This week’s roundup highlights the specifics of a proposed settlement in the lawsuit over Pokémon Go-related trespassing, an amended lawsuit against CBS and some execs over curiously timed stock sales, a settlement in the class action involving exploding Samsung washing machines, and much more.
Let’s get into it.
Investors File Amended Class Action Complaint Against CBS, Execs Over Stock Turmoil Stemming from #MeToo Revelations and Company’s “Culture of Fear”
The suspiciously timed sale of more than $200 million in stock as reports of pervasive sexual harassment rolled in is just one focus of the consolidated litigation against CBS Corporation and a number of its executives, including now-ousted and embattled ex-CEO and Chairman of the Board Leslie Moonves.
On February 11th, an 86-page amended complaint was filed in New York federal court and stemmed from the fallout of the defendants’ alleged concealment of the “culture of fear” that exposed the media behemoth to “significant reputational risk and the potential loss of key executives.” Predictably, much of the case centers on Moonves, who’s pegged in the lawsuit as the figure most responsible for reviving what many once considered a dead-in-the-water media company through shrewd prime-time programming choices and “savvy business prowess.”
According to the lawsuit, the defendants, throughout the class period of September 26, 2016, to December 4, 2018, represented to investors that CBS maintained the highest standards of ethical and appropriate business conduct, including a zero-tolerance sexual harassment policy. CBS additionally made clear during this time, the suit says, that it would protect anyone who submitted good-faith reports of sexual harassment and that any retaliation over such reports would not be tolerated.
Behind the scenes, however, CBS was a morass of “sexual harassment, intimidation and retaliation,” a hostile culture that appears to have been born and thrived during Moonves’ tenure, the lawsuit says. Citing CBS’s own statements that the company’s financial well-being “depends upon the continued efforts, abilities and expertise of its chief executive officer and other key employees,” the lawsuit charges the defendants knew full well what was going on, yet chose not to disclose the risks the company and investors faced should Moonves and others be forced to leave the company.
It was in November 2017 that the #MeToo movement clashed with CBS, which fired storied 60 Minutes host Charlie Rose after the publication of a Washington Post article detailing numerous allegations of sexual misconduct, the lawsuit says. According to the complaint, it was around this time, too, that Moonves “quickly moved to publicly align himself with its cause,” calling the #MeToo movement “a watershed moment,” among other posturing. Then, in July 2018, the complaint continues, reports sprang up that The New Yorker’s Ronan Farrow would be publishing a piece detailing allegations from six women that Moonves engaged in a pattern of sexual harassment at CBS.
With news of The New Yorker’s damning exposé on Moonves came a more than six-percent price drop for CBS Class A and Class B stock on unusually heavy trading volume, which according to the lawsuit was the company’s largest one-day decline since 2011. Trading on July 30, 2018 showed a continuing drop in CBS Class A and Class B stock prices.
The ensuing months brought more revelations of Moonves’s alleged sexual misconduct at CBS, culminating, the lawsuit says, with a September 2018 story from The New Yorker that went into even further detail on the toxic culture at the company. Moonves stepped down as CBS chairman and CEO hours after the report was published, the case reads, which was quickly followed by the ousting of 60 Minutes head Jeff Fager, who reported directly to Moonves and allegedly sent a threatening text to a reporter investigating allegations of the culture of harassment at CBS.
The crux of the lawsuit rests on what CBS executives knew about the investigations into and allegations made against Moonves and when they knew it, and how all that lines up with the “everything’s fine and ordinary” risk disclosures issued to investors during the class period. All told, any gains recovered by CBS stock after the summer of 2018 vanished in subsequent months as shares fell even further as more reports and allegations led back to Moonves.
According to the lawsuit, however, while a seemingly impenetrable black cloud hung over CBS, certain executives saw the writing on the wall and moved their own stock shares while there was still some profit to be made:
As set forth in further detail below, before the disclosures about the Company’s sexual harassment and hostile work environment problems were revealed to the market, defendant Moonves and other CBS executives, including certain of the Individual Defendants (defined below), collectively sold over 3.4 million shares of CBS stock during the Class Period, totaling over $200 million in proceeds, to the unsuspecting investing public, thereby profiting from their failure to disclose the truth to the market.”
