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Cotchett, Pitre & McCarthy, LLP
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Lawsuit Filed Against PetSmart and PetSmart Groomer For Loss of Puppy

Today, Cotchett, Pitre & McCarthy filed a lawsuit on behalf of Terrie Peacock and Stefan Zier, whose beloved dachshund puppy, Henry, was crushed to death at the hands of a PetSmart groomer, Juan Zarate. Henry was more than just a pet, he was a member of the Peacock-Zier family. On May 15, 2016, Henry was brought to a PetSmart location in San Mateo, California for a routine nail trim. The nail trim turned ugly within moments. Henry went from healthy to having two broken ribs and a punctured lung. When Zarate emerged from the grooming station, Terrie and Stefan were stunned to see Henry’s limp and broken body, struggling to breathe with bright red blood foaming from his mouth. Henry died minutes later at the on-site veterinary hospital. Adding to the shock of what Terrie and Stefan observed was the failure of the PetSmart groomer to offer any explanation or apology for what happened.

The Complaint alleges that an alarming number of consumers have reported serious injury and/or death to pets while being groomed at PetSmart. The injuries range from severe cuts, to overheating and “cooking” the animal, to strangulation and blunt force trauma. According to the Complaint, PetSmart had knowledge and awareness of the harm its groomers were causing for years prior to Henry’s death, but failed to correct the problem. This failure is especially appalling in an unregulated industry, such as pet grooming, where PetSmart makes broad representations to the public regarding the care and commitment it provides in caring for pets.

Alison Cordova of Cotchett, Pitre & McCarthy said, “The volume of reports of dogs and cats sustaining serious, and sometimes lethal, injuries while being groomed at PetSmart undermines the claim that PetSmart is ‘where pets are family’. PetSmart claims that it trains its groomers and annually certifies its groomers in safety. This failure is especially appalling in an unregulated industry, such as pet grooming, where PetSmart makes countless representations to the public regarding its commitment to safety in caring for pets.”
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Exploding Samsung 7 Phones Are Just the Tip of the Iceberg

Today, Cotchett, Pitre & McCarthy and Stonebarger Law filed a lawsuit on behalf of a 32 year old man, Brandon Covert, who suffered serious injuries to his hand when he tried to protect his family from a Samsung Galaxy “6 Active” Series phone which exploded and caught fire in his bedroom while he was asleep with his wife and seven month old child. The couple was awakened by the sound of a “gun blast”, then they observed fire and sparking from the phone that was on their bedroom dresser being charged. In an effort to douse the fire and save his family from the threat of a larger blaze, Brandon Covert grabbed the fiery device to dispose of it out of harm’s way.

The complaint alleges a history of incidents by consumers who have complained about overheating Samsung phones over several years and various different models. The suit alleges that the safety risk of overheating phones was known by officials at Samsung well before their recent recall of the 7 Series, and raises serious concerns that earlier models suffer from the same design and manufacturing defects.

Frank Pitre of Cotchett, Pitre & McCarthy said, “In my opinion, the problems with the Series 7 phones are just the tip of the iceberg. Samsung has been aware that various models of their phones have presented safety risks and they simply haven’t addressed the root cause of the problems. They seem content to issue consumers replacement phones without eliminating the safety risk.”

Gene Stonebarger of Stonebarger Law said, "Samsung has exposed consumers to risks of significant harm by selling dangerous smartphone devices that have the potential to detonate internally and explode. People should not have to live in fear that they are carrying a potential ticking time bomb with them throughout the day or that their phone may ignite into flames while they sleep in their homes.
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Protecting Our Seniors (and Taxpayers) – U.S. Department of Justice (DOJ) Indicts Operators of 70 Facility Nursing Home Chain

Posted on October 14, 2016 by Anne Marie Murphy

Fraud in nursing homes is rampant and takes every imaginable form – from the small scale (a staff member who take narcotics from elders to sell on the street) – to the massive (systematic defrauding of the government). With billions of government dollars flowing through our Nation’s nursing homes it is a hot bed for criminal activity. Fortunately, whistleblowers and government investigators are able to work together to return funds to the government when there has been fraud or false claims for reimbursement by nursing homes.

As an example, this week the U.S. DOJ charged the CEO and COO of a major nursing home chain (American Senior Communities) for a fraud and kickback scheme that cost the Federal Government over $16 million dollars. The thirty-two count indictment charges James Burkhart, Daniel Benson, and Steven Ganote with conspiracy to violate the federal Anti-Kickback Statute as well as conspiracy to commit mail, wire and health care fraud.

