Class Action

Consumer protection issues include cases that address economic losses often related to security breaches like data breaches, or defective products. These are often handled in class action litigation, which involves joining a large number of people together in consolidated litigation against a company or other entity whose actions resulted in financial harm to the consumer.

Our focus in reviewing potential class action theories is centered on issues that are more product design oriented or violations of consumer protection statutes. Class action theories that involve purely fraud (and therefore “reliance”) have become difficult to prove due to the fact that individualized issues typically predominate and may defeat the commonality and typicality prongs required for certification under Rule 23, F.R.Civ.P.

Data Breach

It is estimated that cybercriminals steal $1 billion every year from small and medium sized businesses in the U.S. and Europe. Data breach involves any type of personal confidential information that has been stolen, accessed or even just looked at by someone who is not authorized to do so. With all the electronic information today and ease of access to information, it is easy to lose that information or not protect it as it should be.

A type of data breach the public is most familiar with involves hackers using malicious software, better known as malware, to infect and infiltrate the system of a business and access credit card or other personal consumer information like social security numbers. A data breach also may affect a business by causing data to be lost. For example, a breach affecting Community Health System caused patients’ medical records to be lost as well as personal information compromised and stolen.

Retailers like Target and Home Depot experienced cyberattacks around their point-of-sale (POS) systems, where malware had worked its way into all of the systems across the nation. Fortunately, the U.S. took a big step forward in cybersecurity by introducing chip cards with EMV (standing for Europay, Mastercard and Visa) technology. The new technology promises to help alleviate worries of data breach by means of a computer chip inside the card. The chip works as a microprocessor that creates a new transaction code upon each use.

But hackers are attacking much larger targets than retail POS systems. In 2017, one of the largest data breaches to date was reported. Hackers accessed the data for Equifax, one of the three major U.S. credit reporting companies, potentially compromising the data for up to 2.5 million Americans, potentially compromising the data of nearly 146 million Americans – about 60 percent of the adult population.

The consumer information hackers obtained includes the names of U.S. consumers and their social security numbers, dates of birth, addresses, and driver’s license numbers. Additionally, the credit card numbers for 209,000 consumers were stolen and the personal information used in disputes for about 182,000 people was also stolen. Another troubling aspect of the Equifax breach is that it potentially exposed all those affected to the threat of identity theft not just in the immediate future but for the rest of their lives.

Corporations involved in data breaches are often at fault because they are negligent in monitoring their cyber security, and do not act quickly to recognize and arrest a data breach or repair a weakness. There are security standards that corporations are required to follow to protect confidential information such as payment card information or confidential medical information.

Defective Automobiles and Auto Products

A vehicle is one of the major purchases a person will make. A lot of time is usually invested in researching the best deal, finding a good warranty plan, and making sure the vehicle is suitable for the driver’s needs. A new vehicle purchase also has a lot of emotional attachment. People want to love what they drive. But above all, they need to rely on the vehicle.

When a manufacturer creates a defective vehicle, the bond of trust between the consumer and the manufacturer is broken. The car may lose value, making it impossible to resell, or incurring uninsurable repair costs. In short – the consumer isn’t getting what he paid for, or what he was promised.

Beasley Allen is currently working on a number of auto defect class actions in an effort to secure compensation for economic losses related to the defective vehicles, including vehicles affected by the GM ignition switch and Takata airbags.

In addition to defective products, economic loss claims also can be related to deception on the part of the automaker, which sells a consumer a vehicle based on certain promises that are not kept, or that are based on falsehood.

An example of this is the Volkswagen emissions cheat scandal. Volkswagen installed the emissions cheat on around 11 million diesel-powered vehicles worldwide, including the half million U.S. vehicles — all while promoting “clean diesel” as an alternative to electric and hybrid vehicles.

