Lawsuits & Settlements

SAN FRANCISCO -- Attorney General Kamala D. Harris today announced a $1.2 million settlement with TravelCenters, a leading truck stop operator, over environmental violations at a truck stop and fuel tank system in Riverside County.

“Environmental regulations safeguard the public health,” Attorney General Harris said. “As Attorney General, I will defend those regulations and crack down on those who violate them.”

In March 2009, the Attorney General’s office joined a lawsuit filed by the Riverside District Attorney regarding serious and numerous violations at a truck stop in Coachella. TravelCenters operates 10 service area truck stops in California.

The Riverside County Department of Environmental Health, Hazardous Materials Division discovered numerous violations at a truck stop in Coachella – the most significant of which involved the tampering or disabling of sensors on the fuel tank monitoring system. These sensors are designed to detect the release of hazardous material at the earliest possible opportunity and activate warning alarms.

Other violations at the facility included failure to test and certify the underground storage tanks, failure to properly label and cover hazardous wastes and failure to train employees in a timely manner on safety procedures.

The $1.2 million settlement requires TravelCenters to pay $950,000 in cash for penalties, costs and expenses. TravelCenters receives a $250,000 credit for environmentally protective equipment installed at the Coachella facility that is more than currently required by state law.

A copy of the settlement is attached to the online version of this release at www.oag.ca.gov.

SAN FRANCISCO --- California residents who purchased products with LCD panels (computer monitors, laptops, and PCs) from 1999 to 2006 are encouraged to visit a new class action website for information on how to file a claim related to a half billion dollar settlement with manufacturers that engaged in price-fixing.

Consumers are encouraged to visit www.lcdclass.com for more information, and to obtain copies of the settlement agreements and register to receive a claim form. Consumers can also call 855.225.1886 or write: LCD Class, P.O. Box 8025, Faribault, MN, 55021-9425.

In October 2010, Attorney General Kamala D. Harris filed a lawsuit against ten companies for engaging in price fixing of LCD panels from 1999 to 2006 that resulted in higher prices for California residents and businesses, as well as government agencies.

The settlements announced in December 2011 resolve Attorney General Harris’ claims against seven companies, along with those of seven other attorneys general and a national class action. As part of the settlements, the companies that engaged in price fixing will provide a fund for consumers and businesses in 25 states, including California. The settling companies have also resolved claims brought by Attorney General Harris for civil penalties under California’s Unfair Competition Law, as well as restitution for government agencies that purchased the flat screen LCD panels.

Attorney General Harris is joined in these settlements by the attorneys general of Arkansas, Florida, Michigan, Missouri, New York, West Virginia and Wisconsin, as well as a class action brought on behalf of private claimants in the United States District Court for the Northern District of California.

Settling defendants include: Chimei Innolux Corp., Chi Mei Optoelectronics USA, Inc., Chi Mei Optoelectronics Japan Co., Ltd, HannStar Display Corporation, Hitachi, Ltd., Hitachi Displays, Ltd., Hitachi Electronic Devices, USA, Inc., Samsung Electronics, Co., Ltd., Samsung Electronics America, Inc., Samsung Semiconductor, Inc., Sharp Corporation, and Sharp Electronics Corporation.

SAN FRANCISCO – Attorney General Kamala D. Harris today announced an agreement committing the leading operators of mobile application platforms to improve privacy protections for millions of consumers around the globe who access the Internet through applications (“apps”) on their smartphones, tablets and other mobile devices.

Attorney General Harris forged the agreement with six companies whose platforms comprise the majority of the mobile apps market: Amazon, Apple, Google, Hewlett-Packard, Microsoft and Research In Motion. These platforms have agreed to privacy principles designed to bring the industry in line with a California law requiring mobile apps that collect personal information to have a privacy policy. The majority of mobile apps sold today do not contain a privacy policy.

“Your personal privacy should not be the cost of using mobile apps, but all too often it is,” said Attorney General Harris.

