HB Litigation News

Category: Complex Business Litigation

International Discovery Tool Kit Aims to Facilitate Discovery in Both Domestic and Foreign Litigation

The Authors

Benjamin DanielsRobinson+Cole

Benjamin Daniels advises financial institutions and global corporations about litigation and dispute resolution. As a member of the Business Litigation Group, Ben provides creative and ardent advocacy during litigation, enforcement actions, investigations, crisis management, and white-collar defense matters.

Ben’s clients often face complex, cross-border disputes. He has deep experience with the interplay between domestic and international courts, including discovery disputes and Hague convention proceedings. He also represents clients in international arbitrations and mediations.

Jenna ScovilleRobinson+Cole

Jenna Scoville is a member of the firm’s Business Litigation Group. She focuses her practice on all aspects of general business litigation and dispute resolution, as well as government enforcement matters, and appellate work. She helps companies respond to a variety of business disputes, including claims for breach of contract, unfair trade practices and fraud.

Jenna also has extensive appellate experience. Prior to joining the firm, she clerked for the Honorable Peter W. Hall of the U.S. Court of Appeals for the Second Circuit.

Emerging Litigation PodcastProduced by HB Litigation and Law Street Media

Interviews with leading attorneys and other subject matter experts on new twists in the law and how the law is responding to new twists in the world.

International Discovery Tool Kit Aims to Facilitate Discovery in Both Domestic and Foreign Litigation

“At a time when litigants have increasingly relied on U.S. federal courts to obtain otherwise unobtainable evidence from entities located within the United States, the U.S. Supreme Court has decisively closed the door to U.S.-style discovery in private arbitrations abroad. That means U.S. companies will no longer face the time, exposure, and expense of U.S.-style discovery that § 1782 had injected into those proceedings.“

Abstract: Business knows no borders. Every year companies increase their global reach and open new offices both domestically and abroad. The COVID-19 pandemic accelerated this process—remote employees spread documents and witnesses from Chicago to Shanghai to Sumatra. This has made litigation—especially discovery—more complex. Navigating this environment requires a tool kit of resources to secure discovery in support of both domestic and foreign litigation. This article discusses those tools and several traps for the unwary practitioner facing cross-border discovery to anticipate to effectively use those tools to their benefit.

When evaluating whether to allow a party to use the Hague Evidence Convention, courts consider several factors, including:

1) the importance of the documents or information to the case,

2) the specificity of the request,

3) whether the information originated in the United States,

4) the availability of other ways to secure the information, and

5) whether compliance with the request would undermine important interests of the United States or the foreign country.

Download the article now!

Enjoyed reading Ben & Jenna’s article?

Ben has a podcast exploring the subject more in 2024!

Podcast: Navigating International Discovery

September 15, 2023
The Use—and Abuse—of Rule 41(a) to Destroy Federal Question Jurisdiction Post-Removal

The Authors

John SearNelson Mullins

John defends manufacturers in product liability litigation involving a range of products, e.g., ATVs, RVs, institutional chemicals, medical devices, and pharmaceuticals. From single cases to mass tort litigation and class actions, John has defended clients in courtrooms around the country.

T. Michael PangburnThor Motor Coach Inc.

Michael is General Counsel of Thor Motor Coach Inc., a final-stage manufacturer of motor homes headquartered in Elkhart, Indiana. He is also an adjunct professor of commercial law at the Notre Dame Law School.

Taryn RyanNelson Mullins

Taryn focuses her practice on litigation. She has experience dealing with products liability, discovery issues, corporate structure and governance, wealth management, private and commercial lending, real estate, and Indian affairs for lobbying both on state and federal levels. Taryn contributed valuable research to this article.

Emerging Litigation PodcastProduced by HB Litigation and Law Street Media

Interviews with leading attorneys and other subject matter experts on new twists in the law and how the law is responding to new twists in the world.

The Use—and Abuse—of Rule 41(a) to Destroy Federal Question Jurisdiction Post-Removal

“A plaintiff seeking to divest the court of subject matter jurisdiction post-removal should at least comply with the requirements of the rule they have relied on. Glossing over those requirements undermines the purpose and intent of both the rule and removal statutes. The case should stay put in federal court in the absence of compliance.”

Abstract: Defendants in civil litigation can level the often uneven state court playing field by removing cases to federal court through federal question removal. In those cases in which the plaintiff has alleged a claim grounded in federal law, the defendant may remove the case to an often more impartial federal forum. Once removed, the plaintiff has few options for defeating removal. About the only option available to the plaintiff is to forgo the federal claim and divest the court of federal question jurisdiction, forcing remand to state court. In pursuit of a ticket back to state court, however, plaintiffs routinely misuse Fed. R. Civ. P. 41 in seeking to dismiss fewer than all claims and less than the entire action. Too frequently courts simply go along with the ruse. This article addresses the misuse and abuse of Rule 41. It provides an overview of the text and history of Rule 41, discusses how the rule should be used and applied, analyzes decisions that indulge the misuse, and explains how the misuse can and does prejudice defendants.

GET THE COMPLETE ARTICLE

September 14, 2023
The Plight of the Indirect Purchaser

The Plight of the Indirect Purchaser with Austin Cohen

You might think that if you purchase a product for a price inflated by bad actors in the supply chain that you would be able to collect damages. Unfortunately, depending on who you are, you would be wrong.

