Legal News Line

Bondi: Florida robocall campaign halted by court order

Shaun Zinck — Wed, 01 Jul 2015 14:01:02 -0500

]]> TALLAHASSEE, Fla. (Legal Newsline) - An Orlando-based company is barred from making massive robocalls to consumers after a court order obtained by Florida and the Federal Trade Commission, Florida Attorney General Pam Bondi said Monday.

Bondi said the operation conducted by Payless Solutions tricked customers into signing up, and paying for, credit card interest rate reduction programs that turned out to be worthless. The calls were targeted mainly at seniors claiming to be calling from credit card services.

“These scammers were making illegal robocalls to people nationwide, some of whom were seniors on fixed incomes,” Bondi said in a statement. "Too often the services promised were never provided, and consumers faced even more credit card debt through charges made without their consent.

"My office, in partnership with the FTC, has shut down this illegal credit card interest rate reduction scam and brought those responsible under the control of a federal court receiver."

Payless allegedly would call consumers around the country claiming their programs could save at least $2,500 in interest rate reductions. Customers would pay Payless Solutions between $300 and $4,999 in up-front costs.

“Working with the Florida Attorney General, we’re shutting down a scam that blasted robocalls to older people and offered bogus solutions to relieve credit card debt,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “It’s illegal to sell products or services with out-of the-blue robocalls, and if you get one you can expect that the sales pitch is a lie, too.”

Forty state AGs file brief in support of Miss. AG Hood, argue federal judge shouldn’t have stopped Google investigation

Jessica Karmasek — Wed, 01 Jul 2015 13:40:05 -0500

]]> NEW ORLEANS (Legal Newsline) - Forty state attorneys general say they support Mississippi Attorney General Jim Hood’s effort to overturn a preliminary injunction that prevents him from investigating Internet search engine giant Google Inc.

In March, Judge Henry Wingate for the U.S. District Court for the Southern District of Mississippi granted Google’s motion for a temporary restraining order and motion for preliminary injunction against Hood.

The judge’s order prevents the attorney general from enforcing subpoenas or bringing a civil or criminal charge against Google under state law, as threatened.

Hood filed an appeal with the U.S. Court of Appeals for the Fifth Circuit soon after.

In an amicus brief filed Monday, a vast majority of the nation’s state attorneys general say they agree with Hood in fighting the injunction.

Those states signing the brief include: Kentucky, Massachusetts, Pennsylvania, Arizona, Alabama, Alaska, Arkansas, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Montana, Nevada, New Hampshire, New Jersey, New York, North Dakota, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia and Wisconsin. The District of Columbia also signed.

The list included 23 Republicans and 17 Democrats. Notably missing was California Attorney General Kamala Harris, a Democrat. Google is headquartered in Mountain View, Calif.

“This is a case about the authority of state Attorneys General to exercise one of their fundamental powers: the ability to investigate potential violations of state law,” the attorneys general wrote in their 27-page brief.

“What should be a routine discovery dispute in Mississippi state courts, resolved under established state procedures has instead evolved into a contrivance for a company doing business in the state of Mississippi to invoke federal jurisdiction by asserting potential affirmative defenses to claims that have never been filed.”

The attorneys general argue that if Wingate’s order is allowed to stand, it would provide a “roadmap” for other potential wrongdoers subject to a legitimate state law enforcement investigation.

“With the Order as a guide, any target of a state investigation would be invited to conjure up potential federal defenses to yet-to-be filed civil claims and file a preemptive lawsuit in federal court against state law enforcement authorities,” they wrote. “Such an outcome would undermine Attorneys General’s powers, granted to them by state constitutions and state statutes, to protect the general citizenry from violations of state law.

“It would also flood the federal courts with what amount to state-law discovery disputes. And it should not be countenanced by this Court.”

The attorneys general contend they have an “overriding” interest in the case.

“Without taking any position on the likely outcome of the Mississippi Attorney General’s investigation into Google’s practices, the amici join this brief in strong support of the public interest in preserving the ability of state Attorneys General to investigate potentially unlawful and harmful conduct,” they wrote, urging the Fifth Circuit to vacate the federal court’s order.

Last fall, Hood sent a 79-page subpoena to Google. The attorney general has said he suspects the company is helping criminals through its search engine and autocomplete function. Hood also takes issue with the company’s sharing of YouTube ad revenue.

But Google, which filed its lawsuit against Hood in December, argues it can’t be held responsible for third-party content. It also believes the attorney general is in cahoots with movie studios to use legal action to obtain better piracy protection.

In his full written order March 27 -- a follow-up to his March 2 order granting Google’s motion for a TRO and preliminary injunction -- Wingate was highly critical of the attorney general, saying he could not “wage an unduly burdensome fishing expedition into Google’s operations.”

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

N.Y. AG: PayPal to stop robocalling consumers

Shaun Zinck — Wed, 01 Jul 2015 10:23:29 -0500

]]> ALBANY, N.Y. (Legal Newsline) - A popular online payment system company has agreed to stop robocalling consumers unless the customers consent to the calls, New York Attorney General Eric Schneiderman said Monday.

Schneiderman commended PayPal for making the changes. The company would make the robocalls to promote the products they offered to consumers.

“Again and again, Americans have demanded that companies stop invasive robocalling to promote their products,” the attorney general said in a statement. “Today, PayPal, which immediately cooperated with my office’s inquiry, announced that unless a consumer explicitly consents, it will not robocall for marketing purposes. We commend the company for doing the right thing and ensuring consumers’ rights are protected.”

The change was in response to a letter sent by the attorney general's Internet Bureau. The company said it will only robocall consumers for cases of fraud, debt collection or for account-related activity.

The company also said it planned to provide more opt-out features for consumers who wish to stop even those calls from going out. The features will likely be available at the point when a consumer provides his or her phone number to PayPal, the company said.

Prior to that, consumers wishing to opt out of the robocalling should contact PayPal directly.

Arkansas AG named co-chair of attorneys general association's new agriculture committee

Shaun Zinck — Wed, 01 Jul 2015 10:06:54 -0500

]]> LITTLE ROCK, Ark (Legal Newsline) - Arkansas Attorney General Leslie Rutledge was named co-chair of the newly formed agriculture committee for the National Association of Attorneys General, she said Wednesday.

Iowa Attorney General Tom Miller was selected as the other co-chair by NAAG President Marty Jackley, South Dakota's attorney general, after the association's summer meeting in San Diego.

Rutledge said agriculture adds more than $20 billion to the Arkansas economy, and is “vitally important” to the state as its largest industry.

“It is critically important for attorneys general who share a common goal of advocating for and protecting the agriculture industry and its participants to have a venue to collaborate and share new ideas,” Rutledge said in a statement. “I am honored to join my colleague and friend, Attorney General Miller, in this effort to co-chair the new agriculture committee, and I appreciate the confidence of President Jackley in both of us to lead this committee.”

Jackley said the agriculture committee would allow the association to address “21st Century legal challenges” in the industry.

“Agriculture is constantly evolving,” Miller said. “As state attorneys general we need to ensure that we work together on legal issues that impact farmers and, more broadly, the industry. I look forward to collaborating with Attorney General Rutledge and other colleagues who share an interest in agriculture.”

N.Y. AG: Chase Bank agrees to open up more services to state consumers

Shaun Zinck — Wed, 01 Jul 2015 10:01:30 -0500

]]> ALBANY, N.Y. (Legal Newsline) - JP Morgan Chase has agreed to offer more access to mainstream financial services to its customers in the state of New York, Attorney General Eric Schneiderman said Tuesday.

Schneiderman said the bank has modified some policies used to screen consumers applying for checking accounts, and will allow more customers to open those accounts. Additional changes include allowing holders of the Liquid Card, used by consumers who don't qualify to open a checking account, to pay bills online or have the bank mail checks for them at no additional charge.

“It is critical that low-income Americans -- and New Yorkers in particular -- have access to mainstream banking services,” the attorney general said. “These new actions on the part of Chase Bank will help expand access to low-cost financial services for consumers across the state.

"I look forward to working with additional banks to help consumers avoid financial services laden with fees and other penalties.”

Schneiderman said the new changes will allow card users to pay rent, utilities and other bills easily without having to use check-cashing outlets or money transmitters, which are usually a higher cost alternative.

Chase is the latest bank to overhaul its policies and offer more services to consumers. Schneiderman's office has previously reached agreements with Citibank, Capital One and Santander.

Maryland law firm sued for allegedly charging clients illegal up-front fees

Shaun Zinck — Wed, 01 Jul 2015 09:50:14 -0500

]]> ANNAPOLIS, Md. (Legal Newsline) - Maryland has filed a lawsuit against a Towson-based law firm for allegedly charging clients illegal advance fees for loan modification services, Maryland Attorney General Brian Frosh said Friday.

The Law Offices of Daniel M. Radebaugh and its owner Daniel Radebaugh are accused of charging the fees to at least 400 different clients and then not providing refunds as promised. The law firm negotiated loan modifications for clients and allegedly promised to refund the money if the negotiation wasn't successful, Frosh said.

Frosh's Consumer Protection Division filed the lawsuit claiming the firm made false and misleading representations to potential customers.

The lawsuit claims the firm violated the state's Credit Services Business Act and the Maryland Consumer Protection Act between 2010 and 2013. The firm would require clients to pay up front fees of up to $2,495 even though non-profit organizations offer the same services for free.

The suit is seeking restitution for those clients that were charged the illegal fees and never given a refund. Frosh's office also is seeking a $1,000 civil penalty against Radebaugh and his firm for every alleged violation of the Consumer Protection Act.

A hearing is scheduled for Oct. 1, according to the Attorney General's Office.

Second lawsuit filed against EPA over new water rule

Shaun Zinck — Wed, 01 Jul 2015 09:08:04 -0500

]]> LITTLE ROCK, Ark. (Legal Newsline) - Arkansas has joined 12 other states in filing a complaint against the federal Environmental Protection Agency over a new rule that defines waters in the country, Arkansas Attorney General Leslie Rutledge said Monday.

The complaint also was filed against the Corps of Engineers, and challenges the new “Waters of the United States" rule under the Clean Water Act.

“From the beginning, I have explained that this rule from the EPA and the Corps goes beyond the intent of Congress under the Clean Water Act and will negatively impact Arkansas’s agriculture community – a community that accounts for one in every six jobs across the State,” Rutledge said in a statement.

“I have also indicated that I was prepared to take any and all legal action to prevent implementation of this unlawful regulation, which is why I am proud to join 12 other states in filing this lawsuit today. I am confident that the courts will once again affirm that local oversight and local control is the best way to protect our waters.”

The states said in the complaint the new definition of waters in the country violates the CWA, National Environmental Policy Act, the Administrative Procedures Act and the U.S. Constitution.

The lawsuit was filed in U.S. District Court for the District of North Dakota, and asks the court to enjoin the EPA and the Corps from enforcing the new rule.

Life insurance company accused of lying to consumers about financial stability

Shaun Zinck — Wed, 01 Jul 2015 08:43:40 -0500

]]> SAN FRANCISCO (Legal Newsline) - A life insurance company is being sued over allegations it defrauded annuity holders by lying about its financial condition.

Rachel Silva and Don Hudson filed the lawsuit on June 12 in United States District Court in California against Aviva PLC claiming the company misled consumers about the strength of its finances.

The lawsuit claims Aviva carried about the “scheme” by entering into financial transactions with other wholly owned companies “in order to hide Aviva’s mounting risks and inflate or misstate the assets Aviva holds to meet those risks.”

“Through this scheme, Aviva was able to keep less cash and stable assets on hand to meet future liabilities, to continue reaping the financial rewards from selling large amounts of annuities, and to funnel money out of Aviva to its affiliates, parent companies, and executives,” the lawsuit said.

The lawsuit claims the scheme dates back to the beginning of the financial crisis in 2007. The plaintiffs are seeking class status for those who used Aviva life insurance, and is seeking an unspecified amount in damages.

The plaintiffs are represented by Jeff D. Friedman of Hagens Berman Sobol Shapiro LLP in Berkeley, Calif.; Steve W. Berman and Sean R. Matt of the same law firm in Seattle; Andrew S. Friedman and Francis J. Balint, Jr. in Bonnett Fairbourn Freidman & Balint PC in Phoenix; Erin Dickinson and Chuck Crueger of Hansen Reynolds Dickinson Crueger LLC in Milawukee; and Ingrid M. Evans of Evans Law Firm, Inc. in San Francisco.

United States District Court for the Northern District of California case number 5:15-cv-02665.

Patriots fan in California files class action against NFL over blacking out games

Shaun Zinck — Tue, 30 Jun 2015 14:37:46 -0500

]]> LOS ANGELES (Legal Newsline) - The National Football League is being sued in federal court over allegations that the league violated the law by blacking out games that are considered out of market for consumers.

Thomas Abrahamian filed the lawsuit on June 17 in United States District Court in California against the NFL, claiming the league violated antitrust laws by blacking out games.

Abrahamian, who lives in California, said his favorite team is the New England Patriots. However, in order for him to watch the games he must subscribe to the satellite television company DirecTV. The suit claims the league allows the owners of the clubs to enter into business agreements to broadcast the games.

“In so doing, the owners act in their own economic self-interest, including entering into a series of agreements that eliminate, restrict, and prevent off-field competition,” the lawsuit said. “In exchange for being granted anticompetitive protections in its own home market, the team and its partners expressly agree not to compete in the other teams’ exclusive territories. The stated purpose of these policies is to create regional monopolies that protect the partners from competition in their respective local areas.”

The only way Abrahamian can watch the “out-of-market” games is with DirecTV's NFL Sunday Ticket, which he claims cost “supra-competitive prices.”

He is seeking class status in the case, and is also seeking an unspecified amount in damages. He is represented by Abbas Kazerounian of Kazerouni Law Group, APC, in Costa Mesa, Calif., and Joshua B. Swigart of Hyde & Swigart in San Diego.

United States District Court for the Central District of California case number 2:15-cv-04606.

Home care service company sued for wrongful termination

Shaun Zinck — Tue, 30 Jun 2015 14:33:58 -0500

]]> JACKSONVILLE, Fla. (Legal Newsline) - A former nurse at a home care company is suing the business, claiming she was wrongfully terminated after she attempted to stop unlawful practices by the business.

Marsha Yandell filed the lawsuit on behalf of the United States on June 10 in United States District Court in Florida against Advanced Homecare Inc. claiming she was unlawfully terminated from her position on Jan. 18, 2010.

The lawsuit claims Advanced Homecare knowingly submitted false claims to Medicare for payment starting in January 2009 through the present. The false claims were for care given to “homebound” patients even though the company knew that person receiving the care wasn't actually homebound, she said.

Other false claims were also alleged in the lawsuit including failing to get a physician signature, falsifying patient charts electronically, and changing dates of service.

According to the lawsuit Yandell claims she attempted to stop the Medicare false claims from being filed by Advanced Homecare, and as a result she was fired from her position in January 2010.

Yandell is seeking an unspecified amount in damages in the lawsuit. She is represented by Kevin J. Darken and Barry A. Cohen of Cohen, Foster & Romine, P.A. in Tampa, Fla.

United States District Court Middle District of Florida-Jacksonville Division case number 3:11-cv-00146.

Kohl's Department Store sued over allegedly false discount prices

Shaun Zinck — Tue, 30 Jun 2015 14:28:43 -0500

]]> LOS ANGELES (Legal Newsline) - A major department store is being sued in federal court over allegations it mislead customers with its advertisements of original prices, regular prices and discount prices.

Steven Russell filed the lawsuit on June 11 in United States District Court in California against Kohl's Department Stores claiming the company advertised false original and regular prices to customers.

The lawsuit said Kohl's used direct marketing to advertise its deals to customers. However, the original and regular prices weren't the true prices, and the result was a false price discount on sale items offered to customers, the suit says.

Russell claims he visited a Kohl's Department Store on about 15 different occasions, and purchased products from the store in Palm Desert, Calif., where the store had the falsely advertised products.

The lawsuit is seeking class status for those who purchased products from Kohl's between June 11, 2011 and the present. The suit is also seeking more than $5 million in damages plus court costs.

Russell is represented by Douglas Caiafa, of Douglas Caiafa, a professional law corporation in Las Angeles, and Christopher J. Morosoff of the Law Office of Christopher J. Morosoff in Palm Desert, Calif.

United States District Court Central District of California-Eastern Division case number 5:15-cv-01143.

Nature's Body sued over 'slack-fill' in packaging

Shaun Zinck — Tue, 30 Jun 2015 14:26:11 -0500

]]> NEW YORK (Legal Newsline - A nutritional supplement manufacturer is the subject of a class action lawsuit over allegations its packaging is misleading to customers.

Jeennit Rodriguez, Josefina Valdez and Jing Ye filed the lawsuit on June 11 in United States District Court in New York against Nature's Body claiming the “slack-fill” in its bottles violates federal law.

Slack-fill is the empty space located in a bottle or packaging. The lawsuit names 12 different products sold by Nature's Body, claiming there is too much slack-fill for the size of the product in the package. Nature's Body did this in order to increase the size of the packaging and make it more appealing to customers, according to the lawsuit.

“The size of the bottles in comparison to the volume of the products contained therein make it appear as if the consumer is buying more than what is actually being sold,” the lawsuit said. “By increasing the size of the product packaging, (Nature's Body) maximizes the shelf presence of its products over competitor products.”

The lawsuit is seeking class status for those who purchased one of Nature's Body's products, and is also seeking more than $5 million in damages.

The plaintiffs are represented by C.K. Lee of the Lee Litigation Group, PLLC in New York City.

United States District Court for the Southern District of New York case number 1:15-cv-04547.

Class action says Hoosier Racing Tire makes defective product

Shaun Zinck — Tue, 30 Jun 2015 14:22:29 -0500

]]> TAMPA, Fla. (Legal Newsline) - A tire manufacturer is being sued in federal court over allegations that it sold defective tires.

Ronald Horton filed the lawsuit on June 19 in United States District Court in Florida against Hoosier Racing Tire, claiming the tires suffer from “tread separation.”

The lawsuit said the tread separation causes the middle of the tire to develop a “wart like” growth, which results in “massive vibration and ultimately blow out failure.”

Horton said when the tire fails, it can cause serious damage to vehicles and requires the tires to be replaced at a cost of about $1,200 to $1,300 per set.

The lawsuit claims the tires are manufactured with the defect, and that Hoosier should have known the material design would cause the tires to fail. The suit further alleges the company attempted to conceal the fact that the components in the tire are defective, and didn't reveal the defect to consumers.

Horton is seeking class status for those who purchased the tires, and is also seeking more than $5 million in damages from Hoosiers.

He is represented by D. Michael Campbell of Campbell Law in Lakeland, Florida; Robert K. Shelquist, Elizabeth R. Odette and Craig S. Davis of Lockridge Grindal Nauen P.L.L.P. of Minneapolis; and Charles J. LaDuca of Cuneo Gilbert & LaDuca, LLP in Washington, D.C.

United States District Court for the Middle District of Florida-Tampa Division case number 8:15-cv-01453.

W.Va., eight other states file federal lawsuit over EPA’s proposed water rule

Jessica Karmasek — Tue, 30 Jun 2015 13:56:27 -0500

]]> CHARLESTON, W.Va. (Legal Newsline) - West Virginia Attorney General Patrick Morrisey is leading the charge in a lawsuit, filed in a Georgia federal court Tuesday, that challenges a proposed Environmental Protection Agency rule that would extend its authority to all bodies of water.

West Virginia is among the bipartisan, nine-state coalition that argues the “Waters of the United States” rule would unlawfully expand the federal agency’s regulatory reach over small streams, land and farms.

Morrisey, a Republican, feels the rule, proposed in March last year, could hurt local landowners.

“This rule is a staggering overreach by the federal government and violates the very law it claims to enforce,” the attorney general said in a statement.

“It will have dire consequences for homeowners, farmers and other entities by forcing them to navigate a complex federal bureaucracy and obtain costly permits in order to perform everyday tasks like digging ditches, building fences or spraying fertilizers.”

Under the EPA’s proposed rule, the agency’s authority would extend to almost all bodies of water, no matter the size or frequency.

In a September blog post on The Huffington Post, EPA administrator Gina McCarthy said 60 percent of the nation’s streams and “millions” of acres of wetlands lack protection from pollution under the EPA’s Clean Water Act.

McCarthy called the new rule a “fix” to the problem.

Morrisey argues that the proposal would extend the EPA and Corps of Engineers’ regulatory jurisdiction to an “untold” number of small bodies of water, including roadside ditches and short-lived streams -- or any other area where the agencies believe water may flow once every 100 years.

“The way this rule is written creates a series of absurd scenarios for which people can be fined,” the attorney general explained. “If you dump a wheelbarrow of dirt in the creek bed behind your house, and you don’t get a permit first, you could be fined, even if that creek was never previously subject to federal regulation.

“This rule expands a scheme whereby property owners have to ask the EPA for permission to do yard work -- it’s regulatory lunacy.”

Failure to comply with the new regulations could result in fines of up to $37,500 a day, Morrisey said.

Joining Morrisey in filing the 36-page complaint in U.S. District Court for the Southern District of Georgia were the attorneys general of Alabama, Florida, Georgia, Kansas, Kentucky, South Carolina, Utah and Wisconsin.

The states argue the final rule put out by the EPA and Corps of Engineers violates the CWA, the Administrative Procedure Act and the U.S. Constitution, and usurps the states’ primary responsibility for the management, protection and care of intrastate waters and lands.

“The Agencies’ unlawful attempt to expand their authority to broad categories of non-navigable, intrastate waters and lands imposes great harm upon the States and their citizens,” the attorneys general wrote.

Under the CWA, the EPA and Corps only have the authority to regulate “navigable waters.” As the attorneys general argue in their lawsuit, Congress gave the states the responsibility of regulating other waters.

The states are asking the federal court to declare the proposed rule illegal and issue an injunction to prevent the agencies from enforcing it. They also are asking the judge to order the agencies to draft a new rule that complies with the law and honors states’ rights.

To view a copy of the complaint, click here.

U.S. Sen. Shelley Moore Capito also has questioned the rule.

Capito, R-W.Va., told McCarthy during a Congressional hearing in February that bringing “ephemeral waters” into the rule brings confusion and uncertainty.

“This is unacceptable in a state like West Virginia,” she said during the hearing. “You can’t let the whim of a particular Corps or EPA employee decide which private property is now federally regulated.”

Capito said she fears the new rule could hurt future farming, highway and road construction projects in the Mountain State. Not to mention, the state’s oil and natural gas industries could be dealt a blow, she said.

The U.S. Supreme Court has twice rejected the agencies’ attempts to expand their authority -- in Solid Waste Agency of Northern Cook County v. Army Corps of Engineers in 2001 and Rapanos v. United States in 2006.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

Cisco, BlackBerry agree to cross-license patents

Jessica Karmasek — Tue, 30 Jun 2015 11:29:49 -0500

]]> SAN JOSE, Calif. (Legal Newsline) - Worldwide IT leader Cisco and the once-popular smartphone maker BlackBerry are the latest to sign a long-term patent cross-licensing agreement.

The companies made the announcement last week.

As part of the cross-licensing deal, which covers their respective products and technologies, BlackBerry will receive a license fee from Cisco.

More specific terms of the agreement, which is designed to help the companies avoid costly litigation, are confidential.

“Our agreement with Cisco underscores the value companies place on BlackBerry’s broad and foundational patent portfolio,” said Dr. Mark Kokes, vice president of intellectual property and licensing for BlackBerry.

“With the agreement in place, BlackBerry and Cisco can focus on innovation and continued technical cooperation, allowing our companies more freedom to create leading products and services for customers without the potential for patent disputes.”

Dan Lang, vice president of intellectual property for Cisco, agreed.

Lang said cross-licensing is an effective way for companies to assure freedom of operation and help remove concerns about lawsuits.

“This agreement recognizes Cisco’s patent portfolio, one that is regularly rated among the strongest in the telecommunications and networking industry,” he said. “We look forward to continuing to innovate to meet the needs of our respective customers.”

Cisco signed similar deals with other technology companies, including Samsung and Google, last year.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

Federal court sides with maker of CowManager technology in patent infringement lawsuit

Jessica Karmasek — Tue, 30 Jun 2015 10:29:17 -0500

]]> MADISON, Wis. (Legal Newsline) - The U.S. District Court for the Western District of Wisconsin this month said the maker of electronic cattle monitoring system CowManager did not infringe on patents owned by SCR Engineers Ltd. and VocalTag Ltd.

SCR and VocalTag, both based in Israel, filed their patent infringement lawsuit against Netherlands-based Agis Automatisering B.V. in the federal court in September 2013.

Although it does not have any offices in the U.S., Agis sells its CowManager system in the Wisconsin district.

The companies contend Agis, one of their competitors, infringed on U.S. Patent Nos. 7,350,481 and 7,878,149. VocalTag is the owner of the ‘481 patent. SCR, the owner of the ‘149 patent and licensee of the ‘481 patent, sells a cattle monitoring system in the U.S. under the name “Heatime.”

SCR and VocalTag, in their lawsuit, said Agis’ CowManager SensOor system utilizes mathematical algorithms to determine the meaning of specific measured movements. These same measurements are made and recorded by the devices and methods that are protected by the infringed claims of the ‘481 and ‘149 patents, the companies argued.

Judge James Peterson, in his 28-page ruling, said Agis did not infringe either of the patents.

“Plaintiffs’ argument is implausible, undeveloped, and supported only by inadmissible evidence,” he wrote in his opinion and order.

Peterson said the claimed system involves counting and timing individual chews, while the CowManager system does neither.

The judge said Agis’ system also determines estrus in a manner other than that claimed in the ‘149 patent. Estrus is a state that lasts about five to 10 hours and occurs about every 19 to 23 days. Cows in estrus typically are more physically active and receptive to mating.

“The CowManager system performs a statistical analysis of data sampled from the accelerometer in the SensOor ear tag. The system determines when the sampled data shows an unusually high level of physical activity for a cow, and when certain criteria are met, it deems the monitored cow to be in estrus,” Peterson wrote. “But the level of physical activity of the cow is not expressed by the energy level of the signal from the accelerometer, and at no point is the energy level of the accelerometer signal attenuated.”

The judge granted Agis’ motion for summary judgment of non-infringement and no willful infringement in his June 4 order; however, he dismissed the company’s counterclaims for declaratory judgment of invalidity.

In a statement, Agis said it was pleased with the court’s ruling.

The company noted that its founder and CEO, Gerard Griffioen, has invested “significant” resources and “years” of dairy farming knowledge in the development of CowManager.