“This agreement strengthens the privacy protections of California consumers and of millions of people around the globe who use mobile apps,” Attorney General Harris continued. “By ensuring that mobile apps have privacy policies, we create more transparency and give mobile users more informed control over who accesses their personal information and how it is used.”

Privacy policies are an important safeguard for consumers. Privacy policies promote transparency in how companies collect, use and share personal information. The agreement with the platforms is designed to ensure that mobile apps comply with the California Online Privacy Protection Act. The Act requires operators of commercial web sites and online services, including mobile apps, who collect personally identifiable information about Californians to conspicuously post a privacy policy.

This agreement will allow consumers the opportunity to review an app’s privacy policy before they download the app rather than after, and will offer consumers a consistent location for an app’s privacy policy on the application-download screen. If developers do not comply with their stated privacy policies, they can be prosecuted under California’s Unfair Competition Law and/or False Advertising Law.

The agreement further commits the platforms to educate developers about their obligations to respect consumer privacy and to disclose to consumers what private information they collect, how they use the information, and with whom they share it. The platforms will also work to improve compliance with privacy laws by giving users tools to report non-compliant apps and committing companies to implement processes to respond to these reports.

In six months, Attorney General Harris will convene the mobile application platforms to assess privacy in the mobile space.

There are more than 50,000 individual developers who have created the mobile apps currently available for download on the leading platforms. There are nearly 600,000 applications for sale in the Apple App Store alone, and another 400,000 for sale in Google’s Android Market. These apps have been downloaded more than 35 billion times.

These figures are expected to grow. An estimated 98 billion mobile applications will be downloaded by 2015, and the $6.8 billion market for mobile applications is expected to grow to $25 billion within four years.

The rapid growth and expansion in the mobile market exposes consumers to a wide variety of privacy invasions. Smartphones are often on and tethered to their user, transmitting rich data to the app developers. Users of mobile devices are vulnerable to privacy intrusion and abuse by numerous entities, app developers, analytic services and advertising networks. These entities could have access to sensitive information, including a user’s location, contacts, identity, messages and photos. Without a privacy policy, what companies do with the personal data they collect is largely invisible to consumers.

It is estimated that a majority of the mobile apps currently available for download through the platforms do not include even the most basic privacy protection: a privacy policy setting forth how personal data is collected, used and shared. One recent study found that only 5 percent of all mobile apps have a privacy policy.

A recent report by the Federal Trade Commission (FTC), Mobile Apps are Disappointing, evaluated the lack of privacy information available to parents before downloading mobile apps for their children. The FTC report recommended that mobile apps platforms do more to help parents and kids by providing a consistent means for app developers to display information about their privacy practices. The FTC specifically recommended that the platforms provide a designated space for developers to disclose their information in the app stores and markets and that the platforms improve enforcement of requirements for app developers to disclose the private data they collect.

Attorney General Harris, in August, 2011, convened Amazon, Apple, Google, Hewlett-Packard, Microsoft and Research In Motion as the most direct way to improve compliance with California law requiring that mobile apps have privacy policies. The platforms have committed to these principles today and are now working to implement them.

“California has a unique commitment to protecting the privacy of our residents. Our constitution directly guarantees a right to privacy, and we will defend it,” added Attorney General Harris. “Forging this common statement of mobile privacy principles shows the power of collaboration -- among government, industry and consumers -- to create solutions to problems no one group can tackle alone.”

Last year, Attorney General Harris also established an eCrime Unit to prosecute identity theft, data intrusions, and crimes involving the use of technology.

LOS ANGELES – Attorney General Kamala D. Harris today announced an historic commitment to California of up to $18 billion that will benefit hundreds of thousands of homeowners in the state hardest hit by the mortgage crisis.

“California families will finally see substantial relief after experiencing so much pain from the mortgage crisis,” said Attorney General Harris. “Hundreds of thousands of homeowners will directly benefit from this California commitment.”

“This outcome is the result of an insistence that California receive a fair deal commensurate with the harm done here. We insisted on homeowner relief for Californians and demanded enforceability so homeowners actually see a benefit that will allow them to stay in their homes, and preserved our ability to investigate banker crime and predatory lending,” continued Harris.

