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Article Type: Investigation

NCL Corporation 401(k) Plan Breach of Fiduciary Duties Class Action

NCL Corporation, Ltd offers a retirement plan for its employees, the NCLC 401(k) Plan. This class action sues NCL and the plan’s administrator, NCL (Bahamas), Ltd., alleging they have breached their fiduciary duties of loyalty and prudence to the plan, by choosing poorly-performing investments, high-cost share classes, and recordkeeping services that charge excessive fees.

The class for this action is all persons, except the defendants in this case, who were participants in, or beneficiaries of, the plan, at any time between September 4, 2016 and the present.

The plan is subject to the Employee Retirement Income Security Act (ERISA). It has more than $218 million in assets and 2, 357 participants, and the complaint alleges this gives it “tremendous bargaining power” in the market for services and in selecting share classes that could be used to the benefit of the participants.

Fiduciaries, the complaint alleges, have a duty to monitor investments in a retirement plan and to get rid of those that are imprudent.

“During the class period,” the complaint alleges, NCL and the plan’s administrator “failed to prudently monitor the Plan to determine whether the Plan was invested in the lowest-cost share class available for the Plan’s mutual funds, which are identical to the mutual funds in the Plan in every way except for the their lower cost.” A table compares expense ratios for funds that were in the plan along with lower-cost share classes for the same fund, and the net expense ratio.

Recordkeepers provide a range of services for plans, and the complaint alleges that the market for these services is very competitive. The recordkeeper for the plan has been Prudential Retirement and Annuity Company. “Upon information and belief,” the complaint alleges, the company and plan’s administrator “have failed to undertake an RFP during the class period.” If they had done so, the complaint claims, they would have found that Prudential’s compensation for the job has been “unreasonable and excessive.”

The complaint shows direct recordkeeping compensation for the years of the class period, which ranges from a low of around $22 to a high of around $80. The complaint alleges that Prudential did not get only the direct compensation recorded in the chart, but received even more through revenue-sharing payments.

The complaint alleges that “the best practice is a flat price based on the number of participants in a plan[.]” It claims, “The total amount of recordkeeping fees (both through direct and indirect payments) currently is at least $150 per participant annually (or more), when are reasonable fee ought to be no more than $25 per participant annually.”

Hino Commercial Vehicles Emissions Misconduct Investigation

Is there yet another emissions scandal?

A Hino Motors internal review has reportedly found that some of the electronic emissions control systems in certain of its 2016-2019 vehicles were manipulated to fraudulently show better fuel economy and earn better emissions certifications. We’re investigating these reports.

Hino Motors is a Japanese manufacturer of commercial vehicles as well as diesel engines for use in trucks, buses, and other vehicles. Majority-owned by Toyota Motor Corporation, it operates factories in Japan and Thailand, and makes part in the US for Toyota.

Many of us remember the emissions cheating that was discovered in 2015 in diesel vehicles for Volkswagen and other companies.

An article in Autoevolution.com claims that Hino was asked in 2016 if it had discovered any information about falsified emissions data and that the company said no.

According to Dieselnet.com, the problem was “discovered through an internal investigation of on-road engines for the North American market. Hino provided an initial report of its findings to the ‘relevant regulators’. Subsequently, the US Department of Justice commenced an investigation…” In 2018, US authorities told Hino that its trucks were not up to standard.

Hino’s internal investigation found “past misconduct” relating to emissions standards in previous years. An article on The Truth About Cars website alleges that “fuel economy ratings tabulated during testing had been tampered with by engineers.”

Autoevolution.com claims the problems occurred at Japanese plants because “[e]mployees were switching important exhaust systems parts to reach the desired results when it came to establishing emissions.”

The company’s statements may support this allegation. “Based on the findings to date,” a prepared company statement claimed, “Hino believes that it failed to appropriately respond to internal pressures to achieve certain targets and meet schedules that were placed on Hino employees[.]”

As a result of its findings, Hino has decided to suspend sales of the A05C (HC-SCR) medium-duty engine and the A09C and E13C heavy-duty engines and vehicles equipped with these engines.

