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SEPTEMBER 2016
Distributed to over 40,000 subscribers each month
BeasleyAllen.comI. tion, the mechanisms of harm, and II.
other essential proofs. Both Plaintiff and
CAPITOL Defense lawyers questioned numerous AUTOMOBILE
OBSERVATIONS expert witnesses over the course of two NEWS OF NOTE
weeks and made closing arguments on
Aug. 19. A ruling is expected very soon.
On Sept. 26, 2016, Beasley Allen
New Developments In The Talcum Powder An Update On The Volkswagen Litigation
lawyers will travel back to St. Louis to
Litigation
begin the third trial against Johnson & The parties announced on June 28,
Talc litigation continues to move Johnson and Imerys, the talc manufac- 2016, that Volkswagen AG reached set-
forward at a rapid pace and there have turer that provides talcum powder to tlement agreements with the United
been a number of new developments the Johnson & Johnson Defendants, on States Department of Justice (DOJ) and
this summer. I will briefly discuss some behalf of Deborah Giannecchini. She the State of California; the U.S. Federal
of them. On July 15, a Motion for Con- was diagnosed with ovarian cancer in Trade Commission (FTC); and private
solidation and Transfer was filed before 2012 when she was 59 years old. This Plaintiffs represented by the Plaintiffs’
the United States Judicial Panel on Multi- came after she used Johnson’s Baby Steering Committee (PSC) to resolve
district Litigation ( JPML), requesting Powder for feminine hygiene for more civil claims regarding nitrogen oxide
consolidation of more than 20 talcum than 45 years.
powder cases currently filed in federal You will recall we reported on the
court. Consolidation into multidistrict first two verdicts after two St. Louis I N TH I S I S SU E
litigation relocates all cases pending in juries found in favor of Jacqueline Fox
and Gloria Ristesund as a result of their I. Capitol Observations. . . . . . . . . . . . . . . . 2
federal court to one venue for purposes
of pre-trial discovery. ovarian cancer being caused by the use II. Automobile News Of Note . . . . . . . . . . . . 2
Our firm filed an objection to consoli- of Johnson and Johnson’s Baby Powder
dation, contending that these cases are and Shower to Shower. Those verdicts III. Purely Political News & Views. . . . . . . . . 5
not proper for consolidation at this time. came down in February and May of this
year and totaled $72 million dollars— IV. Court Watch. . . . . . . . . . . . . . . . . . . . . . . 5
All parties to any pending federal talc
case had the opportunity to file a brief $62 million of which was punitive in V. The Corporate World. . . . . . . . . . . . . . . . 6
in support of or in opposition to consoli- nature—and $55 million dollars—$50
dation. In September, all interested m i l l ion of wh ich was pu n itive i n VI. Whistleblower Litigation . . . . . . . . . . . . . 8
parties will appear before the JPML and nature—respectively.
Additionally, there are more trials set VII. Product Liability Update . . . . . . . . . . . . 11
argue their respective positions on con-
solidation. Beasley Allen lawyers will for the end of this year and 2017. On VIII. Mass Torts Update. . . . . . . . . . . . . . . . . 13
attend oral arguments and present the Oct. 11, our talcum powder trial team
reasons for our opposition to consolida- will go to New Jersey to begin trial. IX. Business Litigation. . . . . . . . . . . . . . . . . 15
tion. Following the hearing, the Panel Additional trials are set for January 2017
in both New Jersey and St. Louis, Mo., X. An Update On Securities Litigation. . . . . 15
will issue an order either denying con-
solidation or consolidating and relocat- courts. Plaintiffs in the Talc litigation are XI. Insurance and Finance Update . . . . . . . 16
ing all federal cases to one venue. being represented by Beasley Allen
Kemp hearings began on Aug. 8, 2016, lawyers, along with Allen Smith of The XII. Premises Liability. . . . . . . . . . . . . . . . . 17
in Atlantic County, N.J. In Kemp v. State Smith Law Firm in Mississippi, and
lawyers with the St. Louis firm of Onder, XIII. Workplace Hazards. . . . . . . . . . . . . . . . 17
of New Jersey, 2002 WL 1901333, *12
(N.J. August 20, 2002), the Court chose Shelton, O’Leary & Peterson. Lawyers XIV. Transportation. . . . . . . . . . . . . . . . . . . . 19
not to adopt the more specific and rigor- with the Pennsylvania firm of Golomb &
ous criteria applied by the Supreme Honik and the D’Amato Law Firm in XV. Environmental Concerns. . . . . . . . . . . . 20
Court of the United States in Daubert v. New Jersey are involved in the New
Jersey case. XVI. Health Issue Concerns. . . . . . . . . . . . . . 21
Merrell Dow Pharmaceuticals, Inc.,
509 U.S. 579 (1993). Atlantic County If you have any questions regarding XVII. Update On Nursing Home Litigation . . . 24
Judge Nelson Johnson required hearings these cases or any aspect of the litiga-
after the defendants filed Kemp motions tion, contact Ted Meadows, who heads XVIII. An Update On Class Action Litigation. . . 24
challenging plaintiffs’ experts even up our Talc Litigation Team, at Ted.
Me adows @ be a sle ya l len.com or XIX. The Consumer Corner. . . . . . . . . . . . . . 27
though a federal court has denied
similar Daubert motions in another case 800-898-2034.
XX. Recalls Update. . . . . . . . . . . . . . . . . . . . 29
and expert challenges in the two St.
Louis cases that went to trial earlier XXI. Firm Activities. . . . . . . . . . . . . . . . . . . . 35
this year.
XXII. Special Recognitions. . . . . . . . . . . . . . . 37
Du r i ng Kemp hear i ngs, exper ts
expected to testify at trial are ques- XXIII. Favorite Bible Verses. . . . . . . . . . . . . . . 38
tioned as to their qualifications and
methodolog y si nce exper ts of ten XXIV. Closing Observations. . . . . . . . . . . . . . . 38
provide vital testimony regarding causa-
XXV. Parting Words. . . . . . . . . . . . . . . . . . . . 39
2 BeasleyAllen.comemitting Volkswagen and Audi 2.0L TDI • Customers can choose to sell back in the greater Tampa area. If you own
diesel engine vehicles in the United their vehicle to Volkswagen or termi- one of the affected vehicles, you may
States. Approximately 460,000 Volkswa- nate their lease without penalty, or, if have a claim. You can contact one of our
gen and 15,000 Audi vehicles are cur- a modification is approved, choose to class action lawyers for more details.
rently in use and eligible for buybacks have their vehicle modified free of More information about the proposed
and lease terminations or emissions charge and keep it. Customers who 2.0L TDI settlement program, including
modifications, if approved by regulators. select any of these options will also the settlement agreements in full, can
The parties submitted three agree- receive a cash payment from be found at www.VWCourtSettlement.
ments to Judge Charles R. Breyer of the Volkswagen. com or www.AudiCourtSettlement.com.
