Biggest Class Action Lawsuits of 2008
Biggest Class Action Lawsuits of 2008
As America's big businesses continue to struggle into the new year, faulty practices have caused the American public to fight back.
By filing a class action lawsuit, individuals or small groups can act on behalf of a larger group to seek justice. Many class action lawsuits have been filed in 2008, combating bad business and false promises.
Internet giant Comcast has been involved in a class action suit regarding its promise of service since early 2008. Gilbert Randolph LLP filed a class action suit against Comcast in the Superior Court of the District of Columbia in February 2008.
The complaint alleges that Comcast's promises to provide the "fastest Internet connection" and "unfettered access to all the content, services, and applications that the Internet has to offer" are false because Comcast impedes access to peer to peer (P2P) applications.
When it comes to P2P applications, Comcast isn't exactly the forgiving type. According to the complaint, Comcast sends "reset packets" which tell the transmitting computer to stop sending data. Therefore, "users of peer-to-peer applications are denied full access to the Internet despite paying for a service that Comcast promises is 'unfettered.'"
Sanford Sidner, the lead plaintiff in the DC case said, "I've been a Comcast customer for several years, and I feel betrayed." A lot of other customers are right there with him; in July 2008, Gilbert Randolph LLP took the complaint to a federal court in Portland, Oregon and filed a nationwide class action lawsuit against Comcast for the same reasons. Filing in federal court makes any settlement or decision against Comcast available to people in every state where the provider offers internet access.
On September 16, 2008, several former and current Los Angeles Times employees filed a lawsuit against the newspaper's corporate parent, Tribune Co., and its chief executive, Sam Zell, contending reckless management is destroying the value of the company.
Filed in the US District Court in Los Angeles, the suit alleges that Zell and former Tribune CEO Dennis J. FitzSimons created a plan to take the company private. Tribune's roughly 18,000 employees became owners of the company when it was taken private in 2007. The transaction saddled the business with $12.5 billion in debt and created an employee stock ownership plan (ESOP). According to the lawsuit, FitzSimons received nearly $21 million in bonuses, severance, and other payouts as part of the deal.
The lawsuit seeks damages on behalf of employees of The Times and Tribune Co., which owns a variety of newspapers, television stations, and other assets, including the Chicago Cubs baseball team. The plaintiffs seek to recover losses to the ESOP and want to replace the Tribune board of directors and the plan's trustee. They also want a full accounting of pension plan assets.
The trouble started in late 2007, when Washington Mutual, Inc. announced severe losses for the third quarter. By early 2008, WaMu stock had dropped from nearly $45 per share in mid-2007 to less than $10 per share and the country's sixth-largest bank was facing 12 class actions suits brought by its shareholders. Most of the lawsuits were ultimately consolidated into one case.
Plaintiffs allege that Washington Mutual made false and misleading statements about its performance and that company leaders conspired to defraud shareholders. CEO Kerry Killinger and several company executives were named in at least one of the suits, as were 12 of the company's 14 board members, including Killinger.
The case was still pending in late 2008 when Washington Mutual Bank suffered the largest bank failure in American history on September 25. On September 26, 2008, Washington Mutual, Inc., the bank's holding company, filed for Chapter 11 bankruptcy.
Since the bankruptcy filing, additional defendants have been added and additional claims have been made against the defendants of the pending suit. Several new class action lawsuits have also been filed against Washington Mutual, Inc.
Because of the large number of plaintiffs and the lack of remaining Washington Mutual assets, plaintiffs in the class action suits are expected to recover a very small percentage of their losses. Shareholders who purchased stock on the advice of a financial advisor or brokerage firm can pursue a securities arbitration claim against the broker or firm. The securities arbitration process may provide an opportunity for individual investors to recover a greater percentage of their investment losses. Often, investors must "opt-out" of the class action lawsuit in order to pursue a securities arbitration claim, otherwise investors are excluded from this legal option.