The vehicles under investigation include the following vehicles:

  • 2016-2022 Hino Ranger
  • 2016-2022 Hino Profia
  • 2016-2022 Hino S’elega
  • 2016-2022 Hino 195
  • 2016-2022 Hino 258
  • 2016-2022 Hino 268
  • 2016-2022 Hino 338
  • 2019 Toyota Coaster

Hino and Toyota may recall some 150,000 vehicles.

We’re investigating to see if a class action is needed. If you own one of the above engines or vehicles, fill out the form below and let us know about it.

Too Little Milkfat in Nips “Rich & Creamy” Caramel Candy Class Action

Should a caramel candy described as “Rich & Creamy” contain a significant amount of milkfat? The complaint for this class action says yes. It brings suit against Ferrara Candy Company for its Nips brand hard caramel candy, which it says does not contain an appropriate amount of milkfat for a caramel candy and the association with cream.

Two classes have been defined for this action:

  • The Illinois Class is all persons in Illinois who bought the product during the applicable statutes of limitations.
  • The Consumer Fraud Multi-State Class is all persons in Arkansas, Iowa, Michigan, Wyoming, Montana, Nebraska, Virginia, Georgia, and West Virginia who bought the product during the applicable statutes of limitations.

The first page of the complaint shows an image of the Nips candy box, showing the word “Caramel” on a large banner and, in a smaller but still noticeable font, the words “Rich & Creamy.”

The complaint lists several definitions of the word “caramel.” For example, Macmillan Dictionary says a caramel is a “candy made from sugar, butter, and milk.” Britannica Dictionary says a caramel is a “light brown candy made from butter, sugar, and milk or cream.” The milk or cream ingredient is repeated in each of the definitions.

The complaint alleges that milkfat is “the most significant ingredient in caramel, responsible for texture, body, and flavor” and that it “provide[s] unique flavors by carrying lipid-soluble volatile compounds like ketones and aldehydes.” Also, it claims, “Dairy fat ingredients are described as ‘rich’ and ‘creamy’ because they contain[] hundreds of lactones, or aroma compounds, which contribute to taste receptors in the mouth.”

Page 3 of the complaint reproduces the ingredient panel for the product. After corn syrup and sugar, the next two ingredients are “Reduced Fat Milk (Milk, Skim Milk)” and then “Hydrogenated Coconut Oil.”

The complaint alleges, “While the ingredients include ‘Reduced Fat Milk’ consisting of whole and skim (nonfat) milk, the Product’s fat content is almost exclusively provided by the third ingredient, ‘Hydrogenated Coconut Oil.’” The complaint alleges that the oil is “close to 90% fat, whereas reduced fat milk contains 2% fat.”

The complaint then displays the nutrition facts panel, which shows that the product contains 10mg of calcium. It then calculates the amount of fat in reduced fat milk, and draws the conclusion about the product that “ninety percent of its fat content[] is from hydrogenated coconut oil, the only other ingredient with any fat.”

It therefore asserts that the product substitutes hydrogenated coconut oil for the milkfat expected in a caramel. While the product does contain whey, another milk product, the complaint alleges that whey “is almost entirely protein” and that the whey “is added for cost savings over more expensive milk fat ingredients.”

The complaint alleges, “It is false, deceptive and misleading to describe a product as ‘Caramel,’ with the prominent terms[] “Rich & Creamy,’ because consumers will expect it is made with the standard dairy ingredients, based on milkfat.”

Investigation of Toxic PFAS Chemicals in Makeup

When you apply your makeup, are you smoothing toxic chemicals over your face and in your lip and eye areas? You might be, if you’re using certain brands and types of makeup products, says a new study from Notre Dame University.

PFAS: “Forever Chemicals”

Perfluoroalkyl and polyfluoroalkyl substances (PFAS) are manufactured chemicals that have been in use since the 1940s. They’re used in a variety of commercial products, including pizza boxes, stain repellants, certain kinds of surgical gowns, cell phones, and nonstick coatings for cookware.

An article at SmithsonianMag.com noted that PFAS “are linked to severe health effects such as cancer, hormone disruptions, weakened immune systems, and low birth weights.”

