Lawsuits & Settlements

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.

LOS ANGELES -- Attorney General Kamala D. Harris today filed a first-of-its-kind “greenwashing” lawsuit against three companies that allegedly made false and misleading claims by marketing plastic water bottles as “100 percent biodegradable and recyclable.”

Under California law, it is illegal to label a plastic food or beverage container as biodegradable. Plastic takes thousands of years to biodegrade and may never do so in a landfill. Today’s lawsuit is the first government action to enforce the state’s landmark environmental marketing law.

“These companies’ actions violate state law and mislead consumers,” Attorney General Harris said. “Californians are committed to recycling and protecting the environment, but these efforts are undermined by the false and misleading claims these companies make when they wrongly advertise their products as 'biodegradable.'”

Balance and AquaMantra sell their products in plastic water bottles marketed by ENSO Plastics LLC; according to the label, ENSO claims that a microbial additive created the “first truly biodegradable and recyclable” plastic bottle. The bottles’ labeling states that the bottles will break down in less than five years in a typical landfill or compost environment, but that claim is false because the additive does not speed up the centuries-long process required to break down plastic.

The claim of recycling is also deceptive. The microbial additive put into the bottle is considered by the Association of Post Consumer Plastic Recyclers to be a “destructive contaminant” that can compromise the strength of the products they make.

Consumers may buy these defendants’ bottles and either dispose of them incorrectly, on the assumption that they will biodegrade quickly, when in fact they will simply take up space in landfills, or they will try to recycle them, creating problems and costs for recyclers.

A recent Gallup poll found that 76 percent of Americans buy products specifically because of their perception the product is better for the environment.

In 2008, the California Legislature banned the use of words like “biodegradable,” “degradable,” or “decomposable” in the labeling of plastic food or beverage containers. Senate Bill 567, signed into law by the Governor this year, will expand that law to all plastic products beginning in 2013.

Deputy Attorney General Raissa S. Lerner and Deputy Attorney General Laura J. Zuckerman are handling the case for Attorney General Harris’ Environment section. A copy of the complaint filed today in the Orange County Superior Court is attached to the online version of this release at www.oag.ca.gov. Also attached are photos of the bottles in question.

SAN FRANCISCO --- Attorney General Kamala D. Harris joined federal, state, and Bay Area officials to announce a comprehensive civil settlement with the owners and operators of the M/V Cosco Busan, resolving all natural resource damages, penalties, and response costs that resulted from the ship striking the San Francisco-Oakland Bay Bridge in 2007, and the subsequent oil spill in the San Francisco Bay. The event killed thousands of birds, impacted a significant portion of the Bay’s 2008 herring spawn, spoiled miles of shoreline habitat and closed the Bay and area beaches to recreation and fishing.

“This Bay is the jewel of the San Francisco region and the Cosco Busan oil spill left a lasting scar across our water, natural habitats and wildlife,” Attorney General Harris said. “This settlement will allow all of these precious resources to be restored to their original health and beauty.”

The U.S. Department of Justice, the State of California, the City and County of San Francisco, and the City of Richmond signed and lodged a consent decree that requires Regal Stone Limited and Fleet Management Ltd., the owners and operators of the M/V Cosco Busan to pay $44.4 million for natural resource damages and penalties and to reimburse the governmental entities for response costs incurred as a result of the 53,000 gallon oil spill that occurred when the vessel struck the San Francisco-Oakland Bay Bridge on Nov. 7, 2007.

The full U.S. Department of Justice press release and consent decree is available for viewing at www.justice.gov/enrd/Consent_Decrees.html.

LOS ANGELES -- Attorney General Kamala D. Harris today announced her intention to join a lawsuit challenging Riverside County’s approval of an industrial project next to Mira Loma Village, a community already disproportionately affected by diesel exhaust and noise pollution.

The proposed project, the Mira Loma Commerce Center, would consist of a million square feet of warehouses and industrial buildings, resulting in approximately 1,500 additional diesel truck trips a day traveling next to the low-income, primarily Hispanic residential community of Mira Loma Village.

“The proposed Mira Loma complex carries significant health risks to a community that is already suffering the impacts of what are among the worst particulate pollution levels in the nation,” Attorney General Harris said. “All California residents could be put at risk if developments like this are pushed through by officials without appropriate, and legally-mandated, consideration of the environmental effects on health and welfare.”

Attorney General Harris filed in court Wednesday a motion to join the California Environmental Quality Act (CEQA) action filed by the Center for Community Action and Environmental Justice (CCAEJ) to set aside the county’s approvals for the project. The judge has set a September 16th hearing on that motion.