United States District Court for the Beasley Allen law yers handling this
Northern District of California, who • A n eligible vehicle’s value for a litigation are Dee Miles, Archie Grubb
presides over the federal Multi-District buyback will be determined based on and Clay Barnett. Our primary staff
Litigation (MDL) proceedings related to the Clean Trade-In Value as published contacts are Michel le Fu l mer and
the diesel matter. Judge Breyer is consid- in the September 2015 edition of the Whitney Gagnon.
ering: (1) a Consent Decree filed with NADA Used Car Guide, with adjust-
the Court by the DOJ on behalf of the ments for factory options and mileage.
Environmental Protection Agency (EPA) • Pay $2.7 billion over three years into Tesla Has Another Autopilot Crash
and by the State of California by and an environmental trust, managed by a
through the California Air Resources trustee appointed by the Court, to There was another highway crash in
Board (CARB) and the California Attor- remediate excess nitrogen oxide August involving one of Tesla’s Model S
ney General; (2) a Consent Order sub- ( N O x) e m i s s io n s f r o m 2 .0 L cars. The vehicle was being driven in
mitted by the FTC; and (3) a proposed TDI vehicles. autopilot mode on the streets of Beijing
class settlement agreement with the PSC at the time. It appears there were no
on behalf of a nationwide settlement • Invest $2.0 billion over 10 years in injuries to the driver or others around
class of current and certain former zero emissions vehicle (ZEV) infra- the crash site. After looking into the
owners and lessees of eligible 2.0L TDI str ucture, access and awareness incident and at footage from the driver’s
Volkswagen and Audi vehicles. The initiatives. dash camera, a Tesla Motors Inc. spokes-
parties continue to work expeditiously person told Law360 that the driver’s
to reach an agreed resolution for The settlement program will go live hands were not on the wheel when the
affected vehicles with 3.0L TDI V- 6 as soon as Judge Breyer grants final accident occurred, as is required when
diesel engines. approval of the agreements. Approval the Model S is in autopilot. It should be
Additionally, Volkswagen reached a will likely occur in the fall of 2016. Indi- noted that Tesla is saying that the
settlement with the attorneys general of vidual class members received packets feature is marketed as an “advanced
44 U.S. states, the District of Columbia detai li ng thei r r ights and options driver assistance system” and not a fully
and Puerto Rico to resolve existing and (including the option to “opt out” of the “self-driving car.”
potential state consumer protection settlement agreement) after the Court Tesla says the vehicle in the accident
claims related to the diesel matter for a granted preliminary approval of the pro- was being driven on a highway in
total settlement amount of approxi- posed class settlement at the latest China’s capital where a vehicle parked
mately $603 million. hearing on July 26, 2016. The emissions in the left side shoulder was also strad-
cheat affects the following vehicles: dling the left lane, and that the Tesla
• VW Jetta (2009-2014) was “following closely” behind the car
Proposed 2.0L TDI Settlements • VW Beetle (2013-2015) directly in front of it which swerved to
• VW Golf (2010-2015) avoid the parked car. The Tesla spokes-
Subject to Court approval of the pro- • VW Passat (212-2015) person said:
posed 2.0L TDI settlement program, • VW Toureg (2009-2016)
Volkswagen has agreed to: The driver of the Tesla, whose
• Audi A3 (2010-2015) hands were not detected on the
• Buy back or terminate the leases of • Audi A6 Quattro (2014-2016) steering wheel, did not steer to
eligible vehicles, or provide free emis- • Audi A7 Quattro (2014-2016) avoid the parked car and instead
sions modifications (if approved by • Audi A8/A8L (2014-2016) scraped against its side. As clearly
the EPA and CARB), and also make • Audi Q5 (2014-2016) communicated to the driver in the
cash payments to affected current and • Audi Q7 (2009-2015) vehicle, autosteer is an assist
certain former owners and lessees. • Porsche Cayenne (2014-2016) feature that requires the driver to
Our firm is also representing the Envi- keep his hands on the steering
• Volkswagen will establish a single wheel at all times, to always main-
funding pool to cover the 2.0L TDI ronmental Protection Commission of
Hillsborough County, Fla., in a case tain control and responsibility for
settlement program. The maximum the vehicle, and to be prepared to
f unding amount will not exceed against Volkswagen, Audi, and Porsche
to recover statutory penalties for viola- take over at any time.
$10.033 billion and is dependent on
how many customers participate in tions of a local clean air ordinance for Tesla’s spokesperson stated that auto-
the program and which option they these allegations. The illegal defeat pilot and features like autosteer are dis-
choose if proposed modifications devices installed in the Defendants’ abled by default in a Model S in order to
are approved. diesels affect more than 1,000 vehicles ensure “that those using the feature do
JereBeasleyReport.com 3so knowingly and deliberately.” The analysis. The agency said about 8 The complaint alleges that the company
accident comes about three months million inflators were manufactured to continued to market and sell cars with
after a much more severe crash involv- be used in automobiles made by Chrys- defective gear shifters even after it
ing a Model S being test driven in auto- ler, General Motors, Kia and Hyundai became clear they were unsafe. It’s
pi lot mo de o cc u r r ed i n F lor id a , through 2004. NHTSA, in its announce- alleged further that soon after FCA
resulting in the death of the Tesla ment of the upgrade, said: started selling cars with the faulty elec-
test driver. tronic gear shift system, which was sup-
In that crash, neither the Tesla nor the ODI’s investigation will focus on plied by ZF Friedrichshaffen AG in 2011,
driver was able to see a 53-foot white determining the entire U.S. popu- FCA received complaints from custom-
tractor-trailer that pulled in front of the l a t ion of A RC - m anufa c t u r e d ers who thought their cars were in park
car in time to apply the brakes due to a driver air bag inf lators, single- when they were actually in drive,
lack of contrast against a bright lit sky. and dual-stage, identification of causing rollaways and collisions. The
While the fatality is believed to be the affected vehicle manufacturers, National Highway Traffic Safety Admin-
first in 130 million miles of autonomous and whether any single - stage istration (NHTSA) had received several
test driving done by Tesla, consumer driver air bag inflators manufac- complaints by December 2013 and FCA
advocacy groups in July said the crash tured at ARC’s facility in China had started to phase out use of the shift-
proves the technology “has no place on were used in vehicles produced for ers in 2014. However, FCA didn’t issue a
public roads,” according to a letter sale or lease in the United States. recall until April 2016.
urging the Obama administration to Additionally, ODI will conduct a In February 2011, FCA started using
slow the process of self-driving car regu- program to recover the subject the ZF electronic gear shift system,
lation. The groups also said other, nonfa- ARC inflators from vehicles in the which uses electronic signals and not
tal Tesla autopilot crashes have come to field for further testing and evalu- traditional mechanical links to convey
light since the May accident, and the ation in support of root gear switch requests to the transmis-
technology should not be allowed on cause analysis. sion. The technology uses a monostable
the road until it’s proven safe through NHTSA launched its preliminar y shifter, which doesn’t stay in place
the National Highway Traffic Safety investigation after receiving two reports when a driver shifts gears, but springs
Administration’s investigation into that ARC air bag inflators ruptured and back like a “joystick.” NHTSA has
the matter. caused injury, one involving a 2002 received hundreds of complaints about
As we have reported previously, Con- Chrysler Town & Country and another the device, which the lawsuit says
sumer Reports magazine has also urged involving a 2004 Kia Optima. The inves- “clearly describe a pattern of failed gear
Tesla to entirely disable autopilot tech- tigation initially projected that 420,000 selection.”
nology in its vehicles until additional Chrysler Town & Countr y minivans In August 2015, NHTSA’s Office of
safety enhancements are developed. could be affected along with 70,000 Defects Investigation (ODI) started
About two weeks ago, however, the 2004 Kia Optima vehicles. During the looking into the Jeep Grand Cherokee.