They are called “forever chemicals” because they do not break down and dissipate in soil or water, the way other chemicals tend to do under normal conditions. They also “bio-accumulate,” or get stored in the body at a greater rate than they can be flushed out.

The Notre Dame University Study

Researchers at the university tested 231 makeup products, including liquid foundation, concealer, blush, lipsticks, and mascara. They tested by looking at levels of fluorine, using that as a marker for PFAS. More than half of the products tested, they found, contained high levels of PFAS.

Products with objectionable levels of PFAS included roughly 82% of waterproof mascaras, 63% of foundations, and 62% of liquid lipsticks. The twenty-nine items with the highest amounts of PFAS were shown to contain chemicals that go on to break down into other highly toxic PFAS.

The Makeup

PFAS are added to makeup to make it long-lasting or waterproof, and to make skin look smooth and shimmering.

PFAS do not break down in water, so they are most likely to be found in makeup that’s advertised as “wear resistant,” “waterproof,” or “long-lasting.” Many such products are used around the eyes or lips, where they can be absorbed into mucous membranes or tear ducts.

Even when the products are washed off, the PFAS are not broken down, and they can find their way into drinking water supplies.

Most of the products tested did not name PFAS on their ingredient lists, so it’s hard for consumers to know what they’re buying and using.

The Investigation

We’re investigating foundation, liquid lipstick, and waterproof mascara, to see if a class action is needed. We’re particularly interested in the following brands:

  • Clinique
  • Cover Girl
  • Estee Lauder
  • L’Oreal
  • Mac
  • Maybelline
  • Nars
  • Smashbox
  • Ulta Beauty

If you’ve used foundation, liquid lipstick, or waterproof mascara from one of these brands, fill out the form on this page and let us know about your experience.

Hospitality Investors Trust REIT Investigation

Did you lose money by following a broker’s recommendation to invest in Hospitality Investors Trust REIT? If so, you may be able to participate in a lawsuit. 

We’re investigating whether brokers or financial advisors recommended this REIT to their clients, even if it was not suitable for them.

A REIT is a real estate investment trust, that is, a group that owns income-producing real estate. REITs collect money from investors, then use it to buy properties such as hotels, shopping centers, apartment buildings, or office buildings. 

Investors in REITs hope to profit from regular cash distributions from the REIT’s income.

Recent Events

Hospitality Investors Trust REIT began by selling its shares at $25, but the price has dramatically decreased in value. The REIT stopped all distributions in 2017. Its self-tender offer (that is, an offer to buy its own shares) set a much lower price for shares.

In May 2021, with $1.3 billion in debt, the REIT declared bankruptcy. The bankruptcy plan, issued in June 2021, worsens the situation for investors, with only a potential for payouts, limited to $6 per share and not transferable. Investors are unlikely to recover much of the money they invested.

A Risky Investment

Hospitality Investors Trust is a publicly-registered, non-traded REIT, formerly called American Realty Capital Hospitality Trust (ARC Hospitality Trust). 

It was a risky investment from the beginning, because it did not have assets or own real estate properties. In fact, at first, it could not even point to the properties it intended to acquire or invest in, which means that brokers, advisors, and investors would have difficulty evaluating the REIT.

Non-traded REITs are risky investments, but they may offer high commissions, so that brokers may have an incentive to get clients to buy shares.

Did Your Broker Recommend It?

Brokers and financial advisors have a duty to the people they serve to make only suitable investment recommendations. An investment’s suitability for a particular client is based on a number of considerations, including the client’s age, investment experience, risk tolerance, need for liquidity, and other factors.

A broker or financial advisor who recommends unsuitable investments, or who does not take these factors into consideration, may bear some liability for losses. 

Investigation for a Potential Class Action

If your broker suggested Hospitality Investors Trust REIT, and it was not an appropriate investment for you, you may be eligible to file a class action. Fill out the form on this page and let us know what your experience was.

