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Robert V. Prongay (SBN 270796) [email protected] Charles Linehan (SBN 307439) [email protected] Pavithra Rajesh (SBN 323055) [email protected] GLANCY PRONGAY & MURRAY LLP 1925 Century Park East, Suite 2100 Los Angeles, California 90067 Telephone: (310) 201-9150 Facsimile: (310) 201-9160 Attorneys for Plaintiff Joseph Fazio UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA Case No. JOSEPH FAZIO, Individually and on Behalf of All Others Similarly Situated, Plaintiff, CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS v. DEMAND FOR JURY TRIAL EARGO, INC., CHRISTIAN GORMSEN, and ADAM LAPONIS, Defendant. Plaintiff Joseph Fazio (“Plaintiff”), individually and on behalf of all others similarly situated, by and through his attorneys, alleges the following upon information and belief, except as to those allegations concerning Plaintiff, which are alleged upon personal knowledge. Plaintiff’s information and belief is based upon, among other things, his counsel’s investigation, which includes without limitation: (a) review and analysis of regulatory filings made by Eargo, Inc. (“Eargo” or the “Company”) with the United States (“U.S.”) Securities and Exchange Commission (“SEC”); (b) review and analysis of press releases and media reports issued by and disseminated by Eargo; and (c) review of other publicly available information concerning Eargo. NATURE OF THE ACTION AND OVERVIEW 1. This is a class action on behalf of persons and entities that purchased or otherwise acquired Eargo securities between February 25, 2021 and September 22, 2021, inclusive (the “Class Period”). Plaintiff pursues claims against the Defendants under the Securities Exchange Act of 1934 (the “Exchange Act”). 2. Eargo is a medical device company. It claims that its hearing aids “are the first and only virtually invisible, rechargeable, completely-in-canal, FDA-regulated, exempt Class I and Class II devices for the treatment of hearing loss.” 3. On August 12, 2021, after the market closed, Eargo revealed that claims submitted to the Company’s largest third-party payor, which accounted for 80% of Eargo’s accounts receivable, had not been paid since March 1, 2021. 4. On this news, the Company’s share price fell $8.00, or over 24%, to close at $24.70 per share on August 13, 2021, on unusually heavy trading volume. 5. On September 22, 2021, after the market closed, Eargo revealed that “it is the target of a criminal investigation by the U.S. Department of Justice (the ‘DOJ’) related to insurance reimbursement claims the Company has submitted on behalf of customers covered by federal employee health plans.” Moreover, the DOJ is the “principal contact related to the subject matter of the [ongoing] audit” of Eargo by an insurance company that is the Company’s largest third-party payor. As a result of the foregoing, Eargo withdrew its full year financial guidance. 6. On this news, the Company’s share price fell $14.81, or over 68%, to close at $6.86 per share on September 23, 2021, on unusually heavy trading volume. 7. Throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Eargo had improperly sought reimbursements from certain third-party payors; (2) that the foregoing was reasonably likely to lead to regulatory scrutiny; (3) that, as a result and because the reimbursements at issue involved the Company’s largest third-party payor, Eargo’s financial results would be adversely impacted; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis. 8. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. JURISDICTION AND VENUE 9. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. § 240.10b-5). 10. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. § 1331 and Section 27 of the Exchange Act (15 U.S.C. § 78aa). 11. Venue is proper in this Judicial District pursuant to 28 U.S.C. § 1391(b) and Section 27 of the Exchange Act (15 U.S.C. § 78aa(c)). Substantial acts in furtherance of the alleged fraud or the effects of the fraud have occurred in this Judicial District. Many of the acts charged herein, including the dissemination of materially false and/or misleading information, occurred in substantial part in this Judicial District. In addition, the Company’s principal executive offices are located in this District. 12. In connection with the acts, transactions, and conduct alleged herein, Defendants directly and indirectly used the means and instrumentalities of interstate commerce, including the United States mail, interstate telephone communications, and the facilities of a national securities exchange. PARTIES 13. Plaintiff Joseph Fazio, as set forth in the accompanying certification, incorporated by reference herein, purchased Eargo securities during the Class Period, and suffered damages as a result of the federal securities law violations and false and/or misleading statements and/or material omissions alleged herein. 14. Defendant Eargo is incorporated under the laws of Delaware with its principal executive offices located in San Jose, California. Eargo’s common stock trades on the NASDAQ exchange under the symbol “EAR.” 15. Defendant Christian Gormsen (“Gormsen”) was the Company’s Chief Executive Officer (“CEO”) at all relevant times. 16. Defendant Adam Laponis (“Laponis”) was the Company’s Chief Financial Officer (“CFO”) at all relevant times. 17. Defendants Gormsen and Laponis (collectively the “Individual Defendants”), because of their positions with the Company, possessed the power and authority to control the contents of the Company’s reports to the SEC, press releases and presentations to securities analysts, money and portfolio managers and institutional investors, i.e., the market. The Individual Defendants were provided with copies of the Company’s reports and press releases alleged herein to be misleading prior to, or shortly after, their issuance and had the ability and opportunity to prevent their issuance or cause them to be corrected. Because of their positions and access to material non-public information available to them, the Individual Defendants knew that the adverse facts specified herein had not been disclosed to, and were being concealed from, the public, and that the positive representations which were being made were then materially false and/or misleading. The Individual Defendants are liable for the false statements pleaded herein. SUBSTANTIVE ALLEGATIONS Background 18. Eargo is a medical device company. It claims that its hearing aids “are the first and only virtually invisible, rechargeable, completely-in-canal, FDA-regulated, exempt Class I and Class II devices for the treatment of hearing loss.” Materially False and Misleading Statements Issued During the Class Period 19. The Class Period begins on February 25, 2021. On that day, Eargo announced its fourth quarter and full year 2020 financial results in a press release that stated, in relevant part: Recent Highlights: • Net revenues of $22.4 million in the fourth quarter and $69.2 million for the full year of 2020, representing 110.8% and 110.9% increases, respectively, over the corresponding periods of 2019 • Gross systems shipped of 12,096 in the fourth quarter and 38,243 for the full year of 2020, representing 67.7% and 67.8% increases, respectively, over the corresponding periods of 2019 • Return accrual rate of 24.4% in the fourth quarter and 25.9% for the full year of 2020, representing a 9.6 and 9.0 percentage point improvement, respectively, over the corresponding periods of 2019 • Gross margin of 70.6% in the fourth quarter and 68.4% for the full year of 2020, representing a 15.4 and 16.6 percentage point improvement, respectively, over the corresponding periods of 2019; non-GAAP gross margin of 70.8% in the fourth quarter and 68.5% for the full year of 2020 representing a 15.5 and 16.6 percentage point improvement, respectively, over the corresponding periods of 2019 * * * Full Year 2021 Financial Guidance • Net revenue of between $87 million and $93 million • GAAP gross margin of between 68% and 71% • Non-GAAP gross margin of between 70% and 72% 20. On March 16, 2021, Eargo filed its annual report on Form 10-K for the period ended December 31, 2020 (the “2020 10-K”), affirming the previously reported financial results. Regarding reimbursements from third-party payors, the report stated: Changes in third-party coverage and reimbursement may impact our ability to grow and sell our products. Our products are primarily purchased on a cash-pay basis and currently only have limited coverage by third-party payors. Third-party coverage and reimbursement may increase for certain hearing aids but not our products, or could decrease for our products, which could reduce our market share. The process for determining whether a third-party payor will provide coverage for a product may be separate from the process for establishing the reimbursement rate that such a payor will pay for the product. A payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Further, one payor’s determination to provide coverage for a product does not assure that other payors will also provide such coverage. Third-party coverage and reimbursement may never become available to us at sufficient levels. 21. On May 12, 2021, Eargo announced its first quarter 2021 financial results in a press release that stated, in relevant part: Recent Highlights: • Net revenues of $22.0 million, up 74.0% year-over-year • Gross systems shipped of 11,704, up 66.5% year-over-year • Return accrual rate of 23.2%, a 4.4 percentage point improvement year-over- year • GAAP gross margin of 71.4%, up 8.2 percentage points year-over-year; non- GAAP gross margin of 72.2%, up 9.0 percentage points year-over-year * * * Full Year 2021 Financial Guidance • Increasing net revenue guidance from between $87 million and $93 million to between $89 million and $93 million • Reiterating GAAP gross margin guidance of between 68% and 71% • Reiterating non-GAAP gross margin of between 70% and 72% 22. On May 13, 2021, Eargo filed its quarterly report on Form 10-Q for the period ended March 31, 2021 (the “1Q21 10-Q”), affirming the previously reported financial results. Regarding third-party payors, it stated, in relevant part: A significant portion of our revenue is dependent upon reimbursement from third- party payors. Any material changes to third-party coverage or reimbursement could significantly impact our business and our ability to grow and sell our products. A significant portion of our revenue depends on payments from third-party payors that we submit claims to on behalf of our customers. If there are decreases in hearing aid benefits offered under these plans, our ability to seek third-party reimbursement could be reduced. Decreases in hearing benefits could lead to changes in the amount these plans will pay for hearing aids, the types of providers these plans allow their members to see for hearing aids, or how often the plans will pay for hearing aids. If we fail to maintain access to existing levels of coverage and reimbursement for our products, our business and operating results could be adversely affected. We currently submit claims on behalf of customers to a concentrated number of third- party payors under certain benefit plans. Additionally, third-party payors periodically conduct pre- and post-payment reviews, including audits of previously submitted claims, and we are currently experiencing and may experience such reviews and audits of claims in the future. For example, we are currently subject to a routine audit with our largest third-party payor, who accounted for approximately 57% of the Company’s gross accounts receivable as of March 31, 2021. Such reviews and audits of our claims have resulted and could in the future result in significant delays in payment, and could result in material recoupments of previous claims paid or denials of pending or future claims, which could impact our ability to recognize revenue, reduce our net sales and profitability, or result in the loss of our ability to submit claims to certain third-party payors for payment. (Second emphasis added.) 23. The above statements identified in ¶¶ 19-22 were materially false and/or misleading, and failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Eargo had improperly sought reimbursements from certain third-party payors; (2) that the foregoing was reasonably likely to lead to regulatory scrutiny; (3) that, as a result and because the reimbursements at issue involved the Company’s largest third-party payor, Eargo’s financial results would be adversely impacted; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis. 24. The truth began to emerge on August 12, 2021, after the market closed, when Eargo revealed that claims submitted to the Company’s largest third-party payor had not been paid since March 1, 2021. In a press release announcing its second quarter 2021 financial results, Eargo stated, in relevant part: Accounts receivable, net was $15.4 million as of June 30, 2021. The increase in accounts receivable from March 31, 2021 was primarily due to a claims audit by an insurance company that is our largest third-party payor, who accounted for approximately 80% of our gross accounts receivable as of June 30, 2021. During the audit, claims since March 1, 2021 have not been paid. The Company is in active discussions with the payor and continues to work toward conclusion of the audit. Full Year 2021 Financial Guidance • Increasing net revenue guidance from between $89 million and $93 million to between $93 million and $96 million • Reiterating GAAP gross margin guidance of between 68% and 71% • Reiterating non-GAAP gross margin of between 70% and 72% 25. Moreover, the same day, Eargo filed its quarterly report on Form 10-Q for the period ended June 30, 2021 (the “2Q21 10-Q”), affirming the previously reported financial results. Regarding third-party payors, the report stated: A significant portion of our revenue is dependent upon reimbursement from third- party payors. Any material changes to third-party coverage or reimbursement or adverse outcomes of third-party payor audits could significantly impact our business and our ability to grow and sell our products. A significant portion of our revenue depends on payments from third-party payors that we submit claims to on behalf of our customers. If there are decreases in hearing aid benefits offered under these plans, our ability to seek third-party reimbursement could be reduced. Decreases in hearing benefits could lead to changes in the amount these plans will pay for hearing aids, the types of providers these plans allow their members to see for hearing aids, or how often the plans will pay for hearing aids. If we fail to maintain access to existing levels of coverage and reimbursement for our products, our business and operating results could be adversely affected. We currently submit claims on behalf of customers to a concentrated number of third- party payors under certain benefit plans. Additionally, third-party payors periodically conduct pre- and post-payment reviews, including audits of previously submitted claims, and we are currently experiencing and may experience such reviews and audits of claims in the future. For example, we are currently subject to a claims audit with our largest third-party payor, who accounted for approximately 80% of our gross accounts receivable as of June 30, 2021, during which claims submitted since March 1, 2021 have not been paid. Reimbursement claims submitted to another insurance company are also currently undergoing an audit, and to date claims from this insurance company have been processed and approved consistent with normal business practices during the audit. In addition to the risk that the insurance companies may deny the claims subject to the current audits, and we have received some denials to date, it is possible that they may seek recoupments of previous claims paid and deny any future claims. While we believe the claims submitted are valid and reimbursable with these insurance companies, and there exist processes for appeal and, if necessary, corrective action, an unfavorable outcome of the ongoing audits could have a material adverse effect on our future financial results, including our revenue recognition, sales return rate and bad debt reserve. We are unable to provide assurances regarding the outcome of these audits. Such reviews and audits of our claims have resulted and could in the future result in significant delays in payment, and could result in material recoupments of previous claims paid or denials of pending or future claims, which could impact our ability to recognize revenue, reduce our net sales and profitability, or result in the loss of our ability to submit claims to certain third-party payors for payment. (Second and third emphases added.) 26. On this news, the Company’s share price fell $8.00, or over 24%, to close at $24.70 per share on August 13, 2021, on unusually heavy trading volume. 27. The 2Q21 10-Q also stated that the Company may be subject to penalties for violations of certain healthcare laws and regulations. Specifically, it stated: If we fail to comply with U.S. or foreign federal and state healthcare regulatory laws, we could be subject to penalties, including, but not limited to, administrative, civil and criminal penalties, damages, fines, disgorgement, exclusion from participation in governmental healthcare programs and the curtailment of our operations, any of which could adversely impact our reputation and business operations. To the extent our products are or become covered by any federal or state government healthcare program, our operations and business practices may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations. These laws may constrain the business or financial arrangements and relationships through which we conduct our operations, including our sales and marketing practices, consumer incentive and other promotional programs and other business practices. Such laws include, without limitation: * * * • the U.S. federal false claims laws, including the False Claims Act, which can be enforced through whistleblower actions, and civil monetary penalties laws, which, among other things, impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to the U.S. federal government, claims for payment or approval that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. federal government. In addition, the government may assert that a claim including items and services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; 28. The above statements identified in ¶¶ 24-25, 27 were materially false and/or misleading, and failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Eargo had improperly sought reimbursements from certain third-party payors; (2) that the foregoing was reasonably likely to lead to regulatory scrutiny; (3) that, as a result and because the reimbursements at issue involved the Company’s largest third-party payor, Eargo’s financial results would be adversely impacted; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis. Disclosures at the End of the Class Period 29. On September 22, 2021, after the market closed, Eargo revealed that “it is the target of a criminal investigation by the U.S. Department of Justice (the ‘DOJ’) related to insurance reimbursement claims the Company has submitted on behalf of customers covered by federal employee health plans.” Moreover, the DOJ is the “principal contact related to the subject matter of the [ongoing] audit” of Eargo by an insurance company that is the Company’s largest third-party payor. As a result of the foregoing, Eargo withdrew its full year financial guidance. Specifically, the Company filed a Form 8-K with the SEC that stated, in relevant part: On September 21, 2021, Eargo, Inc. (the “Company”) was informed that it is the target of a criminal investigation by the U.S. Department of Justice (the “DOJ”) related to insurance reimbursement claims the Company has submitted on behalf of its customers covered by federal employee health plans. The Company is cooperating with the investigation. In addition, the Company intends to work with the government with the objective of validating the process to support any future claims that the Company may submit for reimbursement. As previously disclosed, the Company has been the subject of an ongoing claims audit by an insurance company that is the Company’s largest third-party payor. The Company has been informed by the insurance company that the DOJ is now the principal contact related to the subject matter of the audit. In light of this information, the Company is withdrawing its financial guidance for the fiscal year ending December 31, 2021. 30. On this news, the Company’s share price fell $14.81, or over 68%, to close at $6.86 per share on September 23, 2021, on unusually heavy trading volume. CLASS ACTION ALLEGATIONS 31. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3) on behalf of a class, consisting of all persons and entities that purchased or otherwise acquired Eargo securities between February 25, 2021 and September 22, 2021, inclusive, and who were damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers and directors of the Company, at all relevant times, members of their immediate families and their legal representatives, heirs, successors, or assigns, and any entity in which Defendants have or had a controlling interest. 32. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Eargo’s shares actively traded on the NASDAQ. While the exact number of Class members is unknown to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff believes that there are at least hundreds or thousands of members in the proposed Class. Millions of Eargo shares were traded publicly during the Class Period on the NASDAQ. Record owners and other members of the Class may be identified from records maintained by Eargo or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions. 33. Plaintiff’s claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that is complained of herein. 34. Plaintiff will fairly and adequately protect the interests of the members of the Class and has retained counsel competent and experienced in class and securities litigation. 35. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are: (a) whether the federal securities laws were violated by Defendants’ acts as alleged herein; (b) whether statements made by Defendants to the investing public during the Class Period omitted and/or misrepresented material facts about the business, operations, and prospects of Eargo; and (c) to what extent the members of the Class have sustained damages and the proper measure of damages. 36. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation makes it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. UNDISCLOSED ADVERSE FACTS 37. The market for Eargo’s securities was open, well-developed and efficient at all relevant times. As a result of these materially false and/or misleading statements, and/or failures to disclose, Eargo’s securities traded at artificially inflated prices during the Class Period. Plaintiff and other members of the Class purchased or otherwise acquired Eargo’s securities relying upon the integrity of the market price of the Company’s securities and market information relating to Eargo, and have been damaged thereby. 38. During the Class Period, Defendants materially misled the investing public, thereby inflating the price of Eargo’s securities, by publicly issuing false and/or misleading statements and/or omitting to disclose material facts necessary to make Defendants’ statements, as set forth herein, not false and/or misleading. The statements and omissions were materially false and/or misleading because they failed to disclose material adverse information and/or misrepresented the truth about Eargo’s business, operations, and prospects as alleged herein. 39. At all relevant times, the material misrepresentations and omissions particularized in this Complaint directly or proximately caused or were a substantial contributing cause of the damages sustained by Plaintiff and other members of the Class. As described herein, during the Class Period, Defendants made or caused to be made a series of materially false and/or misleading statements about Eargo’s financial well-being and prospects. These material misstatements and/or omissions had the cause and effect of creating in the market an unrealistically positive assessment of the Company and its financial well-being and prospects, thus causing the Company’s securities to be overvalued and artificially inflated at all relevant times. Defendants’ materially false and/or misleading statements during the Class Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities at artificially inflated prices, thus causing the damages complained of herein when the truth was revealed. LOSS CAUSATION 40. Defendants’ wrongful conduct, as alleged herein, directly and proximately caused the economic loss suffered by Plaintiff and the Class. 41. During the Class Period, Plaintiff and the Class purchased Eargo’s securities at artificially inflated prices and were damaged thereby. The price of the Company’s securities significantly declined when the misrepresentations made to the market, and/or the information alleged herein to have been concealed from the market, and/or the effects thereof, were revealed, causing investors’ losses. SCIENTER ALLEGATIONS 42. As alleged herein, Defendants acted with scienter since Defendants knew that the public documents and statements issued or disseminated in the name of the Company were materially false and/or misleading; knew that such statements or documents would be issued or disseminated to the investing public; and knowingly and substantially participated or acquiesced in the issuance or dissemination of such statements or documents as primary violations of the federal securities laws. As set forth elsewhere herein in detail, the Individual Defendants, by virtue of their receipt of information reflecting the true facts regarding Eargo, their control over, and/or receipt and/or modification of Eargo’s allegedly materially misleading misstatements and/or their associations with the Company which made them privy to confidential proprietary information concerning Eargo, participated in the fraudulent scheme alleged herein. APPLICABILITY OF PRESUMPTION OF RELIANCE (FRAUD-ON-THE-MARKET DOCTRINE) 43. The market for Eargo’s securities was open, well-developed and efficient at all relevant times. As a result of the materially false and/or misleading statements and/or failures to disclose, Eargo’s securities traded at artificially inflated prices during the Class Period. On February 25, 2021, the Company’s share price closed at a Class Period high of $61.16 per share. Paintiff and other members of the Class purchased or otherwise acquired the Company’s securities relying upon the integrity of the market price of Eargo’s securities and market information relating to Eargo, and have been damaged thereby. 44. During the Class Period, the artificial inflation of Eargo’s shares was caused by the material misrepresentations and/or omissions particularized in this Complaint causing the damages sustained by Plaintiff and other members of the Class. As described herein, during the Class Period, Defendants made or caused to be made a series of materially false and/or misleading statements about Eargo’s business, prospects, and operations. These material misstatements and/or omissions created an unrealistically positive assessment of Eargo and its business, operations, and prospects, thus causing the price of the Company’s securities to be artificially inflated at all relevant times, and when disclosed, negatively affected the value of the Company shares. Defendants’ materially false and/or misleading statements during the Class Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities at such artificially inflated prices, and each of them has been damaged as a result. 45. At all relevant times, the market for Eargo’s securities was an efficient market for the following reasons, among others: (a) Eargo shares met the requirements for listing, and was listed and actively traded on the NASDAQ, a highly efficient and automated market; (b) As a regulated issuer, Eargo filed periodic public reports with the SEC and/or the NASDAQ; (c) Eargo regularly communicated with public investors via established market communication mechanisms, including through regular dissemination of press releases on the national circuits of major newswire services and through other wide-ranging public disclosures, such as communications with the financial press and other similar reporting services; and/or (d) Eargo was followed by securities analysts employed by brokerage firms who wrote reports about the Company, and these reports were distributed to the sales force and certain customers of their respective brokerage firms. Each of these reports was publicly available and entered the public marketplace. 46. As a result of the foregoing, the market for Eargo’s securities promptly digested current information regarding Eargo from all publicly available sources and reflected such information in Eargo’s share price. Under these circumstances, all purchasers of Eargo’s securities during the Class Period suffered similar injury through their purchase of Eargo’s securities at artificially inflated prices and a presumption of reliance applies. 47. A Class-wide presumption of reliance is also appropriate in this action under the Supreme Court’s holding in Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128 (1972), because the Class’s claims are, in large part, grounded on Defendants’ material misstatements and/or omissions. Because this action involves Defendants’ failure to disclose material adverse information regarding the Company’s business operations and financial prospects—information that Defendants were obligated to disclose—positive proof of reliance is not a prerequisite to recovery. All that is necessary is that the facts withheld be material in the sense that a reasonable investor might have considered them important in making investment decisions. Given the importance of the Class Period material misstatements and omissions set forth above, that requirement is satisfied here. NO SAFE HARBOR 48. The statutory safe harbor provided for forward-looking statements under certain circumstances does not apply to any of the allegedly false statements pleaded in this Complaint. The statements alleged to be false and misleading herein all relate to then-existing facts and conditions. In addition, to the extent certain of the statements alleged to be false may be characterized as forward looking, they were not identified as “forward-looking statements” when made and there were no meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the purportedly forward-looking statements. In the alternative, to the extent that the statutory safe harbor is determined to apply to any forward-looking statements pleaded herein, Defendants are liable for those false forward-looking statements because at the time each of those forward-looking statements was made, the speaker had actual knowledge that the forward-looking statement was materially false or misleading, and/or the forward-looking statement was authorized or approved by an executive officer of Eargo who knew that the statement was false when made. FIRST CLAIM Violation of Section 10(b) of The Exchange Act and Rule 10b-5 Promulgated Thereunder Against All Defendants 49. Plaintiff repeats and re-alleges each and every allegation contained above as if fully set forth herein. 50. During the Class Period, Defendants carried out a plan, scheme and course of conduct which was intended to and, throughout the Class Period, did: (i) deceive the investing public, including Plaintiff and other Class members, as alleged herein; and (ii) cause Plaintiff and other members of the Class to purchase Eargo’s securities at artificially inflated prices. In furtherance of this unlawful scheme, plan and course of conduct, Defendants, and each defendant, took the actions set forth herein. 51. Defendants (i) employed devices, schemes, and artifices to defraud; (ii) made untrue statements of material fact and/or omitted to state material facts necessary to make the statements not misleading; and (iii) engaged in acts, practices, and a course of business which operated as a fraud and deceit upon the purchasers of the Company’s securities in an effort to maintain artificially high market prices for Eargo’s securities in violation of Section 10(b) of the Exchange Act and Rule 10b-5. All Defendants are sued either as primary participants in the wrongful and illegal conduct charged herein or as controlling persons as alleged below. 52. Defendants, individually and in concert, directly and indirectly, by the use, means or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a continuous course of conduct to conceal adverse material information about Eargo’s financial well- being and prospects, as specified herein. 53. Defendants employed devices, schemes and artifices to defraud, while in possession of material adverse non-public information and engaged in acts, practices, and a course of conduct as alleged herein in an effort to assure investors of Eargo’s value and performance and continued substantial growth, which included the making of, or the participation in the making of, untrue statements of material facts and/or omitting to state material facts necessary in order to make the statements made about Eargo and its business operations and future prospects in light of the circumstances under which they were made, not misleading, as set forth more particularly herein, and engaged in transactions, practices and a course of business which operated as a fraud and deceit upon the purchasers of the Company’s securities during the Class Period. 54. Each of the Individual Defendants’ primary liability and controlling person liability arises from the following facts: (i) the Individual Defendants were high-level executives and/or directors at the Company during the Class Period and members of the Company’s management team or had control thereof; (ii) each of these defendants, by virtue of their responsibilities and activities as a senior officer and/or director of the Company, was privy to and participated in the creation, development and reporting of the Company’s internal budgets, plans, projections and/or reports; (iii) each of these defendants enjoyed significant personal contact and familiarity with the other defendants and was advised of, and had access to, other members of the Company’s management team, internal reports and other data and information about the Company’s finances, operations, and sales at all relevant times; and (iv) each of these defendants was aware of the Company’s dissemination of information to the investing public which they knew and/or recklessly disregarded was materially false and misleading. 55. Defendants had actual knowledge of the misrepresentations and/or omissions of material facts set forth herein, or acted with reckless disregard for the truth in that they failed to ascertain and to disclose such facts, even though such facts were available to them. Such defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and for the purpose and effect of concealing Eargo’s financial well-being and prospects from the investing public and supporting the artificially inflated price of its securities. As demonstrated by Defendants’ overstatements and/or misstatements of the Company’s business, operations, financial well-being, and prospects throughout the Class Period, Defendants, if they did not have actual knowledge of the misrepresentations and/or omissions alleged, were reckless in failing to obtain such knowledge by deliberately refraining from taking those steps necessary to discover whether those statements were false or misleading. 56. As a result of the dissemination of the materially false and/or misleading information and/or failure to disclose material facts, as set forth above, the market price of Eargo’s securities was artificially inflated during the Class Period. In ignorance of the fact that market prices of the Company’s securities were artificially inflated, and relying directly or indirectly on the false and misleading statements made by Defendants, or upon the integrity of the market in which the securities trades, and/or in the absence of material adverse information that was known to or recklessly disregarded by Defendants, but not disclosed in public statements by Defendants during the Class Period, Plaintiff and the other members of the Class acquired Eargo’s securities during the Class Period at artificially high prices and were damaged thereby. 57. At the time of said misrepresentations and/or omissions, Plaintiff and other members of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff and the other members of the Class and the marketplace known the truth regarding the problems that Eargo was experiencing, which were not disclosed by Defendants, Plaintiff and other members of the Class would not have purchased or otherwise acquired their Eargo securities, or, if they had acquired such securities during the Class Period, they would not have done so at the artificially inflated prices which they paid. 58. By virtue of the foregoing, Defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. 59. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and the other members of the Class suffered damages in connection with their respective purchases and sales of the Company’s securities during the Class Period. SECOND CLAIM Violation of Section 20(a) of The Exchange Act Against the Individual Defendants 60. Plaintiff repeats and re-alleges each and every allegation contained above as if fully set forth herein. 61. Individual Defendants acted as controlling persons of Eargo within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level positions and their ownership and contractual rights, participation in, and/or awareness of the Company’s operations and intimate knowledge of the false financial statements filed by the Company with the SEC and disseminated to the investing public, Individual Defendants had the power to influence and control and did influence and control, directly or indirectly, the decision-making of the Company, including the content and dissemination of the various statements which Plaintiff contends are false and misleading. Individual Defendants were provided with or had unlimited access to copies of the Company’s reports, press releases, public filings, and other statements alleged by Plaintiff to be misleading prior to and/or shortly after these statements were issued and had the ability to prevent the issuance of the statements or cause the statements to be corrected. 62. In particular, Individual Defendants had direct and supervisory involvement in the day-to-day operations of the Company and, therefore, had the power to control or influence the particular transactions giving rise to the securities violations as alleged herein, and exercised the same. 63. As set forth above, Eargo and Individual Defendants each violated Section 10(b) and Rule 10b-5 by their acts and omissions as alleged in this Complaint. By virtue of their position as controlling persons, Individual Defendants are liable pursuant to Section 20(a) of the Exchange Act. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and other members of the Class suffered damages in connection with their purchases of the Company’s securities during the Class Period. PRAYER FOR RELIEF WHEREFORE, Plaintiff prays for relief and judgment, as follows: (a) Determining that this action is a proper class action under Rule 23 of the Federal Rules of Civil Procedure; (b) Awarding compensatory damages in favor of Plaintiff and the other Class members against all defendants, jointly and severally, for all damages sustained as a result of Defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon; (c) Awarding Plaintiff and the Class their reasonable costs and expenses incurred in this action, including counsel fees and expert fees; and (d) Such other and further relief as the Court may deem just and proper. JURY TRIAL DEMANDED Plaintiff hereby demands a trial by jury. DATED: October 6, 2021 GLANCY PRONGAY & MURRAY LLP By: s/ Pavithra Rajesh Robert V. Prongay Charles Linehan Pavithra Rajesh 1925 Century Park East, Suite 2100 Los Angeles, California 90067 Telephone: (310) 201-9150 Facsimile: (310) 201-9160 Email: [email protected] Counsel for Plaintiff Joseph Fazio EARGO, INC. (EAR) SECURITIES LITIGATION I, Joseph Fazio, certify that: 1. I have reviewed the Complaint and authorize its filing and/or the filing of a Lead Plaintiff motion on my behalf. 2. I did not purchase the Eargo, Inc. securities that are the subject of this action at the direction of plaintiff’s counsel or in order to participate in any private action arising under this title. 3. I am willing to serve as a representative party on behalf of a class and will testify at deposition and trial, if necessary. 4. My transactions in Eargo, Inc. securities during the Class Period set forth in the Complaint are as follows: (See attached transactions) 5. I have not sought to serve, nor served, as a representative party on behalf of a class under this title during the last three years, except for the following: 6. I will not accept any payment for serving as a representative party, except to receive my pro rata share of any recovery or as ordered or approved by the court, including the award to a representative plaintiff of reasonable costs and expenses (including lost wages) directly relating to the representation of the class. I declare under penalty of perjury that the foregoing are true and correct statements. 9/25/2021 ________________ _________________________________________ Date Joseph Fazio Joseph Fazio's Transactions in Eargo, Inc. (EAR) Date Transaction Type Quantity Unit Price 6/25/2021 Bought 100 $37.8564 7/9/2021 Bought 150 $31.8000 7/9/2021 Bought 100 $31.2800 7/9/2021 Bought 100 $32.9800 7/9/2021 Bought 100 $34.0000 7/9/2021 Sold -300 $34.9000 8/12/2021 Bought 10 $31.9200 8/12/2021 Bought 10 $31.7500 8/13/2021 Bought 50 $26.3000 8/13/2021 Bought 5 $25.1795 8/13/2021 Bought 50 $30.0000 8/16/2021 Bought 100 $24.5900 8/17/2021 Bought 10 $24.0950 8/17/2021 Bought 50 $24.7200 8/18/2021 Bought 50 $23.9000 8/19/2021 Bought 25 $21.4750 8/19/2021 Bought 5 $22.2100 8/19/2021 Bought 10 $22.6900 8/20/2021 Bought 5 $21.5400 8/25/2021 Bought 50 $21.5000 8/30/2021 Bought 10 $21.2000 8/31/2021 Bought 15 $20.0500 8/31/2021 Bought 10 $19.9000 9/1/2021 Bought 5 $20.4494 9/2/2021 Bought 100 $20.4000 9/7/2021 Bought 10 $20.7657 9/10/2021 Bought 70 $20.5000 9/13/2021 Bought 100 $20.6470 9/16/2021 Bought 50 $21.4630 9/20/2021 Bought 50 $20.8198 9/22/2021 Bought 50 $21.7050

securities

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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION CLASS ACTION KELLEY HELLMAN, on behalf of herself and all others similarly situated, COMPLAINT Plaintiff, Civil Action No. v. _____________________ VW CREDIT, INC., Defendant. NATURE OF CLAIM 1. This is a proceeding for declaratory relief and monetary damages to redress the deprivation of rights secured to plaintiff and all other employees of VW Credit, Inc. (“VW Credit” or “defendant”), similarly situated, by the Fair Labor Standards Act of 1938 (“FLSA”), as amended, 29 U.S.C. § 201 et seq. and the Illinois Minimum Wage Law, 820 ILCS § 105/1 et seq. (“IMWL”). JURISDICTION AND VENUE 2. The jurisdiction of this Court is invoked pursuant to 28 U.S.C. § 1331, 28 U.S.C. § 1343 (3) and (4) conferring original jurisdiction upon this Court of any civil action to recover damages or to secure equitable relief under any Act of Congress providing for the protection of civil rights; under 28 U.S.C. § 1337 conferring jurisdiction of any civil action arising under any Act of Congress regulating interstate commerce; and under 29 U.S.C. § 216(b) conferring jurisdiction of any civil action arising under the FLSA. 3. This Court’s pendent jurisdiction for claims arising under Illinois law is also invoked. 4. Venue is appropriate in the Northern District of Illinois since the allegations arose in this district and plaintiff resides in this district. CLASS ACTION ALLEGATIONS 5. Plaintiff brings her FLSA claim as a collective action under 29 U.S.C. §216(b). Plaintiff’s consent form to act as a representative plaintiff under the FLSA is attached hereto as Exhibit A. 6. Plaintiff brings her IMWL claim as a class action under Fed. R. Civ. P. 23. 7. The IMWL claim is properly maintainable as a class action under Federal Rule of Civil Procedure 23. 8. The class action is maintainable under subsections (1), (2), (3) and (4) of Rule 9. The class is defined as all current and former employees whose primary job duty related to approving loans, evaluating whether to issue loans to individual loan applicants and/or evaluating loan applications under credit guides and approving loans if they meet standards and who were classified as exempt by defendant. 10. The class includes those employees whose title has been reclassified as non- exempt. 11. The class size is believed to be over 50 employees. - 2 - 12. The named plaintiff will adequately represent the interests of the class members because she is similarly situated to the class members and her claims are typical of, and concurrent to, the claims of the other class members. 13. Common questions of law and fact predominate in this action because the claims of all class members are based on whether VW Credit’s policy of not paying statutory overtime to employees who perform underwriting functions for hours worked in excess of forty per week violates Illinois law. 14. There are no known conflicts of interest between the named plaintiff and the other class members. 15. The class counsel, Thomas & Solomon LLP and Werman Salas P.C., are qualified and able to litigate the class members’ claims. 16. The class counsel concentrate their practice in employment litigation, and their attorneys are experienced in class action litigation, including class actions arising under federal and state wage and hour laws. 17. The class action is maintainable under subsection (1) of Rule 23(b) because prosecuting separate actions by individual class members across the jurisdictions in which defendant does business would create the risk of inconsistent adjudications, resulting in incompatible standards of conduct for defendant. 18. The class action is maintainable under subsection (3) of Rule 23(b) because common questions of law and fact predominate among the class members and because the class action is superior to other available methods for the fair and efficient adjudication of the - 3 - controversy. 19. The class is also maintainable under Rule 23(c)(4) with respect to particular PARTIES A. Defendant 20. Defendant VW Credit Inc. is a Delaware corporation. 21. VW Credit is an enterprise engaged in the sale of goods crossing interstate lines. 22. VW Credit employed 50 or more people during the relevant time of this lawsuit. VW Credit is an enterprise engaged in interstate commerce whose annual gross volume of sales made is not less than $500,000. 23. Defendant was plaintiff’s “employer” as defined by the FLSA, 29 U.S.C. § 203(d), and IMWL, 820 ILCS 105/3(d). B. Plaintiff and Class Members 24. Named plaintiff Kelley Hellman was an employee of defendant under the relevant statutes at all relevant times. Specifically, Plaintiff Hellman was employed by defendant from approximately December 2010 until November 2012 at defendant’s Libertyville, Illinois location. Plaintiff Hellman customarily worked over 40 hours per week. 25. The Class Members are those employees of defendant, as defined above, who were suffered or permitted to work by defendant and not paid their statutorily required rate of pay for all hours worked. - 4 - FACTUAL BACKGROUND 26. Named plaintiff, and other employees similarly situated to named plaintiff, customarily worked more than 40 hours in a week and were not compensated at a rate of one-and-a-half times their hourly rate as required by the FLSA and Illinois law. 27. VW Credit is in the business of extending credit to customers. 28. One of the products VW Credit produces for its customers is loans. 29. Underwriting job functions are integral to VW Credit’s production of these products. 30. Defendant’s policy is to not pay statutory overtime to employees who perform the job functions set forth above. 31. This policy of not paying statutory overtime to employees who perform underwriting functions exists in all VW Credit facilities everywhere in the country. 32. This is a nationwide policy. 33. VW Credit’s policy of not paying statutory overtime to employees who perform underwriting job functions is long-standing and, upon information and belief, has been in effect for at least six years. 34. This failure to pay overtime as required by the FLSA and Illinois law was willful. 35. Defendant has failed to maintain adequate and required records on the hours worked by the plaintiff and class members as required by the FLSA and Illinois law. 36. Defendant has failed to pay plaintiff’s and class members’ wages as required by Illinois law. - 5 - FIRST CAUSE OF ACTION FLSA 37. Plaintiff realleges the above paragraphs as if fully restated herein. 38. Defendant violated its obligations under the FLSA and is liable to the named plaintiff and those plaintiffs similarly situated. SECOND CAUSE OF ACTION IMWL 39. Plaintiff realleges the above paragraphs as if fully restated herein. 40. Defendant violated its obligations under the IMWL and is liable to named plaintiff and those plaintiffs similarly situated. WHEREFORE, plaintiff demands judgment against defendant in her favor and that she be given the following relief: a) an order preliminarily and permanently restraining defendant from engaging in the aforementioned pay violations; and b) an award to plaintiffs of the value of the hours and wages which were not properly compensated under the FLSA and Illinois law; and c) liquidated damages under the FLSA equal to the sum of the amount of wages and overtime which were not properly paid to plaintiffs; and d) prejudgment interest on the back wages in accordance with 815 ILCS 205/2 and punitive damages pursuant to the formula set forth in 820 ILCS 105/12(a); and e) an award to plaintiffs of the actual losses sustained by plaintiffs as a direct result of the violation; and f) an award of consequential damages to plaintiffs as a result of the acts and practices of defendant; and - 6 - g) an award of compensatory damages in an amount determined by the jury to be able to reasonably compensate plaintiffs; and h) an award of attorneys’ fees, expenses, expert fees and costs incurred by plaintiffs in vindicating their rights; and i) an award to plaintiffs of the value of the unpaid back wages due defendant’s employees; and j) an award of pre and post judgment interest; and k) such other and further legal or equitable relief as this Court deems to be just and appropriate. Respectfully submitted, Dated: February 25, 2015 s/ Douglas M. Werman One of Plaintiff’s Attorneys W WERMAN SALAS P.C. Douglas M. Werman, Esq. 77 W. Washington Street, Suite 1402 Chicago, IL 60602 (312) 419-1008 [email protected] THOMAS & SOLOMON LLP J. Nelson Thomas, Esq. (pro hac vice admission anticipated) Michael J. Lingle, Esq. (pro hac vice admission anticipated) 693 East Avenue Rochester, New York 14607 Telephone: (585) 272-0540 [email protected] [email protected] - 7 -

employment & labor

ubDaCocBD5gMZwczYQIe

UNITED STATES DISTRCT COURT DISTRICT OF MASSACHUSETTS CIVIL ACTION NO. ) MICHAEL SCRIBNER, on behalf of ) himself and all others similarly situated, ) ) Plaintiff, ) ) v. ) JURY DEMANDED ) OCEAN STATE JOBBERS, INC., ) ) Defendant. ) COLLECTIVE ACTION COMPLAINT I. INTRODUCTION 1. This is an action brought on behalf of all assistant store managers employed by Defendant Ocean State Jobbers, Inc. (hereinafter, “Ocean State” or “Defendant”) for failure to pay overtime wages in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq. As set forth below, Ocean State has misclassified Plaintiff and others similarly situated as exempt from the FLSA’s requirement to pay employees overtime for hours worked in excess of 40 per week. In fact, the primary duties of Ocean State’s assistant store managers are not management and the assistant store managers do not qualify for any of the FLSA’s recognized exemptions to the overtime pay requirement. As a result of this misclassification, Ocean State has failed to pay Plaintiff or any of its assistant store managers time-and-a-half for their overtime hours. Moreover, Ocean State assistant store managers, including Plaintiff, routinely work in excess of 40 hours per week. 1 2. Plaintiff brings this action on behalf of himself and all other similarly situated employees of Defendant who have been improperly misclassified and denied time-and-a-half for hours worked in excess of 40 per week. These employees have worked at Ocean State’s stores in Connecticut, Massachusetts, New Hampshire, New York, Rhode Island and Vermont at any time since April **, 2011. Plaintiff seeks reimbursement of overtime wages, for himself and any individuals who opt-in to this litigation, as well as liquidated damages, attorneys’ fees and costs, as provided for by II. PARTIES 3. Plaintiff Michael Scribner (“Plaintiff” or “Scribner”) is an adult resident of Newmarket, New Hampshire. Scribner has worked for Defendant as an assistant store manager since October 2010, first in Defendant’s Portsmouth, New Hampshire store and, since July 2012, in Defendant’s Hookset, New Hampshire store. Scribner routinely works 50 or more hours a week for Defendant but has never been paid time-and-a-half for hours worked over 40 in a single week. 4. Plaintiff brings this action on his own behalf and on behalf of all similarly situated individuals who have worked as assistant store managers for Defendant and who may choose to opt-in to this action pursuant to 29 U.S.C. § 216(b). 5. Plaintiff and all other Ocean State assistant store managers are similarly situated because they are all subject to Defendant’s common plan or practice of classifying individuals in that position as exempt from overtime and denying them time- and-a-half pay for hours worked over 40 in a single week as a result. 2 6. Defendant Ocean State Jobbers, Inc. is a corporation with its principal office in North Kingstown, Rhode Island. Defendant, on its own and through various affiliated corporations and limited liability companies, owns and operates numerous Ocean State Job Lot stores throughout New York and New England. 7. Defendant creates and enforces company-wide policies and procedures that govern the operations of each of its stores. Among other topics, these corporate policies and procedures govern recruitment, hiring, training, compensation, management, and termination of store personnel, including assistant store managers. 8. Defendant is an employer for purposes of the FLSA because it retains the power to hire and fire assistant store managers; supervises and controls the work of assistant store managers – including the conditions of employment – through its agents; maintains employment records for assistant store managers; and has the authority to set rates, schedules and methods of payment for those employees. III. JURISDICTION AND VENUE 9. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1331 because Plaintiff has brought a claim pursuant to federal law, namely, the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. 10. Venue is proper in this district, pursuant to 28 U.S.C. § 1391(b)(1) because Defendant does business in Massachusetts, with over 46 stores in the Commonwealth, more than any other state in which Defendant operates. 3 IV. FACTS 11. Plaintiff Scribner has been employed as an assistant store manager for Defendant since October 2010, first in its Portsmouth, New Hampshire store and, since July 2012, in its Hookset, New Hampshire store. 12. Ocean State requires that Plaintiff, like all assistant store managers, work at least 48 hours per week and 54 hours per week during certain times of the year. Plaintiff has routinely worked more than 40 hours per week during his tenure with Ocean State. 13. Defendant classifies all of its assistant store managers, including Plaintiff, as “exempt” from the overtime requirements of the FLSA, regardless of the size, location or sales volume of the employee’s store. As a result of this classification, Ocean State does not pay its assistant store managers time-and-a-half for hours worked over 40 in a given week. 14. Despite this classification, Plaintiff and other assistant store managers spend well over fifty percent of their time performing non-exempt work, including: unloading shipments of merchandise to the stores, sorting and processing merchandise and stocking shelves. 15. Individuals apply for a position as an assistant store manager with Ocean State by completing a standardized, online job application that is processed in Defendant’s corporate headquarters. 16. Once hired, assistant store managers are trained by Defendants using uniform training materials prepared by Defendant and through corporate trainers who 4 travel throughout the Northeast to ensure compliance with Defendant’s training requirements. 17. Assistant store managers share a common job description and all report directly to a store manager. 18. All of Ocean State’s assistant store managers are subject to common corporate policies and procedures created by Defendant. 19. The job duties and responsibilities of Ocean State’s assistant store managers do not require the employees to exercise discretion or independent judgment on matters of any significance. 20. Assistant store managers do not have the authority to hire or fire other store employees. 21. Assistant store managers are closely supervised by Defendant’s more senior employees and agents. 22. Assistant store managers are paid on a salary basis, at a flat weekly rate, regardless of how many hours they work per week. Assistant store managers’ compensation is comparable to Defendant’s non-exempt store associates when the overtime they spend on the job is taken into account. 23. The primary value of assistant store managers to Defendant is not any managerial tasks they perform but the non-exempt, primarily manual labor they perform for the company. 24. Defendant’s failure to pay Plaintiff and other assistant store managers time-and-a-half for their overtime hours, despite their eligibility for overtime pay, is a willful violation of the FLSA. 5 COUNT I VIOLATION OF THE FAIR LABOR STANDARDS ACT Defendant’s knowing and willful failure to pay Plaintiff and other similarly situated individuals who may choose to opt-in to this case the overtime compensation to which they are entitled violates the federal Fair Labor Standards Act, 29 U.S.C. § 201, et seq. DEMAND FOR RELIEF Plaintiff requests a trial by jury on these claims. WHEREFORE, Plaintiff requests that this Court enter the following relief: a. Permission to notify similarly situated individuals of their right to opt in to this action, pursuant to 29 U.S.C. § 216(b); b. An award of unpaid overtime compensation; c. An award of liquidated damages; d. Attorneys’ fees and costs; e. Pre-judgment and post-judgment interest; and f. Any other relief to which Plaintiff or other individuals who opt-in to this case may be entitled. 6 Respectfully submitted, MICHAEL SCRIBNER, Individually and on behalf of others similarly situated By: /s/ Shannon Liss-Riordan Shannon Liss-Riordan, BBO # 640716 Sara Smolik, BBO # 661341 Lichten & Liss-Riordan, P.C. 100 Cambridge Street, 20th Floor Boston, MA 02114 (617) 994.5800 (617) 994.5801 [email protected] [email protected] Richard E. Hayber, pro hac vice anticipated Hayber Law Firm, LLC 221 Main Street, Suite 502 Hartford, CT 06106 Fed No.: ct11629 (860) 522-8888 (860) 218-9555 (facsimile) [email protected] Jordan M. Lewis Kelley/Uustal, PLC Courthouse Law Plaza 700 SE 3rd Ave, Third Floor Ft. Lauderdale, FL 33316 100 Washington Avenue South (954) 522-6601 (954) 522-6608 (facsimile) [email protected] Attorneys for Plaintiffs April 2, 2014 7

employment & labor

oA-sFocBD5gMZwczvzFu

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA SHEHAN WIJESINHA, individually and ) on behalf of all others similarly-situated, ) ) Plaintiffs, ) ) vs. ) ) DIRECTV, LLC, a foreign limited ) liability company, ) ) Defendant ) ) CLASS ACTION COMPLAINT 1. Shehan Wijesinha (“Plaintiff”) brings this class action for damages, injunctive relief, and any other available legal or equitable remedies, resulting from the illegal actions of DirecTV, LLC (“Defendant”) in negligently, and/or willfully, contacting Plaintiff on Plaintiff’s cellular telephone without his prior express consent in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq., (“TCPA”). Plaintiff alleges as follows upon personal knowledge as to himself and his own acts and experiences, and, as to all other matters, upon information and belief, including investigation conducted by his attorneys. JURISDICTION AND VENUE 2. Jurisdiction is proper under 28 U.S.C. § 1331 as Plaintiff’s complaint alleges violations of a federal statute. Jurisdiction is also proper under 28 U.S.C. § 1332(d)(2) because Plaintiff alleges a national class, which will result in at least one class member belonging to a different state than that of Defendant. Plaintiff seeks up to $1,500.00 (one-thousand-five-hundred dollars) in damages for each call in violation of the TCPA, which, when aggregated among a proposed class numbering in the tens of thousands, or more, exceeds the $5,000,000.00 (five- million dollars) threshold for federal court jurisdiction under the Class Action Fairness Act (“CAFA”). Therefore, both the elements of diversity jurisdiction and CAFA jurisdiction are present. 3. Venue is proper in the United States District Court for the Southern District of Florida pursuant to 28 U.S.C. § 1391(b) and (c) because Defendant is deemed to reside in any judicial district in which it is subject to the court’s personal jurisdiction, and because Defendant provides and markets its services within this district thereby establishing sufficient contacts to subject it to personal jurisdiction. Moreover, and on information and belief, Defendant has made the same calls complained of by Plaintiff within this judicial district, such that some of Defendant’s acts in making such calls have occurred within this district. PARTIES 4. Plaintiff is a natural person and a citizen and resident of the State of Florida. 5. DirecTV, LLC is a limited liability company organized and existing under the laws of the State of California. THE TELEPHONE CONSUMER PROTECTION ACT OF 1991 6. The TCPA was passed into law in 1991. The TCPA regulates and restricts the use of automatic telephone equipment. 7. The TCPA protects consumers from unwanted calls and text messages that are made with autodialers and with prerecorded messages. 8. Specifically, 47 U.S.C. § 227(b) provides: (1) Prohibitions It shall be unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States— (A) to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice— * * * (iii) to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call; 9. Individuals, including Plaintiff and members of the Class, who receive calls in violation of the TCPA suffer concrete injuries analogous to common law torts such as invasion of privacy, intrusion on seclusion, trespass to chattels and conversion. See Palm Beach Golf Center v. John G. Sarris, D.D.S., P.A., 781 F.3d 1245, 1250–51 (11th Cir. 2015) (owner of facsimile machine has Article III standing to sue where he loses use of that machine); Soppet v. Enhanced Recovery Co., LLC, 679 F.3d 637, 638 (7th Cir. 2012) (“An automated call to a landline phone can be an annoyance; an automated call to a cell phone adds expense to annoyance”); Bagg v. Ushealth Group, Inc., Case No. 6:15-cv-1666-Orl-37GJK, 2016 WL 1588666, at *3 (M.D. Fla. Apr. 20, 2016)(“‘Courts have consistently held that the TCPA protects a species of privacy interest in the sense of seclusion,’ and recognize that the sending of an unsolicited fax constitutes an invasion of privacy.”)(quoting Park Univ. Enters., Inc. v. Am. Cas. Co. of Reading, PA, 442 F.3d 1239, 1249 (10th Cir. 2006)); Jamison v. Esurance Insurance Services, Inc., Case No. 3:15-CV-2484-B, 2016 WL 320646, at *3 (N.D. Tex. Jan. 27, 2016)(“From this, the Court concludes that an individual suffers an injury in fact from unauthorized telephone contact when it causes an incurrence of charges, a reduction in usable minutes, or occupation of the telephone line, making it unavailable for other use.”); Johnson v. Navient Solutions, Inc., Case No. 1:15-cv-00716-LJM-MJD, 2015 WL 8784150, at *2 (S.D. Ind. Dec. 15, 2015)(“Based on the allegations in the Complaint and the TCPA’s protection of Johnson’s privacy rights, the Court concludes that Johnson has stated a claim for actual harm, upon which he may rely to provide standing.”)(citing Schumacher v. Credit Protection Ass’n, Cause No. 4:13–cv–00164–SEB–DML, 2015 WL 5786139, at *5 (S.D. In. Sept. 30, 2015)(“Here, [plaintiff’s] TCPA-created right to privacy was invaded by repeated automated calls from CPA.”); Weisberg v. Kensington Professional and Associates, LLC, Case No. 15-cv- 08532, 2016 WL 1948785, at *3 (C.D. Cal. May 3, 2016)(“The invasion of privacy and the allegation that the illegal calls cost Plaintiff and the class money — financial harm — are not speculative future injuries or injuries based on the violation of rights provided in a statute. Thus…Plaintiff does allege actual monetary damages.”); Lathrop v. Uber Technologies, Inc., Case No. 14-cv-05678-JST, 2016 WL 97511, at *4 (N.D. Cal. Jan. 8, 2016)(“Plaintiffs allege they and members of the class ‘suffered damages in the form of text message, data, and other charges to their cellular telephone plans.’ Id. ¶ 116. Based on the allegations in the Second Amended Complaint, the Court concludes that Plaintiffs have sufficiently stated an injury in fact.”); Fini v. Dish Network, L.L.C., 955 F.Supp.2d 1288, 1296–97 (M.D. Fla. 2013) (plaintiff has standing to sue where she lost use of cellular service for which she previously had paid). 10. The Federal Communications Commission (“FCC”) is empowered to issue rules and regulations implementing the TCPA. According to the FCC’s findings, calls in violation of the TCPA are prohibited because, as Congress found, automated or prerecorded telephone calls are a greater nuisance and invasion of privacy than live solicitation calls, and such calls can be costly and inconvenient. The FCC also recognized that wireless customers are charged for incoming calls whether they pay in advance or after the minutes are used. Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Report and Order, 18 FCC Rcd 14014 (2003). 11. The FCC has issued rulings and clarified that in order to obtain an individual’s consent, a clear, unambiguous, and conspicuous written disclosure must be provided to the individual. See 2012 FCC Order, 27 FCC Rcd. at 1839 ("[R]equiring prior written consent will better protect consumer privacy because such consent requires conspicuous action by the consumer — providing permission in writing — to authorize autodialed or prerecorded telemarketing calls...."). Mais v. Gulf Coast Collection Bureau, Inc., 768 F.3d 1110, 1123-1124 (11th Cir. 2014). 12. With respect to telemarketing, 47 C.F.R. § 64.1200(c) provides: No person or entity shall initiate any telephone solicitation to: (1) Any residential telephone subscriber before the hour of 8 a.m. or after 9 p.m. (local time at the called party's location), or (2) A residential telephone subscriber who has registered his or her telephone number on the national do-not-call registry of persons who do not wish to receive telephone solicitations that is maintained by the Federal Government. Such do-not-call registrations must be honored indefinitely, or until the registration is cancelled by the consumer or the telephone number is removed by the database administrator. 13. The term telephone solicitation means the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person, excluding calls made with prior express written consent, or made by or on behalf of a tax-exempt nonprofit organization. See 47 C.F.R. § 64.1200(f)(14); In re Joint Petition Filed by Dish Network, LLC, 28 FCC Rcd. 6574, 6574 (2013). FACTUAL ALLEGATIONS PERTAINING TO PLAINTIFF SHEHAN WIJESINHA 14. At all times relevant, Plaintiff was a citizen of the State of Florida. Plaintiff is, and at all times mentioned herein was, a “person” as defined by 47 U.S.C. § 153 (39). 15. In or around October 2013 Plaintiff entered into a two (2) year contract with Defendant for television service. 16. In October 2015, Plaintiff ended his contractual relationship with Defendant and paid all amounts owed to Defendant. 17. Over the course of the following months, Plaintiff received multiple automated calls from Defendant to his cellular telephone with telephone number ending in 7557 (the “7557 Number”). 18. In all calls answered by Plaintiff, individuals who claimed to work for Defendant attempted to convince Plaintiff to return as Defendant’s customer. 19. Defendant’s calls to Plaintiff featured a few seconds of silent “dead air” before Plaintiff heard a human voice, which demonstrates that Defendant placed these calls using a predictive dialer, which is an Automatic Telephone Dialing System within the scope of the TCPA. 20. Defendant’s calls to Plaintiff included at least two calls from telephone number 210-332-4065. Plaintiff’s telephone records indicate he received calls from this number on various dates including December 29, 2015 and April 4, 2016. 21. Calls placed to 210-332-4065 are answered by a recording which begins with “Hello, you have reached DirecTV.” 22. Plaintiff has never provided Defendant with consent to receive automated solicitation calls. 23. Plaintiff is the subscriber and sole user of the 7557 Number, and is financially responsible for phone service to the 7557 Number. 24. The 7557 Number has been registered with the National Do-Not-Call Registry1 since September 13, 2005. 25. Defendant’s calls were a nuisance which briefly deprived Plaintiff of the use of his phone, invaded his personal privacy, and wasted his time. Additionally, Plaintiff incurred a reduction in his cellular battery life as a result of Defendant’s calls. CLASS ACTION ALLEGATIONS 26. Plaintiff brings this case as a class action pursuant to Fed. R. Civ. P. 23, on behalf of himself and all others similarly situated. 27. Plaintiff represents, and is a member of the following classes: The ATDS Class consisting of: (1) all persons residing within the United States (2) who received a telephone call from Defendant (3) to their cellular telephone (4) within the four years prior to the filing of the Complaint in this action, (5) for the purpose of selling or attempting to sell Defendant’s goods and/or services (6) using an automatic telephone dialing system (7) who did not provide prior express consent for such call(s). The Former Customer Sub-Class consisting of: (1) all persons residing within the United States (2) who received a telephone call from Defendant (3) to their cellular telephone (4) within the four years prior to the filing of the Complaint in this action, (5) for the purpose of convincing the recipient to return as a customer of Defendant (6) using an automatic telephone dialing system (7) who did not provide prior express consent for such call(s). The DNC Class consisting of: (1) all persons within the United States who, (2) within the four years prior to the filing of this Complaint, (3) received more than one telephone call (4) to said person’s cellular telephone number (5) within any 12-month period, (6) by or on behalf of the same entity, (7) without their prior express consent, (8) while listed on the national Do Not Call Registry. Numerosity 28. Upon information and belief, based off of Defendant’s identity as a national television service provider as well as widespread internet complaints about Defendant’s 1 The National Do-Not-Call Registry allows individuals to register their phone numbers on a national “do-not-call list," and prohibits most commercial telemarketers from calling the numbers on that list. Mainstream Marketing Services, Inc. v. F.T.C., 358 F.3d 1228, (10th Cir. 2004). telemarketing calls, the members of the class are believed to number in the thousands or millions such that joinder of all members is impracticable. 29. The exact number and identities of the Class members are unknown at this time and can only be ascertained through discovery. Identification of the Class members is a matter capable of ministerial determination from Defendants’ call records. Common Questions of Law and Fact 30. There are numerous questions of law and fact common to the Classes which predominate over any questions affecting only individual members of the Class. Among the questions of law and fact common to the Class are: a. Whether Defendants made non-emergency calls to Plaintiff’s and Class members’ cellular telephones using an autodialer and/or prerecorded message; b. Whether Defendants can meet its burden of showing that they obtained prior express consent to make such calls; c. Whether Defendants’ conduct was knowing and willful; d. Whether Defendants are liable for damages, and the amount of such damages; and e. Whether Defendants should be enjoined from such conduct in the future. 31. The common questions in this case are capable of having common answers. Defendant routinely places automated calls to telephone numbers assigned to cellular telephone thus, Plaintiff and the Class members will have identical claims capable of being efficiently adjudicated and administered in this case. Typicality 32. Plaintiff’s claims are typical of the claims of the Class members, as they are all based on the same factual and legal theories. Protecting the Interests of the Class Members 33. Plaintiff is a representative who will fully and adequately assert and protect the interests of the Classes, and has retained counsel who is experienced in prosecuting class actions. Accordingly, Plaintiff is an adequate representative and will fairly and adequately protect the interests of the Classes. Proceeding Via Class Action is Superior and Advisable 34. A class action is superior to all other available methods for the fair and efficient adjudication of this lawsuit, because individual litigation of the claims of all members of the Classes are economically unfeasible and procedurally impracticable. While the aggregate damages sustained by the Classes are in the millions of dollars, the individual damages incurred by each member of the Class resulting from Defendant’s wrongful conduct are too small to warrant the expense of individual lawsuits. The likelihood of individual Class members prosecuting their own separate claims is remote, and, even if every member of the Class could afford individual litigation, the court system would be unduly burdened by individual litigation of such cases. 35. The prosecution of separate actions by members of the Class would create a risk of establishing inconsistent rulings and/or incompatible standards of conduct for Defendants. For example, one court might enjoin Defendants from performing the challenged acts, whereas another may not. Additionally, individual actions may be dispositive of the interests of the Class, although certain class members are not parties to such actions. COUNT I KNOWING AND/OR WILLFUL VIOLATIONS OF THE TCPA, 47 U.S.C. 227(b). 36. Plaintiff re-alleges and incorporates the preceding paragraphs as if fully set forth herein. 37. Defendant violated the TCPA by making telephone calls to Plaintiff, the ATDS Class members and the Former Customer Sub-Class members on their cellular phones without first obtaining their prior express consent and using equipment which constitutes and automatic telephone dialing system for the express purpose of marketing Defendant’s goods and/or services. 38. Defendant’s calls caused Plaintiff, the ATDS Class members, and the Former Customer Sub-Class members concrete injuries including, but not limited to, invasion of their personal privacy; nuisance and disruption in their daily lives; reduction in cellular telephone battery life; and loss of use of their cellular telephones. 39. As a result of the aforementioned violations of the TCPA, Plaintiff, the ATDS Class, and the Former Customer Sub-Class are entitled to an award of $500.00 in statutory damages for each call in negligent violation of the TCPA, or up to $1,500 in statutory damages for each call in willful violation of the TCPA, pursuant to 47 U.S.C. § 227(b)(3)(B). 40. Additionally, Plaintiff and the Class are entitled to and seek injunctive relief prohibiting such future conduct. WHEREFORE, Plaintiff and members of the Class demand a jury trial on all claims so triable, and judgment against Defendant for the following: a. Injunctive relief prohibiting violations of the TCPA by Defendants in the future; b. Statutory damages of $500.00 for each and every call made in negligent violation of the TCPA or $1,500 for each and every call made in willful violation of the TCPA, pursuant to 47 U.S.C. § (b)(3)(B); and c. Such other relief as this Court deems just and proper. COUNT II VIOLATIONS OF THE TCPA, 47 U.S.C. § 227(c) 41. Plaintiff re-alleges and incorporates paragraphs 1-35 as if fully set forth herein. 42. Plaintiff and other members of the DNC Class received more than one telephone call within a 12-month period, by or on behalf of Defendant, for the express purpose of marketing Defendant’s goods and/or services without their written prior express consent. 43. Defendant’s calls caused Plaintiff and the DNC Class members concrete injuries including, but not limited to, invasion of their personal privacy; nuisance and disruption in their daily lives; charges and/or reduction in cellular telephone battery life; and loss of use of their cellular telephones. 44. As a result of the aforementioned violations of the TCPA, Plaintiff and the DNC Class are entitled to an award of up to $1,500.00 for each call in violation of the TCPA pursuant to 47 U.S.C. § 227(c)(5). 45. Additionally, Plaintiff and the DNC Class are entitled to and seek injunctive relief prohibiting such future conduct. WHEREFORE, Plaintiff and members of the Class demand a jury trial on all claims so triable, and judgment against Defendant for the following: a. Injunctive relief prohibiting violations of the TCPA by Defendants in the future; b. Statutory damages of $1500.00 for each and every call made in violation of the TCPA pursuant to 47 U.S.C. § (b)(3)(B); and c. Such other relief as this Court deems just and proper. Dated: June 8, 2016 /s/ Scott D. Owens Scott D. Owens, Esq. Scott D. Owens, P.A. 3800 S. Ocean Drive, Suite 235 Hollywood, FL 33019 Telephone: (954) 589-0588 Fax: (954) 337-0666 [email protected] Attorney for Plaintiff and the putative classes

privacy

YaIdCYcBD5gMZwcz4Qx0

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x DONALD NIXON, on behalf of himself and all others similarly situated, No.: ___________________ Plaintiffs, CLASS ACTION COMPLAINT v. JURY TRIAL DEMANDED ACORNS ADVISERS, LLC, Defendant. : : : : : : : : : : : : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x INTRODUCTION 1. Plaintiff DONALD NIXON (hereinafter “Plaintiff”), on behalf of himself and others similarly situated, asserts the following claims against Defendant ACORNS ADVISERS, LLC, for its failure to design, construct, maintain, and operate its website to be fully accessible to and independently usable by Plaintiff and other blind or visually-impaired people. 2. Plaintiff is a visually-impaired and legally blind person who suffers from what constitutes a “qualified disability” under the Americans with Disabilities Act of 1990 (“ADA”) and thus requires screen-reading software to read website content using his computer. Plaintiff uses the terms “blind” or “visually-impaired” to refer to all people with visual impairments who meet the legal definition of blindness in that they have a visual acuity with correction of less than or equal to 20 x 200. Some blind people who meet this definition have limited vision while others are completely impaired and have no vision. 3. Defendant’s denial of full and equal access to its website, and therefore denial of its goods and services offered thereby, is a violation of Plaintiff’s rights under the ADA. 4. Because Defendant’s website, www.acorns.com (the “Website” or “Defendant’s website”), is not equally accessible to blind and visually-impaired consumers, it violates the ADA. Defendant’s website contains various and multiple access barriers that make it difficult if not impossible for blind and visually-impaired consumers to attempt to complete a transaction. 5. Plaintiff seeks a permanent injunction to initiate a change in Defendant’s corporate policies, practices, and procedures so that Defendant’s website will become and remain accessible to blind and visually-impaired consumers. JURISDICTION AND VENUE 6. This Court has subject-matter jurisdiction over this action under 28 U.S.C. § 1331 and 42 U.S.C. § 12181, as Plaintiff’s claims arise under Title III of the ADA, 42 U.S.C. § 12181, et seq., and 28 U.S.C. § 1332. 7. This Court has supplemental jurisdiction under 28 U.S.C. § 1367 over Plaintiff’s New York City Human Rights Law, N.Y.C. Admin. Code § 8-101 et seq., (“NYCHRL”) claims. 8. Venue is proper in this district under 28 U.S.C. §1391(a)(2) because a substantial part of the acts and/or omissions giving rise to Plaintiff’s claims occurred in this District. Defendant have also been and is continuing to commit the alleged acts and/or omissions in this District that caused injury and violated Plaintiff’s rights and the rights of other disabled individuals. 9. Defendant is subject to personal jurisdiction in this District. Defendant has been and is committing the acts or omissions alleged herein in the Southern District of New York that caused injury and violated rights the ADA prescribes to Plaintiff and to other blind and other visually impaired-consumers. A substantial part of the acts and omissions giving rise to Plaintiff’s claims occurred in this District: on several separate occasions, Plaintiff has been denied the full use and enjoyment of the facilities, goods and services offered to the general public, on Defendant’s Website in Queens County. These access barriers that Plaintiff encountered have caused a denial of Plaintiff’s full and equal access multiple times in the past, and now deter Plaintiff on a regular basis from accessing the Defendant’s Website in the future. 10. This Court is empowered to issue a declaratory judgment under 28 U.S.C. §§ 2201 and 2202. PARTIES 11. Plaintiff DONALD NIXON, at all relevant times, is and was a resident of Queens, New York. 12. Plaintiff is a blind, visually-impaired handicapped person and a member of a protected class of individuals under the ADA, under 42 U.S.C. § 12102(1)-(2), and the regulations implementing the ADA set forth at 28 CFR §§ 36.101 et seq., and the NYCHRL. 13. Defendant is and was at all relevant times a Delaware Limited Liability Company doing business in New York. 14. Defendant owns, manages, controls and maintains the Website, and its facilities, goods, and services offered thereupon, is a public accommodation within the definition of Title III of the ADA, 42 U.S.C. § 12181(7). 15. A Website is a place of accommodation defined as “places of exhibition and entertainment,” places of recreation,” and “service establishments.” 28 CFR §§ 36.201 (a); 42 U.S.C. § 12181 (7). NATURE OF ACTION 16. The Internet has become a significant source of information, a portal, and a tool for conducting business, doing everyday activities such as shopping, learning, banking, researching, as well as many other activities for sighted, blind and visually- impaired persons alike. 17. Blind and visually impaired users of Windows operating system computers and devices have several screen-reading software programs available to them. Some of these programs are available for purchase and other programs are available without the user having to purchase the program separately. Job Access With Speech (“JAWS”), and NonVisual Desktop Access (“NVDA”) are among the most popular. 18. In today’s world, blind and visually-impaired people have the ability to access websites using keyboards in conjunction with screen access software that vocalizes the visual information found on a computer screen or displays the content on a refreshable Braille display. This technology is known as screen-reading software. Screen-reading software is currently the only method a blind or visually-impaired person may independently access the internet. Unless websites are designed to be read by screen-reading software, blind and visually-impaired persons are unable to fully access websites, and the information, products, goods and contained thereon. 19. For screen-reading software to function, the information on a website must be capable of being rendered into text. If the website content is not capable of being rendered into text, the blind or visually-impaired user is unable to access the same content available to sighted users. 20. The international website standards organization, the World Wide Web Consortium, known throughout the world as W3C, has published version 2.1 of the Web Content Accessibility Guidelines (“WCAG 2.1”). WCAG 2.1 are well- established guidelines for making websites accessible to blind and visually- impaired people. These guidelines are universally followed by most large business entities and government agencies to ensure their websites are accessible. 21. Non-compliant websites pose common access barriers to blind and visually- impaired persons. Common barriers encountered by blind and visually impaired persons include, but are not limited to, the following: a. Alternative text (“alt-text”) or text equivalent for every non-text element. Alt-text is an invisible code embedded beneath a graphical image on a website. Web accessibility requires that alt-text be coded with each picture so that screen-reading software can speak the alt-text where a sighted user sees pictures, which includes captcha prompts. Alt-text does not change the visual presentation, but instead a text box shows when the mouse moves over the picture; b. Videos that do not maintain audio descriptions; c. Title frames with text are not provided for identification and navigation; d. Equivalent text is not provided when using scripts; e. Forms with the same information and functionality as for sighted persons are not provided; f. Information about the meaning and structure of content is not conveyed by more than the visual presentation of content; g. Text cannot be resized without assistive technology up to 200% without losing content or functionality; h. If the content enforces a time limit, the user is not able to extend, adjust or disable it; i. Web pages do not have titles that describe the topic or purpose; j. The purpose of each link cannot be determined from the link text alone or from the link text and its programmatically determined link context; k. One or more keyboard operable user interface lacks a mode of operation where the keyboard focus indicator is discernible; l. The default human language of each web page cannot be programmatically determined; m. When a component receives focus, it may initiate a change in context; n. Changing the setting of a user interface component may automatically cause a change of context where the user has not been advised before using the component; o. Labels or instructions are not provided when content requires user input, which include captcha prompts that require the user to verify that he or she is not a robot; p. In content which is implemented by using markup languages, elements do not have complete start and end tags, elements are not nested according to their specifications, elements may contain duplicate attributes, and/or any IDs are not unique; q. Inaccessible Portable Document Format (PDFs); and, r. The name and role of all User Interface elements cannot be programmatically determined; items that can be set by the user cannot be programmatically set; and/or notification of changes to these items is not available to user agents, including assistive technology. STATEMENT OF FACTS 22. Defendant is an investment platform. Defendant owns, operates, manages and controls the website, www.acorns.com (its “Website”). The Website offers features which should allow all consumers to access the services and which Defendant ensures the delivery of such services throughout the United States, including New York State. 23. Defendant’s Website is integrated with its retail business operations, serving as its gateway. The Website offers services to the general public. The Website offers features which ought to allow users to learn about Defendant’s services, browse for items, information, access navigation bar descriptions, prices, savings and/or coupons and sale discount items, and avail consumers of the ability to peruse the numerous items offered for sale. The features offered by www.acorns.com include learning about the services, about the company, read reviews, and make investments and transactions. 24. It is, upon information and belief, Defendant’s policy and practice to deny Plaintiff and other blind or visually-impaired users access to its Website, thereby denying the facilities and services that are offered and integrated with its investment operations. Due to its failure and refusal to remove access barriers to its Website, Plaintiff and visually-impaired persons have been and are still being denied equal access to Defendant’s retail operations and the numerous facilities, goods, services, and benefits offered to the public through its Website. 25. Defendant’s Website is an investment platform without any physical location. Thus, Defendant’s Website is the main point of sale for its business operation. 26. Plaintiff is a visually-impaired and legally blind person, who cannot use a computer without the assistance of screen-reading software. Plaintiff has visited the Website on separate occasions using a screen-reader. 27. During Plaintiff’s visits to the Website, www.acorns.com, the last occurring in March of 2020, Plaintiff encountered multiple access barriers which effectively denied him the full enjoyment of the goods and services of the Website. Plaintiff visited Defendant’s Website with an intent to invest for his retirement. Despite his efforts, however, Plaintiff was denied an experience similar to that of a sighted individual due to the website’s lack of a range of features and accommodations, which effectively barred Plaintiff from being able to make his desired investment. 28. Many features on the Website lacks alt. text, which is the invisible code embedded beneath a graphical image. As a result, Plaintiff was unable to differentiate what options were on the screen due to the failure of the Website to adequately describe its content. 29. Many features on the Website also fail to add a label element or title attribute for each field. This is a problem for the visually impaired because the screen reader fails to communicate the purpose of the page element. It also leads to the user not being able to understand what he or she is expected to insert into the subject field. This was an issue on Defendant’s Website particularly in the select style section. As a result, Plaintiff and similarly situated visually impaired users of Defendant’s Website are unable to enjoy the privileges and benefits of the Website equally to sighted users. 30. Plaintiff has made multiple attempts to complete a transaction on www.acorns.com, most recently in March of 2020, but was unable to do so independently because of the many access barriers on Defendant’s website. These access barriers have caused www.acorns.com to be inaccessible to, and not independently usable by, blind and visually-impaired persons. 31. The Website also contained a host of broken links, which is a hyperlink to a non- existent or empty webpage. For the visually impaired this is especially paralyzing due to the inability to navigate or otherwise determine where one is on the website once a broken link is encountered. For example, upon coming across a link of interest, Plaintiff was redirected to an error page. However, the screen-reader failed to communicate that the link was broken. As a result, Plaintiff could not get back to his original search. 32. These access barriers effectively denied Plaintiff the ability to use and enjoy Defendant’s website the same way sighted individuals do. The access barriers Plaintiff encountered have caused a denial of Plaintiff’s full and equal access in the past, and now deter Plaintiff on a regular basis from accessing the Website. 33. Due to the inaccessibility of Defendant’s Website, blind and visually-impaired customers such as Plaintiff, who need screen-readers, cannot fully and equally use or enjoy the facilities, and services Defendant offers to the public on its Website. The access barriers Plaintiff encountered have caused a denial of Plaintiff’s full and equal access in the past, and now deter Plaintiff on a regular basis from visiting the Website, presently and in the future. 34. If the Website was equally accessible to all, Plaintiff could independently navigate the Website and complete a desired transaction as sighted individuals do. 35. Through his attempts to use the Website, Plaintiff has actual knowledge of the access barriers that make these services inaccessible and independently unusable by blind and visually-impaired people. 36. Because simple compliance with the WCAG 2.1 Guidelines would provide Plaintiff and other visually-impaired consumers with equal access to the Website, Plaintiff alleges that Defendant has engaged in acts of intentional discrimination, including but not limited to the following policies or practices: a. Constructing and maintaining a website that is inaccessible to visually-impaired individuals, including Plaintiff; b. Failure to construct and maintain a website that is sufficiently intuitive so as to be equally accessible to visually-impaired individuals, including Plaintiff; and, c. Failing to take actions to correct these access barriers in the face of substantial harm and discrimination to blind and visually-impaired consumers, such as Plaintiff, as a member of a protected class. 37. Defendant therefore uses standards, criteria or methods of administration that have the effect of discriminating or perpetuating the discrimination of others, as alleged herein. 38. The ADA expressly contemplates the injunctive relief that Plaintiff seeks in this action. In relevant part, the ADA requires: In the case of violations of . . . this title, injunctive relief shall include an order to alter facilities to make such facilities readily accessible to and usable by individuals with disabilities . . . Where appropriate, injunctive relief shall also include requiring the . . . modification of a policy . . . 42 U.S.C. § 12188(a)(2). 39. Because Defendant’s Website has never been equally accessible, and because Defendant lacks a corporate policy that is reasonably calculated to cause its Website to become and remain accessible, Plaintiff invokes 42 U.S.C. § 12188(a)(2) and seeks a permanent injunction requiring Defendant to retain a qualified consultant acceptable to Plaintiff (“Agreed Upon Consultant”) to assist Defendant to comply with WCAG 2.1 guidelines for Defendant’s Website. Plaintiff seeks that this permanent injunction requires Defendant to cooperate with the Agreed Upon Consultant to: a. Train Defendant’s employees and agents who develop the Website on accessibility compliance under the WCAG 2.1 guidelines; b. Regularly check the accessibility of the Website under the WCAG 2.1 guidelines; c. Regularly test user accessibility by blind or vision-impaired persons to ensure that Defendant’s Website complies under the WCAG 2.1 guidelines; and, d. Develop an accessibility policy that is clearly disclosed on Defendant’s Websites, with contact information for users to report accessibility-related problems. 40. Although Defendant may currently have centralized policies regarding maintaining and operating its Website, Defendant lacks a plan and policy reasonably calculated to make them fully and equally accessible to, and independently usable by, blind and other visually-impaired consumers. 41. Without injunctive relief, Plaintiff and other visually-impaired consumers will continue to be unable to independently use the Website, violating their rights. 42. Defendant has, upon information and belief, invested substantial sums in developing and maintaining its Website and has generated significant revenue from the Website. These amounts are far greater than the associated cost of making its Website equally accessible to visually impaired customers. CLASS ACTION ALLEGATIONS 43. Plaintiff, on behalf of himself and all others similarly situated, seeks to certify a nationwide class under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the United States who have attempted to access Defendant’s Website and as a result have been denied access to the equal enjoyment of goods and services, during the relevant statutory period. 44. Plaintiff, on behalf of himself and all others similarly situated, seeks certify a New York City subclass under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the City of New York who have attempted to access Defendant’s Website and as a result have been denied access to the equal enjoyment of goods and services offered, during the relevant statutory period. 45. Common questions of law and fact exist amongst Class, including: a. Whether Defendant’s Website is a “public accommodation” under the ADA; b. Whether Defendant’s Website is a “place or provider of public accommodation” under the NYCHRL; c. Whether Defendant’s Website denies the full and equal enjoyment of its products, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating the ADA; and d. Whether Defendant’s Website denies the full and equal enjoyment of its products, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating the NYCHRL. 46. Plaintiff’s claims are typical of the Class. The Class, similarly, to the Plaintiff, are severely visually impaired or otherwise blind, and claim that Defendant has violated the ADA or NYCHRL by failing to update or remove access barriers on its Website so either can be independently accessible to the Class. 47. Plaintiff will fairly and adequately represent and protect the interests of the Class Members because Plaintiff has retained and is represented by counsel competent and experienced in complex class action litigation, and because Plaintiff has no interests antagonistic to the Class Members. Class certification of the claims is appropriate under Fed. R. Civ. P. 23(b)(2) because Defendant has acted or refused to act on grounds generally applicable to the Class, making appropriate both declaratory and injunctive relief with respect to Plaintiff and the Class as a whole. 48. Alternatively, class certification is appropriate under Fed. R. Civ. P. 23(b)(3) because fact and legal questions common to Class Members predominate over questions affecting only individual Class Members, and because a class action is superior to other available methods for the fair and efficient adjudication of this litigation. 49. Judicial economy will be served by maintaining this lawsuit as a class action in that it is likely to avoid the burden that would be otherwise placed upon the judicial system by the filing of numerous similar suits by people with visual disabilities throughout the United States. FIRST CAUSE OF ACTION VIOLATIONS OF THE ADA, 42 U.S.C. § 12181 et seq. 50. Plaintiff, on behalf of himself and the Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 51. Section 302(a) of Title III of the ADA, 42 U.S.C. § 12101 et seq., provides: No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation. 42 U.S.C. § 12182(a). 52. Defendant’s Website is a public accommodation within the definition of Title III of the ADA, 42 U.S.C. § 12181(7). The Website is a service that is offered to the general public, and as such, must be equally accessible to all potential consumers. 53. Under Section 302(b)(1) of Title III of the ADA, it is unlawful discrimination to deny individuals with disabilities the opportunity to participate in or benefit from the products, services, facilities, privileges, advantages, or accommodations of an entity. 42 U.S.C. § 12182(b)(1)(A)(i). 54. Under Section 302(b)(1) of Title III of the ADA, it is unlawful discrimination to deny individuals with disabilities an opportunity to participate in or benefit from the products, services, facilities, privileges, advantages, or accommodation, which is equal to the opportunities afforded to other individuals. 42 U.S.C. § 12182(b)(1)(A)(ii). 55. Under Section 302(b)(2) of Title III of the ADA, unlawful discrimination also includes, among other things: [A] failure to make reasonable modifications in policies, practices, or procedures, when such modifications are necessary to afford such goods, services, facilities, privileges, advantages, or accommodations to individuals with disabilities, unless the entity can demonstrate that making such modifications would fundamentally alter the nature of such goods, services, facilities, privileges, advantages or accommodations; and a failure to take such steps as may be necessary to ensure that no individual with a disability is excluded, denied services, segregated or otherwise treated differently than other individuals because of the absence of auxiliary aids and services, unless the entity can demonstrate that taking such steps would fundamentally alter the nature of the good, service, facility, privilege, advantage, or accommodation being offered or would result in an undue burden. 42 U.S.C. § 12182(b)(2)(A)(ii)-(iii). 56. The acts alleged herein constitute violations of Title III of the ADA, and the regulations promulgated thereunder. Plaintiff, who is a member of a protected class of persons under the ADA, has a physical disability that substantially limits the major life activity of sight within the meaning of 42 U.S.C. §§ 12102(1)(A)-(2)(A). Furthermore, Plaintiff has been denied full and equal access to the Website, has not been provided services that are provided to other patrons who are not disabled, and has been provided services that are inferior to the services provided to non-disabled persons. Defendant has failed to take any prompt and equitable steps to remedy its discriminatory conduct. These violations are ongoing. 57. Under 42 U.S.C. § 12188 and the remedies, procedures, and rights set forth and incorporated therein, Plaintiff, requests relief as set forth below. SECOND CAUSE OF ACTION VIOLATIONS OF THE NYCHRL 58. Plaintiff, on behalf of himself and the New York City Sub-Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 59. N.Y.C. Administrative Code § 8-107(4)(a) provides that “It shall be an unlawful discriminatory practice for any person, being the owner, lessee, proprietor, manager, superintendent, agent or employee of any place or provider of public accommodation, because of . . . disability . . . directly or indirectly, to refuse, withhold from or deny to such person, any of the accommodations, advantages, facilities or privileges thereof.” 60. Defendant’s Website is a sales establishment and public accommodations within the definition of N.Y.C. Admin. Code § 8-102(9). 61. Defendant is subject to NYCHRL because it owns and operates its Website, making it a person within the meaning of N.Y.C. Admin. Code § 8-102(1). 62. Defendant is violating N.Y.C. Administrative Code § 8-107(4)(a) in refusing to update or remove access barriers to Website, causing its Website and the services integrated with such Website to be completely inaccessible to the blind. This inaccessibility denies blind patrons full and equal access to the facilities, products, and services that Defendant makes available to the non-disabled public. 63. Defendant is required to “make reasonable accommodation to the needs of persons with disabilities . . . any person prohibited by the provisions of [§ 8-107 et seq.] from discriminating on the basis of disability shall make reasonable accommodation to enable a person with a disability to . . . enjoy the right or rights in question provided that the disability is known or should have been known by the covered entity.” N.Y.C. Admin. Code § 8-107(15)(a). 64. Defendant’s actions constitute willful intentional discrimination against the Sub- Class on the basis of a disability in violation of the N.Y.C. Administrative Code § 8-107(4)(a) and § 8-107(15)(a) in that Defendant has: a. constructed and maintained a website that is inaccessible to blind class members with knowledge of the discrimination; and/or b. constructed and maintained a website that is sufficiently intuitive and/or obvious that is inaccessible to blind class members; and/or c. failed to take actions to correct these access barriers in the face of substantial harm and discrimination to blind class members. 65. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 66. As such, Defendant discriminates, and will continue in the future to discriminate against Plaintiff and members of the proposed class and subclass on the basis of disability in the full and equal enjoyment of the products, services, facilities, privileges, advantages, accommodations and/or opportunities of its Website under § 8-107(4)(a) and/or its implementing regulations. Unless the Court enjoins Defendant from continuing to engage in these unlawful practices, Plaintiff and members of the class will continue to suffer irreparable harm. 67. Defendant’s actions were and are in violation of the NYCHRL and therefore Plaintiff invokes his right to injunctive relief to remedy the discrimination. 68. Plaintiff is also entitled to compensatory damages, as well as civil penalties and fines under N.Y.C. Administrative Code § 8-120(8) and § 8-126(a) for each offense as well as punitive damages pursuant to § 8-502. 69. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 70. Under N.Y.C. Administrative Code § 8-120 and § 8-126 and the remedies, procedures, and rights set forth and incorporated therein Plaintiff prays for judgment as set forth below. THIRD CAUSE OF ACTION DECLARATORY RELIEF 71. Plaintiff, on behalf of himself and the Class and New York City Sub-Classes Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 72. An actual controversy has arisen and now exists between the parties in that Plaintiff contends, and is informed and believes that Defendant denies, that its Website contains access barriers denying blind customers the full and equal access to the products, services and facilities of its Website, which Defendant owns, operations and controls, fails to comply with applicable laws including, but not limited to, Title III of the Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y. Exec. Law § 296, et seq., and N.Y.C. Admin. Code § 8-107, et seq. prohibiting discrimination against the blind. 73. A judicial declaration is necessary and appropriate at this time in order that each of the parties may know their respective rights and duties and act accordingly. PRAYER FOR RELIEF WHEREFORE, Plaintiff respectfully requests this Court grant the following relief: a. A preliminary and permanent injunction to prohibit Defendant from violating the Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y.C. Administrative Code § 8-107, et seq., and the laws of New York; b. A preliminary and permanent injunction requiring Defendant to take all the steps necessary to make its Website into full compliance with the requirements set forth in the ADA, and its implementing regulations, so that the Website is readily accessible to and usable by blind individuals; c. A declaration that Defendant owns, maintains and/or operates its Website in a manner that discriminates against the blind and which fails to provide access for persons with disabilities as required by Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y.C. Administrative Code § 8-107, et seq., and the laws of New York d. An order certifying the Class and Sub-Classes under Fed. R. Civ. P. 23(a) & (b)(2) and/or (b)(3), appointing Plaintiff as Class Representative, and his attorneys as Class Counsel; e. Compensatory damages in an amount to be determined by proof, including all applicable statutory and punitive damages and fines, to Plaintiff and the proposed class and subclasses for violations of their civil rights under New York City Human Rights Law; f. Pre- and post-judgment interest; g. An award of costs and expenses of this action together with reasonable attorneys’ and expert fees; and h. Such other and further relief as this Court deems just and proper. DEMAND FOR TRIAL BY JURY Pursuant to Fed. R. Civ. P. 38(b), Plaintiff demands a trial by jury on all questions of fact the Complaint raises. Dated: Forest Hills, New York March 13, 2020 SHALOM LAW, PLLC. By: /s/Jonathan Shalom Jonathan Shalom, Esq. 105-13 Metropolitan Avenue Forest Hills, New York 11375 Tel: (718) 971-9474 Email: [email protected] ATTORNEYS FOR PLAINTIFF

civil rights, immigration, family

-MWSDYcBD5gMZwczGuaz

CASE NO. 1:15-cv-1364 JURY TRIAL DEMANDED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF INDIANA INDIANAPOLIS DIVISION SHAMECA S. ROBERTSON , on Behalf of Herself and All Others Similarly Situated, Plaintiff, vs. ALLIED SOLUTIONS, LLC Defendants. CLASS ACTION COMPLAINT Now comes the plaintiff, Shameca S. Robertson (“Robertson”) on behalf of herself and all other similarly situated individuals and for her Class Action Complaint alleges the following NATURE OF THE ACTION 1. This class action seeks remedies under the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. (“FCRA”) on behalf of consumers who were the subject of consumer reports procured by Defendant, Allied Solutions, LLC (“Allied”) as a precondition of employment with Allied during the period prescribed by 15 U.S.C. § 1681p (“the Class Period”) preceding the filing of the Complaint. PARTIES 2. Robertson is and has been a resident of Marion County, Indiana, and is a consumer as defined by 15 U.S.C. § 1681a. 3. Allied Solutions, LLC is an Indiana limited liability company headquartered in Carmel, Indiana. 4. Further, Allied is a “person” using “consumer reports” to make “employment decisions” and take “adverse action” against “consumers”, as those terms are defined by 15 U.S.C. § 1681a. JURISDICTION AND VENUE 5. The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331 and 15 U.S.C. § 1681p. 6. Venue is proper in the Southern District of Indiana because Allied is subject to personal jurisdiction in this District, maintains a place of business in this District, and makes employment decisions regarding individuals residing in this District. 28 U.S.C. § 1391(c). ROBERTSON’S EMPLOYMENT EXPERIENCE 7. Robertson applied for a client support supervisor position with Allied and was subsequently offered employment on or about May 14, 2015. 8. Allied provided Robertson with an employment packet to complete and return prior to her June 1, 2015 start date. 9. Allied then engaged a consumer reporting agency to provide a consumer report, which included public record information purportedly regarding Robertson. 10. The information provided to Allied by the reporting agency included certain non-conviction information pertaining to Robertson. 11. Consumer reporting agencies traffic in the reputations of job applicants by purchasing public records data from various sources and compiling the information into a separate database used to generate consumer reports for a fee upon request. 12. Consumer reporting agencies often make this information available to employers instantly online, and rarely provide contemporaneous notice to job applicants that adverse public record information has been shared with a prospective employer. 13. On or about May 28, 2015, an Allied human resource officer advised Robertson that her employment with Allied was terminated because of information contained in her “criminal background check” report. 14. At no time prior to withdrawing her employment opportunity, did Allied provide Robertson with a copy of her background report or a written summary of her rights under the FCRA. 15. Because Allied denied Robertson this information, she was unable to address the negative information contained in her consumer report before Allied took adverse action against her. ALLEGATIONS AS TO THE COMMON QUESTIONS 16. Allied announces on its website that it has offices in 17 states and places employees in more than 30 states. 17. Upon information and belief, Allied has purchased consumer reports from consumer reporting agencies for the last five (5) years, which are used as a basis to take adverse action against job applicants. 18. Allied purchases these consumer reports after hiring applicants and determining that applicants are otherwise qualified for employment. 19. Uniformly, Allied does not provide pre-adverse action notice to job applicants, including a copy of the applicants’ consumer report and a statement of the applicants’ rights as required by 15 U.S.C. § 1681b(b)(3) before making a decision regarding their employment. 20. Allied’s violations of the FCRA have been willful, wanton and reckless in that Allied knew, or reasonably should have known, that it was failing to comply with the requirements of the FCRA. 21. The specific requirements of 15 U.S.C. § 1681b(b)(3) have been the subject of numerous federal district court, circuit court and Supreme Court decisions. Moreover, these requirements have been the subject of numerous FTC staff opinions authored over the last 15 22. More importantly, upon information and belief, Allied’s obligations under the FCRA, including obligations under 15 U.S.C. § 1681b(b)(3) are made available by the consumer reporting agency it uses to procure consumer reports. 23. Moreover, Allied had actual knowledge that the FCRA required a reasonable time period for applicants to dispute or explain information contained in a consumer report before making a final hiring decision. 24. Regulatory guidance provided by the FTC has explained the FCRA’s requirement that employers like Allied must wait a “reasonable time” after providing notice under 15 U.S.C. § 1681b(b)(3) to provide final adverse action notice to applicants. 25. Such FTC staff opinions originate in 1997 and were publically available to 26. Title 15 U.S.C. §1681n(a) permits a consumer to recover statutory and punitive damages, along with attorney fees and costs for willful violations of the FCRA. CLASS ACTION ALLEGATIONS 27. Pursuant to FED. R. CIV. P. 23, Robertson brings this action on behalf of the Class initially defined below: All natural persons residing in the United States who applied for employment with Allied during the Class Period and against whom Allied made an adverse hiring decision based in whole or in part on information contained in the consumer report without first providing the applicant with a copy of the report and a written summary of rights under the FCRA. 28. Upon information and belief, the putative Class exceeds 1,000 members. Information concerning the exact size of the putative class is within the exclusive possession of 29. The Class members are so numerous that joinder of all members is impracticable. 30. Robertson’s claims are typical of the claims of the other Class members as all Class members were similarly affected by Allied’s unlawful conduct in violation of the FCRA. 31. Robertson will fairly and adequately protect the interest of the Class members and has retained counsel competent and experienced in complex class-action litigation. Robertson is a member of the Class and does not have any interests antagonistic to or in conflict with the members of the Class. Further, Robertson’s claims are the same as those of the Class, which all arise from the same operative facts and are based upon the same legal theories. 32. Common questions of law and fact exist as to all Class members and predominate over any questions solely affecting individual Class members, including: a. Whether Allied provided a copy of the consumer report to the applicant or employee before making a decision to decline, delay, withdraw employment or discharge the applicant or employee based on the results thereof as required by 15 U.S.C. § 1681b(b)(3)(A)(i); and b. Whether Allied provided a written summary of the applicant or employee’s rights under the FCRA before making a decision to decline, delay, withdraw employment or discharge the applicant or employee as required by 15 U.S.C § 1681b(b)(3)(A)(ii). 32. A class action is superior to other available methods for the fair and efficient adjudication of this controversy because the membership of the Class is so numerous and involves claims that, taken individually, may not justify the costs and effort of bringing suit. 33. Further, the prosecution of several actions by individual members of the Class would create a risk of varying adjudications with respect to members of the Class, as well as create inconsistent standards of conduct for those opposing the Class. Additionally, individual actions by members of the Class may be dispositive of the interests of other members not parties to the adjudication of the claim, which would impair or impede the ability of those individuals to protect their interests. COUNT ONE — CLASS CLAIM FAILURE TO PROVIDE PRE-ADVERSE ACTION NOTICE 34. Robertson re-alleges and incorporates by reference all preceding allegations of law and fact. 35. Allied willfully violated 15 U.S.C. § 1681b(b)(3)(A)(i) by failing to provide a copy of the consumer report used to make an employment decision to Robertson and the Class members before taking adverse action that was based in whole or in part on that report. 36. Allied willfully violated 15 U.S.C. § 1681b(b)(3)(A)(ii) by failing to provide a copy of the summary of rights required by this section to Robertson and the Class members before taking adverse action that was based in whole or in part on a consumer report. 37. Robertson and the Class members seek statutory damages for these violations pursuant to 15 U.S.C. § 1681n(a)(1)(A). 38. Robertson and the Class members also seek punitive damages for these violations pursuant to 15 U.S.C. § 1681n(a)(2). 39. Further Robertson and the Class members seek attorney fees and costs pursuant to 15 U.S.C. § 1681n(a)(3). WHEREFORE, Robertson and the putative class respectfully pray for the following A. An order certifying the proposed class herein pursuant to FED. R. CIV. P. 23 and appointing the undersigned counsel to represent same; B. The creation of a common fund available to provide notice of and remedy Allied’s unlawful conduct; C. Statutory and punitive damages for all class claims; and D. Attorneys’ fees, expenses and costs. JURY DEMAND Plaintiff Shameca S. Robertson and the putative class demand a trial by a jury as to all issues presented herein. Respectfully submitted, /s/ Paul B. Poracky KORANSKY, BOUWER & PORACKY, P.C. Paul B. Poracky (#10899-45) 425 Joliet Street, Suite 425 Dyer, Indiana 46311 Telephone: (219) 865-6700 Email: [email protected] O’TOOLE, McLAUGHLIN, DOOLEY & PECORA CO., LPA Matthew A. Dooley (OH 0081482)* Anthony R. Pecora (OH 0069660)* 5455 Detroit Road Sheffield Village, Ohio 44054 Tel: (440) 930-4001 Facsimile: (440) 930-7208 Email: [email protected] [email protected] Counsel for Plaintiff and the Putative Class *Pro Hac Admission to be filed G:\28\28142-1\Complaint Robertson v Allied Solutions LLC (8 20 15).docx

consumer fraud

9kS-AokBRpLueGJZKLst

GRANOVSKY & SUNDARESH PLLC BENJAMIN R. DELSON (Ohio Bar # 97257) ALEXANDER GRANOVSKY (Ohio Bar # 92900) 600 Superior Ave. East, Suite 1300 Cleveland, Ohio 44114 Tel. (216) 600-7994 / Fax (646) 417-5500 [email protected] / [email protected] Attorneys for PLAINTIFF GEORGE CARMICHAEL UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO CASE NO.: 21-cv-01961 GEORGE CARMICHAEL, on behalf of himself and all other persons similarly situated, Plaintiff, COLLECTIVE AND CLASS v. ACTION COMPLAINT with JURY DEMAND RAM JACK OHIO LLC and RICHARD FOLLETT, Defendants. Plaintiff GEORGE CARMICHAEL ("Plaintiff" or "Carmichael"), on behalf of himself and all other persons similarly situated, upon personal knowledge as to himself and upon information and belief as to other matters, by his attorneys, GRANOVSKY & SUNDARESH PLLC, brings this action as an opt-in collective action for violations of the Fair Labor Standards Act, 29 U.S.C. § 201, et. seq., and supporting regulations ("FLSA"), and as an opt-out Rule 23 class action for violations of the Ohio Minimum Fair Wage Standards Act, O.R.C. §§4111.01-4111.99 ("OMFWSA"). NATURE OF ACTION 1. From approximately February 2021 to August 2021, Plaintiff George Carmichael was employed by Defendant Ram Jack Ohio LLC ("Ram Jack"), a company providing foundation inspection and repair services in northeastern Ohio, and by Defendant Richard Follett, the owner and operator of Ram Jack (and, together with Ram Jack, "Defendants"). 2. Carmichael worked long hours for Defendants, doing a little bit of everything: driving Defendants' vehicles, overseeing Defendants' worksites and employees, reading blueprints, operating Defendants' equipment, and generally getting the job done for Defendants. He spent many hours every day travelling to and from worksites to provide services to Defendants' far-flung customers. 3. But, in violation of both the Fair Labor Standards Act, 29 U.S.C. § 201, et. seq., and supporting regulations ("FLSA"), and Ohio Minimum Fair Wage Standards Act, O.R.C. §§4111.01-4111.99 ("OMFWSA"), and as detailed below, Defendants failed to pay Carmichael any wages at all for certain hours that he worked, and failed to pay him overtime wages for hours that he worked past forty in a given week. 4. Upon information and belief, in failing to pay Carmichael, Defendants were merely following company policy: as detailed below, Defendants followed across-the- board pay policies that resulted in none of their hourly employees receiving all of their proper wages under FLSA or OMFWSA. 5. Carmichael, on behalf of himself and all other similarly situated employees and former employees of Defendants, now brings this lawsuit seeking recovery against Defendants for Defendants' violations of the FLSA, and alleges that he and all others who elect to opt into this action pursuant to the collective action provisions of 29 U.S.C. § 216(b) are entitled to recover from Defendants: (1) unpaid wages; (2) unpaid overtime wages; (3) liquidated damages; and (4) attorneys’ fees and costs. 6. Carmichael also brings this lawsuit as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of himself and all other similarly situated employees and former employees of Defendants, seeking recovery against Defendants for Defendants' violation of the OMFWSA, and alleges that he and all other members of the class defined below are entitled to recover from Defendants: (1) unpaid wages; (2) unpaid overtime wages; (3) liquidated damages; and (4) attorneys’ fees and costs. JURISDICTION AND VENUE 7. This Court has subject matter jurisdiction over Plaintiff's FLSA claims pursuant to 28 U.S.C. §§ 1331. 8. This Court has subject matter jurisdiction over Plaintiff's OMFWSA claims pursuant to 28 U.S.C. § 1367. 9. Venue is proper in this district pursuant to 28 U.S.C. § 1391 because a substantial part of the acts or omissions giving rise to the claims herein occurred in this District. THE PARTIES Plaintiff George Carmichael 10. Plaintiff GEORGE CARMICHAEL was and is, at all relevant times, an adult individual residing in the State of Ohio. 11. Plaintiff brings this action as an opt-in collective action pursuant to FLSA, 29 U.S.C. § 216(b), on behalf of himself and all other individuals employed by Defendants in Ohio to perform foundation inspection or repair services within three years of the date this Complaint was filed (the "Collective Action Plaintiffs"). 12. Plaintiff also brings this action as an opt-out class action pursuant to Rule 23 of the Federal Rules of Civil Procedure, on behalf of himself and and all other individuals employed by Defendants in Ohio to perform foundation inspection or repair services within three years of the date this Complaint was filed (the "Ohio Rule 23 Class"). 13. Plaintiff, the Collective Action Plaintiffs, and the Ohio Rule 23 Class are current or former employees of Defendants within the meaning of the FLSA and the OMFWSA. 14. At all relevant times, Plaintiff and similarly situated employees worked in interstate commerce, so as to fall within the protections of the FLSA. 15. A written consent form for George Carmichael to serve as a party plaintiff in this action is attached as Exhibit A to this Complaint. Defendants Ram Jack Ohio LLC and Richard Follett 16. Defendant Ram Jack Ohio LLC ("Ram Jack") is an Ohio corporation, with a principal place of business located at 11709 Old State Rd., Chardon, OH 44024. 17. According to the Ram Jack website, www.ramjack.com, "Ram Jack Ohio provides expert foundation inspection and repair services to commercial and residential customers in Cuyahoga, Lake, Geauga, Summit and surrounding counties." 18. Defendant Richard "Skip" Follett is an adult and a resident of Ohio, who lives at 11709 Old State Rd., Chardon, OH 44024. Mr. Follett runs Ram Jack's operation from the same property where Mr. Follett lives. 19. Mr. Follett is the chief executive, owner and operator of Ram Jack's Chardon, Ohio location. 20. Mr. Follett exercises near complete control over the working conditions of the employees at Ram Jack's Chardon, Ohio location. Mr. Follett determines who is hired, who is fired, what hours each employee will be credited (and not credited) with working, and what they will be paid for their work. Mr. Follett has near complete control over all policies and practices, including all scheduling and payroll policies. 21. Upon information and belief, at all times relevant to this Complaint, Defendants' annual revenue has been not less than $500,000.00. 22. At all times relevant to this Complaint, Defendants were and are an “enterprise” as defined by the FLSA, and an “enterprise engaged in commerce” under the FLSA, and employers engaged in interstate commerce and/or the production of goods for commerce within the meaning of the FLSA. 23. At all relevant times, Defendant Ram Jack and Defendant Follett were the employers of Plaintiff, the Collective Action Plaintiffs and the members of the Ohio Rule 23 Class within the meaning of the FLSA and OMFWSA. 24. Defendants caused the violations set forth in this Complaint. STATEMENT OF FACTS 25. In about February 2021, Defendants hired Plaintiff George Carmichael. 26. Carmichael's responsibilities included performing foundation inspection or repair services for clients of Ram Jack. 27. Carmichael's wage was $20 per hour. 28. The man in charge of Ram Jack's Chardon Ohio location is Richard "Skip" Follett. Mr. Follett runs Ram Jack's operation from the same property in Chardon, Ohio where Mr. Follett lives. 29. On a typical day, Carmichael arrived at Ram Jack's Chardon location at about 6:45 or 7:00 am. 30. Shortly after arrival, Carmichael would clock in using an electronic punch system operated by Defendants. 31. Shortly after 7:00am there would be a morning meeting, during which Defendants' employees, including Carmichael, would receive instructions about what jobs would be performed that day, who would perform work on which job site, what equipment and materials would be needed for each job site, and what repairs or maintenance were needed on equipment or trucks. 32. These morning meetings lasted approximately half an hour, sometimes longer. 33. At the conclusion of the morning meeting, the workers would begin loading equipment and materials onto trucks. This work typically lasted at least another half hour, sometimes longer 34. Typically, at about 8 in the morning, the morning meeting would be concluded, the trucks would be loaded, and the Defendants' workers would be departing for their job sites in the company's vehicles. 35. It was common for job sites to be located an hour's drive or further from Ram Jack's Chardon location. 36. Defendants made it mandatory for their workers: (1) to congregate at Ram Jack's Chardon location first thing in the morning, (2) to attend the morning meeting to learn about their assignments, (3) to load the trucks and perform other preparatory work to get ready for their assignment, and (4) to use Defendants' vehicles to travel to job sites with their co-workers. 37. Once at a job site, Carmichael would do a little bit of everything: oversee other of Defendants' employees, read blueprints, operate Defendants' equipment, and generally get the job done for Defendants' customers. 38. Skip Follett instructed Carmichael and other of Defendants' employees to make note, including on their time cards, of what time they left a job site for the day. 39. When he was done for the day at a job site, Carmichael was required to return to Ram Jack's Chardon location in Defendants' vehicle. 40. Upon arrival at Ram Jack's Chardon location, Carmichael would perform a further 15 or 20 minutes of work, unloading the truck and cleaning the truck and equipment. 41. At the end of his work day in Chardon, Carmichael would clock out using the electronic punch system operated by Defendants. 42. Depending on the nature of the job he had been assigned to that day, Carmichael might punch out as early as about 3pm, or as late as 7pm or later. 43. Carmichael's average day was about 10 hours long, but occasionally it was much longer. 44. For example, in about June of 2021, Carmichael was assigned to a job in Port Clinton, a long drive from Chardon. On the two days that he worked on that Port Clinton job, he worked from about 5am until about 9pm. 45. Carmichael typically worked five or six days a week. 46. Carmichael typically worked fifty hours a week, but occasionally he worked much more. 47. For example, there were weeks when Carmichael worked in excess of eighty hours. 48. Carmichael was not paid for all of the hours he worked. For example, in a week where he worked in excess of forty hours, he might be paid for less than forty hours. 49. Carmichael was not paid overtime for all the overtime hours he worked. For example, in a week where he worked in excess of forty hours, he might be paid for more than forty hours, but at a "straight time" rate of $20/hr. for every one of those hours (as opposed to being paid time-and-a-half, or $30/hr., for every hour after forty). 50. Defendants did not maintain consistent nor accurate records of their employees' hour or pay. 51. Except for those times that an employee repeatedly insisted on receiving a pay stub, Defendants would not provide employees with any written accounting of their hours and pay. 52. Indeed, rather than preserve them as required by law, Defendants regularly discarded employees' time cards. Carmichael personally saw employee time cards being disposed of in Defendants' trash cans. 53. Skip Follett gave changing and inconsistent explanations for how his employees were paid: a. Mr. Follett stated that employees would be paid for time driving Ram Jack vehicles, but would not be paid for time riding in Ram Jack vehicles. b. Upon information and belief, Mr. Follett stated to some employees that they would be paid for time riding in Ram Jack vehicles on the way to job sites, but would not be paid for time riding back from job sites. c. Mr. Follett stated that employee hours would be tracked in two separate tallies, with one tally for hours at the Chardon location and at actual job sites, and a second tally for hours driving or riding Ram Jack vehicles. Upon information and belief, the purpose of tallying these hours separately was to reduce below forty the total number of hours in any given tally, and thus justify the decision not to pay overtime. d. Mr. Follett stated that employees would not be paid overtime, but would be paid straight time for all hours worked in a week. e. Mr. Follett stated that employees were not permitted to take lunch breaks. Mr. Follett stated that employees would be docked one hour of pay for taking a lunch break, even if the lunch break lasted less than one hour. f. Mr. Follett stated that employees' pay would be docked to compensate for alleged damages to Ram Jack equipment. 54. Upon information and belief, Mr. Follett also engaged in other practices designed to not pay his employees. 55. Upon information and belief, for the course of several pay periods in early 2021, Defendants ceased paying some employees entirely. Mr. Follett told employees he was "banking hours," and that Defendants would pay them for their hours worked at some later point in time. Upon information and belief, Defendants did not pay those employees for those hours. 56. Carmichael repeatedly complained to Skip Follett about improper pay. 57. Despite Carmichael's complaints, Defendants did not correct its pay practices. 58. Carmichael's last day working for Defendants was August 13, 2021. 59. At the time that he ceased working for Defendants, Defendants remained in possession of certain tools and equipment owned by Carmichael, including a MAC air ratchet (worth about $300), a green drill bit case with bits (worth about $60), and a heavy chain and lock (worth about $80). As of the date of this Complaint, those items have not been returned to Carmichael. COLLECTIVE ACTION ALLEGATIONS 60. Plaintiff incorporates by reference the facts and allegations of the preceding paragraphs. 61. All of Defendants' laborers were subject to the same illegal pay practices that Carmichael was subject to. 62. Carmichael therefore seeks to prosecute his FLSA claims as a collective action on behalf of all persons similarly situated, that is: all persons who are, or were formerly, employed by Defendants in Ohio, from three years before the filing of the Complaint in this case to the entry of judgment in this case (the “Collective Action Period”), to perform foundation inspection or repair services (the “Collective Action Plaintiffs”). 63. At all relevant times, Carmichael and the Collective Action Plaintiffs have been subjected to wage and hour policies implemented by Defendants that culminated in a willful failure and refusal to pay Carmichael and the Collective Action Plaintiffs the minimum wage and/or proper overtime wages. 64. Specifically, during the Collective Action Period Carmichael and the Collective Action Plaintiffs were employed by Defendants, and regularly worked in excess of forty hours per workweek for Defendants. Defendants willfully violated the rights of Carmichael and the Collective Action Plaintiffs under the FLSA by not paying Carmichael and the Collective Action Plaintiffs (i) the federal minimum wage for all hours worked for Defendants, and (ii) overtime wages equal to one-and-one-half their normal hourly wage for all hours worked for Defendants in excess of forty hours in a workweek. 65. The Collective Action Plaintiffs are readily ascertainable. For purposes of notice and other purposes related to this action, their names and addresses are readily available from the Defendant. Notice can be provided to the Collective Action Plaintiffs via first class mail to the last address known to Defendant, and via text to the last known cell phone number known to Defendant. 66. The collective action is so numerous that joinder of all Plaintiffs is impracticable. Although the precise number of such persons is unknown, and the facts on which the calculation of that number are presently under the sole control of the Defendant, upon information and belief there are more than twenty Plaintiffs of the collective action who worked for Defendants during the Collective Action Period as non-exempt hourly employees, most of whom would not be likely to file individual suits because they lack adequate financial resources, access to attorneys or knowledge of their claims. 67. Carmichael will fairly and adequately protect the interests of the Collective Action Plaintiffs: Carmichael has retained counsel that is experienced and competent in the fields of employment law and collective action litigation. Carmichael has no interests that are contrary to or in conflict with the Collective Action Plaintiffs. 68. The Collective Action Plaintiffs are similarly situated to Carmichael in that, upon information and belief, Defendants had a policy and practice of willfully disregarding and purposefully evading recordkeeping requirements of the FLSA and OMFWSA by failing to maintain accurate and complete records of hours and pay. 69. The Collective Action Plaintiffs are also similarly situated to Carmichael in that, upon information and belief, Defendants had a policy and practice of not paying employees at all for certain hours of work, including hours spent in transit, and hours docked for lunch. 70. The Collective Action Plaintiffs are also similarly situated to Carmichael in that, upon information and belief, Defendants had a policy and practice of not paying employees overtime premium wages. 71. Upon information and belief, these practices by Defendants were done willfully to disguise the actual wages and overtime wages due Defendants' employees. 72. A collective action is superior to other available methods for the fair and efficient adjudication of this controversy, since joinder of all Collective Action Plaintiffs is impracticable. Furthermore, inasmuch as the damages suffered by individual Collective Action Plaintiffs might be relatively small, the expense and burden of individual litigation make it virtually impossible for the Plaintiffs of the collective action to individually seek redress for the wrongs done to them. There will be no difficulty in the management of this action as a collective action. 73. Questions of law and fact common to the members of the collective action predominate over questions that may affect only individual Plaintiffs because Defendants acted on grounds generally applicable to all Plaintiffs. Among the common questions of law and fact common to all Plaintiffs are: a. Whether Defendants "employed" Carmichael and the Collective Action Plaintiffs within the meaning of the FLSA; b. Whether Defendants failed to keep true and accurate records of hours worked by, and wages paid to, Carmichael and the Collective Action Plaintiffs; c. What proof of hours worked is sufficient, where the employer fails in its duty to maintain records of such hours; d. Under what circumstances an employer need and need not pay an employee for time spent in transit, including under the Portal-to-Portal Act; e. Whether Defendants failed to pay Carmichael and the Collective Action Plaintiffs for all hours of work; f. Whether Defendants failed to pay Carmichael and the Collective Action Plaintiffs overtime premium wages for hours worked in excess of forty hours a week; g. Whether Defendants' violations of the FLSA are willful as that term is used in the context of those statutes; h. Whether Defendants are liable for all damages claimed hereunder, including but not limited to compensatory, liquidated and statutory damages, interests, costs and disbursements and attorneys’ fees. 74. Carmichael knows of no difficulty that will be encountered in the management of this litigation that would preclude its maintenance as a collective action. 75. Carmichael has consented in writing to be a part of this action pursuant to 29 U.S.C. §216(b). Carmichael's signed consent form is attached as Exhibit A. OHIO CLASS ACTION ALLEGATIONS 76. Plaintiff incorporates by reference the facts and allegations of the preceding paragraphs. 77. All of Defendants' laborers were subject to the same illegal pay practices that Carmichael was subject to. 78. Carmichael therefore seeks to prosecute his OMFWSA claims both individually and as a class action pursuant to Rule 23 (a) and (b) of the Federal Rules of Civil Procedure on behalf of all similarly situated individuals in the State of Ohio, that is: all persons who are, or were formerly, employed by Defendants in Ohio, from three years before the filing of the Complaint in this case to the entry of judgment in this case (the “Class Period”), to perform foundation inspection or repair services (the “Ohio Rule 23 Class”). 79. The members of the proposed Ohio Rule 23 Class are so numerous that joinder of all members is impractical and inefficient such that the requirements of Rule 23(a)(1) are met. Although the precise number of such persons is unknown, and the facts on which the calculation of that number are presently under the sole control of the Defendant, upon information and belief there are more than twenty member of the Ohio Rule 23 Class. 80. There are common questions of law and fact affecting the member of the Ohio Rule 23 Class, including: a. Whether Defendants"employed" Carmichael and the members of the Ohio Rule 23 Class within the meaning of the OMFWSA; b. Whether Defendants failed to keep true and accurate records of hours worked by, and wages paid to, Carmichael and the members of the Ohio Rule 23 Class; c. What proof of hours worked is sufficient, where the employer fails in its duty to maintain records of such hours; d. Under what circumstances an employer need and need not pay an employee for time spent in transit under the OMFWSA; e. Whether Defendants failed to pay Carmichael and the members of the Ohio Rule 23 Class for all hours of work; f. Whether Defendants failed to pay Carmichael and the members of the Ohio Rule 23 Class overtime premium wages for hours worked in excess of forty hours a week; g. Whether Defendants' violations of the OMFWSA are willful as that term is used in the context of those statutes; h. Whether Defendants are liable for all damages claimed hereunder, including but not limited to compensatory, liquidated and statutory damages, interests, costs and disbursements and attorneys’ fees. The requirements of Rule 23(a)(2) are met. 81. Carmichael's claims are typical of the claims of the Rule 23 Class as a whole. Carmichael and the Ohio Rule 23 Class have suffered harm due to Defendants' failure to pay them the Ohio minimum wage for all hours worked, and due to Defendants' failure to pay them overtime compensation equal to one-and-one-half their normal hourly wage for all hours worked in excess of forty hours in a workweek. The requirements of Rule 23(a)(3) are met. 82. Carmichael will fairly and adequately protect the interests of the Collective Action Plaintiffs: Carmichael has retained counsel that is experienced and competent in the fields of employment law and collective action litigation. Carmichael has no interests that are contrary to or in conflict with the Collective Action Plaintiffs. The requirements of Rule 23(a)(4) are met. 83. A class action is superior to other available methods for the fair and efficient adjudication of this controversy, since joinder of all Collective Action Plaintiffs is impracticable. Furthermore, inasmuch as the damages suffered by individual Collective Action Plaintiffs might be relatively small, the expense and burden of individual litigation make it virtually impossible for the Plaintiffs of the collective action to individually seek redress for the wrongs done to them. In addition, class certification is superior because it will obviate the need for unduly duplicative litigation that might result in inconsistent judgments about Defendants' practices. Certification under Rule 23(b)(3) is appropriate. 84. There will be no difficulty in the management of this action as a collective action. 85. Plaintiff intends to send notice to all members of the proposed Ohio Rule 23 Class to the extent required by Rule 23. COUNT ONE On Behalf of Plaintiff and the Collective Action Plaintiffs Under the FLSA 86. Plaintiff George Carmichael, on behalf of himself and the Collective Action Plaintiffs, repeats, realleges, and incorporates by reference the foregoing allegations as if set forth fully and again herein. 87. Carmichael and the Collective Action Plaintiffs were not paid the federal minimum wage for all hours worked for Defendants. 88. Carmichael and the Collective Action Plaintiffs were not paid one-and-one-half times their hourly wage for all hours worked for Defendants in excess of forty hours in a workweek. 89. As a result of Defendants' willful failure to pay Plaintiff George Carmichael and each of the Collective Action Plaintiffs wages, including overtime wages, Defendants violated the FLSA, 29 U.S.C. §201 et. seq.. 90. The foregoing conduct, as alleged, constitutes a willful violation of the FLSA within the meaning of 29 U.S.C. §255(a). 91. Due to Defendants' FLSA violations, Plaintiff and the Collective Action Plaintiffs are entitled to recover from Defendants unpaid compensation and unpaid overtime compensation, in an amount to be determined at trial, and an additional equal amount as liquidated damages, plus interest, reasonable attorneys’ fees, and costs and disbursements of this action, pursuant to 29 U.S.C. § 216(b). COUNT TWO On Behalf of Plaintiff and the Ohio Rule 23 Class Under the OMFWSA 92. Plaintiff George Carmichael, on behalf of himself and the Ohio Rule 23 Class, repeats, realleges, and incorporates by reference the foregoing allegations as if set forth fully and again herein. 93. Carmichael and the Ohio Rule 23 Class were not paid the Ohio minimum wage for all hours worked for Defendants. 94. Carmichael and the Ohio Rule 23 Class were not paid one-and-one-half times their hourly wage for all hours worked for Defendants in excess of forty hours in a workweek. 95. As a result of Defendants' failure to pay Plaintiff George Carmichael and the members of the Ohio Rule 23 Class wages, including overtime wages, Defendants violated the OMFWSA, O.R.C. §§4111.01 et. seq.. 96. The foregoing conduct, as alleged, constitutes a willful violation of the law, within the meaning of the OMFWSA, O.R.C. §4111.14(J). 97. Due to Defendants' OMFWSA violations, Plaintiff and the members of the Ohio Rule 23 Class are entitled to recover from Defendants unpaid compensation and unpaid overtime compensation, in an amount to be determined at trial, plus liquidated damages as permitted by OMFWSA, plus interest, reasonable attorneys’ fees, and costs and disbursements of this action, pursuant to OMFWSA. PRAYER FOR RELIEF WHEREFORE, Plaintiff George Carmichael, on behalf of himself and the Collective Action Plaintiffs, respectfully requests that this Court grant the following relief: (a) Designation of this action as a collective action on behalf of the Collective Action Plaintiffs and prompt issuance of notice pursuant to 29 U.S.C. § 216(b) to all similarly situated Plaintiffs, apprising them of the pendency of this action, permitting them to assert timely FLSA claims in this action by filing individual Consents to Sue pursuant to 29 U.S.C. §216(b), and appointing Plaintiff George Carmichael and his counsel to represent the Collective Action Plaintiffs; (b) Award Plaintiff and the Collective Action Plaintiffs compensatory damages for unpaid wages, including unpaid wages at the statutory overtime rate, due to Plaintiff and the Collective Action Plaintiffs under the FLSA; (c) Award Plaintiff and the Collective Action Plaintiffs liquidated damages as a result of Defendants' willful failure to pay wages and overtime wages under the FLSA; (d) Award Plaintiff and the Collective Action Plaintiffs interest (including pre- and post-judgment interest); (e) Award Plaintiff and the Collective Action Plaintiffs their costs of this action, including reasonable attorneys’ fees; and (f) Such other and further relief as to this Court appears necessary and proper. AND WHEREFORE, Plaintiff George Carmichael, on behalf of himself and on behalf of the Ohio Rule 23 Class, respectfully requests that this Court grant the following relief: (a) Certify this action as a class action, pursuant to Rule 23 of the Federal Rules of Civil Procedure, on behalf of the Ohio Rule 23 Class; (b) Appoint Plaintiff George Carmichael as Class Representative and appoint his counsel as Class Counsel; (c) Award Plaintiff and the members of the Ohio Rule 23 Class compensatory damages for unpaid wages, including unpaid wages at the statutory overtime rate, due to Plaintiff and the Collective Action Plaintiffs under the OMFWSA; (d) Award Plaintiff and the members of the Ohio Rule 23 Class liquidated damages as a result of Defendants' willful failure to pay wages under the OMFWSA; (e) Award Plaintiff and the members of the Ohio Rule 23 Class interest (including pre- and post-judgment interest); (f) Award Plaintiff and the members of the Ohio Rule 23 Class their costs of this action, including reasonable attorneys’ fees; and (g) Such other and further relief as to this Court appears necessary and proper. AND WHEREFORE, Plaintiff George Carmichael, on behalf of himself, respectfully requests that this Court order the return of his tools and equipment in Defendants' possession. DEMAND FOR JURY TRIAL Plaintiff, by and through his undersigned counsel, hereby demands a jury trial on all causes of actions and claims for which he has a right to a jury trial. Dated: October 12, 2021 Respectfully Submitted, GRANOVSKY & SUNDARESH PLLC By: BENJAMIN R. DELSON (Ohio Bar # 97257) ALEXANDER GRANOVSKY (Ohio Bar # 92900) GRANOVSKY & SUNDARESH PLLC 600 Superior Ave. East, Suite 1300 Cleveland, Ohio 44114 Tel. (216) 600-7994 / Fax (646) 417-5500 [email protected] / [email protected] Attorneys for Plaintiff George Carmichael EXHIBIT A GEORGE CARMICHAEL, on behalf of himself and all other persons similarly situated, Plaintiff, CONSENT TO BE PARTY PLAINTIFF v. RAM JACK OHIO LLC and RICHARD FOLLETT, Defendants. GEORGE CARMICHAEL states: 1. I am a plaintiff in the above-captioned action. My address is 28 Leslie Street, Apt. 4, Geneva OH 44041. 2. Pursuant to 29 USC §216(b), this action asserts claims under the Fair Labor Standards Act (“FLSA”), 29 USC §201 et seq., on behalf of myself and all other employees similarly situated. Pursuant to 29 USC §§216(b) and 256, I consent to being a party plaintiff in this action and to the filing and prosecution of the above referenced FLSA claims on my behalf and on behalf of all other employees similarly situated. ���������� Dated: ____________, 2021 __________________________ GEORGE CARMICHAEL

employment & labor

8cH3DIcBD5gMZwczOQek

SOUTHERN DISTRICT OF NEW YORK CHRISTOPHER SCHIRO, Individually and on Behalf of All Others Similarly Situated, Plaintiff, Case No. CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS JURY TRIAL DEMANDED vs. CEMEX, S.A.B. de C.V., FERNANDO A. GONZÁLEZ OLIVIERI and JOSÉ ANTONIO GONZALEZ FLORES, Defendants Plaintiff Christopher Schiro (“Plaintiff”), individually and on behalf of all other persons similarly situated, by Plaintiff’s undersigned attorneys, for Plaintiff’s complaint against Defendants (defined below), alleges the following based upon personal knowledge as to Plaintiff and his own acts, and information and belief as to all other matters, based upon, inter alia, the investigation conducted by and through Plaintiff’s attorneys, which included, among other things, a review of the Defendants’ public documents, conference calls and announcements made by Defendants, United States Securities and Exchange Commission (“SEC”) filings, wire and press releases published by and regarding Cemex, S.A.B. de C.V. (“Cemex” or the “Company”), analysts’ reports and advisories about the Company, and information readily obtainable on the Internet. Plaintiff believes that substantial evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. NATURE OF THE ACTION 1. This is a federal securities class action on behalf of a class consisting of all persons other than Defendants who purchased or otherwise acquired securities of Cemex between August 14, 2014 and March 13, 2018, both dates inclusive (the “Class Period”). Plaintiff seeks to recover compensable damages caused by Defendants’ violations of the federal Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder. 2. Cemex S.A.B. de C.V. is a global building materials company that produces, distributes, and markets cement, ready-mix concrete, aggregates, and related building materials. Cemex operates throughout the Americas, Europe, Africa, the Middle East, and Asia. 3. Founded in 1906, the Company is headquartered in San Pedro Garza, Mexico, and its American depositary receipt (“ADR”) trades on the New York Stock Exchange (“NYSE”) under the ticker symbol “CX.” 4. Throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Cemex executives had engaged in an unlawful bribery scheme in connection with the Company’s business dealings in Colombia; (ii) discovery of the foregoing conduct would likely subject the Company to heightened regulatory scrutiny and potential criminal sanctions; (iii) the Company lacked adequate internal controls over financial reporting; and (iv) as a result, Cemex’s public statements were materially false and misleading at all relevant times. 5. On September 23, 2016, post-market, Cemex disclosed the Company’s dismissal of two senior executives after an internal probe found that payments worth $20 million relating to a land deal in Colombia had breached company protocols. 6. On this news, Cemex’s American depositary receipt price fell $0.17, or 2.28%, to close at $7.26 on September 26, 2016. 7. On December 9, 2016, Cemex disclosed receipt of a subpoena from the SEC seeking information about irregular payments made at the Company’s Colombia unit. 2 investigating the Company over payments made by the Company related to a cement plant it is building in Colombia to determine whether any violations of federal bribery laws occurred. 9. On this news, Cemex’s ADR price fell $0.12, or 1.64%, to close at $7.21 on March 14, 2018. 10. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. JURISDICTION AND VENUE 11. The claims asserted herein arise under and pursuant to §§10(b) and 20(a) of the Exchange Act (15 U.S.C. §§78j(b) and §78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. §240.10b-5). 12. This Court has jurisdiction over the subject matter of this action under 28 U.S.C. §1331 and §27 of the Exchange Act. 13. Venue is proper in this Judicial District pursuant to §27 of the Exchange Act (15 U.S.C. §78aa) and 28 U.S.C. §1391(b) as Cemex’s ADRs trade on the NYSE, located within this Judicial District. 14. In connection with the acts, conduct and other wrongs alleged in this Complaint, Defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including but not limited to, the United States mail, interstate telephone communications and the facilities of the national securities exchange. 3 15. Plaintiff, as set forth in the accompanying Certification, purchased Cemex securities at artificially inflated prices during the Class Period and was damaged upon the revelation of the alleged corrective disclosure. 16. Defendant Cemex is headquartered in Mexico, with the Company’s principal executive offices located at Avenida Ricardo Margain Zozaya, 325, Colonia Valle del Campestre, San Pedro Garza Garcia, NL 66265 Mexico. Cemex’s securities trade on the NYSE under the ticker symbol “CX.” 17. Defendant Fernando A. González Olivieri (“Olivieri”) has served at all relevant times as the Company’s Chief Executive Officer (“CEO”) and Director. 18. Defendant José Antonio González Flores (“Flores”) has served at all relevant times as the Company’s Chief Financial Officer (“CFO”) and Executive Vice President of Finance and Administration. 19. The Defendants referenced above in ¶¶ 17-18 are sometimes referred to- herein as the “Individual Defendants.” 20. The Individual Defendants possessed the power and authority to control the contents of Cemex’s SEC filings, press releases, and other market communications. The Individual Defendants were provided with copies of the Company’s SEC filings and press releases alleged herein to be misleading prior to or shortly after their issuance and had the ability and opportunity to prevent their issuance or to cause them to be corrected. Because of their positions with the Company, and their access to material information available to them but not to the public, the Individual Defendants knew that the adverse facts specified herein had not been disclosed to and were being concealed from the public, and that the positive representations 4 the false statements and omissions pleaded herein. SUBSTANTIVE ALLEGATIONS Background 21. Cemex S.A.B. de C.V. is a global building materials company that produces, distributes, and markets cement, ready-mix concrete, aggregates, and related building materials. Cemex operates throughout the Americas, Europe, Africa, the Middle East, and Asia. Materially False and Misleading Statements Issued During the Class Period 22. The Class Period begins on August 14, 2014, when Cemex issued a press release entitled “Cemex Announces New CLH Cement Plant in Colombia,” announcing the construction of a cement plant in Colombia. The press release stated in relevant part: MONTERREY, MEXICO. AUGUST 14, 2014. – CEMEX, S.A.B. de C.V. (“CEMEX”) (NYSE: CX) announced today that its subsidiary, CEMEX Latam Holdings, S.A. (“CLH”) (BVC: CLH), will begin the construction of a cement plant in Colombia. The total investment is expected to reach approximately US$340 million and to increase CLH’s cement production capacity in Colombia from 4.5 million to close to 5.5 million tons per year. The first phase of this project includes the construction of a new grinding mill that is expected to start cement production during the second quarter of 2015. The rest of the plant will be completed during the second half of 2016. The plant will operate using modern and efficient technology to comply with high quality and environmental standards. This facility will be strategically located in the Antioquia department. This region has enjoyed high levels of economic growth and is expected to further benefit from the construction of infrastructure projects under the highway concession program in Colombia. 23. On April 27, 2015, Cemex filed an annual report on Form 20-F with the SEC, announcing the Company’s financial and operating results for the quarter and fiscal year ended December 31, 2014 (the “2014 20-F”). For fiscal year 2014, Cemex reported a net loss of 5 of $849.24 million, or $0.06 per diluted share, on revenue of $15.33 billion for fiscal year 2013. 24. In the 2014 20-F, the Company stated in relevant part: Item 16B—Code of Ethics We have adopted a written code of ethics that applies to all employees, including our principal executive officer, principal financial officer and principal accounting officer, to ensure that all of our employees abide by the same high standards of conduct in their daily interactions. Our code of ethics provides the following main guidelines: *** (viii) Anti-bribery: we reject all forms of corruption; paying or receiving bribes is illegal and highly unethical, and can lead to severe consequences for all parties involved, including jail for individuals and harsh penalties to our company; we are committed to conducting our business with transparency and integrity, and try to ensure that all transactions comply with anti-bribery laws, including requirements to maintain complete and accurate books and records; *** We ensure awareness and enforcement of our code of ethics through our ethics committees, training programs, and secured internal communications channels. We periodically evaluate and update the provisions of our code of ethics. You may view our code of ethics in the corporate governance section of our website (www.cemex.com)... (Emphasis added.) 25. The Company’s Code of Ethics and Business Conduct (latest version available on the Company’s website) stated in relevant part: We reject all forms of corruption. Paying or receiving bribes is illegal and highly unethical, and can lead to severe consequences for all parties involved, including jail for individuals and harsh penalties for the Company. We are committed to conducting our business with transparency and integrity, and will therefore ensure that all transactions comply with anti-bribery laws, including requirements to maintain complete and accurate books and records. 26. The 2014 20-F contained signed certifications pursuant to the Sarbanes-Oxley Act of 2002 (“SOX”) by the Individual Defendants, stating that the information contained in the 6 cash flows of the company as of, and for, the periods presented in this report.” 27. On April 22, 2016, Cemex filed an annual report on Form 20-F with the SEC, announcing the Company’s financial and operating results for the quarter and fiscal year ended December 31, 2015 (the “2015 20-F”). For fiscal year 2015, Cemex reported net income of $75.83 million, or $0.01 per diluted share, on revenue of $13.91 billion, compared to a net loss of $510.06 million, or $0.04 per diluted share, on revenue of $15.79 billion. 28. In the 2015 20-F, the Company stated in relevant part: Item 16B—Code of Ethics We have adopted a written code of ethics that applies to all employees, including our principal executive officer, principal financial officer and principal accounting officer, to ensure that all of our employees abide by the same high standards of conduct in their daily interactions. Our code of ethics provides the following main guidelines: *** (viii) Anti-bribery: we reject all forms of corruption; paying or receiving bribes is illegal and highly unethical, and can lead to severe consequences for all parties involved, including jail for individuals and harsh penalties to our company; we are committed to conducting our business with transparency and integrity, and try to ensure that all transactions comply with anti-bribery laws, including requirements to maintain complete and accurate books and records; *** We ensure awareness and enforcement of our code of ethics through our ethics committees, training programs, and secured internal communications channels. We periodically evaluate and update the provisions of our code of ethics. You may view our code of ethics in the corporate governance section of our website (www.cemex.com)... (Emphasis added.) 29. Cemex’s Code of Ethics and Conduct contained the representations described supra at ¶25. 7 Defendants, stating that the information contained in the 2015 20-F “fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report.” 31. The statements referenced in ¶¶ 22-30 above were materially false and/or misleading because they misrepresented and/or failed to disclose the following adverse facts pertaining to the Company’s business, operational and financial results, which were known to Defendants or recklessly disregarded by them. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Cemex executives had engaged in an unlawful bribery scheme in connection with the Company’s business dealings in Colombia; (ii) discovery of the foregoing conduct would likely subject the Company to heightened regulatory scrutiny and potential criminal sanctions; (iii) the Company lacked adequate internal controls over financial reporting; and (iv) as a result, Cemex’s public statements were materially false and misleading at all relevant times. The Truth Begins to Emerge 32. On September 23, 2016, post-market, Cemex issued a press release, filed on Form 6-K with the SEC, announcing the dismissal of two senior executives after an internal probe found that payments worth $20 million relating to a land deal in Colombia had breached company protocols. The press release stated in part: On September 23, 2016, CEMEX, S.A.B. de C.V. (NYSE: CX) (“CEMEX”) informed the Mexican Stock Exchange (Bolsa Mexicana de Valores) that CEMEX’s indirect subsidiary, CEMEX Latam Holdings, S.A. (“CEMEX Latam”), informed the Colombian Stock Exchange (Bolsa de Valores de Colombia) and Colombian Financial Superintendency (Superintendencia Financiera de Colombia) that with respect to the matter previously reported by CEMEX Latam regarding the new cement plant being built by CEMEX Colombia S.A. (“CEMEX Colombia”) in the department of Antioquia in the municipality of Maceo, Colombia 8 (“Maceo”), internal audits and investigations performed in accordance with the Corporate Governance policies and Code of Ethics of CEMEX Latam and CEMEX, have raised questions about the payment procedures related to the acquisition of the land and mining rights and benefits of the free tax zone in which the new cement plant is being built in Maceo. These payments did not adhere to CEMEX’s and CEMEX Latam’s established protocols. As officers responsible for the implementation and execution of the above referenced payments, two members of senior management of CEMEX Latam and CEMEX Colombia (the Vice President of Planning of CEMEX Latam and CEMEX Colombia and the General Counsel of CEMEX Latam Holdings and CEMEX Colombia), have been terminated effective immediately. In addition, the Chief Executive Officer of CEMEX Latam/Director of CEMEX Colombia has resigned, effective today. It is expected that in the following days, Mr. Jaime Muguiro Domínguez, the current President of CEMEX’s operations in South, Central America and the Caribbean, and also current Chairman of the Board of Directors of CEMEX Latam who has worked at CEMEX for approximately 20 years, will assume the duties of Chief Executive Officer of CEMEX Latam and Director of CEMEX Colombia. CEMEX Colombia and CEMEX Latam have brought this matter to the attention of the Colombian Attorney General and presented to him the results of their audits and investigations concerning these payments, which were made to a non-governmental third party in the amount of approximately U.S.$20 million. CEMEX Latam and CEMEX Colombia have pledged to cooperate with the Colombian Attorney General, as required. As of today, CEMEX is not able to assess the likelihood that these investigations and the termination and departure of the above mentioned officers will lead to any actions that could impact CEMEX. If any legal or administrative actions are brought against CEMEX Latam and these are ultimately resolved against CEMEX Latam, these actions are currently not expected to have a material adverse impact on CEMEX’s results of operations, liquidity and financial condition. 33. On this news, Cemex’s ADR price fell $0.17, or 2.28%, to close at $7.26 on September 26, 2016. 34. On December 9, 2016, Cemex issued a press release, filed on Form 6-K with the SEC, disclosing receipt of a subpoena from the SEC seeking information about irregular payments made at the Company’s Colombia unit. The press release stated in relevant part: On December 9, 2016, CEMEX, S.A.B. de C.V. (NYSE: CX) (“CEMEX”) informed the Mexican Stock Exchange (Bolsa Mexicana de Valores) that it had received a subpoena from the United States Securities and Exchange Commission (“SEC”) seeking information to determine whether there have 9 been any violations of the U.S. Foreign Corrupt Practices Act (“FCPA”). This subpoena arises from the matter previously reported by CEMEX regarding the new cement plant being built by CEMEX Colombia S.A. (“CEMEX Colombia”) in the department of Antioquia in the municipality of Maceo, Colombia (the “Maceo Project”). This subpoena does not mean that the SEC has concluded that CEMEX or any of its affiliates has broken the law. As previously disclosed, internal audits and investigations by CEMEX and CEMEX Latam Holdings, S.A. (“CEMEX Latam”) had raised questions about payments relating to the Maceo Project. Those payments, totaling approximately U.S.$20.5 million, were made to a non-governmental third party in connection with the acquisition of the land, mining rights, and benefits of the tax free zone for the Maceo Project. These payments did not adhere to CEMEX’s and CEMEX Latam’s established protocols. As announced on September 23, 2016, the CEMEX Latam and CEMEX Colombia officers responsible for the implementation and execution of the above referenced payments were terminated and the then Chief Executive Officer of CEMEX Latam resigned. CEMEX Latam and CEMEX Colombia had already, in September 2016, brought the matter to the attention of the Colombian Attorney General, so that it could take any actions it deemed appropriate. As per the requirements of the audit committees of CEMEX and CEMEX Latam, CEMEX Colombia has also retained external counsel to assist CEMEX Latam and CEMEX Colombia in their collaboration with the Colombian Attorney General, which is still conducting its investigation. In accordance with CEMEX Latam’s controls and customary procedures, an independent audit team reporting to external legal counsel in Colombia was engaged. CEMEX’s external auditors are also reviewing CEMEX’s internal audit documentation. CEMEX maintains an anti-bribery policy applicable to all of its employees and subsidiaries. CEMEX has been cooperating with the SEC and the Colombian Attorney General and intends to continue cooperating fully with the SEC and the Colombian Attorney General. It is possible that the United States Department of Justice or investigatory entities in other jurisdictions may also open investigations into this matter. To the extent they do so, CEMEX intends to cooperate fully with those inquiries, as well. At this point, CEMEX is unable to predict the duration, scope, or outcome of the SEC investigation or any other investigation that may arise; however, CEMEX does not expect this matter to have a material adverse impact on its consolidated results of operations, liquidity or financial position. 35. Then, on March 14, 2018, Cemex disclosed that the U.S. Department of Justice is investigating the Company over payments made by the Company related to a cement plant it is building in Colombia to determine whether any violations of federal bribery laws occurred. 10 March 14, 2018. 37. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. PLAINTIFF’S CLASS ACTION ALLEGATIONS 38. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who purchased or otherwise acquired Cemex securities traded on the NYSE during the Class Period (the “Class”); and were damaged upon the revelation of the alleged corrective disclosures. Excluded from the Class are Defendants herein, the officers and directors of the Company, at all relevant times, members of their immediate families and their legal representatives, heirs, successors or assigns and any entity in which Defendants have or had a controlling interest. 39. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Cemex securities were actively traded on the NYSE. While the exact number of Class members is unknown to Plaintiff at this time and can be ascertained only through appropriate discovery, Plaintiff believes that there are hundreds or thousands of members in the proposed Class. Record owners and other members of the Class may be identified from records maintained by Cemex or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions. 40. Plaintiff’s claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that is complained of herein. 11 Class and has retained counsel competent and experienced in class and securities litigation. Plaintiff has no interests antagonistic to or in conflict with those of the Class. 42. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are:  whether the federal securities laws were violated by Defendants’ acts as alleged herein;  whether statements made by Defendants to the investing public during the Class Period misrepresented material facts about the financial condition, business, operations, and management of Cemex;  whether Defendants caused Cemex to issue false and misleading financial statements during the Class Period;  whether Defendants acted knowingly or recklessly in issuing false and misleading financial statements;  whether the prices of Cemex securities during the Class Period were artificially inflated because of Defendants’ conduct complained of herein; and  whether the members of the Class have sustained damages and, if so, what is the proper measure of damages. 43. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation make it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. 44. Plaintiff will rely, in part, upon the presumption of reliance established by the fraud-on-the-market doctrine in that: 12  Defendants made public misrepresentations or failed to disclose material facts during the Class Period;  the omissions and misrepresentations were material;  Cemex securities are traded in efficient markets;  the Company’s shares were liquid and traded with moderate to heavy volume during the Class Period;  the Company traded on the NYSE, and was covered by multiple analysts;  the misrepresentations and omissions alleged would tend to induce a reasonable investor to misjudge the value of the Company’s securities; and  Plaintiff and members of the Class purchased and/or sold Cemex securities between the time the Defendants failed to disclose or misrepresented material facts and the time the true facts were disclosed, without knowledge of the omitted or misrepresented facts. 45. Based upon the foregoing, Plaintiff and the members of the Class are entitled to a presumption of reliance upon the integrity of the market. 46. Alternatively, Plaintiff and the members of the Class are entitled to the presumption of reliance established by the Supreme Court in Affiliated Ute Citizens of the State of Utah v. United States, 406 U.S. 128, 92 S. Ct. 2430 (1972), as Defendants omitted material information in their Class Period statements in violation of a duty to disclose such information, as detailed above. COUNT I Violation of Section 10(b) of The Exchange Act and Rule 10b-5 Against All Defendants 47. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. 13 upon Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder by the SEC. 49. During the Class Period, Cemex and the Individual Defendants, individually and in concert, directly or indirectly, disseminated or approved the false statements specified above, which they knew or deliberately disregarded were misleading in that they contained misrepresentations and failed to disclose material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. 50. Cemex and the Individual Defendants violated §10(b) of the 1934 Act and Rule 10b-5 in that they:  employed devices, schemes and artifices to defraud;  made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or  engaged in acts, practices and a course of business that operated as a fraud or deceit upon plaintiff and others similarly situated in connection with their purchases of Cemex securities during the Class Period. 51. Cemex and the Individual Defendants acted with scienter in that they knew that the public documents and statements issued or disseminated in the name of Cemex were materially false and misleading; knew that such statements or documents would be issued or disseminated to the investing public; and knowingly and substantially participated, or acquiesced in the issuance or dissemination of such statements or documents as primary violations of the securities laws. These Defendants by virtue of their receipt of information reflecting the true facts of Cemex, their control over, and/or receipt and/or modification of Cemex allegedly materially misleading statements, and/or their associations with the Company which made them privy to confidential proprietary information concerning Cemex, participated in the fraudulent scheme alleged herein. 14 Company, had actual knowledge of the material omissions and/or the falsity of the material statements set forth above, and intended to deceive Plaintiff and the other members of the Class, or, in the alternative, acted with reckless disregard for the truth when they failed to ascertain and disclose the true facts in the statements made by them or other Cemex personnel to members of the investing public, including Plaintiff and the Class. 53. As a result of the foregoing, the market price of Cemex securities was artificially inflated during the Class Period. In ignorance of the falsity of Cemex’s and the Individual Defendants’ statements, Plaintiff and the other members of the Class relied on the statements described above and/or the integrity of the market price of Cemex securities during the Class Period in purchasing Cemex securities at prices that were artificially inflated as a result of Cemex’s and the Individual Defendants’ false and misleading statements. 54. Had Plaintiff and the other members of the Class been aware that the market price of Cemex securities had been artificially and falsely inflated by Cemex’s and the Individual Defendants’ misleading statements and by the material adverse information which Cemex’s and the Individual Defendants did not disclose, they would not have purchased Cemex’s securities at the artificially inflated prices that they did, or at all. 55. As a result of the wrongful conduct alleged herein, Plaintiff and other members of the Class have suffered damages in an amount to be established at trial. 56. By reason of the foregoing, Cemex and the Individual Defendants have violated Section 10(b) of the 1934 Act and Rule 10b-5 promulgated thereunder and are liable to the plaintiff and the other members of the Class for substantial damages which they suffered in connection with their purchase of Cemex securities during the Class Period. COUNT II 15 Violation of Section 20(a) of The Exchange Act Against The Individual Defendants 57. Plaintiff repeats and realleges each and every allegation contained in the foregoing paragraphs as if fully set forth herein. 58. During the Class Period, the Individual Defendants participated in the operation and management of Cemex, and conducted and participated, directly and indirectly, in the conduct of Cemex’s business affairs. Because of their senior positions, they knew the adverse non-public information regarding the Company’s inadequate internal safeguards in data security protocols. 59. As officers and/or directors of a publicly owned company, the Individual Defendants had a duty to disseminate accurate and truthful information with respect to Cemex’s financial condition and results of operations, and to correct promptly any public statements issued by Cemex which had become materially false or misleading. 60. Because of their positions of control and authority as senior officers, the Individual Defendants were able to, and did, control the contents of the various reports, press releases and public filings which Cemex disseminated in the marketplace during the Class Period. Throughout the Class Period, the Individual Defendants exercised their power and authority to cause Cemex to engage in the wrongful acts complained of herein. The Individual Defendants therefore, were “controlling persons” of Cemex within the meaning of Section 20(a) of the Exchange Act. In this capacity, they participated in the unlawful conduct alleged which artificially inflated the market price of Cemex securities. 61. By reason of the above conduct, the Individual Defendants are liable pursuant to Section 20(a) of the Exchange Act for the violations committed by Cemex. PRAYER FOR RELIEF 16 A. Determining that the instant action may be maintained as a class action under Rule 23 of the Federal Rules of Civil Procedure, and certifying Plaintiff as the Class representative; B. Requiring Defendants to pay damages sustained by Plaintiff and the Class by reason of the acts and transactions alleged herein; C. Awarding Plaintiff and the other members of the Class prejudgment and post- judgment interest, as well as their reasonable attorneys’ fees, expert fees and other costs; and D. Awarding such other and further relief as this Court may deem just and proper. DEMAND FOR TRIAL BY JURY Plaintiff hereby demands a trial by jury. Dated: March 16, 2018 Respectfully submitted, POMERANTZ, LLP /s/Jeremy A. Lieberman Jeremy A. Lieberman J. Alexander Hood II 600 Third Avenue, 20th Floor New York, New York 10016 Telephone: (212) 661-1100 Facsimile: (212) 661-8665 E-mail: [email protected] E-mail: [email protected] POMERANTZ LLP Patrick V. Dahlstrom Ten South La Salle Street, Suite 3505 Chicago, Illinois 60603 Telephone: (312) 377-1181 Facsimile: (312) 377-1184 E-mail: [email protected] BRONSTEIN, GEWIRTZ & GROSSMAN, LLC Peretz Bronstein 60 East 42nd Street, Suite 4600 17 New York, NY 10165 (212) 697-6484 Email: [email protected] Attorneys for Plaintiff 18

securities

esxXDocBD5gMZwczVR5F

Todd M. Friedman (SBN 216752) Adrian R. Bacon (SBN 280332) LAW OFFICES OF TODD M. FRIEDMAN, P.C. 21550 Oxnard St., Suite 780 Woodland Hills, CA 91367 Phone: 323-306-4234 Fax: 866-633-0228 [email protected] [email protected] Attorneys for Plaintiff UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA LOUIS FLOYD and JEFFREY KATZ, individually and on behalf of all others similarly situated, Plaintiff, vs. Case No. 3:21-cv-5548 CLASS ACTION COMPLAINT FOR VIOLATIONS OF: 1. NEGLIGENT VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT [47 U.S.C. §227 ET SEQ.] 2. WILLFUL VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT [47 U.S.C. §227 ET SEQ.] WENIG HOLDINGS LLC DBA INSURANCESERVICES4U.COM; DOES 1 through 10, inclusive, Defendant(s). ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) DEMAND FOR JURY TRIAL Plaintiffs, LOUIS FLOYD and JEFFREY KATZ (“Plaintiff”), on behalf of themselves and all others similarly situated, allege the following upon information and belief based upon personal knowledge: NATURE OF THE CASE 1. Plaintiff brings this action for himself and others similarly situated seeking damages and any other available legal or equitable remedies resulting from the illegal actions of WENIG HOLDINGS, LLC (“Defendant”), in negligently, knowingly, and/or willfully contacting Plaintiff via “telephone facsimile machine” in violation of the Telephone Consumer Protection Act, 47. U.S.C. § 227 et seq. (“TCPA”), thereby causing Plaintiff and all others similarly situated to incur the costs of receiving unsolicited advertisement messages via “telephone facsimile machines” and invading their privacy. JURISDICTION & VENUE 2. Jurisdiction is proper under 28 U.S.C. § 1332(d)(2) because Plaintiffs, residents of California, seek relief on behalf of a Class, which will result in at least one class member belonging to a different state than that of Defendant, a company with its principal place of business and State of Incorporation in Florida state. Plaintiff also seeks up to $1,500.00 in damages for each call in violation of the TCPA, which, when aggregated among a proposed class in the thousands, exceeds the $5,000,000.00 threshold for federal court jurisdiction. Therefore, both diversity jurisdiction and the damages threshold under the Class Action Fairness Act of 2005 (“CAFA”) are present, and this Court has jurisdiction. 3. Venue is proper in the United States District Court for the Northern District of California pursuant to 28 U.S.C. § 1391(b)(2) because Defendant does business within the state of California and Plaintiffs reside within this District. PARTIES 4. Plaintiff, LOUIS FLOYD, is a natural person residing in Santa Clara County, California and is a “person” as defined by 47 U.S.C. § 153 (39). 5. Plaintiff, JEFFREY KATZ, is a natural person residing in San Francisco County, California and is a “person” as defined by 47 U.S.C. § 153 (39). 6. Plaintiffs, LOUIS FLOYD and JEFFREY KATZ will hereinafter be referred to collectively as “Plaintiffs.” 7. Defendant, WENIG HOLDINGS (“Defendant” or “DEFENDANT”), is a marketer of health insurance plans, and is a “person” as defined by 47 U.S.C. § 153 (39). 8. The above named Defendant, and its subsidiaries and agents, are collectively referred to as “Defendants.” The true names and capacities of the Defendants sued herein as DOE DEFENDANTS 1 through 10, inclusive, are currently unknown to Plaintiff, who therefore sues such Defendants by fictitious names. Each of the Defendants designated herein as a DOE is legally responsible for the unlawful acts alleged herein. Plaintiff will seek leave of Court to amend the Complaint to reflect the true names and capacities of the DOE Defendants when such identities become known. 9. Plaintiff is informed and believes that at all relevant times, each and every Defendant was acting as an agent and/or employee of each of the other Defendants and was acting within the course and scope of said agency and/or employment with the full knowledge and consent of each of the other Defendants. Plaintiff is informed and believes that each of the acts and/or omissions complained of herein was made known to, and ratified by, each of the other Defendants. FACTUAL ALLEGATIONS 10. Beginning in or around July 2019, Defendant contacted Plaintiffs on their telephone facsimile numbers ending in -8670 and -3052 in an effort to sell or solicit its services. 11. On or around or around July 18, 2019 Defendant contacted Plaintiff LOUIS FLOYD on his telephone facsimile number ending in -8670 in an effort to sell or solicit its services. 12. On or around July 8, 2020 Defendant contacted Plaintiff JEFFREY KATZ on his telephone facsimile number ending in -3052 in an effort to sell or solicit its services. 13. Defendant’s messages constituted “telephone solicitation” as defined by the TCPA, 47 U.S.C. § 227(a)(4) and “unsolicited advertisement” as defined by the TCPA, 47 U.S.C. § 227(a)(5). 14. Defendant used an “telephone facsimile machine” as defined by 47 U.S.C. § 227(a)(3) to place its calls to Plaintiff seeking to sell or solicit its business services. 15. Defendant’s calls constituted calls that were not for emergency purposes as defined by 47 U.S.C. § 227(b)(1)(A). 16. Defendant’s calls were placed to telephone facsimile numbers assigned to a telephone service for which Plaintiff incurs a charge for incoming messages. 17. Plaintiffs are not customers of Defendant’s services and have never provided any personal information, including their telephone facsimile number(s), to Defendant for any purpose whatsoever. Accordingly, Defendant never received Plaintiffs’ “prior express consent” to receive calls using a telephone facsimile machine pursuant to 47 U.S.C. § 227(b)(1)C). CLASS ALLEGATIONS 18. Plaintiffs bring this action on behalf of themselves and all others similarly situated, as members of the proposed class (hereafter “The Class”) defined as follows: All persons within the United States who received any telephone facsimile messages from Defendant to said person’s telephone facsimile number made through the use of any telephone facsimile machine and such person had not previously consented to receiving such messages and such messages did not contain any opt-out notice within the four years prior to the filing of this Complaint 19. Plaintiffs represent, and are members of, The Class, consisting of All persons within the United States who received any telephone facsimile messages from Defendant to said person’s telephone facsimile number made through the use of any telephone facsimile machine and such person had not previously not provided their telephone facsimile number to Defendant within the four years prior to the filing of this Complaint. 20. Defendant, its employees and agents are excluded from The Class. Plaintiffs do not know the number of members in The Class, but believes the Class members number in the thousands, if not more. Thus, this matter should be certified as a Class Action to assist in the expeditious litigation of the matter. 21. The Class is so numerous that the individual joinder of all of its members is impractical. While the exact number and identities of The Class members are unknown to Plaintiffs at this time and can only be ascertained through appropriate discovery, Plaintiffs are informed and believe and thereon allege that The Class includes thousands of members. Plaintiffs allege that The Class members may be ascertained by the records maintained by Defendant. 22. Plaintiffs and members of The Class were harmed by the acts of Defendant in at least the following ways: Defendant illegally contacted Plaintiffs and Class members via their telephone facsimile numbers thereby causing Plaintiffs and Class members to incur certain charges or reduced telephone facsimile time for which Plaintiffs and Class members had previously paid by having to retrieve or administer messages left by Defendant during those illegal calls, and invading the privacy of said Plaintiffs and Class members. 23. Common questions of fact and law exist as to all members of The Class which predominate over any questions affecting only individual members of The Class. These common legal and factual questions, which do not vary between Class members, and which may be determined without reference to the individual circumstances of any Class members, include, but are not limited to, the following: a. Whether, within the four years prior to the filing of this Complaint, Defendant sent telephone facsimile messages (other than for emergency purposes or made with the prior express consent of the called party and with an opt-out notice contained in the messages) to a Class member using any telephone facsimile machine to any telephone number assigned to a telephone facsimile service; b. Whether Plaintiff and the Class members were damaged thereby, and the extent of damages for such violation; and c. Whether Defendant should be enjoined from engaging in such conduct in the future. 24. As people who received numerous messages from Defendant using a telephone facsimile machine, without Plaintiffs’ prior express consent, Plaintiffs are asserting claims that are typical of The Class. 25. Plaintiffs will fairly and adequately protect the interests of the members of The Class. Plaintiffs have retained attorneys experienced in the prosecution of class actions. 26. A class action is superior to other available methods of fair and efficient adjudication of this controversy, since individual litigation of the claims of all Class members is impracticable. Even if every Class member could afford individual litigation, the court system could not. It would be unduly burdensome to the courts in which individual litigation of numerous issues would proceed. Individualized litigation would also present the potential for varying, inconsistent, or contradictory judgments and would magnify the delay and expense to all parties and to the court system resulting from multiple trials of the same complex factual issues. By contrast, the conduct of this action as a class action presents fewer management difficulties, conserves the resources of the parties and of the court system, and protects the rights of each Class member. 27. The prosecution of separate actions by individual Class members would create a risk of adjudications with respect to them that would, as a practical matter, be dispositive of the interests of the other Class members not parties to such adjudications or that would substantially impair or impede the ability of such non- party Class members to protect their interests. 28. Defendant has acted or refused to act in respects generally applicable to The Class, thereby making appropriate final and injunctive relief with regard to the members of the California Class as a whole. FIRST CAUSE OF ACTION Negligent Violations of the Telephone Consumer Protection Act 47 U.S.C. §227 et seq. 29. Plaintiffs repeat and incorporate by reference into this cause of action the allegations set forth above at Paragraphs 1-28. 30. The foregoing acts and omissions of Defendant constitute numerous and multiple negligent violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227 et seq. 31. As a result of Defendant’s negligent violations of 47 U.S.C. § 227 et seq., Plaintiffs and the Class Members are entitled an award of $500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B). 32. Plaintiffs and the Class members are also entitled to and seek injunctive relief prohibiting such conduct in the future. SECOND CAUSE OF ACTION Knowing and/or Willful Violations of the Telephone Consumer Protection Act 47 U.S.C. §227 et seq. 33. Plaintiffs repeat and incorporate by reference into this cause of action the allegations set forth above at Paragraphs 1-28. 34. The foregoing acts and omissions of Defendant constitute numerous and multiple knowing and/or willful violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227 et 35. As a result of Defendant’s knowing and/or willful violations of 47 U.S.C. § 227 et seq., Plaintiffs and the Class members are entitled an award of $1,500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B) and 47 U.S.C. § 227(b)(3)(C). 36. Plaintiffs and the Class members are also entitled to and seek injunctive relief prohibiting such conduct in the future. PRAYER FOR RELIEF WHEREFORE, Plaintiffs request judgment against Defendant for the following: FIRST CAUSE OF ACTION Negligent Violations of the Telephone Consumer Protection Act 47 U.S.C. §227 et seq. • As a result of Defendant’s negligent violations of 47 U.S.C. §227(b)(1), Plaintiffs and the Class members are entitled to and request $500 in statutory damages, for each and every violation, pursuant to 47 U.S.C. 227(b)(3)(B); and • Any and all other relief that the Court deems just and proper. SECOND CAUSE OF ACTION Knowing and/or Willful Violations of the Telephone Consumer Protection Act 47 U.S.C. §227 et seq. • As a result of Defendant’s willful and/or knowing violations of 47 U.S.C. §227(b)(1), Plaintiffs and the Class members are entitled to and request treble damages, as provided by statute, up to $1,500, for each and every violation, pursuant to 47 U.S.C. §227(b)(3)(B) and 47 U.S.C. §227(b)(3)(C); and • Any and all other relief that the Court deems just and proper. JURY DEMAND 37. Pursuant to the Seventh Amendment to the Constitution of the United States of America, Plaintiffs reserve their right to a jury on all issues so triable. Respectfully Submitted this 20th day of July, 2021. LAW OFFICES OF TODD M. FRIEDMAN, P.C. By: s/ Todd M. Friedman Todd M. Friedman Law Offices of Todd M. Friedman Attorney for Plaintiff

privacy

f_WJE4cBD5gMZwczt_jR

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA O.A., K.S., A.V., G.Z., D.S., C.A., Civil Action No. _______________ Plaintiffs, v. COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF DONALD J. TRUMP as President of the United States 1600 Pennsylvania Avenue, N.W. Washington, D.C. 20500; MATTHEW G. WHITAKER, as Acting Attorney General U.S. Department of Justice 950 Pennsylvania Avenue, N.W. Washington, D.C. 20530; KIRSTJEN M. NIELSEN, as Secretary of the Department of Homeland Security U.S. Department of Homeland Security 245 Murray Lane, S.W., Washington, D.C. 20528; LEE FRANCIS CISSNA, as Director of United States Citizenship and Immigration Services U.S. Citizenship and Immigration Services 20 Massachusetts Avenue, N.W. Washington, D.C. 20529; JOHN LAFFERTY, Asylum Division Chief, U.S. Citizenship and Immigration Services 20 Massachusetts Avenue, N.W. Washington, D.C. 20529 Defendants. PRELIMINARY STATEMENT 1. �����������������������������������������unlawful attempt to deprive vulnerable individuals access to the protection that the ���������asylum system affords. 2. Under U.S. law, noncitizens are entitled to seek asylum irrespective of immigration status and without regard to manner of entry into the United States. See 8 U.S.C. § 1158(a)(1). �������������������������������������������������������������������������������� under the Refugee Act of 1980. U.S. law also requires certain procedural safeguards during removal proceedings. See id. § 1225(b)(1). These safeguards are critical to ensuring that individuals who face persecution�including rape, kidnapping, torture, and even death�in their home countries are given a fair chance to establish their eligibility for asylum. 3. On November 9, 2018, the ��������������������������������������Department of H���������������������������������������������������������� ������������, EOIR Docket No. 18�0501; A.G. Order No. 4327�2018, imposing new, significant limitations on who may seek asylum in the United States. On the same day, President Trump signed a presidential proclamation entitled �Presidential Proclamation Addressing Mass Migration Through the Southern Border of �������������������������P���������������hat purports to suspend the entry of individuals who have entered the United States from across the U.S.�Mexico border without receiving inspection at a designated port of entry. Together, the Rule and the Proclamation render ineligible for asylum any noncitizen who enters the United States without inspection from across the U.S.�Mexico border. ����� ��������� ������� ��� ���� ��������� ������� ����� shutters access to the asylum system for thousands of men, women, and children that the Administration concedes are likely to have meritorious asylum claims. The Rule is illegal in several respects. 4. First, the Rule contradicts the requirements of the Immigration and Nationality Act �������, specifically 8 U.S.C. § 1158(a)(1), which gives any noncitizen who is physically present in or who arrives in the United States a statutory right to seek asylum, irrespective of the ������������������������������and requires the government to follow specific processes when an individual expresses a desire to seek asylum or fear of returning to his or her home country. The Rule is therefore contrary to law under the INA and the Administrative Procedure Act, 5 U.S.C. § 551 et seq. �������� 5. Second, the Rule violates 8 U.S.C. § 1225 by mandating a denial of a credible fear determination, even in situations where a noncitizen in expedited removal proceedings shows a significant possibility that she could establish eligibility for asylum. For this reason, the Rule is again contrary to law under the INA and the APA. 6. Third, the Rule violates The William Wilberforce Trafficking Victims Protection Act, 8 U.S.C. § 1158 (b)(3)(C), by denying unaccompanied children the opportunity to first present the substance of their claims for asylum in a non-adversarial proceeding before an asylum officer. 7. Fourth, by adopting, without notice and the opportunity to comment, an interim final rule depriving certain asylum seekers of the statutory protection outlined in the INA simply because they enter the country without inspection, the responsible government officials have acted in excess of their statutorily prescribed authority, contrary to law, and arbitrarily and capriciously, all in violation of the APA. 8. Fifth, the promulgation of the Rule was invalid because the current Acting Attorney General who putatively authorized promulgation of the Rule is ineligible to serve in that role under 28 U.S.C. § 508 and the Appointments Clause of the United States Constitution, art. II, § 2, cl. 2. 2 9. Sixth, ����� ��������� ���� �������� ������� ��������� ���������� ������������ ���� lawful, the Rule violates the requirement under 8 U.S.C. § 1158(b)(2)(C) that any changes to the limitations and conditions imposed on asylum seekers be made by regulation�rather than by presidential decree. Because the Rule is predicated on an abdication of that responsibility, and simply incorporates by reference the consequence of Presidential proclamations, the Rule is invalid under the APA and is ultra vires. 10. If allowed to stand, the Rule would fundamentally reshape and constrict asylum ���������������������������������������������������������������������������������������������������� �����������������������������������������������������������������������������to thousands of asylum seekers who desperately need protection in this country. 11. Plaintiffs respectfully request a declaration that the Rule violates the APA, and an order enjoining the application of the Rule. PARTIES 12. Plaintiffs are noncitizens who are presently in the United States and wish to seek 13. Plaintiff O.A. is a 23-year-old man from Honduras who the government contends is subject to the Proclamation. O.A. fled Honduras with his 4-year-old daughter, K.S., because a gang called Mara-18 (M-18), threatened to kill him and his family. They did so because M-18 had ������������������������������������������������������������������������������������������������ ���������������������������������������������������� O.A. knew that the police in Honduras would not be willing or able to help him, and he decided to flee Honduras with his daughter. 14. Plaintiff K.S. is a 4-year-old girl from Honduras. O.A. is her father, and she entered the United States with him when he entered the United States after fleeing Honduras. ������������ 3 was at risk in Honduras because her father cooperated with police to investigate the death of his brother, and she accompanied him when he fled Honduras to seek asylum in the United States. 15. Plaintiff A.V. is a 27-year-old woman from Honduras who crossed the border from Mexico into the United States other than at a port of entry on November 11, 2018. She has a credible fear of persecution in Honduras because she is a victim of repeated violent assaults by her partner (who is the father of her children), and because her partner is likely a member of gang and has threatened to kill her. A.V. has nowhere to turn for help in Honduras. 16. Plaintiff G.Z. is a 17-year-old unaccompanied minor from Honduras who the government alleges crossed the U.S.�Mexico border other than at a port of entry on November 10, 2018. In Honduras, G.Z. was the victim of recurring violence at the hands of his father, who is a police officer. G.Z. has no ability to seek protection from the police, because his father is one of them. In the weeks preceding his departure from Honduras, G.Z. also rebuffed efforts by MS-13 gang members to recruit him because he believes their activities to be morally wrong. GZ feared that if he did not leave Honduras he would be killed. He has a credible fear of persecution. 17. Plaintiff D.S. is an asylum seeker from Honduras. She fled Honduras because of severe domestic abuse by her partner, who is a security guard. She tried to report the violence, which at points required hospitalization, but the government did nothing in response to her complaint and did not pursue her partner when he failed to appear in judicial proceedings. D.S. also tried to relocate internally within Honduras but her partner tracked her down and threatened to kill her. D.S. made the difficult journey across Mexico with her son, C.A., over the course of two weeks, during which time she exhausted all of her financial resources. D.S., with her son, C.A., entered the United States other than at a port of entry on November 13, 2018, and they were apprehended by immigration officials on the U.S. side of the border. 4 18. Plaintiff C.A. is an asylum seeker from Honduras, whose mother is Plaintiff D.S. Plaintiff C.A. was regularly beaten by his father in Honduras and accompanied his mother, D.S., on her journey to the United States. With D.S., C.A. entered the United States other than at a port of entry on November 13, 2018, and they were apprehended by immigration officials on the U.S. side of the border. 19. Defendant Donald J. Trump is the President of the United States. On November 9, 2018, he issued the Proclamation. He is sued in his official capacity. 20. Defendant Matthew G. Whitaker was appointed to the position of Acting Attorney �������������������������������Acting ������������������ on November 7, 2018. The Attorney General is responsible for administering the INA, oversees the Executive Office for Immigration Rev���������������������������������������������������������������������������������������������� his official capacity. 21. ������������������������������������������������������������������������������ ������������������������������������������������������������ICE������������������������������ ���������������������������������������������������������������������������������������������� She is sued in her official capacity. 22. Defendant Lee Francis Cissna is Director of USCIS, which is the agency that employs the Asylum Officers who conduct credible fear screening interviews to determine whether individuals may apply for asylum before an immigration judge. He is sued in his official capacity. 23. Defendant John Lafferty, the Asylum Division Chief within USCIS, is responsible for overseeing the credible fear screening process and asylum adjudication within USCIS. He is sued in his official capacity. 5 NATURE OF ACTION 24. This is an action arising under the ������������������������������������������� U.S.C. § 1101 et seq., and the Administrative Procedure Act �������, 5 U.S.C. § 551 et seq. 25. Plaintiffs seek a declaratory judgment that the interim final rule entitled �Aliens Subject to a Bar on Entry Under Certain Presidential Proclamations; Procedures for Protection Claims,� 83 Fed. Reg. 55,934 (Nov. 9, 2018) is arbitrary, capricious, contrary to law, and beyond the authority of the Acting Attorney General and the Secretary to promulgate under the APA and otherwise. Plaintiffs further seek an injunction prohibiting Defendants from enforcing the Rule and such additional and other relief as is just and proper. JURISDICTION AND VENUE 26. This Court has jurisdiction under 28 U.S.C. § 1331, as the claims in this case arise under federal statutes, including the INA, 8 U.S.C. § 1101 et seq., and the APA, 5 U.S.C. § 701 et seq. �������������� ����� ������ ���� ������������� ��� ������� ������������ ������� ����� the Rule is inconsistent with the INA and thus ultra vires to it. 27. This Court further has jurisdiction to review this case as a challenge to changes in the expedited removal process under 8 U.S.C. § 1252(e)(3). Although courts generally lack jurisdiction to review challenges to the expedited removal process, judicial review under § 1225(b) is available to determine if any regulation issued to implement such section is constitutional or whether such regulation is otherwise in violation of law. This case falls squarely within this ��������������������������������������������������������������������������������������������������� removal. See 8 U.S.C. § 1252(e)(3). The Rule and Proclamation are each �� ��������� ������� ����������� �������� ������� ����������� ��� �������� ����������� ������� ��� ���������� ���� ���������� removal procedures set forth in 8 U.S.C. § 1225(b). And Plaintiffs assert that the Rule and Proclamation impose ������������������������������������������������������������������������ 6 consistent with applicable provisions of [8 U.S.C. § ��������������������������������������������� ������ Id. § 1252(e)(3)(A)(ii). 28. The declaratory, injunctive and other relief sought by Plaintiffs are authorized by 28 U.S.C. §§ 2201 and 2202. 29. Venue in this District is proper pursuant to 5 U.S.C. § 703 and 8 U.S.C. § 1252(e). In addition, venue is proper pursuant to 28 U.S.C. § 1391(e) because a substantial part of the events or omissions giving rise to the claim occurred at or in this District. Defendants are headquartered ���������������������������������������������������������������������������������������������� to the expedited removal and credible fear processes have taken place and are being made in the District of Columbia. FACTUAL ALLEGATIONS Legal Framework 30. ���������������������������������������������������������������������������������� ���������������������������������������������������������� United Nations Convention Relating to the Status of Refugees and the 1967 United Nations Protocol Relating to the Status of Refugees. INS v. Cardoza-Fonseca, 480 U.S. 421, 436�37 (1987). 31. Among the treaty obligations undertaken by the United States was the promise that ���� ������������� ������� ������ ������ ���� ����������� ��� ����� ����������� ��� ��������� �������� ����������������������������������������������������������� Convention Relating to the Status of Refugees art. 3, July 28, 1951, 19 U.S.T. 6259, 189 U.N.T.S. 150.1 ����������[c]ontracting States shall not impose penalties, on account of their illegal entry or presence, on refugees who, coming directly from a territory where their life or freedom was threatened in the sense of Article 1, enter 1 The text of the Convention is available online at http://www.unhcr.org/en-us/3b66c2aa10. 7 or are present in their territory without authorization, provided they present themselves without ������������������������������������������������������������������������������������Id. at art. 31(1). This prohibition against restricting asylum access based on manner of entry is reiterated in the Introductory Note to the Refugee Convention, which states: ����������������������������������� that, subject to specific exceptions, refugees should not be penalized for their illegal entry or stay. ���������������������������������������������������������������������������������������������� Id. at Introductory Note. 32. The INA is the embodiment of these international law obligations. Its instructions regarding the asylum process are clear: ���������������������������������������������������������� or who arrives in the United States (whether or not at a designated port of arrival and including an alien who is brought to the United States after having been interdicted in international or United States waters), irrespective of such alien’s status, may apply for asylum in accordance with this section or, where applicable, section 1225(b) of this title�� 8 U.S.C. § 1158(a)(1) (emphases added). 33. While asylum is ultimately a discretionary remedy within the parameters set by statute, the duty to allow a noncitizen access to the process for seeking asylum is not discretionary, as the U.S. government has recognized. See, e.g.����������������������������������������port of Motion for Summary Judgment and Dismissal for Lack of Jurisdiction, cited in Munyua v. United States, 2005 U.S. Dist. LEXIS 11499, at *16�19 (N.D. Cal. Jan. ���� ������ �������������� acknowledges that [the immigration officers] did not have the discretion to ignore a clear expression of fear of return or to coerce an alien into withdrawing an application for admission.��� 34. For a noncitizen to be eligible for asylum, the noncitizen must establish that he or she is a refugee under the INA, defined as follows: 8 ������������������������������������������������������������������������������������������ person having no nationality, is outside any country in which such person last habitually resided, and who is unable or unwilling to return to, and is unable or unwilling to avail himself or herself of the protection of, that country because of persecution or a well- founded fear of persecution on account of race, religion, nationality, membership in a particular social group, or political opinion. 8 U.S.C. § 1101(a)(42)(A); see id. § 1158(a)(1). 35. To demonstrate a well-founded fear of persecution, a noncitizen need not show that harm is certain or even more likely than not; a 1 in 10 chance of persecution is sufficient under U.S. Supreme Court precedent. See Cardoza-Fonseca, 480 U.S. at 430. Expedited Removal and Credible Fear 36. In 1996, Congress passed the Illegal Immigration Reform and Immigrant ��������������� ���� ������������ ������ �������� ��� ���������� �������� �������� ���� ������������ officials to deport certain individuals deemed inadmissible under the INA. 37. Out of a concern that expedited removal would prevent individuals from seeking and applying for asylum������������������������������������������������������������������������ international law�IIRIRA implemented the �credible fear� screening process to ensure that individuals subject to expedited removal proceedings would be given meaningful access to the asylum process. 38. Under those provisions, if a noncitizen facing expedited removal indicates any fear of returning to his or her home country, an immigration officer must refer the asylum seeker for a ����������������������������See 8 U.S.C. § 1225(b)(1)(A)(ii); 8 C.F.R. § 235.3(b)(4). This interview �������������������������������������������������������������������������������������������������� credible fear of persecution or ��������������������§ 208.30(d). 39. To satisfy the credible fear standard, an asylum seeker need only show a ��������������������������������������������������������������������������������������������noncitizen 9 and in support of the noncitizen�������������������������������������������������������������������� noncitizen ����������������������������������������� 8 U.S.C. § 1225(b)(1)(B)(v). The standard used in this initial screening is intentionally lower than the standard used in the full asylum hearing that the applicant will later undergo if he or she passes the credible fear interview. The intentionally low threshold for demonstrating a credible fear accounts for the reality that credible fear interviews typically take place shortly after asylum seekers have completed their often traumatic journeys to the United States, in border processing centers or detention facilities where asylum seekers typically do not have access to attorneys. The standard also acknowledges that many asylum seekers arrive in the United States without the time, resources, or expertise to develop fully, upon arrival, the evidence necessary to prevail on their ultimate asylum application. 40. The credible fear process includes another important limitation. Recognizing the abbreviated nature of these interviews, if a person meets the definition of a refugee but may be subject to a bar to asylum, officers are required to flag those potential bars for future adjudication, but to refer the applicant for full removal proceedings. See 8 C.F.R. § 208.30(e)(5). 41. The requirement to refer an asylum seeker subject to expedited removal proceedings to an asylum officer for a credible fear interview is mandatory. See 8 U.S.C. § 1225(b)(1)(A)(ii) (immigration ���������shall refer the [noncitizen] for an interview by an asylum �������������������������); 8 C.F.R. § ��������������[T]he inspecting officer shall not proceed further with removal of the [noncitizen] until the [noncitizen] has been referred for an interview by an asylum officer.������������������). 42. If an applicant is found by an asylum officer to have a credible fear of persecution or torture, the applicant is taken out of the expedited removal process and placed in the regular removal process. The applicant thus obtains the ability to develop a full record in support of his 10 or her asylum claim; the right to present that claim before an immigration judge at a trial-like hearing; and the ability to appeal an adverse decision to the Board of Immigration Appeals and a federal court of appeals. See 8 U.S.C. § 1225(b)(1)(B)(ii). 43. The newly promulgated Rule and the accompanying Proclamation upend this detailed statutory scheme. Under the Rule, asylum seekers who enter without inspection from across the U.S.�Mexico border are barred from obtaining asylum and may only apply for ������������������������������������������������������������������������������������������������� of these forms of relief requires satisfying a different standard than credible fear interviews, ��������������������������������������������������������������������������������������������������� protected ground. ������������������������������������������������������������������������������� standard. That is so because the reasonable fear screening standard is the same standard required ��������������������-��������������������������������������������������������������������������������� on the other hand, requires only a showing of a significant possibility that the well-founded fear will be established. 44. Moreover, unlike asylum, withholding of removal and CAT protection do not prohibit the government from removing the noncitizen to a third country; do not create a path to lawful permanent resident status and citizenship; do not allow the noncitizen to travel freely within the United States or internationally; and do not ensure family unity by permitting ��������������� family members to obtain lawful immigration status derivatively. 45. The Government contends that Plaintiffs are subject to the new Proclamation and Rule; Plaintiffs are suffering irreparable harm as a result. Plaintiffs suffered persecution that their �����������������������������������������������������������������������me to the United States to seek refuge. The Proclamation and Rule effectively prevent Plaintiffs from applying for asylum 11 and the benefits that come with it, and place Plaintiffs at high risk of being returned to the country that perpetrated or sanctioned their oppression. ���������������������ro-����������������������������� 46. In April 2018, the U.S. govern�������������������������������-������������������ on immigration. In announcing the policy, then-Attorney General Jefferson B. Sessions III stated without any evidence ����� ������� ���������� ��� ���� ���������� ������� ��� ��������������� ���� �������������������������������������������������������������������������������������������������2 Mr. Sessions ����������� � ���� ������ ���� ����� ��� ���������� ���� ������ ����������������� commitment to public safety, national security, and the rule of law, I warn you: illegally entering this country will not be rewarded, but will instead be met with the full prosecutorial powers of the ����������������������� 47. In accordance with this directive, the U.S. government took steps to deter immigration at the southern border, such as referring greater numbers of migrants, including asylum seekers, for criminal prosecution, detaining migrants (including children) in inhospitable conditions, and encouraging adjudication officers to deny asylum claims. 48. ����������������������zero-tolerance� policy resulted in the forcible separation of child migrants from their parents, ostensibly so that the government could criminally prosecute the parents for illegal entry or reentry.3 Before federal courts enjoined the practice of separating families, the Department of Homeland Security had separated over 2,000 children from their parents. 2 DOJ, Attorney General Announces Zero-Tolerance Policy for Criminal Illegal Entry (Apr. 6, 2018) <https://tinyurl.com/y96nsut6>. 3 See Miriam Jordan, How and Why “Zero-Tolerance” is Splitting Up Families, N.Y. TIMES, May 12, 2018 <https://tinyurl.com/y73urcyj>. 12 49. ����������������������zero-tolerance� policy applied even to asylum seekers. In �����������-��������������������������������������������criminal prosecutions of individuals seeking such protection, including many parents who entered the United States without inspection because it was their only means of protecting their children from the persecution faced in their home countries.4 50. Nor did the Administration always permit asylum seekers to seek asylum through designated ports of entry; the Administration began to employ a policy of ����������������������� Mexico border to keep a caravan of asylum seekers from presenting themselves at the border to seek protection. The existence of this policy was confirmed by the Secretary, who stated in a May ������������������������������������������������������������������������������������������������ �������������������������������������������������������������5 A September 27, 2018 Special ��������������������������������zero-tolerance������������������������������������������������� ����������������������������������� ������������������������������������������������������������ CBP officers standing at the international border line in the middle of the bridges to the ports of entry; when an asylum seeker approaches the border line, officers confirm whether space is ��������������������������������������������������������������������������������������������������6 4 See Russell Berman, 85 Immigrants Sentenced Together Before One Judge, THE ATLANTIC, June 19, 2018 <https://tinyurl.com/ydh63e8u>. The need to escape the persecution they face in their home countries is frequently cited by asylum seekers as a primary reason for seeking safe harbor in the United States. See generally University of Washington, The Cycle of Violence: Migration from the Northern Triangle (2017) <https://tinyurl.com/yabyz9ax> (reporting that the increase of violence in Guatemala, Honduras, and El Salvador between 2011 and 2016 coincided ������������������������������������������������������������������������������������������������������ 5 Fox News, Secretary Nielsen Talks Immigration, Relationship with Trump 03:20 (May 15, 2018) <https://tinyurl.com/y8buwakc>. 6 Dep��������������������������������������������������������������������- Initial Observations Regarding Family Separation Issues Under the Zero Tolerance Policy, at 6 (Sept. 27, 2018) 13 51. Although CBP does not maintain a wait list for those who have been turned away due to metering, some asylum seekers have instituted an unofficial waitlist to keep track of those awaiting entry. CBP will often refer migrants to the unofficial waitlist when metering. Due to metering, the average wait time for asylum seekers at a port of entry can be up to several weeks. Public Statements by Defendants 52. Public statements by the senior Executive Branch officials and the President both ������� ���� ������ ���� ��������������� ��� �����-����������� ���nforced the basic theme of the A������������������������������������������������������������������������ 53. On October 12, 2017, then-Attorney General Sessions, in an address to the Executive Office for Immigration Review, stated, without any evidence�� � ��� . . . have dirty immigration lawyers who are encouraging their otherwise unlawfully present clients to make false claims of asylum providing them with the magic words needed to trigger the credible fear ���������7 54. On January 16, 2018, Secretary Nielsen stated, before the U.S. Senate, ��������� must tighten [our] case processing standards, including t������������-����������������8 ����������������������������������������������������������������������� ���� limited capacity to process asylum applications are similarly unfounded. Senior CBP and ICE officials at the San ����������������������������������������������������������������������������������������������������� ����������������������������������������������������������������������������������������������USA: ‘You Don’t Have Any Rights Here’: Illegal Pushbacks, Arbitrary Detention & Ill-Treatment of Asylum-Seekers in the United States (2018) <https://tinyurl.com/y8k4q54o>. The September 2018 OIG report ������������������������������������������������������������������������������������� ��������������������� 7 DOJ, Attorney General Sessions Delivers Remarks to the Executive Office of Immigration Review (Oct. 12, 2017) <https://tinyurl.com/y9n3alru>. 8 DHS, Written testimony of DHS Secretary Kirstjen Nielsen for a Senate Committee on the ���������� �������� ������� ����������� ��� ���� ������� ������� ����������� ��� ��������� ���������� <https://tinyurl.com/yc57pd6n>. 14 55. For his part, President Trump has made no secret of his disdain for the N�������� duly-enacted immigration laws, including the asylum laws: a. On June 21, 2018, ���������������������������������������������������������� the thousands, as our ridiculous immigration laws demand, we should be changing our laws, building the Wall, hire Border Agents and Ice and not let people come into our country based on the legal phrase they are told to say as ���������������� b. On June 24, 2018, the President tweeted���������������������������������������� to invade our Country. When somebody comes in, we must immediately, with no Judges or Court Cases, bring them back from where they came. Our system is a mockery to good immigration policy and Law and Order. Most children come without parents . . . .� c. On June ��������������������������������������������������������������������� illegally, we must IMMEDIATELY escort them back out without going ������������������������������������ d. On July ��� ������ ���� ���������� ��������� � ������ �������� ����� ��� �������� children, enter our Country, they must be told to leave without our Country being forced to endure a long and costly trial. Tell the ������������������������ ������������������������������������������������������������������������� e. On October �������������������������������������������������������������� very bad people are mixed into the Caravan heading to our Southern Border. Please go back, you will not be admitted into the United States unless you go through the legal process. This is an invasion of our Country and our Military �������������������� f. On November 1, 2018, President Trump delivered a speech regarding asylum policy. In that speech, the President again referred to migrants from Central ������������������������������������������������������������������������������� �����������������������������������������������������������������9 g. In the same speech, President Trump attacked the content of the asylum laws ����������������������������������������������������������������������������� statement given by a lawyer, and we have a three-and-a-half-year court case for ���� ��������� � ���� ���������� ������� ���� ����� ����� ��������� �as passed ������������������������������������������������������������������������������ ��������������������������������������������������������������������������������� 9 Remarks by President Trump on the Illegal Immigration Crisis and Border Security, The White House (Nov. 1, 2018) <https://tinyurl.com/y9x88wfj>. 15 56. The foregoing statements reflect a hostility amongst senior members of the Administration to the immigration system and to asylum claims, especially those filed by individuals from Central America. The statements also demonstrate the A����������������������� to shutter access to asylum by all possible means. Effects of the Zero-Tolerance Policy 57. ����������������������������������������-tolerance policy, many migrants who arrive at ports of entry on the U.S.�Mexico border are rebuffed and left in limbo on the Mexican side of the border. 58. In recent years, violence in M�������������������������������������������������������� �������������������������������������������������������������������������������10 In January 2018, the U.S. State Department issued a Level Four��������������������������the highest-level travel warning�for the state of Tamaulipas, which incorporates Reynosa, Matamoros, and Nuevo Laredo, three major port of entry sites.11 Many of the other border states, such as Chihuahua, Coahuila, Nuevo León, and Sonora, are listed at Level Three��������������������������� ������������������������������������������������������12 59. The violence faced by migrants and refugees like Plaintiffs while in Mexico is disproportionately high and serious. They face grave risks of kidnapping, disappearances, sexual assault, traffick�������������������������������������������������������������������������������� 10 Human Rights First, Mexico: Still Not Safe for Refugees and Migrants (Mar. 2018) <https://tinyurl.com/y8b6flak>. 11 ����������������������Mexico Travel Advisory ������������������������������������������������ such as murder, armed robbery, carjacking, kidnapping, extortion, and sexual assault, is common. Gang activity, including gun battles, is widespread. . . . Local law enforcement has limited capabilit������������������������������������������������������� 16 only due to their inherent vulnerabilities as refugees and migrants, but also due to their nationality, race, gender, sexual orientation and gender identity. Additionally, they have limited or no financial resources or contacts in the region. 60. Long wait times for access to ports of entry�times which will only increase under the Rule�leave asylum-seekers especially vulnerable. Cartels and other criminal organizations prey on migrants in border towns and near ports of entry, with cartel members often waiting directly outside some ports of entry.13 ��������������������������������������and disappearances in Mexico suggest disproportionate killing of non-������������������14 Attorneys and employees ����������������������������������������������������������if not all�migrants they encounter who had been turned away from the port of entry have ������������������������������������15 And with migrant shelters frequently at capacity, many asylum-seekers have no other choice but to sleep on the streets or on the bridge itself while they await access to a port of entry. 61. ��������������������������������������������������������������������������������� legitimate asylum seekers to cross the border other than at authorized ports of entry. ����� recent OIG Report confirmed this reality. The OIG reported �evidence that limiting the volume of asylum-seekers entering at ports of entry leads some aliens who would otherwise seek legal entry into the United States to cross the border illegally. According to one Border Patrol supervisor, the 13 Human Rights First, Crossing the Line: U.S. Border Agents Illegally Reject Asylum Seekers, at 16 (May 2017) [hereinafter Crossing the Line] <https://tinyurl.com/y8rxsfmn>. 14 Josiah Heyman & Jeremy Slack, Blockading Asylum Seekers at Ports of Entry at the US–Mexico Border Puts Them at Increased Risk of Exploitation, Violence, and Death, Ctr. for Migration Studies (June 25, 2018) <https://tinyurl.com/yc5tgec3>. 15 Crossing the Line, supra n.13, at 16. 17 Border Patrol sees a�������������������������������������������������������������������������16 The �������������������������������������������������������������������������������������������������� metering leads to increased illegal border crossings strongly suggests a relationship between the Issuance of the Rule and Proclamation 62. On November 9, 2018, Defendants enacted the next phase of their �����-����������� policy aimed at significantly reducing the availability of asylum. 63. The process began when Acting Attorney General Whitaker and the Secretary promulgated the Rule. The Rule makes three main changes to asylum law. a. First, the Rule provides that noncitizens who apply for asylum after November 9, 2018 will be ineligible for asylum if they are ��������� ��� �� presidential proclamation or other presidential order suspending or limiting the entry of aliens along the southern border with Mexico that is issued pursuant to subsection 212(f) of 215(a)(1) of the Act on or after November 9, 2018� and have entered the United States contrary to the terms of the proclamation or order. See Rule, 83 Fed. Reg. at 55,952 (to be codified at 8 C.F.R. §§ 208.13(c)(3), 1208.13(c)(3)). b. Second, the Rule provides that noncitizens who are ineligible for asylum pursuant to §§ 2018.13(c)(3) and 1208.13(c)(3) will not be permitted to make a �������� ��� ���������� ������ ��� ������������� ��� noncitizens seeking asylum presently may do. Under the Rule, �������������� request for asylum is, from a 16 OIG Report, supra note 6, at 7. 17 Id. at n.15. 18 merits standpoint, summarily denied, because the asylum officer is directed to ������� �� ��������� ��������� ����� �������������� ����� �������� ��� ���� �������� application ���� ��������� � ���� noncitizen instead will be placed into �������������������������������������������������������������������������������� claim for withholding of removal under section 241(b)(3) of the Act, or for withholding or deferral of removal under the Convention Against Torture if the �����������������������������������������������������������������Id. (to be codified at 8 C.F.R. § 208.30). c. Third, the Rule provides for what an immigration judge is to do with respect to the review of expedited removal orders following a negative credible or reasonable fear assessment. The Rule provides that an immigration judge is to review de novo the determination that a noncitizen falls within the scope of a Presidential proclamation that is described in 8 C.F.R. § 208.13(c)(3) or § 1208.13(c)(3). If the immigration judge determines that the noncitizen is not ��������������������������������������������������������������������������������� DHS may commence removal proceedings under Section 240 of the INA. If the judge agrees that the noncitizen is subject to a proclamation, the judge will ����� ������� ���� ������� ���������� �������������� ����� ���� noncitizen lacks a reasonable fear of persecution pursuant to the procedures set forth in 8 C.F.R. § 1208.30(g)(2). 64. Put more succinctly, together the Rule and Proclamation prohibit anyone from obtaining asylum if they cross outside of a port of entry and make it more difficult for those people 19 to obtain other forms of relief. At the same time, as detailed above, the Administration has made it untenable for many, if not most, noncitizens to apply for asylum at a port of entry. 65. In support of the Rule, the Acting Attorney General and the Secretary cited 8 U.S.C. § ��������������� ������ ����������� ���� ��������� �������� ��� ���� ����������� ���������� ����������� limitations and conditions, consistent with [the remainder of Section 1158], under which an alien ������������������������������������������������������������������������������������������������� U.S.C. § 1158(d)(5)(B), which provides that the Attorney General may ��������������������������� any other conditions or limitations on the consideration of an application for asylum not �������������������������������� ������������������������ation������������������������������������� present in Section 1158 relate to manner of entry, and a bar to asylum based on manner of entry is contrary to the plain language of Section 1158. 66. The Acting Attorney General and the Secretary acknowledged that in the previous year 1,889 migrants from the Northern Triangle (i.e., Guatemala, Honduras, and El Salvador), representing nearly 25% of those whose asylum applications were adjudicated on the merits, had been granted asylum. See Rule, 83 Fed. Reg. at 55,946. ��������������������������������������� of those asylum grants wou��������������������������������������������������������������������� the Rule. Id. at 55,948. 67. Although the APA requires an agency to allow for a period of public notice and comment (as well as a 30-day waiting period) before implementing a proposed regulation, see 5 U.S.C. §§ 553(b), (c), (d), the Rule became effective upon its publication. In explaining why they failed to follow the ordinary rule���������������������������������������������������������sted to bypass those procedures under 5 U.S.C. § 553(b)(B). DOJ and DHS also invoked the ��������� �������� exception to the notice and comment requirement set forth in 5 U.S.C. § 553(a)(1). 20 68. Also on November 9, 2018, President Trump issued the Proclamation pursuant to 8 U.S.C. §§ 1182(f) and 1185(a). The ��������������������������������������������������������� United States across the international boundary between the United States and Mexico is ��������������������������������������������������������������§ 1, at which point the President will decide whether to extend the suspension period, id. § 2(d). The suspension of entry applies ����������������������������������������������������������������������������������������������������� alien who enters the United States at a port of entry and properly presents for inspection, or to any ��������������������������� Id. §§ 2(a), (b). 69. In the Proclamation, President Trump openly prejudged asylum claims of intending migrants; he specifically stated that the Proclamation was meant to bar access to asylum for Central Americans, who, according to the President��� ������������ ���-so�� ������ ��� ������� ������ ���� ���������������������������� 70. Taken together, the Rule and Proclamation eliminate asylum for a person who enters the United States along the southern border other than at a port of entry, even if she has a credible fear of persecution if returned to her home country and even if she ultimately crosses other than at ����������������������������������������������������������������������have exhausted her financial resources or expose her to a continuing threat of crime and violence at the Mexican 71. The Administration purported to justify the Rule ������������������������������� ��������������������������������������������ule, 83 Fed. Reg. at 55,944. Contrary to assertions contained in the Rule, however, the available data show that migration across the U.S.�Mexico 21 border has, in fact, decreased since 2016.18 In 2017, the number of people apprehended by border officials after crossing irregularly was the lowest it has been in 46 years.19 20 72. According to CBP, when compared to 2016, there were, at the southern border, more than 60,000 fewer apprehensions of undocumented aliens from Mexico in 2017, and more 18 Douglas Massey, Today’s US–Mexico ‘Border Crisis’ in 6 Charts, THE CONVERSATION (Jun. 27, 2018) <https://tinyurl.com/ycn4czpl>; see also Max Bearak, Even Before Trump, More Mexicans Were Leaving the U.S. Than Arriving, WASH. POST, Jan. 27, 2017 <https://tinyurl.com/ybbrr348>. 19 U.S. Border Patrol, U.S. Customs & Border Protection, Southwest Border Sectors: Total Illegal Alien Apprehensions By Fiscal Year (Oct. 1st through Sept. 30th) [hereinafter Total Apprehensions] (Dec. 2017) <https://tinyurl.com/ybg3vkld>. 20 Rebecca Hersher, 3 Charts That Show What’s Actually Happening Along The Southern Border, NPR (June 22, 2018) <https://tinyurl.com/y8o7m7d2> (referencing United States Broder Patrol Data). 22 than 40,000 fewer apprehensions of undocumented aliens from outside Mexico.21 In 2018, the number of people without legal status who have been apprehended attempting to enter the United States from Mexico has been roughly the same as it has been for the last five years.22 73. While President Trump in the Proclamation has taken the position that only a ����������� ��� ������� ����������� ���� �������� ���� ����� ������� ����� ������ ������� ���� ������� �������������������������������������thousands of refugees from Northern Triangle countries were found to have valid claims for asylum in 2016 alone. In 2016, 2,157 people from El Salvador, 1,505 from Honduras, and 1,949 from Guatemala were found by U.S. asylum officers and immigration judges to be eligible for asylum.23 ����������������������������������������������� and Guatemala were two leading countries of nationality of people granted asylum in the United States in 2016�the third being China�while El Salvador, Guatemala, and Honduras were four of the five leading nationalities of persons granted asylum by the immigration courts, the fifth, again, being China.24 21 Total Apprehensions, supra n.19. 22Linda Qiu, Fact Check of the Day: Border Crossings Have Been Declining for Years, Despite Claims of a ‘Crisis of Illegal Immigration’, N.Y. TIMES, June 20, 2018 <https://tinyurl.com/y7dhmlt6>; U.S. Customs & Border Protection, SW Border Migration FY 2018 (2018) <https://tinyurl.com/ycorhe4p>. 23 See Nadwa Mossad & Ryan Baugh, Refugee Asylees: 2016, Homeland Security: Office of Immigration Statistics (Jan. 2016) <https://tinyurl.com/y7n4bxqk> (Tables 4 and 5). 23 COUNTS COUNT ONE VIOLATION OF THE ADMINISTRATIVE PROCEDURE ACT: RULEMAKING CONTRARY TO LAW (8 U.S.C. § 1158) 74. Plaintiffs incorporate by reference paragraphs 1 through 73. 75. The Immigration and Nationality Act, 8 U.S.C. § 1158(a)(1), gives any noncitizen who is physically present in or who arrives in the United States a statutory right to seek asylum, �������������������������������������������������� and manner of entry. 76. By barring the plaintiffs from obtaining asylum based solely on the manner in which they entered the United States, the Rule violates the INA, which prohibits penalizing refugees for entering the country illegally and other than at a port of entry. 77. �������������������������������������������������������hold unlawful and set aside agency action, findings, and conclusions found to be . . ��������������������������������5 U.S.C. 78. The Rule is not in accordance with 8 U.S.C. § 1158(a)(1). The Rule is therefore contrary to law under the APA. 79. Plaintif�������������������������������������������������������������������� and the APA. In particular, Plaintiffs have been denied a meaningful opportunity to seek asylum, exposing them to multiple other harms including the threat of removal to their home countries and the persecution from which they fled. The Rule also deprives Plaintiffs of other benefits to which asylees are entitled. The harm to Plaintiffs is irreparable. 80. Plaintiffs do not have an adequate remedy at law to redress the violations alleged herein, and therefore seek injunctive relief restraining Defendants from continuing to engage in the unlawful policy and practices alleged herein. 24 COUNT TWO VIOLATION OF THE ADMINISTRATIVE PROCEDURE ACT: RULEMAKING CONTRARY TO LAW (8 U.S.C. § 1225(b)) 81. Plaintiffs incorporate by reference paragraphs 1 through 80. 82. The Immigration and Nationality Act, including 8 U.S.C. § 1225(b)(1) (expedited removal) and 8 U.S.C. § 1158 (asylum), affords noncitizens an opportunity to apply for asylum, by screening arriving noncitizens to determine whether their asylum claims are potentially viable. 83. Expedited removal procedures apply to certain noncitizens, including noncitizens who lack proper travel documents and either arrive at a port of entry or are apprehended within 14 days of their arrival and within 100 miles of the U.S. international border. See 69 Fed. Reg. 48,877 (Aug. 11, 2004). Under expedited removal procedures, an inspecting officer may summarily remove certain noncitizens. However, if the noncitizen expresses a fear of returning to her country ����������������������������������������������������������������������������������������������������������� See 8 U.S.C. § 1225(b)(1). 84. ������������������������������������������������������������������������������������� ������������������������������������������������������������������������������������������������������� support of the ������������������������������������������������������������������������������������� �������������������������������������������������������������������� Id. § 1225(b)(1)(B)(v). 85. Under this Congressional design, a noncitizen in expedited removal proceedings� including a noncitizen who enters without inspection�should not fail a credible fear interview unless there is no significant possibility that that individual would ultimately prevail in her asylum claim. See 8 C.F.R. § 208.30(e)(5) (citing to 8 C.F.R. § 208.13(c)(3)). A credible fear interview is not an on-the-merits adjudication of the claim. To the contrary, the credible fear standard of 25 review is intended to be sufficiently low to ensure all bona fide asylum seekers receive a full hearing on their claims. 86. The Rule mandates a negative credible fear finding for anyone who enters without inspection, even in cases where there is a significant possibility that the noncitizen is eligible for asylum. This requirement violates the plain meaning of Section 1225. 87. Immigration judges are mandated to follow the same rules as those that are applicable to asylum officers in denying a credible fear finding for asylum seekers who are subject to the Rule. 8 C.F.R. § 1208.30(e). This also violates the plain text of Section 1225. 88. The Rule forbids a positive credible fear determination even if an asylum officer or ��������������������������������������������������������������������������������������������������� determine that the individual has a right to seek asylum under the statute notwithstanding the regulations, and that the individual otherwise has a significant possibility of winning such a claim. See id. § 208.30(e)(5); id. § 1208.30(e)(5). 89. Under the Administrative Procedure ������������������������������������������������ agency action, findings, and conclusions found to be . . ����������������������������������������� 90. ������������Rule is �������������������������������������������������������������� expedited removal provisions and thus is ������������������������8 U.S.C. § 1252(e)(3)(A)(ii). The Rule is therefore contrary to law under the APA. 91. Plaintiffs do not have an adequate remedy at law to redress the violations alleged herein, and therefore seek injunctive relief restraining Defendants from continuing to engage in the unlawful policy and practices alleged herein. 26 COUNT THREE VIOLATION OF THE ADMINISTRATIVE PROCEDURE ACT: RULEMAKING CONTRARY TO THE TRAFFICKING VICTIMS PROTECTION REAUTHORIZATION ACT OF 2008 92. Plaintiffs incorporate by reference paragraphs 1 through 91. 93. The William Wilberforce Trafficking V������������������������������� provides specific asylum protections to children. See 8 U.S.C. § 1158 (b)(3)(C). 94. Under the TVPRA, unaccompanied children who enter without inspection are generally not subject to expedited removal provisions. See id. § 1232(a)(5)(D)(i). Instead, unaccompanied children are placed into regular removal proceedings before an immigration judge without having to pass a credible fear interview. Id. 95. However, the immigration judge is not the first person to whom an unaccompanied minor presents his or her application for asylum. Instead, the TVPRA prov����������������������� officer . . . shall have initial jurisdiction over any asylum application filed by an unaccompanied ���������������Id. 96. Under the TVPRA, if the asylum officer denies the application for asylum, the unaccompanied minor then has an opportunity to proceed before the immigration judge. 97. This sequencing implements an important objective of the statute. By allowing an unaccompanied child the opportunity to present an asylum claim to an asylum officer in the first instance, the TVPRA ensures that when a child recounts for the first time the traumatic and sensitive facts of the persecution underlying a claim for humanitarian protection, he or she may do so in a non-adversarial setting. 98. The Rule is contrary to the system established by the TVPRA. Under the Rule, unaccompanied children subject to the Proclamation are ineligible for asylum, and will be subject 27 to a mandatory negative credible fear finding. Because asylum officers do not have authority to order withholding of removal or protection under the Convention Against Torture, the asylum officer will, under the Rule, have no obvious basis to hear or assess the merits of the ��������������������������������������������� 99. As a result, the first time an unaccompanied minor like GZ will be permitted to present and obtain any review of the traumatic and sensitive details of a claim for asylum is in the adversarial proceeding that occurs before an immigration judge. The Rule thus upends the non- adversarial process mandated by Congress in 8 U.S.C. § 1158 (b)(3)(C). 100. �������� ������������ �������� ������ ���� ����� ���� ��������� ��� ���� TVPRA, they violate APA Section ���������� �������� ����� ���� ����� ��� ����������� ����� ����� ���� ���� Section 706(2)(C) becaus������������������������������������������������ 101. Plaintiff GZ is irreparably harmed by losing his statutory right to participate in a non-adversarial process before an asylum officer. Plaintiff GZ therefore asks that this Court grant him declaratory and injunctive relief. COUNT FOUR VIOLATION OF THE ADMINISTRATIVE PROCEDURE ACT: RULEMAKING THAT IS ARBITRARY, CAPRICIOUS, AN ABUSE OF DISCRETION AND OTHERWISE CONTRARY TO LAW 102. Plaintiffs incorporate by reference paragraphs 1 through 101. 103. The promulgation of the Rule constitutes agency action by the Acting Attorney General and the Secretary that is arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law for a number of reasons. Among other things, the Rule is irrational and arbitrary. It is therefore unlawful under 5 U.S.C. § 706(2)(A). 28 COUNT FIVE VIOLATION OF THE ADMINISTRATIVE PROCEDURE ACT: CONTRARY TO 28 U.S.C. § 508 AND THE APPOINTMENTS CLAUSE 104. Plaintiffs incorporate by reference paragraphs 1 through 103. 105. President Trump fired former Attorney General Jefferson B. Sessions III on or about November 7, 2018. Mr. Sessions therefore was no longer the Attorney General at the time the Rule issued and could not have promulgated the Rule. 106. ������������������������������������������������������������������������������� invalid because it violates the requirements of 28 U.S.C. § 508. Section ��������������������������� of a vacancy in the office of Attorney General, or his absence or his disability, the Deputy Attorney ��������������������������������������������������� 28 U.S.C. § 508. If the Deputy Attorney General ������������������������������������������������������������������������������ney General and the Attorney General may also designate the Solicitor General or the Assistant Attorneys General to assume the duties. Id. § 508(b). 107. Because Defendant Whitaker was not the Deputy Attorney General, Associate Attorney General, Solicitor General, or an Assistant Attorney General at the time of his appointment to the position of Acting Attorney General, his appointment is invalid under 28 U.S.C. 108. ������������������������������������������������������������������������������� also invalid because it violates the Appointments Clause of the United States Constitution, art. II, § 2, cl. 2. 109. ���� ������������� ������� ��������� ����� ���� ���������� ������� ���e Advice and ����������������������������������������������������������������������������������� U.S. Const. art. II, § 2, cl. 2. 29 110. The Attorney General, as the chief law enforcement officer of the United States, the head of the Department of Justice, and a Cabinet level official who reports only to the President, is a principal officer under the Appointments Clause. See Morrison v. Olson, 487 U.S. 654, 670� 77 (1988). An Acting Attorney General must therefore be appointed by the President and confirmed by the Senate. 111. President Trump did not obtain the advice and consent of the Senate before appointing Defendant Whitaker to the position of Acting Attorney General. ��������������������� appointment is thus in direct contravention of the Appointments Clause. 112. Because Defendant Whitaker lacked authority to promulgate the Rule due to his illegal appointment, the Rule is unlawful under the APA, 5 U.S.C. § 706(2)(C). COUNT SIX VIOLATION OF THE ADMINISTRATIVE PROCEDURE ACT: CONTRARY TO REQUIREMENT THAT ASYLUM LIMITS BE MADE BY REGULATION 113. Plaintiffs incorporate by reference paragraphs 1 through 112. 114. �������������������������������������������������������������������������������� the Rule constitutes agency action in excess of the statutory authority conferred upon him. 115. In 8 U.S.C. § ������������������������������������������������������������������ by Regulation establish additional limitations and conditions, consistent with this section, under ����������������������������������������������� 116. The Rule violates the statutory requirement that additional limitations and conditions be established by regulation, because it automatically incorporates, without independent rulemaking process, the content of unspecified Presidential proclamations, so long as �������������������������������������������������������������������������������������������������� 30 ������������������������������������������������������������������������������������ INA on or after November 9, 2018. 117. The Rule is contrary to the statutory requirement that conditions and limitations on the availability of asylum be established by regulation. Instead, the Rule constitutes an abdication of that responsibility by allowing the President, by proclamation and without a rulemaking process, to add or change the conditions and limitations for asylum. 118. The Rule therefore exceeds ����������������������������s statutory authority under 8 U.S.C. § 1158(b)(2)(C) and is invalid under the APA. COUNT SEVEN VIOLATION OF THE ADMINISTRATIVE PROCEDURE ACTION: NOTICE AND PUBLIC COMMENT PROVISIONS 119. Plaintiffs incorporate by reference paragraphs 1 through 118. 120. The Rule is illegal because the Administration promulgated the Rule without providing the notice and opportunity for public comment set forth in 5 U.S.C. §§ 553(a)�(d). COUNT EIGHT VIOLATION OF THE IMMIGRATION AND NATIONALITY ACT: ULTRA VIRES RULEMAKING 121. Plaintiffs incorporate by reference paragraphs 1 through 120. 122. The Rule is illegal and so is ultra vires for the reasons provided in Counts One through Six. See, e.g., Trudeau v. FTC, 456 F.3d 178 (D.C. Cir. 2006); Aid Ass’n for Lutherans v. U.S. Postal Serv., 321 F.3d 1166, 1172, 1175 (D.C. Cir. 2003). 31 PRAYER FOR RELIEF WHEREFORE, Plaintiffs respectfully request that the Court enter judgment in its favor and against Defendants, and to grant the following relief: a. A declaratory judgment (1) that the Rule is arbitrary, capricious, and contrary to law within the meaning of 5 U.S.C. § 706; (2) that ������������������������������������ ���� position of Acting Attorney General is unlawful, and the promulgation of the Rule therefore constitutes agency action in excess of the statutory authority conferred upon the office of the Attorney General; (3) ������������������������������������������������������������������������ was lawful, that the promulgation of the Rule violates the requirement that additional limitations on the availability of asylum be established by regulation; (4) that the Rule was promulgated in violation of 5 U.S.C. § 553; and (5) the Rule is ultra vires because it is illegal. b. Such preliminary injunctive and ancillary relief as may be necessary to avert the likelihood of irreparable harm to Plaintiffs during the pendency of this action, including, but not limited to, temporary and preliminary injunctions; c. A permanent injunction forbidding Defendants from implementing or enforcing the d. An order awarding Plaintiffs� ������ ��� ������ ���� ����������� ����������� ����� ���� expenses pursuant to any applicable law; and 31

criminal & enforcement

Ok3BA4kBRpLueGJZBMSo

BARSHAY SANDERS, PLLC 100 Garden City Plaza, Suite 500 Garden City, New York 11530 Tel: (516) 203-7600 Fax: (516) 706-5055 Email: [email protected] Attorneys for Plaintiff Our File No.: 118912 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK Stacy Berkowitz, individually and on behalf of all others similarly situated, Plaintiff, Docket No: CLASS ACTION COMPLAINT vs. JURY TRIAL DEMANDED Aargon Collection Agency, Inc., Defendant. Stacy Berkowitz, individually and on behalf of all others similarly situated (hereinafter referred to as “Plaintiff”), by and through the undersigned counsel, complains, states and alleges against Aargon Collection Agency, Inc. (hereinafter referred to as “Defendant”), as follows: INTRODUCTION 1. This action seeks to recover for violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (the “FDCPA”). JURISDICTION AND VENUE 2. This Court has federal subject matter jurisdiction pursuant to 28 U.S.C. § 1331 and 15 U.S.C. § 1692k(d). 3. Venue is proper under 28 U.S.C. § 1391(b) because a substantial part of the events or omissions giving rise to the claim occurred in this Judicial District. 4. At all relevant times, Defendant conducted business within the State of New PARTIES 5. Plaintiff Stacy Berkowitz is an individual who is a citizen of the State of New York residing in Suffolk County, New York. 6. Plaintiff is a natural person allegedly obligated to pay a debt. 7. Plaintiff is a “consumer” as defined by 15 U.S.C. § 1692a(3). 8. On information and belief, Defendant Aargon Collection Agency, Inc., is a Nevada Corporation with a principal place of business in Clark County, Nevada. 9. Defendant regularly collects or attempts to collect debts asserted to be owed to others. 10. Defendant is regularly engaged, for profit, in the collection of debts allegedly owed by consumers. 11. The principal purpose of Defendant's business is the collection of such debts. 12. Defendant uses the mails in its debt collection business. 13. Defendant is a “debt collector” as defined by 15 U.S.C. § 1692a(6). THE FDCPA AS IT RELATES TO THE CLAIMS HEREIN 14. Congress enacted the FDCPA upon finding that debt collection abuse by third party debt collectors was a widespread and serious national problem. See S. Rep. No. 95-382, at 2 (1977) reprinted in U.S.C.C.A.N. 1695, 1696; 15 U.S.C § 1692(a). 15. The purpose of the FDCPA is to protect consumers from deceptive or harassing actions taken by debt collectors, with the aim of limiting the suffering and anguish often inflicted by independent debt collectors. Kropelnicki v. Siegel, 290 F.3d 118, 127 (2d Cir. 2002); Russell v. Equifax A.R.S., 74 F.3d 30, 34 (2d Cir. 1996). 16. To further these ends, “the FDCPA enlists the efforts of sophisticated consumers ... as 'private attorneys general' to aid their less sophisticated counterparts, who are unlikely themselves to bring suit under the Act, but who are assumed by the Act to benefit from the deterrent effect of civil actions brought by others.” Jacobson v. Healthcare Fin. Servs., Inc., 516 F.3d 85, 91 (2d Cir. 2008). 17. As such, the circumstances of the particular debtor in question have no bearing as to the question of whether there has been a violation of the FDCPA. See Easterling v. Collecto, Inc., 692 F.3d 229, 234 (2d Cir. 2012). Indeed, it is not necessary for a plaintiff to show that he or she was confused by the communication received. Jacobson, 516 F.3d at 91. Likewise, the plaintiff consumer's actions or inaction in response to a communication from a debt collector are irrelevant. Thomas v. Am. Serv. Fin. Corp., 966 F. Supp. 2d 82, 90 (E.D.N.Y. 2013). 18. Instead, “the test is how the least sophisticated consumer—one not having the astuteness of a 'Philadelphia lawyer' or even the sophistication of the average, everyday, common consumer—understands the notice he or she receives.” Russell, 74 F.3d at 34. 19. If a debt collector's communication is “reasonably susceptible to an inaccurate reading” by the least sophisticated consumer, it violates the FDCPA. DeSantis v. Computer Credit, Inc., 269 F.3d 159, 161 (2d Cir. 2001). Similarly, a communication violates the FDCPA if it is “open to more than one reasonable interpretation, at least one of which is inaccurate,” or if the communication “would make the least sophisticated consumer uncertain as to her rights.” Clomon v. Jackson, 988 F.2d 1314, 1319 (2d Cir. 1993); Jacobson, 516 F.3d at 90. 20. The FDCPA is a strict liability statute, and a debt collector's intent may only be considered as an affirmative defense. 15 U.S.C. § 1692k(c); Ellis v. Solomon & Solomon, P.C., 591 F.3d 130, 135 (2d Cir. 2010). Likewise, “the degree of a defendant's culpability may only be considered in computing damages.” Bentley v. Great Lakes Collection Bureau, 6 F.3d 60, 63 (2d Cir. 1993). A single violation of the FDCPA to establish civil liability against the debt collector. Id. ALLEGATIONS SPECIFIC TO PLAINTIFF 21. Defendant alleges Plaintiff owes a debt (“the alleged Debt”). 22. The alleged Debt is an alleged obligation of Plaintiff to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes. 23. The alleged Debt does not arise from any business enterprise of Plaintiff. 24. The alleged Debt is a “debt” as defined by 15 U.S.C. § 1692a(5). 25. At an exact time known only to Defendant, the alleged Debt was assigned or otherwise transferred to Defendant for collection. 26. At the time the alleged Debt was assigned or otherwise transferred to Defendant for collection, the alleged Debt was in default. 27. In its efforts to collect the alleged Debt, Defendant contacted Plaintiff by telephone on December 28, 2019, at approximately 7:10 p.m. 28. Defendant left a voicemail message (“the Message”) for Plaintiff. 29. The Message announced the call was from “Aargon Agency.” 30. The Message conveyed information regarding the alleged Debt. 31. The Message is a “communication” as defined by 15 U.S.C. § 1692a(2). 32. The deprivation of Plaintiff's rights will be redressed by a favorable decision FIRST COUNT Violation of 15 U.S.C. § 1692g(a)(1) 33. Plaintiff repeats and realleges the foregoing paragraphs as if fully restated herein. 34. 15 U.S.C. § 1692c(b) provides that without the prior consent of the consumer given directly to the debt collector, a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector. 35. The Message announced the call was from “Aargon Agency.” 36. The Message announced the call was from a debt collector. 37. The Message announced that the Defendant was calling in an attempt to collect a 38. Plaintiff played the Message on speakerphone. 39. Plaintiff’s boyfriend was in the same room. 40. Prior to listening to the Message, Plaintiff had no way of knowing that Defendant had left the Message. 41. Prior to listening to the Message, Plaintiff had no way of knowing that there was a message from a debt collector. 42. The Message gave no warning or other notice that Plaintiff should listen to the Message in private. 43. The Message gave no warning or other notice that the Message was private or personal in nature. 44. The Message had no pause or other break that would have allowed Plaintiff to discontinue listening to the message if a third-party was present. 45. Plaintiff’s boyfriend heard the Message. 46. Plaintiff’s boyfriend was not aware of the Debt. 47. Plaintiff never gave Defendant consent to communicate with any third party in connection with the collection of the Debt. 48. Plaintiff did not give Defendant express permission to leave messages on the telephone that the Defendant called. 49. Defendant’s conduct invaded the privacy protections afforded to Plaintiff through the FDCPA 50. Defendant’s actions as described herein violate 15 U.S.C. § 1692c(b). 51. Plaintiff was caused significant embarrassment and humiliation as a result of the Defendant’s conduct. 52. For all of the foregoing reasons, Defendant violated 15 U.S.C. §§ 1692c(b) and is liable to Plaintiff therefor. SECOND COUNT Violation of 15 U.S.C. § 1692g 53. Plaintiff repeats and realleges the foregoing paragraphs as if fully restated herein. 54. The Message was the initial communication Plaintiff received from Defendant concerning the alleged Debt. 55. 15 U.S.C. § 1692g provides that within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing certain enumerated information, notices and disclaimers. 15 U.S.C. § 1692g(a)(1)-(5). 56. Defendant was required to send Plaintiff the aforementioned written notice within five days of the telephone call to Plaintiff. 57. Defendant failed to send the required written notice to Plaintiff within five days of the telephone call to Plaintiff. 58. Defendant’s failure to send the required written notice to Plaintiff within five days of the telephone call to Plaintiff is a violation of 15 U.S.C. § 1692g. 59. For the foregoing reasons, Defendant violated 15 U.S.C. § 1692g and is liable to Plaintiff therefor. CLASS ALLEGATIONS 60. Plaintiff brings this action individually and as a class action on behalf of all persons similarly situated in the State of New York. 61. Plaintiff seeks to certify two classes of: i. All consumers to whom Defendant left a collection voicemail message without prior consent and; substantially and materially similar to the message left with the Plaintiff, which message was left on or after a date one year prior to the filing of this action to the present. ii. All consumers to whom Defendant failed to send a written notice as required by Section 1692g of the FDCPA, on or after a date one year prior to the filing of this action to the present 62. This action seeks a finding that Defendant's conduct violates the FDCPA, and asks that the Court award damages as authorized by 15 U.S.C. § 1692k. 63. The Class consists of more than thirty-five persons. 64. Plaintiff's claims are typical of the claims of the Class. Common questions of law or fact raised by this action affect all members of the Class and predominate over any individual issues. Common relief is therefore sought on behalf of all members of the Class. A class action is superior to other available methods for the fair and efficient adjudication of this controversy. 65. The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to the individual members of the Class, and a risk that any adjudications with respect to individual members of the Class would, as a practical matter, either be dispositive of the interests of other members of the Class not party to the adjudication, or substantially impair or impede their ability to protect their interests. Defendant has acted in a manner applicable to the Class as a whole such that declaratory relief is warranted. 66. Plaintiff will fairly and adequately protect and represent the interests of the Class. The management of the class is not extraordinarily difficult, and the factual and legal issues raised by this action will not require extended contact with the members of the Class, because Defendant's conduct was perpetrated on all members of the Class and will be established by common proof. Moreover, Plaintiff has retained counsel experienced in actions brought under consumer protection laws. JURY DEMAND 67. Plaintiff hereby demands a trial of this action by jury. PRAYER FOR RELIEF WHEREFORE Plaintiff respectfully requests judgment be entered: a. Certifying this action as a class action; and b. Appointing Plaintiff as Class Representative and Plaintiff's attorneys as Class Counsel; c. Finding Defendant's actions violate the FDCPA; and d. Granting damages against Defendant pursuant to 15 U.S.C. § 1692k; and e. Granting Plaintiff's attorneys' fees pursuant to 15 U.S.C. § 1692k; and f. Granting Plaintiff's costs; all together with g. Such other relief that the Court determines is just and proper. DATED: February 13, 2020 BARSHAY SANDERS, PLLC By: _/s/ Craig B. Sanders Craig B. Sanders, Esquire 100 Garden City Plaza, Suite 500 Garden City, New York 11530 Tel: (516) 203-7600 Fax: (516) 706-5055 [email protected] Attorneys for Plaintiff Our File No.: 118912

consumer fraud

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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF FLORIDA TALLAHASSEE DIVISION BENJAMIN ALEXANDER, GEORGE COLLIER by his next friend, Timothy Collier, RAIMUNDO LEAL, JEFFERSON LANGLAISE, CELIA LOPEZ by her next friend, Javier Lopez, and GERALDINE DAVENPORT by her next friend, Barbara Roti, on behalf of themselves and all others similarly situated, Plaintiffs, vs. Case No. JUSTIN SENIOR, in his official capacity as Secretary, Florida Agency for Health Care Administration, and JEFFREY BRAGG, in his official capacity as Secretary, Florida Department of Elder Affairs, Defendants. ________________________________/ CLASS ACTION COMPLAINT FOR DECLARATORY AND INJUCTIVE RELIEF PRELIMINARY STATEMENT 1. This is a statewide class action lawsuit brought by low-income older adults and adults with disabilities on a waitlist for long term care services. They 1 bring this suit because they seek, but cannot obtain, long-term care services in their homes or in other community-based settings. Defendants have the ability, under federal Medicaid law, to provide these services. Instead, they ration services to a restricted number of people, and, as a result, fail to address the care needs of thousands of waitlisted older adults and adults with disabilities. Defendants’ administration of the Medicaid long-term care system violates the civil rights of the Named Plaintiffs and proposed class by requiring them to choose between receiving needed care and remaining in their homes. 2. Specifically, Defendants’ administrative, planning, and funding decisions heavily favor nursing facility payment and nursing facility entry, while allowing the waitlist for Medicaid home and community based long-term care services to grow to be the longest in the nation. Meanwhile, Florida ranks near the bottom in the nation in terms of Medicaid funding of home and community based services as compared to nursing facility expenditures. Defendants utterly fail to meet the demonstrated need for home and community based long-term care services. 3. Florida’s Statewide Medicaid Managed Care Long-Term Care Program includes both nursing facility care and home and community based care services in a managed care system. Plaintiffs have sought care and treatment through 2 the part of the program that would allow them to remain in their most integrated setting, termed herein as the “Long-Term Care Waiver.” Yet, because of the discriminatory way Defendants manage the public health care system, Named Plaintiffs and others like them face the real prospect of unnecessary institutionalization. 4. Defendants’ failure to provide needed home and community based services to the Named Plaintiffs and proposed class violates the Americans with Disabilities Act (ADA), 42 U.S.C. § 12132. JURISDICTION 5. This is an action for declaratory and injunctive relief under the ADA, 42 U.S.C. § 12132. 6. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §§ 1331 & 1342. Plaintiffs’ claims for declaratory and injunctive relief are authorized under 28 U.S.C. §§ 2201-02. VENUE 7. Venue lies in the Northern District pursuant to 28 U.S.C. § 1391(b), and in the Tallahassee Division, because Defendants officially reside there. N.D. Fla. Loc. R. 3.1. 3 NAMED PLAINTIFFS 8. BENJAMIN ALEXANDER is 55-years-old. He lives with his elderly mother in Duval County, Florida. He is a person with a disability under the ADA. He is eligible for the Long-Term Care Waiver. He wishes to remain living in the community with appropriate home and community based services. Mr. Alexander sought services through the Long-Term Care Waiver and was placed on the waiting list in March 2018. 9. GEORGE COLLIER is 91-years-old. Pursuant to Fed. R. Civ. P 17(c)(2), he sues through his next friend, Timothy Collier. He lives in an assisted living home in St. Lucie County, Florida. He is a person with a disability under the ADA. He is eligible for the Long-Term Care Waiver. He wishes to remain living in the community with appropriate home and community based services. Mr. Collier sought services through the Long-Term Care Waiver and was placed on the waitlist in 2015. 10. RAIMUNDO LEAL is 76-years-old. He lives in his own apartment in Hillsborough County, Florida. He is a person with a disability under the ADA. He is eligible for the Long-Term Care Waiver. He wishes to remain living in the community with appropriate home and community based services. Mr. Leal sought services through the Long-Term Care Waiver and was placed on the 4 waitlist in 2016. 11. JEFFERSON LANGLAISE is 50-years-old. He lives in an assisted living home in Miami-Dade County, Florida. He is a person with a disability under the ADA. He is eligible for the Long-Term Care Waiver. He wishes to remain living in the community with appropriate home and community based services. Mr. Langlaise sought services through the Long-Term Care Waiver in 2017 and was placed on the waitlist in 2018. 12. CELIA LOPEZ is 82-years-old. Pursuant to Fed. R. Civ. P 17(c)(2), she sues through her next friend, Javier Lopez. She lives in Miami-Dade County, Florida with her granddaughter, her granddaughter’s husband and three great-grandchildren. She is a person with a disability under the ADA. She is eligible for the Long-Term Care Waiver. She wishes to remain living in the community with appropriate home and community based services. Ms. Lopez sought services through the Long-Term Care Waiver and was placed on the waitlist in November 2014. 13. GERARLDINE DAVENPORT is 90-years-old. Pursuant to Fed. R. Civ. P 17(c)(2), she sues through her next friend, Barbara Roti. She lives in an assisted living home in St. Lucie County, Florida. She is a person with a disability under the ADA. She is eligible for the Long-Term Care Waiver. She 5 wishes to remain living in the community with appropriate home and community based services. Ms. Davenport sought services through the Long- Term Care Waiver and was placed on the waitlist in 2013. DEFENDANTS 14. Defendant JUSTIN SENIOR is Secretary of Florida’s Agency for Health Care Administration (AHCA) and is sued in his official capacity. (This Defendant will be referenced by the agency, AHCA.) AHCA is the “single state agency” that operates and administers Florida’s Medicaid program, including Florida’s Long-Term Care Waiver, and is charged with developing legislative budgetary requests for the Medicaid program. See 42 U.S.C. § 1396a(a)(5), § 20.42(3), Fla. Stat. (2018), § 216.023, Fla. Stat. (2018). Secretary Senior is responsible for the oversight, supervision, and control of AHCA and its divisions, and is ultimately responsible for ensuring that AHCA’s services for people with disabilities are provided in conformance with federal law. 15. Defendant JEFFREY BRAGG is Secretary of Florida’s Department of Elder Affairs (DOEA), and is sued in his official capacity. (This Defendant will be referenced by the agency, DOEA.) DOEA is the primary state agency responsible for administering human services programs for the elderly and developing policy recommendations for long-term care. § 430.03, Fla. Stat. 6 (2018). It recommends legislative budget requests for programs and services for the state’s elderly population. Id. Among other duties, DOEA prepares, submits to the Governor and the Legislature, and monitors implementation of a master plan for policies and programs in Florida that relate to aging. Id. § 430.04. DOEA funds a community care service system, the declared primary purpose of which is “the prevention of unnecessary institutionalization of functionally impaired elderly persons through the provision of community- based core services.” Id. § 430.204. DOEA is also the agency responsible for maintaining the statewide waitlist for the Long-Term Care Waiver, including assessing each applicant’s priority status on that waitlist and making offers of enrollment to eligible individuals. Id. § 409.979. 16. At all times relevant to this Complaint, Defendants were public entities under the ADA. 42 U.S.C. § 12132. CLASS ACTION ALLEGATIONS 17. Pursuant to Fed. R. Civ. P. 23(a) and (b)(2), the Named Plaintiffs bring this action on behalf of themselves and all other persons similarly situated. 18. The proposed class consists of: Adult residents of Florida who are at risk of unnecessary institutionalization without home and community based long- term care services because they: (1) are residing, and wish to 7 remain, at home or in a community residential setting; (2) qualify or would qualify if allowed to enroll in the Long-Term Care Waiver; and (3) have been placed on the Long-Term Care Waiver waitlist. 19. Numerosity: The proposed class is so numerous that joinder of all its members is impracticable. According to the Florida Department of Elder Affairs, as of August 2018, there were more than 50,000 people on a waitlist for home and community based services through the Long-Term Care Waiver. 20. Commonality: The questions of law or fact that are common to the Named Plaintiffs and proposed class members include: a. Whether Defendants’ failure to provide needed home and community based services to the Named Plaintiffs and proposed class members violates the ADA. b. Whether the Named Plaintiffs and proposed class members can access appropriate long-term care services outside of entry to a nursing facility. c. Whether Defendants’ Medicaid funded long-term care system favors institutional services to the detriment of the Named Plaintiffs and proposed class members seeking home and community based services. 21. Typicality: The claims of the Named Plaintiffs are typical of the claims of the class as a whole in that the Named Plaintiffs and proposed class members 8 are all qualified individuals with disabilities who wish to remain in the community, but who are without Medicaid long-term care services and are at risk of unnecessary institutionalization. 22. Adequate representation: The Named Plaintiffs will fairly represent and adequately protect the interests of the proposed class as a whole. The Named Plaintiffs do not have any interests antagonistic to those of other proposed class members. By filing this action, the Named Plaintiffs have displayed an interest in vindicating their rights, as well as the claims of others who are similarly situated. The relief sought by the Named Plaintiffs will inure to the benefit of members of the proposed class generally. The Named Plaintiffs are represented by counsel who are skilled and knowledgeable about civil rights litigation, disability discrimination, Medicaid law, practice and procedure in the federal courts, and the prosecution and management of class action litigation. 23. Defendants have acted or refused to act on grounds generally applicable to the proposed class, thereby making final injunctive relief appropriate with respect to the proposed class as a whole under Fed. R. Civ. P. 23(b)(2). Although the specific disabilities of the proposed class members can vary, they share a common need for Medicaid funded home and community based services. A class action is superior to individual lawsuits for resolving this 9 controversy. FACTUAL ALLEGATIONS Statewide Medicaid Managed Care Long-Term Care Program 24. Medicaid is a joint federal and state program that covers medical services to low-income persons pursuant to Title XIX of the Social Security Act, 42 U.S.C. §§ 1396-1396v. 25. States are not required to participate in Medicaid, but if they do, they must comply with the requirements of Title XIX and its implementing regulations promulgated by the U.S. Department of Health & Human Services. States which participate must submit to the federal government a state Medicaid plan that fulfills the requirements of Title XIX. 42 U.S.C. § 1396a(a). 26. One of the primary purposes of Medicaid is “to furnish … rehabilitation and other services to help such families and individuals attain or retain capability for independence or self-care ….” 42 U.S.C. § 1396-1. Each participating state’s Medicaid plan must contain reasonable standards to determine the extent of services needed to obtain these objectives. 42 U.S.C. § 1396a(a)(17). 27. Coverage of certain services is mandatory under Title XIX, including 10 nursing facility services. 42 U.S.C. § 1396a(a)(10)(A)(i) (incorporating 42 U.S.C. § 1396d(a)(1)-(5), (17), (21)). 28. Federal Medicaid law allows states to include certain home and community based services in their state Medicaid program plans, including personal care services. Such services are provided to all qualifying persons, without enrollment limits. 42 U.S.C. § 1396d(a)(xvii)(24). Florida has opted not to provide these services to older adults or adults with disabilities. 29. In addition, Federal Medicaid law allows states to offer home and community based waiver programs (Waiver Programs). These Waiver Programs are designed to enable people who are elderly or have disabilities, and otherwise need the level of care provided in a nursing facility or other institution, to receive long-term care services in the community. 42 U.S.C. § 1396n(c). The federal Medicaid program allows states to obtain waivers of certain program requirements, including the requirement that otherwise prohibits enrollment caps. 42 U.S.C. § 1396n(c)(3). 30. The purpose of waivers, like Florida’s Long-Term Care Waiver, is to provide “an array of home and community-based services that an individual needs to avoid institutionalization.” 42 C.F.R. § 441.300. 31. When providing long-term care services, State Medicaid programs 11 must comply with the ADA. The ADA prohibits unnecessary institutionalization or segregation of persons with disabilities. 42 U.S.C. § 12132. A state’s obligations under the ADA are distinct from its obligations under the Medicaid Act. 32. Florida’s Medicaid program provides only a few options for adults who are disabled or elderly and need long-term care services: nursing facility placement, or home and community based services under the Long-Term Care Waiver. In addition, six counties operate limited facility based long-term care day services under the Program of All-Inclusive Care for the Elderly. 33. Nursing facilities are institutional settings under the ADA. 34. On average, the cost of nursing facility placement is several times the cost of care provided in the home and community through the Long-Term Care Waiver. 35. The Long-Term Care Waiver provides home and community based services in various residential settings, including assisted living homes, adult family care homes, and in an individual’s own home or family member’s home. 36. The Long-Term Care Waiver covers a wide range of services critical to maintaining people with long-term care needs in their homes and in the community. These services include assisted living care, adult day health care, 12 assistive care services, attendant nursing care, behavioral management, care coordination, home accessibility adaptation, home delivery of meals, homemaker services, hospice, nursing, medical equipment and supplies, medication administration and management, personal care services, personal emergency response system, respite, skilled therapies and non-emergency transportation. 37. In December 2017, the federal Centers for Medicare & Medicaid Services (CMS) approved Defendant ACHA’s application for the current Long- Term Care Waiver program, authorizing it to continue for another five years. 38. In the waiver application, Defendant AHCA requested to limit the number of people getting services to 62,000 at any point in time, with no increase in capacity over the five years of the approval period. 39. States can obtain CMS approval to raise a waiver program’s enrollment cap to respond to increased demand. Some states do not cap enrollment in their long-term care waiver program at all. 40. As of October 2018, there were 59,329 persons receiving home and community based services through the Long-Term Care Waiver. 41. The Long-Term Care Waiver has absorbed seven other waiver programs that had been targeted to meet the needs of discrete populations. The 13 most recent consolidation in 2018 decommissioned three waiver programs dedicated to meeting the needs of people with HIV, traumatic brain or spinal cord injuries, and Cystic Fibrosis — a total of 7,500 slots. Of this number, a little over 1,700 people previously served were transitioned onto the Long-Term Care Waiver. 42. The transition of people from the decommissioned waivers to the Long- Term Care Waiver has increased the number of people served on the Long- Term Care Waiver but has reduced the capacity of the system as a whole. People newly seeking services that had been covered by the decommissioned waivers now must join the lengthy waitlist for the Long-Term Care Waiver. 43. As of October 2018, there were 53,193 persons on Defendants’ waitlist for the Long-Term Care Waiver. 44. The Long-Term Care Waiver is considered an Aged and Disabled waiver by CMS. According to Kaiser Family Foundation data, 31 states had no waiting list at all for their Aged, Physically Disabled or Aged and Disabled waivers (per 2016 data). 45. The federal Medicaid Act does not allow waitlists for nursing facility services. 46. Nursing facility occupancy rates in Florida are among the highest in the 14 country. Defendants’ Waitlist Ranking Underestimates the Risk of Unnecessary Nursing Facility Placement 47. When Named Plaintiffs and proposed class members seek to enroll in the Long-Term Care Waiver, they go through Defendants’ assessment process to purportedly determine their level of risk of nursing facility placement. 48. Defendant DOEA contracts with the regional Aging and Disability Resource Centers (ADRCs) to field requests and complete an assessment over the telephone. 49. Once assessed, individuals are placed on the waitlist for Long-Term Care Waiver services, called the Assessed Prioritized Consumer List. Completion of the assessment results in each individual being placed by numerical rank into one of five “priority levels” (levels 1-5): the higher the level, the higher the assessed risk. Fla. Admin. Code R. 59G-4.193(3). 50. There are additional levels of risk (levels 6-8) that DOEA ranks based on specific statutory characteristics. In October 2018, there were only 45 people on the Long-Term Care Waiver waitlist in levels 6-8. 51. In addition, individuals in three statutory categories are authorized to apply directly for the Long-Term Care Waiver, without any additional 15 assessment of risk: individuals residing in a nursing facility for at least 60 days who have requested to transition to their communities; children aged 18, 19 or 20 with medically complex care needs; and persons classified by Adult Protective Services as “high risk” and placed by the State in an assisted living facility. § 409.979 (3)(f), Fla. Stat. (2018). 52. Other than these three special statutory categories, Defendants’ assessment of risk governs when a person may move off of the waitlist. 53. Levels 0-5 are based exclusively on the results of an assessment conducted over the telephone. This assessment process asks applicants a series of questions from the 701S assessment tool. Responses to certain questions are then run through an algorithm, which determines the individual’s “score” and priority level. Fla. Admin. Code R. 59G-4.193(3). 54. Certain important risk factors are not considered when assigning a priority level. These include: whether the survey was completed by someone else (i.e., a proxy), memory loss, cognitive decline or dementia, the presence of Parkinson’s Disease, full paralysis, previous nursing facility stay, the age of the caregiver, financial strain on the caregiver, and history of falls. While some of these factors are captured in the assessment, the algorithm does not consider them in assigning a risk score. 16 55. The assessment process relies heavily on voluntary caregiver involvement but does not properly take into account a caregiver’s availability, ability, and willingness to provide support. 56. The vast majority of people on the waitlist are over 60-years-old, and more than half of them are over 74-years-old. A quarter of the waitlist is comprised of people 85 or older. 57. Many people with dementia are on the wait list and are in need of services. 42% of people at Level 3 have dementia or a cognitive impairment; at Level 4 that number rises to 51%, and at Level 5 it is 57%. But the assessment process does not adequately factor in dementia or cognitive impairment. The assessment asks about medical validation of cognitive decline, but those questions have no impact on the individual’s score or priority ranking on the waitlist. 58. One in four caregivers of individuals at Level 3 priority have been found by Defendant DOEA to be “in crisis,” and at Level 4 that number rises to more than half. Nonetheless, people assessed at these levels wait years on average to get needed long-term care. 59. Defendants’ criteria and methods of administration perpetuate the institutionalization and segregation of people with disabilities by 17 underestimating their risk of institutionalization and failing to administer the long-term care system based on accurate assessments of need for long-term care services in the community. Defendants Do Not Move People Off of the Long-Term Care Waiver Waitlist at a Reasonable Pace 60. Average wait times are long. People with a Level 1 assessment wait on average 42 months. Other average wait times are 43 months for Level 2, 40 months for Level 3, and 30 months for Level 4. 61. Only people at the highest level of assessed risk, Level 5, move off of the waitlist within 3 months. To achieve a Level 5 score, the person must demonstrate a high level of need for long-term care, have highly inadequate unpaid support, and have a caregiver in crisis. 62. Between July 1, 2016, and March 8, 2018, over 1,400 people on the waitlist had to move to nursing facilities. In this same period, over 8,600 people died while on the waitlist. 63. The Long-Term Care Waiver waitlist continues to grow. In March 2017, the waitlist had 42,195 people on it. As of October 2018, there were over 53,000 people on the waitlist – an increase of over 20%. 64. As the waitlist increases, the number of people at risk of unnecessary 18 institutionalization grows as well. 65. Florida has no comprehensive, effectively working plan (called an “Olmstead Plan”) for providing long-term care to proposed class members so they can remain in the most integrated setting in the community, rather than being forced into segregated, institutional settings by virtue of their care needs. Defendants Overly Rely on Nursing Facility Settings 66. The ADA requires that states administer their “services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities.” 28 C.F.R. § 35.130(d). This requirement applies to state Medicaid programs. 67. Despite their obligations to provide individuals with disabilities services in the most integrated setting appropriate to their needs, Defendants have allocated the vast majority of Florida’s Medicaid long-term care resources to nursing facility services. 68. Florida ranks near the bottom in the nation in terms of Medicaid expenditures for home and community based services for older adults and adults with disabilities. Only 22.5% of Medicaid expenditures for long-term care for this population were for home and community based care in 2016. This was less than half the national average of 45.2%. 19 69. In 2016, Defendant AHCA’s Medicaid program spent four times as much on nursing facility care as it did on home and community based long-term care for this population. 70. In addition, Florida has become further entrenched in its commitment to institutions by lifting the moratorium for new certificates of need to allow for the building of new nursing facility beds. Defendant AHCA has approved thousands of new nursing facility beds since the moratorium was lifted in 2015. 71. Defendant AHCA has an incentive program within the long-term care system that provides fiscal rewards to managed care entities who transition people out of nursing facilities and into the Long-Term Care Waiver. There is no similar incentive program to bring people into the Long-Term Care Waiver from the waitlist. The result is an incentive to move into a nursing facility: a person seeking services at home or in the community can bypass the long waitlist only by first submitting to at least 60 consecutive days of institutionalization in a nursing facility. 72. Transitioning out of a nursing facility placement is difficult for low- income people. Once Medicaid-eligible individuals are admitted to nursing facilities, they must turn over most of their income, including Social Security benefits, to the state and nursing facility, except for a small monthly personal 20 needs allowance. 73. As a result, nursing facility residents are often unable to continue paying rent or mortgages and accordingly may lose the home they had before entering the nursing facility. 74. Defendants administer their Medicaid long-term care system in a discriminatory manner that perpetuates the institutionalization and segregation of persons with disabilities, over relies on nursing facility services and underfunding community based care, and fails to provide sufficient alternative Medicaid funded long-term care services in the community. NAMED PLAINTIFFS’ ALLEGATIONS Benjamin Alexander 75. Mr. Alexander is a Medicaid beneficiary who requested Long-Term Care Waiver services in early 2018, but was placed on the waitlist. 76. Mr. Alexander became disabled as a result of back surgery he had three years ago that left him paralyzed. At first quadriplegic, Mr. Alexander was able to regain most movement in his upper body. However, his left hand does not open completely. He is paralyzed from the waist down, has uncontrolled muscle spasms, abdominal pain, severe constipation, and is incontinent. 77. Mr. Alexander has been treated in a hospital approximately ten times 21 in the past year due to his ongoing muscle spasms, abdominal pain, and constipation. 78. Mr. Alexander lives with his 92-year-old mother in her home and relies on her and a former neighbor to help him. He cannot bathe, maintain hygiene, or perform incontinence care without assistance. He cannot keep his home clean and safe without help. Neither Mr. Alexander nor his mother are licensed to drive and they must rely on others to help with shopping. They also rely on the Meal on Wheels program, which comes once per day. 79. Mr. Alexander’s mother is elderly with her own physical health problems including unsteadiness. She has great difficulty meeting her son’s physical care needs. When his legs seize up on him, she cannot assist him in getting dressed or attend to his incontinence. When he needs to move to his wheelchair, she struggles to lift him and help him transfer. She is not confident she has the ability to provide the care he needs. 80. The home Mr. Alexander lives in is not accessible to him. There is no shower that he can maneuver into and his mother cannot lift him into the tub, so she gives him a sponge bath in his chair or on his bed. Mr. Alexander rotates himself every two hours with great difficulty because he does not have a bed or mattress that will adjust and assist with the prevention of skin breakdown. 22 81. Defendants recently assessed Mr. Alexander and ranked him at Level 3 on the waitlist. 82. Defendants’ ranking failed to take into account his elderly mother’s difficulty in lifting and maneuvering him to provide personal care. When his mother is unable to provide care, he must rely on the kindness of a former neighbor who travels to his home to provide the care for him. His ranking also did not weigh the financial strain on his caregiver, his numerous emergency room visits in the last year, or the total number of activities of daily living where he needs assistance. 83. Mr. Alexander wants to remain living with his mother, but he is at risk of unnecessary nursing facility entry. He cannot independently care for himself and his 92-year-old mother cannot do so either, which leaves Mr. Alexander further dependent upon the uncertainty of his former neighbor’s willingness to assist with his care needs. Without his mother and his former neighbor’s help, he would have to enter a nursing facility. George Collier 86. Mr. Collier requested Long-Term Care Waiver services in 2015, but was placed on the waitlist. He currently lives in an assisted living home. 87. Mr. Collier has numerous health conditions including dementia, 23 diabetes, and blindness. He cannot take medications by himself, and his diabetes has been uncontrolled at times. He was found unresponsive on the floor in the last year. He cannot use the telephone, shop and prepare meals, manage money or his medications, or go out into the community without assistance. He uses a walker to ambulate. 88. Mr. Collier is happy in his assisted living home, where he sings karaoke and enjoys dancing. He likes to go to the grocery store to buy his food, but needs total assistance. His daughter-in-law says that putting him in a nursing facility, “would be like putting him in a coffin.” 89. Mr. Collier’s assisted living home helps him with medication management and meal preparation including preparing his plate and cutting his food due to Mr. Collier’s blindness. He also needs but is not receiving stand- by assistance with showering due to his unsteadiness, and assistance with dressing. 90. He is frequently dizzy and has had numerous falls in the last year, six of them requiring ambulance services. Most recently, Mr. Collier went to the emergency room for dementia and undiagnosed weakness. 91. Mr. Collier has unmet care needs because he does not have the money to cover the cost of needed services. These unmet needs place him at increased 24 risk of falls and wounds or infections. For example, his unsteadiness in the shower leaves him at risk of more falls and hospitalizations. He needs close monitoring of his blood glucoses to prevent further dizziness and falls. 92. Defendants assessed and ranked Mr. Collier at Level 3 on the waitlist. 93. The Defendants’ ranking does not take into consideration the financial strain on Mr. Collier’s son. Though he continues to strive to pay the difference for Mr. Collier’s assisted living facility, he also continues to pay additional health care costs for Mr. Collier such as dental care when Mr. Collier broke a tooth due to one of his falls. In addition, his ranking did not take into account his dementia or his history of falls. 94. Mr. Collier is at risk of unnecessary nursing facility entry. Mr. Collier wants to remain in his home, so his son has been paying the difference between Mr. Collier’s limited income and the cost of care and rent. His son cannot sustain the $1,900 cost per month. Without the services provided at his assisted living home, Mr. Collier would have to enter a nursing facility. Raimundo Leal 95. Raimundo Leal requested Long-Term Care Waiver Services in 2011 but was placed on the waitlist. 96. Mr. Leal resides in a subsidized apartment and relies on occasional 25 assistance from neighbors or self-paid care for homemaking and other chores. If his apartment is not maintained, he risks being in violation of his lease and evicted. 97. Mr. Leal is engaged with his family and community. His brother comes to visit him each week, and his son and grandchildren provide companionship and help him to go to the grocery store. 98. Mr. Leal has insulin-dependent diabetes, chronic obstructive pulmonary disease, and is subject to falls. He also has rheumatoid arthritis. His memory is sometimes poor. 99. Mr. Leal cannot bathe and dress himself without assistance, and sometimes he cannot ambulate without help. He has difficulty managing his medications. 100. Mr. Leal has had several hospitalizations due to falls and has recently progressed from just using oxygen to now having a tracheostomy. 101. Mr. Leal first requested Long-Term Care Waiver services in July 2011, where Defendants ranked him at Level 3. He was placed on the wait list. 102. Since his initial request, Mr. Leal has been assessed numerous times. In June 2017, Mr. Leal’s health deteriorated and he requested a reassessment. Defendants ranked him at Level 4. The assessment noted that he is a frequent 26 fall risk. He needs daily help, but he rarely has assistance. Different friends from his community will pitch in or help when they can. He remained on the waitlist. 103. In October of 2017, Mr. Leal needed more help at home and was reassessed again. Defendants ranked him at Level 3, although he still was a fall risk and needed assistance. He remained on the waitlist. Mr. Leal was last reassessed in May of 2018 and is now ranked Level 2. 104. Mr. Leal falls frequently, often due to respiratory distress and resulting in multiple hospitalizations. He usually does not recall the events leading up to his falls and, without regular assistance in his home, has been lucky to have been found by neighbors or family. Mr. Leal was recently hospitalized again in August 2018, and required a tracheostomy to address oxygen deficiency. He was later admitted to a subacute care hospital for continued care and has remained there with a discharge order for a skilled nursing facility since September 2018. 105. Mr. Leal, however, does not want to be admitted to a skilled nursing facility and wishes to be discharged home with Long-Term Care Waiver Services. Discharge home without services or a caregiver in the home is against medical advice. 27 106. Mr. Leal is at risk of unnecessary nursing facility entry. He would be able to continue to live independently near his brother, children, and grandchildren with the assistance of the Long-Term Care Waiver services. Without those supports and services, Mr. Leal would have to enter a nursing facility. Jefferson Langlaise 107. Jefferson Langlaise requested Long-Term Care Waiver services in 2017, but was placed on the waitlist. 108. Mr. Langlaise has a seizure disorder with generalized seizures that occur several times a week. He also has co-occurring mental health conditions, dizziness, high blood pressure and high cholesterol. He is unable to work due to his disabilities and needs assistance with walking, mobility, bathing, medication management, shopping, meal preparation and chores. 109. Mr. Langlaise lives in an assisted living home, but his income is not enough to pay the cost. His mother, his primary support, is paying the remainder of his rent and expenses. She is nearing retirement age, has another adult child with a disability at home, and cannot continue to sustain the cost of paying the difference. 110. Defendants assessed and ranked Mr. Langlaise at a Level 2 on the 28 waitlist. 111. Defendants’ ranking did not take into account the financial strain his mother is under to sustain the care he receives from the assisted living home. 112. Mr. Langlaise is at risk of unnecessary nursing facility entry because his Social Security income is not enough to cover the cost of his assisted living home. His mother is privately paying for the remainder of his rent, medications, incidental expenses, and transportation. His mother is unsure how she will continue to support Mr. Langlaise. She has limited years left to work herself plus cares for her older son with disabilities living with her. Without the care that she pays for, Mr. Lainglaise would need to enter a nursing facility. Celia Lopez 86. Ms. Lopez requested Long-Term Care Waiver services in November 2014 but was placed on the waitlist 87. Ms. Lopez lives with her granddaughter and her granddaughter’s family. 88. Ms. Lopez cannot perform necessary incontinence care, bathe herself, dress herself or eat without assistance. She needs help with mobility and is at risk for serious injury from falls. She needs assistance to access the community around her, and would enjoy doing so. 29 89. Ms. Lopez’s family is committed to helping her live at home with them. However, she needs help all day, every day, particularly because of her advanced dementia. She cannot speak words anymore. 90. Ms. Lopez is helped each day and each night by caregivers paid for by her grandchildren. However, this arrangement is not sustainable financially. Moreover, because of the cost, Ms. Lopez does not have sufficient services to access the world outside of her granddaughter’s home. 91. Defendants recently assessed Ms. Lopez and ranked her a Level 1 on the waitlist. 92. The Defendants’ ranking does not reflect Ms. Lopez’s dementia and need for supervision to prevent wandering. Nor does the ranking take into consideration the financial strain the cost of her care puts on her grandchildren. They cannot sustain the continued cost and, without the care they pay for, Ms. Lopez would have to enter a nursing facility. Geraldine Davenport 93. Ms. Davenport requested Long-Term Care Waiver services in March 2013 but was put on the waitlist. 94. At that time, Ms. Davenport was living with her daughter who sought services for her mother because her mother had dementia and did not have much 30 money 95. While waiting for services and living with her daughter, Ms. Davenport was without a caretaker while her daughter was at work. Her confusion led to episodes of risky behavior, including taking all her medications at once, putting paper plates in the toaster oven, forgetting if she ate food, and eating multiple lunches. 96. In late December 2017, Ms. Davenport experienced severe back pain—she had fractured her eleventh vertebrae. Although she had a large bruise on her back, she did not remember falling. She was hospitalized and then released to a rehabilitation facility. She could not return home because her daughter worked during the day and there was no caretaker or services to provide the support Ms. Davenport required. After rehabilitation, Ms. Davenport moved to an assisted living home in January 2018. 97. Ms. Davenport meets the qualifications for the Long-Term Care Waiver. She needs assistance with bathing, transferring, as well as walking and mobility. She cannot manage her own money, prepare meals, shop, or do chores. She cannot use the telephone, manage her medications, and use transportation without assistance. 98. Ms. Davenport experiences bouts of depression and requires the 31 relaxed and quiet environment that she now has at her assisted living home. She has visited nursing facilities in the past and found the setting to be depressing. 99. In January 2018, the Defendants ranked Ms. Davenport at Level 2 on the waitlist. 100. Her risk assessment score did not take into consideration her dementia or memory loss, the fact that she was in a rehabilitation facility, or her history of falls. 101. Ms. Davenport wants to remain in the community. She is at risk of unnecessary nursing facility entry because she cannot afford the cost of the assisted living home where she lives. Without the services provided by the assisted living home, Ms. Davenport would have to enter a nursing facility. CLAIM FOR RELIEF AMERICANS WITH DISABILITIES ACT 102. Paragraphs 1 through 101 are incorporated by reference. 103. Title II of the Americans with Disabilities Act provides that, “no qualified individual with a disability shall, by reason of disability, be excluded from participation in or be denied the benefits of the services, programs, or activities of a public entity, or be subjected to discrimination by any such 32 entity.” 42 U.S.C. § 12132. 104. Each Named Plaintiff and proposed class member is a “qualified individual with a disability” within the meaning of the ADA in that they: (1) have a physical impairment that substantially limits one or more major life activities; and (2) meet the essential eligibility requirements for long-term care under Florida’s Medicaid program. 105. Defendants are public agency directors responsible for operation of a public entity, pursuant to 42 U.S.C. §§ 12131(1)(A) & (B). 106. Title II of the ADA requires that public entities “administer services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities.” See 28 C.F.R. § 35.130(d). 107. Defendants violate the integration mandate of the ADA by failing to provide needed home and community based services to Named Plaintiffs and proposed class members, placing them at risk of unnecessary institutionalization or segregation. 108. The ADA further prohibits a state from utilizing, “criteria or other methods of administration [t]hat have the effect of subjecting qualified individuals with disabilities to discrimination on the basis of disability.” See 28 C.F.R. § 35.130(b)(3)(i). This includes methods of administration that, 33 “have the purpose or effect of defeating or substantially impairing accomplishment of objectives of the public entity’s program with respect to individuals with disabilities.” Id. § 35.130(b)(3)(ii). 109. Defendants’ criteria and methods of administering the Long-Term Care Waiver subject Named Plaintiffs and proposed class members to discrimination by: (1) using a system of assessment and prioritization that underestimates risk of institutionalization and places individuals at risk of unnecessary institutionalization; and (2) funding Medicaid Long-Term Care services with a bias toward institutional care. 110. Defendants’ unlawful discrimination against Named Plaintiffs and proposed class members violates Title II of the ADA. REQUEST FOR RELIEF WHEREFORE, Named Plaintiffs and proposed class members respectfully request that this Court: a. Certify this action as a class action and appoint individual Named Plaintiffs as class representatives; 34 b. Declare that Defendants’ failure to provide Named Plaintiffs and proposed class members with needed home and community based services violates Title II of the ADA; c. Enter a permanent injunction requiring Defendants to comply with the ADA, to include at a minimum: i. the provision of Medicaid-funded home and community based services required by Named Plaintiffs and the proposed class members to avoid or prevent unnecessary institutionalization and to avoid segregation; ii. notification to Named Plaintiffs and proposed class members of the availability of home and community- based alternatives to nursing facility or other institutional care and how to access those alternatives; and iii. development of a valid and reliable assessment tool for risk of nursing facility. d. Require Defendants to publicly report on a quarterly basis on the progress of compliance; 35 e. Retain jurisdiction over this case until Defendants have come into compliance with the ADA as applied to Named Plaintiffs and proposed class members; f. Award Plaintiffs their reasonable attorneys’ fees, litigation expenses, and costs; and g. Grant such other relief as this Court deems just and proper. Dated: December 12, 2018 Respectfully submitted, /s/ Amanda Heystek AMANDA HEYSTEK, Fla. Bar No. 285020 [email protected] Disability Rights Florida 1000 N. Ashley Dr. Ste. 640 Tampa, FL 33602 (850) 488-9071 JODI SIEGEL, Fla. Bar No. 511617 [email protected] Southern Legal Counsel, Inc. 1229 NW 12th Avenue Gainesville, FL 32601 (352) 271-8890 NANCY E. WRIGHT, Fla. Bar No. 309419 [email protected] Law Office of Nancy E. Wright 3231 NW 47th Place Gainesville, FL 32605 36 (352) 871-8255 REGAN BAILEY, pro hac vice pending [email protected] CAROL A. WONG, pro hac vice pending [email protected] JUSTICE IN AGING 1444 Eye Street, NW Suite 1100 Washington, D.C. 20005 (202) 683-1990 ERIC CARLSON, pro hac vice pending [email protected] JUSTICE IN AGING 3660 Wilshire Blvd., Suite 718 Los Angeles, CA 90010 (213) 674-2813 JOHN J. SULLIVAN, pro hac vice pending [email protected] DAVID H. REICHENBERG, pro hac vice pending [email protected] COZEN O’CONNOR 45 Broadway Suite 1600 New York, NY 10006 (212) 453-3729 ASHLEY GOMEZ-RODON, Fla. Bar No. 1010237 [email protected] COZEN O’CONNOR 200 South Biscayne Boulevard, Suite 3000 Miami, FL 33131 (786) 871-3996 ATTORNEYS FOR PLAINTIFFS 37

civil rights, immigration, family

xwaOFYcBD5gMZwcz8DQW

Case No.: COMPLAINT Collective Action and Class Action Complaint UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK CARLOS VILLIMAR SOLIS and ROLANDO CHACON, individually and on behalf of others similarly situated, Plaintiffs, -against- COSTAMAR EXPRESS CARGO & SHIPPING, INC. and BYRON ARCOS, Defendants. Plaintiffs CARLOS VILLIMAR SOLIS (“Solis”) and ROLANDO CHACON (“Chacon”), individually and on behalf of others similarly situated by and through their attorneys, FISHER TAUBENFELD LLP, allege against Defendants COSTAMAR EXPRESS CARGO & SHIPPING, INC. (the “Corporate Defendant”) and BYRON ARCOS (the “Individual Defendant”) (collectively, the “Defendants”) as follows: JURISDICTION AND VENUE 1. This Court has subject matter jurisdiction pursuant to 29 U.S.C. § 216(b) (Fair Labor Standards Act), 28 U.S.C. § 1337 (interstate commerce), and 28 U.S.C. § 1331 (original federal question jurisdiction). Supplemental jurisdiction over the New York State law claims is conferred by 28 U.S.C. § 1367(a), as such claims are so related in this action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. 2. Venue is proper in this District because Defendants conduct business in this district, the Corporate Defendant resides in this District, and a substantial part of the events or omissions giving rise to the claim occurred in this District. THE PARTIES 3. The Corporate Defendant is a domestic business corporation organized and existing under the laws of the State of New York and maintains its principal place of business at 4310 National Blvd, Corona, NY 11366. 4. The Corporate Defendant operate a shipping company, which is headquartered in Queens County, New York. 5. Upon information and belief, at all times relevant hereto, the Corporate Defendant has been a business or enterprise engaged in interstate commerce employing more than two (2) employees and earning gross annual sales over $500,000. 6. Plaintiff worked with tools and materials that traveled through interstate commerce, particularly dollies and tap. 7. At all relevant times hereto, Defendants have been and continue to be “employers” engaged in interstate “commerce” and/or in the production of “goods” for “commerce,” within the meaning of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 203. 8. At all relevant times hereto, Plaintiffs were engaged in interstate “commerce” within the meaning of the FLSA. 9. At all relevant times hereto, Defendants have employed “employee[s],” including Plaintiffs. 10. At all relevant times hereto, Defendants have been Plaintiffs’ employers within the meaning of the New York Labor Law (“NYLL”) §§ 2 and 651. 11. Each Plaintiff is an adult individual who has been employed by Defendants within the last six (6) years. 12. Upon information and belief, Defendant Acros resides in the State of New York and is an owner, manager, and/or employee of the Corporate Defendant. 13. Upon information and belief, Defendant Acros is the sole owner of the Corporate Defendant and operates the Corporate Defendant. Defendant Acros makes and/or made hiring and firing, scheduling, and payroll decisions and maintains pay records on behalf of the Corporate Defendant. 14. Defendant Acros is a natural person engaged in business in the State of New York, who is sued individually in his capacity as an owner, manager, and/or agent of the Corporate Defendant. 15. Defendant Acros exercises operational control over the Corporate Defendant’s operations. 16. At all relevant times, all Defendants have been Plaintiffs’ employer within the meaning of the FLSA and NYLL. Defendant Acros possessed and executed the power to hire and fire Plaintiffs, controlled their terms and conditions of employment, determined the rate and method of any compensation in exchange for their services, and maintained records of their employment. 17. Defendant Acros, among other actions, hired and fired Plaintiffs, set their rates of pay, determined their schedule, and maintained employment records. 18. Defendant Acros is Plaintiffs’ employer under the FLSA and NYLL and is individually liable to Plaintiffs. NATURE OF THE ACTION 19. Plaintiffs bring this action on behalf of (a) themselves and other similarly situated employees who have worked for the Defendants on or after the date that is three (3) years before the filing of this Complaint pursuant to the FLSA; and (b) themselves and other similarly situated employees on or after the date that is six (6) years before the filing of this Complaint pursuant to the NYLL and the New York Commissioner of Labor’s Wage Orders codified at 12 N.Y.C.R.R. 142 et seq., based upon the following acts and/or omissions: i. Defendants’ failure to pay minimum wage compensation required by New York State law and regulations to Plaintiffs; ii. Defendants’ failure to pay overtime compensation required by federal and New York State law and regulations to Plaintiffs when they worked in excess of forty (40) hours per week; and iii. Defendants’ failure to provide Plaintiffs with a wage notice or proper paystubs as required by NYLL § 195. FACT ALLEGATIONS 20. At all times relevant hereto, Defendants have committed the following acts and/or omissions intentionally and willfully, with knowledge that they have been violating federal and state laws and that Plaintiffs have been and continue to be economically injured. 21. Defendants have willfully disregarded and purposefully evaded recordkeeping requirements of the FLSA and NYLL and supporting regulations. Plaintiff Solis’ Schedule and Pay 22. Defendants hired Plaintiff Solis on March 10, 2018, as a driver, a position he held until Defendants terminated him on April 25, 2019. 23. Throughout most of Plaintiff Solis’ employment, he usually worked six days a week. His usual schedule was Monday through Wednesday from 10:00 a.m. until 11:00 p.m., Thursday from 10:00 a.m. to 4:00 a.m., and Friday and Saturday from 10:00 a.m. to 10:00 24. On several occasions, Plaintiff Solis was scheduled to work on Saturday from 6:00 a.m. to as late as 10:00 p.m. 25. For this work, Defendants paid Plaintiff Solis a set weekly rate of six hundred dollars ($600.00) for his scheduled hours, which did not meet the New York State minimum wage. 26. Plaintiff Solis received a raise in February 2019 to six hundred and fifty dollars a week ($650.00). 27. Defendants also did not pay Plaintiff Solis any extra pay for the extensive overtime hours he worked each week. 28. As such, Defendants violated both the federal Fair Labor Standard Act and the New York Labor Law by failing to properly pay Plaintiff Solis for each of his hours at the proper rate. Plaintiff Chacon’s Schedule and Pay 29. Defendants hired Plaintiff Chacon on May 12, 2018, as a driver, a position he held until Defendants terminated him on June 15, 2019. 30. Throughout most of Plaintiff Chacon’s employment, he usually worked six days a week. His usual schedule was Monday through Wednesday from 10:00 a.m. until 9:00 p.m. or 10:00 p.m., Thursday from 10:00 a.m. to 2:00 a.m. or 4:00 a.m. or later, Friday from 10:00 a.m. to 8:00 p.m. or 9:00 p.m., and Saturday from 10:00 a.m. to 7:00 p.m. or 8:00 p.m. 31. On several occasions, Plaintiff Chacon was scheduled to work on Saturday from 6:00 a.m. to as late as 9:00 p.m. 32. Plaintiff Chacon also worked on Sunday on limited occasions. 33. For this work, Defendants initially paid Plaintiff Chacon a set weekly rate of six hundred dollars ($600.00) for his scheduled hours, which did not meet the New York State minimum wage. 34. Plaintiff Chacon received a raise in February 2019 to six hundred and fifty dollars a week ($650.00). 35. Defendants also did not pay Plaintiff Chacon any extra pay for the extensive overtime hours he worked each week. 36. As such, Defendants violated both the federal Fair Labor Standard Act and the New York Labor Law by failing to properly pay Plaintiff Chacon for each of his hours at the proper rate. Defendants’ Violations of NYLL § 195 37. Defendants have failed to provide Plaintiffs with a wage notice in compliance with NYLL § 195. 38. Defendants did not at any time provide Plaintiffs with a notice specifying their rate of pay, the basis of pay, allowances, if any, claimed against the minimum wage (e.g., tips, meals, lodging) or the identification of their regular pay day. 39. Defendants also failed to provide Plaintiffs with wage statements stating, among other things, the correct number of regular or overtime hours they worked or their hourly rate for regular or overtime hours. COLLECTIVE ACTION ALLEGATIONS UNDER THE FLSA 40. Defendants’ failure to comply with the FLSA extended beyond the Plaintiffs to all other similarly situated employees insofar as Defendants had a policy to pay their employees a set weekly pay rate that did not provide for the minimum wage and also did not include any overtime premium for the hours they worked in excess of 40. 41. Plaintiffs seek certification of this action as a collective action on behalf of themselves, individually, and all other similarly situated current and former non-exempt employees of Defendants pursuant to 29 U.S.C. § 216(b). 42. The consent to sue forms for Plaintiffs are attached hereto as Exhibit 1. 43. Upon information and belief, there are at least 50 current and former employees who have been denied proper minimum and overtime wage compensation while working for Defendants. 44. At all relevant times, Plaintiffs and others who are and/or have been similarly situated, were paid by Defendants in similar ways, and have been subject to Defendants’ common practices, policies, programs, procedures, protocols and plans of willfully failing and refusing to pay them the statutorily required overtime compensation for hours worked in excess of forty (40) per workweek. The claims of Plaintiffs stated herein are similar to those of the other employees. 45. In bringing this action, Plaintiffs are representative of and are acting on behalf of the interests of other current and former non-exempt employees who have worked for Defendants within the last three (3) years. CLASS ACTION ALLEGATIONS UNDER FED.R.CIV.P.23(b)(3) FOR VIOLATIONS OF THE NYLL 46. Plaintiffs bring this action on behalf of themselves and all other non- exempt persons who were or are employed by the Defendants but who did not receive compensation required by the NYLL in respect to their work for the Defendants. 47. Upon information and belief, this class of persons consists of no fewer than 100 employees, and the class is thus so numerous that joinder of all members is impracticable under the standards of Fed.R.Civ.P.23(a)(1). 48. There are questions of law and fact common to the class, which predominate over any questions affecting only individual members, specifically: whether the employment of Plaintiffs by the Defendants is subject to the jurisdiction and the wage and overtime requirements of the NYLL. 49. The claims of Plaintiffs are typical of the claims of the above-described class in that all of the members of the class have been similarly affected by the acts and practices of the Defendants. 50. Plaintiffs will fairly and adequately protect the interests of the members of the class, in that their interests are not adverse to the interests of the other members of the class. 51. A class action is superior to the other available methods for the fair and efficient adjudication of the controversy under the standards of Fed.R.Civ.P.23(b)(3). 52. Plaintiffs bring the second, fourth, and fifth claims for relief herein on behalf of themselves and all other persons similarly situated as a class action pursuant to Fed.R.Civ.P.23, in respect to all claims that Plaintiffs and all persons similarly situated have against the Defendants as a result of the Defendants’ violations under the NYLL. FIRST CLAIM FOR RELIEF (FLSA Overtime Wage Violations by Plaintiffs) 53. Plaintiffs repeat and reallege all paragraphs above as though fully set forth 54. Throughout the statute of limitations period covered by these claims, Plaintiffs and others similarly situated regularly worked in excess of forty (40) hours per workweek. 55. At all relevant times hereto, Defendants have had and operated under a decision, policy and plan, and under common policies, programs, practices, procedures, protocols, routines and rules of knowingly and willfully failing and refusing to pay Plaintiffs and others similarly situated at one and a half times their regular rate of pay for all hours of work in excess of forty (40) hours per workweek, and willfully failing to keep required records, in violation of the FLSA. 56. Plaintiffs seek damages in the amount of their respective unpaid compensation, liquidated (double) damages as provided by the FLSA, attorneys’ fees and costs, and such other legal and equitable relief as this Court deems just and proper. SECOND CLAIM FOR RELIEF (NYLL Overtime Wage Violations) 57. Plaintiffs repeat and reallege all paragraphs above as though fully set forth 58. New York law prohibits an employer from permitting an employee to work without paying overtime wages for all hours worked in excess of forty (40) in any workweek. 59. Throughout the statute of limitations period covered by these claims, Defendants knowingly, willfully, regularly and repeatedly have failed to pay Plaintiffs and others similarly situated at the required overtime rates, one and a half times their regular rate of pay, for hours worked in excess of forty (40) per workweek. 60. As a direct and proximate result of Defendants’ willful and unlawful conduct, as set forth herein, Plaintiffs and others similarly situated have sustained damages and seeks recovery for unpaid wages in an amount to be determined at trial, attorneys’ fees, costs, liquidated damages and prejudgment interest as provided by NYLL § 663 and supporting regulations, and such other legal and equitable relief as this Court deems just and proper. THIRD CLAIM FOR RELIEF (FLSA Minimum Wage Violations) 61. Plaintiffs repeat and reallege all paragraphs above as though fully set forth 62. Defendants have knowingly and willfully engaged in a policy, pattern or practice of violating the FLSA, as detailed in this Complaint. 63. Throughout the statute of limitations period covered by these claims, Defendants failed to pay Plaintiffs and others similarly situated the federal minimum wage for each hour worked, in violation of 29 U.S.C. §§ 206(a) and 255(a). 64. Plaintiffs seek damages in the amount of their respective unpaid compensation, liquidated (double) damages as provided by the FLSA, attorneys’ fees and costs, and such other legal and equitable relief as this Court deems just and proper. FOURTH CLAIM FOR RELIEF (NYLL Minimum Wage Violations) 65. Plaintiffs repeat and reallege all paragraphs above as though fully set forth 66. Defendants knowingly and willfully paid the Plaintiffs and others similarly situated less than the minimum wage in violation of NYLL § 652 and the supporting regulations of the New York State Department of Labor. 67. As a direct and proximate result of Defendants’ willful and unlawful conduct, as set forth herein, Plaintiff and others similarly situated have sustained damages and seek recovery for unpaid wages in an amount to be determined at trial, attorneys’ fees, costs, liquidated damages and prejudgment interest as provided by NYLL § 663 and supporting regulations, and such other legal and equitable relief as this Court deems just and proper. FIFTH CLAIM FOR RELIEF (NYLL Failure to Notify) 68. Plaintiffs repeat and reallege all paragraphs above as though fully set forth 69. Pursuant to §195(1) of the NYLL, within ten business days of Plaintiffs and other similarly situated employee’s hiring, Defendants were obligated to provide them with a notice describing, inter alia, their hourly regular and overtime rates of pay. 70. Pursuant to §195(3) of the NYLL, Defendants were required to provide to Plaintiffs and others similarly situated a wage statement containing, inter alia, a correct record of each overtime hour worked and the employee’s overtime rate of pay. 71. Defendants failed to provide Plaintiffs and others similarly situated with a notice or wage statements in accordance with §195 of the NYLL. 72. As a direct and proximate result of Defendants’ willful and unlawful conduct, as set forth herein, Plaintiffs and others similarly situated have sustained damages and seek damages in accordance with §198 of the NYLL for each week Defendants failed to provide such notice and wage statement, along with attorneys’ fees, costs and prejudgment interest as provided by NYLL § 198 and supporting regulations, and such other legal and equitable relief as this Court deems just and proper. PRAYER FOR RELIEF WHEREFORE, Plaintiffs respectfully request that this Court enter judgment for: A. Compensatory Damages in an amount to be determined at trial; B. Prejudgment Interest; C. Liquidated Damages pursuant to the FLSA and NYLL; D. Plaintiffs’ costs and reasonable attorneys’ fees; and E. Any relief the Court deems just and proper. Dated: June 2, 2021 New York, New York Respectfully submitted, _______________________________ Michael Taubenfeld FISHER TAUBENFELD LLP 225 Broadway, Suite 1700 New York, New York 10007 Phone: (212) 571-0700 Facsimile: (212) 505-2001 ATTORNEYS FOR PLAINTIFFS EXHIBIT 1 AUTORIZACIÓN PARA DEMANDAR BAJO LA LEY FEDERAL DE NORMAS RAZONABLES DE TRABAJO Soy un individuo que fue empleado de Costamar Express Cargo & Shipping, Inc. o de entidades relacionadas. Autorizo ser demandante en una acción para recolectar sueldos impagos. Acepto cumplir con los términos del Contrato de Prestación de Servicios Profesionales que firmé para este 5/26/2021 ____________________________________ NOMBRE ____________________________________ FIRMA ________________________ FECHA CONSENT TO SUE UNDER FEDERAL FAIR LABOR STANDARDS ACT I am an individual who was formerly employed by Costamar Express Cargo & Shipping, Inc. and/or related entities. I consent to be a plaintiff in an action to collect unpaid wages. I agree that I am bound by the terms of the Professional Services Agreement signed by me in this case. ______________________ SIGNATURE ____ DATE I hereby declare that I am fluent in both the Spanish and English languages and that English translation of the above Consent to Sue form is a true translation of the Spanish Consent to Sue form signed by Carlos Villamar. ________________________ MATTHEW VASQUEZ AUTORIZACIÓN PARA DEMANDAR BAJO LA LEY FEDERAL DE NORMAS RAZONABLES DE TRABAJO Soy un individuo que fue empleado de Costamar Express Cargo & Shipping, Inc. o de entidades relacionadas. Autorizo ser demandante en una acción para recolectar sueldos impagos. Acepto cumplir con los términos del Contrato de Prestación de Servicios Profesionales que firmé para este 5/25/2021 ____________________________________ NOMBRE ____________________________________ FIRMA ________________________ FECHA CONSENT TO SUE UNDER FEDERAL FAIR LABOR STANDARDS ACT I am an individual who was formerly employed by Costamar Express Cargo & Shipping, Inc. and/or related entities. I consent to be a plaintiff in an action to collect unpaid wages. I agree that I am bound by the terms of the Professional Services Agreement signed by me in this case. ______________________ SIGNATURE ____ DATE I hereby declare that I am fluent in both the Spanish and English languages and that English translation of the above Consent to Sue form is a true translation of the Spanish Consent to Sue form signed by Rolando Chacon. ________________________ MATTHEW VASQUEZ

employment & labor

5vnsE4cBD5gMZwczYRBz

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x MARY WEST, on behalf of herself and all others similarly situated, CLASS ACTION COMPLAINT AND Plaintiffs, v. DEMAND FOR JURY TRIAL 1:20-cv-3591 LORITO BOOKS, INC., Defendant. : : : : : : : : : : : : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x INTRODUCTION 1. Plaintiff MARY WEST, on behalf of herself and others similarly situated, asserts the following claims against Defendant LORITO BOOKS, INC. as follows. 2. Plaintiff is a visually-impaired and legally blind person who requires screen- reading software to read website content using her computer. Plaintiff uses the terms “blind” or “visually-impaired” to refer to all people with visual impairments who meet the legal definition of blindness in that they have a visual acuity with correction of less than or equal to 20 x 200. Some blind people who meet this definition have limited vision. Others have no vision. 3. Based on a 2010 U.S. Census Bureau report, approximately 8.1 million people in the United States are visually impaired, including 2.0 million who are blind, and according to the American Foundation for the Blind’s 2015 report, approximately 400,000 visually impaired persons live in the State of New York. 4. Plaintiff brings this civil rights action against Defendant for its failure to design, construct, maintain, and operate its website to be fully accessible to and independently usable by Plaintiff and other blind or visually-impaired people. Defendant’s denial of full and equal access to its website, and therefore denial of its goods and services offered thereby, is a violation of Plaintiff’s rights under the Americans with Disabilities Act (“ADA”). 5. Because Defendant’s website, www.loritobooks.com (the “Website”), is not equally accessible to blind and visually impaired consumers, it violates the ADA. Plaintiff seeks a permanent injunction to cause a change in Defendant’s corporate policies, practices, and procedures so that Defendant’s website will become and remain accessible to blind and visually-impaired consumers. JURISDICTION AND VENUE 6. This Court has subject-matter jurisdiction over this action under 28 U.S.C. § 1331 and 42 U.S.C. § 12181, as Plaintiff’s claims arise under Title III of the ADA, 42 U.S.C. § 12181, et seq., and 28 U.S.C. § 1332. 7. This Court has supplemental jurisdiction under 28 U.S.C. § 1367 over Plaintiff’s New York City Human Rights Law, N.Y.C. Admin. Code § 8-101 et seq., (“NYCHRL”) claims. 8. Venue is proper in this district under 28 U.S.C. §1391(b)(1) and (2) because Defendant conducts and continues to conduct a substantial and significant amount of business in this District, and a substantial portion of the conduct complained of herein occurred in this District because Plaintiff attempted to utilize, on a number of occasions, the subject Website within this Judicial District. 9. Defendant is subject to personal jurisdiction in this District. Defendant has been and is committing the acts or omissions alleged herein in the Southern District of New York that caused injury and violated rights the ADA prescribes to Plaintiff and to other blind and other visually impaired-consumers. A substantial part of the acts and omissions giving rise to Plaintiff’s claims occurred in this District: on several separate occasions, Plaintiff has been denied the full use and enjoyment of the facilities, goods and services offered to the general public, on Defendant’s Website in New York County. These access barriers that Plaintiff encountered have caused a denial of Plaintiff’s full and equal access multiple times in the past, and now deter Plaintiff on a regular basis from accessing the Defendant’s Website in the future. 10. This Court is empowered to issue a declaratory judgment under 28 U.S.C. §§ 2201 and 2202. THE PARTIES 11. Plaintiff MARY WEST, at all relevant times, is and was a resident of Kings County, New York. 12. Plaintiff is a blind, visually-impaired handicapped person and a member of a protected class of individuals under the ADA, under 42 U.S.C. § 12102(1)-(2), and the regulations implementing the ADA set forth at 28 CFR §§ 36.101 et seq., and NYCHRL. 13. Defendant is and was at all relevant times a Colorado Corporation doing business in New York. 14. Defendant’s Website, and its goods, and services offered thereupon, is a public accommodation within the definition of Title III of the ADA, 42 U.S.C. § 12181(7). NATURE OF ACTION 15. The Internet has become a significant source of information, a portal, and a tool for conducting business, doing everyday activities such as shopping, learning, banking, researching, as well as many other activities for sighted, blind and visually- impaired persons alike. 16. In today’s tech-savvy world, blind and visually impaired people have the ability to access websites using keyboards in conjunction with screen access software that vocalizes the visual information found on a computer screen or displays the content on a refreshable Braille display. This technology is known as screen-reading software. Screen-reading software is currently the only method a blind or visually- impaired person may use to independently access the internet. Unless websites are designed to be read by screen-reading software, blind and visually-impaired persons are unable to fully access websites, and the information, products, goods and contained thereon. 17. Blind and visually-impaired users of Windows operating system-enabled computers and devices have several screen reading software programs available to them. Some of these programs are available for purchase and other programs are available without the user having to purchase the program separately. Job Access With Speech, otherwise known as “JAWS” is currently the most popular, separately purchased and downloaded screen-reading software program available for a Windows computer. Another popular screen-reading software program available for a Windows computer is NonVisual Desktop Access “NVDA”. 18. For screen-reading software to function, the information on a website must be capable of being rendered into text. If the website content is not capable of being rendered into text, the blind or visually-impaired user is unable to access the same content available to sighted users. 19. The international website standards organization, the World Wide Web Consortium, known throughout the world as W3C, has published version 2.1 of the Web Content Accessibility Guidelines (“WCAG 2.1”). WCAG 2.1 are well- established guidelines for making websites accessible to blind and visually- impaired people. These guidelines are universally followed by most large business entities and government agencies to ensure their websites are accessible. 20. Non-compliant websites pose common access barriers to blind and visually- impaired persons. Common barriers encountered by blind and visually impaired persons include, but are not limited to, the following: a. A text equivalent for every non-text element is not provided; b. Title frames with text are not provided for identification and navigation; c. Equivalent text is not provided when using scripts; d. Forms with the same information and functionality as for sighted persons are not provided; e. Information about the meaning and structure of content is not conveyed by more than the visual presentation of content; f. Text cannot be resized without assistive technology up to 200% without losing content or functionality; g. If the content enforces a time limit, the user is not able to extend, adjust or disable it; h. Web pages do not have titles that describe the topic or purpose; i. The purpose of each link cannot be determined from the link text alone or from the link text and its programmatically determined link context; j. One or more keyboard operable user interface lacks a mode of operation where the keyboard focus indicator is discernible; k. The default human language of each web page cannot be programmatically determined; l. When a component receives focus, it may initiate a change in context; m. Changing the setting of a user interface component may automatically cause a change of context where the user has not been advised before using the component; n. Labels or instructions are not provided when content requires user input, which include captcha prompts that require the user to verify that he or she is not a robot; o. In content which is implemented by using markup languages, elements do not have complete start and end tags, elements are not nested according to their specifications, elements may contain duplicate attributes, and/or any IDs are not unique; p. Inaccessible Portable Document Format (PDFs); and, q. The name and role of all User Interface elements cannot be programmatically determined; items that can be set by the user cannot be programmatically set; and/or notification of changes to these items is not available to user agents, including assistive technology. STATEMENT OF FACTS 21. Defendant is a children’s Spanish book and audiobook company that owns and operates www.loritobooks.com (its “Website”), offering features which should allow all consumers to access the goods and services and which Defendant ensures the delivery of such goods throughout the United States, including New York State. 22. Defendant’s Website offers products and services for online sale and general delivery to the public. The Website offers features which ought to allow users to browse for items, access navigation bar descriptions, inquire about pricing, and avail consumers of the ability to peruse the numerous items offered for sale. 23. Plaintiff is a visually-impaired and legally blind person, who cannot use a computer without the assistance of screen-reading software. Plaintiff is, however, a proficient NVDA screen-reader user and uses it to access the Internet. Plaintiff has visited the Website on separate occasions using a screen-reader. 24. On multiple occasions, the last occurring in March of 2020, Plaintiff visited Defendant’s website, www.loritobooks.com, to make a purchase. Despite her efforts, however, Plaintiff was denied a shopping experience similar to that of a sighted individual due to the website’s lack of a variety of features and accommodations, which effectively barred Plaintiff from being able to determine what specific products were offered for sale. 25. Many features on the Website lacks alt. text, which is the invisible code embedded beneath a graphical image. As a result, Plaintiff was unable to differentiate what products were on the screen due to the failure of the Website to adequately describe its content. Such issues were predominant in the section where Plaintiff was attempting, but was unsuccessful, in making a purchase. 26. Many features on the Website also fail to Add a label element or title attribute for each field. This is a problem for the visually impaired because the screen reader fails to communicate the purpose of the page element. It also leads to the user not being able to understand what he or she is expected to insert into the subject field. As a result, Plaintiff and similarly situated visually impaired users of Defendant’s Website are unable to enjoy the privileges and benefits of the Website equally to sighted users. 27. Many pages on the Website also contain the same title elements. This is a problem for the visually impaired because the screen reader fails to distinguish one page from another. In order to fix this problem, Defendant must change the title elements for each page. 28. The Website also contained a host of broken links, which is a hyperlink to a non- existent or empty webpage. For the visually impaired this is especially paralyzing due to the inability to navigate or otherwise determine where one is on the website once a broken link is encountered. For example, upon coming across a link of interest, Plaintiff was redirected to an error page. However, the screen-reader failed to communicate that the link was broken. As a result, Plaintiff could not get back to her original search. 29. These access barriers effectively denied Plaintiff the ability to use and enjoy Defendant’s website the same way sighted individuals do. 30. It is, upon information and belief, Defendant’s policy and practice to deny Plaintiff, along with other blind or visually-impaired users, access to Defendant’s website, and to therefore specifically deny the goods and services that are offered to the general public. Due to Defendant’s failure and refusal to remove access barriers to its website, Plaintiff and visually-impaired persons have been and are still being denied equal access to Defendant’s Website, and the numerous goods and services and benefits offered to the public through the Website. 31. Due to the inaccessibility of Defendant’s Website, blind and visually-impaired customers such as Plaintiff, who need screen-readers, cannot fully and equally use or enjoy the facilities, products, and services Defendant offers to the public on its Website. The access barriers Plaintiff encountered have caused a denial of Plaintiff’s full and equal access in the past, and now deter Plaintiff on a regular basis from equal access to the Website. 32. If the Website were equally accessible to all, Plaintiff could independently navigate the Website and complete a desired transaction as sighted individuals do. 33. Through her attempts to use the Website, Plaintiff has actual knowledge of the access barriers that make these services inaccessible and independently unusable by blind and visually-impaired people. 34. Because simple compliance with the WCAG 2.1 Guidelines would provide Plaintiff and other visually-impaired consumers with equal access to the Website, Plaintiff alleges that Defendant has engaged in acts of intentional discrimination, including but not limited to the following policies or practices: a. Constructing and maintaining a website that is inaccessible to visually-impaired individuals, including Plaintiff; b. Failure to construct and maintain a website that is sufficiently intuitive so as to be equally accessible to visually impaired individuals, including Plaintiff; and, c. Failing to take actions to correct these access barriers in the face of substantial harm and discrimination to blind and visually-impaired consumers, such as Plaintiff, as a member of a protected class. 35. Defendant therefore uses standards, criteria or methods of administration that have the effect of discriminating or perpetuating the discrimination of others, as alleged herein. 36. The ADA expressly contemplates the injunctive relief that Plaintiff seeks in this action. In relevant part, the ADA requires: In the case of violations of . . . this title, injunctive relief shall include an order to alter facilities to make such facilities readily accessible to and usable by individuals with disabilities . . . Where appropriate, injunctive relief shall also include requiring the . . . modification of a policy . . . 42 U.S.C. § 12188(a)(2). 37. Because Defendant’s Website has never been equally accessible, and because Defendant lacks a corporate policy that is reasonably calculated to cause its Website to become and remain accessible, Plaintiff invokes 42 U.S.C. § 12188(a)(2) and seeks a permanent injunction requiring Defendant to retain a qualified consultant acceptable to Plaintiff (“Agreed Upon Consultant”) to assist Defendant to comply with WCAG 2.1 guidelines for Defendant’s Website. Plaintiff seeks that this permanent injunction requires Defendant to cooperate with the Agreed Upon Consultant to: a. Train Defendant’s employees and agents who develop the Website on accessibility compliance under the WCAG 2.1 guidelines; b. Regularly check the accessibility of the Website under the WCAG 2.1 guidelines; c. Regularly test user accessibility by blind or vision-impaired persons to ensure that Defendant’s Website complies under the WCAG 2.1 guidelines; and, d. Develop an accessibility policy that is clearly disclosed on Defendant’s Websites, with contact information for users to report accessibility-related problems. 38. Although Defendant may currently have centralized policies regarding maintaining and operating its Website, Defendant lacks a plan and policy reasonably calculated to make them fully and equally accessible to, and independently usable by, blind and other visually-impaired consumers. 39. Defendant has, upon information and belief, invested substantial sums in developing and maintaining their Website and has generated significant revenue from the Website. These amounts are far greater than the associated cost of making their Website equally accessible to visually impaired customers. 40. Without injunctive relief, Plaintiff and other visually-impaired consumers will continue to be unable to independently use the Website, violating their rights. CLASS ACTION ALLEGATIONS 41. Plaintiff, on behalf of herself and all others similarly situated, seeks to certify a nationwide class under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the United States who have attempted to access Defendant’s Website and as a result have been denied access to the equal enjoyment of goods and services, during the relevant statutory period. 42. Plaintiff, on behalf of herself and all others similarly situated, seeks to certify a New York City subclass under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the City of New York who have attempted to access Defendant’s Website and as a result have been denied access to the equal enjoyment of goods and services offered, during the relevant statutory period. 43. Common questions of law and fact exist amongst the Class, including: a. Whether Defendant’s Website is a “public accommodation” under the ADA; b. Whether Defendant’s Website is a “place or provider of public accommodation” under the NYCHRL; c. Whether Defendant’s Website denies the full and equal enjoyment of its products, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating the ADA; and d. Whether Defendant’s Website denies the full and equal enjoyment of its products, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating the NYCHRL. 44. Plaintiff’s claims are typical of the Class. The Class, similarly to the Plaintiff, are severely visually impaired or otherwise blind, and claim that Defendant has violated the ADA or NYCHRL by failing to update or remove access barriers on its Website so either can be independently accessible to the Class. 45. Plaintiff will fairly and adequately represent and protect the interests of the Class Members because Plaintiff has retained and is represented by counsel competent and experienced in complex class action litigation, and because Plaintiff has no interests antagonistic to the Class Members. Class certification of the claims is appropriate under Fed. R. Civ. P. 23(b)(2) because Defendant has acted or refused to act on grounds generally applicable to the Class, making appropriate both declaratory and injunctive relief with respect to Plaintiff and the Class as a whole. 46. Alternatively, class certification is appropriate under Fed. R. Civ. P. 23(b)(3) because fact and legal questions common to Class Members predominate over questions affecting only individual Class Members, and because a class action is superior to other available methods for the fair and efficient adjudication of this litigation. 47. Judicial economy will be served by maintaining this lawsuit as a class action in that it is likely to avoid the burden that would be otherwise placed upon the judicial system by the filing of numerous similar suits by people with visual disabilities throughout the United States. FIRST CAUSE OF ACTION VIOLATIONS OF THE ADA, 42 U.S.C. § 12181 et seq. 48. Plaintiff, on behalf of herself and the Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 49. Section 302(a) of Title III of the ADA, 42 U.S.C. § 12101 et seq., provides: No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation. 42 U.S.C. § 12182(a). 50. Defendant’s Website is a public accommodations within the definition of Title III of the ADA, 42 U.S.C. § 12181(7). The Website is a service that is offered to the general public, and as such, must be equally accessible to all potential consumers. 51. Under Section 302(b)(1) of Title III of the ADA, it is unlawful discrimination to deny individuals with disabilities the opportunity to participate in or benefit from the products, services, facilities, privileges, advantages, or accommodations of an entity. 42 U.S.C. § 12182(b)(1)(A)(i). 52. Under Section 302(b)(1) of Title III of the ADA, it is unlawful discrimination to deny individuals with disabilities an opportunity to participate in or benefit from the products, services, facilities, privileges, advantages, or accommodation, which is equal to the opportunities afforded to other individuals. 42 U.S.C. § 12182(b)(1)(A)(ii). 53. Under Section 302(b)(2) of Title III of the ADA, unlawful discrimination also includes, among other things: [A] failure to make reasonable modifications in policies, practices, or procedures, when such modifications are necessary to afford such goods, services, facilities, privileges, advantages, or accommodations to individuals with disabilities, unless the entity can demonstrate that making such modifications would fundamentally alter the nature of such goods, services, facilities, privileges, advantages or accommodations; and a failure to take such steps as may be necessary to ensure that no individual with a disability is excluded, denied services, segregated or otherwise treated differently than other individuals because of the absence of auxiliary aids and services, unless the entity can demonstrate that taking such steps would fundamentally alter the nature of the good, service, facility, privilege, advantage, or accommodation being offered or would result in an undue burden. 42 U.S.C. § 12182(b)(2)(A)(ii)-(iii). 54. The acts alleged herein constitute violations of Title III of the ADA, and the regulations promulgated thereunder. Plaintiff, who is a member of a protected class of persons under the ADA, has a physical disability that substantially limits the major life activity of sight within the meaning of 42 U.S.C. §§ 12102(1)(A)-(2)(A). Furthermore, Plaintiff has been denied full and equal access to the Website, has not been provided services that are provided to other patrons who are not disabled, and has been provided services that are inferior to the services provided to non-disabled persons. Defendant has failed to take any prompt and equitable steps to remedy its discriminatory conduct. These violations are ongoing. 55. Under 42 U.S.C. § 12188 and the remedies, procedures, and rights set forth and incorporated therein, Plaintiff, requests relief as set forth below. SECOND CAUSE OF ACTION VIOLATIONS OF THE NYCHRL 56. Plaintiff, on behalf of herself and the New York City Sub-Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 57. N.Y.C. Administrative Code § 8-107(4)(a) provides that “It shall be an unlawful discriminatory practice for any person, being the owner, lessee, proprietor, manager, superintendent, agent or employee of any place or provider of public accommodation, because of . . . disability . . . directly or indirectly, to refuse, withhold from or deny to such person, any of the accommodations, advantages, facilities or privileges thereof.” 58. Defendant’s Website is a sales establishment and public accommodations within the definition of N.Y.C. Admin. Code § 8-102(9). 59. Defendant is subject to NYCHRL because it owns and operates its Website, making it a person within the meaning of N.Y.C. Admin. Code § 8-102(1). 60. Defendant is violating N.Y.C. Administrative Code § 8-107(4)(a) in refusing to update or remove access barriers to Website, causing its Website and the services integrated with such Website to be completely inaccessible to the blind. This inaccessibility denies blind patrons full and equal access to the facilities, products, and services that Defendant makes available to the non-disabled public. 61. Defendant is required to “make reasonable accommodation to the needs of persons with disabilities . . . any person prohibited by the provisions of [§ 8-107 et seq.] from discriminating on the basis of disability shall make reasonable accommodation to enable a person with a disability to . . . enjoy the right or rights in question provided that the disability is known or should have been known by the covered entity.” N.Y.C. Admin. Code § 8-107(15)(a). 62. Defendant’s actions constitute willful intentional discrimination against the Sub- Class on the basis of a disability in violation of the N.Y.C. Administrative Code § 8-107(4)(a) and § 8-107(15)(a) in that Defendant has: a. constructed and maintained a website that is inaccessible to blind class members with knowledge of the discrimination; and/or b. constructed and maintained a website that is sufficiently intuitive and/or obvious that is inaccessible to blind class members; and/or c. failed to take actions to correct these access barriers in the face of substantial harm and discrimination to blind class members. 63. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 64. As such, Defendant discriminates, and will continue in the future to discriminate against Plaintiff and members of the proposed class and subclass on the basis of disability in the full and equal enjoyment of the products, services, facilities, privileges, advantages, accommodations and/or opportunities of its Website under § 8-107(4)(a) and/or its implementing regulations. Unless the Court enjoins Defendant from continuing to engage in these unlawful practices, Plaintiff and members of the class will continue to suffer irreparable harm. 65. Defendant’s actions were and are in violation of the NYCHRL and therefore Plaintiff invokes her right to injunctive relief to remedy the discrimination. 66. Plaintiff is also entitled to compensatory damages, as well as civil penalties and fines under N.Y.C. Administrative Code § 8-120(8) and § 8-126(a) for each offense as well as punitive damages pursuant to § 8-502. 67. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 68. Under N.Y.C. Administrative Code § 8-120 and § 8-126 and the remedies, procedures, and rights set forth and incorporated therein Plaintiff prays for judgment as set forth below. THIRD CAUSE OF ACTION DECLARATORY RELIEF 69. Plaintiff, on behalf of herself and the Class and New York City Sub-Classes Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 70. An actual controversy has arisen and now exists between the parties in that Plaintiff contends, and is informed and believes that Defendant denies, that its Website contains access barriers denying blind customers the full and equal access to the products, services and facilities of its Website, which Defendant owns, operates and controls, fails to comply with applicable laws including, but not limited to, Title III of the Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., and N.Y.C. Admin. Code § 8-107, et seq. prohibiting discrimination against the blind. 71. A judicial declaration is necessary and appropriate at this time in order that each of the parties may know their respective rights and duties and act accordingly. PRAYER FOR RELIEF WHEREFORE, Plaintiff respectfully requests this Court grant the following relief: a. A preliminary and permanent injunction to prohibit Defendant from violating the Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y.C. Administrative Code § 8-107, et seq., and the laws of New York; b. A preliminary and permanent injunction requiring Defendant to take all the steps necessary to make its Website into full compliance with the requirements set forth in the ADA, and its implementing regulations, so that the Website is readily accessible to and usable by blind individuals; c. A declaration that Defendant owns, maintains and/or operates its Website in a manner that discriminates against the blind and which fails to provide access for persons with disabilities as required by Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y.C. Administrative Code § 8-107, et seq., and the laws of New York d. An order certifying the Class and Sub-Classes under Fed. R. Civ. P. 23(a) & (b)(2) and/or (b)(3), appointing Plaintiff as Class Representative, and her attorneys as Class Counsel; e. Compensatory damages in an amount to be determined by proof, including all applicable statutory and punitive damages and fines, to Plaintiff and the proposed class and subclasses for violations of their civil rights under New York City Human Rights Law and City Law; f. Pre- and post-judgment interest; g. An award of costs and expenses of this action together with reasonable attorneys’ and expert fees; and h. Such other and further relief as this Court deems just and proper. DEMAND FOR TRIAL BY JURY Pursuant to Fed. R. Civ. P. 38(b), Plaintiff demands a trial by jury on all questions of fact the Complaint raises. Dated: Hackensack, New Jersey May 8, 2020 STEIN SAKS, PLLC By: /s/ David P. Force David P. Force, Esq. [email protected] 285 Passaic Street Hackensack, NJ 07601 Tel: (201) 282-6500 Fax: (201) 282-6501 ATTORNEYS FOR PLAINTIFF

civil rights, immigration, family

qN-7EIcBD5gMZwczsWMu

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI ELMER BUSH, individually and on behalf of all others similarly situated, Plaintiff, v. CIVIL ACTION NO.: 4:15-cv-1026 JURY TRIAL DEMANDED ARCH COAL, INC., JOHN W. EAVES, PAUL A. LANG, JAMES R. BOYD, DAVID C. FREUDENTHAL, PATRICIA FRY GODLEY, PAUL T. HANRAHAN, DOUGLAS H. HUNT, BRIAN J. JENNINGS, J. THOMAS JONES, STEVEN F. LEER, GEORGE C. MORRIS, III, A. MICHAEL PERRY, ROBERT G. PORTER, JAMES A. SABALA, THEODORE S. SANDS, WESLEY M. TAYLOR, PETER I. WOLD, ALLEN R. KELLY, JOHN ZIEGLER, JR., MERCER FIDUCIARY TRUST COMPANY, ARCH COAL, INC. EMPLOYEE THRIFT PLAN RETIREMENT COMMITTEE, FINANCE COMMITTEE OF BOARD OF DIRECTORS OF ARCH COAL, INC., AND DOES 1-10, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CLASS ACTION COMPLAINT Plaintiff Elmer Bush (“Plaintiff”), on behalf of the Arch Coal, Inc. Employee Thrift Plan (the “Plan”), himself, and a class of similarly situated participants and beneficiaries of the Plan (the “Participants”), alleges as follows: INTRODUCTION 1. Arch Coal, Inc. (“Arch Coal” or the “Company”), is a domestic coal company that derives substantially all of its revenue from mining and selling coal to power plants, steel mills, and industrial facilities. See Arch Coal Annual Report for Year-End 2014, at 5 (filed Feb. 27, 2015 (“2014 Form 10-K”). As of December 31, 2014, Arch Coal operated, or contracted out the operation of, 16 active mines located in each of the major coal-producing regions of the United States. See id. 2. Arch Coal provides its employees the opportunity to save for retirement through the Plan, which is a defined contribution plan. See Arch Coal, Inc. Employee Thrift Plan Annual Report for Year-End 2014, at 4 (filed June 29, 2015) (“2014 Form 11-K”). 3. In essence, defined contribution retirement plans confer tax benefits on participating employees to incentivize saving for retirement. An employee participating in a defined contribution plan may have the option of purchasing the common stock of his or her employer for part of his or her retirement investment portfolio. In this case, Participants, through the Plan, had the option of purchasing the common stock of Arch Coal (“Arch Coal Stock” or “Company Stock”). 4. Plaintiff is a former employee of Arch Coal and was a Participant in the Plan during the Class Period (July 27, 2012 to the present), during which time the Plan and Plaintiff’s individual account in the Plan, held interests in Arch Coal Stock. 5. This is a class action brought pursuant to §§ 409 and 502 of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1109 and 1132, against the Plan’s fiduciaries, which include Arch Coal, the Finance Committee of the Board of the Directors (the “Finance Committee”), the Arch Coal, Inc. Employee Thrift Plan Retirement Committee (“Retirement Committee”), and certain individual officers and management-level employees of the Company. 6. The Plan is a legal entity that can sue and be sued. ERISA § 502(d)(1), 29 U.S.C. § 1132(d)(1). However, in a breach of fiduciary duty action such as this, the Plan is not a party. Rather, pursuant to ERISA § 409, and the law interpreting it, the relief requested in this action is for the benefit of the Plan and its Participants. 7. Plaintiff alleges that Defendants, as “fiduciaries” of the Plan, as that term is defined under ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A), breached duties owed to the Plan, to Plaintiff, and to the other Participants by, inter alia, retaining Arch Coal Stock as an investment option in the Plan when a reasonable fiduciary using the “care, skill, prudence, and diligence… that a prudent man acting in a like capacity and familiar with such matters would use” would have done otherwise. See ERISA § 404(a)(1), 29 U.S.C. § 1104(a)(1). 8. Specifically, Plaintiff alleges in Count I that Defendants, each having certain responsibilities regarding the management and investment of the Plan’s assets, breached their fiduciary duties to the Plan, to Plaintiff, and to the proposed Class by: (a) continuing to offer Arch Coal Stock as an investment option for the Plan when it was imprudent to do so; and (b) maintaining the Plan’s pre-existing significant investment in Arch Coal Stock when it was no longer a prudent investment for the Plan. These actions/inactions run directly counter (i) to the express purpose of ERISA pension plans, which are designed to help provide funds for participants’ retirement (see ERISA § 2, 29 U.S.C. § 1001 (“CONGRESSIONAL FINDINGS AND DECLARATION OF POLICY”)), and (ii) the purpose of the Plan (i.e., to help Participants save for retirement). 9. Plaintiff’s Count II alleges that certain Defendants failed to avoid or ameliorate inherent conflicts of interests which crippled their ability to function as independent, “single-minded” fiduciaries with only the Plan’s and its Participants’ best interests in mind. 10. Plaintiff’s Count III alleges that certain Defendants breached their fiduciary duties by failing to adequately monitor other persons to whom management/administration of the Plan’s assets was delegated, despite the fact that such Defendants knew or should have known that such other fiduciaries were imprudently allowing the Plan to continue offering Arch Coal Stock as an investment option and investing the Plan’s assets in Arch Coal Stock when it was no longer prudent to do so. 11. Plaintiff’s Count IV alleges that Mercer Fiduciary Trust Company (“Mercer”), the Plan’s trustee,1 breached its fiduciary duties by blindly following the directions of the Plan’s named and de facto fiduciaries, in violation of ERISA, when it was clearly imprudent to do so. Mercer continued to allow the Plan to hold and acquire Arch Coal Stock when it was clear, based upon publicly available information, that Arch Coal Stock was an objectively imprudent retirement investment option. 12. The thrust of Plaintiff’s allegations is that Defendants allowed the imprudent investment of the Plan’s assets in Arch Coal Stock throughout the Class Period despite the fact that they knew or should have known that such investment was imprudent as a retirement vehicle because of the sea-change in the basic risk profile and business prospects of the Company caused by inter alia: (a) the collapse of coal prices which drastically and for the foreseeable future compromised Arch Coal’s financial health; (b) the Company’s deteriorating Altman Z-score (“Z- score”) – a financial formula commonly used by financial professionals to predict whether a company is likely to go into bankruptcy – which indicated that Arch Coal was and is in danger of 1 Mercer HR Services serves as the Plan’s recordkeeper. See 2014 11-K at 8. bankruptcy; (c) an excessive increase in the Company’s debt to equity ratio; and (d) other indicia of the Company’s financial distress, including mine closures and employee layoffs, as discussed further below. 13. Defendants knew or should have known that continued significant investment of the Plan’s Participants’ retirement savings in Company Stock would inevitably result in substantial losses to the Plan and, consequently, to the Plan’s Participants. Indeed, as a consequence of the foregoing, the Plan and its Participants have suffered tens of millions of dollars of losses as the market price of Arch Coal has fallen from approximately $6.55 on July 27, 2012, the first day of the Class Period, to $0.42 (both adjusted closes) on June 29, 2015, the most recent trading day preceding the date of this filing – a decline of almost 100%. 14. Defendants recognized or should have recognized the severity of the problems at the Company during the Class Period as a result of the above factors, yet took no steps to protect the Plan and its Participants. 15. ERISA requires fiduciaries to employ appropriate methods to investigate the merits of all plan investments as well as to engage in a reasoned decision-making process, consistent with that of a prudent person acting in a like capacity. The duty of prudence also requires fiduciaries to monitor the prudence of their investment decisions to ensure that they remain in the best interest of the plan’s participants. 16. The Department of Labor (“DOL”) has issued regulations interpreting the duty of prudence. In order to comply with the duty of prudence, a fiduciary must give “appropriate consideration to those facts and circumstances that, given the scope of such fiduciary’s investment duties, the fiduciary knows or should know are relevant to the particular investment or investment course of action involved, including the role that the investment or investment course of action plays in that portion of the plan’s investment portfolio with respect to which the fiduciary has investment duties.” 29 C.F.R. § 2550.404a-1(b)(1). “Appropriate consideration,” according to DOL regulations, includes but is not necessarily limited to “(i)[a] determination by the fiduciary that the particular investment or investment course of action is reasonably designed…to further the purposes of the plan, taking into consideration the risk of loss and the opportunity for gain (or other return) associated with the investment or investment course of action.” 29 C.F.R. § 2550.404a-1(b)(2). 17. A fiduciary who simply ignores changed circumstances that have increased the risk of loss to the trust’s beneficiaries is acting imprudently in violation of ERISA. 18. Trust law, from which ERISA is derived, clarifies that a “trustee has a duty to the beneficiaries to invest and manage the funds of the trust as a prudent investor would, in light of the purposes, terms, distribution requirements, and other circumstances of the trust.”2 See Restatement (Third) of Trusts § 90. 19. When a trustee makes investment decisions, the trustee’s conduct is judged using a “prudent investor” standard. Restatement (Third) § 90, at 292. The trustee must “invest and manage the funds of the trust as a prudent investor would, in light of the purposes, terms, distribution requirements, and other circumstances of the trust.” Id. “[A] trustee’s duties apply not only in making investments but also in monitoring and reviewing investments, which is to be 2 The Restatement (Second) of Trusts, which was effective when ERISA was enacted, states that: “Except as otherwise provided by the terms of the trust, if the trustee holds property which when acquired by him was a proper investment, but which thereafter becomes an investment which would not be a proper investment for the trustee to make, it becomes the duty of the trustee to the beneficiary to dispose of the property within a reasonable time.” Id. at § 231 (1959). The Uniform Prudent Investor Act (1994), which has been adopted by almost all states, recognizes that “the duty of prudent investing applies both to investing and managing trust assets. . . .” Nat’l Conference of Comm’rs on Uniform State Laws, Uniform Prudent Investor Act § 2(c) (1994). The official comment explains that “‘[m]anaging’ embraces monitoring, that is, the trustee’s continuing responsibility for oversight of the suitability of investments already made as well as the trustee’s decisions respecting new investments.” Id. § 2 comment. done in a manner that is reasonable and appropriate to the particular investments, courses of action, and strategies involved.” Id. comment b, at 295. Indeed, “[t]he Uniform Prudent Investor Act confirms that ‘[m]anaging embraces monitoring’ and that a trustee has ‘continuing responsibility for oversight of the suitability of the investments already made.” Tibble, et al. v. Edison International et al., 135 S. Ct. 1823, 1828 (2015) (citing The Uniform Prudent Investor Act § 2, Comment, 7B U.L.A. 21 (1995)). 20. In other words, “[p]rudence focuses on the process for making fiduciary decisions. Therefore, it is wise to document decisions and the basis for those decisions.”3 Thus a trustee must “make[] an investigation as to the safety of [an] investment and the probable income to be derived therefrom” and then make a reasonable investment decision based on that investigation. Restatement (Second) § 227 comment b, at 530. 21. As similarly summarized in the Third Restatement: “Changes in a company’s circumstances, adaptation to trust- and capital-market developments, fine-tuning, and the like may, of course, justify the selling and buying of properties as an aspect of a prudent plan of asset allocation and diversification …. This is consistent with the trustee’s ongoing duty to monitor investments and to make portfolio adjustments if and as appropriate, with attention to all relevant considerations, including tax consequences and other costs associated with such transactions.” Restatement (Third) § 90 comment e(1) (emphasis added). 22. Prudent investment management demands, inter alia, that Defendants not merely rely upon the fact that the price of Arch Coal Stock remains above $0 in determining whether investing in Company Stock was and is appropriate for the Plan. ERISA requires Defendants to scrutinize the risk of the Plan’s investment in Arch Coal Stock – based upon, inter alia, the 3 http://www.dol.gov/ebsa/publications/fiduciaryresponsibility.html public information upon which the stock price is based and the risk inherent in the stock – to protect the Plan’s Participants’ retirement savings. 23. Even if it may have been a reasonable investment for some investors, ERISA requires fiduciaries to avoid taking excessive risk with retirement assets. After all, ERISA’s fiduciary duties “have been described as ‘the highest known to the law.’” See, e.g., Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 598 (8th Cir. 2009) (quoting Donovan v. Bierwirth, 680 F.2d 263, 272 n.8 (2d Cir. 1982)). 24. As discussed below, several years before the start of the Class Period, certain obstacles to the U.S. coal industry’s continued growth were quite apparent. Among these obstacles were the increasing oversupply of coal, stiff competition from natural gas producers, and the transition of power generation plants to “cleaner” energy sources such as “renewable” and gas-fired thermal plants instead of coal, all of which crashed coal prices to levels not seen in years.4 25. In April 2012, three months before the start of the Class Period, Moody’s forecasted “permanent shifts” in the energy sector, as “depressed natural gas prices continue to put pressure on the coal generation sector.” See Moody’s foresees permanent shifts in energy sector over next decade, SNL Power Week (Canada), Apr. 9, 2012. 26. Thus, by the start of the Class Period, it was painfully obvious that Arch Coal was wholly-dependent upon a dying industry. 4 See US Coal: the West Coast challenge, Platts Energy Economist, Mar. 3, 2011 at 1; see also Nick Cunningham, Latest Casualty in Energy’s Hardest Hit Industry¸ May 13, 2015. Recently, Norway “made a big move toward dropping investments in coal companies by its massive $900 billion sovereign wealth fund because of their impact on climate change.” See Karl Ritter, Norway’s $900 billion oil fund to slash coal investments, U.S. News & World Report, May 28, 2015, available at http://www.usnews.com/news/business/articles/201/05/28/norway-oil-fund-to- slash-coal-investments. 27. The Plan’s Participants had every right under ERISA to expect the Plan’s fiduciaries to act in their interest and protect them from unduly risky investments, whether in the form of Company Stock or any other asset. 28. In failing to investigate, analyze, and review whether it was prudent to continue investment in Arch Coal Stock in the Plan, Defendants acted with procedural imprudence. Had Defendants conducted a prudent evaluation of whether Arch Coal Stock was an appropriate investment for the Plan during the Class Period, and taken appropriate Plan-protective action based upon what they would have discovered – such as ceasing the offering of Arch Coal Stock, divesting the Plan of Arch Coal Stock, or any of the other actions as described below – the Plan’s Participants would not have suffered such devastating losses to their retirement savings. 29. Pursuant to both the ERISA statute itself and the DOL rules and regulations implementing the statute, the Company’s problems discussed herein – including the sky- rocketing debt-to-equity ratio, inherent risk of loss, and indeed the risk of bankruptcy – all should have made the Plan’s fiduciaries aware of the imprudence of Arch Coal Stock. See 29 C.F.R. § 2550.404a-1(b)(1) and (2). 30. Given the totality of circumstances prevailing during the Class Period, no prudent fiduciary would have made the same decision to retain the clearly imprudent Arch Coal Stock as a Plan investment option. 31. This action is brought on behalf of the Plan pursuant to ERISA §§ 409 and 502(a)(2), 29 U.S.C. §§ 1109 and 1132(a)(2), and seeks recovery of the losses to the Plan for which Defendants are personally liable. Because Plaintiff’s claims apply to the Plan as a whole, inclusive of all its Participants with accounts invested in Company Stock during the Class Period, and because ERISA specifically authorizes participants such as Plaintiff to sue for Plan- wide relief for breaches of fiduciary duty such as those alleged herein, Plaintiff also brings this action under FED. R. CIV. P. 23(b) on behalf of all Participants and beneficiaries of the Plan whose Plan accounts were invested in Arch Coal Stock during the Class Period. JURISDICTION AND VENUE 32. Subject Matter Jurisdiction. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331 and ERISA § 502(e)(1), 29 U.S.C. § 1132(e)(1). 33. Personal Jurisdiction. This Court has personal jurisdiction over all Defendants because they are all residents of the United States and ERISA provides for nation-wide service of process pursuant to ERISA § 502(e)(2), 29 U.S.C. § 1132(e)(2). 34. Venue. Venue is proper in this district pursuant to ERISA § 502(e)(2), 29 U.S.C. § 1132(e)(2) because the Plan is administered in this district, some or all of the fiduciary breaches for which relief is sought occurred in this district, and one or more Defendants reside or may be found in this district. PARTIES Plaintiff 35. Plaintiff Elmer Bush is a former Arch Coal employee. He is a “participant” in the Plan, within the meaning of ERISA § 3(7), 29 U.S.C. § 1102(7), and held shares of Arch Coal Stock in his retirement investment portfolio during the Class Period. During the Class Period, the value of shares in Arch Coal Stock within his Plan account diminished considerably as a result of Defendants’ breaches of fiduciary duty a described herein. Defendants Company Defendant 36. Defendant Arch Coal is a Delaware Corporation with its principal place of business at One CityPlace, Suite 300, Saint Louis, Missouri. As noted above, Arch Coal is a domestic coal company, which as of December 31, 2014, operated, or contracted out the operation of, 16 active mines located in each of the major coal-producing regions of the United States. See 2014 Form 10-K at 5. 37. According to the 2014 Form 11-K, Arch Coal established the Plan “for the benefit of the eligible employees of the Company, its subsidiaries and controlled affiliates.” See 2014 Form 11-K at 4. 38. Arch Coal is identified as the Plan Sponsor on the Plan’s Forms 5500 filed with the Department of the Treasury, Internal Revenue Service, and Department of Labor (“DOL”) for the plan years ending 2011, 2012, and 2013. 39. At all relevant times, Arch Coal acted through its officers and employees, including the Board of Directors, who performed Plan-related fiduciary functions in the course and scope of their employment. Accordingly, the actions of the individual Defendants named herein, and other employee fiduciaries are imputed to Arch Coal under the doctrine of respondeat superior, and Arch Coal is liable for these actions. Thus, Defendant Arch Coal was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because it exercised discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. Director Defendants 40. At all relevant times, Arch Coal acted through its Board of Directors. 41. Defendant John W. Eaves (“Eaves”) served as Chairman, President, Chief Executive Officer, and Director of Arch Coal during the Class Period. Defendant Eaves previously served as President and Chief Operating Officer of the Company from 2006 until he was appointed as Chairman and Chief Executive Officer in April 2012, the positions he currently holds. Defendant Eaves was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 42. Defendant Paul A. Lang (“Lang”) served as Executive Vice President, Chief Operating Officer, and Director of Arch Coal during the Class Period. Defendant Lang previously served as Executive Vice President-Operations from August 2011 to April 2012 when he was appointed Executive Vice President and Chief Operating Officer, the positions he currently holds. Defendant Lang was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 43. Defendant James R. Boyd (“Boyd”) served as a Director, including as Lead Director, of Arch Coal during the Class Period. Defendant Boyd served as Director from 1990 until 2014, and served as Chairman of the Board from 1998 to 2006. Defendant Boyd was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 44. Defendant David C. Freudenthal (“Freudenthal”) served as a Director of Arch Coal during the Class Period. Defendant Freudenthal joined the Board of Directors in 2011 and is a current member of the Board. Defendant Freudenthal was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 45. Defendant Patricia Fry Godley (“Godley”) served as a Director of Arch Coal during the Class Period. Defendant Godley joined the Board of Directors in 2004 and is a current member of the Board. Defendant Godley was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because she exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 46. Defendant Paul T. Hanrahan (“Hanrahan”) served as a Director of Arch Coal during the Class Period. Defendant Hanrahan joined the Board of Directors in 2012 and is a current member of the Board. Defendant Hanrahan was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 47. Defendant Douglas H. Hunt (“Hunt”) served as a Director of Arch Coal during the Class Period. Defendant Hunt joined the Board of Directors in 1995 and is a current member of the Board. Defendant Hunt was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 48. Defendant Brian J. Jennings (“Jennings”) served as a Director of Arch Coal during the Class Period. Defendant Jennings joined the Board of Directors in 2006 and served on the Board until 2013. Defendant Jennings was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 49. Defendant J. Thomas Jones (“Jones”) served as a Director of Arch Coal during the Class Period. Defendant Jones joined the Board of Directors in 2010 and is a current member of the Board. Defendant Jones was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 50. Defendant Steven F. Leer (“Leer”) served as a Chairman of the Board of Directors and Director of Arch Coal during the Class Period. Defendant Leer served as Chairman of the Board of Directors from 2006 until April 24, 2014 when he retired after the annual meeting of Arch Coal stockholders. Defendant Leer previously served as Chief Executive Officer of Arch Coal from 1992 until April 2012, and as president of Arch Coal from 1992 to 2006. Defendant Leer was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 51. Defendant George C. Morris, III (“Morris”) served as a Director of Arch Coal during the Class Period. Defendant Morris joined the Board of Directors in 2012 and is a current member of the Board. Defendant Morris was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 52. Defendant A. Michael Perry (“Perry”) served as a Director of Arch Coal during the Class Period. Defendant Perry joined the Board of Directors in 1998 and retired from the Board immediately after the annual meeting of Arch Coal stockholders on April 25, 2013. Defendant Perry was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 53. Defendant Robert G. Porter (“Porter”) served as a Director of Arch Coal during the Class Period. Defendant Porter joined the Board of Directors in 2001 and served on the Board until 2013. Defendant Porter was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 54. Defendant James A. Sabala (“Sabala”) served as a Director of Arch Coal during the Class Period. Defendant Sabala joined the Board of Directors in 2015 and is a current member of the Board. Defendant Sabala was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 55. Defendant Theodore S. Sands (“Sands”) served as a Director of Arch Coal during the Class Period. Defendant Sands joined the Board of Directors in 1999 and is a current member of the Board. Defendant Sands was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 56. Defendant Wesley M. Taylor (“Taylor”) served as a Director of Arch Coal during the Class Period. Defendant Taylor was appointed Chairman of the Board of Directors in April 2014 and currently serves in that position. Defendant Taylor served as Lead Director from February 2013 to April 2014. Defendant Taylor was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 57. Defendant Peter I. Wold (“Wold”) served as a Director of Arch Coal during the Class Period. Defendant Wold joined the Board of Directors in 2010 and is a current member of the Board. Defendant Wold was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 58. Defendants Eaves, Lang, Boyd, Freudenthal, Godley, Hanrahan, Hunt, Jennings, Jones, Leer, Morris, Perry, Porter, Sabala, Sands, Taylor, and Wold are collectively referred to herein as the “Director Defendants.” Finance Committee Defendants 59. Defendant Finance Committee had responsibility, for inter alia, reviewing and evaluating the Company’s status and performance in the employee benefit area. Its review was to include, at a minimum, “actuarial valuations, investment policies, individual investment manager’s performance, and internal retirement committee performance.” See Finance Committee Charter, attached hereto as Exhibit A. Upon information and belief, members of the Finance Committee served at the pleasure of the full Board of Directors. 60. Defendant Sands was a member of the Finance Committee during the Class Period. See http://investor.archcoal.com. Accordingly, Defendant Sands was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 61. Defendant Eaves was a member of the Finance Committee during the Class Period. See http://investor.archcoal.com. Accordingly, Defendant Eaves was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 62. Defendant Jones was a member of the Finance Committee during the Class Period. See http://investor.archcoal.com. Accordingly, Defendant Jones was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 63. Defendant Morris was a member of the Finance Committee during the Class Period. See http://investor.archcoal.com. Accordingly, Defendant Morris was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 64. Defendant Lang was a member of the Finance Committee during the Class Period. See http://investor.archcoal.com. Accordingly, Defendant Lang was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 65. Defendant Sabala was a member of the Finance Committee during the Class Period. See http://investor.archcoal.com. Accordingly, Defendant Sabala was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 66. Defendants Sands, Eaves, Jones, Morris, Lang, and Sabala are collectively referred to herein as the “Finance Committee Defendants.” Plan Administrator Defendants 67. As noted in the 2014 Form 11-K, the Company has “appointed the Vice President-Human Resources as the Plan Administrator.” 2014 Form 11-K at 8. See also 2013 Form 5500, Notes to Financial Statements at 9 (same). 68. Defendant Allen R. Kelly (“Kelly”) served as Vice President-Human Resources and Vice President-Enterprise Risk Management during the Class Period. Defendant Kelly served as Vice President-Enterprise Risk Management from 2008 to March 2014, at which time he was appointed as Vice President-Human Resources. Defendant Kelly signed the 2014 Form 11-K, 2013 Form 11-K,5 and 2013 Form 5500 as Plan Administrator. See 2014 Form 11-K at 21; 2013 Form 5500 at 1. Defendant Kelly was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. 69. Defendant John Ziegler, Jr. (“Ziegler”) served as Chief Commercial Officer and Vice President-Human Resources during the Class Period. Defendant Ziegler served as Vice President-Human Resources from April 2012 to March 2014 at which time he was appointed Chief Commercial Officer. Defendant Ziegler signed both the 2012 Form 11-K and 2012 Form 5500 as Plan Administrator. See Arch Coal, Inc. Employee Thrift Plan 401(k) Plan Annual Report for Year-End 2012, at 19 (filed June 26, 2013) (“2012 Form 11-K”); 2012 Form 5500, at 1. Defendant Ziegler was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because he exercised discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets 70. Defendants Kelly and Ziegler, as well as any other individual who served as Vice President-Human Resources and/or Plan Administrator during the Class Period are collectively referred to herein as the “Plan Administrator Defendants.” 5 Arch Coal, Inc. Employee Thrift Plan Annual Report for Year-End 2013 (filed June 26, 2014) (“2013 Form 11-K”). Retirement Committee Defendants 71. As explained in the 2014 Form 11-K, the Company has “established a Retirement Committee to oversee the activities of the Plan.” 2014 Form 11-K at 8. See also 2013 Form 5500, Notes to Financial Statements at 9 (same). 72. Upon information and belief, the Retirement Committee had the responsibility for selecting and monitoring the Plan’s investment options. See also 2014 Form 11-K at 1, Report of Independent Registered Public Accounting Firm letter addressed to The Retirement Committee, Arch Coal, Inc. Employee Thrift Plan. Upon information and believe the Retirement Committee and its members6 were fiduciaries of the Plan, within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A), because they exercised discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan 73. Defendants Retirement Committee and all individual members of the Retirement Committee during the Class Period are collectively referred to herein as the “Retirement Committee Defendants. Trustee Defendant 6 The entire composition of the Retirement Committee is not presently known to Plaintiff. During his investigation, Plaintiff requested pursuant to, ERISA § 104(b)(4), 29 C.F.R. § 2520.104b-1 that the Plan Administrator provide meeting minutes of the Retirement Committee in order to help identify all of the names of the members of the Retirement Committee. Plaintiff believes that after a reasonable opportunity for discovery to obtain any committee charters, trust agreements, and other relevant information, the aforementioned documents will provide additional evidentiary support for the allegations set forth herein, including with respect to the composition of the Retirement Committee during the Class Period. Indeed, while Plaintiff has identified the Defendant fiduciaries in the instant submission in accordance with the information he has obtained thus far, Plaintiff reserves the right to further amend during and after discovery, as determining the identity and full breadth of responsibilities of ERISA fiduciaries is an inherently fact-intensive effort. 74. Defendant Mercer Fiduciary Trust Company (“Mercer”) served as the Plan’s Trustee, holding the Plan’s assets in a trust. See 2014 11-K at 8. Mercer maintains an office at 701 Market Street, Suite 1100, St. Louis, MO 63101. 75. Mercer was a fiduciary of the Plan because it exercised discretionary authority or control over the Plan’s management and/or authority or control over management or disposition of the Plan’s assets. Pursuant to ERISA Section 403(a)(1), 29 U.S.C. § 1103(a)(1), as directed trustee, Mercer had a duyt to follow only “proper directions” that are “not contrary to ERISA.” Additional “John Doe Defendants” 76. To the extent that there are additional Company officers, directors, and employees who were fiduciaries of the Plan during the Class Period, including members of the Retirement Committee, the identities of whom are currently unknown to Plaintiff, Plaintiff reserves the right, once their identities are ascertained, to seek leave to join them to the instant action. Thus, without limitation, unknown “John Doe” Defendants 1-10 include other individuals, including, but not limited to, Company officers, directors, and employees, who were fiduciaries of the Plan within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A) during the Class THE PLAN Purpose of the Plan 77. The Arch Coal Employee Thrift Plan June 2015 Expense and Investment Notice (the “June 2015 Plan Notice”), attached as Exhibit B, distributed/available to Plan Participants makes clear that the Plan’s purpose is to help participants save for retirement. 78. Specifically, the June 2015 Plan Notice notes “Saving for retirement is important for your financial future, whether you are retiring soon or years from now. The ARCH COAL EMPLOYEE TRIFT PLAN (your ‘Plan’) is designed to assist you in meeting your retirement goals.” See June 2015 Plan Notice at 2. The June 2015 Plan Notice further notes that the Plan “is an important part of a secure financial future.” Id. Overview of the Plan 79. The 2014 Form 11-K notes that the Plan “was established by Arch Coal, Inc. (the Company) for the benefit of eligible employees of the Company, its subsidiaries and controlled affiliates.” 2014 Form 11-K at 4. 80. “The Plan is a defined contribution plan that covers substantially all salaried employees, nonunion hourly employees, and certain union employees where specified by applicable collective bargaining agreements of the Company, its subsidiaries, and any controlled affiliates that elect to participate in the Plan.” Id. Administration of the Plan 81. As noted in the 2014 Form 11-K, the Company has “appointed the Vice President-Human Resources as the Plan Administrator.” 2014 Form 11-K at 8. See also 2013 Form 5500, Notes to Financial Statements at 9 (same). 82. The 2014 Form 11-K also notes the “Company established a Retirement Committee to oversee the activities of the Plan.” 2014 Form 11-K at 8. See also 2013 Form 5500, Notes to Financial Statements at 9 (same). Upon information and belief, the Retirement Committee is responsible for the day-to-day operation of the Plan. See also 2014 Form 11-K at 1, Report of Independent Registered Public Accounting Firm letter addressed to The Retirement Committee, Arch Coal, Inc. Employee Thrift Plan. Eligibility in the Plan 83. The Plan includes an automatic enrollment provision for all eligible employees. See 2014 Form 11-K at 4. 84. The automatic enrollment provides for default salary deferral contributions of 6% of eligible compensation, which will be invested in a target retirement fund. Id. Contributions to the Plan 85. The Plan provides for both participant contributions and matching contributions from the Company. See 2014 Form 11-K at 4. 86. Participants may elect to defer between 1% and 50% of their compensation. Id. at 87. With respect to Company matching contributions, the Company is required to make matching contributions to all participants equal to 100% of the participant salary deferral contributions up to the first 6% of eligible compensation. Id. This is true for all Plan participants with the exception of participants who are hourly eligible employees of Mountain Laurel,7 who instead receive a fixed 8% of employer contributions. Id. 88. The Plan also provides for the possibility of Company discretionary contributions, including such contributions in the discussion of participants’ accounts. See 2014 Form 11-K at 5. Specifically, the 2014 Form 11-K notes that each participant’s accounts is credited with the participant’s salary deferral and rollover contributions, the Company’s matching contributions, and Company discretionary contributions, if applicable, and an allocation on Plan earnings. Id. Vesting of Contributions in the Plan 89. Participants are fully vested in their salary deferral and rollover contributions plus actual earnings. See 2014 Form 11-K at 5. 7 Mountain Laurel is one of the mines owned and operated by Arch Coal, located in in the Central Appalachia Region in Sharples, West Virginia. 90. All eligible employees of the Company as of December 31, 1997, became fully vested in the Plan. Id. Eligible employees hired subsequent to December 31, 1997 vest in Company contributions and earnings upon the completion of three fully years of service. Id. 91. The hourly employees at Mountain Laurel are fully vested after the completion of two full years of service. Id. 92. Former participants in the International Coal Group, Inc. 401(k) Savings and Retirement Plan (which merged with the Plan as of January 1, 2012) are 20% vested after the completion of one year of service, 40% vested after the completion of two years of service, and 100% vested after the completion of three years of service. Id. Investment Options in the Plan 93. Upon enrollment in the Plan, a participant may direct contributions in a number of investment options offered by the Plan. See 2014 Form 11-K at 6. 94. The June 2015 Plan Notice states “Arch Coal Company Stock is an available investment option under your Plan.” June 2015 Plan Notice at 5. 95. The 2014 Form 11-K lists the Plan’s investment options for December 31, 2013 and December 31, 2014. See 2014 Form 11-K at 9. The investment options fall into five categories – Mutual Funds, Stable Value Fund, Company Stock, Collective Trust Funds, and Brokerage Securities. See id. As of December 31, 2012 and December 31, 2013 there were twelve mutual fund options and twelve collective trust fund options in the Plan in addition to the Stable Value Fund, Brokerage Securities, and Company Stock. 2013 Form 11-K at 8. As of December 31, 2014, there were nine mutual fund options and eleven collective trust fund options in the Plan in addition to the Stable Value Fund, Brokerage Securities, and Company Stock. 2014 Form 11-K at 9. Arch Coal Stock in the Plan 96. The Plan notes that Company Stock is valued at the closing price reported on the active market on which the individual securities are traded. See 2014 Form 11-K at 13. See also June 2015 Plan Notice at 5 (“The value of Arch Coal Company Stock is calculated based on market transactions during the day based on procedures established for your Plan.”). 97. The value of the Arch Coal in the Plan has diminished significantly leading up to the start of the Class Period and has continued its significant decline during the Class Period. The June 2015 Plan Notice informs that the Arch Coal Stock one year, five year, ten year, and since inception performance as of year-end 2014 is negative across the board: Stock Performance 1 year 5 year 10 year Since inception -59.90% -38.61% -19.47% -2.57% Arch Coal Company Stock (ACI) See June 2015 Plan Notice at 12. 98. Specifically, as of December 31, 2012, the Plan had $23,324,416 in Company Stock. See 2013 Form 11-K at 2. As of December 31, 2013, the Plan had $17,580,458 in Company Stock, a 24.6% decline, losing more than $5.7 million dollars. Based on the Arch Coal Stock price of $4.44 as of December 31, 2013, the number of Arch Coal shares in the Plan as of year-end 2013 was approximately 3,959,562.61. 99. As reported in the 2014 Form 11-K, as of December 31, 2013, the Plan had $17,580,458 in Company Stock. See 2014 Form 11-K at 2. As of December 31, 2014, the Plan had $8,169,449 in Company Stock, a $9.4 million loss, or a loss of more than 50% in just one year. Id. 100. Based on the Arch Coal Stock price of $1.78 as of December 31, 2014, the number of Arch Coal shares in the Plan as of year-end 2014 was approximately 4,589,578.09. Assuming the Plan has not purchased additional shares of Arch Coal Stock since year-end December 31, 2014, the value of Arch Coal Stock as of the filing of the instant complaint would be roughly $1,927,622.80 based on Arch Coal Stock price of $0.42 as of June 29, 2015. Thus, the value of the Arch Coal Stock in the Plan is worth just a fraction of its value from the start of the Class Period. Plan Fiduciaries Are Bound by ERISA’s Strict Standards 101. Despite the Plan’s substantial investment in Arch Coal Stock, Defendants failed to protect the Plan and its Participants from the decline in value of the Arch Coal Stock resulting from the Company’s deteriorating financial condition. 102. Fiduciaries of retirement plans such as the Plan here are bound by core ERISA fiduciary duties, including the duties to act loyally, prudently, and for the exclusive purpose of providing retirement benefits to plan participants. This is true regardless of the structure of a 103. Accordingly, if the fiduciaries of the Plan knew, or if an adequate investigation would have revealed, that Company Stock was no longer a prudent investment for the Plan, then the fiduciaries had the obligation to disregard any purported Plan directions to maintain investments in Company Stock and protect the Plan by investing the Plan’s assets in other, suitable, prudent investments. CLASS ACTION ALLEGATIONS 104. Plaintiff brings this action derivatively on the Plan’s behalf pursuant to ERISA §§ 409 and 502, 29 U.S.C. §§ 1109 and 1132, and as a class action pursuant to Rules 23(a), (b)(1), and/or (b)(2) of the Federal Rules of Civil Procedure on behalf of the Plan, Plaintiff, and the following class of similarly situated persons (the “Class”): All persons, except Defendants and their immediate family members, who were participants in or beneficiaries of the Plan at any time between July 27, 2012 and the present (the “Class Period”)8 and whose Plan accounts included investments in Arch Coal Stock. 105. The members of the Class are so numerous that joinder of all members is impracticable. While the exact number of Class members is unknown to Plaintiff at this time, and can only be ascertained through appropriate discovery, Plaintiff believes there are thousands of employees of the Plan who participated in, or were beneficiaries of, the Plan during the Class Period and whose Plan accounts included investment in Arch Coal Stock. 106. For example, in 2012, there were 5,520 participants in the Plan. See 2012 Plan Form 5500 filed with the Department of Treasury Internal Revenue Service and the Department of Labor. In 2013, the number of participants in the Plan was 7,863. See 2013 Plan Form 5500 filed with the Department of Treasury Internal Revenue Service and the Department of Labor. 107. At least one common question of law or fact exists as to Plaintiff and all members of the Class. Indeed, multiple questions of law and fact common to the Class exist, including, but not limited to: (a) whether Defendants each owed a fiduciary duty to the Plan, Plaintiff, and members of the Class; (b) whether Defendants breached their fiduciary duties to the Plan, Plaintiff, and members of the Class by failing to act prudently and solely in the interests of the Plan and the Plan’s participants and beneficiaries; (c) whether Defendants violated ERISA; and 8 Plaintiff reserves the right to modify the Class Period definition in the event that further investigation/discovery reveals a more appropriate and/or broader time period during which Arch Coal Stock was an imprudent investment option for the Plan. (d) whether the Plan, Plaintiff, and members of the Class have sustained damages and, if so, what is the proper measure of damages. 108. Plaintiff’s claims are typical of the claims of the members of the Class because the Plan, Plaintiff, and the other members of the Class each sustained damages arising out of Defendants’ uniform wrongful conduct in violation of ERISA as complained of herein. 109. Plaintiff will fairly and adequately protect the interests of the Plan and members of the Class because they have no interests antagonistic to or in conflict with those of the Plan or the Class. In addition, Plaintiff has retained counsel competent and experienced in class action litigation, complex litigation, and ERISA litigation. 110. Class action status in this ERISA action is warranted under Rule 23(b)(1)(B) because prosecution of separate actions by the members of the Class would create a risk of adjudications with respect to individual members of the Class which would, as a practical matter, be dispositive of the interests of the other members not parties to the actions, or substantially impair or impede their ability to protect their interests. 111. Class action status is also warranted under Rule 23(b)(1)(A) and (b)(2) because: (i) prosecution of separate actions by the members of the Class would create a risk of establishing incompatible standards of conduct for Defendants; and (ii) Defendants have acted or refused to act on grounds generally applicable to the Class, thereby making appropriate final injunctive, declaratory, or other appropriate equitable relief with respect to the Class as a whole. DEFENDANTS’ FIDUCIARY STATUS 112. ERISA requires every plan to provide for one or more named fiduciaries who will have “authority to control and manage the operation and administration of the plan.” ERISA § 402(a)(1), 29 U.S.C. § 1102(a)(1). 113. ERISA treats as fiduciaries persons explicitly named as fiduciaries under § 402(a)(1), 29 U.S.C. § 1102(a)(1), and any other persons who in fact perform fiduciary functions (e.g., de facto or functional fiduciaries). Thus, a person acts as an ERISA fiduciary to the extent “(i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.” ERISA § 3(21)(A)(i), 29 U.S.C. § 1002(21)(A)(i). 114. During the Class Period, upon information and belief, each of the Defendants was a fiduciary – i.e., either a named fiduciary or a de facto fiduciary – with respect to the Plan and owed fiduciary duties to the Plan and its Participants under ERISA. As fiduciaries, Defendants were required by ERISA § 404(a)(1), 29 U.S.C. § 1104(a)(1), to manage and administer the Plan, and the Plan’s investments, solely in the interest of the Plan’s Participants and with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. 115. Plaintiff does not allege that each Defendant was a fiduciary with respect to all aspects of the Plan’s management, administration, and assets. Rather, as set forth below, Defendants were fiduciaries to the extent of the specific fiduciary discretion and authority for Plan management and authority assigned to or exercised by each of them and/or the specific exercise of authority or control over Plan assets by each of them, and, as further set forth below, the claims against each Defendant are based on such specific discretion and authority and/or exercise of authority or control. 116. Instead of delegating all fiduciary responsibility for the Plan to external service providers, upon information and belief, the Company chose to assign the appointment and removal of fiduciaries, such as the members of the Retirement Committee, to itself. 117. ERISA permits fiduciary functions to be delegated to insiders without an automatic violation of the rules against prohibited transactions occurring, ERISA § 408(c)(3), 29 U.S.C. § 1108(c)(3), but insider fiduciaries, like external fiduciaries, must act solely in the interest of participants and beneficiaries, not in the interest of the Plan’s sponsor(s). 118. During the Class Period, all of Defendants acted as fiduciaries of the Plan pursuant to ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A), and the law interpreting that section. The Company and Director Defendants’ Fiduciary Status 119. Instead of delegating fiduciary responsibility for the Plan to external service providers, Arch Coal chose to internalize certain vital fiduciary functions. 120. As the 2014 Form 11-K notes, Arch Coal established the Plan for the benefit of the eligible employees of the Company, its subsidiaries and controlled affiliates. See 2014 Form 11-K at 4. Further, Arch Coal is identified as the Plan Sponsor on the Plan’s 2011, 2012, and 2013 Forms 5500. 121. At all times, Arch Coal acted through its directors, officers, and employees, including the Director Defendants, who performed Plan-related fiduciary functions in the course and scope of their employment. Arch Coal had, at all applicable times, effective control over the activities of its officers and employees, including their Plan-related activities. Through its Board of Directors or otherwise, Arch Coal had the authority and discretion to hire and terminate said directors, officers, and employees. Additionally, by failing to properly discharge their fiduciary duties under ERISA, the directors, officers, and employee fiduciaries breached duties they owed to the Plan’s Participants. 122. Accordingly, the actions of the Director Defendants and other employee fiduciaries are imputed to Arch Coal under the doctrine of respondeat superior, and Arch Coal is liable for these actions. The Finance Defendant’s Fiduciary Status 123. As noted supra, Defendant Finance Committee had responsibility, for inter alia, reviewing and evaluating the Company’s status and performance in the employee benefit area. Its review was to include, at a minimum, “actuarial valuations, investment policies, individual investment manager’s performance, and internal retirement committee performance.” See Exhibit A. 124. Accordingly, the Finance Defendants were fiduciaries of the Plan within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A) because they exercised discretionary authority to appoint and monitor Plan fiduciaries who had discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. The Plan Administrator Defendants’ Fiduciary Status 125. As explained in the 2014 Form 11-K, the Company has “appointed the Vice President-Human Resources as the Plan Administrator.” 2014 Form 11-K at 8. See also 2013 Form 5500, Notes to Financial Statements at 9 (same). 126. Defendants Kelly and Ziegler both served as Vice President-Human Resources during portions of the Class Period, and signed the Forms 11-K and 5500 on behalf of the Plan as Plan Administrator. See 2014 Form 11-K at 21, 2013 Form 11-K at 20, and 2013 Form 5500 at 1 signed by Defendant Kelly; 2012 Form 11-K at 19 and 2012 Form 5500 at 1 signed by Defendant Ziegler. 127. The Plan Administrator Defendants were fiduciaries of the Plan within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A) because they exercised discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. The Retirement Committee’s Fiduciary Status 128. Upon information and belief, the Company officers/employees who comprised the Retirement Committee were appointed by the Board and/or the Finance Committee and were delegated the day-to-day responsibility for the administration of the Plan and the Plan’s assets. See, e.g., 2014 Form 11-K at 8 (noting the Company has “established a Retirement Committee to oversee the activities of the Plan”); 2013 Form 5500, Notes to Financial Statements at 9 (same). 129. Upon information and belief, the Retirement Committee had the responsibility for selecting and monitoring the Plan’s investment options. See also 2014 Form 11-K at 1, Report of Independent Registered Public Accounting Firm letter addressed to The Retirement Committee, Arch Coal, Inc. Employee Thrift Plan. 130. Thus, the Retirement Committee and its members were fiduciaries of the Plan within the meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A) because they exercised discretionary authority or control over Plan management and/or authority or control over management or disposition of Plan assets. The Trustee’s Fiduciary Status 131. A directed trustee cannot blindly follow directions of other fiduciaries; it is an ERISA fiduciary and has a duty to “supervise” and “investigate” the directions it receives from a plan’s named fiduciary when it has “some reason to know” that the directions may conflict with ERISA or a plan’s terms. Pursuant to ERISA Section 403(a)(1), 29 U.S.C. § 1103(a)(1), a directed trustee may only follow “proper directions” that are “not contrary to ERISA.” 132. Because during the Class Period Mercer knew or should have known that Arch Coal was in dire straits, was an unreasonably risky retirement investment, and had a very high probability of bankruptcy, it had a fiduciary duty to protect the Plan and its Participants from the continued imprudent investment in Arch Coal Stock. Additional Fiduciary Aspects of Defendants’ Actions/Inactions 133. As the Plan’s fiduciaries, Defendants knew or should have known certain basic facts about the characteristics and behavior of the Plan’s Participants, well-recognized in the 401(k) literature and the trade press9 concerning investment in company stock, including that: (a) Employees tend to interpret a match in company stock as an endorsement of the company and its stock; (b) Out of loyalty, employees tend to invest in company stock; (c) Employees tend to over-extrapolate from recent returns, expecting high returns to continue or increase going forward; 9 See, e.g., David K. Randall, Danger in Your 401(k), Forbes.com (August 30, 2010), available at: www.forbes.com/forbes/2010/0830/health-retirement-savings-erisa-danger-in- 401k_print.html); Liz Pulliam Weston, 7 Ways to Mess Up Your 401(k), MSN.com (December 31, 2007), available at: articles.moneycentral.msn.com/RetirementandWills/InvestForRetirement/7MostCommon401kBl unders.aspx); Joanne Sammer, Managed Accounts: A new direction for 401(k) plans, Journal of Accountancy, Vol. 204, No. 2 (August 2007), available at: www.aicpa.org/pubs/jofa/aug2007/sammer.htm); Roland Jones, How Americans Mess Up Their 401(k)s, MSNBC.com (June 20, 2006), available at: www.msnbc.msn.com/id/12976549/); Bridgitte C. Mandrian and Dennis F. Shea, The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior, 116 Q. J. Econ. 4, 1149 (2001), available at: mitpress.mit.edu/journals/pdf/qjec_116_04_1149_0.pdf); Nellie Liang & Scott Weisbenner, 2002, Investor behavior and the purchase of company stock in 401(k) plan - the importance of plan design, Finance and Economics Discussion Series 2002-36, Board of Governors of the Federal Reserve System (U.S.), available at: www.federalreserve.gov/pubs/feds/2002/200236/200236pap.pdf). (d) Employees tend not to change their investment option allocations in the plan once made; (e) No qualified retirement professional would advise rank and file employees to invest more than a modest amount of retirement savings in company stock, and many retirement professionals would advise employees to avoid investment in company stock entirely; (f) Lower income employees tend to invest more heavily in company stock than more affluent workers, though they are at greater risk; and (g) Even for risk-tolerant investors, the risks inherent to company stock are not commensurate with its rewards. 134. Even though Defendants knew or should have known these facts, and even though Defendants knew of the substantial investment of the Plan’s funds in Company Stock, they still took no action to protect the Plan’s assets from its imprudent investment in Company Stock. FACTS BEARING UPON DEFENDANTS’ FIDUCIARY BREACHES Overview 135. In July 1997, the Arch Mineral Corporation merged with Ashland Coal, Inc. to become Arch Coal Incorporated, one of the largest producers of low-sulfur coal in the United States. See 2014 Form 10-K at 5. Arch Coal is one of the largest coal producers in the world with 16 active mines located in the United States. Id. Arch Coal, “sell[s] substantially all of [its] coal to power plants, steel mills and industrial facilities. Id. 136. Arch Coal’s success is heavily reliant on high coal prices and strong demand for coal. Based on this criteria, the last several years have been disastrous for Arch Coal specifically, and the coal industry in general, with no respite in the foreseeable future. Summed up, “[p]rices have been sliding (see chart [below]), political opposition growing and demand dropping. The Dow Jones Total Coal Market index has fallen by 76% in the past five years.” See Coal Mining, In the Depths, The Economist, Mar. 28, 2015 at 65. 137. Worldwide, “the tide is turning against coal.” See Coal Mining, In the Depths, The Economist, Mar. 28, 2015 at 65. In America, coal use peaked in 2007. Id. One of the reasons is that in the United States, “coal now struggles to compete with natural gas, which has fallen 80% in price since 2008.” Id. Other coal industry experts have similarly opined that “the industry faces something historic – persistently low natural gas prices – a reality that caps the level of potential price improvement in U.S. coal markets.” See Weak 2014 Numbers Worsen An Already Bad Outlook For Coal Companies, Institute for Energy Economics and Financial Analysis, Feb. 2, 2015 at 1, available at http://ieefa.org/weak-2014-numbers-worsen-already- bad-outlook-coal-companies/. 138. This downturn for the coal industry is not simply a temporary blip. “The fear now is of a structural shift” in which coal is phased out. Coal Mining, In the Depths, The Economist, Mar. 28, 2015 at 65. The Economist predicts “new coal-mining investments would risk becoming stranded assets, and older deep mines would be even more uneconomic than now.” Id. According to the Economist, “Carbon Tracker, a non-profit group, reckons that more than $100 billion worth of planned capital spending risks being stranded by 2035. A prospect as black as a miner’s lungs.” Id. 139. The fact is that the “U.S. coal industry has decoupled from the broader, gradually recovering economy and its spiral has deepened.” See Weak 2014 Numbers Worsen An Already Bad Outlook For Coal Companies, Institute for Energy Economics and Financial Analysis, Feb. 2, 2015 at 1, available at http://ieefa.org/weak-2014-numbers-worsen-already- bad-outlook-coal-companies/. It appears that “more pragmatic leaders and champions of the industry acknowledge the severity of its financial conditions, and have conceded a reality that is more in line with analysts who see weak prices through 2015 – and then little upside potential thereafter.” Id. 140. Predictably, the severe and historic downturn of the coal industry has devastated Arch Coal’s financials. For full-year 2012, Arch Coal reported a staggering net income loss of $683,955,000; for full-year 2013, it reported a net income loss of $641,832,000, and for full-year 2014, it reported a net income loss of $558,353,000. 141. The Company’s financial condition, when viewed through the lens of objective financial metrics, plainly indicates the Company’s deterioration over the last several years. Not surprisingly, the Company’s stock price reflects the struggling company’s condition. Arch Coal’s stock price reached its highest peak on June 1, 2008 at $75.03 per share. The next highest peak was $36.04 on March 1, 2011. The Company has seen its share price steadily decline ever 142. In light of the Company’s diminished financial prospects, resulting in a dramatic shift in the Company’s basic risk profile, Arch Coal Stock was not a prudent Plan investment option during the Class Period. The Plan’s fiduciaries knew or should have known this fact and should have taken steps to protect the Plan and its Participants. Sadly though, as set forth below, the Defendant-fiduciaries did nothing while the retirement savings of the Plan’s Participants simply evaporated as a result of these inactions. The Colossal Collapse of the Coal Industry 143. Modern coal use around the world is largely divided into two types: thermal coal, used for the production of electric power generation whether by power plants or industries producing and consuming their own power, and metallurgical coal, which is used by industries in the production of other materials, such as iron and steel. See The Coal Facts: thermal coal vs. metallurgical coal, Global News, June 10, 2013, available at http://globalnews.ca/news/627069/the-coal-facts-thermal-coal-vs-metallurgical-coal/. 144. Beginning in 2007, certain obstacles to the U.S. coal industry’s continued growth started to become apparent. In that year, coal plants had severely slowed production, reducing their use from between 50 and 80% capacity on average to less than 30% on average. This is in addition to the number of coal plants which either had or were scheduled to be completely retired. See Bank of America and Citigroup Biggest Lenders to Coal, Bloomberg Business, Apr. 29, 2013, available at http://www.bloomberg.com/news/articles/2013-04-29/bank-of-america- and-citigroup-biggest-lenders-to-coal. 145. By the end of 2007, in addition to increased pressure from the natural gas market as a competitor to thermal coal, regulatory uncertainty about increased emissions standards had “stalled plans for many new coal plant builds,” needed to replace aging plants which were due to be retired. See Fitch: Regulatory Challenges and Beneficial Fundamentals for U.S. Coal Industry, Business Wire, Dec. 19, 2007 at 1. While U.S. electric consumption was growing, certain coal-plants were aging and due for retirement, and industry uses and exports were expected to remain flat. “As a result, the US coal industry’s fortunes are inextricably linked with the development of new U.S. coal-fired plants.” See Uphill struggle for new US coal plant, Platts Energy Economist, Aug. 1, 2008 at 1. 146. In 2008, the Dow Jones U.S. Coal Index hit a high of 700. This was driven in large part by strong demand for metallurgical coal in the developing world, including China and India. As a result, a number of coal companies whose core business was thermal coal acquired metallurgical coal companies in an attempt to diversify via debt-heavy deals. See Are coal stocks ready to make a comeback?, CNBC, Jul. 9, 2014, available at http://www.cnbc.com/id/101816298. The 2008 high is in stark contrast to today’s Dow Jones U.S. Coal Index which stands below 100. 147. By 2012, there was a marked decline in U.S. coal demand. In April 2012, Moody’s forecast “permanent shifts” in the energy sector, as “depressed natural gas prices continue to put pressure on the goal generation sector.” See Moody’s foresees permanent shifts in energy sector over next decade, SNL Power Week (Canada), Apr. 9, 2012 at 1. 148. On June 26, 2012, the U.S. Energy Information Administration (“EIA”) predicted continuing U.S. coal production declines through 2015. See Annual Energy Outlook 2012, U.S. Energy Information Administration, Jun. 25, 2012 at 98. Long term, the outlook for coal was similarly poor: Over the next 25 years, the share of electricity generation from coal falls to 38 percent, well below the 48-percent share seen as recently as 2008, due to slow growth in electricity demand, increased competition from natural gas and renewable generation, and the need to comply with new environmental regulations. 149. On July 13, 2012, the EIA released the results of a study about competition between coal, natural gas and petroleum in the energy generation sector which clearly showed the decline of coal as a fuel for energy production in the face of natural gas competition. Noting that coal’s share of power generation historically “varied in response to changes in the cost and availability of competing fuels,” the EIA cited the lower cost of natural gas as well as a 96% growth of natural gas generating capacity between 2002 and 2012 as key factors in coal’s declining use as illustrated by this chart: See Competition among fuels for power generation driven by changes in fuel prices, EIA, July 13, 2012, available at http://www.eia.gov/todayinenergy/detail.cfm?id=7090. 150. In late July 2012, the EIA announced that plant owners and operators were planning to retire 8.5% of the total 2011 coal-fired plant capacity. See 27 gigawatts of coal-fired capacity to retire over next five years, EIA, July 27, 2012, available at http://www.eia.gov/todayinenergy/detail.cfm?id=7290. This was more than four times the number of retirements of the preceding five year period: 151. The EIA also predicted that coal would not recapture its 45% share of the power generation market over the next 25 years. See Fuel used in electricity generation is projected to shift over the next 25 years, EIA, July 30, 2012, available at http://www.eia.gov/todayinenergy/detail.cfm?id=7310. In fact, coal’s share of power generation, already historically low, was predicted fall to fall 38% over the next quarter century. Id. 152. In keeping with projections, in August 2012, the EIA released the results of a survey of new electric capacity additions by fuel source, showing that new coal-plants were being far outpaced by natural gas and wind-plants: See Natural gas, renewables dominate electric capacity additions in the first half of 2012, EIA, Aug. 20, 2012, available at http://www.eia.gov/todayinenergy/detail.cfm?id=7610. 153. By September 2012, Moody’s had already seen that any growth in exports for the U.S. coal industry would be insufficient to offset domestic declines. See Moody’s: Growing export opportunities for US coal industry insufficient to offset domestic declines, Moody’s Investors Service, Sep. 14, 2012 at 1. The industry “is going through a long-term shift in market fundamentals, pressured by abundant, cheap natural gas and ever-stringent environmental regulations, and has shrunk coal’s share of the US power market by over 10% in the last four years.” Id. 154. The situation was clear by the fall of 2012: Once mighty, the US coal industry’s domestic market appears to be in terminal decline. New power generation is made up almost entirely of natural gas plant or renewable energy sources. Old coal plant closures as being hastened by environmental regulation. In the face of shale gas, coal no longer seems cheap. On a variety of fronts, coal has been left standing on the starting line, outpaced by innovation in other sectors of the energy world. See US Coal in decline, Platts Energy Economist, Oct. 1, 2012 at 1 (emphasis added). 155. Coal exports to Canada were also expected to continue their decline, begun in 2007, as depicted in the below chart: See Canada Week: Canada is a declining market for U.S. coal, EIA, Nov. 29, 2012, available at http://www.eia.gov/todayinenergy/detail.cfm?id=8970. This was the result of Canadian policies aimed at reducing coal-fired electric generation as contributors of greenhouse gases. Id. 156. Long-term prospects for exports to Europe were also dim. With nearly half of U.S. exports headed to European coal-fired power plants, Laszlo Varro, head of gas, coal and power markets for the International Energy Agency (“IEA”) stated that, “regulations in Europe will eventually lead to a substantial decommissioning of coal-fired generation capacity outside of Germany, similar to what is happening in the U.S. now.” See IEA head: European coal renaissance ‘not going to be permanent’, SNL Daily Gas Report, Jan. 28, 2013 at 1. Varro also expressed doubt that the U.S. industry would be a strong competitor for Chinese and Indian markets, with Indonesia being a closer low-cost supplier and China improving its railroad infrastructure to move coal from its own mines to power plants. Id. at 2. Leading to the Start of the Class Period, Numerous Red Flags Warned of the Imprudence of Arch Coal Stock as an Investment Option for the Plan 157. In addition to the above objective indicia that the coal industry was undergoing a historic downturn that would last for the foreseeable future, other objective factors demonstrated the imprudence of investing retirement savings in Arch Coal Stock. 158. For example, on June 15, 2011, Arch Coal completed its acquisition of International Coal Group (or ICG) for $3.4 billion. See Mayur Sontakke, “Understanding Arch Coal’s Acquisition of International Coal Group,” www.marketrealist.com, December 3, 2014. “The acquisition helped the company expand its metallurgical [“met”] coal portfolio significantly.” Id. 159. However, the acquisition of ICG would prove to be a financial albatross for Arch Coal. “Soon after the acquisition, met coal prices dropped.” Id. For perspective, in the second quarter of 2011, a ton of met coal cost $330. See Paul Ausick, Can US Coal Miners Dodge the Bankruptcy Bullet?, 24/7 Wall St., available at http://247wallst.com/energy- business/2015/06/17/can-us-coal-miners-dodge-the-bankruptcy-bullet/. “In the first quarter of 2015, that same ton of met coal cost an average of $117.” Id. In the second quarter of 2015, the price of met coal was $95 per ton. Id. 160. At the time of the ICG acquisition, the Company had expected to ship 15 million tons of met coal by the end of 2012 (compared to a shipment of 7.4 million tons in 2011). However, with a drop in prices and oversupply in the market, the company could ship just half of it (7.5 million tons) during the year.” Id. 161. Further, Arch Coal’s debt jumped from $1.5 billion before the ICG acquisition to $3.7 billion by the end of 2011 after the acquisition. Id. Additionally, at the time of the completion of Arch’s acquisition of ICG, its stock price closed at $25.10, by the end of the year Arch’s stock had fallen 42% to $14.51. Marketwatck.com. 162. There was additional evidence of the Company’s precarious financial condition. The Altman Z-Score (“Z-Score”), developed in 1968 by Professor Edward Altman of the Stern School of Business at New York University, is a bankruptcy prediction model commonly accepted and used by financial analysts. See National Wildlife Federation v. EPA, 286 F.3d 554, 565-66 (D.C. Cir. 2002) (upholding Federal agency’s use of Altman Z-Score analysis for predicting likelihood of bankruptcy and accepting that it “has been quite accurate over these last 25 years and remains an objective, established tool”) (internal quotes and citations omitted). 163. A Z-Score greater than 2.99 is the “safe zone” meaning a company is unlikely to go bankrupt, a score of 1.88 to 2.99 is the “grey zone,” and a score less than 1.88 is the “distress zone” where there is a high probability the company will go bankrupt within two years. 164. By March 31, 2012, Arch Coal’s Z-Score was well within the distress zone at .90. The Company’s debt-to equity ratio stood at 1.26 but was rapidly increasing. 165. Standard & Poor’s Ratings Services on April 25, 2012, put credit ratings for Arch Coal “on Credit –Watch with negative implications because of ‘very difficult’ operating conditions for coal producers.” See Dan Lowrey, “S&P Puts Arch on Credit Watch Negative, Citing ‘Very Difficult’ Coal Market Conditions,” SNL Daily Coal Report, April 26, 2012. James Fielding noted that, “Operating conditions for domestic producers of thermal coal and to a lesser extent, metallurgical coal remain very difficult due to a mild winter, natural gas substitution in the U.S., and slowing steel production overseas. In our view, these conditions are likely to decrease demand and hurt contract pricing into 2013.” Id. “Arch has acknowledged that coal producers are facing significant headwinds in 2012, including the possibility of a significant reduction in coal demand from electric utilities.” Id. (emphasis added). 166. Other red flags indicating the Company’s deteriorating financial condition were apparent. On May 1, 2012, Arch Coal reported its financial results for the first quarter of 2012, ending March 31, 2012. As reported therein, the Company had a net income of $1.4 million compared to a $55.8 million net income for the previous quarter, a 97.5% drop. See May 10, 2012 Form 10-Q at 4. 167. After Arch Coal’s stock dropped 7.4% on May 22, 2012, it was reported that, “there seems to be no reprieve in sight for coal companies, according to the U.S. Energy Information Administration, which estimated that electric power coal consumption would decline by about 10% this year while electricity generation from natural gas is expected to increase by about 16%.” See Amir Kurtovic, “Big Chill for Coal Stocks: Peabody, Arch, Patriot Shares Hit New lows, Lose $16.5 Billion in Market Capital,” St. Louis Business Journal, May 25, 2012 (emphasis added). Meredith Bandy, VP of coal equity research for BMO Capital Markets stated, “There is a possibility that we won’t see any improvement for the coal industry in the near future.” Id. (emphasis added). 168. An analysis done by the energy research firm Doyle Trading Consultants identified Arch Coal “as the coal supplier[] that could be the most vulnerable to looming coal unit retirements.” See Michael Niven, “Study: Arch, Peabody, Alpha Producers Most Vulnerable to Coal Unit Retirements,” SNL Daily Coal Report, May 21, 2012 (emphasis added). The study, “examined a portfolio of 243 GW [gigawatt] of coal-fired generating capacity in the United States.” Id. “Of the 243 GW of coal capacity analyzed by DTC, the firm found that approximately 41.1 GW of generation has been announced to be retired by 2020 or is vulnerable to retirement by then…The firm expects roughly 90% of the 41.1 GW to be retired by 2015, pushed by the need to comply with the U.S. EPA’s looming Mercury and Air Toxics Standards.” Id. As of 2010, Arch supplied more than 25 million tons of coal to the vulnerable plants, topping the list as the company supplying the most coal to vulnerable plants. Id. 169. On June 21, 2012, Arch Coal stated “that it will cut about 750 full-time employees, or about a tenth of its workforce, as it closes three higher-cost thermal mining complexes and temporarily idles or curtails production at several others in Appalachia.” See Diana Barr, “Arch Coal Cutting 750 Workers, Idling 3 Mines,” St. Louis Business Journal, June 21, 2012. “The company said the moves are prompted by, ‘the unprecedented downturn in demand for coal-based electricity.’” Id. Arch Coal’s President and CEO, John Eaves, said, “Current market pressures and a challenging regulatory environment have pushed coal consumption in the United States to a 20-year low.” Id. 170. As of June 30, 2012, Arch Coal’s likelihood of bankruptcy had increased even further as its Z-Score moved even further into the distress zone with a score of .59. 171. Probably the most eye-popping red flag was the incredible wave of bankruptcy filings by U.S. coal producers that began in 2012 and continued into 2013, in the wake of calls that 2013 would see “trough” pricing of coal. See Bankruptcy filings by US coal companies accelerate as markets flounder, SNL Daily Coal Report, Mar. 1, 2013 at 1. Facing slower economic growth in countries such as China, thus decreasing demand for metallurgical coal, and competition from shale gas and stricter environmental regulations hitting thermal coal, the downturn appeared “more chronic” rather than cyclical. Id. Coal-fired plants, too costly to retrofit with better pollution control technology in the face of cheap natural gas, were forced to close, which lead to lower demand for coal especially from Central Appalachian producers. The largest company to file was Patriot Coal Corporation (“Patriot Coal”) on July 9, 2012, with assets of nearly $4 billion. Id. 172. Patriot Coal’s bankruptcy is of particular relevance to the Defendants’ breach of fiduciary duty to the Plan and its Participants. Defendants were well aware of Patriot Coal because in 2008 Patriot Coal bought Magnum Coal which was a spinoff from Arch Coal. See Clement Daly, US Miners’ Union Reaches Settlement With Patriot Coal and Peabody Energy, Oct. 15, 2013, available at https://www.wsws.org/en/articles/2013/10/15/patr-015.html. Arch Coal would later be embroiled in litigation with employees of Patriot Coal who accused Arch Coal of spinning off its failing mines (i.e., Magnum Coal) to avoid having to pay pensions and long-term health care obligations. See Darren Epps, “UMWA points finger at Peabody, Arch for Patriot Bankruptcy,” SNL Daily Coal Report, August 30, 2012.10 173. Like Arch Coal, Patriot Coal sponsored a defined contribution plan. Prior to June 28, 2012, the Patriot Coal plan invested in common stock of Patriot Coal through the Patriot Coal Stock Fund. The Patriot Coal plan fiduciaries, who were operating with a similar backdrop of dire circumstances as Defendant-fiduciaries are today, appointed an independent fiduciary on June 21, 2012 (prior to filing for bankruptcy) to oversee the Patriot Coal Stock Fund. See Patriot Coal 2012 Form 5500, Notes to Financial Statements For the Years Ended December 31, 2012 and 2011 at 7. Upon information and belief, the Defendant-fiduciaries here have not even taken such a minimal step toward protecting the Plan and its Participants. This is just another example of the Company’s disregard for the long-term savings and financial future of its employees. 10 Arch Coal and the employees eventually “reached a $12 million deal to settle [the] legal issues.” See Taylor Kuykendall, “UMWA, Arch Coal Settle for $12 Over Retirement Obligations Related to Patriot,” SNL Daily Coal Report, Feb. 5, 2014. 174. Significantly, “[b]ased on a number of considerations, the independent fiduciary determined that it was in the best interest of Plan participants and beneficiaries to stop purchasing Patriot Coal Stock under the Plan and to sell all shares of Patriot Coal held in the Patriot Coal Stock Fund. On June 28, 2012, all of the shares were sold and participants can no longer invest in Patriot Coal Stock through the Plan.” See Patriot Coal 2012 Form 5500, Notes to Financial Statements For the Years Ended December 31, 2012 and 2011 at 7. 175. The action taken by the Patriot Coal plan fiduciaries along with the numerous other bankruptcy filings by coal companies in 2012 should have alerted the Defendant- fiduciaries to take steps to protect the assets of the Plan and its Participants invested in Arch Coal Stock. This is especially so when considering that during this time period, as noted above, Arch Coal remained at serious risk of bankruptcy as measured by its Z-Score. 176. On July 27, 2012, Arch Coal reported its financial results for the second quarter of 2012, ending June 30, 2012. As reported therein, the Company had a net loss of $435.4 million compared to a profit of $1.4 million the previous quarter. See August 9, 2012 Form 10-Q at 4. Further, earnings per share were a loss of $2.05 per share for the quarter. Id at 3. The Company’s liabilities increased $187 million to over $6.8 billion since the start of the year, id. at 5, and Arch Coal’s long term debt had risen nearly 19% since year-end 2011 to $4.46 billion. Id 177. Trust law states that “if the trustee holds property which when acquired by him was a proper investment, but which thereafter becomes an investment which would not be a proper investment for the trustee to make, it becomes the duty of the trustee to the beneficiary to dispose of the property within a reasonable time.” See Restatement (Second) of Trusts § 231 (1959) (emphasis added); see also discussion supra Introduction. 178. The Class Period begins on July 27, 2012, because by this point in time, at the time of the announcement of the disastrous second quarter results, a sufficiently reasonable amount of time had elapsed for the Plan’s fiduciaries to take action to protect the Plan given the numerous red flags regarding the Company’s precarious financial position in the preceding months. Among other things, as noted above, just a month earlier on June 21st, the Company implemented a work-force reduction citing an unprecedented downturn in the coal industry and around the same time, the Patriot Coal plan fiduciaries had ceased investment of the Patriot Coal plan assets in Patriot Coal stock due in part to the dismissal future for coal. 179. These and the plethora of other red flags described above made clear that Arch Coal Stock was not a prudent investment option for retirement savings. On July 27, 2012, the Company Stock was trading at $6.55, which was 91% below the all-time high of $75.03 on June 1, 2008 when coal prices were at their peak. 180. To be sure, by July 27, 2012, it was patently clear, or should have been clear, to the Plan’s fiduciaries, that a permanent structural shift in the only true business segment that comprised Arch Coal’s business, i.e., coal, was irreparably compromised for the foreseeable future given, inter alia, the depressed prices of coal prices and drastically reduced demand for coal over the last several years. Because of these and other factors delineated above, by July 27, 2012, the basic risk profile and future business prospects of Arch Coal had so dramatically changed, that continued deterioration of the price of Arch Coal Stock was inevitable, making Arch Coal Stock an imprudent Plan investment option. 181. The news only got worse from this point forward. Just a week later, “in an investor presentation released Aug. 7, [2012] Arch Coal Inc. offered a more pessimistic view for metallurgical coal in the current global market than in a May presentation.” Darren Epps, “Metallurgical Coal Markets Suddenly Unattractive, Arch Says,” SNL Daily Coal Report, August 9, 2012. “Arch said seaborne coal markets, including met coal, were oversupplied by about 25 million tonnes in the first half in 2012.” Id. Just in May 2012, Arch claimed the met coal market was poised for recovery. Id. 182. More bad news followed. On September 12, 2012, Arch Coal announced that it would idle the Imperial Mine in Upshur, West Virginia, due to a lack of market demand. See Darren Epps, “Arch Coal Idling Imperial Mine in West Virginia, Moving Employees to Leer,” SNL Daily Coal Report, September 13, 2012. 183. On September 30, Arch Coal’s Z-Score remained at .59, still in the distress zone. By year’s end, however, Arch Coal’s Z-Score had dropped even lower to .41, falling further into the distress zone. 184. The Company reported a net loss of $295 million for the fourth quarter of 2012 and a net loss of $681.6 million for the year. See Arch Coal Inc., Arch Coal, Inc. Reports Fourth Quarter and Full Year 2012 Results [press release], February 5, 2013 at 1. Arch Coal’s total assets declined by $207.2 million, while liabilities increased to almost $7.2 billion from 2011 to 2012. Id at 8. 2013 Was a New Year But the Same Old Story for Arch Coal 185. As 2013 began, there was no mistaking the fact that there was no recovery in sight for Arch Coal or the coal industry in general. In February 2013, “Arch Coal Inc. CFO John Drexler said …that the company expects Central Appalachia coal production to total less than 130 million tons in 2013, down from about $185 million tons in 2011, due to a ‘collapsing’ thermal market for the high-Btu coal.” See Darren Epps, “Arch Sees Central App Thermal Market Collapsing; Idled Mines Unlikely to Return,” SNL Daily Coal Report, February 27, 2013 (emphasis added). Arch closed 10 complexes in the area and Drexler said, “we don’t see those coming back in the near term.” Id. 186. Arch Coal reported it had a net loss of $70 million for the first quarter of 2013, ending March 31, 2013, compared to a net income of $1.4 million for the same quarter of the previous year. See May 8, 2013 Form 10-Q at 6. Furthermore revenue for the first quarter fell to $825.5 million, a drop of nearly 20% from a year back. Id at 3. 187. At the end of the first quarter of 2013, Arch Coal’s Z-Score had dropped even further to .3 and its debt to equity ratio had increased to 1.84. 188. Analysts continued to forecast bleak conditions for the coal industry stating that “Weak economic conditions in Europe, slower growth in Asia and readily available supply across the globe are impacting the international markets for both thermal coal and metallurgical coal.” Get ready for drop in US coal exports, industry official say, SNL Daily Coal Report, Apr. 29, 2013. Citigroup Global Markets Inc. in particular predicted that 2013 would see price declines in almost all commodities, including thermal coal. Id. 189. On May 10, 2013, Fitch Ratings downgraded the ratings for Arch Coal to B-, six steps into junk territory, from B. See Debbie Cai, “Fitch Cuts Arch Coal Rating on Oversupply of U.S. Coal,” Dow Jones News Service, May 10, 2013. Reasons given for the downgrade were that “[d]omestic oversupply in steam coal [was] expected to result in substantially lower earnings” through the year, and the Company noted that weak metallurgical coal prices could persist beyond the year. Id. Additionally, “Fitch also [saw] lower earnings, combined with high debt levels after the acquisition of International Coal Group in 2011, as leading to high leverage metrics over the ratings horizon.” Id. 190. In early June 2013, citing, “difficult and persistently weak coal markets,” Arch Coal announced that it was idling two mines at its Cumberland River complex and some operations at its Hazard complex in Kentucky.” See Dan Lowrey, “Arch Coal Curtailing Additional Met Coal Production, Laying Off 110,” SNL Coal Daily Report, June 10, 2013. “Arch already [had] laid off hundreds of Appalachian coal miners … and cut millions of tons of production in response to a worldwide decline in coal demand and excess supply from other coal-producing regions.” Id. 191. At the end of June 2013, with the “lingering slump in coal markets,” Arch Coal announced that it had agreed to sell three of its non-core Utah mines in order to give the company more “financial flexibility.” See Jeffrey Tomich, “Arch Coal to Sell Utah Mines for $435 Million,” St. Louis Post-Dispatch, June 29, 2013. 192. As of June 30, 2013, Arch Coal’s Z-Score remained in the distress zone at 0.43. 193. For the second quarter of 2013, ending June 30, 2013, the Company had a net loss of $74.2 million. See July 30, 2013 Form 10-Q at 3. Further, revenues for Arch Coal declined over 20% from the same quarter in 2012, dropping to $766.3 million. Id. at 3. The Company also lost 8.2% of its cash and cash equivalents from the beginning of the year falling to $644.2 million. Id. at 5. 194. For the third quarter of 2013, ending September 30, 2013, Arch Coal had a net loss of $128.4 million. See November 12, 2013 Form 10-Q at 3. This third quarter loss brought the Company’s total loss for the year to date to $270.6 million. Id. at 3. 195. By the end of the third quarter of 2013, Arch’s debt-to-equity ratio stood at 1.97. The Company’s Z-Score continued to languish in the distress zone at .32. 196. In October 2013, another alarm sounded for the U.S. coal industry, with the release of a study noting that most of the coal estimated to exist in the U.S. is “buried too deeply,” or was otherwise too unprofitable to extract, and thus unlikely to be mined. Speaking for the Institute for Energy Economics and Financial Analysis (“IEEFA”), Tom Sanzillo stated that the country will undergo a shift in its energy mix, leading to an industry that would “be smaller with less producers, fewer mines and higher prices.” See New reports say US has reached ‘peak coal’, SNL Daily Coal Report, Oct. 31, 2013. 197. Before it reported its fourth quarter 2013 results, “Arch Coal warned it expects to post lower-than-planned shipments and production levels from some facilities.” See Ben Fox Rubin, “Arch Coal Warns of Lower-Than-Expected Shipments, Production,” Dow Jones Industrial News, January 21, 2014. Powder River Basin shipments declined more than 15% because of rail service issues. Id. “Arch has idled several operations and reduced its production in mining complexes throughout Appalachia due to persistent decline in demand for coal-based electricity. Power plants have been switching to natural gas as prices hover near 10-year lows. Additionally, increased environmental regulation and rising costs have compounded the coal producers’ challenges.” Id. 198. For the year ending December 31, 2013, Arch Coal had a net loss of $641.8 with revenues dropping 20% from 2012. February 28, 2014 Form 10-K at F-5. Further, Arch Coal lost over a billion dollars of its total assets for the year prior. Id. at F-7. 199. At year’s end, December 31, 2013, Arch Coal’s Z-score dropped even lower to 0.22. Its debt to equity ratio was now at 2.29. The Company’s Struggles Continued and the Losses Mounted Throughout 2014 200. Shockingly, while the Plan and its Participants’ retirement savings continued to shrink as a result of the diminution in the value of Arch Coal Stock, Defendant Eaves saw his compensation rise from $4.3 million in 2013 to $7.3 million in 2014.11 201. In the first half of 2014, Citigroup published three reports which reiterated the major structural decline in the coal industry caused by new, stricter emission standards, increasing competition by renewable energy sources and limited feasibility in opening new coal plants in the wake of older plant retirement. “In short, Citigroup says, the evolution in electricity markets is being driven by a combination of regulatory and technology changes.” See Beginning of the end for coal? Citi sees structural decline, Renew Economy, May 15, 2014, available at http://reneweconomy.com.au/2014/beginning-end-coal-citi-sees-structural-decline-30396. 202. In February 2014, recognizing its critical situation, Arch Coal begun to take desperate measures. Seeking to “increase cash flow” and “improve operational efficiencies” Arch Coal reduced its dividend to $0.01 per share and also announced that it sold its ADDCAR Systems LLC subsidiary for $21 million. See Darren Epps, “Arch Coal Sells Highwall Mining Unit for $21M, Declares Annual Dividend,” SNL Energy M&A Review, March 1, 2014. Arch had acquired ADDCAR as part of the International Coal Group deal in 2011. Id. The ADDCAR divestiture came less than eight months after Arch Coal announced plans to sell Utah longwall mines to Bowie Resources LLC. Id. 203. Then, on March 5, 2014, Arch Coal announced it reached a deal to sell its Hazard subsidiary in Central Appalachia to Blackhawk Mining for $26.3 million. See Darren Epps, “Arch Coal Makes Another Deal, Sells Hazard Unit to Blackhawk Mining,” SNL Daily Coal Report, March 6, 2014. 11 See Dan Lowrey, “Arch Coal CEO Eaves’ 2014 Compensation Rises to $7.3 Million,” SNL Daily Coal Report, March 3, 2015. 204. Jefferies LLC downgraded Arch Coal on March 25, 2013 because of “sluggish” metallurgical coal prices and lower natural gas prices. See Dan Lowrey, “Analyst Downgrades Arch Coal, Alpha Natural on Outlook for Met Coal, Gas Prices,” SNL Daily Coal Report, March 26, 2013. Jefferies analyst Peter Ward noted that Arch Coal “made untimely acquisitions during a cyclical high in met coal markets that they are now paying for with heavy debt loads.” Id. “The problem is that Arch needs a lot of free cash flow in order to materially reduce its high debt level.” Id. 205. Arch Coal’s third quarter results for the period ending March 31, 2014, were dismal. The Company had a net loss of $124.1 million compared to a loss of $70 million for the same quarter last year, an increase loss of 77.2%. See May 12, 2014 Form 10-Q at 3. 206. As of March 31, 2014, Arch Coal’s Z-score was 0.19, meaning the Company continued to remain at great risk of bankruptcy. Additionally, its debt to equity ratio had increased to 2.42. 207. May 2014 brought more bad news for the coal industry and Arch Coal. The IEEFA noted that there was a global shrink in the demand for thermal coal. Increasing Chinese coal production would further limit the ability of American and Australian mines to offset shrinking domestic use through exports, as well as China’s own environmental initiatives and move to more efficient energy generation. See Briefing Note: Thermal Coal Outlook, May 15, 2014 at 6, available at http://ieefa.org/thermal-coal-outlook-may2014/. United States thermal coal capacity would continue to fall, with newer natural gas and solar power plants vastly outnumbering new coal plant additions. Id. at 6-7. Further, Europe and Japan were increasingly relying on stronger output from renewable energy sources, including off-shore wind farms and new solar power capacities. Id. at 7-8. 208. In June 2014, the Environmental Protection Agency announced new regulations for curbing carbon dioxide emissions from power plants, with major implications for both power plants and the coal companies that supply them. See Jacob Barker, “Carbon Rules Loom Large for Coal-Heavy Missouri, Illinois,” St. Louis Post Dispatch, June. 1, 2014. Arch Coal was obviously shaken by the news as Arch Coal Senior VP of Strategy and Public Policy, Deck S. Sloan, responded to the EPA’s proposed regulations by expressing how “costly” the regulations would be. See “Arch Coal Comments on EPA’s Greenhouse Gas Regulations,” Energy Monitor Worldwide, June 10, 2014. 209. Arch Coal’s financial results for the second quarter of 2014, ending June 30, 2014 presented more gloomy news. The Company had a net loss of $96.9 million compared to a loss of $72.2 million for the same quarter 2013. See August 8, 2014 Form 10-Q at 3. The Company also lost $334 million in total assets since the start of the year. Id at 5. 210. On June 30, 2014, Arch’s Z-Score remained in the distress zone at 0.13. The Company’s debt to equity ratio was now 2.53. 211. The hemorrhaging continued. On July 21, 2014 Arch Coal reported it was laying off 213 employees and closing its Cumberland River Coal Company Complex. See Jacob Kirn, “Arch Coal Lays Off 213 in Appalachia Mine Closure,” St. Louis Business Journal, July 21, 2014. This was a clear sign of the Company’s financial difficulties. According to Arch Coal President and CEO, John Eaves, the closure reduced Arch Coal’s annual 2013 metallurgical coal sales volumes by about 200,000 tons. Id. 212. September brought more bad news for the U.S. coal industry and Arch Coal. According to a report issued by the EIA, in the first half of 2014, 4,350 megawatts of new generation capacity came online, completely attributable to natural gas, solar, wind and other sources. No coal capacity was added. Even the 1,500 megawatts of coal-fired capacity added in 2013 was minimized by the 4,500 megawatt capacity added by natural gas-fired plants that same year, as demonstrated by this chart: See Natural gas, solar, and wind lead power plant capacity additions in first-half 2014, EIA, Sept. 9, 2014, available at http://www.eia.gov/todayinenergy/detail.cfm?id=17891 213. For the third quarter of 2014, ending September 30, 2014, Arch Coal posted yet another net loss, this time of $97.2 million; bringing total losses for the year to $318.2 million. See November 7, 2014 Form 10-Q at 3. 214. As of September 30, 2014, Arch Coal Stock was trading at $2.40, down 64% from its value at the start of the Class Period. 215. By November 2014, IEEFA noted the sharp decline of U.S. coal stocks relative the positive performance of the stock market: While the overall U.S. stock market has risen dramatically since 2010, U.S. coal stocks have collapsed, and the U.S. coal industry is in its fourth year of decline. Third-quarter earnings reports show the trend continuing. The four largest producers in the Power River Basin (Alpha, Arch, Cloud Peak, and Peabody) continue to see their stock prices drop as they report declining revenues, tighter margins, and distressed asset sales. See 20 Fourth-Quarter Questions for Powder River Basin Coal Producers, Nov. 11, 2014 at 1 (emphasis added), available at http://ieefa.org/20questions/. 216. The article further detailed that each producer reported declining revenues ranging from 10 to 30 percent from 2011 through 2013. Id. Noting a “fundamental structural coal- industry change,” due in part to increased, constant competition from cheap natural gas as well as a diminishing likelihood with the industry’s ability to offset domestic losses with exports, the article saw “little true likelihood of a significant turnaround.” Id. 217. Arch Coal was not the only coal company to experience stock market declines due to the downturn in the industry as a whole. As explained by SNL Daily Coal Report: Under assault from almost every direction, U.S. coal equities saw their value shrink to historic lows, with some equities hitting all- time lows. See Peabody hits back at coal critics, calling for rejection of ‘climate alarmism’, Sept. 29, 2014 (emphasis added). 218. For the year ending December 31, 2014, Arch Coal reported a net loss of $558.4 million. See February 27, 2015 Form 10-K at 61. This marked the third straight year that Arch Coal reported a net loss of income. Id. at 61. Revenues declined for the fourth straight year dipping to $2.9 billion. Id. at 61. Arch Coal’s total assets also declined for the fourth straight year, this year falling 6.2% from $8.99 billion in 2013 to $8.43 billion in 2014. Id. at 61. In 2015, Arch Coal Fared No Better as the Company’ Financial Condition Continued to Deteriorate, Losses Continued to Mount and its Stock Price Continued to Plummet 219. At the beginning of 2015, Arch Coal Stock was trading below $2 a share, recording a per share price of $1.68 on January 2, 2015. A month later, in the midst of its continuing struggles, the Company announced that it would stop paying dividends to investors “in light of ongoing market weakness.” See “Arch Coal Posts Smaller Loss, Stops Dividend Payments,” Associated Press State & Local, February 3, 2015. 220. Arch Coal’s financial results for the first quarter of 2015, ending March 31, 2015, was once again extremely disappointing. As reported, the Company had a net loss of $113.2 million, the tenth straight quarter posting a loss. See April 30, 2015 Form 10-Q at 3. The company had also lost $115 million in total assets since the end of year 2014. Id. at 5. 221. By March 31, 2015 Arch Coal’s Z-Score stood at .23 and its debt to equity ratio was a dreadful 3.3 meaning the Company’s debt was more than three times its equity. 222. A little over a month later on May 6, 2015, Bank of America published a new coal policy, attached as Exhibit C, that cemented the generally held view that the coal industry was an unduly risky segment in which to invest. Following a due diligence review, the bank announced: Over the past several years, Bank of America has significantly reduced our exposures to coal extraction companies. Going forward, Bank of America will continue to reduce our credit exposure to coal extraction companies. This commitment applies globally, to companies focused on coal extraction and to divisions of diversified mining companies that are focused on coal. 223. The dire outlook for the coal industry shows no signs of abating. On May 12, 2015, Patriot Coal filed for bankruptcy protection for the second time in three years, the results of competition from natural gas, high emission standards and weakened demand for metallurgical coal in China. It had emerged from the previous bankruptcy in December 2013, having reduced its debt from $3.07 billion to $545 million through the sale of assets and the closure of some mines. See Patriot Coal Files for Second Bankruptcy in Three Years Amid Commodity Price Slump, BNA’s Bankruptcy Law Reporter, May 12, 2015, available at http://www.bloomberg.com/news/articles/2015-05-12/patriot-coal-files-for-bankruptcy-after- commodity-price-slump. Not surprisingly, “Patriot’s woes are indicative of the wider malaise in the coal industry.” See Nick Cunningham, Latest Casualty In Energy’s Hardest Hit Industry, Yahoo Finance, May 25, 2015, available at http://finance.yaoo.com/news/latest-casualty-energy- hardest-hit-202728319.html. 224. Other coal companies to file for protection recently include Longview Power LLC, Dynegy Inc., Edison Mission Energy, James River Coal Co., America West Resources Inc., Trinity Coal Corp., Americas Energy Co., Clearwater Resources LP and Consolidated Energy. See Patriot Coal Files for Second Bankruptcy in Three Years Amid Commodity Price Slump, BNA’s Bankruptcy Law Reporter, May 12, 2015, available at http://www.bloomberg.com/news/articles/2015-05-12/patriot-coal-files-for-bankruptcy-after- commodity-price-slump. An additional four companies, including Arch Coal were seen as distressed: Walter Energy had raised the possibility of its own bankruptcy filing, Alpha Natural Resources Inc., the second-largest coal producer by sales, was warned by the New York Stock Exchange that its shares would be delisted if its shares continued to trade below $1, and Arch Coal and Peabody Energy Corp. had each lost over 75% of their share value since 2014. Id. 225. Less than two weeks after Patriot Coal’s bankruptcy filing, Arch Coal released a statement on May 22, 2015, “that it no longer satisfies the minimum standards necessary to be listed on the New York Stock Exchange.” See Tony Owusu, “Arch Coal (ACI) Tanks on Debt Restructuring Negotiations, NYSE Delisting Notice,” Thestreet.com, May 26, 2015 (emphasis added). After having a stock price below $1 for 30 consecutive trading days, Arch 12 Penny stocks are loosely defined as “any stock that trades for pennies or those that trade for under $5.” See http://www.investopedia.com/terms/p/pennystock.asp. Such stocks “are generally considered to be highly speculative and high risk because of their lack of liquidity, large bid-ask spreads, small capitalization and limited following and disclosure. They will often trade over the counter through the OTCBB and pink sheets. Id. Coal received a delisting notice. Id. Arch Coal Stock is now effectively a “penny stock” trading for less than $.50 as of the filing of the instant complaint.12 226. Another blow to Arch Coal and the coal industry was the recent revelation in an article that the Office of Surface Mining Reclamation and Enforcement (OSMRE), “the nation’s leading coal industry regulator” is examining whether coal companies, including Arch Coal, still qualify for a government program that allows coal companies to self-insure or “self-bond” for clean-up costs in case of bankruptcy. See Patrick Rucker, Coal Giant Peabody Faces Federal Scrutiny Over Clean-Up Insurance, Yahoo! Finance, June 4, 2015, available at http://finance.yahoo.com/news/coal-giant-peabody-faces-federal-174047899.html. The reason for the examination is OSMRE’s concern that “slumping coal prices and declining demand have put industry balance sheets under stress, raising questions about whether … coal firms meet the financial criteria to self bond.” Id. Importantly, as the article notes, “the shares of many major coal companies … have fallen by more than 90 percent in the last four years and industry analysts warn that near-term bankruptcies are a real danger.” Id. (emphasis added). 227. According to Greg Conrad, director of the Interstate Mining Compact Commission which speaks for coal producing states, “[t]his is the first time we’ve see [sic] this: a downturn in the coal industry raising questions about self bonds.” Id. 228. If Arch Coal were to be disqualified from the government program, it would be subjected to substantial cost increases as it would have to pay market rates to insure the billions of dollars required to restore old mines and ravaged landscapes back to health. Id. 229. By the end of 2014, it appeared that Arch Coal would no longer qualify to self- bond. In order to maintain its qualification for self-bonding, Arch Coal “must have a ratio of total liabilities to net worth of 2.5 times or less, and a ratio of current assets to current liabilities of 1.2 times or greater.” Id. However, a review of securities filings found that Arch Coal failed both those tests at the end of 2014. Id. 230. As of the filing of the instant complaint, for all the reasons set forth above, Arch Coal has been and remains an imprudent investment option for the Plan. DEFENDANTS KNEW OR SHOULD HAVE KNOWN THAT ARCH COAL WAS AN IMPRUDENT INVESTMENT FOR THE PLAN, YET FAILED TO PROTECT THE PLAN’S PARTICIPANTS 231. As illustrated by the following chart, Arch Coal’s tenuous financial condition as measured by, inter alia, its Z-Score and debt-equity ratio began in early 2012, but accelerated sharply during the third quarter ending September 30, 2012. 232. Further, as the below graph of Arch Coal’s performance relative to the S&P 500 makes clear, the Company has severely underperformed the general market: Source: http://www.google.com/finance?q=INDEXSP%3A.INX&ei=DhtuVZLQKcG7rgGHt4HgDQ. 233. Arch Coal is radically underperforming compared to the oil and gas sector as well as the S&P 500 Index, having lost over 93% of the share price in three years compared to a sector increase of nearly 12%: Source: https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&indu stry=101020 234. Even compared to the Dow Jones U.S. Coal Index, Arch Coal has lost more market capitalization than its peers: Source: Google Finance http://www.google.com/finance?cid=4931635 235. The Company’s financial condition, when viewed through the lens of objective financial metrics, plainly indicates the Company’s deterioration over the last several years. During the Class Period, although they knew or should have known that Company Stock was an imprudent investment for the Plan, Defendants did nothing to protect the significant investment of the Plan Participants’ retirement savings in Arch Coal Stock. 236. Since the beginning of the Class Period through the filing of the instant complaint, the Plan’s imprudent investments in Arch Coal Stock have been decimated, as indicated below: Source: http://bigcharts.marketwatch.com. 237. As a result of the enormous erosion of the value of Arch Coal, the Plan’s Participants, the retirement savings of whom were heavily invested in Arch Coal Stock, suffered unnecessary and unacceptable losses. 238. Because of their high ranking positions within the Company and/or their status as fiduciaries of the Plan, Defendants knew or should have known of the existence of the above- mentioned problems. 239. Defendants knew or should have known that, due to the Company’s spiraling financial reality and outlook given its exposure to losses stemming from the problems described above, Company Stock was imprudent no matter what its price. Regardless, the Company Stock price inevitably dropped drastically and steadily beginning in 2011, a year before the start of the Class Period, and continued throughout the Class Period due to the pervasive problems facing the Company. There was absolutely no objective evidence that the Company Stock price would or could recover. Yet, Defendants failed to protect the Plan and its Participants from these foreseeable losses. 240. Upon information and belief, Defendants failed to adequately review the performance of the other fiduciaries of the Plan to ensure that they were fulfilling their fiduciary duties under the Plan and ERISA. Defendants also failed to conduct an appropriate investigation into whether Arch Coal Stock was a prudent investment for the Plan and, in connection therewith, failed to provide the Plan’s Participants with information regarding Arch Coal’s problems so that the Plan’s Participants could make informed decisions regarding whether to include Arch Coal Stock in their accounts in the Plan. 241. An adequate (or even cursory) investigation by Defendants would have revealed to a reasonable fiduciary that investment by the Plan in Arch Coal Stock during the Class Period was clearly imprudent. A prudent fiduciary acting under similar circumstances would have acted during the Class Period to protect the Plan’s Participants against unnecessary losses, and would have made different investment decisions. 242. Because Defendants knew or should have known that Arch Coal Stock was not a prudent investment option for the Plan during the Class Period, they had an obligation to protect the Plan and its Participants from unreasonable and entirely predictable losses incurred during the Class Period as a result of the Plan’s investment in Arch Coal Stock. 243. Defendants had available to them several different options for satisfying this duty, including, among other things: divesting the Plan of Arch Coal Stock; discontinuing further contributions to and/or investment in Arch Coal Stock under the Plan; resigning as fiduciaries of the Plan if, as a result of their employment by Arch Coal, they could not loyally serve the Plan and the Plan’s Participants in connection with the Plan’s acquisition and holding of Arch Coal Stock; making appropriate public disclosures as necessary; and/or consulting independent fiduciaries regarding appropriate measures to take in order to prudently and loyally serve the Participants of the Plan. 244. Despite the availability of these and other options, Defendants failed to take any adequate action during the Class Period to protect the Plan’s Participants from losses resulting from the Plan’s investment in Arch Coal Stock. AT LEAST CERTAIN OF THE DEFENDANTS SUFFERED FROM CONFLICTS OF INTEREST 245. Pursuant to the duty of loyalty, an ERISA fiduciary must discharge his duties solely in the interest of the participants and beneficiaries. 29 U.S.C. § 1104(a)(1)). 246. Arch Coal’s SEC filings during the Class Period, including Form DEF 14A Proxy Statements, make clear that a portion of certain officers’ compensation, including Defendants Eaves and Lang, was in the form of stock awards and option awards. For example, in 2014, Defendant Eaves received $2,744,517 in stock awards while Defendant Lang received $1,628,718. See 2014 Form DEF 14A Proxy Statement (filed Mar. 20, 2015) at 60. 247. Defendant Eaves and Lang were also beneficial owners of Arch Coal Stock. As of February 26, 2015, Defendants Eaves and Lang owned 315,712, and 99,416 shares of Arch Coal Stock, respectively. Id. at 33. 248. Because of at least some of the Defendants’ compensation in Arch Coal Stock and ownership of Arch Coal Stock, these Defendants had a conflict of interest which put them in the position of having to choose between their own interests as executives and stockholders, and the interests of the Plan’s Participants, whose interests Defendants were obligated to loyally serve with an “eye single” to the Plan. See generally Mertens v. Hewitt Assoc., 508 U.S. 248, 251-52 (1993); 29 U.S.C. § 1104(a)(1)(B). These Defendants, while attempting to shore up Arch Coal during the Class Period as its stock price inevitably plummeted, abandoned their duties to the Plan and its Participants, and failed to consider at any time during the Class Period what was in the best interest of the Plan and its Participants as they should have done as Plan fiduciaries. 249. Some Defendants may have had no choice in tying their compensation to Arch Coal Stock (because compensation decisions were out of their hands), but Defendants did have the choice of whether to keep the Plan’s Participants’ retirement savings tied up to a large extent in Arch Coal Stock or to take steps to protect the Plan and its Participants. CLAIMS FOR RELIEF UNDER ERISA 250. At all relevant times, Defendants are/were and acted as fiduciaries within the meaning of ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A). 251. ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2), provides, in pertinent part, that a civil action may be brought by a participant for relief under ERISA § 409, 29 U.S.C. § 1109. 252. ERISA § 409(a), 29 U.S.C. § 1109(a), “Liability for Breach of Fiduciary Duty,” provides, in pertinent part, that any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this title shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary. 253. ERISA §§ 404(a)(1)(A) and (B), 29 U.S.C. §§ 1104(a)(1)(A) and (B), provide, in pertinent part, that a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries, for the exclusive purpose of providing benefits to participants and their beneficiaries, and with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. These fiduciary duties under ERISA §§ 404(a)(1)(A) and (B) are referred to as the duties of loyalty, exclusive purpose and prudence and, as courts within this Circuit have noted, these duties “have been described as ‘the highest known to the law.’” See, e.g., Braden, 588 at 598 (quoting Donovan, 680 F.2d at 272 n.8). 254. These duties entail, among other things: (a) the duty to conduct an independent and thorough investigation into, and continually to monitor, the merits of all the investment alternatives of a plan; (b) the duty to avoid conflicts of interest and to resolve them promptly when they occur. A fiduciary must always administer a plan with an “eye single” to the interests of the participants and beneficiaries, regardless of the interests of the fiduciaries themselves or the plan sponsor; (c) the duty to disclose and inform, which encompasses: (1) a negative duty not to misinform; (2) an affirmative duty to inform when the fiduciary knows or should know that silence might be harmful; and (3) a duty to convey complete and accurate information material to the circumstances of participants and beneficiaries. 255. ERISA § 405(a), 29 U.S.C. § 1105 (a), “Liability for breach by co-fiduciary,” provides, in pertinent part, that: [I]n addition to any liability which he may have under any other provision of this part, a fiduciary with respect to a plan shall be liable for a breach of fiduciary responsibility of another fiduciary with respect to the same plan in the following circumstances: (A) if he participates knowingly in, or knowingly undertakes to conceal, an act or omission of such other fiduciary, knowing such act or omission is a breach; (B) if, by his failure to comply with section 404(a)(1), 29 U.S.C. § 1104(a)(1), in the administration of his specific responsibilities which give rise to his status as a fiduciary, he has enabled such other fiduciary to commit a breach; or (C) if he has knowledge of a breach by such other fiduciary, unless he makes reasonable efforts under the circumstances to remedy the breach. 256. Plaintiff therefore brings this action under the authority of ERISA § 502(a) for Plan-wide relief under ERISA § 409(a) to recover losses sustained by the Plan arising out of the breaches of fiduciary duties by Defendants for violations under ERISA § 404(a)(1) and ERISA § COUNT I FAILURE TO PRUDENTLY AND LOYALLY MANAGE THE PLAN’S ASSETS (BREACHES OF FIDUCIARY DUTIES IN VIOLATION OF ERISA §§ 404 AND 405 BY THE COMPANY DEFENDANT AND THE RETIREMENT COMMITTEE DEFENDANTS) 257. Plaintiff incorporates the allegations contained in the previous paragraphs of this Complaint as if fully set forth herein. 258. This Count alleges fiduciary breaches against the Company Defendant and the Retirement Committee Defendants (the “Prudence Defendants”). 259. At all relevant times, as alleged above, the Prudence Defendants were fiduciaries of the Plan within the meaning of ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A) in that they had or exercised discretionary authority or control over the administration and/or management of the Plan and/or exercised any authority or control over the disposition of the Plan’s assets. 260. Under ERISA, fiduciaries who have or exercise discretionary authority or control over management of a plan or exercise any authority or control over the disposition of a plan’s assets are responsible for ensuring that all investment options made available to participants under a plan are prudent. Furthermore, such fiduciaries are responsible for ensuring that assets within the plan are prudently invested. The Prudence Defendants were responsible for ensuring that all investments in Company Stock in the Plan were prudent. The Prudence Defendants are liable for losses incurred as a result of such investments being imprudent. 261. According to DOL regulations interpreting the duty of prudence, in order to comply with the duty of prudence, a fiduciary must give “appropriate consideration to those facts and circumstances that, given the scope of such fiduciary’s investment duties, the fiduciary knows or should know are relevant to the particular investment or investment course of action involved, including the role that the investment or investment course of action plays in that portion of the plan’s investment portfolio with respect to which the fiduciary has investment duties.” 29 C.F.R. § 2550.404a-1(b)(1). “Appropriate consideration,” according to DOL regulations, includes but is not necessarily limited to “(i)[a] determination by the fiduciary that the particular investment or investment course of action is reasonably designed…to further the purposes of the plan, taking into consideration the risk of loss and the opportunity for gain (or other return) associated with the investment or investment course of action.” 29 C.F.R. § 2550.404a-1(b)(2). 262. A fiduciary’s duty of loyalty and prudence requires it to disregard plan documents or directives that it knows or reasonably should know would lead to an imprudent result or would otherwise harm plan participants or beneficiaries. ERISA § 404(a)(1)(D), 29 U.S.C. § 1104(a)(1)(D). Thus, a fiduciary may not blindly follow plan documents or directives that would lead to an imprudent result or that would harm plan participants or beneficiaries, nor may it allow others, including those whom they direct, or who are directed by the plan, including plan trustees, to do so. 263. The Prudence Defendants’ duty of loyalty and prudence also obligates them to speak truthfully to Participants, not to mislead them regarding the Plan or its assets, and to disclose information that Participants need in order to exercise their rights and interests under the Plan. This duty to inform Participants includes an obligation to provide Participants with complete and accurate information, and to refrain from providing inaccurate or misleading information, or concealing material information, regarding Plan investments/investment options such that Participants can make informed decisions with regard to the prudence of investing in such options made available under the Plan. 264. The Prudence Defendants breached their duties to prudently and loyally manage the Plan’s assets. During the Class Period, the Prudence Defendants knew or should have known that, as described herein, Company Stock was not a suitable and appropriate investment for the Plan. Yet, during the Class Period, despite their knowledge of the imprudence of the investment, the Prudence Defendants failed to take any meaningful steps to protect Plan’s Participants from the inevitable losses that they knew would ensue as the already-weakened Arch Coal faced mounting losses as the core of its business model – the coal industry – became increasingly obsolete and its ultimate demise became more of a likelihood. 265. The Prudence Defendants further breached their duties of loyalty and prudence by failing to divest the Plan of Company Stock during the Class Period when they knew or should have known that it was not a suitable and appropriate investment for the Plan. 266. The Prudence Defendants also breached their co-fiduciary obligations by, among their other failures, knowingly participating in each other’s failure to protect the Plan from inevitable losses. The Prudence Defendants had or should have had knowledge of such breaches by other fiduciaries of the Plan, yet made no effort to remedy them. 267. As a direct and proximate result of the breaches of fiduciary duties during the Class Period alleged herein, the Plan and, indirectly, Plaintiff and the Plan’s other Participants and beneficiaries lost a significant portion of their retirement investments. Had the Prudence Defendants taken appropriate steps to comply with their fiduciary obligations during the Class Period, Participants could have liquidated some or all of their holdings in Company Stock and thereby eliminated, or at least reduced, losses to the Plan and themselves. 268. Pursuant to ERISA § 502(a), 29 U.S.C. § 1132(a) and ERISA § 409, 29 U.S.C. § 1109(a), Defendants in this Count are liable to restore the losses to the Plan caused by their breaches of fiduciary duties alleged in this Count. COUNT II BREACH OF DUTY TO AVOID CONFLICTS OF INTEREST (BREACHES OF FIDUCIARY DUTIES IN VIOLATION OF ERISA §§ 404 AND 405 BY THE DIRECTOR AND FINANCE COMMITTEE DEFENDANTS) 269. Plaintiff incorporates the allegations contained in the previous paragraphs of this Complaint as if fully set forth herein. 270. This Count alleges fiduciary breaches against the Director and Finance Committee Defendants (the “Conflicts of Interest Defendants”). 271. At all relevant times, as alleged above, the Conflicts of Interest Defendants were fiduciaries of the Plan within the meaning of ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A). Consequently, they were bound by the duties of loyalty, exclusive purpose and prudence. 272. ERISA § 404(a)(1)(A), 29 U.S.C. § 1104(a)(1)(A), imposes on plan fiduciaries a duty of loyalty, that is, a duty to discharge their duties with respect to a plan solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits to participants and beneficiaries. 273. During the Class Period, the Conflicts of Interest Defendants breached their duty to avoid conflicts of interest and to promptly resolve them by, inter alia: failing to timely engage independent fiduciaries who could make independent judgments concerning the Plan’s investments in the Company’s own securities; and by otherwise placing their own and/or the Company’s interests above the interests of the Participants with respect to the Plan’s investment in Company Stock. 274. As a consequence of the Conflicts of Interest Defendants’ breaches of fiduciary duty during the Class Period, the Plan suffered tens of millions of dollars in losses, as its holdings of Company Stock were devastated. If the Conflicts of Interest Defendants had discharged their fiduciary duties to prudently manage and invest the Plan’s assets, the losses suffered by the Plan would have been minimized or avoided. Therefore, as a direct and proximate result of the breaches of fiduciary duties alleged herein, the Plan and, indirectly, Plaintiff and the Plan’s other Participants, lost a significant portion of their retirement investments. 275. Pursuant to ERISA § 502(a), 29 U.S.C. § 1132(a), and ERISA § 409, 29 U.S.C. § 1109(a), Defendants in this Count are liable to restore the losses to the Plan caused by their breaches of fiduciary duties alleged in this Count. COUNT III FAILURE TO ADEQUATELY MONITOR OTHER FIDUCIARIES AND PROVIDE THEM WITH COMPLETE AND ACCURATE INFORMATION (BREACHES OF FIDUCIARY DUTIES IN VIOLATION OF ERISA § 404 BY THE COMPANY, DIRECTOR, AND FINANCE COMMITTEE DEFENDANTS) 276. Plaintiff incorporates the allegations contained in the previous paragraphs of this Complaint as if fully set forth herein. 277. This Count alleges fiduciary breaches against the Company, Director, and Finance Committee Defendants (the “Monitoring Defendants”). 278. At all relevant times, as alleged above, the Monitoring Defendants were fiduciaries of the Plan, within the meaning of ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A). Thus, they were bound by the duties of loyalty, exclusive purpose, and prudence. 279. As alleged above, the scope of the fiduciary responsibilities of the Monitoring Defendants included the responsibility to appoint, remove, and, thus, monitor the performance of other Plan fiduciaries. 280. Under ERISA, a monitoring fiduciary must ensure that monitored fiduciaries are performing their fiduciary obligations, including those with respect to the investment and holding of a plan’s assets, and must take prompt and effective action to protect the plan and participants when they are not. 281. The monitoring duty further requires that appointing fiduciaries have procedures in place so that on an ongoing basis they may review and evaluate whether the “hands-on” fiduciaries are doing an adequate job (for example, by requiring periodic reports on their work and the plan’s performance, and by ensuring that they have a prudent process for obtaining the information and resources they need). In the absence of a sensible process for monitoring their appointees, the appointing fiduciaries would have no basis for prudently concluding that their appointees were faithfully and effectively performing their obligations to the plan’s participants or for deciding whether to retain or remove them. 282. Furthermore, a monitoring fiduciary must provide the monitored fiduciaries with complete and accurate information in their possession that they know or reasonably should know that the monitored fiduciaries must have in order to prudently manage the plan and the plan’s assets, or that may have an extreme impact on the plan and the fiduciaries’ investment decisions regarding the plan. 283. During the Class Period, the Monitoring Defendants breached their fiduciary monitoring duties by, among other things: (a) failing, at least with respect to the Plan’s investment in Company Stock, to properly monitor their appointee(s), to properly evaluate their performance, or to have any proper system in place for doing so, and standing idly by as the Plan suffered enormous losses as a result of the appointees’ imprudent actions and inaction with respect to Company Stock; (b) failing to ensure that the monitored fiduciaries appreciated the true extent of the Company’s precarious financial situation and the likely impact that financial failure would have on the value of the Plan’s investment in Company Stock; (c) to the extent any appointee lacked such information, failing to provide complete and accurate information to all of their appointees such that they could make sufficiently informed fiduciary decisions with respect to the Plan’s assets and, in particular, the Plan’s investment in Company Stock; and (d) failing to remove appointees whose performance was inadequate in that they continued to permit the Plan to make and maintain investments in the Company Stock despite the practices that rendered it an imprudent investment during the Class Period. 284. As a consequence of the Monitoring Defendants’ breaches of fiduciary duty, the Plan suffered tremendous losses. If the Monitoring Defendants had discharged their fiduciary monitoring duties as described above, the losses suffered by the Plan would have been minimized or avoided. 285. The Monitoring Defendants are liable as co-fiduciaries because they knowingly participated in each other’s fiduciary breaches as well as those by the monitored fiduciaries, they enabled the breaches by those Defendants, and they failed to make any effort to remedy these breaches despite having knowledge of them. 286. Therefore, as a direct and proximate result of the breaches of fiduciary duty by the Monitoring Defendants during the Class Period alleged herein, the Plan and, indirectly, Plaintiff and the Plan’s other Participants and beneficiaries, lost tens of millions of dollars of retirement savings. 287. Pursuant to ERISA §§ 409, 502(a)(2) and (a)(3), 29 U.S.C. §§ 1109, 1132(a)(2) and (a)(3), the Monitoring Defendants are liable to restore the losses to the Plan caused by their breaches of fiduciary duties alleged in this Count and to provide other equitable relief as appropriate. COUNT IV FAILURE TO PRUDENTLY AND LOYALLY MANAGE THE PLAN’S ASSETS (BREACHES OF FIDUCIARY DUTIES IN VIOLATION OF ERISA §§ 404 AND 405 BY DEFENDANT MERCER) 288. Plaintiff incorporates the allegations contained in the previous paragraphs of this Complaint as if fully set forth herein. 289. This Count alleges fiduciary breaches against Mercer (the “Trustee Defendant”). 290. At all relevant times, as alleged above, the Trustee Defendant was a fiduciary of the Plan within the meaning of ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A) in that it had or exercised discretionary authority or control over the administration and/or management of the Plan or exercised any authority or control over the disposition of the Plan’s assets. 291. As noted above, according to DOL regulations interpreting the duty of prudence, a fiduciary must give “appropriate consideration to those facts and circumstances that, given the scope of such fiduciary’s investment duties, the fiduciary knows or should know are relevant to the particular investment or investment course of action involved, including the role that the investment or investment course of action plays in that portion of the plan’s investment portfolio with respect to which the fiduciary has investment duties.” 29 C.F.R. § 2550.404a-1(b)(1). “Appropriate consideration,” according to DOL regulations, includes but is not necessarily limited to “(i)[a] determination by the fiduciary that the particular investment or investment course of action is reasonably designed…to further the purposes of the plan, taking into consideration the risk of loss and the opportunity for gain (or other return) associated with the investment or investment course of action.” 29 C.F.R. § 2550.404a-1(b)(2). 292. Under ERISA, fiduciaries who have or exercise discretionary authority or control over management of a plan or exercise any control over the disposition of a plan’s assets are responsible for ensuring that all investment options made available to participants under a plan are prudent. Furthermore, such fiduciaries are responsible for ensuring that assets within the plan are prudently invested. The Trustee Defendant could not blindly follow directions of the Prudence Defendants if they knew or should have known such directions were improper under 293. A directed trustee’s duty of prudence requires it to disregard plan documents or directives that it knows or reasonably should know would lead to an imprudent result or would otherwise harm plan participants or beneficiaries. ERISA § 404(a)(1)(D), 29 U.S.C. § 1104(a)(1)(D). Thus, a fiduciary may not blindly follow plan documents or directives that would lead to an imprudent result or that would harm plan participants or beneficiaries, nor may it allow others, including those whom they direct, or who are directed by the plan, including plan trustees, to do so. 294. The Trustee Defendant breached its duties to prudently and loyally manage the Plan’s assets. During the Class Period, the Trustee Defendants knew or should have known that, as described herein, Company Stock was not a suitable and appropriate investment for the Plan. Yet, during the Class Period, despite its knowledge of the imprudence of the investment, the Trustee Defendant failed to take any meaningful steps to protect Plan’s Participants from the inevitable losses that it knew would ensue as it became increasingly obvious that Arch Coal was in severe distress with no relief in the foreseeable future. 295. The Trustee Defendant further breached its duties of loyalty and prudence by failing to divest the Plan of Company Stock when it knew or should have known that it was not a suitable and appropriate investment for the Plan. 296. The Trustee Defendant also breached its co-fiduciary obligations by, among its other failures, knowingly participating in the failure of the Plan’s other fiduciaries to protect the Plan from inevitable losses. The Trustee Defendant had or should have had knowledge of such breaches by other fiduciaries of the Plan, yet made no effort to remedy them. 297. As a direct and proximate result of the breaches of fiduciary duties alleged herein, the Plan, and indirectly the Plan’s participants and beneficiaries, lost a significant portion of their retirement investment. Had the Trustee Defendant taken appropriate steps to comply with its fiduciary obligations, Participants could have liquidated some or all of their holdings in Company Stock and thereby eliminated, or at least reduced, losses to the Plan. 298. Pursuant to ERISA § 502(a), 29 U.S.C. § 1132(a) and ERISA § 409, 29 U.S.C. § 1109(a), Defendant in this Count is liable to restore the losses to the Plan caused by its breaches of fiduciary duties alleged in this Count. CAUSATION 299. The total Arch Coal price collapse of nearly 100% as of the filing of the instant complaint, which devastated the Plan’s assets, could have and would have been avoided in whole or in part by Defendants complying with their ERISA fiduciary duties. Defendants could have taken certain actions based on the publicly known information alone such as, and not limited to: investigating whether Arch Coal Stock was a prudent retirement investment; retaining outside advisors to consult them or to act as fiduciaries; seeking guidance from governmental agencies (such as the DOL or SEC); resigning as fiduciaries of the Plan; stopping or limiting additional purchases of Arch Coal Stock by the Plan; and/or by divesting the Arch Coal Stock held by the 300. Despite these and other options, Defendants – who knew or should have known that Arch Coal Stock was an imprudent retirement investment – chose to, as fiduciaries, continue allowing the Plan to acquire further Arch Coal Stock, while taking no action to protect their wards as Arch Coal’s condition worsened and the Plan’s Participants’ retirement savings were decimated. Prudent fiduciaries would have acted otherwise and taken appropriate actions to protect the Plan and its Participants. 301. To the extent Defendants wanted to take action based on non-publicly disclosed information that they were privy to, the following alternative options – which are pled as alternative statements under FED. R. CIV. P. 8(d)(2) to the extent they are inconsistent – were available to Defendants and (a) could have been done without violating securities laws or any other laws, (b) should have been done to fulfill Defendants’ fiduciary obligations under ERISA, and (c) would not have been more likely to harm the Plan than to help it. 302. First, Defendants could have and should have directed that all Company and Participant contributions in Arch Coal Stock be held in cash. The refusal to purchase Arch Coal Stock is not a “transaction” within the meaning of insider trading prohibitions. This action would not have required any independent disclosures that could have had a materially adverse effect on the price of Arch Coal Stock. 303. Alternatively, Defendants should have closed the Plan to further investment in Arch Coal Stock and directed that contributions be diverted from the Arch Coal Stock into other (prudent) investment options or, if there were no such instructions, the Plan’s default investment 304. Additionally, and importantly, because Defendants could and should have concluded that Arch Coal Stock was an imprudent retirement savings vehicle based solely upon public information, no disclosure was required before conducting an orderly liquidation of the Plan’s holdings. 305. Defendants also could have:  sought guidance from the DOL or SEC as to what they should have done;  resigned as Plan fiduciaries to the extent they could not act loyally and prudently;  retained outside experts to serve either as advisors or as independent fiduciaries specifically for the Plan and not the Company in general. 306. The Plan suffered millions of dollars in losses during the Class Period because substantial assets of the Plan were imprudently invested, or allowed to be invested, by Defendants in Company Stock during the Class Period, in breach of Defendants’ fiduciary duties, as reflected in the diminished account balances of the Plan’s Participants. 307. Had Defendants properly discharged their fiduciary and/or co-fiduciary duties, the Plan and its Participants would have avoided a substantial portion of the losses that they suffered through the Plan’s continued investment in Company Stock. 308. Given the totality of circumstances prevailing during the Class Period, no prudent fiduciary would have made the same decision to retain the clearly imprudent Arch Coal Stock as an investment in the Plan. 309. Despite the availability of these and other options, Defendants took no meaningful action during the Class Period to protect the Plan’s Participants from losses as a result of the Company Stock’s imprudence until it was too late to make any substantial difference. REMEDIES FOR BREACHES OF FIDUCIARY DUTY 310. As noted above, as a consequence of Defendants’ breaches, the Plan suffered significant losses. 311. ERISA § 502(a), 29 U.S.C. § 1132(a) authorizes a plan participant to bring a civil action for appropriate relief under ERISA § 409, 29 U.S.C. § 1109. Section 409 requires “any person who is a fiduciary . . . who breaches any of the . . . duties imposed upon fiduciaries . . . to make good to such plan any losses to the plan….” Section 409 also authorizes “such other equitable or remedial relief as the court may deem appropriate….” 312. With respect to calculation of the losses to a plan, breaches of fiduciary duty result in a presumption that, but for the breaches of fiduciary duty, the Participants in the Plan would not have made or maintained its investments in the challenged investment and, where alternative investments were available, that the investments made or maintained in the challenged investment would have instead been made in the most profitable alternative investment available. In this way, the remedy restores the values of the Plan’s assets to what they would have been if the Plan had been properly administered. 313. Plaintiff, the Plan, and the Class are therefore entitled to relief from Defendants in the form of: (1) a monetary payment to the Plan to make good to the Plan the losses to the Plan resulting from the breaches of fiduciary duties alleged above in an amount to be proven at trial based on the principles described above, as provided by ERISA § 409(a), 29 U.S.C. § 1109(a); (2) injunctive and other appropriate equitable relief to remedy the breaches alleged above, as provided by ERISA §§ 409(a) and 502(a), 29 U.S.C. §§ 1109(a) and 1132(a); (3) reasonable attorney fees and expenses, as provided by ERISA § 502(g), 29 U.S.C. § 1132(g), the common fund doctrine, and other applicable law; (4) taxable costs; (5) interests on these amounts, as provided by law; and (6) such other legal or equitable relief as may be just and proper. 314. Each Defendant is jointly and severally liable for the acts of the other Defendants as a co-fiduciary. JURY DEMAND Plaintiff demands a jury. REQUEST FOR RELIEF WHEREFORE, Plaintiff requests the following relief: A. A Judgment that the Defendants, and each of them, breached their ERISA fiduciary duties to the Participants during the Class Period; B. A Judgment compelling the Defendants to make good to the Plan all losses to the Plan resulting from Defendants’ breaches of their fiduciary duties, including losses to the Plan resulting from imprudent investment of the Plan’s assets, and to restore to the Plan all profits the Defendants made through use of the Plan’s assets, and to restore to the Plan all profits which the Participants would have made if the Defendants had fulfilled their fiduciary obligations; C. A Judgment imposing a Constructive Trust on any amounts by which any Defendant was unjustly enriched at the expense of the Plan as the result of breaches of fiduciary D. A Judgment awarding actual damages in the amount of any losses the Plan suffered, to be allocated among the Plan Participants’ individual accounts in proportion to the accounts’ losses; E. A Judgment requiring that Defendants allocate the Plan’s recoveries to the accounts of all Participants who had any portion of their account balances invested in Arch Coal Stock maintained by the Plan in proportion to the accounts’ losses attributable to the decline in the price of Arch Coal Stock; F. A Judgment awarding costs pursuant to 29 U.S.C. § 1132(g); G. A Judgment awarding attorneys’ fees pursuant to 29 U.S.C. § 1132(g) and the common fund doctrine; and H. A Judgment awarding equitable restitution and other appropriate equitable monetary relief against the Defendants. Dated: June 30, 2015 Respectfully submitted, DYSART TAYLOR COTTER MCMONIGLE & MONTEMORE, P.C. By: /s/ Don R. Lolli Don R. Lolli Bar Number: 56263MO 4420 Madison Avenue Kansas City, MO 64111 Telephone: (816) 931-2700 Facsimile: (816) 931-7377 Email: [email protected] KESSLER TOPAZ MELTZER & CHECK LLP Edward W. Ciolko Donna Siegel Moffa Mark K. Gyandoh Julie Siebert-Johnson 280 King Of Prussia Road Radnor, PA 19087 Telephone: (610) 667-7706 Facsimile: (610) 667-7056 Email: [email protected] [email protected] [email protected] [email protected] Counsel for Plaintiff

