USFL Settles Class Action For Inflating Cost Of Life Insurance
Subject to final approval by the United States District Court for the Southern District of Ohio, U.S. Financial Life Insurance (USFL) Company has reached a class action settlement valued at over $28 million with the named Plaintiff and a proposed settlement class involving nearly 12,000 policyholders of USFL.
The lead plaintiff and the proposed settlement class are represented by Beasley Allen lawyers Dee Miles, Rachel Minder, and Paul Evans, along with local counsel Jeffrey S. Goldenberg and Todd B. Naylor of Goldenberg Schneider, L.P.A.
On May 4, U.S. District Judge Matthew W. McFarland of the Southern District of Ohio preliminarily approved the proposed settlement and preliminarily certified the proposed settlement class. Judge McFarland preliminarily appointed Dee Miles, Rachel Minder, and Paul Evans as Lead Class Counsel and ordered the dissemination of class notice to proposed class members.
The proposed settlement relates to the class action complaint filed in Farris v. U.S. Financial Life Insurance Co., No. 1:17-cv-417 (S.D. Ohio filed June 19, 2017). Plaintiffs’ class action complaint asserted claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, conversion, and fraudulent misrepresentation, alleging the insurer unjustifiably increased the cost of insurance (COI) charges on certain universal life products in 2015. These increases affected approximately 11,891 universal life policyholders, who are included in the proposed settlement class definition.
The settlement agreement reached with USFL, subject to final approval, provides the proposed class members with several valuable benefits.
- USFL will create a common settlement fund for $11.5 million. This fund will be distributed to settlement class members, pro-rata, based on the proportion of COI charged to each class policy after the 2015 COI rate increases. No settlement class member will receive less than $100.
- The proposed settlement provides that USFL agrees not to impose any COI rate increases on class members’ policies for five years.
- USFL agrees not to seek to void, rescind, cancel, have declared void, or otherwise deny coverage or death claims submitted by settlement class members based on any alleged lack of insurable interest or misrepresentations made in connection with the initial application process.
- For class members who have not already availed themselves of this right in 2021, USFL agrees to provide in-force illustrations to class members upon request and at no cost to the settlement class member until October 1, 2021.
In total, the collective value of the proposed settlement benefits is between $26,143,000 and $29,071,600. This total value comprises the $11.5 million Common Settlement Fund and the valuation of the other relief detailed above, reasonably valued between $14,643,000 and $17,571,600, which is supported by formal and informal discovery as well as valuations by Plaintiff’s experts.
Subject to the requirements of any orders entered by the court, the Settlement Administrator will send a Class Notice by first-class mail to the last known address of each reasonably identified person and entity in the Settlement Class. Settlement Class Members will have 45 days after notice is sent to either exclude themselves from the Settlement Class by sending a written Request for Exclusion to Co-Lead Class Counsel or object to the proposed Settlement by filing a written statement of objections with the Court. The Final Fairness Hearing is scheduled for August 12, 2021.
Our firm is proud to represent these policyholders and is pleased with their relief in this class action settlement. The case was a hard-fought battle with worthy advocates opposing our class, but the case resolved with very good relief and benefits to the class members. We look forward to the court granting final approval to the class in August.
For information on this settlement, contact our Consumer Fraud & Commercial Litigation Section Head Dee Miles at [email protected], Rachel Minder at [email protected] or Paul Evans at [email protected] or by telephone at 1-800-898-2034.
Ford Tailgate System Class Action
Our law firm has filed an important class action lawsuit against Ford Motor Co. in Michigan. Our lawyers contend in the complaint that “some of Ford’s ‘toughest’ and ‘most capable’ trucks are in fact dangerous and unfit for the road due to an electronic tailgate defect.” The nationwide class action alleges Ford knowingly advertised and sold vehicles suffering from a “dangerously defective and unreliable tailgate latch system.” It also alleges the faulty systems cause the affected Ford trucks to release the loads they are towing randomly, even while in motion.