National Transportation Safety Board course of the preliminary investigation. Findings in February catalogued 306 rol-
said the test driver in the fatal Florida NHTSA found that the affected inflators laway incidents, 117 of which ended in
crash was driving almost 10 miles over also affected cer tain GM and crashes, 28 involving injuries. FCA
the speed limit, but made clear that its Hyundai vehicles. announced it had initiated a recall on
preliminary report does not present a NHTSA said in July it was told by cars with the shifter in April 2016. FCA
probable cause for the crash. I fear there Transport Canada—a Canadian trans- sent a letter to all owners and lessees
will be many more problems with these portation regulator—that an air bag rup- warning them that their “vehicle may
vehicles before the technology is fully tured in a 2009 Hyundai Elantra, killing roll away, striking and injuring you,
developed. the driver. It said the inflator was manu- your passengers or bystanders if the
Source: Law360.com factured by ARC and ruptured in rela- vehicle’s engine is left running, the
tively the same way the inflators did in parking brake is not engaged and the
the two prior incidents mentioned transmission is not in the ‘PARK’ posi-
NHTSA Upgrades ARC Air Bag Probe After above. NHTSA said the driver air bag tion before exiting the vehicle.”
Driver’s Death module in the Elantra used a single- On June 24, 2016, five days after
stage inf lator made by ARC’s China Anton Yelchin was crushed to death
The National Highway Traffic Safety facility. when his parked Jeep Grand Cherokee
Administration (NHTSA) has upgraded rolled into him, FCA issued a follow-up
Source: Law360.com
its investigation into certain air bag recall notice offering a software patch
inflators manufactured by ARC Automo- that would install an “auto park” func-
tive Inc., which are used by a number of tion to avoid rollaways. NHTSA closed
Class Action Lawsuit Filed Against its engineering analysis after the recall
au t o m o b i l e m a nu f a c t u r e r s. T h i s
Chrysler Over Gearshift Malfunctions was announced, but complaints contin-
upg r ade ca me a f ter a d r iver was
killed in Canada in July after an air ued to come in about other transmission
A proposed class of drivers filed suit
bag rupture. issues not related to parked cars. It’s
recently against Fiat Chrysler Automo-
NHTSA’s Office of Defects Investiga- alleged in the complaint that the soft-
biles (FCA) in a New York federal court.
tion (ODI) is upgrading its preliminary ware patch has “proven ineffective,” and
The lawsuit is over the transmission
evaluation of the air bag inflators, which that it didn’t address dangers caused by
problem that was responsible for the
it opened in July 2015, to an engineering other gear changes, such as when a
death of Star Trek actor Anton Yelchin.
4 BeasleyAllen.comdriver makes a three-point turn. It the race is really beginning to heat up. IV.
appears that FCA has not offered any Regardless of who tries to change him,
additional remedial measures to resolve and how hard they try, I predict Trump COURT WATCH
the safety issues associated with the will continue to be Trump. The man has
ZF Shifter. changed positions on all of the key
This suit seeks certification for a issues so many times that the confusion United States Supreme Court Rules Federal
nationwide class and a New York sub- he has caused actually seems to help Securities Laws Do Not Preempt State Suits
class of anyone who purchased or him. The next few months will at least
leased an FCA car with the ZF shifter. be interesting! Earlier this year, the Supreme Court of
Those models include the 2012-2014 the United States ruled, in a unanimous
Chr ysler 300, the 2012-2014 Dodge opinion, that the Securities Exchange
Charger and the 2014-2015 Jeep Grand Alabama Legislature Elected McCutcheon Act does not bar shareholders from
Cherokee. The nationwide class could As Speaker Of The House bringing their claims in state court. The
include more than 800,000 U.S. drivers, opinion, authored by Justice Elena
according to the complaint. T he Republ ic a n C auc u s i n t he Kagan, arose from a shareholder suit
The suit accuses FCA of violating the Alabama House of Representatives nom- against a unit of Merill Lynch and other
Magnuson-Moss Warranty Act, the New inated Rep. Mac McCutcheon last month Wall Street firms that was filed in New
York Deceptive Practices Act and the as their candidate for Speaker of the Jersey state court. The suit alleged that
New York False Advertising Act. The House. When the legislature convened the Defendants engaged in a deceptive
complaint also includes claims for for a specia l session on Aug. 15, short-selling campaign against the share-
breach of implied warranty of merchant- McCutcheon was elected Speaker by a holders in violation of New Jersey’s
ability, breach of express warranty and vote of 68-28. He was then officially stringent securities and racketeering
unjust enrichment. The class seeks com- sworn in as Speaker. laws, as well as common law claims.
pensatory damages, treble damages, McCutcheon has represented District The decision in Merrill Lynch v.
statutory damages, punitive damages, 25, which includes parts of Madison and Manning was before the Supreme Court
award restitution, disgorgement of reve- Limestone counties, since 2006, and on appeal from the Third Circuit.
nues to class, award prejudgment inter- chaired the Rules Committee. McCutch- Merrill Lynch removed the case to
est and attorneys’ fees. eon replaces Mike Hubbard, who was federal court even though the claims
The Plaintiff in the suit is represented convicted on June 10 by a Lee County arose under state law. The Third Circuit
by Douglas G. Blankinship and Jeremiah jur y on 12 felony ethics violations, held that Merrill Lynch and others could
Frei-Pearson of Finkelstein Blankinship removing him from office. not litigate the suit in federal court
Frei-Pearson & Garber LLP. The case is In his new role, Speaker McCutcheon despite the complaint’s reference to
Lynd v. FCA US LLC in the U.S. District indicated his goal is to serve the people Securities & Exchange Commission
C ou r t for t he Nor t he r n D i s t r ic t of A labama, and to work with all (SEC) rules concerning short-selling
of New York. members of the House. He pulled no stocks. Upholding this decision, the
Source: Law360.com punches in noting that his predecessor United States Supreme Court ruled that
had a different focus. Addressing the the Securities Exchange Act does not
House membership, he said, “To put it prevent shareholders from bringing
bluntly, the days of the imperial speaker- their claims in New Jersey state court
III. ship are over.” The new Speaker later under the state’s securities and anti-rack-
PURELY POLITICAL told the media that he is honored and eteer i ng laws. I n t he u n a n i mou s
opinion, Justice Kagan wrote:
humbled to have the support of his col-
NEWS & VIEWS leagues in the House and is ready to
We will not lightly read the statute
go to work.
