Recently in lawsuits Category

Edward Gormbley, a former Assistant Vice President at General Electric Capital Services, filed suit in Connecticut Superior Court today seeking $10 Million from GE.  Mr. Gormbley's complaint asserts that GE Capital retaliated and constructively discharged him after he complained that GE Capital fraudulently overvalued one of its largest investment assets, Momentive Performance Materials ("Momentive").

Gormbley, a "Top-Talent" employee of  GE, filed the Complaint after the Company cut his compensation, reduced his responsibilities and destroyed his professional reputation after he repeatedly expressed legitimate concerns to his superiors that GE Capital's valuation methods resulted in a grossly inflated valuation of Momentive in 2008.

Gormbley is represented in the matter  by Sanford Wittels & Heisler LLP, in Washington, D.C.   

"Mr. Gormbley repeatedly was warned to keep what he knew about GE Capital's valuation of Momentive to himself," said David Sanford. "When Gormbley refused  to play GE's games, GE swiftly and brutally  retaliated against  him."

In addition to GE Capital Services, the suit names General Electric Company, GE Equity, GE Company Chair and CEO Jeffrey Immelt, and a number of other high-ranking corporate executives as defendants.

Gormbley was hired by GE in 2000, joining its Financial Management Program.  After working in a wide range of divisions throughout the company, he joined GE Commercial Finance, a subdivision of GE Capital in 2006. Throughout  his rise through the ranks, he earned and maintained a spot on the top rung of the company's forced ranking system. His strong, positive performance also won  him a coveted position on GE's corporate audit staff. 

In mid-2008, Gormbley became concerned  because he recognized that GE's valuation of Momentive was inflated by some $2  billion. He shared these conclusions with his superiors.  They were not appreciative. 

GE's first response to Gormbley's bad  news was to ignore the message.  When Gormbley persisted in making his concerns known to an increasing circle of individuals in the company, GE's answer was to kill the messenger.

In early October 2008, while the  financial sector was in a state of turmoil, GE announced a $12 billion stock offering, touting the company's financial soundness and pledging to maintain its high quarterly dividend.  Yet, at the same time, it was becoming increasingly clear that GE Capital was in trouble.  In fact, in private meetings with Bush administration Treasury Department officials, including then-Treasury Secretary Henry Paulson, Immelt expressed concerns about GE and GE Capital's finances and financial stability.

In November and December 2008, Gormbley continued to warn GE about Momentive's declining performance and recommended that GE Equity take a write down of Momentive's valuation.  Gormbley was explicitly and implicitly  warned to stop talking about Momentive's decline and its effects on GE.  Gormbley's superiors instructed him to change his valuation methodologies for Momentive calculations and to stop "making things so difficult."

In January of 2009 Gormbley's concerns about GE's over-valuation of Momentive were confirmed.  At that time, GE Equity received  Momentive's board book verifying that the value of Momentive had plummeted.  With this written corroboration of his  concerns, Mr. Gormbley sent an email to the President of GE Capital and other senior GE officials in which he again advocated a write-down of Momentive.  In response, GE chastised Mr. Gormbley  for making the situation public and discouraged him from speaking at  meetings. 

But Gormbley would not stay silent. He  had witnessed and objected to GE Capital's overstatement of Momentive's value and its concealment and misrepresentation of faulty valuation data to internal  controllers, external auditors, and the Securities and Exchange Commission. In its February 2009 Form 10-K filing, GE chose not to include the most updated  valuation information for Momentive, thereby violating the SEC's reporting  requirements.

In response, GE Equity's leadership  initiated a campaign of retaliation that ended Gormbley's career at the company and caused him severe financial and emotional harm.  The retaliation included removing him from a team of energy investment professionals, prohibiting him from pursuing  new deals, passing him over as a board observer on an investment deal in which  he has served as lead underwriter, reducing his performance rating, cutting his  year-end bonus, removing him from the Momentive account, excluding him from  meetings essential to his performance, delaying his 2009 performance review, refusing him the opportunity to work from home or utilize flex time, and  threatening to revoke a $133,000 loan.