The way this particular scheme worked was that the nursing home found contractors – for a variety of facility needs – everything from pharmacy services to landscaping – who would mark up there charges to the nursing home (often by 30-50%) and then refund the mark up to a side company run by the owners of the nursing home chain. The indictment alleges that the vendor who provided pharmacy services to the nursing homes paid three of Ganote’s shell companies over $5.5 million for so called “marketing services.”
The DOJ alleges Burkhart, Benson and Ganote spent millions of dollars of illegal kickbacks on such things as vacation homes, jewelry, and gold bullion. Sadly, it is taxpayers who foot the bill when there is nursing home fraud because the fraudulent costs get passed on to government pay programs such as Medicare and state-run programs.

Our firm, Cotchett, Pitre & McCarthy, LLP represents elders in elder abuse and other types of litigation – we also represent whistleblowers who work in the nursing home industry and notice fraud against the government. Under the False Claims Act, whistleblowers who step forward to blow the whistle on government fraud are entitled to a significant share of the money that is recovered for the government. If you are in the nursing home industry and think you may know about a fraudulent practice or false billing for services to the government (whether to Medicare or a state-run program such as Medi-Cal), contact us for a confidential case evaluation. Anne Marie Murphy, amurphy@cpmlegal.com;(650) 697-6000.
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Elizabeth Tran Selected as Honoree for the 2016 Antitrust Enforcement Awards

CPM is pleased to announce that the American Antitrust Institute (“AAI”) has selected Elizabeth Tran as an Honoree for the 2016 Antitrust Enforcement Awards. Ms. Tran will accept the Outstanding Antitrust Litigation Achievement by a Junior Lawyer at the Antitrust Enforcement Awards Dinner in Washington, D.C. on November 9, 2016. Ms. Tran is receiving this award for her contribution to In re Automotive Parts Antitrust Litigation, the benefit realized by consumers and businesses, and the positive development of antitrust policy. The AAI press release will follow on Monday, October 10, 2016.
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Lawsuit Filed Against Mentor Worldwide Over Mentor MemoryGel Silicone Breast Implants

A Seattle woman, Sara Ebrahimi, has filed suit against Mentor Worldwide LLC and its parent company, Johnson & Johnson Services, Inc., alleging the defective manufacturing of Mentor MemoryGel™ Silicone Breast Implants. The lawsuit alleges that Mentor and its parent company, Johnson & Johnson, repeatedly failed to follow the requirements imposed by the Food and Drug Administration (“FDA”) in connection with the approval of Mentor’s premarket approval application. It is further alleged that the companies failed to warn the FDA and women receiving the implants of the devices’ known dangerous propensities. The lawsuit -- Ebrahimi v. Mentor Worldwide LLC, et al. (case no. 2:16-cv-07316-DMG) -- was filed in the Central District of California in Los Angeles, where Mentor is headquartered.

Mentor develops, manufactures, and markets products for surgical and non-surgical procedures, including Mentor MemoryGel™ Silicone Breast Implants. The lawsuit alleges that chemicals Mentor used in the manufacturing process bled through the implants, and into Ms. Ebrahimi’s body, causing her to suffer serious medical problems. It is alleged that Mentor and Johnson & Johnson knew that their devices were defective, yet allowed them to be surgically implanted in Ms. Ebrahimi and other unsuspecting women. It is further alleged that Mentor and Johnson & Johnson failed to warn the FDA of these risks by not providing adequate follow-through studies.

Mentor MemoryGel™ Silicone Breast Implants are regulated medical devices under the Food, Drug and Cosmetic Act that require FDA approval. As a condition of approval, the FDA required that Mentor conduct six post-approval studies to demonstrate, over time, that its silicone implants were safe and effective. The lawsuit alleges that Mentor failed to design effective studies and, as a result, failed to provide the FDA with the longitudinal studies that were required as a condition to the devices’ approval. It is alleged that:

It was Mentor’s obligation to design and execute a study where women were able to access internet forms that are easily understood and provide a working forum to report their experience with implants. Mentor intentionally and systematically failed to make this happen which is a violation of the FDA’s conditions for approval. Data collection was sparse and potential serious side effects and harmful complications were downplayed and under-reported due to inadequate sample size.

Ms. Ebrahini is represented by the law firm of Cotchett, Pitre & McCarthy, LLP, which has decades of experience litigating complex cases involving defective products that harm consumers.
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Protecting Our Seniors – U.S. Government Takes Important Step to Eliminate Forced Arbitration in Nursing Homes

Posted on October 3, 2016 by Anne Marie Murphy

Senior advocates, including elder abuse attorneys have long voiced opposition to the continued use of forced arbitration provisions in nursing home contracts. In a rule that becomes effective November 28, 2016, the U.S. Government’s Centers for Medicare & Medicaid Services (“CMS”) is prohibiting pre-dispute arbitration clauses in nursing home contracts. This move is a critical protection for our Nation’s approximately 1.3 million nursing home residents.