California secured the $18 billion agreement as part of a national multistate settlement to penalize robo-signing and other bank servicing and foreclosure misconduct. The agreement comes after California departed from the multistate negotiations last September when the estimated relief to California was $4 billion. Attorney General Harris insisted on more relief for the most distressed homeowners, meaningful enforcement, and the ability of California and other states to pursue investigations into misconduct.

California’s participation in the settlement also increased the amount of relief other states will receive by approximately $6 billion.

Attorney General Harris also obtained separate, enforceable guarantees to ensure that banks will be accountable for their commitments to California. As part of the separate California guarantee, banks must enact a minimum of $12 billion in principal reductions for California homeowners. Failure to achieve this minimum level of reductions will result in substantial cash payments of up to $800 million that the banks will have to pay to the state. Unlike the larger multistate agreement, which is enforceable in a federal court in Washington, D.C., this payment provision empowers the Attorney General to summon the banks to California state court.

California’s separate guarantee also creates important incentives to ensure that banks will reduce the principal mortgage balance of underwater homeowners in California’s hardest-hit counties and that the principal reductions in these communities will occur within the first year of the settlement.

To speed investigations and strengthen prosecutions of these mortgage cases, California will expand its Mortgage Fraud Strike Force, adding to the more than 42 members already working on the team. The state will continue its investigative alliance with Nevada, that allows the sharing of resources, information and strategies, and will look to collaborate with additional states focused on a law enforcement response to the wave of mortgage fraud.

The national multistate agreement and California commitment will provide substantial relief for thousands of Californians whose mortgages are owned by the five banks in the settlement, but thousands more will still need help as they struggle to stay in their homes.

“I will continue to fight for principal reductions for the approximately 60 percent of California homeowners whose loans are owned by Fannie Mae and Freddie Mac,” Attorney General Harris added.

Attorney General Harris will propose a comprehensive legislative agenda to protect homeowners in the mortgage market. This legislation will build on the three-year reforms agreed to as part of the California commitment, including a single point of contact for mortgage-holders and an end to the unfair and confusing system of dual-track foreclosures.

“This is an historic amount of relief for California homeowners, but it is one piece of a broader focus. We will continue our crackdown on mortgage fraud and quickly move to pass legislation that will simplify, reform and upgrade our broken mortgage system,” Harris added.

The financial benefits of this historic agreement extend to homeowners whose loans are owned or serviced by one of the five largest mortgage lenders. Benefits include:
- More than $12 billion is guaranteed to reduce the principal on loans or offer short sales to approximately 250,000 California homeowners who are underwater on their loans and behind or almost behind in their payments.
- $849 million is estimated to be dedicated to refinancing the loans of 28,000 homeowners who are current on their payments but underwater on their loans.
- $279 million will be dedicated to offering restitution to approximately 140,000 California homeowners who were foreclosed upon between 2008 and December 31, 2011.
- $1.1 billion is estimated to be distributed to homeowners for unemployed payment forbearance and transition assistance as well as to communities to repair the blight and devastation left by waves of foreclosures, targeted at 16,000 recent foreclosures.
- $3.5 billion will be dedicated to relieving 32,000 homeowners of unpaid balances remaining when their homes are foreclosed.
- $430 million in costs, fees and penalty payments.

County-specific payments are based on the number of homeowners and the depth of the foreclosure crisis. It is estimated that homeowners in the following counties will accrue the following level of benefits over the three-year life of the commitment.
- Los Angeles: $3.92 billion
- Riverside: $1.59 billion
- San Bernardino: $1.13 billion
- Sacramento: $820 million
- Stanislaus County: $368 million

Additional details on the settlement, including how homeowners can apply for relief, can be found at www.oag.ca.gov.

SAN FRANCISCO -- Attorney General Kamala D. Harris today announced a settlement with the manufacturer of Brazilian Blowout products that will require the company to warn consumers and hair stylists that two of its most popular hair smoothing products emit formaldehyde gas.