Virtual Beauty Makeovers and Privacy Investigation

Selfie Face on Smartphone Screen

Have you used the virtual online beauty makeover apps in beauty-product stores or makeup-testing programs on cosmetic websites? Do you live in Illinois?

When these sites obtain an image of you that allows you to try on different cosmetics, they may be taking scans of your features and face. 

Illinois has a Biometric Information Privacy Act (BIPA) that regulates what private businesses must do before they collect your biometrics, how they must handle or use them once they have them, and a requirement that they must eventually destroy them. But it appears that many of these sites don’t come anywhere near meeting the legal requirements.

Do You Qualify?

Here are some companies whose store apps or websites that may not meet the legal requirements:

  • Estee Lauder
  • Nars
  • Laura Mercier
  • Maybelline
  • L’Oreal 
  • MAC
  • Nyx
  • Schwartzkopf
  • MaryKay
  • DailyMakeover.com
  • Sephora
  • GlamST (from Ulta Beauty)
  • LiftMagic.com (for plastic surgery)

If you live in Illinois and you used one of these virtual makeover or makeup testing features, and a scan was made of your face, live or from a photo, you may qualify to start a class action under BIPA.

The Problem with Biometrics

Biometrics are often used as identifiers for individuals. For example, some employees are required to clock in or out at work through a palm scan or fingerprint.

But the storage and use of biometrics present problems that other identifiers and personal information don’t. For example, if your driver’s license or credit card number is stolen, you can get a new driver’s license or credit card with a different number. But you cannot get a new set of fingers with a different set of prints.

Also, what happens if the company storing your biometrics is threatened with going out of business? Can it sell its databases, including those with your information, to another party?

What BIPA Does

BIPA is a first attempt at regulating private businesses’ use of biometrics. It requires a number of things of them, including that they inform people of the specific purpose for which their biometrics are being collected and that they get a written release from those people to collect their biometrics. 

BIPA requires that private businesses apply at least the same level of security to the biometrics they store as they do to other important personal information. 

Private businesses must also publish a written policy, made available to the public, that specifies how long the biometrics will be kept on file and a plan for destroying them eventually. At most, businesses can only retain biometrics for three years after their last use for the original purpose.

Importantly, it also forbids private businesses from selling biometric information.

BIPA applies to things like retinal scans and facial recognition information as well as to fingerprints and hand scans.

However, because BIPA is an Illinois law, it only applies to people who live in Illinois.

Class Actions Have Already Been Filed

A number of class actions have already been filed against companies that are believed to have violated BIPA. Some bring suit against employers who do not follow the law for employees in Illinois. Others have been brought against major companies like Apple, Facebook, and Instagram who may have scanned the faces in photos posted, either for facial recognition or to build databases that will help them develop or improve facial recognition programs.

We’re all aware of the unacceptably high number of data breaches occurring in recent years. Our individual biometrics should not be put at more risk than necessary.

What We’re Investigating 

It may be that the only way these programs can accurately position blush, eye makeup, or lipstick on an image of a face is to scan and analyze that face.

One company that supplies such software claims that it analyzes 99 different points on a face; another claims to cite 200 “facial landmarks.” Can they do this on a live image, where you are sitting in front of your computer camera, moving around? Or must they take and have a still image to analyze?

And what happens to this image and the facial analysis when you leave the website? 

If you’ve used one or more of these makeover or makeup programs, fill out the form on this page and let us know what your experience was. If you qualify, an attorney will call you to ask for more information. This consultation is free. Note, however, that only persons who used these programs while living in Illinois are eligible.

“Free” Gambling Apps, In-App Purchases, and State Law Investigation

Are free gambling apps subject to state gambling laws? What about if they offer in-app purchases, so that players pay real money to keep playing?

Are these gambling apps legal, or are the Apple App Store and the Google Play Store profiting from illegal gambling? We’re launching an investigation to sort this out.

With the Internet playing an ever-larger role in how people do everything, things like gambling apps have proliferated and are testing jurisdictional boundaries.