Moonves himself sold off more than $155 million in CBS stock in 2017 and early 2018, the lawsuit claims, just as it became clear that his alleged sexual misconduct would come to light.
The full lawsuit can be read here. For a helpful chart that shows the many peaks and more valleys for CBS stock over the last two-and-a-half-or-so years, click here.
Proposed Obama-Era Payday Lending Safeguards to Be Rolled Back by Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) is about to roll back payday loan safeguards proposed during the Obama administration. The rules, which never actually went into effect, would have encouraged competition within the payday loan industry, as well as help boost credit options for financially strapped borrowers. Citing the agency’s critics, National Public Radio writes that although the proposed rules would’ve protected vulnerable borrowers from the often unmanageable debt that comes handcuffed to a payday loan, the CFPB, under Trump administration-appointed Kathy Kraniger, has chosen to side with the very industry it was set up to keep an eye on.
The payday loan rule was first proposed under President Obama in 2016 and was sold as the end of predatory lending, NPR writes. Under the rule, lenders would have been required to determine first whether customers would pay off their loans before issuing them. Lenders would also have been afforded only two attempts to take money from borrowers’ accounts, NPR says, in an attempt to target the exorbitant fees charged by many payday loan companies.
On February 6th, the CFPB announced the part of the rule that required lenders to check whether borrowers could pay their loans would be axed, and that the implementation of the rest of the protective rule would be delayed until 2020. The reason behind the CFPB’s about-face under the Trump administration, NPR says, stems from an apparent lack of supporting evidence, as well as the overall effect it would have on the payday loan industry:
A senior CFPB official said the bureau's decision stems from a concern that there is not enough evidence showing that payday lending is unfair and abusive enough to necessitate the rule. Also, the official, who spoke to journalists on condition of anonymity, said that if the rule had kicked in, some two-thirds of borrowers wouldn't qualify for a payday loan.”
NPR’s Daniella Cheslow has more.
Trump Campaign Staffer’s Class Action Suit Looks to Strike Down “Fatally Flawed” Non-Disclosure Agreements
A former staff member of President Donald Trump’s 2016 election campaign has filed a proposed class action lawsuit to invalidate the nondisclosure and non-disparagement agreements (NDAs) that were mandatorily signed by all employees, volunteers and contractors and bar them from ever criticizing the President or disclosing confidential information.
The lawsuit, which was first reported by Buzzfeed News, states the Trump campaign’s NDAs prohibit “extraordinarily broad” categories of communications and actions, and cover everyone and everything from the President and his family to the companies they own and those with which they’re involved—identified in the documents as “Trump Persons.” The plaintiff, who the case notes is a registered Republican, argues the NDAs are “fatally flawed” for a number of reasons, including that they are allegedly:
In violation of state and federal law given that they allow any Trump Person to retaliate with “grievous financial penalties” against anyone who chooses to assert their statutory rights as an employee (e.g., filing discrimination or harassment claims, filing suit over wage and hour claims, or alleging fraud or financial impropriety); “Impermissibly vague,” which the case argues allows Trump Persons to bring secret arbitrations over “any negative statement” about a Trump Person or disclosure of any information a Trump Person arbitrarily considers private or confidential; Unenforceable in that they lack “proper temporal or geographic limitations”; Lacking in a legitimate purpose; and “Procedurally and substantively unconscionable.”
The NDAs, according to the suit, effectively rob employees, contractors and volunteers on the campaign of the ability to pursue any of their rights to redress workplace misconduct.
“Anything and everything they could do will of necessity contain some information that a Trump Person could find disparaging or a disclosure of confidential information,” the lawsuit stresses.
The plaintiff alleges that she was “slandered and systematically sexually discriminated” against during her time with the campaign, allegations for which she filed a lawsuit against the campaign in New York Supreme Court in November 2017. In response, the complaint says, the Trump campaign filed an “expressly retaliatory” arbitration against the woman “to punish [her] for enforcing her right to be free of a discriminatory and hostile workplace.”
According to Buzzfeed News, the plaintiff’s attorneys wager that thousands of individuals who worked on Trump’s 2016 campaign could be covered by the suit. Buzzfeed News reporter Zoe Tillman has more.