The settlement requires GIB, LLC, which does business under the name Brazilian Blowout, to cease deceptive advertising that describes two of its popular products as formaldehyde-free and safe. The company must also make significant changes to its website and pay $600,000 in fees, penalties and costs.

“California laws protect consumers and workers and give them fair notice about the health risks associated with the products they use,” said Attorney General Harris. “This settlement requires the company to disclose any hazard so that Californians can make more informed decisions.”

Today’s settlement is the first government enforceable action in the United States to address the exposures to formaldehyde gas associated with Brazilian Blowout products. It is also the first law enforcement action under California’s Safe Cosmetics Act, a right-to-know law enacted in 2005.

In November 2010, the Attorney General’s office filed suit against GIB, LLC for violating five state laws, including deceptive advertising and failure to provide consumers with warnings about the presence of a carcinogen in its products.

The settlement covers two products used in a popular salon hair straightening process, the “Brazilian Blowout Acai Smoothing Solution” and the “Brazilian Blowout Professional Smoothing Solution”.

The complaint alleged the two products contained formaldehyde but were labeled “formaldehyde free.”
Proposition 65 requires businesses to notify Californians about certain exposures to chemicals in the products they purchase. Formaldehyde is on the Proposition 65 list of chemicals known to cause cancer.

The complaint alleged that that GIB – the manufacturer of the Brazilian Blowout products – did not inform customers or workers that formaldehyde gas was being released during a Brazilian Blowout treatment, and therefore product users did not take steps to reduce their exposure, such as increasing ventilation. Under the terms of the settlement, GIB is required to:

- Produce a complete and accurate safety information sheet on the two products that includes a Proposition 65 cancer warning; distribute this information to recent product purchasers who may still have product on hand; and distribute it with all future product shipments. The revised safety information sheet -- known as a “Material Safety Data Sheet,” or MSDS -- will be posted on the company’s web site.

- Affix “CAUTION” stickers to the bottles of the two products to inform stylists of the emission of formaldehyde gas and the need for precautionary measures, including adequate ventilation.

- Cease deceptive advertising of the products as formaldehyde-free and safe; engage in substantial corrective advertising, including honest communications to sales staff regarding product risks; and change numerous aspects of Brazilian Blowout’s web site content.

- Retest the two products for total smog-forming chemicals (volatile organic compounds) at two Department of Justice-approved laboratories, and work with DOJ and the Air Resources Board to ensure that those products comply with state air quality regulations.

- Report the presence of formaldehyde in its products to the Safe Cosmetics Program at the Department of Public Health.

- Disclose refund policies to consumers before the products are purchased.

- Require proof of professional licensing before selling “salon use only” products to stylists.

GIB will also pay $300,000 in Proposition 65 civil penalties, and $300,000 to reimburse the Attorney General’s office fees and costs.

A copy of the settlement is attached to the online version of this release at www.oag.ca.gov.

SAN FRANCISCO --- Attorney General Kamala D. Harris today announced that she filed a motion to intervene in a lawsuit seeking to require the San Diego Association of Governments (SANDAG) Regional Transportation Plan to take a harder look at the region’s long-term transportation development options.

The lawsuit contends that the Environmental Impact Report (EIR) prepared for the plan does not adequately address air pollution and climate concerns and prioritizes expanding freeways while delaying public transit projects.

“The 3.2 million residents of the San Diego region already suffer from the seventh worst ozone pollution in the country,” said Attorney General Harris. “Spending our transit dollars in the right way today will improve the economy, create sustainable jobs and ensure that future generations do not continue to suffer from heavily polluted air.”

Attorney General Harris will file in San Diego Superior Court papers seeking to intervene in the California Environmental Quality Act (CEQA) action filed by the Cleveland National Forest Foundation and the Center for Biological Diversity. In September 2011, she sent a letter to SANDAG stating that the draft EIR on the Regional Transit Plan was inadequate under CEQA. The final EIR was not substantially different.