Agis described the CowManager’s SensOor -- an ear tag with heat detection and health and nutrition monitoring capabilities -- as “revolutionary.” The company noted that it’s used by a “large and rapidly growing” number of farmers nationwide.

“CowManager will continue its focus on developing and marketing innovative and high-tech solutions for large dairy herds,” Agis said.

The company has a 30-year history of developing technology solutions for dairy farmers and was founded by multi-generation dairy farmers in Harmelen, Netherlands.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

U.S. SC sides with states, says EPA was ‘unreasonable’ to not consider cost

Jessica Karmasek — Mon, 29 Jun 2015 14:22:07 -0500

]]> WASHINGTON (Legal Newsline) - The U.S. Supreme Court ruled Monday the Environmental Protection Agency “unreasonably” interpreted federal law when it deemed cost irrelevant to the decision to regulate power plants.

The Clean Air Act directs the EPA to regulate emissions of hazardous air pollutants from power plants if the agency finds regulation “appropriate and necessary.”

In Michigan v. EPA, the agency found power-plant regulation “appropriate” because the plants’ emissions pose risks to public health and the environment, and because controls capable of reducing these emissions were available.

The EPA found regulation “necessary” because the imposition of other CAA requirements did not eliminate those risks.

However, the agency refused to consider cost when making its decision -- even though it estimated that the cost of its regulations to power plants would be $9.6 billion a year.

The petitioners in the case, including 23 states, sought review of the EPA’s rule in the U.S. Court of Appeals for the D.C. Circuit. The D.C. Circuit upheld the agency’s decision not to consider cost.

The Supreme Court, in its 5-4 ruling, sided with the petitioners. Justice Antonin Scalia authored the court’s opinion. Chief Justice John Roberts and justices Anthony Kennedy, Clarence Thomas and Samuel Alito joined. Justice Elena Kagan filed a dissent, in which justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor joined.

“The agency must consider cost -- including, most importantly, cost of compliance -- before deciding whether regulation is appropriate and necessary,” Scalia wrote in the 15-page decision. “We need not and do not hold that the law unambiguously required the agency, when making this preliminary estimate, to conduct a formal cost-benefit analysis in which each advantage and disadvantage is assigned a monetary value.

“It will be up to the agency to decide (as always, within the limits of reasonable interpretation) how to account for cost.”

Thomas, who filed a separate concurring opinion, went even further.

“Although we hold today that EPA exceeded even the extremely permissive limits on agency power set by our precedents, we should be alarmed that it felt sufficiently emboldened by those precedents to make the bid for deference that it did here,” he wrote in his five-page opinion.

“As in other areas of our jurisprudence concerning administrative agencies, we seem to be straying further and further from the Constitution without so much as pausing to ask why. We should stop to consider that document before blithely giving the force of law to any other agency ‘interpretations’ of federal statutes.”

West Virginia Attorney General Patrick Morrisey, who was part of the bipartisan coalition of states, led by Michigan, said the ruling should serve as a “clear warning” to the EPA to stop violating the law.

“I am thrilled that, for the second year in a row, the Supreme Court agreed with my office’s argument that the EPA violated the Clean Air Act in imposing a costly regulation on the American people,” Morrisey said in a statement. “The Supreme Court’s ruling today that the EPA has no authority to ignore the costs of its regulation will have far-reaching consequences for the agency’s many other overly expensive rules, including those it plans to enact as part of its effort to cripple West Virginia coal.”

The attorney general said he hopes the agency finally heeds the warning.

He noted that just last month, the EPA put forward a rule that imposes federal control on local waters and farmlands, in clear violation of the Clean Water Act. And in the coming months it is slated to finalize its so-called Clean Power Plan, which will seek to impose requirements on states and coal-fired power plants.

“These rules will have devastating effects on coal miners, farmers, businesses and homeowners of West Virginia,” Morrisey said.

“If the EPA ignores the Supreme Court’s clear warning today and continues to press forward with these illegal, costly rules, my office will challenge those rules in court, and we intend to win -- again.”

West Virginia and the other states argued the agency improperly confined its focus to health and environmental risks, and ignored what it would cost the industry to comply with such a broad, new regulatory regime.

West Virginia’s governor, Earl Ray Tomblin, said he, too, is pleased with the high court’s ruling.

“As we have maintained for years, the Environmental Protection Agency far too often fails to consider the impact its mandates have on jobs and the economies of both our state and our nation,” he said, adding that he hopes it encourages those making these “unreasonable” decisions to reconsider their plans.

West Virginia’s Congressional delegation also came out in support of the court’s decision.

U.S. Sen. Shelley Moore Capito, a Republican, said the ruling confirms what they have long known in the state, but it may be too late for some.

“While today’s ruling is encouraging, many West Virginians have already suffered the effects of EPA’s misguided (Mercury and Air Toxics Standards) rule with job layoffs, numerous mine closures and electricity rate increases occurring throughout the state,” she said. “Going forward, states should not be forced to bear the brunt of other costly EPA regulations before legal challenges are complete.

“I will continue to work with my colleagues to advance policies that protect reliable and affordable energy, put jobs and our economy first and curb federal overreach.”

U.S. Rep. David McKinley, R-W.Va., called the court’s ruling an “important step” in protecting the economy. But, like Capito, he fears the decision came too late.

“This decision is a strong rebuke of the EPA’s overreach and will force the Obama Administration to consider the true costs to businesses and families of complying with these burdensome regulations,” he said.

“Unfortunately, the ruling is too late to stop the damage from this regulation and save the coal-fired power plants that have already been shut down.”

States and utilities considering complying with the agency’s other “economically destructive” regulations should take notice of the decision, McKinley said.

“The EPA should go back to the drawing board on ALL their costly regulations and ensure hardworking families are put ahead of their radical agenda,” he said.

Bill Raney, president of the West Virginia Coal Association, called the decision a “major win” for not only the coal industry, but also consumers.

“The West Virginia coal industry, its employees and the entire state of West Virginia have been particularly hard-hit by the impacts of EPA’s regulation which have spurred a massive closure of coal-fired power plants across the country,” he said. “Today’s decision is an important first step in reining in a clearly out of control bureaucratic agency that intends to implement its vision for America’s future regardless of Congressional intent, cost to the consumer, risk to electricity reliability and impacts to the nation’s coal mining regions.

“We are still reviewing the decision and its implications, but I think it’s fair to say that the Supreme Court handed down a decision for common sense and affordable energy today.”

The West Virginia Republican Party even chimed, calling the ruling a “counter-punch for common sense and the common man.”

“An unelected executive agency should not be able to destroy our industries by fiat,” Chairman Conrad Lucas said in a statement. “Today, thanks to courageous conservatives like our attorney general, Patrick Morrisey, we know that we can fight back against Obama and those who collaborated to elect him.

“The fight to save our coal jobs and get this state working again is a difficult one, and today is a battlefield win in a challenging war.”

Carrie Severino, chief counsel and policy director to the Judicial Crisis Network and former clerk to Justice Thomas, said it is never “appropriate” for a government agency to ignore the burdens that it creates on American businesses.

“This Administration will do anything to avoid considering the costs that its policies force upon the American economy,” she said.

“Today, the Court rejected the EPA’s attempts to superimpose its radical environmentalist agenda on the law.”

She pointed to Thomas’ opinion, saying the justice raises “important questions” about whether it is constitutionally appropriate to ever defer to an administrative agency under the separation of powers.

However, there are some who argue the court’s ruling is putting Americans’ lives at risk.

“The rule overturned by the majority today would have prevented 11,000 premature deaths every year,” Alliance for Justice President Nan Aron said in a statement. “Dirty air causes more hospitalizations and disease, and the EPA’s efforts to curb pollution have been scuttled by a conservative agenda that favors polluters over people.

“Once again, the Roberts Court majority has overreached, using a tortured interpretation of the law to put the interests of big business ahead of common sense and public health.”

To read the justices’ opinions, click here.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

Appeals court judge selected to fill vacancy on Colorado SC

Jessica Karmasek — Mon, 29 Jun 2015 06:45:09 -0500

]]> DENVER (Legal Newsline) - Gov. John Hickenlooper has appointed a state appeals court judge to the Colorado Supreme Court.

Hickenlooper made the announcement last week.

Judge Richard Lance Gabriel will replace Justice Gregory J. Hobbs Jr., who is retiring Sept. 1 after serving on the state’s high court since 1996.

“Richard Gabriel has been unfailingly dedicated to the law, community and his family,” Hickenlooper said in a statement. “He brings a strong background in commercial litigation and business law, which has been underrepresented on the Court.

“He’s currently a bright star on the Colorado Court of Appeals and will be an exceptional member of the Colorado Supreme Court.”

Prior to becoming a judge in 2008, Gabriel was an associate and partner at Denver law firm Holme Roberts & Owen LLP -- now Bryan Cave LLP.

In private practice, he specialized in general complex and commercial litigation, including business torts, intellectual property, products liability, probate litigation and appeals.

He also was an associate at Shea & Gould in New York City, and served as a law clerk to Judge J. Frederick Motz of the U.S. District Court for the District of Maryland.

Gabriel earned his undergraduate degree from Yale University and his law degree from the University of Pennsylvania School of Law.

He also served as city prosecutor for Lafayette, Colo., for four years.

“I believe deeply that our courts exist to ensure equal justice under the law,” Gabriel said last week following the governor’s announcement. “We also have a duty to ensure access to justice for all citizens, which is a significant issue facing many Colorado citizens today.

“I will do everything in my power and work hard every day in pursuit of those magnificent ideals.”

According to his court bio, he is married to Jill Wichlens, an appellate attorney with the Federal Public Defender’s Office in Denver. They have two daughters.

In Colorado, the Supreme Court Nominating Commission recommends candidates to serve as judges for the Supreme Court and the Court of Appeals.

The chief justice of the Supreme Court chairs the commission and is a non-voting member. The commission includes one citizen admitted to practice law in Colorado and one citizen not admitted to practice law residing in each of the state’s seven congressional districts, and one additional citizen not admitted to practice law in the state.

After receiving a list of nominees from the commission, the governor must make his or her selection within 15 days. If the governor does not appoint someone within those 15 days, then the chief justice appoints one of those individuals to fill the vacancy.

The chosen judge serves an initial term of two years, then must stand for retention at the next general election.

If retained by voters after serving an initial two-year term, state Supreme Court justices serve a term of 10 years.

All Colorado state judges must retire by age 72.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

Groups continue to rail against Innovation Act, which could be considered by House next week

Jessica Karmasek — Mon, 29 Jun 2015 06:12:49 -0500

]]> WASHINGTON (Legal Newsline) - A coalition of universities, inventors, venture capitalists and small businesses continue to oppose House-introduced patent reform legislation, which could be considered by the House floor in the coming weeks.

The Association of American Universities, the Association of Public and Land-Grant Universities, the Biotechnology Industry Organization, the Innovation Alliance, the Medical Device Manufacturers Association, the National Small Business Association, the National Venture Capital Association, the Pharmaceutical Research and Manufacturers of America, the Small Business Technology Council, and the Alliance of U.S. Startups and Inventors for Jobs said in a statement Thursday that H.R. 9, the Innovation Act, still needs “significant work.”

The coalition argues that the legislation, re-introduced by U.S. Rep. Bob Goodlatte, R-Va., in February, should not be considered for floor action in the House in its current form.

“H.R. 9 would dramatically weaken intellectual property rights and undermine a patent system that is vital to incentivizing innovation and job creation in our country,” the groups said. “The bill also fails to adequately address abusive practices against legitimate patent owners.

“We urge House members to meaningfully revise H.R. 9 to target abuses of patent trolls without damaging our nation’s entire innovation ecosystem.”

The groups said they expect the House to take up the bill as early as next week.

Earlier this month, members of the House Judiciary Committee voted 24-8 in favor of H.R. 9 -- one of the more aggressive pieces of patent reform bills floating around Congress.

The June 11 vote came after what was described by some as a “marathon” markup of the legislation, in which 20 different amendments were proposed, including Goodlatte’s own manager’s amendment.

Among those notable changes made to the bill was a new provision that would crack down on “unreasonable” venue shopping by so-called patent “trolls.”

The panel, during the markup, called out the U.S. District Court for the Eastern District of Texas, which over the years has become a plaintiff-friendly venue for patent lawsuits.

Other adjustments to the legislation included a rewrite of a provision that would limit early discovery and adding language to make sure universities won’t have to pay trolls’ legal bills.

Some other tweaks were made to heightened pleading requirements and the bill’s customer stay provision.

Still, significant differences remain between the legislation and the Senate’s Protecting American Talent and Entrepreneurship Act -- in particular, a fee-shifting provision.

Lawmakers and stakeholders have said the Senate version, which also cleared its judiciary committee this month, is more balanced.

However, Bob Krause, a Democrat who is looking to challenge U.S. Sen. Chuck Grassley, R-Iowa and the lead sponsor of the PATENT Act, in 2016, argues that even that bill has the potential to hurt inventors, manufacturing companies and small independent entrepreneurs.

Krause is a small business owner and inventor -- he invented and patented a system for intermodal transportation at one point in his career -- and a former U.S. Department of Transportation official and colonel in the Army Reserve.

“Today, our patent system is faltering. A few misguided decisions by the courts and the ‘so-called’ America Invents Act of 2011 has made it a CEO’s fiduciary responsibility to steal patented inventions and massively commercialize them with no concern for patent rights,” he wrote in a column on IPWatchdog Sunday. “Weak patent rights create big problems for small time independent inventors, small businesses and investors.

“Today, the odds are that an inventor will lose his patent if he brings an infringement case against a large corporation. In today’s world of time-warp like speed between invention and obsolescence, no one knows what is patentable and what is not, and patent defense has become a multi-million dollar crapshoot stacked cruelly against inventors and small businesses.”

Large corporations, Krause contends, have taken advantage of problems created by weak patent rights and have used their “massive resources and excellent political connections” to do so.

“The so-called ‘patent troll’ fabrication is part of the script,” he wrote. “While there are lawyers that specialize in patent defense, there are specialists in many fields of law. Each requires a client that has a need for justice that falls in a specialized legal field.

“But now, for the first time in our history, inventors and their counsel are considered villains for defending hard-earned patent rights. Companies that steal patents from inventors are called our innovators. The innovation world has turned upside-down.”

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

Illinois fails to measure nonprofit spending, policy expert says

Amanda Robert — Sat, 27 Jun 2015 09:40:04 -0500

]]> SPRINGFIELD Ill. (Legal Newsline) - While the Illinois state government gives billions of dollars to nonprofit organizations over the course of an ordinary budget year, there is little oversight of how the organizations spend those dollars, says Kristina Rasmussen, executive vice president of the Illinois Policy Institute.

“They give that money with the best intentions, hoping it will help carry out some of the priorities they have deemed to be important,” Rasmussen said. “Unfortunately, in some instances, government will have long-time partnerships with nonprofits, and some of them are on autopilot, as opposed to, ‘Are we putting our dollars in the highest impact, highest priority areas right now?’”

The Illinois Citizens Board (CUB) is just one nonprofit organization that receives significant funding from the state government. Following efforts led by then consumer activist and now former Gov. Pat Quinn, the Illinois General Assembly created CUB in 1983, to represent the interests of residential utility customers.

According to the Illinois Department of Commerce and Economic Opportunity, CUB has received a total of $1.9 million in state grants since 2007. From 2009 to 2015 – the years Quinn served as governor – the organization received $1.7 million in state grants.

CUB’s most recent $200,000 grant, which started in May 2014 and ended in April 2015, was designated for operating costs. Another grant, which started in May 2011 and ended in April 2013, totaled $782,000, and went to “administrative costs directly associated with performance of the Grantee’s services.”

CUB received a similar administrative grant for $718,000 in December 2009. It ended in November 2011.

According to their description on the DCEO website, these grants were directed to “specific local governments, units of government, educational facilities and not-for-profit organizations by members of the General Assembly and the Governor for specific purposes to bolster the State’s economy, promote a clean environment and improve the overall quality of life throughout the State of Illinois.”

According to the Illinois Comptroller’s Office, grants comprise about 72 percent of the state’s General Revenue Funds budget. The office also points out on its website that, year to date, the state has given nearly $762 million in grants to nonprofit organizations.

Rasmussen contends that a huge portion of these grants come from the Department of Human Services, in an “incredibly political” process.

“It’s a way to implement political discipline within the General Assembly,” she said. “‘You, rank and file legislator, don’t want to go along with us? We’ll make sure this particular disease or community group that you care about won’t get the funding that they did last year.’

“That’s obviously disturbing, because we shouldn’t be spending dollars as a political enforcement tool.”

While a lot of nonprofit organizations’ grants come from the Illinois General Revenue Fund, Rasmussen adds that they have also come from other sources, such as the hundreds of special funds in the state, or even the capital bill signed by Quinn in 2009.

She says that so far, there have been few ways to measure whether nonprofit organizations are putting their state grants to good use. The organizations are supposed to report key information to the state government, but when the Illinois Policy Institute surveys state grants, they often find incomplete files.

“They might have the original grant application, but very little in there about how they actually spend the dollars, and more importantly, the impact and efficiency that came out of it,” she said. “And certainly, none of the impact is available online.”

While there has been some discussion in the Illinois General Assembly about bringing the state standards for grant reporting up to match federal standards, Rasmussen contends that even then, nonprofit organizations wouldn’t always have to explain how they used their grant dollars and why they benefited the community.

In recent years, John DiIulio Jr., a political science professor at the University of Pennsylvania, has focused on the increase in federal grant awards to nonprofit organizations. In an article for National Affairs, he contends that while three-quarters of nonprofit organizations, including faith-based groups, spend less than $500,000 each year and receive little or no government grants, the quarter of organizations that have the largest budgets also have the greatest dependence on government funding.

He says this means that “one-third of all non-profit dollars are from government, paid through grants or contracts.”

“Over the past quarter-century, government grants to non-profit organizations have nearly tripled (in inflation-adjusted dollars),” DiIulio also writes in the article. “And just as businesses lobby to keep government contracts flowing, non-profit organizations lobby to preserve government grants and to block measures to limit itemized deductions in the federal tax code.”

According to the Internal Revenue Service, nonprofit organizations reported $2.9 trillion in assets in Tax Year 2010, the most recent year for which data is available. This represents a 9 percent increase from the previous year.

The IRS also points out that these nonprofit organizations reported $1.6 trillion in total revenue, nearly three-quarters of which came from program services, and $1.5 trillion in expenses.

Additionally, according to the IRS, total expenses reported by nonprofit organizations grew by 127 percent between Tax Years 1985 and 2010.

While the federal government may not provide solutions to Illinois’ problem, Rasmussen contends that other states, such as North Carolina, show some promise.

She explains that the Tar Heel State adopted a new reporting system for nonprofit organizations in the early 2000s. As part of this system, if organizations fail to report their results in the allotted amount of time, the state government stops sending their checks. The state government would also then publish a list of noncompliant nonprofit organizations.

Rasmussen points out that a similar system could work for CUB and for all of the other nonprofit organizations in Illinois.

“I’m of the perspective that if you’re taking taxpayer dollars, you should have to show value,” Rasmussen said. “If you can’t show value, it’s a good sign that we should reevaluate whether this is a good use of funds.”

Alleged Oregon magazine subscription scam to pay $3 million in restitution and penalties

Shaun Zinck — Sat, 27 Jun 2015 09:20:30 -0500

]]> SALEM, Ore. (Legal Newsline) - A White City, Ore., enterprise will pay the State $3 million for allegedly running a newspaper and magazine subscription scam, said Oregon Attorney General Ellen Rosenblum.

The enterprise, which consisted of 19 companies and nine individuals, will pay $500,000 in restitution to consumers who overpaid or didn't receive the magazines they subscribed to, according to the Assurance of Voluntary Compliance filed in Marion County court on Tuesday.

"This was a sophisticated operation that generated millions of dollars each year from consumers across the country who thought they were doing business with a reputable magazine or newspaper publisher, but were instead working with a company that made its money by scamming them,” Rosenblum said. "It's a particular embarrassment to the legitimate Oregon business community when national companies based here don't play by the rules. The only option was to shut them down—and we have."

Rosenblum said consumers would receive solicitations in the mail that appeared to be invoices from magazines or newspaper publishers, but were actually from a third-party source. The mailings would advertise that the subscriptions were the lowest price, but the prices were inflated significantly, Rosenblum said.

The named defendants in the case included Liberty Publishers Service, Express Publishers Services, Associated Publishers Network, Publishers Payment Processing, Jeffrey Hoyal, Lydia Pugsley and Noel Parducci.

Challenge to Sysco-USF Holding merger awarded temporary injunction

Shaun Zinck — Sat, 27 Jun 2015 09:18:49 -0500

]]> ANNAPOLIS, Md. (Legal Newsline) - A federal judge has blocked the merger of the nation's two largest foodservice distributors and a challenge to the merger was successful, Maryland Attorney General Brian Frosh said this week.

Frosh said his office's Antitrust Division joined with the Federal Trade Commission and nine other states in an attempt to stop the merging of Sysco Corp and USF Holding Corp. U.S. District Court Judge Amit Mehta issued a temporary injunction against the merger, and the FTC will undergo a full administrative review of the proposed transaction before it can continue.

"This is terrific news for anyone who eats. And that means all Marylanders," Frosh said. "This proposed merger would reduce competition and lead to higher prices for Marylanders who dine out, as well as for food service providers."

The two distributors compete with each other to sell food to hotels, hospitals, restaurants, schools and other facilities throughout the country. If the two were to merge the combined company would control about 75 percent of the market nationally and about 80 percent of the market in Annapolis and the Baltimore-Washington corridor, Frosh said.

The nine states that joined in fighting against the merger included California, Illinois, Iowa, Minnesota, Nebraska, Ohio, Pennsylvania, Tennessee and Virginia, along with Washington D.C.

R.J. Reynolds, Brown and Williamson paying $15M in settlement with Mississippi

Shaun Zinck — Sat, 27 Jun 2015 09:16:51 -0500

]]> JACKSON, Miss. (Legal Newsline) - Two tobacco companies will pay the state of Mississippi $15 million to settle allegations they didn't pay the state under a 1997 settlement, said Mississippi Attorney General Jim Hood.

Hood announced the settlement with R.J. Reynolds Tobacco Company and Brown and Williamson Tobacco Corporation on Monday.

“Several years ago, we discovered that Brown and Williamson manufactured cigarettes for a company called Star Tobacco, but failed to pay what they were required to pay us under the original 1997 tobacco settlement agreement,” Hood said. “The original settlement requires the company to pay Mississippi for every cigarette it makes and ships to the state.”

Hood added Brown and Williamson got around making the payment by manufacturing cigarettes for Star Tobacco, and then sold the cigarettes to consumers in the state. Hood's office discovered other instances when the two tobacco companies shortchanged the state, he says.

The $15 million is the principal and interest owed to the state that should have been paid years ago, Hood said. The companies will also pay the legal fees for the cost of the investigation.

“The 1997 settlement with the tobacco companies is perpetual, and contributes on average over $100 million per year to the State’s health care budget,” Hood said. “I will continue to closely monitor the tobacco companies and hold them accountable for their actions.”

Massachusetts solar energy company to pay $125K for violating state wage laws

Shaun Zinck — Sat, 27 Jun 2015 09:15:06 -0500

]]> BOSTON (Legal Newsline) - A Massachusetts solar energy company will pay $125,000 in restitution and penalties to the State for violating prevailing wage and hinderance laws, state Attorney General Maura Healey said.

Cavallo-Cavallo, which is based in New Bedford, and does business as Beaumont Solar was ordered to pay the money on Monday, Healey said. About $83,000 of the penalty will go towards restitution, $42,000 in penalties, and $10,000 for hindering the attorney general's investigation.

Healey said the violations occurred when Cavallo was hired to install solar panels at public schools in Melrose, New Bedford and Newton, Massachusetts.

“We are committed to ensuring that all workers receive the wages that they are entitled to,” Healey said. “Contractors that violate prevailing wage laws take advantage of their employees and misuse taxpayer dollars. Our office will hold these companies accountable for this type of conduct.”

The investigation began in September 2013 after the National Electrical Contractors Association referred the case to the attorney general's Fair Labor Division, Healey said. According to Healey's office the company classified electricians as laborers, which was improper, illegally deducted from the prevailing wage, and paid other workers at an apprentice level without having the required number of electricians on the worksite.

Mortgage procurement companies to pay $45K for allegedly not having proper licenses

Shaun Zinck — Sat, 27 Jun 2015 09:12:17 -0500

]]> ANNAPOLIS, Md. (Legal Newsline) - Two mortgage loan procurement and credit consulting providers will pay $45,000 in restitution to settle a lawsuit with the state of Maryland that accused the companies of providing services without the proper license, Maryland Attorney General Brian Frosh said this week.

Baltimore Home Ownership Program and NowICanBuy along with the owner of the companies, Dwight Williams, reached the settlement agreement with Frosh's office on Monday. The lawsuit also accused the companies of collecting advanced fees and making false representations about its services and the success it has had with consumers, Frosh said.

"The process of buying a home can be overwhelming, but consumers shouldn't have to fear being victimized," Frosh said. "Our office and other state agencies, as well as reputable nonprofit organizations, offer resources to help Marylanders navigate the home-buying process."

Under the terms of the agreement, the companies will pay $45,000 in restitution to the consumers that paid for credit improvement or mortgage loan assistance services prior to May 5, 2014. A $230,000 civil penalty was also issued, but the penalty will be waived if the companies comply with the full terms of the settlement, Frosh said. Additionally, the companies will pay $5,000 in costs to the Attorney General's Office Consumer Protection Division.

Kansas AG joins others in asking Congress to investigate Medicaid coercion by federal health department

Shaun Zinck — Sat, 27 Jun 2015 09:08:44 -0500

]]> WASHINGTON (Legal Newsline) - Congress should look into practices by the U.S. Department of Health and Human Services coercing states to expand Medicaid programs, Kansas Attorney General Derek Schmidt said.

Schmidt, along with nine other state attorneys general, addressed a letter on Tuesday to Rep. Fred Upton, chairman of the House Energy and Commerce Committee. The letter said the Centers for Medicare and Medicaid Services (CMS) should be investigated over allegations the center was withholding health care funding as a way to force states to expand Medicaid program.

“The United States Supreme Court has made clear that the federal government cannot compel states to administer federal programs, and CMS’s recent decisions to deny unrelated federal health care funding based on a state’s non-expansion of Medicaid constitutes unlawful coercion,” the letter stated.

