- COURT: N.D. Ill
- TRACK DOCKETS: No. 1:23-cv-04142, No. 1:23-cv-04143
Abbott Laboratories, a major infant formula manufacturer, was hit with two shareholder derivative suits alleging its board breached fiduciary duties by not implementing stronger oversight in its formula production.
The suits center on Abbott’s Sturgis, Mich., plant that was shut down in 2022 after the Food and Drug Administration found deadly bacteria in its powdered infant formula, Similac, and the company recalled the product. The recall led to a nationwide formula shortage.
Now, two separate pension funds allege Abbott’s directors ignored safety concerns for years before the recall. Both filed their complaints in the US District Court for the Northern District of Illinois on Tuesday.
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In addition to alleging breaches of fiduciary duty related to the board’s oversight duties, the other complaint filed by the International Brotherhood of Teamsters Local 710 Pension Fund and the Southeastern Pennsylvania Transportation Authority, alleges insider trading by eight defendants.
That complaint alleges the eight defendants collectively sold over $163 million of Abbott stock at artificially inflated prices.
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Teamsters Local 710 Pension Fund and SEPTA are represented by Cohen Milstein Sellers & Toll PLLC and Scott + Scott Attorneys At Law LLP. Kehoe Law Firm PC also represents SEPTA.
Read Abbott Labs Faces Two Lawsuits for Alleged Formula-Making Lapses.
The District of Columbia’s attorney general on Wednesday sued property management platform RealPage and more than a dozen of the city’s largest apartment building landlords, accusing them of a scheme to artificially fix rental prices in violation of U.S. antitrust law.
The lawsuit filed in D.C. Superior Court marks the first government antitrust enforcement action against RealPage since last year, when it was hit with more than two dozen private civil lawsuits that are now consolidated in Nashville, Tennessee, federal court.
U.S.-based plaintiffs’ law firm Cohen Milstein Sellers & Toll filed the complaint with lawyers from the D.C. attorney general’s office, led by Attorney General Brian Schwalb. Cohen Milstein and other private firms have also worked with the office on other civil lawsuits.
In a statement, Schwalb said landlords conspired to keep rental prices high using RealPage’s revenue management platform. The attorney general’s office said District residents had paid “millions of dollars above fair market prices.”
An eight-year legal battle ended in a win for prison reform, as Judge Shelly Dick ruled in favor of Angola prisoners.
“The court’s decision validates the humanity of the thousands of men incarcerated in Angola,” said Samantha Bosalavage with the Promise of Justice Initiative.
The New Orleans-based firm represented the prisoners as a whole, claiming the medical care at the state penitentiary was inadequate and unconstitutional.
Judge Dick’s opinion cites eight cases where inmates died, all involving repeated complaints of symptoms with no medical care given until it was too late. It included an inmate who complained of chest pains for over a year, finally getting to a doctor who found he had lung cancer and dying a week later.
Now she’s demanding the feds step in.
“The court ordered the state to fix the problem. The court put in place guardrails to make sure the state essentially overhauls its entire healthcare system in Louisiana. This is a major win for incarcerated people in Louisiana,” said Bosalavage.
Judge Dick will appoint a special council of a doctor, a nurse practitioner and a person with disability experience. They will develop plans to make sure Angola is no longer inflicting ‘cruel and unusual punishment’ as she described.
A civil engineering company will pay $8 million to resolve claims it failed to warn Flint, Michigan, residents of likely lead contamination that triggered a drinking water crisis in the city, according to a proposed settlement filed in federal court.
Class members and individuals suing Lockwood Andrews & Newnam PC for professional negligence urged a Michigan federal court to approve the agreement Tuesday, noting the financial offer was the most the company could afford even if Flint residents were victorious in court.
The proposal comes ahead of a February trial over allegations that another engineering firm, Veolia North America LLC, also failed in its professional duty to warn residents about potential toxic contamination in the city’s water system leading to the 2014 crisis. Veolia is not a party to the proposed settlement.