The AG’s motion contends that the EIR on the transit plan did not adequately analyze the public health impacts of the increased air pollution. The San Diego region already has a very high cancer risk from particulate matter emitted by diesel engines and vehicles and there is no analysis as to whether this risk will increase.

In addition, the EIR did not analyze the impact of air pollution on communities in San Diego that are already burdened by significant air pollution.

While greenhouse gases initially decrease in the plan, the EIR shows that after 2020, driving miles will increase and overall greenhouse gas emissions from driving will continue to increase at least until 2050.

The transit plan also prioritizes expanding or extending freeways and highways in its early years, largely deferring investment in public transit projects, such as transit, bicycle and foot paths, when funds may not be available.

Related documents are attached to the online version of this press release at http://oag.ca.gov/.

Additional information about the California Environmental Quality Act can be found at http://ag.ca.gov/globalwarming/ceqa.php

SAN FRANCISCO -- Attorney General Kamala D. Harris today announced that her office secured more than $1 million from eight Northern and Southern California car washes that underpaid workers, denied rest and meal breaks, and created false records of time worked.

“Workers at these car washes were taken advantage of by unscrupulous employers who illegally denied them the pay and benefits they earned,” said Attorney General Harris. “I am pleased that the resolution of this case will allow workers to receive the pay they are owed.”

In October 2010, the Attorney General’s office filed a civil lawsuit against eight car washes in Fair Oaks, Folsom, Irvine, Laguna Hills, Laguna Niguel, Santa Monica, San Ramon and Venice.

Investigators interviewed more than 80 workers and found the car washes routinely denied workers minimum wage and overtime, failed to pay wages owed to those who quit or were terminated, denied rest and meal breaks, and created false records of time worked.

The car washes required employees to report to work several hours in advance and be available, unpaid, until business picked up. When workers were paid, many received paychecks that could not be cashed because of insufficient company funds. Additionally, the car washes operated for years without licenses from the Labor Commissioner, which are required under California law.

The lawsuit was filed against eight car washes and Dipu Haque Sikder, who spearheaded the business. The suit alleged that the car washes violated California Business & Professions Code section 17200 and Labor Code sections 203 and 203.1, sought lost wages and civil penalties, and an injunction to prevent the defendants from committing similar violations in the future.

Sergio Diaz-Esquivel and Juvenal Diaz-Esquivel worked for the Wash & Go Hand Wash in Irvine during 2005 and 2006 and quit because of the poor working conditions. They worked seven days a week and were not paid for all the hours they worked, nor paid the overtime wages due to them. After they quit, Wash & Go Hand Wash continued to refuse to pay them, which forced the workers to go to the Labor Commissioner. In August 2007, they obtained judgments totaling $14,708.24, including penalties for the car wash’s willful failure to pay them their wages.

Along with more than $1 million in restitution of unpaid wages and civil penalties, the car washes are required to pay $50,000 in employment taxes.

A copy of the settlement is attached to the online version of this release at www.oag.ca.gov

SAN FRANCISCO - Attorney General Kamala D. Harris announced today that her office, along with the offices of seven other attorneys general, has reached a $553 million settlement with manufacturers that engaged in price fixing of flat screen LCD (Liquid Crystal Display) panels found in monitors, laptops and televisions.

In October 2010, the Attorney General's office filed a lawsuit against ten companies for engaging in price fixing of LCD panels from 1999 to 2006 that resulted in higher prices for California residents and businesses, as well as government agencies.

Today’s settlements resolve Attorney General Harris’ claims against seven companies, along with those of seven other attorneys general and a national class action. As part of the settlements, the companies that engaged in price fixing will provide a fund for consumers and businesses in 25 states, including California. The settling companies have also resolved claims brought by Attorney General Harris for civil penalties under California’s Unfair Competition Law, as well as restitution for government agencies that purchased the flat screen LCD panels.

Attorney General Harris is joined in these settlements by the attorneys general of Arkansas, Florida, Michigan, Missouri, New York, West Virginia and Wisconsin, as well as a class action brought on behalf of private claimants in the United States District Court for the Northern District of California.