CMS told Florida that it wouldn't receive funding for its Low Income Pool until it expanded Medicaid services, and Kansas is facing the same threats for a similar program.

“The Supreme Court said that it is up to the states to decide whether to expand their Medicaid programs,” Schmidt said. “The federal government may provide incentive for expansion, but it may not punish states for declining expansion by withdrawing unrelated financial support for other programs.”

U.S. SC sides with Marvel in patent dispute over Spider-Man toy

Jessica Karmasek — Fri, 26 Jun 2015 11:14:22 -0500

]]> WASHINGTON (Legal Newsline) - The U.S. Supreme Court issued a number of much-anticipated rulings this week, including one that upheld a 50-year-old precedent governing patent licensing agreements.

The nation’s high court released its opinion in Kimble v. Marvel Enterprises Inc. Monday.

In a 6-3 ruling, the justices affirmed the judgment of the U.S. Court of Appeals for the Ninth Circuit, refusing to overrule its 1964 decision, Brulotte v. Thys Co. Brulotte established rules governing enforcement of contracts entered into between patent holders and licensees.

“What we can decide, we can undecide,” Justice Elena Kagan wrote for the majority. “But stare decisis teaches that we should exercise that authority sparingly.”

Stare decisis is a legal principle by which judges are obliged to respect the precedent established by prior decisions.

“Scott Paper (Co. v. Marcalus Mfg. Co.) -- the decision on which Brulotte primarily relied -- remains good law. So too do this Court’s other decisions refusing to enforce either state laws or private contracts constraining individuals’ free use of formerly patented (or unpatentable) discoveries,” Kagan wrote.

“If Brulotte is outdated, then (for example) is Scott Paper too? We would prefer not to unsettle stable law.”

The majority added that nothing about Brulotte has proved unworkable.

“The decision is simplicity itself to apply,” Kagan wrote. “A court need only ask whether a licensing agreement provides royalties for post-expiration use of a patent. If not, no problem; if so, no dice.”

Kimble involved a dispute over royalty payments allegedly due the inventor of a web-shooter toy that allows a child to role play as Spider-Man.

The patent expired in 2010, but the inventor, Stephen Kimble, asserted a right to royalties for the toy that a Marvel Enterprises licensee still markets.

Marvel’s corporate predecessor had agreed to purchase Kimble’s patent in exchange for a lump sum plus a 3 percent royalty on future sales. The agreement set no end date for royalties.

Marvel, pointing to Brulotte, sought a declaratory judgment in federal district court confirming that it could stop paying Kimble royalties. The district court granted relief and the Ninth Circuit affirmed. Kimble appealed to the Supreme Court, asking it to overrule Brulotte.

The Washington Legal Foundation, a public interest law firm and policy center that filed a brief with the high court to uphold Brulotte, called the ruling a victory.

A decision overturning Brulotte would have “unnecessarily upset settled expectations” and spawn a “cottage industry” of lawsuits over long-expired licenses, WLF argued.

“In a world where patent trolls and rampant litigation funding thrive, ‘zombie’ litigation -- in which long-expired licenses are dredged up for new rounds of litigation -- would have been an all-too-likely result of a decision overturning Brulotte,” said Richard Samp, chief counsel for WLF.

“The court correctly concluded that overturning statutory-interpretation precedents is almost never appropriate when companies have been relying on them in entering into business transactions.”

Some academics, in recent years, have criticized Brulotte as “out of step” with modern approaches to patent and antitrust law.

But the Supreme Court, noting that criticism in its opinion, said any change in the rule should come from Congress, not the courts.

Justices Antonin Scalia, Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor joined Kagan in the majority opinion. Justice Samuel Alito filed a dissenting opinion, in which Chief Justice John Roberts and Justice Clarence Thomas joined.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

U.S. SC rejects challenge to Fair Housing Act, rules law forbids ‘disparate impact’

Jessica Karmasek — Thu, 25 Jun 2015 14:49:16 -0500

]]> WASHINGTON (Legal Newsline) - The U.S. Supreme Court ruled Thursday that the federal Fair Housing Act forbids “disparate impact” discrimination.

Disparate impact holds that practices in employment, housing or other areas may be considered discriminatory and illegal if they have a disproportionate “adverse impact” on persons in a protected class.

Justice Anthony Kennedy, who wrote the 24-page majority opinion, said minorities who allege racial discrimination don’t have to prove intent to sue under the FHA.

Those objecting to zoning, sales or rental practices only need to show they had a disparate impact on minorities, Kennedy wrote.

“Much progress remains to be made in our Nation’s continuing struggle against racial isolation,” the justice wrote. “In striving to achieve our ‘historic commitment to creating an integrated society,’ we must remain wary of policies that reduce homeowners to nothing more than their race.

“But since the passage of the Fair Housing Act in 1968 and against the backdrop of disparate-impact liability in nearly every jurisdiction, many cities have become more diverse.”

Kennedy continued, “The FHA must play an important part in avoiding the Kerner Commission’s grim prophecy that ‘[o]ur Nation is moving toward two societies, one black, one white -- separate and un-equal.’”

But the justice warned that a disparate-impact claim that relies on statistical disparity must fail if the plaintiff cannot point to a defendant’s policy or policies causing that disparity.

“The FHA does not decree a particular vision of urban development; and it does not put housing authorities and private developers in a double bind of liability, subject to suit whether they choose to rejuvenate a city core or to promote new low-income housing in suburban communities,” Kennedy wrote.

“As HUD itself recognized in its recent rulemaking, disparate-impact liability ‘does not mandate that affordable housing be located in neighborhoods with any particular characteristic.’”

The 5-4 ruling affirms a decision by the U.S. Court of Appeals for the Fifth Circuit that held disparate-impact claims are cognizable under the FHA.

The FHA was adopted shortly after the assassination of Dr. Martin Luther King Jr.

Recognizing that persistent racial segregation had left predominantly black inner cities surrounded by mostly white suburbs, the law addresses the denial of housing opportunities on the basis of “race, color, religion or national origin.”

In 1988, Congress amended the FHA, creating certain exemptions from liability.

In Texas, the state Department of Housing and Community Affairs distributes low-income housing tax credits, provided by the federal government, to developers by designated state agencies.

The Inclusive Communities Project Inc., or ICP, a Texas-based nonprofit corporation that assists low-income families in obtaining affordable housing, brought a disparate-impact claim under the FHA.

The ICP, in its claim, alleged that the department and its officers had caused continued segregated housing patterns by allowing too many tax credits to housing in predominantly black inner-city areas and too few in predominantly white suburban neighborhoods.

Relying on statistical evidence, the district court concluded that the ICP had established a prima facie showing of disparate impact and that the department failed to meet its burden to show that there were no less discriminatory alternatives for allocating the tax credits.

While the department’s appeal was pending, a regulation was issued interpreting the FHA to encompass disparate-impact liability and establishing a burden-shifting framework for adjudicating such claims.

The Fifth Circuit, in turn, held that disparate-impact claims are cognizable under the federal law, but reversed and remanded on the merits, concluding that, in light of the new regulation, the district court had improperly required the department to prove less discriminatory alternatives.

The state of Texas, in response, appealed to the Supreme Court to argue that the FHA does not allow lawsuits over disparate impacts.

The high court’s more conservative justices -- Clarence Thomas, Samuel Alito, John Roberts and Antonin Scalia -- dissented.

Thomas, in his own dissent, called disparate-impact liability a “rule without a reason, or at least without a legitimate one.”

Alito’s dissent -- in which Thomas, Roberts and Scalia joined -- was even more biting. The justice called the majority’s decision a “serious mistake.”

“The Fair Housing Act does not create disparate-impact liability, nor do this Court’s precedents,” he wrote. “And today’s decision will have unfortunate consequences for local government, private enterprise, and those living in poverty.

“Something has gone badly awry when a city can’t even make slumlords kill rats without fear of a lawsuit.”

Texas Attorney General Ken Paxton said the state “stands strongly against” racial discrimination. However, he said the court’s decision places an “unfair burden” on landlords, lenders and developers, leading them to make decisions based on consideration of race.

“The Administration’s interpretation of federal housing law is overreaching and misguided, and I am disappointed with the Supreme Court’s ruling,” Paxton said.

But the case is far from over, the attorney general said.

“The court recognized the ‘novelty’ of the plaintiff’s claims, and noted that the FHA does not prohibit actions taken for ‘legitimate objectives.’ The Texas Department of Housing and Community Affairs acted with the legitimate objective of revitalizing neighborhoods and providing affordable, fair housing when it distributed federal tax credits.”

Roger Clegg, president and general counsel of the Center for Equal Opportunity, agreed that the court’s decision was a disappointing one.

“It fails to follow the clear language of the statute, and it will encourage race-based decision-making in the housing area -- exactly what the Fair Housing Act was meant to prohibit,” he said.

“The only silver lining is that Justice Kennedy’s opinion itself recognizes this problem, and some of the language toward the end will be useful in stemming the worst abuses.”

Carrie Severino, chief counsel and policy director to the Judicial Crisis Network and former clerk to Thomas, said the ruling now puts state governments in a catch-22 situation.

“Either pursue unconstitutional racially discriminatory social policies and discriminate against some citizens based on race, or face liability under the Fair Housing Act,” she said. “This is not a choice that the Constitution allows. Equal protection is fundamentally about protecting people from intentional governmental discrimination, not about enabling progressive social engineering projects.”

Others were pleased with the court’s ruling, calling it a “welcome relief” for the most vulnerable Americans.

“The Supreme Court’s decision ensures that millions of Americans will still be protected from housing discrimination and upholds the important principle that, as a nation, we value the diversity of the communities in which we live,” said Wade Henderson, president and CEO of The Leadership Conference on Civil and Human Rights.

“When Americans are denied equal opportunity to housing, they are denied access to good jobs, quality education, safe streets, transit, and a clean and healthy environment, all of which are critical to leading healthy and prosperous lives.

“As the court acknowledged, ‘much progress remains to be made in our Nation’s continuing struggle against racial isolation.’ At a time of heightened concern across the country over threats to racial justice, as seen in places like Ferguson, Missouri and Baltimore, Maryland, a fully functioning and effective Fair Housing Act is more important than ever, and we applaud the court’s recognition that the Fair Housing Act has a ‘continuing role in moving the Nation toward a more integrated society.’”

Alliance for Justice President Nan Aron agreed.

“We are pleased that the Supreme Court respected decades of precedent and the obvious intent of the Fair Housing Act,” she said. “The court refused to place another roadblock in the way of those seeking justice when faced with housing discrimination.”

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

AG Healey calls on Congress to change nuclear fuel rod storage policies

Shaun Zinck — Thu, 25 Jun 2015 11:07:05 -0500

]]> BOSTON (Legal Newsline) - Massachusetts Attorney General Maura Healey sent a letter to the U.S. Senate Environment and Public Works Committee, urging Congress to regulate the disposal of spent fuel rods at nuclear power plants.

The letter was addressed to committee chairman U.S. Sen. James Inhofe and ranking member Sen. Barbara Boxer, adding the regulation would help protect the health and well-being of residents and the environment.

“The Nuclear Regulatory Commission (NRC) has long had an obligation to develop meaningful long-term solutions to the current on-site storage of nuclear waste in facilities across the country, yet it has failed to do so,” Healey said in her letter. “Its failure to act poses risks to public safety and the environment.”

Healey said her office has urged the NRC since 2006 to change the fuel rod storage regulations, but the commission has not changed its policies.

Healey said there must be proper security at decommissioned nuclear plants that have stored spent fuel, and that all spent fuel rods should be transferred to dry cask storages away from wet pools.

“While we are hopeful the federal government will fulfill its obligations to provide a long-term storage solution, the absence of a long-term solution has created issues for states and their residents that need to be addressed now,” Healey said.

Massachusetts AG announces regulations for earned sick time law

Shaun Zinck — Thu, 25 Jun 2015 11:06:02 -0500

]]> BOSTON (Legal Newsline) - Official regulations for the State of Massachusetts' Earned Sick Time law were published late last week by state Attorney General Maura Healey.

Healey said the law, which was passed by voters in November, will provide about one million workers in the state with access to sick leave for the first time.

“Nearly one million of our most vulnerable, lowest paid workers, will no longer need to worry about whether they can afford to take a day off if they are sick or to care for a loved one,” Healey said. “Hundreds of employers and workers contributed to our effort to write balanced, clear, and workable rules. We are committed to partnering with businesses and employees to help them understand their rights and responsibilities and ensure that the law is successfully implemented statewide.”

There were 11 public hearings and listening sessions held throughout the state since the laws was passed by voters. Healey's office said about 1,100 people came to the meetings. About 75 formal comments were filed during the public comment period, and the Attorney General's Office responded to hundreds of emailed questions asking about the law.

Employers in the state have until Jan. 1 to become compliant with the law. Under the new law, earned sick time can be used for emergency or routine medical visits and to care for sick family members. Massachusetts, California and Connecticut are the only states in the country to have a law governing earned sick time.

Maine AG: FDA should add e-cigs to Tobacco Control Act

Shaun Zinck — Thu, 25 Jun 2015 11:04:06 -0500

]]> AUGUSTA, Maine (Legal Newsline) - The U.S. Food and Drug Administration should act on a proposal to add e-cigarettes to the Tobacco Control Act, Maine Attorney General Janet Mills said this week.

The move would allow the FDA to regulate e-cigarettes like it does for other tobacco products. About a year ago, the administration proposed the change and took public comment on the recommended change until August. However, the FDA hasn't made any subsequent moves since, Mills said.

“It’s hard to believe we are willing to sit back and watch our children develop addictive smoking habits, after we’ve fought so hard to reduce youth smoking and tobacco use in America,” Mills said. “Providing the same regulation of e-cigarettes as we do other tobacco products is critical to stop this new trend in its tracks.”

Mills said the use of e-cigarettes by youth has “skyrocketed” while the FDA refuses to act. A study in 2014 by the University of Michigan found that more teens are using e-cigarettes than any other tobacco products.

Mills and Indiana Attorney General Greg Zoeller sent a letter to the FDA last week “expressing frustration” that the administration hasn't acted on its proposed change. Zoeller is the chair and Mills is the vice-chair of the Tobacco Committee for the National Association Representing Attorneys General.

Colorado sends out $450K to homeowners in restitution from lawsuit against foreclosure firm

Shaun Zinck — Thu, 25 Jun 2015 10:29:36 -0500

]]> DENVER (Legal Newsline) - About $450,000 in checks have been sent out by the Colorado Attorney General's Office to consumers who were improperly charged posting and title foreclosure costs by a now closed law firm, said Colorado Attorney General Cynthia Coffman.

The Law Office of Michael P. Medved, a former foreclosure law firm, was allegedly overcharging homeowners when they were required to pay the firm's fees in order to make their mortgage payments current after they had stopped a foreclosure through reinstatement or cure.

“A person’s home is a sacred space and the fear of losing a home due to foreclosure causes extreme mental anguish for any family. For a law firm to overcharge families at their most vulnerable time is reprehensible,” Coffman said. “We will protect Colorado families from these practices and we want to send a message to other law firms who hope to profit from Coloradans’ distress.”

Coffman's office reached a $1 million settlement with the laws office, and in the agreement the firm was required to make two restitution payments to the affected homeowners. The payments are of $500,000 each, and the second payment is scheduled to be dispersed later this year. Coffman said the second portion will be given to homeowners who stopped the foreclosure through a loan modification.

Skilled nursing facility to pay $17 million for alleged kickback scheme

Shaun Zinck — Thu, 25 Jun 2015 10:26:29 -0500

]]> WASHINGTON (Legal Newsline) - A Florida-based skilled nursing facility will pay the federal government $17 million to settle a lawsuit that claimed the company paid doctors in order to receive Medicare referrals for patients that required skilled nursing care.

U.S. Deputy Assistant Attorney General Benjamin Mizer said Hebrew Homes Health Network, its affiliates and subsidiaries and its former president and executive director, William Zubkoff, all agreed to the terms. It's the largest settlement involving a kickback scheme with a skilled nursing facility, Mizer said.

Hebrew Homes provided its services at seven rehab and skilled nursing facilities in Miami-Dade County in Florida.

“Illegal inducements paid to physicians in exchange for patient referrals will not be tolerated,” said Mizer, who works in the U.S. Justice Department’s Civil Division. “Medicare funds should be used to provide care for our senior citizens, not as an inducement to physicians to refer business.”

The lawsuit claims the company operated the kickback scheme between 2006 and 2013, and alleged it hired “numerous” doctors as medical directors. The directors would sign contracts that specified their duties and hourly requirements.

However, the lawsuit said the contracts were for “ghost positions, and that most of the medical directors were required to perform few, if any, of their contracted job duties.”

The federal government claimed patient referrals “increased exponentially” once the medical directors were brought on board.

Hospice care to pay $10 million for allegedly overcharging Medicaid

Shaun Zinck — Thu, 25 Jun 2015 10:22:57 -0500

]]>
Covenant Hospice, Inc. provides hospice care for patients in Southern Alabama and the Florida Panhandle.

“The hospice benefits provided by federal health care programs are intended to provide comfort and care to patients nearing the end of life,” Mizer said. “We will continue to ensure that these benefits are used for their intended purposes.”

Between January 2009 and December 2010 the federal government claims that Covenant Hospice billed federal health care programs for general inpatient care even though it should have been billed at the routine home care level.

Under the settlement, the federal government will receive about $9.6 million, and the states of Alabama and Florida will receive a combined $553,225 for the over billing.

“Careful and correct claims for reimbursement from critical federal health care programs are essential to the health of our economy,” said U.S. Attorney Pamela C. Marsh of the Northern District of Florida. “Those public servants who worked hard to investigate the conduct and obtain this settlement deserve our deepest gratitude. We will continue our efforts to ensure that federal dollars intended for compassionate care and legitimate patient needs are protected.”

New York car dealerships to pay $14M for allegedly 'jamming' consumers

LocalLabs News Service — Thu, 25 Jun 2015 10:18:45 -0500

]]> ALBANY, N.Y. (Legal Newsline) - Three New York car dealerships agreed to a $14 million settlement with the state in order to settle a lawsuit that claimed the companies' practices resulted in inflated car prices, New York Attorney General Eric Schneiderman said.

Paragon Motors of Woodside, Worldwide Motors and Civic Center Motors agreed to the terms last week, Schneiderman said. About $13.5 million from the settlement will go to consumers as restitution. The lawsuit alleged the car dealerships added more than $2,000 in hidden costs on top of the price of the vehicles. Under the agreement the company will also pay $325,000 in penalties.

“When consumers shop for a car, they deserve to be dealt with honestly and fairly – and not to be misled by auto dealers who use deceptive tactics to fleece their own customers,” Schneiderman said.

“New York consumers must beware: Car dealerships sometimes pad their pockets by charging for worthless after-sale items, which inflate the price of their car. These items are often ones that consumers don’t need, did not ask for and often are not even told about. Businesses need to make a profit to survive, but it’s illegal to do so by duping consumers.”

Schneiderman said the lawsuit and settlement with the dealerships are part of an ongoing “initiative” to stop the practice of “jamming” by other car dealerships. Jamming is the unlawful charging of hidden purchases by car dealerships.

Lyft to pay New York $300K for allegedly violating state law

Shaun Zinck — Thu, 25 Jun 2015 10:13:14 -0500

]]> ALBANY, N.Y. (Legal Newsline) - A popular driving service will pay the State of New York $300,000 for allegedly violating state and municipal laws, New York Attorney General Eric Schneiderman said this week.

Schneiderman said Lyft, which provides a driving service through a smartphone app, reached the terms of the settlement last week, and has agreed to comply with all relevant laws.

“I have always been committed to fostering an innovative and competitive environment in which both new and existing companies can flourish in our great state,” Schneiderman said.

“However, it’s critical that the laws put in place to protect consumers and ensure fair competition are not violated in the process. Today’s agreement enables Lyft to grow and prosper within the bounds of state and local regulations, while the penalties imposed send the message that companies that attempt to skirt the law will be held accountable.”

The agreement requires all Lyft drivers to have auto insurance through a New York-authorized insurer, and must cover the drivers while they have the Lyft app open and are picking up passengers. Lyft must give the New York Superintendent, Attorney General's Office and other municipality or jurisdiction a three week notice prior to launching the service in the given region of the state.

The lawsuit was filed by Schneiderman's office in July 2014 after the company launched its service in Buffalo and Rochester without informing the cities of their operation and prior to getting the necessary approvals.

Dental management company to pay New York $450K to settle lawsuit

Shaun Zinck — Thu, 25 Jun 2015 10:09:28 -0500

]]> ALBANY, N.Y. (Legal Newsline) - An East Syracuse dental administrative company will pay $450,000 in civil penalties to the state, and will overhaul the way it does its business in New York as part of a settlement with the state, New York Attorney General Eric Schneiderman said this week.

Aspen Dental Management, Inc., provides support and administrative services to seven independent dental practices with 40 offices in the state. Under the settlement, the company will have to make it clear to consumers that it does not provide dental services.

Aspen also agreed to stop splitting patients' fees with clinics and won't instruct the care provided by dentists and hygienists, Schneiderman said.

“Medical and dental decisions should be made by licensed providers using their best clinical judgment, and should not be influenced by management companies’ shared interest in potential profits,” Schneiderman said. “By enforcing New York’s laws banning the corporate practice of medicine and fee-splitting between medical practitioners and non-licensed individuals and entities, today’s agreement ensures that New Yorkers receive quality dental care.”

The New York Attorney General's Health Care Bureau has received more than 300 complaints by consumers against Aspen Dental since 2005. The complaints regarded concerns over misleading advertising, billing practices, quality of care and other concerns.

Garlock bankruptcy plan includes national ads targeting asbestos victims

Jessica Karmasek — Thu, 25 Jun 2015 09:37:10 -0500

]]> CHARLOTTE, N.C. (Legal Newsline) - Garlock Sealing Technologies has employed a nationally recognized firm to provide notice -- by way of newspaper supplements, magazines, television and even the Internet -- to potential asbestos claimants as part of its bankruptcy proceeding.

The advertising is part of the notice program for the deadline to file proofs of claim, usually called a “bar date.”

In order for Garlock to bind its creditors to the bar date -- which is a prelude to confirmation of a chapter 11 plan and the company’s exit from bankruptcy -- the creditors must receive sufficient notice of the bar date to satisfy the requirements of due process.

Due process can be provided through actual notice or constructive notice.

Constructive notice for unknown creditors may exist where the debtor publishes notice to the world in a way reasonably calculated to apprise interested parties of the pendency of the bar date, even if not all potential creditors actually see the notice.

Bankruptcy attorney David Christian, founder of the David Christian Attorneys law firm and not an active participant in the Garlock bankruptcy case, explained that historically debtors have sought to satisfy this standard, with some success, through publication of a notice -- approved by the bankruptcy court -- in widely circulated newspapers in areas where the debtor did business or in industry publications relevant to the particular claims in a case.

In this case, Garlock and its fellow debtors -- Garrison Litigation Management Group Ltd. and The Anchor Packing Company -- also are providing notice via television and Internet banner ads.

“With the growing use of other means by which people acquire information, including the growth in use of the Internet, some debtors are supplementing traditional publication notice with the use of other media,” Christian said, calling it a “new trend.”

“Garlock is attempting to make sure that the orders emanating from its bankruptcy case actually bind everyone.”

Last year, U.S. District Judge George Hodges ruled in favor of Garlock, ordering the gasket manufacturer to put $125 million in its bankruptcy trust, which is more than $1 billion less than what plaintiffs’ attorneys requested as Garlock’s liability.

Hodges found that the amount of previous awards and settlements paid by the company in the civil justice system were not reliable because plaintiffs’ attorneys had withheld evidence of their clients’ exposure to asbestos-containing products manufactured by other companies in order to maximize recovery against Garlock.

Garlock has proposed a $358 million settlement.

According to court documents, the debtors have hired Kinsella Media LLC, a legal notice firm located in Washington, D.C.

KM specializes in the design and implementation of notice programs that reach unnamed class members in matters such as consumer protection and antitrust and claimants in bankruptcy and mass tort litigation.

The firm is well-known, developing and directing some of the most expansive notice programs undertaken in the fields of antitrust, bankruptcy, consumer fraud, mass tort and product liability. The cases have spanned a broad spectrum of products, including asbestos, breast implants, home siding and roofing, infant formula, pharmaceuticals, polybutylene plumbing and tobacco.

KM, to date, has developed or consulted on more than 800 notice programs and has placed more than $350 million in paid media.

The Garlock notice program, according to a proposal filed by KM with the bankruptcy court last June, employs three methods to provide notice in both the United States and Canada:

- Direct notice: mailed notice directly through attorneys to all identifiable asbestos claimants represented by counsel whose names and addresses have been determined by the debtors, or to claimants directly if not represented by counsel;

- Paid media notice: broad national and local published notice through the use of national and local paid and earned media; and

- Third-party notice: notice by direct mail to third-parties who are likely to have contact with asbestos claimants.

But the core of the notice program is paid media.

Among those paid media outlets recommended by KM were American Profile and Parade, supplements that are inserted into weekend or Sunday edition newspapers nationwide. American Profile appears in 1,035 papers and Parade appears in 750 papers.

KM also suggested ads be placed in consumer magazines such as AARP Bulletin, National Geographic, People and Reader’s Digest.

In addition, online media - including Internet banner ads on Weather.com, Advertising.com, Yahoo! and social media website Facebook - was recommended.

Local newspapers also were recommended by the firm, in particular those in areas where Garlock’s asbestos-containing products were manufactured and potentially used.

Information provided by the debtors indicated that those key areas include: Sodus, N.Y., and Palmyra, N.Y., where the vast majority of Garlock’s products were designed, manufactured and sold; and oil refineries, steel mills and shipbuilding sites that used the company’s products during the 1940s through the 1970s.

KM also recommended the use of sponsored links, which appear when Internet users search keywords on search engines such as Bing, Google and Yahoo!

Although an exact cost of running all of the ads could not be found in court documents, Christian said the debtors easily could have paid $50,000 for such a notice program -- and quite possibly more.

Judge J. Craig Whitley, for the U.S. Bankruptcy Court for the Western District of North Carolina, approved the notice program, including a few revisions by KM, in April.

He wrote in his order that it was “reasonably calculated” to provide notice to known and unknown claimants of Garlock’s bankruptcy plan, voting deadlines and confirmation hearing.

Under the court’s current schedule, objections to the confirmation of the plan that do not depend on the results of voting are due Oct. 6 and confirmation objections that do depend on such results are due Dec. 18.

