In 28 states, low-level exhibitor staffers are fighting to end long hours without extra pay.

While a strong December film slate helped lead U.S. box office revenue to a projected $11.4 billion in 2019 (down 4 percent year-over-year), many lower-level employees at top theater chains in multiple states worked without overtime or holiday pay — as they have for much of the past century.

Now, a widely circulated petition by staffers at AMC Theatres is hoping to draw attention to a longtime exemption in 1938’s federal Fair Labor Standards Act that allows exhibitors to refrain from providing staff with time-and-a-half pay rates in states without strict overtime laws. “The theater can take advantage of employees and schedule them as much as possible without having to worry, since there’s no overtime pay,” says Mathew Carpenter, who recently left his job at AMC and was among the 7,496 signatures on the petition that was started by an Atlanta-based, theater-restaurant cook at the chain in 2018. (AMC did not respond to requests for comment.)

Currently, lower-level movie theater employees lack mandated overtime in 28 states. Theater chains nabbed their Fair Labor Standards Act amendment in 1967 to exempt “any employee employed by an establishment which is a motion picture theater” from both minimum wage and overtime. The rationale for the exemption at the time was that theaters could not afford the labor costs because of low profit margins, poor box office and rising costs. While the minimum-wage exemption was removed in 1974, the overtime exemption has remained, to the puzzlement of labor experts.

“To me, the motion picture worker [exemption] makes no sense,” says Eve Wagner, a mediator/arbitrator with Signature Resolution, which specializes in employment, entertainment and business matters. Adds Michael Hancock, an attorney at Cohen Milstein‘s civil rights and employment group and a former assistant administrator for the Department of Labor’s Wage and Hour division, “It’s hard to see any sort of rational economic argument for it.” (The National Association of Theatre Owners declined to comment.)

…

Without intervention from the Department of Labor, theater employees seeking changes to their benefits for overtime pay might have the most luck pressuring individual state representatives since, as Hancock notes, “legislation at a federal level is pretty much at a standstill.” Wagner adds, “The states could certainly enact their own legislation. Or the business could just decide to do it. Just because you don’t have to do it doesn’t mean you can’t.”

A landmark data breach deal that requires Equifax to pay up to $425 million to consumers provides valuable monetary and injunctive benefits that “likely exceed” what class members could have achieved at trial, a Georgia federal judge said in a lengthy ruling explaining why he approved the contested settlement.

In a 122-page opinion issued on Monday, U.S. District Judge Thomas W. Thrash Jr. elaborated on his reasoning for his Dec. 19 bench ruling granting final approval to the pact, which was crafted to resolve multidistrict litigation over a 2017 data breach at Equifax that exposed roughly 147 million consumers’ personal data. Besides compensating affected consumers, Equifax has also agreed to shell out $77.5 million in attorney fees and $1 billion to improve its own data security.

. . .

The judge noted that the deal provides more than $7 billion in aggregate benefits to consumers and represents “the largest and most comprehensive recovery in a data breach case in U.S. history by several orders of magnitude.” 

“Not only does the size of the settlement fund exceed all previous data breach settlements, but the specific benefits provided to class members (both monetary and nonmonetary) … meet or substantially exceed those that have been obtained in other data breach cases,” Judge Thrash ruled.

“Additionally, the court finds that much of the relief afforded by the settlement likely exceeds what could be achieved at trial, and, taken as a whole the settlement represents a result that is at the high end of the range of what could be achieved through continued litigation.”

The judge called it “particularly significant” that all valid claims for out-of-pocket losses will likely be paid in full, that 3.3 million class members have already submitted claims for the credit monitoring services available under the deal — an expense currently valued at roughly $6 billion — and that all class members will have access to identity restoration services to help deal with the aftermath of any identity theft for the next seven years.

. . .

“The plaintiffs’ lawyers undertook extraordinary litigation risk in pursuing this case and investing as much time and effort as they did,” Judge Thrash added. “Moreover, the amount of work devoted to this case by class counsel likely was a principal reason that they were able to obtain such a favorable settlement at a relatively early stage.”

