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.

As a partner at Cohen Milstein, Carol Gilden fearlessly fights big challenges to ensure that investors aren’t being shortchanged by fraud or illegal practices.

Although there are a few principles and philosophies by which Carol Gilden operates, mentors, and leads, she says the guiding principle of her legal work boils down to a basic—or, at least, what should be a basic—fact of life.

“It’s about doing the right thing and making the right choices. I’m proud of my work because we are fighting for people and institutions who have been harmed by illegal business practices. Fraud is never sustainable,” she says. “Illegal business practices are never sustainable as a business model. The truth always comes out.”

In her role as a partner in the securities litigation and investor protection practice group in Cohen Milstein’s Chicago office, Gilden maintains a relentless pursuit of that truth as she represents public pension funds, Taft-Hartley pension plans, and health and welfare funds as well as other institutional investors in securities class actions and transaction and derivative litigation. She also handles complex litigation in addition to class actions in state and federal courts nationwide and advises clients regarding foreign securities litigation.

It might sound like she covers a lot of varying ground, but Gilden says she sees all the work she does as having a unified mission.

“It all falls under the same idea of accountability,” she says. “At the end of the day, fraud is rampant in our marketplace, and investors have the right to invest based on full information and without someone cooking the books or rigging the system against them. The reality is that fraud manifests itself in a variety of different ways, so when misconduct is uncovered, we have to be creative and look at all the laws available to address the problem.”

An attorney at Cohen Milstein Sellers & Toll PLLC has been named lead counsel in a group of suits in Michigan federal court accusing General Motors LLC of selling cars with defective transmissions.

U.S. District Judge David M. Lawson appointed Theodore J. Leopold to coordinate and oversee the five cases and the plaintiffs’ steering committee in an order filed late Thursday.

“I am very proud that Judge Lawson appointed me as lead counsel,” Leopold told Law360 on Monday. “I look forward to leading a great team of attorneys and law firms for this important litigation and bringing General Motors’ conduct to light to both consumers and the public as a whole so that a full measure of justice can be obtained.”

The order also names attorneys from Berger Montague PC, Kessler Topaz Meltzer & Check LLP, Capstone Law APC, The Miller Law Firm and Gordon & Partners PA to the plaintiffs’ steering committee, and names Michael L. Pitt of Pitt McGehee Palmer & Rivers PC as liaison counsel.

Mark A. Ozzello of Capstone Law APC said his firm supported Leopold’s appointment, and accepts its appointment to the plaintiffs’ steering committee.

A spokesperson for Cohen Milstein said that the firm planned to file a consolidated complaint late Monday night.

Walmart Inc. has agreed to work toward resolving the cases of 178 female employees who claim they were paid less than male co-workers or denied promotions because of their sex, a spokesman for the Bentonville retailer said Tuesday.

Walmart spokesman Randy Hargrove said the company told the Equal Employment Opportunity Commission it is “willing to engage in the conciliatory process” with all the women, who were part of a landmark class-action suit the U.S. Supreme Court ended in 2011.

…

Christine Webber, a partner with the law firm Cohen Milstein Sellers & Toll representing the women, said the EEOC is urging the parties to reach a settlement. While there’s no set deadline for resolution, she said, eventually the agency must decide whether the effort has failed. At that point, Webber said, the EEOC may file a lawsuit of its own.

Webber‘s firm filed charges with the EEOC on behalf of more than 1,900 female Walmart employees, she said. About 200 women over the years have asked the agency for a right-to-sue letter so they could speed the process by going to court. These “spinoff” cases have been making their way through the court system.

The 178 cause findings the EEOC sent to Walmart are the first it has issued in cases related to the huge, but now-defunct lawsuit, Webber said.

Retailer tells agency it is willing to engage in conciliatory process

Walmart Inc. likely discriminated against 178 female workers by paying less or denying promotions because of their gender, the Equal Employment Opportunity Commission said in memos viewed by The Wall Street Journal.

The EEOC documents ask Walmart and the women who filed complaints to come to “a just resolution of this matter,” which could include a settlement and changes to Walmart’s practices, say labor lawyers. If Walmart and the women don’t reach an agreement, the EEOC could file a lawsuit against the retailer.

The determination by the federal regulator marks a milestone in a nearly two-decade effort by current and former store workers to seek damages from the retail behemoth for discrimination.

