There has been a lot of press in the past year about the various government programs in place for the United States to snoop on its own citizens. Well, apparently, all that snooping is far from free, and the federal government is none too happy with one of its bills. Federal officials filed a lawsuit earlier this week alleging that Sprint Communications overbilled the FBI, U.S. Bureau of Alcohol, Tobacco and Firearms, and other government to the tune of $21 million for wiretap services. Communication companies ordered by courts to intercept customers’ communications are allowed to recoup the cost of installing and maintaining the wiretaps. However, the federal government and communications battled for years over who covers the cost to upgrade their equipment and facilities to ensure they can comply with court orders seeking wiretaps of their customers. In 2006, the Federal Communications Commission settled the dispute in favor of the government, ruling that companies can’t bill for modifying their equipment and facilities to more efficiently intercept communications. Shocking! The lawsuit filed in federal court in San Francisco alleges that Sprint fraudulently billed for such expenses relating to equipment and facilities, which it knew was not billable. The tab from 2007 to 2010 amounted to $21 mil. Of course, like any good Plaintiffs, the government doesn’t just want its $21 million back from the over-billing. The feds are seeking treble damages, which would amount to approximately $63 million. Sprint has denied any wrongdoing. This whole thing just seems silly. Maybe Sprint should just suggest that the federal government join up with Russia for a wiretapping Framily Plan. That might save Uncle Sam a little money. Because “You don’t have to be family, to be Framily.”
Buying a pet for your child is a rite of passage into parenthood. Whether it is a golden retriever or a goldfish, the pet is bound to cause at least some problems at the house. Thankfully, most of the problems can be remedied with a little carpet cleaner or a toilet flush. But, what happens when those nominal pet problems turn into problems for the children themselves? What if the new pet comes packaged with a communicable disease which infects the child? According to a new lawsuit out of California, you blame the pet store. According to an AP report, the family of a 10-year old boy has filed suit against Petco after their son died allegedly as a result of a bacterial infection he contracted from his pet rat. The boy’s grandmother purchased the male rat on May 27, 2013, to serve as a companion to the boy’s female rat. On June 11, the boy developed severe abdominal pain and died later that night. The cause of death was determined to be an infection commonly known as rat-bite fever caused by exposure to an infected rat. The Center for Disease Control has tested the rat to determine whether it was infected; however, those results have not been made available. The lawsuit alleges that Petco was negligent in failing to detect the disease and in failing to adequately warn about the potential risks.
This is obviously a tragic accident, but it is not one without questions regarding liability. First, it remains to be seen whether the rat was infected at the time of purchase. We here at Abnormal Use do not pretend to be experts on rat infections, so we will refrain from speculation. Nonetheless, this question will be pertinent to the litigation. Second, what is the culpability of the seller of a pet? If the seller was an individual rat breeder, rather than a national retail chain, would this matter be handled differently? It is not uncommon to obtain a pet and discover later that it is stricken with a health condition. As is the case with humans, pets unfortunately get diseases. The risk is inherent with the purchase of any pet. The basis of this suit, however, is not that the rat had a disease, but, rather, that the family wouldn’t have purchased it had they known.
At this point, we do not know what steps Petco took to inform these buyers. We do not know if the rats were tested. We do know, however, that Petco actually warns customers online and through fliers in its stores that all rats are potential carriers of the infection. Petco also warns that children under the age of 5 and people with weakened immune systems should “consider not having a pet.” It is unclear whether the family failed to see these warnings or whether they did but consider them to be inadequate. If the family did see the warnings, then it seems apparent that every rat was at risk.
Regardless of what steps Petco took, it should have been known that rats are carriers of disease. Everyone hears of the horrors of the bubonic plague at some point in their lives after all.
One of Apple’s big selling points has long been that their products “just work.” Most Apple users would likely confirm that the claim is true, at least for the most part. However, one group of Apple customers was apparently not so satisfied with Apple’s voice recognition software, known as Siri, and filed a consumer protection lawsuit in 2012. That lawsuit (In Re iPhone 4S Consumer Litigation, 12-cv-1127, U.S. District Court, Northern District of California (San Francisco)) was recently dismissed. The plaintiffs claimed that Siri didn’t work as advertised. Specifically, they alleged that sometimes Siri didn’t understand their requests, required long wait times, or responded with the wrong answer. Apple didn’t exactly put up a strong defense of Siri’s functionality by arguing that the plaintiffs could have simply returned their phones if they were dissatisfied. Even assuming the complaints about Siri are true, does that mean the plaintiff’s are entitled to recover? Not even close.