consumer fraud

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COLLECTIVE ACTION CASE NO. _________________ JUDGE ____________________ JURY DEMAND UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF GEORGIA DUBLIN DIVISION LYNDSEY MICHELLE LOYD, On Behalf of HERSELF and All Others Similarly Situated, Plaintiff, v. JACKS ENTERPRISE, LLC d/b/a JOHNNY’S PIZZA, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) COLLECTIVE ACTION COMPLAINT 1. Plaintiff Lyndsey Michelle Loyd (“Named Plaintiff”) brings this collective action on behalf of herself and all others similarly situated against Defendant JACKS Enterprise, LLC d/b/a Johnny’s Pizza (“JACKS”), her employer, to recover unpaid minimum and overtime wages under the Fair Labor Standards Act (“FLSA”). 2. JACKS operates a pizza restaurant chain in the state of Georgia. Named Plaintiff and those similarly situated are servers who worked for JACKS during the applicable statutory period in at least one of its restaurants in Georgia. 3. Named Plaintiff brings her FLSA claims on her own behalf and on behalf of all similarly situated employees of JACKS as a collective action pursuant to 29 U.S.C. § 216(b). JURISDICTION 4. This Court has jurisdiction over Named Plaintiff’s claims because they are brought pursuant to 29 U.S.C. § 216(b) and because they raise a federal question pursuant to 28 U.S.C. § 1331. 5. Venue properly lies in this judicial district pursuant to 28 U.S.C. § 1391 because Defendant resides in this judicial district and because the claims arose in this judicial district. PARTIES 6. Named Plaintiff Lyndsey Michelle Loyd is a resident of East Dublin, Laurens County, Georgia and was employed by JACKS as a server at its Johnny’s Pizza restaurant located in Dublin, Laurens County, Georgia from or around March 2016 until September 2016. 7. Defendant JACKS is a Georgia domestic limited liability company with its principal office located at 1909 Springdale Road, Dublin, Georgia 31021. Defendant’s registered agent is John C. Hall, Jr., CPA, 307 W. Gaines Street, Dublin, Georgia 31021. 8. Throughout the statutory period covered by this action, JACKS employed individuals who are engaged in interstate commerce and/or in the production of goods for interstate commerce or are engaged in handling, receiving, selling, or otherwise working on goods or materials that were moved in or produced for interstate commerce. As such, JACKS is and was covered by the FLSA. FACTS 9. Named Plaintiff and those she seeks to represent in this action were employed as servers for JACKS in Georgia. 10. During the three-year period relevant to this lawsuit, JACKS has employed dozens of servers at its restaurants. 11. From approximately March 2016 until September 2016, Named Plaintiff was employed by JACKS as a server at its location in Dublin, Georgia. 12. Throughout the applicable statutory period, JACKS paid Named Plaintiff and its other servers an hourly wage below $7.25. For example, JACKS paid Named Plaintiff an hourly wage between $2.15 and $2.30. 13. In seeking to comply with the FLSA mandate that employees receive a minimum wage of $7.25 per hour, JACKS purported to utilize a “tip credit” for each hour worked by Named Plaintiff and other servers at JACKS’ Georgia restaurants. See 29 U.S.C. § 203(m). 14. JACKS required Named Plaintiff and other servers to contribute a portion of their tips to its employees who worked in the position of Dishwasher. 15. JACKS’ Dishwashers do not receive tips directly from customers because Dishwashers generally work in or near the kitchen area and do not interact with restaurant customers. A Dishwasher’s job primarily consists of cleaning and washing cooking utensils as well as cleaning and washing silverware and dishes used by restaurant patrons. 16. JACKS also had a policy and practice of requiring Named Plaintiff and its other servers to spend more than 20% of their shift performing non-tip-producing work, including, but not limited to, rolling silverware, dusting and cleaning the restaurant, sweeping, mopping, stocking the refrigerator, chopping vegetables, stocking and maintaining the salad bar, preparing salad, stocking the soft drink machine, and changing out beer kegs. 17. When the tips received by Plaintiff and similarly situated servers did not cover the difference between the lower tipped hourly rate they received and the $7.25 per hour statutory minimum wage, JACKS did not make any payments to Plaintiff and similarly situated servers to ensure that they were paid the FLSA-mandated minimum wage. COLLECTIVE ALLEGATIONS 18. Named Plaintiff brings her FLSA claim pursuant to 29 U.S.C. § 216(b) on behalf of all individuals who, during any time within the past three years, were employed as servers at any JACKS restaurant in Georgia. 19. Named Plaintiff’s FLSA claims should proceed as a collective action because Named Plaintiff and other similarly situated servers, having worked pursuant to the common policies described herein, are “similarly situated” as that term is defined in 29 U.S.C. § 216(b) and the associated decisional law. CAUSES OF ACTION COUNT I Violation of the Minimum Wage Requirements of the FLSA 20. All previous paragraphs are incorporated as though fully set forth herein. 21. The FLSA entitles employees to a minimum hourly wage of $7.25. 22. While restaurants may utilize a “tip credit” to satisfy their minimum wage obligations to servers, they forfeit the right to do so when they require servers to share tips with other restaurant employees who do not “customarily and regularly receive tips.” See 29 U.S.C. § 203(m). Federal courts interpreting this statutory language hold that restaurants lose their right to utilize a “tip credit” when tips are shared with employees—such as JACKS’ Dishwashers— whose direct customer interaction is minimal. Federal courts interpreting this statutory language also hold that restaurants lose their right to utilize a “tip credit” when their tipped employees— such as JACKS’ servers—spend more than 20% of their shift performing non-tip-producing 23. By requiring Named Plaintiff and other servers to share tips with Dishwashers, JACKS has forfeited its right to utilize the “tip credit” in satisfying its minimum wage obligations to Named Plaintiff and other servers. As such, JACKS has violated the FLSA’s minimum wage mandate by paying Plaintiff and other servers an hourly wage below $7.25. 24. By requiring Named Plaintiff and other servers to spend more than 20% of their shift performing non-tip-producing work, JACKS has forfeited its right to utilize the “tip credit” in satisfying its minimum wage obligations to Named Plaintiff and other servers. As such, JACKS has violated the FLSA’s minimum wage mandate by paying Plaintiff and other servers an hourly wage below $7.25. 25. In violating the FLSA, JACKS has acted willfully and with reckless disregard of clearly applicable FLSA provisions. PRAYER FOR RELIEF WHEREFORE, Named Plaintiff prays for the following relief, on behalf of herself and all others similarly situated: A. An order permitting this litigation to proceed as a collective action pursuant to 29 U.S.C. § 216(b); B. Prompt notice of this litigation, pursuant to 29 U.S.C. § 216(b), to all similarly situated workers; C. A finding that JACKS violated the FLSA; D. A finding that JACKS’ FLSA violations are willful; E. A judgment against JACKS and in favor of Named Plaintiff and similarly situated workers for compensation for all unpaid and underpaid wages that JACKS failed and refused to pay in violation of the FLSA; F. Prejudgment interest to the fullest extent permitted under the law; G. Liquidated damages to the fullest extent permitted under the FLSA; H. Litigation costs, expenses, and Plaintiff’s attorneys’ fees to the fullest extent permitted under the FLSA and Federal Rules of Civil Procedure; and I. Such other and further relief as this Court deems just and proper in equity and under the law. JURY DEMAND Named Plaintiff demands a jury as to all claims so triable. Dated: August 30, 2018 Respectfully submitted, /s/ Michael J. Moore MICHAEL J. MOORE (GA Bar No. 520109) POPE MCGLAMRY, KILPATRICK, MORRISON & NORWOOD, P.C. 3391 Peachtree Road, NE, Suite 300 P.O. Box 191625 (31119-1625) Atlanta, GA 30326 Telephone: (404) 523-7706 [email protected] [email protected] DAVID W. GARRISON (No. 24968)* JOSHUA A. FRANK (No. 33294)* BARRETT JOHNSTON MARTIN & GARRISON, LLC Bank of America Plaza 414 Union Street, Suite 900 Nashville, TN 37219 Telephone: (615) 244-2202 Facsimile: (615) 252-3798 [email protected] [email protected] * Pro Hac Vice Motion anticipated Attorneys for Plaintiff

employment & labor

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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION Civil Action No. 1:18-cv-02551-AT CLASS ACTION DIEGO CERVANTES, Individually and on Behalf of the Invesco 401(k) Plan and All Others Similarly Situated, Plaintiff, vs. AMENDED COMPLAINT FOR LIABILITY UNDER ERISA INVESCO HOLDING COMPANY (US), INC.; INVESCO LTD.; INVESCO NATIONAL TRUST COMPANY; INVESCO ADVISERS, INC.; INVESCO BENEFITS PLAN COMMITTEE; SUZANNE CHRISTENSEN; JOHN COLEMAN; WASHINGTON DENDER; PETER GALLAGHER; DAVID GENOVA; DOUGLAS SHARP; BEN UTT; GARY WENDLER; KEVIN M. CAROME; LOREN M. STARR; and JOHN DOES 1-20, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) TABLE OF CONTENTS Page NATURE OF THE ACTION .................................................................................... 1 JURISDICTION AND VENUE ................................................................................ 5 PARTIES.................................................................................................................... 6 Plaintiff ............................................................................................................ 6 Defendants ....................................................................................................... 6 Invesco Ltd. ..................................................................................................... 6 The Plan Sponsor Defendants .......................................................................... 7 The Invesco Benefits Committee Defendants ................................................. 8 The Investment Manager Defendants ............................................................ 10 The Plan ......................................................................................................... 10 The “Doe” Defendants ................................................................................... 11 DEFENDANTS’ FIDUCIARY DUTIES UNDER ERISA .................................... 11 The Duties of Loyalty and Prudence ............................................................. 11 Fiduciaries Are Required Under ERISA to Act in the Best Interest of Plan Participants When Selecting and Maintaining Investment Options ........................................................................................................... 14 Co-Fiduciary Liability ................................................................................... 15 SUBSTANTIVE ALLEGATIONS ......................................................................... 16 The Plan ......................................................................................................... 16 The Plan Investment Options ........................................................................ 19 - i - Page The Self-Directed Schwab Account .............................................................. 23 Defendants Acted to Benefit Invesco to the Detriment of the Plan and Plan Participants ............................................................................................ 26 The Plan Investments Were Imprudent and the Result of an Imprudent Process ........................................................................................................... 27 Invesco Emerging Markets Equity Trust and Invesco Developing Markets Fund ................................................................................................. 28 Invesco High Yield Bond Fund ..................................................................... 31 Invesco American Franchise Fund ................................................................ 32 Invesco Diversified Dividend Fund ............................................................... 35 Invesco Mid Cap Growth Trust ..................................................................... 37 Investments in the Invesco Short-Term Investment Fund Were Imprudent ....................................................................................................... 40 Restricting the Schwab Account to PowerShares ETFs Was the Result of an Imprudent Process ................................................................................ 41 The Inclusion of Expensive Versions of Plan Investments Through the Schwab Account Was the Result of an Imprudent Process........................... 43 CLASS ACTION ALLEGATIONS ........................................................................ 44 COUNT I .................................................................................................................. 46 Breach of Fiduciary Duties in Violation of ERISA §404(a) Against the Plan Sponsor Defendants and the Benefits Committee Defendants........ 46 COUNT II ................................................................................................................ 52 - ii - Page Breach of Fiduciary Duties in Violation of ERISA §404(a) Against the Plan Sponsor Defendants for Failure to Monitor Other Fiduciaries ....... 52 COUNT III ............................................................................................................... 55 Prohibited Transactions in Violation of ERISA §406(a)(1) (A), (C) and (D) Against Defendant Invesco, the Plan Sponsor Defendants, the Benefits Committee Defendants and the Investment Manager Defendants ..................................................................................................... 55 COUNT IV ............................................................................................................... 58 Prohibited Transactions in Violation of ERISA §406(b)(1) and (3) Against Defendant Invesco, the Plan Sponsor Defendants, the Benefits Committee Defendants, and the Investment Manager Defendants ............... 58 COUNT V ................................................................................................................ 62 Co-fiduciary Liability Under ERISA §405 Against the Plan Sponsor Defendants, the Benefits Committee Defendants, and the Investment Manager Defendants ...................................................................................... 62 COUNT VI ............................................................................................................... 63 Knowing Participation in a Fiduciary Breach or Violation of ERISA Pursuant to ERISA 502(a)(3) Against Defendant Invesco and the Investment Manager Defendants ................................................................... 63 ENTITLEMENT TO RELIEF ................................................................................. 65 PRAYER FOR RELIEF .......................................................................................... 66 - iii - Plaintiff brings this action individually, on behalf of a class of all participants in Invesco Ltd.’s 401(k) Plan (the “Plan”) between May 25, 2012 to the date of Judgment (the “Class Period”), and on behalf of the Plan, for breach of fiduciary duty and prohibited transactions under the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §1001, et seq. (“ERISA”), against the Defendants, as defined below. As alleged herein, Defendants have breached their fiduciary duties of prudence and loyalty with respect to the Plan, and entered into prohibited transactions in violation of ERISA, to the detriment of the Plan and its participants and beneficiaries. NATURE OF THE ACTION 1. Invesco Ltd. (“Invesco”) is an investment management firm that offers mutual funds and other types of investment products to customers. The Plan is offered to employees of Invesco’s wholly-owned subsidiaries. ERISA, which regulates the operation of the Plan, requires plan fiduciaries to act solely in the interest of the Plan’s participants and beneficiaries. To meet their fiduciary obligations, the Plan’s fiduciaries are required to establish and maintain a prudent process to search the market for the best investment options for Plan participants and to monitor the Plan’s investment options on an ongoing basis. 2. Defendants did not consider or act in the best interest of the Plan and its participants throughout the Class Period. Instead, Defendants put their interests before the Plan participants by treating the Plan as an opportunity to promote and generate fees from proprietary investment products offered by Invesco and its subsidiaries. Instead of engaging in a prudent process to benefit the interests of Plan participants, Defendants used Plan participants as a captive market for Invesco’s proprietary investment products to benefit and enrich Invesco and its affiliates. 3. Participants in the Plan were entitled to save for retirement by choosing from an assortment of investment funds selected for the Plan (the “Plan Investments”). Plan participants were also able to invest in securities other than those offered in the Plan as Plan Investments by opening a self-directed brokerage account with the brokerage firm Charles Schwab & Co., Inc. (the “Schwab Account”). 4. In structuring the Plan, the Plan fiduciaries acted to solely benefit Invesco and its affiliate entities to the detriment of the Plan participants in connection with both the Plan Investments and the Schwab Account. 5. The Plan fiduciaries filled the Plan with Invesco mutual funds and collective investment trust (“CITs”) in breach of their fiduciary duties. During the Class Period, between 55% to 68% of the Plan Investments were affiliated with Invesco and 100% of the actively managed Plan Investment choices in key investment - 2 - categories were affiliated with Invesco, even though these Plan investment options performed worse and/or had higher fees than other comparable unaffiliated investment options. 6. Furthermore, the Plan fiduciaries violated their fiduciary duties in connection with the Schwab Account. The Schwab Account is a full service brokerage account that could have afforded Plan participants the opportunity to invest in a wide assortment of investments, including all publicly listed equity securities, and thousands of ETFs. But during the Class Period, Plan fiduciaries restricted the investment options available to Plan participants which benefited Invesco and harmed Plan participants. 7. The Plan’s fiduciaries modified the features of the Schwab Account to prevent Plan participants from purchasing any publicly listed equity securities other than ETFs affiliated with Invesco. Plan participants were not able to purchase any blue chip common stocks or ETFs offered by Invesco’s largest competitors, like BlackRock, Vanguard and State Street, even though those ETFs may have been more liquid, had lower fees or a better track records, or were in investment categories not offered by Invesco. The Schwab Account was set up so that any Plan participant who sought to invest in a liquid security that could be traded while the market was open was forced to invest in an Invesco-affiliated ETF. - 3 - 8. As alleged herein, Defendants acted in their own interests to the detriment of Plan participants. Instead of carefully examining and selecting the most prudent investment options for the Plan or prudently monitoring the Plan to eliminate its poor investment options, Defendants caused a majority of Plan Investments to consist of Invesco-affiliated mutual funds and CITs, and limited the Schwab Account to Invesco affiliated ETFs, enabling Invesco and its subsidiaries to earn lucrative fees, increase its assets under management, and serve business interests unrelated to the benefit of Plan participants. Defendants breached their fiduciary duties and engaged in prohibited transactions in other ways as well, as alleged below. 9. To remedy these fiduciary breaches and prohibited transactions, Plaintiff, individually and as a representative of a Class of participants and beneficiaries in the Plan, brings this action on behalf of the Plan to recover all losses resulting from Defendants’ breaches of fiduciary duty and other ERISA violations and restore to the Plan any profits made by the fiduciaries or the persons and/or entities who knowingly participated in the fiduciaries’ imprudent and disloyal use of Plan assets. In addition, Plaintiff seeks such other equitable or remedial relief as the Court may deem appropriate. - 4 - JURISDICTION AND VENUE 10. Plaintiff brings this action pursuant to 29 U.S.C. §132(a), which provides that participants or beneficiaries in an employee retirement plan may pursue a civil action on behalf of a plan to remedy breaches of fiduciary duty and other violations of ERISA for monetary and appropriate equitable relief. 11. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §1331, because it is a civil action arising under the laws of the United States, and it has exclusive jurisdiction under ERISA §502(e)(1), 29 U.S.C. §1132(e)(1). 12. Venue is proper is this District pursuant to ERISA §502(e)(2), 29 U.S.C. §1132(e)(2), because the Plan was and is administered in Atlanta, Georgia within this District, violations of ERISA took place in this District, and/or a defendant resides or may be found in this District. Venue is also proper in this District pursuant to 28 U.S.C. §1391(b) because a defendant resides and/or does business in this District and because a substantial part of the events or omissions giving rise to the claims asserted herein occurred within this District. - 5 - PARTIES Plaintiff 13. Plaintiff Diego Cervantes has been a Plan participant during the Class Period and invested in Plan Investments affiliated with Invesco. Plaintiff Cervantes has suffered financial harm and has been injured by Defendants’ unlawful conduct as described herein. Furthermore, Defendants have been unjustly enriched from the fees and expenses generated as a result of Plaintiff Cervantes’ Plan Investments. Defendants Invesco Ltd. 14. Defendant Invesco Ltd. (“Invesco”) is an investment management company headquartered in Atlanta, Georgia. Defendant Invesco operates its for-profit investment management business through its wholly-owned subsidiaries, Invesco Advisers, Inc. (“Invesco Advisers”), Invesco National Trust Company (“Invesco Trust Co.”), and PowerShares Capital Management LLC (“PowerShares”). 15. During the Class Period, Invesco’s investment management business was promoted by the Plan because a majority of the Plan’s investment options were affiliated with Invesco and managed and sponsored by Invesco’s subsidiaries: Invesco Advisers and Invesco Trust Co. The Plan’s fiduciaries, members of the Invesco Benefits Plan Committee (“IBPC”) and Invesco Holding Company (US) Inc. (“IVZ - 6 - Inc.”) board of directors, were Invesco officers which created a conflict of interest and an incentive to retain poor performing Invesco investment options managed and sponsored by Invesco affiliates. The Plan Sponsor Defendants 16. Defendant IVZ Inc. is a Delaware corporation and the named Plan Sponsor in the documents governing the Plan (the “Plan Documents”). According to the Plan Documents, Defendant IVZ Inc., as the Plan Sponsor, is responsible for ensuring the Plan’s proprietary and affiliate investment options would not be prohibited under ERISA. 17. Additionally, the Board of Directors of Defendant IVZ Inc. (the “Board”) is responsible for overseeing the Plan’s appointment and designation of Plan fiduciaries, the removal of fiduciaries, and the appointment and removal of the Plan administrator. 18. The Board consisted of the following individual defendants during the Class Period, both of whom were senior executives of Invesco: (a) Kevin M. Carome, Invesco Senior Managing Director and General Counsel; and (b) Loren M. Starr, Invesco Chief Financial Officer and Senior Managing Director. - 7 - 19. The Defendants listed in ¶¶16-18 are referred to herein as the “Plan Sponsor Defendants.” At all relevant times herein, the Plan Sponsor Defendants were fiduciaries within the meaning of ERISA §3(21)(A), 29 U.S.C. §1002(21)(A) because they had discretionary authority to evaluate the Plan’s proprietary investment options and determine whether they should be removed from the Plan, exercised or possessed discretionary authority or discretionary control with respect to management of the Plan, and/or exercised or possessed authority or control with respect to management or distribution of the Plan’s assets, and/or had discretionary authority or discretionary responsibility in the administration of the Plan. The Invesco Benefits Committee Defendants 20. The IBPC is the Plan administrator and named fiduciary of the Plan. The IBPC’s responsibilities include, inter alia: (i) control, management and administration of the Plan; (ii) establishment of the Plan’s investment policy; (iii) selecting and monitoring the Plan Investments available to Plan participants; (iv) responsibility for the management, disposition and investment of Plan assets; (v) the power to appoint and remove Plan Investment managers; and (vi) ensuring that the Plan complies with ERISA, including the duties of loyalty and prudence codified in ERISA 404(c). As alleged below, the IBPC selected wholly-owned subsidiaries of Invesco to manage a majority of Plan Investments. - 8 - 21. During the Class Period, the IBPC consisted of the following individual Defendants, each of whom was a senior executive of Invesco: (a) Defendant Washington Dender, Head of Invesco Human Resources and chairperson of the IBPC; (b) Defendant Ben Utt, Managing Director of Invesco U.S. Institutional Sales; (c) Defendant Gary Wendler, Head of Invesco’s Product Development and Investment Risk; (d) Defendant Suzanne Christensen, Head of Invesco Enterprise Risk & Analytics; (e) Defendant Peter Gallagher, Head of Invesco Retail Sales; (f) Defendant John Coleman, Invesco Managing Director and Chief Administrative Officer; (g) Defendant Douglas Sharp, Head of Invesco’s EMEA Retail Group, who was removed as a member of the IBPC in October 2015; and (h) Defendant David Genova, Invesco Global Investments Director. 22. The Defendants listed in ¶¶20-21 are referred to herein as the “Benefits Committee Defendants.” At all relevant times herein, the members of the IBPC (as well as the IBPC itself) were fiduciaries within the meaning of ERISA §3(21)(A), - 9 - 29 U.S.C. §1002(21)(A) as a result of their membership on the IBPC and because they each exercised or possessed discretionary authority or discretionary control with respect to management of the Plan and/or exercised or possessed authority or control with respect to management or distribution of the Plan’s assets, and/or had discretionary authority or discretionary responsibility in the administration of the Plan. The Investment Manager Defendants 23. Defendants Invesco Advisers and Invesco Trust Co. (collectively, the “Investment Manager Defendants”) are wholly-owned subsidiaries of Invesco. During the Class Period, the Investment Manager Defendants sponsored and managed the Plan Investments. At all relevant times herein, the Investment Manager Defendants received compensation in connection with proprietary and/or affiliated mutual fund and CIT Plan Investments. As the sponsor, investment advisor, and investment sub-advisor of the affiliated Plan Investments, the Investment Management Defendants are parties in interest to the Plan as defined by ERISA §3(14). The Plan 24. The Plan is a Nominal Defendant and at all relevant times herein has been an “employee pension benefit plan” within the meaning of ERISA §3(2)(A), 29 U.S.C. §1002(2)(A), and a “defined contribution plan” or “individual account plan” within the meaning of ERISA §3(34), 29 U.S.C. §1002(34). The Plan is named - 10 - as a nominal defendant pursuant to Fed. R. Civ. P. 19 to ensure that complete relief can be granted as to claims brought on behalf of the Plan. The “Doe” Defendants 25. To the extent there are additional officers and employees of Invesco, members of the Board, the IBPC, or other entities or persons who were fiduciaries, or parties in interest to the Plan during the Class Period, the identities of whom are currently unknown to Plaintiff, Plaintiff reserves the right, once their identities are ascertained, to seek leave to join them to the instant action. Thus, without limitation, unknown “Doe” defendants include other individuals and entities who were fiduciaries of the Plan within the meaning of ERISA §§3(21) and/or 402(a)(1) during the Class Period and are personally liable under ERISA §409(a). DEFENDANTS’ FIDUCIARY DUTIES UNDER ERISA The Duties of Loyalty and Prudence 26. ERISA imposes strict fiduciary duties of loyalty and prudence upon plan fiduciaries. ERISA §404(a)(1)(a) sets forth the duty of loyalty, which states that fiduciaries must discharge their duties solely in the interest of plan participants and beneficiaries and for the exclusive purpose of providing benefits to participants and their beneficiaries and defray reasonable expenses of administering the plan. - 11 - 27. The duty of loyalty requires fiduciaries to act with an “eye single” to the interests of plan participants.1 As the Supreme Court has noted, “Perhaps the most fundamental duty of a [fiduciary] is that he [or she] must display . . . complete loyalty to the interests of the beneficiary and must exclude all selfish interest and all consideration of the interests of third persons.” Id. at 224. 28. Where fiduciaries have conflicting interests that raise questions regarding their loyalty, the fiduciaries “are obliged at a minimum to engage in an intensive and scrupulous independent investigation of their options to insure that they act in the best interests of the plan beneficiaries.”2 29. ERISA §404(a)(1)(b) also imposes a “prudent person” standard upon fiduciaries.3 This duty of prudence means that ERISA fiduciaries must discharge their responsibilities “with the care, skill, prudence, and diligence” that a prudent person “acting in a like capacity and familiar with such matters would use.”4 The duty of prudence means that fiduciaries must not only select prudent investments, but that, 1 Pegram v. Herdrich, 530 U.S. 211, 235 (2000). 2 Kanawi v. Bechtel Corp., No. 09-16253 (9th Cir. 2009) (DOL Amicus Brief). 3 This standard measures fiduciaries’ investment decisions and disposition of assets. See Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459, 2467 (2014) (citation omitted). 4 ERISA §404(a)(1)(b). - 12 - they must monitor the investments to ensure they do not become imprudent over 30. In measuring the prudence of fiduciaries’ conduct, courts state that the key element is the process for considering and examining relevant information. As one court explained, “ERISA §404(a)(1)(B) requires only that the [fiduciaries] vigorously and independently investigate the wisdom of a contemplated investment; it matters not that the investment succeeds or fails, as long as the investigation is ‘intensive and scrupulous and . . . discharged with the greatest degree of care that could be expected under all the circumstances by reasonable beneficiaries and participants of the plan.’”6 31. Thus, to meet the prudent process requirement, fiduciaries must vigorously and thoroughly investigate the investment options to obtain relevant information and then base their decisions on the information obtained. This means considering competing funds to determine which fund should be included in the plan’s investment line-up. “A fiduciary must engage in an objective, thorough, and 5 See Tibble v. Edison Int’l, 135 S. Ct. 1823, 1828 (2015). 6 Donovan v. Walton, 609 F. Supp. 1221, 1238 (S.D. Fla. 1985). - 13 - analytical process that involves consideration of the quality of competing providers and investment products, as appropriate.”7 32. In satisfying these duties, fiduciaries should consider a variety of funds and the expenses associated with the possible funds.8 Furthermore, under ERISA, a fiduciary “has a continuing duty to monitor [plan] investments and remove imprudent ones” that exists “separate and apart from the [fiduciary’s] duty to exercise prudence in selecting investments.”9 If an investment is imprudent, the plan fiduciary “must dispose of it within a reasonable time.” Id. Fiduciaries Are Required Under ERISA to Act in the Best Interest of Plan Participants When Selecting and Maintaining Investment Options 33. To meet their fiduciary obligations, ERISA requires plan fiduciaries to establish and maintain a prudent process to search the market for the best investment options. Moreover, ERISA requires fiduciaries to regularly monitor and review existing investment options to determine whether it is prudent to keep or remove those options from the Plan. Where fiduciaries have conflicting interests that raise 7 72 Fed. Reg. 60453 (October 24, 2007) (Preamble). 8 See Tibble v. Edison Int’l, No. CV-07-5359-SVW, 2010 U.S. Dist. LEXIS 69119 (C.D. Cal. July 8, 2010) (noting that fiduciaries must engage in a thorough investigation of the merits of an investment and noting that the fiduciaries considered five investment criteria, including the expense ratio, when selecting funds). 9 Tibble, 135 S. Ct. at 1828. - 14 - questions about their loyalty to the Plan, they “are obliged at a minimum to engage in an intensive and scrupulous independent investigation of their options to ensure that they act in the best interests of the plan beneficiaries.”10 Co-Fiduciary Liability 34. ERISA §405(a) imposes explicit co-fiduciary liability on plan fiduciaries, provides for fiduciary liability for a co-fiduciary’s breach: “In addition to any liability which he may have under any other provision of this part, a fiduciary with respect to a plan shall be liable for a breach of fiduciary responsibility of another fiduciary with respect to the same plan in the following circumstances: (1) if he participates knowingly in, or knowingly undertakes to conceal, an act or omission of such other fiduciary, knowing such act or omission is a breach; (2) if, by his failure to comply with section 404(a)(1) in the administration of his specific responsibilities which give risk to his status as a fiduciary, he has enabled such other fiduciary to commit a breach; or (3) if he has knowledge of a breach by such other fiduciary, unless he makes reasonable efforts under the circumstances to remedy the breach.” 35. ERISA §409(a) authorizes a plan participant to bring a civil action to enforce a breaching fiduciary’s liability to the plan: “Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties 10 Kanawi v. Bechtel, No. 09-16253 (9th Cir. 2009) (DOL Amicus Brief). - 15 - imposed upon fiduciaries by this title shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary.” 36. In addition to the duties of loyalty and prudence imposed by ERISA §404, certain transactions are expressly prohibited by ERISA §406, and are considered per se violations of ERISA because they entail a high potential for abuse. 37. Each of the Defendants are subject to co-fiduciary liability under 29 U.S.C. §1105(a)(1)(3) because they enabled other fiduciaries to commit breaches of fiduciary duty through their appointment powers, failed to comply with 29 U.S.C. §1104(a)(1) in the administration of their duties, or failed to remedy the known breaches of duty carried out by other fiduciaries. SUBSTANTIVE ALLEGATIONS The Plan 38. The Plan, established and effective as of January 1, 2000, is a defined- contribution Plan for the Invesco subsidiaries: (i) IVZ Inc. (the Plan Sponsor); (ii) Invesco Management Group Inc.; (iii) Invesco Group Services, Inc.; and (iv) Invesco North American Holding, Inc. (collectively the “Plan Employers”). The - 16 - Plan provides retirement income for employees of the Plan Employers. The amount of retirement income available to Plan participants is derived from the investment returns generated on contributions by or on behalf of Plan participants, less fees and expenses. Eligible employees of the Plan Employers may participate in the Plan by contributing up to 75% of their eligible earnings to the Plan. 39. The written instrument, within the meaning of ERISA §402, 29 U.S.C. §1102, by which the Plan is maintained is the Invesco 401(k) Plan (the “Plan Document”), amended as of January 1, 2015. Under the Plan Documents, Charles Schwab Trust Company (“Schwab”) is the directed trustee and custodian of the Plan, receiving both direct and indirect compensation from the Plan. 40. According to the Plan Document, Defendant Invesco is the parent company of the Plan Sponsor, IVZ, Inc. As of December 31, 2016, the Plan had over $890 million in assets, making it one of the largest 401(k) plans in the country. 41. The IBPC is the named fiduciary of the Plan. The IBPC is expressly responsible under the Plan Document for the: (i) control, management and administration of the Plan; (ii) establishment of the Plan’s investment policy; and (iii) selection and monitoring of the Investment Funds available to Participants in the - 17 - 42. The IBPC is composed of senior Invesco executives who have an interest in promoting Invesco’s asset management business. For example, Defendant Ben Utt is the Invesco Director of U.S. Institutional Sales and Services, Defendant Peter Gallagher is Invesco’s Head of U.S. Retail Sales, and Defendant David Genova is Invesco’s Global Investments Director. Each of these IBPC members has a conflict of interest with the Plan participants since a key part of their responsibilities involved increasing sales, fund inflows, assets under management, and profitability for Invesco. For example, the bonus performance criteria under the Invesco Executive Incentive Bonus Plan includes assets under management, net revenue yield on assets under management, operating revenues, and net asset flows. The Plan fiduciaries on the IBPC have strong personal incentives to use Plan assets to positively impact Invesco’s business even though their actions might negatively impact Plan participants. 43. During the Class Period, Invesco generated fees and increased assets under management as a result of the inclusion and retention of proprietary Plan Investments. According to the Plan Documents and Invesco’s Fee and Investment Notices provided to Plan participants, Invesco-affiliated entities earned lucrative fees by charging Plan participants “operating expenses” in connection with their investments in proprietary Plan Investments. The operating expenses were paid - 18 - indirectly from the participants’ accounts on an annual basis, thereby diluting their value and enriching Invesco and its subsidiaries. The Plan Investment Options 44. Plan participants may elect to make before-tax contributions or after-tax (aka Roth) contributions or a combination of both. New employees who are eligible to participate in the Plan who do not elect to be excluded from the Plan will be automatically enrolled as a participant in the Plan. 45. According to the Plan’s “Summary Plan Description” (the “SPD”), Plan participants are permitted to direct the investment of their funds into the Plan Investments, which are selected and monitored by the Benefit Committee Defendants and/or those who were delegated those responsibilities by the Plan Sponsor Defendants. The Plan fiduciaries did not employ a careful and thoughtful process to select, offer or monitor prudent investment options to serve the best interests of Plan participants. Rather, Defendants used the Plan to serve the business interests of Invesco by generating fees, increasing assets under management, and increasing the liquidity of its ETF products. 46. First, during the Class Period, between 55% to 68% of all Plan Investments were affiliated with Invesco. Second, Invesco-affiliated investment options were the exclusive investment option in key categories of actively managed - 19 - investments. Specifically, if a Plan participant had sought an actively managed investment option during the Class Period, between 74% and 88% of those choices would have been limited to Invesco-affiliated options and 100% of the actively managed investment options in many key investment categories were affiliated with Invesco. Below is a chart showing the percentage of all funds that were affiliated with Invesco as well as the percentage of actively managed funds that were affiliated with Invesco: Total % Invesco- Year Options 11 Invesco- affiliated Active Options Invesco- affiliated (Active) % Invesco- affiliated affiliated (Active) 2012 25 15 60% 17 14 82% 2013 26 16 62% 18 15 83% 2014 31 21 68% 23 20 87% 2015 25 15 60% 17 14 82% 2016 27 15 55% 19 14 74% 2017 25 15 60% 16 14 88% 47. Third, the only Plan Investment in numerous investment categories, regardless of whether they were passive or actively managed investments, were limited to investment options affiliated with Invesco. The below chart lists each category of Plan Investments in which the only option was an Invesco-affiliated option: 11 This chart does not include the Invesco Stock Fund which was offered as part of the Plan until 2015. - 20 - Investment Categories With Only Invesco–Affiliated Options Category 2012 2013 2014 2015 2016 2017 High Yield Bond X X X X X X World Allocation/ Allocation – 30% to 50% Equity X X X X X X Large Blend X X X X X X Mid-Cap Growth X X X X X X Small Value X X X X X X Small Growth X X X X X X Foreign Large Growth X X X X X X Diversified Emerging Mkts. X X X X X X Stable Value/ Money Market- Taxable X X X X X X 48. In addition to the Invesco-affiliated investments, the Plan Investments consisted of the Invesco Stock Fund (until 2015), seven to eight passive index funds managed by State Street Global Advisors (“SSGA”), and depending on the year, a few other non-affiliated mutual funds, including a fund that seeks to provide returns linked to the rate of inflation, an alternative long and short fund, a bond fund and a mid-cap value fund. Thus, if a Plan participant wanted an actively managed investment in the large growth, diversified emerging markets, or high yield bond categories, the only options were poor performing Plan Investments affiliated with Invesco. If a Plan participant simply wanted to participate in the small cap growth, small cap blend, large cap blend, diversified emerging markets, or stable value investment categories, even with an index fund, they were also limited to Plan Investments affiliated with Invesco. - 21 - 49. The manner in which the Plan invested funds that were not expressly directed by Plan participants was also set up to benefit Invesco to the detriment of Plan participants. According to the SPD, to the extent a participant failed to direct a portion of their funds for investment, those funds will be automatically invested in a portfolio referred to as the “Moderately Conservative Model Portfolio” (the “MCMP”). As of September 2017, nearly 60% of the MCMP was invested in Invesco-affiliated investments. As such, the Plan was structured so that a majority of funds that were not directed by Plan participants were automatically placed into Invesco Plan Investments. 50. Defendants’ strategy of generating investments in Invesco-affiliated investments was successful. By December 31, 2016, $569,797,686 or 81% of investments by Plan participants were in Invesco-affiliated funds.12 This benefitted Invesco by increasing assets under management and generating associated fees. Plan participants, however, were harmed due to the poor performance and/or high fees of the Invesco-affiliated funds relative to other more prudent non-Invesco investment options. 12 This number consists of the total investments in products offered as Plan Investments. - 22 - The Self-Directed Schwab Account 51. If Plan participants are interested in purchasing securities other than those offered in the Plan as Plan Investments, they are permitted to open the Schwab Account (defined above), which is an individual self-directed brokerage account with the firm Charles Schwab, and direct up to 100% of their contributions to that account. Contrary to the statement in the SPD that the Schwab Account provides Plan participants with “the maximum amount of investment flexibility available,” Defendants structured the account to limit investment options and to steer money into Invesco-affiliated investment products. Thus, Defendants actively and imprudently took steps to structure the Schwab Account to benefit Invesco to the detriment of Plan participants. 52. Indeed, the Schwab Account could have offered Plan participants the ability to invest in all publicly traded individual stocks and bonds, as well as thousands of ETFs from other ETF companies. The Plan fiduciaries, however, severely restricted the Schwab Account so that Plan participants were not, and are not, permitted to purchase equity securities, foreign securities, limited partnerships, fixed income securities, or any of the thousands of ETFs other than those issued by Invesco- affiliated PowerShares. - 23 - 53. Even though Invesco offers the PowerShares ETFs through the Schwab Account, there are many other ETFs offered by significantly larger ETF companies, including Vanguard, BlackRock, and State Street.13 A firm’s ETF business is valued by various metrics, including number of ETFs, assets under management, and trading volume/liquidity of the ETFs. PowerShares is viewed as the fourth largest ETF company, trailing at a distant fourth to Vanguard, BlackRock, and State Street. It was, and continues to be, in the financial interest of Invesco to increase investments in its PowerShares ETFs. Thus, even though there are thousands of ETFs, many of which have better track records and/or lower fees than the PowerShares ETFs, the Plan fiduciaries excluded those ETFs from the Schwab Account. 54. Defendants acted in their own self-interest to limit the Schwab Account to PowerShares ETFs to the detriment of Plan participants. Moreover, the Plan fiduciaries’ failure to engage in a prudent process is shown by the imprudent limitations placed on the purchase of non-PowerShares ETFs. 55. The selection of mutual funds offered to Plan participants through the Schwab Account was also the result of an imprudent process. Even though Plan participants were able to purchase non-Invesco mutual funds through the Schwab 13 Even after acquiring Guggenheim Partners’ ETF business in September 2017, Invesco is still the fourth largest ETF issuer in the United States. - 24 - Account, they were also able to purchase more expensive share classes of the same mutual funds offered as Plan Investments. For example, the Plan offered the High Yield Bond Fund as a Plan Investment with an expense ratio of 0.68%. Due to an imprudent process, however, Defendants permitted Plan participants to purchase through the Schwab Account a more expensive share class of that same fund with an initial sales charge of 4.25% and an expense ratio of 1.09%. 56. Since Defendants acted to input restrictions on the Schwab Account, they should have also acted to limit the purchase of Invesco-affiliated funds. Had the Plan fiduciaries acted in a prudent manner, they would have excluded from the Schwab Account those funds that were included in the Plan as Plan Investments in order to prevent Plan participants from unnecessarily paying higher fees and earning lower returns. For example, as of December 31, 2016, investors held approximately $1,500,000 in the retail and investor shares of the Invesco High Yield Fund, Invesco Balanced Risk Allocation Fund, Invesco Developing Markets Fund, Invesco Floating Rate Fund, Invesco Diversified Dividend Fund and Invesco American Franchise Fund even though they could have purchased those same funds in the Plan, paid less in expenses, and achieved a higher return. 57. Thus, the Plan fiduciaries failed to act prudently and served their own interest by restricting the ETFs that can be purchased through the Schwab Account - 25 - and by failing to restrict proprietary Invesco investment options that were also offered through the Plan. Defendants Acted to Benefit Invesco to the Detriment of the Plan and Plan Participants 58. The Plan fiduciaries failed to meet their fiduciary obligations to the Plan participants who trusted them to construct a Plan that prioritized their interests over Invesco’s profits and that offered superior investment options and world-class investment management. Defendants did not consider or act in the best interest of the Plan and its participants throughout the Class Period. Instead, the Plan fiduciaries put their interests before Plan participants by treating the Plan as an opportunity to promote and generate fees for Invesco’s propriety investment businesses. Defendants acted to bolster Invesco’s investment management business by constructing the Plan in a way so that money would be funneled to Invesco’s financial products even though it was imprudent to do so. 59. Invesco prioritized profit over fiduciary duty and saddled the Plan’s participants with substandard proprietary mutual funds, CITs, and ETFs. The Plan fiduciaries could have, but failed to, include investment options with comparable or better performance from unaffiliated fund managers. Furthermore, the Plan fiduciaries breached their fiduciary duties by failing to remove imprudent investment options from the Plan or structure the Schwab Account to include unaffiliated ETFs - 26 - and exclude imprudent affiliated mutual funds. The inclusion, retention, and addition of the Plan Investments and the investment options made available through the Schwab Account were the result of an imprudent process. The Plan Investments Were Imprudent and the Result of an Imprudent Process 60. The Plan was loaded with Invesco-affiliated products due to their affiliation with Invesco. Defendants used Plan participants as a captive investor base to foster investments in Invesco-affiliated products and benefit Invesco as well as Invesco Advisers, Invesco Trust Co. and PowerShares. The structure of the Plan as well as the Plan Investments were imprudent and the result of the failure of the Plan fiduciaries to engage in a prudent process. 61. A fiduciary acting in the best interest of the Plan and its participants and with due care would not have added or retained many of the Plan Investments because of their poor performance and/or high fees compared with readily available non- affiliated investment options. Prior to and during the Class Period, Invesco-affiliated funds in the Plan suffered from poor performance compared to readily apparent more prudent investment options. Below are representative examples of Invesco-affiliated funds that were imprudent. A prudent and loyal fiduciary under the same circumstances would not have selected, retained, or added the following imprudent investments. - 27 - Invesco Emerging Markets Equity Trust and Invesco Developing Markets Fund 62. The Invesco Emerging Markets Equity Trust (the “Emerging Markets Trust” or “EMET”) was a Plan Investment at the beginning of the Class Period. The Emerging Markets Trust performed poorly prior to and during the Class Period. For example, as of December 31, 2011, the EMET’s one year trailing return of -24.27%, five year trailing return of 1.68%, and ten year trailing return of 9.67%, significantly underperformed its benchmark’s (the “MSCI EM NR USD”) one year return of -18.42% five year trailing return of 2.40%, and ten year trailing return of 13.86%. According to the Fee and Investment Notices provided to Plaintiff and Plan participants, the EMET continued to underperform its benchmark during 2012 to 63. During June 2014, the Plan replaced the EMET with another investment option. A prudent fiduciary would have looked to the market for the best available options. The Plan’s fiduciaries, however, did not act as prudent fiduciaries. Rather, they substituted the EMET for another proprietary investment option affiliated with Invesco, the Invesco Developing Markets Fund (the “Developing Markets Fund” or “GTDFX”). The Invesco Developing Markets Fund, like the Emerging Markets Trust, had a poor track record and was not a prudent investment selection. - 28 - 64. The Developing Markets Fund was not only imprudent because of performance – it was also imprudent because of its high fees. The EMET was a CIT with operating expenses of 0.21%. While a prudent fiduciary would have substituted EMET for a better performing investment option with similar if not lower expenses, the Plan fiduciaries selected a proprietary mutual fund GTDFX which not only had a track record of poor performance, but had an operating expense ratio of 1.01% – nearly 5 times more expensive than EMET. 65. In the year before GTDFX was added to the Plan, it lost 2.81% versus a gain of 15.29% for its benchmark, the “MSCI ACWI EX USA NR USD,” placing the GTDFX in the bottom 58% of comparable emerging market mutual funds. Then, in 2015, its first full year within the Plan, it lost 18.34%, well below its benchmark and placing it in the bottom 83 % of comparable Diversified Emerging Market mutual 66. An August 8, 2018 Morningstar analyst report describes the GTDFX’s performance as “dismal.” As of September 4, 2018, it’s one year trailing returns were -12.54%, placing it in the bottom 97% of all emerging market mutual funds. 67. If Plan participants wanted to invest in an actively managed strategy in the Diversified Emerging Market investment category during the Class Period, the GTDFX and EMET were their only Plan options. - 29 - 68. If the Plan fiduciaries had faithfully executed their fiduciary duties to the Plan and its participants, they would have selected one of the many better performing non-affiliated funds available with comparable investment strategies in the Diversified Emerging Markets Category. 69. The following table summarizes the poor performance and cumulative harm to investors in the Developing Markets Fund as compared to other similar available investment alternatives that were not included in the Plan. INVESCO ERISA Invesco Developing Markets Fund Class R6 (GTDFX) as Compared to Peer Group Investments Compounded Cumulative Annual Returns Growth Rate Fund 2011 2012 2013 2014 2015 2016 2017 GTDFX -11.34% 19.66% -2.81% -2.82% -18.34% 20.22% 30.86% 28.73% 3.67% $0.89 $1.06% $1.03 $1.00 $0.82 $0.98 $1.29 28.73% 3.67% -2.05% 14.60% 37.11% 7.81% -10.10% 9.55% 38.46% 126.26% 12.37% GuideMark Emerging Markets Fund Institutional Shares (GILVX) +/- GTDFX 9.29% -5.06% 39.92% 10.63% 8.24% -10.67% 7.60% 97.54% 8.70% -17.00% 23.22% 15.02% 3.75% -10.97% 4.08% 40.63% 59.04% 6.85% Baron Emerging Markets Fund Institutional Shares (BEXIX) +/- GTDFX -5.66% 3.56% 17.83% 6.57% 7.37% -16.14% 9.77% 30.31% 3.18% -21.60% 24.86% 0.42% -1.21% -7.87% 7.90% 46.36% 41.29% 5.06% American Century Emerging Markets Fund R6 Class (AEDMX) +/- GTDFX -10.26% 5.20% 3.23% 1.61% 10.47% -12.32% 15.50% 12.57% 1.39% 70. As the chart above shows, the Developing Markets Fund cumulative return from 2011 through 2017 was only 28.73% compared to available alternative investments such as GILVX, BEXIX, and AEDMX which returned, 126.26%, 59.04%, and 41.29%, respectively during that period. - 30 - Invesco High Yield Bond Fund 71. The Invesco High Yield Bond Fund (the “High Yield Fund”) was a Plan Investment during the Class Period. Between the start of the Class Period and May 2013, the Plan offered the R5 class of shares of the fund (ticker “AHIYX”) and after that time offered the R6 class of shares (ticker “HYIFX”). If Plan participants wanted to invest in an actively managed strategy in the high yield bond investment category, the High Yield Fund was their only Plan option. 72. Prior to and during the Class Period, the High Yield Fund performed poorly. For example, it only earned 1.75% during 2011, placing it in the bottom 76 of comparable mutual funds in the High Yield Bond Investment Category, according to Morningstar. In 2014, the High Yield Fund only returned 1.77%, well below the performance of its benchmark “Bloomberg Barclays US Aggregate Bond TR USD” which returned 5.97%. During 2016, the High Yield Fund returned only 11.74%, placing it in the bottom 74% of comparable mutual funds in the High Yield Bond investment category. 73. If the Plan fiduciaries had faithfully executed their fiduciary duties to the Plan and its participants, they would have selected one of the many better performing non-affiliated funds available with comparable strategies in the High Yield Bond investment category. - 31 - 74. The following table summarizes the poor performance and cumulative harm to investors in the High Yield Bond Fund as compared to other available investment alternatives that were not included in the Plan: INVESCO ERISA Invesco High Yield R6 (HYIFX) as Compared to Peer Group Investments Compounded Cumulative Annual Returns Growth Rate Fund 2011 2012 2013 2014 2015 2016 2017 HYIFX 1.75% 17.83% 7.35% 1.77% -2.67% 11.74% 6.53% 51.75% 6.14% 3.15% 16.50% 9.69% 3.46% -2.07% 16.32% 8.78% 68.98% 7.78% Lord Abbett High Yield R6 Shares (LHYVX) +/- HYIFX 1.40% -1.33% 2.34% 1.69% 0.60% 4.58% 2.25% 6.17% 16.88% 10.19% 1.48% -7.37% 16.74% 8.00% 62.06% 7.14% Ivy High Income Y Shares (WHIYX) +/- HYIFX 4.42% -0.95% 2.84% -0.29% -4.70% 5.00% 1.47% 1.76% 18.27% 6.28% 2.75% -4.23% 14.73% 7.49% 55.22% 6.48% AB High Income R Shares (AGDRX) +/- HYIFX 0.01% 0.44% -1.07% 0.98% -1.56% 2.99% 0.96% 4.53% 13.78% 6.69% 2.31% -3.11% 14.70% 7.19% 54.67% 6.43% PGIM High Yield R Shares (JDYRX) +/- HYIFX 2.78% -4.05% -0.66% 0.54% -0.44% 2.96% 0.66% 75. As the chart above shows, the High Yield Bond Fund’s cumulative return from 2011 through 2017 was only 51.75%, compared to available alternative investments such as LHYVX, WHIYX, AGDRX, and JDYRX which returned, 68.98%, 62.06%, 55.22%, 54.67% respectively, during that period. Invesco American Franchise Fund 76. The Invesco American Franchise Fund was a Plan investment option offered to Plan participants during the Class Period. It was first offered to Plan participants as a mutual fund, the American Franchise Fund R6 (“VAFFX”), which was managed by Invesco Advisers. In November 2014, the Plan moved the Plan assets from VAFFX into the Invesco American Franchise Trust (the “AFT”), which is - 32 - managed by Invesco Trust Co. and sub-managed by Invesco Advisers. During the Class Period, if Plan participants wanted to invest in an actively managed strategy in the large growth investment category, the VAFFX and AFT were their only Plan options. 77. Before and during the Class Period, the American Franchise Fund performed worse than comparable mutual funds in the same Large Growth investment category. For example, according to Morningstar, in 2009, VAFFX performed 4.54% below the average of other mutual funds in the Large Growth investment category. In 2011, VAFFX’s returns were 8.84% worse than its benchmark, the S&P 500, and 4.27% worse than the average of comparable funds in the Large Growth investment category, according to Morningstar. VAFFX continued to underperform in 2012 with returns that were 2.55% worse than its benchmark, and 1.89% worse than the average of comparable funds in the Large Growth investment category, according to Morningstar. In 2014, VAFFX performed in the bottom 66% of mutual funds in the same Large Growth investment category, according to Morningstar, with returns 4.95% less than its benchmark. 78. Plan participants continued to suffer from poor returns after the assets were transferred to the AFT. According to Morningstar, in 2016, the AFT only achieved 2.11% in net returns, which were 9.85% less than the performance of its - 33 - benchmark, the S&P 500. And, as of July 31, 2018, its gross trailing returns, according to Morningstar in the one year and three year periods were 17.14% and 13.50%, respectively, underperforming the gross returns of the S&P 500 of 19.66% and 16.11%, respectively. 79. If the Plan fiduciaries had faithfully executed their fiduciary duties to the Plan and its participants, they would have selected one of the many better performing non-affiliated funds available with comparable strategies in the Large Growth category. 80. The following table summarizes the poor performance and cumulative harm to investors in the American Franchise Fund as compared to other available investment alternatives that were not included in the Plan: INVESCO ERISA Invesco American Franchise Trust as Compared to Peer Group Investments Compounded Cumulative Annual Returns Growth Rate Fund 2011 2012 2013 2014 2015 2016 2017 -6.73% 13.45% 40.40% 8.74% 5.42% 2.11% 27.34% 121.43% 12.03% Invesco American Franchise Trust 1.67% 18.67% 41.57% 9.34% 11.27% 1.15% 36.46% 186.84% 16.25% T. Rowe Price Blue Chip Growth Trust +/- Invesco Am Franchise 8.40% 5.22% 1.17% 0.60% 5.85% -0.96% 9.12% -0.83% 19.98% 39.54% 9.83% 11.51% 2.09% 34.46% 179.10% 15.79% T. Rowe Price Growth Stock Trust +/- Invesco Am Franchise 5.90% 6.53% -0.86% 1.09% 6.09% -0.02% 7.12% -8.60% 19.20% 36.19% 11.65% 10.01% 0.15% 35.56% 147.43% 13.82% Schwab Institutional Large Cap Growth Trust +/- Invesco Am Franchise -1.87% 5.75% -4.21% 2.91% 4.59% -1.96% 8.22% - 34 - 81. As the chart above shows, the Invesco American Franchise cumulative return14 from 2011 through 2017 was 121.43%, compared to available alternative CITs such as the T. Rowe Price Blue Chip Growth Trust, T. Rowe Price Growth Stock Trust, and Schwab Institutional Large Cap Growth Trust, which returned, 186.84%, 179.10%, and 147.43% respectively, during that period. Invesco Diversified Dividend Fund 82. The Diversified Dividend Fund was a Plan investment option offered to Plan participants during the Class Period. It was first offered to Plan participants as a mutual fund, the Diversified Dividend Fund R6 (“LCEFX”) managed by Invesco Advisers. Then, in November 2014, the Plan moved the Plan assets in LCEFX to the Invesco Diversified Dividend Trust (the “DDT”), which is managed by Invesco Trust Co. and sub-managed by Invesco Advisers. 83. Prior to and during the Class Period, the LCEFX consistently underperformed comparable mutual funds in the same investment category. For example, according to Morningstar, in 2009 the fund returned 23.66%, which was 2.80% less than its benchmark the S&P 500. Then, in 2011, the fund lost 0.20%, underperforming the 2.11% return of its benchmark. During 2013, even though the 14 Due to limited availability of data, the American Franchise cumulative returns are net of all fees and tracks the performance of VAFFX to January 2016 and then the AFT from January 2016 to December 31, 2017. - 35 - LCEFX returned 29.42%, it substantially underperformed its peers and was in the bottom 72% of mutual funds in the same Large Value investment category, according to Morningstar. 84. Plan participants continued to suffer poor returns from their investment in the DDT. According to Morningstar, in 2015, the DDT lost 0.14%, underperforming its benchmark by 1.52%. And, in 2017, the DDT’s net return was 8.87%, which was 12.96% less than its benchmark, the S&P 500, and 8.33% less than the average of other comparable investments in the Large Value category. According to Morningstar, as of July 31, 2018, DDT’s gross trailing returns, in the one year and three year periods were 5.08% and 7.05%, respectively, compared to the gross returns of its benchmark, the S&P 500, which returned 19.66% and 16.11%, respectively. 85. If the Plan fiduciaries had faithfully executed their fiduciary duties to the Plan and its participants, they would have selected one of the many better performing funds available with comparable strategies. 86. The following table summarizes the poor performance and cumulative harm to investors in the Diversified Dividend Plan investment option as compared to other available investment alternatives that were not included in the Plan: - 36 - INVESCO ERISA Invesco Diversified Dividend Trust as Compared to Peer Group Investments Compounded Cumulative Annual Returns Growth Rate Fund 2011 2012 2013 2014 2015 2016 2017 -0.20% 17.28% 29.42% 12.42% 2.20% 14.95% 8.87% 117.80% 11.76% Invesco Diversified Dividend Trust -3.09% 21.51% 38.50% 10.02% -4.81% 20.22% 17.29% 140.86% 13.38% Schwab Institutional Large Cap Value Trust +/- Invesco Divers Div -2.89% 4.23% 9.08% -2.40% -7.01% 5.27% 8.42% 0.43% 16.67% 36.19% 10.81% -0.24% 14.50% 18.02% 138.37% 13.21% MFS Large Cap Value Trust +/- Invesco Divers Div 0.63% -0.61% 6.77% -1.61% -2.44% -0.45% 9.15% -6.10% 18.48% 38.26% 10.74% -2.03% 18.77% 15.32% 128.55% 12.53% The Boston US Dynamic Large Cap Value Trust +/- Invesco Divers Div -5.90% 1.20% 8.84% -1.68% -4.23% 3.82% 6.45% -1.57% 15.68% 36.89% 13.55% -2.62% 10.79% 18.79% 126.81% 12.41% AB US Diversified Value Trust +/- Invesco Divers Div -1.37% -1.60% 7.47% 1.13% -4.82% -4.16% 9.92% 87. As the chart above shows, the Invesco Diversified Dividend Plan’s cumulative return15 from 2011 through 2017 was 117.80%, compared to available alternative CITs such as the Schwab Institutional Large Cap Value Trust, MFS Large Cap Value Trust, Boston U.S. Dynamic Large Cap Value Trust, and AB U.S. Diversified Value Trust, which returned, 140.86%, 138.37%, 128.55%, 126.81%, respectively, during that period. Invesco Mid Cap Growth Trust 88. The Invesco Mid Cap Growth Fund was offered to Plan participants during the Class Period. It was first offered to Plan participants as a mutual fund, the Mid Cap Growth R6 Fund (“VGRFX”) managed by Invesco Advisers. Then, in November 2014, the Plan moved the Plan assets in VGRFX into the Invesco Mid Cap 15 Due to limited availability of data, the Diversified Dividend returns are net of all fees and tracks the performance of LCEFX to January 2016 and then DDT from January 2016 to December 31, 2017. - 37 - Growth Trust (the “MCGT”), managed by Invesco Trust Co. and sub-managed by Invesco Advisers. If Plan participants wanted to invest in an actively managed strategy in the Mid Cap Growth investment category, VGRFX and MCGT were their only Plan options.16 89. Prior to and during the Class Period, VGRFX performed worse than comparable mutual funds in the same investment category. For example, according to Morningstar, in 2008, the fund lost 48.40%, underperforming its benchmark by 11.40% and the average returns of mutual funds in the Mid Cap investment category by 4.63%. In 2011, the fund lost 9.10%, underperforming its benchmark by 11.22% and the average returns of mutual funds in the Mid Cap investment category by 5.14%. 90. Plan participants continued to suffer from poor returns from their investment in the MCGT. For example, in 2015 and 2016, the MCGT underperformed its benchmark, the S&P 500, by 6.69% and 11.73%, respectively. According to Morningstar, as of July 31, 2018, MCGT’s gross trailing returns, in the one year and three year periods, were 17.47% and 8.00%, respectively, which 16 In 2013, the Invesco Dynamics Fund R6 was “reorganized” into the Mid Cap Growth Fund. - 38 - underperformed the trailing returns of its benchmark, the S&P 500, which were 19.66% and 16.11% respectively, during the same periods. 91. If the Plan fiduciaries had faithfully executed their fiduciary duties to the Plan and its participants, they would have selected one of the many better performing funds available with comparable strategies. 92. The following table summarizes the poor performance and cumulative harm to investors in the Invesco Mid Cap Growth Trust as compared to other available investment alternatives that were not included in the Plan: INVESCO ERISA Invesco Mid Cap Growth Trust as Compared to Peer Group Investments Compounded Cumulative Annual Returns Growth Rate Fund 2013 2014 2015 2016 2017 37.25% 8.39% 1.68% 0.23% 22.74% 86.09% 13.23% Invesco Mid Cap Growth Trust 37.76% 13.93% 7.37% 7.13% 25.68% 126.91% 17.81% T. Rowe Price US Mid Cap Growth Equity Trust +/- Invesco Mid Cp Grwth 0.51% 5.54% 5.69% 6.90% 2.94% 39.29% 10.97% 1.57% 11.92% 24.50% 118.75% 16.95% Wellington Mid Cap Opportunities Trust +/- Invesco Mid Cp Grwth 2.04% 2.58% -0.11% 11.69% 1.76% Champlain Mid Cap Trust 37.92% 8.26% 1.66% 19.06% 19.87% 116.63% 16.72% +/- Invesco Mid Cp Grwth 0.67% -0.13% -0.02% 18.83% -2.87% 31.32% 8.85% -0.62% 13.18% 22.48% 96.90% 14.51% Transamerica Partners Mid Growth Trust +/- Invesco Mid Cp Grwth -5.93% 0.46% -2.30% 12.95% -0.26% Voya Mid Cap Growth Trust 31.96% 9.05% 0.55% 7.49% 25.11% 94.58% 14.24% +/- Invesco Mid Cp Grwth -5.29% 0.66% -1.13% 7.26% 2.37% 93. As the chart above shows, the Invesco Mid Cap Growth Trust cumulative return17 from 2011 through 2017 was 86.09%, compared to available alternative CITs 17 Due to limited availability of data, the Invesco Mid Cap Growth cumulative returns are net of all fees and tracks the performance of MGRFX to January 2016 and then the MCGT from January 2016 to December 31, 2017. - 39 - such as the T. Rowe Price US Mid Cap Growth Equity Trust, Wellington Mid Cap Opportunities Trust, Champlain Mid Cap Trust, Transamerica Partners Mid Growth Trust, and Voya Mid Cap Growth Trust, which returned 126.91%, 118.75%, 116.63%, 96.90%, and 94.58%, respectively, during that period. Investments in the Invesco Short-Term Investment Fund Were Imprudent 94. During the Class Period, the Investment Manager Defendants caused Plan Investments to invest in the Invesco Short-Term Investment Fund (the “ISTIF”), a money market fund run by Invesco subsidiary Invesco Trust Co. For example, the Invesco Stable Value Trust (“Stable Value Trust”) and Invesco International Growth Equity Trust (“International Growth Trust”) invested more than $200 million and $20 million in the ISTIF, respectively, at times during the Class Period. The Investment Manager Defendants breached their fiduciary duties to the Plan and Plan participants by investing Plan assets in the ISTIF. 95. During the Class Period, and up until 2016, the ISTIF undertook a series of improper measures that were not disclosed to Plan participants to ensure that the ISTIF’s net asset value (“NAV”) continued to trade at $1 per share even though the ISTIF’s NAV had in reality fallen below $1 due to losses in the value of the ISTIF’s holdings. The measures taken by the ISTIF to artificially inflate its NAV included: (i) retaining a portion of the ISTIF’s income that should have been distributed to - 40 - investors; and (ii) entering into a series of support agreements with an affiliate of Invesco to provide contingent financial support to the ISTIF. The retention of distributions that should have gone to Plan Investments, such as the Stable Value Trust and International Growth Trust, benefitted Invesco by reducing the obligations of the Invesco affiliate that entered into the support agreements to the detriment of Plan participants and harmed the Plan’s Investments by reducing the returns of the Invesco Stable Value Trust and International Growth Trust. 96. The U.S. Department of Labor (“DOL”) uncovered Invesco’s improper conduct in connection with the ISTIF and claimed the manipulation of its NAV and related actions constituted a violation of ERISA. On or about April 29, 2016, the DOL announced a settlement of more than $10.2 million with Invesco Trust Co. as a result of their improper conduction related to the ISTIF. The fiduciaries of the Plan should not have permitted Plan assets to be invested in the ISTIF since it was manipulating its NAV and withholding distributions to Plan Investments. Restricting the Schwab Account to PowerShares ETFs Was the Result of an Imprudent Process 97. Defendants restricted the Schwab Account so that only the Invesco- affiliated PowerShares ETFs were available in order to boost Invesco’s ETFs and to increase the volume of ETF shares traded, an important metric used by ETF investors. It was imprudent for the Plan to limit the purchase of ETFs to PowerShares because - 41 - there are many ETFs provided by other firms that have better performance and lower fees than PowerShares. 98. For illustration purposes, below is a sampling of Invesco-affiliated ETFs available through the Schwab Account that suffered from poor performance relative to more prudent alternatives not offered through the Schwab Account: Investment Option Investment Category 1 Year Trailing 3 Year Trailing 5 Year Trailing Return18 Return Return FTSE RAFI Asia Pacific ex- Japan portfolio (PAF) 6.95% “Pacific/Asia ex-Japan stock” 13.27 % Category Rank: Bottom 82% 4.21% Category Rank: Bottom 83% +/- Benchmark -4.32% 0.71% -2.29% DB G 10 Currency Harvest Fund (DBV) “Multicurrency” 0.02 -0.49% Category Rank: Bottom 68% -2.33% Category Rank: Bottom 85% +/- Benchmark -1.49 -.88% -1.83% Dynamic Biotechnology & Genome Portfolio (PBE) “Health” 18.54 -3.09% Category Rank: Bottom 88% 12.09% Category Rank: Bottom 65% +/- Benchmark -0.23% -7.12% -1.74% Global Agriculture Portfolio (PAGG) “Natural Resources 14.39% Category Rank: Bottom 88% -1.59% Category Rank: Bottom 88% -0.52% Category Rank: Bottom 71% +/- Benchmark -15.05% -2.27% -0.49% S&P Small Cap Information Technology Portfolio (PSCT) “Technology” 13.00% Category Rank: Bottom 96% 15.39% Category Rank: Bottom 77% 18.23% Category Rank: Bottom 68% +/- Benchmark -15.05% -2.27% -0.54% International Dividend Achievers Portfolio (PID) “Foreign Large Value” 9.58% Category Rank: Bottom 66% -1.36% Category Rank: Bottom 95% 1.60% Category Rank: Bottom 93% +/- Benchmark -1.12 -4.72% -3.08% VRDO Tax Free Weekly Portfolio (PVI) “Muni National Short” 0.80% 0.36% Category Rank Bottom 90% 0.18% Category Rank: Bottom 90% +/- Benchmark -0.14% -0.43% -1.16 S&P Emerging Markets Low Volatility Portfolio (EELV) “Diversified Emerging Markets” 12.47% Category Rank: Bottom 73% 1.17% Category Rank: Bottom 92% -0.28% Category Rank: Bottom 91% +/- Benchmark -1.11 -3.50 -2.72 18 Trailing returns for the one year, three year and five-year periods of the ETF investments in the above table were retrieved from Morningstar and are as of May 18, 2018. - 42 - 99. Had the Plan’s fiduciaries considered the best interests of Plan participants and acted prudently, they would have enabled Plan participants to purchase ETF from firms other than Invesco. The Inclusion of Expensive Versions of Plan Investments Through the Schwab Account Was the Result of an Imprudent Process 100. The lack of a prudent process, as well as Defendants acting to benefit Invesco to the detriment of Plan participants, is shown by the inclusion of expensive share classes of mutual funds in the Schwab Account even though different – and less expensive – classes or versions of the same investments were offered as Investment Funds in the Plan. As alleged above, the Plan fiduciaries took steps to modify the investment options available to Plan participants through the Schwab Account. Since they were able to alter the options available through the Schwab Account, the Plan fiduciaries should have acted in the best interests of Plan participants by ensuring participants would not unnecessarily waste money on fees, and sacrifice performance as a result of those fees, by purchasing shares of Invesco mutual funds when shares of the same funds or investments could have been purchased with lower costs as Plan Investments. Had Defendants not acted in their own interest, and had they acted prudently, they would have ensured that the Schwab Account did not offer more expensive classes of shares of Plan Investments. - 43 - 101. As reflected in the below chart, at various times during the Class Period, Plan participants unnecessarily purchased expensive shares of Invesco-affiliated funds through the Schwab Account even though less expensive (and better performing) classes of those investments were available directly through the Plan: Class A Fund Name Plan Version Schwab Version Plan Net Expenses Schwab Acct Net Expenses Sales Charge 0.68% 1.09% 4.25% Invesco High Yield Fund Invesco High Yield Class R6 Invesco High Yield Fund Class A 0.01% 1.22% 5.50% Balanced Risk Allocation Fund Balanced Risk Allocation Trust Balanced Risk Allocation Fund Class A 0.73% 1.15% 5.50% Invesco Mid Cap Growth Fund Invesco Mid Cap Growth Fund Class R6 Invesco Mid Cap Growth Fund Class A 1.01% 1.43% 5.50% Invesco Developing Markets Fund Invesco Developing Markets Fund Class R6 Invesco Developing Markets Fund Class A 0.68% 1.07% 2.50% Invesco Floating Rate Fund Invesco Floating Rate Fund Class R6 Invesco Floating Rate Fund Class A 0.51% 0.77% (none) Invesco Diversified Dividend Fund Invesco Diversified Dividend Fund Class R6 Invesco Diversified Dividend Fund Investor Class 0.65% 1.08% 5.50% Invesco American Franchise Fund Invesco American Franchise Class R6 American Franchise Fund Class A 102. The high fees associated with the proprietary investment options available through the Schwab Account unjustly enriched Defendants to the detriment of Plan participants. CLASS ACTION ALLEGATIONS 103. Plaintiff brings this action in this representative capacity on behalf of the Plan and as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of himself and a Class defined as follows: - 44 - All participants in the Invesco 401(k) Plan from May 25, 2012 to the date of Judgment (the “Class Period”). Excluded from the Class are Defendants and their families, the officers and directors of Invesco Ltd. and any of its subsidiaries, at all relevant times, members of their immediate families and their legal representatives, heirs, successors or assigns, and any entity in which Defendants have or had a controlling interest. 104. The members of the Class are so numerous that joinder of all members is impracticable. The disposition of their claims in a class action will provide substantial benefits to the parties and the Court. As of December 31, 2016, the Plan had over 3,700 participants. 105. There is a well-defined community of interest in the questions of law and fact involved in this case. Questions of law and fact common to the members of the Class that predominate over questions that may affect individual Class members include, inter alia: (a) whether Defendants are fiduciaries of the Plan; (b) whether Defendants breached their fiduciary duties of loyalty and prudence with respect to the Plan; (c) whether Defendants had a duty to monitor other fiduciaries of the (d) whether Defendants breached their duty to monitor other fiduciaries of the Plan; and - 45 - (e) the extent of damage sustained by Class members and the appropriate measure of damages. 106. Plaintiff’s claims are typical of those of the Class because Plaintiff and the Class sustained damages from Defendants’ wrongful conduct. 107. Plaintiff will adequately protect the interests of the Class and has retained counsel experienced in class action litigation. Plaintiff has no interests that conflict with those of the Class. 108. A class action is superior to other available methods for the fair and efficient adjudication of this controversy. COUNT I Breach of Fiduciary Duties in Violation of ERISA §404(a) Against the Plan Sponsor Defendants and the Benefits Committee Defendants 109. Plaintiff repeats and realleges the above paragraphs as though fully set forth herein. 110. The Benefits Committee Defendants were fiduciaries of the Plan under ERISA §3(21), 29 U.S.C. §1002(21), among other reasons, because the IBPC and its members were the named fiduciaries of the Plan and responsible for: (i) establishment of the Plan’s investment policy; (ii) the selection and monitoring of the Plan Investments’ performance; (iii) determining the number and characteristics of the Plan - 46 - Investments; (iv) determining the administrative fees associated with Plan participant fund elections; and (v) appointing and monitoring investment managers for the Plan Investments. 111. The Plan Sponsor Defendants were fiduciaries of the Plan under ERISA §§3(21) and/or 402(a)(1), 29 U.S.C. §§1002(21) and/or 1102(a)(1) because they were either designated in the Plan Document and the Trust Agreement as the Plan Sponsor and/or functioned as the Plan Sponsor under ERISA. The Invesco Plan Sponsor Defendants were responsible for ensuring that the Plan’s proprietary and affiliated investment options would not be prohibited under ERISA and whether the Plan’s proprietary and affiliate investment options should be removed from the Plan. 112. As fiduciaries of the Plan, the Plan Sponsor Defendants and the Benefits Committee Defendants were required pursuant to ERISA §404(a)(1), 29 U.S.C. §1104(a)(1) to act: “(A) for the exclusive purpose of: (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan,” and “(B) to discharge their duties on an ongoing basis with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.” - 47 - 113. ERISA’s duty of prudence required the Plan Sponsor Defendants and the Benefits Committee Defendants to give appropriate consideration to those facts and circumstances that, given the scope of their fiduciary investment duties, they knew or should have known were relevant to the particular investments of the Plan and to act accordingly. See 29 C.F.R. §2550.404a-1. The Supreme Court has concluded that this duty is “a continuing duty to monitor [plan] investments and remove imprudent ones.” Tibble, 135 S. Ct. at 1828. 114. As described above, the Plan Sponsor Defendants and the Benefits Committee Defendants failed to properly evaluate the Plan’s investments to ensure that each of these investments remained prudent and failed to prudently monitor or remove the Plan Investments that were no longer prudent. 115. Under the Plan Documents, both the Plan Sponsor Defendants and the Benefits Committee Defendants were responsible for ensuring that Invesco’s proprietary Plan Investments were in compliance with ERISA, as prudent and loyal investments of the Plan. Both the Plan Sponsor Defendants and the Benefits Committee Defendants breached this portion of the Trust Agreement by retaining poor performing and expensive proprietary Plan Investments. 116. At all relevant times herein, the Plan Sponsor Defendants and the Benefits Committee Defendants had a conflict of interest to select, retain and/or add - 48 - proprietary Plan Investments that were imprudent. Acting in their self-interest, rather than the best interests of the Plan and its participants, the Invesco Plan Sponsor Defendants and the Benefits Committee Defendants imprudently and disloyally selected and retained Plan Investments that performed poorly and/or charged excessive fees that benefited Invesco and its affiliated entities, rather than Plan participants, despite the availability of superior – and readily available – investment alternatives as detailed herein. A prudent fiduciary, in possession of the same information, would have removed the many underperforming and/or expensive proprietary and affiliated Plan Investments, replaced them with more prudent, lower cost and/or better performing alternatives, and used the size, leverage and bargaining power of the Plan, which is one of the larger defined-contribution plans in the United States, to secure access to superior investment alternatives for Plan participants. 117. The Plan Sponsor Defendants and the Benefits Committee Defendants breached their duties of prudence and loyalty with respect to the Plan by at least the following actions or omissions: (a) failing to properly investigate the availability of, and give appropriate consideration to, better performing and lower-cost funds with comparable or superior performance as alternatives to the Plan Investments plagued with underperformance; - 49 - (b) failing to evaluate and monitor on a regular basis the performance of the Plan Investments; (c) failing to recommend more prudent additions to the Plan Investments including better performing and less expensive non-proprietary Plan Investments; (d) failing to implement and employ an ongoing process to monitor the performance, fees, and expenses of the Plan Investments; (e) exposing Plan participants to the ISTIF without their knowledge; (f) structuring the Schwab Account to limit equity purchases to Invesco-affiliated ETFs, and by failing to remove Invesco-affiliated fund choices when less costly alternatives were available as Plan Investments; (g) considering and being motivated in whole or in part by the promotion or success of the business of Defendant Invesco and its asset management business; and (h) failing to promptly remove the imprudent proprietary and/or affiliated Plan Investments. 118. Through these actions and omissions, the Plan Sponsor Defendants and the Benefits Committee Defendants failed to discharge their duties with respect to the Plan: (A) solely in the interest of the participants and beneficiaries of the Plan, and for - 50 - the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the Plan, in violation of ERISA §404(a)(1)(A), 29 U.S.C. §1104(a)(1)(A); and (B) failed to act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, in violation of ERISA §404(a)(1)(B), 29 U.S.C. §1104(a)(1)(B). 119. As a direct and proximate result of these breaches, the Plan, Plaintiff and members of the Class suffered substantial losses in the form of higher fees or lower returns on their investments than they would have otherwise experienced. Additionally, and regardless of the losses incurred by Plaintiff or any member of the Class, pursuant to ERISA §§502(a)(2) and (a)(3), and 409(a), 29 U.S.C. §§1132(a)(2) and (a)(3), and 1109(a), the Plan Sponsor Defendants and the Benefits Committee Defendants and any non-fiduciary which knowingly participated in these breaches are liable to disgorge all profits made as a result of these Defendants’ breaches of the duties of loyalty and prudence. - 51 - COUNT II Breach of Fiduciary Duties in Violation of ERISA §404(a) Against the Plan Sponsor Defendants for Failure to Monitor Other Fiduciaries 120. Plaintiff repeats and realleges the above paragraphs as though fully set forth herein. 121. The Plan Sponsor Defendants were and continue to be fiduciaries of the Plan under ERISA §3(21)(A), 29 U.S.C. §1002(21)(A), because they were responsible for: (i) ensuring all proprietary investments offered as part of the Plan Investments were prudent, loyal, and in compliance with all rules of ERISA; (ii) appointing and removing members of the IBPC; (iii) monitoring the performance of IBPC members; (iv) delegating fiduciary authority under the Plan; and (v) making necessary changes to the Plan. 122. As a fiduciary of the Plan, the Plan Sponsor Defendants were and continue to be required pursuant to ERISA §404(a)(1), 29 U.S.C. §1104(a)(1), to act solely in the interest of the participants and beneficiaries of the Plan they served and (A) “for the exclusive purpose of: (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan,” and (B) discharging their duties on an ongoing basis “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like - 52 - capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.” Consistent with these duties, the Plan Sponsor Defendants were required to ensure that the monitored fiduciaries were performing their fiduciary obligations, including those with respect to the investment and monitoring of Plan assets, and must take prompt and effective action to protect the Plan and participants when the monitored fiduciaries fail to perform their fiduciary obligations in accordance with ERISA. 123. To the extent the Plan Sponsor Defendants delegated fiduciary monitoring responsibilities to other fiduciary Defendants, each Defendant’s monitoring duty included an obligation to ensure that any delegated tasks were performed prudently and loyally. 124. The Plan Sponsor Defendants breached their fiduciary monitoring duties by, among other things: (a) failing to monitor and evaluate the performance of other Plan fiduciaries or have a system in place for doing so, standing idly by as the Plan suffered losses as a result of other Defendants’ election to load the Plan with proprietary Plan Investments when superior non-proprietary investment alternatives were readily available elsewhere, as detailed herein; - 53 - (b) failing to monitor the processes by which Plan Investments were chosen, evaluated and retained, which would have alerted a prudent fiduciary to the preferential treatment Defendants gave to Invesco-affiliated funds out of self-interest, and not based on the best interest of the Plan’s participants; (c) failing to monitor the process by which Plan Investments were chosen, evaluated or retained, which would have alerted a prudent fiduciary of the excessive fees and/or underperformance of the proprietary Plan Investments; (d) failing to monitor their appointees to ensure that they considered availability of comparable non-Invesco funds, including lower-cost funds with similar strategies and similar or superior performance and/or less expensive, better- performing funds than the proprietary and/or affiliated Plan Investments; and (e) failing to remove fiduciaries whose performance was inadequate in that they continued to maintain costly and self-serving investments in the Plan, all to the detriment of the Plan and the Plan’s participants’ retirement savings, including Plaintiff and members of the Class. 125. As a direct and proximate result of these breaches of the duty to monitor, the Plan, Plaintiff and members of the Class have suffered substantial losses in the form of higher fees and/or lower returns on their investments than they would have earned by the prudent and loyal investment of Plan assets. - 54 - 126. Pursuant to ERISA §§502(a)(2) and (a)(3), and 409(a), 29 U.S.C. §§1132(a)(2) and (a)(3), and 1109(a), the Plan Sponsor Defendants are liable to disgorge all fees received from the Plan directly or indirectly, and profits thereon, and restore all losses suffered by the Plan caused by their breaches of the duty to monitor, and such other appropriate equitable relief as the Court deems proper. COUNT III Prohibited Transactions in Violation of ERISA §406(a)(1) (A), (C) and (D) Against Defendant Invesco, the Plan Sponsor Defendants, the Benefits Committee Defendants and the Investment Manager Defendants 127. Plaintiff repeats and realleges the above paragraphs as though fully set forth herein. 128. ERISA §406(a)(1), 29 U.S.C. §1106(a)(1) provides, in pertinent part, that a fiduciary with respect to a plan shall not cause the plan to engage in a transaction, if he knows or should know that such transaction constitutes a direct or indirect – (A) sale or exchange, or leasing, of any property between the plan and a party in interest; * * * (C) furnishing of goods, services, or facilities between the plan and a party in interest; (D) transfer to, or use by or for the benefit of, a party in interest, of any assets of the plan . . . - 55 - 129. The Plan Sponsor Defendants and the Benefits Committee Defendants are fiduciaries of the Plan within the meaning of ERISA §3(21), 29 U.S.C. §1002(21) that caused the Plan to offer the proprietary and/or affiliated Plan Investments and to continue offering the Plan Investments as options in the Plan. 130. As the employer of the named fiduciaries under the Plan, the corporate parent that wholly owns the Plan Sponsor, and the corporate parent that wholly owns the service providers for the Plan, Defendant Invesco is a party in interest under ERISA §3(14). 131. As service providers to the Plan, the Investment Manager Defendants were parties in interest within the meaning of ERISA §3(14). 132. The Plan Sponsor Defendants and/or the Benefits Committee Defendants caused the Plan to almost exclusively select proprietary Invesco products as the Plan Investments offered to Plan participants during and throughout the Class Period, even though the Plan Investments, as identified above, were plagued by needlessly high expenses and underperformance. 133. Since the Investment Manager Defendants were subsidiaries of Defendant Invesco, Defendant Invesco and the Investment Manager Defendants must have known that those transactions constituted a direct or indirect furnishing of services between the Plan and a party in interest. - 56 - 134. These transactions were for more than reasonable compensation, not selected solely in the interests of Plan participants and/or were on terms less favorable than could have been procured if the transactions were the product of arm’s-length negotiations with outside investors. As described throughout the Complaint, compensation paid to parties in interest for management of proprietary mutual funds and CITs was unreasonably high to promote the business of Defendant Invesco and its wholly-owned subsidiaries Defendant Invesco Advisers and Defendant Invesco Trust Co. The Plan fiduciaries, all senior executives or officers of Defendant Invesco, acted in their own self-interest without consideration for Plan participants. As a representative example, in June 2014, Plan fiduciaries steered participants invested in the Invesco Emerging Market Equity Trust, with an operating expense of 0.21%, into the Invesco Developing Markets mutual fund with an operating expense of 1.01% -- 80 bps higher even though the Developing Markets mutual fund had a track record of underperformance. These Defendants failed to consider or select lower cost, non- proprietary investment alternatives, including those offered by unaffiliated investment managers with lower fees. 135. By selecting the proprietary and/or affiliated Plan Investments as the virtually exclusive options in the Plan and by maintaining these as the options in the Plan, Defendant Invesco, the Invesco Plan Sponsor Defendants, the Benefits - 57 - Committee Defendants and the Investment Manager Defendants caused the Plan to engage in a prohibited transaction in violation of ERISA §406(a)(1) (A), (C) and (D), 29 U.S.C. §1106(a)(1) (A), (C) and (D). 136. As parties in interest, Defendant Invesco and the Investment Manager Defendants are liable for these violations of ERISA §406(a)(1) (A), (C) & (D), 29 U.S.C. §1106(a)(1) (A), (C) and (D) pursuant to ERISA §502(a)(3). 137. As a result of these prohibited transactions, Defendant Invesco and the Investment Manager Defendants received, and Plaintiff and members of the Class paid, millions of dollars in the form of higher fees and lower returns on their investments than they would have without these prohibited transactions. COUNT IV Prohibited Transactions in Violation of ERISA §406(b)(1) and (3) Against Defendant Invesco, the Plan Sponsor Defendants, the Benefits Committee Defendants, and the Investment Manager Defendants 138. Plaintiff repeats and realleges the above paragraphs as though fully set forth herein. 139. ERISA §406(b), 29 U.S.C. §1106(b), provides, in pertinent part, that a fiduciary with respect to a plan shall not: (1) deal with the assets of the plan in his own interest or for his own account, or . . . - 58 - (3) receive any consideration for his own personal account from any party dealing with such plan in connection with a transaction involving the assets of the plan. 140. The Plan Sponsor Defendants and the Benefits Committee Defendants are fiduciaries of the Plan within the meaning of ERISA §§3(21) and 406(b)(1), 29 U.S.C. §§1002(21) and 1106(b)(1). 141. The Invesco Plan Sponsor Defendants and the Benefits Committee Defendants dealt with the assets of a plan in their own interest or for their own account by selecting and maintaining the proprietary and/or affiliated Plan Investments despite their high fees and/or poor performance because Defendant Invesco received the financial benefit resulting from the performance of its wholly- owned subsidiaries. 142. Defendant Invesco received consideration for its own account through the receipt of investment management fees paid from the Plan Investments in the Plan to its wholly-owned subsidiaries and/or the profits derived from the fees generated by its wholly-owned subsidiaries in violation of ERISA §406(b)(3), 29 U.S.C. §1106(b)(3). 143. The Investment Manager Defendants were wholly-owned subsidiaries of Defendant Invesco during and throughout the Class Period. As a result, the Investment Manager Defendants would have known that the Invesco Plan Sponsor Defendants and the Benefits Committee Defendants, all senior executives and officers - 59 - of Defendant Invesco, were dealing with the Plan in their own interest or for their own account by selecting and maintaining proprietary and/or affiliated Plan Investments or that these fiduciaries received consideration for their own account by selecting and maintaining proprietary and/or affiliated Plan Investments. 144. By selecting the proprietary and/or affiliated Plan Investments and by maintaining these as the options in the Plan, Defendant Invesco, the Invesco Plan Sponsor Defendants and the Benefits Committee Defendants caused the plan to engage in a prohibited transaction in violation of ERISA §406(b)(1) and (3), 29 U.S.C. §1106(b)(1) and (3). 145. With respect to, at minimum, poor performing and expensive proprietary mutual funds and CIT Plan Investments, including but not limited to the Developing Markets Fund, Defendant Invesco, the Invesco Plan Sponsor Defendants, Benefits Committee Defendants, and the Investment Manager Defendants engaged in prohibited transactions as follows: (a) by causing the Plan to engage in transactions that they know or should know constitute direct or indirect transfers of the Plan’s assets to, or use of the Plan’s assets by or for the benefit of, parties in interest, in violation of 29 U.S.C. §1106(a)(1)(D); - 60 - (b) by causing the Plan to engage in the above conduct and omissions, in which a fiduciary to the Plan dealt with the assets of the plan in his own interest or for his own account in violation of 29 U.S.C. §1106(b)(1); (c) by causing the Plan to engage in the above conduct and omissions, in which a fiduciary to the Plan received consideration for its own personal account from any party dealing with the Plan in connection with a transaction involving the assets of the Plan, in violation of 29 U.S.C. §1106(b)(3); and (d) by causing the Plan to pay investment management fees, investment advisory fees, investment operation fees, or similar fees, which violated the terms of Prohibited Transaction Exemption 77-3. 146. As parties in interest, Defendant Invesco and the Investment Manager Defendants are liable for these violations of ERISA §406(b)(1) and (3), 29 U.S.C. §1106(b)(1) and (3), pursuant to ERISA §502(a)(3). 147. Pursuant to ERISA §§502(a)(2) and (a)(3), and 409(a), 29 U.S.C. §§1132(a)(2) and (a)(3), and 1109(a), Defendant Invesco, the Invesco Plan Sponsor Defendants, the Benefits Committee Defendants and the Investment Manager Defendants are liable to disgorge all amounts and profits received as a result of these prohibited transactions, and such other appropriate equitable relief as the Court deems proper. - 61 - COUNT V Co-fiduciary Liability Under ERISA §405 Against the Plan Sponsor Defendants, the Benefits Committee Defendants, and the Investment Manager Defendants 148. Plaintiff repeats and realleges each of the allegations set forth in the foregoing paragraphs as if fully set forth herein. 149. ERISA §405(a), 29 U.S.C. §1105(a), imposes liability on a fiduciary, in addition to any liability which he may have had under any other provision of ERISA, (1) he participates knowingly in or knowingly undertakes to conceal an act or omission of such other fiduciary knowing such act or omission is a breach; (2) by his failure to comply with ERISA §404(a)(1) in the administration of his specific responsibilities which give rise to his status as a fiduciary, he has enabled such other fiduciary to commit a breach; or (3) he knows of a breach by another fiduciary and fails to make reasonable efforts to remedy it. 150. The Invesco Plan Sponsor Defendants, the Benefits Committee Defendants, and the Investment Manager Defendants were all fiduciaries of the Plan within the meaning of ERISA §402(a), 29 U.S.C. §1102(a), ERISA §3(21)(A), 29 U.S.C. §1002(21)(A), or both. 151. Each of these fiduciaries knew of each breach of fiduciary duty alleged herein arising out of the imprudent investment of the assets of the Plan in the - 62 - proprietary and/or affiliated Plan Investments and the associated breaches. Yet, they knowingly participated in fiduciary breaches, breached their own duties enabling other breaches, and/or took no steps to remedy other fiduciary breaches. COUNT VI Knowing Participation in a Fiduciary Breach or Violation of ERISA Pursuant to ERISA 502(a)(3) Against Defendant Invesco and the Investment Manager Defendants 152. Plaintiff repeats and realleges each of the allegations set forth in the foregoing paragraphs as if fully set forth herein. 153. ERISA §502(a)(3), 29 U.S.C. §1132(a)(3) imposes liability not only on fiduciaries of the Plan but also on non-fiduciaries of the Plan who knowingly participate in fiduciary breaches or other violations of ERISA or the terms of the Plan. As such, the Investment Manager Defendants (even if they are not fiduciaries), can be held liable if either of them knowingly participated in the fiduciary breaches or violations of any fiduciary of the Plan. 154. The Investment Manager Defendants and Defendant Invesco would have known that each of the other Defendants were fiduciaries of the Plan as these other Defendants either were senior Invesco executives and officers or were appointed by Invesco (or high level Invesco executives). The knowledge of any such executives would be imputed to Invesco. - 63 - 155. Defendant Invesco and the Investment Manager Defendants would have been aware of the foregoing breaches and prohibited transactions, including: (a) the proprietary and/or affiliated Plan Investments had inferior investment performance; (b) the proprietary and/or affiliated Plan Investments charged excessive fees; (c) the fiduciaries who selected the Plan Investments had conflicts of interest; (d) the selection and continued offering of the proprietary and/or affiliated Plan Investments was not in the best interests of the participants, but instead the primary purpose of offering them as an investment option was to increase the assets under management, to increase the fees charged and the profits of Invesco, Invesco Advisers, Invesco Trust Co., and PowerShares; and (e) several proprietary Plan Investments they managed were invested in the ISTIF despite the obvious imprudence in doing so. 156. Despite knowledge of these breaches and violations, Defendant Invesco and the Investment Manager Defendants proceeded to engage in the transactions and receive lucrative fees for their benefit. - 64 - 157. By knowingly participating in these breaches and violations, Defendant Invesco and the Investment Manager Defendants are subject to appropriate equitable relief including disgorgement of any profits, having a constructive trust placed on any proceeds received (or which are traceable thereto) and/or is subject to other appropriate equitable relief. ENTITLEMENT TO RELIEF 158. By virtue of the violations set forth in the foregoing paragraphs, Plaintiff and the members of the Class are entitled to sue each of the fiduciary Defendants pursuant to ERISA §502(a)(2), 29 U.S.C. §1132(a)(2), for relief on behalf of the Plan as provided in ERISA §409, 29 U.S.C. §1109, including for recovery of any losses to the Plan, the recovery of any profits resulting from the breaches of fiduciary duty, and such other equitable or remedial relief as the Court may deem appropriate. 159. By virtue of the violations set forth in the foregoing paragraphs, Plaintiff and the members of the Class are entitled, pursuant to ERISA §502(a)(3), 29 U.S.C. §1132(a)(3), to sue any of the Defendants for any appropriate equitable relief to redress the wrongs described above. - 65 - PRAYER FOR RELIEF WHEREFORE, Plaintiff prays for judgment as follows: A. Declaring that each of the Defendants who are fiduciaries of the Plan have breached their fiduciary duties under ERISA; B. Ordering each fiduciary found to have breached his/her/its fiduciary duties to the Plan to jointly and severally restore all losses to the Plan that resulted from the breaches of fiduciary duty, or by virtue of liability pursuant to ERISA §405; C. Entering an order requiring: (a) the disgorgement of profit made by any Defendant; (b) declaring a constructive trust over any assets received by any breaching fiduciary in connection with his/her/its breach of fiduciary duties, or violations of ERISA, or any non-fiduciary Defendant who knowingly participated in that breach or violation; (c) requiring the Plan to divest itself of investments in the imprudent Plan Investments; and (d) any other appropriate equitable monetary relief, whichever is in the best interest of the Plan; D. Ordering, pursuant to ERISA §206(d)(4), 29 U.S.C. §1056(d)(4), that any amount to be paid to or necessary to satisfy any breaching fiduciary’s liability can be satisfied, in whole or in part, by attaching their accounts in or benefits from the Plan; - 66 - E. Removing any breaching fiduciaries as fiduciaries of the Plan and permanently enjoining them from serving as a fiduciary of any ERISA-covered plan in which Plaintiff or any member of the Class is a participant or beneficiary; F. Appointing an independent fiduciary, at the expense of the breaching fiduciaries, to administer the Plan and the management of Plan Investments and/or selection of investment options and/or to oversee the divestment of the Plan’s investments; G. Ordering the Plan’s fiduciaries to provide a full accounting of all fees paid, directly or indirectly, by the Plan; H. Awarding Plaintiff and the Class their attorneys’ fees and costs pursuant to ERISA §502(g), 29 U.S.C. §1132(g), the common benefit doctrine and/or the common fund doctrine; I. Awarding Plaintiff and the members of the Class pre-judgment and post- judgment interest; J. Awarding such equitable, injunctive or other relief as the Court may deem appropriate pursuant to ERISA §502(a)(3) or any relief to which Plaintiff and the Class are entitled to pursuant to Fed. R. Civ. P. Rule 54(c); and - 67 - K. Awarding such equitable, injunctive or other relief as the Court may deem just and proper. DATED: September 7, 2018 ROBBINS GELLER RUDMAN & DOWD LLP JOHN C. HERMAN (Georgia Bar No. 348370) CARLTON R. JONES (Georgia Bar No. 940540) /s/ John C. Herman JOHN C. HERMAN 3424 Peachtree Road, N.E., Suite 1650 Atlanta, GA 30326 Telephone: 404/504-6500 404/504-6501 (fax) [email protected] [email protected] ROBBINS GELLER RUDMAN & DOWD LLP SAMUEL H. RUDMAN (admitted pro hac vice) EVAN J. KAUFMAN (admitted pro hac vice) JORDAN D. MAMORSKY (admitted pro hac vice) 58 South Service Road, Suite 200 Melville, NY 11747 Telephone: 631/367-7100 631/367-1173 (fax) [email protected] [email protected] [email protected] - 68 - JOHNSON FISTEL, LLP MICHAEL I. FISTEL, JR. (Georgia Bar No. 262062) WILLIAM W. STONE (Georgia Bar No. 273907) DAVID A. WEISZ (Georgia Bar No. 134527) 40 Powder Springs Street Marietta, GA 30064 Telephone: 470/632-6000 770/200-3101 (fax) [email protected] [email protected] [email protected] Attorneys for Plaintiff - 69 - CERTIFICATE OF SERVICE I hereby certify that on the 7th day of September, 2018, a true and correct copy of the foregoing was served via CM/ECF filing on all counsel of record. /s/ John C. Herman JOHN C. HERMAN ROBBINS GELLER RUDMAN & DOWD LLP 3424 Peachtree Road, N.E., Suite 1650 Atlanta, GA 30326 Telephone: (404) 504-6500 Facsimile: (404) 504-6501 [email protected]

securities

ywIoFYcBD5gMZwczA_nD

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS Dan Cornelius, on behalf of himself and all others similarly situated Plaintiff, v. Cox Communications, Inc. Defendant. CASE NO.: ______ CLASS ACTION COMPLAINT A Trial by the Maximum Number of Jurors is hereby Demanded : : : : : : : : : : : : For this Class Action Complaint, Plaintiff, Dan Cornelius, by undersigned counsel, states on behalf of himself and a class of similarly situated persons as follows: INTRODUCTION 1. Plaintiff, Dan Cornelius (“Plaintiff”), brings this class action for damages resulting from the illegal actions of Defendant Cox Communications, Inc. (“Cox” or “Defendant”). Cox repeatedly called Plaintiff’s cellular telephone using a prerecorded and/or artificial voice – over Plaintiff’s repeated requests for Defendant to stop and without prior express consent – in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. (the “TCPA”). 2. Cox is the third-largest cable television provider in the United States. As part of its business, Cox operates an aggressive call campaign where it repeatedly calls consumers’ cellular telephones using a prerecorded and/or artificial voice, without their consent and over their specific objections to stop the calls. 3. Indeed, Plaintiff never provided Cox with prior express consent to place calls to his cellular telephone number regarding someone else’s Cox account. Nonetheless, Cox has repeatedly called Plaintiff’s cellular telephone with an identical prerecorded and artificial voice call recording stating “This message is for [unrelated third party] from Cox Communications. To prevent further calls, please call our automated service immediately at 844-472-8791. The number again is 844-472-8971. Please review your account status online at Cox.com as soon as possible. Thank you.” 4. Following his receipt of Cox’s wrong number calls, Plaintiff repeatedly called Cox at the above-referenced telephone number in an effort to get the calls to stop. However, each time he advised Cox that it was calling him in error and asked Cox to stop calling him, Cox advised Plaintiff that it could not stop the calls to Plaintiff’s cellular telephone. Moreover, Cox continued to call Plaintiff’s cellular telephone with the same prerecorded and artificial voice message after Plaintiff asked Cox to stop calling him. 5. Plaintiff is not alone; upon information and belief, Cox has done the same thing to countless other individuals. Accordingly, Plaintiff seeks to certify the following class: All persons within the United States to whom (1) Cox placed one or more prerecorded or artificial voice calls, (2) to said person’s cellular telephone, (3) after said person advised Cox that it was calling a wrong number, or (4) where Cox did not possess said person’s prior express consent, (5) within the four years prior to the filing of the Complaint. JURISDICTION 6. This action arises out of Defendant Cox’s repeated violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. (“TCPA”). 7. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b), because a substantial portion of the acts giving rise to this action – including Plaintiff’s receipt of Defendant’s illegal telephone calls – occurred in this District. PARTIES 8. Plaintiff, Dan Cornelius (“Plaintiff”), is an adult individual residing in Hutchinson, Kansas, and is a “person” as the term is defined by 47 U.S.C. § 153(39). 9. Defendant, Cox Corporation (“Cox”), is a Delaware business entity with a principal place of business at 6205-B Peachtree Dunwoody Road, Atlanta, Georgia 30328, and is a “person” as the term is defined by 47 U.S.C. § 153(39). THE TELEPHONE CONSUMER PROTECTION ACT OF 1991 10. The TCPA regulates, among other things, the placement of telephone calls using a prerecorded or artificial voice. 11. Specifically, 47 U.S.C. § 227(b)(1)(A)(iii) prohibits any call using “an artificial or prerecorded voice” to a cellular phone without prior express consent by the person being called, unless the call is for emergency purposes. FACTUAL ALLEGATIONS APPLICABLE TO PLAINTIFF 12. Within the last four years Cox began calling Plaintiff’s cellular telephone, number 620-xxx-4426, regarding a separate, unrelated person who Plaintiff does not know. 13. Cox placed the calls to Plaintiff’s cellular telephone from, inter alia, telephone number 844-472-8791. 14. Each time Cox called Plaintiff, it left an identical prerecorded and artificial voice message on Plaintiff’s cellular telephone stating the following in a robotic-sounding voice: “This message is for [unrelated third party] from Cox Communications. To prevent further calls, please call our automated service immediately at 844-472-8791. The number again is 844-472-8971. Please review your account status online at Cox.com as soon as possible. Thank you.” 15. Plaintiff never provided his consent to Cox to be contacted on his cellular telephone regarding someone else’s Cox account. 16. Beginning in or around May 2020, Plaintiff called Cox at telephone number 844- 472-8791, waited on the line to speak with a live representative, and then asked Cox to stop calling his cellular telephone and advised it that it was calling Plaintiff in error. 17. Nonetheless, Cox continued to place numerous identical prerecorded and artificial voice calls to Plaintiff’s cellular telephone over the following months. 18. Cox’s calls directly interfered with Plaintiff’s right to peacefully enjoy a service that Plaintiff paid for and caused Plaintiff a significant amount of anxiety, frustration, annoyance, and anger. CLASS ACTION ALLEGATIONS A. The Class 19. Plaintiff brings this case as a class action pursuant to Fed. R. Civ. P. 23 on behalf of himself and all others similarly situated. 20. Plaintiff represents, and is a member of the following class (the “Class”): All persons within the United States to whom (1) Cox placed one or more prerecorded or artificial voice calls, (2) to said person’s cellular telephone, (3) after said person advised Cox that it was calling a wrong number, or (4) where Cox did not possess said person’s prior express consent, (5) within the four years prior to the filing of the Complaint. 21. Defendant and its employees or agents are excluded from the Class. Plaintiff does not know the number of members in the Class but believes the class members number in the several thousands, if not more. Thus, this matter should be certified as a class action to assist in the expeditious litigation of this matter. B. Numerosity 22. Upon information and belief, Defendant placed prerecorded and artificial voice calls to cellular telephone numbers belonging to thousands of persons throughout the United States where it lacked prior express consent to place such calls and/or such persons had previously advised Cox it was calling a wrong number. The members of the Class, therefore, are believed to be so numerous that joinder of all members is impracticable. 23. The exact number and identities of the Class members are unknown at this time and can only be ascertained through discovery. Identification of the Class members is a matter capable of ministerial determination from Defendant’s records. C. Common Questions of Law and Fact 24. There are questions of law and fact common to the Class that predominate over any questions affecting only individual Class members. These questions include: a. Whether Cox placed prerecorded and artificial voice calls to persons’ cellular telephones after said persons advised Cox that it was calling a wrong number; b. Whether Cox can meet its burden of showing it obtained prior express consent to place prerecorded and/or artificial voice calls; c. Whether Defendant’s conduct was knowing and/or willful; d. Whether Defendant is liable for damages, and the amount of such damages; and e. Whether Defendant should be enjoined from such conduct in the future. 25. The common questions in this case are capable of having common answers. If Plaintiff’s claim that Defendant routinely places prerecorded and artificial voice calls to cellular telephone numbers without prior express consent, and over requests to stop the calls, is accurate, Plaintiff and the Class members will have identical claims capable of being efficiently adjudicated and administered in this case. D. Typicality 26. Plaintiff’s claims are typical of the claims of the Class members, as they are all based on the same factual and legal theories. E. Protecting the Interests of the Class Members 27. Plaintiff will fairly and adequately protect the interests of the Class and has retained counsel experienced in handling class actions and claims involving unlawful business practices. Neither Plaintiff nor his counsel has any interests which might cause them not to vigorously pursue this action. F. Proceeding Via Class Action is Superior and Advisable 28. A class action is the superior method for the fair and efficient adjudication of this controversy. The interest of Class members in individually controlling the prosecutions of separate claims against Defendant is small because it is not economically feasible for Class members to bring individual actions. COUNT I VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT, 47 U.S.C. § 227, ET SEQ. 29. Plaintiff repeats and realleges the above paragraphs of this Complaint and incorporates them herein by reference. 30. Plaintiff brings this claim on behalf of himself and the Class. 31. Defendant placed calls using a prerecorded and/or an artificial voice to cellular telephones belonging to Plaintiff and the other members of the Class without their prior express consent and not for any emergency purpose. 32. Moreover, Defendant placed calls using a prerecorded and/or an artificial voice to cellular telephones belonging to Plaintiff and the other members of the Class after they advised Cox that it was calling a wrong number. 33. Each of the aforementioned calls by Defendant constitutes a violation of the TCPA. 34. Plaintiff and the Class are entitled to an award of $500.00 in statutory damages for each message sent in violation of the TCPA pursuant to 47 U.S.C. § 227(b)(3). 35. Additionally, Plaintiff and the Class are entitled to and seek injunctive relief prohibiting such conduct by Defendant in the future. 36. Further, Plaintiff and the Class are entitled to and seek a declaration from Defendant  Defendant violated the TCPA;  Defendant placed prerecorded and/or artificial voices calls to Plaintiff and the members of the Class without prior express consent; and  Defendant placed prerecorded and/or artificial voices calls to Plaintiff and the members of the Class after said persons had previously advised Cox that it was calling a wrong number COUNT II WILLFUL VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT, 47 U.S.C. § 227, ET SEQ. 37. Plaintiff repeats and realleges the above paragraphs of this Complaint and incorporates them herein by reference. 38. Plaintiff brings this claim on behalf of himself and the Class. 39. Defendant knowingly and/or willfully placed calls using a prerecorded and/or an artificial voice to cellular numbers belonging to Plaintiff and the other members of the Class without their prior express consent and not for any emergency purposes. 40. Moreover, Defendant knowing and/or willfully placed calls using a prerecorded and/or an artificial voice to cellular telephones belonging to Plaintiff and the other members of the Class after they advised Cox that it was calling a wrong number. 41. Each of the aforementioned calls by Defendant constitutes a knowing and willful violation of the TCPA. 42. Plaintiff and the Class are entitled to an award of up to $1,500.00 in statutory damages for each message sent in violation of the TCPA pursuant to 47 U.S.C. § 227(b)(3). 43. Additionally, Plaintiff and the Class are entitled to and seek injunctive relief prohibiting such conduct by Defendant in the future. 44. Further, Plaintiff and the Class are entitled to and seek a declaration from Defendant  Defendant knowingly and/or willfully violated the TCPA;  Defendant knowingly and/or willfully placed prerecorded and/or artificial voices to calls to Plaintiff and member of the Class who had previously advised Cox that it was calling a wrong number;  Defendant willfully placed calls to Plaintiff and the Class without prior express consent; and  It is Defendant’s practice and history to place prerecorded and artificial voice calls to persons without their prior express consent. PRAYER FOR RELIEF WHEREFORE, the Plaintiff prays that judgment be entered against Defendant: A. Injunctive relief prohibiting such violation of the TCPA by Defendant in the future; B. Statutory damages of $500.00 for each and every call in violation of the TCPA pursuant to 47 U.S.C. § 227(b)(3)(B); C. Treble damages of up to $1,500.00 for each and every call in violation of the TCPA pursuant to 47 U.S.C. § 227(b)(3)(C); D. An award of attorneys’ fees and costs to counsel for Plaintiff and the Class; and E. Such other and further relief as may be just and proper. TRIAL BY JURY DEMANDED ON ALL COUNTS February 26, 2021 Respectfully submitted, ESLINGER LAW FIRM, LLC /s/ Jason M. Eslinger By: Jason M. Eslinger KS#26595 2517 Jefferson Street Kansas City, MO 64105 (816) 259-5226 Telephone (816) 817-1441 Facsimile [email protected] ATTORNEYS FOR PLAINTIFF and Sergei Lemberg, Esq. (pro hac vice forthcoming) LEMBERG LAW, L.L.C. 43 Danbury Road Wilton, CT 06897 Telephone: (203) 653-2250 Facsimile: (203) 653-3424 Attorneys for Plaintiff

privacy

cxRcF4cBD5gMZwczP7UN

LEE LITIGATION GROUP, PLLC C.K. Lee (CL 4086) Anne Seelig (AS 3976) 30 East 39th Street, Second Floor New York, NY 10016 Tel.: 212-465-1188 Fax: 212-465-1181 Attorneys for Plaintiff and the Class UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK DERRICK REAVES, on behalf of himself and all others similarly situated, Plaintiff, ----------------------------------------------------------- x Case No. - against - COMPLAINT MACY’S, INC., : JURY TRIAL DEMANDED : : : : : : : : : : : Defendant. ------------------------------------------------------------------------ x Plaintiff DERRICK REAVES (hereinafter “Plaintiff”), on behalf of himself and all others similarly situated, by his undersigned attorneys, as for his Complaint against the Defendant, MACY’S, INC., alleges the following: NATURE OF ACTION 1. This action is brought by Plaintiff DERRICK REAVES on behalf of himself and all consumers in the United States who have received unsolicited and unconsented-to commercial text messages to their mobile phones from MACY’S, INC. (herein “Defendant or Macy’s”) in violation of the Telephone Consumer Protection Act 47 U.S.C. § 227 et seq. 1 JURISDICTION AND VENUE 2. The Court has federal question jurisdiction over this action under 28 U.S.C. § 1331 because this action arises out of a violation of federal law - 7 U.S.C. § 227(b). See Mims v. Arrow Fin. Serv., LLC 132 S. Ct. 740 (2012). 3. This Court has personal jurisdiction over Plaintiff because Plaintiff submits to the Court's jurisdiction. This Court has general personal jurisdiction over Defendant because Defendant is headquartered in New York. In the alternative, the Court has personal jurisdiction over Defendant because Defendant purposefully avails itself of the privilege of conducting activities in New York by selling products online all across New York and by soliciting New York residents to enter into its texting program for discounts on products that it sells online. 4. Venue is proper in this District under 28 U.S.C § 1391 because Defendant’s violation of the Telephone Consumer Protection Act (TCPA) took place in this District, and Defendant is subject to personal jurisdiction in this District because its principal place of business is located in Manhattan, NY. PARTIES Plaintiff 5. Plaintiff REAVES is a citizen of the state of New York and a resident of Kings County. Defendant 6. Defendant, MACY’S INC., is a department store chain headquartered in 151 West 34th Street, New York, NY 10001 with its address for service of process listed at c/o Corporations Creations Network, 3411 Silverside Road Tatnall Building Ste 104, Wilmington 2 FACTUAL ALLEGATIONS The Telephone Consumer Protection Act 7. The Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227 et seq., was enacted by Congress in 1991 and is implemented by the Federal Communications Commission (“FCC”). In its June 18, 2015 Declaratory Ruling and Order (“2015 TCPA Order”), the FCC explained the original purposes of the TCPA: As its very name makes clear, the Telephone Consumer Protection Act is a broad “consumer protection” statute that addresses the telemarketing practices not just of bad actors attempting to perpetrate frauds, but also of “legitimate businesses” employing calling practices that consumers find objectionable… The TCPA makes it unlawful for any business—“legitimate” or not—to make robocalls that do not comply with the provisions of the statute. While the Commission has traditionally sought to “reasonably accommodate[] individuals’ rights to privacy as well as the legitimate business interests of telemarketers,”…, we have not viewed “legitimate” businesses as somehow exempt from the statute, nor do we do so today. 2015 TCPA Order ¶ 2 n.6 8. The 2015 TCPA Order also explained the continuing relevance of the TCPA, especially in connection with wireless consumers: Month after month, unwanted robocalls and texts, both telemarketing and informational, top the list of consumer complaints received by the Commission. The Telephone Consumer Protection Act (TCPA) and our rules empower consumers to decide which robocalls and text messages they receive, with heightened protection to wireless consumers, for whom robocalls can be costly and particularly intrusive… With this Declaratory Ruling and Order, we act to preserve consumers’ rights to stop unwanted robocalls, including both voice calls and texts, and thus respond to the many who have let us, other federal agencies, and states know about their frustration with robocalls. 2015 TCPA Order ¶ 1 9. The TCPA makes it “unlawful for any person… to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) 3 using any automatic telephone dialing system or an artificial or prerecorded voice… to any telephone number assigned to a paging service, cellular telephone service… or any service for which the called party is charged for the call…” 47 U.S.C. § 227(b)(1)(A)(iii). 10. “Prior express content” requires: an agreement, in writing, bearing the signature of the person called that clearly authorizes the seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice, and the telephone number to which the signatory authorizes such advertisements or telemarketing messages to be delivered. 47 C.F.R. § 64.1200(f)(8) 11. In addition, the written agreement must include a clear and conspicuous disclosure informing the signer that: By executing the agreement, such person authorizes the seller to deliver or cause to be delivered to the signatory telemarketing calls using an automatic telephone dialing system or an artificial or prerecorded voice; § 64.1200(f)(8)(i)(A) and The person is not required to sign the agreement (directly or indirectly), or agree to enter into such an agreement as a condition of purchasing any property, goods, or services. § 64.1200(f)(8)(i)(B) 12. The 2015 TCPA Order reaffirmed the FCC’s longstanding position that text messages qualify as “calls” under the TCPA. ¶107. 13. Additionally, the 2015 TCPA Order confirmed that text messages which originate from the Internet fall within the ambit of the TCPA’s prohibitions. The text and legislative history of the TCPA revealed “Congress’s intent to give the Commission broad authority to 4 enforce the protections from unwanted robocalls as new technologies emerge.” ¶ 113 Defendant Violated the TCPA 14. In March 22, 2018, Plaintiff REAVES visited a Macy’s website and saw the image below, advertising that he would receive 25% of his purchase by texting the provided number: 15. Macy’s continuously posts such images on its websites. 16. Plaintiff REAVES texted the provided number in the above advertisement in the hopes of gaining 25% off an online purchase. Plaintiff REAVES received a code to use on his purchase. However, when Plaintiff REAVES typed the code into the allocated space while purchasing the items he wanted to purchase, he found out that the code did not apply to his purchase. Nevertheless, Plaintiff REAVES purchased the items that he intended to purchase from Macy’s. 17. Afterwards, Plaintiff REAVES began receiving frequent texts about promotions at Macy’s. Below is an example of the types of marketing text messages that Plaintiff REAVES received from Defendant: 5 18. EXHIBIT A contains the full correspondence between Plaintiff REAVES and Defendant. 19. The terms and conditions of signing up for texts from Macy’s read “to cancel, send STOP to 62297.” 6 20. However, on March 26, 2018, Plaintiff texted STOP multiple times to 62297, but Macy’s continued to send Plaintiff messages. On March 27, 2018 and March 28, 2018, Defendant sent Plaintiff a total of four text messages, four text messages which were unsolicited. 21. Plaintiff REAVES did not consent to any of the messages that he received after he texted STOP to the Defendant. 22. Defendant sent similar unsolicited marketing texts using an automated telephone texting system to other similarly situated persons, who likewise never consented to receiving them. The text messages sent to Plaintiff REAVES were unwanted, annoying, and a nuisance. Plaintiff REAVES would often expect important messages such as family emergency updates, and would open his phone to Defendant’s invasive messages instead. In order to identify the sender, Plaintiff would have to unlock his phone and view the actual message. The messages were disruptive, and diminished the Plaintiff’s usage and enjoyment of his phone. The Second Circuits recent decision has acknowledged that such non-financially related injury allegations are enough to support standing under the TCPA; See Mejia v Time Warner Cable, Inc., 2017 US Dist LEXIS 120445 [SDNY Aug. 1, 2017, No. 15-CV-6445 (JPO)].) Plaintiff REAVES has a concrete injury sufficient to confer Article III standing. See Van Patten v Vertical Fitness Group, LLC, 847 F3d 1037(9th Cir. 2017) (“Unsolicited telemarketing phone calls or text messages, by their nature, invade the privacy and disturb the solitude of their recipients. A plaintiff alleging a 7 violation under the TCPA "need not allege any additional harm beyond the one Congress has identified.”); Melito v. Am. Eagle Outfitters, Inc., No. 14-CV-2440 (VEC), 2017 U.S. Dist. LEXIS 146343 (S.D.N.Y. Sep. 8, 2017). CLASS ACTION ALLEGATIONS 23. Plaintiff REAVES seeks to represent a class consisting of: All persons in the United States who, beginning four years prior to the filing of this action, received unsolicited text messages to their cellular phones from Defendant’s automated telephone dialing system (the “Class”) 24. In the Alternative, Plaintiff REAVES seeks to represent a class consisting of All persons in New York who, beginning four years prior to the filing of this action, received unsolicited text messages to their cellular phones from Defendant’s automated telephone dialing system (the “Class”) 25. The proposed Class excludes current and former officers and directors of Defendant, members of the immediate families of the officers and directors of Defendant, Defendant’s legal representatives, heirs, successors, assigns, and any entity in which it has or has had a controlling interest, and the judicial officer to whom this lawsuit is assigned. 26. Plaintiff reserves the right to revise the Class definition based on facts learned in the course of litigating this matter. 27. The members of the Class are so numerous that joinder of all members is impracticable. While the exact number of members of the proposed Class is unknown to Plaintiff at this time and can only be ascertained through the appropriate discovery, Plaintiff believes that there are thousands of members in the proposed Class. Other members of the Class may be 8 identified from records maintained by Defendant or by their own record of text messages. These members may be notified of the pendency of this action by mail, or by advertisement, using the form of notice customarily used in class actions such as this. 28. Plaintiff’s claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by Defendant’s wrongful conduct. 29. Plaintiff will fairly and adequately protect the interests of the members of the Class because Plaintiff has no interests antagonistic to those of the other members of the Class. Plaintiff has retained experienced and competent counsel. 30. A class action is superior to other available methods for the fair and efficient adjudication of this controversy. Since the damages sustained by individual Members of the proposed Class may be relatively small, the expense and burden of individual litigation make it impracticable for the members of the Class to individually seek redress for the wrongful conduct alleged herein. If Class treatment of these claims were not available, Defendant would likely be able to persist in its unlawful conduct with impunity. 31. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the common questions of law and fact to the Class are: a. whether Defendant sent unsolicited marketing text messages to cellular phones belonging to Plaintiff and the Class; b. whether Defendant used an automated telephone texting system to do so; c. whether text recipients provided their prior express consent; d. whether defendant’s conduct is intentional or negligent; and e. whether Plaintiff and the Class are entitled to damages for Defendant’s conduct. 9 f. The membership of the Class is readily ascertainable from electronic records. 32. The prosecution of this action as a class action will reduce the possibility of repetitious litigation. Plaintiff knows of no difficulty which will be encountered in the management of this litigation which would preclude its maintenance as a class action. 33. A class action is superior to other available methods for the fair and efficient adjudication of this controversy. The damages suffered by any individual class member are too small to make it economically feasible for an individual class member to prosecute a separate action, and it is desirable for judicial efficiency to concentrate the litigation of the claims in this forum. Furthermore, the adjudication of this controversy through a class action will avoid the potentially inconsistent and conflicting adjudications of the claims asserted herein. 34. The prerequisites to maintaining a class action for injunctive relief or equitable relief pursuant to Rule 23(b)(2) are met, as Defendant acts or refuses to act on grounds generally applicable to the Class, thereby making appropriate final injunctive or equitable relief with respect to the Class as a whole. 35. The prerequisites to maintaining a class action for injunctive relief or equitable relief pursuant to Rule 23(b)(3) are met, as questions of law or fact common to the Class predominate over any questions affecting only individual members and a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. 36. The prosecution of separate actions by members of the Class would create a risk of establishing inconsistent rulings and/or incompatible standards of conduct for Defendant. Additionally, individual actions may be dispositive of the interest of all members of the Class, although certain members of the proposed Class are not parties to such actions. 10 37. Defendant’s conduct is generally applicable to the Class as a whole and Plaintiff seeks, inter alia, equitable remedies with respect to the Class as a whole. As such, Defendant’s systematic policies and practices make declaratory relief with respect to the Class as a whole appropriate. CAUSES OF ACTION COUNT I VIOLATION OF THE TELEPHONE CONSUMER PROTECTION ACT 47 U.S.C. § 227 et seq. (Brought on behalf of Plaintiff and Class) 38. Plaintiff REAVES realleges and incorporates herein by references the allegations contained in all preceding paragraphs and further alleges as follows: 39. Plaintiff REAVES brings this claim individually and on behalf of the other members of the Class for Defendant’s violations of the TCPA. 40. Defendant directly or vicariously violates the TCPA when it uses an automated telephone texting system to send unsolicited and unauthorized marketing texts to the cellular phones of Plaintiff and the Class. 41. The TCPA, 47 U.S.C. § 227(b)(3), provides: (1) Private right of action. A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State-- (A) an action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation, (B) an action to recover for actual monetary loss from such a violation, or to receive $ 500 in damages for each such violation, whichever is greater, or (C) both such actions. 11 42. Additionally, the TCPA provides that the Court may, at its discretion, treble the statutory damages if it finds that Defendant’s violation are willful or knowing. 47 U.S.C. § 227(b)(3) 43. Defendant’s violations of the TCPA were willful and knowing. As shown in Exhibit A, although Plaintiff had typed STOP on March 26, Defendant continued to send Plaintiff unsolicited text messages. It was only after Plaintiff typed to Defendant, “Please stop texting me,” this is very annoying, did Plaintiff convince Defendant to agree to stop texting Plaintiff. This interaction demonstrates that Defendant’s actions were willful and knowing. 44. Defendant should also be enjoined from engaging in similar unlawful conduct in the future. 45. Accordingly, Plaintiff and the Class are entitled to all damages referenced herein, attorney’s fees, costs, treble damages, injunctive relief, and any other remedies allowed by the TCPA. PRAYER FOR RELIEF WHEREFORE, Plaintiff, on behalf of himself and all others similarly situated, prays for relief and judgment against Defendant as follows: (A) For an Order certifying the Class under Rule 23 of the Federal Rules of Civil Procedure and naming Plaintiff as representative of the Class and Plaintiff’s attorneys as Class Counsel to represent members of the Class; (B) For an Order declaring that Defendant’s conduct violates the TCPA; (C) For an Order finding in favor of Plaintiff and members of the Class; (D) For statutory or treble damages for each violation of the TCPA, as determined by the evidence presented at trial; 12 (E) For prejudgment interest on all amounts awarded; (G) For an Order enjoining Defendant from further violations of the TCPA; (H) For an Order awarding Plaintiff and members of the Class their reasonable attorney’s fees and expenses and costs of suit; and (I) For such other and further relief as the Court deems just and proper. DEMAND FOR TRIAL BY JURY Pursuant to Rule 38(b) of the Federal Rule of Civil Procedure, Plaintiff, on behalf of himself and the Class, demand a trial by jury on all questions of fact raised by this Complaint. Dated: 4.5.2018 Respectfully submitted, LEE LITIGATION GROUP, PLLC By: /s/ C.K. Lee C.K. Lee (CL 4086) Anne Seelig (AS 3976) 30 East 39th Street, Second Floor New York, NY 10016 Tel.: 212-465-1188 Fax: 212-465-1181 Attorneys for Plaintiff and the Class 13

privacy

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FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION No. 11 cv Honorable Judge Magistrate Judge JURY DEMAND LYNN LIETZ, RHONDA WILLIAMS, NEVADA GRIFFIN, FIDELIA EVANS, TIFFANI HUDSON, MICHELE CLIFT, CASSANDRA GRIGGS, WENDY THURMON, VA MOUA-KUE, RAVEN FLOWERS, CHANEL BICKHAM, BRIAN JOHNSON, DEANNA SIBLEY, LATOYA HALMON, DERRICK PREMPEH, GRZEGORZ SYKUT, ANGELA HARTZOL, LATOSCA WILLIAMS, JAIME STEWART, MICHELLE TODD, SHARONDA PORTER, LATRISE DUDLEY, KAREEM ALI, TOMEKA HUNTER, ROBIN GRUTZIUS, ZUBEEN AMEER-WOODLEY, ROBERT FERRARI II, FELIX A. KING, PATTY TINTAS, BHRAGULATTA K. SHAH, ELIZABETH FLOWERS, TAMMY KING, TENESHA MARTIN, LASHAUNDA BROWN, MARY LEE KANE, EUNICE TUCKER, BONNIE MAZENKO, REBECCA E. CIOTUSZYNSKI, MAGGINEESE MCCAN, DANIELLE LITTON, DANTE JOHNSON, PEZAVAN WHATELY, LISA SPENGLER, RONNIE J. PHIPPS, on behalf of themselves, and all other plaintiffs known and unknown, Plaintiffs v. ILLINOIS BELL TELEPHONE COMPANY Defendants ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) COMPLAINT NOW COME Plaintiffs, LYNN LIETZ, RHONDA WILLIAMS, NEVADA GRIFFIN, FIDELIA EVANS, TIFFANI HUDSON, MICHELE CLIFT, CASSANDRA GRIGGS, WENDY THURMON, VA MOUA-KUE, RAVEN FLOWERS, CHANEL BICKHAM, BRIAN JOHNSON, DEANNA SIBLEY, LATOYA HALMON, DERRICK PREMPEH, GRZEGORZ SYKUT, ANGELA LATRISE DUDLEY, KAREEM ALI, TOMEKA HUNTER, ROBIN GRUTZIUS, ZUBEEN AMEER- WOODLEY, ROBERT FERRARI II, FELIX A. KING, PATTY TINTAS, BHRAGULATTA K. SHAH, ELIZABETH FLOWERS, TAMMY KING, TENESHA MARTIN, LASHAUNDA BROWN, MARY LEE KANE, EUNICE TUCKER, BONNIE MAZENKO, REBECCA E. CIOTUSZYNSKI, MAGGINEESE MCCAN, DANIELLE LITTON, DANTE JOHNSON, PEZAVAN WHATELY, LISA SPENGLER, RONNIE J. PHIPPS, on behalf of themselves and all other Plaintiffs similarly situated, by and through their attorney, JOHN W. BILLHORN, and for their Complaint against Defendants, ILLINOIS BELL TELEPHONE COMPANY, state as follows: I. NATURE OF ACTION 1. This action is brought under the Fair Labor Standards Act, 29 U.S.C. §201, et seq., the Portal-to-Portal Act, 29 U.S.C. §251 et seq., the Illinois Minimum Wage Law, 820 ILCS §105/1 et seq., and the Illinois Wage Payment and Collection Act, 820 ILCS §115/1, et seq. II. JURISDICTION AND VENUE 2. Jurisdiction arises under the provisions of the Fair Labor Standards Act, 29 U.S.C. §§ 206, 207, the Portal-to-Portal Act, 29 U.S.C. §251 et seq., the Davis Bacon Act, 40 U.S.C. §276a, and for the supplemental Illinois statutory claims, pursuant to 28 U.S.C. §1367. Venue lies in the Northern District of Illinois in that during all times relevant to the employment relationship Plaintiffs performed work in this district and are residents of this district and Defendant is engaged in business in this district. III. THE PARTIES 3. Defendant, ILLINOIS BELL TELEPHONE COMPANY, is engaged in the business of providing telephone and other communication services. 4. Plaintiffs, LYNN LIETZ, RHONDA WILLIAMS, NEVADA GRIFFIN, FIDELIA EVANS, TIFFANI HUDSON, MICHELE CLIFT, CASSANDRA GRIGGS, WENDY THURMON, VA MOUA-KUE, RAVEN FLOWERS, CHANEL BICKHAM, BRIAN JOHNSON, DEANNA SIBLEY, WILLIAMS, JAIME STEWART, MICHELLE TODD, SHARONDA PORTER, LATRISE DUDLEY, KAREEM ALI, TOMEKA HUNTER, ROBIN GRUTZIUS, ZUBEEN AMEER-WOODLEY, ROBERT FERRARI II, FELIX A. KING, PATTY TINTAS, BHRAGULATTA K. SHAH, ELIZABETH FLOWERS, TAMMY KING, TENESHA MARTIN, LASHAUNDA BROWN, MARY LEE KANE, EUNICE TUCKER, BONNIE MAZENKO, REBECCA E. CIOTUSZYNSKI, MAGGINEESE MCCAN, DANIELLE LITTON, DANTE JOHNSON, PEZAVAN WHATELY, LISA SPENGLER, RONNIE J. PHIPPS, (hereinafter “the named Plaintiffs”), are either past or present employees who performed work for Defendant as sales and service associates in the call center department. Plaintiffs, and all other unnamed Plaintiffs known and unknown (hereinafter referred to as “members of the Plaintiff Class” or “similarly situated Plaintiffs”), are either present or past employees who worked for Defendant as sales and service associates in the call center department. As employees performing duties for an enterprise engaged in commerce, the named Plaintiffs and all members of the Plaintiff Class were also engaged in commerce as defined by the FLSA. 5. The claims brought herein by the named Plaintiffs are identical or similar to the claims of other past and present employees who were subject to the non-compliant policies and practices alleged herein. 6. The non-compliant practices as alleged herein were part of a practice and policy common to a group or “class” of past and present employees. Those past and present employees are entitled to receive Notice of these proceedings and afforded opportunity to join their individual claims. IV. STATUTORY VIOLATIONS Collective Action Under The Fair Labor Standards Act 7. Pursuant to the Fair Labor Standards Act, 29 U.S.C. §216(b), Count I of this action is brought by Plaintiffs as an opt-in representative or collective action, on behalf of themselves and other Plaintiffs similarly situated who have been damaged by Defendant’s failure to comply with 29 U.S.C. §201 et. seq. and §251 et. seq. Count II alleges a willful liquidated damages under the Fair Labor Standards Act, Section 260. Illinois Minimum Wage Law 8. Pursuant to the Illinois Minimum Wage Law, 820 ILCS §105/1 et seq., Count IV of this action is brought by Plaintiffs to recover unpaid back wages earned on or before the date three (3) years prior to the filing of this action. Each and every Plaintiff who joins this case in the future shall specifically adopt and assert the claims made under this Count IV. Illinois Wage Payment and Collection Act 9. Pursuant to the Illinois Wage Payment and Collection Act, 820 ILCS §115/1 et seq., Count V of this action is brought by Plaintiffs to recover unpaid back wages earned or after the date five (5) years prior to the filing of this action. Each and every Plaintiff who joins this case in the future shall specifically adopt and assert the claims made under this Count V. V. FACTUAL ALLEGATIONS RELEVANT TO ALL COUNTS 10. Plaintiffs at all times pertinent to the cause of action were employed by Defendant, said employment being integral and indispensable to Defendant’s business. 11. Defendant has both in the past and presently, willfully employed members of the Plaintiff Class, including the named Plaintiffs, requiring or allowing work to be performed before their scheduled work time, during their unpaid meal break and after their scheduled shift, without pay for that time. In some instances that unpaid time should have been compensated at time and one-half the workers’ regular hourly rates because if the unpaid time was properly treated as compensable, the workers would have been over 40 hours in particular workweeks. In other instances, the unpaid time should have compensated at the workers’ regular hourly rates pursuant to the requirements of the federal and state statues herein relied upon. VIOLATION OF FAIR LABOR STANDARDS ACT 1-11. Paragraphs 1 through 11 are re-alleged and incorporated as though set forth fully herein as paragraphs 1 through 11 of this Count I. 12. Pursuant to Fair Labor Standards Act, 29 U.S.C. §201 et. seq., and the Portal- to-Portal Act 29 U.S.C. §251 et. seq., the Plaintiffs, and all other Plaintiffs similarly situated, known and unknown, are entitled to compensation for all hours worked and compensation at a rate not less than one and one-half times their regular rate of pay for all hours worked in excess of forty (40) hours in any week during the two (2) years preceding the filing of this action. 13. Defendant has at all times relevant hereto failed and refused to pay compensation to its employees, including the named Plaintiffs herein, and all other Plaintiffs similarly situated, known and unknown, as described above. WHEREFORE, Plaintiffs, on behalf of themselves and all other Plaintiffs similarly situated, known and unknown, respectfully requests this Court to enter an order: (a) awarding back pay equal to the amount of all unpaid overtime compensation for the two (2) years preceding the filing of this Complaint, according to the applicable statute of limitations; (b) awarding prejudgment interest with respect to the total amount of unpaid overtime compensation; (c) awarding Plaintiffs’ reasonable attorney’s fees and costs incurred as a result of Defendant’s violations of the Fair Labor Standards Act; and, (d) for such additional relief as the Court deems appropriate under the circumstances. COUNT II WILLFUL VIOLATION OF THE FAIR LABOR STANDARDS ACT 1-13. Paragraphs 1 through 13 of Count I are realleged and incorporated as though set forth fully herein as Paragraphs 1 through 13 of Count II. violation of the Fair Labor Standards Act in that its practice, as described above, continues and all past amounts of unpaid wages remain unpaid. 15. Pursuant to the Fair Labor Standards Act, Plaintiffs and all other employees similarly situated, past or present, are entitled to compensation at a rate not less than one and one-half times their regular rate of pay for all the hours worked in excess of forty (40) in any given week, entitled to pay for all hours worked, in three (3) years preceding the filing of this complaint. WHEREFORE, Plaintiffs, on behalf of themselves and all other Plaintiffs similarly situated, known and unknown, respectfully requests this Court to enter an order: (a) awarding back pay equal to the amount of all unpaid compensation for one (1) additional year, totaling three (3) years preceding the filing of this Complaint; (b) awarding prejudgment interest with respect to the amount of unpaid overtime compensation; (c) awarding Plaintiffs’ reasonable attorney’s fees and Court costs incurred as a result of Defendants’ violation of the Fair Labor Standards Act; and (d) for such additional relief as the Court deems appropriate under the circumstances. COUNT III LIQUIDATED DAMAGES UNDER THE FAIR LABOR STANDARDS ACT 1-15. Paragraphs 1 through 15 of Count II are re-alleged and incorporated as though set forth fully herein as Paragraphs 1 through 15 of Count III. 16. In denying the named Plaintiffs and members of the Plaintiff Class compensation, as described above, Defendant’s acts were not based upon good faith or reasonable grounds. known and unknown, are entitled to liquidated damages equal to the amount of unpaid compensation, pursuant to 29 U.S.C. §260. WHEREFORE, Plaintiffs, on behalf of themselves and all other Plaintiffs similarly situated, known and unknown, respectfully request this Court to enter an order: (a) awarding liquidated damages equal to the amount of all unpaid compensation; (b) awarding Plaintiffs’ reasonable attorney’s fees and costs incurred as a result of Defendants’ violation of the Fair Labor Standards Act; and (c) for such additional relief as the Court deems appropriate under the circumstances. COUNT IV SUPPLEMENTAL STATE LAW CLAIM VIOLATION OF THE ILLINOIS MINIMUM WAGE LAW 1-17. Paragraphs 1 through 17 of Count III are re-alleged and incorporated as though set forth fully herein as Paragraphs 1 through 17 of this Count IV. 18. As described in the foregoing paragraphs, Defendant’s compensation policies and practices are in violation of the Illinois Minimum Wage Law, 820 ILCS §115/1 et. seq. 19. During a portion or all of the relevant time at issue herein, the Illinois Minimum Wage Law provided that an employer who fails to pay the required amount of wages due an employee under the law shall be liable to the underpaid employee or employees for the unpaid wages and for punitive damages in the amount of 2% of the amount of such underpayments for each month following the date such underpayments remain unpaid. 20. Defendant’s failure to pay compensation, as described above, has been willful and/or in bad faith. WHEREFORE, Plaintiffs, on behalf of themselves and all other Plaintiffs similarly situated, known and unknown, respectfully request this Court to enter an order: herein, and such other violations which may come to light during the prosecution of this matter, in violation of the provisions of the Illinois Minimum Wage Law; (b) awarding an amount of damages, to be shown by the evidence, to which Plaintiffs and other members of the Plaintiff Class are entitled; (c) allowing this Court to retain jurisdiction of the case until such time it is assured Defendant has remedied the compensation policies and practices complained of herein and are determined to be in full compliance with the law; (d) directing Defendant to pay to Plaintiffs’ reasonable attorney’s fees, costs, and litigation expenses, as provided by statute; (e) for such additional relief it deems just and appropriate under the circumstances. COUNT V SUPPLEMENTAL STATE LAW CLAIM VIOLATION OF THE ILLINOIS WAGE PAYMENT AND COLLECTION ACT 1-20. Paragraphs 1 through 20 of Count IV are realleged and incorporated as though set forth fully herein as Paragraphs 1 through 20 of this Count V. 21. The Illinois Wage Payment and Collection Act, §2, defines wages as “any compensation owed to an employee by an employer pursuant to an employment contract or agreement between the 2 parties, . . . .”. Payment to separated employees is termed “final compensation” and defined as “wages, salaries, earned commissions, earned bonuses . . . . and any other compensation owed the employee by the employer pursuant to an employment contract or agreement between the two parties”. 22. At all times relevant there existed an agreement between Plaintiffs, as well as members of the Plaintiff class, with Defendant that Defendant would comply in all respects with pertinent state and federal wage and hour law. Defendant has breached that agreement in that Defendant’s compensation policies violate wage and hour provisions of both state and federal law. shall pay “[A]ll wages earned by any employee during a semi-monthly or bi-weekly pay period shall be paid to such employee not later than 13 days after the end of the pay period in which such wages were earned”. 24. The Illinois Wage Payment and Collection Act, §5, provides that “[E]very employer shall pay the final compensation of separated employees in full, at the time of separation, if possible, but in no case later than the next regularly scheduled payday for such employee”. 25. Defendant’s acts as complained of herein and described above, namely the continuing refusal and failure to pay the earned wages to Plaintiffs and the Plaintiff class, constitutes a violation of the Illinois Wage Payment and Collection Act. WHEREFORE, Plaintiffs, on behalf of themselves and all other Plaintiffs similarly situated, known and unknown, respectfully request this Court to enter an order: (a) declaring and decreeing Defendant’s compensation practices as described herein, and such other violations which may come to light during the prosecution of this matter, in violation of the provisions of the Illinois Wage Payment and Collection Act; (b) awarding an amount of damages, to be shown by the evidence, to which Plaintiffs and other members of the Plaintiff Class are entitled; (c) allowing this Court retain jurisdiction of the case until such time as it is assured that Defendant has remedied the compensation policies and practices complained of herein and are determined to be in full compliance with the law; (d) directing Defendant to pay to Plaintiffs’ reasonable attorney’s fees, costs, and litigation expenses, as provided by statute; circumstances. Respectfully submitted, Electronically Filed 01/07/2011 /s/ John W. Billhorn ___________________________ John William Billhorn BILLHORN LAW FIRM 120 S. State Street, Suite 400 Chicago, IL 60603 (312) 853-1450

employment & labor

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Case No. CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS JURY TRIAL DEMANDED UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA ISAIAH POTTER, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. VERRICA PHARMACEUTICALS INC., TED WHITE, and BRIAN DAVIS, Defendants. Plaintiff Isaiah Potter (“Plaintiff”), individually and on behalf of all others similarly situated, by and through his attorneys, alleges the following upon information and belief, except as to those allegations concerning Plaintiff, which are alleged upon personal knowledge. Plaintiff’s information and belief is based upon, among other things, his counsel’s investigation, which includes without limitation: (a) review and analysis of regulatory filings made by Verrica Pharmaceuticals Inc. (“Verrica” or the “Company”) with the United States (“U.S.”) Securities and Exchange Commission (“SEC”); (b) review and analysis of press releases and media reports issued by and disseminated by Verrica; and (c) review of other publicly available information concerning Verrica. NATURE OF THE ACTION AND OVERVIEW 1. This is a class action on behalf of persons and entities that purchased or otherwise acquired Verrica securities between September 16, 2019 and June 29, 2020, inclusive (the “Class Period”), seeking to pursue claims against the Defendants under the Securities Exchange Act of 1934 (the “Exchange Act”). 2. Verrica is a dermatology therapeutics company that develops treatments for people living with skin diseases. Its lead product candidate, VP-102, is a drug-device combination of a topical solution of cantharidin administered through the Company’s single-use precision applicator. The Company is initially developing VP-102 for the treatment of molluscum contagiosum, or molluscum, a highly contagious and primarily pediatric viral skin disease, and common warts. 3. On June 29, 2020, Verrica disclosed receipt of a letter from the U.S. Food and Drug Administration (“FDA”) regarding the Company’s New Drug Application (“NDA”) for VP-102 for the treatment of molluscum contagiosum. The letter identified certain deficiencies that preclude discussion of labeling and post-marketing requirements. Moreover, according to the Company, the FDA’s information requests have included “specific request related to a potential safety issue with the applicator that could arise if the instructions for use were not properly followed.” 4. On this news, the Company’s share price fell $3.06, or nearly 22%, to close at $11.01 per share on June 30, 2020, on unusually heavy trading volume. 5. Throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the Company’s proprietary applicator used for VP-102 posed certain safety risks if the instructions were not properly followed; (2) that, as a result, Verrica would incorporate certain user features to mitigate the safety risk; (3) that the addition of the user feature would require additional testing for stability supportive data; (4) that, as a result of the foregoing, regulatory approval for VP-102 was reasonably likely to be delayed; and (5) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects, were materially misleading and/or lacked a reasonable basis. 6. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. JURISDICTION AND VENUE 7. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. § 240.10b-5). 8. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. § 1331 and Section 27 of the Exchange Act (15 U.S.C. § 78aa). 9. Venue is proper in this Judicial District pursuant to 28 U.S.C. § 1391(b) and Section 27 of the Exchange Act (15 U.S.C. § 78aa(c)). Substantial acts in furtherance of the alleged fraud or the effects of the fraud have occurred in this Judicial District. Many of the acts charged herein, including the dissemination of materially false and/or misleading information, occurred in substantial part in this Judicial District. In addition, the Company’s principal executive offices are located in this District. 10. In connection with the acts, transactions, and conduct alleged herein, Defendants directly and indirectly used the means and instrumentalities of interstate commerce, including the United States mail, interstate telephone communications, and the facilities of a national securities exchange. PARTIES 11. Plaintiff Isaiah Potter, as set forth in the accompanying certification, incorporated by reference herein, purchased or otherwise acquired Verrica securities during the Class Period, and suffered damages as a result of the federal securities law violations and false and/or misleading statements and/or material omissions alleged herein. 12. Defendant Verrica is incorporated under the laws of Delaware with its principal executive offices located in West Chester, Pennsylvania. Verrica’s common stock trades on the NASDAQ exchange under the symbol “VRCA.” 13. Defendant Ted White (“White”) was, at all relevant times, the President and Chief Executive Officer of the Company. 14. Defendant Brian Davis (“Davis”) has been the Chief Financial Officer of the Company since October 18, 2019. 15. Defendants White and Davis (collectively the “Individual Defendants”), because of their positions with the Company, possessed the power and authority to control the contents of the Company’s reports to the SEC, press releases and presentations to securities analysts, money and portfolio managers and institutional investors, i.e., the market. The Individual Defendants were provided with copies of the Company’s reports and press releases alleged herein to be misleading prior to, or shortly after, their issuance and had the ability and opportunity to prevent their issuance or cause them to be corrected. Because of their positions and access to material non-public information available to them, the Individual Defendants knew that the adverse facts specified herein had not been disclosed to, and were being concealed from, the public, and that the positive representations which were being made were then materially false and/or misleading. The Individual Defendants are liable for the false statements pleaded herein. SUBSTANTIVE ALLEGATIONS Background 16. Verrica is a dermatology therapeutics company that develops treatments for people living with skin diseases. Its lead product candidate, VP-102, is a drug-device combination of a topical solution of cantharidin administered through the Company’s single-use precision applicator. The Company is initially developing VP-102 for the treatment of molluscum contagiosum, or molluscum, a highly contagious and primarily pediatric viral skin disease, and common warts. Materially False and Misleading Statements Issued During the Class Period 17. The Class Period begins on September 16, 2019. On that day, Verrica announced that it had submitted its NDA with the SEC for VP-102 for the treatment of molluscum. Specifically, the Company stated in a press release, in relevant part: Verrica Pharmaceuticals Inc. (“Verrica”) (Nasdaq: VRCA), a medical dermatology company committed to the development and commercialization of novel treatments that provide meaningful benefit for people living with skin diseases, today announced that it has submitted a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) for VP-102 (cantharidin 0.7% Topical Solution), a proprietary topical therapy, for the treatment of molluscum contagiosum (molluscum). No FDA-approved treatments are currently available for molluscum, a common, highly contagious skin disease affecting an estimated 6 million people in the United States, primarily children. Without treatment, molluscum can persist for an average of 13 months, with some cases remaining unresolved for several years. “Molluscum is a viral skin infection that is highly contagious, spreads rapidly, and is significantly undertreated, with no FDA-approved therapeutic options,” said Ted White, President and Chief Executive Officer, Verrica. “The NDA submission potentially brings us one step closer to our goal of providing patients — particularly children and their caregivers — with a safe and effective therapy for molluscum with our proprietary single-use applicator. If approved, VP-102 has the potential to become the standard of care for this disease.” The 505(b)(1) NDA is supported by the positive results from two double-blind Phase 3 trials (CAMP-1 and CAMP-2) that evaluated the safety and efficacy of VP-102 compared to placebo in patients two years of age and older diagnosed with molluscum. The CAMP-1 and CAMP-2 studies enrolled 528 patients in total and were conducted at 31 centers in the United States. Each trial demonstrated superior efficacy of VP-102 compared to placebo with statistically significant differences on the primary endpoint of complete clearance of all treatable molluscum lesions. Specific results from CAMP-1 and CAMP-2 demonstrated 46% and 54%, respectively, of subjects treated with VP-102 achieved complete clearance at day 84, versus 18% and 13% of subjects in the placebo groups (p<0.0001). By the end of the trials (Day 84), VP-102 treated subjects had a 69% and 83% mean reduction in molluscum lesions, a pre-specified endpoint, in CAMP-1 and CAMP-2, respectively, compared to a 20% increase and 19% reduction for subjects on placebo. VP-102 was well-tolerated in both trials, with no serious adverse events reported in VP-102 treated subjects. 18. On November 27, 2019, Verrica announced that the NDA for VP-102 had been accepted for filing by the FDA. In a press release, the Company stated, in relevant part: Verrica Pharmaceuticals Inc. (“Verrica”) (Nasdaq: VRCA), a medical dermatology company, today announced that its New Drug Application (NDA) for VP-102 (cantharidin 0.7% Topical Solution), a proprietary topical therapy for the treatment of molluscum contagiosum (molluscum), has been accepted for filing by the U.S. Food and Drug Administration (FDA). The Prescription Drug User Fee Act (PDUFA) goal date assigned by the FDA for this NDA is July 13, 2020. “There are no FDA-approved treatments currently available to patients diagnosed with molluscum, the majority of whom are children, leaving caregivers to choose between a wait-and-see approach or treatments with unproven efficacy,” said Ted White, President and Chief Executive Officer, Verrica. “Left untreated, molluscum is easily transmitted, with lesions persisting an average of 13 months, and molluscum can last up to several years, as seen in our clinical trials. The acceptance of this NDA for review is the next step toward bringing patients and their caregivers a safe and effective topical therapy for this common, highly contagious viral skin disease that carries a substantial social stigma. We look forward to working closely with the FDA during this review period.” The NDA is based on positive results from two identical Phase 3 randomized, double-blind, multicenter clinical trials (CAMP-1 and CAMP-2) that evaluated the safety and efficacy of VP-102 compared to placebo in patients two years of age and older diagnosed with molluscum. CAMP-1 was conducted under a SPA (Special Protocol Assessment) with the FDA. In both trials, a clinically and statistically significant number of patients treated with VP-102 met the primary endpoint of complete clearance of all treatable molluscum lesions. VP-102 was well-tolerated in both trials, with no serious adverse events reported in VP-102-treated subjects. 19. On March 13, 2020, the Company filed its annual report on Form 10-K for the period ended December 31, 2019 (the “2019 10-K”). Regarding the administration of VP-102, Verrica stated, in relevant part: VP-102 [is] a proprietary drug-device combination of a novel 0.7% w/v topical solution of cantharidin administered through our single-use precision applicator. . . . Our proprietary single-use applicator allows for precise application to each lesion. Our applicator contains a sealed glass ampule providing long-term room temperature stability without the changes in concentration due to evaporation seen in compounded formulations. * * * VP-102 is designed to be administered to patients via a proprietary applicator by a healthcare professional. In the United States, products composed of components that would normally be regulated by different centers at the FDA are known as combination products. Typically, the FDA’s Office of Combination Products assigns a combination product to a specific Agency center as the lead reviewer. The FDA determines which center will lead a product’s review based upon the product’s primary mode of action. Depending on the type of combination product, its approval, clearance or licensure may usually be obtained through the submission of a single marketing application. We anticipate that VP- 102 will be regulated as a drug, and that the FDA will permit a single regulatory submission seeking approval of VP-102 with the applicator in each indication for which we seek approval. 20. Regarding regulatory approval of VP-102 for molluscum, the 2019 10-K stated, in relevant part: Our lead product candidate, VP-102, is being developed for the treatment of molluscum, common warts and external genital warts, for which we are currently conducting clinical trials. If we are unable to successfully develop, receive regulatory approval for and commercialize VP-102 for the treatment of molluscum, common warts, external genital warts or any other indications, or successfully develop any other product candidates, or experience significant delays in doing so, our business will be harmed. We currently have no products that are approved for commercial sale. We have only one product candidate, VP-102 for which we have conducted clinical trials. We have completed two pivotal Phase 3 clinical trials and submitted a New Drug Application, or (NDA) for VP-102 for the treatment of molluscum in the U.S. Our NDA is presently under review by FDA and there can be no assurance that we will receive approval. . . . Our ability to generate revenue from our product candidates, will depend heavily on their successful development, regulatory approval and eventual commercialization of these product candidates. The success of VP-102, VP-103 or any other product candidates that we develop or otherwise may acquire will depend on several factors, including: timely and successful completion of preclinical studies and our clinical trials;  successful development of, or making arrangements with third-party manufacturers for, our commercial manufacturing processes for any of our product candidates that receive regulatory approval;  receipt of timely marketing approvals from applicable regulatory authorities;  launching commercial sales of products, if approved;  acceptance of our products, if approved, by patients, the medical community and third-party payors, for their approved indications;  our success in educating physicians and patients about the benefits, administration and use of VP-102 or any other product candidates, if approved;  the prevalence and severity of adverse events experienced with VP-102 or our other product candidates;  the availability, perceived advantages, cost, safety and efficacy of alternative treatments for molluscum and/or common warts or any other indications which we may pursue for VP-102 or any other product candidates;  our ability to produce VP-102 or any other product candidates on a commercial scale;  obtaining and maintaining patent, trademark and trade secret protection and regulatory exclusivity for our product candidates and otherwise protecting our rights in our intellectual property portfolio;  maintaining compliance with regulatory requirements, including current good manufacturing practices, or cGMPs;  competing effectively with other procedures; and  maintaining a continued acceptable safety, tolerability and efficacy profile of the products following approval. Whether regulatory approval will be granted is unpredictable and depends upon numerous factors, including the substantial discretion of the regulatory authorities. Our product candidates’ success in clinical trials is not guaranteed, and even if clinical trials are successful, it will not guarantee regulatory approval. Following submission of an NDA, it may not be accepted for substantive review, or even if it is accepted for substantive review, the FDA or other comparable foreign regulatory authorities may require that we conduct additional studies or clinical trials, provide additional data, take additional manufacturing steps, or require other conditions before they will reconsider or approve our application. If the FDA or other comparable foreign regulatory authorities require additional studies, clinical trials or data, we would incur increased costs and delays in the marketing approval process, which may require us to expend more resources than we have available. In addition, the FDA or other comparable foreign regulatory authorities may not consider sufficient any additional required studies, clinical trials, data or information that we perform and complete or generate, or we may decide to abandon the program. It is possible that VP-102, VP-103 or any of our other product candidates we may develop or otherwise acquire will never obtain regulatory approval, even if we expend substantial time and resources seeking such approval. If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our product candidates, which would harm our business. 21. As to the applicator, which could affect regulatory approval, the 2019 10-K stated, in relevant part: VP-102 is a drug-device combination involving a proprietary applicator, which may result in additional regulatory and other risks. VP-102 is a drug-device combination product for administration of our cantharidin formulation through our proprietary applicator. We may experience delays in obtaining regulatory approval of VP-102 given the increased complexity of the review process when approval of a drug and a delivery device is sought under a single marketing application. VP-102 will be regulated as a drug-device combination product, which requires coordination within the FDA and similar foreign regulatory agencies for review of the product candidate’s device and drug components. We have filed a single marketing application for the approval of a drug-device combination product, with guidance by the FDA. Although the FDA and similar foreign regulatory agencies have systems in place for the review and approval of combination products such as ours, we may experience delays in the development, approval, and commercialization of our product candidate due to regulatory timing constraints and uncertainties in the product development and approval process, the inherent complexities of combination products, as well as coordination between two different centers within FDA responsible for review of the different components of the combination product. Failure to successfully develop or supply the device, delays in or failure of the studies conducted by us, our collaborators, or third-party providers, or failure of our company, our collaborators, or third-party providers to obtain or maintain regulatory approval or clearance of the device component of VP-102 could result in increased development costs, delays in or failure to obtain regulatory approval, and associated delays in VP-102 reaching the market. Further, failure to successfully develop or supply the device, or to gain or maintain its approval, could adversely affect sales of VP-102. 22. The above statements identified in ¶¶ 17-21 were materially false and/or misleading, and failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the Company’s proprietary applicator used for VP-102 posed certain safety risks if the instructions were not properly followed; (2) that, as a result, Verrica would incorporate certain user features to mitigate the safety risk; (3) that the addition of the user feature would require additional testing for stability supportive data; (4) that, as a result of the foregoing, regulatory approval for VP-102 was reasonably likely to be delayed; and (5) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects, were materially misleading and/or lacked a reasonable basis. The Truth Begins to Emerge 23. On June 29, 2020, after the market closed, Verrica disclosed receipt of a letter from the U.S. Food and Drug Administration (“FDA”) regarding the Company’s New Drug Application (“NDA”) for VP-102 for the treatment of molluscum contagiosum. The letter identified certain deficiencies that preclude discussion of labeling and post-marketing requirements. Moreover, according to the Company, the FDA's information requests have included “specific request related to a potential safety issue with the applicator that could arise if the instructions for use were not properly followed.” Specifically, the Company’s press release stated, in relevant part: Verrica Pharmaceuticals Inc. (“Verrica”) (Nasdaq: VRCA), a dermatology therapeutics company developing medications for viral skin diseases requiring medical interventions, today announced that, on June 24, 2020, the Company received a letter from the U.S. Food and Drug Administration (FDA) as part of the FDA’s ongoing review of the Company’s New Drug Application (NDA) for VP-102 (cantharidin 0.7% topical solution), Verrica’s lead product candidate for the treatment of molluscum contagiosum. The letter states that there are deficiencies that preclude discussion of labeling and post-marketing requirements/commitments at this time. The letter further states that the notification does not reflect a final decision on the information under review. In a letter dated November 26, 2019, the FDA had assigned a Prescription Drug User Fee Act (“PDUFA”) goal date of July 13, 2020 for completion of its review of the NDA. The FDA’s letter does not identify any specific items. But, the Company notes that information requests from the FDA during the NDA review have focused on CMC aspects of the drug-device combination. Verrica’s ability to address these CMC-related requests, however, was significantly impacted in large part by the COVID-19 pandemic. The requests include, but are not limited to, a specific request related to a potential safety issue with the applicator that could arise if the instructions for use were not properly followed. In response, the Company incorporated an additional user feature into the applicator to address that issue. The addition of that user feature, however, has affected human factors testing as well as requiring additional supportive stability data on the fully assembled device incorporating such feature. The Company believes that both its long-term and registration stability data with the ampule, and the as-submitted applicator, support significant shelf life and stability for VP-102. The Company anticipates interactions with, and additional communication from, the FDA and intends to work with the FDA to resolve and address any items as quickly as possible. Notwithstanding the pandemic or the CMC-related requests that have arisen during the review cycle, the Company believes that the positive results from its two double-blind Phase 3 trials (CAMP-1 and CAMP-2) that evaluated the safety and efficacy of VP-102 compared to placebo in patients two years of age and older diagnosed with molluscum indicates that VP-102 remains viable for FDA approval. 24. On this news, the Company’s share price fell $3.06, or nearly 22%, to close at $11.01 per share on June 30, 2020, on unusually heavy trading volume. CLASS ACTION ALLEGATIONS 25. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3) on behalf of a class, consisting of all persons and entities that purchased or otherwise acquired Verrica securities between September 16, 2019 and June 29, 2020, inclusive, and who were damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers and directors of the Company, at all relevant times, members of their immediate families and their legal representatives, heirs, successors, or assigns, and any entity in which Defendants have or had a controlling interest. 26. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Verrica’s common shares actively traded on the NASDAQ. While the exact number of Class members is unknown to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff believes that there are at least hundreds or thousands of members in the proposed Class. Millions of Verrica common stock were traded publicly during the Class Period on the NASDAQ. Record owners and other members of the Class may be identified from records maintained by Verrica or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions. 27. Plaintiff’s claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that is complained of herein. 28. Plaintiff will fairly and adequately protect the interests of the members of the Class and has retained counsel competent and experienced in class and securities litigation. 29. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are: (a) whether the federal securities laws were violated by Defendants’ acts as alleged herein; (b) whether statements made by Defendants to the investing public during the Class Period omitted and/or misrepresented material facts about the business, operations, and prospects of Verrica; and (c) to what extent the members of the Class have sustained damages and the proper measure of damages. 30. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation makes it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. UNDISCLOSED ADVERSE FACTS 31. The market for Verrica’s securities was open, well-developed and efficient at all relevant times. As a result of these materially false and/or misleading statements, and/or failures to disclose, Verrica’s securities traded at artificially inflated prices during the Class Period. Plaintiff and other members of the Class purchased or otherwise acquired Verrica’s securities relying upon the integrity of the market price of the Company’s securities and market information relating to Verrica, and have been damaged thereby. 32. During the Class Period, Defendants materially misled the investing public, thereby inflating the price of Verrica’s securities, by publicly issuing false and/or misleading statements and/or omitting to disclose material facts necessary to make Defendants’ statements, as set forth herein, not false and/or misleading. The statements and omissions were materially false and/or misleading because they failed to disclose material adverse information and/or misrepresented the truth about Verrica’s business, operations, and prospects as alleged herein. 33. At all relevant times, the material misrepresentations and omissions particularized in this Complaint directly or proximately caused or were a substantial contributing cause of the damages sustained by Plaintiff and other members of the Class. As described herein, during the Class Period, Defendants made or caused to be made a series of materially false and/or misleading statements about Verrica’s financial well-being and prospects. These material misstatements and/or omissions had the cause and effect of creating in the market an unrealistically positive assessment of the Company and its financial well-being and prospects, thus causing the Company’s securities to be overvalued and artificially inflated at all relevant times. Defendants’ materially false and/or misleading statements during the Class Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities at artificially inflated prices, thus causing the damages complained of herein when the truth was revealed. LOSS CAUSATION 34. Defendants’ wrongful conduct, as alleged herein, directly and proximately caused the economic loss suffered by Plaintiff and the Class. 35. During the Class Period, Plaintiff and the Class purchased Verrica’s securities at artificially inflated prices and were damaged thereby. The price of the Company’s securities significantly declined when the misrepresentations made to the market, and/or the information alleged herein to have been concealed from the market, and/or the effects thereof, were revealed, causing investors’ losses. SCIENTER ALLEGATIONS 36. As alleged herein, Defendants acted with scienter since Defendants knew that the public documents and statements issued or disseminated in the name of the Company were materially false and/or misleading; knew that such statements or documents would be issued or disseminated to the investing public; and knowingly and substantially participated or acquiesced in the issuance or dissemination of such statements or documents as primary violations of the federal securities laws. As set forth elsewhere herein in detail, the Individual Defendants, by virtue of their receipt of information reflecting the true facts regarding Verrica, their control over, and/or receipt and/or modification of Verrica’s allegedly materially misleading misstatements and/or their associations with the Company which made them privy to confidential proprietary information concerning Verrica, participated in the fraudulent scheme alleged herein. APPLICABILITY OF PRESUMPTION OF RELIANCE (FRAUD-ON-THE-MARKET DOCTRINE) 37. The market for Verrica’s securities was open, well-developed and efficient at all relevant times. As a result of the materially false and/or misleading statements and/or failures to disclose, Verrica’s securities traded at artificially inflated prices during the Class Period. On November 26, 2019, the Company’s share price closed at a Class Period high of $17.43 per share. Plaintiff and other members of the Class purchased or otherwise acquired the Company’s securities relying upon the integrity of the market price of Verrica’s securities and market information relating to Verrica, and have been damaged thereby. 38. During the Class Period, the artificial inflation of Verrica’s shares was caused by the material misrepresentations and/or omissions particularized in this Complaint causing the damages sustained by Plaintiff and other members of the Class. As described herein, during the Class Period, Defendants made or caused to be made a series of materially false and/or misleading statements about Verrica’s business, prospects, and operations. These material misstatements and/or omissions created an unrealistically positive assessment of Verrica and its business, operations, and prospects, thus causing the price of the Company’s securities to be artificially inflated at all relevant times, and when disclosed, negatively affected the value of the Company shares. Defendants’ materially false and/or misleading statements during the Class Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities at such artificially inflated prices, and each of them has been damaged as a result. 39. At all relevant times, the market for Verrica’s securities was an efficient market for the following reasons, among others: (a) Verrica shares met the requirements for listing, and was listed and actively traded on the NASDAQ, a highly efficient and automated market; (b) As a regulated issuer, Verrica filed periodic public reports with the SEC and/or the NASDAQ; (c) Verrica regularly communicated with public investors via established market communication mechanisms, including through regular dissemination of press releases on the national circuits of major newswire services and through other wide-ranging public disclosures, such as communications with the financial press and other similar reporting services; (d) Verrica was followed by securities analysts employed by brokerage firms who wrote reports about the Company, and these reports were distributed to the sales force and certain customers of their respective brokerage firms. Each of these reports was publicly available and entered the public marketplace. 40. As a result of the foregoing, the market for Verrica’s securities promptly digested current information regarding Verrica from all publicly available sources and reflected such information in Verrica’s share price. Under these circumstances, all purchasers of Verrica’s securities during the Class Period suffered similar injury through their purchase of Verrica’s securities at artificially inflated prices and a presumption of reliance applies. 41. A Class-wide presumption of reliance is also appropriate in this action under the Supreme Court’s holding in Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128 (1972), because the Class’s claims are, in large part, grounded on Defendants’ material misstatements and/or omissions. Because this action involves Defendants’ failure to disclose material adverse information regarding the Company’s business operations and financial prospects—information that Defendants were obligated to disclose—positive proof of reliance is not a prerequisite to recovery. All that is necessary is that the facts withheld be material in the sense that a reasonable investor might have considered them important in making investment decisions. Given the importance of the Class Period material misstatements and omissions set forth above, that requirement is satisfied here. NO SAFE HARBOR 42. The statutory safe harbor provided for forward-looking statements under certain circumstances does not apply to any of the allegedly false statements pleaded in this Complaint. The statements alleged to be false and misleading herein all relate to then-existing facts and conditions. In addition, to the extent certain of the statements alleged to be false may be characterized as forward looking, they were not identified as “forward-looking statements” when made and there were no meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the purportedly forward-looking statements. In the alternative, to the extent that the statutory safe harbor is determined to apply to any forward-looking statements pleaded herein, Defendants are liable for those false forward- looking statements because at the time each of those forward-looking statements was made, the speaker had actual knowledge that the forward-looking statement was materially false or misleading, and/or the forward-looking statement was authorized or approved by an executive officer of Verrica who knew that the statement was false when made. FIRST CLAIM Violation of Section 10(b) of The Exchange Act and Rule 10b-5 Promulgated Thereunder (Against All Defendants) 43. Plaintiff repeats and re-alleges each and every allegation contained above as if fully set forth herein. 44. During the Class Period, the Company and the Individual Defendants carried out a plan, scheme and course of conduct which was intended to and, throughout the Class Period, did: (i) deceive the investing public, including Plaintiff and other Class members, as alleged herein; and (ii) cause Plaintiff and other members of the Class to purchase Verrica’s securities at artificially inflated prices. In furtherance of this unlawful scheme, plan and course of conduct, the Company and the Individual Defendants, and each of them, took the actions set forth herein. 45. The Company and the Individual Defendants (i) employed devices, schemes, and artifices to defraud; (ii) made untrue statements of material fact and/or omitted to state material facts necessary to make the statements not misleading; and (iii) engaged in acts, practices, and a course of business which operated as a fraud and deceit upon the purchasers of the Company’s securities in an effort to maintain artificially high market prices for Verrica’s securities in violation of Section 10(b) of the Exchange Act and Rule 10b-5. The Company and the Individual Defendants are sued either as primary participants in the wrongful and illegal conduct charged herein or as controlling persons as alleged below. 46. The Company and the Individual Defendants, individually and in concert, directly and indirectly, by the use, means or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a continuous course of conduct to conceal adverse material information about Verrica’s financial well-being and prospects, as specified herein. 47. These defendants employed devices, schemes and artifices to defraud, while in possession of material adverse non-public information and engaged in acts, practices, and a course of conduct as alleged herein in an effort to assure investors of Verrica’s value and performance and continued substantial growth, which included the making of, or the participation in the making of, untrue statements of material facts and/or omitting to state material facts necessary in order to make the statements made about Verrica and its business operations and future prospects in light of the circumstances under which they were made, not misleading, as set forth more particularly herein, and engaged in transactions, practices and a course of business which operated as a fraud and deceit upon the purchasers of the Company’s securities during the Class Period. 48. Each of the Individual Defendants’ primary liability, and controlling person liability, arises from the following facts: (i) the Individual Defendants were high-level executives and/or directors at the Company during the Class Period and members of the Company’s management team or had control thereof; (ii) each of these defendants, by virtue of their responsibilities and activities as a senior officer and/or director of the Company, was privy to and participated in the creation, development and reporting of the Company’s internal budgets, plans, projections and/or reports; (iii) each of these defendants enjoyed significant personal contact and familiarity with the other defendants and was advised of, and had access to, other members of the Company’s management team, internal reports and other data and information about the Company’s finances, operations, and sales at all relevant times; and (iv) each of these defendants was aware of the Company’s dissemination of information to the investing public which they knew and/or recklessly disregarded was materially false and misleading. 49. The Company and the Individual Defendants had actual knowledge of the misrepresentations and/or omissions of material facts set forth herein, or acted with reckless disregard for the truth in that they failed to ascertain and to disclose such facts, even though such facts were available to them. Such defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and for the purpose and effect of concealing Verrica’s financial well-being and prospects from the investing public and supporting the artificially inflated price of its securities. As demonstrated by the Company and the Individual Defendants’ overstatements and/or misstatements of the Company’s business, operations, financial well- being, and prospects throughout the Class Period, these defendants, if they did not have actual knowledge of the misrepresentations and/or omissions alleged, were reckless in failing to obtain such knowledge by deliberately refraining from taking those steps necessary to discover whether those statements were false or misleading. 50. As a result of the dissemination of the materially false and/or misleading information and/or failure to disclose material facts, as set forth above, the market price of Verrica’s securities was artificially inflated during the Class Period. In ignorance of the fact that market prices of the Company’s securities were artificially inflated, and relying directly or indirectly on the false and misleading statements made by the Company and the Individual Defendants, or upon the integrity of the market in which the securities trades, and/or in the absence of material adverse information that was known to or recklessly disregarded by the Company and the Individual Defendants, but not disclosed in public statements by these defendants during the Class Period, Plaintiff and the other members of the Class acquired Verrica’s securities during the Class Period at artificially high prices and were damaged thereby. 51. At the time of said misrepresentations and/or omissions, Plaintiff and other members of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff and the other members of the Class and the marketplace known the truth regarding the problems that Verrica was experiencing, which were not disclosed by the Company and the Individual Defendants, Plaintiff and other members of the Class would not have purchased or otherwise acquired their Verrica securities, or, if they had acquired such securities during the Class Period, they would not have done so at the artificially inflated prices which they paid. 52. By virtue of the foregoing, the Company and the Individual Defendants have violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. 53. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and the other members of the Class suffered damages in connection with their respective purchases and sales of the Company’s securities during the Class Period. SECOND CLAIM Violation of Section 20(a) of the Exchange Act (Against the Individual Defendants) 54. Plaintiff repeats and re-alleges each and every allegation contained above as if fully set forth herein. 55. The Individual Defendants acted as controlling persons of Verrica within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level positions, and their ownership and contractual rights, participation in and/or awareness of the Company’s operations and/or intimate knowledge of the false financial statements filed by the Company with the SEC and disseminated to the investing public, the Individual Defendants had the power to influence and control and did influence and control, directly or indirectly, the decision-making of the Company, including the content and dissemination of the various statements which Plaintiff contends are false and misleading. The Individual Defendants were provided with or had unlimited access to copies of the Company’s reports, press releases, public filings and other statements alleged by Plaintiff to be misleading prior to and/or shortly after these statements were issued and had the ability to prevent the issuance of the statements or cause the statements to be corrected. 56. In particular, each of these Defendants had direct and supervisory involvement in the day-to-day operations of the Company and, therefore, is presumed to have had the power to control or influence the particular transactions giving rise to the securities violations as alleged herein, and exercised the same. 57. As set forth above, Verrica and the Individual Defendants each violated Section 10(b) and Rule 10b-5 by their acts and/or omissions as alleged in this Complaint. By virtue of their positions as controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of the Exchange Act. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and other members of the Class suffered damages in connection with their purchases of the Company’s securities during the Class Period. PRAYER FOR RELIEF WHEREFORE, Plaintiff prays for relief and judgment, as follows: (a) Determining that this action is a proper class action under Rule 23 of the Federal Rules of Civil Procedure; (b) Awarding compensatory damages in favor of Plaintiff and the other Class members against all defendants, jointly and severally, for all damages sustained as a result of Defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon; (c) Awarding Plaintiff and the Class their reasonable costs and expenses incurred in this action, including counsel fees and expert fees; and (d) Such other and further relief as the Court may deem just and proper. JURY TRIAL DEMANDED Plaintiff hereby demands a trial by jury. Dated: July 14, 2020 By: s/ Lee Albert GLANCY PRONGAY & MURRAY LLP Lee Albert (PA ID# 046852) 230 Park Avenue, Suite 530 New York, NY 10169 Telephone: (212) 682-5340 Facsimile: (212) 884-0988 [email protected] GLANCY PRONGAY & MURRAY LLP Robert V. Prongay Charles H. Linehan Pavithra Rajesh 1925 Century Park East, Suite 2100 Los Angeles, CA 90067 Telephone: (310) 201-9150 Facsimile: (310) 201-9160 THE LAW OFFICES OF FRANK R. CRUZ Frank R. Cruz 1999 Avenue of the Stars, Suite 1100 Los Angeles, CA 90067 Telephone: (310) 914-5007 Attorneys for Plaintiff Isaiah Potter VERRICA PHARMACEUTICALS INC. SECURITIES LITIGATION I, Isaiah Potter, certify that: 1. I have reviewed the Complaint and authorize its filing and/or the filing of a Lead Plaintiff motion on my behalf. 2. I did not purchase the Verrica Pharmaceuticals Inc. securities that are the subject of this action at the direction of plaintiff’s counsel or in order to participate in any private action arising under this title. 3. I am willing to serve as a representative party on behalf of a class and will testify at deposition and trial, if necessary. 4. My transactions in Verrica Pharmaceuticals Inc. securities during the Class Period set forth in the Complaint are as follows: (See attached transactions) 5. I have not sought to serve, nor served, as a representative party on behalf of a class under this title during the last three years, except for the following: 6. I will not accept any payment for serving as a representative party, except to receive my pro rata share of any recovery or as ordered or approved by the court, including the award to a representative plaintiff of reasonable costs and expenses (including lost wages) directly relating to the representation of the class. I declare under penalty of perjury that the foregoing are true and correct statements. 7/8/2020 ________________ _________________________________________ Date Isaiah Potter Isaiah Potter's Transactions in Verrica Pharmaceuticals Inc. (VRCA) Date Transaction Type Quantity Unit Price 6/29/2020 Bought 100 $14.8700 6/29/2020 Bought 30 $14.8900 6/29/2020 Sold -60 $10.8700 6/29/2020 Sold -70 $10.6400

securities

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IN THE UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION (AT CINCINNATI) Civil Action No.: 1:17-cv-225 Judge: CLASS ACTION COMPLAINT PHYSICIANS HEALTHSOURCE, INC., individually, and as the representatives of a class of similarly-situated persons, Plaintiff, v. THE MASSACHUSETTS MEDICAL SOCIETY and JOHN DOES 1-5, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) Plaintiff Physicians Healthsource, Inc. (“Physicians Healthsource”) brings this action on behalf of itself and all others similarly situated, through its attorneys, and except as to those allegations pertaining to Physicians Healthsource or its attorneys, which allegations are based upon personal knowledge, alleges the following upon information and belief against Defendant The Massachusetts Medical Society (“MMS”) and John Does 1-5: PRELIMINARY STATEMENT 1. The Telephone Consumer Protection Act (“TCPA”), which was modified and renamed the Junk Fax Prevention Act (“JFPA”) in 2005, is codified at 47 U.S.C. § 227. Under the JFPA, it is unlawful to send an unsolicited advertisement to someone’s fax machine. The JFPA allows private rights of action and provides statutory damages of $500.00 per violation. 2. MMS sent an unsolicited advertisement to Physicians Healthsource on March 13, 2017 (“the 3/13 Fax Ad”). A copy of the 3/13 Fax Ad is attached hereto as Exhibit A. The 3/13 Fax Ad promotes the commercial availability and/or quality of MMS’s goods or services. 3. The receipt of an unsolicited advertisement via facsimile (or “junk fax”) causes damage to the recipient. A junk fax uses the office supplies of the recipient such as paper, toner, and the fax machine itself. A junk fax also ties up the phone line and the fax machine of the recipient, thereby precluding their use for legitimate, authorized facsimiles and other business. Finally, a junk fax wastes the recipient’s time in reviewing and discarding unwanted solicitations. 4. Based on information, belief, and the appearance of the 3/13 Fax Ad itself, MMS also sent the 3/13 Fax Ad to numerous other persons via their respective fax numbers/fax machines. MMS will likely continue to send such advertisements via facsimile absent an injunction or other action prohibiting such conduct. 5. The claims of Physicians Healthsource and the other recipients of the 3/13 Fax Ad are all based on the same legal theory; i.e., violations of the JFPA. This action seeks, among other items of damages, the following relief expressly authorized by the JFPA: (i) an injunction prohibiting MMS (and its employees, agents, representatives, contractors, affiliates, and all persons and entities acting in concert with MMS) from sending more advertisements to Physicians Healthsource via facsimile; (ii) statutory damages, and (iii) treble damages. JURISDICTION AND VENUE 6. This Court has subject matter jurisdiction under 28 U.S.C. § 1331 as the JFPA is a federal statute and, therefore, gives rise to federal question jurisdiction. 7. This Court has personal jurisdiction over MMS because MMS transacted business within this judicial district, made contracts within this judicial district, and/or committed tortious acts within this judicial district. 8. This Court has venue under 28 U.S.C. § 1391 because a substantial part of the events or omissions giving rise to the claim occurred in this district. PARTIES 9. Physicians Healthsource is an Ohio corporation, and it operates a chiropractic clinic located at 3328 Westbourne Drive in Cincinnati, Ohio 45248. 10. MMS is a Massachusetts corporation, and its principal place of business is located at 860 Winter Street, Waltham Woods Corporate Center in Waltham, Massachusetts 02451. 11. MMS produces and sells continuing education materials for the medical industry. 12. John Does 1-10 assisted MMS in its facsimile advertising activities by providing a list of fax numbers, transmitting the 3/13 Fax Ad, providing advice or assistance on the content of the 3/13 Fax Ad, etc. The identity of the John Doe defendants is not presently known but will be identified through discovery. FACTS 13. On March 13, 2017, MMS used a telephone facsimile machine, computer, or other device to send a facsimile (“the 3/13 Fax Ad”) to Physicians Healthsource. A copy of the 3/13 Fax Ad is attached hereto as Exhibit A. 14. The 3/13 Fax Ad touts the commercial availability and quality of NEJM Knowledge+. 15. NEJM Knowledge+ is a product of NEJM Group, which is a division of MMS. 16. On information and belief, MMS receive some or all of the revenues from the sale of NEJM Knowledge+. Likewise, MMS profits and benefits from the sale of NEJM Knowledge+. 17. Physicians Healthsource did not give prior express invitation or permission to MMS to transmit the 3/13 Fax Ad to Physicians Healthsource via its office facsimile machine. 18. On information and belief, MMS faxed the same and other unsolicited facsimiles to Physicians Healthsource and at least forty other recipients or sent the same and other advertisements by fax without first receiving the recipients’ express invitation or permission and/or without having an established business relationship as defined by the JFPA and its regulations. 19. There is no reasonable means for Physicians Healthsource (or any other class member) to avoid receiving unauthorized faxes. Fax machines are left on and ready to receive the communications their owners desire to receive. CLASS ACTION ALLEGATIONS 20. In accordance with Fed. R. Civ. P. 23(b)(1), (b)(2) and (b)(3), Physicians Healthsource brings this class action pursuant to the JFPA on behalf of the following classes of persons: All persons who (1) on or after four years prior to the filing of this action, (2) were sent telephone facsimile messages of material advertising the commercial availability or quality of any property, goods, or services by or on behalf of MMS, (3) from whom MMS did not obtain prior express invitation or permission to send advertisements via facsimile, or (4) with whom MMS did not have an established business relationship, or (5) where the fax advertisements do not include an opt-out notice compliant with 47 C.F.R. § 64.1200(a)(4)(iii). Physicians Healthsource seeks to certify a class that includes but is not limited to the 3/13 Fax Ad and reserves the right to amend the class definition upon completion of class certification discovery. 18. Numerosity: Advertisements, including those transmitted via facsimile, are typically broadcast to hundreds if not thousands of persons. Based on information, belief, and its general appearance, the 3/13 Fax Ad was sent to over forty persons. The joinder of such a large group of persons in a single lawsuit would be impracticable. 19. Commonality: Common questions of law and fact apply to the claims of the putative class members. These include the following: (a) Whether the 3/13 Fax Ad constitutes an “unsolicited advertisement” within the meaning of the JFPA; (b) Whether the opt-out notice on the 3/13 Fax Ad complies with the requirements of the JFPA; (c) Whether MMS violated the JFPA and the regulations promulgated thereunder with regard to the 3/13 Fax Ad; and (d) Whether MMS sent the 3/13 Fax Ad intentionally, knowingly, or willfully. 20. Typicality: Physicians Healthsource claim is typical of the claims of the putative class members. Physicians Healthsource is asserting the same claim under the same federal statute as the other members of the putative class. Physicians Healthsource is also seeking the same relief for itself and the other members of the putative class. 21. Adequacy: Physicians Healthsource will fairly and adequately represent the interests of the putative class members. Physicians Healthsource has no interests in conflict with the putative class members, has the resources and inclination to prosecute this action to completion, and has retained experienced counsel to assist it in doing so. 22. Predominance: The questions of law and fact common to the putative class members predominate over any questions affecting only individual members because: (a) Physicians Healthsource’s claim depends on the same factual and legal issues as that of the putative class members; (b) the evidence supporting MMS’s likely defenses will come solely from MMS’s own records and will not require any information or inquiries from individual class members; (c) the damages for all putative class members are set by statute and will, therefore, be the same for each and every member of the putative class; and (d) the identity of the putative class members can be readily ascertained from MMS or its agents’ computer records, phone records, or other business records. 23. Superiority: A class action would be superior to individual actions by the putative class members for the following reasons: (a) the damages suffered by any one class member are too low to justify a stand-alone lawsuit; (b) the JFPA contains no provision for awarding attorney fees. As such, individual claimants would, as a practical matter, have to proceed pro se against a large, sophisticated defendant; (c) many of the putative class members are legal entities that would not be permitted to proceed in court pro se; and (d) the evidence concerning each of putative class member’s claims is so similar that the adjudication of each on an individual basis would be repetitive, inefficient, and wasteful. VIOLATION OF THE JUNK FAX PREVENTION ACT 24. Under the JFPA, it is “unlawful for any person to . . . use any telephone facsimile machine, computer or other device to send, to a telephone facsimile machine, an unsolicited advertisement . . . .“ 47 U.S.C. 227(b)(1)(C). 25. Under the JFPA, “the term “unsolicited advertisement’ means any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person’s prior express invitation or permission, in writing or otherwise.” 47 U.S.C. § 227(a)(5). 26. Opt-Out Notice Requirements. The JFPA strengthened the prohibitions against the sending of unsolicited advertisements by requiring, in § (b)(1)(C)(iii) of the JFPA, that senders of faxed advertisements place a clear and conspicuous notice on the first page of the transmission that contains the following among other things (hereinafter collectively the “Opt- Out Notice Requirements”): (a) A statement that the recipient is legally entitled to opt-out of receiving future faxed advertisements – knowing that he or she has the legal right to request an opt-out gives impetus for recipients to make such a request, if desired; (b) A statement that the sender must honor a recipient’s opt-out request within 30 days and the sender’s failure to do so is unlawful – thereby encouraging recipients to opt-out, if they did not want future faxes, by advising them that their opt-out requests will have legal “teeth”; (c) A statement advising the recipient that he or she may opt- out with respect to all of his or her facsimile telephone numbers and not just the ones that receive a faxed advertisement from the sender – thereby instructing a recipient on how to make a valid opt-out request for all of his or her fax machines; (d) The opt-out language must be conspicuous. The requirement of (a) above is incorporated from § (b)(D)(ii) of the JFPA. The requirement of (b) above is incorporated from § (b)(D)(ii) of the JFPA and the rules and regulations of the Federal Communications Commission (the “FCC”) in ¶ 31 of its 2006 Report and Order (In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act, Junk Prevention Act of 2005, 21 F.C.C.R. 3787, 2006 WL 901720, which rules and regulations took effect on August 1, 2006). The requirements of (c) above are contained in § (b)(2)(E) of the JFPA and incorporated into the Opt-Out Notice Requirements via § (b)(2)(D)(ii). Compliance with the Opt-Out Notice Requirements is neither difficult nor costly. The Opt-Out Notice Requirements are important consumer protections bestowed by Congress upon the owners of the telephone lines and fax machines giving them the right, and means, to stop unwanted faxed advertisements. 27. The Fax. On March 13, 2017, MMS sent an advertisement via facsimile transmission from telephone facsimile machines, computers, or other devices to the telephone lines and facsimile machines of Physicians Healthsource and members of the proposed class. These faxes constituted advertisements under the JFPA. MMS failed to comply with the Opt- Out Requirements in connection with these faxes. These faxes were transmitted to persons or entities without their prior express invitation or permission. By virtue thereof, MMS violated the JFPA and the regulations promulgated thereunder by sending these faxes via facsimile transmission to Physicians Healthsource and members of the Class. Physicians Healthsource seeks to certify a class which includes these faxes and all others sent during the four years prior to the filing of this case through the present. 28. MMS’ Other Violations. Physicians Healthsource is informed and believes, and upon such information and belief avers, that during the period preceding four years of the filing of this Complaint and repeatedly thereafter, MMS has sent via facsimile transmission from telephone facsimile machines, computers, or other devices to telephone facsimile machines of members of the proposed class other faxes that constitute advertisements under the JFPA that were transmitted to persons or entities without their prior express invitation or permission. By virtue thereof, MMS violated the JFPA. Physicians Healthsource is informed and believes, and upon such information and belief avers, that MMS may be continuing to send unsolicited advertisements via facsimile transmission in violation of the JFPA and the regulations promulgated thereunder, and absent intervention by this Court, will do so in the future. 29. The JFPA provides a private right of action to bring this action on behalf of Physicians Healthsource and the proposed class to redress MMS’ violations of the JFPA. The JFPA also provides for statutory damages. 47 U.S.C. § 227(b)(3). The JFPA also provides for injunctive relief. Id. 30. The JFPA is a strict liability statute, so MMS are liable to Physicians Healthsource and the other class members even if their actions were only negligent. 31. The MMS knew or should have known that (a) Physicians Healthsource and the other class members had not given prior express invitation or permission for MMS or anybody else to fax advertisements about MMS’ products, goods, or services; (b) Physicians Healthsource and the other class members did not have an established business relationship with MMS; (c) MMS transmitted advertisements; (d) MMS’ faxes did not contain the required Opt-Out Notice; and (e) MMS’ transmission of advertisements that did not contain the required opt-out notice or were sent without prior express invitation or permission was unlawful. 32. MMS’ actions caused damage to Physicians Healthsource and the other class members. Receiving MMS’ junk faxes caused Physicians Healthsource and the other recipients to lose paper and toner consumed in the printing of these faxes. Moreover, MMS faxes used Physicians Healthsource’s and the other class members’ telephone lines and fax machines. MMS’ faxes cost Physicians Healthsource and the other class members time, as Physicians Healthsource and the other class members and their employees wasted their time receiving, reviewing, and routing MMS’ unauthorized faxes. That time otherwise would have been spent on Physicians Healthsource's and the other class members’ business activities. MMS’ faxes unlawfully interrupted Physicians Healthsource's and other class members’ privacy interests in being left alone. WHEREFORE, Plaintiff Physicians Healthsource, Inc., individually and on behalf of all others similarly situated, demands judgment in its favor and against Defendant The Massachusetts Medical Society and John Does 1-5 as follows: (1) that the Court adjudge and decree that the present case may be properly maintained as a class action, appoint Physicians Healthsource as the representative of the class, and appoint Physicians Healthsource’s counsel as counsel for the class; (2) that the Court award actual or statutory damages to Physicians Healthsource and the other class members for each violation of the JFPA by MMS; (3) that the Court enjoin MMS from additional violations of the JFPA; and (4) that the Court award pre-judgment interest, post-judgment interest, attorney fees, treble damages, costs, and such other relief as may be just and proper. Respectfully submitted, PHYSICIANS HEALTHSOURCE, INC., individually and as the representative of a class of similarly-situated persons, /s/ Matthew E. Stubbs GEORGE D. JONSON (0027124) MATTHEW E. STUBBS (0066722) MONTGOMERY, RENNIE & JONSON 36 E. Seventh Street, Suite 2100 Cincinnati, Ohio 45202 (513) 241-4722 (513) 241-8775 (fax) Email: [email protected] [email protected] Counsel for Physicians Healthsource, Inc.

privacy

lfoNFIcBD5gMZwczzR33

DAPEER ROSENBLIT LITVAK, LLP William Litvak, Esq. (CA Bar No. 90533) 11500 W. Olympic Blvd. Suite 550 Los Angeles, California 90064 T: (310) 477-5575 F: (310) 477-7090 E: [email protected] IJH LAW Ignacio J. Hiraldo, Esq. (pro hac vice forthcoming) FL Bar No. 0056031 1200 Brickell Avenue, Suite 1950 Miami, FL 33131 T: 786-496-4469 E: [email protected] SHAMIS & GENTILE, P.A. Mariam Grigorian, Esq. (pro hac vice forthcoming) FL Bar No. 1010510 14 NE 1st Avenue, Suite 400 Miami, Florida 33132 T: 305-479-2299 E: [email protected] Counsel for Plaintiff and Proposed Class UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA No. KELLI ROTH, individually and on behalf of all others similarly situated, Plaintiff, v. PTGMB LLC D/B/A MERCEDES-BENZ OF FRESNO, a California limited liability company, CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT, 47 U.S.C. §§ 227, ET SEQ. (TCPA) JURY TRIAL DEMANDED Defendant. CLASS ACTION COMPLAINT 1. Plaintiff, Kelli Roth, brings this action against Defendant, PTGMB LLC d/b/a Mercedes-Benz Of Fresno, to secure redress for violations of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. NATURE OF THE ACTION 2. This is a putative class action pursuant to the Telephone Consumer Protection Act, 47 U.S.C. §§ 227, et seq. (the “TCPA”). 3. Defendant is a Mercedes-Benz dealership that sells vehicles for individuals and businesses. To promote its services, Defendant engages in aggressive unsolicited marketing, harming thousands of consumers in the process. 4. Through this action, Plaintiff seeks injunctive relief to halt Defendant’s illegal conduct, which has resulted in the invasion of privacy, harassment, aggravation, and disruption of the daily life of thousands of individuals. Plaintiff also seeks statutory damages on behalf of herself and members of the Class, and any other available legal or equitable remedies. JURISDICTION AND VENUE 5. This Court has federal question subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331, as the action arises under the Telephone Consumer Protection Act, 47 U.S.C. §§ 227, et seq. (“TCPA”). 6. The Court has personal jurisdiction over Defendant and venue is proper in this District because Defendant directs, markets, and provides its business activities to this District, and because Defendant’s unauthorized marketing scheme was directed by Defendant to consumers in this District, including Plaintiff. PARTIES 7. Plaintiff is a natural person who, at all times relevant to this action, was a resident of Fresno County, California. 8. Defendant is a California limited liability company whose principal office is located at 7055 North Palm Avenue, Fresno CA 93650. Defendant directs, markets, and provides its business activities throughout the United States, including throughout the state of California. 9. Unless otherwise indicated, the use of Defendant’s name in this Complaint includes all agents, employees, officers, members, directors, heirs, successors, assigns, principals, trustees, sureties, subrogees, representatives, vendors, and insurers of Defendant. THE TCPA 10. The TCPA prohibits: (1) any person from calling a cellular telephone number; (2) using an automatic telephone dialing system; (3) without the recipient’s prior express consent. 47 U.S.C. § 227(b)(1)(A). 11. The TCPA defines an “automatic telephone dialing system” (“ATDS”) as “equipment that has the capacity - (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” 47 U.S.C. § 227(a)(1). 12. In an action under the TCPA, a plaintiff must only show that the defendant “called a number assigned to a cellular telephone service using an automatic dialing system or prerecorded voice.” Breslow v. Wells Fargo Bank, N.A., 857 F. Supp. 2d 1316, 1319 (S.D. Fla. 2012), aff'd, 755 F.3d 1265 (11th Cir. 2014). 13. The Federal Communications Commission (“FCC”) is empowered to issue rules and regulations implementing the TCPA. According to the FCC’s findings, calls in violation of the TCPA are prohibited because, as Congress found, automated or prerecorded telephone calls are a greater nuisance and invasion of privacy than live solicitation calls, and such calls can be costly and inconvenient. The FCC also recognized that wireless customers are charged for incoming calls whether they pay in advance or after the minutes are used. Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Report and Order, 18 FCC Rcd 14014 (2003). 14. In 2012, the FCC issued an order tightening the restrictions for automated telemarketing calls, requiring “prior express written consent” for such calls to wireless numbers. See In the Matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 27 F.C.C.R. 1830, 1838 ¶ 20 (Feb. 15, 2012) (emphasis supplied). 15. To obtain express written consent for telemarketing calls, a defendant must establish that it secured the plaintiff’s signature in a form that gives the plaintiff a “‘clear and conspicuous disclosure’ of the consequences of providing the requested consent….and having received this information, agrees unambiguously to receive such calls at a telephone number the [plaintiff] designates.” In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 27 F.C.C.R. 1830, 1837 ¶ 18, 1838 ¶ 20, 1844 ¶ 33, 1857 ¶ 66, 1858 ¶ 71 (F.C.C. Feb. 15, 2012). 16. The TCPA regulations promulgated by the FCC define “telemarketing” as “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services.” 47 C.F.R. § 64.1200(f)(12). In determining whether a communication constitutes telemarketing, a court must evaluate the ultimate purpose of the communication. See Golan v. Veritas Entm't, LLC, 788 F.3d 814, 820 (8th Cir. 2015). 17. “Neither the TCPA nor its implementing regulations ‘require an explicit mention of a good, product, or service’ where the implication of an improper purpose is ‘clear from the context.’” Id. (citing Chesbro v. Best Buy Stores, L.P., 705 F.3d 913, 918 (9th Cir. 2012)). 18. “‘Telemarketing’ occurs when the context of a call indicates that it was initiated and transmitted to a person for the purpose of promoting property, goods, or services.” Golan, 788 F.3d at 820 (citing 47 C.F.R. § 64.1200(a)(2)(iii); 47 C.F.R. § 64.1200(f)(12); In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 F.C.C. Rcd at 14098 ¶ 141, 2003 WL 21517853, at *49). 19. The FCC has explained that calls motivated in part by the intent to sell property, goods, or services are considered telemarketing under the TCPA. See In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 FCC Rcd. 14014, ¶¶ 139-142 (2003). This is true whether call recipients are encouraged to purchase, rent, or invest in property, goods, or services during the call or in the future. Id. 20. In other words, offers “that are part of an overall marketing campaign to sell property, goods, or services constitute” telemarketing under the TCPA. See In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 FCC Rcd. 14014, ¶ 136 (2003). 21. If a call is not deemed telemarketing, a defendant must nevertheless demonstrate that it obtained the plaintiff’s prior express consent. See In the Matter of Rules and Regulations Implementing the Tel. Consumer Prot. Act of 1991, 30 FCC Rcd. 7961, 7991-92 (2015) (requiring express consent “for non-telemarketing and non-advertising calls”). 22. As recently held by the United States Court of Appeals for the Ninth Circuit: “Unsolicited telemarketing phone calls or text messages, by their nature, invade the privacy and disturb the solitude of their recipients. A plaintiff alleging a violation under the TCPA ‘need not allege any additional harm beyond the one Congress has identified.’” Van Patten v. Vertical Fitness Grp., No. 14-55980, 2017 U.S. App. LEXIS 1591, at *12 (9th Cir. May 4, 2016) (quoting Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016) (emphasis original)). FACTUAL ALLEGATIONS 23. Beginning on or about August 6, 2019, Defendant caused multiple calls with prerecorded messages to be transmitted to Plaintiff’s cellular telephone number ending in 8410 (the “8410 Number”): 24. Because Plaintiff did not answer her telephone after it rang, voicemails containing prerecorded messages were left on Plaintiff’s phone. 25. The following are transcripts of the voicemails that were left in Plaintiff’s voicemail box: Hey this is Rebecca. I’m the customer relations supervisor at Mercedes-Benz of Fresno. I’m giving you a call today because we’re in need of vehicles for our pre- owned inventory. Regardless of your year, make, model or mileage I’m interested in your vehicle and will give you an all cash offer. If you’re thinking about upgrading I’ve got some huge discounts to help you get into a newer vechile as well. Please give me a call back at this number to review your all cash offer for your current vehicle or to discuss your upgrade options to get into a newer vehicle. Again this is Rebecca, I’m the customer relations supervisor at Mercedes-Benz of Fresno. Thank you for your time and I look forward to speaking with you soon. Have a great day. Hey this is Rebecca. I’m the client care manager at Mercedes-Benz of Fresno. I’m giving you a call today because our records indicate you’re driving an exact make and model we really need for our pre-owned inventory. I wanted to see if we could buy it back from your for an all cash offer or offer you a vehicle upgrade to get into something newer. Right now you’re eligible for a Mercedes upgrade bonus cash and we’ve got some huge discounts to help you get into a newer vehicle. There’s never been a better time to upgrade but this offer is only for a limited time. Please give me a call back at this number to schedule an appointment to review your all cash offer for your current vehicle or to discuss your upgrade options to get into a newer vehicle. Again this is Rebecca, I’m the client care manager at Mercedes-Benz of Fresno. Thank you for your time and I look forward to speaking with you soon. Have a great day. 26. The prerecorded calls at issue, which were left as voicemails, were transmitted to Plaintiff’s cellular telephone, and within the time frame relevant to this action. 27. When Plaintiff listened to the voicemails, she was easily able to determine that they were prerecorded messages. Rahn v. Bank of Am., No. 1:15-CV-4485-ODE-JSA, 2016 U.S. Dist. LEXIS 186171, at *10-11 (N.D. Ga. June 23, 2016) (“When one receives a call, it is a clear- cut fact, easily discernible to any lay person, whether or not the recipient is speaking to a live human being, or is instead being subjected to a prerecorded message.”). 28. Defendant’s prerecorded calls constitute telemarketing because they encourage the future purchase or investment in property, goods, and/or services, i.e., selling Plaintiff an automobile. 29. The prerecorded calls Plaintiff received originated from a telephone number owned and/or operated by or on behalf of Defendant. 30. Plaintiff received the subject calls with a prerecorded voice within this judicial district and, therefore, Defendant’s violation of the TCPA occurred within this district. Upon information and belief, Defendant caused other prerecorded messages to be sent to individuals residing within this judicial district. 31. At no point in time did Plaintiff provide Defendant with her express consent to be contacted with a prerecorded call. 32. Plaintiff is the subscriber and sole user of the 8410 Number and is financially responsible for phone service to the 8410 Number. 33. Defendant’s prerecorded calls were sent to a cellular telephone with a 559 area code, which means Defendant knew, or should have known, that it was making calls into this District. The 559 area code serves the counties of Fresno, Madera, Kings, and Tulare—an area largely coextensive with the Fresno and Visalia-Porterville metropolitan areas. 34. Defendant’s prerecorded calls caused Plaintiff actual harm, including invasion of her privacy, aggravation, annoyance, intrusion on seclusion, trespass, and conversion. Defendant’s prerecorded calls also inconvenienced Plaintiff and caused disruption to her daily life. 35. Defendant’s prerecorded calls caused Plaintiff actual harm. Specifically, Plaintiff estimates that she spent approximately fifteen minutes investigating the unwanted prerecorded calls including how they obtained her number and who the Defendant was. CLASS ALLEGATIONS PROPOSED CLASS 36. Plaintiff brings this case as a class action pursuant to Fed. R. Civ. P. 23, on behalf of herself and all others similarly situated. 37. Plaintiff brings this case on behalf of the Class defined as follows: All persons in the United States who, within four years prior to the filing of this Complaint, were sent a prerecorded message, from Defendant or anyone on Defendant’s behalf, to said person’s cellular telephone number, without emergency purpose and without the recipient’s prior express written consent. 38. Defendant and its employees or agents are excluded from the Class. Plaintiff does not know the number of members in the Class but believes the Class members number in the several thousands, if not more. NUMEROSITY 39. Upon information and belief, Defendant has placed automated calls to cellular telephone numbers belonging to thousands of consumers throughout the United States without their prior express consent. The members of the Class, therefore, are believed to be so numerous that joinder of all members is impracticable. 40. The exact number and identities of the members of the Class are unknown at this time and can only be ascertained through discovery. Identification of the Class members is a matter capable of ministerial determination from Defendant’s call records. COMMON QUESTIONS OF LAW AND FACT 41. There are numerous questions of law and fact common to members of the Class which predominate over any questions affecting only individual members of the Class. Among the questions of law and fact common to the members of the Class are: a) Whether Defendant made non-emergency calls to Plaintiff’s and Class members’ cellular telephones using an ATDS; b) Whether Defendant can meet its burden of showing that it obtained prior express written consent to make such calls; c) Whether Defendant’s conduct was knowing and willful; d) Whether Defendant is liable for damages, and the amount of such damages; and e) Whether Defendant should be enjoined from such conduct in the future. 42. The common questions in this case are capable of having common answers. If Plaintiff’s claim that Defendant routinely transmits prerecorded calls to telephone numbers assigned to cellular telephone services is accurate, Plaintiff and the Class members will have identical claims capable of being efficiently adjudicated and administered in this case. TYPICALITY 43. Plaintiff’s claims are typical of the claims of the Class members, as they are all based on the same factual and legal theories. PROTECTING THE INTERESTS OF THE CLASS MEMBERS 44. Plaintiff is a representative who will fully and adequately assert and protect the interests of the Class, and has retained competent counsel. Accordingly, Plaintiff is an adequate representative and will fairly and adequately protect the interests of the Class. PROCEEDING VIA CLASS ACTION IS SUPERIOR AND ADVISABLE 45. A class action is superior to all other available methods for the fair and efficient adjudication of this lawsuit, because individual litigation of the claims of all members of the Class is economically unfeasible and procedurally impracticable. While the aggregate damages sustained by the Class are in the millions of dollars, the individual damages incurred by each member of the Class resulting from Defendant’s wrongful conduct are too small to warrant the expense of individual lawsuits. The likelihood of individual Class members prosecuting their own separate claims is remote, and, even if every member of the Class could afford individual litigation, the court system would be unduly burdened by individual litigation of such cases. 46. The prosecution of separate actions by members of the Class would create a risk of establishing inconsistent rulings and/or incompatible standards of conduct for Defendant. For example, one court might enjoin Defendant from performing the challenged acts, whereas another may not. Additionally, individual actions may be dispositive of the interests of the Class, although certain class members are not parties to such actions. COUNT I Violations of the TCPA, 47 U.S.C. § 227(b) (On Behalf of Plaintiff and the Class) 47. Plaintiff re-alleges and incorporates the foregoing allegations as if fully set forth herein. 48. It is a violation of the TCPA to make “any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system … to any telephone number assigned to a … cellular telephone service ….” 47 U.S.C. § 227(b)(1)(A)(iii). 49. Defendant – or third parties directed by Defendant – transmitted calls using an artificial or prerecorded voice to the cellular telephone numbers of Plaintiff and members of the putative class. 50. These calls were made without regard to whether or not Defendant had first obtained express permission from the called party to make such calls. In fact, Defendant did not have prior express consent to call the cell phones of Plaintiff and the other members of the putative Class when its calls were made. 51. Defendant has, therefore, violated § 227(b)(1)(A)(iii) of the TCPA by using an artificial or prerecorded voice to make non-emergency telephone calls to the cell phones of Plaintiff and the other members of the putative Class without their prior express consent. 52. Defendant knew that it did not have prior express consent to make these calls, and knew or should have known that it was using equipment that at constituted an automatic telephone dialing system. The violations were therefore willful or knowing. 53. As a result of Defendant’s conduct and pursuant to § 227(b)(3) of the TCPA, Plaintiff and the other members of the putative Class were harmed and are each entitled to a minimum of $500.00 in damages for each violation. Plaintiff and the members of the Class are also entitled to an injunction against future calls. Id. COUNT II Knowing and/or Willful Violation of the TCPA, 47 U.S.C. § 227(b) (On Behalf of Plaintiff and the Class) 54. Plaintiff re-alleges and incorporates the foregoing allegations as if fully set forth herein. 55. At all times relevant, Defendant knew or should have known that its conduct as alleged herein violated the TCPA. 56. Defendant knew that it did not have prior express consent to make these calls, and knew or should have known that its conduct was a violation of the TCPA. 57. Because Defendant knew or should have known that Plaintiff and Class Members had not given prior express consent to receive its autodialed calls, the Court should treble the amount of statutory damages available to Plaintiff and the other members of the putative Class pursuant to § 227(b)(3) of the TCPA. 58. As a result of Defendant’s violations, Plaintiff and the Class Members are entitled to an award of $1,500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B) and 47 U.S.C. § 227(b)(3)(C). PRAYER FOR RELIEF WHEREFORE, Plaintiff, individually and on behalf of the Class, prays for the following relief: a. A declaration that Defendant’s practices described herein violate the Telephone Consumer Protection Act, 47 U.S.C. § 227; b. An injunction prohibiting Defendant from using an artificial or prerecorded voice to contact telephone numbers assigned to cellular telephones without the prior express permission of the called party; c. An award of actual and statutory damages; and d. Such further and other relief the Court deems reasonable and just. JURY DEMAND Plaintiff hereby demand a trial by jury. Dated: February 11, 2020 Respectfully submitted, By: /s/ William Litvak, Esquire William Litvak DAPEER ROSENBLIT LITVAK, LLP CA Bar No. 90533 11500 W. Olympic Blvd. Suite 550 Los Angeles, California 90064 T: (310) 477-5575 E: [email protected] Ignacio J. Hiraldo, Esq. (pro hac vice forthcoming) IJH LAW Florida Bar No. 0056031 1200 Brickell Avenue, Suite 1950 Miami, FL 33131 T: 786-496-4469 E: [email protected] Mariam Grigorian, Esq. (pro hac vice forthcoming) SHAMIS & GENTILE, P.A. FL Bar No. 1010510 14 NE 1st Avenue, Suite 1205 Miami, FL 33132 T: 305-479-2299 E: [email protected] Counsel for Plaintiff and the Proposed Class

privacy

SOoOEocBD5gMZwczZwwh

BLUMENTHAL, NORDREHAUG & BHOWMIK Norman B. Blumenthal (State Bar #068687) Kyle R. Nordrehaug (State Bar #205975) Aparajit Bhowmik (State Bar #248066) 2255 Calle Clara La Jolla, CA 92037 Telephone: (858)551-1223 Facsimile: (858) 551-1232 Email: [email protected] Website: www.bamlawca.com Attorneys for Plaintiff UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA '15CV0565 WVG BEN Case No. _______________________ MATTHEW EASTERBROOK, an individual, on behalf of himself, and on behalf of all persons similarly situated, CLASS ACTION COMPLAINT FOR: Plaintiff, vs. 1. VIOLATION OF THE FAIR CREDIT REPORTING ACT FOR FAILURE TO MAKE PROPER DISCLOSURES [15 U.S.C. § 1681, et seq.]; and, INTER-CON SECURITY SYSTEMS, INC., a California Corporation, 2. VIOLATION OF THE FAIR CREDIT REPORTING ACT FOR FAILURE TO OBTAIN PROPER AUTHORIZATION [15 U.S.C. § 1681, et seq.]. Defendant. DEMAND FOR A JURY TRIAL Plaintiff Matthew Easterbrook ("PLAINTIFF"), on behalf of himself and all others similarly situated, alleges on information and belief, except for his own acts and knowledge, the following: THE PARTIES 1. Defendant Inter-Con Security Systems, Inc. (“INTER-CON” or “DEFENDANT”) at all relevant times mentioned herein conducted and continues to conduct substantial and regular business throughout California. 2. Inter-Con Security Systems Inc. is a security company that provides physical security services to government, commercial, and Fortune 100 customers in the United States and internationally. Its services include security personnel, security management, security program design and development, training of security personnel, security program management and administration, security data development and analysis, classified information safeguarding, investigations, and representation of clients before regulatory authorities. Inter-Con Security Systems Inc. was founded in 1973 and is headquartered in Pasadena, California. 3. Plaintiff Matthew Easterbrook has been employed by INTER-CON in California since June of 2012. Plaintiff applied for work at in the summer of 2012. In connection with his employment application, PLAINTIFF completed INTER-CON’s standard application materials. Among other things, these application materials included a background investigation information and consent form. 4. During the application process PLAINTIFF executed the background check disclosure and release authorization form permitting INTER-CON to obtain a consumer report, which form included, among other things, a liability release provision. 5. PLAINTIFF brings this Class Action on behalf of himself and a nationwide class, defined as all employees or prospective employees of DEFENDANT in the United States who were the subject of a consumer report that was used by DEFENDANT and who executed DEFENDANT’s standard FCRA disclosure form that included a liability release clause (the “CLASS”) at any time during the period beginning five (5) years prior to the filing of this Complaint and ending on the date as determined by the Court (the “CLASS PERIOD”). NATURE OF THE ACTION 6. The Fair Credit Reporting Act 15 U.S.C. § 1681, et seq. (“FCRA”) provides individuals with a number of rights. Specifically, pertaining to employment-related background checks, the FCRA provides that a prospective employee must give valid consent to the background check. The FCRA requires a signed authorization and disclosure from the applicant, sometimes referred to as a “consent” form. The authorization and disclosure form most be executed and signed by the applicant prior to an employer requesting or conducting a background check. Importantly, no extraneous information can be attached or included on the consent form. The authorization and disclosure must stand alone. 7. In violation of 15 U.S.C. § 1681b(b)(2)(A)(I), DEFENDANT has unlawfully inserted a liability release provision into forms purporting to grant DEFENDANT the authority to obtain and use consumer report information for employment purposes. The FCRA prohibits this practice and requires that forms granting the authority to access and use consumer report information for employment purposes be stand alone forms, and not include any additional information or agreements. DEFENDANT’s decision to include liability release provisions in its authorization forms is contrary to the plain language of the statute and unambiguous regulatory guidance from the Federal Trade Commission (“FTC”). See Exhibit #1 and incorporated by this reference herein (“The inclusion of such a [liability] waiver in a disclosure form will violate . . . the FCRA, which requires that a disclosure consist ‘solely’ of the disclosure that a consumer report may be obtained for employment purposes.” 8. In violation of 15 U.S.C. § 1681b(b)(2)(A)(ii) DEFENDANT has obtained consumer reports without proper authorization because the authorization and disclosure form signed by PLAINTIFF failed to comply with the requirements of the FCRA. The inclusion of the liability release clause and release of claims provision in DEFENDANT’s authorization forms invalidates the purported consent and also triggers statutory damages under the FCRA in the amount of up to $1,000 for each applicant that DEFENDANT obtained a consumer report without a facially valid authorization, as well as punitive damages, equitable relief, and attorneys’ fees and costs. FACTUAL ALLEGATIONS 9. PLAINTIFF sought employment with DEFENDANT in the summer of 2012. In connection with his employment application, PLAINTIFF completed DEFENDANT’s standard application materials. These application materials included a background check disclosure and authorization form and included on the form was extraneous information, including but not limited to, a liability release clause and a provision purporting to a release of all of PLAINTIFF’s claims. Following his submission of the employment application materials DEFENDANT conducted a background check on PLAINTIFF and PLAINTIFF was hired to work for DEFENDANT as a security guard. 10. The background check disclosure and authorization form disclosed that DEFENDANT intended to conduct a background investigation on the applicant that would involve investigating the applicant’s work record, references and education. The background check disclosure and authorization form also included a liability release provision. 11. The inclusion of this liability release provision in the background check disclosure and authorization form violates the FCRA, 15 U.S.C. § 1681, et seq. 12. Under the FCRA, it is unlawful to procure a consumer report or cause a consumer report to be procured for employment purposes, unless: (i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and (ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause(I)) the procurement of the report. 15 U.S.C. §§ 1681b(b)(2)(A)(I)-(ii) (emphasis added). 13. After PLAINTIFF executed the background check disclosure and authorization form in the summer of 2012, DEFENDANT obtained a consumer report on the PLAINTIFF notwithstanding the fact that the background check disclosure and authorization form was invalid under the requirements of the FCRA. 14. Although the disclosure required by clause (i) and the authorization required by clause (ii) may be combined in a single document, the FTC has warned that “the form should not include any extraneous information.” See Exhibit #1. Further, the FTC has also specifically warned that “[t]he inclusion of such a waiver in a disclosure form will violate Section 604(b)(2)(A) of the FCRA [15 U.S.C. §§ 1681b(b)(2)(A)], which requires that a disclosure consist ‘solely’ of the disclosure that a consumer report may be obtained for employment purposes.” 15. By including a liability release clause in its background check disclosure and authorization form, DEFENDANT willfully disregarded the FTC’s regulatory guidance and violated 15 U.S.C. §§ 1681b(b)(2)(A). THE CLASS 16. PLAINTIFF brings the First and Second Cause of Action pursuant to Fed. R. Civ. Proc. 23(b)(2) and/or (3), on behalf of a nationwide Class, defined as all employees or prospective employees of DEFENDANT in the United States who were the subject of a consumer report that was used by DEFENDANT and who executed DEFENDANT’s standard FCRA disclosure form that included a liability release clause (the “CLASS”) at any time during the period beginning five (5) years prior to the filing of this Complaint and ending on the date as determined by the Court (the “CLASS PERIOD”). 17. To the extent equitable tolling operates to toll claims by the CLASS against DEFENDANT, the CLASS PERIOD should be adjusted accordingly. 18. DEFENDANT, as a matter of corporate policy, practice and procedure, and in violation of The Fair Credit Reporting Act 15 U.S.C. § 1681, et seq., intentionally, knowingly, and wilfully, engaged in a practice whereby DEFENDANT uniformly, unfairly, unlawfully, and deceptively instituted a practice of obtaining consumer reports without valid authorization to do so. 19. The CLASS is so numerous that joinder of all CLASS Members is impracticable. 20. DEFENDANT uniformly violated the rights of the CLASS by: (a) Violating The Fair Credit Reporting Act 15 U.S.C. § 1681, et seq., by unlawfully, unfairly and/or deceptively having in place company policies, practices and procedures that uniformly obtained credit reports on prospective employees without first obtaining valid authorization consent forms. 21. Common questions of law and fact exist as to members of the CLASS, including, but not limited, to the following: (a) Whether DEFENDANT required the CLASS Members to sign an background check disclosure and authorization form; (b) Whether DEFENDANT’s background check disclosure and authorization form complies with the Fair Credit Reporting Act 15 U.S.C. § 1681, et seq. (“FCRA”); (c) Whether DEFENDANT violated the FCRA by including a liability release in its background check disclosure and authorization form; (d) Whether DEFENDANT violated the FCRA by including a waiver of all rights clause in its background check disclosure and authorization form; (e) Whether DEFENDANT violated the FCRA by procuring consumer report information based on invalid authorizations; (f) Whether DEFENDANT’s violations of the FCRA were willful; (g) The proper measure of statutory damages and punitive damages; and, (h) The proper form of injunctive and declaratory relief. 22. This Class Action meets the statutory prerequisites for the maintenance of a Class Action as set forth in Fed. R. Civ. Proc. 23(b)(2) and/or (3), in that: (a) The persons who comprise the CLASS are so numerous that the joinder of all such persons is impracticable and the disposition of their claims as a class will benefit the parties and the Court; (b) Nearly all factual, legal, statutory, and declaratory relief issues that are raised in this Complaint are common to the CLASS will apply uniformly to every member of the CLASS; (c) The claims of the representative PLAINTIFF are typical of the claims of each member of the CLASS. PLAINTIFF, like all the other members of the CLASS, had a credit report obtained on his behalf by DEFENDANT prior to obtaining valid authorization to do so in violation of the FCRA as described herein. PLAINTIFF and the members of the CLASS were and are similarly or identically harmed by the same unlawful, deceptive, unfair and pervasive pattern of misconduct engaged in by DEFENDANT; and, (d) The representative PLAINTIFF will fairly and adequately represent and protect the interest of the CLASS, and has retained counsel who are competent and experienced in Class Action litigation. There are no material conflicts between the claims of the representative PLAINTIFF and the members of the CLASS that would make class certification inappropriate. Counsel for the CLASS will vigorously assert the claims of all employees in the CLASS. 23. In addition to meeting the statutory prerequisites to a Class Action, this Action is properly maintained as a Class Action pursuant to Fed. R. Civ. Proc. 23(b)(2) and/or (3), in that: (a) Without class certification and determination of declaratory, statutory and other legal questions within the class format, prosecution of separate actions by individual members of the CLASS will create the risk of: 1) Inconsistent or varying adjudications with respect to individual members of the CLASS which would establish incompatible standards of conduct for the parties opposing the CLASS; and/or, 2) Adjudication with respect to individual members of the CLASS which would as a practical matter be dispositive of interests of the other members not party to the adjudication or substantially impair or impede their ability to protect their interests. (b) The parties opposing the CLASS have acted or refused to act on grounds generally applicable to the CLASS, making appropriate class-wide relief with respect to the CLASS as a whole; (c) Common questions of law and fact exist as to the members of the CLASS, with respect to the practices and violations of the FCRA as listed above, and predominate over any question affecting only individual CLASS Members, and a Class Action is superior to other available methods for the fair and efficient adjudication of the controversy, including consideration of: 1) The interests of the members of the CLASS in individually controlling the prosecution or defense of separate actions in that the substantial expense of individual actions will be avoided to recover the relatively small amount of economic losses sustained by the individual CLASS Members when compared to the substantial expense and burden of individual prosecution of this litigation; 2) Class certification will obviate the need for unduly duplicative litigation that would create the risk of: A. Inconsistent or varying adjudications with respect to individual members of the CLASS, which would establish incompatible standards of conduct for DEFENDANT; and/or, B. Adjudications with respect to individual members of the CLASS would as a practical matter be dispositive of the interests of the other members not parties to the adjudication or substantially impair or impede their ability to protect their interests; 3) In the context of employment litigation because as a practical matter a substantial number of individual CLASS Members will avoid asserting their legal rights out of fear of retaliation by DEFENDANT, which may adversely affect an individual’s job with DEFENDANT or with a subsequent employer, the Class Action is the only means to assert their claims through a representative; and, 4) A Class Action is superior to other available methods for the fair and efficient adjudication of this litigation because class treatment will obviate the need for unduly and unnecessary duplicative litigation that is likely to result in the absence of certification of this Action pursuant to Fed. R. Civ. Proc. 23(b)(2) and/or (3). 24. This Court should permit this Action to be maintained as a Class Action pursuant to Fed. R. Civ. Proc. 23(b)(2) and/or (3), because: (a) The questions of law and fact common to the CLASS predominate over any question affecting only individual CLASS Members because DEFENDANT’s employment practices were uniform and systematically applied with respect to the CLASS; (b) A Class Action is superior to any other available method for the fair and efficient adjudication of the claims of the members of the CLASS because in the context of employment litigation a substantial number of individual CLASS Members will avoid asserting their rights individually out of fear of retaliation or adverse impact on their employment; (c) The members of the CLASS are so numerous that it is impractical to bring all members of the CLASS before the Court; (d) PLAINTIFF, and the other CLASS Members, will not be able to obtain effective and economic legal redress unless the action is maintained as a Class Action; (e) There is a community of interest in obtaining appropriate legal and equitable relief for the acts of statutory violations and other improprieties, and in obtaining adequate compensation for the injuries which DEFENDANT’s actions have inflicted upon the CLASS; (f) There is a community of interest in ensuring that the combined assets of DEFENDANT are sufficient to adequately compensate the members of the CLASS for the injuries sustained; (g) DEFENDANT has acted or refused to act on grounds generally applicable to the CLASS, thereby making final class-wide relief appropriate with respect to the CLASS as a whole; (h) The members of the CLASS are readily ascertainable from the business records of DEFENDANT. The CLASS consists of all employees or prospective employees of DEFENDANT in the United States who completed DEFENDANT’s background check disclosure and authorization forms that included a liability release allowing DEFENDANT to obtain a consumer report during the CLASS PERIOD; and, (i) Class treatment provides manageable judicial treatment calculated to bring an efficient and rapid conclusion to all litigation of all FCRA claims arising out of the conduct of DEFENDANT as to the members of the CLASS. 25. DEFENDANT maintains records from which the Court can ascertain and identify by name and job title, each of DEFENDANT’s employees who have been systematically, intentionally and uniformly subjected to DEFENDANT’s corporate policy, practices and procedures as herein alleged. PLAINTIFF will seek leave to amend the Complaint to include any additional job titles of similarly situated employees when they have been identified. JURISDICTION AND VENUE 26. This Court has jurisdiction over the PLAINTIFF’s federal claims pursuant to 28 U.S.C. § 1331(a) and 15 U.S.C. 1681p of the FCRA, codified at 15 U.S.C. § 1681, et seq. 27. Venue is proper in this District pursuant to 28 U.S.C. § 1391 because: (I) DEFENDANT is subject to personal jurisdiction in this District and therefore resides in this District; (ii) DEFENDANT maintains offices and facilities in this District; and, (iii) DEFENDANT committed the wrongful conduct against members of the CLASS, including the PLAINTIFF in this District. FIRST CAUSE OF ACTION For Failure to Make Proper Disclosure in Violation of the FCRA [15 U.S.C. § 1681b(b)(2)(A)(I), et seq.] (By PLAINTIFF and the CLASS and Against All Defendants) 28. PLAINTIFF, and the other members of the CLASS, reallege and incorporate by this reference, as though fully set forth herein, paragraphs 1 through 27 of this Complaint. 29. DEFENDANT violated 15 U.S.C. § 1681b(b)(2)(A)(I) of the FCRA by including a liability release clause in the background check disclosure and authorization and disclosure form that PLAINTIFF and other CLASS Members were required to execute as a condition of employment with DEFENDANT. 30. The violations of the FCRA were willful. DEFENDANT knew that its background check disclosure and authorization form should not include extraneous information that is prohibited by the FCRA, and acted in deliberate disregard of its obligations and the rights of PLAINTIFF and other CLASS Members under 15 U.S.C. § 1681b(b)(2)(A)(I). 31. PLAINTIFF and the CLASS Members are entitled to statutory damages of not less than $100 and not more than $1,000 for every violation of the FCRA, pursuant to 15 U.S.C. § 1681n(a)(1)(A). 32. PLAINTIFF and CLASS Members are also entitled to punitive damages for these violations, pursuant to 15 U.S.C. § 1681n(a)(2). 33. PLAINTIFF and CLASS Members are further entitled to recover their costs and attorneys’ fees, pursuant to 15 U.S.C. § 1681n(a)(3). SECOND CAUSE OF ACTION For Failure to Obtain Proper Authorization in Violations of the FCRA [15 U.S.C. § 1681b(b)(2)(A)(ii)] (By PLAINTIFF and the CLASS and Against All Defendants) 34. PLAINTIFF, and the other members of the CLASS, reallege and incorporate by this reference, as though fully set forth herein, paragraphs 1 through 33 of this Complaint. 35. DEFENDANT violated the FCRA by procuring consumer reports relating to PLAINTIFF and other CLASS Members without proper authorization as alleged herein. See 15 U.S.C. § 1681b(b)(2)(A)(ii). 36. The violations of the FCRA were willful. DEFENDANT acted in deliberate disregard of its obligations and the rights of PLAINTIFF and other CLASS Members under 15 U.S.C. § 1681b(b)(2)(A)(ii). 37. PLAINTIFF and the CLASS Members are entitled to statutory damages of not less than $100 and not more than $1,000 for every violation of the FCRA, pursuant to 15 U.S.C. § 1681n(a)(1)(A). 38. PLAINTIFF and CLASS Members are also entitled to punitive damages for these violations, pursuant to 15 U.S.C. § 1681n(a)(2). 39. PLAINTIFF and CLASS Members are further entitled to recover their costs and attorneys’ fees, pursuant to 15 U.S.C. § 1681n(a)(3). PRAYER FOR RELIEF WHEREFORE, the PLAINTIFF prays for judgment against each Defendant, jointly and severally, as follows: 1. On behalf of the CLASS: A) That the Court certify the First and Second Cause of Action asserted by the CLASS as a Class Action pursuant to Fed. R. Civ. Proc. 23(b)(2) and/or (3); B) A determination and judgment that DEFENDANT willfully violated the 15 U.S.C. § 1681(b)(2)(A)(I) and(ii) of the FCRA by failing improperly including liability release language in its background check disclosure and authorization form and by obtaining consumer reports on PLAINTIFF and CLASS Members without having proper authorization to do so; C) Pursuant to 15 U.S.C. § 1681n(a)(1)(A), an award of statutory damages to PLAINTIFF and the members of the CLASS in an amount equal to $1,000 for PLAINTIFF and each CLASS Member for DEFENDANT’s willful violation of the FCRA: D) Pursuant to 15 U.S.C. § 1681n(a)(2), an award of punitive damages to PLAINTIFF and other CLASS Members; E) An award for costs of suit and reasonable attorneys’ fees pursuant to 15 U.S.C. § 1681n(a)(3); and, F) Such other and further relief as the Court deems just and equitable. Dated: March 12, 2015 BLUMENTHAL, NORDREHAUG & BHOWMIK By: /s/Norman B. Blumenthal Norman B. Blumenthal Attorneys for Plaintiff DEMAND FOR A JURY TRIAL PLAINTIFF demands a jury trial on issues triable to a jury. Dated: March 12, 2015 BLUMENTHAL, NORDREHAUG & BHOWMIK By: /s/Norman B. Blumenthal Norman B. Blumenthal Attorneys for Plaintiff G:\D\Dropbox\Pending Litigation\Intercon Security- Easterbrook\p-Complaint-Final.wpd EXHIBIT #1

securities

f_DQEocBD5gMZwczGyJP

Case No.: CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS JURY TRIAL DEMANDED UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK   ELLIOT SOMMER, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. COMSCORE, INC., SERGE MATTA, and MELVIN WESLEY III, Defendants. Plaintiff Elliot Sommer (“Plaintiff”), by and through his attorneys, alleges the following upon information and belief, except as to those allegations concerning Plaintiff, which are alleged upon personal knowledge. Plaintiff’s information and belief is based upon, among other things, his counsel’s investigation, which includes without limitation: (a) review and analysis of regulatory filings made by comScore, Inc. (“comScore” or the “Company”), with the United States (“U.S.”) Securities and Exchange Commission (“SEC”); (b) review and analysis of press releases and media reports issued by and disseminated by comScore; and (c) review of other publicly available information concerning comScore. NATURE OF THE ACTION AND OVERVIEW 1. This is a class action on behalf of persons or entities that acquired comScore securities between May 5, 2015 and March 7, 2016, inclusive (the “Class Period”), seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”). 2. comScore provides data, metrics, products, and services to clients in the media, advertising, and marketing industries. The Company delivers digital media analytics that help content owners and advertisers understand and value the composition of consumer media audiences, and help marketers understand the performance and effectiveness of advertising targeted at these audiences. The Company’s technology measures consumer interactions with digital media, including Web sites, apps, video programming, and advertising. 3. On February 29, 2016, the Company filed a Notification of Late Filing on Form 12b-25 with the SEC, disclosing that the Company would be unable to file its Annual Report on Form 10-K for the fiscal year ended December 31, 2015 on time because the Company “require[d] additional time to prepare its financial statements and complete the external audit of those statements included in the Form 10-K.” Elaborating, the Company disclosed that on February 19, 2016, “the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) received a message regarding certain potential accounting matters” and that, in response, “the Audit Committee immediately commenced a review of the matters with the assistance of independent counsel and advisors.” comScore also announced that the Company would not file its Form 10-K until after the completion of the Audit Committee’s review, and that comScore expected to file the 10-K by March 15, 2016. 4. On this news, shares of comScore fell $1.15 per share, or 2.8%, to close at $40.00 on March 1, 2016, on unusually heavy trading volume. 5. On March 7, 2016, the Company filed an amendment to the Notice of Late Filing previously filed on February 29, 2016. Therein, the Company disclosed that on March 5, 2016, the Audit Committee advised the Company’s Board of Directors that it did not expect to finalize its review before March 15, 2016. The Company also disclosed that, as a result, “the Company is not in a position to file its Form 10-K until after the Audit Committee completes its review and the Company’s independent public accountants assess the conclusions of the Audit Committee in connection with their audit of the Company’s annual financial statements included in the Form 10-K.” The Company also stated that it does not expect to make further comment regarding the Audit Committee’s review until its conclusion. Finally, in a press release issued the same day, the Company announced that “out of an abundance of caution” it was suspending the Company’s previously announced share repurchase program.” 6. On this news, shares of comScore fell $13.67 per share, or 33.5%, to close at $27.04 on March 7, 2016, on unusually heavy trading volume. 7. Throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose: (1) that the Company’s accounting practices were not in compliance with applicable SEC regulations; (2) that the Company lacked adequate internal controls over accounting; (3) that, as such, the Company would be unable to file its Form 10-K for the fiscal year ended December 31, 2015 in a timely manner; and (4) that, as a result of the foregoing, the Company’s financial statements, as well as Defendants’ statements about comScore’s business, operations, and prospects, were false and misleading and/or lacked a reasonable basis. 8. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. JURISDICTION AND VENUE 9. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C. §§78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. § 240.10b-5). 10. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §1331 and Section 27 of the Exchange Act (15 U.S.C. §78aa). 11. Venue is proper in this Judicial District pursuant to 28 U.S.C. §1391(b) and Section 27 of the Exchange Act (15 U.S.C. §78aa(c)). Substantial acts in furtherance of the alleged fraud or the effects of the fraud have occurred in this Judicial District. Many of the acts charged herein, including the dissemination of materially false and/or misleading information, occurred in substantial part in this Judicial District. In addition, the Company’s shares are actively traded within this Judicial District. 12. In connection with the acts, transactions, and conduct alleged herein, Defendants directly and indirectly used the means and instrumentalities of interstate commerce, including the United States mail, interstate telephone communications, and the facilities of a national securities exchange. PARTIES 13. Plaintiff Elliot Sommer, as set forth in the accompanying certification, incorporated by reference herein, acquired comScore common stock during the Class Period, and suffered damages as a result of the federal securities law violations and false and/or misleading statements and/or material omissions alleged herein. 14. Defendant comScore is a Delaware corporation with its principal executive offices located at 11950 Democracy Drive, Suite 600, Reston, Virginia 20190. 15. Defendant Serge Matta (“Matta”) was, at all relevant times, Chief Executive Officer (“CEO”) of comScore. 16. Defendant Melvin Wesley III (“Wesley”) was, at all relevant times, Chief Financial Officer (“CFO”) of comScore. 17. Defendants Matta and Wesley are collectively referred to hereinafter as the “Individual Defendants.” The Individual Defendants, because of their positions with the Company, possessed the power and authority to control the contents of comScore’s reports to the SEC, press releases and presentations to securities analysts, money and portfolio managers and institutional investors, i.e., the market. Each defendant was provided with copies of the Company’s reports and press releases alleged herein to be misleading prior to, or shortly after, their issuance and had the ability and opportunity to prevent their issuance or cause them to be corrected. Because of their positions and access to material non-public information available to them, each of these defendants knew that the adverse facts specified herein had not been disclosed to, and were being concealed from, the public, and that the positive representations which were being made were then materially false and/or misleading. The Individual Defendants are liable for the false statements pleaded herein, as those statements were each “group-published” information, the result of the collective actions of the Individual Defendants. SUBSTANTIVE ALLEGATIONS Background 18. comScore provides data, metrics, products, and services to clients in the media, advertising, and marketing industries. The Company delivers digital media analytics that help content owners and advertisers understand and value the composition of consumer media audiences, and help marketers understand the performance and effectiveness of advertising targeted at these audiences. The Company’s technology measures consumer interactions with digital media, including Web sites, apps, video programming, and advertising. Materially False and Misleading Statements Issued During the Class Period 19. The Class Period began on May 5, 2015. On that day, comScore issued a press release entitled, “comScore, Inc. Reports First Quarter 2015 Results.” Therein, the Company, in relevant part, stated: RESTON, VA - May 5, 2015 - comScore, Inc. (NASDAQ: SCOR), a leader in measuring the digital world, today announced financial results for the first quarter 2015. First Quarter 2015 comScore achieved record first quarter revenue of $87.3 million, an increase of 14% compared to the first quarter of 2014. GAAP loss before income taxes was $9.7 million. GAAP net loss was $7.3 million, or $0.22 per basic and diluted share. First quarter 2015 results and metrics compared to first quarter 2014 on a proforma basis* were as follows:  Revenue of $87.1 million, up 15% from a year ago.  Adjusted EBITDA of $21.3 million, up 25% from a year ago.  Adjusted EBITDA margin was 24% of revenue, up 200 basis points from a year ago. “I’m pleased that comScore delivered another quarter of strong revenues and financial performance,” said Serge Matta, Chief Executive Officer of comScore. “Immediately following the end of the first quarter on April 1, we closed the WPP transaction that we announced on our last earnings call. I am also happy to announce that our board of directors recently authorized the increase of our share buy-back program to $150 million, demonstrating our continued commitment to return capital to our investors.” “As a company, we continue to pursue our mission of making audiences and advertising more valuable, and are doing so during a time of rapid change in the digital media, television and advertising ecosystems,” continued Matta. “Today, one of the toughest challenges for our industry is understanding how, when and where consumers engage with video content across screens. We are solving this challenge. Cross-media is no longer an aspiration at comScore - we are increasingly making it a reality. We will be formally launching our first syndicated Xmedia product later this quarter.” 20. On the same day, May 5, 2015, comScore filed its Quarterly Report with the SEC on Form 10-Q for the 2015 fiscal first quarter. The Company’s Form 10-Q was signed by Defendant Wesley, and reaffirmed the Company’s statements previously announced earlier that day. The Form 10-Q contained certifications pursuant to the Sarbanes-Oxley Act of 2002 (“SOX”), signed by Defendants Matta and Wesley, who certified the following: 1. I have reviewed this quarterly report on Form 10-Q of comScore, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 21. On August 4, 2015 comScore issued a press release entitled, “comScore, Inc. Reports Second Quarter 2015 Results.” Therein, the Company, in relevant part, stated: RESTON, VA - August 4, 2015 - comScore, Inc. (NASDAQ: SCOR), a global media measurement and analytics company, today announced financial results for the second quarter 2015. Second Quarter 2015 comScore achieved record second quarter GAAP revenue of $91.4 million, an increase of 14% compared to the second quarter of 2014. GAAP loss before income taxes was $2.7 million. GAAP net loss was $4.8 million, or $0.12 per basic and diluted share. Second quarter 2015 results and metrics compared to second quarter 2014 on a proforma basis* were as follows:  Revenue of $91.3 million, up 16%.  Adjusted EBITDA of $22.9 million, up 30%.  Adjusted EBITDA margin was 25% of revenue, up 300 basis points. Year to date 2015 results and metrics compared to the six months ended June 30, 2014 on a proforma basis* were as follows:  Revenue of $178.3 million, up 15%.  Adjusted EBITDA of $44.2 million, up 28%.  Adjusted EBITDA margin was 25% of revenue, up 300 basis points. “I’m pleased to share that comScore delivered a quarter of record revenues and strong profitability,” said Serge Matta, President and Chief Executive Officer of comScore. “Because of our continued positive momentum across our business and the strength of our partnerships, which continue to grow in number and impact, we are raising full year revenue and adjusted EBITDA guidance. I’m also delighted that comScore vCE in DoubleClick is now widely available to Google DoubleClick customers. comScore vCE is the first independent audience delivery evaluation solution that is integrated directly into the DoubleClick platform.” “Beyond our work with Google and our innovation in advertising measurement, we continue to focus on solving the challenges that come with the rapid rise of cross-platform television and video audiences. In May, we launched our syndicated cross-media product, comScore XMedia. At comScore, cross-media measurement is no longer an aspiration.” 22. On August 7, 2015, comScore filed its Quarterly Report with the SEC on Form 10-Q for the 2015 fiscal second quarter. The Company’s Form 10-Q was signed by Defendant Wesley, and reaffirmed the Company’s statements previously announced on August 4, 2015. The Form 10-Q contained certifications pursuant to SOX, signed by Defendants Matta and Wesley, substantially similar to the certification described in ¶20, supra. 23. On November 5, 2015 comScore issued a press release entitled, “comScore, Inc. Reports Third Quarter 2015 Results.” Therein, the Company, in relevant part, stated: RESTON, VA - November 5, 2015 - comScore, Inc. (NASDAQ: SCOR), a global media measurement and analytics company, today announced financial results for the third quarter 2015. Third Quarter 2015 comScore achieved record third quarter GAAP revenue of $92.4 million, an increase of 13% compared to the third quarter of 2014. GAAP income before income taxes was $0.9 million. GAAP net income was $1.0 million, or $0.02 per basic and diluted share. Third quarter 2015 results and metrics compared to third quarter 2014 on a proforma basis* were as follows:  Revenue of $92.4 million, up 14%.  Adjusted EBITDA of $23.4 million, up 16%.  Adjusted EBITDA margin was 25% of revenue, up 50 basis points. Year to date 2015 results and metrics compared to the nine months ended September 30, 2014 on a proforma basis* were as follows:  Revenue of $270.7 million, up 15%.  Adjusted EBITDA of $67.6 million, up 23%.  Adjusted EBITDA margin was 25% of revenue, up 200 basis points. “I’m very pleased to announce that comScore delivered a solid quarter of record revenues, strong profitability and net income from operations.” said Serge Matta, President and Chief Executive Officer of comScore. “We continue to see momentum in our advertising solutions, including vCE and new partnerships to bring comScore Bid Ratings to programmatic platforms. We’re incredibly focused on innovation and execution for cross-platform measurement, introducing our new Total Home PanelTM, and working through the details of our planned merger with Rentrak.” “In addition, we are announcing today that Adobe is acquiring our enterprise analytics technology, Digital Analytix. This divesture improves our competitive position, allowing complete focus on our mission to make audiences and advertising more valuable across all the screens that matter.” 24. On November 6, 2015, comScore filed its Quarterly Report with the SEC on Form 10-Q for the 2015 fiscal third quarter. The Company’s Form 10-Q was signed by Defendant Wesley, and reaffirmed the Company’s statements previously announced on November 5, 2015. The Form 10-Q contained certifications pursuant to SOX, signed by Defendants Matta and Wesley, substantially similar to the certification described in ¶20, supra. 25. The above statements contained in ¶¶ 19–24 were false and/or misleading, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, these statements were false and/or misleading statements and/or failed to disclose: (1) that the Company’s accounting practices were not in compliance with applicable SEC regulations; (2) that the Company lacked adequate internal controls over accounting; (3) that, as such, the Company would be unable to file its Form 10-K for the fiscal year ended December 31, 2015 in a timely manner; and (4) that, as a result of the foregoing, the Company’s financial statements, as well as Defendants’ statements about comScore’s business, operations, and prospects, were false and misleading and/or lacked a reasonable basis. Disclosures at the End of the Class Period 26. On February 29, 2016, the Company filed a Notification of Late Filing on Form 12b-25 with the SEC, disclosing that the Company would be unable to file its Annual Report on Form 10-K for the fiscal year ended December 31, 2015 on time because the Company “require[d] additional time to prepare its financial statements and complete the external audit of those statements included in the Form 10-K.” Elaborating, the Company disclosed that on February 19, 2016, “the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) received a message regarding certain potential accounting matters” and that, in response, “the Audit Committee immediately commenced a review of the matters with the assistance of independent counsel and advisors.” comScore also announced that the Company would not file its Form 10-K until after the completion of the Audit Committee’s review, and that comScore expected to file the 10-K by March 15, 2016. 27. On this news, shares of comScore fell $1.15 per share, or 2.8%, to close at $40.00 on March 1, 2016, on unusually heavy trading volume. 28. On March 7, 2016, the Company filed an amendment to the Notice of Late Filing previously filed on February 29, 2016. Therein, the Company disclosed that on March 5, 2016, the Audit Committee advised the Company’s Board of Directors that it did not expect to finalize its review before March 15, 2016. The Company also disclosed that, as a result, “the Company is not in a position to file its Form 10-K until after the Audit Committee completes its review and the Company’s independent public accountants assess the conclusions of the Audit Committee in connection with their audit of the Company’s annual financial statements included in the Form 10-K.” The Company also stated that it does not expect to make further comment regarding the Audit Committee’s review until its conclusion. Finally, in a press release issued the same day, the Company announced that “out of an abundance of caution” it was suspending the Company’s previously announced share repurchase program.” 29. On this news, shares of comScore fell $13.67 per share, or 33.5%, to close at $27.04 on March 7, 2016, on unusually heavy trading volume. CLASS ACTION ALLEGATIONS 30. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3) on behalf of a class, consisting of all those who purchased or otherwise acquired comScore’s securities between May 5, 2015 and March 7, 2016, inclusive (the “Class Period”) and who were damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers and directors of the Company, at all relevant times, members of their immediate families and their legal representatives, heirs, successors or assigns and any entity in which Defendants have or had a controlling interest. 31. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, comScore’s securities were actively traded on the NASDAQ Stock Market (the “NASDAQ”). While the exact number of Class members is unknown to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff believes that there are hundreds or thousands of members in the proposed Class. Millions of comScore shares were traded publicly during the Class Period on the NASDAQ. As of May 4, 2015, comScore had 40,483,660 shares of common stock outstanding. Record owners and other members of the Class may be identified from records maintained by comScore or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions. 32. Plaintiff’s claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that is complained of herein. 33. Plaintiff will fairly and adequately protect the interests of the members of the Class and has retained counsel competent and experienced in class and securities litigation. 34. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are: (a) whether the federal securities laws were violated by Defendants’ acts as alleged herein; (b) whether statements made by Defendants to the investing public during the Class Period omitted and/or misrepresented material facts about the business, operations, and prospects of comScore; and (c) to what extent the members of the Class have sustained damages and the proper measure of damages. 35. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation makes it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. UNDISCLOSED ADVERSE FACTS 36. The market for comScore’s securities was open, well-developed and efficient at all relevant times. As a result of these materially false and/or misleading statements, and/or failures to disclose, comScore’s securities traded at artificially inflated prices during the Class Period. Plaintiff and other members of the Class purchased or otherwise acquired comScore’s securities relying upon the integrity of the market price of the Company’s securities and market information relating to comScore, and have been damaged thereby. 37. During the Class Period, Defendants materially misled the investing public, thereby inflating the price of comScore’s securities, by publicly issuing false and/or misleading statements and/or omitting to disclose material facts necessary to make Defendants’ statements, as set forth herein, not false and/or misleading. Said statements and omissions were materially false and/or misleading in that they failed to disclose material adverse information and/or misrepresented the truth about comScore’s business, operations, and prospects as alleged herein. 38. At all relevant times, the material misrepresentations and omissions particularized in this Complaint directly or proximately caused or were a substantial contributing cause of the damages sustained by Plaintiff and other members of the Class. As described herein, during the Class Period, Defendants made or caused to be made a series of materially false and/or misleading statements about comScore’s financial well-being and prospects. These material misstatements and/or omissions had the cause and effect of creating in the market an unrealistically positive assessment of the Company and its financial well-being and prospects, thus causing the Company’s securities to be overvalued and artificially inflated at all relevant times. Defendants’ materially false and/or misleading statements during the Class Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities at artificially inflated prices, thus causing the damages complained of herein. LOSS CAUSATION 39. Defendants’ wrongful conduct, as alleged herein, directly and proximately caused the economic loss suffered by Plaintiff and the Class. 40. During the Class Period, Plaintiff and the Class purchased or otherwise acquired comScore’s securities at artificially inflated prices and were damaged thereby. The price of the Company’s securities significantly declined when the misrepresentations made to the market, and/or the information alleged herein to have been concealed from the market, and/or the effects thereof, were revealed, causing investors’ losses. SCIENTER ALLEGATIONS 41. As alleged herein, Defendants acted with scienter in that Defendants knew that the public documents and statements issued or disseminated in the name of the Company were materially false and/or misleading; knew that such statements or documents would be issued or disseminated to the investing public; and knowingly and substantially participated or acquiesced in the issuance or dissemination of such statements or documents as primary violations of the federal securities laws. As set forth elsewhere herein in detail, Defendants, by virtue of their receipt of information reflecting the true facts regarding comScore, his/her control over, and/or receipt and/or modification of comScore’s allegedly materially misleading misstatements and/or their associations with the Company which made them privy to confidential proprietary information concerning comScore, participated in the fraudulent scheme alleged herein. APPLICABILITY OF PRESUMPTION OF RELIANCE (FRAUD-ON-THE-MARKET DOCTRINE) 42. The market for comScore’s securities was open, well-developed and efficient at all relevant times. As a result of the materially false and/or misleading statements and/or failures to disclose, comScore’s securities traded at artificially inflated prices during the Class Period. On August 17, 2015, the Company’s stock closed at a Class Period high of $64.64 per share. Plaintiff and other members of the Class purchased or otherwise acquired the Company’s securities relying upon the integrity of the market price of comScore’s securities and market information relating to comScore, and have been damaged thereby. 43. During the Class Period, the artificial inflation of comScore’s stock was caused by the material misrepresentations and/or omissions particularized in this Complaint causing the damages sustained by Plaintiff and other members of the Class. As described herein, during the Class Period, Defendants made or caused to be made a series of materially false and/or misleading statements about comScore’s business, prospects, and operations. These material misstatements and/or omissions created an unrealistically positive assessment of comScore and its business, operations, and prospects, thus causing the price of the Company’s securities to be artificially inflated at all relevant times, and when disclosed, negatively affected the value of the Company stock. Defendants’ materially false and/or misleading statements during the Class Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities at such artificially inflated prices, and each of them has been damaged as a result. 44. At all relevant times, the market for comScore’s securities was an efficient market for the following reasons, among others: (a) comScore stock met the requirements for listing, and was listed and actively traded on the NASDAQ, a highly efficient and automated market; (b) As a regulated issuer, comScore filed periodic public reports with the SEC and/or the NASDAQ; (c) comScore regularly communicated with public investors via established market communication mechanisms, including through regular dissemination of press releases on the national circuits of major newswire services and through other wide-ranging public disclosures, such as communications with the financial press and other similar reporting services; (d) comScore was followed by securities analysts employed by brokerage firms who wrote reports about the Company, and these reports were distributed to the sales force and certain customers of their respective brokerage firms. Each of these reports was publicly available and entered the public marketplace. 45. As a result of the foregoing, the market for comScore’s securities promptly digested current information regarding comScore from all publicly available sources and reflected such information in comScore’s stock price. Under these circumstances, all purchasers of comScore’s securities during the Class Period suffered similar injury through their purchase of comScore’s securities at artificially inflated prices and a presumption of reliance applies. NO SAFE HARBOR 46. The statutory safe harbor provided for forward-looking statements under certain circumstances does not apply to any of the allegedly false statements pleaded in this Complaint. The statements alleged to be false and misleading herein all relate to then-existing facts and conditions. In addition, to the extent certain of the statements alleged to be false may be characterized as forward looking, they were not identified as “forward-looking statements” when made and there were no meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the purportedly forward-looking statements. In the alternative, to the extent that the statutory safe harbor is determined to apply to any forward-looking statements pleaded herein, Defendants are liable for those false forward- looking statements because at the time each of those forward-looking statements was made, the speaker had actual knowledge that the forward-looking statement was materially false or misleading, and/or the forward-looking statement was authorized or approved by an executive officer of comScore who knew that the statement was false when made. FIRST CLAIM Violation of Section 10(b) of The Exchange Act and Rule 10b-5 Promulgated Thereunder Against All Defendants 47. Plaintiff repeats and re-alleges each and every allegation contained above as if fully set forth herein. 48. During the Class Period, Defendants carried out a plan, scheme and course of conduct which was intended to and, throughout the Class Period, did: (i) deceive the investing public, including Plaintiff and other Class members, as alleged herein; and (ii) cause Plaintiff and other members of the Class to purchase or otherwise acquire comScore’s securities at artificially inflated prices. In furtherance of this unlawful scheme, plan and course of conduct, defendants, and each of them, took the actions set forth herein. 49. Defendants (i) employed devices, schemes, and artifices to defraud; (ii) made untrue statements of material fact and/or omitted to state material facts necessary to make the statements not misleading; and (iii) engaged in acts, practices, and a course of business which operated as a fraud and deceit upon the acquirers of the Company’s securities in an effort to maintain artificially high market prices for comScore’s securities in violation of Section 10(b) of the Exchange Act and Rule 10b-5. All Defendants are sued either as primary participants in the wrongful and illegal conduct charged herein or as controlling persons as alleged below. 50. Defendants, individually and in concert, directly and indirectly, by the use, means or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a continuous course of conduct to conceal adverse material information about comScore’s financial well-being and prospects, as specified herein. 51. These defendants employed devices, schemes and artifices to defraud, while in possession of material adverse non-public information and engaged in acts, practices, and a course of conduct as alleged herein in an effort to assure investors of comScore’s value and performance and continued substantial growth, which included the making of, or the participation in the making of, untrue statements of material facts and/or omitting to state material facts necessary in order to make the statements made about comScore and its business operations and future prospects in light of the circumstances under which they were made, not misleading, as set forth more particularly herein, and engaged in transactions, practices and a course of business which operated as a fraud and deceit upon the acquirers of the Company’s securities during the Class Period. 52. Each of the Individual Defendants’ primary liability, and controlling person liability, arises from the following facts: (i) the Individual Defendants were high-level executives and/or directors at the Company during the Class Period and members of the Company’s management team or had control thereof; (ii) each of these defendants, by virtue of their responsibilities and activities as a senior officer and/or director of the Company, was privy to and participated in the creation, development and reporting of the Company’s internal budgets, plans, projections and/or reports; (iii) each of these defendants enjoyed significant personal contact and familiarity with the other defendants and was advised of, and had access to, other members of the Company’s management team, internal reports and other data and information about the Company’s finances, operations, and sales at all relevant times; and (iv) each of these defendants was aware of the Company’s dissemination of information to the investing public which they knew and/or recklessly disregarded was materially false and misleading. 53. The Defendants had actual knowledge of the misrepresentations and/or omissions of material facts set forth herein, or acted with reckless disregard for the truth in that they failed to ascertain and to disclose such facts, even though such facts were available to them. Such defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and for the purpose and effect of concealing comScore’s financial well-being and prospects from the investing public and supporting the artificially inflated price of its securities. As demonstrated by Defendants’ overstatements and/or misstatements of the Company’s business, operations, financial well-being, and prospects throughout the Class Period, Defendants, if they did not have actual knowledge of the misrepresentations and/or omissions alleged, were reckless in failing to obtain such knowledge by deliberately refraining from taking those steps necessary to discover whether those statements were false or misleading. 54. As a result of the dissemination of the materially false and/or misleading information and/or failure to disclose material facts, as set forth above, the market price of comScore’s securities was artificially inflated during the Class Period. In ignorance of the fact that market prices of the Company’s securities were artificially inflated, and relying directly or indirectly on the false and misleading statements made by Defendants, or upon the integrity of the market in which the securities trades, and/or in the absence of material adverse information that was known to or recklessly disregarded by Defendants, but not disclosed in public statements by Defendants during the Class Period, Plaintiff and the other members of the Class acquired comScore’s securities during the Class Period at artificially high prices and were damaged thereby. 55. At the time of said misrepresentations and/or omissions, Plaintiff and other members of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff and the other members of the Class and the marketplace known the truth regarding the problems that comScore was experiencing, which were not disclosed by Defendants, Plaintiff and other members of the Class would not have purchased or otherwise acquired their comScore securities, or, if they had acquired such securities during the Class Period, they would not have done so at the artificially inflated prices which they paid. 56. By virtue of the foregoing, Defendants have violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. 57. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and the other members of the Class suffered damages in connection with their respective purchases, acquisitions, and sales of the Company’s securities during the Class Period. SECOND CLAIM Violation of Section 20(a) of The Exchange Act Against the Individual Defendants 58. Plaintiff repeats and re-alleges each and every allegation contained above as if fully set forth herein. 59. The Individual Defendants acted as controlling persons of comScore within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level positions, and their ownership and contractual rights, participation in and/or awareness of the Company’s operations and/or intimate knowledge of the false financial statements filed by the Company with the SEC and disseminated to the investing public, the Individual Defendants had the power to influence and control and did influence and control, directly or indirectly, the decision-making of the Company, including the content and dissemination of the various statements which Plaintiff contends are false and misleading. The Individual Defendants were provided with or had unlimited access to copies of the Company’s reports, press releases, public filings and other statements alleged by Plaintiff to be misleading prior to and/or shortly after these statements were issued and had the ability to prevent the issuance of the statements or cause the statements to be corrected. 60. In particular, each of these Defendants had direct and supervisory involvement in the day-to-day operations of the Company and, therefore, is presumed to have had the power to control or influence the particular transactions giving rise to the securities violations as alleged herein, and exercised the same. 61. As set forth above, comScore and the Individual Defendants each violated Section 10(b) and Rule 10b-5 by their acts and/or omissions as alleged in this Complaint. By virtue of their positions as controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of the Exchange Act. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and other members of the Class suffered damages in connection with their purchases and acquisitions of the Company’s securities during the Class Period. PRAYER FOR RELIEF WHEREFORE, Plaintiff prays for relief and judgment, as follows: (a) Determining that this action is a proper class action under Rule 23 of the Federal Rules of Civil Procedure; (b) Awarding compensatory damages in favor of Plaintiff and the other Class members against all defendants, jointly and severally, for all damages sustained as a result of Defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon; (c) Awarding Plaintiff and the Class their reasonable costs and expenses incurred in this action, including counsel fees and expert fees; and (d) Such other and further relief as the Court may deem just and proper. JURY TRIAL DEMANDED Plaintiff hereby demands a trial by jury. Dated: March 10, 2016 GLANCY PRONGAY & MURRAY LLP By: s/ Lesley F. Portnoy Lesley F. Portnoy (LP-1941) 122 East 42nd Street, Suite 2920 New York, New York 10168 Telephone: (212) 682-5340 Facsimile: (212) 884-0988 [email protected] GLANCY PRONGAY & MURRAY LLP Lionel Z. Glancy Robert V. Prongay Casey E. Sadler Charles H. Linehan 1925 Century Park East, Suite 2100 Los Angeles, California 90067 Telephone: (310) 201-9150 Facsimile: (310) 201-9160 [email protected] Attorneys for Plaintiff Elliot Sommer 3/8/2016 Elliot Sommer's Transactions in comScore, Inc. (SCOR) Date Transaction Type Quantity 2/1/2016 Acquired* 2,760 *Acquired as a result of the merger of comScore, Inc. and Rentrak Corporation, whereby each share of Rentrak Corporation common stock was converted into the right to receive 1.15 shares of comScore, Inc. common stock.

securities

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA JOSELINE DOTEL, on behalf of herself and all others similarly situated, Plaintiff, v. No. ANTITRUST CLASS ACTION COMPLAINT JURY TRIAL DEMANDED COOPERVISION, INC.; ALCON LABORATORIES, INC; BAUSCH & LOMB INCORPORATED; JOHNSON & JOHNSON VISION CARE, INC.; and ABB/CON-CISE OPTICAL GROUP LLC (a/k/a ABB OPTICAL GROUP), Defendants. Plaintiff, by her attorneys, on behalf of herself and all others similarly situated on behalf of himself and all others similarly situated, makes the following allegations based on the investigation of counsel and based upon information and belief, except as to those allegations specifically pertaining to himself and her counsel, which are based on personal knowledge. NATURE OF ACTION 1. This lawsuit arises from a scheme among four manufacturers of Contact Lenses and the largest distributor of Contact Lenses in the United States whereby they eliminate discounts among retailers of Contact Lenses and artificially fix, raise, maintain and/or stabilize the prices charged to consumers for Contact Lenses. 2. Plaintiff seeks to represent herself and all others similarly situated (the “Classes”). The Class consists of all persons in the United States who indirectly purchased Contact Lenses sold by Defendants CooperVision, Inc. (“CooperVision”), Alcon Laboratories, Inc. (“Alcon”), Bausch & Lomb Incorporated (“B&L”), and Johnson & Johnson Vision Care, Inc. (“J&J”) (collectively referred to as the “Manufacturer Defendants”), or any current or former subsidiary or affiliate thereof, or any co-conspirator, that was subject to Price Floor Policies1 during the period from and including June 1, 2013 through such time as the anticompetitive effects of Defendants’ unlawful conduct cease (the “Class Period”). 3. Plaintiff asserts that the Manufacturer Defendants, along with Defendant ABB/Con-Cise Optical Group LLC (a/k/a ABB Optical Group) (“ABB”) (together with the Manufacturer Defendants, the “Defendants”), and unnamed co-conspirators, engaged in a scheme to fix, raise, maintain and/or stabilize prices of Contact Lenses by imposing Price Floor Policies (“PFPs”). 4. As of mid-2014, nearly 40 million Americans wore Contact Lenses, costing a total of $4.2 billion annually.2 Today, the Manufacturer Defendants dominate and collectively control over 97% of the Contact Lens market in the United States. As an example, Defendant ABB is the largest distributor of Contact Lenses in the United States and services more than two- thirds of independent eye care professionals (“ECPs”). 5. The PFPs set a minimum price for which a reseller can advertise or sell a particular line of Contact Lenses. Although retailers may offer discounts pursuant to the PFPs, the price of lenses after any such discount must not fall below the established price floor. If retailers violate a PFP by advertising or selling Contact Lenses below the set floor price, Defendants have cautioned that they “will cease to supply” the retailer with those lenses. In an 1 Price Floor Policies set a minimum price for which a reseller can advertise or sell a particular line of Contact Lenses. 2 American Antitrust Institute, Letter to the FTC and DOJ (Oct. 24, 2014) at 2 (citing Statement of R. Joe Zeidner, General Counsel, 1-800 CONTACTS, Hearing Before the S. Comm. on the Judiciary Subcomm. on Antitrust, Competition Policy and Consumer Rights 1 (July 30, 2014)). attempt to evade antitrust scrutiny, the Manufacturing Defendants nicknamed the PFPs “Unilateral Pricing Policies.” 6. In June 2013, Alcon implemented the first PFP. Shortly thereafter, the other Manufacturer Defendants followed suit, implementing nearly identical PFPs. 7. The Manufacturer Defendants’ objective in implementing their PFPs was to stifle price competition between independent eye care professional retailers and big-box stores (i.e., Wal-Mart), internet retailers (i.e., 1-800 CONTACTS), and warehouse clubs (i.e., Costco), that, on average, charge approximately 30% less for the same Contact Lenses sold by independent eye care professional retailers. (See Figure 3 below). 8. Acting on behalf of ECPs, ABB was instrumental in facilitating the conspiracy among the Manufacturer Defendants. ABB acted as the “hub” of a “hub-and-spoke” conspiracy3 to shift the entire industry to PFP contracts for the benefit of its eye care professional customers. Before the first PFP was put into effect, ABB itself admitted that it was working with the Manufacturer Defendants to shift industry practices. In February 2013, ABB’s founder and CEO, Angel Alvarez, stated that ABB focused on being “aligned with manufacturers.” Subsequently, Alvarez confirmed ABB’s participation in the conspiracy to create PFPs: ABB has been working closely with manufacturers to develop [PFPs], which we believe enable a better overall patient experience by supporting competitiveness of prescribing practitioners . . . Contact Lens fitters have always been and will always be a focus of our organization. We do everything possible to help them succeed. 3 In a “hub-and-spoke conspiracy”, a central mastermind, or “hub”, controls numerous “spokes”, or secondary co-conspirators. These co-conspirators participate in independent transactions with the individual or group of individuals at the “hub” that collectively further a single, illegal enterprise. United States v. Newton, 326 F.3d 253, 255, n.2 (1st Cir. 2003). 9. Before the Manufacturer Defendants implemented their PFPs beginning in June 2013, Contact Lens purchasers enjoyed significant benefits from intrabrand price competition among Contact Lens retailers.4 10. Since Defendants orchestrated an industry shift to PFPs, prices for Contact Lenses have increased dramatically. For example, the price increases in some of J&J’s lines of Contact Lenses range from approximately 75 to nearly 200%. (See Figure 4 below). J&J estimated that its PFPs would impact roughly 9.66 million Contact Lens consumers, approximately 69% of J&J Contact Lens consumers. 11. On July 30, 2014, a hearing was held before the Subcommittee on Antitrust, Competition Policy and Consumer Rights of the U.S. Senate’s Judiciary Committee, which was investigating the Defendants’ business practices (“Senate Hearing”). At the Senate Hearing, testimony was given by numerous witnesses concerning the anticompetitive effects of the PFPs. 12. More recently, consumers and industry participants have made numerous complaints to the Federal Trade Commission (“FTC”) concerning the negative impact of PFPs. It has also been reported that other government antitrust enforcement authorities are investigating the PFPs. In an October 2014 letter, the American Antitrust Institute urged the FTC and the Department of Justice to investigate the imposition of the PFPs in light of the “evident harm to consumers.” 13. Anticompetitive policies that restrict price competition in the Contact Lens industry is not a new occurrence. In the 1990s, a conspiracy existed between Contact Lens manufacturers and ECPs to curb the supply of Contact Lenses from moving through alternative sources of distribution (i.e., mail-order houses). In 1996, Attorneys General of 32 states, along with consumers, brought antitrust lawsuits against B&L, J&J, CIBA Vision (Alcon’s predecessor), and the American Optometric Association (“AOA”) (a trade association of ECPs) to challenge this anticompetitive conduct. Following the denial of summary judgment to the defendants, the cases settled after several weeks of trial and the challenged practices ceased. 14. In addition to U.S. investigations and litigation, Contact Lens manufacturers, including J&J, have been accused of restricting competition and stabilizing prices in other countries, including Germany and China. 15. Defendants and their co-conspirators participated in a conspiracy to suppress and eliminate competition in the Contact Lens market by agreeing to eliminate discounting among Contact Lens retailers through the implementation of PFPs, as well as fixing, raising, stabilizing and/or maintaining the prices of Contact Lenses sold in the United States. The conspiracy engaged in by the Defendants and their co-conspirators constitutes an unreasonable restraint of trade in violation of the Sherman Antitrust Act (15 U.S.C. § 1), state antitrust, unfair competition, and consumer protection laws and the common law of unjust enrichment. 16. As a direct result of the anticompetitive and unlawful conduct alleged herein, Plaintiff and the Classes paid artificially inflated prices for Contact Lenses during the Class Period. Plaintiff and the Classes have thereby suffered antitrust injury to their business or property. JURISDICTION AND VENUE 17. Plaintiff brings this action under Section 16 of the Clayton Act (15 U.S.C. § 26) to secure equitable and injunctive relief against Defendants for violating Section 1 of the Sherman Act (15 U.S.C. § 1). Plaintiff also alleges claims for actual and exemplary damages pursuant to state antitrust, unfair competition, and consumer protection laws, as well as unjust enrichment. Furthermore, Plaintiff seeks to obtain restitution, recover damages and secure other relief against the Defendants for violations of those state laws and common law. Plaintiff and the Classes also seek attorneys’ fees, costs, and other expenses under federal and state law. 18. This Court has jurisdiction over the subject matter of this action pursuant to Section 16 of the Clayton Act (15 U.S.C. § 26), Section 1 of the Sherman Act (15 U.S.C. § 1), and Title 28, United States Code, Sections 1331 and 1337. This Court has subject matter jurisdiction of the state law claims pursuant to 28 U.S.C. §§ 1332(d) and 1367, in that (i) this is a class action in which the matter or controversy exceeds the sum of $5,000,000, exclusive of interests and costs, and in which some members of the proposed Classes are citizens of a state different from some of the Defendants; and (ii) Plaintiff’s state law claims form part of the same case or controversy as their federal claims under Article III of the United States Constitution. 19. Venue is proper in this District pursuant to Section 12 of the Clayton Act (15 U.S.C. § 22), and 28 U.S.C. §§ 1391 (b), (c), and (d), because a substantial part of the events giving rise to Plaintiff’s claims occurred in this District, a substantial portion of the affected interstate trade and commerce discussed below has been carried out in this District, and one or more of the Defendants reside, are licensed to do business in, are doing business in, had agents in, or are found or transact business in this District. 20. This Court has in personam jurisdiction over the Defendants because each, either directly or through the ownership and/or control of its subsidiaries, inter alia: (a) transacted business in the United States, including in this District; (b) directly or indirectly sold or marketed Contact Lenses throughout the United States, including in this District; (c) had substantial aggregate contacts with the United States as a whole, including in this District; or (d) were engaged in an illegal price-fixing conspiracy that was directed at, and had a direct, substantial, reasonably foreseeable and intended effect of causing injury to, the business or property of persons and entities residing in, located in, or doing business throughout the United States, including in this District. The Defendants also conduct business throughout the United States, including in this District, and they have purposefully availed themselves of the laws of the United States. 21. By reason of the unlawful activities hereinafter alleged, Defendants substantially affected commerce throughout the United States, causing injury to Plaintiff and members of the Classes. The Defendants, directly and through their agents, engaged in activities affecting all states, to fix, raise, maintain and/or stabilize prices in the United States for Contact Lenses, which conspiracy unreasonably restrained trade and adversely affected the market for Contact Lenses. 22. The Defendants’ conspiracy and unlawful conduct described herein adversely affected persons in the United States who indirectly purchased Contact Lenses manufactured by the Manufacturer Defendants, including Plaintiff and the members of the Classes. PARTIES A. Plaintiff 23. Plaintiff Joseline Dotel is a New York resident who purchased Contact Lenses indirectly from one or more Defendants. B. Defendants 24. Defendant Alcon is a Delaware corporation with its headquarters in Fort Worth, Texas and is owned by Novartis International AG, a Swiss multinational pharmaceutical company based in Basel, Switzerland. Alcon is in the business of making eye care products, including Contact Lenses. 25. Defendant J&J is a Florida corporation with its headquarters in Jacksonville, Florida. J&J is in the business of making eye care products, including Contact Lenses. 26. Defendant B&L is a New York corporation with its headquarters in Bridgewater, New Jersey and is now owned by Valeant Pharmaceuticals International, Inc. B&L is in the business of making eye care products, including Contact Lenses. 27. Defendant CooperVision is a United States company incorporated in New York and headquartered in Pleasanton, California. CooperVision is in the business of making eye care products, including Contact Lenses. 28. Defendant ABB is a Delaware Corporation headquartered in Coral Springs, Florida. ABB states on its website that it “is the nation’s largest distributor of soft Contact Lenses,” and that it “suppl[ies] more than two-thirds of [ECPs] in America with brand name Contact Lenses, high grade ophthalmic and fully customizable Gas Permeable Lenses.” ABB is a wholesale seller of Contact Lenses it purchases from the Manufacturer Defendants and services over 19,000 ECPs nationwide. 29. Various persons that are not named as Defendants herein have participated in the violations alleged herein and have performed acts and made statements in furtherance thereof. Plaintiff reserves the right to name some or all of these persons as Defendants at a later date. There are a finite number of co-conspirators and, upon information in belief their identities can be ascertained through Defendants’ own records. AGENTS AND CO-CONSPIRATORS 30. Each Defendant acted as the principal of or agent for the other Defendants with respect to the acts, violations, and common course of conduct alleged herein. 31. Various persons, partnerships, sole proprietors, firms, corporations and individuals not named as Defendants in this lawsuit, and individuals, the identities of which are presently unknown, have participated as co-conspirators with Defendants in the offenses alleged in this Complaint, and have performed acts and made statements in furtherance of the conspiracy or in furtherance of the anticompetitive conduct. 32. Whenever in this Complaint reference is made to any act, deed or transaction of any corporation or limited liability entity, the allegation means that the corporation or limited liability entity engaged in the act, deed or transaction by or through its officers, directors, agents, employees or representatives while they were actively engaged in the management, direction, control or transaction of the corporation’s or limited liability entity’s business or affairs. FACTUAL ALLEGATIONS A. The Contact Lens Industry 1. Background of the Industry 33. Contact Lenses were first introduced in the United States in 1987. Today, they constitute approximately 90% of all eye ware sold in the United States. 34. There are various types of Contact Lenses. Contact Lenses may be worn and then disposed of daily, weekly or monthly. Additionally, Contact Lenses may be spherical, which contain a single refractive power, or specialty. A “specialty” refers to Contact Lenses that are crafted to address specific issues such as toric lenses (for people diagnosed with astigmatism), and bifocal and multifocal Contact Lenses (for people diagnosed with presbyopia). For purposes of this Complaint, “Contact Lenses” refer to disposable contact lenses. 35. Under FDA regulations, Contact Lenses are classified as Class II and Class III pharmaceutical devices. As such, consumers must obtain a prescription from an eye care professional to purchase Contact Lenses. Typically, after performing an eye exam and a Contact Lens fitting, an eye care professional will issue a prescription to the patient for a specific brand and type of Contact Lens. 36. After obtaining a prescription, consumers can choose where to purchase the specified Contact Lenses (i.e., through their eye care professional, another independent eye care professional, or through other channels such as Wal-Mart, Costco, 1-800-CONTACTS or LensCrafters). 37. Contact Lenses are a commoditized product, as publicly admitted by Jim Murphy (“Murphy”), Vice-President of Defendant Alcon. Thus, according to a 2005 Report by the FTC, “the replacement lens a consumer purchases pursuant to a prescription that specifies a brand will be identical, regardless of where it is purchased.” The Strength of Competition In The Sale of Rx Contact Lenses: An FTC Study (the “2005 FTC Report”). 38. Consumers’ ability to freely choose their preferred retail channel was secured by the enactment of the Fairness to Contact Lens Consumers Act (“FCLCA”) (15 U.S.C. §§ 7601 et seq.) in December 2003. The FCLCA was enacted in response to complaints of prescriptions being withheld from patients. It requires ECPs to immediately provide patients with copies of their Contact Lens prescriptions so their method of purchase is uninhibited. 39. Congress recognized that the consumers’ ability to benefit from the FCLCA depended on intrabrand price competition by alternative retail options. The purpose of the FCLCA, according to legislative history, was to: [P]romote[] competition, consumer choice, and lower prices by extending to Contact Lens wearers the same automatic right to copies of their own prescriptions and allows consumers to purchase Contact Lenses from the provider of their choice. H.R. Rep. No. 108-318 (2003) (emphases added). 40. In 2004, the Contact Lens Rule (16 C.F.R. Parts 315 and 456), issued by the FTC, further clarified the requirements under the FCLCA to allow patients control over their Contact Lens prescriptions, thereby “increas[ing] consumers’ ability to shop around when buying Contact Lenses.” 2. Contact Lens Pricing and Retail Channels 41. According to the 2005 FTC Report, Contact Lens manufacturers “distribute the largest share of lenses through independent ECPs and the smallest through the online/mail-order channel” and this remains the case today. Figure 1 below illustrates Contact Lens sales to ECPs compared to other retail channels. Figure 1 42. Furthermore, as illustrated by Figure 2 below, a majority of prescriptions for Contact Lenses are filled by ECPs. Figure 2 43. The plethora of data unambiguously demonstrates that Contact Lenses were more expensive when purchased through ECPs prior to the implementation of the PFPs (as opposed to internet or big-box retailers). 44. A March 2004 study by 1-800 CONTACTS, which was also published in a 2004 FTC report entitled Possible Anticompetitive Barriers to E-Commerce: Contact Lenses (the “2004 FTC Report”), shows that ECPs charged approximately 25 to over 28 percent more than mass merchants and internet retailers for the same exact Contact Lenses. The results of the study are illustrated in Figure 3 below. Figure 3 45. Similarly, a 2005 FTC study found that, on average, Contact Lenses are least expensive when purchased through wholesale clubs.5 The study also found that Contact Lenses were approximately $15 less when purchased through internet retailers as opposed to offline retailers. 46. The 2005 FTC study commended the success of the FCLCA’s requirements, which have resulted in increased competition for Contact Lenses and lowered prices across the United States. 5 On average, prices were approximately $30 less than ECPs. 47. ECPs took notice of the price competition from other retail channels. According to a July 2014 Reuters article, “[t]he online channel is beginning to garner considerable attention from [ECPs]. Many are seeing this channel as a threat to traditional stores . . . The pricing strategies on the Internet usually mean a much cheaper price than that found in physical stores.” Diane Bartz, U.S. Senate panel to look into price setting for contact lenses, Reuters, Jul. 29, 2014 (internal quotations and citation omitted). 3. Defendants Unlawfully Stifled Competition by Colluding to Implement and Enforce Their Anticompetitive Price Floor Policies 48. In response to price competition from alternative retailers to ECPs, the Manufacturer Defendants implemented PFPs almost simultaneously. 49. Alcon announced its PFP in June 2013, initially applying it to its FAILIES TOTAL1® line of Contact Lenses. Alcon then expanded its PFP in January 2014 to its DAILIES® AquaComfort Plus® Multifocal and DAILIES® AquaComfort Plus® Toric Contact Lenses. Again, in June of 2014, Alcon extended its PFP policy to include AIR OPTIX® COLORS Contact Lenses. 50. In January 2014, a PFP was announced by Sauflon Pharmaceuticals (“Sauflon”), which was later acquired by CooperVision in August 2014, for its CLARITI family of Contact Lenses. In September 2014, CooperVision announced it would continue Souflon’s PFPs. 51. Soon after Sauflon and Alcon’s PFP announcements, in February of 2014, B&L implemented its PFP for its ULTRA™ brand of lenses. 52. Thereafter, in June of 2014, J&J implemented PFPs for all of its major Contact Lens brands, and simultaneously announced that it planned to discontinue all Contact Lens lines that were not subject to PFPs. J&J estimated that its PFPs would impact approximately 9.66 million Contact Lens wearers—roughly 69% of J&J Contact Lens consumers. 53. J&J’s Contact Lens brands subject to PFPs include: 1-Day ACUVUE® MOIST®, 1-DAY ACUVUE® MOIST® for ASTIGMATISM, 1-Day ACUVUE® TruEye®, ACUVUE® OASYS® with HYDRACLEAR®, ACUVUE® OASYS® for ASTIGMATISM, and ACUVUE® OASYS® for PRESBYOPIA. 54. In a June 24, 2014 letter, J&J acknowledged the coordinated effort to implement its PFPs and thanked ECPs for their “open and candid responses,” which allowed J&J “to define our strategy and implement the changes and actions you told us were needed.” Additionally, J&J has already made repeated anticompetitive changes to its PFPs based on input from ECPs. See Costco Wholesale Corp. v. Johnson & Johnson Vision Care, Inc., No. 3:15-cv-00941 (N.D. Cal.) (Dkt. No. 1) at ¶¶ 52 and 58 (hereinafter, the “Costco Complaint”). 55. The Manufacturer Defendants needed the agreement of their distributors, which it knows represent many retailers, to implement and enforce the PFPs and to avoid the PFPs being undercut by interbrand competition at the wholesale level. 56. The coordinated effort between the Manufacturer Defendants and their distributors, including ABB, is clear from the face of J&J’s PFPs: Under this policy, [J&J] and its authorized distributors [such as ABB] will cease to supply [PFP] products to any reseller who advertises or sells [PFP] products to patients at a price below the [PFP] price . . . .” 57. ABB is actively encouraging retailers to utilize PFPs as a way to maximize revenue. ABB Concise’s “Profit Advisor” publication directs and informs ECPs on how to increase revenues and charge above PFP prices. 58. The Defendants’ conspiracy was successful. After the coordinated implementation of the PFPs, prices for Contact Lenses increased dramatically. For example, as demonstrated in Figure 4 below, the price increases for some of J&J’s lines of Contact Lenses range from approximately 75 to nearly 200%. Figure 4 59. The Manufacturer Defendants and ABB therefore share a conscious commitment to a common scheme designed to achieve an unlawful objective. B. The United States Contact Lens Market Structure and Characteristics Support the Existence of a Conspiracy 60. The relevant product market for purposes of this Complaint is the Contact Lens market. The relevant geographical market is the United States. This is the market analyzed in the 2004 and 2005 FTC Reports. 61. The structure and other characteristics of the market for Contact Lenses in the United States are conducive to a price-fixing agreement among market participants and have made collusion particularly attractive. 62. Specifically, the Contact Lens market: (1) is highly concentrated; (2) has high barriers to entry; (3) has inelasticity of demand; (4) is highly homogenized; (5) has abundant opportunities for Defendants to meet and conspire; and (6) is comprised of participants who have motives to conspire. In addition, Defendants are each engaging in conduct that is against each of their individual economic self-interest and have implemented PFPs that represent a drastic shift in the way Contact Lenses are priced and sold. 1. The Market for Contact Lenses is Highly Concentrated 63. The Contact Lens market is highly concentrated. Collectively, the four Manufacturer Defendants control 97% of the United States Contact Lens market, as illustrated in Figure 5 below. Figure 5 64. The Manufacturer Defendants’ collective market share is broken down as follows: J&J controls 35.3% market share; Alcon controls 30.6% market share; CooperVision controls 23.9% market share; and B&L controls 7.2% market share. The Manufacturer Defendants’ market share is depicted in Figure 6 below. Figure 6 2. The Market for Contact Lenses Has High Barriers to Entry 65. Under basic economic principles, a collusive arrangement that raises product prices above competitive levels would attract new entrants seeking to benefit from the supra- competitive pricing. When, however, there are significant barriers to entry, new entrants are much less likely to enter the market. Thus, barriers to entry foster the formation and maintenance of a monopoly.6 66. Significant barriers preclude, reduce, and/or make it more difficult for competitors to enter the Contact Lens market. To develop and manufacture Contact Lenses takes years and requires complex technology, industry expertise, and skilled labor. Designing Contact Lenses also requires substantial research and development costs. 6 The exclusive possession or control of the supply or trade in a commodity or service. 67. Ultimately marketing lenses to consumers requires a manufacturer to obtain patents and necessary regulatory approvals. 68. Furthermore, regulations governing the sale of Contact Lenses require that patients obtain a prescription from an eye care professional for a particular line of Contact Lenses. A potential Contact Lens manufacturer would incur substantial costs marketing its product to ECPs and establishing a sophisticated distribution network to reach the professionals and consumers. 3. The Demand for Contact Lenses is Inelastic 69. “Elasticity” is an economics term used to describe the sensitivity of supply and demand relative to changes in one or the other. For example, demand is said to be “inelastic” if an increase in the price of a product results in only a small decline in the quantity sold of that product, if any. In other words, customers have nowhere to turn for alternative, cheaper products of similar quality, and are forced to continue to purchase the product at an increased price. 70. For a cartel to profit from raising prices above competitive levels, demand must be relatively inelastic at competitive prices. Otherwise, increased prices would result in declining sales, revenues, and profits as customers purchase substitute products or decline to buy altogether. Inelastic demand is a market characteristic that fosters collusion, allowing producers to raise their prices without triggering customer substitution and lost sales revenue. 71. Demand for Contact Lenses is highly inelastic. The requirement that ECPs must prescribe the brand and type of Contact Lens a consumer can wear causes there to be no cross elasticity of demand7 with other Contact Lenses and leaves consumers unable to constrain market abuses. 72. A small, non-transitory increase in the price for a prescribed Contact Lens would not cause Contact Lens consumers to switch to glasses or another product or service to correct their vision in significant enough numbers to overcome the price increase. Similarly, a small, non-transitory price increase would not cause Contact Lens distributors or retailers to change their activities sufficiently to make such a price increase unprofitable to a manufacturer with market power. 73. There are no substitutes for a Contact Lens consumer’s prescribed brand of Contact Lenses. As indicated by the American Antitrust Institute, “[t]he law does not permit the consumer to substitute another brand for the prescribed brand . . . generic equivalents cannot be obtained for branded contact lenses.”8 There is simply no alternative for consumers other than branded Contact Lenses, such as those sold by the Manufacturer Defendants. 4. Contact Lenses Are Highly Homogeneous 74. As admitted by Murphy of Alcon, Contact Lenses are a commodity-like product. When products or services offered by various suppliers are viewed as interchangeable by purchasers, it is easier for suppliers to unlawfully agree on the price for the product or service in 7 In economics, the cross elasticity of demand (or cross-price elasticity of demand) measures the responsiveness of the demand for a good to a change in the price of another good. It is measured as the percentage change in demand for the first good that occurs in response to a percentage change in price of the second good. 8 American Antitrust Institute, Letter to the FTC and DOJ (Oct. 24, 2014) at 2. question, making it easier to effectively police the collusively set prices. This allows for the formation and sustainability of an unlawful cartel. 75. Given the unique regulatory nature of the Contact Lens industry, a consumer may only purchase the brand of Contact Lens prescribed by his or her eye care professional. 76. Where different types of retailers (i.e.., independent eye care professional retailers, big-box stores, or internet retailers) offer the particular brand prescribed to a consumer, the consumer will make his or her purchase decision based primarily on price. The core considerations for a purchaser are where, when, and how much.9 77. Quite simply, this commoditization and interchangeability of Contact Lenses facilitated Defendants’ conspiracy by making price coordination much simpler. That is, consumers are not able to choose from numerous distinct Contact Lenses with varying characteristics. 5. Defendants Had Ample Opportunities to Meet and Conspire 78. Defendants attended industry events where they had the opportunity to meet, have improper discussions under the guise of legitimate business contacts, and perform acts necessary for the operation and furtherance of the conspiracy. 79. For example, some Manufacturer Defendants were members of the Contact Lens Manufacturers’ Association (“CLMA”). The CLMA hosts an annual meeting, publishes bi- weekly presidential updates to its members, and regularly publishes a newsletter. 9 http://www-rohan.sdsu.edu/~renglish/370/notes/chapt05/. 80. Additionally, the Manufacturer Defendants are the only members of the Contact Lens Institute (“CLI”). According to the CLI’s website, it was created to “represent[] the interests of its members . . . .” 81. CLI has no members other than the Manufacturer Defendants. Its board of directors consists of one executive from each of the Manufacturer Defendants: Angelini of J&J is the Chair; Andrew Sedgwick, Vice-President of Global Commercial Strategy & Business Development for CooperVision, is the Vice Chair; Richard Weisbarth, Vice-President of Professional Affairs for Alcon, is the Treasurer; and Joseph Barr, Vice-President of Clinical and Medical Affairs for B&L, is the Director. 82. Through CLI, the Manufacturer Defendants exchanged information. According to CLI’s website: The members of the CLI, together with other participating companies participate in a quarterly statistical program to track manufacturer shipment data of Contact Lens and Lens Care products which is managed by Veris Consulting [‘Veris’]. The program’s objective is to provide participants with accurate and timely consolidated market data. . . . . Each participating company in the CLI Statistical Program has a representative on the CLI Global Statistical Task Force. 83. According to Veris’ website, the program established by it for the CLI “track[s] sales at a detailed level worldwide” and “is more valuable than other sources of market data because sales are reported directly from manufacturers.” Veris states that its work for the CLI “is the only program where the data is reviewed annually by Veris to ensure accuracy. Veris implemented this internal review process to reassure participants that they could be confident in the data.” Indeed, Veris requests that “the finance department at each manufacturer’s headquarters . . . . [pull sales information and revenue data] directly from their internal system at the model, or SKU level.” The resulting low margin of error “is extremely important to participants since they use this data for strategic planning” and is reported to the Manufacturer Defendants on a quarterly and annual basis. According to its website, Karen Eftekari, the person at Veris who is the Senior Manager for this work, “also works with member companies [of CLI] such as Johnson & Johnson and Bausch & Lomb performing high-level data analysis and designing custom reporting tools and dashboards.” 84. As members of these industry associations, the Manufacturer Defendants had regular opportunities to meet, exchange information, and signal marketing intentions to one another. 6. Defendants Had Motives to Conspire 85. Each Manufacturer Defendant had a motive to maintain high retail prices for Contact Lenses. The Manufacturer Defendants shared the concern that if retailers charged low prices, it would put pressure on them to lower their wholesale prices. 86. Additionally, Manufacturer Defendants were motivated to keep their ECPs – the largest retail channel – satisfied so they would prescribe the Manufacturer Defendants’ Contact Lenses. Keeping the ECPs satisfied meant keeping retail prices high. 87. ABB, which is the largest distributor of the Manufacturer Defendants’ Contact Lenses in the United States and sells their Contact Lenses to two-thirds of ECPs, has stated that it “worked with” the Manufacturer Defendants to develop and implement the PFPs. ABB served as the “hub” in a “hub-and-spoke” conspiracy and communicated with each Manufacturer Defendant to facilitate the industry shift to implement PFPs. 7. Defendants’ Actions Are Against Each of Their Independent Economic Self- Interest 88. Manufacturer Defendants’ acts in implementing their PFPs were contrary to their independent economic self-interest. 89. Notably, during an analyst presentation on September 11, 2014, CooperVision admitted that the “Potential Downsides/Challenges” of adopting PFPs policies included: (a) “Enforcement can be challenging”; (b) “Consumer activism may generate legislative backlash and negative public perceptions”; and (c) “May alienate larger customers who want greater pricing freedom and cross marketing.” Despite these concerns, CooperVision went forward with implementing a new PFP on its Clariti line of Contact Lenses. 90. The Manufacturer Defendants also implemented the PFPs despite the consequential declining sales growth for 2014. According to an industry analyst, U.S. Contact Lens sales grew a mere 2% through the third quarter of 2014. 91. Additionally, given the significant buying power in the Contact Lens Market possessed by discount retailers, it would have been against each Manufacturer Defendant’s economic self-interest to unilaterally implement PFPs without assurance that its competitors would follow suit. Thus, if only some Manufacturer Defendants implemented PFPs, discount retailers likely would have switched their purchases to another Manufacturer Defendant without PFPs in place. 92. As a case in point, after three of the four Manufacturer Defendants implemented their PFPs, Costco notified its customers of the PFPs and urged them to switch Contact Lens brands to the remaining Manufacturer Defendant, CooperVision. But, soon thereafter, CooperVision followed suit and implemented its PFPs on its Clariti line. 8. The Manufacturer Defendants’ PFPs Were a Sudden and Drastic Shift in the Way Contact Lenses Are Priced and Sold 93. Before June of 2013, none of the Manufacturer Defendants had price floors in place such as those implemented through the PFPs. Subsequent to Alcon’s implementation of its first PFP, all of its major competitors followed suit over the next 15 months. 94. Alvarez of ABB acknowledged the “Fundamental Shift” the PFPs represented in the market for Contact Lenses. C. There is No Legitimate Business Justification for Defendants’ Concerted Price Floor Policies 95. Defendants cannot justify their PFPs as legitimate business decisions and any purported pro-competitive justification is pretextual. 96. Free-riding10 by retailers is not at issue since PFPs do not impact fitting fees charged by ECPs that are necessary for patients to receive their contact lens prescriptions. Even if patients attempt to have their prescriptions filled by a different retailer, the eye care professional has already been compensated through its fitting fee. 97. Additionally, the PFPs do not require investment by retailers by way of services or promotional efforts to improve care to patients or aid the manufacturer’s position versus rivals. Retailers who are not ECPs are unable to influence the brand of contact lens prescribed to consumers, and thus have no incentive to participate in promotional programs. PFPs, however, do incentivize ECPs to prescribe certain lenses based on financial motivations. 98. The Manufacturer Defendants have also attempted to justify the PFPs as a way to protect consumers from injury by buying Contact Lenses from substandard retailers. However, representatives of the Manufacturer Defendants, such as Carol Alexander, a Director of Professional Affairs at J&J, stated during a Utah Senate Business & Labor Committee hearing 10 Free-riding is an economic term used to describe the occurrence when those who benefit from resources, goods, or services do not pay for them, which results in either an under-provision of those goods or services, or in an overuse or degradation of a common property resource. that she could not identify any instance of this type of harm occurring. She then admitted that the adoption of J&J’s PFPs was not motivated by concerns about harm to patients. D. The Defendants Are Recidivist Violators of the Antitrust Laws 99. This is not the first time the Manufacturer Defendants have been accused of conspiring to unlawfully suppress competition in the market for Contact Lenses. 100. In 1996, Attorneys General of 32 states, along with consumers, brought antitrust lawsuits against B&L, J&J, CIBA Vision (Alcon’s predecessor). Disposable Contact Lens Antitrust Litig., 170 F.R.D. 524 (M.D. Fla. 1996). These lawsuits alleged that the Contact Lens manufacturers and the AOA (a trade association of ECPs) “conspired among themselves . . . to restrict the supply of replacement contact lenses to alternative channels of distribution.” The plaintiffs also alleged that the manufacturers engaged in an unlawful group boycott by restricting wholesale sales to “alternative suppliers” (e.g., mail order houses and pharmacies), and that but- for this conspiracy, the plaintiffs would have paid lower prices for Contact Lenses. In re Disposable Contact Lens Antitrust Litig., MDL No. 1030, 2001 WL 493244 (M.D. Fla. Feb. 8, 2001). 101. Following the denial of summary judgment to the defendants, the cases settled after several weeks of trial and the challenged practices ceased. Under the settlement, B&L agreed to pay $8 million and guaranteed it would distribute at least $9.5 million worth of benefits, and agreed to sell their Contact Lenses through alternative channels of distribution on a non-discriminatory basis. J&J agreed to pay $25 million into the settlement fund, guaranteed it would distribute $30 million in benefits, agreed to pay up to $5 million to former J&J Contact Lens wearers, and agreed to sell its Contact Lenses through alternative channels of distribution on a non-discriminatory basis. AOA agreed to pay $750,000 and agreed to not: (i) restrict where consumers could obtain their replacement Contact Lenses; (ii) oppose the release of Contact Lens prescriptions; and (iii) make claims that eye health was impacted by the retailer from which the Contact Lenses were purchased. 102. While the settlement resolved issues of discriminatory conduct by B&L, J&J, and Alcon’s predecessor, other manufactures continued these anticompetitive practices. This conduct led to an investigation by the U.S. government. On September 15, 2006, a hearing was held by the Commerce, Trade and Consumer Protection Subcommittee of the House Energy and Commerce Committee entitled Contact Lens Sales: Is Market Regulation the Prescription? After this hearing, the manufacturer who most visibly engaged in restrictive distribution practices abandoned its policies, effectively mooting the need for legislative action. 103. In addition to U.S. investigations and litigation, J&J, along with other Contact Lens manufacturers, have been accused of restricting competition and stabilizing prices in other countries. 104. In 2009, Germany’s Federal Cartel Office fined Contact Lens manufacturers, including CIBA Vision (Alcon’s predecessor), for pressuring resellers to follow recommended resale prices, among other practices. 105. In May 2014, China’s National Development and Reform Commission (“NDRC”) found that Manufacturer Defendants J&J and B&L’s PFPs, among other practices, violated China’s Anti-Monopoly Law and fined them 3.6 million Yuan and 3.7 million Yuan, respectively. CLASS ACTION ALLEGATIONS 106. Plaintiff brings this action on behalf of herself and as a class action under Rule 23(a) and (b)(2) of the Federal Rules of Civil Procedure, seeking equitable and injunctive relief on behalf of the following class (the “Nationwide Class”): All persons in the United States who indirectly purchased Contact Lenses sold by any of the Manufacturer Defendants, or any current or former subsidiary or affiliate thereof, or any co-conspirator, during the period from and including June 1, 2013 through such time as the anticompetitive effects of Defendants’ conduct cease. 107. Plaintiff also brings this action on behalf of himself and as a class action under Rule 23(a) and (b)(3) of the Federal Rules of Civil Procedure seeking damages pursuant to the common law of unjust enrichment and the state antitrust, unfair competition, and consumer protection laws of the states listed below (the “Indirect Purchaser States”)11 on behalf of the following class (the “Damages Class”): All persons and entities in the Indirect Purchaser States who indirectly purchased Contact Lenses sold by any of the Manufacturer Defendants, or any current or former subsidiary or affiliate thereof, or any co-conspirator, during the Class Period. 108. The Nationwide Class and the Damages Class are referred to herein as the “Classes.” Excluded from the Classes are Defendants, their parent companies, subsidiaries and affiliates, any co-conspirators, federal governmental entities and instrumentalities of the federal government, states and their subdivisions, agencies and instrumentalities, and persons who purchased Contact Lenses directly. 109. While Plaintiff does not know the exact number of the members of the Classes, Plaintiff believes there are (at least) thousands of members in each Class. 11 The Indirect Purchaser States include Arkansas, Arizona, California, District of Columbia, Florida, Hawaii, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Missouri, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, West Virginia and Wisconsin. 110. Common questions of law and fact exist as to all members of the Classes. This is particularly true given the nature of Defendants’ conspiracy, which was generally applicable to all the members of both Classes, thereby making appropriate relief with respect to the Classes as a whole. Such questions of law and fact common to the Classes include, but are not limited to: (a) Whether the Defendants and their co-conspirators engaged in a combination and conspiracy among themselves to fix, raise, maintain or stabilize the prices of Contact Lenses; (b) The identity of the participants of the alleged conspiracy; (c) The duration of the alleged conspiracy and the acts carried out by Defendants and their co-conspirators in furtherance of the conspiracy; (d) Whether the alleged conspiracy violated the Sherman Act, as alleged in the First Count; (e) Whether the alleged conspiracy violated state antitrust and unfair competition law, and/or state consumer protection law, as alleged in the Second and Third Counts; (f) Whether the Defendants unjustly enriched themselves to the detriment of the Plaintiff and the members of the Classes, thereby entitling Plaintiff and the members of the Classes to disgorgement of all benefits derived by Defendants, as alleged in the Fourth Count; (g) Whether the conduct of the Defendants and their co-conspirators, as alleged in this Complaint, caused injury to the business or property of Plaintiff and the members of the Classes; (h) The effect of the alleged conspiracy on the prices of Contact Lenses sold in the United States during the Class Period; (i) The appropriate injunctive and related equitable relief for the Nationwide Class; and (j) The appropriate class-wide measure of damages for the Damages Class. 111. Plaintiff’s claims are typical of the claims of the members of the Classes, and Plaintiff will fairly and adequately protect the interests of the Classes. Plaintiff and all members of the Classes are similarly affected by Defendants’ wrongful conduct in that they paid artificially inflated prices for Contact Lenses purchased indirectly from the Defendants and/or their co-conspirators. 112. Plaintiff’s claims arise out of the same common course of conduct giving rise to the claims of the other members of the Classes. Plaintiff’s interests are coincident with, and not antagonistic to, those of the other members of the Classes. Plaintiff is represented by counsel who are competent and experienced in the prosecution of antitrust and class action litigation. 113. The questions of law and fact common to the members of the Classes predominate over any questions affecting only individual members, including legal and factual issues relating to liability and damages. 114. Class action treatment is a superior method for the fair and efficient adjudication of the controversy, in that, among other things, such treatment will permit a large number of similarly situated persons to prosecute their common claims in a single forum simultaneously, efficiently and without the unnecessary duplication of evidence, effort and expense that numerous individual actions would engender. The benefits of proceeding through the class mechanism, including providing injured persons or entities with a method for obtaining redress for claims that it might not be practicable to pursue individually, substantially outweigh any difficulties that may arise in management of this class action. 115. The prosecution of separate actions by individual members of the Classes would create a risk of inconsistent or varying adjudications, establishing incompatible standards of conduct for Defendants. PLAINTIFF AND THE CLASSES SUFFERED ANTITRUST INJURY 116. Defendants’ price-fixing conspiracy had the following effects, among others: (a) Price competition has been restrained or eliminated with respect to Contact Lenses; (b) The prices of Contact Lenses have been fixed, raised, maintained, or stabilized at artificially inflated levels; (c) Indirect purchasers of Contact Lenses have been deprived of free and open competition; and (d) Indirect purchasers of Contact Lenses paid artificially inflated prices. 117. During the Class Period, Plaintiff and the members of the Classes paid supra- competitive prices for Contact Lenses. Those overcharges have unjustly enriched Defendants. 118. The purpose of the conspiratorial conduct of the Defendants and their co- conspirators was to set a price floor to thereby raise, fix, or stabilize the price of Contact Lenses and, as a direct and foreseeable result, the price of Contact Lenses. 119. The precise amount of the overcharge impacting the prices of Contact Lenses paid by consumers can be measured and quantified. Commonly used and well-accepted economic models can be used to measure both the extent and the amount of the supra-competitive charge passed-through the chain of distribution. Thus, the economic harm to Plaintiff and the members of the Classes can be quantified. 120. By reason of the alleged violations of the antitrust laws and other laws alleged herein, Plaintiff and the members of the Classes have sustained injury to their businesses or property, having paid higher prices for Contact Lenses than they would have paid in the absence of the Defendants’ illegal contract, combination, or conspiracy, and, as a result, have suffered damages in an amount presently undetermined. This is an antitrust injury of the type that the antitrust laws were meant to punish and prevent. FIRST COUNT Violation of Section 1 of the Sherman Act (on behalf of Plaintiff and the Nationwide Class) 121. Plaintiff repeats the allegations set forth above as if fully set forth herein. 122. Defendants and unnamed conspirators entered into and engaged in a contract, combination, or conspiracy in unreasonable restraint of trade in violation of Section 1 of the Sherman Act (15 U.S.C. § 1). 123. The acts done by each of the Defendants as part of, and in furtherance of, their contract, combination, or conspiracy were authorized, ordered, or done by their officers, agents, employees, or representatives while actively engaged in the management of Defendants’ affairs. 124. During the Class Period, Defendants and their co-conspirators entered into a continuing agreement, understanding and conspiracy in restraint of trade to establish a price floor and artificially fix, raise, stabilize, and control prices for Contact Lenses, thereby creating anticompetitive effects. 125. The conspiratorial acts and combinations have caused unreasonable restraints in the market for Contact Lenses. 126. As a result of Defendants’ unlawful conduct, Plaintiff and other similarly situated indirect purchasers in the Nationwide Class who purchased Contact Lenses have been harmed by being forced to pay inflated, supra-competitive prices for Contact Lenses. 127. In formulating and carrying out the alleged agreement, understanding and conspiracy, Defendants and their co-conspirators did those things that they combined and conspired to do, including but not limited to the acts, practices and course of conduct set forth herein. 128. Defendants’ conspiracy had the following effects, among others: (a) Price competition in the market for Contact Lenses has been restrained, suppressed, and/or eliminated in the United States; (b) Prices for Contact Lenses provided by Defendants and their co-conspirators have been fixed, raised, maintained, and stabilized at artificially high, non-competitive levels throughout the United States; and (c) Plaintiff and members of the Nationwide Class who purchased Contact Lenses indirectly from Defendants and their co-conspirators have been deprived of the benefits of free and open competition. 129. Plaintiff and members of the Nationwide Class have been injured and will continue to be injured in their business and property by paying more for Contact Lenses purchased indirectly from Defendants and the co-conspirators than they would have paid and will pay in the absence of the conspiracy. 130. The alleged contract, combination, or conspiracy is a per se violation of the federal antitrust laws. 131. Plaintiff and members of the Nationwide Class are entitled to an injunction against Defendants, preventing and restraining the violations alleged herein. SECOND COUNT Violation of State Antitrust Statutes (on behalf of Plaintiff and the Damages Class) 132. Plaintiff repeats the allegations set forth above as if fully set forth herein. 133. During the Class Period, Defendants and their co-conspirators engaged in a continuing contract, combination or conspiracy with respect to the sale of Contact Lenses in unreasonable restraint of trade and commerce and in violation of the various state antitrust and other statutes set forth below. 134. The contract, combination, or conspiracy consisted of an agreement among the Defendants and their co-conspirators to fix, raise, inflate, stabilize, and/or maintain at artificially supra-competitive prices for Contact Lenses and to allocate customers for Contact Lenses in the United States. 135. In formulating and effectuating this conspiracy, Defendants and their co- conspirators performed acts in furtherance of the combination and conspiracy, including: (a) participating in meetings and conversations among themselves in the United States and elsewhere during which they agreed to price Contact Lenses at certain levels, and otherwise to fix, increase, inflate, maintain, or stabilize effective prices paid by Plaintiff and members of the Damages Class with respect to Contact Lenses provided in the United States; and (b) participating in meetings and conversations among themselves in the United States and elsewhere to implement, adhere to, and police the unlawful agreements they reached. 136. Defendants and their co-conspirators engaged in the actions described above for the purpose of carrying out their unlawful agreements to fix, increase, maintain, or stabilize prices of Contact Lenses. 137. Defendants’ anticompetitive acts described above were knowing, willful and constitute violations or flagrant violations of the following state antitrust statutes. 138. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Arizona Revised Statutes, §§ 44-1401, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) price competition for Contact Lenses was restrained, suppressed, and eliminated throughout Arizona; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout Arizona; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct substantially affected Arizona commerce. (c) As a direct and proximate result of defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants entered into agreements in restraint of trade in violation of Ariz. Rev. Stat. §§ 44-1401, et seq. Accordingly, Plaintiff and members of the Damages Class seek all forms of relief available under Ariz. Rev. Stat. §§ 44-1401, et seq. 139. Defendants have entered into an unlawful agreement in restraint of trade in violation of the California Business and Professions Code, §§ 16700, et seq. (a) During the Class Period, Defendants and their co-conspirators entered into and engaged in a continuing unlawful trust in restraint of the trade and commerce described above in violation of Section 16720, California Business and Professions Code. Defendants, and each of them, have acted in violation of Section 16720 to fix, raise, stabilize, and maintain prices of Contact Lenses at supra-competitive levels. (b) The aforesaid violations of Section 16720, California Business and Professions Code, consisted, without limitation, of a continuing unlawful trust and concert of action among the Defendants and their co-conspirators, the substantial terms of which were to fix, raise, maintain, and stabilize the prices of Contact Lenses. (c) For the purpose of forming and effectuating the unlawful trust, the Defendants and their co-conspirators have done those things which they combined and conspired to do, including but not limited to the acts, practices and course of conduct set forth above and creating a price floor, fixing, raising, and stabilizing the price of Contact Lenses. (d) The combination and conspiracy alleged herein has had, inter alia, the following effects: (1) price competition for Contact Lenses has been restrained, suppressed, and/or eliminated in the State of California; (2) prices for Contact Lenses provided by Defendants and their co-conspirators have been fixed, raised, stabilized, and pegged at artificially high, non-competitive levels in the State of California and throughout the United States; and (3) those who purchased Contact Lenses directly or indirectly from Defendants and their co-conspirators have been deprived of the benefit of free and open competition. (e) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property in that they paid more for Contact Lenses than they otherwise would have paid in the absence of Defendants’ unlawful conduct. As a result of Defendants’ violation of Section 16720 of the California Business and Professions Code, Plaintiff and members of the Damages Class seek treble damages and their cost of suit, including a reasonable attorney’s fee, pursuant to Section 16750(a) of the California Business and Professions Code. 140. Defendants have entered into an unlawful agreement in restraint of trade in violation of the District of Columbia Code Annotated §§ 28-4501, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout the District of Columbia; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout the District of Columbia; (3) Plaintiff and members of the Damages Class, including those who resided in the District of Columbia and/or purchased Contact Lenses that were shipped by Defendants or their co-conspirators, were deprived of free and open competition, including in the District of Columbia; and (4) Plaintiff and members of the Damages Class, including those who resided in the District of Columbia and/or purchased Contact Lenses in the District of Columbia that were shipped by Defendants or their co-conspirators, paid supra-competitive, artificially inflated prices for Contact Lenses, including in the District of Columbia. (b) During the Class Period, Defendants’ illegal conduct substantially affected District of Columbia commerce. (c) As a direct and proximate result of defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of District of Columbia Code Ann. §§ 28-4501, et seq. Accordingly, Plaintiff and members of the Damages Class seek all forms of relief available under District of Columbia Code Ann. §§ 28-4501, et seq. 141. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Hawaii Revised Statutes Annotated §§ 480-1, et seq. 142. Defendants’ unlawful conduct had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Hawaii; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout Hawaii; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supracompetitive, artificially inflated prices for Contact Lenses. 143. During the Class Period, Defendants’ illegal conduct substantially affected Hawaii commerce. 144. As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. 145. By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of Hawaii Revised Statutes Annotated §§ 480-4, et seq. Accordingly, Plaintiff and members of the Damages Class seek all forms of relief available under Hawaii Revised Statutes Annotated §§ 480-4, et seq. 146. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Illinois Antitrust Act, 740 Illinois Compiled Statutes 10/1, et seq. 147. Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Illinois; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout Illinois; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supracompetitive, artificially inflated prices for Contact Lenses. 148. During the Class Period, Defendants’ illegal conduct substantially affected Illinois commerce. 149. As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. 150. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Iowa Code §§ 553.1, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Iowa; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout Iowa; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct substantially affected Iowa commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of Iowa Code §§ 553.1, et seq. Accordingly, Plaintiff and members of the Damages Class seek all forms of relief available under Iowa Code §§ 553.1, et seq. 151. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Kansas Statutes Annotated, §§ 50-101, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Kansas; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout Kansas; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct substantially affected Kansas commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of Kansas Stat. Ann. §§ 50-101, et seq. Accordingly, Plaintiff and members of the Damages Class seek all forms of relief available under Kansas Stat. Ann. §§ 50-101, et seq. 152. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Maine Revised Statutes, Maine Rev. Stat. Ann. 10, §§ 1101, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Maine; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout Maine; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct substantially affected Maine commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of Maine Rev. Stat. Ann. 10, §§ 1101, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under Maine Rev. Stat. Ann. 10, §§ 1101, et seq. 153. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Michigan Compiled Laws Annotated §§ 445.771, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Michigan; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout Michigan; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct substantially affected Michigan commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of Michigan Comp. Laws Ann. §§ 445.771, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under Michigan Comp. Laws Ann. §§ 445.771, et seq. 154. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Minnesota Annotated Statutes §§ 325D.49, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Minnesota; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout Minnesota; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct substantially affected Minnesota commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of Minnesota Stat. §§ 325D.49, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under Minnesota Stat. §§ 325D.49, et seq. 155. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Mississippi Code Annotated §§ 75-21-1, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Mississippi; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout Mississippi; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct substantially affected Mississippi commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of Mississippi Code Ann. § 75-21-1, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under Mississippi Code Ann. § 75-21-1, et seq. 156. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Nebraska Revised Statutes §§ 59-801, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Nebraska; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout Nebraska; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct substantially affected Nebraska commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of Nebraska Revised Statutes §§ 59-801, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under Nebraska Revised Statutes §§ 59-801, et seq. 157. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Nevada Revised Statutes Annotated §§ 598A.010, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Nevada; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout Nevada; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct substantially affected Nevada commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of Nevada Rev. Stat. Ann. §§ 598A, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under Nevada Rev. Stat. Ann. §§ 598A, et seq. 158. Defendants have entered into an unlawful agreement in restraint of trade in violation of the New Hampshire Revised Statutes §§ 356:1, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout New Hampshire; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout New Hampshire; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct substantially affected New Hampshire commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of New Hampshire Revised Statutes §§ 356:1, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under New Hampshire Revised Statutes §§ 356:1, et seq. 159. Defendants have entered into an unlawful agreement in restraint of trade in violation of the New Mexico Statutes Annotated §§ 57-1-1, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout New Mexico; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout New Mexico; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct substantially affected New Mexico commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of New Mexico Stat. Ann. §§ 57-1-1, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under New Mexico Stat. Ann. §§ 57-1-1, et seq. 160. Defendants have entered into an unlawful agreement in restraint of trade in violation of the New York General Business Laws §§ 340, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout New York; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout New York; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses that were higher than they would have been absent the Defendants’ illegal acts. (b) During the Class Period, Defendants’ illegal conduct substantially affected New York commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of the New York Donnelly Act, §§ 340, et seq. The conduct set forth above is a per se violation of the Act. Accordingly, Plaintiff and members of the Damages Class seek all relief available under New York Gen. Bus. Law §§ 340, et seq. 161. Defendants have entered into an unlawful agreement in restraint of trade in violation of the North Carolina General Statutes §§ 75-1, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout North Carolina; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout North Carolina; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct substantially affected North Carolina commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of North Carolina Gen. Stat. §§ 75-1, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under North Carolina Gen. Stat. §§ 75-1, et. seq. 162. Defendants have entered into an unlawful agreement in restraint of trade in violation of the North Dakota Century Code §§ 51-08.1-01, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout North Dakota; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout North Dakota; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct had a substantial effect on North Dakota commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of North Dakota Cent. Code §§ 51-08.1-01, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under North Dakota Cent. Code §§ 51-08.1-01, et seq. 163. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Oregon Revised Statutes §§ 646.705, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Oregon; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout Oregon; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct had a substantial effect on Oregon commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of Oregon Revised Statutes §§ 646.705, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under Oregon Revised Statutes §§ 646.705, et seq. 164. Defendants have entered into an unlawful agreement in restraint of trade in violation of the South Dakota Codified Laws §§ 37-1-3.1, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout South Dakota; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout South Dakota; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct had a substantial effect on South Dakota commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of South Dakota Codified Laws Ann. §§ 37-1, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under South Dakota Codified Laws Ann. §§ 37-1, et seq. 165. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Tennessee Code Annotated §§ 47-25-101, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Tennessee; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout Tennessee; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct had a substantial effect on Tennessee commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of Tennessee Code Ann. §§ 47-25-101, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under Tennessee Code Ann. §§ 47-25-101, et seq. 166. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Utah Code Annotated §§ 76-10-911, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Utah; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout Utah; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct had a substantial effect on Utah commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of Utah Code Annotated §§ 76-10-911, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under Utah Code Annotated §§ 76-10-911, et seq. 167. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Vermont Stat. Ann. 9 §§ 2453, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Vermont; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout Vermont; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct had a substantial effect on Vermont commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of Vermont Stat. Ann. 9 §§ 2453, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under Vermont Stat. Ann. 9 §§ 2453, et seq. 168. Defendants have entered into an unlawful agreement in restraint of trade in violation of the West Virginia Code §§ 47-18-1, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout West Virginia; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout West Virginia; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct had a substantial effect on West Virginia commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of West Virginia Code §§ 47-18-1, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under West Virginia Code §§ 47- 18-1, et seq. 169. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Wisconsin Statutes §§ 133.01, et seq. (a) Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Wisconsin; (2) Contact Lens prices were raised, fixed, maintained and stabilized at artificially high levels throughout Wisconsin; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct had a substantial effect on Wisconsin commerce. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. (d) By reason of the foregoing, Defendants have entered into agreements in restraint of trade in violation of Wisconsin Stat. §§ 133.01, et seq. Accordingly, Plaintiff and members of the Damages Class seek all relief available under Wisconsin Stat. §§ 133.01, et seq. 170. Plaintiff and members of the Damages Class in each of the above states have been injured in their business and property by reason of Defendants’ unlawful combination, contract, conspiracy and agreement. Plaintiff and members of the Damages Class have paid more for Contact Lenses than they otherwise would have paid in the absence of Defendants’ unlawful conduct. This injury is of the type the antitrust laws of the above states were designed to prevent and flows from that which makes Defendants’ conduct unlawful. 171. In addition, Defendants have profited significantly from the aforesaid conspiracy. Defendants’ profits derived from their anticompetitive conduct come at the expense and detriment of members of the Plaintiff and the members of the Damages Class. 172. Accordingly, Plaintiff and the members of the Damages Class in each of the above jurisdictions seek damages (including statutory damages where applicable), to be trebled or otherwise increased as permitted by a particular jurisdiction’s antitrust law, and costs of suit, including reasonable attorneys’ fees, to the extent permitted by the above state laws. THIRD COUNT Violation of State Consumer Protection Statutes (on behalf of Plaintiff and the Damages Class) 173. Plaintiff repeats the allegations set forth above as if fully set forth herein. 174. Defendants engaged in unfair competition or unfair, unconscionable, deceptive or fraudulent acts or practices in violation of the state consumer protection and unfair competition statutes listed below. 175. Defendants have knowingly entered into an unlawful agreement in restraint of trade in violation of the Arkansas Code Annotated, § 4-88-101, et. seq. 176. Defendants knowingly agreed to, and did in fact, act in restraint of trade or commerce by affecting, fixing, controlling, and/or maintaining at non-competitive and artificially inflated levels, the prices at which Contact Lenses were sold, distributed, or obtained in Arkansas and took efforts to conceal their agreements from Plaintiff and members of the Damages Class. 177. The aforementioned conduct on the part of the Defendants constituted “unconscionable” and “deceptive” acts or practices in violation of Arkansas Code Annotated, § 4-88-107(a)(10). 178. Defendants’ unlawful conduct had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Arkansas; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout Arkansas; (3) Plaintiff and the members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and the members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. 179. During the Class Period, Defendants’ illegal conduct substantially affected Arkansas commerce and consumers. 180. As a direct and proximate result of the unlawful conduct of the Defendants, Plaintiff and the members of the Damages Class have been injured in their business and property and are threatened with further injury. 181. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Arkansas Code Annotated, § 4-88-107(a)(10) and, accordingly, Plaintiff and the members of the Damages Class seek all relief available under that statute. 182. Defendants have engaged in unfair competition or unfair, unconscionable, deceptive or fraudulent acts or practices in violation of California Business and Professions Code § 17200, et seq. (a) During the Class Period, Defendants manufactured, marketed, sold, or distributed Contact Lenses in California, and committed and continue to commit acts of unfair competition, as defined by Sections 17200, et seq. of the California Business and Professions Code, by engaging in the acts and practices specified above. (b) This claim is instituted pursuant to Sections 17203 and 17204 of the California Business and Professions Code, to obtain restitution from these Defendants for acts, as alleged herein, that violated Section 17200 of the California Business and Professions Code, commonly known as the Unfair Competition Law. (c) The Defendants’ conduct as alleged herein violated Section 17200. The acts, omissions, misrepresentations, practices and non-disclosures of Defendants, as alleged herein, constituted a common, continuous, and continuing course of conduct of unfair competition by means of unfair, unlawful, and/or fraudulent business acts or practices within the meaning of California Business and Professions Code, Section 17200, et seq., including, but not limited to, the following: (1) the violations of Section 1 of the Sherman Act, as set forth above; (2) the violations of Section 16720, et seq., of the California Business and Professions Code, set forth above; (d) Defendants’ acts, omissions, misrepresentations, practices, and non-disclosures, as described above, whether or not in violation of Section 16720, et seq., of the California Business and Professions Code, and whether or not concerted or independent acts, are otherwise unfair, unconscionable, unlawful or fraudulent; (e) Defendants’ acts or practices are unfair to purchasers of Contact Lenses in the State of California within the meaning of Section 17200, California Business and Professions Code; and (f) Defendants’ acts and practices are fraudulent or deceptive within the meaning of Section 17200 of the California Business and Professions Code. (g) Plaintiff and members of the Damages Class are entitled to full restitution and/or disgorgement of all revenues, earnings, profits, compensation, and benefits that may have been obtained by Defendants as a result of such business acts or practices. (h) The illegal conduct alleged herein is continuing and there is no indication that Defendants will not continue such activity into the future. (i) The unlawful and unfair business practices of Defendants, and each of them, as described above, have caused and continue to cause Plaintiff and the members of the Damages Class to pay supra-competitive and artificially-inflated prices for Contact Lenses. Plaintiff and the members of the Damages Class suffered injury in fact and lost money or property as a result of such unfair competition. (j) The conduct of Defendants as alleged in this Complaint violates Section 17200 of the California Business and Professions Code. (k) As alleged in this Complaint, Defendants and their co-conspirators have been unjustly enriched as a result of their wrongful conduct and by Defendants’ unfair competition. Plaintiff and the members of the Damages Class are accordingly entitled to equitable relief including restitution and/or disgorgement of all revenues, earnings, profits, compensation, and benefits that may have been obtained by Defendants as a result of such business practices, pursuant to the California Business and Professions Code, Sections 17203 and 17204. 183. Defendants have engaged in unfair competition or unfair, unconscionable, or deceptive acts or practices in violation of District of Columbia Code § 28-3901, et seq. (a) Defendants agreed to, and did in fact, act in restraint of trade or commerce by affecting, fixing, controlling and/or maintaining, at artificial and/or non-competitive levels, the prices at which Contact Lenses were sold, distributed or obtained in the District of Columbia (b) The foregoing conduct constitutes “unlawful trade practices,” within the meaning of D.C. Code § 28-3904. Plaintiff was not aware of Defendants’ price-fixing conspiracy and has therefore unaware that he was being unfairly and illegally overcharged. There was a gross disparity of bargaining power between the parties with respect to the price charged by Defendants for Contact Lenses. Defendants had the sole power to set that price and Plaintiff had no power to negotiate a lower price. Moreover, Plaintiff lacked any meaningful choice in purchasing Contact Lenses because he was unaware of the unlawful overcharge and there was no alternative source of supply through which Plaintiff could avoid the overcharges. Defendants’ conduct with regard to sales of Contact Lenses, including their illegal conspiracy to secretly fix the price of Contact Lenses at supra-competitive levels and overcharge consumers, was substantively unconscionable because it was one-sided and unfairly benefited Defendants at the expense of Plaintiff and the public. Defendants took grossly unfair advantage of Plaintiff. The suppression of competition that has resulted from Defendants’ conspiracy has ultimately resulted in unconscionably higher prices for purchasers so that there was a gross disparity between the price paid and the value received for Contact Lenses. (c) Defendants’ unlawful conduct had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout the District of Columbia; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout the District of Columbia; (3) Plaintiff and the Damages Class were deprived of free and open competition; and (4) Plaintiff and the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (d) As a direct and proximate result of the Defendants’ conduct, Plaintiff and members of the Damages Class have been injured and are threatened with further injury. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of District of Columbia Code § 28-3901, et seq., and, accordingly, Plaintiff and members of the Damages Class seek all relief available under that statute. 184. Defendants have engaged in unfair competition or unfair, unconscionable, or deceptive acts or practices in violation of the Florida Deceptive and Unfair Trade Practices Act, Fla. Stat. §§ 501.201, et seq. (a) Defendants’ unlawful conduct had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Florida; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout Florida; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct substantially affected Florida commerce and consumers. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured and are threatened with further injury. (d) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Florida Stat. § 501.201, et seq., and, accordingly, Plaintiff and members of the Damages Class seek all relief available under that statute. 185. Defendants have engaged in unfair competition or unfair, unconscionable, or deceptive acts or practices in violation of the Hawaii Revised Statutes Annotated §§ 480-1, et (a) Defendants’ unlawful conduct had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Hawaii; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout Hawaii; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants’ illegal conduct substantially affected Hawaii commerce and consumers. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured and are threatened with further injury. (d) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Hawaii Rev. Stat. § 480, et seq., and, accordingly, Plaintiff and members of the Damages Class seek all relief available under that statute. 186. Defendants have engaged in unfair competition or unlawful, unfair, unconscionable, or deceptive acts or practices in violation of the Massachusetts Gen. Laws, Ch 93A, § 1 et seq. 187. Defendants were engaged in trade or commerce as defined by G.L. 93A. Defendants, in a market that includes Massachusetts, agreed to, and did in fact, act in restraint of trade or commerce by affecting, fixing, controlling, and/or maintaining at non-competitive and artificially inflated levels, the prices at which Contact Lens were sold, distributed, or obtained in Massachusetts and took efforts to conceal their agreements from Plaintiff and members of the Damages Class. 188. The aforementioned conduct on the part of the Defendants constituted “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce,” in violation of Massachusetts Gen. Laws, Ch 93A, § 2, 11. 189. Defendants’ unlawful conduct had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Massachusetts; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout Massachusetts; (3) Plaintiff and the members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and the members of the Damages Class paid supra- competitive, artificially inflated prices for Contact Lenses. 190. During the Class Period, Defendants’ illegal conduct substantially affected Massachusetts commerce and consumers. 191. As a direct and proximate result of the unlawful conduct of the Defendants, Plaintiff and the members of the Damages Class have been injured in their business and property and are threatened with further injury. 192. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Massachusetts Gen. Laws, Ch 93A, §§ 2, 11, that were knowing or willful, and, accordingly, Plaintiff and the members of the Damages Class seek all relief available under that statute, including multiple damages. 193. Defendants have engaged in unfair competition or unfair, unconscionable, or deceptive acts or practices in violation of the Missouri Merchandising Practices Act, Mo. Rev. Stat. § 407.010, et. seq. (a) Missouri Plaintiff and members of the Damages Class purchased Contact Lenses for personal or family purposes. (b) Defendants engaged in the conduct described herein in connection with the sale of Contact Lenses in trade or commerce in a market that includes Missouri. (c) Defendants agreed to, and did in fact affect, fix, control, and/or maintain, at artificial and non-competitive levels, the prices at which Contact Lenses were sold, distributed, or obtained in Missouri, which conduct constituted unfair practices in that it was unlawful under federal and state law, violated public policy, was unethical, oppressive and unscrupulous, and caused substantial injury to Plaintiff and members of the Damages Class. (d) Defendants concealed, suppressed, and omitted to disclose material facts to Plaintiff and members of the Damages Class concerning Defendants’ unlawful activities and artificially inflated prices for Contact Lenses. The concealed, suppressed, and omitted facts would have been important to Plaintiff and members of the Damages Class as they related to the cost of Contact Lenses they purchased. (e) Defendants misrepresented the real cause of price increases and/or the absence of price reductions in Contact Lenses by making public statements that were not in accord with the facts. (f) Defendants’ statements and conduct concerning the price of Contact Lenses were deceptive as they had the tendency or capacity to mislead Plaintiff and members of the Damages Class to believe that they were purchasing Contact Lenses at prices established by a free and fair market. (g) Defendants’ unlawful conduct had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Missouri; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout Missouri; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (h) The foregoing acts and practices constituted unlawful practices in violation of the Missouri Merchandising Practices Act. (i) As a direct and proximate result of the above-described unlawful practices, Plaintiff and members of the Damages Class suffered ascertainable loss of money or property. (j) Accordingly, Plaintiff and members of the Damages Class seek all relief available under Missouri’s Merchandising Practices Act, specifically Mo. Rev. Stat. § 407.020, which prohibits “the act, use or employment by any person of any deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce…,” as further interpreted by the Missouri Code of State Regulations, 15 CSR 60-7.010, et seq., 15 CSR 60-8.010, et seq., and 15 CSR 60-9.010, et seq., and Mo. Rev. Stat. § 407.025, which provides for the relief sought in this count. 194. Defendants have engaged in unfair competition or unfair, unconscionable, or deceptive acts or practices in violation of the Montana Unfair Trade Practices and Consumer Protection Act of 1970, Mont. Code, §§ 30-14-103, et seq., and §§ 30-14-201, et. seq. (a) Defendants’ unlawful conduct had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Montana; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout Montana; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (b) During the Class Period, Defendants marketed, sold, or distributed Contact Lenses in Montana, and Defendants’ illegal conduct substantially affected Montana commerce and consumers. (c) As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured and are threatened with further injury. (d) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Mont. Code, §§ 30-14-103, et seq., and §§ 30-14-201, et. seq., and, accordingly, Plaintiff and members of the Damages Class seek all relief available under that statute. 195. Defendants have engaged in unfair competition or unfair, unconscionable, or deceptive acts or practices in violation of the New Mexico Stat. § 57-12-1, et seq. (a) Defendants agreed to, and did in fact, act in restraint of trade or commerce by affecting, fixing, controlling and/or maintaining at non-competitive and artificially inflated levels, the prices at which Contact Lenses were sold, distributed or obtained in New Mexico and took efforts to conceal their agreements from Plaintiff and members of the Damages Class. (b) The aforementioned conduct on the part of the Defendants constituted “unconscionable trade practices,” in violation of N.M.S.A. Stat. § 57-12-3, in that such conduct, inter alia, resulted in a gross disparity between the value received by Plaintiff and the members of the Damages Class and the prices paid by them for Contact Lenses as set forth in N.M.S.A., § 57-12-2E. Plaintiff were not aware of Defendants’ price-fixing conspiracy and were therefore unaware that they were being unfairly and illegally overcharged. There was a gross disparity of bargaining power between the parties with respect to the price charged by Defendants for Contact Lenses. Defendants had the sole power to set that price and Plaintiff had no power to negotiate a lower price. Moreover, Plaintiff lacked any meaningful choice in purchasing Contact Lenses because they were unaware of the unlawful overcharge and there was no alternative source of supply through which Plaintiff could avoid the overcharges. Defendants’ conduct with regard to sales of Contact Lenses, including their illegal conspiracy to secretly fix the price of Contact Lenses at supra-competitive levels and overcharge consumers, was substantively unconscionable because it was one-sided and unfairly benefited Defendants at the expense of Plaintiff and the public. Defendants took grossly unfair advantage of Plaintiff. The suppression of competition that has resulted from Defendants’ conspiracy has ultimately resulted in unconscionably higher prices for consumers so that there was a gross disparity between the price paid and the value received for Contact Lenses. (c) Defendants’ unlawful conduct had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout New Mexico; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout New Mexico; (3) Plaintiff and the members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and the members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (d) During the Class Period, Defendants’ illegal conduct substantially affected New Mexico commerce and consumers. (e) As a direct and proximate result of the unlawful conduct of the Defendants, Plaintiff and the members of the Damages Class have been injured and are threatened with further injury. (f) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of New Mexico Stat. § 57-12-1, et seq., and, accordingly, Plaintiff and the members of the Damages Class seek all relief available under that statute. 196. Defendants have engaged in unfair competition or unfair, unconscionable, or deceptive acts or practices in violation of N.Y. Gen. Bus. Law § 349, et seq. (a) Defendants agree to, and did in fact, act in restraint of trade or commerce by affecting, fixing, controlling and/or maintaining, at artificial and non-competitive levels, the prices at which Contact Lenses were sold, distributed or obtained in New York and took efforts to conceal their agreements from Plaintiff and members of the Damages Class. (b) Defendants and their co-conspirators made public statements about the prices of Contact Lenses that either omitted material information that rendered the statements that they made materially misleading or affirmatively misrepresented the real cause of price increases for Contact Lenses; and Defendants alone possessed material information that was relevant to consumers, but failed to provide the information. (c) Because of Defendants’ unlawful trade practices in the State of New York, New York consumer class members who indirectly purchased Contact Lenses were misled to believe that they were paying a fair price for Contact Lenses or the price increases for Contact Lenses were for valid business reasons; and similarly situated consumers were potentially affected by Defendants’ conspiracy. (d) Defendants knew that their unlawful trade practices with respect to pricing Contact Lenses would have an impact on New York consumers and not just the Defendants’ direct customers. (e) Defendants knew that their unlawful trade practices with respect to pricing Contact Lenses would have a broad impact, causing consumer class members who indirectly purchased Contact Lenses to be injured by paying more for Contact Lenses than they would have paid in the absence of Defendants’ unlawful trade acts and practices. (f) The conduct of the Defendants described herein constitutes consumer-oriented deceptive acts or practices within the meaning of N.Y. Gen. Bus. Law § 349, which resulted in consumer injury and broad adverse impact on the public at large, and harmed the public interest of New York State in an honest marketplace in which economic activity is conducted in a competitive manner. (g) Defendants’ unlawful conduct had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout New York; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout New York; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (h) During the Class Period, Defendants marketed, sold, or distributed Contact Lenses in New York, and Defendants’ illegal conduct substantially affected New York commerce and consumers. (i) During the Class Period, each of the Defendants named herein, directly, or indirectly and through affiliates they dominated and controlled, manufactured, sold and/or distributed Contact Lenses in New York. (j) Plaintiff and members of the Damages Class seek all relief available pursuant to N.Y. Gen. Bus. Law § 349 (h). 197. Defendants have engaged in unfair competition or unfair, unconscionable, or deceptive acts or practices in violation of North Carolina Gen. Stat. § 75-1.1, et seq. (a) Defendants agree to, and did in fact, act in restraint of trade or commerce by affecting, fixing, controlling and/or maintaining, at artificial and non-competitive levels, the prices at which Contact Lenses were sold, distributed or obtained in North Carolina and took efforts to conceal their agreements from Plaintiff and members of the Damages Class. (b) Defendants’ price-fixing conspiracy could not have succeeded absent deceptive conduct by Defendants to cover up their illegal acts. Secrecy was integral to the formation, implementation and maintenance of Defendants’ price-fixing conspiracy. Defendants committed inherently deceptive and self-concealing actions, of which Plaintiff could not possibly have been aware. Defendants and their co-conspirators publicly provided pre-textual and false justifications regarding their price increases. Defendants’ public statements concerning the price of Contact Lenses created the illusion of competitive pricing controlled by market forces rather than supra-competitive pricing driven by Defendants’ illegal conspiracy. Moreover, Defendants deceptively concealed their unlawful activities by mutually agreeing not to divulge the existence of the conspiracy to outsiders. (c) The conduct of the Defendants described herein constitutes consumer-oriented deceptive acts or practices within the meaning of North Carolina law, which resulted in consumer injury and broad adverse impact on the public at large, and harmed the public interest of North Carolina consumers in an honest marketplace in which economic activity is conducted in a competitive manner. (d) Defendants’ unlawful conduct had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout North Carolina; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout North Carolina; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (e) During the Class Period, Defendants marketed, sold, or distributed Contact Lenses in North Carolina, and Defendants’ illegal conduct substantially affected North Carolina commerce and consumers. (f) During the Class Period, each of the Defendants named herein, directly, or indirectly and through affiliates they dominated and controlled, manufactured, sold and/or distributed Contact Lenses in North Carolina. (g) Plaintiff and members of the Damages Class seek actual damages for their injuries caused by these violations in an amount to be determined at trial and are threatened with further injury. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of North Carolina Gen. Stat. § 75-1.1, et seq., and, accordingly, Plaintiff and members of the Damages Class seek all relief available under that statute. 198. Defendants have engaged in unfair competition or unfair, unconscionable, or deceptive acts or practices in violation of the Rhode Island Unfair Trade Practice and Consumer Protection Act, R.I. Gen. Laws §§ 6-13.1-1, et seq. (a) Members of this Damages Class purchased Contact Lenses for personal, family, or household purposes. (b) Defendants agreed to, and did in fact, act in restraint of trade or commerce in a market that includes Rhode Island, by affecting, fixing, controlling, and/or maintaining, at artificial and non-competitive levels, the prices at which Contact Lenses were sold, distributed, or obtained in Rhode Island. (c) Defendants deliberately failed to disclose material facts to Plaintiff and members of the Damages Class concerning Defendants’ unlawful activities and artificially inflated prices for Contact Lenses. Defendants owed a duty to disclose such facts, and considering the relative lack of sophistication of the average, non-business purchaser, Defendants breached that duty by their silence. Defendants misrepresented to all purchasers during the Class Period that Defendants’ Contact Lens prices were competitive and fair. (d) Defendants’ unlawful conduct had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Rhode Island; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout Rhode Island; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (e) As a direct and proximate result of the Defendants’ violations of law, Plaintiff and members of the Damages Class suffered an ascertainable loss of money or property as a result of Defendants’ use or employment of unconscionable and deceptive commercial practices as set forth above. That loss was caused by Defendants’ willful and deceptive conduct, as described herein. (f) Defendants’ deception, including their affirmative misrepresentations and omissions concerning the price of Contact Lenses, likely misled all purchasers acting reasonably under the circumstances to believe that they were purchasing Contact Lenses at prices set by a free and fair market. Defendants’ affirmative misrepresentations and omissions constitute information important to Plaintiff and members of the Damages Class as they related to the cost of Contact Lenses they purchased. (g) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Rhode Island Gen. Laws. § 6-13.1-1, et seq., and, accordingly, Plaintiff and members of the Damages Class seek all relief available under that statute. 199. Defendants have engaged in unfair competition or unfair, unconscionable, or deceptive acts or practices in violation of South Carolina Unfair Trade Practices Act, S.C. Code Ann. §§ 39-5-10, et seq. 200. Defendants’ combinations or conspiracies had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout South Carolina; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout South Carolina; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra- competitive, artificially inflated prices for Contact Lenses. 201. During the Class Period, Defendants’ illegal conduct had a substantial effect on South Carolina commerce. 202. As a direct and proximate result of Defendants’ unlawful conduct, Plaintiff and members of the Damages Class have been injured in their business and property and are threatened with further injury. 203. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of S.C. Code Ann. §§ 39-5-10, et seq., and, accordingly, Plaintiff and the members of the Damages Class seek all relief available under that statute. 204. Defendants have engaged in unfair competition or unfair, unconscionable, or deceptive acts or practices in violation of 9 Vermont § 2451, et seq. (a) Defendants agreed to, and did in fact, act in restraint of trade or commerce in a market that includes Vermont, by affecting, fixing, controlling, and/or maintaining, at artificial and non-competitive levels, the prices at which Contact Lenses were sold, distributed, or obtained in Vermont. (b) Defendants deliberately failed to disclose material facts to Plaintiff and members of the Damages Class concerning Defendants’ unlawful activities and artificially inflated prices for Contact Lenses. Defendants owed a duty to disclose such facts, and considering the relative lack of sophistication of the average, non-business purchaser, Defendants breached that duty by their silence. Defendants misrepresented to all purchasers during the Class Period that Defendants’ Contact Lens prices were competitive and fair. (c) Defendants’ unlawful conduct had the following effects: (1) Contact Lens price competition was restrained, suppressed, and eliminated throughout Vermont; (2) Contact Lens prices were raised, fixed, maintained, and stabilized at artificially high levels throughout Vermont; (3) Plaintiff and members of the Damages Class were deprived of free and open competition; and (4) Plaintiff and members of the Damages Class paid supra-competitive, artificially inflated prices for Contact Lenses. (d) As a direct and proximate result of the Defendants’ violations of law, Plaintiff and members of the Damages Class suffered an ascertainable loss of money or property as a result of Defendants’ use or employment of unconscionable and deceptive commercial practices as set forth above. That loss was caused by Defendants’ willful and deceptive conduct, as described herein. (e) Defendants’ deception, including their affirmative misrepresentations and omissions concerning the price of Contact Lenses, likely misled all purchasers acting reasonably under the circumstances to believe that they were purchasing Contact Lenses at prices set by a free and fair market. Defendants’ misleading conduct and unconscionable activities constitutes unfair competition or unfair or deceptive acts or practices in violation of 9 Vermont § 2451, et seq., and, accordingly, Plaintiff and members of the Damages Class seek all relief available under that statute. FOURTH COUNT Unjust Enrichment (on behalf of Plaintiff and the Damages Class) 205. Plaintiff repeats the allegations set forth above as if fully set forth herein. 206. As a result of their unlawful conduct described above, Defendants have and will continue to be unjustly enriched. Defendants have been unjustly enriched by the receipt of, at a minimum, unlawfully inflated prices and unlawful profits on Contact Lenses. 207. Defendants have benefited from their unlawful acts and it would be inequitable for Defendants to be permitted to retain any of the ill-gotten gains resulting from the overpayments made by Plaintiff and the members of the Damages Class for Contact Lenses. 208. Plaintiff and the members of the Damages Class are entitled to the amount of Defendants’ ill-gotten gains resulting from their unlawful, unjust, and inequitable conduct. Plaintiff and the members of the Damages Class are entitled to the establishment of a constructive trust consisting of all ill-gotten gains from which Plaintiff and the members of the Damages Class may make claims on a pro rata basis WHEREFORE, Plaintiff demands judgment that: 1. The Court determine that this action may be maintained as a class action under Rule 23(a), (b)(2) and (b)(3) of the Federal Rules of Civil Procedure, and direct that reasonable notice of this action, as provided by Rule 23(c)(2) of the Federal Rules of Civil Procedure, be given to each and every member of the Class; 2. That the unlawful conduct, contract, conspiracy, or combination alleged herein be adjudged and decreed: (a) An unreasonable restraint of trade or commerce in violation of Section 1 of the Sherman Act; (b) A per se violation of Section 1 of the Sherman Act; (c) An unlawful combination, trust, agreement, understanding and/or concert of action in violation of the state antitrust and unfair competition and consumer protection laws as set forth herein; and (d) Acts of unjust enrichment by Defendants as set forth herein. 3. Plaintiff and the members of the Damages Class recover damages, to the maximum extent allowed under such laws, and that a joint and several judgment in favor of Plaintiff and the members of the Damages Class be entered against Defendants in an amount to be trebled to the extent such laws permit; 4. Plaintiff and the members of the Damages Class recover damages, to the maximum extent allowed by such laws, in the form of restitution and/or disgorgement of profits unlawfully gained from them; 5. Defendants, their affiliates, successors, transferees, assignees and other officers, directors, partners, agents and employees thereof, and all other persons acting or claiming to act on their behalf or in concert with them, be permanently enjoined and restrained from in any manner continuing, maintaining or renewing the conduct, contract, conspiracy, or combination alleged herein, or from entering into any other contract, conspiracy, or combination having a similar purpose or effect, and from adopting or following any practice, plan, program, or device having a similar purpose or effect; 6. Plaintiff and the members of the Damages Class be awarded restitution, including disgorgement of profits Defendants obtained as a result of their acts of unfair competition and acts of unjust enrichment; 7. Plaintiff and the members of the Classes be awarded pre- and post- judgment interest as provided by law, and that such interest be awarded at the highest legal rate from and after the date of service of this Complaint; 8. Plaintiff and the members of the Classes recover their costs of suit, including reasonable attorneys’ fees, as provided by law; and 9. Plaintiff and members of the Classes have such other and further relief as the case may require and the Court may deem just and proper. JURY DEMAND Plaintiff demands a trial by jury, pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, of all issues so triable. Respectfully submitted, Dated: March 27, 2015 Eduardo Palmer, P.A. 255 Aragon Avenue, 2nd Floor Coral Gables, Florida 33134 Telephone: (305) 476-1100 Facsimile: (305) 476-1300 By: s/ Eduardo Palmer____________ EDUARDO PALMER Fla. Bar No. 0562548 BY: /s/ John D. Zaremba* John D. Zaremba ZAREMBA BROWNELL AND BROWN PLLC 40 Wall Street, 27th Floor New York, NY 10005 Phone: (212) 380-6700 Fax: (212) 871-6395 [email protected] Brian Douglas Penny* Goldman Scarlato & Penny 101 East Lancaster Avenue Wayne, Pennsylvania 19087 (484) 342-0700 [email protected] Counsel for Plaintiff and the Putative Classes *(Pro Hac Vice Admission Pending)