Consumers and businesses, indirect purchasers of products whose prices are fixed by those who supply the maker of your purchase may not collect damages in states that, surprisingly, do not have antitrust laws that give them standing.

But what about federal law? Why do some states provide for damages and others do not? Are there alternatives? Are there any pro-purchaser changes on the horizon that could impact antitrust litigation brought by indirect buyers?

For answers to these questions and more, listen to my interview with attorney Austin Cohen of Levin Sedran & Berman LLP of Philadelphia. His practice focuses on antitrust and business law, class actions, torts and products liability, and environmental damage litigation. Austin received a BA in Economics and History from the University of Pennsylvania and his JD, cum laude, from the University of Pittsburgh School of Law.

I hope you enjoy the episode. If so, give us a rating!

*******

This podcast is the audio companion to the Journal on Emerging Issues in Litigation. The Journal is a collaborative project between HB Litigation Conferences and the Fastcaselegal research family, which includes Full Court Press, Law Street Media, and Docket Alarm. The podcast itself is a joint effort between HB and our friends at Law Street Media. If you have comments or wish to participate in one our projects please drop me a note at Editor@LitigationConferences.com.

(actual size)

Tom Hagy
Litigation Enthusiast and
Host of the Emerging Litigation Podcast
Home Page
LinkedIn

Austin B. CohenLevin Sedran & Berman LLP

Mr. Cohen, a native of West Islip, New York, received a BA in Economics and History from the University of Pennsylvania in 1990. He received a JD, cum laude, from the University of Pittsburgh School of Law in 1996. During law school, he interned for the Honorable Lowell Reed (E.D. Pa.) June – August, 1995. He also served as an Executive Editor and Associate Editor for the University of Pittsburgh Journal of Law and Commerce and was a finalist in the Murray S. Love Trial Moot Court Competition.

His practice focuses on antitrust and business law, class actions, torts and products liability, and environmental damage litigation. Austin received a BA in Economics and History from the University of Pennsylvania and his JD, cum laude, from the University of Pittsburgh School of Law.

June 30, 2023
The IRS and Rules About Rules

The IRS and Rules About Rules with Jeff Luechtefeld

Concepts: IRS, Internal Revenue Service, APA, The Administrative Procedure Act

The IRS closed more than 72,000 appeals last year and its Chief Counsel’s Office received more than 65,000 cases.

That’s a lot of disputes. Safe to say they are about rules. Following rules. Not following rules. Questioning rules. Then, there are rules about rules that the IRS must follow.

The Administrative Procedure Act (APA) is such a beast. The APA places requirements on federal agencies when engaged in a “rule making” that has the force and effect of law. The APA has become a focal point in tax litigation, due in large part to the IRS’s record of refusing to comply with the law’s notice-and-comment mandate. In his article for the Journal on Emerging Issues in Litigation, our guest – Jeffrey S. Luechtefeld, shareholder at Chamberlain Hrdlicka – wrote about challenging the IRS, recent trends in tax litigation, and the future of APA challenges. And now, he’s here on our humble podcast.

Jeff is a tax controversy and litigation attorney with a strong technical tax background and a deep understanding of the inner workings of the agency. Jeff advocates on behalf of clients in IRS examinations, appeals and litigation. Previously, he led the regional tax controversy practice for a Big Four accounting firm. He began his career with the IRS Office of Chief Counsel as a litigator, eventually becoming a Special Trial Attorney in the Large Business and International Division. Jeff received his JD from the University of Missouri, Columbia School of Law.

I hope you enjoy the episode. If so, give us a rating!

*******

This podcast is the audio companion to the Journal on Emerging Issues in Litigation. The Journal is a collaborative project between HB Litigation Conferences, and the Fastcaselegal research family, which includes Full Court Press, Law Street Media, and Docket Alarm — all now part of vLex. If you have comments or wish to participate in one our projects please drop me a note at Editor@LitigationConferences.com. I’m often polite.

Actual size.

Tom Hagy
Litigation Enthusiast and
Host of the Emerging Litigation Podcast
Home Page
LinkedIn

Jeffrey S. LuechtefeldChamberlain Hrdlicka

Jeff is a tax controversy and litigation attorney with a strong technical tax background as well as a deep understanding of inner-workings of the Internal Revenue Service. Jeff’s practice focuses on representing clients in IRS examinations, appeals and litigation. His knowledge, combined with strong strategic thinking and negotiation skills allows him to effectively advocate for his clients before the IRS.

Previously, Jeff led the regional Tax Controversy practice for a “Big Four” accounting firm, where he assisted clients in resolving disputes administratively within the IRS either while still in examination or before the IRS Office of Appeals.

Read the article.

June 24, 2023
The Rise of Multi-Claimant Litigation in England and How Companies Can Manage Potential Exposure

The Authors

Sheila L. Birnbaum

Mark S. Cheffo

Dorothy Cory-Wright

Evan Flowers

Jacqueline Harrington

Will Sachse

Stephen Surgeoner

Rachel Leary

Caroline Power

Julie Witham

Emerging Litigation PodcastProduced by HB Litigation and Law Street Media

Interviews with leading attorneys and other subject matter experts on new twists in the law and how the law is responding to new twists in the world.

