The 2015 Volkswagen emissions scandal, which laid bare European consumers’ difficulties in obtaining monetary compensation for mass harm, is now fueling a continental shift toward group litigation—one that will give defrauded investors new legal options to consider.

In April, the European Commission unveiled a proposed directive that would require all 28 EU member countries to establish representative actions for collective redress. Two months later, the German parliament enacted a new law expanding the use of model proceedings.

While both measures fall far short of offering plaintiffs the advantages of U.S.-style class actions, they are seen by proponents and critics alike as a step in that direction. Under the proposed European Commission directive, the outcome of a representative action in one EU country will be binding on all similarly harmed consumers in that same country, and a finding of infringement will provide a rebuttable presumption for consumers harmed by the same behavior in any other EU country. The directive also would allow entities representing investors in various member states to join forces in a single action.

Of course, it will take years of real-life briefing, arguments, declaratory judgments, settlements, and appeals before the true impact of the new laws can be measured. Still, for institutional investors who purchase securities on international exchanges, the developments suggest legal protections will continue to expand in the European Union. This is important given that investors in non-U.S. markets cannot rely on U.S. federal law for protection since the Supreme Court’s sweeping Morrison ruling in 2010.

In announcing the two measures, both the European Commission and the German government cited the “Dieselgate” scandal that erupted in September 2015 when the U.S. Environmental Protection Agency accused VW of violating clean air laws by rigging diesel-powered vehicles to shut off anti-pollution devices when tested.

Volkswagen eventually admitted it had sold 11 million offending vehicles worldwide, including 8.5 million in Europe, where executives have been jailed and the company has paid billions of euros in fines. But while U.S. consumers benefited from class action settlements providing generous cash compensation and the right to sell their vehicles at pre-scandal prices, VW offered European owners only a free “fix” to reduce emissions to lawful (arguably still dangerous) levels.

While it is good short-term news for plaintiffs, a Ninth Circuit appeals court ruling in favor of a more relaxed standard of proof in merger-related securities lawsuits also has created a circuit split that could lead to a showdown at the Supreme Court, a decidedly less friendly venue for plaintiffs.

The decision comes amid a record increase in the number of shareholder class actions asserting violations of Section 14 of the Securities Exchange Act of 1934 (“Exchange Act”) arising out of alleged false and misleading statements made relating to a proposed merger or other strategic transaction. Most Section 14 cases have been filed in the Ninth Circuit, and in April the appeals court held in the tender offer case Varjabedian v. Emulex Corp., No. 16-55088 (9th Cir. Apr. 20, 2018) (“Emulex”) that Section 14(e) requires a showing of mere negligence, not proof of “scienter,” i.e., an intent to mislead shareholders.

Florida’s Workers’ Compensation Act sets up a self-executing system under which an employee injured in a workplace accident can receive medical care and lost wages without filing a civil lawsuit.  This system, however, does not provide all the remedies that would be necessary to make an injured worker whole.  For instance, noneconomic damages, such as pain and suffering, are not available under Florida’s Workers’ Compensation Act. And, the injured worker is often beholden to the employer’s workers’ compensation carrier when seeking medical treatment as the carrier may not agree with such treatment or find it causally related to the workplace accident. While the employee can seek relief through the administrative workers’ compensation system, in some cases greater relief can be found outside the system. One such situation is when a product is a cause of the worker’s injury, which provides an avenue for the employee to recover in a civil product liability lawsuit.  As access to circuit court may be the only means by which the injured worker can make a full recovery of damages, it is important to be aware of opportunities that will open the courthouse doors to injured workers. For this reason, this article focuses on upcoming trends in product liability lawsuits and practice tips for making successful claims on behalf of injured workers outside the workers’ compensation system.

Trending workplace product claims

Saws 
There are many different types of saws, e.g., table, horizontal, miter, all of which are common on many construction sites. Accidents are not uncommon. For instance, researchers estimate over 30,000 table saw injuries alone occur annually.  From a product liability aspect, table saws have been alleged to be defectively designed for not incorporating flesh-detection safety technology, such as something like Sawstop, which is a safety system that stops a saw within 5 milliseconds of the blades contact with human flesh.  Horizontal band saws have been alleged to be defectively designed for not incorporating vises that require two hand-controls to operate,   and for not offering pedestal controls to allow the saws to be operated from a remote, safe position.  Alternatively miter saws have been alleged to be defectively designed for not incorporating lock washers, cotter pins, c-clips, or other locking mechanisms to keep the saw arm in place when not in use.