antitrust

YPMyE4cBD5gMZwczbjpL

CLARK & MARKHAM LLP David R. Markham (State Bar No. 071814) R. Craig Clark (State Bar No. 129219) James M. Treglio (State Bar No. 228077) Laura M. Cotter (State Bar No. 259445) 600 "B" Street, Suite 2130 San Diego, CA 92101 Telephone: (619) 239-1321 Facsimile: (619) 239-5888 HESS-VERDON AND ASSOCIATES PLC Barron E. Ramos (State Bar No. 179620) 620 Newport Center Drive, Ste. 1030 Newport Beach, CA Telephone: (949) 706-7300 Facsimile: (949) 706-7373 Attorneys for Plaintiffs (additional counsel listed on signature page) UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA NASHONNA COLEMAN, an individual, Case No. 11CV1301MMAPOR TERESA SAMANIEGO, an individual, and GAIL CHILLINSKY, an individual, COLLECTIVE AND CLASS on behalf of themselves and all persons ACTION similarly situated, Plaintiffs, V. ) JENNY CRAIG, INC.. a Delaware ) corporation, and DOES 1 through 100, ) Inclusive. ) et seq. (FLSA); ) Defendants. (2) FAILURE TO PAY WAGES OWED IN VIOLATION OF CAL. AND 227.3; AND 1198; (4) FAILURE TO TIMELY PAY WAGES OWED UPON §§ 201, 202, 203; 1 ) (6) UNFAIR COMPETITION IN VIOLATION OF CAL. BUS. & (7) PENALTIES PURSUANT TO CAL. LAB. CODE § 2699 et seq.; DEMAND FOR A JURY TRIAL follows: a reasonable opportunity for further investigation and discovery. JURISDICTION AND VENUE 1. U.S.C. § 1131. 2. claims. 2 3. business/ national headquarters in San Diego County. COLLECTIVE ACTION AND CLASS ACTION DEFINITION 4. worked (hereinafter the "Collective Class"). 5. adequately protect the interests of the Class. 6. scheduled shifts to complete required paperwork. 7. 3Period"). COLLECTIVE ACTION ALLEGATIONS 8. Plaintiff NASHONNA COLEMAN (a) Is an individual who resides in San Diego County; during the Collective Class and Class Period; (c) Was not paid for all time worked; and, Paragraph 3 of this Complaint. 9. Plaintiff TERESA SAMANIEGO (a) Is an individual who resides in San Diego County; during the Collective Class and Class Period; (c) Was not paid for all time worked; and, Paragraph 3 of this Complaint. 10. Plaintiff GAIL CHILLINSKY (a) Is an individual who resides in San Diego County; during the Collective Class and Class Period; (c) Was not paid for all time worked; and, Paragraph 3 of this Complaint. DEFENDANTS 11. Carlsbad, California, in the County of San Diego. 12. The company became a part of Nestlé Nutrition in 2006. 13. 14. scope of said agency and employment. 15. acting within the course and scope of said agency and employment. wrongful conduct, harm and damages alleged herein. 17. Defendants thereby proximately causing the damages as herein alleged. THE CONDUCT 5 worked. 19. often required to continue to work after clocking out at the end of their shifts. 20. and California law. FIRST COUNT IN VIOLATION OF THE FAIR LABOR STANDARDS ACT [Fair Labor Standards Act, 29 U.S.C. § 201, et seq] 21. forth herein, paragraphs 1 through 20 of this First Amended Complaint. 22. throughout the United States and are, therefore, engaged in commerce within the meaning of 29 U.S.C. § 203(b). 23. willful violations of the Fair Labor Standards Act (FLSA). 24. Pursuant to the FLSA, 29 U.S.C. § 201, et seq, Plaintiffs and theworked, including all time spent working "off the clock" during lunch periods, before shifts began and after shifts concluded. 25. At all relevant times, Defendants failed to pay Plaintiffs and other members of the Collective Class for all hours worked. 26. For purposes of the FLSA, the employment practices of Defendants 6 27. As a result of Defendants' failure to pay compensation for all hours were damaged. 28. interest and attorneys' fees as provided by law. SECOND COUNT FOR FAILURE TO PAY WAGES OWED [Cal. Lab. Code §§ 204, 218, 218.5, 218.6] 29. Complaint. 30. in the State of California to be paid wages in a timely fashion for their work. 31. Pursuant to the IWC Wage Orders, Defendant is required to pay time in which an employee is subject to the control of an employer. 32. Defendant's uniform policy and procedure requires its employees to and/or subject to the control of the Defendant. Plaintiffs therefore seek unpaid wages and penalties. 33. creates and/or maintains various materials, such as policy handbooks, letters, and other correspondence which, taken together, constitute a written contract for employment for Plaintiffs and the Class members. 34. 7 the State of California, scheduled to work and/or required, suffered or permitted every hour worked during the Class Period. 35. action. 36. all amounts recovered herein. 37. the Cal. Lab. Code and/or any other statute. THIRD COUNT FOR FAILURE TO PAY OVERTIME COMPENSATION [Cal. Lab. Code §§510, 1194, 1198] 38. Complaint. 39. longer hours than those fixed by the Industrial Welfare Commission is unlawful. 40. employed for more than eight (8) hours in any workday or forty (40) hours in a Any work in excess of eight hours in one workday and any work in 8excess of 40 hours in any one workweek and the first eight hours worked on the seventh day of work in any one workweek shall be compensated at the rate of no less than one and one-half times the regular rate of pay for an employee. Any work in excess of 12 hours in one day shall be compensated at the rate of no less than twice the regular rate of pay for an employee. [Emphasis Added] 41. during the Class Period. 42. the one and a half times their regular rate of pay, or any other additional compensation, for the hours they have worked in excess of the maximum hours 43. By virtue of Defendants' unlawful failure to pay the lawful rate of to suffer, damages in amounts which are presently unknown to them but which according to proof at trial. 44. JENNY CRAIG acted and is acting intentionally, oppressively, and maliciously toward the Plaintiffs and the other members of the Class with a depriving them of property and legal rights and otherwise causing them injury. 45. the costs of litigation from their employer. 46. Plaintiffs and the other members of the Class request recovery of under the Cal. Lab. Code and/or other statutes. FOURTH COUNT FOR FAILURE TO TIMELY PAY WAGES OWED [Cal. Lab. Code §§ 201, 203] 47. by reference, as though fully set forth herein, the preceding paragraphs of this Complaint 48. Cal. Lab. Code §§ 201 and 202 provide that wages earned by an employee but unpaid when the employer discharges the employee, or when the seventy-two (72) hours of notice, are due and payable immediately. 49. do not give at least seventy-two (72) hours of notice that they are terminating the pursuant to Cal. Lab. Code § 202. 50. The Defendants, as alleged above, knew that wages were due to 51. Class their unpaid wages either at the time their employment was terminated, or within seventy-two (72) hours of termination, or for the thirty (30) days that followed. 52. Cal. Lab. Code § 203 provides for a penalty when a terminated employee's unpaid wages are not paid within the requisite period under Cal. Lab. Code §§ 201 and 202. The employer shall be penalized by owing the former 53. 10FIFTH COUNT [Cal. Lab. Code §§ 226.7 and 512] 54. Complaint. 55. minutes or longer. 56. employee one (1) hour of pay at the employee's regular rate of compensation for each meal period that is not provided. 57. Cal. Lab. Code §§ 226.7 and 512 provide that employers shall rest time per four (4) hours of work. 58. each workday that the rest period is not provided. 59. and 512. 60. At all times relevant hereto Plaintiffs and the other members of the and 512. 61. 11 and 512. 62. At all times relevant hereto, the Plaintiffs and other members of the Class worked more than four hours in a workday. At all times relevant hereto, JENNY CRAIG failed to provide rest periods as required by Cal. Lab. Code §§ 226.7 and 512. but which exceed the jurisdictional requirements of this Court and which will be ascertained according to proof at trial. 64. should have known that the Plaintiffs and the other members of the Class were mandated periods. 65. Plaintiffs and the other members of the Class seek to recover the under the Cal. Lab. Code and/or other statutes. SIXTH COUNT FOR UNLAWFUL BUSINESS PRACTICES [Cal. Bus. and Prof. Code §§ 17200 et seq.] 66. this reference, as though fully set forth herein, the preceding paragraphs of this Complaint. 67. Cal. Bus. & Prof. Code § 17201 defines persons as "natural persons, corporations, firms, partnerships, joint stock companies, associations, and other organizations of people." 68. unlawful, unfair, or fraudulent business act or practice". Prof. Code § 17201. 70. At all times relevant hereto, by and through the conduct described pay Plaintiffs and the other members of the Class for all hours worked or for periods as required by the applicable Cal. Lab. Code and IWC Wage Order deprived Plaintiffs and the other members of the Class of fundamental rights and privileges owed to them by law. 71. rights and benefits guaranteed by law, all to their detriment. 72. business practices in violation of Cal. Bus. & Prof. Code § 17200 et seq. 73. Plaintiffs and the other members of the Class are entitled to, and do, seek such relief as may be necessary to restore to them the money and property business acts and practices. 74. do, seek a declaration that the above described business practices are unfair and 13future. 75. Plaintiffs and the other members of the Class have no plain, speedy, unpaid moneys to Plaintiffs and the other members of the Class. SEVENTH COUNT FOR PENALTIES PURSUANT TO THE CALIFORNIA PRIVATE [Cal. Lab. Code §§ 2699 et seq.] 76. forth herein, the preceding paragraphs of this First Amended Complaint. behalf of himself or herself, and other current or former employees. 78. same limitations and conditions, to assess a civil penalty. 14 79. more of the California Labor Code violations was committed against them. 80. Labor Code. 81. each employee per pay period for each subsequent violation. 82. any other applicable statutes. 83. Section 2699.3(a)(1). 84. Lab. Code § 2699.3 (a)(2)(A), Plaintiffs may pursue their claims under § 2699, // // // // 15PRAYER and severally, as follows: ON THE FIRST COUNT 1. Collective Action; 2. members of the Collective Class, plus interest thereon at the statutory rate; 3. are recoverable pursuant to 29 U.S.C. §216 (b); 4. For liquidated damages pursuant to 29 U.S.C. 216 (b); 5. Collective Class Period through the time of judgment; 6. For such other and further relief as the Court deem just and proper. // ON THE SECOND COUNT 1. bonuses, and other losses, according to proof; 2. For general damages, according to proof; 3. 4. suit. // ON THE THIRD COUNT 1. bonuses, and other losses, according to proof; 2. For general damages, according to proof; 3. 4. suit. // ON THE FOURTH COUNT: 1. wages remain unpaid, for up to thirty (30) days. // ON THE FIFTH COUNT 1. provided for each four (4) hours of work; 2. period was not provided; 3. For attorneys' fees and costs. // ON THE SIXTH COUNT 1. For restitution and disgorgement; 2. practices to cease, or as the Court otherwise deems just and proper; 3. California law. // ON THE SEVENTH COUNT 1. For statutory penalties according to proof; 2. 17 in full; 3. For reasonable attorney's fees, expenses, and costs. Dated: October 13, 2011 CLARK & MARKHAM LLP By: From David R. Markham UNITED EMPLOYEES LAW GROUP 65 Pine Ave, #312 Long Beach, California 90802 Tel: (877) 696-8378 Fax: (562) 256-1006 Attorneys for Plaintiffs 18 DEMAND FOR JURY TRIAL Plaintiffs demand a jury trial on issues triable to a jury. Dated: October 13, 2011 CLARK & MARKHAM LLP By: V David R. Markham Attorneys for Plaintiffs 19

employment & labor

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IN THE LTNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA James Caron Butler, Ben Gordon, Anthony Tolliver, and Derrick Williams, individually, and on behalf of all others similarly situated, Plaintiffs, ll 'j i57 V. National Basketball Association, Atlanta Hawks, LP, C-}.'a ;- *r Civil ActionNo|l ;r:: ri-.', -,' V\\l<tr, 1- -- ,\- l'\ i ' ';: " .' rt 1 CLASS ACTION' -r,, COMPLAINT--, 1 ;-T .: " j ,,_\ ,t - ,, ,:,. ruRY TRIAL 4 .:I REQUESTED B anner S eventeen LLC, B obcats B asketball, LLC, Chicago Professional Sports Limited Partnership, Cavaliers Operating Company, LLC, Dallas Basketball Limited, The Denver Nuggets Limited Partnership, Detroit Pistons Basketball Company, Golden State Warriors, LLC, Rocket Ball, Ltd., Pacers Basketball, LLC, LAC Basketball Club, Inc., The Los Angeles Lakers, Inc., Hoops, L.P., Miami Heat Limited Partnership, Milwaukee Bucks, Inc., Minnesota Timberwolves Basketball Limited Partnership, New Jersey Basketball,LLC, New Orleans Hornets NBA Limited Partnership, Madison Square Garden, L.P., Professional Basketball Club, LLC, Orlando Magic, Ltd., Philadelphia 76ers, L.P., Suns Legacy Partners, L.L.C., Trail Blazers, Inc., Sacramento Kings Limited Partnership, San Antonio Spurs, L.L.C., Maple Leaf Sports & Entertainment Ltd., Jazz Basketball Investors, Inc., and Washington Bullets, L.P., Defendants. Plaintiffs, by their undersigned attorneys, for their Complaint herein allege as follows: ril',j i -r ?illl INTRODUCTION 1. Plaintiffs are filing this class action to redress violations by each defendant of the federal antitrust laws and applicable state contract and tort laws. Plaintiffs are four professional basketball players, and similarly situated players who have entered into, and/or who seek to enter into, player contracts with National Basketball Association (.'NBA") teams. 2. Defendants, the NBA and its separately-owned and independently- operated member teams, have jointly agreed and conspired to deny Plaintiffs the ability to provide and/or market their services in the major league market for professional basketball players through an unlawful group boycott and price-fixing arrangement. 3. The NBA Defendants' anticompetitive agreements include a boycott that has eliminated competition in the free agent marketplace for players no longer under contract, as well as a boycott of rookie players seeking an NBA contract for the first time. The NBA Defendants have also conspired to refuse to deal with or to honor the contracts of players who have NBA contracts. The anticompetitive purpose of this group boycott is to coerce Plaintiffs and the other players to succumb to a new anticompetitive system of player restraints which will, among other things, drastically reduce player compensation levels below those that would exist in a competitive market. 4. The group boycott, concerted refusal to deal and price-fixing which Defendants are carrying out are pc1 se illegal acts under Section 1 of the Sherman Act, 15 U.S.C. $ l. Should these anticompetitive agreements be alternatively evaluated under the "quick look" or even a full blown rule of reason test, they would still be illegal. As a result of Defendants' anticompetitive agreements, Plaintiffs and other similarly situated current and future professional basketball players who are employed by or seeking employment with an NBA club will be prevented from offering or providing their services in a competitive market and from receiving a competitive market value for their services, and will be denied the freedom of movement available to employees in virtually every other industry in the United States. 5. The NBA Defendants cannot defend their violations of the federal antitrust laws by hiding behind the non-statutory labor exemption to the antitrust laws. Under Supreme Court precedent and settled law in this Circuit, that exemption only conceivably applies as long as a collective bargaining relationship exists between the NBA Defendants and the players. Here, however, the collective bargaining process and relationship have completely broken down, and the NBA players have exercised their labor law right not to be in a union. Specifically, after more than two years of futile bargaining, and the refusal of the NBA to negotiate any further, the NBA players ended the role of the National Basketball Players Association ('NBPA") as their collective bargaining representative and no longer have a collective bargaining relationship with the NBA Defendants. The consequence is that any labor exemption to the antitrust laws no longer applies. 6. Independent of their federal antitrust violations, the NBA Defendants' boycott also gives rise to state law contractual and tort claims on behalf of Plaintiffs and class members. There is no "labor exemption" or any other legal justification for the NBA Defendants agreeing not to adhere to the terms of operative player contracts and to interfere with the right of players not under contract to seek employment for their services as professional basketball players. JURISDICTION AND VENUE 7. These claims arise and are brousht under Sections 4 and 16 of the Clayton Act, 15 U.S.C. $$ 15, 26, and Section I of the Sherman Antitrust Act, 15 U.S.C. $ l, as well as applicable state contract and tort laws. 8. This Court has jurisdiction pursuant to 28 U.S.C. $$ 133l,1337 and 9. Venue in this action is proper pursuant to 28 U.S.C. $ l39l and 15 U.S.C. $ 22. Each of the Defendants can be found, resides, has an agent, or transacts business in the District of Minnesota, and the unlawful activities were or will be carried on in part by one or more of the Defendants within this district. Additionally, Plaintiff Anthony Tolliver is employed within this district by the Minnesota Timberwolves. THE PARTIES 10. Plaintiff James Caron Butler is a professional basketball player who is a free agent who last played with the Dallas Mavericks and lives in Racine, Wisconsin. 11. Plaintiff Ben Gordon is presently under contract with the Detroit Pistons. He lives in Rochester. Michiean. 12. Plaintiff Anthony Tolliver is presently under contract with the Minnesota Timberwolves. 13. Plaintiff Derrick Williams was the second overall pick of the 2011 NBA draft, was selected by the Minnesota Timberwolves and has received a Required Tender from the Minnesota Timberwolves. 14. Defendant NBA, which maintains its offices at 645 Fifth Avenue New York, New York, is an unincorporated association consisting of the 30 separately- owned and independently-operated professional basketball teams that are listed in paragraph 21. The NBA is engaged in interstate commerce in the business of, among other things, operating the sole major professional basketball league in the United States. 15. The other Defendants are the 30 NBA member teams in the United States and Canada, each of which, upon information and belief, is a corporation, except where noted below (collectively with the NBA, the "NBA Defendants"). Upon information and beliel each of the defendant teams is a separately-owned and independent entity which operates a professional basketball franchise for profit under the team name and in the cities set forth below: Defendant NBA Teams State of Organization NBA Franchise (City) Atlanta Hawks. LP Georeia Atlanta Hawks Banner Seventeen LLC Delaware Boston Celtics Bobcats Basketball LLC Delaware Charlotte Bobcats Chicago Professional Sports Limited Partnership Illinois Chicago Bulls Cavaliers Operating Company, LLC Delaware Cleveland Cavaliers Dallas Basketball Limited Texas Dallas Mavericks The Denver Nuggets Limited Partnership Delaware Denver Nuggets Detroit Pistons Basketball Company Michigan Detroit Pistons Golden State Warriors, LLC California Golden State Warriors Rocket Ball, Ltd. Texas Houston Rockets Pacers Basketball, LLC Indiana Indiana Pacers LAC Basketball Club. Inc. California Los Angeles Clippers The Los Angeles Lakers, Inc. California Los Angeles Lakers Hoops, L.P. Delaware Memphis Grizzlies Miami Heat Limited Partnership Florida Miami Heat Milwaukee Bucks. Inc. Wisconsin Milwaukee Bucks Minnesota Timberwolves B asketball Limited Partnershio Minnesota Minnesota Timberwolves New Jersey Basketb all, LLC New Jersev New Jersev Nets New Orleans Hornets NBA Limited Parfrrership North Carolina New Orleans Hornets Madison Square Garden, L.P. Delaware New York Knicks The Professional Basketball Club. LLC Oklahoma Oklahoma City Thunder Orlando Magic, Ltd. Florida Orlando Magic Philadelphia 76ers, L.P. Delaware PhiladelphiaT6ers Suns Legacy Partners, L.L.C. Delaware Phoenix Suns TrailBlazers. Inc. Oregon Portland Trail Blazers Sacramento Kings Limited Partnership. LP California Sacramento Kings San Antonio Spurs, L.L.C. Texas San Antonio Spurs Maple Leaf Sports & Entertainment Ltd. Ontario. Canada Toronto Raptors J azz Basketball Investors. Inc. Utah UtahJazz Washington Bullets, L.P. District of Columbia I Washington Wizards CLASS ACTION ALLEGATIONS 16. Plaintiffs James Caron Butler, Ben Gordon, Anthony Tolliver and Denick Williams (collectively "Plaintiffs") are representatives of a class, as defined by Rule 23(b)(l),23 (bX2) and/or Rule 23(b)(3) of the Federal Rules of Civil Procedure, and bring this action on behalf of themselves and the class members as described in paragraph 17. The class represented by Plaintiffs is comprised of (i) all players who are under contract to play professional basketball for an NBA team at any time from November 14,201I to the date of final judgment in this action and the determination of any appeal therefrom (the "Under-Contract Subclass"), (ii) all players who are not under contract with an NBA team and are seeking employment as professional basketball players for an NBA team at any time from November 14,2011 to the date of final judgment in this action and the determination of any appeal therefrom (the "Free Agent Subclass"), and (iii) all players who have not previously been under contract with an NBA team and, as of November 15,2011, to the date of final judgment in this action and the determination of any appeal therefrom, are or will be eligible to play basketball as a rookie for an NBA team (the "Rookie Subclass"). 18. The class and each subclass are so numerous and geographically so widely dispersed that joinder of all members is impracticable. There are questions of law and fact common to the class. Plaintiffs' claims are typical of the claims of the class or subclass that they represent, and the Plaintiffs will fairly and adequately protect the interests of the class or subclass that they represent. Common questions of law and fact predominate within the meaning of Rule 23(bX3) of the Federal Rules of Civil Procedure. 19. Each person in the class or subclass is, has been, and/or will be subject to Defendants' boycott. To the extent that in the future the NBA Defendants agreed to a different of player restraints, they would be uniformly imposed on members of the class or subclass. 20. Except for provisions as to individual compensation and other variations which do not materially affect this action, the contracts signed by NBA players are virtually identical throughout the NBA. 21. The prosecution of separate actions by individual members of the class would create the risk of: (a) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or (b) adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests within the meaning of Rule 23(b)(l) of the Federal Rules of Civil Procedure. 22. In construing and enforcing their uniform agreements, rules and practices, and in taking and planning to take the actions described in this complaint, the Defendants have acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief would be appropriate for the class as a whole within the meaning of Rule 23(b)(2). 23. Questions of law and fact are common to the class and each of the subclasses and predominate over any questions affecting only individual class members, including legal and factual issues relating to liability, damages and restitution. This class action is superior to the alternatives, if any, for the fair and efficient adjudication of this controversy. Prosecution as a class action will eliminate the possibility of repetitive litigation. There will be no material difficulty in the management of this action as a class NATURE OF INTERSTATE TRADE AND COMMERCE 24. The primary business in which Defendants are engaged is the operation of major league professional basketball teams and the sale of tickets and telecast rights to the public for the exhibition of the individual and collective basketball talents of players such as Plaintiffs. To conduct this business, the NBA Defendants must compete with each other for and retain the professional services of players, such as Plaintiffs, who are signed to or are seeking to sign to contracts to play basketball for the various NBA defendant teams. 25. The business of major league professional basketball is distinct from other professional sports businesses, as well as from college and minor league 9 professional basketball. Its distinguishing features include: the rules of the sport and the season during which it is played; the talents of and rates of compensation for the players, for whom playing basketball is their full+ime profession; the nature and amounts of trade and commerce involved; and the unique demand for the NBA Defendants' games by the consuming public, both as ticket purchasers and as home viewers of and listeners to television and radio. 26. The NBA Defendants' operation of and engagement in the business of major league professional basketball involves a substantial volume of interstate trade and commerce, including, inter alia, the following interstate activities: travel; communications; purchases and movement of equipment; broadcasts and telecasts of league games; advertisements; promotions; sales of tickets and concession items; sales of merchandise and apparel; employment of players and referees; and negotiations for all of the above. 27. The NBA Defendants' aforesaid interstate transactions involve collective annual expenditures and receipts in excess of $4 billion. 28. The Plaintiffs have been employed by and/or are seeking new employment with, or will seek future employment with, one or more of the defendant teams in interstate commerce as professional basketball players. BACKGROUND The NBA's Historv of Antitrust Violations 29. The NBA Defendants enjoy a monopoly in the market for major league professional basketball in the United States. The relevant market for assessing the 10 restraint of trade at issue is the market for the services of major league professional basketball players in the United States. Robertson v. National Basketball Ass'n. 67 F.R.D. 691, 694 & n.3 (S.D.N.Y.1975). Defendants exercise monopoly power in this market. See Denver Rockets v. All-Pro Management. Inc. ,325 F. Supp. 1049, 1067 (C.D. CaL l97l) (holding that the NBA's four-year college rule a violation of Section I of the Sherman Act because, in part, the NBA did not contest that it enjoys "market power in a degree approaching a shared monopoly" with respect to player services); see also Chicago Professional Sports Ltd. Partnership v. National Basketball Ass'n, 95 F.3d 593,599 (7th Cir. 1996) ("from the perspective of college basketball players who seek to sell their skills, the teams are distinct, and because the human capital of players is not readily transferable to other sports . . . the league looks more like a group of firms acting as a monopsony"). 30. The NBA Defendants comprise the only major league professional basketball association in the United States. The NBA Defendants are the only United States market participants for the services of major league professional basketball players. Together, they monopolize and/or restrain trade in, and/or have combined and conspired to monopolize andlor restrain trade in the United States market for the services of major league professional basketball players. The only actual or potential competition that exists in this market is among the separately-owned and independently-operated NBA teams. Rather than engaging in competition for the players' services, however, the NBA Defendants have combined and conspired to eliminate such competition among themselves for NBA players through a goup boycott, price-fixing arrangement, and l1 concerted refusal to deal, the purpose and effect of which is to prevent players from offering their services to NBA teams in a competitive market and to coerce those players into agreeing to a new set of anticompetitive restraints on competition for their services. 31. This is not the first instance of the NBA violating the federal antitrust laws in an effort to minimize its labor costs. For example, in 1970, a group of fourteen players, led by Oscar Robertson, brought a putative class action challenging the various anticompetitive NBA employment practices, including the College Draft and free agency restrictions. In denying the NBA Defendants' motion for summary judgment, the district court held that practically all of the restraints at issue were pc! se violations of the Sherman Act and were invalid, as well, under the rule of reason. Basketball Ass'n, 389 F. Supp. 867, 890-91 (S.D.N.Y. 1975). The action resulted in the Robertson Settlement Agreement, as well as over $4.3 million to the plaintiffs in damages. Another antitrust class action was filed against the NBA in 1987 known as the Bridgeman class action. Bridgeman v. National Basketball Ass'n, Civ. A. No. 87-4189 (D.N.J. October 16, 1987). That action resulted in the Bridgeman class action settlement agreement. And, the NBA was found guilty of engaging in per se unlawful practices in the player market in Denver Rockets v. All-Pro Management. Inc. ,325 F . Supp. 1049 (C.D. Cal. r97r). The Expiration of the 2005 NBA CBA 32. The last collective bargaining agreement was entered into by the NBA Defendants and the NBPA on July 29,2005 and was set to expire on June 30,2011 or, at the option of the NBA Defendants, could have been extended through 2012. The t2 NBA Defendants declined to extend the agreement, because of its stated desire to achieve a massive "reset" in player salaries and the imposition of a new, far more restrictive set of restraints in the player market that would severely reduce competition for the services of NBA players. 33. The 2005 CBA provided players with approximately 57%o of all "Basketball Related Income" ("BH"), generally, income received as a result of basketball operations. 34. Since at least 2009, the NBA has expressed its unhappiness with the CBA to the NBPA and indicated its intention to seek a massive reduction in player salaries and a far more restrictive market for players. The NBA sought to begin early negotiations for a new collective bargaining agreement and such negotiations, in fact, began by February of 2010. Such negotiations continued for almost twenty months, but ultimately proved to be futile. 35. On July 1,2005, when the 2005 CBA expired, the NBA Defendants decided to impose a "lockout" of all NBA players. The stated purpose of this conduct is to massively roll back player salaries and coerce the NBA players into agreeing to a new onerous set of restraints on the market for player services. The NBA Defendants have repeatedly and publicly stated that their goal is to increase their profit margins by reducing the amount of money they pay to their players and by subjecting them to a new set of anticompetitive player restraints. l3 The Breakdown of Collective Barsainins. The End of the Union and The NBA's Group Bovcott. 36. The NBPA spent almost two years attempting to negotiate a new CBA with the NBA Defendants. Since July l, 2011 alone, scores of collective bargaining sessions have taken place. Twice, the Federal Mediation and Conciliation Service was brought in to try to achieve a collective bargaining agreement. All of these bargaining efforts, however, proved to be fruitless and no new CBA could be negotiated. 37. On November 10, 2011, the NBA presented its final bargaining ultimatum which, among other things, would have reduced the players' share of BRI from 57Yoto 50Vo and imposed a new set of restrictions on player competition that would have wiped out the competitive market for most NBA players. The NBA informed the NBPA that it was making this final "revised" offer for just a few days and that if the NBPA did not accept this offer by the following Monday or Tuesday, the offer would be withdrawn and replaced with an even more onerous offer that would reduce the players' BRI share to 47Yo and impose what amounted to a hard salary cap. The NBA also indicated that its offers would continue to get worse as time went on. The NBA unequivocally stated that it would not entertain any counter-offer from the NBPA to its final "take it or leave it" proposal. Instead, the NBA declared that further bargaining over these terms was at an t4 Renunciation of anv Collective Bargainins Representation bv the NBA Plavers' Union 38. With the NBA having declared that it would not further bargain, the NBA Players concluded that the collective bargaining process had failed and that maintaining a collective bargaining relationship with the NBA was no longer in the interest of NBA players. Accordingly on November 14,2011, the Board of Player Representative of the NBPA met and took action to immediately terminate the NBPA's status as the players' collective bargaining representative effective at 12 noon, Eastern time on November 14.2011. 39. Specifically, a substantial majority of NBA players had previously signed aufhorization cards to empower the NBPA to disclaim the NBPA's role as the collective bargaining representative of NBA players if it was determined that it was no longer in the best interests of NBA players to remain in a union. 40. On November 14, 2}ll,the Executive Committee of the NBPA, along with the Board of Player Representatives, unanimously determined that the collective bargaining process had failed and had no further prospect of achieving an agreement. They therefore voted to immediately have the NBPA disclaim interest as the bargaining representative of the NBA players and directed the association to change its status to that of a trade association which would not engage in any collective bargaining. 41. On November 14. 2011. the NBPA formallv notified the NBA that it was disclaiming interest in acting as the collective bargaining representative of NBA players, effective as of 12 noon Eastern time on that day. The NBPA is in the process of l5 amending its bylaws to prohibit it or its members from engaging in collective bargaining with the NBA, the NBA's member clubs or their agents. 42. The NBPA will no longer represent players in grievances under the expired CBA, and players will now have to pursue or defend any grievance with the NBA or its members on an individual basis. 43. The NBPA has also ceased the regulation of player agents and all other activities associated with being the collective bargaining representative of NBA 44. The NBPA will shortly file a labor orsanization termination notice with the Department of Labor. An application by the NBPA will also shortly be filed with the IRS to reclassiff the NBPA for tax purposes as a professional association rather than a labor organization. 45. Despite being informed of the above disclaimer of collective bargaining status by the NBPA, the NBA Defendants have made it clear that they intend to continue their group boycott of plaintiffs and all other NBA players and will not cease this boycott until the players agree to a new set of anticompetitive restraints and massive roll back in their salaries. This conduct now constitutes ablatant violation of the antitrust The NBA Defendants' Conduct llleeallv Eliminates Competition in the Market for Plaver Services 46. The NBA Defendants have jointly conspired and agreed to impose, a group boycott prohibiting all competition for player services, player signings, and T6 employment and/or a system of anticompetitive restraints on player movement, salaries, contract signings, and payment of compensation due under existing contracts. 47. As part of this group boycott, all NBA Defendants have conspired and agreed to prevent NBA teams from negotiating, or even communicating with, or employing NBA players, thereby completely eliminating a competitive market for player services. In addition, NBA teams have conspired and agreed not to honor existing contracts with NBA players, by not paying them and precluding their access to team facilities and personnel. 48. Neither the existence nor the terms of the NBA Defendants' group boycott agreement is in dispute. 49. The owners' collective pulpose in imposing the group boycott is to force the now non-unionized NBA players to agree to the massive wage reductions and anticompetitive restrictions, which the NBA Defendants are seeking from the players. 50. The prohibition on player signings and/or employment by the NBA Defendants constitutes an illegal group boycott, price-fixing agreement, and/or restraint of trade in violation of the Sherman Act, under each of the pq se, "quick look" and rule ofreason standards. The NBA Defendants' Anticompetitive Behavior Is Not Protected bv Anv Labor Exemption 51. The NBA Defendants are expected to argue, as they have in the past, that their anticompetitive restraints are immune from antitrust scrutiny because of t7 the non-statutory labor exemption defense. However, the law makes clear that no such defense is available here. 52. This Court in McNeil v. National Football League,764 F . Supp. l35l (D. Minn. I99I), found that the following actions taken by NFL players ended the collective bargaining relationship with the NFL: On November 3, 1989, the NFLPA's Executive Committee voted to renounce collective bargaining. On November 6,1989, the Committee advised the NFL Defendants that it would no longer engage in collective bargaining or represent players in grievances. Next, approximately sixty- two percent of the active players signed petitions revoking the authority of the NFLPA or any other entity to engage in collective bargaining on their behalf. On December 5, 1989, the NFLPA's player representatives unanimously adopted new bylaws that ended the organization's status as a collective bargaining representative. Under the new bylaws, no officer, employee or member of the NFLPA is authorized to discuss, deal or negotiate with the NFL or any of its member clubs or their agents. The NFLPA thus terminated its status as a labor organization. Reflecting its change in character and purpose, the NFLPA filed a labor organization termination notice with the United States Department of Labor. The Internal Revenue Service also changed the organization's tax-exempt status from that of a "labor organization" under $ 501(c)(5) of the Internal Revenue Code to that of a "business league" under $ 501(c)(6). Id. at 1356. 53. Just earlier this year, in Brady v. NFL, this Court similarly observed in the context of a preliminary injunction determination, that the non-statutory labor exemption would end with their disclaimer of union status by the NFLPA. Brady v. NFL, 779 F. Supp. 2d992 (D. Minn. 20ll) ("And in contrast to the murky boundaries presented by an impasse that occurs within an ongoing collective bargaining process, the dissolution of the Players' former Union provides a clear boundary demarcating the end of collective bargaining under labor law."). l8 54. The NBA players have similarly taken action to end their collective bargaining relationship with the NBA Defendants. Indeed, the NBA players have only done so after enduring a lockout for more than four months and having the NBA declare that it was no will negotiate about its "final" take it or leave it offer. 55. The Supreme Court of the United States has indicated that the non- statutory labor exemption ends when a collective bargaining relationship has collapsed, such as is the case here. As stated bv the Court: [A]n agreement among employers could be sufficiently distant in time and in circumstances from the collective-bargaining process that a rule permitting antitrust intervention would not significantly interfere with that process. See. e.g., 50 F.3d, at 1057 (suggesting that exemption lasts until collapse of the collective-bargaining relationship. as evidenced by decertification ofthe union). . . . Brown v. Pro Football. Inc., 518 U.S. 231,250 (1996) (emphasis added). Here, the collective bargaining process and relationship have completely broken down, and the NBA players have exercised their labor law right not to be in a union. The non-statutory labor exemption thus no longer applies and offers the NBA Defendants no basis to avoid liability for its group boycott of NBA players under the federal antitrust laws. The Iniuries of Plaintiffs and the Class 56. Upon information and belief, the NBA Defendants intend to continue to impose their group boycott in the U.S. market for the services of major league professional basketball players unless and until the players agree to the anticompetitive set of restrictions and massive salary reductions being sought by the Defendants. Absent this group boycott, the Plaintiffs and class members would be free to work in the 2011 19 NBA season and to offer their services to NBA teams in a competitive market. Plaintiffs and class members will suffer severe damages, totaling billions of dollars, if they are prevented from offering their services in a competitive market to NBA teams. Other injuries being suffered by the Plaintiffs and Class are irreparable, as there is no replacement for a lost NBA season in their short careers. The Plaintiffs 57. Plaintiff James Caron Butler, a member of the Free Agent Subclass, is currently a free agent who last played with the Dallas Mavericks. 58. Plaintiff Ben Gordon, a member of the Under-Contract Subclass, is currently under contract with the Detroit Pistons. 59. Plaintiff Anthony Tolliver, another member of the Under-Contract Subclass, is currently under contract with the Minnesota Timberwolves. 60. As a result of Defendants' boycott, the NBA Defendants are in breach of, and tortiously interfering with, Mr. Gordon's and Mr. Tolliver's contracts. 61. Plaintiff Derrick Williams, a member of the Rookie Subclass, has been drafted by the Minnesota Timberwolves. 62. Defendants' boycott may also prevent all of the Plaintiffs from playing for any NBA team during the 201l-2012 NBA season or beyond. 20 COUNT I Violation of Section 1 of the Sherman Act 63. Plaintiffs repeat and reallege each of the allegations contained in paragraphs I through 62. 64. There is a relevant market for the services of major league professional basketball players in the United States. The group boycott orchestrated by the NBA Defendants is substantially restraining and injuring competition in that market and will continue to do so. 65. The group boycott constitutes an agreement among competitors to eliminate competition for the services of major league professional basketball players in the United States and to refuse to pay contractually-owed compensation to players currently under contract with the NBA Defendants for the 201I season and beyond, in violation of Section I of the Sherman Act. 66. The NBA Defendants' conduct operates as a perpetual horizontal group boycott and price-fixing agreement, which is pgf se unlawful. 67. The NBA Defendants' conduct also constitutes an unreasonable restraint of trade under the "quick look" or rule of reason tests. The NBA Defendants have significant market power in the relevant market. Their group boycott and price- fixing agreement is a naked restraint of trade without any pro-competitive pu{pose or effect. In fact, its objective is to reduce player wages and increase the profits of the NBA Defendants through the imposition of a concerted refusal to deal. Moreover, the 2l agreement is not in any way necessary for the production of NBA basketball or the achievement of any pro-competitive objective. 68. Each of the NBA Defendants is a participant in this unlawful combination or conspiracy. 69. The Plaintiffs and class members have suffered and will suffer antitrust injury to their business or property by reason of the continuation of this unlawful combination or conspiracy. The NBA Defendants' boycott has injured and will continue to injure Plaintiffs and class members by depriving them of the ability to work as, receive contractually-mandated compensation for, and/or offer their services as professional basketball players in a free and open market. 70. Monetary damages alone will not be adequate to compensate Plaintiffs or other class members for the irreparable harm they have and will continue to suffer, warranting permanent inj unctive relief. 71. The conduct of the NBA Defendants is causing and threatens to cause monetary injuries to Plaintiffs and other class members that will total billions of dollars if the defendants continue their boycott for the entire 2011 NBA season. COUNT II Breach of Contract 72. Plaintiffs repeat and reallege each of the allegations contained in paragraphs I through 71. 73. Plaintiffs and the Under-Contract Subclass include players who, as of July l,20ll, are under contract to play professional basketball for an NBA team in 22 what would have been the 2011 NBA season and thereafter. Pursuant to their group boycott, NBA teams are preventing members of the Under-Contract Subclass from working as professional basketball players and will refuse to pay them the compensation mandated by their existing contracts. The aforesaid conduct violates the individual state contract laws that apply to these contracts. 74. Plaintiffs and the Under-Contract Subclass members will be damaged by the NBA Defendants breaches of their contracts by a failure to receive amounts that are contractually owed, and also by being deprived of the opportunity to play professional basketball and further demonstrate their abilities on the basketball field. 75. Monetary damages are not adequate to compensate Plaintiffs or other class members for the irreparable harm they have and will continue to suffer, warranting injunctive relief. 76. The conduct of the NBA Defendants has caused monetary injuries to Plaintiffs and other class members, entitling them to damages for, among other things, their lost compensation. COUNT III Tortious Interference with Contract 77. Plaintiffs repeat and reallege each of the allegations contained in paragraphs I through 76. 78. Each of the NBA Defendants was aware of the contracts entered into by Plaintiffs Gordon and Tolliver and the members of the Under-Contract Subclass 23 with individual NBA teams. The NBA Defendants then intentionally procured the breaches of those contracts with improper motive and without justification. 79. By jointly conspiring and agreeing to refuse to make contractually- owed payments, each of the NBA Defendants intentionally interfered with the rights of those Plaintiffs and class members with NBA Player Contracts for the 2011 NBA season to receive the compensation and other benefits due under those contracts. Absent these restrictions, the Plaintiffs and Subclass members with NBA Player Contracts for the 2011 season would have received payments mandated by their contracts with NBA teams. Plaintiffs Gordon and Tolliver and Under-Contract Subclass members have suffered injury as a result of the NBA Defendants' actions. 80. Plaintiffs and Subclass members with 2011 NBA Player Contracts have suffered significant and irreparable injury as a result of the NBA Defendants' tortious interference with contract. Among other things, these Plaintiffs and Subclass members are being deprived of the ability to practice and compete as NBA players during their very short NBA careers. 81. Monetary damages are not adequate to compensate Plaintiffs or other class members for the irreparable harm they have and will continue to suffer, warranting injunctive relief. 82. The conduct of the NBA Defendants has caused monetary injuries to Plaintiffs and other class members, entitling them to damages for, among things, their lost compensation. 24 83. The NBA Defendants' tortious interference with contract violates tort laws in the states in which such conduct is taking place. COUNT IV Tortious Interference with Prospective Contractual Relations 84. Plaintiffs repeat and reallege each of the allegations contained in paragraphs 1 through 83. 85. By jointly conspiring and agreeing to impose a group boycott, each of the NBA Defendants intentionally interfered with the rights of Plaintiffs Butler and Williams and Free Agent Subclass and Rookie Subclass members to enter into prospective contracts with NBA teams. Absent these restrictions, these Plaintiffs and subclass members, in reasonable probability, would have entered into contracts with NBA teams. 86. The aforesaid conduct was taken intentionally by the NBA Defendants and is improper as it is intended to harm the players and earn monopoly profits for the NBA Defendants by suppressing the market for player services in violation of federal law. 87. Plaintiffs Butler and Williams and the Free Agent and Rookie Subclass members will be injured by the deprivation, by reason of the restrictions imposed by the NBA Defendants, of the ability to negotiate and enter into contracts with NBA teams. These Plaintiffs and Free Agent Subclass and Rookie Subclass members will suffer severe and irreparable harm if they are prevented from entering into contracts with NBA teams for the 2011 season or beyond. 25 88. Monetary damages are not adequate to compensate Plaintiffs or other class members for the irreparable harm they have and will continue to suffer, warranting injunctive relief. 89. The conduct of the NBA Defendants has caused monetary injuries to Plaintiffs and other class members, entitling them to damages for, among other things, their lost compensation. PRAYER FOR RELIEF WHEREFORE, Plaintiffs pray for judgment with respect to their First Amended Complaint as follows: 1. That the Court certifr this action as a class action under Rules 26(bxl), 23(b)(2) and/or 23(bX3) of the Federal Rules of Civil Procedure; 2. Declaring that the NBA Defendants' group boycott violates Section 1 of the Sherman Act: 3. Declaring that Defendants' imposition of other anticompetitive restrictions violates Section 1 of the Sherman Act; 4. Awarding Plaintiffs and class members treble the amount of damages they sustained as a result of the violations of the antitrust laws alleged herein; 5. Awarding Plaintiffs and class members a permanent injunction against Defendants' group boycott and other anticompetitive restrictions in violation of Section 1 of the Sherman Act: 6. Awarding Plaintiffs and Under-Contract Subclass members the damages they sustained as a result of the NBA Defendants' breaches of contract; 26 l. Awarding Plaintiffs and Under-Contract Subclass members the damages they sustained as a result of the NBA Defendants' interference with their contracts; 8. Awarding Plaintiffs and Free Agent and Rookie Subclass members the damages they sustained as a result of the NBA Defendants' interference with their entering into prospective contracts; 9. Declaring that the NBA Defendants are obligated to pay all contractually-owed amounts to Plaintiffs and Under-Contract Subclass members; 10. Awarding Plaintiffs their costs and disbursements in this action, including reasonable attorneys' fees; and I l. Grantine Plaintiffs and class members such other and further relief. including any appropriate injunctive relief, as may be appropriate. DEMAND FOR JURY Pursuant to Rule 38 of the Federal Rules of Civil Procedure. Plaintiffs demand a trial by jury. Dated: November 15, 20ll Respectfully S ubmitted, /olt L;, Barbara Podlucky Be 09788 Just Rae Miller, #387330 Berens & Miller, P.A. 3720 IDS Center 80 South Eighth Street Minneapolis, MN 55402 (612) 34e-6r7r (612) 349-6416 (fax) Attorneysfor Plaintffi 2l

antitrust

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. GEORGE ASSAD, Individually and on Behalf of All Others Similarly Situated, Plaintiff, v. STILLWATER MINING COMPANY, BRIAN D. SCHWEITZER, MICHAEL J. MCMULLEN, GEORGE M. BEE, PATRICE E. MERRIN, LAWRENCE PETER O'HAGAN, MICHAEL S. PARRETT, GARY A. SUGAR, SIBANYE GOLD LIMITED, THOR US HOLDCO INC., and THOR MERGCO INC., Defendants. COMPLAINT FOR VIOLATION OF THE SECURITIES EXCHANGE ACT OF 1934 Plaintiff, by his undersigned attorneys, for this complaint against defendants, alleges upon personal knowledge with respect to himself, and upon information and belief based upon, inter alia, the investigation of counsel as to all other allegations herein, as follows: NATURE OF THE ACTION 1. This action stems from a proposed transaction announced on December 9, 2016 (the “Proposed Transaction”), pursuant to which Stillwater Mining Company (“Stillwater” or the “Company”) will be acquired by Sibanye Gold Limited (“Parent”), Thor US Holdco Inc. (“US Holdco”), and Thor Mergco Inc. (“Merger Sub,” and together with Parent and US Holdco, “Sibanye”). 2. On December 9, 2016, Stillwater’s Board of Directors (the “Board” or “Individual Defendants”) caused the Company to enter into an agreement and plan of merger (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, shareholders of Stillwater will receive $18.00 per share in cash. 3. On January 24, 2017, defendants filed a Preliminary Proxy Statement (the “Proxy Statement”) with the United States Securities and Exchange Commission (“SEC”) in connection with the Proposed Transaction. 4. The Proxy Statement omits material information with respect to the Proposed Transaction, which renders the Proxy Statement false and misleading. Accordingly, plaintiff alleges herein that defendants violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (the “1934 Act”) in connection with the Proxy Statement. JURISDICTION AND VENUE 5. This Court has jurisdiction over the claims asserted herein pursuant to Section 27 of the 1934 Act because the claims asserted herein arise under Sections 14(a) and 20(a) of the 1934 Act and Rule 14a-9. 6. This Court has jurisdiction over defendants because each defendant is either a corporation that conducts business in and maintains operations within this District, or is an individual with sufficient minimum contacts with this District so as to make the exercise of jurisdiction by this Court permissible under traditional notions of fair play and substantial justice. 7. Venue is proper under 28 U.S.C. § 1391(b) because a substantial portion of the transactions and wrongs complained of herein occurred in this District. PARTIES 8. Plaintiff is, and has been continuously throughout all times relevant hereto, the owner of Stillwater common stock. 9. Defendant Stillwater is a Delaware corporation and maintains its principal executive office at 26 West Dry Creek Circle, Suite 400, Littleton, Colorado 80120. Stillwater’s common stock is traded on the NYSE under the ticker symbol “SWC.” 10. Defendant Brian D. Schweitzer (“Schweitzer”) has served as a director and Chairman of the Board of Stillwater since May 2013. According to the Company’s website, Schweitzer is a member of the Corporate Governance & Nominating Committee and the Health, Safety & Environmental Committee. 11. Defendant Michael J. McMullen (“McMullen”) has served as a director of Stillwater since May 2013 and as President and Chief Executive Officer (“CEO”) since December 2013. According to the Company’s website, McMullen is a member of the Health, Safety & Environmental Committee and the Technical and Ore Reserve Committee. 12. Defendant George M. Bee (“Bee”) has served as a director of Stillwater since November 2012. According to the Company’s website, Bee is Chair of the Health, Safety & Environmental Committee and a member of the Technical and Ore Reserve Committee. 13. Defendant Patrice E. Merrin (“Merrin”) has served as a director of Stillwater since May 2013. According to the Company’s website, Merrin is Chair of the Corporate Governance & Nominating Committee and a member of the Compensation Committee. 14. Defendant Lawrence Peter O’Hagan (“O'Hagan”) has served as a director of Stillwater March 2015. According to the Company’s website, O’Hagan is a member of the Audit Committee and the Compensation Committee. 15. Defendant Michael S. Parrett (“Parrett”) has served as a director of Stillwater since May 2009. According to the Company’s website, Parrett is Chair of the Audit Committee and a member of the Corporate Governance & Nominating Committee. 16. Defendant Gary A. Sugar (“Sugar”) has served as a director of Stillwater since August 2012. According to the Company’s website, Sugar is Chair of the Compensation Committee, Chair of the Technical and Ore Reserve Committee, and a member of the Audit Committee. 17. The defendants identified in paragraphs 10 through 16 are collectively referred to herein as the “Individual Defendants.” 18. Defendant Parent is a public company organized under the laws of South Africa and a party to the Merger Agreement. 19. Defendant US Holdco is a Delaware corporation, an indirect wholly owned subsidiary of Parent, and a party to the Merger Agreement. 20. Defendant Merger Sub is a Delaware corporation, a direct wholly-owned subsidiary of US Holdco, and a party to the Merger Agreement. CLASS ACTION ALLEGATIONS 21. Plaintiff brings this action as a class action on behalf of himself and the other public stockholders of Stillwater (the “Class”). Excluded from the Class are defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any defendant. 22. This action is properly maintainable as a class action. 23. The Class is so numerous that joinder of all members is impracticable. As of December 6, 2016, there were approximately 121,080,187 shares of Stillwater common stock outstanding, held by hundreds, if not thousands, of individuals and entities scattered throughout the country. 24. Questions of law and fact are common to the Class, including, among others: (i) whether defendants violated the 1934 Act; and (ii) whether defendants will irreparably harm plaintiff and the other members of the Class if defendants’ conduct complained of herein continues. 25. Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff’s claims are typical of the claims of the other members of the Class and plaintiff has the same interests as the other members of the Class. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. 26. The prosecution of separate actions by individual members of the Class would create the risk of inconsistent or varying adjudications that would establish incompatible standards of conduct for defendants, or adjudications that would, as a practical matter, be dispositive of the interests of individual members of the Class who are not parties to the adjudications or would substantially impair or impede those non-party Class members’ ability to protect their interests. 27. Defendants have acted, or refused to act, on grounds generally applicable to the Class as a whole, and are causing injury to the entire Class. Therefore, final injunctive relief on behalf of the Class is appropriate. SUBSTANTIVE ALLEGATIONS Background of the Company 28. Stillwater is the only United States miner of platinum group metals (“PGMs”) and the largest primary producer of PGMs outside of South Africa and the Russian Federation. 29. The Company is engaged in the development, extraction, and processing of PGMs from a geological formation in south-central Montana recognized as the J-M Reef. The J-M Reef is the only known significant source of PGMs in the United States and the highest-grade PGM deposit known in the world. 30. The Company also recycles PGMs from spent catalytic converters and other industrial sources. 31. The Company owns the Marathon PGM-copper deposit in Ontario, Canada, and the Altar porphyry copper-gold deposit located in the San Juan province of Argentina. 32. On July 29, 2016, Stillwater issued a press release wherein it reported its financial results for the second quarter ended June 30, 2016. The Company reported mined palladium and platinum sales of 150,900 ounces, an increase of 13.5% from 133,000 ounces sold during the second quarter of 2015, and mined palladium and platinum production of 137,100 ounces, an increase of 8.0% from 127,000 ounces mined during the second quarter of 2015. Stillwater processed 169,900 ounces of recycled palladium, platinum, and rhodium, an increase of 12.1% over 151,600 ounces recycled during the second quarter of 2015 and is the second highest total on record. Moreover, East Boulder Mine set several new records in the second quarter, including highest monthly tons milled (June), highest monthly ounces per employee (June), and the first half of 2016 was the highest number of ounces produced for any half-year period. The Company also accelerated its Blitz project on the 56 East development drive, with first production now expected in late 2017 or early 2018. 33. With respect to the results, Individual Defendant McMullen, President and CEO of the Company, commented: We are pleased to report not only strong operational performance this quarter, but also a notable 61.4% year-over-year reduction in our total company reportable incident rate, reflecting our team’s diligence in prioritizing safety while delivering improvement across the organization. We delivered quarterly costs of metals sold of $501 per PGM mined ounce and AISC within our new medium-term mid-to-high $500’s target range. Our momentum continued throughout the quarter, with June delivering the highest monthly ounces since April 2015, a significant decrease in costs of metals sold and the lowest AISC since 2010. We exit the first half of the year on track to exceed several of the original targets set for 2016, and thus today are announcing new guidance for the full-year. Our progress in results and safety represents an important milestone for the Company. I am confident that we now have the culture in place to continue safely increasing production while maintaining cost discipline. The Company’s liquidity position remains strong, with cash and cash equivalents plus highly liquid investments of $442.2 million at the end of the second quarter. The increase in purchased material in the recycling business during the second quarter, coupled with increasing metal prices, drove a $20.5 million build in working capital in the PGM Recycling segment. This shift was a significant factor in the overall reduction in cash and equivalents of $10.2 million from the first quarter of 2016. We continue to make solid progress in growing the recycling business, processing 169,900 PGM ounces during the quarter and achieving the second best quarter on record. In addition, we continue to invest in our mines through sustaining capital activities at a development rate above the schedule under our current mine plan. 34. McMullen continued: Work on the Blitz project continues to progress. Advance rates in the construction of the 56 East development heading, a critical path item for first production, continue to improve. Our focus on accelerating the project timeline has enabled us to bring forward plans for first production, which we now anticipate to occur in late 2017 or early 2018. Project spend on Blitz up to first production is now expected to be in the range of $155 million to $175 million. We anticipate Blitz will provide growth in our production profile and the Company’s lowest cost mined ounces, given the grades shown by the drilling to date, as well as the logistical set up of the Blitz project. Even as realized PGM prices saw a significant decline over the prior year period, recent improvements are encouraging. During the first half of 2016, platinum reversed its previous downward trend to reach $999 per ounce at the mid-year mark, and palladium rose from a low of $470 per ounce in the first quarter to $589 per mined ounce at the mid-year mark. At July 28, 2016, platinum traded at $1,143 per ounce and palladium had strengthened to $702 per ounce. Overall, our solid second quarter performance and strong momentum in June reflect the diligent focus of our team in continuing to drive costs lower and elevate safety across the organization. The fundamentals of palladium, our primary product, remain strong, and we are confident that our disciplined approach to capital deployment and focus on operational efficiencies position Stillwater to benefit across all stages of the commodity cycle. 35. On October 28, 2016, Stillwater issued a press release wherein it reported its financial results for the third quarter ended September 30, 2016. The Company reported PGM mined sales of 131,800 ounces, an increase of 12.4% from 117,300 ounces sold during the third quarter of 2015, and PGM mined production of 138,800 ounces, an increase of 8.4% from 128,100 PGM mined ounces during the third quarter of 2015. The Company processed 175,000 ounces of recycled palladium, platinum, and rhodium, an increase of 8.7% over 161,000 ounces recycled during the third quarter of 2015 and a Company record. The Company further reported consolidated net income attributable to common stockholders of $12.6 million or $0.10 per diluted share, compared to a consolidated net loss attributable to common stockholders of $11.9 million or $0.10 per diluted share for the third quarter of 2015. 36. With respect to the results, Individual Defendant McMullen commented: The third quarter 2016 results demonstrate that Stillwater Mining Company continues to deliver on operational plans and stated objectives. Our efforts to grow the recycling business have been successful as we processed 175,000 ounces of recycled PGMs during the third quarter of 2016, which was a Company record. Mined production and costs were in-line with our expectations. Based on our year-to-date results and future outlook, we remain confident in our ability to achieve the improved full-year guidance targets provided last quarter. . . . The Company remains focused on Blitz, our primary growth project. The progress on the two critical path items to first production, the 56 East development heading and the 53 East decline is ahead of plan. In addition, considerable engineering work has been updated on the Blitz project. This new work has driven a substantial increase to the scope of the project with relatively minimal additional costs. As a result of the new work performed, the project now incorporates the lower Blitz area. We now anticipate that Blitz will add between 270,000 and 330,000 ounces of mine production annually when fully ramped up by 2021- 2022. This is anticipated to be all incremental production for at least the first decade of the Blitz production phase. Costs for the project are expected to increase to approximately $250 million from the previous $205 million estimate, which we consider to be a small escalation given the much expanded scope of the project and the acceleration of the production profile. Additional capital will be required for expansion of the Stillwater Mine concentrator to treat the increased ore tonnage and the related work is currently underway. 37. McMullen concluded: The third quarter provides another data point for the evaluation of the progress we are making at Stillwater. As the business continues to evolve, we have consistently reached our performance targets, while achieving record safety results. I believe we have successfully established a foundation of financial discipline and focus on continuous operational improvement that will allow our shareholders to benefit from the world-class mining and processing assets we possess along with robust PGM market fundamentals. I would like to thank our team for the hard work to achieve the success Stillwater has experienced to date and the continued efforts for future progress. The Inadequate Proposed Transaction and Preclusive Merger Agreement 38. The Board caused the Company to enter into the Merger Agreement, pursuant to which the Company will be acquired for inadequate consideration. 39. The Individual Defendants have all but ensured that another entity will not emerge with a competing proposal by agreeing to a “no solicitation” provision in the Merger Agreement that prohibits the Individual Defendants from soliciting alternative proposals and severely constrains their ability to communicate and negotiate with potential buyers who wish to submit or have submitted unsolicited alternative proposals. Section 6.2.1 of the Merger Agreement states: Except as expressly permitted by this Section 6.2, during the Pre-Closing Period, the Company shall not, and shall cause its Subsidiaries and Representatives and its and their directors, officers and employees and other Representatives not to, directly or indirectly through another Person, (i) initiate, solicit or knowingly take any action to encourage, or knowingly facilitate the submission or making of, any Acquisition Proposal, or any inquiry, expression of interest, proposal, offer or request for information that could reasonably be expected to lead to or result in an Acquisition Proposal, (ii) other than informing Third Parties of the existence of the provisions contained in this Section 6.2 or (for a period of no more than two Business Days), in response to an unsolicited Acquisition Proposal or solely to the extent reasonably necessary to ascertain facts from the Person making such Acquisition Proposal for the purpose of providing the Company Board with sufficient information about such Acquisition Proposal and the Person that made it, participate or engage in negotiations or discussions with, or furnish any information concerning the Company or any of its Subsidiaries to, any Third Party relating to an Acquisition Proposal or any inquiry, expression of interest, proposal, offer or request for information that could reasonably be expected to lead to or result in an Acquisition Proposal, (iii) enter into any Contract (written or oral) relating to an Acquisition Proposal, or (iv) resolve or agree to do any of the foregoing. From and after the execution and delivery of this Agreement, the Company shall, and shall cause its Subsidiaries and its and their respective Representatives to, (A) immediately cease and cause to be terminated all discussions or negotiations with any Person that may be ongoing and existing on the date hereof with respect to any Acquisition Proposal, or any inquiry, expression of interest, proposal, offer or request for information that could reasonably be expected to lead to or result in an Acquisition Proposal, (B) terminate access by any Third Party to any physical or electronic data room or other access to data or information of the Company, in each case relating to or in connection with, any Acquisition Proposal or any potential Acquisition Transaction, (C) request the prompt return or destruction of all information previously provided to any Third Party in connection with any inquiry, expression of interest, proposal, offer or request for information that could reasonably be expected to lead to or result in an Acquisition Proposal or a proposed Acquisition Transaction, and (D) use reasonable best efforts to enforce, and not waive or modify, the provisions of any existing confidentiality or non-disclosure Contract entered into with respect to any Acquisition Proposal or any potential Acquisition Transaction; provided, however, that the Company shall waive standstill provisions therein to the extent such provisions prohibit or limit any Third Party from requesting that such provisions be waived or modified in connection with the submission or possible submission of an Acquisition Proposal in accordance with this Section 6.2. The Company shall ensure that its Representatives and the Representatives of its Subsidiaries are aware of the provisions of this Section 6.2, and it is agreed that any violation of the restrictions set forth in this Section 6.2 by any Representative of the Company or any of its Subsidiaries shall constitute a breach of this Section 6.2 by the Company. 40. Further, the Company must promptly advise Sibanye of any proposals or inquiries received from other parties. Section 6.2.3 of the Merger Agreement states: The Company shall promptly (and in no event later than 24 hours after receipt by the Company) notify Parent (which notice shall be provided orally and in writing and shall identify the Person making the Acquisition Proposal and set forth in reasonable detail the material terms thereof) after receipt of any Acquisition Proposal, and shall promptly (and in no event later than 24 hours after receipt by the Company) provide copies to Parent of any written proposals or indications of interest with respect to any Acquisition Proposal, and/or draft agreements relating to any Acquisition Proposal. Without limiting the foregoing, the Company shall keep Parent informed of any developments (including the status of discussions or negotiations) regarding any Acquisition Proposal (including by promptly (and in no event later than 24 hours after receipt by the Company) providing to Parent copies of any additional or revised written proposals or indications of interest with respect to such Acquisition Proposal, and/or draft agreements relating to such Acquisition Proposal) on a reasonably prompt basis (and in any event within 24 hours after receipt by the Company). The Company agrees that it and its Subsidiaries will not enter into any Contract with any Third Party subsequent to the date of this Agreement that prohibits the Company from providing any information to Parent in accordance with this Section 6.2.3. 41. Moreover, the Merger Agreement contains a highly restrictive “fiduciary out” provision permitting the Board to withdraw its approval of the Proposed Transaction under extremely limited circumstances, and grants Sibanye a “matching right” with respect to any “Superior Proposal” made to the Company. Section 6.2.4 of the Merger Agreement provides, in relevant part: In addition, and without limiting this Section 6.2.4, at any time after the date of this Agreement and prior to the time, but not after, the Company Stockholder Approval is obtained, if the Company Board determines, in good faith, after consultation with its outside legal counsel and outside independent financial advisors, that a written Acquisition Proposal made after the date hereof that did not result from a breach of this Section 6.2 constitutes a Superior Proposal, then the Company Board may, subject to compliance with this Section 6.2.4, make a Company Adverse Recommendation Change; provided, that prior to making a Company Adverse Recommendation Change, the Company shall have provided Parent five Business Days’ prior written notice (“Superior Proposal Notice”) advising Parent that it intends to take such action and specifying, in reasonable detail, the reasons for such action and the terms and conditions of any such Superior Proposal, including the identity of the Third Party who has made such Superior Proposal, and provided Parent a copy of the relevant proposed Alternative Acquisition Agreement or the latest draft thereof or, if no such agreement or draft exists, a written summary of the material terms and conditions of such Superior Proposal, and any other related available documentation and correspondence relating to such Superior Proposal (including any related financing commitments and fee letters), and: (A) during such five Business Day period, if requested by Parent, the Company shall have engaged in good faith negotiations with Parent (and the Company shall have directed its Representatives, including, its outside legal counsel and outside independent financial advisors, to have engaged in good faith negotiations with Parent and its Representatives) regarding changes to the terms of this Agreement intended to cause such Acquisition Proposal to no longer constitute a Superior Proposal; and (B) the Company shall have considered the Proposed Changed Terms proposed by Parent no later than 11:59 p.m., NY time, on the fifth Business Day of such five-Business Day period and shall have determined in good faith (after consultation with its outside legal counsel and outside independent financial advisors) that the Superior Proposal would continue to constitute a Superior Proposal if such Proposed Changed Terms were to be given effect and that the failure to make a Company Adverse Recommendation Change would be inconsistent with the Company Board’s fiduciary duties to the stockholders of the Company under Applicable Law. The Parties acknowledge and agree that any (1) revisions to the financial or any other material terms of a Superior Proposal or (2) revisions to the financial terms or any other material terms of an Acquisition Proposal that the Company Board had determined no longer constitutes a Superior Proposal, shall constitute a new Acquisition Proposal and shall in each case require the Company to deliver to Parent a new Superior Proposal Notice and a new period (which period shall be three Business Days) shall commence thereafter, during which time the Company shall be required to comply with the requirements of this Section 6.2.4 anew with respect to such additional notice. 42. Further locking up control of the Company in favor of Sibanye, the Merger Agreement provides for a “termination fee” of $16.5 million, payable by the Company to Sibanye if the Individual Defendants cause the Company to terminate the Merger Agreement. Stillwater also may be required to reimburse Sibanye’s expenses up to $10 million. 43. By agreeing to all of the deal protection devices, the Individual Defendants have locked up the Proposed Transaction and have precluded other bidders from making successful competing offers for the Company. 44. The consideration to be paid to plaintiff and the Class in the Proposed Transaction is inadequate. 45. Among other things, the intrinsic value of the Company is materially in excess of the amount offered in the Proposed Transaction. 46. The merger consideration also fails to adequately compensate the Company’s stockholders for the significant synergies resulting from the merger. 47. Accordingly, the Proposed Transaction will deny Class members their right to share proportionately and equitably in the true value of the Company’s valuable and profitable business, and future growth in profits and earnings. The Proxy Statement Omits Material Information, Rendering It False and Misleading 48. Defendants filed the Proxy Statement with the SEC in connection with the Proposed Transaction. 49. The Proxy Statement omits material information with respect to the Proposed Transaction, which renders the Proxy Statement false and misleading. 50. First, the Proxy Statement omits material information regarding Stillwater’s financial projections and the financial analyses performed by the Company’s financial advisor, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“BofA Merrill Lynch”), in support of its so-called fairness opinion. 51. For example, with respect to Stillwater’s financial projections, the Proxy Statement fails to disclose: (i) all of the projection line items for Stillwater for each year of the projection period as provided by management and/or relied upon by BofA Merrill Lynch in its financial analyses, including but not limited to annual production rates for each separate product, assumed pricing for each product for each year, and operating expenses; (ii) the definition of unlevered free cash flow; (iii) each of the constituent line items used in the calculation of unlevered free cash flow, including for each of the Stillwater Mine, Blitz project, East Boulder Mine, and Lower East Boulder project; and (iv) a reconciliation of GAAP to non-GAAP metrics. 52. With respect to BofA Merrill Lynch’s Net Asset Value Analysis, the Proxy Statement fails to disclose: (i) the specific inputs and assumptions used to determine the discount rate range of 11.6% to 14.5%; and (ii) the separate concluded values for each of the Stillwater Mine, Blitz project, East Boulder Mine, and Lower East Boulder project, as well as the values for cash, the market value of Stillwater’s convertible debentures as of December 7, 2016, mine closure liabilities, and the value of Altar Resources, as used by BofA Merrill Lynch in this analysis. 53. With respect to BofA Merrill Lynch’s Selected Publicly Traded Companies Analysis, the Proxy Statement fails to disclose the individual multiples for the companies observed by BofA Merrill Lynch in its analysis, as well as the separately concluded values for Stillwater and Altar Resources. 54. With respect to BofA Merrill Lynch’s Selected Precedent Transactions Analysis, the Proxy Statement fails to disclose the individual multiples for the transactions observed by BofA Merrill Lynch in its analysis, as well as the separately concluded values for Stillwater and Altar Resources. 55. When a banker’s endorsement of the fairness of a transaction is touted to shareholders, the valuation methods used to arrive at that opinion as well as the key inputs and range of ultimate values generated by those analyses must also be fairly disclosed. Moreover, the disclosure of projected financial information is material because it provides stockholders with a basis to project the future financial performance of a company, and allows stockholders to better understand the financial analyses performed by the company’s financial advisor in support of its fairness opinion. 56. The omission of this material information renders the Proxy Statement false and misleading, including, inter alia, the following sections of the Proxy Statement: (i) “Opinion of Stillwater’s Financial Advisor”; (ii) “Certain Stillwater Unaudited Prospective Financial Information”; (iii) “Reasons for the Merger; Recommendation of the Stillwater Board of Directors”; and (iv) “Background of the Merger.” 57. Second, the Proxy Statement omits material information regarding potential conflicts of interest of the Company’s officers and directors. 58. Specifically, the Proxy Statement fails to disclose the timing and nature of all communications regarding future employment and/or directorship of Stillwater’s officers and directors, including who participated in all such communications. 59. Communications regarding post-transaction employment during the negotiation of the underlying transaction must be disclosed to stockholders. This information is necessary for stockholders to understand potential conflicts of interest of management and the Board, as that information provides illumination concerning motivations that would prevent fiduciaries from acting solely in the best interests of the Company’s stockholders. 60. Additionally, the Proxy Statement fails to disclose the amount of compensation the Company’s officers and directors are estimated to receive in connection with the Proposed Transaction. 61. The omission of this material information renders the Proxy Statement false and misleading, including, inter alia, the following sections of the Proxy Statement: (i) “Interests of the Company’s Directors and Executive Officers in the Merger”; (ii) “Reasons for the Merger; Recommendation of the Stillwater Board of Directors”; and (iii) “Background of the Merger.” 62. Third, the Proxy Statement omits material information regarding potential conflicts of interest of BofA Merrill Lynch. 63. Specifically, the Proxy Statement fails to disclose whether BofA Merrill Lynch has provided past services to Stillwater and/or its affiliates, as well as the amount of compensation received by BofA Merrill Lynch for such services. 64. Full disclosure of investment banker compensation and all potential conflicts is required due to the central role played by investment banks in the evaluation, exploration, selection, and implementation of strategic alternatives. 65. The omission of this material information renders the Proxy Statement false and misleading, including, inter alia, the following sections of the Proxy Statement: (i) “Opinion of Stillwater’s Financial Advisor”; (ii) “Reasons for the Merger; Recommendation of the Stillwater Board of Directors”; and (iii) “Background of the Merger.” 66. Fourth, the Proxy Statement omits material information regarding the background of the Proposed Transaction. The Company’s stockholders are entitled to an accurate description of the “process” the directors used in coming to their decision to support the Proposed Transaction. 67. For example, the Proxy Statement fails to disclose whether the confidentiality agreements entered into between Stillwater and the potential bidders, including Company B, Company C, and Company D, contained standstill and/or “don’t ask, don’t waive” provisions. 68. The Proxy Statement further fails to disclose the nature of the “preliminary discussions with representatives of third parties regarding possible sales by Stillwater of non- core assets.” 69. The omission of this material information renders the Proxy Statement false and misleading, including, inter alia, the following sections of the Proxy Statement: (i) “Reasons for the Merger; Recommendation of the Stillwater Board of Directors”; and (ii) “Background of the Merger.” 70. The above-referenced omitted information, if disclosed, would significantly alter the total mix of information available to Stillwater’s stockholders. COUNT I Claim for Violation of Section 14(a) of the 1934 Act and Rule 14a-9 Promulgated Thereunder Against the Individual Defendants and Stillwater 71. Plaintiff repeats and realleges the preceding allegations as if fully set forth herein. 72. The Individual Defendants disseminated the false and misleading Proxy Statement, which contained statements that, in violation of Section 14(a) of the 1934 Act and Rule 14a-9, in light of the circumstances under which they were made, omitted to state material facts necessary to make the statements therein not materially false or misleading. Stillwater is liable as the issuer of these statements. 73. The Proxy Statement was prepared, reviewed, and/or disseminated by the Individual Defendants. By virtue of their positions within the Company, the Individual Defendants were aware of this information and their duty to disclose this information in the Proxy Statement. 74. The Individual Defendants were at least negligent in filing the Proxy Statement with these materially false and misleading statements. 75. The omissions and false and misleading statements in the Proxy Statement are material in that a reasonable stockholder will consider them important in deciding how to vote on the Proposed Transaction. In addition, a reasonable investor will view a full and accurate disclosure as significantly altering the total mix of information made available in the Proxy Statement and in other information reasonably available to stockholders. 76. The Proxy Statement is an essential link in causing plaintiff and the Company’s stockholders to approve the Proposed Transaction. 77. By reason of the foregoing, defendants violated Section 14(a) of the 1934 Act and Rule 14a-9 promulgated thereunder. 78. Because of the false and misleading statements in the Proxy Statement, plaintiff and the Class are threatened with irreparable harm. COUNT II Claim for Violation of Section 20(a) of the 1934 Act Against the Individual Defendants and Sibanye 79. Plaintiff repeats and realleges the preceding allegations as if fully set forth herein. 80. The Individual Defendants and Sibanye acted as controlling persons of Stillwater within the meaning of Section 20(a) of the 1934 Act as alleged herein. By virtue of their positions as officers and/or directors of Stillwater and participation in and/or awareness of the Company’s operations and/or intimate knowledge of the false statements contained in the Proxy Statement, they had the power to influence and control and did influence and control, directly or indirectly, the decision making of the Company, including the content and dissemination of the various statements that plaintiff contends are false and misleading. 81. Each of the Individual Defendants and Sibanye was provided with or had unlimited access to copies of the Proxy Statement alleged by plaintiff to be misleading prior to and/or shortly after these statements were issued and had the ability to prevent the issuance of the statements or cause them to be corrected. 82. In particular, each of the Individual Defendants had direct and supervisory involvement in the day-to-day operations of the Company, and, therefore, is presumed to have had the power to control and influence the particular transactions giving rise to the violations as alleged herein, and exercised the same. The Proxy Statement contains the unanimous recommendation of the Individual Defendants to approve the Proposed Transaction. They were thus directly in the making of the Proxy Statement. 83. Sibanye also had direct supervisory control over the composition of the Proxy Statement and the information disclosed therein, as well as the information that was omitted and/or misrepresented in the Proxy Statement. 84. By virtue of the foregoing, the Individual Defendants and Sibanye violated Section 20(a) of the 1934 Act. 85. As set forth above, the Individual Defendants and Sibanye had the ability to exercise control over and did control a person or persons who have each violated Section 14(a) of the 1934 Act and Rule 14a-9, by their acts and omissions as alleged herein. By virtue of their positions as controlling persons, these defendants are liable pursuant to Section 20(a) of the 1934 Act. As a direct and proximate result of defendants’ conduct, plaintiff and the Class are threatened with irreparable harm. PRAYER FOR RELIEF WHEREFORE, plaintiff prays for judgment and relief as follows: A. Preliminarily and permanently enjoining defendants and all persons acting in concert with them from proceeding with, consummating, or closing the Proposed Transaction; B. In the event defendants consummate the Proposed Transaction, rescinding it and setting it aside or awarding rescissory damages; C. Directing the Individual Defendants to disseminate a Proxy Statement that does not contain any untrue statements of material fact and that states all material facts required in it or necessary to make the statements contained therein not misleading; D. Declaring that defendants violated Sections 14(a) and/or 20(a) of the 1934 Act, as well as Rule 14a-9 promulgated thereunder; E. Awarding plaintiff the costs of this action, including reasonable allowance for plaintiff’s attorneys’ and experts’ fees; and F. Granting such other and further relief as this Court may deem just and proper. JURY DEMAND Plaintiff respectfully requests a trial by jury on all issues so triable. DATE: January 27, 2017 Respectfully submitted, /s/ Rusty E. Glenn Rusty E. Glenn THE SHUMAN LAW FIRM 600 17th Street, Suite 2800 South Denver, CO 80202 Telephone: (303) 861-3003 Facsimile: (303) 536-7849 Email: [email protected] Kip B. Shuman THE SHUMAN LAW FIRM Post-Montgomery Ctr. One Montgomery Street, Ste. 1800 San Francisco, CA 94104 Telephone: (303) 861-3003 Facsimile: (303) 536-7849 Email: [email protected] Local Counsel for Plaintiff RIGRODSKY & LONG, P.A. Seth D. Rigrodsky Brian D. Long Gina M. Serra Jeremy J. Riley 2 Righter Parkway, Suite 120 Wilmington, DE 19803 (302) 295-5310 RM LAW, P.C. Richard A. Maniskas 995 Old Eagle School Road, Suite 311 Wayne, PA 19087 (484) 588-5516 Attorneys for Plaintiff

securities

rKRfCYcBD5gMZwczXBgy

Todd M. Friedman (SBN 216752) Adrian R. Bacon (SBN 280332) LAW OFFICES OF TODD M. FRIEDMAN, P.C. 21550 Oxnard St., Suite 780 Woodland Hills, CA 91367 Phone: 323-306-4234 Fax: 866-633-0228 [email protected] [email protected] Attorneys for Plaintiff UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA LINDA JOHNSTONE, individually and on behalf of all others similarly situated, Plaintiff, vs. Case No. 8:21-cv-01177 CLASS ACTION COMPLAINT FOR VIOLATIONS OF: EQUITY DIRECT FINANCIAL, LLC, and DOES 1 through 10, inclusive, and each of them, Defendant. 1. NEGLIGENT VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT [47 U.S.C. §227(b)] 2. WILLFUL VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT [47 U.S.C. §227(b)] 3. NEGLIGENT VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT [47 U.S.C. §227(c)] 4. WILLFUL VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT [47 U.S.C. §227(c)] DEMAND FOR JURY TRIAL ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Plaintiff LINDA JOHNSTONE (“Plaintiff”), individually and on behalf of all others similarly situated, alleges the following upon information and belief based upon personal knowledge: NATURE OF THE CASE 1. Plaintiff brings this action individually and on behalf of all others similarly situated seeking damages and any other available legal or equitable remedies resulting from the illegal actions of EQUITY DIRECT FINANICAL, LLC (“Defendant”), in negligently, knowingly, and/or willfully contacting Plaintiff on Plaintiff’s cellular telephone in violation of the Telephone Consumer Protection Act, 47. U.S.C. § 227 et seq. (“TCPA”) and related regulations, specifically the National Do-Not-Call provisions, thereby invading Plaintiff’s privacy. JURISDICTION & VENUE 2. Jurisdiction is proper under 28 U.S.C. § 1332(d)(2) because Plaintiff, a resident of California, seeks relief on behalf of a Class, which will result in at least one class member belonging to a different state than that of Defendant, a California company. Plaintiff also seeks up to $1,500.00 in damages for each call in violation of the TCPA, which, when aggregated among a proposed class in the thousands, exceeds the $5,000,000.00 threshold for federal court jurisdiction. Therefore, both diversity jurisdiction and the damages threshold under the Class Action Fairness Act of 2005 (“CAFA”) are present, and this Court has jurisdiction. 3. Venue is proper in the United States District Court for the Central District of California pursuant to 28 U.S.C. § 1391(b) and because Defendant does business within the State of California and Plaintiff resides within the County of Ventura. PARTIES 4. Plaintiff, LINDA JOHNSTONE (“Plaintiff”), is a natural person residing in Thousand Oaks, California and is a “person” as defined by 47 U.S.C. § 153 (39). 5. Defendant, EQUITY DIRECT FINANCIAL LLC (“Defendant”) is a mortgage lending company, and is a “person” as defined by 47 U.S.C. § 153 (39). 6. The above named Defendant, and its subsidiaries and agents, are collectively referred to as “Defendants.” The true names and capacities of the Defendants sued herein as DOE DEFENDANTS 1 through 10, inclusive, are currently unknown to Plaintiff, who therefore sues such Defendants by fictitious names. Each of the Defendants designated herein as a DOE is legally responsible for the unlawful acts alleged herein. Plaintiff will seek leave of Court to amend the Complaint to reflect the true names and capacities of the DOE Defendants when such identities become known. 7. Plaintiff is informed and believes that at all relevant times, each and every Defendant was acting as an agent and/or employee of each of the other Defendants and was acting within the course and scope of said agency and/or employment with the full knowledge and consent of each of the other Defendants. Plaintiff is informed and believes that each of the acts and/or omissions complained of herein was made known to, and ratified by, each of the other Defendants. FACTUAL ALLEGATIONS 8. Beginning in or around September 2020, Defendant contacted Plaintiff on Plaintiff’s cellular telephone number ending in -6983, in an attempt to solicit Plaintiff to purchase Defendant’s services. 9. Defendant used an “automatic telephone dialing system” as defined by 47 U.S.C. § 227(a)(1) to place its call to Plaintiff seeking to solicit its services. 10. Defendant contacted or attempted to contact Plaintiff from telephone number (805) 364-8496 confirmed to be Defendant’s number. 11. Defendant’s calls constituted calls that were not for emergency purposes as defined by 47 U.S.C. § 227(b)(1)(A). 12. During all relevant times, Defendant did not possess Plaintiff’s “prior express consent” to receive calls using an automatic telephone dialing system or an artificial or prerecorded voice on her cellular telephone pursuant to 47 U.S.C. § 227(b)(1)(A). 13. Further, Plaintiff’s cellular telephone number ending in -6983 was added to the National Do-Not-Call Registry on or about July 27, 2003. 14. Defendant placed multiple calls and left a voicemail which utilized a prerecorded voice soliciting its business to Plaintiff on her cellular telephone ending in -6983 on or around September 16, 2020. 15. Such calls constitute solicitation calls pursuant to 47 C.F.R. § 64.1200(c)(2) as they were attempts to promote or sell Defendant’s services. 16. Plaintiff received at least one solicitation call from Defendant within a 12-month period. 17. Defendant called Plaintiff in an attempt to solicit its services and in violation of the National Do-Not-Call provisions of the TCPA. 18. Upon information and belief, and based on Plaintiff’s experiences of being called by Defendant after being on the National Do-Not-Call list for several years prior to Defendant’s initial call, and at all relevant times, Defendant failed to establish and implement reasonable practices and procedures to effectively prevent telephone solicitations in violation of the regulations prescribed under 47 U.S.C. § 227(c)(5). CLASS ALLEGATIONS 19. Plaintiff brings this action individually and on behalf of all others similarly situated, as a member the two proposed classes (hereafter, jointly, “The Classes”). 20. The class concerning the ATDS claim for no prior express consent (hereafter “The ATDS Class”) is defined as follows: All persons within the United States who received any solicitation/telemarketing telephone calls from Defendant to said person’s cellular telephone made through the use of any automatic telephone dialing system or an artificial or prerecorded voice and such person had not previously consented to receiving such calls within the four years prior to the filing of this Complaint 21. The class concerning the National Do-Not-Call violation (hereafter “The DNC Class”) is defined as follows: All persons within the United States registered on the National Do-Not-Call Registry for at least 30 days, who had not granted Defendant prior express consent nor had a prior established business relationship, who received more than one call made by or on behalf of Defendant that promoted Defendant’s products or services, within any twelve-month period, within four years prior to the filing of the complaint. 22. Plaintiff represents, and is a member of, The ATDS Class, consisting of all persons within the United States who received any collection telephone calls from Defendant to said person’s cellular telephone made through the use of any automatic telephone dialing system or an artificial or prerecorded voice and such person had not previously not provided their cellular telephone number to Defendant within the four years prior to the filing of this Complaint. 23. Plaintiff represents, and is a member of, The DNC Class, consisting of all persons within the United States registered on the National Do-Not-Call Registry for at least 30 days, who had not granted Defendant prior express consent nor had a prior established business relationship, who received more than one call made by or on behalf of Defendant that promoted Defendant’s products or services, within any twelve-month period, within four years prior to the filing of the complaint. 24. Defendant, its employees and agents are excluded from The Classes. Plaintiff does not know the number of members in The Classes, but believes the Classes members number in the thousands, if not more. Thus, this matter should be certified as a Class Action to assist in the expeditious litigation of the matter. 25. The Classes are so numerous that the individual joinder of all of its members is impractical. While the exact number and identities of The Classes members are unknown to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff is informed and believes and thereon alleges that The Classes includes thousands of members. Plaintiff alleges that The Classes members may be ascertained by the records maintained by Defendant. 26. Plaintiff and members of The ATDS Class were harmed by the acts of Defendant in at least the following ways: Defendant illegally contacted Plaintiff and ATDS Class members via their cellular telephones thereby causing Plaintiff and ATDS Class members to incur certain charges or reduced telephone time for which Plaintiff and ATDS Class members had previously paid by having to retrieve or administer messages left by Defendant during those illegal calls, and invading the privacy of said Plaintiff and ATDS Class members. 27. Common questions of fact and law exist as to all members of The ATDS Class which predominate over any questions affecting only individual members of The ATDS Class. These common legal and factual questions, which do not vary between ATDS Class members, and which may be determined without reference to the individual circumstances of any ATDS Class members, include, but are not limited to, the following: a. Whether, within the four years prior to the filing of this Complaint, Defendant made any telemarketing/solicitation call (other than a call made for emergency purposes or made with the prior express consent of the called party) to a ATDS Class member using any automatic telephone dialing system or any artificial or prerecorded voice to any telephone number assigned to a cellular telephone service; b. Whether Plaintiff and the ATDS Class members were damaged thereby, and the extent of damages for such violation; and c. Whether Defendant should be enjoined from engaging in such conduct in the future. 28. As a person that received numerous telemarketing/solicitation calls from Defendant using an automatic telephone dialing system or an artificial or prerecorded voice, without Plaintiff’s prior express consent, Plaintiff is asserting claims that are typical of The ATDS Class. 29. Plaintiff and members of The DNC Class were harmed by the acts of Defendant in at least the following ways: Defendant illegally contacted Plaintiff and DNC Class members via their telephones for solicitation purposes, thereby invading the privacy of said Plaintiff and the DNC Class members whose telephone numbers were on the National Do-Not-Call Registry. Plaintiff and the DNC Class members were damaged thereby. 30. Common questions of fact and law exist as to all members of The DNC Class which predominate over any questions affecting only individual members of The DNC Class. These common legal and factual questions, which do not vary between DNC Class members, and which may be determined without reference to the individual circumstances of any DNC Class members, include, but are not limited to, the following: a. Whether, within the four years prior to the filing of this Complaint, Defendant or its agents placed more than one solicitation call to the members of the DNC Class whose telephone numbers were on the National Do-Not-Call Registry and who had not granted prior express consent to Defendant and did not have an established business relationship with Defendant; b. Whether Defendant obtained prior express written consent to place solicitation calls to Plaintiff or the DNC Class members’ telephones; c. Whether Plaintiff and the DNC Class member were damaged thereby, and the extent of damages for such violation; and d. Whether Defendant and its agents should be enjoined from engaging in such conduct in the future. 31. As a person that received numerous solicitation calls from Defendant within a 12-month period, who had not granted Defendant prior express consent and did not have an established business relationship with Defendant, Plaintiff is asserting claims that are typical of the DNC Class. 32. Plaintiff will fairly and adequately protect the interests of the members of The Classes. Plaintiff has retained attorneys experienced in the prosecution of class actions. 33. A class action is superior to other available methods of fair and efficient adjudication of this controversy, since individual litigation of the claims of all Classes members is impracticable. Even if every Classes member could afford individual litigation, the court system could not. It would be unduly burdensome to the courts in which individual litigation of numerous issues would proceed. Individualized litigation would also present the potential for varying, inconsistent, or contradictory judgments and would magnify the delay and expense to all parties and to the court system resulting from multiple trials of the same complex factual issues. By contrast, the conduct of this action as a class action presents fewer management difficulties, conserves the resources of the parties and of the court system, and protects the rights of each Classes member. 34. The prosecution of separate actions by individual Classes members would create a risk of adjudications with respect to them that would, as a practical matter, be dispositive of the interests of the other Classes members not parties to such adjudications or that would substantially impair or impede the ability of such non-party Class members to protect their interests. 35. Defendant has acted or refused to act in respects generally applicable to The Classes, thereby making appropriate final and injunctive relief with regard to the members of the Classes as a whole. FIRST CAUSE OF ACTION Negligent Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(b). On Behalf of the ATDS Class 36. Plaintiff repeats and incorporates by reference into this cause of action the allegations set forth above at Paragraphs 1-35. 37. The foregoing acts and omissions of Defendant constitute numerous and multiple negligent violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227(b), and in particular 47 U.S.C. § 227 (b)(1)(A). 38. As a result of Defendant’s negligent violations of 47 U.S.C. § 227(b), Plaintiff and the Class Members are entitled an award of $500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B). 39. Plaintiff and the ATDS Class members are also entitled to and seek injunctive relief prohibiting such conduct in the future. SECOND CAUSE OF ACTION Knowing and/or Willful Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(b) On Behalf of the ATDS Class 40. Plaintiff repeats and incorporates by reference into this cause of action the allegations set forth above at Paragraphs 1-39. 41. The foregoing acts and omissions of Defendant constitute numerous and multiple knowing and/or willful violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227(b), and in particular 47 U.S.C. § 227 (b)(1)(A). 42. As a result of Defendant’s knowing and/or willful violations of 47 U.S.C. § 227(b), Plaintiff and the ATDS Class members are entitled an award of $1,500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B) and 47 U.S.C. § 227(b)(3)(C). 43. Plaintiff and the Class members are also entitled to and seek injunctive relief prohibiting such conduct in the future. THIRD CAUSE OF ACTION Negligent Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(c) On Behalf of the DNC Class 44. Plaintiff repeats and incorporates by reference into this cause of action the allegations set forth above at Paragraphs 1-43. 45. The foregoing acts and omissions of Defendant constitute numerous and multiple negligent violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227(c), and in particular 47 U.S.C. § 227 (c)(5). 46. As a result of Defendant’s negligent violations of 47 U.S.C. § 227(c), Plaintiff and the DNC Class Members are entitled an award of $500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(c)(5)(B). 47. Plaintiff and the DNC Class members are also entitled to and seek injunctive relief prohibiting such conduct in the future. FOURTH CAUSE OF ACTION Knowing and/or Willful Violations of the Telephone Consumer Protection Act 47 U.S.C. §227 et seq. On Behalf of the DNC Class 48. Plaintiff repeats and incorporates by reference into this cause of action the allegations set forth above at Paragraphs 1-47. 49. The foregoing acts and omissions of Defendant constitute numerous and multiple knowing and/or willful violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227(c), in particular 47 U.S.C. § 227 (c)(5). 50. As a result of Defendant’s knowing and/or willful violations of 47 U.S.C. § 227(c), Plaintiff and the DNC Class members are entitled an award of $1,500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(c)(5). 51. Plaintiff and the DNC Class members are also entitled to and seek injunctive relief prohibiting such conduct in the future. PRAYER FOR RELIEF WHEREFORE, Plaintiff requests judgment against Defendant for the following: FIRST CAUSE OF ACTION Negligent Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(b) • As a result of Defendant’s negligent violations of 47 U.S.C. §227(b)(1), Plaintiff and the ATDS Class members are entitled to and request $500 in statutory damages, for each and every violation, pursuant to 47 U.S.C. 227(b)(3)(B). • Any and all other relief that the Court deems just and proper. SECOND CAUSE OF ACTION Knowing and/or Willful Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(b) • As a result of Defendant’s willful and/or knowing violations of 47 U.S.C. §227(b)(1), Plaintiff and the ATDS Class members are entitled to and request treble damages, as provided by statute, up to $1,500, for each and every violation, pursuant to 47 U.S.C. §227(b)(3)(B) and 47 U.S.C. §227(b)(3)(C). • Any and all other relief that the Court deems just and proper. THIRD CAUSE OF ACTION Negligent Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(c) • As a result of Defendant’s negligent violations of 47 U.S.C. §227(c)(5), Plaintiff and the DNC Class members are entitled to and request $500 in statutory damages, for each and every violation, pursuant to 47 U.S.C. 227(c)(5). • Any and all other relief that the Court deems just and proper. FOURTH CAUSE OF ACTION Knowing and/or Willful Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(c) • As a result of Defendant’s willful and/or knowing violations of 47 U.S.C. §227(c)(5), Plaintiff and the DNC Class members are entitled to and request treble damages, as provided by statute, up to $1,500, for each and every violation, pursuant to 47 U.S.C. §227(c)(5). • Any and all other relief that the Court deems just and proper. 52. Pursuant to the Seventh Amendment to the Constitution of the United States of America, Plaintiff is entitled to, and demands, a trial by jury. Respectfully Submitted this 8th Day of July, 2021. LAW OFFICES OF TODD M. FRIEDMAN, P.C. By: /s/ Todd M. Friedman Todd M. Friedman Law Offices of Todd M. Friedman Attorney for Plaintiff

privacy

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK Case No. 1:20-cv-00731-PAE TUTOR PERINI BUILDING CORP., individually and, as to Count I of the Complaint, on behalf of all others similarly situated, pursuant to Article 3-A of the N.Y. Lien Law, Plaintiff, SECOND AMENDED COMPLAINT vs. NEW YORK CITY REGIONAL CENTER, LLC; GEORGE WASHINGTON BRIDGE BUS STATION AND INFRASTRUCTURE Plaintiff Demands Trial By Jury DEVELOPMENT FUND, LLC; GSNMF SUB- CDE 12 LLC; GSB NMTC INVESTOR LLC: LIIF SUB-CDE XXVI, LLC; DVCI CDE XIII, LLC; GWB NMTC INVESTMENT FUND LLC; GWB LEVERAGE LENDER, LLC; GEORGE WASHINGTON BRIDGE BUS STATION AND INFRASTRUCTURE DEVELOPMENT FUND, PHASE II, LLC; UPPER MANHATTAN EMPOWERMENT ZONE DEVELOPMENT CORPORATION; SLAYTON VENTURES, LLC; SLAYTON EQUITIES; SJM PARTNERS INC.; PAUL SLAYTON, an individual, STEPHEN GARCHIK, an individual; WILLIAM “TREY” BURKE, an individual, STEPHEN McBRIDE, an individual; and DOES 1-300, inclusive, ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Defendants. Tutor Perini Building Corp. (“TPBC” or “Plaintiff”), by and through its undersigned counsel, individually and, as to Count I of the Complaint, on behalf of all others similarly situated or class members, pursuant to Article 3-A of the N.Y. Lien Law, files this Second Amended Complaint against (1) New York City Regional Center, LLC; George Washington Bridge Bus Station And Infrastructure Development Fund, LLC; GSNMF Sub-Cde 12 LLC; GSB NMTC Investor LLC; LIIF SUB-CDE XXVI, LLC; DVCI CDE XIII, LLC; GWB NMTC Investment Fund LLC; GWB Leverage Lender, LLC; George Washington Bridge Bus Station And Infrastructure Development Fund, Phase II, LLC; Upper Manhattan Empowerment Zone Development Corporation; (“Lender Defendants”); (2) the Complaint is also brought against individuals and companies related to non-party George Washington Bridge Development Venture LLC, which is the subject of a pending Chapter 11 bankruptcy proceeding, including, Slayton Ventures, LLC; Slayton Equities; SJM Partners Inc.; Paul Slayton, an individual; Stephen Garchik, an individual; William “Trey” Burke, an individual; Stephen McBride, an individual; and (3) to the extent permitted by law, the Complaint is also brought against Does 1-300, inclusive, (collectively, the “Defendants”). Plaintiff, based on knowledge, information and belief, and, as a result of its investigation to date, alleges as follows: I. NATURE OF ACTION 1. This Complaint asserts (a) a claim by TPBC in its representative capacity as a beneficiary of a trust under Article 3-A of the Lien Law and for the benefit of all beneficiaries or class members of said trust, for diversion of trust assets; and (b) claims held by TPBC, in its individual capacity, arising from the George Washington Bridge Bus Station development project, a major construction project located in New York City, New York. This Complaint asserts causes of action due to massive and coordinated fraudulent misconduct that resulted from the wrongful receipt of monies, which said funds were absconded, stolen and/or otherwise diverted from statutory trust funds. The individual defendants and their companies in particular engaged in conduct that shocks any notion of lawful, ethic of reasonable business practice. II. JURISDICTION, VENUE AND STATUTORY PREDICATES 2. The jurisdiction of this Court is based both upon diversity of citizenship and a federal question. 3. First, the jurisdiction of this Court is based upon diversity of citizenship, pursuant to 28 U.S.C. § 1332(a). The parties are citizens of different states and the amount in controversy exceeds $75,000. 4. Second and independently, this Court has jurisdiction because TPBC asserts claims arising under the federal Declaratory Judgment Act. 5. Venue is proper and personal jurisdiction exists because a substantial part of the events giving rise to the Complaint occurred in this District. This case is based on circumstances concerning the building of a construction project located within this District, specifically within Manhattan, New York City, New York. Additionally, multiple Defendants reside and/or their business is conducted within the District. 28 U.S.C. § 1391(b)-(c). 6. This case is commenced pursuant to Article 3-A of the N.Y. Lien Law (the “Lien Law”), Federal Declaratory Judgment Act and the causes of action asserted herein. III. PARTIES 7. Plaintiff Tutor Perini Building Corp. is an Arizona corporation, with its principal place of business in Nevada. During all relevant periods of time and currently, TPBC held a valid license to operate as a general contractor in the State of New York. 8. TPBC alleges that Defendant New York City Regional Center, LLC (“NYCRC” or “Regional Center”) is, and at all times herein mentioned was, a limited liability company duly formed, existing, and organized under the laws of the State of New York, with its principal place of business in the State of New York. The managing members of NYCRC are Paul Anton Levinshon and George Olsen, both of whom are citizens of the State of New York. 9. TPBC alleges that Defendant George Washington Bridge Bus Station and Infrastructure Development Fund, LLC is, and at all times herein mentioned was, a limited liability company duly formed, existing, and organized under the laws of the State of New York, with its principal place of business in the State of New York. The managing member of Defendant George Washington Bridge Bus Station and Infrastructure Development Fund, LLC is NYCRC. NYCRC is a limited liability company duly formed, existing, and organized under the laws of the State of New York with its principal place of business in the State of New York. The managing members of NYCRC are Paul Anton Levinshon and George Olsen, both of whom are citizens of the State of New York. 10. TPBC alleges that Defendant GSNMF SUB-CDE 12 LLC is, and at all times herein mentioned was, a limited liability company duly formed, existing, and organized under the laws of the State of Delaware, with its principal place of business in New York. Defendant GSNMF SUB-CDE 12 LLC has 2 members: 1) GS New Markets Fund, LLC (which owns a .01% membership interest and is the managing member), and 2) GWB NMTC Investment Fund, LLC (which owns a 99.9% membership interest). GS New Markets Fund, LLC is a limited liability company and duly formed, existing, and organized under the laws of the State of Delaware, with its principal place of business in the State of New York. GWB NMTC Investment Fund LLC is, and at all times herein mentioned was, a limited liability company duly formed, existing, and organized under the laws of the State of Delaware, with its principal place of business in New York. GWB NMTC Investment Fund, LLC is wholly owned by 2018 NMTC Secondary Fund LLC. 2018 NMTC Secondary Fund LLC is wholly owned by Citibank N.A. Citibank N.A is wholly owned by Citicorp LLC. Citicorp LLC is wholly owned by Citigroup, Inc. Citigroup Inc. is a corporation formed under the laws of the State of Delaware, with its principal place of business in the State of New York. 11. TPBC alleges that Defendant GSB NMTC Investor Fund LLC is, and at all times herein mentioned was, a limited liability company duly formed, existing, and organized under the laws of the State of Delaware, with its principal place of business in New York. GSB NMTC Investor LLC is the managing member of Defendant GSB NMTC Investor Fund LLC. GSB NMTC Investor LLC is a limited liability company and duly formed, existing, and organized under the laws of the State of Delaware, with its principal place of business in New York. GSB UIG LLC is the 100% owner of the GSB NMTC Investor LLC and is a Delaware LLC with its principal place of business in the State of New York. Goldman Sachs Bank USA is the 100% owner of GSB UIG LLC. Goldman Sachs Bank USA is Chartered Bank, chartered under the laws of the State of New York, with its principal place of business in the State of New York. 12. TPBC alleges that Defendant LIIF SUB-CDE XXVI, LLC is, and at all times herein mentioned was, a limited liability company duly formed, existing, and organized under the laws of the State of Delaware, with its principal place of business in New York. LIIF SUB-CDE XXVI, LLC has two members: 1) GWB NMTC Investment Fund, LLC (99.9 percent) and 2) LIFF New Markets, LLC (.01% Member and Managing Member). GWB NMTC Investment Fund, LLC is a limited liability company and duly formed, existing, and organized under the laws of the State of Delaware, with its principal place of business in the State of New York. LIFF New Markets, LLC is a Delaware a limited liability company and duly formed, existing, and organized under the laws of the State of Delaware, with its principal place of business in the State of New York. GWB NMTC Investment Fund, LLC is wholly owned by 2018 NMTC Secondary Fund LLC. 2018 NMTC Secondary Fund LLC is wholly owned by Citibank N.A. Citibank N.A is wholly owned by Citicorp LLC. Citicorp LLC is wholly owned by Citigroup, Inc. Citigroup Inc. is a corporation formed under the laws of the State of Delaware, with its principal place of business in the State of New York. 13. TPBC alleges that Defendant DVCI CDE XIII, LLC is, and at all times herein mentioned was, a limited liability company duly formed, existing, and organized under the laws of the State of Delaware, with its principal place of business in New York. DVCI CDE XIII, LLC has two members: 1) DV Community Investment Fund LLC is a .01% member, and 2) GWB NMTC Investment Fund LLC is a 99.9% member DV Community Investment Fund is a limited liability company and duly formed, existing, and organized under the laws of the State of Delaware, with its principal place of business in the State of New York. GWB NMTC Investment Fund, LLC is a limited liability company and duly formed, existing, and organized under the laws of the State of Delaware, with its principal place of business in the State of New York. GWB NMTC Investment Fund, LLC is wholly owned by 2018 NMTC Secondary Fund LLC. 2018 NMTC Secondary Fund LLC is wholly owned by Citibank N.A. Citibank N.A is wholly owned by Citicorp LLC. Citicorp LLC is wholly owned by Citigroup, Inc. Citigroup Inc. is a corporation formed under the laws of the State of Delaware, with its principal place of business in the State of New York. 14. TPBC is informed and believes and thereon alleges that Defendant GWB NMTC Investment Fund LLC is, and at all times herein mentioned was, a limited liability company duly formed, existing, and organized under the laws of the State of Delaware, with its principal place of business in New York. GWB NMTC Investment Fund, LLC is wholly owned by 2018 NMTC Secondary Fund LLC. 2018 NMTC Secondary Fund LLC is wholly owned by Citibank N.A. Citibank N.A is wholly owned by Citicorp LLC. Citicorp LLC is wholly owned by Citigroup, Inc. Citigroup Inc. is a corporation formed under the laws of the State of Delaware, with its principal place of business in the State of New York. 15. TPBC alleges that Defendant GWB Leverage Lender, LLC is, and at all times herein mentioned was, a limited liability company duly formed, existing, and organized under the laws of the State of Delaware. GWB Development Partners, LLC is the managing member of Defendant GWB Leverage Lender, LLC. George Washington Bridge Bus Station and Infrastructure Development Fund, Phase II, LLC is the “loan member” of GWB Leverage Lender, LLC. GWB Development Partners, LLC is a limited liability company and duly formed, existing, and organized under the laws of the State of Delaware, with its principal place of business in New York. George Washington Bridge Bus Station and Infrastructure Development Fund, Phase II, LLC is a limited liability company and duly formed, existing, and organized under the laws of the State of New York, with its principal place of business in New York. 16. TPBC alleges that Defendant George Washington Bridge Bus Station and Infrastructure Development Fund, Phase II, LLC is, and at all times herein mentioned was, a limited liability company duly formed, existing, and organized under the laws of the State of New York with its principal place of business in New York. The managing member of Defendant George Washington Bridge Bus Station and Infrastructure Development Fund, Phase II LLC is NYCRC. NYCRC is a limited liability company duly formed, existing, and organized under the laws of the State of New York with its principal place of business in the State of New York. The managing members of NYCRC are Paul Anton Levinshon and George Olsen, both of whom are citizens of the State of New York. 17. TPBC alleges that Defendant Upper Manhattan Empowerment Zone Development Corporation is, and at all times herein mentioned was, a corporation duly formed, existing, and organized under the laws of the State of New York, with its principal place of business in the State of New York. 18. TPBC alleges that Defendant Slayton Ventures, LLC is, and at all times herein mentioned was, a limited liability company duly formed, existing, and organized under the laws of the State of New York, with its principal place of business in New York. Paul Slayton is the managing member of Slayton Ventures LLC, and Paul Slayton is a citizen of the State of New 19. TPBC is informed and believes and thereon alleges that Defendant Slayton Equities, also known as Slayton Equities LTD, is, and at all times herein mentioned was, a corporation, organized under the laws of the State of New York, with its principal place of business in the State of New York. 20. TPBC is informed and believes and thereon alleges that Defendant SJM Partners Inc. is, and at all times herein mentioned was, a corporation duly formed, existing, and organized under the laws of the State of Florida, with its principal place of business in the States of Florida. 21. TPBC is informed and believes and thereon alleges that Defendant Paul Slayton, an individual, is, and at all times herein mentioned was, the principal executive, agent and employee of Defendant Slayton Ventures, LLC, and was acting within the scope of such agency and employment and is his individual capacity for his own benefit, and engaged in other activities related to the allegations set forth in this Complaint. Defendant Paul Slayton is a citizen of the State of New York. 22. TPBC is informed and believes and thereon alleges that Defendant Stephen Garchik, an individual is, and at all times herein mentioned was, the chief executive, agent and employee of Defendant SJM Partners Inc., and was at all times, acting within the scope of such agency and employment and is his individual capacity for his own benefit, and engaged in other activities related to the allegations set forth in this Complaint. Defendant Stephen Garchik is a citizen of the State of Florida. 23. TPBC is informed and believes and thereon alleges that Defendant William “Trey” Burke, an individual, is, and at all times herein mentioned was an agent and employee of Defendant SJM Partners Inc. with the title of “Development, Senior Vice President” and acting is his individual capacity for his own benefit. Mr. Burke is a citizen of the Commonwealth of Virginia. 24. TPBC is informed and believes and thereon alleges that Defendant Stephen McBride, an individual, is, and at all times herein mentioned was an agent and employee of SJM Partners Inc, with the title of “Development, Managing Principal” and acting is his individual capacity for his own benefit. Defendant Stephen McBride is a citizen of the Commonwealth of Virginia. 25. TPBC is informed and believes and thereon alleges that none of the defendants named in this Second Amended Complaint are citizens nor have their principal places of business in the States of Nevada or Arizona. 26. The identities of each fictitiously named Doe defendants are unknown to Plaintiff. Plaintiff is informed and believes, and upon such information and belief thereon alleges, that each Doe defendant is in some manner legally responsible for the damages hereinafter pled. Plaintiff will seek leave to amend this Complaint once the true and correct identities of these Doe defendants are ascertained. The above-named defendants and DOES 1 through 300, inclusive, are collectively referred to herein as “Defendants.” IV. FACTUAL BACKGROUND A. The Project 27. TPBC is a leading building construction firm offering diversified general contracting and engineering services to private clients and public agencies. TPBC has built some of the most complex and high-profile projects in New York and throughout the country, including major sports facilities, hotels, health care centers, residential and retail facilities. 28. The George Washington Bridge Bus Station, which first opened on January 17, 1963, acts as a transit facility operated by the Port Authority of New York and New Jersey (the “Port Authority”). The station is built over the Trans-Manhattan Expressway (Interstate 95) on property owned in fee by the Port Authority between 178th and 179th Streets and Fort Washington and Wadsworth Avenues (designated on the tax map of the City of New York as Block 2163 Lot 1 and Block 2176 Lot 17) (the “Property”). 29. On June 30, 2011, the Port Authority approved a $183.2 million renovation and improvement plan for the George Washington Bridge Bus Station (the “Project”), which is located on the Property. The Project was a public-private venture between the Port Authority, as owner of the Property, and non-party George Washington Bridge Development Venture LLC (the “Developer”), as ground lessee and developer/contractor. The Project included relocating the bus terminals to the third floor of the complex and creating a state-of-the-art ground transportation hub. The Project also entailed a new 15,000 square foot bus terminal that increased the number of gates from 17 to 22. Additionally, 85,000 square feet of the existing bus station was reconfigured and upgraded. By relocating the bus station terminal to the third floor of the complex, a retail center of approximately 129,000 square feet was created. 30. Upon information and belief and representations of agents of the Developer, the members of the Developer are GWB Development Partners, LLC and Marketplace GWB, LLC. Defendants Stephen Garchik, Stephen McBride and Paul Slayton (the “Individual Owners”) are indirect owners of the Developer, given the multi-layered ownership structure of the Developer. One or all of the Individual Owners also own and operate Defendants Slayton Ventures, LLC, Slayton Equities, SJM Partners Inc. (the “Related Developer Entities”). Upon information and belief, Defendant William “Trey” Burke is an employee and principal agent of the Developer (hereinafter referred to with the “Individual Owners” as “Individual Owners”). Upon information and belief, Individual Owners are officers of the Developer or the companies that control the Developer. The structure, ownership and control of the Developer may have changed from time- to-time throughout the project. 31. On or about July 21, 2011, the Port Authority entered into a written contractual lease agreement with the Developer (the “Ground Lease”). Under the Ground Lease, the Developer was permitted to use and operate portions of the Project as retail space for its own benefit for a period of 49 years with 5 ten year extension options (for a total leasehold term of 99 years) (the “Leased Premises”). Additionally, the Ground Lease provided that certain space would be designed and built by the Developer and returned to the Port Authority for its use to operate a bus terminal (the “Reserved Premises”). The Ground Lease provided, inter alia, (a) The scope of work for the Project at the time of execution of the Ground Lease was based on plans (“Stage I Conformed Documents”) previously prepared under a separate agreement between the Port Authority and the Developer. The Developer was obliged under the Ground Lease to advance the Stage I Conformed Documents to final plans and specifications for the work through the preparation of “working drawings, specifications, calculations, product samples and other design materials,” which upon approval by the Port Authority became the “Approved Construction Documents.” (b) The Developer was to perform “all work required to redevelop the [Reserved Premises] . . . in compliance with the Approved Construction Documents” and “all work required to construct the public areas of the Leased Premises, including without limitation all Common Areas . . . the core and shell of the entire Leased Premises,” and other sub-tenant fit-out work, including “all work necessary to properly complete the entire Project as contemplated by and in compliance with the Approved Construction Documents (collectively, the ‘Construction Work’), including all site work, demolition work, staging and phasing, construction work, utility relocation . . ., and equipment procurement and installation.” (c) The Construction Work was to be performed at the Developer’s sole cost and expense except (i) the Port Authority agreed to pay the Developer the fixed price of $52,650,558 for the construction of the Reserved Premises, subject to adjustment as provided in the Ground Lease, payable monthly upon approval by the Port Authority of progress payment applications submitted by the Developer evidencing the work that “was performed by the [Developer]” during the previous month, and (ii) the Port Authority authorized the Developer, in accordance with certain specified terms, to procure construction loans and other financing secured by mortgages on the Developer’s leasehold estate in portions of the Property to finance the remainder of the Developer’s hard and soft construction costs for the Project. (d) The Port Authority retained certain control over the Construction Work as the Project Owner, including but not limited to, (i) the Approved Construction Drawings could not be modified without the Port Authority’s approval, (ii) the Developer was required to perform changes in the work in the Reserved Premises directed by the Port Authority, (iii) the Developer was prohibited from engaging any contractor or permitting any subcontractor to perform Construction Work on the Project without the Port Authority’s approval of the contractor or subcontractor, (iv) the right to issue badges and control who was permitted on the construction site, (v) the Developer was required to consult with the Port Authority for “instructions and/or decisions relating to ‘field-condition’ construction matters” and to comply with the Port Authority’s decisions, (vi) the Port Authority had the right to monitor and inspect Construction Work, (vii) if the Port Authority determined any of the Construction Work was non-compliant by the Developer, the Port Authority had the right to direct the Developer to correct such work, (viii) the Developer was required to provide the Port Authority with certain updates; and (ix) the Developer was required to abide by numerous conditions, requirements, and limitations established by the Port Authority on the Developer’s construction operations. 32. On June 26, 2013, the Developer and TPBC entered into a written contract (the “Construction Contract”), whereunder the parties acknowledged the Developer was contractually obligated under the Ground Lease to perform certain construction work on the Project, and, to the extent set forth in the Construction Contract, TPBC assumed to the Developer “the same obligations and responsibilities expressly and or [sic] relating to the scope of work, quality of work, time and schedule requirements, or character of work as are assumed by the [Developer] to the Port Authority” under certain specified provisions of the Ground Lease. The Developer expressly reserved in the Construction Contract the right to perform construction or operations related to Project with the Developer’s own forces or to award separate contracts in connection with other portions of the Project, in which case, the Developer agreed it would coordinate the activities of TPBC under the Construction Contract with the activities being performed by the Developer and/or the other contractors. And, in fact, TPBC was contracted to conduct only certain work on the Project, including making structural changes and reconstructing certain buildings on the Project site. TPBC was contracted to conduct the construction work on the “build-out” of only a single retail space, but not the remaining multiple retail spaces, including a fitness center, grocery store, restaurants and other spaces, which was done by others retained by the Developer and unaffiliated with TPBC. TPBC commenced work under the Construction Contract in late 2013. 33. The Project is not complete at this time. On June 21, 2019, the Developer, through its principal manager, Stephen J. Garchik, prepared and signed an affidavit filed in federal court indicating that the Project is not yet complete. (See USDC-SDNY Action, 1:19-cv-05344-RA, Docket No. 22, paragraphs 10 and 13). On November 25, 2019, the Developer filed a pleading with the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) (Case No. 19-13196 (SCC); Developer’s Reply to Tutor Perini Building Corp.’s Objection to the Motion to Approve Bidding Procedures; Bankruptcy Docket No. 87, paragraph 8) in which it stated, “Because all Final Punch List Items have not been completed, the Port Authority has not made the Final Payment.” Exhibit A to that same pleading contains a settlement agreement between the Developer and the Port Authority which states, “the Project will be complete upon completion of the New Egress.” In addition, TPBC, through its lower-tier subcontractor, Siemens, continued to conduct certain services under through the Construction Project into the 2020 calendar year. Therefore, based on such information and belief, the Project was not complete as of the filing of this lawsuit on January 27, 2020. 34. Based on information and belief, the Developer’s sole source of revenue since the Project opened was construction funds and rental payments from sublesees of the Leased Premises, and the Developer’s sole asset is the leasehold under the Ground Lease. B. The Developer Received Funds for the Purpose of Paying Costs of Improvements but Defendants Slayton Ventures, LLC, Slayton Equities, SJM Partners Inc, Paul Slayton, Stephen Garchik, William “Trey” Burke and Stephen McBride, Does 1-100, Diverted those Funds to Themselves and Others 35. Each month, following the completion of scheduled work, TPBC would issue the Developer a payment application seeking compensation for costs and labor expended on the Project that month. In accordance with industry practice, this initial payment application was dubbed a “pencil copy,” because it was subject to review and revision by both the Developer and the Port Authority. Indeed, the Developer would frequently make changes and negotiate payment application figures with TPBC, and then submit its own version dubbed the “final copy.” 36. The final copy, as agreed upon by all parties, was signed and notarized by TPBC and formally submitted to the Developer. The Developer then applied to the Port Authority and the Developer’s lenders for the disbursement of funds specifically for the purpose of paying TPBC and others for their construction work. 37. As to TPBC, the Developer made progress payments in connection with payment applications Nos. 1 through 29. However, despite issuing approved final copies for payment applications Nos. 30 through 44, the Developer failed to make payments thereon. These payment applications alone, Nos. 30 through 44, plus the project retention fund, exceed $29 million. C. The Arbitration Proceeding 38. Due to claims submitted by TPBC and its subcontractors concerning, among other things, delays, design changes and extra work costs incurred in construction of the Project, and the Developer’s failure to pay TPBC its contract balance for completion of the Project including 15 monthly payments due under payment applications Nos. 30 through 44, the matter was submitted to the dispute resolution provisions of the Construction Contract. 39. On February 26, 2015, the Developer initiated an arbitration proceeding (the “Arbitration Proceeding”) by filing a demand for arbitration with the American Arbitration Association, pursuant to their Construction Industry Rules. The Arbitration Proceeding is styled as George Washington Bridge Bus Station Development Venture, LLC v. Tutor Perini Building Corp., American Arbitration Association, Case No. 01-15-0002-7887. The demand sought declaratory relief and a determination of the pending claims submitted by the contractors on the Project. TPBC filed an answer and counterclaim, as amended, seeking damages against the Developer, on behalf of itself and its subcontractors. 40. The parties selected an arbitration panel comprising three senior construction attorneys, Dennis Cavanaugh, Gregory Beckwith, and John Fieldsteel (the “Panel”), which was appointed on March 31, 2016. 41. Following extensive discovery, the parties submitted amended pleadings on March 30, 2018, wherein TPBC alleged a claim of $120 million, with the Developer seeking $3.8 million. Certain small claims were resolved during the course of the proceedings, but remain unpaid. 42. In March and July 2018, the parties submitted extensive expert reports and rebuttal reports on the merits and damages sought by the parties. The parties exchanged documents and discovery, and commenced hearings on August 22, 2018, with a site visit by the Panel. Testimony on the merits of the claims began in the Arbitration Proceedings on September 24, 2018. TPBC put on its case-in-chief first. By the time that the Developer commenced its Chapter 11 Case, the Panel had conducted 67 days of evidentiary hearing on the merits regarding Project delays, change orders, and the unpaid contract balance claim. The last hearing on the merits took place on April 12, 2019, with two additional in-person hearings on issuance and enforcement of TPBC’s attachment motion on May 22, 2019, and September 6, 2019. 43. TPBC concluded the presentation of its affirmative claims on April 10, 2019, proving its amended claims for $113 million by the requisite standard. TPBC’s claims were supported by expert and fact witness testimony and voluminous documentary evidence. 44. The Arbitration Proceeding was interrupted when, on April 15, 2019, all of the lawyers of record for the Developer, at two different law firms, withdrew from the case. It was later learned that the Developer had not paid the lawyers for over four months. However, once the Developer hired new legal counsel, the parties were able to schedule further hearing dates with the Panel. This resulted in the vacation of hearing dates scheduled from May to early November 2019, with the hearings scheduled to commence again on November 18, 2019. On October 7, 2019, the Developer filed its Chapter 11 bankruptcy petition, staying the Arbitration Proceeding and forcing the parties to vacate all scheduled hearing dates. As of the filing of this Second Amended Complaint, the Arbitration Proceedings remain stayed. 45. TPBC’s damages asserted in the arbitration at the time the matter was stayed total $113,251,238 (plus millions of dollars of interest and arbitration costs) and is summarized in the chart below. Type Damages Steel and Chipping Work Claim – Direct Cost Proposed Change Inquiry (“PCI”) Claims $4,552,838 Steel and Chipping Work Claim – Impact Claim $8,700,923 $41,784,235 Time Impact Analysis and Request for Time Extension #1, #2 with General Condition and Impact Damages ($23,642,744 in Extended Time-Related Costs, $14,867,554 in Cumulative Impacts, $2,472,508 in Premium Time PCI Claim, and $801,429 Additional Direct Costs PCI related to Delay) PCI Damages – Direct Cost Claims on Individual PCIs (Non-Steel) $10,071,231 TPBC’s Claim for the Delay/Impact to Subcontractor WDF Inc. $6,512,692 TPBC’s Claim for the Delay/Impact to Subcontractor Five Star Electric Corp. $10,572,295 TPBC’s Claim for the Delay/Impact to Subcontractor Associated Specialty Contracting, Inc. $783,492 Contract Balance, Payment Applications 30-44 and Retention $29,131,950 Subtotal $112,109,656 Settlement of All Non-Steel PCIs under $20,000 before Hearing $914,224 Settlement of Various PCIs during Hearings $227,358 GRAND TOTAL $113,251,238 D. Application for Equitable Relief 46. Prior to the commencement of the hearings on the merits in the Arbitration Proceeding, on June 29, 2018, TPBC filed an application for an order of attachment and a preliminary injunction with the Panel (the “Application”) to (a) freeze the $29,131,856.16 approved under payment applications Nos. 30 through 44, plus retention, and allocated to compensate TPBC for work performed in connection with the Project and (b) place the funds in an escrow account monitored by an independent third-party, thereby enjoining the Developer from withdrawing, spending, transferring, dissipating, assigning, encumbering, disposing of, or otherwise using those funds. 47. The Application was based in part on then-recently discovered evidence stating that Developer, the Related Developer Entities and certain Individual Owners were contemplating filing for bankruptcy to avoid paying the Developer’s debt to TPBC. 48. The Developer and the Individual Owners, who were the representatives, declarants and client contacts of the Developer in the Arbitration Proceeding, including their counsel of record in the Arbitration, represented, both verbally and through certain filings, to the Panel and the parties that TPBC was not at risk and there no basis for an injunction or attachment. These include oral representations made during an oral argument conducted with the Arbitration Panel on August 22, 2018, and statements made thereafter by the Developer’s representatives. The Developer further represented to the Arbitration Panel and others that it had no plans to declare bankruptcy, despite internal Developer emails written to the contrary. On September 14, 2018, the Panel declined the injunction. After further briefing, the Panel permitted the Application for the attachment to be renewed at a later time. 49. On February 15, 2019, TPBC presented in the Arbitration the contract balance claim which established the unpaid balance of $29,131,856.16. The claim was not contested on the merits or calculation of the claim. After introduction of the approved payment applications, related correspondence and other evidence, the parties stipulated to a demonstrative chart setting for the contract balance dates, payments and calculation. 50. TPBC concluded the presentation of its affirmative claims on April 10, 2019 and rested its case. The Developer began its defensive case on April 11, 2019, and presented a witness on Thursday and Friday, April 11 and 12, 2019. 51. In a sudden and unexpected development, on Monday, April 15, 2019, all of the lawyers of record for Developer, at two different law firms, simultaneously withdrew from their representation of the Developer in the Arbitration Proceedings. 52. Shortly thereafter, TPBC renewed the Application for the attachment. The renewal was based on three premises: (a) that TPBC had rested its case, proved its damages, including showing a likelihood of success in receiving an award on the contract balance portion of the claim; (b) the financial insolvency of the Developer demonstrated by the withdrawal of its attorneys; and (c) the extension of time sought by the Developer in the proceedings. The Developer retained attorneys to represent it during the renewal proceedings. The Panel conducted a proceeding on the renewal, including the Developer filing papers, through its attorneys retained for such purposes, and conducting a hearing on May 22, 2019. 53. On June 4, 2019, the Panel issued an order granting the Application and issued an order of attachment of Twenty-Three Million dollars ($23,000,000.00), (“Attachment Order”). 54. On July 15, 2019, the Attachment Order was confirmed by the U.S. District Court for the Southern District of New York (“SDNY”) (See USDC-SDNY Action, 1:19-cv-05344-RA) and judgment thereon was entered on July 22, 2019. E. Developer’s Failure to Comply with Attachment Order and Subsequent Disclosures and Continued Diversion of Funds 55. Despite the confirmation of Attachment Order and Judgment, the Developer and the Individual Owners refused to comply therewith. 56. On June 20, 2019, TPBC filed a sanctions motion with the Panel seeking relief from Developer’s failure to comply with the Attachment Order, including the failure to disclose the location of project funds, the continuing disbursement of project funds, and the failure to comply with the attachment. TPBC also submitted post-judgment discovery through its confirmation lawsuit with SDNY to obtain information relating to the location of the funds to enforce the Attachment Order. 57. Developer responded to both the sanctions motion and the post-judgment discovery with an Affidavit by Defendant Stephen Garchik, indicating that Developer was not in possession of the $23 million TPBC sought to attach. Defendant Stephen Garchik affirmed that Developer “has very limited cash on hand.” 58. The Panel scheduled a hearing for September 6, 2019, pertaining, inter alia, to Developer’s failure to disclose the location of the funds to be attached and its inquiry was limited to funds in Developer’s possession from the date of entry of the Attachment Order. 59. During that September 6, 2019 hearing, Developer refused to provide principals of the Developer as expressly ordered by the Panel, but instead produced witness Stephen Winiarski, a bookkeeper hired as a project accountant by the Developer specifically for this Project, to testify regarding the Developer’s financial status as of the entry of the Attachment Order. Mr. Winiarski is not an employee of the Developer, but rather an employee of his own corporation, Envirocon Financial, Inc. The Developer was represented by its business attorneys during these proceedings. The hearing was transcribed by the certified court reporter. 60. Mr. Winiarski testified that Developer had not received payments from the Port Authority or loan disbursements from the Developer’s lenders since late March or early April 2017 to his knowledge, and no such funds were in Developer’s primary bank account on June 4, 2019 – the date the Panel entered its Attachment Order. This was in direct contradiction to prior statements made on behalf of the Developer by its attorneys during the original attachment proceedings, including statements made on August 22, 2018. 61. Upon information and belief, Developer and the Individual Owners were effectively in possession and control of those funds and prioritized the Developer’s obligation to a favored lender in direct violation of the Panel’s Attachment Order, as confirmed by the SDNY. 62. Upon information and belief, there were also payments, authorized and directed by one or all of the Individual Owners, that Winiarski made, for purposes other than the payment for the construction work on the Project, including payments to the Developer’s principals. Mr. Winiarski testified he was aware of the Attachment Order, but violated it at the direction of Paul Slayton and/or Stephen Garchik. 63. As a result of that hearing on September 6, 2019 and subsequent briefing and a telephonic hearing on September 24, 2019, on October 3, 2019, the Panel issued a further order finding against the Developer that: “After consideration of the written submissions, the evidence and arguments presented at the September 6th hearing, and oral argument, the Panel finds that the GWBDV [Developer] willfully violated the Panel's Interim Orders dated June 4, 2019. The Panel finds that GWBDV transferred funds subject to the Interim Order of attachment for the payment of personal expenses of one of its principals, Douglas Slayton and for the payment of legal expenses of GWBDV. The Panel further finds GWBDV wrongfully transferred net rental income received to its third-party lender, George Washington Bridge Bus Station and Infrastructure Development Fund, LLC ("Infrastructure Fund").” 64. In addition, the Panel ordered the return of certain funds paid to “Douglas Slayton”, “Stephen J. Garchik”, “all payments/wire transfers to Sterling National for George Washington Bridge Bus Station and Infrastructure Development Fund, LLC.” and others. The Panel further ordered that TPBC was entitled to have the address of Project included in the judgment to administer the attachment. 65. On Friday, October 4, 2019, TPBC filed the October 3, 2019, order of the Panel with the District Court seeking to amend the Court’s July 22, 2019, Judgment of attachment confirming the original attachment order of the Panel dated June 4, 2019 (Case No. 1:19-cv-05344- RA; Docket 55). F. The Chapter 11 Case 66. On Monday, October 7, 2019, the Developer commenced a Chapter 11 proceeding in the United States Bankruptcy Court for the Southern District of New York by filing a petition for relief under Chapter 11 of the Bankruptcy Code, which was assigned Case No. 19-13196-scc. Upon the filing of the Chapter 11 Case, the automatic stay under 11 U.S.C. § 362 stayed the Arbitration Proceeding and the District Court action. The Developer is not a party to this action. V. CAUSES OF ACTION COUNT I WRONGFUL DIVERSION OF MONIES FROM TRUST FUND (Article 3-A N.Y. Lien Law (§ 70, et seq.)) (By Plaintiff on behalf of itself and all others similarly situated, pursuant to Article 3-A of the N.Y. Lien Law, Against All Defendants, including New York City Regional Center, LLC; George Washington Bridge Bus Station And Infrastructure Development Fund, LLC; GSNMF Sub-Cde 12 LLC; GSB NMTC Investor LLC: LIIF SUB-CDE XXVI, LLC; DVCI CDE XIII, LLC; GWB NMTC Investment Fund LLC; GWB Leverage Lender, LLC; George Washington Bridge Bus Station And Infrastructure Development Fund, Phase II, LLC; Defendant Upper Manhattan Empowerment Zone Development Corporation; Slayton Ventures, LLC; Slayton Equities; SJM Partners Inc.; Paul Slayton, an Individual; Stephen Garchik, an individual; William “Trey” Burke, an individual; Stephen McBride, an individual; and Does 1-300, inclusive) 67. The Plaintiff restates and realleges the foregoing paragraphs, which are incorporated by reference as if set forth fully herein. 68. The Developer is a “contractor” under the New York State Lien Law § 2(9) as it entered into the Lease with the Port Authority for the improvement of the Property, which is owned by the Port Authority. 69. The Developer is also an “owner” under Lien Law § 2(3) as it is defined as a lessee under the Lease. 70. Under Article 3-A of the Lien Law, the funds received by Developer under or in connection with the Ground Lease are the assets of a trust (the “Article 3-A Trust”) which may only be used for the payment of the architects, contractors, subcontractors, and material suppliers and for certain other specified purposes. 71. The Ground Lease authorized the Developer, under certain terms and conditions, to procure construction loans and other financing secured by mortgages on the Developer’s leasehold estate in portions of the Property to finance the remainder of the Developer’s hard and soft construction costs for the Project. The Developer procured loans from a variety of sources to finance the Construction Work it was obliged to perform under the Ground Lease, and the proceeds of those loans are assets of the Article 3-A Trust. 72. On or about July 20, 2011, the Developer procured a loan in an amount not to exceed $72 million from Defendant George Washington Bridge Bus Station and Infrastructure Development Fund, LLC (“Senior Lender”) secured by a mortgage against the Developer’s leasehold estate on the Property and an assignment of leases and rents in connection with the Developer’s leasehold estate on the Property. The Senior Lender loan agreement and mortgage expressly provides that, inter alia, (a) the proceeds of the Senior Lender loan would be used solely to finance the hard and soft costs of construction of the Project; (b) the Developer would construct the Project in accordance with the approved plans and specifications, which could not be modified without the Senior Lender’s prior approval; (c) the Senior Lender had the right to monitor the progress of construction with a consultant hired by the Senior Lender at the Developer’s cost; (d) the Developer was obliged to deliver to the Senior Lender reports on the status of construction; (e) the Developer would pay the Senior Lender an origination fee of two percent (2%) of the amount of each advance made to the Developer; (f) the loan proceeds were part of an Article 3-A Trust “to be applied first for the purpose of paying any unpaid costs of the Improvements before any part of the same is used for any other purpose”; and (g) the Developer was expressly prohibited from using the loan proceeds to pay interest or origination fees. 73. On or about December 26, 2013, the Developer procured a loan in an amount up to $19.065 million from Defendants GSB NMTC Investor LLC, GSNMF Sub-CDE 12 LLC, LIIF Sub-CDE XXVI, LLC, DVCI CDE XIII, LLC, GWB NMTC Investment Fund LLC, and George Washington Bridge Bus Station and Infrastructure Development Fund, Phase II, LLC. (collectively, the “Co-Lenders”) secured by a building loan mortgage against the Developer’s leasehold estate on the Property and the assignment and pledge of the Developer’s accounts. The Co-Lenders loan agreement and mortgage expressly provides that, inter alia, (a) the proceeds of the Co-Lenders loan would be used solely to finance the hard and soft costs of construction of the Project; (b) the Co-Lenders’ obligation to fund was conditioned on its review and approval of, among other things, the Ground Lease, the Construction Contract, and a consent from TPBC to the assignment of the Construction Contract to the Co-Lenders; (c) the Co-Lenders would retain a Construction Consultant to, among other things, verify the work claimed under a Draw Request filed by the Developer and to approve the Plans and any changes thereto ; (d) the Developer would pay Co-Lenders’ fees and expenses, including but not limited to, asset management fees, audit and tax reimbursements, success fees, management fees, administration and compliance expenses and fees, and the cost of the Administrative Agent, its Construction Consultant, and its attorneys; (e) the Developer pre-approved in the Loan Agreement the use of loan proceeds to pay the foregoing fees and expenses of the Co-Lenders and interest on the Co-Lenders’ loan; and (f) the loan was “subject to the trust fund provisions of the Lien Law” and the loan proceeds would be deposited by the Developer into a “Building Loan Trust Account” for the purpose of paying only the cost of the improvements. 74. On or about April 7, 2014, the Developer procured a loan in an amount up to $9 million from Defendant GWB Leverage Lender, LLC (“Leverage Lender”) secured by a pledge by Marketplace GWB, LLC of its membership interest in the Developer. The Leverage Lender loan agreement expressly provides, inter alia, (a) the proceeds of the Leverage Lender loan would be used solely to pay the Direct and Indirect Costs of construction of the Project; (b) Leverage Lender’s prior written consent was required for any amendments to the Construction Contract or any of the major subcontracts; (c) Leverage Lender would retain a Construction Consultant to, among other things, monitor the progress of construction, review the Developer’s requests for advances to verify the work has been substantially and satisfactorily completed, and other similar services; (d) the Developer would pay certain fees and expenses of Leverage Lender, including but not limited to, the costs of the Construction Consultant and Leverage Lender’s taxes (except for its income, franchise, or branch profits taxes); and (e) the Developer was required to submit periodic reports to the Leverage Lender on the status of construction. 75. On or about February 27, 2018, the Developer procured a loan in the principal sum of $5 million from Defendant Upper Manhattan Empowerment Zone Development Corporation (“UMEZ”) secured by a mortgage against the Developer’s leasehold estate on the Property and an assignment of leases and rents in connection with the Developer’s leasehold estate on the Property. The UMEZ loan agreement and mortgage expressly provides that, inter alia, (a) the proceeds of the UMEZ loan would be used solely to pay for the costs incurred or to be incurred in the completion of the construction, fit-out and leasing of the Project and for certain loan closing costs; (b) the Developer disclosed to UMEZ that there was a pending arbitration between the Developer and TPBC (the “Arbitration Proceeding”) and that TPBC, the architect for the Project, and other subcontractors and suppliers claimed to be owned approximately $101 million for work performed on the Project; (c) the Developer agreed to complete the construction of the Project in accordance with the approved plans and specifications, which could not be modified without UMEZ’s prior approval; (d) UMEZ had the right to monitor the progress of construction with a consultant hired by the UMEZ at the Developer’s cost; (e) the Developer was obliged to deliver to UMEZ periodic reports on the status of construction and of the Arbitration Proceeding; (e) the Developer would pay UMEZ at the closing an origination fee of $125,000 and other costs and would reimburse UMEZ for all reasonable out-of-pocket costs, including fees for outside counsel; and (f) the loan proceeds were part of an Article 3-A Trust “to be applied first for the purpose of paying any unpaid costs of the Improvements before any part of the same is used for any other purpose.” 76. Defendants George Washington Bridge Bus Station and Infrastructure Development Fund, LLC; GSNMF Sub-CDE 12 LLC; GSB NMTC Investor LLC; LIIF Sub-CDE XXVI, LLC; DVCI CDE XIII, LLC; GWB NMTC Investment Fund LLC; George Washington Bridge Bus Station and Infrastructure Development Fund, Phase II, LLC; GWB Leverage Lender, LLC; and Upper Manhattan Empowerment Zone Development Corporation collectively are referred to as the “Lender Defendants.” 77. TPBC is informed and believes, and based thereon alleges, that each of the aforementioned loans was fully funded and the Article 3-A Trust includes (a) the $52,650,558, subject to adjustment as provided in the Ground Lease, in funds paid or payable to the Developer by the Port Authority under the Ground Lease; (b) the $72 million in loan proceeds paid or payable to the Developer pursuant to the loan with the Senior Lender; (c) the $19.065 million in loan proceeds paid or payable to the Developer pursuant to the loan with the Co-Lenders; (d) the $9 million in loan proceeds paid or payable to the Developer pursuant to the loan with the Leverage Lender; and (e) the $10 million in loan proceeds paid or payable to the Developer pursuant to the loan with UMEZ. 78. TPBC and the other beneficiaries of the Article 3-A Trust furnished labor, materials and equipment which were used in and for the improvement of the Project and were furnished for and were applied in the construction of the Project. There is now due, owing and unpaid from the Developer to the beneficiaries (which include TPBC and other similarly-situated parties) of the Article 3-A Trust in excess of $113,251,231. 79. Notwithstanding the outstanding unpaid claims of the beneficiaries of the Article 3-A Trust, TPBC is informed and believes, and based thereon alleges, that the Developer paid, transferred or applied assets of the Article 3-A Trust for numerous purposes other than and prior to the payment or discharge of amounts due, or to become due, to the trust beneficiaries, and that each such use constitutes a diversion of trust assets, including but not limited to, (a) the payment of interest, origination fees, loan closing costs, asset management fees, compliance fees, audit and tax reimbursements, administration and compliance expenses, success fees, attorney’s fees, and construction monitoring costs to the Lender Defendants, and each of them; (b) the repayment of loan principal to Lender Defendants; (c) payments made to the Individual Owners and Related Developer Entities, and each of them; (d) payments made by the Developer to fund the Arbitration Proceedings; and (e) other payments made to Defendants, and each of them. The Individual Owners, and each of them, knew or should have known that the funds received by the Developer from the Port Authority and the Lender Defendants were to be used to pay for the construction work on the Project. TPBC is informed and believes, and based thereon alleges that the Individual Owners, and each of them, had possession, custody, or control over the assets of the Article 3-A Trust and, in their capacity as statutory trustees of said Trust, instructed, authorized, or caused the Developer to disburse funds from the Article 3-A Trust for purposes other than the payment or discharge of amounts due, or to become due to beneficiaries of the trust and in breach of their fiduciary duty to such beneficiaries. 80. TPBC alleges that Doe defendants 1 through 25 are owners, partners, members, agents, employees, principals and the persons with an interest in and acting on behalf of or in concert with the Developer, and which, upon amendment of the Complaint to add this defendant by its true identity, will be referred to as an “Individual Owners.” TPBC alleges that Doe defendants 26 through 50 are owners, related or affiliated companies, or alter egos, with an interest in and acting on behalf of or in concert with the Developer, and which, upon amendment of the Complaint to add this defendant by its true identity, will be referred to as a “Related Developer Entity.” TPBC alleges that Doe defendants 51 through 99 are persons or entities which received a distribution of assets of the Article 3-A Trust for a purpose other than the payment or discharge of amounts due or to become due to beneficiaries of the trust. All references in this Complaint to a defined category of Defendants shall also refer to the corresponding Doe defendants as described above, and each of them. 81. TPBC alleges that Defendants Does 100-300 are EB-5 investors, which used the Defendants New York City Regional Center, LLC, George Washington Bridge Bus Station and Infrastructure Development Fund, LLC, George Washington Bridge Bus Station and Infrastructure Development Fund, Phase II, LLC and certain of their affiliates as their agents to make the EB-5 contributions to the Developer and to otherwise administer their investments in the Developer and the Project. Defendants Does 100-300 are therefore properly imputed with all of the Defendant New York City Regional Center, LLC’s, George Washington Bridge Bus Station and Infrastructure Development Fund, LLC, George Washington Bridge Bus Station and Infrastructure Development Fund, Phase II, LLC, and their affiliates’ actual or constructive knowledge regarding the transfers. Upon information and belief, substantial portions of the funds transferred by the Developer to Defendant New York City Regional Center, LLC, George Washington Bridge Bus Station and Infrastructure Development Fund, LLC, George Washington Bridge Bus Station and Infrastructure Development Fund, Phase II, LLC and their affiliates were, in turn, transferred by Defendant New York City Regional Center, LLC, George Washington Bridge Bus Station and Infrastructure Development Fund, LLC, George Washington Bridge Bus Station and Infrastructure Development Fund, Phase II, LLC and their affiliates to the EB-5 investors. 82. Plaintiff asserts this cause of action on its own behalf and on behalf of all beneficiaries of the Article 3-A Trust created in connection with the Project. 83. One year has not elapsed since the completion of the Project within the meaning of Article 3-A of the Lien Law. 84. The Court should compel the Individual Owners, and each of them, to provide a final accounting of the Article 3-A Trust, including the identification of (a) the source and amount of all funds which were at any time assets of the Article 3-A Trust and (b) the amount and recipient of any Article 3-A Trust assets for a purpose other than the payment or discharge of an amount owed to a trust beneficiary. 85. The Court, based on such final accounting, should enter an Order (a) requiring each Defendant that was the recipient of such diverted funds to return such funds to the Article 3-A Trust together with interest on each such payment from the date the diverted payment was received by that Defendant, (b) requiring the Individual Owners, and each of them, as statutory trustees, to restore the entirety of the diverted funds to the Article 3-A Trust, with interest on each such payment from the date of each diverted payment, and (c) establishing a procedure for distribution of the recovered funds to the beneficiaries of the Article 3-A Trust and the disposition of the remaining balance, if any, after all trust claims have been paid or discharged in full. COUNT II DECLARATORY JUDGMENT (Declaratory Judgment Act) (By Plaintiff Against the Lender Defendants, including New York City Regional Center, LLC; George Washington Bridge Bus Station And Infrastructure Development Fund, LLC; GSNMF Sub-Cde 12 LLC; GSB NMTC Investor LLC: LIIF SUB-CDE XXVI, LLC; DVCI CDE XIII, LLC; GWB NMTC Investment Fund LLC; GWB Leverage Lender, LLC; George Washington Bridge Bus Station And Infrastructure Development Fund, Phase II, LLC; Defendant Upper Manhattan Empowerment Zone Development Corporation; and Does 1-300, inclusive) 86. The Plaintiff restates and realleges the foregoing paragraphs, which are incorporated by reference as if set forth fully herein. 87. The Ground Lease was entered into by the Developer and the Port Authority. The Ground Lease remains in effect as a valid and binding contract for, inter alia, the lease of the Project by the Port Authority to the Developer. 88. The advances by the Defendants were subordinated to the claims of other creditors. Section 14A.10 of the Ground Lease provides that: Subordination. Notwithstanding anything contained in any Mortgage or in this Article 14A, it is understood and agreed that the rights of the holder of any Mortgage, including a Recognized Mortgagee, shall be subject and subordinate to [the Ground Lease]. The terms, covenants, conditions and provisions of [the Ground Lease] shall govern as between the Port Authority, the [Developer] and any Recognized Mortgagee, and in the event of any inconsistency between the terms, covenants, conditions and provisions of [the Ground Lease] and the terms, covenants, conditions and provisions of any Mortgage, the terms, covenants, conditions, and provisions of [the Ground Lease] shall control. … Any Mortgage granted hereunder shall make reference to the provisions of [the Ground Lease] and shall provide that the Mortgage and the rights of the Recognized Mortgagee thereunder are and shall be in all respects subject to all provisions of [the Ground Lease]. 89. Under section 14A.10 of the Ground Lease, the claims of any contractor, subcontractor, material-men and workmen retained on the Project would be senior to any purported mortgage, not least because section 5.7(c) of the Ground Lease expressly provides for the payment of such parties. 90. Section 5.7(c) provides, in relevant part, that: [p]rovided that the Port Authority shall pay the amounts due and owing under Section 5.4 hereof, the [Developer] shall pay all claims lawfully made against it by its contractors, subcontractors, material- men and workmen and all claims lawfully made against it by other third persons arising out of or in connection with or because of the performance of the Construction Work and shall cause its contractors and subcontractors to pay all such claims lawfully made against them. 91. The provisions of the Ground Lease relating to, inter alia, the payment of the contractors and subcontractors on the Project were entered into to benefit such parties. For example, section 5.7(c) of the Ground Lease specifically provides for the direct performance— i.e., payment—by the Developer to TPBC (and the other contractors and subcontractors) of amounts required to be paid under the Construction Contract. Other circumstances surrounding the execution of the Ground Lease and the retention of TPBC as general contractor for the Project pursuant to the Construction Contract demonstrate that TPBC was an intended beneficiary of the Ground Lease, including the fact that the Port Authority and the Developer knew that TPBC was the general contractor for the Project. The Port Authority has even acknowledged that TPBC is a beneficiary of the terms of the Ground Lease. See Port Authority Reply ¶ 681. 92. In a letter dated July 20, 2011, the Regional Center agreed that it would lend money for the Project subject to the terms of the Lease. The Regional Center stated: “In addition to commercially standard loan terms in New York City, the Loan will be made subject to and in accordance with the terms and conditions of the Agreement of Lease between The Port Authority of New York and New Jersey and George Washington Bridge Bus Station Development Venture, LLC. [sic] entered into in connection with the Project.” Accordingly, Regional Center made loans to the Developer having expressly acknowledged that its leasehold mortgage and the remedies thereunder were subject to and in accordance with the terms of the Lease – including Sections 5.7(c) and 14A.10. 93. TPBC (and the other contractors and subcontractors) were to receive immediate and ongoing benefit from the applicable provisions of the Ground Lease. For example, section 5.7(c) of the Ground Lease provides for the timely payment of TPBC, and under the Construction Contract, TPBC was entitled to regular construction payments from the Developer. 1 A true and correct copy of the Response of the Port Authority to (I) Debtor’s Opposition to Tutor Perini Building Corp.’s Motion for an Order Granting (A) Relief from the Automatic Stay with Respect to the Tutor Perini Arbitration and (B) Related Relief; and (II) Objection and Joinder of New York City Regional Center, LLC to Debtor’s Opposition to Tutor Perini Building Corp.’s Motion for an Order Granting (A) Relief from the Automatic Stay with Respect to the Tutor Perini Arbitration and (B) Related Relief can be found at can be found in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) (Case No. 19-13196 (SCC), Docket No. 135, dated January 16, 2020. 94. Because TPBC is an intended third-party beneficiary of the Ground Lease, TPBC is entitled to the benefits of section 14A.10 of the Ground Lease, which subordinates the liens and claims of the Lenders to the liens and claims held by the Port Authority and TPBC. Due to such subordination, TPBC should be paid out of the proceeds of any disposition of the Ground Lease before the Lender Defendants receive any such proceeds. COUNT III COMMON LAW CONVERSION (By Plaintiff Against the Individual Owners and Related Developer Entities, including Slayton Ventures, LLC; Slayton Equities; SJM Partners Inc.; Paul Slayton, an Individual; Stephen Garchik, an individual; William “Trey” Burke, an individual; Stephen McBride, an individual; and Does 1-300, inclusive) 95. Plaintiff restates and realleges the foregoing paragraphs, which are incorporated by reference as if set forth fully herein. 96. During the pendency of the Project, TPBC became the beneficial owner of specific sums of money which was to be paid to TPBC for construction work upon the Project. These sums of money include: (a) TPBC’s pro rata share (based on the sum of $113,251,231, together with interest and costs thereon, due and owing to TPBC ) of the Article 3-A Trust Funds, which were the property of TPBC and other trust beneficiaries who furnished labor, materials and equipment which were used in and for the improvement of the Project, based on the sum of $113,251,231, together with interest and costs thereon, due and owing to TPBC, and (b) in the event the Article 3-A Trust is for some reason deemed invalid, the $29,131,856.16 paid by the Port Authority and Lender Defendants to Developer upon final copies of payment applications Nos. 30 through 44 and for acknowledged retention for the Project (“TPBC Contract Balance”), and (c) the funds and other assets subject to the Attachment Order. For purposes of this Conversion action, TPBC’s share of the Article 3-A Trust Funds and the TPBC Contract Balance will be collectively referred to as the “TPBC Funds”). 97. The Individual Owners, who were the executive officers or principals of Developer and the Related Developer Entities, had control over the TPBC Funds that were being held in the possession of the Developer. 98. During the time that the Individual Owners and the Related Developer Entities were in possession and control of the TPBC Funds, the Individual Owners, on their own behalf and on behalf of Developer made or caused to be made hundreds of unauthorized transfers of the TPBC Funds to individuals and entities other than the trust beneficiaries in violation of Article 3-A of the Lien Law and/or the Attachment Order, including, but not limited to the Individual Owners themselves, the Related Developer Entities, and the Lender Defendants, according to proof. 99. By making the unauthorized transfers of TPBC Funds, the Individual Owners and Related Developer Entities, acting for themselves and on behalf of Developer, exercised dominion and control of the TPBC Funds. Thus, the Individual Owners took, stole, and/or absconded with the aforesaid TPBC Funds, and converted same for their own benefit, use and control. 100. None of the aforementioned transfers of TPBC Funds were authorized by TPBC, who had continued throughout this period to demand payment of the TPBC Contract Balance, as well as payment of additional TPBC Funds that had been received by Developer for payment of TPBC’s claims for additional compensation, delays and impacts incurred upon the Project. In fact, TPBC wrote several letters to the Developer demanding that the funds be held in trust pending the outcome of the Arbitration Proceedings and warning the Developer that any transfer of such funds would be in violation of New York law. 101. Upon learning the Individual Owners were exercising dominion and control over TPBC Funds, TPBC made specific demands for return of the TPBC Funds which TPBC knew had been transferred to the Developer by the Port Authority and by the Lender Defendants for the purpose of paying TPBC. To that end, TPBC made multiple demands for payment and filed and prosecuted a claim for compensation in the Arbitration. In addition, TPBC filed a request to the Panel requesting attachment of the $29.131,856.16 which constituted the TPBC Contract Balance. 102. Despite TPBC’s consistent demands for return of the absconded TPBC Funds, the Individual Owners refused to return the TPBC Funds upon which they had exercised wrongful dominion and control. The Individual Owners, acting for themselves and in their capacity as executive officers and principals of Developer, resisted TPBC’s demands for payment of the TPBC Funds and resisted TPBC’s two requests for attachment. 103. As the direct and proximate result of the Individual Owners’ and Related Developer Entities conversion of the TPBC Funds, Plaintiff has suffered general, consequential and special damages, and interest thereon. 104. The acts of the Individual Owners and Related Developer Entities in converting the TPBC Funds were performed intentionally and/or with reckless disregard of Plaintiff’s property and/or legal rights, as demonstrated by the Panel’s finding that the transfers to the Individual Owners and Related Developer Entities were made in willful disregard of the Panel’s Order of Attachment. 105. By reason of the above, the Individual Owners and Related Developer Entities are jointly and severally liable to Plaintiffs in an amount to be determined at trial. 106. By reason of the above, the Individual Owners and Related Developer Entities are jointly and severally liable to Plaintiff for to punitive damages in an amount to be determined at COUNT IV CONSTRUCTIVE FRAUD (By Plaintiff Against the Individual Owners and Related Developer Entities, including Slayton Ventures, LLC; Slayton Equities; SJM Partners Inc.; Paul Slayton, an Individual; Stephen Garchik, an individual; William “Trey” Burke, an individual; Stephen McBride, an individual; and Does 1-300, inclusive)) 107. Plaintiff restates and realleges the foregoing paragraphs, which are incorporated by reference as if set forth fully herein. 108. As owners, principals and officers of the Developer and the representatives of the Developer on the Project and during the Arbitration Proceeding, the Individual Owners and Related Developer Entities were aware of TPBC’s claims against the Developer for its work to improve the Property and the Project. Moreover, the Individual Owners, and the Related Developer Entities, and each of them, were aware that funds obtained by the Developer, whether from the Port Authority or from the Lender Defendants, were funds intended to pay for construction work on the Project, and thus were part of the Article 3-A Trust. 109. It is believed and therefore alleged that the Individual Owners, each of them collectively and individually, including specifically Slayton Ventures, LLC, Slayton Equities, SJM Partners Inc., Paul Slayton, Stephen Garchik, William “Trey” Burke and Stephen McBride were directly involved in the payment application process, submission of payment applications to the Port Authority and Lenders, receipt of funds from the Lenders and Port Authority, and/or the distribution of such funds. 110. Each month, including for Payment Applications 30-44 that remain unpaid to TPBC, TPBC would prepare two payment application drafts (one for the Reserved Premises and one for Leased Premises), wherein William “Trey” Burke and other Developer project staff would engage with TPBC in monthly meetings to review the payment applications, revise and edit those payment applications to reach agreement on the scope and percentage of work complete, and approve the completion of the work and expenditures on the Project by TPBC and its subcontractors. These monthly payment applications were further discussed, in detail, during every Bi-Weekly Project Meeting. These meetings were attended by William “Trey” Burke and often by Stephen McBride, as the representatives of the Developer, wherein the payment applications and expenditures on the construction project were discussed in detail. Once discussed and approved with the Developer, TPBC would sign and certify the payment application and formally submit them to the Developer. 111. Thereafter, the Individual Owners would cause these approved and signed payment applications to be submitted to the Lenders and Port Authority, so the payment application amounts, along with other expenditures for designers and others would be funded. 112. Once the approved payment application funds were received by the Developer, Paul Slayton, Stephen Garchik and others, would direct the distribution of the received funds to the Individual Owners and others. These distributions were done by the Individual Owners with knowledge that the funds were collected based on the completed construction work of TPBC. 113. The Individual Owners, each of them, acted on their own behalf and collectively as a group for the benefit of each other, engaged in acts to collect funds from the Port Authority and Lenders, and to retain those funds collected by the benefit of TPBC in contradiction of their fiduciary obligations to TPBC. 114. The Individual Owners further were aware that the Port Authority and Lenders had made payment to Developer of the TPBC Contract Balance of approximately $29 million, which represented payment applications 30-44 and retention. 115. As principals, owners and officers of the Developer, the Individual Owners are trustees of the Article 3-A Trust Funds. 116. Additionally, as transferees of the Article 3-A Trust Funds, the Individual Owners and the Related Developer Entities are trustees of those funds under the Lien Law. 117. As a statutory trustee, the Individual Owners and Related Developer Entities were obligated to act as fiduciary manager of the Article 3-A Trust Funds. The Individual Owners therefore owed TPBC, one of the beneficiaries of the Article 3-A Trust Funds, a duty of loyalty and were required to administer the trust solely in the interest of the beneficiaries of the Article 3- A Trust, including TPBC. 118. In addition to the Lien Law, the Individual Owners and Related Developer Entities had a statutory and common law fiduciary duty to TPBC to protect Project funds belonging to 119. TPBC made its initial application for attachment to the Panel on or about June 29, 2018. The Developer and the Individual Owners, who were the representatives, declarants and client contacts of the Developer in the Arbitration Proceeding, including their counsel of record in the Arbitration, represented, both verbally and through certain filings, to the Panel and the parties that TPBC was not at risk and there no basis for an injunction or attachment. These include oral representations made during an oral argument conducted with the Arbitration Panel on August 22, 2018, and statements made thereafter by the Developer’s representatives. The Developer further represented to the Arbitration Panel and others that it had no intention of declaring bankruptcy, despite internal Developer emails written to the contrary. The Individual Owners and Related Developer Entities were aware of the disclosure by Developer’s counsel in the Arbitration Proceeding and made no efforts to correct the disclosure. 120. These statements by the Individual Owners, by themselves and through their attorneys of record, were made for the purpose of (a) preventing the Panel from issuing an attachment of the Trust Funds held by Developer, and (b) preventing TPBC from ceasing performance of additional work on the Project for nonpayment or taking such other legal measures as it had available, including appealing the Panel’s ruling denying the initial request for attachment to the Court or instituting additional legal proceedings in the Courts to enforce its rights to the TPBC Funds. 121. The Panel and TPBC believed the representations of the Individual Owners to be true and, consequently, they both justifiably relied upon the representations of the Individual Defendants and Developer, as made through their attorneys, that funds which were the property of TPBC were being held by Developer for the benefit of TPBC and its subcontractors and would be paid over to TPBC upon completion of the Arbitration. After these representations, the Panel refused TPBC’s initial application for attachment in July 2018, and TPBC forewent instituting other legal action in the state, federal or bankruptcy courts to enforce its rights to the TPBC Funds. 122. As described above, TPBC made a second request for attachment to the Panel on or about April 22, 2019. The Panel granted TPBC’s request by Order of June 4, 2019 and attached the sum of $23,000,000, which was confirmed by the United States District Court for the Southern District of New York on July 15, 2019, and entered as a judgment of attachment on July 22, 2019. As owners and officers of the Developer and the representatives of the Developer in the Arbitration Proceeding, the Individual Owners and Related Developer Entities were aware of the Order of Attachment issued by the Panel freezing $23,000,000 from the amounts the Developer and the Individual Owners and Related Developer Entities previously represented was being held by the Developer to satisfy TPBC’s claims in the Arbitration Proceeding. 123. The representations by the Individual Owners, by themselves and through their counsel that the Developer was holding funds to pay TPBC claims should TPBC prevail in the Arbitration were false. In fact, the Developer was not holding funds to pay TPBC claims. Developer, through the Individual Owners made numerous transfers of TPBC Funds to themselves, to the Related Developer Entities, and to the Lender Defendants, effectively depleting the funds purportedly being held for owed to TPBC to zero. By way of example, on July 19, 2018, the Developer transferred the sum of $1,152,666.67 to Defendant New York City Regional Center, and on January 10, 2019, Developer transferred $1,165,333.33 to Defendant New York City Regional Center. Upon information and belief, Developer and the Individual Owners made many tens of additional transfers of funds belonging to TPBC despite their representations that they were holding TPBC Funds for the benefit of TPBC. This information is within the sole custody and control of Developer and the Individual Owners. 124. As evidenced by the sworn testimony of Stephen Winiarski, the Developer’s Project accountant, on September 6, 2019 in the Arbitration Proceeding, the Individual Owners and Related Developer Entities were effectively in possession and control of the Article 3-A Trust Funds and authorized and directed payments of those trust funds to themselves and the other Defendants during the Arbitration Proceeding and after the Order of Attachment had been issued, despite the Individual Owners’ knowledge of TPBC’s claims, the Developer’s and the Individual Owners and Related Developer Entities’ representations to TPBC and the Panel and the directions set forth in the Order of Attachment. Mr. Winiarski testified that Defendants Steven Garchik and Paul Slayton were the officers of Developer that had the authority to make transfers of funds from Developer accounts, and that both of them did in fact direct transfers of funds form Developer’s accounts despite knowledge of their obligations to hold the funds for the benefit of TPBC. 125. By authorizing and directing these transfers to themselves and the other Defendants, the Individual Owners and Related Developer Entities deprived TPBC of its share of the Article 3-A Trust Funds, and breached the fiduciary duty owed by the Individual Owners to 126. In addition to the violation under the Lien Law, the Individual Owners and Related Developer Entities in having transferred project funds belonging to TPBC to themselves and others had a statutory and common law fiduciary duty over those funds, which the Individual Owners and Related Developer Entities violated by wasting, disposing, transferring and other misappropriating the money of TPBC. 127. As the direct and proximate result of the constructive fraud accomplished by the acts described, TPBC has suffered general, consequential and special damages in an amount to be determined at trial. 128. The acts of the Individual Owners described herein were performed intentionally and/or with willful disregard of TPBC’s property and/or legal rights, such that each of the Individual Owners are guilty of oppression, fraud, or malice, and TPBC is entitled to recover exemplary or punitive damages from the Individual Owners for the sake of example and by way of punishment. 129. In addition, TPBC is entitled by law to recover its costs of suit herein and to obtain such other and further relief as the Court may order. V. DEMAND FOR TRIAL BY JURY 130. Pursuant to Federal Rule of Civil Procedure 38 and other applicable law, Plaintiff, on behalf of itself, and, as to Count I of the Complaint, on behalf of all others similarly situated, demand a trial by jury on all issues so triable. VI. PRAYER FOR RELIEF WHEREFORE, by reason of the foregoing, TPBC requests that judgment be entered against the Defendants as follows: A. On Count I, entering a judgment against (i) Defendants named therein that were the recipient of diverted funds to return such funds to the Article 3-A Trust together with interest on each such payment from the date the diverted payment was received by that Defendant, and (ii) the Individual Owners, and each of them, as statutory trustees, to restore the entirety of the diverted funds to the Article 3-A Trust, with interest on each such payment from the date of each diverted payment, and establishing a procedure for distribution of the recovered funds to the beneficiaries of the Article 3-A Trust and the disposition of the remaining balance, if any, after all trust claims have been paid or discharged in full. B. On Count II, entering a judgment against Defendants named therein finding that (a) TPBC is a third-party beneficiary of the Ground Lease and, as such, entitled to enforce its terms and (b) as such, TPBC is entitled to the benefit of section 14A.10 of the Ground Lease and therefore should be paid out of the proceeds of any disposition of the Ground Lease before the Lenders receive any such proceeds. C. On Count III, entering a judgment in favor of TPBC against Defendants named therein for their conversion of funds in an amount to be determined at trial. D. On Count IV, entering a judgment in favor of TPBC against Defendants named therein for their constructive fraud in an amount to be determined at trial. E. On all Counts, entering a judgment in favor of TPBC against Defendants for interest on the amount of judgment. F. On all Counts, entering a judgment in favor of TPBC against Defendants for costs of this suit. G. On all Counts, entering a judgment in favor of TPBC against Defendants for attorney fees to the extent permitted by law or contract. H. On all Counts, for other judgment that the Court finds just. Respectfully submitted, DATED: May 11, 2020 /s/ ROBERT NIDA NIDA & ROMYN, P.C. Robert Nida 1900 Avenue of the Stars, Suite 650 Los Angeles, CA 90067 Telephone: (310) 286-3400 [email protected] SHEPPARD, MULLIN, RICHTER & HAMPTON LLP Ira M. Schulman Emily D. Anderson 30 Rockefeller Plaza New York, NY 10112-0015 Telephone: (212) 653-8700 [email protected] [email protected]

consumer fraud

3dtLEIcBD5gMZwczZ9sw

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA CHRISTINA DARDAR CIVIL ACTION NO.: VERSUS JUDGE: MAGISTRATE: PIT STOP EATERY OF HOUMA, LLC COLLECTIVE ACTION COMPLAINT UNDER THE FAIR LABOR STANDARDS ACT Plaintiff Christina Dardar, a major domiciled in Terrebonne Parish, Louisiana, individually and on behalf of all others similarly situated (“the “FLSA Collective”), brings this action against defendant Pit Stop Eatery of Houma, LLC (“Pit Stop”) for failing to pay the plaintiff and all other similarly situated Pit Stop employees all of their overtime pay as required by the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. In support of this action, the plaintiff respectfully represents as follows: 1. Made defendant herein is Pit Stop Eatery of Houma, LLC (“Pit Stop”), a domestic limited liability company authorized to do business in the State of Louisiana, which may be served through its registered agent, Charles Babin, 928 Eagle Drive, Houma, Louisiana, 70364. 2. Pit Stop operates and conducts business in Terrebonne Parish, which is within this judicial district, and the alleged conduct occurred within this judicial district. Therefore, this claim is within the jurisdiction of this Court. 3. The plaintiff brings this action against Pit Stop for unpaid overtime compensation, declaratory relief, and other relief under the Fair Labor Standards Act, as amended, 29 U.S.C. § 216(b) (the “FLSA”). This Court has jurisdiction over the plaintiff’s claims pursuant to 28 U.S.C. § 1331 and the FLSA. 4. This action is brought against Pit Stop under the FLSA to recover unpaid overtime compensation, liquidated damages, and reasonable attorney fees and costs. FACTUAL ALLEGATIONS RELATED TO ALL CLAIMS 5. The plaintiff re-alleges and incorporates by reference the above paragraphs as if fully set forth herein. 6. Plaintiff Christina Dardar was employed at Pit Stop from August 2013 through December 7. The plaintiff and other similarly situated individuals worked as employees of Pit Stop during the past three years at its locations at 8045 Park Avenue, Houma, Louisiana 70364, and at 6613 West Park Avenue, Houma, Louisiana 70364. 8. During her employment, the plaintiff took on various roles, including as a short order cook for Pit Stop’s location at 8045 Park Avenue, Houma, Louisiana 70364 from approximately 2013 through 2015; as a manager of both Pit Stop locations at 8045 Park Avenue, Houma, 2 Louisiana 70364 and at 6613 West Park Avenue, Houma, Louisiana 70364 from approximately 2015 through 2017; and then again as a cook at 8045 Park Avenue, Houma, Louisiana 70364 from 2017 until her termination in December 2019. 9. At all material times relevant to this action, Pit Stop failed to comply with 29 U.S.C. §§ 201-209, because the plaintiff and other similarly situated employees performed services for Pit Stop for which no provisions were made by Pit Stop to properly pay the plaintiff or other employees the entire amount that was owed to them under the law for all hours worked in excess of 40 within a work week. 10. Pit Stop compensated the plaintiff and other employees for their work on an hourly basis. 11. Pit Stop suffered and permitted the plaintiff and other similarly situated employees to work more than 40 hours per workweek. 12. Pit Stop had a policy of not paying the plaintiff and other similarly situated employees at a rate of one and one-half times their regular rate of pay for the overtime hours they worked as required by the FLSA. 13. In calculating the plaintiff’s and other similarly situated employees’ overtime pay, Pit Stop only paid them their regular hourly rate (i.e., straight time rate), rather than the legally required one and one-half times their regular rate of pay. 3 14. Further, as part of the scheme of not paying the plaintiff and other similarly situated employees their full rate of one and one-half times their hourly rate for hours worked above 40 hours per week, Pit Stop had a practice of paying the plaintiff and other similarly situated employees in cash for such overtime hours. 15. Pit Stop willfully operated under a scheme to deprive the plaintiff and the other similarly situated employees of proper overtime compensation by paying them less than what is required under federal law. 16. Pit Stop knew or should have known that the plaintiff and other similarly situated employees performed work that required proper payment of overtime compensation. 17. Pit Stop was aware, or should have been aware, of its unlawful payment practices and recklessly chose to disregard the consequences of its actions. 18. The plaintiff and similarly situated employees were entitled to be paid for all time worked for Pit Stop, including time and one-half their regular rate of pay for each hour worked in excess of 40 hours per work week. 19. The records, to the extent any exist, concerning the number of hours worked, amounts paid to the plaintiff and other similarly situated employees, and other information relevant to the 4 allegations of this Complaint, are in the possession and custody of Pit Stop, which as an employer is required to maintain such records pursuant to 29 C.F.R. Part 516. FLSA COLLECTIVE ACTION ALLEGATIONS 20. The plaintiff realleges and incorporates by reference the above paragraphs as if fully set forth herein. 21. The plaintiff brings Count I below individually and on behalf of all similarly situated employees, specifically: All persons employed by Pit Stop at any time since three years prior to the filing of this Complaint until the date of final judgment in this matter (the proposed “FLSA Collective”). 22. The plaintiff consents in writing to assert her claims for unpaid wages under the FLSA pursuant to 29 U.S.C. § 216(b). The plaintiff’s signed consent form is filed with the Court as Exhibit A to this Complaint. As this case proceeds, it is likely that other individuals will file consent forms and join as opt-in plaintiffs. 23. Members of the proposed FLSA Collective are known to Pit Stop and are readily identifiable through Pit Stop’s records. 24. The plaintiff and the FLSA Collective are all victims of Pit Stop’s repeated, systematic, and consistent illegal policies that have resulted in willful violations of their rights under the FLSA, which have caused significant damage to the plaintiff and the FLSA Collective. 5 25. These individuals would benefit from the issuance of court-supervised notice of this lawsuit and the opportunity to join by filing their written consent. COUNT I Fair Labor Standards Act, 29 U.S.C. § 201 et seq. On Behalf of the Plaintiff and the FLSA Collective 26. The plaintiff, individually and on behalf of the FLSA Collective, realleges and incorporates by reference the above paragraphs as if fully set forth herein. 27. Pit Stop is an “employer” and an “enterprise” as defined by the FLSA, 29 U.S.C. § 203, and is engaged in commerce within the meaning of the FLSA, § 203(b), (s)(1). 28. The FLSA requires covered employers like Pit Stop to pay non-exempt employees like the plaintiff and the FLSA Collective no less than one and one-half (1.5) times their regular rate of pay for all hours worked in excess of forty (40) in a workweek. 29 U.S.C. § 207. 29. The plaintiff and the FLSA Collective regularly worked more than forty (40) hours per week for Pit Stop, but Pit Stop did not properly compensate them for all of their overtime hours as required by the FLSA. 30. Pit Stop did not and has not made a good-faith effort to comply with the FLSA as it relates to the compensation of the plaintiff and the FLSA Collective. 6 31. Pit Stop knew that the plaintiff and the FLSA Collective worked overtime without proper compensation, and they willfully failed and refused to pay the plaintiff and the FLSA Collective wages at the required overtime rates. See 29 U.S.C. § 255. 32. Pit Stop’s willful failure and refusal to pay the plaintiff and the FLSA Collective overtime wages for time worked violates the FLSA. 29 U.S.C. § 207. 33. As a direct and proximate result of these unlawful practices, the plaintiff and the FLSA Collective suffered and continue to suffer wage loss and are therefore entitled to recover unpaid overtime wages for up to three years prior to the filing of their claims, liquidated damages or prejudgment interest, attorneys’ fees and costs, and such other legal and equitable relief as the Court deems just and proper. PRAYER FOR RELIEF 34. WHEREFORE, Plaintiff Christina Dardar, individually and on behalf of the proposed FLSA Collective, prays for relief as follows: a) A finding that the plaintiff and the FLSA Collective are similarly situated; b) Certification of this case as a collective action pursuant to 29 U.S.C. § 216(b); c) Authorization for the prompt issuance of notice to all those similarly situated, apprising them of the pendency of this action and providing them with the opportunity to assert timely FLSA claims by filing individual consent forms; d) Judgment against Defendants for an amount equal to the plaintiff’s and the FLSA Collective’s unpaid back wages at the applicable overtime rates; e) A finding that Defendants’ violations of the FLSA are willful; 7 f) An amount equal to the plaintiff’s and the FLSA Collective’s damages as liquidated damages; g) All costs and attorneys’ fees incurred prosecuting this claim; h) An award of any pre- and post-judgment interest; i) Leave to add additional plaintiffs or claims by motion, the filing of written consent forms, or any other method approved by the Court; and j) All further relief as the Court deems just and equitable Respectfully submitted: Simien & Simien, L.L.C. Attorneys and Counselors at Law 7908 Wrenwood Boulevard Baton Rouge, Louisiana 70809 Telephone: (225) 932-9221 FAX: (225) 932-9286 /s/Roy Bergeron, Jr. By: Eulis Simien, Jr. (T.A.), Bar # 12077 Jimmy Simien, Bar # 1598 Roy Bergeron, Jr., Bar # 33726 8 EXHIBIT A PIT STOP EATERY OF HOUMA, LLC PLAINTIFF CONSENT FORM Consent to sue under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 216(b) 1. I consent to make a claim under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq., against my current/former employer, Pit Stop Eatery of Houma, LLC, and any other related entities or affiliates (“Pit Stop”) to recover overtime pay. 2. During the past three years, there were occasions when I worked over 40 hours per week for Pit Stop and did not receive proper compensation for all of my hours worked, including overtime pay. 3. If this case does not proceed collectively, then I also consent to join any subsequent action to assert these claims against Pit Stop and any other related entities or affiliates. 4. I choose to be represented in this matter by the named plaintiff and counsel, Simien & Simien, LLC, in this action. 5. I understand that I may withdraw my consent to proceed with my claims at any time by notifying the attorneys handling the matter. Date: 06/03/2020 Signature Christina Dardar Print Name Return this form by mail, e-mail, or fax to: Simien & Simien, LLC Attn: Dawn Davide 7908 Wrenwood Boulevard Baton Rouge, LA 70809 E-mail: [email protected] Fax: (225) 932-9286

employment & labor

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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE WESTERN SECTION JANE DOE, INDIVIDUALLY AND AS CLASS REPRESENTATIVE OF ALL OTHERS SIMILARLY SITUATED, Plaintiff, vs. Docket No.: 2:13-cv-03002 CITY OF MEMPHIS, Defendant. ______________________________________________________________________ CLASS ACTION COMPLAINT ______________________________________________________________________ COMES NOW, Plaintiff Jane Doe, by and through undersigned counsel of record and on behalf of herself individually and others similarly situated, and states as follows: I. NATURE OF ACTION Plaintiff and the putative class members are female individuals who reported sexual assaults to third parties, had bodily fluid samples removed from their bodies and placed within sexual assault evidence kits, and whose sexual assault kits were subsequently transported to the Memphis Police Department for testing, evidentiary and custodial purposes. The City of Memphis failed to submit over 15,000 such sexual assault kits for further testing and caused the spoliation of the sexual assault kits all of which resulted in damages to the Plaintiff and the putative class which constitutes a violation of the equal protection clauses of the Tennessee and United States constitutions. II. PARTIES 1. Class Representative, Plaintiff Jane Doe (hereinafter referred to as “Class Representative” or “Plaintiff Doe”), is an adult female resident of Memphis, Shelby County, Tennessee. 2. Defendant City of Memphis (hereinafter referred to as “Defendant” or “City of Memphis”) is a municipal entity, located in Shelby County, Tennessee, recognized by the State of Tennessee as a properly organized and legal municipal entity, operated the Memphis Police Department and can be served with process through its city attorney, Herman Morris at his office located at 125 North Main Street, Suite 336, Memphis, Tennessee 38103. III. JURISDICTION AND VENUE 3. The wrongful acts, omissions and injuries described in the body of this Complaint all occurred in Memphis, Shelby County, Tennessee and venue is appropriate in this judicial district pursuant to 28 U.S.C § 1391. 4. The jurisdiction of this lawsuit is proper in the United States District Court for the Western District of Tennessee, Western Division. Jurisdiction lies with this Court pursuant to 28 U.S.C. § 1331 and 1343 and supplemental jurisdiction pursuant to 28 U.S.C. § 1367. 5. This action is brought pursuant to 42 U.S.C. §§ 1983 and 48 U.S.C. § 1985 and various other state laws and the common law. IV. CLASS ACTION 6. Pursuant to Fed. R. Civ. P. Rule 23(a) and 23(b)(1) and (2), Class Representative Plaintiff Doe brings this class action on her behalf and on behalf of other similarly situated sexually assaulted citizens in Memphis, Shelby County, Tennessee (“Class”). 7. The exact number of members in the Class identified in the preceding paragraph is not presently known, but upon information and belief, the Class includes over fifteen thousand (15,000) individuals, and is therefore so numerous that joinder of individual members in this action is impracticable. 8. There are common questions of law and fact in the action that relate to and affect the rights of each member of the Class. The relief sought is common to the entire Class, as set forth below in this Complaint. 9. The claims of the Class Representative are typical of the Class she represents as the Class Representative claims that the City of Memphis violated the rights held by the Class members under the Fourteenth Amendment to the United States Constitution, Tennessee Constitution, 42 U.S.C. §1983 and state law. There is no conflict between the Class Representative and any other members of the Class with respect to this action. 10. The Class Representative is the representative party for the Class, and is able to fairly and adequately protect the interests of the Class, and will so represent the 11. The attorneys for the Class Representative are experienced and capable in the field of constitutional law. 12. The City of Memphis has acted on grounds generally applicable to the Class, thereby making final injunctive relief or corresponding injunctive relief appropriate with respect to the Class as a whole. 13. This action is properly maintained as a class action in that the prosecution of separate actions by individual Class members would create a risk of different adjudications with respect to individual members of the Class that would establish incompatible standards of conduct for the City of Memphis. 14. The Class consists of females who reported sexual assaults to third parties, had body fluid samples removed from their bodies and placed within sexual assault evidence kits, and whose sexual assault kits were subsequently transported to the Memphis Police Department for testing, evidentiary and custodial purposes. Plaintiff Doe is a member of the class. 15. During the relevant time period more than fifteen thousand (15,000) individuals reported sexual assaults to third parties, had body fluid samples removed from their bodies and placed within sexual assault evidence kits, and whose sexual assault kits were subsequently transported to the Memphis Police Department for testing, evidentiary and custodial purposes. 16. Pursuant to Fed. R. Civ. P. 23(a)(1), based on the number of Class members, the Class is so numerous that joinder of all members is impracticable. 17. All Class members were exposed to the same type of conduct by the Defendant and experienced the same due process, equal protection and statutory violations by the Defendant. Accordingly, pursuant to Fed. R. Civ. P. 23(a)(2), there are questions of law and fact common to the Class. 18. Plaintiff Doe experienced the same type of conduct by the Defendant as the Class and experienced the same due process, equal protection and statutory violations by the Defendant as the rest of the class. Accordingly, pursuant to Fed. R. Civ. P. 23(a)(3) the claims of the Class Representative are typical of the claims of the 19. Plaintiff Doe is an adequate representative of the Class because her interests do not conflict with the interests of the Class that she seeks to represent, she has retained counsel competent and experienced in class action and civil rights litigation and she intends to prosecute this action vigorously. Accordingly, pursuant to Fed. R. Civ. P. 23(a)(4), the Class Representative will fairly and adequately protect the interests of the Class. 20. This action is properly maintained as a class action in that the prosecution of separate actions by individual Class members would create a risk of different adjudications with respect to individual members of the Class that, as a practical matter, would be dispositive of the interests of other members not party to the adjudication, or would substantially impair or impede their ability to protect their interests. 21. This action is properly maintainable under both Fed. R. Civ. P. 23(b)(2) and 23(b)(3) because the City of Memphis has acted or refused to act on grounds generally applicable to the Class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the Class as a whole and because questions of law and fact predominate over questions affecting individual members and a class action is superior to other available methods for the fair and efficient adjudication of this case. This action is also maintainable under Fed. R. Civ. P. 23(c)(4)(A) for all class issues alleged herein. 22. The questions of law or fact common to the Class and which predominate over any other questions affecting individual class members, include without limitation: a. Whether the Defendant City of Memphis had a custom, policy and practice of failing to submit sexual assault evidence kits for testing; b. Whether the Defendant City of Memphis’s custom, policy and practice with respect to its treatment of sexual assault evidence kits violated constitutionally protected rights of the Class under 42 U.S.C. §1983 and the due process clause with respect to their liberty and property interests; c. Whether the Defendant City of Memphis’s custom, policy and practice with respect to its treatment of sexual assault evidence kits violated constitutionally protected rights of the Class under 42 U.S.C. §1983 and the equal protection clause by treating sexual assault reports from women with less priority than other crimes not involving women or domestic violence; d. Whether Defendant City of Memphis’s treatment of female rape victims and sexual assault kits was consistent with ordinary and reasonable law enforcement practices or whether such treatment was reckless and/or intentional; and e. Whether Defendant City of Memphis’s treatment of female rape victims the sexual assault kits they submitted was reckless and/or intentional. 23. This action is superior to any other available means for the fair and efficient adjudication of this controversy, and no unusual difficulties are likely to be encountered in the management of this class action. Individual litigation would increase the delay and expense to all parties and the court system, would create the potential for inconsistent or contradictory judgments and would possibly impair or impeded the ability of individual class members to protect their interests. By contrast, this class action presents far fewer management difficulties and provides the benefits of a single adjudication, economy of scale and comprehensive supervision by a single court. V. FACTS PERTAINING TO THE WRONGFUL TREATMENT OF JANE DOE 24. Plaintiff Doe was born on XXXXX XX, 19XX. 25. At all times relevant herein, Plaintiff Doe was a single parent and resided with her minor children. 26. In the early morning of March 30, 2001 Plaintiff Doe was asleep at home in her bedroom and her minor children were asleep in an adjacent bedroom. 27. At approximately 2:00a.m. on March 30, 2001 an intruder violently broke into Plaintiff Doe’s home by kicking in a window. 28. After the intruder broke into Plaintiff Doe’s home, her arms and feet were bound and she was sexually assaulted multiple times by the intruder. 29. On March 30, 2001 Plaintiff Doe reported the sexual assault to the Memphis Police Department. 30. On March 30, 2001, Plaintiff Doe was transported to the Rape Crisis Center for treatment and the collection of evidence. While at the Rape Crisis Center medical personnel took body fluid samples from Jane Doe and placed them into a Memphis Police Department Sexual Assault Evidence Kit (hereinafter referred to as “Sexual Assault Evidence Kit”). 31. An officer from the Memphis Police Department transported the Sexual Assault Evidence Kit to the Memphis Police Department ostensibly for testing and to be used as evidence against the intruder. 32. Over the next thirteen (13) years Defendant City of Memphis never submitted Plaintiff Doe’s Sexual Assault Evidence Kit for testing. 33. Unknown to Plaintiff Doe, the City of Memphis had a policy, practice and/or custom of discarding sexual assault evidence kits. 34. Unknown to Plaintiff Doe, the City of Memphis had a policy, practice and/or custom of failing to submit sexual assault evidence kits for testing: a. Over fifteen thousand (15,000) Sexual Assault Evidence Kits went untested over a period of several decades; and b. A disproportionate number of the victims whose body fluids were taken and located in the Sexual Assault Evidence Kits were women. 35. Defendant City of Memphis failed to: a. Arrange for the timely analysis and evaluation of the evidence contained in the Sexual Assault Evidence Kit; b. Affect an arrest of the intruder; c. Determine if other crimes may have been committed by the intruder; and d. Prevent future rapes by the intruder. 36. On information and belief, the failure to submit Plaintiff Doe’s Sexual Assault Evidence Kit for testing was consistent with an institutional practice of the City of Memphis Police Department, was known to policy makers within the City of Memphis Police Department, was ratified by multiple policymakers within the City of Memphis Police Department, and the Defendant failed to take any effective action to prevent the personnel within the Memphis Police Department from continuing to engage in such misconduct. 37. On information and belief, Defendant City of Memphis authorized, tolerated as institutional practices and ratified the misconduct above by: a. Failing to properly supervise the Memphis Police Department; b. Failing to properly train the Memphis Police Department; c. Failing to forward to the District Attorney General of Shelby County evidence of criminal acts committed in Shelby County; d. Failing to protect and ensure evidence is not lost or mishandled; and e. Failing to discipline, restrict and control Memphis Police Department employees for failing to investigate crimes of sexual assault of females. 38. Plaintiff Doe suffered injuries, including but not limited to: a. Physical injuries from the sexual assault, and b. Severe emotional and psychological injuries. VI. 42 U.S.C. § 1983 EQUAL PROTECTION AGAINST THE CITY OF MEMPHIS 39. Plaintiff Doe repeats, realleges, and incorporates herein each of the preceding paragraphs 1-38 as if fully set forth herein. 40. At all relevant times herein, the Memphis Police Department acted under color of law. 41. At all relevant times herein, the Defendant City of Memphis with deliberate indifference, intentionally, willfully and wantonly and/or with reckless disregard deprived Plaintiff Doe and the Class of rights and/or privileges secured by the constitution, including but not limited to: a. Defendant violated Plaintiff Doe and Class members of Due Process Clause property interests in their DNA samples, which had been provided and stored at the City of Memphis facility, and their right to redress in the courts, by failing to investigate, submit sexual evidence kits or arrest the accused; and b. Defendant violated Plaintiff Doe and Class members of Due Process Clause property interests in their persons, by failing to investigate, submit sexual assault evidence kits or arrest the accused. 42. Defendant with deliberate indifference, failed to train its police officers as to the rights of persons with whom the police come into contact, including but not limited to Plaintiff Doe and other Class members. 43. Defendant’s deliberate indifference, willful and wanton conduct created a danger of an increased risk of harm of sexual abuse, and/or fostered an environment to exist and continue in which a victim was sexually abused and/or in fear of sexual assault. 44. Defendant’s deliberate indifference, willful and wanton conduct created a danger of an increased risk of harm to the victims of sexual abuse, which are disproportionately females, by failing to investigate sexual assault crimes. 45. Defendant’s deliberate indifference, willful and wanton conduct created a danger of an increased risk of harm to the victims of sexual abuse, which are disproportionately females, by fostering an environment whereby the perpetrators of sexual assault were allowed to continue to prey on victims without fear of investigation by the Memphis Police Department. 46. Defendant’s conduct was motivated by gender. 47. Defendant’s conduct was intentional and due to Plaintiff Doe’s and the Class members’ female gender. 48. Defendant has a history of discriminating against females. Defendant treats domestic violence abuse reports from women with less priority than other crimes not involving women reporting domestic violence abuse. 49. Defendant violated Plaintiff Doe’s and the Class members’ civil rights by having an express policy that, when enforced, caused a constitutional deprivation to Plaintiff Doe and the Class members, or by having a wide-spread practice and/or custom that, although not authorized by written law or express municipal policy was so permanent and well settled as to constitute a custom or usage with the force of law. 50. The constitutional injury inflicted by the Defendant was caused by a person with final policymaking authority for the City of Memphis. 51. Defendant knew about the herein described conduct and facilitated it, approved it, condoned it and/or turned a blind eye to it. 52. The above described conduct of the City of Memphis constitutes a violation of 42 U.S.C. § 1983. Plaintiff Doe and the Class members are entitled to compensatory damages and other non-pecuniary losses. 53. As a direct and proximate result of the actions the Plaintiff Doe and the Class members suffered deprivation of their constitutional rights. VII. REQUEST FOR PRELIMINARY AND PERMANENT INJUNCTIONS 54. Plaintiff Doe repeats, realleges, and incorporate herein each of the preceding paragraphs 1-53 as if fully set forth herein. 55. The Plaintiffs seek a preliminary injunction restraining and prohibiting Defendants from continuing its policy and/or custom of failing to test sexual assault evidence kits. 56. In the absence of the issuance of a preliminary injunction, the Defendant will cause immediate and irreparable harm including, but not limited to, violation of citizens’ exercise of constitutional rights, physical and mental harm. 57. There is no harm to the public interest if an injunction issues, and, in fact, the issuance of an injunction under the circumstances and facts of this case protects the public interest. 58. The harm to the females who submit sexual assault evidence kits to the City of Memphis outweighs any harm to the Defendant, thus injunctive relief is appropriate. WHEREFORE, PREMISES CONSIDERED, Plaintiffs demand that the court issue a Declaratory Order declaring the policy of the Defendant with respect to the handling of the sexual assault evidence kits to be unconstitutional; issue the injunctions as prayed for in the Complaint, empanel a jury to try the issues raised herein which are properly triable before a jury and pray for a monetary judgment against the Defendant in an amount to be determined at trial and any other relief the Court deems just and proper, including by not limited to: i) Attorney’s fees and costs pursuant to 42 U.S.C. §1988; (ii) Pre- and post- judgment interest; (iii) Discretionary costs; and (iv) All such further relief, both general and specific, to which Plaintiffs may be entitled or to which they may show themselves entitled. Respectfully submitted, SPENCEWALK, PLLC By: s/ Robert L. J. Spence, Jr. Robert L. J. Spence, Jr. (BPR# 12256) Kristina A. Woo (BPR #22349) Bryan M. Meredith (BPR 26876) One Commerce Square, Suite 2200 Memphis, Tennessee 38103 Office: (901) 312-9160 Facsimile: (901) 521-9550 [email protected] [email protected] [email protected] Attorneys for Plaintiffs

products liability and mass tort

4q2ZCocBD5gMZwczCfQB

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION G. NEIL GARRETT, D.D.S., P.C., ) on behalf of plaintiff and ) the class members defined herein, ) ) Plaintiff, ) ) v. ) ) HEALTH CARE EQUIPMENT ) SPECIALTY, INC., ) and JOHN DOES 1-10, ) ) Defendants. ) COMPLAINT – CLASS ACTION MATTERS COMMON TO MULTIPLE COUNTS INTRODUCTION 1. Plaintiff G. Neil Garrett, D.D.S., P.C., brings this action to secure redress for the actions of defendant Health Care Equipment Specialty, Inc., in sending or causing the sending of unlawful advertisements to telephone facsimile machines in violation of the Telephone Consumer Protection Act, 47 U.S.C. §227 (“TCPA”), the Illinois Consumer Fraud Act, 815 ILCS 505/2 (“ICFA”), and the common law. PARTIES 2. Plaintiff G. Neil Garrett, D.D.S., P.C., is a corporation with offices in the Chicago metropolitan area, where it maintains telephone facsimile equipment. 3. Defendant Health Care Equipment Speciality, Inc., is a Texas corporation. Its registered agent and office is James W. Oliver, 900 Indiana Avenue, Wichita Falls, Texas 76301. 1 4. Defendants John Does 1-10 are other natural or artificial persons that were involved in the sending of the facsimile advertisements described below. Plaintiff does not know who they are. JURISDICTION AND VENUE 5. This Court has jurisdiction under 28 U.S.C. §§1331 and 1367. Mims v. Arrow Financial Services, LLC, 132 S. Ct. 740, 751-53 (2012); Brill v. Countrywide Home Loans, Inc., 427 F.3d 446 (7th Cir. 2005). 6. Personal jurisdiction exists under 735 ILCS 5/2-209, in that defendants: a. Have committed tortious acts in Illinois by causing the transmission of unlawful communications into the state. b. Have transacted business in Illinois. 7. Venue in this District is proper for the same reason. FACTS 8. On December 18, 2009, plaintiff G. Neil Garrett, D.D.S., P.C., received the unsolicited fax advertisement attached as Exhibit A on its facsimile machine. 9. On December 21, 2009, plaintiff G. Neil Garrett, D.D.S., P.C., received the unsolicited fax advertisement attached as Exhibit B on its facsimile machine. 10. On January 21, 2010, plaintiff G. Neil Garrett, D.D.S., P.C., received the unsolicited fax advertisement attached as Exhibit C on its facsimile machine. 11. Discovery may reveal the transmission of additional faxes as well. 12. Defendant Health Care Equipment Specialty, Inc., is responsible for sending or causing the sending of the faxes. 2 13. Defendant Health Care Equipment Specialty, Inc., as the entity whose products or services were advertised in the faxes, derived economic benefit from the sending of the faxes. 14. Defendant Health Care Equipment Specialty, Inc., either negligently or wilfully violated the rights of plaintiff and other recipients in sending the faxes. 15. The fax refers to a website registered to defendant Health Care Equipment Specialty, Inc. 16. The TCPA makes unlawful the “use of any telephone facsimile machine, computer or other device to send an unsolicited advertisement to a telephone facsimile machine ...” 47 U.S.C. §227(b)(1)(C). 17. The TCPA provides for affirmative defenses of consent or an established business relationship. Both defenses are conditioned on the provision of an opt out notice that complies with the TCPA. Holtzman v. Turza, 728 F.3d 682 (7th Cir. 2013); Nack v. Walburg, 715 F.3d 680 (8th Cir. 2013). 18. The faxes do not contain an “opt out” notice in the form required by 47 U.S.C. § 19. On information and belief, the faxes attached hereto were sent as part of a mass broadcasting of faxes. 20. On information and belief, defendants have transmitted similar fax advertisements to at least 40 other persons in Illinois. 21. There is no reasonable means for plaintiff or other recipients of defendants’ advertising faxes to avoid receiving illegal faxes. Fax machines must be left on and ready to receive the urgent communications authorized by their owners. 3 COUNT I – TCPA 22. Plaintiff incorporates ¶¶ 1-21. 23. The TCPA, 47 U.S.C. §227(b)(3), provides: Private right of action. A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State– (A) an action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation, (B) an action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater, or (C) both such actions. If the Court finds that the defendant willfully or knowingly violated this subsection or the regulations prescribed under this subsection, the court may, in its discretion, increase the amount of the award to an amount equal to not more than 3 times the amount available under the subparagraph (B) of this paragraph. 24. Plaintiff and each class member suffered damages as a result of receipt of the faxes, in the form of paper and ink or toner consumed as a result. Furthermore, plaintiff’s statutory right of privacy was invaded. 25. Plaintiff and each class member is entitled to statutory damages. 26. Defendants violated the TCPA even if their actions were only negligent. 27. Defendants should be enjoined from committing similar violations in the future. CLASS ALLEGATIONS 28. Pursuant to Fed.R.Civ.P. 23(a) and (b)(3), plaintiff brings this claim on behalf of a class, consisting of (a) all persons with fax numbers (b) who, on or after a date four years prior 4 to the filing of this action (28 U.S.C. §1658), (c) were sent faxes by or on behalf of defendant Health Care Equipment Specialty, Inc., promoting its goods or services for sale (d) which did not contain an opt out notice as described in 47 U.S.C. §227. 29. The class is so numerous that joinder of all members is impractical. Plaintiff alleges on information and belief that there are more than 40 members of the class. 30. There are questions of law and fact common to the class that predominate over any questions affecting only individual class members. The predominant common questions include: a. Whether defendants engaged in a pattern of sending unlawful fax advertisements; b. Whether defendants thereby violated the TCPA; c. Whether defendants thereby engaged in unfair acts and practices, in violation of the ICFA. d. Whether defendants thereby converted the property of plaintiff. e. Whether defendants thereby created a private nuisance. f. Whether defendants thereby committed a trespass to chattels. 31. Plaintiff will fairly and adequately protect the interests of the class. Plaintiff has retained counsel experienced in handling class actions and claims involving unlawful business practices. Neither plaintiff nor plaintiff's counsel have any interests which might cause them not to vigorously pursue this action. 32. Plaintiff’s claims are typical of the claims of the class members. All are based on the same factual and legal theories. 5 33. A class action is the superior method for the fair and efficient adjudication of this controversy. The interest of class members in individually controlling the prosecution of separate claims against defendants is small because it is not economically feasible to bring individual actions. 34. Several courts have certified class actions under the TCPA. Holtzman v. Turza, 08 C 2014, 2009 U.S. Dist. LEXIS 95620 (N.D.Ill., Oct. 14, 2009), affirmed in pertinent part, 728 F.3d 682 (7th Cir. 2013); Sadowski v. Med1Online, LLC, 07 C 2973, 2008 U.S. Dist. LEXIS 41766 (N.D.Ill., May 27, 2008); CE Design Ltd. v Cy's Crabhouse North, Inc., 259 F.R.D. 135 (N.D.Ill. 2009); Targin Sign Sys. v Preferred Chiropractic Ctr., Ltd., 679 F. Supp. 2d 894 (N.D.Ill. 2010); Garrett v. Ragle Dental Lab, Inc., 10 C 1315, 2010 U.S. Dist. LEXIS 108339, 2010 WL 4074379 (N.D.Ill., Oct. 12, 2010); Hinman v. M & M Rental Ctr., 545 F.Supp. 2d 802 (N.D.Ill. 2008); Clearbrook v. Rooflifters, LLC, 08 C 3276, 2010 U.S. Dist. LEXIS 72902 (N.D. Ill. July 20, 2010) (Cox, M.J.); G.M. Sign, Inc. v. Group C Communs., Inc., 08 C 4521, 2010 U.S. Dist. LEXIS 17843 (N.D. Ill. Feb. 25, 2010); Kavu, Inc. v. Omnipak Corp., 246 F.R.D. 642 (W.D.Wash. 2007); Display South, Inc. v. Express Computer Supply, Inc., 961 So.2d 451, 455 (La. App. 1st Cir. 2007); Display South, Inc. v. Graphics House Sports Promotions, Inc., 992 So. 2d 510 (La. App. 1st Cir. 2008); Lampkin v. GGH, Inc., 146 P.3d 847 (Ok. App. 2006); ESI Ergonomic Solutions, LLC v. United Artists Theatre Circuit, Inc., 203 Ariz. (App.) 94, 50 P.3d 844 (2002); Core Funding Group, LLC v. Young, 792 N.E.2d 547 (Ind.App. 2003); Critchfield Physical Therapy v. Taranto Group, Inc., 293 Kan. 285; 263 P.3d 767 (2011); Karen S. Little, L.L.C. v. Drury Inns. Inc., 306 S.W.3d 577 (Mo. App. 2010); Travel 100 Group, Inc. v. Empire Cooler Service, Inc., 03 CH 14510 (Cook Co. Cir. Ct., Oct. 19, 2004); Rawson v. C.P. Partners 6 LLC, 03 CH 14510 (Cook Co. Cir. Ct., Sept. 30, 2005); Nicholson v. Hooters of Augusta, Inc., 245 Ga.App. 363, 537 S.E.2d 468 (2000). 35. Management of this class action is likely to present significantly fewer difficulties that those presented in many class actions, e.g. for securities fraud. WHEREFORE, plaintiff requests that the Court enter judgment in favor of plaintiff and the class and against defendants for: a. Actual damages; b. Statutory damages; c. An injunction against the further transmission of unlawful fax advertising; d. Costs of suit; e. Such other or further relief as the Court deems just and proper. COUNT II – ILLINOIS CONSUMER FRAUD ACT 36. Plaintiff incorporates ¶¶ 1-21. 37. Defendants engaged in unfair acts and practices, in violation of ICFA § 2, 815 ILCS 505/2, by sending fax advertising to plaintiff and others. 38. Defendants engaged in an unfair practice by engaging in conduct that is contrary to public policy, unscrupulous, and caused injury to recipients of their advertising. 39. Plaintiff and each class member suffered damages as a result of receipt of the unlawful faxes, in the form of paper and ink or toner consumed as a result. 40. Defendants engaged in such conduct in the course of trade and commerce. 41. Defendants’ conduct caused recipients of their advertising to bear the cost thereof. This gave defendants an unfair competitive advantage over businesses that advertise lawfully, 7 such as by direct mail. For example, an advertising campaign targeting one million recipients would cost $500,000 if sent by U.S. mail but only $20,000 if done by fax broadcasting. The reason is that instead of spending $480,000 on printing and mailing his ad, the fax broadcaster misappropriates the recipients’ paper and ink. “Receiving a junk fax is like getting junk mail with the postage due”. Remarks of Cong. Edward Markey, 135 Cong Rec E 2549, Tuesday, July 18, 1989, 101st Cong. 1st Sess. 42. Defendants’ shifting of advertising costs to plaintiff and the class members in this manner makes such practice unfair. In addition, defendants’ conduct was contrary to public policy, as established by the TCPA and Illinois statutory and common law. 43. Defendants should be enjoined from committing similar violations in the future. CLASS ALLEGATIONS 44. Pursuant to Fed.R.Civ.P. 23(a) and (b)(3), plaintiff brings this claim on behalf of a class, consisting of (a) all persons with Illinois fax numbers (b) who, on or after a date three years prior to the filing of this action, (c) were sent faxes by or on behalf of defendant Health Care Equipment Specialty, Inc., promoting its goods or services for sale (d) which did not contain an opt out notice as described in 47 U.S.C. §227. 45. The class is so numerous that joinder of all members is impractical. Plaintiff alleges on information and belief that there are more than 40 members of the class. 46. There are questions of law and fact common to the class that predominate over any questions affecting only individual class members. The predominant common questions include: a. Whether defendants engaged in a pattern of sending unlawful fax advertisements; 8 b. Whether defendants thereby violated the TCPA; c. Whether defendants thereby engaged in unfair acts and practices, in violation of the ICFA. d. Whether defendants thereby converted the property of plaintiff. e. Whether defendants thereby created a private nuisance. f. Whether defendants thereby committed a trespass to chattels. 47. Plaintiff will fairly and adequately protect the interests of the class. Plaintiff has retained counsel experienced in handling class actions and claims involving unlawful business practices. Neither plaintiff nor plaintiff's counsel have any interests which might cause them not to vigorously pursue this action. 48. Plaintiff’s claims are typical of the claims of the class members. All are based on the same factual and legal theories. 49. A class action is the superior method for the fair and efficient adjudication of this controversy. The interest of class members in individually controlling the prosecution of separate claims against defendants is small because it is not economically feasible to bring individual 50. Management of this class action is likely to present significantly fewer difficulties that those presented in many class actions, e.g. for securities fraud. WHEREFORE, plaintiff requests that the Court enter judgment in favor of plaintiff and the class and against defendants for: a. Appropriate damages; b. An injunction against the further transmission of unlawful fax advertising; 9 c. Attorney’s fees, litigation expenses and costs of suit; d. Such other or further relief as the Court deems just and proper. COUNT III – CONVERSION 51. Plaintiff incorporates ¶¶ 1-21. 52. By sending plaintiff and the class members unlawful faxes, defendants converted to their own use ink or toner and paper belonging to plaintiff and the class members. 53. Immediately prior to the sending of the unlawful faxes, plaintiff and the class members owned and had an unqualified and immediate right to the possession of the paper and ink or toner used to print the faxes. 54. By sending the unlawful faxes, defendants appropriated to their own use the paper and ink or toner used to print the faxes and used them in such manner as to make them unusable. Such appropriation was wrongful and without authorization. 55. Defendants knew or should have known that such appropriation of the paper and ink or toner was wrongful and without authorization. 56. Plaintiff and the class members were deprived of the paper and ink or toner, which could no longer be used for any other purpose. Plaintiff and each class member thereby suffered damages as a result of receipt of the unlawful faxes. 57. Defendants should be enjoined from committing similar violations in the future. CLASS ALLEGATIONS 58. Pursuant to Fed.R.Civ.P. 23(a) and (b)(3), plaintiff brings this claim on behalf of a class, consisting of (a) all persons with Illinois fax numbers (b) who, on or after a date five years prior to the filing of this action, (c) were sent faxes by or on behalf of defendant Health Care 10 Equipment Specialty, Inc., promoting its goods or services for sale (d) which did not contain an opt out notice as described in 47 U.S.C. §227. 59. The class is so numerous that joinder of all members is impractical. Plaintiff alleges on information and belief that there are more than 40 members of the class. 60. There are questions of law and fact common to the class that predominate over any questions affecting only individual class members. The predominant common questions include: a. Whether defendants engaged in a pattern of sending unlawful fax advertisements; b. Whether defendants thereby violated the TCPA; c. Whether defendants thereby engaged in unfair acts and practices, in violation of the ICFA. d. Whether defendants thereby converted the property of plaintiff. e. Whether defendants thereby created a private nuisance. f. Whether defendants thereby committed a trespass to chattels. 61. Plaintiff will fairly and adequately protect the interests of the class. Plaintiff has retained counsel experienced in handling class actions and claims involving unlawful business practices. Neither plaintiff nor plaintiff’s counsel have any interests which might cause them not to vigorously pursue this action. 62. Plaintiff’s claims are typical of the claims of the class members. All are based on the same factual and legal theories. 63. A class action is the superior method for the fair and efficient adjudication of this controversy. The interest of class members in individually controlling the prosecution of separate 11 claims against defendants is small because it is not economically feasible to bring individual 64. Management of this class action is likely to present significantly fewer difficulties that those presented in many class actions, e.g. for securities fraud. WHEREFORE, plaintiff requests that the Court enter judgment in favor of plaintiff and the class and against defendants for: a. Appropriate damages; b. An injunction against the further transmission of unlawful fax advertising; c. Costs of suit; d. Such other or further relief as the Court deems just and proper. COUNT IV – PRIVATE NUISANCE 65. Plaintiff incorporates ¶¶ 1-21. 66. Defendants’ sending plaintiff and the class members unlawful faxes was an unreasonable invasion of the property of plaintiff and the class members and constitutes a private nuisance. 67. Congress determined, in enacting the TCPA, that the prohibited conduct was a “nuisance.” Universal Underwriters Ins. Co. v. Lou Fusz Automotive Network, Inc., 401 F.3d 876, 882 (8th Cir. 2005). 68. Defendants acted either intentionally or negligently in creating the nuisance. 69. Plaintiff and each class member suffered damages as a result of receipt of the unlawful faxes. 70. Defendants should be enjoined from continuing its nuisance. 12 CLASS ALLEGATIONS 71. Pursuant to Fed.R.Civ.P. 23(a) and (b)(3), plaintiff brings this claim on behalf of a class, consisting of (a) all persons with Illinois fax numbers, (b) who, on or after a date five years prior to the filing of this action, (c) were sent faxes by or on behalf of defendant Health Care Equipment Specialty, Inc., promoting its goods or services for sale (d) which did not contain an opt out notice as described in 47 U.S.C. §227. 72. The class is so numerous that joinder of all members is impractical. Plaintiff alleges on information and belief that there are more than 40 members of the class. 73. There are questions of law and fact common to the class that predominate over any questions affecting only individual class members. The predominant common questions include: a. Whether defendants engaged in a pattern of sending unlawful fax advertisements; b. Whether defendants thereby violated the TCPA; c. Whether defendants thereby engaged in unfair acts and practices, in violation of the ICFA. d. Whether defendants thereby converted the property of plaintiff. e. Whether defendants thereby created a private nuisance. f. Whether defendants thereby committed a trespass to chattels. 74. Plaintiff will fairly and adequately protect the interests of the class. Plaintiff has retained counsel experienced in handling class actions and claims involving unlawful business practices. Neither plaintiff nor plaintiff’s counsel have any interests which might cause them not to vigorously pursue this action. 13 75. Plaintiff’s claims are typical of the claims of the class members. All are based on the same factual and legal theories. 76. A class action is the superior method for the fair and efficient adjudication of this controversy. The interest of class members in individually controlling the prosecution of separate claims against defendants is small because it is not economically feasible to bring individual 77. Management of this class action is likely to present significantly fewer difficulties that those presented in many class actions, e.g. for securities fraud. WHEREFORE, plaintiff requests that the Court enter judgment in favor of plaintiff and the class and against defendants for: a. Appropriate damages; b. An injunction against the further transmission of unlawful fax advertising; c. Costs of suit; d. Such other or further relief as the Court deems just and proper. COUNT V – TRESPASS TO CHATTELS 78. Plaintiff incorporates ¶¶ 1-21. 79. Plaintiff and the class members were entitled to possession of the equipment they used to receive faxes. 80. Defendants’ sending plaintiff and the class members unlawful faxes interfered with their use of the receiving equipment and constitutes a trespass to such equipment. Chair King v. Houston Cellular, 95cv1066, 1995 WL 1693093 at *2 (S.D. Tex. Nov. 7, 1995) (denying a motion to dismiss with respect to plaintiff's trespass to chattels claim for unlawful faxes), vacated 14 on jurisdictional grounds 131 F.3d 507 (5th Cir. 1997). 81. Defendants acted either intentionally or negligently in engaging in such conduct. 82. Plaintiff and each class member suffered damages as a result of receipt of the unlawful faxes. 83. Defendants should be enjoined from continuing trespasses. CLASS ALLEGATIONS 84. Pursuant to Fed.R.Civ.P. 23(a) and (b)(3), plaintiff brings this claim on behalf of a class, consisting of (a) all persons with Illinois fax numbers (b) who, on or after a date five years prior to the filing of this action, (c) were sent faxes by or on behalf of defendant Health Care Equipment Specialty, Inc., promoting its goods or services for sale (d) which did not contain an opt out notice as described in 47 U.S.C. §227. 85. The class is so numerous that joinder of all members is impractical. Plaintiff alleges on information and belief that there are more than 40 members of the class. 86. There are questions of law and fact common to the class that predominate over any questions affecting only individual class members. The predominant common questions include: a. Whether defendants engaged in a pattern of sending unlawful fax advertisements; b. Whether defendants thereby violated the TCPA; c. Whether defendants thereby engaged in unfair acts and practices, in violation of the ICFA. d. Whether defendants thereby converted the property of plaintiff. e. Whether defendants thereby created a private nuisance. 15 f. Whether defendants thereby committed a trespass to chattels. 87. Plaintiff will fairly and adequately protect the interests of the class. Plaintiff has retained counsel experienced in handling class actions and claims involving unlawful business practices. Neither plaintiff nor plaintiff’s counsel have any interests which might cause them not to vigorously pursue this action. 88. Plaintiff’s claims are typical of the claims of the class members. All are based on the same factual and legal theories. 89. A class action is the superior method for the fair and efficient adjudication of this controversy. The interest of class members in individually controlling the prosecution of separate claims against defendants is small because it is not economically feasible to bring individual 90. Management of this class action is likely to present significantly fewer difficulties that those presented in many class actions, e.g. for securities fraud. WHEREFORE, plaintiff requests that the Court enter judgment in favor of plaintiff and the class and against defendants for: a. Appropriate damages; b. An injunction against the further transmission of unlawful fax advertising; c. Costs of suit; d. Such other or further relief as the Court deems just and proper. 16 /s/ Daniel A. Edelman Daniel A. Edelman Daniel A. Edelman Cathleen M. Combs James O. Latturner Heather A. Kolbus EDELMAN, COMBS, LATTURNER & GOODWIN, LLC 120 S. LaSalle Street, 18th floor Chicago, Illinois 60603 (312) 739-4200 (312) 419-0379 (FAX) 17 NOTICE OF LIEN AND ASSIGNMENT Please be advised that we claim a lien upon any recovery herein for 1/3 or such amount as a court awards. All rights relating to attorney’s fees have been assigned to counsel. /s/ Daniel A. Edelman Daniel A. Edelman Daniel A. Edelman EDELMAN, COMBS, LATTURNER & GOODWIN, LLC 120 S. LaSalle Street, 18th Floor Chicago, Illinois 60603 (312) 739-4200 (312) 419-0379 (FAX) 18

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS __________________________________________ ) RGOI ASC, LTD. d/b/a RIO GRANDE ) ORTHOPAEDIC INSTITUTE ) AMBULATORY SURGERY ) CENTER ) Case No. _____ ) Plaintiff, Individually ) COMPLAINT - and as a Member of ) CLASS ACTION Classes ) ) Sherman Act § 2 ) 15 U.S.C. § 2 ) ) Clayton Act §§ 4(a), 16 v. ) 15 U.S.C. §§ 15(a), 26 ) ) GENERAL ELECTRIC COMPANY, ) JURY TRIAL DEMANDED GE HEALTHCARE INC., a subsidiary of ) GENERAL ELECTRIC COMPANY; ) and DATEX-OHMEDA, INC., a subsidiary of ) GENERAL ELECTRIC COMPANY. ) ) Defendants. ) _________________________________________ ) Table of Contents NATURE OF ACTION............................................................................................................. 1 PARTIES ................................................................................................................................... 3 JURISDICTION AND VENUE ................................................................................................ 3 TRADE AND COMMERCE AFFECTED .............................................................................. 4 RELEVANT MARKETS .......................................................................................................... 4 Relevant Product Market for the Sale of Parts for GE Gas Anesthesia Machines ......................... 4 Relevant Product Market for the Sale of Service Training for GE Gas Anesthesia Machines..................................................................................................................................... 5 Relevant Product Market for Sale of Service for GE Gas Anesthesia Machines ........................... 5 Relevant Geographic Markets ..................................................................................................... 7 MONOPOLY POWER ............................................................................................................. 8 Relevant Market for the Sale of Service for GE Gas Anesthesia Machines .................................. 8 Relevant Product Market for the Sale of Parts for GE Gas Anesthesia Machines ......................... 9 Relevant Product Market for the Sale of Service Training for GE Gas Anesthesia Machines ..... 10 Relevant Market for GE Service ................................................................................................ 10 GE EXCLUSIONARY CONDUCT TO MAINTAIN A SERVICE MONOPOLY .............. 12 Collateral Estoppel .................................................................................................................... 12 Long-Term GE Exclusionary Conduct Contributing to Antitrust Price Injury in the Damage Period Is Actionable .................................................................................................... 12 GE’s Exclusionary Conduct Is Evaluated in Its Entirety Rather Than Piecemeal ....................... 13 GE’s Use of Its Parts Monopoly to Monopolize Service ............................................................ 13 For a Decade and One-Half GE Profitably Sold Parts Directly to Its ISO Service Competitors Allowing National ISO Service Competition ......................................................... 14 i Beginning in 2011 GE Ended Its Direct Parts Sales with the Effect of Eliminating Reliable ISO Parts Access and Substantially Suppressing Its Service Competition .................................................................................................................. 14 GE’s Use of Its Service-Training Monopoly to Monopolize Service .......................................... 15 For Years GE Profitably Sold Service Training to Its ISO Competitors ..................................... 16 Denial of ISO Training on Both Older and Newer Machines ..................................................... 16 GE Conditions Make ISO Training Economically Infeasible ..................................................... 17 INJURY TO COMPETITION ............................................................................................... 18 CLASS ACTION ALLEGATIONS........................................................................................ 19 Class of Direct Purchasers of GE Service .................................................................................. 19 Federal Rule of Civil Procedure 23(a) Prerequisites .................................................................. 19 Federal Rule of Civil Procedure 23(b)(3) Prerequisites .............................................................. 20 Federal Rule of Civil Procedure 23(b)(2) Prerequisites .............................................................. 20 COUNT I (Monopolization - Section 2 of the Sherman Act) .................................................... 21 PRAYER FOR RELIEF ......................................................................................................... 21 JURY DEMAND ..................................................................................................................... 22 ii NATURE OF ACTION 1. Plaintiff RGOI ASC, LTD. d/b/a Rio Grande Orthopedic Institute Ambulatory Surgery Center individually and as a proposed representative of direct purchasers of service for GE gas anesthesia machines will show the Court as follows. 2. Defendants General Electric Company, GE Healthcare, and Datex-Ohmeda d/b/a GE Medical Systems (hereinafter collectively referred to as “GE”) sell service for complex and durable GE gas anesthesia machines primarily to hospitals, clinics, physician groups, and asset management companies (collectively referred to herein as “purchasers” or “hospitals”) GE possesses monopoly power in the markets for parts and service training for GE gas anesthesia machines and uses its monopoly power in the parts and service-training markets to maintain its monopoly in the market for servicing GE gas anesthesia machines, allowing GE to charge supra competitive prices for its servicing of these machines. 3. The GE equipment is unique and the GE parts and GE service training are not compatible with, or reasonably interchangeable with, parts and training associated with anesthesia gas machines manufactured by others. 4. In providing service for these complex GE machines, GE competes with third party service vendors (“independent service organizations” or “ISOs”) in a national relevant market for the sale of such service. To perform service on the GE machines GE technicians and ISOs need reliable, rapid, and cost-effective access to GE parts and GE service training. 5. In the past those ISOs able to gain access to parts and service training have nearly always priced their service substantially below that of GE for comparable service quality. 1 6. For nearly a decade and one-half GE profitably sold GE parts directly to ISOs, as well as GE service training. In 2011, however, GE changed its parts policies under which it profitably sold parts to ISOs to leverage unlawfully its monopoly control over these parts to disadvantage severely ISOs as they seek to provide rapid, cost-effective and efficient service at competitive prices for critical and complex GE gas anesthesia machines. 7. Thereafter in 2014 GE also changed its policies under which it profitably sold service training to ISOs to leverage unlawfully its monopoly control over this training also to disadvantage severely ISOs seeking to provide rapid, cost-effective and efficient service for this critical and complex medical equipment. 8. With these exclusionary parts and service training policies GE has monopolized the relevant market for service of GE gas anesthesia machines. 9. By virtue of the express and detailed findings in a verdict form entered in Red Lion Medical Safety Inc. et al v. General Electric Company, Inc. et al., No. 2:15-cv-00308 (E.D. Tex.) (action brought by 14 ISOs), GE has been found to have monopolized service for a relevant market for service for GE gas anesthesia machines using parts and service training exclusionary practices. Ex. A attached (verdict form); Ex. B (jury instructions). The District Court has denied GE’s post-trial motions seeking to set aside these findings as to unlawful monopolization. Memorandum and Order (Dkt. No. 247, filed March 30, 2018). It has ordered a new trial as to the ISOs’ lost-profit damages. (The latter vary from the class overcharge damages sought here, which are computed as the difference from the estimated pricing purchasers would have paid with competition and the monopoly price actually paid.). 2 10. When this judgment as to violation is entered upon the conclusion of the retrial of damages, GE will be collaterally estopped from contesting here that it has violated the antitrust laws by using its monopolies in the relevant markets for the sale of GE parts and GE service training to acquire and maintain a monopoly in a distinct and separate relevant market for the sale of service for GE gas anesthesia machines to the date of the judgment. 11. As a consequence, direct purchasers of GE service in the proposed Class need only show this Court that they have been materially injured by GE service monopolization in their business or property by paying monopoly pricing to GE and the amount of their actual damages. 12. Should this Court determine in some respect that collateral estoppel does not pertain as to monopolization, Plaintiff would show the Court as follows. PARTIES 13. Plaintiff RGOI ASC, LTD. d/b/a Rio Grande Orthopedic Institute Ambulatory Surgery Center is a Texas corporation primarily providing arthroscopic treatment of knee and shoulder injuries in McAllen, Texas. In its practice it employs GE gas anesthesia machines and has purchased GE service for those machines in the last four years. 14. Defendant General Electric Company is a New York corporation with a principal place of business in Boston, Massachusetts. 15. Defendant GE Healthcare Inc. is a subsidiary of General Electric Company incorporated in the state of Delaware with a principal place of business in Chicago, Illinois. 3 16. Defendant Datex-Ohmeda, Inc. d/b/a GE Medical Systems is a subsidiary of General Electric Company incorporated in the state of Delaware with a principal place of business in Madison, Wisconsin. JURISDICTION AND VENUE 17. This Court has subject matter jurisdiction under 28 U.S.C. § 1337 (commerce and antitrust regulation), Section 2 of the Sherman Act (15 U.S.C. § 2), and Sections 4(a) and 16 of the Clayton Act (15 U.S.C. §§ 15(a) and 26). 18. Venue is proper because GE is headquartered in this judicial district and thus resides herein as provided in 28 U.S.C. § 1391(b) and (c), and as provided in Sections 4 and 12 of the Clayton Act (15 U.S.C. §§ 15 and 22). TRADE AND COMMERCE AFFECTED 19. Defendants are in the business of selling, among other things, the servicing of GE-manufactured gas anesthesia machines. 20. At all times pertinent to this Complaint, Defendants have sold a substantial amount of servicing of GE-manufactured gas anesthesia machines in interstate commerce in numerous states around the United States. 21. Defendant’s conduct has affected a substantial amount of interstate trade and commerce in the United States with respect to the sale of servicing of GE manufactured gas anesthesia machines. RELEVANT MARKETS Relevant Product Market for the Sale of Parts for GE Anesthesia Gas Machines 4 22. This market encompasses the sale of parts, service manuals, and other documentation (collectively “parts”) necessary to service GE gas anesthesia machines. The market includes the sellers of parts fully compatible with GE gas anesthesia machines to which ISOs and others can reasonably turn for alternative supplies to service these GE machines. 23. Because the parts needed to service the GE machines are not reasonably interchangeable with those used with other brands of gas anesthesia machines, the relevant parts market is composed only of sales of parts for use in the GE machines. 24. By virtue of the express and detailed findings by the jury in Red Lion Medical Safety Inc., when judgment is entered GE will be collaterally estopped from contesting here that there exists a distinct parts relevant product market as defined. This jury heard and decided (1) identical market definition issues; (2) and this definition was necessary to its decision. Ex. A at 2 ¶ 1.2; Ex. B at 23 ¶¶ 1, 3. Relevant Product Market for the Sale of Service Training for GE Gas Anesthesia Machines 25. This market encompasses the sale of training necessary for the service of GE gas anesthesia machines. The market includes the sellers to which GE and ISO technicians and others can reasonably turn for alternative supply of training necessary to service these GE machines. 26. Because training for this service is not reasonably interchangeable with training used for service of other brands of gas anesthesia machines, the relevant service-training market is composed of sales of service training for the service of GE gas anesthesia machines only. 27. By virtue of the express and detailed findings by the jury in Red Lion Medical Safety Inc., when judgment is entered GE will be collaterally estopped from contesting here that there exists a distinct relevant market for GE service training as defined. This jury heard and 5 decided (1) identical market definition issues; (2) and this definition was necessary to its decision. Ex. A at 2 ¶ 1.2; Ex. B at 23 ¶¶ 1,3. Relevant Product Market for Sale of Service for GE Gas Anesthesia Machines 28. This market encompasses the sale of service for GE gas anesthesia machines. The market includes the sale by GE and ISOs providing service for these machines to which hospitals and other operators of these machines may reasonably turn for their service. The market does not include service that hospitals and other operators provide on their own machines because they do not compete with GE and ISO technicians to provide service to other operators. A large majority of operators do not employ in-house technicians servicing their GE machines. 29. The fact that a hospital may service its own GE anesthesia machine does not act as a price constraint on external servicers such as GE and ISOs. A ten percent increase in price of an anesthesia servicing contract would not be sufficient for a hospital to integrate vertically that contract, suggesting that in-house technician service is not interchangeable with ISO, GE, or asset- manager service. 30. Hospitals are the largest purchasers of service for GE anesthesia gas machines. Service is also purchased by out-patient surgery centers, individual physicians, and physician groups. Hospitals generally may own anywhere from two to twenty-five GE machines. An average-size hospital, one with approximately 400 beds, may own eight to ten machines. 31. Gas anesthesia machines are very durable and, with proper servicing, can have a useful life of ten to fifteen years or more. They require regular service. 32. To provide full, competitive service for all these GE machines GE and ISOs must have immediate access to a near-complete inventory of GE parts and employ trained technicians 6 skilled in the service of this complex equipment. An ISO without reliable GE parts access is unable to respond adequately, rapidly, and reliably to many types of service problems. Its service customers require such response. 33. Sales of service for GE gas anesthesia machines are in a relevant market distinct from the relevant markets for the sale of GE parts and GE service training. There is sufficient operator service demand such that it is efficient for GE to provide service separately from its sales of GE parts and GE service training. Some operators buy GE service without GE parts because some service does not require parts, and hospitals and other operators which maintain their GE machines buy parts and service training without service. 34. The proper service market definition for GE gas anesthesia machines necessarily excludes technicians who are only capable of servicing non-GE brands. 35. GE does not sell a complete system comprising the sale of the GE machine, lifetime service, and lifetime parts for a single price. 36. By virtue of the express and detailed findings by the jury in Red Lion Medical Safety Inc., when judgment is entered, GE will be collaterally estopped from contesting here the existence of a distinct and separate relevant market for service of GE anesthesia gas machines as defined. This jury heard and decided (1) identical market definition issues; (2) and this definition was necessary to its decision. Ex. A at 2 ¶ 1.2; Ex. B at 23 ¶¶ 1,3. Relevant Geographic Markets 37. Along with asset managers and numerous ISOs, GE services a national market. Customers can and do turn to providers nationwide for timely service, at least because ISOs and 7 GE are able to provide service far from their home offices by stationing technicians around the country at minimal cost. 38. Thus, the geographic relevant market for service of GE gas anesthesia machines is nationwide, as customers turn to a national market when seeking service, and both the ISOs and GE are able to provide those services nationwide. 39. The relevant geographic markets for sales of GE parts and GE service training also encompass the United States. 40. By virtue of the express and detailed findings by the jury in Red Lion Medical Safety Inc., when judgment is entered GE will be collaterally estopped from contesting here the existence of these relevant geographic markets as defined. This jury heard and decided (1) identical market definition issues; (2) and this definition was necessary to its decision. Ex. A at 1 ¶ 1.1; Ex. B at 12-13. MONOPOLY POWER Relevant Market for the Sale of Service for GE Gas Anesthesia Machines 41. There is direct and circumstantial evidence of GE monopoly power in the relevant market for service of GE gas anesthesia machines. 42. There is direct evidence of GE’s ability to control prices or exclude service competition by virtue of its control of two essential inputs for GE anesthesia-machine service -- GE parts and training. GE is the only source for GE parts, and alternative sources for parts are unreliable and insufficient to provide service. Training is necessary for competition in the market. GE directly controls access to training and that GE is the only source for training. Technicians can work on GE anesthesia machines only if they use GE parts and have been GE- 8 trained. 43. There is also circumstantial evidence as well that GE possesses monopoly power, that is, GE controls 70 percent of the service product market protected by high barriers to entry. 44. Even though GE’s service pricing is above-competitive levels due to its exclusionary practices, the customer’s cost of switching anesthesia machines is high and the machine operators will tolerate some level of above-competitive pricing and price increases before changing equipment brands to obtain better service pricing. 45. By virtue of the express and detailed findings by the jury in Red Lion Medical Safety Inc., when judgment is entered GE will be collaterally estopped from contesting here the existence of its monopoly power in the relevant market for the sale of service for GE anesthesia gas machines as defined. This jury heard and decided (1) identical monopoly power issues; (2) and this finding of monopoly power was necessary to its decision. Ex. A at 2 ¶ 2.1; Ex. B at 23 Relevant Product Market for the Sale of Parts For GE Gas Anesthesia Machines 46. GE also has monopoly power in each of the distinct relevant markets for (a) the sale of GE parts essential for the service of GE anesthesia gas machines; and (b) the sale of service training essential for the service of these machines. 47. GE has the power to control prices or exclude competition in the parts relevant market. Through its manufacture of the parts, its exclusive dealing arrangements with its parts suppliers, and its agreements with self-maintaining machine operators (that they will not re-sell GE parts to ISOs). GE controls nearly 100% of the supply of GE parts in the relevant market with no readily available substitutes for GE parts for use with GE anesthesia gas machines. 9 48. There are multiple barriers to entry in the GE parts relevant market facing actual or potential parts competitors, including substantial economies of scale and scope enjoyed only by GE; GE exclusive dealing arrangements with its parts suppliers; and GE patents on some GE parts. GE maintenance manuals, technical service bulletins, technical service procedures and other documentation are protected under the federal copyright laws and GE does not allow them to be reproduced. 49. By virtue of the express and detailed findings by the jury in Red Lion Medical Safety Inc., when judgment is entered GE will be collaterally estopped from contesting here the existence of its monopoly power in the relevant market for the sale of parts for GE anesthesia gas machines as defined. This jury heard and decided (1) identical monopoly power issues; (2) and this finding of monopoly power was necessary to its decision. Ex. A at 2 ¶ 2.1; Ex. B at 23 ¶¶ 1,3,4,5. Relevant Product Market for the Sale of Service Training for GE Gas Anesthesia Machines 50. GE has the power to control prices or exclude competition in the service-training relevant market. It controls nearly 100% of sales in this relevant market with no readily available substitutes for training on the full range of GE anesthesia machines. 51. Barriers to entry face actual or potential GE service-training competitors. As the manufacturer and service provider for its gas anesthesia machines, GE enjoys substantial learning by doing not enjoyed by its actual or potential competitors which would be prohibitively costly for them to replicate. Further GE maintenance manuals, technical service bulletins, technical service procedures and other documentation cannot be reproduced without violating federal copyright law. 10 52. By virtue of the express and detailed findings by the jury in Red Lion Medical Safety Inc., when judgment is entered GE will be collaterally estopped from contesting here the existence of its monopoly power in the relevant market for the sale of service training for GE anesthesia gas machines as defined. This jury heard and decided (1) identical monopoly power issues; (2) and a finding of monopoly power was necessary to its decision. Ex. A at 2 ¶ 2.1; Ex. B at 23 ¶¶ 1,3,4,5. Relevant Market for GE Service 53. GE has the power to control prices or exclude competition in the relevant market for service of GE gas anesthesia machines. It has leveraged its monopoly control over the relevant markets for GE parts and GE service training to control price or exclude competition in the relevant market for service of GE gas anesthesia machines. It has acquired and maintained between 60% and 70% shares in this highly-concentrated market which are protected by high barriers to entry, including GE’s control over GE parts and GE service training essential for the service of its machines. 54. GE’s nationwide and persistent exclusion of service competition has suppressed the presence and capacity of its ISO competitors nationwide such that they cannot take sufficient market share from GE to make its monopoly service pricing unprofitable and bid this pricing down to competitive levels. 55. Nor does the loss of prospective machine sales by GE due to its aftermarket monopoly service pricing prevent GE’s monopoly service pricing. Its machine purchasers are not able to engage in effective, accurate, and long-term “life cycle” pricing with which they are able to determine the total cost of operating a machine (including monopoly service and parts pricing) 11 over its lifetime due to very substantial information costs. This lifetime may encompass ten to fifteen years a machine operates. GE does not sell for one price the cost of the machine, GE parts and GE service. 56. Nor can machine operators reasonably switch to alternative brands of gas anesthesia machines once they purchase a GE machine to prevent the cost of GE monopoly service pricing. GE machines are durable and require a substantial financial investment of between $35,000 to $90,000. Thus, for the most part, it is not feasible for an operator to forgo much of this investment to switch to another brand in response to GE service monopoly pricing with the effect of disciplining and preventing this monopoly pricing. 57. Further, direct evidence of GE monopoly power over the sale of GE service is its persistent ability to set its service pricing substantially above the service pricing of its ISO competitors for comparable service (where ISOs have been able to obtain the necessary parts and service training typically for older machines). 58. By virtue of the express and detailed findings by the jury in Red Lion Medical Safety Inc., when judgment is entered GE will be collaterally estopped from contesting here the existence of its monopoly power in the relevant market for the sale of service for GE anesthesia gas machines as defined. This jury heard and decided (1) identical service monopoly power issues; (2) and a finding of this monopoly power was necessary to its decision. Ex. A at 2 ¶ 2.1; Ex. B at 23 ¶¶ 1,3,4, 5 GE EXCLUSIONARY CONDUCT TO MAINTAIN A SERVICE MONOPOLY Collateral Estoppel 59. By virtue of the express findings by the jury in Red Lion Medical Safety Inc., 12 when a violation judgment is entered, GE will be collaterally estopped from contesting here that it has used its monopolies over the relevant markets for GE parts and GE service training to acquire and maintain a monopoly over the relevant market for sale of service for its anesthesia gas machines. The jury heard and decided (1) identical monopoly violation issues presented here; (2) and a finding of this violation was necessary to its decision. Ex. A at 3 ¶¶ 2.2,2.3; Ex. B at 23 ¶¶ 4,5. In the alternative, should estoppel be found not to pertain, Plaintiff would show the Court as follows. Long-Term GE Exclusionary Conduct Contributing to Antitrust Price Injury in the Damage Period Is Actionable 60. All GE exclusionary acts before and after the beginning of the four-year damage period which materially contribute in combination to GE monopoly power, monopoly pricing in the relevant service market, and antitrust price injury in the damage period are all actionable. Much of GE’s exclusionary conduct continues to the present and occurs in the damage period. Nonetheless, as a matter of law, exclusionary acts occurring before the beginning of the damage period in 2014 are also actionable to the extent they contribute to antitrust price injury in the damage period. As long as GE continues to use monopoly power it has gained unlawfully over time to overcharge purchasers of its service, it has no claim on the repose that a statute of limitations is intended to provide. The taint of anticompetitive origin does not dissipate after four years if the exclusionary conduct continues to cause antitrust price injury in the damage period. GE’s Exclusionary Conduct Is Evaluated in Its Entirety Rather Than Piecemeal 61. Plaintiff need not demonstrate how each of GE’s several exclusionary acts leveraging its parts and service-training monopolies have alone materially contributed to the 13 acquisition and maintenance of its monopoly power in the relevant service market. As a matter of law, the combined effect of GE’s exclusionary practices must be evaluated to determine whether in combination they have materially contributed to monopoly power and above- competition pricing for its service. Each exclusionary act alone need not constitute monopolization of the relevant service market. Further, Plaintiff need not demonstrate how much each exclusionary act alone has contributed to the level of GE monopoly pricing. GE’s Use of Its Parts Monopoly to Monopolize Service 62. While GE’s exclusionary conduct must be viewed as a whole, each of its exclusionary practices even when viewed in isolation is anticompetitive. 63. Timely access to GE parts is essential for ISOs to compete fully and vigorously for service of GE gas anesthesia machines. GE has used its monopoly power in the parts market to refuse to sell parts to ISOs, thus denying them access to inputs essential to compete in the service relevant market. 64. This has severely disadvantaged its ISO competition. Timely and reliable ISO access to GE’s parts is essential if ISOs are to be full and vigorous competitors for GE service technicians. ISOs’ customers demand that they be able to obtain repair parts rapidly at reasonable cost to enable rapid and efficient repair of critical medical equipment. 65. A monopolist in one market, here the GE parts relevant market, may not leverage its control over access to these parts to monopolize an adjacent market, here the service relevant market, by refusing to deal. Further, because GE has a history of selling parts profitably and directly to ISOs for nearly a decade and one half, it may not thereafter lawfully sacrifice those profits effectively to refuse to deal to gain a competitive advantage and obtain monopoly service 14 66. For a Decade and One-Half GE Profitably Sold Parts Directly to Its ISO Service Competitors, Allowing National ISO Service Competition. Between 1997 and 2011 Ohmeda/GE implemented a policy under which ISOs with technicians certified by Ohmeda/GE training schools could buy parts directly from Ohmeda/GE. (Ohmeda was purchased by GE in 2003). Thus for nearly a decade and one-half Ohmeda/GE made substantial profits from its direct sales to ISOs of parts. 67. Beginning in 2011 GE Ended Its Direct Parts Sales with the Effect of Eliminating Reliable ISO Parts Access and Substantially Suppressing Service Competition. In 2011 GE began to refuse to sell parts directly to ISOs. It did so not because the sales had become unprofitable. It profitably continues to provide parts directly to (a) GE service technicians competing with the ISOs; and (b) hospitals and others maintaining their own machines; including its government customers. 68. In 2011 GE appointed an exclusive distributor for its parts, Alpha Source. Inc., and announced that ISOs could only buy its parts indirectly through this distributor. As opportunistically and anticompetitively implemented by GE and Alpha Source, this new distribution has inflicted seven competitive disadvantages on ISO service technicians substantially impeding their attempt to compete with unencumbered GE technicians. 69. GE’s appointment of Alpha Source was a scheme to stifle a competitive threat to GE’s competitive position. Prior to 2011 ISO were achieving double-digit growth. GE’s appointment of a parts distributor to supply its competitors was in response to this threat. GE internally states that the Alpha Source appointment would “dis(enable)” competitors by slowing 15 down competitor fulfillment capability and adding to their costs with the end result that ISO customers would return to GE. A GE executive found that the parts policy had this very effect. 70. GE sacrificed profits in pursuing this parts policy. Internally it found that its reduced profits from the parts policy were “as hoped for the most part -- flat with decline.” 71. Not only did GE’s appointment of Alpha Source “disenable” competitors by slowing down their fulfillment capabilities and increasing their costs, GE also admits that the parts policy harms customers, and that it has sacrificed short-term profits on the sale of parts for an anticompetitive reason. Internally it confirmed it had “hoped for” and achieved reduced profits on the sale of its GE parts as a result of the parts policy. 72. An ISO’s ability to pick up stray parts in some unreliable manner, or to acquire parts for older machines, does not translate to fully-vigorous and viable competition in the market for service of GE gas anesthesia machines. GE’s Use of Its Service-Training Monopoly to Monopolize Service 73. Three years after it began its exclusionary parts monopoly placing ISO technicians at a severe competitive disadvantage, GE dropped the other exclusionary shoe. It began using its monopoly over service-training to the same end, thereby increasing the potency of its service exclusion. 74. By virtue of its monopoly in the relevant market for service-training GE has control over access to unique GE knowledge and knowhow as to the operation and service of its machines. GE has leveraged its training monopoly to exclude ISOs from the relevant service market. 75. ISOs must have this training if they are to compete to provide a full range of 16 service on both older and newer GE machines; and ISOs have in the past compensated GE adequately and profitably for such training when available. GE has denied the ISOs this essential input they need to compete. 76. For Years GE Profitably Sold Service Training to Its ISO Competitors. Except for a period of four months in late 2006 and early 2007 (when GE implemented – and then rolled back – prohibitive, discriminatory price increases for ISO training) Ohmeda/GE between 1997 and 2014 dealt profitably with ISOs to provide their technicians service training comparable to that provided to its own technicians. 77. Denial of ISO Training. GE closed its training facility in 2013 and did not train ISOs for nearly a year, Then, reversing its profitable course of dealing with ISOs as to training on all GE machines, GE informed them that only the Jupiter, Florida GE training facility, which largely provides training only on GE’s older machines, would be open for ISO enrollment. 78. Nonetheless, it has effectively denied ISO access here as well. It takes the position that at Jupiter “scheduling, frequency, and location of courses will remain at GE Healthcare discretion” and has used this discretion to curtail sharply, or eliminate for periods of time, effective ISO training access. 79. Frequently ISOs have been told that Jupiter-scheduled courses of interest have been canceled or overbooked and, hence, unavailable. 80. GE also effectively denies training access for its newer, more technically- sophisticated GE machines. ISOs have made repeated requests to attend the relevant training schools for three newer GE machines (the Aespire, the Avance, and the Aisys). They have been denied this access for the most part because this training is largely done at GE’s Waukesha, 17 Wisconsin location which has been made off limits for ISO training. 81. GE Conditions Make ISO Training Economically Infeasible. GE also imposes training conditions further placing an ISO at a substantial competitive disadvantage. It compels an ISO to disclose to GE its service customers using the machines for which training is sought. Thus, GE is effectively demanding highly-confidential and sensitive customer lists as a condition of ISO training. 82. Further, GE demands a verification from an ISO’s customer which has the effect, in many instances, of preventing training access. For each training class desired by an ISO it has to present a customer certification to the effect: “[y]our signature below verifies that the ISO individual seeking to register for a GE Healthcare clinical systems technical training class performs services on GE Healthcare equipment that is the subject of the requested class and does so exclusively at your site/network of sites.” (emphasis in the original). Since the ISO customer often is aware that the technician will work on similar machines for other customers, it cannot provide in good faith the certification and this condition often prevents access. No similar certification is required from a GE technician’s customer to obtain comparable training. The customer endorsement policy was one final step in GE’s scheme to “phase-out” third party training. 83. Further, the requested verification also apparently disallows remote diagnosis and service by the ISO technician, whereas the competing GE technician can provide this service, which often allows more efficient and rapid diagnosis and service. The earlier the GE technician’s diagnosis the earlier the necessary parts and software can be acquired from GE, thereby deepening the ISO’s competitive problem of lack of reliable parts access. 18 84. In pursuit of its exclusionary training policies GE has sacrificed profits. It typically earns a 70% profit margin on training sales to ISOs, and that numerous ISO have applied for training and were rejected. GE admits that it was “giving up the money it could be making by training as many third parties as it … possibly could[.]” INJURY TO COMPETITION 85. Before GE’s implementation of its exclusionary parts and service training policies ISOs, the low-cost providers in the market, were growing by double-digits. Thereafter they were severely hampered competitively by the GE policies, and the ISOs exclusion from the market has harmed competition. 86. As a consequence of GE’s exclusionary parts and service training policies, its ISO competitors have been prevented from obtaining a sufficient presence and capacity in the national service market to enable them to bid down GE’s monopoly service pricing charged to its service customers in the proposed Class to competitive levels by taking service market share from GE sufficient to make its pricing unprofitable. 87. The harm to competition due to GE parts and service training policies hurts its own service customers. The GE policies have led to antitrust price injury inflicted on these customers by raising and maintaining prices to above-competitive levels, causing deterioration in service quality, and limiting customer choice as to service. CLASS ACTION ALLEGATIONS 19 Class of Direct Purchasers of GE Service Federal Rule of Civil Procedure 23(a) Prerequisites 88. Plaintiff (“Class Representative”) is a representative of a Class of United States direct purchasers from GE of service for GE anesthesia gas machines on or after December 21, 2014 to the entry of judgment in Red Lion Medical Safety Inc. et al v. General Electric Company, Inc. et al., No. 2:15-cv-00308 (E.D. Tex..) “Purchasers” include without limitation hospitals, hospital systems, clinics, physician groups, and asset management companies. 89. Prosecution of the claims of the Class as a class action is appropriate because the prerequisites of Rule 23(a) of the Federal Rules of Civil Procedure are met: (a) The number of persons in the Class is in the thousands and the members of the Class are therefore so numerous that joinder of all members of the Class is impracticable. Joinder also is impracticable because of the geographic diversity of the members of the Class, the need to expedite judicial relief, and the Class Representative’s lack of knowledge of the identity and addresses of all members of the Class. (b) There are numerous questions of law and fact which are common to the members of the Class. These include, but are not limited to, common issues as to (1) the existence of collateral estoppel; (2) whether there has been service monopolization; (3) the existence of distinct and separate GE parts, GE service-training, and service relevant markets; and (4) whether GE’s monopolization has caused antitrust price injury to be inflicted on purchasers of GE service in the Class. In addition, there are common issues as to the nature and extent of the injunctive and monetary relief available to the members of the Class. 90. The claims of the Class Representative are typical of the claims of the members of 20 the Class and fairly encompass the claims of the members of the Class. The Class Representative and the members of the Class are similarly or identically harmed by the same systematic and pervasive concerted action and monopoly service pricing. 91. The Class Representative and its counsel will fairly and adequately protect the interests of the members of the Class. There are no material conflicts between the claims of the Class Representative and the members of the Class that would make class certification inappropriate. Counsel for the Class will vigorously assert the claims of the Class Representative and the other members of the Class. Federal Rule of Civil Procedure 23(b)(3) Prerequisites 92. In addition, the prosecution of the claims of the Class as a class action pursuant to Rule 23(b)(3) is appropriate because: (a) Questions of law or fact common to the members of the Class predominate over any questions affecting only its individual members; and (b) A class action is superior to other methods for the fair and efficient resolution of the controversy. Federal Rule of Civil Procedure 23(b)(2) Prerequisites 93. The prosecution of the claims of the Class as a class action pursuant to Rule 23(b)(2) is appropriate because GE has acted, or refused to act, on grounds generally applicable to the Class, thereby making appropriate final injunctive relief, or corresponding declaratory relief, for the Class as a whole. 21 COUNT I Monopolization (Section 2 of the Sherman Act) 94. All foregoing paragraphs incorporated herein by reference. 95. GE has monopolized the relevant market for sale of service for GE gas anesthesia machines as alleged. 96. It has used its monopolies over the relevant market for sale of parts for GE gas anesthesia machines and for the sale of service training for these machines to acquire and maintain monopoly power and monopoly pricing in the relevant service market. 97. GE’s exclusionary conduct has been a material cause of substantial price injury and actual damages to members of the proposed Class of direct purchasers of GE service and has denied them competitive choice. 98. GE’s conduct is unlawful under Section 2 of the Sherman Act, 15 U.S.C. § 2. PRAYER FOR RELIEF WHEREFORE, Plaintiff individually and as a member of the proposed Class alleged prays that: A. This Court declare that Defendants’ conduct constitutes a violation of the Sherman Act, 15 U.S.C. § 2 allowing treble damage relief to members of the proposed Class. B. This Court permanently enjoin Defendants from continuing the practices which in combinations are found unlawful under Section 16 of the Clayton Act, 15 U.S.C. § 26. C. Plaintiff recover reasonable attorneys’ fees and costs as allowed by law; 22 D. Plaintiff recover pre-judgment and post-judgment interest at the highest rate allowed by law; and E. Plaintiff be granted such other and further relief as the Court deems just and equitable. JURY DEMAND Plaintiff requests a trial by jury in this matter. Dated: December 21, 2018 Respectfully submitted, Whatley Kallas LLP By: /s/ Patrick J. Sheehan Patrick J. Sheehan (BBO #639320) Whatley Kallas, LLP 60 State Street, 7th Floor Boston, MA 02109 Telephone: (617) 573-5118 Facsimile: (800) 922-4851 Email: [email protected] Joe R. Whatley, Jr. (pro hac vice petition forthcoming) Edith M. Kallas (pro hac vice petition forthcoming) 1180 Avenue of the Americas, 20th Floor New York, NY 10036 Telephone: (212) 447-7060 Facsimile: (800) 922-4851 [email protected] [email protected] 23 Henry C. Quillen (pro hac vice petition forthcoming) 159 Middle St., Suite 2C Portsmouth, NH 03801 Telephone: (603) 294-1591 Facsimile: (800) 922-4851 [email protected] Weitz Morgan, PLLC Mark A. Weitz (pro hac vice petition forthcoming) Kristi Morgan Aronica (pro hac vice petition forthcoming) 100 Congress Avenue Suite 2000 Austin, Texas 78701 Telephone: (512) 370-5211 [email protected] Berry Law PLLC R. Stephen Berry (pro hac vice petition forthcoming) 1717 Pennsylvania Avenue, N.W. Suite 850 Washington, D.C. 20006 Telephone: (202) 296-3020 Facsimile: (202) 296-3038 [email protected] Attorneys for Plaintiff 24

antitrust

QVKn_ogBF5pVm5zYmhvQ

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION CASE NO. JUDGE PLAINTIFF’S COMPLAINT (Jury Demand Endorsed Herein) CIERA CONNER 1122 Park Avenue SW Canton, OH 44706 on behalf of herself and all others similarly situated, Plaintiff, vs. Defendant. TRUBRIDGE, INC. c/o Statutory Agent Corporation Service Company 50 West Broad Street, Suite 1330 Columbus, OH 43215 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Now comes Plaintiff Ciera Conner, by and through undersigned counsel, and for her Complaint against TruBridge, Inc. (“Defendant” or “TruBridge”), states and alleges the following: INTRODUCTION 1. This is a “collective action” instituted by Plaintiff as a result of Defendant’s practices and policies of not paying its non-exempt employees, including Plaintiff and other similarly situated employees, for all hours worked, including overtime compensation in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219, as well as a “class action” pursuant to Fed. R. Civ. P. 23 to remedy violations of the Ohio Minimum Fair Wage Standards Act (“OMFWSA”), R.C. § 4111.03. JURISDICTION AND VENUE 2. The Court has jurisdiction over Plaintiff’s FLSA claims pursuant to 28 U.S.C. § 1331 and 29 U.S.C. § 216(b). 3. The Court has supplemental jurisdiction over Plaintiff’s OMFWSA claims pursuant to 28 U.S.C. § 1367 because the claims are so related to the FLSA claims as to form part of the same case or controversy. 4. Venue is proper pursuant to 28 U.S.C. § 1391(b) because Defendant conducts business throughout this District and Division and because a substantial part of the events and omissions giving rise to the claims occurred in this District and Division. PARTIES 5. At all times relevant herein, Plaintiff was a citizen of the United States and a resident of Stark County, Ohio. 6. At all times relevant herein, Plaintiff was an employee within the meaning of 29 U.S.C. § 203(e) and R.C. § 4111.03(D)(3). 7. At all times relevant herein, Defendant was a for profit corporation, organized and existing under the laws of the State of Ohio. 8. At all times relevant herein, Defendant was an employer within the meaning of 29 U.S.C. § 203(d) and R.C. § 4111.03(D)(2). 9. At times relevant herein, Defendant was an enterprise within the meaning of 29 U.S.C. § 203(r). 10. At all times relevant herein, Defendant was an enterprise engaged in commerce or in the production of goods for commerce within the meaning of 29 U.S.C. § 203(s)(1). 11. At all times relevant herein, Plaintiff was an employee engaged in commerce or in the production of goods for commerce within the meaning of 29 U.S.C. §§ 206-207. 2 12. Written consents to join this action as to Count One, as and when executed by other individual plaintiffs, will be filed pursuant to 29 U.S.C. § 216(b). FACTUAL ALLEGATIONS 13. Defendant offers insurance services to its customers. 14. Defendant employed Plaintiff between September 2018 and December 2020 as a health insurance sales agent at its North Canton call center. 15. Other similarly situated employees were employed as sales agents at Defendant’s North Canton call center. 16. Defendant classified Plaintiff and other similarly situated employees as non-exempt employees. 17. Defendant paid Plaintiff and other similarly situated employees on an hourly basis. 18. Defendant paid Plaintiff and other similarly situated employees monthly bonuses. 19. Plaintiff and other similarly situated employees frequently worked over 40 hours per week. 20. Plaintiff worked on average over 40 hours each week. Failure to Pay For Time Spent Starting and Logging Into Computer Systems, Applications, and Phone System) 21. Plaintiff and other similarly situated employees were required by Defendant to perform unpaid work before clocking in each day, including, but not limited to, starting, booting up, and logging into Defendant’s computer systems, numerous software applications, and phone systems. Booting up and logging into the computer systems and numerous software applications required entering unique and frequently changing passwords for each of the numerous programs. 22. By common policy and practice, Plaintiff and other similarly-situated employees were required to have their computers booted up and have several applications running before the 3 start of their shifts so that they could take their first call promptly upon commencing work at their scheduled start times. 23. Defendant arbitrarily failed to count this work performed by Plaintiff and other similarly situated employees as “hours worked.” 24. Plaintiff and other similarly situated employees performed this unpaid work every workday, and it constituted a part of their fixed and regular working time. 25. Plaintiff estimates that they spent approximately 10 to 20 minutes before their shifts start times clocking in each day, including but not limited to starting and logging into Defendant’s computer systems, numerous software applications, and phone systems. 26. This unpaid work performed by Plaintiff and other similarly situated employees was practically ascertainable to Defendant. 27. There was no practical administrative difficulty of recording this unpaid work of Plaintiff and other similarly situated employees. It could have been precisely recorded for payroll purposes simply by allowing them to clock in before they began booting up Defendant’s computer systems, applications, and phone systems. 28. This unpaid work performed by Plaintiff and other similarly situated employees constituted a part of their principal activities, was required by Defendant, and was performed for Defendant’s benefit. 29. Starting and logging into Defendant’s computer systems, numerous software applications, and phone systems is an intrinsic element of their job duties. Plaintiff and other similarly situated employees cannot dispense with these tasks if they are to be able to perform their 30. Moreover, this unpaid work was an integral and indispensable part of other 4 principle activities performed by Plaintiff and other similarly situated employees. They could not perform their work without booting up Defendant’s computer systems, applications, and phone systems. 31. Defendant knowingly and willfully failed to pay Plaintiff and other similarly situated inbound sales representatives for starting and logging into Defendant’s computer systems, numerous software applications, and phone systems, during which they performed work that managers and/or other agents and/or representatives observed. (Failure to Pay Overtime Compensation) 32. As a result of Plaintiff and other similarly situated employees not being paid for all hours worked, Plaintiff and other similarly situated employees were not paid overtime compensation for all of the hours they worked over 40 each workweek. 33. Defendant knowingly and willfully engaged in the above-mentioned violations of the FLSA. (Failure to Keep Accurate Records) 34. Defendant failed to make, keep and preserve records of the unpaid work performed by Plaintiff and other similarly situated employees before clocking in each day. 35. The amount of time Plaintiff and other similarly situated employees spent on their required and unpaid work before clocking in amounted to approximately 10 to 20 minutes when Defendant’s computer systems were working properly, or longer when Defendant’s computer systems were slow or not working. COLLECTIVE ACTION ALLEGATIONS 36. Plaintiff brings Count One of this action on her own behalf pursuant to 29 U.S.C. § 216(b), and on behalf of all other persons similarly situated who have been, are being, or will be 5 adversely affected by Defendant’s unlawful conduct. 37. The class which Plaintiff seeks to represent and for whom Plaintiff seeks the right to send “opt-in” notices for purposes of the collective action, and of which Plaintiff herself is a member, is composed of and defined as follows: All former and current call center employees employed by TruBridge, Inc. at any time between March 10, 2018 and the present. 38. Plaintiff is unable to state at this time the exact size of the potential class, but upon information and belief avers that it consists of several hundred persons. 39. This action is maintainable as an “opt-in” collective action pursuant to 29 U.S.C. § 216(b) as to claims for unpaid wages, overtime compensation, liquidated damages, attorneys’ fees and costs under the FLSA. In addition to Plaintiff, numerous current and former employees are similarly situated with regard to their wages and claims for unpaid wages and damages. Plaintiff is representative of those other employees and are acting on behalf of their interests, as well as her own, in bringing this action. 40. These similarly situated employees are known to Defendant and are readily identifiable through Defendant’s business and payroll records. These individuals may readily be notified of this action, and allowed to opt in pursuant to 29 U.S.C. § 216(b), for the purpose of collectively adjudicating their claims for unpaid wages, overtime compensation, liquidated damages, attorneys’ fees and costs under the FLSA. CLASS ACTION ALLEGATIONS 41. Plaintiff brings Count Two of this action pursuant to Fed. R. Civ. P. 23(a) and (b)(3) on behalf of herself and all other members of the class (“the Ohio Class”) defined as: All former and current call center employees employed by TruBridge, Inc. at any time between March 10, 2018 and the present. 6 42. The Ohio Class is so numerous that joinder of all class members is impracticable. Plaintiff is unable to state at this time the exact size of the potential Ohio Class, but upon information and belief, avers that it consists of at least one thousand persons. 43. There are questions of law or fact common to the Ohio Class, including but not limited to the following: (a) whether Defendant failed to pay overtime compensation to its manufacturing employees for hours worked in excess of 40 each workweek; and (b) what amount of monetary relief will compensate Plaintiff and other members of the class for Defendant’s violation of R.C. § 4111.03 and § 4111.10. 44. The claims of the named Plaintiff are typical of the claims of other members of the Ohio Class. Named Plaintiff’s claims arise out of the same uniform course of conduct by Defendant, and are based on the same legal theories, as the claims of the other Ohio Class members. 45. Named Plaintiff will fairly and adequately protect the interests of the Ohio Class. Her interests are not antagonistic to, but rather are in unison with, the interests of the other Ohio Class members. The named Plaintiff’s counsel has broad experience in handling class action wage-and-hour litigation, and is fully qualified to prosecute the claims of the Ohio Class in this 46. The questions of law or fact that are common to the Ohio Class predominate over any questions affecting only individual members. The primary questions that will determine Defendant’s liability to the Ohio Class, listed above, are common to the class as a whole, and predominate over any questions affecting only individual class members. 7 47. A class action is superior to other available methods for the fair and efficient adjudication of this controversy. Requiring Ohio Class members to pursue their claims individually would entail a host of separate suits, with concomitant duplication of costs, attorneys’ fees, and demands on court resources. Many Ohio Class members’ claims are sufficiently small that they would be reluctant to incur the substantial cost, expense, and risk of pursuing their claims individually. Certification of this case pursuant to Fed. R. Civ. P. 23 will enable the issues to be adjudicated for all class members with the efficiencies of class litigation. COUNT ONE (Fair Labor Standards Act Violations) 48. Plaintiff incorporates by reference the foregoing allegations as if fully rewritten herein. 49. Defendant’s practice and policy of not paying Plaintiff and other similarly situated employees for work performed before clocking in each day violated the FLSA, 29 U.S.C. § 207, 29 CFR § 785.24. 50. Defendant’s practice and policy of not paying Plaintiff and other similarly situated employees overtime compensation at a rate of one and one-half times their regular rate of pay for all of the hours they worked over 40 in a workweek violated the FLSA, 29 U.S.C. § 207. 51. Defendant’s failure to keep records of all of the hours worked each workday and the total hours worked each workweek by Plaintiff and other similarly situated employees violated the FLSA, 29 CFR § 516.2(a)(7). 52. By engaging in the above-mentioned conduct, Defendant willfully, knowingly and/or recklessly violated the provisions of the FLSA. 53. As a result of Defendant’s practices and policies, Plaintiff and other similarly situated employees have been damaged in that they have not received wages due to them pursuant 8 to the FLSA. COUNT TWO (Violations of Ohio Revised Code 4111.03) 54. Plaintiff incorporates by reference the foregoing allegations as if fully rewritten herein. 55. Defendant’s practice and policy of not paying Plaintiff and other similarly situated employees for all time worked and overtime compensation at a rate of one and one-half times their regular rate of pay for all of the hours they worked over 40 each workweek violated the OMFWSA, R.C. § 4111.03. 56. By engaging in the above-mentioned conduct, Defendant willfully, knowingly and/or recklessly violated the provisions of the OMFWSA. 57. As a result of Defendant’s practices and policies, Plaintiff and other similarly situated employees have been damaged in that they have not received wages due to them pursuant to the OMFWSA. PRAYER FOR RELIEF WHEREFORE, Plaintiff, and all those similarly situated, collectively pray that this Honorable Court: A. Issue an order permitting this litigation to proceed as a collective action and certifying the class pursuant to Fed. R. Civ. R. 23(a) and (b)(3); B. Order prompt notice, pursuant to 29 U.S.C. § 216(b), to all class members that this litigation is pending and that they have the right to “opt in” to this litigation; C. Award Plaintiff and the classes she represents actual damages for unpaid wages; D. Award Plaintiff and the classes she represents liquidated damages equal in amount to the unpaid wages found due to Plaintiff and the class; 9 E. Award Plaintiff and the classes she represents pre- and post-judgment interest at the statutory rate; F. Award Plaintiff and the classes she represents attorneys’ fees, costs, and disbursements; and G. Award Plaintiff and the classes she represents further and additional relief as this Court deems just and proper. Respectfully submitted, /s/ Lori M. Griffin Lori M. Griffin (0085241) Anthony J. Lazzaro (0077962 Chastity L. Christy (0076977) The Lazzaro Law Firm, LLC The Heritage Bldg., Suite 250 34555 Chagrin Boulevard Moreland Hills, Ohio 44022 Phone: 216-696-5000 Facsimile: 216-696-7005 [email protected] [email protected] [email protected] Attorneys for Plaintiff JURY DEMAND Plaintiff hereby demands a trial by jury on all issues so triable. /s/ Lori M. Griffin One of the Attorneys for Plaintiff 10

employment & labor

BvNJE4cBD5gMZwczofWm

GLANCY PRONGAY & MURRAY LLP LIONEL Z. GLANCY (#134180) ROBERT V. PRONGAY (#270796) LESLEY F. PORTNOY (#304851) CHARLES H. LINEHAN (#307439) 1925 Century Park East, Suite 2100 Los Angeles, CA 90067 Telephone: (310) 201-9150 Facsimile: (310) 201-9160 Email: [email protected] Attorneys for Plaintiff Case No.: CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS JURY TRIAL DEMANDED UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA BABULAL TARAPARA, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. K12 INC., RONALD J. PACKARD, NATHANIEL A. DAVIS, and JAMES J. RHYU, Defendants. Plaintiff Babulal Tarapara (“Plaintiff”), by and through his attorneys, alleges the following upon information and belief, except as to those allegations concerning Plaintiff, which are alleged upon personal knowledge. Plaintiff’s information and belief is based upon, among other things, his counsel’s investigation, which includes without limitation: (a) review and analysis of regulatory filings made by K12 Inc. (“K12” or the “Company”), with the United States (“U.S.”) Securities and Exchange Commission (“SEC”); (b) review and analysis of press releases and media reports issued by and disseminated by K12; and (c) review of other publicly available information concerning K12. NATURE OF THE ACTION AND OVERVIEW 1. This is a class action on behalf of persons and entities that acquired K12 securities between November 7, 2013, and October 27, 2015, inclusive (the “Class Period”), against the Defendants,1 seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”). 2. K12 is a technology-based education company that purportedly provides technology-based educational products and solutions to public school districts, public schools, virtual charter schools, private schools, and families. 3. On October 27, 2015, Stanford’s Center for Research on Education Outcomes (“CREDO”) published a study regarding online charter schools, specifically mentioning K12. CREDO also published a press release in conjunction with the study, summarizing the results of the study. CREDO, in the press release, stated: “Innovative new research suggests that students of online charter schools had significantly weaker academic performance in math and reading, compared with their counterparts in conventional schools.” Multiple news organizations publicized the CREDO study. 4. On the same day, October 27, 2015, the Company issued a press release entitled “K12 Inc. Reports First Quarter Fiscal 2016 With Revenue of $221.2 Million.” Therein, the 1 “Defendants” refers to K12, Ronald J. Packard, Nathaniel A. Davis, and James J. Rhyu, collectively. Company reported disappointing financial results including “[r]evenues of $221.2 million, compared to $236.7 million in the first quarter of FY 2015,” “EBITDA . . . of negative $3.9 million, compared to $3.7 million in the first quarter of FY 2015,” and an “[o]perating loss of $20.5 million, compared to an operating loss of $13.2 million in the first quarter of FY 2015.” 5. On this news, K12’s stock price fell $1.93 per share, or 15.8%, to close at $10.25 per share on October 27, 2015, on unusually heavy trading volume. 6. After the market closed on October 27, 2015, K12 filed its Form 10-Q with the SEC for the fiscal quarter ended September 30, 2015. Therein, the Company disclosed that it received a subpoena from the Attorney General of the State of California, Bureau of Children’s Justice in connection with an investigation styled “In the Matter of the Investigation of: For- Profit Virtual Schools.” 7. Though the market did not immediately react to the disclosure of the subpoena buried in the Company’s Form 10-Q, K12’s stock price slid a cumulative $0.54 per share, or 5.2%, over three days from a close of $10.25 per share on October 27, 2015, to a close of $9.71 per share on October 30, 2015. 8. Throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose: (1) that K12 was publishing misleading advertisements about students’ academic progress, parent satisfaction, their graduates’ eligibility for University of California and California State University admission, class sizes, the individualized and flexible nature of K12’s instruction, hidden costs, and the quality of the materials provided to students; (2) that K12 submitted inflated student attendance numbers to the California Department of Education in order to collect additional funding; (3) that, as a result of the aforementioned practices, the Company was open to potential civil and criminal liability; (4) that the Company would likely be forced to end these practices, which would have a negative impact on K12’s operations and prospects, and/or that K12 was, in fact, ending the practices; and (5) that, as a result of the foregoing, Defendants’ statements about K12’s business, operations, and prospects, were false and misleading and/or lacked a reasonable basis. 9. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. JURISDICTION AND VENUE 10. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. § 240.10b-5). 11. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. § 1331 and Section 27 of the Exchange Act (15 U.S.C. § 78aa). 12. Venue is proper in this Judicial District pursuant to 28 U.S.C. § 1391(b) and Section 27 of the Exchange Act (15 U.S.C. § 78aa(c)). Substantial acts in furtherance of the alleged fraud or the effects of the fraud have occurred in this Judicial District. Many of the acts charged herein, including the dissemination of materially false and/or misleading information, occurred in substantial part in this Judicial District. 13. In connection with the acts, transactions, and conduct alleged herein, Defendants directly and indirectly used the means and instrumentalities of interstate commerce, including the United States mail, interstate telephone communications, and the facilities of a national securities exchange. PARTIES 14. Plaintiff Babulal Tarapara, as set forth in the accompanying certification, incorporated by reference herein, purchased K12 common stock during the Class Period, and suffered damages as a result of the federal securities law violations and false and/or misleading statements and/or material omissions alleged herein. 15. Defendant K12 is a Delaware corporation with its principal executive offices located at 2300 Corporate Park Drive, Herndon, Virginia. K12’s common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “LRN.” 16. Defendant Ronald J. Packard (“Packard”) was the Chief Executive Officer (“CEO”) of K12 prior to the beginning of the Class Period, and during the Class Period until December 31, 2013. 17. Defendant Nathaniel A. Davis (“Davis”) was, at all relevant times, CEO of K12 from January 1, 2014 through the end of the Class Period. Davis relinquished his position as CEO on February 8, 2016. Davis was also Executive Chairman of the Board of Directors throughout the Class Period. 18. Defendant James J. Rhyu (“Rhyu”) was, at all relevant times, Chief Financial Officer (“CFO”) of K12. 19. Defendants Packard, Davis, and Rhyu are collectively referred to hereinafter as the “Individual Defendants.” The Individual Defendants, because of their positions with the Company, possessed the power and authority to control the contents of K12’s reports to the SEC, press releases and presentations to securities analysts, money and portfolio managers and institutional investors, i.e., the market. Each defendant was provided with copies of the Company’s reports and press releases alleged herein to be misleading prior to, or shortly after, their issuance and had the ability and opportunity to prevent their issuance or cause them to be corrected. Because of their positions and access to material non-public information available to them, each of these defendants knew that the adverse facts specified herein had not been disclosed to, and were being concealed from, the public, and that the positive representations which were being made were then materially false and/or misleading. The Individual Defendants are liable for the false statements pleaded herein, as those statements were each “group-published” information, the result of the collective actions of the Individual Defendants. SUBSTANTIVE ALLEGATIONS Background 20. K12 is a technology-based education company that purportedly provides technology-based educational products and solutions to public school districts, public schools, virtual charter schools, private schools, and families. Materially False and Misleading Statements Issued During the Class Period 21. The Class Period begins on November 7, 2013. On that day, K12 issued a press release entitled, “K12 Inc. Reports First Quarter Fiscal 2014 Results.” Therein, the Company, in relevant part, stated: HERNDON, Va., Nov. 7, 2013 (GLOBE NEWSWIRE) -- K12 Inc. (NYSE:LRN), a leading provider of proprietary, technology-based curriculum, software and education services created for individualized learning for students primarily in kindergarten through 12th grade, today announced its results for the first fiscal quarter ended September 30, 2013. Financial Highlights for the Three Months Ended September 30, 2013 (First Quarter Fiscal Year 2014)  Revenues for the first quarter of FY 2014 increased 3.3% to $228.4 million.  Revenues in Q1 were reduced by $4.5 million as a result of changes in certain contract agreements. The revenue has been deferred to the remainder of the current fiscal year.  Institutional Sales were lower on market pressure for some of our product lines.  EBITDA, a non-GAAP measure (see reconciliation below), for the first quarter of FY 2014 was $8.5 million, compared to $24.3 million from the first quarter of FY2013.  Operating loss of $8.5 million compared to operating income of $8.7 million in the first quarter of FY 2013.  EBITDA and the operating loss in Q1 were negatively impacted by deferral of revenue mentioned above along with higher seasonal selling, administrative and operating expenses in anticipation of stronger enrollments.  Net loss attributable to common and Series A stockholders of $5.0 million, compared to net income of $4.4 million from first quarter of FY 2013.  Diluted net loss attributable to common stockholders per share was $0.13, which includes the pro rata effect of the Series A Special shares conversion to common shares onSeptember 3, 2013. Stock Buyback The Board of Directors has authorized the repurchase of up to $75 million of the Company’s outstanding common stock. Any purchases under this buyback would be dependent upon business and market conditions and other factors. The stock purchases may be made from time to time and may be made through a variety of methods including open market purchases and 10b5-1 plans. Comments from Management “We are clearly disappointed by our first quarter enrollment and revenue results and the operating issues that hampered growth. However, demand for our services remains strong and I am encouraged by the early indicators that our new programs will make a positive difference in student academic outcomes,” said Nate Davis, Executive Chairman of the Board. “The authorization of a stock buyback underscores the Board’s continuing confidence in the company’s capacity for further growth and creation of shareholder value,” added Davis. * * * Enrollment Data The following table sets forth average enrollment data for students in Managed Public Schools and total enrollment data for students in the International and Private Pay Schools for the periods indicated. These figures exclude enrollments from classroom pilot programs and consumer programs. * The Managed Public Schools average student enrollments include enrollments for which we receive no public funding. Q1 average student enrollments are equal to the official count date number, which is the first Wednesday of October in a year. 22. On November 7, 2013, after the market closed, K12 filed its Quarterly Report with the SEC on Form 10-Q for the fiscal quarter ended September 30, 2013. The Company’s Form 10-Q was signed by Defendant Rhyu, and reaffirmed the Company’s financial results previously announced in the press release issued the same day. 23. On February 4, 2014, K12 issued a press release entitled, “K12 Inc. Reports Second Quarter Fiscal 2014 With Revenue of $223.9 Million.” Therein, the Company, in relevant part, stated: HERNDON, Va., Feb. 4, 2014 (GLOBE NEWSWIRE) -- K12 Inc. (NYSE:LRN), a technology-based education company and leading provider of proprietary curriculum and online school programs for students in pre-K through high school, today announced its results for the second fiscal quarter ended December 31, 2013. Financial measures are provided on a GAAP basis, followed by a summary of results excluding the impact of specific charges which had a significant impact on second quarter results. Financial Highlights for the Three Months Ended December 31, 2013 (Second Quarter Fiscal Year 2014)  Revenues for the second quarter of FY 2014 increased 8.7% from the prior year to $223.9 million.  EBITDA, a non-GAAP measure (see reconciliation below), for the second quarter of FY 2014 was $25.6 million, compared to $32.5 million from the second quarter of FY 2013.  Operating loss of $8.9 million compared to operating income of $16.3 million in the second quarter of FY 2013.  Net loss attributable to common stockholders of $3.7 million, compared to net income of $9.5 million from second quarter of FY 2013.  Diluted net loss attributable to common stockholders per share was $0.09. During the quarter ended December 31, 2013, the Company incurred the following charges, totaling $32.2 million including $4.4 million in cash charges.  Additional reserve for excess inventory and accelerated depreciation on software, products and computer hardware of $18.6 million.  Accelerated amortization of trade names in our Institutional business of $5.2 million.  Severance costs associated with the departure of Ron Packard, K12’s former CEO, and a modest workforce reduction enacted primarily at K12 headquarters, collectively $7.4 million.  The Company announced its intent to form a new company which K12 will contribute assets and its partners will contribute cash. Other charges and expenses of $1.0 million included costs related to the formation of this new company. Excluding the impact of the aforementioned charges, for the three months ended December 31, 2013 (see additional tables below).  EBITDA would have increased to $40.2 million, a 23.7% increase compared to the $32.5 million from the second quarter of FY 2013.  Operating income would have increased to $23.3 million, a 42.9% increase compared to operating income of $16.3 million in the second quarter of FY 2013.  Net income attributable to common and Series A stockholders would have increased to $14.3 million, a 50.5% increase compared to net income of $9.5 million in the second quarter of FY 2013.  Diluted net income attributable to common stockholders per share would have increased to $0.36 as compared to the $0.24 in the prior year. Financial Highlights for the Six Months Ended December 31, 2013  Revenues for the six months ended December 31, 2013 increased 5.9% to $452.3 million.  EBITDA, a non-GAAP measure (see reconciliation below), was $34.1 million, compared to $56.8 million from the first six months of FY 2013.  Operating loss of $17.4 million compared to operating income of $24.9 million for the first six months of FY 2013.  Net loss attributable to common and Series A stockholders of $8.7 million, compared to net income of $13.9 million for the first six months of FY 2013.  Diluted net loss attributable to common stockholders per share was $0.22, which includes the pro rata effect of the Series A Special shares conversion to commons shares on September 3, 2013. Excluding the impact of the aforementioned charges, for the six months ended December 31, 2013  EBITDA would have been $48.6 million compared to $56.8 million for the first six months of FY 2013.  Operating income would have been $14.9 million compared to operating income of $24.9 million for the first six months of FY 2013.  Net income attributable to common and Series A stockholders would have been $9.2 million compared to net income of $13.9 million for the first six months of FY 2013.  Diluted net income attributable to common stockholders per share would have been $0.24, which includes the pro rata effect of the Series A Special shares conversion to common shares on September 3, 2013. Comments from Management “We continue to be focused on our primary mission to provide an individualized and effective educational experience for our students,” said Nate Davis, Chairman and Chief Executive Officer. “This quarter we continued to invest in new content, programs, and infrastructure while improving internal operating efficiency. Our Managed Schools are now in the middle of the school year using many of the new educational programs we put in place this year which we believe will improve educational outcomes for all engaged families,” added Davis. 24. On February 4, 2014, after the market closed, K12 filed its Quarterly Report with the SEC on Form 10-Q for the fiscal quarter ended December 31, 2013. The Company’s Form 10-Q was signed by Defendant Rhyu, and reaffirmed the Company’s financial results previously announced in the press release issued the same day. 25. On April 29, 2014, K12 issued a press release entitled, “K12 Inc. Reports Third Quarter Fiscal 2014 With Revenue of $235.2 Million.” Therein, the Company, in relevant part, HERNDON, Va., April 29, 2014 (GLOBE NEWSWIRE) -- K12 Inc. (NYSE:LRN), a technology-based education company and leading provider of proprietary curriculum and online school programs for students in pre-K through high school, today announced its results for the third fiscal quarter ended March 31, 2014. Financial Highlights for the Three Months Ended March 31, 2014 (Third Quarter Fiscal Year 2014)  Revenues for the third quarter of FY 2014 increased 7.9% from the prior year to $235.2 million.  EBITDA, a non-GAAP measure (see reconciliation below), for the third quarter of FY 2014 was $45.4 million, an increase of 27.5% compared to $35.6 million from the third quarter of FY 2013.  Operating income of $27.4 million, an increase of 41.2% compared to operating income of $19.4 million in the third quarter of FY 2013.  Net income attributable to common stockholders of $15.9 million, an increase of 32.5% compared to net income of $12.0 million from third quarter of FY 2013.  Diluted net income attributable to common stockholders per share was $0.40, an increase of 29.0% compared to the year ago period. Financial Highlights for the Nine Months Ended March 31, 2014  Revenues of $687.5 million, compared to revenues of $645.1 million for the first nine months of FY 2013.  EBITDA, a non-GAAP measure (see reconciliation below), of $79.5 million, compared to EBITDA of $92.5 million for the first nine months of FY 2013.  Operating income of $10.0 million, compared to operating income of $44.3 million for the first nine months of FY 2013.  Net income attributable to common and Series A stockholders of $7.2 million, compared to net income of $25.8 million for the first nine months of FY 2013.  Diluted net income attributable to common stockholders per share was $0.19, which includes the pro rata effect of the Series A Special shares conversion to commons shares on September 3, 2013. Excluding the impact of the $32.2 million in charges relating to additional reserves, accelerated amortization and severance costs recorded in the second fiscal quarter, for the nine months ended March 31, 2014:  EBITDA would have been $94.0 million, compared to EBITDA of $92.5 million for the first nine months of FY 2013.  Operating income would have been $42.3 million, compared to operating income of $44.3 million for the first nine months of FY 2013.  Net income attributable to common and Series A stockholders would have been $26.8 million, compared to net income of $25.8 million for the first nine months of FY 2013.  Diluted net income attributable to common stockholders per share would have been $0.68, which includes the pro rata effect of the Series A Special shares conversion to common shares on September 3, 2013. Comments from Management “Improving academic outcomes remains our number one priority,” said Nate Davis, Chairman and Chief Executive Officer. “To support this goal, we will continue to invest in new content, systems and tools for our students and teachers while driving further enhancements across the schools we serve,” added Davis. 26. On April 29, 2014, after the market closed, K12 filed its Quarterly Report with the SEC on Form 10-Q for the fiscal quarter ended March 31, 2014. The Company’s Form 10-Q was signed by Defendant Rhyu, and reaffirmed the Company’s financial results previously announced in the press release issued the same day. 27. On August 14, 2014, K12 issued a press release entitled, “K12 Inc. Reports Full Year Fiscal 2014 With Revenue of $919.6 Million.” Therein, the Company, in relevant part, HERNDON, Va., Aug. 14, 2014 (GLOBE NEWSWIRE) -- K12 Inc. (NYSE:LRN), a technology-based education company and leading provider of proprietary curriculum and online school programs for students in pre-K through high school, today announced its results for the fourth fiscal quarter and full fiscal year ended June 30, 2014. Financial Highlights for the Three Months Ended June 30, 2014 (Fourth Quarter Fiscal Year 2014)  Revenues of $232.0 million, compared to $203.1 million in the fourth quarter of FY 2013.  EBITDA, a non-GAAP measure (see reconciliation below), of $36.0 million, compared to $19.0 million in the fourth quarter of FY 2013.  Operating income of $12.8 million, compared to $1.4 million in the fourth quarter of FY 2013.  Net income attributable to common stockholders of $12.4 million, compared to $2.3 million in the fourth quarter of FY 2013.  Diluted net income attributable to common stockholders per share of $0.32, compared to $0.06 in the fourth quarter of FY 2013. Financial Highlights for the Year Ended June 30, 2014  Revenues of $919.6 million, compared to $848.2 million for the full fiscal year of 2013.  EBITDA, a non-GAAP measure (see reconciliation below), of $115.5 million, compared to $111.4 million for the full fiscal year of 2013.  Operating income of $22.9 million, compared to $45.7 million for the full fiscal year of 2013.  Net income attributable to common and Series A stockholders of $19.6 million, compared to $28.1 million for the full fiscal year of 2013.  Diluted net income attributable to common stockholders per share was $0.50, which includes the pro- rata effect of the Series A Special shares conversion to commons shares on September 3, 2013, compared to $0.72 for the full fiscal year of 2013. Excluding the impact of the $32.2 million in charges relating to additional reserves, accelerated amortization and severance costs and the $6.4 million realized gain on sale of assets, for the year ended June 30, 2014:  EBITDA would have been $123.6 million, compared to $111.4 million for the full fiscal year of 2013.  Operating income would have been $55.1 million, compared to $45.7 million for the full fiscal year of 2013.  Net income attributable to common and Series A stockholders would have been $35.6 million, compared to net income of $28.1 million for the full fiscal year of 2013.  Diluted net income attributable to common stockholders per share would have been $0.91, which includes the pro rata effect of the Series A Special shares conversion to common shares on September 3, 2013, compared to $0.72 for the full fiscal year of 2013. Comments from Management “While I am pleased with our solid financial performance this year, I am even more proud of our teachers, our school administrators and our employees who have worked tirelessly to improve academic outcomes,” said Nate Davis, Chairman and Chief Executive Officer. “The academic performance of the students we serve has improved, but our work is far from finished. We will continue to invest and innovate to drive further improvements for all the students that we serve,” added Davis. * * * Enrollment Data The following table sets forth average enrollment data for students in Managed Public Schools and total enrollment data for students in the International and Private Pay Schools for the periods indicated. These figures exclude enrollments from classroom pilot programs and consumer programs. 28. On August 15, 2014, after the market closed, K12 filed its Annual Report with the SEC on Form 10-K for the fiscal year ended June 30, 2014. The Company’s Form 10-K was signed by Defendant Davis, and reaffirmed the Company’s financial results previously announced in the press release issued August 14, 2014. 29. On October 30, 2014, K12 issued a press release entitled, “K12 Inc. Reports First Quarter Fiscal 2015 with Revenue of $236.7 Million.” Therein, the Company, in relevant part, HERNDON, Va., Oct. 30, 2014 (GLOBE NEWSWIRE) -- K12 Inc. (NYSE:LRN), a technology-based education company and leading provider of proprietary curriculum and online school programs for students in pre-K through high school, today announced its results for the first fiscal quarter ended September 30, 2014. Financial Highlights for the Three Months Ended September 30, 2014 (First Quarter Fiscal Year 2015)  Revenues of $236.7 million, compared to $228.4 million in the first quarter of FY 2014.  EBITDA, a non-GAAP measure (see reconciliation below), of $3.7 million, compared to $8.5 million in the first quarter of FY 2014.  Operating loss of $13.2 million, compared to an operating loss of $8.5 million in the first quarter of FY 2014.  Net loss attributable to common stockholders of $6.8 million, compared to a net loss of $5.0 million in the first quarter of FY 2014.  Diluted net loss attributable to common stockholders per share of $0.18, compared to a diluted net loss of $0.13 in the first quarter of FY 2014. During fiscal year 2014, the Company sold certain businesses which, in aggregate, were responsible for $16.9 million in revenue for the full year and were close to breakeven for the year. Excluding the impact of these businesses, revenue for the first quarter of FY 2014 would have been $224.9 million. Comments from Management “K12 continues to drive the advancement of education by developing state-of-the art, adaptive learning programs for students,” said Chairman and CEO Nate Davis. “We will continue to invest in emerging digital technologies that enhance the potential of each student and empowers them to achieve the highest quality of education possible.” 30. On October 30, 2014, after the market closed, K12 filed its Quarterly Report with the SEC on Form 10-Q for the fiscal quarter ended September 30, 2014. The Company’s Form 10-Q was signed by Defendant Rhyu, and reaffirmed the Company’s financial results previously announced in the press release issued the same day. 31. On January 29, 2015, K12 issued a press release entitled, “K12 Inc. Reports Second Quarter Fiscal 2015 With Revenue of $231.3 Million.” Therein, the Company, in relevant part, stated: HERNDON, Va., Jan. 29, 2015 (GLOBE NEWSWIRE) -- K12 Inc. (NYSE:LRN), a technology-based education company and leading provider of proprietary curriculum and online school programs for students in pre-K through high school, today announced its results for the second fiscal quarter ended December 31, 2014. Financial Highlights for the Three Months Ended December 31, 2014 (Second Quarter Fiscal Year 2015)  Revenues of $231.3 million, compared to $223.9 million in the second quarter of FY 2014.  EBITDA, a non-GAAP measure (see reconciliation below), of $38.1 million, compared to $25.6 million in the second quarter of FY 2014.  Operating income of $20.5 million, compared to an operating loss of $8.9 million in the second quarter of FY 2014.  Net income attributable to common stockholders of $12.3 million, compared to a net loss of $3.7 million in the second quarter of FY 2014.  Diluted net income attributable to common stockholders per share of $0.33, compared to a diluted net loss of $0.09 in the second quarter of FY 2014. During fiscal year 2014, the Company sold certain businesses and incurred charges relating to additional reserves, accelerated amortization and severance costs. Excluding the impact of these businesses and charges, for the three months ended December 31, 2014 (see Appendix C below).  EBITDA, a non-GAAP measure (see reconciliation below), of $38.1 million, compared to $39.7 million in the second quarter of FY 2014.  Operating income of $20.5 million, compared to $23.1 million in the second quarter of FY 2014.  Net income attributable to common stockholders of $12.3 million, compared to $14.2 million in the second quarter of FY 2014.  Diluted net income attributable to common stockholders per share of $0.33, compared to $0.35 in the second quarter of FY 2014. Financial Highlights for the Six Months Ended December 31, 2014  Revenues of $468.0 million, compared to $452.3 million for the first six months of FY 2014.  EBITDA, a non-GAAP measure (see reconciliation below), of $41.8 million, compared to $34.1 million for the first six months of FY 2014.  Operating income of $7.3 million compared to an operating loss of $17.4 million for the first six months of FY 2014.  Net income attributable to common and Series A stockholders of $5.6 million, compared to a net loss of $8.7 million for the first six months of FY 2014.  Diluted net income attributable to common stockholders per share of $0.15, which includes the pro rata effect of the Series A Special shares conversion to commons shares on September 3, 2013, compared to a diluted net loss of $0.22 for the first six months of FY 2014. Excluding the impact of the aforementioned charges and sold businesses, for the six months ended December 31, 2014 (See Appendix C below).  EBITDA, a non-GAAP measure (see reconciliation below), of $41.8 million, compared to $48.7 million for the first six months of FY 2014.  Operating income of $7.3 million compared to $15.2 million for the first six months of FY 2014.  Net income attributable to common and Series A stockholders of $5.6 million, compared to $9.4 million for the first six months of FY 2014.  Diluted net income attributable to common stockholders per share of $0.15, which includes the pro rata effect of the Series A Special shares conversion to commons shares on September 3, 2013, compared to $0.24 for the first six months of FY 2014. Comments from Management “The academic progress of our students and successes of our managed public schools continue to drive K12 forward,” said Chairman and CEO Nate Davis. “After years of focused investment coupled with an unrivaled commitment to putting students first, we are beginning to see improvement in student proficiency on State academic assessments. The K12 team remains passionate about supporting students, teachers and our partner schools to continue this trend toward academic excellence.” 32. On January 29, 2015, after the market closed, K12 filed its Quarterly Report with the SEC on Form 10-Q for the fiscal quarter ended December 31, 2014. The Company’s Form 10-Q was signed by Defendant Rhyu, and reaffirmed the Company’s financial results previously announced in the press release issued the same day. 33. On April 28, 2015, K12 issued a press release entitled, “K12 Inc. Reports Third Quarter Fiscal 2015 With Revenue of $244.6 Million.” Therein, the Company, in relevant part, HERNDON, Va., April 28, 2015 (GLOBE NEWSWIRE) -- K12 Inc. (NYSE:LRN), a technology-based education company and leading provider of proprietary curriculum and online school programs for students in pre-K through high school, today announced its results for the third fiscal quarter ended March 31, 2015. Financial Highlights for the Three Months Ended March 31, 2015 (Third Quarter Fiscal Year 2015)  Revenues of $244.6 million, compared to $235.2 million in the third quarter of FY 2014.  EBITDA, a non-GAAP measure (see reconciliation below), of $45.2 million, compared to $45.4 million in the third quarter of FY 2014.  Operating income of $27.4 million, compared to $27.4 million in the third quarter of FY 2014.  Net income attributable to common stockholders of $17.0 million, compared to $15.9 million in the third quarter of FY 2014.  Diluted net income attributable to common stockholders per share of $0.45, compared to $0.40 in the third quarter of FY 2014. Financial Highlights for the Nine Months Ended March 31, 2015  Revenues of $712.6 million, compared to $687.5 million for the first nine months of FY 2014.  EBITDA, a non-GAAP measure (see reconciliation below), of $87.0 million, compared to $79.5 million for the first nine months of FY 2014.  Operating income of $34.7 million compared to $10.0 million for the first nine months of FY 2014.  Net income attributable to common stockholders of $22.6 million, compared to $7.2 million for the first nine months of FY 2014.  Diluted net income attributable to common stockholders per share of $0.60, compared to $0.19 for the first nine months of FY 2014, including the pro rata effect of the Series A Special shares conversion to common shares on September 3, 2013. During fiscal year 2014, the Company sold certain businesses and incurred charges relating to additional reserves, accelerated amortization and severance costs. Excluding the impact of these businesses and charges, for the nine months ended March 31, 2015 (see Appendix C below).  EBITDA, a non-GAAP measure, of $87.0 million (see reconciliation below), compared to $94.0 million for the first nine months of FY 2014.  Operating income of $34.7 million compared to $42.1 million for the first nine months of FY 2014.  Net income attributable to common and Series A stockholders of $22.6 million, compared to $26.7 million for the first nine months of FY 2014.  Diluted net income attributable to common stockholders per share of $0.60, compared to $0.68 for the first nine months of FY 2014, including the pro rata effect of the Series A Special shares conversion to common shares on September 3, 2013. Comments from Management “I am extremely proud of this year’s academic accomplishments which highlight the commitment of our dedicated teachers and school teams to put students first. I am also pleased that K12 has delivered solid financials including the second consecutive quarter of double digit gains in our education technology sales to school districts and strong growth in our private schools,” said Nate Davis, Chairman and Chief Executive Officer. “We will continue to drive value and scale in our business and over-deliver on our commitment to improve academic results in our managed schools,” added Davis. 34. On April 28, 2015, after the market closed, K12 filed its Quarterly Report with the SEC on Form 10-Q for the fiscal quarter ended March 31, 2015. The Company’s Form 10-Q was signed by Defendant Rhyu, and reaffirmed the Company’s financial results previously announced in the press release issued the same day. 35. On August 4, 2015, K12 issued a press release entitled, “K12 Inc. Reports Fiscal 2015 Revenue of $948.3 Million and Operating Income of $18.4 Million.” Therein, the Company, in relevant part, stated: HERNDON, Va., Aug. 4, 2015 (GLOBE NEWSWIRE) -- K12 Inc. (NYSE:LRN), a technology-based education company and leading provider of proprietary curriculum and online school programs for students in pre-K through high school, today announced its results for the fourth fiscal quarter and full fiscal year ended June 30, 2015. Financial measures are provided on a GAAP basis, followed by a summary of results excluding the impact of specific charges which had a significant impact on fourth quarter and full year results. Financial Highlights for the Three Months Ended June 30, 2015 (Fourth Quarter Fiscal Year 2015)  Revenues of $235.7 million, compared to $232.0 million in the fourth quarter of FY 2014.  EBITDA, a non-GAAP measure (see reconciliation below), of $15.2 million, compared to $36.0 million in the fourth quarter of FY 2014.  Operating loss of $16.3 million, compared to income of $12.8 million in the fourth quarter of FY 2014.  Net loss attributable to common stockholders of $11.6 million, compared to net income of $12.4 million in the fourth quarter of FY 2014.  Diluted net loss attributable to common stockholders per share of $0.31, compared to net income of $0.32 in the fourth quarter of FY 2014. During the quarter ended June 30, 2015, the Company incurred the following charges, totaling $28.4 million of which $0.5 million are cash charges.  Reserves and write downs related to end of life products, software and inventory of $14.3 million.  Incremental accounts receivable reserves of $10.7 million, primarily related to closed schools, a funding deficit in one state and the interest on a receivable.  Severance costs of $3.4 million. Excluding the impact of the aforementioned charges, for the three months ended June 30, 2015 (see Appendix C below).  EBITDA would have been $26.6 million, compared to the $36.0 million from the fourth quarter of FY 2014.  Operating income would have been $8.9 million, compared to operating income of $12.8 million in the fourth quarter of FY 2014.  Net income attributable to common and Series A stockholders would have been $6.8 million, compared to net income of $12.4 million in the fourth quarter of FY 2014.  Diluted net income attributable to common stockholders per share would have been $0.18 as compared to the $0.32 in the fourth quarter of FY 2014. Financial Highlights for the Year Ended June 30, 2015  Revenues of $948.3 million, compared to $919.6 million for the full fiscal year of 2014.  EBITDA, a non-GAAP measure (see reconciliation below), of $102.2 million, compared to $115.5 million for the full fiscal year of 2014.  Operating income of $18.4 million, compared to $22.9 million for the full fiscal year of 2014.  Net income attributable to common and Series A stockholders of $11.0 million, compared to $19.6 million for the full fiscal year of 2014.  Diluted net income attributable to common stockholders per share was $0.29, compared to $0.50, which includes the pro-rata effect of the Series A Special shares conversion to common shares on September 3, 2013, for the full fiscal year of 2014. During fiscal year 2014, the Company sold certain businesses and incurred charges relating to additional reserves, accelerated amortization and severance costs. Excluding the impact of these businesses and charges, and excluding the impact of the aforementioned charges in the fourth quarter of fiscal year 2015, for the year ended June 30, 2015 (see Appendix C, D and E below).  EBITDA would have been $113.6 million compared to $123.6 million for the full fiscal year of 2014.  Operating income would have been $43.7 million compared to $54.5 million for the full fiscal year of 2014.  Net income attributable to common and Series A stockholders would have been $29.4 million compared to $35.6 million for the full fiscal year of 2014.  Diluted net income attributable to common stockholders per share would have been $0.78, compared to $0.88, which includes the pro-rata effect of the Series A Special shares conversion to common shares on September 3, 2013, for the full fiscal year of 2014. Comments from Management “We delivered solid financial results for the year, including double-digit revenue gains in our education technology sales to school districts and our private schools, while continuing significant investments in student academic outcomes,” said Nate Davis, Chairman and Chief Executive Officer. ”As we begin a new fiscal year, we will continue using our strong financial position to improve our products and services,” added Davis. 36. On August 4, 2015, after the market closed, K12 filed its Annual Report with the SEC on Form 10-K for the fiscal year ended June 30, 2015. The Company’s Form 10-K was signed by Defendant Davis, and reaffirmed the Company’s financial results previously announced in the press release issued the same day. 37. The above statements contained in ¶¶21-36 were materially false and/or misleading, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, these statements were false and/or misleading statements and/or failed to disclose: (1) that K12 was publishing misleading advertisements about students’ academic progress, parent satisfaction, their graduates’ eligibility for University of California and California State University admission, class sizes, the individualized and flexible nature of K12’s instruction, hidden costs, and the quality of the materials provided to students; (2) that K12 submitted inflated student attendance numbers to the California Department of Education in order to collect additional funding; (3) that, as a result of the aforementioned practices, the Company was open to potential civil and criminal liability; (4) that the Company would likely be forced to end these practices, which would have a negative impact on K12’s operations and prospects, and/or that K12 was, in fact, ending the practices; and (5) that, as a result of the foregoing, Defendants’ statements about K12’s business, operations, and prospects, were false and misleading and/or lacked a reasonable basis. Disclosures at the End of the Class Period 38. On October 27, 2015, CREDO published a study regarding online charter schools, specifically mentioning K12. CREDO also published a press release in conjunction with the study, summarizing the results of the study. CREDO, in the press release, stated: “Innovative new research suggests that students of online charter schools had significantly weaker academic performance in math and reading, compared with their counterparts in conventional schools.” Multiple news organizations publicized the CREDO study. 39. On the same day, October 27, 2015, the Company issued a press release entitled “K12 Inc. Reports First Quarter Fiscal 2016 With Revenue of $221.2 Million.” Therein, the Company, in relevant part, stated: HERNDON, Va., Oct. 27, 2015 (GLOBE NEWSWIRE) -- K12 Inc. (NYSE:LRN), a technology-based education company and leading provider of proprietary curriculum and online school programs for students in pre-K through high school, today announced its results for the first fiscal quarter ended September 30, 2015. Financial Highlights for the Three Months Ended September 30, 2015 (First Quarter Fiscal Year 2016)  Revenues of $221.2 million, compared to $236.7 million in the first quarter of FY 2015. The year over year decline is largely due to the Agora Cyber School shifting from a Managed to Non-managed program.  EBITDA, a non-GAAP measure (see reconciliation below), of negative $3.9 million, compared to $3.7 million in the first quarter of FY 2015.  Operating loss of $20.5 million, compared to an operating loss of $13.2 million in the first quarter of FY 2015.  Net loss attributable to common stockholders of $12.8 million, compared to a net loss of $6.8 million in the first quarter of FY 2015.  Diluted net loss attributable to common stockholders per share of $0.34, compared to a diluted net loss of $0.18 in the first quarter of FY 2015. Comments from Management “We have been using an online model to educate students for fifteen years, and every year we increase the tools and capabilities families and teachers can use to make their students successful,” said Nate Davis, Chairman and Chief Executive Officer. ”We remain committed to continuous improvement, including increased offerings, and improvements in technology and content that make us one of the nation’s premier education technology providers. Bringing award winning technology to education is our contribution to our nation’s commitment to its students.” Enrollment Data The following table sets forth enrollment data for students in Managed Public School Programs and our Non-managed Public School Programs for the periods indicated. These figures exclude enrollments from classroom pilot programs and consumer programs. (1) If a school changes from a Managed to a Non-managed program, the corresponding enrollment classification would change in the period in which the contract arrangement changed. (2) Managed Public School Programs include enrollments for which K12 receives no public funding or revenue. (3) Enrollments are equal to the official count date number, which is the first Wednesday of October in a year, or October 7, 2015 for Q1 FY16 and October 1, 2014 for Q1 FY15. 40. On this news, K12’s stock price fell $1.93 per share, or 15.8%, to close at $10.25 per share on October 27, 2015, on unusually heavy trading volume. 41. After the market closed on October 27, 2015, K12 filed its Form 10-Q with the SEC for the fiscal quarter ended September 30, 2015. Therein, the Company disclosed that it received a subpoena from the Attorney General of the State of California, Bureau of Children’s Justice in connection with an investigation styled “In the Matter of the Investigation of: For- Profit Virtual Schools.” 42. Though the market did not immediately react to the disclosure of the subpoena buried in the Company’s Form 10-Q, K12’s stock price slid a cumulative $0.54 per share, or 5.2%, over three days from a close of $10.25 per share on October 27, 2015, to a close of $9.71 per share on October 30, 2015. CLASS ACTION ALLEGATIONS 43. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3) on behalf of a class, consisting of all persons and entities that acquired K12’s securities between November 7, 2013, and October 27, 2015, inclusive, and who were damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers and directors of the Company, at all relevant times, members of their immediate families and their legal representatives, heirs, successors, or assigns, and any entity in which Defendants have or had a controlling interest. 44. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, K12’s common stock actively traded on the NYSE. While the exact number of Class members is unknown to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff believes that there are at least hundreds or thousands of members in the proposed Class. Millions of K12 shares were traded publicly during the Class Period on the NYSE. As of October 21, 2015, K12 had 38,939,704 shares of common stock outstanding. Record owners and other members of the Class may be identified from records maintained by K12 or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions. 45. Plaintiff’s claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that is complained of herein. 46. Plaintiff will fairly and adequately protect the interests of the members of the Class and has retained counsel competent and experienced in class and securities litigation. 47. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are: (a) whether the federal securities laws were violated by Defendants’ acts as alleged herein; (b) whether statements made by Defendants to the investing public during the Class Period omitted and/or misrepresented material facts about the business, operations, and prospects of K12; and (c) to what extent the members of the Class have sustained damages and the proper measure of damages. 48. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation makes it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. UNDISCLOSED ADVERSE FACTS 49. The market for K12’s securities was open, well-developed and efficient at all relevant times. As a result of these materially false and/or misleading statements, and/or failures to disclose, K12’s securities traded at artificially inflated prices during the Class Period. Plaintiff and other members of the Class purchased or otherwise acquired K12’s securities relying upon the integrity of the market price of the Company’s securities and market information relating to K12, and have been damaged thereby. 50. During the Class Period, Defendants materially misled the investing public, thereby inflating the price of K12’s securities, by publicly issuing false and/or misleading statements and/or omitting to disclose material facts necessary to make Defendants’ statements, as set forth herein, not false and/or misleading. The statements and omissions were materially false and/or misleading because they failed to disclose material adverse information and/or misrepresented the truth about K12’s business, operations, and prospects as alleged herein. 51. At all relevant times, the material misrepresentations and omissions particularized in this Complaint directly or proximately caused or were a substantial contributing cause of the damages sustained by Plaintiff and other members of the Class. As described herein, during the Class Period, Defendants made or caused to be made a series of materially false and/or misleading statements about K12’s financial well-being and prospects. These material misstatements and/or omissions had the cause and effect of creating in the market an unrealistically positive assessment of the Company and its financial well-being and prospects, thus causing the Company’s securities to be overvalued and artificially inflated at all relevant times. Defendants’ materially false and/or misleading statements during the Class Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities at artificially inflated prices, thus causing the damages complained of herein when the truth was revealed. LOSS CAUSATION 52. Defendants’ wrongful conduct, as alleged herein, directly and proximately caused the economic loss suffered by Plaintiff and the Class. 53. During the Class Period, Plaintiff and the Class purchased K12’s securities at artificially inflated prices and were damaged thereby. The price of the Company’s securities significantly declined when the misrepresentations made to the market, and/or the information alleged herein to have been concealed from the market, and/or the effects thereof, were revealed, causing investors’ losses. SCIENTER ALLEGATIONS 54. As alleged herein, Defendants acted with scienter since Defendants knew that the public documents and statements issued or disseminated in the name of the Company were materially false and/or misleading; knew that such statements or documents would be issued or disseminated to the investing public; and knowingly and substantially participated or acquiesced in the issuance or dissemination of such statements or documents as primary violations of the federal securities laws. As set forth elsewhere herein in detail, Defendants, by virtue of their receipt of information reflecting the true facts regarding K12, his/her control over, and/or receipt and/or modification of K12’s allegedly materially misleading misstatements and/or their associations with the Company which made them privy to confidential proprietary information concerning K12, participated in the fraudulent scheme alleged herein. APPLICABILITY OF PRESUMPTION OF RELIANCE (FRAUD-ON-THE-MARKET DOCTRINE) 55. The market for K12’s securities was open, well-developed and efficient at all relevant times. As a result of the materially false and/or misleading statements and/or failures to disclose, K12’s securities traded at artificially inflated prices during the Class Period. On June 23, 2014, the Company’s stock price closed at a Class Period high of $25.98 per share. Plaintiff and other members of the Class purchased or otherwise acquired the Company’s securities relying upon the integrity of the market price of K12’s securities and market information relating to K12, and have been damaged thereby. 56. During the Class Period, the artificial inflation of K12’s stock was caused by the material misrepresentations and/or omissions particularized in this Complaint causing the damages sustained by Plaintiff and other members of the Class. As described herein, during the Class Period, Defendants made or caused to be made a series of materially false and/or misleading statements about K12’s business, prospects, and operations. These material misstatements and/or omissions created an unrealistically positive assessment of K12 and its business, operations, and prospects, thus causing the price of the Company’s securities to be artificially inflated at all relevant times, and when disclosed, negatively affected the value of the Company stock. Defendants’ materially false and/or misleading statements during the Class Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities at such artificially inflated prices, and each of them has been damaged as a result. 57. At all relevant times, the market for K12’s securities was an efficient market for the following reasons, among others: (a) K12 stock met the requirements for listing, and was listed and actively traded on the NYSE, a highly efficient and automated market; (b) As a regulated issuer, K12 filed periodic public reports with the SEC and/or the NYSE; (c) K12 regularly communicated with public investors via established market communication mechanisms, including through regular dissemination of press releases on the national circuits of major newswire services and through other wide-ranging public disclosures, such as communications with the financial press and other similar reporting services; and/or (d) K12 was followed by securities analysts employed by brokerage firms who wrote reports about the Company, and these reports were distributed to the sales force and certain customers of their respective brokerage firms. Each of these reports was publicly available and entered the public marketplace. 58. As a result of the foregoing, the market for K12’s securities promptly digested current information regarding K12 from all publicly available sources and reflected such information in K12’s stock price. Under these circumstances, all purchasers of K12’s securities during the Class Period suffered similar injury through their purchase of K12’s securities at artificially inflated prices and a presumption of reliance applies. 59. A Class-wide presumption of reliance is also appropriate in this action under the Supreme Court’s holding in Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128 (1972), because the Class’s claims are, in large part, grounded on Defendants’ material misstatements and/or omissions. Because this action involves Defendants’ failure to disclose material adverse information regarding the Company’s business operations and financial prospects—information that Defendants were obligated to disclose—positive proof of reliance is not a prerequisite to recovery. All that is necessary is that the facts withheld be material in the sense that a reasonable investor might have considered them important in making investment decisions. Given the importance of the Class Period material misstatements and omissions set forth above, that requirement is satisfied here. NO SAFE HARBOR 60. The statutory safe harbor provided for forward-looking statements under certain circumstances does not apply to any of the allegedly false statements pleaded in this Complaint. The statements alleged to be false and misleading herein all relate to then-existing facts and conditions. In addition, to the extent certain of the statements alleged to be false may be characterized as forward looking, they were not identified as “forward-looking statements” when made and there were no meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the purportedly forward-looking statements. In the alternative, to the extent that the statutory safe harbor is determined to apply to any forward-looking statements pleaded herein, Defendants are liable for those false forward- looking statements because at the time each of those forward-looking statements was made, the speaker had actual knowledge that the forward-looking statement was materially false or misleading, and/or the forward-looking statement was authorized or approved by an executive officer of K12 who knew that the statement was false when made. FIRST CLAIM Violation of Section 10(b) of The Exchange Act and Rule 10b-5 Promulgated Thereunder Against All Defendants 61. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. 62. During the Class Period, Defendants carried out a plan, scheme and course of conduct which was intended to and, throughout the Class Period, did: (i) deceive the investing public, including Plaintiff and other Class members, as alleged herein; and (ii) cause Plaintiff and other members of the Class to purchase K12’s securities at artificially inflated prices. In furtherance of this unlawful scheme, plan and course of conduct, defendants, and each of them, took the actions set forth herein. 63. Defendants (i) employed devices, schemes, and artifices to defraud; (ii) made untrue statements of material fact and/or omitted to state material facts necessary to make the statements not misleading; and (iii) engaged in acts, practices, and a course of business which operated as a fraud and deceit upon the purchasers of the Company’s securities in an effort to maintain artificially high market prices for K12’s securities in violation of Section 10(b) of the Exchange Act and Rule 10b-5. All Defendants are sued either as primary participants in the wrongful and illegal conduct charged herein or as controlling persons as alleged below. 64. Defendants, individually and in concert, directly and indirectly, by the use, means or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a continuous course of conduct to conceal adverse material information about K12’s financial well-being and prospects, as specified herein. 65. These defendants employed devices, schemes and artifices to defraud, while in possession of material adverse non-public information and engaged in acts, practices, and a course of conduct as alleged herein in an effort to assure investors of K12’s value and performance and continued substantial growth, which included the making of, or the participation in the making of, untrue statements of material facts and/or omitting to state material facts necessary in order to make the statements made about K12 and its business operations and future prospects in light of the circumstances under which they were made, not misleading, as set forth more particularly herein, and engaged in transactions, practices and a course of business which operated as a fraud and deceit upon the purchasers of the Company’s securities during the Class Period. 66. Each of the Individual Defendants’ primary liability, and controlling person liability, arises from the following facts: (i) the Individual Defendants were high-level executives and/or directors at the Company during the Class Period and members of the Company’s management team or had control thereof; (ii) each of these defendants, by virtue of their responsibilities and activities as a senior officer and/or director of the Company, was privy to and participated in the creation, development and reporting of the Company’s internal budgets, plans, projections and/or reports; (iii) each of these defendants enjoyed significant personal contact and familiarity with the other defendants and was advised of, and had access to, other members of the Company’s management team, internal reports and other data and information about the Company’s finances, operations, and sales at all relevant times; and (iv) each of these defendants was aware of the Company’s dissemination of information to the investing public which they knew and/or recklessly disregarded was materially false and misleading. 67. The defendants had actual knowledge of the misrepresentations and/or omissions of material facts set forth herein, or acted with reckless disregard for the truth in that they failed to ascertain and to disclose such facts, even though such facts were available to them. Such defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and for the purpose and effect of concealing K12’s financial well-being and prospects from the investing public and supporting the artificially inflated price of its securities. As demonstrated by Defendants’ overstatements and/or misstatements of the Company’s business, operations, financial well-being, and prospects throughout the Class Period, Defendants, if they did not have actual knowledge of the misrepresentations and/or omissions alleged, were reckless in failing to obtain such knowledge by deliberately refraining from taking those steps necessary to discover whether those statements were false or misleading. 68. As a result of the dissemination of the materially false and/or misleading information and/or failure to disclose material facts, as set forth above, the market price of K12’s securities was artificially inflated during the Class Period. In ignorance of the fact that market prices of the Company’s securities were artificially inflated, and relying directly or indirectly on the false and misleading statements made by Defendants, or upon the integrity of the market in which the securities trades, and/or in the absence of material adverse information that was known to or recklessly disregarded by Defendants, but not disclosed in public statements by Defendants during the Class Period, Plaintiff and the other members of the Class acquired K12’s securities during the Class Period at artificially high prices and were damaged thereby. 69. At the time of said misrepresentations and/or omissions, Plaintiff and other members of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff and the other members of the Class and the marketplace known the truth regarding the problems that K12 was experiencing, which were not disclosed by Defendants, Plaintiff and other members of the Class would not have purchased or otherwise acquired their K12 securities, or, if they had acquired such securities during the Class Period, they would not have done so at the artificially inflated prices which they paid. 70. By virtue of the foregoing, Defendants have violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. 71. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and the other members of the Class suffered damages in connection with their respective purchases and sales of the Company’s securities during the Class Period. SECOND CLAIM Violation of Section 20(a) of The Exchange Act Against the Individual Defendants 72. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. 73. The Individual Defendants acted as controlling persons of K12 within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level positions, and their ownership and contractual rights, participation in and/or awareness of the Company’s operations and/or intimate knowledge of the false financial statements filed by the Company with the SEC and disseminated to the investing public, the Individual Defendants had the power to influence and control and did influence and control, directly or indirectly, the decision-making of the Company, including the content and dissemination of the various statements which Plaintiff contends are false and misleading. The Individual Defendants were provided with or had unlimited access to copies of the Company’s reports, press releases, public filings and other statements alleged by Plaintiff to be misleading prior to and/or shortly after these statements were issued and had the ability to prevent the issuance of the statements or cause the statements to be corrected. 74. In particular, each of these Defendants had direct and supervisory involvement in the day-to-day operations of the Company and, therefore, is presumed to have had the power to control or influence the particular transactions giving rise to the securities violations as alleged herein, and exercised the same. 75. As set forth above, K12 and the Individual Defendants each violated Section 10(b) and Rule 10b-5 by their acts and/or omissions as alleged in this Complaint. By virtue of their positions as controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of the Exchange Act. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and other members of the Class suffered damages in connection with their purchases of the Company’s securities during the Class Period. PRAYER FOR RELIEF WHEREFORE, Plaintiff prays for relief and judgment, as follows: (a) Determining that this action is a proper class action under Rule 23 of the Federal Rules of Civil Procedure; (b) Awarding compensatory damages in favor of Plaintiff and the other Class members against all defendants, jointly and severally, for all damages sustained as a result of Defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon; (c) Awarding Plaintiff and the Class their reasonable costs and expenses incurred in this action, including counsel fees and expert fees; and (d) Such other and further relief as the Court may deem just and proper. JURY TRIAL DEMANDED Plaintiff hereby demands a trial by jury. Dated: July 20, 2016 GLANCY PRONGAY & MURRAY LLP By: s/ Robert V. Prongay Lionel Z. Glancy Robert V. Prongay Lesley F. Portnoy Charles H. Linehan 1925 Century Park East, Suite 2100 Los Angeles, CA 90067 Telephone: (310) 201-9150 Facsimile: (310) 201-9160 Email: [email protected] Attorneys for Plaintiff Babulal Tarapara In re ITT Educational Services, Inc. Securities Litigation (Indiana) Case No. 1:14-cv-01599-TWP-DML 7/13/2016 Babulal Tarapara's Transactions in K12, Inc (LRN) Date Transaction Type Quantity Unit Price 01/02/2014 Bought 2,000 $20.9200 01/02/2014 Bought 2,000 $21.0400 01/02/2014 Bought 2,000 $21.1500 10/06/2014 Sold -1,000 $16.3000 10/16/2014 Sold -3,100 $14.6000 10/30/2014 Bought 1,500 $13.9000 11/10/2014 Sold -3,000 $12.4500 12/09/2014 Sold -1,200 $11.8000 12/24/2014 Bought 1,200 $12.3000 01/06/2015 Sold -2,300 $10.6500 03/16/2015 Sold -4,989 $16.6600 07/07/2015 Sold -1,100 $12.6500 10/01/2015 Sold -1,500 $12.3600 10/01/2015 Sold -100 $12.4400

securities

C7ELC4cBD5gMZwczXI2s

IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT, OHIO EASTERN DIVISION ADVANCED DERMATOLOGY On behalf of itself and all those similarly situated 8940 Darrow Road Twinsburg, Ohio 44087 Plaintiff, -vs- CASE NO.: JUDGE CLASS ACTION COMPLAINT AND JURY DEMAND MYDERMRECRUITER 7506 Bluff Road Washington, MO 63090 and MICHELLE SULLENTRUP 7506 Bluff Road Washington, MO 63090 Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) INTRODUCTION Plaintiff Advanced Dermatology (“Plaintiff”) brings this nationwide Class Action Complaint against Defendants MyDermRecruiter and Michelle Sullentrup for violations of the Telephone Consumer Protection Act, 47 U.S.C. §227 (“TCPA”) in sending unsolicited facsimiles to people and businesses who have not given their consent. Plaintiff, for its Complaint, alleges as follows upon personal knowledge as to itself, and as to all other matters, upon information and belief, including investigation conducted by its attorneys. 1. The TCPA prohibits any unsolicited facsimiles. PARTIES 1 2. Defendant MyDermRecruiter is a for-profit Missouri corporation, with its headquarters in Washington, Missouri. 3. Defendant MyDermRecruiter solicits small businesses, including dermatology offices across the nation, to use its recruiting services to match employers with job seekers. 4. Defendant MyDermRecruiter is paid upon placement of its candidates with businesses. 5. Defendant Michelle Sullentrup (hereinafter “Ms. Sullentrup”) is the sole owner and shareholder of MyDermRecruiter. 6. On information and belief, Ms. Sullentrup directly participated in and/or personally authorized and/or directed the sending of unsolicited faxes by MyDermRecruiter, as described 7. On information and belief, Ms. Sullentrup exercises complete control over MyDermRecruiter so that Defendants have no separate mind; that control is exercised to commit unlawful acts against Plaintiff; and that control resulted in injury, such that Ms. Sullentrup may be held liable for the acts of MyDermRecruiter. 8. Plaintiff is a resident of Ohio who received two unsolicited facsimiles from Defendants on its office fax machine without consent on May 20, 2019 and June 19, 2019. See Exhibits 1 and 2. JURISDICTION 9. This Court has jurisdiction 28 U.S.C. §1331 and 47 U.S.C. §227. 10. Venue is proper in this District because Defendant directed its acts and conduct herein to the Northern District of Ohio and Plaintiff’s injury occurred here. FACTS 2 11. On or about May 20, 2019, Plaintiff received a one-page facsimile, attached hereto as Exhibit 1, on its fax machine from “myDermRecruiter.com.” 12. On the facsimile, Defendants tout MyDermRecruiter as the “#1 Dermatology Recruitment Firm in the Nation!,” and features a candidate with accompanying job qualifications. 13. The facsimile also provides MyDermRecruiter’s complete contact information, including phone, address, website address, and the name and direct line to one of MyDermRecruiter’s recruitment specialists. 14. On or about June 19, 2019, Plaintiff received a second one-page facsimile, attached hereto as Exhibit 2, on its fax machine from Defendants. 15. Again, the fax provided a listing for a job candidate with skills and job experience listed, and a specific name and direct phone number for one of Defendants’ recruitment specialist. 16. The second facsimile also provides MyDermRecruiter’s contact information, including phone, address, and website address, and promotion as the “#1 Dermatology Recruitment Firm in the Nation!.” Exhibit 2 17. Plaintiff had no business relationship with Defendants, did not give Defendants its number, and had not consented to be sent a facsimile. 18. On information and belief, Defendants routinely send facsimiles to recipients where no relationship exists and sends these facsimiles without prior consent to do so. 19. On information and belief, Defendants continue to solicit businesses by sending these facsimiles nationwide. 20. Plaintiff was damaged by Defendants’ facsimiles by suffering a monetary loss, including incurring the costs of the use of facsimile paper, ink and toner, loss of employee time to review the facsimiles, invasion of privacy, nuisance, interruption of work, trespass to its chattel by 3 interfering with its office facsimile used to aid patients, stress, aggravation, and because a violation of the TCPA itself is a concrete injury. CLASS ALLEGATIONS 21. Class Definition: Plaintiff brings this action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of itself and a Class of similarly situated individuals or business, defined as follows: A. All persons in the United States who received a facsimile from or on behalf of Defendants and who had no ongoing business relationship with Defendants and had not given consent to receive facsimiles from Defendants within the four years prior to the filing of the Complaint until the class is certified. 22. Numerosity: The exact number of class members is unknown and is not available to Plaintiff at this time, but individual joinder in this case is impracticable. The Class likely consists of thousands of individuals and businesses. Class members can be easily identified through MyDermRecruiter’s or its agent’s records. 23. Commonality and Predominance: There are many questions of law and fact common to the claims of Plaintiff and other members of the Class, and those questions predominate over any questions that may affect individual members of the Class. Common questions for the Class include but are not limited to the following: a) Whether Defendants sent the faxes or had them sent on its behalf; b) Whether Defendants had consent; c) Whether Defendants have processes in place to prevent these facsimiles; d) Whether Defendants’ conduct was willful; 4 e) Whether Defendants’ facsimiles were solicitations; and f) Whether Defendants’ conduct constitutes a violation of the TCPA. 24. Typicality: Plaintiff’s claims are typical of the claims of other Class members and it sustained the same damages as other members of the Class as a result of Defendants’ actions. 25. Adequate Representation: Plaintiff will fairly and adequately represent and protect the interests of the Class. Plaintiff has retained counsel competent and experienced in complex litigation and class actions, including TCPA cases. Plaintiff has no interests antagonistic to the Class, and Defendants have no defenses unique to Plaintiff. Plaintiff and its counsel are committed to vigorously prosecuting this action on behalf of members of the Class and have the financial resources to do so. 26. Superiority: This case is appropriate for certification because class proceedings are the best method available for the fair and efficient adjudication of this controversy in light of the common issues across the class. CAUSE OF ACTION Violation of 47 U.S.C § 227 (On behalf of Plaintiff and the Class) 31. Plaintiff incorporates the foregoing allegations as if fully set forth herein. 32. The TCPA expressly prohibits unsolicited fax advertising, 47 U.S.C.§ 227(b) (1) (C). 33. Defendants violated this provision by sending an unsolicited faxes to Plaintiff. 34. As a result of Defendants’ unlawful conduct, Plaintiff and the other members of the Class suffered actual damages as set forth in paragraph 13 above and under Section 227(b)(3)(B), are each entitled to, inter alia, a minimum of $500 in statutory damages for each violation. 5 35. Should the Court determine that Defendants’ misconduct was willful and knowingly, the Court may, pursuant to section 227(b)(3)(C), treble the amount of statutory damages recoverable by Plaintiff and the other members of the Class to $1,500 per fax. PAYER FOR RELIEF WHEREFORE, Plaintiff, on behalf of itself and the Class, respectfully requests that this Court enter an order: A. Certifying this case as a class action on behalf of the Class defined above, appointing Plaintiff as representative of the Class, and appointing its counsel as Class Counsel; B. Awarding injunctive and other equitable relief as necessary to protect the interests of the Class, including, inter alia, an order prohibiting Defendants from engaging in the wrongful and unlawful acts described herein; C. An award of actual and statutory damages; D. Awarding Plaintiff and the Class their reasonable litigation expenses and attorneys' fees; E. Awarding Plaintiff and the Class pre- and post-judgment interest, to the extent allowable; and F. Awarding such other and further relief as equity and justice may require. 6 Respectfully submitted, /s/Ronald I. Frederick Ronald I. Frederick (#0063609) Michael L. Berler (#0085728) Michael L. Fine (#0077131) Frederick & Berler LLC 767 East 185th Street Cleveland, Ohio 44119 (216) 502-1055 (phone) (216) 566-9400(fax) [email protected] [email protected] [email protected] Attorneys for Plaintiff JURY DEMAND Plaintiff demands a trial by jury for all issues so triable. /s/Ronald I. Frederick Ronald I. Frederick (#0063609) Frederick & Berler, LLC Attorney for Plaintiff 7

privacy

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UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA Case No. : DEANNA HICKS, individually and on behalf of all others similarly situated, Plaintiff, CLASS ACTION COMPLAINT DEMAND FOR JURY TRIAL HOUSTON BAPTIST UNIVERSITY, a Delaware corporation, Defendant. CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Plaintiff DeAnna Hicks (“Hicks” or “Plaintiff Hicks”) brings this Class Action Complaint and Demand for Jury Trial (“Complaint”) against Defendant Houston Baptist University (“HBU” or “Defendant”) to (1) stop its practice of placing calls using an “automatic telephone dialing system” to the cellular telephones of consumers nationwide without their prior express written consent; (2) enjoin Defendant from continuing to place autodialed telephone calls to consumers who did not provide their prior express written consent to receive them - and even to those on the National Do Not Call Registry- and (3) obtain redress for all persons injured by its conduct. Plaintiff, for her Complaint, alleges as follows upon personal knowledge as to herself and her own acts and experiences, and, as to all other matters, upon information and belief, including investigation conducted by her attorneys. NATURE OF THE ACTION 1. Senator Hollings, one of the [Telephone Consumer Protection Act’s (“TCPA”)] sponsors, described computerized calls as ”the scourge of modern civilization. They wake us up in the morning; they interrupt our dinner at night; they force the sick and elderly out of bed; they hound us until we want to rip the telephone cord out of the wall.” 137 Cong. Rec. 30, 821 (1991). Senator Hollings presumably intended telephone subscribers another option: telling the autodialers to simply stop calling.” Osario v. State Fram Bank, F.S.B., 746 F.3d 1242, 1256 (11th Cir. 2014). Thus, the TCPA was enacted to empower the private citizen and to protect the privacy (and perhaps the sanity) of consumers nationwide. 2. But, unfortunately, computerized calls continue to increase and further invade the privacy of millions of consumers. Last year, in 2016, 4 million complaints related to unwanted calls were lodged with the Federal Communications Commission (the “FCC”).1 This number is markedly higher than the previous year, which yielded 2.6 million complaints (which rose from the year before that).2 Notably (and inauspiciously), many consumers who have been subjected to illegal calling activity do not report each instance of illegal calling activity, and the actual number of consumers affected by illegal calls is significantly higher. 3. Here, Defendant HBU contacts consumers without their prior express written consent in an effort to solicit their business with respect to signing up for college classes at HBU. 4. Accordingly, this case addresses HBU’s repeated pattern of practice of calling consumers on their cellular telephones using an autodialer who have no direct relationship with HBU. Defendant conducted (and continues to conduct) a wide-scale solicitation campaign that features the repeated making of unwanted autodialed phone calls to consumers’ cellular 1 National Do Not Call Registry Data Book FY 2016, October 1, 2015 - September 30, 2016, FEDERAL TRADE COMMISSION (Dec. 2016), https://www.ftc.gov/system/files/documents/reports/national-do-not-call-registry-data- book-fiscal-year-2016/dnc_data_book_fy_2016_post.pdf; Consumer Complaints Data - Unwanted Calls, FCC - Open Data, FEDERAL COMMUNICATIONS COMMISSION, https://opendata.fcc.gov/Consumer-and- Government-Affairs/Consumer-Complaints-Data-Unwated-Calls/vakf-fz8e. 2 National Do Not Call Registry Data Book FY 2015, FEDERAL TRADE COMMISSION (Nov. 2015), https://www.ftc.gov/system/files/documents/reports/national-do-not-call-registry-data-book-fiscal-year- 2015/dncdatabookfy2015.pdf: Consumer Complaints Data - Unwanted Calls, FCC - Open Data, FEDERAL COMMUNICATIONS COMMISSION, https://opendata.fcc.gov/Consumer-and-Government-Affairs/Consumer- Complaints-Data-Unwanted-Calls/vakf-fz8e; Fact Sheet: Wheeler Proposal to Protect and Empower Consumers Against Unwanted Robocalls, Texts to Wireless Phones, FEDERAL COMMUNICATIONS COMMISSION, https://apps.fcc.gov/edocs_public/attachmatch/DOC-333676A1.pdf; National Do Not Call Registry Data Book FY 2014, FEDERAL TRADE COMMISSION (Nov. 2014), https://www.ftc.gov/system/files/documents/reports/national-do-not-call-registry-data-book-fiscal-year- 2014/dncdatabookfy2014.pdf. telephones without prior express written consent, all in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (the “TCPA”). 5. By making these autodialed calls, Defendant caused Plaintiff and the members of the Classes actual harm and cognizable legal injury. This includes the aggravation and nuisance and invasions of privacy that result from the receipt of such calls, in addition to the wear and tear on their cellular telephones, consumption of battery life, lost cellular minutes, loss of value realized for the monies consumers paid to their wireless carriers for the receipt of such calls, in the form of the diminished use, enjoyment, value, and utility of their cellular telephone plans. Furthermore, Defendant made the calls knowing they interfered with Plaintiff and the other Class members’ use and enjoyment of, and the ability to access their cellphones, including the related data, software, and hardware components. 6. The TCPA was enacted to protect consumers from autodialed telephone calls like those alleged and described herein. In response to Defendant’s unlawful conduct, Plaintiff files this lawsuit seeking injunctive relief, requiring Defendant to cease all autodialed telephone calling activities to cellular telephones without first obtaining prior express written consent, as well as an award of statutory damages to the members of the Classes under the TCPA, costs, and reasonable attorney’s fees. PARTIES 7. Plaintiff Hicks is a natural person and resides in Youngsville, North Carolina. 8. Defendant HBU is a corporation with a principal place of business located at 7502 Fondren Road, Houston, Texas, 77074. Defendant conducts business throughout this District, the State of North Carolina, and the United States. JURISDICTION AND VENUE 9. This Court has jurisdiction over the subject matter of this action under 28 U.S.C. § 1331, as the action arises under the TCPA, which is a federal statute. This Court has personal jurisdiction over Defendant because Defendant conducts a significant amount of business in this District, solicits consumers in this District, made and continues to make unwanted autodialed solicitation calls in this District, and because the wrongful conduct giving rise to this case occurred in, was directed to, and/or emanated from this District. 10. Venue is proper in this District under 28 U.S.C. § 1391(b) because Defendant conducts a significant amount of business within this District and markets to this District, and because the wrongful conduct giving rise to this case occurred in, was directed to, and/or emanated from this District. Furthermore, venue is proper because Plaintiff resides in this District. COMMON FACTUAL ALLEGATIONS 11. Defendant is a private university and contacts consumers to solicit them to sign up for college classes using an Automated Telephone Dialing System (“ATDS”). 12. As explained by the Federal Communications Commission (“FCC”) in its 2012 order, the TCPA requires “prior express written consent for all autodialed or prerecorded [solicitation] calls to wireless numbers and residential lines.” In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG No. 02-278, FCC 12-21, 27 FCC Rcd. 1830 ¶ 2 (Feb. 15, 2012). 13. Yet in violation of this rule, Defendant fails to obtain any prior express written consent to make these autodialed solicitation calls to cellular telephone numbers. 14. In placing the calls that form the basis of this Complaint, Defendant utilized an ATDS in violation of the TCPA. Specifically, the hardware and software used by Defendant has the capacity to generate and store random numbers, and/or receive and store lists of telephone numbers, and to dial such numbers, en masse, in an automated fashion without human intervention. Defendant’s automated dialing equipment also is, or includes features substantially similar to, a predictive dialer, meaning that it is capable of making numerous phone calls simultaneously and automatically connecting answered calls to then available callers and disconnecting the rest (all without human intervention). 15. In fact, HBU advertises its autodialing technology on its very own website, as shown below: 16. The above image states that by signing up on HBU’s website, a consumer agrees to be subject to “[HBU] contacting [the consumer] about educational opportunities via text, email, phone, including [the consumer’s] mobile phone if provided, and those calls may be placed using an autodialer.”3 4 3 http://onlinenursing.hbu.edu/privacy/. 4 Plaintiff never provided her number to HBU. 17. When placing these calls to consumers, Defendant failed to obtain prior express written consent as required by the TCPA from cellular telephone owners/users to make such 18. At all times material to this Complaint, Defendant was and is fully aware that unwanted autodialed telemarketing calls are being made to consumers’ cellular telephones through its own efforts and their agents. 19. Defendant knowingly made (and continues to make) autodialed solicitation calls to cellular telephones without the prior express written consent of the call recipients. In so doing, Defendant not only invaded the personal privacy of Plaintiff and members of the putative Class, but also intentionally and repeatedly violated the TCPA. FACTS SPECIFIC TO PLAINTIFF DEANNA HICKS 20. On August 11, 2006, Plaintiff Hicks’ cellular telephone number was registered on the National Do Not Call Registry. 21. Plaintiff Hicks became a registered nurse after studying at Austin Community College (hereinafter “ACC”). 22. While studying at ACC, Hicks signed a document with ACC that stated that ACC would not share nor sell her information with any other schools or organizations. 23. On September 13, 2017 at 1:55 p.m., and more than 30 days after Hicks’ telephone number was registered on the National Do Not Call Registry, Hicks began receiving unwanted autodialed solicitation calls from telephone number 888-688-1710 (the “1710 Number”). The agent calling from the 1710 Number left a voice message. During the voice message, the live agent explained that she was calling “on behalf of Houston Baptist University” and encouraged Hicks to contact HBU to learn more about what it can offer her by calling 844- 326-3019 or going online to visit http://onlinenursing.hbu.edu/. The webpage the operator directed Plaintiffs Hicks to describe their program where a registered nurse such as Plaintiff Hicks can enroll in HBU’s paid curriculum to earn a Master of Science in Nursing (MSN) or a Bachelor of Science in Nursing which can “launch registered nurses ahead.”5 The webpage advertises that these programs can be completed fully online. The programs cost anywhere from $11,475 to $18,000 in tuition. 24. The next day, on September 14, 2017 at 9:41 a.m., Hicks received another call from the 1710 Number (the “September 14th Call”). 25. Upon answering the September 14th Call, Hicks noticed a slight pause. This artificially long pause is indicative of the caller using an autodialer to place the calls. 26. During the September 14th Call, HBU again solicited Hicks to sign up for their online programs and their HBU agent explained to Hicks that HBU had partnered with her former school, although, curiously, HBU’s agent did not specifically state Hicks’ former school by name (ACC) until Hicks herself mentioned her former school’s name. 27. During the September 14th Call, Hicks demanded that HBU stop calling her. 28. HBU owns/operates and/or utilizes the 1710 Number to place solicitation calls to potential consumers. 29. Hicks does not have a relationship with HBU, or any of its affiliated companies, or has ever requested that HBU place calls to her. Simply put, HBU did not possess Hicks’ prior express written consent to place a solicitation telephone call to her on her cellular telephone using autodialer and Hicks has no business relationship with HBU. Hicks even contacted her former nursing school ACC to ensure that it did not share or sell her information. ACC replied that it had not shared her information. 5 http://onlinenursing.hbu.edu/ 30. By making unauthorized autodialed telephone calls as alleged herein, HBU has caused consumers actual harm in the form of annoyance, nuisance, and invasion of privacy. In addition, the calls disturbed Hicks’ use and enjoyment of her cellular telephone, in addition to the wear and tear on the phone’s hardware (including the phone’s battery) and the consumption of memory on Hicks’ cellular telephone. In the present case, a consumer could be subjected to many unsolicited collection calls as HBU does not take care to ensure that the recipients of its autodialed solicitation calls have given their prior express written consent to be called, even those on the National Do Not Call Registry. 31. In order to redress these injuries, Hicks, on behalf of herself and a class of similarly situated individuals, brings suit under the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq., which prohibits unsolicited autodialed telephone calls to cellular telephones. 32. On behalf of the Classes, Plaintiff seeks an injunction requiring Defendant to cease all unsolicited autodialed telephone calling activities and an award of statutory damages to the class members, together with costs and reasonable attorney’s fees. CLASS ALLEGATIONS 33. Plaintiff brings this action pursuant to Federal Rule of Civil Procedure 23(b)(2) and Rule 23(b)(3) on behalf of herself and all others similarly situated and seeks certification of the following two Classes: Autodialed No Consent Class: All persons in the United States from four years prior to the filing of this action through the present who (1) Defendant (or a third person acting on behalf of Defendant) called, (2) on the person’s cellular telephone, (3) using an autodialer, and (4) for whom Defendant claims it obtained prior express written consent in the same manner as Defendant claims it supposedly obtained prior express written consent to call the Plaintiff. Do Not Call Registry Class: All persons in the United States who (1) Defendant (or a third person acting on behalf of Defendant) called more than one time on his/her cellular telephone; (2) within any 12-month period (3) where the cellular telephone number had been listed on the National Do Not Call Registry for at least thirty days; (4) for the purpose of selling Defendant’s products and services; and (5) for whom Defendant claims it obtained prior express consent in the same manner as Defendant claims it obtained prior express consent to call the Plaintiff. 34. The following individuals are excluded from the Class: (1) any Judge or Magistrate presiding over this action and members of their families; (2) Defendant, its subsidiaries, parents, successors, predecessors, and any entity in which Defendant or its parents have a controlling interest and their current or former employees, officers and directors; (3) Plaintiff’s attorneys; (4) persons who properly execute and file a timely request for exclusion from the class; (5) the legal representatives, successors or assigns of any such excluded persons; and (6) persons whose claims against Defendant have been fully and finally adjudicated and/or released. Plaintiff anticipates the need to amend the class definition following appropriate discovery. 35. Numerosity: The exact size of the Classes are unknown and not available to Plaintiff at this time, but it is clear that individual joinder is impracticable. On information and belief, Defendant placed autodialed solicitation calls to thousands of consumers who fall into the definition of the Class. Members of the Class can be easily identified through Defendant’s 36. Commonality and Predominance: There are many questions of law and fact common to the claims of Plaintiff and the Classes, and those questions predominate over any questions that may affect individual members of the Classes. Common questions for the Classes include, but are not necessarily limited to the following: (a) whether Defendant’s conduct constitutes a violation of the TCPA; (b) whether Defendant systematically made telephone calls to members of the Classes without first obtaining prior express consent to make the calls; (c) whether Defendant utilized an automatic telephone dialing system to make its calls to members of the Classes; (d) whether Defendant systematically made multiple telephone calls to consumers whose telephone numbers were registered with the National Do Not Call Registry; (e) whether Defendant made autodialed telephone calls to members of the Classes without first obtaining prior express written consent to make the calls; (f) whether members of the Classes are entitled to treble damages based on the willfulness of Defendant’s conduct; and (g) whether Defendant obtained prior express written consent to contact any class members. 37. Adequate Representation: Plaintiff will fairly and adequately represent and protect the interests of the Classes, and has retained counsel competent and experienced in class actions. Plaintiff has no interests antagonistic to those of the Classes, and Defendant has no defenses unique to Plaintiff. Plaintiff and her counsel are committed to vigorously prosecuting this action on behalf of the members of the Classes, and have the financial resources to do so. Neither Plaintiff nor her counsel has any interest adverse to the Classes. 38. Appropriateness: This class action is also appropriate for certification because Defendant has acted or refused to act on grounds generally applicable to the Classes and as a whole, thereby requiring the Court’s imposition of uniform relief to ensure compatible standards of conduct toward the members of the Classes and making final class-wide injunctive relief appropriate. Defendant’s business practices apply to and affect the members of the Classes uniformly, and Plaintiff’s challenge of those practices hinges on Defendant’s conduct with respect to the Classes as wholes, not on facts or law applicable only to Plaintiff. Additionally, the damages suffered by individual members of the Classes will likely be small relative to the burden and expense of individual prosecution of the complex litigation necessitated by Defendant’s actions. Thus, it would be virtually impossible for the members of the Classes to obtain effective relief from Defendant’s misconduct on an individual basis. A class action provides the benefits of single adjudication, economies of scale, and comprehensive supervision by a single court. Economies of time, effort, and expense will be fostered and uniformity of decisions will be ensured. FIRST CAUSE OF ACTION Telephone Consumer Protection Act (Violations of 47 U.S.C. § 227 et seq.) (On Behalf of Plaintiff and the Autodialed No Consent Class) 39. Plaintiff incorporates the foregoing factual allegations as if fully set forth herein. 40. Defendant made autodialed solicitation telephone calls to cellular telephone numbers belonging to Plaintiff and other members of the Autodialed No Consent Class without first obtaining prior express written consent to receive such calls. 41. Defendant made the telephone calls using equipment that had the capacity to store or produce telephone numbers using a random or sequential number generator, to receive and store lists of phone numbers, and to dial such numbers, en masse, without human intervention. 42. The telephone dialing equipment utilized by Defendant, also known as a predictive dialer, dialed numbers from a list, or dialed numbers from a database of telephone numbers, in an automatic and systematic manner. Defendant’s autodialer disseminated information en masse to Plaintiff and other consumers. 43. By making the unwanted solicitation telephone calls to Plaintiff and the Autodialed No Consent Class members’ cellular telephones without their prior express consent, and by utilizing an autodialer to make those calls, Defendant violated 47 U.S.C. § 227(b)(1)(A)(iii). 44. As a result of Defendant’s unlawful conduct, Plaintiff and the members of the Autodialed No Consent Class are each entitled a minimum of Five Hundred Dollars ($500.00) in damages for each such violation of the TCPA. 45. In the event that the Court determines that Defendant’s conduct was willful and knowing, it may, under 47 U.S.C. § 227(b)(3)(C), treble the amount of statutory damages recoverable by Plaintiff and the other members of the Autodialed No Consent Class. SECOND CAUSE OF ACTION Telephone Consumer Protection Act (Violation of 47 U.S.C. § 227) (On Behalf of Plaintiff and the Do Not Call Registry Class) 46. Plaintiff incorporates by reference the foregoing allegations as if fully set forth 47. 47 U.S.C. § 227(c) provides that any “person who has received more than one telephone call within any 12-month period by or on behalf of the same entity in violation of the regulations prescribed under this subsection may” bring a private action based on a violation of said regulations, which were promulgated to protect telephone subscribers’ privacy rights to avoid receiving telephone solicitations to which they object. 48. The TCPA’s implementing regulation, 47 C.F.R. § 64.1200(c), provides that “[n]o person or entity shall initiate any telephone solicitation” to “[a] residential telephone subscriber who has registered his or her telephone number on the national do-not-call registry of persons who do not wish to receive telephone solicitations that is maintained by the federal government.” 49. 47 C.F.R. § 64.1200(e), provides that § 64.1200(c) and (d) “are applicable to any person or entity making telephone solicitations or telemarketing calls to wireless telephone numbers to the extent described in the FCC’s July 3, 2003 Report and Order, which in turn, provides as follows: The Commission’s rules provide that companies making telephone solicitations to residential telephone subscribers must comply with time of day restrictions and must institute procedures for maintaining do-not-call lists. For the reasons described above, we conclude that these rules apply to calls made to wireless telephone numbers. We believe that wireless subscribers should be afforded the same protections as wireline subscribers.6 50. 47 C.F.R. § 64.1200(d) further provides that “[n]o person or entity shall initiate any call for telemarketing purposes to a residential telephone subscriber unless such person or entity has instituted procedures for maintaining a list of persons who request not to receive telemarketing calls made by or on behalf of that person or entity. The procedures instituted must meet the following minimum standards: (1) Written policy. Persons or entitles making calls for telemarketing purposes must have a written policy, available upon demand, for maintaining a do-not-call list. (2) Training of personnel engaged in telemarketing. Personnel engaged in any aspect of telemarketing must be informed and trained in the existence and use of the do-not-call list. (3) Recording, disclosure of do-not-call requests. If a person or entity making a call for telemarketing purposes (or on whose behalf such a call is made) receives a request from a residential telephone subscriber not to receive calls from that person or entity, the person or entity must record the request and place the subscriber’s name, if provided, and telephone number on the do-not-call list at the time the request is made. Persons or entities making calls for telemarketing purposes (or on whose behalf such calls are made) must honor a residential subscriber’s do-not-call request within a reasonable time from the date such request is made. This period may not exceed thirty days from the date of such request . . . . (4) Identification of sellers and telemarketers. A person or entity making a call for telemarketing purposes must provide the called party with the name of the individual caller, the name of the person or entity on whose behalf the call is being made, and a telephone number or address at which the person or entity may be contacted. The telephone number provided may not be a 900 number or any other number for which charges exceed local or long distance transmission charges. (5) Affiliated persons or entities. In the absence of a specific request by the subscriber to the contrary, a residential subscriber’s do-not-call request shall apply to the particular business entity making the call (or on whose behalf a call is made), 6 Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Report and Order, 18 FCC Rcd 14014 (2003) Available at https://apps.fcc.gov/edocs_public/attachmatch/FCC-03-153A1.pdf and will not apply to affiliated entities unless the consumer reasonably would expect them to be included given the identification of the caller and the product being advertised. (6) Maintenance of do-not-call lists. A person or entity making calls for telemarketing purposes must maintain a record of a consumer’s request not to receive further telemarketing calls. A do-not-call request must be honored for 5 years from the time the request is made. 51. Defendant violated 47 C.F.R. § 64.1200(c) by initiating, or causing to be initiated, telephone solicitations to wireless telephone subscribers such as Plaintiff and the Do Not Call Registry Class members who registered their respective telephone numbers on the National Do Not Call Registry, a listing of persons who do not wish to receive telephone solicitations that is maintained by the federal government. These consumers requested to not receive calls from Defendant, as set forth in 47 C.F.R. § 64.1200(d)(3). 52. Defendant also violated 47 C.F.R. § 64.1200(d) by failing to have a written policy of dealing with do not call requests, by failing to inform or train its personnel engaged in telemarketing regarding the existence and/or use of any do not call list, and by failing to internally record and honor do not call requests. 53. Defendant made more than one unsolicited telephone call to Plaintiff and other members of the Do Not Call Registry Class within a 12-month period without their prior express consent to receive such calls. Plaintiff and other members of the Do Not Call Registry Class never provided any form of consent to receive telephone calls from Defendant, and/or Defendant does not have a current record of consent to place telemarketing calls to them. 54. Defendant violated 47 C.F.R. § 64.1200(d) by initiating calls for telemarketing purposes to residential and wireless telephone subscribers, such as Plaintiff and the Do Not Call Registry Class, without instituting procedures that comply with the regulatory minimum standards for maintaining a list of persons who request not to receive telemarketing calls from 55. Defendant violated 47 U.S.C. § 227(c)(5) because Plaintiff and the Do Not Call Registry Class received more than one telephone call in a 12-month period made by or on behalf of Defendant in violation of 47 C.F.R. § 64.1200, as described above. As a result of Defendant’s conduct as alleged herein, Plaintiff and the Do Not Call Registry Class suffered actual damages and, under section 47 U.S.C. § 227(c), are each entitled, inter alia, to receive up to $500 in damages for such violations of 47 C.F.R. § 64.1200. 56. To the extent Defendant’s misconduct is determined to be willful and knowing, the Court should, pursuant to 47 U.S.C. § 227(c)(5), treble the amount of statutory damages recoverable by the members of the Do Not Call Registry Class. PRAYER FOR RELIEF WHEREFORE, Plaintiff, individually and on behalf of the Classes, prays for the following relief: 57. An order certifying the Classes as defined above, appointing Plaintiff DeAnna Hicks as the representative of the Classes, and appointing her counsel as Class Counsel; 58. An award of actual monetary loss from such violations or the sum of five hundred dollars ($500.00) for each violation, whichever is greater all to be paid into a common fund for the benefit of the Plaintiff and the Class Members; 59. An order declaring that Defendant’s actions, as set out above, violate the TCPA; 60. A declaratory judgment that Defendant’s telephone calling equipment constitutes an automatic telephone dialing system under the TCPA; 61. An order requiring Defendant to disgorge any ill-gotten funds acquired as a result of its unlawful telephone calling practices; 62. An order requiring Defendant to identify any third-party involved in the autodialing as set out above, as well as the terms of any contract or compensation arrangement it has with such third parties; 63. An injunction requiring Defendant to cease all unsolicited autodialed calling activities, and otherwise protecting the interests of the Classes; 64. An injunction prohibiting Defendant from using, or contracting the use of, an automatic telephone dialing system without obtaining, and maintaining records of, call recipient’s prior express written consent to receive calls made with such equipment; 65. An injunction prohibiting Defendant from contracting with any third-party for marketing purposes until it establishes and implements policies and procedures for ensuring the third-party’s compliance with the TCPA; 66. An injunction prohibiting Defendant from conducting any future autodialing activities until it has established an internal Do Not Call List as required by the TCPA; 67. An award of reasonable attorneys’ fees and costs to be paid out of the common fund prayed for above; and 68. Such other and further relief that the Court deems reasonable and just. JURY DEMAND Plaintiff requests a trial by jury of all claims that can be so tried. Respectfully Submitted, DEANNA HICKS, individually and on behalf of classes of similarly situated individuals Dated: December 20, 2017 By: ___/s/ Ted Lewis Johnson_________ One of Plaintiff’s Attorneys Ted Lewis Johnson PO Box 5272 Greensboro, NC 27435 [email protected] Phone: (336) 252-8596 Stefan Coleman* [email protected] 201 S. Biscayne Blvd, 28th Floor Miami, Fl 33131 Phone: (877) 333-9427 Fax: (888) 498-8946 Attorneys for Plaintiff and the putative Classes *Pro Hac Vice to be sought