to alter the usual constitutional
Speaker McCutcheon is retired from
The Presidential Race Will Be Heating Up
balance, as it would by sending
the City of Huntsville, where he worked
actions with all state-law claims to
as a police officer, detective, probation
As we approach Labor Day, it appears federal court just because a com-
officer and zoning coordinator. He also
that the presidential race is definitely plaint references a federal duty.
has worked as a farmer, and as an associ-
beginning to take shape. While Hillary ate pastor in the College Park Church of Suggesti ng a nar row readi ng of
Clinton is leading Donald Trump in all God. He is a U.S. Army veteran, and Section 27 of the Securities Exchange
the polls by a large margin at this stage, earned his bachelor’s degree in criminal Act, Merrill Lynch argued that Section
I don’t believe the race is over. Both justice from Trinity University. The new 27 gives federal courts exclusive juris-
campaigns will move into another and Speaker and his wife, Debbie, have two diction over all suits that seek to enforce
higher gear very soon. This race prom- children. I predict that McCutcheon will any duty created by the act or its regula-
ises to be a knock down, drag out affair. do an outstanding job as Speaker. From tions, even if the suit is also brought to
It has been most interesting to watch all accounts, he appears to be a good, enforce state law.
Trump’s new campaign managers try to decent man with no personal agenda. The Supreme Court held that the juris-
make their candidate look “normal” and That’s a breath of fresh air! dictional test applied under Section 27
less “unstable.” They have a difficult Sources: WHNT, Al.com, Montgomery Advertiser of the Securities Exchange Act, which
task and I am not sure they can do it. In grants federal jurisdiction over all cases
any event, we will see if his new manag- “brought to enforce any liability or duty
ers can do a needed make-over now that
JereBeasleyReport.com 5created by” the statute, is governed by V. agreed to pay $512 million to settle with
the same test used to determine federal the direct purchaser class Plaintiffs in
question jurisdiction under Section 1331 THE CORPORATE the lawsuit styled King Drug Co. of
of the U.S. Code, which confers federal WORLD Florence Inc. v. Cephalon Inc.
jurisdiction on “all civil actions arising Source: Law360.com
under” federal law. Therefore, regard-
less of the potential differences between
Cephalon To Pay $125 Million To Settle
claims “arising under” federal law and Jury Finds PG&E Obstructed Investigation
Provigil Antitrust Litigation
claims “brought to enforce” the securi- And Violated Safety Laws
ties statute, the jurisdictional test is Cephalon Inc. has reached a $125
the same. million settlement with 48 states includ- The California utility company whose
Essentially, the Supreme Court ruled ing New York, New Jersey, Florida, faulty high-pressure gas lines exploded
that Plaintiffs’ references to SEC rules Pennsylvania and Texas to resolve alle- and leveled an entire San Francisco Bay
concerning short selling stocks were gations it paid generic-drug makers to Area neighborhood in 2010 was con-
not sufficient to create federal jurisdic- delay launching their own version of victed by a federal court jury last month
tion pursuant to the general “arising narcolepsy treatment Provigil. Cepha- on one criminal charge of obstruction
under” standard and that Plaintiffs’ lon, Barr Pharmaceuticals Inc. and their and five safety violations. Pacific Gas &
claims were not brought to enforce lia- parent company Teva Pharmaceutical Electric (PG&E), California’s biggest
bilities created by federal law. Justice Industries Ltd. have agreed to pay $125 uti lit y company, violated pipeli ne
Kagan added: million to the 48 states and the District record-keeping, evaluation, and testing
of Columbia, as well as individual con- requirements mandated by the U.S.
Applying a different test for juris-
sumers. This will bring to an end a mul- Natural Gas Pipeline Safety Act for high-
diction of claims “brought to
tistate investigation into allegations the pressure transmission lines. The utility
enforce” a statute versus those
companies delayed the entry of generic company also misled authorities with
“arising under” federal law would
versions of Provigil in violation of the National Transpor tation Safety
“undermine important goals of
various antitrust and consumer protec- Board (NTSB) which was investigating
interpreting jurisdictional
tion laws. New York Attorney General the deadly blast, which killed eight
statutes.
Eric Schneiderman, who led the investi- people and injured dozens more. The
In the concurring opinion, joined by gation, said in a press release: company was acqu itted of si x
Justice Sotomayor, Justice Thomas other charges.
agreed that federal jurisdiction was When pharmaceutical companies Federal prosecutors contended during
absent, but disagreed that Section 27 put profits ahead of people by ille- the trial that PG&E intentionally misled
should have the same jurisdictional test, gally restricting competition, it federal investigators about the standards
writing that the Exchange Act confers harms patients across our state. it used to identify pipelines at high risk
federal jurisdiction over any complaint This misconduct, which drives up of failure. The NTSB concluded that the
that alleges claims “that necessarily the cost of prescription drugs, will San Francisco-based utility’s “sloppy
depend on establishing a breach of an not be tolerated. maintenance practices and poor record
Exchange requirement.” keeping” paved the way for the blast,
The settlement, which comes out of
This unanimous Supreme Court deci- facilitated by “too-lax oversight by the
an escrow fund from Cephalon’s $1.2
sion resolves a split among the circuits Public Utility Commission.”
billion settlement with the Federal
regarding the jurisdictional reach of The disaster arose from an under-
Trade Commission (FTC) in May 2015,
Section 27 of the Exchange Act and may ground high-pressure natural gas pipe-
provides $90 million to the states and
encourage plaintiffs to file more state line that had a defective weld, but was
$35 million to consumers who were
law claims in state court. incorrectly listed in PG&E’s records as
harmed by the conduct. The settlement
If you would like to know more about seamless. It was reported that eight
is subject to court review and must get
this decision, or if you have any security people in San Bruno lost their lives, 38
court approval. The antitrust litigation—
cases that you would like for lawyers at homes were destroyed, a neighborhood
which includes a number of suits
Beasley Allen to investigate, contact Ali was obliterated and a city was trauma-
brought by direct purchasers, end
Hawthorne, a lawyer in our Consumer tized. Many San Bruno residents who
payors and the FTC—arises from a
Fr aud a nd Com merci a l L it igat ion lost their homes and suffered a multi-
series of reverse payment settlements
Section, at 800-898-2034 or by email at tude of injuries including burns and dis-
worth about $300 million that Cephalon
Alison.Hawthorne@beasleyallen.com. figuring scars settled civil lawsuits with
reached with four generic-drug makers
Source: Law360.com the utility in 2013. Additionally, the
in 2005 and 2006 to resolve patent
state’s Public Utility Commission hit
infringement litigation over the block-
PG&E last year with $1.6 billion in pen-
buster narcolepsy treatment. The gener-
alties for violations it found played a role
ics companies all sought approval to
in the disaster.