The Rise of Multi-Claimant Litigation in England and How Companies Can Manage
Potential Exposure

“With the growth in US/English partnerships for bringing multi-claimant actions in England, there may be an increased interest in leveraging US discovery for copycat English claims. The larger mass torts become in the United States, the more likely they are to feed into related multi-claimant actions in England.”

Abstract: Recent court decisions have signaled the English courts’ willingness to embrace multi-claimant litigation and to broaden the types of questions decided on a collective basis. These developments have led UK-based plaintiffs’ lawyers to expand mass tort filings, including doing so in partnership with US plaintiffs’ lawyers who are actively advertising in England. This article provides an overview of multi-claimant litigation in England, highlights some of the factors that may lead to its increase, and discusses steps that companies operating in the English market can take now to manage potential exposure.

Three primary mechanisms for bringing collective actions before an English court:

1) Representative actions, group litigation orders (GLOs), and collective actions before the Competition Appeal Tribunal (CAT).

2) Representative actions, in their current form, and GLOs are products of the general Civil Procedure Rules (CPR).

3) Representative actions originated in the common law and permit a representative claimant or defendant with the “same interest” in a claim to represent that interest on behalf of a class.

Download the article now!

June 21, 2023
Persuasion as Direct and Honest Trial Advocacy with Jack Siegal

Persuasion as Direct and Honest Advocacy with Jack Siegal

The relevance to jury trials and jury persuasion is obvious. According to studies cited in a 2019 article in Business Insider, people develop first impressions of you “even before you open your mouth.” That means your mere appearance “affects how trustworthy, promiscuous, and powerful people think you are.”

It’s the trustworthy part that attorneys need to pay attention to. Regardless of the strength of their case or whether the law is on their side, an attorney still must be persuasive. And, unless the audience – whether it is a judge, a panel of judges, a regulatory body, or a jury – sees you as credible, the rest will likely not matter. But what makes an attorney, or anyone for that matter, credible? Is this something you’re born with or is it something you can develop over time? Is it true, as some studies suggest, that you can change some first impressions by making some changes in how you present yourself, or are you just stuck with a less than trustworthy vibe? Interested in upping your jury persuasion game?

A Good Place to Start

Listen to my interview with attorney Jack I. Siegal, a partner with Fox Rothschild LLP in Boston. Jack believes we can all make positive adjustments in the nuanced practice of achieving credibility.

This podcast is the audio companion to the Journal on Emerging Issues in Litigation. The Journal is a collaborative project between HB Litigation Conferences and the Fastcase legal research family, which includes Full Court Press, Law Street Media, and Docket Alarm. The podcast itself is a joint effort between HB and our friends at Law Street Media. If you have comments or wish to participate in one our projects please drop me a note at Editor@LitigationConferences.com.

P.S. Toward the end I could barely manager my ADHD and took the conversation into a chat that ranged from TikTok clips of the attorneys in the Amber Heard/ Johnny Depp trial, somewhat on point, to discussion of great drumming, which would take some crafty knots to tie that in. Jack, being good natured and a good sport, went right along with me. Also, that’s me on the bongos.

(actual size)

Tom Hagy
Litigation Enthusiast and
Host of the Emerging Litigation Podcast
Home Page
LinkedIn

Jack SiegalFox Rothschild LLP

Jack is a seasoned trial lawyer with experience spanning 20 years experience, during which he has tried cases in several jurisdictions. He also provides transactional counseling for executive compensation agreements, mergers, and other matters. Jack focuses on complex commercial disputes, government investigations and white-collar defense, regulatory proceedings, and compliance across a wide range of industries, including financial, healthcare, high-technology, and government contracting. Education: Santa Clara University School of Law, J.D., magna cum laude; Santa Clara University, B.A., Greek and Latin, magna cum laude, Phi Beta Kappa; University of Virginia, Graduate Study, Classics and Classical Languages, Literature, and Linguistics.

May 6, 2023
Litigation Funding Battle Over Litigation Control
Sysco and Burford Capital Butting Heads Over Litigation Control.
- Food giant claims funder is interfering with antitrust litigation.
- Funder says its client is settling for too little.
- Public dustups over litigation funding are rare.
Photo by Richard Lee on Unsplash

Leading litigation funder Burford Capital LLC and food distribution giant Sysco Corp. are locking horns over the control and use of litigation funds. Burford says Sysco is settling Burford-funded antitrust litigation for amounts that deny the financial company optimal return on its investment. Sysco says the funder has overstepped its bounds and interfered with Sysco’s litigation oversight.

Sysco received $140 million from Burford in part to fund price-fixing lawsuits against poultry, pork and beef producers – complex multidistrict litigation involving hundreds of plaintiffs, dozens of defendants, and related criminal suits brought by the Department of Justice (DOJ). So far, settlements of private antitrust litigation have reached into the hundreds of millions, and DOJ has levied more than $100 million in fines.

Burford, which gets a share of any settlements in the antitrust litigation, says Sysco is settling for too little.

Sysco has sued companies associated with Burford – Glaz LLC, Posen Investments LP, and Kenosha Investments LP – claiming they are meddling in Sysco’s settlement efforts. Glaz, Posen, and Kenosha are all companies which have Burford Capital Limited as the only direct or indirect partner. All three are controlled by Burford and Burford operates as the sole funder of their respective litigation efforts.