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THE ROSEN LAW FIRM, P.A. Phillip Kim, Esq. (PK 9384) Laurence M. Rosen, Esq. (LR 5733) 275 Madison Avenue, 34th Floor New York, New York 10016 Telephone: (212) 686­1060 Fax: (212) 202­3827 Email: [email protected] Email: [email protected] Counsel for Plaintiff UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK DAVID REILLY, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, Plaintiff, v. Case No. CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS JURY TRIAL DEMANDED ABEONA THERAPEUTICS INC. f/k/a/ PLASMATECH BIOPHARMACEUTICALS, INC., STEVEN H. ROUHANDEH, and STEPHEN B. THOMPSON Defendants. Plaintiff David Reilly (“Plaintiff”), individually and on behalf of all other persons similarly situated, by Plaintiff’s undersigned attorneys, for Plaintiff’s complaint against Defendants (defined below), alleges the following based upon personal knowledge as to Plaintiff and Plaintiff’s own acts, and upon information and belief as to all other matters based on the investigation conducted by and through Plaintiff’s attorneys, which included, among other things, a review of Securities and Exchange Commission (“SEC”) filings by Abeona Therapeutics Inc. (“Abeona”), formerly known as PlasmaTech Biopharmaceuticals, Inc. (“PlasmaTech” and together with Abeona, the “Company”), as well as media and analyst reports about the Company. Plaintiff believes that substantial evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. NATURE OF THE ACTION 1. This is a federal securities class action on behalf of a class consisting of all persons and entities, other than Defendants and their affiliates, who: (1) purchased or otherwise acquired publicly traded PlasmaTech securities from March 31, 2015 to June 19, 2015, both dates inclusive (the “PlasmaTech Class Period”); and/or (2) purchased or otherwise acquired publicly traded Abeona securities from June 22, 2015 to December 9, 2016, both dates inclusive (the “Abeona Class Period” and together with the PlasmaTech Class Period, the “Class Period”), seeking to recover compensable damages caused by Defendants’ violations of federal securities laws and pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b­5 promulgated thereunder. JURISDICTION AND VENUE 2. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b­5 promulgated thereunder (17 C.F.R. § 240.10b­5). 3. This Court has jurisdiction over the subject matter of this action pursuant to Section 27 of the Exchange Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1331. 4. Venue is proper in this Judicial District pursuant to Section 27 of the Exchange Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1391(b) as Defendants conduct business in this District and a significant portion of the Defendants' actions, and the subsequent damages, took place within this District. 5. In connection with the acts, conduct and other wrongs alleged herein, Defendants either directly or indirectly used the means and instrumentalities of interstate commerce, including but not limited to the United States mails, interstate telephone communications, and the facilities of the national securities exchange. PARTIES 6. Plaintiff as set forth in the attached PSLRA Certification, acquired PlasmaTech and/or Abeona securities at artificially inflated prices during the Class Period and was damaged upon the revelation of the alleged corrective disclosures. 7. Defendant Abeona focuses on developing and delivering gene therapy and plasma­based products for severe and life­threatening rare diseases. The Company is incorporated in Delaware and maintains an office in New York at 1325 Avenue of the Americas, 27th Floor, New York, NY 10019. Abeona securities trade on the Nasdaq Stock Market (“NASDAQ”) under the symbol “ABEO.” From October 24, 2014 to June 19, 2015, the Company was named PlasmaTech Biopharmaceuticals, Inc. Plasma securities traded on the NASDAQ from December 19, 2014 until June 19, 2015 under the symbol “PTBI.” 8. Defendant Steven H. Rouhandeh (“Rouhandeh”) has been the Company’s Executive Chairman and Principal Executive Officer throughout the Class Period.. 9. Defendant Stephen B. Thompson (“Thompson”) has been the Company’s Chief Accounting Officer, Secretary and Treasurer throughout the Class Period. 10. Collectively, Defendants Rouhandeh and Thompson are referred to herein as “Individual Defendants.” 11. Collectively, Defendant Abeona and Individual Defendants are herein referred to as “Defendants”. 12. Each of the Individual Defendants: a. directly participated in the management of the Company; b. was directly involved in the day­to­day operations of the Company at the highest levels; c. was privy to confidential proprietary information concerning the Company and its business and operations; d. was directly or indirectly involved in drafting, producing, reviewing and/or disseminating the false and misleading statements and information alleged herein; e. was directly or indirectly involved in the oversight or implementation of the Company’s internal controls; f. was aware of or recklessly disregarded the fact that the false and misleading statements were being issued concerning the Company; and/or g. approved or ratified these statements in violation of the federal securities laws. 13. Abeona is liable for the acts of the Individual Defendants and its employees under the doctrine of respondeat superior and common law principles of agency as all of the wrongful acts complained of herein were carried out within the scope of their employment with authorization. 14. The scienter of the Individual Defendants and other employees and agents of the Company is similarly imputed to Abeona under respondeat superior and agency principles. SUBSTANTIVE ALLEGATIONS Background 15. Sanfilippo syndrome, also called MPS III, is metabolism disorder in which the body cannot properly break down long chains of sugar molecules. There are 4 main types of Sanfilippo syndrome, described as type A, B, C or D. 16. Abeona’s lead programs are ABO­101 (AAV NAGLU) and ABO­102 (AAV SGSH), adeno­associated virus (AAV)­based gene therapies for Sanfilippo syndrome (MPS IIIB and IIIA, respectively). Defendants’ False and Misleading Class Period Statements 17. On March 31, 2015, the Company filed an annual report on Form 10­K with the SEC announcing the Company’s financial and operating results for the fiscal year ended December 31, 2014 (the “2014 10­K”). The 2014 10­K was signed by Defendants Rouhandeh and Thompson. The 2014 10­K contained signed certifications pursuant to the Sarbanes­Oxley Act of 2002 (“SOX”) by Defendants Rouhandeh and Thompson attesting to the accuracy of financial reporting, the disclosure of any material changes to the Company’s internal control over financial reporting and the disclosure of all fraud. 18. The 2014 10­K provide the following biographical information about Defendant Rouhandeh: Mr. Steven H. Rouhandeh became our Executive Chairman on January 1, 2015. Mr. Rouhandeh has been a director and Chairman of the Board since March 4, 2008. He has been Chief Investment Officer of SCO Capital Partners, a group of New York based life sciences funds since 1997. Mr. Rouhandeh possesses a diverse background in financial services that includes experience in asset management, corporate finance, investment banking and law. He has been active throughout recent years as an executive in venture capital and as a founder of several companies in the biotech field. His experience also includes positions as Managing Director of a private equity group at Metzler Bank, a private European investment firm and Vice President, Investment Banking at Deutsche Bank. Mr. Rouhandeh was also a corporate attorney at New York City­based Cravath, Swaine & Moore. Mr. Rouhandeh holds a J.D., from Harvard Law School, Harvard University and B.A. Political Science, from Southern Illinois University. 19. On March 30, 2016, the Company filed an annual report on Form 10­K with the SEC announcing the Company’s financial and operating results for the fiscal year ended December 31, 2015 (the “2015 10­K”). The 2015 10­K was signed by Defendants Rouhandeh and Thompson. The 2015 10­K contained signed SOX certifications by Defendants Rouhandeh and Thompson attesting to the accuracy of financial reporting, the disclosure of any material changes to the Company’s internal control over financial reporting and the disclosure of all 20. The 2015 10­K provide the following biographical information about Defendant Rouhandeh: Mr. Steven H. Rouhandeh, became our Executive Chairman, Principal Executive Officer, on January 1, 2015. Mr. Rouhandeh has been a director and Chairman of the Board since March 4, 2008. He has been Chief Investment Officer of SCO Capital Partners, a group of New York based life sciences funds since 1997. Mr. Rouhandeh possesses a diverse background in financial services that includes experience in asset management, corporate finance, investment banking and law. He has been active throughout recent years as an executive in venture capital and as a founder of several companies in the biotech field. His experience also includes positions as Managing Director of a private equity group at Metzler Bank, a private European investment firm and Vice President, Investment Banking at Deutsche Bank. Mr. Rouhandeh was also a corporate attorney at New York City­based Cravath, Swaine & Moore. Mr. Rouhandeh holds a J.D., from Harvard Law School, Harvard University and B.A. Political Science, from Southern Illinois University. 21. The 2015 10­K stated the following with regards to ABO­101 and ABO­102: ABO­101 for MPS III B and ABO­102 for MPS III A (Sanfilippo syndrome) Mucopolysaccharidosis (MPS) type III (Sanfilippo syndrome) is a group of four inherited genetic diseases, described as type A, B, C or D, which cause enzyme deficiencies that result in the abnormal accumulation of glycosaminoglycans (sugars) in body tissues. MPS III is a lysosomal storage disease, a group of rare inborn errors of metabolism resulting from deficiency in normal lysosomal function. The incidence of MPS III (all four types combined) is estimated to be 1 in 70,000 births. Mucopolysaccharides are long chains of sugar molecules used in the building of connective tissues in the body. There is a continuous process in the body of replacing used materials and breaking them down for disposal. Children with MPS III are missing an enzyme called heparan sulfate which is essential in breaking down the used mucopolysaccharides. The partially broken down mucopolysaccharides remain stored in cells in the body causing progressive damage. Babies may show little sign of the disease, but as more and more cells become damaged, symptoms start to appear. In MPS III, the predominant symptoms occur due to accumulation within the central nervous system (CNS), including the brain and spinal cord, resulting in cognitive decline, motor dysfunction, and eventual death. To date, there is no cure for MPS III and treatments are largely supportive. Abeona is developing next generation AAV­based gene therapies for MPS III (Sanfilippo syndrome), which involves a one­time delivery of a normal copy of the defective gene to cells of the central nervous system with the aim of reversing the effects of the genetic errors that cause the disease. After a single dose in Sanfilippo preclinical models, ABO­101 and ABO­102 induced cells in the CNS and peripheral organs to produce the missing enzymes which helped repair the damage caused to the cells. Preclinical in vivo efficacy studies in Sanfilippo syndrome have demonstrated functional benefits that remain for months after treatment. A single dose of ABO­101 or ABO­102 significantly restored normal cell and organ function, corrected cognitive defects that remained months after drug administration, increased neuromuscular control and increased the lifespan of animals with MPS III over 100% one year after treatment compared to untreated control animals. These results are consistent with studies from several laboratories suggesting AAV treatment could potentially benefit patients with Sanfilippo Syndrome Type A and B. In addition, safety studies conducted in animal models of Sanfilippo syndromes have demonstrated that delivery of AB0­101 or AB0­102 are well tolerated with minimal side effects. 22. The statements referenced in ¶¶ 17­21 above were materially false and/or misleading because they misinterpreted and failed to disclose the following adverse facts pertaining to the Company’s business and operations which were known to Defendants or recklessly disregarded by them. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) the science behind Abeona’s proposed gene therapy treatment for Sanfilippo syndrome is unviable; (2) defendant Rouhandeh previously worked in a high ranking position for a biotech promoter who was convicted of securities fraud and involved in manipulating biotech stocks; and (3) as a result, Defendants’ statements about Abeona’s business, operations and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times. The Truth Emerges 23. On December 12, 2016, analyst firm Mako Research published a report on the Company (the “Mako Research Report”) asserting, among other things, that the Company’s science underpinning ABO­101 and ABO­102 is unviable, stating in part: This report will cover the following key points about Abeona’s science: Three serious flaws in Abeona’s gene therapy approach guarantee failure of ABO­101 and ABO­102. Furthermore, ABEO does not appear to be pursuing a rational regulatory pathway forward, calling into question the true motives of insiders as they continue to collect their ridiculously excessive insider compensation paid for with shareholder money. Similar to AVXS, ABEO has pursued flakey trials at a single location ­ the Nationwide Children's Hospital (NCH) in Ohio. As I wrote about previously in my report on AVXS, NCH faces a host of related party conflicts of interest, negative media coverage after the Sarepta fiasco, and a tainted reputation that casts significant doubt over the limited data studies conducted at NCH. Lastly, even if Abeona ever made its way through all of the red flags above, the TAM of Sanfilippo syndrome is incredibly small, and ABEO faces a host of larger competitors pursuing superior treatments in this small and crowded market. With ABEO, investors appear under the mistaken belief that adeno associated virus (AAV) based gene therapy approaches are a cure all for monogenic diseases like Sanfilippo syndrome. They don't dig into the scientific details and as such are susceptible to believing the superficial analysis conducted by conflicted sell side banks and stock promoters. This certainly seems to be the case with Abeona as a deep dive into the medical literature reveals not one but three key flaws in Abeona's approach, any of which would render their claims unviable. First, a primer on gene therapy. In order for gene therapy to work, the gene in question has to get to the target cell AND it has to express once it is there. The first part, called delivery, is typically accomplished by a virus. The second is accomplished through the use of a promoter. In other words, there are two key steps that must both be successful for the gene therapy treatment to work. The promoter (pun intended in the case of Abeona) directs expression of the gene of interest once the virus has transduced the tissue. Promoters come in two types: constitutive (always on) and tissue specific (only work in certain tissues). With that as a background, let us explore why Abeona's approach fails these two criteria, which in turn makes ABO­101 and 102 destined to certain failure based on our research. Furthermore, we then show that ABEO has no rational regulatory pathway forward. Abeona Flaw #1: AAV gene therapy has already been tried in MPS3a and hasn’t worked We rarely have a case where we can compare direct delivery with indirect delivery for the same disease but it turns out Abeona is not the first to consider gene therapy for MPS3a. Unlike Abeona who is relying on inferior intravenous administration of the AAV vector, Lysogene attempted direct intraparenchymal delivery of their AAV vector. That means they injected it directly into the patient’s brain. By directly introducing the virus into the brain, any concern that the virus would not reach brain tissue is eliminated. In other words, the delivery problem has been eliminated. Simply stated, if the direct approach attempted by Lysogene doesn't work then intravenous gene therapy (i.e., Abeona’s approach of indirectly applying the treatment that may or may not successfully reach the brain) clearly doesn't stand a chance, in our view. The results presented by Lysogene were underwhelming as shown in this abstract which concluded, “Brain atrophy evaluated by magnetic resonance imaging seemed to be stable in Patients 1 and 3 but tended to increase in Patients 2 and 4.” Hardly a ringing endorsement and this is from a study where the barrier to delivery was non­existent. How well could Abeona’s approach, which has a much more difficult path to delivery, be expected to work in light of these Lysogene results? How will Abeona do better than this when they are administering the virus into a peripheral vein and hoping or praying that it gets into the central nervous system? We already know that superior delivery via directly into the brain showed mediocre results at best. Making matters worse for Abeona is that the study described above used a promoter that is active in all tissue types. As we'll see below, Abeona's promoter choice is even more problematic as well which brings us to flaw number 2. Abeona Flaw #2 - The promoter chosen by Abeona doesn't work in glia The nervous system consists of two broad cell classifications: neurons and glia. Neurons are the cells that transmit electric signals to other cell types and glial cells play a supportive role. MPS3a affects both cell types (see electron micrograph in the source below). Source: NCBI The AAV vector being used by Abeona supposedly transduces both cell types but getting into the cell is not enough: Once inside the virus must express the protein of interest. If the virus gets into the correct cells but does not express, there is no benefit to the patient. Expression of the protein of interest is done by placing a good copy of the gene in front of a "promoter" which will drive its expression. Abeona chose a promoter called U1a as shown in their clinical trials.gov listing: Unfortunately for Abeona, they chose a promoter called U1a that apparently IS NOT ACTIVE in glia which means it can only treat some of the cells in the CNS. How can one honestly expect good results from this? Moreover, what does this say about the scientific acumen of Abeona's scientists? This is a rookie mistake. Furthermore, Abeona has set the bar for the primary end point for their trial comically low. Below is Abeona's primary endpoint from clinical trials.gov. How difficult do you think this primary endpoint ­ development of unacceptable toxicity ­ will be to achieve? I could develop unacceptable toxicity levels with a rock. Even if Abeona achieves this primary outcome measure, it's essentially meaningless. Why would Abeona set the bar so low? And if Abeona wants to run a credible trail, why go to Nationwide Children's Hospital (aka the place it seems to me that you go if you want a positive, but worthless, trial) to determine whether the drug works or not? I covered the dubious science and rampant conflicts of interest that have occurred in other trials at NCH in my recent report on Avexis (NASDAQ:AVXS): please see that report for further details, which I believe are also relevant for Abeona. ***** The bottom line is that, similar to Avexis, Abeona's proposed gene therapy treatment is deeply flawed: The delivery mechanism is inferior to existing studies from other companies with superior delivery mechanisms which still showed mediocre clinical results, rendering ABEO's science unviable. The promoter Abeona has chosen doesn't even work in glia anyway, rendering ABEO's science unviable. Abeona is attempting to clear a bar that is so low that it's essentially meaningless, meaning whatever their trial shows should be clinically worthless. All occurring at what we believe is the most dubious clinical site in the country. (Emphasis in original). 24. The Mako Research Report also asserted that Defendant Rouhandeh was a Managing Director for a biotech stock promoter convicted of securities fraud and involved in manipulating biotech stocks, stating in part: Introducing the Cast of Characters: David Blech and Steven Rouhandeh David Blech: The Godfather of Biotech Stock Fraud Many of today's investors are too young or too new to the investment business to remember the spectacular flame out of D. Blech & Co in the early 1990s. The firm, named after now­convicted felon David Blech who was a key insider in ABEO (in previous incarnations), specialized in making investments in low quality biotech stocks. Blech, who is bipolar and reportedly has a gambling addiction, pled guilty to securities fraud in 1998 but avoided prison time. As recently as 2013, Blech was apparently headed to prison for a second securities fraud conviction according to the NY Times. Known as an aggressive stock promoter involved in many dubious companies, “Blech stocks” have long been a favorite among short sellers and have frequently produced stellar returns for those betting they will decline in price. Several of these legacy Blech stocks, including Abeona, still exist in the market, though often only after failing and reemerging, and/or saddling early investors with crushing dilution and losses. Eventually and not that surprisingly, D. Blech & Co. imploded. Sources claim the firm's collapse caused several biotech stocks to drop by 20­40% or more in a single day, in what later became known as “Blech Thursday.” A Reuters blog identified that these companies lost more than $168 million in market capitalization on this one trading day alone. To detail all of the schemes Blech was involved with would require a novel­length report but I believe Blech’s own employees said it best when they claimed that Blech ran “a sleazy boiler room operation.” We’re not aware of anyone within biotech over the last few decades who has a worse reputation than David Blech ­ and we’ve looked. His involvement in the predecessor companies that ultimately became Abeona is an undeniable red flag, in our view. Steven Rouhandeh: Blech's Protégé and Now Master of Biotech Wipeouts Abeona's Executive Chairman and largest shareholder via his investment firm SCO Capital and affiliates is Steven Rouhandeh. ABEO specifically suggests that Rouhandeh’s “extensive domestic and international financial experience in the health care industry” are his qualifications to serve on the board. So what exactly are Rouhandeh's qualifications? Early in his career, Rouhandeh worked in a position of authority (Managing Director) at D. Blech & Co. and apparently didn't leave until nearly the very end, according to the Wall Street Journal. Since that time, as we will see below, Rouhandeh has blazed a trail of shareholder destruction in lousy biotech stocks that would rival even Blech himself. In my opinion, the key take away here is that Rouhandeh worked in a high ranking position for a biotech stock promoter who was convicted of securities fraud and involved in manipulating biotech stocks. This is not an impressive qualification and would make any investor conducting real due diligence at least a little uneasy. I suspect that most Abeona investors are completely unaware of this fact because it has apparently been omitted from Rouhandeh's recent, publicly available business background profiles. The key question now becomes, how and why was this key piece of Rouhandeh's qualifications omitted from his biography and past? Source: Google Images and Institutional Investors Alpha After reviewing numerous profiles, I found that Rouhandeh’s role as Managing Director at D. Blech & Co. mysteriously disappears even though it seems he previously included it before the firm was the subject of widespread media coverage based on David Blech’s fraudulent behavior. This complete lack of disclosure is especially unsettling since Rouhandeh still discloses that he served as a Managing Director at Metzler Bank which he worked at before he began working at D. Blech & Co. This is consistent across the public business profiles I reviewed, it does not appear to be an administrative error. It's worth re­iterating that these actions are highly relevant to someone making a decision to invest in a biotech company and I find it appalling that these proper disclosures have been neglected. (Emphasis in original). 25. On this news, shares of the Company fell $0.70 per share or over 13% from its previous closing price to close at $4.45 per share on December 12, 2016, damaging investors. 26. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s common shares, Plaintiff and other Class members have suffered significant losses and damages. PLAINTIFF’S CLASS ACTION ALLEGATIONS 27. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who (1) purchased or otherwise acquired PlasmaTech securities publicly traded on the NASDAQ from March 31, 2015 to June 19, 2015, both dates inclusive; and/or (2) purchased or otherwise acquired Abeona securities publicly traded on the NASDAQ from June 22, 2015 to December 9. 2016, both dates inclusive (the “Class”) and were damaged upon the revelation of the alleged corrective disclosure. Excluded from the Class are Defendants herein, the officers and directors of the Company, at all relevant times, members of their immediate families and their legal representatives, heirs, successors or assigns and any entity in which Defendants have or had a controlling interest. 28. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, PlasmaTech and Abeona securities were actively traded on the NASDAQ. While the exact number of Class members is unknown to Plaintiff at this time and can be ascertained only through appropriate discovery, Plaintiff believes that there are hundreds or thousands of members in the proposed Class. Record owners and other members of the Class may be identified from records maintained by the Company or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions. 29. Plaintiff’s claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that is complained of herein. 30. Plaintiff will fairly and adequately protect the interests of the members of the Class and has retained counsel competent and experienced in class and securities litigation. Plaintiff has no interests antagonistic to or in conflict with those of the Class. 31. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are: a. whether the federal securities laws were violated by Defendants’ acts as alleged herein; b. whether statements made by Defendants to the investing public during the Class Period misrepresented material facts about the business, operations and management of the Company; c. whether the Individual Defendants caused the Company to issue false and misleading financial statements during the Class Period; d. whether Defendants acted knowingly or recklessly in issuing false and misleading financial statements; e. whether the prices of PlasmaTech and/or Abeona securities during the Class Period were artificially inflated because of the Defendants’ conduct complained of herein; and f. whether the members of the Class have sustained damages and, if so, what is the proper measure of damages. 32. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation make it impossible for members of the Class to redress individually the wrongs done to them. There will be no difficulty in the management of this action as a class action. 33. Plaintiff will rely, in part, upon the presumption of reliance established by the fraud­on­the­market doctrine in that: a. Defendants made public misrepresentations or failed to disclose material facts during the Class Period; b. the omissions and misrepresentations were material; c. PlasmaTech and/or Abeona securities are traded in an efficient market; d. PlasmaTech and/or Abeona’s shares were liquid and traded with moderate to heavy volume during the Class Period; e. the misrepresentations and omissions alleged would tend to induce a reasonable investor to misjudge the value of PlasmaTech and/or Abeona’s securities; and f. Plaintiff and members of the Class purchased, acquired and/or sold PlasmaTech and/or Abeona securities between the time the Defendants failed to disclose or misrepresented material facts and the time the true facts were disclosed, without knowledge of the omitted or misrepresented facts. 34. Based upon the foregoing, Plaintiff and the members of the Class are entitled to a presumption of reliance upon the integrity of the market. 35. Alternatively, Plaintiff and the members of the Class are entitled to the presumption of reliance established by the Supreme Court in Affiliated Ute Citizens of the State of Utah v. United States, 406 U.S. 128, 92 S. Ct. 2430 (1972), as Defendants omitted material information in their Class Period statements in violation of a duty to disclose such information, as detailed above. FIRST CAUSE OF ACTION Violation of Section 10(b) of The Exchange Act Against and Rule 10b-5 Promulgated Thereunder Against All Defendants 36. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. 37. This cause of action is asserted against all Defendants. 38. During the Class Period, Defendants carried out a plan, scheme and course of conduct which was intended to, and throughout the Class Period, did: (1) deceive the investing public, including Plaintiff and other Class members, as alleged herein; and (2) cause Plaintiff and other members of the Class to purchase and/or sell PlasmaTech and/or Abeona’s securities at artificially inflated and distorted prices. In furtherance of this unlawful scheme, plan and course of conduct, Defendants, individually and as a group, took the actions set forth herein. 39. Defendants, individually and in concert, directly and indirectly, by the use, means or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a continuous course of conduct to conceal adverse material information about the business, operations and future prospects of the Company as specified herein. 40. Defendants employed devices, schemes and artifices to defraud, while in possession of material adverse non­public information and engaged in acts, practices, and a course of conduct as alleged herein in an effort to assure investors of the Company’s value and performance and continued substantial growth, which included the making of, or the participation in the making of, untrue statements of material facts and omitting to state material facts necessary in order to make the statements made about the Company and its business operations and financial condition in light of the circumstances under which they were made, not misleading, as set forth more particularly herein, and engaged in transactions, practices and a course of business that operated as a fraud and deceit upon the purchasers of PlasmaTech and/or Abeona securities during the Class Period. 41. Each of the Defendants’ primary liability, and controlling person liability, arises from the following: (a) Defendants were high­level executives, directors, and/or agents at the Company during the Class Period and members of the Company’s management team or had control thereof; (b) by virtue of their responsibilities and activities as senior officers and/or directors of the Company, were privy to and participated in the creation, development and reporting of the Company’s plans, projections and/or reports; (c) Defendants enjoyed significant personal contact and familiarity with the other members of the Company’s management team, internal reports and other data and information about the Company’s operations, and (d) Defendants were aware of the Company’s dissemination of information to the investing public which they knew or recklessly disregarded was materially false and misleading. 42. Defendants had actual knowledge of the misrepresentations and omissions of material facts set forth herein, or acted with reckless disregard for the truth in that they failed to ascertain and to disclose such facts, even though such facts were available to them. Such Defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and for the purpose and effect of concealing the Company’s financial condition from the investing public and supporting the artificially inflated price of its securities. As demonstrated by Defendants’ false and misleading statements during the Class Period, Defendants, if they did not have actual knowledge of the misrepresentations and omissions alleged, were reckless in failing to obtain such knowledge by failing to take steps necessary to discover whether those statements were false or misleading. 43. As a result of the dissemination of the materially false and misleading information and failure to disclose material facts, as set forth above, the market price for PlasmaTech and/or Abeona’s securities was artificially inflated during the Class Period. 44. In ignorance of the fact that market prices of PlasmaTech and/or Abeona’s publicly­traded securities were artificially inflated or distorted, and relying directly or indirectly on the false and misleading statements made by Defendants, or upon the integrity of the market in which PlasmaTech and/or Abeona’s securities trade, and/or on the absence of material adverse information that was known to or recklessly disregarded by Defendants but not disclosed in public statements by Defendants during the Class Period, Plaintiff and the other members of the Class acquired PlasmaTech and/or Abeona’s securities during the Class Period at artificially high prices and were damaged thereby. 45. At the time of said misrepresentations and omissions, Plaintiff and other members of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff and the other members of the Class and the marketplace known the truth regarding the Company’s financial results and condition, which were not disclosed by Defendants, Plaintiff and other members of the Class would not have purchased or otherwise acquired PlasmaTech and/or Abeona securities, or, if they had acquired such securities during the Class Period, they would not have done so at the artificially inflated prices or distorted prices at which they did. 46. By virtue of the foregoing, the Defendants have violated Section 10(b) of the Exchange Act, and Rule 10b­5 promulgated thereunder. 47. As a direct and proximate result of the Defendants’ wrongful conduct, Plaintiff and the other members of the Class suffered damages in connection with their respective purchases and sales of the Company’s securities during the Class Period. 48. This action was filed within two years of discovery of the fraud and within five years of Plaintiff’s purchases of securities giving rise to the cause of action. SECOND CAUSE OF ACTION Violation of Section 20(a) of The Exchange Act Against the Individual Defendants 49. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. 50. This second cause of action is asserted against each of the Individual Defendants. 51. The Individual Defendants acted as controlling persons of the Company within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high­level positions, agency, and their ownership and contractual rights, participation in and/or awareness of the Company’s operations and/or intimate knowledge of aspects of the Company’s dissemination of information to the investing public, the Individual Defendants had the power to influence and control, and did influence and control, directly or indirectly, the decision­making of the Company, including the content and dissemination of the various statements that Plaintiff contend are false and misleading. The Individual Defendants were provided with or had unlimited access to copies of the Company’s reports, press releases, public filings and other statements alleged by Plaintiff to be misleading prior to and/or shortly after these statements were issued, and had the ability to prevent the issuance of the statements or to cause the statements to be corrected. 52. In particular, each of these Defendants had direct and supervisory involvement in the day­to­day operations of the Company and, therefore, is presumed to have had the power to control or influence the particular transactions giving rise to the securities violations as alleged herein, and exercised the same. 53. As set forth above, Abeona and the Individual Defendants each violated Section 10(b) and Rule 10b­5 by their acts and omissions as alleged in this Complaint. 54. By virtue of their positions as controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of the Exchange Act as they culpably participated in the fraud alleged herein. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and other members of the Class suffered damages in connection with their purchases of the Company’s common stock during the Class Period. 55. This action was filed within two years of discovery of the fraud and within five years of Plaintiff’ purchases of securities giving rise to the cause of action. PRAYER FOR RELIEF WHEREFORE, Plaintiff prays for relief and judgment, as follows: a. Determining that this action is a proper class action, designating Plaintiff as class representative under Rule 23 of the Federal Rules of Civil Procedure and Plaintiff’s counsel as Class Counsel; b. Awarding compensatory damages in favor of Plaintiff and the other Class members against all defendants, jointly and severally, for all damages sustained as a result of Defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon; c. Awarding Plaintiff and the Class their reasonable costs and expenses incurred in this action, including counsel fees and expert fees; and d. Awarding such other and further relief as the Court may deem just and proper. JURY TRIAL DEMANDED Plaintiff hereby demands a trial by jury. Dated: December 16, 2016 Respectfully submitted, THE ROSEN LAW FIRM, P.A. By: /s/ Phillip Kim Laurence M. Rosen, Esq. (LR 5733) Phillip Kim, Esq. (PK 9384) 275 Madison Ave, 34th Floor New York, NY 10016 Phone: (212) 686­1060 Fax: (212) 202­3827 Counsel for Plaintiff

securities

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UNITED STATES DISTRICT COURT ECEIVE SOUTHERN DISTRICT OF NEW YORK MAR 22 2011 ) U.S.D.C. S.D. N.Y. ) Civil Action COMPLETED ) Plaintiff, ) ) CLASS ACTION COMPLAINT V. ) ) ) JURY TRIAL DEMANDED ) Defendants. ) ) ) Plaintiff Marlon Fund Sicav plc ("Plaintiff"), individually and on behalf of all other NATURE OF THE ACTION 1. This is a securities fraud class action, on behalf of all those who purchased or 2. Throughout the Class Period, Defendants made false and/or misleading 3. On March 15, 2011, the Company shocked the market with the disclosure "that it 4. Upon this disclosure, Nasdaq halted trading of ShengdaTech shares at $3.55. 5. As a result of defendants' wrongful acts and omissions, and the precipitous JURISDICTION AND VENUE 6. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange 7. This Court has jurisdiction over the subject matter of this action pursuant to 28 8. Venue is proper in this District pursuant to Section 27 of the Exchange Act, 15 9. In connection with the challenged conduct, defendants, directly or indirectly, used PARTIES 10. Plaintiff Marlon Fund Sicav plc, as set forth in the accompanying certification, 11. Defendant ShengdaTech is a Nevada corporation with its principal executive 12. Defendant Xiangzhi Chen ("X. Chen") was, at all relevant times, the 13. Defendant Anhui Guo ("Guo") has been the Company's Acting Chief Financial 14. Defendant Andrew Weiwen Chen ("A. Chen") was the Company's CFO from 15. The defendants referenced above in 19 12 through 14 are collectively referred toSUBSTANTIVE ALLEGATIONS 16. On May 10, 2010, the Company filed a Form 10-Q for the first quarter ended 17. On May 11, 2010, the Company issued a press release announcing its financial 18. On August 9, 2010, the Company filed a Form 10-Q for the second quarter ended 19. On August 10, 2010, ShengdaTech issued a press release announcing its financial 20. On November 8, 2010, ShengdaTech issued a press release announcing its 21. On November 8, 2010, the Company filed a Form 10-Q for the 3Q10 with the 22. The statements referenced above in II 16-22 above were materially false and/or 23. On March 15, 2011, the Company disclosed "that it had appointed a special 24. As a result of the Company's disclosure, Nasdaq halted trading of ShengdaTec 25. On March 18, 2011, the Company issued a press release revealing: [O]n March 16, 2011, it received a letter from the Listing Qualifications Department of The Nasdaq Stock Market ("Nasdaq") advising the Company that due to its inability to file its Annual Report on Form 10-K for the fiscal year ended December 31, 2010 with the Securities and Exchange Commission in a timely manner, the Company is not in compliance with Nasdaq Listing Rule 5250(c)(1). The Company also received a request for information and documents from the Listing Investigation Department of Nasdaq. Nasdaq has requested that the Company submit, prior to March 31, 2011, a plan to regain compliance. If Nasdaq accepts the Company's plan, Nasdaq can grant up to 180 calendar days from March 31, 2011, to regain compliance. The Company currently intends to submit a plan to regain compliance with the Nasdaq Listing Rules and a response to the information and document request as soon as reasonably practicable. CLASS ACTION ALLEGATIONS 26. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil27. The members of the Class are SO numerous that joinder of all members is 28. Plaintiff's claims are typical of the claims of the members of the Class as all 29. Plaintiff will fairly and adequately protect the interests of the members of the 30. Common questions of law and fact exist as to all members of the Class and whether the federal securities laws were violated by defendants' acts as alleged herein; whether statements made by defendants to the investing public during the Class Period misrepresented material facts about the business, operations, financial condition, and prospects of ShengdaTech whether the Individual Defendants caused ShengdaTech to issue false and misleading financial statements during the Class Period; whether defendants acted knowingly or recklessly in issuing false and misleading financial statements; whether the prices of ShengdaTech securities during the Class Period were artificially inflated because of the defendants' conduct complained of herein; and whether the members of the Class sustained damages when the truth began to be disclosed and, if so, what is the proper measure of damages. 31. A class action is superior to all other available methods for the fair and efficient 32. Plaintiff will rely, in part, upon the presumption of reliance established by the defendants made public misrepresentations or failed to disclose material facts during the Class Period; the omissions and misrepresentations were material; ShengdaTech securities are traded in efficient markets; the Company's shares were liquid and traded with moderate to heavy volume during the Class Period; the Company traded on the Nasdaq, and was covered by multiple analysts; the misrepresentations and omissions alleged would tend to induce a reasonable investor to misjudge the value of the Company's securities; and Plaintiff and members of the Class purchased and/or sold Shengda Tech securities between the time the defendants failed to disclose or misrepresented material facts and the time the true facts were disclosed, without knowledge of the omitted or misrepresented facts. 33. Based upon the foregoing, Plaintiff and the members of the Class are entitled to a CLAIMS FOR RELIEF COUNT I (Against All Defendants For Violations of Section 10(b) And Rule 10b-5 Promulgated Thereunder) 34. Plaintiff re-alleges each and every allegation contained above as if fully set forth 35. This Count is asserted against all defendants and is based upon Section 10(b) of 36. During the Class Period, defendants engaged in a plan, scheme, conspiracy and 37.38. By virtue of their positions at ShengdaTech, defendants had actual knowledge of 39. Defendants were personally motivated to make false statements and omit material 40. Information showing that defendants acted knowingly or with reckless disregard 41. The Individual Defendants are liable both directly and indirectly for the wrongs 42. During the Class Period, ShengdaTech securities were traded on an active and 43. By reason of the conduct alleged herein, defendants knowingly or recklessly, 44. As a direct and proximate result of defendants' wrongful conduct, Plaintiff and COUNT II (Violations of Section 20(a) of the Exchange Act Against The Individual Defendants) 45. Plaintiff repeats and realleges each and every allegation contained in the 46. (a) During the Class Period, the Individual Defendants participated in the (b) As officers and/or directors of a publicly owned company, the Individual (c) Because of their positions of control and authority as senior officers, the47. Each of the Individual Defendants, therefore, acted as a controlling person of 48. By reason of the above conduct, the Individual Defendants are liable pursuant to PRAYER FOR RELIEF WHEREFORE, Plaintiff demands judgment against defendants as follows: A. Determining that the instant action may be maintained as a class action under B. Awarding compensatory damages in favor of Plaintiff and the other class C. Awarding Plaintiff and the other members of the Class prejudgment and post- D. Awarding rescissionary damages; and E. Awarding such equitable, injunctive or other relief as this Court may deem just DEMAND FOR TRIAL BY JURY Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiff hereby demands Respectfully Submitted, POMERANTZ HAUDEK GROSSMAN & GROSS, LLP By: Marc I Gross L Loven Jeremy A. Lieberman 100 Park Avenue, 26th Floor New York, New York 10017-5516 Telephone: (212) 661-1100 Facsimile: (212) 661-8665 [email protected] [email protected] POMERANTZ HAUDEK GROSSMAN & GROSS LLP Patrick V. Dahlstrom 10 South LaSalle Street, Suite 3505 Chicago, IL 60603 Phone: 312-377-1181 Fax: 312-377-1184 [email protected] Counsel for Plaintiff CERTIFICATION PURSUANT TO FEDERAL SECURITIES LAWS 1. J, luc Sitbon , on behalf of Marlon Fund Sicav Plc ("Marlon Fund") make this declaration pursuant to Section 21D(a)(2) of the Securities Exchange Act of 1934 as amended by the Private Securities Litigation Reform Act of 1995. I have authority to commence this action on behalf of Marlon Fund. 2. I have reviewed a Complaint against ShengdaTech Inc. ("ShengdaTech"), and authorize the filing of a comparable complaint on behalf of Marlon Fund. 3. Marlon Fund did not purchase ShengdaTech securities at the direction of plaintiffs counsel or in order to participate in any private action arising under the Securities Exchange Act of 1934. 4. Marlon Fund is willing to serve as a representative party on behalf of a Class of investors who purchased Shengda Tech during the class period, including providing testimony at deposition and trial, if necessary. Marlon Fund understands that the Court has the authority to select the most adequate lead plaintiff'in this action. 5. To the best of my current knowledge, the attached sheet lists all of Marlon Fund's transactions in ShengdaTech securities during the Class Period as specified in the Complaint. 6. During the three-year period preceding the date on which this Certification is signed, Marlon Fund has not sought to serve as a representative party on behalf of a class under the federal securities laws. 7. Marlon Fund agrees not to accept any payment for serving as a representative party on behalf of the class as set forth in the Complaint, beyond its pro rata share of any recovery, except such reasonable costs and expenses directly relating to the representation of the class as ordered or approved by the Court. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed 22/03/11 London UK , at (Date) (City, State) 1 (Signature) LUC SITBON (Type or Print Name) DIRECTOR (Title) SUMMARY OF PURCHASES AND SALES DATE PURCHASE OR SALE NUMBER OF SHARES PRICE PER SHARE 09-Aug-10 BUY 10,000 4.6675 16-Aug-10 BUY 5,000 4,5909 01-Sep-10 BUY 5,000 4.4884 04-Oct-10 BUY10,000 5.24 07-Oct-10 Buy 10,000 5.5 24-Nov-10 SELL - 3,931 6.0899 26-Nov-10 SELL - 6,069 6.0101 13-Dec-10 SELL - 4,800 5.0199 25-Jan-11 BUY 5,000 4.1782 08-Mar-11 SELL - 10,000 4.0102 14-Mar-11 BUY 10,000 3.5418

securities

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David S. Casey, Jr., SBN 060768 [email protected] Gayle M. Blatt, SBN 122048 [email protected] Jeremy Robinson, SBN 188325 [email protected] P. Camille Guerra, SBN 326546 [email protected] James M. Davis, SBN 301636 [email protected] CASEY GERRY SCHENK FRANCAVILLA BLATT & PENFIELD, LLP 110 Laurel Street San Diego, CA 92101 Telephone: (619) 238-1811 Facsimile: (619) 544-9232 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA 2:20-cv-9553 NOREEN PFEIFFER, JOSE CONTRERAS and SUSAN WRIGHT, on behalf of themselves and all other persons similarly situated, Plaintiffs, v. CASE NO. CLASS ACTION COMPLAINT Demand for Jury Trial RADNET, INC., a Delaware corporation, Defendant. Plaintiffs Noreen Pfeiffer, Jose Contreras and Susan Wright, individually, and on behalf of all others similarly situated, upon personal knowledge of facts pertaining to them and on information and belief as to all other matters, by and through undersigned counsel, hereby bring this Class Action Complaint against Defendant RadNet, Inc., and allege as follows: INTRODUCTION 1. Obtaining a job requires turning over to employers valuable personal identifying information (“PII”), including social security numbers, driver’s license numbers, birth dates and addresses. If stolen, identity thieves can use this highly sensitive information to fraudulently open new accounts, access existing accounts, perpetrate identity fraud or impersonate victims in myriad schemes, all of which can cause grievous financial harm, negatively impact the victim’s credit scores for years, and cause victims to spend countless hours mitigating the impact. 2. Despite the dire warnings about the severe impact of data breaches on Americans of all economic strata, companies still fail to put adequate security measures in place to protect their customers’ and employees’ data. 3. Defendant RadNet, Inc. (“RadNet”), a provider of outpatient imaging, is among those companies that failed to meet its obligation to protect the sensitive personal identifying information entrusted to it by their current and former employees. 4. As a corporation doing business in California, RadNet is legally required to protect the PII it gathers from unauthorized access and exfiltration. 5. Defendant RadNet collected its employees’ sensitive PII. And in acquiring various imaging centers, Defendant collected the PII of employees of those businesses. In either case, Defendant had an obligation to secure that PII by implementing reasonable and appropriate data security. 6. On or about July 18, 2020, an unknown third party gained unauthorized access to a RadNet server that was used to store certain employee data, and copied files to an external server. The unlawfully access information included employee names, social security numbers, driver’s license numbers, and additional data such as dates of birth, addresses, and passport numbers. 7. As a result of RadNet’s failure to provide adequate data security, Plaintiffs’ and the Class members’ PII has been exposed to those who should not have access to it. Plaintiffs and the Class are now at much higher risk of identity theft and for cybercrimes of all kinds. THE PARTIES 8. Defendant Radnet, Inc., is a Delaware corporation with its principal place of business in Los Angeles, California. 9. Plaintiff Noreen Pfeiffer is a resident of Cockeysville, Maryland. She was employed by Medical Imaging of Baltimore from June 1988 until January 2012. As a part of her employment, she provided that entity with her PII. 10. Medical Imaging of Baltimore was acquired by RadNet before the data breach at issue herein. In or about January 2012, following RadNet’s acquisition of Medical Imaging of Baltimore, Pfeiffer became an employee of RadNet and began to receive compensation from RadNet. As part of the acquisition of Medical Imaging of Baltimore, RadNet acquired and stored the PII that Plaintiff Pfieffer had provided to that company as a part of her employment. 11. Pfeiffer reasonably believed RadNet would keep her PII secure. Had RadNet disclosed to Pfeiffer that her PII would not be kept secure and would be left easily accessible to hackers and third parties, she would have taken additional precautions relating to her PII. 12. Plaintiff Susan Wright is a resident of Edgewood, Maryland. She was employed by Advanced Imaging Partners, Inc. from May 1988 to June 2020. As a part of her employment, she provided that entity with her PII. 13. Advanced Imaging Partners, Inc. was acquired by RadNet before the data breach at issue herein. RadNet is the controlling company of Advanced Imaging Partners, Inc. As part of the acquisition of Advanced Imaging Partners, Inc., RadNet acquired and stored the PII that Plaintiff Wright had provided to that company as a part of her employment. 14. Wright reasonably believed RadNet would keep her PII secure. Had RadNet disclosed to Wright that her PII would not be kept secure and would be kept easily accessible to hackers and third parties, she would have taken additional precautions relating to her PII. 15. Plaintiff Jose Contreras is a resident of Pacoima, California. He was employed by RadNet San Fernando Valley Northridge Diagnostic Imaging Center from approximately 2006 to 2016. 16. Contreras reasonably believed RadNet would keep his PII secure. Had RadNet disclosed to Contreras that his PII would not be kept secure and would be kept easily accessible to hackers and third parties, he would have taken additional precautions relating to his PII. JURISDICTION AND VENUE 17. Subject matter jurisdiction in this civil action is authorized pursuant to 28 U.S.C. § 1332(d) because there are more than 100 Class members, at least one class member is a citizen of a state different from that of Defendant, and the amount in controversy exceeds $5 million, exclusive of interest and costs. 18. This Court has personal jurisdiction over Defendant because it maintains its principal place of business in this District, is registered to conduct business in California, and has sufficient minimum contacts with California. 19. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) because Defendant resides in this District and, on information and belief, a substantial part of the events or omissions giving rise to Plaintiffs’ and Class members’ claims occurred in this District. 20. Application of California law to this dispute is proper because Defendant’s headquarters are in California, the decisions or actions that gave rise to the underlying facts at issue in this Complaint were presumably made or taken in California, and the action and/or inaction at issue emanated from California. FACTUAL ALLEGATIONS A. RadNet Collects and Stores Thousands of Employees’ and Former Employees’ PII and Fails to Provide Adequate Data Security 21. RadNet is a publicly traded company with a market capitalization approaching one billion dollars. It is a major player in its industry. In addition to a full range of medical imaging solutions, it also operates an IT division which delivers integrated, web-based, cloud solutions for medical imaging workflow.1 RadNet also provides a “sophisticated portfolio of insurance solutions to physicians” and operates RadNet TV delivering “targeted, dynamic programming for patients, family members, friends, and guests.”2 22. On July 18, 2020, an unknown third party gained access to a RadNet server that was used to store employee data and copied files to an external server. 23. Employee names, social security numbers, driver’s license numbers, as well as dates of birth, addresses, and passport numbers were among the PII that may have been accessed by the unknown third party. 24. This incident is referred to herein as the “Data Breach.” 25. On or about September 28, 2020, Plaintiffs Pfeiffer, Jose Contreras and Wright received a letter titled “Notice of Data Breach,” dated September 21, 2020, from RadNet. The letter stated that their PII, including those mentioned above, may have been compromised. 26. The information exposed by RadNet is a virtual goldmine for phishers, hackers, identity thieves and cyber criminals. 1 https://www.radnet.com/ 2 Id. 27. This exposure is tremendously problematic. Cybercrime is rising at an exponential rate, as shown in the FBI’s Internet Crime Complaint statistics chart below: 28. According to experts, one out of four data breach notification recipients become a victim of identity fraud. 29. Stolen PII is often trafficked on the “dark web,” a heavily encrypted part of the Internet that is not accessible via traditional search engines. Law enforcement has difficulty policing the “dark web” due to this encryption, which allows users and criminals to conceal identities and online activity. 30. Once PII is sold, it is often used to gain access to various areas of the victim’s digital life, including bank accounts, social media, credit card, and tax details. This can lead to additional PII being harvested from the victim, as well as PII from family, friends and colleagues of the original victim. 31. According to the FBI’s Internet Crime Complaint Center (IC3) 2019 Internet Crime Report, Internet-enabled crimes reached their highest number of complaints and dollar losses in 2019, resulting in more than $3.5 billion in losses to individuals and business victims. 32. Further, according to the same report, “rapid reporting can help law enforcement stop fraudulent transactions before a victim loses the money for good.” Here, Defendant did not rapidly report to Plaintiffs and Class Members that their PII had been stolen. Instead, it took Defendant almost two months to notify them. 33. Victims of identity theft also often suffer embarrassment, blackmail, or harassment in person or online, and/or experience financial losses resulting from fraudulently opened accounts or misuse of existing accounts. 34. Data breaches facilitate identity theft as hackers obtain consumers’ PII and then use it to siphon money from current accounts, open new accounts in the names of their victims, or sell consumers’ PII to others who do the same. 35. For example, The United States Government Accountability Office noted in a June 2007 report on data breaches (the “GAO Report”) that criminals use PII to open financial accounts, receive government benefits, and make purchases and secure credit in a victim’s name.3 The GAO Report further notes that this type of identity fraud is the most harmful because it may take some time for a victim to become aware of the fraud, and can adversely impact the victim’s credit rating in the meantime. The GAO Report also states that identity theft victims will face “substantial costs and inconveniences repairing damage to their credit records . . . [and their] good name.”4 B. RadNet Failed to Comply with Federal Trade Commission Requirements 36. Federal and State governments have established security standards and issued recommendations to minimize data breaches and the resulting harm to individuals and financial institutions. The Federal Trade Commission (“FTC”) has 3 See Government Accountability Office, Personal Information: Data Breaches are Frequent, but Evidence of Resulting Identity Theft is Limited; However, the Full Extent is Unknown (June 2007), available at http://www.gao.gov/assets/270/262899.pdf (last visited October 6, 2020). 4 Id. issued numerous guides for businesses that highlight the importance of reasonable data security practices. According to the FTC, the need for data security should be factored into all business decision-making.5 37. In 2016, the FTC updated its publication, Protecting Personal Information: A Guide for Business, which established guidelines for fundamental data security principles and practices for business.6 Among other things, the guidelines note businesses should properly dispose of personal information that is no longer needed; encrypt information stored on computer networks; understand their network’s vulnerabilities; and implement policies to correct security problems. The guidelines also recommend that businesses use an intrusion detection system to expose a breach as soon as it occurs; monitor all incoming traffic for activity indicating someone is attempting to hack the system; watch for large amounts of data being transmitted from the system; and have a response plan ready in the event of a breach.7 38. Additionally, the FTC recommends that companies limit access to sensitive data; require complex passwords to be used on networks; use industry- tested methods for security; monitor for suspicious activity on the network; and verify that third-party service providers have implemented reasonable security measures.8 39. Highlighting the importance of protecting against data breaches, the FTC has brought enforcement actions against businesses for failing to adequately and 5 See Federal Trade Commission, Start With Security (June 2015), https://www.ftc.gov/system/files/documents/plain-language/pdf0205- startwithsecurity.pdf (last visited October 6, 2020). 6 See Federal Trade Commission, Protecting Personal Information: A Guide for Business (Oct. 2016), https://www.ftc.gov/system/files/documents/plain-language/pdf- 0136_proteting-personal-information.pdf (last October 6, 2020). 7 Id. 8 Federal Trade Commission, Start With Security, supra note 6. reasonably protect PII, treating the failure to employ reasonable and appropriate measures to protect against unauthorized access to confidential consumer data as an unfair act or practice prohibited by Section 5 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 45. Orders resulting from these actions further clarify the measures businesses must take to meet their data security obligations.9 40. By allowing an unknown third party to access a RadNet server and copy employee PII to an unknown server, RadNet failed to employ reasonable and appropriate measures to protect against unauthorized access to confidential employee data. RadNet’s data security policies and practices constitute unfair acts or practices prohibited by Section 5 of the FTC Act, 15 U.S.C. § 45. CLASS ACTION ALLEGATIONS 41. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Plaintiffs bring this action on behalf of themselves and the following proposed Nationwide Class and California Subclass, defined as follows: a. The Nationwide Class: All persons residing in the United States who are employees or former employees of RadNet or any affiliate, parent, or subsidiary of RadNet who had their PII compromised as a result of the Data Breach that occurred on or about July 18, 2020. b. The California Subclass: All persons residing in the State of California who are employees or former employees of RadNet or any affiliate, parent, or subsidiary of RadNet who had their PII compromised as a result of the Data Breach that occurred on or about July 18, 2020. 42. Collectively, the Nationwide Class and the California Subclass will be referred to as “the Class” unless there is a need to differentiate them. 9 Federal Trade Commission, Privacy and Security Enforcement Press Releases, https://www.ftc.gov/news-events/media-resources/protecting-consumer- privacy/privacy-security-enforcement (last visited October 6, 2020). 43. Excluded from the proposed Class are any officer or director of RadNet; any officer or director of any affiliate, parent, or subsidiary of RadNet; anyone employed by counsel in this action; and any judge to whom this case is assigned, his or her spouse, and members of the judge’s staff. 44. Numerosity. Members of the proposed Class are large in number and are too numerous to practically join in a single action. Membership in the Class is readily ascertainable from Defendant’s own records. 45. Commonality and Predominance. Common questions of law and fact exist as to all proposed Class members and predominate over questions affecting only individual Class members. These common questions include: a. Whether Defendant engaged in the wrongful conduct alleged herein; b. Whether Defendant’s inadequate data security measures were a cause of the data security breach; c. Whether Defendant owed a legal duty to Plaintiffs and the other Class members to exercise due care in collecting, storing, and safeguarding their PII; d. Whether Defendant negligently or recklessly breached legal duties owed to Plaintiffs and the other class members to exercise due care in collecting, storing, and safeguarding their PII; e. Whether Plaintiffs and the Class are at an increased risk for identity theft because of the data security breach; f. Whether Defendant’s conduct violated Cal. Bus. & Prof. Code § 17200 et seq.; g. Whether Defendant violated section 1798.150 of the California Consumer Privacy Act by failing to prevent Plaintiffs’ and Class members’ PII from unauthorized access and exfiltration, theft, or disclosure, as a result of Defendant’s violations of its duty to implement and maintain reasonable security procedures and practices appropriate to the nature of the information; h. Whether Plaintiffs and the other class members are entitled to actual, statutory, or other forms of damages, and other monetary relief; and i. Whether Plaintiffs and the other class members are entitled to equitable relief, including, but not limited to, injunctive relief and restitution. 46. Defendant engaged in a common course of conduct giving rise to the legal rights sought to be enforced by Plaintiffs individually and on behalf of the other Class members. Individual questions, if any, pale by comparison, in both quantity and quality, to the numerous questions that dominate this action. 47. Typicality: The claims of Plaintiffs Noreen Pfeiffer and Susan Wright are typical of the claims of the members of the National Class. The claims of Plaintiff Jose Contreras are typical of the claims of the members of the California Subclass. All Class members were subject to the Data Breach and had their PII accessed by and/or disclosed to unauthorized third parties. 48. Adequacy of Representation: Plaintiffs are adequate representatives of the Class because their interests do not conflict with the interests of the other Class members they seek to represent; they have retained counsel competent and experienced in complex class action litigation, and Plaintiffs will prosecute this action vigorously. The interests of the Class will be fairly and adequately protected by Plaintiffs and their counsel. 49. Superiority: A class action is superior to any other available means for the fair and efficient adjudication of this controversy, and no unusual difficulties are likely to be encountered in the management of this matter as a class action. The damages, harm, or other financial detriment suffered individually by Plaintiffs and the other Class members are relatively small compared to the burden and expense that would be required to litigate their claims on an individual basis against Defendant, making it impracticable for Class members to individually seek redress for Defendant’s wrongful conduct. Even if Class members could afford individual litigation, the court system could not. Individualized litigation would create a potential for inconsistent or contradictory judgments and increase the delay and expense to all parties and the court system. By contrast, the class action device presents far fewer management difficulties and provides the benefits of single adjudication, economies of scale, and comprehensive supervision by a single court. FIRST CAUSE OF ACTION Violation of the California’s Unfair Competition Law Cal. Bus. & Prof. Code § 17200, et seq. (On Behalf of Plaintiffs and the Nationwide Class) 50. Plaintiffs incorporate by reference all previous allegations as though fully set forth herein. 51. Defendant violated and continues to violate California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200, et seq., which prohibits unlawful, unfair, and/or fraudulent business acts or practices. 52. Defendant’s conduct, as alleged above, is unlawful because it violates state data security laws, including the California Consumer Protection Act, as well as Section 5 of the Federal Trade Commission Act, which prohibits “unfair … practices in or affecting commerce.” 53. Defendant’s failure to safeguard Plaintiffs’ and Class members’ PII is an unfair practice under the UCL because the gravity of harm to Plaintiffs and Class members outweighs the utility of Defendant’s conduct. This conduct includes Defendant’s failure to adequately ensure the privacy, confidentiality, and security of employee data entrusted to it and Defendant’s failure to have adequate data security measures in place. Current and former employees of Defendant were harmed because they were obligated to provide sensitive and confidential information in order to obtain or continue employment, and Defendant failed to provide such security. 54. Indeed, the PII of Plaintiffs and Class members, including their names, Social Security numbers, driver’s license numbers, birth dates, addresses, and passport numbers, were made accessible by Defendant to unauthorized third parties, subjecting Plaintiffs and the Class members to an impending risk of identity theft. 55. As a direct result of Defendant’s violations of the UCL, as set out above, Plaintiffs and the Class members suffered injury in fact and lost money or property by not being adequately compensated for the heightened risks they were taking by providing their PII. 56. As a direct result of Defendant’s violations of the UCL, Plaintiffs and the Class members are entitled to restitution and other equitable relief. SECOND CAUSE OF ACTION Negligence (On Behalf of Plaintiffs and the Nationwide Class) 57. Plaintiffs incorporate by reference all previous allegations as though fully set forth herein. 58. Defendant owed a duty to Plaintiffs and the Class to exercise reasonable care in obtaining, securing, safeguarding, storing, and protecting Plaintiffs’ and Class members’ PII from being compromised, lost, stolen, and accessed by unauthorized persons. This duty includes, among other things, designing, maintaining and testing its data security systems to ensure that Plaintiffs’ and Class members’ PII in Defendant’s possession was adequately secured and protected. 59. Defendant owed a duty of care to Plaintiffs and members of the Class to provide security, consistent with industry standards, to ensure that its systems and networks adequately protected the PII of its current and former employees. 60. Defendant owed a duty of care to Plaintiffs and members of the Class because they were foreseeable and probable victims of any inadequate data security practices. Defendant knew or should have known of the inherent risks in collecting and storing the PII of its current and former employees and the critical importance of adequately securing such information. 61. Plaintiffs and members of the Class entrusted Defendant with their PII with the understanding that Defendant would safeguard their information, and Defendant was in a position to protect against the harm suffered by Plaintiffs and members of the Class as a result of the Data Breach. 62. Defendant’s own conduct also created a foreseeable risk of harm to Plaintiffs and Class members. Defendant’s misconduct included failing to implement the systems, policies, and procedures necessary to prevent the Data Breach. 63. Defendant knew, or should have known, of the risks inherent in collecting and storing PII and the importance of adequate security. Defendant knew about – or should have been aware of - numerous, well-publicized data breaches affecting businesses in the United States. 64. Defendant breached its duties to Plaintiffs and Class members by failing to provide fair, reasonable, or adequate computer systems and data security to safeguard the PII of Plaintiffs and Class members. 65. Because Defendant knew that a breach of its systems would damage thousands of current and former RadNet employees, including Plaintiffs and Class members, Defendant had a duty to adequately protect its data systems and the PII contained therein. 66. Defendant had a special relationship with Plaintiffs and Class members by virtue of being Plaintiffs’ and Class members’ current or former employees. Plaintiffs and Class members reasonably believed that Defendant would take adequate security precautions to protect their PII. 67. Defendant also had independent duties under state and federal laws that required Defendant to reasonably safeguard Plaintiffs’ and Class members’ PII. 68. Through Defendant’s acts and omissions, including Defendant’s failure to provide adequate security and its failure to protect Plaintiffs’ and Class members’ PII from being foreseeably accessed, Defendant unlawfully breached its duty to use reasonable care to adequately protect and secure the PII of Plaintiffs and Class members during the time it was within Defendant’s possession or control. 69. In engaging in the negligent acts and omissions as alleged herein, which permitted an unknown third party to access a RadNet server containing current and former employee PII, Defendant violated Section 5 of the FTC Act, which prohibits “unfair…practices in or affecting commerce.” This prohibition includes failing to have adequate data security measures and failing to protect their current and former employees’ PII. 70. Plaintiffs and the Class members are among the class of persons Section 5 of the FTC Act was designed to protect, and the injuries suffered by Plaintiffs and the Class members is the type of injury Section 5 of the FTC Act was intended to prevent. As a result, Defendant is negligent per se. 71. Neither Plaintiffs nor the other Class members contributed to the Data Breach as described in this Complaint. 72. As a direct and proximate cause of Defendant’s conduct, Plaintiffs and Class members have suffered and/or will suffer injury and damages, including: (i) the loss of the opportunity to determine for themselves how their PII is used; (ii) the publication and/or theft of their PII; (iii) out-of-pocket expenses associated with the prevention, detection, and recovery from identity theft, tax fraud, and/or unauthorized use of their PII; (iv) lost opportunity costs associated with effort expended and the loss of productivity addressing and attempting to mitigate the actual and future consequences of the Data Breach, including but not limited to efforts spent researching how to prevent, detect, contest and recover from tax fraud and identity theft; (v) costs associated with placing freezes on credit reports; (vi) anxiety, emotional distress, loss of privacy, and other economic and non-economic losses; (vii) the continued risk to their PII, which remains in Defendant’s possession and is subject to further unauthorized disclosures so long as Defendant fails to undertake appropriate and adequate measures to protect the PII of employees and former employees in its continued possession; and, (viii) future costs in terms of time, effort and money that will be expended to prevent, detect, contest, and repair the inevitable and continuing consequences of compromised PII for the rest of their lives. THIRD CAUSE OF ACTION Breach of Implied Contract (On Behalf of Plaintiffs and the Nationwide Class) 73. Plaintiffs incorporate by reference all previous allegations as though fully set forth herein. 74. Defendant offered employment to Plaintiffs and Class members, either directly or through acquiring the businesses for which Plaintiffs and Class members worked. Defendant either required Plaintiffs and Class members to provide their PII or acquired their PII, including names, addresses, dates of birth, Social Security numbers, driver’s license numbers, passport numbers and other personal information, from their former employers which Defendant acquired. 75. Implied in these exchanges was a promise by Defendant to ensure that the PII of Plaintiffs and Class members in its possession was only used to provide the agreed-upon compensation and other employment benefits from Defendant. 76. Defendant was therefore required to reasonably safeguard and protect the PII of Plaintiffs and Class members from unauthorized disclosure and/or use. 77. Plaintiffs and Class members accepted Defendant’s employment offer and/or fully performed their obligations under the implied contract with Defendant by providing their PII, directly or indirectly, to Defendant, among other obligations. 78. Plaintiffs and Class members would not have provided and entrusted their PII to Defendant in the absence of their implied contracts with Defendant, and would have instead retained the opportunity to control their PII for uses other than compensation and other employment benefits from Defendant. 79. Defendant breached the implied contracts with Plaintiffs and Class members by failing to reasonably safeguard and protect Plaintiffs’ and Class members’ PII. 80. As a proximate and direct result of Defendant’s breaches of its implied contracts with Plaintiffs and Class members, Plaintiffs and the Class members suffered damages as described in detail above. FOURTH CAUSE OF ACTION Violation of the California Consumer Privacy Act, Cal. Civ. Code § 1798.150 (On Behalf of Plaintiff Contreras and the California Subclass) 81. Plaintiff Contreras incorporates by reference all previous allegations as though fully set forth herein. 82. Defendant collects consumers’ personal information as defined in Cal. Civ. Code § 1798.140. As a result, Defendant has a duty to implement and maintain reasonable security procedures and practices to protect this personal information. As alleged herein, Defendant failed to do so. 83. Defendant violated § 1798.150 of the California Consumer Privacy Act (“CCPA”) by failing to prevent Plaintiff Contreras’ and California Subclass members’ nonencrypted and nonredacted PII from unauthorized access and exfiltration, theft, or disclosure. These failures were the result of Defendant’s violations of its duty to implement and maintain reasonable security procedures and practices appropriate to the nature of the information. 84. As a direct and proximate result of Defendant’s conduct, Plaintiff Contreras’s and the California Subclass members’ personal information, including names, social security numbers, driver’s license numbers, and additional data such as dates of birth, addresses, and passport numbers, was subjected to unauthorized access, exfiltration, and theft. On information and belief, Plaintiff Conreras and the California Subclass allege this PII was not encrypted or redacted in the format accessed during the Data Breach. 85. Plaintiff Contreras and the California Subclass members seek injunctive or other equitable relief to ensure Defendant hereafter adequately safeguards customers’ PII by implementing reasonable security procedures and practices. Such relief is particularly important because Defendant continues to hold customers’ PII, including that of Plaintiff Contreras and the California Subclass. These individuals have an interest in ensuring that their PII is reasonably protected. 86. On October 17, 2020, Plaintiffs’ Counsel sent a notice letter to Defendant’s registered service agent via FedEx Priority. Assuming Defendant cannot cure the Data Breach within 30 days, and Plaintiffs believe any such cure is not possible under these facts and circumstances, Plaintiffs intend to promptly amend this complaint to seek actual damages and statutory damages of no less than $100 and up to $750 per customer record subject to the Data Breach on behalf of the California Subclass as authorized by the CCPA. PRAYER FOR RELIEF WHEREFORE, Plaintiffs, individually, and on behalf of all others similarly situated, respectfully request that the Court enter an order: a. Certifying the proposed Class as requested herein; b. Appointing Plaintiffs as Class Representatives and undersigned counsel as Class Counsel; c. Finding that Defendant engaged in the unlawful conduct as alleged herein; d. Enjoining Defendant’s conduct and requiring Defendant to implement proper data security policies and practices; e. Awarding Plaintiffs and Class members damages; f. Awarding Plaintiffs and Class members pre-judgment and post-judgment interest on all amounts awarded; g. Awarding Plaintiffs and the Class members reasonable attorneys’ fees, costs, and expenses; and h. Granting such other relief as the Court deems just and proper. DEMAND FOR JURY TRIAL Plaintiffs, on behalf of themselves and the proposed Class, hereby demand a trial by jury as to all matters so triable. Dated: October 17, 2020 /s/ Gayle M. Blatt GAYLE M. BLATT CASEY GERRY SCHENK FRANCAVILLA BLATT & PENFIELD, LLP Attorneys for Plaintiffs and the putative Class

privacy

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IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION WILLIAM GUNN, Individually and on behalf ) of all others similarly situated, ) ) Plaintiffs, ) CLASS ACTION COMPLAINT v. ) ) PROSPECTS DM, LLC ) ) Case No.: 4:19-cv-3129 & ) ) ICOT HEARING SYSTEMS, LLC d/b/a ) LISTENCLEAR ) ) & ) ) ICOT HOLDINGS, LLC ) ) & ) ) JOHN DOE CORPORATIONS 1 THROUGH ) 10, and OTHER JOHN DOE ENTITES 1 ) THROUGH 10, all whose true names are ) unknown. ) JURY TRIAL DEMANDED ) ) Defendant. ) COMPAINT AND DEMAND FOR JURY TRIAL COMES NOW Plaintiff William Gunn, individually and on behalf of all others similarly situated, and through undersigned counsel, and for his Complaint against Defendants, Prospects DM, LLC, John Doe Corporations, Other John Doe Entities, ICOT Hearing Systems, LLC d/b/a ListenClear, and ICOT Holdings, LLC, and for their violations under the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq. (“TCPA”), states to the Court as follows: INTRODUCTION 1. The TCPA was enacted in response to widespread public outrage about the proliferation of intrusive, nuisance telemarketing practices. Mims v. Arrow Fin. Servs., LLC, 132 S. Ct. 740, 745 (2012). 2. Defendant ICOT Hearing Systems, LLC d/b/a ListenClear (“ListenClear”) is owned and controlled by Defendant ICOT Holdings, LLC (“ICOT”). 3. Defendant ListenClear manufactures and sells hearing devices. Upon information and belief, its marketing structure is based on offering a free thirty-day trial to individuals. 4. Defendant ListenClear and ICOT commissioned or otherwise encouraged Defendant Prospects DM, LLC (“PDM”), and upon information and belief, numerous other corporations and vendors, to make auto-dialed calls to individuals across the country. 5. Unfortunately, Defendants do not obtain prior express written consent to place these autodialed telemarketing calls and, therefore, are in violation of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. 6. These autodialed calls placed by Defendants caused Plaintiff and class members to suffer actual harm and legal injury. Plaintiff has suffered aggravation, invasion of privacy, nuisance due to receiving such calls. Plaintiff and class members suffered from the diminished use, enjoyment, utility, and value of their telephones as these calls interfered with their access to their cell phones. 7. The TCPA was enacted to protect consumers from unauthorized and unwanted autodialed calls exactly like the ones alleged in this case. See Mims v. Arrow Fin Servs., LLC, 132 S.Ct., 740, 745 (2012). Defendant placed these autodialed calls despite the fact that Plaintiffs never provided Defendant with prior express written consent to receive them. 8. Senator Hollings, the TCPA’s sponsor described these autodialed calls as “the scourge of modern civilization, they wake us up in the morning; they interrupt our dinner at night; they force the sick and elderly out of bed; they hound us until we want to rip the telephone out of the wall.” 137 Cong. Rec. 30, 821 (1991). 2 9. By placing the autodialed calls at issue, Defendant has violated the privacy and statutory rights of Plaintiff and caused him to suffer actual harm by subjecting him to the aggravation that necessarily accompanies the receipt of such repeated and unauthorized autodialed calls. 10. Plaintiffs therefore seek an injunction requiring Defendant to stop using an autodialer to place telemarketing calls to telephones, as well as an award of actual and statutory damages, together with costs and reasonable attorneys’ fees. PARTIES 11. Plaintiff William Gunn (“Plaintiff”) is a resident of the State of Missouri. 12. Defendant PDM is a limited liability company organized in the state of California with its mailing address at 603 Seagaze Drive, Suite 817, Oceanside, California 92054 that conducts business throughout this state and throughout the country. 13. Defendant ListenClear is a limited liability company organized in the state of Georgia with its headquarters located at 300 Bull St. Suite 200, Savannah, Georgia 31401 that conducts business in this state and throughout the country. 14. Defendant ICOT is a limited liability company organized in the state of Georgia with its headquarters located at 300 Bull Street, Suite 200, Savannah, Georgia 31401 that conducts business in this state and throughout the country 15. Defendant ICOT has control over the conduct and actions of ListenClear. 16. Defendant ICOT, upon information and belief, controls ListenClear’s marketing strategy, including its decision to employ unlawful telemarketing strategies. 17. Defendant ICOT is vicariously liable for ListenClear’s actions as they had agency over determining marketing strategies, who received calls, and how these were limited. 3 18. Upon information and belief, Defendants John Doe Corporations 1 through 10 (the “Corporate Defendants”) are corporations, the names and addresses of residence of which are unknown. 19. Upon information and belief, Defendants Other Entity Defendants 1 through 10 (the “Other Entity Defendants”) are other legal entities, the names of addresses of residences of which are unknown. JURISDICTION AND VENUE 20. This Court has personal jurisdiction over Defendants because Defendants transact business within this state, have made contracts within this state, and/or have committed tortious acts within this state and otherwise have sufficient minimum contacts with the State of Missouri. 21. Venue is proper because a substantial part of the events, actions, and omissions of Defendants, which give rise to the claims and subject Defendants to liability for this telemarking campaign, occurred in this circuit. 22. Plaintiff is an individual located in St. Louis, Missouri. 23. This Court has personal jurisdiction over Defendants because they conduct business in this Circuit and the events giving rise to this lawsuit occurred in and emanated from, in substantial part, this Circuit. TCPA BACKGROUND 24. In 1991, Congress enacted the TCPA to regulate the explosive growth of the telemarketing industry. In so doing, Congress recognized that “[u]nrestricted telemarketing…can be an intrusive invasion of privacy[.]” Telephone Consumer Protection Act of 1991, Pub. L. No. 102- 243, § 2(5) (1991) (codified at 47 U.S.C. § 227). 25. Through the TCPA, Congress outlawed telemarketing via unsolicited automated or pre-recorded telephone calls (“robocalls”), finding: 4 Residential telephone subscribers consider automated or prerecorded telephone calls, regardless of the content or the initiator of the message, to be a nuisance and an invasion of privacy. - - - Banning such automated or prerecorded telephone calls to the home, except when the receiving party consents to receiving the call…is the only effective means of protecting telephone consumers from this nuisance and privacy invasion. Id. § 2(10) and (12); see also Mims, 132 S. Ct. at The TCPA imposes vicarious liability on third-parties who do not physically dial the calls 26. Under the TCPA, a seller of a product or service may be vicariously liable for a third- party marketer’s violations of Sections 227(b) and 227(c), even if the seller did not physically dial the illegal call, and even if the seller did not directly control the marketer who did. In re Joint Pet. Filed by Dish Network, LLC, FCC 13-54 ¶ 37, 2013 WL 193449 (May 9, 2013) (“FCC Ruling”). 27. A seller is liable under Sections 227(b) and (c) when it has authorized a telemarketer to market its goods or services. Id. ¶ 47. 28. Additionally, a seller may be vicariously liable for violations of those provisions under principles of apparent authority and ratification. Factors relevant to a finding of vicarious liability include: a. Whether “the seller allows the outside sales entity access to information and systems that normally would be within the seller’s exclusive control, including…access to detailed information regarding the nature and pricing of the seller’s products and services or to the seller’s customer information,” b. Whether the outside sales entity can “enter consumer information into the seller’s sales or customer systems,” 5 c. Whether the outside sales entity has “the authority to use the seller’s trade name, trademark and service mark,” d. Whether the “seller approved, wrote or reviewed the outside entity’s telemarketing scripts,” and e. “Whether the seller knew (or reasonably should have known) that the telemarketer was violating the TCPA on the seller’s behalf and the seller failed to take effective steps within its power to force the telemarketer to cease that conduct.” Id. ¶ 46. FACTUAL ALLEGATIONS 29. Plaintiff is a “person” as defined by 47 U.S.C. § 153(39). 30. On or about March 2019, Plaintiff began receiving phone calls from telemarketing representatives of PDM, Corporate Defendants, and Other Entity Defendants, all purportedly calling on behalf of Defendants ICOT and ListenClear. 31. Defendant PDM, Corporate Defendants, and Other Entity Defendants called Plaintiff in an attempt to sell or otherwise coerce Plaintiff into engaging with Defendant ListenClear, and by extension, Defendant ICOT. 32. Plaintiff has never used ListenClear products, contracted with ListenClear, or otherwise given ListenClear permission to contact him. 33. Plaintiff is the regular user and only individual assigned to the phone number 314-785- 1255 and was the recipient of Defendants’ phone calls to that number. 34. Plaintiffs caller ID identified the calls from Defendant as being initiated from numerous phone numbers that appear to have been “spoofed,” or numbers that appear to be legitimate phone numbers but are actually autodialed telemarketing calls from Defendants. 35. When Plaintiff answered these phone calls there was not a human salesperson on the line, but rather an automated robotic voice. 6 36. Plaintiff has received at least one hundred and fifty (150) calls from Defendants in which Plaintiff did not consent to receiving. 37. Upon information and belief, Plaintiff has received well in excess of one hundred and fifty (150) calls, as to be determined in the discovery phase. 38. Plaintiff has not given written consent to receive telemarketing calls from, or on behalf of, ICOT, ListenClear, or Corporate Defendants and Other Entity Defendants. 39. In fact, Plaintiff on several occasions demanded to be placed on the “Do Not Call” list for PDM, Corporate Defendants and Other Entity Defendants, and by extension ListenClear, and ICOT, yet these repeated demands were ignored. 40. Plaintiff repeatedly asked the agents/representatives of Defendants to stop calling him. Plaintiff made very clear that he did not consent in any way to the phone calls being placed. 41. Plaintiff has had to constantly endure these phone calls throughout his workday as they invaded upon his privacy and solitude. 42. As Plaintiff works in a school as a college advisor, he does not have the option of simply ignoring any number he does not recognize. Plaintiff must answer these calls in case they are the numbers of parents, administrators, or other school staff. 43. Upon information and belief, some or all of the calls the Defendants made to the Plaintiff’s telephone number were made using an “automatic telephone dialing system” which has the capacity to store and produce telephone numbers to be called, using a random or sequential number generator or an artificial or prerecorded voice; and to dial such numbers as specified by 47 U.S.C. § 227(a)(1). 44. On several occasions, Plaintiff instructed Defendants’ agents/representatives to stop calling his device. 7 45. Despite clearly and unequivocally revoking any consent Defendants may have believed they had to call Plaintiff, Defendants continue to place automated calls to Plaintiff. 46. In fact, several of Defendants’ representatives acknowledged that per the Defendants’ internal communications, Plaintiff was supposed to have been placed on the internal Do Not Call List within their “systems.” 47. Upon information and belief, Defendants’ “systems” include an auto-dialer system and an internal Do Not Call List. 48. Upon information and belief, Defendants continued to call individuals placed on the internal Do Not Call List despite consumer’s requests to be placed on such a list. 49. Each subsequent call Defendants made to Plaintiff’s telephone was knowing and willful and done so without the express consent of Plaintiff. 50. Defendants intentionally harassed and abused Plaintiff on numerous occasions by calling up to eight times in one day and calling multiple days in a row with such frequency as can reasonably be expected to harass. 51. Upon information and belief, Defendants ICOT and ListenClear have engaged in a business strategy that includes marketing through illegal telemarketing calls. 52. Upon information and belief, Defendants PDM, Corporate Defendants, and Other Entity Defendants have a corporate policy to use an automatic telephone dialing system or a pre- recorded or artificial voice to individuals just as they did to Plaintiff’s line in this case. 53. Upon information and belief, Defendant PDM’s, Corporate Defendants’, and Other Entity Defendants’ corporate policies are structured so as to continue to call individuals like Plaintiff, on behalf of other companies that seek to harass consumers, despite these individuals explaining to all Defendants that they want the calls to cease. 8 54. Not a single call placed by Defendants to Plaintiff was placed for “emergency purposes” as specified in 47 U.S.C. § 277(b)(1)(A). 55. Defendants willfully and knowingly violated the TCPA with respect to Plaintiff. 56. Each phone call placed by Defendants to the Plaintiff’s phone without consent caused Plaintiff to suffer the injury of invasion of privacy and the intrusion upon his right of seclusion. 57. Each phone call placed by Defendants to the Plaintiff’s phone without consent caused Plaintiff to suffer the injury of unnecessary expenditures to his time. For the calls Plaintiff answered, the time spent on these calls was unnecessary as Plaintiff repeatedly asked for the calls to stop. Even for unanswered calls, Plaintiff had to waste time silencing the call or waiting for the phone to stop ringing and Plaintiff had to waste time to check his voicemail. This also impaired the usefulness of Plaintiff’s phone, which is designed to inform the user of important and legitimate missed communications. 58. Each phone call placed by Defendants to the Plaintiff’s phone without consent caused Plaintiff to suffer the injury of occupation of his phone line by unwanted calls, making the phone unavailable for legitimate callers or outgoing calls while the phone was ringing from Defendants’ calls. 59. Each phone call where a voice message was left by Defendants without the consent of the Plaintiff occupied space in Plaintiff’s phone. 60. Every phone call placed by Defendants without express consent to Plaintiff’s phone resulted in injury of trespass to Plaintiff’s chattel, namely his telephone. 61. As a result of the calls described above, Plaintiff was affected in a personal and individualized way through stress, anxiety, nervousness, distress and aggravation. 62. ICOT officers and directors control ListenClear’s sales and marketing strategy, including its decisions to solicit the unlawful use of autodialers. 9 63. Upon information and belief, ICOT and ListenClear arbitrarily share and allocate funds amongst themselves. 64. ICOT has taken out, and paid for, insurance policies that list ListenClear as the insured. 65. ICOT and ListenClear have a unity of business interest and operate under the ListenClear brand. 66. ListenClear has no separate interests or functions that exist outside of ICOT’s interests and functions. 67. A corporation or other entity that contracts out its telephone marketing may be held vicariously liable under federal common law principles of agency for violations of section 227(b) or section 227(c) that are committed by third-party telemarketers. 68. ListenClear and ICOT are thus directly liable for PDM’s, Corporate Defendants’, and Other Entity Defendants’ telemarketing calls because, upon information and belief, they actively participated in the calls by allowing such an outside entity access to information and systems that normally would be within the seller’s exclusive control by giving PDM, Corporate Defendants, and Other Entity Defendants access to its calling systems. 69. ListenClear and ICOT maintain interim control over PDM, Corporate Defendants, and Other Entity Defendants, as they hired these companies to perform tasks and dictated parameters for potential prospects. 70. ListenClear and ICOT knew, or should have known, that PDM, Corporate Defendants and Other Entity Defendants were violating the TCPA on its behalf and failed to take effective steps within its power to force these companies to cease such conduct. ListenClear and ICOT tacitly consented to such actions by not reasonably investigating or preventing such conduct. CLASS ALLEGATIONS 71. This action is brought as a class action. Plaintiff brings this action on behalf of himself 10 and on behalf of all other persons similarly situated pursuant to Rule 23 of the Federal Rules of Civil Procedure. 72. The identities of all class members are readily ascertainable from the records of PDM, Corporate Defendants, Other Entity Defendants, ICOT and ListenClear. 73. Excluded from the Plaintiff’s Class is PDM, Corporate Defendants, Other Entity Defendants, ICOT, ListenClear, and all officers, members, partners, managers, directors, and employees of PDM, Corporate Defendants, Other Entity Defendants, ICOT, and ListenClear, and all of their respective immediate families, and legal counsel for all parties to this action and all members of their immediate families. 74. There are questions of law and fact common to the Plaintiff’s Class, which common issues predominate over any issues involving only individual class members. The principal issues are whether PDM, Corporate Defendants, Other Entity Defendants, ICOT, and ListenClear’s communications with the Plaintiff, such as the above stated claims, violate provisions of the TCPA and Missouri Consumer Fraud and Deceptive Business Practices Act Chapter 407. 75. Plaintiff’s claims are typical of the class members, as all are based upon the same facts and legal theories. 76. Plaintiff will fairly and adequately protect the interests of the Plaintiff’s Class defined in this complaint. Plaintiff has retained counsel with experience in handling consumer lawsuits, complex legal issues, and class actions, and neither the Plaintiff nor his attorneys have any interests, which might cause them not to vigorously pursue this action. 77. This action has been brought, and may properly be maintained, as a class action pursuant to the provisions of Rule 23 of the Federal Rules of Civil Procedure because there is a well- defined community interest in the litigation: a. Numerosity: Plaintiff is informed and believes, and on that basis alleges, that 11 the Plaintiff’s Class defined above is so numerous that joinder of all members would be impractical. b. Common Questions Predominate: Common questions of law and fact exist as to all members of the Plaintiff’s Class and those questions predominate over any questions or issues involving only individual class members. The principal issues are whether PDM’s, Corporate Defendants’, and Other Entity Defendants’ communications with the Plaintiff, as directed by ICOT and ListenClear, such as in the above stated claims, violate provisions of the TCPA and Missouri Consumer Fraud and Deceptive Business Practices Act. c. Typicality: Plaintiff’s claims are typical of the claims of the class members. Plaintiff and all members of Plaintiff’s Class defined in this complaint have claims arising out of the Defendants’ common uniform course of conduct complained of herein. d. Adequacy: Plaintiff will fairly and adequately protect the interests of the class members insofar as Plaintiff has no interests that are adverse to the absent class members. Plaintiff is committed to vigorously litigating this matter. Plaintiff has also retained counsel experienced in handling consumer lawsuits, complex legal issues, and class actions. Neither the Plaintiff nor his counsel have any interests, which might cause them not to vigorously pursue the instant class action lawsuit. e. Superiority: A class action is superior to the other available means for the fair and efficient adjudication of this controversy because individual joinder of all members would be impracticable. Class action treatment will permit a large number of similarly situated persons to prosecute their common claims in a single forum efficiently and without unnecessary duplication of effort and expense that individual actions would engender. Certification of a class under Rule 23(b)(l)(A) of the Federal Rules of Civil Procedure is 12 appropriate because adjudications with respect to individual members create a risk of inconsistent or varying adjudication which could establish incompatible standards of conduct for Defendants who, upon information and belief, instigate the autodialed calling of non-consenting individuals throughout the United States of America and throughout Missouri. 78. Certification of a class under Rule 23(b)(2) of the Federal Rules of Civil Procedure is also appropriate in that a determination that the above stated claims, violate provisions of the TCPA, and is tantamount to declaratory relief and any monetary relief under the TPCA would be merely incidental to that determination. 79. Certification of a class under Rule 23(b)(3) of the Federal Rules of Civil Procedure is also appropriate in that the questions of law and fact common to members of the Plaintiff’s Class predominate over any questions affecting an individual member, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy. 80. Further, PDM, Corporate Defendants, Other Entity Defendants, ICOT, and ListenClear have acted, or failed to act, on grounds generally applicable to the Rule (b)(l)(A) and (b)(2) Class, thereby making appropriate final injunctive relief with respect to the Class as a whole. 81. Depending on the outcome of further investigation and discovery, Plaintiff may, at the time of class certification motion, seek to certify one or more classes only as to particular issues pursuant to Fed. R. Civ. P. 23(c)(4). 82. This cause of action is brought on behalf of Plaintiff and the members of a class. 83. The class consists of all persons whom Defendants’ records reflect resided in the State of Missouri and who were called with an auto-dialed by PDM, Corporate Defendants, and Other Entity Defendants, at the instruction of ICOT or ListenClear and (a) who had not given written consent to be subjected to these calls; or (b) had explicitly revoked or made clear the lack of consent 13 to make such calls; and (c) the Plaintiff asserts that the phone calls described contained violations of the TCPA and Missouri Consumer Fraud and Deceptive Business Practices Act for making autodialed telemarking calls in which they had no authority or right to make to Plaintiff and all those in the Class. COUNT I VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT, 47 U.S.C. § 227 ET SEQ. 84. Plaintiff, individually and on behalf of all others similarly situated, incorporates by reference all other paragraphs of this Complaint as if fully stated herein. 85. The foregoing acts and omissions of the Defendants constitute violations of the TPCA, including but not limited to each of the above cited provisions of 47 U.S.C. § 227 et seq. 86. Defendants violated the TCPA by (a) initiating a telephone call using an automated dialing system to Plaintiff’s telephone number assigned to him, or (b) by the fact that others caused the initiation of those calls on its behalf. See C.F.R. 64.1200(a)(1)(iii); 47 U.S.C. § 227(b)(1). 87. The TCPA provides a private right of action, wherein a person may, if otherwise permitted by the laws or rules of court of a state, bring in an appropriate court of that state: a. An action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation. b. An action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater; or c. Both such actions. 88. The Court, in its discretion, may treble the statutory damages if the violation was knowing. 47 U.S.C. § 227. 89. The TCPA is a strict liability statute and Defendants are liable to Plaintiff, individually, and on behalf of all others similarly situated, even if their actions were only negligent. 14 90. Defendants knew or should have known that: (a) Plaintiff had not given express permission or invitation for Defendants or anyone else to initiate a telephone call using an automated dialing system to Plaintiff’s telephone number to solicit advertisements about Defendants’ goods or services. 91. If the Court finds that Defendants knowingly violated this subsection or the regulations prescribed under this subsection, the Court may, in its discretion, increase the amount of the award to an amount equal to not more than three times the amount available under subparagraph (b) of this paragraph. 47 U.S.C. § 227(b)(3). 92. Plaintiff, and all others similarly situated, is also entitled to and do seek injunctive relief prohibiting the Defendants’ violation of the TCPA in the future. WHEREFORE, Plaintiff, individually and on behalf of all others similarly situated, respectfully requests that the Court grant Plaintiff, and all others similarly situated, the following relief against the Defendants: a. Injunctive relief prohibiting such violations of the TCPA by the Defendant in the future; b. As a result of the Defendants’ willful and/or knowing violations of 47 U.S.C. § 227, Plaintiff, and all others similarly situated, seek treble damages, as provided by statute, of up to $1,500 for each and every call that violated the TCPA; c. As a result of Defendant’s violations of 47 U.S.C. § 227, Plaintiff, and all others similarly situated, seek $500 in statutory damages for each and every call that violated the TCPA; d. A declaration that Defendants’ conduct violated the TCPA and that this action is just and proper; 15 e. An award of costs and such further relief as the Court may deem just and proper; f. That this Court award pre-judgment and post-judgment interest at the statutory rate of 9%; g. That this Court award Plaintiff’s its attorney fees and all expenses incurred in preparing and prosecuting this claim; and h. Such other relief as this Court may deem just and proper. COUNT II VIOLATIONS OF MISSOURI CONSUMER FRAUD AND DECEPTIVE BUSINESS PRACTICES ACT Chapter 407 93. Plaintiff, individually, and on behalf of all others similarly situated, incorporates by reference the foregoing paragraphs of this Complaint as if fully set forth herein. 94. In accordance with Chapter 407, Plaintiff, and all others similarly situated, bring Count II for Defendants’ unfair practice of making unsolicited and unlawful telephone calls while using an automated dialing system to Plaintiff’s telephone number: All persons who, on or after four years prior to the filing of this action, were sent telephone messages by or on behalf of Defendants with respect to whom Defendants cannot provide evidence of prior express permission or invitation. 95. Defendants violated the unfairness predicate of the Act by engaging in an unscrupulous business practice and by violating Missouri public policy, which public policy violations in the aggregate caused substantial injury to Plaintiff. 96. Defendants’ misconduct caused damages to Plaintiff, including loss of the exclusive use of his telephone, loss of time, and emotional distress. 97. Plaintiff routinely uses his telephone. Defendants’ actions prevented Plaintiff from using his telephone during the time Defendants contacted Plaintiff’s telephone for Defendants’ unlawful purposes. Plaintiff lost valuable time receiving Defendants’ unlawful telephone calls. 16 PRAYER FOR RELIEF WHEREFORE, Plaintiff, individually and on behalf of all others similarly situated, respectfully requests that the Court grant Plaintiff, and all others similarly situated, the following relief against the Defendants: a. That this Court award judgment against Defendant in a total amount in excess of the $25,000 jurisdictional amount of this Court to be proven at trial; b. That this Court award damages to Plaintiff, and all others similarly situated; c. That this Court award treble damages to Plaintiff, and all others similarly situated, for knowing violations of the TCPA; d. That this Court award punitive damages to Plaintiff, and all others similarly situated; e. That this Court declare that Defendants’ conduct violated the TCPA and that this action is just and proper; f. That this Court award Plaintiff, and all others similarly situated, damages and attorney fees for violation of The Missouri Consumer Fraud and Deceptive Business Practices Act Chapter 407; g. That this Court award Plaintiff’s attorneys’ fees and costs; h. That this Court award Plaintiff all expenses incurred in preparing and prosecuting these claims; i. That this Court enter an injunction prohibiting Defendants from such violations of the TCPA by the Defendants in the future; and j. Awarding such further relief as this Court may deem just and proper. 17 Dated: November 21, 2019 Respectfully Submitted, HALVORSEN KLOTE By: /s/ Samantha Orlowski Samantha J. Orlowski, #72058 Joel S. Halvorsen, #67032 680 Craig Road, Suite 104 St. Louis, MO 63141 P: (314) 451-1314 F: (314) 787-4323 [email protected] [email protected] Attorneys for Plaintiffs 18

privacy

Rqo3CocBD5gMZwczruUo

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA Menachem Gutnick, individually and on behalf of all others similarly situated, C.A. No: 9:21-cv-81492 Plaintiff, CLASS ACTION COMPLAINT DEMAND FOR JURY TRIAL -v.- Midland Credit Management, Inc., Defendant(s). COMPLAINT Plaintiff Menachem Gutnick (hereinafter “Plaintiff”) brings this Class Action Complaint by and through his attorneys, Zeig Law Firm, LLC, against Defendant Midland Credit Management, Inc. (hereinafter “MCM” or “Defendant”) individually and on behalf of a class of all others similarly situated, pursuant to Rule 23 of the Federal Rules of Civil Procedure, based upon information and belief of Plaintiff’s counsel, except for allegations specifically pertaining to Plaintiff, which are based upon Plaintiff's personal knowledge. INTRODUCTION 1. Congress enacted the Fair Debt Collection Practices Act (“FDCPA” or the “Act”) in 1977 in response to the “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.” 15 U.S.C. §1692(a). At that time, Congress was concerned that “abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.” Id. Congress concluded that “existing laws…[we]re inadequate to protect consumers,” and that “the effective collection of debts” does not require “misrepresentation or other abusive debt collection practices.” 15 U.S.C. §§ 1692(b) & (c). 2. Congress explained that the purpose of the Act was not only to eliminate abusive debt collection practices, but also to “insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged.” 15 U.S.C. § 1692(e). After determining that the existing consumer protection laws were inadequate Id. § 1692(b), Congress gave consumers a private cause of action against debt collectors who fail to comply with the Act Id. § 1692k. JURISDICTION AND VENUE 3. The Court has jurisdiction over this class action pursuant to 28 U.S.C. § 1331 and 15 U.S.C. § 1692 et. seq. The Court has pendent jurisdiction over any state law claims in this action pursuant to 28 U.S.C. § 1367(a). 4. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(b)(2) as this is where is where the Plaintiff resides, as well as a substantial part of the events or omissions giving rise to the claim occurred and where Plaintiff resides. NATURE OF THE ACTION 5. Plaintiff brings this class action on behalf of a class of Florida consumers under § 1692 et seq. of Title 15 of the United States Code, commonly referred to as the Fair Debt Collections Practices Act (“FDCPA”). 6. Plaintiff is seeking damages and declaratory relief. PARTIES 7. Plaintiff is a resident of the State of Florida, County of Palm Beach. 8. Defendant MCM is a “debt collector” as the phrase is defined in 15 U.S.C. § 1692(a)(6) and as used in the FDCPA and can be served upon their registered agent, Midland Funding LLC, 13008 Telecom Dr Ste. 350. Temple Terrace, FL 33637. 9. Upon information and belief, Defendant MCM is a company that uses the mail, telephone, and facsimile and regularly engages in business, the principal purpose of which is to attempt to collect debts. CLASS ALLEGATIONS 10. Plaintiffs bring this claim on behalf of the following case, pursuant to Fed. R. Civ. P. 23(a) and 23(b)(3). 11. The Class consists of: a. all individuals with addresses in the State of Florida; b. to whom Defendant MCM sent a collection letter attempting to collect a consumer debt; c. containing options for settlement; d. one of which is for monthly payments as low as $50 per month; e. which letter was sent on or after a date one (1) year prior to the filing of this action and on or before a date twenty-one (2l) days after the filing of this action. 12. The identities of all class members are readily ascertainable from the records of Defendants and those companies and entities on whose behalf they attempt to collect and/or have purchased debts. 13. Excluded from the Plaintiff Class are the Defendants and all officer, members, partners, managers, directors and employees of the Defendants and their respective immediate families, and legal counsel for all parties to this action, and all members of their immediate families. 14. There are questions of law and fact common to the Plaintiff Class, which common issues predominate over any issues involving only individual class members. The principal issue is whether the Defendant’s written communications to consumers, in the forms attached as Exhibit A, violate 15 U.S.C. § 1692e et seq. 15. The Plaintiff’s claims are typical of the class members, as all are based upon the same facts and legal theories. The Plaintiff will fairly and adequately protect the interests of the Plaintiff Class defined in this complaint. The Plaintiff has retained counsel with experience in handling consumer lawsuits, complex legal issues, and class actions, and neither the Plaintiff nor his attorneys have any interests, which might cause them not to vigorously pursue this action. 16. This action has been brought, and may properly be maintained, as a class action pursuant to the provisions of Rule 23 of the Federal Rules of Civil Procedure because there is a well-defined community interest in the litigation: a. Numerosity: The Plaintiff is informed and believes, and on that basis alleges, that the Plaintiff Class defined above is so numerous that joinder of all members would be impractical. b. Common Questions Predominate: Common questions of law and fact exist as to all members of the Plaintiff Class and those questions predominance over any questions or issues involving only individual class members. The principal issue is whether the Defendant’s written communications to consumers, in the forms attached as Exhibit A violate 15 U.S.C. § 1692e et seq. c. Typicality: The Plaintiff’s claims are typical of the claims of the class members. The Plaintiff and all members of the Plaintiff Class have claims arising out of the Defendants' common uniform course of conduct complained of herein. d. Adequacy: The Plaintiff will fairly and adequately protect the interests of the class members insofar as Plaintiff has no interests that are adverse to the absent class members. The Plaintiff is committed to vigorously litigating this matter. Plaintiff has also retained counsel experienced in handling consumer lawsuits, complex legal issues, and class actions. Neither the Plaintiff nor his counsel have any interests which might cause them not to vigorously pursue the instant class action lawsuit. e. Superiority: A class action is superior to the other available means for the fair and efficient adjudication of this controversy because individual joinder of all members would be impracticable. Class action treatment will permit a large number of similarly situated persons to prosecute their common claims in a single forum efficiently and without unnecessary duplication of effort and expense that individual actions would engender. 17. Certification of a class under Rule 23(b)(3) of the Federal Rules of Civil Procedure is also appropriate in that the questions of law and fact common to members of the Plaintiff Class predominate over any questions affecting an individual member, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy. 18. Depending on the outcome of further investigation and discovery, Plaintiff may, at the time of class certification motion, seek to certify a class(es) only as to particular issues pursuant to Fed. R. Civ. P. 23(c)(4). FACTUAL ALLEGATIONS 19. Plaintiff repeats, reiterates and incorporates the allegations contained in paragraphs numbered above herein with the same force and effect as if the same were set forth at length herein. 20. Some time prior to February 6, 2021, an obligation was allegedly incurred to creditor Synchrony Bank. 21. The Synchrony Bank obligation arose out of transactions incurred primarily for personal, family or household purposes, specifically a personal credit card. 22. The alleged Synchrony Bank obligation is a “debt” as defined by 15 U.S.C.§ 1692a(5). 23. Synchrony Bank is a “creditor” as defined by 15 U.S.C.§ 1692a(4). 24. Synchrony Bank sold the alleged debt to Defendant MCM, who is the current owner of the alleged debt for the purpose of debt collection. Therefore, Defendant MCM is a debt collector as defined by 15 U.S.C.§ 1692a(6). Violation – February 6, 2021 Collection Letter 25. On or about February 6, 2021, Defendant MCM sent the Plaintiff a collection letter (the “Letter”) regarding the alleged debt originally owed to Capital One. (See a true and correct copy of the Letter attached as Exhibit A.) 26. The Letter states a current balance of $3,167.14. 27. The Letter goes on to state “You have been pre-approved for options designed to save you money. Act now to maximize your savings…” 28. The Letter then proceeds to give three payment options: 1) Option 1: 10% Off – Pay $2,850.43 2) Option 2: 5% Off – 6 monthly payments of $501.46 3) Option 3: Monthly Payments as low as: $50 per month 29. The third option provided by Defendant is not adequately explained and results in at least two different possible interpretations. 30. First, Option 3 might be construed as an option by which a discounted total amount is paid by monthly installments of $50 per month. 31. Second, Option 3 might be construed as an option by which monthly installments of $50 are made until the total debt amount is paid in full. 32. By failing to explain whether Option 3 is a settlement option or an option to pay in full, the Letter is false, deceptive and misleading. 33. Furthermore, the Letter references “savings” and proclaims that it is “designed to save [the consumer] money”. 34. If in fact Option 3 is an offer for payment in full on the entire balance, the promises made by Defendant in the Letter to the Plaintiff consumer are completely false. 35. These violations by Defendant were knowing, willful, negligent and/or intentional, and Defendant did not maintain procedures reasonably adapted to avoid any such violations. 36. Congress is empowered to pass laws and is well-positioned to create laws that will better society at large. 37. As it relates to this case, Congress identified a concrete and particularized harm with a close common-law analogue to the traditional tort of fraud. 38. Now, consumers have a right to receive proper notice from debt collectors, including a right to receive proper notice of the nature of their debts and settlement options. When a debt collector fails to effectively inform the consumer of how much it would cost to satisfy their debt in full satisfaction of the obligation, in violation of statutory law, the debt collector has harmed the consumer. 39. Defendant’s collection efforts with respect to this alleged debt from Plaintiff caused Plaintiff to suffer concrete and particularized harm, inter alia, because the FDCPA provides Plaintiff with the legally protected right not to be misled or treated unfairly with respect to any action regarding the collection of any consumer debt. 40. Defendant’s deceptive, misleading and unfair representations with respect to its collection efforts were material misrepresentations that affected and frustrated Plaintiff's ability to intelligently respond to Defendant’s collection efforts because Plaintiff could not adequately respond to Defendant’s demand for payment of this debt. 41. As a result of Defendant’s deceptive, misleading and unfair debt collection practices, Plaintiff has been damaged. COUNT I VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. §1692e et seq. 42. Plaintiff repeats, reiterates and incorporates the allegations contained in paragraphs above herein with the same force and effect as if the same were set forth at length herein. 43. Defendant’s debt collection efforts attempted and/or directed towards the Plaintiff violated various provisions of the FDCPA, including but not limited to 15 U.S.C. § 1692e. 44. Pursuant to 15 U.S.C. §1692e, a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. 45. Defendant violated §1692e: a. As the Letter is open to more than one reasonable interpretation, at least one of which is inaccurate in violation of §1692e(2). b. By making a false and misleading representation in violation of §1692e(10). 46. By reason thereof, Defendant is liable to Plaintiff for judgment in that Defendant's conduct violated Section 1692e et seq. of the FDCPA, actual damages, statutory damages, costs and attorneys’ fees. DEMAND FOR TRIAL BY JURY 47. Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff hereby requests a trial by jury on all issues so triable. PRAYER FOR RELIEF WHEREFORE, Plaintiff Menacham Gutnick, individually and on behalf of all others similarly situated, demands judgment from Defendant MCM as follows: 1. Declaring that this action is properly maintainable as a Class Action and certifying Plaintiff as Class representative, and Justin Zeig, Esq. as Class Counsel; 2. Awarding Plaintiff and the Class statutory damages; 3. Awarding Plaintiff and the Class actual damages; 4. Awarding Plaintiff costs of this Action, including reasonable attorneys’ fees and expenses; 5. Awarding pre-judgment interest and post-judgment interest; and 6. Awarding Plaintiff and the Class such other and further relief as this Court may deem just and proper. May 3, 2021 Respectfully Submitted, ZEIG LAW FIRM, LLC /s/ Justin Zeig Justin Zeig, Esq. 3475 Sheridan St. Ste 310 Hollywood, FL 33021 Telephone: (754) 217-3084 Facsimile: (954) 272-7807 [email protected] Counsel for Plaintiff

consumer fraud

8fDdEocBD5gMZwcz3JA8

IN THE UNITED STATES DISTRICT COURT FEB 09 2011 FOR THE NORTHERN DISTRICT OF MISSISSIPPI GREENVILLE DIVISION PLAINTIFF No.: 4.11-CV-012PS JURY DEMANDED DEFENDANTS COMPLAINT & DEMAND FOR JURY TRIAL COMES NOW Plaintiff, Mary Jackson ("Plaintiff"), on behalf of herself and others PARTIES 1. Plaintiff is a resident of Choctaw County, Alabama and is a former employee of 2. Plaintiff brings this action, on behalf of herself and all others similarly situated, 3. Defendant, Healthport Technologies, LLC is a Georgia limited liability company 4. This action is brought under the FLSA to recover from Defendant unpaid 5. Based upon information and belief, at all material times relevant to this action, 6. Defendant is engaged in interstate commerce and was SO engaged during 7. At all relevant times, Defendant had two or more employees of the enterprise 8. Plaintiff and those similarly situated to her were individually covered by the JURISDICTION AND VENUE 9. This Court has subject matter jurisdiction over Plaintiff's claims pursuant to 28 10. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(b)(2) as FACTS 11. Plaintiff was employed by Defendant as a Release of Information Specialist Field 12. Plaintiff was an employee of Defendant. 13. Defendant provided medical record scanning services and release of information 14. Plaintiff's duties and job responsibilities as a Release of Information Specialist for 15. Plaintiff would scan medical records for a clinic and transmit them to Defendant 16. Defendant paid Plaintiff a commission based on a percentage of the billable 17. Defendant also required Plaintiff to scan non-billable records, but Defendant did 18. Defendant also paid Plaintiff a car allowance. 19. Defendant did not pay Plaintiff for the time spent driving to and from the various 20. Plaintiff's time spent driving to and from the various medical clinics and 21. Plaintiff's time spent driving to and from the various medical clinics and 22. Plaintiff's time spent driving to and from the various medical clinics and 23. During one or more weeks while employed by Defendant, Plaintiff did not make 24. Plaintiff also worked more than 40 hours in a workweek for one or more 25. Defendant did not properly compensate Plaintiff for the hours worked over 40 in a 26. Defendant failed to comply with 29 USC § § 201-209, because Plaintiff performed 27. Defendant failed to comply with 29 USC §§ 201-209 because Defendant failed to 28. Upon information and belief, the records - to the extent such records exist - COUNT ONE FAILURE TO PAY MINIMUM WAGE 29. Plaintiff reasserts and incorporates by reference all allegations contained within 30. Plaintiff was not paid at least the minimum wage for each hour worked while 31. Plaintiff was entitled to be paid at least the minimum wage for each hour that she32. Plaintiff expressly demanded proper compensation for hours worked, but she 33. Defendant willfully, intentionally, and/or recklessly failed to pay Plaintiff at least 34. Upon information and belief, Defendant's failure to properly compensate Plaintiff COUNT TWO RECOVERY OF OVERTIME COMPENSATION 35. Plaintiff reasserts and incorporates by reference all allegations contained within 36. During her employment with Defendant, Plaintiff worked more than forty (40) 37. Defendant failed to properly compensate Plaintiff for overtime hours that she 38. Defendant willfully, intentionally, and/or recklessly failed to pay Plaintiff at least 39. Upon information and belief, Defendant's failure to properly compensate Plaintiff DAMAGES AND REQUESTED RELIEF 40. As a result of Defendant's intentional, willful, and reckless failure to lawfully 41. As a result of Defendant's intentional, willful, and reckless violation(s) of the 42. Plaintiff respectfully demands a trial by jury. WHEREFORE, Plaintiff and all other similarly situated employees of Defendant demand a) payment of their overtime wages and/or minimum wages, where applicable, at the correct rate pursuant to 29 U.S.C. § 207; b) an equal amount of liquidated damages pursuant to 29 U.S.C. § 216(b); c) declaratory relief pursuant to the DJA and FLSA finding that all hours worked should be paid at an amount at least equal to the applicable minimum wage and that all hours worked over forty in a workweek should be paid time and one-half of an employees' regular rate of pay as long as an employee is not exempt from the FLSA; d) pre-judgment and post-judgment interest where applicable; e) reasonable attorneys' fees and costs pursuant to 29 U.S.C. § 216(b); and f) all other relief that the Court deems just and proper. Respectfully submitted, MORGAN & MORGAN, PA By: J Justin 2600 One M Ross Commerce #99832 Square Memphis, Tennessee 38103 Tel: (901) 333-1844 Fax: (901) 333-1897 Email: [email protected] Submitted this 3rd day of February 2011.

employment & labor

yts0EIcBD5gMZwczgSOT

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA CASE NO.: 0:19cv60960 JERRY PAUL, individually and on behalf of a class of others similarly situated, Plaintiff, v. COMPLAINT – CLASS ACTION COMMONWEALTH FINANCIAL SYSTEMS, INC., Defendants. _______________________________/ CLASS ACTION COMPLAINT SEEKING INJUNCTIVE RELIEF AND STATUTORY DAMAGES JURY DEMAND On behalf of the putative class, Plaintiff JERRY PAUL (“Plaintiff”), seeks redress for the unlawful conduct of Defendant COMMONWEALTH FINANCIAL SYSTEMS, INC. (“Defendant”), to wit, violation of 15 U.S.C. § 1692 et seq., the Fair Debt Collection Practices Act (“FDCPA”). Simply put, Defendant has dispatched thousands unlawful collection letters to United States consumers, whereby each such letter contains identical violations of §§ 1692e, 1692e(2)(a), 1692e(5), 1692e(10) and/or 1692f of the FDCPA. INTRODUCTION 1. The FDCPA “is a consumer protection statute that imposes open-ended prohibitions on, inter alia, false, deceptive, or unfair’” debt-collection practices. Crawford v. LVNV Funding, LLC, 758 F.3d 1254, 1257 (11th Cir. 2014) (quoting Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 587 (2010)). Page 1 of 8 2. “Congress enacted the FDCPA after noting abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.” Brown v. Card Serv. Ctr., 464 F.3d 450 (3rd Cir. 2006) (internal quotations omitted); see, e.g., Id. at 453 (quoting 15 U.S.C. §1692(a)) (“Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.”). 3. As set forth in more detail below, Defendant has dispatched thousands of unlawful collection letters to consumers in an attempt to collect a debt, and in each such letter, Defendant falsely claimed that certain debts were barred by the statute of limitations, when they were not, in violation of §§ 1692e, 1692e(2)(a), 1692e(5), 1692e(10) and/or 1692f.. Accordingly, Plaintiff, on behalf of the putative class, seeks statutory damages under the FDCPA over the punitive class timeframes set forth herein. DEMAND FOR JURY TRIAL 4. Plaintiff is entitled to, and hereby respectfully demands, a trial by jury on all counts alleged and on any issues so triable. See Sibley v. Fulton DeKalb Collection Service, 677 F.2d 830 (11th Cir.1982) (wherein the Eleventh Circuit held that, “a plaintiff, upon timely demand, is entitled to a trial by jury in a claim for damages under the FDCPA.”). JURISDICTION AND VENUE 5. This Court has jurisdiction for all counts under 28 U.S.C. §§ 1331, 1337 and 15 U.S.C. § 1692k. 6. Jurisdiction of this Court arises under 15 U.S.C. §1692k(d), 28 U.S.C §1331, and 28 U.S.C §1337. 7. Venue in this District is proper because Plaintiff resides here, Defendant transacts business here, and the complained of conduct occurred within the venue. Page 2 of 8 PARTIES 8. Plaintiff is a natural person, and a citizen of the State of Florida, residing in Broward County, Florida. 9. Plaintiff is a “consumer” within the meaning of the FDCPA. See 15 U.S.C §1692a. 10. Defendant is a Pennsylvania corporation, with its principal place of business located in Dickson City, PA. 11. Defendant engages in interstate commerce by regularly using telephone and mail in a business whose principal purpose is the collection of debts. 12. At all times material hereto, Defendant was acting as a debt collector in respect to the collection of Plaintiff’s debts. FACTUAL ALLEGATIONS 13. The debt at issue (the “Consumer Debt”) is a financial obligation Plaintiff incurred primarily for personal, family, or household purposes. 14. The Consumer Debt is a “debt” governed by the FDCPA. See 15 U.S.C §1692a(5). 15. On a date better known by Defendant, Defendant began attempting collect the Consumer Debts from Plaintiff. 16. On or about March 29, 2019 Defendant sent a collection letter to Plaintiff (the “Collection Letter”) in an attempt to collect the Consumer Debt. A copy of the Collection Letter is attached hereto as Exhibit “A.” 17. Below is an excerpt taken directly from the Collection Letter which lists the multiple debts that defendant is attempting to collect and, inter alia, the dates of service: Page 3 of 8 See Exhibit A. 18. At the bottom of the Collection Letter, the following disclosure is made: See Exhibit A. 19. In Florida, there is a five year statute of limitation for medical debts in which a written agreement to pay exists. 20. Here, there are multiple accounts that are less than five years old and therefore, contrary to the statement made by Defendant regarding the enforceability of the debts listed, Plaintiff can be sued. 21. Defendant has therefore violated multiple sections of the FDCPA by making false, misleading and deceptive statements regarding the enforceability of Plaintiff’s debts. 22. Any potential bona fide error defense which relies upon Defendant’s mistaken interpretation of the legal duties imposed upon them by the FDCPA would fail as a matter of law. Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, L.P.A., 130 S.Ct. 1605 (2010). CLASS ACTION ALLEGATIONS 23. This action is brought on behalf of the following class, to wit, the “Statute of Limitations Class.” Page 4 of 8 24. The “Statute of Limitations Class” consists of: (i) all persons in the United States (ii) who were mailed a letter (iii) between April 12, 2018 and April 12, 2019 (iv) by Defendant (v) in an attempt to collect a debt incurred for personal, family, or household purposes, (vi) of which Defendant claimed that the statute of limitations had expired with regard to a debt when it actually did not. 25. Plaintiff alleges on information and belief that the Statute of Limitations Class is so numerous that joinder of all members is impracticable because Defendant has dispatched thousands of identical dunning letters to consumers attempting to collect consumer debts. A. EXISTENCE AND PREDOMINANCE OF COMMON QUESTIONS OF LAW & FACT 26. Common questions of law and fact exist as to each class, and predominate over any issues involving only individual class members. 27. With respect to the Statute of Limitations Class: (a) The factual issues common to the class are whether members received a collection letter from Defendant, in an attempt to collect a consumer debt, within the class period; and (b) The principal legal issue of the class is whether Defendant violated §§ 1692e, 1692e(2)(a), 1692e(5), 1692e(10) and/or 1692f by falsely claiming that a debt was barred by the statute of limitations. 28. Excluded from each class is Defendant’s agents and employees, Plaintiff’s attorneys and their employees, the Judge to whom this action is assigned, and any member of the Judge’s staff and immediate family. Page 5 of 8 B. TYPICALITY 29. Plaintiff’s claims are typical of the claims of each class member and are based on the same facts and legal theories. C. ADEQUACY 30. Plaintiff is an adequate representative of each of the class. 31. Plaintiff will fairly and adequately protect the interests of the class. 32. Plaintiff has retained counsel experienced in handling actions involving unlawful practices under the FDCPA and other consumer-based class actions. Neither Plaintiff nor Plaintiff’s counsel have any interests which might cause them (Plaintiff or Plaintiff’s counsel) to not vigorously pursue this action. D. PREDOMINANCE AND SUPERIORITY 33. Certification of the class under Rule 23(b)(3) of the Federal Rules of Civil Procedure is also appropriate in that: (a) The questions of law or fact common to the members of the class predominate over any questions affecting an individual member. (b) A class action is superior to other available methods for the fair and efficient adjudication of the controversy. 34. Certification of a class under Rule 23(b)(2) of the Federal Rules of Civil Procedure is also appropriate, in that, Defendant has acted on grounds generally applicable to the class thereby making appropriate declaratory relief with respect to the class as a whole. Plaintiff request Page 6 of 8 certification of a hybrid class under Rule 23(b)(3) for monetary damages and to Rule 23(b)(2) for injunctive and equitable relief. COUNT I. VIOLATION OF 15 U.S.C §§ 1692e, 1692e(2)(a), 1692e(5), 1692e(10) and/or 1692f 33. Plaintiff incorporates by reference paragraphs 13-34 of this Complaint as though fully stated herein. 34. Pursuant to § 1692e(2)(a) of the FDCPA, Defendant is prohibited from, inter alia, falsely representing the character, amount or legal status of the consumer debt. See 15 U.S.C. § 1692e(2)(a). Here, by falsely stating that the Plaintiff’s debt(s) were no longer legally enforceable, Defendant falsely represented the character and legal status of the debts it sought to collect. 35. Section 1692e(5) of the FDCPA prohibits “the threat to take any action that cannot legally be taken or that is not intended to be taken.” 15 U.S.C. § 1692e(5). Here, by falsely stating that the Plaintiff’s debt(s) were no longer legally enforceable, Defendant threatened to take an action (or omission) that it cannot legally take nor did it intend to take. 36. Section 1692e(10) of the FDCPA prohibits “the use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.” 15 U.S.C. § 1692e(10). Here, by falsely stating that the Plaintiff’s debt(s) were no longer legally enforceable, Defendant made false, misleading and/or deceptive representations to members of the class with regards to their actual rights. 37. Section 1692f of the FDCPA prohibits “unfair or unconscionable means to collect or attempt to collect any debt.” 15 U.S.C. § 1692f. Here, by falsely stating that the Plaintiff’s Page 7 of 8 debt(s) were no longer legally enforceable, Defendant utilized unfair and/or unconscionable means in collecting debts from members of the class. WHEREFORE, Plaintiff, individually and on behalf of the Statute of Limitations Class request that the Court enter judgment in favor of Plaintiff and the G-Notice Class and against Defendant for: (1) Statutory damages, as provided under 15 U.S.C. § 1692k(a)(2)(B); (2) Attorney’s fees, litigation expenses and costs of the instant suit, as provided under 15 U.S.C. § 1692k(a)(3); and (1) Such other or further relief as the Court deems proper. Such other or further relief as the Court deems proper. DATED: April 14, 2019 Respectfully Submitted, /s/ Jibrael S. Hindi . JIBRAEL S. HINDI, ESQ. Florida Bar No.: 118259 E-mail: [email protected] THE LAW OFFICES OF JIBRAEL S. HINDI 110 SE 6th Street, Suite 1744 Fort Lauderdale, Florida 33301 Phone: 954-907-1136 Fax: 855-529-9540 Page 8 of 8

consumer fraud

YADQFIcBD5gMZwczLTf1

LEON GREENBERG, ESQ. Law Office of Leon Greenberg 2965 South Jones Boulevard #E-4 Las Vegas, Nevada 89146 13 CV (702) 383-6085 (702) 385-1827 (fax) [email protected] Attorney for Plaintiff UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK X SABRINA PENCEAL, SHIREEF Case No : JONES and KRISTY WALDRIP, 2013 Individually and on behalf of ) all others similarly ) COMPLAINT situated, CLASS ACTION Plaintiffs, ) VS. ) ) ) EMPIRE BEAUTY SCHOOL INC. / EEG ) INC., EEG LLC, CHIC SCHOOLS, ) INC., , EMPIRE EDUCATION GROUP, ) INC., FRANK SCHOENEMAN, MICHAEL ) D. BOUMAN, REGIS CORPORATION, ) and "John Doe Entities", name ) fictitious, name and number ) unknown, all conducting ) business as the Empire ) Education Group, ) ) Defendants. ) ) allege: JURISDICTION AND VENUE 1. use or handling of goods that have moved or were moving in interstate commerce, as those terms are defined in the FLSA. 2. and fact as the FLSA claims. CAFA jurisdiction is properly under CAFA over such claims are present. 3. made herein at that location. PARTIES York. Pennsylvania. 6. and performed uncompensated labor for defendants in Colorado. 7. State of New York is in New York County. 8. Defendant EEG Inc. (one of the "Empire Corporation" various states besides the State of Delaware. 9. Defendant EEG LLC (one of the "Empire Corporation" 10. Defendant Chic Schools, Inc. (one of the "Empire the laws of the State of Michigan.entity its jurisdiction of incorporation is unknown. to reflect their true names. 14. stock is publicly traded on the New York Stock Exchange. through one or more intermediaries, of one or more Empire defendants. and/or one or more of the "John Doe" entity defendants. 17. through one or more intermediaries, of one or more Empire defendants. 18. Corporation Defendants. 19. defendants in Arizona, Colorado, Florida, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, operation, both in terms of students, revenue, and number of including the Empire Beauty School name. CLASS ACTION AND REPRESENTATIVE ALLEGATIONS 20. The named Plaintiffs bring this action on their own and on behalf of the general public. Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Rhode Island, Tennessee, Virginia and Wisconsin (the "state for the reasons alleged herein. of this action through the date of any judgment, such claims commencement of this action through the date of any judgment. the class is impracticable. 24. for in 29 U.S.C. § 206, such conduct also violating the legalthe class to the relief requested in this Complaint. the claims of those in the class. The named plaintiffs have defendants towards the class and/or the risk of inconsistent met warranting the class action certification of such claims. 26. court. RELEVANT FACTS OF THE DEFENDANTS' BUSINESS OPERATIONS AND THE PARTIES' RELATIONSHIP for-profit business, meaning it is not registered with, or charitable enterprise. or returns. practice, as regulated by various state laws, the trades of manicuring. services, for a fee, to members of the public (the "personal manicuring services. the receipt of such services. services business. labor. public paid a fee to the Empire Beauty School, was furnished exclusively or predominately by the class members. the FLSA and such state laws.of the typical prices it charges for those services. 37. The Empire Beauty School competes with other profit personal services. 38. The Empire Beauty School is able to advantageously those charged by its competitors. operating costs in its personal services business because it wage required by the FLSA or state law to their employees who provide the same labor and services to the public. consumed in providing such personal services. the educational services business. 43. School's personal services business benefits them in securing ultimate goal of being licensed to practice their desired occupation, defendants' decision to operate the Empire Beauty fee for such personal services, or if it only charged a fee sufficient to cover the actual cost of the materials, if any, services.unpaid labor of the class members. competitors must charge, such competitors paying at least the unpaid labor in the Empire Beauty School's personal services 46. The amount of hours of unpaid labor that the class business is known to the defendants who kept detailed 500 hours. HOW THE RELEVANT FACTS ESTABLISH AN EMPLOYMENT RELATIONSHIP FOR THE PURPOSES OF THE FLSA AND STATE LAW putative class members in the Empire Beauty School's personal the following reasons: labor; their labor in the Empire Beauty School's personal them in achieving their occupational goals, were charges; (c) The class members' labor in the Empire Beauty not confer any educational or occupational benefit necessary for the conducting of the Empire Beauty to pay the class members any wages whatsoever; and (e) For the reasons stated in paragraph 45, as personal services business depresses the wages of opportunities in that industry. HOW THE RELEVANT FACTS RENDER THE DEFENDANTS OTHER THAN THE EMPIRE CORPORATIONS LEGALLY RESPONSIBLE FOR THE PLAINTIFFS' CLAIMSstate law alleged in this complaint. in this complaint. FLSA and the state minimum wage laws that are alleged in this Beauty School. School. upon the unpaid labor of the class members. laws in the states where the Empire Beauty School operated. and the class members, were made aware that the use of unpaid using uncompensated student labor in a profit making personal services business. and the class members, were made aware that the use of unpaid been found by at least one court to violate the FLSA. The using uncompensated student labor in a profit making personal services business. and/or they acquiesced to the continuation of such violationscivilly liable for such violations of law. FIRST CLAIM FOR RELIEF UNDER THE FAIR LABOR STANDARDS ACT though fully set forth herein. currently $7.25 an hour, for each hour that they labored in hours per week. a week, the overtime pay requirements of 29 U.S.C. $ 207. in that defendants were aware they were running a for profit hourly wage requirements of the FLSA. FLSA. SECOND CLAIM FOR RELIEF UNDER STATE LAWS REQUIRING A MINIMUM HOURLY WAGE AND UNDER CERTAIN CIRCUMSTANCES AN OVERTIME WAGE though fully set forth herein. Illinois, Kentucky, Maine, Maryland, Massachusetts, Michigan, that right through civil action) ; Wage Order (s) issued thereunder, and Section 15 of the payment of minimum wages; (c) the payment of minimum wages; (d) Illinois Statutes Chapter 820, Section 105 et seq.; (e) Kentucky Revised Statutes 337.275; (f) Maine Revised Statutes Title 26, Section 664; (g) Maryland Labor and Employment Code § 3-413; (h) wage claims) ; (i) Michigan Statutes Section 408.384; Chapter 177; (k) New Jersey Statutes Section 34:11-56a4;(1) New York Labor Law Section 652; (m) 4111 of the Ohio Revised Code; (n) 333.104; (o) Rhode Island General Laws § 28-12-3; the same. Colorado, Florida, Illinois, Kentucky, Maine, Maryland, such states' laws. Colorado, Florida, Illinois, Kentucky, Maine, Maryland, states' minimum wage or overtime wage payment requirements. THIRD CLAIM FOR RELIEF UNDER STATE STATUTES REQUIRING THE PAYMENT OF EARNED AND UNPAID WAGES though fully set forth herein. minimum hourly wages required by the FLSA and in certain (a) Arizona Revised Statutes, §§ 23-351, 23-355, 23-353 (b) (c) Georgia Code § 34-7-2; (e) Indiana Code 22-2-5-1; (f) Kentucky Revised Statutes 337.020; (h) of triple damages) ; (j) Michigan Statutes Section 408.384; (k) Minnesota Statutes § 181.10, 181.171; (1) New Jersey Statutes $34.11-4.2 and § 34:11-4.7; (m) New York Labor Law Section 198; (n) and 95-25.22; (o) Ohio Revised Code Sec. 4113.15; other applicable provisions; (r) Tennessee Code Annotated § 50-2-103; thereof including Wis. Stat. § 109.03. 69. pursuant to such states' laws.pursuant to such states' laws. continuing to fail to pay the wages of the class members, as Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Pennsylvania, Rhode Island, Tennessee and Wisconsin. FOURTH CLAIM FOR RELIEF UNDER STATE STATUTES IMPOSING PENALTIES OR CONTINUING WAGE PAYMENT OBLIGATIONS though fully set forth herein. continuing wages to such persons or other monetary damages, including, but not necessarily limited to, the following: damages on unpaid wage claims) ; (b) Colorado Statutes Title 8, Article 4, Section 109; (c) 115/14(a) et seq. (d) Indiana Code. 22-2-5-1, 22-2-9-4 & 22-2-5-2; (e) Kentucky Revised Statutes 337.385 (1) ; (f) Maine Revised Statutes Title 26, Section 626; (g) Maryland Labor and Employment code § 3-507. (b) ; of triple damages) ; (i) Michigan Statutes Section 408.393; (j) Minnesota Statutes § 181.13; (k) New York Labor Law Section 198; (1) North Carolina General Statutes 95-25.22; (n) Wisconsin Statutes 109.11. 74. Colorado, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, New York, North Carolina, Pennsylvania and Wisconsin the wages defendants were legally addition to such unpaid wages, pursuant to such states' laws. damages and monetary relief authorized by the state laws of Massachusetts, Michigan, Minnesota, New York, North Carolina, same arising as a result of defendants' failure to pay the all class members as follows: 1. with an award of costs and attorney's fees; 2. and overtime wages as required by the applicable state laws plaintiffs and the class members; 3. the plaintiffs and the class members;applicable state laws; reasonable attorney's fees; and a trial by jury. Dated this 24th day of October, 2013 Leon Greenberg, Esq. By: you REZ Leon Greenberg, Esq. 2965 South Jones Boulevard E-4 Las Vegas, NV 89146 (702) 383-6085 [email protected] Attorney for Plaintiffs CONSENT TO JOINDER Sabrina Penceal, by signing Sabrina Penceal CONSENT TO JOINDER Shireef Jones, by signing below, Shrung Shireef Jones Jones CONSENT TO JOINDER Kristy Waldrip, by signing below, Kristy Waldrip

employment & labor

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Additional counsel for plaintiff Martin R. Aranas: PUBLIC LAW CENTER Julie Greenwald (Cal. Bar No. 233714) Monica Ashiku (Cal. Bar No. 263112) 601 Civic Center Drive West Santa Ana, CA 92701 Telephone: (714) 541-1010 (Greenwald Ext. 263, Ashiku Ext. 249) Facsimile: (714) 541-5157 [email protected] [email protected] ASIAN LAW ALLIANCE Beatrice Ann M. Pangilinan (Cal. Bar No. 271064) 184 Jackson Street, San Jose, CA 95112 Telephone: (408) 287-9710 Facsimile: (408) 287-0864 Email: [email protected] Additional counsel for plaintiffs Irma Rodriguez and Jane DeLeon: LAW OFFICES OF MANULKIN & BENNETT Gary H. Manulkin (Cal. Bar No. 41469) Reyna M. Tanner (Cal. Bar No. 197931) 10175 Slater Avenue, Suite 111 Fountain Valley, CA 92708 Telephone: 714-963-8951 Facsimile: 714-968-4948 [email protected] [email protected] Plaintiffs allege as follows: I PRELIMINARY STATEMENT 1. Plaintiffs Irma Rodriguez and Jane DeLeon are married and of the same sex. Plaintiff Rodriguez is a U.S. citizen and resident of California. Plaintiff DeLeon is a Filipino national and a resident of California. Plaintiff Martin Aranas is the son of plaintiff DeLeon and at all relevant times was eligible for lawful permanent resident status as a derivative beneficiary of the application to confer lawful permanent residence on his mother. Defendants denied plaintiff DeLeon’s Form I-601 Application for Waiver of Grounds of Inadmissibility solely because DeLeon is married to a person of the same sex, and § 3 of the Defense of Marriage Act, 1 U.S.C. § 7, defines “marriage” under federal law as “only a legal union between one man and one woman as husband and wife.” 2. Plaintiffs Rodriquez and DeLeon have been partners for 20 years. They were lawfully married in California in 2008. They reside together as legally married spouses and plan to remain together for the rest of their lives. They accept all of the duties and responsibilities that are commonly associated with marriage. Plaintiff Martin Aranas, now 25 years old, is the son of plaintiff DeLeon, has lived in the United States since the age of nine years; he will qualify for adjustment of status if plaintiff DeLeon is granted adjustment of status. 3. Plaintiffs allege that defendants’ refusal to grant immigration benefits, including lawful permanent residence, to the spouses of U.S. citizen petitioners solely because their spouses are the same sex violates the substantive due process and equal protection guarantees of the Fifth Amendment to the United States Constitution and 8 U.S.C. § 1152(a)(2), which prohibits discrimination in the issuance of visas based upon a petitioner’s or an immigrant visa beneficiary’s “sex.” 4. This is an action for declaratory and injunctive relief pursuant to 28 U.S.C. §§ 2201-2202 and Fed.R.Civ.Proc. Rule 57, and for review of agency action pursuant to the Administrative Procedure Act, 5 U.S.C. §§ 701-706. Plaintiffs seek a declaration that DOMA § 3, 1 U.S.C. § 7, violates the United States Constitution, as applied to plaintiffs and those similarly situated, by refusing to recognize their lawful marriages for purposes of conferring family-based immigration waivers and benefits. As a direct and proximate result of the violations of the Constitution alleged herein, plaintiffs have been denied, and will continue to be denied, legal protections and benefits under the Immigration and Nationality Act that would be available to them were they spouses of different sexes. II JURISDICTION 5. This Court has jurisdiction pursuant to U.S. Const. Art. III; 28 U.S.C. § 1331 (federal question jurisdiction); 28 U.S.C. § 1361 (mandamus jurisdiction), and 28 U.S.C. § 2241 (habeas corpus jurisdiction). 6. Plaintiffs’ prayer for declaratory relief is brought pursuant to 28 U.S.C. §§ 2201 and 2202. 7. Venue is properly in this court pursuant to 28 U.S.C. § 1391(b) and (e)(1), (2), and (4), because acts complained of occurred in this district, the plaintiffs reside in this district, defendants have offices in this district, and no real property is involved in this action. III PARTIES 8. Plaintiff, Irma Rodriguez is a U.S. citizen, a resident of California, and is the lawful spouse of plaintiff Jane DeLeon. 9. Plaintiff Jane DeLeon is a citizen of the Philippines, the lawful spouse of Plaintiff Rodriquez, a resident of California, and the beneficiary of an approved employment-based immigrant visa petition. 10. Plaintiff Martin R. Aranas is the biological son of plaintiff DeLeon, a citizen of the Philippines, a resident of California, and would qualify for lawful permanent resident status were his mother is granted lawful permanent resident status. 11. Defendant Janet Napolitano is the Secretary of the United States Department of Homeland Security. Defendant Napolitano is charged with the administration of the United States Department of Homeland Security. Defendant United States Citizenship and Immigration Services is a subordinate agency within the Department of Homeland Security, and as such is under the authority and supervision of defendant Napolitano. She is sued in her official capacity. 12. Defendant Alejandro Mayorkas is the Director of defendant the United States Citizenship and Immigration Services, an entity within the Department of Homeland Security with statutory responsibility for adjudicating petitions filed by United States citizens and lawful permanent residents for benefits to “immediate relative” immigrant family members, including lawful spouses of United States citizens and lawful permanent residents. He is sued in his official capacity. 13. Defendant the United States Citizenship and Immigration Service (“USCIS”) is an entity within the Department of Homeland Security with statutory responsibility for the constitutional and lawful adjudication of petitions and applications filed by United States citizens and lawful permanent residents to grant benefits to immigrant family member beneficiaries, including lawful spouses of United States citizens and lawful permanent residents. IV CLASS ACTION ALLEGATIONS 14. Pursuant to Rules 23(a)(1)-(4) and (b)(2) of the Federal Rules of Civil Procedure, plaintiffs bring this action as a class action on behalf of the following proposed class: All members of lawful marriages whom the Department of Homeland Security, pursuant to § 3 of the Defense of Marriage Act, 1 U.S.C. § 7, refuses to recognize as spouses for purposes of conferring lawful status and related benefits under the Immigration and Nationality Act, 8 U.S.C. §§ 1101 et seq. 15. The size of the class is so numerous that joinder of all members is impracticable. 16. The claims of plaintiffs and those of the proposed class members raise common questions of law and fact concerning the constitutionality of DOMA as applied to deny family-based immigration benefits under the INA. This question is common to the named parties and to the members of the proposed class because defendants have acted or will act on grounds generally applicable to both the named parties and proposed class members. Plaintiffs’ claims are also typical of the class claims. 17. The prosecution of separate actions by individual members of the class would create a risk of inconsistent or varying adjudications establishing incompatible standards of conduct for defendants. Prosecution of separate actions would also create the risk that individual class members will secure court orders that would as a practical matter be dispositive of the claims of other class members not named parties to this litigation, thereby substantially impeding the ability of unrepresented class members to protect their interests. 18. Defendants, their agents, employees, and predecessors and successors in office have acted or refused to act, or will act or refuse to act, on grounds generally applicable to the class, thereby making appropriate injunctive relief or corresponding declaratory relief with respect to the class as a whole. Plaintiffs will vigorously represent the interests of unnamed class members. All members of the proposed class will benefit by the action brought by plaintiffs. The interests of the named plaintiffs and those of the proposed class members are identical. Plaintiffs’ counsel include attorneys highly experienced in federal class action litigation and litigation involving the INA and the Fifth Amendment of the United States Constitution. V FACTUAL ALLEGATIONS 19. Plaintiff DeLeon was born on August 21, 1964 in the Philippines. She is a citizen of the Philippines. From about 1984 to 1989 plaintiff DeLeon lived in a common- law “marriage” with Joseph Randolph Aranas. They have two sons born in the Philippines, Mikkel R. Aranas, born in 1985, and plaintiff Martin Aranas, born in 1986. 20. Plaintiff DeLeon was admitted to the United States on or about December 18, 1989, on a B-2 visitor’s visa and has resided here continuously since that time. 21. When plaintiff DeLeon left the Philippines the country was in turmoil, poverty was endemic, armed opposition groups were confronting the government, and sexual discrimination and repression of women were rampant. 22. When plaintiff DeLeon entered the United States in 1989, her passport listed her occupation as “housewife” and her name as Jane Francis L. Aranas, although she was not legally married to Joseph Aranas. So-called common-law “marriages” are not unusual in the Philippines and are governed by Article 147 of the Family Code which reads in part, for example, that “[w]hen a man and a woman … live exclusively with each other as husband and wife without the benefit of marriage …, their wages and salaries shall be owned by them in equal shares and the property acquired by both of them through their work or industry shall be governed by the rules on co-ownership.” 23. In the Philippines, plaintiff DeLeon used the name Jane Francis L. Aranas, Francis being her middle name and the “L” standing for DeLeon, her maiden name. It is common in the Philippines for women to adopt the names of their husbands with whom they live exclusively as husband and wife without the benefit of marriage. 24. Joseph Randolph Aranas followed plaintiff DeLeon to the United States shortly after her entry. Plaintiff DeLeon and Mr. Aranas resided together in the United States until in or about 1991. 25. Plaintiffs Rodriquez and DeLeon met in Westminster, California, in 1992. They have resided together in a committed life-long relationship for 20 years. They were lawfully married under the laws of California on August 22, 2008. They continue to reside together as a married couple and plan to do so for the rest of their lives. 26. On or about March 2, 2006, plaintiff DeLeon’s employer applied for permanent resident status on her behalf. The visa petition was approved on or about May 22, 2006. Her “priority date” (date in line for a visa) was March 2, 2006. On or about August 16, 2007, plaintiff DeLeon filed an application for adjustment of status under § 245 of the Immigration and Nationality Act, as amended (“INA”). At the time she applied for adjustment of status her priority date was current (there were visa numbers available for the quota under which her employment-based visa was approved). Plaintiff Martin Aranas also applied for adjustment of status as a derivative beneficiary of his mother. 27. On April 14, 2011, defendants notified plaintiff DeLeon that she appeared to be inadmissible to the United States because she had entered the United States in 1989 as a “housewife,” under the name Jane L. Aranas, but was not legally married to Mr. Aranas at the time. The notice alleged that plaintiff DeLeon had entered the U.S. in 1989 by misrepresenting her name and marital status, and was therefore inadmissible under INA § 212(a)(6)(C), which makes inadmissible anyone who obtains a visa or admission to the U.S. by misrepresenting a material fact. 28. Defendants nevertheless provided plaintiff DeLeon specific instructions on how to apply for a waiver of inadmissibility pursuant to INA § 212(i), 8 U.S.C. § 1182(i), which requires a showing that her removal or denial of adjustment of status would “result in extreme hardship to [her] citizen … spouse or parent …” Id. 29. Plaintiffs did not believe plaintiff DeLeon was eligible for a waiver of inadmissibility based upon hardship to plaintiff Rodriguez. On July 5, 2011, plaintiff DeLeon instead filed an Application for Waiver of Grounds of Inadmissibility, Form I- 601, based on the hardship her removal would cause her 92-year old citizen father, who resides both in the U.S. and in the Philippines. 30. On September 1, 2011, defendants denied plaintiff DeLeon’s applications for a waiver of inadmissibility and adjustment of status. Defendants denied plaintiff DeLeon’s I-601 waiver application on the ground she had failed to establish that denial of lawful permanent resident status would cause extreme hardship to her citizen father. The waiver denial automatically resulted in a denial of the application for adjustment of status. 31. After consulting counsel, plaintiffs Rodriquez and DeLeon then determined that pursuant to INA § 212(i) they could renew the I-601 waiver application based upon extreme hardship that plaintiff Rodriquez would suffer if plaintiff DeLeon were denied lawful resident status and required to depart the country. 32. On or about September 27, 2011, plaintiff DeLeon submitted a timely Motion to Reopen/Reconsider I-601 Denial (“I-601 Motion to Reopen”) on the ground that denying her lawful permanent residence and requiring her departure from the United States would cause extreme hardship to her U.S. citizen spouse, plaintiff Rodriquez. 33. If plaintiff DeLeon is forced to depart the United States, plaintiff Rodriquez will be forced to leave the United States and relocate to the Philippines, abandon her employment, and leave her immediate family members, or end a 20-year committed lifetime relationship and effectively end her marriage. 34. Factors typically considered by defendants to determine extreme hardship needed to approve a waiver of inadmissibility are (1) presence of U.S. citizen family member, (2) ties to the U.S., (3) qualifying relatives, (4) ties outside the U.S., (5) conditions in the country to which the qualifying relative would relocate, (6) the financial impact of departure, and (7) significant issues of health “particularly when tied to the unavailability of suitable medical care in a country to which the qualifying relocating relative would relocate.” In re Cervantes-Gonzalez, 22 I&N Dec. 560 (BIA 1999) (en 35. Applying these standards to this case: (1) Plaintiff DeLeon has a U.S. citizen spouse, (2) Both plaintiff Rodriguez and plaintiff DeLeon have a wide range of ties in the U.S. through their gainful employment, extended family, friends and community ties they have developed over the course of their twenty years together in the U.S. (3) Plaintiff DeLeon has two sons who reside in the United States. Her sister and a niece also reside in the United States as lawful permanent residents. Plaintiff Rodriguez’s father, mother, three sisters and one brother all are U.S. citizens and reside permanently in the United States. (4) Plaintiff Rodriguez has no immediate relatives living in the Philippines. She has no social, economic, or community ties in the Philippines. (5) The conditions in the Philippines continue to be marked by rampant discrimination against women in general and lesbians in particular, criminalization of lesbians and gay men who show public affection, endemic poverty, substandard housing, and armed insurgency. Under Article 200 of the Revised Penal Code of the Philippines, homosexual displays of affection may be penalized by “arresto mayor and public censure,” as it is subject to the “grave scandal” prohibition. Article 27 of the Revised Penal Code of the Philippines provides for incarceration for one month and one day to six months for a violation of Article 200. The U.S. State Department reports that treatment of women in the Philippines is highly discriminatory with respect to employment and public safety. Fifteen percent of women in the Philippines have been raped. http:www.state.gov (Philippines Report Release April 8, 2011). The State Department reports that women in police custody are frequently raped, particularly women from marginalized groups, such as lesbians. The report also notes that the Philippines “has yet to even approve any anti- discrimination legislation” to protect gay and lesbian citizens. Id. The married life shared by plaintiffs Rodriquez and DeLeon would more likely than not result in their persecution and possible prosecution were they forced to relocate to the Philippines. (6) Plaintiffs’ relocating to the Philippines would have a catastrophic impact on plaintiff Rodriguez’s economic situation inasmuch as she would have to abandon her employment in the United States and seek employment in the Philippines where joblessness is endemic and wages perhaps 10-20 percent of what they are in the United States. (7) Plaintiffs’ relocating to the Philippines could significantly and adversely impact plaintiff Rodriguez’s medical condition because of inadequate available care there and the unavailability of prescription medications she is required to take. Plaintiff Rodriguez suffers from stenosis of the left brain that causes extreme pain, disorientation, and numbness. She also suffers hypertension. She may require surgery in the future to address her stenosis, and if her condition worsens rapidly, surgery may be required immediately. Due to her illnesses, plaintiff Rodriguez is required to take several prescription medications. Large areas of the Philippines have no routine access to pharmacies, and one of the prescription medications she is required to take for pain control, Ultram, is not available in the Philippines. The provision of health services in the Philippines is extremely poor for the vast majority of people. Relocating there may well cause plaintiff Rodriguez’s medical condition to deteriorate and, if brain surgery is needed, it is unlikely she will receive the medical care possibly needed to save her life, which she would be able to obtain if she remained in the U.S. 36. The facts presented in plaintiff DeLeon’s motion to reopen her I-601 Application for Waiver of Grounds of Inadmissibility would in any similar case (not involving a same sex marriage) result in approval of a waiver of inadmissibility. On information and belief, defendants routinely approve waiver applications based on far less compelling facts than those underlying plaintiff’s application. 37. On November 9, 2011, defendants denied the Motion to Reopen and waiver not because the application failed to show that plaintiff DeLeon’s departure from the country would cause plaintiff Rodriquez extreme hardship, but solely because, under DOMA § 3, plaintiff DeLeon was married to someone of the “wrong” sex. The denial states that under the DOMA “Jane DeLeon’s ‘same-sex spouse’ does not qualify as a relative for purposes of establishing hardship.” Defendants also informed plaintiff DeLeon that she was no longer authorized for employment. She was further advised that she was now accruing “unlawful presence” in this country; that if she accrues more than six months of unlawful presence she will be barred from the United States for three years; and that if she remains for more than one year she will be barred from the United States for ten years. 38. Plaintiff Martin Aranas’s immigration status is wholly dependent on that of his mother. He is a derivative beneficiary of plaintiff De Leon’s visa petition and application to adjust status. A child under the age of 21 receives the same priority date as his or her parent. 22 C.F.R. § 42.53(a). Sons and daughters who are derivative beneficiaries of a parent’s priority date in employment-based categories remain eligible for derivative immigration benefits so long as they are under 21 at the time a visa becomes immediately available. INA § 203(h). Child Status Protection Act, Pub. L. 107- 208, 116 Stat. 927 (Aug. 6, 2002) (“CSPA of 2000”). 39. Defendants approved plaintiff De Leon’s I-140 Petition in 2006, and an immigrant visa became immediately available to her in July 2007. In August 2007 plaintiff De Leon timely filed an I-485 application for adjustment of status seeking lawful permanent residence for plaintiff Martin Aranas as a derivative beneficiary. Plaintiff Martin Arana was 20 years old at the time of the I-485 filing. His reaching the age of 21 after the date a visa became available to his mother does not bar him from derivative immigration status. However, defendants’ denying plaintiff DeLeon’s application for adjustment of status disqualifies plaintiff Martin Arana from receiving derivative immigration benefits through any future application for immigration benefits filed on his mother’s behalf and strips him of his protection under CSPA of 2000 against aging-out. 40. Plaintiffs seek preliminary relief to save plaintiff DeLeon and Aranas from forced unemployment or illegal employment and the forced separation of the plaintiffs’ family or involuntary relocation to the Philippines pendent lite. They seek permanent relief restoring plaintiffs DeLeon and Aranas to the position they would now be in but for the constitutional violations alleged herein. Application of the INA 41. The purpose of INA § 212(i) is to keep families together when the departure of an immediate family member would cause extreme hardship to a United States citizen or lawful permanent resident spouse or parent. Defendants routinely apply INA 212(i) so as to preserve family units in cases in which refusal to grant an inadmissible immigrant a waiver leading to denial of adjustment of status would cause extreme hardship to a U.S. citizen or lawful permanent resident spouse or parent. 42. The INA nowhere limits the term “spouse” to only include a union between “one man and one woman.” The INA does not exclude from its definition of “spouse” those spouses who are the same sex as one another. To the contrary, the INA disallows discrimination in the issuance of visas on the basis of sex. 8 U.S.C. § 1152(a)(2). 43. In 1990, Congress amended the INA to provide that immigrants could not be denied visas or admission to the United States based on sexual orientation. Immigration Act of 1990, Pub. L. No. 101-649, 104 Stat. 4978 (1990). 44. A marriage is usually valid for immigration purposes if it is recognized by the law of the state where it occurs. Matter of Lovo-Lara, 23 I&N Dec. 746, 748 (BIA 2005). Historically, as long as two people intend to establish a life together at the time of the marriage, the marriage is valid for immigration purposes. Bark v. INS, 511 F.2d 1200 (9th Cir. 1975). Under the Tenth Amendment to the U.S. Constitution, states reserve all powers not assigned to the federal government, including the classification of a person’s sex and determining the lawfulness of marriages. Matter of Lovo-Lara, 23 I&N Dec. at 748. DOMA’s Enactment 45. DOMA’s legislative history identifies several interests that Congress purportedly sought to advance through the law’s enactment. The House Report acknowledged that federalism constrained Congress’s power, and that “[t]he determination of who may marry in the United States is uniquely a function of state law.” H.R. Rep. No. 104-664, at 3 (1996), reprinted in 1996 U.S. Code Cong. & Admin. News 2905, 2906-07 (“H. Rep.”). Nonetheless, the Report stated that Congress was not “supportive of (or even indifferent to) the notion of same-sex ‘marriage’.” Id. at 12. The authoritative House Report provides several purported reasons for the enactment of DOMA: (1) defending and nurturing the institution of traditional, heterosexual marriage; (2) defending traditional notions of morality; (3) protecting state sovereignty and democratic self-governance; and (4) preserving scarce government resources. Id. The Report also claimed interests in “encouraging responsible procreation and child-rearing,” and conserving scarce resources. Id. at 13, 18. 46. Although DOMA amended the eligibility criteria for a vast number of federal benefits, rights, and privileges dependent upon marital status either directly under federal law or controlled in some fashion by federal law, the relevant committees did not engage in any meaningful examination of the scope or effect of the law, much less detail the ways in which federal interests underlying numerous programs would be affected. 47. The interests identified by Congress and all other interests that might be advanced to justify DOMA’s constitutionality are inapposite in the context of federal immigration benefits, and/or are not rationally related to discriminating against married same-sex couples. 48. Procreation, which Congress erroneously deemed the unique province of “traditional, heterosexual marriage[s],” is not a precondition of marriage, of receipt of federal marital protections, or of the issuance of a family-based immigrant benefits. The federal government’s refusal to recognize the marriages of same-sex couples does not nurture, improve, stabilize or enhance the marriages of other married couples. Nor would the federal government’s recognition of the marriage of plaintiffs Rodriguez and DeLeon or of other married, same-sex couples degrade, destabilize or have any other deleterious effect on the marriages of other married couples. The claimed federal “interest” in “defending” “traditional heterosexual marriage” simply states the government’s intent to discriminate against same-sex couples and provides no independent justification for such discrimination. 49. The INA sets out several acts involving immoral conduct that make immigrants inadmissible for visas and adjustment of status. E.g. INA§ 212(a) (2)(D) (excluding aliens who “has engaged in prostitution within 10 years of the date of the application”); INA § 212(a)(2)(A)(i)(I) (excluding aliens who have committed a crime involving moral turpitude); INA § 212(a)(2)(D)(iii) (excluding aliens who enter the United States “to engage in any other unlawful commercialized vice”). Nowhere has Congress made a finding that granting visas only to heterosexual immigrants protects the institution of “traditional heterosexual marriage” or “traditional notions of morality.” 50. The INA does not require defendants to deny visas or adjustment of status based upon an immigrant’s sex or sexual orientation. There is no credible evidence that lesbian and gay married couples in any way increase the immorality of the communities or countries in which they reside. There is no evidence or rational basis to believe that granting plaintiff DeLeon or similarly situated immigrants adjustment of status will in any way negatively impact “traditional notions of morality.” 51. Nor does DOMA advance any interest in protecting states’ sovereignty over marriage; instead, it negates and disregards states’ decisions regarding the institution of marriage. The INA and federal immigration authorities fully embrace the myriad of state marriage laws by recognizing as valid for federal immigration purposes heterosexual marriages that have been declared valid pursuant to state law, notwithstanding that the requirements for a valid marriage differ from state to state. 52. Application of DOMA to prevent plaintiffs from obtaining immigration benefits does nothing to preserve the resources of the federal Government. The Congressional Budget Office has correctly found that enforcing the DOMA saves the federal government no money, but to the contrary, results in net costs. Cong. Budget Office, U.S. Cong., The Potential Budgetary Impact of Recognizing Same-Sex Marriages 1 (June 21, 2004), http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/55xx/doc5 5 59/06-2 l-samesexmarriage.pdf. 53. DOMA and its application to plaintiffs Rodriquez and DeLeon and their proposed class members deprives plaintiffs and putative class members of substantive due process by burdening the integrity of their lawful marriages and their most intimate family relationships. 54. DOMA on its face discriminates on the basis of sex and implicitly on the basis of sexual orientation. Such a law requires heightened scrutiny. A classification triggers heightened scrutiny when (1) the target group has suffered a history of invidious discrimination, and (2) the characteristics that distinguish the group’s members bear no relation to their ability to perform or contribute to society. In applying heightened scrutiny courts also have considered the group’s minority status and/or relative lack of political power, and whether group members have obvious, immutable, or distinguishing characteristics that define them as a discrete group. 55. The target group in this case has clearly suffered a history of invidious discrimination. “[F]or centuries there have been powerful voices to condemn homosexual conduct as immoral,” Lawrence v. Texas, 539 U.S. 558, 571 (2003), and “state- sponsored condemnation” of homosexuality has led to “discrimination both in the public and in the private spheres.” Id. at 575. To this day, lesbians and gay men remain the subjects of public opprobrium, face the ever-present threat of anti-gay violence, and remain vulnerable to discrimination in employment, housing, and public accommodations. 56. The characteristics that distinguish the group’s members, including plaintiffs DeLeon and Rodriquez, bear no relation to their ability to perform or contribute to society. There exists no credible evidence that sexual orientation bears any relation to one’s ability to perform or contribute to society. The psychological and medical community has long confirmed that homosexuality per se entails no impairment in judgment, stability, reliability or general social or vocational capabilities. Gay men and lesbians serve in Congress, in the federal judiciary, and in the Executive Branch of government. Empirical studies have consistently found that lesbians and gay men are as able as heterosexuals to form loving, committed relationships. Plaintiffs Rodriguez and DeLeon illustrate this: They have had a relationship of almost 20 years. They were married as soon as they were legally permitted to do so. They have made a commitment to live together as a family. Like millions of their fellow lesbians and gay men, they are woven into the fabric of everyday America, leading productive lives as spouses, family members, friends, neighbors, and coworkers. 57. The obstacles to political power for gay men and lesbians are well known. Gay men and lesbians are, both nationally and locally, a minority, comprising about 3.5 percent of the population. They are geographically dispersed, and, unlike many minorities, may go unidentified out of fear of ostracism and even violence, further eroding the potential for political mobilization. Political opposition to legal protections and benefits for gay men and lesbians is powerful, mobilized, and well-funded. There is no federal prohibition against discrimination based on sexual orientation in employment, housing, public accommodations, or education, nor any such protection in 29 states. Openly gay officials are significantly underrepresented in political office in proportion to the gay and lesbian population. 58. Although not essential to heightened scrutiny, laws that discriminate based on obvious, immutable, or distinguishing characteristics that define persons as a discrete group may trigger heightened scrutiny. Sexual orientation and sexual identity are entirely or largely immutable; they are so fundamental to one’s identity that a person should not be required to abandon them. Sexual orientation is inherent to one's very identity as a person. It would work a fundamental injustice to require gay men and lesbians to chose between retaining their identity and somehow changing (if that were even possible) to gain parity with their heterosexual brethren. 59. Heightened scrutiny is also warranted because DOMA unequally burdens plaintiffs’ constitutionally protected interest in the integrity of their families. By its sweeping reclassification of the plaintiffs as “single” or “unmarried” for all federal purposes, DOMA erases their marriages under federal law. By throwing plaintiffs’ marriages into a confusing legal status in which their marriages “count” for some purposes but not others, DOMA erases much of the meaning their marriages would otherwise have—in both public and private settings—and relegates them to second-class status. The right to maintain family relationships free from undue government restrictions is a long-established and fundamental liberty interest. 60. Heightened scrutiny is also warranted because DOMA intrudes into an area of traditional state prerogative—regulation of marriage and family—and accordingly raises federalism concerns. DOMA represents the first time that the federal government has attempted to mandate a uniform definition of marriage. The absence of precedent for this legislative classification demonstrates an impermissible animus and hostility toward same-sex couples and individuals based upon their sexual orientation. 61. There exists no fairly conceivable set of facts that could ground a substantial or rational relationship between DOMA and a legitimate government objective in this case. Congress has yet to identify a reason why gay and lesbian individuals who have met their obligations as taxpaying citizens and who are married to someone of the same sex must be denied family benefits available to persons who are married to someone of a different sex. Singling out same-sex couples that are married among all married persons for denial of waivers of inadmissibility is simply an expression of the intent to discriminate against gay people. At bottom, DOMA, 1 U.S.C. § 7, is motivated by disapproval of gay men and lesbians and their relationships, an illegitimate federal interest. 62. On February 23, 2011, the Attorney General notified congressional leadership that the Administration had determined that § 3 of DOMA is unconstitutional as applied to same-sex couples whose marriages are legally recognized under state law and that the Department of Justice would no longer defend DOMA § 3 before the federal courts. The Department of Justice believes that discrimination on the basis of sexual orientation must withstand heightened scrutiny and that DOMA § 3 fails to do so. 63. While defendants rely on DOMA § 3 to deny U.S. citizen plaintiff Rodriquez the right to reside in her own country with her spouse who has an approved visa petition, and to deny plaintiff DeLeon a waiver of inadmissibility, defendants permit a range of non-citizen temporary visitors (students, temporary employees, investors, etc.) to have their spouses live with them through the issuance of “accompanying” relative visas. See, e.g., INA §§ 101(a)(15)(E) (Treaty Investor Spouse), 101(a)(15)(F) (student spouse); 101(a)(15)(H)(temporary worker spouse). There is no rational basis for permitting non-citizen visiting immigrants to live with their different-sex spouses in the U.S., while not permitting U.S. citizens to live with their spouses simply because they are of the same sex. 64. While defendants rely on DOMA § 3 to deny Rodriguez—a U.S. citizen in a 20 year relationship (and three year marriage)—the ability to live here with her spouse, defendants approve otherwise identical waiver applications sought by different-sex married couples who may have met only a handful of weeks ago over the internet. 65. At the same time as defendants automatically deny immigration benefits to plaintiffs and their putative class members, defendants have granted and continue to grant family based petitions and waivers to, inter alia, different-sex married couples who remain childless for whatever reason, immigrant beneficiaries convicted of crimes or who have engaged in other conduct involving moral turpitude, fiancés of U.S. citizens who are not even married, and different-sex married couples who met over the internet and have been married for only a few days or weeks. 66. Despite the willingness of plaintiffs Rodriguez and DeLeon to assume the legally imposed responsibilities of marriage at the federal level, just as they do at the state level, and plaintiff DeLeon’s willingness to accept all of the responsibilities associated with becoming a lawful permanent resident of the United States, plaintiffs are prevented from doing so by defendants’ implementation of the DOMA § 3, 1 U.S.C. § 7. VI IRREPARABLE INJURY 67. Plaintiffs have suffered and will continue to suffer irreparable harm because of defendants’ applying DOMA § 3 as alleged herein. Defendants’ policies and practices have deprived and will continue to deprive plaintiffs of substantive due process and equal protection in violation of the Fifth Amendment to the United States Constitution. 68. As a result of defendants’ applying DOMA § 3 as alleged herein, plaintiffs Rodriguez and DeLeon imminently face either living apart in different countries, or U.S. citizen plaintiff Rodriquez having to abandon the United States in order to maintain her family life with plaintiff DeLeon. The denial of plaintiff DeLeon’s waiver also terminated her and plaintiff Martin Aranas’s temporary lawful status and employment authorization of many years, effectively placing in immediate jeopardy their right to continue to be employed, and to remain here other than in “illegal” status pending entry of judgment in this case. VII FIRST CLAIM FOR RELIEF [Fifth Amendment Equal Protection] 69. Plaintiffs hereby incorporate by reference ¶¶ 1-68 of this Complaint as though fully set forth herein. 70. Defendants’ applying DOMA § 3 to deny family-based immigration waivers and petitions solely based upon a married couples’ sexual orientation, and/or the fact that the petitioning party and the immigrant beneficiary are of the same sex, violate the equal protection guarantee of the Fifth Amendment inasmuch as DOMA treats identically situated married persons differently based on their sexual orientation and sex, with no permissible or constitutionally adequate justification. / / / VIII SECOND CLAIM FOR RELIEF [Denial of substantive due process] 71. Plaintiffs hereby incorporate by reference ¶¶ 1-68 of this Complaint as though fully set forth herein. 72. DOMA and its application to plaintiffs deprives plaintiffs Rodriquez and DeLeon of substantive due process by burdening the integrity of their lawful marriage and their most intimate family relationships. The right to maintain family relationships and personal choice in matters of marriage and family life free from undue government restrictions is a fundamental liberty interest. Lawrence v. Texas, 539 U.S. 558 (2003). DOMA substantially burdens plaintiffs’ fundamental interest in their existing familial relationships without a rational, substantial, or compelling reason for doing so. 73. When the government intrudes upon the personal and private lives of lesbians and gay men in a manner that implicates the rights identified in Lawrence v. Texas, supra, the government must advance an important governmental interest, which it has not done in this case; the government must show that the intrusion significantly furthers that interest, which has not been shown in this case; and the government must show that the intrusion is necessary to further that interest, which it has not shown in this case. Witt v. Dep’t of the Airforce, 527 F.3d 806 (9th Cir. 2008). X PRAYER FOR RELIEF WHEREFORE, plaintiffs pray that this Court — 1. assume jurisdiction of this cause; 2. certify a class of similarly situated same-sex married couples as proposed herein; 3. enter declaratory judgment that defendants’ applying DOMA § 3 in this and similar cases, and defendants’ regulations, policies and practices applying DOMA § 3 against plaintiffs and those similarly situated are unlawful; 4. issue a temporary injunction enjoining defendants— a) from removing or detaining plaintiffs DeLeon and Arenas and those similarly situated; b) from revoking or denying employment authorization to plaintiffs DeLeon and Arenas and those similarly situated; and c) from deeming plaintiffs DeLeon and Arenas and those similarly situated inadmissable pursuant to 8 U.S.C. § 1182(a)(9)(B)(i), where such persons would not have accrued more than six months in unlawful status but for DOMA § 3; 5. issue a permanent injunction enjoining defendants from denying United States citizen petitioners and their immigrant spouses approvals of benefits under the INA solely

criminal & enforcement

fuasEYcBD5gMZwczNfXF

12-cv-1952 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. ________________ SETH WARNICK, on behalf of himself and all others similarly situated, Plaintiff, v. DISH NETWORK LLC, Defendant. CLASS ACTION COMPLAINT FOR DAMAGES AND INJUNCTIVE RELIEF PURSUANT TO THE TELEPHONE CONSUMER PROTECTION ACT, 47 U.S.C. § 227 et seq. Plaintiff SETH WARNICK (hereinafter referred to as “Plaintiff”), individually and on behalf of all others similarly situated, alleges on personal knowledge, investigation of his counsel, and on information and belief as follows: NATURE OF ACTION 1. Plaintiff brings this action for damages, and other legal and equitable remedies, resulting from the illegal actions of Dish Network LLC (hereinafter referred to as “DISH” or “Defendant”) in negligently, knowingly, and/or willfully contacting Plaintiff on Plaintiff’s cellular telephone without his prior express consent within the meaning of the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq. (hereinafter referred to as the “TCPA”). 2. “Consumer complaints about abuses of telephone technology – for example, computerized calls to private homes – prompted Congress to pass the Telephone Consumer Protection Act of 1991, 47 U.S.C. § 227 et seq. Congress determined that federal legislation was needed because telemarketers, by operating interstate, were escaping state-law prohibitions on intrusive nuisance calls.” Mims v. Arrow Financial Services, LLC, Slip Opinion, Case No. 10- 1195 (United States Supreme Court January 18, 2012) (internal citations omitted). In an effort to enforce this fundamental federal right to privacy, Plaintiff files the instant class action complaint alleging violations of the TCPA. 3. Defendant has caused consumers actual injury in fact, not only because plaintiff and the putative class were subjected to the aggravation that necessarily accompanies these calls, but also because consumers frequently have to pay their cell phone service providers for the receipt of such calls and such calls are an intrusion upon seclusion, diminish cellular battery life, and waste data storage capacity. JURISDICTION AND VENUE 4. This Court has jurisdiction under 28 U.S.C. § 1331 under the Telephone Consumer Protection Act, 47 U.S.C. §227 (TCPA). 5. Venue is proper in the United States District Court for the District of Colorado pursuant to 28 U.S.C. § 1391(b)-(c) and 1441(a), because Defendant is headquartered in this District, and because Defendant’s contacts with this District are sufficient to subject it to personal jurisdiction. PARTIES 6. Plaintiff is, and at all times mentioned herein was, an individual citizen of the State of Texas, who resides in Spring Branch, Texas. 7. DISH is a Colorado limited liability company that maintains its headquarters at 9601 S. Meridian Blvd, Englewood, CO 80112. DISH provides direct broadcast satellite service throughout the United States. The telecommunications company post annual revenues in excess of eleven billion dollars and is a Fortune 200 Company. THE TELEPHONE CONSUMER PROTECTION ACT OF 1991 (TCPA), 47 U.S.C. § 227 8. In 1991, Congress enacted the TCPA, in response to a growing number of consumer complaints regarding certain telemarketing practices. 9. The TCPA regulates, among other things, the use of automated telephone equipment, or “autodialers.” Specifically, the plain language of section 227(b)(1)(A)(iii) prohibits the use of autodialers to make any call to a wireless number in the absence of an emergency or the prior express consent of the called party. 10. According to findings by the Federal Communication Commission (“FCC”), the agency Congress vested with authority to issue regulations implementing the TCPA, such calls are prohibited because, as Congress found, automated or prerecorded telephone calls are a greater nuisance and invasion of privacy than live solicitation calls, and such calls can be costly and inconvenient. The FCC also recognized that wireless customers are charged for incoming calls whether they pay in advance or after the minutes are used. 11. On January 4, 2008, the FCC released a Declaratory Ruling wherein it confirmed that autodialed and prerecorded message calls to a wireless number by a creditor (or on behalf of a creditor) are permitted only if the calls are made with the “prior express consent” of the called party. The FCC “emphasize[d] that prior express consent is deemed to be granted only if the wireless number was provided by the consumer to the creditor, and that such number was provided during the transaction that resulted in the debt owed.” FACTUAL ALLEGATIONS 12. Plaintiff is, and at all times mentioned herein was, a “person” as defined by 47 U.S.C. § 153(10). 13. Seth Warnick never had an account with DISH nor did his wife. Mr. Warnick has not conducted any business with DISH, nor did he have any prior business relationship. Moreover, Mr. Warnick has never made telephonic contact with DISH such that DISH would have permission or consent to contact him. 14. DISH is, and at all times mentioned herein was, a company and a “person”, as defined by 47 U.S.C. § 153(10). 15. Notwithstanding the fact Plaintiff did not provide DISH with his cellular number, DISH repeatedly contacted Plaintiff via pre-recorded messages on Plaintiff’s cellular telephone. Plaintiff received numerous calls on his cellular phone that were attempts to collect upon a debt. Plaintiff avers that these collection attempts occurred within four years of filing this action. 16. All telephone contact by DISH to Plaintiff on his cellular telephone occurred via an “automatic telephone dialing system,” as defined by 47 U.S.C. § 227(a)(1), and all calls that are the subject of this Complaint occurred within four years of the filing of this Complaint. 17. The telephone calls placed by DISH to Plaintiff’s cellular telephone via the automatic telephone dialing system used “an artificial or prerecorded voice” as described in 47 U.S.C. § 227(b)(1)(A). 18. The telephone number that DISH used to contact Plaintiff, with a “prerecorded voice” made by an “automatic telephone dialing system,” was assigned to a cellular telephone service as specified in 47 U.S.C. § 227(b)(1)(A)(iii). 19. Plaintiff did not provide his wireless number to DISH “during the transaction that resulted in the debt owed” because the Plaintiff does not owe a debt to Dish. Moreover, he never otherwise provided express consent to receive prerecorded calls by DISH on Plaintiff’s cellular telephone. 20. DISH did not make telephone calls to Plaintiff’s cellular phone “for emergency purposes” utilizing an “artificial or prerecorded voice” or placed by an “automatic telephone dialing system,” as described in 47 U.S.C. § 227(b)(1)(A). 21. Under the TCPA and pursuant to the FCC’s January 2008 Declaratory Ruling, the burden is on DISH to demonstrate that Plaintiff and the class members provided express consent within the meaning of the statute, because there is a question as to whether express consent was ever provided and it is the best entity to determine how such consent was attained. 22. To the extent that DISH retained or otherwise caused a third party to make the calls to plaintiff and the putative class, the FCC’s January 2008 Declaratory Ruling provides that creditors, like DISH, are liable for third party calls under the TCPA. CLASS ACTION ALLEGATIONS 23. Plaintiff brings this action on behalf of himself and on behalf of all other persons similarly situated (hereinafter referred to as “the Class”). 24. Plaintiff proposes the following Class definition, subject to amendment as appropriate: (a) All persons within the United States to whose cellular telephone number; (b) Dish or an entity on its behalf, placed a non-emergency telephone call; (c) through the use of an automatic telephone dialing system or an artificial or prerecorded voice; (d) within four years prior to filing this lawsuit; (e) where Dish cannot show that the person provided prior express consent for such calls. 25. Plaintiff represents and is a member of the Class. Excluded from the Class are Defendant and any entities in which Defendant has a controlling interest, Defendant’s agents and employees, the Judge to whom this action is assigned and any member of the Judge’s staff and immediate family, and claims for personal injury, wrongful death and/or emotional distress. 26. Plaintiff does not know the exact number of members in the Class, but based upon the size of DISH, Plaintiff reasonably believes that Class members number at minimum in the tens of thousands. 27. Plaintiff and all members of the Class have been harmed by the acts of DISH not only because consumers were subjected to the aggravation that necessarily accompanies these calls, but also because consumers frequently have to pay their cell phone service providers for the receipt of such calls and such calls are an intrusion upon seclusion, diminish cellular battery life, and waste data storage capacity. 28. This Class Action Complaint seeks money damages and injunctive relief. 29. The joinder of all Class members is impracticable due to the size and relatively modest value of each individual claim. The disposition of the claims in a class action will provide substantial benefit the parties and the Court in avoiding a multiplicity of identical suits. The Class can be identified easily through records maintained by DISH. 30. There are well-defined, nearly identical, questions of law and fact affecting all parties. The questions of law and fact involving the class claims predominate over questions, which may affect individual Class members. Those common questions of law and fact include, but are not limited to, the following: (a) Whether DISH made nonemergency calls to Plaintiff and Class members’ cellular telephones using an automatic telephone dialing system or an artificial or prerecorded voice; (b) Whether DISH can meet its burden of showing it obtained prior express consent (i.e., consent that is clearly and unmistakably stated), during the transaction that resulted in the debt owed, to make such calls; (c) Whether DISH’s conduct was knowing and/or willful; (d) Whether DISH is liable for damages, and the amount of such damages; and (e) Whether DISH should be enjoined from engaging in such conduct in the future. 31. As a person who received numerous and repeated telephone calls using an automatic telephone dialing system or an artificial or prerecorded voice, without his prior express consent within the meaning of the TCPA, Plaintiff asserts claims that are typical of each Class member. Plaintiff will fairly and adequately represent and protect the interests of the Class, and he has no interests that are antagonistic to any member of the Class. 32. Plaintiff has retained counsel experienced in handling class action claims involving violations of federal and state consumer protection statutes such as the TCPA. 33. A class action is the superior method for the fair and efficient adjudication of this controversy. Class wide relief is essential to compel DISH to comply with the TCPA. The interest of Class members in individually controlling the prosecution of separate claims against DISH is small because the statutory damages in an individual action for violation of the TCPA are small. Management of these claims is likely to present significantly fewer difficulties than are presented in many class claims because the calls at issue are all automated and the Class members, by definition, did not provide the prior express consent required under the statute to authorize calls to their cellular telephones. 34. DISH has acted on grounds generally applicable to the Class, thereby making final injunctive relief and corresponding declaratory relief with respect to the Class as a whole appropriate. Moreover, on information and belief, Plaintiff alleges that the TCPA violations complained of herein are substantially likely to continue in the future if an injunction is not entered. CAUSES OF ACTION FIRST COUNT: NEGLIGENT VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT, 47 U.S.C. § 227 et seq. 35. Plaintiff incorporates by reference the foregoing paragraphs of this Complaint as if fully set forth herein. 36. The foregoing acts and omissions of DISH constitute numerous and multiple negligent violations of the TCPA, including but not limited to each of the above cited provisions of 47 U.S.C. § 227 et seq. 37. As a result of DISH’s negligent violations of 47 U.S.C. § 227 et seq., Plaintiff and Class members are entitled to an award of $500.00 in statutory damages for each and every call in violation of the statute, pursuant to 47 U.S.C. § 227(b)(3)(B). 38. Plaintiff and Class members are also entitled to and do seek injunctive relief prohibiting DISH’s violation of the TCPA in the future. 39. Plaintiff and Class members are also entitled to an award of attorneys’ fees and WHEREFORE, Plaintiff respectfully requests that the Court grant Plaintiff and all Class members the following relief against Defendant: A. As a result of DISH’s negligent violations of 47 U.S.C. § 227(b)(1), Plaintiff seeks for himself and each Class member the greater of $500.00 in statutory damages or actual damages for each and every call that violated the TCPA; B. Injunctive relief prohibiting such violations of the TCPA by DISH in the future; C. An award of attorneys’ fees and costs to counsel for Plaintiff and the Class; D. An order certifying this action to be a proper class action pursuant to Federal Rule of Civil Procedure 23, establishing an appropriate Class and any Subclasses the Court deems appropriate, finding that Plaintiff is a proper representative of the Class, and appointing the lawyers and law firms representing Plaintiff as counsel for the Class; E. Such other relief as the Court deems just and proper. SECOND COUNT: KNOWING AND/OR WILLFUL VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT, 47 U.S.C. § 227 et seq. 40. Plaintiff incorporates by reference the foregoing paragraphs of this Complaint as if fully stated herein. 41. The foregoing acts and omissions of DISH constitute numerous and multiple knowing and/or willful violations of the TCPA, including but not limited to each of the above- cited provisions of 47 U.S.C. § 227 et seq. 42. As a result of DISH’s knowing and/or willful violations of 47 U.S.C. § 227 et seq., Plaintiff and each member of the Class is entitled to treble damages of up to $1,500.00 for each and every call in violation of the statute, pursuant to 47 U.S.C. § 227(b)(3). 43. Plaintiff and all Class members are also entitled to and do seek injunctive relief prohibiting such conduct violating the TCPA by DISH in the future. 44. Plaintiff and Class members are also entitled to an award of attorneys’ fees and WHEREFORE, Plaintiff respectfully requests that the Court grant Plaintiff and all Class members the following relief against Defendant: A. As a result of DISH’s willful and/or knowing violations of 47 U.S.C. § 227(b)(1), Plaintiff seeks for himself and each Class member the greater of treble damages, as provided by statute, of up to $1,500.00 or actual damages for each and every call that violated the TCPA; B. Injunctive relief prohibiting such violations of the TCPA by DISH in the future; C. An award of attorneys’ fees and costs to counsel for Plaintiff and the Class; D. An order certifying this action to be a proper class action pursuant to Federal Rule of Civil Procedure 23, establishing an appropriate Class and any Subclasses the Court deems appropriate, finding that Plaintiff is a proper representative of the Class, and appointing the lawyers and law firms representing Plaintiff as counsel for the Class; E. Such other relief as the Court deems just and proper. Dated: July 26, 2012 Respectfully Submitted, By: /s/ Steven L. Woodrow Steven L. Woodrow (SBN 43140) Megan Lindsey (SBN 43817) EDELSON MCGUIRE LLC 999 W. 18th Street, Suite 3000 Denver, CO 80202 Tel: (303) 357-4878 Fax: (303) 446-911 [email protected] [email protected] Keith J. Keogh (Pro Hac Vice to be filed) Timothy Sostrin (Pro Hac Vice to be filed) KEOGH LAW, LTD 101 N Wacker Drive, Suite 605 Chicago, IL 60606 Tel: (312) 726-1092 Fax: (312) 726-1093 [email protected] [email protected] David Schafer (Pro Hac Vice to be filed) Brian Trenz (Pro Hac Vice to be filed) THE LAW OFFICES OF DAVID SCHAFER, PLLC 7800 IH-10 West, Suite 830 San Antonio, TX 78230 Tel: (210) 348-0500 [email protected] [email protected]

privacy

QuIVEYcBD5gMZwcziTm1

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK Blima Lebron, individually and on behalf of all others similarly situated; Civil Action No: Plaintiff, CLASS ACTION COMPLAINT DEMAND FOR JURY TRIAL -v.- Credit Control, LLC dba Credit Control & Collections, LLC and John Does 1-25 Defendants. Plaintiff Blima Lebron (hereinafter, “Plaintiff”), a New York resident, brings this Class Action Complaint by and through her attorneys, Stein Saks PLLC, against Defendant Credit Control, LLC dba Credit Control & Collections, LLC (hereinafter “Defendant CC”), individually and on behalf of a class of all others similarly situated, pursuant to Rule 23 of the Federal Rules of Civil Procedure, based upon information and belief of Plaintiff’s counsel, except for allegations specifically pertaining to Plaintiff, which are based upon Plaintiff’s personal knowledge. INTRODUCTION/PRELIMINARY STATEMENT 1. Congress enacted the Fair Debt Collection Practices Act (hereinafter “the FDCPA”) in 1977 in response to the “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.” 15 U.S.C. §1692(a). At that time, Congress was concerned that “abusive debt collection practices contribute to the number of personal 1 bankruptcies, to material instability, to the loss of jobs, and to invasions of individual privacy.” Id. Congress concluded that “existing laws…[we]re inadequate to protect consumers,” and that “‘the effective collection of debts” does not require “misrepresentation or other abusive debt collection practices.” 15 U.S.C. §§ 1692(b) & (c). 2. Congress explained that the purpose of the Act was not only to eliminate abusive debt collection practices, but also to “insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged.” Id. § 1692(e). After determining that the existing consumer protection laws ·were inadequate. Id § l692(b), Congress gave consumers a private cause of action against debt collectors who fail to comply with the Act. Id. § 1692k. JURISDICTION AND VENUE 3. The Court has jurisdiction over this class action pursuant to 28 U.S.C. § 1331 and 15 U.S.C. § 1692 et. seq. The Court has pendent jurisdiction over the State law claims in this action pursuant to 28 U.S.C. § 1367(a). 4. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(b)(2) as this is where a substantial part of the events or omissions giving rise to the claim occurred. 5. Venue is also proper in this judicial district pursuant to 28 U.S.C. § 1392(b)(1) as this is the defendant’s primary place of business is located here. NATURE OF THE ACTION 6. Plaintiff brings this class action on behalf of a class of New York consumers under §1692 et seq. of Title 15 of the United States Code, commonly referred to as the Fair Debt Collections Practices Act (“FDCPA”), and 7. Plaintiff is seeking damages and declaratory relief. PARTIES 8. Plaintiff is a resident of the State of New York, County of Rockland, residing at 2 Cedar Lane, Monsey NY 10952-2101. 9. Defendant Credit Control LLC is a “debt collector” as the phrase is defined in 15 U.S.C. § 1692(a)(6) and used in the FDCPA with an address at 5757 Phantom Drive, Suite 330, Hazelwood, MO 63042 and can be served upon their registered agent, C T Corporation System, at 28 Liberty St., New York, New York 10005. 10. Upon information and belief, Defendant Credit Control LLC is a company that uses the mail, telephone, and facsimile and regularly engages in business the principal purpose of which is to attempt to collect debts alleged to be due another. 11. John Does 1-25, are fictitious names of individuals and businesses alleged for the purpose of substituting names of Defendants whose identities will be disclosed in discovery and should be made parties to this action. CLASS ALLEGATIONS 12. Plaintiffs bring this claim on behalf of the following case, pursuant to Fed. R. Civ. P. 23(a) and 23(b)(3). 13. The Class consists of: a. all individuals with addresses in the State of New York; b. to whom Defendant CC sent a collection letter attempting to collect a consumer debt; c. and in response a consumer called up the Defendant to dispute the validity of the debt; d. and the Defendant responded by questioning the validity of the dispute and asking for the reasons for the dispute; 14. The identities of all class members are readily ascertainable from the records of Defendants and those companies and entities on whose behalf they attempt to collect and/or have purchased debts. 15. Excluded from the Plaintiff Class are the Defendants and all officer, members, partners, managers, directors and employees of the Defendants and their respective immediate families, and legal counsel for all parties to this action, and all members of their immediate families. 16. There are questions of law and fact common to the Plaintiff Class, which common issues predominate over any issues involving only individual class members. The principal issue is whether the Defendant’s response to Plaintiffs oral dispute, violated 15 U.S.C. §1692g, 1692e. 17. The Plaintiff’s claims are typical of the class members, as all are based upon the same facts and legal theories. The Plaintiff will fairly and adequately protect the interests of the Plaintiff Class defined in this complaint. The Plaintiff has retained counsel with experience in handling consumer lawsuits, complex legal issues, and class actions, and neither the Plaintiff nor her attorneys have any interests, which might cause them not to vigorously pursue this action. 18. This action has been brought, and may properly be maintained, as a class action pursuant to the provisions of Rule 23 of the Federal Rules of Civil Procedure because there is a well-defined community interest in the litigation: a. Numerosity: The Plaintiff is informed and believes, and on that basis alleges, that the Plaintiff Class defined above is so numerous that joinder of all members would be impractical. b. Common Questions Predominate: Common questions of law and fact exist as to all members of the Plaintiff Class and those questions predominance over any questions or issues involving only individual class members. The principal issue is whether the Defendant’s response to the Plaintiff’s oral dispute, violated 15 U.S.C. §1692g, 1692e. c. Typicality: The Plaintiff’s claims are typical of the claims of the class members. The Plaintiff and all members of the Plaintiff Class have claims arising out of the Defendant’s common uniform course of conduct complained of herein. d. Adequacy: The Plaintiff will fairly and adequately protect the interests of the class members insofar as Plaintiff has no interests that are adverse to the absent class members. The Plaintiff is committed to vigorously litigating this matter. Plaintiff has also retained counsel experienced in handling consumer lawsuits, complex legal issues, and class actions. Neither the Plaintiff nor her counsel has any interests which might cause them not to vigorously pursue the instant class action lawsuit. e. Superiority: A class action is superior to the other available means for the fair and efficient adjudication of this controversy because individual joinder of all members would be impracticable. Class action treatment will permit a large number of similarly situated persons to prosecute their common claims in a single forum efficiently and without unnecessary duplication of effort and expense that individual actions would engender. 19. Certification of a class under Rule 23(b)(3) of the Federal Rules of Civil Procedure is also appropriate in that the questions of law and fact common to members of the Plaintiff Class predominate over any questions affecting an individual member, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy. 20. Depending on the outcome of further investigation and discovery, Plaintiff may, at the time of class certification motion, seek to certify a class(es) only as to particular issues pursuant to Fed. R. Civ. P. 23(c)(4). FACTUAL ALLEGATIONS 21. Plaintiff repeats, reiterates and incorporates the allegations contained in paragraphs numbered above herein with the same force and effect as if the same were set forth at length herein. 22. Some time prior to August 21, 2019, an obligation was allegedly incurred to JP Morgan Chase Bank N.A. 23. The JP Morgan Chase Bank N.A. obligation arose out of transactions to purchase items which were primarily for personal, family or household purposes. 24. The alleged JP Morgan Chase Bank N.A. obligation is a “debt” as defined by 15 U.S.C. § 1692a(5). 25. JP Morgan Chase Bank N.A. is a “creditor” as defined by 15 U.S.C. § 1692a(4). 26. Defendant CC contracted with JP Morgan Chase Bank N.A. to collect the alleged debt. 27. Defendant collects and attempts to collect debts incurred or alleged to have been incurred for personal, family or household purposes on behalf of creditors using the United States Postal Service, telephone and internet. Phone Call Violation 28. On or about August 21, 2019, Defendant sent the Plaintiff notice (the “Letter”), hereto attached as Exhibit A, regarding the alleged debt. 29. Plaintiff called Defendant on or around September 18, 2019, to dispute the debt as per her rights under the FDCPA section 1692g. 30. When asked the reason for his contacting Defendant CC at that time, Plaintiff replied that she was disputing the validity of the debt, as per her rights. 31. Defendant’s representative refused to accept the Plaintiff’s dispute. 32. Defendant’s representative demanded that the Plaintiff give reasons for the dispute and demanded that Plaintiff give specifics regarding the validity of the dispute. 33. Plaintiff’s dispute, made by telephone, meets the criteria set forth by § 1692g, as he unequivocally stated that she was disputing the validity of the debt and has no requirement to give any reason or proof regarding the validity of the dispute. 34. Furthermore, it well established in the 2nd Circuit that oral disputes are a completely valid method of asserting a consumer’s rights under § 1692g. 35. Requiring that the Plaintiff prove the validity of her dispute and provide reasons for the dispute violates the consumer rights as provided for under the Fair Debt Collection Practices Act. 36. Defendant’s demand for reason for the dispute overshadowed Plaintiff’s §1692g right to dispute the debt over the phone, or in general as no reason is required to be given by the Plaintiff to validly exercise her dispute rights under 1692g. 37. This false and deceptive tactic of demanding a specific reason before “accepting a dispute as valid” is misleading because it confuses the consumer as to how to exert her dispute and validation rights under FDCPA. 38. Defendant intentionally chose to make it difficult for the Plaintiff to dispute the debt, even though she did it in a proper manner. 39. As a result of Defendant’s deceptive, misleading and false debt collection practices, Plaintiff has been damaged. COUNT I VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. §1692g et seq. 40. Plaintiff repeats, reiterates and incorporates the allegations contained in paragraphs above herein with the same force and effect as if the same were set forth at length herein. 41. Defendant’s debt collection efforts attempted and/or directed towards the Plaintiff violated various provisions of the FDCPA, including but not limited to 15 U.S.C. § 1692g. 42. The Defendant violated 15 U.S.C. §1692g: a. By demanding a reason for Plaintiff’s dispute and rejecting the Plaintiff’s dispute, despite the fact she validly exercised his dispute rights under the FDCPA. 43. By reason thereof, Defendant is liable to Plaintiff for judgment that Defendant’s conduct violated Section 1692g et seq. of the FDCPA, actual damages, statutory damages, costs and attorneys’ fees. COUNT II VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. §1692e et seq. 44. Plaintiff repeats, reiterates and incorporates the allegations contained in paragraphs above herein with the same force and effect as if the same were set forth at length herein. 45. Defendant’s debt collection efforts attempted and/or directed towards the Plaintiff violated various provisions of the FDCPA, including but not limited to 15 U.S.C. § 1692e. 46. Pursuant to 15 U.S.C. §1692e, a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. 47. Defendant violated §1692e: a. By requiring Plaintiff to submit a reason for her dispute, as opposed to accepting an oral dispute of the account without a reason. b. By making a false and misleading representation in violation of §1692e(10). 48. By reason thereof, Defendant is liable to Plaintiff for judgment that Defendant’s conduct violated Section 1692e et seq. of the FDCPA, actual damages, statutory damages, costs and attorneys’ fees. DEMAND FOR TRIAL BY JURY 49. Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff hereby requests a trial by jury on all issues so triable. PRAYER FOR RELIEF WHEREFORE, Plaintiff Blima Lebron, individually and on behalf of all others similarly situated, demands judgment from Defendant CC as follows: 1. Declaring that this action is properly maintainable as a Class Action and certifying Plaintiff as Class representative, and Raphael Deutsch, Esq. as Class Counsel; 2. Awarding Plaintiff and the Class statutory damages; 3. Awarding Plaintiff and the Class actual damages; 4. Awarding Plaintiff costs of this Action, including reasonable attorneys’ fees and expenses; 5. Awarding pre-judgment interest and post-judgment interest; and 6. Awarding Plaintiff and the Class such other and further relief as this Court may deem just and proper. Dated: Hackensack, New Jersey August 31, 2020 /s/ Raphael Deutsch By: Raphael Deutsch, Esq. Stein Saks, PLLC 285 Passaic Street Hackensack, NJ 07601 Phone: 201-282-6500 Fax: 201-282-6501 Email: [email protected] Attorneys for Plaintiff

consumer fraud

18ELDYcBD5gMZwczVajk

Todd M. Friedman (SBN 216752) Adrian R. Bacon (SBN 280332) Meghan E. George (SBN 274525) Tom E. Wheeler (SBN 308789) LAW OFFICES OF TODD M. FRIEDMAN, P.C. 21550 Oxnard St., Suite 780 Woodland Hills, CA 91367 Phone: 877-206-4741 Fax: 866-633-0228 tfriedman@ toddflaw.com abacon@ toddflaw.com [email protected] [email protected] Attorneys for Plaintiff UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA ABANTE ROOTER AND PLUMBING, INC., individually and on behalf of all others similarly situated, Plaintiff, vs. Case No. CLASS ACTION COMPLAINT FOR VIOLATIONS OF: 1. NEGLIGENT VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT [47 U.S.C. §227(b)] BF ADVANCE LLC, and DOES 1 through 10, inclusive, and each of them, Defendant. 2. WILLFUL VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT [47 U.S.C. §227(b)] ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) DEMAND FOR JURY TRIAL Plaintiff ABANTE ROOTER AND PLUMBING, INC. (“Plaintiff”), individually and on behalf of all others similarly situated, alleges the following upon information and belief based upon personal knowledge: NATURE OF THE CASE 1. Plaintiff brings this action individually and on behalf of all others similarly situated seeking damages and any other available legal or equitable remedies resulting from the illegal actions of BF ADVANCE LLC (“Defendant”), in negligently, knowingly, and/or willfully contacting Plaintiff on Plaintiff’s cellular telephone in violation of the Telephone Consumer Protection Act, 47. U.S.C. § 227 et seq. (“TCPA”) and related regulations, thereby invading Plaintiff’s privacy and causing it to incur unnecessary and unwanted expenses. JURISDICTION & VENUE 2. Jurisdiction is proper under 28 U.S.C. § 1332(d)(2) because Plaintiff, a resident of California, seeks relief on behalf of a Class, which will result in at least one class member belonging to a different state than that of Defendant, a limited liability company of New York State. Plaintiff also seeks up to $1,500.00 in damages for each call in violation of the TCPA, which, when aggregated among a proposed class in the thousands, exceeds the $5,000,000.00 threshold for federal court jurisdiction. Therefore, both diversity jurisdiction and the damages threshold under the Class Action Fairness Act of 2005 (“CAFA”) are present, and this Court has jurisdiction. 3. Venue is proper in the United States District Court for the Northern District of California pursuant to 28 U.S.C. § 1391(b)(2) because Defendant does business within the State of California and Plaintiff resides within this district. PARTIES 4. Plaintiff, ABANTE ROOTER AND PLUMBING, INC. (“Plaintiff”), is a natural person residing in Alameda, California and is a “person” as defined by 47 U.S.C. § 153 (39). 5. Defendant, BF ADVANCE LLC (“Defendant”), is a business financing company, and is a “person” as defined by 47 U.S.C. § 153 (39). 6. The above named Defendant, and its subsidiaries and agents, are collectively referred to as “Defendants.” The true names and capacities of the Defendants sued herein as DOE DEFENDANTS 1 through 10, inclusive, are currently unknown to Plaintiff, who therefore sues such Defendants by fictitious names. Each of the Defendants designated herein as a DOE is legally responsible for the unlawful acts alleged herein. Plaintiff will seek leave of Court to amend the Complaint to reflect the true names and capacities of the DOE Defendants when such identities become known. 7. Plaintiff is informed and believes that at all relevant times, each and every Defendant was acting as an agent and/or employee of each of the other Defendants and was acting within the course and scope of said agency and/or employment with the full knowledge and consent of each of the other Defendants. Plaintiff is informed and believes that each of the acts and/or omissions complained of herein was made known to, and ratified by, each of the other Defendants. FACTUAL ALLEGATIONS 8. Beginning in or around June of 2017, Defendant contacted Plaintiff on Plaintiff’s cellular telephone numbers ending in -6147 and-7200, in an attempt to solicit Plaintiff to purchase Defendant’s services. 9. Defendant used an “automatic telephone dialing system” as defined by 47 U.S.C. § 227(a)(1) to place its call to Plaintiff seeking to solicit its services. 10. Defendant contacted or attempted to contact Plaintiff from telephone numbers confirmed to belong to Defendant, including without limitation (929) 384- 1009 and (646) 813-7886. 11. Defendant’s calls constituted calls that were not for emergency purposes as defined by 47 U.S.C. § 227(b)(1)(A). 12. Defendant’s calls were placed to telephone number assigned to a cellular telephone service for which Plaintiff incurs a charge for incoming calls pursuant to 47 U.S.C. § 227(b)(1). 13. During all relevant times, Defendant did not possess Plaintiff’s “prior express consent” to receive calls using an automatic telephone dialing system or an artificial or prerecorded voice on his cellular telephone pursuant to 47 U.S.C. § 227(b)(1)(A). 14. Defendant placed multiple calls soliciting its business to Plaintiff on its cellular telephones ending in -6147 and -7200 beginning in or around June of 2017 and continued through June of 2018. 15. Such calls constitute solicitation calls pursuant to 47 C.F.R. § 64.1200(c)(2) as they were attempts to promote or sell Defendant’s services. 16. Plaintiff received numerous solicitation calls from Defendant within a 12-month period. 17. Upon information and belief, and based on Plaintiff’s experiences of being called by Defendant despite having no prior relation to Plaintiff whatsoever, and at all relevant times, Defendant failed to establish and implement reasonable practices and procedures to effectively prevent telephone solicitations in violation of the regulations prescribed under 47 U.S.C. § 227(c)(5). CLASS ALLEGATIONS 18. Plaintiff brings this action individually and on behalf of all others similarly situated, as a member of the proposed class (hereinafter, “The Class”), defined as follows: All persons within the United States who received any solicitation/telemarketing telephone calls from Defendant to said person’s cellular telephone made through the use of any automatic telephone dialing system or an artificial or prerecorded voice and such person had not previously consented to receiving such calls within the four years prior to the filing of this Complaint 19. Plaintiff represents, and is a member of, The Class, consisting of all persons within the United States who received any solicitation/telemarketing telephone calls from Defendant to said person’s cellular telephone made through the use of any automatic telephone dialing system or an artificial or prerecorded voice and such person had not previously not provided their cellular telephone number to Defendant within the four years prior to the filing of this Complaint. 20. Defendant, its employees and agents are excluded from The Class. Plaintiff does not know the number of members in The Class, but believes the Class’s members number in the thousands, if not more. Thus, this matter should be certified as a Class Action to assist in the expeditious litigation of the matter. 21. The Class is so numerous that the individual joinder of all of its members is impractical. While the exact number and identities of The Class members are unknown to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff is informed and believes and thereon alleges that The Class includes thousands of members. Plaintiff alleges that The Class members may be ascertained by the records maintained by Defendant. 22. Plaintiff and members of The Class were harmed by the acts of Defendant in at least the following ways: Defendant illegally contacted Plaintiff and The Class members via their cellular telephones thereby causing Plaintiff and The Class members to incur certain charges or reduced telephone time for which Plaintiff and The Class members had previously paid by having to retrieve or administer messages left by Defendant during those illegal calls, and invading the privacy of said Plaintiff and The Class members. 23. Common questions of fact and law exist as to all members of The Class which predominate over any questions affecting only individual members of The Class. These common legal and factual questions, which do not vary between Class members, and which may be determined without reference to the individual circumstances of any Class members, include, but are not limited to, the following: a. Whether, within the four years prior to the filing of this Complaint, Defendant made any telemarketing/solicitation call (other than a call made for emergency purposes or made with the prior express consent of the called party) to a Class member using any automatic telephone dialing system or any artificial or prerecorded voice to any telephone number assigned to a cellular telephone service; b. Whether Plaintiff and The Class members were damaged thereby, and the extent of damages for such violation; and c. Whether Defendant should be enjoined from engaging in such conduct in the future. 24. As a person that received numerous telemarketing/solicitation calls from Defendant using an automatic telephone dialing system or an artificial or prerecorded voice, without Plaintiff’s prior express consent, Plaintiff is asserting claims that are typical of The Class. 25. Plaintiff will fairly and adequately protect the interests of the members of The Class. Plaintiff has retained attorneys experienced in the prosecution of class actions. 26. A class action is superior to other available methods of fair and efficient adjudication of this controversy, since individual litigation of the claims of all Class members is impracticable. Even if every Class’s member could afford individual litigation, the court system could not. It would be unduly burdensome to the courts in which individual litigation of numerous issues would proceed. Individualized litigation would also present the potential for varying, inconsistent, or contradictory judgments and would magnify the delay and expense to all parties and to the court system resulting from multiple trials of the same complex factual issues. By contrast, the conduct of this action as a class action presents fewer management difficulties, conserves the resources of the parties and of the court system, and protects the rights of each Class member. 27. The prosecution of separate actions by individual Class members would create a risk of adjudications with respect to them that would, as a practical matter, be dispositive of the interests of the other Class members not parties to such adjudications or that would substantially impair or impede the ability of such non- party Class members to protect their interests. 28. Defendant has acted or refused to act in respects generally applicable to The Class, thereby making appropriate final and injunctive relief with regard to the members of the Classes as a whole. FIRST CAUSE OF ACTION Negligent Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(b). On Behalf of The Class 29. Plaintiff repeats and incorporates by reference into this cause of action the allegations set forth above at Paragraphs 1-28. 30. The foregoing acts and omissions of Defendant constitute numerous and multiple negligent violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227(b), and in particular 47 U.S.C. § 227 (b)(1)(A). 31. As a result of Defendant’s negligent violations of 47 U.S.C. § 227(b), Plaintiff and the Class Members are entitled an award of $500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B). 32. Plaintiff and The Class members are also entitled to and seek injunctive relief prohibiting such conduct in the future. SECOND CAUSE OF ACTION Knowing and/or Willful Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(b) On Behalf of The Class 33. Plaintiff repeats and incorporates by reference into this cause of action the allegations set forth above at Paragraphs 1-28. 34. The foregoing acts and omissions of Defendant constitute numerous and multiple knowing and/or willful violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227(b), and in particular 47 U.S.C. § 227 (b)(1)(A). 35. As a result of Defendant’s knowing and/or willful violations of 47 U.S.C. § 227(b), Plaintiff and The Class members are entitled an award of $1,500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B) and 47 U.S.C. § 227(b)(3)(C). 36. Plaintiff and the Class members are also entitled to and seek injunctive relief prohibiting such conduct in the future. PRAYER FOR RELIEF WHEREFORE, Plaintiff requests judgment against Defendant for the following: FIRST CAUSE OF ACTION Negligent Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(b)  As a result of Defendant’s negligent violations of 47 U.S.C. §227(b)(1), Plaintiff and The Class members are entitled to and request $500 in statutory damages, for each and every violation, pursuant to 47 U.S.C. 227(b)(3)(B).  Any and all other relief that the Court deems just and proper. SECOND CAUSE OF ACTION Knowing and/or Willful Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(b)  As a result of Defendant’s willful and/or knowing violations of 47 U.S.C. §227(b)(1), Plaintiff and The Class members are entitled to and request treble damages, as provided by statute, up to $1,500, for each and every violation, pursuant to 47 U.S.C. §227(b)(3)(B) and 47 U.S.C. §227(b)(3)(C).  Any and all other relief that the Court deems just and proper. JURY DEMAND 37. Pursuant to the Seventh Amendment to the Constitution of the United States of America, Plaintiff is entitled to, and demands, a trial by jury. Respectfully Submitted this 1st Day of October, 2018. LAW OFFICES OF TODD M. FRIEDMAN, P.C. By: /s/ Todd M. Friedman Todd M. Friedman Law Offices of Todd M. Friedman Attorney for Plaintiff

privacy

BrxwDIcBD5gMZwcz8c-n

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION TIARA PAYNE, individually and on behalf of all other similarly situated individuals, Plaintiff, Civil Action No.: v. WBY, INC. d/b/a THE FOLLIES, Defendant. COLLECTIVE ACTION COMPLAINT __________________________________________________________________ Plaintiff Tiara Payne (“Plaintiff”), by and through her attorneys, Mays & Kerr, LLP and Nichols Kaster, PLLP, on behalf of herself and the Collective as defined below, bring this Collective Action Complaint against WBY, Inc. d/b/a The Follies (“Follies” or “Defendant”). Plaintiff alleges as follows: JURISDICTION AND VENUE 1. This Court has original jurisdiction to hear this Complaint and to adjudicate the claims stated herein pursuant to 28 U.S.C. § 1331 because this 1 action asserts claims arising under federal law, the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq. 2. Venue is proper in this District pursuant to 28 U.S.C. § 1391 because Defendant resides in this District and because a substantial part of the events or omissions giving rise to the claims occurred in this District. PARTIES 3. Defendant Follies is a domestic corporation with its principal place of business located in Atlanta, Georgia. At times relevant to this action, Follies qualifies as Plaintiff’s and the Collective’s “employer” within the meaning of the FLSA, 29 U.S.C. § 203(d), (g). 4. Plaintiff Tiara Payne is an adult resident of Fulton County, Georgia. During relevant times, Plaintiff Payne worked as an entertainer for Follies and qualified as an “employee” as defined by the FLSA, 29 U.S.C. § 203(e)(1). 5. Plaintiff has consented in writing to assert claims for unpaid minimum wages under the FLSA, 29 U.S.C. § 216(b). (See Ex. A.) As this case proceeds, it is likely that other individuals will sign consent forms and join this action as opt-in Plaintiffs. 2 FACTUAL ALLEGATIONS 6. Plaintiff re-alleges and incorporates by reference the above paragraphs as if fully set forth herein. 7. Plaintiff and the Collective work(ed) for Defendant as exotic dancers, also referred to as entertainers, during the statutory period. 8. Entertainers are integral to Defendant’s business operations. 9. Defendant is a nude, adult entertainment club. 10. Defendant advertises its entertainment, in part, on twitter, magazines, and billboards. 11. Defendant has the occasion to entertain out-of-state customers. 12. Defendant controls its entire club, including providing the stage, furniture, lighting, sanitation, music, and other amenities. These items of furniture and décor together form the aesthetic Defendant desires to maintain, promote, and sell at the club. This furniture and décor are likely manufactured outside of Georgia and/or pass through interstate commerce prior to its arrival at Defendant’s establishment. 13. Defendant limits its customer base to adults over the age of twenty-one. Defendant serves domestic and imported alcohol to its customers. 3 14. Its customers pay an admission for entry. In exchange, entertainers entertain customers at Defendant’s direction and control. 15. At relevant times, Defendant exerts control over entertainers, for example, in the following ways: a) Hires and fires entertainers; b) Requires that entertainers sign in at the beginning of their shifts; c) Limits the amount of time the entertainers can spend in the dressing room; d) Sets the rates for VIP room usage; e) Selects the music to which entertainers dance and establishes a three-dance rotation for stage dancing; f) Prohibits entertainers from working if their attire is unacceptable; g) Requires entertainers sell promotional drink tickets to customers; h) Decides when entertainers may leave the club; and i) Requires entertainers get appropriate signatures on their “see ya passes” before they may leave. 16. Defendant communicates many of these and other restrictions to entertainers through posted rules, handouts, and direct communication by management. 17. Defendant enjoys the discretion to create, change, implement, and enforce rules and restrictions for its entertainers as it sees fit. 4 18. When entertainers violate rules, Defendant has the authority to fine, suspend, or terminate them at its discretion. 19. During the relevant time frame, Defendant fired entertainers who took back their permit from Defendant so that they could work at other clubs. 20. Entertainers work for Defendant as employees in fact. Nevertheless, Defendant considers entertainers to be “independent contractors.” 21. Defendant misclassifies entertainers in part in order to avoid paying them a minimum wage as required by law. 22. Indeed, Defendant does not pay entertainers any wages or other compensation for the work it suffers or permits them to perform. 23. Defendant instead requires entertainers to pay the club as a precondition to working at the facility. 24. Defendant requires entertainers pay, for example, nightly house fees at the beginning of every shift. 25. If entertainers wish to leave a shift early, Defendant requires the entertainers to pay an additional fee and acquire a pass. 26. If entertainers do not dance on the stage, they must pay the DJ a fee. 27. Defendant requires entertainers to purchase from it drink tickets, which entertainers must in turn sell to customers. If the entertainers are 5 unsuccessful in their attempts to sell these tickets to customers, Defendant does reimburse them for the cost of the tickets. 28. Defendant requires the entertainers to pay Defendant’s other employees. Entertainers must tip out the DJ, house mom, bartenders, valets, and security. Entertainers cannot leave at the end of their shift until they distribute all required tip outs. 29. Defendant cannot avail itself of the federal tipped minimum wage rate because Defendant does not provide notice to its employees of its intention to take a tip credit and because Defendant forbids its entertainers from keeping all of their tip money. See 29 U.S.C. § 201. 30. Defendant also imposes fines on the entertainers. At relevant times, Defendant has issued fines to entertainers for the following offenses by way of example: spending too much time in the dressing room and for failing to tip Defendant’s other employees. 31. Defendant requires entertainers to pay fees, buy drink tickets, tip out other employees, and pay fines regardless of whether or not entertainers earned enough tips from customers to cover these charges. 6 32. Because Defendant directly controls entertainers, it is aware that entertainers work as employees in fact; yet, Defendant still fails to classify entertainers as employees under federal law. 33. This District has found entertainers who worked under similar circumstances to qualify as “employees” under the FLSA under similar circumstances, see Stevenson v. Great Am. Dream, Inc., No. 1:12-CV-3359, 2013 WL 6880921 (N.D. Ga. Dec. 31, 2013); Clincy v. Galardi S. Enter., Inc., 808 F. Supp. 2d 1326 (N.D. Ga. 2011). 34. Defendant is aware of pending and/or prior litigation against its competitors and has responded, in part, by requiring entertainers sign contracts that identify them as “independent contractors.” 35. Defendant’s failure to pay entertainers prescribed wages under these circumstances is willful and reckless. COLLECTIVE ACTION ALLEGATIONS 36. Plaintiff re-alleges and incorporates by reference the above paragraphs as if fully set forth herein. 37. Like Plaintiff, there are members of this putative Collective who are or were legally employed by Defendant who have also been denied minimum wages. These individuals would benefit from the issuance of court-supervised 7 notice of this lawsuit and the opportunity to join by filing their written consent. Defendant can readily identify these similarly situated entertainers through its business records. 38. Plaintiff therefore brings Count One of this Complaint pursuant to the FLSA, 29 U.S.C. § 216(b) as a putative Collective on behalf of herself and other similarly situated entertainers. Specifically, this putative Collective includes: All persons who work(ed) as entertainers for Defendant at any time within three years of the filing of this Complaint. COUNT ONE MINIMUM WAGE VIOLATION Fair Labor Standards Act, 29 U.S.C. § 201, et. seq. 39. Plaintiff re-alleges and incorporates by reference the above paragraphs as if fully set forth herein. 40. The FLSA requires covered employers to pay employees no less than $7.25 for each hour worked in a workweek. 29 U.S.C. § 206. 41. The minimum wage requirement must be satisfied “free and clear” of any deductions or “kickbacks.” 29 C.F.R. § 531.35 (“For example, if it is a requirement of the employer that the employee must provide tools of the trade which will be used in or are specifically required for the performance of the employer’s particular work, there would be a violation of the Act in any workweek 8 when the cost of such tools purchased by the employee cuts into the minimum or overtime wages required to be paid him under the Act.”). 42. Defendant is an “enterprise,” as that term is defined by the FLSA, 29 U.S.C. § 203(r)(1), and is engaged in commerce within the meaning of the FLSA, 29 U.S.C. § 203(b), (s)(1). 43. Defendant is an “employer” of Plaintiff and the Collective, who are “employees in fact,” as defined by the FLSA, 29 U.S.C. § 203(d), (e)(1), (g). 44. Defendant failed to pay Plaintiff and the Collective any wages, much less free and clear minimum wages. 45. In failing to provide wages at the minimum rate and in taking monies in the form of fees, fines, drink ticket sales, and tip-outs, Defendant violated the FLSA. 46. Defendant did not and has not made a good-faith effort to comply with the FLSA as it relates to the compensation of Plaintiff and the Collective. 47. Defendant knew Plaintiff and the Collective worked as employees in fact, and it willfully failed and refused to pay Plaintiff and the Collective the required minimum wages. 48. Defendant’s willful failure and refusal to pay Plaintiff and the Collective minimum wages for time worked violates the FLSA. 29 U.S.C. § 206. 9 49. As a result of these unlawful practices, Plaintiff and the Collective suffered and continue to suffer wage loss and are therefore entitled to recover unpaid minimum wages for up to three years prior to the filing of their claims, liquidated damages or prejudgment interest, attorneys’ fees and costs, and such other legal and equitable relief as the Court deems just and proper. PRAYER FOR RELIEF WHEREFORE, Plaintiff, on behalf of herself, and all others similarly situated, pray for judgment against Defendant as follows: a. A finding that Plaintiff and the Collective are similarly situated; b. Certification of this case as a collective action pursuant to 29 U.S.C. § 216(b); c. Authorization for the prompt issuance of notice to all those similarly situated employees, apprising them of the pendency of this action and providing them with the opportunity to assert timely FLSA claims by filing individual consent forms; d. Judgment that Plaintiff and the Collective are non- exempt employees entitled to protection under the FLSA; e. Judgment against Defendant for violation of the minimum wage provisions of the FLSA; f. Judgment that Defendant acted willfully and without good faith in violating the FLSA; g. An award to Plaintiff and those similarly situated for the amount of unpaid minimum wages owed free and clear, and liquidated damages; 10 h. An award of prejudgment interest to the extent liquidated damages are not awarded; i. An award of reasonable attorneys’ fees and costs; j. Leave to add additional plaintiffs by the filing of written consent forms, or any other method approved by the Court; and k. For such other relief as the Court may deem just. Dated: March 28, 2014 MAYS & KERR, LLC /s/ Jeff Kerr Jeff Kerr, GA Bar No. 634260 Craig Nydick, GA Bar No. 760565 235 Peachtree St. NE #202 Atlanta, GA 30303 Telephone: (404) 410-7998 Fax: (404) 855-4066 [email protected] [email protected] NICHOLS KASTER, PLLP Michele R. Fisher, GA Bar No. 76198 Anna Prakash, MN Bar No. 0351362* Rebekah L. Bailey, MN Bar No. 0389599* 4600 IDS Center, 80 South 8th Street Minneapolis, MN 55402 Telephone: (612) 256-3200 Fax: (612) 215-6870 [email protected] [email protected] *pro hac vice admissions forthcoming ATTORNEYS FOR PLAINTIFF AND THE COLLECTIVE 11

employment & labor

gMWFDYcBD5gMZwczQ37i

Charles H. Field (CA SBN 189817) Edward D. Chapin (CA SBN 53287) SANFORD HEISLER SHARP, LLP 655 West Broadway, Suite 1700 San Diego, CA 92101 Telephone: (619) 577-4253 Facsimile: (619) 577-4250 [email protected] [email protected] Kevin Sharp (TN SBN 016287, Pro Hac Vice forthcoming) SANFORD HEISLER SHARP, LLP 611 Commerce St., Suite 3100 Nashville, TN 37203 Telephone: (615) 434-7001 Facsimile: (615) 434-7020 [email protected] David Sanford (DC SBN 457933, Pro Hac Vice forthcoming) Andrew Miller (DC SBN 1047209, Pro Hac Vice forthcoming) SANFORD HEISLER SHARP, LLP 1666 Connecticut Avenue NW, Suite 310 Washington, D.C. 20009 Telephone: (202) 499-5200 Facsimile: (202) 499-5199 [email protected] [email protected] David Tracey (NY SBN 5232624, Pro Hac Vice forthcoming) SANFORD HEISLER SHARP, LLP 1350 Avenue of the Americas, 31st Floor New York, NY 10019 Telephone: (646) 402-5650 Facsimile: (646) 402-5651 [email protected] Attorneys for Plaintiffs and the Class UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA CLASS ACTION COMPLAINT '17CV1960 BLM CAB KRISTI HASKINS, LAURA SCULLY, and DONALD J. JANAK, individually and as representatives of a class of similarly situated persons in the General Electric Retirement Savings Plan and the General Electric Savings and Security Program, Plaintiffs, GENERAL ELECTRIC COMPANY, GENERAL ELECTRIC RETIREMENT SAVINGS PLAN TRUSTEES, and DOES 1-30, Defendants. I. INTRODUCTION 1. Plaintiffs Kristi Haskins, Laura Scully, and Donald J. Janak (“Plaintiffs”), individually and as representatives of a class of similarly situated persons in General Electric’s 401(k) Plan a/k/a the General Electric Retirement Savings Plan and its predecessor, the General Electric Savings and Security Program (“Plan”) between January 1, 2011 and June 30, 2016 (“Class Period”), bring this action under the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. 1001, et seq. (“ERISA”), against the Plan’s fiduciaries: General Electric Company (“GE”), General Electric Retirement Savings Plan Trustees (“GE Plan Trustees”), and DOES 1 through 30 inclusive (“DOES”) (collectively, “Defendants”). As described herein, Defendants have breached their fiduciary duties and engaged in prohibited transactions and unlawful self-dealing in violation of ERISA and to the detriment of Plaintiffs. Defendants’ harm to Plaintiffs arises from five of the Plan’s funds: GE Institutional International Equity Fund (“International Fund”), GE Institutional Strategic Investment Fund (“Strategic Fund”), GE RSP U.S. Equity Fund (“RSP Equity Fund”), GE RSP U.S. Income Fund (“RSP Income Fund”) (collectively, “GE Funds”) and GE Institutional Small Cap Equity Fund (“Small Cap Fund”). Plaintiffs bring this action to remedy Defendants’ harm, unlawful conduct, prevent further mismanagement of the Plan, and obtain equitable and other relief as provided by ERISA. 2. This Court has exclusive jurisdiction over the subject matter of this action under 28 U.S.C. § 1331 and ERISA § 502(e)(1), 29 U.S.C. § 1132(e)(1). 3. This district is the proper venue for this action under 28 U.S.C. § 1391(b) and ERISA § 502(e)(2), 29 U.S.C. § 1132(e)(2) because it is the district where the Plan is administered, where at least one of the alleged breaches took place, or where at least one Defendant may be found. All Defendants are subject to nationwide service of process under 29 U.S.C. § 1132(e)(2). III. PARTIES A. Plaintiffs 4. Plaintiff KRISTI HASKINS is a participant in the Plan and a resident of San Diego, California. Plaintiff Haskins suffered harm from her ownership of the GE Funds and the Small Cap Fund during the Class Period. 5. Plaintiff LAURA SCULLY is a participant in the Plan and a resident of San Diego, California. Plaintiff Scully suffered harm from her ownership of the RSP Equity Fund and Small Cap Fund, among other investments she may have made in other GE Funds, during the Class Period. 6. Plaintiff DONALD J. JANAK is a participant in the Plan and a resident of Carrollton, Texas. Plaintiff Janak suffered harm from his ownership of the International Fund, RSP Equity Fund, RSP Income Fund, and Small Cap Fund, among other investments he may have made in other GE Funds, during the Class Period. 7. During the Class Period, Plaintiffs suffered harm from GE’s selection of poor- to mediocre-performing investment options. GE’s management and administration of the Plan deprived Plaintiffs of the investment returns GE could and should have pursued and earned. B. Defendants 8. Defendant GENERAL ELECTRIC COMPANY (“GE”) is a New York corporation that operates a global digital industrial company and, until 2016, operated an investment management business through GE Asset Management Incorporated (“GEAM”). GE is the Plan’s sponsor and administrator and one of the Plan’s fiduciaries. As the Plan’s administrator, GE is entrusted with the power to make the Plan’s rules and regulations as well as use its discretion to control, manage, and administer the Plan’s investment options. GE is obligated to act for the exclusive benefit of the Plan’s participants and beneficiaries, select prudent investments for the Plan, monitor their selected investments’ performance, and accordingly modify the Plan’s investment options to maximize the benefits accruing to the Plan’s participants and beneficiaries. 9. Defendant GENERAL ELECTRIC RETIREMENT SAVINGS PLAN TRUSTEES (“GE Plan Trustees”) are fiduciaries of the Plan and were officers of GEAM. GE Plan Trustees were obligated to act for the exclusive benefit of the Plan’s participants and beneficiaries, select prudent investments for the Plan, monitor their selected investments’ performance, and accordingly modify the Plan’s investment options to maximize the benefits accruing to the Plan’s participants and beneficiaries. To the extent that GE Plan Trustees delegated any of their fiduciary functions to another person or entity, that person or entity has not been disclosed to Plaintiffs and is also a fiduciary under 29 U.S.C. § 1002(21)(A). 10. DOE DEFENDANTS 1 to 30 (“DOES”) are sued herein under fictitious names because after diligent and good faith efforts, their names, identities, and capacities, whether individual, corporate, associate, or otherwise, are presently unknown to Plaintiffs. Plaintiffs will make the names or identities of said Defendants known to the Court after the information has been ascertained. Plaintiffs are informed and believe, and based thereupon allege, that each of the Defendants designated herein as a DOE DEFENDANT has taken part in some or all of the matters referred to herein and is thus responsible in some manner for the allegations in this Complaint and is liable for the relief sought herein. 11. The Defendants are also subject to co-fiduciary liability under 29 U.S.C. § 1105(a)(1)(3) because they enabled other fiduciaries to commit breaches of fiduciary duties through their appointment powers, failed to comply with 29 U.S.C. § 1104(a)(1) in the administration of their duties, and failed to remedy the breach of duties they knew other fiduciaries carried out. IV. PRELIMINARY STATEMENT 12. Plaintiffs and the almost quarter of a million employees who participated in the Plan (“the Plan’s participants”) during the Class Period are victims of Defendants’ failure to uphold their fiduciary duties. 13. The Plan is a profit-sharing plan that includes a “qualified cash or deferred arrangement” as described in Section 401(k) of the Internal Revenue Code, I.R.C. § 401(k) (1986) and is subject to the provisions of ERISA. The Plan is established and maintained under a written document in accordance with 29 U.S.C. § 1102(a). The Plan has over $28 billion in assets and is one of the largest 401(k) plans in the country. The Plan provides retirement income for GE’s current and former employees. The retirement income the Plan can provide depends on the amount the Plan’s participants invest, the amount the Company contributes on behalf of its employees, and the performance of selected investment options less the investments’ fees and expenses. The Plan’s fiduciaries exclusively control the investment options selected and the costs of the Plan’s investments. 14. Each year, the Plan’s participants collectively invested billions of dollars in the Plan. GE representatives encouraged the Plan’s participants at company meetings to invest their 401(k) account assets in GE’s proprietary mutual funds, which GEAM managed until July 1, 2016. GE was aware that despite the performance of the proprietary mutual funds it selected for the Plan, GE would stand to earn significant revenues and profits in investment management fees that GEAM would charge the Plan’s participants. 15. The Plan’s participants trusted GE to construct a 401(k) plan that prioritized their interests over its profit and that offered superior investment options and world-class investment management. Instead, GE prioritized profit over its fiduciary duty and saddled the Plan’s participants with substandard proprietary mutual funds. 16. As of December 31, 2015, 68% of the Plan’s assets comprised GE-related investment options and approximately 56% of the pooled investment fund options available in the Plan consisted of five of GE’s proprietary mutual funds. 17. The Plan was vital to GE’s mutual fund business and the healthy growth of its bottom line. According to public documents, as of December 31, 2015, the Plan owned the vast majority of assets in the following proprietary mutual funds: Fund Name Percentage Owned by the Plan GE Institutional International Equity Fund 90% GE Institutional Small Cap Equity Fund 84% GE Institutional Strategic Investment Fund 75% GE RSP U.S. Income Fund 75% GE RSP U.S. Equity Fund 70% 18. GE’s selection of its proprietary mutual funds for the Plan provided GEAM a constant source of fees and helped inflate the market value of GEAM, which GE sold to State Street for a reported $485 million on July 1, 2016. At the time of the sale, GEAM managed approximately $8 billion of the Plan’s assets. 19. Tainted by self-interest, GE’s investment conduct was imprudent and disloyal. GE selected and retained its poor-performing proprietary mutual funds for the Plan when superior investment options were readily available. Moreover, to the detriment of the Plan’s participants, GE through GEAM profited from an arrangement where investment sub-advisers managed the Plan for a rate less than the amount GEAM earned from the Plan’s participants in investment management fees. 20. During the Class Period, GE earned hundreds of millions of dollars from GEAM and its management of the Plan, while the Plan’s participants whom GE owed a fiduciary duty suffered losses in the hundreds of millions of dollars. A. GE Selected and Retained Poor-Performing Proprietary Mutual Funds 21. GE selected and retained four of its proprietary mutual funds in the Plan: the International Fund, Strategic Fund, RSP Equity Fund, and RSP Income Fund (collectively, “GE Funds”). GE Funds’ poor performance is demonstrated by comparing GE Funds’ annual and rolling investment returns to a broad measure of related market performance.1 This comparative measure consists of various data points, including: (i) the fund’s own broad based securities market index (e.g., the S&P 500 Index); (ii) the funds’ rankings and ratings among Morningstar’s compilation of hundreds of funds with equivalent investment strategies;2 and, (iii) the investment leaders’ individual funds with an equivalent investment strategy. 22. Any prudent fiduciary would have viewed each of the following GE Funds during the Class Period as poor investments and would not have selected any of them or would have promptly selected a superior investment option after it underperformed relative to its benchmark: i. International Fund. The International Fund suffered from chronic underperformance relative to its benchmark and other readily available alternatives dating back to January 2008. In the 9-year period between 2008 and 2016, the International Fund’s annual returns fell short of the benchmark every year but 2012 and 2015. During that same period, the International Fund underperformed relative to most of the comparable international equity mutual funds Morningstar identified. In 2010, the International Fund performed worse than 90% of the hundreds of international equity mutual funds available on the market. The International Fund also performed worse than 78%, 87%, and 73% of international equity mutual funds in 2011, 2014, 1 The United States Securities and Exchange Commission recognizes this comparative measure as the prevailing method of evaluating a fund’s performance. 2 Morningstar, Inc. is a leading provider of independent investment research products (e.g., data and research insights on managed investment products, publicly listed companies, and private capital markets) for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the private capital markets in North America, Europe, Australia, and Asia. and 2016, respectively. Morningstar’s total number of identified comparators ranged between 339 and 592 mutual funds. ii. Strategic Fund. The Strategic Fund suffered from chronic underperformance relative to its benchmark and other readily available alternatives dating back to January 2008. In the 9-year period between 2008 and 2016, the Strategic Fund’s annual returns were below most of the moderate-risk, target mutual funds Morningstar identified. In 2010, Strategic Fund performed worse than 85% of the hundreds of moderate risk target mutual funds available on the market. The Strategic Fund also performed worse than 81%, 53%, 69%, and 78% of moderate risk target mutual funds in 2011, 2013, 2014, and 2016, respectively. Morningstar’s total number of identified comparators ranged between 431 and 727 mutual funds. iii. RSP Equity Fund. The RSP Equity Fund suffered from chronic underperformance relative to its benchmark and other readily available alternatives dating back to January 2009. In the 8-year period between 2009 and 2016, the RSP Equity Fund’s annual returns were below the benchmark in every year but 2009, 2012, and 2013. The underperformance was significant in 2010, 2011, and 2015. During that same period, the RSP Equity Fund underperformed relative to most of the comparable large cap mutual funds Morningstar identified. In 2010, the RSP Equity Fund performed worse than 87% of the hundreds of large cap mutual funds available on the market. In 2011, 2015, and 2016, the RSP Equity Fund ranked in the bottom half of large cap mutual funds. Morningstar’s total number of identified comparators exceeded 1,000 mutual funds. iv. RSP Income Fund. From 2008 through 2010, the RSP Income Fund underperformed its benchmark (i.e., the Bloomberg Barclays U.S. Aggregate Bond Index) by 3.65%. During the same three-year period, the RSP Income Fund also significantly underperformed relative to the comparable mutual funds of investment leaders (e.g., Vanguard, PIMCO, and BlackRock) in the fixed income asset class. The RSP Income Fund’s underperformance relative to comparable fixed income mutual funds continued until July 2016 when GE sold GEAM to State Street. 23. Any reasonable, disinterested investor monitoring their investments would have viewed these funds as imprudent investments. In fact, from 2011 through 2016, the International Fund suffered significant redemptions as investors sought to distance themselves from this fund and GE’s advisory services. Similarly, from 2013 through 2016, the Strategic Fund, RSP Equity Fund, and RSP Income Fund experienced net redemptions as potential new investors sought to avoid these funds and GE’s investment advisory services. 24. As the investment adviser to GE Funds, GEAM—and by extension GE—was or should have been aware of GE Funds’ annual investment performance and investor redemptions. 25. GEAM’s poor management of GE Funds should have prompted GE to select a more lucrative investment option for the Plan’s participants. Instead, GE retained GE Funds because it stood to benefit from the investment management fees GEAM was collecting from the Plan’s participants. GE’s self-interest and failure of effort and/or competence cost the Plan’s participants at least tens of millions of dollars in fees and poor investment performance every year. B. GE Charged the Plan’s Participants Unreasonable Fees 26. The Small Cap Fund was the only GE proprietary fund that consistently outperformed its benchmark. However, in contrast to its practice with the GE Funds, GEAM did not actively manage the Small Cap Fund’s assets. Instead, it hired and negotiated a fee with multiple investment sub-advisers to manage the fund. GEAM collected an investment management fee from the Small Cap Fund’s performance and retained for itself the difference between the management fee it collected from the fund and the fee it agreed to pay its investment sub-advisers. From this arrangement, GEAM— and thereby GE—collected millions of dollars in unreasonable and/or excessive fees for services that GE was ultimately responsible for performing as the Plan’s administrator. 27. As the Plan’s administrator, GE owed fiduciary duties to the Plan’s participants. By charging excessive fees incident to administering the Plan, GE breached its fiduciary duties and engaged in transactions prohibited under ERISA. 28. GE flouted its fiduciary duties and wrongfully wasted and mismanaged the Plan’s assets. The Plan, as a whole, lost hundreds of millions of dollars due to GE’s breaches of fiduciary duties. The approximately 250,000 current and former GE employees who participated in the Plan deserved better from a leading global investment firm that touts its investment acumen. V. ERISA’S FIDUCIARY STANDARDS 29. ERISA imposes strict fiduciary duties of loyalty and prudence upon the Defendants as fiduciaries of the Plan. 29 U.S.C. § 1104(a)(1), states, in relevant part, that “a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and—(A) for the exclusive purpose of (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan; (B) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims.” 30. Under 29 U.S.C. § 1103(c)(1), with certain exceptions not relevant here, “the assets of a plan shall never inure to the benefit of any employer and shall be held for the exclusive purposes of providing benefits to participants in the plan and their beneficiaries and defraying reasonable expenses of administering the plan.” 31. ERISA’s fiduciary duties are “the highest known to the law” and must be performed “with an eye single” to the interests of participants. Donovan v. Bierwirth, 680 F.2d 263, 271-272 n.8 (2d Cir. 1982). Thus, “in deciding whether and to what extent to invest in a particular investment, a fiduciary must ordinarily consider only factors relating to the interests of plan participants and beneficiaries . . . . A decision to make an investment may not be influenced by [other] factors unless the investment, when judged solely on the basis of its economic value to the plan, would be equal or superior to alternative investments available to the plan.” Dep’t of Labor ERISA Advisory Op. 88-16A, (Dec. 19, 1988) (emphasis added). 32. Under ERISA section 406(b)(1), 29 U.S.C. § 1106(b)(1), “[a] fiduciary with respect to a plan shall not deal with the assets of the plan in his own interest or for his own account.” 33. In measuring fiduciary conduct, courts have made it clear that the key element is the process for considering and examining relevant information. As one court explained, “ERISA § 404(a)(1)(B) requires only that [fiduciaries] vigorously and independently investigate the wisdom of a contemplated investment; it matters not that the investment succeeds or fails, as long as the investigation is intensive and scrupulous and . . . discharged with the greatest degree of care that could be expected under all the circumstances by reasonable beneficiaries and participants of the plan.” Donovan v. Walton, 609 F. Supp. 1221, 1238 (S.D. Fla. 1985). 34. Thus, to meet the prudent process requirement, fiduciaries must vigorously and thoroughly investigate the investment options to obtain relevant information and then base their decisions on the information obtained. This means considering competing funds to determine which fund should be included in the plan’s investment line-up. “A fiduciary must engage in an objective, thorough, and analytical process that involves consideration of the quality of competing providers and investment products, as appropriate.” 72 Fed. Reg. 60453 (October 24, 2007) (Preamble). 35. In satisfying these duties, fiduciaries should consider a variety of funds and the expenses associated with the possible funds. See Tibble v. Edison International, 49 EBC 1725 (C.D. Cal. 2010) (noting that fiduciaries must engage in a thorough investigation of the merits of an investment and noting that the fiduciaries considered five investment criteria, including the expense ratio, when selecting funds). 36. Furthermore, under ERISA, a fiduciary “has a continuing duty to monitor [plan] investments and remove imprudent ones” that exists “separate and apart from the [fiduciary’s] duty to exercise prudence in selecting investments.” Tibble v. Edison Int’l, 135 S. Ct. 1823, 1828 (2015). If an investment is imprudent, the plan fiduciary “must dispose of it within a reasonable time.” Id. (citation omitted). 37. ERISA also imposes explicit co-fiduciary liability on plan fiduciaries. 29 U.S.C. § 1105(a) provides for fiduciary liability for a co-fiduciary’s breach: “In addition to any liability which he may have under any other provision of this part, a fiduciary with respect to a plan shall be liable for a breach of fiduciary responsibility of another fiduciary with respect to the same plan in the following circumstances: (1) if he participates knowingly in, or knowingly undertakes to conceal, an act or omission of such other fiduciary, knowing such act or omission is a breach; or (2) if, by his failure to comply with section 404(a)(1) in the administration of his specific responsibilities which give risk to his status as a fiduciary, he has enabled such other fiduciary to commit a breach; or (3) if he has knowledge of a breach by such other fiduciary, unless he makes reasonable efforts under the circumstances to remedy the breach.” 38. 29 U.S.C. § 1132(a)(2) authorizes a plan participant to bring a civil action to enforce a breaching fiduciary’s liability to the plan under 29 U.S.C. § 1109. Section 1109(a) provides in relevant part: “Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this title shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary.” 39. Under ERISA, “[t]he question of loss to the Plan . . . requires a comparison between the actual performance of the Plan and the performance that would have otherwise taken place.” Bierwirth, 754 F.2d at 1057. VI. FACTS APPLICABLE TO ALL COUNTS A. The Plan’s Investments 40. As of December 31, 2015, the Plan had approximately $28.5 billion in assets, with approximately $14.5 billion in pooled investment funds. The GE Funds and the Small Cap Fund comprised about 56% of the Plan’s assets among pooled investment funds. Value of Plan Plan Investments Investment (as of December 31, 2015) GE Common Stock Fund $11,046,325,391 GE Investment Funds: GE RSP U.S. Income Fund $1,856,666,000 GE RSP U.S. Equity Fund $3,496,467,000 GE Institutional International Equity Fund $1,151,000,000 GE Institutional Small Cap Equity Fund $1,101,531,000 GE Institutional Strategic Investment Fund $595,930,000 Total GE Investment Funds $8,201,594,422 Non-GE Investment Funds: Non-U.S. Equity Index Fund $844,833,545 U.S. Aggregate Bond Index Fund $645,596,009 U.S. Large-Cap Equity Index Fund $3,115,339,870 U.S. Mid-Cap Equity Index Fund $902,027,992 U.S. Small-Cap Equity Index Fund $576,134,517 U.S. Treasury Inflation-Protected Securities Index Fund $281,069,727 Total Non-GE Investment Funds $6,365,001,660 Other Individual Investments $2,524,200,670 41. GE controlled the menu of investment options that were available to the Plan’s participants. Despite the market’s many high-quality investment options, GE invested the Plan’s assets in five of its proprietary mutual funds. Each of these funds was the exclusive investment option in its respective category of actively managed investment strategy. For example, if a Plan participant wanted to invest in an actively managed large cap strategy, RSP Equity Fund was the only available option. 42. GE managed each of these proprietary funds for a profit by charging investors—including the Plan’s participants—fees for services. The fee revenue and GEAM’s management of the Plan’s assets enhanced the value of GEAM. GE realized the value of GEAM—$485 million—in its sale to State Street. GE therefore gained profits by including each of these funds in the Plan. 43. GE’s imprudent investment decisions, tainted through a process rife with self- dealing, is evidenced in four principal ways: (A) GE year in and year out retained four poor-performing proprietary mutual funds relative to their stated benchmarks and/or other readily available mutual funds with comparable investment strategies; (B) GE, through GEAM, collected millions of dollars of investment management fees despite GE Funds’ poor performance; (C) through the Plan, GE built and prolonged its investment management business, which it then sold to State Street for a reported $485 million; and (D) GE, through GEAM, collected an investment management fee from the Small Cap Fund’s performance and retained for itself the difference between the management fee it collected and the fee it agreed to pay its investment sub-advisers. In each case, GE promoted its own business interests at the expense of the Plan’s participants. 44. These incentives tainted GE’s investment decisions. GE selected its proprietary funds not based on their merits as investments or because doing so was in the interest of the Plan’s participants, but because these products provided significant revenues and profits to GE. The GE Funds and the Small Cap Fund consistently suffered from high fees, poor performance, or both, relative to comparable, readily apparent investment options. A prudent, loyal fiduciary under these circumstances would not have selected or retained such expensive, poor-performing investments. B. GE Failed to Remove Their Poor-Performing Proprietary Mutual Funds 45. For the actively managed investment strategies—stock/bond allocation, international equity, and U.S. equity—GE offered participants the single option of a GE proprietary mutual fund geared to that strategy, even though comparable but better- performing investment options were readily available. Indeed, these GE funds were so under-performing—and superior investment options were so readily apparent—that an adequate investigation would have revealed them as imprudent investments. 46. The Strategic Fund, International Fund, Small Cap Fund, RSP Equity Fund, and RSP Income Fund are known in the industry as “actively managed” funds, which means that each fund’s investment objective is to outperform a targeted “benchmark” through superior stock picking skills after accounting for all expenses. “Actively managed” funds stand in contrast to “passively managed” or index funds, which simply buy and hold all the stocks within a given index. 47. Benchmarks can include broad based securities market indices such as the Standard & Poor’s 500 Index (“S&P 500”), or the Morgan Stanley Europe, Australasia and the Far East Index (“MSCI EAFE”). Benchmarks can also include a universe of hundreds and thousands of funds with equivalent investment strategies, such as the Morningstar Moderate Allocation Fund Category. Measuring a mutual fund’s performance against an established benchmark is the most recognized method used by investors to assess the success or failure of the mutual fund. When active fund managers succeed in beating their benchmarks, this is commonly referred to as “beating the market.” 48. Three of the proprietary GE funds (i.e., the Strategic Fund, International Fund, and RSP Equity Fund) consistently underperformed relative to not only their benchmarks—and thus the market—but also the majority of available alternative funds. Options that were readily apparent included the investment funds offered by highly reputable groups such as T. Rowe Price, Fidelity, American Funds, and Vanguard/Wellington. 49. The annual returns of the three funds were regularly below those of their T. Rowe Price, Fidelity, American Funds, and Wellington counterparts. Moreover, Morningstar consistently rated the three Funds in the bottom 50th and 75th percentile among hundreds of funds with equivalent strategies. Accordingly, for each Fund, superior alternative investments were readily apparent such that an adequate investigation would have uncovered those alternatives. 50. The fourth proprietary GE fund, the RSP Income Fund, consistently underperformed relative to other fixed income asset class mutual funds managed by industry leaders Vanguard, PIMCO, and BlackRock. Accordingly, superior alternative investments were readily apparent such that an adequate investigation would have uncovered those alternatives. 51. Despite their ongoing underperformance during the Class Period, GE continued to retain the GE Funds when any prudent fiduciary monitoring the Plan would have removed them as early as 2011. 52. GE stood to, and did, benefit from the fees it charged the Plan’s participants for managing the GE Funds. Of course, had GE offered any of the readily apparent better- performing, non-proprietary alternatives, it would have stood to lose tens of millions of dollars, both from a loss of the fee revenue stream worth millions of dollars, and from a reduction to GEAM’s reported $485 million price tag in the tens of millions of dollars. Accordingly, the process used by GE to select and maintain its investment options was tainted by failure of effort, competence, and/or loyalty. 53. Plaintiffs did not have knowledge of all material facts (including, among other things, comparisons of the Plan’s costs and investment performance versus other available alternatives, comparisons to other similarly-sized plans, and information regarding separate accounts and collective trusts) necessary to understand that Defendants breached their fiduciary duties and engaged in other unlawful conduct in violation of ERISA, until shortly before this suit was filed. Further, Plaintiffs do not have actual knowledge of the specifics of Defendants’ decision-making processes with respect to the Plan, including Defendants’ processes for selecting, monitoring, and removing the Plan’s investments, because this information is solely within the possession of Defendants prior to discovery. For purposes of this Complaint, Plaintiffs have drawn reasonable inferences regarding these processes based upon information and belief and the facts set forth herein. 54. Below, Plaintiffs describe in detail the performance of the Strategic Fund, International Fund, RSP Equity Fund, and RSP Income Fund. 1. Strategic Fund 55. The Strategic Fund invests primarily in a combination of U.S. and foreign (non-U.S.) equity and debt securities and cash. The Strategic Fund measures relative investment performance by comparing the weighted average performance of U.S., equity, foreign equity, and fixed income securities to three indexes: S&P 500 Index, Barclay’s Aggregate U.S. Bond Index, and MSCI AWCI ex-US Index. Given the complexities of trying to apply three different indexes to measure the weighted average of the Strategic Fund’s portfolio, Plaintiffs are relying on Morningstar for benchmark data for illustrative purposes. Morningstar has identified the Strategic Fund’s benchmark as Moderate Target Risk Index and its fund category as Moderate Allocation. 56. During the Class Period, the Plan’s assets under management in the Strategic Fund ranged between approximately $450 million and $620 million. If a participant in GE’s 401(k) Plan sought a balanced-style investment portfolio that allocated between stocks and bonds, the Strategic Fund was the only option available to the participant. 57. The placement of the Strategic Fund into GE’s 401(k) was an important arrangement for GE. The Plan’s participants represented approximately 75% of the Strategic Fund’s total assets. 58. For the three-year period from 2008 through 2010, the Strategic Fund was clearly an underachiever relative to its Morningstar Moderate Target Risk Index and the approximately 500 other mutual funds in the Morningstar Moderate Allocation category. The Strategic Fund also underperformed other well-known, readily available funds with comparable investment strategies (e.g., T. Rowe Price Capital Appreciation Fund, American Balanced Fund, Fidelity Puritan Fund, and Vanguard/Wellington Fund). 59. From January 1, 2008 through December 31, 2010, the Strategic Fund had a cumulative return of 2.27%. The Moderate Target Risk Index, had a return of 11.91%. The Strategic Fund also performed worse than 55%, 67%, and 85% of the mutual funds within the Moderate Allocation category in 2008, 2009, and 2010, respectively. The T. Rowe Price Capital Appreciation Fund had a return of 19.95%. The American Funds Balanced Fund had a return of 9.95%. The Fidelity Puritan Fund had a return of 11.57%. The Vanguard/Wellington Fund had a return of 11.15%. 60. During this same period, the Strategic Fund had fees that were 20% higher than the better-performing American Balanced Fund, and 100% more expensive than the better-performing Vanguard/Wellington Fund. 61. A reasonable investigation in 2010 would have revealed the underperformance of the Strategic Fund. It would have also uncovered these readily- apparent alternative investments that were better performing and in some cases cheaper. In light of the available alternatives, a prudent fiduciary monitoring the Plan would not have offered the Plan’s participants the Strategic Fund. But GE did just that. 62. Investment performance did not improve from there. The Strategic Fund performed worse than 81%, 53%, 69%, and 78% of funds within the Morningstar Moderate Allocation category in 2011, 2013, 2014, and 2016, respectively. Morningstar’s total number of identified comparator mutual funds within the category ranged between 431 and 727 mutual funds. 63. From the beginning of calendar year 2011 through the end of calendar year 2016, the performance of the Strategic Fund was significantly below that of the comparable T. Rowe Price, Fidelity, Vanguard/Wellington, and American Funds. 64. The chart provided immediately below this paragraph shows the relative annual and cumulative performances of the Strategic Fund and the comparable mutual funds of T. Rowe Price, Fidelity, Vanguard/Wellington, and American Funds. The underperformance of the GE Fund is striking. Fund 2011 2012 2013 2014 2015 2016 Cumulative 12.85 16.78 4.88 -1.18 5.52 +36.29% Strategic Fund -2.56 3.19 14.70 22.43 12.25 5.42 8.34 +66.33% T. Rowe Price Capital Appreciation Fund GE +/- -5.75 -1.85 -5.65 -7.37 -6.60 -2.82 +/- Cumulative -7.6 -13.25 -20.62 -27.22 -30.04 -30.04% .74 13.94 20.48 10.86 1.82 5.20 +53.04% Fidelity Puritan Fund GE +/- -3.30 -1.09 -3.70 -5.98 - 3.00 +.32 +/- Cumulative -4.39 -8.09 -14.07 -17.07 -16.75 -16.75% Vanguard/ Wellington Fund 3.95 12.67 19.96 9.90 .14 11.09 +57.71% GE +/- -6.51 +.18 -3.18 -5.02 -1.32 -5.57 +/- Cumulative -6.33 -9.51 -14.53 -15.85 -21.42 -21.42% American Funds Balanced Fund 4.16 14.57 22.12 9.22 2.03 8.90 +61.00% GE +/- -6.72 -1.72 -5.34 -4.34 -3.21 -3.38 +/- Cumulative -8.44 -13.78 -18.12 -21.33 -24.71 -24.71% 65. During this period, the money flowing out of the Strategic Fund exceeded new money flowing into the Strategic Fund, as potential new investors sought to avoid the poor- performing fund and GE’s investment advisory services. As the investment adviser to the Strategic Fund, GEAM would have been aware of the redemptions and lack of new sales aside from the reinvestment of dividends by existing shareholders. Despite chronic underperformance and net redemptions, GE continued to offer the Strategic Fund in the 66. The funds listed in the tables above are well known, readily available, and easily accessible to all investors. These superior alternative investments were readily apparent such that an adequate investigation and prudent monitoring would have uncovered them. GE would not have had to scour the market to find them, particularly given GE’s presence in the investments marketplace. On the contrary, GE would likely have had to scour the market to find an offering as poor-performing as the Strategic Fund. 67. Nevertheless, GE retained the Strategic Fund in the Plan when any reasonable investor that was monitoring the investment would have weeded it out. GE did so even after it became apparent that its performance was inferior to alternative, readily available funds with an equivalent investment strategy. A fiduciary acting in the best interest of the Plan’s participants and with due care would have removed the Strategic Fund from the 68. However, GE had business and financial incentives to select and maintain the Strategic Fund in the Plan. Even though the Strategic Fund performed poorly, GEAM— and thereby GE—collected millions of dollars in advisory fees from the fund. Furthermore, the Strategic Fund’s fee revenue enhanced the sale value of GEAM, which factored into the reported $485 million price GE received from its sale of GEAM. This by itself is suggestive of improper self-dealing. 69. Not replacing the Strategic Fund with a better option had a negative impact on participants. Listed in the table below is the hypothetical growth in investment value of a $400 million fund based on the investment performance of each fund for the period beginning six years prior to the filing of this suit through June 30, 2016, the day before GE sold GEAM. Growth of $400 Fund Name Cumulative Performance Annualized Performance Million Strategic Fund 49.48% 7.03% $598 million 101.47% 12.57% $806 million T. Rowe Price Capital Appreciation Fund 75.95% 10.01% $703 million Fidelity Puritan Fund Vanguard Wellington Fund 76.52% 10.08% $706 million American Funds Balanced Fund 88.66% 11.33% $750 million 70. GE’s process for selecting, maintaining, and monitoring the Strategic Fund as a Plan investment option was tainted by a failure of effort, competence, and/or loyalty. The Plan’s participants suffered millions of dollars in losses as a result of GE’s breach of fiduciary duty. 2. International Fund 71. Another chronic underperforming mutual fund option through June 2016 was the International Fund. The International Fund invested primarily in companies located in developed and emerging market countries outside the U.S. The International Fund’s prospectus identified the MSCI EAFE Index as it primary benchmark against which the fund compared its investment performance. 72. If a participant in the Plan sought to invest with an actively managed international large cap strategy, the International Fund was the only option available to the participant. Between 2010 and 2015, the Plan’s assets under management in the International Fund ranged between approximately $940 million and $1.3 billion. 73. The placement of the International Fund into GE’s 401(k) was an important arrangement for GE. The Plan’s participants represented approximately 90% of the International Fund’s total assets. 74. For the three-year period from 2008 through 2010, the International Fund was clearly an underachiever relative to the MSCI EAFE Index and the approximately 500 other mutual funds in the Morningstar Foreign Large Blend Category. The International Fund also underperformed other well-known, readily available funds with comparable investment strategies (e.g., T. Rowe Price Overseas Stock Fund, the American Funds EuroPacific Growth Fund, and the Fidelity Diversified International Fund)3. 75. From January 1, 2008 through December 31, 2010, the International Fund had a cumulative negative return of -11.51%. The MSCI EAFE Index had a negative return of -3.85%. The International Fund also performed worse than 55%, 70%, and 90% of the over 300 mutual funds within Morningstar’s Foreign Large Blend Category in 2008, 2009, and 2010, respectively. On an individual fund level, the Fidelity Diversified International Fund had a negative return of -3.78%; the T. Rowe Price Overseas Stock Fund had a positive return of 2.21%; and the American Funds EuroPacific Growth Fund had a positive return of 8.58%. 76. A reasonable investigation in 2010 would have revealed the underperformance of the International Fund. It would have also uncovered these readily apparent better-performing, alternative investments. In light of the available alternatives, a prudent fiduciary monitoring the Plan would not have offered the Plan’s participants the International Fund. But GE did just that. 77. The poor performance did not end there. In 2011, 2014, and 2016, the International Fund performed worse than 78%, 87%, and 73% of international equity mutual funds, respectively. Morningstar’s total number of identified comparators ranged between 339 and 592 mutual funds. 78. As the investment adviser to the International Fund, GEAM—and thereby GE—would have been aware of the investment performance of the International Fund on an annual basis, both in terms of its absolute performance and its benchmark, the MSCI EAFE. Each year the International Fund’s prospectuses disclosed the fund’s annual investment returns relative to the MSCI EAFE. Here are excerpts from the International Fund’s prospectuses for each year between, and including, 2008 and 2015: 3 Vanguard does not offer an actively managed fund for this investment strategy. -44.35 27.35 5.49 -15.89 20.79 21.65 -7.68 -1.46 Fund’s Returns -43.38 31.78 7.75% -12.14 17.32 22.78 -4.90 -0.81 MSCI EAFE Index 79. Other than 2012, the International Fund underperformed its benchmark every single year. Given these overall investment results, adequate monitoring would have revealed the imprudence of investing in the International Fund. Furthermore, an adequate investigation would have revealed superior, readily apparent funds with an international large cap investment strategy. 80. From the beginning of calendar year 2011 through the end of calendar year 2016, the International Fund’s performance was significantly below that of the comparable funds of T. Rowe Price, Fidelity, and American Funds. 81. The chart provided immediately below shows the relative annual and cumulative performances of the International Fund and other mutual funds with equivalent investment strategies. The differences are striking. Fund 2011 2012 2013 2014 2015 2016 Cumulative -15.89 20.79 21.65 -7.68 -0.46 -0.97 17.44% International Fund -10.12 18.59 21.75 -4.49 -2.45 3.01 26.29% T. Rowe Price Overseas Stock Fund GE +/- -5.77 +2.20 -0.10 -3.19 +1.99 -3.98 +/- Cumulative -3.57 -3.67 -6.86 -4.87 -8.85 -8.85% Fidelity Overseas Fund -15.80 25.30 26.97 -3.52 8.42 -1.20 40.17% GE +/- -0.09 -4.51 -5.32 -4.17 -8.87 +0.23 +/- Cumulative -4.60 -9.92 -14.09 -22.96 -22.73 -22.73% -13.31 19.64 20.58 -2.29 -0.48 1.01 25.15 American Funds EuroPacific Fund GE +/- -2.58 +1.15 +1.07 -5.39 +0.02 -1.98 +/- Cumulative -1.43 -.36 -5.75 -5.73 -7.71 -7.71% 82. For each fiscal year from fiscal year 2011 through fiscal year 2016, the International Fund suffered massive redemptions as investors sought to distance themselves from the poor-performing fund and GE’s investment advisory services. As the investment adviser to the International Fund, GEAM would have been aware of the mass redemptions. Despite chronic underperformance and redemptions, GE continued to offer the International Fund in the Plan. 83. The funds listed in the tables above are well known, readily available, and easily accessible to all investors. These superior alternative investments were readily apparent such that an adequate investigation would have uncovered them. GE would not have had to scour the market to find them, particularly given GE’s presence in the investments market place. On the contrary, GE would likely have had to scour the market to find an offering as poor-performing as the International Fund. 84. Nevertheless, GE retained the International Fund in the Plan when any reasonable investor monitoring the investment would have weeded it out. It did so even after it became apparent that its performance was inferior to alternative, readily available funds with an equivalent investment strategy. A fiduciary acting in the best interest of the Plan’s participants and with due care would have removed the International Fund from the 85. However, GE had business and financial incentives to select and maintain the International Fund in the Plan. Even though the International Fund performed poorly, GEAM—and thereby GE—collected millions of dollars in advisory fees from the fund. Furthermore, the International Fund’s fee revenue enhanced the sale value of GEAM, which factored into the reported $485 million price GE received from its sale of GEAM. This by itself is suggestive of improper self-dealing. 86. Not replacing the International Fund with a better option had a negative impact on the Plan’s participants. Listed in the table below is the hypothetical growth in investment value of a $1 billion fund based on the investment performance of each fund for the period beginning approximately six years prior to the filing of this suit through June 30, 2016, the day before GE sold GEAM. Growth of $1 Fund Name Cumulative Performance Annualized Performance Billion International Fund 22.19% 3.44% $1.22 billion T. Rowe Price Overseas Fund 34.17% 5.09% $1.34 billion Fidelity Overseas Fund 57.03% 7.93% $1.57 billion American Funds EuroPacific Fund 34.10% 5.08% $1.34 billion 87. GE’s process for selecting and maintaining the International Fund as a Plan investment option was tainted by a failure of effort, competence, and/or loyalty. The Plan’s participants suffered millions of dollars in losses as a result of GE’s breach of fiduciary 3. RSP Equity Fund 88. The RSP Equity Fund provides yet another example of a poor-performing proprietary fund that GE loaded onto the Plan despite superior, readily apparent alternative funds. The RSP Equity Fund invested primarily in large capitalized U.S. companies. If a Plan participant wanted to invest in an actively managed U.S. large cap stock fund, the RSP Equity Fund was the only option available to the participant. 89. According to annual 401(k) disclosure statements GE furnished to the Plan’s participants, GE measured the RSP Equity Fund’s investment results relative to the S&P 500 Index. During the Class Period, the Plan’s assets under management in the RSP Equity Fund ranged between approximately $2.4 billion and $3.8 billion. 90. The placement of the RSP Equity Fund into GE’s 401(k) was an important arrangement for GE. The Plan’s participants represented approximately 70% of the RSP Equity Fund’s total assets. 91. In 2008 and 2009, the RSP Equity Fund performed favorably against its benchmark, the S&P 500 Index. However, the RSP Equity Fund’s investment performance relative to the S&P 500 Index turned sour in 2010 and never recovered, as illustrated in the chart below: 2010 2011 2012 2013 2014 2015 2016 10.71 -2.16 16.78 35.15 13.27 -2.05 10.13 RSP Equity Fund’s Returns S&P 500 Index 15.06 2.11 16.00 32.38 13.69 1.38 11.96 Fund +/- Index -4.35 -4.27 +0.77 +2.76 -0.42 -3.43 -1.83 Cumulative -4.35 -8.62 -7.85 -5.09 -5.51 -8.94 -10.77 92. In the three-year period between 2008 through 2010, the RSP Equity Fund had an investment return of +7.7%, which was below the investment returns generated by comparable funds managed by T. Rowe Price, Fidelity, Vanguard, and American Funds. For the same three-year period, the T. Rowe Price Institutional Large Cap Growth Fund had an investment return of +8.83%; the Fidelity Large Cap Stock Fund had an investment return of +21.21%; the Vanguard Institutional Total Stock Market Index Fund had an investment return of +9.22%; and the American Funds AMCAP Fund had an investment return of +16.23%. 93. A reasonable investigation in 2010 would have uncovered these alternative, readily apparent investments and thus revealed the underperformance of the RSP Equity Fund relative to these funds. In light of the available alternatives, a prudent fiduciary monitoring the Plan would not have offered the Plan’s participants the RSP Equity Fund. But GE did just that. 94. The RSP Equity Fund’s poor performance relative to the funds offered by T. Rowe Price, Fidelity, Vanguard, and American Funds did not end there. The chart listed below shows the relative annual and cumulative performances of the RSP Equity Fund and the funds offered by T. Rowe Price, Fidelity, Vanguard, and American Funds. Again, the differences are striking. Fund 2011 2012 2013 2014 2015 2016 Cumulative -2.16 16.78 35.15 13.27 -2.05 10.13 +71.12% RSP Equity Fund T. Rowe Price Institutional Large Cap Growth Fund GE +/- -0.76 -0.77 -9.29 +4.55 -12.13 +7.28 -1.53 -10.82 -6.27 -18.4 -11.12 -11.12% +/- Cumulative -1.62 20.71 39.24 10.13 -3.17 16.70 +81.99% Fidelity Large Cap Stock Fund GE +/- -0.54 -3.93 -4.09 +3.14 +1.12 -6.57 -4.47 -8.56 -5.42 -4.30 -10.87 -10.87% +/- Cumulative 1.09 16.47 33.64 12.60 0.45 12.75 +77% Vanguard Institutional Total Stock Market Index Fund GE +/- -3.25 +0.31 +1.51 +0.67 -2.50 -2.62 +/- Cumulative -2.94 -1.43 -.76 -3.26 -5.88 -5.88% 0.71 16.13 37.26 12.48 1.11 9.37 +77.06% American Funds AMCAP Fund GE +/- -2.87 +0.65 -2.11 +0.79 -3.16 +0.76 +/- Cumulative -2.22 -4.33 -3.54 -6.7 -5.94 -5.94% 95. During this period, the money flowing out of the RSP Equity Fund exceeded new money flowing into the RSP Equity Fund, as potential new investors sought to avoid the poor-performing fund and GE’s investment advisory services. As the investment adviser to the RSP Equity Fund, GEAM would have been aware of the net redemptions and lack of new sales aside from the reinvestment of dividends by existing shareholders. Despite chronic underperformance and redemptions, GE continued to offer the RSP Equity Fund in the Plan. 96. The funds listed in the tables above are well known, readily available, and easily accessible to all investors. These superior alternative investments were readily apparent such that an adequate investigation would have uncovered them. GE would not have had to scour the market to find them, particularly given GE’s presence in the investments marketplace. 97. Nevertheless, GE retained the RSP Equity Fund in the Plan when any reasonable investor monitoring the investment would have weeded it out. GE did so even long after it became apparent that the RSP Equity Fund’s performance was inferior to alternative, readily available funds with an equivalent investment strategy. A fiduciary acting in the best interest of the Plan’s participants and with due care would have removed the RSP Equity Fund from the Plan. 98. However, GE had business and financial incentives to select and maintain the RSP Equity Fund in the Plan. Even though the RSP Equity Fund performed poorly, GEAM—and thereby GE—collected millions of dollars in advisory fees from the fund. Furthermore, the RSP Equity Fund’s fee revenue enhanced the sale value of GEAM, which factored into the reported $485 million price GE received from its sale of GEAM. This by itself is suggestive of improper self-dealing. 99. Not replacing the RSP Equity Fund with a better option had a negative impact on the Plan’s participants. Listed in the table below is the hypothetical growth in investment value of a $2 billion fund based on the investment performance of each fund for the period beginning approximately six years prior to the filing of this suit through June 30, 2016, the day before GE sold GEAM. Growth of $2 Fund Name Cumulative Performance Annualized Performance Billion RSP Equity Fund 98.07% 12.25% $3.96 billion 124.20% 14.62% $4.48 billion T. Rowe Price Institutional Large Cap Growth Fund Fidelity Large Cap Stock Fund 109.43% 13.31% $4.18 billion 115.03% 13.81% $4.3 billion Vanguard Institutional Total Stock Market Index Fund American Funds AMCAP Fund 115.98% 13.90% $4.31 billion 100. GE’s process for selecting, maintaining, and monitoring the RSP Equity Fund as a Plan investment option was tainted by a failure of effort, competence, and/or loyalty. The Plan’s participants suffered millions of dollars in losses as a result of GE’s breach of fiduciary duty. 4. RSP Income Fund 101. The RSP Income Fund provides yet another example of a poor-performing proprietary fund that GE loaded onto the Plan despite superior, readily apparent alternative funds. The RSP Income Fund invested primarily in bonds with durations of one year or more. If a Plan participant wanted to invest in an actively managed bond fund, the RSP Income Fund was the only option available to the participant. 102. The placement of the RSP Income Fund into GE’s 401(k) was an important arrangement for GE. The Plan’s participants represented approximately 75% or more of the RSP Income Fund’s total assets. 103. According to the RSP Income Fund’s annual report, GE measured the RSP Income Fund’s investment results relative to the Barclays US Aggregate Bond Index.4 104. During the Class Period, the Plan’s assets under management in the RSP Income Fund ranged between approximately $1.8 billion and $2.2 billion. 105. In the three-year period between 2008 through 2010, the RSP Income Fund had cumulative investment returns of 14.06%, which was 3.65% less than the cumulative return of 17.71% that Barclays U.S. Aggregate Bond Index generated during the same period. 4 The Barclays U.S. Aggregate Bond Index is a market value weighted index of taxable investment grade debt issues, including government, corporate, asset-backed and mortgage-backed securities, with maturities of one year or more. This index is designed to represent the performance of the U.S. investment grade first rate bond market. 106. The RSP Income Fund’s investment return of 14.06% was also considerably less than comparable bond funds managed by large, highly regarded fixed income managers such as Vanguard, PIMCO, and BlackRock. The Vanguard Intermediate-Term Bond Index Fund had a cumulative return of 21.53%. The PIMCO Income Fund had a cumulative return of 34.2%. The BlackRock Total Return Fund had a cumulative return of 15.03%. 107. A reasonable investigation in 2010 would have uncovered these alternative, readily apparent investments and thus revealed the underperformance of the RSP Income Fund relative to these funds. In light of the available alternatives, a prudent fiduciary monitoring the Plan would not have offered the Plan’s participants the RSP Income Fund. But GE did just that. 108. The RSP Income Fund’s poor performance relative to the mutual funds offered by Vanguard, PIMCO, and BlackRock did not end there. The chart listed below shows the relative annual and cumulative performances of the RSP Income Fund and the funds offered by Vanguard, PIMCO, and BlackRock. The underperformance is striking. Fund 2011 2012 2013 2014 2015 2016 Cumulative 8.01 5.87 -0.85 5.83 0.34 3.50 22.70% RSP Income Fund 10.78 7.05 -3.42 6.99 1.30 2.85 25.55% Vanguard Intermediate- Term Bond Index Fund GE +/- -2.77 -1.18 +2.57 -1.16 -.96 +.65 +/- Cumulative -3.95 -1.38 -2.54 -3.51 -2.85 -2.85% 6.37 22.17 4.80 7.18 2.64 8.72 51.88% PIMCO Income Fund GE +/- -1.64 -16.3 -5.65 -1.35 -2.3 -5.22 +/- Cumulative -14.66 -20.31 -21.66 -23.96 -29.18 -29.18% 4.53 10.16 -0.20 8.05 0.35 3.45 26.34% BlackRock Total Return Fund GE +/- +3.48 -4.29 -.65 -2.22 -.01 +.05% +/- Cumulative -0.81 -1.46 -3.68 -3.69 -3.64 -3.64% 109. Beginning in 2012, the RSP Income Fund suffered from significant mass redemptions as investors sought to distance themselves from the poor-performing fund and GE’s investment advisory services. As the investment adviser to the RSP Income Fund, GEAM would have been aware of the redemptions and lack of new sales aside from the reinvestment of dividends by existing shareholders. Despite chronic underperformance and redemptions, GE continued to offer the RSP Income Fund in the Plan. 110. The funds listed in the tables above are well known, readily available, and easily accessible to all investors. These superior alternative investments were readily apparent such that an adequate investigation would have uncovered them. GE would not have had to scour the market to find them, particularly given GE’s presence in the investments marketplace. 111. Nevertheless, GE retained the RSP Income Fund in the Plan when any reasonable investor monitoring the investment would have weeded it out. GE did so even after it became apparent that the RSP Income Fund’s performance was inferior to alternative, readily available funds with an equivalent investment strategy. A fiduciary acting in the best interest of the Plan’s participants and with due care would have removed the RSP Income Fund from the Plan. 112. However, GE had business and financial incentives to select and maintain the RSP Income Fund in the Plan. Even though the RSP Income Fund performed poorly, GEAM—and thereby GE—collected millions of dollars in advisory fees from the fund. Furthermore, the RSP Income Fund’s fee revenue enhanced the sale value of GEAM, which factored into the reported $485 million price GE received from its sale of GEAM. This by itself is suggestive of improper self-dealing. 113. Not replacing the RSP Income Fund with a better option had a negative impact on the Plan’s participants. Listed in the table immediately below is the hypothetical growth in investment value of a $1.8 billion fund based on the investment performance of each fund for the period beginning approximately six years prior to the filing of this suit through June 30, 2016, the day before GE sold GEAM. Fund Name Cumulative Performance Annualized Performance Growth of $1.8 Billion RSP Income Fund 20.7% 3.91% $2.17 billion 24.65% 4.58% $2.24 billion Vanguard Intermediate-Term Bond Index Fund PIMCO Income Fund 46.69% 8.10% $2.64 billion BlackRock Total Return Fund 26.67% 4.93% $2.28 billion 114. GE’s process for selecting, maintaining, and monitoring the RSP Income Fund as a Plan investment option was tainted by a failure of effort, competence, and/or loyalty. The Plan’s participants suffered millions of dollars in losses as a result of GE’s breach of fiduciary duty. B. The Small Cap Fund Had Unreasonable Fees 115. The one bright spot, in terms of the Plan’s performance, was the Small Cap Fund. However, the Small Cap Fund too violated ERISA. In the case of the Small Cap Fund, GEAM did not actually furnish hands-on investment management of the Small Cap Fund’s assets. Instead, it hired and negotiated a fee with multiple investment sub-advisers to manage the fund. GEAM collected an investment management fee from the Small Cap Fund’s performance and retained for itself the difference between the fee it collected from the Small Cap Fund and the fee it chose to pay the other investment sub-advisers. Based on the disclosure in the Small Cap Fund’s registration statement, GE retained for itself approximately 30% of the annual .88% investment management fee collected on average assets of about $1 billion per annum during the Class Period. 116. The placement of the Small Cap Fund into GE’s 401(k) was an important arrangement for GE. Investment by the Plan’s participants represented approximately 80% or more of the Small Cap Fund’s total assets. From this arrangement GEAM—and thereby GE—collected millions of dollars in unreasonable and/or excessive fees for services that GE was ultimately responsible for performing as the Plan’s administrator. 117. As the Plan’s administrator, GE owed fiduciary duties to the Plan’s participants. By charging excessive fees incident to administering the Plan, GE breached its fiduciary duties and engaged in transactions prohibited under ERISA. 118. Defendants acted to benefit themselves by using proprietary investment funds managed by GEAM, thereby enriching themselves at the expense of the Plan’s participants. Defendants’ enrichment on the backs of the Plan’s participants through the Plan’s poor investment performance and unreasonable fees was not enough. On July 1, 2016, Defendants again furthered their own self-interest by selling GEAM to State Street for a reported $485 million. 119. By acting for their own benefit rather than solely in the interest of the Plan’s participants, Defendants breached their fiduciary duties of loyalty and prudence and engaged in transactions expressly prohibited by ERISA. VII. CLASS ACTION ALLEGATIONS 120. 29 U.S.C. § 1132(a)(2) authorizes any participant or beneficiary of the Plan to bring an action individually on behalf of the Plan to enforce a breaching fiduciary’s liability to the Plan under 29 U.S.C. § 1109(a). 121. In acting in a representative capacity and to enhance the due process protections of unnamed participants and beneficiaries of the Plan, Plaintiffs seek to certify this action as a class action on behalf of all participants and beneficiaries of the Plan (the “Class”). Plaintiffs seek to certify and to be appointed as a representative of the following Class: All participants and beneficiaries of the Plan, excluding the Defendants, from 2011 through June 30, 2016 (“Class Period”). 122. This action meets the requirements of Federal Rule of Civil Procedure 23(a) and is certifiable as a class action for the following reasons: a. The Class includes approximately 250,000 members and is so large that joinder of all its members is impracticable. b. There are questions of law and fact common to this Class because the Defendants owed fiduciary duties to the Plan and to all participants and beneficiaries, and took the actions and omissions alleged herein as to the Plan and not as to any individual participant. Thus, common questions of law and fact include the following without limitation: who are the fiduciaries liable for the remedies provided by 29 U.S.C. § 1109(a); whether the fiduciaries of the Plan breached their fiduciary duties to the Plan; what are the losses to the Plan resulting from each breach of fiduciary duty; and what Plan-wide equitable and other relief the Court should impose in light of Defendants’ breach of duty. c. Plaintiffs’ claims are typical of the claims of the Class because each was a participant during the Class Period. Plaintiffs and all participants in the Plan were similarly harmed by Defendants’ misconduct. As a result of Defendants’ self-dealing and imprudence, Plaintiffs and all the Plan’s participants suffered from excessive fees, deficient performance, and inadequate investment options. This directly caused each of them substantial monetary harm. Plaintiffs and all other participants’ retirement savings are depleted as compared to what they could have realized in a robust and cost-effective Plan. d. Plaintiffs are adequate representatives of the Class because each was a participant in the Plan during the Class Period, has no interest that is in conflict with the Class, is committed to the vigorous representation of the Class, and has engaged experienced, and competent attorneys to represent the Class. 123. This action may be certified as a class action under Rule 23(b)(1)(A) or (B). Prosecution of separate actions by individual participants and beneficiaries for Defendants’ breaches of fiduciary duties would create the risk of (A) inconsistent or varying adjudications that would establish incompatible standards of conduct for Defendants in respect to the discharge of their fiduciary duties to the Plan and personal liability to the Plan under 29 U.S.C. § 1109(a), and (B) adjudications by individual participants and beneficiaries regarding these breaches of fiduciary duties and remedies for the Plan would, as a practical matter, be dispositive of the interests of the participants and beneficiaries not parties to the adjudication or would substantially impair or impede those participants’ and beneficiaries’ ability to protect their interests. 124. Additionally, or in the alternative, certification under Rule 23(b)(2) is appropriate because Defendants have acted or refused to act on grounds that apply generally to the Class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the Class as a whole. Plaintiffs seek comprehensive reformation of the Plan to make it a more viable retirement investment option, which will benefit them and the Plan’s participants. 125. Additionally, or in the alternative, this action may be certified as a class under Rule 23(b)(3). A class action is the superior method for the fair and efficient adjudication of this controversy because joinder of all participants and beneficiaries is impracticable, the losses suffered by individual participants and beneficiaries may be small and it is impracticable for individual members to enforce their rights through individual actions, and the common questions of law and fact predominate over individual questions. Given the nature of the allegations, no class member has an interest in individually controlling the prosecution of this matter and Plaintiffs are aware of no difficulties likely to be encountered in the management of this matter as a class action. 126. Additionally, or alternatively, this action may be certified as to particular issues under Rule 23(c)(4), including, but not limited to, Defendants’ liability to the Class for their allegedly disloyal and imprudent conduct. 127. Plaintiffs’ counsel, Sanford Heisler Sharp, LLP, will fairly and adequately represent the interests of the Class and is best able to represent the interests of the Class under Rule 23(g). VIII. CAUSES OF ACTION COUNT I Breach of Duties of Loyalty and Prudence by Mismanaging the Investment Options Selected For and Retained By the Plan During the Class Period (Violation of ERISA, 29 U.S.C. § 1104) 128. The allegations set forth in paragraphs 12 through 127 are realleged and incorporated herein by reference. 129. GE used the Plan as a strategic and financial benefit to recruit and retain workers. 130. In joining GE and subsequently enrolling in the Plan, GE employees trusted and relied on GE’s resources and expertise to construct and maintain a state-of-the-art 401(k) plan. 131. At all relevant times during the Class Period, the Defendants acted as fiduciaries within the meaning of 29 U.S.C. § 1002(21)(A), by exercising authority and control with respect to the management of the Plan and its assets. 132. 29 U.S.C. § 1104(a)(1) requires plan fiduciaries to act “solely in the interest” of plan participants and beneficiaries. a. Subsection (A) of this section requires that the fiduciary act for the “exclusive purpose” of providing benefits to plan participants and defraying reasonable expenses of plan administration. 29 U.S.C. § 1104(a)(1)(A). b. Subsection (B) adds the duty of prudence, requiring a plan fiduciary to act with the “care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.” 29 U.S.C. § 1104(a)(1)(B). 133. The scope of the fiduciary duties and responsibilities of Defendants includes managing the assets of the Plan for the sole and exclusive benefit of the Plan’s participants and beneficiaries, defraying reasonable expenses, and administering the plan with the care, skill, diligence, and prudence required by ERISA. Defendants are responsible for selecting prudent investment options, eliminating imprudent ones, evaluating and monitoring the Plan’s investment on an on-going basis, and taking all necessary steps to ensure the Plan’s assets are invested prudently. 134. Defendants selected and retained the Plan’s investment options. The process for selecting and retaining the Plan’s investment portfolio options is and has been based on a faulty investment process that was tainted by Defendants’ self-interest and imprudence. 135. The faulty process resulted in a plan loaded with relatively poor-to-mediocre proprietary options which substantially impaired the Plan’s use, its value, and its investment performance for all the Plan’s participants, past and present. This process included the retention of these proprietary options despite sustained poor relative investment performance. 136. A prudent investigation would have concluded that the process used by Defendants was causing the Plan to waste hundreds of millions of dollars of the Plan’s participants’ retirement savings. 137. The fact that the Plan’s poor investment options have caused material relative underperformance constitutes a breach of Defendants’ fiduciary duty under ERISA to each and every person who was a participant in the Plan during the Class Period regardless of the investment option in which the participant had actually invested. 138. In failing to adequately consider better-performing investments for the Plan, Defendants, with respect to the entire Plan, failed to discharge their duties with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. 139. As a direct and proximate result of these breaches of fiduciary duties, the Plan and each of its participants have suffered hundreds of millions of dollars of damages and lost-opportunity costs which continue to accrue and for which Defendants are jointly and severally liable pursuant to 29 U.S.C. § 1109. Pursuant to ERISA, 29 U.S.C. §§ 1132(a)(2), 1132(a)(3), and 1109(a), Defendants are liable to make good to the Plan the losses resulting from the aforementioned breaches, to restore to the Plan any profits Defendants made through the use of Plan assets, to restore to the Plan any profits resulting from the breaches of fiduciary duties alleged in this Count, and are subject to other equitable or remedial relief as appropriate. 140. Each Defendant also knowingly participated in the breach of the other Defendants, knowing that such acts were a breach; enabled the other Defendants to commit a breach by failing to lawfully discharge its own fiduciary duties; and knew of the breach by the other Defendants yet failed to make any reasonable effort under the circumstances to remedy the breach. Thus, each Defendant is liable for the losses caused by the breach of its co-fiduciary under ERISA section 409, 29 U.S.C. § 1105(a). COUNT II Breach of Duties of Loyalty and Prudence— Unreasonable Fees (Violation of ERISA, 29 U.S.C. § 1104) 141. The allegations set forth in paragraphs 12 through 127 are realleged and incorporated herein by reference. 142. Defendants are responsible for ensuring the Plan’s fees are reasonable for the services provided. 143. GEAM entered into contracts under which it provided investment advisory services to the Small Cap Fund offered on the Plan in exchange for compensation. 144. However, GEAM did not furnish actual hands-on investment management of the Small Cap Fund’s assets. Instead, it hired and negotiated a fee with multiple investment sub-advisers to manage the fund. GEAM then collected an investment management fee from the Small Cap Fund’s performance and retained for itself—and thereby GE—the difference between the fee it collected from the Small Cap Fund and the fee it agreed to pay the other investment sub-advisers. 145. From this arrangement, GE collected millions of dollars in fee revenue for performing a task that GE was otherwise obligated to perform as the Plan’s administrator. In other words, this arrangement allowed GE, indirectly through the Small Cap Fund and GEAM, to receive its own compensation as the administrator of the Plan and to collect unreasonable and/or excessive fees from the Plan. 146. The GE Plan Trustees allowed GE and GEAM to make a profit from the Plan by retaining the difference between what GEAM collected from the Small Cap Fund and what it paid to investment sub-advisers. 147. Moreover, the GE Plan Trustees had a potential conflict of interest as employees of GEAM, and failed to expressly consider the potential effect of that conflict of interest on their decision-making. 148. By using its fiduciary authority to affect their own compensation and by failing to use the excess fees collected from the Small Cap Fund to offset fees the Plan would have otherwise had to pay, Defendants failed to discharge their duties with respect to the Plan: a. Solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits to participants and beneficiaries and defraying reasonable expenses of administering the Plan, in violation of 29 U.S.C. § 1104(a)(1)(A); and b. With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, in violation of 29 U.S.C. § 1104(a)(1)(B). 149. As a direct and proximate result of these breaches of fiduciary duties, the Plan and each of its participants have suffered millions of dollars of damages for which Defendants are jointly and severally liable pursuant to 29 U.S.C. § 1109. Pursuant to ERISA, 29 U.S.C. §§ 1132(a)(2), 1132(a)(3), and 1109(a), Defendants are liable to make good to the Plan the losses resulting from the aforementioned breaches, to restore to the Plan any profits Defendants made through the use of Plan assets, to restore to the Plan any profits resulting from the breaches of fiduciary duties alleged in this Count, and are subject to other equitable or remedial relief as appropriate. 150. Each Defendant also knowingly participated in the breach of the other Defendants, knowing that such acts were a breach; enabled the other Defendants to commit a breach by failing to lawfully discharge its own fiduciary duties; and knew of the breach by the other Defendants yet failed to make any reasonable effort under the circumstances to remedy the breach. Thus, each Defendant is liable for the losses caused by the breach of its co-fiduciary under ERISA section 409, 29 U.S.C. § 1105(a). COUNT III Prohibited Transactions Concerning Investment Management and Administrative Services Fees (Violation of ERISA, 29 U.S.C. § 1106) 151. The allegations set forth in paragraphs 12 through 127 are realleged and incorporated herein by reference. 152. ERISA § 406(a)(1)(D), 29 U.S.C. § 1106(a)(1)(D), prohibits fiduciaries from causing plans to engage in transactions that they know or should know constitute direct or indirect transfers of the Plans’ assets to, or use of the Plans’ assets by or for the benefit of, parties in interest. 153. ERISA § 406(b), 29 U.S.C. § 1106(b) prohibits fiduciary self-dealing. a. Subsection (1) provides that a fiduciary shall not “deal with the assets of the plan in his own interest or for his own account.” b. Subsection (2) provides that a fiduciary shall not “in his individual or in any other capacity act in any transaction involving the plan on behalf of a party (or represent a party) whose interests are adverse to the interests of the plan or the interests of its participants or beneficiaries.” c. Subsection (3) provides that a fiduciary shall not “receive any consideration for his own personal account from any party dealing with such plan in connection with a transaction involving the assets of the plan.” 154. Defendants caused the Plan to utilize the Small Cap Fund. 155. Throughout the Class Period, Defendants dealt with the assets of the Plan in their own interest and for their own account when they caused the Plan to pay unreasonable investment management fees to GEAM. Under the arrangement with the Small Cap Fund, GEAM charged the fund a separate investment management fee, investment advisory fee, or similar fee. 156. Accordingly, Defendants engaged in prohibited transactions as follows: a. By causing the Plan to engage in transactions that they know or should know constitute direct or indirect transfers of the Plans’ assets to, or use of the Plans’ assets by or for the benefit of, parties in interest, in violation of 29 U.S.C. § 1106(a)(1)(D); and b. By causing the Plan to engage in the above conduct and omissions, in which a fiduciary to the Plan dealt with the assets of the plan in his own interest or for his own account in violation of 29 U.S.C. § 1106(b)(1); and c. By causing the Plan to engage in the above conduct and omissions, in which a fiduciary to the Plan, in his individual or in any other capacity, acted on behalf of a party whose interests were adverse to the interests of the Plan or the interests of its participants or beneficiaries, in violation of 29 U.S.C. § 1106(b)(2); and d. By causing the Plan to engage in the above conduct and omissions, in which a fiduciary to the Plan received consideration for its own personal account from any party dealing with the Plan in connection with a transaction involving the assets of the Plan, in violation of 29 U.S.C. § 1106(b)(3); and e. By causing the Plan to pay a separate investment management fee, investment advisory fee, or similar fee violated the terms of Prohibited Transaction Exemption 77-3. 157. Pursuant to 29 U.S.C. §§ 1132(a)(2), 1132(a)(3), and 1109(a), Defendants are liable to restore all losses suffered by the Plan as a result of these prohibited transactions and disgorge all revenues received and/or earned directly or indirectly by GE resulting from the above-mentioned prohibited transactions or received in connection with the management of the Plan’s assets or other services performed for the Plan for more than reasonable compensation. COUNT IV Breach of Duties of Loyalty and Prudence by Failing to Remove or Replace Certain GE Proprietary Funds as 401(k) Plan Investment Vehicles (Violation of ERISA, 29 U.S.C. § 1104) 158. The allegations set forth in paragraphs 12 through 127 are realleged and incorporated herein by reference. 159. Defendants breached its duties of loyalty and prudence by selecting and then failing to timely remove as Plan investment options each of the GE Funds—i.e., the Strategic Fund, International Fund, RSP Equity Fund, and RSP Income Fund. 160. The GE Funds exhibited poor performance during and before the Class Period. GE profited from the Plan by causing the Plan to retain GE’s own poor-performing proprietary funds. 161. A prudent investigation not tainted by self-interest would have revealed to a reasonably prudent fiduciary that the GE Funds were inferior to other readily apparent investment options. GE’s conduct reflects a failure to consider and obtain better- performing alternative, unaffiliated funds at the expense and to the detriment of the Plan. 162. Had a prudent and loyal fiduciary conducted such an investigation, it would have concluded that the GE Funds were selected and retained for reasons other than the best interest of the Plan and were causing the Plan to waste hundreds of millions of dollars of employees’ retirement savings in underperformance relative to prudent investment options available to the Plan. 163. Defendants committed these breaches during each of the meetings of the GE Plan Trustees that occurred periodically during each year of the Class Period. At each of these meetings, the GE Plan Trustees had cause to remove the GE Funds based on their poor performance, but failed to do so. A prudent fiduciary would have removed the GE Funds from the Plan. 164. As a direct and proximate result of these breaches of fiduciary duties, the Plan and each of its participants have suffered millions of dollars of damages and lost- opportunity costs which continue to accrue and for which Defendants are jointly and severally liable pursuant to 29 U.S.C. § 1109. Pursuant to ERISA, 29 U.S.C. §§ 1132(a)(2), 1132(a)(3), and 1109(a), Defendants are liable to make good to the Plan the losses resulting from the aforementioned breaches, to restore to the Plan any profits Defendants made through the use of Plan assets, to restore to the Plan any profits resulting from the breaches of fiduciary duties alleged in this Count, and are subject to other equitable or remedial relief as appropriate. 165. Each Defendant also knowingly participated in the breach of the other Defendants, knowing that such acts were a breach; enabled the other Defendants to commit a breach by failing to lawfully discharge its own fiduciary duties; and knew of the breach by the other Defendants yet failed to make any reasonable effort under the circumstances to remedy the breach. Thus, each Defendant is liable for the losses caused by the breach of its co-fiduciary under ERISA section 409, 29 U.S.C. § 1105(a). COUNT V Failure to Monitor Fiduciaries 166. The allegations set forth in paragraphs 12 through 127 are realleged and incorporated herein by reference. 167. As alleged above, GE is a fiduciary under 29 U.S.C. § 1002(21), and thus bound by the duties of loyalty and prudence. 168. A monitoring fiduciary must ensure that the monitored fiduciaries are performing their fiduciary obligations, including those with respect to the investment and holding of plan assets, and must take prompt and effective action to protect the plan and participants when they are not doing so. 169. To the extent that the GE Plan Trustees managed the assets of the Plan, GE’s monitoring duty included an obligation to ensure that any delegated tasks were being performed prudently and loyally. 170. The GE Plan Trustees monitoring duty included an obligation to ensure that any delegated tasks were being performed prudently and loyally. 171. The Defendants breached their fiduciary monitoring duties, inter alia, by: a. failing to monitor its appointees, to evaluate their performance, or to have a system in place for doing so, and standing idly by as the Plan suffered enormous losses as a result of their appointees’ imprudent actions and omissions with respect to the Plan; b. failing to ensure that the monitored fiduciaries considered the ready availability of comparable investment options for the Plan; c. failing to remove appointees whose performance was inadequate in that they continued to maintain imprudent investments; and d. failing to remove options that did not even keep up with a majority of funds with comparable investment strategies, all to the detriment of the Plan’s participants. 172. As a consequence of Defendants’ breaches of their fiduciary duty to loyally and prudently select investments and monitor their performance, the Plan failed to accrue hundreds of millions of dollars of additional investment performance and moreover suffered very substantial losses. Had Defendants discharged their fiduciary monitoring duties loyally and prudently as described above, the losses suffered by the Plan would have been avoided. Therefore, as a direct result of the breaches of fiduciary duty alleged herein, Plaintiffs and the Plan’s participants lost hundreds of millions of dollars. 173. Pursuant to 29 U.S.C. §§ 1132(a)(2), 1132(a)(3), and 1109(a), Defendants are personally liable to make good and restore to the Plan any losses to the Plan resulting from the breaches of fiduciary duties alleged in this Count, and are subject to other equitable or remedial relief as appropriate. IX. PRAYER FOR RELIEF 174. Plaintiffs, on behalf of the Plan’s participants and beneficiaries, respectfully request that the Court: A. Find and declare that the Defendants breached their fiduciary duties as described above; B. Find and adjudge that Defendants are personally liable to make good to the Plan $700 million in losses to the Plan resulting from each breach of fiduciary duty, and to otherwise restore the Plan to the position it would have occupied but for the breaches of fiduciary duty; C. Determine the method by which Plan losses under 29 U.S.C. § 1109(a) should be calculated; D. Order Defendants to provide all accountings necessary to determine the amounts Defendants must make good to the Plan under 29 U.S.C. § 1109(a); E. Remove the fiduciaries who have breached their fiduciary duties and enjoin them from future ERISA violations; F. Reform the Plan to render it compliant with ERISA; G. Surcharge against Defendants and in favor of the Plan all amounts involved in any transactions which such accounting reveals were improper, excessive, and/or in violation of ERISA; H. Certify the Class, appoint Plaintiffs as class representatives, and appoint Sanford Heisler Sharp, LLP as Class Counsel; I. Award to the Plaintiffs and the Class their attorney’s fees and costs under 29 U.S.C. § 1132(g)(1) and/or the common fund doctrine; J. Order the payment of interest to the extent it is allowed by law; and K. Grant other equitable or remedial relief as the Court deems appropriate. Dated: September 26, 2017 Respectfully Submitted, /s/ Charles Field Charles H. Field, CA Bar No. 189817 Edward Chapin, CA Bar No. 053287 SANFORD HEISLER SHARP, LLP 655 W. Broadway, 17th floor San Diego, CA 92101 Phone: (619) 577-4251 Facsimile: (619) 577-4250 [email protected] [email protected] Kevin H. Sharp (Pro Hac Vice forthcoming) SANFORD HEISLER SHARP, LLP 611 Commerce Street, Suite 3100 Nashville, TN 37203 Phone: (615) 434-7000 Facsimile: (615) 434-7020 [email protected] David Sanford (Pro Hac Vice forthcoming) Andrew Miller (Pro Hac Vice forthcoming) SANFORD HEISLER SHARP, LLP 1666 Connecticut Avenue NW, Suite 310 Washington, D.C. 20009 Telephone: (202) 499-5200 Facsimile: (202) 499-5199 [email protected] [email protected] David Tracey (Pro Hac Vice forthcoming) SANFORD HEISLER SHARP, LLP 1350 Avenue of the Americas, 31st Floor New York, NY 10019 Facsimile: (646) 402-5651 [email protected] Attorneys for Plaintiffs and the Proposed Class

consumer fraud

GGlWrIkBzZV2kahMsU3C

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x JOSUÉ PAGUADA, on behalf of himself and all others similarly situated, CLASS ACTION COMPLAINT Plaintiffs, AND v. DEMAND FOR JURY TRIAL AS SEEN ON TV DE, LLC, Defendant. : : : : : : : : : : : : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x INTRODUCTION 1. Plaintiff JOSUÉ PAGUADA, on behalf of himself and others similarly situated, asserts the following claims against Defendant AS SEEN ON TV DE, LLC as follows. 2. Based on a 2010 U.S. Census Bureau report, approximately 8.1 million people in the United States are visually impaired, including 2.0 million who are blind, and according to the American Foundation for the Blind’s 2016 report, approximately 420,000 visually impaired persons live in the State of New York. 3. Plaintiff brings this civil rights action against Defendant for its failure to design, construct, maintain, and operate its website to be fully accessible to and independently usable by Plaintiff and other blind or visually-impaired people. 4. Plaintiff uses the terms “blind” or “visually-impaired” to refer to all people with visual impairments who meet the legal definition of blindness in that they have a visual acuity with correction of less than or equal to 20 x 200. 5. Defendant’s denial of full and equal access to its website, and therefore denial of its goods and services offered thereby, is a violation of Plaintiff’s rights under the Americans with Disabilities Act (“ADA”). 6. Because Defendant’s website, www.asseenontvlive.com (the “Website” or “Defendant’s website”), is not equally accessible to blind and visually-impaired consumers, it violates the ADA. Plaintiff seeks a permanent injunction to cause a change in Defendant’s corporate policies, practices, and procedures so that Defendant’s website will become and remain accessible to blind and visually- impaired consumers. JURISDICTION AND VENUE 7. This Court has subject-matter jurisdiction over this action under 28 U.S.C. § 1331 and 42 U.S.C. § 12181, as Plaintiff’s claims arise under Title III of the ADA, 42 U.S.C. § 12181, et seq., and 28 U.S.C. § 1332. 8. This Court has supplemental jurisdiction under 28 U.S.C. § 1367 over Plaintiff’s New York City Human Rights Law, N.Y.C. Admin. Code § 8-101 et seq., (“NYCHRL”) claims. 9. Venue is proper in this district under 28 U.S.C. §1391(b)(1) and (2) because Defendant conducts and continues to conduct a substantial and significant amount of business in this District, and a substantial portion of the conduct complained of herein occurred in this District because Plaintiff attempted to utilize, on a number of occasions, the subject Website within this Judicial District. 10. Defendant is subject to personal jurisdiction in this District. Defendant has been and is committing the acts or omissions alleged herein in the Southern District of New York that caused injury, and violated rights the ADA prescribes to Plaintiff and to other blind and other visually impaired-consumers in this District. A substantial part of the acts and omissions giving rise to Plaintiff’s claims occurred in this District: Plaintiff has been denied the full use and enjoyment of the facilities, goods and services offered to the general public, on Defendant’s Website in New York County. These access barriers that Plaintiff encountered have caused a denial of Plaintiff’s full and equal access multiple times in the past, and now deter Plaintiff on a regular basis from accessing the Defendant’s Website in the future. 11. This Court is empowered to issue a declaratory judgment under 28 U.S.C. §§ 2201 and 2202. THE PARTIES 12. Plaintiff JOSUÉ PAGUADA, at all relevant times, is and was a resident of Astoria, New York. 13. Plaintiff is a blind, visually-impaired handicapped person and a member of member of a protected class of individuals under the ADA, under 42 U.S.C. § 12102(1)-(2), and the regulations implementing the ADA set forth at 28 CFR § 36.101 et seq., and NYCHRL. 14. Defendant is and was at all relevant times a Delaware Limited Liability Company doing business in New York. 15. Defendant’s Website, and its goods and services offered thereupon, is a public accommodation within the definition of Title III of the ADA, 42 U.S.C. § 12181(7). NATURE OF ACTION 16. The Internet has become a significant source of information, a portal, and a tool for conducting business, doing everyday activities such as shopping, learning, banking, researching, as well as many other activities for sighted, blind and visually- impaired persons alike. 17. In today’s tech-savvy world, blind and visually-impaired people have the ability to access websites using keyboards in conjunction with screen access software that vocalizes the visual information found on a computer screen or displays the content on a refreshable Braille display. This technology is known as screen-reading software. Screen-reading software is currently the only method a blind or visually- impaired person may independently access the internet. Unless websites are designed to be read by screen-reading software, blind and visually-impaired persons are unable to fully access websites, and the information, products, goods and contained thereon. 18. Blind and visually-impaired users of Windows operating system-enabled computers and devices have several screen reading software programs available to them. Some of these programs are available for purchase and other programs are available without the user having to purchase the program separately. NonVisual Desktop Access, otherwise known as “NVDA” is a popular, screen-reading software program available for a Windows computer. 19. For screen-reading software to function, the information on a website must be capable of being rendered into text. If the website content is not capable of being rendered into text, the blind or visually-impaired user is unable to access the same content available to sighted users. 20. The international website standards organization, the World Wide Web Consortium, known throughout the world as W3C, has published version 2.1 of the Web Content Accessibility Guidelines (“WCAG 2.1”). WCAG 2.1 are well- established guidelines for making websites accessible to blind and visually- impaired people. These guidelines are universally followed by most large business entities and government agencies to ensure their websites are accessible. STATEMENT OF FACTS 21. Defendant is a television-advertised products company that owns and operates the website, www.asseenontvlive.com (its “Website”), offering features which should allow all consumers to access the goods and services which Defendant ensures the delivery of throughout the United States, including New York State. 22. Defendant’s Website offers its products and services for online sale and general delivery to the public. The Website offers features which ought to allow users to browse for items, access navigation bar descriptions and prices, and avail consumers of the ability to peruse the numerous items offered for sale. 23. Plaintiff is a visually-impaired and legally blind person, who cannot use a computer without the assistance of screen-reading software. Plaintiff is, however, a proficient NVDA screen-reader user and uses it to access the Internet. Plaintiff has visited the Website using a screen-reader. 24. Plaintiff most recently visited Defendant’s website in August of 2020 to browse and potentially make a purchase. Despite his efforts, however, Plaintiff was denied a user experience similar to that of a sighted individual due to the website’s lack of a variety of features and accommodations, which effectively barred Plaintiff from being able to enjoy the privileges and benefits of Defendant’s public accommodation. 25. For example, many features on the Website lacks alt. text, which is the invisible code embedded beneath a graphical image. As a result, Plaintiff was unable to differentiate what products were on the screen due to the failure of the Website to adequately describe its content. 26. Many features on the Website also fail to contain a proper label element or title attribute for each field. This is a problem for the visually impaired because the screen reader fails to communicate the purpose of the page element. It also leads to the user not being able to understand what he or she is expected to insert into the subject field. As a result, Plaintiff was unable to enjoy the privileges and benefits of the Website equally to sighted users. 27. Many pages on the Website also contain the same title elements. This was a problem for Plaintiff because in certain instances the screen reader failed to distinguish one page from another. In order to fix this problem, Defendant must change the title elements for each page. 28. The Website also contains a host of broken links, which is a hyperlink to a non- existent or empty webpage. For the visually impaired this is especially paralyzing due to the inability to navigate or otherwise determine where one is on the website once a broken link is encountered. For example, upon coming across a link of interest, Plaintiff was redirected to an error page. However, the screen-reader failed to communicate that the link was broken. As a result, Plaintiff could not get back to his original search. 29. As a result of visiting Defendant’s Website and from investigations performed on his behalf, Plaintiff is aware that the Website includes at least the following additional barriers blocking his full and equal use: a. The Website does not provide a text equivalent for every non-text element; b. The purpose of each link cannot be determined from the link text alone or from the link text and its programmatically determined link context; c. Web pages lack titles that describe their topic or purpose; d. Headings and labels do not describe topic or purpose; e. Keyboard user interfaces lack a mode of operation where the keyboard focus indicator is visible; f. The default human language of each web page cannot be programmatically determined; g. The human language of each passage or phrase in the content cannot be programmatically determined; h. Labels or instructions are not always provided when content requires user input; i. Text cannot be resized up to 200 percent without assistive technology so that it may still be viewed without loss of content or functionality; j. A mechanism is not always available to bypass blocks of content that are repeated on multiple web pages; k. A correct reading sequence is not provided on pages where the sequence in which content is presented affects its meaning; l. In content implemented using markup languages, elements do not always have complete start and end tags, are not nested according to their specifications, may contain duplicate attributes, and IDs are not always unique; and m. The name and role of all UI elements cannot be programmatically determined; things that can be set by the user cannot be programmatically set; and/or notification of changes to these items is not available to user agents, including assistive technology. 30. These access barriers effectively denied Plaintiff the ability to use and enjoy Defendant’s website the same way sighted individuals do. 31. It is, upon information and belief, Defendant’s policy and practice to deny Plaintiff, along with other blind or visually-impaired users, access to Defendant’s website, and to therefore specifically deny the goods and services that are offered to the general public. Due to Defendant’s failure and refusal to remove access barriers to its website, Plaintiff and visually-impaired persons have been and are still being denied equal access to Defendant’s Website, and the numerous goods and services and benefits offered to the public through the Website. 32. Due to the inaccessibility of Defendant’s Website, blind and visually-impaired customers such as Plaintiff, who need screen-readers, cannot fully and equally use or enjoy the facilities, products, and services Defendant offers to the public on its Website. The access barriers Plaintiff encountered have caused a denial of Plaintiff’s full and equal access in the past, and now deter Plaintiff on a regular basis from visiting the Website, presently and in the future. 33. If the Website were equally accessible to all, Plaintiff could independently navigate the Website and complete a desired transaction as sighted individuals do. 34. Through his attempts to use the Website, Plaintiff has actual knowledge of the access barriers that make these services inaccessible and independently unusable by blind and visually-impaired people. 35. Because simple compliance with the WCAG 2.1 Guidelines would provide Plaintiff and other visually-impaired consumers with equal access to the Website, Plaintiff alleges that Defendant has engaged in acts of intentional discrimination, including but not limited to the following policies or practices: a. Constructing and maintaining a website that is inaccessible to visually-impaired individuals, including Plaintiff; b. Failure to construct and maintain a website that is sufficiently intuitive so as to be equally accessible to visually-impaired individuals, including Plaintiff; and, c. Failing to take actions to correct these access barriers in the face of substantial harm and discrimination to blind and visually-impaired consumers, such as Plaintiff, as a member of a protected class. 36. Defendant therefore uses standards, criteria or methods of administration that have the effect of discriminating or perpetuating the discrimination of others, as alleged herein. 37. The ADA expressly contemplates the injunctive relief that Plaintiff seeks in this action. In relevant part, the ADA requires: In the case of violations of . . . this title, injunctive relief shall include an order to alter facilities to make such facilities readily accessible to and usable by individuals with disabilities . . . Where appropriate, injunctive relief shall also include requiring the . . . modification of a policy . . . 42 U.S.C. § 12188(a)(2). 38. Upon information and belief, because AS SEEN ON TV DE, LLC’s Website has never been accessible and because AS SEEN ON TV DE, LLC does not have, and has never had, an adequate corporate policy that is reasonably calculated to cause its Website to become and remain accessible, Plaintiff invokes 42 U.S.C. § 12188(a)(2) and seeks a permanent injunction requiring: a. that AS SEEN ON TV DE, LLC retain a qualified consultant acceptable to Plaintiff (“Mutually Agreed Upon Consultant”) who shall assist it in improving the accessibility of its Website so the goods and services on them may be equally accessed and enjoyed by individuals with vision related disabilities; b. that AS SEEN ON TV DE, LLC work with the Mutually Agreed Upon Consultant to ensure that all employees involved in website development and content development be given web accessibility training on a periodic basis, including onsite training to create accessible content at the design and development stages; c. that AS SEEN ON TV DE, LLC work with the Mutually Agreed Upon Consultant to perform an automated accessibility audit on a periodic basis to evaluate whether its Website may be equally accessed and enjoyed by individuals with vision related disabilities on an ongoing basis; d. that AS SEEN ON TV DE, LLC work with the Mutually Agreed Upon Consultant to perform end-user accessibility/usability testing on a periodic basis with said testing to be performed by individuals with various disabilities to evaluate whether its Website may be equally accessed and enjoyed by individuals with vision related disabilities on an ongoing basis; e. that AS SEEN ON TV DE, LLC work with the Mutually Agreed Upon Consultant to create an accessibility policy that will be posted on its Website, along with an e-mail address and tollfree phone number to report accessibility- related problems; and f. that Plaintiff, their counsel and its experts monitor Defendant’s Website for up to two years after the Mutually Agreed Upon Consultant validates it is free of accessibility errors/violations to ensure it has adopted and implemented adequate accessibility policies. 39. Web-based technologies have features and content that are modified on a daily, and in some instances, an hourly, basis, and a one time “fix” to an inaccessible website will not cause the website to remain accessible without a corresponding change in corporate policies related to those web-based technologies. To evaluate whether an inaccessible website has been rendered accessible, and whether corporate policies related to web-based technologies have been changed in a meaningful manner that will cause the website to remain accessible, the website must be reviewed on a periodic basis using both automated accessibility screening tools and end user testing by disabled individuals. 40. Although Defendant may currently have centralized policies regarding maintaining and operating its Website, Defendant lacks a plan and policy reasonably calculated to make them fully and equally accessible to, and independently usable by, blind and other visually-impaired consumers. 41. Defendant has, upon information and belief, invested substantial sums in developing and maintaining their Website and has generated significant revenue from the Website. These amounts are far greater than the associated cost of making their Website equally accessible to visually impaired customers. 42. Without injunctive relief, Plaintiff and other visually-impaired consumers will continue to be unable to independently use the Website, violating their rights. CLASS ACTION ALLEGATIONS 43. Plaintiff, on behalf of himself and all others similarly situated, seeks to certify a nationwide class under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the United States who have attempted to access Defendant’s Website and as a result have been denied access to the equal enjoyment of goods and services, during the relevant statutory period. 44. Plaintiff, on behalf of himself and all others similarly situated, seeks certify a New York City subclass under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the City of New York who have attempted to access Defendant’s Website and as a result have been denied access to the equal enjoyment of goods and services offered, during the relevant statutory period. 45. Common questions of law and fact exist amongst Class, including: a. Whether Defendant’s Website is a “public accommodation” under the ADA; b. Whether Defendant’s Website is a “place or provider of public accommodation” under the NYCHRL; c. Whether Defendant’s Website denies the full and equal enjoyment of its products, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating the ADA; and d. Whether Defendant’s Website denies the full and equal enjoyment of its products, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating the NYCHRL. 46. Plaintiff’s claims are typical of the Class. The Class, similarly to the Plaintiff, are severely visually impaired or otherwise blind, and claim that Defendant has violated the ADA or NYCHRL by failing to update or remove access barriers on its Website so either can be independently accessible to the Class. 47. Plaintiff will fairly and adequately represent and protect the interests of the Class Members because Plaintiff has retained and is represented by counsel competent and experienced in complex class action litigation, and because Plaintiff has no interests antagonistic to the Class Members. Class certification of the claims is appropriate under Fed. R. Civ. P. 23(b)(2) because Defendant has acted or refused to act on grounds generally applicable to the Class, making appropriate both declaratory and injunctive relief with respect to Plaintiff and the Class as a whole. 48. Alternatively, class certification is appropriate under Fed. R. Civ. P. 23(b)(3) because fact and legal questions common to Class Members predominate over questions affecting only individual Class Members, and because a class action is superior to other available methods for the fair and efficient adjudication of this litigation. 49. Judicial economy will be served by maintaining this lawsuit as a class action in that it is likely to avoid the burden that would be otherwise placed upon the judicial system by the filing of numerous similar suits by people with visual disabilities throughout the United States. FIRST CAUSE OF ACTION VIOLATIONS OF THE ADA, 42 U.S.C. § 12181 et seq. 50. Plaintiff, on behalf of himself and the Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 51. Section 302(a) of Title III of the ADA, 42 U.S.C. § 12101 et seq., provides: No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation. 42 U.S.C. § 12182(a). 52. Defendant’s Website is a public accommodations within the definition of Title III of the ADA, 42 U.S.C. § 12181(7). The Website is a service that is offered to the general public, and as such, must be equally accessible to all potential consumers. 53. Under Section 302(b)(1) of Title III of the ADA, it is unlawful discrimination to deny individuals with disabilities the opportunity to participate in or benefit from the products, services, facilities, privileges, advantages, or accommodations of an entity. 42 U.S.C. § 12182(b)(1)(A)(i). 54. Under Section 302(b)(1) of Title III of the ADA, it is unlawful discrimination to deny individuals with disabilities an opportunity to participate in or benefit from the products, services, facilities, privileges, advantages, or accommodation, which is equal to the opportunities afforded to other individuals. 42 U.S.C. § 12182(b)(1)(A)(ii). 55. Under Section 302(b)(2) of Title III of the ADA, unlawful discrimination also includes, among other things: [A] failure to make reasonable modifications in policies, practices, or procedures, when such modifications are necessary to afford such goods, services, facilities, privileges, advantages, or accommodations to individuals with disabilities, unless the entity can demonstrate that making such modifications would fundamentally alter the nature of such goods, services, facilities, privileges, advantages or accommodations; and a failure to take such steps as may be necessary to ensure that no individual with a disability is excluded, denied services, segregated or otherwise treated differently than other individuals because of the absence of auxiliary aids and services, unless the entity can demonstrate that taking such steps would fundamentally alter the nature of the good, service, facility, privilege, advantage, or accommodation being offered or would result in an undue burden. 42 U.S.C. § 12182(b)(2)(A)(ii)-(iii). 56. The acts alleged herein constitute violations of Title III of the ADA, and the regulations promulgated thereunder. Plaintiff, who is a member of a protected class of persons under the ADA, has a physical disability that substantially limits the major life activity of sight within the meaning of 42 U.S.C. §§ 12102(1)(A)-(2)(A). Furthermore, Plaintiff has been denied full and equal access to the Website, has not been provided services that are provided to other patrons who are not disabled, and has been provided services that are inferior to the services provided to non-disabled persons. Defendant has failed to take any prompt and equitable steps to remedy its discriminatory conduct. These violations are ongoing. 57. Under 42 U.S.C. § 12188 and the remedies, procedures, and rights set forth and incorporated therein, Plaintiff, requests relief as set forth below. SECOND CAUSE OF ACTION VIOLATIONS OF THE NYCHRL 58. Plaintiff, on behalf of himself and the New York City Sub-Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 59. N.Y.C. Administrative Code § 8-107(4)(a) provides that “It shall be an unlawful discriminatory practice for any person, being the owner, lessee, proprietor, manager, superintendent, agent or employee of any place or provider of public accommodation, because of . . . disability . . . directly or indirectly, to refuse, withhold from or deny to such person, any of the accommodations, advantages, facilities or privileges thereof.” 60. Defendant’s Website is a sales establishment and public accommodations within the definition of N.Y.C. Admin. Code § 8-102(9). 61. Defendant is subject to NYCHRL because it owns and operates its Website, making it a person within the meaning of N.Y.C. Admin. Code § 8-102(1). 62. Defendant is violating N.Y.C. Administrative Code § 8-107(4)(a) in refusing to update or remove access barriers to Website, causing its Website and the services integrated with such Website to be completely inaccessible to the blind. This inaccessibility denies blind patrons full and equal access to the facilities, products, and services that Defendant makes available to the non-disabled public. 63. Defendant is required to “make reasonable accommodation to the needs of persons with disabilities . . . any person prohibited by the provisions of [§ 8-107 et seq.] from discriminating on the basis of disability shall make reasonable accommodation to enable a person with a disability to . . . enjoy the right or rights in question provided that the disability is known or should have been known by the covered entity.” N.Y.C. Admin. Code § 8-107(15)(a). 64. Defendant’s actions constitute willful intentional discrimination against the Sub- Class on the basis of a disability in violation of the N.Y.C. Administrative Code § 8-107(4)(a) and § 8-107(15)(a) in that Defendant has: a. constructed and maintained a website that is inaccessible to blind class members with knowledge of the discrimination; and/or b. constructed and maintained a website that is sufficiently intuitive and/or obvious that is inaccessible to blind class members; and/or c. failed to take actions to correct these access barriers in the face of substantial harm and discrimination to blind class members. 65. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 66. As such, Defendant discriminates, and will continue in the future to discriminate against Plaintiff and members of the proposed class and subclass on the basis of disability in the full and equal enjoyment of the products, services, facilities, privileges, advantages, accommodations and/or opportunities of its Website under § 8-107(4)(a) and/or its implementing regulations. Unless the Court enjoins Defendant from continuing to engage in these unlawful practices, Plaintiff and members of the class will continue to suffer irreparable harm. 67. Defendant’s actions were and are in violation of the NYCHRL and therefore Plaintiff invokes his right to injunctive relief to remedy the discrimination. 68. Plaintiff is also entitled to compensatory damages, as well as civil penalties and fines under N.Y.C. Administrative Code § 8-120(8) and § 8-126(a) for each offense as well as punitive damages pursuant to § 8-502. 69. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 70. Under N.Y.C. Administrative Code § 8-120 and § 8-126 and the remedies, procedures, and rights set forth and incorporated therein Plaintiff prays for judgment as set forth below. THIRD CAUSE OF ACTION DECLARATORY RELIEF 71. Plaintiff, on behalf of himself and the Class and New York City Sub-Classes Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 72. An actual controversy has arisen and now exists between the parties in that Plaintiff contends, and is informed and believes that Defendant denies, that its Website contains access barriers denying blind customers the full and equal access to the products, services and facilities of its Website, which Defendant owns, operations and controls, fails to comply with applicable laws including, but not limited to, Title III of the Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., and N.Y.C. Admin. Code § 8-107, et seq. prohibiting discrimination against the blind. 73. A judicial declaration is necessary and appropriate at this time in order that each of the parties may know their respective rights and duties and act accordingly. PRAYER FOR RELIEF WHEREFORE, Plaintiff respectfully requests this Court grant the following relief: a. A preliminary and permanent injunction to prohibit Defendant from violating the Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y.C. Administrative Code § 8-107, et seq., and the laws of New York; b. A preliminary and permanent injunction requiring Defendant to take all the steps necessary to make its Website into full compliance with the requirements set forth in the ADA, and its implementing regulations, so that the Website is readily accessible to and usable by blind individuals; c. A declaration that Defendant owns, maintains and/or operates its Website in a manner that discriminates against the blind and which fails to provide access for persons with disabilities as required by Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y.C. Administrative Code § 8-107, et seq., and the laws of New York d. An order certifying the Class and Sub-Classes under Fed. R. Civ. P. 23(a) & (b)(2) and/or (b)(3), appointing Plaintiff as Class Representative, and his attorneys as Class Counsel; e. Compensatory damages in an amount to be determined by proof, including all applicable statutory and punitive damages and fines, to Plaintiff and the proposed class and subclasses for violations of their civil rights under New York City Human Rights Law and City Law; f. Pre- and post-judgment interest; g. An award of costs and expenses of this action together with reasonable attorneys’ and expert fees; and h. Such other and further relief as this Court deems just and proper. DEMAND FOR TRIAL BY JURY Pursuant to Fed. R. Civ. P. 38(b), Plaintiff demands a trial by jury on all questions of fact the Complaint raises. Dated: Queens, New York August 19, 2020 MARS KHAIMOV LAW, PLLC By: /s/ Mars Khaimov Mars Khaimov, Esq. [email protected] 10826 64th Avenue, Second Floor Forest Hills, New York 11375 Tel: (929) 324-0717 Attorneys for Plaintiff

civil rights, immigration, family

LAxgFocBD5gMZwczks0Z

20 Civ. 5890 COMPLAINT JURY DEMAND UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK CONTRARIAN EMERGING MARKETS, L.P., GMO EMERGING COUNTRY DEBT FUND, GMO EMERGING COUNTRY DEBT INVESTMENT FUND PLC, and GMO EMERGING COUNTRY DEBT (UCITS) FUND, Individually and On Behalf of All Others Similarly Situated, Plaintiffs, -against- THE REPUBLIC OF ECUADOR, Defendant. Plaintiffs Contrarian Emerging Markets, L.P., GMO Emerging Country Debt Fund, GMO Emerging Country Debt Investment Fund plc, and GMO Emerging Country Debt (UCITS) Fund, by their attorneys, bring this federal securities class action on behalf of all tendering and non- tendering holders of Eligible Bonds (defined below) from the Republic of Ecuador between July 20, 2020 and July 31, 2020 (the “Class Period”). Plaintiffs allege the following: NATURE OF THE ACTION 1. This action is brought by Plaintiffs Contrarian Emerging Markets, L.P. (“Contrarian”) and GMO Emerging Country Debt Fund, GMO Emerging Country Debt Investment Fund plc, and GMO Emerging Country Debt (UCITS) Fund (collectively, the “GMO Funds”) against Defendant Republic of Ecuador (the “Republic” or “Ecuador”) for violations of the federal securities laws arising from a coercive exchange, or tender offer for $17.4 billion of the Republic’s outstanding bonds (the “Proposal”), based on materially false and misleading statements made by the Republic in a press release on July 27, 2020 (the “Press Release”) and in the underlying transaction documents.1 The tender offer expires on Friday, July 31, less than two weeks after it was commenced. The Republic’s false and misleading Press Release and statements are designed to deceive and mislead bondholders about the coercive nature of the tender and exchange offer, which deprives bondholders of key protections and subjects bondholders to harshly inequitable treatment should they decline to consent. If the tender offer goes forward based on this false and misleading information, the Court will be without power to unscramble the proverbial egg and restore Plaintiffs and other bondholders to their previous positions. 2. If the tender offer is permitted to go forward on the basis of the Republic’s false and misleading statements, Plaintiffs will be irreparably harmed. Plaintiffs and other bondholders will be forced to either consent to the unfavorable terms of the Proposal – which seeks to eviscerate the bargained-for protections that bondholders relied upon in deciding to invest in securities of the Republic – or will risk facing the significantly less favorable treatment that the Proposal imposes upon non-tendering bondholders. Courts have enjoined tender offers where, as here, false and misleading information has been disseminated by the issuer. Such relief is necessary here to prevent the Republic from implementing its coercive, one-sided Proposal upon investors through fraudulent and misleading statements. 3. Furthermore, a suit for money damages will be inadequate. As explained more fully below, the Republic is admittedly insolvent and has indicated in clear terms that it intends to oppose efforts to collect on its defaulted debt. If this coercive Proposal is not enjoined, Plaintiffs will be deprived of any opportunity to adequately recover from the Republic. 1 A true and correct copy of the Republic of Ecuador’s Press Release, dated July 27, 2020, is attached as Exhibit 1. 4. Plaintiffs, as part of a group of bondholders, objected in writing to Ecuador that the coercive tender offer violates the provisions of their bonds because it discriminates against non- tendering bondholders. The tender offer gives substantially greater consideration to tendering bondholders in violation of the plain language of the bonds which requires that existing bondholders receive “no less favorable treatment” in any exchange offer. Instead of receiving no- less-favorable treatment as required, non-tendering bondholders are punished on the back-end of the tender offer and are given inferior bonds which have less value and are denied any past due interest. Further, in the event that the tender is not entirely successful because the requisite consent thresholds for its acceptance for some of the bonds are not achieved, Ecuador has made clear that it will not make payment on the existing bonds. 5. The terms of the tender offer are set forth in an Invitation Memorandum dated July 20, 2020 (the “Invitation Memorandum”),2 in which Ecuador has solicited tenders from existing bondholders to approve the restructuring, but bondholders who tender receive far better terms than those who do not. Tendering bondholders will receive a combination of newly-issued bonds (the “New Securities”) representing significantly greater value – offering higher interest rates, shorter maturities, and better non-economic terms – than the existing bonds held by non-tendering bondholders that will be non-consensually modified under the Proposal (the “Modified Bonds”). Furthermore, if the tender is approved, all bondholders will see their accrued and unpaid interest eliminated, but only those who tender by July 31, 2020 will receive an additional bond for past due interest (a so-called “PDI Bond”) that gives them back 86% of their accrued and unpaid interest. By contrast, existing bondholders who decline to tender will get 0% – none – of their accrued and unpaid interest. Far from ensuring that existing bondholders receive terms that “are 2 A true and correct copy of the Invitation Memorandum, dated July 20, 2020, is attached as Exhibit 2. no less favorable” than those of the new bond offering, Ecuador has announced a plan that gives some bondholders – those who decline to tender or who tender late – terms that are dramatically worse. Bondholders have until Friday, July 31 to tender. Thus, the tender offer is not only an undeniable breach of the terms of the existing indentures, but coercive in the extreme. 6. Further, the Invitation Memorandum – which contains important disclosures relating to the tender offer – makes perfectly clear in the very first risk factor that in the event some or all of the tender is not successful the Republic does not intend to pay a penny to any non- tendering bondholders on those bonds. To further compound the pressure on non-tendering bondholders, the Invitation Memorandum makes clear that if one or more series of bonds are not tendered, the Republic will seek to make other changes to the bonds to further diminish their value and curtail the rights of bondholders. 7. Through a false and misleading press release, Ecuador has made material misrepresentations about, among other things, the lack of coercion in the tender offer and the transparency of the process. As explained more fully below, these statements are not only materially false and misleading, but contradict other statements made by Ecuador in the Invitation Memorandum. Nothing compelled Ecuador to misrepresent the process by which the tender offer was negotiated, except an apparent intent to deceive investors. Unless Ecuador is enjoined from soliciting, promoting, or implementing the tender offer, corrective disclosures ordered, and future violations of the federal securities laws enjoined, Plaintiffs and other bondholders will suffer irreparable harm. PARTIES 8. Plaintiff Contrarian Emerging Markets, L.P. is organized under the laws of the State of Delaware, with its registered office located at 251 Little Falls Drive, Wilmington, Delaware 19807, United States. Contrarian operates as an investment fund, which is managed by Contrarian Capital Management, LLC. Contrarian holds hundreds of millions of dollars of bonds issued by the Republic of Ecuador that are subject to the tender offer. Contrarian’s Ecuadorian bonds are held in the United States through Wells Fargo Securities, LLC. 9. Plaintiff GMO Emerging Country Debt Fund is organized under the laws of the Commonwealth of Massachusetts, with its registered office located at 40 Rowes Wharf, Boston, Massachusetts 02110. GMO Emerging Country Debt Fund operates as an investment fund, and is managed by Grantham, Mayo, Van Otterloo & Co. LLC. GMO Emerging Country Debt Fund holds more than $100,000,000 of bonds issued by the Republic of Ecuador that are subject to the tender offer. 10. Plaintiff GMO Emerging Country Debt Investment Fund plc is organized under the laws of Ireland, with its registered office located at 78 Sir John Rogerson’s Quay, Dublin 2, Ireland. GMO Emerging Country Debt Investment Fund plc operates as an investment fund, which is managed by Grantham, Mayo, Van Otterloo & Co. LLC. GMO Emerging Country Debt Investment Fund plc holds tens of millions of bonds issued by the Republic of Ecuador that are subject to the tender offer. 11. Plaintiff GMO Emerging Country Debt (UCITS) Fund is organized under the laws of Ireland, with its registered office located at 78 Sir John Rogerson’s Quay, Dublin 2, Ireland. GMO Emerging Country Debt (UCITS) Fund operates as an investment fund, and is managed by Grantham, Mayo, Van Otterloo & Co. LLC. GMO Emerging Country Debt (UCITS) Fund holds more than ten million dollars of bonds issued by the Republic of Ecuador that are subject to the tender offer. 12. Defendant Republic of Ecuador is a “foreign state” within the meaning of 28 U.S.C. § 1330 who, as explained below, has engaged in domestic transactions in its sovereign bonds where irrevocable liability will occur and title will transfer in the United States and therefore is subject to the United States federal securities laws, including those that make securities fraud unlawful. JURISDICTION AND VENUE 13. This Court has subject matter jurisdiction pursuant to Section 27 of the Exchange Act, 15 U.S.C. § 78aa, 28 U.S.C. § 1331 (federal question jurisdiction), and 28 U.S.C. § 1337 (commerce), as Plaintiffs allege violations of Sections 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. § 240.10b-5), as well as seek a declaratory judgment under 28 U.S.C. § 2201. 14. Venue is proper in this district pursuant to 28 U.S.C. § 1391, in that Defendant is subject to personal jurisdiction in this judicial district, and a substantial part of the events or omissions giving rise to Plaintiffs’ claims occurred in this judicial district. FACTUAL ALLEGATIONS Ecuador’s History of Defaults 15. Ecuador has a long and well known history of defaulting on its legal obligations. From 1826 to 2010, Ecuador has “defaulted nine times on foreign-currency bonds and numerous times to foreign commercial-bank creditors and others, such that the sovereign has been in default for at least 109 out of the last 184 years—sixty percent of the time from 1826 through 2010.”3 16. Ecuador also has a legacy of political instability and corruption scandals that has been a substantial contributing factor in its economic woes and persistent sovereign debt defaults. Between 1997 and 2007, Ecuador has had eight presidents, three of whom were overthrown during periods of political unrest. (Ex. 2, at 32.) 3 Arturo C. Porzecanski, When Bad Things Happen to Good Sovereign Debt Contracts: The Case of Ecuador, 73 Law and Contemporary Problems 251-271, 251 (Fall 2010), available at https://scholarship.law.duke.edu/lcp/vol73/iss4/17 (“Porzecanski, supra”). 17. Since the turn of the 21st century, Ecuador has had three separate sovereign debt crises within a span of roughly twenty years. Following each crisis, new bonds were issued with provisions designed to provide additional protections for investors and to avoid future crises. After each crisis, history repeated itself with the only material difference being that the dollar-size of the defaults grew ever larger. 18. In September of 1999, Ecuador defaulted on its interest payments for the so-called “Brady Bonds” (named after former U.S. Treasury Secretary Nicholas F. Brady). One month later in October 1999, Ecuador defaulted on a Eurobond interest payment.4 19. In 2008, the Republic again defaulted on $157 million in interest payments associated with approximately U.S. $3.2 billion of principal outstanding debt. (Ex. 2, at 30.) At the time, Ecuador’s then-President Rafael Correa declared that Ecuador’s foreign debt was “illegal” and “immoral.”5 20. Ecuador is also no stranger to abusive and hard-ball tactics to intimidate bondholders into accepting highly unfavorable restructurings of its sovereign bonds. During the Correa administration, it was reported that after Ecuador defaulted on its bonds, it bought back its bonds at a fraction of their face value in various ways including through “a modified Dutch auction with a base price of thirty cents on the dollar.” The disclosure document for the Dutch auction made plain that Ecuador had “no intention of resuming payments on these bonds” following with the expiration date of the auction.6 4 Congressional Research Service, “Ecuador’s Brady Bond Default: Background and Implications” (Feb. 1, 2000), available at https://www.everycrsreport.com/reports/RL30348.html. 5 See Forbes, “Boston Investment Company Sues Ecuador Over Bond Default” (Dec. 22, 2014), available at https://www.forbes.com/sites/nathanvardi/2014/12/22/boston-investment-company-sues-ecuador-over- bond-default/#75e809082e34. 6 See Porzecanski, supra, at 266. 21. During the period from 2014 to 2019, Ecuador issued billions of dollars of bonds and induced investors to purchase them by making a simple contractual promise in the indentures: if there were any subsequent restructuring, the holders of the bonds who do not tender would receive terms that “are no less favorable” than the terms of any new bond offering. A variation of this so-called “No Less Favorable Treatment Provision” is contained in each bond issue that is subject to the $17.4 billion coercive tender offer. 22. Now in 2020, Ecuador stands again on the precipice of default, this time on $17.4 billion of existing bonds. In recent months, Ecuador has entered a state of serious financial distress. This is due in large part to the severe impact of the COVID-19 pandemic on Ecuador’s economy and the global decrease in demand for crude oil, as well as downturns in Ecuador’s tourism, transportation, and shipping sectors. (See Ex. 2 at 28-29.) To combat this crisis, Ecuador has requested at least U.S. $2.9 billion in external financing from the International Monetary Fund, the World Bank, the International Development Bank, and the Corporation Andina de Fomento (the Development Bank of Latin America), and has received at least U.S. $1.83 billion to date. (Id. at 29.) The Republic has also imposed severe austerity measures, cutting its public expenses by U.S. $1.4 billion, with plans to cut an additional $4 billion. (Id.) 23. On or about March 23, 2020, Ecuador’s finance minister Richard Martinez announced that Ecuador would delay approximately $200 million in coupon payments on three series of bonds due in 2022, 2025, and 2030.7 7 Reuters, “UPDATE 3 – Ecuador to delay bond interest payment to fund coronavirus effort” (Mar. 23, 2020), available at https://www.reuters.com/article/health-coronavirus-ecuador-finance- idAFL1N2BH004. 24. In response to Mr. Martinez’s announcement, the bondholders and Ecuador were able to agree to a grace period deferring certain interest payments of approximately $811 million until August 15, 2020, pursuant to a consent solicitation. Ecuador’s Refusal to Negotiate in Good Faith 25. After Ecuador and the bondholders agreed to a grace period on Ecuador’s interest payments, a Steering Committee (the “Committee”) for a group of bondholders of which Plaintiffs are members,8 attempted to negotiate with the Republic regarding a potential debt restructuring, but the Republic refused to engage with the Committee. The Committee proposed a 30-day extension of the grace period to reach a resolution, which was rejected by Ecuador. 26. The Republic instead decided to pursue discussions with another Ad Hoc Group of bondholders (the “Ad Hoc Group”) and to ignore the Steering Committee. The Republic enlisted the support of the Ad Hoc Group for its coercive tender offer and then disclosed that to the market along with the percentage of shares held by the Ad Hoc Group members in order to put further pressure on undecided or non-tendering bondholders. 27. Rather than re-engage with the Steering Committee, as explained more fully below, Ecuador has launched a coercive tender offer to force Plaintiffs and other creditors to accept unfair terms that violate the underlying bonds the tender offer seeks to replace rather than face the draconian consequences of receiving less favorable treatment should the tender succeed or, if the tender were to fail, to being placed on the proverbial island with now worthless bonds that Ecuador does not intend to make payments on. 8 Contrarian is managed by Contrarian Capital Management LLC. The GMO Funds are managed by Grantham, Mayo, Van Otterloo & Co. LLC. Contrarian and the GMO Funds were founding members of the Steering Committee for a group of more than 25 global investors. This group owns bonds issued by Ecuador across the maturity spectrum with holdings in excess of 25% of all series that are subject to the Proposal, and more than 35% in certain series of bonds. The Republic of Ecuador’s Consent Solicitation and Invitation For The Tender Offer 28. On July 20, 2020, the Republic of Ecuador commenced a coercive tender offer by which it has proposed to modify the terms of approximately U.S. $17.4 billion of bonds. The Republic announced the tender offer in a July 20, 2020 press release, in which Ecuador falsely stated that “throughout its debt restructuring process, Ecuador engaged in good faith with its bondholders, providing information with transparency and seeking to adjust the terms of its outstanding debt while respecting inter-creditor equity.”9 In fact, as set forth above, the Republic had refused to engage with the Steering Committee and was anything but transparent. 29. The bonds subject to the tender offer Proposal are broadly categorized into two groups of so-called Eligible Bonds (the “Eligible Bonds”) according to the Invitation Memorandum: (i) the Aggregated Eligible Bonds, which comprise all series of debt securities other than the 7.95% Notes due 2024 (the “2024 Bond”), and (ii) the 2024 Bond. The Eligible Bonds are set forth in the following two tables: The Aggregated Eligible Bonds Title of Security ISIN / Common Code Outstanding Issue Date Amount U.S.$2,000,000,000 July 28, 2016 XS1458516967; XS1458514673 / 145851696; 145851467 10.750% Notes due 2022 U.S.$1,000,000,000 June 2, 2017 8.750% Notes due 2023 XS1626768656; XS1626768730 / 162676865; 162676873 U.S.$600,000,000 September 27, 2019 7.875% Notes due 2025 XS2058848826; XS2058845210 / 205884882; 205884521 9 A true and correct copy of the Republic of Ecuador’s press release, dated July 20, 2020 is attached as Exhibit 3. Title of Security ISIN / Common Code Outstanding Issue Date Amount U.S.$1,750,000,000 December 13, 2016 9.650% Notes due 2026 XS1535072109; XS1535071986 / 153507210; 153507198 U.S.$1,000,000,000 May 30, 2017 9.625% Notes due 2027 XS1626529157; XS1626530320 / 162652915; 162653032 U.S.$2,500,000,000 October 23, 2017 8.875% Notes due 2027 XS1707041429; XS1707041262 / 170704142; 170704126 U.S.$3,000,000,000 January 23, 2018 7.875% Notes due 2028 XS1755432363; XS1755429732 / 175543236; 175542973 U.S.$2,125,000,000 January 31, 2019 10.750% Notes due 2029 XS1929377015; XS1929376710 / 192937701; 192937671 U.S.$1,400,000,000 September 27, 2019 9.500% Notes due 2030 XS2058866307; XS2058864948 / 205886630; 205886494 2024 Bond Title of Security ISIN / Common Code Outstanding Issue Date Amount U.S.$2,000,000,000 June 20, 2014 7.95 % Notes due 2024 XS1080331181; XS1080330704 / 108033118; 108033070 The No Less Favorable Treatment Provisions of the Eligible Bonds 30. The Eligible Bonds that are the subject of the tender offer each contain express clauses that forbid the discriminatory tender offer that Ecuador is soliciting. 31. In or around 2014, the Republic sought to stabilize its debt market. In response to concerns about the creditworthiness of Ecuador and to prevent Ecuador from imposing less favorable economic terms on existing bondholders during a restructuring, the Republic included a “No Less Favorable Treatment Provision” in each series of bonds that were issued between 2014 and 2019, and are the subject of the Proposal. Each of these bonds – representing $17.4 billion in total offerings – contains identical No Less Favorable Treatment Provisions that apply in the event that the Republic should seek to restructure its debt yet again by exchanging existing bonds for new bonds of the Republic. The No Less Favorable Treatment Provision of the applicable Indentures states: If any Reserved Matter Modification is sought in the context of a simultaneous offer to exchange the debt securities of one or more series for new debt instruments of Ecuador or any other person, Ecuador shall ensure that the relevant provisions of the applicable Series of Notes, as amended by such Modification, are no less favorable to the holders of such Series of Notes than the provisions of the new instrument being offered in the exchange, or if more than one debt instrument is offered, no less favorable than the new debt instrument issued having the largest aggregate principal amount. (emphasis added) (See, e.g., Trust Indenture for 7.950% Notes Due 202410 (the “Indenture for 2024 Notes”), § 7.3.)11 32. The above provision applies to a tender situation whereby the Republic seeks to modify existing debt of non-participating holders – as permitted under the indenture’s modification provisions (the “Collective Action Clauses”) – and exists to protect non-participating investors from coercion. In such a situation, a tendering bondholder would receive a new bond via the 10 A true and correct copy of the Trust Indenture for 7.950% Notes Due 2024, dated June 20, 2014, is attached as Exhibit 4. 11 Reserved Matter Modifications include, among other things, modifications that would change the due date for the payment of principal or interest under the Notes; reduce the amount of principal amount of the Notes; and reduce the requisite consent threshold necessary to modify the terms and conditions of the debt securities or the indentures. Non-Reserved Matter modifications are any modifications other than those constituting a Reserved Matter. (See, e.g., Ex. 4, § 1.1.) tender, and a non-tendering investor’s existing debt would be non-consensually modified. The No Less Favorable Treatment Provision establishes limits on that modification. Specifically, even though the non-tendering bondholder did not participate in the tender or vote in favor of the modifications that amended its debt, those modifications cannot leave the non-tendering bondholder with inferior treatment than what the tendering bondholder received. If the tendering bondholder agreed, for example, to reduce cash interest by five percent and extend maturities by ten years, the non-tendering bondholder cannot be forced to reduce cash interest or extend maturities to a greater extent than that five percent and ten years. In short, the non-tendering bondholder cannot be punished for exercising its right to vote against a restructuring proposal. The Republic of Ecuador’s Tender Offer 33. Under the terms of the tender offer, the Republic seeks to solicit the consent of eligible holders to amend each series of Eligible Bonds and their respective indentures (the “Consent Solicitation”). The Republic also proposes to exchange the modified Eligible Bonds (the “Modified Bonds”) for a package of the New Securities, bonds maturing in 2030, 2035, and 2040, to be issued by the Republic under a new master indenture. Plaintiffs are the holders of several hundred million dollars of face value of the Eligible Bonds. 34. Although the Eligible Bonds – as well as the new bonds the Republic intends to issue under the tender – are listed on the Luxembourg Stock Exchange, the transactions with Plaintiffs contemplated by the tender offer involve domestic securities transactions under the United States federal securities laws because the transfer of title and irrevocable liability occur in the United States. 35. As set forth in the Invitation Memorandum, irrevocable liability is accomplished through the sending of consents and tender orders which, for each of the Plaintiffs, are sent from the United States. Further, the Invitation Memorandum makes clear that once a consent and tender is sent, it is irrevocable and binding and cannot be revoked. (Ex. 2, at 43 (“Consents and Tender Orders may not be revoked or withdrawn at any time, except under certain limited circumstances where we make a change (adverse to the economic interests of Eligible Holders) to, or waive a material condition of, the Invitation, or otherwise are required to do so by law, in each case as determined by us [the Republic] in our sole discretion.”). Thus, the terms of the Invitation Memorandum must be agreed to by any beneficial owners of Eligible Bonds, such as Plaintiffs, as a condition of the tender. (Id. at 57.) Accordingly, irrevocable liability for the bondholder attaches when the consent and tender order is sent. 36. Holders of Eligible Bonds, such as Plaintiffs, who hold their bonds through a “financial institution or intermediary” are instructed in the Invitation Memorandum to have their financial institution or intermediary process the Consent and Tender Order. If the financial institution or intermediary is based in the United States, as is the case for Plaintiff Contrarian, that is an additional basis for irrevocable liability and consent to attach in the United States. 37. Further, under the terms of the Invitation Memorandum, Global Bondholder Services Corporation (“GBSC”) is the information, tabulation, and exchange agent for tender offer. GBSC has its offices in New York, New York, (Ex. 2, at vi), and is “responsible for collecting Consent and Tender Orders and certifying to the Trustee the aggregate principal amount of the Eligible Bonds covered by Consent and Tender Orders received.” (Id. at 49.) Accordingly, consent and tender orders are processed in New York. 38. Further, the Republic’s irrevocable liability for the tender and consents also occurs in New York when it accepts the consent and tender order. As explained in the Invitation Memorandum, “[a]ll questions regarding the validity, form and eligibility of any Consent and Tender Order will be determined by us [the Republic] in our sole discretion, which determination will be final and binding. And Ecuador “reserves the absolute right to reject (i) any and all Consent and Tender Orders that are not in proper form and (ii) any and all Consent and Tender Orders for which any corresponding agreement by us to exchange would, in the opinion of our counsel, be unlawful.” (Id. at 55.) Accordingly, likewise irrevocable liability for the consents and tenders for the Republic occurs in the United States when – in its sole discretion – it accepts consents and tenders and they are tabulated. The Minimum Participation and Requisite Consent Thresholds 39. The Invitation Memorandum establishes a “Minimum Participation Condition” whereby the Proposal will only be effective if the Republic receives the consent of holders prior to July 31, 2020 at 5:00 p.m. (Central European Time) that will result in at least 80% of the aggregate principal amount outstanding of the Aggregated Eligible Bonds being modified pursuant to the Proposed Modifications or otherwise exchanged for New Securities. This is a substantially lower threshold than a minimum condition requiring consents and tenders of 80% of the aggregate principal amount outstanding of the Aggregated Eligible Bonds, because the Minimum Participation Condition allows for the inclusions of all series in which the bonds’ Collective Action Clauses are triggered. The Minimum Participation Condition cannot be waived by the Republic. 40. Under the Collective Action Clauses in the bonds, the Proposed Modifications will become effective as to all holders of the Aggregated Eligible Bonds if the Republic receives the consent of holders of (i) more than 50% of the aggregate principal amount outstanding of each series of Aggregated Eligible Bonds, and (ii) not less than 66 ⅔% of the aggregate principal amount outstanding of all series of Aggregated Eligible Bonds. With respect to the 2024 Bonds, the Proposed Modifications relating to Reserved Matters will be effective as to all bondholders if the Republic receives the consent of holders of 75% of the aggregate principal amount outstanding in that series, whereas a Non-Reserved Matter modification requires the consent of holders of 66 ⅔% of the aggregate principal amount outstanding in that series. The Proposal Violates The No Less Favorable Treatment Provisions Of The Existing Bonds 41. The Invitation Memorandum establishes a deadline of July 31, 2020 – less than two weeks after the Proposal was commenced – for holders of Eligible Bonds to deliver consent and tender orders (the “Consent Deadline”). Under the terms of the Proposal, Eligible Holders who validly consent and tender prior to the Consent Deadline will receive a combination of the New Securities, newly-issued bonds with maturity dates in 2030 (the “New 2030 Bond”), 2035 (the “New 2035 Bond”), and 2040 (the “New 2040 Bond”). In addition, tendering bondholders will receive the New Past Due Interest Bond (the “New PDI 2030 Bond”), which represents 86% of the accrued and unpaid interest on the Eligible Bonds. Eligible Holders who do not consent and tender their securities prior to the Consent Deadline will not receive the New PDI 2030 Bond. 42. In consenting to the tender offer, Eligible Holders are required to irrevocably waive any accrued and unpaid interest through and excluding August 20, 2020 (the “Settlement Date”). According to the Invitation Memorandum, Eligible Holders are not entitled to receive any payments in respect of accrued and unpaid interest on the Eligible Bonds, other than the New PDI 2030 Bonds. Therefore, the only way that Eligible Holders may receive any amount of payment in respect of accrued and unpaid interest they are due under the Eligible Bonds is to receive the New PDI 2030 Bonds by consenting and tendering per the terms of the Proposal prior to the July 31, 2020 Consent Deadline. 43. Second, and ultimately more important from an economic perspective, if the tender ultimately is approved, existing bondholders will not all receive the same kinds – or value – of new bonds in return for their current holdings. On the contrary, existing bondholders who tender will be able to exchange their current bonds for a mix of new bonds that are significantly more valuable than the value that non-tendering bondholders will receive for their current bonds.12 44. Bondholders who tender will receive, in exchange for their current bonds, a combination of new bonds that mature in 2030, 2035, and 2040 (New 2030 Bonds, New 2035 Bonds, and New 2040 Bonds, respectively). The precise breakdown of the new bonds they will receive varies depending on the year in which the existing bond they currently hold comes due, but for every bond series, they will tender 100% of their bonds and receive 49.53% of New 2035 Bonds in return (and a combination of other bonds that, along with the New 2035 Bonds, total 91.13%). Chart A sets forth the breakdown of the new bonds tendering shareholders will receive. New 2030 Bonds, New 2035 Bonds, and New 2040 Bonds also carry different interest rates, as shown in Chart B. Currently, New 2035 Bonds have the largest aggregate principal amount. CHART A: New Bond Mix CURRENT 2030 2035 2040 ECUA 2022 30.00% 49.53% 11.60% ECUA 2023 22.90% 49.53% 18.70% ECUA 2024 30.00% 49.53% 11.60% ECUA 2025 18.90% 49.53% 22.70% ECUA 2026 18.90% 49.53% 22.70% ECUA 2027 18.90% 49.53% 22.70% ECUA 2027 18.90% 49.53% 22.70% ECUA 2028 18.90% 49.53% 22.70% ECUA 2029 18.90% 49.53% 22.70% ECUA 2030 18.90% 49.53% 22.70% 12 Any argument that a difference in interest rate or maturity here would not constitute different treatment conflicts with the basic terms and definitions of many of the indentures at issue. Specifically, the definitions of “Uniformly Applicable” and “same terms” include the “same new instrument,” “the same offer on past due interest” only exclude “differences as between different series of affected debt securities which are necessary having regard to the currency of denomination.” (See, e.g., Offering Circular for 10.75% Notes due 2029 at 210.) A true and correct copy of the Offering Circular for 10.75% Notes due 2029, dated June 10, 2019, is attached as Exhibit 5. CHART B: New Bond Interest Rates New Bonds Interest Rate Accrual Maturity Principal Repayment New 2030 Bonds July 31, 2030 Principal on the New 2030 Bonds will be repaid in U.S. dollars in ten equal semi- annual installments starting on January 31, 2026 through maturity. 1. From and including the Settlement Date to but excluding July 31, 2021: 0.500%; 2. From and including July 31, 2021 to but excluding July 31, 2022: 5.000%; 3. From and including July 31, 2022 to but excluding July 31, 2023: 5.500%; 4. From and including July 31, 2023 to but excluding July 31, 2024: 6.000%; 5. From and including July 31, 2024 to but excluding July 31, 2030: 6.900%. New 2035 Bonds July 31, 2035 Principal on the New 2035 Bonds will be repaid in U.S. dollars in ten equal semi- annual installments starting on January 31, 2031 through maturity. 1. From and including the Settlement Date to but excluding July 31, 2021: 0.500%; 2. From and including July 31, 2021 to but excluding July 31, 2022: 1.000%; 3. From and including July 31, 2022 to but excluding July 31, 2023: 2.500%; 4. From and including July 31, 2023 to but excluding July 31, 2024: 3.500%; 5. From and including July 31, 2024 to but excluding July 31, 2025: 5.500%; 6. From and including July 31, 2025 to but excluding July 31, 2035: 6.900%. New 2040 Bonds July 31, 2040 Principal on the New 2040 Bonds will be repaid in U.S. dollars in ten equal semi- annual installments starting on January 31, 2036 through maturity. 1. From and including the Settlement Date to but excluding July 31, 2021: 0.500%; 2. From and including July 31, 2021 to but excluding July 31, 2022: 0.500%; 3. From and including July 31, 2022 to but excluding July 31, 2023: 1.500%; 4. From and including July 31, 2023 to but excluding July 31, 2024: 2.500%; 5. From and including July 31, 2024 to but excluding July 31, 2026: 5.000%; 6. From and including July 31, 2026 to but excluding July 31, 2027: 5.500%. New Bonds Interest Rate Accrual Maturity Principal Repayment 7. From and including July 31, 2027 to but excluding July 31, 2028: 6.000%. 8. From and including July 31, 2028 to but excluding July 31, 2029: 6.500%. 9. From and including July 31, 2029 to but excluding July 31, 2040: 6.900%. New PDI 2030 Bonds 0% July 31, 2030 Principal on the New PDI 2030 Bonds will be repaid in U.S. dollars in ten equal semi-annual installments starting on January 31, 2026 through maturity. 45. By contrast, non-tendering bondholders will receive much less value. If the tender is approved, the bonds currently held by non-tendering bondholders will be modified such that their economic terms mirror those of the New 2040 Bonds. This is a critical difference. Bonds that mature in earlier years have a greater net present value than bonds that mature in later years. As a result, given the differences in the maturity dates of the bonds they receive, as well as the interest rates associated with those bonds, bondholders who tender will receive significantly more value than bondholders who do not. In present value terms, tendering bondholders will receive 58.3 cents on the dollar, whereas bondholders who do not tender will receive only 47.4 cents on the dollar. Factoring out the value associated with the New PDI 2030 Bond that tendering bondholders receive (which is equivalent to the present value of roughly 2.3 cents on the dollar), tendering bondholders will receive a present value of 8.6 cents less on the dollar than bondholders who do not tender. In total, this amounts to approximately a 20% penalty for bondholders who do not tender. This differential treatment constitutes another flagrant violation of the No Less Favorable Treatment Provision.13 13 This valuation reflects the present value associated with discounting future cash flows back to July 31, 2020 using a 10% discount rate, and assuming payments are made on the 1st of each month they are due. 46. The modifications set forth in the Invitation Memorandum also seek to remove certain creditor protections from the original Eligible Bonds, including reduction of the threshold needed to give effect to a Non-Reserved Matter Modification under applicable indentures from at least 66⅔% to more than 50% of the aggregate principal amount of the applicable Series of Eligible Bonds; elimination of Section 7.4 of the Indenture for the 2024 Bonds and Section 7.6 of the Indenture for the Aggregated Eligible Bonds, which provide for limitations on reopening and new issuance of notes; exclusion from the events of default cross defaults arising from the entering or issuance of judgments and arbitral awards relating to (1) any Eligible Bonds that are not modified by the Proposed Modifications, (2) any Modified Eligible Bonds, (3) any New Securities, (4) the 7.25% Social Housing Notes due 2035 (the “Social Housing Notes”) issued by the Republic, and (5) the 4.625% Notes due 2021 (“PAM Notes”) issued by La Empresa Pública de Exploración, and; elimination of the requirement that events of default (other than the non-payment of principal that became due solely as a result of such acceleration) have been cured or waived by the holders of not less than a majority of the principal amount of the outstanding notes or remedied. Crucially, the Proposal also seeks to eliminate the No Less Favorable Treatment Provision, which limits Reserved Matter Modifications in the context of exchange offers and issuances of new notes through consent solicitations. Ecuador Has Stated Unequivocally That It Does Not Intend To Pay Non-Tendering Bondholders 47. Ecuador has stated unequivocally in its Invitation Memorandum relating to the Proposal that in the event a tender for one or more series of bonds is unsuccessful, it does not intend to pay anything to non-tendering bondholders. The Invitation Memorandum lists as its first risk factor the “Risks of Not Participating in the Invitation.” In plain, clear, and simple language, The present value of future cash flows was then divided by the principal amount outstanding on existing bonds to calculate the % of par or face value. this risk factor lays bare the true intent of the Republic: “The Eligible Bonds may enter into default. If the Eligible Bonds are not tendered in the Invitation and do in fact enter into default, they may remain in default indefinitely and, if you elect to litigate, the Republic intends to oppose such attempts to collect on its defaulted debt.” (Ex. 2, at 20.) In plain language, the coercive nature of the tender was revealed. The Committee Informs The Republic Of Its Objections To The Coercive Tender Offer 48. On July 22, 2020, counsel for the Committee wrote to counsel for the Republic explaining the Committee’s objections to the tender offer, its violation of the No Less Favorable Treatment Provision, its coercive nature, and the misrepresentations about the transparency of the process.14 49. On July 24, 2020, counsel for the Republic responded to the Committee’s letter explaining Ecuador’s position, and disputing the merits of the Committee’s position.15 Ecuador’s July 27, 2020 Press Release 50. On July 27, 2020, Ecuador, in order to put further pressure on undecided and non- tendering bondholders, issued a false and misleading Press Release intending to promote the tender offer that flatly denied its patently obvious coercive nature. Ecuador’s misrepresentations about the coercive nature of the tender offer were highly public and are material to investors. As explained below, the Press Release made numerous false and misleading statements about the tender offer that also contradicted statements made by the Republic in its Invitation Memorandum. 14 A true and correct copy of a letter from C. Clark to E. Koster, dated July 22, 2020 is attached as Exhibit 6. 15 A true and correct copy of a letter from D. Tracey to C. Clark dated July 24, 2020 is attached as Exhibit 7. 51. The Press Release falsely stated that “The Republic’s focus is on . . . seeking a fair outcome for the bondholders through a process that is open to all bondholders and which fundamentally applies principles of inter-creditor equity. The Republic is committed to a . . . transparent process.” (Ex. 1.) 52. In truth and in fact, for the reasons set forth above, the Republic was not focused on a “fair outcome for the bondholders” and “principles of inter-creditor equity.” Instead, as the Republic well knew, the Republic was in reality treating non-tendering bondholders unfairly by giving them substantially less consideration than their tendering counterparts in violation of the No Less Favorable Treatment Provisions in the bonds. Indeed, the provisions of the Invitation Memorandum provide ample evidence of that unfairness. 53. The Press Release falsely stated that “Ecuador is acting within the four corners of our indenture, including modification provisions available upon obtaining the requisite consent from bondholders.” (Id.) 54. Ecuador has wrongly claimed that the tender offer is proper and compliant with the indentures governing its outstanding bonds. As explained above and as Ecuador well knew, even a cursory review of the bondholders’ indentures clearly reveals the Proposal would be an intentional breach of the No Less Favorable Treatment Provisions in those agreements. 55. The Press Release made false claims about the complete lack of coercion of the tender. Specifically, the Press Release stated that “The [Steering Committee] asserted that the Republic negotiated with them in bad faith and characterized the process as ‘coercive.’ Nothing could be further from the truth.” (Id.) 56. As explained above, the consent and tender offer is, in fact, plainly coercive. As the Republic well knew, by its actions, it was seeking to coerce non-tendering bondholders with the threat of unequal and much less favorable consideration. Further, the Republic has threatened to not make any further payments on the Eligible Bonds – should all or part of the tender be blocked – which could not be anything but coercive. The fact that the Republic seeks to modify the No Less Favorable Treatment Provision pursuant to this transaction – a provision that seeks to prohibit coercion – stands as direct evidence of the coercive nature of the offer. Finally, the entire process and time-line of the tender offer – a ten-day period for bondholders to take-it or leave-it or else – is by its very nature highly coercive. To even suggest otherwise – let alone deny it emphatically as the Republic did in the Press Release – is not only false, but outrageous. 57. The Press Release falsely stated that “During the month of June, the Republic formally approached the Minority Committee and attempted to engage in confidential negotiations, but the advisor to the Minority Committee spent two weeks negotiating the wording of Non-Disclosure Agreements . . . .” (Id.) 58. In truth and in fact, the Committee attempted to engage with the Republic, but was rebuffed. As the Republic well knew, the Committee did not spend two weeks negotiating non- disclosure agreements. What in reality occurred, and is a material fact omitted by the Republic, is that the Republic and its advisors explored and agreed to other terms with the Ad Hoc Group whereby the Ad Hoc Group and its members would support the coercive tender offer. Whether the Ad Hoc Group or its members received any additional consideration for their support is not 59. The Press Release also falsely stated that the Republic was not seeking “to compel the consent of the investor” and made misleading statements that “[t]he payment of a consent fee in the form of the PDI 2030 Bonds provides a financial incentive for holder to provide their consent to the amendments and accept the terms of the restructuring. There is nothing improper or unusual in the payment of a consent fee.” (Id.) 60. In truth and in fact, as the Republic well knew, the “consent fee” is not a consent fee; but rather it is a disparate and discriminatory payment of past due interest to tendering bondholders that the Republic refuses to provide on equal terms to non-tendering bondholders. Further, the Press Release is misleading for the added reason that it omits any reference to the No Less Favorable Treatment Provisions which are being violated by the Republic. 61. The Press Release also falsely and misleadingly disparages the arguments advanced by the Committee stating, irresponsibly and without any support, that the Committee has “no basis to argue that they are being treated in an unequal manner.” (Id.) 62. In truth and in fact, as explained above, the Republic well knew that the tender offer violates the No Less Favorable Treatment Provision, as explained by counsel for the Committee in its July 22 letter. Far from there being “no basis,” the Committee and Plaintiffs have ample basis to assert they are being treated in an unequal manner. 63. Further, the Press Release undermines the statements made by the Republic in its Invitation Memorandum and is contrary to the express risk factors stated therein including the following: “Certain creditors of the Republic may attempt to challenge the progress or consummation of the Invitation or may attempt to attach assets in connection with the Invitation, which may result in the delay or termination of the Invitation if litigation frustrates its purpose.” 64. In fact, rather than disparage positions of the Committee as having “no basis,” the Invitation Memorandum acknowledges the potential risk of litigation and the uncertainty of outcomes, and states in more measured and balanced terms: “The Republic may be subject to efforts by certain creditors to enjoin or otherwise prevent the consummation of the Invitation or to attach assets in connection with the Invitation, and the Republic may delay or terminate the Invitation if litigation frustrates its purpose. While the Republic intends to vigorously oppose any such litigation efforts, the Republic cannot assure you of its success.” (Ex. 2, at 24.) 65. Moreover, the Invitation Memorandum also acknowledged that recent federal court decisions cast some uncertainty with regard to the tender offer: “Certain federal court decisions in the United States create uncertainty regarding the meaning of ranking provisions and could potentially reduce or hinder the ability of sovereign issuers to restructure their public sector debt.” (Id. at 26.) Additional Allegations Supporting Scienter 66. As demonstrated above, at all relevant times, Defendant knew but failed to disclose and/or recklessly disregarded that the statements referenced supra were materially false and/or misleading and/or omitted material information that Defendant knew or recklessly disregarded was necessary to make such statements not materially false and/or misleading, for the reasons stated supra. Such statements were also known by Defendant to be materially false and/or misleading at the time they were made, for the reasons outlined above, and for the following reasons, among Economic Loss 67. Here, there can be no doubt that the Defendant’s fraud already has caused loss, and will cause loss, to the Plaintiffs and the class of bondholders they represent. As to the former, bondholders who have tendered because of the Defendant’s fraud already have incurred damages, in the form of reduced principal, reduced interest, and bonds otherwise devalued because of fraud. As to the latter, bondholders who will tender, as Plaintiffs will absent judicial intervention, will incur damages, in the form of reduced principal, reduced interest, and bonds otherwise devalued because of fraud. 68. Because Plaintiffs represent the class of bondholders who have been fraudulently induced to tender, as well as those who will be coerced into tendering absent judicial intervention, Plaintiffs will succeed in proving loss causation. See also In re Parmalat Sec. Litig., 376 F. Supp. 2d 472, 510 (S.D.N.Y. 2005) (stating that “the loss causation requirement will be satisfied if [Defendants’ deceptive or manipulative] conduct had the effect of concealing the circumstances that bore on the ultimate loss.”). Plaintiffs will therefore succeed on the merits of the loss causation element. Class Action Allegations 69. Plaintiffs bring this action as a Class Action pursuant to Federal Rule of Civil Procedure 23(a) and (b)(1), (2), and (3) on behalf of all members of the proposed class of similarly situated bondholders. This action satisfies the numerosity, commonality, typicality, adequacy, predominance, and superiority requirements of the provisions. 70. The Class consists of all holders of Eligible Bonds and their predecessors, heirs, successors, assigns, or representatives who tendered or refused to tender Eligible Bonds as a part of the Proposal (the “Class”). 71. Excluded from the Class is Defendant, any affiliates of Defendant, or any entity in which any excluded person or entity has a controlling interest, and the legal representatives, heirs, successors, and assigns of any excluded person or entity. 72. The members of the Class are so numerous that joinder of all members is impracticable. While the exact number of Class members is unknown to Plaintiffs at this time and can only be ascertained through appropriate discovery, Plaintiffs believe that there are hundreds of thousands of members in the proposed Class. Record owners and the other members of the Class may be identified from records maintained by the Republic and/or its transfer agents and may be notified of the pendency of this action by mail, using a form of notice similar to that customarily used in securities class actions. 73. Plaintiffs’ claims are typical of the claims of the other members of the Class as all members of the Class are similarly affected by Defendant’s wrongful conduct in violation of federal law that is complained of herein. 74. Plaintiffs will fairly and adequately protect the interests of the other members of the Class, and has retained counsel competent and experienced in class and securities litigation. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are: a. Whether the federal securities laws were violated by the Republic’s acts and omissions as alleged herein; b. Whether the Republic participated in and pursued the common course of conduct complained of herein; c. Whether documents, press releases, and other statements disseminated to the Republic’s bondholders misrepresented material facts about the Consent Solicitation; and d. The extent to which the members of the Class will be damaged and the proper measure of damages. 75. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation makes it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. Applicability of the Presumption of Reliance 76. Through its material false and misleading statements to bondholders at large, Defendant has committed a fraud on the market. In precisely this context, the Supreme Court has recognized that bondholders may satisfy the element of detrimental reliance through the fraud-on- the-market presumption. See Basic Inc. v. Levinson, 485 U.S. 224, 231 (1988). Plaintiffs and the Class are entitled to a presumption of reliance and a fraud-on-the-market presumption because during the Class Period, the market for Eligible Bonds was an efficient market for the following reasons, among others: a. The Eligible Bonds met the requirements for listing, and were listed and actively traded on the Luxembourg Stock Exchange, a highly efficient market; b. The Eligible Bonds were followed by securities analysts employed by major brokerage firms who wrote reports which were distributed to the sales force and certain customers of their respective brokerage firms. Each of these reports was publicly available and entered the public marketplace; and c. The Republic issued press releases which were carried by national and international newswires. Each of these releases was publicly available and entered the public marketplace. 77. As a result of the foregoing, the market for Eligible Bonds promptly digested current information regarding the Eligible Bonds from all publicly available sources and reflected such information in the price of the Eligible Bonds. Accordingly, Plaintiffs and other members of the Class relied, and are entitled to have relied, upon the integrity of the market for the Eligible Bonds, and are entitled to a presumption of reliance on Defendant’s’ materially false and misleading statements and omissions during the Class Period. 78. Plaintiffs and the Class are also entitled to a presumption of reliance under Affiliated Ute Citizens v. United States, 406 U.S. 128 (1972), because the claims asserted herein against Defendant are predicated upon omissions of material fact for which there was a duty to disclose. Defendant had no duty to make the statements contained in the July 27, 2020 Press Release. But when it chose to speak, it undertook a duty to speak truthfully and absent material omission. Because Defendant chose to speak about the terms and process related to its tender offer, and did so in a false and misleading way, it also had a duty to correct its misstatements and disclose any additional facts necessary to make its statements not misleading. No Safe Harbor 79. The statutory safe harbor provided for forward-looking statements under certain circumstances does not apply to any of the allegedly false statements pleaded in this Complaint. Many of the specific statements pleaded herein were not identified as “forward-looking statements” when made. To the extent there were any forward-looking statements, there were no meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the purportedly forward-looking statements. Alternatively, to the extent that the statutory safe harbor does apply to any forward-looking statements pleaded herein, Defendant is liable for those false forward-looking statements because at the time each of those forward-looking statements was made, the particular speaker knew that the particular forward- looking statement was false and/or the forward-looking statement was authorized and/or approved by an officer of Ecuador who knew that those statements were false when made. FIRST CLAIM FOR RELIEF For Violation of Section 10(b) of the Exchange Act and Rule 10b-5(b) 80. Plaintiffs repeat, reallege, and incorporate by reference the allegations in paragraphs 1 through 79 as set forth herein. 81. Defendant made false and/or misleading statements of material fact and/or omitted material facts necessary to make the statements made not misleading with respect to the Proposal, as set forth above. 82. Plaintiffs will suffer irreparable injury from Defendant’s violations of the federal securities laws described herein, and unless Defendant is enjoined from soliciting, promoting, or implementing the tender offer, corrective disclosures ordered, and future violations of the federal securities laws enjoined, Plaintiffs and other bondholders will suffer irreparable harm. 83. By reason of the foregoing, Defendant has violated Section 10(b) of the Exchange Act and Rule 10b-5(b). 84. As a result of the false and/or misleading statements and/or omissions of material facts in the Press Release (and the anticipated false and/or misleading statements and/or omissions of material facts in future press releases and public filings in connection with the Proposal), injunctive relief is appropriate. 85. Further, based on the statements in the Press Release that Defendant intends to consummate the tender offer, unless the Court specifically enjoins Defendant from doing so, Plaintiffs will suffer irreparable harm, and will have no choice but to cave to the Republic’s coercive demands and tender their Eligible Bonds under duress on July 31, 2020. 86. As a result of Defendant’s violations of the federal securities laws described herein, Plaintiffs will suffer money damages and other tangible harm unless Defendant is enjoined from soliciting, promoting, or implementing the tender offer; enjoined from future violations of the federal securities laws; and ordered to issue corrective disclosures. 87. Sufficiently serious questions going to the merits of Plaintiffs’ claims make them fair ground for litigation. 88. The balance of the equities tips toward the issuance of an injunction, and is in the interest of the public. WHEREFORE, Plaintiffs respectfully request that the Court issue a judgment against the Republic of Ecuador as follows: a. preliminarily enjoining The Republic of Ecuador, and any of its affiliates or others acting in concert with it, from proceeding with the transactions announced on July 20, 2020, or any parts thereof, and b. ordering the Republic of Ecuador to (a) toll the expiration date for the transactions announced on July 20, 2020, which date is currently set for July 31, 2020 at 5:00 p.m. CET, for a period of time equal to the period of time between the signing of the order to show cause and the hearing for a temporary restraining order, and (b) enable bondholders who have already tendered Eligible Bonds to promptly withdraw their consents and tender orders unconditionally; and, c. granting such further relief that the Court deems just and proper. Dated: July 29, 2020 Greenwich, Connecticut Respectfully submitted, LATHAM & WATKINS LLP By: /s/ Christopher J. Clark Christopher J. Clark 885 Third Avenue New York, New York 10022 Tel: (212) 906-1200 Fax: (212) 751-4864 Email: [email protected] Attorney for Plaintiffs Contrarian Emerging Markets, L.P., GMO Emerging Country Debt Fund, GMO Emerging Country Debt Investment Fund plc, and GMO Emerging Country Debt (UCITS) Fund CERTIFICATION I, Jennifer Diagonale, as General Counsel and Chief Compliance Officer to Contrarian Capital Management, LLC, which manages and advises Plaintiff Contrarian Emerging Markets, L.P. (“Contrarian”) hereby certify as follows: 1. I am fully authorized to enter into and execute this Certification on behalf of Contrarian. I have reviewed the Complaint prepared against The Republic of Ecuador (“Ecuador”) alleging violations of the federal securities laws; 2. Contrarian did not purchase securities at the direction of counsel or in order to participate in any private action under the federal securities laws; 3. Contrarian is willing to serve as lead plaintiff and representative party in this matter, including providing testimony at deposition and trial, if necessary; 4. Contrarian has purchased hundreds of millions in Eligible Bonds during the Class 5. Contrarian is not serving as lead plaintiff in another class action under the federal securities laws filed during the last three years. 6. Beyond its pro rata share of any recovery, Contrarian will not accept payment for serving as lead plaintiff and representative party on behalf of the Class, except the reimbursement of such reasonable costs and expenses (including lost wages) as ordered or approved by the Court. I declare under penalty of perjury that the foregoing is true and correct on this 29th day of July, 2020. ___________________________ Jennifer Diagonale as General Counsel and Chief Compliance Officer of Contrarian Capital Management, L.L.C. on behalf of Plaintiff Contrarian Emerging Markets, L.P. CERTIFICATION I, Kevin O'Brien of Grantham, Mayo, Van Otterloo & Co. LLC ("GMO"), which manages and advises Plaintiffs GMO Emerging Country Debt Fund, GMO Emerging Country Debt Investment Fund plc, and GMO Emerging Country Debt (UCITS) Fund, a sub-fund of GMO Investments ICAV (collectively the "GMO Funds") hereby certify as follows: 1. I am fully authorized to enter into and execute this Certification on behalf of the GMO Funds. I have reviewed the Complaint prepared against The Republic of Ecuador ("Ecuador") alleging violations of the federal securities laws; 2. The GMO Funds did not purchase securities at the direction of counsel or in order to participate in any private action under the federal securities laws; 3. The GMO Funds are willing to serve as lead plaintiff and representative party in this matter, including providing testimony at deposition and trial, if necessary; 4. The GMO Funds have purchased hundreds of millions in Eligible Bonds during the Class Period. 5. The GMO Funds are not serving as lead plaintiff in another class action under the federal securities laws filed during the last three years. 6. Beyond its pro rata share of any recovery, the GMO Funds will not accept payment for serving as lead plaintiff and representative party on behalf of the Class, except the reimbursement of such reasonable costs and expenses (including lost wages) as ordered or approved by the Court. I declare under penalty of perjury that the foregoing is true and correct on this 29th day of July, 2020. Kevin O'Brien General Counsel for Grantham, Mayo, Van Otter loo & Co. LLC, on behalf of Plaintiffs the GMO Funds

securities

_aa2CYcBD5gMZwczmdUP

Jon B. Fougner (State Bar No. 314097) [email protected] 600 California Street, 11th Floor San Francisco, California 94108 Telephone: (415) 577-5829 Facsimile: (206) 338-0783 [Additional counsel appear on signature page] Attorneys for Plaintiff Sidney Naiman and the Proposed Class UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. SIDNEY NAIMAN, individually and on behalf of all others similarly situated, Plaintiff, COMPLAINT FOR INJUNCTION AND DAMAGES v. Class Action SELECTQUOTE INSURANCE SERVICES, Defendant. JURY TRIAL DEMAND Plaintiff Sidney Naiman, by his undersigned counsel, for this class action complaint against Defendant SelectQuote Insurance Services (“SelectQuote”) and its present, former, and future direct and indirect parents, subsidiaries, affiliates, agents, and related entities, alleges as follows: I. INTRODUCTION 1. Nature of Action: This case arises from Defendant’s unsolicited telemarketing in violation of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. 2. The telemarketing was conducted using an automated telephone dialing system (“ATDS”), a tactic among those that inspired Congress to enact the TCPA and that most infuriate people to this day. - 1 - COMPL. 3. The telemarketing targeted, among other phone lines, cellular telephones and numbers listed on the National Do Not Call Registry (“NDNCR”). 4. For every 7,000,000 robocalls, there’s only one TCPA lawsuit in federal court. Compare Herb Weisbaum, It’s Not Just You—Americans Received 30 Billion Robocalls Last Year, NBC News (Jan. 17, 2018), https://www.nbcnews.com/business/consumer/it-s-not-just- you-americans-received-30-billion-robocalls-n838406 (30.5 billion robocalls); with WebRecon, WebRecon Stats for Dec 2017 & Year in Review (last visited Oct. 29, 2018), https://webrecon.com/webrecon-stats-for-dec-2017-year-in-review/ (4,392 TCPA complaints). II. PARTIES 5. Mr. Naiman is a natural person. 6. He resides in Maricopa County, Arizona. 7. SelectQuote is a corporation. 8. It’s a California corporation. 9. Its principal place of business is 595 Market Street, 10th Floor, San Francisco, California 94105. III. JURISDICTION AND VENUE 10. Jurisdiction: This Court has federal-question subject matter jurisdiction pursuant to 28 U.S.C. § 1331 because the TCPA is a federal statute. 47 U.S.C. § 227; Mims v. Arrow Fin. Servs., LLC, 565 U.S. 368, 372 (2012). 11. Personal Jurisdiction: This Court has personal jurisdiction over Defendant because: a. its principal place of business is in California; and b. its conduct at issue was organized from that California office. 12. Venue: Venue is proper in this District pursuant to 28 U.S.C. § 1391(b)(1)-(2) because a substantial part of the events giving rise to Plaintiff’s claims—namely, the direction of the illegal telemarketing from SelectQuote’s office—occurred in this District. 13. Intradistrict Assignment: Assignment to this Division is proper pursuant to Civil Local Rule 3-2(c) because a substantial part of the events or omissions that give rise to Plaintiff’s - 2 - COMPL. claims—namely, the direction of the illegal telemarketing from SelectQuote’s office—occurred in San Francisco. IV. FACTS A. The Enactment of the TCPA and the FCC’s Regulations Thereunder 14. Robocalls Outlawed: Enacted in 1991, the TCPA makes it unlawful “to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using an automatic telephone dialing system or an artificial or prerecorded voice . . . to any telephone number assigned to a . . . cellular telephone service.” 47 U.S.C. § 227(b)(1). Calls made by an ATDS or with a prerecorded or artificial voice are referred to as “robocalls” by the Federal Communications Commission (“FCC”) and herein. Encouraging people to hold robocallers accountable on behalf on their fellow Americans, the TCPA provides a private cause of action to persons who receive such calls. 47 U.S.C. § 227(b)(3). 15. Rationale: In enacting the TCPA, Congress found: “Evidence compiled by the Congress indicates that residential telephone subscribers consider automated or prerecorded telephone calls, regardless of the content or the initiator of the message, to be a nuisance and an invasion of privacy.” Telephone Consumer Protection Act of 1991, Pub. L. No. 102-243, 105 Stat. 2394 § 2(10). Congress continued: “Banning such automated or prerecorded telephone calls to the home, except when the receiving party consents to receiving the call or when such calls are necessary in an emergency situation affecting the health and safety of the consumer, is the only effective means of protecting telephone consumers from this nuisance and privacy invasion.” Id. § 2(12). 16. The TCPA’s sponsor described unwanted robocalls as “the scourge of modern civilization. They wake us up in the morning; they interrupt our dinner at night; they force the sick and elderly out of bed; they hound us until we want to rip the telephone out of the wall.” 137 Cong. Rec. 30,821 (1991) (statement of Sen. Hollings). 17. Prior Express Written Consent: The FCC has made clear that “prior express written consent” is required before making telemarketing robocalls to wireless numbers. Specifically, it ordered: - 3 - COMPL. [A] consumer’s written consent to receive telemarketing robocalls must be signed and be sufficient to show that the consumer: (1) received clear and conspicuous disclosure of the consequences of providing the requested consent, i.e., that the consumer will receive future calls that deliver prerecorded messages by or on behalf of a specific seller; and (2) having received this information, agrees unambiguously to receive such calls at a telephone number the consumer designates. In addition, the written agreement must be obtained without requiring, directly or indirectly, that the agreement be executed as a condition of purchasing any good or service. In the Matter of Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991, 27 FCC Rcd. 1830, 1844 ¶ 33 (2012) (footnote and internal quotation marks omitted). 18. Do Not Call Registry: Additionally, the TCPA outlaws unsolicited telemarketing (robocalls or otherwise) to phone numbers on the NDNCR. 47 U.S.C. § 227(c); 47 C.F.R. § 64.1200(c)(2). Encouraging people to hold telemarketers accountable on behalf on their fellow Americans, the TCPA provides a private cause of action to persons who receive such calls. 47 U.S.C. § 227(c)(5). B. The Worsening Problem of Robocalls and Spam Texts 19. Unfortunately, the problems Congress identified when it enacted the TCPA have only grown worse in recent years. 20. “Month after month, unwanted [communications], both telemarketing and informational, top the list of consumer complaints received by the [Federal Communications] Commission.” In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 30 FCC Rcd. 7961, 7991 ¶ 1 (2015). 21. “Robocalls and telemarketing calls are currently the number one source of consumer complaints at the FCC.” Tom Wheeler, Cutting off Robocalls (July 22, 2016), https://www.fcc.gov/news-events/blog/2016/07/22/cutting-robocalls (statement of FCC Chairman). 22. “The FTC receives more complaints about unwanted calls than all other complaints combined.” Comment of the Staff of the Federal Trade Commission’s Bureau of Consumer Protection, In re Rules and Regulations Implementing the Telephone Consumer Protection Act of - 4 - COMPL. 1991, Notice of Proposed Rulemaking, CG Docket No. 02-278, at p. 2; FCC 16-57 (June 6, 2016), available at https://www.ftc.gov/system/files/documents/advocacy_documents/comment- staff-ftc-bureau-consumer-protection-federal-communications-commission-rules- regulations/160616robocallscomment.pdf. 23. In 2017, the FTC received 4,501,967 complaints about robocalls, up from 3,401,614 in 2016. Federal Trade Commission, FTC Releases FY 2017 National Do Not Call Registry Data Book and DNC Mini Site (Dec. 18, 2017), https://www.ftc.gov/news-events/press- releases/2017/12/ftc-releases-fy-2017-national-do-not-call-registry-data-book-dnc. 24. Like most other leading newspapers, The New York Times has been writing and reporting on the exploding number of robocall complaints filed by consumers and widespread consumer outrage about illegal telemarketing. Gail Collins, Let’s Destroy Robocalls, N.Y. Times (Mar. 1, 2019), https://www.nytimes.com/2019/03/01/opinion/robocall-scams.html; Tara Siegel Bernard, Yes, It’s Bad. Robocalls, and Their Scams, Are Surging, N.Y. Times (May 6, 2018), https://www.nytimes.com/2018/05/06/your-money/robocalls-rise-illegal.html. 25. An Emmy-winning journalist recently observed: “Everybody is annoyed by robocalls. Hatred of them might be the only thing that everyone in America agrees on now.” Robocalls, Last Week Tonight with John Oliver (HBO Mar. 10, 2019), available at https://www.youtube.com/watch?v=FO0iG_P0P6M. 26. The harm from of illegal robocalls is “is at least $3 billion per year from lost time alone.” Babette Boliek & Eric Burger, Beating Back Unwanted Robocalls, FCC (June 5, 2019), https://www.fcc.gov/news-events/blog/2019/06/05/beating-back-unwanted-robocalls (statement of FCC Chief Economist and FCC Chief Technology Officer). 27. In fact, the wasted hours exceed such time lost outright, because “little surges of the stress hormone cortisol” from interruptions from smartphones result in elevated heart rates, sweaty hands, tightened muscles, anxiety, and distraction, a “switch cost” that weighs on a person even after the interruption ends, reducing his or her efficiency by 40%. Stephanie Stahl, Constant Interruptions From Smartphone Can Impact Brain Chemistry, Scientists Say, CBS - 5 - COMPL. Philly (May 29, 2018), https://philadelphia.cbslocal.com/2018/05/29/scientists-constant- interruptions-smartphone-impact-brain-chemistry/. 28. Robocalls are overwhelming hospitals and patients, threatening a new kind of health crisis. Tony Romm, Robocalls Are Overwhelming Hospitals and Patients, Threatening a New Kind of Health Crisis, Wash. Post (June 17, 2019), https://www.washingtonpost.com/technology/2019/06/17/robocalls-are-overwhelming-hospitals- patients-threatening-new-kind-health-crisis/. C. SelectQuote’s Automated, Nonconsensual Telemarketing 29. SelectQuote sells insurance, including term life insurance. 30. Some of its marketing strategies involve an ATDS. 31. SelectQuote uses equipment that has the capacity—(1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers automatically (even if the system must be turned on or triggered by a person). 32. SelectQuote calls numbers even though they are assigned to cellular telephone services. 33. SelectQuote calls numbers even though they are listed on the NDNCR. 34. Recipients of these calls, including Plaintiff, had not consented to receive them. 35. Recipients of these calls, including Plaintiff, had not provided prior express written consent to receive them. 36. SelectQuote’s calls were not necessitated by an emergency. 37. SelectQuote’s calls were made to numbers within the United States. 38. Violating the TCPA is profitable for SelectQuote. D. Defendant’s Unsolicited, Automated Telemarketing to Mr. Naiman 39. Mr. Naiman is, and at all times mentioned herein was, a “person” as defined by 47 U.S.C. § 153(39). 40. He is the user of a phone number that begins “(925) 735” (the “Naiman Phone Number”). All calls to him referenced herein were to the Naiman Phone Number. 41. The Naiman Phone Number is assigned to a cellular telephone service. - 6 - COMPL. 42. It has been listed on the NDNCR since April 11, 2004. 43. Mr. Naiman never consented to receive calls from SelectQuote. 44. He never gave the Naiman Phone Number to SelectQuote before the call at issue. 45. He never did business with SelectQuote. 46. SelectQuote called the Naiman Phone Number on May 29, 2019. 47. When Plaintiff answered that call, there was a long pause on the other end. 48. During that pause, Plaintiff said “Hello?” several times. 49. After the pause, Plaintiff heard a clicking sound. 50. The pause and click indicated that the call had been autodialed. 51. Eventually, a human came on the calling party’s end of the line. 52. During the call, Plaintiff alleged that the call had been autodialed. The human did not dispute Plaintiff’s allegation. 53. Autodialing is a common practice in insurance sales. 54. The purpose of the call was to sell insurance in order to generate revenue for SelectQuote. 55. During the call, SelectQuote promoted itself several times to try to get Plaintiff to buy its services. 56. Confirming the call was from or on behalf of SelectQuote, Plaintiff received an e- mail from SelectQuote on May 29, 2019. 57. The e-mail was sent from “[email protected].” 58. James Turner is an employee of Defendant. 59. The caller ID that appeared on the call was (304) 896-0957. 60. At least 30 other people have complained of receiving unsolicited calls, telemarketing, or nuisance calls from (304) 896-0957: Phone number 3048960957 has negative rating. 30 users rated it as negative. Approximated caller location is LOGAN, LOGAN, West Virginia. ZIP code is 25601. It’s registered in LEVEL 3 COMMUNICATIONS, LLC - WV. This phone number is mostly categorized as Unsolicited call (23 times), Telemarketer (4 times) and Nuisance call (2 times). - 7 - COMPL. Who Called You from 3048960957?, Should I Answer?, https://www.shouldianswer.com/phone- number/3048960957 (last visited July 18, 2019). 61. Whitepages has receive 58 reports of “spam” calls from (304) 896-0957. Scam or Fraud, Whitepages, https://www.whitepages.com/phone/1-304-896-0957 (last visited July 18, E. The Invasion of Privacy Caused by Defendant’s Automated Telemarketing 62. Before directing its automated telemarketing to him, Defendant never did anything to confirm that Plaintiff had provided prior express written consent to its telemarketing. 63. The conduct alleged herein: a. invaded Plaintiff’s privacy and solitude; b. interrupted Plaintiff’s train of thought; c. wasted Plaintiff’s time; d. annoyed Plaintiff; e. harassed Plaintiff; and f. consumed the battery life of Plaintiff’s cellular telephone. V. CLASS ACTION ALLEGATIONS 64. Class Definition: Pursuant to Federal Rule of Civil Procedure 23(b)(2) and (b)(3), Plaintiff brings this case on behalf of a class defined as follows: All persons in the United States to whom: a. Defendant and/or a third party acting on its behalf made a call or sent a text message; b. to a cellular telephone number; c. using an ATDS or an artificial or prerecorded voice; d. between the date four years before the filing of the original complaint in this case and the first day of trial. 65. Plaintiff is a member and proposed representative of the class. 66. Exclusions: Excluded from the class are Defendant, any entity in which Defendant has a controlling interest or that has a controlling interest in Defendant, Defendant’s legal - 8 - COMPL. representatives, assignees, and successors, the judges to whom this case is assigned and the employees and immediate family members of all of the foregoing. 67. Numerosity: The class is so numerous that joinder of all its members is impracticable. 68. SelectQuote claims to be the largest seller of term life insurance in the United States. 69. Sending a robotext or placing a robocall costs less than one cent. 70. Defendant could afford to, and did, send thousands of robocalls. 71. Commonality: There are many questions of law and fact common to Plaintiff and class members. Indeed, the very feature that makes Defendant’s conduct so annoying—its automated nature—makes this dispute amenable to classwide resolution. These common questions of law and fact include, but are not limited to, the following: a. whether the calls were dialed en masse by an ATDS; b. whether Defendant’s desire to sell insurance constitutes an “emergency” within the meaning of the TCPA; c. whether Defendant is in the United States; d. whether Defendant had a pattern and practice of failing to obtain prior express written consent from people to whom it directed telemarketing; e. whether Defendant had a pattern and practice of failing to remove cellular telephone numbers from their telemarketing lists; f. whether Defendant had a pattern and practice of failing to remove numbers on the NDNCR from its telemarketing lists; g. whether Defendant’s violations of the TCPA were knowing or willful; and h. whether Defendant should be enjoined from continuing to robocall and telemarket to people in violation of the TCPA. 72. Typicality: Plaintiff’s claims are typical of the claims of the class. Plaintiff’s claims and those of the class arise out of the same automated telemarketing by Defendant and seek the same legal and equitable remedies. 73. Adequacy: Plaintiff will fairly and adequately protect the interests of the class. Plaintiff has retained competent and capable counsel experienced in TCPA class action litigation. - 9 - COMPL. Plaintiff and his counsel are committed to prosecuting this action vigorously on behalf of the class and have the financial resources to do so. The interests of Plaintiff and his counsel are aligned with those of the proposed class. 74. Superiority: The foregoing common issues predominate over any individual issues, making a class action the superior means of resolution. Adjudication of these common issues in a single action has important advantages, including judicial economy, efficiency for class members and classwide res judicata for Defendant. Classwide relief is essential to compel Defendant to comply with the TCPA. a. Control: The interest of individual members of the class in individually controlling the prosecution of separate claims against Defendant is small because the damages in an individual action (up to $1,500 per TCPA violation) are dwarfed by the cost of prosecution. b. Forum: The forum is a desirable, efficient location in which to resolve the dispute because SelectQuote is headquartered in it. c. Difficulties: No significant difficulty is anticipated in the management of this case as a class action. Management of the claims at issue is likely to present significantly fewer difficulties than are presented in many class actions because the calls at issue are automated (and thus uniform) and because the TCPA articulates bright-line standards for liability and damages. 75. Appropriateness: Defendant has acted on grounds generally applicable to the class, thereby making final injunctive relief and corresponding declaratory relief appropriate on a classwide basis. VI. FIRST CLAIM FOR RELIEF (Violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227(b)(1)) On Behalf of Plaintiff and the Class 76. Plaintiff realleges and incorporates by reference each and every allegation set forth in the preceding paragraphs. - 10 - COMPL. 77. Defendant violated the TCPA, 47 U.S.C. § 227(b)(1), by placing non-emergency calls to the cellular telephone numbers of Plaintiff and members of the class using an ATDS and/or artificial or prerecorded voice without prior express written consent. 78. Plaintiff and class members are entitled to an award of $500 in damages for each such violation. 47 U.S.C. § 227(b)(3)(B). 79. Plaintiff and class members are entitled to and seek an injunction prohibiting Defendant and all other persons who are in active concert or participation with it from violating the TCPA, 47 U.S.C. § 227(b)(1), by placing non-emergency calls to any cellular telephone number using an ATDS and/or artificial or prerecorded voice. VII. SECOND CLAIM FOR RELIEF (Knowing and/or Willful Violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227(b)(1)) On Behalf of Plaintiff and the Class 80. Plaintiff realleges and incorporates by reference each and every allegation set forth in the preceding paragraphs. 81. Defendant knowingly and/or willfully violated the TCPA, 47 U.S.C. § 227(b)(1), by placing non-emergency calls to the cellular telephone numbers of Plaintiff and members of the class using an ATDS and/or artificial or prerecorded voice without prior express written consent. 82. Plaintiff and class members are entitled to an award of up to $1,500 in damages for each such knowing and/or willful violation. 47 U.S.C. § 227(b)(3). VIII. PRAYER FOR RELIEF WHEREFORE, Plaintiff, on his own behalf and on behalf of all class members, prays for judgment against Defendant as follows: A. Certification of the proposed class; B. Appointment of Plaintiff as representative of the class; C. Appointment of the undersigned counsel as counsel for the class; D. A declaration that actions complained of herein violate the TCPA; E. An order enjoining Defendant and all other persons who are in active concert or participation with it from engaging in the conduct set forth herein; - 11 - COMPL. F. An award to Plaintiff and the class of damages, as allowed by law; G. An award to Plaintiff and the class of costs and attorneys’ fees, as allowed by law, equity and/or California Code of Civil Procedure section 1021.5; H. Leave to amend this complaint to conform to the evidence presented at trial; and I. Orders granting such other and further relief as the Court deems necessary, just, and proper. IX. DEMAND FOR JURY Plaintiff demands a trial by jury for all issues so triable. X. SIGNATURE ATTESTATION The CM/ECF user filing this paper attests that concurrence in its filing has been obtained from its other signatories. RESPECTFULLY SUBMITTED AND DATED on August 15, 2019. By: /s/ Jon B. Fougner Jon B. Fougner Anthony I. Paronich, Pro Hac Vice Forthcoming [email protected] PARONICH LAW, P.C. 350 Lincoln Street, Suite 2400 Hingham, Massachusetts 02043 Telephone: (617) 738-7080 Facsimile: (617) 830-0327 Edward A. Broderick, Pro Hac Vice Forthcoming [email protected] BRODERICK LAW, P.C. 99 High Street, Suite 304 Boston, Massachusetts 02110 Telephone: (617) 738-7080 Facsimile: (617) 830-0327 Matthew P. McCue, Pro Hac Vice Forthcoming [email protected] THE LAW OFFICE OF MATTHEW P. McCUE - 12 - COMPL. 1 South Avenue, Suite 3 Natick, Massachusetts 01760 Telephone: (508) 655-1415 Facsimile: (508) 319-3077 Andrew W. Heidarpour, Pro Hac Vice Forthcoming [email protected] HEIDARPOUR LAW FIRM, PPC 1300 Pennsylvania Avenue NW, 190-318 Washington, DC 20004 Telephone: (202) 234-2727 Attorneys for Plaintiff Sidney Naiman and the Proposed Class - 13 - COMPL.