market their own versions of the drug
It was reported that during the trial,
on the same day, meaning that all four
prosecutors unexpectedly asked the
were eligible for the initial 180 -day
court to dismiss most of the potential
exclusivity window granted to first
punishment, which reduced total liabil-
filers under the Hatch-Waxman Act. In
ity down to $6 million. In the end,
April 2015, Cephalon, Barr and Teva
6 BeasleyAllen.comPG&E was ordered to pay just half that related transportation hub was being inmates … openly using impro-
amount. This apparently came as a sur- performed by women- and minority- vised tools on the helmets, which
prise to many observers. owned contractors. A jury in Manhat- damaged the helmets’ ballistic
Sources: The East Bay Times, The Los Angeles t a n, N.Y., deter m i ned t h at D av i s material, and created the poten-
Times, NPR, and The San Francisco Examiner deceived New York and New Jersey offi- tial for the tools’ use as weapons
cials overseeing the project in order to in the prison.
secure the projects under a provision
that was designed to ensure diversity in The inspector general also discovered
Defense Auction Company Accused Of $106
the workforce. The combined value of “testing and quality control” problems,
Million Insider Trades
the jobs was $586 million. as FPI “pre-selected helmets for inspec-
An investor has sued executives at Canadian contractor DCM acquired tion,” violating the terms of a Defense
Liquidity Services Inc., (LSI) an auction the $256 million contract for One World Department contract that called for
company, on behalf of the company. It’s Trade Center in 2007 and a subsequent random testing. The report also said
claimed that the executives knew an $330 million contract for the transporta- that the company instructed inmates to
attempt to lessen the company’s reli- tion hub in 2009. Davis, 65, was charged forge documents to make it appear
ance on defense contracts was failing, in 2013 with conspiracy and wire fraud helmets had passed inspection.
but didn’t tell investors. Instead, the along with his company, which also was The inspector general’s office said it
named Defendants—all executive board convicted. His defense was basically found no information of any soldiers
members—allegedly made $106 million that he did not intend to commit fraud who had been killed or injured as a
off of insider trades. In the suit, filed in during the time the contracts were result of the defective helmets. The mili-
Washington, D.C., federal court, Thomas being fulfilled. Obviously, the jurors, tary recalled the helmets in 2010 and
Billard, the named Plaintiff, claims that after hearing the evidence, disagreed. production stopped at that time. Federal
LSI founder and CEO William P. Angrick Prosecutors alleged Davis concocted Prison Industries had two contracts to
III, former CFO James M. Rallo and eight the scheme with Ecuador-born Johnny manufacture military helmets. The Pen-
current or former board members Garcia of Solera Construction Inc., who tagon had paid ArmorSource, an Ohio-
misled the public about the auction they say gained $200 million through based private military contractor, more
company’s f inances bet ween 2012 the scheme, and Gale D’Aloia of GLS than $30 million to build more than
and 2014. It’s alleged that all but two Enterprises Inc., who allegedly made 126,000 helmets. ArmorSource later
of three directors engaged in hundreds of thousands of dollars as a subcontracted with FPI.
insider trading. result of the fraud. Both Garcia and The Defense Department also hired
Billard alleges that the company, D’Aloia pleaded guilty to their role FPI directly to build another 23,000
which had historically received a major- i n the deception and testi f ied helmets, but it was never paid for these
ity of its revenue from contracts to against Davis. helmets after they were “quarantined.”
auction off scrap for the U.S. Depart- The FPI manufacturing facility where
Source: Law360.com
ment of Defense (DOD), made failed these helmets were built was shut down
attempts in 2012 to diversify its business and ArmorSource agreed to pay a $3
by buying two other companies. The million settlement for what the inspec-
Company Sold ‘Defective’ Combat Helmets tor general called a lack of oversight.
companies, GoIndustry and Network To Pentagon
International, auction competitors, did Source: TheHill.com by Tim Devaney
not perform well after merging with LSI. A government investigation found
It appears the executives did not fulfill “endemic manufacturing problems” at a
their responsibility to disclose that fact company that was sel l i ng combat Furukawa Settles Car Parts Antitrust
to investors. helmets to the federal government. The Claims For $42.5 Million
Attorneys for the Plaintiff are Eliza- people found that Federal Prison Indus-
beth K. Tripodi and Donald J. Enright of tries (FPI) had sold millions of dollars’ Japanese auto wiring supplier Furu-
Levi & Korsinsky LLP and Peter C. worth of defective combat helmets. The kawa Electric Co. will pay $42.5 million
Harrar, Benjamin Y. Kaufman, Daniel Justice Department’s inspector general to settle claims that it secretly agreed
Tepper, Gloria Kui Melwani of Wolf Hal- released a scathing report on practices with other companies to rig the price of
denstein Adler Freeman & Herz LLP. The at the company, a government-operated in-car electronic systems beginning in
case is Billard v. Angrick et al., in U.S. group that employed inmates to manu- the late 1990s. In the event the settle-
Distr ict Cou r t for the Distr ict facture nearly 150,000 military helmets. ment is approved by the court only
of Columbia. The helmets produced contained three manufacturers of so-called auto-
Source: Law360.com serious “deformities,” according to the motive wire harness systems out of the
report, including “ballistic failures,” 12 originally sued will remain in the
“blisters” and “expired paint.” The case. The other Defendants have settled:
hel met s were a l so m a nu fac t u red Mitsubishi paid $64 million to resolve
CEO Convicted Of Fraud Related To World
with “unauthorized methods.” The price-rigging claims for wiring and
Trade Center Construction Projects
report found: other auto parts; and a group of other
Larry Davis, the CEO of DCM Erec- parts manufacturers agreeing to pay
tors, was convicted last month of fraud- A sur pr i se in spec tion b y the $225 million. Furukawa has agreed “to
ulently representing that work on the [inspector general’s office] and provide substantial discovery coopera-
new World Trade Center (WTC) and a militar y personnel uncovered tion” as the case moves forward in the
JereBeasleyReport.com 7form of inter views, documents and Transocean agreed to a $212 million Dock line of cases. Consequently, the
sales data. settlement. recommended allocation amongst claim
The litigation arises from a massive Unlike the Deepwater Horizon Eco- categories is as follows:
investigation by U.S., Japanese and Euro- nomic & Property Damages settlement
pean authorities in and around 2011 that struck with BP, the Halliburton and • 80 percent—Real Property owners
yielded approximately $2.4 billion in Transocean (HESI/TO) settlements will • 0 . 6 p e r c e n t— P e r s o n a l P r o p -
criminal fines paid to the U.S. Depart- not pay for any economic loss or per- erty owners
ment of Justice (DOJ), including $200 sonal injury claims. Instead, the two set-
million paid by Furukawa over its admit- tlements, which total to $1,239,750,000, • 17.8 percent—Commercial Fishermen
ted role in price-fixing and bid-rigging cover claims that could have been
between 2000 and 2010. Several of the asserted for punitive damages as well as • 0.2 percent—Charterboat Fishermen
company’s executives went to jail for certain assigned claims from the BP set- • 1.4 p e r c e n t— L o s s o f S u b s i s -
their role in the scheme. tlement. The Court-appointed Alloca- tence Fishermen
While it’s not clear as to the size of tion Neutral, United States Magistrate
the Furukawa class of so-called end Judge Joseph C. Wilkinson, Jr., proposed Most HESI/TO claimants will not have
payors, the claims extend from 1998 to that the HESI/TO settlements be distrib- to submit any new documents because
2016. The Plaintiffs said in their com- uted to t wo d i f fe rent cl a s s e s of their claim will automatically transfer to
plaint that the company controls about claimants: the new HESI/TO settlement program
4 percent of the global market for wire after their claim is fully processed under
har ness systems. The par ties that The “New Class” consists of class the BP settlement. Claimants who did
haven’t yet settled are Chiyoda Manufac- members whose real or personal not file a BP claim will be required to
turing Corp., G.S. Electech Inc. and Asti property was physically oiled and, submit a claim form and supporting
Corp. and their affiliates. as a result, would be entitled to documents required by the BP settle-
The proposed class of end-payor Plain- punitive damages under general ment as well as proof of that claimant’s
tiffs is represented by Steven N. Wil- maritime law. Importantly, this timely preservation of rights pursuant to
liams, Elizabeth Tran and Demetrius X. i nclude s pr e v iou sly excluded Pre-Trial Order 60.