The affected trucks include model year 2017-2021 Ford F-250, F-350, and F-450 Super Duty vehicles with an electronic tailgate system. The trucks cannot reliably and safely transport humans and animals or haul and tow heavy cargo and equipment, which is their highly advertised function. While Ford knew about the tailgate defect, it has continued marketing the trucks as reliable for towing and hauling heavy-duty gear.
William Cunningham, one of the lead plaintiffs in the case, “bought a new 2019 Ford F-250 in 2019, and although the vehicle had already faced a safety recall, he was never made aware of its potential defect. The Cunningham’s tailgate on the truck began opening unintentionally not long after he purchased the truck and has continued to do so since.
In 2018, Tristate Collision, LLC, another lead plaintiff in the case, alleges a similar situation occurred when it purchased a new 2018 Ford F-250 in Alabama. Two months after buying the truck, the tailgate began opening unintentionally. Since then, Tristate Collision says it has done so at least once every other week. This defect poses a clear, substantial, and unreasonable danger of death to any person in the vehicle.
Ford has been aware of the tailgate defect since 2017. The company has issued technical services bulletins relating to the problem and recalled 231,664 vehicles for tailgate-related issues. However, the recall was inadequate because it did not include all the affected vehicles. The vehicles still suffered the issue after repairs were made. Cunningham and Tristate Collision seek to represent anyone in the US who owns or leases one of the affected Ford trucks. They are filing an Alabama and Georgia subclass. The lawsuit includes claims of Magnusson-Moss Warranty Act violations, fraudulent omission, breach of warranty, and unjust enrichment.
Members of Beasley Allen’s Auto Defect Class Action Litigation Team, Dee Miles, Clay Barnett and Mitch Williams, are leading the charge on this case, along with two other law firms, Dicello, Levitt & Gutzler and The Miller Law Firm. We will keep our readers posted on developments in this new class action lawsuit as it goes forward. If you have any questions, contact Dee, Clay or Mitch at 800-898-2034 or by email at [email protected], [email protected] or [email protected].
More Information On Class Action Litigation
Activity in class action litigation hasn’t slowed down a bit during 2020, and the same holds true thus far in 2021. Even with the pandemic slowing down the judicial system, cases are being filed and settled, and trials being set. There have been a significant number of settlements around the country in class action litigation. We will mention some of the significant ones below.
$1.3 Billion Hyundai, Kia Engine Flaw Settlement
A California federal judge has given final approval to an approximately $1.3 Billion settlement that includes full reimbursements for repairs and extended warranties to resolve consolidated class claims that Hyundai and Kia sold vehicles with failure-prone engines that could sometimes catch fire.
U.S. District Judge Josephine L. Staton of the Central District of California granted the parties’ request for final approval of a nationwide settlement valued at $1.3 billion that reimburses consumers for out-of-pocket repairs, offers software updates, provides goodwill payments and extends warranties for affected-class vehicles, among other things. The bulk of the settlement — almost $1 billion — is attributed to the estimated value of the lifetime warranty coverage.
Despite their willingness to settle, the automakers have denied thousands of claims submitted by class consumers, a development that concerned Judge Staton. The judge ordered the parties to report back on claims processing to ensure that Hyundai and Kia “are not denying claims unreasonably or in bad faith.” She also asked for assurances that claimants were told of their right to arbitrate their case through the Better Business Bureau.
Judge Staton made it clear that: “Explicitly excluded from the settlement are any claims for death, personal injury, damage to property other than a class vehicle, or subrogation.”
For nearly a decade, the class actions alleged that Hyundai and Kia knowingly sold vehicles equipped with Theta II 2.0-liter or 2.4-liter direct-injection engines that could seize, fail, or potentially catch fire. They accused Hyundai and Kia of failing to properly disclose the defects and issuing piecemeal technical service bulletins or limited safety recalls of only certain cars over the years that never fixed the underlying defect.