"GE did everything it could possibly do  to discredit me, ruin my reputation within the company and generally make my  life miserable," said Gormbley. "When I asked Human Resources to investigate the  retaliation I was being regularly subjected to, my requests were ignored.  To preserve my professional reputation and financial security, I finally had to resign."

The Complaint calculates damages at over $10 million.  

Sanford Wittels & Heisler is a law firm with offices in Washington, D.C., New York, and San Francisco that specializes in employment discrimination, wage and  hour, consumer and complex corporate class action litigation and has represented  thousands of individuals in some of the major class action cases in the  United  States. The firm also represents individual clients in employment, employment discrimination, sexual harassment, whistleblower, public accommodations, commercial, medical malpractice, and  personal injury matters

Attorneys from Houston's Ahmad, Zavitsanos & Anaipakos are representing a group of investors in a lawsuit filed against hedge fund auditors Ernst & Young after the group lost more than $17 million following the collapse of a Plano, Texas-based hedge fund that promised low-risk investments.

The lawsuit focuses on two funds sold by Plano's Parkcentral Global and was filed on behalf of Houston financial consultant Gus H. Comiskey and four Tucson, Ariz.-based entities, including the Thomas R. Brown Family Private Foundation. The now-defunct Parkcentral Global was operated by affiliates of billionaire and former presidential candidate H. Ross Perot before closing its doors after losing a total of more than $2.6 billion.

"Our clients were told that an investment in Parkcentral was designed to preserve capital.  Instead, they lost every penny in record time.  E&Y was supposed to be auditing Parkcentral, but the audited financial statements never once warned Parkcentral's investors of their impending doom," says attorney Demetrios Anaipakos, who will try the case with Amir H. Alavi.

The lawsuit includes claims that New York-based Ernst & Young falsely represented that the company fairly audited Parkcentral Global and the auditor failed in its "watchdog" role to warn relying investors of the risk of fraud and noncompliance by management.  The suit accuses Ernst & Young of fraud, negligent misrepresentation, securities fraud and conspiracy.

This month, Brown Investment Management, L.P., one of the plaintiffs in this suit against Ernst & Young, won a Delaware Supreme Court ruling that requires Parkcentral Global to disclose its former investors. Those investors could be added to the new Houston lawsuit.

The investments of the Brown foundation, Brown Investment Management and the two other family-related ventures totaled $16 million and were lost within 90 days despite a "worst case loss" estimate of 5 percent. Mr. Comiskey, like his fellow investors, lost 100 percent of his investment when Parkcentral Global went under.

Mr. Anaipakos and Mr. Alavi have handled disputes against hedge funds and private equity firms for more than a decade. This lawsuit is separate from a class action filed in the U.S. District Court for the Northern District of Texas against Parkcentral Global.

The Harris County District Court lawsuit, Brown Investment Management, L.P. v. Ernst & Young, LLP, No. 2010- 53393, was filed Aug. 25, 2010.

Ahmad, Zavitsanos & Anaipakos represents plaintiffs and defendants in securities fraud, breach of fiduciary duty and other commercial litigation matters. More information about the firm can found at http://www.azalaw.com/index.html.

List Blocks People From Flying Without Explanation Or Due Process

The American Civil Liberties Union today filed a first-of-its-kind lawsuit on behalf of 10 U.S. citizens and lawful residents who are prohibited from flying to or from the United States or over U.S. airspace because they are on the government's "No Fly List." None of the individuals in the lawsuit, including a disabled U.S. Marine Corps veteran stranded in Egypt and a U.S. Army veteran stuck in Colombia, have been told why they are on the list or given a chance to clear their names.

"More and more Americans who have done nothing wrong find themselves unable to fly, and in some cases unable to return to the U.S., without any explanation whatsoever from the government," said Ben Wizner, staff attorney with the ACLU National Security Project. "A secret list that deprives people of the right to fly and places them into effective exile without any opportunity to object is both un-American and unconstitutional."