Sysco also criticized its attorneys at Boies Schiller Flexner, whom, they say, allegedly spoke with Burford representatives without Sysco’s knowledge.

Sysco says the firm gave into Burford’s demands, an accusation the firm vehemently denies. Meanwhile, Burford has obtained an arbitration ruling blocking Sysco from finalizing any of the price-fixing settlements against the meat producers. Sysco has moved to overturn that order, saying it “violates several of the most fundamental public policies underlying our judicial system, including party control over litigation.” Burford claims Sysco gave it veto power over settlements, but only after the food distributor violated the terms of the investment deal.

This high-stakes kerfuffle raises issues around the role litigation funders play in the cases they fund – a subject critics have hammered on since the inception of the industry. While ethics rules forbid interference by lenders, Sysco and Burford clearly disagree on whether the funder veered out of its lane. Whatever the result, it’s unusual to see disputes between funders, litigants, and counsel fought in broad daylight like this.

According to Custom Market Insights, the global litigation funding market was $12.2 billion in 2021 and is expected to reach $25.8 billion by 2030. In addition to London-based Burford, it lists key market players as Parabellum Capital, Bentham Capital, Juridica Investments, Woodsford Litigation Funding Ltd., and others.

Legal News

Email the Editor

How AI Is Transforming the Practice of Law with Cristin Traylor

Artificial intelligence is rapidly changing legal practice, but where does it deliver real value—and where is human judgment still essential? Cristin Traylor of Relativity joins Tom Hagy to discuss generative AI in legal workflows, discovery, defensibility, validation, and what lawyers should consider before relying on AI-generated results.

The Texas Two-Step: Testing Bankruptcy Law and Jury Rights with Adam Silverstein

Can financially healthy companies use bankruptcy to resolve billions of dollars in mass tort claims? Plaintiff lawyer Adam Silverstein of Otterbourg examines the Texas two-step, Johnson & Johnson’s unsuccessful talc bankruptcy attempts, the impact of the Supreme Court’s Purdue decision, and the tension between Chapter 11 and plaintiffs’ jury trial rights.

The Hidden Danger of Carbon Monoxide: Proving Exposure, Brain Injury & Liability with Sam Cannon

Carbon monoxide poisoning can cause devastating injuries while leaving victims and attorneys with difficult questions about exposure, causation, and liability. Attorney Sam Cannon of Cannon Law discusses how carbon monoxide cases are investigated, how brain injuries are proven, and why deferred maintenance, expert testimony, and multiple responsible parties can become critical to the litigation.

War Risk Insurance and Exclusion | Webinar for CLE Credit

War risk exclusions can determine whether a multimillion-dollar loss is covered or excluded. This CLE webinar examines the legal principles governing war risk insurance, political risk coverage, terrorism exclusions, cyber war claims, and the landmark cases that continue to shape insurance recovery. Featuring Robert M. Horkovich of Anderson Kill and Rich Boone of Wilson Elser, the program provides practical guidance for evaluating policy language, analyzing exclusion defenses, and developing effective recovery strategies in an evolving geopolitical and cyber risk environment.

AI and the Law: A Year-End Retrospective 2025 and Beyond | Webinar for CLE Credit

Artificial intelligence continues to reshape the legal landscape, bringing new litigation risks, evolving regulatory obligations, and complex governance challenges. In this CLE webinar, Abigail Damsky, Jamie O’Neill, and Seán McCabe of Anderson Kill examine the legal developments that continue to influence AI-related litigation and compliance, including privacy and biometric claims, copyright disputes, AI washing, algorithmic discrimination, product liability, antitrust concerns, and the expanding global regulatory framework. Gain practical insights into the cases, trends, and governance considerations that remain highly relevant for legal professionals advising clients on AI risk.
April 26, 2023
Alleged Hair Product Injuries Impact Women of Color
L’Oréal Among Defendants in Litigation Over Hair Products.
- Dozens of hair straightener cases allege higher incidence of cancers and other diseases.
- Plaintiffs in dry shampoo litigation say products contain benzene.
- Seven companies control the U.S. hair product industry.
Photo by Giorgio Trovato on Unsplash

L’Oréal has been hit hard in recent hair care litigation related to straighteners, relaxants, and dry shampoos. L’Oréal was named a defendant in nearly sixty complaints alleging that straightening products manufactured by the beauty giant have caused cancer in its consumers. L’Oréal has also been named a defendant in a proposed class-action for its Redken dry shampoo that allegedly contains the carcinogen benzene. Other large industry players such as Johnson and Johnson and Unilever have also been accused of selling dry shampoos with dangerous levels of benzene.

Straighteners and Relaxers Litigation

Dozens of cases have been consolidated in multidistrict litigation against L’Oréal for its potentially cancerous hair straighteners and relaxers. Mitchell v. L’Oréal USA Inc. is a typical case. It was filed by Missourian Jennifer Mitchell, a black woman, after her diagnosis of uterine cancer which she claims was caused by endocrine disrupting chemicals (EDCs) in L’Oréal’s hair straighteners and relaxers. Jennifer Mitchell was diagnosed with her cancer on August 10, 2018.