“Given significant limitations on LAN’s ability to pay in the event of a favorable verdict, plaintiffs believe the class’s interests are best served by securing as much financial relief from LAN now and focusing all remaining efforts on holding the last remaining defendants [Veolia] accountable in the upcoming issues class trial,” the residents said.
The planned deal with LAN and its corporate parent Leo A. Daly Co., would add to a $626 million settlement between Flint residents and state and city officials over their alleged responsibility in the disaster.
Half the $8 million total would be paid out to individuals suing LAN, with the other half going to the class, according to the proposal. Nearly all the class allocation would go to a property damage subclass, the residents said. The company also reached settlements last year with four Flint kids who alleged the company contributed to their lead poisoning.
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The class is represented by Theodore J. Leopold of Cohen Milstein Sellers & Toll PLLC and Michael L. Pitt of Pitt McGhee Palmer Bonanni & Rivers PC.
The attorney general of Washington, D.C., sued RealPage and 14 D.C.-area landlords Wednesday, joining a long list of lawsuits accusing the software company of colluding to illegally use its algorithm to raise rents, violating both federal and local antitrust laws.
Attorney General Brian L. Schwalb accused RealPage Inc. and the landlords of violating the Sherman Act when they delegated their rent-setting authority to the technology company’s revenue management software in order to turn greater profits, according to the complaint. Schwalb wants a declaratory judgment that the defendants violated local antitrust laws, to enjoin them from engaging in further anticompetitive activities, and appoint a corporate monitor to ensure the illegal activities. Schwalb also seeks actual, statutory, punitive and treble damages.
“RealPage and the defendant landlords illegally colluded to artificially raise rents by participating in a centralized, anticompetitive scheme, causing district residents to pay millions of dollars above fair market prices,” Schwalb said in a statement. “Defendants’ coordinated and anticompetitive conduct amounts to a district-wide housing cartel. At a time when affordable housing in D.C. is increasingly scarce, our office will continue to use the law to fight for fair market conditions and ensure that district residents and law-abiding businesses are protected.”
RealPage became the focus of a probe initiated by Schwalb in October, in which counsel from Cohen Milstein Sellers & Toll PLLC scrutinized its rental pricing activities in the D.C. area after it became the target of dozens of lawsuits nationally.
The landlords included in the lawsuit are some of the largest multifamily housing providers, accounting for more than 50,000 units across the region, according to a statement from the attorney general’s office.
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The attorney general’s office is represented by Adam Gitlin and Amanda Hamilton of the Office of the Attorney General for the District of Columbia’s Public Advocacy Division and Emmy L. Levens, Robert A. Braun and Aaron J. Marks of Cohen Milstein Sellers & Toll PLLC.
Read DC’s AG Accuses RealPage, Landlords Of Price Fixing.
- Imports resume after EPA questions spurred four-year hiatus
- Chemours boosted waste oversight after EPA alleged violations
Community and environmental groups are exploring legal responses after the EPA approved shipments of up to 4.4 million of pounds of PFAS wastes to a Chemours plant in North Carolina that has been the source of previous pollution.
The Environmental Protection Agency’s approval (Notice ID: 035594/07I/23, Notice ID: 035605/07I/23) of up to 100 shipments of wastes containing per- and polyfluoroalkyl substances (PFAS) from the Chemours Netherlands B.V. facility in Dordrecht to the Chemours Fayetteville Works plant was first reported by NC Newsline earlier this month.
The shipments, previously a routine way Chemours recycled chemicals, are alarming local residents because the company and factory from which the wastes are being shipped has been held liable and continues to face scrutiny by Dutch authorities. Also, since 2018, when Fayetteville received its most recent shipments from the Netherlands, the EPA has advised near-zero drinking water limits nationwide for several PFAS.
An injunction could be sought to try and stop the imports, said Theodore J. Leopold, a Cohen Milstein Sellers & Toll PLLC, partner and co-lead counsel in Nix v. The Chemours Co. FC LLC, a class action case seeking property damage and related claims alleged from PFAS.
