Category: In the News - Page 27

A Maryland federal judge has reinstated certification for several classes of consumers suing Marriott and its information technology provider over a massive data breach at the hotel’s Starwood-branded properties, finding that Marriott’s response to the litigation has been “wholly inconsistent” with its argument that guests had agreed to pursue their claims individually.

U.S. District Judge John Preston Bailey’s ruling, issued Wednesday, came in response to the Fourth Circuit in August vacating an earlier district court order certifying eight classes of potentially millions of Marriott International Inc. customers who are pressing claims that the hotel and its IT provider, Accenture LLC, failed to take reasonable steps to protect personal information exposed in a 2018 data breach that affected roughly 133 million Starwood guests in the U.S.

In doing so, the appellate court found that the district court had not properly considered the “effect” on class certification of a “choice of law and venue” clause in a Starwood guest rewards contract that the members of the damages class had signed and remanded the dispute to the lower court for further consideration of this issue.

Judge Bailey undertook this task in his latest order, concluding that Marriott had “waived any benefit from its Choice of Law and Venue provision” through both its “inaction and action” during the course of the case and that, even if the provision weren’t waived, the contest agreement was “ineffective to override the court’s discretion” to certify a class or consolidate proceedings in order to promote judicial efficiency.

The judge’s decision to reinstate the previously-certified classes hinged on his interpretation of the alleged “class waiver” in the contract that Starwood Preferred Guest Program members signed. That clause stated that any disputes arising out of the agreement would be “handled individually without any class action,” would be governed by New York law and be litigated exclusively in New York courts.

In concluding that Marriott waived this provision, Judge Bailey raised several issues, including that Marriott had requested that all the cases filed over the breach be consolidated in multidistrict litigation and it had not objected to the dispute being heard in Maryland federal court.

“An MDL is the antithesis of handling each claim on any individual basis,” Judge Bailey found, adding that Marriott’s request that the litigation be assigned to a judge in Maryland was also “wholly inconsistent with the Choice of Law and Venue provision’s requirement that the dispute be filed in New York.”

Additionally, Marriott had backed the parties’ joint suggestion that they select 10 bellwether cases to test the sufficiency of the pleadings, with each claim being keyed to the law of a particular state, a move that “again … is wholly inconsistent with handling cases on an individual basis, in New York, applying only New York law,” according to Judge Bailey.

. . .

Judge Grimm issued another order in May 2022 certifying eight classes for monetary damages, negligence and other liability issues that covered potentially millions of impacted guests spanning six states, which the Fourth Circuit vacated in August and Judge Bailey reinstated in full on Wednesday.

The consumers are represented by Amy Keller of DiCello Levitt LLC, Andrew N. Friedman of Cohen Milstein Sellers & Toll PLLC, James Pizzirusso and Megan Jones of Hausfeld LLP, Jason L. Lichtman and Sean A. Petterson of Lieff Cabraser Heimann & Bernstein LLP, Norman E. Siegel and Kasey Youngentob of Stueve Siegel Hanson LLP, MaryBeth V. Gibson of The Finley Firm, Timothy Maloney and Veronica Nannis of Joseph Greenwald & Laake PA, Gary F. Lynch of Lynch Carpenter LLP, James Ulwick of Kramon & Graham PA, Daniel Robinson of Robinson Calcagnie Inc. and Ariana J. Tadler of Tadler Law LLP.

Read Marriott Can’t Use Class Waiver To Block Cert. In Breach Row

After the ends of Epic v. Google day 13 and day 14, where it became painfully obvious, I am not a legal expert, I figured I should probably talk to one!

My biggest question was how the heck we’re going to get from a bunch of competing theories about what market definition should be to the actual questions in front of the jury. Does the judge pick market definition, like one did in Epic v. Apple? Do we have to go with the ones Epic named? Does the jury get to make it up?

Here’s Dan McCuaig, a partner at Cohen Milstein, who spent over a decade in the DOJ’s antitrust division. Not only did he answer my question, he also gave us an elegant summary of the how the process works.

Market definition is a question of fact rather than law. So, in a jury trial, the jury decides what the relevant market is. (The judge instructs the jury how to make that determination.) The jury then determines whether the challenged restraint/activity generated anticompetitive harm in that market. (If not, the defendant wins.) If so, the jury determines whether that same restraint/activity also generated procompetitive benefits in that same relevant market. (If not, the plaintiff wins.) If so, the jury then determines whether there was some less restrictive alternative that could have achieved the same (or virtually the same) procompetitive benefits with no (or substantially less) anticompetitive harm, and, ultimately, the jury balances the anticompetitive effects against the procompetitive benefits to determine, on balance, whether the challenged restraint/activity harmed or benefited the competitive process.