Lambrinos of Cotchett Pitre & McCarthy groups (such as local governments, Law yers in our firm’s Toxic Torts
LLP; Hollis Salzman, Bernard Persky and menhaden/pogy fishermen), indi- Section, who have worked on the litiga-
William V. Reiss of Robins Kaplan LLP; viduals/entities that opted out of tion, believe the proposed distribution
and Marc M. Seltzer and Steven G. the BP settlement, and BP settle- model offers a fair and expedient way to
Sklaver of Susman Godfrey LLP. The ment class claimants such as com- resolve claims. Judge Carl Barbier will
case is Wire Harness—End Payor mercial fisherman, charterboat hold a hearing on Nov. 10, 2016, to
Actions in U.S. District Court for the operators, and subsistence fisher- determine whether to approve the
Eastern District of Michigan. men. This class is set to receive HESI/TO settlements. This hearing will
$902,083,250 (or 72.8 percent) of come two weeks after the fairness
Source: Law360.com
the aggregate fund. hearing is held on Oct. 20, 2016.
The “Old Class” is comprised of
Distribution Model For Halliburton & thousands of business and individu-
Transocean Settlements Released als who were previously compen- VI.
sated i n the BP settlement. A
The massive oil spill that occurred in precondition to that settlement was WHISTLEBLOWER
the Gulf of Mexico in 2010 resulted in a BP agreeing to assign to the Old LITIGATION
huge settlement by BP and that has been Class certain claims it asserted
widely reported. With the passage of against Hallibur ton and Trans -
time, however, lots of folks have forgot- ocean. This class is set to receive The Implied Certification Theory Of FCA
ten that BP was not the only company the remaining $337,666,750 (or 27.2 Liability
bearing fault in the explosion aboard percent) of the fund on a pro rata
the Deepwater Horizon oil rig and the basis according to the amount a In June of this year, the U.S. Supreme
subsequent oil spill. Halliburton Energy c l a i m a nt r e ce i ve d i n t he B P Court upheld that businesses could
Services, Inc. and Transocean Holdings, settlement. violate the False Claims Act (FCA)
LLC were co-Defendants, along with BP, through implied false certifications. The
in litigation. As the litigation progressed, Although we will not learn as much
implied certification theory of FCA lia-
the Defendants all sought to assign about the potential distributions to Old
bility is applicable when a business or
blame to each other for the nation’s Class members until BP claims process-
person misrepresents compliance with
worst environmental disaster in history. ing wraps up, the distribution model for
federal statutes or regulations, which
While BP was designated the “Responsi- the New Class reveals what these class
then induces payment of federal funds.
ble Party” under the Oil Pollution Act, members can expect to receive. Accord-
Therefore, when a business fails to
both Halliburton and Transocean were ing to HESI/TO Claims Administrator
satisfy a material statute or regulation, it
also found comparatively negligent for 3 Michael Juneau, the distribution model
could result in an FCA violation. The
percent and 30 percent respectively. affords the greatest priority to claim
Supreme Court decision in Escobar has
Ultimately, Halliburton paid out more types that have the clearest and longest
left lower courts with the question as to
than $1 billion in settlements while recognized standing to assert claims for
how connected the ancillary laws or
punitive damages under the Robins Dry
8 BeasleyAllen.comregulations have to be in order for the statistics are material to the government agency. This came just six days after the
violation of a statute or regulation to paying Premier Education Group. Mate- SEC issued its first fine over such
constitute an FCA violation. riality is met when either a reasonable waivers against Atlanta building prod-
In Universal Health Servs., Inc. v. man would consider it to be material, or ucts distributor BlueLinx Holdings Inc.
Escobar, the Court upheld an implied when the Defendant possesses actual Antonia Chion, an associate director
false certification theory can be a basis knowledge that the recipient attaches of the SEC’s Enforcement Division, high-
for liability under the FCA. 136 S. Ct. importance to the matter. Escobar, 136 lighted the importance of financial
1989, 1995 (2016). In Escobar, the rela- S. Ct. at 2002. i nce nt i ve s to t he w h i s t le blowe r
tors were the parents of a child who The relators contend that the govern- program as she announced the latest
tragically had a seizure and died after ment would not have given Premier Edu- charges in a statement saying:
being diagnosed as bipolar and taking cation financial assistance had they
the medications for that disorder. 136 S. known of the regulation violations. Rela- Financial incentives in the form of
Ct. at 1993. The practitioner who diag- tors allege that Premier Education’s falsi- whistleblower awards, as Congress
nosed the daughter represented to the fied statistics were directed to the recognized, are integral to promot-
parents that she had a Ph. D., but did not government to obtain Title IV financial ing whistleblowing to the Commis-
mention that the degree came from an aid. Therefore, it is likely that the Rela- sion. Health Net used its severance
unaccredited internet college nor that tors have alleged a viable implied false agreements with departing
the State of Massachusetts rejected the certification theory by demonstrating employees to strip away those
practitioner’s application to become a the materiality of the false statistics pro- financial incentives, targeting the
licensed psychologist. Id. at 1997. vided to the government. Commission’s whistle-
The relators alleged that Universal If any of you are aware of fraud being blower program.
He a lt h subm it ted re i mbu r s ement committed against the federal govern- The SEC’s rules that enable whistle-
claims, which represented that specific ment, or a state government, the FCA blowers to collect 10 to 30 percent of
services were being provided by spe- can protect and reward you for doing the total award when giving information
cific types of professionals − even the right thing by reporting the fraud. If that leads to an action recovering at
though that was rarely the case. Id. at you have any questions about whether least $1 million, known as Rule 21F-17,
1998. The Supreme Court vacated the you qualify as a whistleblower, you can were passed in August 2011 as part of
judgment of the First Circuit and contact a lawyer at Beasley Allen for a the Dodd-Frank Act.
remanded the case, holding that an free and confidential evaluation of your
Source: Law360.com
implied false certification theory is a claim. You can email one of the lawyers
basis for liability under the FCA. Id. on our whistleblower litigations team:
at 2004. Andrew Brashier (Andrew.Brashier@
The holding in Escobar will soon be b e a sle ya l le n.com), A rch ie Gr ubb The Dermagraft FCA Investigation Results
interpreted by the District Court of New (A rch ie.Gr ubb @ bea sleya l len.com), In A $350 Million Settlement
Jersey in United States v. Premier Edu- Larry Golston (Larry.Golston@beasley
Sh i re Ph a r m aceut ica l s PLC h a s
cation Group. The relators in this allen.com) or Lance Gould (Lance.
reached a tentative $350 million settle-
pending action alleged that Premier Gould@beaselyallen.com). You can also
ment with the U.S. Department of
Education Group, who owns and oper- call these lawyers at 800-898-2034.