The suit outlines the county’s failure to adequately analyze and mitigate the project’s impacts in light of the already serious health and environmental risks suffered by the community. The Environmental Impact Report (EIR) did not sufficiently disclose that the county’s land use decisions result in the burdens of the project being primarily borne by the residents of Mira Loma.

Since the 1990s, Riverside County has approved a series of warehouse projects in the Mira Loma area. There are now approximately 90 mega-warehouse complexes in Mira Loma. Thousands of trucks travel to and from the ports of Los Angeles and Long Beach to distribution centers and warehouses in Riverside County each day. Over 15,000 truck trips a day already flow onto the main roads in Mira Loma.

The residents of Mira Loma have been burdened by the harmful impacts of industrial development for decades. A recent study by the University of Southern California found that the area’s extremely high rate of particulate-matter pollution is linked to stunted lung development and other serious illnesses in Mira Loma children. Mira Loma’s levels of particulate matter and ozone pollutants are significantly higher than both California and federal air quality standards.

“We have battled for more than 10 years trying to protect our families’ health and quality of life. This project is the final straw,” said Penny Newman, executive director of CCAEJ. “We are so grateful to have the Attorney General join us in what us truly a fight for their lives.”

Diesel exhaust is listed as a known carcinogen under Proposition 65. The California Air Resources Board had recommended a buffer zone between a diesel source and residential neighborhoods, schools and parks to reduce the risk of health impact from diesel particulate emissions. While the EIR acknowledged increased pollutants, the county failed to adopt all feasible mitigation measures to reduce air quality impacts. The county rejected the recommended buffer zone as infeasible, but did not explore the possibility of a more limited buffer zone or other comparable mitigation, such as a trees or shrubs, which can reduce particulate pollution by as much as 30 percent.

A copy of the proposed complaint is attached to the press release.

SACRAMENTO --- Attorney General Kamala D. Harris today announced the filing of a proposed $24.5 million settlement with Chevron U.S.A. Inc. and Chevron Stations Inc. The proposed settlement will resolve law enforcement allegations that the companies violated state laws governing hazardous materials and hazardous waste by failing to properly inspect and maintain underground tanks used to store gasoline for retail sale.

"There must be accountability and consequences when the environment is compromised and innocent people are potentially exposed to hazardous materials that could endanger their health,' Attorney General Harris said. 'This settlement accomplishes both, and will protect Californians by mandating a compliance program for Chevron's underground storage tanks.'

The Attorney General's office was joined in this enforcement action by Humboldt County District Attorney Paul V. Gallegos, Merced County District Attorney Larry D. Morse II, Nevada County District Attorney Clifford Newall, and Sacramento County District Attorney Jan Scully.

The complaint, filed last Friday, alleges that - since 1998 - Chevron has violated anti-pollution laws with respect to underground storage tanks by tampering with or disabling leak detection devices, and failing to test secondary containment systems, conduct monthly inspections, train employees in proper protocol, and maintain operational alarm systems, among other violations.

A statewide investigation found violations of hazardous materials and hazardous waste laws and regulations at gas stations in 32 counties across the state.

The parties have agreed to resolve the matter, and today submitted to Alameda County Superior Court a proposed final judgment that would impose a permanent injunction on the defendants. The hearing on the motion for judicial approval of the settlement is scheduled for September 29 at 2pm in Department 20.

If approved by the Court, the settlement would require Chevron to maintain a statewide compliance program, which includes a training program for employees and a database to track how underground storage tanks are monitored, among other requirements.

Deputy Attorney General Brett J. Morris handled the case for Attorney General Harris' Environment Section.

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

SAN FRANCISCO --- Attorney General Kamala D. Harris today announced that the California Department of Justice, in conjunction with the State Bar of California, has sued multiple entities accused of fraudulently taking millions of dollars from thousands of homeowners who were led to believe they would receive relief on their mortgages.

Attorney General Harris sued Philip Kramer, the Law Offices of Kramer & Kaslow, two other law firms, three other lawyers, and 14 other defendants who are accused of working together to defraud homeowners across the country through the deceptive marketing of 'mass joinder' lawsuits. 'Mass joinder' lawsuits are lawsuits with hundreds, or more, individually named plaintiffs. This is the first consumer action by the Attorney General’s Mortgage Fraud Strike Force.

