Posts belonging to Category Settlements

Pharmaceutical giant Bayer Corporation has agreed to settle a consolidated class action involving its allegedly misleading marketing of particular varieties of aspirin. The litigation has been ongoing since 2008, and plaintiffs’ position received a substantial boost when the defendant’s motion to dismiss was denied in March 2010. See In re Bayer Corp. Combination Aspirin Prods. Mktg. & Sales Practices Litig., 701 F. Supp. 2d 356 (E.D.N.Y. 2010) (order denying motion to dismiss) (available here).

The plaintiffs allege that Bayer Aspirin with Heart Advantage and Bayer Women’s Low Dose Aspirin + Calcium were sold without FDA approval and without proof that the medications were safe and effective as advertised. Specifically, the plaintiffs contend that consumers were overcharged as a result of their reliance on representations on product packaging touting benefits to cardiac health that had not been properly established.

The court preliminarily approved the proposed settlement in an order dated July 23, 2012. Pending final court approval, plaintiffs will benefit from a $15 million settlement fund, out of which they will receive reimbursements of between $4 and $6 for each purchase of the at-issue products. The order granting preliminary approval is available here.

LivingSocial, a website which sells discount vouchers on items ranging from yoga classes to racecar driving lessons, has agreed to settle a class action lawsuit alleging that the company violated consumer-protection laws that mandate a minimum five-year redemption period for gift certificates. See In re LivingSocial Mktg. & Sales Practices Litig., No. 11-0472 (D.D.C.). The Joint Motion for Preliminary Approval of Settlement is available here.

LivingSocial issues its vouchers in the form of gift certificates marketed as “group coupons.” The plaintiffs allege that LivingSocial attempted to circumvent consumer-protection laws by misleading purchasers into believing that they must redeem the gift certificates prior to the printed expiration dates (often just weeks from the date of purchase) or else lose the entire value. This was allegedly done in order to accelerate the redemption of gift certificates and to induce additional gift certificate purchases.

The proposed settlement requires LivingSocial to modify its practices so that the vouchers it issues will not expire for at least five years from the date of purchase, consistent with the federal Credit Card Accountability Responsibility and Disclosure Act of 2009. The Credit CARD Act mandates that LivingSocial and similar companies, such as the popular Groupon site, abide by the longer of the five-year limit or the limit set by state law.

The multi-district litigation comprises five class actions filed by consumers in California, Washington, Florida, and the District of Columbia, which were consolidated in the United States District Court for the District of Columbia. The proposed settlement awaits judicial approval as the action enters the notice phase, pursuant to Federal Rule 23.

Enthusiasts of the popular “Madden NFL” video game, put out by industry leader Electronic Arts, have scored a legal victory, as the parties have reached a settlement in the class action lawsuit alleging that Electronic Arts violated antitrust and consumer-protection statutes. See Pecover v. Electronic Arts Inc., No. 08-2820 (N.D. Cal. filed June 5, 2008).

The plaintiffs had alleged that Electronic Arts foreclosed competition in a market for interactive football software by acquiring, in separate agreements, exclusive rights to publish video games using the trademarks and other intellectual property of “the only viable sports football associations and leagues in the United States.” Complaint at 3. Indeed, while the Sega-produced NFL 2K video game had made inroads into Madden’s dominant market share, Electronic Arts signed an exclusivity deal with the NFL that made Madden NFL the only video game allowed to use NFL team and player names. That exclusivity arrangement was the crux of the plaintiffs’ allegations of antitrust violations. See generally id.

Critical to providing the plaintiffs with settlement leverage was the 2009 defeat of Electronic Arts’ motion to dismiss, despite the court having applied the U.S. Supreme Court’s heightened standards for antitrust pleading under Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). See Pecover v. Electronic Arts, Inc., 633 F. Supp. 2d 976 (2009). The court ratified the essence of the plaintiffs’ allegations, holding that the “Plaintiffs allege that EA’s exclusive agreement with the NFL ‘killed off’ the only other allegedly competitive interactive software and allowed EA to raise its prices ‘dramatically.’ [Citation omitted.] For purposes of pleading the claims at bar, these allegations suffice to allege a product market.” Pecover, 633 F. Supp. 2d at 981.

Class members include all consumers who bought a new copy of an Electronic Arts Madden NFL, NCAA Football, or Arena Football video game for Xbox, Xbox 360, PlayStation 2, PlayStation 3, GameCube, PC, or Wii, with a release date of January 1, 2005 to June 21, 2012. Under the agreement, the $27 million settlement fund will be distributed according to class members’ eligible purchases, with one class of purchasers receiving a $6.79 reimbursement per game purchased, up to a maximum of $54.32, while a second class of purchasers could receive up to $15.60. Because the purchaser classes are not mutually exclusive, some class members could receive approximately $70 in compensation for Electronic Arts’ monopoly pricing advantage.

The settlement has been preliminarily approved, and notice sent to the class members. The opt-out and objection deadline is set for December 10, 2012, and the Final Approval Hearing is set for February 7, 2013.

E-books, viewed on devices like Amazon’s Kindle, arrived with the tacit promise that a competitive market would significantly drive down E-book prices, consistent with basic microeconomic theory, in stark contrast to labor-intensive conventional books. Early on, that promise was fulfilled, with E-books typically costing less than $5. However, in suspicious unison, E-book sellers found higher price points, first $9.99, more recently $12.99, and in some instances entirely closing the gap between E-books and conventional books.

The U.S. Justice Department and two state attorneys general took notice, and their investigation led to the allegation that consumers had paid “tens of millions” of dollars more than market-competitive prices, owing to a pricing conspiracy among E-book publishers. Five publishers were named as defendants in litigation prosecuted by the DOJ and state AGs: Hachette, HarperCollins, Simon & Schuster, Penguin Group and MacMillan.

Three of the publishers have agreed to a settlement that was granted preliminary approval in September; Penguin and MacMillan have not yet settled. Now, as the parties await final court approval, consumers are beginning to receive tangible indications of how they will benefit from the settlement. While the settlement announcement indicated that the defendants would pay substantial amounts under the terms of the agreement (Hachette: $31,711,425; HarperCollins: $19,575,246, and Simon & Schuster: $17,752,480), there was a paucity of detail concerning the settlement’s ground-level mechanics, in particular the remedies available to consumers who bought E-books and are within the settlement class definition.

Now, clearer indications of those details have emerged, as E-book retailers such as Amazon.com have begun sending emails informing customers that they may be entitled to credits in connection with purchases made between April 2010 and May 2012. Although defendants in the suit were publishers, the settlement’s ground-level administration will predominantly take place through retailers, with which customers have a close and regular nexus (unlike the publishers). Consumer refunds will appear in their online accounts on iTunes, Amazon and Barnes & Noble, except for consumers who purchased their E-books through Google or Sony’s storefronts, who will receive checks.

Along with consumers, retailing giant Amazon.com was also alleged to be a victim of the price-fixing scheme. The suit contended that publishers colluded with Apple to increase the price of E-books, thereby confounding Amazon’s discount pricing and allowing the Apple iPad to compete with the generally lower prices for E-books readable on the Amazon Kindle. Apple is also a defendant in the action, and is not part of the settlement. Accordingly, the litigation continues against Apple and the two non-participating publishers, Penguin and MacMillan. A final approval hearing on the settlements will be held on February 8, 2013.