The National Highway Traffic Safety Administration in 2017 began investigating reports of engine failures in certain Hyundai and Kia vehicles, a probe that was expanded in April 2019 after the vehicle safety agency received complaints of fires in more than 3,000 Hyundai and Kia vehicles, as well as 103 injuries and one death.
Under the settlement, Hyundai and Kia have agreed to install an updated safety feature called the “knock sensor detection system” that warns drivers if there’s a risk of engine stalling. Class members will also receive a lifetime warranty on the so-called engine short block — specifically, the rotating assembly where the defect is located. The settlement covers nearly 4 million Hyundai and Kia vehicles.
Additionally, class members will be reimbursed for past repair expenses, including rental car and towing service costs. And class members whose engines failed or caught fire, as well as those whose repairs were delayed, are eligible for additional goodwill payments. For example, if a class member was “inconvenienced by prolonged delays (exceeding 60 days) obtaining any qualified repair from an authorized Hyundai or Kia dealership,” then the class member can collect $50 for delays lasting 61 to 90 days, and $25 for each additional 30-day delay, according to the order.
Hyundai and Kia also agreed to reimburse consumers in the class who sold or traded in their car without first getting the recommended repair. The reimbursement amount would be the difference between the value the class member received in the transaction and the vehicles’ baseline “black book” value, plus an additional $140 goodwill payment, according to the order.
According to the court order, as of April 2, Hyundai had received 59,986 claims totaling approximately $80 million, but only approved 3,648 worth $5 million. Over 29,000 claims are still pending. And as of March 31, Kia had received 42,269 claims for a total claimed value of $43.9 million but only approved 3,583 in the amount of $5.9 million. About 2,000 Kia claims are still pending.
The consumers are represented by Joseph G. Sauder, Matthew D. Schelkopf and Joseph B. Kenney of Sauder Schelkopf LLC, Adam Gonnelli of the Law Office of Adam R. Gonnelli LLC, Bonner Walsh of Walsh PLLC and Steve Berman of Hagens Berman Sobol Shapiro LLP.
The lead case is In re: Hyundai and Kia Engine Litigation (case number 8:17-cv-00838), and related cases are Christopher Stanczak et al. v. Kia Motors America Inc. (case number 8:17-cv-01365); Wallace Coats et al. v. Hyundai Motor Co. Ltd. et al. (case number 8:17-cv-02208); Andrea Smolek v. Hyundai Motor America et al. (case number 2:18-cv-05255); Maryanne Brogan v. Hyundai Motor America et al. (case number 8:18-cv-00622); and Leslie Flaherty et al. v. Hyundai Motor Co. et al. (case number 8:18-cv-02223) in the U.S. District Court for the Central District of California.
Granite Construction And Investors Reach $129 Million Settlement On Fraud Claims
A class of investors suing Granite Construction Inc. for using fraudulent accounting techniques have reached a $129 million settlement. They asked a California federal judge to approve the settlement preliminarily. The suit was over the “hiding of $338 million in cost overruns” by Granite Construction.
The investors said the agreed settlement was reached after multiple mediation sessions with a magistrate judge. The settlement would also resolve a proposed class action pending out in California state court over the same set of facts.
The class plaintiffs told U.S. District Judge William Alsup that the proposed settlement is fair and that the $129 million “represents a significant benefit for the class. To put it into context, $129 million represents 21-30% of estimated total damages, a percentage that exceeds by nearly 400% the average recovery of Section 10(b) cases between 2011 and 2020 and many recent class action settlements in this district,” according to class plaintiffs.
California-based Granite Construction bids on and completes large infrastructure projects for public and private clients, including the four at issue in the August 2019 lawsuit, in which the company is said to have used fraudulent accounting techniques in preparing financial reports.
Investors, led by the Police Retirement System of St. Louis, allege the following in the complaint:
- Granite Construction committed securities fraud between April 30, 2018, and Oct. 24, 2019, by artificially inflating the value of the company’s stock.