privacy

80ZP_YgBF5pVm5zYuCyx

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK HEATHER HAUPTMAN, AND TIMOTHY MOSS, individually and on behalf of others similarly situated, Civil No. 17-cv-9382 CORRECTED Plaintiffs, CLASS ACTION COMPLAINT v. INTERACTIVE BROKERS, LLC, Defendant. Jury Trial Demanded Plaintiffs Timothy Moss and Heather Hauptman (“Plaintiffs”), individually and on behalf of all others similarly situated, allege on personal knowledge, investigation of their counsel, and on information and belief, as follows: NATURE OF ACTION 1. Plaintiffs bring this action for breach of contract, promissory estoppel, negligence, breach of the covenant of good faith and fair dealing, unjust enrichment, and declaratory relief, seeking legal and equitable remedies, resulting from the unlawful actions of Interactive Brokers, LLC (hereinafter referred to as “IB” or “Defendant”), in connection with IB’s improper administration of their Portfolio Margin Accounts and the Portfolio Margin Accounts of all other similarly situated investors. 2. “Portfolio margin” is a relatively new type of investment lending that employs a complex methodology for calculating margin requirements and generally allows for the use of higher leverage than standard “strategy-based” margin lending (commonly referred to as “Regulation T” margin lending). The U.S. Securities and Exchange Commission (“SEC”) and the regulatory predecessor to the Financial Industry Regulatory Authority (“FINRA”) 1 amended FINRA Rule 4210 in 2007 to allow, for certain types of securities, portfolio margin trading in retail customer accounts. Specifically, and as explained in detail herein, Rule 4210(g) provides that broker-dealers may use portfolio margin to calculate margin requirements using a “risk-based” model, only in relation to specifically enumerated security types. This risk-based approach results in margin requirements that account for “offsetting” or “hedged” positions, and thus allows for potentially greater leverage to be utilized in an account. With the potential for substantially greater leverage and the use of complex mathematical calculations to determine the margin requirements, however, the potential risk to the investor in a Portfolio Margin Account can also be substantially greater. 3. In light of the increased potential risks to the investor associated with portfolio margin trading, the SEC and FINRA promulgated clear and explicit rules regarding which securities may be properly considered under a “risk-based” model for purposes of determining margin requirements in Portfolio Margin Accounts. FINRA rules limit portfolio margin eligibility to specific investment product categories, such as equity-based securities, and derivatives on eligible equity securities — like options or warrants on equities. 4. IB, however, disregarded this rule in administering its customers’ Portfolio Margin Accounts. Instead, IB provides portfolio margin treatment for Exchange Traded Notes (“ETNs”), such as the Barclays Bank PLC iPath S&P 500 VIX Short-Term Futures ETN, traded under the symbol (and more commonly known as) the VXX. ETNs, and the VXX in particular, are not equities or (derivatives of equities), but instead are unsecured debt instruments. In the case of the 1 FINRA is a self-regulatory organization (“SRO”) for brokerage firms and securities markets, empowered pursuant to 15 U.S.C. § 78o-3(b). It is the successor in interest to, among other entities, the National Association of Securities Dealers, Inc. (“NASD”). In its capacity as a regulator, FINRA writes and enforces the rules governing the activities of the almost 4,000 broker-dealers in the United States, including Defendant IB. See http://www.finra.org/about (last visited 10/11/2017). Pursuant to 15 U.S.C. § 78s, FINRA’s rules are reviewed and approved by the SEC. VXX, for example, there is no equity position supporting the security. Instead, the value of the VXX is designed to track the movement of futures on an index that measures overall market volatility. As unsecured debt instruments that do not represent ownership of any underlying asset, ETNs – like the VXX – are not among the approved list of investment products eligible for portfolio margin. 5. IB was informed directly and on several occasions, by both FINRA regulators and the Options Clearing Corporation (the “OCC”), that unsecured debt instruments such as the VXX are ineligible for portfolio margin and risk-based margining treatment. By continuing to provide portfolio margin’s risk-based margining treatment for open positions in ETNs and options on ETNs – such as the VXX – IB knowingly violated FINRA rules to its customers’ detriment, and knowingly breached its contractual agreements with its customers which obligated IB to follow FINRA rules and other industry regulations. 6. Additionally, the disclosure form required by FINRA and provided by IB to its customers specifically lists each category of investment product that may be included for purposes of calculating portfolio margin requirements. ETNs are absent from that disclosure form. 7. The FINRA rule restricting portfolio margining to only certain types of products is important. As FINRA informed IB, regulators promulgated Rule 4210(g) to exclude ETNs, such as the VXX, because the inherent risks associated with ETNs make them inappropriate for risk- based margin treatment. By including these inappropriate financial products in risk-based margin calculations, IB exposed its customers to the same excessive investment risk that FINRA rules, which the SEC formally approved, were designed to avoid. 8. Furthermore, through its disclosures and other communications, IB informed its clients that ETNs would not be afforded portfolio margin treatment. Yet, IB violated FINRA rules, ignored its own disclosures and exposed its customers to the very risks regulators sought to avoid when they approved the FINRA rules that IB agreed to follow. Unfortunately, these risks materialized. For example, Plaintiffs and other similarly-situated persons experienced a “blow out” (margin trading losses due to forced liquidation of positions) when the Dow Jones Industrial Average suddenly dropped by over 1,000 points on August 24, 2015, causing a spike in the VXX, as is more specifically recounted herein. 9. By way of this class action lawsuit, Plaintiffs seek to vindicate the rights of themselves and all similarly-situated persons who had Portfolio Margin Accounts with IB at any time from December 1, 2011, through the date of judgment herein, in which portfolio margin treatment was applied to positions in or options on ETNs (“the putative Class”). JURISDICTION AND VENUE 10. This Court has subject matter jurisdiction pursuant to the Class Action Fairness Act of 2005 (“CAFA”) codified as 28 U.S.C. § 1332(d)(2). The matter in controversy exceeds $5,000,000, in the aggregate, exclusive of interest and costs. 11. This Court has jurisdiction over IB because IB does substantial business in this District. Furthermore, IB consented to this Court’s jurisdiction pursuant to the Interactive Brokers LLC Customer Agreement (“Customer Agreement”) (attached hereto as Exhibit 1) between itself and Plaintiffs. Under the Customer Agreement (in ¶ 32), all disputes between IB and its customers are “governed by the laws of the State of New York” and the “Courts of New York have exclusive jurisdiction over disputes relating to this Agreement, except when arbitration is provided.” 12. Venue is proper in the United States District Court for the Southern District of New York under 28 U.S.C. §§ 1391(b) and (c) because a substantial part of the events or omissions giving rise to the claims asserted occurred in this District, and Defendant is deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. Also, as alleged above, the Customer Agreement provides that the Courts of New York are the exclusive venue for any disputes arising under that Agreement. PARTIES 13. Plaintiff Timothy Moss is, and was at all times mentioned herein, an individual citizen of the State of Colorado, and currently resides in that state. 14. Plaintiff Heather Hauptman is, and was at all times mentioned herein, an individual citizen of the State of Colorado, and currently resides in Argentina. 15. Defendant Interactive Brokers, LLC is a Connecticut corporation with its headquarters and principal place of business in Greenwich, Connecticut. FACTUAL ALLEGATIONS Margin Trading and Portfolio Margin Accounts 16. Margin trading is a practice by which investors are able to leverage their existing portfolio of securities and cash in order to purchase or sell additional securities. In non-margin trading, the maximum risk of loss to the investor in any particular position is the amount of money put into the account to purchase that position. In margin trading, the investor risks the principal, in addition to any money loaned by the broker-dealer. 17. In light of this risk, margin trading is subject to FINRA rules and requirements designed to protect investors and the public interest.2 In particular, all margin accounts have a “margin requirement,” which represents the minimum equity value that must be in the account at 2 The statutory basis for the promulgation of FINRA Rule 4210(g) explains that, “FINRA believes that the proposed rule change is consistent with the provisions of Section 15(A)(b)(6), which requires, among other things, that the FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and in general to protect investors and the public interests.” Securities and Exchange Commission, SR-2008-041 at 5 (emphasis added). any time to serve as collateral. For example, a margin requirement of 50% means that a hypothetical investor must maintain equity in the margin account equal to 50% of the total value of the assets in the portfolio. 18. If the account falls below the margin requirement, the broker-dealer or other financial institution administering the account may issue a “margin call.” When a margin call is issued, the investor must put additional capital into the account to bring it up to the margin requirement, liquidate positions and turn the proceeds over to the broker-dealer to retire a portion of the margin debt, or some combination of the two. 19. Margin requirements are designed to control and manage the risk of margin trading. The higher the ratio between account value and the amount of the portfolio financed by the financial institution, the lower the risk that an investor will be forced to “pay out of pocket” to make the financial institution whole in the event of a decline in the value of the financial instruments that comprise the account. Correspondingly, the lower the margin requirement, the greater the risk that the investor will suffer a large loss in the event of a decline in value of the positions that make up the account. As such, the margin requirement represents an assessment of the acceptable amount of risk allowed under regulations for positions in a margin account. 20. Portfolio margining is a relatively new methodology for determining margin requirements and was authorized by the SEC and FINRA (f/k/a the NASD) in 2007 for use by retail investors. Portfolio margin differs from traditional margin by virtue of the manner in which the margin requirement is calculated. Under traditional “strategy-based” or “Regulation T” margining, the margin requirement is typically determined by a formula that is a function of the size and market price of each position. Portfolio Margin requirements differ from Regulation T margining in that they are calculated using a complex statistical model that assesses the potential volatility of each security, and then measures the potential impact of various price movements on a portfolio as a whole. The calculations that inform Portfolio Margin requirements are created according to a methodology known as the Theoretical Intermarket Margining System (“TIMS model”), and the data from the TIMS model is distributed to broker-dealers by the OCC after the close of trading on each trading day. Broker-dealers then apply the data from the TIMS model to their customers’ Portfolio Margin positions to determine each customer’s Portfolio Margin requirement. The margin requirement determined according to the TIMS model reflects the regulatory minimum for Portfolio Margin Accounts. 21. One of the primary ways that the portfolio margin model differs from the traditional model is by considering the risk of “hedged” positions. Hedged positions are two or more securities that normally react in an offsetting manner according to market movements, and are generally designed to reduce risk. 22. Because Portfolio Margin requirements are calculated in a manner that assesses the relative risk profile of a particular portfolio (at least in theory), Portfolio Margin Accounts that are “hedged” allow for a level of leverage to the account holder that is potentially far greater than would be available under a standard strategy-based margin model. For instance, on information and belief, IB allows the gross position value of a Portfolio Margin Account to reach as high as 50 times the net liquidating value, or equity, of the account. FINRA Regulations of Portfolio Margin Trading 23. Margin trading is governed by FINRA Rule 4210. As discussed above, FINRA, with the approval of the SEC, amended Rule 4210 in 2007 to authorize Portfolio Margin trading.3 FINRA Rule 4210(g) specifically governs Portfolio Margin. The SEC and FINRA 3 Portfolio Margin began as a pilot program under the NASD on April 2, 2007, and the SEC allowed FINRA to make portfolio margin permanent in 2008. designated which securities may be afforded portfolio margin or “risk-based” margin treatment. Rule 4210(g)(6)(B)(i) delineates precisely what types of financial products are eligible for Portfolio Margin treatment. Specifically: For eligible participants . . ., a transaction in, or transfer of, an eligible product may be effected in the portfolio margin account. Eligible products under this paragraph (g) consist of: a. a margin equity security (including a foreign equity security and option on a foreign equity security, provided the foreign equity security is deemed to have a “ready market” under SEA Rule 15c3-1 or a “no-action” position issued thereunder, and a control or restricted security, provided the security has met the requirements in a manner consistent with Securities Act Rule 144 or an SEC “no-action” position issued thereunder, sufficient enough to permit the sale of the security, upon exercise or assignment of any listed option or unlisted derivative written or held against it, without restriction); b. a listed option on an equity security or index of equity securities; c. a security futures product; d. an unlisted derivative on an equity security or index of equity securities; e. a warrant on an equity security or index of equity securities; f. a related instrument as defined in paragraph (g)(2)(D) [i.e., as “broad- based index futures and options on broad-based index futures covering the same underlying instrument.”]4 24. FINRA has issued further guidance on the types of financial products to be considered when calculating portfolio margin requirements, reinforcing that: All margin equity securities (as defined in Section 220.2 of Regulation T of the Board of Governors of the Federal Reserve System), warrants on margin equity securities or on eligible indices of equity securities, equity-based or equity-index based listed options, and security futures products (as defined in Section 3(a)(56) of the Securities Exchange Act of 1934) are eligible to be margined in a portfolio margin account. In addition, a customer that has an account with equity of at least five million dollars may establish and maintain positions in unlisted derivatives (e.g., OTC swaps, options) on a margin equity security or an eligible index of equity 4 FINRA Rule 4210 (g)(6)(B)(i) (emphases added). Footnote continued on next page securities that can be priced by a theoretical pricing model approved by the Securities and Exchange Commission (“SEC”).5 25. In sum, FINRA Rule 4210(g)(6)(B) and associated guidance stands for the proposition that only equity securities, and options or derivative products derived from equity securities or equity-based indices, are eligible for treatment under the portfolio margin methodology. The margin requirement for products ineligible for portfolio margin, such as ETNs, must be calculated according to the far more restrictive Regulation T requirements. Exchange Traded Notes 26. An ETN is not an equity security, but rather an unsecured debt instrument traded on the major stock exchanges. ETNs function in some respects like a promissory note — the investor pays money to the financial institution issuing the ETN, and upon maturity, the investor receives a payment of money in return. But unlike a traditional promissory note, which regularly pays a fixed amount upon maturity plus interest, the value of ETN upon maturity is pegged to a particular market index and subject to the creditworthiness of the issuer of the note. Therefore, an ETN is an investment on the future state of the market, or a particular aspect of the market, at the time the ETN matures, as well as a stake on the ability of the issuing bank to avoid defaulting on the note prior to maturity. 27. An example of an ETN is the Barclays Bank PLC iPath S&P 500 VIX Short-Term Futures ETN, traded under the stock symbol VXX. The VXX is tied to a spread of short-term futures contracts related to the CBOE Volatility Index (ticker symbol VIX), a popular measure of the implied volatility of the S&P 500 index. The CBOE Volatility Index represents one measure of the market’s expectation of stock market volatility over the next 30-day period. 5 FINRA Regulatory Notice 08-09 (herein after referred to as “FINRA NTM 08-09”) (March 14, 2008) (emphases added). 28. In short, the VXX note is derived from futures contracts on the VIX index, which in turn are derived from the VIX index, which in turn is derived from an indexed calculation of the volatility of the market as a whole, which in turn is derived from the action of individual equities in the market. The structure of the VXX means that fluctuations in the broader securities market have a disproportionately large impact on the VXX. Because the VXX, like all ETNs, is securitized and traded on an exchange, the price of VXX notes move on a continuous basis in response to changes in market conditions. 29. The VXX and other ETNs are not eligible products for portfolio margin treatment, according to FINRA Rule 4210(g)(6)(B). In contrast ETNs are debt instruments, in which the issuing financial institution owes a debt to the holder of the note. The FINRA rule limits Portfolio Margin treatment to equity-based securities; debt instruments such as the VXX note and options on VXX notes are ineligible for Portfolio Margin treatment. 30. FINRA has made it clear to brokers (including, specifically, IB) that ETNs are not eligible for consideration in calculating Portfolio Margin requirements. In an email to David Battan, General Counsel and Executive Vice President of IB, Steve Yannolo from FINRA Credit Regulation stated: “[i]t was recently brought to our attention that the OCC is providing P/L for ETNs. Since these are debt instruments, they are ineligible for portfolio margin.” This was reiterated in a follow-up email to Mr. Battan and other IB employees from Mr. Yannolo the following day that states “because of the[ir] inherent risk,” ETN products (such as the VXX) “should not get a risk-based treatment, as they are debt products and not eligible for portfolio margin.” Instead, Yannolo explained FINRA “expect[ed] firms” such as IB “to apply higher strategy-based margin requirements” to such products. Additionally, in a prior proceeding, IB’s own expert witness, the FINRA Managing Director of Credit Regulation and co-author of FINRA NTM 08-09, testified that ETNs do not fit the definition of “Eligible Investments” for Portfolio Margin under SEC approved FINRA rules or IB’s own Portfolio Margin Disclosure.6 IB’S Administration of Portfolio Margin Accounts 31. Interactive Brokers, LLC, is the largest subsidiary of the publicly traded company Interactive Brokers Group, Inc. IB is an electronic-only broker-dealer and trading platform and is one of the largest such entities in the United States. IB is regulated by FINRA and subject to FINRA rules. 32. When a customer opens an account with IB to engage in trades, he or she agrees to the “Interactive Brokers LLC Customer Agreement,” which provides in part: “All transactions are subject to rules and policies of relevant markets and clearinghouses, and applicable laws and regulations.”7 This provision contractually obligates IB to conduct trades on the basis of “applicable laws and regulations,” which includes relevant FINRA rules. 33. In addition, under the section labeled “Margin,” the Customer Agreement states that “[m]argin transactions are subject to initial and maintenance margin requirements of exchanges, clearinghouses and regulators and also to any additional margin requirement of IB, which may be greater.”8 Thus, once again, the Customer Agreement contractually obligates IB to conduct margin transactions in accordance with the margin requirements of regulators such as FINRA. 6 In sworn testimony in FINRA Case No. 15-03035, Rudolph Verra, the FINRA Managing Director of Credit Regulation through December of 2013 previously testified to the following: Q: And do you see there where it says positions eligible for a portfolio margin accounts”? A. (Verra): Yes, I do. Q. I just want to make sure we are clear. A. (Verra): Uh-Huh. Q. Do ETNs, Exchange Traded notes, fit any category there in paragraph 4 [of FINRA NTM 08-09]? A. (Verra): No. 7 Ex. 1 at ¶ 6 (emphasis added). 8 Id. at ¶ 11(B) (emphasis added). Footnote continued on next page 34. Finally, that same section of the Customer Agreement states that the “[c]ustomer represents that he or she has read the ‘Disclosure of Risks of Margin Trading’ provided separately by IB.”9 The “Portfolio Margin Risk Disclosure Statement,”10 describes the limitations governing which positions in an account may be subject to Portfolio Margin calculations. Specifically, under “Positions Eligible for a Portfolio Margin Account,” the disclosure states: All margin equity securities (as defined in Section 220.2 of Regulation T of the Board of Governors of the Federal Reserve System), warrants on margin equity securities or on eligible indices of equity securities, equity-based or equity-index based listed options, and security futures products (as defined in Section 3(a)(56) of the Securities Exchange Act of 1934) are eligible to be margined in a portfolio margin account. In addition, a customer that has an account with equity of at least five million dollars may establish and maintain positions in unlisted derivatives (e.g., OTC swaps, options) on a margin equity security or an eligible index of equity securities that can be priced by a theoretical pricing model approved by the Securities and Exchange Commission (“SEC”).11 35. The language in the disclosure is a word-for-word copy of the FINRA NTM 08-09, the regulatory guidance interpreting FINRA Rule 4210. As such, IB’s Portfolio Margin Risk Disclosure Statement warrants and represents that all transactions will be conducted in accordance with FINRA’s Portfolio Margin requirement calculation guidelines, and explicitly lists the only securities eligible to receive portfolio margin treatment. Unsecured debt securities, like ETNs, are not included. 36. Additionally, in or around April 2014, IB published on its website a notice stating that ETNs were not eligible for Portfolio Margin treatment, and that IB would not provide Portfolio Margin for ETNs, including, but not limited to, the VXX.12 Such notice remained on IB’s website until January 2016. 9 Id. at ¶ 11(A). 10 See Ex. 2. 11 Id. at ¶ 4. 12 See Ex. 3. 37. It turns out, however, that during the Class Period, IB calculated the margin requirement for ETNs in its customers’ Portfolio Margin Accounts in a manner that applies risk- based margin requirements, despite the fact that by IB’s own admission ETNs are not eligible for Portfolio Margining. As such, IB is acting in a manner directly contrary to its Customer Agreement, its own disclosures, and FINRA regulations that IB is contractually obligated to 38. As stated above, FINRA specifically informed IB in early 2014 that ETNs were not eligible for Portfolio Margin treatment. As a result, IB was unquestionably aware in early 2014 that it was administering its accounts in a manner inconsistent with the Customer Agreement, its own disclosures, and FINRA regulations. Nevertheless, IB continued to include ETNs in its calculations of Portfolio Margin requirements even after being informed that the practice violated FINRA Rule 4210. On information and belief, IB continues to include ETNs in the calculation of Portfolio Margin requirements as of the date of this filing. Losses Suffered Because of IB’S Wrongful Conduct 39. Margin trading functions similarly to a line of credit extended by the broker-dealer to the customer. Just as a reduction in the value of a mortgaged home reduces the equity in the home, but not the amount owed on the mortgage, a loss in the value of the financial products in a margin account reduces the value of the customer’s collateral in the account. This can result in a negative equity situation (i.e., the loan against the account is more than the value of the positions in the account). Further, because of the use of leverage through margin, losses accumulate more rapidly. In the case of investments that are made pursuant to Portfolio Margin, because of the substantially higher leverage provided, a small move in market prices can result in massive losses (or gains) in an account. 40. Both the traditional strategy-based margin requirements, but especially the newer risk-based margin requirements, are based on complex formulas and models which can vary from security to security. IB customers rely on IB’s trading interface and the calculations IB’s systems perform in order to determine the margin requirements and margin compliance of the customer’s portfolio. In fact, because of the complexity associated with margin calculations, especially portfolio margin calculations, IB’s customers are wholly reliant on IB to report the margin requirements to them. Likewise, IB prides itself on its sophisticated trading interface and publicly touts that its trading software offers traders a superior platform for monitoring risk and executing trades. 41. Because IB customers are reliant upon IB to calculate the margin requirements for their portfolios, and because IB applies the incorrect margin calculations for ETNs in a Portfolio Margin Account, IB allows and executes margin trades that are not permitted by FINRA regulations and the Customer Agreement. Furthermore, these improper trades greatly increase the risk to IB’s clients. In addition to the increase in risks, the additional leverage afforded by IB increases the commissions, interest and fees assessed to its portfolio margin customers. Because IB knowingly violated industry rules in allowing trades, any losses from those trades are directly attributable to IB’s violation. Facts Relating to Named Plaintiffs 42. Heather Hauptman is a long-time resident of Colorado who currently lives in Argentina. Ms. Hauptman engaged the services of a financial advisory firm, Meridian Capital Advisors, LLC (“Meridian”), and provided them with discretionary authority over her investments.13 13 A discretionary account allows a financial advisor to make trades in an investor’s account without prior approval or authorization from the investor for any trading. 43. On or about June 19, 2015, Ms. Hauptman, at the recommendation of her financial advisor, opened an account with IB and signed the Customer Agreement. That same day, she signed the Portfolio Margin Risk Disclosure Statement. See Exhibits 1 and 2. 44. Ms. Hauptman’s account included VXX positions. Unbeknownst to Ms. Hauptman, IB immediately began to improperly apply Portfolio Margin treatment to her VXX positions. Meridian maintained and traded positions in the VXX in Ms. Hauptman’s Portfolio Margin Account for approximately three months. For example, on August 21, 2015, Meridian sold 125 call options on the VXX and purchased 125 put options on the VXX in Ms. Hauptman’s account.14 By selling calls and buying puts on the VXX, Meridian was taking a “short” position in the VXX. If the price of the VXX dropped or stayed the same prior to expiration of the contracts, Ms. Hauptman would benefit in two ways: (1) the call options would expire worthless, allowing Ms. Hauptman to keep the premium collected from the sale of those options; and (2) the put options would benefit from an increase in value. If the price of the VXX rose, however, then Ms. Hauptman would be required to deliver notes of the VXX to the buyer of the call options and would lose 100% of the funds used to purchase the put options. Moreover, Ms. Hauptman would be required to purchase VXX notes on the open market and deliver them to the buyer of the call options. In such a case, Ms. Hauptman’s loss would be the difference between the market price at which she was forced to purchase the VXX notes, and the “strike” price of the option. Meridian’s VXX option trades on August 21, 2015 hinged on the expectation that the VXX price would fall. 45. Ms. Hauptman’s trades in the VXX options occurred in her Portfolio Margin Account, and IB applied the risk-based margin model (rather than the strategy-based margin model) to calculate the margin requirements for the ETN positions. 14 Each option contract represents 100 notes of the VXX. Thus, Meridian sold call options on 12,500 VXX notes and bought put options on 12,500 notes of the VXX. 46. As of the end of day on August 21, 2015, the total value in Ms. Hauptman’s Portfolio Margin Account was in excess of $200,000. 47. Timothy Moss is a similarly affected investor. Like Ms. Hauptman, Tim Moss also engaged Meridian and gave it discretionary authority over his investments. His savings had been with Meridian since 2011. Outside of his investments managed by Meridian, he had limited investment experience. As Meridian managed both the Plaintiffs’ accounts, the trading in each of the accounts was very similar. Like Ms. Hauptman, Meridian was trading the VXX and options, as well as other securities, on the VXX in Mr. Moss’s account. As in Ms. Hauptman’s account, IB applied Portfolio Margin requirements to Mr. Moss’s VXX positions. 48. At the beginning of August of 2015, Mr. Moss’ account held numerous positions including VXX and options on the VXX. As in Ms. Hauptman’s account, Meridian shorted 128 VXX calls on August 21, 2015. IB calculated the margin requirement for this trade using Portfolio Margin. At the end of the day on August 21, 2015, the Mr. Moss’ account was valued at approximately $186,000. 49. Over the weekend after August 21, 2015, events unfolding in the Asian markets began to impact the American markets, and U.S. stock futures began to drop. At around 12:00 AM on the morning of August 24, 2015, IB changed the margin requirements, increasing the margin requirement for the VXX and VXX option positions for all of its clients, including Plaintiffs.15 When the market opened on August 24, 2015, the Dow index dropped 1,000 points and the price of the VXX spiked. As a result, the value of Plaintiffs’ Portfolio Margin Accounts (and those of all similarly situated IB customers) dropped. Further, because IB had so dramatically 15 The exact increase of Plaintiffs’ margin requirement is unknown, but on information and belief, similarly- situated customers had the margin requirement on VXX short call positions instantaneously increased by as much as 600%. increased the Portfolio Margin requirements, many customers were put into a margin deficiency situation. 50. In response to the massive increase in the margin requirement, coupled with the decrease in the account value, from August 25 to August 31, IB force liquidated most of the positions in Plaintiffs’ accounts, resulting in large losses. In the month of August, Ms. Hauptman’s account lost over $175,000, primarily as a result of the VXX and VXX option trades that occurred using Portfolio Margin leverage. Likewise, in the month of August, the Mosses lost around $150,000, with most of the losses due to VXX and VXX option trades that occurred using portfolio margin leverage. 51. This scenario was not unique to Plaintiffs, and, in fact, occurred in many other IB accounts that week. In a number of cases, the VXX trades and subsequent liquidations resulted in margin deficiencies. In a twist of irony, IB invoked FINRA Rule 4210 and its portfolio margin disclosures and customer agreements—the very rule and agreements it breached when it applied portfolio margin requirements to the VXX—in order to collect on the margin deficiencies from some of its customers. 52. Fortunately, in the instant case, IB’s actions did not result in these Plaintiffs owing a margin debt to IB. Unfortunately, like many IB customers, Plaintiffs saw their accounts lose most of their value in August 2015 as a direct result of IB’s improper portfolio margining. 53. In short, having only been customers of IB for less than four months, Plaintiffs suffered losses equal to approximately 85% of their accounts’ values. CLASS ACTION ALLEGATIONS 54. Plaintiffs incorporate by reference all other paragraphs of this Complaint as if fully stated herein. 55. Plaintiffs bring this action individually and on behalf of all other persons similarly situated (hereinafter referred to as “the Class”) pursuant to Federal Rule of Civil Procedure 23. 56. Plaintiffs propose the following Class definition, subject to amendment as appropriate: All persons who held a Portfolio Margin Account with Interactive Brokers, LLC, containing a position or option in an ETN at any point from December 1, 2011 through the date of judgment, and whose ETN positions received Portfolio Margin treatment. Collectively, all these persons will be referred to as “Class members.” Plaintiffs represent, and are members of, the Class. Excluded from the Class are Defendant, and any entities in which Defendant has a controlling interest, and Defendant’s agents and employees, and any Judge to whom this action is assigned and any member of such Judge’s staff and immediate family. 57. Plaintiffs do not know the exact number of members in the Class, but reasonably believe that Class members number, at a minimum, to be more than 1,000. 58. Plaintiffs and members of the Class have been harmed and/or continue to be harmed by the acts of Defendant. 59. Plaintiffs seek injunctive and declaratory relief on behalf of themselves and all Class members, as well as damages in their individual capacity. 60. The joinder of all Class members is impracticable due to the number of Class members. 61. Additionally, the disposition of the claims in a class action will provide substantial benefit to the parties and the Court by avoiding a multiplicity of identical suits, as well as inconsistent or varying adjudications with respect to individual Class members that would establish incompatible standards of conduct for the party opposing the Class. 62. Further, the Class can be identified easily through records maintained by the Defendant. 63. There are well-defined, nearly identical, common questions of law and fact affecting all parties. 64. The questions of law and fact, referred to above, involving the class claims predominate over questions that may affect individual Class members. 65. Such common questions of law and fact include, but are not limited to, the following: a. Whether positions or options in ETNs qualify for portfolio margin treatment under FINRA rules; b. Whether IB includes positions or options in ETNs in its portfolio margin calculations; c. Whether IB was aware that it was including positions or options in ETNs in its portfolio margin calculations, in violation of Portfolio Margin rules; d. Whether IB breached its Customer Agreement with its customers by including positions or options in ETNs in its portfolio margin calculations; e. Whether Plaintiffs and the Class are entitled to a declaratory judgment that IB breached its Customer Agreement with its customers by including positions or options in ETNs in its portfolio margin calculations; f. Whether IB promised its customers that it would calculate portfolio margin requirements in a manner consistent with FINRA rules; g. Whether IB’s statement in its Portfolio Margin Risk Disclosure Statement with regard to how it would calculate portfolio margin requirements constituted a promise made to its customers; h. Whether IB broke its promises to customers by including positions or options in ETNs in its portfolio margin requirement calculations; i. Whether the duty that IB owed to its customers included that IB would exclude positions or options in ETNs from its portfolio margin calculations; j. Whether IB breached that duty by including positions or options in ETNs in its portfolio margin calculations; k. Whether IB breached the covenant of good faith and fair dealing by including positions or options in ETNs in its portfolio margin calculations; l. Whether IB should be enjoined from giving positions or options in ETNs portfolio margin treatment in the future. 66. The claims of Plaintiffs are typical of the claims of the Class they seek to represent. Plaintiffs and other Class members held Portfolio Margin Accounts including positions or options in ETNs during the Class Period. 67. Plaintiffs will fairly and adequately represent and protect the interests of the Class. 68. Plaintiffs have no interests which are antagonistic to any member of the Class. 69. Plaintiffs have retained counsel experienced in handling class action claims involving breaches of contract and violations of SEC and/or FINRA rules. Plaintiffs’ counsel are also experienced in prosecuting the claims of investors against their broker-dealers. 70. Common issues predominate over any individual issues. The focus of these claims is on IB’s conduct, which did not vary as between class members. Resolution of these common questions will drive the claims of all Class members toward judgment or resolution: they involve a “fatal similarity” for purposes of the claims of all class members. 71. A class action is the superior method for the fair and efficient adjudication of this controversy. 72. Class-wide relief is essential to compel IB to comply with the relevant FINRA rules regarding Portfolio Margin Accounts, and abide by its contracts and agreements. 73. Plaintiffs therefore seek certification of the Class pursuant to Rules 23(b)(1)(A), (b)(2), and (b)(3). Plaintiffs seek certification of a Rule 23(b)(1)(A) class. Adjudicating IB’s liability for the facts and claims alleged here poses a substantial risk of inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for IB if a class is not certified. 74. Plaintiffs seek certification of an injunctive and declaratory relief class pursuant to Rule 23(b)(2). IB has acted on grounds generally applicable to the Class, and the violations complained of herein are substantially likely to continue in the future if an injunction is not entered. Therefore, final injunctive relief and corresponding declaratory relief with respect to the Class as a whole is appropriate. 75. Plaintiffs seek certification of a Rule 23(b)(3) class. As detailed above, common questions regarding IB’s conduct predominate over any individual issues, and a class action is superior to the alternative of hundreds or thousands of individual cases involving the same core facts and claims. 76. In the alternative, Plaintiffs seek certification of an “issues” class pursuant to Rule 23(c)(4). This class would incorporate, and allow for the adjudication of, all issues the Court adjudges to be common to members of the class and subclass, such as one or more of the common issues identified by Plaintiffs in ¶ 65, supra. CAUSES OF ACTION FIRST COUNT Breach of Contract A. Breach of the Customer Agreement to Abide by applicable Rules and Regulations 77. Plaintiffs incorporate by reference the preceding paragraphs of this Complaint as if fully stated herein. 78. In order to use the IB trading platform, a potential customer must enter into the Customer Agreement with IB, which “governs the relationship between Customer and [IB].” Ex. 1, at ¶ 1. Therefore, Plaintiffs and each member of the Class entered into the Customer Agreement with IB. 79. The Customer Agreement states that “[a]ll transactions are subject to . . . applicable laws and regulations.” Id. at ¶ 6. 80. The “applicable laws and regulations” referenced in paragraph 6 of the Customer Agreement includes FINRA Rule 4210 regarding the proper calculation of margin requirements for Portfolio Margin Accounts. 81. In addition, the Customer Agreement specifically states that “Margin transactions are subject to initial and maintenance margin requirements of . . . regulators. . . .” Id. at ¶ 11(B). The “initial and maintenance margin requirements of . . . regulators” incorporates and includes FINRA Rule 4210 regarding the proper calculation of margin requirements for Portfolio Margin Accounts. 82. IB did not calculate margin requirements for the accounts of Plaintiffs and Class members in a manner consistent with FINRA Rule 4210. Specifically, IB’s risk-based margin calculations included ETNs in contravention to that rule. Such products are, by the explicit terms of FINRA Rule 4210, not eligible to be considered for purposes of portfolio margin calculations. 83. By including ETNs in its calculation of portfolio margin levels for the accounts of Plaintiffs and Class members, and thus failing to abide by “applicable laws and regulations” and “margin requirements of . . . regulators,” IB breached its Customer Agreement with Plaintiffs and members of the Class. 84. As such, IB breached its Customer Agreement with Plaintiffs and Class members. 85. IB’s breach of the Customer Agreement resulted in losses to Plaintiffs and Class members, and continues to expose them to harm in the form of investment losses that would not have been realized if IB had fulfilled its obligations under the Customer Agreement. 86. These losses reflect damages to Plaintiffs and Class members in an amount to be proven at trial or in a separate proceeding or proceedings if necessary. B. Breach of the Portfolio Margin Disclosure 87. Plaintiffs incorporate by reference the preceding paragraphs of this Complaint as if fully stated herein. 88. In order to open a portfolio margin account, a potential customer must acknowledge the FINRA mandated Portfolio Margin Disclosure modeled after FINRA NTM 08-09. Ex. 1. Such disclosure is incorporated by reference into the agreements governing the language between clients and IB. Therefore, Plaintiffs and each member of the Class entered are a party to the Portfolio Margin Disclosure with IB. 89. Paragraph 4 of the Portfolio Margin Disclosure details the only products eligible to receive portfolio margin treatment. Ex. 2, ¶ 4. ETNs are not included in that definition. Such disclosure constitutes an agreement between Plaintiffs and each member of the Class that IB would not apply portfolio margin to products other than those listed in Paragraph 4 of the Portfolio Margin Disclosure. 90. By including ETNs in its calculation of portfolio margin levels for the accounts of Plaintiffs and Class members, and thus failing to abide by the terms of the Portfolio Margin Disclosure, IB breached its agreement with Plaintiffs and each member of the Class. 91. IB’s breach of the terms of the Portfolio Margin Disclosure resulted in losses to Plaintiffs and Class members, and continues to expose them to harm in the form of investment losses that would not have been realized if IB had fulfilled its obligations under the Portfolio Margin Disclosure. 92. These losses reflect damages to Plaintiffs and Class members in an amount to be proven at trial or in a separate proceeding or proceedings if necessary. SECOND COUNT Promissory Estoppel 93. Plaintiffs incorporate by reference the preceding paragraphs of this Complaint as if fully stated herein, except for the paragraphs in the other Counts, infra and supra. 94. IB represented and promised to its customers in its Customer Agreement that it would conduct its calculation of portfolio margin requirements in a manner consistent with “applicable laws and regulations,” Ex. 1, at ¶ 6, and “subject to initial and maintenance margin requirements of … regulators. . . .” Id. at ¶ 11(B). 95. In addition, IB’s Portfolio Margin Disclosure Statement, which all customers must review and sign pursuant to the terms of the Customer Agreement (see id. at ¶ 11(A)), warrants that “[a]ll margin equity securities (as defined in Section 220.2 of Regulation T of the Board of Governors of the Federal Reserve System), warrants on margin equity securities or on eligible indices of equity securities, equity-based or equity-index based listed options, and security futures products (as defined in Section 3(a)(56) of the Securities Exchange Act of 1934) are eligible to be margined in a portfolio margin account.” Ex. 2, at ¶ 4. 96. Also, IB made public representations through website postings that it would not apply portfolio margin to ETNs. Ex. 3. 97. Plaintiffs and Class members justifiably relied on IB’s representations that it would calculate portfolio margin requirements in a manner consistent with applicable rules, such as FINRA Rule 4210, and its own Portfolio Margin Disclosure Statement. 98. IB failed to abide by “applicable laws and regulations” and the “margin requirements of . . . regulators,” in the form of including ETNs in its portfolio margin calculations for Plaintiffs and Class Members. 99. ETNs are not an equity security, nor a warrant or index of such securities, nor an option or a security future product. Instead, ETNs are debt instruments. 100. IB violated its own disclosures with regard to its customers with Portfolio Margin Accounts by including ETNs in IB’s portfolio margin calculations. 101. IB therefore violated its promise, set forth in the Customer Agreement, to abide by FINRA Rules with regard to the administration of Portfolio Management Accounts. 102. IB therefore acted in contradiction to its public and private pronouncements that it would not apply portfolio margin to ETNs. 103. As a direct and proximate result of IB’s breach of its explicit promises, Plaintiffs and Class members suffered losses, in the form of investment losses that would not have occurred if IB had fulfilled its promises. These losses reflect damages to Plaintiffs and Class members at an amount to be proven at trial. THIRD COUNT Unjust Enrichment 104. Plaintiffs incorporate by reference all other paragraphs of this Complaint as if fully stated herein, except for the paragraphs in the other Counts, infra and supra. 105. By improperly calculating portfolio margin requirements to include ETN positions, IB overstated the amount of funds available to Plaintiffs and Class members to make margin- financed trades. As a result of IB’s improper calculation methodology, margin-financed trades were made by Plaintiffs and Class members that would not have occurred but for the improper calculations. 106. IB received fees and/or commissions from every trade made by Plaintiffs and Class members on Portfolio Margin Accounts, including those trades that would not have been made but for the improper portfolio margin requirement calculations. 107. Additionally, IB charged interest on the margin loans that would not have been allowed but for the improper portfolio margin requirement calculations. 108. Also, IB received fees for lending securities for transactions that would not have been allowed but for the improper portfolio margin requirement calculations. 109. IB has therefore been unjustly enriched by these trades and margin loans that would not and should not have happened if IB had utilized appropriate and FINRA mandated portfolio margin requirement rules. 110. Plaintiffs and Class members conferred a benefit on IB of which IB had knowledge, as IB was aware that ETNs were not appropriate financial products for consideration in portfolio margin requirement calculation, as stated in FINRA rules. 111. The circumstances are such that it would be inequitable, unconscionable, and unjust to permit IB to retain the benefit of moneys that it unfairly obtained from Plaintiffs and other members of the Class. 112. Plaintiffs and Class members, having been harmed by IB’s conduct, are entitled to recover funds as a result of the unjust enrichment of IB to their detriment. FOURTH COUNT Breach of the Implied Covenant of Good Faith and Fair Dealing 113. Plaintiffs incorporate by reference all other paragraphs of this Complaint as if fully stated herein, except for the paragraphs in the other Counts, infra and supra. 114. The implied covenant of good faith and fair dealing, which inheres in every contract, obligates IB to honor its representations that it would calculate portfolio margin requirements in a manner consistent with FINRA Rule 4210 and IB’s own Portfolio Margin Risk Disclosure Statement. 115. IB breached this covenant by including ETNs in the calculation of the portfolio margin requirements for Plaintiffs and Class members. 116. As a direct and proximate result of IB’s breach, Plaintiffs and Class members suffered losses that would not have occurred if IB had fulfilled its promises. 117. These losses reflect damages to Plaintiffs and Class members in an amount to be proven at trial or in a separate proceeding or proceedings. FIFTH COUNT Negligence 118. Plaintiffs incorporates by reference all other paragraphs of this Complaint as if fully stated herein, except for the paragraphs in the other Counts, infra and supra. 119. IB had a duty to exercise reasonable care in conducting and facilitating transactions for its customers. 120. IB’s standard of care for its customers is codified in the form of regulations promulgated by FINRA, which has supervisory authority over broker-dealers and other entities in the financial industry. 121. IB unlawfully breached this duty by knowingly incorporating ETNs into the calculation of portfolio margin requirements for its customers, in violation of FINRA Rule 4210. 122. Defendant’s negligent and wrongful breaches of its duties owed to Plaintiffs and Class members proximately caused losses, in the form of investment losses that would not have occurred if IB had shown due care toward its customers by following the FINRA rules for Portfolio Margin accounts 123. These losses reflect damages to Plaintiffs and Class members in an amount to be proven at trial or in a separate proceeding or proceedings. SIXTH COUNT Declaratory and Injunctive Relief 124. Plaintiffs incorporate by reference all other paragraphs of this Complaint as if fully stated herein, except for the paragraphs in the other Counts, infra and supra. 125. There exists an actual controversy under the terms of the Customer Agreement, and applicable law governing the same, as to whether IB may consider ETNs in the calculation of portfolio margin requirements for Portfolio Margin Accounts. 126. This question is common to Plaintiffs and Class members who seek a declaration of their rights and legal obligations in addition to such other relief which might be granted by this 127. Pursuant to 28 U.S.C. § 2201, this Court may “declare the rights and legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 128. Plaintiffs and Class members are interested parties who seek a declaration of their rights and legal obligations vis-à-vis IB under the Customer Agreement, including declarations: (1) that IB is obligated under the Customer Agreement to calculate portfolio margin requirements by considering only those financial instruments that are approved by FINRA Rule 4210; (2) that IB has calculated portfolio margin requirements in a manner that considers ETNs, which are not authorized under FINRA Rule 4210; (3) that IB must, going forward, calculate portfolio margin requirements in strict conformity to FINRA Rule 4210, and therefore IB must not consider ETN positions for calculating portfolio margin requirements. 129. In addition to the declaration described above, Plaintiffs and the Class are now suffering, and will continue to suffer, irreparable injury from IB’s acts, in the form of exposure to excessive risk in portfolio margin trading. 130. Plaintiffs and the Class have no plain, adequate, or complete remedy at law to redress the wrongs alleged herein. As such, Plaintiffs seek injunctive relief on behalf of themselves and members of the Class to bar IB from continuing to calculate portfolio margin requirements in a manner inconsistent with FINRA Rule 4210. PRAYER FOR RELIEF WHEREFORE, Plaintiffs respectfully requests that the Court grant Plaintiffs and all Class members the following relief against the Defendant: A. For all recoverable compensatory and other damages sustained by Plaintiffs and the Class, to the extent not adjudicated in separate proceedings; B. For the disgorgement of all profits stemming from fees and commissions collected by IB associated with margin loans and trades in Portfolio Margin Accounts where ETN positions were subjected to portfolio margin treatment; C. A declaratory judgment that IB violated the terms of the Customer Agreement; D. An injunction preventing IB from calculating portfolio margin requirements using ETN positions, going forward; E. An award of attorneys’ fees and costs to counsel for Plaintiffs and the Class; F. An order certifying this action to be a proper class action pursuant to Federal Rule of Civil Procedure 23, establishing an appropriate Class or Classes and any Subclasses the Court deems appropriate, finding that Plaintiffs are proper representatives of the Class, and appointing the lawyers and law firms representing Plaintiffs as counsel for the Class; G. Such other relief as the Court deems just and proper. DEMAND FOR JURY TRIAL Plaintiffs demand a trial by jury on all counts so triable. Dated: December 1, 2017 KAPLAN FOX & KILSHEIMER LLP By: /s/ Frederic S. Fox Frederic S. Fox Frederic S. Fox Email: [email protected] Donald R. Hall, Jr. Email: [email protected] 850 Third Avenue, 14th Floor New York, NY 10022 Telephone: (212) 687-1980 Facsimile: (212) 687-7714 MEYER WILSON CO., LPA David Meyer Email: [email protected] Matthew R. Wilson Email: [email protected] Michael J. Boyle, Jr. Email: [email protected] 1320 Dublin Road, Ste. 100 Columbus, Ohio 43215 Telephone: (614) 224-6000 Facsimile: (614) 224-6066 (pro hac vices to be filed) SHEPHERD, SMITH, EDWARDS & KANTAS, LLP Samuel B. Edwards Email: [email protected] David W. Miller Email: [email protected] 1010 Lamar, Suite 900 Houston, TX 77002 Telephone: (713) 227-2400 Facsimile: (713) 227-7215 (pro hac vices to be filed) KAPLAN FOX & KILSHEIMER LLP Laurence D. King Email: [email protected] Matthew B. George Email: [email protected] 350 Sansome St., Suite 400 San Francisco, CA 94104 Telephone: (415) 772-4700 Facsimile: (415) 772-4707 (pro hac vice to be filed) Attorneys for Plaintiffs and the Proposed Class

securities

-7tUDIcBD5gMZwczP-cw

Seth M. Lehrman (178303) [email protected] EDWARDS POTTINGER LLC 425 North Andrews Avenue, Suite 2 Fort Lauderdale, FL 33301 Telephone: 954-524-2820 Facsimile: 954-524-2822 Attorney for Plaintiff Retina Associates Medical Group, Inc. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION CLASS ACTION JUNK-FAX COMPLAINT JURY TRIAL DEMANDED RETINA ASSOCIATES MEDICAL GROUP, INC., individually and on behalf of all others similarly situated, Plaintiff, v. KEELER INSTRUMENTS, INC., Defendant. ) ) ) ) ) ) ) ) ) ) ) ) Plaintiff Retina Associates Medical Group, Inc., brings this class action under Rule 23 of the Federal Rules of Civil Procedure against Defendant Keeler Instruments, Inc., for its violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA), and the regulations promulgated thereunder. JURISDICTION AND VENUE 1. This Court has federal question subject matter jurisdiction pursuant to 28 U.S.C. § 1331 and 47 U.S.C. § 227. 2. Venue in this judicial district is proper under 28 U.S.C. § 1391(b)(2), because a substantial part of the events or omissions giving rise to the claims in this case occurred in this District. 3. The Court has personal jurisdiction over Defendant because it conducts substantial business in this state, sent unlawful fax advertisements into this state, and engaged in tortious conduct with consequences directed into this state. 4. Many years ago, Defendant was registered with the California Secretary of State to transact business in California. 5. Defendant filed with the California Secretary of State a Certificate of Surrender of Right to Transact Intrastate Business on November 21, 2001, but has continued transacting business within this state. 6. Some of Defendant’s recent prior contacts within this state are, according to prior pages on Defendant’s website, that Defendant had booths at the American Society Cataract & Refractive Surgery trade show in Los Angeles on May 6-8, 2018, the American Academy of Orthopedic Surgery trade show in San Diego on March 15-17, 2017, the American Urological Association trade show in San Diego on May 7-10, 2016, and the American Society of Retina Specialists trade show in San Francisco on August 9-14, 2016, and the American Academy of Optometry trade show in Anaheim on November 9-11, 2016, and according to Defendant’s website Defendant will be attending a trade show at Ketchum University on October 25-27, 2018. 7. Defendant also markets to optometry students: Defendant’s website states that “Keeler is proud to offer high quality equipment and service to the following optometry schools,” and the website then lists “Southern California College of Optometry” and “University of California – Berkeley,” among others. www.keelerusa.com/students-and-residents.html (last visited Aug. 1, 2018). 8. Defendant’s website identifies Defendant’s Irvine, California distributor, www.keelerusa.com/ophthalmic/index.php/distributors/united- states/mz/ophthalmic-instruments-inc.html (last visited Aug. 1, 2018). PARTIES 9. Plaintiff Retina Associates Medical Group, Inc., is a citizen of the state of California, with its principal place of business in Orange County, California. 10. Defendant Keeler Instruments, Inc., is a Delaware corporation with its principal place of business in Malvern, Pennsylvania. 11. Defendant, directly or else through other persons acting on its behalf, conspired to, agreed to, contributed to, assisted with, or otherwise caused the wrongful acts and omissions, including the dissemination of the junk faxes addressed in this Complaint. THE FAX 12. On or about July 18, 2018, Defendant, or someone acting on its behalf, used a telephone facsimile machine, computer, or other device to send to Plaintiff’s telephone facsimile machine at (714) 633-7470 an unsolicited advertisement, a true and accurate copy of which is attached as Exhibit A (Fax). 13. Plaintiff received the Fax through Plaintiff’s facsimile machine. 14. The Fax, which includes pricing for 3mL eye drops, constitutes material advertising the quality or commercial availability of goods. 15. On information and belief, Defendant has sent other facsimile transmissions of material advertising the quality or commercial availability of goods to Plaintiff and to at least 40 other persons as part of a plan to broadcast fax advertisements, of which the Fax is an example, or, alternatively, the Fax was sent on Defendant’s behalf. 16. The Fax is not a customized document specific to Plaintiff. 17. On information and belief, Defendant approved, authorized and participated in the scheme to broadcast fax advertisements by (a) directing a list to be purchased or assembled, (b) directing and supervising employees or third parties to send the faxes, (c) creating and approving the fax form to be sent, and (d) determining the number and frequency of the facsimile transmissions. 18. Defendant had a high degree of involvement in, actual notice of, or ratified the unlawful fax broadcasting activity and failed to take steps to prevent such facsimile transmissions. 19. Defendant created, made, or ratified the sending of the Fax and other similar or identical facsimile advertisements to Plaintiff and other members of the “Class” as defined below. 20. The Fax to Plaintiff and, on information and belief, the similar facsimile advertisements sent by Defendant, lacked a proper notice informing the recipient of the ability and means to avoid future unsolicited advertisements. 21. Under the TCPA and 47 C.F.R. § 64.1200(a)(4)(iii), the opt-out notice for unsolicited faxed advertisements must meet the following criteria: (A) The notice is clear and conspicuous and on the first page of the advertisement; (B) The notice states that the recipient may make a request to the sender of the advertisement not to send any future advertisements to a telephone facsimile machine or machines and that failure to comply, within 30 days, with such a request meeting the requirements under paragraph (a)(4)(v) of this section is unlawful; (C) The notice sets forth the requirements for an opt-out request under paragraph (a)(4)(v) of this section (D) The notice includes— (1) A domestic contact telephone number and facsimile machine number for the recipient to transmit such a request to the sender; and (2) If neither the required telephone number nor facsimile machine number is a toll-free number, a separate cost-free mechanism including a Web site address or e-mail address, for a recipient to transmit a request pursuant to such notice to the sender of the advertisement. A local telephone number also shall constitute a cost-free mechanism so long as recipients are local and will not incur any long distance or other separate charges for calls made to such number; and (E) The telephone and facsimile numbers and cost-free mechanism identified in the notice must permit an individual or business to make an opt-out request 24 hours a day, 7 days a week. 22. The Fax and, on information and belief, Defendant’s similar facsimile advertisements lacked an opt-out notice containing a facsimile machine number, thereby violating 47 U.S.C. § 227(b)(2)(D)(iv)(I) and 47 C.F.R. § 64.1200(a)(4)(iii)(D)(1). 23. The Fax and, on information and belief, Defendant’s similar facsimile advertisements lacked a stating that the recipient may make a request to the sender of the advertisement not to send any future advertisements to a telephone facsimile machine or machines and that failure to comply, within 30 days, with such a request meeting the requirements for a proper opt-out request is unlawful, thereby violating 47 U.S.C. § 227(b)(2)(D)(ii) and 47 C.F.R. § 64.1200(a)(4)(iii)(B).. 24. On information and belief, Defendant faxed the same or other substantially similar facsimile advertisements to the members of the Class in California and throughout the United States without first obtaining the recipients’ prior express invitation or permission. 25. Defendant violated the TCPA by transmitting the Fax to Plaintiff and to the Class members without obtaining their prior express invitation or permission and by not displaying the proper opt-out notice required by 47 C.F.R. § 64.1200(a)(4). 26. Defendant knew or should have known that (a) facsimile advertisements, including the Fax, were advertisements, (b) Plaintiff and the other Class members had not given their express invitation or permission to receive facsimile advertisements, (c) no established business relationship existed with Plaintiff and the other Class members, and (d) Defendant’s facsimile advertisements did not display a proper opt-out notice. 27. Pleading in the alternative to the allegations that Defendant knowingly violated the TCPA, Plaintiff alleges that Defendant did not intend to send transmissions of facsimile advertisements, including the Fax, to any person where such transmission was not authorized by law or by the recipient, and to the extent that any transmissions of facsimile advertisement was sent to any person and such transmission was not authorized by law or by the recipient, such transmission was made based on Defendant’s own understanding of the law or on the representations of others on which Defendant reasonably relied. 28. The transmissions of facsimile advertisements, including the Fax, to Plaintiff and the Class caused concrete and personalized injury, including unwanted use and destruction of their property, e.g., toner or ink and paper, caused undesired wear on hardware, interfered with the recipients’ exclusive use of their property, cost them time, occupied their fax machines for the period of time required for the electronic transmission of the data, and interfered with their business or personal communications and privacy interests. CLASS ACTION ALLEGATIONS 29. Plaintiff brings this class action on behalf of the following class of persons, hereafter, the “Class”: All persons in the United States who on or after four years prior to the filing of this action, (1) were sent by or on behalf of Defendant a telephone facsimile message of material advertising the commercial availability or quality of any goods, (2) with respect to whom Defendant cannot provide evidence of prior express invitation or permission for the sending of such fax or (3) with whom Defendant did not have an established business relationship, and (4) the fax identified in subpart (1) of this definition (a) did not display a clear and conspicuous opt-out notice on the first page stating that the recipient may make a request to the sender of the advertisement not to send any future advertisements to a telephone facsimile machine or machines and that failure to comply, within 30 days, with such a request meeting the requirements under 47 C.F.R. § 64.1200(a)(4)(v) is unlawful or (b) lacked a facsimile number for sending the opt-out request. 30. Excluded from the Class are Defendant, its employees, agents, and members of the judiciary. 31. This case is appropriate as a class action because: a. Numerosity. On information and belief, based in part on review of the sophisticated Fax and online research, the Class includes at least 40 persons and is so numerous that joinder of all members is impracticable. b. Commonality. Questions of fact or law common to the Class predominate over questions affecting only individual Class members, e.g.: i. Whether Defendant engaged in a pattern of sending unsolicited fax advertisements; ii. Whether the Fax, and other faxes transmitted by or on behalf of Defendant, contains material advertising the commercial availability of any goods; iii. Whether the Fax, and other faxes transmitted by or on behalf of Defendant, contains material advertising the quality of goods; iv. The manner and method Defendant used to compile or obtain the list of fax numbers to which Defendant sent the Fax and other unsolicited faxed advertisements; v. Whether Defendant faxed advertisements without first obtaining the recipients’ prior express invitation or permission; vi. Whether Defendant violated 47 U.S.C. § 227; vii. Whether Defendant willfully or knowingly violated 47 U.S.C. § 227; viii. Whether Defendant violated 47 C.F.R. § 64.1200; ix. Whether the Fax, and the other fax advertisements sent by or on behalf of Defendant, displayed the proper opt-out notice required by 47 C.F.R. § 64.1200(a)(4); x. Whether the Court should award statutory damages per TCPA violation per fax; xi. Whether the Court should award treble damages per TCPA violation per fax; and xii. Whether the Court should enjoin Defendant from sending TCPA-violating facsimile advertisements in the future. c. Typicality. Plaintiff’s claim is typical of the other Class members’ claims, because, on information and belief, the Fax was substantially the same as the faxes sent by or on behalf of Defendant to the Class, and Plaintiff is making the same claim and seeking the same relief for itself and all Class members based on the same statute and regulation. d. Adequacy. Plaintiff will fairly and adequately protect the interests of the other Class members. Plaintiff’s counsel is experienced in TCPA class actions, having litigated many such cases, and having been appointed class counsel in multiple cases. Neither Plaintiff nor its counsel has interests adverse or in conflict with the Class members. e. Superiority. A class action is the superior method for adjudicating this controversy fairly and efficiently. The interest of each individual Class member in controlling the prosecution of separate claims is small and individual actions are not economically feasible. 32. The TCPA prohibits the “use of any telephone facsimile machine, computer or other device to send an unsolicited advertisement to a telephone facsimile machine.” 47 U.S.C. § 227(b)(1). 33. The TCPA defines “unsolicited advertisement,” as “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person’s express invitation or permission.” 47 U.S.C. § 227(a)(4). 34. The TCPA provides: Private right of action. A person may, if otherwise permitted by the laws or rules of court of a state, bring in an appropriate court of that state: (A) An action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation, (B) An action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater, or (C) Both such actions. 47 U.S.C. § 227(b)(3)(A)-(C). 35. The TCPA also provides that the Court, in its discretion, may treble the statutory damages if a defendant “willfully or knowingly” violated Section 227(b) or the regulations prescribed thereunder. 36. Defendant’s actions caused concrete and particularized harm to Plaintiff and the Class, as a. receiving Defendant’s faxed advertisements caused the recipients to lose paper and toner consumed in printing Defendant’s faxes; b. Defendant’s actions interfered with the recipients’ use of the recipients’ fax machines and telephone lines; c. Defendant’s faxes cost the recipients time, which was wasted time receiving, reviewing, and routing the unlawful faxes, and such time otherwise would have been spent on business activities; and d. Defendant’s faxes unlawfully interrupted the recipients’ privacy interests in being left alone and intruded upon their seclusion. 37. Defendant intended to cause damage to Plaintiff and the Class, to violate their privacy, to interfere with the recipients’ fax machines, or to consume the recipients’ valuable time with Defendant’s advertisements; therefore, treble damages are warranted under 47 U.S.C. § 227(b)(3). 38. Defendant knew or should have known that (a) Plaintiff and the other Class members had not given express invitation or permission for Defendant or anyone else to fax advertisements about Defendant’s goods, (b) the Fax and the other facsimile advertisements were advertisements, (c) Defendant did not have an established business relationship with Plaintiff and the other Class members, and (d) the Fax and the other facsimile advertisements did not display the proper opt-out notice. 39. Defendant violated the TCPA by transmitting the Fax to Plaintiff and substantially similar facsimile advertisements to the other Class members without obtaining their prior express invitation or permission and by not displaying the proper opt-out notice required by 47 C.F.R. § 64.1200(a)(4)(iii). WHEREFORE, Plaintiff, for itself and all others similarly situated, demands judgment against Defendant as follows: a. certify this action as a class action and appoint Plaintiff as Class representative; b. appoint the undersigned counsel as Class counsel; c. award damages of $500 per TCPA violation per facsimile pursuant to 47 U.S.C. § 227(a)(3)(B); d. award treble damages up to $1,500 per TCPA violation per facsimile pursuant to 47 U.S.C. § 227(a)(3); e. enjoin Defendant and its contractors, agents, and employees from continuing to send TCPA-violating facsimiles pursuant to 47 U.S.C. § 227(a)(3)(A); f. award class counsel reasonable attorneys’ fees and all expenses of this action and require Defendant to pay the costs and expenses of class notice and claim administration; g. award Plaintiff an incentive award based upon its time expended on behalf of the Class and other relevant factors; h. award Plaintiff prejudgment interest and costs; and i. grant Plaintiff all other relief deemed just and proper. DOCUMENT PRESERVATION DEMAND Plaintiff demands that Defendant take affirmative steps to preserve all records, lists, electronic databases, or other itemization of telephone or fax numbers associated with the Defendant and the communication or transmittal of advertisements as alleged herein. DATED: August 3, 2018 EDWARDS POTTINGER LLC /s/ Seth M. Lehrman Seth M. Lehrman Attorney for Plaintiff RETINA ASSOCIATES MEDICAL GROUP, INC.

privacy

luoNEocBD5gMZwcz5Qhs

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK x OKLAHOMA FIREFIGHTERS PENSION AND RETIREMENT SYSTEM, Individually and on Behalf of All Others Similarly Situated, Plaintiff, vs. LEXMARK INTERNATIONAL, INC., PAUL A. ROOKE, DAVID REEDER, GARY STROMQUIST, and MARTIN S. CANNING, Case No. CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS DEMAND FOR JURY TRIAL : : : : : : : : : : : : : : x Defendants. Plaintiff Oklahoma Firefighters Pension and Retirement System (“Oklahoma Firefighters” or “Plaintiff”), individually and on behalf of all others similarly situated, alleges the following based on personal knowledge as to Plaintiff and Plaintiff’s own acts, and upon information and belief as to all other matters based upon the investigation conducted by and through Plaintiff’s attorneys, which included, among other things, a review of Securities and Exchange Commission (“SEC”) filings by Lexmark International, Inc. (“Lexmark” or the “Company”), as well as conference call transcripts and media and analyst reports about the Company. Plaintiff believes that substantial evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. INTRODUCTION 1. This is a class action brought on behalf of all persons or entities who purchased or otherwise acquired the publicly traded securities of Lexmark between August 1, 2014 and July 20, 2015, both dates inclusive (the “Class Period”). The action is brought against Lexmark and certain of the Company’s senior executives (collectively, “Defendants”) for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rule l0b-5 promulgated thereunder. 2. Defendant Lexmark is a manufacturer of printers and related supplies, primarily ink cartridges. Lexmark sells its products to wholesale distributors and large retail chains in more than 90 countries around the world. Based on its 2014 financial results, 37 percent of Lexmark’s total revenues were generated within its Europe, Middle East and Africa (“EMEA”) segment. Supplies sales in Europe are especially critical to the EMEA segment. 3. Throughout the Class Period, Lexmark made false and misleading statements regarding its end-user demand, channel inventory, and growth prospects for its high-margin supplies business. The Company also failed to disclose deterioration in end-user demand and excessive inventory levels at its European wholesale distributors. Lexmark ultimately acknowledged that its supplies growth was not attributable to end-user demand but rather the result of its European customers buying ahead of customary price increases which produced excessive inventory. 4. The truth was finally revealed on July 21, 2015, when the Company reported poor results for its second quarter ending June 30, 2015 and lowered its 2015 sales guidance. Lexmark blamed these disappointing results on lower-than-expected supplies revenue from its European wholesale distributors. Lexmark explained that the Company had increased supplies prices for its European distributors three times between October 2014 and June 2015. In reaction to these price increases, European distributors immediately stocked up on supplies prior to the expiration of their fixed-price contracts while slowing down their purchases from Lexmark. 5. On this news, Lexmark stock dropped $9.57 per share, or 20.2 percent, wiping out approximately $550 million in market capitalization. 6. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. JURISDICTION AND VENUE 7. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC, 17 C.F.R. § 240.10b-5. 8. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §§ 1331 and 1337, and Section 27 of the Exchange Act, 15 U.S.C. § 78aa. 9. Venue is proper in this District pursuant to Section 27 of the Exchange Act and 28 U.S.C. §1391(b) as Defendants conduct business in this District, and a significant portion of the Defendant’s actions, and the subsequent damages, took place within this District. In addition, Lexmark’s stock traded on the New York Stock Exchange (“NYSE”), located within this District. 10. In connection with the acts alleged in this complaint, Defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including, but not limited to, the mails, interstate telephone communications, and the facilities of the national securities markets. PARTIES 11. Plaintiff Oklahoma Firefighters, as set forth in the accompanying Certification, which is incorporated by reference herein, purchased the common stock of Lexmark during the Class Period and was damaged as the result of Defendants’ wrongdoing as alleged in this complaint. 12. Defendant Lexmark is a global manufacturer of printers and related supplies. The Company’s stock was listed on the NYSE under the ticker symbol “LXK” during the Class Period. In November 2016, the Company was acquired for $2.5 billion by a consortium of private investors led by Apex Technology Co., Ltd. and PAG Asia Capital (the “Private Equity Purchasers”) and is no longer listed for trading. 13. Defendant Paul A. Rooke (“Rooke”) was throughout the Class Period, Chairman and Chief Executive Officer (“CEO”) of Lexmark. 14. Defendant David Reeder (“Reeder”) was throughout the Class Period, Vice President and Chief Financial Officer (“CFO”) of Lexmark. Reeder was named President and CEO of Lexmark in November 2016. 15. Defendant Gary Stromquist (“Stromquist”) was Lexmark’s interim CFO from May 20, 2014 through January 9, 2015. 16. Martin S. Canning (“Canning”) was throughout the Class Period, Executive Vice President and President of Lexmark’s Imaging Solutions and Services (“ISS”) division. 17. Defendants Rooke, Reeder, Stromquist, and Canning are collectively referred to hereinafter as the “Individual Defendants.” The Individual Defendants, because of their positions with the Company, possessed the power and authority to control the contents of Lexmark’s reports to the SEC, press releases, and presentations to securities analysts, money portfolio managers and institutional investors, i.e., the market. The Individual Defendants were provided with copies of the Company’s reports and press releases alleged herein to be misleading prior to, or shortly after, their issuance and had the ability and opportunity to prevent their issuance or cause them to be corrected. Because of their positions and access to material non-public information available to them, the Individual Defendants knew that the adverse facts specified herein had not been disclosed to, and were being concealed from, the public, and that the positive representations which were being made were then materially false and/or misleading. The Individual Defendants are liable for the false statements pleaded herein, as those statements were each “group-published” information, the result of the collective actions of the Individual Defendants. 18. Lexmark and the Individual Defendants are referred to herein, collectively, as “Defendants.” SUBSTANTIVE ALLEGATIONS Background 19. Lexmark is a manufacturer of printers and related supplies. The Company also provides customers with related software and services. Lexmark sells its products and services to wholesale distributors and large retail chains in more than 90 countries around the world. 20. The Company is managed along two operating segments: (1) Imaging Solutions and Services (“ISS”); and (2) Enterprise Software. The ISS segment accounted for 92 percent of Lexmark’s total 2014 revenues. Within the ISS segment, sales of printing supplies, which includes laser, inkjet, and dot matrix cartridges, accounted for 66 percent of the Company’s 2014 total revenues. 21. Based on its 2014 results, 43 percent of total 2014 revenues were generated in the United States, and 37 percent of total 2014 revenues were generated within Europe, Africa, and the Middle East (“EMEA”). Supplies sales in Europe are especially critical to the EMEA geographic area. 22. Lexmark relies on fixed-price supplies contracts to lock in prices charged to its customers for a set period, typically between one and five years. These contracts allow Lexmark’s customers to place unlimited orders for supplies during the contract term. Accordingly, Lexmark often protects its margins by “harmonizing” or “aligning” its product prices across all markets via price increases. 23. As early as 2009, Lexmark explained that whenever the Company announces price increases pursuant to harmonization strategies, Lexmark’s customers in the affected markets immediately “buy ahead” of price increases to secure more favorable pricing before their fixed-price contracts expire. This “buy-ahead” allows Lexmark’s customers to take advantage of their lower, fixed price rate before they will be forced into the higher prices upon expiration of their contracts. Materially False and Misleading Statements Issued During the Class Period 24. The Class Period begins August 1, 2014, when Lexmark filed a quarterly report on Form 10-Q with the SEC, announcing the Company’s financial and operating results for the quarterly period ended June 30, 2014 and fiscal year (“2014 2Q 10-Q”), and reaffirming the financial results announced in the press release issued on July 22, 2014. The 2014 2Q 10-Q contained signed certifications pursuant to the Sarbanes-Oxley Act of 2002 by Defendants Rooke and Stromquist, stating that the financial information contained in the 2014 2Q 10-Q was accurate and disclosed any material changes to the Company’s internal control over financial reporting. 25. On October 21, 2014, Lexmark reported better-than-expected profit for its Third Quarter 2014 Financial Results and stated that the Company’s “Laser supplies revenue of $533 million grew 2 percent year to year.” 26. On October 31, 2014, Lexmark filed a quarterly report on Form 10-Q with the SEC, announcing the Company’s financial and operating results for the quarterly period ended September 30, 2014 and fiscal year (“2014 3Q 10-Q”), and reaffirming the financial results announced in the press release issued on October 21, 2014. The 2014 3Q 10-Q contained signed certifications pursuant to the Sarbanes-Oxley Act of 2002 by Defendants Rooke and Stromquist, stating that the financial information contained in the 2014 3Q 10-Q was accurate and disclosed any material changes to the Company’s internal control over financial reporting. 27. On January 27, 2015, Lexmark issued a press release in which it announced its Fourth Quarter 2014 and Full Year 2014 Financial Results. Lexmark’s 2015 outlook forecasted earnings per share (“EPS”) of $1.81 to $2.01, or 45 to 60 percent growth over 2014 EPS first- quarter 2015 financial results. The Company also forecasted 2015 sales “to decline in the range of 3 to 5 percent year to year” due to Lexmark’s exit from its Inkjet business and additional currency headwinds. 28. During the related earnings call, CEO Rooke stated that to “offset these headwinds, we expect continued strong operational performance, as well as improvement in laser profitability as we drive [Managed Print Services or MPS], supplies price harmonization as needed, and ongoing cost and expense reductions.” In addition, in anticipation of investors’ concerns that the supplies channel was growing beyond optimal levels, CEO Rooke stated, “we’re going to try to hold the channel flat whereas . . . we had some growth last year.” 29. On the same earnings call, CFO Reeder’s prepared remarks focused on Lexmark’s high-margin supplies business and included the following: “Reflecting robust end- user demand, laser supplies revenue was quite strong . . . . Laser supplies revenue grew 5% year-to-year, and we continued to see good end-user demand for laser supplies, highlighting the continued growth in the quality of our MPS and large workgroup installed base.” 30. On February 10, 2015, the Company participated in the Goldman Sachs Technology & Internet Conference. Responding to questions concerning the growth of the Company’s supplies channel, Canning asserted that supplies growth was spurred by end-user demand, stating the following in pertinent part: [Our] strategy has been extremely successful . . . . Our sellout pages that we’re seeing now have been moving at a consistent mid to high single-digit level . . . . So we’re displacing competitors, we’re consolidating pages and putting more pages per device . . . . So we feel very good about this shift that we’ve been driving with our high-end versus low-end workgroup and the pages that are resulting from it.” We see competition sometimes waiting to see which way the customer is going to do it. We’re full-out driving it. We’ve had 29 consecutive quarters of growth in Managed Print Services, 15 consecutive years and 8 consecutive quarters of double-digit growth in Managed Print Services . . . . So we think we’re on the right path.” 31. In addition, Canning further stated the following when asked about supplies performance, its connection with increased channel inventory, and that conversely, competitors’ channel inventory has decreased: When I see channel movement on this side -- and I have to admit, I don’t see it all . . . . [T]he channel dynamics that we’re seeing make sense to me . . . . Ultimately, these channel partners are going to do what’s best for their business, and they just continue to move forward in a way that’s consistent . . . with the fundamentals that I see.” 32. On March 2, 2015, the Company filed its annual report on Form 10-K with the SEC, announcing the Company’s financial and operating results for the fiscal year ended December 31, 2014 (“2014 10-K”). The 2014 10-K contained signed certifications pursuant to the Sarbanes-Oxley Act of 2002 by Defendants Rooke and Reeder, stating that the financial information contained in the 2014 10-K was accurate and disclosed any material changes to the Company’s internal control over financial reporting. 33. On March 5, 2015, the Company participated in the Morgan Stanley Technology, Media & Telecom Conference. During the Company’s presentation, Reeder confirmed that Lexmark was in fact “doing price harmonization so there’s no cross border arbitrage . . . .” CFO Reeder further confirmed that Lexmark “took one [price harmonization] action in Europe in the fourth quarter[,]” but with respect to the prospect for subsequent price actions, CFO Reeder only stated, “stay tuned, we’ll see what happens here this year.” 34. Then, on April 28, 2015, Lexmark announced its Q1 2015 Financial Results and maintained its 2015 sales growth forecast of a 3.0 to 5.0 percent decline from 2014. During the relating earnings call, Reeder attributed the growth of Lexmark’s supplies business to end-user demand, and not to channel buy-ahead in response to the price harmonization strategy. Specifically, Reeder stated “[s]trong end-user demand was the primary driver of year-to-year growth, but we estimate that the Laser supplies channel inventory increased slightly. As experienced in the first quarter, channel inventory often increases ahead of price harmonization. We expect inventory to decline in the second quarter as the harmonization activity works its way through the channel. Geographically, we saw . . . a 2% decline in EMEA . . . .” 35. On the same call, in response to a question regarding the decline in supplies revenue growth and build-up in channel inventory, Rooke responded by touting the growth of Lexmark’s supplies business, stating “we remain encouraged about the activity we see, particularly in our core geographies in the US or North America and Europe . . . . [W]hen you factor in the currency and the slight channel movement there, we feel very good about the trajectory of our supplies business.” 36. On April 30, 2015, Lexmark filed a quarterly report on Form 10-Q with the SEC, announcing the Company’s financial and operating results for the quarterly period ended March 31, 2015 and fiscal year (“2015 1Q 10-Q”), and reaffirming the financial results announced in the press release issued on April 28, 2015. The 2015 1Q 10-Q contained signed certifications pursuant to the Sarbanes-Oxley Act of 2002 by Defendants Rooke and Reeder, stating that the financial information contained in the 2015 1Q 10-Q was accurate and disclosed any material changes to the Company’s internal control over financial reporting. 37. The statements contained in ¶¶ 24-36 were materially false and/or misleading when made because Defendants failed to disclose that: (1) end-user demand and growth for the Company’s supplies business was deteriorating; (2) pricing increases were the primary driver of supplies revenue growth, not end-user demand; (3) customers in the supplies channel reacted by buying ahead of anticipated pricing increases; and as a result, (4) there was excessive inventory levels at it European wholesale distributors. The Truth Emerges 38. The truth about Defendants’ misrepresentations was finally revealed on July 21, 2015, when Lexmark reported poor results for its second quarter ending June 30, 2015 and lowered its 2015 sales guidance. Lexmark blamed these disappointing results on lower-than- expected supplies revenue from its European wholesale distributors explaining that the Company was enduring “ongoing headwinds from the strong U.S. dollar and near-term laser supplies channel optimization particularly in EMEA . . . .” 39. On a related earnings call, analysts had trouble making sense of the supplies channel inventory. In response, Defendant Rooke acknowledged the inventory build-up and explained that the Company had increased supplies prices, stating in pertinent part: Now with the 2015 guidance, we’re factoring in a number of assumptions for the second half, including . . . a reduction in laser supply sell in to draw down channel inventory for laser supplies. We are focused on reducing laser supplies channel inventory, particularly in EMEA where our models and channel reporting show a buildup in channel inventory from the multiple cost actions we’ve taken worldwide as the US dollar strengthens. * * * This has come from a lot of the price actions we’ve taken in Europe over the last several quarters . . . . We saw a little bit of a sell out softness in the second quarter more than expected. As so as we drew down our supply sell in [sic] we didn’t see the reduction of channel inventory . . . . 40. On this news, shares of Lexmark dropped $9.57 per share, or 20.2 percent, to close at $37.75 per share on July 21, 2015. 41. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. CLASS ACTION ALLEGATIONS 42. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of all persons or entities who purchased or otherwise acquired the securities of Lexmark between August 1, 2014 and July 20, 2015, both dates inclusive (the “Class”). Excluded from the Class are Defendants, members of the immediate family of each of the Individual Defendants, any subsidiary or affiliate of Lexmark, and the directors and officers of Lexmark and their families and affiliates at all relevant times. 43. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Lexmark common stock was actively traded on the NYSE. While the exact number of Class members is unknown to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff believes that there are hundreds of thousands of members in the proposed Class. Record owners and other members of the Class may be identified from records maintained by Lexmark and/or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions. 44. Plaintiff’s claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that is complained of herein. 45. Plaintiff will fairly and adequately protect the interests of the members of the Class and has retained counsel competent and experienced in class action and securities litigation. 46. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are: (a) whether the Exchange Act was violated by Defendants as alleged herein; (b) whether statements made by Defendants misrepresented material facts about the business, operations and management of Lexmark; and (c) to what extent the members of the Class have sustained damages and the proper measure of damages. 47. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation make it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. UNDISCLOSED ADVERSE FACTS 48. The market for Lexmark’s securities was open, well-developed and efficient at all relevant times. As a result of these materially false and/or misleading statements, and/or failures to disclose, Lexmark’s securities traded at artificially inflated prices during the Class Period. Plaintiff and other members of the Class purchased or otherwise acquired Lexmark’s securities relying upon the integrity of the market price of the Company’s securities and market information relating to Lexmark, and have been damaged thereby. 49. During the Class Period, Defendants materially misled the investing public, thereby inflating the price of Lexmark’s securities, by publicly issuing false and/or misleading statements and/or omitting to disclose material facts necessary to make Defendants’ statements, as set forth herein, not false and/or misleading. These statements and omissions were materially false and/or misleading in that they failed to disclose material adverse information and/or misrepresented the truth about Lexmark’s business, operations, and prospects as alleged herein. 50. At all relevant times, the material misrepresentations and omissions particularized in this Complaint directly or proximately caused or were a substantial contributing cause of the damages sustained by Plaintiff and other members of the Class. As described herein, during the Class Period, Defendants made or caused to be made a series of materially false and/or misleading statements about Lexmark’s financial well-being and prospects. These material misstatements and/or omissions had the cause and effect of creating in the market an unrealistically positive assessment of the Company and its financial well-being and prospects, thus causing the Company’s securities to be overvalued and artificially inflated at all relevant times. Defendants’ materially false and/or misleading statements during the Class Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities at artificially inflated prices, thus causing the damages complained of herein. LOSS CAUSATION 51. During the Class Period, as detailed herein, Defendants made false and misleading statements and engaged in a scheme to deceive the market and a course of conduct that artificially inflated the prices of Lexmark securities, and operated as a fraud or deceit on Class Period purchasers of Lexmark securities by misrepresenting the value and prospects for the Company’s business, growth prospects, and accounting compliance. Later, when Defendants’ prior misrepresentations and fraudulent conduct were disclosed to the market, the price of Lexmark securities fell precipitously, as the prior artificial inflation came out of the price. As a result of their purchases of Lexmark securities during the Class Period, Plaintiff and other members of the Class suffered economic loss, i.e., damages, under the federal securities ADDITIONAL SCIENTER ALLEGATIONS 52. During the Class Period, as alleged herein, the Individual Defendants acted with scienter in that the Individual Defendants knew or were reckless as to whether the public documents and statements issued or disseminated in the name of the Company during the Class Period were materially false and misleading; knew or were reckless as to whether such statements or documents would be issued or disseminated to the investing public; and knowingly and substantially participated or acquiesced in the issuance or dissemination of such statements or documents as primary violations of the federal securities laws. 53. The Individual Defendants permitted Lexmark to release these false and misleading statements and failed to file the necessary corrective disclosures, which artificially inflated the value of the Company’s stock. 54. As set forth herein, the Individual Defendants, by virtue of their receipt of information reflecting the true facts regarding Lexmark, their control over, receipt, and/or modification of Lexmark’s allegedly materially misleading statements and omissions, and/or their positions with the Company that made them privy to confidential information concerning Lexmark, participated in the fraudulent scheme alleged herein. 55. The Individual Defendants are liable as participants in a fraudulent scheme and course of conduct that operated as a fraud or deceit on purchasers of Lexmark securities by disseminating materially false and misleading statements and/or concealing material adverse facts. The scheme deceived the investing public regarding Lexmark’s business, operations, and management and the intrinsic value of Lexmark securities and caused Plaintiff and members of the Class to purchase Lexmark securities at artificially inflated prices. INAPPLICABILITY OF STATUTORY SAFE HARBOR 56. The statutory safe harbor provided for forward-looking statements under certain circumstances does not apply to any of the allegedly false statements pleaded in this Complaint. The statements alleged to be false and misleading herein all relate to then-existing facts and conditions. In addition, to the extent certain of the statements alleged to be false may be characterized as forward looking, they were not identified as “forward-looking statements” when made and there were no meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the purportedly forward-looking statements. In the alternative, to the extent that the statutory safe harbor is determined to apply to any forward-looking statements pleaded herein, Defendants are liable for those false forward- looking statements because at the time each of those forward-looking statements were made, the speaker had actual knowledge that the forward-looking statement was materially false or misleading, and/or the forward-looking statement was authorized or approved by an executive officer of Lexmark who knew that the statement was false when made. PRESUMPTION OF RELIANCE 57. Plaintiff will rely upon the presumption of reliance established by the fraud-on- the-market doctrine in that, among other things: (a) Defendants made public misrepresentations or failed to disclose material facts during the Class Period; (b) the omissions and misrepresentations were material; (c) the Company’s stock traded in an efficient market; (d) the misrepresentations alleged would tend to induce a reasonable investor to misjudge the value of the Company’s securities; and (e) Plaintiff and other members of the Class purchased Lexmark securities between the time Defendants misrepresented or failed to disclose material facts and the time the true facts were disclosed, without knowledge of the misrepresented or omitted facts. 58. At all relevant times, the markets for Lexmark securities were efficient for the following reasons, among others: (a) as a regulated issuer, Lexmark filed periodic public reports with the SEC; (b) Lexmark regularly communicated with public investors via established market communication mechanisms, including through regular disseminations of press releases on the major news wire services and through other wide-ranging public disclosures, such as communications with the financial press, securities analysts, and other similar reporting services; (c) Lexmark was followed by several securities analysts employed by major brokerage firm(s) who wrote reports that were distributed to the sales force and certain customers of their respective brokerage firm(s) and that were publicly available and entered the public marketplace; and (d) Lexmark common stock was actively traded in an efficient market, namely the NYSE, under the ticker symbol “LXK.” 59. As a result of the foregoing, the market for Lexmark securities promptly digested current information regarding Lexmark from all publicly available sources and reflected such information in Lexmark’s stock price. Under these circumstances, all purchasers of Lexmark securities during the Class Period suffered similar injury through their purchase of Lexmark’s securities at artificially inflated prices and the presumption of reliance applies. 60. Further, to the extent that the Exchange Act Defendants concealed or improperly failed to disclose material facts with regard to the Company, Plaintiff is entitled to a presumption of reliance in accordance with Affiliated Ute Citizens v. United States, 406 U.S. 128, 153 (1972). COUNT I For Violation of Section 10(b) of the Exchange Act and Rule 10b-5 Against All Defendants 61. Plaintiff repeats and realleges each and every allegation contained in the foregoing paragraphs as if fully set forth herein. 62. During the Class Period, Defendants disseminated or approved the false statements specified above, which they knew or recklessly disregarded were misleading in that they contained misrepresentations and failed to disclose material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. 63. Defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 in that (a) Employed devices, schemes, and artifices to defraud; (b) Made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or (c) Engaged in acts, practices, and a course of business that operated as a fraud or deceit upon plaintiff and others similarly situated in connection with their purchases of Lexmark securities during the Class Period. 64. Plaintiff and the Class have suffered damages in that, in reliance on the integrity of the market, they paid artificially inflated prices for Lexmark securities. Plaintiff and the Class would not have purchased Lexmark securities at the prices they paid, or at all, if they had been aware that the market prices had been artificially and falsely inflated by Defendants’ misleading statements. 65. As a direct and proximate result of these Defendants’ wrongful conduct, Plaintiff and the other members of the Class suffered damages in connection with their purchases of Lexmark securities during the Class Period. COUNT II For Violation of Section 20(a) of the Exchange Act Against the Individual Defendants 66. Plaintiff repeats and realleges each and every allegation contained in the foregoing paragraphs as if fully set forth herein. 67. The Individual Defendants acted as controlling persons of Lexmark within the meaning of Section 20(a) of the Exchange Act. By virtue of their positions and their power to control public statements about Lexmark, the Individual Defendants had the power and ability to control the actions of Lexmark and its employees. By reason of such conduct, Defendants are liable pursuant to Section 20(a) of the Exchange Act. PRAYER FOR RELIEF WHEREFORE, Plaintiff prays for relief and judgment, as follows: A. Determining that this action is a proper class action, designating Plaintiff as Lead Plaintiff and certifying Plaintiff as a Class representative under Rule 23 of the Federal Rules of Civil Procedure and Plaintiff’s counsel as Lead Counsel; B. Awarding compensatory damages in favor of Plaintiff and the other Class members against all Defendants, jointly and severally, for all damages sustained as a result of Defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon; C. Awarding Plaintiff and the Class their reasonable costs and expenses incurred in this action, including counsel fees and expert fees; D. Awarding rescission or a rescissory measure of damages; and E. Awarding such equitable/injunctive or other relief as deemed appropriate by the JURY DEMAND Plaintiff demands a trial by jury. DATED: July 20, 2017 Respectfully submitted, /s/ Christopher J. Keller Christopher J. Keller Eric J. Belfi Francis P. McConville LABATON SUCHAROW LLP 140 Broadway New York, New York 10005 Telephone: (212) 907-0700 Facsimile: (212) 818-0477 [email protected] [email protected] [email protected] Counsel for Oklahoma Firefighters Pension and Retirement System

securities

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK JOSE R. CABRERA JR., Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. Case No. CLASS ACTION COMPLAINT JURY TRIAL DEMANDED ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) TAHOE RESOURCES INC., RONALD W. CLAYTON, C. KEVIN McARTHUR, ELIZABETH DIANNE McGREGOR, and MARK T. SADLER, Defendants. CLASS ACTION COMPLAINT Plaintiff Jose R. Cabrera Jr. (“Plaintiff”), individually and on behalf of all other persons similarly situated, by his undersigned attorneys, for his complaint against Defendants, alleges the following based upon personal knowledge as to itself and his own acts, and information and belief as to all other matters, based upon, inter alia, the investigation conducted by and through its attorneys, which included, among other things, a review of the Defendants’ public documents, conference calls and announcements made by Defendants, United States Securities and Exchange Commission (“SEC”) filings, wire and press releases published by and regarding Tahoe Resources Inc. (“Tahoe” or the “Company”), analysts’ reports and advisories about the Company, and information readily obtainable on the Internet. Plaintiff believes that substantial evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. NATURE OF THE ACTION 1. This is a federal securities class action on behalf of a class consisting of all persons other than defendants who purchased or otherwise acquired Tahoe securities between April 3, 2013 and July 5, 2017, both dates inclusive (the “Class Period”), seeking to recover damages caused by defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials. 2. Tahoe, together with its subsidiaries, explores, develops, and operates mines in the Americas. The Company primarily produces copper, gold, silver, lead/zinc, and natural gas and petroleum, as well as precious metals assets. 3. Formerly known as CKM Resources Inc., the Company changed its name to Tahoe Resources Inc. in January 2010. Tahoe is headquartered in Reno, Nevada, and its stock trades on the New York Stock Exchange (“NYSE”) under the ticker symbol “TAHO.” 4. On April 3, 2013, Tahoe announced that Guatemala’s Ministry of Energy and Mines (“MEM”) had granted the Company an exploitation license for the Escobal mine, a large silver mine located in the department of Santa Rosa in Southern Guatemala. 5. Throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Guatemala’s MEM had granted the Escobal mining license to Tahoe’s Minera San Rafael subsidiary without prior consultation with Guatemala’s Xinca indigenous people; (ii) the foregoing constituted a violation of Guatemalan law and provided a basis for suspension of the Escobal license; (iii) consequently, the Company’s revenues associated with the Escobal mining license were unlikely to be sustainable; and (iv) as a result of the foregoing, Tahoe’s public statements were materially false and misleading at all relevant times. 6. On July 6, 2017, Tahoe disclosed that the Supreme Court of Guatemala had issued a provisional decision suspending the Escobal mining license of Minera San Rafael, a Tahoe subsidiary, in connection with a legal action brought by the human rights organization Centro de Acción Legal Ambiental y Social de Guatemala (“CALAS”) against Guatemala’s MEM. CALAS alleges that MEM violated the Xinca indigenous people’s right of consultation prior to granting the Escobal mining license. 7. On this news, Tahoe’s common share price fell $2.74, or 33.01%, to close at $5.56 on July 6, 2017. 8. As a result of Defendants' wrongful acts and omissions, and the precipitous decline in the market value of the Company's securities, Plaintiff and other Class members have suffered significant losses and damages. JURISDICTION AND VENUE 9. The claims asserted herein arise under and pursuant to §§10(b) and 20(a) of the Exchange Act (15 U.S.C. §§78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. §240.10b-5). 10. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §§ 1331 and Section 27 of the Exchange Act. 11. Venue is proper in this Judicial District pursuant to §27 of the Exchange Act (15 U.S.C. §78aa) and 28 U.S.C. §1391(b). Tahoe’s securities trade on the NYSE, located within this Judicial District. 12. In connection with the acts, conduct and other wrongs alleged in this Complaint, defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including but not limited to, the United States mail, interstate telephone communications and the facilities of the national securities exchange. PARTIES 13. Plaintiff, as set forth in the attached Certification, acquired Tahoe securities at artificially inflated prices during the Class Period and was damaged upon the revelation of the alleged corrective disclosures. 14. Defendant Tahoe is headquartered in Reno, Nevada, with principal executive offices located at 5310 Kietzke Lane, Reno, Nevada 89511. The Company is incorporated in British Columbia, Canada. Tahoe’s shares trade on the NYSE under the ticker symbol “TAHO.” 15. Defendant Ronald W. Clayton (“Clayton”) has served as Tahoe’s Chief Executive Officer (“CEO”) since August 2016 and as Tahoe’s President since March 2014. From March 2010 until August 2016, Clayton served as Tahoe’s Chief Operating Officer. 16. Defendant C. Kevin McArthur (“McArthur”) served as Tahoe’s Chief Executive Officer from November 2009 until April 2015 and from August 2015 until August 2016. 17. Defendant Elizabeth Dianne McGregor (“McGregor”) has served as Tahoe’s Chief Financial Officer (“CFO”) and Vice President since August 2016. 18. Defendant Mark T. Sadler (“Sadler”) served as Tahoe’s CFO and Vice President from March 2013 until August 2016. 19. The defendants referenced above in ¶¶ 15-19 are sometimes referred to herein as the “Individual Defendants.” SUBSTANTIVE ALLEGATIONS Background 20. Tahoe, together with its subsidiaries, explores, develops, and operates mines in the Americas. The Company primarily produces copper, gold, silver, lead/zinc, and natural gas and petroleum, as well as precious metals assets. Materially False and Misleading Statements Issued During the Class Period 21. The Class Period begins on April 3, 2013, when Tahoe issued a press release entitled “Tahoe’s Escobal Project Receives Final Permit.” The press release stated, in relevant Tahoe Resources Inc. (TSX: THO, NYSE: TAHO) is pleased to announce that it has received the Escobal exploitation license from Guatemala’s Ministry of Energy and Mines. Construction activities remain on-budget and on-schedule for mill commissioning in the second half of 2013 and commercial production in early 2014. 22. On May 20, 2013, Tahoe issued a press release, concurrently filed as a Current Report on Form 6-K with the SEC, announcing the Company’s financial results for the quarter ending March 31, 2013 (the “Q1 2013 6-K”). For the quarter, Tahoe reported a net loss of $24.9 million, or $0.17 per share. 23. In the Q1 2013 6-K, Tahoe stated, in relevant part: Escobal Project Update The construction and underground development of the Escobal project is continuing on-schedule and on budget. Engineering, procurement and construction management was at 79 percent completion and underground development necessary for commencement of production was at 90 percent completion as of March 31, 2013. The Company completed 1,937 metres of underground development during the first quarter and 7,144 metres to date. 24. On August 8, 2013, Tahoe issued a press release, concurrently filed as a Current Report on Form 6-K with the SEC, announcing the Company’s financial results for the quarter ending June 30, 2013 (the “Q2 2013 6-K”). For the quarter, Tahoe reported a net loss of $24.9 million, or $0.11 per share. 25. In the Q2 2013 6-K, Tahoe stated, in relevant part: Escobal Project Update Construction and underground development of the Escobal project continues with early mill commissioning commencing in late June 2013. Initial production of metals concentrates is expected to begin in the late third quarter of 2013. Second quarter underground advance was 2,080 metres with total advance project to date at 9,221 metres. Access to 18 primary transverse and 18 secondary transverse stopes from the 1290 and 1265 footwall laterals was achieved at the end of the second quarter. Final development has been completed in the first five stopes and production drilling is advancing in the first three stopes as expected. Approximately 60,000 tonnes of mill feed stockpile is anticipated by mill start-up. Each of the stopes contains 30,000 to 50,000 tonnes. The project continues on schedule and on budget with full production anticipated to commence in the first quarter of 2014. The Company believes it has sufficient funds to complete construction and commence production. 26. On November 12, 2013, Tahoe issued a press release, subsequently filed as a Current Report on Form 6-K with the SEC, announcing the Company’s financial results for the quarter ending September 30, 2013 (the “Q3 2013 6-K”). For the quarter, Tahoe reported a net loss of $15.5 million, or $0.11 per share. 27. In the Q3 2013 6-K, Tahoe stated, in part: Escobal Project Update Mill commissioning continued through the quarter with first metals concentrate being produced on September 30, 2013 and the first concentrate being shipped on October 15, 2013. The Company plans to ramp-up to full production at the 3500 tpd level by the first quarter of 2014. The team at Escobal completed 2,102 metres of underground development during the quarter and 10,934 metres total to date. At the end of the quarter, ten stopes (underground mining areas) were available for production and an additional ten stopes were in final development. Stockpiled mill feed totaled 97,250 tonnes at an estimated grade of 487 grams per tonne (g/t) silver, 0.4 g/t gold, 0.7% lead and 1.3% zinc. All major components except the paste backfill plant have been fully commissioned to-date, and no impediments or bottlenecks to the 3500 tpd designed capacity have been identified. The paste plant is scheduled to be commissioned during the fourth quarter when the first mined-out stope is available for cemented backfill placement. Mill optimization operations are underway to produce commercially viable metals concentrates to the specifications outlined in the May 2012 Preliminary Economic Assessment (PEA). This work is moving forward satisfactorily and regular concentrate shipments to smelters have been underway for the past several weeks. The present priorities are to bring the metals concentrate qualities up to commercial specifications and to increase mill throughput to 3500 tpd. 28. On January 14, 2014, Tahoe issued a press release entitled “Tahoe Announces Commercial Production At Escobal.” The press release stated, in part: VANCOUVER, B.C. (January 14, 2014) – Tahoe Resources Inc. (TSX: THO, NYSE: TAHO) is pleased to announce that its Escobal mine in Guatemala has reached commercial production. Operations commenced in late September 2013 and production has been ramping towards the 3500 tonne per day (tpd) target level since that time. Tahoe President and CEO Kevin McArthur said, “Our Guatemalan team has done a terrific job in delivering this world-scale silver mine within four years of the company’s initial public offering. While we continue to optimize the mill, tailings filtration and paste backfill operations, this has been a remarkable start-up for a precious metals flotation plant over a very short time period.” “I am also pleased to report that we have commenced paying Guatemalan income taxes and look forward to making our first agreed upon royalty payments in the near future,” added Mr. McArthur. “Escobal mine has been designed and constructed to the highest environmental and social responsibility standards. We are very gratified to be working with our Guatemalan partners to bring sustainable benefits to a broad region of southeastern Guatemala through the development of Escobal.” (Emphasis added.) 29. On March 13, 2014, Tahoe filed an Annual Report on Form 40-F with the SEC, announcing the Company’s financial and operating results for the quarter and year ended December 31, 2013 the (“2013 40-F”). For the quarter, Tahoe reported a net loss of $9.57 million, or $0.07 per diluted share, on zero revenue, compared to a net loss of $24.92 million, or $0.17 per diluted share, on zero revenue for the same period in the prior year. For 2013, Tahoe reported a net loss of $65.6 million, or $0.45 per diluted share, on zero revenue, compared to a net loss of $93.45 million, or $0.65 per diluted share, on zero revenue for 2012. 30. In the 2013 40-F, with respect to its licenses regarding the Escobal mine, Tahoe stated, in relevant part: PERMITS Operational activities at the Escobal mine are conducted under permits and licenses issued by MEM and MARN. All required permits for surface and underground activities are in place. The environmental approvals and requirements for the Escobal mine from MARN are specified in Resolution 3061- 2011/DIGARN/ECM/beor, dated October 19, 2011. Exploitation activities are authorized by MEM through exploitation license LEXT 015-11, dated April 3, 2013 and through the export credential EXPORT –TI -13-2013, dated July 17, 2013 and amended on November 18, 2013. LEGAL On July 23, a Court of Appeals in Guatemala held that MEM should have conducted a hearing of a written opposition to the Escobal exploitation license during the permitting application process. The court did not rule on the substance or validity of the opposition; it merely stated that MEM was obligated to hold an administrative hearing addressing the substance of the opposition under the 1997 Mining Law. The Court did not invalidate or comment on the Escobal exploitation license in its decision. MEM issued a press release on July 24 stating that the ruling had no impact on the status of Escobal’s exploitation license. MEM and the company have appealed the lower court’s decision to the Constitutional Court. If the Constitutional Court upholds the Court of Appeals’ decision, MEM will have to hear the opposition which it already stated it believes to be without merit. A public hearing was held on the issue in November 2013. The Constitutional Court is expected to issue a ruling in the case sometime in the next several months. The Escobal exploitation license is required for the Company to operate the mill and to produce concentrate from the mine. All other permits required for continued exploration, construction and operations are in place. However, as the Escobal mine is the Company’s sole project, if the exploitation permit for Escobal is unexpectedly suspended, the Company will be unable to generate revenue. As a result and under such circumstances, the Company expects this would adversely impact its business, results of operations, financial performance and may result in default on the debt facility or reduction of workforce at the project. 31. The 2013 40-F contained signed certifications pursuant to the Sarbanes-Oxley Act of 2002 (“SOX”) by Defendants McArthur and Sadler, certifying that the 2013 40-F “fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended” and that “the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operation of the Company.” 32. On May 8, 2014, Tahoe issued a press release, concurrently filed as a Current Report on Form 6-K with the SEC, announcing the Company’s financial results for the quarter ending March 31, 2014 (the “Q1 2014 6-K”). For the quarter, Tahoe reported net earnings of $24.8 million, or $0.17 per share. 33. In the Q1 2014 6-K, Tahoe stated, in part: Tahoe Resources Inc. (TSX: THO, NYSE: TAHO) today reported financial results for the quarter ending March 31, 2014 and provided a production update for its Escobal silver mine in Guatemala. “We are extremely pleased with the Company’s first quarter of commercial production,” said Tahoe Chief Executive Officer Kevin McArthur. “The ramp-up to 3,500 tonnes per day (tpd) proceeded according to plan, and despite a handful of normal startup issues, the operations team maintained operating costs within expectations,” he added. “Furthermore, we have consistently delivered on promises to stakeholders. Escobal has been built to world standards, is a clean operation and is providing substantial economic benefits to the communities in Guatemala,” added Mr. McArthur. 34. On August 12, 2014, Tahoe issued a press release, concurrently filed as a Current Report on Form 6-K with the SEC, announcing the Company’s financial results for the quarter ending June 30, 2014 (the “Q2 2014 6-K”). For the quarter, Tahoe reported net earnings of $36.1 million, or $0.25 per share. 35. In the Q2 2014 6-K, Tahoe stated, in part: Tahoe Chief Executive Officer Kevin McArthur said, “The ramp-up and optimization at Escobal were completed as planned during the second quarter. We are very happy with the outstanding team performance at the Escobal mine, and we continue to make great strides towards accomplishing our 2014 goals. In addition to posting strong operating and financial results for the quarter, we have positioned the Company’s balance sheet to reflect a strong cash balance by year- end.” 36. On November 12, 2014, Tahoe issued a press release, concurrently filed as a Current Report on Form 6-K with the SEC, announcing the Company’s financial results for the quarter ending September 30, 2014 (the “Q3 2014 6-K”). For the quarter, Tahoe reported net earnings of $20.0 million, or $0.13 per share. 37. In the Q3 2014 6-K, Tahoe stated, in part: Tahoe Vice Chair and CEO Kevin McArthur said, “We have produced strong free cash flow in each of our first three quarters of production and paid down $25 million of our term debt this quarter. As the Escobal mine approaches our goal of 18 to 21 million ounces of silver production in its first year, the time is right to initiate a dividend that we believe is sustainable and can grow over time.” 38. On March 11, 2015, Tahoe filed an Annual Report on Form 40-F with the SEC, announcing the Company’s financial and operating results for the quarter and year ended December 31, 2014 the (“2014 40-F”). For the quarter, Tahoe reported net income of $9.84 million, or $0.07 per diluted share, on revenue of $65.4 million, compared to a net loss of $9.57 million, or $0.07 per diluted share, on zero revenue for the same period in the prior year. For 2014, Tahoe reported net income of $90.79 million, or $0.61 per diluted share, on revenue of $350.27 million, compared to a net loss of $65.6 million, or $0.45 per diluted share, on zero revenue for 2013. 39. In the 2014 40-F, with respect to its licenses regarding the Escobal mine, Tahoe stated, in relevant part: LEGAL APPEAL BEFORE THE CONSTITUTIONAL COURT On July 23, 2013, the Court of Appeals in Guatemala (“the Court”) held that MEM should have conducted a hearing of a written opposition to the Escobal mine exploitation license during the permitting application process. The Court did not rule on the substance or validity of the license; it merely stated that MEM was obligated to hold an administrative hearing addressing the substance of the opposition under the 1997 Mining Law. The Court did not invalidate or comment on the Escobal mine exploitation license in its decision. MEM issued a press release on July 24, 2013 stating that the ruling had no impact on the status of the Escobal mine exploitation license. MEM and the Company have appealed the Court’s decision to the Constitutional Court. If the Constitutional Court upholds the Court’s decision, MEM will likely be compelled to hear the opposition which it already stated it believes to be without merit. A public hearing of the appeal was held in November 2013. The Constitutional Court is expected to issue a ruling in the case sometime in the near future. . . . PERMITS Operations at the Escobal mine are conducted under permits and licenses issued by MEM and MARN. All required permits for surface and underground activities are in place. The environmental approvals and requirements for the Escobal mine from MARN are specified in Resolution 3061-2011/DIGARN/ECM/beor, dated October 19, 2011. Exploitation activities are authorized by MEM through exploitation license LEXT 015-11, dated April 3, 2013. The export of concentrates from the Escobal mine is licensed through MEM, with annual renewal requirements. The Company’s export license (EXPORT-TI-17-2014) is current and valid. 40. The 2014 20-F contained signed certifications pursuant to SOX by Defendants McArthur and Sadler, certifying that the 2014 40-F “fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended” and that “the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operation of the Company.” 41. On April 28, 2015, Tahoe issued a press release, subsequently filed as a Current Report on Form 6-K with the SEC, announcing the Company’s financial results for the quarter ending March 31, 2015 (the “Q1 2015 6-K”). For the quarter, Tahoe reported net earnings of $31.9 million, or $0.22 per share. 42. In the Q1 2015 6-K, Tahoe stated, in part: Escobal Update Mill throughput for the quarter was 335,174 tonnes at a silver grade of 500 grams per tonne (gpt). Development of the second mining front on the 1190 level is on track to meet the mid-year target. Commissioning of the fourth tailings filter is on schedule for the second quarter and the new paste plant is expected to be commissioned early in the third quarter, in advance of the 4500 tpd ramp-up. 43. On August 11, 2015, Tahoe issued a press release, concurrently filed as a Current Report on Form 6-K with the SEC, announcing the Company’s financial results for the quarter ending June 30, 2015 (the “Q2 2015 6-K”). For the quarter, Tahoe reported a net loss of $9.3 million, or $0.04 per share. 44. In the Q2 2015 6-K, Tahoe stated, in part: Escobal Operations Update Average mill throughput for the quarter was 4,288 tonnes per day (tpd), with an average silver head grade of 422 grams per tonne (g/t). Construction of the paste backfill plant is 85 percent complete, with final commissioning and start-up scheduled for September 2015. The Company anticipates annual cost reductions of $1 to $2 million per year when the new plant is operational. Installation and commissioning of the fourth tailing filter press has been completed. The filter press is operating at design specifications allowing the mill to reach the planned expansion to the 4500 tpd throughput rate. Installation of the second primary ventilation fan was near completion at the end of the second quarter with commissioning of the fan scheduled for the third quarter. “We are very pleased with the progress at Escobal during the quarter,” said Tahoe President and Chief Operating Officer Ron Clayton. “The expansion towards 4500 tpd is on schedule and on budget. As planned, our 2015 optimization program has been successful as demonstrated by the trend of unit cost reductions.” 45. On November 12, 2015, Tahoe issued a press release, subsequently filed as a Current Report on Form 6-K with the SEC, announcing the Company’s financial results for the quarter ending September 30, 2015 (the “Q3 2015 6-K”). For the quarter, Tahoe reported net earnings of $13.3 million, or $0.06 per share. 46. In the Q3 2015 6-K, Tahoe stated, in part: "Both Escobal and La Arena continue to produce at very low operating costs," said Tahoe Executive Chair Kevin McArthur. "In addition, we set a new quarterly production record of 5.8 million ounces of silver at Escobal, while achieving record revenues of $145.7 million, and we nearly broke the prior cash flow record, despite lower metals prices. Our balance sheet remains very strong and the construction at Shahuindo is on track for the first gold pour in early 2016," he added. . . . Escobal Operations Update Expansion construction activities are complete and Escobal is operating at the 4500 tpd throughput level. Cost optimization continues as illustrated in the table below, with approximately 20 percent reduction in operating cost from third quarter of 2015 compared to the same period in 2014. 47. On March 24, 2016, Tahoe filed an Annual Report on Form 40-F with the SEC, announcing the Company’s financial and operating results for the quarter and year ended December 31, 2015 the (“2015 40-F”). For the quarter, Tahoe reported a net loss of $107.72 million, or $0.55 per diluted share, on revenue of $154.89 million, compared to net income of $9.84 million, or $0.07 per diluted share, on revenue of $65.4 million for the same period in the prior year. For 2015, Tahoe reported a net loss of $71.91 million, or $0.35 per diluted share, on revenue of $519.72 million, compared to net income of $90.79 million, or $0.61 per diluted share, on revenue of $350.27 million for 2014. 48. In the 2015 40-F, with respect to its licenses regarding the Escobal mine, Tahoe stated, in relevant part: LEGAL APPEAL BEFORE THE CONSTITUTIONAL COURT On July 23, 2013, the Court of Appeals in Guatemala (“the Court”) held that MEM should have conducted a hearing of a written opposition to the Escobal Mine exploitation license during the permitting application process. The Court did not rule on the substance or validity of the license; it merely stated that MEM was obligated to hold an administrative hearing addressing the substance of the opposition under the 1997 Mining Law. The Court did not invalidate or comment on the Escobal exploitation license in its decision. MEM issued a press release on July 24, 2013 stating that the ruling had no impact on the status of the Company’s exploitation license. On July 25, 2013, MEM and the Company appealed the Court’s decision to the Constitutional Court and the Constitutional Court upheld the Court’s decision, compelling MEM to conduct a hearing on the opposition that MEM already found to be without merit. The claimants subsequently requested a clarification from the Constitutional Court, which is currently pending. . . . PERMITS Operations at the Escobal Mine are conducted under permits and licenses issued by MEM and MARN. All required permits for surface and underground activities are in place. The environmental approvals and requirements for the Escobal Mine from MARN are specified in Resolution 3061-2011/DIGARN/ECM/beor, dated October 19, 2011. Exploitation activities are authorized by MEM through exploitation license LEXT 015-11, dated April 3, 2013. The export of concentrates from the Escobal Mine is licensed through MEM, with annual renewal requirements. The Company’s export license (EXPORT 41-15) is current and valid. 49. The 2015 40-F contained signed certifications pursuant to SOX by Defendants McArthur and Sadler, certifying that the 2015 40-F “fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended” and that “the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operation of the Company.” 50. On May 3, 2016, Tahoe issued a press release, subsequently filed as a Current Report on Form 6-K with the SEC, announcing the Company’s financial results for the quarter ending March 31, 2016 (the “Q1 2016 6-K”). For the quarter, Tahoe reported net earnings of $35.5 million, or $0.16 per share. 51. In the Q1 2016 6-K, Tahoe stated, in part: Escobal Operations Update Average mill throughput at the Escobal mine was 4,264 tonnes per day with an average silver head grade of 524 grams per tonne (“gpt”) compared to average mill throughput of 3,724 tpd with an average silver head grade of 500 gpt in the first quarter of 2015. The mine produced metal concentrates containing 5.7 million ounces of silver, 3,298 ounces of gold, 2,738 tonnes of lead and 4,224 tonnes of zinc during the first quarter of 2016 compared to 4.6 million ounces of silver, 2,542 ounces of gold, 2,258 tonnes of lead and 3,410 tonnes of zinc for the same period in 2015. The average silver recovery to concentrates was 87.1% versus 85.0% in the first quarter of 2015. During the first quarter of 2016, 5,474 dry metric tonnes of lead concentrate and 7,018 dry metric tonnes of zinc concentrate containing approximately 4.6 million payable ounces of silver were shipped and sold to third party smelters. Concentrate sales during the quarter generated $78.2 million in revenues at mine operating costs of $46.5 million resulting in mine operating earnings of $31.7 million. Total cash costs per ounce of silver produced in concentrate, net of byproduct credits, for the first quarter of 2016 averaged $4.51, compared to $7.10 per ounce in the first quarter of 2015. AISC per ounce of silver, net of byproduct credits, averaged $5.97 per ounce versus $9.78 per ounce for the same period a year ago. Cost and productivity improvements in the mine and mill, coupled with favorable diesel fuel prices, continue to drive production costs lower. 52. On August 10, 2016, Tahoe issued a press release, subsequently filed as a Current Report on Form 6-K with the SEC, announcing the Company’s financial results for the quarter ending June 30, 2016 (the “Q2 2016 6-K”). For the quarter, Tahoe reported net earnings of $57.9 million, or $0.19 per share. 53. In the Q2 2016 6-K, Tahoe stated, in part: Silver Operations Escobal Average mill throughput at the Escobal mine during Q2 2016 was 4,388 tonnes per day (“tpd”) with an average silver head grade of 509 grams per tonne (“gpt”) compared to average mill throughput of 4,288 tpd with an average silver head grade of 422 gpt in Q2 2015. The mine produced metal concentrates containing 5.7 million ounces of silver, 2,711 ounces of gold, 2,699 tonnes of lead and 4,037 tonnes of zinc during Q2 2016 compared to 4.5 million ounces of silver, 2,069 ounces of gold, 1,958 tonnes of lead and 2,954 tonnes of zinc for the same period in 2015. The average silver recovery to concentrates was 87.6% versus 84.8% in Q2 2015. During Q2 2016, 6,024 dry metric tonnes of lead concentrate and 7,523 dry metric tonnes of zinc concentrate containing approximately 5.2 million payable ounces of silver were shipped and sold to third party smelters. Concentrate sales during the quarter generated $103.7 million in revenues at mine operating costs of $53.8 million resulting in mine operating earnings of $49.9 million. Cost and productivity improvements in the mine and mill, coupled with favorable diesel fuel prices, continue to drive production costs lower. Every 10% change in the price of diesel fuel impacts Escobal’s total cash costs and AISC by approximately $0.10 per ounce. The average price of diesel fuel used in power generation in the first half of 2016 was $1.60 per gallon compared to an assumed price of $2.60 per gallon used for the Company’s original 2016 cost guidance. 54. On November 3, 2016, Tahoe issued a press release, subsequently filed as a Current Report on Form 6-K with the SEC, announcing the Company’s financial results for the quarter ending September 30, 2016 (the “Q3 2016 6-K”). For the quarter, Tahoe reported net earnings of $63.0 million, or $0.20 per share. 55. In the Q3 2016 6-K, Tahoe stated, in part: Ron Clayton, Tahoe’s President and CEO, commented, “We are well on the way to a record year in 2016, including achieving our key production and cost guidance. Escobal is having an outstanding year with both production and unit costs running at or better than expected levels. Driven by our strong results at Escobal, we are on track to pay over $35 million in royalties and taxes in Guatemala in 2016, in addition to paying approximately $20 million in wages and benefits and making significant direct investments in support of nutritional programs, education, skills training, agriculture and infrastructure development in the communities surrounding the mine. We have over 1,000 employees at Escobal, 97% of whom are Guatemalan. We very much appreciate the efforts of our employees and the strong support we receive from the surrounding community. . . . Silver Operations Escobal Average mill throughput at the Escobal mine during Q3 2016 was 4,472 tonnes per day (“tpd”) at an average silver head grade of 444 grams per tonne (“gpt”) compared to average mill throughput of 4,446 tpd at an average silver head grade of 508 gpt in the third quarter of 2015 (“Q3 2015”). The mine produced metal concentrates containing 5.0 million ounces of silver, 2,314 ounces of gold, 2,017 tonnes of lead and 2,974 tonnes of zinc during Q3 2016 compared to 5.8 million ounces of silver, 3,744 ounces of gold, 2,862 tonnes of lead and 4,033 tonnes of zinc for the same period in 2015. The average silver recovery to concentrates was 84.8% versus 87.1% in Q3 2015, with the reduction reflecting lower grades and the introduction of ore from the East Zone to the process plant. During Q3 2016, 5,072 dry metric tonnes (“dmt”) of lead concentrate and 5,845 dry metric tonnes of zinc concentrate containing approximately 4.8 million payable ounces of silver were shipped and sold to third party smelters compared to 6,687 dmt of lead concentrate and 6,113 dmt of zinc concentrate containing approximately 5.5 million payable ounces of silver shipped and sold during Q3 2015. Concentrate sales during the quarter generated $103.5 million in revenues at mine operating costs of $47.7 million resulting in mine operating earnings of $55.8 million. Concentrate sales for Q3 2015 generated $82.6 million in revenues at operating costs of $60.0 million resulting in a mine operating earnings of $22.6 million. Cost and productivity improvements in the mine and mill, coupled with favorable diesel fuel prices, continue to drive low production costs. Every 10% change in the price of diesel fuel impacts Escobal’s total cash costs and AISC by approximately $0.10 per ounce. The average price of diesel fuel used in power generation in Q3 YTD 2016 was approximately $2.00 per gallon compared to an assumed price of $2.60 per gallon used for the Company’s original 2016 cost guidance. 56. On March 10, 2017, Tahoe filed an Annual Report on Form 40-F with the SEC, announcing the Company’s financial and operating results for the quarter and year ended December 31, 2016 the (“2016 40-F”). For the quarter, Tahoe reported net income of $0.32 million, or zero per diluted share, on revenue of $189.4 million, compared to a net loss of $107.72 million, or $0.55 per diluted share, on revenue of $154.89 million for the same period in the prior year. For 2016, Tahoe reported net income of $117.88 million, or $0.41 per diluted share, on revenue of $784.5 million, compared to a net loss of $71.91 million, or $0.35 per diluted share, on revenue of $519.72 million for 2015. 57. In the 2016 40-F, with respect to its licenses regarding the Escobal mine, Tahoe stated, in relevant part: LEGAL APPEAL BEFORE THE CONSTITUTIONAL COURT On July 23, 2013, the Court of Appeals in Guatemala (the “Court”) held that MEM should have conducted a hearing of a written opposition to the Escobal Mine Exploitation License (“Opposition”) during the permitting application process. The Court did not rule on the substance or validity of the license; it merely stated that MEM was obligated to hold an administrative hearing addressing the substance of the Opposition under the 1997 Mining Law. MEM issued a press release on July 24, 2013 stating that the ruling had no impact on the status of the Company’s exploitation license. On July 25, 2013, MEM and the Company appealed the Court’s decision to the Constitutional Court and the Constitutional Court upheld the Court’s decision, compelling MEM to conduct a hearing on the Opposition that MEM already found to be without merit. The claimants subsequently requested a clarification from the Constitutional Court, which the Court denied in early May 2016. In June 2016, MEM commenced the hearing process and then suspended it indefinitely. The Opposition involves dated claims of prospective environmental harm (no such harm has materialized since production at Escobal began three years ago) and new claims of inadequate consultation. Based on the legal posture of the case, the lack of environmental harm after three years of operations and the extensive consultation process that MSR followed prior to issuance of the license, the Company expects a favorable ruling. . . . PERMITS Operations at the Escobal Mine are conducted under permits and licenses issued by MEM and MARN. All required permits for surface and underground activities are in place. The environmental approvals and requirements for the Escobal Mine from MARN are specified in Resolution 3061-2011/DIGARN/ECM/beor, dated October 19, 2011. Exploitation activities are authorized by MEM through exploitation license LEXT 015-11, dated April 3, 2013. The export of concentrates from the Escobal Mine is licensed through MEM, with annual renewal requirements. The Company’s export license (EXPORT-TI-10-2016) is current and valid. 58. The 2016 40-F contained signed certifications pursuant to SOX by Defendants Clayton and McGregor, certifying that the 2016 40-F “fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended” and that “the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operation of the Company.” 59. On May 2, 2017, Tahoe issued a press release, concurrently filed as a Current Report on Form 6-K with the SEC, announcing the Company’s financial results for the quarter ending March 31, 2017 (the “Q1 2017 6-K”). For the quarter, Tahoe reported net earnings of $74.7 million, or $0.24 per share. 60. In the Q1 2017 6-K, Tahoe stated, in part: Another excellent quarter at Escobal – Tahoe reported total silver production in Q1 2017 of 5.7 million ounces driven by strong results at Escobal. Q1 2017 silver production was 17% higher than the previous quarter and the highest quarterly production since Q1 2016 (5.7 million ounces). Total cash costs and all-in sustaining costs (“AISC”) were $5.72 and $8.11 per ounce of silver produced, net of byproduct credits, respectively, better than the $6.48 and $9.76 per ounce recorded in Q4 2016 and well below the full-year target ranges included in the Company’s 2017 guidance. . . . Silver Operations Escobal Mill throughput averaged 4,332 tonnes per day (“tpd”) during Q1 2017. The mill processed a total of 0.4 million tonnes at an average silver head grade of 520 grams per tonne (“g/t”) with an average silver recovery of 86% during the quarter. The mine produced metal concentrates containing 5.6 million payable ounces of silver, 2,500 ounces of gold, 2,200 tonnes of lead and 3,200 tonnes of zinc in Q1 2017. Silver production for the quarter compared favourably to full-year 2017 guidance and was 17% higher than the previous quarter and largely in line with Q1 2016 levels. A total of 5.5 million ounces of silver in concentrate were sold in Q1 2017, which was approximately one million ounces more than was sold in Q4 2016 and Q1 2016. Concentrate sales during the quarter generated $113.1 million in revenues at mine operating costs of $53.5 million resulting in mine operating earnings of $59.6 million. Total cash costs net of by-product credits for Q1 2017 were $5.72 per ounce, while AISC were $8.11 per ounce. Per ounce silver costs averaged below the target ranges included in the Company’s full-year 2017 guidance and improved from Q4/16. Total cash costs in Q1 2017 were $1.21 per ounce or 27% higher than in Q1 2016, while AISC increased by $2.14 per ounce or 36% from the same quarter a year earlier. The increase in total cash costs and AISC was primarily the result of an additional $5.3 million in royalty expense during Q1 2017 as a result of the finalization of sales above the $16.00 per ounce threshold when compared to Q1 2016. AISC were also impacted by a $5.8 million increase in sustaining capital. 61. The statements referenced in ¶¶ 21-60 were materially false and misleading because defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operational and compliance policies. Specifically, defendants made false and/or misleading statements and/or failed to disclose that: (i) Guatemala’s MEM had granted the Escobal mining license to Tahoe’s Minera San Rafael subsidiary without prior consultation with Guatemala’s Xinca indigenous people; (ii) the foregoing constituted a violation of Guatemalan law and provided a basis for suspension of the Escobal license; (iii) consequently, the Company’s revenues associated with the Escobal mining license were unlikely to be sustainable; and (iv) as a result of the foregoing, Tahoe’s public statements were materially false and misleading at all relevant times. The Truth Emerges 62. On July 6, 2017, Tahoe issued a press release, entitled “Guatemalan Lower Court Issues Ruling on Tahoe’s Mining License.” The press release stated, in part: VANCOUVER, British Columbia – July 5, 2017 – Tahoe Resources Inc. (TSX: THO, NYSE: TAHO) (“Tahoe” or the “Company”) today reported that the Company has learned that the Supreme Court of Guatemala has issued a provisional decision in respect of an action brought by the anti-mining organization, CALAS, against Guatemala’s Ministry of Energy and Mines (“MEM”). The action alleges that MEM violated the Xinca Indigenous people’s right of consultation in advance of granting the Escobal mining license to Tahoe’s Guatemalan subsidiary, Minera San Rafael. The provisional decision is in respect of a request by CALAS for an order to temporarily suspend the license to operate the Escobal mine until the action is fully heard. The Company understands that no Xinca representative or community is currently participating in the CALAS lawsuit against MEM. The provisional decision suspends the Escobal mining license of Minera San Rafael while the action is being reviewed by the court. The Company was not a party to the action commenced by CALAS and did not previously have standing to make submissions to the court in respect of the provisional application. This decision confers legal standing on the Company which will now take all legal steps possible to have the ruling reversed and the license reinstated as soon as possible, including immediately appealing the decision to the Constitutional Court. . . . While the Company cannot determine at this time when or if the suspension will be rescinded and the license will be reinstated, including for purposes of conducting a consultation process, we believe ILO 169 does not apply here, and if it did apply, was already met. We understand that the effect of ruling in favour of CALAS could mean that consultation must occur before the suspension is revoked. It could also mean, as happened in similar cases in Guatemala, that the court could allow operations to resume while a consultation process is conducted. We believe that the timeframe to undertake the consultation processes, and for a reconsideration of our application for the issue of the license, could be in the range of six to 12 months. Upon formal receipt of the order temporarily suspending the license for Escobal, the mine will be placed on stand-by and is planned to be maintained in a manner such that full production can be expeditiously resumed on a reversal of the suspension. During this time, the Company will continue to maintain its high standard of security and environmental protection. 63. On this news, Tahoe’s common share price fell $2.74, or 33.01%, to close at $5.56 on July 6, 2017. 64. As a result of Defendants' wrongful acts and omissions, and the precipitous decline in the market value of the Company's securities, Plaintiff and other Class members have suffered significant losses and damages. PLAINTIFF’S CLASS ACTION ALLEGATIONS 65. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who purchased or otherwise acquired Tahoe securities during the Class Period (the “Class”); and were damaged upon the revelation of the alleged corrective disclosures. Excluded from the Class are defendants herein, the officers and directors of the Company, at all relevant times, members of their immediate families and their legal representatives, heirs, successors or assigns and any entity in which defendants have or had a controlling interest. 66. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Tahoe securities were actively traded on the NYSE. While the exact number of Class members is unknown to Plaintiff at this time and can be ascertained only through appropriate discovery, Plaintiff believes that there are hundreds or thousands of members in the proposed Class. Record owners and other members of the Class may be identified from records maintained by Tahoe or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions. 67. Plaintiff’s claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by defendants’ wrongful conduct in violation of federal law that is complained of herein. 68. Plaintiff will fairly and adequately protect the interests of the members of the Class and has retained counsel competent and experienced in class and securities litigation. Plaintiff has no interests antagonistic to or in conflict with those of the Class. 69. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are: • whether the federal securities laws were violated by defendants’ acts as alleged herein; • whether statements made by defendants to the investing public during the Class Period misrepresented material facts about the business, operations and management of Tahoe; • whether the Individual Defendants caused Tahoe to issue false and misleading financial statements during the Class Period; • whether defendants acted knowingly or recklessly in issuing false and misleading financial statements; • whether the prices of Tahoe securities during the Class Period were artificially inflated because of the defendants’ conduct complained of herein; and • whether the members of the Class have sustained damages and, if so, what is the proper measure of damages. 70. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation make it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. 71. Plaintiff will rely, in part, upon the presumption of reliance established by the fraud-on-the-market doctrine in that: • defendants made public misrepresentations or failed to disclose material facts during the Class Period; • the omissions and misrepresentations were material; • Tahoe securities are traded in an efficient market; • the Company’s shares were liquid and traded with moderate to heavy volume during the Class Period; • the Company traded on the NYSE and was covered by multiple analysts; • the misrepresentations and omissions alleged would tend to induce a reasonable investor to misjudge the value of the Company’s securities; and • Plaintiff and members of the Class purchased, acquired and/or sold Tahoe securities between the time the defendants failed to disclose or misrepresented material facts and the time the true facts were disclosed, without knowledge of the omitted or misrepresented facts. 72. Based upon the foregoing, Plaintiff and the members of the Class are entitled to a presumption of reliance upon the integrity of the market. 73. Alternatively, Plaintiff and the members of the Class are entitled to the presumption of reliance established by the Supreme Court in Affiliated Ute Citizens of the State of Utah v. United States, 406 U.S. 128, 92 S. Ct. 2430 (1972), as Defendants omitted material information in their Class Period statements in violation of a duty to disclose such information, as detailed above. COUNT I (Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Promulgated Thereunder Against All Defendants) 74. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. 75. This Count is asserted against defendants and is based upon Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder by the SEC. 76. During the Class Period, defendants engaged in a plan, scheme, conspiracy and course of conduct, pursuant to which they knowingly or recklessly engaged in acts, transactions, practices and courses of business which operated as a fraud and deceit upon Plaintiff and the other members of the Class; made various untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and employed devices, schemes and artifices to defraud in connection with the purchase and sale of securities. Such scheme was intended to, and, throughout the Class Period, did: (i) deceive the investing public, including Plaintiff and other Class members, as alleged herein; (ii) artificially inflate and maintain the market price of Tahoe securities; and (iii) cause Plaintiff and other members of the Class to purchase or otherwise acquire Tahoe securities and options at artificially inflated prices. In furtherance of this unlawful scheme, plan and course of conduct, defendants, and each of them, took the actions set forth herein. 77. Pursuant to the above plan, scheme, conspiracy and course of conduct, each of the defendants participated directly or indirectly in the preparation and/or issuance of the quarterly and annual reports, SEC filings, press releases and other statements and documents described above, including statements made to securities analysts and the media that were designed to influence the market for Tahoe securities. Such reports, filings, releases and statements were materially false and misleading in that they failed to disclose material adverse information and misrepresented the truth about Tahoe’s finances and business prospects. 78. By virtue of their positions at Tahoe, defendants had actual knowledge of the materially false and misleading statements and material omissions alleged herein and intended thereby to deceive Plaintiff and the other members of the Class, or, in the alternative, defendants acted with reckless disregard for the truth in that they failed or refused to ascertain and disclose such facts as would reveal the materially false and misleading nature of the statements made, although such facts were readily available to defendants. Said acts and omissions of defendants were committed willfully or with reckless disregard for the truth. In addition, each defendant knew or recklessly disregarded that material facts were being misrepresented or omitted as described above. 79. Information showing that defendants acted knowingly or with reckless disregard for the truth is peculiarly within defendants’ knowledge and control. As the senior managers and/or directors of Tahoe, the Individual Defendants had knowledge of the details of Tahoe’s internal affairs. 80. The Individual Defendants are liable both directly and indirectly for the wrongs complained of herein. Because of their positions of control and authority, the Individual Defendants were able to and did, directly or indirectly, control the content of the statements of Tahoe. As officers and/or directors of a publicly-held company, the Individual Defendants had a duty to disseminate timely, accurate, and truthful information with respect to Tahoe’s businesses, operations, future financial condition and future prospects. As a result of the dissemination of the aforementioned false and misleading reports, releases and public statements, the market price of Tahoe securities was artificially inflated throughout the Class Period. In ignorance of the adverse facts concerning Tahoe’s business and financial condition which were concealed by defendants, Plaintiff and the other members of the Class purchased or otherwise acquired Tahoe securities at artificially inflated prices and relied upon the price of the securities, the integrity of the market for the securities and/or upon statements disseminated by defendants, and were damaged thereby. 81. During the Class Period, Tahoe securities were traded on an active and efficient market. Plaintiff and the other members of the Class, relying on the materially false and misleading statements described herein, which the defendants made, issued or caused to be disseminated, or relying upon the integrity of the market, purchased or otherwise acquired shares of Tahoe securities at prices artificially inflated by defendants’ wrongful conduct. Had Plaintiff and the other members of the Class known the truth, they would not have purchased or otherwise acquired said securities, or would not have purchased or otherwise acquired them at the inflated prices that were paid. At the time of the purchases and/or acquisitions by Plaintiff and the Class, the true value of Tahoe securities was substantially lower than the prices paid by Plaintiff and the other members of the Class. The market price of Tahoe securities declined sharply upon public disclosure of the facts alleged herein to the injury of Plaintiff and Class members. 82. By reason of the conduct alleged herein, defendants knowingly or recklessly, directly or indirectly, have violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. 83. As a direct and proximate result of defendants’ wrongful conduct, Plaintiff and the other members of the Class suffered damages in connection with their respective purchases, acquisitions and sales of the Company’s securities during the Class Period, upon the disclosure that the Company had been disseminating misrepresented financial statements to the investing COUNT II (Violations of Section 20(a) of the Exchange Act Against The Individual Defendants) 84. Plaintiff repeats and realleges each and every allegation contained in the foregoing paragraphs as if fully set forth herein. 85. During the Class Period, the Individual Defendants participated in the operation and management of Tahoe, and conducted and participated, directly and indirectly, in the conduct of Tahoe’s business affairs. Because of their senior positions, they knew the adverse non-public information about Tahoe’s misstatement of income and expenses and false financial statements. 86. As officers and/or directors of a publicly owned company, the Individual Defendants had a duty to disseminate accurate and truthful information with respect to Tahoe’s financial condition and results of operations, and to correct promptly any public statements issued by Tahoe which had become materially false or misleading. 87. Because of their positions of control and authority as senior officers, the Individual Defendants were able to, and did, control the contents of the various reports, press releases and public filings which Tahoe disseminated in the marketplace during the Class Period concerning Tahoe’s results of operations. Throughout the Class Period, the Individual Defendants exercised their power and authority to cause Tahoe to engage in the wrongful acts complained of herein. The Individual Defendants therefore, were “controlling persons” of Tahoe within the meaning of Section 20(a) of the Exchange Act. In this capacity, they participated in the unlawful conduct alleged which artificially inflated the market price of Tahoe securities. 88. Each of the Individual Defendants, therefore, acted as a controlling person of Tahoe. By reason of their senior management positions and/or being directors of Tahoe, each of the Individual Defendants had the power to direct the actions of, and exercised the same to cause, Tahoe to engage in the unlawful acts and conduct complained of herein. Each of the Individual Defendants exercised control over the general operations of Tahoe and possessed the power to control the specific activities which comprise the primary violations about which Plaintiff and the other members of the Class complain. 89. By reason of the above conduct, the Individual Defendants are liable pursuant to Section 20(a) of the Exchange Act for the violations committed by Tahoe. PRAYER FOR RELIEF WHEREFORE, Plaintiff demands judgment against Defendants as follows: A. Determining that the instant action may be maintained as a class action under Rule 23 of the Federal Rules of Civil Procedure, and certifying Plaintiff as the Class representative; B. Requiring Defendants to pay damages sustained by Plaintiff and the Class by reason of the acts and transactions alleged herein; C. Awarding Plaintiff and the other members of the Class prejudgment and post- judgment interest, as well as their reasonable attorneys’ fees, expert fees and other costs; and D. Awarding such other and further relief as this Court may deem just and proper. DEMAND FOR TRIAL BY JURY Plaintiff hereby demands a trial by jury. Dated: July 7, 2017 Respectfully submitted, POMERANTZ LLP /s/ Jeremy A. Lieberman Jeremy A. Lieberman J. Alexander Hood II 600 Third Avenue, 20th Floor New York, New York 10016 Telephone: (212) 661-1100 Facsimile: (212) 661-8665 Email: [email protected] [email protected] POMERANTZ LLP Patrick V. Dahlstrom 10 South La Salle Street, Suite 3505 Chicago, Illinois 60603 Telephone: (312) 377-1181 Facsimile: (312) 377-1184 Email: [email protected] Attorneys for Plaintiff

securities

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POMERANTZ LLP Jennifer Pafiti (SBN 282790) 1100 Glendon Avenue, 15th Floor Los Angeles, California 90024 Telephone: (310) 405-7190 [email protected] Attorney for Plaintiff [Additional Counsel on Signature Page] '20CV1066 WVG JAH UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA JEANNETTE CALVO, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. Case No. CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS DEMAND FOR JURY TRIAL SORRENTO THERAPEUTICS, INC., HENRY JI, and MARK R. BRUNSWICK, Defendants. Plaintiff Jeannette Calvo (“Plaintiff”), individually and on behalf of all other persons similarly situated, by Plaintiff’s undersigned attorneys, for Plaintiff’s complaint against Defendants, alleges the following based upon personal knowledge as to Plaintiff and Plaintiff’s own acts, and information and belief as to all other matters, based upon, inter alia, the investigation conducted by and through Plaintiff’s attorneys, which included, among other things, a review of the Defendants’ public documents, conference calls and announcements made by Defendants, United States (“U.S.”) Securities and Exchange Commission (“SEC”) filings, wire and press releases published by and regarding Sorrento Therapeutics, Inc. (“Sorrento” or the “Company”), analysts’ reports and advisories about the Company, and information readily obtainable on the Internet. Plaintiff believes that substantial evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. NATURE OF THE ACTION 1. This is a federal securities class action on behalf of a class consisting of all persons other than Defendants who purchased or otherwise acquired Sorrento securities between May 15, 2020, and May 22, 2020, both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the 1 Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials. 2. Sorrento was founded in 2006 and is based in San Diego, California. Sorrento is a clinical stage biopharmaceutical company that engages in the development of therapies for the treatment of cancer, autoimmune, inflammatory, and neurodegenerative diseases. 3. On May 8, 2020, Sorrento announced a collaboration with Mount Sinai Health System (“Mount Sinai”) for the purpose of “generat[ing] antibody products that would act as a ‘protective shield’ against SARS-CoV-2 coronavirus infection, potentially blocking and neutralizing the activity of the virus in naïve at-risk populations as well as recently infected individuals.” 4. On May 15, 2020, during pre-market hours, news sources reported that Sorrento had announced discovery of the STI-1499 antibody, which the Company described as providing “100% inhibition” of COVID-19. That same day, Defendant Henry Ji, Ph.D. (“Ji”), founder and Chief Executive Officer (“CEO”) of Sorrento referred to Sorrento’s breakthrough as a “cure.” 5. On this news, Sorrento’s stock price rose $4.14 per share, or 158.02%, to close at $6.76 per share on May 15, 2020, on unusually heavy trading volume. The stock continued to increase after hours and opened at $9.98 per share on May 2 18, 2020, trading at a high of $10.00 per share that same day, which represented an increase of 281.68% from the May 14, 2020 closing price. 6. Throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Sorrento had overstated the prospects of the STI-1499 antibody for completely inhibiting COVID-19; (ii) the foregoing, once revealed, was foreseeably likely to have a material negative impact on the Company’s financial results; and (iii) as a result, the Company’s public statements were materially false and misleading at all relevant times. 7. On May 18, 2020, during pre-market hours, Vital Knowledge Media, an online investor information resource, expressed skepticism over Sorrento’s announcement regarding the discovery of the STI-1499 antibody, describing the Company’s statements as “very disingenuous” and stating that “some of the narratives around drugs and vaccines” needed to be tempered. 8. On this news, Sorrento’s stock price fell $0.26 per share, or 3.85%, to close at $6.50 per share on May 18, 2020. 9. On May 19, 2020, during pre-market hours, BayStreet.ca Media Corp (“BayStreet”), a leading Canadian online investor news resource, published an article entitled “Sell Sorento,” which alleged that statements made by Defendant Ji 3 about the STI-1499 antibody were misleading. Specifically, the article called into question Ji’s representations to Fox News, wherein Ji stated “[w]e want to emphasize there is a cure” and “[t]here is a solution that works 100 percent,” noting that “[a]stute investors should recognize that no true biotechnology firm would make such a claim” and “Sorrento may just want to get attention and push up the value of its stock” given that “[i]ts balance sheet is poor with a debt/equity of 2 times.” The article ultimately concluded by calling the Company’s stock “speculative” and cautioned investors to “[a]void.” 10. On this news, Sorrento’s stock price fell $1.08 per share, or 16.62%, to close at $5.42 per share on May 19, 2020. 11. On May 20, 2020, Hindenburg Research (“Hindenburg”) published a report (the “Hindenburg Report”) doubting the validity of Sorrento’s claims and calling them “sensational,” “nonsense” and “too good to be true.” Hindenburg spoke with researchers at Mount Sinai who stated that Sorrento’s announcement was “very hyped” and that “nothing in medicine is 100%.” The Hindenburg Report also asserted that Sorrento faced significant solvency concerns ahead of its announcement regarding a supposed COVID-19 cure, citing statements by former employees, and asserted that “Sorrento’s actions are manipulative at the worst possible time and simply amount to an attempt to shamelessly profiteer off the pandemic.” 4 12. However, that same day, Defendant Ji appeared on Yahoo! Finance to rebut the Hindenburg Report, stating that “investor[s] suspecting . . . another pump and dump” were wrong and that “when you see a virus is not infecting the healthy cell, you know you have the real deal” and “eventually the market [will] catch[] up.” 13. On the Hindenburg Report and rebuttal news, Sorrento’s stock price closed at $5.70 per share on May 20, 2020, representing a decline of $4.30 per share, or 43.00%, from the Class Period high, on unusually high volume. 14. Finally, on May 22, 2020, Hindenburg published a post on Twitter, alleging that, moments ago, Defendant Ji had “walked back his comments about having a cure,” that Hindenburg “believe[s] this amounts to flagrant securities fraud when compared to his statements to Fox [News] last week,” and “encourag[ed] regulators to investigate any stock sales in the interim.” Specifically, Hindenburg cited comments Ji made in an interview with BioSpace, an online life science industry news outlet. The BioSpace article stated that in a May 21, 2020 interview with Defendants Ji and Mark R. Brunswick, Ph.D. (“Brunswick”), Ji “insist[ed] that they did not say it was a cure.” Ji is quoted as saying: [I]f it gets through safety studies, if it demonstrates efficacy, it potentially is a cure—if you have the antibody in the blood and it prevents infection. After virus infection, if it blocks the virus from replicating in healthy cells continuously, you might have a cure. We cannot cure the late-stage patients, on ventilators, because of all the other comorbidities and complications. Those are not the job of the antibodies. 5 (Emphases in original.) 15. On this news, Sorrento’s stock price closed at $5.07 per share on May 22, 2020, representing a decline of $4.93 per share, or 49.3%, from the Class Period high, on unusually high volume. 16. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. JURISDICTION AND VENUE 17. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. § 240.10b-5). 18. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. § 1331 and Section 27 of the Exchange Act. 19. Venue is proper in this Judicial District pursuant to Section 27 of the Exchange Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1391(b). Substantial acts in furtherance of the alleged fraud or the effects of the fraud have occurred in this Judicial District. Many of the acts charged herein, including the dissemination of materially false and/or misleading information, occurred in substantial part in this Judicial District. In addition, the Company’s principal executive offices are located in this Judicial District. 6 20. In connection with the acts alleged in this complaint, Defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including, but not limited to, the mails, interstate telephone communications, and the facilities of the national securities markets. PARTIES 21. Plaintiff, as set forth in the attached Certification, acquired Sorrento securities at artificially inflated prices during the Class Period and was damaged upon the revelation of the alleged corrective disclosures. 22. Defendant Sorrento is a Delaware corporation with principal executive offices located at 4955 Directors Place, San Diego, California 92121. Sorrento common stock trades in an efficient market on the Nasdaq Stock Market (“NASDAQ”) under the ticker symbol “SRNE.” 23. Defendant Ji was Sorrento’s Co-Founder, Chairman of the Board of Directors, CEO, and President at all relevant times. He has also served as a Director of Sorrento since January 2006, and previously served as Sorrento’s Chief Scientific Officer from November 2008 to September 2012. 24. Defendant Brunswick was the Vice President of Regulatory Affairs and Quality of Sorrento at all relevant times. 25. Defendants Ji and Brunswick are sometimes referred to herein collectively as the “Individual Defendants.” 7 26. The Individual Defendants possessed the power and authority to control the contents of Sorrento’s SEC filings, press releases, and other market communications. The Individual Defendants were provided with copies of Sorrento’s SEC filings and press releases alleged herein to be misleading prior to or shortly after their issuance and had the ability and opportunity to prevent their issuance or to cause them to be corrected. Because of their positions with Sorrento, and their access to material information available to them but not to the public, the Individual Defendants knew that the adverse facts specified herein had not been disclosed to and were being concealed from the public, and that the positive representations being made were then materially false and misleading. The Individual Defendants are liable for the false statements and omissions pleaded herein. 27. Sorrento and the Individual Defendants are sometimes collectively referred to herein as “Defendants.” SUBSTANTIVE ALLEGATIONS Background 28. Sorrento was founded in 2006 and is based in San Diego, California. Sorrento is a clinical stage biopharmaceutical company that engages in the development of therapies for the treatment of cancer, autoimmune, inflammatory, and neurodegenerative diseases. 8 29. On May 8, 2020, Sorrento announced a collaboration with Mount Sinai for the purpose of “generat[ing] antibody products that would act as a ‘protective shield’ against SARS-CoV-2 coronavirus infection, potentially blocking and neutralizing the activity of the virus in naïve at-risk populations as well as recently infected individuals.” Materially False and Misleading Statements Issued During the Class Period 30. The Class Period begins on May 15, 2020, when Fox News reported that Sorrento had made a “coronavirus antibody breakthrough,” which the Company would announce in a press release later that day, citing an exclusive interview with Defendant Ji (the “Fox News Report”). Specifically, Sorrento claimed to have discovered the STI-1499 antibody, which it stated can provide “100% inhibition” of COVID-19. 31. The Fox News Report also quoted Defendant Ji, who touted, in relevant part: “We want to emphasize there is a cure. There is a solution that works 100 percent . . . . If we have the neutralizing antibody in your body, you don't need the social distancing. You can open up a society without fear . . . . This puts its arms around the virus. It wraps around the virus and moves them out of the body . . . . This is the best solution . . . .” Defendant Ji’s statement misleadingly referred to Sorrento’s research as a “cure.” 9 32. Additionally, the Fox News Report quoted Defendant Brunswick, who touted, in relevant part: “As soon as [the COVID-19 antibody] is infused, that patient is now immune to the disease . . . . For the length of time, the antibody is in that system. So, if we were approved [by the FDA] today, everyone who gets that antibody can go back to work and have no fear of catching COVID-19.” (Alteration in original). Defendant Brunswick’s statement misleadingly conflated Sorrento’s finding of 100% inhibition in an in vitro virus infection with 100% inhibition in a “patient.” 33. Later that day, Sorrento issued a press release announcing its discovery of the STI-1499 antibody, which the Company again described as providing “100% inhibition” of COVID-19 (the “May 2020 Press Release”). Specifically, that press release touted, in relevant part, that Sorrento’s “anti-SARS-CoV-2 antibody, STI- 1499, demonstrated 100% inhibition of SARS-CoV-2 virus infection in an in vitro virus infection experiment at a very low antibody concentration”; that “Sorrento has been diligently screening billions of antibodies” and, “[a]mong the antibodies showing neutralizing activity, one antibody stood out for its ability to completely block SARS-CoV-2 infection of healthy cells in the experiments,” namely, STI- 1499, which “completely neutralized the virus infectivity at a very low antibody dose, making it a prime candidate for further testing and development”; and that 10 “[i]nitial biochemical and biophysical analyses also indicate STI-1499 is a potentially strong antibody drug candidate.” 34. Additionally, the May 2020 Press Release quoted Defendant Ji, who touted, in relevant part: “Our STI-1499 antibody shows exceptional therapeutic potential and could potentially save lives following receipt of necessary regulatory approvals. We at Sorrento are working day and night to complete the steps necessary to get this product candidate approved and available to the waiting public[.]” 35. Following this news, Sorrento’s stock price rose $4.14 per share, or 158.02%, to close at $6.76 per share on May 15, 2020, on unusually heavy trading volume. The stock continued to increase after hours and opened at $9.98 per share on May 18, 2020, trading at a high of $10.00 per share that same day, which represented an increase of 281.68% from the May 14, 2020 closing price. 36. The statements referenced in ¶¶ 30-34 were materially false and misleading because Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Sorrento had overstated the prospects of the STI-1499 antibody for completely inhibiting COVID-19; (ii) the foregoing, once revealed, was foreseeably likely to have a material negative impact on the 11 Company’s financial results; and (iii) as a result, the Company’s public statements were materially false and misleading at all relevant times. The Truth Begins to Emerge 37. On May 18, 2020, during pre-market hours, Vital Knowledge Media, an online investor information resource, expressed skepticism over Sorrento’s announcement regarding the discovery of the STI-1499 antibody, describing the Company’s statements as “very disingenuous” and stating that “some of the narratives around drugs and vaccines” needed to be tempered. 38. On this news, Sorrento’s stock price fell $0.26 per share, or 3.85%, to close at $6.50 per share on May 18, 2020. 39. On May 19, 2020, during pre-market hours, BayStreet, a leading Canadian online investor news resource, published an article entitled “Sell Sorento,” which alleged that statements made by Defendant Ji about the STI-1499 antibody were misleading. Specifically, the article called into question Ji’s representations to Fox News, wherein Ji stated “[w]e want to emphasize there is a cure” and “[t]here is a solution that works 100 percent,” noting that “[a]stute investors should recognize that no true biotechnology firm would make such a claim” and “Sorrento may just want to get attention and push up the value of its stock” given that “[i]ts balance sheet is poor with a debt/equity of 2 times.” The article ultimately concluded by calling the Company’s stock “speculative” and cautioned investors to “[a]void.” 12 40. On this news, Sorrento’s stock price fell $1.08 per share, or 16.62%, to close at $5.42 per share on May 19, 2020. 41. On May 20, 2020, Hindenburg published a report doubting the validity of Sorrento’s claims and calling them “sensational,” “nonsense” and “too good to be true.” Hindenburg spoke with researchers at Mount Sinai who stated that Sorrento’s announcement was “very hyped” and that “nothing in medicine is 100%.” The Hindenburg Report also asserted that Sorrento faced significant solvency concerns ahead of its announcement regarding a supposed COVID-19 cure, citing statements by former employees, and asserted that “Sorrento’s actions are manipulative at the worst possible time and simply amount to an attempt to shamelessly profiteer off the pandemic.” 42. Specifically, with respect to the comments from the researchers at Mount Sinai, which Sorrento had a collaboration agreement with, the Hindenburg Report stated, in relevant part: When reached via e-mail about the Fox News article, one researcher at the Department of Medicine and Microbiology at Mt. Sinai told us: “This looks very hyped. You need massive amounts of antibody to achieve this. This is the reason why this is not used for influenza. Too expensive, too much antibody needed. This cannot be a solution for everybody. There are no data yet in humans. For Ebola, there were several antibodies that worked like this one in vitro, but only a few are protective in vivo. Bottom line, very early in development to know feasibility.” 13 A second Mt. Sinai research worker that we reached via e-mail simply told us that: “In general terms…nothing in medicine is 100%. Nothing.” We also communicated with Dr. Charles Rice, the Chair in Virology & Head of the Laboratory of Virology and Infectious Disease at Rockefeller University, who told us: “I don’t know the details of the Sorrento MAb but their claims at this apparent stage of development, without clinical data, seem overstated. There are dozens of groups developing these antibodies and time (and appropriate tests) will tell which are most effective. As a general solution or “cure” it is unlikely that an infused product, even if long lasting, will cover all of the bases needed to control this infection.” Finally, a PhD at the National Institute of health warned us: “…be cognizant of the stage of the research (ex. if there is only data in vitro, which means in a petri dish).” (Emphases in original.) 43. Hindenburg also cited “a former C-suite [Sorrento] executive, who worked at the company for years and has followed its developments closely,” who stated that, “[i]f you now identify an antibody that binds to an epitope of the viral spike protein, and you thereby inhibit that virus to bind to the ACE-2 entry receptor on the human cell and you thereby inhibit infection, my loose estimate would be that there are literally hundreds of [research and development] groups that have something like that” (emphasis in original). Furthermore, the former employee “warned . . . about making such bold claims with in vitro results,” stating, “you do know that when somebody has data from an agent that shows efficacy in an in vitro 14 assay – that if you then say I have now a cure, then this statement can only be understood narrowly . . . ” (emphasis in original). The former C-suite executive also stated “I would have never in my life issued a press release where . . . I say we have a cure” (emphasis in original). 44. The Hindenburg Report also cited two other former Sorrento employees. For example, a former Vice President of Sorrento, who worked at the Company recently for about a year, stated “I suggest extreme skepticism regarding any claims made by Sorrento.” Additionally, a former senior scientist at the Company for more than six years stated: “It is too early to really tell if it will translate in vivo. And we would have to see safety data. Also, their announced timeline seems very aggressive[.]” 45. The Hindenburg Report also included the following quote from George Yancopoulos, Co-Founder, President, and Chief Scientific Officer of Regeneron, a company that is also researching an antibody treatment for COVID-19, which provides additional context of the stages of development of some of Sorrento’s competitors in the field: Several companies have previously announced that they have already generated very potent anti-viral neutralizing antibodies – including our company as we announced a while back. That is only the first step, and there are many more steps to manufacture and progress such antibodies into clinical trials – I believe most accounts suggest that our company and probably one other company (Lilly) are the leaders into progressing these antibodies into clinical trials, and both of us are planning on doing this in the next few weeks. And then there are the challenges of 15 successfully carrying out these clinical trials, which is also not guaranteed. I am not aware of any data suggesting Sorrento’s single Ab is as good as the many others that had already been previously generated (such as ours or Lilly’s), nor that they have any of the required downstream capabilities, nor that they have demonstrated any capabilities or success previously in other programs (such as the success we demonstrated with our related efforts against Ebola), and they seemingly are substantially behind the leaders at this time. So it is very hard to seriously evaluate the Sorrento effort. (Emphasis in original.) 46. However, that same day, Defendant Ji appeared on Yahoo! Finance to rebut the Hindenburg Report, stating: So you have the antibody that can prevent the virus infecting healthy cells. That means you’re going to have a real product. If you have a real product, eventually the stock is going to be reflecting the assets you have. And we believe right now probably there’s a lot of investor excited about this story. However, there is a lot of investor suspecting this is another pump and dump, which is typical, which is normal, but we don’t believe that’s the case. And we have working with academic collaborator with a real virus infection. And when you see a virus is not infecting the healthy cell, you know you have the real deal. 47. The statements referenced in ¶ 46 were materially false and misleading because Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Sorrento had overstated the prospects of the STI-1499 antibody for completely inhibiting COVID-19; (ii) the foregoing, once 16 revealed, was foreseeably likely to have a material negative impact on the Company’s financial results; and (iii) as a result, the Company’s public statements were materially false and misleading at all relevant times. 48. On the Hindenburg Report and rebuttal news, Sorrento’s stock price closed at $5.70 per share on May 20, 2020, representing a decline of $4.30 per share, or 43.00%, from the Class Period high, on unusually high volume. 49. Finally, on May 22, 2020, Hindenburg published a post on Twitter, alleging that, moments ago, Defendant Ji had “walked back his comments about having a cure,” that Hindenburg “believe[s] this amounts to flagrant securities fraud when compared to his statements to Fox [News] last week,” and “encourag[ed] regulators to investigate any stock sales in the interim.” Specifically, Hindenburg cited comments Ji made in an interview with BioSpace, an online life science industry news outlet. The BioSpace article stated that in a May 21, 2020 interview with Defendants Ji and Brunswick, Ji “insist[ed] that they did not say it was a cure.” Ji is quoted as saying: [I]f it gets through safety studies, if it demonstrates efficacy, it potentially is a cure—if you have the antibody in the blood and it prevents infection. After virus infection, if it blocks the virus from replicating in healthy cells continuously, you might have a cure. We cannot cure the late-stage patients, on ventilators, because of all the other comorbidities and complications. Those are not the job of the antibodies. (Emphases in original.) 17 50. On this news, Sorrento’s stock price closed at $5.07 per share on May 22, 2020, representing a decline of $4.93 per share, or 49.3%, from the Class Period high, on unusually high volume. 51. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. PLAINTIFF’S CLASS ACTION ALLEGATIONS 52. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who purchased or otherwise acquired Sorrento securities during the Class Period (the “Class”); and were damaged upon the revelation of the alleged corrective disclosures. Excluded from the Class are Defendants herein, the officers and directors of the Company, at all relevant times, members of their immediate families and their legal representatives, heirs, successors or assigns and any entity in which Defendants have or had a controlling interest. 53. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Sorrento securities were actively traded on the NASDAQ. While the exact number of Class members is unknown to Plaintiff at this time and can be ascertained only through appropriate discovery, Plaintiff believes that there are hundreds or thousands of members in the proposed 18 Class. Record owners and other members of the Class may be identified from records maintained by Sorrento or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions. 54. Plaintiff’s claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that is complained of herein. 55. Plaintiff will fairly and adequately protect the interests of the members of the Class and has retained counsel competent and experienced in class and securities litigation. Plaintiff has no interests antagonistic to or in conflict with those of the Class. 56. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are: • whether the federal securities laws were violated by Defendants’ acts as alleged herein; • whether statements made by Defendants to the investing public during the Class Period misrepresented material facts about the business, operations and management of Sorrento; • whether the Individual Defendants caused Sorrento to issue false and misleading financial statements during the Class Period; • whether Defendants acted knowingly or recklessly in issuing false and misleading financial statements; 19 • whether the prices of Sorrento securities during the Class Period were artificially inflated because of the Defendants’ conduct complained of herein; and • whether the members of the Class have sustained damages and, if so, what is the proper measure of damages. 57. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation make it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. 58. Plaintiff will rely, in part, upon the presumption of reliance established by the fraud-on-the-market doctrine in that: • Defendants made public misrepresentations or failed to disclose material facts during the Class Period; • the omissions and misrepresentations were material; • Sorrento securities are traded in an efficient market; • the Company’s shares were liquid and traded with moderate to heavy volume during the Class Period; • the Company traded on the NASDAQ and was covered by multiple analysts; • the misrepresentations and omissions alleged would tend to induce a reasonable investor to misjudge the value of the Company’s securities; and 20 • Plaintiff and members of the Class purchased, acquired and/or sold Sorrento securities between the time the Defendants failed to disclose or misrepresented material facts and the time the true facts were disclosed, without knowledge of the omitted or misrepresented facts. 59. Based upon the foregoing, Plaintiff and the members of the Class are entitled to a presumption of reliance upon the integrity of the market. 60. Alternatively, Plaintiff and the members of the Class are entitled to the presumption of reliance established by the Supreme Court in Affiliated Ute Citizens of the State of Utah v. United States, 406 U.S. 128, 92 S. Ct. 2430 (1972), as Defendants omitted material information in their Class Period statements in violation of a duty to disclose such information, as detailed above. COUNT I (Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Promulgated Thereunder Against All Defendants) 61. Plaintiff repeats and re-alleges each and every allegation contained above as if fully set forth herein. 62. This Count is asserted against Defendants and is based upon Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder by the SEC. 63. During the Class Period, Defendants engaged in a plan, scheme, conspiracy and course of conduct, pursuant to which they knowingly or recklessly engaged in acts, transactions, practices and courses of business which operated as a 21 fraud and deceit upon Plaintiff and the other members of the Class; made various untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and employed devices, schemes and artifices to defraud in connection with the purchase and sale of securities. Such scheme was intended to, and, throughout the Class Period, did: (i) deceive the investing public, including Plaintiff and other Class members, as alleged herein; (ii) artificially inflate and maintain the market price of Sorrento securities; and (iii) cause Plaintiff and other members of the Class to purchase or otherwise acquire Sorrento securities and options at artificially inflated prices. In furtherance of this unlawful scheme, plan and course of conduct, Defendants, and each of them, took the actions set forth herein. 64. Pursuant to the above plan, scheme, conspiracy and course of conduct, each of the Defendants participated directly or indirectly in the preparation and/or issuance of the quarterly and annual reports, SEC filings, press releases and other statements and documents described above, including statements made to securities analysts and the media that were designed to influence the market for Sorrento securities. Such reports, filings, releases and statements were materially false and misleading in that they failed to disclose material adverse information and misrepresented the truth about Sorrento’s finances and business prospects. 22 65. By virtue of their positions at Sorrento, Defendants had actual knowledge of the materially false and misleading statements and material omissions alleged herein and intended thereby to deceive Plaintiff and the other members of the Class, or, in the alternative, Defendants acted with reckless disregard for the truth in that they failed or refused to ascertain and disclose such facts as would reveal the materially false and misleading nature of the statements made, although such facts were readily available to Defendants. Said acts and omissions of Defendants were committed willfully or with reckless disregard for the truth. In addition, each Defendant knew or recklessly disregarded that material facts were being misrepresented or omitted as described above. 66. Information showing that Defendants acted knowingly or with reckless disregard for the truth is peculiarly within Defendants’ knowledge and control. As the senior managers and/or directors of Sorrento, the Individual Defendants had knowledge of the details of Sorrento’s internal affairs. 67. The Individual Defendants are liable both directly and indirectly for the wrongs complained of herein. Because of their positions of control and authority, the Individual Defendants were able to and did, directly or indirectly, control the content of the statements of Sorrento. As officers and/or directors of a publicly-held company, the Individual Defendants had a duty to disseminate timely, accurate, and truthful information with respect to Sorrento’s businesses, operations, future 23 financial condition and future prospects. As a result of the dissemination of the aforementioned false and misleading reports, releases and public statements, the market price of Sorrento securities was artificially inflated throughout the Class Period. In ignorance of the adverse facts concerning Sorrento’s business and financial condition which were concealed by Defendants, Plaintiff and the other members of the Class purchased or otherwise acquired Sorrento securities at artificially inflated prices and relied upon the price of the securities, the integrity of the market for the securities and/or upon statements disseminated by Defendants, and were damaged thereby. 68. During the Class Period, Sorrento securities were traded on an active and efficient market. Plaintiff and the other members of the Class, relying on the materially false and misleading statements described herein, which the Defendants made, issued or caused to be disseminated, or relying upon the integrity of the market, purchased or otherwise acquired shares of Sorrento securities at prices artificially inflated by Defendants’ wrongful conduct. Had Plaintiff and the other members of the Class known the truth, they would not have purchased or otherwise acquired said securities, or would not have purchased or otherwise acquired them at the inflated prices that were paid. At the time of the purchases and/or acquisitions by Plaintiff and the Class, the true value of Sorrento securities was substantially lower than the prices paid by Plaintiff and the other members of the Class. The 24 market price of Sorrento securities declined sharply upon public disclosure of the facts alleged herein to the injury of Plaintiff and Class members. 69. By reason of the conduct alleged herein, Defendants knowingly or recklessly, directly or indirectly, have violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. 70. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and the other members of the Class suffered damages in connection with their respective purchases, acquisitions and sales of the Company’s securities during the Class Period, upon the disclosure that the Company had been disseminating misrepresented financial statements to the investing public. COUNT II (Violations of Section 20(a) of the Exchange Act Against The Individual Defendants) 71. Plaintiff repeats and re-alleges each and every allegation contained in the foregoing paragraphs as if fully set forth herein. 72. During the Class Period, the Individual Defendants participated in the operation and management of Sorrento, and conducted and participated, directly and indirectly, in the conduct of Sorrento’s business affairs. Because of their senior positions, they knew the adverse non-public information about Sorrento’s misstatement of income and expenses and false financial statements. 25 73. As officers and/or directors of a publicly owned company, the Individual Defendants had a duty to disseminate accurate and truthful information with respect to Sorrento’s financial condition and results of operations, and to correct promptly any public statements issued by Sorrento which had become materially false or misleading. 74. Because of their positions of control and authority as senior officers, the Individual Defendants were able to, and did, control the contents of the various reports, press releases and public filings which Sorrento disseminated in the marketplace during the Class Period concerning Sorrento’s results of operations. Throughout the Class Period, the Individual Defendants exercised their power and authority to cause Sorrento to engage in the wrongful acts complained of herein. The Individual Defendants therefore, were “controlling persons” of Sorrento within the meaning of Section 20(a) of the Exchange Act. In this capacity, they participated in the unlawful conduct alleged which artificially inflated the market price of Sorrento securities. 75. Each of the Individual Defendants, therefore, acted as a controlling person of Sorrento. By reason of their senior management positions and/or being directors of Sorrento, each of the Individual Defendants had the power to direct the actions of, and exercised the same to cause, Sorrento to engage in the unlawful acts and conduct complained of herein. Each of the Individual Defendants exercised 26 control over the general operations of Sorrento and possessed the power to control the specific activities which comprise the primary violations about which Plaintiff and the other members of the Class complain. 76. By reason of the above conduct, the Individual Defendants are liable pursuant to Section 20(a) of the Exchange Act for the violations committed by Sorrento. PRAYER FOR RELIEF WHEREFORE, Plaintiff demands judgment against Defendants as follows: A. Determining that the instant action may be maintained as a class action under Rule 23 of the Federal Rules of Civil Procedure, and certifying Plaintiff as the Class representative; B. Requiring Defendants to pay damages sustained by Plaintiff and the Class by reason of the acts and transactions alleged herein; C. Awarding Plaintiff and the other members of the Class prejudgment and post-judgment interest, as well as their reasonable attorneys’ fees, expert fees and other costs; and D. Awarding such other and further relief as this Court may deem just and proper. DEMAND FOR TRIAL BY JURY Plaintiff hereby demands a trial by jury. 27 Dated: June 11, 2020 Respectfully submitted, POMERANTZ LLP /s/ Jennifer Pafiti Jennifer Pafiti (SBN 282790) 1100 Glendon Avenue, 15th Floor Los Angeles, California 90024 Telephone: (310) 405-7190 [email protected] POMERANTZ LLP Jeremy A. Lieberman (pro hac vice application forthcoming) J. Alexander Hood II (pro hac vice application forthcoming) 600 Third Avenue, 20th Floor New York, New York 10016 Telephone: (212) 661-1100 Facsimile: (212) 661-8665 [email protected] [email protected] POMERANTZ LLP Patrick V. Dahlstrom (pro hac vice application forthcoming) 10 South La Salle Street, Suite 3505 Chicago, Illinois 60603 Telephone: (312) 377-1181 Facsimile: (312) 377-1184 [email protected] BRONSTEIN, GEWIRTZ & GROSSMAN, LLC Peretz Bronstein (pro hac vice application forthcoming) 60 East 42nd Street, Suite 4600 New York, NY 10165 Telephone: (212) 697-6484 28 Facsimile: (212) 697-7296 [email protected] Attorneys for Plaintiff 29

securities

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA Case No. COMPLAINT ENZO COSTA Saint Elizabeths Hospital 1100 Alabama Avenue SE Washington, DC 20032 VINITA SMITH Saint Elizabeths Hospital 1100 Alabama Avenue SE Washington, DC 20032 WILLIAM DUNBAR Saint Elizabeths Hospital 1100 Alabama Avenue SE Washington, DC 20032 STEFON KIRKPATRICK Saint Elizabeths Hospital 1100 Alabama Avenue SE Washington, DC 20032 on behalf of themselves and all persons similarly situated, Plaintiffs, v. BARBARA J. BAZRON, Director Department of Behavioral Health in her individual capacity 64 New York Avenue, NE - 3rd Floor Washington, DC 20002 MARK J. CHASTANG, Chief Executive Officer, Saint Elizabeths Hospital in his individual capacity 1100 Alabama Avenue, SE Washington, DC 20032 DISTRICT OF COLUMBIA c/o Attorney General of the District of Columbia 441 4th Street, NW Washington, DC 20001, Defendants. CLASS ACTION COMPLAINT (For declaratory and injunctive relief—unconstitutional conditions at Saint Elizabeths Hospital) Introduction 1. A hospital without water is not really a hospital. Plaintiffs Enzo Costa, Vinita Smith, Stefon Kirkpatrick, and William Dunbar are all patients at Saint Elizabeths Hospital, the District’s psychiatric hospital (“Saint Elizabeths” or the “Hospital”). They are four of approximately 270 individuals with mental health disabilities at Saint Elizabeths Hospital. Plaintiffs and other similarly situated patients are currently subject to unconstitutional and inhumane conditions that shock the conscience. Saint Elizabeths Hospital has been without safe, running water since September 26, 2019, exposing these vulnerable patients to irreparable harmful physical, emotional, and mental health consequences. Although there are reports that the water is being turned back on (see ¶34 below), this is not the first time that government officials have promised that the water will restored during this current crisis. It is also the second time in three years that Saint Elizabeths Hospital has experienced a major and extended water outage. 2. The extended water outage is directly impacting necessary patient medical care. Defendants closed the Treatment Mall, the location at the Hospital where treatment planning meetings are held and patients receive group therapy, art therapy, and music therapy, and they have curtailed or suspended a wide variety of therapy and other forms of psychiatric care on which Plaintiffs and members of the class demand and need to manage and maintain their mental health. Patients are confined to their units and their rooms and are unable to attend regularly scheduled therapy. Patients cannot access other forms of routine medical care. 3. Unhygienic conditions are pervasive to the point where they are endangering patient health. As a result of the extended water crisis, patients at Saint Elizabeths, all of whom are committed to the District’s care and custody, are enduring inhumane, unsafe, and medically dangerous conditions that risk the health, mental health, and safety. Patients cannot shower, wash their hands, or use the toilets regularly. Fecal matter, urine, and menstrual blood are accumulating in the bathrooms. Patients are only allowed to shower on a limited schedule, and must shower outside in dirty and portable showers which are inaccessible to the many patients with mobility disabilities. 4. This Class Action Complaint challenges the Defendant’s decision to keep Saint Elizabeths operating during this extended water crisis without adequate protections for patients. Despite the fact that there is no safe, running water, Defendants are continuing to admit new patients at Saint Elizabeths Hospital and to keep patients at Saint Elizabeths rather than transferring them to other appropriate facilities or discharging them to community-based care where appropriate. Defendants are not providing appropriate care and safety for Plaintiffs and other similarly situated patients in violation their due process rights and rights under federal law Defendant’s conduct in continuing to commit Plaintiffs in facility with no safe, running, water is so egregious as to shock the conscience. Subject Matter Jurisdiction & Venue 5. The Court has subject matter jurisdiction over this case under 28 U.S.C. §§ 1331 and 1343 because this action presents federal questions and seeks to redress the deprivation of rights under the Fifth Amendment to the U.S. Constitution, pursuant to 42 U.S.C. §1983. 6. Venue is proper in this District under 28 U.S.C. §1391(b)(2) because all of the events giving rise to the claims took place in this District. 7. Declaratory relief is authorized by 28 U.S.C. §2201. A declaration of law is necessary and appropriate to determine the parties’ respective rights and duties. 8. Injunctive relief is authorized by 28 U.S.C. § 2202. Parties 9. Enzo Costa is thirty-eight years old and is a patient at Saint Elizabeths Hospital in Unit 1C. He is diagnosed with schizophrenia, dystonia, schizo-affective disorder, and anti-social personality disorder. He is indefinitely, involuntarily civilly committed to the District’s care. 10. Vinita Smith is a fifty-six years old and is a patient at Saint Elizabeths Hospital in Unit 1F. She is diagnosed with schizo-affective disorder that requires medication and therapy. She is indefinitely, involuntarily civilly committed to the District’s care. 11. Stefon Kirkpatrick is thirty years old and is a patient at Saint Elizabeths Hospital in Unit 2C. He is diagnosed with psychosis disorder. He is indefinitely, involuntarily civilly committed to the District’s care. 12. William Dunbar is thirty years old and is a patient at Saint Elizabeths Hospital in Unit 2A. He is diagnosed with paranoia schizophrenia. He is indefinitely, involuntarily civilly committed to the District’s care. 13. Plaintiffs bring this action on behalf of themselves and other similarly situated patients at Saint Elizabeths Hospital. 14. The named Plaintiffs and the members of the Plaintiff Class are persons with a disability or perceived to have a disability, as that term is defined in the Americans with Disabilities Act (“ADA”), and are entitled to the protections of the ADA. 42 U.S.C. §12102(2)(A). 15. Defendant District of Columbia (“the District”) owns and operates Saint Elizabeths Hospital, and is responsible for the services and supports provided to patients at Saint Elizabeths. Saint Elizabeths is the District’s only public psychiatric facility for individuals with serious and persistent mental illness who need intensive inpatient care to support their recovery. Saint Elizabeths also provides mental health evaluations and care to patients committed by the 16. The District of Columbia is a public entity as that term is defined in the ADA. 42 U.S.C. § 12131(1). 17. Defendant Barbara Bazron is the Director of the Department of Behavioral Health, the District agency that oversees Saint Elizabeth. She is sued in her individual capacity. 18. Defendant Mark Chastang is the Chief Executive Officer of Saint Elizabeths Hospital. He is sued in his individual capacity. Statement of Facts Contaminated Water at Saint Elizabeths Hospital 19. Saint Elizabeths Hospital is the District’s public psychiatric facility and serves individuals with mental illness who need intensive inpatient care. Saint Elizabeths is the District’s only public psychiatric facility for individuals with serious and persistent mental illness who need intensive inpatient care to support their recovery. Saint Elizabeth’s also provides mental health evaluations and care to patients committed by the courts. 20. Patients at Saint Elizabeths Hospital are entitled to a dignified, respectful and supportive environment and generally accepted standards of individualized treatment, continuity of care, professionalism, and health and safety. 21. Saint Elizabeths has an average of 270 patients per day and approximately 700 employees. 22. Saint Elizabeths has not had safe, running water since at least September 26, 2019. Since September 26, 2019, the water supply at Saint Elizabeths has been either completely turned off or has been limited for sewage use only. 23. Despite the extended water outage and the inability to provide appropriate, required medical care and therapy, as described below, Saint Elizabeths is still accepting new patients. 24. The extended water outage and its effects cause a clear risk to the health and safety of Saint Elizabeths’ patients, including Plaintiffs and class members. The extended water outage and its effects creates an unreasonable risk of traumatizing patients and exacerbates symptoms of mental illness. 25. The current conditions at Saint Elizabeths, as described below, will result in long lasting, if not permanent, damage to patients and their efforts at recovery. 26. The current conditions at Saint Elizabeths, as described below, violate professional standards of care and treatment. 27. On September 26, 2019, the D.C. Department of Behavioral Health (“DBH”) received preliminary lab results for a water quality test of Saint Elizabeths showing evidence of pseudomonas and legionella bacteria in the facility’s water supply. 28. Legionella bacteria is known for causing Legionnaires’ disease, which can lead to severe infections in people with weakened immune systems. According to the Centers for Disease Control and Prevention, one out of four people who contract Legionnaires’ disease in a healthcare setting dies because of it. 29. Pseudomonas bacteria can lead to severe infections for people with weakened immune systems. 30. In response to the bacteria found in the water supply, DBH reportedly implemented its “water emergency protocol” and turned the water off completely. Upon information and belief, the water has been turned on occasionally and for limited purposes since September 26, 2019 but at no point has Saint Elizabeths had safe, running water. 31. At the end of September, Plaintiffs Ms. Smith, Mr. Costa, Mr. Kirkpatrick, and Mr. Dunbar were abruptly told by staff that the water would be shut off because there was a water problem. 32. Upon information and belief, DBH hired contractors to flush Saint Elizabeths’ water system with chlorine, but testing following the “super chlorination” of the water system continued to show legionella within the facility’s water system. 33. According to Plaintiff Mr. Costa, as of 4:00 p.m. on October 23, 2019, the water remained shut off at Saint Elizabeths and upon information and belief, DBH has not given a precise date that it will be turned back on. 34. At 5:45 p.m. on October 23, 2019, Councilmember Vincent Gray tweeted that he had been informed by an unnamed source that “all bacteria has been eliminated” from the water system at St. Elizabeths Hospital and that “the process has already begun to restore full water service to the hospital.” According to Vincent Gray’s tweets, the “toilet are fully operational” and “[F]aucet heads are being reconnected now and that process should be fully completed by tomorrow [October 24, 2019].” Vincent Gray has shared no supporting documents, water tests, or information from DBH or Saint Elizabeths Hospital on Twitter. 35. Each of the previous dates DBH communicated to patients, their attorneys, or the public for when DBH expected to have safe running water has not been met. 36. This is the second time in three years that Saint Elizabeths Hospital has experienced an extended water outage. Defendants’ response to this second extended water outage indicates that they do not have an appropriate Emergency Water Supply Plan to manage extended water outages at Saint Elizabeths Hospital. 37. Plaintiffs are all indefinitely, involuntarily committed to the District’s care and will likely be committed at Saint Elizabeths for all or most of their lives. For example, Ms. Smith has been committed to Saint Elizabeth’s for approximately 17 years. 38. As discussed below, the extended water outage at Saint Elizabeths that plaintiffs continue to suffer is irreparably harming the Plaintiffs and plaintiff class. Furthermore, even if the clean water is restored in the near future, Plaintiffs and the plaintiff class will remain at risk of further irreparable harm until the Defendants remediate conditions at Saint Elizabeths, provide adequate mental health services to meet the current needs of patients, and establish an appropriate Emergency Water Supply Plan. Thus, even if the current crisis is ameliorated, Plaintiffs will still be at risk of further irreparable harm. It is also far from clear that the wrongful behavior cannot be expected recur. Defendants Are Depriving Patients of Essential Medical and/or Mental Health Care 39. The extended water outage at Saint Elizabeths has prevented patients from receiving appropriate and necessary care, including medical care, psychiatric care, and therapy, creating an imminent risk of irreparable harm. 40. Because of the extended water outage, Defendants closed the Treatment Mall. Patients remain on their locked wards and are not receiving appropriate group therapy, art therapy, or exercise. 41. Staff, including psychologists and psychiatrists, are not regularly attending work because of the water crisis, forcing cancelations of patient team meetings and other appointments. 42. Defendants have severely curtailed or suspended the psychiatric care on which patients depend. Patients at Saint Elizabeths, including Plaintiffs, are receiving fewer services, and less of the services they are still receiving, than normal. The minimal services they are receiving are not appropriate or tailored to their needs. 43. DBH has not explained how it is appropriately dispensing medication, particularly those medications that need to be suspended in water. DBH has not made any statement about how they are addressing patients’ medication side effects that are related to the lack of adequate water or that need water in response, such as dry mouth and dehydration. 44. In addition to depriving patients of psychiatric care necessary on an ongoing basis, Saint Elizabeths’ staff are failing to provide other types of health care. Upon information and belief, staff are not performing routine checks of new patients for lice, bacteria, and other infections. 45. Patients have no access to dentistry and podiatry care that is typically available at Saint Elizabeths. 46. Ms. Smith has had a toothache but cannot go to the dentist. 47. Mr. Costa’s ward administrator, psychologist, psychiatrist, and therapist have all missed work during the time period while the water was shut off and have not been able to convene his team meetings. Mr. Costa has been unable to talk to his psychiatrist about switching one of his medications since the water outage occurred. 48. Mr. Costa has not been able to access behavioral therapy, anger management classes, group therapy, art therapy, or the gym since Defendants closed the Treatment Mall. 49. Mr. Costa normally gets 40 hours per week of therapy but Defendants are providing him with just 2 hours per day (10 hours per week) currently. The little therapy he is receiving is inappropriate: it is a competency restoration group but Mr. Costa is already competent. 50. Because there was no water, Defendants have not provided Mr. Kirkpatrick with group therapy. 51. Defendants cancelled a Narcotics Anonymous meeting that both Mr. Kirkpatrick and Mr. Dunbar attend because there was no water. 52. Defendants have not provided Mr. Dunbar with group therapy or the opportunity to exercise since the water was shut off. The District is Depriving Patients of Essential Hygiene and Endangering Patient Safety 53. Without safe, running water, patients and staff cannot flush the toilets regularly, wash their hands, shower, wash clothing, or drink from the water fountains. Patients at Saint Elizabeths are using bottled water, hand sanitizers, and personal care body wipes to care for their basic hygiene. Patients are permitted limited use of temporary portable showers and toilets. Clothes and linens are only washed periodically and must be sent outside of the facility to be cleaned. Toilets 54. Patients and staff cannot regularly and routinely flush the toilets at Saint Elizabeths. Saint Elizabeths has more than 70 operating bathrooms when the facility has running water. A limited number of toilets within the facility are in use when the water is turned off. These toilets must be flushed manually by pouring water into the tanks. Staff are only flushing the toilets twice per day, leading to the accumulation of feces, urine, and menstrual blood. The toilets are overflowing and human waste is flowing onto the floors in some bathrooms. There are also a limited number of port-a-potties outside the facility which were not provided until after the water had been shut off for some time. 55. Ms. Smith did not have access to port-a-potties for several days after the water was shut off. While she was awaiting port-a-potties, she used the indoor toilets. Staff would flush those toilets twice per day. The indoor toilets were disgusting and unclean. There were menstrual products all over the bathroom. 56. Mr. Costa’s unit, Unit 1C, normally has six toilets. Unit 1C houses 26 men. Currently all of the men on his unit must use one toilet. That toilet is flushed manually by pouring water into the tank only once a day. The toilets back up and the smell from the toilets is “disgusting, pungent, sour, and strong.” 57. Mr. Costa did not have access to a port-a-potty until about a week after the water was shut off. The port-a-potties are outside and about 200 yards from his unit. The port-a- potties are not clean and they smell. 58. Mr. Kirkpatrick’s unit has an average of two usable toilets for approximately 25 people. The toilets do not have running water and are flushed by staff or patients. There is a buildup of feces on the toilet and floor. The bathroom smells. 59. Mr. Kirkpatrick did not have access to a port-a-potty until about 2-3 weeks after the water was shut off. 60. Mr. Dunbar’s unit, Unit 2A, only has 2 usable toilets for approximately 27 people. The smell of the toilets is so nasty and strong that it makes Mr. Dunbar want to vomit. Mr. Dunbar is able to secure day passes to temporarily leave the facility and during this time he tries holds his solid waste until he can use toilets outside of Saint Elizabeths grounds. Showers 61. Patients cannot use the indoor showers at Saint Elizabeths. Patients have to bathe in portable outdoor showers. DBH secured eight portable showers for Saint Elizabeths’ entire patient population. The portable showers are clogged and dirty. The patients have to stand outside in groups and take showers in rotation because they have to travel back inside the facility as a group. There is no privacy in the showers. 62. Before the outdoor showers arrived, Ms. Smith had to use wipes to clean herself because she was not permitted to shower indoors. She does not like using the wipes and does not feel clean using the wipes. 63. Ms. Smith is only permitted to use the outdoor showers on Mondays, Wednesdays and Fridays, rather than showering every day. She is not allowed to use the showers when it is raining. 64. Mr. Costa did not have access to a shower until about a week after the water was shut off. On his unit, only 8 individuals are permitted to use the portable showers per day. His unit can use the portable showers on Mondays, Wednesday, and Fridays, which means that he is only able to shower one time per week. 65. One time that Mr. Costa was permitted to shower, the water was cold. After he showered he had to stand outside in the cold temperatures while waiting for everyone to finish showering. He got a headache as a result. 66. When Mr. Costa does not have access to a shower, he has the options to clean himself with sanitary wipes or a five gallon bucket of soapy water and a wash rag. The wipes make his skin uncomfortable. Washing with a bucket is degrading and Mr. Costa has not used that option because it makes him feel like he is treated like an animal. 67. Mr. Kirkpatrick used a portable shower and had to stand outside in the cold while others finished showering. He got sick after using the portable shower, experiencing chills and a migraine. 68. Mr. Dunbar did not have access to a portable shower for several days after the water was shut off. When he was able to access a portable shower, the water kept turning on and 69. The portable showers are not accessible for patients who use wheelchairs and with other mobility issues. The portable showers have steps up to them. The portable showers have narrow passageways inside. Many older patients are unable to use them. 70. Ms. Smith’s knee gave out one day while walking up the stairs to the shower. 71. Upon information and belief, the portable showers are being overseen by male security guards only. Many women at Saint Elizabeths are survivors of sexual assault and do not feel safe using the portable showers. As a result, some of the women have not showered for more than four weeks. Other Essential Hygiene Needs 72. Ms. Smith cannot wash her hands. She must use bottled water to brush her teeth and is not always given enough water to brush her teeth. She has not washed her hair in three weeks. She cannot do laundry in the hospital and when her cloths were sent out to the laundry, some of them went missing. She currently only has one clean outfit to wear. Ms. Smith’s unit has been unusually cold while the water has been shut off. Ms. Smith’s unit smells like dead 73. Mr. Costa cannot use the faucets to wash his hands, brush his teeth, or shower. The dirty toilets have attracted bugs and mosquitos that are biting him and others on his unit. 74. Mr. Kirkpatrick cannot use the water. He cannot do laundry and does not have access to a washer-dryer. He does not know when he will be able to do laundry or obtain clean clothes again. 75. Mr. Dunbar cannot use the water and has to use bottled water to drink and to brush his teeth. Because the conditions in the bathrooms are so dirty and unhygienic, he does not feel comfortable using the bathrooms or cleaning his teeth. Some of the closed bathrooms in his unit have signs indicating that they are quarantined because of a bacterial infection. He has had his laundry sent out only once in the last three weeks. When his clothes were returned some had shrunk and they still felt dirty. 76. Mr. Dunbar is permitted to leave the facility on a day pass approximately two times per month. He normally spends time with his family. Because of the unsanitary conditions, he worries about bringing home bacteria and spreading it to his family. The District is Depriving Patients of a Safe and Therapeutic Environment 77. The lack of water has caused a tense and stressful environment among patients and staff. Patients are confined to their units during the day instead of receiving therapy and recreation. Staff are not regularly reporting for work. 78. A restrictive psychiatric hospital setting like Saint Elizabeths must be safe, calm, predictable in its routine, and responsive to each individual’s needs for treatment in order to achieve its goals of preventing and ameliorating harm. 79. An environment that is chaotic, unpredictable, and unsafe, in which patients are not receiving individualized, continuous, intensive treatment risks traumatizing people further and exacerbating the psychiatric needs that were the basis for their admission. 80. Delays in treatment of psychiatric illness in a psychiatric facility that restricts self- determination and integration into community-based settings, like Saint Elizabeths, can result in feelings of isolation, hopelessness, and despair; and increased stress and anxiety. 81. Patients, including Ms. Smith and Mr. Costa, are unable to leave their units and rooms to receive treatments or recreate. As a result, they and other patients are sleeping and dozing during the day. 82. There has been an increase in fights and physical aggression between patients following the water outage. 83. There has been an increase in the use of seclusion and restraint of the patients following the water outage. The District Bears Responsibility for the Conditions at St. Elizabeths 84. As the director of DBH, the agency that oversees Saint Elizabeths, Defendant Bazron has the authority to “[s]upervise and direct the Department” and “[e]xercise any other powers necessary and appropriate to implement the provisions of this chapter.” D.C. Code § 7- 1141.04. 85. These powers make Defendant Bazron the final policymaking authority with respect to responding to emergencies at St. Elizabeths. 86. Defendant Bazron is responsible for the fact that, during the water crisis, Saint Elizabeths has continued housing patients in unsafe conditions without adequate protections. 87. Defendant Bazron informed reporters that she and her team were “very, very involved in making sure that we got the [water] problem solved.” 88. Defendant Bazron further demonstrated her responsibility for Saint Elizabeths’ decision to keep patients in dangerous conditions without adequate protections by explaining and defending that approach to the public through multiple statements to journalists. 89. For example, Defendant Bazron told reporters that DBH had procured “an extensive supply of bottled water” but had continued admitting patients and declined to move patients to other locations. Defendant Bazron also endorsed DBH’s response, stating that “[t]hings are really moving very smoothly. 90. Additionally, Defendants displayed deliberate indifference to the risk that the response to the conditions at St. Elizabeths would result in constitutional violations. By shutting off the water at that facility, Defendants knew or should have known that they would drastically curtail access to showers, toilets, clean clothing, and medical care, and create disorder that could exacerbate patients’ mental health disabilities. The policy Defendants adopted in response to this risk was not reasonably calculated to prevent it. CLASS ACTION ALLEGATIONS 91. The named Plaintiffs bring this suit on their own behalf and on behalf of all current Saint Elizabeths Hospital patients and all patients who will be admitted in the future while the water is shut off. 92. This class is so numerous that joinder of all members in impractical. Saint Elizabeths Hospital has approximately 270 patients currently. Because the population changes on a daily basis, it is inherently fluid and the class also includes future members whose names are not known at this time. Fed. R. Civ. P. 23(a)(1). 93. There are questions of law and fact common to all class members, including but not limited to the Defendants’ deprivation of the class members’ substantive due process rights, the Defendants’ failure to provide constitutionally safe and humane conditions to class members and the Defendants’ failure to provide appropriate medical care to class members, and the District’s violation of the class members’ rights under the Americans with Disabilities Act. Fed. R. Civ. P. 23(a)(3). 94. The named Plaintiffs will fairly and adequately represent the interests of the class. They possess a strong personal interest in the subject matter of the lawsuit and are represented by experienced counsel with expertise in class action litigation in federal court. Counsel have the legal knowledge and resources to fairly and adequately represent the interests of all class members in this action. Fed. R. Civ. P. 23(a)(4). 95. Defendants have acted or refused to act on grounds generally applicable to the class in that Defendants’ policies and practices of violating the Plaintiffs’ constitutional rights have affected all class members. Accordingly, final injunctive and declaratory relief is appropriate to the class as a whole. Fed. R. Civ. P. 23(b)(2). NECESSITY FOR EMERGENCY INJUNCTIVE RELIEF 96. The Defendants have acted and, as of the time of filing, continue to act in violation of the law as described above. The named Plaintiffs and the class they seek to represent do not have an adequate remedy at law. As a result of the policies, practices, acts, and omissions of the Defendants, the named Plaintiffs, and the class they seek to represent, have suffered, are suffering, and will suffer serious, imminent, irreparable physical, mental, and emotional injuries. Such serious injuries are continuing and likely irreversible. FIRST CLAIM FOR RELIEF: (Claim under 42 U.S.C. §1983 for violation of the Fifth Amendment—Due Process) 97. The Fifth Amendment’s Due Process Clause protects individuals in the District of Columbia from government conduct that deprives them of their constitutional rights because it is “so egregious that it may fairly be said to shock the contemporary conscience.” 98. Individuals who are committed to the District’s custody, like the named Plaintiffs and other class members, have a protected constitutional right under the Due Process Clause of the Fifth Amendment to be housed in humane conditions and to have the District take reasonable steps to guarantee their safety. 99. Defendants’ actions are depriving class members of humane conditions by failing to provide running water which deprives them of basic sanitation including sanitary toileting, safe and sanitary showers, and clean clothes and linens, as alleged in Paragraphs 22 and 53 through 76 and by failing to maintain an appropriate Emergency Water Supply Plan after the first extended water outage, as alleged in Paragraph 36, Defendants’ actions and inactions shock the conscience and deprive class members of their constitutionally protected rights. 100. Individuals who are committed to the District’s custody, like the named Plaintiffs and other class members, have a protected constitutional right under the Due Process Clause of the Fifth Amendment to be afforded adequate medical care, including mental health care. 101. Defendants’ actions in unilaterally ceasing or altering medical care, as alleged in Paragraphs 26 and 39 through 52, departs from professionally accepted standards and/or appropriate professional judgement, and deprive class members of their constitutionally protected rights. 102. Defendants’ policies, practices, acts, and/or omissions have placed and will continue to place the named Plaintiffs and the members of the class they seek to represent at an unreasonable risk of harm as alleged in Paragraphs 1, 24, 28, 29, 38, and 39. 103. There is no reasonable justification for the Defendants’ actions. SECOND CLAIM FOR RELIEF: (Claim against the District of Columbia under 42 U.S.C. §12131 et seq. for violation of the Americans with Disabilities Act) 104. Plaintiffs re-allege the allegations in all preceding paragraphs as though fully set forth herein. 105. The named Plaintiffs and the Plaintiff Class are individuals with disabilities within the meaning of the ADA. Their impairments substantially limit one or more major life activities, including caring for oneself, concentrating, and thinking. 106. As adults who have been determined to require intensive inpatient care to support their recovery from serious and persistent mental illness by the District, the named Plaintiffs and the Plaintiff Class are qualified to participate in Defendants’ behavioral health programs and services. 42 U.S.C. § 12131(2). 107. The District of Columbia is a public entity as defined by Title II of the ADA. 42 U.S.C. § 12131(1). 108. The District of Columbia is failing to reasonably modify its system to avoid discrimination, including but not limited to by (i) failing to cease intakes and (ii) failing to conduct individual assessments of patients to determine whether other options exist in lieu of continued placement at Saint Elizabeths and (iii) failing to take appropriate action for Plaintiffs and other class members, including relocating within the District those patients for whom it is appropriate or providing reasonably modified services for those for whom relocating is not appropriate. 28 C.F.R. § 35.130(b)(7). 109. The District of Columbia is utilizing methods of administration, including but not limited to restricting all access to the Treatment Mall and thereby preventing planning team meetings and suspending art and music therapy, vocational training, exercise, and socialization; providing inappropriate and diminished group therapy sessions; restricting patient movement to the patient’s unit;, intermittently shutting off the water; inappropriately restricting toilets and shower use, providing inaccessible portable showers; and suspending medically necessary services such as dentistry and podiatry as alleged in ¶¶ 25, 30, 35, 36, 37, 40, 49, 65, and 73 above, that have the effect of defeating or substantially impairing the accomplishment of the objectives of Defendants’ behavioral health programs with respect to the Individual Named Plaintiffs and the Plaintiff Class. 28 C.F.R. § 35.130(b)(3)(ii). 110. Defendants’ policies, practices, acts, and/or omissions violate the Americans with Disabilities Act. 42 U.S.C. §12131 PRAYER FOR RELIEF Based on the foregoing, Plaintiffs request that the Court: 111. Declare that Defendants violated Plaintiffs’ rights under the Fifth Amendment to the U.S. Constitution; 112. Declare that Defendants violated Plaintiffs’ rights under the Americans with Disabilities Act; 113. Order injunctive relief requiring Defendants their agents, employees, and all persons acting in concert with or on behalf of Defendants to cease their unconstitutional and unlawful practices, including: a. During any extended water outage, immediate cessation of admissions at Saint Elizabeths to the greatest extent possible; b. Within 48 hours during any extended water outage,, conduct individual assessments of patients by the Medical Director with input from the patients’ treatment team, his/her attorney, and/or other supportive decision makers as determined by patient choice to assess the effects of the current conditions and determine whether other options exist in lieu of continued placement at Saint Elizabeths; c. Implement recommendations from the assessments immediately: i The assessment team must consider a full range of available alternative treatment options, including discharge to a community setting. ii Under no circumstances should an individual be transferred to a jail or nursing home. iii To the extent continued placement at Saint Elizabeths’ Hospital is the only reasonable option, patients must receive medical care and therapy as scheduled and specific steps should be taken to ensure that each patient has timely and complete access to sanitation, clean water, safely prepared meals, and other basic requirements for health, safety, and privacy. d. Conduct independent testing to ensure that the water is safe for all uses; e. Sanitize all Saint Elizabeths hospital facilities; f. Restore sanitation services and other services that were discontinued or delayed during the extended water outage; g. Immediately resume providing all medical and mental health treatment services, including but not limited to opening the Treatment Mall and providing all previously available services; h. Within 48 hours, conduct individual assessments of patients by the Medical Director with input from the patients’ treatment team, his/her attorney, and/or other supportive decision makers as determined by patient choice to assess the effects of the stress and trauma of living without safe, running water in the conditions described above and the deprivation of appropriate mental health services has had on patients’ mental health status and determine if changes to individual patients’ treatment plans are needed; i. Implement any changes and recommendations from the individualized assessments immediately; j. Conduct regular, independent testing to ensure that the water is safe; and k. Appoint an independent monitor to advise the parties and the court about the implementation of any injunctive relief. Order Defendants to develop and adopt an appropriate Emergency Water Supply Plan with input from community members and the District’s protection and advocacy organization. 114. Certify this case as a Class Action pursuant to Fed. R. Civ. P. 23(b)(2); 115. Designate undersigned counsel as attorneys for the certified class; 116. Award to Plaintiffs their reasonable attorney’s fees and costs, as provided by law; 117. Grant the Plaintiffs such other relief as the Court deems just. Dated October 23, 2019 Respectfully submitted, /s/ Arthur B. Spitzer Arthur B. Spitzer (D.C. Bar No. 235960) AMERICAN CIVIL LIBERTIES UNION FOUNDATION OF THE DISTRICT OF COLUMBIA 915 15th Street NW, Second Floor Washington, D.C. 20005 (202) 457-0800 [email protected] Kaitlin Banner (D.C. Bar No. 1000436) Margaret Hart (D.C. Bar No. 1030528 ) Hannah Lieberman (D.C. Bar No. 336776 ) Jonathan Smith (D.C. Bar No. 396578 ) Maria Morris* WASHINGTON LAWYERS’ COMMITTEE FOR CIVIL RIGHTS AND URBAN AFFAIRS 700 14th Street, NW, Suite 400 Washington, DC 20005 Phone: (202) 319-1000 Fax: (202) 319-1010 [email protected] [email protected] [email protected] [email protected] *Admitted to practice law in Alabama, New York, and California. Practicing under the supervision of DC Bar members. Scott Michelman (D.C. Bar No. 1006945) Michael Perloff (D.C. Bar No. 1601047) AMERICAN CIVIL LIBERTIES UNION FOUNDATION OF THE DISTRICT OF COLUMBIA 915 15th Street NW, Second Floor Washington, D.C. 20005 (202) 457-0800 [email protected] [email protected] John A. Freedman (D.C. Bar No. 453075) Tirzah S. Lollar (D.C. Bar No. 497295) Emily Reeder (D.C. Bar No. 252710) ARNOLD & PORTER KAYE SCHOLER LLP 601 Massachusetts Avenue, N.W. Washington, D.C. 20004 (202) 942-5000 [email protected] [email protected] [email protected]

civil rights, immigration, family

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ROBBINS GELLER RUDMAN & DOWD LLP DAVID C. WALTON (167268) BRIAN E. COCHRAN (286202) 655 West Broadway, Suite 1900 San Diego, CA 92101-8498 Telephone: 619/231-1058 619/231-7423 (fax) [email protected] [email protected] – and – SAMUEL H. RUDMAN 58 South Service Road, Suite 200 Melville, NY 11747 Telephone: 631/367-7100 631/367-1173 (fax) [email protected] Attorneys for Plaintiff [Additional counsel appear on signature page.] UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA '16CV0685 BGS BTM Case No. CLASS ACTION CHARTER TOWNSHIP OF CLINTON POLICE AND FIRE RETIREMENT SYSTEM, Individually and on Behalf of All Others Similarly Situated, Plaintiff, COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS vs. LPL FINANCIAL HOLDINGS INC., MARK S. CASADY and MATTHEW J. AUDETTE, Defendants. DEMAND FOR JURY TRIAL ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Plaintiff Charter Township of Clinton Police and Fire Retirement System, individually and on behalf of all others similarly situated, by plaintiff’s undersigned attorneys, for plaintiff’s complaint against defendants, alleges the following based upon personal knowledge as to plaintiff and plaintiff’s own acts, and upon information and belief as to all other matters based on the investigation conducted by and through plaintiff’s attorneys, which included, among other things, a review of U.S. Securities and Exchange Commission (“SEC”) filings by LPL Financial Holdings Inc. (“LPL” or the “Company”), as well as media and analyst reports about the Company and Company press releases. Plaintiff believes that substantial additional evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. NATURE OF THE ACTION 1. This is a securities class action on behalf of all purchasers of LPL common stock between December 8, 2015 and February 11, 2016, inclusive (the “Class Period”), against LPL and certain of its officers and/or directors for violations of the Securities Exchange Act of 1934 (“1934 Act”). 2. Defendant LPL is an independent broker-dealer, a custodian for registered investment advisors (“RIAs”) and an independent consultant to retirement plans. The Company provides a platform of brokerage and investment advisory services to independent financial advisors enabling them to provide their retail investors with financial and investment advice. The Company generates revenues primarily from fees and commissions on clients’ brokerage and advisory assets. 3. Prior to 2010, LPL was majority owned by TPG Capital (“TPG”) and Hellman & Friedman LLC (“Hellman & Friedman”), two private equity firms. In November 2010, these private equity firms took LPL public in an initial public offering (“IPO”) in which 15.7 million LPL shares were sold to the public at $30 per share. 4. After the IPO, TPG retained a substantial ownership stake in the Company and influence over its affairs. For example, two TPG partners, Richard Boyce and Richard Schifter, served as directors of the Company. LPL has also identified TPG as a “related party” in SEC filings and stated that it has continued to enter into various related-party transactions with TPG and certain of TPG’s portfolio companies since the IPO. As of December 31, 2014, TPG owned approximately 13% of the outstanding shares of LPL common stock. LPL’s annual report on Form 10-K for fiscal 2014 stated that as a result of this ownership interest, TPG “will continue to be able to influence our decisions, regardless of whether or not other stockholders believe that the transaction is in their own best interests.” 5. Following the IPO, the Company became the subject of several regulatory and governmental investigations into allegedly fraudulent, deceptive and/or legally deficient business practices at LPL and among its network of financial advisors. For example: • In February 2013 it was announced that LPL had settled allegations by Massachusetts securities regulators that it had failed to adequately supervise its brokers who sold investments in non-traded real estate investment trusts (“REITs”) for $2.5 million. • In May 2015 the Financial Industry Regulatory Authority (“FINRA”) announced that it had sanctioned LPL $11.7 million for “[w]idespread [s]upervisory [f]ailures [r]elated to [c]omplex [p]roduct [s]ales, [t]rade [s]urveillance and [t]rade [c]onfirmations [d]elivery.” • In September 2015 it was announced that LPL had agreed to pay $1.8 million to settle charges by the Massachusetts Attorney General that it had improperly sold and marketed risky exchange-traded funds (“ETFs”) to retail investors. • Also in September 2015, it was announced that LPL had agreed to remediate investor losses and pay $1.425 million in civil penalties to regulators in 48 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands for its alleged failure to implement an adequate supervisory system regarding its sale of non-traded REITs and its failure to enforce its written procedures regarding the sale of non-traded REITs. 6. On October 29, 2015, LPL announced its third quarter fiscal 2015 financial results. LPL reported adjusted earnings per share (“EPS”) for the quarter of $0.55 per share, above consensus analyst estimates, and stated that it expected to move on from its regulatory problems with “meaningfully lower” regulatory-related charges going forward. It also announced that it would be implementing a new “capital management plan to create greater shareholder value.” Key to this plan was a $500 million share repurchase program authorized by LPL’s board of directors (the “Board”). The Company stated that in order to pay for this share repurchase it planned to significantly increase its leverage from a target ratio in the range of two to three times net debt-to-earnings before interest, taxes, depreciation and amortization (“EBITDA”) to a target ratio of four times net debt-to-EBITDA. On a conference call to discuss the quarterly results, defendant Mark S. Casady (“Casady”), LPL’s Chief Executive Officer (“CEO”) and Chairman of the Board, stated that the share buyback was a “bargain,” as he believed LPL shares were trading “at a significant discount to what we believe is their intrinsic value.” Defendant Matthew J. Audette (“Audette”), LPL’s Chief Financial Officer (“CFO”), meanwhile stated that increasing the Company’s leverage to a four times net debt-to-EBITDA ratio is “what makes the most sense today,” and that LPL would only exceed the four times net debt-to- EBITDA ratio if there were “very good returns to justify doing so.” 7. Also on October 29, 2015, national credit rating agency Moody’s Investors Service, Inc. (“Moody’s”) downgraded LPL’s corporate credit rating to Ba3 from Ba2 as a result of the Company’s announced share repurchase plan and expected leverage increases. 8. On November 24, 2015, LPL issued a press release announcing that it had entered into $700 million of new term loans due November 20, 2022 and had extended $631 million of existing term loans to March 29, 2021 in order to pay for a $250 million accelerated share repurchase plan. As a result of the debt transaction, the Company stated its net target leverage had increased to a 3.7 times net debt-to- EBITDA ratio, and that it would breach its credit covenants if its leverage exceeded a five times net debt-to-EBITDA ratio. In connection with the transaction, the Company incurred $21 million of debt issuance costs and its total weighted average interest rate for debt outstanding increased from 3.1% to 3.9%. The Company also announced that it had entered into an agreement with Goldman, Sachs & Co. (“Goldman”) whereby it would pay Goldman $250 million to carry out the accelerated share repurchase on LPL’s behalf. The press release stated that LPL estimated the accelerated share repurchase “will take several months to complete.” 9. Analysts widely panned the debt transaction as unfavorably increasing LPL’s cost of debt. For example, following the announcement a UBS analyst lowered LPL’s stock price target based on what were viewed as “[u]nattractive [d]ebt [t]erms.” Another analyst at Susquehanna Financial Group put things more bluntly, writing the “Transaction Does Not Make Economic Sense.” 10. On December 2, 2015, LPL announced that it would be presenting at a financial services conference sponsored by Goldman on December 8, 2015. Around this time, TPG approached Goldman about cashing out a significant portion of its LPL stock as part of the accelerated share repurchase program. 11. At the December 8, 2015 conference and in the related slide presentation, defendants Casady and Audette made false and misleading statements regarding LPL’s business, prospects and financial results. Specifically, defendants provided a near-end-of-quarter financial update for LPL stating, among other false and misleading statements, that: (a) LPL had an “earnings stream that is quite steady,” and the Company had been “executing it all well” over “the last two months,” when in fact quarterly adjusted earnings and net income would be down 46% and 45% year over year, respectively; (b) LPL was in the midst of a “recovery” and had experienced a “nice rebound” in client assets since the end of the third quarter, specifically highlighting $483 billion in client assets at the end of October 2015, when in fact client assets had deteriorated and would actually decline by billions of dollars by quarter end; (c) gross profits would likely decline only “slightly on a sequential basis,” when in fact LPL would experience its worst sequential gross profit decline in four years; (d) commission revenues were “slow” but would be “more of the same that we saw in the third quarter,” when in fact alternative investment revenues (including investment categories in which LPL had paid substantial regulatory fines, settlements and penalties) would drop a staggering 75% year-over-year; (e) the Company was “still on track” to meet its general and administrative (“G&A”) expenses for the year, but would in fact have higher non- G&A expenses, including $8 million in regulatory-related charges and $22.5 million in depreciation and amortization costs (a 37% sequential increase); and (f) the recently announced share repurchase plan was the “best use” of the Company’s capital because of the then-current “price” of LPL’s common stock, when in fact defendants knew that LPL’s stock price was artificially inflated and if the truth had been disclosed LPL would have suffered a negative share price decline, and thus its proposed share repurchase was a wasteful and inefficient use of Company capital that also increased the risk that LPL would violate the leverage covenants in its credit agreements. 12. As a result of defendants’ false statements, LPL common stock traded at artificially inflated prices during the Class Period, with its shares reaching a high of $45.06 per share on December 8, 2015, the day of the conference. 13. On December 10, 2015, LPL issued a press release announcing the early completion of its accelerated share repurchase program, stating that TPG had “approached Goldman about selling a block of shares, providing the opportunity to settle the [accelerated share repurchase program] more quickly.” TPG sold 4.3 million shares of LPL common stock at $43.27 per share to Goldman to be delivered to the Company through the accelerated share repurchase program. As a result, TPG generated approximately $187 million in insider sales proceeds. The release stated that TPG had approached Goldman as it was “buying the Company’s shares” for the accelerated share repurchase program, a process which began prior to defendants’ December 8, 2015 conference. 14. On February 11, 2016, LPL issued a press release announcing its fourth quarter and full year 2015 financial results. The Company reported results that fell well below analyst’s estimates. For example, LPL stated that it had generated only $0.37 per share in adjusted EPS, well below consensus analyst estimates of $0.51 per share. The Company also stated that client assets at quarter end totaled only $476 billion, $7 billion below the amount of client assets touted at the December 8, 2015 conference. The Company also revealed disappointing revenues, primarily as a result of dramatically lower commission revenues and revenues from alternative investments, as well as higher-than-expected expenses for the quarter. 15. As a result of this news, the price of LPL common stock dropped $8.76 per share to close at $16.50 per share on February 12, 2016, a one-day decline of nearly 35% on unusually high trading volume of over 11.4 million shares. Analysts described the results as “[u]gly” and noted a “lack of confidence in management,” with some expressing concern over the Company’s substantially increased leverage and ability to remain under its maximum leverage ratio as required by its revised credit agreements. 16. Notably, if TPG had sold the same 4.3 million shares of LPL stock to the Company at the February 12, 2016 closing price, its sale proceeds would have been diminished by approximately $115 million. By the same token, if LPL had waited to purchase shares from TPG until after announcing its fourth quarter results, it could have purchased the same number of shares from TPG for $115 million less. Thus, its purchase from TPG of LPL shares at $43.27 per share was a wasteful and inefficient use of Company capital. The following chart illustrates defendants’ fraudulent scheme to allow TPG to cash out at artificially inflated price before LPL’s true business, prospects and financial results were revealed: 17. As a result of defendants’ false statements, LPL common stock traded at artificially inflated prices during the Class Period. However, after the above revelations seeped into the market, the Company’s common stock was hammered by massive sales, sending the price of the Company’s stock down 63% from its Class Period high and causing economic harm and damages to class members. TPG, meanwhile, avoided tens of millions of dollars in investment losses and pocketed $187 million in insider sales proceeds. JURISDICTION AND VENUE 18. The claims asserted herein arise under and pursuant to §§10(b) and 20(a) of the 1934 Act, 15 U.S.C. §§78j(b) and 78t(a), and Rule 10b-5 promulgated thereunder by the SEC, 17 C.F.R. §240.10b-5. 19. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §1331 and §27 of the 1934 Act. 20. Venue is proper in this District pursuant to §27 of the 1934 Act and 28 U.S.C. §1391(b). Many of the acts charged herein, including the preparation and dissemination of materially false and misleading information, occurred in substantial part in this District. LPL also maintains primary offices in this District and has publicly stated that defendant Audette will be based out of this District. 21. In connection with the acts alleged in this complaint, defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including, but not limited to, the mails, interstate telephone communications and the facilities of the NASDAQ stock market. PARTIES 22. Plaintiff Charter Township of Clinton Police and Fire Retirement System acquired LPL common stock as set forth in the attached certification and has been damaged thereby. 23. Defendant LPL is an independent broker-dealer, a custodian for RIAs and an independent consultant to retirement plans. The Company maintains offices at 4707 Executive Drive, San Diego, California 92121. 24. Defendant Casady is, and at all relevant times was, the Company’s Chairman of the Board and CEO. 25. Defendant Audette is, and at all relevant times was, the Company’s CFO. 26. The defendants referenced above in ¶¶24-25 are referred to herein as the “Individual Defendants.” The Individual Defendants made, or caused to be made, false statements which caused the price of LPL common stock to be artificially inflated during the Class Period. 27. The Individual Defendants, because of their positions with the Company, possessed the power and authority to control the contents of LPL’s quarterly reports, shareholder letters, press releases and presentations to securities analysts, money and portfolio managers and institutional investors, i.e., the market. They were provided with copies of the Company’s reports and press releases alleged herein to be misleading prior to or shortly after their issuance and had the ability and opportunity to prevent their issuance or cause them to be corrected. They also participated in conference calls with securities analysts and investors in which they made materially misleading statements and omissions and held themselves out to be knowledgeable on the topics which they discussed. Because of their positions with the Company, and their access to material non-public information available to them but not to the public, the Individual Defendants knew that the adverse facts specified herein had not been disclosed to and were being concealed from the public, and that the positive representations being made were then materially false and misleading. The Individual Defendants are liable for the false and misleading statements pleaded herein. DEFENDANTS’ FRAUDULENT SCHEME AND COURSE OF BUSINESS 28. Defendants are liable for: (i) making false statements; or (ii) failing to disclose adverse facts known to them about LPL. Defendants’ fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of LPL common stock was a success, as it: (i) deceived the investing public regarding LPL’s prospects and business; (ii) artificially inflated the price of LPL common stock; and (iii) caused plaintiff and other members of the Class (as defined below) to purchase LPL common stock at inflated prices. BACKGROUND 29. LPL, together with its subsidiaries, provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at financial institutions in the United States. Its brokerage offerings include variable and fixed annuities, mutual funds, equities, retirement and 529 education savings plans, fixed income products, insurance and alternative investments. LPL’s insurance offerings comprise personalized advance case design, point-of-sale service, and product support for a range of life, disability, and long-term care products. The Company also offers fee-based advisory platforms and support, which provide access to no-load/load-waived mutual funds, ETFs, stocks, bonds, conservative option strategies, unit investment trusts, institutional money managers, and no-load multi-manager variable annuities. In addition, it offers cash sweep programs and retirement solution, a fee-based service that allows qualified advisors to provide consultation and advice. Further, it provides other services comprising tools and services enabling advisors to maintain and grow their practices and custodial services to trusts for estates and families. The Company offers its services to approximately 14,000 independent financial advisors, including financial advisors at approximately 700 financial institutions. 30. The majority of LPL’s revenue streams fall into two categories: commission revenues and advisory revenues. For fiscal 2014, commission revenues and advisory revenues generated 48% and 31%, respectively, of LPL’s total net revenues. Commission revenues derive from upfront advisor fees and commissions for investment products and, for certain products, a trailing commission. Advisory revenues derive from fee-based advisory platforms and the provision of ongoing investment advisory services. For fiscal 2014, 68% of LPL’s revenue was recurring in nature, providing the Company substantial visibility into its future revenue streams. In addition, for transaction-based commissions, the Company generates revenues “at the point of sale,” providing the Company with further visibility into its commission- based revenues at a given point in time. LPL also has significant visibility into its depreciation and amortization expenses. These expenses are computed by taking the book values of long-lived assets, such as internally developed software, leasehold improvements, computers and software, and furniture and equipment (recorded at historical cost and reduced by accumulated depreciation and amortization), and then dividing those assets on a straight-line basis over the estimated useful lives of the assets – all things readily determined and anticipated and under the control of management. 31. Prior to 2010, LPL was majority owned by TPG and Hellman & Friedman, two private equity firms that owned a combined 72% stake in the Company. In November 2010, these private equity firms took LPL public in an IPO in which 15.7 million LPL shares were sold to the public at $30 per share. 32. Even after the IPO, TPG retained a substantial ownership stake in the Company and influence over its affairs. For example, two TPG partners, Richard Boyce and Richard Schifter, served as directors of the Company. While Boyce and Schifter retired from their positions with TPG in 2013, they remained on the Board throughout the relevant time frame and kept in close contact with TPG. LPL has also identified TPG as a “related party” in SEC filings, and stated that it has continued to enter into various related-party transactions with TPG and certain of TPG’s portfolio companies since the IPO. As of December 31, 2014, TPG owned approximately 13% of the outstanding shares of LPL common stock. LPL’s annual report on Form 10-K for fiscal 2014 stated that as a result of this ownership interest, TPG “will continue to be able to influence our decisions, regardless of whether or not other stockholders believe that the transaction is in their own best interests.” 33. Following the IPO, LPL became the subject of several regulatory and governmental investigations into allegedly fraudulent, deceptive and/or legally deficient business practices at the Company and among its network of financial advisors. For example: • In February 2013 it was announced LPL had settled allegations by Massachusetts securities regulators that it had failed to adequately supervise its brokers who sold investments in non-traded REITs for $2.5 million. • In May 2015 FINRA announced that it had sanctioned LPL $11.7 million for “[w]idespread [s]upervisory [f]ailures [r]elated to [c]omplex [p]roduct [s]ales, [t]rade [s]urveillance and [t]rade [c]onfirmations [d]elivery.” • In September 2015 it was announced that LPL had agreed to pay $1.8 million to settle charges by the Massachusetts Attorney General that it had improperly sold and marketed risky ETFs to retail investors. • Also in September 2015, it was announced that LPL had agreed to remediate investor losses and pay $1.425 million in civil penalties to regulators in 48 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands for its alleged failure to implement an adequate supervisory system regarding its sale of non-traded REITs and its failure to enforce its written procedures regarding the sale of non-traded REITs. 34. On October 29, 2015, LPL financial announced its third quarter fiscal 2015 financial results. LPL reported adjusted EPS for the quarter of $0.55 per share, above consensus analyst estimates, and stated that it expected to move on from its regulatory problems with “meaningfully lower” regulatory-related charges going forward. It also announced that it would be implementing a new “capital management plan to create greater shareholder value.” Key to this plan was a $500 million share repurchase program authorized by the Board. The Company stated that in order to pay for this share repurchase it planned to significantly increase its target leverage ratio from a range of two to three times net debt-to-EBITDA to a ratio of four times net debt-to-EBITDA. On a conference call to discuss the quarterly results, defendant Casady stated that the share buyback was a “bargain,” as he believed LPL shares were trading “at a significant discount to what we believe is their intrinsic value.” Defendant Audette meanwhile stated that increasing the Company’s leverage to a four times net debt-to-EBITDA ratio is “what makes the most sense today,” and that LPL would only go above the four times debt-to-EBITDA ratio if there were “very good returns to justify doing so.” 35. Also on October 29, 2015, national credit rating agency Moody’s downgraded LPL’s corporate credit rating to Ba3 from Ba2 as a result of “increased credit risk” following the Company’s announced share repurchase plan and expected leverage increases. 36. On November 24, 2015, LPL issued a press release announcing that it had entered into $700 million of new term loans due November 20, 2022 and had extended $631 million of existing term loans to March 29, 2021 in order to pay for a $250 million accelerated share repurchase plan. As a result of the debt transaction, the Company stated its net target leverage had increased to a 3.7 times net debt-to- EBITDA ratio, and that it would breach its revised credit covenants if its leverage exceeded a five times net debt-to-EBITDA ratio. In connection with the transaction, the Company incurred $21 million of debt issuance costs and its total weighted average interest rate for debt outstanding increased from 3.1% to 3.9%. The Company also announced that it had entered into an agreement with Goldman whereby it would pay Goldman $250 million to carry out the accelerated share repurchase on LPL’s behalf. The press release stated that LPL estimated the accelerated share repurchase “will take several months to complete.” 37. Analysts widely panned the debt transaction as unfavorably increasing LPL’s cost of debt. For example, following the announcement a UBS analyst lowered LPL’s stock price target based on what were viewed as “[u]nattractive [d]ebt [t]erms.” Another analyst at Susquehanna Financial Group put things more bluntly, writing the “Transaction Does Not Make Economic Sense.” 38. On December 2, 2015, LPL announced that it would be presenting at a financial services conference sponsored by Goldman on December 8, 2015. This was around the same time TPG approached Goldman to discuss cashing out a significant portion of its LPL stock through the accelerated share repurchase program. FALSE AND MISLEADING STATEMENTS ISSUED DURING THE CLASS PERIOD 39. At the December 8, 2015 conference and in the related slide presentation, defendants Casady and Audette made false and misleading statements regarding LPL’s business, prospects and financial results. For example, in response to an analyst question about how LPL would “turn the page” on its recent regulatory problems, defendant Casady stated that “execut[ing]” the share repurchase would be “key.” 40. The analyst also asked defendant Audette what he had seen in his short time with the Company, having only joined as CFO in September 2015. Audette responded by again highlighting the share repurchase capital plan, claiming that it was “in the best interest of shareholders,” and stating that he had witnessed a Company that was a “lot more powerful and compelling than I thought from the outside,” with “an earnings stream that is quite steady and produces cash flow over time,” and that LPL had been “executing it all well” since he had come on board: But, now, being here, a little bit over two months, spending a lot of time with the team just getting up to speed on what our offering is, and starting to think through our key customer and client; the advisor running a small advisory shop in their hometown area and thinking through we’ve got the ability to have them offer brokerage services through us, to offer advisory services, whether I’m a small firm that wants [to] utilize our compliance work and regulatory work on the corporate side, or if I’m a bigger player and I want to utilize the overall hybrid platform and have both brokerage and independent advisory. Being here for these two months and spending a lot of time, I wouldn’t say it was a surprise because it was expected, but I think it’s a lot more powerful and compelling than I thought from the outside. Third, and what Mark kind of hinted to on the capital plan side, being at a place where there’s a lot less approvals necessary to go execute on a capital plan in the best interest of shareholders. So, the way we speak about it, a capital-lite model, an earnings stream that is quite steady and produces cash flow over time. Hopefully, the last two months have shown that that opportunity absolutely was there. We’re executing it all well. 41. Defendant Audette continued by giving a mid-quarter update that concealed the amount and extent of LPL’s gross profit, earnings and revenue declines and non-G&A expense growth, claiming LPL was in the midst of a “recovery” with client assets experiencing a “nice rebound” since the end of the third quarter: I would say, very broadly, we say more of the same that we saw in the third quarter. Just the very top bullet point, we did see market levels and asset levels recover nicely. Those of you that I’m sure follow closely, September 30th or Q3 quarter end, markets went down a fair bit on that day. So, we’re up at the end of October to $483 billion versus $462 billion at the end of the quarter. So, nice rebound there. Second thing is in that first bullet, net new advisory assets continue to flow in well. And we are averaging about $1.5 billion a month. And you see that we had that in October. Now, at the same time, on that second bullet, I think the key thing here, and I would underscore the word slightly, is that Q4 gross profit is likely to decline slightly for a few reasons, including the one that I just mentioned, is that first sub- bullet; that advisory fees are really grounded in the prior quarter’s balances, meaning right on September 30th. So the recovery we see, there will be a little bit of a lag of that showing up in gross profit going forward. In the second bullet, sales commissions continue to be slow. They were slow last quarter. They continue to be slow from what we’ve seen so far this quarter. So, I think those are probably the key drivers on the gross profit side. Final bullet here, advisor headcount growth consistent with what we saw in the third quarter. The numbers are relatively small with high- quality, higher asset level advisors coming in being offset by the lower asset size or the lower-quality items, advisors. Turning to page 21, I would say, broadly, this page with respect to expenses and the capital plan, is largely just reiterating that what we said on the earnings call is we are still on track to do and that’s still our guidance. And just quickly, to highlight probably the most notable ones in the first two sub bullet points in the top half of the page on expenses; that our 2015 core G&A guidance is 7.5% to 8.5% and, in dollars, roughly $700 million, that $697 million to $703 million. We’re still on track. And then, specifically for next year, 2016, core G&A in that $715 million to $730 million range, which is that 2% to 4% growth. So that largely – not largely – that remains on track. So, no news here. Just reiterating that what we said on the call is still the case. 42. Defendant Casady then responded to an analyst’s question about what he was seeing in terms of advisor growth, stating that he “like[d] th[e] trend,” as he was seeing more productive advisors join the Company’s network while less productive advisors were leaving: How we know that’s true is that we have 97% retention revenue. So, with the folks who are leaving, it’s clear that they’re small producers. And we see good advisory asset growth overall. And we know that the market data that tells us about movement of advisors puts us right at the top of the league tables as it relates to advisors joining LPL. So, fundamentally, this year is sort of like any other in terms of the gross amount and what’s different is that we do have the smaller producers leaving. Classes that are coming in are bigger, on average, in terms of production than those who are with us already. So, we like that trend, as well. And we’re staying right around that $0.25 to the dollar, on average, cost of acquisition transition assistance, which is very good vis a vis the market. We do see a strong pipeline. So, we do think that the numbers will pick up in terms of the gross – again, it would be larger. Not so sure about the small producers continuing to move out. But we do see the pipeline building in strength over time. So, I’d call this a pretty typical year or average year for us. 43. Defendant Audette later stressed that he and the Company were focused on providing investors with “transparency of [LPL’s] results” and “[j]ust grounding it all.” 44. Later during the conference, defendant Casady was asked about the Company’s recently announced share repurchase program and he reaffirmed that the share repurchase would be the “best use” of Company capital because of LPL’s then- current share price: So, it’s just price. At the end of the day, we can buy our own stock at 8- to 9-times EBITDA. And what seems to be available to us in the M&A market appears to be more like 10-, 12-, 14-times EBITDA. And, quite simply, I think it’s a question of allocation of capital, the best use. And so, it’s no more complex than that. 45. The statements referenced above in ¶¶39-44 were materially false and misleading when made because they failed to disclose the following adverse facts which were known by defendants or recklessly disregarded by them: (a) that LPL’s earnings and revenue were not “steady,” but were substantially declining, as LPL’s fourth quarter adjusted earnings, EPS and net income would be down double digits year over year; (b) that LPL’s client assets were not “rebound[ing]” nicely and in the midst of a “recovery,” but were actually deteriorating and would decline by billions of dollars from the October figure provided at the conference through the end of the fourth quarter; (c) that LPL’s gross profits would not decline “slightly on a sequential basis,” but significantly, and LPL would in fact experience its worst sequential gross profit decline in four years; (d) that commission revenues would not be “more of the same that [LPL] saw in the third quarter,” but down sequentially from the end of the third quarter, and in fact, LPL was suffering a staggering loss of revenue from alternative investments, including from investment categories in which LPL had paid substantial regulatory fines, settlements and penalties; (e) that the Company was expecting a substantial increase in non- G&A expenses, including $8 million in regulatory-related charges and a 37% sequential increase in depreciation and amortization costs; and (f) that the announced share repurchase plan was not the “best use” of the Company’s capital because of the then-current “price” of LPL’s common stock, but rather a wasteful and inefficient use of Company capital in light of the inflated price of LPL shares, which also increased the risk that LPL would violate the leverage covenants in its credit agreements. 46. As a result of defendants’ false statements, LPL common stock traded at artificially inflated prices during the Class Period, with its shares reaching a high of $45.06 per share on December 8, 2015, the day of the conference. 47. On December 10, 2015, LPL issued a press release announcing the early completion of its accelerated share repurchase program, stating that TPG had “approached Goldman about selling a block of shares, providing the opportunity to settle the [accelerated share repurchase program] more quickly.” TPG sold 4.3 million shares of LPL common stock at $43.27 per share to Goldman to be delivered to the Company through the accelerated share repurchase program. As a result, TPG generated approximately $187 million in insider sales proceeds. The release stated that TPG had approached Goldman as it was “buying the Company’s shares” for the accelerated share repurchase program, a process which began prior to the December 8, 2015 conference. 48. On February 11, 2016, LPL issued a press release announcing its fourth quarter and full year 2015 financial results. The Company reported results that fell well below analyst’s estimates. For example, LPL stated that it had generated only $0.37 per share in adjusted EPS, 27% below consensus analyst estimates of $0.51 per share. The Company also stated that gross profit had declined more than 5% since the end of the third quarter, the largest sequential decline in four years. The Company also revealed that client assets at quarter end totaled only $476 billion, $7 billion below the amount of client assets at the end of October that defendants had touted at the December 8, 2015 conference. In addition, LPL revealed disappointing revenues, including a 4% sequential decline in quarterly commission revenues and a staggering 75% decline in alternative investments year over year. Further, LPL disclosed that depreciation and amortization expenses had increased 37% sequentially and that it had recorded an $8 million regulatory charge during the quarter. 49. As a result of this news, the price of LPL common stock dropped $8.76 per share to close at $16.50 per share on February 12, 2016, a one-day decline of 35% on unusually high trading volume of over 11.4 million shares. Analysts described the results as “[u]gly” and noted a “lack of confidence in management,” with some expressing concern over the Company’s substantially increased leverage and ability to remain under its maximum leverage ratio as required by its credit agreements. 50. Notably, if TPG had sold the same 4.3 million shares of LPL stock to the Company at the February 12, 2016 closing price, its sale proceeds would have been diminished by approximately $115 million. By the same token, if LPL had waited to purchase shares from TPG until after announcing its fourth quarter results, it could have purchased the same number of shares from TPG for $115 million less. Thus, its purchase from TPG of LPL shares at $43.27 per share was a wasteful and inefficient use of Company capital. 51. As a result of defendants’ false statements, LPL common stock traded at artificially inflated prices during the Class Period. However, after the above revelations seeped into the market, the Company’s common stock was hammered by massive sales, sending the price of the Company’s stock down 63% from its Class Period high and causing economic harm and damages to Class members. TPG, meanwhile, avoided tens of millions of dollars in investment losses and pocketed $187 million in insider sales proceeds. LOSS CAUSATION/ECONOMIC LOSS 52. During the Class Period, as detailed herein, defendants made false and misleading statements by misrepresenting the Company’s business and prospects and engaged in a scheme to deceive the market and a course of conduct that artificially inflated the price of LPL common stock and operated as a fraud or deceit on Class Period purchasers of LPL common stock. Later, when defendants’ prior misrepresentations and fraudulent conduct became apparent to the market, the price of LPL common stock fell precipitously, as the prior artificial inflation came out of the price over time. As a result of their purchases of LPL common stock during the Class Period, plaintiff and other members of the Class suffered economic loss, i.e., damages, under the federal securities laws. APPLICABILITY OF THE PRESUMPTION OF RELIANCE AND FRAUD ON THE MARKET 53. Plaintiff will rely upon the presumption of reliance established by the fraud-on-the-market doctrine in that, among other things: (a) Defendants made public misrepresentations or failed to disclose material facts during the Class Period; (b) The omissions and misrepresentations were material; (c) The Company’s stock traded in an efficient market; (d) The misrepresentations alleged would tend to induce a reasonable investor to misjudge the value of the Company’s common stock; and (e) Plaintiff and other members of the Class purchased LPL common stock between the time defendants misrepresented or failed to disclose material facts and the time the true facts were disclosed, without knowledge of the misrepresented or omitted facts. 54. At all relevant times, the market for LPL common stock was efficient for the following reasons, among others: (a) LPL stock met the requirements for listing, and was listed and actively traded on the NASDAQ, a highly efficient and automated market; (b) As a regulated issuer, LPL filed periodic public reports with the SEC; and (c) LPL regularly communicated with public investors via established market communication mechanisms, including through regular disseminations of press releases on the major news wire services and through other wide-ranging public disclosures, such as communications with the financial press, securities analysts and other similar reporting services. NO SAFE HARBOR 55. Defendants’ false and misleading statements during the Class Period were not forward-looking statements (“FLS”) and/or identified as such by defendants, and thus did not fall within any “Safe Harbor.” 56. LPL did not issue verbal “Safe Harbor” warnings to accompany its oral FLS issued during the Class Period and, in any event, any warnings were ineffective to shield those statements from liability. 57. Defendants are also liable for any false or misleading FLS pleaded because, at the time each FLS was made, the speaker knew the FLS was false or misleading and the FLS was authorized and/or approved by an executive officer of LPL who knew that the FLS was false. Further, none of the historic or present tense statements made by defendants were assumptions underlying or relating to any plan, projection or statement of future economic performance, as they were not stated to be such assumptions underlying or relating to any projection or statement of future economic performance when made. CLASS ACTION ALLEGATIONS 58. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of all persons who purchased LPL common stock during the Class Period (the “Class”). Excluded from the Class are defendants and their families, the officers and directors of the Company, at all relevant times, members of their immediate families and their legal representatives, heirs, successors or assigns, and any entity in which defendants have or had a controlling interest. 59. The members of the Class are so numerous that joinder of all members is impracticable. LPL stock is actively traded on the NASDAQ and there are nearly 89 million shares of LPL common stock outstanding. While the exact number of Class members is unknown to plaintiff at this time and can only be ascertained through appropriate discovery, plaintiff believes that there are hundreds of members in the proposed Class. Record owners and other members of the Class may be identified from records maintained by LPL or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions. 60. Common questions of law and fact predominate and include: (i) whether defendants violated the 1934 Act; (ii) whether defendants omitted and/or misrepresented material facts; (iii) whether defendants knew or recklessly disregarded that their statements were false; and (iv) whether defendants’ statements and/or omissions artificially inflated the price of LPL common stock and the extent and appropriate measure of damages. 61. Plaintiff’s claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by defendants’ wrongful conduct in violation of federal law that is complained of herein. 62. Plaintiff will fairly and adequately protect the interests of the members of the Class and has retained counsel competent and experienced in class and securities litigation. 63. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation make it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. COUNT I For Violation of §10(b) of the 1934 Act and Rule 10b-5 Against All Defendants 64. Plaintiff incorporates all allegations in ¶¶1-63 above by reference. 65. During the Class Period, defendants disseminated or approved the false statements specified above, which they knew or recklessly disregarded were misleading in that they contained misrepresentations and failed to disclose material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. 66. Defendants violated §10(b) of the 1934 Act and Rule 10b-5 in that they: (a) Employed devices, schemes and artifices to defraud; (b) Made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or (c) Engaged in acts, practices, and a course of business that operated as a fraud or deceit upon plaintiff and others similarly situated in connection with their purchases of LPL common stock during the Class Period. 67. Plaintiff and the Class have suffered damages in that, in reliance on the integrity of the market, they paid artificially inflated prices for LPL common stock. Plaintiff and the Class would not have purchased LPL common stock at the prices they paid, or at all, if they had been aware that the market price had been artificially and falsely inflated by defendants’ misleading statements. 68. As a direct and proximate result of defendants’ wrongful conduct, plaintiff and the other members of the Class suffered damages in connection with their purchases of LPL common stock during the Class Period. COUNT II For Violation of §20(a) of the 1934 Act Against All Defendants 69. Plaintiff incorporates all allegations in ¶¶1-68 above by reference. 70. The Individual Defendants acted as controlling persons of LPL within the meaning of §20(a) of the 1934 Act. By virtue of their positions with the Company, and ownership of LPL common stock, the Individual Defendants had the power and authority to cause LPL to engage in the wrongful conduct complained of herein. LPL controlled the Individual Defendants and all of its employees. By reason of such conduct, defendants are liable pursuant to §20(a) of the 1934 Act. PRAYER FOR RELIEF WHEREFORE, plaintiff prays for judgment as follows: A. Determining that this action is a proper class action, designating plaintiff as Lead Plaintiff and certifying plaintiff as a class representative under Rule 23 of the Federal Rules of Civil Procedure and plaintiff’s counsel as Lead Counsel; B. Awarding damages and interest; C. Awarding plaintiff’s reasonable costs, including attorneys’ fees; and D. Awarding such equitable/injunctive or other relief as the Court may deem just and proper. JURY DEMAND Plaintiff demands a trial by jury. DATED: March 22, 2016 ROBBINS GELLER RUDMAN & DOWD LLP DAVID C. WALTON BRIAN E. COCHRAN s/David C. Walton DAVID C. WALTON 655 West Broadway, Suite 1900 San Diego, CA 92101-8498 Telephone: 619/231-1058 619/231-7423 (fax) ROBBINS GELLER RUDMAN & DOWD LLP SAMUEL H. RUDMAN 58 South Service Road, Suite 200 Melville, NY 11747 Telephone: 631/367-7100 631/367-1173 (fax) VANOVERBEKE MICHAUD & TIMMONY, P.C. MICHAEL J. VANOVERBEKE 79 Alfred Street Detroit, MI 48201 Telephone: 313/578-1200 313/578-1201 (fax) Attorneys for Plaintiff I:\Admin\CptDraft\Securities\Cpt LPL Financial.docx CERTIFICATION OF NAMED PLAINTIFF PURSUANT TO FEDERAL SECURITIES LAWS CHARTER TOWNSHIP OF CLINTON POLICE AND FIRE RETIREMENT SYSTEM (“Plaintiff”) declares: 1. Plaintiff has reviewed a complaint and authorized its filing. 2. Plaintiff did not acquire the security that is the subject of this action at the direction of plaintiff’s counsel or in order to participate in this private action or any other litigation under the federal securities laws. 3. Plaintiff is willing to serve as a representative party on behalf of the class, including providing testimony at deposition and trial, if necessary. 4. Plaintiff has made the following transaction(s) during the Class Period in the securities that are the subject of this action: Security Transaction Date Price Per Share See attached Schedule A. 5. Plaintiff has not sought to serve or served as a representative party in a class action that was filed under the federal securities laws within the three-year period prior to the date of this Certification except as detailed below: Charter Township of Clinton Police and Fire Ret. Sys. v. Volkwagen AG, et al., No. 2:15-cv-13999 (E.D. Mich.) 6. The Plaintiff will not accept any payment for serving as a representative party on behalf of the class beyond the Plaintiff’s pro rata share of SECURITIES TRANSACTIONS Acquisitions Date Type/Amount of Acquired Price Securities Acquired 01/19/2016 2,600 $34.26 02/02/2016 1,400 $28.07

securities

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Jeff D. Friedman (SBN 173886) HAGENS BERMAN SOBOL SHAPIRO LLP 715 Hearst Avenue, Suite 202 Berkeley, CA 94710 Telephone: (510) 725-3000 Facsimile: (510) 725-3001 [email protected] Steve W. Berman (pro hac vice to be filed) Sean R. Matt (pro hac vice to be filed) HAGENS BERMAN SOBOL SHAPIRO LLP 1301 Second Avenue, Suite 2000 Seattle, WA 98101 Telephone: (206) 623-7292 Facsimile: (206) 623-0594 [email protected] [email protected] Attorneys for Plaintiffs [Additional Counsel Listed on the Signature Page] UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION No. 18-cv-07054 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED CHRISTOPHER MOONAN, SEAN T. SMITH, ISAIAH RUDY, JOSE HERNANDEZ, SEAN M. BUOB, RICHARD SAMSON, RYAN ARTHUR JENSEN, DOUGLAS CRENSHAW, ANTHONY RAYMOND SMITH, BRADLEY RICE, BRUCE K. GARLOCK, CHRIS S. MCALISTER, COLBY BARRY, DEBRA KAY CASKEY, DOUGLAS HUGHES, ERIC THOMAS CORDER, ERNEST HAROLD MILLER, GEOFF COCHEMS, JOHN THOMAS WHITE, KALEB BEAN, KENNETH MUNRO, KENNY TRAN, KEVIN ALLEN LAWSON, KEVIN SUTHERLAND, MICHAEL L. MCCOY, MILTON LEON HUSS, JR., NICHOLAS BROCK, STACY WADE SIZELOVE, THORIN JAY ASKIN, RYAN MADURO, MARCOS R. COBAIN, JR., MICHELE DINIZ, JAMES DUSTIN MORGANTI, and BRANDON TIROZZI, each plaintiff is a citizen of the State of California and each plaintiff brings suit individually and on behalf of all others similarly situated, Plaintiffs, v. GENERAL MOTORS LLC, a Delaware corporation, Defendant. TABLE OF CONTENTS I. INTRODUCTION ................................................................................................................... 1 II. INTRADISTRICT ASSIGNMENT ........................................................................................ 4 III. PARTIES ................................................................................................................................. 5 A. The Plaintiffs ............................................................................................................... 5 B. The Defendant. .......................................................................................................... 48 IV. VENUE AND JURISDICTION ............................................................................................ 49 V. FACTUAL ALLEGATIONS ................................................................................................ 50 A. The Class Vehicles .................................................................................................... 50 B. The rise of diesel vehicles in the United States ......................................................... 50 C. Pre-Class Period Failures ot the CP4 Are Known Within The auto Industry ...................................................................................................................... 52 D. GM’s Additional Knowledge of Incompatibility, Defectiveness, and Failures Associated with Bosch’s CP4 Pump. .................................................... 61 E. Supposed “Remedies” are Insufficient and Costly. ................................................... 74 F. GM Knew Durability and Superiority Were Material to Consumers and Made Hollow Promises of Durability and Superiority. ...................................... 76 VI. TOLLING OF THE STATUTE OF LIMITATIONS ........................................................... 85 VII. CLASS ACTION ALLEGATIONS ...................................................................................... 87 VIII. CAUSES OF ACTION CLAIMS BROUGHT ON BEHALF OF THE CLASS AND ON BEHALF OF THE NAMED PLAINTIFFS ............................................ 91 COUNT I FRAUD BY CONCEALMENT ....................................................................................... 91 COUNT II VIOLATIONS OF THE CALIFORNIA UNFAIR COMPETITION LAW (CAL. BUS. & PROF. CODE § 17200, ET SEQ.) ...................................................... 94 COUNT III VIOLATIONS OF THE CONSUMER LEGAL REMEDIES ACT (“CLRA”) (CAL. CIV. CODE § 1750, ET SEQ.) ................................................................. 98 COUNT IV UNJUST ENRICHMENT ............................................................................................ 99 COUNT V BREACH OF IMPLIED WARRANTY OF MERCHANTABILITY (CAL. COM. CODE §§ 2314 AND 10212) ........................................................................ 100 COUNT VI VIOLATION OF THE MAGNUSON-MOSS WARRANTY ACT, (15 U.S.C. § 2301, ET SEQ.) ............................................................................................... 102 PRAYER FOR RELIEF .................................................................................................................. 105 DEMAND FOR JURY TRIAL ....................................................................................................... 106 Christopher Moonan, Sean T. Smith, Isaiah Rudy, Jose Hernandez, Sean M. Buob, Richard Samson, Ryan Arthur Jensen, Douglas Crenshaw, Anthony Raymond Smith, Bradley Rice, Bruce K. Garlock, Chris S. McAlister, Colby Barry, Debra Kay Caskey, Douglas Hughes, Eric Thomas Corder, Ernest Harold Miller, Geoff Cochems, John Thomas White, Kaleb Bean, Kenneth Munro, Kenny Tran, Kevin Allen Lawson, Kevin Sutherland, Michael L. Mccoy, Milton Leon Huss, Jr., Nicholas Brock, Stacy Wade Sizelove, Thorin Jay Askin, Ryan Maduro, Marcos R. Cobain, Jr., Michele Diniz, James Dustin Morganti, and Brandon Tirozzi, each individually and on behalf of all others similarly situated (“the Class”), file this suit against Defendant General Motors LLC. This lawsuit is based upon the investigation of counsel, the review of scientific and automotive industry papers, and the investigation of experts with relevant education and experience. In support thereof, Plaintiffs state as follows: I. INTRODUCTION 1. General Motors LLC (“GM”) has sold millions of diesel-tank automobiles equipped with high-pressure fuel injection pumps that are proverbial ticking time bombs, wholly unbeknownst to an unassuming American public who ponies-up big bucks for these vehicles’ fictitious “durability,” “longevity,” and “topnotch fuel economy.” GM promised consumers the continued reliability of their diesel engines, but with increased fuel efficiency and power at greater fuel efficiency. However, this came with a hidden and catastrophic cost that was secretly passed on to consumers. The key was the Bosch-supplied CP4 high pressure fuel injection pump, which unbeknownst to consumers is a ticking time bomb when used in American vehicles. As GM knew all along, Bosch’s CP4 pump was never compatible with American diesel fuel standards. The CP4 pump is not built to withstand the specifications for U.S. diesel fuel in terms of lubrication or water content, and it struggles to lift a volume of fuel sufficient to lubricate itself. As a result, the pump is forced to run dry and destroy itself as air bubbles allow metal to rub against metal. As a result of this defect, the pump secretly deposits metal shavings and debris throughout the fuel injection system and the engine until it suddenly and cataclysmically fails without warning, further contaminating the fuel delivery system with larger pieces of metal. The “catastrophic” (i.e., complete and total) pump failure often occurs as early as “mile 0,” as the fuel injection disintegration process begins at the very first fill of the tank. This total fuel injection system failure and consequential engine failure results in an outrageously expensive repair bill, even when it is “covered under warranty,” all for a repair that will not truly ameliorate the issue so long as the vehicle is being filled with U.S. diesel. And, although complete and total pump failure takes time to occur, the defective CP4 pump starts damaging the vehicle’s fuel injection system and engine immediately upon the vehicle’s first use. Further, the sudden and unexpected shutoff of the vehicle’s engine while it is in motion and then subsequent inability to restart the vehicle present an inherent risk to consumer safety—one which GM itself has acknowledged in the past. Thus, Plaintiffs and other Class members have suffered from a defect that existed in the Class Vehicles, which began damaging the Class Vehicles and their fuel delivery systems upon the first use of the Class Vehicles and throughout their lifetime. Plaintiffs and other Class members are seeking recovery for this manifested and immediately damaging defect, in addition to any and all consequential damages stemming therefrom. 2. What is worse, consumers are left with repair bills that range from $8,000.00 to $20,000.00 per vehicle. Some victims of GM’s grand scam are American businesses who own several vehicles and have suffered multiple failures. Others have spent several hundred or several thousand dollars attempting to prevent or mitigate these failures. Moreover, diesel fans pay so much more for their trucks because diesel trucks are expected to last for 500,000 to 800,000 miles, and have more power, and a lower fuel bill. Put simply, Plaintiffs and all members of the proposed Class paid a premium for their diesel vehicles, and were harmed by being sold vehicles with a defective fuel injection pump that is substandard for American fuel. 3. GM saw Bosch’s CP4 fuel injection pump as another way to make money—to take advantage of consumers’ desire to drive diesel vehicles that were reliable, durable, fuel-efficient, and powerful. After the CP4 fuel injection system worked successfully in vehicles in Europe, GM sought to use the CP4 system in American vehicles, promising consumers exactly what they were looking for—improvements in torque, horsepower, durability, and fuel economy. But GM could never deliver on that promise for American vehicles because the CP4 fuel pump is not compatible with American diesel fuel; in fact, GM knew this from the start, and equipped its modern Duramax diesel vehicles with the European-designed CP4 fuel pump anyway. 4. Unbeknownst to consumers, the improved fuel efficiency of the Bosch-made component CP4 pump in American vehicles comes at the cost of running the pump nearly dry so that it destroys itself, and—ultimately and catastrophically—destroys the fuel injection system and the engine altogether. American diesel fuel is cleaner, which means that it also provides less lubrication than European diesel fuel. The lubricity specifications of American diesel are incompatible with the specifications of the CP4 system. When American diesel fuel is run through the fast moving, high pressure, lower volume CP4 pump, it struggles to maintain lubrication. The cleaner, thinner diesel allows air pockets to form inside the pump during operation, causing metal to rub against metal, generating metal shavings which are dispersed throughout the fuel injection system, contaminating and destroying the fuel system and indeed the entire engine. Contrary to GM’s claims that the CP4 fuel injection system is more reliable, more durable, more powerful, and more fuel-efficient, the CP4 fuel injection system is costly, destructive, and dangerous. 5. The kicker is, GM knew from the specifications of the pump as compared to the specifications of American diesel, that the Bosch-made CP4 pump was clearly incompatible with the ordinary use of American diesel fuel. Indeed, well before GM ever chose to implement the CP4 component part (as incorporated in the diesel engines of the subject Class Vehicles), the issue of incompatibility was (or should have been) known and yet was totally ignored in the design of the Class Vehicles’ engine systems. This is further evidenced by the fact that GM, as well as its fellow mega-automotive manufacturers, had experience with widespread catastrophic fuel injection pump failures when cleaner diesel standards were first implemented in the 1990s. By 2002, the Truck & Engine Manufacturers Association (“EMA”)—of which GM is a member company1—acknowledged that the lower lubricity of American diesel could cause catastrophic failure in fuel injection system components that are made to European diesel specifications. Not only did GM fail to inform 1 See Truck & Engine Manufacturers Association (EMA) membership webpage, http://www.truckandenginemanufacturers.org/companies/ (last visited Nov. 13, 2018). American consumers and fail to stop touting the fabricated benefits of the vehicles containing CP4 pumps, they actively attempted to shift the blame to the American consumers. For instance, GM claimed it was consumers’ improper use of contaminated or substandard fuels that damaged the vehicles’ fuel system, even when GM knew that the malfunction was actually the result of the CP4 fuel injection pump design, which was simply not fit for American diesel fuel. 6. Vehicle engines with the Bosch CP4 fuel injection pumps are not compatible with American fuel, and GM’s conduct is not compatible with American law. GM knowingly and intentionally deceived American consumers through its individual representations to respective consumers in a (successful) effort to increase revenues and profits at the expense of consumers. 7. Indeed, Plaintiffs and similarly situated Class members have suffered from an innately manifested—though not readily apparent—defect that existed in the Class Vehicles prior to purchase (or lease), and which began damaging the Class Vehicles and their fuel delivery systems upon first use. Plaintiffs were thus injured at the point of sale and throughout their ownership of the vehicle and paid far more than they would have if GM had told the truth. Indeed, Plaintiffs and no reasonable consumer would have bought these vehicles if GM had told the truth. 8. These consumers are entitled to be reimbursed for the millions of dollars GM fraudulently obtained from them, and to be compensated for their actual losses. This lawsuit seeks to hold GM accountable to these consumers, who are the unwitting casualties of the company’s massive fraud. II. INTRADISTRICT ASSIGNMENT 9. This action is properly assigned to the San Francisco Division of this District pursuant to N.D. Cal. L.R. 3-2, because a substantial part of the events or omissions giving rise to the Plaintiffs’ and Class members’ claims arose in the counties served by the San Francisco Division. Several Plaintiffs and proposed Class members purchased and maintained their Class Vehicles in the counties served by this Division. Moreover, (a) GM conducts substantial business in the counties served by this Division; (b) GM has marketed, advertised, and sold/leased the Class Vehicles in those counties; and (c) GM caused harm to Plaintiffs and Class members residing in those counties. III. PARTIES A. The Plaintiffs 10. For ease of reference, the following chart identifies the Representative Plaintiffs and their vehicles: Representative Plaintiff Make Model Year Isaiah Rudy Chevrolet Silverado 2500 HD 2012 Kaleb Bean Chevrolet Silverado 2500 HD 2011 Jose Hernandez Chevrolet Silverado 2500 HD 2012 Stacy Wade Sizelove Chevrolet Silverado 2500 HD 2011 Milton Leon Huss Jr. Chevrolet Silverado 2500 HD 2015 Christopher Moonan Chevrolet Silverado 2500 HD 2016 Bruce K. Garlock Chevrolet Silverado 3500 HD 2016 Geoff Cochems Chevrolet Silverado 2500 HD 2011 Sean M. Buob Chevrolet Silverado 2500 HD 2015 Michael L. Mccoy Chevrolet Silverado 2500 HD 2015 Chris S. McAlister Chevrolet Silverado 3500 HD 2015 John Thomas White Chevrolet Silverado 2500 HD 2016 Sean T. Smith Chevrolet Silverado 2500 HD 2016 Kevin Allen Lawson Chevrolet Silverado 2500 HD 2013 Kevin Sutherland Chevrolet Silverado 2500 HD 2011 Ernest Harold Miller Chevrolet Silverado 2500 HD 2012 Kenneth Munro Chevrolet Silverado 2500 HD 2015 Douglas Hughes Chevrolet Silverado 2500 HD 2015 Nicholas Brock Chevrolet Silverado 2500 HD 2011 Colby Barry Chevrolet Silverado 3500 HD 2016 Kenny Tran GMC Sierra 2500 HD 2015 Richard Samson GMC Sierra HD Denali 2016 Bradley Rice GMC Sierra HD 2014 Debra Kay Caskey GMC Sierra 2500 HD 2014 Douglas Crenshaw GMC Sierra 2500 HD 2015 Eric Thomas Corder GMC Sierra 2500 HD 2011 Representative Plaintiff Make Model Year Anthony Raymond Smith GMC Sierra 2500 HD 2011 Ryan Arthur Jensen GMC Sierra 3500 HD 2015 Thorin Jay Askin GMC Sierra 2500 HD 2015 Ryan Maduro GMC Sierra 2500 HD 2016 Marcos R. Cobain, Jr. Chevrolet Silverado 3500 HD 2014 Michele Diniz GMC Sierra 2500 HD 2013 James Dustin Morganti Chevrolet Silverado 2500 HD 2014 Brandon Tirozzi Chevrolet Silverado 2500 HD 2013 11. Plaintiff Isaiah Rudy (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Riverside, California. On or around November 1, 2011 Plaintiff purchased a new 2012 Chevrolet Silverado 2500 HD, VIN 1GC1KYC83CF105132 (for the purpose of this paragraph, the “Class Vehicle”) for $64,000.00 from Carmel Chevy, an authorized GM dealership in Los Angeles, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 2500 HD to tow his 25-foot boat and 35-foot 5th wheel trailer on vacations with his family. His 2012 truck currently has 120,000 miles on it. In the days and weeks preceding his purchase, Plaintiff Rudy saw and heard Chevrolet’s television commercials, radio advertisements, and printed brochures and advertisements wherein Chevrolet claimed the Duramax diesel truck, like the one Plaintiff would purchase, had superior horsepower and durability compared to other diesel trucks in the American market. On the date that Plaintiff Rudy purchased the vehicle, and in purchasing the vehicle, Plaintiff Rudy relied on representations that the vehicle was compatible with American diesel fuel, was durable, and was reliable. Plaintiff Rudy relied on these representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. Plaintiff Rudy relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Plaintiff Rudy experienced a failure of his CP4 fuel injection pump. One morning, in 2017, the Class Vehicle would not turn on; it had approximately 90,000 miles on it at the time. He brought the vehicle in to Extreme Diesel in Hemet, California, who attempted to repair and replace the damaged parts. Plaintiff Rudy also reported the failure to Chevrolet on two different occasions. Chevrolet investigated the engine problems twice because Plaintiff Rudy brought the vehicle in after getting a “check engine” light alert. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 12. Plaintiff Kaleb Bean (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Bakersfield, California. On or around October 1, 2010 Plaintiff purchased a new 2011 Chevrolet Silverado 2500 HD, VIN 1GC1KXC8XBF126570 (for the purpose of this paragraph, the “Class Vehicle”) for $43,000.00 from Santa Paula Chevrolet, an authorized GM dealership in Santa Paula, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 2500 HD as his personal vehicle to get to work and for daily activities. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Bean purchased the Class Vehicle, and prior to his purchase, Plaintiff Bean relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Bean that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Bean relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 13. Plaintiff Jose Hernandez (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Sylmar, California. On or around January 1, 2013 Plaintiff purchased a used 2012 Chevrolet Silverado 2500 HD, VIN 1GC1KYE89CF149780 (for the purpose of this paragraph, the “Class Vehicle”) for $42,000.00 from Carmax in Burbank, California. Plaintiff purchased and still owns the vehicle. Mr. Hernandez purchased his diesel truck in order to haul is 24- foot camper trailer on family vacations to watch his children play in softball tournaments. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. In the days and weeks preceding his purchase, Plaintiff Hernandez saw and heard Chevrolet’s television commercials, radio advertisements, and printed brochure and advertisements wherein Chevrolet claimed the Duramax diesel truck, like the one Plaintiff would purchase, had superior horsepower, durability, and greater longevity as compared to other diesel trucks in the American market. On the date that Plaintiff Hernandez purchased the vehicle, and in purchasing the vehicle, Plaintiff Hernandez relied on representations that the vehicle was compatible with American diesel fuel, was durable, and was reliable and had good longevity. Plaintiff Hernandez relied on these representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. Plaintiff Hernandez relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 14. Plaintiff Stacy Wade Sizelove (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Long Beach, California. On or around September 24, 2010 Plaintiff purchased a new 2011 Chevrolet Silverado 2500 HD, VIN 1GC1KYE89BF137238 (for the purpose of this paragraph, the “Class Vehicle”) for $67,000.00 from Harbor Chevrolet, an authorized GM dealership in Long Beach, California. Plaintiff purchased and still owns the vehicle which he uses as his daily transportation and occasionally uses to pull his trailer. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Plaintiff Sizelove sought to purchase a diesel truck to tow his 24-foot trailer. In the days and weeks preceding his purchase, Plaintiff Sizelove saw and heard Chevrolet’s television commercials, radio advertisements, and printed brochures and advertisements wherein Chevrolet claimed the Duramax diesel truck, like the one Plaintiff would purchase, had superior horsepower and durability compared to other diesel trucks in the American market. On the date that Plaintiff Sizelove purchased the vehicle, and in purchasing the vehicle, Plaintiff Sizelove relied on representations that the vehicle was compatible with American diesel fuel, was durable, and was reliable. Plaintiff Sizelove relied on these representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Further, Plaintiff Sizelove experienced a failure of his CP4 fuel injection pump approximately three months after of the time limit for warranty claim, so GM did not cover replacement or repairs under warranty. Plaintiff Sizelove has purchased 13 Chevrolet's in his life and yet GM refused to cover the pump failure in this vehicle. Repairing the vehicle cost Mr. Sizelove $9,000.00 and it was in the shop for nine days. Moreover, as a result of his vehicle’s failure, he was left stranded in the desert for seven hours on Highway 95 in middle of the summer heat. No one could locate him. He still owns the vehicle but he does not trust it at all, but does still use it only when he has to pull his trailer (he relies on another vehicle for all other travel). Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of- pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. Chevrolet 15. Plaintiff Milton Leon Huss, Jr. (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in La Mirada, California. On or around September 9, 2015 Plaintiff purchased a new 2015 Chevrolet Silverado 2500 HD, VIN 1GC1CWE83FF651836 (for the purpose of this paragraph, the “Class Vehicle”) for $59,000.00 from AutoNation Chevrolet Valencia, an authorized Chevrolet dealership in Santa Clarita, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 2500 HD to travel between his home in La Miranda, California and his vacation home, in Arizona. While in Arizona, Mr. Huss uses his truck to two his boats to and from the lake. Plaintiff Huss sought to purchase a diesel truck for this purpose, to tow his 28-foot and 22-foot trailers to and from Arizona. In the days and weeks preceding his purchase, Plaintiff Huss saw and heard Chevrolet’s television commercials, radio advertisements, and printed brochures and advertisements wherein Chevrolet claimed the Duramax diesel truck, like the one Plaintiff would purchase, was the best truck on the market, that it had superior horsepower, durability, and reliability as compared to other diesel trucks in the American market. On the date that Plaintiff Huss purchased the vehicle, and in purchasing the vehicle, Plaintiff Huss relied on representations that the vehicle was compatible with American diesel fuel, was durable, and was reliable. Plaintiff Huss relied on these representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 16. Plaintiff Christopher Moonan (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Corona, California. On or around January 1, 2018 Plaintiff purchased a used 2016 Chevrolet Silverado 2500 HD, VIN 1GC1CVE80GF272501 (for the purpose of this paragraph, the “Class Vehicle”) for $40,000.00 from Dutton GMC and Cadillac, an authorized GM dealership in Corona, California. Plaintiff purchased and still owns the vehicle. Mr. Moonan, who is a general contractor, uses his Silverado 2500 HD as his personal vehicle as well as to tow dump trailers, equipment and other materials needed as his contacting sites. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Moonan purchased the Class Vehicle, and prior to his purchase, Plaintiff Moonan relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Moonan that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Moonan relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Plaintiff Moonan experienced a failure of his CP4 fuel injection pump. He was in the desert in 127º heat when his CP4 fuel injection pump failed. Plaintiff Moonan suffered from heat stroke and suffered symptoms for over three days. To date, Plaintiff Moonan continues to suffer from anxiety over the event. He took the vehicle into Bradley Chevrolet in Park, Arizona, which informed him that the CP4 fuel injection pump had “exploded.” He informed the dealership that the vehicle should be recalled as it posed a significant health hazard. The engine light recently came back on and he can smell burning coolant. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 17. Plaintiff Bruce K. Garlock (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Madera, California. On or around January 1, 2016 Plaintiff purchased a new 2016 Chevrolet Silverado 3500 HD, VIN 1GC4K0E80GF140860 (for the purpose of this paragraph, the “Class Vehicle”) for $65,000.00 from Hedrick's Chevrolet, a certified GM dealership in Clovis, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 3500 HD as his personal vehicle to get to work and for daily activities. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Garlock purchased the Class Vehicle, and prior to his purchase, Plaintiff Garlock relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Garlock that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Garlock relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 18. Plaintiff Geoff Cochems (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Ridgecrest, California. On or around September 1, 2018 Plaintiff purchased a used 2011 Chevrolet Silverado 2500 HD, VIN 1GC1KXC83BF122411 (for the purpose of this paragraph, the “Class Vehicle”) for $37,500.00 from Pacific Auto Sales, in Fontana, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 2500 HD as his personal vehicle to get to work and for daily activities. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Cochems purchased the Class Vehicle, and prior to his purchase, Plaintiff Cochems relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Cochems that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Cochems relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 19. Plaintiff Sean M. Buob (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Bakersfield, California. On or around October 1, 2017 Plaintiff purchased a new 2015 Chevrolet Silverado 2500 HD, VIN 1GT1KWE87FF564810 (for the purpose of this paragraph, the “Class Vehicle”) for $48,000.00 from 3 Way Cheverolet, an authorized Chevrolet dealership in Bakersfield, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 2500 HD as his personal vehicle to get to work and for daily activities. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Buob purchased the Class Vehicle, and prior to his purchase, Plaintiff Buob relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Buob that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Buob relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 20. Plaintiff Michael L. McCoy (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Menifee, California. On or around October 14, 2014 Plaintiff purchased a new 2015 Chevrolet Silverado 2500 HD, VIN 1GC1CVE87FF19739 (for the purpose of this paragraph, the “Class Vehicle”) for $52,000.00 from Paradise Chevrolet, an authorized Chevrolet dealership in Temecula, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 2500 HD as his personal vehicle and to haul his 30’ trailer and his boat. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff McCoy purchased the Class Vehicle, and prior to his purchase, Plaintiff McCoy relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff McCoy that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff McCoy relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 21. Plaintiff Chris S. McAlister (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Visalia, California. On or around May 1, 2015 Plaintiff purchased a new 2015 Chevrolet Silverado 3500 HD, VIN 1GC1KVE88FF586334 (for the purpose of this paragraph, the “Class Vehicle”) for $58,000.00 from Ed Dena's Auto Center, an authorized Chevrolet, GMC, and Buick dealership in Dinuba, California. Plaintiff purchased and still owns the vehicle. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff McAlister purchased the Class Vehicle, and prior to his purchase, Plaintiff McAlister relied on GM’s specific representations made through television and print advertisements concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff McAlister that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable; sales representatives told Plaintiff McAlister that the vehicle was “the best truck out there.” Plaintiff McAlister relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 22. Plaintiff John Thomas White (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Beaumont, California. On or around November 6, 2016 Plaintiff purchased a new 2016 Chevrolet Silverado 2500 HD, VIN 1GC1KWE83GF288393 (for the purpose of this paragraph, the “Class Vehicle”) for $61,000.00 from Gosch Chevrolet, a certified GM dealership in Hemet, California. Plaintiff purchased and still owns the vehicle. Plaintiff purchased his truck as a retirement gift to himself and uses it for personal traveling and errands around town. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, in the days and weeks prior to Plaintiff White purchasing the Class Vehicle, he saw internet advertisements from GM containing specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff White that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff White relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 23. Plaintiff Sean T. Smith (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Santa Clarita, California. On or around March 1, 2017 Plaintiff purchased a new 2016 Chevrolet Silverado 2500 HD, VIN 1GC1KWE86GF286430 (for the purpose of this paragraph, the “Class Vehicle”) for $67,000.00 from Rydell Chevrolet, an authorized GM dealership in Vanys, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 2500 HD as his personal vehicle to get to work and for daily activities. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Smith purchased the Class Vehicle, and prior to his purchase, Plaintiff Smith relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Smith that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Smith relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 24. Plaintiff Kevin Allen Lawson (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Temecula, California. On or around January 1, 2013 Plaintiff purchased a new 2013 Chevrolet Silverado 2500 HD, VIN 1GC1KYE82DF168947 (for the purpose of this paragraph, the “Class Vehicle”) for $62,000.00 from Paradise Chevrolet, an authorized Chevrolet dealership in Temecula, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 2500 HD as his personal vehicle to get to work and for daily activities. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Lawson purchased the Class Vehicle, and prior to his purchase, Plaintiff Lawson relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Lawson that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Lawson relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 25. Plaintiff Kevin Sutherland (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Westminster, California. On or around July 1, 2013 Plaintiff purchased a used 2011 Chevrolet Silverado 2500 HD, VIN 1GC1KYC8XBF182773 (for the purpose of this paragraph, the “Class Vehicle”) for $42,000.00 from a private seller in Long Beach, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 2500 HD as his personal vehicle and to tow all his “toys,” his fishing boat, off-road cars, dirt-bikes, and trailers. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Sutherland purchased the Class Vehicle, and prior to his purchase, Plaintiff Sutherland relied on GM’s specific representations concerning the Class Vehicle’s fuel economy, durability, fuel efficiency, and reliability. Plaintiff Sutherland relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Plaintiff Sutherland’s Class Vehicle experienced failure of its CP4 fuel injection pump. On or around August 8, 2018, Plaintiff and two children were in the Class Vehicle traveling from California to Arizona and towing a boat. He pulled over to use a rest stop and when he got back in the Class Vehicle, he travelled for a short distance when the CP4 fuel injection pump had failed. He pulled to the right shoulder of the highway and the Class Vehicle would not start. Over two hours later, a tow truck finally arrived. Plaintiff Sutherland called Bradley Chevrolet who informed him “We’ve been seeing a lot of this lately, you better hope it’s not your fuel pump.” When Bradley Chevrolet finally got the opportunity to look at the vehicle, they informed him that it was a failed CP4 fuel injection pump and that it would need to be replaced to the tune of $12,000.00. GM would not cover the part under warranty and he was ultimately able to have it repaired at his own expense at Bradley Chevrolet at Havasu City, Arizona. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of- pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. Plaintiff thusly brings claims individually and as a representative of the Class. 26. Plaintiff Ernest Harold Miller (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Huntington Beach, California. On or around November 1, 2011 Plaintiff purchased a new 2012 Chevrolet Silverado 2500 HD, VIN 1GC1KYE86CF175995 (for the purpose of this paragraph, the “Class Vehicle”) for $54,000.00 from Bradley Chevrolet, an authorized GM dealership in Parker, Arizona. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 2500 HD as his personal vehicle to get to work and for daily activities. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Miller purchased the Class Vehicle, and prior to his purchase, Plaintiff Miller relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Miller that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Miller relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. Plaintiff thusly brings claims individually and as a representative of the Class. 27. Plaintiff Kenneth Munro (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Temecula, California. On or around October 17, 2017 Plaintiff purchased a used 2015 Chevrolet Silverado 2500 HD, VIN 1GC1KWE83FF543879 (for the purpose of this paragraph, the “Class Vehicle”) for $54,000.00 from a private seller, in Temecula, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 2500 HD as his personal vehicle to get to work and for daily activities. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that had great performance, fuel economy, durability, reliability, and efficiency of a diesel vehicle. Specifically, on the day Plaintiff Munro purchased the Class Vehicle, and prior to his purchase, Plaintiff Munro relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. . Plaintiff Munro relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. Plaintiff thusly brings claims individually and as a representative of the Class. 28. Plaintiff Douglas Hughes (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Mokelumne Hill, California. On or around October 31, 2015 Plaintiff purchased a new 2015 Chevrolet Silverado 2500 HD, VIN 1GC1KWE80FF671495 (for the purpose of this paragraph, the “Class Vehicle”) for $59,000.00 from Burbank Chevrolet, an authorized GM dealership in Burbank, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 2500 HD as his personal vehicle to get to work and for daily activities. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Hughes purchased the Class Vehicle, and prior to his purchase, Plaintiff Hughes relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Hughes that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Hughes relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 29. Plaintiff Nicholas Brock (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Fontana, California. On or around October 29, 2012 Plaintiff purchased a used 2011 Chevrolet Silverado 2500 HD (for the purpose of this paragraph, the “Class Vehicle”) for $48,999.00 from Mark Christopher Chevrolet, a certified GM dealership in Ontario, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 2500 HD as his personal vehicle for daily activities and to tow his camper trailer. Prior to purchasing the Class Vehicle, Plaintiff Brock was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Brock purchased the Class Vehicle, and prior to his purchase, Plaintiff Brock relied on GM’s specific representations from dealership sales representatives concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Brock that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Brock relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 30. Plaintiff Colby Barry (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Antioch, California. On or around July 27, 2016 Plaintiff purchased a new 2016 Chevrolet Silverado 3500 HD, VIN 1GC4K1E86GF125043 (for the purpose of this paragraph, the “Class Vehicle”) for $63,843.00 from Chase Chevrolet, a certified GM dealership in Stockton, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Silverado 3500 HD as his daily driver and to occasionally haul his 40’ camping trailer. Prior to purchasing the Class Vehicle, Plaintiff Barry was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Prior to his purchase, Plaintiff Barry researched the Class Vehicle on the internet and saw GM’s internet advertisements representing the Class Vehicle’s reliability, durability, and efficiency. GM represented to Plaintiff Barry that the Class Vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Barry relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 31. Plaintiff Kenny Tran (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Garden Grove, California. On or around April 6, 2016 Plaintiff purchased a used 2015 GMC Sierra 2500 HD, VIN 1GT12YE82FF163671 (for the purpose of this paragraph, the “Class Vehicle”) for $43,000.00 from Ken Garff Chevorlet, a certified GM dealership in American Fork, Utah. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Sierra 2500 HD for daily activities and heavy duty towing. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, in the days and weeks preceding Plaintiff Tran’s purchase of the Class Vehicle, Plaintiff Tran saw and relied on GM’s specific representations in television advertisements concerning the Class Vehicle’s durability and reliability. GM represented to Plaintiff Tran, and Plaintiff Tran believed based on those representations, that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Tran relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 32. Plaintiff Richard Samson (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Apple Valley, California. On or around January 1, 2018 Plaintiff purchased a new 2016 GMC Sierra HD Denali, VIN 1GT12UE82GF100516 (for the purpose of this paragraph, the “Class Vehicle”) for $67,000.00 from Platinum Auto Group, in Victorville, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Sierra HD Denali as his personal vehicle to get to work and for daily activities. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Samson purchased the Class Vehicle, and prior to his purchase, Plaintiff Samson relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Samson that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Samson relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 33. Plaintiff Bradley Rice (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Penryn, California. On or around March 17, 2014 Plaintiff purchased a new 2014 GMC Sierra HD, VIN 1GT125E83EF149839 (for the purpose of this paragraph, the “Class Vehicle”) for $58,500.00 from Folsom Buick GMC, a certified GM dealership in Folsom, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Sierra HD as his personal vehicle to get to work and for daily activities. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Rice purchased the Class Vehicle, and prior to his purchase, Plaintiff Rice relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Rice that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Rice relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 34. Plaintiff Debra Kay Caskey (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Fairfield, California. On or around October 5, 2016 Plaintiff purchased a used 2014 GMC Sierra 2500 HD, VIN 1GT125E86EF174170 (for the purpose of this paragraph, the “Class Vehicle”) for $50,000.00 from Christopher Creamer, in Sacramento, California. Plaintiff purchased and still owns the vehicle. Ms. Caskey uses the truck to haul the family’s 28-foot travel trailer and to tow large items. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Caskey purchased her Class Vehicle, and prior to her purchase, Plaintiff Caskey relied on GM’s specific representations through internet advertisements concerning the Class Vehicle’s reliability, durability, and compatibility with American diesel fuel. At the dealership, the sales representatives told Plaintiff Caskey that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Caskey relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 35. Plaintiff Douglas Crenshaw (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Visalia, California. On or around December 1, 2015 Plaintiff purchased a new 2015 GMC Sierra 2500 HD, VIN 1GT12ZE81FFS12020 (for the purpose of this paragraph, the “Class Vehicle”) for $61,695.00 from Thompson Auto and Truck Center, a certified GMC dealership in Placerville, California. Plaintiff purchased and still owns the Class Vehicle. Mr. Crenshaw uses his truck everyday and often tows his 37-foot 5th wheel camper on vacation and weekend getaways. Prior to purchasing the Class Vehicle, Plaintiff Crenshaw was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Crenshaw purchased the Class Vehicle, and prior to his purchase, Plaintiff Crenshaw relied on GM’s specific representations through its authorized representatives concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Crenshaw that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Crenshaw relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 36. Plaintiff Eric Thomas Corder (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Grand Terrace, California. On or around June 4, 2015 Plaintiff purchased a used 2011 GMC Sierra 2500 HD, VIN 1GT121C8XBF173482 (for the purpose of this paragraph, the “Class Vehicle”) for $36,000.00 from Selman Chevrolet, an authorized GM dealership in Orange, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Sierra 2500 HD for work purposes and to tow his 27-foot camper trailer. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Corder purchased the Class Vehicle, and prior to his purchase, Plaintiff Corder relied on GM’s specific representations through internet advertisements concerning the Class Vehicle’s fuel economy and reliability. Through the internet advertisements and through statements made by sales representatives at the dealership, GM told Plaintiff Corder that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Corder relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 37. Plaintiff Anthony Raymond Smith (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Simi Valley, California. On or around August 1, 2015 Plaintiff purchased a used 2011 GMC Sierra 2500 HD, VIN 1GT121C8XBF256930 (for the purpose of this paragraph, the “Class Vehicle”) for $40,000.00 from Carmax, in Burbank, California. Plaintiff purchased and still owns the vehicle. Mr. Smith purchased his GMC truck to help tow large loads for work and maintenance. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Smith purchased the Class Vehicle, and prior to his purchase, Plaintiff Smith relied on GM’s specific representations through printed sales and advertising materials concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Smith that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Smith relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas- powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 38. Plaintiff Ryan Arthur Jensen (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Visalia, California. On or around June 1, 2014 Plaintiff purchased a new 2015 GMC Sierra 3500 HD, VIN 1GT412C84FF141767 (for the purpose of this paragraph, the “Class Vehicle”) for $55,000.00 from Bojorn, a certified GM dealership in Paso Robles, California. Plaintiff experienced a CP4-pump-induced failure in January 2017, causing the truck to stall while he was driving down the road with his family. Plaintiff rolled through an intersection without vehicle power, but was then able to safely coast to the side of the road. Plaintiff dispensed with the defective vehicle shortly thereafter, in February 2017, after being told at the GMC dealership (Visalia Buick GMC, an authorized GM dealership in Visalia, California) that repairs to the vehicle were going to cost him approximately $13,000. While the dealership did ultimately cover the repair ($5,000) under warranty, Plaintiff knew the expiration of his manufacturer warranty was coming up, and knowing that the vehicle was not adequately repaired (i.e., knowing that this problem was likely to occur again), Plaintiff traded in the defective vehicle at a non-GM dealership at a loss of $11,000. Plaintiff used his Sierra 3500 HD as his personal vehicle to get to work and for daily activities, and for travel and to haul horse trailers. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Jensen purchased the Class Vehicle, and prior to his purchase, Plaintiff Jensen relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Jensen that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Jensen relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 39. Plaintiff Thorin Jay Askin (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Placerville, California. On or around January 6, 2018 Plaintiff purchased a used 2015 GMC Sierra 2500 HD, VIN 1GT12YE81FF125977 (for the purpose of this paragraph, the “Class Vehicle”) for $38,000.00 from Thompsons Buick GMC, a certified GM dealership in Placerville, California. Plaintiff purchased and still owns the vehicle. Plaintiff uses his Sierra 2500 HD as his personal vehicle to get to work and for daily activities. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Askin purchased the Class Vehicle, and prior to his purchase, Plaintiff Askin relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability. At the dealership, the sales representatives told Plaintiff Askin that the vehicle had superior fuel economy with American diesel fuel as compared to other diesel trucks on the market and that is was more reliable. Plaintiff Askin relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 40. Plaintiff Ryan Maduro (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Covina, California. On or around October 1, 2016, Plaintiff purchased a new 2016 GMC Sierra 2500 HD, VIN 1GT12UE81GF254392 (for the purpose of this paragraph, the “Class Vehicle”) for $66,000.00 from Simpson Buick GMC of Buena Park, an authorized GM dealership in Buena Park, California. Plaintiff purchased this vehicle for recreational and/or towing purposes, namely for his leisure 20-foot boat and two Sea-Doo watercrafts, and still owns the vehicle to this day. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Specifically, on the day Plaintiff Maduro purchased the Class Vehicle, and prior to his purchase, Plaintiff Maduro relied on GM’s specific representations concerning the Class Vehicle’s fuel economy and reliability, and had heard, seen, and relied upon promises made by the manufacturer via its television advertisements. Plaintiff Maduro relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 41. Plaintiff Marcos R. Cobain, Jr. (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Los Angeles, California. On or around October 1, 2016, Plaintiff purchased a used 2014 Chevrolet Silverado 3500 HD, VIN 1GB4KZC87EF130562 (for the purpose of this paragraph, the “Class Vehicle”) for $46,000.00 from an automotive dealership in Sacramento, California. Plaintiff still owns this vehicle. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Plaintiff relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 42. Plaintiff Michele Diniz (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Atwater, California. On or around October 1, 2018, Plaintiff purchased a relatively new 2013 GMC Sierra 2500 HD, VIN 1GT120C87DF113155 (for the purpose of this paragraph, the “Class Vehicle”) for $47,000.00 from Tracy Chevrolet, a GM- authorized dealership in Tracy, California. Plaintiff purchased this automobile for recreational use, with plans to tow a 26-foot camping trailer with the Class Vehicle. Upon information and belief, there are approximately 11,000 miles on this vehicle at present. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. More specifically, prior to purchasing the Class Vehicle, Plaintiff heard, saw, and relied on promises made by GM via its television commercials about the power, durability, and reliability of the Class Vehicle, and moreover was lured by GM’s promises that the Class Vehicle could obtain high mileage per gallon. Plaintiff relied on GM’s representations in purchasing the vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 43. Plaintiff James Dustin Morganti (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Oceanside, California. On or around May 1, 2014, Plaintiff purchased a relatively new 2014 Chevrolet Silverado 2500 HD, VIN 1GC1KYE85EF123275 (for the purpose of this paragraph, the “Class Vehicle”) for $69,000.00 from Keller Chevrolet, a GM-authorized dealership in Hanford, California. Plaintiff still owns this vehicle. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. Plaintiff relied on GM’s representations regarding the aforementioned qualities of the Class Vehicle in purchasing said vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. 44. Plaintiff Brandon Tirozzi (for the purpose of this paragraph, “Plaintiff”) is a citizen of the State of California, and domiciled in Rialto, California. On or around November 22, 2013, Plaintiff purchased a used 2013 Chevrolet Silverado 2500 HD, VIN 1GC1KXE8XDF171704 (for the purpose of this paragraph, the “Class Vehicle”) with approximately 20,000 miles on it for the price of $56,000.00 from Mark Christopher Auto Center in Ontario, California. Plaintiff no longer owns this vehicle. On August 2, 2015, Plaintiff was driving approximately 65 miles per hour on Interstate I-70 when his Silverado suddenly shut down. Being a skilled professional driver with his commercial driver’s license (“CDL”), he was able to maneuver the vehicle off the roadway onto the shoulder relatively safely. However, the vehicle would not restart. The vehicle was eventually towed to Ed Bozarth Chevrolet and Buick, Inc., a certified GM dealership in Grand Junction, Colorado. Plaintiff was received an estimate of over $8,000 from the GM dealership, despite the vehicle still being under manufacturer warranty. When Plaintiff took the vehicle to another, non-GM dealer, the non-GM dealer sent him photographs of the vehicle’s high-injection fuel pump gasket which was covered with metal shavings; indeed, he was told there were likely metal shavings throughout his fuel and engine systems. After finding a GM technical service bulletin about this very issue, Plaintiff repeatedly contacted GM headquarters in Detroit to alert them about the issue and see if they would in fact pay for the repair. GM refused to honor their warranty and did not reimburse the repair. 45. Prior to purchasing the Class Vehicle, Plaintiff was looking for a car that was durable, powerful, reliable, and could obtain the high mileage per gallon of a diesel vehicle. In fact, he purchased the vehicle to earn a living pulling new travel trailers, as Plaintiff has a Commercial Driver’s License (“CDL”) and is therefore a professional driver. Plaintiff relied on GM’s representations regarding the aforementioned qualities of the Class Vehicle in purchasing said vehicle and, absent these representations, would not have purchased the vehicle and/or would have paid less for it. These knowingly false representations, in combination with the advertised fuel efficiency and performance, the representation that the vehicle would retain all of its promised fuel economy and performance throughout its useful life, and the Class Vehicle’s reputation for maintaining a high resale value, caused Plaintiff to purchase the Class Vehicle, which is unfit for its ordinary use and purpose. Unbeknownst to Plaintiff, at the time of acquisition, the Class Vehicle contained a defective CP4 fuel injection system that was not suitable for American vehicles and which deceived American consumers. Consequently, the vehicle could not deliver the advertised combination of durability, power, reliability, and fuel efficiency of diesel that Plaintiff relied upon. Neither GM nor any of its agents, dealers, or other representatives informed Plaintiff or Class members of the existence of the unlawfully and/or unexpectedly defective nature of the GM Duramax diesel engine’s CP4 high pressure fuel pump system—which is common to all Class Vehicles—prior to purchasing. Accordingly, Plaintiff and each Class member suffered concrete economic injury as a direct and proximate result of GM’s wrongful, deceptive conduct, and would not have purchased the Class Vehicle or would have paid less for it, had GM not concealed the CP4 fuel injection system defects. As deemed appropriate, Plaintiff’s and each other Class member’s ascertainable losses include, but are not limited to, a high premium for the engine compared to what they would have paid for a gas-powered engine, out-of-pocket losses by overpaying for the vehicles at the time of purchase, decreased performance of the vehicles, and diminished value of the vehicles. B. The Defendant. 46. Defendant General Motors LLC (“GM”) is a Delaware corporation with its headquarters and principal place of business located at 300 Renaissance Center, Detroit, Michigan 48232. GM can be served with process through its agent at the aforementioned Detroit, Michigan address. The sole member and owner of General Motors LLC is General Motors Holdings LLC. General Motors Holdings LLC is a Delaware limited liability company with its principal place of business in the State of Michigan. GM is in the business of marketing, supplying, and selling motor vehicles in this District. 47. Defendant GM, through its various entities, including Chevrolet and GMC, designs, manufactures, distributes, and sells GM-brand automobiles in this District and multiple other locations in the United States and worldwide. GM and/or its agents designed, manufactured, and installed the engine systems in the Class Vehicles. GM also developed and disseminated the materially misrepresentative owner’s manuals and warranty booklets, advertisements, and other intentionally unreasonable and deceptive promotional materials relating to the Class Vehicles. GM also designed advertising material that it sent to GM Dealerships for the purpose of having dealers distribute these to consumers, and GM authorized dealers to communicate with consumers about the performance of the vehicles, and GM further undertook that the dealership was a plae where GM could disclose material facts to prospective buyers. IV. VENUE AND JURISDICTION 48. Venue is proper in this District under 28 U.S.C. § 1391 in light of the following: (1) GM conducts substantial business in this District and have intentionally availed themselves of the laws and markets of the United States and this District; and/or (2) Many of the acts and transactions giving rise to this action occurred in this District, including, inter alia, the GM’s promotion, marketing, distribution, and sale of vehicles containing Bosch’s high injection CP4 fuel pump known in this District. Several named Plaintiffs and proposed representatives, as well as tens of thousands of Class members, purchased their Class Vehicles from the multiple GM dealerships located in this District. Further, a significant number of the Class Vehicles were registered in this District and thousands of Class Vehicles were in operation in this District. Venue is also proper under 18 U.S.C. § 1965(a) because GM is subject to personal jurisdiction in this District as alleged, infra, and GM has multiple agents, i.e., GM-certified dealerships, located in this District. 49. The Court has jurisdiction over this action pursuant to the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d), because at least one Class member is of diverse citizenship from the Defendant, there are more than 100 Class members, and the aggregate amount in controversy exceeds $5,000,000.00, exclusive of interests and costs. Subject-matter jurisdiction also arises under the Magnuson-Moss Warranty Act claims asserted under 15 U.S.C. § 2301, et seq. The Court has personal jurisdiction over GM pursuant to 18 U.S.C. §§1965(b) and (d), and Cal. Code Civ. Proc § 410.10, and supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367. 50. This Court has personal jurisdiction over Defendant GM. GM has committed and continues to commit acts giving rise to this action within California and within this judicial District. GM has established minimum contacts within the forum such that the exercise of jurisdiction over GM would certainly not offend traditional notions of fair play and substantial justice. In conducting business, i.e., marketing, supplying, and distributing GM-brand automobiles within the State of California, and specifically, within this judicial District, GM derives substantial revenue from its activities and its products being sold, used, imported, and/or offered for sale in California and this judicial District. GM has more than one-hundred-and-fifty certified GM-brand dealerships in the state of Califgornia and sells hundreds of thousands of automobiles each year in the state. GM provides advertising and customer facing information to these dealers for the purpose of exposing consumers in California to that information. V. FACTUAL ALLEGATIONS A. The Class Vehicles 51. For purposes of this Complaint, the “Class Vehicles” consist of the following GM- manufactured diesel-fueled U.S. automobiles:  2011–2016 2500HD Silverado 6.6L V8 Duramax Diesel Trucks with LML engines;  2011–2016 3500HD Silverado 6.6L V8 Duramax Diesel Trucks with LML engines;  2011–2016 2500HD Sierra 6.6L V8 Duramax Diesel Trucks with LML engines;  2011–2016 3500HD Sierra 6.6L V8 Duramax Diesel Trucks with LML engines;  2010–2011 Chevrolet Express van with Duramax LGH engines;  2010–2011 GMC Savana van with Duramax LGH engines;  2010–2011 GMC Sierra trucks with RPO ZW9 (chassis cabs or trucks with pickup box delete) with Duramax LGH engines;  2011–2012 2500HD 3500 Silverado 6.6L V8 Duramax Diesel Trucks with LGH engines; and  2011–2012 2500HD 3500 Sierra 6.6L V8 Duramax Diesel Trucks with LGH engines. B. The rise of diesel vehicles in the United States 52. Diesel engines have long enjoyed a loyal following in some U.S. market segments because of their reliability, fuel efficiency, and power. Diesel engines produce higher torque, even at low revolutions per minute (“RPM”), making them popular in buses, heavy-duty pickups, and vans, including commercial vehicles, farm trucks, and ambulances. 53. With the invention of common-rail systems, diesel fuel was injected at higher pressure, forming a finer mist that increases fuel efficiency and power. Common-rail systems also made diesel engines burn cleaner and with less noise. While diesel had long been popular overseas, these advances fueled a growing market here in the U.S. for diesel trucks, and even diesel passenger cars. 54. From the outset, GM was in competition with fellow “Big Three” auto manufacturers like Ford and Fiat Chrysler, each racing to dominate the growing American diesel vehicle market. GM looked to Europe and the expertise of international automotive parts supplier Bosch to increase the fuel efficiency and power of its diesel engines. The heart of this diesel revolution would be powered by Bosch’s extremely durable CP3 fuel injection pump, the predecessor to the CP4 fuel injection pump at issue in this suit. The CP3 pump was one of Bosch’s heavy-duty injection pumps, simplified for increased reliability. The reliability of the CP3 became key to the “million-mile” performance of diesel truck engines in the U.S. Not surprisingly, American trust in diesel technology grew. 55. Americans paid a premium for the increased reliability, fuel efficiency, and power of diesel—and, Bosch promised to continue to deliver advances and continued improvements in diesel engine technology. Bosch claimed that the next generation of fuel pump, the CP4, would maintain reliability while also increasing fuel efficiency and power. 56. However, much like what occurred in the nationwide Volkswagen emissions scandal involving Bosch, reliance on Bosch’s expertise in the design of diesel engines would lead GM into a course of action it should now regret. The heart of GM’s success under increasingly competitive fuel efficiencies was Bosch’s cheaper, substandard CP4 fuel injection pump. Bosch had the technical know-how to do what needed to be done to get ahead; unfortunately for the American public, the easiest way for GM to succeed was to cheat American consumers on durability and overall vehicle functionality by equipping the Class Vehicles with this ticking time bomb of a fuel injection pump that doomed the modern GM Duramax diesel engine system from day one. C. Pre-Class Period Failures ot the CP4 Are Known Within The auto Industry 57. As GM knew or should have known, the Bosch CP4 fuel injection pump was defective and incompatible with U.S. diesel fuel from the get-go, as CP4 failures began running rampant in American Audi and Volkswagen vehicles at least as early as 2008, before GM ever implemented the cheaper, less robust pump in its 2011 and later model year diesel automobiles. Indeed, in February 2008, Bosch began meeting with Audi and Volkswagen representatives on a monthly – or sometimes weekly – basis to track CP4 pump field failures that the auto manufacturers were seeing in the U.S.; indeed, these failures echo the very failures that continue to occur in the Class Vehicles to this day, and documentation regarding CP4 failures was provided to the National Highway Traffic Safety Administration (“NHTSA”) in connection with NHTSA’s Office of Defect Investigations (“ODI”) Inquiry No. INRD-EA11003, an investigation which GM was subject to as well.2 See, e.g., Jul. 7, 2008 email between Audi and Bosch representatives re: “Performance drop AU716 98017 with shavings in the HPP,” discussing how “[s]omething is disintegrating” in the Audi 716 fuel pump and that “[w]e are a bit speechless” about “[t]he shavings, or whatever it is”), submitted as part of Bosch’s responses to NHTSA ODI Inquiry No. INRD-EA11003, document entitled, “INRD-EA11003-59334P.pdf,” at 6; id. at 27 (Jul. 31, 2008 email from Audi representative re: “Fuel quality in [REDACTED],” stating that, “With our [Audi’s] V6TDI with the high-pressure pump CP4.2 we have significantly higher failure rates in [REDACTED] (higher by a factor of approx. 30 than the average of all markets) . . . . Have you any information suggesting that such a thing could be possible with this country-specific diesel fuel?”); id. at 28-31 (Feb.-May 2011 email chain between Audi, Volkswagen and Bosch representatives re: “Status CP4 USA,” in which the parties discuss the substantial increase in warranty claims involving fuel pump failures in MY 2010 versus 2009 vehicles in the US market). 2 See infra ¶ 64 & n. 11 (discussing GM’s response to NHTSA’s requests pursuant to ODI Inquiry No. INRD-EA11003). 58. In July 2008, Audi representatives reached out to Bosch regarding their investigative efforts into CP4 pump failures, explaining to Bosch that, “We have biggish problems in the field and already have 4 failures in [the] Q verification in the U.S. . . . Failure Q7 USA no. 3 is on its way to Germany, fuel samples as well.”3 “Q7 USA” was a U.S. Audi vehicle equipped with a CP4. Bosch diagnosed the problem as being due to a vehicle “manufacturing fault” in what it called a “sluggish roller,” but also noted that they could not rule out the “‘sluggish roller’ [being caused by] water in the fuel. (Water in fuel significantly increases the friction coefficient between roller and roller support).”4 However, Audi representatives did not appear to be buying the water-contamination line from Bosch, nor Bosch’s half-hearted attempts at “ameliorative measures” to a known, continuing problem.5 59. Similarly, in August 2009, Audi sent Bosch a failed CP4 fuel pump for analysis after “[t]he high pressure fuel pump failed catastrophically shedding metal shavings throughout the entire fuel system. . . . This car will require a complete new fuel system from tank to injectors and everything in between. This will be a very lengthy repair (weeks). . . We need to determine if component failure or bad fuel is to blame.” March 7, 2011 Bosch submission to NHTSA in response to Inquiry No. INRD-EA11003, document entitled, “INRD-EA11003-59347P.pdf,” at 35. Thereafter, on September 1, 2009, Bosch responded to Audi with the following flippant analysis note from their 3 Jul. 10, 2008, email from Audi representative to Bosch representatives regarding “Information on pump failures in the U.S.,” produced in response to NHTSA Inquiry EA11003EN-00639[0], available at https://static.nhtsa.gov/odi/inv/2011/INRD-EA11003-59428P.PDF (last accessed Nov. 6, 2018), at 141. 4 See id. 5 See March 7, 2011 Bosch submission to NHTSA in response to Inquiry No. INRD-EA11003, document entitled, “INRD-EA11003-59347P.pdf,” at 157 (May 11, 2009 email between Bosch and Audi representatives re: “Breakdown: KPM report 4987001),” in which Audi notes while discussing the analysis of “[s]havings in the high-pressure pump” that, “During the last regular meeting on breakdowns, [REDACTED] (among others) complained that [(1) there is a] known problem with the high-pressure pump from Bosch[; and (2)] various measures from the Bosch Company are not convincing”); see also id. at 159-60 (Apr. 30, 2009 email from Bosch to Audi re: “Metal splashes curve for CP4 roller support and overview of measures,” in which Bosch’s “not convincing” measures are laid out). failed pump inspection: “Gentleman, The pump mentioned below was analyzed. The result of the finding is sand-like particles in the fuel. Defect caused by customer.” Id. at 38 (emphasis added). 60. Thus, early-on, it was well-known in the U.S. automotive industry that there were serious U.S. diesel incompatibility issues that now run rampant in the Class Vehicles due to the defective CP4 pump. See March 7, 2011 Bosch submission to NHTSA in response to Inquiry No. INRD-EA11003, document entitled, “INRD-EA11003-59347P.pdf,” at 21 (Mar. 31, 2008 email from Volkswagen to Bosch re: “Radio: Drivetrain damage failure US07 (Jetta),” in which the parties are discussing an HPFP failure in a 2007 Jetta and the Volkswagen representative frustratedly states, “Can you (panel of experts) explain to us how the failure mechanism was after this mileage? . . . . We will certainly not accept a failure because of fuel quality! . . . . We also see a big risk here for our BIN5 pump, which has to manage with the same fuel in USA”); May 2012 Bosch submission to NHTSA in response to Inquiry No. INRD-EA11003, document entitled, “INRD-EA11003- 59334P.pdf,” at 9-10 (Jul. 4, 2008 email from Audi to Bosch re: “CP4 BIN5 3rd and 4th failure in USA,” analyzing root cause of CP4 field failures and positing, “Why is it that EC pumps do not fail? Because of a different fuel?”); id. at 13-14 (Jul. 11, 2008 email between Audi and Bosch representatives re: “W19 BIN5 pump failure” in which Audi writes, “For the zero error meeting in FeP on Tuesday we expect the information discussed at the error meeting on endurance testing of fuels with ‘poor lubricity, containing water etc.’ and all failures, drivetrain damage in all component, system and other endurance runs of Bosch and all customers”); Jul. 27, 2012 Bosch submission to NHTSA in response to Inquiry No. INRD-EA11003, document entitled, “INRD-EA11003- 59345P.pdf,” at 7 (emphasis added) (Jun. 30, 2009 email between Bosch and Audi representatives re: “ANS: HPP measures/ USE,” in which the Audi representative writes, “I don’t think you’re reading my mails anymore! Please look at the failure curves specifically, then you’ll see that we only have a problem in certain markets[.] . . . Depending on how poor the fuel currently on the market is”); id. (“I’d prefer to have a more robust pump”). 61. In September 2009, Audi contacted Bosch about a “3rd HPP failure” in the U.S., explaining, “I’m afraid there’s bad news from the U.S.: After 2 failures in the field. . . the 3rd HPP failure has now occurred in the EC endurance run.”6 Photos attached to the email show the failed Bosch CP4 fuel pump, replete with metal shavings in the gasket:7 6 Sept. 2, 2009, email from Audi representative to Bosch representatives regarding “3rd HPP Failure USA,” produced in response to NHTSA Inquiry EA11003EN-00639[0], available at https://static.nhtsa.gov/odi/inv/2011/INRD-EA11003-59428P.PDF (last accessed Nov. 6, 2018), at 146. 7 Id. at 148–50. 62. By March 2011, Bosch was continuing to receive “a respectable number of claimed [failures in] CR-pumps Typ CP4 for US-07” in Volkswagen vehicles, and specifically “a few pumps with the fault description from [a] local VW [dealership]: ‘Metal particle [sic] at the filter.’ In a few cases the [dealer] use[s] this as an indication, to verify a mechanical breakdown from the CR-pump. . . . Please note[:] To find some particle [sic] or dust in the main filter box, can not be prevented.”8 63. In June 2011, Bosch received a report from Volkswagen regarding a CP4 pump failure in a 2.0L Volkswagen TDI in which the Volkswagen representative explained, “I have here a pump from [sic] a 2.0L TDI. I have been testing a lot of these this week and many have an amount of ‘metal Debris’ or other metallic particles in them.”9 The following image of the contaminated pump accompanied the email: 64. Indeed, Bosch CP4 failures in U.S. Audi and Volkswagen vehicles were widespread and catastrophic by the end of 2011. See Jul. 27, 2012 Bosch submission to NHTSA in response to Inquiry No. INRD-EA11003, document entitled, “INRD-EA11003-59345P.pdf,” at 69 (emphasis added) (Sept. 15, 2011 email from Volkswagen to Bosch re: “080211_Status_CP4.1_Bosch,” in which the Volkswagen representative sends a formal “change request in [the] form of exemplary documents on failures of high-pressure diesel pump Bosch CP4.1. I think the failures are well 8 Mar. 22, 2011, email from Bosch employee to Volkswagen employees regarding analysis of failing CP4 fuel pumps, produced in response to NHTSA Inquiry EA11003EN-00639[0], available at https://static.nhtsa.gov/odi/inv/2011/INRD-EA11003-59428P.PDF (last accessed Nov. 6, 2018), at 11; see also id. at 19-22 (spreadsheet showing results of Bosch’s pre-analysis of HPFP failures in Volkswagen/Audi vehicles where “metal chips found in fuel system”). 9 Mar. 7, 2011 Bosch submission to NHTSA in response to Inquiry No. INRD-EA11003, document entitled, “INRD-EA11003-59347P.pdf,” at 12 (Jun. 9, 2011 email from Volkswagen Group of America, Inc. to Bosch re: “2.0L TDI Fuel Pump”). known. It is also important to know that not only the high-pressure fuel pump, but the entire injection system is to be replaced in case of damage to a HPP with a cost >[REDACTED] caused by chip contamination”). 65. Yet, GM went on to contract with Bosch to supply the CP4 fuel pumps in 2011 and later model years. Seeking to gain an advantage, GM began a long partnership with Bosch in 2000. But from the beginning, GM was aware of a mismatch between Bosch’s European fuel injection pumps and American diesel fuel. 66. GM set out to design a modern diesel engine for its pickup trucks. In 2000, GM formed a joint venture with Isuzu, called “DMAX” to create the 6.6L Duramax V8 engine. DMAX then teamed up with Robert Bosch GmbH to incorporate Bosch’s high pressure common-rail for fuel injection. Two years later, the Duramax engine had garnered 30% of the U.S. market for diesel pickup trucks. The Duramax engine has long been an option on GM pickups, vans, and medium- duty trucks, and has undergone many changes over the years. 67. For 2010, GM created the LGH version of the Duramax engine. It featured increased power, increased torque, and greater fuel efficiency. But, in order to achieve greater fuel efficiency, the Duramax LGH engine incorporated a newer, lower-volume fuel injection pump, Bosch’s CP4 pump. 68. On February 7, 2011, as the first models of the Class Vehicles were being sold, NHTSA’s Office of Defect Investigations (“ODI”) opened an investigation certain major automotive manufacturers for a potential defect in predecessor diesel high pressure fuel injection pumps as well as certain model year vehicles containing the CP4 pump.10 As part of that investigation, in October 2011, ODI requested “peer vehicle” information from GM, specifically regarding (among other things) an “[a]lleged defect” involving “[a]ny one or more of the following symptoms or conditions. . .: (1) HPFP failure; (2) Metallic debris/contamination in the fuel system; (3) Repairs involving 10 See Feb. 7, 2011, NHTSA ODI Resume for Investigation No. EA 11-003 regarding “High- Pressure Fuel Pump Failure (HPFP),” available at https://static.nhtsa.gov/odi/inv/2011/INOA- EA11003-5971.PDF (last accessed Nov. 16, 2018) . fuel system replacement; (4) General allegations of fuel pump failure (i.e., the specific fuel pump is not identified); or (5) All other allegations of fuel system failures or malfunctions resulting in engine stall.”11 69. Among other things, GM responded that in the 2nd quarter of 2011 alone, it was aware of at least ninety-nine (99) field reports of high-pressure fuel pump failure in the 2011 Chevrolet Silverado HD, thirty (30) of which involved moving stalls.12 70. Meanwhile in 2011, GM was touting the improved durability of its all-new Duramax LML engine, which was installed in many of the subject Class Vehicles and incorporated the CP4 fuel pump. Indeed, GM claimed that the Duramax LML improve durability while increasing fuel injection pressure to 29,000 psi, increasing noise reduction and also tolerating up to 20% biodiesel fuel mixtures, and added a urea-based diesel exhaust fluid (“DEF”) system to treat its exhaust. The Duramax LML continued to use the new lower-volume Bosch CP4 fuel injection pump, as did some of the Duramax LGH’s, including but not necessarily limited to the following vehicles:  2011–2016 Chevrolet 2500HD Silverado 6.6L V8 Duramax Diesel Trucks with LML engines  2011–2016 Chevrolet 3500HD Silverado 6.6L V8 Duramax Diesel Trucks with LML engines  2011–2016 Chevrolet 2500HD Sierra 6.6L V8 Duramax Diesel Trucks with LML engines  2011–2016 GMC 3500HD Sierra 6.6L V8 Duramax Diesel Trucks with LML engines  2010–2011 Chevrolet Express van with Duramax LGH engines  2010–2011 GMC Savana Van with Duramax LGH engines 11 Oct. 7, 2011, Ltr. from Frank S. Borris, Director, Office of Defects Investigation, to Carmen Benavides, GM Director of Product Investigations, available at https://static.nhtsa.gov/odi/inv/2011/INPR-EA11003-48548.pdf (last accessed Nov. 16, 2018). 12 Dec. 3, 2011, Ltr. from Carmen Benavides, head of GM Product Investigations and Safety Regulations, to Frank Borris, head of NHTSA’s Office of Defects Investigations (ODI), in response to ODI Inquiry No. EA11-003, at 3, available at https://static.nhtsa.gov/odi/inv/2011/INRL- EA11003-50067P.pdf (last accessed Nov. 16, 2018).  2010–2011 GMC Sierra Trucks with RPO ZW9 (chassis cabs or trucks with pickup box delete) with Duramax LGH engines  2011–2012 Chevrolet 2500HD Silverado 6.6L V8 Duramax Diesel Trucks with LGH engines  2011-2012 Chevrolet 3500HD Silverado 6.6L V8 Duramax Diesel Trucks with LGH engines  2011–2012 Chevrolet 2500HD Sierra 6.6L V8 Duramax Diesel Trucks with LGH engines  2011-2012 Chevrolet 3500HD Sierra 6.6L V8 Duramax Diesel Trucks with LGH engines 71. Some of these vehicles are modified for commercial purposes, such as cargo vans, specialized work trucks, and a variety of ambulances offered by GM. The CP4 has long experienced problems, and the failure of these pumps can be devastating to people and businesses alike. The CP4 performed terribly from the start, but GM put it into more and more engines. 72. Moreover, GM was on notice—and indeed, has repeatedly admitted—that the safety risks of moving stalls or “no-starts” such as those associated with the CP4 fuel pump pose an inherent risk to vehicle occupant safety. In 2014, GM issued a series of safety recalls for approximately 30 million vehicles due to an ignition switch defect which caused, among other things, loss of engine power (in other words, moving stalls), which “increase[e] the risk of a crash.”13 Thus, pursuant to California law, because the Class Vehicles have an inherent safety defect (as evidenced by the customer complaints cited herein), the purchasers and lessors of the Class Vehicles have been economically injured, because a vehicle which later turns out to have a safety defect is clearly worth less than it was at the point-of-sale while the defect was still being concealed. 13 See, e.g., GM 573 Ltr. to NHTSA re: NHTSA Recall No. 14V346, Jun. 19, 2014. The full relevant text of paragraph 573.6(c)(5) reads as follows: “There is a risk, under certain conditions, that some drivers may bump the ignition key with their knee and unintentionally move the key away from the “run” position. If this occurs, engine power, and power braking will be affected and power steering may be affected, increasing the risk of a crash. . . .” D. GM’s Additional Knowledge of Incompatibility, Defectiveness, and Failures Associated with Bosch’s CP4 Pump. 73. The Bosch CP4 Pump operates at higher pressures than its predecessor, the CP3. The CP4 achieves greater fuel efficiency by pumping less fuel through the engine. The Bosch CP4 Pump had a proven track record in Europe, but it is not compatible with American diesel fuel. 74. The CP4 relies on the diesel fuel itself to maintain lubrication. The lubricity of diesel in Europe is more standardized than American diesel, but European diesel is also dirtier. Because the sulfur in diesel exhaust is a major cause of smog and acid rain, in 2007, the EPA required diesel fuel sold in the U.S. to have less than 15 ppm of sulfur. This is known as Ultra Low Sulfur Diesel (“ULSD”). It is produced through a refinery process known as hydrodesulfurization (“HDS”). Sulfur provides some of the lubricity needed for the pump to operate. But more importantly, the refinery process required to produce low sulfur diesel destroys a variety of important nitrogen and oxygen based polar and organic compounds that give diesel fuel its lubricity. As a result, American diesel does not contain the lubrication necessary for the Bosch CP4 Pump to operate durably. 75. Low sulfur diesel fuel first appeared in American markets in the 1990’s, with fewer than 500 ppm of sulfur. It is estimated that 65 million fuel injection pumps failed as a result. It was thought that the pumps failed at the equivalent of 100 to 200 hours of operation. Thus, the critical importance of lubricity for diesel injection pumps was well known to all auto manufacturers for a decade or more before the Class Vehicles were designed or introduced into the market. 76. Engine manufacturers were well aware of the mismatch between engine part specifications that require a maximum of 460 wear scar, and the lower lubricity specifications of Ultra Low Sulphur American diesel fuel: Lubricity describes the ability of a fluid to minimize friction between, and damage to, surfaces relative to motion under loaded conditions. Diesel fuel injection equipment relies on the lubricating properties of fuel. Shortened life of engine components such as fuel injection pumps and unit injectors can usually be attributed to lack of fuel lubricity and, hence, lubricity is of concern to engine manufacturers. This property is not addressed adequately by ASTM D 975. 4/22/2002 Engine Manufacturers’ Association, Position Statement titled, “EMA Consensus Position Pump Grade Specification.” GM is a member of the Engine Manufacturers’ Association.14 77. Further, the Engine Manufacturers’ Association made clear: Regardless of the fuel sulfur level, ASTM D975 currently requires lubricity specified as a maximum wear scar diameter of 520 micrometers using the HFRR test method (ASTM D6079) at a temperature of 60°C. Based on testing conducted on ULSD fuels, however, fuel injection equipment manufacturers have required that ULSD fuels have a maximum wear scar diameter of 460 micrometers. EMA recommends that the lubricity specification be consistent with the fuel injection equipment manufacturers’ recommendation. 8/8/2005 Engine Manufacturers Association, Position Paper titled “North American Ultra Low Sulfur Diesel Fuel Properties.” 78. In 2005, the EPA instituted a lubricity requirement for the lower sulfur diesel sold in the U.S. It required sellers of diesel to ensure the fuel meets a minimum lubricity level of a maximum wear scar diameter of 520 microns based on the testing and standard propounded by the American Society for Testing and Materials (“ASTM”) D-975. A prudent manufacturer would design or select a fuel injection pump designed for this low lubricity fuel. 79. Yet, Bosch provided the CP4 Pump for GM’s Duramax engines in the 2010 and 2011 model years. It was no secret to any of them that the Bosch CP4 Pump is inappropriate for diesel vehicles in the U.S. The Bosch CP4 Pump specifications for fuel lubricity allow for a maximum of 460 wear scar. By definition, the 520 wear scar specification of American diesel fuel is inadequate to lubricate the Bosch CP4 Pump. 80. In order to increase fuel efficiency, GM sold vehicles with a fuel injection pump that was clearly out of specification, having inadequate lubrication for the U.S. market. 81. GM and its inherent cohort Bosch were aware of the incompatibility issues early on. For example, in May 2010, after analyzing foreign particles found in the fuel filter of a failed Audi diesel engine and determining that the biodiesel used in the subject engine was “insufficient[ly] 14 See Truck & Engine Manufacturers Association (EMA) membership webpage, http://www.truckandenginemanufacturers.org/companies/ (last accessed Nov. 13, 2018). cleans[ed]” resulting in deposit formation “which is not conducive to establishing the lubricating film in the [fuel pump] roller support,” Bosch noted that, “When [diesel fuel] viscosity is too low, the lubricating film is not established properly and mixed friction and surface contact occurs = bad.”15 82. The Bosch CP4 Pump multiplies the diesel fuel problem in ways that are catastrophic. But GM chose the Bosch CP4 Pump because it was supposed to improve fuel efficiency by using less fuel. The Bosch CP4 Pump struggles to supply adequate fuel to the engine under the lower pressure of newer engines. The combination of the low volume of fuel, which is under constant suction, and the low lubricity of the fuel, allows cavitation of the fuel. Air pockets form inside the pump during operation. These air bubbles allow metal to rub against metal. GM had achieved greater fuel efficiency at the expense of running the pump dry. 83. As the Bosch CP4 Pump wears, it sends metal shavings and sometimes even larger particles throughout the fuel system. As the shavings disperse and contaminate the engine and the high-pressure fuel system, the fuse of the proverbial CP4 “time bomb” has been lit, and it is only a matter of time before the entire engine system fails. The failure of a CP4 pump requires repair or replacement of the entire high-pressure fuel system, including the pump, fuel injectors, fuel rails, and injection lines.16 Repair costs when a CP4 pump fails average between $8,000.00 and $20,000.00. 84. Indeed, field incidents involving CP4 implosions in 2011 MY Class Vehicles came rolling in almost as soon as the vehicles were off the assembly line. To be sure, GM has had notice of scores of consumer complaints regarding the now-notorious CP4 pump failure, and is notorious for blatantly refusing to take responsibility for its own defective vehicle design. 15 Jul. 27, 2012 Bosch submission to NHTSA in response to Inquiry No. INRD-EA11003, document entitled, “INRD-EA11003-59345P.pdf,” at 12-14 (May 26, 2010 email chain between Audi and Bosch representatives re: “Particle analyses, fuel filter”). 16 See, e.g., Nov. 18, 2016, “2011-2015 6.6L LML/LGH Duramax Diagnostics,” Oregon Fuel Injection, Inc., at 6, available at https://cdn.oregonfuelinjection.com/content/uploads/2016/08/gm- duramax-11-15-diagnostic.pdf (last accessed Nov. 17, 2018) (providing diagnostic tips for addressing CP4 failures and noting, “Note: The CP4.2 pumps are not as durable as the CP3 pumps. . . . When they fail it is often catastrophic and they send metal particles throughout the high pressure side of the fuel system, causing further damage”). 85. For example, on October 5, 2010, a Duramax Forum member posted the following regarding a nearly brand-new 2011 Chevrolet Silverado 3500 Crew Cab 6.6L Duramax: “Ive got 3200 miles on my 2011 3500 srw, crew cab, 4x4, z71, duramax. And ive already got- in my opinion a serious[] problem- it wont start. Cranks and Cranks and cranks. Usually it finally starts. After extensive diagnostic review, the dealer and the chief duramax engineer from gm feel its an Injector Pump issue. . . . Of course the part is back ordered. Any one else had similar issues? Im pretty frustrated.”17 86. In the same vein, on October 13, 2013, the owner of a 2011 GMC Sierra HD 2500 posted the following on the diesel enthusiast website TheDieselPageForums.com: “My 2011 GMC 2500HD recently experienced what has been diagnosed at a GM dealership as a high pressure fuel pump failure . . . . a bit of a loss of confidence in the reliability of the bullet proof 6600 Durmax here. . .”18 The truck owner went on to note the following diagnosis from his GM service advisor: “CONTAMINATED FUEL SYSTEM CAUSED BY HIGH PRESSURE PUMP FAILURE[.] CRANK NO START-SCAN PCM, NO FAILURE CODES. CHECK CRANK SENSOR OPERATION AND CRANKING RPM'S-HAS NORMAL CRANKING SPEED AND RPM'S. CHECK FUEL API RATING-API OF 40. INSPECT FOR FUEL LEAKS AND AIR IN FUEL SYSTEM-NO AIR AND NO FUEL LEAKS. CHECK FUEL PRESSURE WHILE CRANKING...INSTALL PRESSURE GUAGE AT FUEL TEST PORT AND AND PUMP TO 10 PSI WITH FUEL PRIMER PUMP-CRANK ENGINE FUEL PRESSURE DOES NOT DROP. CALL TAC. INSPECT FUEL PRESSURE REGULATOR AND SENSORS FOR METAL DEBRIS. FOUND FUEL SYSTEM CONTAMINATED WITH METAL FROM HIGH PRESSURE FUEL PUMP. SEE PIP5133, PIP5151, PIP4949C. . . .”19 87. Similarly, on July 2, 2014, the following customer complaint involving a 2012 GMC Sierra 3500 HD was filed with NHTSA: “DRIVING FROM GM DEALER FOR TWO MILES CHANGE FUEL FILTER MESSAGE APPEARED AND ENGINE DIED. TOWED TO A DEALER DIAGNOSED AS A HIGH PRESSURE INJECTOR PUMP FAILURE WITH METAL CONTAMINATION TO FUEL SYSTEM. I HAVE FOUND A BULLETIN 17 Oct. 5, 2010, DuramaxForum.com thread post entitled, “2011 Injector Pump failure,” available at https://www.duramaxforum.com/forum/11-16-lml-duramax-powertrain/72500-2011-injector- pump-failure.html (last accessed Nov. 16, 2018). 18 Oct. 30, 2013, TheDieselPageForums.com thread post entitled, “High Pressure Fuel Pump Failure at 50K,” available at https://www.thedieselpageforums.com/tdpforum/archive/index.php/t- 42676.html (last accessed Nov. 17, 2018). 19 Id. (emphasis added). DATED 2009 FROM EQUIPMENT MANUFACTURERS. THIS JOINT STATEMENT HAS INFORMATION ABOUT THE FUEL USED IN THE USA THAT I WAS NOT AWARE OF AND MAY HAVE AVOIDED THIS FAILURE. THIS IS A VERY EXPENSIVE REPAIR AS I USE MY TRUCK FOR WORK. *TR”20 88. Likewise, on August 5, 2014, the owner of a 2012 Chevrolet Silverado 2500 filed a complaint with NHTSA about the following incident which occurred on July 11, 2014, in Chualar, California: VEHICLE WOULD NOT START. WHEN THEY PUT IT ON SCOPE THEY FOUND THAT THE FUEL RAIL PRESSURE WAS TO LOW. THEY FOUND METAL SHAVINGS THROUGHOUT THE FUEL SYSTEM AS IF A PART WAS COMING APART FROM THE INSIDE. THEY HAD TO REPLACE ENTIRE FUEL SYSTEM FROM PUMP TO INJECTORS PLUS ALL THE LINES AND INJECTION PUMP. THIS VEHICLE IS 2 YEARS OLD. *TR21 89. On February 7, 2015, the following “catastrophic failure” caused by the CP4 pump in a 2012 GMC Sierra Duramax truck was reported to NHTSA: “THE FUEL INJECTION PUMP CP4 HAD A CATASTROPHIC FAILURE AS I WAS DRIVING ON A HEAVILY TRAVELED FOUR LANE HIGHWAY, US RT.20. I LOST POWER STEERING AND BRAKES. I FELT FORTUNATE THAT I WAS NOT TOWING A 16,000 LB. FIFTH WHEEL CAMPER DOWN A MOUNTAIN ROAD.I SAY THIS BECAUSE IT WAS EXTREMELY DIFFICULT TO MAINTAIN CONTROL OVER THE TRUCK STEERING IT AND BRINGING IT TO A CONTROLLED STOP. I HAVE READ ABOUT THESE PUMPS FAILING ON NUMEROUS DIESEL FORD AND GM TRUCKS. I ALSO FEEL IF A WOMAN OR SMALL PERSON HAD THIS HAPPEN TO THEM THE OUTCOME COULD END IN LOSS OF CONTROL RESULTING IN INJURIES EVEN DEATHS. THE ONLY ONE THAT KNOWS THE ACTUAL NUMBER OF PUMPS THAT HAVE FAILED IS THE MANUFACTURERS, WHO WILL NOT SHARE THAT INFORMATION WILLINGLY. *JS”22 90. On May 4, 2015, the following report regarding a 2011 GMC Sierra Duramax HD was filed with NHTSA: “VEHICLE WAS TRAVELING DOWN ACCESS ROAD COMING UP TO INTERSTATE OFFRAMP. RIGHT BEFORE YIELD SIGN BOSCH CP4 PUMP FAILED STOPPING MOTOR. BRAKES AND STEERING AFFECTED. JUST 20 NHTSA ID No. 10607796. 21 NHTSA ID No. 10619113 (emphasis added). 22 NHTSA ID No. 10681960 (emphasis added). ENOUGH MOMENTUM TO FIGHT TRUCK INTO ADJACENT PARKING LOT RIGHT AFTER RAMP. *TR”23 91. Similarly, on June 13, 2016, the owner of a 2012 Chevrolet Silverado submitted the following complaint to NHTSA regarding the defective condition: “I WAS DRIVING DOWN A HIGHWAY ROAD WHEN MY VEHICLE ABRUPTLY LOST POWER, I RECEIVED A WARNING FROM MY DASHBOARD SAYING FUEL FILTER NEEDS REPLACING AND SUBSEQUENTLY LOST ENGINE POWER WHICH RESULTED IN NO POWER STEERING AND NO BRAKES. I WAS ABLE TO KEEP THE VEHICLE UNDER CONTROL AND GOT IT TO THE SIDE OF THE ROAD BEFORE IT BECAME DEAD. AFTER GETTING THE VEHICLE TOWED TO A GARAGE IT WAS DETERMINED THAT THE CP4 FUEL INJECTION PUMP HAD FAILED RESULTING IN FUEL BEING STARVED FROM THE ENGINE AND THE RESULT WAS THE ENGINE SHUTTING OFF. THE REPAIRS ALONE FOR THIS SINGLE FAILURE ARE $8550 BECAUSE THIS PUMP HAS FOULED ALL THE FUEL INJECTORS AND REGULATORS IN THE FUEL SYSTEM. MOST IMPORTANTLY THOUGH, I WAS FORTUNATE ENOUGH TO BE IN A POSITION ON HIGHWAY WHERE I HAD NO TRAFFIC BEHIND ME, AND ON A RELATIVELY STRAIGHT ROAD WHERE I WAS ABLE TO GET TO THE CURB BEFORE IT BECOME A BIGGER PROBLEM. FROM WHAT I HAVE FOUND THIS IS BECOMING A COMMON PROBLEM ON ALL OF THE DURAMAX 6.6L LML ENGINES UTILIZING THIS TYPE OF FUEL INJECTION PUMP AND GM NEEDS TO RECALL THESE SYSTEMS AND REPAIR THEM. I DO NOT HAVE THE REPAIR INVOICE YET BECAUSE THE VEHICLE IS STILL BEING REPAIRED BUT WILL BE HAPPY TO SUPPLY IT WHEN I RECEIVE IT.”24 92. On December 19, 2016, the owner of a 2012 Chevrolet Silverado 2500 reported the following failure to NHTSA: “TL* THE CONTACT OWNS A 2012 CHEVROLET SILVERADO 2500. WHILE DRIVING 10 MPH, THE VEHICLE STALLED WITHOUT WARNING. THE VEHICLE WAS TOWED TO THE DEALER TO BE DIAGNOSED. THE CONTACT WAS INFORMED THAT THERE WAS METAL CONTAMINATION IN THE FUEL SYSTEM DUE TO A FUEL PUMP FRACTURING IN THE FUEL TANK. THE VEHICLE WAS NOT REPAIRED. THE MANUFACTURER WAS NOT NOTIFIED OF THE FAILURE. THE APPROXIMATE FAILURE MILEAGE WAS 130,000.”25 23 NHTSA ID No. 10714457 (emphasis added). 24 NHTSA ID No. 10873931 (emphasis added). 25 NHTSA ID No. 10936256. 93. On December 28, 2016, the owner of a 2016 GMC Sierra 2500 reported the following to NHTSA regarding an incident that occurred on November 27, 2016: “TL* THE CONTACT OWNS A 2016 GMC SIERRA 2500. WHILE DRIVING APPROXIMATELY 15 MPH, THE ENGINE STALLED WITHOUT WARNING. THE VEHICLE WAS TOWED TO A DEALER WHERE IT WAS DIAGNOSED THAT THE FUEL INJECTOR PUMP FAILED AND NEEDED TO BE REPLACED. THE VEHICLE WAS REPAIRED. THE MANUFACTURER WAS INFORMED OF THE FAILURE. THE VIN WAS UNKNOWN. THE APPROXIMATE FAILURE MILEAGE WAS 11,000.”26 94. Likewise, on January 9, 2017, the owner of a 2013 GMC Sierra 2500 submitted the following complaint to NHTSA regarding the defective condition: “BOSCH CP4 FUEL PUMP FAILURE. PLEASE REFERENCE EA11-003 AND FIND THE SAME FUEL PUMPS THAT WERE FOUND TO FAIL ON AUDI/VW VEHICLES ARE ALSO USED ON GM, FORD, AND DODGE VEHICLES. SAID PUMP FAILED DURING DRIVING WITHOUT WARNING CAUSING COMPLETE ENGINE SHUTDOWN AND LOSS OF POWER. CERAMIC AND METAL INTERNALS OF THE PUMP DISINTEGRATED AND TRAVELED THROUGH THE FUEL SYSTEM, SUBSEQUENTLY CAUSING THE INJECTORS TO FAIL. SIMILAR TO THE FINDINGS IN EA11-003, PAGE 16 PARAGRAPH 2, THE REPAIR IS TO COST APPROXIMATELY $10,000 TO FIX THE ENTIRE FUEL SYSTEM. *TR”27 95. Similarly, on March 15, 2017, the owner of a 2012 Chevrolet Silverado 3500 submitted the following complaint to NHTSA regarding the defective condition: “WHILE DRIVING ON A FOUR-LANE HIGHWAY TOWING OUR 15,500 LB FIFTH WHEEL, SUDDENLY, WITHOUT ANY WARNING, WE HEARD RATTLING, LOST POWER, AND THE ENGINE SHUT DOWN. THE NOISE AND LOSS OF PROPULSION, POWER STEERING AND POWER BRAKES ALL OCCURRED WITHIN ABOUT 2-3 SECONDS. GRATEFULLY, THE DRIVER HAD THE FORTITUDE TO IMMEDIATELY BEGIN PULLING ONTO THE SHOULDER OF THE SLIGHT DOWNWARD SLOPE ON WHICH WERE [SIC] DRIVING. LUCKILY, WE WERE ON A STRETCH OF ROAD THAT WAS NOT INCLINED, NOT IN A CONSTRUCTION ZONE WITH BARRIERS, NOT IN A SNOWY MOUNTAIN PASS OR IN OTHER INCLEMENT WEATHER, NOT IN THE LEFT LANE PASSING, ETC. HAD ANY OF THESE FACTORS PREVENTED US FROM SIMPLY PULLING ONTO THE SHOULDER OF THE ROAD, THE POTENTIAL FOR A LIFE THREATENING ACCIDENT WOULD HAVE BEEN 26 NHTSA ID No. 10937972. 27 NHTSA ID No. 10943828 (emphasis added). SIGNIFICANT. THE CHEVROLET/GM SERVICE CENTER CONFIRMED THE BOSCH CP4 HPFP SUFFERED A CATASTROPHIC FAILURE, DESTROYING THE ENTIRE FUEL SYSTEM OF THE TRUCK. GM IS COVERING PART OF THE REPAIR COSTS (TRUCK IS AT 119,705 MILES), BUT OUR BILL WILL REMAIN SUBSTANTIAL. RESEARCH OF DIESEL, TDI, AND OTHER FORUMS DOCUMENT THIS PROBLEM AS WELL-KNOWN AND BROADER THAN THE EXISTING 9 COMPLAINTS IN THE NHSTA PUBLIC DATABASE AND THE INVESTIGATION OF VW/AUDI. SOME PEOPLE ARE EVEN REPORTING MULTIPLE FAILURES. THE MOST COMMON BELIEVABLE CAUSE OF THE FAILURES SEEMS TO BE A MISMATCH OF LUBRICITY SPECS BETWEEN THE BOSCH CP4 AND THE DIESEL FUEL IN THE U.S. PLEASE OPEN AN INVESTIGATION, AND ORDER GM, FORD, VW, BOSCH AND OTHERS TO RECALL THESE VEHICLES TO PROVIDE THE NECESSARY REPAIRS. ALSO PLEASE MANDATE, TO THE EXTENT YOU'RE ABLE, REIMBURSEMENT TO THOSE OF US PAYING FOR REPAIRS TODAY. I HAVE READ, BUT HAVE NOT BEEN ABLE TO CONFIRM, THAT VW EXTENDED THE WARRANTY TO 120K MILES. THIS SEEMS LIKE A MINIMUM (MORE IS BETTER) STEP, AND IT SHOULD BE RETROACTIVE.”28 96. On May 26, 2017, the owner of a 2012 GMC Denali Duramax Sierra 2500 posted the following on DuramaxForum.com: “So I have a 2012 GMC Denali Duramax with 116k on the odometer. A couple of weeks it just stopped working while driving. We had it towed to the dealer and they took a look at it and stated the fuel pump ‘blew’ up and contaminated the entire fuel delivery system. They want to replace the entire fuel system as well as put in an ‘upgraded’ GM pump for about $7100.”29 97. In the same vein, diesel truck owners in the online forum DieselPlace.com lamented their woes in the following conversation thread entitled, “Have they fixed the CP4 issue yet?”  “[My 2015 GMC LML] just blew up at 68k. Sent metal through the whole fuel system. [$]10.5K to fix.”  “There is nothing NORMAL about a +$10k repair bill. . . . If CP4s failed like CP3[’]s nobody would be talking about it. But the fact they puke with 28 NHTSA ID No. 10966092 (emphasis added). 29 May 26, 2017, DuramaxForum.com thread entitled, “Injection CP4 pump failure,” available at https://www.duramaxforum.com/forum/11-16-lml-duramax-powertrain/909393-injection-cp4- pump-failure.html (last accessed Nov. 7, 2018). no [failsafe] is the real issue. When people are having to take out 2nd mortgages to get their truck repaired there's a problem with that.”30 98. Along these same lines, in January 2015, the owner of a 2015 GMC Sierra 3500 began a thread on the DuramaxForum.com stating as follows: “I have a new 2015 GMC 3500 with 14k miles that the injection pump crapped out on me. Dealer has had it for 3 1/2 weeks. Was told if they find any metal they would have to tear the engine down. Well they found metal but didn’t tear it all the way down. Has anyone else had an issue [with] the injection pump on the 2015 Duramax[?]”31 99. Shortly thereafter, the following response comes in from a fellow DuramaxForum.com user: “[L]ots of LML's have had injector pump issues in the states[,] go down to the LML [forum] and read, it[’]s caused by the new cp4.2 pump that needs better fuel then what you can buy.”32 100. Notably, the initial complainant then explained how he finally got his truck back after a series of fuel line/tank line/chassis line flushes and replacements by the dealership, including a fuel pump injector replacement: “[I]t was around [an $]8000.00 job and that was warranty price.”33 One DuramaxForum.com user aptly responded, “To[o] bad the dealers won[’]t just install a cp3 instead of the crappy cp4 when these go out in the lml[]s. It only makes sense!!!”34 101. Along the same lines, on August 3, 2017, the owner of a 2012 Chevrolet Silverado 2500 submitted the following complaint to NHTSA regarding the defective condition: “BOSCH CP4.2 FUEL PUMP MALFUNCTIONED AND CONTAMINATED THE ENTIRE FUEL AND INJECTION SYSTEM WITH METAL SHAVINGS. THE TRUCK ENGINE STOPPED WHILE TRAVELING AT 50 MPH ON A CITY STREET AND LEFT ME WITH NO POWER STEERING. THE ENTIRE FUEL 30 https://www.dieselplace.com/forum/63-gm-diesel-engines/365-duramax-fifth-generation- 2011-2016-lml/794162-have-they-fixed-cp4-issue-yet.html (last accessed Nov. 3, 2018). 31 See https://www.duramaxforum.com/forum/general-discussion/560786-2015-duramax- injection-pump-troubles.html (last accessed Nov. 3, 2018). 32 See id. 33 Id. 34 Id. SYSTEM NEEDS TO NOW BE REPLACED AND NOT COVERED BY THE MANUFACTURER. REPAIR BILL OF OVER $7,000.”35 102. On November 13, 2017, the following incident involving a 2014 GMC Sierra 2500HD Duramax truck was filed with NHTSA: “MY FUEL PUMP AND INJECTORS FAILED WHILE I WAS DRIVING, STRANDING MY TRUCK IN THE MIDDLE OF TRAFFIC RIGHT WHERE A CITY STREET WAS CHANGING TO A COUNTRY ROAD. THE GMC DEALERSHIP FALSELY CLAIMED THAT THIS WAS CAUSED BY USING UNAPPROVED FUEL. THE FUEL I USED WAS B20 BIODIESEL, WITH 80% RENEWABLE DIESEL, WHICH MEETS DIESEL SPECIFICATIONS AND IS A LEGAL ROAD FUEL IN CALIFORNIA. THEY ALSO CLAIMED THAT A CASCADE OF OTHER PROBLEMS WERE ALL CAUSED BY MY FUEL AND REFUSED TO APPLY MY WARRANTY.”36 103. On April 10, 2018, the following customer complaint involving a 2016 Chevrolet Silverado 3500 diesel truck was filed with NHTSA: “TL* THE CONTACT OWNS A 2016 CHEVROLET SILVERADO 3500. WHILE DRIVING 40-45 MPH, THE REDUCED ENGINE SPEED WARNING INDICATOR ILLUMINATED AND THE VEHICLE STALLED. THE CONTACT WAS UNABLE TO RESTART THE VEHICLE. THE VEHICLE WAS TOWED TO HERB EASLEY MOTORS (1125 CENTRAL E FWY, WICHITA FALLS, TX 76306, (940) 723-6631) WHERE IT WAS DIAGNOSED THAT THE FAILURE WAS DUE TO CONTAMINATION OF METAL SHAVINGS IN THE FUEL PUMP AND FUEL RAILS. IN ADDITION, THE FAN CLUTCH FAILED AND NEEDED TO BE REPLACED, INCLUDING THE ENTIRE FUEL SYSTEM. THE VEHICLE WAS REPAIRED, BUT THE FAILURE RECURRED SEVERAL MONTHS LATER. THE VEHICLE WAS TAKEN BACK TO THE DEALER WHERE IT WAS DIAGNOSED THAT THE FUEL SYSTEM NEEDED TO BE REPLACED AGAIN. THE VEHICLE WAS NOT REPAIRED DUE TO COST. THE MANUFACTURER WAS NOTIFIED OF THE FAILURES AND CASE NUMBER: 8-4064184145 WAS OPENED. THE APPROXIMATE FAILURE MILEAGE WAS 38,000.”37 104. On April 17, 2018, the following report was submitted to NHTSA on behalf of the owner of a 2013 GMC Sierra 3500: “TL* THE CONTACT OWNS A 2013 GMC SIERRA 3500. THE CONTACT STATED THAT THE VEHICLE FAILED TO START. THE VEHICLE WAS TOWED TO KUHIO CHEVROLET CADILLAC HYUNDAI NISSAN (3033 35 NHTSA ID No. 11012551 (emphasis added). 36 NHTSA ID No. 11045708. 37 NHTSA ID No. 11084287. AUKELE ST, LIHUE, HI 96766, (808) 245-6731) WHERE IT WAS DIAGNOSED THAT THE FUEL PUMP AND INJECTORS FAILED AND NEEDED TO BE REPLACED. THE VEHICLE WAS NOT REPAIRED. THE MANUFACTURER WAS CONTACTED AND DID NOT ASSIST. THE APPROXIMATE FAILURE MILEAGE WAS 34,500. THE VIN WAS NOT AVAILABLE.”38 105. On November 12, 2018, the owner of a 2011 Chevrolet Silverado 2500 submitted the following complaint to NHTSA regarding the defective condition: “I WAS TRAVELING TO WORK IN THE FAST LANE OF THE FREEWAY WHEN I HEARD A FAINT SQUEALING NOISE AND THE TRUCK SUDDENLY STARTED RUNNING ROUGH. I BEGAN CROSSING ALL 4 LANES AND BY THE TIME I MADE IT TO THE [SIC] SLOW LANE THE TRUCK COMPLETELY DIED. I WAS ABLE TO SAFELY COAST OFF OF THE FREEWAY DUE TO MY QUICK REACTION AND LACK OF TRAFFIC AT THE TIME, BUT THE SITUATION WAS VERY DANGEROUS AND COULD HAVE BEEN MUCH MORE SO WITH HEAVIER TRAFFIC OR A LESS AWARE DRIVER. LATER DIAGNOSIS AT THE CHEVROLET DEALERSHIP TOLD ME THAT THE CP4 FUEL PUMP DISINTEGRATED INSIDE. AFTER SPEAKING WITH THE DIESEL TECHNICIAN AT THE DEALER I LEARNED THAT IT IS A VERY COMMON PROBLEM AND THE REPAIR COMES WITH A $10,000 PRICE TAG. I WAS ALSO VERY SURPRISED THAT THERE HAS NEVER BEEN A RECALL FOR THIS PROBLEM AND GM CONTINUED TO USE THEM UNTIL 2017...7 YEARS! MY TRUCK IS A 2011 WITH ONLY 54K MILES, AND THEY JUST FIXED A 2017 WITH ONLY 7K MILES! I HAVE SINCE DONE A LOT OF RESEARCH FINDING HUNDREDS OF LOW MILEAGE GM DURAMAX DIESEL BETWEEN 2011-2017 WITH THE EXACT SAME FAILURE. I WAS ABLE TO GET THE BOTTOM OF THE FAILURE ITSELF AND I FOUND THE FOLLOWING...THE BOSCH CP4 FUEL PUMPS THAT WERE USED IN THESE TRUCKS (ALSO FOUND IN LATE FORD AND VW DIESELS) ARE MADE IN EUROPE TO DIFFERENT SPECIFICATIONS. THE PUMPS RELY ON LUBRICANT FOUND IN DIESEL #1 TO OPERATE SMOOTHLY AND LAST A LONG TIME. HERE IN THE U.S. WE ONLY HAVE DIESEL #2 WHICH LACKS THAT LUBRICANT AND CAUSES THE INTERNAL PARTS OF THE PUMP TO DISINTEGRATE SENDING METAL SHAVINGS THROUGHOUT THE ENTIRE FUEL SYSTEM. THIS IS WHY THE REPAIR AVERAGES $10,000 ACROSS THE COUNTRY, THE ENTIRE FUEL SYSTEM BECOMES CONTAMINATED AND HAS TO BE REPLACED. I CONTACTED GM AND THEY DON'T BELIEVE THIS IS A SAFETY ISSUE. A VEHICLE SUDDENLY DIEING WITH SECONDS NOTICE ON THE FREEWAY IS CERTAINLY A SAFETY 38 NHTSA ID No. 11088735. ISSUE IN MY EYES. ESPECIALLY WHEN IT'S A COMMON FAILURE THAT CAN BE PREVENTED.”39 106. Notably, in August 2014, GM issued an internal “Preliminary Information” service bulletin to dealers—but not consumers—regarding the following vehicles equipped with the 6.6L Duramax Diesel RPO codes LGH and LML: 2010-15 Chevrolet Express van, 2010-15 Chevrolet Silverado, 2010-15 GMC Savana van, and the 2010-15 GMC Sierra.40 The bulletin’s subject was, “Duramax Diesel Hard Start No Start P0087 P0088 P0191 P128E Or Injection Pump Replacement,” and stated that if a customer with one of the aforementioned vehicles came into a dealership with “a hard start or a no start” problem, and the normal diagnostic procedure led the dealer to conclude that fuel injection pump replacement was necessary, “Fuel Pressure Regulator 1 must be inspected for magnetic metal debris” as well.41 In other words, simply replacing the fuel injection pump would not completely solve the problem because metal shavings would have contaminated the entire fuel injection system. The bulletin directed dealers to remove the fuel injection pump and pressure regulator and “inspect[] for magnetic metal debris,” and if metal debris was found, GM required its dealers to retain the affected fuel system components which “will be requested back for an engineering inspection.”42 The following photographs of a contaminated fuel pressure regulator were provided as examples of the condition having manifested – and metal shavings can be seen throughout:43 107. Rather than issue a recall, in March 2017 GM went on to reissue the Preliminary Information as Technical Service Bulletin #16-NA-102, expanding the affected model years to include the 2016 model year.44 39 NHTSA ID No. 11150932 (emphasis added). 40 See Aug. 2014 GM Service Bulletin PIP4949D, Preliminary Information regarding “Duramax Diesel Hard Start No Start P0087 P0088 P0191 P128E Or Injection Pump Replacement,” available at https://static.nhtsa.gov/odi/tsbs/2014/SB-10044240-3551.pdf (last accessed Nov. 18, 2018). 41 Id. at 1. 42 Id. at 1, 3. 43 Id. at 2-3. 44 Mar. 2, 2017, GM Technical Service Bulletin #16-NA-102: Duramax Diesel Hard Start, No Start, DTCs P0087, P0088, P0191, P128E or Injection Pump Replacement, Document ID: 4474673, 108. Tellingly, GM stopped equipping the Class Vehicles with the CP4 pump after the 2016 model year, opting instead for the Denso HP4 fuel injection pump45 – a design that has been available for medium and large-sized trucks since at least the 2004 model year.46 available at https://f01.justanswer.com/Bluegorilla/53288260-1d95-4c61-94ef- 9cbd4868f4c1_My_Boot_Camp_printed_document.pdf (last accessed Nov. 18, 2018). 45 See, e.g., Nov. 1, 2017, “Everything You Need to Know About the 2017 Silverado HDS,” Ultimate Diesel Builder’s Guide, available at https://www.pressreader.com/usa/ultimate-diesel- builders-guide/20171101/281535111145444 (last accessed Nov. 18, 2018) (“Breaking away from Bosch for the first time, the [2017] L5P Duramax makes use of a high-pressure common-rail fuel system from Denso. At the heart of the system rests a Denso HP4 injection pump. . .”). 46 See, e.g., Sept. 2007 Denso Diesel Injection Pump Service Manual for Common Rail System (CRS) Operation, Sec. 1.5 (“Common Rail System And Supply Pump Transitions”), available at http://steldiesel.ru/files/crdensoservismanual.pdf (last accessed Nov. 18, 2018) (“In 2004, the three- cylinder HP4 based on the HP3 was introduced”); Dec. 2013 Denso Diesel Systems & Diagnostics, Technical News Bulletin, Issue 1, at 1, available at http://www.denso.ro/media/151806/2013_technical-service-bulletin_no-01.pdf (last accessed Nov. 18, 2018) (showing different types of Denso high-pressure pumps and their range of applications, including the HP4, beginning in the 2004 2nd Generation Common Rail System). E. Supposed “Remedies” are Insufficient and Costly. 109. Because of its incompatibility with U.S. diesel fuel, CP4 pumps and corresponding fuel injection systems, even when replaced or “fixed,” will continue to fail in the Class Vehicles. Indeed, in a June 2010 email chain between Bosch and representatives of Audi and Volkswagen regarding the failure of a CP4 pump in a 2010 Audi A3 TDI, Audi asked Bosch, “[W]hy are the defects mentioned below still present after replacing the high-pressure pump and the injector? What could the [dealer] have done wrong by way of incorrect repair so that such defects are appearing?” Bosch responded that “In this case the complete fuel system (HPP, rail, injectors, all lines) need to be changed. . . . I assume that because of the ‘cruncher,’ the entire system is contaminated with chips, which are then pumped in circulation and can soon lead to the next failure! The rough running can be explained by the fact that a chip is already present before or in the injector and is impairing its function.”47 110. The Bosch CP4 Pump problem is so prevalent that several automotive manufacturers now provide kits to mitigate the inevitable harm. “Disaster Preventer Kits” or “bypass kits” usually 47 Mar. 7, 2011 Bosch submission to NHTSA in response to Inquiry No. INRD-EA11003, document entitled, “INRD-EA11003-59347P.pdf,” at 79-80 (Jun. 7-9, 2010 email chain between Bosch, Audi, and Volkswagen representatives regarding CP4 fuel pump failure falsely attributed to “misfuel”). refer to a fuel bypass system that does not prevent the failure, the loss of the expensive injection pump, or the need to clean metal shavings from the fuel system. But these kits are designed to redirect the lubricating fuel for the CP4 back to the fuel tank, so that it will be filtered before it returns to the engine. The bypass kit directs the fuel contaminated with metal shavings into the gas tank, which is less expensive to clean than the engine and high-pressure fuel system – in other words, a “Band-Aid” solution. These bypass kits are also less expensive than more complete remedies, requiring only $300-$400 in parts, and are marketed as having the ability to “[p]revent CP4 failures from contaminating the high pressure fuel system.”48 Many consumers have turned to this sort of remedy preemptively due to the known impending failures their vehicles are facing. 111. Another method of addressing the Bosch CP4 Pump failure is to modify the Class Vehicles to return to the older, more reliable technology of simply using more fuel. With Duramax engines, the strategy may be simply to buy a predecessor CP3 pump from an independent automotive parts vendor and install it in place of the Bosch CP4 Pump. Indeed, the CP4 pump is so substandard that many Class Vehicle owners have opted to replace their CP4 pumps with CP3 pumps at a cost of at least $3,000 per vehicle for the replacement parts alone.49 Resorting to this “remedy” fails to make consumers whole because they are not getting the fuel efficiency promised with the Bosch CP4 Pump, and for which they paid a premium. Further, consumers are having to pay thousands of 48 Online sales listing for “2011-2016 LML CP4 Fuel Bypass Kit,” PerformanceFueled.com, available at http://performancefueled.com/cp4-fuel-bypass-kit/ (last accessed Nov. 16, 2018). 49 See, e.g., http://www.engineered-diesel.com/lml-duramax-cp3-conversion-kit-with-re- calibrated-pump-50-state-carb-certified (selling “LML Duramax CP3 Conversion Kit with re- calibrated Pump[s]” for $3,000.00 and noting that the “[k]it is designed to replace the less reliable CP4 that comes stock on the LML”); https://www.dieselpowerproducts.com/p-15627-industrial- injection-436403-cp4-to-cp3-injection-pump-conversion-kit-tuning-required-11-16-66l-gm- duramax-lml.aspx (selling an “Industrial Injection CP4 to CP3 Injection Pump Conversion Kit” for 2011-2016 6.6L GM Duramax LML and noting, “With the release of the LML Duramax in 2011, GM made the switch from the reputable CP3 injection pump to the lower output CP4 pump, simply because they deemed it was ‘good enough.’ Is ‘good enough’ good enough for you and your truck? We’ve seen numerous failures on the CP4 on stock trucks, let alone even slightly modified trucks that chew them up and spit them out. Industrial Injection has this complete conversion kit that delivers everything you need to swap out your failure prone CP4 to a dependable CP3”). dollars out of pocket to essentially redesign a design flaw that was implemented by GM in the Class Vehicles. 112. Another potential “remedy” is to leave the CP4 in place on the Class Vehicle, but install a lift pump, a second pump to assist the Bosch CP4 Pump and increase the fuel pressure. But, again, this “remedy” deprives consumers of the fuel-efficiency for which they paid a premium. 113. The lift pump and CP3 pump options remedy part of the problem by pumping and burning more fuel. So, in addition to the expense of buying a new fuel injection pump, the “remedies” would require owners to purchase more fuel. 114. A fourth way to mitigate the damage is to spend money for fuel additives to increase the lubricity of the fuel. This approach may work best in conjunction with the previously discussed modifications, but even by itself, it can be expensive. 115. In short, there is no known way to remedy or mitigate CP4 pump failure without decreasing the fuel efficiency promised to Plaintiffs and other Class members and without significant expense to Plaintiffs and other Class members. F. GM Knew Durability and Superiority Were Material to Consumers and Made Hollow Promises of Durability and Superiority. 116. When it first came on the scene in 2010, GM announced that its new 6.6 liter Duramax V-8 diesel engine for 2011 model year Chevrolet Silverado and GMC Sierra heavy duty trucks would be 11 percent more fuel efficient than its previous Duramax diesel engines, with “a mind-blowing 765 pounds-feet of torque.”50 In a press release, GM’s chief Duramax engineer, Gary Arvan, proclaimed, “[W]e’ve enhanced the Duramax to make it one of the most competitive engines in the segment – one that takes performance and fuel economy to the next level. Whether it’s a new Sierra Denali HD or an ambulance based on a Sierra chassis cab, customers will find the Duramax is the power behind the greater capability these trucks offer.”51 50 Mar. 9, 2010, “GM Announces Best-in-Class Power Figures for 2011 6.6-liter Duramax V-8 Diesel,” PickupTrucks.com, available at https://news.pickuptrucks.com/2010/03/gm-announces-best- in-class-power-figures-for-2011-duramax-v8-diesel.html (last accessed Nov. 17, 2018). 51 Mar. 10, 2010, “GMC’s 2011 Heavy-Duty Trucks Build on Proven Heritage with New Duramax 6.6L Turbo Diesel Engines,” GM Pressroom, available at 117. GM’s 2011 Chevrolet Silverado HD truck brochure boasted of an eleven-percent increase in fuel efficiency while claiming the durability of its predecessors, “PROVEN DURABILITY[:] The Duramax-Allison combination continues to build on its proven reliability.” 118. GM’s 2011 Chevrolet Silverado HD brochure further emphasized that GM had “engineered the new 2011 Silverado HD with durable, advanced technology that makes this [their] most powerful heavy-duty ever.” GM also provided an express “100,000 mile/5-year Powertrain Warranty to guarantee the quality.” The brochure further stated “[t]he new Silverado HD. From Chevrolet – the most dependable, longest-lasting full-size pickups on the road.” 119. Moreover, this brochure expressly stated that the Duramax diesel engine in the 2011 Silverado could run on “B20 biodiesel. . . which is composed of 20% biodiesel mixed with regular diesel:”52 https://media.gm.com/media/us/en/gmc/vehicles/sierra_hd/2011.detail.html/content/Pages/news/us/e n/2010/Mar/0310_gmc_sierra_hd/0310_duramax.html (last accessed Nov. 17, 2018). 52 2011 Chevrolet Silverado HD Vehicle Brochure, at 5, available at http://www.auto- brochures.com/makes/Chevrolet/Silverado/Chevrolet_US%20SilveradoHD_2011.pdf (last visited Nov. 16, 2018). 120. Likewise, for the 2012 GMC Sierra HD, GM actively touted the Duramax diesel engine’s “advanced” high-pressure diesel direct injection system “that helps it start in as little as 3.0 seconds . . . [and] can give you a maximum highway range of up to 680 miles on a single fill-up, thanks to its extra-large 36-gallon fuel tank:”53 53 2012 GMC Sierra Vehicle Brochure, at 28, available at https://cdn.dealereprocess.net/cdn/brochures/gmc/2012-sierra.pdf (last accessed Nov. 16, 2018). 121. GM’s 2012 Chevrolet Silverado HD brochure highlights the “dependable, long-lasting workhorse of a truck that comes with the best coverage of any size pickup –a 100,000 MILE/5- YEAR POWERTRAIN WARRANTY. Because [they know] it’s one thing to talk quality and quite another to back it up:”54 54 2012 Chevrolet Silverado Vehicle Brochure, at 3, available at https://cdn.dealereprocess.net/cdn/brochures/chevrolet/2012-silveradohd.pdf (last accessed Nov. 16, 2018). 122. GM’s 2013 Chevrolet Silverado HD brochure underlined the depth of their heritage and passion for what they do at Chevrolet. Chevrolet’s brochure indicated that it is “ingrained in the bold design, spirited performance, proven durability, and exceptional value [their] drivers enjoy.”55 Moreover, GM touted its 2013 1500 HD trucks as the “most dependable[,] longest-lasting full-size pickups on the road:”56 55 2013 Chevrolet Silverado Vehicle Brochure, at 2, available at https://cdn.dealereprocess.net/cdn/brochures/chevrolet/2013-silverado1500.pdf (last accessed Nov. 16, 2018). 56 Id. at 4 (last accessed Nov. 16, 2018). 123. GM’s 2014 Chevrolet Silverado HD brochure emphasized that consumers could “EXPECT THE BEST” and guaranteed that, “every Silverado 2500HD and 3500HD is backed by the Best Pickup Coverage in America, including a 100,000-mile/5-year Powertrain Limited Warranty and 24,000-mile/2-year scheduled maintenance. That’s long-lasting dependability you can believe in:”57 57 2014 Chevrolet Silverado HD Vehicle Brochure, at 2, available at https://cdn.dealereprocess.net/cdn/brochures/chevrolet/2014-silverado2500hd.pdf (last accessed Nov. 16, 2018). 124. For the 2015 Chevrolet Silverado HD, which GM touted as “our most advanced heavy-duty pick-up ever,” GM’s vehicle brochure proclaimed, “You don’t get to be part of the most dependable, longest-lasting full-size pickups on the road by tampering with what works. You build on proven success. You make your best even better:”58 58 2015 Chevrolet Silverado HD Vehicle Brochure, at 3, available at https://www.gmcertified.com/PDFs/ModelLibrary/Chevrolet/Silverado%20HD/2015-Chevrolet- Silverado-HD.pdf (last accessed Nov. 16, 2018). 125. Likewise, GM touted the longevity and reliability of the Duramax 6.6L Turbo-Diesel engines in 2016 Chevrolet Silverado HD 2500 and 3500 vehicles by proclaiming that, “There are over 1 million Duramax diesels with Allison transmissions on the road today with over 100 billion miles of experience. . . . [The] Duramax Turbo-Diesel engine lets Silverado HD offer you best-in- class maximum conventional towing capability. That’s power you can trust to go the distance:”59 126. GM similarly touted the capability of the 2011 Chevrolet Express van by noting that its new 6.6L Duramax diesel engine had “up to 11-percent greater fuel economy” than previous 59 2016 Chevrolet Silverado HD Vehicle Brochure, at 9, available at https://www.gmcertified.com/PDFs/ModelLibrary/Chevrolet/Silverado%20HD/2016-Chevrolet- Silverado-HD.pdf (last accessed Nov. 17, 2018). models, along with a “new 30,000-psi (2,000 bar) piezo-actuated fuel injection system – capable of operating on ASTM grade B20 biodiesel – ensur[ing] more precise fuel delivery, improving emission performance.”60 127. Likewise, GM advertised the 2011 GMC Savana van as having a “new Duramax 6.6L turbo diesel” engine that was “more fuel-efficient – up to 11-percent greater fuel economy than the outgoing model,” as well as having a “new 30,000-psi (2,000 bar) piezo-actuated fuel injection system – capable of operating on ASTM grade B20 biodiesel – ensur[ing] more precise fuel delivery, improving emission performance.”61 128. GM also provided an express 60-month, 100,000-mile written warranty with the Class Vehicles it manufactured. 129. GM has repeatedly refused to honor its warranties, deviously claiming that the metal shavings caused by the failures of their pump design voided the warranty because they also caused fuel contamination. 130. Despite the clear mismatch between the Bosch CP4 Pump and American diesel fuel, GM has cleverly passed the $8,000.00–$20,000.00 cost of failure along to the consumer. GM’s agents, specifically its dealerships, is oftentimes determining that CP4 pump failures are not under warranty. The logic is that when a European-designed CP4 pump mists internal diesel engine components, its innate incompatibility with less American diesel produces damaging levels of metal- on-metal friction, launching metal debris into the high-pressure fuel system and the engine. Warranties do not cover the use of contaminated fuel. Because the fuel is now contaminated with metal from the pump, the repairs are for fuel contamination and are not covered by the warranties. 60 “2011 Chevrolet Express Offers Powerful Duramax Diesel in 3500 Passenger Vans, Greater Connectivity,” GM Pressroom, available at https://media.gm.com/media/us/en/chevrolet/vehicles/express-psgr/2011.html (last accessed Nov. 17, 2018). 61 “2011 GMC Savana Offers Powerful Duramax Diesel in 3500 Passenger Vans, Greater Connectivity,” GM Pressroom, available at https://media.gmc.com/media/us/en/gmc/vehicles/savana/2011.html (last accessed Nov. 17, 2018). 131. GM induced Plaintiffs and other Class members to pay a premium for increased durability, performance and fuel efficiency, with a design GM has long known would cause fuel contamination—a condition GM now uses to absolve itself of the catastrophic and costly consequences to Plaintiffs and other Class members. VI. TOLLING OF THE STATUTE OF LIMITATIONS 132. As of the date of this Complaint, GM continues to market the Class Vehicles based on superior durability, performance, and fuel efficiency, despite its knowledge that the Class Vehicles are defective and have failed or will fail—in fact, GM still has not disclosed and continues to conceal that the Class Vehicles are defective, incompatible with American diesel fuel, and will experience catastrophic and costly failure. 133. Until shortly before the filing of this Complaint, Plaintiffs and other Class members had no way of knowing about GM’s wrongful and deceptive conduct with respect to their defective Class Vehicles. 134. With respect to Class Vehicles that have not experienced CP4 pump failure, Plaintiffs and other Class members did not discover and could not reasonably have discovered that their Class Vehicles are defective, that their Class Vehicles are out of specification and incompatible with American diesel fuel, that this incompatibility has resulted in the breakdown of fuel components and contamination of fuel caused by the defective CP4 fuel pump, that their CP4 fuel pumps will fail, that the durability and performance of their Class Vehicles is impaired by this defect and incompatibility and that such durability and performance is far less than GM promised, or that, as a result of the foregoing, they overpaid for their vehicles, the value of their vehicles is diminished, and/or their vehicles will require costly modification to avoid a catastrophic, even more costly failure, and that any such modifications will impair other qualities of the Class Vehicles that formed a material part of the bargain between the parties in the purchase of the Class Vehicles by Plaintiffs and other Class members. 135. With respect to Class Vehicles that have experienced CP4 pump failure prior to the filing of this Complaint, Plaintiffs and other Class members did not discover and could not reasonably have discovered that their CP4 pump failure was due to a defect known to GM or that such failure was due to an incompatibility between the Class Vehicle and the fuel intended by GM to be used in the Class Vehicles. 136. Within the period of any applicable statutes of limitation or repose, Plaintiffs and members of the proposed classes could not have discovered through the exercise of reasonable diligence that GM was concealing the conduct complained of herein and misrepresenting the defective nature of the Class Vehicles. 137. Plaintiffs and other Class members did not discover, and did not know of, facts that would have caused a reasonable person to suspect that GM did not report information within their knowledge to consumers, dealerships, or relevant authorities; nor would a reasonable and diligent investigation have disclosed that GM was aware of the non-conforming and defective nature of the CP4 fuel pump and the Class Vehicles in which it was incorporated. Plaintiffs only learned of the defective nature of the CP4 fuel injection pump and their vehicles, and of GM’s scheme to design and sell such non-conforming and defective fuel pumps and vehicles, shortly before this action was filed. 138. All applicable statutes of limitation and repose have also been tolled by GM’s knowing, active, and fraudulent concealment, and denial of the facts alleged herein throughout the period relevant to this action. 139. Instead of disclosing the defective nature of the CP4 fuel pumps to consumers, GM falsely represented that CP4 pump failure in the Class Vehicles was caused by Plaintiffs’ or other Class members’ conduct or by the use of contaminated fuel. 140. In reality, GM’s conduct in designing, manufacturing, marketing, or selling Class Vehicles for use with American diesel fuel, with which GM knew the Class Vehicles were incompatible, causes the “fuel contamination” that ultimately leads to CP4 pump failure. 141. GM, with the purpose and intent of inducing Plaintiffs and other Class members to refrain from filing suit, pursuing warranty remedies, or taking other action with respect to GM’s conduct or the Class Vehicles, fraudulently concealed the true cause of CP4 pump failure by blaming Plaintiffs, Class members, and/or contaminated fuel when GM, even before the design, manufacture, or sale of the Class Vehicles, knew that the defective nature of the Bosch CP4 Pump would and has caused fuel contamination and resulting CP4 pump failure. 142. GM was under a continuous duty to disclose to Plaintiffs and other Class members the true character, quality, and nature of the durability and performance of Class Vehicles, the ongoing process of fuel contamination in Class Vehicles, CP4 pump failure, and the true cause of CP4 pump failure. Instead, GM knowingly, affirmatively, and actively concealed or recklessly disregarded the foregoing facts. As a result, GM is estopped from relying on any statutes of limitation or repose as a defense in this action. 143. For the foregoing reasons, all applicable statutes of limitation and repose have been tolled by operation of the discovery rule and by GM’s fraudulent concealment with respect to all claims against GM; and, GM is estopped from asserting any such defenses in this action. VII. CLASS ACTION ALLEGATIONS 144. Throughout this Complaint, “Class Vehicle” is defined as any GM-brand vehicle fitted at any time with a Bosch CP4 fuel pump. 145. This is a class action brought pursuant to Federal Rule of Civil Procedure 23 on behalf of the following Class: All persons or entities in the state of California who are current owners and/or lessees, and/or former owners and/or lessees who incurred expenses related to engine or fuel pump repair, of the following vehicles: o 2011–2016 2500HD Silverado 6.6L V8 Duramax Diesel Trucks with LML engines; o 2011–2016 3500HD Silverado 6.6L V8 Duramax Diesel Trucks with LML engines; o 2011–2016 2500HD Sierra 6.6L V8 Duramax Diesel Trucks with LML engines; o 2011–2016 3500HD Sierra 6.6L V8 Duramax Diesel Trucks with LML engines; o 2010–2011 Chevrolet Express van with Duramax LGH engines; o 2010–2011 GMC Savana van with Duramax LGH engines; o 2010–2011 GMC Sierra trucks with RPO ZW9 (chassis cabs or trucks with pickup box delete) with Duramax LGH engines; o 2011–2012 2500HD 3500 Silverado 6.6L V8 Duramax Diesel Trucks with LGH engines; and o 2011–2012 2500HD 3500 Sierra 6.6L V8 Duramax Diesel Trucks with LGH engines. 146. Excluded from the Class are individuals who have personal injury claims resulting from a CP4 fuel injection pump failure. Also excluded from the Class are GM and its officers, directors, affiliates, legal representatives, employees, co-conspirators, successors, subsidiaries, and assigns, as well as any entity in which GM has a controlling interest. In addition, Governmental entities and any judge, justice, or judicial officer presiding over this matter and the members of their immediate families and judicial staff are excluded from the Class. Plaintiffs reserve the right to revise the Class definition based upon information learned through discovery. 147. Certification of Plaintiffs’ claims for class-wide treatment is appropriate because Plaintiffs can prove the elements of their claims on a class-wide basis using the same evidence as would be used to prove those elements in individual actions alleging the same claim. 148. The Class Representatives are asserting claims that are typical of claims of the Class, and they will fairly and adequately represent and protect the interests of the Class in that they have no interests antagonistic to those of the putative Class members. 149. The amount of damages suffered by each individual member of the Class, in light of the expense and burden of individual litigation, would make it difficult or impossible for individual Class members to redress the wrongs done to them. Plaintiffs and other members of the Class have all suffered harm and damages as a result of GM’s unlawful and wrongful conduct. Absent a class action, GM will likely not have to compensate victims for GM’s wrongdoings and unlawful acts or omissions, and will continue to commit the same kinds of wrongful and unlawful acts or omissions in the future. 150. Numerosity under Federal Rule of Civil Procedure 23(a)(1): The Class is so numerous that individual joinder of all of its members is impracticable. Due to the nature of the trade and commerce involved, Plaintiffs believe that the total number of Class Plaintiffs is at least in the thousands, and are numerous and geographically dispersed across California. While the exact number and identities of the Class members are unknown at this time, such information can be ascertained through appropriate investigation and discovery, as well as by the notice Class members will receive by virtue of this litigation so that they may self-identify. The disposition of the claims of Class members in a single class action will provide substantial benefits to all Parties and the Court. Members of the Class may be notified of the pendency of this action by recognized, Court-approved notice dissemination methods, which may include U.S. Mail, electronic mail, Internet postings, and/or published notice. The number of persons for whom this action is filed who are citizens of California effectively exhausts the membership of the class, with the potential exception of some few, but unknown, transients in California or residents of California who happen to be citizens of other states. 151. Commonality and Predominance under Federal Rule of Civil Procedure 23(a)(2) and 23(b)(3): This action involves common questions of law and fact which predominate over any questions affecting individual Class members, including, without limitation: a. Whether GM engaged in the conduct alleged herein; b. Whether GM knew about the CP4 defect and the inherent problems related thereto when said component part is used with American diesel fuel, and if so, how long GM knew or should have known as much; c. Whether GM designed, advertised, marketed, distributed, leased, sold, or otherwise placed the defective Class Vehicles into the stream of commerce in the United States; d. Whether the GM diesel engine systems that are the subject of this complaint are defective such that they are not fit for ordinary consumer use; e. Whether GM omitted material facts about the quality, durability, fuel economy, and vehicle longevity of the Class Vehicles; f. Whether GM designed, manufactured, marketed, and distributed Class Vehicles with defective or otherwise inadequate fuel injection systems; g. Whether GM’s conduct violates California consumer protection statutes, and constitutes breach of contract or warranty and fraudulent concealment, as asserted herein; h. Whether Plaintiffs and the other Class members overpaid for their vehicles at the point of sale; and i. Whether Plaintiffs and the other Class members are entitled to damages and other monetary relief and, if so, what amount. 152. Typicality under Federal Rule of Civil Procedure 23(a)(3): Plaintiffs’ claims are typical of the other Class members’ claims because all have been comparably injured through GM’s wrongful conduct as described above. 153. Adequacy of Representation under Federal Rule of Civil Procedure 23(a)(3): Plaintiffs are adequate Class representatives because their interests do not conflict with the interests of the other Class members they seek to represent. Additionally, Plaintiffs have retained counsel with substantial experience in handling complex class action and multi-district litigation. Plaintiffs and their counsel are committed to prosecuting this action vigorously on behalf of the Class and have the financial resources to do so. The interests of the Class will be fairly and adequately protected by Plaintiffs and their counsel. 154. Superiority of Class Action under Federal Rule of Civil Procedure 23(b)(3): A class action is superior to any other available means for the fair and efficient adjudication of this controversy, and no unusual difficulties are likely to be encountered in the management of this class action. The financial detriment suffered by Plaintiffs and the other members of the Class are relatively small compared to the burden and expense that would be required to individually litigate their claims against GM’s wrongful conduct. Even if members of the Class could afford individual litigation, the court system could not. Individualized litigation creates a potential for inconsistent or contradictory judgments and increases the delay and expense to all parties and the court system. By contrast, the class action device presents far fewer management difficulties and provides the benefits of single adjudication, economy of scale, and comprehensive supervision by a single court. VIII. CAUSES OF ACTION CLAIMS BROUGHT ON BEHALF OF THE CLASS AND ON BEHALF OF THE NAMED PLAINTIFFS COUNT I FRAUD BY CONCEALMENT 155. Plaintiffs re-allege and incorporate the preceding paragraphs as though fully set forth herein. 156. Plaintiffs bring this Count individually and on behalf of the Class against GM. 157. As set forth above, Plaintiffs and other Class members have suffered from a defect that existed in the Class Vehicles which began damaging the Class Vehicles and their fuel delivery systems upon the first use of the Class Vehicles. Plaintiffs and other Class members are seeking recovery for this manifested defect and any and all consequential damages stemming therefrom. 158. As alleged above, GM intentionally concealed and suppressed material facts concerning the durability and performance of the Bosch CP4 Pump and (more importantly) facts concerning the durability and performance of the Class Vehicles and their engines, in order to defraud and mislead the Class about the true nature of the Class Vehicles. 159. As alleged above, GM knew at least by 2002 that its fuel injection systems required heightened lubricity, which was not met by American diesel fuel specifications. 160. As alleged above, GM had specific knowledge by at least 2002 that their fuel injection systems were incompatible with American diesel fuel specifications. 161. As alleged above, prior to the design, manufacture, and sale of the Class Vehicles, GM knew that the Bosch CP4 Pumps were expected to quickly fail in the Class Vehicles and that such failure would result in contamination of the fuel system components and require repair and replacement of those components, the repairs or replacements of which GM would refuse to cover under their warranties. 162. The foregoing omitted facts and representations were material because they directly impacted the value of the Class Vehicles purchased or leased by Plaintiffs and other Class members, because those facts directly impacted the decision regarding whether or not Plaintiffs and other Class members would purchase a Class Vehicle, and because they induced and were intended to induce Plaintiffs and other Class members to purchase a Class Vehicle. 163. Despite this knowledge, GM marketed the Class Vehicles, touting the increased durability and performance of the Class Vehicles. 164. Due to their specific and superior knowledge that the Bosch CP4 Pumps in the Class Vehicles will fail, and due to their false representations regarding the increased durability of the Class vehicles, GM had a duty to disclose to Class members that their vehicles were incompatible with the use of U.S. fuel, that the Bosch CP4 Pumps will fail in Class Vehicles, that Class Vehicles do not have the expected durability over other diesel vehicles or of their namesake predecessor engines, that failure of the Bosch CP4 Pumps will cause damage to Class Vehicle engines and engine systems, and that Class members would be required to bear the cost of the damage to their vehicles. 165. GM knew that Plaintiffs and other Class members reasonably relied upon GM’s false representations and omissions. Plaintiffs and other Class members had no way of knowing that GM’s representations and omissions were false and misleading, that the Class Vehicles were incompatible with the fuel GM knew would be used to operate the Class Vehicles, that the normal and intended use of the Class Vehicles will cause the Bosch CP4 Pumps to fail, or that GM would refuse to repair, replace, or compensate Plaintiffs and other Class members for the failure of the Bosch CP4 Pumps and the known consequences of that failure to the Class Vehicle engines. 166. Plaintiffs and other Class members could not have known that the Class Vehicles, which were touted by GM for their durability and performance, will fail when used as intended by GM. 167. GM knew that Plaintiffs and other Class members could not have known that Class Vehicles will fail when used as intended by GM. 168. GM falsely represented the durability of the Class Vehicles and omitted material facts regarding the lack of durability of the Class Vehicles, the incompatibility of the Class Vehicles with the fuel intended by GM to be used in the Class Vehicles, and the consequences of that incompatibility, for the purpose of inducing Plaintiffs and other Class members to purchase Class Vehicles, and to increase their revenue and profits. 169. GM’s devious scheme to design, market, and sell Class Vehicles with defective CP4 pumps, knowing that U.S. fuel was certain to be used in the Class Vehicles and the consequence of using U.S. diesel fuel in those vehicles, then concealing their fraudulent scheme from the public and consumers over numerous model years, reveals a corporate culture that emphasized sales and profits over integrity and an intent to deceive Plaintiffs, other Class members and the American public regarding the durability and performance of the Class Vehicles and their fuel delivery systems. 170. GM had a duty to disclose the incompatibility of Class Vehicles with U.S. diesel fuel, including the consequences of that incompatibility, to Plaintiffs and Class members. 171. Had Plaintiffs and other Class members known that the Class Vehicles did not have increased durability over other diesel vehicles, the Class Vehicles were incompatible with the fuel intended by Plaintiffs, the other Class members, and GM to be used in the Class Vehicles (without which the Class Vehicles would serve no purpose to Plaintiffs and other Class members), or that the Class Vehicles will fail when used as intended, Plaintiffs and other Class members would not have purchased a Class Vehicle, or would have paid substantially less for their Class Vehicle based on GM’s false representations and omissions, or, in the case of Plaintiffs and other Class members whose vehicles experienced CP4 pump failure, would have taken affirmative steps to mediate the impact of or prevent failure. 172. Because of GM’s false representations and omissions, Plaintiffs and other Class members have sustained damages because they own vehicles that are diminished in value as a result of GM’s concealment of the true nature and quality of the Bosch CP4 Pump and the Class Vehicles. 173. GM’s failure to disclose the incompatibility of the Class Vehicles with U.S. diesel fuel was intended to cause and did cause Plaintiffs and other Class members to operate Class Vehicles with U.S. fuel; and, as a result, certain Plaintiffs and other Class members have been damaged by the failure of the Bosch CP4 Pumps and the resulting failure of Class Vehicle engines, resulting in damages to Class members and Plaintiffs including but not limited to the cost of repair or replacement of the CP4 fuel pump, the cost of damage caused to the Class Vehicles by the failure of the CP4 fuel pump, loss of use of the Class Vehicles, loss of earnings, and other damages. 174. Accordingly, GM is liable to Plaintiffs and other Class members for damages in an amount to be proved at trial. 175. GM’s acts were done wantonly, maliciously, oppressively, deliberately, with intent to defraud, and in reckless disregard of Plaintiffs’ and other Class members’ rights, and the representations made by GM to them were made in order to enrich GM. GM’s conduct warrants an assessment of punitive damages in an amount sufficient to deter such conduct in the future, which amount is to be determined according to proof. COUNT II VIOLATIONS OF THE CALIFORNIA UNFAIR COMPETITION LAW (CAL. BUS. & PROF. CODE § 17200, ET SEQ.) 176. Plaintiffs re-allege and incorporate the preceding paragraphs as though fully set forth herein. 177. Plaintiffs assert this Count individually and on behalf of the Class against GM. 178. Plaintiffs have Article III standing to bring these claims for economic losses ensuing from the defects in the Class Vehicles because, among other things and as alleged herein, the CP4 fuel pump defect involves a safety defect which presents an actual and/or imminent risk to vehicle occupant safety; specifically, the risk of a moving stall, which is a known consequence of the CP4 fuel pump defect, presents a risk to occupant safety which GM has admittedly recognized through, inter alia, its 2014 Ignition Switch Defect recalls in which GM recalled millions of vehicles for that very risk. Put simply, defective cars are just not worth as much.62 Further, even without a safety 62 See, e.g., In re Toyota Motor Corp., 790 F. Supp. 2d 1152, 1163 (C.D. Cal. 2011) (“[O]nce the safety defect is sufficiently and plausibly pled by all Plaintiffs, the economic losses resulting from the defect are readily established: defective cars are simply not worth as much”). issue, Plaintiffs overpaid at the point of sale as these vehicles have impaired performance due to the defect. 179. As set forth above, Plaintiffs and other Class members have suffered from a defect that existed in the Class Vehicles which began damaging the Class Vehicles and their fuel delivery systems upon the first use of the Class Vehicles. In this Count, Plaintiffs and other Class members are seeking any and all relief available under Cal. Bus. & Prof. Code § 17200 et seq. for this manifested defect and the consequences stemming therefrom, including restitution and injunctive relief. 180. California’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200 et seq., proscribes acts of unfair competition, including “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” 181. GM’s conduct, as described herein, was and is in violation of the UCL. GM’s conduct violates the UCL in at least the following ways: a. By failing to disclose that the CP4 high-pressure fuel injection pump is out of specification for use with diesel fuel in the United States; that the fuel injection system on the Class Vehicles destroys the reliability and durability of the engine and its high-pressure fuel system, because the fuel injection pump will run dry on the thinner, cleaner, less lubricating higher water content diesel used in the United States; that the CP4 pump will emit shavings of metal that travel throughout the engine and fuel injection system; and that eventually, the CP4 pump will fail catastrophically, requiring extensive repairs; b. By selling and leasing Class Vehicles that suffer from a defective Bosch CP4 fuel injection pump; c. By knowingly and intentionally concealing from Plaintiffs and the other Class members that the Bosch CP4 Pumps would fail in the Class Vehicles when used with American diesel fuel; d. By marketing Class Vehicles for their durability, reliability, and performance when GM knew the Class Vehicles were incompatible with American fuel, causing the “fuel contamination” that ultimately leads to CP4 pump failure; and e. By violating other California laws, including California consumer protection laws. 182. GM intentionally and knowingly misrepresented material facts regarding the Class Vehicles with an intent to mislead Plaintiffs and Class members. 183. In purchasing or leasing the Class Vehicles, Plaintiffs and the other Class members were deceived by GM’s failure to disclose the incompatibility of Class Vehicles with U.S. diesel fuel and the fact that the Bosch CP4 fuel injection pumps were defective and have failed or will fail, requiring extensive repairs. 184. Plaintiffs and Class members were also deceived by GM’s portrayal of the Class Vehicles as reliable, durable, containing the fuel efficiency and power expected of a diesel vehicle, and compatible with American diesel fuel, even though GM knew: (1) the Class Vehicles were incompatible with the use of U.S. fuel; (2) the Bosch CP4 pumps will fail in Class Vehicles; (3) Class Vehicles do not have the expected durability over other diesel vehicles or of their namesake predecessor engines; (4) failure of the Bosch CP4 Pumps will cause catastrophic damage to Class Vehicle engines; and (5) that GM would require Plaintiffs and Class members to bear the cost of the damage to their vehicles. 185. Plaintiffs and Class members reasonably relied upon GM’s false misrepresentations in making their decision to purchase their Class Vehicles. They had no way of knowing that GM’s representations were false and gravely misleading. As alleged herein, GM engaged in extremely sophisticated methods of deception. Plaintiffs and Class members did not, and could not, unravel GM’s deception on their own. 186. GM knew or should have known that its conduct violated the UCL. 187. GM owed Plaintiffs and the Class a duty to disclose the incompatibility of Class Vehicles with U.S. diesel fuel, including the consequences of that incompatibility, to Plaintiffs and other Class members. Specifically, GM: a. Possessed exclusive knowledge that that the lower lubricity of American diesel could cause catastrophic failure in Class Vehicles’ CP4 fuel injection system components that are made to European diesel specifications; b. Intentionally concealed the foregoing from Plaintiffs and other Class members; and/or c. Made incomplete representations that consumers’ improper use of contaminated or substandard fuels damaged Class Vehicles’ fuel systems, while purposefully withholding material facts from Plaintiffs and other Class members that contradicted these representations. 188. Plaintiffs and the other Class members relied on GM’s material representations and/or omissions that the Class Vehicles they were purchasing were durable and reliable vehicles that were compatible with American diesel fuel and free from defects. 189. GM’s conduct proximately caused injuries to Plaintiffs and the other Class members. 190. Plaintiffs and the other Class members were injured and suffered ascertainable loss, injury-in-fact, and/or actual damage as a proximate result of GM’s conduct in that Plaintiffs and the other Class members overpaid for their vehicles, and/or their vehicles have suffered a diminution in value, and/or their vehicles will require costly modification to avoid a catastrophic, even more costly failure, and that any such modifications will impair other qualities of the Class Vehicles that formed a material part of the bargain between the parties in the purchase of the Class Vehicles by Plaintiffs and other Class members. These injuries are the direct and natural consequence of GM’s misrepresentations and omissions. 191. GM’s misrepresentations and omissions alleged herein caused Plaintiffs and the other Class members to purchase or lease the Class Vehicles. Absent those misrepresentations and omissions, Plaintiffs and the other Class members would not have purchased or leased Class Vehicles, would not have purchased or leased Class Vehicles at the prices they paid, and/or would have purchased or leased less expensive alternative vehicles that did not contain a defective Bosch CP4 fuel injection pump that was incompatible with American diesel fuel. Accordingly, Plaintiffs and the other Class members have suffered injuries in fact, including lost money or property, as a result of GM’s misrepresentations and omissions. 192. Plaintiffs seek to enjoin further unlawful, unfair, and/or fraudulent acts or practices by GM under Cal. Bus. & Prof. Code § 17200. 193. Plaintiffs request that this Court enter such orders or judgments as may be necessary to restore to Plaintiffs and members of the Class any money GM and/or its affiliates, subsidiaries, agents, et al., acquired by unfair competition, including restitution and/or restitutionary disgorgement, as provided in Cal. Bus. & Prof. Code § 17203 and Cal. Civ. Code § 3345; and for such other as may be appropriate. COUNT III VIOLATIONS OF THE CONSUMER LEGAL REMEDIES ACT (“CLRA”) (CAL. CIV. CODE § 1750, ET SEQ.) 194. Plaintiffs re-allege and incorporate the preceding paragraphs as though fully set forth herein. 195. Plaintiffs intend to bring this Count individually and on behalf of the Class against GM. 196. Plaintiffs intend to assert a claim under the Consumer Legal Remedies Act, Cal. Civ. Code § 1750, et seq. (“CLRA”), which prohibits “unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer[.]” Cal. Civ. Code § 1770(a). Plaintiffs will make a demand in satisfaction of the Act and may amend this Complaint to Assert claims under the Act once thirty (30) days have elapsed from the time the demand is made. Plaintiffs and other Class members have suffered from a defect that existed in the Class Vehicles which began damaging the Class Vehicles and their fuel delivery systems upon the first use of the Class Vehicles. Plaintiffs and other Class members intend to seek appropriate relief under the CLRA for this manifested defect and any and all consequential damages stemming therefrom. This paragraph is included for purposes of notice only and is not intended to actually assert a claim under the CLRA. COUNT IV UNJUST ENRICHMENT 197. Plaintiffs re-allege and incorporate the preceding paragraphs as though fully set forth herein. 198. Plaintiffs bring this Count individually and on behalf of the Class against GM. 199. As set forth above, Plaintiffs and other Class members have suffered from a defect that existed in the Class Vehicles which began damaging the Class Vehicles and their fuel delivery systems upon the first use of the Class Vehicles. Plaintiffs and other Class members are seeking recovery for this manifested defect and any and all consequential damages stemming therefrom. 200. As a result of its wrongful and fraudulent acts and omissions, as set forth herein, pertaining to the defects in the Bosch CP4 Pump and the Class Vehicles and the concealment thereof, GM charged a higher price for the Class Vehicles than the Vehicles’ true value and GM, therefore, obtained monies that rightfully belong to Plaintiffs and other Class members. 201. GM has benefitted from manufacturing, selling, and leasing at an unjust profit defective Class Vehicles whose value was artificially inflated by GM’s concealment of the defective nature of the CP4 fuel pump and of the Class Vehicles, and false representations related thereto. 202. GM enjoyed the benefit of increased financial gains, to the detriment of Plaintiffs and other Class members, who paid a higher price for their vehicles that actually had lower values. 203. GM has received and retained unjust benefits from the Plaintiffs and other Class members, and inequity has resulted. 204. It would be inequitable and unconscionable for GM to retain these wrongfully obtained benefits. 205. Because GM concealed its fraud and deception, Plaintiffs and other Class members were not aware of the true facts concerning the Class Vehicles and did not benefit from GM’s misconduct. 206. GM knowingly accepted and retained the unjust benefits of its fraudulent conduct. 207. As a result of GM’s misconduct, the amount of its unjust enrichment should be disgorged and returned to Plaintiffs and other Class members, in an amount to be proven at trial. 208. Plaintiffs and other Class members, therefore, seek an order establishing GM as a constructive trustee of the profits unjustly obtained, plus interest. COUNT V BREACH OF IMPLIED WARRANTY OF MERCHANTABILITY (CAL. COM. CODE §§ 2314 AND 10212) 209. Plaintiffs re-allege and incorporate the preceding paragraphs as though fully set forth herein. 210. Plaintiffs bring this Count individually and on behalf of the Class against GM. 211. As set forth above, Plaintiffs and other Class members have suffered from a defect that existed in the Class Vehicles which began damaging the Class Vehicles and their fuel delivery systems upon the first use of the Class Vehicles. Plaintiffs and other Class members are seeking recovery for this manifested defect and any and all consequential damages stemming therefrom. 212. A warranty that the Class Vehicles were in merchantable condition and fit for the ordinary purpose for which the vehicles are used is implied by law pursuant to Cal. Com. Code §§ 2314 and 10212. “The core test of merchantability is fitness for the ordinary purpose for which such goods are used. Such fitness is shown if the product is in safe condition and substantially free from defects.” Isip v. Mercedes-Benz, USA, LLC, 155 Cal. App. 4th 19, 26 (2007); see also Mexia v. Rinker Coat Co., Inc., 174 Cal. App. 4th 1291 (2009). Thus, “where a car can provide safe, reliable transportation, it is generally considered merchantable.” Am. Suzuki Motor Corp. v. Superior Court, 37 Cal. App. 4th 1291 (1995). As demonstrated herein, the Class Vehicles are not substantially free from defects; the Class Vehicles contain an existing, manifested defect which is certain to continue to destroy the engines and other fuel system components and which renders the Class Vehicles unreliable. 213. GM is and was at all times a “merchant” with respect to motor vehicles under Cal. Com. Code §§ 2104(1) and 10103(c), and a “seller” of motor vehicles under § 2103(1)(d). 214. With respect to leases, GM is and was at all relevant times a “lessor” of motor vehicles under Cal. Com. Code § 10103(a)(16). 215. The Class Vehicles are and were at all relevant times “goods” within the meaning of Cal. Com. Code §§ 2105(1) and 10103(a)(8). 216. A warranty that the Class Vehicles were in merchantable condition and fit for the ordinary purpose for which the vehicles are used is implied by law pursuant to Cal. Com. Code §§ 2314 and 10212. 217. The Class Vehicles, when sold or leased and at all times thereafter, were not in merchantable condition and are not fit for the ordinary purpose for which vehicles are used. Specifically, the Class Vehicles are incompatible with the use of American diesel fuel (the fuel GM intended and expected Plaintiffs and other Class members to use) in that use of American diesel fuel (the only fuel reasonably available to Plaintiffs and other Class members) causes a breakdown of the CP4 fuel pump (a condition that GM knew would occur prior to its design and sale of the Class Vehicles), resulting in fuel contamination, ultimate and catastrophic failure of the Bosch CP4 Pump, and contamination and failure of other components in the Class Vehicle fuel delivery system. 218. It was reasonable to expect that Plaintiffs may use, consume, or be affected by the defective vehicles, regardless of contractual privity with GM. 219. The Class Vehicles contained an inherent defect that was substantially certain to result in malfunction during the useful life of the product. 220. Plaintiffs were and are third-party beneficiaries to the defendant manufacturer’s contracts with GM-certified/authorized retailers who sold the Class Vehicles to Plaintiffs.63 63 See In re Nexus 6P Prod. Liab. Litig., 293 F. Supp. 3d 888, 922 (N.D. Cal. 2018) (“[California law] allow[s] plaintiffs to bring implied warranty claims in the absence of privity if the plaintiff shows that he was a beneficiary to a contract between the defendant and a third party.”); id. (internal 221. In addition, or in the alternative, Plaintiffs directly relied upon Defendant GM’s advertising, as alleged above.64 222. GM was provided notice of these issues within a reasonable time of Plaintiffs’ knowledge of the non-conforming or defective nature of the Class Vehicles, by letters from Plaintiffs’ counsel, on behalf of Plaintiffs, to GM, complaints by Plaintiffs or Class members to GM either orally or in writing, complaints to GM dealerships, intermediate sellers, or repair facilities either orally or in writing, presentation of the vehicles for repair to dealerships or to intermediate sellers or repair facilities, countless consumer complaints to NHTSA regarding the defect that is the subject of this Complaint, and/or by the allegations contained in this Complaint. 223. As a direct and proximate result of GM’s breach of the implied warranty of merchantability, Plaintiffs and other Class members have been damaged in an amount to be proven at trial. COUNT VI VIOLATION OF THE MAGNUSON-MOSS WARRANTY ACT, (15 U.S.C. § 2301, ET SEQ.) 224. Plaintiffs re-allege and incorporate the preceding Paragraphs as though fully set forth herein. 225. Plaintiffs bring this Count individually and on behalf of the Class against GM. 226. As set forth above, Plaintiffs and other Class members have suffered from a defect that existed in the Class Vehicles which began damaging the Class Vehicles and their fuel delivery citations omitted) (“Because third party beneficiary status is a matter of contract interpretation, a person seeking to enforce a contract as a third party beneficiary must plead a contract which was made expressly for his [or her] benefit and one in which it clearly appears that he [or she] was a beneficiary.”); In re MyFord Touch Consumer Litig., 46 F. Supp. 3d 936, 983 (N.D. Cal. 2014) (internal citations omitted) (“[T]here is an exception to the privity requirement that applies when a plaintiff is the intended beneficiary of implied warranties in agreements linking a retailer and a manufacturer”). 64 See Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1023 (9th Cir. 2008) (holding that, for purposes of a breach of implied warranty claim, a Plaintiff need not stand in vertical contractual privity with the defendant when the plaintiff relies on written labels or advertisements of a manufacturer). systems upon the first use of the Class Vehicles. Plaintiffs and other Class members are seeking recovery for this manifested defect and any and all consequential damages stemming therefrom. 227. This Court has jurisdiction to decide claims brought under 15 U.S.C. § 2301 by virtue of 28 U.S.C. § 1332(a)–(d). 228. The Class Vehicles manufactured and sold by GM are “consumer products” within the meaning of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301(1). 229. Plaintiffs and other Class members are “consumers” within the meaning of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301(3). They are consumers because they are persons entitled under applicable state law to enforce against the warrantors the obligations of their implied warranties. 230. GM was a “supplier” and “warrantor” within the meaning of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301(4)–(5). 231. GM provided Plaintiffs and other Class members with an implied warranty of merchantability in connection with the purchase or lease of the Class Vehicles, that is an “implied warranty” within the meaning of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301(7). As a part of the implied warranty of merchantability, GM warranted that the Class Vehicles were fit for their ordinary purpose as motor vehicles, would pass without objection in the trade as designed, manufactured, and marketed, and were adequately contained, packaged, and labeled. 232. GM breached its implied warranties, as described in more detail above, and is therefore liable to Plaintiffs and other Class members pursuant to 15 U.S.C. § 2310(d)(1). Without limitation, the Class Vehicles were equipped with defective CP4 fuel pumps that are incompatible with American diesel fuel (which fuel is intended by GM to be used in the Class Vehicles, expected by Plaintiffs and other Class members to be used in Class Vehicles, and is the only fuel reasonably available in order for Plaintiffs and other Class members to use the Class Vehicles for their intended or ordinary purpose), which, when used with the intended American diesel fuel, break down, resulting in fuel contamination, complete and catastrophic failure of the Bosch CP4 Pump, and contamination and catastrophic and costly failure of the Class Vehicles’ fuel delivery systems. 233. In its capacity as a warrantor, GM had knowledge of the inherent defects in the Class Vehicles. Any effort by GM to limit the implied warranties in a manner that would exclude coverage of the Class Vehicles is unconscionable, and any such effort to disclaim, or otherwise limit, liability for the Class Vehicles is null and void. 234. Any limitations GM might seek to impose on their warranties are procedurally unconscionable. There was unequal bargaining power between GM and Plaintiffs and the other Class members, as, at the time of purchase and lease, Plaintiffs and the other Class members had no other options for purchasing warranty coverage other than directly from GM. 235. Any limitations GM might seek to impose on its warranties are substantively unconscionable. GM knew that the Class Vehicles were defective and would continue to fail during and after any purported expiration of warranties. 236. Despite knowing that failure was expected to occur with the intended use of American diesel fuel, GM failed to disclose these defects to Plaintiffs and the other Class members. Therefore, any enforcement of the durational limitations on those warranties is harsh and shocks the conscience, and moreover violates public policy. 237. Plaintiffs and each of the other Class members have had sufficient direct dealings with either GM or its agents (i.e., dealerships) to establish privity of contract between GM, on the one hand, and Plaintiffs and each of the Class members, on the other hand. Nevertheless, privity is not required here because Plaintiffs and each of the other Class members are intended third-party beneficiaries of contracts between GM and its dealers, and specifically, of GM’s implied warranties. The dealers were not intended to be the ultimate consumers of the Class Vehicles and have no rights under the warranty agreements provided with the Class Vehicles; the warranty agreements were designed for and intended to benefit consumers. 238. Pursuant to 15 U.S.C. § 2310(e), Plaintiffs are entitled to bring this class action and are not required to give GM notice and an opportunity to cure until such time as the Court determines the representative capacity of Plaintiffs pursuant to Rule 23 of the Federal Rules of Civil Procedure. 239. Nonetheless, GM was provided notice of the defective and non-conforming nature of the Class Vehicles, as described herein, within a reasonable time of Plaintiffs’ knowledge of the non- conforming and defective nature of the Class Vehicles, by letters from Plaintiffs’ counsel, on behalf of Plaintiffs, to GM, complaints by Plaintiffs or Class members to GM either orally or in writing, complaints to dealerships, intermediate sellers, or repair facilities either orally or in writing, presentation of the vehicles for repair to dealerships, intermediate sellers or repair facilities, and by the allegations contained in this Complaint. 240. The amount in controversy of Plaintiffs’ individual claims meets or exceeds the sum of $25.00. The amount in controversy of this action exceeds the sum of $50,000.00 exclusive of interest and costs, computed on the basis of all claims to be determined in this lawsuit. Plaintiffs, individually and on behalf of other Class members, seek all damages permitted by law, including diminution in value of their vehicles, in an amount to be proven at trial. In addition, pursuant to 15 U.S.C. § 2310(d)(2), Plaintiffs and the other Class members are entitled to recover a sum equal to the aggregate amount of costs and expenses (including attorneys’ fees based on actual time expended) determined by the Court to have reasonably been incurred by Plaintiffs and the other Class members in connection with the commencement and prosecution of this action. PRAYER FOR RELIEF WHEREFORE, Plaintiffs, individually and on behalf of members of the Class, respectfully request that the Court enter judgment in their favor and against GM as follows: A. Certification of the proposed Class, including appointment of Plaintiffs’ counsel as Class Counsel; B. An order temporarily and permanently enjoining GM from continuing unlawful, deceptive, fraudulent, and unfair business practices alleged in this Complaint; C. Injunctive relief in the form of a recall, free replacement, or buy-back program; D. An order establishing GM as a constructive trustee over profits wrongfully obtained, plus interest; E. Costs, restitution, damages, including punitive damages, exemplary damages and treble damages, and disgorgement in an amount to be determined at trial; F. An order requiring GM to pay both pre- and post-judgment interest on any amounts awarded; G. An award of costs and attorney’s fees; and H. Such other or further relief as may be appropriate. DEMAND FOR JURY TRIAL Plaintiffs hereby demand a jury trial for all claims so triable. Dated: November 20, 2018 Respectfully submitted, HAGENS BERMAN SOBOL SHAPIRO LLP By /s/ Jeff D. Friedman Jeff D. Friedman (SBN 173886) 715 Hearst Avenue, Suite 202 Berkeley, CA 94710 Telephone: (510) 725-3000 Facsimile: (510) 725-3001 [email protected] Steve W. Berman (pro hac vice to be filed) Sean R. Matt (pro hac vice to be filed) HAGENS BERMAN SOBOL SHAPIRO LLP 1301 Second Avenue, Suite 2000 Seattle, WA 98101 Telephone: (206) 623-7292 Facsimile: (206) 623-0594 [email protected] [email protected] -and- Robert C. Hilliard, Esq. Texas State Bar No. 09677700 Federal I.D. No. 5912 HILLIARD, MARTINEZ, GONZALES LLP65 E-mail: [email protected] 719 S. Shoreline Blvd. Corpus Christi, Texas 78401 Telephone: (361) 882-1612 Facsimile: (361) 882-3015 (pro hac vice motion forthcoming) Rudy Gonzales, Jr. Texas State Bar No. 08121700 Federal I.D. No. 1896 Email: [email protected] John B. Martinez Texas State Bar No. 24010212 Federal I.D. No. 25316 Email: [email protected] 65 Following the filing of this Complaint, Robert C. Hilliard, Esq., of the law firm of Hilliard Martinez Gonzales LLP, 719 S. Shoreline Boulevard, Corpus Christi, Texas 78401, 361-882-1612, Texas State Bar No. 09677700, Federal I.D. No. 5912, [email protected], together with other attorneys from such law firm, intends to seek admission pro hac vice in this action. Marion Reilly Texas State Bar No. 24079195 Federal I.D. No. 1357491 Email: [email protected] Bradford P. Klager State Bar No. 24012969 Federal I.D. No. 24435 Email: [email protected] 719 S. Shoreline Blvd. Corpus Christi, Texas 78401 Phone: (361) 882-1612 Fax: (361) 882-3015 -and- T. Michael Morgan, Esq. FBN: 0062229 E-Mail: [email protected] Secondary Email: [email protected] MORGAN & MORGAN, P.A. 20 North Orange Ave., Ste. 1600 P.O. Box 4979 Orlando, FL 32801 Tel.: (407) 418-2081 Fax: (407) 245-3392 Attorneys for Plaintiffs