. . .

The consumers are represented by co-lead counsel Amy Keller of DiCello Levitt Gutzler LLC, Kenneth Canfield of Doffermyre Shields Canfield & Knowles LLC and Norman Siegel of Stueve Siegel Hanson LLP. Barnes Law Group LLC and Evangelista Worley LLC serve as co-liaison counsel. Cohen Milstein Sellers & Toll PLLC, Girard Gibbs LLP, Hausfeld LLP, Tadler Law LLP, Morgan & Morgan Complex Litigation Group, Murphy Falcon & Murphy and The Doss Firm LLC are on the plaintiffs’ steering committee. Griffin & Strong PC serves as state court coordinating counsel.

Alphabet’s new Chief Executive Sundar Pichai on Friday gained the opportunity to reshape the leadership of Google’s parent with the exit of Chief Legal Officer David Drummond, whose outsized strategic role was overshadowed by employee concerns about his personal relationship with a subordinate.

Drummond, also senior vice president of corporate development, had been with Google since its start in 1998. He incorporated the company as outside counsel, winning the business of co-founders Larry Page and Sergey Brin. He later spent nearly 18 years as the company’s top lawyer and one of its few black executives.

Scrutiny centered on Drummond as the board last year investigated the company’s handling of sexual misconduct complaints throughout its workforce, and he became a lightning rod for criticism about what some employees viewed as tolerance for poor behavior.

. . .

He remains a defendant, alongside other executives, in a lawsuit shareholders brought last year accusing Alphabet leadership of covering up sexual harassment scandals within the company including by awarding lavish exit packages to two top executives found responsible for misconduct.

“While we are glad to see Mr. Drummond is no longer with Alphabet, we still intend to hold him accountable for fiduciary breaches through our litigation,” said Julie Goldsmith Reiser, attorney for the lead plaintiffs.

The board completed an internal investigation last month, but has not publicized findings. The litigation is in mediation, and the board’s findings and resulting actions may become known as it goes on.

Allergan agreed to pay $300 million to settle a lawsuit claiming two of its subsidiaries, Warner Chilcott and Watson Pharmaceuticals, partnered in a pay-for-delay deal that violated antitrust laws, the drugmaker said Jan. 6.

The lawsuit, filed in 2013, claimed Warner Chilcott entered into agreements with Watson and generic drugmaker Lupin Pharmaceuticals to delay a generic version of Loestrin 24 FE from coming to market, according to Cohen Milstein law firm, a co-lead counsel in the case. Loestrin 24 FE is a birth control pill.

Warner sought to delay competition to inflate its prices of the birth control pill, according to the lawsuit. The lawsuit also alleges that Warner withheld from the U.S. Patent and Trademark Office a study that either wasn’t sufficient or would have proved Loestrin 24 FE had been in public use for a year, making it ineligible for a patent.

The case was set to go to trial Jan. 6, the day the settlement was reached. The settlement makes no admission of wrongdoing on Allergan’s part.

2020 is shaping up to be a banner year for benefits law, with three ERISA cases already on the U.S. Supreme Court’s docket and a number of other high-profile lawsuits at the circuit court level that could attract the justices’ attention.

The conservative-leaning Supreme Court could use the cases to limit workers’ ability to pursue Employee Retirement Income Security Act class actions, but that’s far from a sure bet. The U.S. Department of Labor supports the workers’ position in two of the three cases, one against U.S. Bank and the other against Intel Corp.’s retirement plan committee.

Attorneys say they are looking forward to the clarity these rulings could bring in areas that have long troubled ERISA litigators.

Here, Law360 looks at what 2020 may hold for benefits litigation.

. . .

Intel v. Sulyma

A month after oral arguments in the IBM case, the high court watched Intel’s retirement committee spar with a proposed class of Intel employees and retirees over whether workers should get three or six years to file fiduciary-breach suits.

ERISA gives workers six years from the date of a fiduciary breach to sue, unless employers can point to the exact day the worker received “actual knowledge” of the breach, in which case a three-year deadline applies.