“Ms. Mitchell was first exposed to EDCs and/or phthalate-based products around 2000, at or around the age of 10, when she began using Defendants’ Product.” She used the products as instructed for 22 years, leaving the chemicals in her hair for long periods of time. At the age of 28, she was diagnosed with uterine cancer despite the cancer not being in her family history. As a result of her cancer diagnosis, Ms. Mitchell had to undergo a full hysterectomy, causing her emotional and physical pain, and rendering her unable to have children.

The complaint details a long history of marketing harmful hair relaxers and straighteners to black women to combat their natural hair texture and meet a Eurocentric white beauty standard.

The filed complaint consisted of fifteen counts ranging from strict liability failure to warn and negligence to medical monitoring. The products included in the complaint were Motions, Dark & Lovely, Olive Oil Relaxer, and Organic Root Stimulator.

Ms. Mitchell’s evidence supports her claims that the products allegedly caused her cancer due to EDCs. Health issues linked to EDCs include uterine cancer, breast cancer, uterine fibroids, endometriosis, and preterm delivery, amongst others. “On October 17, 2022, a study led by the National Institutes of Health (NIH) reported findings that women who frequently used chemical hair straightening or hair relaxer products were more than twice as likely to develop uterine cancer as women who did not use such products.

Ms. Mitchell’s case was consolidated with dozens of other cases against L’Oréal and other defendants in Chicago federal court as In re: Hair Relaxer Marketing, Sales Practices, and Products Liability Litigation. The consolidation was opposed on December 7, 2022, by L’Oréal USA, Inc., L’Oréal USA Products, Inc., SoftSheen-Carson LLC, and SoftSheen-Carson (W.I.), Inc., collectively known as “the L’Oréal defendants.”

In the L’Oréal defendants’ response to the motion for consolidation, the company first outlined its issues with the frequently referenced NIH study that catalyzed the filing of many of the plaintiffs’ lawsuits. For example, L’Oréal stated that the study “did not collect information on specific brands or ingredients used by the participants,” and that “all of the women in the NIH Study had sisters who had been diagnosed with breast cancer.” L’Oréal also argued that none of the plaintiffs’ cases were similar enough to consolidate. The plaintiffs’ cases differed in products used, timespans, named defendants, and injuries.

Further, L’Oréal argued that if consolidation had to happen, then the case should use the Southern District of New York as a forum, where fifteen of the matters were pending, and where the company has its headquarters. The defendant also disagreed with the Chicago judge that the case would be assigned to—The Honorable Mary M. Rowland—claiming she lacked multidistrict litigation (MDL) experience.

Despite L’Oréal’s best efforts, its motion was fruitless. Cases in “Schedule A” of the MDL (MDL No. 3060) were consolidated on February 6, 2023. Cases from California, New York, Georgia, and Illinois, including Ms. Mitchell’s case, were assigned to The Honorable Mary M. Rowland in the Northern District of Illinois. Since the original transfer, many other actions have been added to the MDL.

Dry Shampoo Litigation

In addition to allegations that its relaxing and straightening hair products cause cancer, L’Oréal is also currently facing accusations of using benzene, a well-known carcinogen, in its dry shampoo products. Other big-names that have been appearing in dry-shampoo complaints include Johnson and Johnson (J&J)’s OGX brand and Unilever’s Dove, Nexxus, Suave, Tigi and Tresemmé brands.

What Is Benzene?

Benzene is a chemical compound that can be both naturally and man-produced. Its harm to human health has been at the heart of many instances of litigation. Benzene, “a component of crude oil, gasoline, and cigarette smoke,” has been determined to be unsafe for human exposure in any quantity greater than zero. Government bodies such as the Food and Drug Administration (FDA), the Environmental Protection Agency, the Department of Health and Human Services, and the World Health Organization have spoken out against the dangers of benzene, and have attempted to limit its exposure to the public.

Valisure’s Report

On October 31, 2022, Valisure released a Citizen Petition on Benzene in Dry Shampoo Products, which prompted the wave of dry shampoo litigation hitting the U.S. court system. The company claims to have tested 148 batches of dry shampoo from 34 different brands and found that 70% of its samples contained benzene in varying amounts.

Pictured Above: Valisure Table 6. Overview of first spray analyses by brand. In some cases, two bottles from the same lot were analyzed and these duplicate lots are grouped by a black outline around the two values.

The petition itself requested a recall of the products Valisure found to be contaminated with benzene, that the Commissioner of the FDA establish better procedures for informing the public of their exposure to dangerous substances in cosmetics, amongst other requests.

Hirsch v. L’Oréal USA, Inc.: The Complaint

In a complaint filed on November 22, 2022, Plaintiff Eileen Hirsch and others similarly situated brought suit against L’Oréal USA, Inc. for its Redken brand dry shampoo products. The class action lawsuit alleges that the product line contains benzene, a carcinogen with evidence linking it to causing cancers such as leukemia, amongst other illnesses. Benzene was not a listed ingredient in the products. Yet, the independent study performed by Valisure found that the product contained as much as 7.55 parts per million (“ppm”) of benzene.