The ACLU, along with its affiliates in Oregon, Southern California, Northern California and New Mexico, filed the lawsuit against the U.S. Department of Justice, the FBI and the Terrorist Screening Center in U.S. District Court for the District of Oregon. The plaintiffs on the case are:

• Ayman Latif, a U.S. citizen and disabled Marine veteran living in Egypt who has been barred from flying to the United States and, as a result, cannot take a required Veterans' Administration disability evaluation;
• Raymond Earl Knaeble, a U.S. citizen and U.S. Army veteran who is stuck in Santa Marta, Colombia after being denied boarding on a flight to the United States;
• Steven Washburn, a U.S. citizen and U.S. Air Force veteran who was prevented from flying from Europe to the United States or Mexico; he eventually flew to Brazil, from there to Peru, and from there to Mexico, where he was detained and finally escorted across the border by U.S. and Mexican officials;
• Samir Mohamed Ahmed Mohamed, Abdullatif Muthanna, Nagib Ali Ghaleb and Saleh A. Omar, three American citizens and a lawful permanent resident of the United States who were prevented from flying home to the U.S. after visiting family members in Yemen;
• Mohamed Sheikh Abdirahman Kariye, a U.S. citizen and resident of Portland, Oregon who was prevented from flying to visit his daughter who is in high school in Dubai;
• Adama Bah, a citizen of Guinea who was granted political asylum in the United States, where she has lived since she was two, who was barred from flying from New York to Chicago for work; and
• Halime Sat, a German citizen and lawful permanent resident of the United States who lives in California with her U.S.-citizen husband who was barred from flying from Long Beach, California to Oakland to attend a conference and has since had to cancel plane travel to participate in educational programs and her family reunion in Germany.

According to the ACLU's legal complaint, thousands of people have been added to the "No Fly List" and barred from commercial air travel without any opportunity to learn about or refute the basis for their inclusion on the list. The result is a vast and growing list of individuals who, on the basis of error or innuendo, have been deemed too dangerous to fly but who are too harmless to arrest.

"Without a reasonable way for people to challenge their inclusion on the list, there's no way to keep innocent people off it," said Nusrat Choudhury, a staff attorney with the ACLU National Security Project. "The government's decision to prevent people from flying without giving them a chance to defend themselves has a huge impact on people's lives - including their ability to perform their jobs, see their families and, in the case of U.S. citizens, to return home to the United States from abroad."

In addition to Wizner and Choudhury, attorneys on the case are Kevin Diaz and cooperating attorney Steven Wilker with the ACLU of Oregon; Ahilan Arulanantham, Jennie Pasquarella and cooperating attorney Reem Salahi with the ACLU of Southern California; Alan Schlosser and Julia Harumi Mass of the ACLU of Northern California; and Laura Ives of the ACLU of New Mexico. The Council on American-Islamic Relations consulted with Raymond Knaeble and directed him to the ACLU.

The ACLU's complaint is available online at: www.aclu.org/national-security/latif-et-al-v-holder-et-al-complaint.  More information about the ACLU's lawsuit is available online at: www.aclu.org/national-security/aclu-challenges-government-no-fly-list-0.

No on 17 intentionally trying to mislead voters. 'Parade of Horribles' Listed by Opponents in their Ballot Statements are Result of Current Auto Insurance Regulations, Not Prop. 17

Yes on 17, Californians for Fair Auto Insurance Rates, a coalition of consumers, businesses, senior organizations, taxpayer advocates and insurers, filed a lawsuit today in Sacramento Superior Court to force Proposition 17 opponents to make changes to their ballot arguments and ballot rebuttals and correct the patently false and misleading statements contained therein.

Proposition 17 on the June 8, 2010, California statewide ballot simply makes an existing persistency or "continuous coverage" discount portable, allowing customers to take it with them if they change insurance companies. Prop. 17 will mean more competition and choice in the auto insurance marketplace and will result in lower rates for drivers.