The confirmation hearing -- the hearing on the confirmation of the plan -- is set for June 20, 2016.

Members of the Official Committee of Asbestos Personal Injury Claimants, referred to as the ACC, argue that the proposed trust amount in the bankruptcy proceeding is “defective, deficient and unfair” to individuals holding claims against one or more of the debtors.

The committee, which is tasked with protecting the interests of individuals with known asbestos injuries, sent out a news release earlier this month urging asbestos victims to vote “no” on the reorganization plan.

The ACC said it “unanimously opposes” the plan and is litigating to defeat it in bankruptcy court because, in its view:

- The plan does not provide enough money to compensate asbestos claimants;

- The plan would limit Garlock's liability for asbestos claims at much less than it can afford; and

- The plan does not comply with the bankruptcy law Congress wrote specifically for the reorganization of asbestos defendants such as Garlock.

The committee is made up of plaintiffs’ attorneys for 12 asbestos victims appointed by the bankruptcy court.

Each of the following plaintiff law firms represents a member of the ACC: Belluck & Fox LLP; Cooney & Conway; The Jaques Admiralty Law Firm; Kazan, McClain, Satterly & Greenwood PLC; Lipsitz & Ponterio LLC; Motley Rice LLC; Paul, Reich & Meyers PC; Simmons Hanly Conroy LLC; Simon Greenstone Panatier Bartlett LLP; Thornton & Naumes LLP; and Weitz & Luxenberg PC.

Attorneys Steven Kazan and Joseph F. Rice are co-chairs of the committee.

Rice, in an “urgent” update posted to his firm’s blog last week, said the plan is “not beneficial” to asbestos victims.

Christian said opponents of a bankruptcy plan are allowed to lobby against it.

“Certainly, private actors have a First Amendment right to advocate against it,” he said of Rice’s blog post.

“It’s really the debtor that’s under a restriction before it starts soliciting.”

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

Prosecutor to make second bid for Vermont AG

Jessica Karmasek — Thu, 25 Jun 2015 09:29:27 -0500

]]> MONTPELIER, Vt. (Legal Newsline) - Chittenden County State’s Attorney T.J. Donovan said this week he will -- for the second time in four years -- challenge fellow Democrat and longtime incumbent Bill Sorrell for Vermont attorney general.

Donovan made the announcement Monday morning on his Facebook page: “Team -- I’m running… for Attorney General! More to come.” He included a photo of running shoes and the hashtag “TJ4AG.”

“I tried this two years ago, came up a little bit short, (but I’m) still interested, still think I can provide a service to the state of Vermont, and I decided there’s never a good time, so I may as well put it out there, that I am running for attorney general,” Donovan told Vermont Public Radio Monday.

Donovan, who is in his third term as county prosecutor, lost the Democratic primary to Sorrell in 2012 by about 700 votes.

It was the first time Sorrell has faced what some would consider a serious challenger since being appointed by former Gov. Howard Dean in 1997.

Since then, he has won re-election eight times -- in 1998, 2000, 2002, 2004, 2006, 2008, 2010 and 2012.

Sorrell hasn’t yet decided if he’ll seek reelection.

Vermont’s primaries are set for Aug. 9, 2016. Its general election is set for Nov. 8, 2016.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

Class action alleges pharma company’s patent infringement lawsuit a ‘sham’

Jessica Karmasek — Thu, 25 Jun 2015 08:03:49 -0500

]]> BOSTON (Legal Newsline) - A class action lawsuit filed in federal court this week alleges that a patent infringement lawsuit filed by multinational pharmaceutical company Novartis against generic maker Sun Pharma simply was a delay tactic.

The United Food and Commercial Workers Unions and Employers Midwest Health Benefits Fund, or UFCW, and the Laborers Health and Welfare Trust Fund for Northern California filed the lawsuit on behalf of a class of all purchasers of Novartis’ Gleevec drug in the U.S. District Court for the District of Massachusetts Monday.

The employee welfare benefit plans, according to their filing, have paid some or all of the price of 100 mg and 400 mg Gleevec tablets on behalf of their plan participants.

Both argue they will pay more for the drug -- used in treating patients diagnosed with chronic myeloid leukemia, a cancer of the blood and bone marrow -- than they would have absent Novartis’ “unlawful scheme” to prevent and delay its generic entry.

Gleevec, which costs about $9,000 a month, was expected to go generic effective July 5.

The Food and Drug Administration already has cleared two generic applications, but Novartis has barred Sun Pharma from releasing its generic version of Gleevec for at least an additional seven months by way of a “sham” patent infringement lawsuit.

According to the 82-page proposed class action, Novartis unlawfully listed invalid follow-on patents in the FDA’s Orange Book.

The publication “Approved Drug Products with Therapeutic Equivalence Evaluations,” commonly known as the Orange Book, identifies drug products approved on the basis of safety and effectiveness by the FDA under the Federal Food Drug and Cosmetic Act.

In particular, at issue is Novartis’ U.S. Patent No. 6,894,051. The ‘051 patent, which expires in November 2019, is among those alleged invalid follow-on patents.

The class action contends that the U.S. Patent and Trademark Office mistakenly issued the patent.

“But in the stark light of patent litigation alleging infringement of the ’051, Novartis knew that if a court were to eventually rule on the validity issue after deliberative proceedings, the ’051 patent would be held invalid,” the class action alleges.

Sun Pharma, in June 2013, sued Novartis in the U.S. District Court for the District of New Jersey, seeking a declaratory judgment that Sun Pharma was not infringing the ‘051 patent and/or that the ‘051 patent was invalid or otherwise unenforceable.

A month later, Novartis filed counterclaims against Sun Pharma, alleging infringement of the ‘051 patent and also seeking a declaration that the ‘051 patent was valid and enforceable.

“Novartis had enormous incentives to settle the patent infringement litigation and avoid competition,” the class action alleges. “By 2013, Gleevec was a roughly $2 billion drug. Losing a substantial portion of that revenue stream -- as Novartis would have if the patents were held by a court to be invalid, unenforceable, or not infringed -- would have drastically affected Novartis’ profits in 2013 and subsequent years.”

Last year -- less than a year into the underlying litigation -- Novartis and Sun Pharma agreed to settle the patent lawsuit.

The terms were not revealed, except that both parties announced that under their agreement Sun Pharma would be permitted to launch its generic version of Gleevec as of Feb. 1, 2016.

The class action contends that if Novartis had never “brandished” the ‘051 patent against Sun Pharma, there never would have been the need for the litigation between the two companies, there never would have been a settlement between them and there never would have been the agreement to delay the generic’s entry.

“Novartis should rightly enjoy exclusivity for Gleevec through the expiry of the original compound patent in early July 2015 (having grossed over $13.5 billion in U.S. sales over the years from the drug, which now yields about $2 billion per year),” the class action states.

“But patent gamesmanship and frivolous litigation undertaken solely for the purpose of extracting settlements that delay generic entry violate basic principles of antitrust law, and should be enjoined.”

UFCW and Laborers, in their class action, are seeking a permanent injunction to allow generic competition.

“If Novartis played by the rules, a generic version of Gleevec would be available for cancer patients this July, but Novartis wants to illegally reap benefits from its sham of a patent infringement suit,” Thomas M. Sobol, a partner at Hagens Berman Sobol Shapiro LLP. The consumer rights class action law firm is among those firms representing the proposed class of plaintiffs.

The firm notes that the lawsuit marks the first time purchasers of prescription drugs have sought injunctive relief to try to prevent antitrust overcharges or damages stemming from delayed launch of generic drugs.

Novartis, in a company statement, said it believes the claims are “unsubstantiated.”

“The patents covering Gleevec remain legally in force and are covered by a statutory presumption of validity,” it said. “The patents are clearly directed to our marketed product and are properly listed in the FDA’s Orange Book and the settlement with Sun Pharma is a lawful settlement agreement resolving the declaratory judgement action filed by Sun Pharma challenging the validity of one of the Gleevec patents.

“We will vigorously defend our patent rights and litigate these improper allegations.”

Pointing to the settlement with Sun Pharma last year, Novartis said patents are “vital” to the ability of companies such as itself to invest in high-risk research to advance breakthrough treatments for patients without treatment options.

“This settlement validates the Novartis patents while allowing Sun Pharma’s subsidiary to enter the market with its generic product,” the company said.

District Judge Allison Burroughs is presiding over the case.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

Doctor in Sheldon Silver case treated plaintiff three weeks before Weitz firm filed possible $11M lawsuit

John O'Brien — Wed, 24 Jun 2015 09:57:28 -0500

]]> NEW YORK (Legal Newsline) – The doctor who is alleged to have steered mesothelioma patients to the law firm of then-New York Assembly Speaker Sheldon Silver treated a now-deceased man 22 days before Silver’s firm filed a lawsuit on the man’s behalf that resulted in an $11 million verdict.

Research conducted by Legal Newsline shows that Arthur Juni was treated by Dr. Robert Taub in July 2012, three weeks before Weitz & Luxenberg filed a lawsuit on his behalf. The multimillion-dollar verdict awarded by a jury two years later was overturned by a judge in April, a decision Weitz & Luxenberg is currently appealing.

Silver was indicted earlier this year and is alleged to have traded state funds used for research for referrals of mesothelioma patients.Silver

Silver is accused of using his position in state government to earn millions of dollars in referral fees.

Juni was first treated in June 2012 at Nyack Hospital, where he was diagnosed with mesothelioma after a biopsy. Dr. Mark Ginsburg referred Juni to Taub, who worked at Columbia University at the time.

Taub’s initial consultation took place on July 2, 2012, and Weitz & Luxenberg filed Juni’s lawsuit on July 24.

Taub continued to treat Juni’s condition until Juni passed away on March 15, 2014. He died days before a trial in the New York City Asbestos Litigation system was scheduled to begin.

In May 2014, a NYCAL jury awarded $8 million for pain and suffering and $3 million to Juni’s widow.

Among other things, Silver is accused of steering state funds to Taub, who headed a mesothelioma research facility at Columbia University until Silver’s arrest. According to the New York Post, Taub is a cooperating witness for federal prosecutors.

Silver was “of counsel” at Weitz & Luxenberg until his arrest. Taub is referred to as “Doctor-1” in the criminal complaint.

Grand jurors indicted Silver, finding he deprived citizens of his honest services by masking bribes and kickbacks as legitimate income.

They found he had no prior experience in asbestos cases, had no contact with clients, did not evaluate claims and did not advise attorneys at Weitz & Luxenberg, which has denied knowledge of the alleged scheme.

Jurors found he went to great lengths to conceal his relationship with Taub.

They also found he kept secret from Weitz & Luxenberg that he allocated state funds to the doctor’s research center.

Silver has moved to dismiss the indictment. Taub is suing Columbia for firing him in the wake of Silver’s arrest.

In addition to the $11 million verdict in Juni’s case, settlements reached with several defendants resulted in more than $1.7 million. Those defendants were Massey Ferguson, Borg Warner Corp., Caterpillar, Dana Companies, Fel-Pro, Honeywell, International Truck and Engine Corp. and Lipe Rollaway.

In April, Judge Barbara Jaffe granted Ford’s motion for judgment notwithstanding the verdict and dismissed the complaint.

“The Court misapprehended the relevant law and overlooked the critical facts, improperly invaded the jury’s province, and erroneously failed to view the evidence in the light most favorable to the nonmovant,” Alani Golanski of Weitz & Luxenberg wrote.

Ford argued that the opinions of Juni’s expert witnesses on causation lacked a sufficient foundation and were based on invalid assumptions.

One of the witnesses’ opinion that his exposure to asbestos contained in brakes, clutches or gaskets sold by Ford was a substantial factor in causing his illness was “mostly based on hypothetical facts she was instructed to assume,” Jaffe wrote.

“Although there may be cases where it will be difficult or impossible to quantify a plaintiff’s exposure to a toxin, the Parker Court held that some quantification is nonetheless necessary for a plaintiff to prove causation,” Jaffe added.

“Therefore, that the plaintiff’s burden of establishing that a particular exposure to asbestos was the cause of his mesothelioma is satisfied by an expert’s opinion that a cumulative exposure to asbestos, no matter how small and without any quantification, was a substantial contributing factor to the development of a plaintiff’s mesothelioma, is contrary to New York law…”

From Legal Newsline: Reach editor John O’Brien at jobrienwv@gmail.com.

South Dakota AG elected head of attorneys general group

Jessica Karmasek — Tue, 23 Jun 2015 13:53:23 -0500

]]> SAN DIEGO (Legal Newsline) - South Dakota Attorney General Marty Jackley was elected president of the National Association of Attorneys General during its annual summer meeting, held in San Diego last week.

“I am honored to serve alongside my fellow attorneys general in the vital task of cooperatively enforcing our state laws and promoting sound law enforcement policies,” Jackley said in a statement.

“By bringing attorneys general together, the association is a valuable resource for improving public safety and the lives of citizens in our states.”

Mississippi Attorney General Jim Hood concluded his 2014-15 presidential term by acknowledging the work done on his year-long initiative, “Protecting Our Digital Lives: New Challenges for Attorneys General.”

Jackley has not designated his year-long presidential initiative.

Also elected at last week’s meeting: Connecticut Attorney General George Jepsen as president-elect and Kansas Attorney General Derek Schmidt as vice president. Hood became immediate past president.

NAAG elects its officers yearly, through geographical rotation by region.

Election of the four officers always takes place at its summer meeting.

Also last week, the association -- made up 56 state and territorial attorneys general -- gave its prestigious Kelley-Wyman Award to Indiana Attorney General Greg Zoeller.

The award is given annually to the attorney general who has done the most to achieve the association’s objectives.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

Massachusetts settles with metal-cladding company over wastewater allegations

Shaun Zinck — Tue, 23 Jun 2015 13:22:50 -0500

]]> BOSTON (Legal Newsline) - An Attleboro, Mass., metal-cladding company will pay a $50,000 civil penalty for the state to settle a lawsuit over allegations that its illegally stored industrial wastewater at its facility, said state Attorney General Maura Healey.

The lawsuit claimed that Engineered Materials Solutions stored its industrial wastewater between October 2010 and May 2014 in holding tanks prior to shipping the tanks offsite. The alleged practice violates the state's Industrial Wastewater Holding Tank Regulations because the company has an existing connection to the Attleboro sewer system.

“We allege this company wrongfully stored industrial wastewater on-site, even though it has an existing connection to Attleboro’s sewer system,” Healey said. “The Holding Tank Regulations are intended to prevent wastewater from being unnecessarily transported on state roads and to avoid utilizing facilities with less effective treatment technologies. This settlement will ensure that industrial wastewater is properly disposed of moving forward.”

The company will pay the $50,000 and is required to connect all of its wastewater discharges to the Attleboro sewer system within one year. If Engineered Materials Solutions successfully connects the wastewater discharges to the sewer system, then $20,000 of the civil penalty will be waived, according to the terms of the settlement.

Kentucky to receive $12K in $6M federal settlement with pharmaceutical company

Shaun Zinck — Tue, 23 Jun 2015 13:21:19 -0500

]]> FRANKFORT, Ky. (Legal Newsline) - Kentucky Attorney General Jack Conway said the state will receive about $12,000 as a result of a federal settlement with a pharmaceutical company to resolve allegations that the company illegally marketed one of its drugs.

The settlement is with Inspire Pharmaceuticals, which is headquartered in Illinois, and is with Kentucky, 48 other attorneys general and the federal government. The government claimed the business violated the False Claims Act, and cause doctors to write out prescriptions for its drug AzaSite that wasn't approved by the U.S. Food and Drug Administration.

The prescriptions allegedly resulted in millions of dollars in false claims being paid by Medicaid and other federal healthcare programs. The FDA approved the drug to treat pink eye, however, the company marketed the drug to treat inflammation of eyelash follicles.

The total settlement is for $6 million, and Kentucky's Medicaid share is about $51,456. About $39,353 of that is the federal share, which leaves the state about $12,100.

“Patients have a right to trust they are being prescribed properly tested and effective medicine,” Conway said. “Pharmaceutical companies like Inspire will not be permitted to skirt FDA rules and regulations to make a profit at the expense of patients. These FDA rules are enforced to ensure patients are only prescribed drugs that are proven to benefit the patient.”

Colorado Supreme Court rules in favor of workplace drug policies

Shaun Zinck — Tue, 23 Jun 2015 13:19:38 -0500

]]> DENVER (Legal Newsline) - Colorado employers have a right to a drug-free workplace after a state Supreme Court ruling last week, said Colorado Attorney General Cynthia Coffman.

The high court's ruling unanimously affirmed a lower court of appeals' decision in the case of Coats v. Dish Network. The lawsuit against the satellite provider challenged whether an employer had a right to terminate a worker after they tested positive for marijuana during a random workplace drug screening.

Coffman said while not all businesses will choose to go the same route, it's important to develop a standard that fits each business.

“We are pleased the Colorado Supreme Court agreed with our position in this case," Coffman said. "The court's decision allows Colorado companies the freedom to write their own employment policies regarding marijuana. Not every business will opt for zero-tolerance, but it is important that the latitude now exists to craft a policy that fits the individual workplace.”

Coffman's office participated in the argument before the state Supreme Court. Her office also filed a friend-of-the-court brief, supporting the “critical importance” of workplace drug policies for employers in Colorado, Coffman said.

The Supreme Court ruled that the state's lawful activities statute defines the term “lawful” as activities that are legal at both a state and federal level. Recreational use of marijuana is legal in Colorado, but not at a state level. So those that use the drug are not protected under the state statute, the court said.

Patent appeal board’s new pilot program hopes to reduce backlog of appeals

Jessica Karmasek — Tue, 23 Jun 2015 10:25:39 -0500

]]> WASHINGTON (Legal Newsline) - A new pilot program by the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board will allow those with multiple appeals before the board to expedite review.

The PTAB is an administrative law body of the PTO that decides issues of patentability. It was formed in September 2012 as part of the America Invents Act.

Under the board’s new Expedited Patent Appeal Pilot, announced Friday, appellants with multiple ex parte appeals pending before the PTAB can speed up review of one appeal in return for withdrawing another appeal.

According to the PTO, the pilot program will allow appellants having multiple ex parte appeals pending before the board to have “greater control” over the priority with which their appeals are decided.

The program also hopes to reduce the backlog of appeals pending before the PTAB.

The PTAB will accept petitions for participation in the pilot program until June 20, 2016, or until the board grants 2,000 petitions -- whichever occurs first.

Appellants wishing to participate in the pilot program need only make a certification and file a petition to the chief judge.

In particular, as part of the petition process, an appellant must certify that docketing notices were issued for the appeal to be made special and the appeal to be withdrawn before June 19, 2015, and that both applications underlying the identified appeals are owned by the same party as of June 19, 2015 or name at least one inventor in common.

Additionally, the appellant must agree to waive any requested oral hearing in the appeal to be made special, acknowledge that any oral hearing fees paid in connection with the appeal to be made special and any appeal fees, including oral hearing fees, paid in connection with the appeal to be withdrawn will not be refunded.

The PTO said it has waived the petition fee and provided a form-fillable PDF -- Form PTO/SB/438 -- for use in filing the certification and petition.

The PTAB said the goal is to issue a final decision on the appeal to be made special within six months from the date that the petition is filed.

For more information about the pilot program and how to participate, please click here.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

Former Hawaii AG among those recommended for federal judgeship

Jessica Karmasek — Tue, 23 Jun 2015 09:35:04 -0500

]]> WASHINGTON (Legal Newsline) - Former Hawaii Attorney General David Louie is one of three potential nominees for a federal court judgeship.

Last week, U.S. Sens. Mazie Hirono and Brian Schatz announced they have submitted recommendations to the White House for Louie, Assistant U.S. Attorney Jill Otake and private attorney Clare Connors to the U.S. District Court for the District of Hawaii.

A seat on the court will be open following Chief Judge Susan Oki Mollway’s transition to senior judge effective Nov. 6. Senior judge status is a form of semi-retirement for federal judges, who are appointed for life.

Louie, Otake and Connors were among those recommended by Hawaii’s Federal Judicial Selection Commission. The commission was created by Hirono and Schatz in March.

The seven-member commission -- three members appointed by each senator and a chair jointly agreed upon -- reviewed more than 30 applications.

Chairwoman Louise Ing, founder of Honolulu law firm Alston Hunt Floyd & Ing, said the commission took the selection of the nominees “very seriously” and are pleased with the qualifications and diverse backgrounds of the final candidates.

“The Federal Judicial Selection Commission will proudly stand behind the eventual nominee for federal district judge to represent our state and replace Judge Susan Mollway,” she said.

A short list of candidates was submitted to the senators for interviews.

“The commission’s review process coupled with our own interviews helped us identify individuals with outstanding qualifications who we believe would make excellent nominees to the court,” Hirono and Schatz wrote in their letter to President Barack Obama.

Louie, admitted to the Hawaii Bar in 1977, has practiced exclusively in Hawaii.

Most notably, he was appointed the state’s attorney general in 2011. He served through 2014.

Before becoming the state’s top lawyer, he was a trial lawyer with the Honolulu law firm of Roeca Louie Hiraoka LLP, practicing for more than 30 years in the areas of personal injury defense, construction defect litigation and commercial litigation.

Otake has spent most of her legal career in criminal litigation as a prosecuting attorney.

She began her career as a deputy prosecuting attorney for King County, Wash.

She also clerked for Hawaii Supreme Court Justice Simeon Acoba before returning to Washington to serve as an assistant U.S. attorney for the state.

Otake became an assistant U.S. attorney for Hawaii in 2014, and has served in that capacity since.

Connors, a trial attorney, began her legal career in 2001 with the Tax Division of the U.S. Department of Justice.

In 2002, she served as a clerk for Judge David Ezra, in his capacity as a judge for the District of Hawaii.

She returned to Hawaii to serve as an assistant U.S. attorney, and eventually moved to civil litigation. She continues to practice law in Hawaii.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

U.S. PTO to reexamine Invisalign maker’s patent portfolio

Jessica Karmasek — Mon, 22 Jun 2015 14:09:32 -0500

]]> WASHINGTON (Legal Newsline) - The U.S. Patent and Trademark Office has granted a request by ClearCorrect, the maker of clear, removable dental braces, to reexamine three patents assigned to its competitor, Align Technology Inc.

ClearCorrect LLC, headquartered in Round Rock, Texas, is one of the leading manufacturers of clear aligners.

The company, in its request to the PTO, asked for review of Align’s U.S. Patent Nos. 6,217,325; 8,070,487; and 6,722,880. Align, based in San Jose, Calif., makes the popular Invisalign brand aligners.

“It has been our longstanding position that Align’s patents offered nothing new or novel given the historic inventions made by orthodontists over the years.” ClearCorrect CEO Jarrett Pumphrey said last week.

According to ClearCorrect, a formal rejection of the claims of the ‘325 patent has been issued. Align must respond to this notice within two months if reversal of the office’s determination is to be pursued.

The PTO is set to issue formal rejections in the ‘487 and ‘880 patents in the weeks ahead based on some of the same evidence, ClearCorrect said in a statement.

The company has filed four reexamination requests concerning patents held by Align. Acceptance of the fourth request is expected in “due course,” ClearCorrect said.

“The U.S. PTO has found that the prior art submitted with these reexaminations is not only important in reassessing patentability of these patents, but, in fact, renders the challenged claims unpatentable,” said Scott McKeown, a partner at Oblon McClelland Maier & Neustadt LLP and lead counsel for ClearCorrect’s reexamination effort. “We look forward to the ultimate cancellation of these claims.”

Mark Gilbreth, an attorney for ClearCorrect, explained that Align’s claims are very similar and revolve around a “core concept” of orthodontic treatment that has existed for more than seven decades.

“As such, all of the patent claims ClearCorrect has challenged -- and those it intends to challenge in the future -- are unpatentable by virtue of the same prior art,” he said.

Align, in response, filed an 8-K report with the U.S. Securities and Exchange Commission. The broad form is used to notify investors of any material event that is important to either shareholders or the SEC.

The company noted in the report that the PTO’s decision to reexamine claims in its three patents is a “low-threshold standard” and only “the start of a process.”

“The reexamination process at this point is in the preliminary stage based only on arguments provided by ClearCorrect, and no final decision has been made by the U.S. PTO,” wrote Roger E. George, vice president for legal and corporate affairs, general counsel and corporate secretary for Align.

“Now Align will have the ability to respond and present its rebuttal arguments and evidence.”

George noted in the 8-K that all three patents were previously found to be valid by an administrative law judge and the commission. In fact, ClearCorrect was found to have infringed all three patents, he wrote.

The cited prior art references relied on by ClearCorrect in the reexaminations were not new and all were previously of record with the PTO, he wrote in the report.

The company seems to be confident it will prevail, noting that all previous reexamination of its patents have resulted in the patents being confirmed valid.

“Align intends to continue to expand its patent portfolio and vigorously enforce its intellectual property rights,” George wrote the commission and shareholders.

In patent law, reexamination is a process in which a third party, or inventor, can have a patent reexamined by a patent examiner to verify that the subject matter it claims is patentable.

To have a patent reexamined, an interested party must submit prior art that raises a “substantial new question of patentability.”

Prior art is defined as information made available to the public in any form before a given date that might be relevant to a patent’s claims of originality.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

Jawbone files patent infringement lawsuit against Fitbit over wearable fitness trackers

Jessica Karmasek — Mon, 22 Jun 2015 09:46:16 -0500

]]> SAN FRANCISCO (Legal Newsline) - Jawbone, known for its wearable technology, has filed a lawsuit against the maker of popular fitness tracker Fitbit for alleged patent infringement.

San Francisco-based Jawbone argues in its eight-page complaint, filed in the U.S. District Court for the Northern District of California June 10, that Fitbit’s product line infringes one or more of its patents.

In particular, Jawbone alleges that Fitbit, also based in San Francisco, is infringing on three of its patents: U.S. Patent Nos. 8,446,276 titled “General Health and Wellness Management Method and Apparatus For A Wellness Application Using Data From a Data-Capable Band,” 8,073,707 titled “System For Detecting, Monitoring, And Reporting An Individual’s Physiological Or Contextual Status,” and 8,398,546 titled “System For Monitoring And Managing Body Weight And Other Physiological Conditions Including Iterative And Personalized Planning, Intervention And Reporting Capability.”

Jawbone and fellow plaintiff BodyMedia Inc. -- which was acquired by AliphCom d/b/a Jawbone in April 2013 -- contend they have invested “heavily” in their wearable technology business.

