Lawsuit Against Pilot Flying J Allowed to Continue

Earlier this month, U.S. District Judge Amul Thapar ruled, in a 77 page Order, that several trucking companies can proceed with claims they were cheated by Pilot Flying J truck-stop company owned by Cleveland Browns owner Jimmy Haslam and his brother Tennessee Governor Bill Haslam. What remains of the lawsuit are approximately two dozen counts by the trucking companies to proceed against Pilot. They include claims of breach of contract, fraud and negligent misrepresentation.

However, the ruling was not a total defeat for the defendant. Judge Thapar granted Pilot Flying J’s motion to dismiss several other counts against the gas station giant. He dismissed seven of 11 civil claims against Jimmy Haslam, the company's CEO, and allowed four others to go forward, including accusations of unjust enrichment and conspiracy to commit fraud.

National Retail Transportation and Keystone Freight were among several trucking companies that opted out of a settlement that resolved most of the lawsuits against Pilot. Previously, Pilot agreed to pay out nearly $85 million to 5,500 customers as part of the settlement. The remaining trucking companies claim they were cheated out of fuel rebates and discounts promised by Knoxville, Tennessee-based Pilot Flying J, the nation's largest diesel retailer with annual revenues of around $30 billion.

Ten former employees have pleaded guilty to some form of wire or mail fraud since federal agents raided Pilot's Tennessee headquarters in April 2013. Jimmy Haslam has not, as of yet, been charged with any crimes.

Along with the civil settlement, Pilot agreed to pay $92 million in fines and accept responsibility for the criminal conduct of its employees while the government agreed not to prosecute the company. The agreement required Pilot to comply with several conditions, including cooperation in the investigation of people who may have been involved in the fraud. It did not protect any individual at Pilot from prosecution.

The scheme, as detailed in some of my previous posts, involved sales team members reducing the amount of money that was due to trucking company customers they deemed too unsophisticated to notice. The scheme was widely known in the sales department, according to court documents, with supervisors teaching other employees how to do it.

Judge Thapar's Order said the trucking companies "state four facts that plausibly suggest that some of the individual defendants managed or knowingly carried out the fraudulent rebate-reduction scheme."

The plaintiffs first allege that in 2012, Haslam, Brian Mosher, Arnold Ralenkotter, Mark Hazelwood and John Freeman planned an annual meeting with breakout sessions for teaching other employees to reduce rebates without detection, the order says.

"Second, those individuals planned teaching sessions to train employees --or directly taught other employees -- how to participate in the rebate-reduction scheme and avoid detection," Thapur wrote.

"Third, (the trucking companies) specifically allege Mosher told others to reduce rebates manually, and that Hazelwood in turn instructed Mosher to do so. And finally, (the trucking companies) allege that Freeman hosted a meeting at his lake house to discuss how to perpetuate the fraudulent rebate scheme."

"Together, these facts at least plausibly suggest that Haslam, Mosher, Ralenkotter, Hazelwood, and Freeman 'adopt[ed] the goal of furthering or facilitating the criminal endeavor,'" Judge Thapar wrote.

Anthem Sees First Lawsuits Over Data Breach

Another major data breach in our country has occurred, and unfortunately will not be the last. Anthem, one of the nation’s largest health insurance companies, first announced the hack on February 4^th, although it was detected on January 27^th. The unauthorized data quarries started as early as December 10^th of last year and is believed to have occurred through the discovery date. Anthem is based out of Indianapolis, Indiana.

The first lawsuits in the Anthem hack have been filed in Indiana, California, Alabama and Georgia. The suits allege that Anthem did not take adequate and reasonable measures to ensure its data systems were protected. It is estimated that 80 million Anthem customers whose information may have been affected could be harmed.

Hackers gained access to a company database that included members' names, birthdays, Social Security numbers, addresses and employment data, including income. Unlike some of the other data breaches covered in this blog such as the Target and Mapco breaches, credit card information was not among the data stolen.

How the hackers got the information is different as well. The hackers appear to have compromised the credentials of five different tech workers at Anthem, possibly through "phishing" e-mails that trick users into unwittingly revealing passwords or downloading malicious software. The malware used to break into Anthem's network has not shown up on other computer networks and does not appear to have been used in recent attack attempts on other companies.

One of the main questions for consumers is why Anthem would have maintained a single database containing information about 80 million current and former members. HIPPA violations could be a concern for Anthem due to the breach as well.

Target Data Breach Lawsuit Brought By Consumers Allowed to Proceed

U.S. District Judge Paul Magnuson has cleared the way for consumers to sue Target over the retailer's late 2013 massive data breach. The breach became public near the height of the holiday shopping season. Judge Magnuson did dismiss claims by plaintiffs in certain states but largely denied Target's request to toss the proposed class action lawsuit altogether. What was dismissed were claims brought under deceptive trade practices laws in three states, claims under data-breach notice laws in nine states after the plaintiffs withdrew them in another three, negligence claims brought under five states' laws, and a class action that could not be maintained for claims under consumer-protection statutes in another 10 states.

The ruling followed a similar decision by Judge Magnuson allowing banks to move forward with a lawsuit to recoup money they spent reimbursing fraudulent charges and issuing new credit and debit cards because of the breach.

