Arias Ozzello & Gignac LLP

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SEC Shuts Down Cloud Computing Scam Targeting Asians, Hispanics

The U.S. Securities and Exchange Commission on Friday said it has shut down a worldwide pyramid scheme that falsely promised fast gains to tens of thousands of Asian-American, Hispanic and foreign investors from cloud computing services.

A federal judge on Thursday granted the regulator's request for an asset freeze over entities operating as WCM and WCM777, which are based near Los Angeles and in Hong Kong and run by Ming Xu of Temple City, California.

WCM and WCM777 allegedly raised more than $65 million since March 2013 by promising people they could double their money in 100 days by investing between $399 and $1,999 in cloud services such as website hosting, data storage and software support.

But instead, according to the SEC, Xu and the WCM entities would use some new money to pay older investors, and spent other funds on two California golf courses and other properties, and to play the stock market. Xu is also known as Phil Ming Xu.

U.S. District Judge Christina Snyder in Los Angeles imposed the asset freeze and ordered a temporary receiver over the defendants' assets. The SEC is also seeking to recoup illegal gains and impose civil penalties.

The case is SEC v. World Capital Market Inc et al, U.S. District Court, Central District of California, No. 14-02334.

Fandango, Credit Karma in Security-Flaw Settlement

The Federal Trade Commission says the mobile apps of movie ticket seller Fandango and credit report provider Credit Karma may have exposed millions of users' sensitive personal information, including credit card data and social security numbers.

The FTC said Friday that the companies failed to properly secure their apps for several years, potentially exposing information users sent or received through the apps.

Fandango and Credit Karma fixed the security issue last year. The companies say they are not aware of any individual's information being stolen. The FTC says that would be difficult to trace.

Fandango, owned by cable provider Comcast Corp., and Credit Karma agreed to settle the FTC's charges.

Bait And Switch: Many Corporations Promise to Pay Arbitration Fees, But Don’t

Please read this post about a really ugly corporate practice of promising to pay all of the costs of arbitration, but then not actually doing so on those occasions when consumers file cases.  It’s extremely hypocritical, it jerks consumers around, and it’s something that the Consumer Financial Protection Bureau is very interested in. 

Pfizer Recalling Effexor Due to Possible Contamination

Pfizer, Inc. is recalling the anti-depressant Effexor because it may have been contaminated with a heart drug. Interaction between the two could be fatal.

The recall affects 30-count and 90-count bottles of Effexor XR 150-milligram extended release capsules and 90-count bottles of Greenstone-branded Venlafaxine 150-milligram extended release capsules.

According to a press release, a pharmacist had reported that a bottle of Pfizer's Effexor XR contained one capsule of Tikosyn. There have been no other reports, but three lots that were packaged on the same line are being voluntarily recalled as a precaution.

The use of Tikosyn by someone taking Effexor or Venlafaxine could have "serious adverse health consequences that could be fatal," the press release states.

Patients should watch out for signs of abnormal heartbeat and contact their doctors if they have any problems.

Dropbox’s Forced Arbitration Clause

The online storage service Dropbox has adopted a forced arbitration policy as a way out of resolving legal disputes with its customers by tweaking its Terms of Service to take away users’ rights to take the company to court and to prevent multiple users from having their complaints heard as a group. 

Dropbox has created an online opt-out form that only takes a few seconds to fill out. You only have 30 days from the date you agree to the new Dropbox terms (or 30 days from the start of service for users who sign up after the new terms go into effect) to file the opt-out request.

If you don’t opt out, you are giving up the right as a Dropbox customer to bring or participate in a class-action lawsuit against Dropbox. You can only bring a lawsuit in small claims court. All other disputes must be handled in binding arbitration. And all complaints — no matter how many people are impacted — are handled on an individual basis.

The ban on class-action lawsuits means that each customer’s dispute must be arbitrated on its own. So even though Dropbox will have to go through the hassle of dealing with each instance of a dispute, the total number of customers who will be willing to enter into the arbitration process is inevitably only a fraction of the total number of affected customers.

Forced arbitration clauses have been on the rise since the 2011 U.S. Supreme Court ruling in AT&T v Concepcion, in which the telecom giant successfully argued that the inclusion of a few words about binding arbitration buried in the back of a massive contract were sufficient for taking away a customers’ right to sue or seek a class action against the company.