Up to now, “Real” gambling apps, where players must pay real money up front to play and can win real money in return, have only been allowed in four countries: Brazil, France, Ireland, and the United Kingdom. However, Google has announced that it will be bringing these kinds of games to its Play Store in another fifteen countries starting March 1, 2021. They may include online casinos, sports betting, lotteries, or daily fantasy sports, depending on the types of gambling each country permits.

But what about free gambling apps, where players are not required to pay to play? Those have been offered at the Apple and Google stores, with the idea that players are not risking real money. Players start out with a number of “chips” or “coins.” If they win, they gain more. But if they lose, their use up that initial supply and are invited to use real money to buy more. Their cash purchases then allow them to keep playing.

Gamers have lost a lot of money on these in-app purchases. It is reported that Americans spent $3.5 billion in 2019 playing these “free” games, which appear to be addictive.

Class action suits have already been filed against the Apple App Store, alleging violations of Ohio laws, and against the Google Play Store alleging New Mexico violations. Yet another against the Apple App Store alleges that the Zynga apps it offers violate the laws of twenty-five states.

Google and Apple distribute the games, and they also make a considerable amount of money from the in-app purchases.

Huuuge, Big Fish, Playtika, and others have already agreed to settlements in other cases.

We’d like to hear from you if you’ve downloaded and played one of the “free” gambling apps below, and you’re from one of the following states: Alabama, Arkansas, Connecticut, Georgia, Illinois, Indiana, Kentucky, Massachusetts, Minnesota, Mississippi, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oregon, South Carolina, South Dakota, Tennessee, Vermont, Virginia, Washington, and West Virginia.

Fill out the form on this page and see if you qualify to join a class action.

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Investigation: Index Universal Life Policy Marketing May Offer Too Much

Do you have an Indexed Universal Life (IUL) life insurance policy? Are you getting the kind of increases in your account value that you saw in the marketing materials for the policy?

The basic idea of IUL policies is that you can allocate amounts from your cash value to an account based on an index, such as the S&P 500 or NASDAQ 100.

We’re investigating to see if insurance companies have been promising more than their IUL policies are likely to deliver.

How IULs Work: Insurance Plus Cash Value Gains

When you pay the premium for a universal life (UL) insurance policy, the insurance company subtracts the cost of insurance, plus certain fees or expenses, and puts the rest into the cash value of your account.

IULs let you allocate percentages of your cash value to two different kinds of accounts. One kind has a guaranteed fixed interest rate.

The other kind of account earns interest based on the gains of an index, for example, the S&P 500. The gains on an S&P 500-indexed account will match the gains in the S&P 500.

For example, if the S&P 500 rises by 10% in a particular year, then the interest you earn on your IUL S&P index account for that year will be 10% of the account’s cash value. If the S&P 500 falls instead, generally your account will not earn any interest.

There are different ways of calculating the interest, A “participation rate” may also be applied. In the above example, the participation rate is 100%, but it may also be 25% or 50%. In that case, the gains would be lower.

An article in Investopedia says, “IUL insurance policies are more volatile than fixed ULs, but they are less risky than variable UL insurance policies, because no money is actually invested in” the stocks or bonds making up that index fund.

Explaining IUL Policies

The Investopedia article notes, “IULs are considered advanced life insurance products in that they can be difficult to adequately explain and understand.” However, insurance companies still have the burden of offering explanations that are both understandable and realistic.

Some insurance companies, it seems, may be painting an overly-rosy picture of IULs.

Inadequate or False Marketing Practices

The following are suspected of inadequate or false marketing practices:

However, other companies may also be giving consumer false hopes.

Were You Disappointed?

When you bought your IUL policy, what did the salespeople tell you about gains? What kind of illustrations of potential gains did they show you? Were you disappointed by your actual gains?

If someone gave you a false idea about your IUL policy, fill out the form on this page. Let us know what your experience was, so we can determine whether a class action is needed.

Investigation of Hidden Costs in “Free” Coronavirus Testing

Were you charged for what was supposed to be a free Covid-19 test? Did your insurance provider refuse to pay the bill, or refuse to pay for things like the office visit or lab fees? We’re investigating to see if a class action is needed.