In 2001, Walmart workers pursued a sprawling class-action suit against Walmart, alleging the retailer systematically paid 1.6 million female workers less than men and offered fewer promotions. The U.S. Supreme Court ruled in 2011 the group had too little in common to form a single class of plaintiffs.

Since then, more than 1,900 women have pursued cases and filed charges with the EEOC against Walmart alleging sex discrimination, said Christine Webber, a partner at the law firm that argued the Supreme Court case on behalf of the women and has acted as co-counsel on the cases since then. The law firm shared the EEOC documents with the Journal.

…

A spokesman for the EEOC said the agency can’t comment on investigations or the administrative process unless litigation is filed. Joe Sellers, head of the employment practice at Cohen Milstein Sellers & Toll, the firm acting as co-council for the women’s filings, declined to comment on settlement talks.

…

Cohen Milstein Sellers & Toll assisted in filing claims with the EEOC for nearly 2,000 women against Walmart in the wake of the Supreme Court loss in 2011 and 2012. Over the years a handful of those women withdrew their claims and some pulled out of the EEOC process to file lawsuits. More than 1,700 women still have claims pending against Walmart with the EEOC, the firm said.

…

“For some of these women, they have been waiting a long time to have some kind of evaluation of their claims and ultimate closure,” said Mr. Sellers. “Our hope is that this sets the stage for resolution of these charges and others like them.”

In 2014, in an effort to save money, the City of Flint switched its water supply to water drawn from the highly contaminated Flint River. That change set into motion a series of events that ended with many of the City’s nearly 8,000 small children permanently harmed by lead poisoning, and over 30,000 of the City’s many housing units rendered nearly worthless because of corroded, unsafe pipes and appliances.

On September 10, 2019, PBS FRONTLINE aired a documentary, drawing from a two-year investigation, that uncovers the extent of a deadly Legionnaires’ disease outbreak during the Flint water crisis — and how officials failed to stop it.

Watch a clip from the documentary below..

Cohen Milstein is Co-Lead Class Counsel in the Flint Water Crisis Class Action Litigation, alleging that, beginning in 2014, city officials in Flint, Michigan, including the Governor of Michigan, and the engineering firms under their management, blatantly failed to provide the citizens and businesses of Flint, Michigan with safe drinking water, instead providing them with poisonous, lead-tainted water, as reported in The Detroit News, Detroit Free Press, Law360 and other national publications.

A New York assemblyman is preparing legislation that will bring the ongoing battle over whether broker-dealers owe a fiduciary duty to their clients to the motherland of the financial services industry.

Jeffrey Dinowitz, a Bronx Democrat, had hoped to introduce the legislation in Albany’s last session but is prepping it for next January, an aide tells RCW. The legislation is modeled on similar laws or regulations already passed or pending in Nevada (IA Watch, Jan. 31, 2019), New Jersey (IA Watch, Jan. 10, 2019), Massachusetts and Maryland.

Give BI a chance

Opponents of the states’ measures have pushed back where the laws or regulations are being considered. A consistent theme in their comments is that state regulators ought to give the SEC’s recently passed Reg BI a chance to take effect (BD Watch, June 5, 2019).

. . .

The Financial Services Institute argued similarly, telling Massachusetts officials that Reg BI and some of the associated, recent reforms (including the Form CRS requirements) achieve “many of the goals” regulators were aiming for in the first place.

Simmering on the back-burner—for now—is the question of whether NSMIA preempts such state moves. SIFMA and the FSI assert the 1996 law does; groups such as the North American Securities Administrators Association disagree.

To preempt or not to preempt

There are voices on each side of the argument who think that, whether NSMIA preempts state actions, the SEC should go farther than Reg BI. “I don’t think Reg BI goes far enough,” says Laura Posner, New Jersey’s former securities bureau chief and a partner at Cohen Milstein Sellers & Toll.

“There are a number of instances in which a broker could simply disclose that they’re not acting in the best interest of an investor and that would be sufficient under the rule, but I don’t think that’s sufficient to protect investors,” states Posner.

. . .

Each side also agrees that, until the Commission or federal courts weigh in, states are likely to continue pushing fiduciary rules for broker-dealers. “This isn’t going to stop with these three or four states,” says Robin Traxler, FSI’s senior VP for policy. “It’s just that there are a lot of different ways that this can come into play,” she adds.