Samsung Settles “Exploding” Washing Machine Lawsuit
Earlier this month, Samsung agreed to settle a class action lawsuit filed over a 2016 washing machine recall that customers said offered inadequate compensation.
The recall involved some 2.8 million top-loading washing machines that, according to the customers, were defective and prone to “exploding.” More specifically, customers reported that the top of the washer or the drain pipe could detach from the machine while in use, which, as you can imagine, could prove dangerous to anyone standing nearby.
Under the settlement, as covered by Consumer Reports, people who purchased certain washers made between March 2011 and October 2016 will be given five compensation options, including a rebate, a free repair, and reimbursement of certain costs and expenses (such as clean-up costs or money spent at a laundromat.) Even customers who no longer own their washer can still receive the minimum recall rebate.
Customers whose washers were subject to the recall should be mailed notice of the settlement, Consumer Reports writes, but anyone can check out the settlement site to see if his or her washer qualifies and file a claim.
Head over to Consumer Reports for more details.
USC Settles Class Action Over Former Gynecologist Accused of Sexual Abuse
CNN reported last week that the University of Southern California has agreed to settle a $215 million class action lawsuit filed on behalf of women who allege they were sexually abused by the school’s former gynecologist, Dr. George Tyndall. The doctor, according to CNN, worked at the student health center for nearly 30 years before being fired by USC in 2017 for “inappropriate behavior.”
The settlement looks to cover individuals who received women’s health services from Tyndall between August 14, 1989 and June 21, 2016, CNN writes, with compensation to be divided between three tiers of people. Individuals included in Tier 1, which is composed of all women treated by Tyndall at the USC Student Health Center, will each receive an automatic $2,500, according to CNN. Tier 2 includes victims who submit a written form that asks each woman to describe “her experience with Tyndall, the impact to her, and the harm she suffered.” Each of these women will receive between $7,500 and $20,000, the CNN article says. Finally, Tier 3 victims, who agree to be interviewed by the special master’s team in addition to filling out the written form, will reportedly be paid between $7,500 and $250,000 each.
In addition to compensation, the settlement will require USC to implement “a number of reforms,” CNN writes, including performing background checks on workers at the USC Health Center and providing female students the option to see a female doctor.
Check out CNN for more information.
Pokémon Go Creator Niantic Settles Trespassing Claims
Remember the month that Pokémon Go came out? For players it seemed like the closest we would ever get to world peace. But, because all good things must come to an end,lawsuits were filed and the game’s popularity began to fade. The lawsuits against Niantic claimed that the virtual critters were a nuisance and incited trespassing onto private property. And now, nearly three years later, the litigation is coming to an end.
Niantic has agreed to settle the lawsuits – and not just by throwing money at the problem. The company has agreed to deliver courtesy reminders whenever 10 or more players are active in the same area, reminding them to be courteous and aware of their surroundings. It also agreed to work with park authorities to remind users of hours of operation, keep a database of complaints and make a reasonable effort to solve them within 15 days, and grant homeowners 120 feet around their property in which they can have Pokéstops or Gyms removed.
You can find the rest of the story over on Polygon.
Activision Initiates Guitar Hero Live Refund Program
Guitar Hero Live players who bought the game recently may be able to claim a refund offered by Activision. A lawsuit filed in September stated that the game’s streaming mode (which contained more than 90 percent of the available song library) was shut down and that the company’s claims of an “always-on music video network” were therefore misleading.
In response, Activision launched what it is calling a “voluntary refund program.” The program looks to cover anyone in the United States who bought Guitar Hero Live between December 1, 2017 and January 1, 2019. Qualifying players have until May 1, 2019 to claim their piece. For more on the case and the refund program, head over to Ars Technica.
Feds Share Terrorist Watchlist with Non-Governmental Entities, Class Action Discovery Reveals
A recent disclosure in a class action lawsuit that takes issue with federal terrorist watchlist procedures has revealed that the government shares watchlist information with approximately 1,400 private entities, despite previously denying that the list is available to non-government institutions.