In February, U.S. District Court Judge Claudia Wilken dismissed the plaintiff’s claims, calling them ”non-actionable puffery” and ruling that the plaintiffs had failed to show adequate evidence of any fraud in Apple’s part. She also noted that Apple made no promise that Siri would operate without fail and that a reasonable consumer would understand that the commercials depicting the products they are intended to promote would be unlikely to depict failed attempts.
Thankfully, the judge used common sense in this case, which will hopefully help avoid a line of case law requiring advertisements to depict dropped calls, broken down cars, malfunctioning computers, et cetera.
We reached out to Siri for a comment and she replied:
I’m really sorry, but I can’t take any requests right now. Please try again in a little while.
(Editor’s Note: Since we’re talking about Siri, please feel feel to revisit our April 2012 post entitled “Deposing Siri.”).
News broke last week that a California Little League coach is suing his former player over injuries he allegedly sustained in a victory celebration. According to reports, the 14-year old player scored from second base to win a game in walk-off fashion. In so doing, he took off his helmet and tossed into the air in celebration. When the helmet came back down to earth, it allegedly hit his coach, Allan Beck, tearing his Achilles’ tendon. Beck filed suit against the boy, seeking $100,000 in actual damages plus $500,000 in pain and suffering. However, Beck has indicated that he really was only interested in having the kid’s parents pony up the $20,000 he paid in medical expenses.
An interesting case this one is. Had this been a case of a player intentionally throwing his helmet at the coach in anger after striking out, then this lawsuit would not have garnered so much national attention. But, this is not the case. There is no evidence of which we are aware that the boy intended anything other than to celebrate a victory. Watch baseball at any level and you will see players throw helmets in the air in much the same fashion. Until now, it has always been no harm no foul. What makes this case different, is that there allegedly was a harm. So, should the player be responsible for it? It is certainly foreseeable that someone could be injured by a falling helmet. After all, the laws of gravity dictate that what goes up must come down. It is surprising that more players or coaches haven’t been injured by helmets in these situations.
Generally, sports injury cases hinge on whether the injury occurred as a result of an act inherent to the sport. For example, a football player can’t sue an opposing player when tearing his ACL on a routine tackle. Throwing a helmet in the air doesn’t necessarily fall into that same category as a tackle; however, as mentioned, it may, too, be “part of the game.”
Regardless of the liability aspects, we are curious as to how Beck tore his Achilles’ tendon by a helmet thrown up into the air at home plate. The logistics of the injury seem to defy all odds. In describing the injury, Beck told Fox News:
I could not register right at that second, so I turned around and looked and there was a helmet laying on the ground and this young man that hit me was looking at me, stunned.
Given Beck’s own uncertainty, we have to wonder whether he sustained his injury when stepping on the helmet rather than when it fell from the heavens. Just leave it to us to speculate.
Let’s imagine, the year is 2007 and you are Research In Motion Limited, maker of the BlackBerry. Some computer company has just announced a new touchscreen phone. As my father now denies saying, the iPhone is not made for the business world. Don’t panic, you have at least three more years of dominance over the iPhone. But due to a myriad of reasons, not the least of which was the failure that is the BlackBerry Storm, your days are numbered. By 2011, you are restructuring and laying off employees. In 2013, you release the Q10 and change your corporate name to BlackBerry Limited, but also announce that you are open for purchase and have signed a letter of intent to sell. And in the mind of this author, who moderately follows tech news and admittedly never owned a BlackBerry, you are kaput. So imagine this author’s shock when he reads that on January 4, 2014, BlackBerry filed suit against Ryan Seacrest’s tech company, Typo Products, LLC in federal court in California. BlackBerry claims that Typo’s external case for the iPhone 5 and 5s infringes upon its patents and designs used in the Q10. BlackBerry alleges that Typo “blatantly copied BlackBerry’s keyboard.” BlackBerry’s chief legal officer stated: “We are flattered by the desire to graft our keyboard onto other smartphones, but we will not tolerate such activity without fair compensation for using our intellectual property and our technological innovations.” Typo stated that it intends to defend against BlackBerry’s claims. Perhaps this move by BlackBerry is an attempt to return to the glory years of the early 2000’s, when BlackBerry was constantly involved in patent litigation. In fact, BlackBerry is nearly as familiar with patent litigation as it is with making cell phones. Since 2000, BlackBerry been involved in patent litigation with Glenayre Electronics, Good Technology, Handspring, NTP, Xerox, Visto, Motorola, Eatoni, and Mformation.