The jury need not find the same relevant market as the plaintiff has proposed in order for the plaintiff to win but, as a practical matter, the jury will always or almost always come out for the defendant if it rejects the plaintiff’s proposed relevant market.

He adds:

Epic v. Apple was a bench trial, so the judge served as finder of fact — and thus made the call on relevant market.

If you take a look at the near-final jury instructions (pdf) for this case, you’ll see the flow sounds like what McCuaig is describing.

Read How Will the Jury Decide Epic v. Google? An Antitrust Lawyer Weighs In – The Verge

Academic support initiatives aim to help all students, including those from underrepresented backgrounds, adjust to their new environment. But telling data and testimonials reveal how Berkeley Law’s Academic Skills Program (ASP) empowers students not just to survive law school, but to thrive in it.

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Early bonds

The week-long pre-orientation helps 40 to 45 1Ls each year. Beyond the concrete academic tools they acquire, students immediately begin forging community and building strong relationships.

“The most meaningful part of the program to me was meeting other people who had the same foundational questions and first-generation backgrounds as myself,” says Adnan Toric ’21. “There’s a special comfort in beginning law school with a group of people you can lean on. Law school is tough, but the pre-orientation program allows you to feel like you belong at Berkeley Law before classes even start.”

Toric later became an ASP tutor, an editor at two Berkeley Law journals, and directed the student-led Academic Empowerment Program. After two years clerking for a federal district court judge, he recently joined Cohen Milstein as an associate in its Philadelphia office.

During his pre-orientation, Toric recalls a professor known for being a tough cold caller conducting a mock class and demystifying the law school classroom dynamic, which made courses less intimidating when the semester actually began.

“The ASP is vital for students from non-traditional backgrounds to feel a sense of both confidence and community in law school,” Toric says. “Some of my close friends even now are people I met during the program as a first-year student and later working within it as a tutor. The program allows students to learn how to be law students, what is expected of them, and gives them a game plan to meet those expectations.

“All the better, their peers are the ones teaching them how to succeed. Who could be a better tutor than someone who just finished going through what you’re going through now? I think those are the reasons the program has been successful, aside from the wonderful guidance of faculty like Diana DiGennaro and Professor Kristen Holmquist.”

In January 2020, the program received a note about Toric from an anonymous student, which read: “I just wanted to drop off a quick thank you for your program. Before ASP I had no clue what a case brief or outline were. Many accolades to my mod’s tutor — Adnan Toric — for his infinite patience while helping me to discern the differences between holding/judgment/rule and what the heck an ‘issue’ was. His encouragement and down-to-earth advice were linchpins to my success last semester. Give the guy a raise! Sincerely, an appreciative student.”

Read Launchpad: Academic Skills Program Boosts Confidence, Propels Students to New Heights

A pair of former warship designers filed a proposed class action in Virginia federal court against two major shipbuilders for the U.S. military, General Dynamics and Huntington Ingalls Industries, and other companies allegedly involved in a decades-long conspiracy to suppress their wages through a no-poach “gentlemen’s agreement.”

Plaintiffs Susan Scharpf and Anthony D’Armiento are seeking to represent a class of all people employed as naval architects, marine engineers or both in the United States by most of the defendants from Jan. 1, 2000, through “such date as defendants’ unlawful conduct ceases,” arguing that a no-poach conspiracy the companies have unofficially engaged in violates the Sherman Antitrust Act.

“Confidential witnesses have confirmed that, for decades, these companies and a close-knit, ‘incestuous’ community of their executives and managers have maintained an illegal agreement not to actively recruit, or ‘poach,’ each other’s employees,” the plaintiffs said Friday. “This unwritten ‘gentlemen’s agreement’ suppressed wages for naval engineers below competitive levels, depriving plaintiffs and the class of hundreds of millions of dollars in compensation.”

The defendants include General Dynamics and Huntington, which operate the only five shipyards in the country used to build large military vessels, as well as midsize shipbuilders Bollinger Shipyards and Marinette Marine, according to the suit.

Defendants Gibbs & Cox, JJMA/Serco, BMT Group, CSC/CACI, The Columbia Group, Thor Solutions, Tridentis, and a subsidiary of Huntington Ingalls are specialized engineering consultancies, and defendant Faststream Recruitment is a recruitment agency, according to the suit.

. . .