products liability and mass tort

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS MICHAEL BAHNMAIER, individually and on behalf of all others similarly situated, Plaintiff, Case No. CLASS ACTION COMPLAINT JURY TRIAL DEMANDED v. WICHITA STATE UNIVERSITY, Defendant. COMPLAINT Plaintiff Michael Bahnmaier (“Plaintiff”), individually and on behalf of all other similarly situated persons, by and through their undersigned attorneys, files this Class Action Complaint against Wichita State University (“WSU” or “Defendant”), and alleges the following based on personal knowledge, the investigation of counsel, and information and belief: NATURE OF THE ACTION 1. With this action, Plaintiff seeks to hold WSU responsible for the harm it caused him and the thousands of similarly situated persons in the massive (and preventable) data breach WSU announced in March 2020. 2. WSU is one of the largest public research universities in the state of Kansas. WSU offers more than 60 undergraduate degree programs in more than 200 areas of study in six colleges. The Graduate School offers 44 master’s degrees in more than 100 areas and also offers several doctoral degrees. WSU operates a network of campuses throughout Kansas, including a main campus in Wichita, six satellite campuses, and a multitude of online degree programs. 1 3. Plaintiff and the other members of the Class (as defined below) are current and former students and employees of WSU who were required to provide Defendant with certain personal information with the understanding that WSU would keep this information confidential and secure. Plaintiff and the Class trusted WSU to protect their personal information. Yet this trust was misplaced. 4. Defendant announced that in December 2019, it learned that “an unauthorized person gained access” to a “computer server that WSU used to operate various student and employee web portals” between December 3, 2019 and December 5, 2019 (the “Data Breach” or the “Breach”). Defendant explained that by January 13, 2020, WSU determined that in the Data Breach, the hacker gained unauthorized access to confidential personally identifiable information of Plaintiff and the Class, including their names, email addresses, dates of birth, and Social Security numbers (collectively, the “PII” or the “Personal Information”). Defendant waited until March 6, 2020 to advise Plaintiff and the Class of this Breach. 5. This class action seeks to redress WSU’s negligence that caused cyber criminals and identity thieves to access Plaintiff’s and the Class’s Personal Information. Because of the Breach, Plaintiff and the Class have suffered damages and are at imminent risk of serious and crippling identity theft. Plaintiff and Class members have incurred and will continue to incur damages in the form of, among other things, lost time and expenses related to mitigating the harms caused by the Data Breach, increased risk of harm, diminished value of their PII, loss of privacy, and/or additional damages as described below. 6. Accordingly, Plaintiff brings this action individually and on behalf of the Class, seeking compensatory damages, restitution, and injunctive and declaratory relief, along with the reasonable attorney fees, costs, and expenses incurred in bringing this action. 2 THE PARTIES 7. Plaintiff Michael Bahnmaier is a citizen of Kansas and is a former student of WSU. 8. Defendant Wichita State University is a public research university based in Wichita, Kansas. WSU had more than 16,000 students enrolled for the fall 2019 semester. JURISDICTION AND VENUE 9. This Court has subject matter jurisdiction under 28 U.S.C. §1332(d)(2), because the Class defined herein contains more than 100 persons, the aggregate amount in controversy exceeds $5,000,000, and many members of the Class are citizens of states different from Defendant.1 10. This Court has personal jurisdiction over Defendant because Defendant has transacted business in this District and certain transactions and occurrences alleged occurred in this District. FACTUAL ALLEGATIONS 11. Plaintiff incorporates by reference all allegations of the foregoing as though fully alleged here. A. The Data Breach 12. On March 6, 2020, WSU began mailing letters to current and former students and employees informing them that their information may have been compromised in a data breach of WSU’s computer server, which the company had discovered in December 2019. 1 Indeed, WSU has notified the attorney generals of several states that the PII of citizens of those states was compromised in the Data Breach. For example, in WSU’s letter to the Office of the Attorney General of Iowa, it explained that the Breach implicated the PII of 1,762 Iowans. See https://www.iowaattorneygeneral.gov/media/cms/3102020_Wichita_State_University_79C1A33 9D590C.pdf. 3 13. The letter that Plaintiff Bahnmaier received, attached as Exhibit A, stated the following: The investigation determined that an unauthorized person gained access to this computer server between December 3, 2019 and December 5, 2019. WSU performed a comprehensive review of the server and, on January 13, 2020, determined that information stored in a historical database on the server contained your name, email address, date of birth, and Social Security number. 14. The letter acknowledged that this would cause inconvenience to affected individuals and that financial harm would likely occur, stating: We encourage you to remain vigilant against incidents of identity theft and fraud, to review your account statements, and to monitor your credit reports for suspicious activity. (Emphasis added). 15. The letter further acknowledged that WSU needed to improve its security protocols, And, to help prevent a similar incident in the future, we are taking steps to enhance our existing security protocols and re-educating our staff for awareness on these types of incidents. 16. While the letter emphasized that WSU would be “taking steps to enhance our existing security protocols and re-educating our staff for awareness on these types of incidents,” WSU’s inadequate security protocols and ill-prepared staff had already caused a data breach earlier that same year. Indeed, in January 2019, cybercriminals spoofed the university’s payroll system by sending phishing emails to WSU employees, which allowed the scammers to access bank account numbers, student records and other personal information, according to university officials.2 It wasn’t until a number of employees did not receive their paychecks that WSU 2 See Suzanne Perez Thomas, WSU Employees Fall Victim to Phishing Scam, Lose Paychecks, THE WICHITA EAGLE (Jan. 3, 2019), https://www.kansas.com/new/local/crime/ article223873805.html. 4 discovered the data breach.3 WSU was therefore put on a heightened notice that its data systems were both being targeted for attack as well as vulnerable to attack. 17. In light of WSU’s data breach just months earlier, and in light of the fact that WSU maintained unencrypted PII on its unsecured server, it is obvious that WSU negligently failed to take the necessary precautions required to safeguard and protect Plaintiff’s and the other Class members’ PII from unauthorized disclosure. Defendant’s actions represent a flagrant disregard of its employees’ and students’ rights, both as to privacy and property. 18. Had WSU taken the well-known risk of cyber intrusion seriously and adequately tested, audited, and invested in its systems and adequately trained its staff to vigilantly detect vulnerabilities and intrusions, the Data Breach would not have occurred. 19. After all, data breaches are preventable.4 B. Cyber Criminals Will Use Plaintiff’s and Class Members’ Personal Information to Defraud Them 20. Personal information is of great value to hackers and cyber criminals, and the PII stolen in the Data Breach can and will be used in a variety of sordid ways for criminals to exploit Plaintiff and the Class members and to profit off their misfortune. 21. Each year, identity theft causes tens of billions of dollars of losses to victims in the United States.5 For example, with the PII stolen in the Data Breach, including Social Security numbers, identity thieves can open financial accounts, apply for credit, file fraudulent tax returns, 3 See Stu Sjouwerman, Wichita State University Employees Get Fooled into Losing their Paychecks, CYBERHEIST NEWS (Jan. 19, 2019), https://blog.knowbe4.com/cyberheistnews-vol-9- 4-it-only-takes-1-phish-wichita-state-university-employees-get-fooled-into-losing-their- paychecks. 4 See Lucy L. Thomson, “Despite the Alarming Trends, Data Breaches Are Preventable,” in DATA BREACH AND ENCRYPTION HANDBOOK (Lucy Thompson, ed., 2012). 5 “Facts + Statistics: Identity Theft and Cybercrime,” Insurance Info. Inst., https://www.iii.org/fact- statistic/facts-statistics-identity-theft-and-cybercrime (discussing Javelin Strategy & Research’s report “2018 Identity Fraud: Fraud Enters a New Era of Complexity”). 5 commit crimes, create false identification and sell it to other criminals or undocumented immigrants, steal government benefits, give breach victims’ names to police during arrests, and as many other harmful uses as there are identity thieves.6 It hardly needs to be mentioned, but these criminal activities will result in devastating financial and personal losses to Plaintiff and the Class members. 22. This is not just speculative. As the FTC has reported, if hackers get access to PII, they will use it.7 23. Hackers may not use the information right away. According to the U.S. Government Accountability Office, which conducted a study regarding data breaches: [I]n some cases, stolen data may be held for up to a year or more before being used to commit identity theft. Further, once stolen data have been sold or posted on the Web, fraudulent use of that information may continue for years. As a result, studies that attempt to measure the harm resulting from data breaches cannot necessarily rule out all future harm.8 24. PII is such a valuable commodity to identity thieves that once it has been compromised, criminals often trade the information on the cyber black-market for years. 25. Identity theft victims like Plaintiff and other Class members must spend countless hours and large amounts of money repairing the impact to their credit.9 26. Defendant’s offer of one year of identity monitoring to Plaintiff and the Class, although a concession that the Data Breach placed Plaintiff and the Class at great risk of future 6 See, e.g., Christine DiGangi, 5 Ways an Identity Thief Can Use Your Social Security Number, Nov. 2, 2017, https://blog.credit.com/2017/11/5-things-an-identity-thief-can-do-with-your-social- security-number-108597/. 7 Ari Lazarus, How fast will identity thieves use stolen info?, FED. TRADE COMM’N (May 24, 2017), https://www.consumer.ftc.gov/blog/2017/05/how-fast-will-identity-thieves-use-stolen-info. 8 Data Breaches Are Frequent, but Evidence of Resulting Identity Theft Is Limited; However, the Full Extent Is Unknown, GAO, July 5, 2007, https://www.gao.gov/assets/270/262904.html (emphasis added). 9 “Guide for Assisting Identity Theft Victims,” Federal Trade Commission, 4 (Sept. 2013), http://www.consumer.ftc.gov/articles/pdf-0119-guide-assisting-id-theft-victims.pdf. 6 harm and that Defendant’s systems were inadequate and breached, is woefully inadequate. The full scope of the harm has yet to be realized. There may be a time lag between when harm occurs versus when it is discovered, and also between when PII is stolen and when it is used. Indeed, the type of personal information taken in this Breach has a long timeframe for use. For instance, the person who wrongfully obtained a victim’s Social Security number, full legal name, and date of birth has information that is either permanent or not easily changed. Furthermore, identity monitoring only alerts someone to the fact that they have already been the victim of identity theft (i.e., fraudulent acquisition and use of another person’s PII)—it does not prevent identity theft.10 27. As a direct and proximate result of the Data Breach, Plaintiff and the Class have been placed at an imminent, immediate, and continuing increased risk of harm from continued fraud and identity theft. Plaintiff and the Class must now take the time and effort to mitigate the impact of the Data Breach on their everyday lives, including placing “freezes” and “alerts” with credit reporting agencies, contacting their financial institutions, alerting tax authorities to the potential for fraud, closing or modifying financial accounts, and closely reviewing and monitoring bank accounts, and credit reports for unauthorized activity for years to come. 28. Plaintiff and the Class have suffered, and continue to suffer, actual harms for which they are entitled to compensation, including: a. Trespass, damage to, and theft of their personal property including PII; b. Improper disclosure of their PII; 10 See, e.g., Kayleigh Kulp, Credit Monitoring Services May Not Be Worth the Cost, Nov. 30, 2017, https://www.cnbc.com/2017/11/29/credit-monitoring-services-may-not-be-worth-the- cost.html. 7 c. The imminent and certainly impending injury flowing from potential fraud and identity theft posed by their PII being placed in the hands of criminals and having been already misused; d. Damages flowing from Defendant untimely and inadequate notification of the data breach, including lost opportunity to take steps to protect themselves; e. Loss of privacy suffered as a result of the Data Breach; f. Ascertainable losses in the form of out-of-pocket expenses and the value of their time reasonably expended to remedy or mitigate the effects of the data breach; and g. Ascertainable losses in the form of deprivation of the value of customers’ personal information for which there is a well-established and quantifiable national and international market. 29. Below is a chart that shows the kinds of expenses and disruptions that victims of identity theft experience11: 11 Jason Steele, Credit Card and ID Theft Statistics, CREDITCARDS.COM (Oct. 24, 2017), https://www.creditcards.com/credit-card-news/credit-card-security-id-theft-fraud-statistics- 1276.php. 8 30. Moreover, Plaintiff and the Class have an interest in ensuring that their information, which remains in the possession of Defendant, is protected from further breaches by the implementation of security measures and safeguards. 31. Defendant itself acknowledged the harm caused by the Data Breach because it offered Plaintiff and Class members twelve months of identity theft repair and monitoring services. Twelve months of identity theft and repair and monitoring is, however, woefully inadequate to protect Plaintiff and Class members from a lifetime of identity theft risk and does nothing to reimburse Plaintiff and Class members for the injuries they have already suffered. 9 C. Defendant was Aware of the Risk of Cyber-Attacks and Could Have Prevented the Data Breach 32. Data security breaches have dominated the headlines for the last two decades, and it doesn’t take an IT industry expert to know that major institutions like WSU are at risk. 33. Universities in particular, with their troves of confidential information from young people, have been targeted by hackers for years.12 Schools large and small have been targeted with increasing frequency. UC Berkeley,13 Oberlin College, Grinnell College, Hamilton College, Washington State University, Oregon State University, University of Connecticut,14 Pennsylvania State University, University of Virginia, Johns Hopkins University,15 Georgia Institute of Technology,16 and more have been victims of high-profile and extremely damaging data breaches in just the last four years. 34. WSU acknowledges that it is a likely target for a data breach given the amount of personal and confidential information it collects. WSU’s Security Awareness page states, in relevant part: PURPOSE You’ve seen it on TV and heard it on the news. While there are many processes and applications in the background regarding security at WSU, it is vital that you are aware of those things that can assist Wichita State University in keeping data, information, and privacy intact. *** 12Henry Gass, UC Berkeley Breach: Universities Increasingly Targeted in Cyberattacks, CHRISTIAN SCI. MONITOR (Feb. 29, 2016), https://www.csmonitor.com/USA/Education /2016/0229/UC-Berkeley-breach-Universities-increasingly-targeted-in-cyberattacks. 13Id. 14PULSEWAY, University Data Breaches in 2019 That Are Hard To Ignore (June 28, 2019), https://www.pulseway.com/blog/university-data-breaches-in-2019-that-are-hard-to-ignore. 15Kieth Wagstaff & Chiara A. Sottile, Cyberattack 101: Why Hackers Are Going After Universities, NBCNEWS (Sept. 20, 2015), https://www.nbcnews.com/tech/security/universities- become-targets-hackers-n429821. 16Bruce Sussman, ‘Tech’ in the Name, But Breached Twice in a Year, SECUREWORLDEXPO.COM (Apr. 3, 2019), https://www.secureworldexpo.com/industry-news/georgia-tech-data-breach. 10 INFORMATION SECURITY EXPLAINED Information security involves the preservation of:  Confidentiality - Ensuring information is disclosed to, and reviewed exclusively by intended recipients and/or authorized individuals  Integrity - Ensuring the accuracy and completeness of information and processing methods  Availability - Ensuring that information and associated assets are accessible, whenever necessary, by authorized individuals LAWS AND ACTS TO FOLLOW In many cases, the responsibility of data security is the LAW. WSU must consider many Federal and State laws which are intended to make certain that certain data does not fall into the wrong hands.  Health Insurance Portability and Accountability Act (HIPAA)  USA Patriot Act  Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM)  Higher Education Opportunity Act of 2008  Family Educational Rights and Privacy Act of 1974 (FERPA or the Buckley Amendment)  Digital Millennium Copyright Act (DMCA) CONSEQUENCES OF A BREACH OF SECURITY Should there be a breach of security, WSU could be subject to many costly consequences. Because we are a state educational institution of Kansas, these consequences can be very costly. The possible consequences of insufficient security are:  Loss of productivity  Identity theft  Equipment theft  Service interruption (e.g., email and Enterprise Resource Planning applications)  Embarrassing media coverage  Compromised confidence  Legal penalties VITAL INFORMATION Your effectiveness in securing Wichita State University’s information begins with an understanding of what is vitally important. Here are some examples of data that needs to be protected:  Credit Card Information  Social Security Numbers 11  Addresses  Private Documents  Payroll Information  Intellectual Property  Academic Transcripts *** UNAUTHORIZED SYSTEMS ACCESS Unauthorized systems access occurs when individuals maliciously obtain unauthorized access to computers, applications, confidential information, and other valuable assets. Not all guilty parties are unknown…….some can be your co- workers. Unauthorized systems access can result in theft and damage of vital information [Emphasis added.]17 35. In fact, WSU had specific knowledge that it was at risk of a data breach due to its inadequate security measures. Indeed, as discussed infra, WSU’s sub-par security protocols and ill-prepared staff had already caused a data breach just months before the Data Breach that compromised Plaintiff’s PII. Specifically, in January 2019, cybercriminals spoofed the university’s payroll system by sending phishing emails to WSU employees, which allowed the scammers to access bank account numbers, student records and other personal information, according to university officials.18 36. Among other things, WSU failed to meet the minimum standards of any of the following frameworks: the NIST Cybersecurity Framework, NIST Special Publications 800-53, 53A, or 800-171; the Federal Risk and Authorization Management Program (FEDRAMP); or the Center for Internet Security’s Critical Security Controls (CIS CSC), which are well known standards in reasonable cybersecurity readiness. 17 See https://www.wichita.edu/services/its/security_awareness.php (last visited May 1, 2020). 18 See Suzanne Perez Thomas, WSU Employees Fall Victim to Phishing Scam, Lose Paychecks, THE WICHITA EAGLE (Jan. 3, 2019), https://www.kansas.com/new/local/crime/article223873805. html. 12 37. In addition, WSU failed to comply with Kan. Stat. § 50-6139b(b) (the “Kansas Information Security Statute”), which requires that holders of personal information must: (1) Implement and maintain reasonable procedures and practices appropriate to the nature of the information, and exercise reasonable care to protect the personal information from unauthorized access, use, modification or disclosure. If federal or state law or regulation governs the procedures and practices of the holder of personal information for such protection of personal information, then compliance with such federal or state law or regulation shall be deemed compliance with this paragraph and failure to comply with such federal or state law or regulation shall be prima facie evidence of a violation of this paragraph; and (2) unless otherwise required by federal law or regulation, take reasonable steps to destroy or arrange for the destruction of any records within such holder’s custody or control containing any person’s personal information when such holder no longer intends to maintain or possess such records. Such destruction shall be by shredding, erasing or otherwise modifying the personal identifying information in the records to make it unreadable or undecipherable through any means.19 38. WSU failed to implement reasonable industry standards necessary to prevent a data breach, including failing to adhere to the Kansas Information Security Statute. Among other things, if unauthorized users were able to access people’s names, email addresses, dates of birth, and Social Security numbers from WSU’s servers, it is clear that WSU was not maintaining such information in an encrypted format. Such industry standard encryption would have made Plaintiff’s and Class members’ personal information indecipherable. 39. Because of its failure to create, maintain, and/or comply with an adequate cybersecurity program that incorporated physical, technical, and administrative safeguards for the protection of personal information and reasonably conformed to an industry recognized cybersecurity framework, WSU was unable to ensure the protection of information, protect against 19 Kan. Stat. § 50-6139b(d) provides that: “Each violation of this section shall be an unconscionable act or practice in violation of K.S.A. 50-627, and amendments thereto. Each record that is not destroyed in compliance with subsection (b)(2) shall constitute a separate unconscionable act within the meaning of K.S.A. 50-627, and amendments thereto.” 13 obvious and readily foreseeable threats to information security and confidentiality, or protect against unauthorized access of the PII. 40. In requesting that Plaintiff and the Class provide WSU with their most sensitive Personal Information, WSU both explicitly and implicitly represented to Plaintiff and the Class that it understood the importance of protecting their Personal Information and that it would do so as a part of their agreement. WSU represented to Plaintiff and the Class through its stated privacy policies, records retention policies, and its security practices that it maintained robust procedures designed to carefully protect the PII with which it was entrusted. 41. WSU’s Release of Student Information Policy (Privacy Law) provides the following, in relevant part: The Family Educational Rights and Privacy Act of 1974 (FERPA), as amended, is a federal law that sets forth requirements pertaining to the disclosure of, and access to, education records maintained by Wichita State University. Wichita State University accords all rights under the law to students. Those rights are: 1. The right to inspect and review the student’s education records; 2. The right to request amendment of the student’s education records to ensure that they are not inaccurate, misleading or otherwise in violation of the student’s privacy or other rights; 3. The right to consent to disclosures of personally identifiable information contained in the student’s education records, except to the extent that FERPA authorizes disclosure without consent; and 4. The right to file with the U.S. Department of Education a complaint concerning alleged failures by Wichita State University to comply with the requirements of FERPA. No one outside the institution shall have access to, nor will the institution disclose any information from, students’ education records without the prior written consent of the student with the exception of disclosure to: 1. Personnel within the institution who have a legitimate educational interest, 2. Persons or organizations providing students financial aid, 3. Accrediting agencies carrying out an accreditation function, 4. Persons in compliance with a judicial order, 14 5. Persons in an emergency in order to protect the health or safety of the student or other persons, or 6. Other persons or entities to whom disclosure is permitted under FERPA. *** Disclosure of “Personally Identifiable” and “Directory Information” The university shall obtain the written consent of the student before disclosing personally identifiable information from education records, other than directory information, except as otherwise provided in this policy. [Emphasis added]20 42. WSU’s Policies and Procedures and Retention of University Records provides the following, in relevant part: Preamble It is necessary and appropriate that Wichita State University requires that different types of records be retained for specific periods of time and that it designate official repositories for maintenance and retention of records. University records must be managed in accordance with this policy. Policy The University is committed to effective record retention to meet legal standards, optimize the use of space, ensure security of confidential information, minimize the cost of record retention, preserve institutional history and ensure that outdated and useless records are destroyed. *** Procedures Responsibilities for Managing Official University Records Departments that maintain any University Records are the Official Repository of such records and each department head or designee must: 1. Implement the department's record management practices consistent with this policy. 2. Educate staff within the department in understanding sound record management practices, including a system for efficient retrieval of Active Records. 3. Transfer Inactive Records that may have historic value to the University Archives. 20 See http://catalog.wichita.edu/undergraduate/university-policies-procedures/release-student- information-policy-privacy-law/ (last visited April 27, 2020). 15 4. Ensure that access to confidential files is restricted. Long-term restrictions on access to selected Archival Records should be negotiated at the time of their transfer to the University Archives. 5. Destroy Inactive Records that have no historic value upon passage of the applicable retention period. If in doubt as to the potential historic value, consult with the Curator of Special Collections and University Archivist (hereinafter University Archivist) before destroying the Inactive Records. *** Inactive Records If it has been determined that University Records are Inactive Records, and therefore, not of permanent historic value, they, consistent with K.S.A. 45-403, should be destroyed in one of the following ways: 1. Recycle non-confidential paper records; or 2. Shred or otherwise render unreadable confidential records; or 3. Erase or destroy Electronic Records (periodically review records generated and maintained in University information systems or equipment to ensure that these requirements are met). [Emphasis added.]21 43. WSU’s Privacy of Financial Information policy further provides, in relevant part: Preamble The “Safeguards Rule” promulgated by the Federal Trade Commission (FTC) under the Gramm-Leach-Bliley Act (“GLBA”) imposes specific standards and obligations regarding the privacy of certain personally identifiable financial information. Wichita State University recognizes its obligation to protect the security, confidentiality and integrity of such information and this policy is intended to implement FTC requirements in this regard. Policy 1. Wichita State University will make all reasonable efforts to achieve and maintain compliance with FTC standards and obligations regarding the privacy of personally identifiable financial information of its customers. 2. Wichita State University will develop, implement and maintain a comprehensive information security program. 3. Wichita State University's comprehensive information security program shall provide for the appointment of an information security plan coordinator; risk assessments; training programs for employees; oversight of service providers; and periodic adjustments of the program. 21 See https://www.wichita.edu/about/policy/ch_20/ch20_23.php (last visited April 27, 2020). 16 [Emphasis added.]22 44. In addition, WSU’s Website Privacy Policy states, in relevant part: Security We take precautions to protect your information. When you submit sensitive information via the website, your information is protected both online and offline. Wherever we collect sensitive information (such as credit card data), that information is encrypted and transmitted to us in a secure way. You can verify this by looking for a lock icon in the address bar and looking for "https" at the beginning of the address of the Web page. While we use encryption to protect sensitive information transmitted online, we also protect your information offline. Only employees who need the information to perform a specific job (for example, billing or customer service) are granted access to personally identifiable information. The computers/servers in which we store personally identifiable information are kept in a secure environment. [Emphasis added.]23 45. Contrary to WSU’s stated policies and procedures regarding securing the sensitive information it collects, WSU failed to protect the confidential information of Plaintiff and the Class and instead allowed unauthorized hackers to access the unencrypted and insufficiently secured PII of Plaintiff and Class members. 46. It was possible for WSU to keep the Personal Information of Plaintiff and the Class confidential. 47. Data breaches are preventable.24 As Lucy Thompson wrote in the DATA BREACH AND ENCRYPTION HANDBOOK, “In almost all cases, the data breaches that occurred could have been prevented by proper planning and the correct design and implementation of appropriate 22 See https://www.wichita.edu/about/policy/ch_20/ch20_18.php (last visited April 23, 2020). 23 See https://www.wichita.edu/about/privacy.php (last visited April 27, 2020). 24 Lucy L. Thomson, “Despite the Alarming Trends, Data Breaches Are Preventable,” in DATA BREACH AND ENCRYPTION HANDBOOK (Lucy Thompson, ed., 2012). 17 security solutions.”25 She added that “[o]rganizations that collect, use, store, and share sensitive personal data must accept responsibility for protecting the information and ensuring that it is not compromised . . . .”26 48. “Most of the reported data breaches are a result of lax security and the failure to create or enforce appropriate security policies, rules, and procedures. . . . Appropriate information security controls, including encryption, must be implemented and enforced in a rigorous and disciplined manner so that a data breach never occurs.”27 49. In a Data Breach like this, many failures committed by WSU laid the groundwork for the success (from the cyber criminal’s view) of the Breach. 50. For example, the information on WSU’s systems and servers lacked the necessary encryption to maintain the confidentiality of the sensitive Personal Information Plaintiff and the Class entrusted to WSU. 51. WSU also failed to adequately test and audit its systems and servers, failed to adequately supervise and monitor its systems and servers, failed to adequately train WSU staff and personnel, and failed to design and enforce appropriate industry-standard security policies, rules, and procedures. 52. WSU additionally had far too much information held in unencrypted documents and/or accounts. No sophisticated business or institution in the 21st century should permit the— unencrypted—PII of hundreds of thousands of current and former students and employees to be stored on an inadequately secured server. Had WSU exercised reasonable care, it would have (at 25Id. at 17. 26Id. at 28. 27 Id. 18 minimum) disposed of all former students’ and employee’s information as soon as it was no longer needed, and until then it should have stored such PII in an encrypted system. 53. To the extent the Breach was caused by phishing attacks, these are readily preventable through industry standard email filtering software and regular awareness training for staff, and the harm from phishing-related breaches can be minimized through proper network segmentation and encryption of all confidential information. 54. Had WSU exercised reasonable care, the Data Breach would not have happened and Plaintiff and the Class would not have suffered the injuries they are continuing to face. D. WSU’S Response to the Data Breach is Inadequate to Protect Plaintiff and the Class 55. Had WSU exercised reasonable care, the Data Breach would not have happened and Plaintiff and the Class would not have suffered the injuries they are continuing to face. 56. WSU failed to inform Plaintiff and Class members of the Data Breach in time for them to protect themselves from identity theft. 57. The notice letters sent to Plaintiff and Class members stated that WSU discovered the Data Breach in December 2019. Yet, WSU did not start notifying affected former and current students and employees until March 2020—three months after learning of the Data Breach. 58. If WSU had investigated the Data Breach more diligently and reported it sooner, the damage could have been mitigated. 59. Further, the 12-months of identity theft monitoring is seriously inadequate for the risks to which WSU has exposed its former and current students and employees. WSU has also not offered to compensate breach victims for their lost time devoted to responding to the Breach, nor has WSU offered to provide paid time-off for its employees who are using their personal time to respond to the Data Breach. 19 E. Plaintiff’s Experience 60. To participate in classes as a student at WSU, Plaintiff was required to provide his PII to Defendant. 61. Plaintiff received a letter from WSU, dated March 6, 2020, informing him that his name, email address, date of birth, and Social Security number were compromised in the Data Breach. See Exhibit A. 62. Because of the Data Breach, Plaintiff’s PII is now in the hands of cyber criminals. He, and all Breach Victims like him, are now imminently at risk of crippling identity theft and 63. Since the Breach period, Plaintiff has experienced a notable increase in spam/phishing emails that he believes are related to the Data Breach. 64. This has been distressing to him and has caused him anxiety. He feels that any day his identity may be stolen and has spent time investigating and responding to the Data Breach. 65. In the weeks following the March 6 letter from WSU, Plaintiff has spent considerable time monitoring his credit and reviewing his account statements. 66. Because the Data Breach was an intentional hack by cyber criminals seeking information of value that they could exploit, Plaintiff is at imminent risk of severe identity theft and exploitation. 67. Plaintiff has also suffered injury directly and proximately caused by the Data Breach, including: (a) theft of Plaintiff’s valuable PII; (b) costs associated with time spent and the loss of productivity from taking time to address and attempt to ameliorate and mitigate the actual and future consequences of the Data Breach, including (without limitation) monitoring their personal accounts for unauthorized activity, dealing with increased solicitations and spam emails, 20 and the stress, nuisance and annoyance of dealing with all issues resulting from the Data Breach; (c) the imminent and certain impending injury flowing from fraud and identity theft posed by Plaintiff’s PII being placed in the hands of cyber criminals; (d) damages to and diminution in value of Plaintiff’s PII that was entrusted to Defendant for the sole purpose of obtaining educational classes with the understanding that Defendant would safeguard this information against disclosure; (e) loss of the benefit of the bargain with Defendant to provide adequate and reasonable data security—i.e., the difference in value between what Plaintiff should have received from Defendant (including the understanding that Plaintiff’s PII would be protected by reasonable data security and the understanding that Plaintiff would receive timely notification in the event of a data breach) and Defendant’s defective and deficient performance of that obligation by failing to provide reasonable and adequate data security and failing to protect Plaintiff’s PII; (f) overpayment of money for educational services at WSU in that the money paid by Plaintiff and Class members included costs of WSU providing reasonable and adequate safeguards and security measures to protect their personal data, which WSU failed to do and, as a result, Plaintiff and Class members did not receive what they paid for and were overcharged by WSU; and (g) continued risk to Plaintiff’s PII, which remains in the possession of Defendant and which is subject to further breaches so long as Defendant fails to undertake appropriate and adequate measures to protect the PII that was entrusted to Defendant. 68. WSU should be held responsible for the damages it has caused Plaintiff and the Class through the Data Breach. CLASS ACTION ALLEGATIONS 69. Plaintiff incorporates by reference the allegations from the preceding paragraphs as if fully restated here. 21 70. Plaintiff brings this action against WSU individually and on behalf all others similarly situated under Kan. Stat. § 60-223. Plaintiff asserts all claims on behalf of a nationwide Class defined as follows: All persons whose sensitive personal information was compromised as a result of the Data Breach at Wichita State University announced in March 2020. 71. Plaintiff also brings this suit as a class action on behalf of the following subclass (“Kansas Student Subclass”): All residents of the State of Kansas who are former or current students of Wichita State University whose sensitive personal information was compromised as a result of the Data Breach at Wichita State University announced in March 2020. 72. Unless otherwise indicated, the Class and the Kansas Student Subclass are referred to herein jointly as the “Class.” 73. Excluded from the Class are Defendant and Defendant’s officers, directors, legal representatives, successors, subsidiaries, and assigns. Also excluded from the Class is any judge, justice, or judicial officer presiding over this matter and members of their immediate families and judicial staff. 74. Plaintiff reserves the right to amend the above definition or to propose other or additional subclasses in subsequent pleadings and motions for class certification. a. Class Certification is Appropriate 75. The proposed Class and any additional subclasses meet the requirements of Fed. R. Civ. P. 23(a), (b)(1), (b)(2), (b)(3), and (c)(4). 76. Numerosity: The proposed Class is so numerous that joinder of all members is impracticable. Defendant has not publicly disclosed the total number of individuals affected, but 22 based on publicly available information the Class appears to include hundreds of thousands of members. 77. Typicality: Plaintiff’s claims are typical of the claims of the Class. Plaintiff and all members of the Class were injured through WSU’s uniform misconduct. The same event and conduct that gave rise to Plaintiff’s claims are identical to those that give rise to the claims of every other Class member because Plaintiff and each member of the Class had their Personal Information compromised in the same way by the same conduct of WSU. 78. Adequacy: Plaintiff is an adequate representative of the Class because Plaintiff’s interests do not conflict with the interests of the Class that he seeks to represent; Plaintiff has retained counsel competent and highly experienced in data breach class action litigation; and Plaintiff and Plaintiff’s counsel intend to prosecute this action vigorously. The interests of the Class will be fairly and adequately protected by Plaintiff and his counsel. 79. Superiority: A class action is superior to other available means of fair and efficient adjudication of the claims of Plaintiff and the Class. The injury suffered by each individual Class member is relatively small in comparison to the burden and expense of individual prosecution of complex and expensive litigation. It would be very difficult if not impossible for members of the Class individually to effectively redress WSU’s wrongdoing. Even if Class members could afford such individual litigation, the court system could not. Individualized litigation presents a potential for inconsistent or contradictory judgments. Individualized litigation increases the delay and expense to all parties, and to the court system, presented by the complex legal and factual issues of the case. By contrast, the class action device presents far fewer management difficulties and provides benefits of single adjudication, economy of scale, and comprehensive supervision by a single court. 23 80. Commonality and Predominance: There are many questions of law and fact common to the claims of Plaintiff and the other members of the Class, and those questions predominate over any questions that may affect individual members of the Class. Common questions for the Class include: a. Whether Defendant engaged in the wrongful conduct alleged herein; b. Whether Defendant failed to adequately safeguard Plaintiff’s and the Class’s PII; c. Whether Defendant owed a duty to Plaintiff and the Class to adequately protect their PII, and whether it breached this duty; d. Whether Defendant’s conduct, including its failure to act, resulted in or was the proximate cause of the Breach of its IT systems; e. Whether Plaintiff and the Class were injured as a proximate and foreseeable result of Defendant’s breach of its duties to Plaintiff and the Class; f. Whether Defendant violated state and federal laws, thereby breaching its duties to Plaintiff and the Class as a result of the Data Breach; g. Whether WSU was negligent in permitting the unencrypted PII of vast numbers of individuals to be stored within its servers; h. Whether WSU was negligent in failing to adhere to reasonable retention policies, thereby greatly increasing the size of the Data Breach to include former students; i. Whether WSU breached contractual duties to Plaintiff and the Class to use reasonable care in protecting their PII; j. Whether WSU failed to adequately respond to the Data Breach, including failing to investigate it diligently and notify affected individuals in the most expedient time 24 possible and without unreasonable delay, and whether this caused damages to Plaintiff and the Class; k. Whether WSU continues to breach duties to Plaintiff and the Class; l. Whether Plaintiff and the Class suffered injury as a proximate result of WSU’s negligent actions or failures to act; m. Whether Defendant was unjustly enriched by its failure to adequately invest in minimum data security measures necessary to protect the PII; and n. Whether Plaintiff and the Class are entitled to recover damages, restitution, declaratory, injunctive and other equitable relief, and attorney fees, costs, and expenses. CAUSES OF ACTION FIRST CAUSE OF ACTION NEGLIGENCE (On Behalf of the Class) 81. Plaintiff incorporates by reference all preceding factual allegations as though fully alleged here. 82. Defendant WSU solicited, gathered, and stored the PII of Plaintiff and the Class. 83. Defendant had full knowledge of the sensitivity of the PII and the types of harm that Plaintiff and the Class could and would suffer if the PII were wrongfully disclosed. 84. Defendant had a duty to Plaintiff and each Class member to exercise reasonable care in holding, safeguarding, and protecting that information. 85. Plaintiff and the Class members were the foreseeable victims of any inadequate safety and security practices. 25 86. Plaintiff and the Class members had no ability to protect their PII that was in WSU’s possession. 87. Defendant was well aware of the fact that cyber criminals routinely target large institutions, such as universities, through software vulnerabilities and phishing attacks and other cyberattacks in an attempt to steal PII. 88. Defendant owed Plaintiff and the Class members a common law duty to use reasonable care to avoid causing foreseeable risk of harm to Plaintiff and the Class when obtaining, storing, using, and managing personal information, including taking action to reasonably safeguard such data and providing notification to Plaintiff and the Class members of any breach in a timely manner so that appropriate action could be taken to minimize losses. 89. Defendant’s duty extended to protecting Plaintiff and the Class from the risk of foreseeable criminal conduct of third parties, which has been recognized in situations where the actor’s own conduct or misconduct exposes another to the risk or defeats protections put in place to guard against the risk, or where the parties are in a special relationship. See Restatement (Second) of Torts § 302B. 90. Defendant knew or should have known the risk of collecting and storing the PII and the importance of maintaining secure systems. 91. Defendant had duties to protect and safeguard the PII from unauthorized disclosure. Defendant had a duty to use reasonable, industry standard information security measures when dealing with sensitive Personal Information. Specific duties that WSU owed Plaintiff and the Class include: a. To create, maintain, and comply with a written cybersecurity program that incorporated physical, technical, and administrative safeguards for the protection 26 of personal information and reasonably conforms to an industry recognized cybersecurity framework; b. To exercise reasonable care in obtaining, retaining, securing, safeguarding, deleting and protecting the Personal Information in its possession; c. To protect the Personal Information in its possession using reasonable and adequate security procedures and systems, including firewalls and encryption; d. To adequately and properly audit, scan, monitor, and test its IT systems for vulnerabilities and intrusions; e. To adequately and properly audit, test, and train its employees regarding how to properly and securely transmit and store Personal Information; f. To implement processes to quickly detect a data breach, security incident, or intrusion; and g. To promptly notify Plaintiff and Class members of any data breach, security incident, or intrusion that affected or may have affected their Personal Information. 92. Defendant owed these duties to Plaintiff and the Class because they are a well- defined, foreseeable, and probable class of persons whom Defendant was aware (or should have been) would be injured by Defendant’s breach of these duties. 93. Defendant also had a heightened duty to implement an adequate cyber security program and safeguards to protect the Plaintiff and Class members’ PII due to the prior breach WSU experienced in January 2019. 94. Plaintiff and the Class were the intended beneficiaries of Defendant’s duties. Plaintiff and the Class lacked the ability to protect the information they had entrusted to Defendant and relied entirely on Defendant to keep it safe and secure. A special relationship therefore existed 27 between the Class and WSU. Defendant was in a position to ensure that its systems were sufficient to protect the PII that Plaintiff and the Class had entrusted to it. 95. There is a close causal connection between WSU’s failure to implement reasonable security measures to protect its current and former student and employees’ PII and the harm suffered by Plaintiff and members of the Class. 96. The public policy of preventing future harm supports finding a special relationship between WSU and its students and employees. It was foreseeable to WSU that collecting large amounts of student and employee personal information without adequate data security practices and policies would lead to improper disclosure of such information and cause injuries to students and employees. Indeed, WSU had experienced a data breach just months before the Data Breach at issue in this Complaint. 97. There is a very close connection between WSU’s negligence and the injuries that Plaintiff and the Class suffer. If institutions are not held accountable for such negligence, they will not take needed steps to protect the PII they collect from individuals. 98. Defendant breached its duties of care by failing to adequately protect Plaintiff’s and the Class’s Personal Information. Defendant breached its duties by, among other things: a. Failing to exercise reasonable care in obtaining, retaining securing, safeguarding, deleting, and protecting the Personal Information in its possession; b. Failing to protect the Personal Information in its possession using reasonable and adequate security procedures and systems; c. Failing to adequately and properly audit, scan, monitor, and test its IT systems to identify and correct vulnerabilities; 28 d. Failing to implement and enforce adequate security policies, systems, protocols and practices sufficient to protect the Personal Information, and thereby creating a foreseeable, unreasonable risk of harm; e. Failing to adequately and properly audit, test, and train its employees regarding how to properly and securely protect Personal Information; f. Failing to comply with the minimum industry data security standards, including the guidelines issued by the FTC, to protect the Personal Information it solicited and retained; g. Failing to consistently enforce security policies aimed at protecting Plaintiff and the Class’s Personal Information; h. Failing to implement processes to quickly detect data breaches, security incidents, or intrusions; i. Failing to abide by reasonable retention and destruction policies for the Personal Information of former students and employees; and j. Failing to promptly notify Plaintiff and Class members of the Data Breach that affected their Personal Information. 99. Defendant’s willful failure to abide by these duties was wrongful, reckless, and grossly negligent in light of the foreseeable risks and known threats. 100. As a proximate and foreseeable result of Defendant’s grossly negligent conduct, Plaintiff and the Class have suffered actual damages, as described above, and are at imminent risk of additional harms and damages. 101. The damages Plaintiff and the Class have suffered were and are reasonably foreseeable. 29 102. The damages Plaintiff and the Class have and will suffer were and are the direct and proximate result of Defendant’s grossly negligent conduct. 103. Plaintiff and the Class have suffered injury and are entitled to actual and punitive damages in an amount to be proven at trial. SECOND CAUSE OF ACTION NEGLIGENCE PER SE (On Behalf of the Class, or alternatively, a Kansas Student Subclass) 104. Plaintiff incorporates by reference all preceding factual allegations as though fully alleged here. 105. Pursuant to the Kansas Consumer Protection Act and the Kansas Information Security Statute, Defendant has additional duties to implement safeguards to protect Plaintiff’s and the Class’s PII. 106. Defendant breached its duties to Plaintiff and the Class under the Kansas Consumer Protection Act and the Kansas Information Security Statute by failing to provide fair, reasonable, or adequate computer systems and data security practices to safeguard the PII of Plaintiff and the 107. Defendant further breached its duties to Plaintiff and the Class under the Kansas Protection of Consumer Information Notification Statute by failing to provide prompt notice of the Breach without reasonable delay. 108. Defendant’s failure to comply with applicable laws and regulations constitutes negligence per se. 109. Plaintiff and the Class are within the class of persons that the Kansas Consumer Protection Act the Kansas Information Security Statute, and the Kansas Protection of Consumer Information Notification Statute were intended to protect. 30 110. The harm that occurred as a result of the Data Breach is the type of harm the Kansas Consumer Protection Act the Kansas Information Security Statute, and the Kansas Protection of Consumer Information Notification Statute were intended to guard against. 111. Plaintiff and the Class have suffered damages as a result of Defendant’s breaches of its duties, and the damages were foreseeable. 112. Defendant’s violations of these duties are the proximate cause of Plaintiff’s and the Class members’ damages. 113. Plaintiff and the Class are entitled to actual and punitive damages for Defendant’s negligence per se in an amount to be proven at trial. THIRD CAUSE OF ACTION BREACH OF IMPLIED CONTRACT (On Behalf of the Class) 114. Plaintiff incorporates by reference all preceding factual allegations as though fully alleged here. 115. Plaintiff and Class members who are or were students of WSU were required, as a condition of their enrollment, to provide Defendant with their PII, including their Social Security numbers. 116. Plaintiff and Class members who are or were employees of WSU were required, as a condition of their employment, to provide Defendant with their PII, including their Social Security numbers. 117. WSU was obligated, as outlined in WSU’s privacy policies, records retention policies, and security policies, to maintain the confidentiality of Plaintiff and Class members’ PII, particularly the PII of WSU’s current and former students. 31 118. Further, implicit in WSU’s collection of Plaintiff and Class members’ PII, as part of student enrollment and employee hiring, was the obligation that the information provided to WSU would be maintained confidentially and securely. 119. WSU has an implied duty of good faith to reasonably safeguard and protect the PII of Plaintiff and Class members from unauthorized disclosure or uses. 120. Additionally, Defendant implicitly promised to retain this PII only under conditions that kept such information secure and confidential. 121. Based on the implicit understanding and also on Defendant’s representations (as described above), Plaintiff and the Class accepted Defendant’s offers and provided Defendant with their Personal Information. 122. Plaintiff and Class members would not have provided their Personal Information to Defendant had they known that WSU would not safeguard their Personal Information as promised or provide timely notice of a data breach. 123. Plaintiff and Class members fully performed their obligations under the implied contracts with Defendant. 124. Defendant breached the implied contracts by failing to safeguard Plaintiff’s and Class members’ PII and failing to provide them with timely and accurate notice of the Data Breach. 125. Based on Defendant’s representations and acceptance of Plaintiff’s and the Class members’ PII, Defendant had an express and/or implied duty to safeguard their PII through the use of reasonable industry standards. 126. Defendant’s failure to protect the PII of Plaintiff and Class members who are employees constitutes a material breach of the terms of the agreement by Defendant. 32 127. As a direct and proximate result of Defendant’s breach of implied contract, Plaintiff and the Class members have suffered damages, including foreseeable consequential damages that Defendant knew about when it requested Plaintiff’s and the Class members’ PII. 128. As a result of WSU’s breach of contract or implied contract, by failing to adequately secure Plaintiff and Class members’ PII, Plaintiff and Class members did not receive the full benefit of the bargain, and instead received services that were less valuable than described and bargained for. Plaintiff and Class members, therefore, were damaged in an amount at least equal to the difference in value between what was bargained for and what WSU provided. 129. Also as a result of WSU’s breach of contract or implied contract, Plaintiff and Class members have suffered actual damages resulting from the theft of their PII, and they remain at imminent risk of suffering additional breaches in the future. 130. Accordingly, Plaintiff and the Class are entitled to compensatory damages, including restitution and unjust enrichment, injunctive relief requiring WSU to more securely maintain the PII of Plaintiff and the Class, and attorney fees, costs, and expenses. FOURTH CAUSE OF ACTION VIOLATION OF THE KANSAS CONSUMER PROTECTION ACT KAN. STAT. §§ 50-626(A), (B)(1)(A)(D) AND (B)(3), AND KAN. STAT. §50-627, ET SEQ. (ON BEHALF OF THE KANSAS STUDENT SUBCLASS) 131. Plaintiff incorporates by reference all preceding factual allegations as though fully alleged here. 132. Plaintiff and members of the Kansas Student Subclass constitute consumers pursuant to the Kansas Consumer Protection Act. 133. WSU engaged in the conduct alleged in this Complaint in transactions intended to result, and which did result, in the sale of services to consumers, including Plaintiff and the Kansas Student Subclass. 33 134. WSU’s acts, practices and omissions were done in the course of WSU’s business of marketing, offering for sale, and selling services throughout the United States, including in Kansas. 135. WSU’s conduct as alleged in this Complaint, including without limitation, WSU’s failure to maintain adequate computer systems and data security practices to safeguard students’ and employees’ personal information, WSU’s failure to disclose the material fact that its computer systems and data security practices were inadequate to safeguard the personal information it was collecting and maintaining from theft, and WSU’s failure to disclose in a timely and accurate manner to Plaintiff and members of the Kansas Student Subclass the material fact of the WSU’s Data Breach constitutes unfair methods of competition and unfair, deceptive, fraudulent, unconscionable and/or unlawful acts or practices. 136. By engaging in such conduct and omissions of material facts, WSU has violated Kansas consumer laws prohibiting representing that “property or services have sponsorship, approval, accessories, characteristics, ingredients, uses, benefits or quantities that they do not have,” representing that “property or services are of particular standard, quality, grade, style or model, if they are of another which differs materially from the representation,” and/or “willful[ly] fail[ing] to state a material fact, or the willful concealment, suppression or omission of a material fact.” Kan. Stat. §§ 50-626(b)(1)(A), (b)(1)(D) and (b)(3). WSU has also violated Kansas consumer laws by engaging in a “deceptive act or practice in connection with a consumer transaction.” Kan. Stat. § 50-626(a). 137. In addition, WSU has violated Kan. Stat. § 50-627 by “engag[ing] in any unconscionable act or practice in connection with a consumer transaction.” A violation of the Kansas Information Security Statute “shall be an unconscionable act or practice in violation of 34 K.S.A. 50-627, and amendments thereto.” Kan. Stat. § 50-6139b(d). The Kansas Information Security Statute requires that holders of personal information, including social security numbers, must (among others) “implement and maintain reasonable procedures and practices” and “exercise reasonable care to protect the personal information from unauthorized access, use, modification or disclosure.” Kan. Stat. § 50-6139b(b)(1). The Kansas Information Security Statute further requires that holders of personal information must “take reasonable steps to destroy or arrange for the destruction of any records within such holder’s custody or control containing any person’s personal information.” Kan. Stat. § 50-6139b(b)(2). WSU failed to comply with the Kansas Information Security Statute, by failing to reasonably protect Plaintiff and Class members’ PII, including their social security numbers, and by failing to take reasonable steps to destroy such information once it was no longer needed. As a result, WSU has engaged in an unconscionable act or practice in violation of Kan. Stat. § 50-627. See Kan. Stat. § 50-6139b(d). 138. Plaintiff and the Kansas Student Subclass have suffered damages as a result of Defendant’s breaches of its duties and violations of the Kansas Consumer Protection Act, and such damages were foreseeable. 139. Defendant’s violations of these duties are the proximate cause of Plaintiff’s and the Kansas Student Subclass members’ damages. 140. Plaintiff seeks all available relief, including (without limitation) restitution to the Class of money or property that the Defendant acquired by means of Defendant’s deceptive, unlawful, unfair, and unconscionable business practices, declaratory relief, attorney fees, costs and expenses, and injunctive or other equitable relief. 35 FIFTH CAUSE OF ACTION VIOLATION OF THE KANSAS PROTECTION OF CONSUMER INFORMATION NOTIFICATION STATUTE, KAN. STAT. §§ 50-7a02(a), ET SEQ. (ON BEHALF OF THE KANSAS STUDENT SUBCLASS) 141. Plaintiff incorporates by reference all preceding factual allegations as though fully alleged here. 142. Plaintiff and members of the Kansas Student Subclass constitute consumers pursuant to the Kansas Consumer Protection Act. 143. WSU engaged in the conduct alleged in this Complaint in transactions intended to result, and which did result, in the sale of services to consumers, including Plaintiff and the Kansas Student Subclass. 144. The Data Breach constituted a breach of the security system of WSU within the meaning of the Kansas Protection of Consumer Information Notification Statute (“KPCI”), Kan. Stat. §§ 50-7a02(a), et seq. 145. The KPCI requires institutions that collect and maintain computerized personal information to “give notice to the affected Kansas resident without unreasonable delay and as soon as possible.” 146. Plaintiff’s and Class members’ names, email addresses, dates of birth, and Social Security numbers were compromised as part of the Data Breach. Such information, particularly the Social Security numbers combined with the individuals’ names, constitute personal information under KPCI. 147. WSU unreasonably delayed in informing the public, including Plaintiff and members of the Kansas Student Subclass about the Breach that of security that left their highly sensitive personal information exposed. 36 148. While WSU learned of the Data Breach in December 2019, and determined that Plaintiff’s and the Class members’ personal information was exposed as part of the Breach by January 13, 2020, WSU inexplicably waited until March 6, 2020 before beginning to notify the affected victims of the Breach. 149. WSU failed to disclose to Plaintiff and the Kansas Student Subclass members without unreasonable delay and in the most expedient time possible, the breach of security of their PII when WSU knew, or reasonably believed, such information had been compromised. 150. Plaintiff and members of the Kansas Student Subclass suffered harm directly resulting from WSU’s failure to provide and the delay in providing Plaintiff and the Kansas Student Subclass members with timely and accurate notice as required by the KPCI. Plaintiff and the Kansas Student Subclass suffered damages as a direct result of WSU’s delay in providing timely and accurate notice of the data breach. 151. Had WSU provided timely and accurate notice of the Data breach, Plaintiff and Kansas Student Subclass members would have been able to avoid and/or attempt to ameliorate or mitigate the damages and harm resulting from the unreasonable delay by WSU in providing notice. 152. As a result of Defendant’s violation of the KPCI, Plaintiff and the Class were deprived of prompt notice of the Data Breach and were thus prevented from taking appropriate protective measures, such as securing identity theft protection or requesting a credit freeze. These measures could have prevented some of the damages suffered by Plaintiff and Class members because their stolen information would have had less value to identity thieves. 153. As a result of Defendant’s violation of the KPCI, Plaintiff and the Class suffered incrementally increased damages separate and distinct from those simply caused by the Data Breach itself. 37 154. Plaintiff and the Class seek all available remedies, including, but not limited to the damages suffered by Plaintiff and the other Class members as alleged above and equitable relief. SIXTH CAUSE OF ACTION UNJUST ENRICHMENT (On Behalf of the Class) 155. Plaintiff incorporates by reference all preceding factual allegations as though fully alleged here. 156. Plaintiff and the Class bring this claim in the alternative to all other claims and remedies at law. 157. By way of its affirmative actions and omissions, including its knowing violations of its express or implied contracts with Plaintiff and the Class, its violation of Kansas law, and its violation of its common law duties of care, Defendant knowingly and deliberately enriched itself by saving the costs it reasonably and contractually should have expended on data security measures to secure Plaintiff’s and Class members’ PII. 158. Instead of providing for a reasonable level of security that would have prevented the Data Breach, as described above and as is common industry practice among entities entrusted with similar PII (including WSU itself, which had experienced a data breach just months before the Breach at issue here), Defendant instead consciously and opportunistically calculated to increase its own profits at the expense of Plaintiff and Class members. 159. While it cut costs on security, Defendant continued to obtain the benefits conferred on it by Plaintiff and the Class, including the benefits of tuition and other fees and the benefit of continued employment from its faculty and staff. 160. Plaintiff and Class members, on the other hand, suffered as a direct and proximate result. As a result of Defendant’s decision to profit rather than provide requisite security and the 38 resulting disclosure of students’ and employees’ PII, Plaintiff and Class members suffered and continue to suffer considerable injuries as alleged in detail above. 161. Defendant, therefore, was unjustly enriched when it profited from Plaintiff and the Class by promising to protect their PII but failing to invest the necessary resources into doing so. As such, it would be inequitable, unconscionable, and unlawful to permit Defendant to retain the benefits it derived as a consequence of this failure. 162. Accordingly, Plaintiff on behalf of himself and the Class members, is entitled to relief in the form of restitution and/or compensatory damages. SEVENTH CAUSE OF ACTION INJUNCTIVE AND DECLARATORY RELIEF (On Behalf of the Class) 163. Plaintiff incorporates by reference all preceding factual allegations as though fully alleged here. 164. Plaintiff and the Class bring this claim in addition to all other claims and remedies. 165. As previously alleged and pleaded, Defendant owes duties of care to Plaintiff and the Class that require it to adequately secure their Personal Information. 166. Defendant still possesses the PII of Plaintiff and the Class. 167. Defendant has not satisfied its contractual obligations and legal duties to Plaintiff and the Class. 168. Defendant has claimed that it is taking some steps to increase its data security, but there is nothing to indicate that these changes will be sufficient, and there is nothing to prevent Defendant from reversing these changes once it has weathered the increased public attention resulting from this Breach. 169. Plaintiff, therefore, seeks a declaration (1) that Defendant’s existing security measures do not comply with its contractual obligations and duties of care to provide adequate 39 security, and (2) that to comply with its contractual obligations and duties of care, Defendant must implement and maintain reasonable security measures, including, but not limited to: a. Ordering Defendant to engage third-party security auditors/penetration testers as well as internal security personnel to conduct testing, including simulated attacks, penetration tests, and audits on Defendant’s systems on a periodic basis, and ordering Defendant to promptly correct any problems or issues detected by such third-party security auditors; b. Ordering Defendant to engage third-party security auditors and internal personnel to run automated security monitoring; c. Ordering that Defendant audit, test, and train their security personnel regarding any new or modified procedures; d. Ordering that Defendant segment student and employee data by, among other things, creating firewalls and access controls so that if one area of Defendant’s systems is compromised, hackers cannot gain access to other portions of Defendant’s systems; e. Ordering that Defendant implement encryption rules on all IT systems containing Personal Information of students and employees; f. Ordering that Defendant purge, delete, and destroy in a reasonably secure manner Personal Information not necessary for its provisions of services; g. Ordering that Defendant conduct regular database scanning, vulnerability, and securing checks; 40 h. Ordering Defendant to routinely and continually conduct internal training and education to inform internal security personnel how to identify and contain a breach when it occurs and what to do in response to a breach; i. Ordering Defendant to implement and enforce adequate retention policies for Personal Information, including destroying student and employee Personal Information as soon as it is no longer necessary for the purposes it was originally acquired; and j. Ordering Defendant to meaningfully educate its current, former, and prospective employees about the threats they face as a result of the loss of their personal information to third parties, as well as the steps they must take to protect themselves. PRAYER FOR RELIEF WHEREFORE, Plaintiff and the Class pray for judgment against Defendant as follows: a. An order certifying this action as a class action, defining the Class as requested herein, appointing the undersigned as Class counsel, and finding that Plaintiff is a proper representative of the Class requested herein; b. A judgment in favor of Plaintiff and the Class awarding them appropriate monetary relief, including actual and statutory damages, punitive damages, attorney fees, expenses, costs, and such other and further relief as is just and proper; c. An order providing injunctive and other equitable relief as necessary to protect the interests of the Class as requested herein; d. An order requiring Defendant to pay the costs involved in notifying the Class about the judgment and administering the claims process; 41 e. A judgment in favor of Plaintiff and the Class awarding them pre-judgment and post- judgment interest, reasonable attorneys’ fees, costs and expenses as allowable by law; and f. An award of such other and further relief as this Court may deem just and proper. DEMAND FOR JURY TRIAL Plaintiff hereby demands a trial by jury on all appropriate issues raised in this Complaint. Dated: May 14, 2020 Respectfully submitted by: BOULWARE LAW LLC /s/ Brandon J.B. Boulware Brandon J.B. Boulware KS # 25840 1600 Genessee Street, Suite 416 Kansas City, MO 64102 Tel: (816) 492-2826 Email: [email protected] William B. Federman FEDERMAN & SHERWOOD 10205 N. Pennsylvania Ave. Oklahoma City, Oklahoma 73120 (405) 235-1560 (405) 239-2112 (facsimile) [email protected] Counsel for Plaintiff and the Putative Class 42

securities

MVKr_ogBF5pVm5zYVT3x

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK JOSEPH KINNEY on behalf of himself and all others similarly situated, 22-cv-2458 CASE NO. Plaintiff, v. PUBLIC CONSULTING GROUP, INC., and STAFFING SOLUTIONS ORGANIZATION, LLC, Defendants, CLASS ACTION COMPLAINT FOR VIOLATION OF WARN ACT 29 U.S.C. § 2101, ET SEQ. Plaintiff Joseph Kinney (“Plaintiff”) alleges on behalf of himself and a putative class of similarly situated former employees, by way of his Class Action Complaint against Public Consulting Group, Inc. and Staffing Solutions Organization, LLC (collectively, “Defendants”). NATURE OF THE ACTION 1. Beginning on or about February 25, 2022, and within 90 days of that date, Defendants terminated hundreds of its employees. 2. Plaintiff brings this action on behalf of himself, and other similarly situated former employees who worked for Defendants and who were terminated without cause, as part of, or as the foreseeable result of, a mass layoff or plant closing ordered by Defendants beginning on February 25, 2022, and within 90 days of that date and who were not provided 60 days advance written notice of their terminations by Defendants, as required by the Worker Adjustment and Retraining Notification Act (“WARN Act”), 29 U.S.C. § 2101 et seq., and 90 days advance written notice of their terminations by Defendants, as required by the New York Worker Adjustment and Retraining Notification Act (“NY WARN Act”), New York Labor Law (“NYLL”) § 860 et seq. 3. Plaintiff and all similarly situated employees seek to recover up to 60 days wages and benefits, pursuant to 29 U.S.C. § 2104 and NYLL § 860-g (2), from Defendants. JURISDICTION AND VENUE 4. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331, 1334, 1367 and 29 U.S.C. § 2104(a)(5). 5. Venue is proper in this District pursuant to 29 U.S.C. § 2104(a)(5). THE PARTIES Plaintiff 6. Until he was terminated from his employment on or about February 25, 2022, Plaintiff was employed by Defendants in their Virtual Call Center as a contact tracer/case investigator in the NY Contact Tracing Initiative. 7. Plaintiff was terminated without cause. 8. Plaintiff did not receive 60 days’ notice of his termination. Defendants 9. Upon information and belief and at all relevant times, Defendant Public Consulting Group, Inc.(“PCG”) maintained its corporate headquarters at 148 State Street, 10th Floor, Boston, Massachusetts 02109. 10. Upon information and belief and at all relevant times, PCG maintained an office located at 80 Maiden Lane, Suite 1106, New York NY 10038 and conducted business in this district. 11. Staffing Solutions Organization, LLC (“SSO”), upon information and belief, and at all relevant times, is a wholly-owned subsidiary of PCG. 12. Upon information and belief and at all relevant times, both PCG and SSO maintained offices at the same location, 99 Washington Avenue, Suite 1720, Albany, NY 12210 (the “Headquarters Facility”). 13. Upon information and belief, PCG and SSO conducted business in this district. 14. Upon information and belief, on or about May 2020, Defendants contracted with New York State to carry out the operations of the New York (NY) Contact Tracing Initiative. 15. Defendants’ role in the NY Contact Tracing Initiative was to establish and maintain a Virtual Call Center in the state of New York as part of the state’s efforts to counter the spread of COVID-19. 16. Upon information and belief, Defendants managed their NY Contact Tracing Initiative/Virtual Call Center workforce from the Headquarters Facility. 17. Defendants’ involvement with the NY Contact Tracing Initiative included recruiting, interviewing, hiring, training, and managing contact tracers and case investigators, their managers, and other staff, and administering all human resources management functions for this workforce. 18. Defendants were responsible for managing the day-to-day operations and work performed by this workforce. 19. Defendants regularly issued directives to Plaintiff and the contact tracer/case investigators regarding what they should and should not say in their calls, provided scripts, established protocols, procedures, and workflows for the Virtual Call Center teams, and kept track of their work hours, compliance with policies, and performance. 20. Plaintiff and the similarly situated Virtual Call Center employees worked outside of any of the Defendants’ regular employment sites, and they reported to, and they received assignments or were managed from, Defendants’ Headquarters Facility. 21. When performing case investigations, Virtual Call Center employees were instructed to call patients, whose positive COVID test results had been reported to the New York State Department of Health. Following a script, the investigator would interview the person about their activities before and after the test. They would also provide guidance regarding isolation and other steps to be taken. The interview, which could last more than an hour, would generate names of contacts of the patient. A contact tracer would then call those contacts, in order to alert them and provide guidance. Virtual Call Center employees also assisted individuals by making referrals to social, medical, and financial services. 22. Defendants employed about 4,000 NY Contact Tracing Initiative staff members by the end of 2020. 23. Upon information and belief, Defendants reduced the number of their full time NY Contact Tracing Initiative employees to about 3,000, state-wide, by the end of 2021. 24. Upon information and belief, prior to February 11, 2022, Defendants decided to reduce the number of Virtual Call Center employees in the NY Contact Tracing Initiative and began making plans to do so. 25. On or about February 11, 2022, Defendants informed employees of their decision to “right size” the Virtual Call Center. Defendants’ message did not state the extent of the reduction or who would be affected. It said the affected employees would be notified of their layoff on February 24, and be terminated the next day. 26. On information and belief, on February 24, Defendants notified selected employees, including Plaintiff, of their termination. 27. The next day, on February 25, 2022, Defendants halved the number of Virtual Call Center employees state-wide, including approximately half of the 375 employees in the Mohawk Valley Region where Plaintiff worked. 28. Upon information and belief, Plaintiff and the other similarly situated individuals were terminated by Defendants without cause beginning on or about February 25, 2022, while those who were not terminated continued to work for Defendants in the NY Contact Tracing Initiative’s Virtual Call Center. 29. Upon information and belief, on or about March 11, 2022, Defendants informed the remaining Virtual Call Center employees that further terminations would occur on March 25. 30. Upon information and belief, on March 24, Defendants disseminated notices of termination to the hundreds the Virtual Call Center employees whom they had chosen to terminate the next day. 31. Upon information and belief, Defendants terminated those affected Virtual Call Center workers on March 25, 2022. 32. In their messages to Plaintiff and those similarly situated concerning their jobs, Defendants, throughout their employment, identified themselves variously as PCG or SSO. 33. Defendants made the decision to terminate the employment of Plaintiff and the other similarly situated former employees without 60 days’ advance notice. 34. Upon information and belief, Defendants, in their continuation of the NY Contact Tracing Initiative, still employ hundreds of Virtual Call Center employees. WARN CLASS ALLEGATIONS, 29 U.S.C. § 2104 35. Plaintiff brings this Claim for Relief for violation of 29 U.S.C. § 2101 et seq., on behalf of himself and on behalf of all other similarly situated former employees, pursuant to 29 U.S.C. § 2104(a)(5) and Fed. R. Civ P. 23(a), who worked at, reported to, or received assignments from Defendants’ Headquarters Facility and were terminated without cause beginning on or about February 25, 2022, and within 90 days of that date, or were terminated without cause as the reasonably foreseeable consequence of the mass layoff and/or plant closing ordered by Defendants beginning on or about February 25, 2022, and who are affected employees, within the meaning of 29 U.S.C. § 2101(a)(5) (the “WARN Class”). 36. The persons in the WARN Class identified above (“WARN Class Members”) are so numerous that joinder of all members is impracticable. Although the precise number of such persons is unknown, the facts on which the calculation of that number can be based are presently within the sole control of one or both Defendants. 37. On information and belief, the identity of the members of the class and the recent residence address of each of the WARN Class Members is contained in the books and records of one or both Defendants. 38. On information and belief, the rate of pay and benefits that were being paid by Defendants to each WARN Class Member at the time of his/her termination is contained in the books and records of one or both Defendants. 39. Common questions of law and fact exist as to members of the WARN Class, including, but not limited to, the following: (a) whether the members of the WARN Class were employees of the Defendants who worked at, reported to, or received assignments from the Headquarters Facility; (b) whether Defendants unlawfully terminated the employment of the members of the WARN Class without cause on their part and without giving them 60 days advance written notice in violation of the WARN Act; (c) whether Defendants, as a single employer, violated the WARN Act; and (d) whether Defendants unlawfully failed to pay the WARN Class members 60 days wages and benefits as required by the WARN Act. 40. Plaintiff’s claims are typical of those of the WARN Class. Plaintiff, like other WARN Class members, worked at, reported to, or received assignments from the Headquarters Facility, and were terminated without cause beginning on or about February 25, 2022, due to the mass layoff and/or plant closing ordered by Defendants. 41. Plaintiff will fairly and adequately protect the interests of the WARN Class. Plaintiff has retained counsel competent and experienced in complex class actions, including the WARN Act and employment litigation. 42. On or about February 25, 2022, Defendants began terminating the employment of Plaintiff and similarly situated employees, as part of a mass layoff or a plant closing as defined by 29 U.S.C. § 2101(a)(2), (3), for which the affected employees were entitled to receive 60 days advance written notice under the WARN Act. Class certification of these claims is appropriate under Fed. R. Civ. P. 23(b)(3) because questions of law and fact common to the WARN Class predominate over any questions affecting only individual members of the WARN Class, and because a class action superior to other available methods for the fair and efficient adjudication of this litigation – particularly in the context of WARN Act litigation, where individual plaintiffs may lack the financial resources to vigorously prosecute a lawsuit in federal court against a corporate defendant, and damages suffered by individual WARN Class members are small compared to the expense and burden of individual prosecution of this litigation. 43. Concentrating all the potential litigation concerning the WARN Act rights of the members of the Class in this Court will obviate the need for unduly duplicative litigation that might result in inconsistent judgments, will conserve the judicial resources and the resources of the parties and is the most efficient means of resolving the WARN Act rights of all the members of the WARN Class. 44. Plaintiff intends to send notice to all members of the WARN Class to the extent required by Rule 23. CLAIM FOR RELIEF I. Violation of the WARN Act, 29 U.S.C. § 2104 45. Plaintiff realleges and incorporates by reference all allegations in all preceding paragraphs. 46. At all relevant times, Defendants employed more than 100 employees who in the aggregate worked at least 4,000 hours per week, exclusive of hours of overtime, within the United 47. At all relevant times, Defendants were an “employer,” as that term is defined in 29 U.S.C. § 2101 (a)(1) and 20 C.F.R. § 639(a) and continued to operate as a business as they decided to order, and carried out, a mass layoff or plant closing. 48. Because SSO was, on information and belief, inter alia, owned by PCG and its subsidiaries, common issues of fact include whether Defendants were functionally independent of one another in managing the NY Contact Tracing Initiative and Virtual Call Center, whether they shared common directors and/or officers, whether SSO was under the de facto control of PCG, and whether SSO’s operations were dependent on PCG so that Defendants, as a single employer, are jointly and severally liable to Plaintiff and the similarly situated terminated employees during the relevant time period for not providing them notice pursuant to the WARN Act. 49. On or about February 25, 2022, Defendants ordered a mass layoff and/or plant closing at the Headquarters Facility, as those terms are defined by 29 U.S.C. § 210l(a)(2). 50. The mass layoff or plant closing at the Headquarters Facility resulted in “employment losses,” as that term is defined by 29 U.S.C. §2101(a)(2) for at least 500 of Defendants’ employees, or fifty or more employees comprising at least thirty-three percent (33%) of Defendants’ workforce at, or reporting to, or receiving assignments from the Headquarters Facility, excluding “part-time employees,” as that term is defined by 29 U.S.C. § 2l01(a)(8). 51. Plaintiff and the WARN Class Members were terminated by Defendants without cause on their part, as part of or as the reasonably foreseeable consequence of the mass layoff or plant closing ordered by Defendants at the Headquarters Facility. 52. Plaintiff and the WARN Class Members are “affected employees” of Defendants, within the meaning of 29 U.S.C. § 210l(a)(5). 53. Defendants were required by the WARN Act to give Plaintiff and the WARN Class Members at least 60 days advance written notice of their terminations. 54. Defendants failed to give Plaintiff and the WARN Class members written notice that complied with the requirements of the WARN Act. 55. Until Defendants sent Plaintiff and the WARN Class members the email of February 11, informing them that some terminations would occur in February, they never told them that they might be terminated in February 2022. 56. At the time of Plaintiff’s and the WARN Class members’ terminations, the Virtual Call Center work was ongoing, and the NY Contact Tracing Initiative was continuing. 57. Plaintiff and each of the WARN Class Members, are “aggrieved employees” of Defendants as that term is defined in 29 U.S.C. § 2104 (a)(7). II. New York WARN Act Class Allegations, NYLL § 860 et seq. 58. Plaintiff brings this claim for relief for violation of NYLL § 860 et seq., on behalf of himself and a class of similarly situated persons pursuant to NYLL § 860-g (7) and Federal Rules of Civil Procedure, Rule 23(a) and (b), who worked at, reported to, or received assignments from the Headquarters Facility and were terminated without cause beginning on or about February 25, 2022 and within 90 days of that date, or were terminated without cause as the reasonably foreseeable consequence of the mass layoff and/or plant closing ordered by Defendants beginning on or about February 25, 2022, and who are affected employees, within the meaning of NYLL § 860-a (1),(4) and(6). 59. The persons in the Class identified above (“NY Class Members”) are so numerous that joinder of all members is impracticable. Although the precise number of such persons is unknown, the facts on which the calculation of that number can be based are presently within the sole control of Defendants. 60. On information and belief, Defendants employed 50 or more employees within New York State as of the time notice was first required to be given. On information and belief, Defendants terminated at least 250 full-time employees within 90 days of February 25, 2022, from their Headquarters Facility in New York State, or at least 25 employees comprising one-third of the employees there. 61. On information and belief, the identity of the members of the class and the recent residence address of each of the NY Class Members is contained in the books and records of Defendants. 62. On information and belief, the rate of pay and benefits that were being paid by Defendants to each NY Class Member at the time of his/her termination is contained in the books and records of the Defendants. 63. Common questions of law and fact exist as to members of the NY Class, including, but not limited to, the following: a. whether the members of the NY Class were employees of Defendants who worked at, reported to, or received assignments from a covered site of employment of Defendants; b. whether Defendants, unlawfully terminated the employment of the members of the NY Class without cause on their part and without giving them 90 days advance written notice in violation of the NY WARN Act; c. whether Defendants unlawfully failed to pay the NY Class Members 60 days wages and benefits as required by the NY WARN Act; and d. whether Defendants as a single employer violated the NY WARN Act. 64. Plaintiff’s claims are typical of those of the NY Class Members. Plaintiff, like other NY Class Members, worked at, reported to, or received assignments from worked at or reported to the Headquarters Facility and was terminated on February 25, 2022, or within 90 days of that date, due to the terminations ordered by Defendants. 65. Plaintiff will fairly and adequately protect the interests of the NY Class. Plaintiff has retained counsel competent and experienced in complex class actions on behalf of employees, including the NY WARN Act. 66. Class certification of these claims is appropriate under Fed.R. Civ.P. 23(b)(3) because questions of law and fact common to the NY Class predominate over any questions affecting only individual members of the NY Class, and because a class action is superior to other available methods for the fair and efficient adjudication of this litigation – particularly in the context of NY WARN class action litigation, where individual plaintiff may lack the financial resources to vigorously prosecute a lawsuit in federal court against a corporate defendant, and damages suffered by individual NY Class Members are small compared to the expense and burden of individual prosecution of this litigation. 67. Concentrating all the potential litigation concerning the NY WARN Act rights of the members of the NY Class in this Court will obviate the need for unduly duplicative litigation that might result in inconsistent judgments, will conserve the judicial resources and the resources of the parties and is the most efficient means of resolving the NY WARN Act rights of all the members of the NY Class Members. 68. Plaintiff intends to send notice to all the NY Class Members to the extent required by Rule 23. PRAYER FOR RELIEF WHEREFORE, the Plaintiff, individually and on behalf of all other similarly situated persons, pray for the following relief as against Defendants: A. Certification of this action as a class action; B. Designation of Plaintiff as the WARN Class and NY WARN Class Representative; C. Appointment of the undersigned attorneys as Class Counsel for all class members; D. A judgment against Defendants in favor of the Plaintiff and the other similarly situated former employees equal to the sum of: their unpaid wages, as determined in accordance with the WARN Act, 29 U.S.C. § 2104 (a)(1)(A) and NYLL § 860- g (1)(a); E. Plaintiff’s reasonable attorneys’ fees and the costs and disbursements that the Plaintiff incurred in prosecuting this action, as authorized by the WARN Act, 29 U.S.C. § 2104(a)(6) and NYLL § 860-g (7); and F. Such other and further relief as this Court may deem just and proper. DATED: March 25, 2022 /s/ Jack. A. Raisner Jack A. Raisner René S. Roupinian RAISNER ROUPINIAN LLP 270 Madison Avenue, Suite 1801 New York, New York 10016 Telephone: (212) 221-1747 Fax: (212) 221-1747 Email: [email protected] Email: [email protected] Attorneys for the Plaintiff and the putative Class

employment & labor

bvxZFIcBD5gMZwcz8oGH

John P. Kristensen (SBN 224132) Jesenia A. Martinez (SBN 316969) Jacob J. Ventura (SBN 315491) KRISTENSEN LLP 12540 Beatrice Street, Suite 200 Los Angeles, California 90066 Telephone: 310-507-7924 Fax: 310-507-7906 [email protected] [email protected] [email protected] Jarrett Ellzey (pro hac vice pending) HUGHES ELLZEY, L.L.P. 1105 Milford Houston, Texas Telephone: 888-350-3931 Fax: 888-995-3335 [email protected] Attorneys for Plaintiff and all others similarly situated IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA - OAKLAND DIVISION REEVE SCHLEY, individually and on behalf of all others similarly situated, Plaintiff, vs. ONE PLANET OPS INC., a Delaware Corporation; BUYERLINK LLC dba CONTRACTORS.COM, a California limited liability company; and DOES 1 through 50, inclusive, and each of them, Defendant. Case No.: CLASS ACTION COMPLAINT FOR DAMAGES AND INJUNCTIVE RELIEF (1) Violations of the TCPA, 47 U.S.C. § 227, et seq. (Cell Phone and Text); (2) Violations of the TCPA, 47 U.S.C. § 227, et seq. (Do Not Call); (3) Violations of the TCPA, 47 C.F.R. § 64.1200(d) (Internal Do Not Call); DEMAND FOR JURY TRIAL ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) other persons similarly situated, alleges the following upon information and belief based upon personal knowledge: NATURE OF THE CASE 1. Plaintiff brings this action for himself and others similarly situated seeking damages and any other available legal or equitable remedies resulting from the illegal actions of defendants ONE PLANET OPS INC., (“Defendant” or “One Planet”) BUYERLINK LLC dba CONTRACTORS.COM (“Defendant” or “BuyerLink”) and DOES 1 through 50 (collectively referred to throughout portions of this Class Action Complaint as “Defendants”), in contacting Plaintiff as well as knowingly, and/or willfully contacting Plaintiff via text and unsolicited telemarketing calls on Plaintiff’s cellular telephone in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. (“TCPA”), and , 47 C.F.R. § 64.1200(D) thereby invading Plaintiff’s privacy. Plaintiff, alleges as follows upon personal knowledge as to himself and his own acts and experiences, and, as to all other matters, upon information and belief, including investigation conducted by his attorney. 2. Defendants own and operate a real-time lead service company in the online marketing and advertising industry. In an effort to solicit potential customers, Defendants, or employed agents use machines that had the capacity to store a list of phone numbers and send out blast texts to cellular telephone calls, en masse, to consumers across the country. On information and belief, Defendants and or its agents purchase “leads” containing consumers’ contact information and create electronic databases from which Defendants makes automated calls. 3. Defendants conducted wide-scale telemarketing campaigns and repeatedly made contact with consumers’ telephones—whose numbers appear on the National Do Not Call Registry—without consent, all in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (the “TCPA”). 4. The Telephone Consumer Protection Act, 47 U.S.C. § 227 (the “TCPA”) was enacted to protect consumers from unsolicited telephone contact exactly like those alleged in seek an injunction requiring Defendants to cease all unsolicited telephone contacting activities and an award of statutory damages to the members of the Class under the TCPA up to $500.00 per violation, together with court costs, reasonable attorneys’ fees, and up to three times actual monetary loss damages (for knowing and/or willful violations). 5. This case arises from the transmissions of text messages and telephone calls to the cellular telephones of Plaintiff and members of the class for the purpose of promoting Defendants’ services. 6. By sending the illegal texts and making the telephone calls at issue in this Complaint, Defendants caused Plaintiff and the members of a putative Class of consumers (defined below) actual harm, including the aggravation, nuisance, and invasion of privacy that necessarily accompanies the receipt of unsolicited and harassing text messages, as well as the monies paid to their carriers for the receipt of such text messages and telephone calls. 7. Plaintiff brings this class action against Defendants to secure redress because Defendants willfully violated the TELEPHONE CONSUMER PROTECTION ACT (“TCPA”), 47 U.S.C § 227, et seq. by sending text messages and causing unsolicited automated calls to be made to Plaintiff and other class members’ telephones. 8. The TCPA was enacted to protect consumers from unsolicited text messages and telephone calls exactly like those alleged in this case. In response to Defendants’ unlawful conduct, Plaintiff files the instant lawsuit and seeks an injunction requiring Defendants to halt their illegal conduct, including to cease all unsolicited text messaging and telephone activities, which has resulted in the invasion of privacy, harassment, aggravation, and disruption of the daily life of thousands of individuals nationwide. Plaintiff also seeks statutory damages on behalf of himself and members of the class, and any other available legal or equitable remedies resulting from the illegal actions of Defendants. /// /// /// 9. Plaintiff REEVE SCHLEY is a natural person and citizen in the state of California. 10. Defendant ONE PLANET OPS INC. (“Defendant” or “One Planet”) is Delaware corporation with its principal place of business at 1820 Bonanza Street, Ste. 200, Walnut Creek, California 94596. Defendant may be served with process by serving its registered agent, Incorporating Services, Ltd. at 7801 Folsom Boulevard, Suite 202, Sacramento, California 95826. 11. Defendant BUYERLINK LLC dba CONTRACTORS.COM (“Defendant” or “BuyerLink”) is a California limited liability company with its principal place of business at 1820 Bonanza Street, Ste. 200, Walnut Creek, California 94596. Defendant may be served with process by serving its registered agent, Incorporating Services, Ltd. at 7801 Folsom Boulevard, Suite 202, Sacramento, California 95826. 12. Plaintiff does not yet know the identity of Defendant’s employees/agents that had direct, personal participation in or personally authorized the conduct found to have violated the statute and were not merely tangentially involved. They will be named, as numerous District Courts have found that individual officers/principals of corporate entities may be personally liable (jointly and severally) under the TCPA if they had direct, personal participation in or personally authorized the conduct found to have violated the statute, and were not merely tangentially involved. Texas v. American Blastfax, Inc., 164 F.Supp.2d 892, 899 (W.D. Tex. 2001) (“American Blastfax”); Sandusky Wellness Center, LLC v. Wagner Wellness, Inc., 2014 WL 1333472, at * 3 (N.D. Ohio March 28, 2014); Maryland v. Universal Elections, 787 F.Supp.2d 408, 415-16 (D.Md. 2011) (“Universal Elections”); Baltimore-Washington Tel Co. v. Hot Leads Co., 584 F.Supp.2d 736, 745 (D.Md. 2008); Covington & Burling v. Int’l Mktg. & Research, Inc., 2003 WL 21384825, at *6 (D.C.Super Apr. 17, 2003); Chapman v. Wagener Equities, Inc. 2014 WL 540250, at *16-17 (N.D.Ill. Feb. 11, 2014); Versteeg v. Bennett, Deloney & Noyes, P.C., 775 F.Supp.2d 1316, 1321 (D.Wy.2011) (“Versteeg”). Upon learning of the identities of said individuals, Plaintiff will move to amend to name the individuals as to herein as “Defendants.” 13. Whenever in this complaint it is alleged that Defendant(s) committed any act or omission, it is meant that the Defendant’s officers, directors, vice-principals, agents, servants, or employees, subsidiaries, or affiliates committed such act or omission and that at the time such act or omission was committed, it was done with the full authorization, ratification or approval of Defendant or was done in the routine normal course and scope of employment of the Defendant’s officers, directors, vice-principals, agents, servants, or employees. JURISDICTION, VENUE AND INTRADISTRICT ASSIGNMENT 14. This action is brought under the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. (“TCPA”), and 47 C.F.R. § 64.1200(D), which is a federal statute. 15. Subject matter jurisdiction over this action is conferred by 28 U.S.C. § 1331 (federal question). 16. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) because the wrongful conduct giving rise to this case occurred in, was directed to, and/or emanated from Contra Costa County, which is located in the Northern District of California. It is also the district in which One Planet’s and BuyerLink’s principal place of business is located. 17. Since the acts or omissions which give rise to Plaintiff’s claims occurred in Contra Costa County, Pursuant to Local Rule 3.2(c), this action must be assigned to the Oakland division of the Northern District Court. LEGAL BASIS FOR THE CLAIMS 18. In 1991, Congress enacted the TCPA to regulate the explosive growth of the telemarketing industry. In doing so, Congress recognized that “[u]nrestricted telemarketing…can be an intrusive invasion of privacy…” Telephone Consumer Protection Act of 1991, Pub. L. No. 102-243 § 2(5) (1991) (codified at 47 U.S.C. § 227). 19. Specifically, the TCPA restricts telephone solicitations (i.e., telemarketing) and the use of automated telephone equipment. The TCPA limits the use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages, and fax machines. It also systems—principally with provisions requiring identification and contact information of the entity using the device to be contained in the message. 20. The TCPA and the Federal Communications Commission’s (“FCC”) implemented rules prohibit: (1) making telemarketing calls using an artificial or prerecorded voice to residential telephones without prior express consent; and (2) making any non- emergency call using an automatic telephone dialing system (“ATDS”) or an artificial or prerecorded voice to a wireless telephone number without prior express consent. If the call includes or introduces an advertisement, or constitutes telemarketing, consent must be in writing. The TCPA grants consumers a private right of action, with a provision for $500 or the actual monetary loss in damages for each violation, whichever is greater, and treble damages for each willful or knowing violation, as well as injunctive relief. 21. In its initial implementation of the TCPA rules, the FCC included an exemption to its consent requirement for prerecorded telemarketing calls. Where the caller could demonstrate an “established business relationship” with a customer, the TCPA permitted the caller to place pre-recorded telemarketing calls to residential lines. The new amendments to the TCPA, effective October 16, 2013, eliminate this established business relationship exemption. Therefore, all pre-recorded telemarketing calls to residential lines and wireless numbers violate the TCPA if the calling party does not first obtain express written consent from the called party. /// /// /// /// /// /// /// /// /// consent,1 the TCPA and Federal Communications Commission (FCC) rules under the TCPA generally:  Prohibits solicitors from calling residences before 8 a.m. or after 9 p.m., local time.  Requires solicitors provide their name, the name of the person or entity on whose behalf the call is being made, and a telephone number or address at which that person or entity may be contacted.  Prohibits solicitations to residences that use an artificial voice or a recording.  Prohibits any call or text made using automated telephone equipment or an artificial or prerecorded voice to a wireless device or telephone.  Prohibits any call made using automated telephone equipment or an artificial or prerecorded voice to an emergency line (e.g., “911”), a hospital emergency number, a physician’s office, a hospital/health care facility/elderly room, a telephone, or any service for which the recipient is charged for the call.  Prohibits autodialed calls that engage two or more lines of a multi-line business.  Prohibits unsolicited advertising faxes.  Prohibits certain calls to members of the Do-Not-Call Registry 23. The TCPA prohibits: (1) any person from calling a cellular telephone number; (2) using an automatic telephone dialing system or prerecorded message; (3) without the recipient’s prior express consent. 47 U.S.C. § 227(b)(1)(A). 24. The TCPA defines an “automatic telephone dialing system” (“ATDS”) as “equipment that has the capacity - (A) to store or produce telephone numbers to be called, using 1 Prior express written consent means “an agreement, in writing, bearing the signature of the person called that clearly authorizes the seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice, and the telephone number to which the signatory authorizes such advertisements or telemarketing messages to be delivered. 47 C.F.R. § 64.1200(f)(8). 25. In an action under the TCPA, a plaintiff must only show that the defendant “called a number assigned to a cellular telephone service using an automatic dialing system or prerecorded voice.” Breslow v. Wells Fargo Bank, N.A., 857 F. Supp. 2d 1316, 1319 (S.D. Fla. 2012), aff'd, 755 F.3d 1265 (11th Cir. 2014). 26. The Federal Communications Commission (“FCC”) is empowered to issue rules and regulations implementing the TCPA. According to the FCC’s findings, calls in violation of the TCPA are prohibited because, as Congress found, automated or prerecorded telephone calls are a greater nuisance and invasion of privacy than live solicitation calls, and such calls can be costly and inconvenient. The FCC also recognized that wireless customers are charged for incoming calls whether they pay in advance or after the minutes are used. Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02- 278, Report and Order, 18 FCC Rcd 14014 (2003). 27. There are just a handful of elements need to be proven for violations of the Do Not Call provision of the TCPA. A. DO NOT CALL VIOLATIONS OF THE TCPA 28. More Than One Call within Any 12 Month Period. 47 U.S.C. § 227(c) provides that any “person who has received more than one telephone call within any 12-month period by or on behalf of the same entity in violation of the regulations prescribed under this subsection may” bring a private action based on a violation of said regulations, which were promulgated to protect telephone subscribers’ privacy rights to avoid receiving telephone solicitations to which they object. 29. Calls to Residential Lines on the Do Not Call List. The TCPA’s implementing regulation—47 C.F.R. § 64.1200(c)—provides that “[n]o person or entity shall initiate any telephone solicitation” to “[a] residential telephone subscriber who has registered his or her telephone number on the national do-not-call registry of persons who do not wish to receive telephone solicitations that is maintained by the federal government.” See 47 C.F.R. § 64.1200(c). numbers (aka mobile or cellular phones) receive the same protections from the Do Not Call provision as owners or subscribers of wireline (“landline”) phone numbers. 47 C.F.R. § 64.1200(e), provides that 47 C.F.R. §§ 64.1200(c) and (d) “are applicable to any person or entity making telephone solicitations or telemarketing calls to wireless telephone numbers to the extent described in the Commission’s Report and Order, CG Docket No. 02-278, FCC 03- 153, ‘Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991,’” which the Report and Order, in turn, provides as follows: The Commission’s rules provide that companies making telephone solicitations to residential telephone subscribers must comply with time of day restrictions and must institute procedures for maintaining do-not-call lists. For the reasons described above, we conclude that these rules apply to calls made to wireless telephone numbers. We believe that wireless subscribers should be afforded the same protections as wireline subscribers. 31. The Affirmative Defense of Prior Express Consent. The Ninth Circuit has defined “express consent” to mean “clearly and unmistakably stated.” Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 955 (9th Cir. 2009) (“Satterfield”)). “Prior express consent is an affirmative defense for which the defendant bears the burden of proof.” See Grant v. Capital Management Services, L.P., 2011 WL 3874877, at *1, n.1. (9th Cir. Sept. 2, 2011) (“express consent is not an element of a TCPA plaintiff’s prima facie case, but rather is an affirmative defense for which the defendant bears the burden of proof”); see also Robbins v. Coca-Cola Company, No. 13-cv-132, 2013 WL 2252646, at *2 (S.D. Cal. May 22, 2013). /// /// /// /// /// /// /// /// 47 C.F.R. § 64.1200(d) further provides that “[n]o person or entity shall initiate any call for telemarketing purposes to a residential telephone subscriber unless such person or entity has instituted procedures for maintaining a list of persons who request not to receive telemarketing calls made by or on behalf of that person or entity.” The procedures instituted must meet the following minimum standards: (1) Written policy. Persons or entitles making calls for telemarketing purposes must have a written policy, available upon demand, for maintaining a do-not-call list. (2) Training of personnel engaged in telemarketing. Personnel engaged in any aspect of telemarketing must be informed and trained in the existence and use of the do-not-call list. (3) Recording, disclosure of do-not-call requests. If a person or entity making a call for telemarketing purposes (or on whose behalf such a call is made) receives a request from a residential telephone subscriber not to receive calls from that person or entity, the person or entity must record the request and place the subscriber’s name, if provided, and telephone number on the do-not-call list at the time the request is made. Persons or entities making calls for telemarketing purposes (or on whose behalf such calls are made) must honor a residential subscriber’s do-not-call request within a reasonable time from the date such request is made. This period may not exceed thirty days from the date of such request… (4) Identification of sellers and telemarketers. A person or entity making a call for telemarketing purposes must provide the called party with the name of the individual caller, the name of the person or entity on whose behalf the call is being made, and a telephone number or address at which the person or entity may be contacted. The telephone number provided may not be a 900 number or any other number for which charges exceed local or long distance transmission charges. (5) Affiliated persons or entities. In the absence of a specific request by the subscriber to the contrary, a residential subscriber’s do-not-call request shall apply to the particular business entity making the call (or on whose behalf a call is made) and will not apply to affiliated entities unless the consumer reasonably would expect them to be included given the identification of the caller and the product being advertised. (4) Maintenance of do-not-call lists. A person or entity making calls for telemarketing purposes must maintain a record of a consumer’s request not to COMMON FACTUAL ALLEGATIONS 33. Defendants own and operate a real-time lead service company in the online marketing and advertising industry. Defendants have engaged in a scheme, to place text messages and place automated telephone calls, en masse, to consumers across the country. On information and belief, Defendants and or their agents purchase “leads” containing consumers’ contact information and create electronic databases from which Defendants makes automated text messages that are not hand delivered. On information and belief, Defendants and/or their agents also obtain “leads” containing consumers’ contact information and create an electronic database from which Defendants make automated calls through a sophisticated automatic telephone dialling system utilizing an artificial or pre-recorded voice. On information and belief, Defendants and/or their agents also obtain “leads” containing consumers’ contact information by utilizing referral services. Defendants and/or third parties believe they have circumvented the TCPA and have legal consent to place the calls to these individuals. The problem is, on information and belief, Defendants and/or third parties forwards contact information for any live body who answers the call and communicates with the automated system, regardless of whether that person gave valid consent to receive subsequent marketing calls from Defendants. 34. In Defendants’ overzealous attempt to market its services, Defendants placed repeated and unwanted texts and automated telemarketing calls to consumers whose phone numbers are listed on the National Do Not Call Registry. Consumers place their phone numbers on the Do Not Call Registry for the express purpose of avoiding unwanted telemarketing calls like those alleged here. 35. Defendants knowingly made these telemarketing text messages and automated telemarketing calls without the prior express written consent of the recipients, and knowingly continue to message them after requests to stop. As such, Defendants not only invaded the personal privacy of Plaintiff and members of the putative Class, but also intentionally and repeatedly violated the TCPA. telephone numbers beginning with the (925) area code from Contra Costa County, California. FACTS SPECIFIC TO PLAINTIFF REEVE SCHLEY A. TEXT VIOLATIONS 37. On or about August 7, 2019 at 3:50 p.m., Defendants began using an automated text-messaging platform, causing the following text message to be transmitted to Plaintiff’s cellular telephone: “Hi Good day! this is Mark Belfort from Contractors.com, We are a real-time Lead Service Company. just checking in if you’re already available to take additional Home Improvement Projects from Homeowners. We are currently receiving a lot of Roofing Job request in LA We only charge $45 for Roofing, no annual fees, no subscription fees and no contracts or any long term commitment. Please let me know if you’re interested.” 38. The message was sent from the number 925-465-2000, which is a dedicated number used for mass texts, not hand delivered messages. 39. On or about August 9, 2019 at 8:45 a.m., Defendants using an automated text- messaging platform, caused a similar sales pitch text message from Contractors.com to be transmitted to Plaintiff’s cellular phone. The message was sent from the number 925-378-3733, which is a dedicated number used for mass texts, not hand delivered messages. 40. On or about August 21, 2019 at 3:39 p.m., Defendants using an automated text- messaging platform, caused at least three text messages to be transmitted to Plaintiff’s cellular telephone with a similar sales pitch referenced in ¶ 37. These messages were sent from the same number 925-465-2000. 41. Defendants’ text message constitutes telemarketing because it promotes Defendants’ goods and/or services, including its “lead service for roofing fees.” 42. At no point in time did Plaintiff provide Defendants with his express written consent to be contacted by text messages using an ATDS. 43. At no point in time did Plaintiff provide Defendants with his express consent or express permission to be contacted by text messages using an ATDS. ****. 45. Upon information and belief, Defendants caused the same or similar text messages to be transmitted to the cellular telephones of consumers throughout the country. 46. The impersonal and generic nature of Defendants’ text message establishes that Defendants utilized an ATDS in transmitting the messages. See Jenkins v. LL Atlanta, LLC, No. 1:14-cv-2791-WSD, 2016 U.S. Dist. LEXIS 30051, at *11 (N.D. Ga. Mar. 9, 2016) (“These assertions, combined with the generic, impersonal nature of the text message advertisements and the use of a short code, support an inference that the text messages were sent using an ATDS.”) (citing Legg v. Voice Media Grp., Inc., 20 F. Supp. 3d 1370, 1354 (S.D. Fla. 2014) (plaintiff alleged facts sufficient to infer text messages were sent using ATDS; use of a short code and volume of mass messaging alleged would be impractical without use of an ATDS); Kramer v. Autobytel, Inc., 759 F. Supp. 2d 1165, 1171 (N.D. Cal. 2010) (finding it “plausible” that defendants used an ATDS where messages were advertisements written in an impersonal manner and sent from short code); Robbins v. Coca-Cola Co., No. 13-CV-132-IEG NLS, 2013 U.S. Dist. LEXIS 72725, 2013 WL 2252646, at *3 (S.D. Cal. May 22, 2013) (observing that mass messaging would be impracticable without use of an ATDS)). 47. Defendants utilized a combination of hardware and software systems to send the text messages at issue in this case. The systems utilized by Defendants have the current capacity or present ability to store numbers using a random or sequential generator, and to dial such numbers. Additionally, the equipment used by Defendants has the capacity to dial numbers from a list of numbers, automatically without human intervention. 48. Defendants knowingly made these telemarketing text messages without the prior express written consent of the recipients, and knowingly continue to text them after requests to stop. As such, Defendants not only invaded the personal privacy of Plaintiff and members of the putative Class, but also intentionally and repeatedly violated the TCPA. /// /// 49. Plaintiff registered his cellular phone number with the area code 310 and beginning in 435-**** with the National Do Not Call Registry several years prior to Defendants’ illegal texts and calls. 50. Plaintiff is the regular carrier and exclusive user of the telephone assigned the number beginning in 310-435-****. The number is assigned to a cellular telephone service for which Plaintiff is charged for incoming calls pursuant to 47 U.S.C. § 227(b)(1). 51. Beginning on or about August 21, 2019, Plaintiff began receiving automated calls on his cellular telephone from various numbers including 925-465-2000, claiming to be Defendants. 52. On or about September 6, 2019 at 10:55 a.m., Plaintiff received an automated call on his cellular telephone from the number 925-378-3733, claiming to be Defendants. 53. On or about September 26, 2019 at 1:50 p.m., Plaintiff received an automated call on his cellular telephone from the number 925-322-2820, claiming to be Defendants. 54. On or about September 26, 2019 at 4:22 p.m., Plaintiff received an automated call on his cellular telephone from the number 925-951-0936, claiming to be Defendants. 55. On or about November 1, 2019, Plaintiff received an automated call on his cellular telephone from the number 925-357-3136, claiming to be Defendants. 56. On or about December 20, 2019 at 11:22 a.m., Plaintiff received an automated call on his cellular telephone from the number 925-357-3136, claiming to be Defendants. 57. Plaintiff has received approximately thirty (30) calls between August 2019 and December 2019, from various numbers all with the area code (925), claiming to be Defendants. 58. Plaintiff never had a business relationship with Defendants. 59. Plaintiff never provided Defendants with prior consent or invitation or permission to contact him on his phone via a text message or telephone call. 60. Nonetheless, Defendants called Plaintiff utilizing a deceptive automated system at least twice on his phone during a twelve-month period. 61. Plaintiff received at least two calls in which, after picking up the call, a voice second delay was caused by an ATDS system, connecting live call recipients with telemarketers. C. FACTS CONCERNING TEXTS AND TELEPHONE CALL VIOLATIONS 62. Defendants’ calls/texts constituted calls that were not for emergency purposes as defined by 47 U.S.C. § 227(b)(1(A)(i). 63. Defendants’ unsolicited telemarketing calls/texts caused Plaintiff extreme aggravation and occupied his telephone line. 64. Plaintiff has reason to believe Defendants texted thousands of telephone customers to market their products and services. 65. Plaintiff’s overriding interest is ensuring Defendants cease all illegal telemarketing practices and compensates all members of the Plaintiff Class for invading their privacy in the manner the TCPA was contemplated to prevent. 66. In order to redress injuries caused by Defendants’ violations of the TCPA, Plaintiff, on behalf of himself and a class of similarly situated individuals, bring suit under the TCPA, 47 U.S.C. § 227, et seq., which prohibits certain unsolicited calls voice and text to individuals whose numbers are registered on the Do Not Call Registry as well as illegal text messages to anyone cellphones. 67. On behalf of the Class, Plaintiff seeks an injunction requiring Defendants to cease all illegal telemarketing and spam activities and an award of statutory damages to the class numbers, together with costs and reasonable attorneys’ fees. STANDING 68. Plaintiff has standing to bring this suit on behalf of himself and the members of the class under Article III of the United States Constitution because Plaintiff’s claims state: (a) a valid injury in fact; (b) an injury which is traceable to the conduct of Defendants; and (c) is likely to be redressed by a favorable judicial decision. See Spokeo v. Robins, 578 U.S. __ (2016) at 6; Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). /// 69. Plaintiff has standing to bring this suit on behalf of himself and the members of the class under Article III of the United States Constitution because Plaintiff’s claims state: (a) a valid injury in fact; (b) an injury which is traceable to the conduct of Defendants; and (c) is likely to be redressed by a favorable judicial decision. See Spokeo v. Robins, 578 U.S. __ (2016) at 6; Robins v. Spokeo, 867 F.3d 1108 (9th Cir. 2017) (cert denied. 2018 WL 491554, U.S., Jan. 22 2018); Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992); and Chen v. Allstate Inc. Co., 819 F.3d 1136 (9th Cir. 2016). 70. Plaintiff’s injuries must be both “concrete” and “particularized” in order to satisfy the requirements of Article III of the Constitution. (Id.) 71. For an injury to be concrete it must be a de facto injury, meaning it actually exists. In the present case, Plaintiff took the affirmative step of enrolling himself on the National Do-Not-Call Registry for the purpose of preventing marketing calls to their telephones. Such telemarketing calls are a nuisance, an invasion of privacy, and an expense to Plaintiff. See Soppet v. enhanced Recovery Co., LLC, 679 F.3d 637, 638 (7th Cir. 2012). All three of these injuries are present in this case. (See also Chen v. Allstate Inc. Co., 819 F.3d 1136 (9th Cir. 2016).) 72. Furthermore, the Third Circuit recently stated, Congress found that “[u]nsolicited telemarketing phone calls or text messages, by their nature, invade the privacy and disturb the solitude of their recipients,” Van Patten, 847 F.3d at 1043, and sought to protect the same interests implicated in the traditional common law cause of action. Put differently, Congress was not inventing a new theory of injury when it enacted the TCPA. Rather, it elevated a harm that, while “previously inadequate in law,” was of the same character of previously existing “legally cognizable injuries.” Spokeo, 136 S.Ct. at 1549. Spokeo addressed, and approved, such a choice by Congress. Susinno v. Work Out World Inc., No. 16-3277, 2017 WL 2925432, at *4 (3d Cir. July 10, 2017). 73. For an injury to be particularized means that the injury must affect the plaintiff in a personal and individual way. See Spokeo at 7. Furthermore, Plaintiff is the person who pays particular to Plaintiff. B. TRACEABLE TO THE CONDUCT OF DEFENDANTS 74. Plaintiffs must allege at the pleading stage of the case facts to show that their injury is traceable to the conduct of Defendants. In this case, Plaintiff satisfies this requirement by alleging that Defendants, and/or agents of Defendants on behalf of Defendants, placed illegal text messages and automated telephone calls to Plaintiff’s phone. 75. In the instant case, Defendants placed text messages and automated telephone calls to Plaintiff’s wireless/cellular phone. C. INJURY LIKELY TO BE REDRESSED BY A FAVORABLE JUDICIAL OPINION 76. The third prong to establish standing at the pleadings phase requires Plaintiffs to allege facts to show that the injury is likely to be redressed by a favorable judicial opinion. In the present case, Plaintiff’s Prayers for Relief include a request for damages for each text made by Defendants, as authorized by statute in 47 U.S.C. § 227. The statutory damages were set by Congress and specifically redress the financial damages suffered by Plaintiff and the members of the putative class. Furthermore, Plaintiff’s Prayers for Relief request injunctive relief to restrain Defendants from the alleged abusive practices in the future. The award of monetary damages and the order for injunctive relief redress the injuries of the past, and prevent further injury in the future. 77. Because all standing requirements of Article III of the U.S. Constitution have been met, as laid out in Spokeo, Inc. v. Robins, 578 U.S. ___ (2016) and in the context of a TCPA claim, as explained by the Ninth Circuit in Chen v. Allstate Inc. Co., 819 F.3d 1136 (9th Cir. 2016), Plaintiff has standing to sue Defendants on the stated claims. CLASS ACTION ALLEGATIONS A. CLASS ALLEGATIONS 78. Plaintiff brings this action pursuant to Federal Rule of Civil Procedure 23(a), (b)(2), and (b)(3) on behalf of himself and all others similarly situated, as a member of a proposed class (hereafter “the Cell Phone Class,” “the DNC Class,” and the “Internal DNC Class”): “Cell Phone Class”: All individuals within the United States, who within four years prior to the filing of the initial Complaint in this action, were sent a text message or received more than one telephone call via an ATDS made by or on behalf of Defendants within a 12-month period, from Defendants or anyone on Defendants’ behalf, to said person’s cellular telephone number, for the purposes of promoting Defendants’ service, without their prior express written consent. “DNC2 Class”: All individuals in the United States who: (1) received more than one telephone call made by or on behalf of Defendants within a 12-month period; and, (2) to a telephone number that had been registered with the National Do Not Call Registry for at least 30 days. “Internal DNC Class”: All persons in the United States to whom: (a) received more than one telephone call made by or on behalf of Defendant(s); (b) promoting Defendants’ goods or services; (c) more than 30 days after requesting not to receive further calls; (d) in a 12- month period; (e) on their cellular telephone line or residential telephone line; and (f) at any time in the period that begins four years before the date of filing this Complaint to trial. 79. The following individuals are excluded from the Class: (1) any Judge or Magistrate presiding over this action and members of their families; (2) Defendants, Defendants’ subsidiaries, parents, successors, predecessors, and any entity in which Defendants or their parents have a controlling interest, and its current or former employees, officers, and directors; (3) Plaintiff’s counsel and Defendants’ counsel; (4) persons who properly execute and file a timely request for exclusion from the Class; (5) the legal representatives, successors or assigns of any such excluded persons; (6) persons whose claims against Defendants have been fully and finally adjudicated and/or released; and (7) individuals for whom Defendants have record of consent to place telemarketing calls. 80. This suit seeks only damages, statutory penalties, and injunctive relief for recovery of economic injury on behalf of the Class, and it expressly is not intended to request any recovery for personal injury and claims related thereto. 2 “DNC” referenced herein refers to the National Do Not Call Registry, established pursuant to 47 U.S.C. 227(c) and the regulations promulgated by the Federal Communications Commission (“FCC”). behalf of additional persons as warranted as facts are learned in further investigation and discovery. 82. Plaintiff and members of the Class were harmed by Defendant’s acts in at least the following ways: Defendants, either directly or through agents, illegally contacted Plaintiff and the Class members via their telephones, after Plaintiff and the Class members took the affirmative step of registering their numbers on the DNC, and/or contacted Plaintiff and members of the Class using a pre-recorded voice for telemarketing purposes without first obtaining prior consent. B. NUMEROSITY 83. The exact sizes of the Class is unknown and not available to Plaintiff at this time, but it is clear individual joinder is impracticable. 84. On information and belief, Defendants made text messages to thousands of consumers who fall into the definition of the Class. Members of the Class can be easily identified through Defendants’ records. C. COMMONALITY AND PREDOMINANCE 85. There are many questions of law and fact common to the claims of Plaintiff and the Class, and those questions predominate over any questions that may affect individual members of the Class. 86. Common questions for the Class include, but are not necessarily limited to the following: (a) Whether Defendants’ conduct violated the TCPA; (b) Whether Defendants systematically made text messages to consumers who did not previously provide Defendants and/or their agents with prior express written consent to receive such messages; (c) Whether Defendant systematically made telephone calls to consumers whose telephone numbers were registered with the Do Not Call Registry; (d) Whether Defendants contacted Plaintiff and the Cell Phone Class members using an automatic telephone dialing system, without prior express written consent; (e) Whether Defendants complied with 47 CFR § 1200(d) requirement to maintain an internal DNC list and whether Defendants continued to contact members on that internal DNC list; (f) Whether members of the Classes are entitled to up to three times actual monetary loss based on the willfulness of Defendants’ conduct; and (g) Whether Defendants and their agents should be enjoined from engaging in such conduct in the future. 87. The common questions in this case are capable of having common answers. If Plaintiff’s claim that Defendants routinely violate the TCPA is correct, Plaintiff and the Class members will have identical claims capable of being efficiently adjudicated and administered in this case. D. TYPICALITY 88. Plaintiff’s claims are typical of the claims of the other members of the Classes. 89. Plaintiff and the Class sustained damages as a result of Defendants’ uniform wrongful conduct during transactions with Plaintiff and the Classes. E. ADEQUATE REPRESENTATION 90. Plaintiff will fairly and adequately represent and protect the interests of the Class, and has retained counsel competent and experienced in complex class actions. 91. Plaintiff has no interest antagonistic to those of the Defendants and their agents, and Defendants have no defenses unique to Plaintiff. F. POLICIES GENERALLY APPLICABLE TO THE CLASS 92. This class action is appropriate for certification because the Defendants have acted or refused to act on grounds generally applicable to the Classes as a whole, thereby requiring the Court’s imposition of uniform relief to ensure compatible standards of conduct toward the Classes members, and making final injunctive relief appropriate with respect to the Classes as a whole. 93. Defendants’ practices challenged herein apply to and affect the Classes’ members uniformly, and Plaintiff’s challenge of those practices hinges on Defendants’ conduct with respect to the Classes as a whole, not on facts or law applicable only to Plaintiff. 94. This case is also appropriate for class certification because class proceedings are superior to all other available methods for the fair and efficient adjudication of this controversy given that joinder of all parties is impracticable. 95. The damages suffered by the individual members of the Classes will likely be relatively small, especially given the burden and expense of individual prosecution of the complex litigation necessitated by Defendants’ actions. 96. Thus, it would be virtually impossible for the individual members of the Classes to obtain effective relief from Defendants’ misconduct. 97. Even if members of the Classes could sustain such individual litigation, it would still not be preferable to a class action, because individual litigation would increase the delay and expense to all parties due to the complex legal and factual controversies presented in this Complaint. 98. By contrast, a class action presents far fewer management difficulties and provides the benefits of single adjudication, economy of scale, and comprehensive supervision by a single court. Economies of time, effort and expense will be fostered, and uniformity of decisions ensured. FIRST CAUSE OF ACTION VIOLATION OF TCPA, 47 U.S.C. § 227 (“Illegal Cell Phone and Text Claim” on behalf of Plaintiff and the Cell Phone Class) 99. Plaintiff re-alleges and incorporates by reference each preceding paragraph as though set forth at length herein. 100. The foregoing acts and omissions of Defendants constitute numerous and multiple violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227, et seq. and 47 C.F.R. §64.1200, et seq. /// /// /// emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice…to any telephone number assigned to a…cellular telephone service….” 47 U.S.C. § 227(b)(1)(A)(iii). 102. “Automatic telephone dialing system” refers to any equipment that has the “capacity to dial numbers without human intervention.” See, e.g., Hicks v. Client Servs., Inc., No. 07-61822, 2009 WL 2365637, at *4 (S.D. Fla. June 9, 2009) (citing FCC, In re: Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991: Request of ACA International for Clarification and Declaratory Ruling, 07–232, ¶ 12, n.23 (2007)). 103. Defendants – or third parties directed by Defendants – used equipment having the capacity to dial numbers without human intervention to make non-emergency text messages and phone calls to the cellular telephones of Plaintiff and the other members of the Cell Phone Class. Defendants contacted Plaintiff and members of the Cell Phone Class, on their cellular phones through a sophisticated automatic telephone dialling system utilizing an artificial or pre- recorded voice message and via text message. 104. When Plaintiff answered the repeated telephone calls from Defendants’ caller identification numbers, all beginning with area code (925), a voice became audible after a several seconds of delayed silence. These facts led Plaintiff to believe that Defendants were utilizing an ATDS or pre-recorded voice while making the calls prior to connecting call recipients with telemarketers. 105. Plaintiff was annoyed by the unsolicited automated calls and wanted them to stop. When Plaintiff called Defendant’s (925) telephone numbers back, he was greeted with an automated system that would abruptly redirect the call to hold with automated music audible. 106. These calls were made without regard to whether Defendants had first obtained express written consent to make such calls or send such texts. In fact, Defendants did not have prior express written consent to call or text the cell phones of Plaintiff and Cell Phone Class members when the subject calls and texts were made. /// telephone dialing system to make non-emergency text messages to the cell phones of Plaintiff and the other members of the putative Class without their prior express consent. 108. As a result of Defendants’ conduct, and pursuant to 47 U.S.C. § 227, et seq., and 47 C.F.R. § 64.1200, et seq., Plaintiff and the other members of the putative Class were harmed and are each entitled to a minimum of $500.00 in damages for each violation. Plaintiff and the class are also entitled to an injunction against future calls. 109. To the extent Defendants’ misconduct is determined to be willful and knowing, the Court should, pursuant to 47 U.S.C. § 227(c)(5), award up to three times the amount of statutory damages recoverable by the members of the Class. 110. Plaintiff is also entitled to and seeks injunctive relief prohibiting such conduct in the future. SECOND CAUSE OF ACTION VIOLATION OF TCPA, 47 U.S.C. § 227 (“DNC Claim” on behalf of Plaintiff and the DNC Class) 111. Plaintiff re-alleges and incorporates by reference each preceding paragraph as though set forth at length herein. 112. 47 U.S.C. § 227(c) provides that any “person who has received more than one telephone call within any 12-month period by or on behalf of the same entity in violation of the regulations prescribed under this subsection may” bring a private action based on a violation of said regulations, which were promulgated to protect telephone subscribers’ privacy rights to avoid receiving telephone solicitations to which they object. 113. The TCPA’s implementing regulation—47 C.F.R. § 64.1200(c)—provides that “[n]o person or entity shall initiate any telephone solicitation” to “[a] residential telephone subscriber who has registered his or her telephone number on the national do-not-call registry of persons who do not wish to receive telephone solicitations that is maintained by the federal government.” See 47 C.F.R. § 64.1200(c). /// initiated, telephone solicitations to wireless and residential telephone subscribers such as Plaintiff and the DNC Class members who registered their respective telephone numbers on the National Do Not Call Registry, a listing of persons who do not wish to receive telephone solicitations that is maintained by the federal government. 115. Defendants made more than one unsolicited telephone call to Plaintiff and members of the Class within a 12-month period without their prior express consent to place such calls. Plaintiff and members of the DNC Class never provided any form of consent to receive telephone calls from Defendants and do not have a record of consent to place telemarketing calls to them. 116. Defendants violated 47 U.S.C. § 227(c)(5) because Plaintiff and the DNC Class members received more than one telephone call in a 12-month period made by or on behalf of Defendants in violation of 47 C.F.R. § 64.1200, as described above. As a result of Defendants’ conduct as alleged herein, Plaintiff and the DNC Class suffered actual damages and, under section 47 U.S.C. § 227(c), are each entitled, inter alia, to receive up to $500 in damages for such violations of 47 C.F.R. § 64.1200. 117. To the extent Defendants’ misconduct is determined to be willful and knowing, the Court should, pursuant to 47 U.S.C. § 227(c)(5), treble the amount of statutory damages recoverable by the members of the Class. /// /// /// /// /// /// /// /// /// INTERNAL DNC CLAIM IN VIOLATION OF THE TELEPHONE CONSUMER PROTECTION ACT, 47 U.S.C. § 227, ET SEQ. (64 C.F.R. § 64.1200(D)) (“Internal DNC Claim” on behalf of Plaintiff and the Internal DNC Class) 118. Plaintiff hereby incorporates by reference and re-alleges each and every allegation set forth in each and every preceding paragraph of this Complaint, as though fully set forth herein. 119. 47 C.F.R. § 64.1200(d) further provides that “[n]o person or entity shall initiate any call for telemarketing purposes to a residential telephone subscriber unless such person or entity has instituted procedures for maintaining a list of persons who request not to receive telemarketing calls made by or on behalf of that person or entity. The procedures instituted must meet the following minimum standards: (1) Written policy. Persons or entitles making calls for telemarketing purposes must have a written policy, available upon demand, for maintaining a do-not-call list. (2) Training of personnel engaged in telemarketing. Personnel engaged in any aspect of telemarketing must be informed and trained in the existence and use of the do-not-call list. (3) Recording, disclosure of do-not-call requests. If a person or entity making a call for telemarketing purposes (or on whose behalf such a call is made) receives a request from a residential telephone subscriber not to receive calls from that person or entity, the person or entity must record the request and place the subscriber’s name, if provided, and telephone number on the do-not-call list at the time the request is made. Persons or entities making calls for telemarketing purposes (or on whose behalf such calls are made) must honor a residential subscriber’s do-not-call request within a reasonable time from the date such request is made. This period may not exceed thirty days from the date of such request… (4) Identification of sellers and telemarketers. A person or entity making a call for telemarketing purposes must provide the called party with the name of the individual caller, the name of the person or entity on whose behalf the call is being made, and a telephone number or address at which the person or entity may be contacted. The telephone number provided may not be a 900 number or any other number for which charges exceed local or long distance transmission charges. (5) Affiliated persons or entities. In the absence of a specific request by the subscriber to the contrary, a residential subscriber’s do-not-call request shall apply to the particular business entity making the call (or on whose behalf a call is made), and will not apply to affiliated entities unless the consumer reasonably would expect them to be included given the identification of the caller and the product being advertised. (6) Maintenance of do-not-call lists. A person or entity making calls for telemarketing purposes must maintain a record of a consumer’s request not to receive further telemarketing calls. A do-not-call request must be honored for 5 years from the time the request is made. 120. Defendants made more than one unsolicited telephone call to Plaintiff and members of the Internal DNC Class within a 12-month period. Plaintiff and members of the Internal DNC Class never provided any form of consent to receive telephone calls from Defendants do not have a record of consent to place telemarketing calls to them and/or Plaintiff and members of the Internal DNC Class revoked consent. 121. Defendants violated 47 C.F.R. § 64.1200(d) by initiating calls for telemarketing purposes to residential and wireless telephone subscribers, such as Plaintiff and the Class, without instituting procedures that comply with the regulatory minimum standards for maintaining a list of persons who request not to receive telemarketing calls from them. 122. Defendants violated 47 U.S.C. § 227(c)(5) because Plaintiff and the Internal DNC Class received more than one telephone call more than 30 days after revoking any purported consent in violation of 47 C.F.R. § 64.1200, as described above. As a result of Defendants’ conduct as alleged herein, Plaintiff and the Internal DNC Class and the Class suffered actual damages and, under section 47 U.S.C. § 227(c), are each entitled, inter alia, to receive up to $500 in damages for such violations of 47 C.F.R. § 64.1200. 123. To the extent Defendants’ misconduct is determined to be willful and knowing, the Court should, pursuant to 47 U.S.C. § 227(c)(5), treble the amount of statutory damages recoverable by the members of the Class. 124. Plaintiff is also entitled to and seeks injunctive relief prohibiting such conduct in the future. /// 125. Each and every allegation contained in the foregoing paragraphs is re-alleged as if fully rewritten herein. 126. Plaintiff is entitled to recover reasonable attorney fees under Rule 23 of the Federal Rules of Civil Procedure, California law, and requests the attorneys’ fees be awarded. JURY DEMAND 127. Plaintiff, individual and on behalf of the Classes, demand a jury trial on all issues triable to a jury. PRAYER FOR RELIEF WHEREFORE, Plaintiff, individually and on behalf of the Class, prays for the following relief: (a) An order certifying the Cell Phone Class as defined above, appointing Plaintiff as the representative of the Class, and appointing his counsel, Kristensen LLP as lead Class Counsel; (b) An order certifying the DNC Class as defined above, appointing Plaintiff as the representative of the Class, and appointing his counsel, Kristensen LLP as lead Class Counsel; (c) An order certifying the Internal DNC Class as defined above, appointing Plaintiff as the representative of the Class, and appointing his counsel, Kristensen LLP as lead Class Counsel; (d) An award of actual and statutory damages for each and every violation to each member of the Class pursuant to 47 U.S.C. § 227(b)(3)(B); (e) An award of actual and statutory damages for each and every knowing and/or willful violation to each member of the Class pursuant to 47 U.S.C § 227(b)(3)(B); (f) An injunction requiring Defendants and Defendants’ agents to cease all unsolicited telephone calling activities, and otherwise protecting the interests of the Class, pursuant to 47 U.S.C. § 227(b)(3)(A); (h) Pre-judgment and post-judgment interest on monetary relief; (i) An award of reasonable attorneys’ fees and court costs; and (j) All other and further relief as the Court deems necessary, just, and proper. Dated: January 9, 2020 Respectfully submitted, By: /s/ John P. Kristensen John P. Kristensen (SBN 224132) KRISTENSEN LLP 12540 Beatrice Street, Suite 200 Los Angeles, California 90066 Telephone: (310) 507-7924 Fax: (310) 507-7906 [email protected] Jarrett L. Ellzey (pro hac vice pending) HUGHES ELLZEY, LLP Attorneys for Plaintiffs Plaintiff hereby demands a trial by jury for all such triable claims. Dated: January 9, 2020 Respectfully submitted, By: /s/ John P. Kristensen John P. Kristensen (SBN 224132) KRISTENSEN LLP 12540 Beatrice Street, Suite 200 Los Angeles, California 90066 Telephone: (310) 507-7924 Fax: (310) 507-7906 [email protected] Jarrett L. Ellzey (pro hac vice pending) HUGHES ELLZEY, LLP Attorneys for Plaintiffs

privacy

26D1CIcBD5gMZwczicm0

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS SANDRA WASHINGTON, on behalf of herself and all others similarly situated, Plaintiff, Civil Action No. 18-cv-03334 COLLECTIVE AND CLASS ACTION COMPLAINT MED-SPEC. TRANSPORT, INC. JURY DEMANDED Defendant. COLLECTIVE AND CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FAIR LABOR STANDARDS ACT, ILLINOIS’ MINIMUM WAGE LAW, AND THE FEDERAL EQUAL PAY ACT Plaintiff, SANDRA WASHINGTON, by and through her undersigned counsels, Cass T. Casper, Esq., TALON LAW, LLC, and complains as follows against Defendant on behalf of herself and all others similarly-situated. NATURE OF THE CASE 1. This is a collective action under the Fair Labor Standards Act (“FLSA”) and an Illinois class action brought by Plaintiff SANDRA WASHINGTON (“Plaintiff”), on behalf of herself and others similarly situated, to recover overtime compensation from her employer Med-Spec. Transport, Inc. (“Defendant”). 2. Defendant employs persons in the position known as “Carrier,” and persons in similar positions, but improperly classifies them as “independent contractors.” The Carriers routinely work more than forty (40) hours in a workweek, but are not paid an overtime premium for any of their overtime hours. 3. Plaintiff brings this action (1) as an opt-in collective action on behalf of herself and all similarly-situated individuals for violations of the FLSA, 29 U.S.C. § 201, et seq.; and, (2) as an opt-out class action on behalf of herself and the putative class for state violations of the Illinois Minimum Wage Law (“IMWL”), 820 ILCS 105/1, et seq. 4. Plaintiff’s FLSA claim is asserted as a collective action under FLSA, 29 U.S.C. § 216(b), while her IMWL claim is asserted as a class action under Federal Rule of Civil Procedure 23. 5. Plaintiff additionally brings a claim under the federal Equal Pay Act (“EPA”), 29 U.S.C. 206(d), on behalf of herself and all others similarly-situated, for willful discrimination by Defendant based on her sex (female) in regards to pay and benefits. Plaintiff also brings this claim as an opt-out class action under Federal Rule of Civil Procedure 23. JURISDICTION AND VENUE 6. This Court has original jurisdiction pursuant to 28 U.S.C. § 1331 to hear this Complaint and to adjudicate these claims because this action is brought under the federal FLSA and the federal EPA. 7. This Court has supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a) to hear Plaintiff’s state law claims brought under the IMWL, 820 ILCS 105/1, et seq. 2 8. Venue is proper in this Court pursuant to 28 U.S.C. § 1391 because Defendant operates in this district, Plaintiff works in this district, and because a substantial part of the events/omissions giving rise to the claims herein occurred in this district. PARTIES 9. Plaintiff SANDRA WASHINGTON is an adult resident of Cook County, Illinois. Plaintiff has worked for Defendant as a Carrier since approximately 2012. 10. Plaintiff is assigned to pick up and deliver medical/biological specimens, and medical supplies, from medical locations throughout Cook County, Illinois. 11. Plaintiff brings this action on behalf of herself and all other similarly-situated individuals nationwide (“FLSA Collective”) pursuant to the FLSA, 29 U.S.C. § 216(b). Plaintiff and the FLSA collective are current and former employees of Defendant within the meaning of the FLSA, employed as Carriers, or other job titles performing similar duties, across the country within the three years predating the filing of this Complaint. See 29 U.S.C. § 255(a). 12. Plaintiff also brings her IMWL claim as a class action pursuant to Federal Rule of Civil Procedure 23 on behalf of all Carriers who have worked for Defendant in Illinois in the past three years (“IMWL Class”). Plaintiff and the IMWL Class are current and former employees of Defendant within the meaning of the IMWL, employed by Defendant as Carriers, or other job titles performing similar duties, across the state of Illinois within three years predating the filing of this Complaint. 3 13. Defendant MED-SPEC. TRANSPORT, INC., is a domestic corporation incorporated and headquartered, to the best of Plaintiff’s knowledge and belief, within the state of Illinois. 14. Defendant is a provider of delivery services to various hospitals, medical laboratories, and companies in the business of providing dialysis services. Defendant sells its delivery and transport services to such companies, and employs drivers, such as Plaintiff, to deliver both organic biological material, as well as medical and other supplies. 15. Upon information and belief, gross annual sales//business done by Defendant has been in excess of $500,000 during each of the three years prior to the filing of this Complaint. 16. At all times relevant, Defendant is and has been an “employer” engaged in interstate commerce and/or the production of goods and/or the procurement of services for commerce, within the meaning of the FLSA, 29 U.S.C. § 203(d). Defendant is also an “employer” within the meaning of the IMWL, as well as under the Equal Pay Act. 17. Defendant operates in interstate commerce by, inter alia, dispatching its employees, equipment, supplies, and services to customers in multiple states, including Illinois, Florida, Wisconsin, Maryland, Arizona, California, Georgia, New York, and Virginia. Defendant also utilizes the instrumentalities of interstate commerce in the implementation of its services and operates on a nationwide basis. 4 FACTUAL ALLEGATIONS 18. Plaintiff, the FLSA Collective, and the IMWL Class are individuals who are or were employed by Defendant as Carriers, or in other job titles performing similar duties. In these positions, their primary job duties were non-exempt work, including picking up and delivering organic and biological medical material, and medical and other supplies. 19. Plaintiff, the FLSA Collective, and the IMWL Class are individuals who were paid hourly, but they do not, and have never, received overtime pay for hours worked over forty (40) in a workweek. 20. Defendant suffered and permitted Plaintiff, the FLSA Collective, and the IMWL Class to work more than forty (40) hours a week without overtime pay. 21. Defendant has classified Plaintiff, the FLSA Collective, and the IMWL Class as independent contractors who are precluded from receiving overtime compensation. 22. Defendant at all times is and has been aware of Plaintiff’s, the FLSA Collective’s, and the IMWL Class’ long work hours in excess of 40 hours per workweek. Plaintiff, for example, routinely works more than 40 hours per workweek in order to complete all of the deliveries she is assigned by the Defendant. 23. In addition, Plaintiff and similarly-situated current and former employees routinely work “off-the-clock,” with no pay whatsoever, in order to complete all of her required deliveries within the time period allotted for her to do so by Defendant. 5 FLSA COLLECTIVE ACTION ALLEGATIONS 24. Plaintiff and the FLSA Collective restate and incorporate by reference all other paragraphs of this Complaint as if fully restated herein. 25. Plaintiff files this action on behalf of herself and all similarly-situated individuals. The proposed FLSA Collective is defined as follows: All persons who worked as Carriers (or other job titles performing similar job duties) for Defendant at any time since three years prior to the filing of this Complaint. 26. Plaintiff has consented in writing to be a part of this action. Plaintiff’s signed consent form is attached as Exhibit A. 27. As this case proceeds, it is likely that other individuals will file consent forms and join as “opt-in” plaintiffs. 28. During the applicable statutory period, Plaintiff and the FLSA Collective routinely worked in excess of forty (40) hours a workweek without receiving overtime compensation. 29. Defendant willfully engaged in a pattern of violating the FLSA, 29 U.S.C. § 201, et seq., as described in this Complaint in ways including, but not limited to, failing to pay its Carriers overtime compensation. Defendant’s conduct constitutes a willful violation of the FLSA within the meaning of 29 U.S.C. § 255. 30. Defendant is liable under the FLSA for failing to properly compensate Plaintiff and the FLSA Collective. Accordingly, notice should be sent to the FLSA Collective. 6 There are numerous similarly-situated current and former employees of Defendant who have suffered from Defendant’s practice of denying overtime pay, and who would benefit from issuance of court-supervised notice of this lawsuit and opportunity to join. Those similarly-situated employees are known to Defendant and are readily identifiable through Defendant’s records. FEDERAL EQUAL PAY ACT AND STATE LAW IMWL CLASS ACTION ALLEGATIONS 31. Plaintiff and the IMWL Class restate and incorporate by reference all other paragraphs of this Complaint as if fully restated herein. 32. Plaintiff, as class representative, files this action on behalf of herself and all similarly-situated individuals pursuant to Rule 23(a) and (b) of the Federal Rules of Civil Procedure. 33. The proposed IMWL Class is defined as follows: All persons who worked as Carriers (or other job titles performing similar job duties) for Defendant at any time since three years prior to the filing of this Complaint. 34. The proposed EPA Class is defined as follows: All females who worked as Carriers (or other job titles performing similar job duties) for Defendant at any time since three years prior to the filing of this Complaint. 35. Plaintiff has consented in writing to be a part of this EPA action pursuant to 29 U.S.C. § 216(b). Plaintiff’s signed consent form is attached as Exhibit B. 7 36. Members of the proposed IMWL and EPA Classes are so numerous that joinder is impractical and inefficient. Upon information and belief, there are more than 50 members of the proposed IMWL Class, and more than 20 members of the EPA Class. The identities of the proposed IMWL and EPA Classes may be ascertained from the files and records of Defendant. 37. There are common questions of law and fact affecting Plaintiff and members of the IMWL and EPA Class, including, but not limited to, whether Defendant misclassified Plaintiff and the IMWL Class and unlawfully failed to pay them overtime compensation, whether Defendant discriminated against members of the EPA Class, whether Defendant failed to keep accurate time records for all hours worked, whether Defendant’s actions were willful, and the proper measure of damages by Plaintiff, and the IMWL and EPA Class members. 38. The claims of Plaintiff are typical of the claims of the IMWL and the EPA Class. Plaintiff had the same job duties and responsibilities as other IMWL and EPA Class members, and other IMWL Class members worked unpaid overtime hours. Like Plaintiff, other EPA Class members were paid less than male counterparts performing identical and/or substantially similar job duties. Plaintiff and the IMWL Class are and were subject to Defendant’s uniform policy and practice of improperly treating and classifying its Carriers as “independent contractors” not entitled to the benefit of wage and hour laws nor overtime compensation. Plaintiff and the EPA 8 Class are and were subject to Defendant’s policy and practice of discriminating against female Carriers with respect to pay and benefits. 39. Plaintiff will fairly and adequately protect the interest of the proposed IMWL and EPA Class because her interests are not inconsistent with or antagonistic to the interests of the proposed other class members. She has retained counsel experienced in employment litigation (Cass T. Casper, Esq., TALON LAW, LLC) and class litigation (Art Gold, Esq., Gold & Associates). 40. The prosecution of separate actions by individual members of the class would create a risk that inconsistent or varying adjudications with respect to individual members of the class would establish incompatible standards of conduct for Defendant in opposing the proposed IMWL and EPA Class, and would substantially impair or impede the interest of other members of the proposed IMWL and EPA Class to protect their interests. Certification under Rule 23(b)(1) is, therefore, appropriate. 41. The class action mechanism is superior to other available methods for the fair and efficient adjudication of this controversy, particularly in the context of wage and hour litigation where individual plaintiffs lack the financial resources to vigorously prosecute separate lawsuits in federal court against a large Defendant, such as is the case here. 42. The members of the proposed IMWL and EPA Class have suffered damages and are entitled to recovery as a result of Defendant’s common practices and uniform 9 policies, including Defendant’s willful misclassification of them as independent contractors, and willful payment of female employees less wages and benefits than their male counterparts. The damages suffered by class members are relatively small compared to the expense and burden of individual prosecution of the claims underlying this Complaint. Class certification will also eliminate the likelihood of inconsistent judgments. 43. Plaintiff intends to send notice to all members of the proposed IMWL and EPA Class to the extent permitted and required by Federal Rule of Civil Procedure 23. COUNT 1: VIOLATIONS OF THE FLSA: FAILURE TO PAY OVERTIME (On behalf of Plaintiff and the FLSA Collective) 44. Plaintiff and the FLSA Collective restate and incorporate by reference all other paragraphs of this Complaint as if fully restated herein. 45. The FLSA, 29 U.S.C. § 207, requires employers to pay non-exempt employees one and one-half times the regular rate of pay for all hours worked over forty (40) hours per workweek. 46. Defendant suffered and permitted Plaintiff and the FLSA Collective to routinely work more than forty (40) hours a workweek without overtime compensation. 47. Defendant’s actions, policies, and practices described herein violate the FLSA’s overtime requirements by regularly and repeatedly failing to compensate Plaintiff and the FLSA Collective at the required overtime rate. 10 48. As a direct and proximate result of Defendant’s unlawful conduct, Plaintiff and the FLSA Collective have suffered and will continue to suffer a loss of income and other damages. Plaintiff and the FLSA Collective are entitled to liquidated damages and attorney’s fees and costs incurred in connection with this claim. 49. The foregoing conduct, as alleged, constitutes a willful violation of the FLSA within the meaning of 29 U.S.C. § 255(a). Defendant knew or showed reckless disregard for the fact that its compensation practices were in violation of these laws. WHEREFORE, Plaintiff, on behalf of herself and all others similarly-situated, prays for judgment against Defendant as follows: A. Designation of this action as a collective action on behalf of Plaintiff and those similarly situated, and prompt issuance of notice pursuant to 29 U.S.C. § 216(b) to all those similarly situated apprising them of the pendency of this action, and permitting them to assert timely FLSA claims in this action by filing individual consent forms; B. A finding that Plaintiff and the FLSA Collective are employees entitled to protection under the FLSA; C. A finding that Defendant violated the overtime provisions of the FLSA; D. A finding that Defendant’s violations of the FLSA were and are willful violations; 11 E. Judgment against Defendant in the amount of Plaintiff and the FLSA Collective’s unpaid back wages at the applicable rates; F. An award of all damages, liquidated damages, pre- and post-judgment interest; G. An award of attorneys’ fees and costs incurred in prosecuting this action; H. Leave to add additional plaintiffs and/or state law claims by motion, the filing of written consent forms, or any other method approved by the Court; and, I. For such other and further legal and/or equitable relief as this Court deems just and proper. COUNT 2: VIOLATIONS OF THE IMWL: FAILURE TO PAY OVERTIME (On behalf of Plaintiff and the IMWL Rule 23 Class) 50. Plaintiff and the IMWL Class restate and incorporate by reference all other paragraphs of this Complaint as if fully restated herein. 51. At all times relevant, Plaintiff and the IMWL Class were employees of Defendant within the meaning of the IMWL, and, therefore, entitled to such law’s protections. See 820 ILCS 105/3(d). 52. Defendant is an employer within the meaning of the IMWL. See 820 ILCS 105/3(c). 53. The IMWL entitles employees to overtime compensation “at a rate not less than 1 ½ times the regular rate” for hours worked over forty (40) in a workweek. See 820 ILCS 105/4a(1). 54. Defendant violated the IMWL by routinely failing to compensate Plaintiff and the IMWL Class for hours worked in excess of forty (40) a workweek, and with respect 12 to such hours, failing to compensate Plaintiff and the IMWL Class based on the overtime pay rate of one and one-half times their regular pay rate. 55. Plaintiff and the IMWL Class seek damages in the amount of their underpayments based on Defendant’s failure to pay wages due pursuant to the IMWL, and such other legal and equitable relief from Defendant’s unlawful conduct as the Court deems proper. 56. Plaintiff and the IMWL Class also seek recovery of all attorneys’ fees, costs, liquidated damages, pre- and post-judgment interest, and expenses of this action that are available under the IMWL. WHEREFORE, Plaintiff, on behalf of herself and all others similarly-situated, prays for judgment against Defendant as follows: A. Certification of this action as a class action, pursuant to Rule 23 of the Federal Rules of Civil Procedure, on behalf of the IMWL Class; B. A finding that Plaintiff and IMWL Class are employees entitled to protection under the IMWL; C. A finding that Defendant violated the overtime provisions of the IMWL; D. Judgment against Defendant in the amount of Plaintiff and the IMWL Class’ unpaid back wages at the applicable rates; E. An award of all damages, including liquidated damages as allowed by 820 ILCS 105/12; 13 F. An award of attorneys’ fees and costs incurred in prosecuting this action; G. Leave to add additional plaintiffs and/or state law claims by motion, the filing of written consent forms, or any other method approved by the Court; and, H. For such other and further legal and/or equitable relief as this Court deems just and proper. COUNT 3: VIOLATIONS OF THE EQUAL PAY ACT, 29 U.S.C. § 206(d) (On behalf of Plaintiff and the EPA Class) 57. Plaintiff restates and incorporates by reference all other paragraphs of this Complaint as if fully restated herein. 58. This Count is brought on behalf of Plaintiff and all members of the EPA Class. 59. Plaintiff, a female, is employed by Defendant as a Carrier and works identical and/or substantially-similar job duties as male Carriers. 60. Defendant has discriminated against Plaintiff and similarly-situated female employees in violation of the federal Equal Pay Act, by subjecting her and EPA Class members to unequal pay on the basis of sex. 61. Defendant has discriminated against Plaintiff and similarly-situated female employees by treating them differently from and less preferably than similarly- situated male employees who performed jobs which required equal skill, effort, responsibility, and which were performed under similar working conditions. Defendant has also discriminated against them by subjecting them to less – and 14 discriminatory – pay and benefits in violation of the federal Equal Pay Act, 29 U.S.C. § 206(d). 62. As a result of Defendant’s conduct alleged herein and/or Defendant’s willful, knowing, and intentional discrimination, Plaintiff and similarly-situated female employees have suffered and will continue to suffer harm, including, but not limited to, lost wages, lost benefits, and other financial loss. 63. Plaintiff and similarly-situated female employees should be awarded the entire amount of underpayment, interest, costs, reasonable attorneys’ fees and other statutory penalties or relief as may be allowed by the Court pursuant to 29 U.S.C. § 206(d) and other applicable provisions of the Equal Pay Act. WHEREFORE, Plaintiff, on behalf of herself and all others similarly-situated, prays for judgment against Defendant as follows: A. Certification of this Count as a class action, pursuant to Rule 23 of the Federal Rules of Civil Procedure, on behalf of the EPA Class; B. A finding that Plaintiff and EPA Class are employees entitled to protection under the Equal Pay Act; C. A finding that Defendant violated the equal pay provisions of the Equal Pay Act; D. Judgment against Defendant in the amount of Plaintiff and the EPA Class’ unpaid wages at the applicable rates; 15 E. An award of all damages, including unpaid minimum and overtime wages, and liquidated damages as allowed by 29 U.S.C. § 216(b); F. An award of reasonable attorneys’ fees and costs incurred in prosecuting this action; and, G. For such other and further legal and/or equitable relief as this Court deems just and proper. CONCLUSION FOR THE FOREGOING REASONS, Plaintiff prays that this Honorable Court grant the relief sought in all Counts in this Complaint, on behalf of herself and all others similarly-situated. PLAINTIFF DEMANDS A TRIAL BY JURY AS TO ALL COUNTS DATED: MAY 9, 2018 Respectfully submitted, /s Cass T. Casper By:________________________________ Cass T. Casper One of Plaintiff’s Attorneys Cass T. Casper, Esq. (IL #6303022) TALON LAW, LLC 1153 West Lunt Avenue, Suite 253 Chicago, Illinois 60626 P: (312) 351-2478 16 F: (312) 276-4930 E: [email protected] 17

discrimination

Hf2FFIcBD5gMZwczA9w6

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x VICTOR LOPEZ, ON BEHALF OF HIMSELF AND ALL OTHER PERSONS SIMILARLY SITUATED Plaintiffs, ECF CASE No.:19cv3125 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED v. : : : : : : : : : : : : MCR INVESTORS LLC, Defendant. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X INTRODUCTION 1. Plaintiff, VICTOR LOPEZ, on behalf of himself and all other persons similarly situated (“Plaintiff”), asserts the following claims against Defendants, MCR INVESTORS LLC, (“Defendant” or “MCR”), as follows. 2. Plaintiff is a visually-impaired and legally blind person who requires screen- reading software to read website content using his computer. Plaintiff uses the terms “blind” or “visually-impaired” to refer to all people with visual impairments who meet the legal definition of blindness in that they have a visual acuity with correction of less than or equal to 20 x 200. Some blind people who meet their definition have limited vision. Others have no vision. 3. Based on a 2010 U.S. Census Bureau report, approximately 8.1 million people in the United States are visually impaired, including 2.0 million who are blind, and according to the American Foundation for the Blind’s 2015 report, approximately 400,000 visually impaired persons live in the State of New York. 4. Plaintiff asserts claims under the Americans With Disabilities Act (“ADA”), New York State Human Rights Law (“NYSHRL”) and New York City Human Rights Law (“NYCHRL”) against Defendant. 5. Because Defendant’s websites, https://www.mcrdevelopment.com/contact.htm (the “Website” or “Defendant’s Website”)1, fail to identify and describe accessible features in the hotels and guest rooms offered through its reservations service on its Website in enough detail to reasonably permit individuals with disabilities such as the Plaintiff to assess independently whether a given hotel or guest room meets his or her accessibility needs, it violates the provisions of the ADA including certain regulations promulgated thereunder (28 C.F.R. § 36.302(e)(1)). 6. Plaintiff seeks a permanent injunction to cause a change in Defendant’s corporate policies, practices, and procedures so that Defendant’s Website will include information as to accessibility features in their hotels and guest rooms to reasonably permit individuals with disabilities, including Plaintiff, to assess independently whether Defendant’s hotels or guest rooms meet his or her accessibility needs so that Defendant’s hotels become and remain accessible to blind and visually-impaired consumers. See, Poschmann v. Coral Reef of Key Biscayne Developers, Inc., (U.S.D.C. SDFL, May 23, 2108), WL 3387679, Lexis 87457. JURISDICTION AND VENUE 7. The Court has subject-matter jurisdiction over this action under 28 U.S.C. § 1331 and 42 U.S.C. § 12181, as Plaintiff’s claims arise under Title III of the ADA, 42 U.S.C. § 12181, et seq., and 28 U.S.C. § 1332. 1Included in the definition of Defendant’s website are all of the subsidiary websites for the MCR’s brands which are all accessed through this website, “main website” and are owned, operated, and managed in New York City or New York State, as follows: The New Yorker Hotel: https://www.mcrdevelopment.com/contact.htm and TWA Hotel: https://www.twahotel.com/. -2- 8. The Court has supplemental jurisdiction under 28 U.S.C. § 1367 over Plaintiff’s New York State Human Rights Law, N.Y. Exec. Law Article 15, (“NYSHRL”) and New York City Human Rights Law, N.Y.C. Admin. Code § 8-101 et seq., (“NYCHRL”) claims. 9. Venue is proper in this District under 28 U.S.C. §1391(b)(1) and (2) because Defendant does business by owning, managing and/or operating several hotels in New York, NY in this District and would thereby be considered a resident of this District if it were a separate state and 28 U.S.C. §1391(d) because a substantial part of the events giving rise to this claim occurred in this District due to the Plaintiff attempting to access the Defendant’s website to find more information about their hotels located in this district, from his home in New York, NY. 10. Defendant is subject to personal jurisdiction in this District. Defendant has been and is committing the acts or omissions alleged herein in the Southern District of New York that caused injury, and violated rights the ADA prescribes to Plaintiff and to other blind and other visually impaired-consumers. Plaintiff has been denied the full use and enjoyment of the Defendant’s facilities, goods, and services of Defendant’s physical hotels as a result of Defendant’s failure to include information relating to the accessibility features of its facilities and information relating to its accessible guest rooms in enough detail on its reservation system to permit Plaintiff to access whether the facility and/or the guest room meets its individual needs. The lack of information on the Website reservation system has caused a denial of Plaintiff’s full and equal access to Defendant’s hotels. 11. The Court is empowered to issue a declaratory judgment under 28 U.S.C. §§ 2201 and 2202. -3- THE PARTIES 12. Plaintiff, at all relevant times, is a resident of New York, New York. Plaintiff is a blind, visually-impaired handicapped person and a member of a protected class of individuals under the ADA, under 42 U.S.C. § 12102(1)-(2), and the regulations implementing the ADA set forth at 28 CFR §§ 36.101 et seq., the NYSHRL and NYCHRL. 13. Defendant, MCR Investors LLC, is and was, at all relevant times herein, registered to do business in New York state and is a Delaware Foreign Limited Liability Company with a principal place of business located at One World Trade Center, Floor 86, New York, NY. 14. MCR is one of the largest hospitality companies in the world and operates numerous hotels around the country. The hotels which are subject to this lawsuit are the New Yorker Hotel and the TWA Hotel. 15. MCR gives access to each of their owned hotel’s reservation system by way of offering a link on their website. These links on MCR’s website, connect its users with the reservation of system of each of their hotels so that users may make a reservation and/or contact the property for more information, such as amenities, special offers, and property locations. NATURE OF ACTION 16. The Internet has become a significant source of information, a portal, and a tool for conducting business, doing everyday activities such as shopping, learning, banking, researching, choosing hotel accommodations, as well as many other activities for sighted, blind and visually-impaired persons alike. 17. Blind and visually-impaired people have the ability to access websites using keyboards in conjunction with screen access software that vocalizes the visual information found -4- on a computer screen or displays the content on a refreshable Braille display. Their technology is known as screen-reading software. Screen-reading software is currently the only method a blind or visually-impaired person may independently access the Internet. Unless websites are designed to be read by screen-reading software, blind and visually-impaired persons are unable to fully access websites, and the information, products, and services contained thereon. 18. Blind and visually-impaired users of Windows operating system-enabled computers and devices have several screen reading software programs available to them. Some of these programs are available for purchase and other programs are available without the user having to purchase the program separately. Job Access With Speech, otherwise known as “JAWS” is currently the most popular, separately purchased and downloaded screen-reading software program available for a Windows computer. 19. For screen-reading software to function, the information on a website must be capable of being rendered into text. If the website content is not capable of being rendered into text, the blind or visually-impaired user is unable to access the same content available to sighted 20. The international website standards organization, the World Wide Web Consortium, known throughout the world as W3C, has published version 2.0 of the Web Content Accessibility Guidelines (“WCAG 2.0”). WCAG 2.0 are well-established guidelines for making websites accessible to blind and visually-impaired people. These guidelines are universally followed by most large business entities, most Courts and government agencies to ensure their websites are accessible. -5- 21. On March 15, 2012, the revised regulations implementing Title III of the ADA took effect, imposing significant new obligations on inns, motels, hotels and other “places of lodging,” specifically, 28 C.F.R. § 36.302(e)(i) provides that: Reservations made by places of lodging. A public accommodation that owns, leases (or leases to), or operates a place of lodging shall, with respect to reservations made by any means, including by telephone, in person, or by a third party --- (i) Modify its policies, practices, or procedures to ensure that individuals with disabilities can make reservations for accessible guest rooms during the same hours and in the same manner as individuals who do not need accessible rooms; (ii) Identify and describe accessible features in the hotels and guest rooms offered through its reservations service in enough detail to reasonably permit individuals with disabilities to assess independently whether a given hotel or guest room meets his or her accessibility needs; (iii) Ensure that accessible guest rooms are held for use by individuals with disabilities until all other guest rooms of that type; (iv) Reserve, upon request, accessible guest rooms or specific types of guest rooms and ensure that the guest rooms requested are blocked and removed from all reservation systems; and (v) Guarantee that the specific accessible guest room or guest rooms reserved through its reservations service is held for the reserving customer, regardless of whether a specific room is held in response to reservations made by others 22. Hotels are required to identify and describe all accessible features in the hotel and guest rooms; “[t]his requirement is essential to ensure individuals with disabilities receive information they need to benefit from the services offered by the place of lodging.” 28 C.F.R. Part 36, Appx. A. Moreover, “a public accommodation’s designation of a guest room as ‘accessible’ does not ensure necessarily that the room complies with all of the 1991 Standards.” 28 C.F.R. Part 36, Appx. A. Labeling a guest room as “accessible” or “ADA” is not sufficient. Accordingly, Defendant is required to set forth specific accessible features and not merely recite -6- that a guest room is “accessible” or “ADA compliant” or list accessibility features that may (or may not) be offered within a particular room. 23. For hotels in buildings constructed after the effective date of 1991, such as many of Defendant’s hotels, the regulations provide that it is sufficient to advise that the hotel itself is fully ADA compliant, and for each accessible guest room, to specify the room type, the type of accessible bathing facility in the room, and the communications features in the room. 28 C.F.R. Part 36, Appx. A. For hotels built before the effective date in 1991, there is detailed information relating to the description of individual accessibility features that the hotel is also required to disclose. 24. In promulgating these new requirements, it is clear that the intention of the Department of Justice is to ensure that individuals with disabilities should be able to reserve hotel rooms with the same efficiency, immediacy, and convenience as those who do not need accessible guest rooms. 28 C.F.R. Part 36, Appx. A. STATEMENT OF FACTS Defendant’s Website and Compliance with Requirement to Describe Accessibility Features 25. Defendant owns and operates hotels in the City of New York as well as in the rest of the United States. Many of these locations also offer dining and entertainment options, including on-site restaurants, room service and lobby lounges. 26. Defendant’s Website offers features to the public that should allow all consumers to access the facilities and services that it offers about their hotels. The Website is heavily integrated with their hotels, serving as their gateway. -7- 27. It is, upon information and belief, Defendant’s policy and practice to deny Plaintiff, along with other blind or visually-impaired users, using Defendant’s Website access to information through their reservation system relating to the availability of ADA compliant rooms and handicap accessible features of the hotel, and to therefore specifically deny the goods and services that are offered and integrated with Defendant’s hotels. Due to Defendant’s failure and refusal to add information through their reservation system relating to its accessibility for visually-impaired persons on their Website, Plaintiff and visually-impaired persons have been and are still being denied equal access to Defendant’s hotels and the numerous goods, services, and benefits offered to the public at Defendant’s hotels. 28. Plaintiff is a visually-impaired and legally blind person, who cannot use a computer without the assistance of screen-reading software. Plaintiff is, however, a proficient JAWS screen-reader user and uses it to access the Internet. Plaintiff has visited the Defendant’s Website on separate occasions using the JAWS screen-reader. 29. During Plaintiff’s visits to the Website, last occurring in March, 2019, Plaintiff was not able to determine from the reservation system on the Website what ADA compliant features, if any, the hotels offer and whether the guest rooms have handicap accessible facilities or communications equipment in the guest rooms suitable to blind or visually-impaired persons. As a result, Plaintiff has been denied full and equal access to the facilities, goods and services offered to the public and made available to the public; and that denied Plaintiff the full enjoyment of the facilities, goods, and services of Defendant’s physical locations in New York City and New York State by being unable to learn any information about the accessibility features of the hotels or its guest rooms. -8- Defendant Must Include Information Relating to ADA Compliant Rooms and Handicap Accessibility Features Through Its Website Reservation System 30. Due to the lack of information relating to the accessibility features of Defendant’s hotels through the reservation system on the Website, blind and visually-impaired customers such as Plaintiff, who need screen-readers, cannot fully and equally use or enjoy the facilities, goods, and services Defendant offers to the public in their hotels. The access barriers Plaintiff encountered have caused a denial of Plaintiff’s full and equal access in the past, and now deter Plaintiff on a regular basis using the services that the hotels offer to the public because of the lack of information on accessibility through the reservation system on the Website. Plaintiff intends to visit Defendant’s hotels or book rooms in Defendant’s hotels in the future if the Plaintiff was able to learn about the accessibility of Defendant’s hotels and guest rooms for blind and vision-impaired persons through the reservation system on their website and those accessibility features meet the needs of the Plaintiff. 31. These access barriers on Defendant’s Website reservation system have deterred Plaintiff from visiting Defendant’s physical locations, and enjoying them equal to sighted individuals because: Plaintiff was unable to find information on the Website reservation system relating to the accessibility of the hotels and guest rooms for blind and visually-impaired people and other important information, preventing Plaintiff from reserving a room at the hotels, staying at the hotel and using the facilities of the hotel including restaurants and attending events. 32. If the hotels and the Website reservation system were equally accessible to all, Plaintiff could independently navigate the Website and complete a desired transaction as sighted individuals do. -9- 33. Through visiting the Website, Plaintiff has actual knowledge of the lack of information on accessibility features available on the reservation system on the Website that result in making the services and facilities of the hotel inaccessible and independently unusable by blind and visually-impaired people. 34. Because simple compliance with the provisions of the ADA relating to providing information about accessibility features of the hotels and the guest rooms on its Website reservation system would provide Plaintiff and other visually-impaired consumers with equal access to the services and facilities at Defendant’s hotels, Plaintiff alleges that Defendant has engaged in acts of intentional discrimination, including, but not limited to, the failure to provide information on its Website reservation system sufficient to advise that the hotels are fully ADA compliant, and for each accessible guest room, to specify the room type, the type of accessible facility in the room, and the communications features in the room. 35. Defendant therefore use standards, criteria or methods of administration that have the effect of discriminating or perpetuating the discrimination of others, as alleged herein. 36. The ADA expressly contemplates the injunctive relief that Plaintiff seeks in this action. In relevant part, the ADA requires: In the case of violations of . . . this title, injunctive relief shall include an order to alter facilities to make such facilities readily accessible to and usable by individuals with disabilities . . . Where appropriate, injunctive relief shall also include requiring the . . . modification of a policy . . . 42 U.S.C. § 12188(a)(2). 37. Because Defendant’s Website reservation system has never included the required information, and because Defendant lacks a corporate policy that is reasonably calculated to cause the Website reservation system to include the required information relating to accessibility, Plaintiff invokes 42 U.S.C. § 12188(a)(2) and seeks a permanent injunction requiring Defendant -10- to retain a qualified consultant acceptable to Plaintiff (“Agreed Upon Consultant”) to assist Defendant to comply with the ADA regulations requiring certain accessibility information to be included on Defendant’s Website reservation system. Plaintiff seeks that their permanent injunction requires Defendant to cooperate with the Agreed Upon Consultant to: a. Train Defendant’s employees and agents who develop the Website for accessibility and compliance to identify and describe accessible features in the hotels and guest rooms on the Website reservation system and a statement that the hotels are fully ADA compliant, and for each accessible guest room, to specify the room type, the type of accessible facility in the room including a detailed description of the features of such facility so that a blind or visually-impaired person can determine if the features meet such person’s needs, and the communications features in the room including a detailed description of the communications features so that a blind or visually-impaired person can independently determine if the features meet such person’s needs, including, but not limited to: 1. Whether Defendant’s employees and agents such as managers, bell staff, doormen, concierges, transportation providers, security personnel, front desk and other staff are trained to assist blind and vision-impaired guests with basic needs such as: completing the hotel registration; learning about and completing service requests like laundry, dry cleaning, valet, shipping, room service, etc.; reviewing the hotel bill and charges; counting and identifying currency; using a signature guide or template in conjunction with their credit card; using a passcard-type of key; luggage rooms, business center, gym or health club, lounge facilities, rest rooms; orienting guests to hotel and guest room layouts; location of fire alarms, emergency exits and equipment; heating and air -11- conditioning controls; TV remote controls; message retrieval system; automated wake- up systems; and safe deposit box. 2. Whether Defendant accepts guide dogs and, if so, if there are any charges associated with the guide dogs, their policies with respect to guide dogs and if there are any rest areas for guide dogs. 3. Whether the hotels provide a braille and/or large print menu for restaurants and/or room service and, in the alternative, if they have trained staff to read the menu to blind or vision-impaired guests. 4. Whether or not emergency exit signs are compliant with ADAAG2 requirements and emergency evacuation plans and information are provided in braille and large print. 5. Whether or not all accessible signage complies with the requirements of the ADAAG. 6. Whether or not the stairs, escalators and elevators comply with ADAAG standards, such as braille for floor numbers in the elevator and a verbal annunciator for each floor. 7. Whether or not the hotels have removed or protected protruding objects which protrude more than 4” into walkways and hallways such as drinking fountains, fire extinguishers, and planters and if they provide cane detectable warnings for the underside of stairways. 8. Whether or not the guest rooms contain tactile and large print thermostat controls and talking/large print clocks. 9. Whether or not signage in the hotel can be easily located by blind and vision-impaired persons with 2” minimum height raised letters and braille characters centered at 60” above the finished floor to indicate floor numbers, rest rooms, lobby, vending and ice machines and all other hotel facilities and amenities. 2 ADA Accessibility Guidelines promulgated by the United States Access Board -12- b. Regularly check the accessibility of the Website and its reservation system under the WCAG 2.0 guidelines; c. Regularly test user accessibility by blind or vision-impaired persons to ensure that Defendant’s Website and the reservation system complies under the WCAG 2.0 guidelines; and d. Regularly check the hotels and the guest rooms to ensure that the accessibility features that they describe on its website reservation system are in fact available and properly maintained. 38. If the ADA-required information is included on the Website reservation system, Plaintiff and similarly situated blind and visually-impaired people could independently determine through use of the Website if Defendant’s hotels and guest rooms are ADA compliant and if the facilities described relating the facilities and communications equipment in guest rooms are acceptable to the Plaintiff and similarly situated blind and visually-impaired people 39. Although Defendant may currently have centralized policies regarding maintaining and operating its Website and the inclusion of information on the Website, Defendant lacks a plan and policy reasonably calculated to include the ADA-required information on the Website reservation system to make such information fully and equally accessible to, and independently usable by, blind and other visually-impaired consumers. 40. Defendant has, upon information and belief, invested substantial sums in developing and maintaining the Website and has generated significant revenue from the Website. These amounts are far greater than the associated cost of including the information required under the ADA regulations on the Website reservation system in order to make its facilities and guest rooms equally accessible to visually impaired customers. -13- 41. Without injunctive relief, Plaintiff and other visually-impaired consumers will continue to be unable to independently use the Website reservation system to obtain information relating to ADA accessibility of the hotels and their guest rooms, violating their rights. CLASS ACTION ALLEGATIONS 42. Plaintiff, on behalf of himself and all others similarly situated, seeks to certify a nationwide class under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the United States who have attempted to access Defendant’s Website to obtain the ADA-required accessibility information and as a result have been denied access to the equal enjoyment of goods and services offered in Defendant’s physical locations, during the relevant statutory period. 43. Plaintiff, on behalf of himself and all others similarly situated, seeks to certify a New York State subclass under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the State of New York who have attempted to access Defendant’s Website to obtain the ADA- required information and as a result have been denied access to the equal enjoyment of goods and services offered in Defendant’s physical locations, during the relevant statutory period. 44. Plaintiff, on behalf of himself and all others similarly situated, seeks to certify a New York City subclass under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the City of New York who have attempted to access Defendant’s Website to obtain the ADA- required information and as a result have been denied access to the equal enjoyment of goods and services offered in Defendant’s physical locations, during the relevant statutory period. 45. Common questions of law and fact exist amongst Class, including: a. Whether Defendant’s Website reservation system contains the information on accessibility required under the ADA regulations; -14- b. Whether Defendant’s Website is a “place or provider of public accommodation” under the NYSHRL or NYCHRL; c. Whether Defendant’s Website denies the full and equal enjoyment of its goods, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating the ADA; and d. Whether Defendant’s Website denies the full and equal enjoyment of its goods, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating the NYSHRL or NYCHRL. 46. Plaintiff’s claims are typical of the Class. The Class, similarly to the Plaintiff, are severely visually impaired or otherwise blind, and claim that Defendant have violated the ADA, NYSHRL or NYCHRL by failing to include the ADA-required information on the Website reservation system so individuals with disabilities can independently assess if Defendant’s hotels or guest rooms meet the accessibility needs of the Plaintiff and the Class. 47. Plaintiff will fairly and adequately represent and protect the interests of the Class Members because Plaintiff has retained and is represented by counsel competent and experienced in complex class action litigation, and because Plaintiff has no interests antagonistic to the Class Members. Class certification of the claims is appropriate under Fed. R. Civ. P. 23(b)(2) because Defendant has acted or refused to act on grounds generally applicable to the Class, making appropriate both declaratory and injunctive relief with respect to Plaintiff and the Class as a 48. Alternatively, class certification is appropriate under Fed. R. Civ. P. 23(b)(3) because fact and legal questions common to Class Members predominate over questions -15- affecting only individual Class Members, and because a class action is superior to other available methods for the fair and efficient adjudication of their litigation. 49. Judicial economy will be served by maintaining their lawsuit as a class action in that it is likely to avoid the burden that would be otherwise placed upon the judicial system by the filing of numerous similar suits by people with visual disabilities throughout the United FIRST CAUSE OF ACTION VIOLATIONS OF THE ADA, 42 U.S.C. § 12181 et seq. 50. Plaintiff, on behalf of himself and the Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 51. Section 302(a) of Title III of the ADA, 42 U.S.C. § 12101 et seq., provides: No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation. 42 U.S.C. § 12182(a). 52. Defendant’s hotels are places of public accommodation within the definition of Title III of the ADA, 42 U.S.C. § 12181(7)(A). Defendant’s Website is a service, privilege, or advantage of Defendant’s hotels. The Website is a service that is integrated with the Defendant’s hotels and is a gateway thereto. 53. Under Section 302(b)(1) of Title III of the ADA, it is unlawful discrimination to deny individuals with disabilities the opportunity to participate in or benefit from the goods, services, facilities, privileges, advantages, or accommodations of an entity. 42 U.S.C. § 12182(b)(1)(A)(i). -16- 54. Under Section 302(b)(1) of Title III of the ADA, it is unlawful discrimination to deny individuals with disabilities an opportunity to participate in or benefit from the goods, services, facilities, privileges, advantages, or accommodation, which is equal to the opportunities afforded to other individuals. 42 U.S.C. § 12182(b)(1)(A)(ii). 55. Under Section 302(b)(2) of Title III of the ADA, unlawful discrimination also includes, among other things: [A] failure to make reasonable modifications in policies, practices, or procedures, when such modifications are necessary to afford such goods, services, facilities, privileges, advantages, or accommodations to individuals with disabilities, unless the entity can demonstrate that making such modifications would fundamentally alter the nature of such goods, services, facilities, privileges, advantages or accommodations; and a failure to take such steps as may be necessary to ensure that no individual with a disability is excluded, denied services, segregated or otherwise treated differently than other individuals because of the absence of auxiliary aids and services, unless the entity can demonstrate that taking such steps would fundamentally alter the nature of the good, service, facility, privilege, advantage, or accommodation being offered or would result in an undue burden. 42 U.S.C. § 12182(b)(2)(A)(ii)-(iii). 56. The acts alleged herein constitute violations of Title III of the ADA, and the regulations promulgated thereunder. Plaintiff, who is a member of a protected class of persons under the ADA, has a physical disability that substantially limits the major life activity of sight within the meaning of 42 U.S.C. §§ 12102(1)(A)-(2)(A). Furthermore, Plaintiff has been denied full and equal access to the ADA-required information on the Website reservation system, and, as a result, has not been provided services that are provided to other patrons who are not disabled, and has been provided services that are inferior to the services provided to non-disabled persons. Defendant have failed to take any prompt and equitable steps to remedy its discriminatory conduct. These violations are ongoing. 57. Under 42 U.S.C. § 12188 and the remedies, procedures, and rights set forth and incorporated therein, Plaintiff, requests relief as set forth below. -17- SECOND CAUSE OF ACTION VIOLATIONS OF THE NYSHRL 58. Plaintiff, on behalf of himself and the New York State Sub-Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 59. N.Y. Exec. Law § 296(2)(a) provides that it is “an unlawful discriminatory practice for any person, being the owner, lessee, proprietor, manager, superintendent, agent or employee of any place of public accommodation . . . because of the . . . disability of any person, directly or indirectly, to refuse, withhold from or deny to such person any of the accommodations, advantages, facilities or privileges thereof.” 60. Defendant’s physical hotels are located in the State of New York and constitute places of public accommodation within the definition of N.Y. Exec. Law § 292(9). Defendant’s Website is a service, privilege or advantage of Defendant. Defendant’s Website is a service that is heavily integrated with these physical locations and is a gateway thereto. 61. Defendant is subject to New York Human Rights Law because it owns and operates its physical locations and Website. The Defendant is a person within the meaning of N.Y. Exec. Law § 292(1). 62. Defendant is violating N.Y. Exec. Law § 296(2)(a) in refusing to include the ADA-required information on the Website reservation system, causing the Website and the services integrated with Defendant’s physical locations to be completely inaccessible to the blind. This inaccessibility denies blind patrons full and equal access to the facilities, goods and services that Defendant makes available to the non-disabled public. 63. Under N.Y. Exec. Law § 296(2)(c)(i), unlawful discriminatory practice includes, among other things, “a refusal to make reasonable modifications in policies, practices, or procedures, when such modifications are necessary to afford facilities, privileges, advantages or -18- accommodations to individuals with disabilities, unless such person can demonstrate that making such modifications would fundamentally alter the nature of such facilities, privileges, advantages or accommodations being offered or would result in an undue burden." 64. Under N.Y. Exec. Law § 296(2)(c)(ii), unlawful discriminatory practice also includes, “a refusal to take such steps as may be necessary to ensure that no individual with a disability is excluded or denied services because of the absence of auxiliary aids and services, unless such person can demonstrate that taking such steps would fundamentally alter the nature of the facility, privilege, advantage or accommodation being offered or would result in an undue burden.” 65. Readily available, well-established guidelines exist on the Internet for including the ADA-required information on websites making such websites accessible to the blind and visually impaired. Incorporating the basic components to make the Website reservation system include the ADA-required information would neither fundamentally alter the nature of Defendant’s business nor result in an undue burden to Defendant. 66. Defendant’s actions constitute willful intentional discrimination against the class on the basis of a disability in violation of the NYSHRL, N.Y. Exec. Law § 296(2) in that Defendant has: a. constructed and maintained a website that does not contain the ADA- required information on its reservation system making their hotels inaccessible to blind class members with knowledge of the discrimination; and/or b. failed to take actions to correct the lack of the ADA-required information in the face of substantial harm and discrimination to blind class members. -19- 67. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 68. Defendant discriminates, and will continue in the future to discriminate against Plaintiff and New York State Sub-Class Members on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, accommodations and/or opportunities of Defendant’s Website and their physical locations under § 296(2) et seq. and/or its implementing regulations. Unless the Court enjoins Defendant from continuing to engage in these unlawful practices, Plaintiff and the Sub-Class Members will continue to suffer irreparable 69. Defendant’s actions were and are in violation of New York State Human Rights Law and therefore Plaintiff invokes his right to injunctive relief to remedy the discrimination. 70. Plaintiff is also entitled to compensatory damages, as well as civil penalties and fines under N.Y. Exec. Law § 297(4)(c) et seq. for each and every offense. 71. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 72. Under N.Y. Exec. Law § 297 and the remedies, procedures, and rights set forth and incorporated therein Plaintiff prays for judgment as set forth below. THIRD CAUSE OF ACTION VIOLATIONS OF THE NYCHRL 73. Plaintiff, on behalf of himself and the New York City Sub-Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 74. N.Y.C. Administrative Code § 8-107(4)(a) provides that “It shall be an unlawful discriminatory practice for any person, being the owner, lessee, proprietor, manager, superintendent, agent or employee of any place or provider of public accommodation, because of -20- . . . disability . . . directly or indirectly, to refuse, withhold from or deny to such person, any of the accommodations, advantages, facilities or privileges thereof.” 75. Defendant’s hotels are places of public accommodation within the definition of N.Y.C. Admin. Code § 8-102(9), and the Website is a service that is integrated with their establishments. 76. Defendant is subject to NYCHRL because it owns and operates physical locations in the City of New York and the Website, making the Defendant a person within the meaning of N.Y.C. Admin. Code § 8-102(1). 77. Defendant is violating N.Y.C. Administrative Code § 8-107(4)(a) in refusing to update the Website and remove access barriers to its hotels by failing to include the ADA- required information on its reservation system, causing the services integrated with their physical locations to be completely inaccessible to the blind. The inaccessibility denies blind patrons full and equal access to the facilities, goods, and services that Defendant makes available to the non- disabled public. 78. Defendant is required to “make reasonable accommodation to the needs of persons with disabilities . . . any person prohibited by the provisions of [§ 8-107 et seq.] from discriminating on the basis of disability shall make reasonable accommodation to enable a person with a disability to . . . enjoy the right or rights in question provided that the disability is known or should have been known by the covered entity.” N.Y.C. Admin. Code § 8-107(15)(a). 79. Defendant’s actions constitute willful intentional discrimination against the Sub- Class on the basis of a disability in violation of the N.Y.C. Administrative Code § 8-107(4)(a) and § 8-107(15)(a) in that Defendant has: -21- a. constructed and maintained a website that does not contain the ADA- required information on its reservation system making their hotels inaccessible to blind class members with knowledge of the discrimination; and/or b. failed to take actions to correct the lack of the ADA-required information in the face of substantial harm and discrimination to blind class members. 80. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 81. As such, Defendant discriminates, and will continue in the future to discriminate against Plaintiff and members of the proposed class and subclass on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, accommodations and/or opportunities of the Website and their establishments under § 8- 107(4)(a) and/or its implementing regulations. Unless the Court enjoins Defendant from continuing to engage in these unlawful practices, Plaintiff and members of the class will continue to suffer irreparable harm. 82. Defendant’s actions were and are in violation of the NYCHRL and therefore Plaintiff invokes his right to injunctive relief to remedy the discrimination. 83. Plaintiff is also entitled to compensatory damages, as well as civil penalties and fines under N.Y.C. Administrative Code § 8-120(8) and § 8-126(a) for each offense as well as punitive damages pursuant to § 8-502. 84. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 85. Under N.Y.C. Administrative Code § 8-120 and § 8-126 and the remedies, procedures, and rights set forth and incorporated therein Plaintiff prays for judgment as set forth -22- FOURTH CAUSE OF ACTION DECLARATORY RELIEF 86. Plaintiff, on behalf of himself and the Class and New York State and City Sub- Classes Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 87. An actual controversy has arisen and now exists between the parties in that Plaintiff contends, and is informed and believes that Defendant denies, that the Website does not contain the ADA-required information on its reservation system denying blind customers the full and equal access to the goods, services and facilities of the Website and by extension their physical locations, which Defendant owns, operates and controls, fails to comply with applicable laws including, but not limited to, Title III of the Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y. Exec. Law § 296, et seq., and N.Y.C. Admin. Code § 8-107, et seq. prohibiting discrimination against the blind. 88. A judicial declaration is necessary and appropriate at this time in order that each of the parties may know their respective rights and duties and act accordingly. PRAYER FOR RELIEF WHEREFORE, Plaintiff respectfully requests the Court grant the following relief: a. A preliminary and permanent injunction to prohibit Defendant from violating the Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y. Exec. Law § 296, et seq., N.Y.C. Administrative Code § 8-107, et seq., and the laws of New York; b. A preliminary and permanent injunction requiring Defendant to take all the steps necessary to make the Website reservation system into full compliance with the requirements set forth in the ADA, and its implementing regulations, so that the Website -23- contains the ADA-required information making their hotels and guest rooms accessible to and usable by blind and vision-impaired individuals; c. A declaration that Defendant owns, maintains and/or operates the Website reservation system in a manner that discriminates against the blind and vision-impaired and which fails to provide access for persons with disabilities as required by Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y. Exec. Law § 296, et seq., N.Y.C. Administrative Code § 8-107, et seq., and the laws of New York d. An order certifying the Class and Sub-Classes under Fed. R. Civ. P. 23(a) & (b)(2) and/or (b)(3), appointing Plaintiff as Class Representative, and his attorneys as Class Counsel; e. Compensatory damages in an amount to be determined by proof, including all applicable statutory and punitive damages and fines, to Plaintiff and the proposed class and subclasses; f. Pre- and post-judgment interest; g. An award of costs and expenses of the action together with reasonable attorneys’ and expert fees; and h. Such other and further relief as this Court deems just and proper. DEMAND FOR TRIAL BY JURY Pursuant to Fed. R. Civ. P. 38(b), Plaintiff demands a trial by jury on all questions of fact the Complaint raises. Dated: New York, New York April 8, 2019 GOTTLIEB & ASSOCIATES s/Jeffrey M. Gottlieb Jeffrey M. Gottlieb (JG-7905) -24- Dana L. Gottlieb (DG-6151) GOTTLIEB & ASSOCIATES 150 East 18th Street, Suite PHR New York, New York 10003 Tel: 212.228.9795 Fax: 212.982.6284 [email protected] -25-

civil rights, immigration, family

57_DDIcBD5gMZwcz7WnC

CLASS ACTION Case No. JURY TRIAL DEMANDED SUSAN TAYLOR, individually and on behalf of all others similarly situated, Plaintiff, vs. HUDSON VALLEY AUTOMOTIVE ENTERPRISES, L.L.C., a New York limited liability company, Defendant. ______________________________________/ CLASS ACTION COMPLAINT 1. Plaintiff, Susan Taylor, brings this action against Defendant, Hudson Valley Automotive Enterprises, L.L.C., to secure redress for violations of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. NATURE OF THE ACTION 2. This is a putative class action pursuant to the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq., (the “TCPA”). 3. Defendant is an automotive dealership that sells vehicles to individuals and businesses. To promote its services, Defendant engages in unsolicited marketing, harming thousands of consumers in the process. 4. Through this action, Plaintiff seeks injunctive relief to halt Defendant’s illegal conduct, which has resulted in the invasion of privacy, harassment, aggravation, and disruption of the daily life of thousands of individuals. Plaintiff also seeks statutory damages on behalf of herself and members of the class, and any other available legal or equitable remedies. JURISDICTION AND VENUE statute. Jurisdiction is also proper under 28 U.S.C. § 1332(d)(2) because Plaintiff alleges a national class, which will result in at least one class member belonging to a different state than that of Defendant. Plaintiff seeks up to $1,500.00 (one-thousand-five-hundred dollars) in damages for each call in violation of the TCPA, which, when aggregated among a proposed class numbering in the tens of thousands, or more, exceeds the $5,000,000.00 (five-million dollars) threshold for federal court jurisdiction under the Class Action Fairness Act (“CAFA”). Therefore, both the elements of diversity jurisdiction and CAFA jurisdiction are present. 6. Venue is proper in the United States District Court for the Southern District of New York pursuant to 28 U.S.C. § 1391(b) and (c) because Defendant is deemed to reside in any judicial district in which it is subject to the court’s personal jurisdiction, because Defendant resides within this judicial district, and because Defendant provides and markets its services within this district thereby establishing sufficient contacts to subject it to personal jurisdiction. Further, Defendant’s tortious conduct against Plaintiff occurred within the State of New York and, on information and belief, Defendant has sent the same text messages complained of by Plaintiff to other individuals within this judicial district, such that some of Defendant’s acts in making such calls have occurred within this district, subjecting Defendant to jurisdiction in the State of New York. PARTIES 7. Plaintiff is a natural person who, at all times relevant to this action, was a resident of Ulster County, New York. 8. Defendant is a New York limited liability company whose principal office is located at 200 Auto Park Pl, Newburgh, NY 12550. Defendant directs, markets, and provides its business activities throughout the State of New York. THE TCPA an automatic telephone dialing system; (3) without the recipient’s prior express consent. 47 U.S.C. § 227(b)(1)(A). 10. The TCPA defines an “automatic telephone dialing system” (“ATDS”) as “equipment that has the capacity - (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” 47 U.S.C. § 227(a)(1). 11. In an action under the TCPA, a plaintiff must only show that the defendant “called a number assigned to a cellular telephone service using an automatic dialing system or prerecorded voice.” Breslow v. Wells Fargo Bank, N.A., 857 F. Supp. 2d 1316, 1319 (S.D. Fla. 2012), aff'd, 755 F.3d 1265 (11th Cir. 2014). 12. The Federal Communications Commission (“FCC”) is empowered to issue rules and regulations implementing the TCPA. According to the FCC’s findings, calls in violation of the TCPA are prohibited because, as Congress found, automated or prerecorded telephone calls are a greater nuisance and invasion of privacy than live solicitation calls, and such calls can be costly and inconvenient. The FCC also recognized that wireless customers are charged for incoming calls whether they pay in advance or after the minutes are used. Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Report and Order, 18 FCC Rcd 14014 13. In 2012, the FCC issued an order tightening the restrictions for automated telemarketing calls, requiring “prior express written consent” for such calls to wireless numbers. See In the Matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 27 F.C.C.R. 1830, 1838 ¶ 20 (Feb. 15, 2012) (emphasis supplied). 14. To obtain express written consent for telemarketing calls, a defendant must establish that it secured the plaintiff’s signature in a form that gives the plaintiff a “‘clear and conspicuous disclosure’ of the consequences of providing the requested consent….and having received this designates.” In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 27 F.C.C.R. 1830, 1837 ¶ 18, 1838 ¶ 20, 1844 ¶ 33, 1857 ¶ 66, 1858 ¶ 71 (F.C.C. Feb. 15, 2012). 15. The TCPA regulations promulgated by the FCC define “telemarketing” as “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services.” 47 C.F.R. § 64.1200(f)(12). In determining whether a communication constitutes telemarketing, a court must evaluate the ultimate purpose of the communication. See Golan v. Veritas Entm't, LLC, 788 F.3d 814, 820 (8th Cir. 2015). 16. “Neither the TCPA nor its implementing regulations ‘require an explicit mention of a good, product, or service’ where the implication of an improper purpose is ‘clear from the context.’” Id. (citing Chesbro v. Best Buy Stores, L.P., 705 F.3d 913, 918 (9th Cir. 2012)). 17. “‘Telemarketing’ occurs when the context of a call indicates that it was initiated and transmitted to a person for the purpose of promoting property, goods, or services.” Golan, 788 F.3d at 820 (citing 47 C.F.R. § 64.1200(a)(2)(iii); 47 C.F.R. § 64.1200(f)(12); In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 F.C.C. Rcd at 14098 ¶ 141, 2003 WL 21517853, at *49). 18. The FCC has explained that calls motivated in part by the intent to sell property, goods, or services are considered telemarketing under the TCPA. See In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 FCC Rcd. 14014, ¶¶ 139-142 (2003). This is true whether call recipients are encouraged to purchase, rent, or invest in property, goods, or services during the call or in the future. Id. 19. In other words, offers “that are part of an overall marketing campaign to sell property, goods, or services constitute” telemarketing under the TCPA. See In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 FCC Rcd. 14014, ¶ 136 obtained the plaintiff’s prior express consent. See In the Matter of Rules and Regulaions Implementing the Tel. Consumer Prot. Act of 1991, 30 FCC Rcd. 7961, 7991-92 (2015) (requiring express consent “for non-telemarketing and non-advertising calls”). 21. Further, the FCC has issued rulings and clarified that consumers are entitled to the same consent-based protections for text messages as they are for calls to wireless numbers. See Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 952 (9th Cir. 2009) (The FCC has determined that a text message falls within the meaning of “to make any call” in 47 U.S.C. § 227(b)(1)(A)); Toney v. Quality Res., Inc., 2014 WL 6757978, at *3 (N.D. Ill. Dec. 1, 2014) (Defendant bears the burden of showing that it obtained Plaintiff's prior express consent before sending him the text message). (emphasis added). 22. As recently held by the United States Court of Appeals for the Ninth Circuit: “Unsolicited telemarketing phone calls or text messages, by their nature, invade the privacy and disturb the solitude of their recipients. A plaintiff alleging a violation under the TCPA ‘need not allege any additional harm beyond the one Congress has identified.’” Van Patten v. Vertical Fitness Grp., No. 14-55980, 2017 U.S. App. LEXIS 1591, at *12 (9th Cir. May 4, 2016) (quoting Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016) (emphasis original)). FACTS 23. On or about September of 2019, Defendant sent the following telemarketing text message to Plaintiff’s cellular telephone number ending in 7507 (the “7507 Number”): 24. Defendant’s text message was transmitted to Plaintiff’s cellular telephone, and within the time frame relevant to this action. 25. Defendant’s text message constitutes telemarketing because it encourages the future purchase or investment in property, goods, or services, i.e., selling Plaintiff a vehicle. 26. The information contained in the text message advertises Defendant’s prepaid gift cards available after a test drive, which Defendant sends to promote its business. 27. Plaintiff received the subject text within this judicial district and, therefore, Defendant’s violation of the TCPA occurred within this district. Upon information and belief, Defendant caused other text messages to be sent to individuals residing within this judicial district. 28. At no point in time did Plaintiff provide Defendant with her express written consent to be contacted using an ATDS. responsible for phone service to the 7505 Number. 30. The impersonal and generic nature of Defendant’s text message demonstrates that Defendant utilized an ATDS in transmitting the messages. See Jenkins v. LL Atlanta, LLC, No. 1:14- cv-2791-WSD, 2016 U.S. Dist. LEXIS 30051, at *11 (N.D. Ga. Mar. 9, 2016) (“These assertions, combined with the generic, impersonal nature of the text message advertisements and the use of a short code, support an inference that the text messages were sent using an ATDS.”) (citing Legg v. Voice Media Grp., Inc., 20 F. Supp. 3d 1370, 1354 (S.D. Fla. 2014) (plaintiff alleged facts sufficient to infer text messages were sent using ATDS; use of a short code and volume of mass messaging alleged would be impractical without use of an ATDS); Kramer v. Autobytel, Inc., 759 F. Supp. 2d 1165, 1171 (N.D. Cal. 2010) (finding it "plausible" that defendants used an ATDS where messages were advertisements written in an impersonal manner and sent from short code); Hickey v. Voxernet LLC, 887 F. Supp. 2d 1125, 1130; Robbins v. Coca-Cola Co., No. 13-CV-132-IEG NLS, 2013 U.S. Dist. LEXIS 72725, 2013 WL 2252646, at *3 (S.D. Cal. May 22, 2013) (observing that mass messaging would be impracticable without use of an ATDS)). 31. The text messages originated from telephone number 407-449-7440, a number which upon information and belief is owned and/or operated by Defendant. 32. The number used by Defendant is known as a “long code,” a standard 10-digit phone number that enabled Defendant to send SMS text messages en masse, while deceiving recipients into believing that the message was personalized and sent from a telephone number operated by an individual. 33. Long codes work as follows: Private companies known as SMS gateway providers have contractual arrangements with mobile carriers to transmit two-way SMS traffic. These SMS gateway providers send and receive SMS traffic to and from the mobile phone networks' SMS centers, which transmission of a large number of SMS messages to and from a long code. 34. Specifically, upon information and belief, Defendant utilized a combination of hardware and software systems to send the text messages at issue in this case. The systems utilized by Defendant have the capacity to store telephone numbers using a random or sequential generator, and to dial such numbers from a list without human intervention. 35. To send the text messages, Defendant used a messaging platform (the “Platform”) that permitted Defendant to transmit thousands of automated text messages without any human involvement. 36. The Platform has the capacity to store telephone numbers, which capacity was in fact utilized by Defendant. 37. The Platform has the capacity to generate sequential numbers, which capacity was in fact utilized by Defendant. 38. The Platform has the capacity to dial numbers in sequential order, which capacity was in fact utilized by Defendant. 39. The Platform has the capacity to dial numbers from a list of numbers, which capacity was in fact utilized by Defendant. 40. The Platform has the capacity to dial numbers without human intervention, which capacity was in fact utilized by Defendant. 41. The Platform has the capacity to schedule the time and date for future transmission of text messages, which occurs without any human involvement. 42. To transmit the messages at issue, the Platform automatically executed the following steps: a. The Platform retrieved each telephone number from a list of numbers in the sequential order the numbers were listed; combined each number with the content of Defendant’s message to create “packets” consisting of one telephone number and the message content; c. Each packet was then transmitted in the sequential order listed to an SMS aggregator, which acts an intermediary between the Platform, mobile carriers (e.g. AT&T), and consumers. d. Upon receipt of each packet, the SMS aggregator transmitted each packet – automatically and with no human intervention – to the respective mobile carrier for the telephone number, again in the sequential order listed by Defendant. Each mobile carrier then sent the message to its customer’s mobile telephone. 43. The above execution these instructions occurred seamlessly, with no human intervention, and almost instantaneously. Indeed, the Platform is capable of transmitting thousands of text messages following the above steps in minutes, if not less. 44. Further, the Platform “throttles” the transmission of the text messages depending on feedback it receives from the mobile carrier networks. In other words, the platform controls how quickly messages are transmitted depending on network congestion. The platform performs this throttling function automatically and does not allow a human to control the function. 45. The following graphic summarizes the above steps and demonstrates that the dialing of the text messages at issue was done by the Platform automatically and without any human intervention: of her privacy, aggravation, annoyance, intrusion on seclusion, trespass, and conversion. Defendant’s text messages also inconvenienced Plaintiff and caused disruption to her daily life. 47. Defendant’s unsolicited text messages caused Plaintiff actual harm. Specifically, Plaintiff estimates that she has wasted approximately 10 minutes reviewing Defendant’s unwanted message and retaining counsel for this case in order to stop Defendant’s unwanted messages. 48. Furthermore, Defendant’s text message took up memory on Plaintiff’s cellular phone. The cumulative effect of unsolicited text messages like Defendant’s poses a real risk of ultimately rendering the phone unusable for text messaging purposes as a result of the phone’s memory being taken up. See https://www.consumer.ftc.gov/articles/0350-text-message-spam#text (finding that text message solicitations like the ones sent by Defendant present a “triple threat” of identity theft, unwanted cell phone charges, and slower cell phone performance). 49. Defendant’s text messages also can slow cell phone performance by taking up space on the recipient phone’s memory. See https://www.consumer.ftc.gov/articles/0350-text-message- spam#text (finding that spam text messages can slow cell phone performance by taking up phone memory space). CLASS ALLEGATIONS PROPOSED CLASS 50. Plaintiff brings this case as a class action pursuant to Fed. R. Civ. P. 23, on behalf of herself and all others similarly situated. 51. Plaintiff brings this case on behalf of a Class defined as follows: No Consent Class: All persons who from four years prior to the filing of this action (1) were sent a text message by or on behalf of Defendant, (2) using an automatic telephone dialing system, (3) for the purpose of soliciting Defendant’s goods and services, and (4) for whom Defendant claims (a) it did not obtain prior express written consent, or (b) it obtained prior express written consent in the same manner as Defendant claims it supposedly obtained prior express written consent to call the Plaintiff. 52. Defendant and its employees or agents are excluded from the Class. Plaintiff does not know the number of members in the Class, but believes the Class members number in the several thousands, if not more. NUMEROSITY 53. Upon information and belief, Defendant has placed automated and/or prerecorded calls to cellular telephone numbers belonging to thousands of consumers throughout the United States without their prior express consent. The members of the Class, therefore, are believed to be so numerous that joinder of all members is impracticable. 54. The exact number and identities of the Class members are unknown at this time and can only be ascertained through discovery. Identification of the Class members is a matter capable of ministerial determination from Defendant’s call records. COMMON QUESTIONS OF LAW AND FACT 55. There are numerous questions of law and fact common to the Class which predominate over any questions affecting only individual members of the Class. Among the questions of law and fact common to the Class are: (1) Whether Defendant made non-emergency calls to Plaintiff’s and Class members’ cellular telephones using an ATDS; (2) Whether Defendant can meet its burden of showing that it obtained prior express written consent to make such calls; (3) Whether Defendant’s conduct was knowing and willful; (4) Whether Defendant is liable for damages, and the amount of such damages; and (5) Whether Defendant should be enjoined from such conduct in the future. claim that Defendant routinely transmits text messages to telephone numbers assigned to cellular telephone services is accurate, Plaintiff and the Class members will have identical claims capable of being efficiently adjudicated and administered in this case. TYPICALITY 57. Plaintiff’s claims are typical of the claims of the Class members, as they are all based on the same factual and legal theories. PROTECTING THE INTERESTS OF THE CLASS MEMBERS 58. Plaintiff is a representative who will fully and adequately assert and protect the interests of the Class, and has retained competent counsel. Accordingly, Plaintiff is an adequate representative and will fairly and adequately protect the interests of the Class. PROCEEDING VIA CLASS ACTION IS SUPERIOR AND ADVISABLE 59. A class action is superior to all other available methods for the fair and efficient adjudication of this lawsuit, because individual litigation of the claims of all members of the Class is economically unfeasible and procedurally impracticable. While the aggregate damages sustained by the Class are in the millions of dollars, the individual damages incurred by each member of the Class resulting from Defendant’s wrongful conduct are too small to warrant the expense of individual lawsuits. The likelihood of individual Class members prosecuting their own separate claims is remote, and, even if every member of the Class could afford individual litigation, the court system would be unduly burdened by individual litigation of such cases. 60. The prosecution of separate actions by members of the Class would create a risk of establishing inconsistent rulings and/or incompatible standards of conduct for Defendant. For example, one court might enjoin Defendant from performing the challenged acts, whereas another may not. Additionally, individual actions may be dispositive of the interests of the Class, although certain class members are not parties to such actions. Violations of the TCPA, 47 U.S.C. § 227(b) (On Behalf of Plaintiff and the Class) 61. Plaintiff re-alleges and incorporates the foregoing allegations as if fully set forth herein. 62. It is a violation of the TCPA to make “any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system … to any telephone number assigned to a … cellular telephone service ….” 47 U.S.C. § 227(b)(1)(A)(iii). 63. Defendant – or third parties directed by Defendant – used equipment having the capacity to dial numbers without human intervention to make non-emergency telephone calls to the cellular telephones of Plaintiff and the other members of the Class defined below. 64. These calls were made without regard to whether or not Defendant had first obtained express permission from the called party to make such calls. In fact, Defendant did not have prior express consent to call the cell phones of Plaintiff and the other members of the putative Class when its calls were made. 65. Defendant has, therefore, violated § 227(b)(1)(A)(iii) of the TCPA by using an automatic telephone dialing system to make non-emergency telephone calls to the cell phones of Plaintiff and the other members of the putative Class without their prior express written consent. 66. Defendant knew that it did not have prior express consent to make these calls, and knew or should have known that it was using equipment that at constituted an automatic telephone dialing system. The violations were therefore willful or knowing. 67. As a result of Defendant’s conduct and pursuant to § 227(b)(3) of the TCPA, Plaintiff and the other members of the putative Class were harmed and are each entitled to a minimum of $500.00 in damages for each violation. Plaintiff and the class are also entitled to an injunction against future calls. Id. Knowing and/or Willful Violation of the TCPA, 47 U.S.C. § 227(b) (On Behalf of Plaintiff and the Class) 68. Plaintiff re-allege and incorporate paragraphs 1-60 as if fully set forth herein. 69. At all times relevant, Defendant knew or should have known that its conduct as alleged herein violated the TCPA. 70. Defendant knew that it did not have prior express consent to make these calls, and knew or should have known that its conduct was a violation of the TCPA. 71. Because Defendant knew or should have known that Plaintiff and Class Members had not given prior express consent to receive its autodialed calls, the Court should treble the amount of statutory damages available to Plaintiff and the other members of the putative Class pursuant to § 227(b)(3) of the TCPA. 72. As a result of Defendant’s violations, Plaintiff and the Class Members are entitled to an award of $1,500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B) and 47 U.S.C. § 227(b)(3)(C). PRAYER FOR RELIEF WHEREFORE, Plaintiff, individually and on behalf of the Classes, prays for the following a) An order certifying this case as a class action on behalf of the Classes as defined above, and appointing Plaintiff as the representative of the Classes and counsel as Class Counsel; a) An award of actual and statutory damages; b) An order declaring that Defendant’s actions, as set out above, violate the TCPA; c) A declaratory judgment that Defendant’s telephone calling equipment constitutes an automatic telephone dialing system under the TCPA; d) An injunction requiring Defendant to cease all unsolicited text messaging activity, and to otherwise protect the interests of the Classes; telephone dialing system without obtaining, recipient’s consent to receive calls made with such equipment; and f) Such further and other relief as the Court deems necessary. JURY DEMAND Plaintiff and Class Members hereby demand a trial by jury. Dated: September 9, 2020 Shamis & Gentile, P.A. /s/ Andrew J. Shamis Andrew J. Shamis, Esq. NY Bar No. 5195185 [email protected] 14 NE 1st Avenue, Suite 705 Miami, FL 33132 Telephone: 305-479-2299 Counsel for Plaintiff and the Class

privacy

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Todd M. Friedman (SBN 216752) Adrian R. Bacon (SBN 280332) Meghan E. George (SBN 274525) LAW OFFICES OF TODD M. FRIEDMAN, P.C. 21550 Oxnard St., Suite 780 Woodland Hills, CA 91367 Phone: 877-206-4741 Fax: 866-633-0228 tfriedman@ toddflaw.com abacon@ toddflaw.com [email protected] Attorneys for Plaintiff UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA ERICA ZOZULA, individually and on behalf of all others similarly situated, Plaintiff, vs. Case No. CLASS ACTION COMPLAINT FOR VIOLATIONS OF: 1. NEGLIGENT VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT [47 U.S.C. §227(b)] SURVEY SAMPLING INTERNATIONAL, LLC, and DOES 1 through 10, inclusive, and each of them Defendant. 2. WILLFUL VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT [47 U.S.C. §227(b)] DEMAND FOR JURY TRIAL ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Plaintiff ERICA ZOZULA (“Plaintiff”), individually and on behalf of all others similarly situated, alleges the following upon information and belief based upon personal knowledge: NATURE OF THE CASE 1. Plaintiff brings this action individually and on behalf of all others similarly situated seeking damages and any other available legal or equitable remedies resulting from the illegal actions of SURVEY SAMPLING INTERNATIONAL, LLC (“Defendant”), in negligently, knowingly, and/or willfully contacting Plaintiff on Plaintiff’s cellular telephone in violation of the Telephone Consumer Protection Act, 47. U.S.C. § 227 et seq. (“TCPA”) and related regulations, specifically the “automatic telephone dialing system” and “artificial or prerecorded voice” provisions, thereby invading Plaintiff’s privacy. JURISDICTION & VENUE 2. Jurisdiction is proper under 28 U.S.C. § 1332(d)(2) because Plaintiff, a resident of California, seeks relief on behalf of a Class, which will result in at least one class member belonging to a different state than that of Defendant, a Delaware company. Plaintiff also seeks up to $1,500.00 in damages for each call in violation of the TCPA, which, when aggregated among a proposed class in the thousands, exceeds the $5,000,000.00 threshold for federal court jurisdiction. Therefore, both diversity jurisdiction and the damages threshold under the Class Action Fairness Act of 2005 (“CAFA”) are present, and this Court has jurisdiction. 3. Venue is proper in the United States District Court for the Northern District of California pursuant to 28 U.S.C. 1391(b) and because Defendant does business within the State of California and Plaintiff resides within the County of Alameda. PARTIES 4. Plaintiff, ERICA ZOZULA (“Plaintiff”), is a natural person residing in Castro Valley, California and is a “person” as defined by 47 U.S.C. § 153 (39). 5. Defendant, SURVEY SAMPLING INTERNATIONAL, LLC (“Defendant”) is a data research company, and is a “person” as defined by 47 U.S.C. § 153 (39). 6. The above named Defendant, and its subsidiaries and agents, are collectively referred to as “Defendants.” The true names and capacities of the Defendants sued herein as DOE DEFENDANTS 1 through 10, inclusive, are currently unknown to Plaintiff, who therefore sues such Defendants by fictitious names. Each of the Defendants designated herein as a DOE is legally responsible for the unlawful acts alleged herein. Plaintiff will seek leave of Court to amend the Complaint to reflect the true names and capacities of the DOE Defendants when such identities become known. 7. Plaintiff is informed and believes that at all relevant times, each and every Defendant was acting as an agent and/or employee of each of the other Defendants and was acting within the course and scope of said agency and/or employment with the full knowledge and consent of each of the other Defendants. Plaintiff is informed and believes that each of the acts and/or omissions complained of herein was made known to, and ratified by, each of the other Defendants. FACTUAL ALLEGATIONS 8. Beginning in or around December 2015, Defendant contacted Plaintiff on Plaintiff’s cellular telephone number ending in -9260, in an attempt to acquire information from Plaintiff for purposes of survey research. 9. Defendant used an “automatic telephone dialing system” (“ATDS”) and an “artificial or prerecorded voice” as defined by 47 U.S.C. § 227(a)(1) to place its call to Plaintiff seeking to gather information for purposes of survey research. 10. Defendant contacted or attempted to contact Plaintiff from telephone numbers (510) 455-8177 and (510) 455-8180. 11. Defendant’s calls constituted calls that were not for emergency purposes as defined by 47 U.S.C. § 227(b)(1)(A). 12. Defendant’s calls were placed to telephone number assigned to a cellular telephone service for which Plaintiff incurs a charge for incoming calls pursuant to 47 U.S.C. § 227(b)(1). 13. During all relevant times, Defendant did not possess Plaintiff’s “prior express consent” to receive calls using an automatic telephone dialing system or an artificial or prerecorded voice on her cellular telephone pursuant to 47 U.S.C. § 227(b)(1)(A). 14. Defendant placed multiple calls attempting to gather survey research to Plaintiff on her cellular telephone ending in -9260 beginning in or around December 2015. 15. Plaintiff received numerous survey calls from Defendant within a 24- month period. 16. Plaintiff requested for Defendant to stop calling Plaintiff during one of the initial calls from Defendant, thus revoking any prior express consent that had existed and terminating any established business relationship that had existed, as defined under 16 C.F.R. 310.4(b)(1)(iii)(B). 17. Despite this, Defendant continued to call Plaintiff using an automatic dialer in an attempt to gather survey research and in violation of the ADTS provisions of the TCPA. 18. Upon information and belief, and based on Plaintiff’s experiences of being called by Defendant after requesting they stop calling, and at all relevant times, Defendant failed to establish and implement reasonable practices and procedures to effectively prevent survey calls made by an automatic dialer and/or an artificial or prerecorded voice in violation of the regulations prescribed under 47 U.S.C. § 227(b)(3). 19. When Plaintiff would answer Defendant’s calls a pre-recorded message would start, and, despite Plaintiff repeatedly requesting that Defendant stop calling her, the pre-recorded message would follow the exact same script each time, which is indicative of an automated telephone dialing system and/or an artificial or prerecorded voice. CLASS ALLEGATIONS 20. Plaintiff brings this action individually and on behalf of all others similarly situated, as a member the two proposed classes (hereafter, jointly, “The Classes”). The class concerning the ATDS claim for no prior express consent (hereafter “The ATDS Class”) is defined as follows: All persons within the United States who received any survey telephone calls from Defendant to said person’s cellular telephone made through the use of any automatic telephone dialing system or an artificial or prerecorded voice and such person had not previously consented to receiving such calls within the four years prior to the filing of this Complaint 21. The class concerning the ATDS claim for revocation of consent, to the extent prior consent existed (hereafter “The ATDS Revocation Class”) is defined as follows: All persons within the United States who received any survey telephone calls from Defendant to said person’s cellular telephone made through the use of any automatic telephone dialing system or an artificial or prerecorded voice and such person had revoked any prior express consent to receive such calls prior to the calls within the four years prior to the filing of this Complaint. 22. Plaintiff represents, and is a member of, The ATDS Class, consisting of all persons within the United States who received any survey telephone calls from Defendant to said person’s cellular telephone made through the use of any automatic telephone dialing system or an artificial or prerecorded voice and such person had not previously not provided their cellular telephone number to Defendant within the four years prior to the filing of this Complaint. 23. Plaintiff represents, and is a member of, The ATDS Revocation Class, consisting of all persons within the United States who received any survey telephone calls from Defendant to said person’s cellular telephone made through the use of any automatic telephone dialing system or an artificial or prerecorded voice and such person had revoked any prior express consent to receive such calls prior to the calls within the four years prior to the filing of this Complaint. 24. Defendant, its employees and agents are excluded from The Classes. Plaintiff does not know the number of members in The Classes, but believes the Classes members number in the thousands, if not more. Thus, this matter should be certified as a Class Action to assist in the expeditious litigation of the matter. 25. The Classes are so numerous that the individual joinder of all of its members is impractical. While the exact number and identities of The Classes members are unknown to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff is informed and believes and thereon alleges that The Classes includes thousands of members. Plaintiff alleges that The Classes members may be ascertained by the records maintained by Defendant. 26. Plaintiff and members of The ATDS Class and The ATDS Revocation Class were harmed by the acts of Defendant in at least the following ways: Defendant illegally contacted Plaintiff and ATDS Class members via their cellular telephones thereby causing Plaintiff and ATDS Class and ATDS Revocation Class members to incur certain charges or reduced telephone time for which Plaintiff and ATDS Class and ATDS Revocation Class members had previously paid by having to retrieve or administer messages left by Defendant during those illegal calls, and invading the privacy of said Plaintiff and ATDS Class and ATDS Revocation Class members. 27. Common questions of fact and law exist as to all members of The ATDS Class which predominate over any questions affecting only individual members of The ATDS Class. These common legal and factual questions, which do not vary between ATDS Class members, and which may be determined without reference to the individual circumstances of any ATDS Class members, include, but are not limited to, the following: a. Whether, within the four years prior to the filing of this Complaint, Defendant made any call (other than a call made for emergency purposes or made with the prior express consent of the called party) to a ATDS Class member using any automatic telephone dialing system or any artificial or prerecorded voice to any telephone number assigned to a cellular telephone service; b. Whether Plaintiff and the ATDS Class members were damaged thereby, and the extent of damages for such violation; and c. Whether Defendant should be enjoined from engaging in such conduct in the future. 28. As a person that received numerous survey calls from Defendant using an automatic telephone dialing system or an artificial or prerecorded voice, without Plaintiff’s prior express consent, Plaintiff is asserting claims that are typical of The ATDS Class. 29. Common questions of fact and law exist as to all members of The ATDS Revocation Class which predominate over any questions affecting only individual members of The ATDS Revocation Class. These common legal and factual questions, which do not vary between ATDS Revocation Class members, and which may be determined without reference to the individual circumstances of any ATDS Revocation Class members, include, but are not limited to, the following: a. Whether, within the four years prior to the filing of this Complaint, Defendant made any call (other than a call made for emergency purposes or made with the prior express consent of the called party) to an ATDS Revocation Class member, who had revoked any prior express consent to be called using an ATDS, using any automatic telephone dialing system or any artificial or prerecorded voice to any telephone number assigned to a cellular telephone service; b. Whether Plaintiff and the ATDS Revocation Class members were damaged thereby, and the extent of damages for such violation; and c. Whether Defendant should be enjoined from engaging in such conduct in the future. 30. As a person that received numerous survey calls from Defendant using an automatic telephone dialing system or an artificial or prerecorded voice, after Plaintiff had revoked any prior express consent, Plaintiff is asserting claims that are typical of The ATDS Revocation Class. 31. Plaintiff will fairly and adequately protect the interests of the members of The Classes. Plaintiff has retained attorneys experienced in the prosecution of class actions. 32. A class action is superior to other available methods of fair and efficient adjudication of this controversy, since individual litigation of the claims of all Class members is impracticable. Even if every Class member could afford individual litigation, the court system could not. It would be unduly burdensome to the courts in which individual litigation of numerous issues would proceed. Individualized litigation would also present the potential for varying, inconsistent, or contradictory judgments and would magnify the delay and expense to all parties and to the court system resulting from multiple trials of the same complex factual issues. By contrast, the conduct of this action as a class action presents fewer management difficulties, conserves the resources of the parties and of the court system, and protects the rights of each Class member. 33. The prosecution of separate actions by individual Class members would create a risk of adjudications with respect to them that would, as a practical matter, be dispositive of the interests of the other Class members not parties to such adjudications or that would substantially impair or impede the ability of such non- party Class members to protect their interests. 34. Defendant has acted or refused to act in respects generally applicable to The Classes, thereby making appropriate final and injunctive relief with regard to the members of the Classes as a whole. FIRST CAUSE OF ACTION Negligent Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(b). On Behalf of the ATDS Class and ATDS Revocation Class 35. Plaintiff repeats and incorporates by reference into this cause of action the allegations set forth above at Paragraphs 1-34. 36. The foregoing acts and omissions of Defendant constitute numerous and multiple negligent violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227(b), and in particular 47 U.S.C. § 227 (b)(1)(A). 37. As a result of Defendant’s negligent violations of 47 U.S.C. § 227(b), Plaintiff and the Class Members are entitled an award of $500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B). 38. Plaintiff and the ATDS Class and ATDS Revocation Class members are also entitled to and seek injunctive relief prohibiting such conduct in the future. SECOND CAUSE OF ACTION Knowing and/or Willful Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(b) On Behalf of the ATDS Class and the ATDS Revocation Class 39. Plaintiff repeats and incorporates by reference into this cause of action the allegations set forth above at Paragraphs 1-34. 40. The foregoing acts and omissions of Defendant constitute numerous and multiple knowing and/or willful violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227(b), and in particular 47 U.S.C. § 227 (b)(1)(A). 41. As a result of Defendant’s knowing and/or willful violations of 47 U.S.C. § 227(b), Plaintiff and the ATDS Class and ATDS Revocation Class members are entitled an award of $1,500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B) and 47 U.S.C. § 227(b)(3)(C). 42. Plaintiff and the Class members are also entitled to and seek injunctive relief prohibiting such conduct in the future. PRAYER FOR RELIEF WHEREFORE, Plaintiff requests judgment against Defendant for the following: FIRST CAUSE OF ACTION Negligent Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(b)  As a result of Defendant’s negligent violations of 47 U.S.C. §227(b)(1), Plaintiff and the ATDS Class and ATDS Revocation Class members are entitled to and request $500 in statutory damages, for each and every violation, pursuant to 47 U.S.C. 227(b)(3)(B).  An order for injunctive relief prohibiting such conduct by Defendants in the future.  Any and all other relief that the Court deems just and proper. SECOND CAUSE OF ACTION Knowing and/or Willful Violations of the Telephone Consumer Protection Act 47 U.S.C. §227(b)  As a result of Defendant’s willful and/or knowing violations of 47 U.S.C. §227(b)(1), Plaintiff and the ATDS Class and ATDS Revocation Class members are entitled to and request treble damages, as provided by statute, up to $1,500, for each and every violation, pursuant to 47 U.S.C. §227(b)(3)(B) and 47 U.S.C. §227(b)(3)(C).  An order for injunctive relief prohibiting such conduct by Defendants in the future.  Any and all other relief that the Court deems just and proper. Respectfully Submitted this 2nd Day of August, 2018. LAW OFFICES OF TODD M. FRIEDMAN, P.C. By: /s/ Todd M. Friedman Todd M. Friedman Law Offices of Todd M. Friedman Attorney for Plaintiff

privacy

CwEAFYcBD5gMZwczYLs9

IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TENNESSEE EASTERN DIVISION ) WILLIAM HARRIS, ) Individually, and on behalf of others ) similarly situated. ) ) Plaintiff, ) ) v. ) NO. ) ) JURY TRIAL DEMANDED NPC INTERNATIONAL, INC. ) ) Defendant. ) ) COMPLAINT Plaintiff William Harris, individually, and on behalf of all others similarly situated, for their Complaint against NPC International, Inc. (“NPC”), alleges as follows: I. INTRODUCTION 1. This lawsuit is brought against NPC International (“NPC”) as a collective action under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq., to recover unpaid wages, minimum wages, and overtime wages for Plaintiff and other similarly situated employees who are members of a class as defined herein and currently or previously employed by NPC. II. JURISDICTION AND VENUE 2. The FLSA authorizes court actions by private parties to recover damages for violations of the FLSA’s wage and hour provisions. Jurisdiction over Plaintiff’s FLSA claims is based on 29 U.S.C. § 216 (b) and 28 U.S.C. § 1331. 3. Venue in this district is proper pursuant to 28 U.S.C. § 1391(b) and (c) because Plaintiff is a resident of this district, and NPC has conducted business and continuously engaged in the wrongful conduct alleged herein in this district. III. CLASS DESCRIPTION 4. Plaintiff brings this action on behalf of the following similarly situated persons: All current and former cooks of NPC employed in the United States who work or have worked at NPC’s Pizza Hut Restaurants at any time during the applicable limitations period covered by this Complaint (i.e. two years for FLSA violations and three years for willful FLSA violations), up to and including the date of final judgment in this matter and who are named Plaintiffs or elect to opt-in to this action under the FLSA, 29 U.S.C. § 216(b). (Collectively, “the class”). IV. PARTIES 5. NPC is a Kansas Corporation with its principal executive office located in Overland Park, Kansas. 6. Plaintiff William Harris has been employed by NPC as an hourly-paid cook in NPC’s Bolivar, Tennessee; Henderson, Tennessee; and Jackson, Tennessee restaurants during the past three years. Plaintiff Harris’ Consent to Become a Party Plaintiff pursuant to 29 U.S.C. § 216(b) is attached hereto as Exhibit A. IV. ALLEGATIONS 7. NPC owns and operates Pizza Hut restaurants in numerous states across the country, including: Alabama, Arkansas, Colorado, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Minnesota, Mississippi, Missouri, North Carolina, North Dakota, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, and West Virginia. 8. The primary function of these Pizza Hut restaurants is to sell pizza and other food items to customers, whether they dine in the restaurants, carry-out the food, or have it delivered to customers. 9. NPC is and/or has been the “employer” of Plaintiff and those similarly situated within the meaning of 29 U.S.C. § 203(d). 10. NPC employed Plaintiff (and those similarly situated) and was responsible for setting pay and overtime rates, including overtime pay during the period of time in question. 11. The decisions regarding Plaintiff’s (and other members of the class’s) compensation and other terms of employment were made through a centralized management of NPC’s Headquarters location in Overland Park, Kansas. 12. NPC has had a uniform policy and practice of incentivizing General Managers of its individual restaurants (as well as its Area Managers) to encourage, permit, and/or require employees such as Plaintiff (and those similarly situated) to perform “off the clock” work, as well as to undergo training and attend meetings “off the clock,” in order to meet its tickets per labor hour (“TPLH”) standard. 13. NPC has had a uniform policy and practice of requiring its General Managers as well as cooks (such as the Plaintiff and those similarly situated) to meet its tickets per labor hour standard as a performance condition. 14. At all times material to this action, Plaintiff and those similarly situated are or have been “employees” of NPC as defined by Section 203(e)(1) of the FLSA and worked for NPC within the territory of the Unites States within three (3) years preceding the filing of this lawsuit. 15. At all times material to this action, NPC has been an enterprise engaged in commerce or in the production of goods for commerce as defined by Section 203(s)(1) of the FLSA, with annual revenue in excess of $500,000.00. 16. At all times material to this action, NPC has been subject to the pay requirements of the FLSA because it is an enterprise in interstate commerce and its employees are engaged in interstate commerce. 17. At all times material to this action, NPC has had a uniform job training program that cooks must undergo and successfully complete as a condition of being employed as a cook. 18. At all times material to this action, NPC has had a uniform mandatory monthly meetings program that required the attendance of all cooks. 19. Each of NPC’s Pizza Hut restaurants employs hourly-paid cooks whose primary duties are to prepare and cook pizza and other food items. 20. Plaintiff and all other similarly situated persons are current or former employees of NPC. 21. NPC employs a uniform electronic time keeping system for tracking and reporting employee hours worked at each of its restaurants. 22. Cooks are paid only for the hours recorded on the uniform electronic time keeping system. 23. Pursuant to NPC’s uniform policies and practices, Plaintiff and other members of the class have been encouraged, permitted, and/or required to perform prescribed duties before, after, and during their regular shifts without being clocked into NPC’s electronic timekeeping system. 24. As a result of Plaintiff and other members of the class performing prescribed duties before, after, and during their shifts without being clocked-in to NPC’s electronic timekeeping system, NPC’s timekeeping records do not reflect the total hours worked by Plaintiff and other members of the class. 25. Also, as a consequence of NPC’s timekeeping records not reflecting actual hours worked, when their “off the clock” work time is added to their recorded time, Plaintiff and other members of the class who have worked in excess of forty hours per week are entitled to receive overtime compensation for such work time. 26. In addition, and as a consequence of NPC’s timekeeping records not reflecting the actual hours worked by Plaintiff and other members of the class, when their “off the clock” work time is added to their recorded time, Plaintiff and other members of the class who have been paid less than the applicable minimum wage rate required by Fair Labor Standards Act are entitled to receive minimum wages for such work time. 27. The net effect of NPC’s policy and practice of encouraging, condoning, suffering, permitting, and/or requiring Plaintiff and other members of the class to perform work before, after, and during their shifts without being clocked-in to NPC’s electronic timekeeping system is that NPC willfully failed to pay Plaintiff and other members of the class for all straight time work, minimum wages, and premium pay for overtime work in order to save payroll costs and payroll taxes. NPC thereby enjoys ill-gained profits at the expense of its employees. 28. In addition to the above described “off the clock” work time being unpaid pursuant to NPC’s uniform policies and practices, Plaintiff and other members of the class were required to undergo and successfully complete NPC’s cook’s training for which training time was not recorded on NPC’s electronic timekeeping system and was thus unpaid. 29. As a result of the required job training time not being recorded on NPC’s electronic timekeeping system, NPC’s timekeeping records do not reflect the total hours worked by Plaintiff and other members of the class. 30. Also, as a consequence of NPC’s timekeeping records not reflecting actual hours worked, when the unpaid training time is added to their recorded time, Plaintiff and other members of the class who have worked in excess of forty hours per week are entitled to overtime compensation for such training time. 31. In addition, and as a consequence of NPC’s timekeeping records not reflecting actual hours worked, when the unpaid training time is added to their recorded time, Plaintiff and other members of the class who, as a result, have been paid less than the applicable minimum wage required by the FLSA, are entitled to receive minimum wages for such training time. 32. The net effect of NPC’s policy of requiring Plaintiff and other members of the class to undergo and successfully complete cook’s job training without being paid is that NPC willfully failed to pay Plaintiff and other members of the class for all straight-time work, minimum wage, and overtime compensation in order to save payroll costs and payroll taxes. NPC thereby enjoys ill-gained profits at the expense of its employees. 33. In addition to the above described “off the clock” work time being unrecorded and unpaid and the required training time being unrecorded and unpaid pursuant to NPC’s uniform policies and practices, NPC required Plaintiff and other members of the class to attend mandatory monthly meetings without the time for such meetings being recorded on its electronic timekeeping system. 34. As a result of such meetings time not being reflected on NPC’s electronic timekeeping system, NPC’s timekeeping records do not reflect the total hours for which Plaintiff and the other members of the class are entitled to be compensated. 35. Also, as a consequence of NPC’s timekeeping records not reflecting actual hours to be compensated, when the unpaid meetings time is added to their recorded time, Plaintiff and the other members of the class who have worked in excess of forty hours per week are entitled to receive overtime compensation for such meeting time. 36. In addition, and as a consequence of NPC’s timekeeping records not reflecting actual hours to be compensated, when the unpaid meetings time is added to their recorded time, Plaintiff and other members of the class who, as a result, have received less than minimum wage, are entitled to receive minimum wages for all such meetings time. 37. The net effect of NPC’s uniform policies and practices of requiring unpaid attendance at mandatory monthly meetings is that NPC has willfully failed to pay Plaintiffs and other members of the class for all straight work time, minimum wage, and overtime compensation in order to save payroll costs and payroll taxes. NPC therefore enjoys ill- gained profits at the expense of the employee 38. Although at this stage Plaintiff is unable to state the exact amount of damages owed to the class, Plaintiff believes such information will become available during the course of discovery. But when an employer fails to keep complete and accurate time records, employees may establish the hours worked solely by their testimony and the burden of overcoming such testimony shifts to the employer. V. COLLECTIVE ACTION ALLEGATIONS 39. Plaintiff brings this action on behalf of himself and the class as a collective action under the Fair Labor Standards Act, 29 U.S.C. §§ 206, 207, and 216(b). 40. The claims under the Fair Labor Standards Act may be pursued by those who opt-in to this case pursuant to 29 U.S.C. § 216(b). 41. The other members of the class are so numerous that joinder of all members of the class is impracticable. While the exact number of the other members of the class is unknown to Plaintiff at this time and can only be ascertained through applicable discovery, Plaintiff believes there are at least thousands of individuals in the class. 42. The claims of Plaintiff are typical of the claims of the class. Plaintiff and the other members of the class work or have worked for NPC at its Pizza Hut restaurants and were subject to the same operational, compensation, and timekeeping policies and practices — including not being paid for all hours worked. 43. Common questions of law and fact exist as to the class which predominate over any questions only affecting other members of the class individually and include, but are not limited to, the following: • Whether Plaintiff and other members of the class were expected and/or required to work hours without compensation; • Whether NPC suffered and permitted Plaintiff and other members of the class to work hours without compensation; • Whether NPC failed to pay Plaintiff and other members of the class all applicable straight-time wages for all hours worked; • Whether NPC failed to pay Plaintiff and the other members of the class the applicable minimum wage for all hours worked; • Whether NPC failed to pay Plaintiff and other members of the class all overtime compensation due them for all hours worked in excess of forty (40) hours per week; • The correct statutes of limitations for Plaintiff’s claims and the claims of the other members of the class; • Whether Plaintiff and other members of the class are entitled to damages, including, but not limited to, liquidated damages, as well as the measure of damages; and, • Whether Defendant is liable for interest, attorneys’ interest, fees, and costs. 44. Plaintiff will fairly and adequately protect the interests of the class as their interests are aligned with those of the other members of the class. Plaintiff has no interests adverse to the class and has retained competent counsel who are experienced in collective action litigation. 45. The collective action mechanism is superior to the other available methods for a fair and efficient adjudication of the controversy. The expenses, costs, and burden of litigation suffered by individual class members in a collective action are relatively small in comparison to the expenses, costs, and burden of litigation of individual actions, making it virtually impossible for other members of the class to individually seek address for the wrongs done to them. 46. Plaintiff and other members of the class have suffered and will continue to suffer irreparable damage from the unlawful policies, practices, and procedures implemented by NPC. COUNT I FAIR LABOR STANDARDS ACT VIOLATIONS – UNPAID WAGES 47. Plaintiff, on behalf of himself and the class, repeats and realleges Paragraphs 1 through 46 above as if they were fully set forth herein. 48. At all relevant times, NPC has been and continues to be an employer engaged in interstate commerce within the meaning of the FLSA, 29 U.S.C. §§ 206(a) and 207(a). 49. At all relevant times, NPC employed (and/or continues to employ) Plaintiff and each of the other members of the class within the meaning of the FLSA. 50. At all times relevant, NPC had a uniform policy and practice of willfully refusing to pay Plaintiff and other members of the class for all hours worked. 51. As a result of NPC’s willful failure to compensate Plaintiff and other members of the class the applicable federal minimum wages for all hours worked, NPC has violated and continues to violate the FLSA, 29 U.S.C. §§ 201, et seq. 52. NPC’s conduct constitutes a willful violation of the FLSA within the meaning of 29 U.S.C. § 255(a). 53. Due to NPC’s FLSA violations, Plaintiff and the other members of the class are entitled to recover from NPC compensation for unpaid wages, an additional equal amount as liquidated damages, as well as interest, reasonable attorneys’ fees, costs, and disbursements relating to this action under 29 U.S.C. § 216(b). COUNT II FAIR LABOR STANDARDS ACT VIOLATIONS – OVERTIME 54. Plaintiff, on behalf of himself and other members of the class, repeats and realleges Paragraphs 1 through 53 above as if they were set forth herein. 55. At all times relevant herein, NPC has been and continues to be an employer engaged in interstate commerce within the meaning of the FLSA, 29 U.S.C. §§ 206(a) and 207(a). 56. At all times relevant herein, NPC employed (and/or continues to employ) Plaintiff and each of the other members of the class within the meaning of the FLSA. 57. At all times relevant herein, NPC had a uniform policy and practice of willfully refusing to pay Plaintiff and other members of class appropriate overtime compensation for all hours worked in excess of forty hours per week by Plaintiff and each of the other members of the class. 58. As a result of NPC’s willful failure to compensate Plaintiff and the other members of the class the applicable federal minimum wage for all hours worked at a rate not less than one and one-half times the regular rate of pay for work performed in excess of forty hours per work week, NPC has violated and continues to violate the FLSA, 29 U.S.C. § 255(a). 59. Due to NPC’s FLSA violations, Plaintiff, and the other members of the class are entitled to recover from NPC compensation for unpaid overtime wages, an additional equal amount as liquidated damages, as well as interest, reasonable attorneys’ fees, costs, and disbursements relating to this action under the FLSA, 29 U.S.C. § 216(b). COUNT III FAIR LABOR STANDARDS ACT VIOLATIONS – MINIMUM WAGE 60. Plaintiff, on behalf of himself and the other members of the class, repeats and realleges Paragraphs 1 through 59 above as if they were fully set forth herein. 61. At all times relevant herein, NPC has been and continues to be an employer engaged in interstate commerce within the meaning of the FLSA, 29 U.S.C. § 206(a) and 207(a). 62. Pursuant to NPC’s uniform compensation policies, NPC has failed to pay Plaintiffs and other members of the class the applicable minimum wage rates as required by the FLSA. 63. Because of NPC’s failure to pay Plaintiff and other members of the class for all hours worked, Plaintiff and other members of the class have not received wages equal to or in excess of the applicable minimum wage as required by the FLSA for all hours worked. 64. NPC’s conduct constitutes a willful violation of the FLSA within the meaning of 29 U.S.C. § 255(a). 65. Plaintiff and the other members of the class are therefore entitled to compensation for unpaid minimum wages at an hourly rate required by the FLSA, plus applicable overtime compensation, and an additional amount as liquidated damages, together with interest, costs, and reasonable attorney’s fees pursuant to the FLSA, 29 U.S.C. § 216(b). PRAYER FOR RELIEF Whereas, Plaintiff, individually and/or on behalf of himself and all other similarly situated other members of the class, request this Court to grant the following relief against NPC: A. Designation of this cause as a collective action on behalf of the class and promptly issue notice pursuant to 29 U.S.C. §216(b), apprising other members of the class of the pendency of this action and permitting other members of the class to assert timely FLSA claims in this action by filing individual Consents pursuant to 29 U.S.C. § 216(b); B. On Count I, an award of compensation for unpaid wages to Plaintiff and other members of the class; C. On Count II, an award of compensation for unpaid overtime to Plaintiff and the other members of the class; D. On Count III, an award of compensation for unpaid minimum wages to Plaintiff and other member of the class at the applicable minimum wage rate as required by the FLSA; E. On Counts I, II, and III, an award of liquidated damages to Plaintiff and other members of the class for the Defendant’s willful violations of the FLSA; F. On Counts I, II, and III, an award of prejudgment and post-judgment interest at the applicable legal rate to Plaintiff and other members of the class; G. On Counts I, II, and III, an award of costs, expenses, and disbursements relating to this action together with reasonable attorneys’ fees and expert fees to Plaintiff and other members of the class; and H. Such other general and specific relief as this Court deems just and proper. JURY TRIAL DEMAND Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiff demands a trial by jury on all issues so triable. Dated: January _29_, 2013 Respectfully Submitted, s/ Gordon E. Jackson. Gordon E. Jackson (#8323) James L. Holt, Jr. (#12123) Timothy A. Perkins (#024657) JACKSON, SHIELDS, YEISER & HOLT 262 German Oak Drive Memphis, Tennessee 38018 Tel: (901) 754-8001 Fax: (901) 759-1745 ATTORNEYS FOR PLAINTIFF [email protected]

employment & labor

NKkVCocBD5gMZwczqtPt

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK BRIAN FISCHLER, Individually and on behalf of all other persons similarly situated, Plaintiff, v. ECF CASE No.: ____________________ CLASS ACTION COMPLAINT JURY TRIAL DEMANDED BETTER MANAGEMENT HOLDINGS, LLC, d/b/a DNTL Bar, Defendant. INTRODUCTION 1. Plaintiff Brian Fischler, who is legally blind, brings this civil rights action against Defendant Better Management Holdings, LLC, d/b/a DNTL Bar (“Defendant”) for its failure to design, construct, maintain, and operate its website, www.dntlbar.com (the “Website”), to be fully accessible to and independently usable by Plaintiff Fischler and other blind or visually-impaired people. Defendant denies full and equal access to its Website. 2. Plaintiff Fischler, individually and on behalf of others similarly situated, asserts claims under the Americans With Disabilities Act (“ADA”), New York State Human Rights Law (“NYSHRL”), and New York City Human Rights Law (“NYCHRL”) against Defendant. 3. Plaintiff Fischler seeks a permanent injunction to cause Defendant to change its corporate policies, practices, and procedures so that its Website will become and remain accessible to blind and visually-impaired consumers. THE PARTIES 4. Plaintiff Fischler is, at all relevant times, a resident of Astoria, New York, Queens County. As a blind, visually-impaired handicapped person, he is a member of a protected class of individuals under Title III of the ADA, under 42 U.S.C. § 12102(1)-(2), and the regulations implementing the ADA set forth at 28 CFR §§ 36.101 et seq., the NYSHRL and NYCHRL. 5. Defendant is at all relevant times a foreign limited liability company that is organized under Delaware law and is authorized to do business in the State of New York. JURISDICTION AND VENUE 6. This Court has subject-matter jurisdiction over this action under 28 U.S.C. § 1331 and 42 U.S.C. § 12181, as Plaintiff Fischler’s claims arise under Title III of the ADA, 42 U.S.C. § 12181, et seq., and 28 U.S.C. § 1332. 7. This Court has supplemental jurisdiction under 28 U.S.C. § 1367 over Plaintiff Fischler’s NYSHRL, N.Y. Exec. Law Article 15, and NYCHRL, N.Y.C. Admin. Code § 8-101 et seq., claims. 8. Venue is proper under §1391(b)(2) as a substantial part of the events giving rise to the claims occurred in this District: Plaintiff Fischler is a resident of this District; and he has attempted to access the Website in this District and, in doing so, was denied the full use and enjoyment of the facilities, goods, and services of the Website while in Kings County. 9. This Court is empowered to issue a declaratory judgment under 28 U.S.C. §§ 2201 and 2202. NATURE OF ACTION 10. Blind and visually-impaired people can access websites using keyboards in conjunction with screen access software that vocalizes the visual information found on a computer screen or displays the content on a refreshable Braille display. This technology is known as screen-reading software. Screen-reading software is currently the only method a blind or visually impaired person may independently access the Internet. Unless websites are designed to be read by screen-reading software, blind and visually impaired persons are unable to fully access websites, and the information, products, and services contained thereon. 11. Blind and visually impaired users of computers and devices have several screen-reading software programs available to them. Some of these programs are available for purchase and other programs are available without the user having to purchase the program separately. Job Access With Speech (“JAWS”), Talk Back and Voiceover are currently the most popular screen-reading programs. 12. For screen-reading software to function, the information on a website must be capable of being rendered into text. If the website content is not capable of being rendered into text, the blind or visually impaired user is unable to access the same content available to sighted users. 13. The international website standards organization, the World Wide Web Consortium, known throughout the world as W3C, has published version 2.0 of the Web Content Accessibility Guidelines (“WCAG 2.0”). WCAG 2.0 are well-established guidelines for making websites accessible to blind and visually impaired people. These guidelines are universally followed by most large business entities and government agencies to ensure its websites are accessible. 14. For a website to be equally accessible to a blind or visually impaired person, under these guidelines, it should have following: a. Alternative text (“alt-text”) or text equivalent for every non-text element. Alt-text is an invisible code embedded beneath a graphical image on a website. Web accessibility requires that alt-text be coded with each picture so that screen-reading software can speak the alt-text where a sighted user sees pictures, which includes captcha prompts. Alt-text does not change the visual presentation, but instead a text box shows when the mouse moves over the picture. The lack of alt-text on these graphics prevents screen readers from accurately vocalizing a description of the graphics, depriving that person from knowing what is on the website. b. Videos have audio description. c. Title frames with text are provided. Absent these titles, navigating a website is particularly difficult. d. Webpage headings are properly labeled with the topic or purpose of the webpage, versus being blank. Screen readers read out page headings, allowing users to quickly skip to a section. Navigation is, however, very difficult without those headings. e. Equivalent text is provided when using scripts. f. Forms may be completed with the same information and functionality as for sighted persons. Absent forms being properly labeled, it is difficult for a visually impaired or blind individual to complete the forms, as they do not know what the fields, how to input data, or what options to select (e.g., selecting a date or a size). A compliant website will, instead, provide labels or instructions when content requires user input. This includes captcha prompts, requiring the user to verity that he or she is not a robot. g. Information about the meaning and structure of content is conveyed by more than the visual presentation of content. h. Web pages do not share the same ID or title. When two or more elements on a web page share the same ID or title, it cause problems in screen readers which use IDs for labeling controls and table headings. i. Linked images must contain alt-text explaining the image. Absent that alt-text, a screen reader has no content to present the user as to what the image is. j. The purpose of each link is easily determined from how the link is labeled. Absent properly labeling each link or when no description exists, it confuses keyboard and screen-reader users as they do not know the purpose of the links. This includes captcha prompts. k. No redundant links where adjacent links go to the same URL address. When redundant links exist, it causes additional navigation and repetition for keyboard and screen-reader users. l. Portable Document Formats (PDFs) are accessible. When they are inaccessible, the visually impaired or blind individual cannot learn what information is on them. m. One or more keyboard operable user interface has a mode of operation where the keyboard focus indicator is discernible. n. Changing the setting of a user interface component does not automatically cause a change of content where the user has not been advised before using the component. o. The name and role of all user interface elements can be programmatically determined; items that can be set by the user can be programmatically set; and/or notification of changes to these items are available to user agents, including assistive technology. STATEMENT OF FACTS Defendant, Its Website And Its Website’s Barriers 15. Defendant operates walk-in dental bars in New York City. It currently has a location at 776 6th Avenue, New York, New York, with a second location opening soon in Union Square, New York City. At these locations, one can get a teeth cleaning, routine dental evaluation, teeth whitening, and similar services. 16. Defendant’s Website is heavily integrated with its dental bars, serving as a gateway to them. Through the Website, Defendant’s customers are, inter alia, able to: learn about the dental bar locations, learn about services offered at the dental bars, learn about upcoming events and promotions, pay your bill and schedule an appointment. 17. It is, upon information and belief, Defendant’s policy and practice to deny Plaintiff Fischler and other blind or visually-impaired users access to its Website, thereby denying the facilities and services that are offered and integrated with its dental bars. Due to its failure and refusal to remove access barriers to its Website, Plaintiff Fischler and visually-impaired persons have been and are still being denied equal access to Defendant’s facilities, goods, services, and benefits offered to the public through its Website. 18. Plaintiff Fischler cannot use a computer without the assistance of screen- reading software. He is, however, a proficient VoiceOver screen-reader user and uses it to access the Internet. He has visited the Website on separate occasions using screen- reading software. 19. During his visits to the Website, the last occurring on or about June 29, 2020, Plaintiff Fischler encountered multiple access barriers that denied him the full enjoyment of the facilities, goods, and services of the Website, as the facilities, goods, and services offered at Defendant’s dental bars. Because of these barriers he was unable a. Know what is on the Website. This is largely due to the lack of alternative text for non-text images. Several images are labeled only image. Other images are not even detected by the screen reader. For example, on the location page for Chelsea, a sighted user gets four (4) images including the map. No images were detected by Plaintiff Fischler’s screen reader. Without access to the map, Plaintiff Fischler cannot learn about Defendant’s locations equal to a sighted user. Plaintiff Fischler had difficulty learning about available appointments because none of the form fields are properly labeled and he was unable to interact with the calendar to learn about date and time options. When he tried to click on the link to view the list of available appointments, no information was detected. b. Navigate the Website. Plaintiff Fischler encountered issues with screen reader focus throughout the Website. At the top of the Website, there is a carousel of images that plays automatically and will hijack screen reader focus when he is not interacting. Because the majority of information is presented on a single page, these issues arouse when he was trying to learn about locations, the Dntl club, Defendant’s philosophy and other information contained on the Website. Plaintiff Fischler found it difficult to know where content ends or begins because as he is navigating through it, focus was repeatedly redirected back to the top of the page. c. Contact the company. Plaintiff Fischler was unable to contact Defendant through the form embedded on the Website because it is not properly labeled and therefore is inaccessible to a screen reader user. 20. Plaintiff Fischler was denied full and equal access to the facilities and services Defendant offers to the public on its Website because he encountered multiple accessibility barriers that visually-impaired people often encounter with non-compliant websites: a. Lack of alt-text for images. b. Frames do not have a title. d. Some pages have the same title so the title cannot be used to distinguish pages. e. Forms have fields without label elements or title attributes. f. Form field labels are not unique on a page or enclosed in a fieldset with a legend that makes the label unique. g. Webpages have no headings, headings are not nested correctly, and headings are empty. h. Webpages have markup errors. Defendant Must Remove Barriers to Its Website 21. Due to the Website’s inaccessibility, blind and visually-impaired individuals such as Plaintiff Fischler, who need screen-readers, cannot fully and equally use or enjoy the facilities, goods, and services Defendant offers to the public on its Website. The Website’s access barriers that Plaintiff Fischler encountered have caused a denial of his full and equal access in the past, and now deter him on a regular basis from accessing the Website. These access barriers have likewise deterred him from visiting Defendant’s dental bars and enjoying them equal to sighted individuals. 22. If the Website was equally accessible to all, Plaintiff Fischler could independently navigate it, view goods and service items, learn about Defendant’s dental bars and services, learn about or schedule an appointment and contact the company, as sighted individuals can. 23. Through his attempts to use the Website, Plaintiff Fischler has actual knowledge of the access barriers that make these services inaccessible and independently unusable by blind and visually-impaired people. 24. Because simple compliance with the WCAG 2.0 AA Guidelines would provide Plaintiff Fischler and other visually-impaired consumers with equal access to the Website, Plaintiff Fischler alleges that Defendant has engaged in acts of intentional discrimination, including, but not limited to, the following policies or practices: a. Constructing and maintaining a website that is inaccessible to visually-impaired individuals, including Plaintiff Fischler; b. Failing to construct and maintain a website that is sufficiently intuitive to be equally accessible to visually-impaired individuals, including Plaintiff Fischler; and, c. Failing to take actions to correct these access barriers in the face of substantial harm and discrimination to blind and visually impaired consumers, such as Plaintiff Fischler, as a member of a protected class. 25. Defendant therefore uses standards, criteria or methods of administration that have the effect of discriminating or perpetuating the discrimination of others, as alleged herein. 26. Title III of the ADA expressly contemplates the injunctive relief that Plaintiff Fischler seeks under 42 U.S.C. § 12188(a)(2). 27. Because its Website has never been equally accessible, and because Defendant lacks a corporate policy that is reasonably calculated to cause its Website to become and remain accessible, Plaintiff Fischler seeks a permanent injunction under 42 U.S.C. § 12188(a)(2) requiring Defendant to retain a qualified consultant acceptable to Plaintiff Fischler to assist Defendant to comply with WCAG 2.0 AA guidelines for its Website: a. Remediating the Website to be WCAG 2.0 AA compliant; b. Training Defendant employees and agents who develop the Website on accessibility compliance under the WCAG 2.0 AA guidelines; c. Regularly checking the accessibility of the Website under the WCAG 2.0 guidelines; d. Regularly testing user accessibility by blind or vision-impaired persons to ensure that Defendant’s Website complies under the WCAG 2.0 AA guidelines; and, e. Developing an accessibility policy that is clearly disclosed on Defendant’s Website, with contact information for users to report accessibility-related problems. 28. Although Defendant may currently have centralized policies on maintaining and operating its Website, Defendant lacks a plan and policy reasonably calculated to make them fully and equally accessible to, and independently usable by, blind and other visually impaired consumers. 29. Without injunctive relief, Plaintiff Fischler and other visually impaired consumers will continue to be unable to independently use the Website, violating its rights. 30. Defendant has, upon information and belief, invested substantial sums in developing and maintaining its Website and has generated significant revenue directly from the Website and indirectly by encouraging customers to visit the dental bars. These amounts are far greater than the associated cost of making its Website equally accessible to visually impaired customers. 31. Defendant has failed to take any prompt and equitable steps to remedy its discriminatory conduct. These violations are ongoing. CLASS ACTION ALLEGATIONS 32. Plaintiff Fischler seeks to certify a nationwide class under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the United States who have attempted to access Defendant’s Website and as a result have been denied access to the equal enjoyment of goods and services offered in the dental bars during the relevant statutory period (“Class Members”). 33. Plaintiff Fischler seeks to certify a State of New York subclass under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the State of New York who have attempted to access the Website and as a result have been denied access to the equal enjoyment of goods and services offered in the dental bars during the relevant statutory period (“New York Subclass Members”). 34. Plaintiff Fischler seeks to certify a New York City subclass under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the City of New York who have attempted to access the Website and as a result have been denied access to the equal enjoyment of goods and services offered in Defendant’s hospitals during the relevant statutory period (“New York City Subclass Members”). 35. Common questions of law and fact exist amongst the Class Members, New York Subclass Members and New York City Subclass Members: a. Whether Defendant’s dental bars are “public accommodations”; b. Whether Defendant’s Website is a “public accommodation” or a service or good “of a place of public accommodation” under Title III of the ADA; c. Whether Defendant’s Website is a “place or provider of public accommodation” or an “accommodation, advantage, facility or privilege” under the NYSHRL or NYCHRL; d. Whether Defendant’s Website denies the full and equal enjoyment of its goods, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating Title III of the ADA; and e. Whether Defendant’s Website denies the full and equal enjoyment of its goods, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating the NYSHRL or NYCHRL. 36. Plaintiff Fischler’s claims are typical of the Class Members, New York Subclass Members and New York City Subclass Members: they are all severely visually impaired or otherwise blind, and claim that Defendant has violated Title III of the ADA, NYSHRL or NYCHRL by failing to update or remove access barriers on its Website so it can be independently accessible to the visually impaired individuals. 37. Plaintiff Fischler will fairly and adequately represent and protect the Class and Subclasses’ interests because he has retained and is represented by counsel competent and experienced in complex class action litigation, and because he has no interests antagonistic to the Class or Subclasses. Class certification of the claims is appropriate under Fed. R. Civ. P. 23(b)(2) because Defendant has acted or refused to act on grounds generally applicable to the Class and Subclasses, making appropriate both declaratory and injunctive relief with respect to Plaintiff, the Class and Subclasses. 38. Alternatively, class certification is appropriate under Fed. R. Civ. P. 23(b)(3) because fact and legal questions common to Class and Subclass Members predominate over questions affecting only individuals, and because a class action is superior to other available methods for the fair and efficient adjudication of this litigation. 39. Judicial economy will be served by maintaining this lawsuit as a class action in that it is likely to avoid the burden that would be otherwise placed upon the judicial system by the filing of numerous similar suits by people with visual disabilities throughout the United States. FIRST CAUSE OF ACTION VIOLATIONS OF THE ADA, 42 U.S.C. § 12181 et seq. 40. Plaintiff Fischler, individually and on behalf of the Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 41. Title III of the ADA prohibits “discriminat[ion] on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.” 42 U.S.C. § 12182(a). 42. The Defendant’s dental bars are public accommodations under Title III of the ADA, 42 U.S.C. § 12181(7). Its Website is a service, privilege, or advantage of Defendant’s dental bars. The Website is a service that is integrated with Defendant’s dental bars. 43. Under Title III of the ADA, it is unlawful discrimination to deny individuals with disabilities the opportunity to participate in or benefit from the goods, services, facilities, privileges, advantages, or accommodations of an entity. 42 U.S.C. § 12182(b)(1)(A)(i). 44. Under Title III of the ADA, it is unlawful discrimination to deny individuals with disabilities an opportunity to participate in or benefit from the goods, services, facilities, privileges, advantages, or accommodation, which is equal to the opportunities afforded to other individuals. 42 U.S.C. § 12182(b)(1)(A)(ii). 45. Under Title III of the ADA, unlawful discrimination also includes, among other things: [A] failure to make reasonable modifications in policies, practices, or procedures, when such modifications are necessary to afford such goods, services, facilities, privileges, advantages, or accommodations to individuals with disabilities, unless the entity can demonstrate that making such modifications would fundamentally alter the nature of such goods, services, facilities, privileges, advantages or accommodations; and a failure to take such steps as may be necessary to ensure that no individual with a disability is excluded, denied services, segregated or otherwise treated differently than other individuals because of the absence of auxiliary aids and services, unless the entity can demonstrate that taking such steps would fundamentally alter the nature of the good, service, facility, privilege, advantage, or accommodation being offered or would result in an undue burden. 42 U.S.C. § 12182(b)(2)(A)(ii)-(iii). 46. These acts violate Title III of the ADA, and the regulations promulgated thereunder. Plaintiff Fischler, who is a member of a protected class of persons under Title III of the ADA, has a physical disability that substantially limits the major life activity of sight within the meaning of 42 U.S.C. §§ 12102(1)(A)-(2)(A). Furthermore, he has been denied full and equal access to the Website, has not been provided services that are provided to other patrons who are not disabled, and has been provided services that are inferior to the services provided to non-disabled persons. 47. Under 42 U.S.C. § 12188 and the remedies, procedures, and rights set forth and incorporated therein, Plaintiff Fischler requests the relief as set forth below. SECOND CAUSE OF ACTION VIOLATIONS OF THE NYSHRL 48. Plaintiff Fischler, individually and on behalf of the New York Subclass Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 49. The Defendant’s dental bars constitute sales establishments and public accommodations under N.Y. Exec. Law § 292(9). Defendant’s Website is a service, privilege or advantage of Defendant’s dental bars. Defendant’s Website is a service that is by and integrated with its hospitals. 50. Defendant is subject to NYSHRL because it owns and operates its dental bars and the Website. Defendant is a “person” under N.Y. Exec. Law § 292(1). 51. Defendant is violating the NYSHRL in refusing to update or remove access barriers to its Website, causing its Website and the services integrated with its dental bars to be completely inaccessible to the blind. This inaccessibility denies blind patrons full and equal access to the facilities, goods and services that Defendant makes available to the non-disabled public. N.Y. Exec. Law §§ 296(2)(a), 296(2)(c)(i), 296(2)(c)(ii). 52. Readily available, well-established guidelines exist on the Internet for making websites accessible to the blind and visually impaired. These guidelines have been followed by other large business entities and government agencies in making their websites accessible, including but not limited to: adding alt-text to graphics and ensuring that all functions can be performed using a keyboard. Incorporating the basic components to make its Website accessible would neither fundamentally alter the nature of its business nor result in an undue burden to them. 53. Defendant’s actions constitute willful intentional discrimination against the class because of a disability, violating the NYSHRL, N.Y. Exec. Law § 296(2), in that Defendant has: a. Constructed and maintained a website that is inaccessible to Class Members with knowledge of the discrimination; and/or b. Constructed and maintained a website that is sufficiently intuitive and/or obvious that is inaccessible to blind class members; and/or c. Failed to take actions to correct these access barriers in the face of substantial harm and discrimination to blind class members. 54. Defendant discriminates, and will continue in the future to discriminate against Plaintiff Fischler and New York Subclass Members on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, accommodations and/or opportunities of Defendant’s Website and its dental bars under § 296(2) et seq. and/or its implementing regulations. Unless the Court enjoins Defendant from continuing to engage in these unlawful practices, Plaintiff and the New York Subclass Members will continue to suffer irreparable harm. 55. As Defendant’s actions violate the NYSHRL, Plaintiff Fischler seeks injunctive relief to remedy the discrimination. 56. Plaintiff Fischler is also entitled to compensatory damages, as well as civil penalties and fines under N.Y. Exec. Law § 297(4)(c) et seq. for every offense. 57. Plaintiff Fischler is also entitled to reasonable attorneys’ fees and costs. 58. Under N.Y. Exec. Law § 297 and the remedies, procedures, and rights set forth and incorporated therein Plaintiff prays for judgment as set forth below. THIRD CAUSE OF ACTION VIOLATIONS OF THE NYCHRL 59. Plaintiff Fischler, individually and on behalf the New York City Subclass Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 60. Defendant’s dental bars are sales establishments and public accommodations under NYCHRL, N.Y.C. Admin. Code § 8-102(9), and its Website is a service that is integrated with its establishments. 61. Defendant is subject to NYCHRL because it owns and operates its dental bars in the City of New York, and its Website, making it a person under N.Y.C. Admin. Code § 8-102(1). 62. Defendant is violating the NYCHRL in refusing to update or remove access barriers to Website, causing its Website and the services integrated with its dental bars to be completely inaccessible to the blind. This inaccessibility denies blind patrons full and equal access to the facilities, goods, and services that the Defendant makes available to the non-disabled public. N.Y.C. Admin. Code §§ 8-107(4)(a), 8-107(15)(a). 63. Defendant’s actions constitute willful intentional discrimination against the Subclass because of a disability, violating the NYCHRL, N.Y.C. Admin. Code § 8- 107(4)(a) and § 8-107(15)(a,) in that it has: a. Constructed and maintained a website that is inaccessible to blind class members with knowledge of the discrimination; and/or b. Constructed and maintained a website that is sufficiently intuitive and/or obvious that is inaccessible to blind class members; and/or c. Failed to take actions to correct these access barriers in the face of substantial harm and discrimination to blind class members. 64. As such, Defendant discriminates, and will continue in the future to discriminate against Plaintiff Fischler and the New York City Subclass Members because of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, accommodations and/or opportunities of its Website and its establishments under § 8-107(4)(a) and/or its implementing regulations. Unless the Court enjoins Defendant from continuing to engage in these unlawful practices, Plaintiff and the New York City Subclass will continue to suffer irreparable harm. 65. As Defendant’s actions violate the NYCHRL, Plaintiff Fischler seeks injunctive relief to remedy the discrimination. 66. Plaintiff Fischler is also entitled to compensatory damages, as well as civil penalties and fines for each offense. N.Y.C. Admin. Code §§ 8-120(8), 8-126(a). 67. Plaintiff Fischler is also entitled to reasonable attorneys’ fees and costs. 68. Under N.Y.C. Admin. Code § 8-120 and § 8-126 and the remedies, procedures, and rights set forth and incorporated therein Plaintiff prays for judgment as set forth below. FOURTH CAUSE OF ACTION DECLARATORY RELIEF 69. Plaintiff Fischler, individually and on behalf the Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 70. An actual controversy has arisen and now exists between the parties in that Plaintiff Fischler contends, and is informed and believes that Defendant denies, that its Website contains access barriers denying blind customers the full and equal access to the goods, services and facilities of its Website and by extension its dental bars, which Defendant owns, operates and controls, failing to comply with applicable laws including, but not limited to, Title III of the Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y. Exec. Law § 296, et seq., and N.Y.C. Admin. Code § 8-107, et seq. prohibiting discrimination against the blind. 71. A judicial declaration is necessary and appropriate now in order that each of the parties may know its respective rights and duties and act accordingly. PRAYER FOR RELIEF WHEREFORE, Plaintiff Fischler respectfully requests this Court grant the following relief: a. A preliminary and permanent injunction to prohibit Defendant from violating Title III of the ADA, 42 U.S.C. §§ 12182, et seq., N.Y. Exec. Law § 296, et seq., N.Y.C. Admin. Code § 8-107, et seq., and the laws of New York; b. A preliminary and permanent injunction requiring Defendant to take all the steps necessary to bring its Website into full compliance with the requirements set forth in Title III of the ADA, and its implementing regulations, so that the Website is readily accessible to and usable by blind individuals; c. A declaration that Defendant owns, maintains and/or operates the Website in a manner that discriminates against the blind and which fails to provide access for persons with disabilities as required by ADA, 42 U.S.C. §§ 12182, et seq., N.Y. Exec. Law § 296, et seq., N.Y.C. Admin. Code § 8-107, et seq., and the laws of New York d. An order certifying the Class and Subclasses under Fed. R. Civ. P. 23(a) & (b)(2) and/or (b)(3), appointing Plaintiff as Class Representative, and his attorneys as Class Counsel; e. Compensatory damages in an amount to be determined by proof, including all applicable statutory damages, punitive damages and fines; f. Pre- and post-judgment interest; g. An award of costs and expenses of this action together with reasonable attorneys’ and expert fees; and h. Such other and further relief as this Court deems just and proper. DEMAND FOR TRIAL BY JURY Pursuant to Fed. R. Civ. P. 38(b), Plaintiff Fischler demands a trial by jury on all questions of fact the Complaint raises. Dated: New York, New York June 30, 2020 LIPSKY LOWE LLP s/ Christopher H. Lowe Christopher H. Lowe Douglas B. Lipsky 420 Lexington Avenue, Suite 1830 New York, New York 10170 Tel: 212.392.4772 Fax: 212.444.1030 [email protected] [email protected]

civil rights, immigration, family

EwHyFIcBD5gMZwcz9E8M

I. (a) PLAINTIFFS DEFENDANTS Janicia Hyde, individually and on behalf of all others similarly situated WWF Operating Company, LLC Kings (b) County of Residence of First Listed Plaintiff County of Residence of First Listed Defendant (EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY) NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND INVOLVED. (c) Attorneys (Firm Name, Address, and Telephone Number) Attorneys (If Known) SHEEHAN & ASSOCIATES, P.C., 505 NORTHERN BLVD STE 311 GREAT NECK NY 11021-5101, (516) 303-0552 II. BASIS OF JURISDICTION (Place an “X” in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an “X” in One Box for Plaintiff (For Diversity Cases Only) and One Box for Defendant) � 1 U.S. Government � 3 Federal Question PTF DEF PTF DEF Plaintiff (U.S. Government Not a Party) Citizen of This State � 1 � 1 Incorporated or Principal Place � 4 � 4 of Business In This State � 2 U.S. Government � 4 Diversity Citizen of Another State � 2 � 2 Incorporated and Principal Place � 5 � 5 Defendant (Indicate Citizenship of Parties in Item III) of Business In Another State Citizen or Subject of a � 3 � 3 Foreign Nation � 6 � 6 Foreign Country IV. NATURE OF SUIT (Place an “X” in One Box Only) CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES � 6 Multidistrict Litigation - Transfer � 8 Multidistrict Litigation - �Direct File � 110 Insurance PERSONAL INJURY PERSONAL INJURY � 625 Drug Related Seizure � 422 Appeal 28 USC 158 � 375 False Claims Act � 120 Marine � 310 Airplane � 365 Personal Injury - of Property 21 USC 881 � 423 Withdrawal � 376 Qui Tam (31 USC � 130 Miller Act � 315 Airplane Product Product Liability � 690 Other 28 USC 157 3729(a)) � 140 Negotiable Instrument Liability � 367 Health Care/ � 400 State Reapportionment � 150 Recovery of Overpayment � 320 Assault, Libel & Pharmaceutical PROPERTY RIGHTS � 410 Antitrust & Enforcement of Judgment Slander Personal Injury � 820 Copyrights � 430 Banks and Banking � 151 Medicare Act � 330 Federal Employers’ Product Liability � 830 Patent � 450 Commerce � 152 Recovery of Defaulted Liability � 368 Asbestos Personal � 840 Trademark � 460 Deportation Student Loans � 340 Marine Injury Product � 470 Racketeer Influenced and (Excludes Veterans) � 345 Marine Product Liability LABOR SOCIAL SECURITY Corrupt Organizations � 153 Recovery of Overpayment Liability PERSONAL PROPERTY � 710 Fair Labor Standards � 861 HIA (1395ff) � 480 Consumer Credit of Veteran’s Benefits � 350 Motor Vehicle � 370 Other Fraud Act � 862 Black Lung (923) � 490 Cable/Sat TV � 160 Stockholders’ Suits � 355 Motor Vehicle � 371 Truth in Lending � 720 Labor/Management � 863 DIWC/DIWW (405(g)) � 850 Securities/Commodities/ � 190 Other Contract Product Liability � 380 Other Personal Relations � 864 SSID Title XVI Exchange � 195 Contract Product Liability � 360 Other Personal Property Damage � 740 Railway Labor Act � 865 RSI (405(g)) � 890 Other Statutory Actions � 196 Franchise Injury � 385 Property Damage � 751 Family and Medical � 891 Agricultural Acts � 362 Personal Injury - Product Liability Leave Act � 893 Environmental Matters Medical Malpractice � 790 Other Labor Litigation � 895 Freedom of Information REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS � 791 Employee Retirement FEDERAL TAX SUITS Act � 210 Land Condemnation � 440 Other Civil Rights Habeas Corpus: Income Security Act � 870 Taxes (U.S. Plaintiff � 896 Arbitration � 220 Foreclosure � 441 Voting � 463 Alien Detainee or Defendant) � 899 Administrative Procedure � 230 Rent Lease & Ejectment � 442 Employment � 510 Motions to Vacate � 871 IRS—Third Party Act/Review or Appeal of � 240 Torts to Land � 443 Housing/ Sentence 26 USC 7609 Agency Decision � 245 Tort Product Liability Accommodations � 530 General � 950 Constitutionality of � 290 All Other Real Property � 445 Amer. w/Disabilities - � 535 Death Penalty IMMIGRATION State Statutes Employment Other: � 462 Naturalization Application � 446 Amer. w/Disabilities - � 540 Mandamus & Other � 465 Other Immigration Other � 550 Civil Rights Actions � 448 Education � 555 Prison Condition � 560 Civil Detainee - Conditions of Confinement V. ORIGIN (Place an “X” in One Box Only) � 1 Original Proceeding � 2 Removed from State Court � 3 Remanded from Appellate Court � 4 Reinstated or Reopened � 5 Transferred from Another District (specify) Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity): 28 USC § 1332 VI. CAUSE OF ACTION Brief description of cause: False advertising 5,000,000.00 VII. REQUESTED IN COMPLAINT: � CHECK IF THIS IS A CLASS ACTION UNDER RULE 23, F.R.Cv.P. DEMAND $ CHECK YES only if demanded in complaint: JURY DEMAND: � Yes � No VIII. RELATED CASE(S) IF ANY (See instructions): JUDGE DOCKET NUMBER DATE SIGNATURE OF ATTORNEY OF RECORD 10/02/2019 /s/ Spencer Sheehan Spencer Sheehan plaintiff ��������������������������������������������������������������������������������������������������������������������� ������������������������������������������������������������������ �������������������������������������������������������������������������������������� �������������������������������������� ����������������������������������������������������������� �������������������������������������������������������� ������������������������������������������������������������������������������������������������������ ��������������������������������������������������������������� ������������������������������������������������������������������������������������������������������������������������������������������������������� ���������������������������������������������������������������������������������������������������������������������������������������������������������� ������������������������������������������������������������������������������������������������������������������������������������������������������������� ����������������������������������������������������������������������������������������������������������������������������������������������������������� ������������������������������������������������������������������������������������������������������������������������������������������������������������ ����������������������������������������������������������������������������������������������������������������������������������������������������������� ������� ����������������������������������������� No ���� ������������������������������������������������������������������������������������������������������������������������ �������������������������������� No ���� ��������������������������� �� ������������������������������������������������������������������������������������������������������������������������� �������������������������������� Yes �� ������������������������������������������������������������������������������������������������������������������� ���������������������������������� ��������������������������������������������������������������������������������������������������������������������������������������������� ��������������������������������������������������������������������������������������������������������������������������������������������� ���������������������������������������� ����������������������������������������������������������������������������������������������������������������� ������������� ����������������������������������������������������������������������������������������������������������������������������� ��� ��� ��������������������������������������������������������������������������������������������������������� ���� ������������������������� ��� ���������������������������������������������������������

consumer fraud

RxECF4cBD5gMZwczS-Kx

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TENNESSEE Cassius Croom, individually and on behalf of all others similarly situated, Case. No.: 2:20-cv-2872 Plaintiff, CLASS ACTION COMPLAINT DEMAND FOR JURY TRIAL -v.- Automated Collection Services, Inc. and John Does 1-25, Defendants. Plaintiff Cassius Croom (“Plaintiff”) brings this Class Action Complaint by and through her attorneys, Stein Saks, PLLC, against Defendant Automated Collection Services, Inc., (“ACS”), individually and on behalf of a class of all others similarly situated, pursuant to Rule 23 of the Federal Rules of Civil Procedure, based upon information and belief of Plaintiff’s counsel, except for allegations specifically pertaining to Plaintiff, which are based upon Plaintiff's personal knowledge. INTRODUCTION/PRELIMINARY STATEMENT 1. The Fair Debt Collection Practices Act (“FDCPA’) was enacted in response to the "abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors." 15 U.S.C. §1692(a). This was because of the concern that "abusive debt collection practices contribute to the number of personal bankruptcies, to material instability, to the loss of jobs, and to invasions of individual privacy." Id. Congress concluded that "existing laws…[we]re inadequate to protect consumers," and that "'the effective collection of debts" does not require "misrepresentation or other abusive debt collection practices." 15 U.S.C. §§ 1692(b) & (c). 2. The purpose of the Act was not only to eliminate abusive debt collection practices, but also to ensure “that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged." Id. § 1692(e). After determining that the existing consumer protection laws were inadequate. Id. § 1692(b), Congress gave consumers a private cause of action against debt collectors who fail to comply with the Act. Id. § 1692k. JURISDICTION AND VENUE 3. The Court has jurisdiction over this class action pursuant to 28 U.S.C. § 1331 and 15 U.S.C. § 1692 et. seq. The Court has pendent jurisdiction over any State law claims in this action pursuant to 28 U.S.C. § 1367(a). 4. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(b)(2) as this is where a substantial part of the events or omissions giving rise to the claim occurred. NATURE OF THE ACTION 5. Plaintiff brings this class action on behalf of a class of Tennessee consumers under § 1692 et seq. of Title 15 of the United States Code, also known as the Fair Debt Collections Practices Act ("FDCPA"), and 6. Plaintiff is seeking damages and declaratory relief. PARTIES 7. Plaintiff is a resident of the State of Tennessee, residing at 3716 Southridge Blvd, Murfreesboro, TN 37128. 8. Defendant ACS is a "debt collector" as the phrase is defined in 15 U.S.C. § 1692(a)(6) and used in the FDCPA with a physical address at 2802 Opryland Drive, Nashville, TN 37214. 9. Defendant ACS is a company that uses the mail, telephone, and facsimile and regularly engages in business the principal purpose of which is to attempt to collect debts alleged to be due itself or another. 10. John Does 1-25, are fictitious names of individuals and businesses alleged for the purpose of substituting names of Defendants whose identities will be disclosed in discovery and should be made parties to this action. CLASS ALLEGATIONS 11. Plaintiff brings this claim on behalf of the following case, pursuant to Fed. R. Civ. P. 23(a) and 23(b)(3). 12. The Class consists of: a. all individuals with addresses in the State of Tennessee; b. to whom Defendant ACS sent an initial collection letter; c. attempting to collect a consumer debt; d. providing multiple addresses; e. without identifying which address is the correct one to send a dispute; and f. which letter was sent on or after a date one (1) year prior to the filing of this action and on or before a date twenty-one (21) days after the filing of this action. 13. The identities of all class members are readily ascertainable from the records of Defendants and those companies and entities on whose behalf they attempt to collect and/or have purchased debts. 14. Excluded from the Plaintiff Class is the Defendant and all officers, members, partners, managers, directors and employees of the Defendant and its respective immediate families, and legal counsel for all parties to this action, and all members of their immediate families. 15. There are questions of law and fact common to the Plaintiff Class, which common issues predominate over any issues involving only individual class members. The principal issue is whether the Defendant’s written communications to consumers, in the forms attached as Exhibit A, violate 15 U.S.C. §§ 1692e, 1692f, and 1692g. 16. The Plaintiff’s claims are typical of the class members, as all are based upon the same facts and legal theories. The Plaintiff will fairly and adequately protect the interests of the Plaintiff Class defined in this complaint. The Plaintiff has retained counsel with experience in handling consumer lawsuits, complex legal issues, and class actions, and neither the Plaintiff nor his attorneys have any interests, which might cause them not to vigorously pursue this action. 17. This action has been brought, and may properly be maintained, as a class action pursuant to the provisions of Rule 23 of the Federal Rules of Civil Procedure because there is a well- defined community interest in the litigation: a. Numerosity: The Plaintiff is informed and believes, and on that basis alleges, that the Plaintiff Class defined above is so numerous that joinder of all members would be impractical. b. Common Questions Predominate: Common questions of law and fact exist as to all members of the Plaintiff Class and those questions predominance over any questions or issues involving only individual class members. The principal issue is whether the Defendants' written communications to consumers, in the forms attached as Exhibit A violate 15 U.S.C. §§ 1692e, 1692f, and 1692g. c. Typicality: The Plaintiff’s claims are typical of the claims of the class members. The Plaintiff and all members of the Plaintiff Class have claims arising out of the Defendants' common uniform course of conduct complained of herein. d. Adequacy: The Plaintiff will fairly and adequately protect the interests of the class members insofar as Plaintiff has no interests that are adverse to the absent class members. The Plaintiff is committed to vigorously litigating this matter. Plaintiff has also retained counsel experienced in handling consumer lawsuits, complex legal issues, and class actions. Neither the Plaintiff nor her counsel have any interests which might cause them not to vigorously pursue the instant class action lawsuit. e. Superiority: A class action is superior to the other available means for the fair and efficient adjudication of this controversy because individual joinder of all members would be impracticable. Class action treatment will permit a large number of similarly situated persons to prosecute their common claims in a single forum efficiently and without unnecessary duplication of effort and expense that individual actions would engender. 18. Certification of a class under Rule 23(b)(3) of the Federal Rules of Civil Procedure is also appropriate in that the questions of law and fact common to members of the Plaintiff Class predominate over any questions affecting an individual member, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy. 19. Depending on the outcome of further investigation and discovery, Plaintiff may, at the time of class certification motion, seek to certify a class(es) only as to particular issues pursuant to Fed. R. Civ. P. 23(c)(4). FACTUAL ALLEGATIONS 20. Plaintiff repeats the above allegations as if set forth here. 21. Some time prior to December 2, 2019, Plaintiff allegedly incurred an obligation to Vanderbilt Hospital. 22. The obligation arose out of a transaction involving a medical debt to Vanderbilt Hospital in which money, property, insurance or services, which are the subject of the transaction, were incurred solely for personal purposes, specifically personal medical care. 23. The alleged Vanderbilt Hospital obligation is a "debt" as defined by 15 U.S.C.§ 1692a (5). 24. Vanderbilt Hospital is a "creditor" as defined by 15 U.S.C. § 1692a (4). 25. Vanderbilt Hospital contracted with the Defendant ACS to collect the alleged debt. 26. Defendant ACS collects and attempts to collect debts incurred or alleged to have been incurred for personal, family or household purposes on behalf of creditors using the United States Postal Services, telephone and internet. December 2, 2019 Collection Letter 27. On or about December 2, 2019, Defendant sent the Plaintiff an initial collection letter regarding the alleged debt owed to Vanderbilt Hospital. See Letter attached as Exhibit A. 28. The letter ostensibly provides the notices as required by 15 U.S.C. § 1692g regarding disputing the debt. 29. However, there are three addresses listed for Defendant in two different cities and a. 2802 Spryland Drive, Nashville, TN 37214; b. PO Box 4115, Concord, CA 94524; c. PO Box 17737 Nashville, TN 37217. 30. None of the three addresses are specifically identified as the correct address where to send disputes. 31. The consumer is therefore confused as to how to properly dispute the debt and exercise his rights under § 1692g. 32. Upon information and belief, disputes sent to one or more of these addresses will not be honored by Defendant. 33. Listing these incorrect addresses(es) misleads the consumer into believing a proper dispute can be sent there. 34. Plaintiff was therefore unable to straightforwardly dispute the debt resulting in wasted time. 35. As a result of Defendant's deceptive, misleading and unfair debt collection practices, Plaintiff has been damaged. COUNT I VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. §1692e et seq. 36. Plaintiff repeats the above allegations as if set forth here. 37. Defendant’s debt collection efforts attempted and/or directed towards the Plaintiff violated various provisions of the FDCPA, including but not limited to 15 U.S.C. § 1692e. 38. Pursuant to 15 U.S.C. § 1692e, a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. 39. Defendant violated said section: a. By providing multiple addresses and not identifying which one should be used to dispute the debt, in violation of § 1692e (10). 40. By reason thereof, Defendant is liable to Plaintiff for judgment that Defendant's conduct violated Section 1692e et seq. of the FDCPA, actual damages, statutory damages, costs and attorneys’ fees. COUNT II VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. §1692f et seq. 41. Plaintiff repeats the above allegations as if set forth here. 42. Defendant’s debt collection efforts attempted and/or directed towards the Plaintiff violated various provisions of the FDCPA, including but not limited to 15 U.S.C. § 1692f. 43. Pursuant to 15 U.S.C. § 1692f, a debt collector may not use any unfair or unconscionable means in connection with the collection of any debt. 44. Defendant violated this section by providing multiple addresses and not identifying which one should be used for disputing the debt. 45. By reason thereof, Defendant is liable to Plaintiff for judgment that Defendant's conduct violated Section 1692f et seq. of the FDCPA, actual damages, statutory damages, costs and attorneys’ fees. COUNT III VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. §1692g et seq. 46. Plaintiff repeats the above allegations as if set forth here. 47. Defendant’s debt collection efforts attempted and/or directed towards the Plaintiff violated various provisions of the FDCPA, including but not limited to 15 U.S.C. § 1692g. 48. Pursuant to 15 U.S.C. § 1692g: Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing – 1. The amount of the debt; 2. The name of the creditor to whom the debt is owed; 3. A statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any 4. portion thereof, the debt will be assumed to be valid by the debt- collector; 5. A statement that the consumer notifies the debt collector in writing within thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and 6. A statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor. 49. Defendant violated this section by providing multiple addresses and not identifying which one should be used for disputing the debt thereby failing to provide the proper notice required by §1692g in an initial collection letter. 50. By reason thereof, Defendant is liable to Plaintiff for judgment that Defendant's conduct violated Section 1692g et seq. of the FDCPA, actual damages, statutory damages, costs and attorneys’ fees. DEMAND FOR TRIAL BY JURY 51. Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff hereby requests a trial by jury on all issues so triable. PRAYER FOR RELIEF WHEREFORE, Plaintiff Cassius Croom, individually and on behalf of all others similarly situated, demands judgment from Defendant ACS as follows: i. Declaring that this action is properly maintainable as a Class Action and certifying Plaintiff as Class representative, and Yaakov Saks, Esq. as Class Counsel; ii. Awarding Plaintiff and the Class statutory damages; iii. Awarding Plaintiff and the Class actual damages; iv. Awarding Plaintiff costs of this Action, including reasonable attorneys’ fees and expenses; v. Awarding pre-judgment interest and post-judgment interest; and vi. Awarding Plaintiff and the Class such other and further relief as this Court may deem just and proper. Dated: December 2, 2020 Respectfully Submitted, Stein Saks, PLLC /s/ Yaakov Saks _________ Yaakov Saks 285 Passaic Street Hackensack, NJ, 07601 P. (201) 282-6500 ext 101 F. (201) 282-6501 [email protected] Attorneys for Plaintiff

consumer fraud

rejrEYcBD5gMZwczu_VK

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK HIMELDA MENDEZ, for herself and on behalf of all other persons similarly situated, Plaintiff, 19 CV 11538 –against– PRIMAVERA GALLERY, INC., Defendant. CLASS ACTION COMPLAINT AND JURY DEMAND INTRODUCTION 1. Plaintiff, HIMELDA MENDEZ, on behalf of herself and others similarly situated, asserts the following claims against Defendant PRIMAVERA GALLERY, INC., as follows. 2. Plaintiff is a visually-impaired and legally blind person who requires screen- reading software to read website content using her computer. Plaintiff uses the terms “blind” or “visually-impaired” to refer to all people with visual impairments who meet the legal definition of blindness in that they have a visual acuity with correction of less than or equal to 20 x 200. Some blind people who meet their definition have limited vision. Others have no vision. 3. Based on a 2010 U.S. Census Bureau report, approximately 8.1 million people in the United States are visually impaired, including 2.0 million who are blind, and according to the American Foundation for the Blind’s 2015 report, approximately 400,000 visually impaired persons live in the State of New York. 4. Plaintiff brings her civil rights action against CAVIN-MORRIS, INC., (“Defendant” or “COMPANY”), for its failure to design, construct, maintain, and operate its website to be fully accessible to and independently usable by Plaintiff and other blind or visually- impaired people. Defendant’s denial of full and equal access to its website, and therefore denial of its products and services offered thereby and in conjunction with its physical location, is a violation of Plaintiff’s rights under the Americans with Disabilities Act (“ADA”). 5. Because Defendant’s website, https://www.primaveragallery.com (the “Website” or “Defendant’s Website”), is not equally accessible to blind and visually-impaired consumers, it violates the ADA. Plaintiff seeks a permanent injunction to cause a change in Defendant’s corporate policies, practices, and procedures so that Defendant’s website will become and remain accessible to blind and visually-impaired consumers. JURISDICTION AND VENUE 6. The Court has subject-matter jurisdiction over this action under 28 U.S.C. § 1331 and 42 U.S.C. § 12181, as Plaintiff’s claims arise under Title III of the ADA, 42 U.S.C. § 12181, et seq., and 28 U.S.C. § 1332. 7. The Court has supplemental jurisdiction under 28 U.S.C. § 1367 over Plaintiff’s New York State Human Rights Law, N.Y. Exec. Law Article 15, (“NYSHRL”) and New York City Human Rights Law, N.Y.C. Admin. Code § 8-101 et seq., (“NYCHRL”) claims. 8. Venue is proper in this district under 28 U.S.C. §1391(b)(1) and (2) because Defendant conducts and continues to conduct a substantial and significant amount of business in this District, Defendant is subject to personal jurisdiction in this District, and a substantial portion of the conduct complained of herein occurred in this District. 9. Defendant is subject to personal jurisdiction in this District. Defendant has been and is committing the acts or omissions alleged herein in the Southern District of New York that caused injury, and violated rights the ADA prescribes to Plaintiff and to other blind and other visually impaired-consumers. A substantial part of the acts and omissions giving rise to Plaintiff’s claims occurred in this District: on several separate occasions, Plaintiff has been denied the full use and enjoyment of the facilities, goods, and services of Defendant’s physical location and/or Website with respect to Defendant’s art gallery located in New York County. These access barriers that Plaintiff encountered have caused a denial of Plaintiff’s full and equal access multiple times in the past, and now deter Plaintiff on a regular basis from visiting Defendant’s brick-and mortar location. This includes, Plaintiff attempting to obtain information about Defendant’s art gallery (location and hours and other important information) in New York County 10. The Court is empowered to issue a declaratory judgment under 28 U.S.C. §§ 2201 and 2202. PARTIES 11. Plaintiff, at all relevant times, is a resident of New York, New York. Plaintiff is a blind, visually-impaired handicapped person and a member of member of a protected class of individuals under the ADA, under 42 U.S.C. § 12102(1)-(2), and the regulations implementing the ADA set forth at 28 CFR §§ 36.101 et seq., the NYSHRL and NYCHRL. 12. Defendant, is and was, at all relevant times herein, a Domestic Business Corporation registered to do business in the State of New York with a principal place of business located at 210 11th Avenue, New York, NY. Defendant operates its art gallery as well as the Website and advertises, markets, and operates in the State of New York and throughout the United States. Defendant is, upon information and belief, licensed to do business and is doing business in the State of New York. 13. Defendant’s art gallery operates as a place of public accommodation, as a sales establishment and/or place of exhibition. Defendant’s art gallery provides to the public important goods and services. Defendant’s Website provides consumers with access to an array of goods and services including art gallery location and hours, information about artwork, events, art descriptions, inquiring about pricing and other products available online and in the art gallery for purchase, the Defendant’s privacy policies and other goods and services offered by the Defendant. 14. Defendant’s art gallery is a place of public accommodation within the definition of Title III of the ADA, 42 U.S.C. § 12181(7). Defendant’s Website is a service, privilege, or advantage of Defendant’s art gallery. NATURE OF ACTION 15. The Internet has become a significant source of information, a portal, and a tool for conducting business, doing everyday activities such as shopping, learning, banking, researching, as well as many other activities for sighted, blind and visually-impaired persons alike. 16. In today’s tech-savvy world, blind and visually-impaired people have the ability to access websites using keyboards in conjunction with screen access software that vocalizes the visual information found on a computer screen or displays the content on a refreshable Braille display. Their technology is known as screen-reading software. Screen-reading software is currently the only method a blind or visually-impaired person may independently access the Internet. Unless websites are designed to be read by screen-reading software, blind and visually- impaired persons are unable to fully access websites, and the information, products, and services contained thereon. 17. Blind and visually-impaired users of Windows operating system-enabled computers and devices have several screen reading software programs available to them. Some of these programs are available for purchase and other programs are available without the user having to purchase the program separately. Job Access With Speech, otherwise known as “JAWS” is currently the most popular, separately purchased and downloaded screen-reading software program available for a Windows computer. 18. For screen-reading software to function, the information on a website must be capable of being rendered into text. If the website content is not capable of being rendered into text, the blind or visually-impaired user is unable to access the same content available to sighted 19. The international website standards organization, the World Wide Web Consortium, known throughout the world as W3C, has published version 2.0 of the Web Content Accessibility Guidelines (“WCAG 2.0”). WCAG 2.0 are well-established guidelines for making websites accessible to blind and visually-impaired people. These guidelines are universally followed by most large business entities and government agencies to ensure their websites are accessible. 20. Non-compliant websites pose common access barriers to blind and visually- impaired persons. Common barriers encountered by blind and visually impaired persons include, but are not limited to, the following: a. A text equivalent for every non-text element is not provided; b. Title frames with text are not provided for identification and navigation; c. Equivalent text is not provided when using scripts; d. Forms with the same information and functionality as for sighted persons are not provided; e. Information about the meaning and structure of content is not conveyed by more than the visual presentation of content; f. Text cannot be resized without assistive technology up to 200% without losing content or functionality; g. If the content enforces a time limit, the user is not able to extend, adjust or disable it; h. Web pages do not have titles that describe the topic or purpose; i. The purpose of each link cannot be determined from the link text alone or from the link text and its programmatically determined link context; j. One or more keyboard operable user interface lacks a mode of operation where the keyboard focus indicator is discernible; k. The default human language of each web page cannot be programmatically determined; l. When a component receives focus, it may initiate a change in context; m. Changing the setting of a user interface component may automatically cause a change of context where the user has not been advised before using the component; n. Labels or instructions are not provided when content requires user input, which include captcha prompts that require the user to verify that he or she is not a robot; o. In content which is implemented by using markup languages, elements do not have complete start and end tags, elements are not nested according to their specifications, elements may contain duplicate attributes and/or any IDs are not unique; p. Inaccessible Portable Document Format (PDFs); and, q. The name and role of all User Interface elements cannot be programmatically determined; items that can be set by the user cannot be programmatically set; and/or notification of changes to these items is not available to user agents, including assistive technology. STATEMENT OF FACTS Defendant’s Barriers on Its Website 21. Defendant is an art dealer that operates its art gallery as well as the Website to the public. The art gallery is located at 210 11th Avenue, New York, NY, New York, New York. Defendant’s art gallery constitutes a place of public accommodation. Defendant’s art gallery provides to the public important goods and services. Defendant’s Website provides consumers with access to an array of goods and services which allow consumers to find information about the art gallery location and hours, information about artwork, events, art descriptions, inquire about pricing and other products available online and in the art gallery for purchase and view privacy policies and other goods and services offered by the Defendant. 22. It is, upon information and belief, Defendant’s policy and practice to deny Plaintiff, along with other blind or visually-impaired users, access to Defendant’s Website, and to therefore specifically deny the goods and services that are offered and integrated with Defendant’s art gallery. Due to Defendant’s failure and refusal to remove access barriers to its Website, Plaintiff and visually-impaired persons have been and are still being denied equal access to Defendant’s art gallery and the numerous goods, services, and benefits offered to the public through the Website. 23. Plaintiff is a visually-impaired and legally blind person, who cannot use a computer without the assistance of screen-reading software. Plaintiff is, however, a proficient JAWS screen- reader user and uses it to access the Internet. Plaintiff has visited the Website on separate occasions using the JAWS screen-reader. 24. During Plaintiff’s visits to the Website, the last occurring in July, 2019, Plaintiff encountered multiple access barriers that denied Plaintiff full and equal access to the facilities, goods and services offered to the public and made available to the public; and that denied Plaintiff the full enjoyment of the facilities, goods, and services of the Website, as well as to the facilities, goods, and services of Defendant’s physical location in New York by being unable to learn more information on the location and hours of the art gallery, information about artwork, events, art descriptions, inquiries about pricing and other products available online and in the art gallery for purchase and view privacy policies and other goods and services offered by Defendant. 25. While attempting to navigate the Website, Plaintiff encountered multiple accessibility barriers for blind or visually-impaired people that include, but are not limited to, the following: a. Lack of Alternative Text (“alt-text”), or a text equivalent. Alt-text is an invisible code embedded beneath a graphical image on a website. Web accessibility requires that alt-text be coded with each picture so that screen-reading software can speak the alt-text where a sighted user sees pictures, which includes captcha prompts. Alt-text does not change the visual presentation, but instead a text box shows when the keyboard scrolls over the picture. The lack of alt-text on these graphics prevents screen readers from accurately vocalizing a description of the graphics. As a result, visually-impaired customers of the Defendant are unable to determine what is on the Website, browse, look for information about the art gallery’ locations and hours of operation, artwork, events, art descriptions, inquiries about pricing and other products available online and in the art gallery for purchase, view privacy policies and other goods and services offered by the Defendant; b. Empty Links That Contain No Text causing the function or purpose of the link to not be presented to the user. They can introduce confusion for keyboard and screen-reader c. Redundant Links where adjacent links go to the same URL address which results in additional navigation and repetition for keyboard and screen-reader users; and d. Linked Images Missing Alt-text, which causes problems if an image within a link contains no text and that image does not provide alt-text. A screen reader then has no content to present the user as to the function of the link, including information contained in PDFs. Defendant Must Remove Barriers To Its Website 26. Due to the inaccessibility of Defendant’s Website, blind and visually-impaired customers such as Plaintiff, who need screen-readers, cannot fully and equally use or enjoy the facilities, goods, and services Defendant offers to the public on its Website. The access barriers Plaintiff encountered have caused a denial of Plaintiff’s full and equal access in the past, and now deter Plaintiff on a regular basis from accessing the Website. 27. These access barriers on Defendant’s Website have deterred Plaintiff from visiting Defendant’s physical location, and enjoying it equal to sighted individuals because: Plaintiff was unable to find the location and hours of operation of Defendant’s physical art gallery on its Website and other important information, preventing Plaintiff from visiting the location to view and purchase the artwork and to attend events. 28. If the Website was equally accessible to all, Plaintiff could independently navigate the Website and complete a desired transaction as sighted individuals do. 29. Through her attempts to use the Website, Plaintiff has actual knowledge of the access barriers that make these services inaccessible and independently unusable by blind and visually-impaired people. 30. Because simple compliance with the WCAG 2.0 Guidelines would provide Plaintiff and other visually-impaired consumers with equal access to the Website, Plaintiff alleges that Defendant has engaged in acts of intentional discrimination, including but not limited to the following policies or practices: a. Constructing and maintaining a website that is inaccessible to visually- impaired individuals, including Plaintiff; b. Failure to construct and maintain a website that is not sufficiently intuitive so as to be equally accessible to visually-impaired individuals, including Plaintiff; and, c. Failing to take actions to correct these access barriers in the face of substantial harm and discrimination to blind and visually-impaired consumers, such as Plaintiff, as a member of a protected class. 31. Defendant therefore uses standards, criteria or methods of administration that have the effect of discriminating or perpetuating the discrimination of others, as alleged herein. 32. The ADA expressly contemplates the injunctive relief that Plaintiff seeks in this action. In relevant part, the ADA requires: In the case of violations of . . . their title, injunctive relief shall include an order to alter facilities to make such facilities readily accessible to and usable by individuals with disabilities . . . Where appropriate, injunctive relief shall also include requiring the . . . modification of a policy . . . 42 U.S.C. § 12188(a)(2). 33. Because Defendant’s Website has never been equally accessible, and because Defendant lacks a corporate policy that is reasonably calculated to cause its Website to become and remain accessible, Plaintiff invokes 42 U.S.C. § 12188(a)(2) and seeks a permanent injunction requiring Defendant to retain a qualified consultant acceptable to Plaintiff (“Agreed Upon Consultant”) to assist Defendant to comply with WCAG 2.0 guidelines for Defendant’s Website. Plaintiff seeks that their permanent injunction requires Defendant to cooperate with the Agreed Upon Consultant to: a. Train Defendant’s employees and agents who develop the Website on accessibility compliance under the WCAG 2.0 guidelines; b. Regularly check the accessibility of the Website under the WCAG 2.0 guidelines; c. Regularly test user accessibility by blind or vision-impaired persons to ensure that Defendant’s Website complies under the WCAG 2.0 guidelines; and, d. Develop an accessibility policy that is clearly disclosed on Defendant’s Website, with contact information for users to report accessibility-related problems. 34. If the Website was accessible, Plaintiff and similarly situated blind and visually- impaired people could independently view artwork, locate Defendant’s art gallery’ locations and hours of operation, shop for and otherwise research related products and services via the Website. 35. Although Defendant may currently have centralized policies regarding maintaining and operating its Website, Defendant lacks a plan and policy reasonably calculated to make them fully and equally accessible to, and independently usable by, blind and other visually-impaired consumers. 36. Defendant has, upon information and belief, invested substantial sums in developing and maintaining its Website and has generated significant revenue from the Website. These amounts are far greater than the associated cost of making its Website equally accessible to visually impaired customers. 37. Without injunctive relief, Plaintiff and other visually-impaired consumers will continue to be unable to independently use the Website, violating their rights. CLASS ACTION ALLEGATIONS 38. Plaintiff, on behalf of herself and all others similarly situated, seeks to certify a nationwide class under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the United States who have attempted to access Defendant’s Website and as a result have been denied access to the equal enjoyment of goods and services offered in Defendant’s physical location, during the relevant statutory period. 39. Plaintiff, on behalf of herself and all others similarly situated, seeks to certify a New York State subclass under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the State of New York who have attempted to access Defendant’s Website and as a result have been denied access to the equal enjoyment of goods and services offered in Defendant’s physical location, during the relevant statutory period. 40. Plaintiff, on behalf of herself and all others similarly situated, seeks to certify a New York City subclass under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the City of New York who have attempted to access Defendant’s Website and as a result have been denied access to the equal enjoyment of goods and services offered in Defendant’s physical location, during the relevant statutory period. 41. Common questions of law and fact exist amongst Class, including: a. Whether Defendant’s Website is a “public accommodation” under the b. Whether Defendant’s Website is a “place or provider of public accommodation” under the NYSHRL or NYCHRL; c. Whether Defendant’s Website denies the full and equal enjoyment of its goods, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating the ADA; and d. Whether Defendant’s Website denies the full and equal enjoyment of its goods, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating the NYSHRL or NYCHRL. 42. Plaintiff’s claims are typical of the Class. The Class, similarly to the Plaintiff, are severely visually impaired or otherwise blind, and claim that Defendant has violated the ADA, NYSHRL or NYCHRL by failing to update or remove access barriers on its Website so either can be independently accessible to the Class. 43. Plaintiff will fairly and adequately represent and protect the interests of the Class Members because Plaintiff has retained and is represented by counsel competent and experienced in complex class action litigation, and because Plaintiff has no interests antagonistic to the Class Members. Class certification of the claims is appropriate under Fed. R. Civ. P. 23(b)(2) because Defendant has acted or refused to act on grounds generally applicable to the Class, making appropriate both declaratory and injunctive relief with respect to Plaintiff and the Class as a whole. 44. Alternatively, class certification is appropriate under Fed. R. Civ. P. 23(b)(3) because fact and legal questions common to Class Members predominate over questions affecting only individual Class Members, and because a class action is superior to other available methods for the fair and efficient adjudication of their litigation. 45. Judicial economy will be served by maintaining their lawsuit as a class action in that it is likely to avoid the burden that would be otherwise placed upon the judicial system by the filing of numerous similar suits by people with visual disabilities throughout the United States. FIRST CAUSE OF ACTION VIOLATIONS OF THE ADA, 42 U.S.C. § 12181 et seq. 46. Plaintiff, on behalf of herself and the Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 47. Section 302(a) of Title III of the ADA, 42 U.S.C. § 12101 et seq., provides: No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation. 42 U.S.C. § 12182(a). 48. Defendant’s art gallery is a place of public accommodation within the definition of Title III of the ADA, 42 U.S.C. § 12181(7). Defendant’s Website is a service, privilege, or advantage of Defendant’s art gallery. The Website is a service that is integrated with these locations. 49. Under Section 302(b)(1) of Title III of the ADA, it is unlawful discrimination to deny individuals with disabilities the opportunity to participate in or benefit from the goods, services, facilities, privileges, advantages, or accommodations of an entity. 42 U.S.C. § 12182(b)(1)(A)(i). 50. Under Section 302(b)(1) of Title III of the ADA, it is unlawful discrimination to deny individuals with disabilities an opportunity to participate in or benefit from the goods, services, facilities, privileges, advantages, or accommodation, which is equal to the opportunities afforded to other individuals. 42 U.S.C. § 12182(b)(1)(A)(ii). 51. Under Section 302(b)(2) of Title III of the ADA, unlawful discrimination also includes, among other things: [A] failure to make reasonable modifications in policies, practices, or procedures, when such modifications are necessary to afford such goods, services, facilities, privileges, advantages, or accommodations to individuals with disabilities, unless the entity can demonstrate that making such modifications would fundamentally alter the nature of such goods, services, facilities, privileges, advantages or accommodations; and a failure to take such steps as may be necessary to ensure that no individual with a disability is excluded, denied services, segregated or otherwise treated differently than other individuals because of the absence of auxiliary aids and services, unless the entity can demonstrate that taking such steps would fundamentally alter the nature of the good, service, facility, privilege, advantage, or accommodation being offered or would result in an undue burden. 42 U.S.C. § 12182(b)(2)(A)(ii)-(iii). 52. The acts alleged herein constitute violations of Title III of the ADA, and the regulations promulgated thereunder. Plaintiff, who is a member of a protected class of persons under the ADA, has a physical disability that substantially limits the major life activity of sight within the meaning of 42 U.S.C. §§ 12102(1)(A)-(2)(A). Furthermore, Plaintiff has been denied full and equal access to the Website, has not been provided services that are provided to other patrons who are not disabled, and has been provided services that are inferior to the services provided to non-disabled persons. Defendant has failed to take any prompt and equitable steps to remedy its discriminatory conduct. These violations are ongoing. 53. Under 42 U.S.C. § 12188 and the remedies, procedures, and rights set forth and incorporated therein, Plaintiff, requests relief as set forth below. SECOND CAUSE OF ACTION VIOLATIONS OF THE NYSHRL 54. Plaintiff, on behalf of herself and the New York State Sub-Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 55. N.Y. Exec. Law § 296(2)(a) provides that it is “an unlawful discriminatory practice for any person, being the owner, lessee, proprietor, manager, superintendent, agent or employee of any place of public accommodation . . . because of the . . . disability of any person, directly or indirectly, to refuse, withhold from or deny to such person any of the accommodations, advantages, facilities or privileges thereof.” 56. Defendant’s physical location is located in the State of New York and constitute a sales establishment and place of public accommodation within the definition of N.Y. Exec. Law § 292(9). Defendant’s Website is a service, privilege or advantage of Defendant. Defendant’s Website is a service that is by and integrated with this physical location. 57. Defendant is subject to New York Human Rights Law because it owns and operates its physical location and Website. Defendant is a person within the meaning of N.Y. Exec. Law § 58. Defendant is violating N.Y. Exec. Law § 296(2)(a) in refusing to update or remove access barriers to its Website, causing its Website and the services integrated with Defendant’s physical location to be completely inaccessible to the blind. Their inaccessibility denies blind patrons full and equal access to the facilities, goods and services that Defendant makes available to the non-disabled public. 59. Under N.Y. Exec. Law § 296(2)(c)(i), unlawful discriminatory practice includes, among other things, “a refusal to make reasonable modifications in policies, practices, or procedures, when such modifications are necessary to afford facilities, privileges, advantages or accommodations to individuals with disabilities, unless such person can demonstrate that making such modifications would fundamentally alter the nature of such facilities, privileges, advantages or accommodations being offered or would result in an undue burden". 60. Under N.Y. Exec. Law § 296(2)(c)(ii), unlawful discriminatory practice also includes, “a refusal to take such steps as may be necessary to ensure that no individual with a disability is excluded or denied services because of the absence of auxiliary aids and services, unless such person can demonstrate that taking such steps would fundamentally alter the nature of the facility, privilege, advantage or accommodation being offered or would result in an undue burden.” 61. Readily available, well-established guidelines exist on the Internet for making websites accessible to the blind and visually impaired. These guidelines have been followed by other large business entities and government agencies in making their website accessible, including but not limited to: adding alt-text to graphics and ensuring that all functions can be performed using a keyboard. Incorporating the basic components to make its Website accessible would neither fundamentally alter the nature of Defendant’s business nor result in an undue burden to Defendant. 62. Defendant’s actions constitute willful intentional discrimination against the class on the basis of a disability in violation of the NYSHRL, N.Y. Exec. Law § 296(2) in that Defendant a. constructed and maintained a website that is inaccessible to blind class members with knowledge of the discrimination; and/or b. constructed and maintained a website that is not sufficiently intuitive and/or obvious and that is inaccessible to blind class members; and/or c. failed to take actions to correct these access barriers in the face of substantial harm and discrimination to blind class members. 63. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 64. Defendant discriminates and will continue in the future to discriminate against Plaintiff and New York State Sub-Class Members on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, accommodations and/or opportunities of Defendant’s Website and its physical locations under § 296(2) et seq. and/or its implementing regulations. Unless the Court enjoins Defendant from continuing to engage in these unlawful practices, Plaintiff and the Sub-Class Members will continue to suffer irreparable harm. 65. Defendant’s actions were and are in violation of New York State Human Rights Law and therefore Plaintiff invokes her right to injunctive relief to remedy the discrimination. 66. Plaintiff is also entitled to compensatory damages, as well as civil penalties and fines under N.Y. Exec. Law § 297(4)(c) et seq. for each and every offense. 67. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 68. Under N.Y. Exec. Law § 297 and the remedies, procedures, and rights set forth and incorporated therein Plaintiff prays for judgment as set forth below. THIRD CAUSE OF ACTION VIOLATIONS OF THE NYCHRL 69. Plaintiff, on behalf of herself and the New York City Sub-Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 70. N.Y.C. Administrative Code § 8-107(4)(a) provides that “It shall be an unlawful discriminatory practice for any person, being the owner, lessee, proprietor, manager, superintendent, agent or employee of any place or provider of public accommodation, because of . . . disability . . . directly or indirectly, to refuse, withhold from or deny to such person, any of the accommodations, advantages, facilities or privileges thereof.” 71. Defendant’s location is a sales establishment and place of public accommodation within the definition of N.Y.C. Admin. Code § 8-102(9), and its Website is a service that is integrated with its establishment. 72. Defendant is subject to NYCHRL because it owns and operates its physical location in the City of New York and its Website, making it a person within the meaning of N.Y.C. Admin. Code § 8-102(1). 73. Defendant is violating N.Y.C. Administrative Code § 8-107(4)(a) in refusing to update or remove access barriers to Website, causing its Website and the services integrated with its physical location to be completely inaccessible to the blind. The inaccessibility denies blind patrons full and equal access to the facilities, goods, and services that Defendant makes available to the non-disabled public. 74. Defendant is required to “make reasonable accommodation to the needs of persons with disabilities . . . any person prohibited by the provisions of [§ 8-107 et seq.] from discriminating on the basis of disability shall make reasonable accommodation to enable a person with a disability to . . . enjoy the right or rights in question provided that the disability is known or should have been known by the covered entity.” N.Y.C. Admin. Code § 8-107(15)(a). 75. Defendant’s actions constitute willful intentional discrimination against the Sub- Class on the basis of a disability in violation of the N.Y.C. Administrative Code § 8-107(4)(a) and § 8-107(15)(a) in that Defendant has: a. constructed and maintained a website that is inaccessible to blind class members with knowledge of the discrimination; and/or b. constructed and maintained a website that is not sufficiently intuitive and/or obvious and that is inaccessible to blind class members; and/or c. failed to take actions to correct these access barriers in the face of substantial harm and discrimination to blind class members. 76. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 77. As such, Defendant discriminates, and will continue in the future to discriminate against Plaintiff and members of the proposed class and subclass on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, accommodations and/or opportunities of its Website and its establishments under § 8-107(4)(a) and/or its implementing regulations. Unless the Court enjoins Defendant from continuing to engage in these unlawful practices, Plaintiff and members of the class will continue to suffer irreparable harm. 78. Defendant’s actions were and are in violation of the NYCHRL and therefore Plaintiff invokes her right to injunctive relief to remedy the discrimination. 79. Plaintiff is also entitled to compensatory damages, as well as civil penalties and fines under N.Y.C. Administrative Code § 8-120(8) and § 8-126(a) for each offense as well as punitive damages pursuant to § 8-502. 80. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 81. Under N.Y.C. Administrative Code § 8-120 and § 8-126 and the remedies, procedures, and rights set forth and incorporated therein Plaintiff prays for judgment as set forth FOURTH CAUSE OF ACTION DECLARATORY RELIEF 82. Plaintiff, on behalf of herself and the Class and New York State and City Sub- Classes Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 83. An actual controversy has arisen and now exists between the parties in that Plaintiff contends, and is informed and believes that Defendant denies, that its Website contains access barriers denying blind customers the full and equal access to the goods, services and facilities of its Website and by extension its physical location, which Defendant owns, operate and controls, fails to comply with applicable laws including, but not limited to, Title III of the Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y. Exec. Law § 296, et seq., and N.Y.C. Admin. Code § 8-107, et seq. prohibiting discrimination against the blind. 84. A judicial declaration is necessary and appropriate at this time in order that each of the parties may know their respective rights and duties and act accordingly. PRAYER FOR RELIEF WHEREFORE, Plaintiff respectfully requests the Court grant the following relief: a. A preliminary and permanent injunction to prohibit Defendant from violating the Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y. Exec. Law § 296, et seq., N.Y.C. Administrative Code § 8-107, et seq., and the laws of New York; b. A preliminary and permanent injunction requiring Defendant to take all the steps necessary to make its Website into full compliance with the requirements set forth in the ADA, and its implementing regulations, so that the Website is readily accessible to and usable by blind individuals; c. A declaration that Defendant owns, maintains and/or operates its Website in a manner that discriminates against the blind and which fails to provide access for persons with disabilities as required by Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y. Exec. Law § 296, et seq., N.Y.C. Administrative Code § 8-107, et seq., and the laws of New York d. An order certifying the Class and Sub-Classes under Fed. R. Civ. P. 23(a) & (b)(2) and/or (b)(3), appointing Plaintiff as Class Representative, and her attorneys as Class Counsel; e. Compensatory damages in an amount to be determined by proof, including all applicable statutory and punitive damages and fines, to Plaintiff and the proposed class and subclasses for violations of their civil rights under New York State Human Rights Law and City f. Pre- and post-judgment interest; g. An award of costs and expenses of the action together with reasonable attorneys’ and expert fees; and h. Such other and further relief as this Court deems just and proper. DEMAND FOR TRIAL BY JURY Pursuant to Fed. R. Civ. P. 38(b), Plaintiff demands a trial by jury on all questions of fact the Complaint raises. LAW OFFICE OF JUSTIN A. ZELLER, P.C. Dated: New York, New York December 17, 2019 By: __________________________________ Justin A. Zeller [email protected] John M. Gurrieri [email protected] 277 Broadway, Suite 408 New York, N.Y. 10007-2036 Telephone: (212) 229-2249 Facsimile: (212) 229-2246 GOTTLIEB & ASSOCIATES Jeffrey M. Gottlieb (JG7905) [email protected] Dana L. Gottlieb (DG6151) [email protected] 150 East 18th Street, Suite PHR New York, N.Y. 10003-2461 Telephone: (212) 228-9795 Facsimile: (212) 982-6284 ATTORNEYS FOR PLAINTIFF

civil rights, immigration, family

ecWHDYcBD5gMZwczPY5I

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA ANDRES GOMEZ, individually and on behalf of all others similarly situated, Plaintiff, v. ONEUNITED BANK, Defendant. Case No. Complaint – Class Action CLASS ACTION COMPLAINT Comes now Andres Gomez, (“Plaintiff”), on behalf of himself and all others similarly situated and alleges as follows: INTRODUCTION 1. Plaintiff is a legally blind individual. He suffers from macular degeneration. 2. As Plaintiff goes about his daily business, he regularly has occasion to make use of the banking services that are available through Automated Teller Machines (“ATMs”), so long as those ATMs are accessible to the blind. As discussed at length below, federal law includes very specific provisions calculated to guarantee that ATMs are accessible to blind and visually- impaired individuals.1 3. If a given ATM does not include the accessibility features that are mandated by federal law, a blind consumer like Plaintiff cannot use the ATM independently and is thus faced with the prospect of having to share private banking information with other individuals to complete a banking transaction at the ATM. The mandatory ATM accessibility requirements at 1 Plaintiff invokes the term “accessibility” as a defined term of art. That is, “accessibility” is specifically defined in the applicable statutes and regulations discussed at length in the text below and Plaintiff is using the term in the context of those definitions, and not in the abstract. issue in this lawsuit are calculated to permit blind and visually impaired individuals to use ATMs independently, without having to divulge private banking information to a third party. 4. Notwithstanding that federal law mandates very specific ATM accessibility requirements for the blind, a March 7, 2012 Wall Street Journal article noted the widely publicized fact that at least 50% of the nation’s ATMs remain inaccessible to blind individuals in violation of these laws. In that same article, a spokesperson for the National Federation of the Blind (“NFB”) was quoted as saying: “It is absolutely unacceptable that at this late date there are hundreds of thousands of ATMs that are still not accessible to blind people.” 5. As is the case nationally, a significant percentage of the ATMs throughout Florida continue to violate accessibility requirements mandated by federal law. Many inaccessible ATMs are located within the geographic zone that Plaintiff typically travels as part of his regular activities. This shortage of accessible ATMs severely limits the ability of Plaintiff and other blind and visually impaired individuals to benefit from the banking services made available to the American consumer public through ATMs. 6. The NFB and other blind advocacy groups have been fighting to achieve ATM accessibility since at least as early as 1999, at which time the NFB began to work with the manufacturers of ATMs and the banking industry to encourage the addition of voice guidance and universal tactile keypads, inter alia, to ATM machines. 7. While some financial institutions have worked pro-actively to achieve compliance with federal ATM accessibility requirements that impact the blind community, the NFB and other blind advocacy organizations have pursued civil litigation against financial institutions which remain in violation of accessibility requirements long after those accessibility requirements were first introduced.2 8. As noted above, to the extent that a given ATM does not comply with the accessibility requirements mandated by federal law, it is nearly impossible for Plaintiff and others similarly situated to independently use that ATM.3 9. After March 15, 2012, Plaintiff visited an ATM owned and operated by Defendant Oneunited Bank (“Defendant”) located at 3275 Northwest 79th Street, Miami, FL 33147 (the “Subject ATM”). The Subject ATM is inaccessible to the blind in violation of applicable law, as is described in detail in the text below. 10. The Subject ATM is within the geographic zone that Plaintiff typically travels as part of his regular activities. The Subject ATM is located approximately five (5) miles from Plaintiff’s home. Plaintiff will continue to visit the Subject ATM in the future as part of his effort to locate accessible ATMs that he personally can use within the geographic zone that he typically travels as part of his regular activities, and on behalf of the blind community, generally. 11. Plaintiff alleges violations of Title III of the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq., (the “ADA”) and its implementing regulations. 12. On behalf of a class of similarly situated individuals, Plaintiff seeks a declaration that Defendant’s ATMs violate federal law as described and an injunction requiring Defendant to 2 The history of the specific accessibility requirements applicable to ATMs is discussed in detail in the text below. 3 To understand how difficult it would be for a blind person to use an ATM that does not include the accessibility features at issue in this lawsuit, a sighted individual need only close his or her eyes, approach the ATM and attempt to perform a banking transaction—any transaction. It is impossible to perform the transaction without vision because the input modalities for the transaction rely upon visual cues, which are of course meaningless to somebody who is blind. That is why an ATM is not accessible to a blind individual unless it offers voice guidance and all of the additional accessibility requirements that are mandated by the laws at issue. update or replace its ATMs so that they are fully accessible to, and independently usable by, blind individuals. Plaintiff also requests that once Defendant is fully in compliance with the requirements of the ADA, the Court retain jurisdiction for a period of time to be determined to ensure that Defendant has adopted and is following an institutional policy that will, in fact, cause Defendant to remain in compliance with the law. JURISDICTION AND VENUE 13. This Court has federal question jurisdiction over the ADA claims asserted herein pursuant to 28 U.S.C. § 1331 and 42 U.S.C. § 12188. 14. Plaintiff’s claims asserted herein arose in this judicial district and Defendant does substantial business in this judicial district. 15. Venue in this judicial district is proper under 28 U.S.C. § 1391(b)(2) in that this is the judicial district in which a substantial part of the acts and omissions giving rise to the claims occurred. PARTIES 16. Plaintiff, Andres Gomez, is and, at all times relevant hereto, was a resident of the State of Florida. Plaintiff is and, at all times relevant hereto, has been legally blind and is therefore a member of a protected class under the ADA, 42 U.S.C. § 12102(2) and the regulations implementing the ADA set forth at 28 CFR §§ 36.101 et seq. 17. Defendant, Oneunited Bank is a bank organized under the laws of the Commonwealth of Massachusetts and is headquartered at 100 Franklin Street, Boston, MA 02110. Defendant is a public accommodation pursuant to 42 U.S.C. § 12181(7)(F) which offers banking services through its ATMs. TITLE III OF THE ADA 18. On July 26, 1990, President George H.W. Bush signed into law the ADA, a comprehensive civil rights law prohibiting discrimination on the basis of disability. 19. The ADA broadly protects the rights of individuals with disabilities with respect to employment, access to State and local government services, places of public accommodation, transportation, and other important areas of American life. 20. Title III of the ADA prohibits discrimination in the activities of places of public accommodation and requires places of public accommodation to comply with ADA standards and to be readily accessible to, and independently usable by, individuals with disabilities. 42 U.S.C. § 12181-89. 21. On July 26, 1991, the Department of Justice (“DOJ”) issued rules implementing Title III of the ADA, which are codified at 28 CFR Part 36.4 22. Appendix A of the 1991 Title III regulations (republished as Appendix D to 28 CFR part 36) contains the ADA standards for Accessible Design (1991 Standards), which were based upon the Americans with Disabilities Act Accessibility Guidelines (1991 ADAAG) published by the Access Board on the same date.5 4 The DOJ is the administrative agency charged by Congress with implementing the requirements of the ADA. 5 The Access Board was established by section 502 of the Rehabilitation Act of 1973. 29 U.S.C.§ 792. The Board consists of 13 public members appointed by the President, the majority of whom must be individuals with disabilities, and the heads of the 12 Federal departments and agencies specified by statute, including the heads of the Department of Justice and the Department of Transportation. Originally, the Access Board was established to develop and maintain accessibility guidelines for facilities designed, constructed, altered, or leased with Federal dollars under the Architectural Barriers Act of 1968. 42 U.S.C. § 4151 et seq. The passage of the ADA expanded the Access Board’s responsibilities. The ADA requires the Access Board to “issue minimum guidelines . . . to ensure that buildings, facilities, rail passenger cars, and vehicles are accessible, in terms of architecture and design, transportation, and communication, to individuals with disabilities.” 42 U.S.C. § 12204. 23. In 1994, the Access Board began the process of updating the 1991 ADAAG by establishing a committee composed of members of the design and construction industries, the building code community, and State and local government entities, as well as individuals with disabilities. 24. In 1999, based largely on the report and recommendations of the advisory committee, the Access Board issued a notice of proposed rulemaking to update and revise its ADA and ABA Accessibility Guidelines. 25. The Access Board issued final publication of revisions to the 1991 ADAAG on July 23, 2004 (“2004 ADAAG”). 26. On September 30, 2004, the DOJ issued an advance notice of proposed rulemaking to begin the process of adopting the 2004 ADAAG. 27. On June 17, 2008, the DOJ published a notice of proposed rulemaking covering Title III of the ADA. 28. The long-contemplated revisions to the 1991 ADAAG culminated with the DOJ’s issuance of The 2010 Standards for Accessible Design (“2010 Standards”). The DOJ published the Final Rule detailing the 2010 Standards on September 15, 2010. The 2010 Standards consist of the 2004 ADAAG and the requirements contained in subpart D of 28 CFR part 36.6 The ADA requires the DOJ to issue regulations that include enforceable accessibility standards applicable to facilities subject to Title III that are consistent with the “minimum guidelines” issued by the Access Board, 42 U.S.C. § 12134(c), 12186(c), but vests with the Attorney General sole responsibility for the promulgation of those standards that fall within the DOJ’s jurisdiction and enforcement of the regulations. The ADA also requires the DOJ to develop regulations with respect to existing facilities subject to Title III. 6 Though the Effective Date of the 2010 Standards was March 15, 2011, the communication elements of Chapter 7 of the Standards—which frame Plaintiff’s allegations in this case—did not become effective until March 15, 2012, at which time the 2010 Standards became enforceable through civil actions by private plaintiffs. THE ADA HAS LONG REQUIRED THAT FINANCIAL INSTITUTIONS THAT OWN, OPERATE, CONTROL AND/OR LEASE ATMS PROVIDE ATMS THAT ARE FULLY ACCESSIBLE AND INDEPENDENTLY USABLE BY BLIND PEOPLE 29. Since the enactment of the ADA in 1991, banks and financial institutions which provide banking services through ATMs have been required to ensure that all banking services available at the ATM are fully accessible to, and independently usable by, individuals who are blind. The 1991 DOJ Standards required that “instructions and all information for use shall be made accessible to and independently usable by persons with vision impairments.” 28 CFR part 36, App. A. section 4.34.4. 30. Initially, the ADA and its implementing regulations did not provide technical details defining the steps required to make an ATM fully accessible to and independently usable by blind individuals. 31. However, after a lengthy rulemaking process wherein the Access Board entertained extensive input from all stakeholders, the 2004 ADAAGs adopted very specific guidelines calculated to ensure that ATM banking services were, in fact, fully accessible to, and independently usable by, individuals who are blind. 32. Section 220.1 of the 2004 ADAAGs stated that “where automatic teller machines . . . are provided, at least one of each type provided at each location shall comply with Section 33. In turn, Section 707 of the 2004 ADAAGs delineated very precise accessibility guidelines for ATMs, including guidelines calculated to ensure that ATMs are fully accessible to, and independently usable by, visually impaired individuals. These guidelines included, inter alia, the following elements: ATMs shall be speech enabled (i.e. talking ATMs)—Section 707.5; input controls shall be tactilely discernible—Section 707.6; function keys shall have specific tactile symbols—Section 707.6.3.2; Braille instructions shall be provided for initiating the speech mode. 34. As noted, the 2010 Standards adopt the 2004 ADAAGs. The communication elements of the 2010 Standards are set forth at Section 7-- including, in relevant part, the elements which are expressly calculated to make ATMs fully accessible to, and independently usable by, visually impaired individuals. The Section 7 communication elements became fully effective on March 15, 2012.7 35. Defendant owns, operates, controls and/or leases a place of public accommodation. 36. Defendant’s ATMs are not fully accessible to, and independently usable by, blind individuals. Some of Defendant’s ATMs do not include functional voice guidance and suffer from myriad additional violations of Section 7 of the 2010 Standards. 37. Defendant does not have an institutional policy that is reasonably calculated to ensure that its ATMs be fully accessible to, and independently usable by, visually impaired individuals, as those terms are informed by Section 7 of the 2010 Standards. VIOLATIONS AT ISSUE 38. After March 15, 2012, Plaintiff visited the Subject ATM located at 3275 Northwest 79th Street, Miami, FL 33147. 39. The Subject ATM is within the geographic zone that Plaintiff typically travels as part of his regular activities and it is located approximately five (5) miles from his home. 7 The DOJ has consistently taken the position that the communication-related elements of ATMs are auxiliary aids and services, rather than structural elements. See 28 CFR part 36, app. B at 728 (2009). Thus, the 2010 Standards do not provide a safe-harbor provision for implementation of these requirements unless compliance would cause an “undue hardship” upon a public accommodation. 40. When Plaintiff visited the Subject ATM, he had in his possession an ATM card, and headphones that are compatible with the 2010 Standards, and intended to avail himself of the banking services offered through Defendant’s ATM. 41. At the time of the visit, the Subject ATM 2 violated Chapter 7 of the 2010 Standards in that: there was no voice-guidance feature (Section 707.5); there were no Braille instructions for initiating speech mode (Section 707.8), and the function keys did not have the proper tactile symbols (Section 707.6.3.2). 42. To date, Plaintiff has not had the practical ability to use the Subject ATM, because it is in violation of the 2010 Standards (and prior to the effective date of the 2010 Standards, the Subject ATM was not otherwise readily accessible to or independently usable by blind individuals). 43. Plaintiff will continue to attempt to use the Subject ATM because he wants to identify convenient accessible ATM options within the geographic zone that he typically travels as part of his regular activities, and he wants to increase ATM accessibility for the blind community, generally. However, so long as the Subject ATM continues to violate Section 7, Plaintiff will be unable to use it independently and will be, thereby, deterred from visiting it. 44. Though Defendant has centralized policies regarding the management and operation of its ATMs, Defendant does not have a plan or policy that is reasonably calculated to cause its ATMs to be in timely compliance with Chapter 7 of the 2010 Standards, as is demonstrated by the fact that its network remains out of compliance. 45. Plaintiff uses ATMs that meet the accessibility requirements of the 2010 Standards, but these ATMs are often not conveniently located. 46. A significant percentage of the ATMs that are located within the geographic zone that Plaintiff typically travels as part of his regular activities do not comply with the 2010 Standards and are therefore inaccessible to blind individuals like Plaintiff. 47. In contrast to an architectural barrier at a public accommodation, wherein a remediation of the barrier to cause compliance with the ADA provides a permanent or long-term solution, the addition of, or repair to, a speech enabling function (and other related accessibility requirements) provided at the ATM of a public accommodation requires periodic monitoring to confirm, not only that the public accommodation is in compliance in the first instance, but also that the public accommodation remains in compliance. 48. Without injunctive relief, Plaintiff will continue to be unable to independently use Defendant’s ATMs in violation of his rights under the ADA. CLASS ACTION ALLEGATIONS 49. Plaintiff brings this action pursuant to Rules 23(a) and 23(b)(2) of the Federal Rules of Civil Procedure on behalf of himself and all legally blind individuals who have attempted to access, or will attempt to access, Defendant’s ATMs. 50. The class described above is so numerous that joinder of all individual members in one action would be impracticable. The disposition of the individual claims of the respective class members through this class action will benefit both the parties and this Court. 51. Typicality: Plaintiff’s claims are typical of the claims of the members of the class. The claims of the Plaintiff and members of the class are based on the same legal theories and arise from the same unlawful conduct. 52. Common Questions of Fact and Law: There is a well-defined community of interest and common questions of fact and law affecting members of the class in that they all have been and/or are being denied their civil rights to full and equal access to, and use and enjoyment of, Defendant’s facilities and/or services due to Defendant’s failure to make its ATMs fully accessible and independently usable as above described. 53. The questions of fact and law common to the class include but are not limited to the following: a. Whether Defendant is a “public accommodation” under the ADA; b. Whether Defendant’s conduct in failing to make its ATMs fully accessible and independently usable as above described violated the ADA, 42 U.S.C. § 12101 et seq.; and c. Whether Plaintiff and members of the class are entitled to declaratory and injunctive relief, and also costs and/or attorneys’ fees for Defendant’s acts and conduct. 54. Adequacy of Representation: Plaintiff is an adequate representative of the class because his interests do not conflict with the interests of the members of the class. Plaintiff will fairly, adequately, and vigorously represent and protect the interests of the members of the class and has no interests antagonistic to the members of the class. Plaintiff has retained counsel who are competent and experienced in the prosecution of class action litigation. 55. Class certification is appropriate pursuant to Fed. R. Civ. P. 23(b)(2) because Defendant has acted or refused to act on grounds generally applicable to the Class, making appropriate both declaratory and injunctive relief with respect to Plaintiff and the Class as a whole. SUBSTANTIVE VIOLATION 56. The allegations contained in the previous paragraphs are incorporated by reference. 57. Defendant has discriminated against Plaintiff and the Class in that it has failed to make its ATM banking services fully accessible to, and independently usable by, individuals who are blind in violation of Section 707 of the 2010 Standards, as described above. 58. Complying with the ADA and Section 707 of the 2010 Standards would neither fundamentally alter the nature of Defendant’s banking services nor result in an undue burden to Defendant. 59. Defendant’s conduct is ongoing, and, given that Defendant has not complied with the ADA’s requirements that public accommodations make ATM services fully accessible to, and independently usable by, blind individuals—as specifically defined in Section 707 of the 2010 Standards, Plaintiff invokes his statutory right to declaratory and injunctive relief, as well as costs and attorneys’ fees. 60. Without the requested injunctive relief, specifically including the request that the Court retain jurisdiction of this matter for a period to be determined after the Defendant certifies that it is fully in compliance with the mandatory requirements of the ADA that are discussed above, Defendant’s non-compliance with the ADA’s requirements that its ATMs be fully accessible to, and independently usable, by blind people is likely to recur. PRAYER FOR RELIEF WHEREFORE, Plaintiff, on behalf of himself and the members of the class, prays for: a. A Declaratory Judgment that at the commencement of this action Defendant was in violation of the specific requirements of Title III of the ADA described above (specifically including Section 707 of the 2010 Standards); b. A permanent injunction which directs Defendant to take all steps necessary to bring its ATMs into full compliance with the requirements set forth in the ADA, and its implementing regulations, and which further directs that the Court shall retain jurisdiction for a period to be determined after Defendant certifies that all of its ATMs are fully in compliance with the relevant requirements of the ADA to ensure that Defendant has adopted and is following an institutional policy that will in fact cause Defendant to remain in compliance with the law; c. An Order certifying the class proposed by Plaintiff, and naming Plaintiff as class representative and appointing his counsel as class counsel; d. Payment of costs of suit; e. Payment of reasonable attorneys’ fees; and, f. The provision of whatever other relief the Court deems just, equitable and appropriate. Dated: September 20, 2013 Respectfully Submitted, /s/ Carlos R. Diaz_______ Carlos R. Diaz (FL 832871) [email protected] CARLSON LYNCH LTD PNC Park 115 Federal Street, Suite 210 Pittsburgh, PA 15212 www.carlsonlynch.com (p) 412.322.9243 (f) 412.231.0246

