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3rd Circuit Deals Blow to Class-Arbitration Waivers

February 25, 2009

Consumers and the lawyers who aim to represent them en masse scored a major victory Tuesday when a federal appeals court held that arbitration clauses may be struck down — under state law — as unconscionable if they prohibit the use of the class action vehicle in cases where a large number of consumers have claims that would individually yield only small sums.

 

In Homa v. American Express Co., the 3rd U.S. Circuit Court of Appeals revived a suit against American Express after finding that a lower court improperly dismissed the suit on the grounds that the consumers were barred from suing in court or as a class and instead were required to bring individual claims before arbitrators.

 

The unanimous three-judge panel concluded that state courts (as well as federal courts applying state law) are free to declare that such class-arbitration waivers are unconscionable — even if the contract included a choice-of-law provision that called for applying the law of a state that is decidedly amenable to such pro-business provisions.

 

Read Article: Law.com

 

Novartis Unit Must Pay $78 Million for Overcharges

Novartis AG’s Sandoz generic-drugs unit overcharged Alabama’s Medicaid health program for medicines and must pay more than $78 million in damages, a jury ruled. The jury in Montgomery, Alabama, found that the company committed fraud and awarded $28.4 million in compensatory and $50 million in punitive damages, Dee Miles, a lawyer representing the state, said today.

 

The ruling is the second loss for Novartis in Alabama in lawsuits over so-called Average Wholesale Prices, an industry price-reporting system that drugmakers are accused of manipulating to boost market share and profits. Novartis and GlaxoSmithKline Plc were ordered in July to pay the state $114 million in damages over AWP pricing on brand-name drugs.

 

“The fact that a generic drug is cheaper than a brand did not give Sandoz the right to cheat,” said Jere Beasley, another lawyer for the state. “Sandoz knowingly reported false prices.”

 

Read Article: Bloomberg

 

New Rule Enacted by Bush Administration Impedes Cases Against Nursing Homes

The Bush administration shut off a source of information last fall about abuse and neglect in long-term care facilities that people suing nursing homes consider crucial to their cases. The change, which affects the $144 billion nursing-home industry, was enacted with no public notice or attention.

 

“This is pretty stunning,” said Mark Kosieradzki, a plaintiff attorney in Plymouth, Minn. “Nobody was told. It was just done.” The rule designates state inspectors and Medicare and Medicaid contractors as federal employees, a group usually shielded from providing evidence for either side in private litigation.

 

The restrictions affect about 16,000 nursing facilities and 3 million residents in the United States. The practical effect is to force litigants to go to greater lengths, including seeking court orders, to get inspection reports or depositions for cases they are pursuing or defending.

 

Read Article: Washington Post

 

Detroit to pay $2 million in lawsuit for death in lockup

The City of Detroit has agreed to pay $2 million to settle a lawsuit over the death of a 67-year-old man in a police lockup, a case that produced an extraordinary rebuke from a judge about the performance of Detroit’s lawyer.

 

James Stone, arrested for a parole violation, had a heart attack and died in August 2005 at the police department’s Second Precinct. Lawyers for his estate said he complained for hours about chest pain, but no one took him to a hospital. The case was settled Monday for $2 million before a jury was picked in federal court, said Towana Tate, a lawyer for Stone’s estate. City lawyers declined to comment on the financial terms.

 

Stone’s family is happy the litigation is over “but they’re still grieving and upset over their dad’s death,” Tate said Tuesday. Earlier this month, U.S. Magistrate Judge Steven Pepe accused the city of “egregious misconduct” during the discovery phase of the case.

 

Read Article: Detroit Free Press

 

Trigger-happy gun

James Bond’s gun of choice has been targeted for a recall. Smith & Wesson said yesterday that it’s recalling all Walther PPK and PPK/S guns manufactured between March 2002 and early this month. The Springfield firm said a defect could allow the $605 weapon to go off without anyone pulling the trigger.

 

“While we have no reason to believe that the condition affects every pistol produced during the designated period, we have chosen in the interest of safety to replace the hammer block in every (weapon) that is returned,” Smith & Wesson said in a U.S. Securities and Exchange Commission filing.

 

In a memo to customers posted on its Web site, the Springfield firm advised owners of the gun to “STOP USING YOUR PISTOL AND RETURN IT TO SMITH & WESSON AT ONCE.” Company Vice President Liz Sharp told the Herald that Smith & Wesson engineers discovered the problem during routine tests, and that the firm “has not reported” any consumer injuries.

 

Read Article: Boston Herald

 

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