Both Leopold and Robert M. Sussman—an environmental lawyer who represents local residents in a lawsuit, Center for Environmental Health v. Michael Regan—said they’ve fielded questions about options to oppose the EPA’s decision, but neither have heard of a group choosing a specific action.
Emily Donovan, co-founder of Clean Cape Fear, said the North Carolina community group is examining legal and other actions.
The community is tired of being a “sacrifice zone” for a government that’s allowing chemical companies to dictate policies “at the expense of our health, our families, and our livelihood,” she said.
Local residents’ concerns and questions about the wastes being shipped to their community are heightened because of actions in the Netherlands, Donovan said.
The Netherlands’ Public Prosecutor’s Office has launched a criminal investigation of Chemours’ managers, and the Rotterdam District Court in September ruled that Chemours Co. and DuPont de Nemours Inc. are liable for past PFAS emissions.
EPA: No Other Choice
The EPA’s approval means the Fayetteville plant can resume importing wastewater containing hexafluoropropylene oxide (HFPO), a type of PFAS, for recycling and reuse, an activity it did until 2019. The Fayetteville plant is the only US site where HFPO is produced, according to EPA information.
The shipments stopped while the Netherlands’ Human Environment and Transport Inspectorate (ILT), which supervises waste imports and exports, and Chemours answered questions the EPA posed in late 2018 and in 2020.
“Insufficencies” in previous importation requests were addressed, the agency said in a recent statement.
Neither the federal or state consent orders under which Chemours operates in Fayetteville prohibit the importation of waste containing HFPO at the facility, the EPA said.
Absent “other disqualifying circumstances” the EPA had “no course of action other than to provide the conditional consent,” the agency said.
Conditions it imposed include that only nonhazardous wastewater containing recoverable amounts of the HFPO chemicals be shipped to the Fayetteville facility, the EPA said.
HFPO chemicals often are called GenX, but that term refers to the technology Chemours uses with HFPO to make fluoropolymers used by semiconductor, electric vehicle, and other manufacturers.
The Dutch government’s investigations and other actions involving the Chemours’ Dordrecht site haven’t impacted the volumes of PFAS substances leaving the Netherlands, said ILT spokesperson Sascha Elzinga.
Read Chemours’ PFAS Waste Imports Scrutinized Despite EPA’s Approval.
The suit named Abbott as well as the company’s CEO Robert B. Ford, members of its board of directors, and executive level leaders of the company.
A 181-page amended shareholder derivative lawsuit has been filed in federal court against Abbott Laboratories by court-appointed lead plaintiffs after the company closed a Michigan infant formula manufacturing facility due to FDA concerns over contamination.
On Feb. 15, 2022, Abbott closed its Sturgis, Michigan, plant, and two days later, issued a voluntary recall of contaminated infant formula products. The shutdown and recall were the results of FDA inspections that found multiple regulatory violations and the deaths of several infants who consumed tainted baby formula, according to the opinion.
The suit, In re Abbott Laboratories Infant Formula Shareholder Derivative Litigation, was filed on Oct. 16, 2023, by court-appointed lead counsel Cohen Milstein Sellers & Toll and Scott & Scott in the U.S. District Court for the Northern District of Illinois on behalf of the International Brotherhood of Teamsters Local No. 710 Pension Fund (Teamsters Local No. 710 Pension Fund) and Southeastern Pennsylvania Transportation Authority (SEPTA).
The suit named Abbott as well as the company’s CEO Robert B. Ford, members of its board of directors, and executive level leaders of the company.
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The lead plaintiffs were represented in the matter by Carol V. Gilden, a partner at Cohen Milstein’s securities and investor protection group, and Geoffrey M. Johnson of Scott & Scott.
“Abbott’s Board breached its duty to the company to oversee mission-critical risks in connection with the highly regulated manufacturing and sale of infant formula,” said Gilden, in a written statement to Law.com. “The result was tragic for our nation’s families, resulting in a nationwide formula shortage and the deaths of multiple infants allegedly due to consuming Abbott’s tainted baby formula, and it has been catastrophic for Abbott’s business, leading to a DOJ consent decree and billions of dollars in damages.”
