A qui tam lawsuit filed against Wells Fargo by two whistleblowers has been unsealed. The suit claims that Wachovia, which was bought by Wells Fargo in 2008, defrauded the federal government by accepting billions from federal programs while engaging in and concealing fraudulent banking practices, including falsifying certifications of the bank's financial statements. Wells Fargo is accused of not being upfront about the fraud inherited from Wachovia.
Employers often go to great lengths to protect their company. To do this, they may develop strict workplace practices with which they ask employees to comply. If an employee violates a contract or the requirements set in an employee handbook, there may be grounds to take legal action against the employee.
In United States ex rel. Glenda Martin and ex rel. Tammie Taylor v. Life Care Centers of America (2014 U.S. Dist. LEXIS 142660), Federal Judge Harry Mattice of the Eastern District of Tennessee found that the Government is permitted to extrapolate from a sample of fraudulent claims to attempt to show larger liability under the False Claims Act ("FCA"). The United States argued that the history and purpose of the FCA support the use of statistical sampling in attempting to prove that an entity is defrauding the Government. Life Care Centers of America ("LCCA"), based in Cleveland, Tennessee, is now appealing to the Sixth Circuit, arguing that statistical sampling cannot satisfy the Government's burden of proof and that its due process rights are negatively affected by such statistical extrapolation.1
In Ross Stores, Inc. and Rachel Goss (Case 31-CA-109296 (October 2014)), Administrative Law Judge ("ALJ") Jay R. Pollack found that clothing retail chain Ross Stores violated the National Labor Relations Act ("NLRA") when it required employees to sign an agreement that barred them from pursuing collective actions. Pollack said that the agreement violated Section 7 of the NLRA, which protects employees' rights to engage in concerted activity when acting in a manner intended to improve their working conditions. In making his decision, ALJ Pollack followed the precedent of the National Labor Relations Board ("NLRB") in D.R. Horton, 357 NLRB No. 184 (2012), which holds that arbitration agreements cannot prevent employees from engaging in concerted activity.1
New Jersey's Assembly Consumer Affairs Committee recently approved a bill meant to reduce penalties for companies that are found by a court to have committed only a technical violation of the state Consumer Fraud Act. Currently, an individual who wins a consumer fraud lawsuit against a New Jersey company is entitled to compensation for the costs of litigation, including attorney fees, even if no damages were suffered by the plaintiff.
The United States Court of Appeals for the Eighth Circuit has ruled that whistleblowers bringing a case under the False Claims Act ("FCA") do not necessarily have to present specific examples of the fraud in order to successfully plead a complaint. The Court decided that a whistleblower can successfully plead a false claims complaint if the whistleblower has "first-hand knowledge" of the alleged fraud. This decision is positive for whistleblowers because they may have witnessed fraud within a company but usually do not have access to company documents that would allow them to specifically show the alleged fraud.1
Under the Dodd-Frank Act, whistleblowers can receive sizable awards for notifying the Securities and Exchange Commission (S.E.C.) of securities fraud. The first payout -- close to $50,000 -- was made in 2012, and the whistleblower program continues to be effective. The S.E.C. is authorized to award between 10 and 30 percent of a sum collected by the government as a result of information provided by a whistleblower.
In Conway v. Cutler Group, Inc., (2014 Pa. LEXIS 2084) the Pennsylvania Supreme Court recently issued a decision holding that an implied habitability warranty from developers does not extend to secondary purchasers of a property. The Court reasoned that because the secondary purchasers were not a party to a contract with the homebuilders, the homebuilders could not be liable to them for breach of implied warranty.1 Despite the plaintiffs' contention that the implied warranty of habitability was a judicial creation from a 1972 Pennsylvania Supreme Court decision, the Court held that if the warranty is to be expanded to secondary purchasers, it must be the Pennsylvania State Legislature that makes that decision. 2
People generally assume that products available to consumers are reasonably safe when used in the proper manner. However, the reality is that each year many products have to be recalled because they pose an unreasonable risk of injury or death, even if the products were initially approved by government regulators.
On September 2, 2014, the Ninth Circuit Court of Appeals held that the U.S. District Court for the Central District of California erred in dismissing a shareholder derivative case against Allergan. The plaintiffs in the case allege that Allergan Board of Directors ("Board") allowed for the illegal marketing of Botox by promoting "off-label" uses of the product. The plaintiffs complain that the Allergan Board members participated in organizing programs to promote the off-label uses and encouraging the sales team to market Botox for off-label uses.1