Justice (DOJ) to settle False Claims Act
ates 27 private colleges, has been fabri- Sources: United States v. Premier Education Group,
(FCA) violations and Medicaid-related
cating var ious statistics. Civil No. Civil No. 1:11-CV-3523-RBK-AMD, Universal Health
Servs., Inc. v. Escobar, 136 S. Ct. 1989 (2016) and claims over the sales and marketing
1:11-CV-3523-RBK-AMD. These statistics
Law360.com practices by the Massachusetts-based
include the job placement of their grad-
biotech company. This settlement arises
uates, the accreditation status of their
from the ongoing investigation into the
programs, and the academic progress of
SEC Fines Another Company Over Anti- sales and marketing practices of the skin
their students. Id. These falsified statis-
Whistleblower Agreements substitute product Dermagraft. Shire
tics violate numerous federal regulations
picked up the product when it acquired
including 34 C.F.R. § 668.32 (concern-
The U.S. Securities and Exchange Advanced Biohealing Inc., now known
ing student eligibility) and 34 C.F.R. §
Commission (SEC) is clamping down on as Shire Regenerative Medicine Inc., as
668. 22(b) (concerning student atten-
companies that attempt to restrict whis- part of a $750 million deal in 2011.
dance). The relators contend that as a
tleblowers. The SEC is scrutinizing Even though Shire divested the Der-
result of these fabricated statistics, the
employment agreements used by the magraft product in Januar y 2014, it
federal government has given financial
companies. For example, the SEC fined retained the liability that could come
aid and assistance to Premier Education
Health Net Inc., a health insurer whose from the DOJ’s investigation. Shire has
Group. Id.
severance agreements allegedly limited agreed to a civil settlement in the
Oral arguments are set for the ninth
former employees’ rights to whistle- amount of $350 million plus interest,
of this month to determine whether the
blower fees. Health Net agreed to pay a subject to negotiating a final settlement
falsified certifications give rise to FCA
$340,000 penalty. It was alleged that the agreement and obtaining final approv-
violations. In determining whether the
company impeded the agency’s whistle- als. The filing with the court stated:
false information concerning compli-
ance is sufficiently connected to consti- blower program by requiring exiting
The tentative settlement proposal
tute FCA violations, the court must employees to waive their right to a mon-
would settle the federal govern-
determine whether the alleged falsified etary award for providing tips to the
ment’s claims under the federal
JereBeasleyReport.com 9False Claims Act and the Derma- among other alleged kickbacks, to per- resu lt i n even larger whistle-
graft Medicaid-related claims for suade physicians to use the stents in the blower awards.
states that opt into the settlement. vascular systems of elderly patients and While the Tax Court’s decision did
Some states with Dermagraft Med- then billed Medicare for the procedures. not disclose the name of the institution
icaid-related claims might elect to Between 2007 and 2012, Atrium sold found guilty of tax fraud, it’s believed
opt out of any final settlement, about $382 million in iCast stents. the $74-million recovery was in the case
and those states’ claims would According to the whistleblower, 100 against Wegelin, Switzerland’s oldest
remain unresolved. percent of those were for unapproved bank. A federal judge ordered Wegelin
uses, and Medicare, Medicaid, military to pay $74 million in January 2013. That
The DOJ initiated both civil and crimi- hospitals and the U.S. Department of ruling was the first time a criminal sen-
nal investigations in June 2011, with U.S. Veterans Affairs paid for 70 percent of tence had been handed down to a
attorneys in Florida and Washington, them. The majority of the settlement foreign bank found guilty of violating
D.C., participating in the process. Shire money will go back to the government. U.S. law. Wegelin was just one overseas
mentioned the investigation two-and-a- This is one of the largest settlements bank to be prosecuted by the U.S. gov-
half years later when it sold off Derma- reached under the FCA for a medical ernment for providing a place for U.S.
graft at a loss of $650 million, saying device company in which the govern- tax evaders to hide their money. Federal
that it would retain the liabilities of the ment didn’t intervene. prosecutors accused Wegelin of hiding
investigation. The proposed settlement, Ms. Sullivan is represented by Chris more than $1.2 billion from the IRS in
if finalized, will be the second that Shire Hamilton, Meagan Martin and Kevin undeclared accounts.
has reached with the government over Colquitt of Standly Hamilton LLP, Loren The latest whistleblower award of
FCA violations in as many years. In Sep- Jacobson, Charles S. Siegel and Caitlyn $17.8 million will likely remove the
tember 2014, Shire reached another set- E. Silhan of Waters & Kraus LLP, Michael largest hurdle barring would-be whistle-
tlement for $56.5 million over the A. Kornbluth of Taibi Kornbluth Law blowers from exposing large-scale tax
marketing and promotion of drugs used Group PA, and Jeffrey A. Newman of fraud in the future, including cases
to treat attention deficit hyperactivity The Law Offices of Jeffrey A. Newman. involving giant foreign banks and off-
disorder and ulcerative colitis. The case is United States of America ex shore tax shelters. Whistleblowers who
The Dermagraft settlement was the rel. Esther Sullivan, Relator et al. v. provide tips to the IRS that result in an
fourth FCA settlement the DOJ reached Atrium Medical Corp. et al. in the U.S. enforcement action and recovery are
in one week last month. Other cases District Court for the Western Dis- entitled to receive up to 30 percent of
include two shippers settling allegations trict of Texas. the amount the government collects.
of overbilling, a South Carolina hospital According to the Wall Street Journal, the
Source: Law360.com
paying $17 million to resolve a whistle- IRS has paid 99 whistleblower awards
blower suit over FCA allegations, and totaling $103.5 million.
the University of Pittsburgh Medical Are you aware of tax fraud being com-
Center agreeing to pay $2.5 million to Tax Court Orders IRS To Pay
Whistleblower Pair $17.8 Million mitted against the federal government,
also settle a whistleblower suit with or a state government? If so, the FCA
FCA claims. can protect and reward you for doing
A husband and wife who provided
Source: Law360.com the right thing by reporting the fraud. If
tips and information to the Internal
Revenue Service (IRS) whistleblower you have any questions about whether
program that led to tax restitutions, you qualify as a whistleblower, you can
Atrium Medical Corp. To Pay $11.5 Million criminal fines, and civil forfeitures total- contact one of the lawyer’s on our firm’s
Over Kickbacks ing more than $74.1 million will receive Whistleblower litigation team for a free
a whistleblower award after originally and confidential evaluation of your
Atrium Medical Corp. has agreed to being denied one. On Aug. 3, Judge claim. You can email one of the lawyers
pay $11.5 million to settle a False Claims Julian Jacobs of the U.S. Tax Court on the firm’s Whistleblower Litigation
Act (FCA) lawsuit in a Texas federal awarded the unidentified pair $17.8 team, Archie Grubb, Larr y Golston,
court. It was alleged that the medical million in a decision that marks the first Lance Gould or Andrew Brashier at
device company paid physicians kick- time whistleblowers have been awarded Archie.Grubb@beasleyallen.com, Larry.
backs in exchange for promoting unap- a percentage of the criminal fines and Golston @ beasleya l len.com, L ance.
proved uses of medical stents. Esther civil forfeitures in addition to part of the Gould@beasleyallen.com or Andrew.