Prop 17 does not create a new discount. Thus any reductions in premiums or increases for those who are uninsured and do not maintain coverage are the result of current auto insurance regulations, not Prop 17.

Despite this, opponents of Prop 17 are intentionally misleading voters by repeatedly stating Proposition 17 creates new penalties. Statements to this effect appear throughout opponents' ballot arguments and rebuttals and are false and misleading. The "parade of horribles" cited in No on 17's ballot arguments are, in fact, already happening today, and exist under current regulations.

Ballot arguments and rebuttals appear in the Official Voter Information Guide compiled by the California Secretary of State and are distributed to every voter in California. Election law (Elec. Code Section 9092, Gov. Code  Section 88006) states that information in the voter guide must not contain "false and misleading" statements.

Opponents' ballot arguments and ballot rebuttals are available on the Secretary of State's website at www.sos.ca.gov.

"Proposition 17 simply allows responsible drivers who already qualify for a continuous coverage discount to take that discount with them if they change insurance companies. It does not create a new discount," said Kirk West, former president of the California Chamber of Commerce and co-chair of Californians for Fair Insurance rates (Cal-FAIR). 

West continued: "Throughout this campaign, opponents have misled and attempted to confuse voters. Their ballot arguments and rebuttals are more of the same statements. As authors of Proposition 103, they understand that the so-called "penalties" they speak of are attributable to current law and not to Prop. 17. Yet they are hiding behind false and misleading statements because they are afraid to acknowledge taking an anti-consumer position on Prop. 17 by opposing a measure that will result in more competition and more choice for more than 80% of California drivers who would benefit under Prop. 17."

Today, more than 80% of drivers maintain auto insurance and qualify for the persistency or continuous coverage discount, but can only get that discount from their current insurer. Thus, if a driver wants to switch to a new insurance company, he or she loses the discount and has to pay more.

Opponents' primary allegation against Prop. 17, made in a variety of ways in the ballot arguments and rebuttals, is that if Prop. 17 is passed and the continuous coverage discount is made portable, drivers seeking insurance who do not continuously maintain insurance coverage will pay more.

In fact, because the persistency or continuous coverage discount is being offered today, drivers who do not maintain continuous insurance coverage are today paying more to offset price reductions for those who do get the discount.

In other words, any reductions in premiums for drivers who qualify for the persistency discount, or the increase in premium for those who do not maintain continuous coverage, are products of existing regulations - not Proposition 17. 

Moreover, Proposition 17 adds new provisions to existing law that require insurers to offer the persistency discount even after lapses of coverage for up to 90 days for any reason other than nonpayment and for military service overseas; and Proposition 17 expressly does not limit an insurer's ability to offer additional grace periods for lapses. Current law offers none of these protections. As a result, repeated statements in the ballot arguments by opponents that Proposition 17 will increase rates for motorists are false and misleading. Any such increases are the result of existing law, not Proposition 17.

March 15, 2010, is the statutory deadline by which all June 2010 ballot argument challenges must be resolved. Prior to the deadline, Yes on 17 and No on 17 will meet in Sacramento Superior Court for oral argument in front of the judge assigned to this case. Since the suit was filed today no court date or judge has been assigned. There will be no ruling prior to oral argument. In past cases, the presiding judge has ruled from the bench immediately after oral arguments.

Background on ballot arguments and rebuttals in California

In ballot proposition campaigns in California, both the Yes side and No campaigns submit ballot arguments and ballot rebuttals for publication in the Official Voter Information Guide prepared by the California Secretary of State's Office.

Ballot arguments are submitted first. The Secretary of State then exchanges the arguments so each side can prepare a rebuttal to the main arguments for and against the proposition.

Rebuttals are in turn submitted, and then made available for public review along with the rest of the Official Voter Information Guide.