Although the rule will not help elders in assisted living or nursing home residents with contracts that pre-date the November 28, 2016 effective date of the rule, the importance of this move by CMC cannot be understated. The full text of the final rule, which is over 700 pages in length can be found here.

Our firm, Cotchett, Pitre & McCarthy, LLP represents elders in elder abuse and other types of litigation. We handle a wide range of cases under California’s elder abuse law, including cases involving serious injuries or death – as well as financial fraud.
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Congratulations to Joe Cotchett and Niall McCarthy for Being Selected to Daily Journal's Top 100 Lawyers in California

We are proud to congratulate Joseph Cotchett and Niall McCarthy on their achievements and selection again to the Daily Journal’s Top 100 Lawyers in California.
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Lawsuit Filed Against Wells Fargo Executives And Board Members For Creation Of Over 2 Million Phony Accounts Which Defrauded Consumers

Wells Fargo shareholder William Sarsfield today filed a lawsuit in San Francisco County Superior court on behalf of the Company, and against Wells Fargo officers and directors, over the creation of over 2 million phony accounts and charging unknowing customers unwarranted fees. The complaint alleges that Wells Fargo’s senior management allowed the bank to commit a major fraud on consumers resulting in serious harm to the bank. The shareholder is represented by the law firm of Cotchett, Pitre & McCarthy.

On September 8, 2016, the Consumer Financial Protection Bureau (CFPB) fined Wells Fargo Bank $100 million for unlawful sales practices, the largest penalty ever imposed by the CFPB. The CFPB said that Wells Fargo employees, for years, were pressured to secretly open unauthorized accounts in order to sales targets and allow executives to receive bonuses. The bank used a sales strategy was called “cross-selling,” where employees were told to sell existing bank customers up to eight different bank products. The complaint alleges this strategy was approved with the knowledge of the Board of Directors and the CEO, John Stumpf. The bank allegedly was informed of complaints of sales abuses resulting from this strategy as far back as 2012, if not earlier, yet did not stop the practice.

On September 8, 2016, the Office of the Comptroller of the Currency also announced its own investigation into Wells Fargo’s sales practices, resulting in two separate Consent Orders against the bank: (1) a “cease and desist” order designed to immediately stop the “unsafe” sales practices by the bank, and (2) an order requiring the bank to pay a civil monetary penalty of $35 million.

Plaintiff’s Attorney, Joseph Cotchett, said, “This case represents a glaring example of a major bank that takes advantage of consumers all in the name of greed – it represents the culture of Wall Street to drive the stock price up in the name of false profits.”

Wells Fargo CEO John Stumpf reportedly said of the fraud,

“I feel accountable and our leadership team feels accountable – and we want all our stakeholders to know that.”

However, during a Senate Committee Hearing on Tuesday, September 20, 2016 on the alleged fraud, Senator Elizabeth Warren expressed skepticism at Stumpf’s claim of accountability,

“And when it all blew up, you kept your job, you kept your multimillion dollar bonuses and you just went on television to blame thousands of $12 an hour employees who were just trying to meet cross-sell quotas that made you rich. This is your accountability. You should resign. You should give back the money that you took while this scam was going on and you should be criminally investigated by both the Department of Justice and the Securities and Exchange Commission.”

The complaint alleges that Carrie Tolstedt headed the division at Wells Fargo where the fake accounts were created. She announced her retirement in July. Tolstedt will reportedly take with her $124.6 million in stock and options when she retires later this year. At the time of her retirement announcement, Stumpf called Tolstedt his “dear friend, role model and standard-bearer for our culture.” The complaint alleges that other executives or managers are retiring or have been terminated, though Wells Fargo refuses to name them or their severance packages.

In 2014, Wells Fargo set a record in reporting net income of $23.1 billion, on revenue of $84.3 billion. The unit headed by Tolstedt accounted for nearly $14 billion of that year’s net income. According to bank proxy statements, for every year of the CFPB’s investigation (2011 – 2016), Tolstedt collected $5.5 million in stock as her portion of the performance share award split among Wells Fargo’s top executives. The complaint requests that the Bank “claw-back” all of the severance packages for the retiring or dismissed employees participating in the fraud, as well as senior executive compensation and director fees paid during that period.

Mark Molumphy who is leading the case at Cotchett, Pitre & McCarthy, said of the conduct, “This is a case about accountability. As alleged, the bank’s officers knew about the conduct years ago, but did not stop it. At the same time, they paid themselves millions, while terminating only lower-level employees. To this day, no officer has been fired nor given up a cent of compensation for this conduct. The buck needs to stop at the top.”