“Cohen Milstein and Scott & Scott are proud to represent shareholders as lead counsel in this important shareholder derivative lawsuit to hold Abbott’s board of directors accountable,” said Gilden.
Also appearing for the plaintiff are Richard Speirs, Amy Miller, Steven J. Toll and Molly Bowen of Cohen Milstein; Jing-Li Yu, Tyler C. Yagman, and Joseph A. Pettigrew of Scott & Scott; and John A. Kehoe of the Kehoe Law Firm.
Read Shareholder Suit Filed Against Abbott Laboratories Over Nationwide Baby Formula Shortage. (Subscription required.)
A pair of lawsuits seeking billions in damages allege the home-sales industry has conspired to keep costs high
In recent years, technology has made a host of consumer transactions cheaper—from booking a vacation to buying stocks—but commission rates for selling a home haven’t really budged. That could soon change.
A pair of class-action lawsuits challenging real-estate industry rules—including one that went to trial beginning this week—and continued pressure from U.S. antitrust officials are threatening to disrupt a compensation model that hasn’t meaningfully changed in decades.
Home buyers rarely pay their agents. Instead, sellers pay their own agents, who in turn share their commissions with the buyer’s representative. In the typical transaction, total agent commissions are 5% to 6% of the sale price. For a $400,000 home purchase, that is roughly $20,000, split two ways.
In most markets, publishing the amount of compensation offered to the buyer’s agent is a condition for listing a home on a multiple-listing service—a vital tool for marketing a home.
In the current environment, trying an alternative approach can be risky. When Jon Anderson decided to sell his khaki-colored three-bedroom house in Colorado Springs four years ago, the veteran home seller was fed up with paying a real-estate agent tens of thousands of dollars.
He hired a low-fee brokerage company, REX, that was bucking a widespread industry rule by not guaranteeing the seller would pay a commission to the home buyer’s agent. At the time, homes were often selling in days, but for several weeks Anderson said virtually no buyers even toured his home. It eventually sold for $15,000 less than he originally listed it.
“I believe that when my house went on the market through REX that we were completely and utterly blackballed by the real-estate market,” he said.
REX, which is now defunct, recorded a call with a buyer’s agent interested in Anderson’s home until she realized there was no guaranteed commission. “I won’t bother to show it,” she said. A former REX data scientist said the recording and about 600 similar ones have been turned over to plaintiffs’ attorneys and the Justice Department.
The plaintiffs in the class actions, who are home sellers in different regions of the country, say the longstanding industry rules amount to a conspiracy to keep costs high in violation of U.S. antitrust law. Buyers, they say, have little incentive to negotiate with their agents because they don’t pay them directly, while sellers are loath to experiment with a lower commission rate for fear that agents will steer clients away from their home.
An academic study released this month provides some evidence of these concerns. It found that home listings offering lower buyers’ agent commissions take significantly more time to sell and are much less likely to sell at all, even after controlling for factors such as the home’s age and location and listing-agent attributes.
Read Real-Estate Commissions Could Be the Next Fee on the Chopping Block. (Subscription required.)
Workers contracted to work for western brands in Saudi Arabia have described conditions as ‘like jail’
- Revealed: Amazon linked to trafficking of workers in Saudi Arabia
- Corporations are paying for worker abuse audits that are ‘designed to fail’, say insiders
- McDonald’s and Amazon’s ties to alleged labor trafficking: five key takeaways
Over the years the world’s most powerful fast-food chain, McDonald’s, has twice honored a Saudi prince’s business empire with its highest accolade for its franchisees: the Golden Arch award.
Prince Mishaal bin Khalid al-Saud – who controls more than 200 McDonald’s outlets across Saudi Arabia – told CEO Magazine in 2018 that one of the secrets of his enterprise’s success is “ensuring a positive and favorable environment for our employees”.
Macrae Lee and Buddhiman Sunar recall a different environment. They say that they labored under harsh and unfair conditions at McDonald’s locations owned and operated by the prince’s Riyadh International Catering Corp (RICC).