Next steps

In the meanwhile, what are broker-dealers to do? Traxler says industry can help itself by coming up with a lexicon for the upcoming Form CRS. “If you have consistent language and consistent definitions, that’s going to allow more of that side-by-side comparisons that will allow investors to really make an informed choice,” she says.

. . .

Posner says that broker-dealers ought to organize around the most onerous of state regulations, just in case, like the way car makers build their autos to California’s stringent emissions’ standards. It shouldn’t be all that hard, she says. After all, many broker-dealers were already putting infrastructure in place to comply with the aborted Department of Labor fiduciary rules.

From the time she got her job at Pace Membership Warehouse in Roseville, Calif., in 1993, Claudia Renati was determined to advance. Her husband had been injured and couldn’t work, and the housing market plummeted in the early ’90s, hitting them hard. “I needed steady income to keep our house,” she recalls.

When Sam’s Club, a warehouse retailer owned by Walmart, bought Pace in 1993, Renati was optimistic. The orientation materials described how high-performing employees could take part in the manager-in-training (MIT) program, a prerequisite for shifting from hourly roles to salaried management. She dreamed of running her own store.

“I worked my butt off year after year with excellent reviews,” she says. Renati kept asking for promotions. Instead, other people–“the white-boy frat,” she says–were put in the positions she sought, and she had to train them. Many didn’t have Renati’s experience; one was a microbiologist.

At one point, Renati says, a district manager told her that to get into the MIT program, she would have to move to Alaska. She pointed out that she had trained plenty of men who had gotten promotions without uprooting to Alaska and that she was willing to move to other Sam’s Clubs in their area to do her training. But this boss wouldn’t budge.

Eventually she watched more than a dozen men get promoted over her. She developed depression, anxiety and high blood pressure, all of which she attributes to the stress of what she went through. “A part of you is torn out every time you applied and they never gave you a chance,” she says. Each time, she’d come home and cry. “And then I’d get up the next day and go to work.”

Renati is hardly the only woman who believes she’s been mistreated by Walmart. Women across the country are lodging complaints against the company. From a former employee at a Kentucky store to a current one who has worked at four different locations in Virginia, the allegations are remarkably similar: the women earned less than men in similar roles, were told that the men needed the money to support their families, were less likely to be promoted, had to train the men who became their supervisors and had their advancement restricted by policies that didn’t seem to apply to their male co-workers.

Renati, who left Sam’s Club in 2002, says she plans to file suit later this month in California accusing the retail giant of gender discrimination. When she does, she will join several hundred women in at least a dozen states who have filed complaints since the end of last year or will be doing so soon, according to Joseph M. Sellers, an attorney at the law firm Cohen Milstein who has worked on these cases since the 2000s and is coordinating among local counsels.

The state’s former securities chief says recently issued fiduciary regulations have been crafted in the interest of aggressively tamping down on conflicts of interest in the financial services industry.

From 2014 to 2017, Laura Posner was the top securities regulator in the state of New Jersey; she is now a partner at Cohen Milstein Sellers & Toll on the firm’s Securities Litigation and Investor Protection, and Ethics and Fiduciary Counseling practices.

According to Posner, the fiduciary regulations issued recently by New Jersey’s Bureau of Securities (within the state’s Division of Consumer Affairs), can be seen as a direct response to what she described as a lackluster conflict of interest mitigation approach being taken by the Securities and Exchange Commission (SEC) under President Donald Trump.

As readers will likely know, in the wake of the defeat of the Obama-era Department of Labor’s fiduciary regulations in a circuit court, the Trump Administration’s SEC is currently working on a set of rules and requirements called “Regulation Best Interest.” During a late 2018 speech, SEC Chairman Jay Clayton said the market regulator is aiming to finish work on its Regulation Best Interest proposal during 2019.

According to Posner and others, the SEC’s Regulation Best Interest will likely fall far short of its stated goal of reducing conflicts of interest that cause brokers to not always act in their clients’ best interest. This is why states like New Jersey have issued their own, much stricter rules applying to brokers operating in their jurisdiction.

“A lot of my thinking about this issue is driven by my interaction with retail and retirement plan investors from the time when I was leading securities regulations for New Jersey,” Posner tells PLANADVISER. “A decent part of my responsibility in that role was driving investor outreach and education. From that work, I saw clearly that consumers believe their financial professionals are always bound to act in their clients’ best interest, at all times. Those of us in the industry know this is just not the case.”

Posner highlights the fact that, increasingly, financial professionals have come to wear “dual hats,” meaning they can be both a broker and an adviser.