Congress has required that insurance companies cover testing and a government program has been set up to cover tests for the uninsured. Still, many people are finding that they are being billed for other costs associated with the procedure—separate charges for an office visit, for example, for a flu test that is given at the same time, or for out-of-network charges.

A New York Times article highlights the case of a woman who got tested after seeing ads about free tests, only to receive a bill for $2,718. The article is entitled, “Coronavirus Tests Are Supposed to Be Free. The Surprise Bills Come Anyway.”

Tests for Covid-19 are important element in getting the coronavirus under control. People who don’t know they have the virus are unlikely to be careful about quarantining or taking other precautions. To make sure that money was not an obstacle to getting tested, Congress has passed two pieces of legislation on billing for tests.

The Families First Coronavirus Response Act informed insurance companies that they could not apply co-payments or deductibles for tests, whether the tests are for the coronavirus itself or for antibodies.

The CARES Act went further, establishing rules for out-of-network tests, which also had to be covered at no charge to the person being tested. Out-of-network tests tend to be more expensive.

However, this has not stopped the bills from coming. Some parties claim this is because the US healthcare system has complicated coding and billing procedures, so that the services provided aren’t always clear. Policies may not be clear about out-of-network testing. “In other cases,” the New York Times article says, “insurers are interpreting gray areas in these new rules in ways that work in their favor.” Others seem to be simply denying claims.

“Patients’ bills suggest that the rules aren’t always being followed,” the article says. “Insurers have, for example, applied co-payments and deductibles to the tests, claim documents show.”

Unfortunately, many people are used to getting unexpected bills from their health providers, or they simply don’t know they should be paying nothing at all for their tests.

Tests are important. People who provide essential services, such as health care workers, supermarket clerks, and police officers are necessarily exposed to the virus, and they must make sure that they are not spreading it to the rest of us. Tests to find out if they’re infected should not be a financial burden they have to shoulder alone, when Congress has already provided for free testing.

If you’ve been billed for a coronavirus test, or for associated services like an “office visit” or “after-hours fee,” we’d like to know what your experience was. Fill out the form on this page and let us know.

Mortgage Processing Fees for Online or Phone Payments Investigation

Have you ever made a mortgage payment online or over the telephone? Were you charged a fee for it?

Many such “processing” fees are unlawful. This may be because they are not permitted under the mortgage agreement, or because they are much higher than the actual cost of processing. We’re investigating to see if a class action is needed to curb this practice.

These fees, which may also be called pay-to-pay fees, convenience fees, speedpay fees, or the like, were the subject of a warning bulletin issued by the Consumer Financial Protection Bureau (CFPB) in July 2017. The CFPB warned companies about misleading consumers about the purpose or amount of the fees, and not telling them about cheaper options.

For example, one such company claimed to charge consumers a “processing fee” of $14.95, when the fee was actually for same-day posting to the consumer’s account. Many consumers don’t need immediate posting, but the company led them to believe they had to pay simply to process the payment.

Other companies don’t disclose such fees. They don’t put them in writing, up front, and they rely on phone representatives to tell the consumer about the fees at the time of payment. When cheaper options are available, but the phone representative often does not tell the consumer.

Pay-to-pay fees are completely legal for many payment situations—for example, for buying a movie ticket online, for remitting taxes, or for paying tuition. They are often imposed for payment methods that fall outside of the business’s normal payment channels.

However, mortgages are governed by agreements that set the rules for payments and fees. Also state or federal laws may limit what companies can charge to the actual costs of processing, which may be as little as fifty cents.

A number of class actions have already been filed against this practice.

A Texas class action brought suit against servicer Arvest Central Mortgage Co., alleging that its $5-$10 fees violate Texas law forbidding mortgage servicers from charging consumers more than the amount they actually pay for processing the payment.

A Florida class action brought suit against Seterus, Inc., claiming that the fees it charges are not explicitly permitted under the law or the terms of its mortgage agreements.

We’re conducting an investigation of similar practices and the state and federal rules and law governing these practices.

If you’ve had to pay high fees to process your mortgage payment online or over the phone, you may qualify to be part of a class action. Fill out the form on this page and let us know what your experience was.