As alleged, Wells Fargo fired 5,300 employees over the last few years related to this scandal. According to Wells Fargo, about 10% of the terminated employees were branch managers or senior to such managers. However, no senior officers have been terminated. As alleged in the complaint, employees would go so far as to create phony PIN numbers and fake email addresses to enroll customers in online banking services. According to the CFPB, Wells Fargo employees would move funds from customers’ existing accounts into newly created ones without their knowledge. Customers would then get charged for insufficient funds or overdraft fees because there would not be enough money in their existing accounts. The CFPB also revealed Wells Fargo opened accounts without the consumer’s consent and then funded the new accounts through unauthorized transfers of funds between the consumer’s accounts; submitted tens of thousands of credit card applications without the consumer’s consent; issued debit cards without the consumer’s consent; and enrolled consumers in online-banking services without the consumer’s consent. The CFPB concluded that this conduct violated the Consumer Financial Protection Act of 2010 and provided the basis for the Consent Order.

Wells Fargo sought to distinguish itself as a leader in “cross-selling” banking products and services to its existing customers. As alleged in the complaint, the bank set sales goals and implemented sales compensation incentives to increase the number of banking products and services that its employees sold to its customers. Wells Fargo’s internal motto for cross-selling was “Eight is Great,” and it was common knowledge within the bank that the goal was to have existing customers use at least eight Wells Fargo financial products.

However, according to the complaint, much of Wells Fargo’s touted success with cross-selling was the product of rampant, illegal fleecing of the bank’s own customers.

As alleged, Wells Fargo’s senior management knew of, encouraged, and closely monitored compliance with the “Eight is Great” program. Nancy Fineman, also of the Cotchett firm, called the conduct of the officers alleged in the complaint, “a total breach of fiduciary duty to the Company, its shareholders and its banking customers.”
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$11 Million Settlement in Whistleblower Lawsuit Against Beauty School Chain

Cotchett, Pitre & McCarthy, LLP and Skapik Law Group today announced the $11 million settlement of a case against Marinello Schools of Beauty. The case is a “false claims” action filed in 2013 on behalf of the United States by six whistleblowers, former employees of Marinello. Based on overlapping allegations, on February 1st of this year, the United States Department of Education denied Marinello’s application to requalify its campuses to receive federal student loan funds, forcing Marinello to close its doors. Prior to its closure, Marinello was one of the largest chains of for-profit beauty schools in the United States.

The lawsuit alleged that Marinello and four of its executives engaged in six broad schemes, including: fabrication of high school diplomas through an organization called “Parkridge Private School” with a scheme labeled “Project Diploma;” manipulation of student attendance records to make ineligible students eligible to receive financial aid; and the manipulation and misrepresentation of graduation, licensing and job placement statistics. The case settled three months before the start of trial in the United States District Court for the Central District of California.

Under the False Claims Act, a majority of the $11 million settlement will be returned to the United States government. The whistleblowers and their attorneys will receive a share of the settlement proceeds as a reward for prosecuting the case. One of the whistleblowers' attorneys, Justin T. Berger of Cotchett, Pitre & McCarthy, LLP, stated, “This is a tremendous victory for taxpayers. Not only are Defendants paying millions of dollars through this settlement, but with the school now closed, taxpayers will save hundreds of millions of dollars over the coming decade.”

Geralyn Skapik, of Skapik Law Group, stated: “Student loan fraud has increased dramatically, largely due to the misappropriation of taxpayers’ money by ‘for-profit’ schools like Marinello School of Beauty. This is also a victory for all students who truly wish to receive an education but cannot because of lack of funding due to student loan fraud. Our courageous clients put their livelihoods and reputations on the line to stop this corruption and misuse of taxpayers' money and their actions should be applauded. Hopefully, this lawsuit will encourage others to come forward to report taxpayer fraud and abuse. Attorneys Eric Morris and John Graham were also instrumental in this complex litigation, assisting in dissecting Marinello’s intricate financial and regulatory schemes."
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Nancy Fineman Inducted as a Fellow in the Academy of Trial Lawyers

Nancy Fineman was inducted as a Fellow in the Academy of Trial Lawyers on July 29. The Academy is a group of truly elite trial lawyers representing both sides of the Bar: prosecutors and defense lawyers in criminal cases, and plaintiffs' and defense counsel in civil litigation (including business and personal injury cases). While the majority of the Fellows come from the U.S., the Academy includes lawyers from more than 30 countries. Fellowship is by invitation only, and trial lawyers are invited to become Fellows only after an extremely careful vetting process. As to U.S. Fellows, the Academy's bylaws limit Fellowship to 500 active trial lawyers under the age of 70. Upon reaching the age of 70, a Fellow retains all of his or her rights and privileges but is no longer counted against the cap of 500. This provision assures that each year there will be openings for first-rate nominees to enter the Fellowship.
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