Since then, dozens of major companies — from banks to wireless companies to e-commerce and cable TV — have either added such clauses or tweaked existing language to reinforce how few rights their customers have.

Amazon Warehouse Workers Take Their Fight To Supreme Court

The U.S. Supreme Court agreed to hear a case that could determine whether companies such as Inc. must pay workers for the time they spend waiting to clear security checks at the end of their work shifts.

The case revolves around workers at Amazon warehouses in Nevada, who had to pass through security checks as part of an anti-theft procedure.

The workers, former temporary employees at Amazon contractor Integrity Staffing Solutions, said they spent nearly 30 minutes some days waiting for the checks. In a 2010 lawsuit, they argued they must be compensated for that time under the federal Fair Labor Standards Act (FLSA).

The U.S. Court of Appeals for the 9th Circuit ruled last April that the workers' suit could go forward, prompting several similar lawsuits against Amazon, the world's largest online retailer, and its third-party warehouse contractors, in federal courts around the country.

U.S. Investigates GM Ignition Recall Timing

The National Highway Traffic Safety Administration announced late Wednesday that it has opened an investigation into "the timeliness of General Motors' recall of faulty ignition switches to determine whether GM properly followed the legal processes and requirements for reporting recalls."

Federal rules require an automaker to notify NHTSA within five business days of determining that it has a safety defect in its vehicles.

The GM recall now covers 1.37 million vehicles in the U.S., plus an additional 253,519 in Canada and Mexico.

Involved are the 2005-2007 Chevrolet Cobalt and 2007 Pontiac G5 recalled Feb. 13, plus the 2003-2007 Saturn Ion, 2006-2007 Chevrolet HHR, 2006-2007 Pontiac Solstice and 2007 added to the recall Tuesday.

The main, deadly, problem is that front airbags sometimes fail to inflate in a crash. The GM remedy is a new ignition switch that's less likely to inadvertently move from "run" to "accessory," which can kill power to the air bags.

Bayer Asked to Pay Up for Mirena IUD Removal Surgery

One IUD, marketed under the name Mirena and manufactured by Bayer Pharmaceuticals, has come under scrutiny for its dangerous side effects and has led to many lawsuits claiming the product is “defective and unreasonably dangerous.” Among the many claims of negligence, Bayer is accused of intentionally selling a dangerous product, deceptive advertising and concealing the risk of complications. Mirena is a plastic intrauterine device (IUD) from Bayer that was popular in the early aughts, even up to now. It’s no surprise that Mirena was extremely profitable for Bayer, with over 15 million women worldwide opting for an IUD.  Five years ago, a government agency even stepped in and issued a warning. A North Carolina woman has filed a Mirena lawsuit, alleging that she was never warned that the IUD could migrate after implantation, which led her to incur expensive medical bills to remove the IUD after it perforated her uterus and embedded in her stomach lining. It’s a common allegation raised in over 100 Mirena IUD lawsuits pending against Bayer. The case is Amber Lefler v. Bayer Healthcare Pharmaceuticals Inc., Case No.: 7:13-cv-07275-CS, in the United States District Court District of New Jersey.




Merck & Co. to Pay $100 Million in Contraceptive Settlement

Merck & Company, Inc. (the second-biggest U.S. drug maker) will pay $100 million to settle product liability lawsuits against its NuvaRing contraceptive devices.

The lawsuits were from women who allegedly were harmed by using Merck and Company’s NuvaRing. Under the settlement, “Merck will be paying a fraction of what at least one company has paid in a similar settlement.” Last year, Bayer AG (a German drug maker) paid $1.6 million to settle lawsuits against its Yaz and Yazmin birth control pills, which allegedly were causing women to have clots, strokes, and heart attacks.

U.S. Justice Department Files Discrimination Lawsuit Against Rhode Island

The U.S. Justice Department is suing the State of Rhode Island and the State Department of Corrections “for allegedly discriminating against minority applicants for correctional officer jobs.”

The lawsuit alleges that Rhode Island’s practice of hiring correctional officers is discriminatory because they have their applicants undergo a written examination and a video examination, which in turn disproportionately screens out African-Americans and Hispanics.

The lawsuit seeks damages that include job offers, back pay, and retroactive seniority.

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