Proponents and opponents review ballot arguments and rebuttals and decide if they meet the California standard. If they do not meet the standard and contain false and misleading statements, lawsuits are permitted to ensure voters are not misled.

Ballot argument/rebuttal submission and litigation takes place months in advance of Election Day to allow time for potential litigation, printing and mailing the Voter Guide.

SOURCE Californians for Fair Auto Insurance Rates

The law firm of McCuneWright, LLP has filed for a preliminary injunction in United States District Court, Central District of California seeking an immediate order requiring Toyota to expand the Sudden Unintended Acceleration recalls.  

McCuneWright, which filed the first and leading class action lawsuit against Toyota to force the automaker to remedy the sudden unintended acceleration defects in all affected makes and models, is asking the court to issue a specific order requiring Toyota to provide a brake over-ride system on all Toyota models equipped with Electronic Throttle Control System -- intelligent ("ETCS-i") that have experienced significant numbers of sudden acceleration events.

The brake override system is a failsafe system that enables the onboard computer to detect when both the throttle and the brake are being activated simultaneously, recognize that there is an error in the signals it is receiving, and immediately return the throttle to idle.  It is an important failsafe system used by other vehicle manufacturers to keep a sudden unintended acceleration event from turning into a runaway vehicle with resulting crashes, injuries, and deaths.

Toyota has recently announced that it will install this important safety device on all new Toyota and Lexus vehicles.  In its November 26, 2009, recall, Toyota also announced that it would retroactively install this important safety device on just six existing models and further limited the recall to only recent model years -- 2007 -- 2010 Toyota Camry, 2005 -- 2010 Toyota Avalon, 2007 -- 2010 Lexus ES 350, 2007 2010 Lexus GS 350, 2006 -- 2010 Lexus IS 250, and 2006 2010 Lexus IS 350.

The preliminary injunction motion asserts that by limiting this brake over-ride system recall to recent model years for just six vehicle models, Toyota has left more than 75 percent of the affected models and model years out of this important recall.

"Toyota cannot justify limiting this important recall to models and model years that include less than 25 percent of the reported sudden acceleration problems," says Richard McCune, a partner at McCuneWright, LLP. "Toyota has identified an important solution to this problem and it has a duty to its customers and to public safety the apply it to all the Toyota vehicles. Toyota shouldn't wait until there's another deadly crash."

On November 5, 2009, McCuneWright filed the first and leading class action on sudden unintended acceleration, Choi, et. al. v. Toyota Motor Company, et. al. CV 09-08143 AHM (FMOx), in United States District Court, Central District of California.  The preliminary injunction and supporting exhibits can be found on the Court's website or is available at www.mccunewright.com/toyota.

SOURCE McCuneWright, LLP

The U.S. Chamber Institute for Legal Reform (ILR) announced today the top five vote getters of its 1st Annual Most Ridiculous Lawsuit of the Year Poll. Nominees were drawn from the monthly Most Ridiculous Lawsuit poll winners, chosen by visitors to FacesofLawsuitAbuse.org, a public awareness campaign Web site that aims to show how abusive lawsuits affect small businesses and average families in very real ways.

"While ridiculous lawsuits may be easy fodder for late-night television hosts, they are no laughing matter for the defendants targeted," said ILR President Lisa Rickard.

The top five Most Ridiculous Lawsuits of 2009 are:

5. Neighbor sues woman for smoking in her own home;

4. Double-murderer sues to claim his victims' classic Chevy pickup;

3. Holocaust denier sues Auschwitz survivor, alleging memoir contains "fantastical tales;"

2. Tourist sues hotel, claiming swimming pool got daughter pregnant;

1. Illegal immigrants sue rancher who stopped them on his property at gunpoint and turned them over to the Border Patrol.

Links to the news stories about these lawsuits can be found at: http://facesoflawsuitabuse.org/polls-archive/.

Throughout the year, the monthly and annual polls collectively received more than 50,000 votes.

ILR seeks to promote civil justice reform through legislative, political, judicial, and educational activities at the national, state, and local levels.