Magnuson rejected Target's argument that the consumers lacked standing to sue because they could not establish any injury. Judge Magnuson wrote in his Order, "Plaintiffs' allegations plausibly allege that they suffered injuries that are 'fairly traceable' to Target's conduct…”

Target reported that at least 40 million credit cards were compromised in the breach, which may have resulted in the theft of as many as 110 million people's personal information, such as email addresses and phone numbers.

The case is In re: Target Corporation Customer Data Security Breach Litigation, U.S. District Court, District of Minnesota, No. 14-md-02522.

Alabama Supreme Court Ruling on Rule 27

In Ex parte Ferrari, 2015 Ala. LEXIS 13 (Ala. Feb. 6, 2015), Ferrari was employed by DR Horton as a land-acquisition manager for its Gulf Coast division.  DR Horton began to suspect that Ferrari was supplying confidential information to third parties and was receiving, through his wife and/or LLCs created by the couple, monetary compensation.  DR Horton conducted interviews of Ferrari and a third party which conferred what was suspected.  Instead of immediately suing Ferrari, DR Horton filed a petition pursuant to Rule 27(a) of the Alabama Rules of Civil Procedure seeking to depose Ferrari and his wife, to propound written interrogatories and to request production of documents, including tax returns.  DR Horton acknowledged that it had justification to commence a lawsuit but needed the requested discovery in order to determine all of the causes of action which might be asserted.

In the opinion, the Alabama Supreme Court held that a trial court must conduct a hearing before permitting any pre-suit discovery and that Rule 27(a) did not permit the propounding of written interrogatories.  Instead, the rule allows for depositions, independent medical examinations and production of documents.

More significantly, the Alabama Supreme Court overruled the holding in Ex parte Anderson, 644 So. 2d 961 (Ala. 1994), that Alabama’s Rule 27(a) does not limit pre-action discovery to perpetuating evidence.  This overruling “returns” Alabama law to the law in other jurisdictions.  The purpose of Rule 27(a) is to preserve or perpetuate testimony or evidence which might be lost before a lawsuit may be commenced, for example, when a party or witness is near death, requiring the conducting of a deposition prior to such death, or when there is a “real” fear that documents or physical things might be destroyed.  Rule 27(a) should not be used as an “investigative” tool to determine (or verify) if there is a viable cause of action or a device to help determine what causes of actions to assert.  As noted in the opinion:  “DR Horton did not offer in its petition, and it does not attempt to offer in response to the Ferrari defendants’ mandamus petition, any reason to perpetuate the testimony of the Ferrari defendants.  Instead, DR Horton openly stated in its Rule 27(a) petition and at the March 25, 2014, hearing that it sought preaction discovery to determine what other causes of action it may have against the Ferrari defendants besides breach of fiduciary duty against Peter Ferrari.”

The Alabama Supreme Court gave no significance to DR Horton’s suggestion that allowing such discovery would save time and resources in a litigation.  Obviously, the Alabama Supreme Court determined that Rule 27(a) has a very specific purpose, namely, perpetuating testimony or evidence which is in real danger of being lost, and that Rule 27(a).  Rule 27(a) was never intended as a device by which a party may obtain information in order to decide whether to institute a lawsuit.

What the opinion leaves as unclear, however, is if Rule 27 can be used to issue a subpoena to obtain documents that may only be obtained via subpoena. For example, a law enforcement agency will not produce a traffic homicide report without a subpoena and the Alabama Department of Forensic Sciences will not release an autopsy without a subpoena. Rule 27 subpoenas are oftentimes a vital tool in helping to determine, unlike in Ex Parte Ferrari where the party wanted to know how many causes of action they could claim in their Complaint, but if there is even a cause of action.

Plaintiff Wins Jury Trial Against DePuy Over ASR Hips

On February 3^rd, a jury in Tulsa County, Oklahoma returned a $2.5 million compensatory damage verdict in favor of plaintiff Andrea Smith and against defendants DePuy Orthopaedics and DePuy International. 

Mrs. Smith was a bilateral DePuy ASR XL hip patient who had both hips revised. She had significantly elevated metal ions before the revision surgeries.  DePuy contended at trial that the devices were not defective and that she needed to have revision surgeries because of a "toe-in" gait on one side and a frayed medical cable (used to repair a fractured femur) on the other.

The jury found in favor of plaintiff in her claim that the ASR was defectively designed, but found for DePuy on the claims for negligence and failure to warn. Jurors found no basis to award punitive damages against DePuy. The votes were 10 to 2 (9 votes were needed).

The trial was presided over by Tulsa County District Court Judge Linda G. Morrissey. DePuy was allowed to present limited evidence pertaining to the FDA, and Judge Morrissey permitted the plaintiff to present evidence about the recall and about events that occurred after the date of plaintiff's original implant surgeries.  The trial lasted three weeks.

This is the second verdict in favor of an ASR plaintiff.  In both cases, the plaintiff prevailed on the claim that the device was defective, but lost on the negligence claim. Neither jury awarded punitive damages.  A third ASR case went to trial and resulted in a defense verdict based on a specific causation defense.

If you or a loved one have had hip replacement surgery and have been implanted with a defective DePuy hip, you may be entitled to compensation for medical bills, pain and suffering, lost wages and other injuries. Our firm is currently investigating claims for those people who have been implanted with DePuy hip replacement devices, both ASR and Pinnacle. If you would like a free case evaluation, please contact Booth Samuels at toll free 1-866-515-8880 or at booths@pittmandutton.com.