The workers are represented by Brent W. Johnson, Robert W. Cobbs, Alison S. Deich and Zachary R. Glubiak of Cohen Milstein Sellers & Toll PLLC, Rio S. Pierce, Steve W. Berman and Elaine T. Byszewski of Hagens Berman Sobol Shapiro LLP, and Rebecca P. Chang, Nicholas Jackson, William H. Anderson and Simon Wiener of Handley Farah & Anderson PLLC.

Read Shipbuilders Accused Of No-Poach ‘Gentlemen’s Agreement’

COURT: D. Conn.
TRACK DOCKET: No. 3:23-cv-00978

Hedge fund manager GWA LLC and its founder George A. Weiss was hit with a proposed class action claiming the entirety of its retirement plan is invested in alternative, proprietary investments including its flagship Weiss Multi-Strategy Partners hedge fund.

The lawsuit, filed Monday in the US District Court for the District of Connecticut, claims the entirety of the company’s $103 million retirement plan is invested in two proprietary investments: the Weiss Multi-Strategy Partners (Cayman) Ltd. hedge fund and a mutual fund that largely replicated the hedge fund’s strategy.

This “highly unprecedented” decision to invest the entire plan in alternative investments is contrary to generally accepted investment principles and exposed the plan to “enormous concentration risk,” former GWA employee Beth Andrew-Berry alleged in the complaint. It also caused the plan to significantly underperform a well-balanced retirement portfolio, according to the complaint.

Andrew-Berry, who seeks to represent a class of about 187 plan participants, charges the company with using the retirement plan to “prop up” the hedge fund at the expense of workers’ retirement savings. She also accuses the company of using the investment as an opportunity to pocket fees that were “substantially above average.”

Read Weiss Multi-Strategy Hedge Fund Spurs Retirement Plan Class Suit.

The National Law Journal recently recognized Joseph Sellers, Cohen Milstein Sellers & Toll co-chair of the firm’s civil rights & employment practice, with the Elite Trial Lawyers Lifetime Achievement Award. He sat down with NLJ to discuss some of his career milestones as well as concerns he has for the future of civil rights in the United States.

When asked about the priorities he has set as a co-chair of the civil rights and employment practice, he said, “We view ourselves as something of a private attorney general. We try to take on matters of public importance that serve our clients’ interests as well as places where the federal, state or local enforcement efforts haven’t worked as well.

We are always looking for ways to continue to expand our availability to serve the people most needy.

With regard to discrimination claims, most of our clients can’t afford our legal services, and as a result we are only compensated when our clients’ cases are resolved successfully and we’re able to recover attorney fees. While our practice was originally focused exclusively on the area of employment discrimination, and that continues to be a major focus of our work, we have expanded our practice to assist clients denied equal access to credit and housing as well as those denied payment for all time worked, in violation of the wage and hour laws.”

Read the interview at ‘Civil Rights Law Protects Everybody’: Joseph Sellers on His Fight For the Disenfranchised.

Abbott Laboratories shareholders, including a powerful union pension fund, have filed a derivative lawsuit on behalf of the company against its leadership that includes a range of accusations, including insider trading amid misconduct related to its baby formula business.

Accusations include claims that North Chicago-based Abbott and its executives violated federal securities law, breached fiduciary duties, engaged in insider trading, and unjustly enriched themselves while unsafely and unethically producing infant formula, and either lied or omitted it to shareholders and the public.

Plaintiffs said in the 166-page complaint that the behavior has caused billions of dollars of damage to Abbott since 2019. Amid the behavior in question, the lawsuit points to Abbott’s board allowing the company to buy back more than 57 million shares for $6.4 billion from 2019 to 2022. Additionally, executives sold $163.7 million in stock over the same period, when the stock was “artificially inflated,” due to the company’s failures to disclose issues with the company’s formula business, the complaint says.

The lawsuit, filed June 27 in U.S. District Court for the Northern District of Illinois, names Abbott CEO Robert Ford and other executives and board members as defendants. The plaintiffs, the International Brotherhood of Teamsters Local 710 Pension Fund and the Southeastern Pennsylvania Transportation Authority, or SEPTA, are seeking restitution be paid to Abbott from the individual defendants for all profits, benefits and other compensation obtained by them. Plaintiffs also ask that Abbott improve its corporate governance and internal procedures, which include requiring independent approval for the terms and timing of insider stock selling.

Teamsters Local 710 Pension Fund, based in southwest suburban Mokena, has about 21,000 members and more than $3.5 billion in plan assets. SEPTA is the sixth-largest public transportation agency in the U.S. with 9,500 employees and more than $1.6 billion in its defined benefit plan.