Whatever the outcome, this lawsuit brings back a wave of nostalgia. I can only hope that Jordin Sparks and Paula Abdul will be called to testify. We’d like to see those depositions.
The first question you probably have is, “What is a ‘hurricane verdict?’” It is possible that we here at Abnormal Use are coining a term because a quick search on the Interwebs yields no references to this new phrase. In any event, a hurricane verdict is a verdict which is both a windfall to the plaintiffs and a rainfall in that it creates a slippery slope. I got pretty lost in the series of remittiturs and offsets, so it is unclear how big the verdict in Asahi Kasei Pharma v. Actelion Ltd. actually was, but it appears that the verdict awarded by the California jury totaled roughly $500 million.
You probably have a lot of questions.
For starters, you are probably wondering whether a hurricane is called a typhoon or a cyclone on the Pacific coast. As it turns out, in order to be considered a typhoon, the storm must form west of the international dateline. Your next question is probably about the case. In a nutshell, Asahi, a Japanese pharmaceutical company, contracted with a U.S. company, CoTherix, to sell its product in the U.S. As part of the contract, CoTherix was required to perform all necessary pre-sale regulatory and other work. Actelion, a Swiss company, had a competitor drug on the market in the U.S., which accounted for almost all of its U.S. sales. Allegedly, fearing the effects of competition, Actelion purchased CoTherix solely for the purpose of preventing the sale of Asahi’s drug on the U.S. market. Actelion’s acquisition of CoTherix was successful, and CoTherix backed out of the agreement with Asahi. As it often does, litigation ensued.
It appears that this $500 million verdict, which included lost profits for a drug that never made it to market, would qualify as a windfall, or “an unexpected, unearned, or sudden gain or advantage.” That is just my initial reaction. Those of us who have waded into the waters of proving/disproving and/or calculating consequential damages know that it is complicated and tedious. I do not have the time to devote to unravelling the specifics of the consequentials in the Asahi case for this post. The bottom line, though, is that after subtracting litigation costs, Asahi ended with hundreds of millions in revenues for a product that it never had to put on the shelf. Of course, Asahi went to great lengths to prove that these numbers were not speculative. It was able to show that the drug had already been approved in China and Japan, and that is was a good drug in those markets, among other things. Notwithstanding, as a practical matter, Asahi never had to face the risks involved with selling the drug in the U.S. It never had to worry about suits against it based on side effects of the drug. It never had to spend money to market the drug. Apart from the courtroom, Asahi never had to actually compete with Actelion’s drug, which already had a foothold on the U.S. market.
The rainfall portion of the hurricane verdict is more problematic than the windfall component. As always, the case had its nuances, but essentially, the basis for liability against Actelion was that it intentionally interfered with the contract between CoTherix and Asahi by buying CoTherix and directing it to breach. In other words, even though CoTherix was a wholly-owned subsidiary of Actelion at the time of the breach, Actelion was treated as a third-party – a stranger to the contract in this case. This is important because the difference between breaching the contract and interfering with the contract was essentially a $400 million difference. How did I determine that? Asahi pursued ICC arbitration against CoTherix, the company that actually breached the contract, and was awarded just shy of $100 million. The verdict against Actelion, based on the interference with the contract, was around $500 million, and there were no remaining claims against CoTherix when the case went to trial. So there are several layers to Asahi’s rake. CoTherix’s actual breach of the contract was worth $100 million. Actelion’s interference with the contract was worth $400 million (after the CoTherix offset). And there is yet another layer that is perhaps the most disturbing aspect of the verdict. While there were no punitive damages awarded against Actelion, there were roughly $30 million in punitives awarded against three Actelion executives who allegedly directed the interference with the contract.
