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October 2010 Archives

GSK to Pay $750 Million for Sale of Adulterated Drugs

The whistleblower whose actions led to a major settlement payment by GlaxoSmithKline will sleep well, knowing she did the right thing. Cheryl Eckard is also eligible to be compensated under the False Claims Act, and will receive $96 million of the $750 million the British pharmaceutical giant has agreed to pay.

GSK will pay the settlement amount and plead guilty to one criminal charge due to manufacture of adulterated drugs in its Puerto Rico facility. The charges focused on the drugs manufactured at GSK's plant in Cidra, Puerto Rico,The Wall Street Journal reports. From 2001 to 2005, the anti-depressants made there were found by federal authorities to have been prepared with incorrect amounts of the active ingredient or would split apart, posing a safety risk to patients taking the medication.

First Amendment Protects Amazon Customer Data

In North Carolina, the tax man cometh. And this week he actually went home empty handed.

A federal judge in Washington state has ruled that the North Carolina Revenue Department cannot request information from online retailer Amazon regarding the book and music purchases of state residents, in the name of tax collection.

As discussed in a prior post on FindLaw's Common Law blog, Amazon, the largest online retailer and one of the nation's biggest booksellers, was pursued by the North Carolina Revenue Department for taxes the department said were owed for sales from that state. As part of the request, the Department asked for the names and addresses of purchasers and then, the kicker:  exactly what the customers purchased. Amazon refused to comply, saying the information on purchase of books and music (which could be matched to names and addresses) was protected under the First Amendment.

Countrywide's Mozilo Settles SEC Charges for $67.5M

Is it the one of the highest penalties levied on an single person by the SEC, or is it merely a slap on the wrist with no deterrent effect for upcoming generations of potential white collar criminals? Depends on who you ask. One thing that is certain: former Countrywide Financial CEO Angelo Mozilo will be paying a sizable chunk of his fortune in a settlement reached recently with the Securities and Exchange Commission.

Time Magazine named Mozilo one of the 25 people most responsible for the financial crisis. By most accounts, it a well-deserved dishonor. According to the Wall Street Journal, Mozilo will pay out $67.5 million in financial penalties for this part in the financial debacle. $22.5 million of the settlement will go to civil penalties and $45 million will be a disgorgement of profits, The Journal reports.

Lack of Judges Leads to Calif. Accused Walking Free

California's Supreme Court has upheld the dismissal of 18 criminal cases, and the reason might surprise you. The cases were not dismissed for lack of evidence, but for lack of judges.

There were simply not enough judges in enough courtrooms to hear the cases in Riverside County, so the Southern California defendants, two charged with felonies and the rest with misdemeanors, each received a get out of court free card.

Riverside County prosecutors challenged the dismissals, saying that every effort had not been made to hear the cases, reports The Los Angeles Times. According to prosecutors, every family law, juvenile and probate judge should have been roped in to hear the criminal cases. Not so, wrote Chief Justice Ronald George, writing the opinion for the state's highest court.

USDA Settles with Native American Farmers for $680M

In a "historic" move, the U.S. Department of Agriculture has settled a class action suit brought over loan discrimination against Native America farmers. As a part of the settlement, the agency has agreed to pay $680 million. When the suit was filed eleven years ago, plaintiffs initially sought $500 million.

According to NPR, the 1999 suit claimed that the USDA denied loans to Native American farmers in favor of white farmers from 1981-1999. As a result, many Native American farmers and ranchers lost their land.

Sept 11 Workers Made a Deal With The WTC

The Port Authority of New York and New Jersey have agreed to a settlement with thousands of Sept 11 workers who cleared rubble from the World Trade Center after the 9/11 terrorist attacks. The workers, who cleaned potentially toxic materials without sophisticated respiratory equipment, will receive $47.5 million. In exchange for the settlement, the workers have agreed to drop their lawsuits against the government. Each worker will still have the option of rejecting the settlement and fighting for a larger award in court.

According to U.S. District Judge Alvin Hellerstein, the deal is fair and reasonable. Hellerstein who is overseeing the litigation, revealed the settlement in an order filed Thursday. He called the deal "fair and reasonable." Hellerstein is no stranger to settlements arising out of the 9/11 attacks. Hellerstein recently oversaw a $712 million settlement in the lawsuit between 10,000 ground zero rescue and cleanup workers and New York City. He threw out a $657 settlement because he said it was too small. The settlement in this case, would be added to the previous settlement, bringing the total figure to approximately $760 milion.

Medtronic Settles Sprint Fidelis Defibrillator Suit for $268M

When it comes to lawsuits involving pharmaceuticals and medical device companies, the figures are often massive. This Thursday was no exception, when Medtronic, the world's largest medical device maker, settled all of its lawsuits involving their Sprint Fidelis Defibrillator leads. The cost to put an end to a lawsuit that arose over their malfunction, which led to as many as 13 deaths: a cool $268 million. As is common, Medtronic did not admit any liability in the settlement.

Still, the peace of mind that sum of money has to provide for Medtronic's executives and attorneys likely makes it a bargain in their eyes. Medtronic recalled its Sprint Fidelis defibrillation leads three years ago, taking the wires off the market in October 2007. The wires had a defect that caused some of them to crack, which in turn sent electric shock to patients that didn't need it in some cases, and failed to deliver shocks when they were needed in other cases.