The lawsuit piles onto the many other pieces of pending litigation related to Abbott’s baby formula business. Other shareholders have filed complaints against Abbott and its executives with similar allegations after the company’s formulas were at the center of a nationwide shortage last year when the company’s Sturgis, Mich., manufacturing plant was shut down amid contamination issues.

The saga has led to multiple federal investigations into conduct at the plant and a group of class-action lawsuits from parents. Additionally, in a somewhat separate issue, there’s a growing group of lawsuits alleging Abbott and competitor Mead Johnson’s cow milk-based formulas are unsafe and sometimes deadly for premature infants.

Allegations in this week’s lawsuit, parts of which are redacted, touch on each of these topics, displaying the shareholders’ general dissatisfaction with how Abbott’s entire pediatric formula segment has operated in recent years.

“Abbott’s board and management have allowed the company to engage in actions to maximize Abbott’s profits related to its manufacture and sales of infant formula products in the U.S., regardless of whether those actions were safe, ethical, or complied with federal regulations,” the complaint reads. “Abbott’s culture, which focuses on maximizing profits at all costs, has pushed its employees to take risky, unsafe and illegal actions, which ultimately caused significant harm to Abbott, with the Individual defendants at the helm.”

The complaint accuses several executives, including Ford and Chief Financial Officer Robert Funck, of taking advantage of Abbott’s high stock price between 2019 and 2022 and selling company stock. Ford sold $22.3 million worth of stock from 2019 to February of 2023 in a manner that was inconsistent with past trading patterns and amounts, according to the complaint. Meanwhile, Funck sold nearly $21 million worth of stock in the same period.

Abbott did not respond to a request for comment. The plaintiffs’ attorneys from New York-based Scott & Scott Attorneys at Law, Washington, D.C.-based Cohen Milstein Sellers & Toll and Philadelphia-based Kehoe Law Firm also did not respond to requests for comment.

Among the many accusations is one that, since at least 2019, Abbott has manufactured and sold formulas in violation of federal regulations, referring to the well-documented sanitation issues at the company’s Sturgis plant, where about half of the company’s formulas were produced. The company was forced to recall formula products following complaints of infants being sickened by Salmonella newport and another type of bacteria called Cronobacter sakazakii.

Abbott has said it did not find any definitive link between its products and the reported illnesses.

The lawsuit also alleges Abbott has used potentially anti-competitive methods to secure a majority of the country’s Special Supplemental Nutrition Program for Women, Infants & Children contracts, a program that subsidizes formula costs for low-income families and makes up a large portion of Abbott’s formula sales. The U.S. Federal Trade Commission opened an investigation into the issue in May.

The complaint also accuses Abbott’s board and management of allowing the company to engage in “deceptive and unethical marketing practices” related to the company’s claims that its cow milk-based infant formulas are safe for preterm infants. This very issue is at the center of a separate group of lawsuits being heard before a Chicago judge from families claiming Abbott and another formula manufacturer, Mead Johnson, sell cow milk-based formula that can cause necrotizing enterocolitis when fed to premature babies. Other similar suits have been filed in British Columbia, Canada and Israel against Abbott, according to the union’s complaint.

During the Sturgis plant shutdown, Abbott’s formula revenues sank dramatically as its products were pulled from shelves and parents turned to alternatives. But sales have begun to rebound. The company reported 9.2% sales growth in its pediatric formula lines in the first quarter, which contributed to overall nutrition segment sales growing 3.8% to $1.9 billion.

Abbott is scheduled to release its second-quarter earnings on July 20.

Last year’s baby formula saga wasn’t the first time the segment caused trouble for Abbott. The business has performed inconsistently since Abbott spun off its branded pharmaceutical business as AbbVie in 2013.

Download a pdf of the Crain’s Chicago Business article.

DOJ hasn’t allocated $629 million penalty
Legal dispute drives inaction

American victims of terror attacks and other violence abroad are frustrated the Justice Department hasn’t committed to directing the proceeds of a $629 million settlement to a fund designed to compensate them for their suffering.

How DOJ’s record-high North Korean sanctions penalty against British American Tobacco Plc gets divvied up is being closely watched by many of the 15,000 eligible claimants, including victims of the 1998 East Africa embassy bombings, a 1968 North Korean capture of a US spy ship, and 9/11. Their lawyers say the law demands all the settlement proceeds be paid to survivors or families of those killed.