civil rights, immigration, family

6fntE4cBD5gMZwczwRu4

Daniel Low (Bar #218387) KOTCHEN & LOW LLP 1745 Kalorama Road NW, Suite 101 Washington, DC 20009 Telephone: (202) 471-1995 Fax: (202) 280-1128 Email: [email protected] Attorney for Plaintiff Reese Voll and Putative Class UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION REESE VOLL, Plaintiff, Case No.: 5:18-cv-4943 COMPLAINT v. FOR EMPLOYMENT DISCRIMINATION CLASS ACTION DEMAND FOR JURY TRIAL HCL TECHNOLOGIES LTD. and HCL AMERICA, INC., Defendants. Plaintiff Reese Voll brings this action on behalf of himself and a class of similarly situated individuals to remedy pervasive, ongoing race discrimination by Defendants HCL Technologies Limited and HCL America, Inc. (collectively, “HCL”), and alleges as follows: NATURE OF THE ACTION 1. HCL Technologies Limited is an Indian company that provides information technology and consulting services to customers worldwide. HCL employs almost 118,000 employees, approximately 12,000 of whom are located in the United States. While roughly 1-2% of the United States population, and about 12% of the relevant labor market, is South Asian, approximately 70% (or more) of HCL’s United States-based workforce is South Asian (primarily from India).1 As 1 As used herein, “South Asian” refers to individuals who trace their ancestry to the Indian sub- continent. See, e.g., Fonseca v. Sysco Food Serv. of Az., Inc., 374 F.3d 840, 850 (9th Cir. 2004) (“Under 42 U.S.C. § 1981, discrimination based on ancestry or ethnic characteristics is prohibited” as discrimination based on race) (citation omitted). discussed below, this grossly disproportionate workforce is the result of HCL’s intentional pattern and practice of employment discrimination against individuals who are not South Asian, including discrimination in hiring, promotion, and termination decisions. 2. HCL’s employment practices violate the Civil Rights Act of 1866, as amended, 42 U.S.C. § 1981 (“§ 1981”). Plaintiff seeks, on his own behalf, and on behalf of a class of similarly situated individuals, declaratory, injunctive, and other equitable relief, compensatory and punitive damages, including pre- and post-judgment interest, attorneys’ fees, and costs to redress HCL’s pervasive pattern and practice of discrimination. PARTIES 3. Plaintiff Reese Voll is a citizen of the United States of America, born in the United States, and of Caucasian race. He is a resident of Texas. Plaintiff is a member of a protected class, as recognized by § 1981. 4. Defendant HCL Technologies Limited is an Indian multinational company that provides technology services, products, and engineering, including business consulting and outsourcing services, to clients located worldwide. HCL Technologies Limited is headquartered in Noida, India and maintains its U.S. headquarters in Sunnyvale, California. 5. Defendant HCL America, Inc. is a wholly-owned subsidiary of HCL Technologies Limited and was incorporated in California in 1988. HCL America, Inc. has 25 offices within the United States and is also headquartered in Sunnyvale, California. HCL America, Inc. provides business services similar to HCL Technologies Limited, including consulting and information technology services. JURISDICTION 6. This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331 and 42 U.S.C. § 1981(a). 7. This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(d) as this matter is a class action with an amount in controversy of greater than $5 million, exclusive of interest and costs, and involves at least one class member who is a citizen of a state and is brought against a foreign corporation. 8. This Court has personal jurisdiction over HCL because it engages in continuous and systematic business contacts within the State of California and maintains a substantial physical presence in this State, including the operation of offices in Sunnyvale, California (its U.S. headquarters), Irvine, California, and Lake Forest, California. VENUE AND INTRADISTRICT ASSIGNMENT 9. Venue is proper in the Northern District of California pursuant to 28 U.S.C. § 1391 and 42 U.S.C. § 2000e-5(f)(3) because HCL resides in this District, conducts business in this District, engaged in discriminatory conduct in this District, and employment records relevant to HCL’s discriminatory pattern and practice are maintained and administered in this District. Assignment in this Division is proper pursuant to Civil L.R. 3-2(c) because a substantial part of the events giving rise to this matter’s claims occurred in this Division. Additionally, HCL engages in continuous and systematic business contacts within this District, and maintains a substantial physical presence in this District, including the operation of its United States headquarters in Sunnyvale, California. STATEMENT OF FACTS Overview of HCL’s Business Model 10. HCL has 25 offices in the United States and employs approximately 12,000 employees domestically. HCL earned over $7.8 billion in revenue in the past fiscal year, and derives approximately 63% of its revenue from the United States (HCL’s largest market). 11. HCL contracts with U.S. companies to provide IT-related services. Once HCL secures a contract with a client, it hires individuals to fill positions to service the client. Individuals must apply and interview for these positions. Once a position servicing a client comes to an end (or if an employee is removed from a position), individuals are placed in an unallocated status, also known as being “benched.” Once on the bench, individuals must again seek new positions within HCL, going through an application and interview process, just as external applicants must. Overview of HCL’s Discriminatory Scheme 12. HCL has engaged in a systematic, company-wide, pattern and practice of discrimination in favor of South Asians and against individuals who are not South Asian in hiring, promotion, and termination decisions. 13. HCL prefers South Asians in employment decisions and has instituted four corporate practices to fulfill its discriminatory preference. First, HCL engages in a practice of securing H-1B and L-1 visas for South Asian workers located overseas who will then be used to staff U.S. positions. The federal government annually awards 65,000 H-1B visas (plus an additional 20,000 for individuals with advanced degrees). These visas are awarded on a lottery basis. Given the cap on H-1B visas, companies compete to secure visas for prospective visa workers. Each year, companies submit H-1B visa petitions at the beginning of April for visas to be awarded later that year. H-1B visa petitions must identify an actual job at a specific location that the prospective visa worker will fill if awarded a visa. 14. To fulfill its employment preference for South Asians, HCL seeks to maximize the number of visas it receives each year from the federal government. HCL submits visa petitions for more positions than actually exist in the U.S. in order to maximize its chances of securing the highest number of available H-1B visas from the lottery process. In this way, HCL has been able to secure visas for far more individuals than it actually has a present need for. For example, HCL is consistently one of the top-10 H-1B visa recipients in the U.S., and from 2015 to 2017, HCL received 10,432 new H-1B visas and 310 L-1 visas, far more positions than could actually exist given that HCL only employs approximately 12,000 individuals in the United States. 15. All, or substantially all, of the individuals for whom HCL secures visas are South Asian. While both individuals already located in the U.S. and foreign individuals who are visa-ready are considered for open positions in the U.S., as a matter of corporate practice, “visa ready” individuals are given first – if not exclusive – preference. HCL’s explicit preference to staff visa holders in U.S. positions minimizes or eliminates competition for the jobs from non-South Asians residing in the U.S. Similarly, non-South Asian individuals are often displaced from their current positions in favor of South Asian and visa-ready individuals. Non-South Asians are then disproportionately relegated to the bench, as jobs are given to visa-holding South Asians from India. 16. Second, HCL’s discriminatory preference is fulfilled through its corporate practice of seeking out and preferring to hire South Asians residing in the U.S. rather than non-South Asians. For example, HCL relies on third party recruiters to supply HCL with South Asian job applicants. The third party recruiters themselves are predominantly South Asian. HCL also sources South Asian job applicants from internal recruiting sources. As a result, and on information and belief, HCL’s “local hiring” (i.e., hiring of individuals who already reside within the U.S.) disproportionately favors South Asians. 17. Third, because of its discriminatory preference for South Asians, HCL promotes South Asians at disproportionately high rates compared to non-South Asians. Employees in the U.S. are awarded annual appraisals, and are appraised on a five-point scale of “Distinguished Performance,” “Exceptional Performance,” “Good Performance,” “Threshold Performance,” and “Performance Needs Improvement.” Promotions at HCL are tied to an employee’s appraisal, and employees receiving scores of “Distinguished Performance” or “Exceptional Performance” are more likely to receive a promotion from HCL. On information and belief, non-South Asians are disproportionately awarded lower appraisal scores, and thus, non-South Asians are promoted less frequently than South Asians at HCL. 18. Fourth, HCL terminates non-South Asians at disproportionately high rates compared to South Asians. For example, HCL has a policy to terminate employees who are on the bench for more than four weeks. Because South Asians are given preference for new positions, and these individuals are used to displace non-South Asians on existing projects, non-South Asians are disproportionately relegated to the bench and unable to secure new positions within HCL. This, among other things, leads to their termination at disproportionate rates compared to South Asians. 19. HCL’s U.S. workforce reflects the result of its discriminatory scheme. At least 70% (if not more) of HCL’s United States-based workforce is South Asian (primarily from India), as is the vast majority of its managerial and supervisory-level staff. By contrast, during the 2010 census, all Asian subgroups combined made up 4.8% of the U.S. population. South Asians made up 1-2% of the U.S. population and about 12% of the U.S. IT industry. Plaintiff’s Experiences 20. Plaintiff Reese Voll is a highly skilled Server Systems, Network, Virtualization, Storage Engineering, and Solutions Architect with over 25 years of professional experience supporting Global business information systems and working in top ten global Tier 1 data centers. Plaintiff is a Microsoft Certified Systems Engineer, a Cisco Unified Computing Technology Support Specialist, an IBM PureSystems Certified Specialist, and also holds certifications in VMWare VSP, VTSP, and Hatchi VSP. He is experienced in the design, configuration, installation, and support of hardware and software on all current Intel, UNIX and compatible platforms, and specializes in analyzing and resolving complex LAN/WAN/SAN/NAS network performance issues and outages. Plaintiff began working for HCL in November 2014. 21. Plaintiff was hired by HCL to serve as a member of its internal Solution Architecture Practice S.W.A.T. team. This team was designed to transition and transform the IT infrastructure of HCL clients and to resolve issues faced by those accounts. Plaintiff worked for almost two years in a Solution Architect / Chief Architect role servicing HCL client PepsiCo in Dallas, Texas and was responsible for resolving infrastructure-related issues for PepsiCo as it transitioned from twelve to five global data centers. The S.W.A.T. team was staffed with five additional HCL employees who worked on various HCL client accounts across the United States. On information and belief, Plaintiff was the only member of the S.W.A.T. team who was not South Asian. 22. Plaintiff reported to three HCL employees during his tenure with the company – Walter Agar, a Director on the PepsiCo account, Ayut Patel, Senior Vice President – Head, Strategic Engagements for HCL, and Sanjay Kohli, a Director-level employee at HCL. Both Mr. Patel and Mr. Kohli are South Asian. 23. Approximately 250 HCL employees serviced PepsiCo in Dallas, Texas, of which, around 200 individuals were “re-badges,” i.e., employees hired directly from PepsiCo by HCL. The vast majority of the 50 or so HCL workers not hired from PepsiCo were South Asian visa holders. On information and belief, the contract between HCL and PepsiCo required all re-badges to be retained by HCL for a two-year period. Upon the expiry of this two-year period, many re-badges were replaced by HCL with South Asian visa holders and the re-badge employees from PepsiCo were placed on the bench and subsequently terminated. 24. While servicing PepsiCo, Plaintiff observed HCL’s preference for staffing client projects with South Asians first-hand. For instance, the vast majority of HCL employees hired to service PepsiCo were South Asian and on multiple occasions, both Mr. Patel and Mr. Kohli informed Plaintiff that HCL’s business plan was to bring H-1B visa holders from India to staff open positions in the United States. Moreover, on multiple occasions, Plaintiff was asked to interview external candidates for HCL’s S.W.A.T. team. On information and belief, the vast majority of these candidates were visa-dependent South Asians, currently employed by other companies in the United States on H-1B visas. 25. While performing his Solution Architect / Chief Architect role, Plaintiff was subject to a hostile work environment by HCL employees. For example, when Plaintiff was hired to replace the Chief Architect on the PepsiCo account, he repeatedly reached out to two of his colleagues on the transition team to acquire information concerning PepsiCo hardware necessary to perform his job. However, the two South Asian employees failed to respond to his emails and telephone calls seeking this information, and failed to provide him with any guidance regarding the PepsiCo project. Plaintiff escalated his concerns to Mr. Patel via email, and copied his two colleagues on the communication. Instead of helping Plaintiff obtain the necessary information, or encouraging Plaintiff’s team members to cooperate with Plaintiff, Mr. Patel chastised Plaintiff, and instead informed him that he needed to “change his approach” when requesting information from these employees. Plaintiff’s requests for help went unanswered for a month, until Mr. Patel finally organized a meeting with Plaintiff and his colleagues to encourage them to work with Plaintiff on the PepsiCo infrastructure transition and transformation project. Moreover, Plaintiff’s South Asian colleagues routinely spoke in Hindi and other non-English languages both socially and while discussing client-related work, precluding Plaintiff from fully participating in these conversations. 26. Despite these challenges, Plaintiff performed well in his role servicing PepsiCo and received no verbal or written criticism regarding his performance. However, Plaintiff never received a promotion or raise during his tenure with the company. 27. In or around July 2016, Mr. Patel called Plaintiff into his office for a meeting. After congratulating Plaintiff for his work servicing PepsiCo, he informed Plaintiff that he was being removed from his Solution Architect / Chief Architect position and placed on the bench. Mr. Patel then asked Plaintiff what he intended to do next. Plaintiff informed Mr. Patel that when he started with HCL, Mr. Patel had informed him that he would work on multiple accounts for HCL, and would be transferred to a new client once all issues relating to PepsiCo’s infrastructure were resolved. Mr. Patel stated that he had no accounts available for Plaintiff to service, and told him to contact Human Resources (“HR”) in order to locate his next project. 28. Plaintiff then spoke with a member of HCL’s HR Department who informed him that he could only remain on the bench for thirty days, after which he would be terminated by the company. HR also referred Plaintiff to the offshore staffing team. The offshore staffing team presented Plaintiff with two open positions, and Plaintiff applied to both roles. Plaintiff also applied to open positions with HCL online. However, Plaintiff was never invited for an interview by HCL, and received no further contact from HR or the offshore staffing team. When Plaintiff reached out to HCL for updates regarding his employment, he was told that the company was checking with various managers regarding open positions, but Plaintiff was never offered a subsequent role with HCL. 29. Plaintiff remained on the bench for approximately one month. On August 26, 2016, HCL terminated his employment. He was not offered any severance payment by the company. 30. In 2016, Plaintiff applied online to two or three open positions with HCL. For example, in September 2016, Plaintiff applied to a Wintel Administrator position with HCL on Dice.com. The position was located in Dallas, Texas. On September 7, 2016, Plaintiff was contacted by Kasi Gupta, Talent Supply Chain for HCL America, Inc., and expressed interest in the open position. However, Plaintiff received no further contact from Mr. Gupta, and was never invited to interview for the Wintel Administrator position. He was not hired by HCL. In October 2016, Plaintiff was again contacted by Mr. Gupta regarding a Network Engineer position with the company in Marlborough, Massachusetts. Plaintiff expressed interest in the position and confirmed his salary requirements with Mr. Gupta on October 7. Again, Plaintiff received no further contact from Mr. Gupta regarding his candidacy and was not interviewed, nor hired, for the Network Engineer position. 31. In 2017, Plaintiff applied online to at least three positions with HCL in the Dallas, Texas area. Plaintiff received no response from HCL, was not invited to interview with the company. He was not hired for any of the open positions, despite his excellent qualifications and considerable experience. 32. In March 2018, Plaintiff was contacted by a recruiter from HCL regarding a Compute Solutions Manager / Architect position with HCL America, Inc. in Frisco, Texas. Mr. Voll expressed interest in the position and participated in three interviews with HCL employees during the month of March. However, despite performing well in these interviews, Mr. Voll was not hired by HCL for the Solutions Manager / Architect position. 33. On June 9, 2018, Plaintiff applied to a VMware Level 3 Administrator position with HCL in Frisco, Texas on Dice.com. Two days later, Mr. Voll provided HCL with a copy of his resume and various information concerning his candidacy. Following this email communication, HCL never contacted Mr. Voll regarding the VMware Level 3 Administrator position, and he was not hired for the role. 34. On July 3, 2018, Plaintiff applied to a Solution Architect position with HCL on Dice.com. Mr. Voll communicated with an HCL employee regarding the position on July 13, but was never invited to interview for the Solution Architect position with HCL. 35. In mid-July 2018, Plaintiff received a call from Sunaina Mittal, a member of HCL America, Inc.’s Resource Management Group, regarding an OpenShift Architect position with the company. Ms. Mittal is South Asian and located in India. Mr. Voll expressed interest in the position, but has not been invited to interview for the OpenShift Architect role. CLASS ACTION ALLEGATIONS 36. Plaintiff brings this Class Action pursuant to Federal Rule of Civil Procedure 23(a), (b)(2), (b)(3), and (c)(4), seeking injunctive, declaratory, equitable, and monetary relief for HCL’s systematic pattern and practice of discrimination against non-South Asian individuals in the United States. This action is brought on behalf of the following class: All individuals who are not of South Asian race who applied for positions with (or within) HCL in the U.S. and were not hired, who were employed by HCL in the U.S. and sought a promotion but were not promoted, and/or who were employed by HCL in the U.S. and were involuntarily terminated. 37. Members of the class are so numerous and geographically dispersed across the United States that joinder is impracticable. While the exact number of class members is unknown to Plaintiff, it is believed to be in the thousands. Furthermore, class members are readily identifiable from information and records in HCL’s possession. 38. There are numerous questions of law and fact common to members of the class. Among the common questions of law or fact are: (a) whether HCL has intentionally discriminated against individuals who are not of South Asian race in making employment decisions; (b) whether HCL has intentionally favored South Asians in hiring, promotion/demotion, and retention decisions and/or whether HCL has intentionally disfavored non-South Asians in hiring, promotion/demotion, and termination decisions; (c) whether HCL’s policy and practice of relying on South Asian visa and local workers is intentionally discriminatory; (d) whether HCL has violated § 1981; (e) whether equitable and injunctive relief is warranted for the class and (f) whether compensatory and/or punitive damages are warranted for the class. 39. Plaintiff’s claims are typical of the class. Members of the class were damaged by the same discriminatory policies and practices employed by HCL. 40. Plaintiff will fairly and adequately protect the interest of other class members because he has no interest that is antagonistic to or which conflicts with those of any other class member, and Plaintiff is committed to the vigorous prosecution of this action and has retained competent counsel experienced in class litigation to represent him and the class. 41. Plaintiff and the class he seeks to represent have suffered substantial losses in earnings and other employment benefits and compensation as a result of HCL’s actions. 42. Class certification is appropriate pursuant to Federal Rule of Civil Procedure 23(b)(2) because HCL has acted and/or refused to act on grounds generally applicable to the class, making declaratory and injunctive relief appropriate with respect to Plaintiff and the class as a whole. Members of the class are entitled to declaratory and injunctive relief to end HCL’s systematic, common, uniform, unfair, and discriminatory policies and practices. 43. Class certification is appropriate pursuant to Federal Rule of Civil Procedure 23(b)(3) for determination of the damages claims of individual class members because the issue of liability is common to the class and the common nucleus of operative facts forms the central issue, which predominates over individual issues of proof. The primary question common to the class is whether HCL has discriminated on the basis of race in their employment practices. These questions are central to the case and predominates over individual issues among the members of the proposed class. HCL has engaged in a common course of discriminatory conduct in a manner that has harmed all of the class members. Class certification under Rule 23(b)(3) would be superior to other methods for fair and efficient resolution of the issues because certification will avoid the need for repeated litigation by each individual class member. The instant case will be eminently manageable as a class action. Plaintiff knows of no difficulty to be encountered in the maintenance of this action that would preclude its maintenance as a class action. 44. Class certification is appropriate pursuant to Federal Rule of Civil Procedure 23(c)(4) to litigate Plaintiff’s claims for prospective classwide compliance and affirmative injunctive relief necessary to eliminate HCL’s discrimination. Certification under this rule is also appropriate to decide whether HCL has adopted a systemic pattern and practice of racial discrimination in hiring and employment decisions. Certification under this rule is also appropriate to determine classwide damages, including punitive damages. COUNT I (Disparate Treatment on the Basis of Race) (Violation of Civil Rights Act of 1866, as amended, 42 U.S.C. § 1981) (On behalf of Plaintiff and the Class) 45. Plaintiff re-alleges each preceding paragraph as though fully set forth herein. 46. This claim is brought by Plaintiff on behalf of himself and the class. 47. Throughout the class liability period, HCL has engaged in a pattern and practice of discriminating against individuals who are not of South Asian race by: (a) knowingly and intentionally favoring individuals of South Asian race in employment decisions, including hiring, promotion/demotion, and termination decisions, (b) knowingly and intentionally disfavoring individuals who are not of South Asian race (including Plaintiff) in employment decisions, including hiring, promotion/demotion, and termination decisions, (c) knowingly and intentionally creating and maintaining an overwhelmingly disproportionate workforce in the United States consisting of approximately 70% or more South Asian employees (primarily from India). 48. As a direct and proximate result of HCL’s intentional discrimination, Plaintiff and class members have been denied employment, denied the fair opportunity to obtain employment, and denied fair opportunities with regard to promotion, compensation, and/or continued employment with HCL. 49. HCL’s actions constitute unlawful discrimination on the basis of race in violation of 42 U.S.C. § 1981. PRAYER FOR RELIEF WHEREFORE, Plaintiff and the class pray for relief as follows: a. Certification of the case as a class action pursuant to Fed. R. Civ. P. 23; b. Designation of Plaintiff as representative of the class; c. Designation of Plaintiff’s counsel as counsel for the class; d. A declaratory judgment that the practices complained of herein are unlawful and violate the Civil Rights Act of 1866, 42 U.S.C. § 1981; e. A permanent injunction against Defendants and their officers, agents, successors, employees, representatives, and any and all persons acting in concert with them, from engaging in unlawful policies, practices, customs, and usages set forth herein; f. Order Defendants to adopt a valid, non-discriminatory method for hiring, promotion, termination, and other employment decisions; g. Order Defendants to post notices concerning its duty to refrain from discriminating against employees on the basis of race; h. Award Plaintiff and the Class damages – including (without limitation) compensatory, exemplary, and punitive damages for the harm they suffered as a result of Defendant’s violations of § 1981; i. Award Plaintiff and the Class pre- and post-judgment interest at the prevailing rate on the compensatory damages as a result of Defendants’ discriminating against them in violation of § 1981; j. Award Plaintiff and the Class front- and back-pay, reinstatement, and such other equitable relief as the Court deems just and appropriate; k. Award reasonable attorneys’ fees, expert witness fees, expenses, and costs of this action and of prior administrative actions; and l. Award Plaintiff and the Class such other relief as this Court deems just and appropriate. JURY DEMAND Pursuant to Fed. R. Civ. P. 38, Plaintiff and the Class respectfully demand a trial by jury on all issues properly triable by a jury in this action. DATED: August 15, 2018 Respectfully submitted, By: /s/Daniel Low Daniel Low, SBN 218387 KOTCHEN & LOW LLP 1745 Kalorama Road NW, Suite 101 Washington, DC 20009 Telephone: (202) 471-1995 Email: [email protected] Attorney for Plaintiff Reese Voll and Putative Class

civil rights, immigration, family

vE46_ogBF5pVm5zYDU2y

Case No. CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS JURY TRIAL DEMANDED UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK AARON HARPER, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. 2U, INC., CHRISTOPHER J. PAUCEK, and CATHERINE A. GRAHAM, Defendants. Plaintiff Aaron Harper (“Plaintiff”), individually and on behalf of all others similarly situated, by and through his attorneys, alleges the following upon information and belief, except as to those allegations concerning Plaintiff, which are alleged upon personal knowledge. Plaintiff’s information and belief is based upon, among other things, his counsel’s investigation, which includes without limitation: (a) review and analysis of regulatory filings made by 2U, Inc. (“2U” or the “Company”) with the United States (“U.S.”) Securities and Exchange Commission (“SEC”); (b) review and analysis of press releases and media reports issued by and disseminated by 2U; and (c) review of other publicly available information concerning 2U. NATURE OF THE ACTION AND OVERVIEW 1. This is a class action on behalf of persons and entities that purchased or otherwise acquired 2U securities between February 25, 2019 and July 30, 2019, inclusive (the “Class Period”), seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange 2. 2U is an education technology company that works with universities to provide online graduate programs and certificates for working adults. 3. On May 7, 2019, the Company lowered its revenue guidance for fiscal 2019 to a range of $534 to $537 million, from prior guidance range of $546.6 to $550.8 million, due to declining average enrollments in some of its largest graduate programs. 4. On this news, the Company’s share price fell $15.16, or nearly 26%, to close at $44.77 per share on May 8, 2019, on unusually heavy trading volume. 5. On July 30, 2019, after the market closed, the Company reported a larger-than- expected loss for second quarter 2019. The Company also revised its guidance for fiscal 2019, expecting a net loss between $157.5 and $151.5 million, compared to prior net loss guidance between $79.0 and $77.2 million, because it would “moderate [its] grad program launch cadence.” 6. On this news, the Company’s share price fell $23.70, or nearly 65%, to close at $12.80 per share on July 31, 2019, on unusually heavy trading volume. 7. Throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the Company faced increasing competition in online education and particularly regarding graduate programs; (2) that the Company faced certain program-specific issues that negatively impacted its performance; (3) that, as a result, the Company’s business model was not sustainable; (4) that the Company would slow its program launches; and (5) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis. 8. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. JURISDICTION AND VENUE 9. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. § 240.10b-5). 10. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. § 1331 and Section 27 of the Exchange Act (15 U.S.C. § 78aa). 11. Venue is proper in this Judicial District pursuant to 28 U.S.C. § 1391(b) and Section 27 of the Exchange Act (15 U.S.C. § 78aa(c)). Substantial acts in furtherance of the alleged fraud or the effects of the fraud have occurred in this Judicial District. Many of the acts charged herein, including the dissemination of materially false and/or misleading information, occurred in substantial part in this Judicial District. 12. In connection with the acts, transactions, and conduct alleged herein, Defendants directly and indirectly used the means and instrumentalities of interstate commerce, including the United States mail, interstate telephone communications, and the facilities of a national securities exchange. PARTIES 13. Plaintiff Aaron Harper, as set forth in the accompanying certification, incorporated by reference herein, purchased 2U securities during the Class Period, and suffered damages as a result of the federal securities law violations and false and/or misleading statements and/or material omissions alleged herein. 14. Defendant 2U is incorporated under the laws of Delaware with its principal executive offices located in Lanham, Maryland. 2U’s common stock trades on the NASDAQ exchange under the symbol “TWOU.” 15. Defendant Christopher J. Paucek (“Paucek”) was the Chief Executive Officer at all relevant times. 16. Defendant Catherine A. Graham (“Graham”) was the Chief Financial Officer of the Company at all relevant times. 17. Defendants Paucek and Graham, (collectively the “Individual Defendants”), because of their positions with the Company, possessed the power and authority to control the contents of the Company’s reports to the SEC, press releases and presentations to securities analysts, money and portfolio managers and institutional investors, i.e., the market. The Individual Defendants were provided with copies of the Company’s reports and press releases alleged herein to be misleading prior to, or shortly after, their issuance and had the ability and opportunity to prevent their issuance or cause them to be corrected. Because of their positions and access to material non-public information available to them, the Individual Defendants knew that the adverse facts specified herein had not been disclosed to, and were being concealed from, the public, and that the positive representations which were being made were then materially false and/or misleading. The Individual Defendants are liable for the false statements pleaded herein. SUBSTANTIVE ALLEGATIONS Background 18. 2U is an education technology company that works with universities to provide online graduate programs and certificates for working adults. Materially False and Misleading Statements Issued During the Class Period 19. The Class Period begins on February 25, 2019. On that day, the Company announced its fourth quarter and full year 2018 financial results, stating in relevant part: Full-Year 2018 Results  Revenue was $411.8 million, an increase of 44% from $286.8 million in 2017.  Net loss was $(38.3) million, or $(0.69) per share, compared to $(29.4) million, or $(0.60) per share, in 2017.  Adjusted net loss was $(3.5) million, or $(0.06) per share, compared to $(4.3) million, or $(0.09) per share, in 2017.  Adjusted EBITDA was $17.7 million, compared to $11.4 million in 2017. "The strength and resilience of 2U's business is clear from our 2018 fourth quarter and full-year results, and reflects the continued expansion and increasing diversity of our degree and short course portfolios, both domestically and internationally," Co-Founder and CEO Christopher "Chip" Paucek said. "Our commitment to investing in sustained growth not only sets 2U apart in the education technology industry, but will allow us to better meet the evolving needs of our partners and the marketplace." 20. On February 26, 2019, the Company filed its annual report on Form 10-K for the period ended December 31, 2018 (the “2018 10-K”), affirming the previously reported financial 21. The truth began to emerge on May 7, 2019, when the Company disclosed declining average enrollments in some of its largest graduate programs. In connection with its first quarter 2019 financial results, the Company lowered its revenue guidance for fiscal 2019 to a range of $534 to $537 million, from prior guidance range of $546.6 to $550.8 million. On the related conference call, Defendant Paucek explained that “the average enrollment for the top five [programs] has come down[, and] the average in 2019 is projected to be 20% lower than the average in 2017.” However, he assured that the Company is “far less dependent today on a few large programs” because its “portfolio as a whole became stronger, more distributed, [and] more resilient.” 22. On this news, the Company’s share price fell $15.16, or nearly 26%, to close at $44.77 per share on May 8, 2019, on unusually heavy trading volume. 23. The above statements identified in ¶¶19-21 were materially false and/or misleading, and failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the Company faced increasing competition in online education and particularly regarding graduate programs; (2) that the Company faced certain program-specific issues that negatively impacted its performance; (3) that, as a result, the Company’s business model was not sustainable; (4) that the Company would slow its program launches; and (5) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis. Disclosures at the End of the Class Period 24. On July 30, 2019, after the market closed, the Company reported a larger-than- expected loss for second quarter 2019. The Company also revised its guidance for fiscal 2019, expecting a net loss between $157.5 and $151.5 million, compared to prior net loss guidance between $79.0 and $77.2 million. 25. During a conference call held to discuss these results, Defendant Paucek stated that the Company has “tempered [its] expectations for the remainder of 2019 and widened [its] guidance ranges” and that it would “moderate [its] grad program launch cadence . . . to support [its] path to profitability and positive free cash flow.” 26. Moreover, defendant Paucek detailed certain factors impacting the revised guidance, stating: Decline and program-specific issues we talked about so much over the past year were masking this broader trend of the mainstreaming of online education. In 2008, there were very few high-quality online options. As we've grown the business since then, new online options for students have expanded significantly. Today, most schools are going online in some form. There are now many more offerings and more competition to enroll students. What does this mean to us? We need to shift our expectations per program, which results in a smaller average steady-state program size than what we would historically expect. * * * In the grad business, we tempered our enrollment and revenue expectations. We expect the average program enrollment at steady-state to come down from what we previously expected. We've accounted for the largest programs regressing toward the mean. Some of that was program-specific issues. However, we think it's prudent to expect fewer programs to substantially outperform these averages long term. 27. On this news, the Company’s share price fell $23.70, or nearly 65%, to close at $12.80 per share on July 31, 2019, on unusually heavy trading volume. CLASS ACTION ALLEGATIONS 28. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3) on behalf of a class, consisting of all persons and entities that purchased or otherwise acquired 2U securities between February 25, 2019 and July 30, 2019, inclusive, and who were damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers and directors of the Company, at all relevant times, members of their immediate families and their legal representatives, heirs, successors, or assigns, and any entity in which Defendants have or had a controlling interest. 29. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, 2U’s common shares actively traded on the NASDAQ. While the exact number of Class members is unknown to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff believes that there are at least hundreds or thousands of members in the proposed Class. Millions of 2U common stock were traded publicly during the Class Period on the NASDAQ. Record owners and other members of the Class may be identified from records maintained by 2U or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions. 30. Plaintiff’s claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that is complained of herein. 31. Plaintiff will fairly and adequately protect the interests of the members of the Class and has retained counsel competent and experienced in class and securities litigation. 32. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are: (a) whether the federal securities laws were violated by Defendants’ acts as alleged herein; (b) whether statements made by Defendants to the investing public during the Class Period omitted and/or misrepresented material facts about the business, operations, and prospects of 2U; and (c) to what extent the members of the Class have sustained damages and the proper measure of damages. 33. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation makes it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. UNDISCLOSED ADVERSE FACTS 34. The market for 2U’s securities was open, well-developed and efficient at all relevant times. As a result of these materially false and/or misleading statements, and/or failures to disclose, 2U’s securities traded at artificially inflated prices during the Class Period. Plaintiff and other members of the Class purchased or otherwise acquired 2U’s securities relying upon the integrity of the market price of the Company’s securities and market information relating to 2U, and have been damaged thereby. 35. During the Class Period, Defendants materially misled the investing public, thereby inflating the price of 2U’s securities, by publicly issuing false and/or misleading statements and/or omitting to disclose material facts necessary to make Defendants’ statements, as set forth herein, not false and/or misleading. The statements and omissions were materially false and/or misleading because they failed to disclose material adverse information and/or misrepresented the truth about 2U’s business, operations, and prospects as alleged herein. 36. At all relevant times, the material misrepresentations and omissions particularized in this Complaint directly or proximately caused or were a substantial contributing cause of the damages sustained by Plaintiff and other members of the Class. As described herein, during the Class Period, Defendants made or caused to be made a series of materially false and/or misleading statements about 2U’s financial well-being and prospects. These material misstatements and/or omissions had the cause and effect of creating in the market an unrealistically positive assessment of the Company and its financial well-being and prospects, thus causing the Company’s securities to be overvalued and artificially inflated at all relevant times. Defendants’ materially false and/or misleading statements during the Class Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities at artificially inflated prices, thus causing the damages complained of herein when the truth was revealed. LOSS CAUSATION 37. Defendants’ wrongful conduct, as alleged herein, directly and proximately caused the economic loss suffered by Plaintiff and the Class. 38. During the Class Period, Plaintiff and the Class purchased 2U’s securities at artificially inflated prices and were damaged thereby. The price of the Company’s securities significantly declined when the misrepresentations made to the market, and/or the information alleged herein to have been concealed from the market, and/or the effects thereof, were revealed, causing investors’ losses. SCIENTER ALLEGATIONS 39. As alleged herein, Defendants acted with scienter since Defendants knew that the public documents and statements issued or disseminated in the name of the Company were materially false and/or misleading; knew that such statements or documents would be issued or disseminated to the investing public; and knowingly and substantially participated or acquiesced in the issuance or dissemination of such statements or documents as primary violations of the federal securities laws. As set forth elsewhere herein in detail, the Individual Defendants, by virtue of their receipt of information reflecting the true facts regarding 2U, their control over, and/or receipt and/or modification of 2U’s allegedly materially misleading misstatements and/or their associations with the Company which made them privy to confidential proprietary information concerning 2U, participated in the fraudulent scheme alleged herein. APPLICABILITY OF PRESUMPTION OF RELIANCE (FRAUD-ON-THE-MARKET DOCTRINE) 40. The market for 2U’s securities was open, well-developed and efficient at all relevant times. As a result of the materially false and/or misleading statements and/or failures to disclose, 2U’s securities traded at artificially inflated prices during the Class Period. On February 27, 2019, the Company’s share price closed at a Class Period high of $74.53 per share. Plaintiff and other members of the Class purchased or otherwise acquired the Company’s securities relying upon the integrity of the market price of 2U’s securities and market information relating to 2U, and have been damaged thereby. 41. During the Class Period, the artificial inflation of 2U’s shares was caused by the material misrepresentations and/or omissions particularized in this Complaint causing the damages sustained by Plaintiff and other members of the Class. As described herein, during the Class Period, Defendants made or caused to be made a series of materially false and/or misleading statements about 2U’s business, prospects, and operations. These material misstatements and/or omissions created an unrealistically positive assessment of 2U and its business, operations, and prospects, thus causing the price of the Company’s securities to be artificially inflated at all relevant times, and when disclosed, negatively affected the value of the Company shares. Defendants’ materially false and/or misleading statements during the Class Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities at such artificially inflated prices, and each of them has been damaged as a result. 42. At all relevant times, the market for 2U’s securities was an efficient market for the following reasons, among others: (a) 2U shares met the requirements for listing, and was listed and actively traded on the NASDAQ, a highly efficient and automated market; (b) As a regulated issuer, 2U filed periodic public reports with the SEC and/or the NASDAQ; (c) 2U regularly communicated with public investors via established market communication mechanisms, including through regular dissemination of press releases on the national circuits of major newswire services and through other wide-ranging public disclosures, such as communications with the financial press and other similar reporting services; and/or (d) 2U was followed by securities analysts employed by brokerage firms who wrote reports about the Company, and these reports were distributed to the sales force and certain customers of their respective brokerage firms. Each of these reports was publicly available and entered the public marketplace. 43. As a result of the foregoing, the market for 2U’s securities promptly digested current information regarding 2U from all publicly available sources and reflected such information in 2U’s share price. Under these circumstances, all purchasers of 2U’s securities during the Class Period suffered similar injury through their purchase of 2U’s securities at artificially inflated prices and a presumption of reliance applies. 44. A Class-wide presumption of reliance is also appropriate in this action under the Supreme Court’s holding in Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128 (1972), because the Class’s claims are, in large part, grounded on Defendants’ material misstatements and/or omissions. Because this action involves Defendants’ failure to disclose material adverse information regarding the Company’s business operations and financial prospects—information that Defendants were obligated to disclose—positive proof of reliance is not a prerequisite to recovery. All that is necessary is that the facts withheld be material in the sense that a reasonable investor might have considered them important in making investment decisions. Given the importance of the Class Period material misstatements and omissions set forth above, that requirement is satisfied here. NO SAFE HARBOR 45. The statutory safe harbor provided for forward-looking statements under certain circumstances does not apply to any of the allegedly false statements pleaded in this Complaint. The statements alleged to be false and misleading herein all relate to then-existing facts and conditions. In addition, to the extent certain of the statements alleged to be false may be characterized as forward looking, they were not identified as “forward-looking statements” when made and there were no meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the purportedly forward-looking statements. In the alternative, to the extent that the statutory safe harbor is determined to apply to any forward-looking statements pleaded herein, Defendants are liable for those false forward- looking statements because at the time each of those forward-looking statements was made, the speaker had actual knowledge that the forward-looking statement was materially false or misleading, and/or the forward-looking statement was authorized or approved by an executive officer of 2U who knew that the statement was false when made. FIRST CLAIM Violation of Section 10(b) of The Exchange Act and Rule 10b-5 Promulgated Thereunder Against All Defendants 46. Plaintiff repeats and re-alleges each and every allegation contained above as if fully set forth herein. 47. During the Class Period, Defendants carried out a plan, scheme and course of conduct which was intended to and, throughout the Class Period, did: (i) deceive the investing public, including Plaintiff and other Class members, as alleged herein; and (ii) cause Plaintiff and other members of the Class to purchase 2U’s securities at artificially inflated prices. In furtherance of this unlawful scheme, plan and course of conduct, Defendants, and each defendant, took the actions set forth herein. 48. Defendants (i) employed devices, schemes, and artifices to defraud; (ii) made untrue statements of material fact and/or omitted to state material facts necessary to make the statements not misleading; and (iii) engaged in acts, practices, and a course of business which operated as a fraud and deceit upon the purchasers of the Company’s securities in an effort to maintain artificially high market prices for 2U’s securities in violation of Section 10(b) of the Exchange Act and Rule 10b-5. All Defendants are sued either as primary participants in the wrongful and illegal conduct charged herein or as controlling persons as alleged below. 49. Defendants, individually and in concert, directly and indirectly, by the use, means or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a continuous course of conduct to conceal adverse material information about 2U’s financial well- being and prospects, as specified herein. 50. Defendants employed devices, schemes and artifices to defraud, while in possession of material adverse non-public information and engaged in acts, practices, and a course of conduct as alleged herein in an effort to assure investors of 2U’s value and performance and continued substantial growth, which included the making of, or the participation in the making of, untrue statements of material facts and/or omitting to state material facts necessary in order to make the statements made about 2U and its business operations and future prospects in light of the circumstances under which they were made, not misleading, as set forth more particularly herein, and engaged in transactions, practices and a course of business which operated as a fraud and deceit upon the purchasers of the Company’s securities during the Class Period. 51. Each of the Individual Defendants’ primary liability and controlling person liability arises from the following facts: (i) the Individual Defendants were high-level executives and/or directors at the Company during the Class Period and members of the Company’s management team or had control thereof; (ii) each of these defendants, by virtue of their responsibilities and activities as a senior officer and/or director of the Company, was privy to and participated in the creation, development and reporting of the Company’s internal budgets, plans, projections and/or reports; (iii) each of these defendants enjoyed significant personal contact and familiarity with the other defendants and was advised of, and had access to, other members of the Company’s management team, internal reports and other data and information about the Company’s finances, operations, and sales at all relevant times; and (iv) each of these defendants was aware of the Company’s dissemination of information to the investing public which they knew and/or recklessly disregarded was materially false and misleading. 52. Defendants had actual knowledge of the misrepresentations and/or omissions of material facts set forth herein, or acted with reckless disregard for the truth in that they failed to ascertain and to disclose such facts, even though such facts were available to them. Such defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and for the purpose and effect of concealing 2U’s financial well-being and prospects from the investing public and supporting the artificially inflated price of its securities. As demonstrated by Defendants’ overstatements and/or misstatements of the Company’s business, operations, financial well-being, and prospects throughout the Class Period, Defendants, if they did not have actual knowledge of the misrepresentations and/or omissions alleged, were reckless in failing to obtain such knowledge by deliberately refraining from taking those steps necessary to discover whether those statements were false or misleading. 53. As a result of the dissemination of the materially false and/or misleading information and/or failure to disclose material facts, as set forth above, the market price of 2U’s securities was artificially inflated during the Class Period. In ignorance of the fact that market prices of the Company’s securities were artificially inflated, and relying directly or indirectly on the false and misleading statements made by Defendants, or upon the integrity of the market in which the securities trades, and/or in the absence of material adverse information that was known to or recklessly disregarded by Defendants, but not disclosed in public statements by Defendants during the Class Period, Plaintiff and the other members of the Class acquired 2U’s securities during the Class Period at artificially high prices and were damaged thereby. 54. At the time of said misrepresentations and/or omissions, Plaintiff and other members of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff and the other members of the Class and the marketplace known the truth regarding the problems that 2U was experiencing, which were not disclosed by Defendants, Plaintiff and other members of the Class would not have purchased or otherwise acquired their 2U securities, or, if they had acquired such securities during the Class Period, they would not have done so at the artificially inflated prices which they paid. 55. By virtue of the foregoing, Defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. 56. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and the other members of the Class suffered damages in connection with their respective purchases and sales of the Company’s securities during the Class Period. SECOND CLAIM Violation of Section 20(a) of The Exchange Act Against the Individual Defendants 57. Plaintiff repeats and re-alleges each and every allegation contained above as if fully set forth herein. 58. Individual Defendants acted as controlling persons of 2U within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level positions and their ownership and contractual rights, participation in, and/or awareness of the Company’s operations and intimate knowledge of the false financial statements filed by the Company with the SEC and disseminated to the investing public, Individual Defendants had the power to influence and control and did influence and control, directly or indirectly, the decision-making of the Company, including the content and dissemination of the various statements which Plaintiff contends are false and misleading. Individual Defendants were provided with or had unlimited access to copies of the Company’s reports, press releases, public filings, and other statements alleged by Plaintiff to be misleading prior to and/or shortly after these statements were issued and had the ability to prevent the issuance of the statements or cause the statements to be corrected. 59. In particular, Individual Defendants had direct and supervisory involvement in the day-to-day operations of the Company and, therefore, had the power to control or influence the particular transactions giving rise to the securities violations as alleged herein, and exercised the 60. As set forth above, 2U and Individual Defendants each violated Section 10(b) and Rule 10b-5 by their acts and omissions as alleged in this Complaint. By virtue of their position as controlling persons, Individual Defendants are liable pursuant to Section 20(a) of the Exchange Act. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and other members of the Class suffered damages in connection with their purchases of the Company’s securities during the Class Period. PRAYER FOR RELIEF WHEREFORE, Plaintiff prays for relief and judgment, as follows: (a) Determining that this action is a proper class action under Rule 23 of the Federal Rules of Civil Procedure; (b) Awarding compensatory damages in favor of Plaintiff and the other Class members against all defendants, jointly and severally, for all damages sustained as a result of Defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon; (c) Awarding Plaintiff and the Class their reasonable costs and expenses incurred in this action, including counsel fees and expert fees; and (d) Such other and further relief as the Court may deem just and proper. JURY TRIAL DEMANDED Plaintiff hereby demands a trial by jury. Dated: August 7, 2019 GLANCY PRONGAY & MURRAY LLP By: /s/ Lesley F. Portnoy Lesley F. Portnoy (LP-1941) 230 Park Ave., Suite 530 New York, NY 10169 Telephone: (212) 682-5340 Facsimile: (212) 884-0988 Email: [email protected] -and- Lionel Z. Glancy Robert V. Prongay Charles H. Linehan Pavithra Rajesh 1925 Century Park East, Suite 2100 Los Angeles, CA 90067 Telephone: (310) 201-9150 Facsimile: (310) 201-9160 Email: [email protected] Attorneys for Plaintiff Aaron Harper 8/4/2019 SWORN CERTIFICATION OF PLAINTIFF 2U, INC. SECURITIES LITIGATION I, Aaron Harper individually, and/or in my capacity as trustee and/or principal for accounts listed on Schedule A, certify that: 1. I have reviewed the Complaint and authorize its filing and/or the filing of a Lead Plaintiff motion on my behalf. 2. I did not purchase 2U, Inc. securities that are the subject of this action at the direction of plaintiff’s counsel or in order to participate in any private action arising under this title. 3. I am willing to serve as a representative party on behalf of a class and will testify at deposition and trial, if necessary. 4. My transactions in 2U, Inc. securities during the Class Period set forth in the Complaint are as follows: (See attached transactions) 5. I have not sought to serve, nor served, as a representative party on behalf of a class under this title during the last three years, except for the following: 6. I will not accept any payment for serving as a representative party, except to receive my pro rata share of any recovery or as ordered or approved by the court, including the award to a representative plaintiff of reasonable costs and expenses (including lost wages) directly relating to the representation of the class. I declare under penalty of perjury that the foregoing are true and correct statements. ________________ _________________________________________ Date Aaron Harper Aaron Harper's Transactions in 2U, Inc. (TWOU) Date Transaction Type Quantity Unit Price 05/09/2019 Bought 1,203 $43.2200 05/10/2019 Bought 116 $43.2200

securities

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Case No.: __________________ CLASS ACTION COMPLAINT JURY TRIAL DEMANDED Jennie Lee Anderson (SBN 203586) ANDRUS ANDERSON LLP 155 Montgomery Street, Suite 900 San Francisco, CA 94104 Tel. (415) 986-1400; Fax. (415) 986-1474 [email protected] Garrett D. Blanchfield (Pro Hac Vice forthcoming) Brant Penney (Pro Hac Vice forthcoming) REINHARDT WENDORF & BLANCHFIELD 332 Minnesota Street, Suite W1050 St. Paul, MN 55101 Tel: (651) 287-2100: Fax: (651) 287-2103 [email protected] [email protected] William G. Caldes (Pro Hac Vice forthcoming) Jeffrey Spector (Pro Hac Vice forthcoming) Mary Ann Geppert (Pro Hac Vice forthcoming) SPECTOR ROSEMAN & KODROFF, P.C. 2001 Market Street, Suite 3420 Philadelphia, PA 19103 Tel: (215) 496-0300; Fax: (215) 496-6611 [email protected] [email protected] MGeppert@ srkattorneys.com Counsel for Plaintiff IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA MARK K. WASVARY, P.C., individually and on behalf of all others similarly situated, Plaintiff, vs. FACEBOOK, INC., a Delaware corporation., Defendant. Plaintiff alleges the following on behalf of itself and others similarly situated based on the review of public documents and information.1 INTRODUCTION 1. This Complaint is brought on behalf of people and companies—including the named Plaintiff—who bought advertising from Facebook at anticompetitively inflated prices. Over the course of the past decade, Facebook devised, executed, and reaped the benefits of a scheme to unlawfully monopolize the market for social advertising. As a direct result, Facebook was able to (and in fact, did) charge supracompetitive prices for social advertisements to thousands of people and businesses, including Plaintiff Mark K. Wasvary, P.C. 2. The nature, and indeed, fact of the anticompetitive overcharge levied by Facebook on Plaintiff and others similarly situated was not known until very recently—because Mark Zuckerberg and his lieutenants throughout Facebook specifically worked to keep their anticompetitive scheme under wraps. But recent revelations—including publicly-revealed internal Facebook communications and documents—make indisputably clear that Facebook intentionally and unlawfully monopolized the social advertising market; charged supracompetitive prices to Plaintiff and other Facebook advertisers; lied about it to Plaintiff, developers, regulators, the press, and the public; and reaped billions of dollars in inflated social advertising revenues in the process. 3. Facebook acquired the power to raise prices through the anticompetitive scheme described below, and did so year after year with no competitive check. 4. By the end of 2010, after Facebook had emerged the victor among social networks such as MySpace and Friendster, Facebook faced a new threat from smartphones. Mobile applications (“apps”) on smartphones for the first time allowed users to access the Internet from 1 All references to internal Facebook documents are exclusively to those published by news organizations and other public sources, particularly NBC News. NBC’s documents were available at https://dataviz.nbcnews.com/projects/20191104-facebook-leaked- documents/assets/facebook-sealed-exhibits.pdf; and https://dataviz.nbcnews.com/projects/20191104- facebook-leaked-documents/assets/facebook- exhibits.pdf. any location, on user interfaces controlled by touch, providing a distinct experience from desktop or laptop computers. Special-purpose apps designed specifically for smartphones and smartphone web browsers could not only access the Internet, but also users’ address books—a ready-made, proto-social network from which apps could draw. 5. The rise of smartphones immediately threatened Facebook’s advertising business, which had plateaued as Facebook rapidly approached its initial public offering in 2012. It was clear that the digital future was moving toward mobile platforms, and Facebook’s mobile product was substandard. Indeed, most of the advertising market would soon be designed for mobile platforms, and Facebook was likely to be left out. Mobile apps also threatened user engagement on Facebook’s core product (a desktop web app), and reduced engagement would in turn reduce the demand for Facebook’s targeted social advertising. Facebook faced a vicious negative feedback loop that could destroy its business. 6. That is when, according to internal Facebook documents, Facebook’s founder and CEO, Mark Zuckerberg, as well as Facebook’s most senior executives, hatched and executed a plan to (a) neutralize any potential competition from tens of thousands of mobile and mobile-friendly apps built using Facebook’s own platform (called “Platform”), (b) conscript apps on its Platform to bootstrap through large advertising purchases Facebook’s fledgling NEKO mobile advertising product with restrictive tying agreements, and (c) acquire, kill, or clone competitors that could rival Facebook as a source of social user data, which would in turn threaten Facebook as a preeminent and unopposed platform for social advertising. 7. Facebook executed its scheme with the help of spyware created by a company it ultimately acquired, Onavo, which—by deceiving millions of mobile users into believing they were downloading apps with utility (such as a virtual private network app)—provided Facebook with real-time surveillance of its competitive threats. This real-time surveillance apparatus allowed Facebook to identify mobile app developers from which to demand advertising purchases or data sharing agreements. It also allowed Facebook to identify rapidly growing threats to its core social networking product—such as Instagram and WhatsApp, which Facebook acquired, and Snap, which Facebook failed to acquire and instead cloned. 8. From 2012 through 2015, Facebook quietly executed its scheme. Its senior lieutenants cataloged and bucketed third-party apps on its Platform according to whether they were aligned with Facebook’s business, were competitive or potentially competitive with Facebook, or were to be destroyed. During this same period, Facebook’s senior-most engineers—many acting under protest— prepared to gut Facebook’s Platform of its most important functionality. 9. The functionality Facebook would remove from its Platform went to the heart of the Platform itself—the application programing interfaces relied on by apps to traverse Facebook’s network of user connections and to access user timelines and/or news feeds (the “Core APIs”). 10. Facebook decided to deceptively announce the scuttling of its own Platform at its “F8” conference held on April 30, 2014. That is, out of concerns that the announcement would cause vocal protests among developers whose business would be destroyed by the move, Facebook planned to bury the announcement under a broader announcement about its Facebook Login product. Internally, Facebook’s senior executives and engineers referred to this plan to bury the change as the “switcharoo plan.” 11. On April 30, 2014, at F8 2014, Facebook, as planned, misleadingly folded in the announcement that the Core APIs would be removed with its announcements surrounding Facebook’s Login product. The alleged premise of the conference and of the Login product changes was to allow users more control over their data. Facebook did not even mention the APIs it was withdrawing at the conference, quietly announcing the deprecation of the Core APIs in a change log, and falsely stating in an FAQ that Facebook would be removing “rarely used” 12. On April 30, 2015, one year after its deceptive FAQ, Facebook ejected 40,000 apps from its Platform by breaking them. At and around that time, Facebook communicated more pretext surrounding its decision, systematically lying to developers and telling them that Facebook’s API decisions were driven by user privacy and the need to curb privacy abuses. Internally, however, Facebook’s most senior executives had called those reasons “False” and “pablum.” 13. While Facebook systematically lied to developers and the public about its Platform change, it quietly forced deals with targeted app developers on its Platform. These chosen developers could continue to use particular Core APIs (which Facebook told others were “going away” for everyone), so long as they entered into agreements with Facebook to (a) purchase large amounts of mobile advertising from Facebook, or (b) feed back their own users’ data to Facebook. The agreements between Facebook and these developers were anticompetitive on their face. 14. Destroying or conscripting apps on its own Platform was not the only thing Facebook did as part of this scheme. Facebook also acquired, killed, or cloned companies that its deceptive spyware, Onavo, had identified as having rapidly obtained user engagement and large user bases. Most notably, Facebook acquired Instagram and WhatsApp to prevent these products from emerging as sources of data and user engagement that could fuel a rival social advertising platform. And when Snap rejected Zuckerberg’s $3 billion acquisition offer, Facebook cloned Snap’s product with precision. 15. Over the course of several years beginning in approximately 2010-2011, the net effect of Facebook’s Platform changes, its unlawful agreements with app developers, its Onavo spyware, and its unlawful mergers and acquisitions was that Facebook (a) coerced massive advertising purchases from developers; (b) captured and exercised control over data that could otherwise fuel a rival social advertising platform through whitelist and data sharing agreements; (c) destroyed rivals not beholden to Facebook to prevent them from emerging as competing advertising platforms or sources of social data; and (d) destroyed apps that threatened user engagement with Facebook’s core product, and thereby Facebook’s social advertising products. 16. Facebook rapidly became the only source for highly valuable advertising that could precisely target networks of users in a social network. Facebook used this market power to repeatedly raise advertising prices every year since it began its scheme. Over the course of nearly a decade, Facebook has faced no meaningful competitive check on social advertising prices— and it has extracted supracompetitive revenues from advertisers like Plaintiff throughout this 17. Plaintiffs are advertisers on Facebook’s advertising platform that were injured by paying supracompetitive prices for social advertising. Indeed, the prices they paid would have been lower if Facebook had not unlawfully monopolized the Social Advertising Market, as those prices would have been subject to competitive forces that would otherwise exist as a check on Facebook’s market power and monopoly. 18. Facebook managed to hide its anticompetitive scheme through (a) a code of secrecy in the face of a duty to speak truthfully and fully about its Platform, (b) affirmative false and pretextual statements to developers about the reasons for its decision to destroy its own developer ecosystem, and (c) false and misleading statements to regulators that approved Facebook’s acquisitions of WhatsApp and Instagram. Facebook’s ruse largely succeeded until internal documents, which were seized by the UK Parliament in 2018, were published in full by NBC News and other news organizations in November 2019. PARTIES I. PLAINTIFF 19. Plaintiff Mark K. Wasvary, P.C. is a Michigan corporation with its principal place of business in Troy, Michigan. Beginning in 2019, Plaintiff purchased advertising on Facebook’s self- service advertising platform. Until no earlier than November 6, 2019, Plaintiff did not know, and could not reasonably have known, the truth about Facebook’s anticompetitive conduct, including its purpose and intent to engage in anticompetitive conduct, nor could it have known that it had been injured by paying supracompetitive prices for advertising. 20. Plaintiff paid prices for advertising that were higher than they would have been absent Facebook’s anticompetitive conduct and unlawfully acquired and/or maintained monopoly. Facebook caused Plaintiff to pay supracompetitive prices for advertising as a result of the market power it obtained and/or maintained as a result of the anticompetitive scheme described in this Complaint. II. DEFENDANT 21. Defendant Facebook, Inc. (“Facebook”) is a publicly traded company, incorporated in Delaware. Facebook’s principal place of business and headquarters is located at 1601 Willow Road in Menlo Park, California. 22. Founded in 2004 by Mark Zuckerberg, Facebook is a social media company that provides online services to billions of users around the world. In exchange for providing services, Facebook collects user data, which it uses to create and sell targeted advertising services. Facebook’s principal revenue is from targeted social media advertising that it provides to advertisers as a data broker. 23. Facebook also operates as a platform for third-party applications and hardware, and owns and operates several business divisions:  Facebook. Facebook’s core application, which bears the company’s name, is, according to Facebook’s filing with shareholders, designed to enable “people to connect, share, discover, and communicate with each other on mobile devices and personal computers.” The Facebook core product contains a “News Feed” that displays an algorithmically ranked series of stories and advertisements individualized for each person.  Instagram. Instagram is a photo-sharing application that allows users to share photos, videos, and messages on mobile devices. Instagram was acquired in April 2012 and at present, Facebook operates Instagram as a separate application from its core Facebook product.  Messenger. Facebook’s Messenger application is a multimedia messaging application, allowing messages that include photos and videos to be sent from person to person across platforms and devices.  WhatsApp. WhatsApp is a secure messaging application used by individuals and businesses. WhatsApp was acquired by Facebook in 2014 for $21.8 billion, and at the time had approximately 450 million users worldwide.  Oculus. Oculus is Facebook’s virtual reality hardware line of business, which Facebook acquired in March 2014 for approximately $2 billion. 24. Facebook’s revenue as of year-end 2019 was $70.70 billion (up 27% from the previous year), with net income from operations of $23.99 billion. Almost all of this revenue came from advertising, particularly mobile advertising. As of year-end 2019, Facebook maintained $54.86 billion in cash and cash-equivalent securities. Facebook employed 44,942 people around the world at the end of 2019 (up 26% from the previous year). 25. For the 2019 fiscal year, Facebook reported to investors that on average it had 1.66 billion daily active users of Facebook and Messenger (“DAUs”) (up 9% from the previous year) and 2.50 billion monthly active users (“MAUs”) (up 8% from the previous year). Facebook also reported that on average it had 2.26 billion daily active people (“DAP”) who used any Facebook product (up 11% from the previous year) and 2.89 billion monthly active people (“MAP”) (up 9% from the previous year). JURISDICTION AND VENUE 26. This action arises under Section 2 of the Sherman Antitrust Act (15 U.S.C. § 2) and Sections 4 and 16 of the Clayton Act (15 U.S.C. §§ 15, 26). The action seeks to recover treble damages, interest, costs of suit, equitable relief, and reasonable attorneys’ fees for damages to Plaintiff and members of the Classes resulting from Defendant’s restraints of trade and monopolization of the Social Advertising Market described herein. 27. This Court has subject matter jurisdiction under 28 U.S.C. §§ 1331 (federal question), 1332 (class action diversity jurisdiction), and 1337(a) (antitrust); and under 15 U.S.C. § 15 (antitrust). 28. Venue is appropriate in this district under 15 U.S.C. § 15(a) (Clayton Act), 15 U.S.C. § 22 (nationwide venue for antitrust matters), and 28 U.S.C. § 1391(b) (general venue provision). Facebook transacts business within this district, and it transacts its affairs and carries out interstate trade and commerce, in substantial part, in this district. 29. The Court has personal jurisdiction over Facebook as it is subject to general jurisdiction in the State of California, where it maintains its headquarters and its principal place of business. The scheme, conspiracy, and monopolization alleged in this Complaint was targeted at individuals throughout the United States, causing injury to persons in the United States, including in this district. INTRADISTRICT ASSIGNMENT 30. This action is properly assigned to the San Francisco Division of this District, pursuant to Civil Local Rule 3-2(c) and (d), because Facebook is headquartered in San Mateo County (which is served by the San Francisco Division), and a substantial part of the events or omissions that give rise to the claims occurred there. FACTS III. FACEBOOK EMERGES AS THE DOMINANT SOCIAL NETWORK A. The Last Social Network Standing 31. Facebook’s meteoric rise since its founding in 2004 is well documented. The company— started in the dorm room of its CEO Mark Zuckerberg as “the facebook”—rose to prominence in the face of fierce competition from several social networks. Initially an exclusive service for elite universities throughout the United States, Facebook eventually expanded its network to encompass a general audience of users throughout the United States and worldwide. 32. Between 2004 and 2010, Facebook vanquished a number of rivals to emerge as the dominant social network in the United States. 33. Facebook’s first chief competitor was MySpace. Founded in 2003 (a year before Facebook), MySpace targeted the same audience, provided largely the same services, and rapidly attracted an enormous number of users. By 2005, MySpace had 25 million active users, and was acquired by NewsCorp for $580 million. In 2006, MySpace registered 100 million users, passing Google as the most visited website in the United States. 34. However, the next three years featured a steady downward spiral for MySpace— and countervailing growth by Facebook. In 2008, Facebook passed MySpace in worldwide active users and continued to grow, reaching 307 million active users across the globe by April 2009. In May 2009, Facebook passed MySpace in United States, 70.28 million to 70.26 million monthly active users. 35. MySpace never came close to Facebook again. By 2010, MySpace had mostly exited the market, leaving the business of social media for good. MySpace’s CEO capitulated in November of 2010: “MySpace is not a social network anymore. It is now a social entertainment destination.” In September 2010, MySpace reported that it had lost $126 million, and in June 2011, NewsCorp sold the company for $35 million—$545 million less than it had paid just six years earlier. By then, its user base had dwindled to just 3 million monthly visitors. 36. During the same time period, several other social networks also met their demise, including Google’s Orkut, AOL’s Bebo, and Friendster, which failed to scale rapidly enough to compete with MySpace and Facebook. 37. By 2009 and through 2010, Facebook emerged as the only peer-to-peer social media network to exist at scale, and no other network or company rivaled Facebook’s massive user base. On March 2, 2010, Adweek reported that Facebook had booked revenues of up to $700 million in 2009 and was on track for $1.1 billion in 2010—almost all from advertising to its newly won users. Facebook had been roughly doubling its revenues every year up until that point—$150 million in 2007, $280-300 million in 2008, and $700 million in 2009. 38. Time Magazine heralded Zuckerberg as its 2010 Person of the Year. 39. Time’s cover story set out the stakes—the scope of the newly assembled social network was unprecedented and staggering: What just happened? In less than seven years, Zuckerberg wired together a twelfth of humanity into a single network, thereby creating a social entity almost twice as large as the U.S. If Facebook were a country it would be the third largest, behind only China and India. It started out as a lark, a diversion, but it has turned into something real, something that has changed the way human beings relate to one another on a species-wide scale. We are now running our social lives through a for-profit network that, on paper at least, has made Zuckerberg a billionaire six times over. 40. By 2010, Facebook was unrivaled and dominant in a way no company since Microsoft had been in post-personal-computer history. And it had done so by riding the currents of powerful network effects. B. A New Market of Its Own Creation 41. By the beginning of the millennium’s second decade, Facebook was the indisputable king of an entirely new market—a market built not on hardware or operating system dominance, but one built on a network of people, with its power and value directly derived from their engagement with that network. The more data users fed into Facebook by communicating and interacting with each other, posting their pictures, and publishing their content, the more valuable the Facebook network became to third parties, who could advertise to Facebook’s users by targeting them using the very information they provided to Facebook’s network. 42. Data about what information users shared on their personal pages; the photos and profiles they viewed; their connections to others; what they shared with others; and even what they put in messages to other users all allowed targeted advertising on a scale that had never before existed. Unlike search advertising, Facebook’s advertising platform allowed advertisers to target Facebook’s user base by their attributes and behavior, not by a query entered into a search box. More importantly, unlike in search, user identity was not only discoverable, it was willingly provided by users—as was the identity of those users’ closest friends and family members. These identities could be tracked and targeted throughout the Internet. 43. This social data created by Facebook’s network of engaged users could be monetized in a number of ways. The data could be resold for targeted advertising and machine learning; Facebook’s machine learning algorithms mined patterns in the data for advertisers, which allowed advertisers to reach precisely the right audience to convert into sales, user signups, or the generation of sales leads. The data also could be sold by commercializing access—for example, by providing application developers, content generators, and advertisers with direct access to the information embedded in Facebook’s network, such as the interconnection between users, user attributes, and user behavior. That data then could be mined by these third parties. 44. All of the methods of monetizing social data were based on selling that data, but such data could be packaged, structured, or mined differently depending on the application for which it was being sold. For advertisers, Facebook’s network presented advertisers and Facebook itself with entirely new social signals, such as relationships, events, friendships, and granular interests. Movies, music, and books were inherent parts of a user’s profile. The amount of information in Facebook’s network that could be mined as social data was unprecedented—and Facebook received all that data daily from its millions of users in the United States and worldwide. 45. The data Facebook collected was uniquely social, derived from the engaged interactions and strong identity of Facebook’s users. Twitter, a public-facing social network, loosely enforced identity and never required users to disclose granular details about themselves. Facebook stood alone in this regard, with a clear product emphasis on individuals and their connections to others. In 2010, Google, Yahoo, and the other major online advertising sources competed in an entirely different market—one based on search data. The data Facebook had at its disposal was not fungible with search data—it was actionable data about individual users, with their identities fully ascertainable. 46. By 2010, Facebook stood alone as the dominant player in the newly emergent market for social advertising—a market in which Facebook’s own users provided Facebook with a constant stream of uniquely valuable information, which Facebook in turn monetized through the sale of advertising. Advertisers, finding no substitute from any other company, paid top dollar for Facebook’s powerful targeting and actionable data, and some of those advertisers—wittingly or not—even fed crucial data about themselves, their products, and the efficacy of their targeting back to Facebook’s network. 47. As Facebook itself explained to third-party developers in May 2007, Facebook’s core value proposition and business model was “providing access to a new kind of data—social data, which enables you to build applications that are relevant to users.” With respect to that data, Facebook told developers: “You are on a level playing field with us. You can build robust apps, not just widgets. Complete integration into the Facebook site.” By 2010, it was clear that Facebook’s entire business was selling this new form of “social data” and that it would do so by selling access to developers and selling advertisements targeting Facebook’s network of engaged and active users. C. The Social Data Barrier to Entry 48. As Facebook’s dominant position emerged in 2010, powerful network effects and feedback loops took hold and solidified that position. Data provided by users made Facebook’s network more valuable, thereby attracting more users to the network. As a typical use case, a Facebook user would invite his closest friends and family, who would then invite and engage with other friends and family members who existed on the network. A familiar feedback loop— a virtuous circle—emerged, rapidly growing Facebook’s user base. 49. The content generated by this user base, in turn, increased the value of the Facebook network. With each photograph, relationship status, check-in, or post by a Facebook user, the Facebook network became more valuable, not just as a means of communicating with directly connected acquaintances, but as a means of learning about more remotely connected 50. As Samuel Lessin, then Facebook’s VP of Product Management, explained to Mark Zuckerberg in an internal email on October 26, 2012, the data Facebook collects makes Facebook progressively more proficient at collecting and monetizing data: One of the things that puts us currently in a very defensible place is the relationship we have created between the people using Facebook all the time, and us having the information we need to make Facebook a better product. This is the fundamental insight in something like coefficient. We know more about what people want to see because people look at more stuff on our platform. In this respect, while there are other ways to get close, it feels viscerally correct that there is an ROS dynamic at play, the more people that use the system, the more information we have on how to make more people use the system. (emphasis added). 51. A barrier to entry emerged from this feedback loop. To compete with Facebook, a new entrant would have to rapidly replicate both the breadth and value of the Facebook network—a task a mere clone of that network could not accomplish. Indeed, to compete with Facebook, a competitor would not only have to build its own vast network, but would have to draw active social engagement on a massive scale—which likely would require drawing a vast quantity of Facebook users away from that platform. The costs to switch would be massive: an entrant-competitor would have to present an overall value proposition to users that not only exceeded that of Facebook’s entrenched network, but one that did so handily. Moreover, to compete with Facebook’s virtuous circle, the value delivered by an entrant- competitor platform would have to facilitate social data mining that would create even more value for users, developers, and advertisers. This barrier to entry is referred to throughout this Complaint as the Social Data Barrier to Entry (“SDBE”). 52. The SDBE protects Facebook’s ability to control and increase prices in the Social Advertising Market without the pressures of price competition from existing competitors or new entrants. Because of its monopoly power in the Social Advertising Market and the SDBE, Facebook has been able to consistently increase the price it charges for social advertising. And this is exactly what Facebook has done since it obtained its dominant position in 2010. 53. From 2011 to 2012, for example, Facebook massively increased the prices it charged for its advertisements—one of the primary sales channels for its social data. That year, costs per thousand impressions (CPM) on Facebook increased by 41%, with a 15% increase in the last quarter of 2011 alone. Cost per click (CPC), which is a measure of advertising costs paid on a by-click basis, rose 23% that same year. Facebook increased prices for social advertising as it also grew the number of advertisements it displayed on its site, indicating monopoly power in the Social Advertising Market. 54. Facebook maintained that power over its prices through 2013, with a 2.9x increase in CPMs year over year. The increase came as overall advertising revenues increased yet again—that year by a staggering 83% over the last. 55. These price increases would not be possible without the SDBE. If a rival network existed with comparable social data available for sale through advertising, Facebook’s price increases would have been met with customer migration to the comparable rival. But Facebook had no such rival and was unfettered in its ability to increase process, even while rapidly increasing its supply of data for sale through advertisement. 56. Once Facebook had achieved dominance in the Social Advertising Market, its position only improved – and became more entrenched. The more advertising Facebook sold, and the more social data Facebook collected and packaged for sale, the more effective Facebook became at selling advertising, targeting users, and commercializing direct access to its users’ social data (e.g., through APIs). This, in turn, made entry by a new rival impossible or prohibitively costly, thereby allowing Facebook to increase prices and make additional investments that deepened the SDBE moat surrounding its business. D. Google’s Failed Entry into the Social Advertising Market 57. In 2010, Google became desperate to enter the Social Advertising Market. It had tried several times to do so before, but each foray was met with failure. Google’s Orkut social network, which was launched days before Facebook, was quickly overtaken. Wave, Google’s social communication platform, never achieved any traction with users. And Google’s Buzz social network—built on the back of its highly successful Gmail product—imploded quickly in early 2010. 58. Google’s next attempt to enter the market attacked Facebook’s functionality head-on, which meant attempting to penetrate the powerful SDBE protecting Facebook’s business. Google made a massive, unprecedented investment of resources into building a product with enough value to lure users away from Facebook’s broad, highly engaged social network. 59. In 2010, Google’s Vic Gundotra became the company’s Chief Architect. Gundotra pitched a new social network to Larry Page, Google’s cofounder, who returned as CEO of the company in 2011. Gundotra repeated an ominous refrain, “Facebook is going to kill us. Facebook is going to kill us,” which frightened Page into action. 60. Page greenlit a new product, Google+. Initially, Google+ sought to leverage Google’s YouTube product to build its social network, requiring a Google+ account for access to certain key features of YouTube. In the face of significant user resistance, Google backed away from that requirement. Nonetheless, Google attempted, through Google+, to build out a “social graph” that would leverage a common user identity across Google products, including YouTube and Gmail. 61. In early 2011, Google began what insiders now refer to as “the 100-day march” toward launch of Google+. The product Google planned to deliver was, by any fair account, largely undifferentiated from what Facebook offered in terms of product features and functionality. By the summer of 2011, the planned features for Google+ included a continuous scroll product called the “stream” (a clone of Facebook’s “feed” product); a companion feature called “sparks,” which related the “stream” to users’ individual interests; and a sharing app called “Circles,” a purportedly improved way to share information with one’s friends, family, contacts, and the public at large. 62. Unlike Google’s past products, Google+ was not designed to organically grow and scale from small beginnings. From the outset, Google invested massive amounts of resources to bring a finished, full-scale social network to market. Calling the project “Emerald Sea,” Google conscripted almost all of the company’s products to help build Google+. Hundreds of engineers were involved in the effort, which remained a flagship project for Page, who had recently reassumed the Google CEO role. Google’s Gundotra was quoted explaining that the product that would become Google+ was a transformation of Google itself: “We’re transforming Google itself into a social destination at a level and scale that we’ve never attempted—orders of magnitude more investment, in terms of people, than any previous project.” 63. The amount of resources Google brought to bear stood in stark contrast to its previous attempts at penetrating the Social Advertising Market. Google had dedicated barely a dozen staff members to its previous failed social network product, Buzz. At its peak, Google+ involved 1,000 employees from divisions across the country. Google, for example, ripped out its elaborate internal video conferencing system and forced employees to use the Google+ Hangouts video chat feature, which one internal employee described as “janky.” Employee bonuses were tied to the success of Google+. And the entire project was confined to a level of secrecy never before seen at Google. 64. Google+ was released on June 28, 2011. The product included the “stream,” the “Circles” app, the “Hangout” video chat and messaging product, and a photo sharing product. The resemblance to Facebook was striking. As one internal Google employee commented: “this looks just like Facebook. What was the big deal? It’s just a social network.” Another Google employee was quoted as saying, “All this fanfare and then we developed something that in the end was quite ordinary.” One thing was indisputable: with the release of Google+, Google had challenged Facebook head-on by effectively cloning Facebook’s product. Because Google’s user base was already massive, the Google+ product attracted millions of users shortly after launch. But though these users signed up for Google+, Google quickly found out they were not using the product. As one former Google employee explained: It was clear if you looked at the per user metrics, people weren’t posting, weren’t returning and weren’t really engaging with the product. Six months in, there started to be a feeling that this isn’t really working. 65. The problem for Google+ was the powerful network effect that reinforced the SDBE that protected Facebook. Google’s clone of Facebook did not present enough new value to overcome massive network-based switching costs—the cost to Facebook users of shifting away from an existing networked product in which the users had actively invested their social data for 66. Paul Adams, a former Google+ user-experience team member, summed it up succinctly when asked why Google+ had failed: What people failed to understand was Facebook and network effects. . . . It’s like you have this grungy night club and people are having a good time and you build something next door that’s shiny and new, and technically better in some ways, but who wants to leave? People didn’t need another version of Facebook. 67. By 2014, Google+ was declared a failure and Gundotra, its founder, eventually left Google. Within just a few years, Google—with all of its resources, developers, and existing user base— failed entirely to overcome the SDBE protecting Facebook. As long as Facebook controlled the data derived from an engaged and active user base, it could continue to keep that user base active and engaged. 68. The only way to disrupt this virtuous circle was with a rival product that provided significantly more or different value than Facebook, and that itself was propelled to scale by powerful network effects. IV. A THREAT TO FACEBOOK’S MONOPOLY: THE RISE OF SMARTPHONES AND MOBILE APPS A. The Mobile App Revolution 69. In 2009 and 2010, as Facebook emerged the undisputed winner of the social media wars, another new market had begun to take hold. The launch of the Apple iPhone in 2007 created a market for a new type of cellular phone: one with a user interface capable of robust Internet connectivity and messaging. No longer constrained by numeric keypads for texting—or clunky, permanent alphanumeric keyboards attached to phones, such as with the Treo or Sidekick cellular phones—the iPhone dynamically displayed a multi-touch keyboard and came equipped with a full-featured web browser that rendered complete web pages. 70. By the summer of 2008, Apple’s newest iPhone, the iPhone 3G, was released with onboard GPS and other hardware upgrades. Accompanying the release of the new iPhone was a new store for third-party applications that would run natively on the iPhone: the Apple App Store, which opened for business on July 10, 2008, the day before the release of the iPhone 3G. 71. Developers who launched their third-party applications via the App Store reaped huge rewards. There were approximately 500 apps available at the App Store’s initial launch. Games using the iPhones accelerometer became immediate successes, some quickly earning hundreds of thousands of dollars by selling downloads for just a few dollars each. Applications that exploited the new GPS functionality in the iPhone also quickly became popular. By September 2008, the Apple App Store had racked up 100 million downloads, and by 2009, it hit 1 billion. iPhone apps had become a new means to deliver scaled value to countless users. 72. Google also launched what became its Play Store (initially known as Android Market) in 2008. It soon overtook Apple’s App Store in terms of overall volume, with 82% growth. The mobile app revolution had begun. 73. Mobile apps rapidly proliferated, with huge opportunities for further growth—as the lion’s share of cell phone activity by 2010 had become something other than making phone calls. For example, a 2010 Pew Research survey showed that taking pictures and sending text messages had become the most common uses for cellular phones among adults, with more than a third of adult cell phone users accessing the Internet, playing games, emailing, recording video, or playing music through their cell phones. At the same time, 29% of adult cell phone users had used a downloaded app. 74. A 2010 Nielsen survey showed that games, news/weather, maps and navigation, and social networking were the most popular apps on cellular phones. 75. Notably, mobile apps resonated most strongly with the demographics that had recently adopted social media and were providing their data to Facebook in droves. App users the age of 20 and another 41% between the ages of 30 and 49. These were the same demographics that were rapidly adopting social media as part of their lives and providing Facebook with the social data that built and maintained the SDBE that protected its business. 76. Many of the mobile apps that were rapidly attracting users were doing so because they presented their own specialized value propositions. These apps had to be specialized because cellular phone screens were smaller, particularly in 2010, and mobile traffic was driven by specialty software, often designed for a single purpose. Users signed up for these apps with their e-mail addresses and personal information and interacted directly with the apps. 77. As WIRED Magazine described in 2010, a typical user moved from app to app, each with some specialized use: You wake up and check your email on your bedside iPad—that’s one app. During breakfast you browse Facebook, Twitter, and the New York Times—three more apps. On the way to the office you listen to a podcast on your smartphone. Another app. At work, you scroll through RSS feeds in a reader and have Skype and IM conversations. More apps. At the end of the day, you come home, make dinner while listening to Pandora, play some games on Xbox Live, and watch a movie on Netflix’s streaming service. 78. In 2010, Morgan Stanley projected that within five years, the number of users who accessed the Internet from mobile devices would surpass the number who accessed it from PCs. The Internet was at an inflection point—the World Wide Web was no longer the dominant way to access information. Users were obtaining their information from specialized walled gardens, and Facebook’s own walled garden was one app away from being superseded. 79. The years leading up to 2010 saw the rise of streaming apps, such as Netflix and Pandora, and e-book readers, such as Kindle and iBooks. Apple’s 2010 list of top-grossing iPhone apps included mobile games such as Angry Birds, Doodle Jump, Skee-Ball, Bejeweled 2 + Blitz, Fruit Ninja, Cut the Rope, All-in-1 GameBox, the Moron Test, Plants vs. Zombies, and Pocket God. Facebook’s mobile app topped the list of free downloads in the App Store, along with Words with Friends, Skype, and the Weather Channel App. B. Facebook Recognizes the Looming Threat Presented by Mobile Applications 80. By 2011, Facebook realized that it had fallen behind. Facebook had just debuted its new “Timeline” product, a controversial modification of the Facebook feed that generated dynamic content for each user rather than a static series of posts visible to the user. Facebook had spent the last eight months prioritizing its desktop experience and its new Timeline product. But while it did so, mobile applications continued their meteoric rise. 81. Facebook’s own mobile application was built on a technology called HTML5, which at the time was good for building web pages but not for building mobile apps native to iOS and Android smartphones. As a result, Facebook’s mobile app was buggy, prone to crashes, and painfully slow. As Zuckerberg would lament years later about HTML5, “We took a bad bet.” 82. Zuckerberg reflected in 2018 that Facebook had fallen behind when mobile apps emerged: One of my great regrets in how we’ve run the company so far is I feel like we didn’t get to shape the way that mobile platforms developed as much as would be good, because they were developed contemporaneously with Facebook early on. I mean, iOS and Android, they came out around 2007, we were a really small company at that point – so that just wasn’t a thing that we were working on. 83. As mobile apps rose, Facebook’s desktop product acquired users at a slower pace. All of this occurred as Facebook was planning its initial public offering. Facebook knew that its position was eroding and that if mobile growth continued, its IPO debut would be in the midst of material changes to its business, undermining Facebook’s financial and qualitative disclosures to public investors. 84. But there was no avoiding the issue. Facebook held its IPO on May 18, 2012. By the time Facebook released its first annual report, the trend was unmistakable—the transition to mobile devices from desktop web-based applications posed an existential threat to Facebook’s business. In its 2012 Form 10-K, Facebook disclosed this risk to shareholders as one of the factors that affected its bottom line: Growth in the use of Facebook through our mobile products as a substitute for use on personal computers may negatively affect our revenue and financial results. We had 680 million mobile MAUs in December 2012. While most of our mobile users also access Facebook through personal computers, we anticipate that the rate of growth in mobile usage will exceed the growth in usage through personal computers for the foreseeable future and that the usage through personal computers may decline or continue to decline in certain markets, in part due to our focus on developing mobile products to encourage mobile usage of Facebook. For example, during the fourth quarter of 2012, the number of daily active users (DAUs) using personal computers declined modestly compared to the third quarter of 2012, including declines in key markets such as the United States, while mobile DAUs continued to increase. While we began showing ads in users’ mobile News Feeds in early 2012, we have generated only a small portion of our revenue from the use of Facebook mobile products to date. In addition, we do not currently offer our Payments infrastructure to applications on mobile devices. If users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to continue to grow mobile revenues, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected. C. The Facebook Platform 85. Although Facebook faced a looming threat from mobile applications, it maintained an important source of leverage: its social data. Facebook possessed (and continued to receive) vast quantities of information about its massive user base, including how each user was connected to others. This information was valuable to both new and existing mobile applications, which could leverage Facebook’s social data to obtain new users and to build novel social features, functions, and apps. 86. Facebook referred to its network as its “Graph,” coined after a mathematical construct that models connections between individual nodes. The Facebook Graph contained user “nodes,” with connections and information exchanged among nodes as “edges.” Facebook coined the term “Open Graph” to describe a set of tools developers could use to traverse Facebook’s network of users, including the social data that resulted from user engagement. 87. Importantly, Open Graph contained a set of application programming interfaces (“APIs”) that allowed those creating their own social applications to query the Facebook network for information. As Facebook explained in its 2012 Form 10-K: Open Graph. Our underlying Platform is a set of APIs that developers can use to build apps and websites that enable users to share their activities with friends on Facebook. As Open Graph connected apps and websites become an important part of how users express themselves, activities such as the books people are reading, the movies people want to watch and the songs they are listening to are more prominently displayed throughout Facebook’s Timeline and News Feed. This enables developer apps and websites to become a key part of the Facebook experience for users and can increase growth and engagement for developers. 88. Open Graph, along with other Facebook products, such as its NEKO advertising and Payments products, comprised Facebook’s Platform. The Platform was vital to Facebook’s business because it ensured that engagement continued on Facebook. Without the Platform, Facebook would be required to build applications that increased the value of its network itself— meaning that Facebook would have to try to predict what applications users wanted; design, code, and scale those applications across its user base and network; and bear the risk and resource drain of guessing wrong and making mistakes. 89. Facebook did not have the resources to do this, so it decided instead to allow third parties to build applications for the Platform. As Mark Zuckerberg observed in a February 2008 email to Facebook’s VP Engineering for Platform Michael Vernal, a senior Zuckerberg lieutenant who was in part responsible for creating Open Graph: Platform is a key to our strategy because we believe that there will be a lot of different social applications And we believe we can’t develop all of them ourselves. Therefore . . . . It’s important for us to focus on it because the company that defines this social platform will be in the best position to offer the most good ways for people to communicate and succeed in the long term. 90. Put simply, Facebook could either speculate on new social applications by building them itself or it could provide a platform for others to do so. For years, Facebook opted to provide a platform until it was able to develop its own social applications. 91. But Facebook also recognized that developers on its Platform could potentially pose a competitive threat. In its 2012 annual report, Facebook disclosed the following significant risk factor to its operations: In addition, Platform partners may use information shared by our users through the Facebook Platform in order to develop products or features that compete with us. As a result, our competitors may acquire and engage users at the expense of the growth or engagement of our user base, which may negatively affect our business and financial results. 92. Thus, Facebook knew that competition could come from its own third-party application developers. But Facebook nevertheless actively sought developers to build applications on its Platform because of the potential to extract profits from the applications these developers built and the users they attracted to, and engaged on, Facebook’s network. 93. As Facebook explained to its investors in 2012, maintaining a Platform on which developers could build applications meant more engagement and therefore greater ad revenues for Facebook: Engagement with our Platform developers’ apps and websites can create value for Facebook in multiple ways: our Platform supports our advertising business because apps on Facebook create engagement that enables us to show ads; our Platform developers may purchase advertising on Facebook to drive traffic to their apps and websites; Platform developers use our Payment infrastructure to facilitate transactions with users on personal computers; Platform apps share content with Facebook that makes our products more engaging; and engagement with Platform apps and websites contributes to our understanding of people’s interests and preferences, improving our ability to personalize content. We continue to invest in tools and APIs that enhance the ability of Platform developers to deliver products that are more social and personalized and better engaged people on Facebook, on mobile decides and across the web. 94. Facebook’s Platform was valuable to Facebook in several important ways. 95. First, the Platform meant that new applications would be built on Facebook’s network, increasing the value of Facebook’s network as the applications became more popular. The increased engagement with Facebook as a result of these new applications translated to better-targeted content and higher advertising revenues. 96. Second, Facebook would not need to spend significant resources to develop new applications or test new business models—third parties would do that instead. Facebook could merely wait for an application built for its Platform to gain widespread adoption, then either build a competing application or passively glean the benefits of that popular application’s user engagement, including valuable new social data for Facebook and its network. 97. Third, access to Facebook’s network was itself valuable to third-party developers, so Facebook could charge developers—most notably, through API access and advertising purchases—to access Facebook’s Platform and the social data it collected from Facebook’s massive number of engaged users. D. The Profitable Open Graph Platform and Mobile Install Business 98. Facebook continued to struggle to catch up with the new onslaught of mobile applications, but it recognized that the new apps required aggressive user growth to be profitable. Among other things, Facebook’s APIs allowed mobile app developers to query the friends of a person’s friends, which allowed mobile applications to find other users who might be interested in using their apps. 99. Mobile apps also could use Facebook to communicate across Facebook’s network, either directly with a user’s friends or with others not directly connected with the user. A mobile payment application, for example, could enable two strangers to pay each other, even if they were not directly connected on Facebook—so long as both of them existed somewhere on Facebook’s Platform. A user of a dating application, such as Tinder, could use Facebook’s APIs to find a compatible date, either in the extended network of one’s friends or beyond—anywhere on Facebook’s Platform. 100. Facebook quickly realized it could monetize the value of its network through third-party mobile applications, and it moved aggressively to do so, beginning with games built to run on Facebook’s Platform. Those games, many of which were social games that allowed users to play with and against each other, sought above all else new users to increase their adoption. Facebook’s Vernal sought to obtain a beachhead with these applications, monetizing each additional game install that resulted from the use of Facebook’s Platform or from Facebook’s advertising product, NEKO. 101. For example, Facebook included ads as “stories” on user timelines that indicated whether the user knew other users who were playing a particular game. Facebook then monetized such advertisements when the game obtained new users from them. As Vernal explained in a May 2012 e- mail: The biggest/most efficient market segment for advertising on mobile today is driving app installs. This is at least partly because it’s the most measurable—if you know that you get $0.70 from every game you sell, then in theory you can afford to pay up to $0.69/install. This kind of measurability allows for maximal bidding. So, what we’re trying to do is kickstart our sponsored stories business on mobile by focusing on one particular type of story (is- playing stories) and one market segment (games), make that work really well, and then expand from there. 102. Facebook thus leveraged its most valuable asset—the information it had about its users, their interests, and most importantly, their friends—to make money from the proliferation of mobile games. 103. Games like Farmville, a mobile application that allowed players to create their own simulated farms, quickly took off because of Facebook’s Platform. Facebook increasingly recognized that it could obtain engagement from users through the game itself. 104. This strategy led to a broader one, in which Facebook drove app installs by allowing developers to advertise to its user base and traverse Facebook’s social network through the Facebook APIs. Facebook collected a fee for each app install that resulted from its network. Vernal outlined the plan in detail. 1/ Create new iOS + Android SDKs, because the current ones are terrible. Ship Thunderhill so we get even broader adoption of our stuff. 2/ Wire them up to make sure we know when you’re playing a game (so we can generate the same kind of is-playing stories we can on canvas). 3/ Generate a bunch of effective, organic distribution for these games via our existing channels (news feed, net ego on both desktop + mobile). Ship send-to-mobile, which allows us to leverage our desktop audience to drive mobile app traffic. 4/ Create an even better app store than the native app stores (our app center) and make a lot of noise about it, so developers know that they should be thinking about us to get traffic to their mobile apps. 5/ Introduce a paid offering, probably cost-per-install (CPI) based, where you can pay us to get installs from your mobile app. Primary channels for this paid distribution are News Feed and App Center (on desktop + mobile) as well as RHC on desktop. 105. The strategy was clear, not just for gaming, but for mobile apps. Facebook would make money by allowing app developers to leverage its user base. Facebook would advertise social games to its users by plumbing their social data—including data about when they played games and which of their friends played them—and in exchange, Facebook would receive some amount of money per install, which would be the app developer’s cost-per-install (CPI). The same plan would work for mobile applications generally. 106. By the end of 2011 and the beginning of 2012, Facebook began discussing other ways to monetize its Platform, including its Open Graph APIs. One way was to sell API access based on usage. Zuckerberg and top executives at Facebook extensively debated a tiered approach to API access. Facebook deliberated over a pricing model for API access, and internally decided that it would be possible to sell API access to third-party developers. Facebook also decided that it could bundle API access with the ability to advertise on Facebook. However, as explained below, Facebook gave up the profits it could glean from API access for the chance to dominate the Social Advertising Market entirely, excluding competitors (both actual and potential) and leveraging network effects to achieve and maintain monopoly power. V. FACEBOOK WEAPONIZES ITS PLATFORM TO DESTROY COMPETITION A. Facebook Makes Plans to Remove Vital Friends and News Feed APIs and Refuses to Sell Social Data to Competing Application Developers 107. Although Facebook had made significant amounts of revenue and profit selling access to its social data through its APIs and its NEKO advertising system and had planned to expand that business, it chose not to, sacrificing those significant profits. 108. By the end of 2011 and the beginning of 2012, Zuckerberg along with Facebook’s Vice President of Growth, Javier Olivan, its VP of Product Management, Samuel Lessin, and Michael Vernal internally debated a plan to prevent third-party developers from building their own competing social networks that could be capable of generating engagement and social data independent of Facebook’s Platform. 109. Emerging mobile applications such as Line, WeChat, and Instagram were creating their own vast user bases with identity and login features separate from the Facebook Platform. Their increasing ubiquity posed an existential threat to Facebook’s core business, which relied heavily on engagement from its user base. These applications provided quintessentially social applications, such as image sharing, messaging, and payments—a direct threat to Facebook’s own applications, including Facebook’s own fledgling Messenger application. 110. Mobile applications were rapidly eating away at Facebook’s dominance, which relied heavily on its web-based desktop product. Zuckerberg openly acknowledged that its desktop applications were not the future and that native phone apps would dominate the mobile web in the future. 111. Zuckerberg therefore sought to consolidate core applications into its own centralized Facebook application, noting in a March 2012 Q&A with employees that Facebook was “building towards social Facebook versions where you can use the individual app or the Facebook version.” That is, users could “replace whole parts of your phone with these Facebook apps and [they] will be a whole package for people.” 112. Beginning in the fall of 2011 and well into 2012, Mark Zuckerberg and his chief lieutenants, Lessin and Vernal, planned to address the looming mobile applications threat. Their solution was a scheme to disrupt the massive growth of mobile applications by attracting third-party developers to build for Facebook’s Platform and then remove their access to the APIs that were most central to their applications. They would accomplish this by leveraging Facebook’s “Friends” and “Timeline” APIs, as well as other vital APIs, including those relating to messaging. 113. The Friends APIs let third-party developers traverse the Facebook Graph, searching through a user’s friends as well as the friends of their friends. Zuckerberg and his executives proposed modifying the APIs to deny third-party developers access to information about a user’s friends (and the friends of their friends) unless that developer’s application was already installed by a user’s friends to begin with. This ensured that new applications could not obtain new users or use Facebook’s social data to increase the value of their application. 114. Facebook also foreclosed developers from continuing to extract information about a user’s friends from their timeline or news feed. Thus, third-party applications that relied on the stream of information that flowed through a user’s news feed, such as a post about a friend of the user getting engaged or sharing a news article, would be abruptly left with none of the social data they needed to function. 115. Removing access to these APIs halted the growth of tens of thousands of third- party applications that relied on these essential APIs and were, in Facebook’s view, threatening Facebook’s dominance by eroding the SDBE that protected Facebook’s business. 116. Facebook’s plan prevented any competitive third-party application from buying social data from Facebook, either through its Platform APIs or through its advertising Platform. As Vernal explained to Lessin in August of 2012, Facebook would “not allow things which are at all competitive to ‘buy’ this data from us.” 117. Facebook thus refused to sell its social data to any competitive third-party developer, sacrificing significant short-term profits in exchange for a competitive advantage in the Social Advertising Market. If not for the prospect of driving these competitors out of the markets in which Facebook competed, the decision to refuse to sell social data to third-party developers made no economic, technical, or business sense. 118. Third-party developers with successful applications increased the value of Facebook’s overall network by increasing engagement and generating the very social data Facebook sold through its targeted advertising channels, including to developers. As Zuckerberg had observed years earlier, Facebook itself could not broadly develop new third-party apps or anticipate what apps would be successful, so it relied on third parties to do so. Refusing API and social data access to third parties meant that they could not develop the applications that were vital to Facebook’s growth, engagement, and advertising revenue. Facebook decided to deliberately sacrifice the value its third-party developers provided to secure dominance in the Social Advertising Market. B. Facebook’s Social-Data Heist 119. In May 2012, Zuckerberg decided to use the threat of blacklisting from its Platform to extract precious social data from some of Facebook’s competitors. He instructed his executives to quietly require “reciprocity” from major competitors that used Facebook’s Platform. The reciprocity Zuckerberg demanded was the very lifeblood of these competitors’ businesses— the social data harvested from user engagement on their competing networks. 120. By the middle of 2012, Facebook began to block some of its competitors from using its Platform and thereby obtaining Facebook’s social data. Facebook had already blocked Google, including its competing social network Google+, from access to Facebook’s APIs and advertising platform. With respect to Twitter, Instagram, Pinterest, and Foursquare, Facebook would demand “reciprocity” or blacklist them. Reciprocity, of course, meant that these competing social networks would have to hand over their most valuable asset—their social data—to their rival Facebook. 121. If rivals did not comply with Zuckerberg’s demands to hand over their social data to Facebook, Facebook would simply take it. In May 2012, Vernal directed his subordinates, Douglas Purdy (Director of Engineering for Platform) and Justin Osofsky (VP of Global Operations), to build “our own hacky scraper” and a “bunch of scrapers” to crawl rival sites like Twitter and Instagram and harvest their social data—with or without their consent. If Twitter or Instagram refused to agree to Zuckerberg’s “reciprocity” proposition, Facebook would use the scrapers to obtain the data instead. 122. In August 2012, Facebook considered broadening its list of companies to shake down for social data—or to block entirely from Facebook’s Platform. That month, Facebook’s then VP of Business and Marketing Partnerships, David Fischer identified other potential product categories and competitive companies in each category to block: I’d expect that a large part of the market for our network will come from current and potential competitors. Here’s the list that Jud worked up of what we’d likely prohibit if we were to adopt a ban on “competitors” using a broad definition:  Social network apps (Google+, Twitter, Path, etc.)  Photo sharing apps (Picasa, Flickr, LiveShare Shutterfly, etc.)  Messaging apps (WhatsApp, Viber, Imo, KakaoTalk, etc.)  Local apps (Google+ local, Google Offers, Yelp, yp, etc.)  Social search apps (HeyStaks, Wajam, etc.)  Platforms (Google Play, Amazon, etc.) 123. Facebook thus identified its direct, horizontal competitors for social data, including those competitors that had, or could create, rival social advertising platforms. These categories of competing applications, particularly on mobile platforms, threatened Facebook’s business because they created social networks independent of Facebook, each capable of generating their own valuable social data. If Facebook lost control over these companies, it would lose access to the social data they generated, which meant Facebook’s own product could not drive engagement and sell advertising. 124. In August 2012, Facebook gave a presentation to its Board of Directors that included various revenue models to monetize its Platform, including its APIs. The Board understood that Facebook could monetize its Platform by charging per company, per application, per user, or per API call. 125. But Facebook opted to do none of those things. Instead, it decided to sacrifice those profits in the short term to obtain complete control over the growing mobile application and advertising markets, thereby maintaining and furthering its dominance of social data and the Social Advertising Market. 126. Facebook’s plan was to instead block competitors from using its Platform, thereby preventing them from eroding the SDBE that protected Facebook’s business. In the case of a select few companies with social data that Facebook needed to maintain and grow its own business, however, Facebook would coerce them into agreements to share their most valuable social data with Facebook. If they refused, Facebook would blacklist them and take it from them anyway with its own crawling software that would scrape their public-facing site for information. 127. In September 2012, Zuckerberg formalized his order to shut down the Friends and News Feed/Timeline APIs and to coerce rivals into providing their valuable data to Facebook on pain of blacklisting. On October 30, 2012, Vernal notified his subordinates of Zuckerberg’s decision: We are going to dramatically reduce the data we expose via the Read API . . . . We are going to change friends.get to only return friends that are also using the app Since friends.get will only returned other TOSed users’data [data from users that agreed to an application’s terms of service], that means we no longer need the friends’ permissions. We are going to remove/whitelist access to the Stream APIs [the News Feed API]. We are going to limit the ability for competitive networks to use our platform without a formal deal in place We are going to require that all platform partners agree to data reciprocity. 128. This decision meant several things: (1) when a third-party application called the Friends APIs, it could not obtain information about a user’s other friends unless those friends already had installed the application; (2) the News Feed APIs would no longer provide information about a user’s connections; (3) access to those API could be “whitelisted” for third-party developers that were offered—and agreed to—data reciprocity; and (4) reciprocity would be required for any access to the APIs. 129. In November 2012, Osofsky, who was then head of Facebook’s Platform, summarized the policy changes required by the decision: Policy changes: define competitive networks + require they have a deal with us, regardless of size. Maintain size-based thresholds for all other developers to force business deals. Require data reciprocity for user extended info to ensure we have richest identity. 130. Facebook knew that these changes would eliminate the “growth channel used by 23% of all Facebook apps” and that 89% of the top 1,000 iPhone apps relied on the full friends list API, with 75% of the top 1,000 iPhone apps relying on the Friends permissions APIs. Facebook determined that popular applications on its platform with millions of customers would break as a result of the decision including FarmVille, ChefVille, CityVille, Skype, Spotify, Xobni, Texas Holdem, Yahoo, Trip Advisor, Microsoft’s Birthday Reminders, Samsung’s clients, Glassdoor and dozens of others. 131. On November 19, 2012, Zuckerberg broadly announced his decision to block competitors or require full data reciprocity for continued access. Facebook’s COO Sheryl Sandberg immediately ratified the decision, adding that “we are trying to maximize sharing on Facebook, not just sharing in the world,” with the note that the distinction was a “critical one” and the “heart of why.” 132. Facebook began preparing its 2013 plan for its mobile advertising business, which included the launch of a new version of its Platform, version 3.0. Platform 3.0 would (according to Facebook) facilitate Facebook’s transition from its desktop advertising business to a mobile advertising business. A central element of the transition plan was the implementation of Zuckerberg’s decision to remove the Friends and News Feed APIs. 133. Vernal explained Zuckerberg’s decision to other Facebook employees in November 2012, noting that he believed the amount of data that Facebook required from competitors was “crazy”: [A company must share] every piece of content by that user that can be seen by another user. What Mark is saying is he wants certain partners (I assume not all) to give us news feeds on behalf of their users, which is kind of crazy. 134. Facebook continued to formalize its plan to require the right to crawl the sites of its competitors as a condition of access to its Platform. In November 2012, Facebook’s Group Product Manager, Rose Yao explained the scheme: We also reserve the right to crawl a partner website for the user’s data. Partners cannot blacklist or block Facebook from crawling your site or using the API. If they do, Facebook reserves the right to block the partner from using our APIs The theory behind Action Importers was that we needed to balance the leverage. You can call our APIs and access our data, as long as we can call your APIs (if you have them) or crawl your web site (if not) and access your data. It’s one thing to drag your heels, but if we’re the ones doing the work then we force you to make a decision—either you allow us access to your data, or you block us. If you block us, then it’s really easy/straightforward for us to decide to block you. What’s changed? When we first started discussing this, we were talking about doing this only for top partners. I think a lot of folks interpreted this as just a negotiation tactic—we’d just threaten to do this if they didn’t cooperate. What’s changed between then and now is that this is now very clearly not a negotiation tactic—this is literally the strategy for the read-side platform. (emphasis added.) 135. Thus, what began as a negotiation strategy to extract social data from rivals became the foundation of Facebook’s Platform strategy. For competitors that posed enough of a threat to create their own rival network, Facebook required them to hand over the only leverage they had—the social data they derived from their users’ engagement. 136. For some rivals that directly competed, no amount of data would justify access to Facebook’s Platform, and for nascent threats that relied on Facebook’s platform that did not have any useful data to extract, Facebook’s decision was to simply cut off their access to the Friends and News Feed APIs, killing their businesses almost immediately. 137. Vernal expressed concern about the strategy to Zuckerberg in November 2012, noting that he was skeptical that competitors such as Pinterest would allow Facebook to take their social data. If they, as well as others, did, Facebook would become a central exchange for data collected among competitors. That is, competitors would share the data to Facebook and Facebook would then share that data back to the competitors that participated in the scheme. Facebook would become a data-passthrough mechanism. 138. In December 2012, despite recognizing that API access, particularly when bundled with Facebook’s NEKO advertising platform, was profitable, Facebook decided not to charge for API access and began full implementation of Zuckerberg’s decision. 139. Although Facebook had planned to announce its decision not to allow access to Friends data through its Friends and News Feed APIs in a public blog post, Zuckerberg vetoed that decision in December 2012. Instead, Zuckerberg decided to enforce the decision selectively and covertly after deliberately analyzing Facebook’s competitors. Some competitors would be blocked entirely from the APIs, while some select few would be blocked only if they did not provide their own social data to Facebook. C. Facebook Targets Its Competitors for Reciprocity or Denial of API Access 140. Beginning in January 2013, Facebook began an internal audit of all of the applications that relied on its Platform. It immediately identified competitors to shutdown entirely from accessing Facebook’s APIs or advertising platform. Specifically, Zuckerberg ordered that WeChat, Kakao, and Line be restricted from using the Friends and News Feed APIs and even from advertising on Facebook’s NEKO and other platforms. 141. Facebook’s David Fischer balked at the decision, noting that blocking competitors even from the advertising platform was irrational and unworkable: I continue to believe we should allow ads from competitors for several reasons: We should be secure enough in the quality of our products to enable them to compete effectively in the open marketplace It looks weak to be so defensive. This will be a challenge to enforce. We have many competitors and the list will grow in time. How will we judge retailers and e-commerce sites as we grow Gifts, since they arguably are competitors too? 142. Fischer was right. The decision made no rational economic or business sense. The sole purpose of refusing to sell social data as part of the Facebook Platform or through advertising was to shut out competition and allow Facebook to dominate the Social Advertising Market. Aside from that anticompetitive purpose, the decision to refuse to sell social data or advertisements even at full price was so facially irrational that Facebook’s own employees who may not have been fully privy to the anticompetitive scheme protested at the irrationality of the decision. 143. That same month Facebook’s Osofsky pleaded with Vernal to make an announcement that would send a clear signal to developers, but Vernal responded that Zuckerberg had already rejected that approach. As Vernal explained, telling developers about the decision means bearing the “very real cost” of “changing the rules,” including the “PR cost” of betraying developers that Facebook had induced to build for Facebook’s APIs and Platform. 144. That same month, Facebook continued to implement Zuckerberg’s decision to blacklist competitors. He ordered that Facebook competitor Vine be “shut down” from Facebook’s API and Platform, including from advertising. Facebook had again sacrificed the profits it would glean from increased engagement and advertising revenue as a result of Vine’s use of Facebook’s Platform in exchange for the exclusion of Vine from the competitive landscape. 145. Indeed, Facebook’s mobile advertising platform was growing rapidly, and blocking large companies from using it made no economic sense other than to effectuate Zuckerberg’s scheme to prevent rivals from competing with Facebook. In a January 20, 2013 email, Facebook’s then-Director of Product Management and Platform Monetization team, Deborah Liu reported: “Neko grew another 50% this week! Hit a high of $725k Friday (see charge below). We are now 5% of total Ads revenue and 21% of mobile ads revenue.” 146. Lessin responded to the news: “The neko growth is just freaking awesome. Completely exceeding my expectations re what is possible re ramping up paid products.” 147. Liu was clear, however, that the increased revenues occurred notwithstanding the blacklisting of formerly large spenders, such as WeChat: “WeChat and other competitive networks are no longer advertising on Neko based on policy.” 148. In February of 2013, Facebook shut down Yahoo’s access to key APIs, resulting in direct negotiations between Yahoo’s Marissa Mayer and Facebook’s Sheryl Sandberg in order to restore Yahoo’s access to the Facebook Platform. 149. In March 2013, Facebook’s key Platform employees began to voice concern that the approach taken by Facebook of shutting down access and then coercing “data reciprocity” was problematic. They instead encouraged making an upfront announcement that the APIs would be unavailable and then negotiating a deal for access to Facebook’s Platform. In an e-mail that month from Purdy to other Facebook employees and executives, he wrote: I have been thinking about the challenges around reciprocity and competitive enforcement (friends.get, etc.) and fact that it is all post facto. The way we are structured today, you build an app on FB and then launch and then we may just shut you down, harming users and the developer. I wonder if we should move as quickly as possible to a model in product where all you get from platform is login (basic info) and sharing without approval. All other APIs are available in development, but have to be approved before the app launches to real users (basically all apps using friends.get have to have that capability approved). We are roughly on course to deliver this as part of unified review, save for the more granular approval for things like friends.get? What I love about this too is we could make our whitelists so much cleaner by making each capability an approval thing. Marie: I think makes your “deprecations” much easier. Thoughts? 150. Although Facebook moved towards full deprecation of the APIs with the exception of those with whitelisting agreements, it continued its campaign of quietly shutting down competitors’ access to the APIs and then asking them to make a reciprocity deal. Indeed, Facebook soon thereafter shut down three competing Amazon apps, resulting in Amazon protesting that the decision “will break 3 of our live integrations.” 151. That same March in 2013, Facebook used API and Platform access as leverage to acquire rival Refresh.io. Facebook internally decided that it would threaten Refresh.io with denial of access to the APIs unless it sold its business to Facebook. That same form of leverage would be used to acquire other rivals—either they sold to Facebook or they saw their business ejected from Facebook’s Platform. 152. In 2013, Facebook also began using mobile spyware company Onavo to secretly track application usage on customers’ phones. Onavo, through deceptive terms of service, tracked app usage in real time, and Facebook used that data to target specific competitors. By April 2013, Olivan was using Onavo to track Snapchat, Pinterest, WhatsApp, Tumblr, Foursquare, Google, Path, vine, Kik, Voxer, MessageMe, Viber, GroupMe, Skype, Line, and Tango. One internal Olivan presentation contained detailed usage data for these applications from August 2012 to March 2013. 153. By July 2013, Onavo data was providing detailed intelligence to Facebook on 30 million Onavo users. Among all of the apps, the data showed the meteoric rise of WhatsApp, a direct competitor to Facebook’s own fledgling product, Messenger. 154. Armed with detailed intelligence about its competitors—both on and off the Facebook Platform—Facebook ordered a detailed audit of Facebook applications that relied on the Friends and News Feed APIs. 155. Facebook’s Director of Developer Platforms & Programs, Konstantinos Papamiltiadis, reported back that there were 40,000 apps using the APIs that were to be restricted, with 7% of them being photo or video sharing apps. 156. Facebook then began to categorize these third-party applications into three general categories: (1) developers that “may cause negative press” if their access to APIs were shut down; (2) applications that “provide strategic value”; and (3) applications that were “competitive” or “not useful to FB. Application developers that would experience “a Major Business Disruption/Kill” as a result of the restriction of API access received a “PR flag.” 157. In response to the categorization, Lessin immediately ordered his subordinates to “shut down access to friends on lifestyle apps . . . because we are ultimately competitive with all of them.” (emphasis added). 158. As Facebook continued its analysis of the applications that relied on the Friends and News Feed APIs, it became clear that Facebook’s plan would result in the deprecation of the “majority of the API surface”—namely, the APIs that were the most essential parts of the Facebook Platform. D. The Decision to Remove Developer Access to the Friends, News Feed and Other Crucial APIs Lacked Any Legitimate Justification 159. The engineers tasked with implementing Zuckerberg’s decision to restrict access to the APIs were baffled. The decision made no technical sense whatsoever. Indeed, there was no justification for it other than to squelch competitors who threatened Facebook’s dominant position and SDBE. 160. As Facebook engineer, David Poll, had written to all Platform Engineers earlier in 2011, the decision would mean gutting the Facebook Platform of functionality used—and needed—by some of the most important mobile apps built on Facebook’s Platform: I was thinking about the Platform 3.0 friend list change a bit as I was using my Android phone tonight and realized that two for the apps that most impact my day-to-day mobile experience will be completely, irrevocably broken by this change In both of these cases, the apps are adding real value to my experience, and in both of those cases, I have zero expectation that any of my friends will be using the app. The fundamental problem I’m having with this change is that my friend list is my information—it’s part of who I am, and for Facebook to shut down this access primarily comes across to me as FB intruding upon and shutting down my own access to my own information. 161. Poll concluded, “No matter how you slice it, this change is going to have a significant negative impact on my day-to-day smartphone experience. 162. Poll was correct. The change meant breaking applications that added significant value to Facebook’s network and increased valuable user engagement on Facebook’s core product. The decision to deliberately break these applications had only one plausible purpose—to strengthen the SDBE and to ensure that competitors could not create rival social networks that could compete with Facebook. 163. That proposition was entirely obvious to those responsible for Facebook’s Platform. In an August 2013 e-mail, senior Platform engineer Bryan Klimt wrote to Ilya Sukhar, Facebook’s Head of Developer Products and Senior Engineer working on its APIs, and others working on Facebook’s Platform, stating that the reason for the decision to block access to the Friends and News Feed APIs was to exclude competitors and that all other reasons were simply false and pretextual. To begin with, Klimt was clear that the removal of the APIs was “ridiculous” because they were so essential to the Facebook Platform: I’m trying to write a post about how bad an idea it would be to remove the api that lets you get a list of user’s friends from Facebook Platform. In order to illustrate my point, I’d like to satirically suggest removing some API that is so core to the developer experience and that removing it would be ridiculous on its face. For example, removing the Windows API method that lets you create a new window. Or removing the Twilio API method that lets you send a text message. Both suggestions are utterly insane. The problem is, for Facebook Platform, removing the method to let you get a list of friends literally is already that ridiculous. I can’t think of an example more ridiculous to parody it with. 164. Klimt then dispelled any notion that the APIs were being removed for any technical or functionality-driven reason: Before we discuss in more detail, I’d like to clear up some misconceptions about the deprecations. I’ve heard some rumors floating around about why we are doing this. But many of them are clearly pablum designed to make engineers think this decision has solid technical reasons. It does not. 1/ This API can be abused so we can remove it. False. That is a non-sequitur. Lots of APIs can be abused. Our whole product can be abused. That’s why we have one of the best teams in the industry at detecting and stemming abuse. That team, plus Unified Review, is more than sufficient to deal with any theoretical abuse coming from this API. Even if this were true, who wants to be in that classroom where the whole class is punished for transgressions of a few? 165. Klimt also was clear that the APIs were not being removed in favor of new or different APIs providing the same features: 2/ It’s okay to remove because we’ve provided alternatives for common uses. False. If you think that’s true, then I don’t think you realize why developer platforms exist. If we wanted to limit Facebook to the set of use cases we’ve already imagined, we could just do that ourselves, and not even have a Platform. The purpose of a Platform is to let people build new things on top of it. It’s to enable the whole universe of ideas that anyone in the world could think of. Developers out there will have all sorts of crazy ideas. We want them to build those crazy ideas on top of Facebook. Do you know why Facebook was originally built for the WWW instead of being part of CompuServe or AOL’s proprietary networks? It’s because the web is an open and extensible platform. It lets developers make their craziest become reality. 166. Klimt then explained that the real reason was to hurt Facebook’s competitors and prevent them from competing with Facebook: So, if neither of those reasons explains why we are doing this, what’s driving it? The only reason I’ve heard that makes sense is that we are worried about people “stealing the graph”, we are doing this as a protectionist grab to make sure no one else can make a competing social network by bootstrapping with our social graph. Okay, so let’s assume for a minute that the social graph does belong to us, and not to our users. And let’s even go so far as to assume that this is a real problem, although, I’m not convinced it is. I mean, concerns that other companies will steal our friend graph may just be paranoia. But for the sake of argument, let’s say it’s not. Then what? We’re removing the core API in our developer platform. Out of concerns that someone will steal our social network product. That sends a clear message to developers: Facebook Platform comes second to Facebook the Social Network Product. This has been a criticism all along with our Platform. When you go read the blog posts critical of our Platform, they all hit on this same point. When our APIs are subjugated to the whims of our other products, they can’t be stable. And an unstable platform isn’t really a platform at all. So then you are left with 2 big problems. 1/ How do you convince external developers to build on a platform where the most basic core APIs may be removed at any time? I mean, the only big value we bring to the table right now is in distribution and discovery, and that’s going to encourage developers to do only the most superficial integration with Facebook. Basically, they’re going to do just enough to be able to use Neko ads. 2/ How do you convince internal developers to work on Platform knowing it’s only ever going to play second fiddle to the rest of the company? I mean why should any of us work on a product that could be crippled at any time to benefit another team? If I worked on Platform, I would be seriously reconsidering my options if the API gets deprecated. (emphasis added). 167. Klimt was clear—the decision to remove the APIs lacked any technical or business justification other than to prevent a competitor from creating a competing social network, eroding the SDBE protecting Facebook’s business. Any proffered justification by anyone at Facebook to the contrary was entirely pretextual. 168. Moreover, the decision to remove the APIs permanently destroyed the value of Facebook’s Platform. If developers could not trust Facebook to maintain the APIs as stable parts of its Platform, they would not risk writing apps for the Platform in the future. The decision meant scuttling Facebook’s valuable Platform for the ability to prevent a rival social network from taking hold. 169. Sukhar responded to Klimt, noting that he agreed and that he “talks about this every single meeting.” His pleas to Vernal, Purdy and Zuckerberg to reverse their decision fell on deaf ears. The decision had been made and Klimt and Sukhar would have to implement it. 170. Facebook continued its audit of apps that relied on the APIs. Most of the Apps were important to the Facebook ecosystem. Indeed, Facebook acknowledged they “are not spammy or crap, but apps users like a lot.” Nonetheless, Facebook’s Papamiltiadis concluded that, among others, apps like Sunrise, Yahoo, IFTT, Friendcaster, MyLife, Sync.me, YouTube, Contacts+, and Bitly “overlap with Facebook products” and “could compromise our success in those areas.” 171. Facebook’s careful monitoring of competitive apps continued well into 2013, and given its heavy reliance on data secretly collected by Onavo, Facebook purchased Onavo on October 14, 2013. Facebook used that data to determine which apps competed with its social network and thus posed a threat to the SDBE. It then targeted those companies for withdrawal of API access and coerced data reciprocity agreements. 172. In October 2013, Facebook’s Purdy reported that Facebook was dividing apps into “three buckets: existing competitors, possible future competitors, developers that we have alignment with on business model.” Facebook’s Eddie O’Neil believed that the “separation between those categories doesn’t feel clean” and that the overlap was problematic. As O’Neil observed, “apps can transition from aligned to competitive and will ultimately make us sad that we leaked a bunch of data to them when they were aligned.” 173. Sukhar objected to the entire exercise, noting that he had been speaking to many dozens of developers “who will get totally fucked by this and it won’t even be for the right reason.” Sukhar explained that his “engineers think this plan is insane and I’m not going to support an all hands [meeting] to convince them otherwise.” (emphasis added). 174. As Sukhar noted, the decision to withdraw the Friends and News Feed APIs from the Platform made no technical sense whatsoever, and Sukhar could not bring himself to tell his engineers— who saw through the ruse—otherwise. It was obvious that Facebook was seeking to squelch potential competition—namely, by preventing user growth and engagement for competitive apps. As one Facebook engineer commented about the obvious purpose of the plan to remove the APIs: “I understand we want to make it hard for a developer to grow a new app.” 175. The review of apps continued and specific decisions with respect to certain highly sensitive competitors were escalated to Mark Zuckerberg. As one internal Facebook e-mail explained: We maintain a small list of strategic competitors that Mark personally reviewed. Apps produced by the companies on the list are subject to a number of restrictions outlined below. Any usage beyond that specified is not permitted without Mark level signoff. 176. In December 2013, Klimt complained to Sukhar about the audit and categorization process: So we are literally going to group apps into buckets based on how scared we are of them and give them different APIs? How do we ever hope to document this? Put a link at the top of the page that says “Going to be building a messenger app? Click here to filter out the APIs we won’t let you use!” And what if an app adds a feature that moves them from 2 to 1. Shit just breaks? And messaging app can’t use Facebook login? So the message is, “if you’re going to compete with us at all, make sure you don’t integrate with us at all.”? I am just dumbfounded. 177. As Poll recognized in response to Klimt’s complaint, the changes to Facebook’s Platform were “more than complicated, it’s sort of unethical.” Klimt agreed with the assessment, noting that the API removal “feels unethical somehow It just makes me feel like a bad person.” E. Facebook Prepares to Announce Removal of the APIs 178. Zuckerberg decided to announce the API removal under the cover of a major change to the Facebook Platform, codenamed PS12N, which would be announced at the next Facebook F8 Developer Conference. Facebook’s engineers were accordingly instructed in September 2013 to bury the changes to the API and announce them quietly along with the changes that would be announced at the conference. 179. In the run-up to its API withdrawal announcement, Facebook continued its audit of applications on its platform that were using the APIs. During that process Facebook continued to classify potential competitors, including LinkedIn and AirBnB, as companies that would be denied access with no whitelist exception. 180. Although Facebook knew that the APIs were going to be removed by the next F8 conference, it continued to tell developers to rely on them. As a Facebook Platform evangelist noted about one particular document frequently shared with developers, “the language in here around friend permissions is very counter to our upcoming platform simplification efforts” and “feels against the spirit of where we are headed.” 181. That was, however, precisely what Facebook wanted—to continue to entice developers to build their software and their businesses on APIs that made them dependent on Facebook. The use of the APIs meant that competitors could be abruptly shut out of the market, useful apps could be extorted for valuable social data, and the rest could simply be destroyed. 182. By October 2013, Facebook required certain application developers it chose to whitelist to sign Private Extended API Agreements, which obligated them to purchase large amounts of advertising or to provide their own valuable social data to Facebook in exchange for continued access. That month, for example, Facebook whitelisted Royal Bank of Canada’s application in exchange for the purchase of social data through Facebook’s NEKO advertising platform. 183. Facebook catalogued and tracked developers on its platform that would likely complain about the decision, creating negative press. Facebook’s internal employees tasked with crafting a PR message explained the undertaking in a December 2013 e-mail: In prep for Platform Simplification, we’re putting together a list of developers who we think could be noisy and negative in press about the changes we’re making: Primarily we think it will be a list of the usual suspects from past policy enforcements. We’d love to pull from your historic knowledge on the topic. Is there anybody you’d add to the list below? We’re going to build plans around how we manage and communicate with each of these developers. There are also comms plans in the works for working with developers who are high ad spenders and friends of Mark/Sheryl.” 184. Facebook planned to manage its message carefully, as its decision likely would alienate even those developers who were making large purchases of social data from Facebook through ads and/or who were friends of Facebook’s two most senior executives, Zuckerberg and Sandberg. Those developers were identified and the message to them was carefully crafted to avoid a PR disaster. For most application developers, however, the decision would result in the complete exclusion of their applications from Facebook’s ecosystem—which would likely be fatal to their businesses. 185. Facebook targeted potentially “noisy” or “negative” developers individually, including, but not limited to, the following applications and developers: iLike, Rock You, Zynga, Path, Flipboard, Slide, Social, Fixer, SocialCam, Viddy, BranchOut, Vince, Voxer, Message Me, Lulu, Anil Dash, Super Cell, Kabam, Washington Post, Guardian, The Wall Street Journal, Jason Calacanis, Cir.cl, Bang with Friends, Tinder, Social Roulette, App Wonder, Ark, Vintage Camera, and Girls Around Me. 186. Facebook also used call-log data secretly collected by Android users to target developers and applications to be shut down. 187. The entire process led Facebook engineer George Lee to lament: We sold developers a bill of goods around implicit OG [Open Graph] 2 years ago and have been telling them ever since that one of the best things they could do is to a/b/ test and optimize the content and creative. Now that we have successes. . . . We’re talking about taking it away [Developers] have invested a lot of time to establish that traffic in our system . . . . The more I think about this, the more concern I have over the pile of asks were [sic] making of our developers this year. PS12N is going to require them to alter how they deal with APIs (and for limited value). 188. Thus, as Facebook continued to prepare its API withdrawal announcement, Facebook’s own executives recognized that Platform developers had been conned into relying on Facebook’s APIs. Facebook knew full well that it intended to remove the APIs, but it allowed and encouraged developers to build entire businesses on and around them. As Lee put it, they were sold a “bill of goods.” 189. By 2014, it was clear that with the exception of a few apps and developers, most would be denied access entirely to the Friend and News Feed APIs. 190. In January 2014, Zuckerberg debated denying API access to dating apps. Facebook decided that it would whitelist Tinder and other anointed dating apps and shut down the rest, clearing the way for the selected apps to dominate the dating market. Zuckerberg reasoned that although Facebook would ultimately create its own dating app, it would let Tinder and a select few others to survive until Facebook’s competing app was ready: I’ve been thinking a lot about Tinder and other people recommendation apps since about 10% of people in many countries are using a Tinder now. People recommendations seems like something that should be right up our alley, but it’s currently something we’re not very good at. Tinder’s growth is especially alarming to me because their product is built completely on Facebook data, and it’s much better than anything we’ve built for recommendations using the same corpus . . . . I think this is a big and important space and it’s something we should have a team working on— probably to develop people recommendation Hunch sections for now. 191. Zuckerberg became increasingly involved in assessing whether individual apps would be whitelisted when the APIs were removed. Facebook’s senior-most executives accordingly prepared recommendations for his consideration. In a January 2014 presentation entitled, “Slides for Mark,” for example, Facebook employees summarized the results of the ongoing app audit. The presentation observed that the changes would make it “impossible to build” an app without a whitelist agreement with Facebook. The presentation made special recommendations for apps that purchased large amounts of social data through Facebook’s NEKO platform or whose developers were friends with Zuckerberg or Sandberg. The bulk of the 41,191 apps that relied on the Friends or News Feed APIs, however, would be shut out and, as a result, completely destroyed . 192. Although the effect on these apps was clear, Facebook continued to evangelize the APIs to developers. In January 2014, Facebook’s George Lee sounded the alarm to Purdy and Vernal, which fell on willfully deaf ears: [P]artner managers are still selling products that we ask them to sell, so when it comes to feed integration, we’re still telling people to use [Open Graph]. The last f8 was all about implicit [Open Graph], so while we may have decided amongst ourselves that this is no longer the future without an alternative we don’t have anything to tell current [developers] (so partners continue to tell them to use [Open Graph] and they continue to integrate it). 193. The plan to quietly take away the APIs in favor of a new crippled developer platform was called the “switcharoo plan” by Facebook’s engineers. It was clear to all involved that the announcement of the changes to the platform at the upcoming F8 conference was cover for the radical changes Facebook planned to make to its platform—namely, the removal of the Friends and News Feed APIs. 194. During March 2014, Facebook’s engineers and employees continued to be baffled by the upcoming decision. As one employee noted: It seems a bit odd that we block other developers from doing things on our platform that we’re ok with doing ourselves. Do we consider ourselves exempted? That seems a little unfair especially when our stance on some of these policies is that they’re about ensuring trusts and a great experience. My mental model on how platform is a level playing field could be way off though. 195. The decision made no sense to Facebook’s own employees, particularly because Facebook itself needed the APIs to make their own competing applications, including Facebook’s Messenger application. Facebook’s executives ignored all of the concerns raised by their employees, including their API engineers, and continued to drive towards the announcement of the removal of the APIs at F8. 196. The real reason for the removal of the APIs was kept tightly under wraps. In April 2014, right before the announcement, Vernal warned Sukhar that if any mention was made of the competitive reasons for the removal of the APIs (as Sukhar wanted), there would be a “high likelihood of breaking into jail.” F. The Announcement at F8 197. On April 30, 2014, Facebook announced “The New Facebook Login and Graph API 2.0” on Facebook’s website. Facebook heralded changes to its new Login system for several pages. Buried in the announcement was a quiet statement about the Platform’s most important APIs—the Friend and News Feed APIs: “In addition to the above, we are removing several rarely used API endpoints; visit our changelog for details.” 198. These APIs were not rarely used at all. Tens of thousands of third-party apps were actively using and building on the APIs. Internal Facebook engineers likened them to essential APIs in Microsoft’s Windows and were outraged at the removal. Five of the top ten Facebook Apps surveyed in December 2012 relied heavily on them. The announcement was entirely false and was deliberately buried beneath other API announcements to avoid drawing attention to the competition-crippling effect of the decision. In fact, today, the changelog referred to in the announcement is no longer accessible on Facebook’s page even though years of other changes are. 199. When Mark Zuckerberg took the stage at F8 days later for his keynote speech, there was no mention of the removed APIs. Instead, Zuckerberg emphasized the “stability” of Facebook’s mobile platform just as Facebook quietly removed some of the most heavily relied- upon and necessary APIs in Facebook’s Platform.   200. At the twenty developer sessions preceding the announcement, not one mention was made of the API removal or that the upcoming changes would simply break nearly all of the more than 40,000 third-party apps that relied on the APIs. After April 30, 2015, the APIs were no longer part of any available version of Facebook’s Platform. 201. Facebook thus had successfully destroyed any application that could possibly create a product that could threaten the SDBE that protected Facebook’s dominant position and market power. A select few would be required to hand over their most valuable resource—their social data—to their behemoth competitor in exchange for continued access. VI. THE WHITELIST AND DATA SHARING AGREEMENTS 202. After the announcement and through the full removal of the APIs in April 2015, Facebook continued to make a series of agreements that forced certain competitors to hand their data over to Facebook. For example, Facebook forced certain third-party developers that it identified as competitive threats with valuable social data to sign Private Extended API agreements—referred to throughout this Complaint as “Whitelist and Data Sharing Agreements” or simply “the Agreements”—in order to obtain access to the Friends and/or News Feed APIs. 203. Facebook’s Whitelist and Data Sharing Agreements, as of January 2015, included a provision that acknowledged that the APIs they covered are not available to the general public. An exhibit to each Whitelist and Data Sharing Agreement listed the specific Facebook APIs to which a particular developer was being granted access. 204. These Agreements were only offered in exchange for massive purchases of Facebook’s social data through mobile advertising and/or through the provision of the developer’s own social data back to Facebook (so-called “reciprocity”). 205. As Facebook executives and engineers understood and acknowledged in internal communications, this scheme allowed Facebook to serve as a “data pass-through” among competitors. Competitors with Whitelist and Data Sharing Agreements provided social data to Facebook, which sold data obtained from one competitor to another whitelisted competitor. 206. If a developer refused to participate in the scheme, it was excluded entirely from Facebook’s Platform because the most important APIs—the Friends and News Feed APIs— would not be available to it. 207. In January 2015, Facebook provided Whitelist and Data Sharing Agreements to the dating apps Tinder and Hinge, because of the value of the social data those applications produced. 208. In February 2015, when Airbiquity (another third-party developer) sought a Whitelist and Data Sharing Agreement, Facebook lied to them, telling Airbiquity that the specified APIs “won’t be available to anyone” after April 30, 2015, and that “all similar integrations will be subject to the same deprecations/restrictions.” 209. That same month (February 2015), Facebook secretly signed Whitelist and Data Sharing agreements with other third-party developers, including Netflix, Nissan, and Lyft. 210. In April 2015, Facebook’s manager of strategic partnerships, Ime Archibong, internally celebrated the fruition of Facebook’s three-year plan to eliminate its competition through Platform changes: “Three years coming, but the ‘Platform Simplification’ initiative finally lands this week.” 211. Also in April 2015—as Facebook finally cut off all public access to the Friends and News Feed APIs—Facebook continued to receive requests for Whitelist and Data Sharing Agreements from companies such as Microsoft, Hootsuite, and Walgreens. 212. Facebook had already extracted valuable social data from dozens of competitors, including Foursquare and Pinterest, in the run-up to the announcement and ultimate removal of the APIs. Without discovery, the precise number and identity of those who entered into Whitelist and Data Sharing Agreements with Facebook cannot be known for certain, but publicly available information indicates that dozens of app developers entered into such Agreements with Facebook. 213. Absent the Agreements and Facebook’s overall anticompetitive scheme to exclude third- party developers, other companies could have created their own social data through the proliferation of their own competing social networks. The engagement on their competing networks and the social data generated from that engagement would have increased the value of their networks because of network effects. As the amount of social data generated and monetized on these competing networks increased, Facebook’s SDBE would erode, potentially driving more users to new platforms. 214. None of that could happen as long as Facebook could coercively demand all of the valuable social data generated on any competing platform. The Whitelist and Data Sharing Agreements ensured that competitive threats such as Foursquare could not accumulate enough social data to create their own feedback loop in—and perhaps come to dominate, through network effects—any market in which Facebook anticipated competing or actually competed. 215. The Agreements also ensured that Facebook’s decision to destroy forty thousand applications built on the Friends and News Feed APIs would be effective—and remain so. If Facebook did not control the supply and sale of social data, excluded developers could simply build their applications on another platform. But by entering into a network of Whitelist and Data Sharing agreements, Facebook ensured that no such competing platform could arise. The Agreements strengthened and preserved the SDBE and/or prevented the proliferation of rival generators of social data and third-party developer platforms. 216. In a world where no such Agreements existed, a rival such as Pinterest or Foursquare would obtain more engaged users, resulting in more social data that those competitors could monetize through their third-party or advertising platforms. The thousands of developers denied access to Facebook’s Platform would therefore build their applications on Foursquare or Pinterest instead of simply going out of business or changing their products/businesses dramatically to survive. By forcing those and other similarly situated companies to hand over their social data, Facebook made sure its Platform would be the only viable platform upon which a third- party social application could be built. 217. As explained in the next section, the only remaining threat to Facebook’s Social Advertising dominance was from a completely independent competitor that did not rely on Facebook’s Platform, and thus could not be extorted into handing over its data in exchange for API access. For such companies, Facebook would pay any price to remove them from the market—and use their assets to strengthen Facebook’s SDBE. 218. But first, Facebook had to identify such threats to its market dominance. Enter Onavo. VII. THE SURVEILLANCE AND ACQUISITION OF COMPETITIVE THREATS 219. To ensure that its scheme to maintain and expand its market power would work, Facebook had to control an important source of competition: independent social networks and producers of social data. Although Facebook could simply destroy any competition that relied on its Platform by denying access to essential APIs, this would do nothing to stop a competitor that was growing its network of engaged users entirely independent of Facebook. 220. To detect such threats before they became too formidable, Facebook sought a way to covertly surveil millions of mobile users to determine what applications they were using, and how. Mobile applications were particularly important—and concerning—to Facebook, as desktop engagement was shrinking while mobile apps rapidly proliferated. By 2012, it was clear to Zuckerberg and to Facebook that any threat to its dominance would come from a mobile application. As explained in this section, Facebook used mobile spyware on an unprecedented scale to surveil, identify, and eventually remove from the market through acquisition competitors that independently threatened Facebook’s dominance and/or the SDBE protecting its monopoly, market power and business. A. Facebook Relies on Onavo’s Surveillance of Facebook’s Competitors, and Acquires and Uses Onavo’s Assets 221. Onavo was an Israeli mobile web analytics company founded by Roi Tiger and Guy Rosen in 2010. The company designed spyware designed to surveil users as they used their mobile devices. To obtain extensive information on a user’s usage of mobile applications and of bandwidth, Onavo cloaked its spyware in virtual private networks (“VPNs”), data compression, and even in mobile privacy apps. 222. Onavo sold the mobile usage data it collected to Facebook, which in turn used the real- time information it received from Onavo to determine which mobile applications posed a threat to Facebook’s dominance and to the SDBE protecting Facebook from new entrants and competition. Facebook used Onavo data to: (a) identify and target competitors from which Facebook could demand Whitelist and Data Sharing Agreements; (b) identify and target competitors to whom Facebook would completely deny Platform access; and (c) identify and target competitors that Facebook would remove from the competitive landscape entirely through acquisition. 223. Facebook received Onavo information in real time, which included the two most important metrics for competing mobile applications—their reach and engagement. Reach measures the size of an application’s user base, and “engagement” measures the extent to which users actively engage with the application. An application with high reach but low engagement cannot generate the sort of social data that Facebook needs to feed its advertising platform with actionable targeting data. Conversely, an application with high engagement but low reach doesn’t generate social data from enough people to attract a broad base of advertisers. The greatest threat to Facebook’s business would come from an application that exhibited strong reach and strong engagement—and especially one that showed rapid growth in both metrics, indicating the development of network effects. 224. As the potential threat to its market dominance from mobile applications continued to grow, Facebook sought to obtain exclusive control over Onavo’s surveillance data— and over its mobile spyware code and installed base. On October 13, 2013, Facebook acquired 225. On its blog, Onavo’s CEO Guy Rosen and CTO Roi Tiger, announced that Onavo would continue as a standalone brand: “When the transaction closes, we plan to continue running the Onavo mobile utility apps as a standalone brand. As always, we remain committed to the privacy of people who use our application and that commitment will not change.” 226. Facebook, however, had other plans. It immediately began integrating Onavo’s applications into both its business operations and its acquisition strategy. Facebook, for example, began analyzing data secretly collected from Onavo’s Protect software, which was a massive surveillance and data collection scheme disguised as VPN software. Billed as a way to “keep you and your data safe,” Onavo Protect in fact monitored all web and mobile application traffic on a user’s mobile device. 227. When an Onavo Protect user opened a mobile app or website, Onavo software secretly redirected the traffic to Facebook’s servers, where the action was logged in a massive database. Facebook product teams then analyzed the aggregated Onavo data to determine which apps and features people were using in real time, how frequently they used the apps, and for how long. If the data in an app was not encrypted, this information was as specific as (for example) the number of photos the average user likes or posts in a week in that app. 228. Based on a 2017 estimate, Onavo’s mobile apps were downloaded an estimated twenty- four million times, and Facebook collected, compiled, and leveraged all of the collected data. By February 2018, Onavo apps had been downloaded thirty-three million times across both iOS and Android. 229. As the former chief technologist for the Federal Trade Commission remarked to the press, Onavo was being leveraged against user interests to stifle competitive innovation: Instead of converting data for the purpose of advertising, they’re converting it to competitive intelligence . . . . Essentially this approach takes data generated by consumers and uses it in ways that directly hurts their interests—for example, to impede competitive innovation. 230. Since 2011 and through the present, Onavo products have provided Facebook with real time data about mobile users on a breadth and scale not available through any other service or app. Using Onavo data, Facebook was able to determine which potential competitors it could target for its Whitelist and Data Sharing agreements; which competitors it could destroy by denying access to crucial APIs; and which competitors is needed to remove from the market through acquisition to preserve its monopoly position and SDBE. 231. Moreover, by monitoring potential threats, Facebook ensured that it had no blind spot— any application that posed a threat to its dominance was dealt with through anticompetitive and unlawful Whitelist and Data Sharing Agreements, destruction by denial of access to vital APIs on Facebook’s platform, or by acquisition. 232. By acquiring Onavo, Facebook obtained exclusive access to the only real-time and high- quality source for mobile app user metrics at scale. Because of the acquisition of Onavo, Facebook strengthened the SDBE by ensuring that any threat to its dominance of the Social Advertising Market was dealt with at the earliest possible stage. Indeed, through Onavo, Facebook was able to (and did) track mobile app usage and trends essentially from launch. If a potential Facebook killer was on the rise, Facebook had a unique tool to identify it before anyone else could—and Facebook used it. 233. In the years after it acquired Onavo, Facebook continued to aggressively leverage the company’s codebase in deceptively labeled apps that facilitated maximum surveillance and data collection of mobile users. For example, Facebook placed Onavo spyware in apps whose stated purposes required privileged access to user’s mobile devices (in some cases, super-user privileges), allowing Facebook to gather data on virtually every aspect of a user’s mobile device 234. The abuses by Facebook were so flagrant that on August 22, 2018, Apple banned Facebook’s Onavo app from its App Store. Apple ejected Facebook’s app from its marketplace because it violated Apple’s rules prohibiting apps from using data in ways far beyond what is required to run the app and provide advertising. In other words, because Onavo Protect was leveraging far more data than any VPN could conceivably need, it was clear that the true purpose of the app was to spy on Onavo users, and Apple would not allow it. 235. Indeed, the amount of surveillance was jaw-dropping. Facebook’s Onavo Protect app reported on users’ activities whether their screens were on or off; whether they used WiFi or cellular data; and even when the VPN was turned off. There was simply no rational relationship between the data collected and the purported purpose of the application. Put simply, a VPN that collected data even when the VPN was off was an obvious subterfuge for blatant spying on user behavior. 236. Undeterred, Facebook repackaged its Onavo spyware as a Facebook Research VPN app. Facebook sidestepped the App Store by rewarding teenagers and adults when they downloaded the Research app and gave it root—superuser—access to network traffic on their mobile devices. Facebook has been leveraging its Onavo code in similar ways since at least 2016, administering the program under the codename “Project Atlas”—a name suited to its goal of surveilling app usage on mobile devices in real time. 237. When the news broke in January 2019 that Facebook’s Research apps were repackaged Onavo apps designed to spy on users, Facebook immediately withdrew the programs from the Apple App store. 238. Apple again concluded that Facebook had tried to violate its policies. Using Apple’s Enterprise Developer Program, which allows the installation of a certificate or policy that provides root access to an iPhone or iPad, Facebook obtained a level of administrative privilege designed for a company’s internal IT department. Thus, using a system that allowed organizations to manage their internal mobile devices, Facebook provided its spyware super user access to regular people’s iPhones and iPads. Apple balked at the abuse. An Apple spokesman stated: We designed our Enterprise Developer Program solely for the internal distribution of apps within an organization. Facebook has been using their membership to distribute a data-collecting app to customers, which is a clear breach of their agreement with Apple. Any developer using their enterprise certificates to distribute apps to consumers will have their certificates revoked, which is what we did in this case to protect our users and their data. 239. U.S. Senator Mark Warner immediately called for new legislation to prevent the sort of abuse which Facebook had engaged in. U.S. Senator Richard Blumenthal issued a fierce statement rebuking Facebook’s repackaging of the Onavo spyware app as “research”: “Wiretapping teens is not research, and it should never be permissible.” 240. In addition to Onavo’s Protect app, Facebook has attempted to deploy its surveillance software as other forms of utility applications that require extensive or privileged access to mobile devices. For example, Facebook released the Onavo Bolt app, which locked apps behind a passcode or fingerprint while it covertly surveilled users—and sent Facebook the results. Facebook also shut that app down the very day that its surveillance functionality was discovered. The Onavo Bolt app had been installed approximately 10 million times. 241. Facebook continues to possess Onavo’s code base and is likely, as it has done before, to repackage its surveillance software into yet another app. Facebook can also easily incorporate surveillance code into any of its mobile applications that enjoy massive installed bases and reach, including Instagram and WhatsApp. Without deterrence or divestiture, Facebook will continue leveraging the surveillance software, infrastructure, and analysis that it acquired as part of its acquisition of Onavo. B. Facebook Identifies Instagram as a Threat and Acquires the Company 242. Data from Onavo reported a significant threat on the horizon likely as early as 2011 (and certainly by 2012): a photo-sharing mobile application called Instagram. That app had its origins when founder Kevin Systrom, then 27, learned to code over nights and weekends. Systrom developed an app called Burbn, which allowed users to check in, post plans and share photos. The photo sharing feature immediately became the app’s most popular. 243. After meeting venture capitalists from Baseline Ventures and Andreesen Horowitz, Systrom received $500,000 of funding. Systrom soon after met co-founder Mike Krieger—then 25 years old—who focused on the user experience of the app. 244. Seeing the positive reception to the photo sharing aspect of the Burbn app, Krieger and Systrom decided to pivot their business to focus on that feature. They studied their rivals in the category, including an app called Hipstamatic, which included photo-editing features, including the ability to add filters to photos. Hipstamatic, however, had no social capabilities. 245. Seeking to bridge the gap between Hipstamatic photo features and Facebook’s elements, Systrom and Krieger stripped Burbn down to its photo, comment, and like capabilities. They then renamed the app Instagram, containing the words “instant” and “telegram.” 246. Systrom and Krieger worked tirelessly to polish the user experience of their new application, designing Instagram to streamline the process of taking photos on mobile devices and uploading them to a social platform. The app had a minimalist focus, requiring as few actions as possible from the user. After eight weeks of fine-tuning, the app entered its beta phase and the founders prepared to launch it on iOS. 247. On October 6, 2010, Instagram launched on iOS. That very day it became the top free photo-sharing app on Apple’s App Store, racking up twenty-five thousand downloads. Instagram’s founders were stunned at the response. As Systrom noted after the launch: “First off, we have to say that we never expected the overwhelming response that we’ve seen. We went from literally a handful of users to the #1 free photography app in a matter of hours.” 248. By the end of the first week, Instagram had been downloaded 100,000 times, and by mid- December 2010, its total downloads had reached one million. The timing of the app was impeccable, as the iPhone 4, with its improved camera, had launched just a few months earlier in June 2010. 249. With Instagram on the rise, investors clamored for a stake. In February 2011, Instagram raised $7 million in Series A funding from a variety of investors, including Benchmark Capital, which valued the company at around $25 million. In March 2011, Jack Dorsey, the CEO of Twitter, pursued the idea of acquiring Instagram, and Twitter made an offer of approximately $500 million dollars for the company. Systrom declined. 250. By March 2012, the app’s user base had swelled to 27 million. That April, Instagram was released on Android phones and was downloaded more than one million times in less than one day. At the time, the company was also in talks to receive another $500 million funding round. 251. Internally, Facebook carefully tracked Instagram’s meteoric rise, including through the intelligence it received from Onavo’s data collection. Instagram clearly posed a competitive threat to Facebook’s dominant position, including in the rapidly expanding market for mobile-based social applications. 252. Unlike Instagram’s streamlined approach to photo sharing, Facebook’s photo- sharing was onerous. As Facebook internally recognized, mobile devices were changing how users uploaded and shared photos and it was causing severe problems for Facebook’s business. As an internal Facebook presentation explained: Before phones, people would take their digital cameras out for special events, vacations, etc. Then, they would post a bunch of photos at once— after uploading them to their computer. With phones, people take and share more photos more often. They share them individually (rather than waiting to upload a bunch at once). 253. This resulted in a large drop in bulk photo uploads on Facebook’s core social networking product—a 29% decline from 2012 to 2014. Facebook also observed that text posts were “tanking” 26% because of “migration to phones with cameras.” The data was clear— Facebook had to shut down the looming threat from the new photo-sharing app. If Facebook did nothing, Instagram’s user base would imminently eclipse Facebook’s at its current growth rate, eroding and perhaps even destroying Facebook’s SDBE. An independent app with no ties or reliance on Facebook, Instagram could become not only a competing mobile-based social app, but a social network unto itself that could rival Facebook in the amount of engagement and social data it could produce and monetize. 254. After direct talks with Mark Zuckerberg, Facebook made Instagram an offer to the company for $1 billion in April 2012, with the express promise that the company would remain independently managed. Facebook consummated the deal immediately prior to its IPO. 255. Facebook’s own Onavo data, which was obtained and published by Buzzfeed, made clear that Instagram posed an existential threat to Facebook. By February 2013, Instagram had grown to 34% of the total user reach among all social apps. 256. With its Instagram acquisition, Facebook’s share of mobile photo sharing app users ballooned as Facebook added Instagram’s 34% user reach to Facebook’s own 72% user 257. Although Instagram had not at the time of the merger meaningfully monetized its user engagement and social data, Facebook quickly did so. By the end of 2013, Facebook had begun showing ads on Instagram. Since then, Instagram has become an ever-increasing proportion of Facebook’s advertising revenue and a large share of Facebook’s user growth. 258. In 2017, Instagram generated $2 billion, or about 15 percent, of Facebook’s $13 billion in ad revenue. 259. By the end of 2018, Instagram had a billion users and was estimated to generate $8 billion to $9 billion in revenue for Facebook in 2018. 260. Instagram also accounts for the bulk of Facebook’s new revenue since the acquisition. 261. Instagram allowed Facebook to grow its social network as Facebook’s desktop and core mobile application began to stagnate. Together, Facebook and Instagram captured and monetized the social data generated across both apps. 262. The Instagram acquisition ensured that Instagram could not become a rival social network that could generate enough social data to erode the SDBE protecting Facebook’s business. It also ensured that Instagram could not build and grow its own developer platform, which would threaten Facebook’s scheme to dominate the Social Advertising Market by denying and/or leveraging social-data dependent applications’ access to essential APIs. The acquisition accordingly also ensured that Facebook rivals required to enter into Whitelist and Data Sharing Agreements had no other platform choice—and thus no option but to hand over their social data to Facebook. 263. At the time of its IPO in 2012, Facebook struggled to grow its mobile product, let alone to meaningfully monetize the social data it collected through advertising. By 2019, Facebook had achieved an 83% share of the Social Advertising Market by leveraging its Instagram mobile application and its Facebook mobile and desktop applications. No other company comes close in market share. 264. Instagram was instrumental to Facebook’s explosive growth in the Social Advertising Market. From the fourth quarter of 2010 until the first quarter of 2011, Facebook’s revenue was flat. From 2011’s holiday cycle to 2012’s opening three months (right before its IPO), Facebook actually shrank. Facebook then experienced a sudden reversal after its acquisition of Instagram, as mobile revenue began to account for a significant share of revenues, and Instagram allowed Facebook to grow with the rise of mobile applications. 265. Notably, Facebook’s acquisition of Instagram also allowed Facebook to exclude third- party apps that provided photo and video sharing functionality from its Platform. If an image sharing or video app contained an important feature, Facebook cloned it, thus paving the way for excluding a competitive rival from its Platform, while simultaneously taking away that rival’s share of users. 266. For example, when Snap, the maker of the app SnapChat, rejected Zuckerberg and Facebook’s $3 billion offer to purchase the company and its product, Facebook flagrantly copied key features from Snap and built it into its Instagram product. Thus, when the SnapChat’s “stories” feature—which allows a user to post a connected series of images and video—rapidly grew in popularity, Instagram simply cloned it. By late 2016, Instagram had launched a product that mooted one of Snapchat’s most popular features. 267. Facebook’s own clunky mobile app’s clone of the “stories” feature did not have nearly the same traction with users. It was Instagram that provided Facebook the platform to compete head-on with a looming threat among social photo- and video-sharing apps. Without Instagram, Facebook would have faced direct competition. Instead, it leveraged Instagram to obtain and maintain its dominance among social mobile apps and the lucrative social data they generated. 268. Put simply, the acquisition of Instagram dramatically increased Facebook’s market share of the Social Advertising Market and strengthened the SDBE protecting Facebook’s business. C. Facebook Acquires WhatsApp 269. In February 2009, Jan Koum and Brian Acton left Yahoo and founded a new company called WhatsApp. Koum had an idea for a mobile application that displayed user statuses in an address book on a smartphone—indicating, for example, whether a user was on a call, had low battery, or was at the gym. The pair enlisted the help of a Russian developer, Igor Solomennikov, to build the app. Koum spent days writing backend code for the app to allow it to sync with any phone number in the world. 270. Although the app—named WhatsApp—was initially unsuccessful, a June 2009 development changed everything. That month, Apple introduced “push notifications” for iPhone, allowing developers to ping app users even when they weren’t using the app. Koum immediately updated WhatsApp to ping a user’s entire network of friends when their status changed. 271. The feature eventually became a form of instant messaging. Because messages sent through WhatsApp instantaneously notified other users even if the phone was not running the app in the foreground, it became ideal for broadcasting messages to connections within a user’s social network, which was built on their phone’s contact list. 272. At the time, WhatsApp’s only significant competition for this sort of instant messaging was BlackBerry’s BBM—which was exclusive to BlackBerry’s proprietary hardware platform. WhatsApp, on the other hand, tapped into the vast network of app-enabled consumer smartphones that had emerged, particularly Apple’s iPhone. 273. WhatsApp continued to innovate, including by introducing a double checkmark that showed when a message was read by another user. Wanting more from text messaging, including the limited MMS protocol used by cellular networks, WhatsApp set out to build a multimedia messenger system to send messages across a social network in real time to mobile devices. 274. Because WhatsApp’s messaging used the mobile phone’s Internet connection rather than text messages, the app allowed users to avoid text messaging fees entirely. In some countries, text messages through cellular providers were metered. WhatsApp’s ability to send messages to any user with a phone using the Internet was its most sought-after feature. 275. In December 2009, WhatsApp updated its app for the iPhone to send photos. User growth spiked, even when WhatsApp charged users for its service. Having created a unique combination of image and messaging apps as one socially powered app, WhatsApp decided to stay a paid service and grew while generating revenue. 276. By early 2011, WhatsApp was one of the top twenty paid apps in Apple’s U.S. App Store. The company attracted the attention of venture capital firm Sequoia, and WhatsApp agreed to take $8 million of additional funding in addition to its original $250,000 seed funding. 277. Two years later, in February 2013, WhatsApp’s user base had ballooned to 200 million active users. That moth, WhatsApp raised additional funds—another $50 million from Sequoia, at a valuation of $1.5 billion. 278. Internally, Facebook had carefully tracked WhatsApp’s rapid rise. Engagement data from Facebook’s Onavo spyware reported that WhatsApp was rivaling Facebook’s own Messenger product, and held third place in terms of user reach among mobile messenger apps for iPhone in the U.S as of April 2013. 279. The broader picture was even more threatening to Facebook. As Buzzfeed recently reported, Onavo had tracked messages sent through WhatsApp and the number dwarfed Facebook’s own mobile product by more than twofold. 280. The same Onavo data reported by Buzzfeed showed massive engagement among WhatsApp users, placing it in fifth place behind Facebook’s own core product; Facebook’s newly acquired Instagram; Twitter; Foursquare; and Snapchat. 281. WhatsApp, although lacking Facebook’s market reach, was drawing from the same pool of limited attention. Given Facebook’s own fledgling Messenger App, WhatsApp exposed a massive vulnerability in Facebook’s business model. WhatsApp was built on a social network derived directly from a smartphone user’s contact list. It did not require Facebook’s graph network for growth and could not therefore be shut down by revoking access to Facebook’s APIs. Nor could Facebook demand that WhatsApp enter into a Whitelist and Data Sharing agreement. 282. WhatsApp posed a direct threat to Facebook’s business, including the SDBE protecting its dominance. WhatsApp allowed for statuses, image sharing, and texting—all of the principal features of Facebook’s core products. By 2013, the size of WhatsApp’s network and the user engagement in that network made WhatsApp the most direct threat to Facebook’s market dominance—and because of Onavo, Facebook knew it. 283. To ensure that it maintained its SDBE, and thereby its dominance of the Social Advertising Market, Facebook sought to remove WhatsApp as a competitor. As The Wall Street Journal reported, Facebook’s Vernal internally commented in 2013: “Whats App launching a competing platform is definitely something I’m super-paranoid about.” Vernal understood that if WhatsApp created a rival platform, Facebook’s own scheme to exclude rivals by leveraging its Platform would fail—developers would migrate to the competing platform provided by WhatsApp. 284. Knowing about WhatsApp’s size, its engagement, and its unique potential to erode the SDBE protecting Facebook market dominance, Facebook moved aggressively to remove this existential threat from the competitive landscape. In late 2013, Facebook made an initial bid of $16 billion in stock for WhatsApp. During negotiations in early 2014, Facebook raised its price to $19.6 billion—adding $3.6 billion to the original price as compensation to WhatsApp employees for staying on board at Facebook. When all was said and done, Facebook ultimately paid close to $22 billion for WhatsApp. 285. But for the value of containing and shutting down the growth of WhatsApp’s competing social network and platform, the transaction made no possible economic sense to Facebook. WhatsApp’s revenues were a meager $10.2 million in 2013. Its six-month revenue for the first half of 2014 totaled $15.9 million, and the company had incurred a staggering net loss of $232 million in that same period. Facebook had paid twenty billion dollars—thousands of times WhatsApp’s revenues—to acquire a money-losing company that created software functionality Facebook itself already had as part of its own products, and could easily build from scratch for a fraction of the cost of the acquisition if it wanted to. 286. At the time of the WhatsApp acquisition, Facebook’s user reach and user base and engagement was already massive—and unrivaled by any competing messaging app—but the addition of WhatsApp’s user base further solidified Facebook’s dominance in the Social Advertising Market. More importantly, however, Facebook had removed a serious threat to its SDBE. If WhatsApp and its nascent social platform were allowed to compete on the merits, Facebook would not have been able to leverage its Platform into continued dominance of the Social Advertising Market, including by using API access to shut down competing third-party apps and to demanding access to other apps’ most valuable social data as a condition for their existence. 287. Moreover, because the reach and engagement on WhatsApp generated (and generates) significant social data that Facebook could (and can) leverage and monetize through its mobile advertising channel, Facebook’s SDBE strengthened as a result of the WhatsApp acquisition, fortifying Facebook’s unrivaled dominance in the Social Advertising Market, and strengthening Facebook’s ability to exclude potential entrants to this market from gaining a foothold with a rival messaging or photo- sharing app. VIII. THE RELEVANT MARKET 288. Plaintiff is a consumer and purchaser in the relevant market at issue in this case— the Social Advertising Market. Plaintiff is a direct purchaser of advertising products from Facebook and was anticompetitively harmed as a participant in the Social Advertising Market. A. The Social Advertising Market 289. The Social Advertising Market is a submarket of online advertising, the latter of which includes banner ads, search-based ads, and advertising on social networks. Social advertising, however, is not fungible or interchangeable with these other forms of online advertising. Indeed, social advertising allows advertisers to granularly target groups of users for ads by their attributes, including by the attributes of their networks. 290. Thus, because of the extensive ability to target advertisements to users on social media sites like Facebook, search and banner advertising are not reasonable substitutes. 291. Several relevant factors indicate that the Social Advertising Market is a distinct submarket of online advertising and more general advertising markets: 292. Industry or public recognition of the submarket as a separate economic entity. Social advertising is broadly considered to be distinct from other forms of advertising by market and industry participants. For example, the advertising company Outbrain describes the differences between social ads on its blog as follows: Paid social ads are served via algorithms that define what the user might be interested in, based on past activity in their social accounts, such as likes, shares, and comments. Unlike search, which is a focused, goal-oriented activity, browsing on social is more relaxed. Think cat memes, vacation snaps, and fun quizzes. Nevertheless, the social platform has accumulated masses of data about every specific user, which can be leveraged to target specific audiences with ads that are likely to be of interest to them. 293. Outbrain explains that social ads are considered useful for a distinct purpose: Social ads are best for targeting audience segments who may be interested in your product or services, based on a range of targeting criteria—location, age group, gender, hobbies, interests. Social networks, such as Facebook, have advanced targeting capabilities, which means you can fine-tune your targeting criteria to reach a very specific, high-quality audience. 294. Outbrain explains that search ads are different, as they “are great for targeting customers when they are already looking for you (i.e., they search your company name or product), or if they are searching for a specific product, service, or piece of information that you can provide.” Outbrain also distinguishes social advertising from other forms of online advertising, like discovery advertising. 295. Moreover, providers of business statistics such as statista.com also provide information as to social media advertising as a distinct submarket of online and general advertising. 296. As another example, in March 2015, leading advertising publication AdAge referred to Facebook’s Custom Audience targeting, which is unique to social advertising, as “potentially different and more special because they have this richer level of data.” 297. Likewise, industry publication Marketing Land reported in an October 14, 2019 article that media agency Zenith, which is owned by Publicis Media, predicted growth in the social media advertising segment as distinguished from search and television advertising, with social media ads coming in third behind television and paid search advertising. 298. Even academic articles, including those published in the Journal of Advertising, have analyzed the market for social media advertising as a distinct segment, with well-defined engagement characteristics. 299. The product’s peculiar characteristics and uses. Social advertising has a distinct purpose from other forms of advertising. Social advertising has different applications than other forms of online advertising. Namely, social advertising allows granular targeting based on user attributes, user interests, and group attributes. Moreover, because of the detailed amount of information that can be collected about users as they engage on social media platforms, social advertising can seek out other users with similar behavioral characteristics. 300. Facebook, for example, describes its own targeting capabilities as follows: Facebook ads can be targeted to people by location, age, gender, interests, demographics, behavior and connections. You can also use more advanced targeting tools like Lookalike Audiences, which lets you target people similar to the people who already engage with your business, or you can layer your targeting options to select a more specific audience. 301. Facebook allows advertisers to create Lookalike audiences. Thus, unlike search or other forms of advertising where the ad is created and placed to reach a preexisting audience, Facebook is able to algorithmically combine a subset of its users to fit an advertisement. This capability is unique to social advertising. 302. As Facebook explains on its website:  When you create a Lookalike Audience, you choose a source audience (a Custom Audience created with information pulled from your pixel, mobile app, or fans of your page). We identify the common qualities of the people in it (for example, demographic information or interests). Then we deliver your ad to an audience of people who are similar to (or “look like”) them. 303. Because of the level of granular data Facebook collects from its users, it can provide targeting flexibility like no other advertising medium. As Facebook explains: You can choose the size of a Lookalike Audience during the creation process. Smaller audiences more closely match your source audience. Creating a larger audience increases your potential reach, but reduces the level of similarity between the Lookalike Audience and source audience. We generally recommend a source audience with between 1,000 to 50,000 people. Source quality matters too. For example, if a source audience is made up of your best customers rather than all your customers, that could lead to better results. 304. Social advertising is also marked by the ability to algorithmically refine advertising targeting as users interact with the ads. For example, Facebook allows users to place a pixel on their website that is pulled off Facebook’s servers when the site is accessed. Facebook is thus able to determine the efficacy of ads run on Facebook once the user transitions to an advertiser’s own website. Over time, Facebook’s advertising becomes more targeted and more effective in terms of particular advertising goals, such as lead generation or online purchases. 305. Other social networks, such as Twitter, provide similar targeting abilities. Twitter, for example, allows targeting based on location, language, device, age, and gender, but also allows for the targeting of audience types, including algorithmically tailored and custom-created audiences. 306. These targeting features, which are available on social advertising platforms, are not comparably available as part of other forms of online advertising, such as display and banner ads or search ads. 307. Unique production facilities. Social advertising requires data collected from users on an inherently social application. A user’s search history, for example, will not provide enough data to create highly targeted advertising features, such as Facebook’s Lookalike Audiences. Likewise, passive advertising, such as banner ads, or even general magazine or publication ads, provides little granular data that can then be used to further refine the targeting of advertising. 308. Providers of social advertising require specialized means of production because they must rely on data harvested from engagement among networks of users to facilitate highly targeted advertising. Platforms capable of delivering social advertising must therefore provide functionality such as image and video sharing, messaging, matchmaking, content sharing, and other inherently social features in order to obtain the data needed to allow for granular user and user network targeting. 309. Because social advertising allows iterative refinement of target audiences, a provider of social advertising must employ machine-learning or artificial intelligence algorithms that are trained on data collected from users as they interact and engage with content and advertising. As Facebook’s head of its Applied Machine Learning Group, Joaquin Quiñonero Candela, told Wired magazine (emphasis in original): Facebook today cannot exist without AI. Every time you use Facebook or Instagram or Messenger, you may not realize it, but your experiences are being powered by AI. 310. Other forms of advertising generally do not require sophisticated machine learning or artificial intelligence. For years prior to the advent of modern machine learning techniques, search engines such as Yahoo and Google used far less sophisticated algorithms to match user searches with suggested websites and, in turn, advertisements. Traditional advertising, such as magazine or television ads, require no algorithms at all, let alone artificial intelligence. 311. Distinct customers. Social advertising customers are distinct from search advertisers and passive display advertisers. Moreover, social advertising is generally more effective at targeted advertising rather than reaching a massive number of people. 312. Customers advertising on search engines are generally seeking priority among the search results returned given a particular keyword. Customers advertising on social media platforms are searching for users that fit a particular, predefined profile or set of characteristics. Small businesses that do not generally have the budget to bid on coveted search results are nonetheless able to bid on granularly defined audiences on a social media platform like Facebook. 313. Distinct prices and sensitivity to price changes. Social advertising prices are distinct from other forms of advertising. In search-based advertising, certain search keywords are bid up by many advertisers seeking to have their ads displayed as part of search results. This means that prices in certain categories, such as legal or home improvement, will be significantly higher on search-based platforms than on social advertising platforms like Facebook. For example, legal ads are on average $1.32 on a cost-per-click basis on Facebook, whereas they are $6.75 on a cost-per-click basis on the Google Ads platform. Likewise, consumer services ads are on average $3.08 on a cost-per-click basis on Facebook’s platform vs. $6.40 on Google Ads. 314. Because bidding on Google Ads and other search-based advertising is zero sum, meaning only a certain number of ads can be coupled with a particular set of search keywords, pricing is more sensitive to changes in demand. 315. Social advertising, however, allows granular targeting, avoiding much of the zero- sum nature of other forms of advertising bidding. Moreover, social advertisers like Facebook can tailor audiences, reducing the likelihood that advertisers will have to compete for the same display opportunity at any given point in time. 316. Other general forms of advertising such as television and print are even more zero- sum, as there are limited time slots or available pages in a newspaper or magazine. Pricing is thus more sensitive to demand in these forms of advertising. 317. Social advertising is thus entirely distinct. Because of the ability to target audiences to advertising, pricing is proportional to the generality of the targeting, not simply to the general demand for a limited search term, key word, or periodical placement. 318. Moreover, Facebook has been able to consistently raise its prices in almost every year it has sold advertising without facing price pressures from competitors. On a cost per mille (CPM)—or cost per thousand advertising impressions—basis, Facebook’s advertising prices grew 90 percent year over year according to a report at the end of 2019. In 2018, Vox reported that CPM prices on Facebook had increased 122 percent year over year. In 2017, Facebook’s CPMs increased 171%. Facebook raised prices in prior years as well. 319. Specialized vendors. The Social Advertising Market has its own distinct and specialized vendors, namely advertising agencies such as Lyfe, Thrive, Volume Nine, Sociallyin, and Firebelly Marketing, all of which boast a specialization in social media advertising and provide specialized social media management products. There are many such specialty advertising agencies that specialize in creating social media advertising campaigns. Moreover, specialized social media analytics vendors also exist, such as Socialbakers, which provides aggregated analytics across social media platforms. There is an entire ecosystem of vendors specializing in social advertising—an indicator that the Social Advertising Market is its own distinct submarket of online advertising, requiring its own unique tools and expertise. 320. Facebook’s revenue share of the Social Advertising Market is approximately 80%. Its share has been above 70% since 2015. 321. Facebook’s advertising revenue has steadily grown both in the United States and globally. Facebook reported advertising revenues totaling $17.383 billion as of Q3 2019. Approximately $8.3 billion of that advertising revenue came from the United States. 322. From 2014 to 2016, Facebook’s advertising revenues grew from $2.9 billion to $6.436 billion. During that period, and even before then, Facebook was one of the few social networks that significantly monetized its network by selling advertising. Other competitors did not come close, and Facebook established unrivaled dominance in the Social Advertising Market and maintains that dominance to this day. 323. Twitter, one of Facebook’s only competitors to sell significant social advertising during the same period Facebook generated revenue in the Social Advertising Market, has never exceeded $800 million in advertising revenues. Revenues in Q1 2012 were approximately $45 million, growing to $432 million in Q4 2014, and standing at $702 million as of Q3 2019. 324. LinkedIn, another competitor that sells social advertising, generated roughly $2 billion in overall annual revenue by the end of 2018, with some portion of that coming from advertising. 325. Considering the revenue generated by LinkedIn and Twitter, Facebook’s advertising revenue accounts for approximately 86% of the total revenue share across the three largest firms competing in the Social Advertising Market. Excluding the contributions from minor competitors that monetize their social networks, the HHI of the Social Advertising Market is approximately 7,685, well beyond what the DOJ considers a highly concentrated market. B. Barriers to Entry 326. The Social Advertising Market is protected by the Social Data Barrier to Entry that prevents Facebook’s competitors from entering the market. Without a critical mass of social data, market participants in the Social Advertising Market cannot generate revenue. 327. Moreover, without adequate social data and engagement with the social network, market participants cannot display content to users that would provide enough value to generate engagement and additional social data. 328. Likewise, without a critical mass of social data, advertising targeting will not be possible or will be substantially diminished in effectiveness, thus reducing revenues in the advertising sales in the Social Advertising Market. 329. A firm’s market power in this market therefore depends on obtaining a critical mass of social data. Because of network effects, users will not use a social network that lacks enough social data to provide targeted content or to provide valuable connections to other users. However, once a certain amount of social data is obtained by a market participant, a feedback loop may form as a result of network effects, further increasing the amount of social data generated by the social network. 330. A new entrant must therefore expend significant amounts of investments in capital, technology and labor to create a network large enough to create the network effects necessary to compete with dominant firms in the market. 331. Because of the large amount of capital and social data required to successfully enter the Social Advertising Market, the SDBE effectively excludes entry by a new competitor, even a well-funded one. Indeed, the SDBE prevented Google from successfully entering the market for social data and the Social Advertising market with its Google+ social networking product. 332. Although Google+ had successfully replicated Facebook’s core functionality and even added additional functionality to its software, its entry failed because it lacked the critical mass of social data that is required to reverse the network effects protecting Facebook. Without that critical mass, users will not incur the costs of switching from Facebook’s social network to a new entrant’s social network. That is, a new entrant will not be able to provide a valuable network of engaged users upon entry to justify a Facebook user to change social networks. 333. That is precisely what happened to Google. Although it had a massive user base, it lacked engagement, which meant it did not provide a sufficient amount of social data that could be used to target content and advertising to users. This, in turn, reduced the value of the entrant social network and accordingly the attraction of switching from Facebook’s social network to Google’s. 334. The SDBE continues to reinforce Facebook’s dominant position. In fact, by excluding rivals and potentially competing social networks through the anticompetitive scheme described in this Complaint, Facebook strengthened the SDBE, providing it a larger share of social data and a stronger monetization channel through social advertising. The additional amount of social data increases the value of its network, and the revenue from social advertising increases the cost of entry for a new rival. 335. Other barriers to entry in the Social Advertising Market include, but are not limited to, the high cost of development, data management, talent acquisition and retention, server infrastructure, development infrastructure, software technology, software libraries, and a brand and marketing presence sufficient enough to attract an engaged user base. C. Relevant Geographic Market 336. The relevant geographic market is the United States Social Advertising market. 337. For the social data that fuels a social advertising product, social data must be compatible with the customers purchasing that data. Thus, social data about a foreign market may be of little use for a U.S.-based advertiser. The data may be collected in a different language, may involve interests more pertinent to a particular geographic region (e.g., American Football vs. Rugby), and may contain a demographic of users that share a common culture or merely a close proximity. 338. The same is true for the Social Advertising Market. An advertiser seeking to sell products designed for consumption in the United States may not have any use for a platform’s advertising targeting capabilities outside of the United States. In the U.S., Facebook enjoys a higher market share of the Social Advertising Market than it does worldwide (which is already very high, as described in subsection VI.A). In short, Facebook enjoys an even more dominant share of the U.S. Social Advertising Market than it does globally. 339. In the U.S., Facebook’s market share of the social data generated by users is even greater than its global market share. Services such as WeChat are geared towards Asian markets, particularly China, and do not generally compete in the U.S. market with Facebook’s Messenger, Instagram, and core social networking product. Thus, Facebook’s U.S.-based market share is even higher than its global market share referenced above in VI.A, which is already a dominant share of the Social Advertising Market. IX. HARM TO COMPETITION AND ANTITRUST INJURY 340. Facebook’s anticompetitive scheme had the purpose and effect of monopolizing the Social Advertising market in the United States. Facebook’s conduct allowed it to maintain the monopoly and market power it had obtained by 2010 in the Social Advertising Market, and/or Facebook intended and attempted to acquire such a monopoly through its anticompetitive scheme. 341. Specifically, Facebook engaged in a series of acts in furtherance of its scheme, including, but not limited to: (a) the removal of important and necessary APIs from its Facebook Platform for the intended purpose of destroying competition in the Social Advertising Market; (b) the targeting of competitors for coercive Whitelist and Data Sharing Agreements on pain of denial of access to Facebook’s Platform and APIs; (c) the use of secret surveillance software to identify and destroy potential competitive threats; (d) the acquisition of rivals with the purpose and effect of strengthening the SDBE and increasing Facebook’s market share and market power in the Social Advertising market; and (f) misleading developers about the stability of Facebook’s Platform to induce them to become dependent on Facebook’s social data. 342. Facebook engaged in this conduct while possessing, and/or acting intentionally to obtain, market power in the Social Advertising Market. Facebook enhanced and/or maintained its market power and monopoly through this scheme and then used it to exclude rivals and potential entrants from the Social Advertising Market (both directly and indirectly, by controlling supply and output of social data, a critical input for social advertising). 343. Facebook’s anticompetitive scheme also reduced consumer choice by stifling innovation among nascent and established competitors that relied on Facebook’s Platform for their products and business and by entering into agreements that strengthened the SDBE. 344. In the alternative, Facebook’s scheme had the purpose and effect of achieving a dangerous probability of a monopoly in the United States Social Advertising Market. 345. Facebook’s decision to remove the Friends and News Feed APIs excluded horizontal and/or direct competitors and rivals from the social data needed to fuel social advertising. Once a potential threat to Facebook or Facebook’s SDBE is eliminated, that entity cannot (a) monetize social data by selling advertising; (b) accumulate social data sufficient to create a competing platform; and/or (c) even purchase social data from Facebook at full price. 346. The above decision allowed Facebook to monopolize and/or maintain a monopoly in the Social Advertising Market. Facebook’s scheme allowed it to force chosen Platform developers to buy large amounts of advertising on its struggling mobile platform, NEKO, in exchange for continued access to some or all Core APIs. At the same time, Facebook’s demand for these developers’ social data in exchange for continued access—including from competing social networks such as Pinterest and Foursquare—ensured that no rival social advertising platform could emerge, as Facebook would have a superset of its competitors’ users’ data. By gaining control over its competitors’ social data—a critical resource for social advertising— Facebook was able to dominate the Social Advertising Market, gaining a monopoly share and sufficient market power to consistently and dramatically raise prices year after year. 347. Facebook sacrificed short-term profits in the Social Advertising Market for the sole purpose of executing its scheme and excluding competition. It made no rational business sense for Facebook to exclude from its Platform the very entities that, if successful, would likely be the most ardent consumers of Facebook’s monetized social data and social advertising. Yet this is exactly what Facebook did by leveraging API access in a manner that excluded nearly all Platform developers. As Facebook’s own executives and managers admitted in internal communications, Facebook did this strictly for competitive dominance. Put simply, Facebook put the prospect of long-term dominance ahead of short- term profit. 348. Facebook knew that once its competitors were foreclosed from the Social Advertising Market by its anticompetitive scheme, Facebook would be free to charge monopoly prices for social data and social advertising without facing any competitive price or quality pressure. In fact, Facebook has reduced the value it provides to users through privacy and feature innovation throughout and after it executed its anticompetitive scheme without sacrificing any significant marginal demand—a clear sign of its market power in the Social Advertising Market. Likewise, Facebook has increased the price of its targeted advertising throughout the period of its anticompetitive scheme and to the present, also a sign of its market power in Social Advertising Market. 349. Facebook’s Whitelist and Data Sharing agreements ensured that Facebook would control competitive threats to its platform and extract their most valuable asset—their social data. Facebook, by requiring Whitelist and Data Sharing agreements by competitors, ensured that these competitors, some of which were competing social networks, could not become alternative platforms for developers. That meant that when Facebook excluded other developers from the market, they were completely foreclosed and would have no reasonable alternative. 350. After excluding applications that competed with it from obtaining social data or from the Social Advertising Market, Facebook was left with competition from entirely independent apps, which did not rely on Facebook’s social data, APIs, or advertising. Rather than compete on the merits with these competitors, Facebook secretly spied on users using the Onavo data and the Onavo assets that it acquired, identifying potentially competitive threats and then acquiring the companies that built those threatening products, often at economically irrational 351. Facebook used the Onavo data and Onavo-based spyware it owned or had in its possession to track Instagram use. When Instagram’s engagement and user reach indicated that it was a potential competitive threat to Facebook, Facebook acquired Instagram and operated it alongside its products, and presently seeks to complete integration of the product with Facebook’s other major properties. 352. Likewise, Facebook secretly tracked mobile users’ use of WhatsApp, and when Facebook determined that WhatsApp threatened to become a platform entirely independent of Facebook’s network and social data, it purchased WhatsApp—at an economically irrational price of thousands of times the company’s revenue. 353. By acquiring potential threats independent of its platform, particularly WhatsApp and Instagram, Facebook ensured that such companies could not be (a) alternative platforms upon which developers excluded by Facebook’s API removal could build their apps; (b) alternative sources of social data that could be monetized through Social Advertising; or (c) alternative social networks that would attract users, developers, and advertisers, thereby weakening the SDBE protecting Facebook’s business. 354. Facebook’s past integration of these acquired assets and its continuing effort to integrate these acquired assets has continuing anticompetitive effects, and threatens to increase and/or maintain Facebook’s dominance in the Social Advertising Market. 355. Facebook also used Onavo and the Onavo assets to maintain a real-time view of users’ mobile application use and mobile traffic. Facebook used that real-time information to monitor, punish, or acquire any competitive threats. Indeed, Facebook used Onavo surveillance data to target threats for denial of access to crucial APIs; for Whitelist and Data Sharing Agreements; or for targeted removal from the market through acquisition. 356. The net effect of Facebook’s scheme was to, inter alia, strengthen and maintain the SDBE, protect its monopoly in the Social Advertising Market, prevent market entry by a potential rival, and reduce consumer choice. 357. Facebook’s scheme also ensured that there would be no competition by a rival social advertising platform on non-price bases, such as, for example, increased privacy, more features, higher quality features, new features, more valuable social connections, reduced advertising to users, or new use cases. The scheme also foreclosed new or alternate business models by competitors or potential competitors, including the business model Facebook itself forwent and sacrificed for anticompetitive purposes—charging developers and competitors for API / Platform access or advertising. 358. Facebook’s anticompetitive scheme has also allowed it to raise prices for social advertising during and after the execution of the scheme. Facebook continues to be one of the only sources for targeted social advertising in the United States and in most of the world. As evidence of its market power in the Social Advertising Market, Facebook has raised prices without sacrificing any demand. 359. Facebook’s anticompetitive scheme excludes developers and would-be competitors from the Social Advertising market; commandeers and restricts output of social data, a critical resource for social advertising; and strengthens the SDBE protecting Facebook’s business. All of this has resulted in sustained and increasing supracompetitive prices for Facebook advertisements. Plaintiff (and the persons, entities, and companies in the proposed Classes) bought Facebook advertisements at supracompetitive prices inflated by Facebook’s anticompetitive scheme. 360. Plaintiff therefore was, and is, harmed in its business and property: it was overcharged for advertising as a result of unlawful, anticompetitive conduct by Facebook. CONCEALMENT AND TOLLING 361. Until no earlier than November 6, 2019, Plaintiff did not know, and could not reasonably have known, the truth about Facebook’s anticompetitive conduct, including its purpose and intent to engage in anticompetitive conduct and the resulting price inflation, as alleged in this Complaint. 362. As set forth below, Facebook, its executives, officers, and senior employees affirmatively acted to prevent the disclosure of the truth, including through (a) enforcing a strict code of silence within the organization, (b) preventing disclosure to developers and the public during and after the scheme, (c) continuing to evangelize the Core APIs knowing that they were slated for removal for competitive reasons, (d) misleading developers and the public about the reasons for the removal through pretextual explanations, including by falsely stating that the APIs were being removed to provide users more control over their data or out of concern for user privacy, and (e) misleading regulators and the public about acquisitions, including of WhatsApp and Instagram. This conduct individually and taken together ensured that the levee would not break and that developers and advertisers would not pursue claims for fraud or anticompetitive conduct. 363. In fact, the levee did not break for years. It was not until internal documents came to light revealing the true, non-pretextual reasons for Facebook’s anticompetitive conduct, including the purported removal of the APIs as well as the lack of legitimate technical or business purpose for the purported removal; the anticompetitive effect and existence of the whitelisting agreements made in exchange for advertising purchases or user data; the capture, clone, or kill strategy implemented by Facebook; and the anticompetitive effects of its acquisitions of WhatsApp and Instagram, including the intended use of these assets, which was hidden from regulators and the public to obtain regulatory approval. A. Facebook Made False Statements About the Availability of the API Functionality and Omitted from Those Statements that Facebook Had Internally Decided to Remove the APIs 364. During the period from September 2011 through April 2014, Facebook repeatedly told developers and the public that the functionality of the Core APIs as well as other functionality removed in April 2015 was available to them to be used as part of their applications. These false statements, omissions, and half-truths created a duty to speak fully and truthfully. As explained below, Facebook never did so—not even after it removed the Core APIs from its Platform. 365. During training sessions, hackathons, meetups, and conferences, many of which were posted on Facebook’s public YouTube channel, Facebook’s employees and executives evangelized the Core APIs to developers and other viewers. Facebook did so to ensure that developers and the public would not learn of the truth—that Facebook had internally begun the process of auditing apps to be slated for destruction. If the truth were known, developers would have fled the platform, destroying Facebook’s ability to anoint winners in various app categories and to destroy their actual and potential competitors by exploiting their reliance on the platform. For example: (a) On June 20, 2012, Cox presented the Ticketmaster app as a case study for what developers could do on Facebook’s platform. Specifically, Cox noted that the Ticketmaster app would allow users to see “which night your friends were going to the concert,” but the very API this app would have relied on was slated for deprecation with respect to any developer that would not ultimately enter into an agreement with Facebook for data or advertising. (b) On October 20, 2013, Zuckerberg gave a speech that touted photo sharing by developer apps and stated that it was an opportunity for developers to monetize their apps. The APIs that were required for such an app, however, had already been restricted as of the date of his statements. During the same speech, Zuckerberg claimed that developers would have access to user photos for their own apps, but at the time he made the statement, Facebook had already planned to remove that functionality from its platform. (c) On February 28, 2013, in a developer video published on Facebook’s public YouTube channel, entitled “Getting started with Facebook SDK for iOS,” Facebook’s Product Manager of the Mobile Platform, Eddie O’Neil, taught developers how to build applications that access a user’s friends’ data by building one with the developers in the audience. He showed how to make a request to “get back photo albums from five friends” and then towards the end shows the finished application stated: “Here are all my friends . . . As I scroll here, you see that we haven’t brough all the friend pictures in yet, but as we bring them in we’ll stick them in that cache and hold on to them . . . when we come back to display this it’s instantaneous,” meaning that the app can show all the friends’ photos in as single request to make it very easy for developers to use this data in their applications. The presentation, including statements about the demonstrated functionality, was false and misleading, as Facebook had internally already begun the process of removing the very functionality that was being evangelized. (d) At a developer conference in Moscow, which was posted on Facebook’s developer YouTube page on February 28, 2013, and entitled “Introduction to the Facebook Platform,” Simon Cross of Facebook demonstrated the use of several of the APIs, including the Friends and News Feed APIs that were slated for removal by Facebook at the time of the demonstration and while the presentation remained on the YouTube developer page. Cross never mentioned Facebook’s internal plans to remove the very functionality he advertised to developers. If he had told the truth, developers would have fled the platform and Facebook’s anticompetitive scheme would have unraveled. (e) At the same February 28, 2013 conference, another Facebook employee, Tom Elliot, demoed the publishing of information from a mobile app to a user’s timeline as well as to the timeline of a user’s friends, noting that Facebook’s Graph API allowed posts from a mobile app “on the timeline of the user and the news feed of the friend of the user—these are people who have never used your app before.” This is precisely the functionality that would require the Friends and News Feed APIs, yet Facebook and its employees never once mentioned that they were internally planning to remove that functionality with respect to certain apps that either (i) did not provide advertising or data to Facebook in exchange for continued use or (ii) were slated for destruction after Facebook’s audit of apps on its Platform. (f) At Facebook’s Mobile Developer Day in November 2012, Facebook again evangelized the ability to use the Friends and News Feed APIs as part of mobile applications. Indeed, the presentation displayed the ability to traverse a user’s friends as part of the test app and to post to a defined audience of friends, as well as to the news feed. The presentation was false and misleading because the functionality being demonstrated was slated for removal with respect to most of the apps on Facebook’s Platform. Developers who viewed presentations like the one at the Developer Day conference would be allowed to build their entire business on functionality that Facebook knew it planned to remove. (g) In a June 26, 2013 video posted on Facebook’s public YouTube page for developers, Facebook touted the work done by one of its partners, Fab.com, which again demonstrated Friends and News Feed API functionality that was slated for removal. The video features a Fab.com employee stating that using the Graph API, they were able to “take everything they have in the catalog and narrowly target to a customer” to “see a product on Facebook and then share with their friends.” Again, Facebook omitted that it was planning to remove the very APIs that made the featured functionality possible and did so because revelation of the truth would have prematurely ended its anticompetitive scheme before it could be completed. (h) Facebook was consistently misleading about the functionality available to developers through the News Feed and Friends APIs. On June 20, 2013, Simon Cross, in a training video published on Facebook’s YouTube Channel, entitled “Getting Started with Graph API,” presented “[a]n introduction to Facebook’s Graph API which is the primary way to programmatically integrate with user—their details, their likes and interests and friends.” The video referenced Facebook’s posted developer documentation, and notably featured the following false and misleading statements about the functionality provided by the Graph APIs, including the Friends and News Feed APIs: Graph API Explorer make it really easy to get started . . . Placed, Pages, Photos, Events and News Feed stories as well as Users are all considered objects in the graph We can go deeper and deeper into the graph. We can also request the picture connection on each returned User object. This would allow me to show the profile picture of each of my friends and to get all of this data in a single request. 366. These statements identified above were false and misleading not only because they were designed to induce developers to build for functionality that was slated for selective removal, but because the statements maintained the secrecy needed for the anticompetitive scheme’s success. Facebook knew that if developers found out the truth, they would flee the Platform and cease making apps that increased the value of Facebook. Without the proliferation of apps on its Platform, Facebook could not choose the “winners” among them for continued access while eliminating any actual or potential competitors when it eventually removed the APIs. 367. These false statements from the end of 2011 through the removal of the APIs in April 2015 created a clear duty to speak fully and truthfully. When Facebook finally announced and purported to remove the APIs, it breached that duty, preventing developers and the public from learning the true reasons for the purported removal of the APIs. B. Facebook and Its Employees Maintained a Code of Silence about the Scheme in the Face of a Duty to Speak 368. Facebook senior executives, including Mark Zuckerberg, acted internally to ensure that the purported removal of the APIs, the reasons for the purported removal, and the overall anticompetitive scheme was kept a secret. 369. For example, when Facebook senior executives began plans to announce Zuckerberg’s decision to remove the APIs and to enforce reciprocity, Zuckerberg vetoed the decision in December 2012. 370. When Sukhar raised the need to inform developers of Facebook’s internal plans for the APIs—namely, their removal for competitive reasons—Vernal told him that any mention of the competitive reasons for the purported removal would mean a “high likelihood of breaking into jail.” Sukhar did not at any point reveal the truth to developers or the public, even though he internally observed that he had been speaking to dozens of developers “who will get totally fucked by this and it won’t even be for the right reason.” In fact, he acquiesced to the scheme, referring to it as the “switcharoo plan” when speaking to other Facebook engineers. 371. Facebook’s George Lee raised the fact that Facebook was continuing to mislead developers about the APIs, even on the eve of the announcement of their purported removal, stating to Purdy and Vernal that “partner managers are still selling products that we ask them to sell, so when it comes to feed integration, we’re still telling people to use [Open Graph].” He noted that Facebook had “decided amongst ourselves that this is no longer the future” but that developers were being told something different. Vernal, Purdy, and Lee all knew that Facebook was going to purport to remove the Friends and News Feed APIs, but none of them stopped Facebook from telling developers or the public otherwise. These systematic and knowingly false statements to developers and the public created a duty to speak fully and truthfully, but Facebook never did so. 372. All of this conduct instilled in Facebook’s employees a need for secrecy. Even when they raised issues with their superiors, none of them would correct the systematic false statements Facebook was making to developers and the public contemporaneously with their internal execution of the scheme to remove the APIs for competitive reasons, including the internal audit of apps. They failed to correct those statements notwithstanding that their false statements about the Platform and its available functionality created a duty to speak fully and truthfully. For example, as described fully above, in internal e-mails to other Facebook executives and employees, Sukhar recounted conversations with developers during which he did not disclose the truth about the APIs. /// C. Facebook Lied to Developers and the Public About the Reasons for the Purported Removal, Offering False, Misleading, and Pretextual Reasons Instead of the Truth 373. At the April 30, 2014 Facebook F8 developers conference, Facebook misleadingly downplayed the announcement of its purported removal of the APIs by folding it into its announcement of new Facebook authentication features, including changes to Facebook’s Login system. Zuckerberg never mentioned during his keynote or any time during the conference that the most central APIs on the Platform, the Friends and News Feed APIs, were purportedly being removed. Instead, the announcement was buried at the bottom of a public FAQ released during the conference. The FAQ falsely stated that “we are removing several rarely used API endpoints; visit our changelog for details.” 374. This public statement was false because Facebook had internally surveyed the apps relying on the APIs and found that thousands of them relied on those APIs. They were not in any sense “rarely used.” The false statement was made to avoid drawing attention to Facebook’s radical decision to announce the purported removal of the Friends and News Feed APIs. By making a public false statement about the reasons for the purported removal of the APIs, Facebook assumed a duty to speak fully and truthfully on the subject. It did not do so. 375. Facebook’s public announcement of the purported removal of the Friends and News Feed APIs was deliberately designed to mislead, as it was announced as part of a broader Facebook Login announcement that was supposedly intended to increase user control over data. Indeed, in a public blog post made on the day of the announcement, Facebook’s Jeffrey Spehar stated that the changes were made because “people want more control over sharing their personal information” and because “[w]e’ve heard from people that they’re often surprised when a friend shared their information with an app.” 376. Facebook never mentioned that it had internally audited apps to determine whether they were competitive and that senior executives had internally stated that the decision was being driven by competitive reasons, not legitimate business or technical reasons. Indeed, Facebook never mentioned that its own engineers thought the removal of the Friends and News Feed API was beyond parody and “insane.” The statements about user feedback as the reason for the decision were pretextual and misleading. 377. Between the announcement and the removal of the APIs in April 2015, Facebook continued to make false and misleading statements and omissions to developers and the public about the purported removal of the APIs, including about the reasons for the purported removal. 378. For example, Facebook told developers and others who inquired that the APIs were “going away.” Indeed, Konstantinos Papamiltiadis told developer Airbiquity on March 30, 2015, precisely this: “there are certain things that are going away on 4.30 that we can’t provide extensions for,” naming the Friends and News Feed APIs explicitly in an e-mail to Airbiquity’s product manager. At no time did Papamiltiadis or anyone else at Facebook tell the full truth— that it was secretly making deals with countless developers it had hand-selected for continued use in exchange for their social data and other compensation. 379. On March 30, 2015, Papamiltiadis also told Microsoft the same thing: that the APIs were going away after April 30, 2015. Again, he never mentioned that in fact Facebook had made secret deals with certain developers. 380. These statements indicate that Facebook’s statements were broad and systematic, designed to mislead developers and the public into thinking that Facebook had evenhandedly applied its policy to all developers alike. If the truth were known, developers (and other interested parties, including members of the press) would have not only complained, but pursued the true reasons for Facebook’s purported withdrawal, which is why Facebook was careful to make false statements to developers and other interested parties whom Facebook had not selected for continued use. 381. Even in a blog post from April 30, 2015, the date the APIs were purportedly removed, Facebook claimed that “Facebook is migrating all apps to v2.0 of the Graph API with the goal of giving people more control over the information they share with apps.” That was not, however, the goal of the purported API withdrawal. Facebook had internally made the decision for competitive reasons and had no legitimate technical or business justification for the decision. Indeed, documents during the several years Facebook and its senior executives planned and executed the scheme reflect that the APIs were being purportedly withdrawn for competitive reasons, not for increasing user control over shared information. 382. Facebook continued to mislead developers and the public by offering pretextual reasons for the purported withdrawal of the APIs. Simon Cross frequented developer message boards, including the widely-read public message board Stack Overflow, and referred developers and others asking questions about the APIs to Facebook’s public documentation and FAQ. The FAQ stated: Why are you deprecating the permissions to get information about people’s friends? To put people first. This update was in response to feedback from people who were uncomfortable knowing that a friend could share their information with an app. With Graph API v.2.0, we wanted to make sure the people had more control over their information. 383. The reasons offered by the public FAQ were false and misleading and omitted material information. Namely, the FAQ’s statement that the purported removal of the APIs was in response to user feedback was false, and mere pretext designed to mislead developers and the public as to the real reasons for the purported withdrawal of the APIs. In fact, Facebook had made the decision approximately three years earlier, as part of Zuckerberg’s mandate that a policy of reciprocity be enforced as to developers and that competitive apps be prevented from using Facebook’s APIs. Indeed, Facebook had used information gleaned from spying on users to measure their engagement with apps, and had performed an internal audit to determine which apps were competitive or potentially competitive with Facebook so that they could be marked for destruction. Facebook’s internal executives, including Sukhar, lamented that the purported removal of the APIs was not based on any legitimate technical reason, and Facebook’s own engineers opposed the decision. None of these executives and employees contemporaneously cited user feedback as even a purported reason for the removal of the APIs. 384. Moreover, by speaking partially, falsely, and misleadingly to the public about the reasons for the purported API withdrawal, Facebook was under a duty to speak fully and truthfully on the subject. It did not do so. Instead, it omitted (a) that the plan to purportedly deprecate the APIs had been made years prior to the announcement by senior executives, (b) that the reasons for the purported removal were competitive, not because of user feedback, and (c) that Facebook had hand selected certain apps for continued use of the APIs. Indeed, Facebook not only omitted that it was broadly entering into extended API agreements, it made false and misleading statements to the contrary in its public FAQ, including that “[w]e’ve removed access to friends data in v.2.0” without any mention of the extended API agreements it was entering with certain app developers. 385. The announcement, FAQ, documentation, and posts to developer message boards misled developers and the public. They accepted the pretextual reasons for the purported API removal after reading or otherwise consuming Facebook’s communications (including documentation, message board answers, and videos) posted after the announcement. If they had known the truth, they would have inquired further into the real reasons for the withdrawal (and so would the press), but Facebook’s false statements successfully prevented any further inquiry. 386. Facebook was careful even when it referenced the purported April 2015 withdrawal of the Friends and News Feed APIs to continue to offer a false, misleading, and pretextual rationale for the decision. Indeed, when Facebook announced additional Platform changes on March 26, 2018, senior executive Ime Archibong referenced the purported API withdrawal and an investigation into apps that had access to a large amount of information before the purported withdrawal as part of a broader initiative to prevent “misuse” of user data and to implement “additional measures to protect data” and give “people more control of their information.” That was not, however, the real reason for the purported withdrawal of the APIs in April 2015, and Facebook again failed to mention the real reasons for doing so despite undertaking a duty to speak fully and truthfully, including when it again spoke publicly on the subject in March 2018. 387. Even after certain internal Facebook documents became public after the UK Parliament used its legal powers to seize them on November 24, 2018, Facebook continued to make false and misleading statements to conceal from developers, the public, and the press the real reasons for the purported API withdrawal. 388. In a public blog post by the company posted on December 5, 2018, Facebook stated falsely and misleadingly that extended API agreements to access the purportedly withdrawn APIs were granted to developers in the “short term” and “only used to prevent people from losing access to specific functions as developers updated their apps.” The blog post also stated that the changes to the APIs were made to prevent the improper access to user data that occurred as part of the Cambridge Analytica scandal. That was not, however, the reason Facebook purported to remove the APIs. In fact, Facebook continued to allow broad access to user data for hand-selected apps that entered into agreements with Facebook to provide their social data back to Facebook or provide other compensation, such as large advertising purchases. 389. On November 6, 2019, NBC News posted the full trove of documents seized by the UK Parliament on its website. For the first time, Facebook’s statements to developers and the public were revealed to have been false, misleading, or having omitted material information. This was the first time any developer or advertiser—or anyone in the public—could have learned the real reason for the purported withdrawal of the APIs: anticompetitive reasons. It was also the first time developers, advertisers, and the public could learn (1) that Facebook internally viewed the purported withdrawal as lacking any legitimate business or technical justification, and (2) that the scheme had broad impact on competition. D. Facebook Misled Regulators and the Public About Its Integration of Instagram and WhatsApp with Its Facebook Product 390. At the beginning of this year, Facebook scrambled to integrate the backends of its Facebook products with its acquired products, WhatsApp and Instagram. Until that integration, Facebook had largely maintained the separateness of the products, but in response to threats of divestiture from antitrust regulators, Facebook began an aggressive effort to integrate the backends—the brains of each product—reneging on promises to regulators to keep the products separate and to frustrate any divestiture ordered. 391. When it acquired WhatsApp, Facebook publicly stated that it would operate WhatsApp independently from its other Facebook properties, but that turned out not to be the case. Indeed, the European Union found Facebook lied to regulators about its integration plans for WhatsApp and fined Facebook € 110 million. The EC regulator explained the reasons for its fine in a press release, dated May 17, 2017: The European Commission has fined Facebook €110 million for providing incorrect or misleading information during the Commission’s 2014 investigation under the EU Merger Regulation of Facebook’s acquisition of WhatsApp . . . When Facebook notified the acquisition of WhatsApp in 2014, it informed the Commission that it would be unable to establish reliable automated matching between Facebook’s users’ accounts and WhatsApp users’ accounts. It stated this both in the notification form and in a reply to a request for information from the Commission. However, in August 2016, WhatsApp announced updates to its terms of service and privacy policy, including the possibility of linking WhatsApp users’ phone numbers with Facebook users’ identities. On 20 December 2016, the Commission addressed a Statement of Objections to Facebook detailing its concerns. The commission has found that, contrary to Facebook’s statements in the 2014 merger review process, the technical possibility of automatically matching Facebook and WhatsApp users’ identities already existed in 2014, and that Facebook staff were aware of such a possibility. 392. Facebook had lied to regulators. It was always capable of integrating its advertising targeting systems and in fact had done so. After the acquisition, WhatsApp’s founder Brian Acton quit in PROTEST IN March 2018, stating on Twitter: “it is time. #deletefacebook.”  393. Consistent with the EC’s finding, Acton believed Facebook misled European Union regulators about its plans to comingle WhatsApp and Facebook data for use in its ad targeting system. And, despite Zuckerberg’s promise that he would not try to monetize WhatsApp for five years, Facebook almost immediately began exploring the monetization of WhatsApp without its founders’ consent. Acton left behind $850 million in stock when he quit in protest. 394. WhatsApp’s other co-founder, Jan Koum, left in April of 2018. Instagram’s founders Kevin Systrom and Mike Krieger followed suit shortly after, resigning from Facebook in the Fall of 2018. 395. With the founders of its two acquired competitors—Instagram and WhatsApp— gone, by late 2018 Facebook had unfettered internal license to integrate two of the most powerful rival social networks with Facebook’s core business. 396. Facebook, however, knew it was vulnerable to divestiture of the acquired assets if it continued to operate them independently, and the integration of its assets would give it unprecedented control over user social data globally. 397. Zuckerberg and Facebook immediately devised a plan to integrate backends of the WhatsApp, Instagram and Facebook products. On March 6, 2019, Zuckerberg announced a plan to integrate the apps on his blog, pretextually cloaking the maneuver as a privacy-related decision to frustrate regulators and hide the anticompetitive effects of his integration of the acquired products. Facebook’s announced plan would implement a unitary form of end-to-end encryption across its messaging and photo sharing apps, and would integrate the acquired assets (WhatsApp, Instagram, and their respective social data) to make them interoperable with—and inextricable from—Facebook’s core product. 398. Although Facebook had prior to the backend integration created interoperability across its applications of its tracking and surveillance infrastructure, the full integration of the so- called backend provides Facebook with surveillance, advertising targeting, and market power incomparable from any other social network (and likely any other private entity) on earth. The integration would ensure that Instagram and WhatsApp networks can also never become viable platform alternatives to Facebook’s Platform. Indeed, once integrated, Instagram and WhatsApp would not be alternatives but part and parcel of the very Facebook Graph API and Platform the company has anticompetitively leveraged dominance in the Social Advertising market to the detriment of thousands of advertisers, including Plaintiff and Class Members herein. 399. The back-end integration is a game changer—and directly reneges on Facebook’s statements to regulators about its ability to merge the apps together and to consolidate market power. The integration means that 2.6 billion users across Facebook, WhatsApp and Instagram would be interoperably reachable across platforms for the first time, creating a massive and unprecedented concentration of market power in the Social Advertising market. CLASS ACTION ALLEGATIONS 400. The Classes’ claims all derive directly from a course of conduct by Facebook. Facebook has engaged in uniform and standardized conduct toward the class. Facebook did not materially differentiate in its actions or inactions toward members of the class. The objective facts on these subjects are the same for all class members. Within each Claim for Relief asserted by the class, the same legal standards govern. Accordingly, Plaintiff brings this lawsuit as a class action on its own behalf and on behalf of all other persons similarly situated as members of the proposed class pursuant to Federal Rules of Civil Procedure 23(a) and (b)(3) and/or (b)(2) and/or (c)(4). This action satisfies the numerosity, commonality, typicality, adequacy, predominance, and superiority requirements of those provisions. Nationwide Advertiser Class 401. Between April 4, 2018, and the present, Facebook advertisers, including Plaintiff, have been governed by materially common terms of service, which applied specifically to “commercial” Facebook accounts during this time period. 402. Plaintiff brings this action and seek to certify and maintain it as a class action under Rules 23(a); (b)(2); and/or (b)(3); and/or (c)(4) of the Federal Rules of Civil Procedure on behalf of itself and a Post-2018 Nationwide Advertiser Class defined as follows: All persons, entities, and/or corporations in the United States who purchased advertising from Facebook between April 4, 2018, and the present, and were thereby injured by anticompetitive price inflation in the Social Advertising market (the “Post-2018 Class Period”). 403. Excluded from the Nationwide Advertiser Class is Facebook, its employees, officers, directors, legal representatives, heirs, successors, and wholly or partly owned subsidiaries or affiliates; and the judicial officers and their immediate family members and associated court staff assigned to this case. Numerosity and Ascertainability 404. The class in this action satisfies the requirements of Fed. R. Civ. P. 23(a)(1). Thousands of persons, entities, and/or companies nationwide purchased advertising from Facebook during the Class Period. Individual joinder of all Class members is impracticable. 405. The Class is ascertainable because its members can be readily identified using Facebook accounts, Facebook Ads registrations, and other records and information kept by Facebook or third parties in the usual course of business and within their control. Plaintiff anticipates providing appropriate notice to the certified Class, in compliance with Fed. R. Civ. P. 23(c)(1)(2)(A) and/or (B), to be approved by the Court after class certification, or pursuant to court order under Fed. R. Civ. P. 23(d). Predominance of Common Issues 406. This action satisfies the requirements of Fed. R. Civ. P. 23(a)(2) and 23(b)(3) because questions of law and fact that have common answers are the same for each Class member and predominate over questions affecting only individual Class members. 407. Common issues include, without limitation, the following questions of law and a. Whether Defendant monopolized the Social Advertising Market. b. Whether Defendant, its employees or affiliates, intended to monopolize the Social Advertising Market. c. Whether Defendant attempted to monopolize the Social Advertising Market. d. Whether Defendant possessed monopoly or market power in the Social Advertising Market. e. Whether user data and data obtained by third parties created a Social Data Barrier to Entry that protected Facebook’s market position and/or monopoly, reduced competition or entry in the Social Advertising Market, and/or increased prices for products in that market, including, but not limited to, advertising sold to members of the proposed Classes. f. Whether Defendant’s decision to withdraw the Friend and Feed Graph APIs lacked any justification and/or whether the procompetitive effects of the decision to do so, if any, was outweighed by the anticompetitive effects. g. Whether Defendant sacrificed short-term profits to monopolize, or attempt to monopolize, the Social Advertising Market. h. Whether the procompetitive effects of the decision to withdraw the Friend and Feed Graph APIs, if any at all existed, could have been accomplished by less restrictive means. i. Whether Defendant’s agreements with whitelisted developers violated Section 2 of the Sherman Act, including whether the agreements restrained trade or strengthened the Social Data Barrier to Entry. j. Whether Defendant’s purchase of WhatsApp violated Section 2 of the Sherman Act. k. Whether Defendant’s conduct harmed competition in the Social Advertising Market. l. Whether Defendant’s conduct caused price increases or the reduction of consumer or developer choice in the Social Advertising Market. m. Whether Defendant’s unlawful conduct was a substantial contributing factor in the injury to members of the Class. Typicality 408. This action satisfies the requirements of Fed. R. Civ. P. 23(a)(3) because the Class and Plaintiff’s claims are typical of the claims of other Class members and arise from the same course of conduct by Defendant. The relief Plaintiff seeks is typical of the relief sought for the absent Class members. Adequate Representation 409. Plaintiff will fairly and adequately represent and protect the interests of the Class. Plaintiff has retained counsel with substantial experience in prosecuting antitrust and consumer class actions, including actions involving defective products. 410. Plaintiff and its counsel are committed to vigorously prosecuting this action on behalf of the Class and have the financial resources to do so. Neither Plaintiff nor its counsel have interests adverse to those of the Class. Superiority 411. This action satisfies the requirements of Fed. R. Civ. P. 23(b)(2) because Defendant has acted and refused to act on grounds generally applicable to the Classes, thereby making appropriate final injunctive and/or corresponding declaratory relief with respect to the Classes as a whole. 412. This action satisfies the requirements of Fed. R. Civ. P. 23(b)(3) because a class action is superior to other available methods for the fair and efficient adjudication of this controversy. Common questions of law and fact regarding Defendant’s conduct and responsibility predominate over any question affecting only individual Class members. 413. Because the damages suffered by each individual Class member may be relatively smaller than the costs of litigation, the expense and burden of individual litigation would make it very difficult or impossible for individual Class members to redress the wrongs done to each of them individually, such that most or all Class members would have no rational economic interest in individually controlling the prosecution of specific actions, and the burden imposed on the judicial system by individual litigation by even a small fraction of the Class would be enormous, making class adjudication the superior alternative under Fed. R. Civ. P. 23(b)(3)(A) for each of the proposed Classes. 414. The conduct of this action as a class action presents far fewer management difficulties, far better conserves judicial resources and the parties’ resources, and far more effectively protects the rights of each Class member than would piecemeal litigation. Compared to the expense, burdens, inconsistencies, economic infeasibility, and inefficiencies of individualized litigation, the challenges of managing this action as a class action are substantially outweighed by the benefits to the legitimate interests of the parties, the court, and the public of class treatment in this Court, making class adjudication superior to other alternatives, under Fed. R. Civ. P. 23(b)(3)(D). 415. Plaintiff is not aware of any obstacles likely to be encountered in the management of this action that would preclude its maintenance as a class action. Rule 23 provides the Court with authority and flexibility to maximize the efficiencies and benefits of the class mechanism and reduce management challenges. The Court may, on motion of Plaintiff or on its own determination, certify nationwide, statewide, and/or multistate classes for claims sharing common legal questions; utilize the provisions of Rule 23(c)(4) to certify any particular claims, issues, or common questions of fact or law for class-wide adjudication; certify and adjudicate bellwether class claims; and utilize Rule 23(c)(5) to divide any class into subclasses. REALLEGATION AND INCORPORATION BY REFERENCE 416. Plaintiff realleges and incorporates by reference all the preceding paragraphs and allegations of this Complaint, as though fully set forth in each of the following Claims for Relief asserted on behalf of the Class. CLAIMS FOR RELIEF COUNT I Section 2 Sherman Act: Monopolization 417. Defendant has willfully acquired and maintained monopoly power in the relevant market for Social Advertising. 418. Facebook possesses monopoly power in the relevant market for Social Advertising. Facebook has the power to control prices or exclude competition in the relevant market. 419. Facebook’s revenue share of the Social Advertising Market is approximately 80%; its share has been above 70% since 2015. 420. Defendant has willfully acquired and maintained monopoly power for Facebook in the relevant market for Social Advertising. As alleged herein Defendant has accomplished this by means of predatory, exclusionary, and anticompetitive conduct, including but not limited to: including but not limited to: removing friends, news feed, and other crucial APIs; refusing to sell social data to competing applications developers; extracting social data from competitors through threats of blacklisting and/or through nonconsensual data scraping; targeting competitors for reciprocity or denial of API access; entering into whitelisting and data sharing agreements with competitors, including for large advertising purchases or the provision of user data; and engaging in covert surveillance of competitors’ users in order to detect and ultimately acquire competitive threats before they became too formidable. 421. Defendant’s conduct alleged above has had an anticompetitive effect in the relevant market for Social Advertising. 422. Defendant’s conduct alleged herein has no legitimate business purpose or procompetitive effect. 423. Defendant’s conduct has had a substantial effect on interstate commerce. 424. Plaintiff and the Class have been and will be injured in their business or property as a result of Defendant’s conduct alleged herein. 425. Plaintiff and the Class have suffered and will suffer injury of the type that the antitrust laws were intended to prevent. Plaintiff and the Class have been and will be injured by the harm to competition as a result of Defendant’s conduct. COUNT II Section 2 Sherman Act: Attempted Monopolization 426. As alleged herein, Defendant has engaged in predatory, exclusionary, and anticompetitive conduct, including but not limited to: removing friends, news feed, and other crucial APIs; refusing to sell social data to competing applications developers; extracting social data from competitors through threats of blacklisting and/or through nonconsensual data scraping; targeting competitors for reciprocity or denial of API access; entering into whitelisting and data sharing agreements with competitors, including for large advertising purchases or the provision of user data; and engaging in covert surveillance of competitors’ users in order to detect and ultimately acquire competitive threats before they became too formidable. 427. Defendant’s conduct alleged above has had an anticompetitive effect in the relevant market for Social Advertising. 428. Defendant’s conduct alleged herein has no legitimate business purpose or procompetitive effect. 429. Defendant has engaged in that conduct with the specific intent of monopolizing the relevant market for Social Advertising. 430. Defendant has engaged in that conduct with a dangerous probability of monopolizing the relevant market for Social Advertising. 431. Defendant’s conduct has had a substantial effect on interstate commerce. 432. Plaintiff and the Class have been and will be injured in their business or property as a result of Defendant’s conduct alleged herein. 433. Plaintiff and the Class have suffered and will suffer injury of the type that the antitrust laws were intended to prevent. Plaintiff and the Class have been and will be injured by the harm to competition as a result of Defendant’s conduct. PRAYER FOR RELIEF WHEREFORE, Plaintiff requests that judgment be entered against Defendant and that the Court grant the following: A. Determine that this action may be maintained as a class action pursuant to Rules 23(a), (b)(2), (b)(3) and/or (c)(4) of the Federal Rules of Civil Procedure, and direct that reasonable notice of this action, as provided by Rule 23(c)(2), be given to the Class, and declare Plaintiff as the representative of the Class; B. Enter a judgment against Defendant in favor of Plaintiff and the Class; C. Award the Classes damages (i.e., three times their damages) in amount to be determined at trial; D. Award actual, compensatory, statutory, and consequential damages; E. Award equitable monetary relief, including restitution and disgorgement of all ill-gotten gains, and the imposition of a constructive trust upon, or otherwise restricting the proceeds of Defendant’s ill-gotten gains, to ensure an effective remedy; F. Grant permanent injunctive relief pursuant to Section 16 of the Clayton Act to remedy the ongoing anticompetitive effects of Defendant’s unlawful conduct; G. Award pre-judgment and post-judgment interest at the highest rate allowed by law; H. Award Plaintiff and the Class their costs of suit, including reasonable attorneys’ fees as provided by law; and I. Award such further and additional relief as the case may require and the Court may deem just and proper under the circumstances. JURY DEMAND Plaintiff demands a trial by jury on all claims so triable as a matter of right. Dated: March 3, 2021 Respectfully submitted, By: /s/ Jennie Lee Anderson Jennie Lee Anderson (SBN 203586) ANDRUS ANDERSON LLP 155 Montgomery Street, Suite 900 San Francisco, CA 94104 Tel. (415) 986-1400; Fax. (415) 986-1474 [email protected] REINHARDT WENDORF & BLANCHFIELD Garrett D. Blanchfield (Pro Hac Vice forthcoming) Brant D. Penney (Pro Hac Vice forthcoming) 332 Minnesota Street, Suite W1050 St. Paul, MN 55101 Tel: (651) 287-2100 Fax: (651) 287-2103 [email protected] [email protected] SPECTOR ROSEMAN & KODROFF, P.C. William G. Caldes (Pro Hac Vice forthcoming) Jeffrey Spector (Pro Hac Vice forthcoming) Mary Ann Geppert (Pro Hac Vice forthcoming) 2001 Market Street, Suite 3420 Philadelphia, PA 19103 Tel: (215) 496-0300 Fax: (215) 496-6611 [email protected] [email protected] MGeppert@ srkattorneys.com Attorneys for Plaintiff

antitrust

qXP7FYkB9sM9pEmadmRo

2013 NOV -1 - AM11:18 CLERK DISTRICT COURT DEST OF CALIF Les ANGELES BY UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA Case CLASS ACTION COMPLAINT DEMAND FOR JURY TRIAL Plaintiffs, V. Defendant. NATURE OF THE CASE 1. Plaintiffs and the Class members they propose to represent purchased or 2. 3. PARTIES 4. 5. Plaintiff Christopher H. White is a citizen and resident of Odenton, 6. 7. 8. Defendant Chrysler Group, L.L.C., (Chrysler) is a limited liability JURISDICTION AND VENUE 9. 10. 11. Venue is proper in this District under 28 U.S.C. § 1391(b) because SUBSTANTIVE ALLEGATIONS 12.13. 14. 15. TOTALLY INTEGRATED POWER MODULE IS GOING OUT ON MULTIPLE JEEP VEHICLES. THE TIPM CONTROLS LIGHTS, HORNS, WIPERS, AIR BAGS, ETC. WHEN THE PART QUITS WORKING IT CAUSES MULTIPLE ISSUES WITH THE VEHICLE. THE VEHICLE WILL NOT START, WHICH CAN LEAVE THE OWNER STRANDED. THE WIPERS, HORN, ETC., JUST TURN ON, WHICH COULD CAUSE AN ACCIDENT. AND THE AIR BAGS MAY NOT DEPLOY IF IN AN ACCIDENT. THE TIPM IS ON NATIONAL BACK ORDER, WHICH MEANS WAITING WEEKS FOR REPAIR AND CHRYSLER IS REFUSING TO PAY FOR A RENTAL CAR FOR THE OWNER, AND WILL, THE REPLACEMENT LAST LONGER THAN THE ORIGINL? THE VEHICLE NEEDS TO BE RECALLED AND REPLACED. CAR WON'T STOP. TIPM FUSE EXPLODED. JEEP DEALER SAYS I WONT HAVE A CAR FOR 2 WEEKS AND JEEP WON'T COVER THIS MAIN STREAM ISSUE. I FOUND 1200 COMPLAINTS ON THE SAME ISSUE. WE WANT EXTENDED WARRANTY OR FULL RECALL ON ALL JEEP GRAND CHEROKEES. 2011 AND 2012. PEOPLE CAN DIE IF THEIR CAR SHUTS OFF ON THE HIGHWAY. I WAS WARNED I CAN DIE IF I DRIVE THIS JEEP BY SHAVER JEEP IN THOUSAND OAKS, CA. TIPM NEEDS RECALL AND WILL END UP KILLING JEEP OWNERS. MY PROBLEM IS WITH MY TOTALLY INTEGRATED POWER MODULE (TIPM). IT IS FAULTY AND NEEDS REPLACED AND SO ARE 25,000 OTHER 2011 VEHCILES IN THE USA. PART IS ON BACKORDER AND THERE IS A BUSINESS PROBLEM WITH THE VENDOR. I AM FLAGGING THIS SITUATION AS A LIFE, HEALTH, AND SAFETY MATTER BECAUSE YOU HAVE ON FILE 5-2011 JEEP GRAND CHEROKEE ACCIDENTS WHERE THE AIR BAGS WERE WRITTEN UP IN THE POLICE REPORTS AS NOT DEPLOYING. THIS GOES RIGHT BACK TO THE TIPM WHICH IS THE BRAIN OF THE WHOLE VEHICLE. THE AIR BAGS ARE WIRED IN TO THE TOTALLY INTEGRATED POWER MODULE. THIS IS THE CASE WHERE YOU NEED TO CONNECT THE DOTS. THERE ARE THOUSANDS OF US OUT THERE THAT WON'T START BECAUSE WE NEED THE TIPM. WHAT ABOUT THE OTHER THOUSANDS OUT THERE THAT DIDN'T DEVELOP THE FAULT YET IN THE TIPM BUT IN THE EVENT OF AN ACCDIENT THE ODDS THAT THE AIR BAGS DON'T DEPLOY HAS BEEN GREATLY INCREASED. THIS CONSUMER/JEEP OWNER HAS NO FAITH AT ALL THAT MY BAGS WILL EVER DEPLOY WHEN NEEDED. WHEN MY JEEP IS RETURNED TO ME I AM IMMEDIATELY TRADING IT IN. NHSTA NEEDS TO FORCE CHRSYLER TO MAKE A RECALL; THEY WILL NEVER DO IT ON THEIR OWN. 16. I WOULD LIKE TO PLACE A FORMAL COMPLAINT AGAINST CHRYSLER GROUP, LLC. MY FAMILY ALONG WITH SEVERAL HUNDREDS, IF NOT THOUSANDS OF OTHER 2011 JEEP GRAND CHEROKEE OWNERS. THIS ISSUE IS AROUND THE TIPM DEVICE THAT SEEMS TO BE FAILING ON MY AND MANY CONSUMER'S VEHICLES DATING BACK TO THE EARLY PART OF 2013. THE PROBLEM IS THE DEALER, NOR THE CHRYSLER GROUP DOESN'T HAVE AN IDEA WHEN THIS PART WILL BE AVAILABLE LEAVING MANY OF US WITHOUT A CAR FOR AN UNDETERMINED AMOUNT OF TIME. THIS PART (TIPM) NEEDS TO BE PLACED ON OFFICIAL RECALL BY THE CORPORATION AND UNTIL IT ACTUALLY IS IT HAS PLACED UNDUE FINANCIALSTRAIN ON MANY OF THE OWNERS OF THE JEEP. WE ARE EXPECTED BY THE BANKS TO CONTINUE PAYING OUR CAR NOTE, ALONG WITH INSURNACE. NOW CHRYSLER IS SAYING THAT WE MUST ALSO COME OUT OF POCKET FOR RENTALS TO REPLACE THE VEHICLES WE HAVE AND OR PAYING FOR UNTIL THEY RESOLVE THE ISSUE. THIS IS NOT RIGHT ON SO MANY LEVELS AND APPARENTLY THEY CAN GET AWAY WITH THIS WITHOUT RECOURSE. IN CONCLUSION, JUST ASKING THE JUSTICE DEPARTEMENT TO LOOK INTO THIS ISSUE AND ASSIST US CONSUMERS BEING HELD HOSTAGE BY CHRYSLER GROUP, LLC. Chrysler Refuses to Acknowledge the TIPM Defect 17. 18. 19. Chrysler's refusal to publically acknowledge the defect has left Class Plaintiff Peter Velasco's Experience 20. In March 2009, Plaintiff Velasco purchased a certified Pre-Owned 2008 21. Mr. Velasco bought his 2008 Chrysler 300 because he needed a reliable 22. 23. 24.25. 26. The Scotts Robinson Chrysler dealership ran a diagnostic test and 27. Plaintiff Christopher White's Experience 28. 30. 31. 32. 33. Mr. White contacted Chrysler customer care but received very limited 34. Plaintiff Jacqueline Young's Experience 35. In January 2011, Plaintiff Young purchased a new 2011 Jeep Grand 36. Ms. Young purchased her 2011 Jeep Grand Cherokee because she 37. 38. Frustrated with the increasing difficulty of starting her vehicle, and39. 40. 41. Plaintiff Christopher Light's Experience 42. 43. 44. 45. Six months later, in early August 2013, Mr. Light's vehicle once again 46.47. 48. 49. On September 20, 2013, the dealership notified Mr. Light that it had 50. Impacted Vehicles 51. Chrysler has long known that it equipped Class Vehicles with defective 52. 53. 54. 55. 56. The TIPM defect has resulted in several thousand consumers incurring CLASS ACTION ALLEGATIONS 57. All persons in the United States who purchased or leased Class Vehicles installed with the TIPM, or, alternatively, all persons in California, Maryland, and Florida who purchased or leased Class Vehicles installed with the TIPM. 58. Excluded from the Class are Chrysler and Chrysler Group, LLC; any59. 60. 61. a. Whether Class Vehicles suffer from the TIPM defect; b. Whether the TIPM defect constitutes an unreasonable safety risk; C. How long Chrysler has known of the defect; d. e. TIPM to Plaintiffs and the Class f. Whether Chrysler has violated California's Consumers Legal g. Whether Chrysler has engaged in unlawful, unfair, or fraudulent 17200 et seq., as alleged in this complaint; h. Act, Md. Code Com. Law § 13-101, et seq., as alleged in this complaint; i. Practices Act, Fla. Stat. § 501.201, et seq., as alleged in this complaint; j. Whether Plaintiffs and the other Class members are entitled to equitable relief, including but not limited to restitution or a preliminary and/or permanent injunction; and k. Whether Plaintiffs and the other Class members are entitled to damages and other monetary relief. 62. 63. 64.65. In the alternative, the Class may be certified because: a. respect to individual Class members which would establish incompatible standards of conduct for Chrysler; b. the prosecution of separate actions by individual Class members would create a risk of adjudications with respect to them which or impede their ability to protect their interests; and C. respect to the members of the Class as a whole. FIRST CAUSE OF ACTION (Violation of the Consumers Legal Remedies Act, Cal. Civ. Code. §§ 1750, et seq.) 66. Plaintiff Velasco, on behalf of himself and all others similarly situated, 67. 68. Plaintiff Velasco and members of the class are "consumers" within the 69. 70. 71. Had Chrysler adequately disclosed information about the headlight 72. SECOND CAUSE OF ACTION (For unlawful, unfair, and fraudulent business practices under Business and Professions Code § 17200 et seq.) 73. Plaintiff Velasco, on behalf of himself and all others similarly situated, 74. Chrysler's acts and practices, as alleged in this complaint, constitute 75. The business practices engaged in by Chrysler that violate the Unfair 76. 77. Chrysler engaged in unfair business practices by, among other things: 78. 79. 80. Engaging in conduct that undermines or violates the stated policies 81. 82. As a direct and proximate result of Chrysler's unlawful, unfair and 83. Plaintiff and Class members are entitled to equitable relief, including THIRD CAUSE OF ACTION (Violation of the Maryland Consumer Protection Act, Md. Code Com. Law § 13-101, et seq. ) 84. 85. Plaintiffs White and Young are "persons" within the meaning of the86. Chrysler is a "person" within the meaning of the Maryland Consumer 87. All of the conduct alleged herein occurred in the course of Chrysler's 88. 89. Plaintiffs White and Young and the Class were injured by Chrysler's 90. FOURTH CAUSE OF ACTION (Violation of the Florida Deceptive and Unfair Trade Practices Act, Fla. Stat. § 501.201, et seq.) 91. Plaintiff Light, on behalf of himself and all others similarly situated, 92. Plaintiff Light and the other Class members are "consumers" within the 93. 94. 95. Pursuant to Fla. Stat. $501.211(1), Plaintiff Light and the other Class 96. PRAYER FOR RELIEF WHEREFORE, Plaintiffs, on Plaintiffs' own behalf and on behalf of the Class, a. counsel to represent the Class; b. For an order awarding Plaintiffs and the members of the Class damages, consequential damages, specific performance, and/or rescission; c. other equitable relief as the Court deems proper; d. For an order enjoining Chrysler from continuing to engage in unlawful business practices as alleged herein; e. and post-judgment interest; f. attorneys' fees and costs of suit, including expert witness fees; and g. just and proper. DEMAND FOR JURY TRIAL Plaintiffs hereby demand a trial by jury on all claims SO triable. Respectfully submitted, GIRARD GIBBS LLP By: Eric H. Gibbs Dylan Hughes Caitlyn D. Finley601 California Street, 14th Floor San Francisco, California 94108 Telephone: (415) 981-4800 Facsimile: (415) 981-4846 [email protected] [email protected] [email protected] Todd M. Schneider Joshua G. Konecky SCHNEIDER WALLACE COTTRELL KONECKY LLP 180 Montgomery Street, Suite 2000 San Francisco, California 94104 Telephone: (415) 421-7100 Facsimile: (415) 421-7105 [email protected] [email protected] Attorneys for Plaintiffs UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA NOTICE OF ASSIGNMENT TO UNITED STATES JUDGES Dean D. Pregerson Victor B. Kenton . The case number on all documents filed with the Court should read as follows: 2:13-CV-8080-DDP (VBKx) Clerk, U. S. District Court November 1, 2013 By MDAVIS Date Deputy Clerk NOTICE TO COUNSEL Southern Division Eastern Division 411 West Fourth St., Ste 1053 3470 Twelfth Street, Room 134 Santa Ana, CA 92701 Riverside, CA 92501 UNITED STATES DISTRICT COURT for the Central District of California ) ) ) situated, ) Plaintiff(s) ) ) V. Civil Action ) CHRYSLER GROUP LLC ) ) ) ) Defendant(s) ) SUMMONS IN A CIVIL. ACTION c/o C T Corporation 818 West Seventh Street Los Angeles, California 90017 A lawsuit has been filed against you. Within 21 days after service of this summons on you (not counting the day you received it) - or 60 days if you Eric H. Glbbs Dylan Hughes Caltlyn D. Finley GIRARD GIBBS, LLP 601 California Street, 14th Floor San Francisco, California 94108 If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint. CLERK OF COURT THE U.S. OF DISTRIA NOV - 1 2013 MARILYN DAVIS Signature of Clerk or CASHFORM OF 1227 PROOF OF SERVICE (This section should not be filed with the court unless required by Fed. R. Civ. P. 4 (l)) I personally served the summons on the individual at (place) on (date) ; or I left the summons at the individual's residence or usual place of abode with (name) , a person of suitable age and discretion who resides there, , and mailed a copy to the individual's last known address; or I served the summons on (name of individual) on (date) ; or I returned the summons unexecuted because Other (specify): for travel and $ for services, for a total of $ 0.00 Server's signature Printed name and title Server's address) DEFENDANTS ( Check box If you are representing yourself ) CHRYSLER GROUP LLC (b) Attorneys (Firm Name, Address and Telephone Number. If you are representing yourself, provide same Information.) III. CITIZENSHIP OF PRINCIPAL PARTIES-For Diversity Cases Only (Place an X in one box for plaintiff and one for defendant) PTF DEF PTF 3. Federal Question (U.S. Citizen of This State 1 1 Incorporated or Principal Place 4 Government Not a Party) of Business In this State Citizen of Another State 2 2 Incorporated and Principal Place 5 of Business In Another State 4. Diversity (Indicate Citizenship Citizen or Subject of a 3 of Parties in Item III) Foreign Country 3 Foreign Nation 6 6. Multi- 2. Removed from 3, Remanded from 4. Reinstated or 5. Transferred from Another District State Court Appellate Court Reopened District (Specify) Litigation Yes No (Check "Yes" only If demanded in complaint) Yes No MONEY DEMANDED IN COMPLAINT: $ CONTRACT REAL PROPERTY CONT IMMIGRATION PRISONER PETITIONS PROPERTY RIGHTS 110 Insurance 240 Torts to Land 462 Naturalization Habeas Corpus: 820 Copyrights 120 Marine 245 Tort Product Application 463 Allen Detainee 830 Patent Liability 465 Other 510 Motions to Vacate 130 Miller Act 290 All Other Real immigration Actions Sentence 840 Trademark 140 Negotiable Property TORTS 530 General SOCIAL SECURITY Instrument TORTS PERSONAL PROPERTY 535 Death Penalty 861 HIA (1395ft) 150 Recovery of PERSONAL PROPERT 370 Other Fraud Other 862 Black Lung (923) Overpayment & 310 Airplane Enforcément of 315 Airplane 371 Truth In Lending 540 Mandamus/Other 863 DIWC/DIWW (405 (g)) Judgment Product Liability 380 Other Personal 550 Civil Rights 864 SSID Title XVI 151 Medicare Act 320 Assault, Libel & Property Damage 555 Prison Condition Slander 865 RSI (405 (g)) 152 Recovery of 385 Property Damage Defaulted Student 330 Fed. Employers' 560 Civil Detainee Product Liability Loan (Excl. Vet.) Liability Conditions of FEDERAL TAX SUITS BANKRUPTCY Confinement 340 Marine 422 Appeal 28 FORFEITURE/PENALTY 153 Recovery of 345 Marline Product Defendant) Overpayment of USC 158 Liability 625 Drug Related Vet. Benefits 423 Withdrawal 28 Selzure of Property 21 7609 350 Motor Vehicle USC 157 USC 881 160 Stockholders' Sults 355 Motor Vehicle CIVII RIGHTS 690 Other Product Liability 190 Other 360 Other Personal 440 Other Civil Rights LABOR Contract Injury 441 Voting 710 Fair Labor Standards Act 195 Contract 362 Personal Injury- Product Liability Med Malpratice 442 Employment 720 Labor/Mgmt. 196 Franchise 365 Personal Injury- 443 Housing/ Relations Product Liability Accomodations 740 Rallway Labor Act REAL PROPERTY 367 Health Care/ 445 American with 210 Land Pharmaceütical Disabilities- 751 Family and Medical Condemnation Personal Injury Employment Leave Act 220 Foreclosure Product Liability 446 American with 790 Other Labor 368 Asbestos Disabilities-Other Litigation 230 Rent Lease & Personal Injury 448 Education 791 Employee Ret. Inc. Electment Product Liability Security Act Case Number: CV13-08080 CIVIL COVER SHEET Page 1 of 3 STATE CASE WAS PENDING IN THE COUNTY OF: Los Angeles Western Yes No Ventura, Santa Barbara, or San Luis Obispo Western Southern Orange Riverside or San Bernardino EasternIf the United States, or one of its agencies or employees, is a party, is it: INITIAL A PLAINTIFF? A DEFENDANT? DIVISION IN Yes CACD IS: No Then check the box below for the county in Then check the box below for the county in which the majority of DEFENDANTS reside. which the majority of PLAINTIFFS reside. Los Angeles Los Angeles Western Ventura, Santa Barbara, or San Luis Ventura, Santa Barbara, or San Luis Western Obispo Obispo Orange Orange Southern Riverside or San Bernardino Riverside or San Bernardino Eastern Other Other Western A. B. C. D. E. Los Angeles Ventura, Santa Barbara, or Orange County Riverside or San Outside the Central County San Luis Obispo Counties Bernardino Counties District of California C.2. Is either of the following true? If so, check the one that applies: 2 or more answers in Column D only 1 answer in Column D and no answers in Column C Your case will initially be assigned to the Your case will initially be assigned to the SOUTHERN DIVISION. EASTERN DIVISION. Enter "Eastern" in response to Question D, below. If none applies, go to the box below. Your case will initially be assigned to the WESTERN DIVISION. Enter "Western" in response to Question D below. INITIAL DIVISION IN CACD WESTERN DIVISION CIVIL COVER SHEET NO NO A. Arise from the same or closely related transactions, happenings, or events; or B. Call for determination of the same or substantially related or similar questions of law and fact; or C. For other reasons would entail substantial duplication of labor if heard by different judges; or D. Involve the same patent, trademark or copyright, and one of the factors identified above in a, b or C also is present. DATE: November 1, 2013 Abbreviation Substantive Statement of Cause of Action HIA (42 U.S.C. 1935FF(b)) BL 923) DIWC all claims filed for child's insurance benefits based on disability. (42 U.S.C. 405 (g)) All DIWW amended. (42 U.S.C. 405 (g)) SSID amended. RSI All claims for retirement (old age) and survivors benefits under Title 2 of the Social Security Act, as amended. (42 U.S.C. 405 (g)) CIVIL COVER SHEET

consumer fraud

2a2CCocBD5gMZwczTj39

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK Kimberly Gross, individually and on behalf of all others similarly situated, Civil Action No: 2:20-cv-05031 Plaintiff(s) -v.- Arnold A. Arpino & Associates, P.C., CLASS ACTION COMPLAINT DEMAND FOR JURY TRIAL and John Does 1-25. Defendant(s). Plaintiff Kimberly Gross (“Plaintiff”), brings this Class Action Complaint by and through her attorneys, Stein Saks, PLLC, against Defendant Arnold A. Arpino & Associates, P.C. (“Arpino”), individually and on behalf of a class of all others similarly situated, pursuant to Rule 23 of the Federal Rules of Civil Procedure, based upon information and belief of Plaintiff’s counsel, except for allegations specifically pertaining to Plaintiff, which are based upon Plaintiff's personal knowledge. INTRODUCTION/PRELIMINARY STATEMENT 1. The Fair Debt Collection Practices Act (“FDCPA”) was enacted in 1977 in response to the "abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors." 15 U.S.C. §1692(a). Congress was concerned that "abusive debt collection practices contribute to the number of personal bankruptcies, to material instability, to the loss of jobs, and to invasions of individual privacy." Id. Congress concluded that "existing laws…[we]re inadequate to protect consumers," and that "the effective collection of debts" does not require "misrepresentation or other abusive debt collection practices." 15 U.S.C. §§ 1692(b) & (c). 2. The purpose of the Act was not only to eliminate abusive debt collection practices, but also to ensure “that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged.” Id. § 1692(e). After determining that the existing consumer protection laws were inadequate, Id. § 1692(b), the Act gave consumers a private cause of action against debt collectors who fail to comply with it. Id. § 1692k. JURISDICTION AND VENUE 3. The Court has jurisdiction over this class action pursuant to 28 U.S.C. § 1331 and 15 U.S.C. § 1692 et. seq. The Court has pendent jurisdiction over state law claims, if any, in this action pursuant to 28 U.S.C. § 1367(a). 4. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(b)(2), as the acts and transactions occurred here, Plaintiff resides here, and Defendant transacts business here. NATURE OF THE ACTION 5. Plaintiff brings this class action on behalf of a class of consumers under § 1692 et seq. of Title 15 of the United States Code, also known as the Fair Debt Collections Practices Act ("FDCPA"), and 6. Plaintiff is seeking damages and declaratory relief. PARTIES 7. Plaintiff is a resident of the State of New York, county of Suffolk, residing at 41 Cornflower Lane, East Northport, NY 11731. 8. Defendant Arpino is a “debt collector” as the phrase is defined in 15 U.S.C. § 1692(a)(6) and used in the FDCPA with an address at 380 Townline Rd., Suite 380, Hauppauge, NY 11788. 9. Upon information and belief, Defendant Arpino is a company that uses the mail, telephone, and facsimile and regularly engages in business the principal purpose of which is to attempt to collect debts alleged to be due to itself or another. 10. John Does 1-25, are fictitious names of individuals and businesses alleged for the purpose of substituting names of Defendants whose identities will be disclosed in discovery and should be made parties to this action. CLASS ALLEGATIONS 11. Plaintiff brings this claim on behalf of the following class, pursuant to Fed. R. Civ. P. 23(a) and 23(b)(3). 12. The Class consists of all individuals: a. with addresses in the State of New York; b. to whom Defendant Arpino failed to send the notice required by 15 U.S.C. § 1692g; c. within five days of an initial communication with a consumer in connection with collection of a debt; d. which communication occurred on or after a date one (1) year prior to the filing of this action and on or before a date twenty-one (21) days after the filing of this action. 13. The identities of all class members are readily ascertainable from the records of Defendant and those companies and entities on whose behalf it attempts to collect and/or has purchased debts. 14. Excluded from the Plaintiff Class are the Defendant and all officers, members, partners, managers, directors and employees of the Defendant and their respective immediate families, and legal counsel for all parties to this action, and all members of their immediate families. 15. There are questions of law and fact common to the Plaintiff Class, which common issues predominate over any issues involving only individual class members. The principal issue is whether the Defendant’s written communications to consumers, in the form attached as Exhibit A, violate 15 U.S.C. §§ 1692e, 1692f, and 1692g. 16. The Plaintiff’s claims are typical of the class members, as all are based upon the same facts and legal theories. The Plaintiff will fairly and adequately protect the interests of the Plaintiff Class defined in this complaint. The Plaintiff has retained counsel with experience in handling consumer lawsuits, complex legal issues, and class actions, and neither the Plaintiff nor her attorneys have any interests, which might cause them not to vigorously pursue this action. 17. This action has been brought, and may properly be maintained, as a class action pursuant to the provisions of Rule 23 of the Federal Rules of Civil Procedure because there is a well- defined community interest in the litigation: a. Numerosity: The Plaintiff is informed and believes, and on that basis alleges, that the Plaintiff Class defined above is so numerous that joinder of all members would be impractical. b. Common Questions Predominate: Common questions of law and fact exist as to all members of the Plaintiff Class and those questions predominate over any questions or issues involving only individual class members. The principal issue is whether the Defendant’s written communications to consumers, in the form attached as Exhibit A violate 15 U.S.C. §§ 1692e, 1692f, and 1692g. c. Typicality: The Plaintiff’s claims are typical of the claims of the class members. The Plaintiff and all members of the Plaintiff Class have claims arising out of the Defendant’s common uniform course of conduct complained of herein. d. Adequacy: The Plaintiff will fairly and adequately protect the interests of the class members insofar as Plaintiff has no interests that are adverse to the absent class members. The Plaintiff is committed to vigorously litigating this matter. Plaintiff has also retained counsel experienced in handling consumer lawsuits, complex legal issues, and class actions. Neither the Plaintiff nor her counsel have any interests which might cause them not to vigorously pursue the instant class action lawsuit. e. Superiority: A class action is superior to the other available means for the fair and efficient adjudication of this controversy because individual joinder of all members would be impracticable. Class action treatment will permit a large number of similarly situated persons to prosecute their common claims in a single forum efficiently and without unnecessary duplication of effort and expense that individual actions would engender. 18. Certification of a class under Rule 23(b)(3) of the Federal Rules of Civil Procedure is also appropriate in that the questions of law and fact common to members of the Plaintiff Class predominate over any questions affecting an individual member, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy. 19. Depending on the outcome of further investigation and discovery, Plaintiff may, at the time of class certification motion, seek to certify a class(es) only as to particular issues pursuant to Fed. R. Civ. P. 23(c)(4). FACTUAL ALLEGATIONS 20. Plaintiff repeats the above allegations as if set forth here. 21. Some time prior to August 10, 2020, an obligation was allegedly incurred to non- party Ambulatory Anesthesia, P.C. 22. This alleged debt was incurred as a financial obligation primarily for personal, family or household purposes and is therefore a “debt” as that term is defined by 15 U.S.C. § 1692a (5), specifically for personal medical services. 23. Ambulatory Anesthesia is a "creditor" as defined by 15 U.S.C.§ 1692a (4). 24. Upon information and belief, Ambulatory Anesthesia contracted with the Defendant to collect the alleged debt. 25. Defendant Arpino collects and attempts to collect debts incurred or alleged to have been incurred for personal, family or household purposes on behalf of itself or other creditors using the United States Postal Services, telephone and internet. Violation – Failure to Send §1692g Notice 26. On or around June, 2020, the Defendant filed a collection lawsuit against the Plaintiff for the Ambulatory Anesthesia debt. 27. This lawsuit was the first communication the Plaintiff received from Defendant. 28. In response to the receipt of this lawsuit the Plaintiff telephoned the Defendant to discuss the alleged debt. 29. Pursuant to 15 U.S.C. §1692g: Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing – 1. The amount of the debt; 2. The name of the creditor to whom the debt is owed; 3. A statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any 4. portion thereof, the debt will be assumed to be valid by the debt- collector; 5. A statement that the consumer notifies the debt collector in writing within thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and 6. A statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor. 30. Defendant failed to send Plaintiff the written notices within five days of this initial communication as required by 15 U.S.C.§ 1692g. Violation – August 10, 2020 Collection Letter 31. On or about August 10, 2020, Defendant Arpino sent Plaintiff a collection letter. A copy of this letter is attached as Exhibit A. 32. The letter is also lacking the notice required by 15 U.S.C. § 1692g. 33. Defendant’s actions were therefore misleading and unfair in attempting to coerce the consumer to pay the alleged debt without taking advantage of her statutorily required rights. 34. The letter is also deceptive on its face in that it fails to give the required notice and leaves the consumer unsure of her statutory rights. 35. As a result of Defendant's deceptive, misleading and unfair debt collection practices, Plaintiff has been damaged. COUNT I VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. §1692e et seq. 36. Plaintiff repeats the above allegations as if set forth here. 37. Defendant’s debt collection efforts attempted and/or directed towards the Plaintiff violated various provisions of the FDCPA, including but not limited to 15 U.S.C. § 1692e. 38. Pursuant to 15 U.S.C. §1692e, a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. 39. Defendant violated said section: a. By making a misleading representation or using deceptive means in violation of §1692e (10) by failing to provide the statutory notices required by § 1692g and thereby coercing the consumer to waive her statutory rights to dispute the debt. 40. By reason thereof, Defendant is liable to Plaintiff for judgment that Defendant's conduct violated Section 1692e et seq. of the FDCPA, actual damages, statutory damages, costs and attorneys’ fees. COUNT II VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. §1692f et seq. 41. Plaintiff repeats the above allegations as if set forth here. 42. Defendant’s debt collection efforts attempted and/or directed towards the Plaintiff violated various provisions of the FDCPA, including but not limited to 15 U.S.C. § 1692f. 43. Pursuant to 15 U.S.C. §1692f, a debt collector may not use any unfair or unconscionable means in connection with the collection of any debt. 44. Defendant violated this section by: a. unfairly attempting to coerce the consumer to pay the alleged debt without notifying her of her rights to dispute the debt, as required by § 1692g. 45. By reason thereof, Defendant is liable to Plaintiff for judgment that Defendant's conduct violated Section 1692f et seq. of the FDCPA, actual damages, statutory damages, costs and attorneys’ fees. COUNT III VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. §1692g et seq. 46. Plaintiff repeats the above allegations as if set forth here. 47. Defendant’s debt collection efforts attempted and/or directed towards the Plaintiff violated various provisions of the FDCPA, including but not limited to 15 U.S.C. § 1692g. 48. Pursuant to 15 U.S.C. §1692g: Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing – 1. The amount of the debt; 2. The name of the creditor to whom the debt is owed; 3. A statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any 4. portion thereof, the debt will be assumed to be valid by the debt- collector; 5. A statement that the consumer notifies the debt collector in writing within thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and 6. A statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor. 49. Defendant violated this section by failing to provide the proper notice required by §1692g in an initial communication or within five days thereafter. 50. By reason thereof, Defendant is liable to Plaintiff for judgment that Defendant's conduct violated Section 1692g et seq. of the FDCPA, actual damages, statutory damages, costs and attorneys’ fees. DEMAND FOR TRIAL BY JURY 51. Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff hereby requests a trial by jury on all issues so triable. PRAYER FOR RELIEF WHEREFORE, Plaintiff Kimberly Gross, individually and on behalf of all others similarly situated, demands judgment from Defendant Arnold A. Arpino & Associates, P.C., as follows: a) Declaring that this action is properly maintainable as a Class Action and certifying Plaintiff as Class representative, and Eliyahu Babad, Esq., as Class Counsel; b) Awarding Plaintiff and the Class statutory damages; c) Awarding Plaintiff and the Class actual damages; d) Awarding Plaintiff costs of this Action, including reasonable attorneys’ fees and expenses; e) Awarding pre-judgment interest and post-judgment interest; and f) Awarding Plaintiff and the Class such other and further relief as this Court may deem just and proper. Dated: October 20, 2020 Respectfully submitted, Stein Saks, PLLC By: /s Eliyahu Babad Eliyahu Babad, Esq. 285 Passaic Street Hackensack, NJ, 07601 P. (201) 282-6500 x121 F. (201) 282-6501 Attorneys for Plaintiff

consumer fraud

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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION THOMAS ESTKA, individually and on ) behalf of all others similarly situated, ) ) Plaintiff, ) No. 12 C 10253 ) v. ) ) CHALET NURSERY AND GARDEN ) SHOP INC., ) ) CLASS ACTION Defendant. ) JURY DEMANDED CLASS ACTION COMPLAINT Plaintiff Thomas Estka (“Plaintiff”), by his attorneys, Markoff Leinberger LLC, states as follows for his Class Action Complaint against Defendant Chalet Nursery and Garden Shop Inc. (“Defendant”). 1. This is a consumer class action based upon Defendant’s violations of the Fair and Accurate Credit Transactions Act (“FACTA”) amendment to Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq., as amended (the “FCRA”). Specifically, this action is based on Section 1681c(g) of the FCRA. This section of the FCRA, like many others, was designed to combat the rampant increase of identity theft throughout the nation in recent years. Under the FCRA, companies that accept credit and debit cards are required to restrict the information they print on sales receipts. Such a practice, if followed, reduces an identity thief’s ability to obtain valuable account information relating to a consumer. Despite the simple steps necessary to comply, and despite abundant notice, Defendant simply chose to ignore compliance with the FCRA. As such, consumers who purchase goods and services from Defendant receive none of the benefits that Section 1681c(g) was designed to confer, and are uniformly burdened with an elevated risk of identity theft. Jurisdiction and Venue 2. Jurisdiction of this Court arises under 15 U.S.C. § 1681, 28 U.S.C. §§ 1331 and 3. Venue lies properly in this district pursuant to 28 U.S.C. §1391(b). Parties 4. Plaintiff is an individual who resides in this district. 5. Defendant is an Illinois corporation with its principal place of business in this district. 6. At all relevant times, Defendant was a “person who accepts credit cards or debit cards for the transaction of business” within the meaning of FACTA. Statutory Framework 7. In 2003, FACTA was enacted to bolster protections for consumers from identity 8. FACTA, 15 U.S.C. § 1681c(g) provides as follows: Except as otherwise provided in this subsection, no person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of sale or transaction. 9. § 1681c(g) applies to any “device that electronically prints receipts” (“Devices”) for point of sale transactions. 10. Devices first put into use after January 1, 2005 must have been immediately compliant with 15 U.S.C. § 1681c(g). 11. Devices first put into use prior to January 1, 2005 must have complied with 15 U.S.C. § 1681c(g) by December 4, 2006. 12. FACTA gave merchants who accept credit or debit cards up to three years to comply with its requirements, requiring full compliance with its provisions no later than December 4, 2006. 13. On June 3, 2008, FACTA was amended to provide that any person who printed an expiration date on any receipt provided to a consumer cardholder at a point of sale or transaction between December 4, 2004 and June 3, 2008, but otherwise complied with the requirements of section 1681c(g) of this title for such receipt shall not be in willful noncompliance with section 1681c(g) of this title by reason of printing such expiration date on the receipt. 15 U.S.C. § 1681n(d). COUNT I Violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681c(g) 14. Plaintiff incorporates paragraphs 1 through 13 as though fully stated herein. 15. On December 14, 2012, Plaintiff made a purchase at Defendant’s business at 3132 Lake Ave., Wilmette, IL 60091. To pay for the purchase, Plaintiff used his Visa card. Following the transaction, Plaintiff received from Defendant an electronically-printed receipt that displayed the expiration date of Plaintiff’s Visa card. 16. Plaintiff brings this action individually and on behalf of the following putative Class: All persons to whom Chalet Nursery and Garden Shop Inc. d/b/a Chalet, located at 3132 Lake Ave., Wilmette, IL 60091, provided an electronically printed receipt at the point of sale or transaction, in a transaction occurring on or after December 21, 2010, which receipt displayed the expiration date of the person’s credit or debit card. 17. The Class is so numerous that joinder of all individual members in one action would be impracticable. On information and belief, there are more than 100 persons to whom Defendant provided an electronically printed receipt at the point of sale or transaction, in a transaction occurring on or after December 21, 2010, which receipt displayed the expiration date of the person’s credit or debit card. 18. Plaintiff’ claims are typical of the claims of the Class members. All are based on the same legal theories and arise from the same unlawful and willful conduct. 19. There are common questions of law and fact affecting members of the Class, which common questions predominate over questions that may affect individual members. These common questions include, but are not limited to: a. Whether Defendant had a practice of providing consumers with electronically printed receipts on which Defendant printed the expiration dates of consumers’ credit or debit cards; and b. Whether Defendant thereby willfully violated FACTA. 20. Plaintiff will fairly and adequately represent the Class members. Plaintiff has no interests that conflict with the interests of Class members. Plaintiff has retained counsel experienced in handling consumer class actions. Neither Plaintiff nor his counsel has any interests that might cause them not to pursue this claim vigorously. 21. This action should be maintained as a class action because the prosecution of separate actions by individual Class members would create a risk of inconsistent or varying adjudications with respect to individual members that would establish incompatible standards of conduct for the parties opposing the Class. 22. Whether Defendant failed to comply with 15 U.S.C. § 1681c(g) can be easily determined by a review of its policies and a ministerial inspection of its business records. 23. A class action is a superior method for the fair and efficient adjudication of this controversy. Management of the Class claims is likely to present significantly fewer difficulties than those presented in many individual claims. Moreover, the identities of the Class members may be obtained from Defendant’s records, rendering identification of the class something capable of ministerial review. 24. At all relevant times, Defendant used Devices for point of sale transactions. 25. As of December 14, 2012, Defendant was aware that it was prohibited from providing to consumers sales receipts that displayed the expiration dates of consumers’ credit or debit cards. 26. Prior to December 14, 2012, VISA, MasterCard and other card associations, acquirers and issuers advised merchants, including Defendant, of the need to truncate card numbers and expiration dates on electronically printed receipts. 27. Prior to December 14, 2012, VISA, MasterCard and other card associations, acquirers and issuers contractually required merchants accepting those cards to truncate card numbers and expiration dates on electronically printed receipts. 28. As of January 1, 2005, the Illinois Consumer Fraud and Deceptive Business Practices Act provided that …no provider may print or otherwise produce or reproduce or permit the printing or other production or reproduction of the following: (i) any part of the credit card or debit card account number, other than the last 4 digits or other characters, (ii) the credit card or debit card expiration date on any receipt provided or made available to the cardholder. 29. On or after December 21, 2010, Defendant provided Plaintiff and Class members receipts that failed to comply with 15 U.S.C. § 1681c(g). 30. At all times pertinent hereto, Defendant acted by and through its agents, servants, and/or employees who were acting within the course and scope of their agency or employment, and under the direct supervision and control of the Defendant. 31. Notwithstanding that (1) Defendant had many years to comply with FACTA, (2) Defendant was contractually required to comply with the truncation requirements even before the FACTA compliance deadlines, (3) Defendant was aware of the truncation requirements and (4) Illinois required truncation of card receipts by January 1 2005, Defendant provided consumers with credit and debit card receipts that failed to comply with 15 U.S.C. § 1681c(g). 32. Defendant willfully violated the FCRA. 33. As a result of Defendant’s willful violations of the FCRA, it is liable to Plaintiff and Class members pursuant to 15 U.S.C. § 1681n. WHEREFORE, Plaintiff, individually and on behalf of the putative Class, requests that this Court enter judgment in his favor and against Chalet Nursery and Garden Shop Inc. and award the following: a. Statutory damages pursuant to 15 U.S.C. § 1681n; b. Attorney’s fees, litigation expenses, and costs pursuant to 15 U.S.C. § 1681n; and c. Such further relief as this Court deems just and proper. Plaintiff Demands a Trial By Jury THOMAS ESTKA, Plaintiff, By: s/ Paul F. Markoff One of Plaintiff’s Attorneys Paul F. Markoff Karl G. Leinberger Markoff Leinberger LLC 134 N. LaSalle St., Ste. 1050 Chicago, IL 60602 312.726.4162 (p) 312.674.7272 (f)

consumer fraud

iMajDYcBD5gMZwcz8HWB

IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TENNESSEE EASTERN DIVISION Civil Action No. 19-1204 CLASS ACTION JESSE DEAN, D.C., a Tennessee resident, individually and as the representative of a class of similarly-situated persons, Plaintiff, v. CARECORE NATIONAL, LLC, a New York limited liability company, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) CLASS ACTION COMPLAINT Plaintiff, JESSE DEAN, D.C. (“Plaintiff”), brings this action on behalf of himself and all others similarly situated, through his attorneys, and except as to those allegations pertaining to Plaintiff or his attorneys, which allegations are based upon personal knowledge, alleges the following upon information and belief against Defendant, CARECORE NATIONAL, LLC (“Defendant”): PRELIMINARY STATEMENT 1. This case challenges Defendant’s practice of sending “unsolicited advertisements” by facsimile. 2. The federal Telephone Consumer Protection Act of 1991, as amended by the Junk Fax Prevention Act of 2005 (“JPFA”), 47 USC § 227 (hereafter “TCPA” or the “Act”), and the regulations promulgated under the Act, prohibit a person or entity from faxing or having an agent fax advertisements without the recipient’s prior express invitation or permission. The TCPA provides a private right of action and provides statutory damages of $500 per violation. On or about September 15, 2015, Defendant sent Plaintiff an unsolicited fax advertisement in violation of the TCPA (“the Fax”), a true and correct copy of which is attached hereto as Exhibit A, and made a part hereof. Upon information and belief, Defendant has sent the Fax and other facsimile transmissions of unsolicited advertisements to Plaintiff and the Class in violation of the TCPA. The Fax describes the commercial availability or quality of Defendant’s property, goods or services, namely, Defendant’s “New Musculoskeletal Newsletter,” and states: “We are excited to announce the launch of the new eviCore healthcare (formerly Triad) Musculoskeletal Newsletter” (Exhibit A). Plaintiff alleges on information and belief that Defendant has sent, and continues to send, unsolicited advertisements via facsimile transmission in violation of the TCPA, including but not limited to the advertisement sent to Plaintiff. 3. Unsolicited faxes damage their recipients. A junk fax recipient loses the use of its fax machine, paper, and ink toner. An unsolicited fax wastes the recipient’s valuable time that would have been spent on something else. A junk fax intrudes into the recipient’s seclusion and violates the recipient’s right to privacy. Unsolicited faxes occupy phone lines, prevent fax machines from receiving authorized faxes, prevent their use for authorized incoming faxes, cause undue wear and tear on the recipients’ fax machines, and require additional labor to attempt to discern the source and purpose of the unsolicited message. 4. On behalf of himself and all others similarly situated, Plaintiff brings this case as a class action asserting claims against Defendant under the TCPA. Plaintiff seeks to certify a class comprising all that were sent the Fax and other unsolicited fax advertisements that were sent without prior express invitation or permission and without compliant opt-out language (to the extent the affirmative defense of established business relationship is alleged). Plaintiff seeks statutory damages for each violation of the TCPA and injunctive relief. 5. Plaintiff is informed and believes, and upon such information and belief avers, that this action is based upon a common nucleus of operative facts because the facsimile transmissions at issue were and are being done in the same or similar manner. This action is based on the same legal theory, namely liability under the TCPA. This action seeks relief expressly authorized by the TCPA: (i) injunctive relief enjoining Defendant, its employees, agents, representatives, contractors, and affiliates, and all persons and entities acting in concert with them, from sending unsolicited advertisements in violation of the TCPA; and (ii) an award of statutory damages in the minimum amount of $500 for each violation of the TCPA, and to have such damages trebled, as provided by § 227(b)(3) of the Act, in the event willfulness in violating the TCPA is shown. JURISDICTION AND VENUE 6. This Court has subject matter jurisdiction under 28 U.S.C. § 1331 and 47 U.S.C. 7. This Court has personal jurisdiction over Defendant because Defendant transacts business within this judicial district, has made contacts within this judicial district, and/or has committed tortious acts within this judicial district. 8. Venue is proper under 28 U.S.C. § 1391(b)(2) because a substantial part of the events or omissions giving rise to the claims occurred within this judicial district. PARTIES 9. Plaintiff, JESSE DEAN, D.C., is a Tennessee resident who owns and operates Milan Chiropractic & Sports Injury Clinic, a medical practice and pain center in Milan, Tennessee. 10. On information and belief, Defendant, CARECORE NATIONAL, LLC, is a New York limited liability company with its principal place of business in Bluffton, South Carolina. CareCore operates under the assumed name eviCore healthcare. FACTS 11. On or about September 15, 2015, Defendant sent an unsolicited facsimile to Plaintiff using a telephone facsimile machine, computer, or other device. See Exhibit A. 12. The Fax states, in part, the following: eviCore healthcare New Musculoskeletal Newsletter . . . Sign Up for the NEW MSK Newsletter! We are excited to announce the launch of the new eviCore healthcare (formerly Triad) Musculoskeletal Newsletter! You can now receive important updates that are delivered directly to your inbox as opposed to fax communications. Our new digital communication allows us to instantly send information to you the moment we hear about it. By subscribing to our newsletter, you will have first-hand access to pertinent information such as changes to existing processes/plans, education opportunities, and webinar training sessions. Our e-mail blasts will be your go-to source for updates, and you’ll be able to share these announcements with others – without having to leave your desk! . . . To sign up for the eviCore healthcare Musculoskeletal (MSK) Newsletter, send an email request to [email protected]. Please include the below information so we can better target our communication: . . . . (Exhibit A). The Fax provides no opt-out instructions. 13. The Fax advertises the commercial availability and quality of Defendant’s new Musculoskeletal Newsletter. On that basis, the Fax is an advertisement under the TCPA and regulations implementing the TCPA. 14. Defendant provides managed healthcare services. See Internet Google result: eviCore healthcare Organization CareCore National, LLC, doing business as eviCore healthcare, provides managed healthcare services. The Company offers radiology, radiation therapy, cardiology, medical oncology, lab management, and health plan, as well as other specialty solutions. Additionally, see from Defendant’s website, www.evicore.com: ABOUT EVICORE: Empowering the Improvement of Care Specifically designed with the size and scale to address the complexity of today’s and tomorrow’s healthcare system, eviCore is a company committed to advancing healthcare management through intelligent care – and enabling better outcomes for patients, providers, and health plans. Ours is an evidence-based approach that leverages our exceptional capabilities, powerful analytics, and acute sensitivity to the challenges and needs of everyone involved across the healthcare continuum. By applying proven talent and leading-edge technology, we harness healthcare’s evolving demand and inherent change to realize healthcare innovation and deliver improved results and a positive experience for everyone. Who We Empower eviCore empowers the improvement of care by connecting patients, providers, and health plans with intelligent, evidence-based solutions to enable better outcomes. 15. On information and belief, Defendant receives some or all of the revenues from the sale of the property, goods or services advertised on Exhibit A, and Defendant profits and benefits from the sale of the property, goods or services advertised on Exhibit A. 16. Plaintiff did not give “prior express invitation or permission” to Defendant to send the Fax. 17. On information and belief, Defendant faxed the same and other unsolicited facsimile advertisements without compliant opt-out language to Plaintiff and at least 40 other recipients. 18. There is no reasonable means for Plaintiff (or any other class member) to avoid receiving unauthorized fax advertisements. Fax machines are left on and ready to receive the urgent communications their owners desire to receive. 19. Defendant’s facsimile attached as Exhibit A does not display a proper opt-out notice as required by 47 C.F.R. § 227(b)(1)(C) and 47 C.F.R. § 64.1200(a)(4). CLASS ACTION ALLEGATIONS 20. In accordance with Fed. R. Civ. P. 23(b)(3), Plaintiff brings this class action pursuant to the TCPA on behalf of the following class of persons: All persons who (1) on or after four years prior to the filing of this action, (2) were sent telephone facsimile messages of material advertising the commercial availability or quality of any property, goods, or services by or on behalf of Defendant, and (3) from whom Defendant did not obtain “prior express invitation or permission” to send fax advertisements, or (4) with whom Defendant did not have an established business relationship, or (5) where the fax advertisements did not include an opt-out notice compliant with 47 C.F.R. § 64.1200(a)(4)(iii) regarding any claimed business relationship. Excluded from the Class are Defendant, its employees and agents, and members of the Judiciary. Plaintiff seeks to certify a class which includes, but is not limited to, the fax advertisements sent to Plaintiff. Plaintiff reserves the right to amend the class definition upon completion of class certification discovery. 21. Class Size (Fed. R. Civ. P. 23(a)(1)): Plaintiff is informed and believes, and upon such information and belief avers, that the number of persons and entities of the Plaintiff Class is numerous and joinder of all members is impracticable. Plaintiff is informed and believes, and upon such information and belief avers, that the number of class members is at least forty. 22. Commonality (Fed. R. Civ. P. 23(a)(2)): Common questions of law and fact apply to the claims of all class members. Common material questions of fact and law include, but are not limited to, the following: (a) Whether the Fax and other faxes sent during the class period constitute advertisements under the TCPA and its implementing regulations; (b) Whether Defendant meets the definition of “sender” for direct TCPA liability, meaning a “person or entity on whose behalf a facsimile unsolicited advertisement is sent or whose goods or services are advertised or promoted in the unsolicited advertisement,” 47 C.F.R. § 64.1200(f)(10); (c) Whether Defendant had prior express invitation or permission to send Plaintiff and the class fax advertisements; (d) Whether the faxes contain an “opt-out notice” that complies with the requirements of § (b)(1)(C)(iii) of the Act, and the regulations promulgated thereunder, and the effect of the failure to comply with such requirements; (e) Whether Defendant should be enjoined from faxing advertisements in the future; (f) Whether Plaintiff and the other members of the class are entitled to statutory damages; and (g) Whether the Court should award treble damages. 23. Typicality (Fed. R. Civ. P. 23(a)(3)): Plaintiff's claims are typical of the claims of all class members. Plaintiff received the same or similar faxes as the faxes sent by or on behalf of Defendant advertising the availability or quality of Defendant’s property, goods or services of during the Class Period. Plaintiff is making the same claims and seeking the same relief for himself and all class members based upon the same federal statute. Defendant has acted in the same or in a similar manner with respect to Plaintiff and all the class members by sending Plaintiff and each member of the class the same or similar fax or faxes which did not contain the proper opt-out language or were sent without prior express invitation or permission. 24. Fair and Adequate Representation (Fed. R. Civ. P. 23(a)(4)): Plaintiff will fairly and adequately represent and protect the interests of the class. Plaintiff is interested in this matter, has no conflicts, and has retained experienced class counsel to represent the class. 25. Predominance and Superiority (Fed. R. Civ. P. 23(b)(3)): Common questions of law and fact predominate over any questions affecting only individual members, and a class action is superior to other methods for the fair and efficient adjudication of the controversy because: (a) Proof of Plaintiff’s claims will also prove the claims of the class without the need for separate or individualized proceedings; (b) Evidence regarding defenses or any exceptions to liability that Defendant may assert and attempt to prove will come from Defendant’s records and will not require individualized or separate inquiries or proceedings; (c) Defendant has acted and is continuing to act pursuant to common policies or practices in the same or similar manner with respect to all class members; (d) The amount likely to be recovered by individual class members does not support individual litigation. A class action will permit a large number of relatively small claims involving virtually identical facts and legal issues to be resolved efficiently in one proceeding based upon common proofs; and (e) This case is inherently manageable as a class action in that: (i) Defendant identified persons to receive the fax transmissions and it is believed that Defendant’s and/or Defendant’s agents’ computers and business records will enable Plaintiff to readily identify class members and establish liability and damages; (ii) Liability and damages can be established for Plaintiff and the class with the same common proofs; (iii) Statutory damages are provided for in the statute and are the same for all class members and can be calculated in the same or a similar manner; (iv) A class action will result in an orderly and expeditious administration of claims and it will foster economics of time, effort and expense; (v) A class action will contribute to uniformity of decisions concerning Defendant’s practices; and (vi) As a practical matter, the claims of the class are likely to go unaddressed absent class certification. Claim for Relief for Violation of the TCPA, 47 U.S.C. § 227 et seq. 26. The TCPA makes it unlawful for any person to “use any telephone facsimile machine, computer or other device to send, to a telephone facsimile machine, an unsolicited advertisement . . . .” 47 U.S.C. § 227(b)(1)(C). 27. The TCPA defines “unsolicited advertisement” as “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission, in writing or otherwise.” 47 U.S.C. § 227 (a) (5). 28. Opt-Out Notice Requirements. The TCPA as amended by the JFPA strengthened the prohibitions against the sending of unsolicited advertisements by requiring, in § (b)(1)(C)(iii) of the Act, that senders of faxed advertisements place a clear and conspicuous notice on the first page of the transmission that contains the following among other things (hereinafter collectively the “Opt-Out Notice Requirements”): (1) A statement that the recipient is legally entitled to opt-out of receiving future faxed advertisements – knowing that he or she has the legal right to request an opt- out gives impetus for recipients to make such a request, if desired; (2) A statement that the sender must honor a recipient’s opt-out request within 30 days and the sender’s failure to do so is unlawful – thereby encouraging recipients to opt-out, if they did not want future faxes, by advising them that their opt-out requests will have legal “teeth”; (3) A statement advising the recipient that he or she may opt-out with respect to all of his or her facsimile telephone numbers and not just the ones that receive a faxed advertisement from the sender – thereby instructing a recipient on how to make a valid opt-out request for all of his or her fax machines; (4) The opt-out language must be conspicuous. The requirement of (1) above is incorporated from § (b)(D)(ii) of the Act. The requirement of (2) above is incorporated from § (b)(D)(ii) of the Act and the rules and regulations of the Federal Communications Commission (the “FCC”) in ¶ 31 of its 2006 Report and Order, 21 F.C.C.R. 3787, 2006 WL 901720, which rules and regulations took effect on August 1, 2006). The requirements of (3) above are contained in § (b)(2)(E) of the Act and incorporated into the Opt- Out Notice Requirements via § (b)(2)(D)(ii). Compliance with the Opt-Out Notice Requirements is neither difficult nor costly. The Opt-Out Notice Requirements are important consumer protections bestowed by Congress upon consumers and businesses, giving them the right, and means, to stop unwanted fax advertisements. 29. 2006 FCC Report and Order. The TCPA, in § (b)(2) of the Act, directed the FCC to implement regulations regarding the TCPA, including the TCPA’s Opt-Out Notice Requirements and the FCC did so in its 2006 Report and Order, which in addition provides among other things: A. The definition of, and the requirements for, an established business relationship (EBR) for purposes of the first of the three prongs of an exemption to liability under § (b)(1)(C)(i) of the Act and provides that the lack of an “established business relationship” precludes the ability to invoke the exemption contained in § (b)(1)(C) of the Act (see 2006 Report and Order ¶¶ 8-12 and 17-20); B. The required means by which a recipient’s facsimile telephone number must be obtained for purposes of the second of the three prongs of the exemption under § (b)(1)(C)(ii) of the Act, and provides that the failure to comply with these requirements precludes the ability to invoke the exemption contained in § (b)(1)(C) of the Act (see 2006 Report and Order ¶¶ 13-16); and C. The things that must be done in order to comply with the Opt-Out Notice Requirements for the purposes of the third of the three prongs of the exemption under § (b)(1)(C)(iii) of the Act, and provides that the failure to comply with these requirements precludes the ability to invoke the exemption contained in § (b)(1)(C) of the Act (see 2006 Report and Order ¶¶ 24-34). As a result thereof, a sender of a faxed advertisement who fails to comply with the Opt- Out Notice Requirements cannot claim the exemption from liability contained in § (b)(C)(1) of the Act. 30. The Fax. On or about September 15, 2015, Defendant sent the Fax via facsimile transmission from telephone facsimile machines, computers, or other devices to the telephone lines and facsimile machines of Plaintiff and members of the Plaintiff Class. The Fax constituted an advertisement under the Act and the regulations implementing the Act. Defendant failed to comply with the Opt-Out Requirements in connection with the Fax. The Fax was transmitted to persons or entities without their prior express invitation or permission and Defendant is precluded from sustaining the EBR safe harbor with Plaintiff and other members of the class, because of the failure to comply with the Opt-Out Notice Requirements. By virtue thereof, Defendant violated the TCPA and the regulations promulgated thereunder by sending the Fax via facsimile transmission to Plaintiff and members of the Class. Plaintiff seeks to certify a class which includes this Fax and all others sent during the four years prior to the filing of this case through the present. 31. Defendant’s Other Violations. Plaintiff is informed and believes, and upon such information and belief avers, that during the period preceding four years of the filing of this Complaint and repeatedly thereafter, Defendant has sent via facsimile transmission from telephone facsimile machines, computers, or other devices to telephone facsimile machines of members of the Plaintiff Class other faxes that constitute advertisements under the TCPA and its implementing regulations that were transmitted to persons or entities without their prior express invitation or permission and without complying with the Opt-Out Notice Requirements. By virtue thereof, Defendant violated the TCPA and the regulations promulgated thereunder. Plaintiff is informed and believes, and upon such information and belief avers, that Defendant may be continuing to send unsolicited advertisements via facsimile transmission in violation of the TCPA and the regulations promulgated thereunder, and absent intervention by this Court, will do so in the future. 32. The TCPA provides a private right of action to bring this action on behalf of Plaintiff and the Plaintiff Class to redress Defendant’s violations of the Act, and provides for statutory damages. 47 U.S.C. § 227(b)(3). The Act also provides that injunctive relief is appropriate. Id. 33. The TCPA is a strict liability statute, so Defendant is liable to Plaintiff and the other class members even if their actions were only negligent. 34. Defendant knew or should have known that (a) Plaintiff and the other class members had not given prior express invitation or permission for Defendant or anybody else to fax advertisements about the availability or quality of Defendant’s property, goods or services; (b) Defendant transmitted advertisements; (c) the Fax did not contain the required Opt-Out Notice; and (d) Defendant’s transmission of unsolicited advertisements that did not contain the required opt-out notice was unlawful. 35. Defendant’s actions caused damages to Plaintiff and the other class members. Receiving Defendant’s junk faxes caused Plaintiff and the other recipients to lose paper and toner consumed in the printing of Defendant’s faxes. Moreover, Defendant’s faxes occupied Plaintiff's and the other class members’ telephone lines and fax machines. Defendant’s faxes cost Plaintiff and the other class members time, as Plaintiff and the other class members and their employees wasted their time receiving, reviewing and routing Defendant’s unauthorized faxes. That time otherwise would have been spent on Plaintiff's and the other class members’ business or personal activities. Defendant’s faxes intruded into Plaintiff's and other class members’ seclusion and violated their right to privacy, including their interests in being left alone. Finally, the injury and property damage sustained by Plaintiff and the other class members from the sending of Defendant’s advertisements occurred outside of Defendant’s premises. WHEREFORE, Plaintiff, JESSE DEAN, D.C., individually and on behalf of all others similarly situated, demands judgment in his favor and against Defendant, CARECORE NATIONAL, LLC, as follows: A. That the Court adjudge and decree that the present case may be properly maintained as a class action, appoint Plaintiff as the representative of the class, and appoint Plaintiff’s counsel as counsel for the class; B. That the Court award actual monetary loss from such violations or the sum of five hundred dollars ($500.00) for each violation, whichever is greater, and that the Court award treble damages of $1,500.00 if the violations are deemed “willful or knowing”; C. That Court enjoin Defendant from additional violations; and D. That the Court award pre-judgment interest, costs, and such further relief as the Court may deem just and proper. Dated: September 13, 2019. Respectfully submitted, JESSE DEAN, D.C., a Tennessee resident, individually and as the representative of a class of similarly-situated persons By: /s/ Benjamin C. Aaron Benjamin C. Aaron (#034118) Charles F. Barrett (#20627) NEAL AND HARWELL, PLC 1201 Demonbreun Street, Suite 1000 Nashville, TN 37203 Telephone: 615-244-1713 Fascimile: 615-726-0573 [email protected] [email protected] and Ryan M. Kelly (pro hac vice to be submitted) ANDERSON + WANCA 3701 Algonquin Road, Suite 500 Rolling Meadows, IL 60008 Telephone: 847-368-1500 Fax: 847-368-1501 [email protected]

privacy

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Case No. 18-cv-4874 SHAKED LAW GROUP, P.C. Dan Shaked (DS-3331) 44 Court Street, Suite 1217 Brooklyn, NY 11201 Tel. (917) 373-9128 Fax (718) 504-7555 Attorneys for Plaintiff and the Class UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK -----------------------------------------------------------X MARION KILER, Individually and as the representative of a class of similarly situated persons, Plaintiff, - against - STEEL TECHNOLOGY, LLC d/b/a Hydro Flask, Defendants. -----------------------------------------------------------X COMPLAINT – CLASS ACTION INTRODUCTION 1. Plaintiff, Marion Kiler (“Plaintiff” or “Kiler”), brings this action on behalf of herself and all other persons similarly situated against Steel Technology, LLC d/b/a Hydro Flask (hereinafter “Hydro Flask” or “Defendant”), and states as follows: 2. Plaintiff is a visually-impaired and legally blind person who requires screen- reading software to read website content using his computer. Plaintiff uses the terms “blind” or “visually-impaired” to refer to all people with visual impairments who meet the legal definition of blindness in that they have a visual acuity with correction of less than or equal to 20 x 200. Some blind people who meet this definition have limited vision; others have no vision. 3. Based on a 2010 U.S. Census Bureau report, approximately 8.1 million people in the United States are visually impaired, including 2.0 million who are blind, and according to 1 the American Foundation for the Blind’s 2015 report, approximately 400,000 visually impaired persons live in the State of New York. 4. Plaintiff brings this civil rights action against Hydro Flask for their failure to design, construct, maintain, and operate their website to be fully accessible to and independently usable by Plaintiff and other blind or visually-impaired persons. Defendant is denying blind and visually-impaired persons throughout the United States with equal access to the goods and services Hydro Flask provides to their non-disabled customers through http//:www.Hydroflask.com (hereinafter “Hydroflask.com” or “the website”). Defendants’ denial of full and equal access to its website, and therefore denial of its products and services offered, and in conjunction with its physical locations, is a violation of Plaintiff’s rights under the Americans with Disabilities Act (the “ADA”). 5. Hydroflask.com provides to the public a wide array of the goods, services, price specials, employment opportunities and other programs offered by Hydro Flask. Yet, Hydroflask.com contains thousands of access barriers that make it difficult if not impossible for blind and visually-impaired customers to use the website. In fact, the access barriers make it impossible for blind and visually-impaired users to even complete a transaction on the website. Thus, Hydro Flask excludes the blind and visually-impaired from the full and equal participation in the growing Internet economy that is increasingly a fundamental part of the common marketplace and daily living. In the wave of technological advances in recent years, assistive computer technology is becoming an increasingly prominent part of everyday life, allowing blind and visually-impaired persons to fully and independently access a variety of services. 6. The blind have an even greater need than the sighted to shop and conduct transactions online due to the challenges faced in mobility. The lack of an accessible website 2 means that blind people are excluded from experiencing transacting with defendant’s website and from purchasing goods or services from defendant’s website. 7. Despite readily available accessible technology, such as the technology in use at other heavily trafficked retail websites, which makes use of alternative text, accessible forms, descriptive links, resizable text and limits the usage of tables and JavaScript, Defendant has chosen to rely on an exclusively visual interface. Hydro Flask’s sighted customers can independently browse, select, and buy online without the assistance of others. However, blind persons must rely on sighted companions to assist them in accessing and purchasing on Hydroflask.com. 8. By failing to make the website accessible to blind persons, Defendant is violating basic equal access requirements under both state and federal law. 9. Congress provided a clear and national mandate for the elimination of discrimination against individuals with disabilities when it enacted the ADA. Such discrimination includes barriers to full integration, independent living, and equal opportunity for persons with disabilities, including those barriers created by websites and other public accommodations that are inaccessible to blind and visually impaired persons. Similarly, New York state law requires places of public accommodation to ensure access to goods, services, and facilities by making reasonable accommodations for persons with disabilities. 10. Plaintiff browsed and intended to make an online purchase of an 18 oz. standard mouth bottle on Hydroflask.com. However, unless Defendant remedies the numerous access barriers on its website, Plaintiff and Class members will continue to be unable to independently navigate, browse, use, and complete a transaction on Hydroflask.com. 11. Because Defendant’s website, Hydroflask.com, is not equally accessible to blind and visually-impaired consumers, it violates the ADA. Plaintiff seeks a permanent injunction to cause a change in Hydro Flask’s policies, practices, and procedures to that Defendant’s website 3 will become and remain accessible to blind and visually-impaired consumers. This complaint also seeks compensatory damages to compensate Class members for having been subjected to unlawful discrimination. JURISDICTION AND VENUE 12. This Court has subject matter jurisdiction over this action under 28 U.S.C. § 1331 and 42 U.S.C. § 12181, as Plaintiff’s claims arise under Title III of the ADA, 42 U.S.C. § 12181 et seq., and 28 U.S.C. § 1332, because this is a class action, as defined by 28 U.S.C. § 1332(d)(1)(B), in which a member of the putative class is a citizen of a different state than Defendant, and the amount in controversy exceeds the sum or value of $5,000,000, excluding interest and costs. See 28 U.S.C. § 133(d)(2). 13. This Court also has supplemental jurisdiction over pursuant to 28 U.S.C. § 1367, over Plaintiff’s pendent claims under the New York State Human Rights Law, N.Y. Exec. Law, Article 15 (Executive Law § 290 et seq.) and the New York City Human Rights Law, N.Y.C. Administrative Code § 8-101 et seq. (“City Law”). 14. Venue is proper in this District of New York pursuant to 28 U.S.C. §§ 1391(b)- (c) and 144(a) because Plaintiff resides in this District, Defendant conducts and continues to conduct a substantial and significant amount of business in this District, and a substantial portion of the conduct complained of herein occurred in this District. 15. Defendant is registered to do business in New York State and has been conducting business in New York State, including in this District. Defendant purposefully targets and otherwise solicits business from New York State residents through its website and sells its products through many retailers in this District. Because of this targeting, it is not unusual for Hydro Flask to conduct business with New York State residents. Defendant also has been and is committing the acts alleged herein in this District and has been and is violating the rights of 4 consumers in this District and has been and is causing injury to consumers in this District. A substantial part of the act and omissions giving rise to Plaintiff’s claims have occurred in this District. Most courts support the placement of venue in the district in which Plaintiff tried and failed to access the Website. In Access Now, Inc. v. Otter Products, LLC 280 F.Supp.3d 287 (D. Mass. 2017), Judge Patti B. Saris ruled that “although the website may have been created and operated outside of the district, the attempts to access the website in Massachusetts are part of the sequence of events underlying the claim. Therefore, venue is proper in [the District of Massachusetts].” Otter Prods., 280 F.Supp.3d at 294. This satisfies Due Process because the harm – the barred access to the website – occurred here.” Otter Prods., 280 F.Supp.3d at 293. Additionally, in Access Now, Inc. v. Sportswear, Inc., No. 17-cv-11211-NMG, 2018 Dist. LEXIS 47318 (D. Mass. Mar. 22, 2018), Judge Nathaniel M. Gorton stated that the defendant “availed itself of the forum state’s economic activities by targeting the residents of the Commonwealth . . . . Such targeting evinces a voluntary attempt to appeal to the customer base in the forum.” Sportswear, No. 1:17-cv-11211-NMG, 2018 U.S. Dist. LEXIS 47318 at *11. Thus, establishing a customer base in a particular district is sufficient cause for venue placement. Specifically, Plaintiff attempted to purchase an 18 oz. standard mouth bottle on Defendant’s website, Hydroflask.com. PARTIES 16. Plaintiff, is and has been at all relevant times a resident of Kings County, State of New York. 17. Plaintiff is legally blind and a member of a protected class under the ADA, 42 U.S.C. § 12102(l)-(2), the regulations implementing the ADA set forth at 28 CFR §§ 36.101 et seq., the New York State Human Rights Law and the New York City Human Rights Law. Plaintiff, Marion Kiler, cannot use a computer without the assistance of screen reader software. 5 Plaintiff, Marion Kiler, has been denied the full enjoyment of the facilities, goods and services of Hydroflask.com as a result of accessibility barriers on Hydroflask.com. 18. Defendant, Steel Technology, LLC, is an Oregon Foreign Limited Liability Company doing business in this State with its principal place of business located at 525 NW York Drive, Bend, OR 97703. 19. Hydro Flask provides to the public a website known as Hydroflask.com which provides consumers with access to an array of goods and services, including, the ability to view the various lines of bottles, flasks and accessories, make purchases, and learn about the innovation of the products, among other features. Consumers across the United States and the world use Defendant’s website to purchase bottles, flasks, and related products. Defendant’s website is a place of public accommodation within the definition of Title III of the ADA, 42 U.S.C. § 12181(7). See Victor Andrews v. Blick Art Materials, LLC, No. 17-cv-767, 2017 WL 3278898 (E.D.N.Y. August 1, 2017). The inaccessibility of Hydroflask.com has deterred Plaintiff from buying a 18 oz. standard mouth bottle. NATURE OF THE CASE 20. The Internet has become a significant source of information, a portal, and a tool for conducting business, doing everyday activities such as shopping, learning, banking, researching, as well as many other activities for sighted, blind and visually-impaired persons alike. 21. The blind access websites by using keyboards in conjunction with screen- reading software which vocalizes visual information on a computer screen. Except for a blind person whose residual vision is still sufficient to use magnification, screen access software provides the only method by which a blind person can independently access the Internet. Unless websites are designed to allow for use in this manner, blind persons are unable to fully access Internet websites and the information, products and services contained therein. 6 22. For screen-reading software to function, the information on a website must be capable of being rendered into text. If the website content is not capable of being rendered into text, the blind user is unable to access the same content available to sighted users. 23. Blind users of Windows operating system-enabled computers and devises have several screen-reading software programs available to them. Job Access With Speech, otherwise known as “JAWS” is currently the most popular, separately purchase and downloaded screen- reading software program available for blind computer users. 24. The international website standards organization, the World Wide Web Consortium, known throughout the world as W3C, has published version 2.1 of the Web Content Accessibility Guidelines (“WCAG 2.1”). WCAG 2.1 are well-established guidelines for making websites accessible to blind and visually-impaired persons. These guidelines are universally followed by most large business entities and government agencies to ensure their websites are accessible. Many Courts have also established WCAG 2.1 as the standard guideline for accessibility. The federal government has also promulgated website accessibility standards under Section 508 of the Rehabilitation Act. These guidelines are readily available via the Internet, so that a business designing a website can easily access them. These guidelines recommend several basic components for making websites accessible, including but not limited to: adding invisible alt-text to graphics, ensuring that all functions can be performed using a keyboard and not just a mouse, ensuring that image maps are accessible, and adding headings so that blind persons can easily navigate the site. Without these very basic components, a website will be inaccessible to a blind person using a screen reader. Websites need to be accessible to the “least sophisticated” user of screen-reading software and need to be able to work with all browsers. Websites need to be continually updated and maintained to ensure that they remain fully accessible. FACTUAL ALLEGATIONS 7 25. Defendant, Steel Technology, LLC, controls and operates Hydroflask.com. in New York State and throughout the United States and the world. 26. Hydroflask.com is a commercial website that offers products and services for online sale. The online store allows the user to browse bottles, flasks, and accessories, make purchases, and perform a variety of other functions. 27. Among the features offered by Hydroflask.com are the following: (a) Consumers may use the website to connect with Hydro Flask on social media, using such sites as Facebook, Twitter, Instagram, and Pinterest; (b) an online store, allowing customers to purchase various kinds and sizes of bottles, flasks, and accessories; and (c) learning about career opportunities, promotions, the innovation of the products, and about the company. 28. This case arises out of Hydro Flask’s policy and practice of denying the blind access to the goods and services offered by Hydroflask.com. Due to Hydro Flask’s failure and refusal to remove access barriers to Hydroflask.com, blind individuals have been and are being denied equal access to Hydro Flask, as well as to the numerous goods, services and benefits offered to the public through Hydroflask.com. 29. Hydro Flask denies the blind access to goods, services and information made available through Hydroflask.com by preventing them from freely navigating Hydroflask.com. 30. Hydroflask.com contains access barriers that prevent free and full use by Plaintiff and blind persons using keyboards and screen-reading software. These barriers are pervasive and include, but are not limited to: lack of alt-text on graphics, inaccessible drop-down menus, the lack of navigation links, the lack of adequate prompting and labeling, the denial of 8 keyboard access, empty links that contain no text, redundant links where adjacent links go to the same URL address, and the requirement that transactions be performed solely with a mouse. 31. Alternative text (“Alt-text”) is invisible code embedded beneath a graphical image on a website. Web accessibility requires that alt-text be coded with each picture so that a screen-reader can speak the alternative text while sighted users see the picture. Alt-text does not change the visual presentation except that it appears as a text pop-up when the mouse moves over the picture. There are many important pictures on Hydroflask.com that lack a text equivalent. The lack of alt-text on these graphics prevents screen readers from accurately vocalizing a description of the graphics (screen-readers detect and vocalize alt-text to provide a description of the image to a blind computer user). As a result, Plaintiff and blind Hydroflask.com customers are unable to determine what is on the website, browse the website or investigate and/or make purchases. 32. Hydroflask.com also lacks prompting information and accommodations necessary to allow blind shoppers who use screen-readers to locate and accurately fill-out online forms. On a shopping site such as Hydroflask.com, these forms include search fields to locate bottles and flasks, fields that specify the color and quantity, and fields used to fill-out personal information, including address and credit card information. Due to lack of adequate labeling, Plaintiff and blind customers cannot make purchases or inquiries as to Defendant’s merchandise, nor can they enter their personal identification and financial information with confidence and security. In fact, when Plaintiff attempted to select a color and click on “add to cart,” her screen- reader could not recognize a link to any color and could not recognize an “add to cart” button. 33. Similarly, Hydroflask.com lacks accessible drop-down menus. Drop-down menus allow customers to locate and choose products as well as specify the quantity of certain items. On Hydroflask.com, blind customers are not aware if the desired products, such as bottles and flasks, have been added to the shopping cart because the screen-reader does not indicate the 9 type of product. Moreover, blind customers are unable to select the color quantity of the product they desire. Therefore, blind customers are essentially prevented from purchasing any items on Hydroflask.com. 34. Furthermore, Hydroflask.com lacks accessible image maps. An image map is a function that combines multiple words and links into one single image. Visual details on this single image highlight different “hot spots” which, when clicked on, allow the user to jump to many different destinations within the website. For an image map to be accessible, it must contain alt-text for the various “hot spots.” The image maps on Hydroflask.com’s menu page do not contain adequate alt-text and are therefore inaccessible to Plaintiff and the other blind individuals attempting to make a purchase. When Plaintiff tried to access the menu link in order to make a purchase, she was unable to access it completely. 35. Hydroflask.com also lacks accessible forms. Color and Quantity boxes allow customers to specify the color and quantity of certain items. On Hydroflask.com, blind customers are unable to select specific color and quantity because the screen-reader does not indicate the function of the box. As a result, blind customers are denied access to the color and quantity box. Furthermore, Plaintiff is unable to locate the shopping cart because the shopping cart form does not specify the purpose of the shopping cart. As a result, blind customers are denied access to the shopping cart. Consequently, blind customers are unsuccessful in adding products into their shopping carts and are essentially prevented from purchasing items on Hydroflask.com. 36. Moreover, the lack of navigation links on Defendant’s website makes attempting to navigate through Hydroflask.com even more time consuming and confusing for Plaintiff and blind consumers. 10 37. Hydroflask.com requires the use of a mouse to complete a transaction. Yet, it is a fundamental tenet of web accessibility that for a web page to be accessible to Plaintiff and blind people, it must be possible for the user to interact with the page using only the keyboard. Indeed, Plaintiff and blind users cannot use a mouse because manipulating the mouse is a visual activity of moving the mouse pointer from one visual spot on the page to another. Thus, Hydroflask.com’s inaccessible design, which requires the use of a mouse to complete a transaction, denies Plaintiff and blind customers the ability to independently navigate and/or make purchases on Hydroflask.com. 38. Due to Hydroflask.com’s inaccessibility, Plaintiff and blind customers must in turn spend time, energy, and/or money to make their purchases at traditional brick-and-mortar retailers. Some blind customers may require a driver to get to the stores or require assistance in navigating the stores. By contrast, if Hydroflask.com was accessible, a blind person could independently investigate products and make purchases via the Internet as sighted individuals can and do. According to WCAG 2.1 Guideline 2.4.1, a mechanism is necessary to bypass blocks of content that are repeated on multiple webpages because requiring users to extensively tab before reaching the main content is an unacceptable barrier to accessing the website. Plaintiff must tab through every navigation bar option and footer on Defendant’s website in an attempt to reach the desired service. Thus, Hydroflask.com’s inaccessible design, which requires the use of a mouse to complete a transaction, denies Plaintiff and blind customers the ability to independently make purchases on Hydroflask.com. 39. Hydroflask.com thus contains access barriers which deny the full and equal access to Plaintiff, who would otherwise use Hydroflask.com and who would otherwise be able to fully and equally enjoy the benefits and services of Hydroflask.com in New York State and throughout the United States. 11 40. Plaintiff, Marion Kiler, has made numerous attempts to complete a purchase on Hydroflask.com, most recently in August 2018, but was unable to do so independently because of the many access barriers on Defendant’s website. These access barriers have caused Hydroflask.com to be inaccessible to, and not independently usable by, blind and visually- impaired persons. Amongst other access barriers experienced, Plaintiff was unable to purchase an 18 oz. standard mouth bottle. 41. As described above, Plaintiff has actual knowledge of the fact that Defendant’s website, Hydroflask.com, contains access barriers causing the website to be inaccessible, and not independently usable by, blind and visually-impaired persons. 42. These barriers to access have denied Plaintiff full and equal access to, and enjoyment of, the goods, benefits and services of Hydroflask.com. 43. Defendant engaged in acts of intentional discrimination, including but not limited to the following policies or practices: (a) constructed and maintained a website that is inaccessible to blind class members with knowledge of the discrimination; and/or (b) constructed and maintained a website that is sufficiently intuitive and/or obvious that is inaccessible to blind class members; and/or (c) failed to take actions to correct these access barriers in the face of substantial harm and discrimination to blind class members. 44. Defendant utilizes standards, criteria or methods of administration that have the effect of discriminating or perpetuating the discrimination of others. 45. Because of Defendant’s denial of full and equal access to, and enjoyment of, the goods, benefits and services of Hydroflask.com, Plaintiff and the class have suffered an 12 injury-in-fact which is concrete and particularized and actual and is a direct result of defendant’s conduct. CLASS ACTION ALLEGATIONS 46. Plaintiff, on behalf of herself and all others similarly situated, seeks certification of the following nationwide class pursuant to Rule 23(a) and 23(b)(2) of the Federal Rules of Civil Procedure: “all legally blind individuals in the United States who have attempted to access Hydroflask.com and as a result have been denied access to the enjoyment of goods and services offered by Hydroflask.com, during the relevant statutory period.” 47. Plaintiff seeks certification of the following New York subclass pursuant to Fed.R.Civ.P. 23(a), 23(b)(2), and, alternatively, 23(b)(3): “all legally blind individuals in New York State who have attempted to access Hydroflask.com and as a result have been denied access to the enjoyment of goods and services offered by Hydroflask.com, during the relevant statutory period.” 48. There are hundreds of thousands of visually-impaired persons in New York State. There are approximately 8.1 million people in the United States who are visually- impaired. Id. Thus, the persons in the class are so numerous that joinder of all such persons is impractical and the disposition of their claims in a class action is a benefit to the parties and to the Court. 49. This case arises out of Defendant’s policy and practice of maintaining an inaccessible website denying blind persons access to the goods and services of Hydroflask.com. Due to Defendant’s policy and practice of failing to remove access barriers, blind persons have been and are being denied full and equal access to independently browse, select and shop on Hydroflask.com. 13 50. There are common questions of law and fact common to the class, including without limitation, the following: (a) Whether Hydroflask.com is a “public accommodation” under the ADA; (b) Whether Hydroflask.com is a “place or provider of public accommodation” under the laws of New York; (c) Whether Defendant, through its website, Hydroflask.com, denies the full and equal enjoyment of its goods, services, facilities, privileges, advantages, or accommodations to people with visual disabilities in violation of the ADA; and (d) Whether Defendant, through its website, Hydroflask.com, denies the full and equal enjoyment of its goods, services, facilities, privileges, advantages, or accommodations to people with visual disabilities in violation of the law of New York. 51. The claims of the named Plaintiff are typical of those of the class. The class, similar to the Plaintiff, is severely visually-impaired or otherwise blind, and claims Hydro Flask has violated the ADA, and/or the laws of New York by failing to update or remove access barriers on their website, Hydroflask.com, so it can be independently accessible to the class of people who are legally blind. 52. Plaintiff will fairly and adequately represent and protect the interests of the members of the Class because Plaintiff has retained and is represented by counsel competent and experienced in complex class action litigation, and because Plaintiff has no interests antagonistic to the members of the class. Class certification of the claims is appropriate pursuant to Fed. R. Civ. P. 23(b)(2) because Defendant has acted or refused to act on grounds generally applicable to the Class, making appropriate both declaratory and injunctive relief with respect to Plaintiff and the Class as a whole. 14 53. Alternatively, class certification is appropriate under Fed. R. Civ. P. 23(b)(3) because questions of law and fact common to Class members clearly predominate over questions affecting only individual class members, and because a class action is superior to other available methods for the fair and efficient adjudication of this litigation. 54. Judicial economy will be served by maintenance of this lawsuit as a class action in that it is likely to avoid the burden that would be otherwise placed upon the judicial system by the filing of numerous similar suits by people with visual disabilities throughout the United States. 55. References to Plaintiff shall be deemed to include the named Plaintiff and each member of the class, unless otherwise indicated. FIRST CAUSE OF ACTION (Violation of 42 U.S.C. §§ 12181 et seq. – Title III of the Americans with Disabilities Act) 56. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 55 of this Complaint as though set forth at length herein. 57. Title III of the American with Disabilities Act of 1990, 42 U.S.C. § 12182(a) provides that “No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.” Title III also prohibits an entity from “[u]tilizing standards or criteria or methods of administration that have the effect of discriminating on the basis of disability.” 42 U.S.C. § 12181(b)(2)(D)(I). 58. Hydroflask.com is a sales establishment and public accommodation within the definition of 42 U.S.C. §§ 12181(7). 15 59. Defendant is subject to Title III of the ADA because it owns and operates Hydroflask.com. 60. Under Title III of the ADA, 42 U.S.C. § 12182(b)(1)(A)(I), it is unlawful discrimination to deny individuals with disabilities or a class of individuals with disabilities the opportunity to participate in or benefit from the goods, services, facilities, privileges, advantages, or accommodations of an entity. 61. Under Title III of the ADA, 42 U.S.C. § 12182(b)(1)(A)(II), it is unlawful discrimination to deny individuals with disabilities or a class of individuals with disabilities an opportunity to participate in or benefit from the goods, services, facilities, privileges, advantages, or accommodation, which is equal to the opportunities afforded to other individuals. 62. Specifically, under Title III of the ADA, 42 U.S.C. § 12182(b)(2)(A)(II), unlawful discrimination includes, among other things, “a failure to make reasonable modifications in policies, practices, or procedures, when such modifications are necessary to afford such goods, services, facilities, privileges, advantages, or accommodations to individuals with disabilities, unless the entity can demonstrate that making such modifications would fundamentally alter the nature of such goods, services, facilities, privileges, advantages or accommodations.” 63. In addition, under Title III of the ADA, 42 U.S.C. § 12182(b)(2)(A)(III), unlawful discrimination also includes, among other things, “a failure to take such steps as may be necessary to ensure that no individual with disability is excluded, denied services, segregated or otherwise treated differently than other individuals because of the absence of auxiliary aids and services, unless the entity can demonstrate that taking such steps would fundamentally alter the nature of the good, service, facility, privilege, advantage, or accommodation being offered or would result in an undue burden.” 16 64. There are readily available, well-established guidelines on the Internet for making websites accessible to the blind and visually-impaired. These guidelines have been followed by other business entities in making their websites accessible, including but not limited to ensuring adequate prompting and accessible alt-text. Incorporating the basic components to make their website accessible would neither fundamentally alter the nature of Defendant’s business nor result in an undue burden to Defendant. 65. The acts alleged herein constitute violations of Title III of the ADA, 42 U.S.C. § 12101 et seq., and the regulations promulgated thereunder. Patrons of Hydro Flask who are blind have been denied full and equal access to Hydroflask.com, have not been provided services that are provided to other patrons who are not disabled, and/or have been provided services that are inferior to the services provided to non-disabled patrons. 66. Defendant has failed to take any prompt and equitable steps to remedy its discriminatory conduct. These violations are ongoing. 67. As such, Defendant discriminates, and will continue in the future to discriminate against Plaintiff and members of the proposed class and subclass on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, accommodations and/or opportunities of Hydroflask.com in violation of Title III of the Americans with Disabilities Act, 42 U.S.C. §§ 12181 et seq. and/or its implementing regulations. 68. Unless the Court enjoins Defendant from continuing to engage in these unlawful practices, Plaintiff and members of the proposed class and subclass will continue to suffer irreparable harm. 69. The actions of Defendant were and are in violation of the ADA, and therefore Plaintiff invokes his statutory right to injunctive relief to remedy the discrimination. 70. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 17 71. Pursuant to 42 U.S.C. § 12188 and the remedies, procedures, and rights set forth and incorporated therein, Plaintiff prays for judgment as set forth below. SECOND CAUSE OF ACTION (Violation of New York State Human Rights Law, N.Y. Exec. Law Article 15 (Executive Law § 292 et seq.)) 72. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 71 of this Complaint as though set forth at length herein. 73. N.Y. Exec. Law § 296(2)(a) provides that it is “an unlawful discriminatory practice for any person, being the owner, lessee, proprietor, manager, superintendent, agent, or employee of any place of public accommodation . . . because of the . . . disability of any person, directly or indirectly, to refuse, withhold from or deny to such person any of the accommodations, advantages, facilities or privileges thereof.”. 74. Hydroflask.com is a sales establishment and public accommodation within the definition of N.Y. Exec. Law § 292(9). 75. Defendant is subject to the New York Human Rights Law because it owns and operates Hydroflask.com. Defendant is a person within the meaning of N.Y. Exec. Law. § 76. Defendant is violating N.Y. Exec. Law § 296(2)(a) in refusing to update or remove access barriers to Hydroflask.com, causing Hydroflask.com to be completely inaccessible to the blind. This inaccessibility denies blind patrons the full and equal access to the facilities, goods and services that Defendant makes available to the non-disabled public. 77. Specifically, under N.Y. Exec. Law § unlawful discriminatory practice includes, among other things, “a refusal to make reasonable modifications in policies, practices, or procedures, when such modifications are necessary to afford facilities, privileges, advantages or accommodations to individuals with disabilities, unless such person can demonstrate that 18 making such modifications would fundamentally alter the nature of such facilities, privileges, advantages or accommodations.” 78. In addition, under N.Y. Exec. Law § 296(2)(c)(II), unlawful discriminatory practice also includes, “a refusal to take such steps as may be necessary to ensure that no individual with a disability is excluded or denied services because of the absence of auxiliary aids and services, unless such person can demonstrate that taking such steps would fundamentally alter the nature of the facility, privilege, advantage or accommodation being offered or would result in an undue burden.” 79. There are readily available, well-established guidelines on the Internet for making websites accessible to the blind and visually-impaired. These guidelines have been followed by other business entities in making their website accessible, including but not limited to: adding alt-text to graphics and ensuring that all functions can be performed by using a keyboard. Incorporating the basic components to make their website accessible would neither fundamentally alter the nature of Defendant’s business nor result in an undue burden to Defendant. 80. Defendant’s actions constitute willful intentional discrimination against the class on the basis of a disability in violation of the New York State Human Rights Law, N.Y. Exec. Law § 296(2) in that Defendant has: (a) constructed and maintained a website that is inaccessible to blind class members with knowledge of the discrimination; and/or (b) constructed and maintained a website that is sufficiently intuitive and/or obvious that is inaccessible to blind class members; and/or (c) failed to take actions to correct these access barriers in the face of substantial harm and discrimination to blind class members. 19 81. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 82. As such, Defendant discriminates, and will continue in the future to discriminate against Plaintiff and members of the proposed class and subclass on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, accommodations and/or opportunities of Hydroflask.com under N.Y. Exec. Law § 296(2) et seq. and/or its implementing regulations. Unless the Court enjoins Defendant from continuing to engage in these unlawful practices, Plaintiff and members of the class will continue to suffer irreparable harm. 83. The actions of Defendant were and are in violation of the New York State Human Rights Law and therefore Plaintiff invokes his right to injunctive relief to remedy the discrimination. 84. Plaintiff is also entitled to compensatory damages, as well as civil penalties and fines pursuant to N.Y. Exec. Law § 297(4)(c) et seq. for each and every offense. 85. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 86. Pursuant to N.Y. Exec. Law § 297 and the remedies, procedures, and rights set forth and incorporated therein, Plaintiff prays for judgment as set forth below. THIRD CAUSE OF ACTION (Violation of New York State Civil Rights Law, NY CLS Civ R, Article 4 (CLS Civ R § 40 et seq.)) 87. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 86 of this Complaint as though set forth at length herein. 88. Plaintiff served notice thereof upon the attorney general as required by N.Y. Civil Rights Law § 41. 20 89. N.Y. Civil Rights Law § 40 provides that “all persons within the jurisdiction of this state shall be entitled to the full and equal accommodations, advantages, facilities, and privileges of any places of public accommodations, resort or amusement, subject only to the conditions and limitations established by law and applicable alike to all persons. No persons, being the owner, lessee, proprietor, manager, superintendent, agent, or employee of any such place shall directly or indirectly refuse, withhold from, or deny to any person any of the accommodations, advantages, facilities and privileges thereof . . .” 90. N.Y. Civil Rights Law § 40-c(2) provides that “no person because of . . . disability, as such term is defined in section two hundred ninety-two of executive law, be subjected to any discrimination in his or her civil rights, or to any harassment, as defined in section 240.25 of the penal law, in the exercise thereof, by any other person or by any firm, corporation or institution, or by the state or any agency or subdivision.” 91. Hydroflask.com is a sales establishment and public accommodation within the definition of N.Y. Civil Rights Law § 40-c(2). 92. Defendant is subject to New York Civil Rights Law because it owns and operates Hydroflask.com. Defendant is a person within the meaning of N.Y. Civil Law § 40- 93. Defendant is violating N.Y. Civil Rights Law § 40-c(2) in refusing to update or remove access barriers to Hydroflask.com, causing Hydroflask.com to be completely inaccessible to the blind. This inaccessibility denies blind patrons full and equal access to the facilities, goods and services that Defendant makes available to the non-disabled public. 94. There are readily available, well-established guidelines on the Internet for making websites accessible to the blind and visually-impaired. These guidelines have been followed by other business entities in making their website accessible, including but not limited 21 to: adding alt-text to graphics and ensuring that all functions can be performed by using a keyboard. Incorporating the basic components to make their website accessible would neither fundamentally alter the nature of Defendant’s business nor result in an undue burden to Defendant. 95. In addition, N.Y. Civil Rights Law § 41 states that “any corporation which shall violate any of the provisions of sections forty, forty-a, forty-b or forty two . . . shall for each and every violation thereof be liable to a penalty of not less than one hundred dollars nor more than five hundred dollars, to be recovered by the person aggrieved thereby . . .” 96. Specifically, under N.Y. Civil Rights Law § 40-d, “any person who shall violate any of the provisions of the foregoing section, or subdivision three of section 240.30 or section 240.31 of the penal law, or who shall aid or incite the violation of any of said provisions shall for each and every violation thereof be liable to a penalty of not less than one hundred dollars nor more than five hundred dollars, to be recovered by the person aggrieved thereby in any court of competent jurisdiction in the county in which the defendant shall reside . . .” 97. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 98. As such, Defendant discriminates, and will continue in the future to discriminate against Plaintiff and members of the proposed class on the basis of disability are being directly indirectly refused, withheld from, or denied the accommodations, advantages, facilities and privileges thereof in § 40 et seq. and/or its implementing regulations. 99. Plaintiff is entitled to compensatory damages of five hundred dollars per instance, as well as civil penalties and fines pursuant to N.Y. Civil Rights Law § 40 et seq. for each and every offense. FOURTH CAUSE OF ACTION 22 (Violation of New York City Human Rights Law, N.Y.C. Administrative Code § 8-102, et seq.) 100. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 99 of this Complaint as though set forth at length herein. 101. N.Y.C. Administrative Code § 8-107(4)(a) provides that “it shall be an unlawful discriminatory practice for any person, being the owner, lessee, proprietor, manager, superintendent, agent or employee of any place or provider of public accommodation, because of . . . disability . . . directly or indirectly, to refuse, withhold from or deny to such person, any of the accommodations, advantages, facilities or privileges thereof.” 102. Hydroflask.com is a sales establishment and public accommodation within the definition of N.Y.C. Administrative Code § 8-102(9). 103. Defendant is subject to City Law because it owns and operates Hydroflask.com. Defendant is a person within the meaning of N.Y.C. Administrative Code § 8- 104. Defendant is violating N.Y.C. Administrative Code § 8-107(4)(a) in refusing to update or remove access barriers to Hydroflask.com, causing Hydroflask.com to be completely inaccessible to the blind. This inaccessibility denies blind patrons full and equal access to the facilities, goods, and services that Defendant makes available to the non-disabled public. Specifically, Defendant is required to “make reasonable accommodation to the needs of persons with disabilities . . . any person prohibited by the provisions of [§ 8-107 et seq.] from discriminating on the basis of disability shall make reasonable accommodation to enable a person with a disability to . . . enjoy the right or rights in question provided that the disability is known or should have been known by the covered entity.” N.Y.C. Administrative Code § 8- 107(15)(a). 23 105. Defendant’s actions constitute willful intentional discrimination against the class on the basis of a disability in violation of the N.Y.C. Administrative Code § 8-107(4)(a) and § 8-107(15)(a) in that Defendant has: (a) constructed and maintained a website that is inaccessible to blind class members with knowledge of the discrimination; and/or (b) constructed and maintained a website that is sufficiently intuitive and/or obvious that is inaccessible to blind class members; and/or (c) failed to take actions to correct these access barriers in the face of substantial harm and discrimination to blind class members. 106. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 107. As such, Defendant discriminates, and will continue in the future to discriminate against Plaintiff and members of the proposed class and subclass on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, accommodations and/or opportunities of Hydroflask.com under N.Y.C. Administrative Code § 8- 107(4)(a) and/or its implementing regulations. Unless the Court enjoins Defendant from continuing to engage in these unlawful practices, Plaintiff and members of the class will continue to suffer irreparable harm. 108. The actions of Defendant were and are in violation of City law and therefore Plaintiff invokes his right to injunctive relief to remedy the discrimination. 109. Plaintiff is also entitled to compensatory damages, as well as civil penalties and fines under N.Y.C. Administrative Code § 8-120(8) and § 8-126(a) for each offense. 110. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 24 111. Pursuant to N.Y.C. Administrative Code § 8-120(8) and § 8-126(a) and the remedies, procedures, and rights set forth and incorporated therein, Plaintiff prays for judgment as set forth below. FIFTH CAUSE OF ACTION (Declaratory Relief) 112. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 111 of this Complaint as though set forth at length herein. 113. An actual controversy has arisen and now exists between the parties in that Plaintiff contends, and is informed and believes that Defendant denies, that Hydroflask.com contains access barriers denying blind customers the full and equal access to the goods, services and facilities of Hydroflask.com, which Hydro Flask owns, operates and/or controls, fails to comply with applicable laws including, but not limited to, Title III of the American with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y. Exec. Law § 296, et seq., and N.Y.C. Administrative Code § 8-107, et seq. prohibiting discrimination against the blind. 114. A judicial declaration is necessary and appropriate at this time in order that each of the parties may know their respective rights and duties and act accordingly. PRAYER FOR RELIEF WHEREFORE, Plaintiff respectfully demands judgment in favor of Plaintiff and the class and against the Defendants as follows: a) A preliminary and permanent injunction to prohibit Defendant from violating the Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y. Exec. Law § 296, et seq., and N.Y.C. Administrative Code § 8-107, et seq., and the laws of New York; b) A preliminary and permanent injunction requiring Defendant to take all the steps necessary to make its website, Hydroflask.com, into full compliance with the 25 requirements set forth in the ADA, and its implementing regulations, so that Hydroflask.com is readily accessible to and usable by blind individuals; c) A declaration that Defendant owns, maintains and/or operates its website, Hydroflask.com, in a manner which discriminates against the blind and which fails to provide access for persons with disabilities as required by Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y. Exec. Law § 296, et seq., and N.Y.C. Administrative Code § 8-107, et seq., and the laws of New York; d) An order certifying this case as a class action under Fed. R. Civ. P. 23(a) & (b)(2) and/or (b)(3), appointing Plaintiff as Class Representative, and his attorneys as Class Counsel; e) An order directing Defendants to continually update and maintain its website to ensure that it remains fully accessible to and usable by the visually-impaired; f) Compensatory damages in an amount to be determined by proof, including all applicable statutory damages and fines, to Plaintiff and the proposed class for violations of their civil rights under New York State Human Rights Law and City Law; g) Plaintiff’s reasonable attorneys’ fees, expenses, and costs of suit as provided by state and federal law; h) For pre- and post-judgment interest to the extent permitted by law; and i) For such other and further relief which this court deems just and proper. Dated: Brooklyn, New York August 27, 2018 SHAKED LAW GROUP, P.C. Attorneys for Plaintiff By:/s/Dan Shaked_________ Dan Shaked (DS-3331) 44 Court St., Suite 1217 Brooklyn, NY 11201 Tel. (917) 373-9128 e-mail: [email protected] 26

civil rights, immigration, family

s6NICYcBD5gMZwcztmPs

FILED ENTERED RECEIVED SERVED ON COUNSEL/PARTIES OF RECORD MAR 13 2020 CLERK US DISTRICT COURT DISTRICT OF NEVADA BY: DEPUTY UNITED STATES DISTRICT COURT DISTRICT OF NEVADA Case No.: 20CV529 CLASS ACTION COMPLAINT AND JURY DEMAND Plaintiffs, V. Defendants. Plaintiffs Larry Lawter, Julie Mutsko, Kerri Shapiro, and Victor Wukovits (collectively INTRODUCTION 1. This is a data breach class action on behalf of millions of consumers whose 2. MGM is a global company that owns, operates, and manages hotels, casinos, and 3. On February 19, 2020, MGM publicly acknowledged that on July 7, 2019, an 4. The stolen PII included names, addresses, phone numbers, email addresses, and 5. The stolen PII has been made available for download on the dark web, where it 6. After being alerted of these findings, MGM belatedly confirmed that the data 7. The Data Breach was a direct result of MGM's failure to implement adequate and 8. MGM disregarded the rights of Plaintiffs and class members by, among other 9. Plaintiffs were guests at various MGM hotels during the period covered by the 10. Plaintiffs and class members have sustained compensable damages as a result of 11. Plaintiffs seek to remedy these harms on behalf of themselves and all similarly PARTIES 12. Plaintiff Larry Lawter is a resident of South Carolina. He paid for a hotel room at13. Plaintiff Julie Mutsko is a resident of Ohio. She paid for a hotel room at MGM 14. Plaintiff Kerri Shapiro is a resident of New York. She paid for a hotel room at 15. Plaintiff Victor Wukovits is a resident of Louisiana. He paid for a hotel room at 16. Defendant MGM Resorts International is a publicly traded company incorporated JURISDICTION AND VENUE 17. This Court has subject matter jurisdiction over this action pursuant to the Class 18. This Court has diversity jurisdiction over Plaintiffs' claims pursuant to 29 U.S.C. 19. This Court has general personal jurisdiction over MGM because it maintains its 20. Venue is proper in this Court pursuant to 28 U.S.C. § 1391(a)(1) because a STATEMENT OF FACTS A. The MGM Data Breach 21. On or about July 7, 2019, an unauthorized individual gained access to MGM's 22. The data consisted of a treasure trove of MGM customers' PII, including their23. In mid-February 2020, the stolen data of all 10.6 million MGM guests was 24. Cyber security specialists have recognized that the PII stolen in the Data Breach 25. On or about September 7, 2019, MGM began notifying affected customers and Notice of Data Incident What Happened On or about July 7, 2019, an individual accessed MGM Resorts International's computer network system without permission. The individual downloaded partial customer data from MGM's computer systems, then posted and disclosed part of the data on a closed internet forum What Information Was Involved MGM immediately initiated an internal forensic investigation into this incident. MGM conducted an exhaustive investigation and search of the downloaded data from the closed internet site. On August 9, 2019, MGM determined your First Name, Last Name and Driver's License Number were part of the compromised file. What We Are Doing We take the security of our customers' data seriously, and after MGM became aware of the event, we took immediate measures to investigate and remediate the incident. We have implemented additional safeguards to improve further 1 MGM Resorts Says Data Breach Exposed Some Guests' Personal Information, The 2 Details of 10.6 Million MGM Hotel Guests Posted on a Hacking Forum, ZDNet, Feb. data security related to external software incidents. Furthermore, MGM reported the incident to law enforcement immediately once MGM discovered the matter. In addition, we are offering identity theft protection services through ID Experts, the data incident and recovery services expert, to provide you with MyIDCare. MyIDCare services include: 12 months of credit and CyberScan monitoring, a $1,000,000 insurance reimbursement policy, and fully managed ID theft recovery services. With this protection, MyIDCare will help you resolve issues if your identity is compromised. What You Can Do We encourage you to contact ID Experts with any questions and to enroll in free MyIDCare services by calling 833-959-1344 or going to https://ide.myidcare.com/mgmri and using the Enrollment Code provided above. Please call 833-959-1344 or go to https://ide.myidcare.com/mgmri for 3 assistance or for any additional questions you may have. 26. In a letter to the North Dakota Attorney General dated September 7, 2019, MGM 27. MGM acknowledged that consumers face a substantial risk of fraud and identity 3 https://media.dojmt.gov/wp-content/uploads/Consumer-Notice-26.pdf(emphasis 4 https://attorneygeneral.nd.gov/sites/ag/files/documents/DataBreach/2019-09-09- 5 Id. 6 https://media.dojmt.gov/wp-content/uploads/Consumer-Notice-26.pdf(attachment to 28. In mid-February 2020, the stolen data of all 10.6 million MGM guests was The personal details of more than 10.6 million users who stayed at MGM Resorts hotels have been published on a hacking forum this week. ZDNet verified the authenticity of the data today, together with a security researcher from Under the Breach, a soon-to-be-launched data breach monitoring service.According to our analysis, the MGM data dump that was shared today contains personal details for 10,683,188 former hotel guests. Included in the leaked files are personal details such as full names, home addresses, phone numbers, emails, and dates of birth. ZDNet reached out to past guests and confirmed they stayed at the hotel, along with their timeline, and the accuracy of the data included in the leaked files. Within an hour after we reached out to the company, we were in a conference call with the hotel chain's security team. Within hours, the MGM Resorts team was able to verify the data and track it to a past security incident. An MGM spokesperson told ZDNet the data that was shared online this week stems from a security incident that took place last year [in 2019]. According to Irina Nesterovsky, Head of Research at threat intel firm KELA, the data of MGM Resorts hotel guests had been shared in some [other] closed-circle hacking forums since at least July, last year. [T]he publication of this data dump on a very popular and openly accessibly hacking forum this week has brought it to many other hackers' attention. 29. These facts illustrate that class members face a significant risk of identity theft or 7 Details of 10.6 Million MGM Hotel Guests Posted on a Hacking Forum, ZDNet, Feb. 30. The Data Breach was reportedly the result of a faulty cloud-based server. A data 31. MGM is a multi-billion-dollar company and had the financial and personnel 32. As a condition of staying at its hotel properties, MGM requires that its customers B. MGM's Privacy Policy 33. MGM's Privacy Policy on its website discussed its data security safeguards and MGM RESORTS PRIVACY POLICY MGM respects your privacy. This Privacy Policy ("Policy") describes the information collection, use, protection, and sharing practices of MGM Resorts International and MGM Resorts International websites, mobile applications, electronic communications, and properties. We collect information from a variety of sources and in a variety of ways, including the following: Personal Information. When you visit, use, and/or access MGM Resorts or MGM Online Services, you may provide us with (and/or we may collect) information by which you can be personally identified including your name, date of birth, postal address, email address, and telephone number, and videos, recordings, and images of you ("Personal Information"). We may also obtain Personal Information from third parties. 8 MGM Admits to 2019 Data Breach Affecting 10.6 Million Customers, SC Magazine, Sensitive Information. When you make a purchase, visit, use and/or access MGM Resorts or MGM Online Services, or engage in other transactions or activities, you may provide us with sensitive Personal Information including your credit or debit card number, financial account number, biometrics, medical/health- related information, driver's license number, government-issued identification card number, social security number, passport number, or naturalization number ("Sensitive Information"). SECURITY Information maintained in electronic form that is collected by MGM Resorts International and any individual MGM Resort is stored on systems protected by industry standard security measures. These measures are intended to protect these systems from unauthorized access We have controls in place that are designed to detect potential data breaches, contain and minimize the loss of data, and conduct forensic investigations of a breach. Our staff is required to take reasonable measures to ensure that unauthorized persons cannot view or access your Personal Information. Employees who violate our internal privacy policies are subject to disciplinary 9 action up to and including termination of employment. 34. These representations were false and misleading because, among other things, 35. Plaintiffs and class members provided their PII to MGM with the reasonable C. The Hotel Industry is a Frequent Target of Cyber Criminals, and MGM Was on Notice of the Threat of a Breach 36. The type of PII collected by hotels makes this industry particularly appealing to 9 https://www.mgmresorts.com/en/privacy-policy.html (emphasis added).Other estimates project that hotels 11 37. Indeed, in recent years, Marriott, Hilton, Hyatt, and Trump Hotels have all been 38. "Hotel chains and travel companies were major targets for cybercriminals in 2019 card skimming malware and others suffering from exposed cloud ,113 39. "While hospitality companies have fewer transactions than retail organizations - This rich personal data is invaluable to 40. The increased risk of data breaches in the hotel industry was widely known 10 Why Cybersecurity Matters, Hotel Management (Oct. 17,2019), available at tps://www.hotelmanagement.net/tech/why-cybersecurity-matters. 11 Id. 12 Id. 13 MGM Admits to 2019 Data Breach Affecting 10.6 Million Customers, SC Magazine, 14 Cybersecurity in Hospitality: An Unsolvable Problem?, Paladion Networks, available 41. PII is also valuable to MGM. MGM recognizes a business value of consumers' D. The Risk of Misuse of the Stolen PII Will Persist for Years 42. MGM was well aware that the PII it collects is highly sensitive, and of significant 43. PII is a valuable commodity to identity thieves. As the Federal Trade 44. A robust cyber black market exists, in which criminals can post stolen PII on 45. The ramifications of MGM's failure to keep PII secure are long lasting. Once PII 46. "The fact that the breach happened about seven months ago without any public 47. Thus, even if misuse has not yet occurred for certain class members, there is a 15 Warning Signs of Identity Theft, Federal Trade Commission, available at 16 MGM Admits to 2019 Data Breach Affecting 10.6 Million Customers, SC Magazine,E. MGM Failed to Comply with FTC Guidelines and Industry Standards 48. The FTC has promulgated numerous guides for businesses, which highlight the 49. In 2016, the FTC updated its publication, Protecting Personal Information: A 50. The FTC further recommends that companies not maintain PII longer than is 51. The FTC has brought enforcement actions against businesses for failing to 17 Start With Security, Federal Trade Commission, available at 18 Protecting Personal Information: A Guide for Business, Federal Trade Commission, 19 Start With Security, Federal Trade Commission, available at 52. MGM failed to adopt reasonable data security safeguards. MGM's failure to 53. Cyber security firms and industry participants have promulgated a series of best 20 54. MGM failed to comply with these and other industry best practices. F. Plaintiffs and Class Members Suffered Damages 55. As a direct and proximate result of MGM's wrongful actions and inactions, 56. Plaintiffs and class members have suffered, will suffer, or are at a substantially a. The unauthorized use of their PII for fraudulent purposes. b. Fraud losses for accounts opened or debts incurred in their name. c. Out-of-pocket costs for mitigation efforts such as purchasing credit 20 How to Work on Hotel Cyber Security, Open Data Security, July 23, 2019, available at monitoring services, credit freezes, credit reports, etc. d. Time spent responding to the Data Breach for things like reviewing financial accounts and credit reports more closely than they otherwise would have, researching and disputing fraudulent charges or suspicious activity, signing up for protective measures, etc. e. Lost opportunity costs and lost wages associated with efforts expended in response to the Data Breach. f. "Loss of value" of their PII. A robust market exists for stolen PII, which is highly coveted and sold on the dark web at specific identifiable prices. The theft of consumers' PII led to a diminution in value of that PII. g. "Benefit of the bargain" damages. Plaintiffs and class members overpaid for hotel services that should have been - but were not - accompanied by adequate data security. Part of the price class members paid to MGM was intended to be used to fund adequate data security. Plaintiffs and class members did not get what they paid for. MGM's misrepresentations and omissions regarding data security diminished the value of Plaintiffs' purchases. h. The continued risk to their PII in MGM's possession, which could be the subject to further breaches if MGM fails to undertake appropriate measures to protect the PII going forward. 57. Consumers face an unusually high risk of misuse from this particular data breach. 58. Identity thieves can combine data stolen in the Data Breach with other59. Thieves can also use the stolen data, alone or in combination with other 60. Thieves can use the stolen data, alone or in combination with other information 61. MGM has acknowledged that consumers face a significant risk of identity theft or G. MGM's Delay in Providing Notice to Class Members Caused Additional Harm 62. "One thing that does matter is hearing about a data breach quickly. That alerts If consumers don't know about a breach because 63. Consumers' PII was stolen on July 7, 2019, but MGM did not begin to send 21 https://media.dojmt.gov/wp-content/uploads/Consumer-Notice-26.pdf(attachment to 22 The Data Breach Next Door, Consumer Reports, Jan. 31, 2019, available at 64. As a result of MGM's unreasonable delay in detecting and notifying consumers of H. Plaintiffs and Class Members Are Entitled to Injunctive Relief 65. Plaintiffs and class members are entitled to injunctive relief requiring MGM to, 66. MGM acted on grounds that apply generally to the class as a whole, SO that CLASS ACTION ALLEGATIONS 67. Plaintiffs bring this case as a class action pursuant to Fed. R. Civ. P. 23(b)(2) and Nationwide Class: All persons residing in the United States whose PII was stolen in the July 7, 2019 Data Breach at MGM. Nevada Sub-Class: All residents of Nevada whose PII was stolen in the July 7, 2019 Data Breach at MGM. Louisiana Sub-Class: All residents of Louisiana whose PII was stolen in the July 7, 2019 Data Breach at MGM. New York Sub-Class: All residents of New York whose PII was stolen in the July 7, 2019 Data Breach at MGM. Ohio Sub-Class: All residents of Ohio whose PII was stolen in the July 7, 2019 Data Breach at MGM. South Carolina Sub-Class: All residents of South Carolina whose PII was stolen in the July 7, 2019 Data Breach at MGM. 68. Excluded from the Classes are Defendant's executive officers, and the judge to69. Plaintiffs hereby reserve the right to amend or modify these class definitions after 70. Numerosity. The Classes are each SO numerous that joinder of all members is 71. Commonality. There are many questions of law and/or fact common to Plaintiffs a. Whether MGM's data security systems prior to the Data Breach complied with applicable data security laws, regulations, and industry standards; b. Whether MGM owed a duty to class members to safeguard their PII; c. Whether MGM breached its duty to class members to safeguard their PII; d. Whether a computer hacker stole class members' PII in the Data Breach; e. Whether MGM knew or should have known that its data security systems were deficient prior to the Data Breach; f. Whether Plaintiffs and class members suffered legally cognizable damages as a result of the Data Breach; and g. Whether Plaintiffs and class members are entitled to injunctive relief. 72. Typicality. Plaintiffs' claims are typical of the claims of all class members 73. Adequacy of Representation. Plaintiffs will fairly and adequately protect the 74. Predominance. MGM has engaged in a common course of conduct toward all 75. Superiority. A class action is superior to other available methods for the fair and 76. MGM acted on grounds that apply generally to the Classes as a whole, SO that 77. Likewise, particular "issues" under Rule 23(c)(4) are appropriate for certification 78. Finally, all members of the proposed Classes are readily ascertainable. MGM has CAUSES OF ACTION COUNT I NEGLIGENCE (On Behalf of the Nationwide Class and all State Sub-Classes) 79. Plaintiffs re-allege and incorporate by reference all preceding allegations as if 80. As a condition of receiving services, Plaintiffs and class members were obligated81. Plaintiffs and class members entrusted their PII to MGM with the understanding 82. MGM had knowledge of the sensitivity of the PII and the types of harm that 83. MGM had a duty to exercise reasonable care in safeguarding, securing, and 84. MGM's duty of care arose as a result of, among other things, the special 85. Also, MGM had a duty to employ reasonable security measures under Section 5 practices in or affecting commerce," 86. MGM was also subject to an "independent duty" untethered to any contract 87. Plaintiffs and class members were the foreseeable victims of inadequate data 88. MGM knew or should have known of the inherent risks in collecting and storing 89. MGM's conduct created a foreseeable risk of harm to Plaintiffs and class 90. Plaintiffs and class members had no ability to protect their PII once in was in 91. MGM was in a position to protect against the harm suffered by Plaintiffs and class 92. MGM, through its actions and/or omissions, unlawfully breached its duty to 93. MGM improperly and inadequately safeguarded Plaintiffs' and class members' 94. But for MGM's wrongful breach of duties owed to Plaintiffs and class members, 95. There is a temporal and close causal connection between MGM's failure to 96. As a result of MGM's negligence, Plaintiffs and class members suffered and will 97. Plaintiffs and class members are entitled to compensatory and consequential 98. Plaintiffs and class members are also entitled to the injunctive relief set forth COUNT II NEGLIGENCE PER SE (On Behalf of the Nationwide Class and all State Sub-Classes) 99. Plaintiffs re-allege and incorporate by reference all preceding allegations as if 100. Section 5 of the FTCA prohibits "unfair practices in or affecting commerce," 101. MGM violated Section 5 of the FTCA by failing to use reasonable measures to 102. MGM's violation of Section 5 of the FTCA constitutes negligence per se as 103. Plaintiffs and class members are within the class of persons that the FTCA was 104. The harm that occurred as a result of the Data Breach is the type of harm the 105. As a direct and proximate result of MGM's negligence per se, Plaintiffs and class 106. Plaintiffs and class members are entitled to compensatory and consequential107. Plaintiffs and class members are also entitled to the injunctive relief set forth COUNT III BREACH OF IMPLIED CONTRACT (On Behalf of the Nationwide Class and all State Sub-Classes) 108. Plaintiffs re-allege and incorporate by reference all preceding allegations as if 109. When Plaintiffs and class members provided their PII to MGM in exchange for 110. MGM solicited and invited Plaintiffs and class members to provide their PII as 111. When entering into the implied contracts, Plaintiffs and class members reasonably 112. MGM's implied promise to safeguard PII is evidenced by, e.g., the 113. Plaintiffs and class members paid money for MGM's services. Plaintiffs and 114. Plaintiffs and class members would not have provided their PII to MGM in the 115. Plaintiffs and class members fully performed their obligations under the implied 116. MGM breached its implied contracts with Plaintiffs and class members by failing 117. As a result of MGM's conduct, Plaintiffs and class members have suffered, and 118. Plaintiffs and class members are entitled to compensatory and consequential 119. Plaintiffs and class members are also entitled to the injunctive relief set forth COUNT IV UNJUST ENRICHMENT (On Behalf of the Nationwide Class and all State Sub-Classes) 120. Plaintiffs re-allege and incorporate by reference all preceding allegations as if 121. This claim is plead in the alternative to the breach of implied contract claim. 122. Plaintiffs and class members conferred a monetary benefit on MGM. Specifically, 123. MGM knew that Plaintiffs and class members conferred a monetary benefit, 124. The amounts Plaintiffs and class members paid to MGM for its services were 125. Under the principles of equity and good conscience, MGM should not be 126. MGM failed to adequately secure consumers' PII and, therefore, did not provide 127. MGM acquired consumers' money and PII through inequitable means in that it 128. If Plaintiffs and class members would have known that MGM employed 129. Plaintiffs and class members have no adequate remedy at law. 130, As a direct and proximate result of MGM's conduct, Plaintiffs and class members 131. MGM should be compelled to disgorge into a common fund or constructive trust, COUNT V VIOLATION OF THE NEVADA CONSUMER FRAUD ACT NRS 41.600 (On Behalf of the Nationwide Class and Nevada Sub-Class) 132. Plaintiffs re-allege and incorporate by reference all preceding allegations as if 133. MGM engaged in unfair and unlawful acts and practices by failing to maintain 134. MGM violated the Nevada Consumer Fraud Act by engaging in unfair anda. by representing that it would maintain adequate data security practices to safeguard consumer information from unauthorized disclosures, data breaches, and theft; b. by omitting and concealing the material fact of the inadequacy of MGM's data security protections for consumers' PII; c. by failing to disclose that MGM's data security systems failed to meet legal and industry standards for the protection of consumers' PII; and d. by soliciting and collecting PII with knowledge that the information would not be adequately protected and by storing that PII in an unsecure electronic environment. 135. Plaintiffs and class members relied on MGM's implied promise of data security 136. MGM's conduct violated NRS 598.0917(7) because it constituted a tender of or tendering terms of sale or lease less favorable than the terms 137. MGM's violations of NRS 598.0917(7) constituted "consumer fraud" for 138. MGM also breached its duty under NRS 603A.210, which requires any data use, modification or disclosure." MGM did not take such 139. Additionally, NRS 598.0923(3) provides that a violation of any federal or Nevada 140. MGM' violations of NRS 598.0923(3), NRS 598.0917(7), and NRS 603A in turn 141. MGM engaged in an unfair practice by engaging in conduct that is contrary to 142. As a direct and proximate result of the foregoing, Plaintiffs and class members 143. As a result of these violations, Plaintiffs and class members are entitled to an COUNT VI VIOLATION OF THE LOUISIANA UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION LAW La. Rev. Stat. Ann. §§ 51:1401, et seq. (On Behalf of the Louisiana Sub-Class) 144. Plaintiff Wukovits re-alleges and incorporates by reference all preceding 145. MGM, Plaintiff Wukovits, and the Louisiana Sub-Class members are "persons" 146. Plaintiff and the Louisiana Sub-Class members are "consumers" within the 147. MGM engaged in "trade" or "commerce" within the meaning of La. Rev. Stat. 148. The Louisiana Unfair Trade Practices and Consumer Protection Law ("Louisiana 149. MGM participated in unfair and deceptive acts and practices that violated thea. Failing to implement reasonable data security measures to protect consumers' PII, which was a direct and proximate cause of the Data Breach; b. Failing to comply with common law and statutory duties pertaining to the security and privacy of PII, including duties imposed by the FTCA, 15 U.S.C. § 45; c. Misrepresenting that it employed reasonable data security measures and would reasonably protect the privacy of consumers' PII; d. Omitting and concealing the material fact that it did not employ reasonable measures to secure PII; and e. Omitting and concealing the material fact that it did not comply with common law and statutory duties pertaining to the security of PII, including duties imposed by the FTCA, 15 U.S.C. § 45. 150. MGM's representations and omissions were material because they were likely to 151. MGM intended to mislead Plaintiff and Louisiana Sub-Class members and/or 152. MGM's unfair and deceptive acts and practices were immoral, unethical, 153. MGM acted intentionally, knowingly, and maliciously in violating the Louisiana 154. Had MGM disclosed that its data systems were not secure and were vulnerable to 155. Accordingly, Plaintiff and the Louisiana Sub-Class members acted reasonably in 156. As a direct and proximate result of MGM's unfair and deceptive acts and 157. Plaintiff and the Louisiana Sub-Class members seek all monetary and non- COUNT VII VIOLATION OF THE NEW YORK GENERAL BUSINESS LAW N.Y. Gen. Bus. Law §§ 349, et seq. (On Behalf of the New York Sub-Class) 158. Plaintiff Kerri Shapiro re-alleges and incorporates by reference all preceding 159. MGM engaged in deceptive acts or practices in the conduct of its business, trade, a. Failing to implement reasonable data security measures to protect consumers' PII, which was a direct and proximate cause of the Data Breach; b. Failing to comply with common law and statutory duties pertaining to the security and privacy of PII, including duties imposed by the FTCA, 15 U.S.C. § 45; c. Misrepresenting that it employed reasonable data security measures and would reasonably protect the privacy of consumers' PII; d. Omitting and concealing the material fact that it did not employ reasonable measures to secure PII; and e. Omitting and concealing the material fact that it did not comply with common law and statutory duties pertaining to the security of PII, including duties imposed by the FTCA, 15 U.S.C. § 45. 160. Plaintiff and members of the New York Sub-Class were deceived in New York. 161. MGM's representations and omissions were material because they were likely to 162. MGM acted intentionally, knowingly, and maliciously in violating New York's 163. As a direct and proximate result of MGM's deceptive and unlawful acts and 164. MGM's deceptive and unlawful acts and practices affected the public interest and 165. MGM's deceptive and unlawful practices caused substantial injury to Plaintiff and 166. Plaintiff and the New York Sub-Class members seek all monetary and non-COUNT VIII VIOLATION OF THE OHIO DECEPTIVE TRADE PRACTICES ACT Ohio Rev. Code §§ 4165.01, et seq. (On Behalf of the Ohio Sub-Class) 167. Plaintiff Julie Mutsko re-alleges and incorporates by reference all preceding 168. MGM, Plaintiff Mutsko, and the Ohio Sub-Class members are each a "person," as 169. MGM advertised, offered, or sold goods or services in Ohio and engaged in trade 170. MGM engaged in deceptive trade practices in the course of its business and a. Representing that its goods and services have characteristics, uses, benefits, or qualities that they do not have, in violation of Ohio Rev. Code § 4165.02(A)(7); b. Representing that its goods and services are of a particular standard or quality when they are of another, in violation of Ohio Rev. Code § 4165.02(A)(9); and c. Advertising its goods and services with intent not to sell them as advertise, in violation of Ohio Rev. Code § 4165.02(A)(11). 171. MGM's deceptive trade practices include: a. Failing to implement reasonable data security measures to protect consumers' PII, which was a direct and proximate cause of the Data Breach; b. Failing to comply with common law and statutory duties pertaining to the security and privacy of PII, including duties imposed by the FTCA, 15 U.S.C. § 45; c. Misrepresenting that it employed reasonable data security measures and would reasonably protect the privacy of consumers' PII; d. Omitting and concealing the material fact that it did not employ reasonable measures to secure PII; and e. Omitting and concealing the material fact that it did not comply with common law and statutory duties pertaining to the security of PII, including duties imposed by the FTCA, 15 U.S.C. § 45. 172. MGM's representations and omissions were material because they were likely to 173. MGM intended to mislead Plaintiff and Ohio Sub-Class members and/or induce 174. MGM acted intentionally, knowingly, and maliciously in violating the Ohio 175. As a direct and proximate result of MGM's deceptive trade practices, Plaintiff and 176. Plaintiff and Ohio Sub-Class members seek all monetary and non-monetary relief COUNT IX VIOLATION OF THE SOUTH CAROLINA UNFAIR TRADE PRACTICES ACT, S.C. Code Ann. §§ 39-5-10, et seq. (On Behalf of the South Carolina Sub-Class) 177. Plaintiff Larry Lawter re-alleges and incorporates by reference all preceding 178. MGM is a "person" as defined by S.C. Code Ann. § 39-5-10(a). 179. The South Carolina Unfair Trade Practices Act prohibits "unfair or deceptive acts 180. MGM advertised, offered, or sold goods or services in South Carolina and 181. MGM engaged in unfair and deceptive acts and practices, including by: a. Failing to implement reasonable data security measures to protect consumers' PII, which was a direct and proximate cause of the Data Breach; b. Failing to comply with common law and statutory duties pertaining to the security and privacy of PII, including duties imposed by the FTCA, 15 U.S.C. § 45; c. Misrepresenting that it employed reasonable data security measures and would reasonably protect the privacy of consumers' PII; d. Omitting and concealing the material fact that it did not employ reasonable measures to secure PII; and e. Omitting and concealing the material fact that it did not comply with common law and statutory duties pertaining to the security of PII, including duties imposed by the FTCA, 15 U.S.C. § 45. 182. MGM's acts and practices had, and continue to have, the tendency or capacity to183. MGM's representations and omissions were material because they were likely to 184. MGM intended to mislead Plaintiff and South Carolina Sub-Class members 185. Had MGM disclosed to consumers that its data systems were not secure and, thus, 186. Plaintiff and the South Carolina Sub-Class members acted reasonably in relying 187. MGM had a duty to disclose the above-described facts due to the sensitivity and a. Possession of exclusive knowledge regarding the security of the PII in its systems; b. Active concealment of the state of its data security; and/or c. Incomplete representations about the security and integrity of its computer and data systems, while purposefully withholding material facts from consumers that contradicted these representations. 188. MGM's business acts and practices offend an established public policy, or are 189. MGM's unfair and deceptive acts or practices adversely affected the public 190. MGM's unfair and deceptive acts or practices have the potential for repetition 191. MGM's violations present a continuing risk to Plaintiff and the South Carolina 192. MGM intended to mislead Plaintiff and South Carolina Sub-Class members 193. MGM acted intentionally, knowingly, and maliciously in violating South 194. As a direct and proximate result of MGM's unfair and deceptive acts or practices, 195. Plaintiff and South Carolina Sub-Class members seek all monetary and non- REQUEST FOR RELIEF WHEREFORE, Plaintiffs, on behalf of themselves and all others similarly situated, A. An Order certifying this case as a class action;B. An Order appointing Plaintiffs as class representatives; C. An Order appointing the undersigned counsel as class counsel; D. Injunctive relief requiring MGM to: (i) strengthen its data security systems and E. An award of compensatory damages, statutory damages, and punitive damages; F. An award of costs and expenses; G. An award of attorneys' fees; and H. Such other and further relief as this court may deem just and proper. DEMAND FOR JURY TRIAL Plaintiffs demand a jury trial as to all issues triable by a jury. Respectfully submitted, /s/ Don Springmeyer WOLF, RIFKIN, SHAPIRO, SCHULMAN AND RABKIN, LLP Don Springmeyer 3556 E Russell Rd Second Floor Las Vegas, NV 89120-2234 702-341-5200 Fax: (702) 341-5300 Email: [email protected] BERGER MONTAGUE PC E. Michelle Drake( Pro Hac Vice to be submitted) 43 SE Main Street, Suite 505 Minneapolis, MN 55414 Tel: (612) 594-5933 Fax: (612) 584-4470 [email protected] BERGER MONTAGUE PC Michael Dell' Angelo (Pro Hac Vice to be submitted) Jon Lambiras (Pro Hac Vice to be submitted) Joshua T. Ripley (Pro Hac Vice to be submitted) 1818 Market Street, Suite 3600 Philadelphia, PA 19103 Tel: (215) 875-3000 Fax: (215) 875-4604 [email protected] [email protected] [email protected] MCCULLEY MCCLUER PLLC Stuart McCluer (Pro Hac Vice to be submitted) R. Bryant McCulley (Pro Hac Vice to be submitted) Frank B. Ulmer (Pro Hac Vice to be submitted) 701 East Bay Street, Suite 411 Charleston, SC 29403 Tel: (843) 444-5404 Fax: (843) 444-5408 [email protected] [email protected] [email protected] Counsel for Plaintiffs and the Proposed Class

securities

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ROBBINS GELLER RUDMAN & DOWD LLP PATRICK J. COUGHLIN (111070) DAVID W. MITCHELL (199706) ALEXANDRA S. BERNAY (211068) CARMEN A. MEDICI (248417) 655 West Broadway, Suite 1900 San Diego, CA 92101-8498 Telephone: 619/231-1058 619/231-7423 (fax) [email protected] [email protected] [email protected] [email protected] DEVINE GOODMAN RASCO & WATTS-FITZGERALD, LLP JOHN W. DEVINE LAWRENCE D. GOODMAN ROBERT J. KUNTZ, JR. 2800 Ponce De Leon Blvd., Suite 1400 Coral Gables, FL 33134 Telephone: 305/374-8200 305/374-8208 (fax) [email protected] [email protected] [email protected] Attorneys for Plaintiffs UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. CLASS ACTION B & R SUPERMARKET, INC., d/b/a MILAM’S MARKET, a Florida corporation, and GROVE LIQUORS LLC, a Florida limited liability company, Individually and on Behalf of All Others Similarly Situated, Plaintiffs, vs. COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, VIOLATIONS OF THE CLAYTON ANTITRUST ACT, CALIFORNIA’S CARTWRIGHT ACT AND UNJUST ENRICHMENT ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) DEMAND FOR JURY TRIAL VISA, INC., a Delaware corporation; VISA USA, INC., a Delaware corporation; MASTERCARD INTERNATIONAL INCORPORATED; a Delaware corporation; [Caption continued on following page.] AMERICAN EXPRESS COMPANY, a New York corporation; DISCOVER FINANCIAL SERVICES, an Illinois corporation; BANK OF AMERICA, N.A., a national banking association; BARCLAYS BANK DELAWARE, a Delaware corporation; CAPITAL ONE FINANCIAL CORPORATION, a Delaware corporation; CHASE BANK USA, NATIONAL ASSOCIATION, a national banking association; CITIBANK (SOUTH DAKOTA), N.A., a South Dakota bank; CITIBANK, N.A., a national banking association; PNC BANK, NATIONAL ASSOCIATION, a national banking association; USAA SAVINGS BANK, a Nevada corporation; U.S. BANCORP NATIONAL ASSOCIATION, a national banking association; WELLS FARGO BANK, N.A., a national banking association; EMVCo, LLC, a Delaware limited liability company; JCB CO. LTD, a Japanese company; and UNIONPAY, a Chinese bank association, ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Defendants. B & R Supermarket, Inc., d/b/a Milam’s Market, a Florida corporation (“Milam’s Market”), and Grove Liquors LLC, a Florida limited liability company (“Grove Liquors”), individually and on behalf of all others similarly situated (collectively, the “Class”), sue Visa, Inc. and Visa USA, Inc. (collectively, “Visa”), MasterCard International Incorporated (“MasterCard”), American Express Company (“American Express”) and Discover Financial Services (“Discover”) (collectively, the “Networks”); Bank of America, N.A. (“BOA”), Barclays Bank Delaware (“Barclays”), Capital One Financial Corporation (“Capital One”), Chase Bank USA, National Association (“Chase”), Citibank (South Dakota), N.A., Citibank, N.A., PNC Bank, National Association (“PNC”), USAA Savings Bank (“USAA”), U.S. Bancorp National Association (“US Bank”) and Wells Fargo Bank, N.A. (“Wells Fargo”) (collectively, the “Issuing Banks”); EMVCo, LLC (“EMVCo”); JCB Co. Ltd (“JCB”); and UnionPay (“UnionPay”) and state as follows: NATURE OF THE CLAIM 1. This is a class action suit for violations of the Sherman Antitrust Act, California’s Cartwright Act, unjust enrichment, and for other equitable and injunctive relief. 2. For their own benefit, the Networks, the Issuing Banks through EMVCo conspired to shift billions of dollars in liability for fraudulent, faulty and otherwise rejected consumer credit card transactions from themselves to the Class, without consideration to, or meaningful recourse by, those merchants (the “Liability Shift”). THE PARTIES 3. Plaintiff B & R Supermarket, Inc., d/b/a Milam’s Market, is a Florida corporation that operates four retail grocery stores in Miami-Dade County. 4. Plaintiff Grove Liquors LLC is a Florida limited liability company operating a retail liquor store in Miami-Dade County. 5. Class members, who bring this class action pursuant to Rules 23(a) and (b)(2) and (b)(3) of the Federal Rules of Civil Procedure, comprise merchants who have been unlawfully subjected to a Liability Shift for the assessment of MasterCard, Visa, Discover, UnionPay, JCB, and American Express credit and charge card chargebacks, despite having purchased EMV-chip- compliant point of sale (“POS”) card readers and having otherwise complied with the directives of the Networks and Issuing Banks, during the period from October 1, 2015 until the anticompetitive acts cease. 6. Defendant Visa is a California-based payments technology company, which operates a retail electronic payments network in the United States. It administers Visa payment programs and its product platform includes consumer credit, consumer debit and cash access, and prepaid and commercial programs. It provides products and services over a secure payments network to support payment programs offered by its member issuing banks to their customers, including tens of millions of retail consumers. Visa conducts business throughout the United States, including extensively in the Northern District of California and this Division, where it is headquartered. Visa is a founding member of EMVCo and has two members, Christina Hulka and Marc Kekicheff, on the EMVCo Board of Managers. Along with American Express, Discover, JCB, MasterCard and UnionPay, Visa is a co-owner of defendant EMVCo. 7. Defendant MasterCard is a New York-based payments technology company, which operates a retail electronic payments network in the United States. It administers MasterCard payment programs and its product platform includes consumer credit, consumer debit and cash access, and prepaid and commercial programs. It provides products and services over a secure payments network to support payment programs offered by its member issuing banks to their customers, including tens of millions of retail consumers. MasterCard conducts business throughout the United States, including extensively in the Northern District of California. MasterCard is a co- owner of defendant EMVCo. MasterCard has a representative, Jonathan Main, on the EMVCo Board of Managers. 8. Defendant American Express is a New York-based payments technology company which issues credit and charge cards and related services and conducts business throughout the United States, including extensively in the Northern District of California, and is a co-owner of defendant EMVCo. American Express has two representatives, Robert Burns and Sean Conroy, on the EMVCo Board of Managers. 9. Defendant Discover is an Illinois-based financial services company, which issues the Discover card and operates the Discover retail electronic payments network in the United States. It administers Discover payment programs and its product platform includes consumer credit cards, and other card services. It provides products and services over a secure payments network to support payment programs offered by its own and some member issuing banks to their customers, including tens of millions of retail consumers. Discover conducts business throughout the United States, including extensively in the Northern District of California. Discover is a co-owner of defendant EMVCo. Discover has two representatives, David Bibby and Cheryl Mish, on the EMVCo Board of Managers. 10. Defendant BOA, a national banking association with its principal place of business in Charlotte, North Carolina, issues credit cards throughout the United States, including extensively in the Northern District of California. It is an issuing bank that, throughout this judicial district, issues General Purpose Cards to individuals and businesses. As an issuing bank, BOA maintains the line of credit associated with each Visa or MasterCard it issues. Cardholder transactions made with these cards are processed by the Networks. BOA is a member of both MasterCard and Visa. Bank of America Merchant Services is an EMVCo Business Associate. According to EMVCo’s website, “EMVCo Business Associates provide EMVCo with input on strategic business and implementation issues related to the use of the EMV Specifications. Business Associates serve on the Board of Advisors and, accordingly, advise the EMVCo Executive Committee.” According to EMVCo, in addition to receiving a seat on the EMVCo Board of Advisors, Business Associates also gain “networking opportunities with EMVCo executives and other Business Associates” and “[a]dvance access to EMV Specification revisions, draft documents and upcoming meeting materials.” 11. Defendant Barclays is a Delaware corporation, which issues credit cards throughout the United States, including extensively in the Northern District of California. It is an issuing bank that, throughout this judicial district, issues General Purpose Cards to individuals and businesses. As an issuing bank, Barclays maintains the line of credit associated with each Visa or MasterCard it issues. Cardholder transactions made with these cards are processed by the Networks. Barclays is a member of both MasterCard and Visa. 12. Defendant Capital One is a Delaware corporation, with its principal place of business in McLean, Virginia, issues credit cards throughout the United States, including extensively in the Northern District of California. It is an issuing bank that, throughout this judicial district, issues General Purpose Cards to individuals and businesses. As an issuing bank, Capital One maintains the line of credit associated with each Visa or MasterCard it issues. Cardholder transactions made with these cards are processed by the Networks. Capital One is a member of both MasterCard and Visa. 13. Defendant Chase, a national banking association, issues credit cards throughout the United States, including extensively in the Northern District of California. It is an issuing bank that, throughout this judicial district, issues General Purpose Cards to individuals and businesses. As an issuing bank, Chase maintains the line of credit associated with each Visa or MasterCard it issues. Cardholder transactions made with these cards are processed by the Networks. Chase is a member of both MasterCard and Visa. Chase is an EMVCo Business Associate. According to EMVCo’s website, “EMVCo Business Associates provide EMVCo with input on strategic business and implementation issues related to the use of the EMV Specifications. Business Associates serve on the Board of Advisors and, accordingly, advise the EMVCo Executive Committee.” According to EMVCo, in addition to receiving a seat on the EMVCo Board of Advisors, Business Associates also gain “networking opportunities with EMVCo executives and other Business Associates” and “[a]dvance access to EMV Specification revisions, draft documents and upcoming meeting materials.” Chase is also a Technical Associate of EMVCo. According to EMVCo’s website, EMVCo “Technical Associates have the opportunity to provide input and receive feedback on detailed technical and operational issues connected to the EMV Specifications and related processes. Open to any industry stakeholder with an interest in monitoring the EMV Specifications, this participation type also gives organisations the opportunity to interact regularly with EMVCo’s technical Working Groups, offer input to meeting agendas, submit technical contributions to EMVCo for consideration, and gain early access to draft specifications and other technical documents. Up to five seats on the EMVCo Board of Advisors are reserved for Technical Associates representing distinct market sectors. Technical Associate representation on the Board of Advisors is determined through an annual election process.” 14. Defendant Citibank (South Dakota), N.A. is a South Dakota bank with its principal place of business in Sioux Falls, South Dakota. It is parent company Citigroup’s primary banking entity responsible for U.S. credit card activities. 15. Defendant Citibank, N.A. is a bank with its principal place of business in New York, New York, and is a subsidiary of Citigroup, Inc., a Delaware corporation with its principal place of business in New York, New York. Citigroup is a member of both Visa and MasterCard. It engages in interstate commerce. It is an issuing bank that, throughout this judicial district, issues General Purpose Cards to individuals and businesses. It also is an acquiring bank that, throughout this judicial district, provides card-acceptance services to class members. 16. Defendant PNC is a Pennsylvania corporation which issues credit cards throughout the United States, including in the Northern District of California. It is an issuing bank that, throughout this judicial district, issues General Purpose Cards to individuals and businesses. As an issuing bank, PNC maintains the line of credit associated with each Visa or MasterCard card it issues. Cardholder transactions made with these cards are processed by the Networks. PNC is a member of both Visa and MasterCard. 17. Defendant USAA is a Nevada corporation which issues credit cards throughout the United States, including in the Northern District of California. It is an issuing bank that, throughout this judicial district, issues General Purpose Cards to individuals and businesses. As an issuing bank, PNC maintains the line of credit associated with each Visa or MasterCard card it issues. Cardholder transactions made with these cards are processed by the Networks. USAA is a member of both Visa and MasterCard. 18. Minneapolis-based U.S. Bancorp, with $422 billion in assets, is the parent company of defendant US Bank, the fifth largest commercial bank in the United States. US Bank issues credit cards throughout the United States, including extensively in the Northern District of California. It is an issuing bank that, throughout this judicial district, issues General Purpose Cards to individuals and businesses. As an issuing bank, US Bank maintains the line of credit associated with each Visa or MasterCard it issues. Cardholder transactions made with these cards are processed by the Networks. US Bank is a member of both MasterCard and Visa. US Bank is also an EMVCo Business Associate. According to EMVCo’s website, “EMVCo Business Associates provide EMVCo with input on strategic business and implementation issues related to the use of the EMV Specifications. Business Associates serve on the Board of Advisors and, accordingly, advise the EMVCo Executive Committee.” According to EMVCo, in addition to receiving a seat on the EMVCo Board of Advisors, Business Associates also gain “networking opportunities with EMVCo executives and other Business Associates” and “[a]dvance access to EMV Specification revisions, draft documents and upcoming meeting materials.” US Bank is also a Technical Associate of EMVCo. According to EMVCo’s website, EMVCo “Technical Associates have the opportunity to provide input and receive feedback on detailed technical and operational issues connected to the EMV Specifications and related processes. Open to any industry stakeholder with an interest in monitoring the EMV Specifications, this participation type also gives organisations the opportunity to interact regularly with EMVCo’s technical Working Groups, offer input to meeting agendas, submit technical contributions to EMVCo for consideration, and gain early access to draft specifications and other technical documents. Up to five seats on the EMVCo Board of Advisors are reserved for Technical Associates representing distinct market sectors. Technical Associate representation on the Board of Advisors is determined through an annual election process.” 19. Defendant Wells Fargo is a San Francisco-based corporation which issues credit cards throughout the United States, including extensively in the Northern District of California. It is an issuing bank that, throughout this judicial district, issues General Purpose Cards to individuals and businesses. As an issuing bank, Wells Fargo maintains the line of credit associated with each Visa or MasterCard it issues. Cardholder transactions made with these cards are processed by the Networks. Wells Fargo is a member of both MasterCard and Visa. 20. Defendant EMVCo is a Delaware limited liability company overseen by, inter alia, the Networks, which, among other things, develops and manages the technical standards by which EMC chip transactions (as defined herein) are processed and maintained. According to EMVCo’s website, American Express, Discover, JCB, UnionPay and Visa “own[s] an equal share of EMVCo and has representatives in the organisation at the management and working group levels. All decisions are made on a consensus basis among the member organisations.” EMVCo is not simply a standard-setting entity. Instead, the organization serves as a means through which defendants here have been able to effectuate their conspiracy. Moreover, the anticompetitive conduct alleged herein was not conducted as part of EMVCo’s standard-setting functions. The U.S. Supreme Court has long acknowledged that standard-setting organizations “can be rife with opportunities for anticompetitive activity.” Am. Soc’y of Mech. Eng’rs v. Hydrolevel Corp., 456 U.S. 556, 571 (1982); see also Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656, 659 (1961). 21. Defendant JCB is a Japanese company and a credit card issuer and acquirer. JCB conducts business throughout the United States, including extensively in the Northern District of California. As of March 2015, JCB had 89.6 million cardholders, including 20 million members outside Japan. JCB is a co-owner of defendant EMVCo. JCB has two representatives, Masao Noda and Junya Tanaka, on the EMVCo Board of Managers. 22. Defendant UnionPay is a Chinese bankcard association established under the approval of the State Council and the People’s Bank of China. At present, the Shanghai- headquartered UnionPay has about 400 domestic and overseas associate members. UnionPay conducts business throughout the United States, including in the Northern District of California. UnionPay is a co-owner of defendant EMVCo. UnionPay has two representatives, Hongliang Xu and Jack Pan, on the EMVCo Board of Managers. 23. Historically Visa and MasterCard were joint ventures between payment card issuing banks. This member bank control over Visa and MasterCard allowed card issuers to jointly set rules regarding the operation of the payment card networks. 24. Over time the joint agreements between the member banks implemented through Visa and MasterCard began to be challenged as violative of the antitrust laws. See below (“Defendants Have a History of Anticompetitive Conduct”). In order to avoid liability, the member banks divested their ownership in Visa and MasterCard through an IPO. But, by creating clever shareholding agreements, the member banks continue to exercise control over Visa and MasterCard. For example, although the MasterCard IPO broadened stock ownership, it imposed clear restrictions that make it impossible for the member banks to lose control of the business of MasterCard. MasterCard’s member banks have ensured that they will maintain effective collective control even now that the IPO is completed by imposing limits on stock purchases and retaining certain veto powers over major business decisions. INTRADISTRICT ASSIGNMENT 25. A substantial part of the events or omissions which give rise to the claim occurred in San Francisco County and defendant Visa, Inc., who was responsible for a substantial part of the events or omissions, is headquartered in San Mateo County. As such this action is properly assigned to the San Francisco division of this Court. JURISDICTION AND VENUE 26. This Court has jurisdiction over this case pursuant to 28 U.S.C. §1332(d) and the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. §1711 et seq., which vests original jurisdiction in the district courts of the United States for any multi-state class action where the aggregate amount in controversy exceeds $5 million and where the citizenship of any member of the Class of plaintiffs is different from that of any defendant. The $5 million amount in controversy and diverse-citizenship requirements of CAFA are satisfied in this case. 27. Venue is proper in this District pursuant to §12 of the Clayton Act (15 U.S.C. §22), and 28 U.S.C. §1391 (b), (c), and (d), because a substantial part of the events giving rise to plaintiffs’ claims occurred in this District, a substantial portion of the affected interstate trade and commerce discussed below has been carried out in this District, and one or more of the defendants resides in, is licensed to do business in, is doing business in, had agents in, or is found or transacts business in this District. 28. This Court has personal jurisdiction over each of the defendants because, inter alia, each defendant: (a) transacted business throughout the United States, including in this District; (b) provided services related to credit cards and/or charge cards throughout the United States, including in this District; (c) had substantial contacts with the United States, including in this District; and/or (d) was engaged in an illegal conspiracy that was directed at and had the intended effect of causing injury to persons residing in, located in, or doing business throughout the United States, including in this District. 29. Defendants engaged in conduct both inside and outside the United States that caused direct, substantial, and reasonably foreseeable and intended anticompetitive effects upon interstate commerce within the United States. 30. The activities of defendants and their co-conspirators were within the flow of, were intended to, and did have, a substantial effect on interstate commerce of the United States. Defendants’ products are sold in the flow of interstate commerce. 31. The anticompetitive conduct, and its effects on U.S. commerce described herein, proximately caused antitrust injury to plaintiffs and members of the Class in the United States. 32. By reason of the unlawful activities alleged herein, defendants substantially affected commerce throughout the United States, causing injury to plaintiffs and members of the Class. 33. Defendants’ conspiracy and wrongdoing described herein adversely affected persons in the United States including plaintiffs and members of the Class. BACKGROUND FACTS Cards and Commerce 34. The American consumer economy runs on plastic. 35. Some 230 million adult American consumers hold more than a billion credit and charge cards which they use to make more than two trillion dollars of purchases each year – in 2011, 26 billion credit card transactions totaled some $2.1 trillion. 36. Millions of merchants, in virtually every branch of the economy, rely on accepting credit and charge transactions for their livelihood. MasterCard and Visa are accepted by about 8 million merchants each, Discover by slightly fewer; and some 4.5 million merchants take American Express. 37. In 1997, payment card usage accounted for approximately 23% of consumer payments. By 2011, cards accounted for more than twice that proportion of consumer sales – 48%. During the same period, use of cash and checks declined, from 70% of consumer transactions to 35%. 38. Although they work the same when a cardholder makes a purchase, credit and charge cards are different: A credit card has a revolving line of credit meaning cardholders are able to spend out of the line of credit using the credit card, and typically have to pay a minimum payment – but are not required to pay the full amount owed – each month. If the cardholder does not pay off the statement balance, he or she pays interest each month on the unpaid balance of the expended line of credit. A charge card, on the other hand, does not come with a line of credit and typically does not allow the cardholder to carry a balance, instead charge cards typically require payment of the full amount charged each month. 39. While many American consumers use credit and charge cards for the convenience they offer, there are some transactions – for example, renting a car or a hotel room, or making an online purchase – which are virtually impossible to make without such a card. 40. For American merchants, like those in the Class, accepting credit and charge cards is a prerequisite and necessity for doing business. Customers expect to be able to use their plastic when they make a purchase and will often choose simply not to do business with a merchant who doesn’t accept a card. Credit Card Mechanics 41. Defendants Visa and MasterCard, while they operate the networks that make transactions on Visa or MasterCard credit cards work, do not issue the cards themselves, or carry the line of credit each card represents. Instead, banks and other financial institutions, including the Issuing Banks, issue the credit cards. 42. In the past, defendant American Express only issued charge cards. In more recent years, American Express began directly issuing credit cards as well. 43. Defendant Discover operates a network of its own. Its cards are mostly issued directly by Discover, along with a few issuing banks. 44. There are numerous moving parts behind a credit or charge card transaction. 45. In the case of American Express charge cards, American Express is both the issuer and provides the network. When a consumer uses the card in lieu of cash to make a purchase from a merchant, the merchant is thereafter paid the purchase price (less a “swipe fee”) by American Express. American Express makes its money by charging cardholders membership fees (which vary depending upon the sort of services or perquisites associated with different card types), interest on unpaid balances and by charging the swipe fee (which varies from around 2% to 5% of the cost of the goods or services purchased) paid by the merchant. 46. Accordingly, a typical American Express charge card transaction involves three parties: The customer, American Express and the merchant. 47. A Visa, MasterCard or Discover credit card transaction, on the other hand, involves as many as five parties: (1) the card-holding customer; (2) the merchant; (3) the “acquiring bank”; (4) the issuing bank (in the case of most Discover cards that is usually Discover Bank); and (5) the Network itself, that is, Visa, MasterCard or Discover. 48. The acquiring bank is the link between the Network and the merchant that accepts the card for payment. The issuing bank is the bank, like the Issuing Banks here, that issues the credit card to the customer and which carries the line of credit represented by the card. The cardholder owes the debt to the issuing bank in the amount of any unpaid balance carried on the card. 49. When the cardholding customer presents a credit card to pay for goods or services, the accepting merchant relays the transaction information to the acquiring bank. The acquiring bank processes the information and transmits it to the network. The network relays the information to the issuing bank, which approves the transaction, presuming approval is warranted based on with the cardholder’s account status or credit limit. The approval is conveyed to the acquiring bank, which in turn relays it to the merchant. 50. The issuing bank then transmits to the acquiring bank the amount of the purchase price minus an “interchange fee.” Before paying the merchant, the acquiring bank withholds an additional fee – called the “merchant discount fee” – for its processing services. Thus, the total amount the merchant receives for the transaction is the purchase price minus the sum of the interchange fee and the merchant discount fee. 51. Interchange fees vary based on factors that include the type of card used and the type of merchant. Many credit cards provide rewards or cash back to cardholder. Those rewards or cash back cost money, and thus these cards, referred to in the industry as “premium cards,” are associated with higher interchange fees. 52. In general, cardholders can dispute their payment card transactions for various reasons, including claims of fraud. Cardholders are rarely responsible for these losses, called “chargebacks,” which, historically, were born by the issuers, and only rarely by the merchants. Credit Card Technology 53. Each credit or charge card bears a unique embossed number, an embossed expiration date and a printed “CVV,” or “card verification value” number – often called the “security code.” 54. The embossed number identifies the card as a Visa, MasterCard, Discover, American Express, JCB or UnionPay, identifies the type of card, the issuing bank (for Visa and MasterCard payment cards), the account number and card number within an account, and contains one or more “check digits,” random numbers added for security. 55. Cards also bear a magnetic stripe or magstrip on the back, similar to a piece of audio or computer tape. The magstrip contains information about the card, including the card number, expiration date and so forth. When swiped though the card reader at the merchant’s POS – in what is called “card present” transaction – the card reader is able to obtain that information from the magstrip and transmit it along the network. 56. This combination of features allows the various participants in a credit card transaction to share information about the card, all with the aim of speeding the transaction while avoiding fraud and unauthorized charges. 57. Beginning in the mid-1990s credit and charge cards began to be manufactured to include, in addition to the magstrip, a so-called “EMV chip.” This electronic chip – actually a tiny micro-processor – is a more advanced form of electronic data storage than a magstrip. While magstrips are “static,” containing only the information with which they are initially coded, EMV chips are “dynamic,” in that the data they contain can be interacted with, altered and updated. An EMV chip creates a unique electronic signature for each transaction. 58. EMVCo is jointly owned by Visa, MasterCard, UnionPay, JCB, Discover and American Express. The EMV standard encompasses specifications, test procedures and compliance processes managed by EMVCo. 59. The EMV name comes from “Europay, MasterCard and Visa,” the companies that in 1994 initiated development of the EMV Specifications. Europay International SA became part of MasterCard in 2002. JCB joined EMVCo in 2004, and American Express in 2009. 60. EMVCo is managed by the Board of Managers, which is comprised of representatives from each of the member payment systems. Various Working Groups complete EMVCo’s work, and “decisions are made on a consensus bases to ensure card infrastructure uniformity.” In 2010, EMVCo launched the EMVCo Associates Programme (EAP), “for key industry stakeholders to provide input to EMVCo’s Board of Managers, Executive Committee, and Working Groups.” 61. EMV is the trademark owned by all of the equity owners of EMVCo: American Express, JCB, Discover, MasterCard, UnionPay and Visa. However, EMV also refers to the various forms of electronic payments that are administered by EMVCo. 62. An EMV chip looks like this: 63. Financial institutions in Europe, Latin America, Asia/Pacific and Canada migrated to EMV over the past decade. Those transitions took years to accomplish and ran into substantial roadblocks along the way. For example, roll out in Canada began in 2008 and as of 2014, the adoption rate was only at 59.5%, according to statistics provided by EMVCo itself. 64. The cost of the transition to EMV chip cards in the United States, as borne by merchants who accept the cards (and who, for example, must purchase new POS equipment that can process chip card transactions at a cost of $100 to $600 per machine) is expected to be between $6 billion and $8 billion. Of that amount, 75% is likely to be paid by merchants, making the transition three times as expensive for them as for defendants. 65. EMV cards, because of their dynamic nature, are purported by the Networks to reduce fraud significantly during card present transactions – those where the customer actually produces his card to the merchant at the merchant’s POS. In addition, EMV chips are supposed to be less prone to illicit copying than magstrips. (Although, an EMV-chip-equipped card does nothing to lessen the likelihood of fraud or error in what are “card not present” transactions, such as those conducted online or over the telephone.) 66. There are two kinds of EMV cards – “chip-and-PIN” (personal identification number) cards, where the transaction is authorized by the merchant processing the chip card and the consumer entering a PIN, and “chip-and-signature” cards, where merchant processes the chip and the consumer signs an electronic signature pad. 67. The European Union’s version of the EMV system, unlike the standard deployed in the United States, utilizes the chip-and-PIN system, rather than a chip-and-signature system. Chip- and-PIN cards are considered more secure. 68. EMV cards have already been widely adopted outside the United States. Lack of EMV-enabled cards – which are common elsewhere in the world – has been blamed in part for the fact that more than half of the $14 billion in global annual credit card fraud occurs within the United States. The “Liability Shift” and “Certification” 69. Despite all the security measures associated with credit cards, with any card transaction, even with EMV chip-enabled cards, there is a possibility of fraud, error or complaint. Cards may be stolen from their rightful owners and used by the thief to make charges. A merchant might charge the wrong amount or deliver the wrong, or faulty, goods. 70. Typically, when a card-holding customer sees a fraudulent charge on his or her card statement, or wishes to dispute a charge for another reason, the customer contacts his or her issuing bank. (The telephone numbers and other contact information printed on the back of credit cards go to card issuers, not to the Networks.) 71. In such cases, the card-holding customer is not usually liable for the fraudulent or unauthorized charge. Instead, chargebacks are typically absorbed by the issuing banks – who marketed such “fraud protection” to their credit card customers as a core service of their cards – when fraudulent card present transactions occur. 72. Accordingly, the Class members were not typically liable for the cost of fraudulent charges in card present transactions, except on those occasions where the merchant improperly handled the transaction in some way, such as not obtaining a customer signature. 73. On the other hand, merchants who accept cards online or in other “card not present” transactions have more frequently had to bear the cost of fraudulent charges. 74. But the Networks decided that on October 1, 2015 – by fiat of Visa, MasterCard, American Express and the issuing banks, and without any opportunity for merchants like plaintiffs and the Class members to object or to opt out – the system for handling chargebacks for card present transactions would change dramatically. 75. In what defendants truthfully enough dubbed a “Liability Shift,” the issuing banks and the Networks decreed that, as of that October 1, 2015, liability for billions of dollars of card present chargebacks would shift from the issuing banks to the merchants, unless the merchants could satisfy certain conditions – conditions, it would turn out, which were impossible for the Class members to meet and which the Networks, the Issuing Banks and EMVCo knew were impossible to meet. 76. Indeed, it is widely accepted within the electronic payments industry that defendants knew that the conditions they had set for the Class members were impossible. Just some examples: (a) In the first place, defendants had the example of every other country that has adopted the EMV chip: “No country has [ever] achieved anywhere near 100 percent EMV readiness at the time of the liability shift,” according to Erik Vlugt, vice president of global product management at VeriFone, a company which actually makes chip-reading equipment and software. (b) The Strawhecker Group, an electronic payments services provider estimated as early as March 2015 that 34% of U.S. merchants could be ready for the Liability Shift deadline. And as the deadline drew nearer, the company lowered its estimates. In September 2015, on the eve of the Liability Shift, the company estimated that only 27% of merchants could be ready. (c) Gilles Ubaghs, senior analyst of financial services technology at Ovum, an independent analyst and consultancy firm headquartered in London, specializing in global coverage of IT and the telecommunications industries, stated that “many merchants and retailers are totally unprepared for the liability shift to EMV on October 1,” and that banks and payment providers had not done enough to educate merchants. (d) A top industry consultant, Allen Weinberg of Glenbrook – a “payments industry strategy consulting and research firm,” whose clients include card payment networks – warned that “[t]hese POS change projects usually span years, not months. Many pieces to the EMV puzzle, particularly regarding debit, were not in place in time for the liability shift deadline.” In addition, he said, “[m]any, many, many integrated POS systems (IPOS), especially the electronic cash register software for these systems, were just not ready in time. Even if the software was ahead of the game, they faced long certification queues at many acquirers.” (e) Defendants also knew that even providing the software to support EMV cards was a challenge, according to Terry Crowley, CEO of TranSend, a company that manufactures the software to make merchants’ equipment work with EMV chip card. Crowley said that while software code for card-accepting devices was historically simple enough to be written on the back of a business card, “now with EMV, that same software wraps around the walls of a room three times . . . hundreds of thousands of lines of code.” With the Liability Shift deadline having passed, Crowley says, suddenly there is a “fire drill” to replace all of this simple software, compounded by the facts that the EMV code is hard to write, harder to certify and that few EMV software developers understand the U.S. market. (f) In September 2015, Digital Transactions, a publication devoted to tracking the industry, stated that “few are surprised that EMV certifications are taking longer than traditional POS terminals.” 77. Despite these obstacles, defendants insisted that the October 1, 2015 Liability Shift occur as to almost all merchants, with no grace period. 78. From the perspective of the relationship between cardholder and issuing bank, nothing changed: The issuing banks continued to market and provide “fraud protection” to cardholders, who were not held liable for fraudulent charges. But from the perspective of the relationship between the issuing banks and merchants the difference was seismic: the issuing banks would now, in many cases, be able to shift the liability for covering such charges from themselves to Class members. 79. Merchants who accepted EMV chip cards, but failed to process them through approved POS card readers (i.e., “inserted” the EMV chips cards in the readers as opposed to “swiping” the magnetic strip on the cards) would now be liable for any chargebacks resulting from fraudulent or improper use of the EMV chip cards. 80. Merchants were not consulted about the change, were not permitted to opt out, were not offered any reduction of the interchange fee, the merchant discount fee, the swipe fee – or any other cost of accepting defendants’ credit and charge cards. This is in contrast to the United Kingdom and Australian markets where merchants were given interchange concessions which helped share the costs of fraud and purchasing and deploying new hardware and software. 81. Thus, what defendants knew, but Milam’s Market, Grove Liquors and the rest of the Class did not and could not know, was that purchasing new POS equipment and training their staff was not going to be enough. In addition, the equipment would have to “certified” after the fact in a murky, nebulous process that was utterly outside of their control. 82. Instead, the “certification” process is controlled by the very entities that benefit from the Liability Shift and it is the primary means through which defendants’ illegal conduct has been able to flourish. 83. According to a report by the International Retail User Group: “Certifications are mandatory and unique to each phase of the EMV payment system.” Each step of the certification process involves numerous entities. “Brand certification involves the card brands and EMVCo”; “PIN pad certification involves PIN pad manufacturers, EMVCo and Acquirers”; “Acquirer certification involves PIN pads and Brands”; and “Retail certification involves PIN pad, Middleware, Store Systems, Acquirer and Brands.” Within each of these steps, there are multiple certifications within each basic process, the report notes. And none of it is within the Class members’ control. 84. A House of Representatives’ Small Business Committee Staff Report pointed out that “[t]here also is a concern that small businesses that have the new hardware installed may be slow to receive certification.” This concern is borne out by Class members’ experience. 85. As a result, Class members such as the plaintiffs here, could not timely comply with the standard, no matter what they did, because the Defendants refused to, or were unable to, “certify” the new equipment by the deadline – or, indeed, ever. 86. Worse, the Networks, the Issuing Banks and EMVCo knew from the outset – and the Class members are now learning – that the “certification” process would take years after the October 1, 2015 Liability Shift was imposed. 87. The result has been massively increased costs for chargebacks being laid at the feet of the Class members, while the Issuing Banks have been spared those same costs and the Networks have continued profit – just as defendants knew would happen. 88. According to statistics from the EMV Migration Forum, as of the end of 2015, approximately 400 million EMV chip cards have been issued in the United States, with 675,000 merchant locations accepting EMV chip transactions. But this does not detail how many of these merchants, like the named plaintiffs, tried to become compliant but, because of defendants’ actions, are now liable for charges they would not have incurred prior to the Liability Shift. 89. Moreover, there is agreement among some industry analysts that EMV technology may not strengthen a merchant’s security, and general reluctance by retailers to switch indicates widespread adoption of EMV in the United States may not occur until 2020. Defendants knew this information well in advance of the Liability Shift deadline, yet they plowed forward. An Example: Milam’s Markets and Grove Liquors 90. Taking heed of the representations made by the industry and Visa, MasterCard, Discover and American Express, Milam’s Market and Grove Liquors management diligently prepared for the October 1, 2015 Liability Shift. 91. Working with their acquirer, Worldpay, and their equipment vendor, NCR Corporation, Milam’s Market and Grove Liquors expended management effort, training time and considerable costs to update and acquire new POS equipment so that their stores would be able to process the EMV chip cards. 92. That equipment, NCR’s Equinox L5300 card readers, were purchased and installed well prior to the Liability Shift. These state-of-the-art POS card readers are designed to process EMV chip card transactions. 93. However, merely having the right equipment in place is not enough for Milam’s Market and Grove Liquors to avoid the Liability Shift – without the completion of the so-called “certification,” they are still caught by the Liability Shift. 94. But while very large retailers such as Target, Walmart and others quickly had their EMV-processing systems “certified” – thus sparing them the Liability Shift – the members of the Class are at the mercy of defendants.1 95. Merchants like Milam’s Market and Grove Liquors have no control over the “certification” process. All they can do is request “certification” and wait for it to occur. And no one can say when that will be. 96. NCR Corporation has advised that “certification” of the Equinox L5300 was “TBD” – to be determined. A copy of that notice is attached as Ex. A. 97. These extended delays for smaller merchants are also no surprise to defendants. The Congressional Small Business Committee Staff Memo noted that there was from the start “a concern that small businesses that have the new hardware installed may be slow to receive certification.” “Most of the Tier I retailers [giants like Target and Walmart] may be able to roll out by October, but across the board, the readiness is not high.” 98. Officials of the National Retail Federation – the world’s largest retail trade association – have summed up the situation perfectly: “So the same guys who mandated this for retailers have not resourced it to where they can get retailers certified.” 1 Notably Target and Walmart are both EMVCo Business Associates and Walmart is an EMVCo Technical Associate as well. 99. Meanwhile, defendants have downplayed these obvious troubles. One representative for MasterCard claimed that all a merchant needs to do to activate an EMV terminal was to “contact their acquirer or payment services provider or terminal manufacturer to find out how to do so.” American Express likewise downplayed issues telling merchants that “to help avoid the liability [shift],” all they would need to do is “work with your processor or terminal provider today to upgrade to chip card technology.” American Express further told merchants “[t]o upgrade, contact your payment processor or terminal provider and tell them you’d like to start accepting chip cards. They’ll provide you with a chip-enabled system and guide you through each step. Before you know it, your upgraded system will be up and running.” 100. Of course, plaintiff Milam’s Market did just that and to this day, despite following every requirement to become EMV compliant, Milam’s Market is suffering damages as a result of defendants’ delays and refusals to properly certify the technology plaintiff was assured would be compliant. 101. The damages are substantial. Milam’s Market and Grove Liquors are being “charged- back” for supposedly fraudulent transactions that, in the past, would have been borne by the Issuing Banks. 102. Illustrative is a “Notification of Chargeback” dated January 4, 2016. The chargeback concerns a $17.99 Visa transaction that occurred on December 13, 2015, which Milam’s Market requested be reversed, and the related Denial of Chargeback Reversal dated January 26, 2016. Copies of the documents are attached as Ex. B. 103. As stated on the Denial of Chargeback Reversal, the reason for this cost to be assessed to Milam’s Market for a “Counterfeit Transaction” was that “[t]he bank [i.e., the issuing bank] stated the EMV chip card was processed. The transaction was not processed through a chip reader terminal, therefore the chargeback will stand.” Ex. B. 104. In other words, Milam’s Market has to bear this cost thanks to the “Liability Shift,” despite everything it has done to comply with defendants’ edicts. 105. Worse, besides the base value of the transaction, Milam’s Market and Grove Liquors must also pay a “chargeback fee” of five dollars, a fee assessed against the merchant each time it is made liable for a chargeback by MasterCard and Visa. For some merchants, these fees are as high as $30 per incident. 106. Accordingly, in this single, illustrative instance, Milam’s Market was assessed a total of $22.99 which, before the “Liability Shift,” it would not have had to pay. Instead, before the “Liability Shift,” the issuing bank would have born the $17.99 chargeback – a cost the issuing bank is now spared. 107. Tellingly, nothing Milam’s Market could have done – short of making the business- crippling decision to stop accepting Visa cards – could have prevented this outcome. Indeed, the expenditures it made in an effort to comply with defendants’ new EMV chip regime have all been for naught, as defendants have failed to conduct the very “certification” required. 108. Milam’s Market and Grove Liquors has been made liable for chargebacks under the Liability Shift for Discover and American Express charges as well. See, e.g., Ex. C, evidencing two Discover chargebacks of $140.47 and $44.98, respectively; see also Ex. D, evidencing an American Express chargeback for $155.12 – all attributable to processing EMV chip cards. 109. The two exemplar Discover chargebacks both are expressly denominated as follows in each relevant “Notification of Chargeback”: UA05 Fraud – Chip Card Counterfeit Transaction Definition: The UA05 reason code is valid for a chargeback on a card present card sale or cash advance involving a chip card and the issuer or cardholder alleges that a counterfeit card was used to conduct a card sale or cash advance and the merchant’s POS device did not support and use EMV technology. Ex. C. 110. The truth is, however, that Milam’s Market’s POS equipment did support and use EMV chip technology when the two charged-back fraudulent purchases were made. The store was only subject to this “liability” shift because defendants had failed to “certify” that equipment. 111. Likewise, the American Express chargebacks are attributed to cause code “Fraud F30.” This is the fraud code reserved for fraud on an EMV chip card. Ex. D. 112. The increase in such losses since the Liability Shift has been substantial. For example, according to Worldpay, during the time period of October 1, 2015 to February 15, 2016, Milam’s Market and Grove Liquors have been assessed final responsibility by MasterCard and Visa for 88 chargebacks totaling $9,196.22 (plus chargeback $5 fees for each item, for an additional cost to Milam’s Market and Grove Liquors of $440 – for a total loss of $9,636.22). During the same period the prior year, between October 1, 2014 and February 15, 2015 – before the Liability Shift – Milam’s Market and Grove Liquors were assessed final responsibility by MasterCard and Visa for only four chargebacks. 113. Add to that the more than $700 in American Express chargebacks in February alone and the nearly $200 in Discover chargebacks and the result is that, because of the Liability Shift that they could not avoid despite their diligence and expenditure, Milam’s Market and Grove Liquors have lost – and Issuing Banks have unjustly gained – some ten thousand dollars in four and a half months. 114. The amount of similar chargebacks for which the Class members have been made to pay as a result of the Liability Shift is enormous, and certainly runs into billions of dollars – with the Issuing Banks having been enriched by the same amount. 115. In exchange for this newly bestowed, unavoidable liability, Milam’s Market, Grove Liquors and the Class members have received . . . nothing. Interchange fees, which defendants have said exist in part to pay for fraud, are still paid for by the merchant, and have not decreased. The Liability Shift was unilaterally imposed to the benefit of defendants, with no compensation, consultation or consideration of any kind made to the Class members. RELEVANT MARKET 116. There exists a relevant market, the product dimension of which is no broader than General Purpose Cards (both credit and charge cards). United States v. Visa U.S.A., Inc., 163 F. Supp. 2d 322, 335 (S.D.N.Y. 2001). The geographic dimension of this market is the United States (“General Purpose Card Market”). Id. at 339-40. Cash and checks are not substitutes for payment cards, and the rules shifting liability to merchants from the Issuing Banks apply in the United States and its territories. 117. Together, the card-issuing defendants possess market power over the market for General Purpose Cards, collectively accounting for roughly 75% of the transactions in the General Purpose Card Market. 118. There exists a relevant market, the product dimension of which is no broader than General Purpose Card Network Services. Visa, 163 F. Supp. 2d at 338. The geographic dimension of this market is the United States (“General Purpose Card Network Services Market”). General Purpose Card networks provide the infrastructure and mechanisms through which general purpose card transactions are conducted, including the authorization, settlement and clearance of transactions. 119. Visa, MasterCard and American Express separately, and the owners of EMVCo collectively, possess market power over the market for General Purpose Card Network Services, collectively having nearly 100% of the General Purpose Card Network Services Market. 120. The shift in liability from the card issuers to the merchants is not attributable to increases in the level of costs associated with the operations of the networks. 121. There is virtually no elasticity of demand. Merchants have no choice but to continue to accept General Purpose Cards. See Visa, 163 F. Supp. 2d at 340 (noting that merchants must accept Visa and MasterCard or else risk losing business to merchants who do accept them). Because of defendants’ collusion and market power, a small but significant increase in the costs of providing General Purpose Card Network Services would not result in the loss of business. 122. There are significant barriers to entry in the General Purpose Card Network Services Market. Because of these barriers, the only successful market entrant since the 1960’s has been Discover, which was introduced by Sears and benefited from its extensive network of stores, its extensive base of customers who carried Sears’ store card, and its relationship with Dean Witter. New entry into the General Purpose Card Network Services Market would cost more than 1 billion dollars and would involve a “‘chicken-and-egg’ problem of developing a merchant acceptance network without an initial network of cardholders who, in turn, are needed to induce merchants to accept the system’s cards in the first place.” Visa, 163 F. Supp. 2d at 342. CLASS ACTION ALLEGATIONS 123. Plaintiffs bring this action as a class action pursuant to Rules 23(a) and (b)(2) and (b)(3) of the Federal Rules of Civil Procedure on behalf of all Class members, defined as those merchants who have been unlawfully subjected to the so-called Liability Shift for the assessment of MasterCard, Visa, Discover and American Express credit and charge card chargebacks, despite having purchased EMV-chip-compliant POS card readers and having otherwise complied with the directives of the Networks and Issuing Banks, for the period from October 1, 2015 until the present (the “Class”). 124. The Class consists of merchants located throughout the United States. While plaintiffs do not know the exact number of the members of the Class, plaintiffs believe there are (at least) hundreds of thousands of members in the Class, thus the members of the Class are so numerous that joinder of all Class members is completely impracticable, if not impossible. The exact number of the Class members is not presently known, but can be determined through appropriate discovery. 125. Plaintiffs will fairly and adequately protect the interests of the members of the Class and have retained counsel competent and experienced in class actions, antitrust and financial services litigation. 126. Plaintiffs’ claims arise out of the same common course of conduct giving rise to the claims of the other members of the Class. Plaintiffs’ interests are coincident with, and not antagonistic to, those of the other members of the Class. 127. Plaintiffs have no interests that are adverse or antagonistic to those of the Class. 128. A class action is superior to other available methods for the fair and efficient adjudication of this controversy. Because the damages suffered by many individual Class members may be relatively small, the expense and burden of individual litigation make it virtually impossible for the Class members to individually seek redress for the wrongful conduct alleged in this Complaint. 129. The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications, establishing incompatible standards of conduct for defendants. 130. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting any individual members of the Class. This is particularly true given the nature of defendants’ conspiracy, which was generally applicable to all the Class members, thereby making appropriate relief with respect to the Class as a whole. Such questions of law and fact common to the Class include, but are not limited to: (a) whether defendants and their co-conspirators engaged in a combination and conspiracy among themselves to institute the October 1, 2015 Liability Shift while knowing that, for millions of merchants, compliance with the nebulous and uncertain certification requirements would be impossible, thus subjecting the Class to charges which would not have been borne by the Class without the Liability Shift; (b) the identity of the participants of the alleged conspiracy; (c) the duration of the alleged conspiracy and the acts carried out by defendants and their co-conspirators in furtherance of the conspiracy; (d) whether the alleged conspiracy violated the Sherman Antitrust Act or California’s Cartwright Act; (e) whether defendants and their co-conspirators fraudulently concealed the conspiracy’s existence from plaintiffs and the members of the Class; (f) the appropriate injunctive and related equitable relief for the Class; and (g) the appropriate Class-wide measure of damages for the Class. PLAINTIFFS AND THE CLASS SUFFERED ANTITRUST INJURY 131. By reason of the alleged violations of the antitrust laws, plaintiffs and the members of the Class have sustained injury to their businesses or property, having paid certain chargebacks that they would not have paid in the absence of defendants’ illegal contract, combination or conspiracy, and, as a result, have suffered damages in an amount presently undetermined. This is an antitrust injury of the type that the antitrust laws were meant to punish and prevent. DEFENDANTS HAVE A HISTORY OF ANTICOMPETITIVE CONDUCT 132. In 1998, the Antitrust Division of the U.S. Department of Justice (“DOJ”) sued Visa and MasterCard, alleging that the joint governance of the two networks and certain rules that prevented banks from issuing cards on competitive networks (the “exclusionary rules”) violated §1 of the Sherman Act. After a 34-day trial the court found the exclusionary rules violated the antitrust laws, and that decision was affirmed by the Second Circuit. Visa, 163 F. Supp. 2d 322. The court found that the Visa and MasterCard Networks, together with their Member Banks, implemented and enforced illegal exclusionary agreements requiring any U.S. bank that issued Visa or MasterCard General Purpose Cards to refuse to issue American Express and Discover cards. Id. at 405-06. 133. The court concluded that the “exclusionary rules undeniably reduce output and harm consumer welfare,” that Visa and MasterCard had “offered no persuasive procompetitive justification for them,” that “the Member Banks agreed not to compete by means of offering American Express and Discover branded cards,” that “[s]uch an agreement constitutes an unreasonable horizontal restraint [that] cannot be permitted,” and that “these rules constitute agreements that unreasonably restrain interstate commerce in violation of Section 1 of the Sherman Act.” Id. 134. In affirming the court’s “comprehensive and careful opinion,” United States v. Visa U.S.A., Inc., 344 F.3d 229, 234 (2d Cir. 2003), the United States Court of Appeals for the Second Circuit underscored the crucial role played by the member banks in agreeing to, and abiding by, the Visa and MasterCard versions of the exclusionary rules: Visa U.S.A. and MasterCard, however, are not single entities; they are consortiums of competitors. They are owned and effectively operated by some 20,000 banks, which compete with one another in the issuance of payment cards and the acquiring of merchants’ transactions. These 20,000 banks set the policies of Visa U.S.A. and MasterCard. These competitors have agreed to abide by a restrictive exclusivity provision to the effect that in order to share the benefits of their association by having the right to issue Visa or MasterCard cards, they must agree not to compete by issuing cards of American Express or Discover. The restrictive provision is a horizontal restraint adopted by 20,000 competitors.” Id. at 242. Thus, “the restraint imposed by the consortium members [the member banks] is on themselves. Each has agreed not to compete with the others in a manner which the consortium considers harmful to its combined interests.” Id. 135. That same year, this Court granted partial summary judgment in a class action brought by merchants against Visa and MasterCard, challenging the networks’ “Honor-All- Cards” rules that required all merchants that accepted Visa and MasterCard-branded credit cards to also accept the networks’ offline-debit cards. In that decision, the Court concluded that Visa possessed market power in the credit-card and debit-card markets as a matter of law. And while the Court did not make the same conclusion as a matter of law with respect to MasterCard, it did note the existence of evidence that would support a finding of market power for MasterCard, such as its high market shares in the credit-card and debit-card markets, evidence of collusion between it and Visa, and the fact that merchants had not switched to other forms of payment even in the face of frequent and significant increases in interchange fees. In re Visa Check/MasterMoney Antitrust Litig., No. 96-cv- 5238, 2003 WL 1712568, at *3-*4 (E.D.N.Y. Apr. 1, 2003). On the eve of trial in Visa Check, Visa and MasterCard settled with the merchant class, agreeing to abolish the challenged portion of the “Honor-All-Cards” rule, to reduce interchange fees for offline-debit cards and to pay the merchant class approximately $3 billion over ten years. 136. Beyond the domestic threats to MasterCard’s anticompetitive collaboration with its member banks, competition and regulatory authorities in many jurisdictions around the globe have concluded that Visa and MasterCard’s collectively fixed uniform schedule of fees and other restraints are anticompetitive and illegal. 137. For example, the European Commission (“E.C.”) ruled on December 19, 2007 that MasterCard’s cross-border interchange fee violates Article 81(1) of the E.C. Treaty, its counterpart to §1 of the Sherman Antitrust Act. 138. In its 241-page decision, the E.C. rejected the arguments that MasterCard’s restructuring absolved them of continuing antitrust liability2 and that the relevant product market is broader than payment cards.3 2 European Commission, Commission Decision of December 19, 2007 Relating to a Proceeding Under Article 81 of the EC Treaty and Article 53 of the EEA Agreement COMP/34.579; COMP 36.518; COMP 58.580, http://ec.europa.eu/competition/antitrust/cases/dec_docs/34579/34579_1889 _2.pdf (“E.C. Decision”) at 102-106. 3 Id. at 77-90. 139. Similarly, in 2005 the antitrust-enforcement body in the United Kingdom, the Office of Fair Trading (“OFT”), concluded after a four-year investigation that MasterCard’s domestic interchange fees violated the U.K. equivalent to §1 of the Sherman Antitrust Act.4 In reaching that conclusion, the OFT found that MasterCard had market power in the relevant markets for payment- card issuance, acquiring and a “wholesale” market.5 140. As to American Express, the DOJ and 17 state attorneys general went to trial against American Express during the summer of 2014. That trial focused on credit card “swipe fees” which generate over $50 billion annually for credit card networks. In 2015, the court overseeing the action in the U.S. District Court for the Eastern District of New York found in favor of the DOJ’s lawsuit claiming that American Express’ rules for merchants violate antitrust laws. 141. Many of the defendants have also been the subject of civil antitrust actions related to payment cards, including In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, No. 05-md-1720, pending in the Eastern District of New York, where Defendants were charged by a nationwide class of merchants with a massive conspiracy between the Member Banks and Visa and MasterCard related to interchange fees and acceptance rules. Defendants in that action agreed to a settlement of more than $5 billion as well as to agreement requiring significant changes to rules affecting merchants. COUNT I Violation of §§1 and 3 of the Sherman Antitrust Act, 15 U.S.C. §§1 and 3 Agreement Restraining Trade 142. Plaintiffs hereby incorporate each preceding and succeeding paragraph as though fully set forth herein. 143. Defendants, and their co-conspirators, entered into and engaged in a conspiracy in unreasonable restraint of trade in violation of §§1 and 3 of the Sherman Antitrust Act, 15 U.S.C. §§1 4 See Decision of the Office of Fair Trading of September 6, 2008: Investigation of the multilateral interchange fees provided for in the UK domestic rules of MasterCard UK Members Forum Limited (formerly known as MasterCard/Europay UK Limited) (No. CA98/05/05), http://webarchive. nationalarchives.gov.uk/20140402142426/http://www.oft.gov.uk/shared_oft/ca98_public_register/ decisions/mastercard.pdf (“U.K. OFT Decision”). 5 U.K. OFT Decision at 50-52. and 3. The conspiracy consisted of a continuing agreement, understanding, or concerted action between and among defendants and their co-conspirators in furtherance of which defendants agreed to shift the liability of fraudulent payment card transactions from the card-issuing banks to merchants. 144. Defendants’ unlawful conduct was through mutual understandings, combinations or agreements by, between, and among defendants and other unnamed co-conspirators. Defendants’ conspiracy is a per se violation of the Sherman Antitrust Act and is, in any event, an unreasonable and unlawful restraint of trade. 145. There is no legitimate business justification for, or procompetitive benefits caused by, defendants’ unreasonable restraint of trade. Any ostensible procompetitive benefit was pretextual or could have been achieved by less restrictive means. 146. Defendants’ conspiracy, and the resulting impact on the prices of credit card acceptance occurred in and affected interstate commerce and commerce in and between the Territories of the United States. 147. As a direct, intended, foreseeable, and proximate result of defendants’ conspiracy and overt acts taken in furtherance thereof, plaintiffs and each member of the Class have suffered injury to their business or property. Plaintiffs’ and each Class member’s damages are directly attributable to defendants’ conduct, which resulted in all Class members paying for fraudulent payment card transactions and associated fees during the class period they would not have otherwise paid for but- for defendants’ agreement. 148. Plaintiffs’ and the Class’s injuries are of the type the antitrust laws were designed to prevent, and flow from that which makes defendants’ conduct unlawful. 149. Plaintiffs and the Class are entitled to treble damages, attorneys’ fees, reasonable expenses, and cost of suit for the violations of the Sherman Antitrust Act. COUNT II Violations of the Cartwright Act 150. Plaintiffs hereby incorporate each preceding and succeeding paragraph as though fully set forth herein. 151. The acts and practices detailed above violate the Cartwright Act, Cal. Bus. & Prof. Code §16700 et seq. 152. The conspiracy consisted of a continuing agreement, understanding, or concerted action between and among defendants and their co-conspirators in furtherance of which defendants agreed to shift the liability of fraudulent payment card transactions from the card-issuing banks to merchants. 153. It is appropriate to bring this action under the Cartwright Act because many of the illegal agreements were made in California, the purchasers reside in California, some defendants have their principal place of business in California, and because overt acts in furtherance of the conspiracy and wrongful charges flowing from those acts occurred in California. 154. Defendants’ unlawful conduct was through mutual understandings, combinations or agreements by, between, and among defendants and other unnamed co-conspirators. Defendants’ conspiracy is a per se violation of the Cartwright Act and is, in any event, an unreasonable and unlawful restraint of trade. 155. There is no legitimate business justification for, or procompetitive benefits caused by, defendants’ unreasonable restraint of trade. Any ostensible procompetitive benefit was pretextual or could have been achieved by less restrictive means. 156. As a direct, intended, foreseeable, and proximate result of defendants’ conspiracy and overt acts taken in furtherance thereof, plaintiffs and each member of the Class have suffered injury to their business or property. Plaintiffs’ and each Class member’s damages are directly attributable to defendants’ conduct, which resulted in all Class members paying for fraudulent payment card transactions and associated fees during the class period they would not have otherwise paid for but- for defendants’ agreement. 157. Plaintiffs’ and the Class’s injuries are of the type the antitrust laws were designed to prevent, and flow from that which makes defendants’ conduct unlawful. 158. Plaintiffs and the Class are entitled to treble damages, attorneys’ fees, reasonable expenses, and cost of suit for the violations of the Cartwright Act. COUNT III Unjust Enrichment 159. Plaintiffs hereby incorporate each preceding and succeeding paragraph as though fully set forth herein. 160. In an effort to recoup the billions of dollars required to issue new chip-enabled cards, defendants, through the Networks EMVCo, conspired and agreed to shift the burden for fraudulent transactions from the defendant Issuing Banks to the Class members for transactions involving chip- enabled cards – even in cases where the merchants, such as plaintiffs here, purchased and installed chip-enabled readers before October 1, 2015. 161. To deal with the substantial costs to implement chip cards, defendants conspired to and changed the benefit/liability scheme of the card payment system by shifting the liability to the Class members for fraudulent transactions knowing that the EMV system would not be fully operational on October 1, 2015. 162. Defendants knew that the verification process would not be fully operational by October 1, 2015, but implemented the Liability Shift knowing that merchants who purchased and installed equipment would be bearing the cost of the Liability Shift for fraudulent transactions even after they purchased and timely installed approved EMV chip-reading equipment. 163. Nevertheless, defendants set October 1, 2015 as the Liability Shift Date, without any consideration or benefit to the plaintiffs. Instead, since October 1, 2015, defendants have received a direct benefit from the Class members as a result of the detrimental liability shift to the Class. 164. The defendant Issuing Banks market to their customers fraud protection, namely that the cardholders will not be financially responsible if their cards are lost, stolen or used fraudulently. 165. As a result of their inequitable conduct, the defendant Issuing Banks have been unjustly enriched by the Class members, who are now assuming fraud-related losses; losses that were previously incurred by the defendant Issuing Banks. 166. Defendant Issuing Banks have accepted and retained the benefit conferred on them by plaintiffs and the Class members as a result of the liability shift. 167. In light of defendants’ conduct, it is inequitable for the defendant Issuing Banks to retain the benefit of the Liability Shift – the shifting of fraud-related losses to the Class members – without paying the value to the plaintiffs and Class members. 168. Because of the acts of defendants and their co-conspirators as alleged herein, defendants have been unjustly enriched at the expense of plaintiffs and the Class. 169. Plaintiffs and the Class seek restitution of the direct benefit they have provided to defendants and all monies of which they were unfairly and improperly deprived, as described herein. PRAYER FOR RELIEF WHEREFORE, plaintiffs, on behalf of themselves and the Class, pray that the Court: A. Determine that this action may be maintained as a class action pursuant to Fed. R. Civ. P. 23(a) and (b)(3), and direct that reasonable notice of this action, as provided by Fed. R. Civ. P. 23(c)(2), be given to the Class, and declare plaintiffs B & R Supermarket, Inc. d/b/a Milam’s Market and Grove Liquors LLC, as named representatives of the Class; B. Conduct expedited discovery proceedings leading to a prompt trial on the merits before a jury on all claims and defenses; C. Enter joint and several judgments against defendants and in favor of plaintiffs and the Class; D. Award the Class damages (i.e., three times overcharges) in an amount to be determined at trial, plus interest in accordance with law; E. Award plaintiffs and the Class their costs of suit, including reasonable attorneys’ fees as provided by law; F. Order that defendants, their directors, officers, employees, agents, successors, members, and all persons in active concert and participation with them be enjoined and restrained from, in any manner, directly or indirectly, committing any additional violations of the law as alleged herein; and G. Award such further and additional relief as is necessary to correct for the anticompetitive market effects caused by defendants’ unlawful conduct, as the Court may deem just and proper under the circumstances. JURY DEMAND Plaintiffs seek trial by jury of all matters so triable. DATED: March 8, 2016 ROBBINS GELLER RUDMAN & DOWD LLP PATRICK J. COUGHLIN DAVID W. MITCHELL ALEXANDRA S. BERNAY CARMEN A. MEDICI s/ Patrick J. Coughlin PATRICK J. COUGHLIN 655 West Broadway, Suite 1900 San Diego, CA 92101-8498 Telephone: 619/231-1058 619/231-7423 (fax) DEVINE GOODMAN RASCO & WATTS-FITZGERALD, LLP JOHN W. DEVINE LAWRENCE D. GOODMAN ROBERT J. KUNTZ, JR. 2800 Ponce De Leon Blvd., Suite 1400 Coral Gables, FL 33134 Telephone: 305/374-8200 305/374-8208 (fax) Attorneys for Plaintiffs I:\Admin\CptDraft\Antitrust\Operative - Cpt Chip Card Antitrust.docx