According to the complaint, the company has spent more than $100 million in research and development related to the devices and the systems that support them.

In turn, they are seeking unspecified compensatory damages and attorneys’ fees from Fitbit, and are asking the federal court to permanently enjoin Fitbit from making, manufacturing, using, selling, importing or offering its products for sale.

Jawbone also notes that both it and BodyMedia plan to file a complaint requesting the International Trade Commission to commence an investigation against Fitbit.

The commission is an independent, quasi-judicial federal agency that directs actions against unfair trade practices, including patent infringement.

In an amended S-1 filing with the U.S. Securities and Exchange Commission last week, Fitbit said if the ITC were to determine that it infringed any of the Jawbone or BodyMedia patents, the commission could issue a preclusion order that would prevent it from importing its products into the U.S. from contract manufacturers outside of the country.

Last month, Fitbit filed papers to hold an initial public offering, hoping to raise $100 million.

“We intend to vigorously defend these litigation matters and, based on our preliminary review, we believe we have valid defenses with respect to each of these matters,” Fitbit said in its S-1 filing.

Law firm Susman Godfrey LLP is representing Jawbone.

Judge Nathanael Cousins is presiding over the case.

It is the second lawsuit in weeks filed against Fitbit by Jawbone. Jawbone filed a similar lawsuit in California state court last month.

According to the New York Times, Jawbone alleges in that lawsuit that Fitbit “plundered” confidential information by hiring Jawbone employees.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

Asbestos claimants committee calls proposed trust amount in Garlock bankruptcy ‘unfair’

Jessica Karmasek — Fri, 19 Jun 2015 10:37:17 -0500

]]> CHARLOTTE, N.C. (Legal Newsline) - Members of an asbestos claimants committee argue that the proposed trust amount in the Garlock Sealing Technologies bankruptcy proceeding is “defective, deficient and unfair” to individuals holding claims against one or more of the debtors.

The Official Committee of Asbestos Personal Injury Claimants, referred to as the ACC, submitted its preliminary objections to the confirmation of the debtors’ -- Garlock, Garrison Litigation Management Group Ltd. and The Anchor Packing Company -- second amended plan of reorganization April 30.

The committee is made up of plaintiffs’ attorneys for 12 asbestos victims appointed by the bankruptcy court. It is tasked with protecting the interests of individuals with known asbestos injuries.

Under the court’s current schedule, objections to the confirmation of the plan that do not depend on the results of voting are due Oct. 6 and confirmation objections that do depend on such results are due Dec. 18.

However, the ACC said it made its submission early on “on a preliminary, good-faith and non-preclusive basis” to aid in “framing the issues.”

Among the more than 30 reasons listed in its 13-page filing, the committee argues that the plan:

- Does not provide sufficient funding to compensate the asbestos claimants fully;

- Purports to impose an artificial cap on the debtors’ aggregate financial responsibility for asbestos claims;

- By reason of the liability cap, fails to make the debtors’ assets fully available to compensate holders of valid asbestos claims;

- Would not value claims as they would be valued outside of bankruptcy;

- Would insulate the debtors’ assets from judgments on claims, to the extent that the judgments exceed the amount of the litigation fund; and

- Is not possible to be accepted or rejected by unknown and unidentifiable persons who will be diagnosed with, or manifest, asbestos-related diseases after confirmation of a plan.

The ACC also contends the Future Claimants’ Representative, or FCR, lacks the legal capacity and authority to accept or reject a plan on behalf of future asbestos claimants, or to cast a ballot.

Last year, U.S. District Judge George Hodges ruled in favor of Garlock, ordering the gasket manufacturer to put $125 million in its bankruptcy trust, which is roughly $1 billion less than what plaintiffs’ attorneys requested as Garlock’s liability.

Hodges found that the amount of previous awards and settlements paid by the company in the civil justice system were not reliable because plaintiffs’ attorneys had withheld evidence of their clients’ exposure to asbestos-containing products manufactured by other companies in order to maximize recovery against Garlock.

FCR Joseph W. Grier III argues in a May 22 response that the ACC’s objections to the debtors’ plan are “without merit.”

Grier was appointed by Hodges just after the judge’s Jan. 10, 2014 ruling. He represents the interest of the holders of future asbestos personal injury claims against the debtors.

“Under the Plan, all asbestos claimants have the option of applying for a settlement offer from an asbestos trust governed by claims resolution procedures (the ‘CRP’), or exercising their jury trial rights and litigating their claims against the Debtors,” Grier notes in his 18-page filing.

“The goal of the CRP is to treat similarly-situated claimants fairly, both present and future, in a transparent and objective manner. The CRP requires claimants seeking a settlement offer to allege that they were exposed to asbestos fibers in the Debtors’ products from activities that have the potential to release such fibers, such as cutting, scraping, or brushing.

“This is consistent with the Debtors’ prepetition settlement practice, tort law, and this Court’s findings in its Order Estimating Aggregate Liability.”

Grier notes that the current plan provides for payment of $500 million over time, made up of: $327.5 million for the asbestos settlement trust; $30 million for the asbestos litigation fund, with a further $132 million available if needed; and another amount, not yet fixed, to pay prepetition allowed settled claims in full.

“The plaintiff firms that control the ACC in this and other cases have not been shy about advancing their own interests and those of current claims at the expense of future claims,” he wrote.

“In fact, the history of bankruptcy asbestos litigation is punctuated with case after case where courts have been called upon to rein in such discriminatory behavior or to address its consequences.”

Grier argues that it is both “right and proper” that the holders of future claims should have a legal representative in these cases, first and foremost because future claims are the largest creditor group.

“In its Preliminary Objections, the ACC argues that future claimants are unknown and unidentifiable persons and therefore it is not physically possible for them to cast a ballot accepting or rejecting a plan of reorganization,” he wrote. “It is true, of course, that future claimants are unknown and unidentifiable at this time. But that is exactly why the Court appointed the FCR -- to protect such claimants.”

The ACC’s arguments, Grier contends, “cannot be squared” with the actual language of the appointment order.

“The ACC wants to amend the Appointment Order to say: ‘The FCR shall not appear on behalf of future claimants; the FCR is not a fiduciary to future claimants; the FCR is not required to protect the rights of future claimants, including their right to vote; and the FCR may not accept or reject any plan of reorganization in these cases on behalf of future claimants,’” he wrote.

“The Appointment Order says none of those things. The ACC’s objection founders on that reality.”

Garlock, in its 15-page response, also filed May 22, argues that the committee’s legal positions are “incorrect.”

“Under the Committee’s view of the world, this case will not end until current claimants say that it can, with distribution procedures of their choosing,” attorneys for the company wrote.

“The Plan pays all claimants in full, and provides more than $357.5 million to pay asbestos claims -- nearly triple the $125 million this Court found would be sufficient to satisfy current and future mesothelioma claims (which comprise the bulk of Garlock’s asbestos liability).

“The Plan distributes these funds under procedures that will prevent the problems that plagued Garlock’s mesothelioma litigation outside of bankruptcy: suppression of material exposure evidence in cases against Garlock, and settlements inflated by the crushing cost of defending against thousands of mesothelioma claims that had little merit.”

Just as important, Garlock argues, the plan will distribute funds equally to current and future asbestos claimants -- a “perennial challenge” in mass tort bankruptcy cases where those claimants are inherently adverse, the company notes.

“The CRP are carefully designed to pay only claimants meeting legitimate medical criteria who offer evidence that they worked in a meaningful way with a Garlock product,” attorneys for the company wrote. “The CRP thereby avoid paying frivolous claims that could dilute assets set aside for future claimants, which is a problem that has prevented other trusts from providing equal treatment to future claims.

“Debtors formulated and filed the Plan based on vigorous negotiations with the FCR during the 12 months following entry of the Estimation Opinion. He is satisfied that it protects the rights of future asbestos claimants.”

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

GOP state senator to run for Pa. AG

Jessica Karmasek — Fri, 19 Jun 2015 08:35:55 -0500

]]> HARRISBURG, Pa. (Legal Newsline) - Republican state Sen. John Rafferty has decided to run for Pennsylvania attorney general.

Rafferty made his announcement Wednesday, according to the Pittsburgh Tribune-Review.

Current Attorney General Kathleen Kane, the first woman and Democrat elected attorney general, has said she will seek re-election.

Rafferty, a former state deputy attorney general, was re-elected to a fourth term in the Senate in November 2014. He represents residents in the state’s 44th District, which includes parts of Berks, Chester and Montgomery counties.

He currently serves as chairman of the Senate Transportation Committee, vice chairman of the Judiciary Committee, and is a member of Appropriations, Consumer Protection and Professional Licensure, and Law and Justice committees.

Prior to his time in the Senate, Rafferty served as an attorney in private practice, focusing on education, real estate, zoning and business, and estates law.

As deputy attorney general for the state from 1988 to 1991, he worked in the Criminal Law Division.

He earned his undergraduate degree from the University of Pittsburgh at Johnstown, his master’s degree from Beaver College, and his law degree from Temple University.

“Unfortunately, there’s been a black cloud over the attorney general’s office of late,” Rafferty said Wednesday, according to the Tribune-Review. “Resources have been committed to addressing other issues that have arisen in that office.

“I want to bring integrity back to that office. I want to bring responsibility back to that office.”

Kane, in her short time in office, has been mired in legal problems.

Among her troubles: her relationship with plaintiffs law firm Cohen Milstein Sellers & Toll.

Since 2010, Cohen Milstein has donated $71,000 to 16 different campaigns, according to a search of FollowTheMoney.org. Of those candidates, 13 would go on to win their state’s general election.

Some of the firm’s largest donations went to: Missouri Attorney General Chris Koster, $5,000; Oregon Attorney General Ellen Rosenblum, $10,000; New Mexico Attorney General Hector Balderas, $5,000; and Kane, $10,000.

Cohen Milstein’s relationship with Kane came to the forefront in April when a group of nursing home operators filed a lawsuit in Pennsylvania’s Commonwealth Court trying to kill the firm’s apparent deal with the Attorney General’s Office.

The dozens of owners and operators of long-term care facilities in the state, which filed their petition for review April 2, argue that the attorney general has overstepped her bounds in investigating skilled nursing facilities’ staffing levels and hiring Cohen Milstein to help conduct the investigation.

“The General Assembly has not granted OAG the jurisdiction to investigate SNF staffing levels, nor has it delegated to OAG the authority to litigate against SNFs based on OAG’s assessment of the sufficiency of nursing staff. Rather, the General Assembly has authorized (the Pennsylvania Department of Health) to exercise exclusive jurisdiction over the investigation, monitoring and enforcement of regulations against SNFs,” the operators wrote in their 46-page petition.

“The OAG’s issuance of the subpoenas, its investigation of the sufficiency of nurse staffing levels at Petitioners’ SNFs and its pursuit of litigation against Petitioners is improper and in derogation of the exclusive authority of PA DOH. As such, the Subpoenas are invalid, and Respondents Kane, OAG and Cohen Milstein should not be allowed to continue this unlawful investigation of nursing staff levels at Petitioners’ SNFs.”

The operators -- certified providers under federal Medicare and Medicaid programs, with at least 10,995 licensed beds in the state -- contend the subpoenas seek information strictly for purposes of litigation.

“Given the terms of the contingent fee agreement between Cohen Milstein and OAG, including the financial arrangements and incentives contained therein, as well as Cohen Milstein’s and OAG’s conduct in these investigations thus far, discussed in detail below, it is evident that litigation against petitioners is intended, imminent and inevitable,” they wrote.

The operators also argue that Kane’s delegation of authority to the law firm is improper because it gives the firm a financial stake in pursuing litigation against them.

“Cohen Milstein seeks to enrich itself through large contingent fees based on litigation claims made against petitioners in the name of OAG,” they wrote.

“The investigation by Respondent Kane, OAG and Cohen Milstein was not prompted by any material consumer complaints to OAG for allegedly insufficient care, but rather was initiated by Cohen Milstein to extract legal fee recoveries, as reported in the New York Times and other sources.”

The operators continued, “This Cohen Milstein-driven investigation is an effort to create a ‘problem’ where none exists in a search for profits for itself.”

Jeffrey Johnson, assistant press secretary for Kane’s office, told Legal Newsline that the attorney general received the petition, was reviewing it and “will act accordingly.”

Kane’s potential Democratic challengers are former state Rep. and Montgomery County Commissioner Josh Shapiro and Philadelphia District Attorney Seth Williams.

State Rep. Todd Stephens reportedly also is considering a run in the GOP primary.

The state’s primaries tentatively are set for April 26, 2016. The general election will be held Nov. 8, 2016.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

Pharmaceutical company allegedly sent illegal fax advertisements

Shaun Zinck — Thu, 18 Jun 2015 14:22:38 -0500

]]> ORLANDO, Fla. (Legal Newsline) - A pharmaceutical company is accused of violating federal law by sending unwanted fax messages soliciting services.

Dr. Guy Yves Pelchat. whose principal place of business is Melbourne, Fla., filed the lawsuit June 12 in U.S. District Court Middle District of Florida-Orlando Division against Prevention Pharmaceuticals, alleging it violated the Telephone Consumer Protection Act when it sent fax message advertisements.

The advertisements marketed a variety of nutraceutical products including omega 3 fish oil.

The suit said the advertisements didn't include “legally required opt-out language.” According to the lawsuit, federal law requires companies that send advertisements via fax messaging must include a “clear and conspicuous opt-out notice stating that the recipient may make a request to the sender not to send any future faxes and that failure to comply with the request within 30 days.”

The lawsuit seeks class status for those who received a fax message from Prevention Pharmaceuticals. It also seeks an unspecified amount in damages plus court costs.

Pelchat is represented by attorneys Shawn A. Heller and Joshua A. Glickman of the Social Justice Law Collective, in Washington, D.C.; and by Peter Bennett and Richard Bennett of Bennett & Bennett in Coral Gables, Fla.

United States District Court Middle District of Florida Orlando Division case number 6:15-cv-00957.

'All natural' label on Capri Sun products puts Kraft Foods in court

Shaun Zinck — Thu, 18 Jun 2015 14:01:39 -0500

]]> SAN FRANCISCO (Legal Newsline) - A major food company is accused of mislabeling some of its popular juice brands as “all natural.”

Yuri Osborne, of Contra Costa County, Calif., filed the lawsuit June 12 in U.S. District Court for the Northern District of California against Kraft Foods Group, alleging its Capri Sun juices contain artificial ingredients.

The lawsuit said four of the Capri Sun flavors, apple, berry, fruit punch and grape, contained citric acid or “natural flavor” as an ingredient, which is considered an artificial ingredient. “Simply put, the products are not 'all natural' because they contain unnatural ingredients,” the lawsuit said.

The suit alleges Kraft labeled the products as all natural in order to mislead customers into believing the juices were healthier than they actually were.

“The market for all natural foods has grown rapidly in the past few years, a trend [Kraft] seeks to take advantage of through the subject false and misleading advertising,” the lawsuit said.

The lawsuit seeks class status for those that purchased Capri Sun within four years of the filing of the suit. Osborne also seeks more than $5 million in damages plus court costs. He is represented by attorney Benjamin M. Lopatin of Eggnatz, Lopatin & Pascucci in San Francisco.

U.S. District Court for the Northern District of California case number 3:15-cv-02653.

Chipotle sued over using consumer reports to hire employees

Shaun Zinck — Thu, 18 Jun 2015 13:42:24 -0500

]]> CHICAGO (Legal Newsline) - A popular Mexican restaurant is being sued over allegations that it illegally used background checks to determine whether to hire certain people.

George Correa filed the lawsuit June 12 in U.S. District Court in Illinois against Chipotle Mexican Grill claiming the restaurant used his criminal background check to deny him a job at one of its locations after it had already hired him.

The lawsuit claims the federal Fair Credit Reporting Act requires businesses to provide a written document explaining the applicant's rights, a “pre-adverse action disclosure” that includes a copy of the potential employee's consumer report, and the opportunity to challenge any of the reported information.

The suit said Chipotle hired Correa in April, but after the consumer report came back with his criminal background in May the restaurant told him it could no longer employ him.

According to the lawsuit, Chipotle agreed with the company that did the background check that it would provide Correa a copy of the consumer report. However, the lawsuit claims the restaurant didn't provide him a copy.

The lawsuit is seeking class status for others who were denied employment based on their consumer report. Correa is also seeking an unspecified amount in damages.

He is represented by Matthew J. Piers and Christopher J. Wilmes of Hughes Socol Piers Resnick & Dym, Ltd. of Chicago and Alejandro Caffarelli of Caffarelli & Associates Ltd., also in Chicago.

U.S. District Court for the Northern District of Illinois Eastern Division case number 1:15-cv-05179.

Patent law firm alleges company hasn't paid fees

Shaun Zinck — Thu, 18 Jun 2015 13:34:26 -0500

]]> SANTA ANA, Calif. (Legal Newsline) - A national law firm is suing a company it agreed to represent, alleging failure to pay legal fees associated with the representation.

Maschoff Brennan Laycock Gilmore Israelsen & Wright filed the lawsuit June 10 in U.S. District Court Central District of California Southern Division against PilePro, which has its principal offices in Austin, Texas.

The lawsuit said Maschoff and PilePro entered into an agreement in October in which the law firm agreed to represent the company in a legal dispute with a business in New York, and in another legal issue involving the U.S. Patent and Trademark Office.

The complaint states in January the law firm filed a motion to withdraw its representation of PilePro and the motion was granted March 5. The firm also motioned to withdraw representation over the patent issue, and that motion was granted in April, the lawsuit states.

The suit says PilePro owes Maschoff Brennan about $352,997, which includes attorney fees, court filing fees and copy fees. The law firm also seeks $75,000 in damages plus the court costs associated with filing the lawsuit. The firm is represented by its own attorneys, Sterling A. Brennan and Tyson K. Hottinger, based in its Irvine, Calif., office.

U.S. District Court Central District of California Southern Division case number 8:15-cv-00915.

Hertz charged 'unethical fees,' class action says

Shaun Zinck — Thu, 18 Jun 2015 13:31:47 -0500

]]> EAST ST. LOUIS, Ill. (Legal Newsline) - A major rental car company is facing accusations in a class action lawsuit that it charged customers “unethical fees” to rent their vehicles.

Dawn Cooks and Emma Bradley filed the lawsuit on May 1 in St. Clair County Circuit Court in Illinois against Hertz Corp., claiming they were “compelled” by Hertz to pay two types of fees. The defendant removed the case to federal court on June 10.

One of the fees is the “energy surcharge” and the other is a fee to recover the cost of vehicle registration, the lawsuit said. The fees are charged in both Illinois and Missouri, and are “improper, deceptive and unethical,” according to the lawsuit.

Hertz said the fees are to reimburse it for some costs, but the plaintiffs claim the fees charged “greatly exceed” the costs and are meant to generate the company a profit.

The lawsuit claims Hertz instituted the energy surcharge fee in order to offset rising energy costs. However, the fee was allegedly imposed when energy costs were going down, the lawsuit claims.

The plaintiffs are seeking class action for those in Illinois and Missouri who rented cars from Hertz. The suit is also seeking an unspecified amount in damages.

The plaintiffs are represented by Richard S. Cornfeld of the Law Office of Richard S. Cornfeld in St. Louis; Richard S. Bender and David G. Bender of Rosenblum Goldenhersh in St. Louis; and Anthony S. Bruning and Anthony S. Bruning Jr. of Leritz, Plunkert & Bruning, P.C. of St. Louis.

Sears allegedly performed illegal background checks

Shaun Zinck — Thu, 18 Jun 2015 13:22:19 -0500

]]> KANSAS CITY, Mo. (Legal Newsline) - A Missouri man is suing a major retailer for allegedly improperly using consumer reports to determine employment for applicants.

Scott Hopfinger, of Raytown, filed the lawsuit May 8 in Cole County Circuit Court in Missouri against Sears Roebuck, alleging the company violated the Fair Credit Reporting Act when it used consumer reports and background checks on employees.

The defendant removed the case to federal court on June 10.

The suit said the illegal acts were done when Sears failed to provide written documentation that it might complete a consumer report and background check on potential employees. The plaintiff alleges the company has based employment solely on the consumer report.

Hopfinger said he was offered a job Sept. 19 and completed a disclosure form. However, the application was not completed even a month after being verbally offered the job, the suit says, and it wasn't until Oct. 25 that Sears' human resources said it wasn't hiring Hopfinger due to his background check.

The suit seeks class status for those who applied to work at Sears Roebuck starting May 6, 2013, running through the present. The suit also seeks an unspecified amount in damages, plus court costs. Hopfinger is represented by attorneys Charles Jason Brown and Jayson A. Watkins of Brown & Associates in Gower, Missouri.

Goodlatte’s Innovation Act passes House committee, with some tweaks

Jessica Karmasek — Thu, 18 Jun 2015 11:21:29 -0500

]]> WASHINGTON (Legal Newsline) - Members of a House panel on Thursday approved one of the more aggressive pieces of patent reform legislation floating around Congress, the Innovation Act.

The U.S. House Judiciary Committee voted 24-8 in favor of H.R. 9, which was reintroduced by committee chairman Bob Goodlatte, R-Va., in February.

The vote came after what was described by some as a “marathon” markup of the legislation, in which 20 different amendments were proposed, including Goodlatte’s manager’s amendment.

Among those notable changes made to the bill was a new provision that would crack down on “unreasonable” venue shopping by so-called patent “trolls.”

The panel, during the markup, called out the U.S. District Court for the Eastern District of Texas, which over the years has become a plaintiff-friendly venue for patent lawsuits.

Other adjustments to the legislation included a rewrite of a provision that would limit early discovery and adding language to make sure universities won’t have to pay trolls’ legal bills.

Some other tweaks were made to heightened pleading requirements and the bill’s customer stay provision.

“At its core, abusive patent litigation is a drag on our economy and stifles innovation,” Goodlatte said. “It is a problem that impacts businesses and industries of all types and the jobs of the people who work for them, from the tech sector to the hospitality industry and even grocery stores. Everyone from independent inventors, to start-ups, to mid-and large-sized businesses face this constant threat.

“The tens of billions of dollars squandered on settlements and litigation expenses associated with abusive patent suits represent truly wasted capital -- capital that could have been used to create new jobs, fund research and development, and create new innovations and technologies.

“The Innovation Act takes the necessary steps to address abusive patent litigation, while protecting legitimate property rights.”

Reaction to the bill’s committee passing was mixed.

The Software and Information Industry Association, the principal trade association for the software and digital content industries, applauded the panel’s approval.

“Today’s action was an important step forward for patent reform and a positive sign that Congress can get patent litigation abuse legislation passed this year,” SIIA Vice President of Public Policy Mark MacCarthy said. “Abusive patent litigation is a significant drain on the American economy and it is doing real harm to innovation in our country.

“In particular, we were pleased to see that the committee was able to come to an agreement on venue and discovery, and that members expressed a commitment to address the pleading provision. We are also thankful to the committee for maintaining the existing inter partes review (IPR) program.”

The United for Patent Reform coalition -- a vocal supporter of the House legislation -- said it believes the “carefully crafted” compromises on venue and discovery will have a “significant” impact in deterring abusive litigation.

“The coalition is grateful to the committee for recognizing the scope of the damage caused by patent trolls and the need for Congress to take swift action to address the issue with a package of reforms designed to inhibit the patent troll business model and create a fair legal system for American businesses,” it said in a statement.

The Consumer Electronics Association called the bill “balanced” and “common-sense,” noting the changes made to venue, discovery and pleading provisions.

“The money that a business must spend on legal bills to fight off trolls is funding it can’t invest in developing new products or creating new jobs,” CEA President and CEO Gary Shapiro said. “The Innovation Act will stop this legalized extortion of American innovators and free our small businesses from the burden of bogus lawsuits.”

The Application Developers Alliance also expressed its support for the venue provision, which makes it so a non-practicing entity can only file lawsuits in courts that are located where it or the defendant has legitimate standing.

“No longer will trolls be able to rent empty offices in small towns just to file their frivolous lawsuits in plaintiff-friendly courts,” Alliance President Jon Potter said.

However, the group said the bill still does not address the problem of abusive patent demand letters or vague lawsuit pleadings.

The alliance wants NPEs to disclose all details of infringement assertions early and accurately -- in demand letters and in judicial complaints.

Other groups contend even more improvements need to be made before the bill can hit the House floor.

“While we appreciate the spirit of H.R. 9 and share the mutual goal of deterring abusive behavior plaguing our patent litigation system, we cannot support the bill in its current form,” said Bobby Franklin, president and CEO of the National Venture Capital Association. “Absent additional modifications, we believe H.R. 9 will create unintended consequences that will discourage investment in innovation and entrepreneurship by making it more difficult for any patent-reliant startup to defend their intellectual property.

“The net result would have a chilling effect on the innovation ecosystem, threatening the crown jewel of the broader U.S. economy and a key driver of American job creation.”

Brian Pomper, executive director of Innovation Alliance, a group made up of research and development-focused companies, contends the bill needs “significant work” before it can move forward.

“Despite concerns raised by a broad coalition of universities, inventors, manufacturing technology and life science companies, venture capitalists, startup communities and others, as well as bipartisan concerns raised by members of Congress, the bill still includes numerous overly-broad and harmful provisions that need to be addressed,” he said.

“In its current form, the Innovation Act would dramatically weaken intellectual property rights, crippling the ability of legitimate patent owners to protect their ideas and undermining innovation and job creation in our country. It would increase the time and cost of all patent litigation, making life harder for inventors and investors and easier for patent infringers, including foreign competitors in China and other countries with weak patent protections.

“We urge Congress to either fix the troubling provisions in this bill or pursue alternative targeted legislation, such as the TROL Act in the House or the STRONG Patents Act in the Senate, that would address abuses while strengthening our critical patent system.”

Erik Telford, president of The Franklin Center for Government and Public Integrity, had even stronger words for the legislation, saying it represents “everything that’s wrong in American politics today.”

“It’s discouraging and disappointing to see members of Congress capitulating to President Obama’s efforts to advance the interests of his Silicon Valley cronies, like Google and his other campaign donors, to push legislation that will severely undermine American innovation,” he said. “That is why voices across the ideological spectrum have spoken out against the attempts to rush passage of this so-called reform.

“The solutions being proposed are like demolishing your house because your dishwasher is broken. To be sure, there are necessary reforms which can and should be made to target nefarious actors in the patent space.”

Telford argues that the Senate’s PATENT Act, which cleared the Senate Judiciary Committee last week, isn’t much better.