Kramer’s firm and other defendants were placed into receivership on Monday, Aug. 15. The legal actions were designed to shut down a scheme operated by attorneys and their marketing partners, in which defendants used false and misleading representations to induce thousands of homeowners into joining the mass joinder lawsuits against their mortgage lenders. Defendants also had their assets seized and were enjoined from continuing their operations. Nineteen DOJ special agents participated as the firms were taken over Wednesday, Aug. 17, along with 42 agents and other personnel from HUD’s Office of Inspector General, the California State Bar, and the Office of Receiver Thomas McNamara at 14 locations in Los Angeles and Orange Counties. Sixteen bank accounts were seized.

"The defendants in this case fraudulently promised to win prompt mortgage relief for millions of vulnerable homeowners across the country,' said Attorney General Harris. 'Innocent people, already battered by the housing crisis, were targeted for fraud in their moment of distress.'

"The number of lawyers who have tried to take advantage of distressed homeowners in these tough economic times is nothing short of shocking,' said State Bar President William Hebert. 'By taking over the practices of four attorneys accused of fraudulent marketing practices, the State Bar can put a stop to their deplorable conduct as part of our ongoing effort to protect the public.'

It is believed that at least two million pieces of mail were sent out by defendants to victims in at least 17 states. Defendants’ revenue from this scam is estimated to be in the millions of dollars.

As alleged in the lawsuit, defendants preyed on desperate homeowners facing foreclosure by selling them participation as plaintiffs in mass joinder lawsuits against mortgage lenders. Defendants deceptively led homeowners to believe that by joining these lawsuits, they would stop pending foreclosures, reduce their loan balances or interest rates, obtain money damages, and even receive title to their homes free and clear of their existing mortgage. Defendants charged homeowners retainer fees of up to $10,000 to join as plaintiffs to a mass joinder lawsuit against their lender or loan servicer.

Consumers who paid to join the mass joinder lawsuits were frequently unable to receive answers to simple questions, such as whether they had been added to the lawsuit, or even to establish contact with defendants. Some consumers lost their homes shortly after paying the retainer fees demanded by defendants.

This mass joinder scam began with deceptive mass mailers, the lawsuit alleges. Some mailers, designed to appear as official settlement notices or government documents, informed homeowners that they were potential plaintiffs in a 'national litigation settlement' against their lender. No settlements existed and in many cases no lawsuit had even been filed. Defendants also advertised through their web sites.

When consumers contacted the defendants, they were given legal advice by sales agents, not attorneys, who made additional deceptive statements and provided (often inaccurate) legal advice about the supposedly 'likely' results of joining the lawsuits. Defendants unlawfully paid commissions to their sales representatives on a per client sign-up basis, a practice known as 'running and capping.'

Defendants’ alleged misconduct violates the following laws:
-False advertising, in violation of section 17500 of the Business and Professions Code
-Unfair, fraudulent and unlawful business practices, in violation of section 17200 of the Business and Professions Code
-Unlawful running and capping, in violation of section 6152, subdivision (a) of the Business and Professions Code (i.e., a lawyer unlawfully paying a non-lawyer to solicit or procure business)
-Improper fee splitting (defendants unlawfully splitting legal fees with non-attorneys)
-Failing to register with the Department of Justice as a telephonic seller.

Homeowners who have paid to be added to one of the lawsuits should contact the State Bar if they feel they may be victims of this scam. They can also contact a HUD-certified housing counselor for general mortgage related assistance.

The Department of Justice has seized the practices of the following non-attorney defendants:
Attorneys Processing Center, LLC; Data Management, LLC; Gary DiGirolamo; Bill Stephenson; Mitigation Professionals, LLC; Glen Reneau; Pate Marier & Associates, Inc.; James Pate; Ryan Marier; Home Retention Division; Michael Tapia; Lewis Marketing Corp.; Clarence Butt; and Thomas Phanco.

The State Bar has seized the practices and attorney accounts of the attorney defendants:
The Law Offices of Kramer & Kaslow; Philip Kramer, Esq; Mitchell J. Stein & Associates; Mitchell Stein, Esq.; Christopher Van Son, Esq.; Mesa Law Group Corp.; and Paul Petersen, Esq.

Attorney General Harris is challenging the defendants’ alleged misconduct in marketing their mass joinder lawsuits; her office takes no position as to the legal merits of any claims asserted in the mass joinder lawsuits filed by defendants.

Victims in the following states are known to have received these mailers, or signed on to join the case. This is a preliminary list that may be updated:

Alaska, Arizona, California, Colorado, Connecticut, Florida, Hawaii, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Texas, Washington

The complaint, temporary restraining order, examples of marketing documents and photos of the enforcement action are available with the electronic version of this release at http://oag.ca.gov/news.