Ladders
Among workers, approximately 20% of fall injuries involve ladders.  Among construction workers, an estimated 81% of fall injuries treated in U.S. emergency departments involve a ladder. From a product liability perspective, ladders have been found defective for several reasons. For instance, from a warning or instructions perspective, ladders have been found defective for not holding an as advertised weight.  These types of ladders fail for larger men or women, even though their body weight does not exceed any maximum weight requirement. From a manufacturing perspective, ladders have been found defective for having out of specification rivets. The rivets are an integral part of the support structure of a ladder and even a minimal misplacement can lead to fatigue fracture or failure.  From a design perspective, ladders have been found defective for not including wider, thicker legs or longer gussets, both of which affect stability.

…

Conclusion
As Florida’s Workers’ Compensation Act limits the damages available to injured workers, it is important to look for other avenues that may enable an injured worker to recover sufficient damages in order to become whole. Because the Act does not preclude an employee, or his or her family, from seeking restitution from a third party, counsel should determine whether the employee’s injuries were caused by a product and whether a civil product liability action might enable the employee to make a greater recovery than a claim merely under Florida’s Workers’ Compensation Act.

If you have a potential claim against a workers’ compensation insurance carrier, please contact Leslie M. Kroeger, Diana L. Martin  or email a member of our Managed Care Abuse Team.

Adopting Commissioner Piwowar’s proposal to permit companies to impose mandatory arbitration provisions in connection with their IPOs would rapidly lead to the end of meaningful securities law remedies for investors.

This proposal in fact presents as great a threat to investor rights as anything I have seen in the past thirty years—ranking with challenges in the Supreme Court to the fraud-on-the-market doctrine underpinning securities class actions. To put it bluntly, Commissioner Piwowar’s proposal is calculated to and would in fact deny investors their rights under the securities laws in almost all situations.

While the proposal by Commissioner Piwowar presently is restricted to use by newly formed public companies, it would inevitably spread over time as companies with such provisions make up an increasing share of listed companies. Further, the scope of forced arbitration provisions would certainly morph beyond companies applying for IPOs, as existing public companies, emboldened by the precedent, will find ways to amend their charters or bylaws to force investors out of court and into arbitration proceedings. The temptation for public companies to avail themselves of what effectively is a “get-out-of-jail-free card” by restricting investors’ ability to use both the court system and the class action mechanism will be irresistible.

So why would this mark the beginning of the end of effective remedies for investors? The answer is that forced arbitration would compel investors to participate in a process that undermines all of the critical elements of current securities litigation that makes that process a fair and economically rational option for investors.So why would this mark the beginning of the end of effective remedies for investors? The answer is that forced arbitration would compel investors to participate in a process that undermines all of the critical elements of current securities litigation that makes that process a fair and economically rational option for investors.

Debate is sharpening over the value of dual-class stock, the controversial governance structure that multiplies the voting power of founders and other insiders—often forever—at the expense of ordinary shareholders.

The number of publicly traded U.S. companies with multi-class stock increased 44% from 2005 to 2015, and nearly one in five IPOs now feature the structure, according to a recent report presented to the Securities and Exchange Commission’s Investment Advisory Committee (IAC).

In March, the IAC recommended that the Commission require additional disclosures from dual-class companies. Others want to go further, including one of the SEC’s own Commissioners, who suggested U.S. stock exchanges should only allow dual-class shares that automatically convert to ordinary ones over time.

The issue of continuing to allow companies with “perpetual” dual-class stock to list on U.S. markets may be too ripe for the SEC to ignore, despite Chair Jay Clayton’s insistence in March that revisiting rules on the topic is “not on my list of near-term priorities.”

Since last summer, three major stock index providers have taken steps to remove dual-class companies from their indices or reduce their weighting, potentially leaving legions of index-fund investors without an interest in some of the world’s most important companies.

The full article can be accessed here.

In Janus v. AFSCME Council 31, et al., the Supreme Court heard oral argument recently on whether an Illinois law requiring nonunion public employees to pay partial fees to unions that negotiate on their behalf violates their constitutional right to free speech. A decision against the unions would undo forty years of precedent and financially devastate organized labor in its last stronghold, the public sector.

In bringing this case, state employee Mark Janus has asked the Court to overrule the 1977 decision Abood v. Detroit Board of Education. Under Abood, non-members can opt out of paying for a public employee union’s political activities but may be required to pay “fair share” fees to support services a union is statutorily required to provide all employees, such as negotiating collective bargaining agreements.

Mr. Janus argues that a union’s bargaining against the government is not government speech expressed through employees but rather advocacy or political speech expressed through an independent interest group. As such, to require non-member employees to pay fees that subsidize the union’s bargaining infringes the non-member employees’ First Amendment rights to choose which political speech is worthy of their support.