- Each project — a $2.3 billion contract on an interstate highway in Florida; a $3.14 billion contract for work on the Governor Mario M. Cuomo Bridge, then named the Tappan Zee Bridge, in New York; a $1.1 billion contract for a bridge in Pennsylvania and a $1.2 billion project to rebuild a long stretch of highway in Texas — experienced significant cost overruns, which the company and its executives either understated or hid in its financial reports.
- Fixed-price contracts governed each project at issue, so Granite Construction had “extremely limited options to obtain additional compensation” if extra expenses arose.
- The company took each project as a joint venture with other construction companies, so its “financial interest in the projects (including its share of profits and losses) was tied to its ownership stake in each.”
- The cost overruns from the four projects allegedly totaled about $1.4 billion.
- Granite Construction’s share in those projects was a combined $338 million.
The suit also names Granite Construction CEO James Roberts, Chief Financial Officer Jigisha Desai and former Chief Financial Officer Laurel Krzeminski. Judge Alsup certified the class in January. The pension fund estimated hundreds “if not thousands of” members in the class, including 453 institutional investors, which is sufficient to satisfy numerosity, the judge said in his certification order.
The proposed settlement would include the release of all claims under the federal suit and the proposed class claims in Nasseri v. Granite Construction, Inc., filed in the California Superior Court in Santa Cruz County. The Nasseri suit does not have a certification motion pending, but any potential class members, in that case, are class members in the federal suit, according to the proposed settlement.
The settlement fund would be distributed based on a statutory formula, including whether the claimant has Securities Exchange Act of 1934 claims or Securities Act of 1933 claims, and “based on the relative strength of such claims,” according to the proposed settlement. The proposed settlement does not grant preferential treatment to class representatives.
The Police Retirement System of St. Louis is represented by Peter E. Borkon, Javier Bleichmar, Joseph A. Fonti and George N. Bauer of Bleichmar Fonti & Auld LLP. The case is The Police Retirement System of St. Louis v. Granite Construction Inc. et al. (case number 3:19-cv-04744) in the U.S. District Court for the Northern District of California.
$95 Million Tableau Stock-Drop Settlement Gets Initial Approval
A New York federal judge has granted the preliminary approval of a $95 million settlement in a class action accusing tech company Tableau Software of misleading investors about threats that competitors posed to its bottom line. This order brings Tableau closer to resolving a pair of Exchange Act claims brought on behalf of thousands of investors alleging the business-analytics firm painted a rosy picture of its financial prospects for shareholders, even as it knew competitors such as Amazon and Microsoft were siphoning off its client base with lower-cost alternatives. U.S. District Judge John G. Koeltl said during a hearing last month:
The proposal is procedurally fair, substantively fair, and certainly should be sent to shareholders for their review.
Judge Koeltl certified the class in January 2020. Lead plaintiffs are the Plumbers and Pipefitters National Pension Fund. The parties filed a joint motion for settlement in April.
The suit alleged that Tableau executives Christian Chabot, Thomas Walker, Patrick Hanrahan and Christopher Stolte knew as early as February 2015 that its profits would slide as competitors to its business analytics software emerged. The suit says the executives quietly sold off substantial portions of their stock holdings, amassing more than $371 million before revealing in February 2016 that the revenue growth had slowed. That triggered a selloff that sent the stock price falling from $81.75 to $41.33 the following day.
The investors are represented by Samuel H. Rudman, David A. Rosenfeld, William J. Geddish, Ellen Gusikoff Stewart and Douglas R. Britton of Robbins Geller Rudman & Dowd LLP; Jonathan Gardner and Christine M. Fox of Labaton Sucharow LLP; and Louis P. Malone of O’Donoghue & O’Donoghue LLP. The case is Scheufele et al. v. Tableau Software Inc. et al. (case number 1:17-cv-05753) in the U.S. District Court for the Southern District of New York. Judge Koeltl scheduled a final settlement hearing for Sept. 14.