Lee, who is from the Philippines, says RICC’s store managers ordered him to put in as many as 22 hours a day and hundreds of hours of unpaid overtime. He was denied days off for rest, he says, even when he was sick with fever. When he tried to quit, a manager withheld paperwork that would have permitted him to find a new employer, he claims, leaving him jobless and begging on the street for food and water.
Sunar says he had to pay a stiff recruiting fee to an employment agent in Nepal to get a job at the prince’s fast-food outlets. Once he was in Riyadh, the Saudi capital, he worked 13- and 14-hour shifts with no breaks, he says. All the while, managers screamed abuse, he says, calling him “an animal” and asking: “Don’t you have a brain in your head?” If he stepped outside the restaurant, he says, he had to fill out an “incident report” explaining why.
“I felt trapped,” Sunar, who left his job with the Saudi McDonald’s franchisee in 2022, said in an interview. “I felt like I was in jail.”
Lee and Sunar are among nearly 100 migrant laborers from Asia who say they’ve been subjected to repressive labor practices while working at the Persian Gulf locations of four well-known American and British brands: McDonald’s, Amazon, Chuck E Cheese and the InterContinental Hotels Group.
The current and former workers say independent employment agents in their home countries coerced them into paying exorbitant recruiting fees, while labor contractors and workplace supervisors in Saudi Arabia and other destination countries subjected them to abuses that included confiscating their passports and limiting their freedom to leave their jobs.
These practices are widely identified as indicators of labor trafficking, which is defined by the United States and the United Nations as using force, coercion or fraud to exploit workers.
The workers were interviewed as part of Trafficking Inc, a joint investigation by the Guardian US, the International Consortium of Investigative Journalists (ICIJ), NBC News, Arab Reporters for Investigative Journalism and other media partners. The latest installments in the investigation reveal how some of the world’s most recognized companies may be complicit in labor abuses through their overseas subsidiaries, franchises and business partnerships.
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The abuses uncovered in this investigation may mean the American parent companies have breached the Trafficking Victims Protection Act, a federal law enacted in 2000 to protect trafficking victims and prosecute traffickers, legal experts say.
“In the United States, the Trafficking Victims Protection Act imposes liability on companies who benefit from participation in a venture that uses forced labor, provided that they knew or should have known of the forced labor,” says Agnieszka Fryszman, partner and chair of the human rights practice at Cohen Milstein, a US law firm. “A franchise agreement would certainly seem to qualify as a venture, and any profit or market share would qualify as a benefit.”
Fryszman and other anti-trafficking experts say big corporations should aggressively monitor the labor practices of their subsidiaries and partners in the Persian Gulf region, which is known for weak labor protections and abuses against migrant workers.
Read McDonald’s and Chuck E Cheese Tied to Alleged Foreign Worker Exploitation.
The U.S. Supreme Court declined on Tuesday to review a Tenth Circuit decision that an arbitration provision in a radiology company’s employee stock ownership plan documents was unenforceable, despite the company’s argument that workers’ claims they were overcharged for company stock didn’t belong in court.
In an order list, the justices rejected the July petition for writ of certiorari from radiology company Envision Management Holding Inc. and ESOP trustee Argent Trust Co. The companies argued that the Tenth Circuit’s decision would allow a single plan participant to disrupt a plan under the Employee Retirement Income Security Act without any guardrails to protect other participants.
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Michelle Yau, who is also representing Harrison, added that this “is a significant victory for hardworking Americans whose retirement plan savings are vulnerable to abuse.”
“We look forward to presenting evidence at trial that the stock sold to employees’ retirement accounts was overpriced and caused substantial losses to their retirement savings,” Yau said.
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Harrison and the proposed class are represented by Bridget C. Asay, Peter K. Stris, Rachana A. Pathak and John Stokes of Stris & Maher LLP and by Michelle C. Yau and Kai H. Richter of Cohen Milstein Sellers & Toll PLLC.
Read High Court Turns Away Push To Send ESOP Suit To Arbitration.