This position appeared to resonate with conservative justices during the February 26 hearing. Justice Samuel Alito was particularly vocal, asking at one point: “When you compel somebody to speak, don’t you infringe that person’s dignity and conscience in a way that you do not when you restrict what the person says?”

A recent survey revealed some startling news about the lack of fiduciary awareness. In the survey conducted by AllianceBernstein L.P., more than 1,000 defined-contribution plan executives were asked if they were fiduciaries. While all in fact were fiduciaries, nearly half said they were not, and another 6 percent didn’t know or weren’t sure. Worse, the survey suggested that fiduciary awareness is steadily decreasing over time. In 2011, 61 percent of interviewees correctly identified themselves as fiduciaries; by 2014, the percentage had dropped to 58 percent; and now we are at a low of 45 percent.

Despite the need for fiduciary education made so painfully clear by the study, only about two-thirds of the plans surveyed offered any fiduciary training at all. And of those respondents who were offered fiduciary training, about 50 percent reported that the training program was not comprehensive. The results dovetail with a 2014 survey of multiemployer trustees conducted by the International Foundation of Employee Benefit Plans (IFEBP), which found that only 15 percent of funds surveyed had formal orientation, mentoring, or knowledge transfer programs for new trustees. The majority of trustees surveyed by the IFEBP opined that it takes 3 to 5 years to develop a competent trustee, and 93 percent found the trustee role more challenging than in the past.

The full article can be accessed here.

There’s been a lot of media coverage about sexual harassment in the workplace, leaving many women – and men – wondering exactly what sort of behavior crosses that sometimes-invisible threshold and rises to the level of illegal harassment. You may have the feeling you’re being harassed at work, but you’re not sure whether you have an actual legal claim. This post is intended to help workers identify sexual harassment violations in the workplace, and take the first steps in addressing the problem.

It’s important to always bear in mind that it’s not always about sex: if you are harassed on the job because of your sex, race, color, religion, gender identity, sexual orientation, or national origin, you may have a legal claim.

First, it’s important to understanding the legal definition of harassment.

Sexual Harassment: If a supervisor makes unwelcome sexual advances to a job applicant or employee, and then uses his authority to take a job action, good or bad, against that person, that is unlawful sexual harassment. If a supervisor threatens – explicitly or implicitly – a harmful job action or offers a job benefit to get an employee to comply with sexual advances, that is also unlawful.

Hostile Workplace: If anyone in the workplace – not just supervisors – engages in unwanted touching or makes unwelcome or offensive comments or “jokes” that are sexual or linked to gender, race, or another protected characteristic, it is considered unlawful harassment if the behavior is so severe or ongoing that it creates an intimidating, hostile, or abusive work environment. A worker must be able to show that tolerating this behavior was a condition of staying in their role.

Specific examples of what can constitute harassment:

• In a case of religious harassment, a state court has found that it was harassing for an employer to place Christian-themed messages and Bible verses on paychecks given to employees.

• Repeated, and unwanted, preaching by coworkers on religious matters can potentially constitute harassment.

• Hanging a picture of a political leader or activist, or photograph of an ethic disturbance or conflict that reflects negatively upon people of that nation, can constitute national-origin harassment.

• Using racial epithets to describe a set of people can constitute racial harassment, even if the epithets are not directed at a particular individual.

Next, here are some steps you can take to address a problem in your workplace:

Let those inside and outside the company know what is going on: If your employer has an anti-harassment policy, follow its process for reporting harassment. In some cases, you risk undermining your claim if you don’t report and give your employer the opportunity to address the issue first. Keep copies of all communications with the harasser and your employer, as well as thorough notes on each incident.

At the same time, you may reach out to the EEOC or your state’s analog, or the following organizations for more information about your legal options: the National Women’s Law Center; Equal Rights Advocates. You may also with to contact a private attorney for confidential advice and counsel. A directory of employment lawyers specializing in representing employees – not employers – is available at the website for the National Employment Lawyers Association.

Litigation can be risky and there are no guarantees of victory. Even when an individual woman recovers a good settlement or jury verdict, she may not see the sort of structural, systemic change that prevents future problems instead of just compensating for past problems. But cases that are brought as class actions have greater potential for relief that can really change a workplace over time. While not all circumstances are appropriate for class action litigation, in cases that are, the relief is more than just monetary. If you are one of many experiencing harassment on the job, it’s worth talking with a lawyer about whether your case is suitable for litigation on a class action basis.

Remember that you have a right to report harassment, participate in a harassment investigation or lawsuit, or oppose harassment, and it is unlawful for your employer to retaliate against for doing so.