Intel’s retirement committee argued that the three-year statute of limitations should be triggered on the date a worker receives financial disclosures from the retirement plan. Attorneys say that if the high court agreed with the committee, the three-year deadline would become standard.

The high court didn’t seem to be leaning that way during oral arguments, though.

. . .

Plaintiffs attorneys were pleased with this development, saying Congress intended to give workers six years to sue under ERISA in most cases. Avoiding such litigation shouldn’t be as easy as sending out disclosures to trigger the shorter statute of limitations, plaintiffs attorneys said.

“It was refreshing to see the justices agree that there is no wiggle room in the statute,” said Michelle Yau, a Cohen Milstein Sellers & Toll PLLC partner. “As a lawyer, it gives you faith in the system. Judges aren’t just saying: Where do my political leanings land me? They’re actually following the law.”

The case is Intel Corp. Investment Policy Committee et al. v. Christopher M. Sulyma, case number 18-1116, in the U.S. Supreme Court.

Thole v. U.S. Bank 

The last ERISA case on the high court’s docket will take its next step toward a conclusion in January, when oral arguments are set to take place. Attorneys say they have been keeping an especially close eye on this case, which Boyko said is “going to have huge implications.”

Thole v. U.S. Bank asks the high court to decide whether employees can sue over pension plan mismanagement when their plan is fully funded. Because the case raises Article III standing issues, its outcome could affect other types of ERISA suits as well, although that’s not a guarantee, attorneys say.

At issue is whether individual workers need to show they’ve been financially harmed by a fiduciary’s actions in order to sue a pension plan.

Defense attorneys argue that the Eighth Circuit was right to rule the workers needed to point to concrete, particularized harm in order to sue, while plaintiffs attorneys argue they only need to show the actions harmed the plan because fiduciary-breach suits are brought on behalf of plans.

“Injury to the plan is injury in fact for Article III purposes,” said Jerry Schlichter, founding partner of Schlichter Bogard & Denton LLP.

The federal government filed a brief that, although neutral on its face, supported the workers’ stance.

Yau, who is on the legal team representing U.S. Bank’s pension plan participants, said she is “cautiously optimistic” that the Supreme Court will rule in her clients’ favor.

Oral arguments in the case are set for Jan. 13.

The case is James J. Thole et al. v. U.S. Bank NA et al., case number 17-1712, in the U.S. Supreme Court.

. . .

Putnam Investments LLC v. John Brotherston

The burden-of-proof case Francisco addressed, Putnam Investments LLC v. John Brotherston, has been on benefits attorneys’ radar for a while because the underlying issue caused a 5-4 circuit split.

Plaintiffs attorneys were happy to see the solicitor general recommend against reviewing the worker-friendly First Circuit decision in the case. That ruling held that after workers show that misconduct occurred and the plan suffered a loss, the burden of proof shifts to companies, which must prove their investments were good. The Second, Fourth, Fifth and Eighth circuits reached the same conclusion.

“I personally think the First Circuit was right,” Yau said. “The Department of Labor’s long-standing view, which is the plaintiff’s view, is that if the plaintiff makes a prima facie showing of loss causation, it’s the defendant’s duty to rebut that.”

Defense attorneys say they still hope the high court picks up the case, overturning the First Circuit decision and bringing case law in line with the Sixth, Ninth, Tenth and Eleventh circuits. Those courts have ruled that after workers show there has been misconduct and a loss, the burden of proof stays with them, and they must connect the misconduct and the loss or their case will be dismissed.

“The government really downplayed the circuit split that exists. They suggested it wasn’t that much of a split,” Merten said. “It seems to me this is a good opportunity, given the 5-4 split, to resolve this issue.”

The case is Putnam Investments LLC et al. v. John Brotherston et al., case number 18-926, in the U.S. Supreme Court.

The deal resolves allegations of anti-competitive behavior by the large hospital system in Northern California.

Sutter Health, the large hospital system in Northern California, said Friday that it had agreed to pay $575 million to settle claims of anti-competitive behavior brought by the California state attorney general as well as unions and employers.