“We must protect property rights through policies that advance the interests of all American inventors, driving economic growth for our own country, not those of rivals like China,” he said.

It’s unclear when the bill will head to the House floor.

Significant differences remain between the legislation and PATENT Act -- in particular, a fee-shifting provision.

Both lawmakers and stakeholders have said the Senate version is more balanced.

To watch a webcast of the markup, view the amendments proposed during Thursday’s hearing or see a complete list of who voted for and against the bill, click here.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

Colorado joins more than two dozen states in enacting patent troll legislation

Jessica Karmasek — Thu, 18 Jun 2015 11:16:19 -0500

]]> DENVER (Legal Newsline) - Colorado Gov. John Hickenlooper has signed into law a bill aimed at combating so-called patent “trolls.”

Hickenlooper signed the legislation, HB 1063, June 5, along with more than a dozen other bills.

The bill, introduced in January by state Rep. Dan Pabon, D-Denver, and Sen. David Balmer, R-Centennial, ensures legitimate patent infringement cases can proceed while giving the state Attorney General’s Office enforcement authority when allegations and communications -- i.e. demand letters -- have been made in bad faith.

Previously, such litigation was considered a private matter and therefore state prosecutors had no such power.

Generally speaking, a non-practicing entity, patent assertion entity or patent monetization entity purchases groups of patents without an intent to market or develop a product.

In some cases, but not all, the entity then targets other businesses with lawsuits alleging infringement of the patents it bought. Often, these are referred to as patent “trolls.”

The new state law has garnered the support of the Colorado Competitive Council, Colorado Bankers Association and the Colorado BioScience Association.

According to the National Conference of State Legislatures, a total of 19 states have introduced legislation to create or amend state laws that punish bad faith assertions.

Eight states, including Colorado, have enacted legislation this year alone.

In total, 26 states have enacted such bills since 2013, when Vermont became the first state to pass legislation. Patent law traditionally is a federal issue.

Congress also is tackling the issue.

Both the U.S. House of Representatives’ Innovation Act and the Senate’s Protecting American Talent and Entrepreneurship, or PATENT, Act cleared their chambers’ judiciary committees recently.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

Companies file lawsuit against Bed Bath & Beyond over Bunch O Balloons patent

Jessica Karmasek — Thu, 18 Jun 2015 09:33:56 -0500

]]> TYLER, Texas (Legal Newsline) - Bed Bath & Beyond, along with popular direct television marketing company Telebrands Corp., is being sued in a Texas federal court over a product the retailer sells called Balloon Bonanza.

Last week, Tinnus Enterprises LLC and Zuru Ltd. filed a patent infringement lawsuit against the companies in the U.S. District Court for the Eastern District of Texas -- one of the most plaintiff-friendly courts for patent lawsuits.

Tinnus and Zuru allege that Telebrands’ product, Balloon Bonanza, which is sold by the domestic merchandise retailer, infringes the patent recently issued to Tinnus -- U.S. Patent No. 9,051,066 -- for Bunch O Balloons.

The product, a hose attachment with 37 pre-connected balloons that automatically fill and tie themselves, has become increasingly popular and often can be seen on television commercials.

The system makes it easier for children to prepare water balloons -- Bunch O Balloons touts it can produce up to 100 water balloons in just one minute.

According to the June 9 complaint, in early 2014 Josh Malone, a father of eight, invented the product and then launched it on crowd-fund website Kickstarter last summer, raising nearly $1 million to date.

Later, Malone assigned the ‘066 patent to his Plano, Texas-based company, Tinnus, which, in turn, granted exclusive rights to Zuru, which is headquartered in China.

The 12-page complaint alleges that Telebrands “engaged in a scheme to copy and mimic the extremely successful Bunch O Balloons product,” and continued to market an infringing product in spite of Zuru’s cease-and-desist letters.

“Telebrands began marketing its copy of Bunch O Balloons in mid-December 2014 -- almost five months after Mr. Malone first introduced Bunch O Balloons to the public in his wildly successful Kickstarter campaign,” according to the lawsuit.

Telebrands, the lawsuit states, is no stranger to litigation.

According to the complaint, public records indicate the defendant -- the self-described creator of the "As Seen On TV" logo -- has been sued more than 50 times since 1983 for infringement of intellectual property rights.

The company’s CEO and founder, Ajit Khubani, often is referred to as the “Knock-Off King” within the infomercial industry.

The lawsuit also notes that the Better Business Bureau’s board of directors has revoked Telebrands’ status as an “accredited business.”

Tinnus and Zuru have asked the court to issue an injunction and an award of treble damages for willful infringement.

Attorneys with Dunlap Bennett & Ludwig PLLC in Leesburg and Richmond, Va., and the Tyler, Texas, law firm Findlay Craft PC are representing the plaintiffs.

Judge Robert W. Schroeder III is presiding over the case.

Telebrands could not immediately be reached for comment.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

Calif. jury awards $4.5 million to plaintiff in case against hip implant maker

Jessica M. Karmasek — Wed, 17 Jun 2015 14:20:42 -0500

]]> LOS ANGELES (Legal Newsline) - Last week, a California jury awarded the plaintiff in the first Wright Medical hip implant lawsuit to go to trial $4.5 million.

Attorneys for plaintiff Alan Warner argued in the product liability lawsuit that the laser etchings made on Wright’s Profemur R hip implant -- used to help doctors properly place the implant during surgery -- caused it to become brittle and break.

The implant used in Warner snapped while he stood in his kitchen in 2010. As a result, Warner, a senior citizen, experienced numerous dislocations and infections, and required more than a dozen major surgeries.

Wright argued, during the two-week trial, that the problem mostly lie with the surgeon who placed Warner’s implant.

According to a Courtroom VIew Network webcast of the trial, which can be viewed here, the jury awarded Warner $4 million for past and future pain and suffering, and $500,000 to his wife for loss of consortium.

The 12-member jury deliberated for a day before issuing its 9-3 decision. The jurors said the company’s design was not at fault, but that the implant used was defective.

The case is the first of more than 1,000 involving the company to go to trial anywhere in the country. Most of the other lawsuits claim metal components in the implants ground together and released toxins into the bloodstream.

The Vartazarian Law Firm in Sherman Oaks, Calif., and Denver-based Warshauer-McLaughlin Law Group PC represented the plaintiff.

“Nobody has ever gone up against [Wright] in trial, and I finally decided that I’m going to do it, and we did, and we won,” Steve Vartazarian told CVN. “It’s possible to take them down.”

Wright is represented by Chicago law firm Howard & Howard and San Diego firm Kirby Noonan Lance & Hoge LLP.

A spokeswoman for Wright said the company expects to appeal the jury verdict.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

Bank of America sued for allegedly manipulating foreign exchange market

Shaun Zinck — Wed, 17 Jun 2015 13:25:20 -0500

]]> A major bank is being accused of manipulating the foreign exchange rates and affecting the future market prices in a class action lawsuit.

Robert Teel filed the lawsuit against Bank of America Corporation in the U.S. District Court for the Southern District of New York June 9. He claims the company manipulated what is called the exchange-trade foreign exchange spot market.

Affecting the price of the spot market is reflected in the futures prices of the foreign exchange, according to the lawsuit.

“Changes in spot market prices are immediately and correspondingly reflected in (foreign exchange) futures prices,” the lawsuit states. “As such, manipulation of the (foreign exchange) spot market is also a manipulation of the (foreign exchange) futures prices.”

The lawsuit claims, due to the manipulation, investors and traders such as Teel are trading on artificial numbers. The plaintiff is seeking class status for those who were engaged in the foreign exchange, and is also seeking an unspecified amount in damages.

He is represented by Louis F. Burke and Leslie Wybiral of Louis F. Burke PC in New York City; Michael Brickman of Richardson, Patrick, Westbrook & Brickman LLC in Charleston, S.C.; and James C. Bradley and Nina Fields Britt of the same law firm in Mount Pleasant, S.C.

U.S. District Court Southern District of New York case number 1:15-cv-04436

3D printing company misled investors, shareholder says

Shaun Zinck — Wed, 17 Jun 2015 13:19:26 -0500

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The City of Bristol Pension Fund filed its lawsuit against 3D Systems Corporation in the U.S. District Court for the District of South Carolina June 12. It claims the company failed to accurately portray its ability to increase the capacity of its metal printing business.

The lawsuit also alleges 3D Systems misled investors over the demand it had for consumer products, its earnings expectations and the value of the companies it was acquiring.

The company said in October 2013 it planned to triple the manufacturing capacity over the following 12 months. However, the lawsuit states the company had no way to prove that it could triple the printing capacity.

In July 2014, revenues for the company were below expectations and, as a result, stock fell 11 percent. The lawsuit claims the fall in stock price is due to the company's misleading statements.

The lawsuit is seeking class status for those who owned 3D Systems stock between Oct. 29, 2013 and Oct. 22, 2014.

The plaintiffs are represented by Chris Moore, Terry E. Richardson and Daniel Scott Haltiwanger of Richardson, Patrick, Westbrook & Brickman LLC in Barnwell, S.C.; Joseph P. Guglielmo, Donald A. Broggi and Thomas L. Laughlin of Scott+Scott, Attorneys at Law, LLP in New York City; and David R. Scott of the same law firm in Colchester, Conn.

U.S. District Court District of South Carolina Rock Hill Division case number 0:15-cv-02393

Class action lawsuit claims body imaging center illegally solicited services through phone calls

Shaun Zinck — Wed, 17 Jun 2015 13:13:37 -0500

]]> LOS ANGELES (Legal Newsline) - A class action lawsuit claims a body imaging center in California illegally contacted people through their telephones.

Kevin Amini and Mona Amini filed the lawsuit June 10 in U.S. District Court in California against Heart Savers, claiming the company violated the Telephone Consumer Protection Act by contacting cellphone numbers soliciting services.

The plaintiffs said in the lawsuit they were each contacted on their cellphones by Heart Saver at least five times over a seven-day period in April via an automatic telephone dialing system. Each time they were contacted, the plaintiffs left a message with the company asking to be taken off the company call lists, they say.

The suit further said Heart Saver didn't have the plaintiffs' permission to contacting them using an automatic telephone dialing system.

The plaintiffs are seeking class status for those who received unwanted solicitation calls from Heart Saver within the last four years. The plaintiffs are also seeking more than $5 million in damages plus court costs.

The plaintiffs are represented by Todd M. Friedman, Suren N. Weerasuriya and Adrian R. Bacon of the Law Offices of Todd M. Friedman, P.C. in Beverly Hills.

U.S. District Court for the Central District of California case number 8:15-cv-00916.

Walmart reaches settlement in class action lawsuit over cornstarch label

Shaun Zinck — Wed, 17 Jun 2015 13:05:09 -0500

]]> TAMPA, Fla. (Legal Newsline) - A class action lawsuit has been settled with Walmart over the labeling of one of its cornstarch products, the law firm DLA Piper LLP recently announced.

The proposed settlement means those who purchased the Walmart brand Great Value All-Natural Cornstarch could be eligible for a cash refund. The lawsuit claimed Walmart mislabeled the cornstarch as “All-Natural,” and the label misled customers into buying the product.

The suit claimed the cornstarch actually contained genetically modified organisms. The Karlin Foods Corp., which was named as a defendant in the lawsuit, has denied any wrongdoing, and stated there are no state or federal regulations that prohibit products that contain genetically modified organisms from being labeled as “all-natural.”

Those who purchased the cornstarch product could be eligible for a $1 refund per purchased product, up to $2 without proof of purchase and up to $8 with a proof of purchase. Refunds are only eligible for those who purchased the cornstarch within the class period, which begins on Aug. 22, 2010, up until the present.

There is $825,000 in the settlement fund.

While a federal court authorized notifying potential class members, the court will still need to schedule a hearing to decide whether or not to approve the settlement with Walmart.

Children's National Medical Center paying $13M False Claims Act settlement

Shaun Zinck — Wed, 17 Jun 2015 12:58:17 -0500

]]> WASHINGTON (Legal Newsline) - A Washington, D.C.-based pediatric care center will pay the United States $12.9 million to settle a lawsuit accusing the center of filing false claims with the Department of Health and Human Services, Benjamin Mizer, principal deputy assistant attorney for the U.S. Department of Justice said.

Children's National Medical Center agreed to the terms on Monday, and the settlement will resolve the suit that alleged it also falsely billed the Virginia and District of Columbia Medicaid programs.

“The false reporting alleged in today’s settlement deprived the Medicare Trust Fund of millions of taxpayers’ dollars,” Mizer said. “Such conduct wastes critical federal health care program funds and drives up the costs of health care for all of us.”

The false reports filed to the Medicaid programs in Virginia and D.C. were used to reimburse the medical center, it is alleged. The federal government accused CNMC of misreporting the number of available beds on its application to the health department.

The government also claimed the medical center misstated its overhead costs, which resulted in the overpayment of Medicare funds and Medicaid funds from Virginia and the District of Columbia.

“The integrity of federal health care programs depends on honest and accurate reporting from the hospitals and other health care providers that receive hundreds of billions of tax dollars every year,” said Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia. “This settlement demonstrates our commitment to defending the integrity of the system and ensuring that taxpayer money goes to meet the most critical health care needs.”

Calif. AG announces new debt relief tool for former Corinthian College students

Shaun Zinck — Wed, 17 Jun 2015 12:57:07 -0500

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The relief options were granted by the U.S. Department of Education, and the new tool will mean a large majority of students who went to Corinthian's California Heald College will be eligible for a streamlined loan forgiveness process.

About 40,000 former Heald students received loans worth an estimated $500 to $600 million since 2010 could be eligible, Harris said.

After students answer a series of questions they will receive a personalized resource sheet that can be downloaded or emailed. The sheet provides information to the students about different types of loan relief that they could qualify for, information on free legal aid organizations and other information about “cost-effective” education resources near them.

Last week, the Department of Education expanded the debt relief options for former students at Corinthian. The department extended the window to June 20, 2015 for students who withdrew from a Corinthian College.

The move is in response to a letter sent by Harris and eight other state attorneys general calling for immediate debt relief for students who went to Corinthian Colleges.

MDL panel decides to consolidate Lumber Liquidators class actions

Jessica M. Karmasek — Wed, 17 Jun 2015 10:00:51 -0500

]]> ALEXANDRIA, Va. (Legal Newsline) - The U.S. Judicial Panel on Multidistrict Litigation last week decided to consolidate at least 10 actions filed over a line of Chinese wood flooring sold by Lumber Liquidators that plaintiffs allege emit “excessive levels” of formaldehyde.

The six-member panel issued its three-page transfer order Friday.

“After considering the argument of counsel, we find that the actions in this litigation involve common questions of fact, and that centralization in the (U.S. District Court for the) Eastem District of Virginia will serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation,” wrote Sarah S. Vance, chair of the panel.

“All actions involve common factual questions regarding whether Lumber Liquidators falsely represented that its Chinese-manufactured laminate flooring complied with Califomia Air Resources Board standards and other legal requirements governing the emissions of formaldehyde.

“Centralization will eliminate duplicative discovery, avoid inconsistent pretrial rulings (including on issues of class certification and Daubert motion practice), and conserve the resources of the parties, their counsel and the judiciary.”

The plaintiffs in the class actions contend their flooring purchases, which were installed in their homes, are now “markedly less valuable.”

The panel’s order affects at least 10 class action lawsuits, but more than 100 related, or tag-along, actions could be transferred into the MDL.

Vance, in the order, shot down the suggestion by some plaintiffs, who supported transferring the actions to other districts, that the MDL wasn’t suited to the speed of the Eastern District of Virginia’s “rocket docket.”

The term refers to a court or other tribunal that is noted for its speedy disposition of cases, often by maintaining strict adherence to the law as it pertains to filing deadlines.

“When pressed at oral argument, however, plaintiffs failed to articulate precisely how proceeding at an expeditious pace would prejudice the parties,” Vance noted, adding that the panel has transferred “relatively few” MDLs to the federal court.

“Further, centralization allows for the coordination of this litigation with a securities action against Lumber Liquidators that was filed in the Eastern District of Virginia in November 2013, which has grown to include allegations concerning formaldehyde emissions from Chinese-made laminate flooring.”

District Judge Anthony Trenga will preside over the matter, according to the panel’s order.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

MDL established for Anthem data breach class actions

Jessica M. Karmasek — Wed, 17 Jun 2015 08:15:55 -0500

]]> SAN JOSE (Legal Newsline) - The U.S. Judicial Panel on Multidistrict Litigation has decided to consolidate more than a dozen actions related to the Anthem medical data breach that occurred earlier this year.

The seven-member panel issued its four-page transfer order Friday.

“After weighing all relevant factors, we select the (U.S. District Court for the) Northern District of California as the transferee district for this litigation,” wrote Sarah S. Vance, chair of the panel.

“Numerous plaintiffs support centralization in this district, both in the first instance and in the alternative. And, although headquartered in Indiana, Anthem has significant ties to California, where it is the largest for-profit health insurer and maintains several offices.”

The data breach, which occurred over the course of weeks, wasn’t disclosed by Anthem Inc. until Feb. 4.

Criminal hackers broke into Anthem’s servers and potentially stole more than 37.5 million records that contain such personal information as names, birthdays, medical IDs, social security numbers, street addresses and employment information, including income data.

According to Anthem, the breach extended into multiple brands it uses to market its health-care plans, including Anthem Blue Cross, Anthem Blue Cross and Blue Shield, Blue Cross and Blue Shield of Georgia, Empire Blue Cross and Blue Shield, Amerigroup, Caremore and UniCare.

The MDL panel noted in its order that 11 of the more than 100 actions are pending in the Northern District of California.

“This district thus presents a convenient and accessible forum with the necessary judicial resources and expertise to manage this litigation efficiently,” Vance wrote.

The order affects at least 17 class action lawsuits: seven pending in the U.S. District Court for the Southern District of Indiana, five in the Central District of California, and one action each in the Northern District of Alabama, the Eastern District of California, the Northern District of California, the Northern District of Georgia and the Southern District of Ohio.

But dozens more could be transferred into the MDL.

“On the basis of the papers filed and the hearing session held, we find that these actions involve common questions of fact, and that centralization in the Northern District of California will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation,” Vance wrote.

All of the actions are putative class actions, many of which are nationwide in scope, the panel noted.

“Centralization will eliminate duplicative discovery, prevent inconsistent pretrial rulings, particularly with respect to class certification, and conserve the resources of the parties, their counsel and the judiciary,” Vance explained.

District Judge Lucy Koh will preside over the matter, according to the panel’s order.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

One class action against AAMCO dismissed, under mediation while another remains

Jessica M. Karmasek — Tue, 16 Jun 2015 13:45:30 -0500

]]> BENTON, Ill. (Legal Newsline) - A class action lawsuit filed against a well-known transmission-repair franchisor, certain affiliates and its executives has been dismissed and is under mediation.

The lawsuit was filed against AAMCO Transmissions Inc. in 2013 by four former AAMCO franchisees and one existing franchisee, claiming violations of federal law against the company.

The plaintiffs -- Timothy Montileone, Rick A. Firmand, Thomas W. Furlong Jr., Kevin Bladow and Clayton Thygerson -- claimed the violations occurred during the process of purchasing franchises and the course of the franchise relationships.

AAMCO, represented by Atlanta law firm Parker Hudson Rainer & Dobbs LLP, filed a comprehensive motion to dismiss the case in the U.S. District Court for the Southern District of Illinois.

Rather than opposing the motion, the plaintiffs voluntarily dismissed their complaint and requested non-binding mediation under the dispute resolution provision of their franchise agreements, according to the law firm.

Judge J. Phil Gilbert dismissed the case against defendant and AAMCO CEO Malon Wilkus with prejudice, and dismissed the case against the remaining defendants without prejudice.

The court denied as moot the remaining motions in the case.

“We are pleased that the court granted the plaintiffs’ request to dismiss the claims,” said Ron Coleman, partner at Parker Hudson Rainer & Dobbs and lead counsel for AAMCO.

However, another, similar lawsuit has been filed against the self-described “world’s leading transmission expert.”

That class action, filed Nov. 19, also in the Southern District of Illinois, claims a three-pronged “scheme” by the Horshman, Pa.-based AAMCO:

- First, it allegedly fraudulently induces franchisees to purchase centers by intentionally misrepresenting the contractual relationship between franchisee and franchisor and the financial prospects of the franchisee;

- Second, it allegedly willfully teaches and encourages franchisees to engage in deceptive business practices for profit; allegedly participates in “franchise churning,” or profit through frequent franchisee turnover; and allegedly charges the franchisees illegal, undisclosed and inflated fees; and

- Third, it allegedly conspired with fellow defendant Michael Ganjei -- the president of the National AAMCO Dealers Association -- to misrepresent material information to franchisees and mislead them about the health of the system.

Judge Michael J. Reagan is presiding over the case.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

La. AG's antitrust suit against Pfizer relying on private attorneys, campaign donors

Kyle Barnett — Tue, 16 Jun 2015 13:22:11 -0500

]]> BATON ROUGE, La. (Legal Newsline) – The Louisiana Attorney General’s Office has again hired a list of political allies for help with an antitrust lawsuit brought against Pfizer which mirrors similar actions taken against several other pharmaceutical companies.

Louisiana Attorney General James “Buddy” Caldwell initially filed the lawsuit against Pfizer on behalf of the State of Louisiana in the 19th Judicial District Court in East Baton Rouge Parish on April 10. The case was remanded to the United States District Court for the Middle District of Louisiana on May 22.

In the suit Caldwell claims Pfizer blocked efforts to introduce a generic version of the drug Neurontin from coming to market by filing “sham patent litigation.” The effort is just the latest in a series by Caldwell accusing pharmaceutical companies of antitrust practices meant to preserve monopolies over the production of certain medications which caused the state to pay inflated prices for the medication over an extended period of time.

The action closely resembles a recently filed antitrust lawsuit against pharmaceutical company AstraZeneca.

In line with his past efforts Caldwell has continued the controversial practice of providing private attorneys and law firms, some who have close political ties to his past elections campaigns, with no-bid contracts to share in the proceeds of any damage awards the litigation may yield.

Caldwell has appointed the following 12 private attorneys to represent the state in their antitrust lawsuit against Pfizer:

- Alejandro R. Perkins; Hammonds, Sills, Adkins & Guice of Baton Rouge
- Allan Kanner; Kanner & Whiteley LLC of New Orleans
- Barrett Black; Beasley Salim-Beasley of Natchitoches
- Conlee S. Whiteley; Kanner & Whiteley LLC of New Orleans
- Edmond Wade Shows; Shows, Cali, Berthelot & Walsh LLP of Baton Rouge
- James P. Ryan; Morrow, Morrow, Ryan & Bassett of Opelousas
- Jimmy Roy Faircloth Jr.; Faircloth, Melton & Keiser of Alexandria
- John Randolph Davis; Kanner & Whiteley LLC of New Orleans
- John Alden Meade; Meade Law LLC of New Orleans
- Patrick Craig Morrow; Morrow, Morrow, Ryan & Bassett of Opelousas
- Robert Lyle Salim; Beasley Salim-Beasley of Natchitoches
- Thomas Allen Usry; Usry, Weeks & Matthews of New Orleans

Of the private attorneys appointed to serve on behalf of the state, campaign records reveal at least five have provided donations or other assistance to Caldwell’s past election efforts.

Most notably, E. Wade Shows, of Shows, Cali & Walsh, has previously served as Caldwell’s campaign manager and T. Allen Usry, of Usry, Weeks & Mathews, has previously served as Caldwell’s campaign treasurer.

Campaign finance records on www.followthemoney.org show Caldwell received a combined $12,650 provided by Jimmy Faircloth and his relatives and associates; $10,000 in campaign finances from Usry; $6,000 in donations from Robert L. Salim, of Natchitoches-based Salim-Beasley, $5,000 from James P. Ryan, of Opelousas-based Morrow, Morrow, Ryan & Bassett and $200 from Alejandro Perkins of Baton Rouge-based Hammonds, Sills, Adkins & Guice.

While New Orleans-based law firm Kanner & Whiteley have not provided campaign support to Caldwell, it has benefitted greatly from past contracts with the AG’s office, including capturing $12.1 million in legal fees for work on behalf of the state in the Deepwater Horizon oil spill case.

Another notable appointment is Faircloth who has deep ties in Baton Rouge political circles. Faircloth formerly served as executive counsel to Gov. Bobby Jindal and since resigning from the position has put together an impressive list of clients including the State of Louisiana through contracts provided to him by Caldwell. Over the past three years Faircloth has also received $1,309,881 through the Deepwater Horizon contract his law firm Faircloth, Melton & Keiser has with Caldwell’s office.

Caldwell did not respond to a request for comment on this story.

Chinese digital media company sued over making false financial statements to investors

Shaun Zinck — Tue, 16 Jun 2015 12:51:57 -0500

]]> LOS ANGELES (Legal Newsline) - A Chinese digital media company is facing a class action lawsuit over allegations the company made false statements to the U.S. Securities and Exchange Commission when it went public in the United States.

Christopher Shreves filed the lawsuit June 8 in U.S. District Court in California against Xunlei Limited, claiming the company failed to disclose information about one of its projects that would eventually become financially “detrimental” to the company's finances.

According to the lawsuit, Project Crystal, a technology innovation from Xunlei, enables the company to “transfer bandwidth and storage from users.” Executives said the product would reduce bandwidth and costs to the company, the suit says.

On May 20, financial information revealed revenues for the company were 8.4 percent down compared to 2014 and a nearly 15 percent drop from the previous quarter. On this news, the stock fell about 15 percent to $9.71 per share.

The lawsuit claims the company withheld information about the viability of Project Crystal from investors.

The lawsuit is seeking class status for those who held Xunlei Limited stock between June 24, 2014, and May 20 of this year. The suit is also seeking an unspecified amount in damages plus court costs.

Shreves is represented by Laurence M. Rosen of The Rosen Law Firm, P.A. in Los Angeles.

U.S. District Court for the Central District of California case number 2:15-cv-04288.

Class action filed over label on Roundup

Shaun Zinck — Tue, 16 Jun 2015 12:30:35 -0500

]]> LOS ANGELES (Legal Newsline) - The maker of a popular weedkiller is facing a class action lawsuit over allegations of misleading and false advertising on the effectiveness of its product.

Elvis Mirzaie, Edison Mirzaie and Romi Mirzaie filed the lawsuit April 20 in Los Angeles Superior Court against Monsanto Co., maker of Roundup. The defendant removed the suit to federal court on June 9.