At issue is whether the 2015 law that created the US Victims of State Sponsored Terrorism Fund allows the Justice Department to exclude penalties tied to a nine-year period—covering much of the tobacco giant’s scheme of disguising sales to avoid sanctions—when North Korea was removed from the list of state terror sponsors. Those proceeds could be used to fund other DOJ programs, such as subsidizing state and local police equipment.

. . .

Language of the Law

BAT, the manufacturer of Lucky Strike and Dunhill, reached a deal to defer prosecution by having a subsidiary plead guilty to a sanctions evasion scheme that stretched from at least August 2007 through at least June 2017, court documents said.

Complicating the matter is that the US government removed North Korea from the state sponsors of terrorism list in October 2008, before reinstating it in November 2017.

That means that under the reading of the law DOJ presented to victims’ attorneys, only the share of the settlement stemming from tobacco sales to North Korea during the initial 14 months of violations would qualify for the fund.

Robert Braun, a Cohen Milstein partner representing victims of the 1983 Beirut Marine barracks bombing and their families, said “whether or when North Korea was designated a state sponsor of terrorism was irrelevant” under the language of the statute establishing the victims’ fund.

The statutory language is silent on fund eligibility when individuals or companies illegally sell products to a country for a period that straddles when the nation was both on and off the terrorism list.

The law orders the transfer to the victims’ account of “all funds” from criminal penalties or fines from violations of the 1977 international sanctions law under which BAT was charged “or any related criminal conspiracy” or “other Federal offense arising from” conducting business with a “state sponsor of terrorism.”

Braun and other victims’ attorneys take the position that “state sponsor of terrorism” doesn’t modify the clause referencing the 1977 law, meaning North Korea’s classification at the time of the violations shouldn’t impact the BAT penalty’s eligibility.

Read Foreign Attack Victims Demand Proceeds of Tobacco Sanctions Fine.

A class of Flint, Michigan, residents says engineering firms the city consulted to evaluate water quality and treatment should not be able to get out of professional negligence claims, arguing that the firms’ relationship with the city extended to its residents and created a duty to warn them that the water was unsafe.

Veolia North America, Lockwood, Andrews & Newnam P.C and Leo A. Daly Company undertook an investigation into Flint’s water quality, giving them a duty to the class to foresee the potential dangers of Flint’s corrosive water, the residents said Friday in responses to the engineers’ motions for summary judgment on the remaining claims against the firms.

. . .

The residents are represented by Theodore J. Leopold, Emmy L. Levens and Trent Rehusch of Cohen Milstein Sellers & Toll PLLC, Michael L. Pitt of Pitt McGehee Palmer Bonanni & Rivers PC, Stephen Morrissey of Susman Godfrey LLP, Peretz Bronstein of Bronstein Gewirtz & Grossman LLC, Paul F. Novak of Weitz & Luxenberg PC, Esther E. Berezofsky of Motley Rice LLC and Teresa A. Bingman of the Law Offices of Teresa A. Bingman PLLC.

Read Flint Class Says Engineers Owed Duty To Them, Not Just City.

The Walt Disney Co. has paid its women employees in middle management at least $150 million less than men in substantially similar positions, according to a lawsuit filed by a group of current and former Disney employees, who on Friday asked a Los Angeles judge for class treatment.

The women, who first filed the proposed class action in Los Angeles Superior Court in 2019, claim that Disney has been systematically paying women employees in California less than men for substantially similar jobs, in violation of the Fair Employment & Housing Act and California’s Equal Pay Act.

“Disney routinely underpays its female employees, passes them over for promotion, piles on extra work without additional compensation, and does not supply sufficient support staff to allow women to succeed at their jobs,” according to the operative complaint filed by LaRonda Rasmussen, Karen Moore, Virginia Eady-Marshall, Enny Joo, Rebecca Train, Amy Hutchins, Nancy Dolan, Pareja Sinn, Dawn Johnson and Chelsea Hanke.

The estimate that women have been paid at least $150 million less than men in similar positions comes from an expert report prepared this month by David Neumark, an economics professor at the University of California, Irvine, who has done research on labor market discrimination.

Disney itself is organized into segments, which are further divided into different business divisions, but all are subject to the company’s centralized employment policies and practices, according to the report. Overall, Neumark found that Disney paid women 2% less, the report states.

. . .

The plaintiffs are represented by Lori Andrus of Andrus Anderson LLP, Joseph M. Sellers, Christine E. Webber and Phoebe Wolfe of Cohen Milstein Sellers & Toll PLLC and James Kan, Byron Goldstein and Stephanie E. Tilden of Goldstein Borgen Dardarian & Ho.

Read Disney Shorted Women Middle Managers $150M, Workers Say.