CVS Fined $75M for Allowing Meth-Related Purchases

How did CVS pharmacy manage to get slapped with the largest civil penalty issued under the Controlled Substance Act? By failing to properly monitor repeated purchases of key ingredients used to make methampetamine in at least five states, that's how. The CVS $75 million meth fine is the product of allowing such purchases to continue for over a year, which ultimately help cause the huge increase in Southern California drug trafficking.

Methamphetamine (or meth) is the considered the number one drug concern among law enforcement agencies, according to a study. This is partially attributed to the fact that most of the necessary chemicals are readily available in household products or over the counter cold or allergy medicines. Enter CVS. There are state, federal, and internal policies designed to regulate the sale of meth-related purchases; mainly by limiting the amount of over the counter products (such as cough and allergy medicine) a customer can buy in a day. In reality, customers were allowed to clear the CVS shelves of the meth products, and then go to another local CVS and do it again. One of the main problems with CVS's system for regulating the sales was that the company looked at the total sales in a given day, rather than the amount an indiviudal was buying at a given time.

Wells Fargo Settlement Made over Deceptive Mortgage Claims

Banking giant Wells Fargo has reached a settlement with the attorneys general of eight states over claims that its subsidiary Wachovia marketed its adjustable rate mortgages in a deceptive manner. The bank will pay a total of $24 million, and make loan modifications in the amount of $772 million under the terms of the settlement which was announced October 6.

The states' claims against Wachovia, acquired by Wells Fargo in 2009, have to do with the way the "pick-a-payment" adjustable rate mortgages were presented to consumers, reports Bloomberg. The program allowed borrowers to pick the payment option they wanted to use. However, the lowest payment option advertised by the bank often did not include the charges for monthly interest, increasing the debt load. This lead to defaults and foreclosures, according to the claims of the states involved.

Apple Challenging $625M Fine for Patent Infringement

A federal jury in Tyler, Texas, returned a verdict in a patent infringement case against Apple for $625 million, but the company isn't about to just give up. Instead Apple has filed an emergency motion asking the judge to stay the verdict due to outstanding issues with the patents Apple was found to have willfully infringed upon.

Apple was sued by David Gelernter, a Yale computer science professor and owner of Mirror Worlds, for infringing three patents used for computers, iPods and iPhones. Apple argues that not only is the verdict incorrect, but that it also amounts to "triple dipping," because it awards the full judgment for each patent.

Naturally, those with Mirror Worlds disagree and strongly contend that the verdict should stand. "The verdict is a clear victory for David and his visionary ideas," said Joseph Diamante, a lawyer for Mirror Worlds. Apple has not commented on the $625M fine.

Visa and MasterCard Settle DOJ Lawsuit, Amex Fights On

A settlement has been reached between Visa and MasterCard with the U.S. Justice Department, allowing merchants to provide customers with reward incentives to encourage paying with lower-cost debit or credit cards. The settlement did not involve any money.

The DOJ lawsuit settlement was not well received by competitor American Express. Amex plans to fight a antitrust lawsuit filed by the government. "We have no intention of settling the case," American Express Chief Executive Officer Kenneth I. Chenault said in a statement. "We will defend the rights of our card members at the point of sale and our own ability to negotiate freely with merchants." American Express contends that retailers are free to choose the credit company that they prefer, but that they credit company is free to set its own terms. Amex says that it is simply uncapable of "forcing" retailers into agreements.

BP to Pay Largest Ever Pollution Fine in Texas Refinery Case

It looks like BP will be opening its wallet once again. The energy company agreed to pay $15 million to resolve violations of the Clean Air Act in a Texas refinery case. The violations came at a refinery in Texas City, Texas, which had been hit by a number of scandals over the past few years. The Clean Air Act is a law outlines the responsibilities for the EPA with regard to maintaining the environment. The Clean Air Act was last updated by Amendment of 1990. Several minor changes have been made since then by the legislature.

The $15 million represents the largest Clean Air Act recovery at an individual facility. The pollution fine now leaves a total figure of $137 million recovered by the federal government from BP for violations involving fires and toxic leaks. The Texas City refinery first came under investigation after a 2005 explosion that killed 15 people and injured over 170, The New York Times reports. BP paid a $50 million fine to the Occupational Safety and Health Administration for a number of violations related to the blast. As of 2009, the Texas attorney general had sued BP for violating the Clean Air Act 72 times in the previous five years.

Novartis to Pay $422M in Improper Off-Label Marketing Settlement

Novartis Pharmaceuticals Corporation has agreed to pay $422.5 million to settle criminal and civil investigations over antiseizure medicine Trileptal, in addition to other drugs five other drugs. The Swiss drug giant already settled another major case this year, $152 Million in a sex discrimination suit.

In this case, Novartis is pleading guilty to misdemeanor charges and accepting a $185 million fine. Novartis also paid $237.5 million over allegations that it illegally submitted claims for five additional drugs. The pharmaceutical company also signed a five-year "integrity agreement" with the inspector general at the Department of Health and Human Services.