Roundup advertises that it targets an enzyme found in only plants and not people, but the lawsuit claims that isn't true and the enzyme is found in both.

“Therefore, where (Monsanto) advertises that Round targets an enzyme 'not found in people,' such claim is objectively false and inherently misleading,” the lawsuit said.

The specific enzyme in question is called EPSP synthase, which is produced by “weeds, plants, bacteria, fungi, algae and other microbes,” the lawsuit said.

The suit added “over one hundred trillion bacteria” that produce the enzyme can be found in humans.

The plaintiffs are seeking a court order to have that information taken off all Roundup labels. The plaintiffs are seeking class status for those that purchased Roundup within the last four years. The suit is also seeking an unspecified amount in damages plus court costs.

The plaintiffs are represented by T. Matthew Phillips, an attorney in Las Vegas.

U.S. District Court for the Central District of California case number 2:15-cv-04361.

Class action against Hertz says company violated FCRA

Shaun Zinck — Tue, 16 Jun 2015 12:27:20 -0500

]]> SAN FRANCISCO (Legal Newsline) - A California man is suing a company over allegations it violated federal law when it denied him employment at one of its business.

Peter Lee filed the lawsuit June 9 in federal court in California against The Hertz Corp., claiming the company violated the Fair Credit Reporting Act when it didn't hire him for its business at the Dollar Thrifty Automotive Group.

The lawsuit claims Hertz used the credit reporting law when determining Lee's possible employment at the company. However, the company isn't using the information gathered in the report legally, it claims.

Lee claims Hertz doesn't give potential employees a sufficient amount of time to challenge any adverse claims on the report before denying employment.

Lee is seeking class status for those who were also denied employment by Hertz due to the consumer report. He is also seeking an unspecified amount in damages plus court costs.

Lee is represented by Jahan C. Sagaif and Katrina L. Eiland of Outten & Golden LLP in San Francisco, and Meredith Desautels and Stephanie Funt of Lawyers' Committee for Civil Rights of the San Francisco Bay Area in San Francisco.

U.S. District Court for the Northern District of California-San Francisco Division case number 4:15-cv-02545.

Wyndham sued over allegedly violating federal law

Shaun Zinck — Tue, 16 Jun 2015 12:18:54 -0500

]]> SACRAMENTO, Calif. (Legal Newsline) - A class action lawsuit claims a debt collector violated federal law when it attempted to call cellphones looking to collect on debt owed.

Barry Gray filed the lawsuit June 8 in U.S. District Court in California against Wyndham Vacation Resorts claiming the company violated the Telephone Consumer Protection Act when it used an automatic telephone dialing system.

The lawsuit alleges Wyndham began calling Gray around the beginning of this year on his cellphone looking to collect outstanding debt owed by his wife. The lawsuit claims the calls violated federal law because the calls were not for emergency services as defined in the statute.

Gray claims his wife doesn't owe the alleged debt claimed by Wyndham, and has never given personal information out to the company. He also claims he never gave consent for Wyndham to contact him using the automatic telephone dialing system.

Gray is seeking class status for those who were also contacted by Wyndham Resorts. He is also seeking more than $5 million in damages plus court costs.

Gray is represented by Todd M. Friedman, Suren N. Weerasuriya and Adrian R. Bacon of the Law Offices of Todd M. Friedman, P.C. in Beverly Hills, Calif.

U.S. District Court for the Eastern District of California case number 5:15-cv-01103.

Candidate for rental car job sues over denial of employment

Shaun Zinck — Tue, 16 Jun 2015 12:12:11 -0500

]]> NEWARK, N.J. (Legal Newsline) - A Florida woman is suing a major car rental company over allegations it violated federal law when it denied her employment.

Angela Fuller filed the lawsuit June 9 in U.S. District Court in New Jersey against Avis Budget Car Rental, claiming the company uses consumer reports without giving a potential employee the chance to dispute a negative report.

The lawsuit also said Avis requires employee candidates to sign off on a standardized background check application that requires applicants to waive certain rights, which also violates federal law.

Fuller said she was denied a job at Avis as a rental sales associate in July 2013 due to a standardized background consumer report. Fuller alleges the background report was done as a way to “obtain future protection for (Avis) for any unlawful actions, and provided other limitations on consumer protections and other extraneous language.”

Fuller is seeking class status for those in a similar situation with Avis who were also denied employment. She is also seeking an unspecified amount in damages plus court costs.

Fuller is represented by John Soumilas, James A. Francis and Lauren KW Brennan of Francis & Mailman, P.C. in Philadelphia.

U.S. District Court for the District of New Jersey case number 2:15-cv-03856.

Former employee sues treatment center over wrongful termination

Shaun Zinck — Tue, 16 Jun 2015 11:49:03 -0500

]]> DETROIT (Legal Newsline) - A former employee of a methadone treatment center is suing the company over wrongful termination.

Philip Wilson filed the lawsuit June 2 in U.S. District Court in Michigan against Rainbow Center of Michigan and President Harriet Alexander, claiming he was fired for voicing concerns about the company's Medicaid billing.

Wilson said in the lawsuit he believed the center was billing Medicaid for services that weren't done or properly performed, in violation of the False Claims Act. He further claims some of the services provided should not have been billed to Medicaid based on the federal government's requirements.

He claims he attempted to voice his concerns internally, but there was no improvement. In March he reported his accusations to the Michigan Department of Health and Human Services. Wilson said in the lawsuit he told the company that he had reported the alleged fraud.

On April 15, Wilson said the company fired him claiming it was due to him reporting the alleged Medicaid fraud.

Wilson is seeking an unspecified amount in damages, plus court and attorneys costs in the lawsuit.

Wilson is represented by Joey S. Niskar of The Niskar Law Firm, PLLC in Farmington Hills, Mich.

U.S. District Court for the Eastern District of Michigan Southern Division case number 2:15-cv-11990.

N.M. AG defends decision to pursue nursing service providers, use outside counsel

Jessica M. Karmasek — Tue, 16 Jun 2015 09:30:49 -0500

]]> SANTA FE (Legal Newsline) - New Mexico Attorney General Hector Balderas is firing back at claims that his office filed and has continued to pursue a lawsuit against nursing service providers at the urging of outside counsel.

Balderas, who took over for Attorney General Gary King in January, defended his decision to renew the lawsuit against the Preferred Care defendants.

“Bilking taxpayers for inadequate care and denying helpless and vulnerable residents basic services will not be tolerated,” he said in a statement to Legal Newsline.

“Our office will continue to aggressively protect New Mexico’s taxpayers and our most vulnerable populations.”

The 18 defendants, who filed multiple motions to dismiss the case last month, argue the claims are “unsubstantiated” -- based on a simulation never used by health officials or adopted by the courts or health-care community -- and the result of outside counsel looking to cash in.

Balderas alleges that the nursing facilities have failed to provide basic services to its residents.

The attorney general filed his amended complaint in the New Mexico First Judicial District Court April 1. A month later, the defendants removed the case to the U.S. District Court for the District of New Mexico.

“(Preferred Care looked) to generate outsized revenues at the expense of the physical well-being of vulnerable nursing home residents through false representations to the state's Medicaid program,” the complaint states.

Balderas claims the mistreatment started on July 1, 2007 and continues to the present. The lawsuit, originally filed in 2014 by King, also contends Preferred Care limited the nursing staff on duty at the facilities, which resulted in it not providing basic care to the residents.

“While the intent may have been to control costs, the effect on resident care was dramatic,” the complaint states.

The attorney general argues the facility essentially made false claims on its state and federal assessments about the level of care it was able to provide.

Balderas is asking the court to require the facility to rectify the procedures, and enter a judgment against it for the services it did not perform. He also is seeking an unspecified amount in damages plus court costs.

But the defendants in the case contend the action was filed at the urging of Cohen Milstein & Toll, an out-of-state plaintiffs law firm known for targeting long-term care facilities.

Balderas denies the claim.

A spokesman for the attorney general said the office is heading up the lawsuit; Cohen Milstein is merely assisting.

“We are directing the suit,” Balderas spokesman James Hallinan said in an email. “Outside counsel takes our direction.”

Hallinan pointed to Balderas’ new policies on case review and outside counsel, adopted after a three-month, office-wide review of all pending litigation involving outside counsel.

The move was seen by many as a response to a New York Times article published in December showing that more attorneys general are hiring private law firms to file lawsuits on behalf of their states. King was featured prominently in the article.

Balderas said in March that his office now will seek bids from law firms and appoint a senior staff member to oversee the litigation.

“Pursuant to my statutory authority and responsibilities regarding litigation on behalf of the state, this office will adhere strictly to an improved process regarding the use of outside counsel to ensure accountability and transparency,” he said at the time, adding that such cases must be “meritorious” and in the best interest of residents.

The attorney general has said he also is committed to making all documents pertinent to request-for-proposal processes -- including the total payment to outside counsel made by the Attorney General’s Office -- publicly available.

Indeed, the office promptly turned over a copy of its contract with Cohen Milstein in the Preferred Care case -- without having to file a Freedom of Information Act request.

It could not be found online because, as Hallinan explained, the office is still “building out” its website, including that particular section.

According to the 13-page contract, signed and agreed to in May 2014, the firm works and acts “at the direction of the agency.”

“The Contractor shall adhere to timetables established by the Agency and shall contact the Agency with regard to all settlement offers and discussions and strategy decisions,” the contract states. “The Agency will maintain control of the Litigation and will make all strategic decisions, including whether and how to proceed with litigation, where to file, which claims to advance, which defendants to sue, what relief to seek, and whether and on what terms to settle.”

Under the contract, the firm is required to meet, coordinate with and submit interim reports to the Attorney General’s Office on a regular basis and as requested.

Also, as required under the contract, at least one point of contact -- designated by the office -- supervises the litigation.

As for compensation, the firm only will be paid for services rendered upon the “successful recovery” of restitution, damages and penalties for the state.

Only then can the firm petition the court for its contractor fees -- and reasonable costs and expenses they advanced. The money will be awarded to the firm by the court from the funds paid by the defendants.

The agreement is scheduled to terminate April 1, 2018.

Since 2010, Cohen Milstein has donated $71,000 to 16 different state attorneys general campaigns, according to a recent search of FollowTheMoney.org. Of those candidates, 13 would go on to win their state’s general election.

Some of the firm’s largest donations went to: Missouri Attorney General Chris Koster, $5,000; Oregon Attorney General Ellen Rosenblum, $10,000; Pennsylvania Attorney General Kathleen Kane, $10,000; and Balderas, $5,000.

Despite the firm’s donation -- and additional, substantial donations from individual firm attorneys -- Balderas maintains he is committed to “greater transparency” in appointing outside counsel.

Still, the defendants in the Preferred Care case call the State’s action a “text book case” of lawyers depositing money in the campaign coffers of attorneys general and then pushing them to file questionable claims against in-state businesses.

“It’s an egregious display of greed and opportunism that moved one former attorney general of Massachusetts to say it ‘threatens the perception of integrity and professionalism of the office’… of the attorney general,” said Mike Gavin, president of Preferred Care Partners Management Group.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

N.J. lawmakers argue role of AG is ‘important’ one, needs to be elected

Jessica M. Karmasek — Mon, 15 Jun 2015 14:20:48 -0500

]]> TRENTON, N.J. (Legal Newsline) - Two New Jersey lawmakers continue to push for an elected attorney general.

On Thursday, members of the state Senate’s State Government, Wagering Tourism and Historic Preservation Committee met and discussed two bills -- SCR 71 and SCR 170 -- that would change how New Jersey’s top lawyer is selected.

Currently, the attorney general and all 21 county prosecutors are selected by the governor, and then approved by the state Senate.

In fact, New Jersey is just one of five states that still appoints its attorney general. In Maine, state lawmakers elect the attorney general. In Tennessee, the attorney general is selected by its highest court. In more than 40 other states, the position is elected by the people.

Sens. Peter Barnes and Raymond Lesniak, both Democrats, would like to see that change.

At the committee meeting last week, Barnes, who serves on the panel, argued that electing an attorney general would give the position more backbone and stability.

“It’s such an important job and the person who holds the position, if they want to, can really expand the role in a much more positive way,” Barnes said, according to The Record in North Jersey.

Barnes introduced SCR 71 last year, asking voters to amend the state constitution to change the selection process. So far, no action has been taken on the legislation.

Lesniak introduced a similar bill -- SCR 170 -- earlier this month.

Neither bill was voted on during Thursday’s meeting.

One state newspaper already is backing the lawmakers’ call for change.

Last month, the Asbury Park Press wrote in an editorial that the state’s governors have shown, time and again, they cannot handle the responsibility that comes with appointing such a position.

“Instead, they put in place allies who won’t aggressively turn their efforts against anyone or anything that might embarrass the governor’s party,” the editorial states.

The newspaper contends the current attorney general, John Hoffman, who has been acting attorney general since 2013, has “done the governor’s bidding time and time again.”

Hoffman took over after Gov. Chris Christie appointed Attorney General Jeff Chiesa to fill the late Frank Lautenberg’s U.S. Senate seat.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

Software company claims Microsoft continues to infringe on ‘out-of-band’ patents

Jessica M. Karmasek — Mon, 15 Jun 2015 13:20:07 -0500

]]> EDISON, N.J. (Legal Newsline) - A New Jersey-based software company has filed a lawsuit against Microsoft Corp., alleging the computer giant is infringing on three of its patents.

StrikeForce Technologies Inc., headquartered in Edison, N.J., filed its lawsuit against Microsoft in the U.S. District Court for the District of Delaware June 5.

The patents at issue are U.S. Patent Nos. 7,870,599; 8,484,698; and 8,713,701. Entitled “Multichannel Device Utilizing A Centralized Out-of-Band Authentication System (COBAS),” the patents relate to several technologies underlying a multi-channel security system for granting and denying access to a host computer in response to a demand from an access-seeking individual and computer.

According to StrikeForce, the company was granted the so-called “out-of-band” patents from the U.S. Patent and Trademark Office in January 2011. Also, a reexamination certificate was issued after a successful ex parte reexamination concluded in December 2011, according to the company.

“There has been a sharp rise in cyber-attack. This increase has led to a strengthening of regulations, such as the (Federal Financial Institutions Examination Council) in the financial global market and HIPAA HiTech and Electronic Protected Healthcare Information (ePHI) in the health-care market, which are prompting an exponential increase in the use of out-of-band authentication,” explained Mark L. Kay, CEO of StrikeForce.

“In light of our having been granted the ‘599 patent and two others, and with increased activity in various markets by enterprises, government agencies and social media, StrikeForce will aggressively protect its patents.”

Kay called the patents a “critical” asset to his company.

“We will take whatever action is necessary to protect our intellectual property rights and maximize shareholder value,” he said.

According to the company’s 22-page complaint, the patents are directed to multi-channel security systems and methods for authenticating a user seeking to gain access to, for example, Internet websites and VPN networks, such as those used for conducting banking, social networking, business activities and other online services.

Such technology is sometimes referred to as out-of-band authentication.

When coupled with more traditional processes, they are more commonly known as two-factor authentication.

StrikeForce’s product, ProtectID, performs out-of-band authentication.

The company, according to its complaint, sent a letter to Microsoft’s CEO in October 2012 giving him actual notice of the ‘599 patent. The next month, StrikeForce sent another letter -- this time, to Microsoft’s chief patent counsel -- also giving actual notice of the patent.

StrikeForce contends that in the next year, Microsoft began offering its Windows Azure Multi-Factor Authentication product, with multi-factor authentication apps for Windows Phone, Android and IOS devices.

Microsoft continues to offer out-of-band authentication at no additional cost for its Active Directory, Windows Azure Active Directory and Office 365 products as a value-added feature, StrikeForce noted in its complaint.

As a result, StrikeForce is seeking: a judgment that Microsoft has infringed its patents; that Microsoft is willfully infringing; an order, by Microsoft, to account for and to pay it actual damages, including damages for lost profits; an award of treble damages; a preliminary injunction; a permanent injunction; and a written report, by Microsoft, setting forth in detail the “manner and form” it has complied with the injunction.

In lieu of a permanent injunction, StrikeForce is seeking an order requiring Microsoft to pay it monetary damages that will be suffered as a result of Microsoft’s “continuing post-verdict infringement” of the patents by forcing Microsoft to take a compulsory license at a reasonable royalty rate on all products that utilize the three patents.

StrikeForce also is asking for costs, expenses and fees, including reasonable attorneys’ fees, and pre-judgment and post-judgment interest.

Last week, the case was assigned to Judge Richard G. Andrews.

Microsoft could not immediately be reached for comment on the lawsuit.

Blank Rome LLP is representing StrikeForce in the case.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

Mortgage lending company sued by stockholders over failing to comply with the law

Shaun Zinck — Fri, 12 Jun 2015 14:30:12 -0500

]]> A mortgage lender is being sued over allegations the company gouged consumers and illegally enhanced profits.

City of St. Clair Shores Police and Fire Retirement System filed the lawsuit June 2 in U.S. District Court in Florida against Nationstar Mortgage Holdings, claiming the company overstated its ability to profit from servicing loans.

The lawsuit claims the company is the second largest non-bank subprime mortgage servicer, and stated in its filings with the U.S. Securities and Exchange Commission that it was improving profitability.

However, the lawsuit claims management deficiencies prevented the company from complying with laws and regulations, and that it was gouging borrowers by charging for “repeated, unnecessary inspections.” The company is also accused of pressuring mortgagors to refinance their mortgages and complete expensive modifications.

The company was eventually named in a federal racketeering lawsuit, and its stock fell 13 percent. The lawsuit is seeking class status for all stockholders between Feb. 27, 2014, and May 4 of this year. The plaintiffs are also seeking an unspecified amount in damages plus court costs.

The plaintiffs are represented by Paul J. Geller, Jack Reise and Elizabeth A. Shonson of Robbins Geller Rudman & Dowd LLP in Boca Raton, Fla., and Samuel H. Rudman and Mary K. Blasy of the same law firm in Melville, N.Y.; and Thomas C. Michaud of Vanoverbeke Michaud & Timmony, P.C. of Detroit.

U.S. District Court Southern District of Florida case number 15-cv-61170.

Citigroup sued for scheming foreign exchange rate, collecting millions

Shaun Zinck — Fri, 12 Jun 2015 14:25:18 -0500

]]> A major national bank is facing allegations that it deducted fees from customers' accounts without disclosing that it was doing to charge the customers.

Benjamin Michael Merryman, Amy Whitaker Merryman Trust, Benjamin Michael Merryman Trust and B Merrman and A Merryman Fourth Generation Remainder Trust filed the lawsuit June 2 in U.S. District Court in Arkansas against Citibank Group.

The lawsuit claimed the bank would take out fees from dividends and cash distributions that were issued by foreign companies without disclosing it to consumers. The lawsuit further stated the fees were “unreasonable” in nature.

The plaintiffs also claim Citi schemed to secretly assign an unfavorable exchange rate when foreign companies would convert cash distributions that were not U.S. dollars prior to issuing the payment to the account holder.

The lawsuit claims Citi “skimed millions of dollars from cash distributions owed and payable to” its account holders. The plaintiffs analyzed 610 cash distributions over 22 different currencies between 2000 and 2015.

The lawsuit seeks class status for those who had Citi accounts and dealt with foreign exchange rates between 2000 and 2015. The plaintiffs believe damages are more than $5 million plus court costs.

The plaintiffs are represented by Amy C. Martin of Everett, Wales and Comstock in Fayetteville, Ark.; Joseph H. Meltzer, Sharan Nirmul and Jonathan Neumann of Kessler Topaz Meltzer & Check, LLP in Radnor, Pa.; and G. Chadd Mason of Mason Law Firm, PLC in Fayetteville.

Pennsylvania electric supplier faces legal action over solicitation pieces

Shaun Zinck — Fri, 12 Jun 2015 14:21:35 -0500

]]> An electric generation supplier is facing legal action from the state of Pennsylvania over allegations that they misled customers, said state Attorney General Kathleen Kane.

Kane filed an assurance of voluntary compliance on Thursday against Ethical Electric, which will require the company to state clearly to consumers that if they sign on with the company they will be switching from their default utility service.

Kane said her office's Bureau of Consumer Protection has received numerous complaints from customers claiming the solicitation and marketing pieces mailed by Ethical Electric are confusing. The company is an electric distributor and supplies electricity to commercial and residential consumers throughout the state.

The marketing pieces listed main utility companies such as West Penn Power, PPL or PECO on the top of the letter making it seem like the letter was from the companies directly. Kane said it made consumers believe they were joining a program that was through one of the default companies.

The letters were also marked with terms such as “Second Notice” and “Important” giving consumers a sense of urgency and causing more confusion. After an investigation, the consumer protection bureau determined Ethical Electric should have stated clearly that the solicitation pieces were from them and not from another utility service.

Under the terms of the voluntary compliance with Ethical Electric, the company will have to pay the attorney general's office $6,000.

California alleges Wells Fargo impersonated account holders on company computers

Shaun Zinck — Fri, 12 Jun 2015 13:49:56 -0500

]]> The state of California is suing a major bank, alleging it used illegal tactics on customers to maintain a high level of sales.

Los Angeles City Attorney Michael Feuer filed a lawsuit June 3 in California Superior Court County of Los Angeles Central District against Wells Fargo and Co. and Wells Fargo Bank National Association.

The lawsuit alleges the bank put “unrealistic sales quotas on its employees” and, as a result of the strict polices, the employees have engaged in illegal acts in order to meet those goals. The suit alleges managers and bankers have engaged in a practice called “gaming,” which includes “omitting signatures and adding unwanted secondary accounts to primary accounts without permission.”

“Wells Fargo has known about and encouraged these practices for years,” the lawsuit said. “It has done little, if anything, to discourage its employees' behavior and protect its customers.”

The suit also states employees would sometimes impersonate customers on computer and sign them up for online banking and bill pay without the account holder's authorization.

The state seeks an injunction against Wells Fargo to prevent the practices from continuing, as well as asking for damages and court costs. In addition to Feuer, the state is represented by: Tina L. Hess, assistant city attorney; Suzanne V. Spillane, deputy city attorney; Jessica B. Brown, deputy city attorney; and Jeremy Berzon, deputy city attorney.

California Superior Court County of Los Angeles Central District case number 2:15-c-v04181.

Former Idaho coin dealer to pay $578,000 back to customers

Shaun Zinck — Fri, 12 Jun 2015 13:47:45 -0500

]]> A former Coeur d'Alene coin dealer will pay $578,000 in restitution for taking money from customers but never delivering the coins that were purchased, said Idaho Attorney General Lawrence Wasden.

Wasden announced Thursday that a judge has signed off on the agreement earlier and Kevin Mitchell, who formerly owned CoiNuts Inc., will pay the money back to the customers he defrauded.

“This case represents an increasing problem in Idaho,” Wasden said. “Business owners accept consumers’ payments, but fail to deliver their purchases, then shut down operations and ignore refund requests.”

Wasden accused Mitchell of violating the Idaho Consumer Protection Act on numerous occasions between 2008 and 2012. The complaint said customers would visit Mitchell's store to buy gold and silver coins, and give him thousands of dollars in exchange for the coins. However, Mitchell would never deliver the coins, Wasden said.

Wasden initially filed the suit in April 2013, and a judge in the case entered a $742,826 default judgment against CoiNuts. In 2014, the courts ruled Mitchell personally violated state law, and the state ordered him to pay $579,569 to 10 of his customers.

“Business owners who are headed down a similar path taken by Mr. Mitchell must stop and contemplate how their misdeeds will damage consumers and the marketplace,” Wasden said. “I encourage all business owners who face financial problems to immediately consult with an attorney. Ignoring your customers is not an option.”

Supreme Court denies Maine governor's health care case

Shaun Zinck — Fri, 12 Jun 2015 13:11:55 -0500

]]> The U.S. Supreme Court won't hear arguments on a case brought by Maine Gov. Paul LePage looking to drop MaineCare coverage for 19-and 20-year-olds, said Maine Attorney General Janet Mills.

Mills said she has been opposed to the change pushed by LePage and has cited a lack of legal merit for his position. The high court made the ruling June 8, the third time a court has ruled against LePage.

“The unanimous decision by the three-judge panel of the First Circuit was correct and there was no reason for the U.S. Supreme Court to take this case,” Mills said June 8. “I respect the earnestness with which the governor sought to advance his argument, but I have felt all along that it lacked legal merit. As an independent constitutional officer, I take seriously my duty to offer unvarnished legal advice and to uphold the rule of law, and I will continue to do so.”

LePage's administration sought a waiver in 2012 from the federal Centers for Medicare and Medicaid Services to drop the coverage for 19-and 20-year-olds from the state's Medicaid program. The age group has been covered since 1991, and the Affordable Care Act requires coverage until 2019. The office denied LePage's request, and the denial was upheld by an administrative hearing. The case was appealed to federal court where it was again denied in November.

“Many of these young Mainers are in transition from childhood to adulthood, are working at the corner store, the big box stores, the gas stations and the doughnut shops, trying to make a living in this state,” Mills said. “If they break a leg, if they are hit by a car or if they require hospitalization, they have no way to pay for it. No other insurance is available except the safety net of MaineCare.”

Pennsylvania debt collector targeted for allegedly coercing debtor relatives

Shaun Zinck — Fri, 12 Jun 2015 12:50:39 -0500

]]> A Pennsylvania-based law group faces a civil lawsuit from the state over allegations it targeted relatives of individuals who owed money, and coerced them into paying the debts they weren't responsible for, said Pennsylvania Attorney General Kathleen Kane.

Kane filed the lawsuit June 5 in Commonwealth Court of Pennsylvania against Hamilton Law Group and its owner James Havassy.

According to the complaint, the law firm was hired by healthcare providers in Lehigh and Northampton to collect medical debt. The complaint said the law firm used the relative's liability procedure, a state statute, in order to get debtors' relatives to pay the owed money.

Kane said in the suit, a letter sent by Havassy's firm is deceptive and confusing for the relatives. In the letter Havassy said relatives are “responsible to care for and maintain or financially assist” the debtors. The letter also said the relatives are “fully responsible for this debt.” the suit states

Havassy also caused relatives' credit to be “negatively marked” if they didn't pay the debts, Kane said in the suit. Kane accused Havassy of failing to prove that the debtor was indigent and couldn't pay, and that the relatives contacted weren't indigent and could pay.

The suit seeks full restitution for the relatives targeted as well as civil penalties. Penalties can run up to $1,000 per violation, which increased to $3,000 for those older than 60, the suit says.