The result in this case does not add up. The civil conspiracy theory of liability (that all of the defendants conspired to harm Asahi) was dismissed before trial, so the jury did not find that executives of CoTherix, and Actelion were in cahoots. Yet both organizations and all three executives were all found liable for essentially the same act. The antitrust allegations did not make it to trial, either. The sole theory of liability was that Actelion purchased a controlling interest in CoTherix such that CoTherix no longer made its own decisions, and that it did so in order to direct CoTherix to induce the breach.
This result sets precedent for three distinct theories of liability based essentially on a single breach by a single organization – 1) the subsidiary with no control over its decisions is liable for the actual breach; 2) the parent company is liable as a nonparty for inducing the subsidiary to breach; and 3) the executives who made the decision to induce the breach are even more liable (such that punitives are warranted) for making the decision to induce the breach. Piercing the corporate veil understates what occurred here. Asahi was able to fire a bunker busting bomb that went through CoTherix, through Actelion, and exploded in the executive wing of Actelion. Additionally, one could argue that this decision sets the dangerous precedent that companies cannot purchase competitor companies without giving rise to liability. Actelion had a duty to its stockholders to maximize profit. Had CoTherix performed on the contract, and had the competitor drug been successful, Asahi would have been able to consume an indeterminate amount of Actelion’s market share. Had Actelion not purchased CoTherix when it was possible to do so, it would have resulted in an indeterminate amount of market share loss. Thus, arguably Actelion could have been liable to its shareholders for not purchasing CoTherix and inducing the breach.
So it appears that the real theory of liability is negligent purchase of a competitor, which Actelion was arguably compelled to do in the course of business. The verdict and decision are arguably an unfair restriction on free markets and the capitalist system in general.
On the heels of an adverse ruling regarding the alleged deceptive advertising of its VitaminWater line, Coca-Cola finds itself back in court facing similar claims over its soft drinks. According to reports, George Engurasoff and Joshua Ogden have sued Coke, alleging that the company has been deceiving consumers by failing to mention that its signature soft drink contains artificial ingredients. These plaintiffs drink only organic, all-natural soft drinks, apparently.
The plaintiffs take particular exception to Coke’s alleged use of phosphoric acid as a flavor-enhancer. According to the plaintiffs’ complaint, Coke’s website indicates that phosphoric acid is “one of the basic elements of nature” and is used in certain soft drinks “to add tartness to the beverage.” These claims, according to the plaintiffs, are misleading. Phosphorous is a naturally occurring element bearing the atomic number 15 on the periodic table. Phosphoric acid, on the other hand, is not one of those “basic elements of nature.” As such, the plaintiffs allege that it is an artifical flavoring – one that has not been disclosed by Coke.
Whether or not phosphoric acid is an artificial flavoring is a question we here at Abnormal Use will leave for the court. Regardless of the answer, we do question just how these plaintiffs have been damaged. They claim that they relied on the soft drink’s labeling and would not have purchased Coke had they known its true contents. Call it a hunch, but we doubt there were too many true “all-natural” soft drink alternatives out there. We also doubt they were all that concerned about phosphoric acid consumption in the first place. Here is the real kicker. They allege that they have only purchased around $25 worth of Coke in the last four years. Using loose, faulty math, $25 of Coke over four years equates to one can of Coke per month. One can. From someone who consumed $25 worth of Coke in the last four days, we don’t feel too sorry for these plaintiffs’ loss of investment.
We agree that there are valid reasons for product labels and that companies should abide by those regulations. But if a class wants to organize and sue a company over it, make sure the named plaintiffs are out more than $25.
The lawsuit is George Engurasoff, et al. v. the Coca-Cola Co., No. 1:13-cv-03990S (N.D. Ca. 2013)
According to a report from Law360, Apple was sued Friday in a California federal court over an issue involving the iPhone 4′s power button. As you may know, there has been a great deal of Internet buzz among iPhone 4 users complaining that the power button becomes stuck or non-responsive after 1-year of usage. Because the button problems arose beyond the 1-year factory warranty, users were left without a remedy. Now, users are responding with a putative class action against the computer giant.