The defeat device enables the vehicles to detect the special parameters of an emissions drive cycle, which prompts the vehicle’s computer to turn on emissions controls, thereby making the vehicle fully compliant with U.S. Environmental Protection Agency (EPA) rules during testing. The software also senses steering, throttle, and other variables unique to real-time driving, which cues the computer to turn off emissions controls, allowing the vehicle to release extremely high levels of nitrogen-oxide emissions up to 40 times higher than federal limits.

Later, regulators also began investigating Fiat Chrysler for similar allegations of emissions cheating. The EPA is assessing emissions-control software in more than 100,000 diesel-powered Jeep Grand Cherokees and Dodge Ram pickup trucks, which manufacturer Fiat Chrysler (FCA) failed to disclose to regulators as required by law.

While the EPA wasn’t ready to call the software a “defeat device” like the software at the center of Volkswagen’s costly emissions scandal, the agency conceded that so far Fiat Chrysler’s software does appear to cheat emissions requirements in violation of the Clean Air Act. The questionable software was found in model year 2014, 2015, and 2016 Jeep Grand Cherokees and Dodge Ram 1500 trucks with 3.0 liter diesel engines sold in the U.S.

Environmental

Protection of people and their property from large corporate polluters is very important. A key part of litigation against these wrongdoers involves the ability to represent a large number of people who have suffered economic losses as a result of environmental pollution. A prime example of this is the 2010 BP Oil Spill.

On April 20, 2010, a massive offshore oil rig known as the Deepwater Horizon exploded and caught fire in the Gulf of Mexico, about 50 miles from Louisiana’s coastal wetlands. Firefighters and the U.S. Coast Guard fought for 2 days to contain the fire, but the rig sank on April 22, releasing nearly a million gallons of diesel fuel into the Gulf waters and creating an unstoppable leak of crude that eventually became the biggest oil disaster the U.S. has ever seen.

It took four months to seal the well and stop the flow of oil. As a result, the environmental and commercial impact was unprecedented. Commercial fishing and shrimping operations all along the spill area were shut down for months, putting hundreds of fishermen already hard hit by the economy out of work. The timing couldn’t have been worse, as the disaster hit the $21 billion commercial seafood industry just before harvesting season in mid-May. Other industries affected included shipping, tourism, the restaurant industry, real estate, and commercial fishing, all of which suffered economic losses and lost income as a result of the spill.

Consumer Products

In many cases where defective consumer products result in economic losses, an avenue of redress is class action litigation. A class action lawsuit allows a large group of people to bring their claims collectively, where an individual may not have the time or resources to file an individual lawsuit. Sometimes, these lawsuits may be related to individual or group personal injury or products liability lawsuits, but consumers are seeking compensation for financial losses related to purchasing a defective product, rather than an injury.

An example of this is litigation related to the Johnson & Johnson talcum powder products. The personal injury / products liability litigation focuses on claims involving women who developed ovarian cancer as a result of using talc. The economic loss class action involves money consumers have spent purchasing talc products that they otherwise would not have done had they known the risk involved in using the products.

In addition to small, individually purchased consumer products, class action litigation may also apply to materials consumers buy in bulk or through a contractor, particularly construction materials like flooring, when the materials turn out to be defective.

In an effort to save money, builders may seek out of cheaper construction products that appear to meet the same standard as construction materials used in past jobs. However, only time will tell if the materials or equipment used was of the same quality as more expensive counterparts, leaving the homeowner with the aftermath. Defective construction products can mean the difference between life and death for unsuspecting homeowners.

Commonly defective construction products include shingles, tiles, windows and flooring. Defective construction materials may be the result of improper testing, problems during the manufacturing process and/or failure to withstand the area’s environmental conditions. Homeowners must be diligent to ensure that builders are using proper construction materials and application techniques when building.

Defective construction materials also may come from a home improvement store, which may be accused of distributing defective products. A recent example is a class action lawsuit against Lowe’s and Armstrong World Industries over laminate flooring that emits toxic levels of formaldehyde. Similar claims were filed against Lumber Liquidators, with complaints alleging the manufacturers of the laminate flooring used materials from untrustworthy Chinese mills that use levels of formaldehyde that exceed U.S. standards to save time and money.


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