Ms. Hirsch, a Chicago resident, purchased multiple canisters of the Redken dry shampoo from a salon in the area. The complaint alleges that she was harmed in two separate ways: “First, Ms. Hirsch purchased adulterated and misbranded products that were illegally sold to her, and therefore worthless. Second, Ms. Hirsch was deceived by Defendant’s representations and omissions regarding the presence of benzene in the Products.” Other class members are also individuals who have purchased Redken dry shampoo.

Defendant’s Motion to Dismiss

Defendant L’Oréal did its best to get the case dismissed in a motion filed on February 7, 2023. In its Motion to Dismiss, L’Oréal gave several reasons for the complaint’s deficiency, including that the plaintiffs lacked standing to bring the claim and that the claims are preempted. Further, L’Oréal argues that the independent Valisure study relied upon by the plaintiff is insufficient to support the claims, stating that “Valisure . . . [is an] untrustworthy laboratory that has been censured by the [FDA] and federal judges alike.”

Plaintiffs responded to L’Oréal’s Motion to Dismiss, stating that the case was simple, standing had been correctly established, and the defendant’s allegations of insufficient Valisure testing were premature. L’Oréal has replied to the plaintiffs’ motion, but the court has not yet ruled on the Motion to Dismiss, determining the fate of the case.

Looking Forward

Those following the concert of haircare litigation should watch closely to see which product lines are tapped next and why. L’Oréal may be one of the more popular defendants, but that does not mean there aren’t other offenders.

Most beauty products known to average consumers are owned by one of seven large companies—J&J, L’Oréal, Eéste Lauder, Unilever, Procter and Gamble, Shiseido, and Coty. For better or for worse, these corporate identities pioneer most of the research and manufacturing that goes into the creation of the world’s fashion, beauty, and hygiene products. That means when these companies use carcinogens, they can likely be found in a mind-boggling number of items behind your own bathroom mirror, leading to mass injury and extremely complex litigation.

By Victoria Kline

Victoria is a third-year student at the University of Miami School of Law, Juris Doctorate Candidate 2023, Law Review Staff Editor, and soon-to-be associate at Jones Day.
April 26, 2023
Electronic Fund Transfer Fraud with Brad Rustin

Electronic Fund Transfer Fraud with Brad Rustin

Grifters, scammers, con artists

Sen. Elizabeth Warren, who championed the creation of Consumer Financial Protection Bureau (CFPB), calls the Zelle digital payments network a “preferred tool for grifters like romance scammers, cryptocurrency con artists, and those who prowl social media sites advertising concert tickets and purebred puppies — only to disappear with buyers’ cash after they pay.”

18 million Americans defrauded

Scams and fraud committed via the Zelle platform and other peer-to-peer services are surging. According to one lawsuit 18 million Americans were defrauded by schemes perpetrated via apps like Zelle in 2020. Some 1,500 member banks and credit unions participate in the Zelle service. People sent $490 billion via the app in 2021.

But Zelle owner, Early Warning, and its consortium comprising Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank, and Wells Fargo, have refused to refund customers for most of their losses. Sen. Warren issued a report that the claims for fraud received by just four banks will likely exceed $255 million by the end of 2022 – a $165 million increase over 2020. The senator and consumers say Zelle is violating federal consumer protection law.

What is fraud?

The heart of the problem is this: banks and consumers do not agree on the definition of “fraud.”

For clarity on issues surrounding the Electronic Fund Transfer Act (EFTA) and its implementing regulation—Regulation E—listen to my interview with fintech attorney Brad Rustin of Nelson Mullins.

In addition to chairing the firm’s Financial Services Regulatory Practice, Brad counsels financial institutions in regulatory matters, including strategic agreements, product development, and operational compliance. Brad is a Certified Anti-Money Laundering Specialist and a Certified Regulatory Compliance Manager. He received his JD, magna cum laude, from the University of South Carolina School of Law and his BA in Political Science and History, cum laude, from Furman University. Brad is also the FinTech advisor on the Editorial Advisory Board of the Journal on Emerging Issues in Litigation.

*******

This podcast is the audio companion to the Journal on Emerging Issues in Litigation. The Journal is a collaborative project between HB Litigation Conferences and the Fastcase legal research family, which includes Full Court Press, Law Street Media, and Docket Alarm. The podcast itself is a joint effort between HB and our friends at Law Street Media. If you have comments or wish to participate in one our projects please drop me a note at Editor@LitigationConferences.com.

(actual size)

Tom Hagy
Litigation Enthusiast and
Host of the Emerging Litigation Podcast
Home Page
LinkedIn

Brad RustinNelson Mullins

Brad Rustin chairs the firm’s Financial Services Regulatory Practice.

He began his career as a litigator focusing on consumer financial services litigation and defense of regulatory claims against chartered and non-chartered financial institutions, finance entities, and money services business. In the wake of the fiscal crisis, he began working with financial institutions, state-licensed lenders money transmitters, non-traditional lenders, check cashers, and mortgage brokers on issues of regulatory compliance.

Brad is a Certified Anti-Money Laundering Specialist (CAMS) by ACAMS and a Certified Regulatory Compliance Manager (CRCM) by the American Bankers Association. He also serves as an expert witness of matters relating to financial regulations and compliance.