It is one thing to allege that a product is defective. It is quite another to allege that the product is rigged to fail just after the expiration of the warranty. Apparently, this is exactly what the class has done. It appears that the suit alleges that Apple not only knew and failed disclose the defective button, but also that it designed the button to fail as to render the phone unusable. That’s harsh.
We here at Abnormal Use do not have enough information to comment on the validity of the defect allegations. However, even if defective, we doubt Apple “rigged” the button to fail. What would Apple’s motivation be to do so?
We appreciate the rationale of a profit-motive argument, but it lacks an understanding of Apple buyers. iPhone users constantly upgrade their devices – broken power button or not. Apple releases new iPhone models every 6 months, making you feel that your barely used phone is outdated. Apple doesn’t need to tamper with your phone to get you to buy a new one. They already use enough trickery in the marketplace. Plus, we hope Apple users would be smart enough to move onto a new product line if the one you are using is defective.
It will be interesting to see how this suit plays out. Of course, Apple probably has the case rigged, right?
Parents who haven’t learned to work the parental control features on their iPhones and iPads may be in luck. Apple has agreed to a settlement in class action lawsuit over so-called “bait apps,” which are games that can be downloaded for free but then charge users for “game currency” like virtual goods or play money. Of course, Apple’s iOS does have a parental control feature that allows users to restrict in-app purchases, but why go to all that trouble when you can just hand over your iPhone willy nilly to a child?
So what’s the big payday for our lucky winners? As far as class action settlements go, it’s actually a pretty decent settlement for the aggrieved parties. For any member of the class whose kids purchased made an in-alp purchase for less than $5, Apple will issue a $5 iTunes gift card. For those between $5 and $30 in unauthorized purchases, Apple will issue a full refund in the form of a gift card. Users whose little rascals spent more than $30 can choose to get a full cash refund.
If your kids made any unauthorized in-app purchases check your inbox in the months to come. The settlement requires Apple to send a notification to all iTunes account holders who made in-app purchases.
For as long as there have been products to sell, manufacturers used puffery in their advertising. Whether it is the claim that a vacuum cleaner will make you happier in the 1940′s or the purported health benefits of cigarettes in the 1920′s, companies often take “artistic liberties.” Most companies are careful enough not to guarantee their results; they include a healthy “results not typical” disclosure. With that in mind, let’s take a look at the Rawlings Power Balance bracelets, pictured below.
According to Rawlings’ website, the bracelets have a “power balance hologram embedded with frequencies that react positively with your body’s natural energy fields” to provide strength and flexibility. It may sound crazy, but the concept behind balancing energy fields is nothing new. Back in August, Stacy Orlick commenced a proposed class action against Rawlings in the U.S. District Court for the Central District of California for allegedly falsely advertising the bracelets on Walmart.com. Orlick claims she purchased a $35 bracelet based on a Walmart.com ad and never received the advertised benefits. Rawlings moved to dismiss the complaint, alleging the plaintiff failed to demonstrate that it was responsible for the Internet advertisement. However, because the Walmart.com ad “substantially mirror[ed]” the ad Rawlings uses on its own website, U.S. District Court Judge George King denied the motion. The case is captioned Stacy Orlick v. Rawlings Sporting Goods Co., No. 12-cv-06787 (C.D. Cal. 2012).
Now that the suit has survived the dismissal, it will be interesting to see how things transpire. Rawlings’ best defense is obviously the truth. The question: How is it measured in this context? We cannot observe energy fields with the naked eye. We imagine some objective strength and flexibility testing could be conducted. But, if testing reveals that any positive effects of the bracelet are the result of a placebo effect, then can Rawlings be found liable for false advertising? If users derive some placebo-led benefit from the use of the bracelet, then there does not appear to be any harm.
We here at Abnormal Use confess to using power balance bracelets. In so doing, we have had more energy and, overall, just felt better. We have no idea whether these results are the product of the “power balance hologram” or of us just really, really liking bracelets.