In addition to the settlement amount — which will go to compensate employers, unions and the state and federal governments — Sutter will also be prohibited from engaging in several practices that the state attorney general and others said the hospital system used to ensure its dominance.

It will be barred from so-called “all or nothing” agreements, which the attorney general said required insurers to include all of Sutter’s medical facilities if they wanted to include some of the system’s hospitals. And it will be required to limit what it can charge patients for out-of-network services, which the state said would prevent people from facing surprise medical bills.

. . .

The UFCW & Employers Benefit, the group of unions and employers who also brought the suit, said in a statement: “From the outset, our goal has been to not only achieve justice for the members of the class, but to also put an end to the anticompetitive behavior that has allowed Sutter to charge inflated prices.”

. . .

The settlement will need to be approved by a court, and a hearing is scheduled for Feb. 25 in the Superior Court of California in San Francisco. An independent monitor will ensure the agreement is followed.

Cohen Milstein is one of five firms representing the Plaintiff Class.  A statement from the UFCW & Employers Benefit Trust can be viewed here.

FINRA is advancing a proposal to modernize the process by which brokers can clear their records of past customer disputes, but one former regulator questions whether the proposed approach fixes some fundamental issues of transparency and fairness for consumers.

During its meeting in late September, FINRA’s Board of Governors approved proposed amendments to the “Codes of Arbitration Procedure” to create, among other things, a roster of specialist arbitrators with enhanced training and experience, from which a panel would be selected in certain instances to rule on a broker’s request to expunge customer dispute information.

The proposed amendments will next be filed with the Securities and Exchange Commission (SEC), which is tasked with approving such actions at FINRA.

According to Laura Posner, a partner at Cohen Milstein and a member of the firm’s securities litigation, investor protection and ethics/fiduciary counseling practice groups, the proposal represents a step in the right direction for what she consider to be a “broken” expungement process.

However, she argues, the FINRA proposal misses an opportunity to address other fundamental problems that exist in the arbitration system that have allowed far more expungements to occur than were anticipated in the creation of the current customer dispute expungement process. Namely, the proposal does not change the fact that expungements are addressed through an arbitration process that structurally favors financial institutions and brokers over individual investors. As such, she wonders whether FINRA’s special arbitrators will run into the same issues that currently allow for an excess of expungements.

“The current system was created, theoretically, for expungements to be a rare occurrence,” Posner says. “That is absolutely not what has happened.”

This is primarily because, once a customer dispute case settles or is otherwise resolved, there is not a lot of motivation on the part of the individual consumer to then get involved again months or years down the road in a second round of arbitration debating whether this record should be expunged. The vast majority of normal, everyday people are just not going to spend the time, money and energy to be involved in this second step.

“So, expungement has become a completely one-sided situation and, unfortunately, it has become a real problem for transparency and fairness,” Posner says. “We hope the new approach will help resolve this issue, but we also want to see FINRA do a lot more to protect consumers.”

First Hand Experience

Notably, prior to joining Cohen Milstein, Posner was appointed by the New Jersey Attorney General to serve as the Bureau Chief for the New Jersey Bureau of Securities, the top securities regulator in New Jersey. This experience, she says, showed her clearly that FINRA’s expungement system is in serious need of adjustment.

“As a general matter, I think the FINRA expungement process is quite broken,” Posner says. “I should also say, my opinion is that there is not really an appropriate place for expungement of brokers’ CRD records in the first place, except for in very rare and specific situations—say in a case of mistaken identity.”

As Posner explains, investors who have a dispute with their broker are already forced into a complex arbitration process by FINRA. For the typical investor, this is going to represent a potentially lengthy, expensive and intimidating affair.

“And so, when an investor does make the effort to come forward and file a complaint and then goes all the way through the arbitration process, we should respect that,” Posner says. “In my view, to allow a complaint or settlement to be expunged from a broker’s record is clearly problematic from the consumer protection perspective. This system doesn’t allow investors to do their due diligence effectively when selecting a financial professional to work with. It is also very problematic from the state regulators’ perspective.”