“This makes it even more complicated from the client perspective to understand the standard of care being applied in any given situation,” Posner says. “I think it also is confusing to financial professionals what hat they are wearing in a given situation.”

Based on her extensive experience, Poser says, it is impossible to deny that U.S. consumers have a hard time understanding the “suitability” standard that many brokers currently operate under. In addition, they do not understand the difference between an adviser and a broker, making it next to impossible for them to understand the different regulatory standards applying to each.

“They do not understand that there are many circumstances where a broker can make technically suitable recommendations that are not in the client’s best interest,” she says. “If we really care about consumer protection, this is just not the kind of environment we want unsophisticated retail investors to be in. They don’t understand that their financial professional could be recommending products that are not in the client’s best interest.”

Posner adds that she is perplexed by those brokers who argue that the SEC’s current suitability standard for brokers is sufficient to protect consumers from bad actors.

“We have plenty of industries in this country in which the suitability versus best interest discussion would be absurd,” Posner says. “For example, I am an attorney. I have no basis to act in any way that is in conflict with my client’s best interest, unless they expressly waived that standard in writing, which would never happen. The same thing goes for a doctor. They must always act in a best interest capacity. So I don’t really understand why brokers think there should be any distinction for the financial services industry. We’re talking about peoples’ livelihoods and their retirement accounts.”

. . .

Posner encourages interested parties to read the North American Securities Administrators Association’s most recent comment letter to the SEC. The letter argues (and Posner agrees) that as currently presented, the SEC’s disclosure approach would still “make it perfectly acceptable for brokers to use a whole host of practices that are proven to not be in the best interest of clients.”

Zooming into the New Jersey standard, Posner says it appears to be a pretty aggressive standard that matches a lot of what was contained in the Obama-era DOL’s approach.

“My read is that the idea is to go much further than the SEC,” Posner says. “They are making the broker standard consistent with the investment adviser standard, which is a strict fiduciary best interest standard. I think it does a good job of laying out some specific practices that have become common and which are not in the best interest of clients—and which are therefore improper under the new standard. There is no presumption in the New Jersey standard that disclosing a conflict of interest in and of itself will satisfy the duty of loyalty.”

For thousands of women, working at the nation’s largest jewelry retailer meant unequal pay, harassment or worse.

The pay-and-promotions lawsuit against Sterling Jewelers Inc. began the way a lot of these things begin: In 2005, Dawn Souto-Coons walked out of the jewelry store where she had been a successful assistant manager and into a local Tampa-area employment office, claiming sex discrimination in her store. She had been working at a Jared the Galleria of Jewelry for nearly four years. But it was only in the last few months that she began to understand that the thing that kept happening to her there, the thing that seemed to keep happening to so many of the women there, went beyond the regular, standard-issue sexism she had been hearing about her whole life. But what woman is certain that the problem isn’t her, but them?

. . .

The employment lawyer Dawn and Marie eventually contacted in 2005, Sam J. Smith, knew that Sterling was a large company with stores across the country. He realized that the things they were saying indicated what might be a systemic problem. He called Thomas Warren, with whom he had worked on the historically large class-action discrimination suit against the restaurant chain Shoney’s, who in turn called Joseph Sellers, a partner at a large firm specializing in civil rights that could sustain what might be a bigger lawsuit than Dawn and Marie, in their one store, had ever imagined.

The lawyers told Dawn and Marie to tell their colleagues who had worked at Sterling properties to contact them if they had a similar complaint. But all the employees had signed a mandatory arbitration agreement in the flood of paperwork that accompanied their hiring at Sterling — everyone did at the time. Arbitration meant that instead of being heard in a public court, they had to proceed privately in Sterling’s in-house system, called Resolve. The first step of Resolve was an internal investigation. If the employee wasn’t satisfied by the results of that investigation, he or she could ask to be heard by a panel of the employee’s peers and an employment lawyer, all selected by Sterling. If the employee was still dissatisfied, the case was sent to arbitration. Sterling paid the arbitrator. The hearing’s proceedings were carried out with judicial oversight, but they were done in private, and their outcome was sealed. Afterward, if there was a settlement, the employee often had to sign a nondisclosure agreement that prohibited the employee from speaking about the case again. The benefit of arbitration to the employee was that the claim was usually resolved more speedily. The benefit to the company was that it was resolved in secret. The secrecy was the point.