Class action targets GE over defective microwave ovens

Shaun Zinck — Fri, 12 Jun 2015 12:40:13 -0500

]]> Three consumers are suing General Electric, alleging it sold defective microwave ovens.

Daniel Levy of California, David Mequet of Texas and Lauren Harris of Florida filed a class action lawsuit June 4 in U.S. District Court for the District of Connecticut against General Electric, alleging the glass door on some of GE's microwave ovens will shatter when used.

The lawsuit names three different models of GE-branded microwaves, and alleges the company knew about the defect as early as September 2002. The plaintiffs say GE has actively tried to hide the defects of the microwaves from consumers.

The lawsuit said the glass shatters due to the interference of the inside surface of the glass and a hinge spring on the door.

The plaintiffs seek class status for consumers who purchased one of the microwave models, plus more than $5 million in damages and court costs. They are are represented by attorneys Seth R. Klein, Robert A. Izard and Mark P. Kindall of Izard Nobel in West Hartford, Connecticut; and Hassan A Zavareei and Anna C. Haac of Tycko & Zavareei in Washington, D.C.

U.S. District Court for the District of Connecticut case number 3:15-cv-00857.

New York alleges Indiana-based company falsely advertised nursing degrees

LocalLabs News Service — Fri, 12 Jun 2015 12:27:57 -0500

]]> New York state is suing an Indiana company that allegedly convinced prospective nursing students that it offered nursing programs in New York when it didn't, said New York Attorney General Eric Schneiderman.

The state named The College Network and its owner Gary Eyler in the lawsuit filed June. 4.

The complaint alleges the company, which has its headquarters in Indiana, targeted as many as 2,000 students looking to study nursing. The company, through advertisements and high-pressure sales tactics, inferred that it was affiliated with Albany-based Excelsior College and was able to create an impression that it offered online nursing degrees, the suit states.

“Businesses operating in New York must conduct business fairly, and that means not using false and deceptive advertising to take advantage of consumers," Schneiderman said. "As we allege, hard-working New Yorkers–-many of them single moms and immigrants–-were duped into buying expensive, inadequate study materials and access to ‘academic advisers’ who were falsely touted as experts. Businesses that take advantage of people seeking to better their lives and communities deserve especially tough attention from law enforcement, and we will continue working to crack down on this kind of abuse in the education sector.”

Miss. SC denies utility’s request for rehearing on refund ruling

Jessica M. Karmasek — Fri, 12 Jun 2015 10:45:50 -0500

]]> JACKSON, Miss. (Legal Newsline) - The Mississippi Supreme Court on Thursday denied Mississippi Power Company’s and the state Public Service Commission’s rehearing requests after the court decided earlier this year that customers should be granted refunds.

In February, the state’s high court ruled that more than 180,000 Mississippi Power customers be granted refunds for a rate increase that was wrongly approved by the PSC in 2013.

The court, in its Feb. 12 opinion, concluded that the PSC failed to comply with the language of the Base Load Act and exceeded its authority granted by the law. The state law allows utility companies to charge customers for construction costs before a new plant is finished -- if ever.

“While we are certainly disappointed with the decision, we continue to do everything reasonable to protect the interests of our customers and the company,” the company said of the rehearing decision Thursday.

As a result of the February ruling, the PSC must force Mississippi Power to refund $281 million that it earned in 2013 and 2014 from the rate increases. The commission first approved a 15 percent rate hike, then an additional 3 percent increase, to help build the company’s new Kemper County energy facility.

“One component of the (Base Load) Act is to allow utility companies to collect prudently incurred preconstruction costs, construction costs and finance costs as incurred to reduce the finance costs, which are capitalized in the utility’s allowance for funds used during construction (‘AFUDC’) upon commercial operation,” the justices wrote in the opinion, noting that AFUDC represents interest on borrowed funds, dividends on preferred stock and the imputed return on common stock.

“The Act contemplates increasing rates to pay AFUDC as incurred, which, if done, would mitigate the effect of compounding interest. However, this appeal concerns ‘mirror CWIP,’ resulting in MPC charging increased rates.”

The justices continued, “But the ratepayers’ property (money) is placed into a regulatory liability account controlled by the Commission. Thus, the money exacted is not being used to pay for funds used during construction as expenses are incurred. The ratepayers’ property (money) is being confiscated through governmental decree, by a rate increase imposed by a privately owned corporation that cannot spend it.”

Simply put, there is no authorization to impose “mirror CWIP” in the statute, the court ruled.

“An analysis of these proceedings leads to the inescapable conviction that the Commission failed to fulfill its duties and obligations pursuant to statutory directives and our existing law and that the overwhelming majority of 186,000 ratepayers was not accorded due process from the beginning,” according to the court’s majority opinion. “As such, the Commission did not balance the ratepayers’ interests with those of the utility, as our law requires.

“An affirmation of the Commission’s actions would constitute a grave injustice.”

The court reversed the PSC’s order granting the rate increases and remanded the case to the commission.

In addition to the refunds, the court also ruled that rates must return to those that were in force as of March 5, 2013 -- the date of the PSC order -- and no increases will be allowed until the commission complies with the opinion.

Mississippi Power filed its request for a rehearing in March.

“If the Supreme Court ruling stands, our customers will see a substantial increase in rates,” President and CEO Ed Holland said at the time. “We do not believe that was the Court’s intent.”

The company, noting that rehearings are “rare,” filed rate proposals with the PSC in May in anticipation of the court’s ruling.

The utility said its preferred plan would keep customers’ bills lower over a four-and-a-half-year period. The plan would keep rates at current levels until the entire facility is placed in service, expected in the first half of 2016, after which there would be a monthly increase of about $6 to $9 for a residential customer having a monthly usage of 1,000 kWh.

Mississippi Power also filed two other options -- a traditional plan and a two-year rate mitigation plan. Both plans would increase rates over a two-year time period.

The traditional plan would result in a monthly increase of approximately $17 for a residential customer having a monthly usage of 1,000 kWh in the first year of approval. The second year’s increase, which would require additional rate filings by the company, would result in an approximately $20 monthly increase, for an overall increase of $37.

The two-year rate plan would result in a monthly increase of approximately $5 for a residential customer having a monthly usage of 1,000 kWh in the first year of approval and an additional $29 monthly in the second year, for an overall increase of $34.

The two alternatives assume funds collected from customers over the last two years are refunded under the court’s ruling.

“We will work with the Mississippi PSC to determine the next steps in this process and will continue to work on methods to lower the impact on customer bills,” the utility said Thursday.

“We are reviewing the Court’s decision and will provide updates on any further response from the company as necessary.”

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

Goodlatte’s Innovation Act passes House committee, with some tweaks

Jessica M. Karmasek — Fri, 12 Jun 2015 08:50:19 -0500

]]> WASHINGTON (Legal Newsline) - Members of a House panel on Thursday approved one of the more aggressive pieces of patent reform legislation floating around Congress, the Innovation Act.

The U.S. House Judiciary Committee voted 24-8 in favor of H.R. 9, which was reintroduced by committee chairman Bob Goodlatte, R-Va., in February.

The vote came after what was described by some as a “marathon” markup of the legislation, in which 20 different amendments were proposed, including Goodlatte’s manager’s amendment.

Among those notable changes made to the bill was a new provision that would crack down on “unreasonable” venue shopping by so-called patent “trolls.”

The panel, during the markup, called out the U.S. District Court for the Eastern District of Texas, which over the years has become a plaintiff-friendly venue for patent lawsuits.

Other adjustments to the legislation included a rewrite of a provision that would limit early discovery and adding language to make sure universities won’t have to pay trolls’ legal bills.

Some other tweaks were made to heightened pleading requirements and the bill’s customer stay provision.

“At its core, abusive patent litigation is a drag on our economy and stifles innovation,” Goodlatte said. “It is a problem that impacts businesses and industries of all types and the jobs of the people who work for them, from the tech sector to the hospitality industry and even grocery stores. Everyone from independent inventors, to start-ups, to mid-and large-sized businesses face this constant threat.

“The tens of billions of dollars squandered on settlements and litigation expenses associated with abusive patent suits represent truly wasted capital -- capital that could have been used to create new jobs, fund research and development, and create new innovations and technologies.

“The Innovation Act takes the necessary steps to address abusive patent litigation, while protecting legitimate property rights.”

Reaction to the bill’s committee passing was mixed.

The Software and Information Industry Association, the principal trade association for the software and digital content industries, applauded the panel’s approval.

“Today’s action was an important step forward for patent reform and a positive sign that Congress can get patent litigation abuse legislation passed this year,” SIIA Vice President of Public Policy Mark MacCarthy said. “Abusive patent litigation is a significant drain on the American economy and it is doing real harm to innovation in our country.

“In particular, we were pleased to see that the committee was able to come to an agreement on venue and discovery, and that members expressed a commitment to address the pleading provision. We are also thankful to the committee for maintaining the existing inter partes review (IPR) program.”

The United for Patent Reform coalition -- a vocal supporter of the House legislation -- said it believes the “carefully crafted” compromises on venue and discovery will have a “significant” impact in deterring abusive litigation.

“The coalition is grateful to the committee for recognizing the scope of the damage caused by patent trolls and the need for Congress to take swift action to address the issue with a package of reforms designed to inhibit the patent troll business model and create a fair legal system for American businesses,” it said in a statement.

The Consumer Electronics Association called the bill “balanced” and “common-sense,” noting the changes made to venue, discovery and pleading provisions.

“The money that a business must spend on legal bills to fight off trolls is funding it can’t invest in developing new products or creating new jobs,” CEA President and CEO Gary Shapiro said. “The Innovation Act will stop this legalized extortion of American innovators and free our small businesses from the burden of bogus lawsuits.”

The Application Developers Alliance also expressed its support for the venue provision, which makes it so a non-practicing entity can only file lawsuits in courts that are located where it or the defendant has legitimate standing.

“No longer will trolls be able to rent empty offices in small towns just to file their frivolous lawsuits in plaintiff-friendly courts,” Alliance President Jon Potter said.

However, the group said the bill still does not address the problem of abusive patent demand letters or vague lawsuit pleadings.

The alliance wants NPEs to disclose all details of infringement assertions early and accurately -- in demand letters and in judicial complaints.

Other groups contend even more improvements need to be made before the bill can hit the House floor.

“While we appreciate the spirit of H.R. 9 and share the mutual goal of deterring abusive behavior plaguing our patent litigation system, we cannot support the bill in its current form,” said Bobby Franklin, president and CEO of the National Venture Capital Association. “Absent additional modifications, we believe H.R. 9 will create unintended consequences that will discourage investment in innovation and entrepreneurship by making it more difficult for any patent-reliant startup to defend their intellectual property.

“The net result would have a chilling effect on the innovation ecosystem, threatening the crown jewel of the broader U.S. economy and a key driver of American job creation.”

Brian Pomper, executive director of Innovation Alliance, a group made up of research and development-focused companies, contends the bill needs “significant work” before it can move forward.

“Despite concerns raised by a broad coalition of universities, inventors, manufacturing technology and life science companies, venture capitalists, startup communities and others, as well as bipartisan concerns raised by members of Congress, the bill still includes numerous overly-broad and harmful provisions that need to be addressed,” he said.

“In its current form, the Innovation Act would dramatically weaken intellectual property rights, crippling the ability of legitimate patent owners to protect their ideas and undermining innovation and job creation in our country. It would increase the time and cost of all patent litigation, making life harder for inventors and investors and easier for patent infringers, including foreign competitors in China and other countries with weak patent protections.

“We urge Congress to either fix the troubling provisions in this bill or pursue alternative targeted legislation, such as the TROL Act in the House or the STRONG Patents Act in the Senate, that would address abuses while strengthening our critical patent system.”

Erik Telford, president of The Franklin Center for Government and Public Integrity, had even stronger words for the legislation, saying it represents “everything that’s wrong in American politics today.”

“It’s discouraging and disappointing to see members of Congress capitulating to President Obama’s efforts to advance the interests of his Silicon Valley cronies, like Google and his other campaign donors, to push legislation that will severely undermine American innovation,” he said. “That is why voices across the ideological spectrum have spoken out against the attempts to rush passage of this so-called reform.

“The solutions being proposed are like demolishing your house because your dishwasher is broken. To be sure, there are necessary reforms which can and should be made to target nefarious actors in the patent space.”

Telford argues that the Senate’s PATENT Act, which cleared the Senate Judiciary Committee last week, isn’t much better.

“We must protect property rights through policies that advance the interests of all American inventors, driving economic growth for our own country, not those of rivals like China,” he said.

It’s unclear when the bill will head to the House floor.

Significant differences remain between the legislation and PATENT Act -- in particular, a fee-shifting provision.

Both lawmakers and stakeholders have said the Senate version is more balanced.

To watch a webcast of the markup, view the amendments proposed during Thursday’s hearing or see a complete list of who voted for and against the bill, click here.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

Telehealth company files patent infringement lawsuit against competitor

Jessica Karmasek — Thu, 11 Jun 2015 15:34:24 -0500

]]> BOSTON (Legal Newsline) - Telehealth company American Well this week filed a lawsuit in federal court against competitor Teladoc for patent infringement.

American Well filed its lawsuit in the U.S. District Court for the District of Massachusetts Monday.

The company connects patients with board-certified physicians and other medical professionals for live, on-demand video consultations via mobile phones, tablets, computers and telehealth kiosks.

Basically, patients create an account online. Then, using the Internet or one of the company’s mobile apps -- which can be downloaded from the App Store or Google Play -- they can see and speak with a doctor over live video.

At issue in this case is American Well’s U.S. Patent No. 7,590,550 entitled “Connecting consumers with service providers.”

The Boston-based American Well, in its 10-page complaint, argues that Teladoc’s system relies on its patented technology, but Teladoc is not authorized to practice any of its patent claims.

American Well also contends that Dallas-based Teladoc is “well aware” that it has been engaging in and continues to engage in the unauthorized practice of its patented inventions.

“Although Teladoc publicly states, ‘we do not believe our business is dependent to a material degree on trademarks, patents, copyrights or trade secrets,’ Teladoc recently sought to obtain a license to American Well’s patents. American Well rejected Teladoc’s request,” the complaint states. “However, Teladoc has chosen to continue making, using, offering to sell and/or selling the Teladoc System.

“Moreover, in March of this year, Teladoc filed a request for the Patent Trial and Appeals Board to conduct an inter partes review of four claims within American Well’s ‘550 patent.”

IPR is a procedure for challenging the validity of a patent before the U.S. Patent and Trademark Office. The procedure, which allows third parties to challenge bad patents, is conducted by the PTAB.

According to American Well’s complaint, the PTAB has not decided whether to institute the IPR and American Well has not yet had the opportunity to respond. The company said it believes Teladoc’s “limited attack” on four claims will not be successful.

“Teladoc’s filing of the IPR request, however, shows that it was aware of American Well’s ‘550 patent before March 2015 and that Teladoc was concerned that it infringed the ‘550 patent,” American Well wrote in its lawsuit. “Meanwhile, Teladoc has chosen to continue making, using, offering to sell and/or selling the Teladoc System.”

American Well is seeking a judgment against Teladoc, an injunction, compensatory damages plus interest and costs, a judgment declaring the infringement “willful and deliberate,” treble damages and prejudgment interest, a judgment declaring the infringement “exceptional,” and expenses, costs and attorneys’ fees.

“Teladoc has infringed American Well's intellectual property,” said Ido Schoenberg, CEO of American Well. “While a transparent and competitive landscape is an imperative for innovation, Teladoc has unfairly disregarded American Well’s ownership rights to advance its business.

“We developed and patented these innovations and we owe it to our clients, partners and shareholders to protect them.”

According to its website, American Well has created an intellectual property portfolio that includes 26 U.S. patents, with another 25 applications pending.

Jason Gorevic, CEO of Teladoc, said in an emailed statement that American Well’s action is a direct response to Teladoc’s March 24 petition with the PTO to invalidate certain American Well patents.

“We very strongly believe that those patents are invalid,” he said. “For one, American Well’s claims of being ‘first-to-market’ are demonstrably false due to the fact that Teladoc and others were providing telehealth long before American Well was even formed as a company.”

Teladoc was founded in 2002; American Well was founded in 2006.

“Second, the patents in question are impermissibly broad and cover matters that are too obvious to be patented,” Gorevic said. “We will continue to pursue our petition to have American Well’s patents invalidated.

“As for today’s action by American Well, Teladoc will vigorously defend itself as it would in any other non-meritorious, ordinary-course litigation.”

IP law firm Fish & Richardson PC is representing American Well in the lawsuit.

According to the docket, Judge Indira Talwani has been assigned to case.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

Georgia hospital to pay nearly $1M for defrauding state Medicaid

Shaun Zinck — Thu, 11 Jun 2015 15:17:45 -0500

]]> A Georgia-based medical facility will pay nearly $1 million to the state for allegedly filing false Medicaid claims, said Georgia Attorney General Sam Olens on Thursday.

Health Management Associates Inc., operator of Clearview Regional Medical Center, will pay Georgia and the United States a total of $991,925 for filing the false claims with Georgia Medicaid in 2008 and 2009. The hospital was accused of giving kickbacks to Clinica de la Mama, an obstetric clinic that mainly serves undocumented Hispanic women, in order to receive referrals of those patients to the hospital for labor and delivery.

The complaint said the hospital knew the women would qualify for Medicaid or Emergency Medical Assistance. In the settlement, the state of Georgia will receive $396,770.

“I am pleased to announce that my office, in conjunction with the federal government, has reached a settlement with HMA and Clearview Regional Medical Center to resolve allegations that they paid kickbacks in exchange for patient referrals of vulnerable women,” said Olens. “Paying kickbacks for patients violates the law and defrauds Georgia Medicaid. The allegations that the defendants in this case took advantage of undocumented pregnant women about to give birth are extremely troubling. Health care providers’ top priority should be the care of their patients, not their bottom line.”

Dover apartment tenants to receive $75,000 in restitution for broken pool

Shaun Zinck — Thu, 11 Jun 2015 15:10:18 -0500

]]> More than 700 tenants at two Dover apartment complexes are to receive about $75,000 in restitution after the complexes advertised an amenity that wasn't available, said Delaware Attorney General Matt Denn on June 9.

The restitution is part of an agreement Dover Investors and Trinity Property Group reached with the Attorney General's Division of Fraud and Consumer Protection earlier this year, Denn said.

According to the complaint, the companies, which own and operate the Alder Park and Pine Grove Apartments, advertised there was a swimming pool at the apartments. However, the pool hadn't been functional for an extended period of time, Denn said.

“Businesses need to carefully ensure their advertisements reflect the actual goods and services they provide,” Denn said. “We will continue to work to make sure Delawareans are protected against false advertising.”

The money given to tenants can be paid in either cash or credit towards their account balance if owed. The tenants must have signed a rental agreement after Aug. 24, 2011, and before Feb. 16, 2014, in order to be eligible for restitution, according to Denn.

In addition to the restitution, the companies also will pay $25,000 in civil penalties and $8,000 in attorney fees and investigative costs, Denn said. The companies were also ordered to stop advertising the amenities unless they were available for tenants to use.

Rhode Island Senate OKs e-cig bill requiring child-resistant packaging

Shaun Zinck — Thu, 11 Jun 2015 15:04:19 -0500

]]> The Rhode Island State Senate passed a bill that requires child-resistant packaging for electronic cigarettes, Attorney General Peter Kilmartin said.

Kilmartin pushed for the legislation, which also prohibits the use of e-cigarettes on school property. The bill was sponsored by Senate Majority Leader Dominick Ruggerio, and a companion bill is sponsored by Rep. Helio Melo, which is pending in the state House of Representatives.

The bill expands current state law on “electronic nicotine-delivery systems” by adding the child resistant requirement. Child-resistant packaging is defined by the Poison Prevention Packaging Act, and means the packaging must be “significantly difficult for children under 5 years of age to open.”

"The popularity and use of e-cigarettes and vaping products continues to rise," Kilmartin said. "While the jury is still out on the health effects of e-cigarettes versus the known health traditional nicotine products, we can all agree that these products should be kept out of the hands of children. Most troubling is that these products–especially e-liquids–come in a variety of enticing flavors, such as candy crush and gummy bear, which appeal to children. There is currently no such regulation on this toxic product with respect to child-resistant packaging."

Florida real estate companies allegedly defrauded customers

Shaun Zinck — Thu, 11 Jun 2015 14:58:46 -0500

]]> Florida Attorney General Pam Bondi is filing a lawsuit against real estate companies for allegedly defrauding its customers out of thousands of dollars.

Property Solutions International Corp., Premier 1 Property and Marvin Scott were named in the complaint filed by Bondi's office June 5. The complaint said the companies promised to sell consumers' land for much more than it was worth.

Bondi said the defendants would charge customers about $2,250 on average to broker the sale of the land, and promising to refund most of the money. However, they rarely followed through with the promises made, she said.

The companies told consumers the payments they made would go to closing fees, title fees, deed fees, attorney fees, transfer fees, broker fees, administrative fees and assessment fees, the suit says, and, additionally, the companies alleged the money would go to posting the land for sale on the websites CoastToCoastland.com and FSBOPropertysolutions.com.

According to the complaint, the companies said about 200 million people visited the website. However, this isn't the case when looking at the websites' traffic estimates, the suit says.

In one incident the companies allegedly contacted a senior citizen saying they could sell his property, worth about $4,000, for nearly $30,000, and required a $1,300 payment to make the deal happen. Bondi said the companies would find potential sellers by using unlicensed telemarketers, and promising buyers were looking and ready to purchase property.

Bondi seeks restitution for 34 people who paid more than $70,000 to the companies.

Court action targets Arkansas grocery store's discount program

Shaun Zinck — Thu, 11 Jun 2015 14:48:04 -0500

]]> Three Arkansas consumers are suing a major grocery store in Arkansas court, alleging its rewards shopper card violated state law.

Kyle Rhodes, Wesley Atwood and Samantha Hudon filed the lawsuit June 1 in Pulaski County Circuit Court against The Kroger Company, Andrea Tyson and Patrick Scherrey, alleging its Kroger Plus shopper's card program violates state law by giving discounts only to card holders.

The lawsuit targets all 32 Arkansas Kroger Stores, and alleges the Kroger Card was instituted in order to allow Kroger to “track personal purchases and build a valuable database and marketing tool.”

The suit says only cardholders would receive certain discounts displayed on the grocery store shelves, and “intentionally refused or failed to grant the same discounts to buyers who did not present a [Kroger card] at the time of purchase.”

The suit seeks class status for those who used a Kroger Store in Arkansas within the last three years and didn't receive the discounts. The plaintiffs seek an unspecified amount in damages, plus court costs. The three plaintiffs are represented by attorneys Gene A. Ludwig, Kyle P. Ludwig, Kale L. Ludwig and Ryan K. Culpepper of the Ludwig Law Firm in Little Rock, Arkansas.

Pulaski County Circuit Court case number 4:15-cv-00312.

Chinese solar energy company sued over misleading investors

Shaun Zinck — Thu, 11 Jun 2015 14:43:33 -0500

]]> A Chinese solar energy company is facing a class action lawsuit over allegations that it made false statements about the viability of its business.

Kevin Knox filed the lawsuit May 28 in U.S. District Court in California against Yingli Green Energy Holding Co., claiming the company failed to disclose to investors that it was inappropriately recognizing revenue.

The company manufactures and sells solar energy products in China, and is reportedly the largest producer of those products in the world.

The lawsuit said the company announced an $88.7 million loss near the end of March. On the news of the net loss, Yingli's stock fell about 15 percent, or 35 cents per share, and closed at $1.99 per share.

Later in May, the company filed a report with the U.S. Securities and Exchange Commission that there was “substantial doubt” that the company could “remain solvent.” On that news, the stock fell another 12 percent, or about 21 cents, to close at $1.49 per share.

The lawsuit seeks class status for those who held stock in Yingli between March 18, 2014, and May 15 of this year. The suit also seeks and unspecified amount in damages plus court costs.

Knox is represented by Lionel Z. Glancy and Robert v. Prongay of Glancy Prongay & Murray LLP of Los Angeles.

U.S. District Court Central District of California case number 2:15-cv-04003.

Television jewelry company sued for falsely advertising discounts on products

Shaun Zinck — Thu, 11 Jun 2015 14:32:30 -0500

]]> A jewelry company that marketed its products on television, sometimes at steep discounts, is being sued over allegations that it falsely advertised discounts for some of its items.

Lianna Kabbash and Angela Hovind filed the lawsuit May 28 in U.S. District Court in California against The Jewelry Channel, doing business as The Liquidation Channel, claiming the company advertised “false former prices, false price discounts, and false retail values” in order to sell the items.

The lawsuit claims the company misrepresents the amount of the discount offered by giving a false retail value.

“As a result of LC’s false price advertising schemes, consumers end up paying more than they bargained for because they do not receive the actual value of the merchandise LC promises them,” the lawsuit said.

The lawsuit reported the company would mark down its products by as much as 93 percent. It alleges the amount LC claims the customer is saving is “grossly overstated because the (retail value) used to calculate the purported savings is not the prevailing fair market value.”

The lawsuit is seeking class status, and is also seeking more than $5 million in damages plus court costs.

The plaintiffs are represented by Eric H. Gibbs and Steve Lopez of the Gibbs Law Group, LLP in Oakland, Calif., and Gregory F. Coleman and Mark E. Silvey of Greg Coleman Law PC in Knoxville, Tenn.

United States District Court Central District of California case number 2:15-cv-04007.

Class action alleges Blue Moon not a craft beer

Shaun Zinck — Thu, 11 Jun 2015 14:28:21 -0500

]]> A class action lawsuit alleges a major beer company falsely advertises that one of its beers is craft brewed and charges a premium price for the product.

Evan Parent filed the lawsuit in May 30 U.S. District Court Southern District of California against MillerCoors, alleging its brand of Blue Moon beer isn't actually craft despite what the company advertises.

The lawsuit said the Brewers Association specifically defines craft breweries as “small, independent and traditional.” Additionally, to quality as a craft brewery, the company must produce less than 6 million barrels of beer every year, make beer with “only traditional or innovative brewing ingredients, and be less than 25 percent owned by a non-craft brewer, the suit says.

The suit says MillerCoors has eight major breweries in the county and produces more than 76 million barrels of beer each year.

The lawsuit seeks class status for all those who purchased Blue Moon beer over the last four years for personal, family or household purposes. Parent also seeks an unspecified amount in damages, plus court costs. He is represented by attorneys R. Craig Clark and James M. Treglio of Clark & Treglio in San Diego.

U.S. District Court Southern District of California case number 3:15-cv-01204.