He received his JD, magna cum laude, from the University of South Carolina School of Law and his BA in Political Science and History, cum laude, from Furman University. Brad is also the FinTech advisor on the Editorial Advisory Board of the Journal on Emerging Issues in Litigation.

April 26, 2023
Pixel Litigation the Latest Craze in Privacy Law

Meta, Google Face Barrage of Pixel Lawsuits in Digital Privacy War

Photo by Amal S on Unsplash

META PLATFORMS INC. AND GOOGLE are currently facing nearly 70 lawsuits involving large companies and some hospital systems or individual health care providers utilizing Pixel tracking tools embedded on their websites and applications. Sensitive private data such as financial information gathered from filing tax returns online or patient healthcare information stored on patient portals is being actively tracked and sent to Meta and Google for both analytical and advertising purposes.

Tracking pixels are a 1×1 Pixel graphic that serves as a snippet of code used for tracking user behavior, site conversions, web traffic, and other metrics generated from a site’s server. In 2018, Meta told Congress that there were more than 2 million Pixels across the web, which at the time, was one of the largest data-harvesting operations most internet users had ever seen. Meta makes their Pixel code freely available to anyone and any business – thus the amount of Pixel tracking has exponentially grown since Meta testified before Congress. The analytical information that companies gleam from Pixel tracking is paying off and is featured on everything from fast food companies such as Chick-Fil-A, media companies like iHeart Radio, and even tax-filing websites such as Tax Slayer or TaxAct.

Pixel Tax Data

On November 22, 2022, theverge.com co-published a report with The Markup, revealing that Pixel tracking tools located on several renown American tax-filing websites were sending individual tax filers’ contact and financial information to Meta and Google. From January to July 2022, The Markup tracked websites’ use of the Pixel as part of the Pixel Hunt in partnership with Mozilla Rally. Participants of the Pixel Hunt installed a browser extension that provided The Markup with a copy of all data shared with Meta through the Pixel. H&R Block, Tax Slayer, and Tax Act utilized Pixels on their websites and applications that sent financial data to Meta according to the data-driven report.

TaxAct’s Pixel sent some of their users’ tax data to Facebook, including their filing status, adjusted gross income, and the amount of their tax return, if applicable. TaxAct says it has about “three million consumer and professional users”. The Pixel Hunt also revealed that TaxAct’s embedded Pixels were sending data to Google Analytics as well. The Pixel Hunt also revealed that Tax Slayer, H&R Block, and Intuit were also sending specific types of data to Meta and Google.

The audit on Tax Slayer revealed that their embedded Pixel was gathering and sharing information such as phone numbers, the name of the user filling out the tax forms, and names of any dependent added to the return.

An audit on Intuit, America’s largest online filing software, revealed that the company did employ a Pixel but did not send financial information to Meta, but instead sent usernames and information about the last time a device signed into the Intuit account. Whereas the audit into H&R Block revealed that information was being gathered and shared on filers’ health savings account usage as well as dependents’ college tuition grants and expenses.

Tax filing is estimated to be an $11 billion industry in the United States with nearly 150 million individual returns filed electronically in 2021 according to this article. Free tax filing preparation and filing options do exist, but it’s limited to people making $73,000 or less and tends to be difficult to use.

Utilizing the Pixel during their tracking, The Markup found that the Internal Revenue Service directs taxpayers attempting to file for free to some of these tax filing websites with embedded Pixels. TaxAct and Tax Slayer are part of an agreement known as the Free File Alliance. TurboTax (“Intuit”) and H&R Block had participated in this program in the past. Several days after this report was published, a class action lawsuit was filed against Meta in the Northern District of California, John Doe and Jane Doe v. Meta Platforms Inc., et al., 3:22-cv-07557.

Pixel Healthcare and Patient Data

Pixels are also utilized by some healthcare systems and individual medical providers in the United States. In another lawsuit regarding Pixel litigation against Meta in the Northern District of California, Jane Doe v. Meta Platforms Inc., et al., 3:22-cv-04293-AGT, the plaintiff alleges that at least 664 hospital systems or medical provider websites have sent data to Meta via its Pixel tracking tools. The plaintiff argues that this tracking of her private health information is in violation of the Health Insurance Portability and Accountability Act (“HIPAA”)

HIPAA protects the privacy of individually identifiable health information by allowing only certain uses and disclosures of health data, such as for research purposes – but only if this data can’t be linked back to a particular patient. Currently under HIPAA, releasing data that is not properly de-identified could be considered a breach of HIPAA.

Recently on January 30, 2023, a class-action lawsuit was filed in the Tenth Judicial District of Louisiana regarding a local health care provider, Willis-Knighton Medical Center using Pixel tracking tools to send sensitive patient health data to Meta. The plaintiff in Jacqueline Horton, individually and on behalf of others similarly situated v. Willis-Knighton Medical Center, 93767-B, brought action against Willis-Knighton Medical Center for ‘exposing highly sensitive personal information to third parties without their knowledge or consent.’ The Louisiana case differs from California’s because California is one of the handful of states that has passed a statute related to video privacy and consumer protection.