Recalling her experience as a state securities regulator, Posner says it is not uncommon to come across brokers that have a handful or even a dozen marks on their record. While there is nothing inherent in such a record to suggest that a firm or broker is currently engaging in problematic activities, it is nonetheless important for the state regulators to know this information.

“The state regulators must be able to see the trends and stop problematic activities before they get much broader,” Posner says. “If FINRA is preventing this information from being out there and studied, they will really hamstring what the state regulators are supposed to be doing.”

Posner shares another, even simpler argument for why FINRA’s expungement processes must be changed.  

“Frankly, I think the current system runs contrary to most peoples’ commonsense understanding of how this sort of issue should work,” Posner says. “Compare this expungement process with what happens in the court system. If someone goes through litigation, those cases don’t ever get ‘expunged.’ They get adjudicated or they get settled, and then they remain out there in the ether, for anyone to find and review on the Internet and in the PACER system. I don’t see any reason the arbitration process should work differently—especially when we remember that the original customer dispute arbitration process is not particularly fair for investors to begin with.”

. . .

The complete article can be viewed here.

Attorney General Curtis Hill today filed a lawsuit against three drug distributors responsible for a commanding share of the prescription opioids sold to Indiana pharmacies during the relevant time period.

The complaint alleges that AmerisourceBergen Drug Corp., Cardinal Health and McKesson Corp. violated Indiana law by: 1) designing flawed systems that failed to adequately identify, report and prevent the shipment of suspicious orders for opioids; 2) failing to adhere to the terms of their own anti-diversion programs for opioids; and 3) unfairly and deceptively marketing prescription opioids.

“Distributors play a crucial role in the drug supply chain,” Attorney General Hill said. “As wholesalers, they are the link between drug manufacturers and the pharmacies that sell drugs directly to consumers. When they conduct themselves responsibly, distributors should function as a significant line of defense to protect the public from too many pills flooding into our communities and being diverted away from legitimate medical channels. In Indiana, these distributors failed to meet their legal obligations, and the results have been devastating.”

Indiana has had one of the highest rates of opioid prescribing and diversion in the nation. From 2012 to 2016, there were 58 Indiana counties with opioid prescribing rates greater than 100 prescriptions per 100 residents per year. As of 2012, Indiana had the ninth-highest rate of opioid prescriptions per capita — and the fifth-highest rate of diversion — in the United States. Between 2010 and 2016, more than 3,000 Hoosiers died of opioid overdoses.

. . .

The lawsuit filed today, spanning more than 200 pages, results from a lengthy, months-long investigation that included multiple depositions of individuals in the industry and extensive review of company documents.

The Office of the Attorney General is being assisted in this matter by the law firms of Cohen Milstein Sellers & Toll PLLC and Zimmerman Reed LLP.

Sutter Health has reached a tentative settlement agreement in a closely watched antitrust case brought by self-funded employers, and later joined by the California Attorney General’s Office. The agreement was announced in the San Francisco Superior Court on Wednesday morning, just before opening arguments were expected to begin.

Details have not been made public, and the parties declined to talk to reporters. Superior Court Judge Anne-Christine Massullo told the jury that details will likely be made public during the approval hearings in February or March.

. . .

Sutter stood accused of violating California’s antitrust laws by using its market power to illegally drive up prices. Healthcare costs in Northern California, where Sutter is dominant, are 20% to 30% higher than in Southern California, even after adjusting for cost of living, according to a 2018 study from the Nicholas C. Petris Center at UC Berkeley cited in the complaint.

FIRST IN PULSE: Reproductive rights group suing HHS over conscience division information. The Center for Reproductive Rights is planning to file suit today after the organization said it’s been stonewalled on a pair of Freedom of Information Act requests related to the HHS civil rights office.

One FOIA request centers on the resources devoted to the Conscience and Religious Freedom Division, which HHS has established to protect providers’ religious liberty; a second FOIA request focuses on what the civil rights office is doing with its millions of dollars collected through HIPAA enforcement.