Grace Sullivan, who worked as a sales tax recovery. The decision reverses the Brashier@beasleyallen.com. You may
representative and territory business IRS’s stance that criminal and civil for- also call them at 800-898-2034.
manager from 2007 through 2012, feitures don’t count as part of the col-
accused Atrium in March 2013 of pro- lected proceeds.
moting its iCast for use in the vascular We b el ie ve t h i s aw a r d , w h ic h
system when it had only been approved amounts to 24 percent of the total col-
to treat tracheobronchial obstructions. lected proceeds, could serve to provide
The federal government in March 2014 encouragement and incentive to other
decl i ned to i nter vene i n the qu i potential whistleblowers who are wit-
tam suit. nesses to tax fraud—including cases of
New Hampshire-based Atrium held offshore tax fraud—and that could
dinners and provided financial grants,
10 BeasleyAllen.comVII. tributing the restraint loads to the move forward, there was not a sufficient
strongest portions of the body; and barrier to protect our young client.
PRODUCT The tire broke through the back of
• Minimize the “second collision” of the
LIABILITY UPDATE occupant against the interior surfaces
the rear seat and broke the little girl
against her own seatbelt. Her seatbelt
of the vehicle. was designed to protect her in a crash,
A Look At An Important Case Involving Seat belts are designed to distribute but not with the added weight of cargo
loads to the strong bony portions of the from the trunk. Testing has shown that
Rear Seat Defects
occupant. For a typical three-point seat plastic seatbacks such as this are defec-
Our firm represents the family of a belt system, the shoulder belt applies tive and cannot withstand even mild
10-year-old girl who was paralyzed in a the crash loads to the sternum and clavi- crash forces. It’s difficult to believe, but
car crash in south Alabama. Our young cle. The lap belt is designed to restrain GM maintains that a plastic seat is safe.
client was seated in the rear seat of her the pelvis by applying the restraint loads Lawyers in our firm are preparing this
family car (believed to be the safest to the pelvis. By applying restraining important case for trial in the Middle
spot) and was properly wearing her forces to these strong areas of the occu- District of Alabama and we look forward
seatbelt. Unfortunately, the car, a 2002 pant’s body, properly designed and to presenting this evidence to a jury.
Pontiac Grand Am, was involved in an worn seat belts are able to prevent or Mike Andrews, a lawyer in our Personal
accident when it struck another vehicle minimize this “second collision” for Injury/Products Liability Section, is the
while crossing an intersection. After the most crashes and maintain the occu- lead lawyer for the firm in the case. We
vehicles came to rest our little girl was pant’s body in an optimal position to wi l l i nclude updates as th is case
still wearing her seatbelt, but was protect the head and spine. By minimiz- develops.
unconscious and completely unrespon- ing the impact of this “second collision,”
sive. Her sister, who was seated next to the severity of any injuries to the occu-
her in the back seat, was completely pant are minimized or eliminated. Beasley Allen Lawyers Are Handling Cases
unharmed. The need to protect an occupant from Involving Recalled Takata Airbags In Honda
After our client was removed from the intruding cargo has also been well Vehicles
car and transported to the hospital, known in the automobile industry and
doctors discovered devastating injuries, among safety experts for years. Many Lawyers in our firm are handling a
including spinal injuries to her neck, veh icle ma nu fact u r i ng reg u lator y number of claims involving Honda vehi-
destruction of portions of her intestines, bodies require that seats and seatbacks cles equipped with recalled Takata
and paralyzing spinal injuries mid-abdo- meet an established minimum perfor- airbags which caused shrapnel-related
men. Even though she was properly m a nce level i n order to prov ide i nju r ie s. A s we h ave pr e v iou sl y
restrained (seat-belted) and her sister maximum protection to vehicle occu- reported, components of the airbags
was uninjured, our young client is now pants. The principles of this concept break off and can cause blunt force
confined to a wheelchair. Our inspec- are based on physics. The items in the trauma or lacerations of occupants.
tion of the car after the crash revealed vehicle will essentially want to continue These Takata airbags are subject to the
that the rear seat where the little girl moving at the pre-impact speed while largest recall in the history of automo-
was sitting was broken by cargo moving the vehicle itself (and restrained passen- tive industry. It became known that the
forward from the trunk. gers in the vehicle) are being abruptly inflators in these airbags were made
The need to restrain occupants within stopped. Any unrestrained cargo would with a propellant that could degrade
vehicles in order to provide crash pro- be moving toward the impact point at over time and which led to ruptures that
tection has been well known for many its pre-impact speed. This means that have been blamed for numerous deaths
years in the automobile industry. It has when a vehicle hits a wall at 30 mph and and injuries worldwide.
also been the subject of numerous stops, the restrained passenger does Airbag inflators aren’t filled with air,
public safety campaigns and advertise- also, but unrestrained items continue to but are instead filled with gases that are
ments.This protection has traditionally move at 30 mph until stopped by some created by burning propellants. Propel-
been provided through the use of seat other force. And if the rear seat fails to lants are used in jet aircraft, gun cham-
belts. In many cases, the need to wear protect occupants from cargo in the bers and demolition explosives. In
seat belts is included in driver’s educa- trunk, devastating injuries can occur. airbags, the propellant is compressed
tion programs. The purposes of a seat When GM designed and built the into aspirin-size tablets and placed in a
belt include: vehicle in this case, the automaker had metal tube called an inflator. During a
many available materials it could have crash, the propellant tablets are ignited
• To prevent occupant ejection from used to build the rear seat. Many manu- and converted from solid into a gas,
the vehicle; facturers, including GM, have used which erupts out of the inflator and into
metal springs and metal seat frames for the airbag in a matter of milliseconds.
• To couple the occupant to the vehicle Ammonium nitrate swells and shrinks
taking advantage of the energy man- years. Unfortunately for our family, GM
chose to build the rear seat of the 2003 with temperature changes. Eventually
agement properties provided by the the propellant tablets will break down
cr ush of the vehicle’s str ucture, Grand Am out of plastic. The only
barrier between the rear seat occupant over time into powder. Water and
thereby allowing the occupant to humidity speed the process. Powder is
“ride down” the forces produced and the trunk was a plastic seat back. As
a result, when the crash forces caused a less stable and burns more quickly than
during the crash by applying and dis- a tablet, so that an airbag inflator whose
spare tire in the trunk of this car to
JereBeasleyReport.com 11You can also read