Christine E. Webber is a partner in the Civil Rights & Employment practice at Cohen Milstein Sellers & Toll PLLC, where she regularly represents victims of discrimination and other illegal employment practices in class and collective actions. Aniko R. Schwarcz is an attorney in the same practice, where she serves as Director of Civil Rights & Employment Case Development, investigating new cases and serving as the first point of contact for prospective clients and class members.

Manufacturers market booster seats to parents whose children are too young to safely travel in one, increasing the risk of serious injury. Here are some issues you may face in these difficult but vital cases – and how to get around them.

Before children are large enough to be placed in booster seats, they typically are buckled into forward-facing restraint systems, also referred to as “harness seats.”¹ Nearly all harness seats incorporate a five-point harness with straps that secure at the shoulders, across the upper thighs, and between the child’s legs. Most children then graduate to booster seats, which elevate a child so that a vehicle’s integrated lap and shoulder belt will fit safely and appropriately.²

Many booster seat companies market their products as equally safe and appropriate as harness seats for children weighing as little as 30 pounds and as young as three. But this directly contradicts the recommendations of the National Highway Traffic Safety Administration (NHTSA) and the American Academy of Pediatrics (AAP.)³ Both state that children between three and seven should ride in a harness seat until they reach the top height or weight limit allowed by the manufacturer and outgrow the harness seat.⁴

Notes
1. 49 C.F.R §571.213 S4 (2017).
2. See id.
3. Dennis R. Durbin, Policy Statement—Child Passenger Safety, 127 Pediatrics 788 (2011).
4. Nat’l Highway Traffic Safety Admin., Car Seat Recommendations for Children (March 21, 2011).

As litigation about the legality of the Department of Labor’s controversial Fiduciary Rule reaches federal circuit courts, the current administration has turned into the Fiduciary Rule’s biggest adversary.

Over a year ago, insurance companies started a broad offensive against the Fiduciary Rule in federal courts across the country. Challengers to the rule have filed six cases in three federal district courts to date. Despite the success of the Department of Labor (“DOL”) in defending the Fiduciary Rule, recent changes of position by the Department of Justice and DOL have cast a shadow over the Fiduciary Rule’s future.

Background

The Fiduciary Rule (the “Rule”) was the product of rulemaking that started nearly eight years ago, in 2010.  DOL sought to replace its 1975 regulation’s five-part test for fiduciary status with a new interpretation of ERISA’s definition of an investment advice fiduciary.  In 2011, DOL withdrew that proposal, and on April 20, 2015, issued a new proposal that again sought to replace the 1975 definition and also sought to revise administrative exemptions under which fiduciary investment advisors may obtain relief from ERISA’s prohibited transaction provisions.

DOL was concerned that its 1975 definition of “fiduciary” no longer covered many of the financial services provided to retirement investors in the 21st century.  Of particular concern was the individual retirement account (“IRA”) market.  According to a 2017 survey by the Investment Company Institute, IRAs hold $8.2 trillion in retirement assets.  This number is likely to increase substantially over the next five years as DOL estimates plan participants will rollover more than $2 trillion of assets from ERISA-protected 401(k) plans into IRAs.  Given the size of this market and the ERISA enforcement gap, DOL sought to promulgate a rule that protects individuals from the detrimental effects that conflicts of interest have on their retirement savings.

The regulation resulting from DOL’s rulemaking imposes fiduciary status on a financial professional that provides investment advice to an individual or a Title I plan for a fee, whether or not that advice is given on a “regular basis”.  This brought under ERISA’s umbrella a number of investment advisers who provide advice on a one-time basis.

The rule also revised the administrative exemption structure under which fiduciary investment advisers may obtain relief from ERISA’s prohibited transaction rules when they recommend the purchase of proprietary investment products in which they have an economic interest. The exemptions allow fiduciaries to engage in these transactions if they comply with conditions designed to mitigate their conflict of interest. The rule includes the new Best Interest Contract Exemption (“BICE”) requiring relevant fiduciaries to (1) give advice in the retirement investors’ best interest; (2) charge only reasonable compensation for the services provided; (3) disclose material information to the retirement investors, such as conflicts of interest; and (4) enter into contracts with the retirement investors that promise the fiduciary will adhere to these standards, without limiting liability or requiring class action waivers.  DOL also revised Prohibited Transaction Exemption 84-24 to include a requirement that fiduciaries comply with the same impartial conduct standard in the BICE and to limit its application to transactions involving fixed-rate annuities rather than variable and fixed-index annuities (whose rates of return are linked to a market rate rather than pre-determined rates).  These products are sold to retirement investors on a one-time basis, bringing the financial professionals who sell the products for compensation under the purview of the Rule.