The FBI’s Terrorist Screening Center has disclosed in a recent court filing that private entities including universities, airlines and hospitals have access to the federal watchlist—officially called the Terrorist Screening Database. As Muslim Americans are disproportionately represented in the database, Muslim civil rights group Council on American-Islamic Relations (CAIR) has urged Congress to investigate the privacy issue. In response to the filing, the Virginia federal judge assigned to the case ruled last week that the government must reveal the details of who has access to the watchlist and why.
The lawsuit, which was filed back in April 2016 by a lawyer with CAIR, cites an alleged “injustice of historic proportions” in which hundreds of thousands of Americans, including children, are surveilled and registered in the watchlist based simply on guesses and hunches, or even race, ethnicity, national origin and religion.
The case argues that the government fails to follow due process while compiling the watchlist, which recklessly alters the lives of its citizens. People placed on the list have no means of removing themselves or challenging the basis for their inclusion, the suit explains. The top five cities represented in the list—Dearborn, Chicago, Houston, New York and San Diego—have large Arab and Muslim populations, the complaint notes, adding that the watchlist is a “product of bigotry and misguided, counterproductive zeal” in which many citizens who have never been charged, convicted or even investigated for any crime are treated as second-class citizens.
People on the list often only learn of their placement “when they feel the web of consequences burdening their lives and aspirations,” the complaint points out. These consequences may include being on the no-fly list, having their bank accounts closed, being identified as a “known or suspected terrorist” in security screenings, and being pulled out of their cars at gunpoint during routine traffic stops. The suit stresses that individuals on the watchlist face real-life danger as the U.S. communicates to federal agents, state and local police, as well as foreign governments that they are a “violent menace.”
Visit AP News for more on the case’s latest developments.
Florida Dept. of Corrections “Effectively Stole” $11 Million in Media Files from Prisoners, Class Action Claims
An individual currently serving a life sentence at the South Florida Reception Center has sued the state’s Department of Corrections over claims that it “effectively stole” millions of dollars’ worth of media files from inmates.
According to the proposed class action lawsuit, the Florida Department of Corrections (FDOC) in 2011 began a program in which inmates were able to buy music and audiobook files for $1.70 each from media vendor Access Corrections, plus a media player for at least $99. By 2017, the case says inmates had purchased 6.7 million media files, which generated $11.3 million in sales and netted the FDOC $1.4 million in commissions. In 2018, the FDOC switched to a new media vendor, JPay—a company that supposedly offered higher profit margins.
The plaintiff alleges that during the program’s transition to JPay, the FDOC confiscated his media files—worth $569.50—despite previously assuring him that he would always own his purchases. The suit claims the FDOC’s actions were motivated by profit, in that forcing prisoners to re-purchase files from JPay would generate more commissions.
All told, the lawsuit argues the FDOC abused its governmental power by stealing the private property of inmates in violation of the fifth and 14th Amendments.
Check out The Verge for more on the story.
Class Action Filed by Female Students Seeks to Gender-Integrate Yale University Fraternities
Three female Yale University students have filed a proposed class action in which they seek to prohibit the school’s fraternities from considering gender in its admissions practices. The suit alleges fraternities’ all-male policy has resulted in power imbalances between men and other students. Specifically, the case says fraternities offer better economic and networking opportunities that sorority members and other students do not have access to.
The plaintiffs argue that allowing people of all genders entry into fraternities would not only give students equal access to resources and opportunities, but also help reform the culture of fraternities, which are notoriously rife with sexual misconduct. According to the complaint, research has warned that fraternities “perpetuate and normalize” forms of gender discrimination and sexual violence. In fact, studies found that fraternity brothers commit sexual assault at a rate three times higher than other male students, the case says. From the complaint:
‘Separate but equal’ Greek life reinforces gender norms, stereotypes, and prejudices. Sex segregation can hinder cross-gender relationships, facilitate the objectification of people of other genders, and normalize sexual assault. Greek life, with its binary assumptions, also largely excludes non-binary students.”
Gender integration in fraternities would change the dynamic between students, the suit argues, and challenge the normalization of harmful behavior.
Given that the case stresses how unsafe fraternities are, CBS News asked the plaintiffs why they don’t seek to fully ban the organizations, to which they responded that integration is a “more feasible” solution that could bring a “paradigm shift” to Greek life.