TD Bank Customers Reach $41.5 Million Settlement In Excessive Fee Suit
Toronto-Dominion Bank and a proposed class of customers alleging it charged them millions in unlawful fees have reached a $41.5 million settlement that includes cash payments and debt forgiveness. The proposed settlement would end the litigation alleging the bank hit its American customers with multiple penalties for non-sufficient funds transactions and represents a recovery of between 42-70% of the estimated damages that could have resulted from a trial, according to the customers.
If approved by the court, the settlement would conclude the “groundbreaking case” that was filed “under a novel theory of liability that had never before been endorsed by a court or challenged by a governmental entity or consumer watchdog,” the customers said. The suit was filed in 2018 on behalf of a putative class by Mary Jennifer Perks, a checking customer at the bank, which is based in Toronto.
While TD Bank is in the right to charge a single $35 NSF fee for a single failed consumer transaction, the bank routinely assesses unlawful, multiple NSF fees by resubmitting transactions even when it “knows full well” the transaction will fail again, according to the 2018 complaint. The suit said TD Bank is unlike other big banks, which do not engage in the allegedly abusive practice, and that Ms. Perks was hit with a total of $140 worth of NSF fees in 2018 when she tried to make two PayPal transfers worth a total of less than $6. The suit alleges further that the bank’s agreement with customers makes material misrepresentations and omits that it will attempt to resubmit failed transactions for an additional $35.
According to the proposed settlement, at least $20,750,000 would be dedicated to forgiving NSF fees still assessed to customers whose accounts are closed at TD Bank. Funds would be distributed to settlement class members by direct deposit to existing customers and by check mailed to former customers. Payments would be distributed pro-rata based on the fees charged to each settlement class member.
The plaintiff is represented by Richard E. Shevitz, Lynn A. Toops and Vess A. Miller of Cohen & Malad LLP, Jeff Ostrow and Jonathan M. Streisfeld of Kopelowitz Ostrow Ferguson Weiselberg Gilbert, Jeffrey D. Kaliel and Sophia Gold of Kaliel PLLC, and James J. Bilsborrow of Weitz & Luxenberg PC.
The case is Perks v. TD Bank NA, case number 1:18-cv-11176, in the U.S. District Court for the Southern District of New York.
$6 Million To Settle Bank Of America Credit Card Autopay Suit
A proposed class of roughly 100,000 consumers have asked a New Jersey federal judge to preliminarily approve a $5.95 million settlement that would resolve claims that Bank of America tricked its credit card holders into choosing the highest interest option for their monthly payments, in violation of debt collection law.
The proposed settlement agreement would create a $5.95 million common fund financed by the North Carolina-based bank. Class members would receive automatic checks proportional to the interest they paid.
The interest period runs from the time a consumer’s “Amount Due” payment option was available to when their “switch of payment options from ‘Amount Due’ to ‘Account Balance’ became effective.”
Plaintiff Michael Jette filed his putative class action last June, claiming that the bank’s online autopay interface doesn’t clarify that the default option is actually the minimum amount due, which is the most costly method for the customer.
The bank’s autopay system presents customers with the options of paying the “Minimum Amount Due,” “Account Balance,” “Fixed Amount,” and “Amount Due.” Like those of other banks, the credit card agreements explain that no interest will be charged if the cardholder pays the entire balance by the due date, according to the complaint.
Jette and the proposed class members chose the “Amount Due” option, so the bank withdrew only the minimum amount due, leaving balances that carried over and incurred interest charges, according to court documents. U.S. District Judge Susan D. Wigenton trimmed claims from the suit last October but denied the bank’s request to strike the class allegations.
Class members will receive a short-form notice through an e-mail if an e-mail address is available or through first-class mail. A long-form notice will also be posted on the settlement website. Class members would not be required to submit a claim form.
Jette is represented by James C. Shah and Natalie Finkelman Bennett of Shepherd Finkelman Miller & Shah LLP, and Hassan A. Zavareei of Tycko & Zavareei LLP. The case is Michael Jette v. Bank of America NA (case no. 2:20-cv-06791) in the U.S. District Court for the District of New Jersey.