Settling defendants include: Chimei Innolux Corp., Chi Mei Optoelectronics USA, Inc., Chi Mei Optoelectronics Japan Co., Ltd, HannStar Display Corporation, Hitachi, Ltd., Hitachi Displays, Ltd., Hitachi Electronic Devices, USA, Inc., Samsung Electronics, Co., Ltd., Samsung Electronics America, Inc., Samsung Semiconductor, Inc., Sharp Corporation, and Sharp Electronics Corporation.

The California case was originally filed in San Francisco Superior Court, where litigation continues against AU Optronics Corporation, AU Optronics Corporation America, Inc., LG Display Co., Ltd., LG Display America, Inc., Toshiba Corporation, Toshiba Mobile Display Co., Ltd., and Toshiba America Electronics Components, Inc.

In 2008, two companies – LG Display Co., Ltd. and LG Display America, Inc. – pleaded guilty to federal charges for price fixing TFT-LCD panels and paid $400 million in federal fines. Defendants AU Optronics Corporation and AU Optronics Corporation America, along with several employees, have been indicted on federal charges of price fixing. The criminal trial is scheduled for January 2012 in the United States District Court for the Northern District of California.

California consumers and government entities will receive a significant portion of the more than $500 million settlement, with an exact percentage to be determined later. Following completion of the litigation, California consumers and businesses can file claims for monetary relief. Information about how to file a claim will be available at the Attorney General's website at www.oag.ca.gov in February 2012.

The complaint is attached to the electronic version of this release at www.oag.ca.gov.

SAN FRANCISCO – Attached are the petitions to enforce investigative interrogatories filed in San Francisco Superior Court today.

SAN FRANCISCO - Attorney General Kamala D. Harris today announced a national settlement with Wachovia Bank N.A. (Wachovia) and Wells Fargo Bank, N.A., as its successor as part of an ongoing nationwide investigation over allegations of anticompetitive and fraudulent conduct in the municipal bond derivatives industry.

“This settlement continues efforts to bring a measure of restitution to school districts, non-profits and municipalities that were all defrauded by Wall Street,” Attorney General Harris said. “Our office will continue to pursue justice on their behalf.”

The settlement was based on allegations that Wachovia made secret deals with competitors handling the bidding process. This illegal conduct included bid-rigging, discussing bids with competitors and offering non-competitive courtesy bids. These schemes enriched the financial institutions and brokers at the expense of cash strapped state agencies, cities, school districts and non-profits that could ill afford the steep financial consequences of this illegal conduct.

As part of the multistate settlement with 26 other attorneys general, Wachovia has agreed to pay $54.5 million in restitution to affected state agencies, municipalities, school districts and not-for-profit entities nationwide that entered into municipal derivative contracts with Wachovia between 1998 and 2004. California entities are set to receive approximately $4.5 million for restitution under this settlement. In addition, Wachovia agreed to pay a $1.25 million civil penalty and $3 million for fees and costs of the investigation to the settling states.

Wachovia also reached agreement with the U.S. Department of Justice’s Antitrust Division, the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency, and the Internal Revenue Service. Wachovia is the fourth financial institution to settle with a multistate task force in the ongoing municipal bond derivatives investigation following Bank of America, UBS AG and JP Morgan. To date, the state working group has obtained settlements worth almost $310 million.

Municipal bond derivatives are contracts that tax-exempt issuers use to reinvest proceeds of bond sales until the funds are needed, or to hedge interest-rate risk.

In April 2008, the states began investigating allegations that certain large financial institutions and certain brokers and swap advisors, engaged in various schemes to rig bids and commit other deceptive, unfair and fraudulent conduct in the municipal bond derivatives market.

The investigation, which is still ongoing, revealed collusive and deceptive conduct involving individuals at Wachovia and other financial institutions, and certain brokers with whom they had working relationships. The wrongful conduct took the form of bid-rigging, submission of non-competitive courtesy bids and submission of fraudulent certifications of compliance to government agencies, among others, in contravention of U.S. Treasury regulations.