In Jane Doe v. Meta Platforms Inc., the website allegedly shared information related to scheduling appointments with a doctor and reviewing test results. The California suit is seeking damages paid to consumers under the Video Privacy Protection Act (“VPPA”) 18 U.S.C. § 2710. This case was also brought under the California Confidentiality of Medical Information Act, that allows for damages of $1,000.00 per violation. In addition, the California court could potentially force hospital systems named in the suit to clearly disclose that their website uses Pixels to share data with Meta. The Plaintiff is also asking the judge to order that Meta delete sensitive health information that could be used to generate specific ads. This case will highlight misunderstandings of how HIPAA protects health information that’s in the hands of health care providers, insurers or any other entity currently subject to existing HIPAA provisions.

Origins of Pixel Litigation Lawsuits

The VPPA regulates the disclosure of information about consumers’ consumption of video content and imposes prescriptive requirements to obtain consumers’ consent to such disclosure(s). The law was originally enacted in 1988, a year after a journalist published Supreme Court Justice Robert H. Bork’s video rental history during his nominee process in 1987. The rental history contained no salacious details however and Congress quickly acted to pass the VPPA. The act reads:

The VPPA prohibits a person or business that rents, sells, or delivers prerecorded “video cassette tapes or similar audio visual materials” from “knowingly disclos[ing], to any person, personally identifiable information concerning any consumer of such provider . . . .,” absent informed, written consent as defined by the VPPA. 18 U.S.C. § 2710(a)(3). If liability is found, the VPPA allows consumers to seek the following remedies – (1) statutory damages in the amount of $2,500 per violation, (2) punitive damages, and (3) recovery of attorneys’ fees. 18 U.S.C. § 2710(c).

The VPPA was originally enacted to address the concept of a video tape service provider (“VTSP”). This was associated with traditional video rental stories and was rarely invoked as of lately. As online video services became more prevalent, the VPPA began to create legal barriers to major businesses and marketing opportunities for them. Prior to Congress amending the VPPA in 2013, the law created a strange legal paradigm: An organization’s business model involving the provisions to consumers, either on a standalone basis or as part of its broader online platform of online video content (such as a social media company), makes the organization qualify as a VTSP.

Congress amended the VPPA in 2013 to provide that disclosure of consumer data to third parties is not wrongful if the consumer elects to give ‘informed, written consent in a form that is distinct and separate from any form setting forth other legal or financial obligations of the consumer at the time the disclosure is sought, or in advance for set period of up to two years.

Under the amendment, the VPPA does provide a number exceptions that permit information being disclosed to third parties. Remarkably, one of those exceptions allows the sharing of information about the user ‘to any person if the disclosure is solely of the names and addresses of consumers and if: (i) the VTSP has provided the consumer with the opportunity, in a clear and conspicuous manner, to prohibit such disclosure; and (ii) the disclosure does not identify the title, description, or subject matter of any videos or other audio-visual material; however, the subject matter of such materials may be disclosed if the disclosure is for the exclusive use of marketing goods and services directly to the consumer.’

These exceptions allow the VPPA to permit the disclosure of the name and address of the user together with the identify of the VTSP and subject matter of the video content so long as the intended purpose is for direct marketing. The VPPA has since been challenged in several distinguishable cases decided in 2015 primarily on the grounds of violation of privacy.

Recent Developments in Pixel Litigation

The VPPA has come under consumer and legal scrutiny in recent years. Several important legal rulings have largely curtailed individual and collective efforts to declare violations under the VPPA. In Ellis v. Cartoon Network Inc., 803 F.3d 1251 (11th Cir. 2015), it was opinioned that, Consumers who use free mobile applications do not quality as ‘subscribers’ under the VPPA. The Ninth Circuit Court also opinioned two cases in 2015 regarding exceptions to the VPPA.

In Rodriguez v. Sony Computer Entm’t Am., LLC, 801 F.3d 1049 (9th Cir. 2015), an intra-corporate disclosure of personal information does not violate the VPPA. Then it was also decided by the 9th Circuit Court in another 2015 opinion Mollett v. Netflix Inc. 795 F.3d 1062 (9th Cir. 2015) that VTSPs cannot be held liable under the VPPA for circumstances where subscribers’ personal information was displayed on devices, such as televisions, that could potentially be viewed by third parties. This Court said that ‘viewing of such devices was beyond the companies’ control.’

These recent rulings narrowed the scope of the VPPA and helped provide definitions for the outdated video-store era law. Civil lawsuits across the nation related to Pixel litigation continues to barrage the integrity of the VPPA.

IHEARTMEDIA, Inc. is facing a lawsuit for allegations of violations of the VPPA in the Middle District of Florida Gloria Talley, individually and on behalf of herself and all others similarly situated v. IHEARTMEDIA, Inc., 8:32-cv-00215. Similarly the popular chicken chain, Chick-Fil-A is facing a similar class action lawsuit in the Northern District of California in Keith Carroll, individually and on behalf of all others similarly situated v. Chick-Fil-A, Inc., 3:23-cv-00314.

As lawsuits continue to mount against Meta and Google, the integrity of the VPPA is thrown into question. It is likely that one of the pending actions across the nation will eventually land the law itself into further judicial review, or if Congress acts, could create an entirely new blanket law altogether to help address the rapid interference and sharing of consumer data.

By Hunter SchmitzGuest Writer

Hunter Schmitz is a freelance writer and paralegal with Focus on Property Law and Civil Litigation.

April 7, 2023