antitrust

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X Docket No.: Plaintiffs, COMPLAINT -against- Defendants. X Plaintiffs, CARLOS FUNEZ and VENANCIO CORDOVA, on behalf of themselves and PRELIMINARY STATEMENT 1. Defendants have profited at the expense of their former employees who performed 1 2. In addition, Defendants failed to timely pay Plaintiffs' wages, and/or made only NATURE OF THE ACTION 3. Plaintiffs seek to recover unpaid wages that Defendants owe them under the Fair JURISDICTION AND VENUE 4. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§1331 and 1337 5. In addition, the Court has jurisdiction over Plaintiffs' claims under the FLSA 6. Venue is proper in the Eastern District of New York pursuant to 28 U.S.C. §1391 7. Defendants do business within the Eastern District of New York and maintain a THE PARTIES 8. The Plaintiff, CARLOS FUNEZ ("FUNEZ"), is a resident of the County of Nassau, 9. At all times relevant to the complaint, Plaintiff FUNEZ was an "employee" within 2 10. Plaintiff FUNEZ was employed by the defendants as a manual laborer from in or 11. The Plaintiff, VENANCIO CORDOVA ("CORDOVA"), is a resident of the 12. At all times relevant to the complaint, Plaintiff CORDOVA was an "employee" 13. Plaintiff CORDOVA was employed by the defendants as a manual laborer from in 14. Defendant TRIPLE S MASON CONTRACTORS, INC., was and still is a domestic 15. At all times relevant, defendant, TRIPLE S MASON CONTRACTORS, INC., was 16. Defendant TRIPLE S CONTRACTORS, CORP., was and still is a domestic 17. At all times relevant, defendant, TRIPLE S CONTRACTORS, CORP., was and 18. The defendant, MICHAEL SACKARIS ("SACKARIS"), resides at in Holbrook, 19. The defendant, SACKARIS, is the President or Chief Executive Officer of TRIPLE 3 20. The defendant SACKARIS is a shareholder of the defendant TRIPLE S MASON 21. The defendant SACKARIS has authority to make payroll and personnel decisions 22. The defendant, MICHAEL SACKARIS, is active in the day to day management of 23. The defendant, SACKARIS, is the President or Chief Executive Officer of TRIPLE 24. The defendant SACKARIS is a shareholder of the defendant TRIPLE S 25. The defendant MICHAEL SACKARIS has authority to make payroll and personnel 26. The defendant, MICHAEL SACKARIS, is active in the day to day management of 27. The defendant, MICHAEL SACKARIS, by virtue of his position as manager and/or FACTS 28. Defendants are engaged in commercial and residential construction. 29. Plaintiff FUNEZ worked as a manual laborer for Defendants from in or about July 430. Plaintiff CORDOVA worked as a manual laborer for Defendants from in or about 31. The Defendants had control over the conditions of Plaintiffs' employment, their 32. Plaintiff FUNEZ regularly worked from approximately 6:00 a.m. to 4:00 p.m., 33. Plaintiff FUNEZ worked more than forty hours in most workweeks in which he 34. Plaintiff CORDOVA regularly worked from approximately 6:00 a.m. to 4:00 35. Plaintiff CORDOVA worked more than forty hours in most workweeks in which 36. Plaintiff FUNEZ was paid fifteen ($15) dollars per hour for all hours worked in 37. Plaintiff CORDOVA was paid twenty ($20) dollars per hour for all hours worked 38. Defendants failed to compensate the Plaintiffs for time worked in excess of forty 5 39. Defendants willfully disregarded and purposefully evaded record keeping 40. Defendants paid Plaintiffs, at times, wholly or partially in cash, without providing 41. Defendants unlawfully failed to pay Plaintiffs proper compensation in violation of 42. Throughout Plaintiffs' employment, Defendants failed to pay them regularly for all 43. For example, for the week ending 7/10/14, Plaintiff FUNEZ worked 52.5 hours but 44. The following week, the week ending on 7/17/14, Plaintiff FUNEZ worked 51.5 45. For example, for the week ending 10/19/12, Plaintiff CORDOVA worked 38.5 6 46. The following week, the week ending on 10/26/12, Plaintiff worked 49 hours but 47. Defendants failed to pay Plaintiffs for all hours worked throughout their 48. Defendants failed to timely pay Plaintiffs' wages in violation of the FLSA's prompt COLLECTIVE ACTION ALLEGATIONS 49. At all times relevant, Plaintiffs and other FLSA Collective Action Plaintiffs are and 50. Upon information and belief, there are many current and former employees who 51. Plaintiffs seek to proceed as a collective action with regard to the First Claim and 7 All persons who are currently, or have been employed by the Defendants, at any time during the three (3) years prior to the filing of their respective consent forms, who worked as manual laborers. 52. The First and Second Claim for Relief are properly brought under and maintainedRULE 23 CLASS ACTION ALLEGATIONS NEW YORK STATE LABOR LAW 53. Plaintiffs bring New York Labor Law claims on behalf of themselves and a class 54. The Class Members are readily ascertainable. The number and identity of the Class 8 55. The proposed Class is numerous such that a joinder of all members is impracticable, 56. Defendants have acted and/or have refused to act on grounds generally applicable 57. There are questions of law and fact common to the Class which predominate over (a) whether Defendants failed and/or refused to pay the Plaintiffs and Class Members the overtime wages for hours worked beyond forty hours in a single workweek; (b) whether Defendants failed to pay Plaintiffs and Class Members in accordance with the agreed terms of employment; (c) whether Defendants made unlawful deductions to the wages of Plaintiffs and Class Members; (d) whether Defendants failed to keep and maintain true and accurate payroll records for all hours worked by Plaintiffs and the Class; (e) whether Defendants' policies, practices, programs, procedures, protocols, and plans regarding keeping and maintaining payroll records complied with the law; (f) whether Defendants failed to furnish the Plaintiffs and Class members with an accurate statement with every payment of wages, listing hours worked, rates of pay, gross wages, and deductions and allowances, as required by law; 9 (g) what was the nature and extent of the Class-wide injury and the appropriate measure of damages for the class; and (h) whether Defendants' general practice of failing and/or refusing to pay the Plaintiff and Class overtime pay was done willfully and/or with reckless disregard of the federal and state wage and hour laws. 58. Plaintiffs' claims are typical of the claims of the Class that they seek to represent. 59. Plaintiffs' claims are typical of those claims that could be alleged by any member 60. Plaintiffs are able to fairly and adequately protect the interests of the Class and have 61. Plaintiffs have retained counsel competent and experienced in class actions, wage 62. A class action is superior to other available methods for the fair and efficient 1063. Class action treatment will permit a large number of similarly situated persons to 64. The members of the Class have been damaged and are entitled to recovery as a 65. Furthermore, current employees are often afraid to assert their rights out of fear of FIRST CLAIM FOR RELIEF (FAIR LABOR STANDARDS ACT) 66. Plaintiffs allege and incorporate by reference all allegations in all preceding 67. Defendants employed Plaintiffs for workweeks longer than forty (40) hours and 11 68. Defendants' violations of the FLSA, as described in this Complaint have been 69. Because defendants' violations of the FLSA have been willful, a three-year statute 70. As a result of defendants' unlawful acts, Plaintiffs are entitled to recover overtime 71. Due to defendants' violations of the New York Labor Law, Plaintiffs are entitled SECOND CLAIM FOR RELIEF (NEW YORK LABOR LAW: UNPAID WAGES) 72. Plaintiffs allege and incorporate by reference all allegations in all preceding 73. Defendants employed Plaintiffs and Class Members for workweeks longer than 74. By Defendants' failure to pay Plaintiffs and Class Members overtime wages for 12 75. Due to Defendants' violations of the New York Labor Law, Plaintiffs and Class THIRD CLAIM FOR RELIEF (VIOLATION OF LABOR LAW SECTION 191) 76. Plaintiffs allege and incorporate by reference all allegations in all preceding 77. Plaintiffs and Class Members were entitled to be paid their weekly wages "not later 78. Defendants violated Labor Law §191 by failing to pay Plaintiffs and Class 79. Plaintiffs and Class Members are entitled to recover from Defendants unpaid FOURTH CLAIM FOR RELIEF (VIOLATION OF LABOR LAW SECTION 193) 80. Plaintiffs allege and incorporate by reference all allegations in all preceding 81. Labor Law §193 prohibits employers from making any deductions from wages, 82. Defendants made deductions to wages, and/or shifted the cost of doing business to 83. The deductions made by Defendants were for the benefit of the Defendants. 13 84. Plaintiffs and Class Members have been damaged in an amount to be determined FIFTH CLAIM FOR RELIEF FOR VIOLATION OF NEW YORK LABOR LAW SECTION 195 85. Plaintiffs allege and incorporate by reference all allegations in all preceding 86. Defendants failed to provide Plaintiffs and Class Members with the notice and 87. Due to defendant's failure to provide Plaintiffs and Class Members with the notice 88. Due to defendant's failure to provide Plaintiffs and Class Members with the notice PRAYER FOR RELIEF WHEREFORE, Plaintiffs, individually and on behalf of all other similarly situated (i) Unpaid wages and an additional and equal amount as liquidated damages pursuant (ii) Issuance of a declaratory judgment that the practices complained of in this 14(iii) Unpaid overtime pay pursuant to New York Labor Law, Article 19, §§650 et seq., (iv) Damages pursuant to Labor Law Section 191; (v) Damages pursuant to Labor Law Section 193; (iv) Damages pursuant to New York State Labor Law Section 195; (v) Award of reasonable attorneys' fees and costs incurred in prosecuting these claims; (vi) Such other relief as this Court deems just and proper. December 14, 2016 LAW OFFICE OF PETER A. ROMERO PLLC By: Park Peter A. Romero (PR-1658) 103 Cooper Street Babylon, New York 11702 (631) 257-5588 [email protected] Attorneys for Plaintiffs 15 CONSENT TO SUE By my signature below, I hereby authorize the filing and prosecution of claims in my name 9/12/16 Date CONSENT TO SUE By my signature below, I hereby authorize the filing and prosecution of claims in my name 30/11/016 30 Date

employment & labor

zsReDYcBD5gMZwcztkiN

Todd M. Friedman (SBN 216752) Adrian R. Bacon (SBN 280332) LAW OFFICES OF TODD M. FRIEDMAN, P.C. 21550 Oxnard St., Suite 780 Woodland Hills, CA 91367 Phone: 323-306-4234 Fax: 866-633-0228 tfriedman@ toddflaw.com abacon@ toddflaw.com Attorneys for Plaintiff UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA JESUS MENDEZ, individually and on behalf of all others similarly situated, Plaintiff, vs. Case No. CLASS ACTION COMPLAINT FOR VIOLATIONS OF: 1. NEGLIGENT VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT [47 U.S.C. §227(b)] MARS IT CORP. d/b/a MARS SOLUTIONS GROUP, and DOES 1 through 10, inclusive, and each of them, Defendants. 2. WILLFUL VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT [47 U.S.C. §227(b)] ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) DEMAND FOR JURY TRIAL Plaintiff JESUS MENDEZ (“Plaintiff”), individually and on behalf of all others similarly situated, alleges the following upon information and belief based upon personal knowledge: NATURE OF THE CASE 1. Plaintiff brings this action individually and on behalf of all others similarly situated seeking damages and any other available legal or equitable remedies resulting from the illegal actions of Defendant, in negligently, knowingly, and/or willfully contacting Plaintiff on Plaintiff’s cellular telephone in violation of the Telephone Consumer Protection Act, 47. U.S.C. § 227, et seq. (“TCPA”). JURISDICTION & VENUE 2. Jurisdiction is proper under 28 U.S.C. § 1332(d)(2) because Plaintiff, a resident of California, seeks relief on behalf of a Class, which will result in at least one class member belonging to a different state than that of Defendant, a Wisconsin corporation. Plaintiff also seeks $1,500.00 in damages for each call in violation of the TCPA, which, when aggregated among a proposed class in the thousands, exceeds the $5,000,000.00 threshold for federal court jurisdiction. Therefore, both diversity jurisdiction and the damages threshold under the Class Action Fairness Act of 2005 (“CAFA”) are present, and this Court has jurisdiction. Jurisdiction is also proper under 28 U.S.C. § 1331 because Plaintiff’s claims arise under a law of the United States, the TCPA. 3. Venue is proper in the United States District Court for the Northern District of California pursuant to 28 U.S.C. § 1391(b) because a substantial part of the events or omissions giving rise to Plaintiff’s claims occurred within this District. PARTIES 4. Plaintiff, JESUS MENDEZ (“Plaintiff”), is a natural person residing in San Jose, California, and is a “person” as defined by 47 U.S.C. § 153 (39). 5. Defendant, MARS IT CORP. d/b/a MARS SOLUTIONS GROUP (“Defendant”), is a recruiting company, and is a “person” as defined by 47 U.S.C. § 153 (39). 6. The above-named Defendant, and its subsidiaries and agents, are collectively referred to as “Defendants.” The true names and capacities of the Defendants sued herein as DOE DEFENDANTS 1 through 10, inclusive, are currently unknown to Plaintiff, who therefore sues such Defendants by fictitious names. Each of the Defendants designated herein as a DOE is legally responsible for the unlawful acts alleged herein. Plaintiff will seek leave of Court to amend the Complaint to reflect the true names and capacities of the DOE Defendants when such identities become known. 7. Plaintiff is informed and believes that at all relevant times, each and every Defendant was acting as an agent and/or employee of each of the other Defendants and was acting within the course and scope of said agency and/or employment with the full knowledge and consent of each of the other Defendants. Plaintiff is informed and believes that each of the acts and/or omissions complained of herein was made known to, and ratified by, each of the other Defendants. FACTUAL ALLEGATIONS 8. Beginning on or about August 30, 2019, Plaintiff received an unsolicited text message from Defendant on Plaintiff’s cellular telephone number ending in -3228, in an attempt to solicit Plaintiff to purchase Defendant’s services. 9. During this time, Defendant began to use Plaintiff’s cellular telephone for the purpose of sending Plaintiff spam advertisements and/or promotional offers, via text messages, including a text message sent to and received by Plaintiff on or about August 30, 2019 from Defendant’s phone number, (262) 372-6471. 10. On or about August 30, 2019, Plaintiff received a text from Defendant that read: “Hi Jesus, My Name is Shane i am a Lead Recruiter at Mars Solutions Group and i am contacting you regarding a job opening just want to check and see if you are available in the job market. i have send you the job details to your email please check my email or give me a call on my direct line 262-299-”. 11. This text message placed to Plaintiff’s cellular telephone was placed via Defendant’s SMS Blasting Platform, i.e., an “automatic telephone dialing system,” (“ATDS”) as defined by 47 U.S.C. § 227(a)(1) as prohibited by 47 U.S.C. § 227(b)(1)(A). 12. The telephone number that Defendant, or its agent, called was assigned to a cellular telephone service for which Plaintiff incurs a charge for incoming calls pursuant to 47 U.S.C. § 227(b)(1). 13. Defendant’s text messages constituted calls that were not for emergency purposes as defined by 47 U.S.C. § 227(b)(1)(A). 14. During all relevant times, Defendant did not possess Plaintiff’s “prior express consent” to receive text messages using an automatic telephone dialing system on his cellular telephone pursuant to 47 U.S.C. § 227(b)(1)(A). CLASS ALLEGATIONS 15. Plaintiff brings this action individually and on behalf of all others similarly situated, as a member the classes (hereafter “The Class”) defined as follows: All persons within the United States who received any solicitation/telemarketing text messages from Defendant to said person’s cellular telephone made through the use of any automatic telephone dialing system and such person had not previously consented to receiving such calls, or who had revoked such consent, within the four years prior to the filing of this Complaint through the date of class certification. 16. Plaintiff represents, and is a member of, The Class, consisting of all persons within the United States who received any solicitation/telemarketing text messages from Defendant to said person’s cellular telephone made through the use of any automatic telephone dialing system and such person had not previously consented to receiving such calls, or who had revoked such consent, within the four years prior to the filing of this Complaint through the date of class certification. 17. Defendant, its employees and agents are excluded from The Class. Plaintiff does not know the number of members in The Class, but believes the Class members number in the thousands, if not more. Thus, this matter should be certified as a Class Action to assist in the expeditious litigation of the matter. 18. The Class is so numerous that the individual joinder of all of its members is impractical. While the exact number and identities of The Class members are unknown to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff is informed and believes and thereon alleges that The Class includes thousands of members. Plaintiff alleges that The Class members may be ascertained by the records maintained by Defendant. 19. Plaintiff and members of The Class were harmed by the acts of Defendant in at least the following ways: Defendant illegally contacted Plaintiff and Class members via their cellular telephones thereby causing Plaintiff and Class members to incur certain charges or reduced telephone time for which Plaintiff and Class members had previously paid by having to retrieve or administer messages left by Defendant during those illegal calls, and invading the privacy of said Plaintiff and Class members. 20. Common questions of fact and law exist as to all members of The Class which predominate over any questions affecting only individual members of The Class. These common legal and factual questions, which do not vary between Class members, and which may be determined without reference to the individual circumstances of any Class members, include, but are not limited to, the following: a. Whether, within the four years prior to the filing of this Complaint, Defendant made any telemarketing/solicitation call/text message (other than a call made for emergency purposes or made with the prior express consent of the called party) to a Class member using any automatic telephone dialing system to any telephone number assigned to a cellular telephone service; b. Whether Plaintiff and the Class members were damaged thereby, and the extent of damages for such violation; and c. Whether Defendant should be enjoined from engaging in such conduct in the future. 21. As a person that received telemarketing/solicitation calls from Defendant using an automatic telephone dialing system, without Plaintiff’s prior express consent, Plaintiff is asserting claims that are typical of The Class. 22. Plaintiff will fairly and adequately protect the interests of the members of The Class. Plaintiff has retained attorneys experienced in the prosecution of class actions. 23. A class action is superior to other available methods of fair and efficient adjudication of this controversy, since individual litigation of the claims of all Class members is impracticable. Even if every Class member could afford individual litigation, the court system could not. It would be unduly burdensome to the courts in which individual litigation of numerous issues would proceed. Individualized litigation would also present the potential for varying, inconsistent, or contradictory judgments and would magnify the delay and expense to all parties and to the court system resulting from multiple trials of the same complex factual issues. By contrast, the conduct of this action as a class action presents fewer management difficulties, conserves the resources of the parties and of the court system, and protects the rights of each Class member. 24. The prosecution of separate actions by individual Class members would create a risk of adjudications with respect to them that would, as a practical matter, be dispositive of the interests of the other Class members not parties to such adjudications or that would substantially impair or impede the ability of such non- party Class members to protect their interests. 25. Defendant has acted or refused to act in respects generally applicable to The Class, thereby making appropriate final and injunctive relief with regard to the members of the Class as a whole. FIRST CAUSE OF ACTION Negligent Violations of the Telephone Consumer Protection Act 47 U.S.C. § 227(b) 26. Plaintiff repeats and incorporates by reference into this cause of action the allegations set forth above at Paragraphs 1-25. 27. The foregoing acts and omissions of Defendant constitute numerous and multiple negligent violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227(b), and in particular 47 U.S.C. § 227(b)(1)(A). 28. As a result of Defendant’s negligent violations of 47 U.S.C. § 227(b), Plaintiff and the Class Members are entitled an award of $500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B). 29. Plaintiff and the Class members are also entitled to and seek injunctive relief prohibiting such conduct in the future. SECOND CAUSE OF ACTION Knowing and/or Willful Violations of the Telephone Consumer Protection Act 47 U.S.C. § 227(b) 30. Plaintiff repeats and incorporates by reference into this cause of action the allegations set forth above at Paragraphs 1-25. 31. The foregoing acts and omissions of Defendant constitute numerous and multiple knowing and/or willful violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227(b), and in particular 47 U.S.C. § 227(b)(1)(A). 32. As a result of Defendant’s knowing and/or willful violations of 47 U.S.C. § 227(b), Plaintiff and the Class members are entitled an award of $1,500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B) and 47 U.S.C. § 227(b)(3)(C). 33. Plaintiff and the Class members are also entitled to and seek injunctive relief prohibiting such conduct in the future. PRAYER FOR RELIEF WHEREFORE, Plaintiff requests judgment against Defendant for the following: FIRST CAUSE OF ACTION Negligent Violations of the Telephone Consumer Protection Act 47 U.S.C. § 227(b)  As a result of Defendant’s negligent violations of 47 U.S.C. § 227(b)(1), Plaintiff and the Class members are entitled to and request $500 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B).  Any and all other relief that the Court deems just and proper. SECOND CAUSE OF ACTION Knowing and/or Willful Violations of the Telephone Consumer Protection Act 47 U.S.C. § 227(b)  As a result of Defendant’s willful and/or knowing violations of 47 U.S.C. § 227(b)(1), Plaintiff and the Class members are entitled to and request treble damages, as provided by statute, up to $1,500, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B) and 47 U.S.C. § 227(b)(3)(C).  Any and all other relief that the Court deems just and proper. 34. Pursuant to the Seventh Amendment to the Constitution of the United States of America, Plaintiff is entitled to, and demands, a trial by jury. Respectfully Submitted this 11th Day of December, 2020. LAW OFFICES OF TODD M. FRIEDMAN, P.C. By: /s/ Todd M. Friedman Todd M. Friedman Law Offices of Todd M. Friedman Attorney for Plaintiff

privacy

s1Yb_4gBF5pVm5zY_iYI

BURSOR & FISHER, P.A. L. Timothy Fisher (State Bar No. 191626) 1990 North California Blvd., Suite 940 Walnut Creek, CA 94596 Telephone: (925) 300-4455 Facsimile: (925) 407-2700 E-mail: [email protected] Attorney for Plaintiffs UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA Case No. 2:22-cv-979 CLASS ACTION COMPLAINT MOHAMED SUUFI and SAM KOCH, individually and on behalf of all others similarly situated, Plaintiffs, v. JURY TRIAL DEMANDED MEDIALAB.AI, INC., Defendant. Plaintiffs Mohamed Suufi and Sam Koch (“Plaintiffs”), on behalf of themselves and all other persons similarly situated, by and through their attorneys, make the following allegations pursuant to the investigation of their counsel and based upon information and belief, except as to allegations specifically pertaining to themselves and their counsel, which are based on personal knowledge. NATURE OF THE ACTION 1. This is a class action suit brought on behalf of all persons who have accounts with Facebook and Imgur and who viewed videos on Imgur.com. 2. MediaLab.Ai, Inc., (“Defendant” or “Imgur”) develops, owns, and operates a popular website, Imgur.com, which Defendant hosts and disseminates images, GIFs, and videos.1 Defendant makes money by collecting and sharing the personal information of Imgur’s subscribers.2 In 2014, for example, Imgur’s Head of Special Initiatives said he planned to monetize the site by doing a “deep dive into the data to analyze who uses Imgur,” along with discovering “why, where, what, and when” users and subscribers view content.3 3. Plaintiffs bring this action for damages and other legal and equitable remedies resulting from the illegal actions of Defendant in knowingly disclosing 1 Shannon Liao, Imgur adds 30-second video uploads so your GIFs can have soundtracks, THE VERGE (MAY 28, 2018) (“Imgur is launching video after years of hosting still images and GIFs on its platform. … And Imgur is likely going to use the opportunity to insert video ads to help make the service more profitable.”); Josh Constine, Gif lord Imgur caves to video to hasten profitability, TechCrunch (May 29, 2018) (“Starting today, everyone can watch videos on Imgur, while iOS users can post video, with that opening to more people soon.”); see also IMGUR BLOG, UPLOAD VIDEOS (WITH SOUND!) ON IMGUR FOR IOS (“Imgur’s mission is to surface the world’s most entertaining content, and we’re excited to introduce short-form video to our platform. … You can choose to include, or remove, sound from your post, have multiple videos in one post, or mix with images and GIFs.”). 2 Megan Ross Dickey, This Is The Future Of Imgur, The Massive Photo-Sharing Startup Yahoo Wants to Buy, BUS. INSIDER (Mar. 18, 2014). 3 Id. personally identifiable information—including a record of every video clip viewed by the user—to unrelated third parties. 4. The VPPA prohibits “[a] video tape service provider who knowingly discloses, to any person, personally identifiable information concerning any consumer of such provider.” 18 U.S.C. § 2710(a)(4). “Personally identifiable information” (“PII”) is defined as “information which identifies a person as having requested or obtained specific video materials or services from a video tape service provider.” 18 U.S.C. § 2710(a)(3). 5. The United States Congress passed the VPPA in 1988, seeking to confer onto consumers the power to “maintain control over personal information divulged and generated in exchange for receiving services from video tape service providers.” S. Rep. No. 100-599, at 8. “The Act reflects the central principle of the Privacy Act of 1974: that information collected for one purpose may not be used for a different purpose without the individual’s consent.” Id. 6. Defendant violated the VPPA by knowingly transmitting Plaintiffs’ and the putative class’s personally identifiable information to unrelated third parties. THE PARTIES 7. Plaintiff Sam Koch is a resident of Somerville, Massachusetts. In June 2007, Mr. Koch created a Facebook account, and in April 2014, he created an Imgur account. To sign up for Imgur, Mr. Koch provided his email and created a username and password. Mr. Koch frequented Imgur to, among other things, watch videos. Unbeknownst to Mr. Koch, every time he watched a video on Imgur’s website, Imgur compelled his browser to send first-party and third-party cookies to Facebook. These cookies contained his Facebook ID, and Imgur transmitted this identifier alongside event data that tracked what buttons he clicked and what pages he viewed. Along with the Facebook ID, Imgur also compelled Mr. Koch’s browser to send other identifiers to Facebook, like his email, phone number and username. Imgur likewise disclosed these identifiers alongside event data. By transmitting Mr. Koch’s Facebook ID and other identifiers alongside data that revealed the videos he watched, Imgur violated the VPPA. Mr. Koch discovered Imgur surreptitiously disclosed his personally identifiable information in December 2021. 8. Plaintiff Mohamed Suufi is a resident of Cambridge, Massachusetts. In May 2015, Mr. Suufi created a Facebook account, and in July 2018, he created an Imgur account. To sign up for Imgur, Mr. Suufi provided his email and created a username and password. Mr. Suufi frequented Imgur to, among other things, watch videos. Unbeknownst to Mr. Suufi, every time he watched a video on Imgur’s website, Imgur compelled his browser to send first-party and third-party cookies to Facebook. These cookies contained his Facebook ID, and Imgur transmitted this identifier alongside event data that tracked what buttons he clicked and what pages he viewed. Along with the Facebook ID, Imgur also compelled Mr. Suufi’s browser to send other identifiers to Facebook, like email, phone number and username. Imgur likewise disclosed these identifiers alongside event data. By transmitting Mr. Suufi’s Facebook ID and other identifiers alongside data that revealed the videos he watched, Imgur violated the VPPA. Mr. Suufi discovered Imgur surreptitiously disclosed his personally identifiable information in December 2021. 9. Defendant MediaLab.Ai, Inc. is a Delaware corporation with its principal place of business at 1222 6th Street, Santa Monica, California 90401. Defendant develops, owns, and operates a popular website, Imgur.com, which disseminate images and videos. JURISDICTION AND VENUE 10. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331 because Plaintiffs bring this civil action under the laws of the United States. 11. Venue is proper in this District pursuant to 28 U.S.C. § 1391 because Defendant’s principal place of business is in this District. FACTUAL ALLEGATIONS COMMON TO ALL CLAIMS A. Facebook and The Facebook Pixel 12. Facebook is the largest social networking site on the planet, touting 2.9 billion monthly active users.4 Facebook describes itself as a “real identity platform,”5 meaning users are allowed only one account and must share “the name they go by in everyday life.”6 To that end, when creating an account, users must provide their first and last name, along with their birthday and gender.7 13. Facebook generates revenue by selling advertising space on its website.8 14. Facebook sells advertising space by highlighting its ability to target users.9 Facebook can target users so effectively because it surveils user activity both on and off its site.10 This allows Facebook to make inferences about users beyond what they explicitly disclose, like their “interests,” “behavior,” and “connections.”11 Facebook compiles this information into a generalized dataset called “Core 4 Sean Burch, Facebook Climbs to 2.9 Billion Users, Report 29.1 Billion in Q2 Sales, YAHOO (July 28, 2021), https://www.yahoo.com/now/facebook-climbs-2-9-billion- 202044267.html. 5 Sam Schechner and Jeff Horwitz, How Many Users Does Facebook Have? The Company Struggles to Figure It Out, WALL. ST. J. (Oct. 21, 2021). 6 FACEBOOK, COMMUNITY STANDARDS, PART IV INTEGRITY AND AUTHENTICITY, https://www.facebook.com/communitystandards/integrity_authenticity. 7 FACEBOOK, SIGN UP, https://www.facebook.com/ 8 Mike Isaac, Facebook’s profit surges 101 percent on strong ad sales., N.Y. TIMES (July 28, 2021), https://www.nytimes.com/2021/07/28/business/facebook-q2- earnings.html. 9 FACEBOOK, WHY ADVERTISE ON FACEBOOK, https://www.facebook.com/business/help/205029060038706. 10 FACEBOOK, ABOUT FACEBOOK PIXEL, https://www.facebook.com/business/help/742478679120153?id=1205376682832142. 11 FACEBOOK, AD TARGETING: HELP YOUR ADS FIND THE PEOPLE WHO WILL LOVE YOUR BUSINESS, https://www.facebook.com/business/ads/ad-targeting. Audiences,” which advertisers use to apply highly specific filters and parameters for their targeted advertisements.12 15. Advertisers can also build “Custom Audiences.”13 Custom Audiences enables advertisers to reach “people who have already shown interest in [their] business, whether they’re loyal customers or people who have used [their] app or visited [their] website.”14 With Custom Audiences, advertisers can target existing customers directly, and they can also build “Lookalike Audiences,” which “leverages information such as demographics, interests, and behavior from your source audience to find new people who share similar qualities.”15 Unlike Core Audiences, Custom Audiences requires an advertiser to supply the underlying data to Facebook. They can do so through two mechanisms: by manually uploading contact information for customers, or by utilizing Facebook’s “Business Tools,” which collect and transmit the data automatically.16 One such Business Tool is the Facebook Tracking Pixel. 16. The Facebook Tracking Pixel is a piece of code that advertisers, like Defendant, can integrate into their website. Once activated, the Facebook Tracking Pixel “tracks the people and type of actions they take.”17 When the Facebook Tracking Pixel captures an action, it sends a record to Facebook. Once this record is 12 FACEBOOK, EASIER, MORE EFFECTIVE WAYS TO REACH THE RIGHT PEOPLE ON FACEBOOK, https://www.facebook.com/business/news/Core-Audiences. 13 FACEBOOK, ABOUT CUSTOM AUDIENCES, https://www.facebook.com/business/help/744354708981227?id=2469097953376494. 14 FACEBOOK, ABOUT EVENTS CUSTOM AUDIENCE, https://www.facebook.com/business/help/366151833804507?id=300360584271273. 15 FACEBOOK, ABOUT LOOKALIKE AUDIENCES, https://www.facebook.com/business/help/164749007013531?id=401668390442328. 16 FACEBOOK, CREATE A CUSTOMER LIST CUSTOM AUDIENCE, https://www.facebook.com/business/help/170456843145568?id=2469097953376494; FACEBOOK, CREATE A WEBSITE CUSTOM AUDIENCE, https://www.facebook.com/business/help/1474662202748341?id=2469097953376494. 17 FACEBOOK, RETARGETING, https://www.facebook.com/business/goals/retargeting. received, Facebook processes it, analyzes it, and assimilates it into datasets like the Core Audiences and Custom Audiences. 17. Advertisers control what actions—or, as Facebook calls it, “events”— the Facebook Tracking Pixel collects. The Facebook Tracking Pixel can capture the website’s metadata, along with what pages a visitor views and what buttons a visitor clicks.18 Advertisers can also configure the Facebook Tracking Pixel to track other events. Facebook offers a menu of “standard events” from which advertisers can choose, including what content a visitor views or purchases.19 Advertisers can also create their own tracking parameters by building a “custom event.” 20 18. Advertisers control how the Facebook Tracking Pixel identifies visitors. The Facebook Tracking Pixel is configured to automatically collect “HTTP Headers” and “Pixel-specific Data.”21 HTTP Headers collect “IP addresses, information about the web browser, page location, document, referrer and persons using the website.”22 Pixel-specific Data includes “the Pixel ID and cookie.”23 B. Imgur and The Facebook Pixel 19. Imgur delivers a library of videos, featuring them on its homepage and embedding them with tags. 20. Imgur hosts the Facebook Tracking Pixel and transmits four distinct events to Facebook: 18 See FACEBOOK, FACEBOOK PIXEL, ACCURATE EVENT TRACKING, ADVANCED, https://developers.facebook.com/docs/facebook-pixel/advanced/; see also FACEBOOK, BEST PRACTICES FOR FACEBOOK PIXEL SETUP, https://www.facebook.com/business/help/218844828315224?id=1205376682832142. 19 FACEBOOK, SPECIFICATIONS FOR FACEBOOK PIXEL STANDARD EVENTS, https://www.facebook.com/business/help/402791146561655?id=1205376682832142. 20 FACEBOOK, ABOUT STANDARD AND CUSTOM WEBSITE EVENTS, https://www.facebook.com/business/help/964258670337005?id=1205376682832142. 21 FACEBOOK, FACEBOOK PIXEL, https://developers.facebook.com/docs/facebook- pixel/. 22 Id. 23 Id. Figure 1 21. Three of the events—PageView, Microdata, and Button Click—reveal what video a subscriber has watched. 22. PageView transmits the Universal Resource Locator (“URL”) accessed: Figure 2 23. Microdata transmits the title and description of the video: Figure 3 24. Button Click discloses the video’s title and registers every button clicked, including when a visitor clicks pause or play: Figure 4 25. The data from PageView, Microdata, and Button Click independently and jointly permit an ordinary person to identify a particular video’s title and content. 26. A visitor who is logged into Facebook while watching a video on Imgur will transmit the c_user cookie to Facebook. The c_user cookie contains an unencrypted Facebook ID. When accessing the above video, for example, eleven cookies were sent to Facebook, including the c_user cookie and corresponding Facebook ID: Figure 5 27. When a visitor’s browser has recently logged out of Facebook, Imgur will compel the browser to send a smaller set of cookies:24 Figure 6 28. The fr cookie contains, at least, an encrypted Facebook ID and browser identifier.25 The _fbp cookie contains, at least, an unencrypted value that uniquely identifies a browser.26 The datr cookies also identifies a browser. 27 Facebook, at a minimum, uses the fr and _fbp cookies to identify users.28 29. If a visitor has never created a Facebook account, three cookies are transmitted: 24 Figures 5 and 6 omit a duplicate _fbp cookie that is sent as a first-party cookie. 25 DATA PROTECTION COMMISSIONER, FACEBOOK IRELAND LTD, REPORT OF RE- AUDIT (Sept. 21, 2012), http://www.europe-v-facebook.org/ODPC_Review.pdf. 26 FACEBOOK, CONVERSION API, https://developers.facebook.com/docs/marketing- api/conversions-api/parameters/fbp-and-fbc/. 27 FACEBOOK, COOKIES & OTHER STORAGE TECHNOLOGIES, https://www.facebook.com/policy/cookies/. 28 FACEBOOK, COOKIES & OTHER STORAGE TECHNOLOGIES, https://www.facebook.com/policy/cookies/. Figure 7 30. Without a corresponding Facebook ID, the fr cookie contains, at least, an abbreviated and encrypted value that identifies the browser. The _fbp cookie contains, at least, an unencrypted value that uniquely identifies a browser. Facebook uses both for targeted advertising.29 31. The fr cookie will expire after 90 days unless the visitor’s browser logs back into Facebook.30 If that happens, the time resets, and another 90 days begins to accrue.31 32. The _fbp cookie will expire after 90 days unless the visitor’s browser accesses the same website.32 If that happens, the time resets, and another 90 days begins to accrue.33 33. The Facebook Tracking Pixel uses both first- and third-party cookies. A first-party cookie is “created by the website the user is visiting”—i.e., Imgur.34 A third-party cookie is “created by a website with a domain name other than the one the user is currently visiting”—i.e., Facebook.35 The _fbp cookie is always transmitted as a first-party cookie. A duplicate _fbp cookie is sometimes sent as a 29 See FACEBOOK, COOKIES & OTHER STORAGE TECHNOLOGIES, https://www.facebook.com/policy/cookies 30 See FACEBOOK, COOKIES & OTHER STORAGE TECHNOLOGIES, https://www.facebook.com/policy/cookies/. 31 Confirmable through developer tools. 32 See FACEBOOK, COOKIES & OTHER STORAGE TECHNOLOGIES, https://www.facebook.com/policy/cookies/. 33 Also confirmable through developer tools. 34 PC MAG, FIRST-PARTY COOKIES, https://www.pcmag.com/encyclopedia/term/first- party-cookie. This is confirmable by using developer tools to inspect a website’s cookies and track network activity. 35 PC MAG, THIRD-PARTY COOKIES, https://www.pcmag.com/encyclopedia/term/third-party-cookie. This is also confirmable by tracking network activity. third-party cookie, depending on whether the browser has recently logged into Facebook. 34. Facebook, at a minimum, uses the fr, _fbp, and c_user cookies to link to Facebook IDs and corresponding Facebook profiles. 35. Facebook ID is personally identifiable information. Anyone can identify a Facebook profile—and all personal information publicly listed on that profile—by appending the Facebook ID to the end of Facebook.com/. 36. Through the Facebook Tracking Pixel’s code, these cookies combine the identifiers with the event data, allowing Facebook to know, among other things, what Imgur videos a subscriber has watched.36 37. Imgur also uses “Automatic Matching for Partner Integrations”: Figure 8 38. “Partner Integrations” means Imgur employs another third-party to “install Meta Business Tools.”37 Automatic Matching means Imgur configures its Pixel to “look for recognizable form field and other sources on your website that contain information such as first name, last name and email.” 38 The Facebook 36 FACEBOOK, GET STARTED, https://developers.facebook.com/docs/meta-pixel/get- started. 37 FACEBOOK, ABOUT FACEBOOK PARTNER INTEGRATIONS, https://www.facebook.com/business/help/1179210765468894?id=1205376682832142 38 FACEBOOK, ABOUT ADVANCED MATCHING FOR WEB, https://www.facebook.com/business/help/611774685654668?id=1205376682832142 Tracking Pixel’s code will collect that information, “along with the event, or action, that took place.”39 This information is “hashed,”40 meaning it is “[a] computed summary of digital data that is a one-way process.” In other words, it “cannot be reversed back into the original data.”41 39. Imgur discloses this information so it can better match visitors to their Facebook profiles, thereby allowing Imgur to precisely target its advertisements and measure its analytics: Figure 9 40. When first signing up, Imgur contains form fields for a username, email, and phone number: 39 Id. 40 DEFINITION OF HASH, https://www.pcmag.com/encyclopedia/term/hash 41 Id. Figure 10 41. When later logging in, Imgur contains form fields for username or email: Figure 11 42. When subscribers enter their username, email, or phone number into these form fields, Imgur’s Pixel transmits this information to Facebook. When subscribers later utilize Imgur, the Facebook Tracking Pixel will transmit these identifiers alongside the event data shown above. The identifiers enable the social media site to match that event data with a Facebook profile. 43. Imgur knows Facebook will match the Automatic Matching parameters with a subscriber’s subsequent activity, thereby helping Imgur “[i]ncrease the number of attributed conversions,” “[i]ncrease [its] Custom Audience size,” and “[d]ecrease the cost per conversion.”42 44. By compelling a visitor’s browser to disclose the Advanced Matching parameters alongside event data for videos, Imgur knowingly discloses information sufficiently permitting an ordinary person to identify a specific individual’s video viewing behavior. 45. By compelling a visitor’s browser to disclose the c_user cookie alongside event data for videos, Imgur knowingly discloses information sufficiently permitting an ordinary person to identify a specific individual’s video viewing behavior. 46. By compelling a visitor’s browser to disclose the fr and _fbp cookies alongside event data for videos, Imgur knowingly discloses information sufficiently permitting an ordinary person to identify a specific individual’s video viewing behavior. 47. Facebook confirms it matches activity on Imgur with a subscriber’s profile. Facebook allows users to download their “Off-Facebook activity,” which is a “summary of activity that businesses and organizations share with us about your interactions, such as visiting their apps or websites.”43 Here, that report confirms Imgur discloses an individual’s video-viewing history:44 42 FACEBOOK, ABOUT ADVANCED MATCHING FOR WEB, https://www.facebook.com/business/help/611774685654668?id=1205376682832142. 43 FACEBOOK, WHAT IS OFF-FACEBOOK ACTIVITY?, https://www.facebook.com/help/2207256696182627. 44 The Off-Facebook Activity report provides some information but is woefully incomplete. It only logs activity that a user sends when logged into Facebook, and it only includes a single event description, even when multiple are captured. See id. Figure 12 48. The “ID” shown here matches the Facebook Pixel ID visible in the first image. The Facebook Pixel ID is a numerical code that uniquely identifies each Pixel.45 In practice, this means Imgur’s Facebook Tracking Pixel has a Pixel ID that differs from all other websites. All subscribers who view videos on Imgur’s website can pull their off-site activity report and see the same Pixel ID. 49. Individuals can create an account and subscribe to Imgur by clicking the “Sign up” button: 45 FACEBOOK, GET STARTED, https://developers.facebook.com/docs/meta-pixel/get- started. Figure 13 50. After clicking sign up, users must input their email and phone number and create a username and password. See Figure 11. 51. Imgur incentivizes users to become subscribers: Figure 14 52. Imgur provides these benefits so it can exploit the personal information that Plaintiffs and putative Class members provide. 53. By creating and utilizing an account, Plaintiffs and Class members subscribed to Imgur. CLASS ACTION ALLEGATIONS 54. Plaintiffs bring this action as a class action under Federal Rule of Civil Procedure 23 on behalf of a Class consisting of all persons in the United States who have a Facebook account, signed up for an Imgur account, and watched videos on Imgur’s website. 55. Excluded from the Class are Defendant, the officers and directors of the Defendant at all relevant times, members of their immediate families and their legal representatives, heirs, successors or assigns and any entity in which either Defendant have or had a controlling interest. 56. Plaintiffs are members of the Class they seek to represent. 57. The Class is so numerous that joinder of all members is impractical. Although Plaintiffs do not yet know the exact size of the Class, Imgur touted 120 million active users in 2015.46 Upon information and belief, the Class includes more than one million members. 58. The Class is ascertainable because the Class Members can be identified by objective criteria – account holders with a Facebook account who viewed videos. Individual notice can be provided to Class Members “who can be identified through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B). 59. There are numerous questions of law and fact common to the Class which predominate over any individual actions or issues, including but not limited to: (a) Whether Defendant collected Plaintiffs’ and the Class’s PII; (b) Whether Defendant unlawfully disclosed and continues to disclose its users’ PII in violation of the VPPA; (c) Whether Defendant’s disclosures were committed knowingly; and (d) Whether Defendant disclosed Plaintiffs’ and the Class’s PII without consent. 46 Josh Constine, Get Addicted Too, TECHCRUNCH (Nov. 11, 2015), https://techcrunch.com/2015/11/11/its-pronounced-image-er/. 60. Plaintiffs’ claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by Defendant’s wrongful conduct. Plaintiffs have no interests antagonistic to the interests of the other members of the Class. Plaintiffs and all members of the Class have sustained economic injury arising out of Defendant’s violations of common and statutory law as alleged herein. 61. Plaintiffs are adequate representatives of the Class because their interests do not conflict with the interests of the Class Members they seek to represent, they have retained counsel competent and experienced in prosecuting class actions, and they intend to prosecute this action vigorously. The interests of the Class Members will be fairly and adequately protected by Plaintiffs and their counsel. 62. The class mechanism is superior to other available means for the fair and efficient adjudication of the claims of Plaintiffs and the Class Members. Each individual Class Member may lack the resources to undergo the burden and expense of individual prosecution of the complex and extensive litigation necessary to establish Defendant’s liability. Individualized litigation increases the delay and expense to all parties and multiplies the burden on the judicial system presented by the complex legal and factual issues of this case. Individualized litigation also presents a potential for inconsistent or contradictory judgments. In contrast, the class action device presents far fewer management difficulties and provides the benefits of single adjudication, economy of scale, and comprehensive supervision by a single court on the issue of Defendant’s liability. Class treatment of the liability issues will ensure that all claims are consistently adjudicated. COUNT I Violation of the Video Privacy Protection Act 18 U.S.C. § 2710, et seq. 63. Plaintiffs repeat the allegations contained in the paragraphs above as if fully set forth herein. 64. Plaintiffs bring this Count individually and on behalf of the members of the Class. 65. Defendant is a “video tape service provider” because it disseminates countless videos on its website and thus “engag[es] in the business, in or affecting interstate or foreign commerce, of rental, sale, or delivery of prerecorded video cassette tapes or similar audio visual materials.” 18 U.S.C. § 2710(a)(4). 66. Plaintiffs and members of the Class are “consumers” because they subscribed to Imgur by creating an account. 18 U.S.C. § 2710(a)(1). 67. Imgur disclosed to a third party, Facebook, Plaintiffs’ and the Class members’ personally identifiable information. Imgur utilized the Pixel to compel Plaintiffs’ web browser to transfer Plaintiffs’ identifying information, like their Facebook ID, along with Plaintiffs’ event data, like the title of the videos they viewed and what buttons they pressed when doing so. 68. Plaintiffs and the Class members viewed video clips using Imgur’s website. 69. Imgur disclosed Plaintiffs’ PII knowingly because it used that data to build audiences on Facebook and retarget them for their advertising campaigns. 70. Plaintiffs and class members did not provide Defendant with any form of consent—either written or otherwise—to disclose their PII to third parties. 71. Nor were Defendant’s disclosures made in the “ordinary course of business” as the VPPA defines that term. In particular, Imgur’s disclosures to Facebook were not necessary for “debt collection activities, order fulfillment, request processing, [or] transfer of ownership.” 18 U.S.C. § 2710(a)(2). 72. On behalf of themselves and the Class, Plaintiffs seek: (i) declaratory relief; (ii) injunctive and equitable relief as is necessary to protect the interests of Plaintiffs and the Class by requiring Defendant to comply with VPPA’s requirements for protecting a consumer’s PII; (iii) statutory damages of $2,500 for each violation of the VPPA pursuant to 18 U.S.C. § 2710(c); and (iv) reasonable attorneys’ fees and costs and other litigation expenses. PRAYER FOR RELIEF WHEREFORE, Plaintiffs pray for relief and judgment, as follows: A. Determining that this action is a proper class action; B. For an order certifying the Class under Rule 23 of the Federal Rules of Civil Procedure, naming Plaintiffs as representative of the Class, and naming Plaintiffs’ attorneys as Class Counsel to represent the Class; C. For an order declaring that Defendant’s conduct violates the statutes referenced herein; D. For an order finding in favor of Plaintiffs and the Class on all counts asserted herein; E. An award of statutory damages to the extent available; F. For punitive damages, as warranted, in an amount to be determined at trial; G. For prejudgment interest on all amounts awarded; H. For injunctive relief as pleaded or as the Court may deem proper; and I. For an order awarding Plaintiff and the Class their reasonable attorneys’ fees and expenses and costs of suit. JURY DEMAND Plaintiffs hereby demand a trial by jury on all claims so triable in this action. Dated: February 11, 2022 BURSOR & FISHER, P.A. By: /s/ L. Timothy Fisher L. Timothy Fisher L. Timothy Fisher (State Bar No. 191626) 1990 North California Blvd., Suite 940 Walnut Creek, CA 94596 Telephone: (925) 300-4455 Facsimile: (925) 407-2700 E-mail: [email protected] Attorney for Plaintiffs

privacy

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ) Civil 10 Action ) No. CIV 7233 ) ) CLASSACTION Plaintiff, ) ) V. ) COMPLAINT FOR VIOLATIONS OF THE ) FEDERAL SECURITIES LAWS ) ) Defendants. ) J.S.B.C. S.D. N.Y. ) JURY TRIAL DEMAND CASHIERS Plaintiff Mingli Li, by and through Plaintiff's attorneys, alleges the following upon NATURE OF THE ACTION AND OVERVIEW 1. This is a class action on behalf of purchasers of Duoyuan Global Water's securities 2. Defendant Duoyuan Global Water purports to be a China-based domestic water 3. Duoyuan Global Water, primarily through Defendant Wenhua Guo ("Guo") - the - 2 - 4. On September 13, 2010, DYP announced a series of alarming management changes, 5. On this news, shares of Duoyuan Global Water declined $8.60 per share, or 41.55%, 6. The concerns raised by DYP's September 13, 2010, announcement were grave. For 7. Throughout the Class Period, Defendants made false and/or misleading statements, - 3 - 8. As a result of Defendants' wrongful acts and omissions alleged herein, and the JURISDICTION AND VENUE 9. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act 10. This Court has jurisdiction over the subject matter of this action pursuant to 28 11. Venue is proper in this Judicial District pursuant to 28 U.S.C. $1391(b) and Section 12. In connection with the acts, transactions, and conduct alleged herein, Defendants 4PARTIES 13. Plaintiff Mingli Li, as set forth in the accompanying certification, incorporated by 14. Defendant Duoyuan Global Water is incorporated under the laws of the British Virgin 15. Defendant Guo was, at all relevant times, Chairman of the Board of Directors and 16. Defendant Stephen C. Park ("Park") was, at all relevant times, CFO and Director of 17. Defendants Guo and Park are collectively referred to hereinafter as the "Individual - 5 - CLASS ACTION ALLEGATIONS 18. Plaintiff brings this action as a class action pursuant to Federal Rules of Civil 19. The members of the Class are so numerous that joinder of all members is - 6 - 20. Plaintiff's claims are typical of the claims of the members of the Class as all members 21. Plaintiff will fairly and adequately protect the interests of the members of the Class 22. Common questions of law and fact exist as to all members of the Class and (a) Whether the federal securities laws were violated by Defendants' acts as (b) Whether statements made by Defendants to the investing public during the (c) To what extent the members of the Class have sustained damages and the 23. A class action is superior to all other available methods for the fair and efficient - 7 -SUBSTANTIVE ALLEGATIONS Background 24. Defendant Duoyuan Global Water purports to be a China-based domestic water 25. Duoyuan Global Water, primarily through Defendant Guo - the Company's CEO, Materially False and Misleading Statements Issued During the Class Period 26. The Class Period begins on November 9, 2009. On November 9, 2009, the Company Mr. Wenhua Guo, the Company's Chairman and ChiefExecutive Officer, stated, "We are pleased with the Company's third quarter financial results, which reflect increased - 8 - demand across all three product lines, our comprehensive and high quality product offering, as well as our low cost manufacturing base, extensive distribution network and strong competitive position. All of these factors contributed to our quarterly financial results today and lay the groundwork for continued growth in the future." Financial Outlook Mr. Stephen C. Park concluded, "As we come off a fantastic third quarter, which is seasonally our strongest quarter, our competitive position remains strong and we are poised for future growth supported by our trusted brand name and vast distribution network. With this in mind, we are targeting revenue of approximately RMB190 million in the fourth quarter of 2009." 27. On January 11, 2010, in connection with the SPO, the Company filed with the SEC Concurrent positions held by Wenhua Guo, our chairman and chief executive officer, with other businesses could impede his ability to devote sufficient time to our business and could pose conflicts of interest. Wenhua Guo serves as chairman of Duoyuan Printing, Inc., a public company. He is also the beneficial owner of 100% of the equity interest in our majority shareholder, Duoyuan Investments Limited, which owns a controlling interest in Duoyuan Printing, Inc. Through its subsidiaries in China, Duoyuan Printing, Inc. is principally engaged in the manufacture and sale of offset printing equipment to the Chinese market. Mr. Guo devotes most of his business time to our affairs and the remainder of his business time to the affairs of these printing equipment-related companies. Mr. Guo's decision-making responsibilities for these printing equipment-related companies are in the areas of public relations, management of human resources, risk management and strategic planning. As a result, conflicts of interest may arise from time to time. Additionally, even though Mr. Guo is accountable to us and our shareholders as a fiduciary, which requires that he exercise good faith and due care in handling our affairs, his existing responsibilities to other entities may limit the amount of time he can spend on our affairs. * * 9 - Other Income Other income is primarily comprised of interest income earned on our cash deposits and rental income which we received in 2006, 2007 and the first half of 2008 from the lease of our office space located at No. 3 Jinyuan Road to Duoyuan Digital Printing Technology Industries (China) Co. Ltd., an entity controlled by our chairman and chief executive officer, Wenhua Guo. For further details, see "Related Party Transactions - Real Property Related Transactions." * * Other Income Other income increased RMB2.0 million, or 80.4%, from RMB2.5 million in 2006 to RMB4.5 million in 2007. This increase was primarily the result of a non-recurring rental charge Duoyuan Digital Printing Technology Industries (China) Co. Ltd., an entity controlled by Wenhua Guo, our chairman and chief executive officer, for the office space located at No. 3 Jinyuan Road. Interest income remained relatively unchanged from 2006 to 2007. * * * Our Directors Wenhua Guo. Mr. Guo is the founder of our company and has served as our chairman and chief executive officer since the commencement of our operations in 1992. Before Mr. Guo founded our company, he was a physics teacher at Beijing Chemical Institute. Mr. Guo served as chief executive officer of Duoyuan Printing, Inc., a public company, from October 2006 to June 2009 and currently serves as chairman of the board of directors of Duoyuan Printing, Inc. Mr. Guo obtained a bachelor's degree in physics from Beijing Normal University in 1983. * * Real Property Related Transactions Prior to the sale transaction described below, our subsidiary, Duoyuan Beijing, owned an office building located at No. 3 Jinyuan Road, Daxing Industrial Development Area, Beijing, China, with 15,400 square meters of building area and related land-use-rights with respect to approximately 7,230 square meters of land area. Duoyuan Beijing had leased since December 25, 2002 approximately 3,000 square meters of office space located at No. 3 Jinyuan Road to Duoyuan Digital Printing Technology Industries (China) Co. Ltd., or Press China, an entity controlled by - 10 -Wenhua Guo, our chairman and chief executive officer. The annual lease payments totaled RMB1.1 million in 2006, 2007 and 2008, respectively. This lease agreement was renewed on December 25, 2007 for a term of one year ending on December 31, 2008. On June 27, 2008, Duoyuan Beijing and Press China agreed to amend this lease agreement to reflect a new termination date of June 30, 2008. * * * With respect to the loans made by Duoyuan Beijing to Beijing Huiyuan, the largest amount outstanding under these loans was approximately RMB32.4 million during 2005, 2006 and 2007. As of December 31, 2007, the amount outstanding under these loans was approximately RMB27.4 million. Pursuant to a repayment agreement dated December 10, 2007 between Duoyuan Beijing, Beijing Huiyuan and Wenhua Guo, Mr. Guo assumed personal responsibility for repayment in full of Beijing Huiyuan's outstanding balance payable to Duoyuan Beijing. Mr. Guo's obligation to pay the outstanding balance was secured by a pledge of his shares of Duoyuan Printing, Inc., a public company. Similarly, on December 12, 2007, Mr. Guo entered into a loan repayment agreement with Duoyuan Huanan and Duoyuan Beijing to repay Duoyuan Huanan's obligation to Duoyuan Beijing that at the time was RMB1 17.0 million. This obligation was also collateralized by a pledge of Mr. Guo's personal shares in Duoyuan Printing, Inc. In December 2007, RMB0.6 million in interest was paid towards this obligation. These obligations were settled by March 31, 2008. We do not intend to make any similar loans to Mr. Guo in the future. See Note 8 to our Notes to Combined and Consolidated Financial Statements December 31, 2006, 2007 and 2008 included elsewhere in this prospectus. 28. On January 19, 2010 and January 20, 2010, the Company filed with the SEC 29. On January 28, 2010, the Company filed the SPO Registration Statement with the - 11 - 30. On March 8, 2010, the Company issued a press release entitled, "Duoyuan Global Mr. Wenhua Guo, the Company's Chairman and Executive Officer, stated, "We are pleased with the Company's fourth quarter and full year financial results, which reflect increased demand across all three product lines, driven by our comprehensive and high quality product offering, our low cost manufacturing base, extensive distribution network and our focus on continually developing new products. We plan to launch 36 products throughout the remainder of this year. We are confident that our competitive strengths and formidable cash position enable us to capitalize on the compelling market opportunities at hand." Fourth Quarter 2009 Financial Highlights * Revenue increased 29.6% to RMB193.8 million ($28.4 million(1)) from RMB149.5 million in the prior year period. * Gross margin increased to 47.3% from 44.1% in the prior year period. * Operating income increased 114.5% to RMB55.0 million ($8.1 million) from RMB25.6 million in the prior year period. * Net income increased 157.5% to RMB39.8 million ($5.8 million) from RMB15.5 million in the comparable period of 2008. * Diluted earnings per ADS(2) was $0.27. Each ADS represents two of the Company's ordinary shares. * * * Mr. Stephen C. Park, the Chief Financial Officer of Duoyuan, stated, "We are excited to move forward into 2010 in a highly flexible financial position. As demand continues to increase for water treatment equipment driven by stringent government regulations and the ongoing need for advanced water treatment equipment for commercial, industrial and residential uses, we believe we are well-positioned to capture the growing market opportunities." "We intend to use the proceeds to continue to expand our manufacturing facilities, to increase in-house production of key components used in existing or new product offerings, and to launch new products. The final phase of our Langfang expansion project is expected to be completed and fully operational by the end of the second quarter of 2010. We will also break ground in March this year on a new facility in Daxing, Beijing, where our headquarters are located, to address the growing demand for our products in 2011 and beyond." - 12 -"Additionally, we remain focused on enhancing our R&D capabilities, evidenced by our plan to build a new R&D center in the third quarter of this year. We look forward to executing our near-term growth strategies with a considerably strong cash position." Financial Outlook Mr. Stephen C. Park concluded, "As we move forward into 2010, our competitive position remains strong and we are poised for future growth supported by our trusted brand name and vast distribution network. With this in mind, we expect to generate revenue of approximately RMB157 million in the first quarter of 2010." 31. On May 12, 2010, the Company issued a press release entitled, "Duoyuan Global First Quarter 2010 Financial Highlights -- Revenue increased 33.0% to RMB160.5 million ($23.5 million)( (1) from RMB120.6 million in the prior year period. -- Gross profit increased 37.4% to RMB 74.9 million ($11.0 million) from RMB54.5 million in the prior year period. Gross margin increased to 46.6% from 45.1% in the prior year period. -- Diluted earnings per ADS was $0.17. Each ADS represents two of the company's ordinary shares. Mr. Wenhua Guo, the Company's Chairman and Chief Executive Officer, stated, "Our first quarter results continue to demonstrate our sustained growth and presence in China's water treatment industry, with revenue growing 33% year over year. These encouraging results attest to the increasing recognition of the Duoyuan brand and our reputation as a high quality and top value manufacturer. Our performance also reflects growing demand for our products across all product lines, driven by our comprehensive and high quality product offering, our low cost manufacturing base, extensive distribution network and our focus on continually developing new products. We remain on schedule to launch 36 new products during 2010, eight of which have already been launched, consisting of two products in our water purification product category and six products in our wastewater treatment product category. We look forward to building upon this momentum as we enhance the diversity of our product portfolio throughout 2010. We are confident that we'll capitalize on the opportunities created by intensified government efforts to monitor wastewater discharge and the growing consumer awareness of water quality concerns in China." - 13 - Guo continued, "We are pleased to announce significant progress in several of our growth initiatives. We continue to move forward in our expansion at Langfang and in the coming weeks we are installing a new aerator production line imported from Germany. We also finalized the land use rights for our new manufacturing facilities in Daxing and progress continues there as we focus on significantly enhancing our production capacity for our existing and new market products over the next two years." Guo then remarked, "We are also excited to announce that we are in the process of negotiating two licensing opportunities. These opportunities would expand our portfolio offerings into the drip irrigation and high-end membrane technology market. Today, we already have more than 100 products in our portfolio and moving forward, we will continue to grow the depth and breadth of our offerings. As demand continues to increase for water treatment equipment, we believe we are well-positioned and uniquely diversified across the sector to capture compelling market opportunities." * Mr. Stephen C. Park, Chief Financial Officer, stated, "As we move forward through 2010, our competitive position remains strong and we are poised for future growth supported by our trusted brand name and extensive distribution network. With this in mind, we expect to generate revenue of approximately RMB280 million in the second quarter of 2010." 32. On June 18, 2010, the Company filed its Annual Report with the SEC on Form 20-F Wenhua Guo, our chairman and chief executive officer and 48.6% beneficial owner of our ordinary shares, has substantial influence over our company, and his interests may not be aligned with the interests of our other shareholders. Wenhua Guo, our chairman and chief executive officer, beneficially owns 48.6% of our ordinary shares. As a result, he has significant influence over our business, including decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, election of directors and other significant corporate actions. This concentration of ownership may also have the effect of discouraging, delaying or preventing a future change of control, which in turn could prevent our shareholders from recognizing a gain in the event that a favorable offer is extended and may materially and adversely affect the market price of our ADSs. - 14 - In addition, on December 1, 2007, we transferred all our Duoyuan-related trademarks to Duoyuan Investments Limited, our majority shareholder, which is wholly owned by Mr. Guo. On September 17, 2008 and May 27, 2009, Duoyuan Investments Limited granted us an exclusive, royalty-free perpetual license to use these trademarks for our business, which license may terminate in certain instances. Mr. Guo's refusal to allow us to use the Duoyuan name on reasonable terms or at all could have the effect of discouraging, delaying or preventing a future change of control, which in turn could prevent our shareholders from recognizing a gain in the event that a favorable offer is extended and may materially and adversely affect the market price of our ADSs. Limitations on our use of the "Duoyuan" name and third-party use of our trademarks and the "Duoyuan" name may dilute their value and materially and adversely affect our reputation, goodwill and brand. On December 1, 2007, we transferred all our Duoyuan-related trademarks to Duoyuan Investments Limited, our majority shareholder, which is wholly owned by Mr. Wenhua Guo, our chairman and chief executive officer. On September 17, 2008 and May 27, 2009, Duoyuan Investments Limited granted us an exclusive, royalty-free perpetual license to use these trademarks for our business. Such license would terminate upon certain events, including a change in control. Duoyuan Investments Limited and Duoyuan Printing, Inc. may use these trademarks for other products, which may create confusion regarding our brand. In addition, some of our distributors use the Chinese characters of our name, "Duoyuan", in their company name and we may be unable to prevent such use. The use of "Duoyuan" in their legal names by these distributors may confuse our end-user customers who may associate our name with the distributor and incorrectly believe our distributors are our affiliates. Due to ambiguities in Chinese intellectual property law, the cost of enforcement and our prior lack of enforcement, we may be unable to prevent third parties from using the Duoyuan trademark and our name, Duoyuan. Concurrent positions held by Wenhua Guo, our chairman and chief executive officer, with other businesses could impede his ability to devote sufficient time to our business and could pose conflicts of interest. Wenhua Guo serves as chairman of Duoyuan Printing, Inc., a public company. He is also the beneficial owner of 100% of the equity interest in our majority shareholder, Duoyuan Investments Limited, which owns a controlling interest in Duoyuan Printing, Inc. Through its subsidiaries in China, Duoyuan Printing, Inc. is principally - 15 -engaged in the manufacture and sale of offset printing equipment to the Chinese market. Mr. Guo devotes most of his business time to our affairs and the remainder of his business time to the affairs of these printing equipment-related companies. Mr. Guo's decision-making responsibilities for these printing equipment-related companies are in the areas of public relations, management of human resources, risk management and strategic planning. As a result, conflicts of interest may arise from time to time. Additionally, even though Mr. Guo is accountable to us and our shareholders as a fiduciary, which requires that he exercise good faith and due care in handling our affairs, his existing responsibilities to other entities may limit the amount of time he can spend on our affairs. * * * Other Income Other income is primarily comprised of interest income earned on our cash deposits and rental income which we received in 2007 and the first half of 2008 from the lease of our office space located at No. 3 Jinyuan Road to Duoyuan Digital Printing Technology Industries (China) Co. Ltd., an entity controlled by our chairman and chief executive officer, Wenhua Guo. 33. On August 18, 2010, the Company issued a press release entitled, "Duoyuan Global Second Quarter 2010 Financial Highlights -- Revenue increased 37.4% to RMB293.6 million ($43.3 million(1)) from RMB213.7 million in the prior year period. -- Gross profit increased 34.1% to RMB140.4 million ($20.7 million) from RMB104.7 million in the prior year period. -- Gross margin was 47.8% compared to 49.0% in the prior year period. -- Diluted earnings per ADS was $0.45. Each ADS represents two of the Company's ordinary shares. * * * Mr. Wenhua Guo, the Company's Chairman and Chief Executive Officer, stated, "Our second quarter results demonstrate our sustained growth and presence in China's water treatment industry as well as contributions from our new, higher margin product launches. We will continue to drive growth through new products - 16 - developed through both our research and development efforts as well as partnership agreements and opportunities. Moving forward, we are confident in our ability to maintain our growth trajectory through our comprehensive and high quality product offerings, our low cost manufacturing base, our extensive distribution network and our focus on continually developing new products." * * Financial Outlook Mr. Stephen C. Park, Chief Financial Officer, stated, "As we move forward through 2010, our competitive position remains strong and we are poised for future growth supported by our trusted brand name and extensive distribution network. With this in mind, we expect to generate revenue of approximately RMB326 million in the third quarter of 2010." 34. The statements contained in 9/26-33 were materially false and/or misleading when The Truth Begins To Emerge 35. On September 13, 2010, DYP issued a press release entitled, "Duoyuan Printing BEIJING, September 13, 2010 - Duoyuan Printing, Inc. (NYSE: DYP) ("Duoyuan Printing" or the "Company"), a leading offset printing equipment supplier in China, today announced several management changes as well as the dismissal of Deloitte Touche Tohmatsu CPA Ltd.("Deloitte") as its independent registered public accounting firm. The Company is currently in discussion with an auditing firm to replace Deloitte. - 17 -Effective immediately, Mr. Xiqing Diao has been appointed Duoyuan Printing's CEO. Previously the Company's COO, Mr. Diao has been with the Company since 2005 and served as interim CEO in 2009. Ms. Baiyun Sun has been appointed CFO. Ms. Sun has been with Duoyuan Printing since 1994 previously serving as the Company's controller. Mr. Wenzhong Liu, previously vice president of sales and marketing, has been appointed COO and Mr. Lianjun Cai, a Company director, has been appointed chairman of the audit committee. Immediately subsequent to the Company's termination of Deloitte, Mr. William Suh resigned as Duoyuan Printing's CFO and Mr. Christopher Holbert resigned as Duoyuan Printing's CEO. Mr Holbert will remain with the Company as vice president of international markets. Mr. James Zhang resigned as director and chairman of the audit committee and Ms. Naoko Hatakeyama and the Honorable Paula J. Dobriansky also subsequently resigned as directors. Mr. Xiqing Diao has also resigned as a director in order to maintain the required proportion of independent directors on Duoyuan Printing's board. Duoyuan Printing's Chairman Mr. Wenhua Guo stated, "The audit committee's decision to change auditing firms was based on its desire to resolve open issues and file our 10-K on a timely basis. We will work closely with our new auditors to address the open issues aired by Deloitte. We believe that our several internal reassignments are the best way to move the company forward and complete our annual audit. We believe we now have the right people in important roles to execute the company's business strategy and to meet our current reporting obligations." 36. On September 13, 2010, DYP filed a Current Report on Form 8-K with the SEC. Item 4.01 Changes in Registrant's Certifying Accountant. Effective as of September 6, 2010, Deloitte Touche Tohmatsu CPA Ltd. ("Deloitte") was dismissed by the Audit Committee (the "Audit Committee") of Duoyuan Printing, Inc. (the "Company") as the independent registered public accounting firm of the Company. During the period of Deloitte's engagement from March 2, 2010 to September 6, 2010, no audit performed by Deloitte had been completed and, therefore, no audit reports had been issued that (i) contained an adverse opinion or disclaimers of opinion or (ii) were qualified or modified as to uncertainty, audit scope or accounting principles. - 18 - During the period from March 2, 2010 to September 6, 2010, there were no disagreements between the Company and Deloitte on matters of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Deloitte, would have caused Deloitte to make reference to the subject matter of the disagreement in their reports on the financial statements, except for the following: Deloitte requested that the Company provide permission to access original bank statements to complete its audit procedures to verify the identity of certain individuals and entities associated with third party distributors and vendors. As of the time of Deloitte's dismissal, the Company had not granted such permission because it believed the method and scope of the request was overly broad for the purpose of verifying the identity of such individuals and entities. Deloitte informed the Chairman of the Audit Committee of such disagreement and the matter was not resolved by the time of Deloitte's dismissal. During the period from March 2, 2010 to September 6, 2010, there were no "reportable events" as that term is defined in Item 304(a)(1)(v) of Regulation S-K, except the following: In the course of its audit procedures, Deloitte identified supporting documentation for approximately RMB24 million of expenses related to advertising and tradeshow costs, the authenticity of which could not be verified to Deloitte's satisfaction. Deloitte suggested to the Audit Committee that it investigate these expenses. The Audit Committee has undertaken an independent investigation. At the time of its dismissal, Deloitte had not received subsequent information from the Audit Committee on the progress or outcome of the investigation. In the course of its audit procedures, Deloitte received information regarding certain distributors and vendors that appeared inconsistent with certain information that the Company had provided. Deloitte informed the Company and the Audit Committee of the inconsistencies. The Company worked to address these inconsistencies, but at the time of its dismissal, Deloitte had not received complete explanations from the Company to address all of its concerns. Deloitte advised the Audit Committee that it was informed by the Chief Executive Officer and Chief Financial Officer of the - 19 - Company that they felt they did not have access to the information on the open matters referred to above nor were they in a position to assist the investigation. Deloitte expressed its concerns as to the impact of this on its ability to rely on the future representations from those members of management that it would otherwise seek to obtain as part of its normal audit procedures. The Company has authorized Deloitte to respond fully to the inquiries of the Company's successor accountant concerning the subject matter of each of the disagreement and reportable events referred to above. The Company provided Deloitte with a copy of the disclosures it is making in this Current Report on Form 8-K (the "Report") prior to the time the Report was filed with the Securities and Exchange Commission (the "SEC"). The Company requested that Deloitte furnish a letter addressed to the SEC stating whether or not it agrees with the statements made herein. The Company will file the letter from Deloitte as an amendment to this Report within two business days of receipt. Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers. (a) On September 6, 2010, following the decision to dismiss Deloitte as the independent registered public accounting firm of the Company: Mr. James Zhang, Chairman of the Audit Committee tendered his resignation from the Board of Directors of the Company (the "Board") effective immediately over the disagreement with the Company and the Board for dismissing Deloitte as the independent registered public accounting firm of the Company. Mr. Zhang had served as the Chairman of the Audit Committee and a member of the Board since September 2009. Mr. Zhang's resignation letter is included as Exhibit 99.2 to this Current Report; and The Honorable Paula J. Dobriansky tendered her resignation from the Board effective immediately, which was later followed by a formal letter. The Honorable Paula J. Dobriansky had served as a member of the Board since May 2010. Ms Dobriansky's resignation letter is included as Exhibit 99.3 to this Current Report. On September 8, 2010: Ms. Naoko Hatakeyama tendered her resignation from the Board effective immediately. Ms. Hatakeyama had served as a member of - 20 -the Board since May 2010. Ms. Hatakeyama's resignation letter is included as Exhibit 99.4 to this Current Report; and Mr. Xiqing Diao tendered his resignation from the Board effective immediately in an effort to maintain a majority of independent directors on the Board to stay in compliance with relevant listing standards. Mr. Diao had served as a member of the Board since November 2005, and will remain with the Company as its new Chief Executive Officer as described in more detail below. The circumstances representing the disagreement that caused the resignation of the above Directors, if any, are provided in their respective resignation letters, if applicable, which are incorporated herein by reference in their entirety. The Company provided each of the above Directors (the "Resigning Directors") with a copy of the disclosures it is making in the Report prior to the time the Report was filed with the SEC. The Company provided each of the Resigning Directors with the opportunity to furnish a letter addressed to the Company stating whether or not he or she agrees with the statements made herein. The Company will file the letter from each of Resigning Directors as an amendment to this Report within two business days of receipt. (b) Following the decision to dismiss Deloitte as the independent registered public accounting firm of the Company: On September 6, 2010, Mr. William D. Suh tendered his resignation from the position of Chief Financial Officer of the Company effective immediately. Mr. Suh had served as the Chief Financial Officer of the Company since October 2008; and On September 8, 2010, Mr. Christopher Patrick Holbert tendered his resignation from the position of Chief Executive Officer of the Company effective September 8, 2010 18:00 p.m. Beijing Time. Mr. Holbert had served as the Chief Executive Officer of the Company since August 2009. (c) On September 8, 2010, the Board also made the following changes: Mr. Lianjun Cai was elected as Chairman of the Audit Committee effective immediately. In making this election, the Board determined that Mr. Lianjun Cai had sufficient accounting and related financial management expertise to serve as the Chairman of the Audit Committee. - 21 - Mr. Xiqing Diao was appointed as the Chief Executive Officer of the Company effective September 8, 2010 18:00 p.m. Beijing Time. At the same time, Mr. Diao stepped down from the position of the Chief Operating Officer of the Company. Mr. Diao has served as a Director and the Chief Operating Officer of the Company since November 2005. Mr. Diao also served as the interim Chief Executive Officer of the Company from July 9, 2009 to August 26, 2009. He served as vice general manager of Duoyuan Clean Water Technology Industries (China) Co., Ltd. ("Duoyuan Water") from August to November 2005, assistant general manager of Duoyuan Electric (Tianjin) Auto Water Pump Co., Ltd., an automobile parts manufacturer, from January to July 2005, and general manager of Operations of Duoyuan Electric Group from January 2003 to December 2004. From May 2001 to December 2002, Mr. Diao served as general manager of No. 1 Division of Duoyuan Water. He was also certified as an ISO9001:2000 Internal Auditor and an ISO14000 Internal Auditor in 2004. Mr. Diao received a bachelor's degree in mechanics from Tianjin Textile Technology Institute, China. Ms. Baiyun Sun was appointed as the Chief Financial Officer of the Company effectively immediately. Ms. Sun served as the Controller of the Company from October 1, 2008 to September 8, 2010. Prior to that, she served as interim Chief Financial Officer of the Company from December 20, 2007 to March 1, 2008 and from May 21, 2008 to October 1, 2008. Prior to that, she served as the Chief Financial Officer of the Company from October 6, 2006 to July 18, 2007, a Director and vice president of the Company between June 2001 and April 2007 and chief accountant of Duoyuan Electric Group from January 1994 to May 2001. Ms. Sun received a bachelor's degree in accounting from Beijing Finance and Commerce Institute, China. Mr. Wenzhong Liu was appointed as the Chief Operating Officer of the Company effectively immediately. Mr. Liu has served as vice president of sales and marketing of the Company since November 2005. He served as assistant general manager of sales at Duoyuan Digital Press Technology Industries (China) Co., Ltd. ("Duoyuan China") from July to October 2005, interim general manager of sales at Duoyuan China from November 2004 to June 2005, and sales representative at Duoyuan China from January 2001 to October 2004. Mr. Liu received a bachelor's degree in science from Luoyang Engineering Institute, China. - 22 -Mr. Christopher Patrick Holbert was appointed as Vice President of International Markets effective immediately. 37. On this news, shares of DGW declined $8.60 per share, or 41.55%, to close on 38. On September 14, 2010, Duoyuan Global Water announced that its Board of Directors The Board of Directors voted unanimously to take proactive action following a recent announcement by Duoyuan Printing, Inc. ("Duoyuan Printing"), that may have been perceived to involve the Company [which is an affiliate of Duoyuan Printing], as Wenhua Guo (the Company's Chairman and CEO) is also Duoyuan Printing's Chairman of the Board and its largest shareholder. While there are presently no known accounting or corporate governance issues to be reviewed and the Company consistently has received unqualified audits from Grant Thornton, an international accounting firm, for four successive years, the Company's Board of Directors is of the opinion that the appointment of an independent third party is necessary to ensure the highest level of transparency and accountability. UNDISCLOSED ADVERSE FACTS 39. The market for Duoyuan Global Water's securities was open, well-developed and - 23 - 40. During the Class Period, Defendants materially misled the investing public, thereby 41. At all relevant times, the material misrepresentations and omissions particularized LOSS CAUSATION 42. Defendants' wrongful conduct, as alleged herein, directly and proximately caused the 43. During the Class Period, Plaintiff and the Class purchased Duoyuan Global Water's - 24 - SCIENTER ALLEGATIONS 44. As alleged herein, Defendants acted with scienter in that Defendants knew that the APPLICABILITY OF PRESUMPTION OF RELIANCE (FRAUD-ON-THE-MARKET DOCTRINE) 45. The market for Duoyuan Global Water's securities was open, well-developed and - 25 -46. During the Class Period, the artificial inflation of Duoyuan Global Water's stock was 47. At all relevant times, the market for Duoyuan Global Water's securities was an (a) Duoyuan Global Water stock met the requirements for listing, and was listed (b) As a regulated issuer, Duoyuan Global Water filed periodic public reports (c) Duoyuan Global Water regularly communicated with public investors via (d) Duoyuan Global Water was followed by securities analysts employed by - 26 - 48. As a result of the foregoing, the market for Duoyuan Global Water's securities NO SAFE HARBOR 49. The statutory safe harbor provided for forward-looking statements under certain - 27 - FIRST CLAIM Violation of Section 10(b) of The Exchange Act and Rule 10b-5 Promulgated Thereunder Against All Defendants 50. Plaintiff repeats and realleges each and every allegation contained above as if fully 51. During the Class Period, Defendants carried out a plan, scheme and course of conduct 52. Defendants (i) employed devices, schemes, and artifices to defraud; (ii) made untrue 53. Defendants, individually and in concert, directly and indirectly, by the use, means or - 28 -54. These defendants employed devices, schemes and artifices to defraud, while in 55. Each of the Individual Defendants' primary liability, and controlling person liability, - 29 - 56. The defendants had actual knowledge of the misrepresentations and/or omissions of 57. As a result of the dissemination of the materially false and/or misleading information 58. At the time of said misrepresentations and/or omissions, Plaintiff and other members - 30 - 59. By virtue of the foregoing, Defendants have violated Section 10(b) of the Exchange 60. As a direct and proximate result of Defendants' wrongful conduct, Plaintiff and the SECOND CLAIM Violation of Section 20(a) of The Exchange Act Against the Individual Defendants 61. Plaintiff repeats and realleges each and every allegation contained above as if fully 62. The Individual Defendants acted as controlling persons of Duoyuan Global Water - 31 -63. In particular, each of these Defendants had direct and supervisory involvement in the 64. As set forth above, Duoyuan Global Water and the Individual Defendants each PRAYER FOR RELIEF WHEREFORE, Plaintiff prays for relief and judgment, as follows: (a) Determining that this action is a proper class action under Rule 23 of the Federal (b) Awarding compensatory damages in favor of Plaintiff and the other Class members - 32 - (c) Awarding Plaintiff and the Class their reasonable costs and expenses incurred in this (d) Such other and further relief as the Court may deem just and proper. JURY TRIAL DEMANDED Plaintiff hereby demands a trial by jury. POMERANTZ HAUDEK GROSSMAN & GROSS LLP By: ones Marc I. Gross Jeremy A. Lieberman Fei-Lu Qian 100 Park Avenue, 26th Floor New York, New York 10017 Telephone: (212) 661-1100 Facsimile: (212) 661-8665 POMERANTZ HAUDEK GROSSMAN & GROSS LLP Patrick V. Dahlstrom 10 South LaSalle Street, Suite 3505 Chicago, IL 60603 Telephone: (312) 377-1181 Facsimile: (312) 377-1184 GLANCY BINKOW & GOLDBERG LLP Lionel Z. Glancy Michael Goldberg Robert V. Prongay 1801 Avenue of the Stars, Suite 311 Los Angeles, California 90067 Telephone: (310) 201-9150 Facsimile: (310) 201-9160 E-mail: [email protected] LAW OFFICES OF HOWARD G. SMITH Howard G. Smith 3070 Bristol Pike, Suite 112 - 33 - Bensalem, PA 19020 Telephone: (215) 638-4847 Facsimile: (215) 638-4867 E-mail: [email protected] Attorneys for Plaintiff Mingli Li - 34 - SWORN CERTIFICATION OF PLAINTIFF Duoyuan Global Water, Inc., SECURITIES LITIGATION I, Mingli Li, certify that: 1. I have reviewed the complaint and authorized its filing. 2. 1 did not purchase Duoyuan Global Water, Inc., the security that is the subject of this action at the direction of plaintiff's counsel or in order to participate in any private action arising under this title. 3. I am willing to serve as a representative party on behalf of a class and will testify at deposition and trial, if necessary. 4. My transactions in Dunyunn Global Water, Inc. during the class period set forth in the Complaint are as follows: I bought 52 shares on 8/3/09 at $30.0 per share. I bought $22 shares on 12/21/09 at 345 per share. I bought 5 shares on 1/20/10 at 33. per share. I bought 200 shares on 1/20/10 at 33. per share. I bought 50 shares on 1 122/ 10 at $290 per share. I sold shares on / / at $ per share. I sold shares on / / at $ per share. I sold shares on / / at $ per share. I sold shares on / at $ per share. I sold shares on / / at $ per share. (List Additional Transactions on a Separate Page if Necessary) 5. I have not served as a representative party on behalf of a class under this title during the last three years except as stated: 6. I will not accept any payment for serving as a representative party, except to receive my pro rata share of any recovery or as ordered or approved by the court including the award to a representative plaintiff of reasonable costs and expenses (including lost wages) directly relating to the representation of the class. Check here if you are a current employee or former employee of the defendant Company. I declare under penalty of perjury that the foregoing are true and correct statements. Dated: 9/17/2010 Mingl (Please Sign Your Li Name Above)

securities

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IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WISCONSIN AMY CHILDERS, BARRY EARLS, THOMAS FETSCH, CODY ITALIA, DAVID KIEL, NAZAR MANSOOR, DEBBIE RIDER, TRENT SHORES, STEVE SCHUSSLER, CASSIE LIETAERT, RYAN INGALLS, CHRIS JESSE, and KAREN FLECKENSTEIN, individually and on behalf of a class of similarly situated individuals, Plaintiffs, v. No. _20-CV-107____________________ MENARD, INC., a Delaware corporation, and JOHN DOES 1-10, Defendants. JURY TRIAL DEMANDED CLASS ACTION COMPLAINT Plaintiffs AMY CHILDERS, BARRY EARLS, THOMAS FETSCH, CODY ITALIA, DAVID KIEL, NAZAR MANSOOR, DEBBIE RIDER, TRENT SHORES, STEVE SCHUSSLER, CASSIE LIETAERT, RYAN INGALLS, CHRIS JESSE, and KAREN FLECKENSTEIN (each individually a “Plaintiff” and collectively “Plaintiffs”) on their own behalf and on behalf of a class comprised of individuals similarly situated bring this Class Action Complaint and Demand for Jury Trial against MENARD, INC. (“Menards” or “Defendant”) and JOHN DOES 1-10 for violating the terms and conditions of its offered rebates. Plaintiffs and the Class Members purchased Menards’ items to which the rebate applied, timely submitted paperwork for the advertised rebate, but never received the advertised rebate at all or in the appropriate amount. Plaintiffs bring this case to enjoin Menards’ ongoing misleading, unfair and deceptive conduct and its systematic and ongoing breach of rebate contracts with its customers. By this class action lawsuit, Plaintiffs seek damages, restitution, injunctive relief and attorneys’ fees against Menards for the conduct detailed herein. Plaintiffs allege the following based upon their own personal knowledge, acts and experiences or upon information and belief, including due investigation conducted by their attorneys. NATURE OF THE ACTION 1. The home improvement, “do it yourself” retail sector is big and has grown significantly in recent years. Between June 2018 and June 2019, American consumers spent nearly $322 billion on remodeling and home improvement, a 6.8% increase from the prior year.1 2. Menards is the largest privately-held home improvement company in the country, with over 300 locations and revenue of approximately $10 billion annually. It is the third largest home improvement store in the country, behind only Home Depot and Lowe’s. 3. Positioning itself as a lower cost alternative to Home Depot and Lowe’s is a critical part of Menards’ marketing strategy. Through its ubiquitous sales, promotions and advertising, its customers and the public generally are implored to “save big money at Menards.” 4. One of the most vital strategies Menards employs is its rebate programs. These rebate programs, particularly its much-hyped store-wide “11% Off Everything” rebate promotion, are a prominent component of Menards’ advertising and marketing efforts, both inside and outside of its 5. Menards’ 11% Rebate promotion, which is a mail-in program, allows Menards to sell items at full price to customers, despite the promise of the 11% discount through the rebate. 1 See https://www.housingwire.com/articles/49589-renovation-spending-will-slow-in-2020-after-record-setting-year- harvard-report-says/ (last visited January 22, 2020). 2 However, rather than discount the cost of a given item by placing that item on sale (and thereby guarantee that it would not receive revenue from the discounted portion), Menards created a rebate mail-in program designed to reduce the issuance and redemption of rebates. 6. Menards benefits from the increased sales that accompany substantial rebate offers (because consumers think they are getting a deal), as well as the profit margins accruing from the sale of full-price goods (because consumers rarely receive the appropriate rebate amount). 7. A consumer would reasonably expect to receive 11% off its entire purchase based upon Menards’ representations. But, Menards systematically and intentionally fails to pay the 11% rebate to consumers who have followed the rebate process, upheld the terms of the agreement Menards itself has established, purchased items eligible for the 11% rebate, and timely submitted the necessary paperwork to redeem that rebate. Many Plaintiffs received only a portion of the stated rebate without any explanation as to why their rebate was reduced. Worse, many Plaintiffs never received their rebates at all. 8. In both instances, Menards breached its contract with Plaintiffs and the Class. Menards makes a business practice of this breach; systematically and repeatedly violating its rebate agreements with its customers by failing to pay owed rebates at all or only paying them in part. 9. Menards’ rebate process systematically denies its customers the full value of the rebates that they earned by following the terms of Menards’ rebate program, purchasing items during the rebate promotional period, and timely submitting the required rebate paperwork. 10. In reality, and as detailed below, customers do not actually “save big money” at Menards. A substantial number of customers never receive the savings and benefits promised by Menards’ rebate campaigns. 3 11. Plaintiffs bring this action to put an end to Menards’ unfair, deceptive and illegal practices, including its ongoing misrepresentations and breaches of its rebate program, and to compel Menards to compensate its customers for the promised rebates to which they are entitled. PARTIES 12. Plaintiff Debbie Rider is a natural person and, at all relevant times, a resident of the State of Illinois. 13. Plaintiff Steve Schussler is a natural person and, at all relevant times, a resident of the State of Illinois. 14. Plaintiff Trent Shores is a natural person and, at all relevant times, a resident of the State of Illinois. 15. Plaintiff Barry Earls is a natural person and, at all relevant times, a resident of the State of Michigan. 16. Plaintiff Ryan Ingalls is a natural person and, at all relevant times, a resident of the State of Michigan. 17. Plaintiff David Kiel is a natural person and, at all relevant times, a resident of the State of Michigan. 18. Plaintiff Cassie Lietaert is a natural person and, at all relevant times, a resident of the State of Michigan. 19. Plaintiff Nazar Mansoor is a natural person and, at all relevant times, a resident of the State of Michigan. 20. Plaintiff Cody Italia is a natural person and, at all relevant times, a resident of the State of Missouri. 21. Plaintiff Thomas Fetsch is a natural person and, at all relevant times, a resident of the State of North Dakota. 4 22. Plaintiff Karen Fleckenstein is a natural person and, at all relevant times, a resident of the State of Ohio. 23. Plaintiff Amy Childers is a natural person and, at all relevant times, a resident of the State of Wisconsin. 24. Plaintiff Chris Jesse is a natural person and, at all relevant times, a resident of the State of Wisconsin. 25. Defendant Menard Inc. is a Delaware corporation with its principal place of business located in Eau Claire, Wisconsin. Menards owns and operates over 300 stores in 14 states across the Midwestern portion of the country and is the third-largest chain of home improvement stores in the United States. 26. Upon information and belief, Menards also controls Rebates International® and RebateInternational.com® (“Rebates International”), a rebate clearinghouse which operates the Menards rebate program. Menards registered trademarks on October 11, 2005 and renewed the service marks in 2015.2 JURISDICTION AND VENUE 27. This Court has subject matter jurisdiction over this action pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2) and (6), because the amount in controversy exceeds the value of $5,000,000, exclusive of interests and costs, because the Class consists of 100 or more putative Class Members, and because a number of named Plaintiffs and Class Members are diverse from Menards, a Delaware corporation with its principal place of business in Wisconsin. 2 See http://tmsearch.uspto.gov/bin/showfield?f=doc&state=4806:i81n93.2.2 (last accessed January 22, 2020); see also http://tmsearch.uspto.gov/bin/showfield?f=doc&state=4804:1etkna.2.1 (last accessed January 22, 2020). 5 28. This Court has personal jurisdiction over Menards because it is a corporation with a principal place of business in Wisconsin, authorized to do business in Wisconsin, transacts business in Wisconsin, and maintains sufficient minimum contacts in Wisconsin. 29. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) because a substantial part of the events giving rise to this claim occurred in this District, Menards regularly conducts business and has its principal place of business in this District, and some of the named Plaintiffs reside in and suffered harm in this District as a result of Menards’ acts set forth more fully below. COMMON FACTUAL ALLEGATIONS Menards Uses a Mail-in Rebate Program to Market to Customers in a Competitive Home- Improvement Marketplace. 30. The amount of money American consumers spent on home improvement has skyrocketed over the past several years. 31. In order to gain a competitive advantage in this growing home improvement marketplace, Menards has attempted to position itself as the low-cost or value option for shoppers. To that end, Menards uses its rebate offers to market to customers with the promise that they will “save big money at Menards.” 32. Menards’ marketing prominently promotes its rebate programs, which offer consumers product-specific rebates and the occasional (and much-advertised) 11% rebate off everything in the store. 33. A mail-in rebate program allows Menards to advertise huge price savings to consumers, all the while designing the program to ensure that some portion of those rebates will never be issued or redeemed. 34. Menards’ rebate program truly is the best of all worlds for Menards. It sells items at full (or an inflated) price knowing that—as a result of its deceptive, unfair and illegal practices—a substantial number of consumers will never receive their bargained-for rebates. 6 Menards Deceives Customers through its Mail-In Rebate Program. 35. Menards employs unfair and deceptive practices in its mail-in rebate program to reduce the issuance and redemption of rebates. 36. Specifically, Menards’ rebate process is designed to deny rebates that its customers earned by the terms of its rebate program after purchasing items during the rebate promotions and timely submitting the required paperwork. 37. Menards offers a variety of mail-in rebate offers, all of which operate in essentially the same manner. 38. Menards’ mail-in rebate program works as follows: 39. First, a customer purchases a product subject to a mail-in rebate. 40. Second, the customer goes from the checkout aisle to a separate service desk in each retail location. The service desk displays a selection of dozens of rebate forms applicable to different products. At the service desk, the customer must identify the forms that correspond to the particular rebate(s) the customer seeks to submit.3 3 For online customer purchases of products eligible for rebates, customers can elect to have their rebate receipt supplied as an attachment to their order confirmation. To redeem the rebate, customers can complete the rebate form from Menards’ online Rebate Center and mail it with their rebate receipt. See Rebates, available at https://www.menards.com/main/rebates/c-12553.htm (last accessed January 20, 2020). 7 41. After purchase, the Menards cashier provides the customer with their purchase receipt, and with what Menards calls a “rebate receipt.” The customer then takes the rebate receipt to the rebate desk to obtain a redemption ticket corresponding to the rebate receipt, as shown below: 42. From there, a customer must complete the redemption ticket and mail it, along with the corresponding original rebate receipt, to Rebates International at a P.O. Box in Elk Mound, Wisconsin. Customers can package multiple rebate receipts and redemption tickets in a single envelope, if they so desire. 43. Menards provides its customers very little information regarding its mail-in rebate program. Neither Menards nor Rebates International provide phone numbers for customers to inquire about the status of their submitted rebates. 8 44. Menards provides a few terms and conditions on mail-in rebates. After customers make a purchase subject to a rebate, they are informed that they must (i) include the original rebate receipt, (ii) send it to a specified P.O. Box (“Save 11%, PO Box: 155, Elk Mound, WI 54739-0155”), (iii) no later than a certain deadline (typically around 21 days from the close of the rebate), and (iv) allow 6-8 weeks for processing. 45. If Menards issues a rebate, it comes in the form of a check that can only be used for additional purchases at Menards.4 46. As detailed in the hundreds of online consumer complaints about Menards’ rebate program, customers have little to no visibility into their rebates after they comply with the steps outlined above. 47. Menards’ rebate form asks consumers to “Allow 6-8 weeks for processing” but Menards typically takes far longer than that to issue rebates, as set forth more fully in Plaintiffs’ allegations below. 48. The only way consumers can contact Rebates International is through an online form e-mail submission or a P.O. Box number in Elk Mound, Wisconsin. 49. Menards also tells customers they can theoretically track the status of their rebates online through Rebates International’s rebate tracker.5 Menard’s rebate tracker allows customers to track the mail-in rebates they have submitted by entering into the Rebates International website either: 1) the tracking number the customer received when they filled out their rebate paperwork; or 2) their first initial, last name, house number and zip code. 4 Plaintiffs here are not challenging the fact that Menards’ “rebates” are actually in-store credit usable only for additional purchases. There is a pending class action lawsuit, Rikkers v. Menard, Inc., No. 17-CV-1208 (E.D. Wis. filed Sept. 6, 2017), by which a different class of individuals is challenging Menards’ practice of sending consumers rebates in the form of in-store credit checks instead of cash. 5 See https://www.rebateinternational.com/RebateInternational/tracking.do (last visited January 22, 2020). 9 50. However, and as detailed below, for many Menards’ rebate customers, Menards fails to acknowledge the receipt of their rebate form submissions on Rebates International’s online rebate tracker, making it impossible for customers to determine what happened to the missing rebates. That is, after timely submitting the required rebate paperwork, customers enter the required information into the rebate tracker, but Menards states that it has no information about the customers’ submitted rebates. 51. For many Menards’ rebate customers, this lack of transparency leads to frustration as they attempt to find out why their rebates are denied or arbitrarily devalued. Some portion of those rebate customers become so frustrated with the clandestine process that they give up trying to obtain their contractually-obligated rebates, further enriching Menards. Menard’s many mail-in rebate offers include Menards’ famous 11% Off Everything rebates (which can apply either store-wide or to particular items), as well as product-specific rebates for other amounts. The store-wide rebate advertisements6 are unambiguous: 6 See e.g., https://milled.com/menards/11-off-everything-Yl9JCL4uQYcGTQ7P (last visited January 22, 2020). 10 52. In fine print at the bottom of the page, the terms and conditions appear as follows: “Mail-In Rebate. Rebate is in the form of a merchandise credit check, valid in-store only. Merchandise credit check is not valid towards purchases made on MENARDS.COM®. Limited to stock on hand. No sorry slips. First come, first served. Future sale price adjustments, exchanges and merchandise returns will void the 11% rebate on the items adjusted, exchanged and/or returned. Rebate is valid on special ordered products but does not extend to the special ordering of any normally stocked items. Not good with any other coupons or offers, except Menards® coupons, Menards rebates and manufacturer coupons. Multiple receipts may accompany one rebate certificate. Menards reserves the right to limit purchases of any and all items to reasonable job lot quantities. Excludes event tickets, gift cards, propane purchases, delivery and handling charges, all rental items, minuteKEY®, processing fees, packaging charges and extended service agreements.”7 7 See https://milled.com/menards/11-off-everything-Yl9JCL4uQYcGTQ7P (last visited January 22, 2020). 11 53. As shown below, Menards also provides product-specific rebates which are separate from the “11% Off Everything” program. These product-specific rebates similarly make promises regarding the amount of the rebates, the form they will take, the steps necessary for redemption and, crucially, the restrictions Menards places on the rebate—the number of items that can be submitted for rebate and that the rebate is in the form of merchandise credit8: 54. The terms and conditions on these flyers, as shown above, are the only terms and conditions available to consumers at the time of purchase. Consumers Have Long Complained About the Deceptiveness of Menards’ Mail-in Rebate Program, but the Program Remains the Same. 8 See http://www.valuetactics.com/wp-content/uploads/2015/10/menards-tempt1a.jpg (last visited January 22, 12 55. Menards’ customers have long been complaining about the unfair and deceptive rebate program for years, accusing Menards of being “con artists” for perpetrating a “scam” and a “ripoff” for refusing to process customer rebates.9 56. The internet is rife with complaints about Menards’ rebate program, with consumers airing their grievances on Twitter, Facebook, the Better Business Bureau website,10 and a number of consumer complaint message boards,11 as highlighted below:  “I bought over $900.00 worth of merchandise at Menards in Toledo, [OH] on 8-25-2018 I have a rebate coming for $99.68 that I have been waiting 9 weeks so far and haven’t seen yet. I spoke with the manager at the Menards store once and the *** manager twice. […] Each time all they say is wait longer. I found out the rebate was issued on 9-25-18 and I told the manager this info, and all he keeps saying is wait a little longer. It is now 10-24- 2018 and still nothing [.] They keep saying they will e-mail to find out about my rebate. They said they have no phone number to call.”12  “Will not be shopping @Menards w/its 11% rebate scam. Mail-in but no coupons at cash register. Only at Cust. Serv. Desk. Mail in for store rebate – NOT cash back. How many people don’t bother? Most people, probably. Lowes w/better quality – here I come!”13 57. The majority of the complaints reference consumers who never obtained their rebate checks altogether. A sampling of these complaints includes:  “Menards RIPOFF 11% Rebate! Have any of you been ripped off and not received your Rebate?? During the Menards 11% rebate we purchased a new Ultra deck and spent $14,800 the rebate should have totaled $1,608.96. We applied for the rebates in September. The rebate company said they have mailed several refunds that we have not 9 See infra, n. 15-17. 10 See, e.g., https://www.bbb.org/us/wi/elk-mound/profile/business-services/rebate-international-0694- 44002999 (last visited January 22, 2020); https://www.bbb.org/us/wi/elk-mound/profile/business-services/rebate- international-0694-44002999/complaints (last visited January 22, 2020); https://www.bbb.org/us/il/hanover- park/profile/building-materials/menard-inc-0694-5000090/complaints (last visited January 22, 2020). 11 See https://menards.pissedconsumer.com/11-rebate-scam-201810241387951.html (last visited January 22, 2020); https://www.consumeraffairs.com/retail/menards.html (last visited January 22, 2020). 12 See https://menards.pissedconsumer.com/11-rebate-scam-201810241387951.html (last visited January 22, 2020). 13 See Pamela Kramer (@pamkramer), Twitter (April 12, 2018 at 8:26 AM), available at https://twitter.com/pamkramer/status/984422515996069888. 13 received. Has this happened to anyone else? I will be filing a legal complaint with the Minnesota Attorney General.”14  “Too bad I rang up $1600 plus and never received rebate. Contact customer service no response MENARDS rip-off con artists.”15  “@Menards 11% Rebate is a total scam. My second over $200 rebate never shows up. And u can’t speak to one person about it to help you. #SCAM.”16  “I keep stellar records and have over 14 rebates that show processed on Menard’s web site, yet have not received one penny from them. […] We have several rebates that show were issued but we never received them.”17 58. Other complaints are from consumers who got a reduced rebate, but never found out why. A sampling of these complaints includes:  “Back in July I spent almost $2500 at Menards in Owensboro Ky was to get back $252 and some change back I have sent email mailed them and Menards letters and Rebate international sent an email stating the check was not cashed of course it wasn’t cashed I never got it they said they would issue another one guess what still haven’t got it. I’m calling the BBB and everyone that might can help this is b[redacted] I’ll take my business else where’s can’t trust them to do what right by the customer.”18  “I have never shopped at Menards but decided when I needed to purchase building materials that I would take advantage of the 11% Rebate. All receipts and forms were sent in within the correct time frame, but after waiting for several weeks and after multiple emails, I received a response that they could issue a stop payment, issue another check and within three days of the email, they would mail the rebate check. I have submitted THREE different rebates to other companies since my initial rebate application to Rebates International and have already received ALL THREE of those rebates. According to the Rebates International website the check was process and should have been mailed, but here I am again after several weeks with no response and no rebate. The excuse has been 14 See Bill Dobbins, Facebook (December 17, 2017 at 4:51 PM), available at https://www.facebook.com/pg/Thedobbinsgroup/posts/?ref=page_internal (last visited January 22, 2020). 15 See Dan Lange (@dlange529), Twitter (May 17, 2018 at 11:20 AM), available at https://twitter.com/dlange529/status/997149935580729344 (last visited January 22, 2020). 16 See Ben Eisenhart (@BEisenhart), Twitter (Sept. 11, 2017 at 10:25 PM), available at https://twitter.com/BEisenhart/status/907444981207629825 (last visited January 22, 2020). 17 See Menards – Over 14 not received 11% rebates, pissedconsumer.com, available at menards.pissedconsumer.com/over-14-not-received-11-rebates-201704031029419.html (last visited January 22, 2020). 18 Rebates International-Menards Reviews, Revdex.com, available at https://www.revdex.com/reviews/rebates- international-menards/3005226 (last visited January 22, 2020). 14 that they use a postcard to send the rebate, but all the information that I have discovered is that while a postcard is not first class mail, a postcard should arrive within 5-10 business days. THAT HAS NOT BEEN MY EXPERIENCE!”19 59. Despite advertising hundreds of millions of dollars in available rebates every year and representing to customers that they would “save big money”, Menards does not honor the benefit of the bargain it strikes with its customers. Menards systematically and routinely denies or substantially underpays promised rebates and takes steps to further drive down the redemption rate. FACTS SPECIFIC TO PLAINTIFFS Plaintiff Debbie Rider 60. On or about March 2018, Plaintiff Debbie Rider, an Illinois resident, went to a Menards location in Forsyth, Illinois, to purchase a washer, dryer, microwave and building supplies during the 11% off everything promotion. 61. Rider purchased these products from Menards for a total of approximately $878.77. 62. After completing her purchase, Rider went to the rebate center within the Menards location and retrieved the store-wide 11% off rebate coupons. 63. Shortly after her purchases, Rider filled out the rebate coupons and, as instructed by Menards, included her receipts in envelopes addressed to P.O. Box 99, Elk Mound, WI 54739-0155. 64. Rider then waited well beyond the six-to-eight week period for rebate processing and mailing quoted by Menards, without receiving any rebate. After eight weeks, Rider checked the Rebates International rebate tracker (https://www.rebateinternational.com/ RebateInternational/tracking.do); but did not see a rebate. 19 Rebates International-Menards Reviews: Mar. 3, 2019 Complaint from angrymenardscustomer, Revdex.com, available at https://www.revdex.com/reviews/rebates-international-menards/3005226 (last visited January 22, 2020). 15 65. Rider contacted Rebates International to follow up regarding the status of her rebate. Rebates International informed Rider via telephone that they did not receive her rebate voucher or receipt, even though she had received smaller rebates from Menards without issue in the past. 66. Menards breached its contract with Rider by failing to send the rebate checks to Rider at all, or by failing to send the full amount promised. 67. Because of Menards’ unfair and deceptive practices and breach of its representations regarding the promised 11% rebate, Rider was denied the approximately $96.66 in rebates to which she was entitled. Plaintiff Steve Schussler 68. On September 9, 2017, Plaintiff Steve Schussler, an Illinois resident, purchased from his local Menards store in Matteson, Illinois, wood for his deck during the Menards 11% Off Everything promotion for a total of approximately $3,429.09. 69. After completing his purchase, Schussler went to the rebate center within the Menards location and retrieved the store-wide 11% off rebate coupon. 70. Shortly thereafter, Schussler filled out the rebate coupon and, as instructed by Menards, included it in a single envelope addressed to P.O. Box 99, Elk Mound, WI 54739-0155. 71. Schussler then waited well beyond the six-to-eight week period for rebate processing and mailing quoted by Menards, without receiving any rebate. Schussler never received a rebate. 72. Menards breached its contract with Schussler by failing to send the rebate checks to Schussler at all, or by failing to send the full amount promised. 73. Because of Menards’ unfair and deceptive practices and breach of its representations regarding the promised 11% rebate, Schussler was denied the approximately $377.20 in rebates to which he was entitled. Plaintiff Trent Shores 16 74. On or about July 12, 2017, Plaintiff Trent Shores, an Illinois resident, purchased from his local Menards store in Galesburg, Illinois, siding during Menards’ 11% Off Everything promotion for a total of approximately $3,850.75. Shores was told during his purchase by Menards’s employees that even though the siding was a special purchase, it still qualified for the 11% Off Everything sale. 75. After completing his purchase, Shores went to the rebate center within the Menards location and retrieved the store-wide 11% off rebate coupon. 76. Within a week of completing his purchase, Shores filled out the rebate coupon and, as instructed by Menards, included it in a single envelope addressed to P.O. Box 99, Elk Mound, WI 54739-0155. 77. Shores then waited well beyond the six-to-eight week period for rebate processing and mailing quoted by Menards, without receiving any rebate. Shores and his wife emailed Rebates International to follow up regarding the status of this rebate on numerous occasions. Ultimately, Shores was told that Rebates International did not receive his paperwork, and a rebate would not be forthcoming. 78. In or about November 2017, Shores purchased a dishwasher during a Menards 11% Off Everything sale. The sale was advertised at the front of the Menards store, and in numerous locations throughout the store, including right in front of the dishwasher that he purchased. 79. Shores purchased the dishwasher for approximately $700. 80. After purchasing the dishwasher, Shores went to the rebate center within the Menards location and retrieved the store-wide 11% Off rebate coupon. 81. Within a week of completing his purchase, Shores filled out the rebate coupon and again mailed it to the Elk Mound, Wisconsin address as instructed by Menards. 82. Shores did not receive any rebate for his dishwasher purchase, either. 17 83. As a result of Menards’ repeated failure to provide him with the advertised rebate, Shores and his wife no longer shop at Menards. 84. Menards breached its contract with Shores by failing to send the rebate checks to Shores at all, or by failing to send the full amount promised. 85. Because of Menards’ unfair and deceptive practices and breach of its representations regarding the promised 11% rebate, Shores was denied the approximately $500.58 in rebates to which he was entitled. Plaintiff Barry Earls 86. On or about June 17, 2017, Plaintiff Barry Earls, a Michigan resident, went to a Menards location in South Haven, Michigan, to purchase a garage pole barn garage package during the 11% Off Everything promotion. 87. Earls purchased the pole barn garage package for a total of approximately $6,959.60. 88. After completing his purchase, Earls went to the rebate center within the Menards location and retrieved the store-wide 11% Off rebate coupon. 89. Within one week of completing his purchase, Earls filled out the rebate coupon and, as instructed by Menards, included it in a single envelope addressed to P.O. Box 995, Elk Mound, WI 54739-0155. 90. Upon information and belief, Earls’ purchase was eligible for approximately $756.56 in rebates based upon the 11% Off Everything promotion. 91. However, on or about November 2017, Earls only received a rebate for approximately 92. In November 2017, Earls contacted Rebates International via e-mail to dispute the amount of his rebate. Per Rebates International’s instructions, Earls resubmitted his paperwork. However, that same month Earls received a letter from Rebates International, without further 18 explanation, stating that the remainder of his rebate would not be forthcoming. Earls discussed this letter from Rebates International with a store manager from Menards shortly thereafter. The store manager told him that she did not understand why Earls did not receive the full amount of rebate because he “did everything right.” 93. Earls has only ever received approximately $456 in rebates, despite completing all the prerequisites of Menards’ rebate program. 94. Menards breached its contract with Earls by failing to send the rebate checks to Earls at all, or by failing to send the full amount promised. 95. Because of Menards’ unfair and deceptive practices and breach of its representations regarding the promised 11% rebate, Menards denied Earls approximately $300 in rebates to which he was entitled. Plaintiff Ryan Ingalls 96. In or about January 2019, Plaintiff Ryan Ingalls, a Michigan resident, went to a Menards location in South Haven, Michigan, to purchase electrical and roofing materials during the 11% Off Everything promotion. 97. Ingalls purchased PVC boxes, ridge vents, and concealed stringer hangers from Menards for a total of approximately $177.41. 98. After completing his purchase, Ingalls went to the rebate center within the Menards location and retrieved the store-wide 11% Off rebate coupon. 99. Within one week of completing his purchase, Ingalls filled out the rebate coupon and, as instructed by Menards, included it in a single envelope addressed to P.O. Box 99, Elk Mound, WI 54739-0155. 100. Ingalls then waited well beyond the six-to-eight week period for rebate processing and mailing quoted by Menards, without receiving any rebate. 19 101. Ingalls checked the Rebates International rebate tracker (https://www.rebateinternational.com/RebateInternational/tracking.do); but did not see a rebate for his purchase of $177.41. 102. Ingalls purchased products that Menards advertised as eligible for rebate under the 11% rebate campaign. 103. Upon information and belief, and unbeknownst to Ingalls and undisclosed by Menards prior to the completion of the sale, Menards denied Ingalls the advertised 11% rebate. 104. Menards breached its contract with Ingalls by failing to send the rebate checks to Ingalls at all, or by failing to send the full amount promised. 105. Because of Menards’ unfair and deceptive practices and breach of its representations regarding the promised 11% rebate of $19.50, Ingalls was denied the full amount of the rebate to which he was entitled. Plaintiff David Kiel 106. In or about late July 2017, Plaintiff David Kiel, a Michigan resident, went to a Menards location in Bay City, Michigan, to purchase carpet, padding and tile flooring during Menards’ 11% Off everything promotion. 107. Kiel purchased these products from Menards for a total of approximately $2,816. 108. After completing his purchase, Kiel went to the rebate center within the Menards location and retrieved the store-wide 11% Off rebate coupon. 109. Within a few days of completing his purchase, Kiel and his wife filled out the rebate coupon and, as instructed by Menards, included it in a single envelope addressed to P.O. Box 99, Elk Mound, WI 54739-0155. 110. Kiel then waited well beyond the six-to-eight week period for rebate processing and mailing quoted by Menards, without receiving any rebate. Kiel tried checking the Rebates International 20 rebate tracker (https://www.rebateinternational.com/ RebateInternational/tracking.do); but the website was confusing, and he was discouraged because there was no phone number to contact Rebates International directly to discuss his rebate. Kiel never received any rebate from Menards. 111. Menards breached its contract with Kiel by failing to send the rebate checks to Kiel at all, or by failing to send the full amount promised. 112. Because of Menards’ unfair and deceptive practices and breach of its representations regarding the promised 11% rebate, Kiel was denied the approximately $256 in rebates to which he was entitled. Plaintiff Cassie Lietaert 113. In or about September, 2017, Plaintiff Cassie Lietaert, a Michigan resident, went to a Menards location in Traverse City, Michigan, to purchase a refrigerator during the 11% Off Everything promotion. 114. Lietaert purchased the refrigerator from Menards for a total of approximately $956.71. 115. After completing her purchase, Lietaert went to the rebate center within the Menards location and retrieved the store-wide 11% off rebate coupon. 116. Within less than one week of completing her purchase, Lietaert filled out the rebate coupon and, as instructed by Menards, included it in a single envelope addressed to P.O. Box 99, Elk Mound, WI 54739-0155. 117. Lietaert then waited well beyond the six-to-eight week period for rebate processing and mailing quoted by Menards, without receiving any rebate. After ten weeks, Lietaert checked the Rebates International rebate tracker (https://www.rebateinternational.com /RebateInternational/tracking.do); and found that the rebate had been processed, but she never received a rebate voucher. 21 118. Lietaert contacted Rebates International regarding the status of her rebate, and in November 2017, Rebates International informed Lietaert via email that it had never received her 119. Menards breached its contract with Lietaert by failing to send the rebate checks to Lietaert at all, or by failing to send the full amount promised. 120. Because of Menards’ unfair and deceptive practices and breach of its representations regarding the promised 11% rebate, Menards unfairly and deceptively denied Lietaert the approximately $105.23 in rebates to which she was entitled. Plaintiff Nazar Mansoor 121. Between May and July 2018, Plaintiff Nazar Mansoor, a Michigan resident, went to a Menards location in Livonia, Michigan, to purchase masonry, stain gallons, and tools during the 11% Off Everything promotion. 122. Mansoor purchased these products from Menards for a total of approximately $380.00. 123. After completing his purchases, Mansoor went to the rebate center within the Menards location and retrieved the store-wide 11% Off rebate coupons associated with his purchases. 124. Within two to three days of completing his purchases, Mansoor filled out the appropriate rebate coupons and, as instructed by Menards, included them in the envelopes he addressed to P.O. Box 99, Elk Mound, WI 54739-0155. 125. Mansoor then waited well beyond the six-to-eight week period for rebate processing and mailing quoted by Menards, without receiving any rebate. After eight weeks, Mansoor stopped by the customer service desk at the Menards in Livonia, Michigan to inquire about the status of his rebate. Mansoor was told that he probably had not received the rebate yet and should keep checking his mail. One month later, Mansoor again visited his local Menards store and asked the customer service desk 22 about the status of his rebate. He was told that Menards did not handle the rebates, and that he would have to check with Rebates International. 126. Mansoor contacted Rebates International in late 2018 via the contact information form at www.rebatesinternational.com. However, Mansoor never received a response to his inquiry. 127. Mansoor continued to visit the customer service desk of his local Menards until January 2019 to inquire about the status of his rebate. To this date, Mansoor has not received a rebate 128. Menards breached its contract with Mansoor by failing to send the rebate checks to Mansoor at all, or by failing to send the full amount promised. 129. Because of Menards’ unfair and deceptive practices and breach of its representations regarding the promised 11% rebate, Mansoor was denied the approximately $98 in rebates to which he was entitled. Plaintiff Cody Italia 130. In the past five years, Plaintiff Cody Italia, a Missouri resident, has spent a total of approximately $5,000 at Menards. Italia has spent a minimum of approximately $21 on dog food on a bi-weekly basis in the past eighteen months. 131. On or about February 2, 2019, Italia went to a Menards location in Popular Bluff, Missouri, to purchase dog food during the 11% Off Everything promotion. 132. Italia purchased these products from Menards for a total of approximately $21.99. 133. After completing his purchase, Italia went to the rebate center within the Menards location and retrieved the store-wide 11% Off rebate coupon. 134. That same day, Italia filled out the rebate coupon and, as instructed by Menards, included it in a single envelope addressed to P.O. Box 99, Elk Mound, WI 54739-0155. 23 135. Italia then waited well beyond the six-to-eight week period for rebate processing and mailing quoted by Menards, without receiving any rebate. Italia checked the Rebates International rebate tracker (https://www.rebateinternational.com/RebateInternational/tracking.do); but did not see a rebate. 136. Italia contacted the Menards by phone regarding the status of his rebate, but he never received an explanation or a rebate voucher. 137. Menards denied Italia the approximately $2.42 in rebates to which he was entitled based on rebate restrictions not disclosed to Italia or the public prior to purchase. 138. Italia purchased products that Menards advertised as eligible for rebate under the 11% rebate campaign that were also eligible for a separate product-specific rebate. 139. Menards breached its contract with Italia by failing to send the rebate checks to Italia at all, or by failing to send the full amount promised. 140. Because of Menards’ unfair and deceptive practices and breach of its representations regarding the promised 11% rebate, Italia was denied the approximately $2.42 in rebates to which he was entitled. Plaintiff Thomas Fetsch 141. Plaintiff Thomas Fetsch, a North Dakota resident, spends approximately $5,000 on tools, building materials, and groceries per year at Menards stores in North Dakota. However, he has only received a handful of rebates through the program since 2015. 142. Between February and July 2016, Fetsch went to a Menards location in Bismarck, North Dakota, to purchase a shop vacuum, smoker pellets, tool sets, and other household supplies during the 11% Off Everything promotion. 143. Fetsch purchased the products from Menards for a total of approximately $1,430. 24 144. After completing his purchases during each visit, Fetsch went to the rebate center within the Menards location and retrieved the store-wide 11% Off rebate coupon. 145. The same day he completed his purchase, Fetsch filled out the rebate coupon and, as instructed by Menards, included it in a single envelope addressed to P.O. Box 99, Elk Mound, WI 54739-0155. 146. Fetsch then waited well beyond the six-to-eight week period for rebate processing and mailing quoted by Menards, without receiving any rebate. After waiting for six to eight weeks, Fetsch checked the Rebates International rebate tracker (https://www.rebateinternational.com /RebateInternational/tracking.do); and found that there were no pending rebates. There was no indication that his rebates had been processed. 147. Fetsch contacted Rebates International regarding the status of his rebates, and in December 2016, Rebates International informed Fetsch via e-mail that they did not have a record of his original or rebate receipts. 148. Menards breached its contract with Fetsch by failing to send the rebate checks to Fetsch at all, or by failing to send the full amount promised. 149. Because of Menards’ unfair and deceptive practices and breach of its representations regarding the promised 11% rebate, Fetsch was denied approximately $157.31 in rebates to which he was entitled. Plaintiff Karen Fleckenstein 150. In or about July 2019, Plaintiff Karen Fleckenstein, an Ohio resident, went to a Menards location in Mentor, Ohio, to purchase fence panels during the 11% Off Everything promotion. 151. Fleckenstein purchased multiple items, including food, children’s toys, and post cap lights, for Menards for a total of approximately $33.47. 25 152. After completing her purchase, Fleckenstein went to the rebate center within the Menards location and collected the store-wide 11% off rebate coupon. 153. Within one week of completing her purchase, Fleckenstein filled out the rebate coupon and, as instructed by Menards, included it in a single envelope addressed to P.O. Box 99, Elk Mound, WI 54739-0155. 154. Fleckenstein then waited well beyond the six-to-eight week period for rebate processing and mailing quoted by Menards, without receiving any rebate. Fleckenstein checked the Rebates International rebate tracker (https://www.rebateinternational.com/ RebateInternational/tracking.do) but did not see a rebate. 155. To this date Fleckenstein has not received a rebate voucher from Menards for approximately $3.68. 156. Menards breached its contracts with Fleckenstein by failing to send the rebate check to Fleckenstein at all or by failing to send the full amount promised. 157. Because of Menards’ unfair and deceptive practices and breach of its representations regarding the promised 11% rebate, Fleckenstein was denied the approximately $3.68 in rebates to which she was entitled. Plaintiff Amy Childers 158. In or about October 2018, Plaintiff Amy Childers, a Wisconsin resident, visited the www.menards.com website to purchase fence panels online during the advertised 11% Off Everything promotion. 159. Childers purchased the fence panels from Menards for a total of approximately $1,327.56. 160. After completing her purchase, Childers then downloaded the appropriate rebate coupon corresponding to her purchase from the online Menards Rebate Center. 26 161. Within one week of completing her purchase, Childers filled out the rebate coupon, attached her original receipt and, as instructed by Menards, included it in a single envelope addressed to P.O. Box 995, Elk Mound, WI 54739-0155. 162. Childers then waited well beyond the six-to-eight week period for rebate processing and mailing quoted by Menards, without receiving any rebate. 163. After eight weeks, Childers checked the Rebates International rebate tracker (https://www.rebateinternational.com/RebateInternational/tracking.do); and found that the rebate had still not been processed and was never even entered into the online tracking system. 164. In December 2018, Rebates International informed Childers via email that her purchase did not qualify for the Menards 11% Off rebate because the items that she purchased were already on sale and therefore did not qualify for a rebate. 165. The fact that the fence panels did not qualify for a rebate because they were on sale when she purchased them was not disclosed to Childers prior to her purchase. Before purchasing the fencing panels online, Childers saw language on Menards’ webpage that there was an “11% Rebate on Everything.” There was no disclosure, at any point before she bought the panels, that the fencing panels she was about to purchase were on sale and ineligible for the 11% rebate. 166. Menards breached its contract with Childers by failing to send the rebate checks to Childers at all, or by failing to send the full amount promised. 167. Menards unfairly and deceptively denied Childers the approximately $146.03 in rebates to which she was entitled. Plaintiff Chris Jesse 168. On August 23, 2017, Plaintiff Chris Jesse, a Wisconsin resident, went to a Menards location in Antigo, Wisconsin, to purchase building materials, a furnace, boiler, and piping during the 11% Off Everything promotion. 27 169. Jesse purchased the building materials, furnace, boiler and piping for a total of approximately $2,825.35. 170. After completing his purchase, Jesse went to the rebate center within the Menards location and retrieved the store-wide 11% Off rebate coupon. His purchase was eligible for approximately $310 in rebates based upon the 11% Off Everything promotion. 171. On the same day after completing his purchase, Jesse filled out the rebate coupon and, as instructed by Menards, included it in a single envelope addressed to P.O. Box 995, Elk Mound, WI 54739-0155. 172. Jesse then waited well beyond the six-to-eight week period for rebate processing and mailing quoted by Menards, without receiving any rebate. Jesse checked the Rebates International rebate tracker (https://www.rebateinternational.com/RebateInternational /tracking.do) and found no record that his rebate had been issued. Jesse also contacted Menards customer service, who mentioned that they had no record of his rebate. 173. Because of Menards’ unfair and deceptive practices and breach of its representations regarding the promised 11% rebate Menards unfairly and deceptively denied Jesse the approximately $310 in rebates to which he was entitled. CLASS ACTION ALLEGATIONS 174. Plaintiffs bring this action pursuant to Fed. R. Civ. P. 23(b)(3) on behalf of themselves and classes of similarly situated individuals defined as follows: Nationwide Mail-In Rebate Class: All customers who have a processed rebate registered in the Rebates International rebate tracker but who did not realize the full 11% rebate which was promised under Menards’ 11% Off Everything promotion. Illinois Mail-In Rebate Class: All residents of the State of Illinois who have a processed rebate registered in the Rebates International rebate tracker but who did not realize the full 11% rebate promised under Menards’11% Off Everything promotion. 28 Michigan Mail-In Rebate Class: All residents of the State of Michigan who have a processed rebate registered in the Rebates International rebate tracker but who did not realize the full 11% rebate which was promised under Menards’11% Off Everything promotion. Missouri Mail-In Rebate Class: All residents of the State of Missouri who have a processed rebate registered in the Rebates International rebate tracker but who did not realize the full 11% rebate which was promised under Menards’11% Off Everything promotion. North Dakota Mail-In Rebate Class: All residents of the State of North Dakota who have a processed rebate registered in the Rebates International rebate tracker but who did not realize the full 11% rebate which was promised under Menards’11% Off Everything promotion. Ohio Mail-In Rebate Class: All residents of the State of Ohio who have a processed rebate registered in the Rebates International rebate tracker but who did not realize the full 11% rebate which was promised under Menards’11% Off Everything promotion. Wisconsin Mail-In Rebate Class: All residents of the State of Wisconsin who have a processed rebate registered in the Rebates International rebate tracker but who did not realize the full 11% rebate which was promised under Menards’ 11% Off Everything promotion. 175. Excluded from the Classes identified above are (1) Menards, Menards’ agents, subsidiaries, parents, successors, predecessors, and any entity or entities in which Menards or its parents have a controlling interest, and that entity’s or those entities’ current and former employees, officers, and directors, (2) the Judge to whom this case is assigned and the Judge’s immediate family, (3) persons who execute and file a timely request for exclusion from the Class, (4) persons who have had their claims in this matter finally adjudicated and/or otherwise released, and (5) the legal representatives, successors, and assigns of any such excluded person. 176. Numerosity: The exact size of each Class is unknown and is not available to Plaintiffs at this time, but individual joinder in this case is impracticable. The Classes likely consist of thousands of individuals as evidenced, among other things, by the numerous complaints submitted online. Class members will be identified through Menards’ records. 29 177. Commonality and Predominance: There are many questions of law and fact common to the claims of Plaintiffs and the other members of the Classes, and those questions predominate over any questions that may affect individual members of the Classes. Common questions for the Classes include but are not limited to the following: a) Whether Menards had a policy or practice of sending rebate checks to consumers through junk mailers in order to deceive Plaintiffs and other members of the Classes into discarding them and thus not using the rebate checks inside; b) Whether Menards engaged in deceptive and misleading practices through its mail-in rebate program as described herein and violated public policy; c) Whether Menards engaged in practices through its mail-in rebate program as described herein in order to breach its contracts with Plaintiffs and other members of the Classes; d) Whether Menards engaged in practices as described herein which resulted in a breach of the implied covenant of good faith and fair dealing with Plaintiffs and other members of the Classes; e) Whether Menards engaged in practices as described herein in order to retain monies belonging to Plaintiffs and other members of the Classes and unjustly enriched itself; g) Whether as a result of Menards’ policies and practices, Plaintiffs and the other members of the Classes have suffered monetary losses; h) Whether Plaintiffs and the members of the Classes are entitled to monetary, punitive and/or restitutionary remedies and, if so, the nature of those remedies; and i) Whether Menards should be enjoined from continuing to engage in such practices. 178. Typicality: Plaintiffs’ claims are typical of the claims of the other members of their respective Classes. Plaintiffs and the members of the Classes sustained damages as a result of Menards’ uniform wrongful conduct regarding valid rebates it offered to Plaintiffs and the members for the Classes. 179. Adequacy: Plaintiffs will fairly and adequately represent and protect the interests of the Classes, and have retained counsel competent and experienced in complex litigations and class 30 actions. Plaintiffs have no interests antagonistic to those of the Classes, and Defendant has no defenses unique to Plaintiffs. 180. Superiority: This case is appropriate for certification because class proceedings are superior to all other available methods for the fair and efficient adjudication of this controversy. The injuries suffered by the individual members of the Classes are likely to have been relatively small compared to the burden and expense of individual prosecution of the litigation necessitated by Defendant’s actions. Absent a class action, it would be difficult, if not impossible, for the individual members of the Classes to obtain effective relief from Defendant. Even if members of the Classes themselves could sustain such individual litigation, it would not be preferable to a class action because individual litigation would increase the delay and expense to all parties and the Court and require duplicative consideration of the legal and factual issues presented herein. By contrast, a class action presents far fewer management difficulties and provides the benefits of single adjudication, economy of scale, and comprehensive supervision by a single Court. Economies of time, effort, and expense will be fostered, and uniformity of decisions will be ensured. FIRST CAUSE OF ACTION Breach of Contract (On Behalf of Plaintiffs and the Nationwide Mail-In Rebate Class) 181. Plaintiffs incorporate the foregoing allegations as if fully set forth herein. 182. By filling in and submitting their redemption tickets to redeem their 11% rebate for their purchases at Menards stores, Plaintiffs and the Nationwide Mail-In Rebate Class entered into specific agreements with Menards. Through the redemption tickets, Menards offered rebates and Plaintiffs and the Nationwide Mail-In Rebate Class members agreed to purchase products under the premise that they would receive the corresponding rebate checks, to be used at Menards for future purchases. 31 183. Specifically, through weekly advertisements, in-store signs, online advertisements, rebate forms, and receipts, Menards represented and promised to provide Plaintiffs and the Nationwide Mail-In Rebate Class rebate checks for a specified amount after they purchased certain products and properly submitted a mail-in rebate. 184. Based on the rebate forms that they filled out and submitted, Plaintiffs and the Nationwide Mail-In Rebate Class agreed to purchase the products that were eligible for rebate. That is, Plaintiffs and the Nationwide Mail-In Rebate Class paid, and Menards accepted, the purchase price for the products and submitted valid rebate applications, and therefore performed their obligations under the specific rebate forms. 185. Menards materially breached its specific contracts with Plaintiffs and the Nationwide Mail-In Rebate Class by failing to send the rebate checks at all or by failing to send the full amount promised to Plaintiffs and the Nationwide Mail-In Rebate Class members. 186. These breaches of contract have directly and proximately caused Plaintiffs and the Nationwide Mail-In Rebate Class economic injury, including the amount of the rebates that should have been conspicuously issued for individuals who properly submitted rebate applications, as well as the interest that should have been accrued following the promised six-to-eight week processing time. SECOND CAUSE OF ACTION Breach of the Implied Covenant of Good Faith and Fair Dealing (On Behalf of Plaintiffs and the Nationwide Mail-In Rebate Class) 187. Plaintiffs incorporate the foregoing allegations as if fully set forth herein. 188. If the Court finds Menards ultimately fulfilled the terms of its contracts, then Menards has still breached the implied covenant of good faith and fair dealing. 189. Implicit in Menards’ specific contracts, namely its rebate forms, with Plaintiffs and Nationwide Mail-In Rebate Class were provisions prohibiting Menards from engaging in conduct that 32 frustrated or impaired Plaintiffs’ and the Nationwide Mail-In Rebate Class’s rights to receive the full benefits of the agreements. 190. Menards acted unreasonably and evaded the spirit of the bargain, and thus breached the implied covenant of good faith and fair dealing, by failing to send the rebate checks at all or by failing to send the full amount promised to Plaintiffs and the Nationwide Mail-In Rebate Class members. 191. The aforementioned breaches have directly and proximately caused Plaintiffs and the Nationwide Mail-In Rebate Class economic injury, including, but not limited to, denying them the money that was promised through the rebate program, as well as the interest that should have been accrued following the promised six-to-eight week processing time. THIRD CAUSE OF ACTION Unjust Enrichment In the Alternative to Claims for Breach of Contract and Implied Covenant of Good Faith and Fair Dealing (On Behalf of Plaintiffs and the Nationwide Mail-In Rebate Class) 192. Plaintiffs incorporate the foregoing allegations as if fully set forth herein. 193. If the Court finds Plaintiffs’ and the Nationwide Mail-In Rebate Class’s contracts with Menards invalid, non-existent, or unenforceable, Plaintiffs and the members of the Nationwide Mail- In Rebate Class may be left without any adequate remedy at law. 194. Plaintiffs and the Nationwide Mail-In Rebate Class have conferred a benefit upon Menards in the form of the money it charged and collected from them when they purchased products with the promise of a rebate. 195. Menards’ practice of failing to send the promised rebate checks at all or by failing to send the full amount promised to Plaintiffs and the Nationwide Mail-In Rebate Class members resulted in Plaintiffs and members of the Nationwide Mail-In Rebate Class being denied the benefit of redeeming their full rebates as promised. Further, Menards benefits because its rebate program is 33 designed to reduce the issuance of and to discourage customers’ redemption of rebates, because rebate checks are mailed to customers in cardstock junk mailers displaying advertisements. Menards appreciates and/or has knowledge of the benefits conferred upon it by Plaintiffs and the Nationwide Mail-In Rebate Class. 196. Under principles of equity and good conscience, Menards should not be permitted to retain the monies belonging to Plaintiffs and the Nationwide Mail-In Rebate Class that they unjustly received as a result of its wrongful conduct described herein. 197. Accordingly, Plaintiffs, on behalf of themselves and the other members of the Nationwide Mail-In Rebate Class, seek restitution and disgorgement of all amounts that should have been paid to them, by which Menards has been unjustly enriched. FOURTH CAUSE OF ACTION Violation of Wis. Stat. § 100.18 (On Behalf of Plaintiffs and the Wisconsin Mail-In Rebate Class) 198. Plaintiffs incorporate the foregoing allegations as if fully set forth herein. 199. Wis. Stat. § 100.18 prohibits a corporation from making any advertisement, announcement, representation, or statement of fact which is untrue, deceptive, or misleading with the intent to sell, distribute, increase the consumption of or in any way dispose of any real estate, merchandise, securities, employment, services, or anything offered by such corporation. 200. Wis. Stat. § 100.18 applies to Menards’ actions and conduct described herein because Menards advertised, announced, represented, and otherwise made statements of fact in connection with the sale of merchandise in Wisconsin. 201. Menards’ actions in affirmatively representing and advertising specific rebates and then imposing undisclosed rebate limitations violates Wis. Stat. § 100.18(1) and (9)(a) and, as described herein, have resulted, and will result, in damages to Plaintiffs and the members of the Wisconsin Mail- In Rebate Class. 34 202. Upon information and belief, and given the fact that Menards offered, implemented and/or managed the Menards rebate program, Menards knew or should have known that it deceptively and unfairly advertised the Menards rebate program to consumers, and misrepresented the amount of the rebate checks mailed to customers. 203. Specifically, Menards promised consumers, through its “11% Off Everything” rebate promotion, that if they purchased any product at Menards during the promotion and timely sent in a completed rebate form, they would receive a rebate check amounting to 11% of the value of their purchase within 6-8 weeks. 204. Despite those promises, Menards did not provide a full rebate check to the members of the Wisconsin Mail-In Rebate Class and minimized its rebate obligations. 205. Menards also sent Plaintiffs’ rebate checks far outside the six to eight week processing period, if it sent the checks at all. 206. Menards represented to consumers that the “after mail-in rebate” prices listed in store could feasibly be obtained by the average consumer following the prescribed rebate process. 207. As a direct and proximate cause of Menards’ deceptive and unfair trade practices, Plaintiffs and the Wisconsin Mail-In Rebate Class suffered actual damages, including monetary losses for the amount of the rebate check they should have (but did not) receive, as well as monetary losses for the purchase price of the product altogether (as they would have chosen not to purchase the product or to purchase it elsewhere). 208. Menards’ failure to fulfill its rebate obligations to Plaintiffs and the Wisconsin Mail-In Rebate Class members was unfair, deceptive, and misleading. 209. Menards’ conduct is in violation of Wis. Stat. § 100.18(1) and (9)(a), and Plaintiffs and the members of the Wisconsin Mail-In Rebate Class are thus entitled to damages totaling twice the amount of pecuniary loss, costs, reasonable attorney’s fees, injunctive relief prohibiting Defendant’s 35 untrue, deceptive, and misleading advertising going forward, and any other penalties or awards that may be appropriate under applicable law. FIFTH CAUSE OF ACTION Violation of the Illinois Consumer Fraud and Deceptive Business Practices Act 815 ILCS 505/1, et seq. (On Behalf of Plaintiffs and the Illinois Mail-In Rebate Class) 210. Plaintiffs incorporate the foregoing allegations as if fully set forth herein. 211. The Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1, et seq. (“ICFA”), protects both consumers and competitors by promoting fair competition in commercial markets for goods and services. 212. The ICFA prohibits any unlawful, unfair, or fraudulent business acts or practices including the employment of any deception, fraud, false pretense, false promise, false advertising, misrepresentation, or the concealment, suppression, or omission of any material fact, with intent that others rely upon the concealment, suppression, or omission of such material fact, or the use or employment of any practice described in Section 2 of the “Uniform Deceptive Trade Practices Act”. 815 ILCS 505/2. 213. The ICFA applies to Menards’ actions and conduct described herein because its conduct resulted in the sale of goods and services in Illinois. 214. As a corporation, Menards is a “person” as defined by Section 505/1(c) of the ICFA. 215. The goods Menards sold to Plaintiffs were “merchandise” within the meaning of Section 505/1(b) of the ICFA, and the Menards’ sale of those items was considered “trade” or “commerce” under Section 505/1(f) of the ICFA. 216. Menards’ actions in affirmatively representing and advertising specific rebates and failing to pay offends public policy, deceived Plaintiffs and the Illinois Mail-In Rebate Class and as 36 described herein, and have resulted, and will result in, damages to Plaintiffs and the members of the Illinois Mail-In Rebate Class. 217. Upon information and belief, and given the fact that Menards offered, implemented and/or managed the Menards rebate program, Menards knew or should have known that it deceptively and unfairly advertised the Menards rebate program to consumers, and misrepresented the amount of the rebate checks mailed to customers. 218. Specifically, Menards promised consumers, through its “11% Off Everything” rebate promotion, that if they purchased any product at Menards during the promotion and timely sent in a completed rebate form, they would receive a rebate check amounting to 11% of the value of their purchase within six to eight weeks. 219. Despite those promises, Menards did not provide a full rebate check to the members of the Illinois Mail-In Rebate Class and minimized its rebate obligations. 220. Menards also sent Plaintiffs’ rebate checks far outside the six to eight week processing period, if it sent the checks at all. 221. Defendant represented to consumers that the “after mail-in rebate” prices listed in store could feasibly be obtained by the average consumer following the prescribed rebate process. 222. As a direct and proximate cause of Menards’ deceptive and unfair trade practices, Plaintiffs and the Illinois Mail-In Rebate Class suffered actual damages, including monetary losses for the amount of the rebate check they should have (but did not) received, and monetary losses for the purchase price of the product altogether (as they would have chosen not to purchase the product or to purchase it elsewhere). 223. As a result of Defendant’s material misrepresentations regarding Menards, Defendant violated section 501/2(a)(9) of the Uniform Deceptive Trade Practices Act (“DTPA”) which proscribes “advertis[ing] goods or services with intent not to sell them as advertised.” 37 224. Menards’ failure to fully and timely fulfill its rebate obligations to Plaintiffs and the Illinois Mail-In Rebate Class members was unfair and deceptive. 225. Menards’ conduct is in violation of the ICFA, and Plaintiffs and the members of the Illinois Mail-In Rebate Class are thus entitled to damages totaling twice the amount of pecuniary loss, costs, reasonable attorney’s fees, injunctive relief prohibiting Defendant’s unfair and deceptive advertising going forward, and any other penalties or awards that may be appropriate under applicable SIXTH CAUSE OF ACTION Violation of the Michigan Consumer Protection Act Mich. Comp. Laws § 445.901, et seq. (On Behalf of Plaintiffs and the Michigan Mail-In Rebate Class) 226. Plaintiffs incorporate the foregoing allegations as if fully set forth herein. 227. The Michigan Consumer Protection Act, Mich. Comp. Laws §445.901, et seq. (“MCPA”), prohibits unfair, unconscionable, or deceptive methods, acts or practices in the conduct of trade or commerce. 228. Namely, under §445.903, the MCPA prohibits false advertising in the conduct of trade or commerce. 229. The MCPA applies to Menards’ actions and conduct described herein because the deceptive methods, acts and practices occurred in the conduct of trade or commerce in Michigan. 230. As a corporation, Menards is a “person” as defined by MCPA Section 445.902(d). 231. Menards’ actions in affirmatively representing and advertising specific rebates and then failing to pay offends public policy, deceived Plaintiffs and the Michigan Mail-In Rebate Class as described herein, and have resulted, and will result, in damages to Plaintiffs and the members of the Michigan Mail-In Rebate Class. 38 232. Upon information and belief, and given the fact that Menards offered, implemented and/or managed the Menards rebate program, Menards knew or should have known that it deceptively and unfairly advertised the Menards rebate program to consumers, and misrepresented the amount of the rebate checks mailed to customers. 233. Specifically, Menards promised consumers, through its “11% Off Everything” rebate promotion, that if they purchased any product at Menards during the promotion and timely sent in a completed rebate form, they would receive a rebate check amounting to 11% of the value of their purchase within six to eight weeks. 234. Despite those promises, Menards did not provide a full rebate check to the Michigan Mail-In Rebate Class and minimized its rebate obligations. 235. Menards also sent Plaintiffs’ rebate checks far outside the six to eight week processing period, if it sent the checks at all. 236. Defendant represented to consumers that the “after mail-in rebate” prices listed in store could feasibly be obtained by the average consumer following the prescribed rebate process. 237. As a direct and proximate cause of Menards’ deceptive and unfair trade practices, Plaintiffs and the Michigan Mail-In Rebate Class suffered actual damages, including monetary losses for the amount of the rebate check they should have (but did not) received, as well as monetary losses for the purchase price of the product altogether (as they would have chosen not to purchase the product or to purchase it elsewhere). 238. Menards’ failure to fully and timely fulfill its rebate obligations to Plaintiffs and the Michigan Mail-In Rebate Class members was unfair and deceptive. 239. Menards’ conduct is in violation of the MCPA, and Plaintiffs and the members of the Michigan Mail-In Rebate Class are thus entitled to damages totaling twice the amount of pecuniary loss, costs, reasonable attorney’s fees, injunctive relief prohibiting Defendant’s unfair and deceptive 39 advertising going forward, and any other penalties or awards that may be appropriate under applicable SEVENTH CAUSE OF ACTION Violation of the Missouri Merchandising Practices Act Missouri Rev. Stat. § 407.010, et. seq. (On Behalf of Plaintiffs and the Missouri Mail-In Rebate Class) 240. Plaintiffs incorporate the foregoing allegations as if fully set forth herein. 241. The Missouri Merchandising Practices Act § 407.010, et seq. (“MMPA”), prohibits unfair or deceptive acts or practices in connection with consumer transactions. 242. The MMPA applies to Menards’ actions and conduct described herein because the unfair and deceptive acts or practices occurred in connection with trade or commerce within the meaning of MMPA § 407.010(7). 243. As a corporation, Menards is a “person” as defined by MMPA § 407.010(5). 244. Further, under §407.020, the MCPA prohibits false advertising in connection with consumer transactions. 245. Menards’ actions in affirmatively representing and advertising specific rebates and then failing to pay offends public policy, deceived Plaintiffs and the Missouri Mail-In Rebate Class as described herein, and have resulted, and will result in, damages to Plaintiffs and the members of the Missouri Mail-In Rebate Class. 246. Upon information and belief, and given the fact that Menards offered, implemented and/or managed the Menards rebate program, Menards knew or should have known that it deceptively and unfairly advertised the Menards rebate program to consumers, and misrepresented the amount of the rebate checks mailed to customers. 247. Specifically, Menards promised consumers, through its “11% Off Everything” rebate promotion, that if they purchased any product at Menards during the promotion and timely sent in a 40 completed rebate form, they would receive a rebate check amounting to 11% of the value of their purchase within six to eight weeks. 248. Despite those promises, Menards did not provide a full rebate check to the Missouri Mail-In Rebate Class and minimized its rebate obligations. 249. Menards also sent Plaintiffs’ rebate checks far outside the six to eight week processing period, if it sent the checks at all. 250. Defendant represented to consumers that the “after mail-in rebate” prices listed in store could feasibly be obtained by the average consumer following the prescribed rebate process. 251. As a direct and proximate cause of Menards’ deceptive and unfair trade practices, Plaintiffs and the Missouri Mail-In Rebate Class suffered actual damages, including monetary losses for the amount of the rebate check they should have (but did not) received, as well as monetary losses for the purchase price of the product altogether (as they would have chosen not to purchase the product or to purchase it elsewhere). 252. Menards’ failure to fully and timely fulfill its rebate obligations to Plaintiffs and the Missouri Mail-In Rebate Class members was unfair, deceptive, and misleading. 253. Menards’ conduct is in violation of the MMPA, and Plaintiffs and the members of the Missouri Mail-In Rebate Class are thus entitled to damages totaling twice the amount of pecuniary loss, costs, reasonable attorney’s fees, injunctive relief prohibiting Menards’ unfair and deceptive advertising going forward, and any other penalties or awards that may be appropriate under applicable EIGHTH CAUSE OF ACTION Violation of the North Dakota Unfair Trade Practices Law N.D. Cent. Code §§ 51-15-01 – 51-15-11 (On Behalf of Plaintiffs and the North Dakota Mail-In Rebate Class) 254. Plaintiffs incorporate the foregoing allegations as if fully set forth herein. 41 255. The North Dakota Unfair Trade Practices Law § 51-15-01, et seq. (“UTPL”), prohibits unfair or deceptive acts or practices in connection with consumer transactions. 256. The UTPL applies to Menards’ actions and conduct described herein because the unfair and deceptive acts or practices occurred in connection with the sale or advertisement of merchandise within the meaning of UTPL § 51-15-01. 257. Further, under § 51-15-02, the UTPL prohibits false advertising in connection with the sale or advertisement of any merchandise. 258. As a corporation, Menards is a “person” as defined by UTPL § 51-15-01. 259. Menards’ actions in affirmatively representing and advertising specific rebates and then failing to pay offends public policy, deceived Plaintiffs and the North Dakota Mail-In Rebate Class as described herein, and have resulted, and will result in, damages to Plaintiffs and the members of the North Dakota Mail-In Rebate Class. 260. Upon information and belief, and given the fact that Menards offered, implemented and/or managed the Menards rebate program, Menards knew or should have known that it deceptively and unfairly advertised the Menards rebate program to consumers, and misrepresented the amount of the rebate checks mailed to customers. 261. Specifically, Menards promised consumers, through its “11% Off Everything” rebate promotion, that if they purchased any product at Menards during the promotion and timely sent in a completed rebate form, they would receive a rebate check amounting to 11% of the value of their purchase within six to eight weeks. 262. Despite those promises, Menards did not provide a full rebate check to the North Dakota Mail-In Rebate Class and minimized its rebate obligations. 263. Menards also sent Plaintiffs’ rebate checks far outside the six to eight week processing period, if it sent the checks at all. 42 264. Defendant represented to consumers that the “after mail-in rebate” prices listed in store could feasibly be obtained by the average consumer following the prescribed rebate process. 265. As a direct and proximate cause of Menards’ deceptive and unfair trade practices, Plaintiffs and the North Dakota Mail-In Rebate Class suffered actual damages, including monetary losses for the amount of the rebate check they should have (but did not) received, as well as monetary losses for the purchase price of the product altogether (as they would have chosen not to purchase the product or to purchase it elsewhere). 266. Menards’ failure to fully and timely fulfill its rebate obligations to Plaintiffs and the North Dakota Mail-In Rebate Class members was unfair, deceptive, and misleading. 267. Menards’ conduct is in violation of the UTPL and Plaintiffs and the members of the North Dakota Mail-In Rebate Class are thus entitled to damages totaling twice the amount of pecuniary loss, costs, reasonable attorney’s fees, injunctive relief prohibiting Defendant’s unfair and deceptive advertising going forward, and any other penalties or awards that may be appropriate under applicable law. NINTH CAUSE OF ACTION Violation of the Ohio Consumer Sales Practices Act Ohio Rev. Stat. Ann. § 1345.01, et seq. (On Behalf of Plaintiffs and the Ohio Mail-In Rebate Class) 268. Plaintiffs incorporate the foregoing allegations as if fully set forth herein. 269. The Ohio Consumer Sales Practices Act § 1345.01, et seq. (“CSPA”), prohibits unfair or deceptive acts or practices in connection with consumer transactions. 270. The CSPA applies to Menards’ actions and conduct described herein because the unfair and deceptive acts or practices occurred in connection with trade or commerce within the meaning of § 1345.01 (A). 271. As a corporation, Menards is a “person” as defined by § 1345.01 (B). 43 272. Menards’ actions in affirmatively representing and advertising specific rebates and then failing to pay offends public policy, deceived Plaintiffs and the Ohio Mail-In Rebate Class as described herein, and have resulted, and will result in, damages to Plaintiffs and the members of the Ohio Mail- In Rebate Class. 273. Upon information and belief, and given the fact that Menards offered, implemented and/or managed the Menards rebate program, Menards knew or should have known that it deceptively and unfairly advertised the Menards rebate program to consumers, and misrepresented the amount of the rebate checks mailed to customers. 274. Specifically, Menards promised consumers, through its “11% Off Everything” rebate promotion, that if they purchased any product at Menards during the promotion and timely sent in a completed rebate form, they would receive a rebate check amounting to 11% of the value of their purchase within six to eight weeks. 275. Despite those promises, Menards did not provide a full rebate check to the Ohio Mail- In Rebate Class and minimized its rebate obligations. 276. Menards also sent Plaintiffs’ rebate checks far outside the six to eight week processing period, if it sent the checks at all. 277. Defendant represented to consumers that the “after mail-in rebate” prices listed in store could feasibly be obtained by the average consumer following the prescribed rebate process. 278. In conjunction with the violations of CSPA, set forth above, Defendant violated § 4165.02 (11) of the Uniform Deceptive Trade Practices Act (“DTPA”) which proscribes “advertis[ing] goods or services with intent not to sell them as advertised.” 279. As a direct and proximate cause of Menards’ deceptive and unfair trade practices, Plaintiffs and the Ohio Mail-In Rebate Class suffered actual damages, including monetary losses for the amount of the rebate check they should have (but did not) received, as well as monetary losses for 44 the purchase price of the product altogether (as they would have chosen not to purchase the product or to purchase it elsewhere). 280. Menards’ failure to fully and timely fulfill its rebate obligations to Plaintiffs and the Ohio Mail-In Rebate Class members was unfair, deceptive, and misleading. 281. Menards’ conduct is in violation of the CSPA and Plaintiffs and the members of the Ohio Mail-In Rebate Class are thus entitled to damages totaling twice the amount of pecuniary loss, costs, reasonable attorney’s fees, injunctive relief prohibiting Defendant’s unfair and deceptive advertising going forward, and any other penalties or awards that may be appropriate under applicable PRAYER FOR RELIEF WHEREFORE, Plaintiffs, on behalf of themselves and the Classes, respectfully requests that this Court enter an order:  Certifying this case as a class action on behalf of the Classes defined above, appointing Plaintiffs as class representatives and appointing their counsel as class counsel;  Declaring that Defendant’s actions, as set out above, constitute (i) violations of the consumer protection laws stated above, (ii) breach of contract, (iii) breach of the implied covenant of good faith and fair dealing, and (iv) unjust enrichment (in the alternative to breach of contract);  Awarding injunctive and other equitable relief as necessary to protect the interests of the Classes, including, inter alia, an order prohibiting Menards from engaging in the wrongful and unlawful acts described herein;  Awarding damages to Plaintiffs and the Classes in an amount to be determined at trial, or, in the alternative, awarding restitution to Plaintiffs and the Classes in an amount to be determined at trial, and requiring Menards to disgorge all amounts by it was unjustly enriched;  Awarding Plaintiffs and the Classes their reasonable litigation expenses and attorneys’ fees;  Awarding Plaintiffs and the Classes pre- and post-judgment interest, to the extent allowable; and  Awarding such other and further relief as equity and justice may require. 45 JURY DEMAND Plaintiffs demand a trial by jury for all issues so triable. Respectfully submitted, __/s/Eric J. Haag_____________________ Eric J. Haag Atterbury, Kammer & Haag, S.C. 8500 Greenway Blvd., Suite 103 Middleton, WI 53562 Telephone:(608) 821-4600 Fax:(608)821-4610 E-mail: [email protected] Sabita J. Soneji V Chai Oliver Prentice Tycko & Zavareei LLP 1970 Broadway, Suite 1070 Oakland, CA 94612 Telephone: (510) 254-6808 Facsimile: (202) 973-0950 E-mail: [email protected] Attorneys for Plaintiffs, individually and on behalf of a class of similarly situated individuals 46

consumer fraud

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND (Southern Division) COMFORT KAAKYIRE * 17661 Kohlhoss Road * Poolesville, MD 20837-2190 * * On Her Own Behalf and on Behalf of All * Others Similarly Situated, * * Plaintiff, * * vs. * Civil No. ______________ * KING BUICK GMC, LLC * 16200 South Frederick Avenue * Gaithersburg, MD 20877 * SERVE ON:` * Conrad V. Aschenbach * C/O King Pontiac Buick GMC, LLC * 16200 South Frederick Avenue * Gaithersburg, MD 20877 * * KING LINCOLN, INC. * 953 North Frederick Avenue * Gaithersburg, MD 20879 * SERVE ON: * Conrad V. Aschenbach * 16200 South Frederick Ave. * Route 355 * Gaithersburg, MD 20760 * * KING AUTO OF SILVER SPRING, LLC * 3221 Automobile Boulevard * Silver Spring, MD 20904 * SERVE ON: * Elizabeth Anne Mendelson * 3221 Automobile Boulevard * Silver Spring, MD 20904-4909 * * KING VEHICLES, LLC * 16160 Frederick Road * Gaithersburg, MD 20877 * SERVE ON: * William Henry Aschenbach * 16160 Frederick Road * Gaithersburg, MD 20877-4011 * * KING HAGERSTOWN MOTORS LLC * 1714 Massey Boulevard * Hagerstown, MD 21740 * SERVE ON: * Conrad V. Aschenbach * 16200 Frederick Rd. * Gaithersburg, MD 20989 * * KING VOLKSWAGEN, LLC * 979 North Frederick Avenue * Gaithersburg, MD 20879 * SERVE ON: * Stephen C. Winter * Suite 300 * 600 Washington Avenue * Towson, MD 21204 * * Defendants. * * * * * * * * * * * * * * * CLASS ACTION COMPLAINT Plaintiff Comfort Kaakyire (“Plaintiff” or “Named Plaintiff”), on her own behalf and on behalf of all others similarly situated, by and through her attorneys Richard S. Gordon, Stacie F. Dubnow, and Thomas M. McCray-Worrall of Gordon & Wolf, Chtd. and Mark H. Steinbach, Of Counsel to O’Toole Rothwell, alleges and states as follows: I. INTRODUCTION 1. This is a Class Action Complaint against King Buick GMC, LLC (“King Buick”), King Lincoln, Inc., King Auto of Silver Spring, LLC, King Vehicles, LLC, King Hagerstown Motors LLC, and King Volkswagen, LLC (hereinafter collectively “King Auto Group”), for violating, conspiring to violate, and aiding and abetting the violation of, the statutory and common law obligations governing motor vehicle sales that provide significant safeguards to consumers purchasing used vehicles, as well as for violating the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (“RICO”), the Maryland Consumer Protection Act (“CPA”), MD. CODE ANN., COMM. LAW §§ 13-301 et seq., the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq., and the Maryland common law. 2. Named Plaintiff and the Class are persons who purchased from one of Defendants’ dealerships in Maryland a motor vehicle previously used for a non-consumer purpose, who were not provided notice of such use as required under Maryland law; that is, the used motor vehicle previously was used as a short-term rental without disclosure of such use. 3. As the Maryland Motor Vehicle Administration (“MVA”) recognized when it enacted COMAR regulations requiring disclosure of prior short-term rental use, many vehicle buyers seek to avoid vehicles used for short-term rentals because of the perception and expectation that these vehicles are driven hard by drivers who care little about them, may not have been well or consistently maintained, and more often are involved in accidents than vehicles used for personal, family, and household purposes. 4. Defendants failed to disclose and intentionally concealed from Named Plaintiff and the Class the material fact that vehicles sold to them previously were used as short-term rentals. In so doing, Defendants violated a clear and explicit disclosure requirement governing motor vehicle sales in Maryland and caused damages and losses to Named Plaintiff and members of the Class. This suit seeks to end Defendants’ illegal sales practices and obtain compensation for the losses sustained by Named Plaintiff and members of the Class. 5. Defendants conspired among themselves, by agreement and understanding, to engage in the unlawful acts and omissions described herein. 6. Defendants associated together under the non-incorporated “King Auto Group” umbrella to advertise, market and, upon information and belief, otherwise conduct business as one entity. All of the Defendants share the moniker “King” in their corporate names and jointly hold themselves out to the general public under the name King Auto Group. As described further below, Defendants jointly market and sell used vehicles on their own behalf and on behalf of each other without the mandatory disclosures required by Maryland law. 7. Although “King Auto Group” is not registered with the Maryland Department of Assessments and Taxation, Defendants conduct business using this name and have established a central website, http://www.KingAuto.com. This joint website solicits business for and provides links to the websites of each entity within the King Auto Group and specifically advertises the entities’ availability for auto sales or service in locations, inter alia, such as Silver Spring, Gaithersburg and Hagerstown. http://www.KingAuto.com (retrieved July 29, 2013). 8. Defendants not only jointly use the King Auto Group moniker and the King Auto Group website to market and sell used vehicles, but as part of and in furtherance of their scheme, Defendants additionally use each of their individual websites to advertise their own used vehicles as well as the used vehicles owned by their co-conspirators. Defendants’ individual websites contain links to the websites of other Defendants, market the identical used vehicles (including vehicles previously used for short-term rentals) being sold on other Defendants’ websites, and refer customers from one Defendant to another for information and sales. 9. King Auto Group agreed to develop and use form documents, and used such form documents, in the course of its used vehicle sales. In addition, Defendants associated together to present themselves to their customers and the world as one entity, even though the members of the King Auto Group association are separately incorporated. As stated, Defendants market themselves through a common website and deliberately use the moniker “King Auto Group” as a way of branding the dealerships and making themselves appear as part of a large umbrella entity that enjoys “family” ownership characteristics. This association is marketed as part of a large, legitimate enterprise that certainly would abide by Maryland law. 10. Through their association, Defendants developed and agreed upon the uniform and systematic scheme described herein to acquire and sell prior short-term rental vehicles to consumers without the disclosures required by Maryland law, with misleading and fraudulent omissions and representations concerning the history of the used vehicles being sold, and with the specific intent to deceive and defraud Named Plaintiff and members of the Class. As a result of this scheme, Named Plaintiff and members of the Class were damaged. 11. The King Auto Group entities purchase a large number of used vehicles previously used as short-term rentals. On information and belief, Defendants collectively negotiate favorable purchase agreements with multiple rental car companies. Defendants also purchase a large number of rental vehicles through dealer auctions and from the general public and systematically place these vehicles on the used car lots of King Auto Group entities alongside other used vehicles that were not used as short-term rentals. At the time of the vehicle purchases by Named Plaintiff and the Class, the King Auto Group took no steps to differentiate for its customers one car (the prior short-term rental) from the next (the vehicle previously used only for personal use). 12. Because prior short-term rental vehicles are harder to sell and consistently result in a lower selling price, the King Auto Group entities conceal the prior use of these vehicles as short-term rentals at the point of purchase by uniformly and consistently failing to provide the consumer with a clear and conspicuous written disclosure of the vehicle’s rental history as required by Maryland law. Defendants’ affirmative acts and concealments violate federal law, as well as Maryland’s motor vehicle laws, common law, and consumer protection law. 13. Defendants’ violations of both federal and Maryland law, as well as their conduct in conspiring to violate, and aiding and abetting the violation of, Maryland law have enriched them unjustly at the expense of hundreds and potentially thousands of Maryland consumers. 14. King Auto Group’s use of form vehicle sales agreements and other form documents to conceal the prior rental history of the vehicles sold to Named Plaintiff and Class members, as well as its uniform non-disclosures and affirmative misrepresentations on those forms, make this case particularly suitable for resolution through a class action lawsuit. 15. Upon information and belief, one or more of the owners of individual King Auto Group entities also enjoy at least a partial ownership interest in some or all of the remaining individual King Auto Group entities and share or obtain the benefit of key management personnel from the other King Auto Group entities. 16. The King Auto Group entities named as Defendants acted in concert to accomplish, and jointly benefitted from, the scheme described herein. II. PARTIES 17. Named Plaintiff Comfort Kaakyire is a resident of Montgomery County, Maryland. On March 17, 2011, Ms. Kaakyire purchased a used 2008 Saturn Outlook from an entity that then held itself out as “King Pontiac Buick GMC”; this entity currently is known and doing business as King Buick GMC, LLC (“King Buick”). An Internet search of the trade name “King Pontiac Buick GMC” directs the searcher to the website www.KingAuto.com. Unbeknownst to Comfort Kaakyire at the time of sale, the vehicle she purchased previously was used for purposes other than as a consumer good. Defendants failed to disclose to Ms. Kaakyire clearly and conspicuously that this vehicle previously was used for a purpose other than as a consumer good or, specifically, that it had been used as a short-term rental. A copy of Ms. Kaakyire’s Buyer’s Order is attached as Exhibit A. 18. Defendant King Buick GMC, LLC, formerly known as King Pontiac Buick GMC, LLC, t/a King Buick GMC, is a Maryland entity whose principal place of business is located at 16200 South Frederick Avenue, Gaithersburg, Maryland 20877, which regularly engages in motor vehicle sales in Montgomery County. King Buick GMC, LLC is an entity that owns and operates car dealerships located in the state of Maryland and is primarily engaged in selling new and used vehicles to consumers on its lot and on the Internet, both on its own behalf and on behalf of its co-conspirators. Ms. Kaakyire purchased her used vehicle from King Buick GMC. 19. Defendant King Lincoln, Inc., formerly known as King Lincoln-Mercury, Inc., t/a King Kia, is a Maryland corporation whose principal place of business is located at 953 North Frederick Avenue, Gaithersburg, Maryland 20879, which regularly engages in motor vehicle sales in Montgomery County. King Lincoln, Inc. is an entity that owns and operates car dealerships located in the state of Maryland and is primarily engaged in selling new vehicles to consumers on its lot and new and used vehicles on the Internet, both on its own behalf and on behalf of its co-conspirators. 20. Defendant King Auto of Silver Spring, LLC, formerly t/a as “King Kia of Silver Spring” and “Kia of Silver Spring,” is a Maryland corporation whose principal place of business is located at 3221 Automobile Boulevard, Silver Spring, Maryland 20904, which regularly engages in motor vehicle sales in Montgomery County. King Auto of Silver Spring, LLC is an entity that owns and operates car dealerships located in the state of Maryland and is primarily engaged in selling new and used vehicles to consumers on its lot and on the Internet, both on its own behalf and on behalf of its co-conspirators. 21. Defendant King Vehicles, LLC, t/a King Mitsubishi and/or King Mitsubishi Fuso, is a Maryland entity whose principal place of business is located at 16160 Frederick Road, Gaithersburg, Maryland 20877, which regularly engages in motor vehicle sales in Montgomery County. King Vehicles, LLC owns and operates car dealerships located in the state of Maryland and is primarily engaged in selling new vehicles to consumers on its lot and new and used vehicles on the Internet, both on its own behalf and on behalf of its co-conspirators. 22. Defendant King Hagerstown Motors LLC, t/a Hagerstown Ford and/or as King Auto, is a Maryland entity whose principal place of business is located at 1714 Massey Boulevard, Hagerstown, Maryland 21740, which regularly engages in motor vehicle sales to Montgomery County residents. King Hagerstown Motors LLC is an entity that owns and operates car dealerships located in the state of Maryland and is primarily engaged in selling new and used vehicles to consumers on its lot and on the Internet, both on its own behalf and on behalf of its co-conspirators. 23. Defendant King Volkswagen, LLC, t/a King Volkswagen, is a Maryland entity whose principal place of business is located at 979 North Frederick Avenue, Gaithersburg, Maryland 20879, which regularly engages in motor vehicle sales in Montgomery County. King Volkswagen, LLC owns and operates car dealerships located in the state of Maryland and is primarily engaged in selling new and used vehicles to consumers on its lot and on the Internet, on both its own behalf and on behalf of its co-conspirators. III. JURISDICTION AND VENUE 24. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331 (Federal Question), and 28 U.S.C. § 1367 (Supplemental Jurisdiction). 25. Venue is proper in this District because, under 28 U.S.C. § 1391(b), a substantial part of the events or omissions giving rise to the claims herein occurred within this District, Named Plaintiff resides in this District, and the Defendants all systematically and continually transact business in this District. IV. FACTS APPLICABLE TO ALL COUNTS 26. This is an action against the Defendants resulting from their uniform and consistent failure to disclose that hundreds, if not thousands, of vehicles sold to consumers were prior short-term rentals; this action also results from Defendants’ conspiracy to conceal and not disclose the rental history of those vehicles, and from their conduct in aiding and abetting the above-described unlawful conduct. 27. King Auto Group acquires its inventory of used motor vehicles from a variety of sources, including direct purchases from consumers, auto auctions, and car rental companies. 28. At the time a vehicle is purchased for resale on one of its lots located in the State of Maryland, Defendants know, and have information available to them, that identifies the prior use of the vehicle for short-term rentals. 29. In accordance with the disclosure provisions of COMAR 11.12.01.14(M)(1), motor vehicle dealers in Maryland must disclose to a prospective purchaser a vehicle’s prior use for any purpose other than as a consumer good “clearly and conspicuously” in writing. This disclosure must specifically indicate, clearly and conspicuously, that the vehicle previously was used as a “short-term rental vehicle.” 30. For more than thirty years, COMAR (currently codified in 11.12.01.14(M)) has provided that: (1) Vehicles formerly used for a purpose other than a consumer good shall be clearly and conspicuously identified as to their former use. This includes, but is not limited to, vehicles formerly used: (a) For public or governmental purposes and normally driven by multiple drivers; (b) As executive driven vehicles; (c) As demonstrators; (d) For driver training; (e) As taxicabs; or (f) As short-term rental vehicles. (2) The word “commercial”, or similar ambiguous terms, may not be used to describe these vehicles. 31. Consequently, Maryland dealers must clearly and conspicuously disclose when the vehicles they offer for sale have been used as short-term rental vehicles. 32. However, King Auto Group does not make this mandated disclosure to buyers. At all times relevant to this Complaint, it has been the standard practice of Defendants to conceal or otherwise fail to disclose to customers a vehicle’s prior use as a short-term rental as required by Maryland law. 33. Defendants are well aware of their duty to clearly and conspicuously disclose to retail buyers any prior short-term use of used vehicles. However, King Auto Group upon information and belief has an unwritten but understood company-wide policy in effect at all of Defendants’ dealerships that does not provide for clear and conspicuous disclosure of the former use of a used vehicle for a purpose other than as a consumer good. 34. Indeed, as part of the fraudulent scheme alleged herein, Defendants agreed to employ, and did employ, standard sales agreements that contain a section expressly requiring disclosure of prior non-consumer vehicle use, including prior short-term rental use, reflecting their knowledge that Maryland law mandates such disclosure. 35. But rather than provide a sales agreement form on which any disclosure of prior short-term rental use would be readily noticeable – for example, by making the disclosure in LARGE BOLD PRINT or in a different color as the MVA contemplates in COMAR 11.12.01.14A(2) – Defendants deliberately designed their standard sales agreement in a manner calculated to not draw attention to any disclosure of prior rental or other commercial use, through what must be called a “non-disclosure disclosure.” See, for example, the sales agreement form Defendant King Buick provided to the Named Plaintiff, attached as Exhibit A. The print Defendants used to facilitate disclosure of prior rental use is measurably smaller than the print elsewhere on the sales agreement; no effort is made to draw the customer’s attention to what purportedly is being disclosed about a vehicle’s prior use. 36. Regardless, Defendants did not give any indication on the sales agreements of Named Plaintiff or any other members of the Class of their vehicles’ rental history, thereby concealing material facts related to their transactions. In all cases, the result was the same – Defendants managed to systematically and routinely sell a prior short-term rental vehicle without disclosing that history to the buyer. 37. As part of its scheme to mislead customers into believing that vehicles used for prior short-term rentals were never put to such use, King Auto Group dealerships further agreed to employ, and from time to time did employ, a form entitled “Disclosure of Prior Vehicle Use for Dealership or Commercial Purposes” (hereafter “Prior Use Acknowledgment Form”). This form, which upon information and belief is provided to buyers only after they have signed the sales agreement and thus become legally bound to purchase a vehicle, does not provide the “clear and conspicuous” disclosure of prior non-consumer use required by law. 38. Nonetheless, after obtaining the customer’s signature on the vehicle sales contract, the King Auto Group provides its customer with a Prior Use Acknowledgment Form. This form contains a series of pre-printed boxes that Defendants may check to disclose, for example, if a vehicle previously has been used for leases or short-term rentals, as a taxicab, or for another non-consumer purpose. However, Defendants failed to disclose and affirmatively misrepresented the prior rental use of the vehicles they sold to consumers on this form. By regularly and systematically failing to check any of the boxes on this form, King Auto Group concealed, and conspired to conceal, from Named Plaintiff and Class members the material fact that the vehicles sold to them had no former use other than as consumer goods, had none of the prior commercial uses indicated on the form and, in particular, had not been used for prior short- term rentals. 39. King Auto Group’s representations to Named Plaintiff and Class members on their contracts of sale and Prior Use Acknowledgement Forms that the vehicles they were buying had not been used for prior short-term rentals constituted affirmative misrepresentations by King Auto Group concerning these vehicles’ former use. Further, as part of the scheme alleged herein, Defendants uniformly and consistently failed to place an “X” or checkmark in the box directly next to the space provided for disclosure of a “Rental/Lease Vehicle” on the Prior Use Acknowledgment Form to indicate to purchasers that the vehicle previously was rented or leased, even when Defendants knew this representation was false. However, even had this box been marked, such a “disclosure” would not have constituted the “clear and conspicuous” disclosure of prior short-term rental use required by COMAR 11.12.01.14(M). 40. As a result, Defendants committed overt acts in furtherance of the fraudulent scheme and conspiracy alleged herein by: (1) failing to clearly and conspicuously disclose and concealing prior rental use on the vehicle sales agreements of Named Plaintiff and the Class, (2) failing to disclose and concealing the prior short-term rental use of vehicles on the Prior Use Acknowledgement Forms provided to Named Plaintiff and the Class; and (3) failing to disclose prior short-term rental use on Prior Use Acknowledgment Forms without obfuscating the disclosure by adding the ambiguous words “Rental/Lease Vehicle” to any disclosure of prior rental use. 41. Just as Defendant King Buick failed to provide clear and conspicuous disclosure to Ms. Kaakyire of the prior short-term rental use of the used vehicle sold to her, each of the following King Auto Group Defendants upon information and belief similarly failed to provide clear and conspicuous disclosure to putative Class members in the offers for sale and sales of their used vehicles. Upon information and belief, Defendants King Volkswagen, LLC, King Hagerstown Motors, LLC and King Auto of Silver Spring, LLC failed to disclose clearly and conspicuously the prior short-term rental use of used vehicles sold to putative Class members in the following transactions in which the titles to such vehicles were transferred to putative Class members on the following dates: Vehicle Description VIN Defendant Approx. Vehicle Sale Date 1/27/10 2008 Volkswagen Jetta S 3VWJZ71K78M059961 King Volkswagen, LLC 3/4/10 2008 Mazda Mazda6I 1YVHP80C285M00223 King Volkswagen, LLC 4/10/10 2008 Kia Spectra EX/LX KNAFE121785544840 King Volkswagen, LLC 4/23/10 2009 Kia Sedona EX/LX KNDMB233896272500 King Volkswagen, LLC 1/7/11 2009 Kia Rondo LX/EX KNAFG528397251439 King Volkswagen, LLC 7/20/10 2009 Chevrolet HHR LT 3GNCA53V89S586314 King Hagerstown Motors, LLC 12/7/10 2009 Ford Fusion SEL 3FAHP08179R116245 King Hagerstown Motors, LLC 1/13/11 2010 Ford Econoline E350 Super Duty 1FBNE3BL2ADA21818 King Hagerstown Motors, LLC 2/8/11 2010 Ford Fusion SE 3FAHP0HA3AR132396 King Hagerstown Motors, LLC 2/22/11 2010 Ford Focus SE 1FAHP3FN3AW111133 King Hagerstown Motors, LLC 5/19/10 2009 Mazda Mazda5 JM1CR293290340422 King Auto of Silver Spring, LLC 6/1/10 2009 Chrysler Sebring Touring/Limited 1C3LC56B39N517551 King Auto of Silver Spring, LLC 6/5/10 2008 Ford Fusion SE 3FAHP07128R260141 King Auto of Silver Spring, LLC 6/25/10 2009 Chrysler 300 Touring 2C3KA53V59H621838 King Auto of Silver Spring, LLC 7/8/10 2009 Kia Spectra EX/LX KNAFE221895596856 King Auto of Silver Spring, LLC 42. Defendants King Lincoln, Inc. and King Vehicles, Inc. are not included in the above table because, upon information and belief, these two Defendants did not sell prior short- term rental vehicles in their own names but, rather, routinely sold these vehicles through their King Auto Group co-conspirators – King Buick, King Volkswagen, LLC, King Hagerstown Motors, LLC or King Auto of Silver Spring, LLC. As a result, although King Lincoln, Inc. and King Vehicles, Inc. marketed prior rentals to consumers, other King Auto Group Defendants consummated these sales on behalf of these two Defendants as part of and in furtherance of Defendants’ conspiracy, agreements, and aiding and abetting of one another’s illegal acts as set forth in this Complaint. 43. Defendants further participated in the above-described conspiracy by, among other things, agreeing to market, and by marketing, other Defendants’ used vehicles on their websites, by jointly advertising the identical vehicle with the identical Vehicle Identification Number (“VIN”) simultaneously on more than one Defendant’s website, by agreeing to refer and by referring customers from one Defendant’s website to another Defendant’s website, by providing contact information from which a customer could obtain additional information concerning a used vehicle owned by that co-conspirator, and by offering Carfax reports on used vehicles owned by co-conspirators which contain embedded links that, when clicked, take the customer either directly to the website of their co-conspirator or to the common KingAuto.com website. 44. By way of example, Hagerstown Motors LLC furnishes Carfax reports for certain used vehicles offered for sale by: (1) King Buick; (2) King Volkswagen, LLC; (3) King Vehicles LLC, and (4) King Lincoln, Inc. Further, King Buick furnishes Carfax reports for certain used vehicles offered for sale by King Lincoln, Inc. and King Volkswagen, LLC; and King Volkswagen, LLC furnishes certain Carfax reports for vehicles offered for sale by King Lincoln, 45. Another example of Defendants’ cross-marketing and cross-selling of vehicles previously used for short term-rentals is the marketing and sale of a used 2009 Kia Rondo, VIN KNAFG528397251439. This prior rental vehicle was first offered for sale by King Kia in Gaithersburg, Maryland between August 20, 2010 and December 20, 2010. Then, on December 21, 2010, the same prior rental vehicle was offered for sale by Hagerstown Ford. Finally, on January 7, 2011, this same prior rental vehicle was sold to a putative Class member by King Volkswagen. Upon information and belief, Defendants sold this vehicle without clearly and conspicuously disclosing its prior short-term rental use as required by Maryland law. 46. By way of additional example, on September 8, 2009, King Buick offered for sale a 2008 Mazda6I, VIN 1YVHP80C285M00223 – a prior short-term rental. On February 4, 2010, King Volkswagen offered this identical vehicle for sale and then, on March 4, 2010, sold this vehicle to a putative Class member 47. Based on the foregoing, Defendants have an agreement to work together to market and sell used vehicles and actively are doing so. Defendants’ cross-marketing and commingling and/or sharing of inventory and Carfax reports is evidence of their cooperation, joint agreements, and use of common procedures and documents to unlawfully sell such used vehicles without the disclosures required by Maryland law. 48. Defendants’ cross-marketing and commingling and/or sharing of inventory and Carfax reports also is evidence of their assistance, aid and substantial encouragement to one another in their sale of used vehicles without the disclosures required by Maryland law. 49. Upon information and belief, Defendants share certain operating expenses and/or profits associated with, among other things, their joint marketing, shared inventories, cross- selling of used vehicles, shared management, and the costs of acquiring and furnishing Carfax reports for one another. 50. At all times relevant to this Complaint, Defendants were aware that the law required clear and conspicuous disclosure of the rental history of a used vehicle and knew that the failure to disclose to retail purchasers such prior use in a clear and conspicuous manner was 51. Each Defendant possessed knowledge that King Buick and the other Defendants routinely failed to disclose clearly and conspicuously and misrepresented to consumers the prior short-term rental use of used vehicles offered for sale and sold to the retail public. 52. As stated, Defendants all used the identical form vehicle sales agreements. These agreements included a space specifically designated for the disclosure of the prior non-consumer use of the vehicles being sold, which Defendants knew did not provide the clear and conspicuous disclosure of prior short-term rental or other commercial use required by Maryland law. 53. Even so, upon information and belief, each Defendant routinely failed to use this space to identify the prior short-term rental use of the vehicles it sold to retail buyers and knew the other King Auto Group Defendants failed to do so as well. Upon information and belief, Defendants instead regularly used this space in their form vehicle sales agreements to misrepresent the vehicles sold to Named Plaintiff and the Class as having no prior short-term rental use. 54. Upon information and belief, Defendants employed the same or similar methodologies for identifying, or failing to identify, vehicles formerly used for a purpose other than as a consumer good in their marketing and sales, and were aware that none of the Defendants were clearly and conspicuously disclosing prior short-term rental use of vehicles to consumers before purchase as required by Maryland law. 55. Upon information and belief, Defendants knew this practice of concealing and misrepresenting the rental history of the used vehicles sold to Named Plaintiff and Class members was uniform throughout all of the King Auto Group dealers. 56. By jointly marketing and cross-selling one another’s used vehicles, using the same form documents in their sales with inadequate disclosure of prior short-term rental, sharing management personnel and operating expenses and profits, developing and implementing the King Auto Group policy governing disclosure of former short-term rental use of vehicles, and referring customers between one another’s dealerships, Defendants provided substantial assistance, aid and encouragement to each other in misrepresenting, concealing and failing to disclose the material rental history of the used vehicles sold by one another, including by King Buick. 57. Defendants knowingly aided, assisted and encouraged each other in their violations of Maryland law by undertaking the acts alleged herein. In particular, Defendants knowingly aided, assisted and encouraged King Buick and one another to violate their respective obligations under Maryland law to disclose the prior short-term rental use of the vehicles sold to Named Plaintiff and other Class members by joining together to engage in the above-described conduct, with the knowledge that their aid, assistance and encouragement to one other would contribute to the commission of tortious acts by the others, including but not limited to a violation of COMAR 11.12.01.14(M). 58. These facts further indicate that all of the Defendants were involved in the transaction of Named Plaintiff as co-conspirators and joint-tortfeasors. As a result, when King Buick failed to disclose and concealed from Ms. Kaakyire the prior rental use of the vehicle she was purchasing, it did so as part of a conspiracy, scheme and concerted action in which all of Defendants participated with their knowledge and consent, as well as with the aid and encouragement of one another. 59. Upon information and belief, pursuant to Defendants’ above-referenced agreement to market and sell used vehicles, Defendants benefited from the profits derived from the sale of used vehicles sold without the clear and conspicuous disclosure of prior short-term rental use required by Maryland law. 60. Upon information and belief, Defendants not only associated as King Auto Group and engaged in the above-described conspiracy to benefit jointly and profit, but did so to advance each Defendant’s own individual interest in the above-described conspiracy and to increase illegally the individual profits, advantage and personal gain of each Defendant. Upon information and belief, each Defendant and/or its respective owners and/or employees had an independent personal stake in its own particular corporation and its profitability, including but not limited to the illegal profits and/or commissions that could be obtained from consumers by selling used vehicles without clearly and conspicuously disclosing a vehicle’s previous short- term rental use. 61. Upon information and belief, payments by Named Plaintiff and the Class to one Defendant actually resulted in separate monetary or other benefits to other Defendants resulting from their conspiracy and association as King Auto Group. Defendants and/or their employees, agents or representatives had both an individual and a collective profit motive in selling prior short-term rental vehicles without disclosing such prior use to consumers. 62. Upon information and belief, the greater the number of used vehicles sold by an individual Defendant without disclosing the prior rental history of such vehicles, the greater the benefit, gain and/or profits to other Defendants and/or to their employees, agents or representatives as a result of the above-described cross-marketing, cross-selling and shared used vehicle inventories and Carfax reports, among other things. 63. As a result of King Auto Group’s scheme to sell prior short-term rentals without the disclosures required by Maryland law, and the other acts, material omissions, affirmative misrepresentations and unfair and deceptive practices described herein, Named Plaintiff and Class members were induced to enter into their transactions and paid significantly more for their vehicles than they were worth. V. FACTS APPLICABLE TO NAMED PLAINTIFF 64. On or about March 17, 2011, Named Plaintiff Comfort Kaakyire purchased a used 2008 Saturn Outlook, VIN 5GZEV23738J148126, from King Pontiac Buick GMC primarily for personal, family and household use. 65. Upon information and belief, this vehicle was advertised on one or more, if not all, of Defendants’ websites. 66. Upon information and belief, each Defendant offered to sell the used 2008 Saturn Outlook, VIN 5GZEV23738J148126 on its website; as a result, each Defendant was legally capable of selling this vehicle to Ms. Kaakyire and of providing, or failing to provide, the disclosures of prior short-term rental use required by Maryland law. 67. Unbeknownst to Comfort Kaakyire on the date of sale, the vehicle previously was titled in the name of a rental car company and previously was used for short-term rentals. Defendants had actual knowledge of this information but did not disclose and intentionally and with actual malice concealed, and conspired to conceal, this information from Named Plaintiff. 68. Defendants were required by Maryland law and, in particular, COMAR 11.12.01.14(M)(1)(f), to disclose clearly and conspicuously in writing to Ms. Kaakyire before purchase that her vehicle previously was used for short-term rentals. Nevertheless, Defendants failed to provide the required clear and conspicuous written disclosure concerning the prior use of the vehicles of Named Plaintiff and other members of the Class on (i) the vehicle sales agreement, (ii) the Prior Use Acknowledgment Form, or (iii) any other document; and Defendants conspired together and aided, abetted and encouraged one another to conceal and misrepresent the prior history of these vehicles. 69. Unbeknownst to Named Plaintiff and the other members of the Class on the date of sale, the vehicles sold to them would not pass without objection in the trade under the contract description, in part because Maryland law requires that the contract describe and disclose clearly and conspicuously the vehicle’s prior use as a short-term rental, and the sales agreement contained no indication of the vehicle’s prior rental history. Accordingly, the vehicles were unmerchantable under Maryland law. 70. As a result of Defendants’ acts and omissions as set forth in this Complaint, Named Plaintiff and other members of the Class were misled as to the prior use of the vehicles and their market values, paid more for the vehicles than they were worth, were denied the opportunity to decline to purchase vehicles previously used for short-term rentals, lost the benefit of their bargains, and have sustained other losses and damages. 71. As part of their regular business practices in Maryland, Defendants systematically and regularly sell, and have conspired to sell, and systematically have aided and abetted their co- conspirators to sell, used vehicles that previously were used as short-term rental vehicles by failing to clearly and conspicuously disclose such prior use to their customers, and by affirmatively concealing such prior use from their customers. 72. In connection with the activities giving rise to this action, Defendants acted with actual malice, intent and knowledge, and with a wanton disregard for the rights of Named Plaintiff and other purchasers. 73. At all times relevant to this Complaint, Defendants conspired with each other to engage in the various activities set forth herein, agreed to participate in the operation of the conspiracy and scheme to defraud Named Plaintiff and Class members, and aided and abetted one another in these activities, all as proscribed by Maryland law. 74. The King Auto Group conspiracy described herein has operated continuously for at least the past five years and has affected numerous consumer transactions through the use of common misleading procedures and form documents that intentionally contained false information and omitted material facts, required by law to be disclosed. Defendants participated and engaged in the conspiracy and were involved in the transactions involving Named Plaintiff and other members of the Class over a period spanning at least five years and involving hundreds if not thousands of transactions. 75. If Named Plaintiff and Class members then had suspected that Defendants were engaged in the fraudulent scheme described herein, at the expense of Named Plaintiff and Class members, they would have refused to conduct business with Defendants, would not have entered into transactions with King Auto Group or Defendants, and would have sought to secure their rights under the law at that time. 76. Named Plaintiff’s and Class members’ injuries to their property further were caused by Defendants’ fraudulent scheme and conspiracy in that Named Plaintiff and Class members were overcharged for their vehicles; upon information and belief, the profits obtained through the fraudulent scheme and conspiracy were split amongst the conspirators according to a prior written contract or other agreement or understanding and used to market the King Auto Group entities as an excellent source of reliable used vehicles sold by reputable family dealers. VI. CLASS ACTION ALLEGATIONS 77. Named Plaintiff brings this action individually and as a class action pursuant to Fed. R. Civ. P. 23 on behalf of a class (the “Class”) defined as follows: All persons who purchased from a King Auto Group dealership in Maryland a used motor vehicle previously used as a short-term rental, who were not provided clear and conspicuous disclosure of such use. 78. Excluded from the Class are those individuals who now are or ever have been King Auto Group executives and the spouses, parents, siblings and children of all such individuals. 79. This Complaint covers the time period up to the resolution of this case. The statutes of limitations under each cause of action asserted herein are inapplicable to the Class members’ claims based on the acts of omission and wrongful conduct by Defendants, as set forth herein, which equitably tolled the limitations period(s) under the circumstances described herein. 80. Named Plaintiff and other members of the Class, despite the exercise of due diligence, and due to their reliance on the accuracy and truthfulness of documents provided by Defendants, did not and could not have discerned their causes of action against Defendants due to Defendants’ fraudulent concealment of the prior rental history of the vehicles sold to Named Plaintiff and the Class. 81. Named Plaintiff and Class members failed to discover the facts that are the basis for their claims because the documentation Defendants provided to them purported to give them all necessary legal disclosures regarding the prior use of their vehicles, creating a false sense of security and preventing Named Plaintiff and Class members from becoming aware of a need or reason for inquiry into the adequacy, truthfulness or completeness of the disclosures received from Defendants prior to the purchase of their vehicles. 82. Named Plaintiff and Class members were not aware of any facts that should have provoked their inquiry. 83. The Class, as defined above, is identifiable. Named Plaintiff is a member of the 84. On information and belief, the Class consists of hundreds and perhaps thousands of individuals and thus is so numerous that joinder of all members is impracticable. 85. There are questions of law and fact that not only are common to the Class, but predominate over any questions affecting only individual Class members. The common and predominating questions include, but are not limited to: a. Whether Defendants failed to provide clear and conspicuous notice in writing to customers of the vehicles’ prior use as short-term rentals; b. Whether Defendants affirmatively concealed from their customers the vehicles’ prior use as short-term rentals; c. Whether Defendants conspired together to conceal and misrepresent in a systematic and uniform way the prior short-term rental history of vehicles sold by their dealerships; d. Whether Defendants conspired together to develop and use form documents geared to conceal the prior rental history of vehicles sold by their dealerships; e. Whether Defendants are liable to Named Plaintiff and members of the Class for damages resulting from their pattern of selling vehicles that previously were used as short-term rentals without disclosing this information to their customers; f. Whether Defendants had knowledge that the vehicles sold previously were used as short-term rentals or for purposes other than as consumer goods; g. Whether declaratory and injunctive relief is proper to prevent Defendants from continuing to sell vehicles that previously were used as short-term rentals without disclosure to prospective customers; h. Whether Defendants’ failure to disclose the prior short-term rental use of the vehicles they sold was an unfair and deceptive trade practice; i. Whether Defendants’ affirmative concealment of the prior short-term rental use of the vehicles they sold was an unfair and deceptive trade practice; j. Whether Defendants negligently misrepresented the value of vehicles previously used for short-term rentals to their customers; k. Whether Defendants negligently failed to disclose the vehicles’ prior use for short-term rentals to their customers; l. Whether under an implied warranty, a vehicle would pass without objection in the trade under the contract description when Defendants failed to disclose and/or misrepresented the vehicle’s prior use as a short-term rental on the sales agreement; m. Whether Defendants conspired to engage in the violations of Maryland law described herein; n. Whether Defendants tortiously aided and abetted the violations of Maryland law described herein; o. Whether Defendants engaged in a pattern of “racketeering activity” as defined by § 1961(5) of 18 U.S.C. § 1961 et seq., and p. Whether the statutes of limitations applicable to each of the causes of action asserted herein have been equitably tolled by Defendants’ wrongful or fraudulent concealment, despite due diligence of Named Plaintiff and members of the Class. 86. The claims of the Named Plaintiff are typical of the claims of each member of the Class within the meaning of FED. R. CIV. P. 23(a)(3), and are based on and arise out of similar facts constituting Defendants’ wrongful conduct. 87. Named Plaintiff will fairly and adequately protect the interests of the Class. Named Plaintiff has no conflicts of interest with the Class. 88. The prosecution of separate actions by individual members of the Class would create a risk of establishing incompatible standards of conduct for Defendants, within the meaning of FED. R. CIV. P. 23 (b)(1)(A). 89. Defendants’ actions are generally applicable to the Class as a whole, and Plaintiff seeks equitable remedies with respect to the Class as a whole, within the meaning of FED. R. CIV. P. 23 (b)(2). 90. The common questions of law and fact enumerated above predominate over questions affecting only individual members of the Class, and a class action is the superior method for fair and efficient adjudication of the controversy, within the meaning of FED. R. CIV. P. 23 (b)(3). The likelihood that individual members of the Class will prosecute separate actions is remote due to the time and expense necessary to conduct such litigation. 91. Named Plaintiff’s counsel are experienced and competent in class actions and complex consumer litigation and foresee little difficulty in the management of this case as a class VII. CIVIL RICO SUMMARY 92. At all times relevant to this Complaint, the “enterprise” King Auto Group, a non- incorporated, informal association-in-fact formed by the Defendants, operated separately and distinct from each of the individual Defendants. 93. All of the Defendants were entities capable of holding a legal or beneficial interest in property and were associated with King Auto Group. 94. Defendants knowingly participated in the scheme to defraud Named Plaintiff and the Class by concealing and failing to disclose the prior rental use of the vehicles they sold, and they used the U.S. mails and electronic or telephonic communications for the purpose of executing this scheme. 95. In addition, Defendants and King Auto Group were engaged in, and affected, interstate commerce in that, inter alia, the vehicle sales that are the subject of the scheme to defraud were consummated in Maryland using vehicles that in many circumstances were purchased out-of-state for sale in Maryland. In many instances, Defendants wired funds or mailed checks from Maryland to persons outside of Maryland to pay for prior short-term rentals later sold within Maryland. In other instances, transactions were funded by wire or check or electronic credit or debit transactions that originated from, or were transmitted to, a party located outside of Maryland. Additionally, the U.S. mails and/or wires were utilized in connection with the acquisition, marketing and sale of the vehicles that are the subject of this Complaint. 96. In furtherance of their fraudulent scheme, Defendants also on numerous occasions used and caused to be used mail depositories of the U.S. Postal Service by both placing and causing to be placed mailable matters in said depositories and by removing and causing to be removed mailable matters from said depositories. These mailings included, but were not limited to, the mailing by Defendants of documents related to the registration of motor vehicles purchased and sold by Defendants with the MVA; the distribution of illicit proceeds of the racketeering conspiracy; the mailing and distribution among Defendants of contracts, form sale and credit agreements, and other documents used in the transactions of Named Plaintiff and the Class; and the mailing of additional documents that facilitated the operation of Defendants’ fraudulent scheme. 97. During all relevant times, and in furtherance of and for the purpose of executing the fraudulent scheme described herein, Defendants also used the wires to execute the above- described fraudulent scheme. Defendants and their co-conspirators on hundreds if not thousands of occasions used, and caused to be used, telephone, Internet and other wire transmissions including, but not limited to, use of the wires in the sale of vehicles previously used as prior short-term rental vehicles to Named Plaintiff and members of the Class; in the emailing, faxing and transmission by wire of documents such as loan applications, vehicles sales and financing contracts and other documents related to the sale and financing of vehicles by Defendants to potential assignees in the transactions of Named Plaintiff and Class members who financed their vehicles with Defendants; in the electronic registration and titling system established with the MVA; and in the marketing of their enterprise “King Auto Group” and its vehicles on the Internet – with the intent to defraud and in furtherance of their scheme to defraud. 98. For example, Defendants used the wires to market their goods and services under the King Auto Group brand and to market the vehicles they sold via the Internet and via the www.KingAuto.com and associated websites. Defendants used the Internet and the wires in connection with the sale of hundreds, if not thousands, of vehicles sold to members of the Class by providing a forum in which customers could search for and receive information regarding vehicles offered for sale by Defendants, including the prior rental vehicles sold by Defendants. 99. Upon information and belief, on or before March 17, 2011, Defendants used the wires to advertise the vehicle sold to Ms. Kaakyire on the Internet, without the required clear and conspicuous disclosure of this vehicle’s prior use as a short-term rental required by Maryland 100. Upon information and belief, Defendants used the wires to advertise the vehicles of hundreds if not thousands of other consumers in the same way. For example, on or before February 18, 2012, Defendants also used the wires to advertise a vehicle sold to Latechia Sahrell T. Chambers on the Internet, without the required clear and conspicuous disclosure of this vehicle’s prior use as a short-term rental required by Maryland law. On February 18, 2012, Defendants sold to Ms. Chambers a 2010 Daimler Dodge Caliber SXT, VIN 1B3CB4HA7AD655943, without providing the clear and conspicuous disclosure required by Maryland law. Ms. Chamber’s vehicle sales agreement failed to disclose that the vehicle sold to her previously was used for short-term rentals, and it affirmatively misrepresented that the vehicle previously was not used for any non-consumer purpose. 101. Defendants also used the wires to advertise to putative Class members the vehicles previously used as short-term rentals (without disclosure of prior rental use) as set forth in the table found in ¶ 41 herein. 102. Defendants further used the wires to send and receive purchase orders, retail installment contracts, and other documents among their co-conspirators, funding lenders, and other entities; to distribute money among those entities; to transmit to the MVA information related to the registration and titling of motor vehicles purchased and sold by Defendants to Named Plaintiff and members of the Class; to transmit among the Defendants forms and other documents used in the sale of vehicles; to send and receive marketing information and payment to local media for the placement and purchase of advertising in local print and electronic media regarding vehicles sold by Defendants, including vehicles previously used as prior short-term rentals but not disclosed as such as required by Maryland law; and to send and receive information regarding prior short-term rental vehicles with sellers of such vehicles, including auctions, other dealers, and rental car companies. 103. Upon information and belief, in or about March 2011, Defendants used the wires and/or U.S. mail to submit a loan application, contract of sale, and other documents related to the sale to a potential assignee for the financing of Ms. Kaakyire’s vehicle – namely Ally Financial, headquartered in Detroit, Michigan, which lists a current address of 200 Renaissance Center, Detroit, MI 48265. Upon further information and belief, following the sale to Ms. Kaakyire, Defendants used the U.S. mails to submit the original documents relating to the financing and sale of Ms. Kaayire’s vehicle to its assignee, Ally Financial. 104. In addition, in or about March 2011, Defendants used the wires to register and title Ms. Kaakyire’s vehicle through an electronic registration and titling system. In particular, on March 17, 2013, Defendants used the wires to electronically transfer $455.88 of funds to the MVA in connection with this transaction for payment of sales tax, titling and registration fees. 105. Similarly, upon information and belief, on or about February 2012, Defendants used the wires and/or U.S. mail to submit a loan application, contract of sale, and other documents related to the sale to a potential assignee for the financing of Ms. Chamber’s prior but undisclosed short-term rental vehicle – namely Capital One Auto Finance (“Capital One”), headquartered in McLean, Virginia which lists a current mailing address of 1680 Capital One Drive, McLean, VA 22102. Upon further information and belief, following the sale to Ms. Chambers, Defendants used the U.S. mails to submit the original documents relating to the financing and sale of Ms. Chamber’s vehicle to its assignee, Capital One. 106. In addition, on or about February 2012, Defendants used the wires to register and title Ms. Chamber’s vehicle through an electronic registration and titling system. In particular, Defendants used the wires to electronically transfer $587.95 of funds to the MVA in connection with this transaction on February 18, 2012, for payment of sales tax, titling and registration fees. 107. Defendants further used the U.S. mails and wires to carry out each of the transactions identified in the table found in ¶ 41 of this Complaint. 108. Each such use of the U.S. mails and wires by Defendants was in furtherance of the fraudulent scheme described herein. 109. Defendants further used the wires to facilitate the operation of and to operate the fraudulent scheme described herein, and to communicate with each during the course of the scheme through telephone calls, facsimiles, e-mail transmissions, and wire transfers of money resulting from and in furtherance of the fraudulent scheme. 110. Also as set forth herein, during all relevant times and in furtherance of and for the purpose of executing the fraudulent scheme described herein, Defendants on hundreds if not thousands of occasions transported, transmitted, and transferred in interstate or foreign commerce money of the value of $5,000 or more, knowing the same to have been obtained and/or taken by fraud, an artifice of fraud, or by means of false or fraudulent pretenses or representations in violation of 18 U.S.C. § 2314. 111. Defendants caused the money collected by Defendants from Named Plaintiff and the other members of the Class as payment for the prior short-term rental vehicles sold to them in violation of the disclosure requirements under Maryland law – having a value of far more than $5,000 – to be transported in interstate commerce in the course of the execution of the Defendants’ fraudulent scheme. Defendants knew this money was obtained or taken by fraud, an artifice of fraud, or by means of false or fraudulent pretenses or representations. In addition, upon information and belief, Defendants divvied up their profits secured from selling prior short- term rental vehicles sold in violation of the disclosure requirements under Maryland law, and those profits – constituting far more than $5,000 – were distributed through interstate commerce. 112. At all relevant times in connection with the activities giving rise to this action, Defendants conspired with each other and other persons and entities to engage in the activities set forth herein, agreed to participate in the operation of the conspiracy and scheme to defraud Named Plaintiff and other customers, and aided and abetted one another in these activities, all as proscribed by both Maryland and federal law. 113. Defendants repeated their pattern of using the U.S. mails and/or telephone or wire transmissions in furtherance of their fraudulent scheme, and of transporting and causing others to transport money and property with a value exceeding $5,000 in interstate commerce, in furtherance of their fraudulent scheme and knowing the same to have been stolen, converted or taken by fraud, in connection with hundreds if not thousands of similar transactions. 114. Each such use of the U.S. mails and/or wires in connection with this fraudulent scheme constituted the offenses of mail and/or wire fraud as proscribed and prohibited by 18 U.S.C. §§ 1341 and/or 1343. Each such transportation by Defendants of money or property with a value exceeding $5,000 in interstate commerce in connection with and in furtherance of the scheme and artifice to defraud, and with their knowledge of the same to have been stolen, converted or taken by fraud, constituted the offense of interstate transport of money, converted or fraudulently obtained in violation of 18 U.S.C. § 2314. 115. These uses of the U.S. mails and wires and the interstate transport of money converted or fraudulently obtained to further the fraudulent scheme were not limited to the transaction of Named Plaintiff but, as stated, also occurred in the transactions of Ms. Chambers and numerous other Class members, including but not limited to the transactions identified in the table set forth in ¶ 41 herein. 116. Each member of the Class completed a transaction in which the Defendants sold a vehicle previously used as a prior short-term rental vehicle, in which the Defendants did not disclose such fact as required under Maryland law, resulting in damages to the Named Plaintiff and the Class. The Defendants repeated this pattern – that is, the use of the U.S. mails and/or wires, and the interstate transport of money converted or fraudulently obtained, in furtherance of their fraudulent scheme – in numerous similar vehicle transactions, including but not limited to the transactions of Ms. Kaakyire, Ms. Chambers and the purchasers of vehicles identified in ¶ 41 of this Complaint. 117. These acts were related, as they had the similar purpose of concealing and affirmatively misrepresenting the prior rental history of vehicles sold to Defendants’ customers, and they used the same methods of commission by concealment and affirmative misrepresentation. 118. Defendants’ enterprise the King Auto Group has operated continuously for more than five years to the present and has affected hundreds or thousands of customers’ transactions through the systematic scheme to sell previously used prior short-term rental vehicles without the disclosure required by Maryland law. Defendants knowingly participated and engaged in the enterprise and functioned as continuing units identifiable over a period of time and were involved in the transactions of Named Plaintiff and other members of the Class over a period spanning more than five years and involving hundreds or thousands of transactions. Defendants’ use of the U.S. mails and wires interstate, and the interstate transport of money and property with a value exceeding $5,000 as described herein, constitute multiple instances of wire and mail fraud, multiple instances of interstate transport of money converted or fraudulently obtained, and further constitute a pattern of racketeering activity. 119. Nevertheless, the enterprise described above did not exist solely for the purpose of engaging in predicate acts violating the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq., but the enterprise also engaged in legitimate vehicle sales transactions over the same period of time. Among other things, the enterprise developed forms and marketing campaigns for legitimate vehicle sales transactions and enabled the distribution of income from these legitimate vehicle sales transactions to the various Defendants, as well as to their owners and employees. 120. Named Plaintiff and members of the Class relied to their detriment on the legitimacy and legality of the RICO enterprise. 121. If Named Plaintiff and Class members then had suspected that the King Auto Group was a racketeering enterprise and was being used to facilitate the fraudulent scheme described herein, at the expense of Named Plaintiff and Class members, they would have refused to conduct business with Defendants and their enterprise, would not have entered into transactions with the King Auto Group or Defendants, and would have sought to secure their rights under the law at that time. 122. Named Plaintiff and Class members’ injuries to their property also were caused by the pattern of racketeering activity conducted through the enterprise described herein in that Named Plaintiff and Class members were overcharged for their vehicles as a result of Defendants’ fraudulent scheme, which constituted a pattern of racketeering activity, were denied the opportunity to decline to purchase vehicles known to have been used previously for short- term rentals, and the profits obtained through the fraudulent scheme upon information and belief were split among the enterprise’s members according to a prior written contract or other agreement. IX. CAUSES OF ACTION COUNT ONE (Implied Warranty of Merchantability) 123. Plaintiff re-alleges and incorporates herein by reference the allegations in the foregoing paragraphs as if fully set forth below. 124. Auto dealers and other professional vehicle buyers in the trade need to know prior to purchasing a vehicle at an auto auction or from any other seller whether the vehicle has been used as a short-term rental vehicle both because use for short-term rentals depresses the market value of such vehicles and because dealers and buyers in the trade know that a seller of the vehicle to a retail buyer will be legally obligated to disclose the vehicle’s prior use for short-term rentals, a disclosure that depresses the vehicle’s market value. 125. To accommodate these concerns of professional vehicle buyers in the trade, auto auctions that process thousands of vehicle transactions routinely require that short-term rental vehicles be offered for sale through “lanes” dedicated solely for short-term rentals so that buyers clearly understand the prior use to which these vehicles have been placed; in addition, when a short-term rental vehicle is sold outside a lane dedicated to such vehicles, auto auctions routinely require that sellers “announce” (i.e., disclose) their knowledge that the vehicle previously has been used for short-term rentals. For a short-term rental vehicle to be acceptable within the trade, its prior use for short-term rentals must be disclosed before sale. 126. Similarly, when a licensed auto dealer in Maryland sells a vehicle previously used for short-term rentals to a prospective retail buyer, Maryland law mandates that the dealer clearly and conspicuously disclose to the prospective retail buyer before sale the vehicle’s prior use for short-term rentals. A vehicle’s prior use for short-term rentals is so significant both within the industry and to the public that the major companies that offer vehicle history reports for sale to both dealers and the public (Carfax at www.carfax.com and Experian at www.autocheck.com) attempt to include in their vehicle history reports information indicating whether a vehicle has been used for short-term rental. 127. Under both a consumer’s reasonable expectations as well as trade quality standards, a vehicle with a prior rental history that is not clearly and conspicuously disclosed cannot pass without objection in the trade under the contract description and simply is not merchantable under Maryland law. A significant segment of the buying public would object to purchasing a used vehicle previously used as a short-term rental vehicle. 128. Defendants are merchants engaged in the business of selling goods such as the used vehicles sold to Named Plaintiff and Class members. 129. At the time of the sales to Named Plaintiff and Class members, Defendants impliedly warranted to Named Plaintiff and Class members that the used vehicles they purchased conformed to the contract descriptions and affirmations of fact made to them in their contracts of sale about their vehicle’s prior use. 130. By including on their standard vehicle sales agreement a space expressly designated for the disclosure of prior non-consumer use of a vehicle, including prior short-term rental use, Defendants warranted to Named Plaintiff and Class members that the prior use of the vehicles comported with the representations concerning prior non-consumer use of the vehicles made by Defendants on the vehicle sales agreements. 131. Defendants’ failure to disclose the prior short-term rental use of the vehicles to Named Plaintiff and Class members in the space provided for such disclosure on their vehicle sales agreements constituted an affirmative misrepresentation to Named Plaintiff and Class members that the vehicles were not used previously for such a purpose. 132. Absent such a disclosure on their contracts of sale, the vehicles sold to Named Plaintiff and the Class could not “[p]ass without objection in the trade under the contract description.” 133. In breach of the implied warranty of merchantability that arises under MD. CODE ANN., COMM. LAW § 2-314(2)(a), on the date Named Plaintiff and Class members purchased their vehicles, each vehicle would not pass without objection in the trade under the contract description. 134. As a result, the used vehicles purchased by Named Plaintiff and Class members failed to conform to the implied warranties made to them. 135. The principal function of merchantability is to give legal effect to a buyer’s reasonable expectations. Where, as here, Named Plaintiff and the Class members had a reasonable and legally protected expectation of receiving goods that would pass without objection in the trade under the contract description, their reasonable expectations were not met, and Defendants breached the implied warranty of merchantability arising under MD. CODE ANN., COMM. LAW § 2-314(2)(a). 136. Upon information and belief, all of the Defendants possessed actual knowledge of the breaches of implied warranty by the other Defendants in their sales to Named Plaintiff and the Class members of vehicles previously used for short-term rentals. 137. As previously alleged and incorporated herein, all of the Defendants aided, abetted and encouraged the wrongful and tortious conduct of one another in the transactions of Named Plaintiff and Class members, including their respective breaches of the implied warranty of merchantability under MD. CODE ANN., COMM. LAW § 2-314(2)(a), and knowingly provided substantial assistance, aid and encouragement to one another in the commission of such unlawful conduct. 138. Defendants further reached an agreement or understanding to breach the implied warranty of merchantability in their transactions with Named Plaintiff and the Class, and they worked in combination with each other and performed the overt acts described herein to facilitate and engage in a conspiracy to breach the implied warranty of merchantability in these transactions. 139. As a result of Defendants’ breach of the implied warranty of merchantability, their aiding and abetting of Defendants’ above-described tortious conduct, and their conspiracy to breach the implied warranty of merchantability, Named Plaintiff and the Class sustained the losses and damages described herein, including but not limited to the loss of the benefit of their bargains. WHEREFORE, Named Plaintiff and the Class pray for an order certifying this action as a class action pursuant to Fed. R. Civ. P. 23; demand judgment against Defendants, jointly and severally, for compensatory damages plus pre-judgment interest and costs for each Class member; and request such other and further relief as may be just and as the Court deems proper for each Class member. COUNT TWO (Magnuson-Moss Warranty Act) 140. Plaintiff re-alleges and incorporates herein by reference the allegations set out in the foregoing paragraphs as if fully set forth below. 141. Congress enacted the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq. (the “Act”) in 1975 in response to widespread complaints from consumers that many warranties were misleading and deceptive, and were not being honored. To remedy this problem of deception and failure to honor warranties, the Act imposes civil liability on any “warrantor” for, inter alia, failing to comply with any obligation under a written warranty and/or implied warranty. See 15 U.S.C. § 2310(d)(1). The Act authorizes a “suit for damages and other legal and equitable relief.” Id. The Act authorizes the award of attorneys’ fees and expressly authorizes class actions. 15 U.S.C. § 2310(e). 142. Defendants are “warrantor[s]” within the meaning of Section 2301(5) of the Act. 143. Named Plaintiff and other members of the Class are “consumers” within the meaning of Section 2301(3) of the Act. 144. Defendants’ breach of the implied warranty of merchantability, and Defendants’ conspiracy to breach the implied warranty of merchantability, set forth in Count One of this Complaint and expressly incorporated herein, violate the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq., including 15 U.S.C. § 2310(d). 145. Defendants reached an agreement or understanding to violate the Magnuson-Moss Warranty Act in Defendants’ transactions with Named Plaintiff and the Class, and they worked in combination with each other and performed the overt acts described in this Complaint to facilitate and engage in a conspiracy to violate the Magnuson-Moss Warranty Act in these transactions. As a result of Defendants’ violation of, and conspiracy to violate, the Magnuson- Moss Warranty Act, Named Plaintiff and the Class sustained the losses and damages described WHEREFORE, Named Plaintiff and the Class pray for an order certifying this action as a class action pursuant to Fed. R. Civ. P. 23; demand judgment against Defendants, jointly and severally, for compensatory damages, as well as reasonable counsel fees and costs as permitted by MD. CODE ANN., COMM. LAW § 13-408 and pre-judgment interest for each Class member; and request such further relief as may be just and as the Court deems proper for each Class member. COUNT THREE (Maryland Consumer Protection Act) 146. Plaintiff re-alleges and incorporates herein by reference the allegations in the foregoing paragraphs as if fully set forth below. 147. Defendants are each merchants within the meaning of the Maryland Consumer Protection Act (“CPA”), MD. CODE ANN., COMM. LAW § 13-101(g), and are subject to all CPA provisions prohibiting unfair or deceptive trade practices, including those in MD. CODE ANN., COMM. LAW §§ 13-303 and 13-301. 148. Defendants made false and misleading representations to Named Plaintiff and Class members in the offer to sell and sale of vehicles to the Named Plaintiff and Class that had the capacity, tendency, or effect of deceiving or misleading consumers. 149. Defendants falsely and misleadingly represented to Named Plaintiff and Class members that the vehicles they purchased had a characteristic they did not have and possessed a particular standard and quality they did not possess by representing to Named Plaintiff and the Class that the vehicles they purchased had not been used for prior short-term rentals. 150. Defendants’ affirmative misrepresentations that the vehicles of Named Plaintiff and the Class were not used previously for short-term rentals, as well as their failure to disclose to, and concealment from, Named Plaintiff and Class members the material fact that their vehicles previously were used for short-term rentals, constituted unfair and deceptive trade practices in violation of the CPA, MD. CODE ANN., COMM. LAW §§ 13-301(1), (2)(i) and (iv) and (3), and 13-303(1) and (2). 151. On information and belief, Defendants regularly and systematically acquire vehicles for the purpose of resale that have been used as short-term rentals, and they retail these vehicles to the public without disclosing the prior rental use to their customers. 152. Defendants conspire together to do so in violation of the CPA to illegally increase their profits for both their joint and individual benefit. 153. Defendants were involved in the transaction of Named Plaintiff as co-conspirators and joint tortfeasors. At the time of the offer to sell and sale of a used vehicle to the Named Plaintiff, Defendants associated together under the King Auto Group moniker to advertise and jointly market themselves, purchased used vehicles that previously had been used as rental vehicles, used and agreed to use misleading form documents in the course of their sales of used vehicles, and agreed to conceal from, and not to disclose to, purchasers the prior rental use of vehicles to advance each Defendant’s independent personal gain and individual financial stake in its respective corporation and in the conspiracy. 154. As a result, when King Buick failed to disclose to, and concealed from, Named Plaintiff the prior rental use of the vehicle she was purchasing from King Buick, it did so as part of a conspiracy, scheme and concerted action in which all of the other Defendants participated, for the joint benefit and with the knowledge and consent of the other Defendants as co- conspirators. 155. Defendants, all associating under the King Auto Group umbrella, reached an agreement or understanding to violate the CPA in their transactions with Named Plaintiff and the Class and worked in combination with each other and performed the overt acts described herein to facilitate and engage in a conspiracy to violate the CPA. 156. Defendants’ failure to comply with the law governing the transactions of Named Plaintiff and the Class members, and their conspiracy to do so, was deceptive and unfair within the meaning of the CPA. 157. Defendants’ suppression and omission of material facts and affirmative misrepresentations had the capacity, tendency or effect of deceiving and misleading the Named Plaintiff and Class and in fact deceived and misled them, causing them to sustain the losses and damages described herein. 158. Upon information and belief, all of the Defendants possessed actual knowledge of the violations of the CPA by the other Defendants in their sales to Named Plaintiff and the Class members of vehicles previously used for short-term rentals. 159. As previously alleged and incorporated herein, all of the Defendants aided, abetted and encouraged the wrongful and deceptive conduct of one another in the transactions of Named Plaintiff and Class members, including their respective violations of the CPA, and knowingly provided substantial assistance, aid and encouragement to one another in the commission of such unlawful conduct. 160. As a result of Defendants’ unfair and deceptive trade practices described above, their aiding and abetting of the above-described conduct, and conspiracy to engage in such unfair and deceptive trade practices, Named Plaintiff and the Class agreed to and did purchase their vehicles, paid Defendants significantly more for their vehicles than they were worth, and sustained the other damages and losses described herein. WHEREFORE, Named Plaintiff and the Class pray for an order certifying this action as a class action pursuant to Fed. R. Civ. P. 23; demand judgment against Defendants, jointly and severally, for compensatory damages, as well as reasonable counsel fees and costs as permitted by MD. CODE ANN., COMM. LAW § 13-408 and pre-judgment interest for each Class member; and request such further relief as may be just and as the Court deems proper for each Class member. COUNT FOUR (Deceit By Non-Disclosure or Concealment) 161. Plaintiff re-alleges and incorporates herein by reference the allegations in the foregoing paragraphs as if fully set forth below. 162. On information and belief, Defendants regularly acquire vehicles for the purpose of resale that have been used as short-term rentals and regularly and intentionally retail these vehicles to the public without disclosing this prior use to their customers, and by concealing prior short-term rental use, in violation of Maryland law to increase their respective profits. 163. As described above, Named Plaintiff entered into a written sales agreement to purchase a 2008 Saturn Outlook from King Buick. The Class members entered into similar written sales agreements to purchase used vehicles from Defendants. 164. The transaction entered into by Named Plaintiff with King Buick is a small but representative sample of Defendants’ systematic fraud on the public and of Defendants’ conspiracy to commit fraud. The transaction of Latechia Sahrell T. Chambers is yet another example of this fraud. 165. Defendants have a duty to disclose the prior use of vehicles employed as short- term rentals, but Defendants intentionally and systematically failed to disclose and concealed from Named Plaintiff and other members of the Class this fact, which they had a duty to disclose. 166. Indeed, due to the requirements of Maryland law that any short-term rental history be disclosed clearly and conspicuously, Defendants’ failure to make such a disclosure on a form that contained a pre-printed space for such disclosure constituted an affirmative misrepresentation of the vehicle’s history by the Defendants who sold these vehicles to Named Plaintiff and Class Members at the time of the consummation of each transaction. 167. Defendants acted with intent to mislead and deceive Named Plaintiff and the Class members. 168. Through their affirmative material misrepresentations and concealments, Defendants intended to induce Named Plaintiff and the Class to act differently than they would have acted had they known the true facts; Defendants intended to induce them to purchase a less desirable and less valuable vehicle that previously was used for rentals instead of a used vehicle without a history of short-term rental use, and to pay more for this vehicle than it was worth. 169. Named Plaintiff and Class members acted in justifiable reliance on Defendants’ concealments, failures to disclose and affirmative misrepresentations concerning the prior rental use of the used vehicles they purchased when they consummated their transactions based on the false and misleading representations by Defendants concerning the prior use of the vehicles they purchased. 170. Defendants reached an agreement or understanding to conceal from, and fail to disclose to, Named Plaintiff and the Class material facts concerning the prior short-term rental use of the vehicles sold to Named Plaintiff and the Class and to engage in the scheme and artifice described herein to defraud Named Plaintiff and the Class. Defendants participated in this fraudulent scheme and worked in combination with each other, performing the overt acts described herein, to facilitate and engage in a conspiracy to deceive and defraud Named Plaintiff and the Class. 171. Upon information and belief, all of the Defendants possessed actual knowledge of the other Defendants’ non-disclosure, concealment and misrepresentation of the rental history of the vehicles they sold to Named Plaintiff and Class members. 172. As previously alleged and incorporated herein, all of the Defendants aided, abetted and encouraged the wrongful and tortious conduct of one another in the transactions of Named Plaintiff and Class members, including the non-disclosure, concealments and misrepresentations of the prior use of the vehicles sold to Named Plaintiff and Class members, and knowingly provided substantial assistance, aid and encouragement to one another in the commission of such unlawful conduct. 173. As a result of Defendants’ affirmative misrepresentations concerning and concealment of the aforesaid material facts, their aiding and abetting of one another in the commission of the above-described unlawful conduct, as well as Defendants’ conspiracy to engage in this conduct, Named Plaintiff and the Class sustained the losses and damages described herein, including but not limited to paying significantly more for their vehicles than these vehicles were worth. 174. Defendants’ above-described sales of used vehicles to Named Plaintiff and the Class, aiding and abetting of one another in the commission of such unlawful conduct, and conspiracy to sell vehicles without disclosing their prior use as short-term rentals, constituted egregious misconduct and was motivated by Defendants’ actual malice toward Named Plaintiff and the Class. 175. Defendants intended to and did injure Named Plaintiff and the Class by deceiving them into purchasing their vehicles and into paying significantly more for their vehicles than they would have paid had Defendants complied with Maryland law by clearly and conspicuously disclosing the vehicles’ prior use as short-term rentals. 176. Until significant punitive damages are awarded against Defendants, Defendants will continue to violate Maryland’s disclosure laws as part of their ongoing scheme to obtain profits illegally at the retail public’s expense. WHEREFORE, Named Plaintiff and the Class pray for an order certifying this action as a class action pursuant to Fed. R. Civ. P. 23; demand judgment against Defendants, jointly and severally, for compensatory damages, as well as punitive damages in such amount necessary to punish and deter Defendants, and pre-judgment interest and costs for each Class member; and request such further relief as may be just and as the Court deems proper for each Class member. COUNT FIVE (Money Had and Received/Unjust Enrichment) 177. Plaintiff re-alleges and incorporates herein by reference the allegations in the foregoing paragraphs as if fully set forth below. 178. As described above, Defendants deceptively assessed and collected payments for vehicles that had been used as short-term rentals in amounts that exceeded the represented value of these vehicles, which conferred a substantial benefit on each of Defendants. 179. By doing so, Defendants have come into the possession of money that they had, and have, no right to at law or in equity. 180. Defendants reached an agreement or understanding to assess and collect payments for vehicles that had been used as short-term rentals in amounts that exceeded the value, and represented value, of those vehicles, and they worked in combination with each other and performed the overt acts described herein to facilitate and engage in a conspiracy to do so. 181. Defendants obtained possession of money belonging to Named Plaintiff and Class members by concealing from, failing to disclose and/or misrepresenting to Named Plaintiff and Class members the description, condition and prior use of the vehicles they were purchasing. 182. Because Defendants misrepresented and concealed the prior rental use of the vehicles that Named Plaintiff and the Class members purchased, Named Plaintiff and the Class purchased such vehicles without material information concerning the prior use of such vehicles and based on a mistake of fact concerning the history of these vehicles. 183. In furtherance of the above-described conspiracy, Defendants both individually and in concert with one another committed the overt acts or omissions alleged herein to the economic loss and injury of Named Plaintiff and members of the Class. 184. Defendants conspired with one another by common agreement or understanding for the unlawful purposes of: (a) depriving Named Plaintiff and Class members of their rights under the statutory provisions and common law; and (b) depriving Plaintiff and Class members of their money and property. 185. Defendants, acting with each other, did unlawfully deprive Named Plaintiff and Class members of both their money and property and the rights alleged herein, for the purpose of advancing their conspiracy. 186. Defendants were aware, and had knowledge, of the substantial benefits conferred by Named Plaintiff and other members of the Class on Defendants by their payment of amounts that exceeded the value of the vehicles purchased as a result of Defendants’ failure to disclose the rental history of such vehicles to Named Plaintiff and the Class. 187. As previously alleged and incorporated herein, all of the Defendants aided, abetted and encouraged the wrongful conduct of one another in the transactions of Named Plaintiff and Class members. 188. As a result of Defendants’ above-described misrepresentations, failures to disclose and concealments, tortious aiding and abetting of one another in the commission of the above-described unlawful conduct, as well as Defendants’ conspiracy to unjustly enrich themselves at the expense of Named Plaintiff and the Class, Defendants have come into the possession of money in the form of payments to which they had, and have, no right at law or in equity, and they have been unjustly enriched at the expense of Named Plaintiff and the Class. 189. Under these circumstances, it would be inequitable for Defendants to retain any such monies that they had no legal right to charge or collect. 190. As a consequence, Named Plaintiff and other members of the Class have sustained the losses and damages described herein, and Defendants should be required to make restitution to them. WHEREFORE, Named Plaintiff and the Class pray for an order certifying this action as a class action pursuant to Fed. R. Civ. P. 23; demand judgment against Defendants, jointly and severally, for damages sustained, including restitution, pre-judgment interest and costs for each Class member; request equitable, declaratory, and/or injunctive relief prohibiting Defendants from selling prior short-term rental vehicles without proper disclosure to consumers; and request such other and further relief as may be just and as the Court deems proper for each Class member. COUNT SIX (Negligent Misrepresentation) 191. Plaintiff re-alleges and incorporates herein by reference the allegations in the foregoing paragraphs as if fully set forth below, except to the extent they allege intentional and malicious conduct by Defendants. In this Count, Plaintiff pleads in the alternative as permitted by Maryland law. 192. Defendants owed a duty to exercise care in the disclosures they provided to Named Plaintiff and the Class in connection with the sale, and offer for sale, of vehicles to them. Defendants owed a duty to ensure that their written disclosures to Named Plaintiff and the Class were accurate and non-misleading and complied with Maryland law governing the sale of used vehicles. In particular, Defendants owed a duty, prior to sale, to clearly and conspicuously disclose to Named Plaintiff and the Class any previous short-term rental use of the vehicles sold to Named Plaintiff and the Class. 193. However, Defendants negligently omitted and failed to disclose the material fact that the vehicles sold to Named Plaintiff and the Class previously had been used as short-term rental vehicles, negligently misrepresented that the vehicles sold to them previously were used for consumer purposes only, negligently misrepresented the condition, quality and standard of the vehicles, negligently failed to disclose that the price of the vehicles did not accurately reflect their value, and failed to disclose that the vehicles would not pass without objection in the trade under the contract description. 194. Defendants breached the duty of care they owed to Named Plaintiff and the Class by making the above-described false, misleading and negligent representations and by negligently omitting material facts, as described above. 195. At the time Defendants made the above-described false statements and omissions of material fact, they intended for Named Plaintiff and Class members to act or rely on these statements and/or omissions of material fact. 196. Defendants knew, or had reason to know, that Named Plaintiff and the Class would reasonably rely on the above-described negligent representations and concealments of material fact which, if erroneous, would cause loss, injury or damage to Named Plaintiff and the 197. Named Plaintiff and the Class justifiably and reasonably acted to their detriment in reliance on Defendants’ false and misleading representations and omissions. Named Plaintiff and Class members were induced to enter into sales agreements for vehicles that were of a lesser quality and value than represented by Defendants and paid significantly more for their vehicles than these vehicles were worth, in reliance on Defendants’ negligent representations and concealments. 198. Upon information and belief, all of the Defendants possessed actual knowledge of the other Defendants’ non-disclosure, concealment and misrepresentation of the former use as short-term rentals of the vehicles that they sold to Named Plaintiff and Class members. 199. As previously alleged and incorporated herein, all of the Defendants aided, abetted and encouraged the wrongful and tortious conduct of one another in the transactions of Named Plaintiff and Class members, including the non-disclosure, concealments and misrepresentations of the rental history of the vehicles sold to Named Plaintiff and Class members, and knowingly provided substantial assistance, aid and encouragement to one another in the commission of such unlawful conduct. 200. Each of the Defendants knowingly perpetrated, participated in and individually benefited from the conspiracy to sell vehicles previously used for short-term rentals without disclosure of this material fact to Named Plaintiff and the Class. 201. As described herein, Defendants reached an agreement and/or understanding concerning the written disclosures to be made to Named Plaintiff and the Class in connection with their vehicle purchases and failed to make the written disclosures required by Maryland law in furtherance of their conspiracy for their own personal gain, advantage and profit, resulting in legal damage to Named Plaintiff and Class. 202. As a direct and proximate result of Defendants’ negligent statements, representations, and omissions of material fact, tortious aiding and abetting of one another in the commission of the above-described conduct, as well as Defendants’ conspiracy concerning these representations, Named Plaintiff and Class members were induced, ab initio, to enter into sales agreements for vehicles with Defendants, paid significantly more for their vehicles than these vehicles were worth, and otherwise were harmed. WHEREFORE, Named Plaintiff and the Class pray for an order certifying this action as a class action pursuant to Fed. R. Civ. P. 23; demand judgment against Defendants, jointly and severally, for compensatory damages, as well as pre-judgment interest and costs for each Class member; and request such further relief as may be just and as the Court deems proper for each Class member. COUNT SEVEN (Breach of Contract) 203. Plaintiff re-alleges and incorporates herein by reference the allegations in the foregoing paragraphs as if fully set forth below. 204. On or about March 17, 2011, Named Plaintiff entered into a written sales agreement to purchase a used 2008 Saturn Outlook from Defendant King Buick. The Class members entered into similar written sales agreements to purchase used vehicles from Defendants. 205. The written sales agreements of Named Plaintiff and the Class members set forth all of the terms of the contracts with the Defendants from whom they purchased their used vehicles. 206. Prior use of a vehicle is material to a person considering purchase of a vehicle. Prior use of a vehicle is material is a matter of law, but it also is material because Defendants purported to expressly represent to Named Plaintiff and Class members the prior use of the vehicles Defendants sold to them in the space specifically designated for such disclosure on the face of their vehicle sales agreements. 207. Pursuant to the terms of their written contracts with Named Plaintiff and Class members, Defendants promised to sell to Named Plaintiff and the Class vehicles that comported with the descriptions of the vehicles set forth in the written sales agreements. Defendants further promised to sell to Named Plaintiff and Class members vehicles that were in the condition represented in the sales agreements, that were not used previously in any manner inconsistent with the written disclosures made to Named Plaintiff and the Class in the written sales agreements, and that were not used previously as prior short-term rentals unless such former use was clearly and conspicuously disclosed as required by Maryland law. 208. The written sales agreements between Defendants and the Named Plaintiff and Class Members contained an implied covenant of good faith and fair dealing, obligating Defendants to exercise good faith in performing their contractual obligations and to deal honestly and fairly with the Named Plaintiff and the Class. 209. Defendants materially breached their contracts with Named Plaintiff and the Class by: (a) failing to sell them the vehicles promised; (b) selling Named Plaintiff and the Class used vehicles that failed to comport with the descriptions of the vehicles set forth in the written sales agreements; (c) selling Named Plaintiff and the Class used vehicles previously used in a manner inconsistent with the written disclosures made to them in connection with their purchases; (d) failing to sell to Named Plaintiff and the Class vehicles in the condition and of the quality and standard represented in their sales agreements; (e) selling Named Plaintiff and the Class members vehicles previously used as short-term rentals without clearly and conspicuously disclosing such prior use before purchase; (f) denying Named Plaintiff and Class members the opportunity to decline to purchase vehicles known previously to have been used as short-term rentals; and by (g) acting dishonestly and in bad faith in their dealings with Named Plaintiff and Class members. 210. As described herein, Defendants reached an agreement and/or understanding concerning the written disclosures to be made to Named Plaintiff and the Class in connection with their vehicle purchases. Upon information and belief, Defendants failed to make the written disclosures required by their written sales agreements and by Maryland law in furtherance of their conspiracy, for their own individual and collective gain, advantage and profit, resulting in legal damage to the Named Plaintiff and Class members. 211. In furtherance of their conspiracy, Defendants also agreed to develop and use form documents to offer for sale and sell to consumers prior short-term rental vehicles, which contained misleading and fraudulent material omissions and misrepresentations concerning the rental history of the vehicles sold to Named Plaintiff and the Class, in violation of Maryland law. 212. As a result of Defendants’ above-described material breaches of contract and conspiracy to breach the contracts of Named Plaintiff and Class members, Named Plaintiff and Class members have incurred damages, including but not limited to the loss of the benefit of their bargains with Defendants. 213. Named Plaintiff and Class members bargained to purchase, and agreed to pay for, vehicles previously used only as represented, and of the condition, quality and standard set forth in their written vehicle sales agreements. 214. However, as a result of Defendants’ above-described material breaches of contract, and Defendants’ conspiracy to breach these contracts, Named Plaintiff and Class members acquired vehicles previously used as short-term rentals and, in doing so, acquired vehicles worth less than they bargained to acquire, paid more for these vehicles than they were worth, and otherwise were harmed. WHEREFORE, Named Plaintiff and the Class pray for an order certifying this action as a class action pursuant to Fed. R. Civ. P. 23; demand judgment against Defendants, jointly and severally, for compensatory damages, as well as pre-judgment interest and costs for each Class member; and request such further relief as may be just and as the Court deems proper for each Class member. COUNT EIGHT (Violation of RICO – 18 U.S.C. § 1962(a)) 215. Plaintiff re-alleges and incorporates herein by reference the allegations in the foregoing paragraphs as if fully set forth below. 216. Named Plaintiff and each Class member is a “person” within the meaning of 18 U.S.C. §§ 1961(3) and 1964(c). 217. Each Defendant is a “person” within the meaning of 18 U.S.C. §§ 1961(3) and 18 U.S.C. 1962(a). 218. Defendants formed an association-in-fact with each other – King Auto Group – an “enterprise” within the meaning of 18 U.S.C. §§ 1961(4) and 1962(a), which was engaged in, and the activities of which affect, interstate commerce. 219. Each of the Defendants used proceeds derived from a pattern of racketeering activity under 18 U.S.C. §§ 1961(1) and (5) to acquire an interest in, establish, and operate the enterprise. 220. These unlawful activities included multiple instances of mail and wire fraud, including but not limited to the mail and wire fraud described in Part VII above, and included use of the mails and wires to transmit documents and transfer funds in violation of 18 U.S.C. §§ 1341 and 1343, which occurred uniformly and consistently during the existence of the “enterprise” and permitted Defendants to maintain and operate it. 221. These unlawful activities also included multiple instances of interstate transport of money converted or fraudulently obtained, including but not limited to the interstate transport of money converted or fraudulently obtained described in Part VII above, which occurred uniformly and consistently during the existence of the enterprise and permitted Defendants to maintain and operate this enterprise. 222. One of the purposes of the enterprise created by Defendants was to pool resources and expertise to acquire, advertise and sell motor vehicles used for short-term rentals, allowing Defendants to establish a methodology and scheme for selling prior short-term rental vehicles without the disclosures required by Maryland law in a uniform way, using form documents developed for use by King Auto Group’s association-in-fact enterprise, and to illegally profit from this scheme at the expense of Named Plaintiff and the Class. 223. This association-in-fact had a common or shared purpose – that is, to give effect to the prior short-term rental sale scheme described herein and to allow Defendants to use form documents and process to conduct their vehicle sales transactions, and it had a distinct division of labor. 224. This association-in-fact has continued as a unit, with a core membership, over a substantial period of time, exceeding five years, and is an ongoing organization established for an economic motive. Although the membership in the enterprise has changed, and some of the Defendants were added into the enterprise over time, the structure of the organization and the functions undertaken by its members have remained constant. The association-in-fact remained viable and active at the time this action was filed. 225. Defendants each played a substantial and distinct role in the scheme. 226. In this association-in-fact, each Defendant car dealership agreed to promote and advertise itself as one of an affiliated group of companies operating under the banner “King Auto Group.” Upon information and belief, Defendants agreed that they would subject themselves to oversight by a group of persons responsible for the management of King Auto Group. 227. Upon information and belief, Defendants agreed that their sales practices and marketing campaigns would be governed by general guidelines developed through their King Auto Group association. 228. However, King Auto Group is not an entity with a legal existence. 229. Defendants created and disseminated for use, and agreed to use and used in their operations, form documents and procedures to sell used vehicles, including but not limited to purchase order forms and Prior Use Acknowledgement Forms, which did not comport with Maryland law and which were used to mislead consumers about the prior history of their vehicles. 230. Defendants further agreed to use and used deceptive procedures for selling prior rental vehicles without the disclosure required by Maryland law, even when using form documents that contained areas specifically designated for the disclosure of the prior non- consumer use of the vehicle being sold. 231. Each member of the Class received form documents that contained fraudulent and false statements and/or omissions and that concealed material facts, which caused Named Plaintiff and members of the Class to act in reasonable reliance on these deceptive documents and to believe that: (i) King Auto Group was a legitimate enterprise and was proceeding legitimately, and (ii) the vehicles sold to them had no prior short-term rental use. 232. All of these activities of the association-in-fact form a pattern, continuous in nature, which consists of numerous unlawful individual acts directed to the Named Plaintiff and each Class member. Defendants’ illegal activities persisted over an extended period of time. 233. Each document provided to Named Plaintiff and the other members of the Class in the course of their vehicle sales transactions was provided in furtherance of the conspiracy described herein, for which Defendants are liable. 234. The reliance of Named Plaintiff and members of the Class on the material omissions and falsehoods contained in such documents and other communications was reasonable and justified because such documents and communications would and did cause persons of ordinary experience to be convinced of the legality and legitimacy of the operations of King Auto Group. 235. The activities of the Defendants as described herein and in Part VII entailed multiple instances of mail fraud, consisting of intentional mail fraud intended to induce, and inducing, Named Plaintiff and the Class to part with property and/or to surrender legal rights in violation of 18 U.S.C. § 1341. 236. These activities of the Defendants also entailed multiple instances of wire fraud, consisting of intentional wire fraud intended to induce, and inducing, Named Plaintiff and the Class to part with property and/or to surrender legal rights in violation of 18 U.S.C. § 1343. 237. These activities of the Defendants also entailed multiple instances of interstate transport of money converted or fraudulently obtained, in violation of 18 U.S.C. § 2314. 238. Through the use of this illegal and fraudulent scheme, and through their efforts to operate and maintain the enterprise described herein and to facilitate the sale of prior short-term rental vehicles without the disclosures required by Maryland law, Defendants have been able to retain money that is rightfully payable to Named Plaintiff and Class members, and to collect money not properly due from Named Plaintiff and Class members. 239. Defendants have retained these illegally gained funds and reinvested and used those funds in their operations in violation of 18 U.S.C. § 1962(a). 240. Furthermore, Defendants each previously acquired illicit funds through similar fraudulent operations involving mail and wire fraud and interstate transport of money converted or fraudulently obtained, and they used these proceeds to continue their scheme by investing in and operating King Auto Group. 241. Through Defendants’ use of the illegal and fraudulent scheme of selling prior short-term rental vehicles without the disclosures required by Maryland law, and through their efforts to operate and maintain the enterprise described herein to facilitate the sale of prior short- term rental vehicles without the disclosures required by law, Defendants have been able both to maintain the enterprise and to profit from it at the expense of Named Plaintiff and the Class. 242. Named Plaintiff and Class members have been injured in their property by reason of the violations of § 1962(a), inter alia, because Named Plaintiff and Class members were overcharged for their purchases from Defendants as a result of the reinvestment and use of funds by Defendants derived from Defendants’ pattern of racketeering activity to fund and operate King Auto Group and facilitate and incentivize the Defendants’ actions in deceptively selling prior rental vehicles without the disclosures required by Maryland law. WHEREFORE, Named Plaintiff and the Class pray that the Court (a) find Defendants jointly and severally liable for violation of 18 U.S.C. § 1962(a) and award Named Plaintiff and Class members three times the amount of any and all damages suffered as a result of the illegal acts set forth herein, as well as any other amounts or damages allowed to be recovered by RICO; (b) declare that King Auto Group is a racketeering enterprise and that the fraudulent scheme set forth in this Complaint constitutes a pattern of racketeering activity; (c) permanently enjoin and restrain the Defendants and their agents, employees, representatives and all persons acting on their behalf from selling prior short-term rental vehicles without the clear and conspicuous disclosures required by Maryland law; (d) award pre-judgment interest and costs for each Class member; (e) award reasonable costs and attorneys’ fees; and (f) award such other and further relief as the Court deems just and proper. COUNT NINE (Violation of RICO – 18 U.S.C. § 1962(c)) 243. Plaintiff re-alleges and incorporates herein by reference the allegations in the foregoing paragraphs as if fully set forth below. 244. Named Plaintiff and each Class member is a “person” within the meaning of 18 U.S.C. §§ 1961(3) and 1964(c). 245. Each Defendant is a “person” within the meaning of 18 U.S.C. §§ 1961(3) and 18 U.S.C. 1962(c). 246. At all times relevant to this Complaint, the “enterprise” described herein, which is a non-incorporated association, operated separately and distinct from the Defendants that committed the violations alleged. As previously stated, each of the Defendants is a separately incorporated entity, has its own business location and employees (other than an overlap in management), and has an individual profit motive and personal financial stake in the conspiracy. Defendants, through contractual arrangement and joint management activity, formed an association-in-fact with each other, which constitutes an “enterprise” engaged in illegal activities affecting interstate commerce pursuant to 18 U.S.C. §§ 1961(4) and 1962(a). 247. Defendants were each associated with the enterprise and participated in its management and/or operation by directing its affairs and/or by conducting business with each other and by participating and assisting in the fraudulent scheme described herein to acquire and sell prior short-term rental vehicles without the disclosures required by Maryland law. 248. Defendants participated, directly or indirectly, in the conduct of the enterprise’s affairs through a pattern of unlawful racketeering activity under 18 U.S.C. § 1961(1)(B), 1961(5) and 1962(c), including: (a) Multiple acts of mail fraud in violation of 18 U.S.C. § 1341; (b) Multiple instances of wire fraud in violation of 18 U.S.C. § 1343; and (c) Multiple instances of interstate transport of money converted or fraudulently obtained in violation of 18 U.S.C. § 2314. 249. Each Class member suffered injury to his or her property within the meaning of 18 U.S.C. § 1964(c) by reason of the Defendants’ violations of 18 U.S.C. § 1962(c). WHEREFORE, Named Plaintiff and the Class pray that the Court (a) find Defendants jointly and severally liable for violation of 18 U.S.C. § 1962(c) and award Named Plaintiff and Class members three times the amount of any and all damages suffered as a result of the illegal acts set forth herein, as well as any other amounts or damages allowed to be recovered by RICO; (b) declare that King Auto Group is a racketeering enterprise and that the fraudulent scheme set forth in this Complaint constitutes a pattern of racketeering activity; (c) permanently enjoin and restrain Defendants and their agents, employees, representatives and all persons acting on their behalf from selling prior short-term rental vehicles without the clear and conspicuous disclosures required by Maryland law; (d) award pre-judgment interest and costs for each Class member; (e) award reasonable costs and attorneys’ fees; and (f) award such other and further relief as the Court deems just and proper. COUNT TEN (Violation of RICO – 18 U.S.C. § 1962(d)) 250. Plaintiff re-alleges and incorporates herein by reference the allegations in the foregoing paragraphs as if fully set forth below. 251. Named Plaintiff and each Class member is a “person” within the meaning of 18 U.S.C. §§ 1961(3) and 1964(c). 252. Each Defendant and co-conspirator is a “person” within the meaning of 18 U.S.C. §§ 1961(3) and 18 U.S.C. 1962(d). 253. Defendants, through contractual arrangement and joint management activity, formed an association-in-fact with each other, which constitutes an “enterprise” engaged in illegal activities affecting interstate commerce pursuant to 18 U.S.C. §§ 1961(4) and 1962(a). 254. Defendants as co-conspirators were associated with the enterprise described herein and conspired within the meaning of 18 U.S.C. § 1962(d) to violate § 1962(a) and (c). 255. Defendants each knew of the RICO violations of the enterprise described in this Complaint and agreed to facilitate and participate in those activities. 256. Defendants as co-conspirators conspired to use or invest income derived from a pattern of unlawful activity under 18 U.S.C. § 1961(1) to acquire an interest in, establish, and operate the enterprise and have done so through a pattern of unlawful activity including under 18 U.S.C. § 1961(1), inter alia, multiple instances of mail fraud in violation of 18 U.S.C. § 1341 and wire fraud in violation of 18 U.S.C. § 1343, as well as multiple instances of interstate transport of money converted or fraudulently obtained in violation of 18 U.S.C. § 2314. 257. Defendants as co-conspirators conspired to operate, maintain control of, participate and maintain an interest in the enterprise and have done so through a pattern of unlawful activity, including under 18 U.S.C. § 1961(1), inter alia, multiple instances of mail fraud in violation of 18 U.S.C. § 1341 and wire fraud in violation of 18 U.S.C. § 1343, and multiple instances of interstate transport of money converted or fraudulently obtained in violation of 18 U.S.C. § 2314. 258. Named Plaintiff and each Class member have suffered injury to their property within the meaning of 18 U.S.C. §§ 1964(c) by reason of the commission of the overt acts described herein, constituting illegal activity in violation of 18 U.S.C. §§ 1961(1) and 1962(d). WHEREFORE, Named Plaintiff and the Class pray that the Court (a) find Defendants jointly and severally liable for violation of 18 U.S.C. § 1962(d) and award Named Plaintiff and Class members three times the amount of any and all damages suffered as a result of the illegal acts set forth herein, as well as any other amounts or damages allowed to be recovered by RICO; (b) declare that King Auto Group is a racketeering enterprise and that the fraudulent scheme set forth in this Complaint constitutes a pattern of racketeering activity; (c) permanently enjoin and restrain the Defendants and their agents, employees, representatives and all persons acting on their behalf from selling prior short-term rental vehicles without the clear and conspicuous disclosures required by Maryland law; (d) award pre-judgment interest and costs for each Class member; (e) award reasonable costs and attorneys’ fees; and (f) award such other and further relief as the Court deems just and proper. Respectfully submitted, Richard S. Gordon (Bar No. 06882) Stacie F. Dubnow (Bar No. 10246) Thomas McCray-Worrall (Bar No. 29447) GORDON & WOLF, CHTD. 102 West Pennsylvania Avenue, Suite 402 Baltimore, Maryland 21204 Telephone: (410) 825-2300 Fax: (410) 825-0066 Mark H. Steinbach (Bar No. 26538) Of Counsel O’TOOLE ROTHWELL 1350 Connecticut Avenue, N.W., Suite 200 Washington, D.C. 20036 (202) 775-1550 Attorneys for Plaintiff and the Class By: /s/ Richard S. Gordon

criminal & enforcement

_hDMFocBD5gMZwczczC3

UNITED STATES DISTRICT COURT Docket Number: 1:19-cv-9827 SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x VALENTIN REID, on behalf of himself and all others similarly situated, CLASS ACTION COMPLAINT AND Plaintiffs, v. DEMAND FOR JURY TRIAL THESY, LLC, Defendant. : : : : : : : : : : : : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x INTRODUCTION 1. Plaintiff VALENTIN REID, on behalf of himself and others similarly situated, asserts the following claims against Defendant THESY, LLC as follows. 2. Plaintiff is a visually-impaired and legally blind person who requires screen- reading software to read website content using his computer. Plaintiff uses the terms “blind” or “visually-impaired” to refer to all people with visual impairments who meet the legal definition of blindness in that they have a visual acuity with correction of less than or equal to 20 x 200. Some blind people who meet this definition have limited vision. Others have no vision. 3. Based on a 2010 U.S. Census Bureau report, approximately 8.1 million people in the United States are visually impaired, including 2.0 million who are blind, and according to the American Foundation for the Blind’s 2015 report, approximately 400,000 visually impaired persons live in the State of New York. 4. Plaintiff brings this civil rights action against Defendant for its failure to design, construct, maintain, and operate its website to be fully accessible to and independently usable by Plaintiff and other blind or visually-impaired people. Defendant’s denial of full and equal access to its website, and therefore denial of its goods and services offered thereby, is a violation of Plaintiff’s rights under the Americans with Disabilities Act (“ADA”). 5. Because Defendant’s website, www.elementvape.com (the “Website”), is not equally accessible to blind and visually impaired consumers, it violates the ADA. Plaintiff seeks a permanent injunction to cause a change in Defendant’s corporate policies, practices, and procedures so that Defendant’s website will become and remain accessible to blind and visually-impaired consumers. JURISDICTION AND VENUE 6. This Court has subject-matter jurisdiction over this action under 28 U.S.C. § 1331 and 42 U.S.C. § 12181, as Plaintiff’s claims arise under Title III of the ADA, 42 U.S.C. § 12181, et seq., and 28 U.S.C. § 1332. 7. This Court has supplemental jurisdiction under 28 U.S.C. § 1367 over Plaintiff’s and New York City Human Rights Law, N.Y.C. Admin. Code § 8-101 et seq., (“NYCHRL”) claims. 8. Venue is proper in this district under 28 U.S.C. §1391(b)(1) and (2) because Defendant conducts and continues to conduct a substantial and significant amount of business in this District, and a substantial portion of the conduct complained of herein occurred in this District because Plaintiff attempted to utilize, on a number of occasions, the subject Website within this Judicial District. 9. Defendant is subject to personal jurisdiction in this District. Defendant has been and is committing the acts or omissions alleged herein in the Southern District of New York that caused injury and violated rights the ADA prescribes to Plaintiff and to other blind and other visually impaired-consumers. A substantial part of the acts and omissions giving rise to Plaintiff’s claims occurred in this District: on several separate occasions, Plaintiff has been denied the full use and enjoyment of the facilities, goods and services offered to the general public, on Defendant’s Website in New York County. These access barriers that Plaintiff encountered have caused a denial of Plaintiff’s full and equal access multiple times in the past, and now deter Plaintiff on a regular basis from accessing the Defendant’s Website in the future. 10. This Court is empowered to issue a declaratory judgment under 28 U.S.C. §§ 2201 and 2202. THE PARTIES 11. Plaintiff VALENTIN REID, at all relevant times, is and was a resident of Brooklyn, New York. 12. Plaintiff is a blind, visually-impaired handicapped person and a member of a protected class of individuals under the ADA, under 42 U.S.C. § 12102(1)-(2), and the regulations implementing the ADA set forth at 28 CFR §§ 36.101 et seq., NYCHRL. 13. Defendant is and was at all relevant times a California Limited Liability Company doing business in New York. 14. Defendant’s Website, and its goods, and services offered thereupon, is a public accommodation within the definition of Title III of the ADA, 42 U.S.C. § 12181(7). NATURE OF ACTION 15. The Internet has become a significant source of information, a portal, and a tool for conducting business, doing everyday activities such as shopping, learning, banking, researching, as well as many other activities for sighted, blind and visually- impaired persons alike. 16. In today’s tech-savvy world, blind and visually impaired people have the ability to access websites using keyboards in conjunction with screen access software that vocalizes the visual information found on a computer screen or displays the content on a refreshable Braille display. This technology is known as screen-reading software. Screen-reading software is currently the only method a blind or visually- impaired person may use to independently access the internet. Unless websites are designed to be read by screen-reading software, blind and visually-impaired persons are unable to fully access websites, and the information, products, goods and contained thereon. 17. Blind and visually-impaired users of Windows operating system-enabled computers and devices have several screen reading software programs available to them. Some of these programs are available for purchase and other programs are available without the user having to purchase the program separately. Job Access With Speech, otherwise known as “JAWS” is currently the most popular, separately purchased and downloaded screen-reading software program available for a Windows computer. Another popular screen-reading software program available for a Windows computer is NonVisual Desktop Access “NVDA”. 18. For screen-reading software to function, the information on a website must be capable of being rendered into text. If the website content is not capable of being rendered into text, the blind or visually-impaired user is unable to access the same content available to sighted users. 19. The international website standards organization, the World Wide Web Consortium, known throughout the world as W3C, has published version 2.1 of the Web Content Accessibility Guidelines (“WCAG 2.1”). WCAG 2.1 are well- established guidelines for making websites accessible to blind and visually- impaired people. These guidelines are universally followed by most large business entities and government agencies to ensure their websites are accessible. 20. Non-compliant websites pose common access barriers to blind and visually- impaired persons. Common barriers encountered by blind and visually impaired persons include, but are not limited to, the following: a. A text equivalent for every non-text element is not provided; b. Title frames with text are not provided for identification and navigation; c. Equivalent text is not provided when using scripts; d. Forms with the same information and functionality as for sighted persons are not provided; e. Information about the meaning and structure of content is not conveyed by more than the visual presentation of content; f. Text cannot be resized without assistive technology up to 200% without losing content or functionality; g. If the content enforces a time limit, the user is not able to extend, adjust or disable it; h. Web pages do not have titles that describe the topic or purpose; i. The purpose of each link cannot be determined from the link text alone or from the link text and its programmatically determined link context; j. One or more keyboard operable user interface lacks a mode of operation where the keyboard focus indicator is discernible; k. The default human language of each web page cannot be programmatically determined; l. When a component receives focus, it may initiate a change in context; m. Changing the setting of a user interface component may automatically cause a change of context where the user has not been advised before using the component; n. Labels or instructions are not provided when content requires user input, which include captcha prompts that require the user to verify that he or she is not a robot; o. In content which is implemented by using markup languages, elements do not have complete start and end tags, elements are not nested according to their specifications, elements may contain duplicate attributes, and/or any IDs are not unique; p. Inaccessible Portable Document Format (PDFs); and, q. The name and role of all User Interface elements cannot be programmatically determined; items that can be set by the user cannot be programmatically set; and/or notification of changes to these items is not available to user agents, including assistive technology. STATEMENT OF FACTS 21. Defendant is a nicotine product retailer that owns and operates www.elementvape.com (its “Website”), offering features which should allow all consumers to access the goods and services and which Defendant ensures the delivery of such goods throughout the United States, including New York State. 22. Defendant’s Website offers products and services for online sale and general delivery to the public. The Website offers features which ought to allow users to browse for items, access navigation bar descriptions and prices, and avail consumers of the ability to peruse the numerous items offered for sale. 23. Plaintiff is a visually-impaired and legally blind person, who cannot use a computer without the assistance of screen-reading software. Plaintiff is, however, a proficient NVDA screen-reader user and uses it to access the Internet. Plaintiff has visited the Website on separate occasions using a screen-reader. 24. On multiple occasions, the last occurring in October of 2019, Plaintiff visited Defendant’s website, www.elementvape.com. Despite his efforts, however, Plaintiff was denied a shopping experience similar to that of a sighted individual due to the website’s lack of a variety of features and accommodations. 25. Many features on the Website lacks alt. text, which is the invisible code embedded beneath a graphical image. As a result, Plaintiff was unable to differentiate what products were on the screen due to the failure of the Website to adequately describe its content. 26. Many features on the Website also fail to Add a label element or title attribute for each field. This is a problem for the visually impaired because the screen reader fails to communicate the purpose of the page element. It also leads to the user not being able to understand what he or she is expected to insert into the subject field. As a result, Plaintiff and similarly situated visually impaired users of Defendant’s Website are unable to enjoy the privileges and benefits of the Website equally to sighted users. 27. Many pages on the Website also contain the same title elements. This is a problem for the visually impaired because the screen reader fails to distinguish one page from another. In order to fix this problem, Defendant must change the title elements for each page. 28. The Website also contained a host of broken links, which is a hyperlink to a non- existent or empty webpage. For the visually impaired this is especially paralyzing due to the inability to navigate or otherwise determine where one is on the website once a broken link is encountered. For example, upon coming across a link of interest, the user is redirected to an error page. However, the screen-reader fails to communicate that the link is broken. As a result, a visually impaired user is not able to return to or continue his original search. 29. These access barriers effectively denied Plaintiff the ability to use and enjoy Defendant’s website the same way sighted individuals do. 30. It is, upon information and belief, Defendant’s policy and practice to deny Plaintiff, along with other blind or visually-impaired users, access to Defendant’s website, and to therefore specifically deny the goods and services that are offered to the general public. Due to Defendant’s failure and refusal to remove access barriers to its website, Plaintiff and visually-impaired persons have been and are still being denied equal access to Defendant’s Website, and the numerous goods and services and benefits offered to the public through the Website. 31. Due to the inaccessibility of Defendant’s Website, blind and visually-impaired customers such as Plaintiff, who need screen-readers, cannot fully and equally use or enjoy the facilities, products, and services Defendant offers to the public on its Website. The access barriers Plaintiff encountered have caused a denial of Plaintiff’s full and equal access in the past, and now deter Plaintiff on a regular basis from equal access to the Website. 32. If the Website were equally accessible to all, Plaintiff could independently navigate the Website and complete a desired transaction as sighted individuals do. 33. Through his attempts to use the Website, Plaintiff has actual knowledge of the access barriers that make these services inaccessible and independently unusable by blind and visually-impaired people. 34. Because simple compliance with the WCAG 2.1 Guidelines would provide Plaintiff and other visually-impaired consumers with equal access to the Website, Plaintiff alleges that Defendant has engaged in acts of intentional discrimination, including but not limited to the following policies or practices: a. Constructing and maintaining a website that is inaccessible to visually-impaired individuals, including Plaintiff; b. Failure to construct and maintain a website that is sufficiently intuitive so as to be equally accessible to visually impaired individuals, including Plaintiff; and, c. Failing to take actions to correct these access barriers in the face of substantial harm and discrimination to blind and visually-impaired consumers, such as Plaintiff, as a member of a protected class. 35. Defendant therefore uses standards, criteria or methods of administration that have the effect of discriminating or perpetuating the discrimination of others, as alleged herein. 36. The ADA expressly contemplates the injunctive relief that Plaintiff seeks in this action. In relevant part, the ADA requires: In the case of violations of . . . this title, injunctive relief shall include an order to alter facilities to make such facilities readily accessible to and usable by individuals with disabilities . . . Where appropriate, injunctive relief shall also include requiring the . . . modification of a policy . . . 42 U.S.C. § 12188(a)(2). 37. Because Defendant’s Website has never been equally accessible, and because Defendant lacks a corporate policy that is reasonably calculated to cause its Website to become and remain accessible, Plaintiff invokes 42 U.S.C. § 12188(a)(2) and seeks a permanent injunction requiring Defendant to retain a qualified consultant acceptable to Plaintiff (“Agreed Upon Consultant”) to assist Defendant to comply with WCAG 2.1 guidelines for Defendant’s Website. Plaintiff seeks that this permanent injunction requires Defendant to cooperate with the Agreed Upon Consultant to: a. Train Defendant’s employees and agents who develop the Website on accessibility compliance under the WCAG 2.1 guidelines; b. Regularly check the accessibility of the Website under the WCAG 2.1 guidelines; c. Regularly test user accessibility by blind or vision-impaired persons to ensure that Defendant’s Website complies under the WCAG 2.1 guidelines; and, d. Develop an accessibility policy that is clearly disclosed on Defendant’s Websites, with contact information for users to report accessibility-related problems. 38. Although Defendant may currently have centralized policies regarding maintaining and operating its Website, Defendant lacks a plan and policy reasonably calculated to make them fully and equally accessible to, and independently usable by, blind and other visually-impaired consumers. 39. Defendant has, upon information and belief, invested substantial sums in developing and maintaining their Website and has generated significant revenue from the Website. These amounts are far greater than the associated cost of making their Website equally accessible to visually impaired customers. 40. Without injunctive relief, Plaintiff and other visually-impaired consumers will continue to be unable to independently use the Website, violating their rights. CLASS ACTION ALLEGATIONS 41. Plaintiff, on behalf of himself and all others similarly situated, seeks to certify a nationwide class under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the United States who have attempted to access Defendant’s Website and as a result have been denied access to the equal enjoyment of goods and services, during the relevant statutory period. 42. Plaintiff, on behalf of himself and all others similarly situated, seeks to certify a New York City subclass under Fed. R. Civ. P. 23(a) and 23(b)(2): all legally blind individuals in the City of New York who have attempted to access Defendant’s Website and as a result have been denied access to the equal enjoyment of goods and services offered, during the relevant statutory period. 43. Common questions of law and fact exist amongst the Class, including: a. Whether Defendant’s Website is a “public accommodation” under the ADA; b. Whether Defendant’s Website is a “place or provider of public accommodation” under the NYCHRL; c. Whether Defendant’s Website denies the full and equal enjoyment of its products, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating the ADA; and d. Whether Defendant’s Website denies the full and equal enjoyment of its products, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating the NYCHRL. 44. Plaintiff’s claims are typical of the Class. The Class, similarly, to the Plaintiff, are severely visually impaired or otherwise blind, and claim that Defendant has violated the ADA or NYCHRL by failing to update or remove access barriers on its Website so either can be independently accessible to the Class. 45. Plaintiff will fairly and adequately represent and protect the interests of the Class Members because Plaintiff has retained and is represented by counsel competent and experienced in complex class action litigation, and because Plaintiff has no interests antagonistic to the Class Members. Class certification of the claims is appropriate under Fed. R. Civ. P. 23(b)(2) because Defendant has acted or refused to act on grounds generally applicable to the Class, making appropriate both declaratory and injunctive relief with respect to Plaintiff and the Class as a whole. 46. Alternatively, class certification is appropriate under Fed. R. Civ. P. 23(b)(3) because fact and legal questions common to Class Members predominate over questions affecting only individual Class Members, and because a class action is superior to other available methods for the fair and efficient adjudication of this litigation. 47. Judicial economy will be served by maintaining this lawsuit as a class action in that it is likely to avoid the burden that would be otherwise placed upon the judicial system by the filing of numerous similar suits by people with visual disabilities throughout the United States. FIRST CAUSE OF ACTION VIOLATIONS OF THE ADA, 42 U.S.C. § 12181 et seq. 48. Plaintiff, on behalf of himself and the Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 49. Section 302(a) of Title III of the ADA, 42 U.S.C. § 12101 et seq., provides: No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation. 42 U.S.C. § 12182(a). 50. Defendant’s Website is a public accommodations within the definition of Title III of the ADA, 42 U.S.C. § 12181(7). The Website is a service that is offered to the general public, and as such, must be equally accessible to all potential consumers. 51. Under Section 302(b)(1) of Title III of the ADA, it is unlawful discrimination to deny individuals with disabilities the opportunity to participate in or benefit from the products, services, facilities, privileges, advantages, or accommodations of an entity. 42 U.S.C. § 12182(b)(1)(A)(i). 52. Under Section 302(b)(1) of Title III of the ADA, it is unlawful discrimination to deny individuals with disabilities an opportunity to participate in or benefit from the products, services, facilities, privileges, advantages, or accommodation, which is equal to the opportunities afforded to other individuals. 42 U.S.C. § 12182(b)(1)(A)(ii). 53. Under Section 302(b)(2) of Title III of the ADA, unlawful discrimination also includes, among other things: [A] failure to make reasonable modifications in policies, practices, or procedures, when such modifications are necessary to afford such goods, services, facilities, privileges, advantages, or accommodations to individuals with disabilities, unless the entity can demonstrate that making such modifications would fundamentally alter the nature of such goods, services, facilities, privileges, advantages or accommodations; and a failure to take such steps as may be necessary to ensure that no individual with a disability is excluded, denied services, segregated or otherwise treated differently than other individuals because of the absence of auxiliary aids and services, unless the entity can demonstrate that taking such steps would fundamentally alter the nature of the good, service, facility, privilege, advantage, or accommodation being offered or would result in an undue burden. 42 U.S.C. § 12182(b)(2)(A)(ii)-(iii). 54. The acts alleged herein constitute violations of Title III of the ADA, and the regulations promulgated thereunder. Plaintiff, who is a member of a protected class of persons under the ADA, has a physical disability that substantially limits the major life activity of sight within the meaning of 42 U.S.C. §§ 12102(1)(A)-(2)(A). Furthermore, Plaintiff has been denied full and equal access to the Website, has not been provided services that are provided to other patrons who are not disabled, and has been provided services that are inferior to the services provided to non-disabled persons. Defendant has failed to take any prompt and equitable steps to remedy its discriminatory conduct. These violations are ongoing. 55. Under 42 U.S.C. § 12188 and the remedies, procedures, and rights set forth and incorporated therein, Plaintiff, requests relief as set forth below. SECOND CAUSE OF ACTION VIOLATIONS OF THE NYCHRL 56. Plaintiff, on behalf of himself and the New York City Sub-Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 57. N.Y.C. Administrative Code § 8-107(4)(a) provides that “It shall be an unlawful discriminatory practice for any person, being the owner, lessee, proprietor, manager, superintendent, agent or employee of any place or provider of public accommodation, because of . . . disability . . . directly or indirectly, to refuse, withhold from or deny to such person, any of the accommodations, advantages, facilities or privileges thereof.” 58. Defendant’s Website is a sales establishment and public accommodations within the definition of N.Y.C. Admin. Code § 8-102(9). 59. Defendant is subject to NYCHRL because it owns and operates its Website, making it a person within the meaning of N.Y.C. Admin. Code § 8-102(1). 60. Defendant is violating N.Y.C. Administrative Code § 8-107(4)(a) in refusing to update or remove access barriers to Website, causing its Website and the services integrated with such Website to be completely inaccessible to the blind. This inaccessibility denies blind patrons full and equal access to the facilities, products, and services that Defendant makes available to the non-disabled public. 61. Defendant is required to “make reasonable accommodation to the needs of persons with disabilities . . . any person prohibited by the provisions of [§ 8-107 et seq.] from discriminating on the basis of disability shall make reasonable accommodation to enable a person with a disability to . . . enjoy the right or rights in question provided that the disability is known or should have been known by the covered entity.” N.Y.C. Admin. Code § 8-107(15)(a). 62. Defendant’s actions constitute willful intentional discrimination against the Sub- Class on the basis of a disability in violation of the N.Y.C. Administrative Code § 8-107(4)(a) and § 8-107(15)(a) in that Defendant has: a. constructed and maintained a website that is inaccessible to blind class members with knowledge of the discrimination; and/or b. constructed and maintained a website that is sufficiently intuitive and/or obvious that is inaccessible to blind class members; and/or c. failed to take actions to correct these access barriers in the face of substantial harm and discrimination to blind class members. 63. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 64. As such, Defendant discriminates, and will continue in the future to discriminate against Plaintiff and members of the proposed class and subclass on the basis of disability in the full and equal enjoyment of the products, services, facilities, privileges, advantages, accommodations and/or opportunities of its Website under § 8-107(4)(a) and/or its implementing regulations. Unless the Court enjoins Defendant from continuing to engage in these unlawful practices, Plaintiff and members of the class will continue to suffer irreparable harm. 65. Defendant’s actions were and are in violation of the NYCHRL and therefore Plaintiff invokes his right to injunctive relief to remedy the discrimination. 66. Plaintiff is also entitled to compensatory damages, as well as civil penalties and fines under N.Y.C. Administrative Code § 8-120(8) and § 8-126(a) for each offense as well as punitive damages pursuant to § 8-502. 67. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 68. Under N.Y.C. Administrative Code § 8-120 and § 8-126 and the remedies, procedures, and rights set forth and incorporated therein Plaintiff prays for judgment as set forth below. THIRD CAUSE OF ACTION DECLARATORY RELIEF 69. Plaintiff, on behalf of himself and the Class and New York City Sub-Classes Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 70. An actual controversy has arisen and now exists between the parties in that Plaintiff contends, and is informed and believes that Defendant denies, that its Website contains access barriers denying blind customers the full and equal access to the products, services and facilities of its Website, which Defendant owns, operates and controls, fails to comply with applicable laws including, but not limited to, Title III of the Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., and N.Y.C. Admin. Code § 8-107, et seq. prohibiting discrimination against the blind. 71. A judicial declaration is necessary and appropriate at this time in order that each of the parties may know their respective rights and duties and act accordingly. PRAYER FOR RELIEF WHEREFORE, Plaintiff respectfully requests this Court grant the following relief: a. A preliminary and permanent injunction to prohibit Defendant from violating the Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y.C. Administrative Code § 8-107, et seq., and the laws of New York; b. A preliminary and permanent injunction requiring Defendant to take all the steps necessary to make its Website into full compliance with the requirements set forth in the ADA, and its implementing regulations, so that the Website is readily accessible to and usable by blind individuals; c. A declaration that Defendant owns, maintains and/or operates its Website in a manner that discriminates against the blind and which fails to provide access for persons with disabilities as required by Americans with Disabilities Act, 42 U.S.C. §§ 12182, et seq., N.Y.C. Administrative Code § 8-107, et seq., and the laws of New York d. An order certifying the Class and Sub-Classes under Fed. R. Civ. P. 23(a) & (b)(2) and/or (b)(3), appointing Plaintiff as Class Representative, and his attorneys as Class Counsel; e. Compensatory damages in an amount to be determined by proof, including all applicable statutory and punitive damages and fines, to Plaintiff and the proposed class and subclasses for violations of their civil rights under New York City Human Rights Law and City Law; f. Pre- and post-judgment interest; g. An award of costs and expenses of this action together with reasonable attorneys’ and expert fees; and h. Such other and further relief as this Court deems just and proper. DEMAND FOR TRIAL BY JURY Pursuant to Fed. R. Civ. P. 38(b), Plaintiff demands a trial by jury on all questions of fact the Complaint raises. Dated: Hackensack, New Jersey October 24, 2019 STEIN SAKS, PLLC By: /s/ Russel Weinrib Russel Weinrib, Esq. [email protected] 285 Passaic Street Hackensack, NJ 07601 Tel: (201) 282-6500 Fax: (201) 282-6501 ATTORNEYS FOR PLAINTIFF

civil rights, immigration, family

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Jeffrey L. Silvestrini (Bar No. 2959) Cohne Kinghorn, PC 111 E. Broadway, 11th Floor Salt Lake City, UT 84111 801.363-4300 [email protected] Joseph E. White, III (pro hac vice to be filed) Lester R. Hooker (pro hac vice to be filed) Saxena White P.A. Boca Center 5200 Town Center Circle, Suite 601 Boca Raton, FL 33486 561.394.3399 [email protected] Richard A. Maniskas (pro hac vice to be filed) Katharine Ryan (pro hac vice to be filed) Ryan & Maniskas, LLP 995 Old Eagle School Rd., St. 311 Wayne, Pennsylvania 19087 Telephone: (484) 588-5516 Facsimile: (484) 450-2582 IN THE UNITED STATES DISTRICT COURT DISTRICT OF UTAH, CENTRAL DIVISION MELANIE DAVIS, Individually and on Behalf of All Others Similarly Situated, Plaintiff, v. SKULLCANDY, INC., SETH DARLING, JASON HODELL, and RICHARD P. ALDEN, Defendants. CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS Case No.: DEMAND FOR JURY TRIAL ) ) ) ) ) ) ) ) ) ) ) ) ) ) TABLE OF CONTENTS I. NATURE OF THE ACTION ..............................................................................................1 II. JURISDICTION AND VENUE ..........................................................................................4 III. PARTIES .............................................................................................................................4 IV. SUBSTANTIVE ALLEGATIONS .....................................................................................6 A. Background of the Company ...................................................................................6 B. Defendants’ Materially False and Misleading Statements .......................................6 C. The Truth Slowly Emerges ....................................................................................11 D. Improper Insider Selling During The Class Period................................................16 V. CLASS ACTION ALLEGATIONS ..................................................................................17 VI. UNDISCLOSED ADVERSE FACTS ...............................................................................20 VII. LOSS CAUSATION ..........................................................................................................21 VIII. SCIENTER ALLEGATIONS ............................................................................................22 IX. APPLICABILITY OF PRESUMPTION OF RELIANCE: FRAUD-ON-THE- MARKET DOCTRINE .....................................................................................................23 X. NO SAFE HARBOR .........................................................................................................24 XI. COUNTS AGAINST DEFENDANTS ..............................................................................25 COUNT I ...........................................................................................................................25 COUNT II ..........................................................................................................................29 XII. PRAYER FOR RELIEF ....................................................................................................30 XIII. JURY TRIAL DEMANDED .............................................................................................31 Plaintiff Melanie Davis (“Plaintiff”), by and through her attorneys, alleges the following upon information and belief, except as to those allegations concerning Plaintiff, which are alleged upon personal knowledge. Plaintiff’s information and belief is based upon, among other things, her counsel’s investigation, which includes without limitation: (a) review and analysis of public filings made by Skullcandy, Inc. (“SKUL” or the “Company”) and other related parties and non-parties with the Securities and Exchange Commission (“SEC”); (b) review and analysis of press releases and other publications disseminated by certain of the Defendants and other related non-parties; (c) review of news articles, shareholder communications, conference call transcripts, and postings on SKUL’s website concerning the Company’s public statements; and (d) review of other publicly available information concerning SKUL and the Individual Defendants. I. NATURE OF THE ACTION 1. This is a class action on behalf of all persons or entities that purchased or otherwise acquired SKUL securities between August 7, 2015 and January 11, 2016, inclusive (the “Class Period”), seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”). 2. SKUL is a designer, marketer and distributer of audio and gaming headphones, earbuds, speakers and other accessories under the Skullcandy, Astro Gaming and 2XL brands. The Company offers an array of styles and price points and includes audio products and categories, such as gaming and sports performance, women’s and wireless offerings, as well as partnerships with manufacturers to license its brand. 3. During the Class Period, Defendants made false and misleading statements and failed to disclose material facts concerning SKUL’s operations and financial results, including issues with its largest Chinese distributor. In addition, Defendants misled the market by issuing false and misleading earnings guidance. As the direct result of Defendants’ wrongful actions, the common stock of SKUL traded at artificially inflated prices throughout the Class Period. 4. Further, Defendants’ wrongful conduct and their dissemination of false and misleading statements enabled Defendant Rick Alden (“Alden”), who is the Company’s Founder, former CEO and a current director, to engage in improper insider trading. Approximately one month after the Company unexpectedly raised guidance, Alden and Relevant Non-Defendant Ptarmagin, LLC (“Ptarmagin”) began disposing their shares through prearranged stock trading plans established on June 5, 2015. Between September 8, 2015, and January 7, 2016, Alden and Ptarmagin sold 775,000 beneficially owned SKUL shares into the open market for proceeds of over $4 million. Ptarmagin is the family trust established for the benefit of Alden’s family. 5. When Defendants fully disclosed the truth regarding the Company’s true business prospects on January 11, 2016, SKUL’s shares plummeted $1.29 per share, or more than 28%, to close at $3.26 per share on January 12, 2016, on unusually heavy volume. 6. As further detailed below, throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose to investors that (i) the third quarter and full year 2015 revenue and net income guidance issued during the Company’s second quarter 2015 earnings announcement and subsequent conference call were materially false and misleading in that the projections were unattainable; (ii) the fourth quarter and full year 2015 revenue and net income guidance issued during the Company’s third quarter 2015 earnings announcement and subsequent conference call were materially false and misleading in that the projections were unattainable; (iii) Defendants intentionally failed to timely disclose the Company’s challenges with its largest China distributor; (iv) Defendant Rick Alden and Ptarmagin, with full knowledge of the undisclosed materially adverse facts alleged herein, embarked on a selling spree of personal holdings of SKUL common stock at artificially inflated prices, which sales they made without first disclosing these adverse material facts known to Defendants and withheld from the market, which permitted them to engage in unusual insider selling and realize proceeds in excess of $4 million; and (v) as a result of the foregoing, Defendants’ statements about SKUL’s business, operations, and prospects were false and misleading and/or lacked a reasonable basis. 7. As a direct result of Defendants’ wrongful actions, SKUL’s common stock traded at artificially inflated prices throughout the Class Period. Defendants’ wrongful conduct and their dissemination of false and misleading statements enabled Defendants Alden and Ptarmagin to engage in improper insider trading. 8. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. II. JURISDICTION AND VENUE 9. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C. §§78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. § 240.10b-5). 10. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §1331 and Section 27 of the Exchange Act (15 U.S.C. §78aa). 11. Venue is proper in this Judicial District pursuant to 28 U.S.C. §1391(b) and Section 27 of the Exchange Act (15 U.S.C. §78aa(c)). A substantial portion of the acts in furtherance of the alleged fraud, including the effects of the fraud, have occurred in this Judicial District. In addition, the Company’s principal executive offices are located within this Judicial District. 12. In connection with the acts, transactions, and conduct alleged herein, Defendants directly and indirectly used the means and instrumentalities of interstate commerce, including the United States mail, interstate telephone communications, and the facilities of a national securities exchange. III. PARTIES 13. Plaintiff Melanie Davis, as set forth in the accompanying certification, incorporated by reference herein, purchased SKUL common stock during the Class Period, and suffered damages as a result of the federal securities law violations and false and/or misleading statements and/or material omissions alleged herein. 14. Defendant Skullcandy, Inc. is a Delaware corporation with its principal executive offices located at 1441 West Ute Blvd., Suite 250, Park City, UT 84098. 15. Defendant Seth “Hoby” Darling (“Darling”) was, at all relevant times, President and Chief Executive Officer (“CEO”) of SKUL. 16. Defendant Jason Hodell (“Hodell”) was, at all relevant times, Chief Financial Officer (“CFO”) of SKUL. 17. Defendant Richard P. “Rick” Alden was, at all relevant times, a member of SKUL’s Board of Directors. Alden founded the Company in January 2003 and served as its CEO until March 2011. 18. Defendants Darling, Hodell, and Alden are collectively referred to hereinafter as the “Individual Defendants.” The Individual Defendants, because of their positions with the Company, possessed the power and authority to control the contents of SKUL’s reports to the SEC, press releases and presentations to securities analysts, money and portfolio managers and institutional investors, i.e., the market. Each defendant was provided with copies of the Company’s reports and press releases alleged herein to be misleading prior to, or shortly after, their issuance and had the ability and opportunity to prevent their issuance or cause them to be corrected. Because of their positions and access to material non-public information available to them, each of these defendants knew that the adverse facts specified herein had not been disclosed to, and were being concealed from, the public, and that the positive representations which were being made were then materially false and/or misleading. The Individual Defendants are liable for the false statements pleaded herein, as those statements were each “group-published” information, the result of the collective actions of the Individual Defendants. 19. Relevant Non-Defendant Ptarmagin, LLC’s only member is the Alden Irrevocable Trust, whose sole beneficiaries are the spouse and children of Defendant Rick Alden. Defendant Alden exercises control over the Alden Irrevocable Trust, including its investments. IV. SUBSTANTIVE ALLEGATIONS A. Background of the Company 20. Skullcandy, Inc. is a designer, marketer and distributer of audio and gaming headphones, earbuds, speakers and other accessories under the Skullcandy, Astro Gaming and 2XL brands. The Company offers an array of styles and price points and includes audio products and categories, such as gaming and sports performance, women’s and wireless offerings, as well as partnerships with manufacturers to license its brand. B. Defendants’ Materially False and Misleading Statements 21. Throughout the Class Period, Defendants repeatedly made false and misleading statements and omissions concerning the Company’s business, operations and prospects. These false and misleading statements created a false impression concerning SKUL’s business and operational status and future growth prospects. 22. On August 6, 2015, SKUL issued a press release entitled “Skullcandy Second Quarter Operating Income and Earnings Per Share Exceed Expectations; Raises Guidance for Full Year Earnings Per Share.” Therein, the Company raised full year 2015 EPS guidance to between $0.41 and $0.43, an increase from its previous guidance of $0.36 and $0.40. The Company issued this increased guidance at a time when certain insiders were poised to capitalize on the expected increase in the Company’s stock, as discussed in greater detail below. In the press release, the Company, in relevant part, stated: PARK CITY, Utah, Aug. 6, 2015 (GLOBE NEWSWIRE) -- Skullcandy, Inc. (NASDAQ:SKUL) today announced financial results for the second quarter ended June 30, 2015. Second quarter 2015 results versus the same quarter in the prior year • Net sales: $58.0 million vs. $53.9 million, up 8% (up 10% currency neutral) • Gross margin: 42.8% vs. 45.0%, down 220 basis points (down 130 basis points currency neutral) • Selling, general and administrative expense (SG&A): $23.8 million vs. $22.9 million, up 4% (up 7% currency neutral) • SG&A expense as a percent of net revenue: 41.1% vs. 42.6% • Operating income: $1.0 million vs. $1.3 million, down $0.3 million (down $0.02 million currency neutral) • Net income per share: 4.2 cents vs. 5.5 cents, down 24% (up 17% currency neutral) “Everything we do at Skullcandy and Astro puts the consumer at the center. We strive to inspire people to live life at full volume through our innovations, products, and brand storytelling,” said Hoby Darling, President and Chief Executive Officer. “Through this dedication to our consumer, Skullcandy once again was the number one headphone choice in units for the second quarter and year to date. Astro also outpaced its competition in the gaming market growing nearly three times faster than the industry during Q2. Our product quality and innovation engine continues to strengthen as evidenced by the accolades and Editor’s Choice awards the Grind and Strum, two recent product introductions, received from leading audio publications while Astro continues to design the best high end gaming headphones in the world. We continue to make smart investments in innovation and demand creation, with double digit year over year increases in spend, while maintaining tight control over non-revenue driving expenses. Looking ahead, we are well positioned to add more fuel to our revenue engine as we see accelerating growth and new shelf space during the upcoming holiday season to kickoff next year with great brand and product momentum.” * * * 2015 Full Year and Third Quarter Financial Outlook For the full year 2015, the Company continues to forecast net sales to increase 13-15% over 2014 levels. The Company also raises guidance for net income on a U.S. GAAP fully-diluted per share basis of a range of $0.41 to $0.43 per share, an increase from its previous guidance of $0.36 to $0.40. For the third quarter of 2015, the Company currently forecasts net sales to increase at a growth rate of 17-19% over 2014 levels and net income on a U.S. GAAP fully-diluted per share basis of a range of $0.07 to $0.08. 23. During the Q2 2015 earnings call on August 6, 2015, Defendant Hodell provided updated guidance for the full year, third quarter and fourth quarter of 2015. In regards to full- year guidance, Defendant Hodell stated: [O]n revenue, we still expect net revenue to grow at 13% to 15% rate for full year 2015 versus 2014. This growth is being driven by new product launches and investments in listening stations and fixtures at our retail partners. We estimate the foreign exchange drag on full year revenue growth at approximately 250 basis points. * * * We are managing SG&A to aggressively leverage the business and drive operating profitability. On SG&A, we are now targeting 36% of net revenues or less and are currently expecting SG&A year-over-year dollar growth of approximately 2%. Due to these combined effects, we are pleased to raise our expectation of operating income to a range of $17.5 million to $18.5 million. For other expense, we are still modeling an annual total of $1.2 million of expense. For taxes, we are raising our expectation of the marginal annual rate to 27.5% as discussed earlier and then adding our year-to-date discreet tax expense items of $150,000. Lastly, based on our updated view of the second half, we are proud to raise our annual EPS guidance to a range of $0.41 to $0.43 from our previous guidance of $0.36 to $0.40. This mid-point point implies year-over-year growth of EPS 56% or 92% on a constant currency basis. 24. In regards to Q3 and Q4 guidance, Defendant Hodell stated: [W]e are currently forecasting net sales increased 17% to 19% over 2014 levels, with growth led by our new product introductions, continuing success of our Wireless Hesh 2 and year-over-year increases with nearly all of our largest key accounts. We estimate the foreign-exchange drag on Q3 year-over-year revenue growth at approximately 320 basis points. We are currently targeting a Q3 gross margin in the range of 40% to 41% or 41.3% to 42.3% on a constant currency basis. Another important note on our Q3 gross margin, we are expediting our new product suite to market and are therefore incurring an approximate $1 million charge for airfreight within our gross margin in Q3, which alone reduce our gross margin by 140 basis points. We expect SG&A to be within a range of $24.3 million to $24.8 million for the quarter and growing year-over-year in absolute dollar terms by approximately 7% to 8%. This SG&A increase the strategic and closely aligned to where we have traditionally seen returns on our marketing investments in terms of sell-through and brand. * * * [I]n Q4, we are currently forecasting net sales to increase 13% to 15% over 2014 levels, with growth led by our International segment and new product introductions. * * * We are expecting Q4 GAAP diluted EPS of $0.42 to $0.44. This mid-point implies year-over-year growth of EPS of 64% or 80% on a constant currency basis. In putting forth this new outlook, we want to remind everyone of the complexity of accurately assessing future earnings and revenue growth given the competitive nature of the industry, the difficulty in predicting sales of our products by key retailers, changes in technology, sourcing costs, trends in consumer preferences, because of our consumer and innovation focus, brand strength, quality products, strong cash position and dedicated team of employees, athletes, sales reps and distributors, we are confident we can achieve our vision of being a global audio leader, deliver profitable growth and increase shareholder value. 25. On this news, shares of SKUL increased $0.68 per share, approximately 9.32%, to close at $7.98 per share on August 7, 2015, on unusually heavy volume. 26. On August 7, 2015, the Company filed its Quarterly Report with the SEC on Form 10-Q for the quarterly period ended June 30, 2015. The Form 10-Q was signed by Defendants Darling and Hodell, and reaffirmed the Company’s financial results previously announced on August 6, 2015. 27. On September 8, 2015, SKUL filed a Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 with the SEC on Form 8-K. Therein, the Company indicated, for the first time, that: On June 5, 2015, Rick Alden, a member of the board of directors of Skullcandy, Inc. (the “Company”) and Ptarmagin, LLC (“Ptarmagin”), each adopted a prearranged stock trading plan in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The Alden Irrevocable Trust, of which Mr. Alden’s family members are the beneficiaries, is the sole member of Ptarmagin. Rule 10b5-1 of the Securities Exchange Commission (the “SEC”) permits individuals to adopt predetermined written plans for trading specified amounts of company stock when they are not in possession of material non-public information. These plans enable gradual asset diversification while simultaneously minimizing the market effect of stock trades by spreading them out over an extended period of time. The 10b5-1 plans involve only a portion of the shares owned by Mr. Alden and Ptarmagin, respectively. The plan adopted by Mr. Alden involves a market order to sell up to 25,000 shares of the Company’s common stock per month effective September 8, 2015 and expiring August 9, 2016, for a total of up to 300,000 shares. The plan adopted by Ptarmagin involves a market order to sell up to 37,500 shares of the Company’s common stock per week effective September 10, 2015 and expiring September 6, 2016, for a total of up to 1,987,500 shares. Except as required by law, the Company does not undertake to report Rule 10b5-1 trading plans by other officers or directors of the Company or to report codifications, transactions or other activities under Rule 10b5-1 trading plans or the similar plans of any of its officers or directors. 28. The statements contained above were materially false and/or misleading when made because Defendants failed to disclose or indicate that: (i) the third quarter and full year 2015 revenue and net income guidance issued during the Company’s second quarter 2015 earnings announcement and subsequent conference call were materially false and misleading in that the projections were unattainable; (ii) the fourth quarter and full year 2015 revenue and net income guidance issued during the Company’s third quarter 2015 earnings announcement and subsequent conference call were materially false and misleading in that the projections were unattainable; (iii) Defendants intentionally failed to timely disclose the Company’s challenges with its largest China distributor; (iv) Defendant Rick Alden and Ptarmagin, with full knowledge of the undisclosed materially adverse facts alleged herein, embarked on a selling spree of personal holdings of SKUL common stock at artificially inflated prices, which sales they made without first disclosing these adverse material facts known to Defendants and withheld from the market, which permitted them to engage in unusual insider selling and realize proceeds in excess of $4 million; and (v) as a result of the foregoing, Defendants’ statements about SKUL’s business, operations, and prospects were false and misleading and/or lacked a reasonable basis. C. The Truth Slowly Emerges 29. On November 5, 2015, after the close of the financial markets, SKUL issued a press release entitled “Skullcandy Reports Third Quarter 16% Net Sales Growth.” In the press release, Defendants continued to mask the Company’s issues, failing to fully disclose the extent to which the Company’s operations were suffering. Therein, the Company, in relevant part, PARK CITY, Utah, Nov. 5, 2015 (GLOBE NEWSWIRE) -- Skullcandy, Inc. (NASDAQ:SKUL) today announced financial results for the third quarter ended September 30, 2015. Third quarter 2015 reported results versus the same quarter a year ago • Net sales: $67.2 million vs. $58.1 million, up 16% (up 19% currency neutral) • Gross margin: 41.0% vs. 45.3%, down 430 basis points (down 272 basis points currency neutral) • Selling, general and administrative expense (SG&A): $24.5 million vs. $22.7 million, up 8% • SG&A expense as a percent of net sales: 36.4% vs. 39.2% • Operating income: $3.1 million vs. $3.6 million, down $0.5 million (up 29% currency neutral) • Earnings per share $0.08, up 8% (up 29% currency neutral) “Our third quarter performance was highlighted by twenty two percent net sales growth in the U.S. and fourteen percent constant currency net sales growth in our international markets. Our product innovation, demand creation and distribution strategies are resonating with Skullcandy and Astro consumers around the world,” said Hoby Darling, President and Chief Executive Officer. “Our deep relationship with our consumer, coupled with our ability to be nimble and quick to market allows us to serve our consumer innovative and creative products that align with current trends. Our new Skullcandy wireless ear buds and headphones are a great example and an awesome addition to our existing product lineup that already includes several of the best-selling styles at retail. Strong sell-through of our new wireless products and increased year over year sales of our traditional wired products contributed to Skullcandy being the number one chosen headphones in the US for the fourth consecutive quarter. At the same time, Astro continues to dominate the high end of the gaming market with its leading portfolio of next- generation compatible headsets that now include Halo 5 and Call of Duty licensed editions. We remain very confident in the strategic course that we have set for the Company.” * * * 2015 Full Year and Fourth Quarter Financial Outlook For the full year 2015, the Company forecasts net sales to increase 10-11% over 2014 levels, or approximately 13% on a constant currency basis, and net income on a U.S. GAAP fully-diluted per share basis of a range of $0.37 to $0.39, an increase of 42% over 2014 levels, or approximately 82% on a constant currency basis. For the fourth quarter of 2015, the Company forecasts net sales to increase 5- 7% over 2014 levels, or approximately 9% on a constant currency basis, and net income on a U.S. GAAP fully-diluted per share basis of a range of $0.38 to $0.40, an increase of 49% over 2014 levels, or approximately 65% on a constant currency basis. 30. During the Q3 2015 earnings call on the same day, Defendant Hodell provided updated guidance for the full year and fourth quarter of 2015: [O]ur full year outlook forecast Q4 to increase 5% to 7% over 2014 levels or 8% to 10% on a constant currency basis with growth led by our domestic Skullcandy brand business and new product introductions while international sales will be tempered due to foreign exchange rate pressure and slower-than-expected growth and distributor transitions in Europe and China. We are targeting a Q4 gross margin in the range of 41.5% to 42.5% or 42.7% to 43.7% on a constant currency basis with an expected gross margin foreign currency drag of 120 basis points. This is lower than our previous estimate as the moderated sales internationally have materially reduced our ear bud sales in Q4. 31. On this news, shares of SKUL decreased $1.53 per share, more than 24%, to close at $4.81 per share on November 6, 2015, on unusually heavy volume. 32. Despite this partial disclosure, the Company’s common stock remained inflated due to Defendants’ failure to fully disclose the issues plaguing the Company’s business operations. 33. On November 9, 2015, the Company filed its Quarterly Report with the SEC on Form 10-Q for the quarterly period ended September 30, 2015. The Form 10-Q was signed by Defendants Darling and Hodell, and reaffirmed the Company’s financial results previously announced on November 5, 2015. 34. On November 18, 2015, the Company presented at the Furey Hidden Gems Conference, where it reiterated its previously disclosed guidance: 2015 Financial Summary • Maintained position of #1 headphones units sold, US NPD • Net Sales projected to increase 10‐11% | 13‐14% in constant currency • Gross margins of approximately 41.7% with 120 bps headwind from F/X • SG&A dollars down 1 to 2% YoY |below 36% of net sales vs. 39.9% LY • Operating Income up 40% to $16 ‐ $17 million | up 93% in constant currency • EPS up 42% to $0.37 ‐ $0.39 | up 82% in constant currency 35. The full extent of SKUL’s fraud was revealed on January 11, 2016, SKUL issued a press release entitled “Skullcandy Updates Fourth Quarter Outlook.” The press release, which updated the Company’s financial outlook for the fourth quarter ended December 31, 2015, and announced that it had missed Q4 2015 net sales projections, stated: Acquires Minority Interest in Mexico Joint Venture Management to Present at 2016 ICR Conference PARK CITY, Utah, Jan. 11, 2016 (GLOBE NEWSWIRE) -- Skullcandy, Inc. (NASDAQ:SKUL) today updated its outlook for the fourth quarter ended December 31, 2015. Updated Fourth Quarter Outlook For the fourth quarter, the Company now expects net sales to be approximately flat with 2014 levels, or increase approximately 2% on a currency neutral basis. The Company had previously forecasted net sales to increase by approximately 5-7%, or approximately 8-10% on a currency neutral basis, compared to the same quarter a year ago. Based on the sales shortfall attributable to disappointing holiday results, combined with the impact on gross margin from product mix shift driven by a higher percentage of gaming headset sales during the holiday season, the Company now expects fourth quarter diluted earnings per share on a U.S. GAAP basis between $0.20 and $0.22, compared to its previous outlook of $0.38 to $0.40. This new outlook includes a $1.6 million pre-tax allowance for bad debt charge related to further challenges with a China distributor. Excluding this China related charge and associated tax rate impacts, fourth quarter diluted earnings per share is expected to be between $0.25 and $0.27. The Company’s financial results are subject to finalization and audit of its financial closing procedures and results. “During the fourth quarter, including the holiday period, we experienced solid consumer demand for both the Skullcandy and Astro brands. Skullcandy domestic sell-through increased mid-teens year-over-year driven by a triple digit gain in our wireless headphone business according to NPD data. At the same time, Astro exceeded expectations and strengthened its connection with elite gamers through the recent launch of our A40 TR suite of products. However, we are disappointed that our strong sell-through performances could not overcome the softness in the U.S. audio headphone market which was unexpectedly down in the fourth quarter. This headwind, as well as aggressive promotional activity by our competitors, negatively affected our replenishment business for Skullcandy branded products contributing to the majority of our revenue miss, combined with a product mix shift that negatively weighed on gross margins,” explained Skullcandy President and CEO Hoby Darling. “We also chose to minimize sales to discount channels to further protect the Skullcandy brand and our retailers, as well as continue the clean-up work with our largest China distributor during the fourth quarter, as we shift to a more direct model in China,” added Darling. Darling continued, “Our recent market share gains and strong pipeline of innovative new products have us cautiously optimistic about our near-term growth prospects, particularly for our gaming and wireless businesses. Our outlook is being balanced by the challenging audio market conditions in the U.S. and our ongoing work to improve certain international markets. As a result, in 2016 we now expect net sales to grow in the mid to high-single digits and earnings per share to grow at a mid-teens rate over 2015 results, excluding the 2015 Q4 bad- debt allowance for our China distributor.” The Company expects to report its actual results for the fourth quarter and full year 2015 and provide a full year outlook for 2016 in March 2016. This press release contains certain non-GAAP information, such as currency neutral basis, which is intended to provide visibility into the Company’s operations by excluding the effects of foreign currency exchange rate fluctuations. 36. On this news, shares of SKUL plummeted $1.29 per share, more than 28%, to close at $3.26 per share on January 12, 2016, on unusually heavy volume. 37. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. D. Improper Insider Selling During The Class Period 38. As a direct result of Defendants’ wrongful actions, SKUL’s common stock traded at artificially inflated prices throughout the Class Period. Defendants’ wrongful conduct and their dissemination of false and misleading statements enabled director Rick Alden, the Company’s founder, and Ptarmagin, LLC, one of SKUL’s largest holders, to engage in improper insider trading. 39. Due to Alden and Ptarmagin’s desire to dump their shares of SKUL into the public market, the Company was caused to make false and misleading statements, including false and misleading projections for the third quarter, fourth quarter, and full year 2015, which artificially inflated the price of the shares during the Class Period, and the price at which Alden and Ptarmagin were able to sell their shares. 40. Defendants Rick Alden and Ptarmagin, LLC’s stock transactions during the Class Period are as follows: Date Entity Relation Shares Price Proceeds 09/08/15 Alden, Rick Director 25,000 $6.79 $169,750 10/13/15 Alden, Rick Director 25,000 $5.73 $143,250 11/10/15 Alden, Rick Director 25,000 $4.62 $115,500 12/08/15 Alden, Rick Director 25,000 $4.15 $103,750 Total Alden 100,000 $532,250 09/10/15 Ptarmagin, LLC 10% Owner 37,500 $6.59 $247,125 09/17/15 Ptarmagin, LLC 10% Owner 37,500 $6.46 $242,250 09/24/15 Ptarmagin, LLC 10% Owner 37,500 $6.19 $232,125 10/01/15 Ptarmagin, LLC 10% Owner 37,500 $5.55 $208,125 10/08/15 Ptarmagin, LLC 10% Owner 37,500 $5.84 $219,000 10/15/15 Ptarmagin, LLC 10% Owner 37,500 $5.63 $211,125 10/22/15 Ptarmagin, LLC 10% Owner 37,500 $5.67 $212,625 10/29/15 Ptarmagin, LLC 10% Owner 37,500 $5.63 $211,125 11/05/15 Ptarmagin, LLC 10% Owner 37,500 $6.14 $230,250 11/12/15 Ptarmagin, LLC 10% Owner 37,500 $4.34 $162,750 11/19/15 Ptarmagin, LLC 10% Owner 37,500 $4.26 $159,750 11/27/15 Ptarmagin, LLC 10% Owner 37,500 $4.14 $155,250 12/03/15 Ptarmagin, LLC 10% Owner 37,500 $4.25 $159,375 12/10/15 Ptarmagin, LLC 10% Owner 37,500 $4.14 $155,250 12/17/15 Ptarmagin, LLC 10% Owner 37,500 $4.43 $166,125 12/24/15 Ptarmagin, LLC 10% Owner 37,500 $4.58 $171,750 12/31/15 Ptarmagin, LLC 10% Owner 37,500 $4.73 $177,375 01/07/16 Ptarmagin, LLC 10% Owner 37,500 $4.56 $171,000 Total 675,000 Ptarmagin $3,492,375 Total Combined 775,000 $4,024,625 V. CLASS ACTION ALLEGATIONS 41. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3) on behalf of a class consisting of all those who purchased or otherwise acquired SKUL securities during the Class Period and who were damaged thereby (the “Class”). Excluded from the Class are Defendants, members of the immediate family of each of the Individual Defendants, any subsidiary or affiliate of SKUL and the directors, officers and employees of the Company or its subsidiaries or affiliates, or any entity in which any excluded person has a controlling interest, and the legal representatives, heirs, successors and assigns of any excluded person. 42. The members of the Class are so numerous that joinder of all members is impracticable. While the exact number of Class members is unknown to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff believes that there are hundreds or thousands of members in the proposed Class. Throughout the Class Period, SKUL’s securities were actively traded on the NASDAQ Global Market (“NASDAQ”) (an open and efficient market) under the symbol “SKUL.” Millions of SKUL shares were traded publicly during the Class Period on the NASDAQ. As of October 31, 2015, SKUL had 28,530,493 shares of common stock outstanding. Record owners and other members of the Class may be identified from records maintained by SKUL and/or its transfer agents and may be notified of the pendency of this action by mail, using a form of notice similar to that customarily used in securities class actions. 43. Plaintiff’s claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that is complained of herein. 44. Plaintiff will fairly and adequately protect the interests of the members of the Class and has retained counsel competent and experienced in class and securities litigation. 45. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are: a) whether the federal securities laws were violated by Defendants’ acts and omissions as alleged herein; b) whether Defendants participated in and pursued the common course of conduct complained of herein; c) whether documents, press releases, and other statements disseminated to the investing public and the Company’s shareholders during the Class Period misrepresented material facts about the business, finances, and prospects of SKUL; d) whether statements made by Defendants to the investing public during the Class Period misrepresented and/or omitted to disclose material facts about the business, finances, value, performance and prospects of SKUL; e) whether the market price of SKUL common stock during the Class Period was artificially inflated due to the material misrepresentations and failures to correct the material misrepresentations complained of herein; and f) the extent to which the members of the Class have sustained damages and the proper measure of damages. 46. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation makes it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. VI. UNDISCLOSED ADVERSE FACTS 47. The market for SKUL’s securities was an open, well-developed and efficient market at all relevant times. As a result of these materially false and misleading statements and failures to disclose described herein, SKUL’s securities traded at artificially inflated prices during the Class Period. Plaintiff and other members of the Class purchased or otherwise acquired SKUL’s securities relying upon the integrity of the market price of the Company’s securities and market information relating to SKUL and have been damaged thereby. 48. During the Class Period, Defendants materially misled the investing public, thereby inflating the price of SKUL’s securities, by publicly issuing false and misleading statements and omitting to disclose material facts necessary to make Defendants’ statements, as set forth herein, not false and misleading. Said statements and omissions were materially false and misleading in that they failed to disclose material adverse non-public information and misrepresented the truth about the Company, as well as its business, accounting, financial operations and prospects, as alleged herein. 49. At all relevant times, the material misrepresentations and omissions particularized in this Complaint directly or proximately caused or were a substantial contributing cause of the damages sustained by Plaintiff and other members of the Class. As described herein, during the Class Period, Defendants made or caused to be made a series of materially false and misleading statements about SKUL’s financial well-being and prospects. 50. These material misstatements and omissions had the cause and effect of creating in the market an unrealistically positive assessment of the Company and its financial well-being and prospects, thus causing the Company’s securities to be overvalued and artificially inflated at all relevant times. Defendants’ materially false and misleading statements during the Class Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities at artificially inflated prices, thus causing the damages complained of herein. VII. LOSS CAUSATION 51. During the Class Period, as detailed herein, Defendants engaged in a scheme to deceive the market and a course of conduct that artificially inflated the prices of SKUL’s securities and operated as a fraud or deceit on Class Period purchasers of SKUL’s securities by failing to disclose to investors that the Company’s financial results were materially misleading and misrepresented material information. When Defendants’ misrepresentations and fraudulent conduct were disclosed and became apparent to the market, the prices of SKUL’s securities fell precipitously as the prior inflation came out of the Company’s stock price. As a result of their purchases of SKUL’s securities during the Class Period, Plaintiff and the other Class members suffered economic loss. 52. By failing to disclose the true state of the Company’s financial statements, investors were not aware of the true state of the Company’s financial status. Therefore, Defendants presented a misleading picture of SKUL’s business practices and procedures. Thus, instead of truthfully disclosing during the Class Period the true state of the Company’s business, Defendants caused SKUL to conceal the truth. 53. Defendants’ false and misleading statements had the intended effect and caused SKUL’s common stock to trade at artificially inflated levels throughout the Class Period. The stock price drop discussed herein caused real economic loss to investors who purchased the Company’s securities during the Class Period. 54. The decline in the price of SKUL’s common stock after the truth came to light was a direct result of the nature and extent of Defendants’ fraud finally being revealed to investors and the market. The timing and magnitude of SKUL’s common stock price decline negates any inference that the loss suffered by Plaintiff and the other Class members was caused by changed market conditions, macroeconomic or industry factors or Company-specific facts unrelated to the Defendants’ fraudulent conduct. The economic loss suffered by Plaintiff and the other Class members was a direct result of Defendants’ fraudulent scheme to artificially inflate the prices of SKUL’s securities and the subsequent decline in the value of SKUL’s securities when Defendants’ prior misrepresentations and other fraudulent conduct were revealed. VIII. SCIENTER ALLEGATIONS 55. As alleged herein, the Individual Defendants acted with scienter in that Individual Defendants knew that the public documents and statements issued or disseminated in the name of the Company during the Class Period were materially false and misleading; knew that such statements or documents would be issued or disseminated to the investing public; and knowingly and substantially participated or acquiesced in the issuance or dissemination of such statements or documents as primary violations of the federal securities laws. 56. As set forth herein, the Individual Defendants, by virtue of their receipt of information reflecting the true facts regarding SKUL, their control over, receipt and/or modification of SKUL’s allegedly materially misleading statements and omissions, and/or their positions with the Company which made them privy to confidential information concerning SKUL, participated in the fraudulent scheme alleged herein. IX. APPLICABILITY OF PRESUMPTION OF RELIANCE: FRAUD-ON-THE- MARKET DOCTRINE 57. At all relevant times, the market for SKUL’s securities was an efficient market for the following reasons, among others: a) SKUL securities met the requirements for listing, and were listed and actively traded on the NASDAQ, a highly efficient market; b) As a regulated issuer, SKUL filed periodic public reports with the SEC and the NASDAQ; c) SKUL securities were followed by securities analysts employed by major brokerage firms who wrote reports which were distributed to the sales force and certain customers of their respective brokerage firms. Each of these reports was publicly available and entered the public marketplace; and d) SKUL regularly issued press releases which were carried by national newswires. Each of these releases was publicly available and entered the public marketplace. 58. As a result of the foregoing, the market for SKUL’s securities promptly digested current information regarding SKUL from all publicly available sources and reflected such information in SKUL’s stock price. Under these circumstances, all purchasers of SKUL’s securities during the Class Period suffered similar injury through their purchase of SKUL’s securities at artificially inflated prices and a presumption of reliance applies. 59. A Class-wide presumption of reliance is also appropriate in this action under the Supreme Court’s holding in Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128 (1972), because Plaintiff’s fraud claims are grounded in Defendants’ omissions of material fact of which there is a duty to disclose. As this action involves Defendants’ failure to disclose material adverse information regarding SKUL’s business practices, financial results and condition and internal controls—information that Defendants were obligated to disclose during the Class Period but did not—positive proof of reliance is not a prerequisite to recovery. All that is necessary is that the facts withheld be material in the sense that a reasonable investor might have considered such information important in the making of investment decisions. X. NO SAFE HARBOR 60. The federal statutory safe harbor provided for forward-looking statements under certain circumstances does not apply to any of the allegedly false statements pleaded in this Complaint. The statements alleged to be false and misleading herein all relate to then-existing facts and conditions. In addition, to the extent certain of the statements alleged to be false may be characterized as forward looking, they were not identified as “forward-looking statements” when made and there were no meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the purportedly forward-looking statements. 61. In the alternative, to the extent that the statutory safe harbor is determined to apply to any forward-looking statements pleaded herein, Defendants are liable for those false forward-looking statements because at the time each of those forward-looking statements was made, the speaker had actual knowledge that the forward-looking statement was materially false or misleading, and/or the forward-looking statement was authorized or approved by an executive officer of SKUL who knew that the statement was false when made. XI. COUNTS AGAINST DEFENDANTS COUNT I Violation of Section 10(b) of the Exchange Act and Rule 10b-5 Promulgated Thereunder Against All Defendants 62. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. This claim is asserted against all Defendants. 63. During the Class Period, SKUL and the Individual Defendants carried out a plan, scheme and course of conduct which was intended to and, throughout the Class Period, did: (i) deceive the investing public, including Plaintiff and the other Class members, as alleged herein; (ii) artificially inflate and maintain the market price of SKUL securities; and (iii) cause Plaintiff and the other members of the Class to purchase SKUL securities at artificially inflated prices. In furtherance of this unlawful scheme, plan and course of conduct, defendants, and each of them, took the actions set forth herein. 64. These Defendants: (a) employed devices, schemes, and artifices to defraud; (b) made untrue statements of material fact and/or omitted to state material facts necessary to make the statements not misleading; and (c) engaged in acts, practices and a course of business which operated as a fraud and deceit upon the purchasers of the Company’s securities in an effort to maintain artificially high market prices for SKUL securities in violation of §10(b) of the Exchange Act and Rule 10b-5. Defendants are sued as primary participants in the wrongful and illegal conduct charged herein. The Individual Defendants are also sued herein as controlling persons of SKUL, as alleged herein. 65. In addition to the duties of full disclosure imposed on Defendants as a result of their making of affirmative statements and reports, or participation in the making of affirmative statements and reports to the investing public, they each had a duty to promptly disseminate truthful information that would be material to investors in compliance with the integrated disclosure provisions of the SEC as embodied in SEC Regulation S X (17 C.F.R. § 210.01 et seq.) and S-K (17 C.F.R. § 229.10 et seq.) and other SEC regulations, including accurate and truthful information with respect to the Company’s operations, financial condition and performance so that the market prices of the Company’s publicly traded securities would be based on truthful, complete and accurate information. 66. SKUL and the Individual Defendants, individually and in concert, directly and indirectly, by the use of means or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a continuous course of conduct to conceal adverse material information about the business, business practices, performance, operations and future prospects of SKUL as specified herein. These Defendants employed devices, schemes and artifices to defraud, while in possession of material adverse non-public information and engaged in acts, practices, and a course of conduct as alleged herein in an effort to assure investors of SKUL’s value and performance and substantial growth, which included the making of, or the participation in the making of, untrue statements of material facts and omitting to state material facts necessary in order to make the statements made about SKUL and its business, operations and future prospects, in light of the circumstances under which they were made, not misleading, as set forth more particularly herein, and engaged in transactions, practices and a course of business which operated as a fraud and deceit upon the purchasers of SKUL’s securities during the Class Period. 67. Each of the Individual Defendants’ primary liability, and controlling person liability, arises from the following facts: (i) each of the Individual Defendants was a high-level executive and/or director at the Company during the Class Period; (ii) each of the Individual Defendants, by virtue of his responsibilities and activities as a senior executive officer and/or director of the Company, was privy to and participated in the creation, development and reporting of the Company’s operational and financial projections and/or reports; (iii) the Individual Defendants enjoyed significant personal contact and familiarity with each other and were advised of and had access to other members of the Company’s management team, internal reports, and other data and information about the Company’s financial condition and performance at all relevant times; and (iv) the Individual Defendants were aware of the Company’s dissemination of information to the investing public which they knew or recklessly disregarded was materially false and misleading. 68. These Defendants had actual knowledge of the misrepresentations and omissions of material facts set forth herein, or acted with reckless disregard for the truth in that they failed to ascertain and to disclose such facts, even though such facts were readily available to them. Such Defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and for the purpose and effect of concealing SKUL’s operating condition, business practices and future business prospects from the investing public and supporting the artificially inflated price of its common stock. As demonstrated by their overstatements and misstatements of the Company’s financial condition and performance throughout the Class Period, the Individual Defendants, if they did not have actual knowledge of the misrepresentations and omissions alleged, were severely reckless in failing to obtain such knowledge by deliberately refraining from taking those steps necessary to discover whether those statements were false or misleading. 69. As a result of the dissemination of the materially false and misleading information and failure to disclose material facts, as set forth above, the market price of SKUL securities was artificially inflated during the Class Period. In ignorance of the fact that the market price of SKUL shares was artificially inflated, and relying directly or indirectly on the false and misleading statements made by Defendants, upon the integrity of the market in which the securities trade, and/or on the absence of material adverse information that was known to or recklessly disregarded by Defendants but not disclosed in public statements by these Defendants during the Class Period, Plaintiff and the other members of the Class acquired SKUL securities during the Class Period at artificially inflated high prices and were damaged thereby. 70. At the time of said misrepresentations and omissions, Plaintiff and other members of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff and the other members of the Class and the marketplace known of the true performance, business practices, future prospects and intrinsic value of SKUL, which were not disclosed by Defendants, Plaintiff and other members of the Class would not have purchased or otherwise acquired SKUL securities during the Class Period, or, if they had acquired such securities during the Class Period, they would not have done so at the artificially inflated prices which they paid. 71. By virtue of the foregoing, SKUL and the Individual Defendants each violated §10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. 72. As a direct and proximate result of the Individual Defendants’ wrongful conduct, Plaintiff and the other members of the Class suffered damages in connection with their purchases of the Company’s securities during the Class Period. COUNT II Violation of Section 20(a) of the Exchange Act Against The Individual Defendants 73. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. 74. The Individual Defendants were and acted as controlling persons of SKUL within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level positions with the Company, participation in and/or awareness of the Company’s operations and/or intimate knowledge of the Company’s actual performance, the Individual Defendants had the power to influence and control and did influence and control, directly or indirectly, the decision-making of the Company, including the content and dissemination of the various statements which Plaintiff contends are false and misleading. Each of the Individual Defendants was provided with or had unlimited access to copies of the Company’s reports, press releases, public filings and other statements alleged by Plaintiff to be misleading prior to and/or shortly after these statements were issued and had the ability to prevent the issuance of the statements or cause the statements to be corrected. 75. In addition, each of the Individual Defendants had direct involvement in the day- to-day operations of the Company and, therefore, is presumed to have had the power to control or influence the particular transactions giving rise to the securities violations as alleged herein, and exercised the same. 76. As set forth above, SKUL and the Individual Defendants each violated §10(b) and Rule 10b-5 by their acts and omissions as alleged in this Complaint. By virtue of their controlling positions, the Individual Defendants are liable pursuant to §20(a) of the Exchange Act. As a direct and proximate result of these Defendants’ wrongful conduct, Plaintiff and other members of the Class suffered damages in connection with their purchases of the Company’s securities during the Class Period. XII. PRAYER FOR RELIEF WHEREFORE, Plaintiff, individually and on behalf of the Class, prays for judgment as follows: a) Declaring this action to be a class action pursuant to Rule 23(a) and (b)(3) of the Federal Rules of Civil Procedure on behalf of the Class defined herein; b) Awarding Plaintiff and the other members of the Class damages in an amount which may be proven at trial, together with interest thereon; c) Awarding Plaintiff and the members of the Class pre-judgment and post-judgment interest, as well as their reasonable attorneys’ and experts’ witness fees and other costs; and d) Awarding such other relief as this Court deems appropriate. XIII. JURY TRIAL DEMANDED Plaintiff hereby demands a trial by jury. Respectfully Submitted, Dated: May 23, 2014 By:/s/ Jeffrey L. Silvestrini Jeffrey L. Silvestrini Attorneys for Plaintiff Melanie Davis COHNE KINGHORN, P.C. Jeffrey L. Silvestrini, Esq. 257 East 200 South Suite 700 Salt Lake City, UT 84111 Telephone: (801) 363-4300 SAXENA WHITE P.A. Joseph E. White, III (pro hac vice to be filed) Lester R. Hooker (pro hac vice to be filed) 5200 Town Center Circle Suite 601 Boca Raton, FL 33486 Telephone: (561) 394-3399 Facsimile: (561) 394-3082 RYAN & MANISKAS, LLP Richard A. Maniskas (pro hac vice to be filed) Katharine Ryan (pro hac vice to be filed) 995 Old Eagle School Rd., St. 311 Wayne, Pennsylvania 19087 Telephone: (484) 588-5516 Facsimile: (484) 450-2582

securities

lMIjDYcBD5gMZwczJWgv

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK Roman Ilyayev, individually and on behalf of all others similarly situated, Civil Action No: 1:20-cv-4944 Plaintiff, CLASS ACTION COMPLAINT DEMAND FOR JURY TRIAL -v.- Portfolio Recovery Associates, LLC. Defendants. Plaintiff Roman Ilyayev (hereinafter, “Plaintiff”), a New York resident, brings this Class Action Complaint by and through his attorneys, Horowitz Law, PLLC, against Defendant Portfolio Recovery Associates, LLC (hereinafter “PRA”), individually and on behalf of a class of all others similarly situated, pursuant to Rule 23 of the Federal Rules of Civil Procedure, based upon information and belief of Plaintiff’s counsel, except for allegations specifically pertaining to Plaintiff, which are based upon Plaintiff's personal knowledge. INTRODUCTION/PRELIMINARY STATEMENT 1. Congress enacted the Fair Debt Collection Practices Act (“the FDCPA’) in 1977 in response to the "abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors." 15 U.S.C. §1692(a). At that time, Congress was concerned that "abusive debt collection practices contribute to the number of personal bankruptcies, to material instability, to the loss of jobs, and to invasions of individual privacy." Id. Congress concluded that "existing laws…[we]re inadequate to protect consumers," and that "'the effective collection of debts" does not require "misrepresentation or other abusive debt collection practices." 15 U.S.C. §§ 1692(b) & (c). 1 2. Congress explained that the purpose of the Act was not only to eliminate abusive debt collection practices, but also to "insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged." Id. § 1692(e). After determining that the existing consumer protection laws ·were inadequate. Id. § l692(b), Congress gave consumers a private cause of action against debt collectors who fail to comply with the Act. § 1692k. JURISDICTION AND VENUE 3. The Court has jurisdiction over this class action pursuant to 28 U.S.C. § 1331 and 15 U.S.C. § 1692 et. seq. 4. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(b)(2) as this is where the Plaintiff resides as well as a substantial part of the events or omissions giving rise to the claim occurred. NATURE OF THE ACTION 5. Plaintiff brings this class action on behalf of a class of New York consumers under § 1692 et seq. of Title 15 of the United States Code, commonly referred to as the Fair Debt Collections Practices Act ("FDCPA"), and 6. Plaintiff is seeking damages and declaratory relief. PARTIES 7. Plaintiff is a resident of the State of New York, County of Queens. 8. Defendant PRA is a "debt collector" as the phrase is defined in 15 U.S.C. § 1692(a)(6) and used in the FDCPA with an address at 120 Corporate Blvd., Suite 100, Norfolk, Virginia 23502. 9. Upon information and belief, Defendant PRA is a company that uses the mail, telephone, and facsimile and regularly engages in business the principal purpose of which is to attempt to collect debts alleged to be due another. CLASS ALLEGATIONS 10. Plaintiff brings this claim on behalf of the following case, pursuant to Fed. R. Civ. P. 23(a) and 23(b)(3). 11. The Class consists of: a. all individuals with addresses in the State of New York; b. to whom Defendant PRA sent a collection letter attempting to collect a consumer debt; c. that states that an account has been transferred to the litigation department; d. implying that legal action would take place when in reality only local counsel would be able to file a lawsuit; e. which letter was sent on or after a date one (1) year prior to the filing of this action and on or before a date twenty-one (2l) days after the filing of this action. 12. The identities of all class members are readily ascertainable from the records of Defendants and those companies and entities on whose behalf they attempt to collect and/or have purchased debts. 13. Excluded from the Plaintiff Class are the Defendants and all officer, members, partners, managers, directors and employees of the Defendants and their respective immediate families, and legal counsel for all parties to this action, and all members of their immediate families. 14. There are questions of law and fact common to the Plaintiff Class, which common issues predominate over any issues involving only individual class members. The principal issue is whether the Defendants' written communication to consumers, in the forms attached as Exhibit A, violate 15 U.S.C. §§ l692e and 1692f. 15. The Plaintiff’s claims are typical of the class members, as all are based upon the same facts and legal theories. The Plaintiff will fairly and adequately protect the interests of the Plaintiff Class defined in this complaint. The Plaintiff has retained counsel with experience in handling consumer lawsuits, complex legal issues, and class actions, and neither the Plaintiff nor his attorneys have any interests, which might cause them not to vigorously pursue this action. 16. This action has been brought, and may properly be maintained, as a class action pursuant to the provisions of Rule 23 of the Federal Rules of Civil Procedure because there is a well-defined community interest in the litigation: a. Numerosity: The Plaintiff is informed and believes, and on that basis alleges, that the Plaintiff Class defined above is so numerous that joinder of all members would be impractical. b. Common Questions Predominate: Common questions of law and fact exist as to all members of the Plaintiff Class and those questions predominance over any questions or issues involving only individual class members. The principal issue is whether the Defendants' written communication to consumers, in the forms attached as Exhibit A, violate 15 § l692e and §1692f. c. Typicality: The Plaintiff’s claims are typical of the claims of the class members. The Plaintiff and all members of the Plaintiff Class have claims arising out of the Defendants' common uniform course of conduct complained of herein. d. Adequacy: The Plaintiff will fairly and adequately protect the interests of the class members insofar as Plaintiff has no interests that are adverse to the absent class members. Plaintiff is committed to vigorously litigating this matter. Plaintiff has also retained counsel experienced in handling consumer lawsuits, complex legal issues, and class actions. Neither the Plaintiff nor his counsel have any interests which might cause them not to vigorously pursue the instant class action lawsuit. e. Superiority: A class action is superior to the other available means for the fair and efficient adjudication of this controversy because individual joinder of all members would be impracticable. Class action treatment will permit a large number of similarly situated persons to prosecute their common claims in a single forum efficiently and without unnecessary duplication of effort and expense that individual actions would engender. 17. Certification of a class under Rule 23(b)(3) of the Federal Rules of Civil Procedure is also appropriate in that the questions of law and fact common to members of the Plaintiff Class predominate over any questions affecting an individual member, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy. 18. Depending on the outcome of further investigation and discovery, Plaintiff may, at the time of class certification motion, seek to certify a class(es) only as to particular issues pursuant to Fed. R. Civ. P. 23(c)(4). FACTUAL ALLEGATIONS 19. Plaintiff repeats, reiterates and incorporates the allegations contained in paragraphs numbered above herein with the same force and effect as if the same were set forth at length herein. 20. Some time prior to October 15, 2019, an obligation was allegedly incurred to Capital One Bank (USA) N.A. 21. The obligation arose out of a transaction in which money, property, insurance or services, of which the subject transactions, were incurred for personal purposes, specifically a Capital One Bank (USA) N.A. credit card used for these types of transactions. 22. The alleged Capital One Bank (USA) N.A. obligation is a "debt" as defined by 15 U.S.C.§ 1692a (5). 23. Capital One Bank (USA) N.A. is a "creditor" as defined by 15 U.S.C.§ 1692a (4). 24. Capital One Bank (USA) N.A. or the current creditor at the time eventually sold the alleged debt to PRA who is the current creditor and debt collector. 25. Defendant PRA collects and attempts to collect debts incurred or alleged to have been incurred for personal, family or household purposes on behalf of creditors using the United States Postal Services, telephone and internet. October 15, 2019 Collection Letter 26. On or about October 15, 2019, Defendant sent the Plaintiff a collection letter (the “Letter”) regarding the alleged debt owed to PRA. See Letter attached as Exhibit A. 27. The collection letter heading states: Account transferred to Litigation Department 28. The Letter further states: At this time, no attorney within the Litigation Department has personally reviewed the particular circumstances of your account. 29. The Letter then offers Plaintiff options to resolve the account but cautions: Your first payment must be received NO LATER than: 12/02/2019. 30. Defendant’s Letter advises that the account has been transferred to the Litigation Department. 31. The implication here is that this particular account is ripe for litigation, i.e. the filing of a lawsuit by the litigation department of Defendant PRA. 32. Defendant PRA is not a law firm and lacks the ability to file a lawsuit in New York. 33. Defendant PRA would need to retain local counsel in New York to initiate any lawsuit on this account. 34. Defendant’s Letter advising Plaintiff to make the first payment to PRA NO LATER than 12/02/2019. This demand is meant to strike fear in the heart of Plaintiff in that if he does not comply by the stated date he will be sued. 35. Defendant misleads and deceives Plaintiff into the belief that a lawsuit is imminent without Plaintiff’s compliance or immediate payment of the account. 36. Plaintiff became fearful that if he did pay the amount demanded in the Letter he would be sued. 37. As a result of Defendant’s deceptive, misleading and false debt collection practices, Plaintiff has been damaged. COUNT I VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. §1692e et seq. 38. Plaintiff incorporates by reference paragraphs 1-37 of this Complaint as though fully stated herein with the same force and effect as if the same were set forth at length herein. 39. Defendant’s debt collection efforts attempted and/or directed towards the Plaintiff violated various provisions of the FDCPA, including but not limited to 15 U.S.C. § 1692e. 40. Pursuant to 15 U.S.C. §1692e, a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. 41. Defendant violated said section by: a. Making a false and misleading representation in violation of but not limited to §1692e (10). b. by giving Plaintiff the impression that PRA is a law firm who has the ability to initiate a lawsuit. 42. By reason thereof, Defendant is liable to Plaintiff for judgment that Defendant's conduct violated Section 1692e, et seq. of the FDCPA and is entitled to actual damages, statutory damages, costs and attorneys’ fees. COUNT II VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. §1692f et seq. 43. Plaintiff incorporates by reference paragraphs 1-35 of this Complaint as though fully stated herein with the same force and effect as if the same were set forth at length herein. 44. Defendant’s debt collection efforts attempted and/or directed towards the Plaintiff violated various provisions of the FDCPA, including but not limited to 15 U.S.C. § 1692f. 45. Pursuant to 15 U.S.C. §1692f, a debt collector may not use any unfair or unconscionable means in connection with the collection of any debt. 46. Defendant violated this section by a. Using the language of “Account Transferred to Litigation Department” that legal proceedings would occur. b. by giving Plaintiff the impression that PRA is a law firm who has the ability to initiate a lawsuit. 47. By reason thereof, Defendant is liable to Plaintiff for judgment that Defendant's conduct violated Section 1692f, et seq. of the FDCPA and is entitled to actual damages, statutory damages, costs and attorneys’ fees. DEMAND FOR TRIAL BY JURY 48. Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff hereby requests a trial by jury on all issues so triable. PRAYER FOR RELIEF WHEREFORE, Plaintiff Roman Ilyayev, individually and on behalf of all others similarly situated, demands judgment from Defendant Portfolio Recovery Associates, LLC as follows: 1. Declaring that this action is properly maintainable as a Class Action and certifying Plaintiff as Class representative, and Uri Horowitz, Esq. as Class Counsel; 2. Awarding Plaintiff and the Class statutory damages; 3. Awarding Plaintiff and the Class actual damages; 4. Awarding Plaintiff costs of this Action, including reasonable attorneys’ fees and expenses; 5. Awarding pre-judgment interest and post-judgment interest; and 6. Awarding Plaintiff and the Class such other and further relief as this Court may deem just and proper. Dated: October 14, 2020 HOROWITZ LAW, PLLC /s/ Uri Horowitz Uri Horowitz, Esq. 14441 70th Road Flushing, NY 11367 Telephone: 718-705-8706 Fax: 718-705-8705 [email protected] Attorneys for Plaintiff

consumer fraud

kss8DocBD5gMZwcze0UI

GREENBER RG, LLC uite 1201 EPALMA G . Greenberg ad Street, Su NJ 07102 ne: (973) 62 e: (973) 623 erg@litedepa 23-3000 3-0858 alma.com s for Plaintif ff nal counsel l listed on sign nature page] ] LITE DE Bruce D. 570 Broa Newark, Telephon Facsimile bgreenbe Attorneys [Addition UNIT T TED STATE DISTRICT D ES DISTRI OF NEW J ICT COURT JERSEY self ivil Action N No.: ORM OPTIC Others Simil S, INC., on larly Situated Behalf of Its d, LASS ACTI ION Plaintiff, LASS ACTI ION COMP PLAINT v. MACEUTICA INC., a Brit ALS tish Columbi ia URY TRIA AL DEMAND DED NT PHARM NATIONAL tion, C C C JU Defendant : : : : : : : : : : : : TRU-FO and All O VALEAN INTERN Corporat t. Pla intiff, by and d through its s attorneys, b based on its individual e experiences, the investig ation of counse el, and inform mation and b belief allege es as follows s: I. IN NTRODUCT TION 1 ndant Valean nt Pharmaceu uticals Intern national Inc. . (“Valeant”) ) is widely Defen . known fo or its controv versial busin ness practice s. Among th hese is Vale eant’s practic ce of acquirin ng rights to existing hea althcare treat tments and th hen impleme enting outsiz zed price inc creases, unre elated to any in ts. crease in the e costs of pro oviding the t treatment, in n order to bo oost the comp pany’s profi Coupled with other “ “aggressive” business pra actices—inc cluding mini imizing resea arch and ies developm ment expense es (the comp pany spends a fraction of f what many y other big d drug compan spend on n developing new treatme ents)—Vale ant’s profits s-through-pri ice-gouging model has b been described d as “gamesm manship” de esigned to in ncrease its sto ock value. 2 ant’s practice es have been n called “dee eply immoral l,” but in som me cases, its s Valea . practices cross the lin ne from imm moral to illeg gal. This cas se involves s such a practi ice: an anticomp petitive schem me by Valea ant to monop polize the ma arket for cer rtain gas perm meable cont tact lens mate erials and the en abuse tha at monopoly power by ra aising prices s far beyond prior competit ive levels. 3 gust 2013, V Valeant enter red the mark ket for orthok keratology ( (“OrthoK”) l lens In Au . materials s—a submar ket of the m market for “ga as permeable e,” or rigid, contact lens s materials— —by acquiring g B&L Hold dings (“Bausc ch & Lomb” ”) for $8.7 bi illion. Baus sch & Lomb was the sec ond largest m manufacturer of OrthoK “ “buttons”—t the materials s used to ma ake OrthoK l lenses. 4 than two yea ars after it ac cquired Baus sch & Lomb , in May 201 15, Valeant Less t . successfu ully acquired d its only com mpetitor in t the OrthoK b button marke et—Paragon n Vision Scie ences (“Parago n”). 5 ant’s acquisit tion of Parag gon gave it 1 100% contro ol over the O OrthoK button n Valea . market, w which it prom mptly used, i in a textbook k example o of the abuse o of monopoly y power, to r raise the price s on OrthoK K buttons by between 61% % and 143% %. 6 ant’s anticom mpetitive con nduct has alr ready resulte ed in the redu uction—if no ot Valea . eliminati ion—of com mpetition in th he market fo or OrthoK bu uttons, and i f left unchec cked, its con nduct will resul lt in no comp petition in th he overall m market for Or rthoK lenses , leaving pat tients paying g higher pr rices for few wer options. II. P PARTIES 7 tiff Tru-Form m Optics, Inc c. (“TruForm m Optics”) is s a Texas cor rporation tha at Plaint . manufact tures gas per rmeable con tact lenses, i including ort rthokeratolog gy lenses. Ja an Svochak, the President t of Plaintiff f TruForm O Optics, also s erves as the President of f the CLMA A, the gas permeabl le lens indus stry’s trade a association, t the Contact L Lens Manuf facturing As sociation (“CLMA A”), in which h approximat tely 95% of GP labs are members. 8 ndant Valean nt Pharmaceu uticals is a m multi-billion dollar pharm maceutical Defen . company y registered u under the law ws of the Pro ovince of Br ritish Columb bia with inte ernational headquar rters in Lava al, Quebec. I Its U.S. Hea adquarters ar re located in Bridgewater r, New Jerse ey. Valeant h has received d recent medi ia attention f for its aggres ssive price in ncreases afte er the acquis sition of two ol lder heart dru ugs, and is w well-known f for its aggre ssive busine ess practices that often sk kirt, and some etimes overs step, the bou unds of legal conduct. A According to public repor rts, Valeant h has received subpoenas r related to a c criminal inve estigation int to payments s between Va aleant subsidiar ries and med dical professi ionals in vio olation of fed deral law. III. J URISDICT TION AND V VENUE 9 Court has sub bject matter jurisdiction .S.C. § 1331 1 (federal under 28 U This C . question) ) and 28 U.S S.C. § 1337 ( (commerce a and antitrust t regulation), , as this actio on arises und der Section 2 2 of the Sher rman Act, 15 5 U.S.C. § 2, , and Section n 4 and 16 o of the Clayto n Act, 15 U. .S.C. §§ 15(a) and 26. The e Court has s supplementa al subject ma atter jurisdic ction of the p pendant state e law nder 28 U.S. .C. § 1367. The Court a also has juris sdiction over r this action p pursuant to 2 28 claims un U.S.C. § 1332(d) bec cause the am mount in cont troversy for the Class ex xceeds $5,00 00,000, and t there are memb bers of the C Class who ar re citizens of f a different state than th he Defendant t. The Court t also has jurisd diction over this action p pursuant to 2 28 U.S.C. § 1 1332(a) beca ause the amo ount in controver rsy exceeds $75,000 and d Plaintiff is a citizen of a different s state than De efendant. 1 e is proper in n this Distric ct under 28 U U.S.C. § 139 91(b) and (c) ) and Section ns 4 Venue 0. and 12 of f the Clayton n Act, 15 U. S.C. §§ 15 a and 22, becau use Defenda ant resides, t transacts bus siness or is foun nd within thi is District, an nd a substan ntial part of t the events gi iving rise to the claims a arose in this Di istrict. IV. R RELEVANT T MARKET T A. ORTH A HOKERAT TOLOGY L LENSES are a type o 1 ermeable (“G GP”) lenses of contact len ns made from m a firm, dur rable Gas p . called “rigi plastic. T These types of lenses are e sometimes d” gas perm meable lenses s, although th hey differ fro om the origin nal “hard len ns” contacts i in that they a allow oxyge en to pass thr rough the len ns and reach h the cornea . GP lenses are custom m made for eac ch individua al, requiring an eye care practition ner (“ECP”) 1 to measure e the exact sh hape of the c cornea—ofte en using sop phisticated technique es to map ey ye topograph hy—and pres scribe lenses s with the sp pecific curva ature, size, an nd correctiv ve power to s suit a particu ular patient’s s eyes. 2 keratology ( (or “OrthoK” ”) refers to t the use of GP P lenses wor rn while the Ortho . patient is s sleeping, in n order to slo owly reshape e the cornea and correct vision. The e reshaping effects of f OrthoK len nses, while n not permanen nt, last long t a patient’s v vision remai ins enough that es. corrected d throughout t the followin ng day—wit thout the nee ed to wear da aytime conta acts or glass 3 K lenses are e the only no on-surgical tr reatment for r myopia tha at permit a pa atient Ortho . to be free e from conta acts or glasse es during day ytime hours. . OrthoK len nses may als so be used to o slow the progression of myopia i in children a and teenagers s, which can nnot be accom mplished wi ith or other types s of contact lenses. glasses o 1 ECPs c can include o ophthalmolo ogists, optom metrists, and opticians. B. MAN B NUFACTUR RING OF O RTHOKER RATOLOGY Y LENSES S 4 manufacturin ng process fo or OrthoK be egins with th he manufactu ure of the FD DA- The m . approved d material,2 u usually made e of oxygen- -permeable p plastic polym mers contain ning silicone and fluorine ( (“OrthoK m aterial”). Th he OrthoK m material is th hen made into o small disk ks (called “buttons” ”), which are e individuall ly mounted o on spinning shafts and sh haped with c computer- controlle d precision c cutting tools s. 5 pproximately y half the Or rthoK lenses s sold in the United State es, the proce ess of For ap . shaping t the buttons i nto lenses is s performed by finishing g labs, such a as Plaintiff T TruForm Opt tics, which sp pecialize in th he custom m manufacture o of gas perme eable contac ct lenses. 6 inishing labs s purchase O OrthoK butto ons from a m materials man nufacturer, th hen The fi . custom s hape each le ens using a p particular len ns design in c conjunction with the pat tient’s specif fic prescript ion informat tion as comm municated by y the ECP. M Many labs h have their ow wn unique le ns —some paten nted—for Or rthoK lenses s, as well as f for GP lense es in general l. The labs designs— compete with each ot ther for cust tomers throu ugh the creati ion of these designs,3 as s well as by cultivatin ng contacts w with ECPs, a and by gener rally marketi ing their spe ecialized serv vices to ECP Ps and their r patients. 7 e May 2015 , there were only two co ompetitors in n the market for the Befor . manufact ture of FDA A-approved O OrthoK butto ons: Paragon n and Bausch h & Lomb (o owned by 00% of the Valeant a as of 2013). After purch hasing Parag gon in May 2 2015, Valean nt controls 1 market fo or those butt tons. 2 See Sec ction IV.C b below for mo ore detail abo out the FDA A approval pr rocess for O OrthoK lenses s. own unique designs, ma any labs also o use designs s licensed fr om s have their 3 Althoug other des gh many lab sign owners. 8 dition to mon nopolizing th he market fo or OrthoK bu uttons, Valea ant also cont trols In add . the other r half of the m market for O OrthoK lense es, which is c composed of f a single Or rthoK produc ct called the e Paragon C RT.4 The Pa aragon CRT T is a “finishe ed” lens pro duct manufa actured by Paragon, meaning tha at both the m manufacture of the button ns and the sh haping of th he buttons int to lenses are e performed d by Paragon n, which then n sells the len nses directly y to ECPs an nd their patie ents.5 9 ant’s Paragon n CRT produ uct thus com mpetes direct tly with the O OrthoK lense es Valea . manufact tured by the finishing lab bs. C. FDA C APPROVA AL FOR OR RTHOKERA ATOLOGY Y MATERIA ALS 1 and Paragon n’s—and now w Valeant’s— —complete dominance o of the marke et for B&L 0. OrthoK b buttons can b be explained d largely by t the burdenso ome process s of gaining F FDA approv val for Ortho oK lenses, w which involve es two steps. . Both of the ese steps req quire enormo ous outlays o of both time e and money y and create a significant t barrier to e ntry into the e OrthoK but tton market, which is not currently y large enou ugh to incent tivize new en ntry given th he costs. 1 y GP lens ma ade in the U. S. must hav ve FDA prem market appro oval (“PMA” ”) for Every 1. both the m materials fro om which it is made, and d the specific c design of t the lens. Ac ccording to th he MA is the m The applicant A.   the P T d su in nt type of dev ve FDA appr s based on a evidence to roved PMA i vice marketi roval of its P determinatio assure that t is, in effect, ing applicati PMA applica on by FDA t the device is a private lic ion required ation prior to that the PMA s safe and ef cense grantin by the FDA o marketing A contains ffective for it ng the applic ts cant use differen to describe a nt all he 4 CRT sta technolog types of c http://ww term “Or evice. PMA ufficient vali ntended use( ands for “co gy, the term corneal resh ww.allaboutv rthoK” to me most stringen t must receiv A approval is id scientific (s). An appr rneal refract “orthokerat aping lenses vision.com/c ean all lense tive therapy. ology” (or O s, including t contacts/orth s used for or ” Although OrthoK) is us the Paragon hok.htm. For rthokeratolog CRT lenses sually used t CRT. See, r that reason gy, includin technically to describe t e.g., n, this Comp g CRT lense laint uses th es. As bs have also ant notified a served as di all such distr istributors fo ributors that or Paragon C t it was cance CRT lenses. eling their 5 Historic of Octob distributi cally, many er 2015, how ion contracts finishing lab wever, Valea s. or owner) pe ermission to market the d device.6 (o 1 over, becaus se OrthoK le enses will be worn overn night, and thu us have a gre eater Moreo 2. need for oxygen perm meability, th he materials u used in Orth hoK lenses— —i.e., the Orth hoK buttons s— must mee et the FDA’s s standard fo or “overnigh ht approval”— —a more rig gorous standa ard than for normal G GP lenses. 1 rocess to get t overnight a approval from m the FDA t takes approx ximately two o The p 3. years,7 an nd can cost o over $1,000, ,000, with ju ust the initial l application n fee usually approaching g $300,000 0. 14 dition to app roving the m material for o overnight us must also e, the FDA m In add 4. approve e each specific c lens design n intended fo or OrthoK us se. That app proval can b e accomplis hed by obtain ning a “510(k k) clearance ,” which ref fers to the se ction of the Food, Drug and Cosmet tic Act requi iring device manufacture ers to notify y the FDA of f their intent to market a new medica al device th hat is “substa antially equiv valent” to on ne that has a already been ved. FDA approv 1 ugh obtainin ng a 510(k) c clearance for r an OrthoK K lens design is substantia ally Althou 5. less burd densome than n obtaining a an original P PMA for ove ernight Ortho oK materials s, approval o of the design ne ecessitates ap pproval of th he underlyin ng materials. In practice e, this means that finishin ng labs cann not get appro oval for their r OrthoK len ns designs in ndependently y, but must o operate as “authoriz zed manufac cturing facilit ties” under t the umbrella a of FDA app proval held b by Valeant f for both the m material and d the design of the Ortho oK lens. p://www.fda ice/Premarke .gov/Medica etsubmission aldevices/De ns/Premarket eviceregulati tapprovalpm ionandguida ma/Default.H ance/Howtom Htm (“FDA W market Website on acknowledge termination[ es, although [, but] [i]n re “FDA regul eality, the rev ations provi view time is to review th onger.” FDA he A de 180 days normally lo 6 See http yourdevi PMA”). 7 As the F PMA and Website FDA itself a d make a det on PMA. 1 use the desig gn approvals are relativel ly broad, how wever, the la abs can still Becau 6. create an nd market un nique lens de esigns—but t they can do so only if th hey operate a as “design partners” ” with the ma anufacturers s that already y hold the PM MAs—i.e., V Valeant.8 Ev ven so, the existence e of many co ompetitors in n the market for finished d OrthoK len nses has allow wed the labs s to innovate with respect t to lens desi igns, providi ing patients with a wide er range of ch hoices. 1 are only thr ree types of G GP lens mat terials curren ntly approve ed by the FD DA There 7. for overn night wear: P Paragon HDS S, Paragon H HDS 100, an nd Boston Eq qualens II. T Two other materials s—Boston X XO and Bosto e also used b by many U.S S. finishing l labs to create e on XO2—are OrthoK l lenses for int ternational s ale. After it ts purchase o of Paragon, V Valeant cont trols all of th hose materials s, and the tim me and expen nse involved d in getting F FDA approv val for Ortho K use mean s that Valeant t thus has a co omplete mon nopoly on the e market for r OrthoK but ttons. V. A ANTICOMP PETITIVE C CONDUCT T 1 than five mo onths after ac cquiring Para agon, on Sep ptember 15, 2015, Valea ant Less t 8. used its m monopoly po ower to impl lement large e across-the-b board price h hikes on Ort thoK buttons s, announci ing the follow wing price in ncreases, wh hich represen nted all FDA A-approved O OrthoK butt tons for use by y patients in n the United States: (a II OrthoK b buttons incre eased from $ $8.20 a) Bosto to $20 n XO Ortho 0.00 per butt oK and Bosto ton, a 143% on Equalens increase. (b oK button in ncreased in p price from $9 9.00 to $20.0 00 per button n, a b) Bosto 122% n XO2 Ortho increase. (c tons for Orth hoK increase ed from $12. .40 to c) Parag $20.00 d Paragon HD n, an increase DS-100 butt e of 61%. der nly ella” s III device 01(f) of the & Lomb and PMAs; i.e., a Shaping Tre on HDS and 0 per button that fails to m FD&C Act Paragon ho all OrthoK d atment (VST meet PMA r and cannot b ld PMAs for designs fall u T)” design, o requirements be marketed r OrthoK, al under either or Paragon’s s is consider .” FDA Web ll designs mu Bausch & L s approval fo red to be adu bsite on PMA ust fall unde Lomb’s appro or its “Parago ulterated und A. Since on r the “umbre oval for its on Quadra” 8 “A clas section 5 Bausch & of those P “Vision S design. 1 e same time, Valeant also o eliminated d volume dis scounts for b both the Bost ton At the 9. buttons. and Parag gon OrthoK 2 dition, on or around the s same date, V Valeant incre eased prices on all Ortho oK In add 0. buttons s sold to U.S. f finishing lab bs for use by patients out tside the Uni ited States,9 from a per- button co ost ranging f from $3.00–$ $6.25, to a p per-button co ost ranging fr from $9.00, a an increase o of between 44% and 20 00%. 2 domestic Orth hoK lens ma arket has bee en growing r recently, but t the OrthoK K The d 1. market h as seen muc ch faster grow wth internati ionally, whe ere, for exam mple, the mar rket for Orth hoK lenses gr rew over 20% % in a single e year from 2 2014–2015. 2 information n and belief, Valeant’s st teep price hik kes on Ortho oK lenses ar re not Upon 2. only an u unlawful abu use of its mo nopoly pow wer in order to o extract pro ofit from cus stomers who o have no o other option s in the mark ketplace. In n this case, be ecause Vale ant manufac ctures not on nly OrthoK b buttons but a also the Para agon CRT fin nished lens, g labs are no ot only Valea ant’s the finishing customer rs, but its com mpetitors. T Thus, by incr reasing the c costs of Orth hoK buttons, , Valeant wil ll be able not o only to incre ease its profi it from butto on sales in th he short- and d medium-ter rm, but to prevent t he finishing labs from co ompeting wi ith it in the m market for fi inished Orth hoK lenses. I In other wo rds, Valeant t’s horizonta al monopoly over the ma arket for Orth hoK buttons s will allow i it to a vertical mo onopoly over r the entire s supply of Or rthoK lenses in the Unite ed States and d achieve a where OrthoK t countries w her have the milar approva aterials used ale of the len ies in which d to manufact nses in the U h they are sol ture the lens U.S., or must ld—approva ses t als 9 In most must eith have sim that take even longer same FDA a als by the gov r to acquire t K lenses are approvals req vernments o than FDA ap sold, the ma quired for sa of the countri pproval. many oth her countries s.10 2 d, confirmin ng Valeant’s intent to exc clude its com mpetitors fro om the Ortho oK Indeed 3. market al ltogether, in early Decem mber 2015, V Valeant bega an informing g finishing la abs that they y could no longer purc hase Parago n HDS Orth hoK buttons. 24 dition, Valea ant recently p purchased Pe elican Produ ucts, a comp any that In add 4. manufact tures, upon i information and belief, 8 80–100% of f the specializ zed cases us sed by the finishing g labs to ship p GP lenses ( (including O OrthoK lenses s) to ECPs— —an acquisit ion that furth her tightens V Valeant’s gr rip on the ver rtical supply y chain for O OrthoK lense es.11 2 months befo fore impleme enting the pr rice increase s on the Orth hoK buttons s, and In the 5. in the mo onths since, V Valeant also o made sever ral offers to p purchase fin nishing labs— —many with h substanti ial OrthoK b usiness—wh hich will allo ow it to incr rease its capa acity to prod duce finished d OrthoK l lenses. Upon n informatio on and belief f, once it has s increased th hat capacity , Valeant int tends to use its monopoly p power to for ce the remai ining finishin ng labs out o of the OrthoK K market altogethe er—leaving V Valeant free e to impleme nt further pr rice increase es to patients s and causing g substanti ial harm to P Plaintiff and Class memb bers, who cur rrently deriv ve millions in n revenue fr rom the sale o of OrthoK le enses. ess to with eant has acce fit patients w bmitted to ers—access s monopoly o on 10 Moreo contact in OrthoK l Valeant. which, up OrthoK b over, as the o nformation f lenses, since This effecti pon informa buttons to ac only holder o for every EC the certifica ively gives V ation and bel chieve a mon of the overni CP in the Uni ation process Valeant direc ief, makes it nopoly over ght PMAs fo ited States c s requires th ct access to i t even easier the entire Or for OrthoK b certified by th hat informatio its competito r for Valeant rthoK supply buttons, Vale he FDA to f on to be sub ors’ custome t to abuse its y chain. losely with P share for the finishing lab s extremely h ducts so that on the case th ors’ cases w bs worked cl high market t, unlike, the hat can nega without incurr eir competito atively affect ring addition Pelican to de e cases deriv ors, their man t the shipped nal expense evelop their s ves from hav nufacturing d lenses. The to remove re specialized c ving specific process doe e labs thus c esidue befor cases, and cally develop s not leave a cannot substi re shipping le ped a itute enses 11 Many Pelican’s their prod residue o competit in them. 2 ant recently d disclosed tha at it received d a letter on O October 16, 2015 from t the Valea 6. Federal T Trade Comm mission (“FT C”) informin ng the comp pany that the e FTC is inve estigating Valeant’s s purchase o of Paragon, a and requestin ng that Valea ant provide i information and documen ntation relatin ng to that pu urchase. VI. A ANTITRUST T INJURY TO PLAIN NTIFF & CL LASS MEM MBERS 2 leged in deta ail above, aft ter and due t to Valeant’s consolidatio on of the ma arket As all 7. for Ortho oK buttons, t there was a s significant p price increase e for the fini ishing labs th hat are the d direct purchase rs of those b buttons. 2 over, if Vale eant is succe ssful in elim minating the l labs from th e OrthoK m market Moreo 8. altogethe er, Valeant w will lessen co ompetition in n the market t for OrthoK K lenses by re educing both h capacity and opportu unities for inn novation wit th respect to o lens design ns and custom mization. If forced ou ut of the Orth hoK market, , Plaintiff an nd Class mem mbers will lo ose millions of dollars of f OrthoK r revenue, and d patients wil ll experience e higher pric ces and less i innovation. 2 direct result of Defendan nt’s anticomp petitive actio ons, competi ition in the As a d 9. market fo or OrthoK bu uttons has be een, and wil ll continue to o be, restrain ned, and com mpetition in t the market fo or OrthoK le enses faces th he threat of r restrained— —if not elimin nated—com mpetition. VII. C CLASS ACT TION ALLE EGATIONS S 3 tiff sues on it ts own behal lf and on beh half of a cla ss of person s and entitie es Plaint 0. pursuant to Federal R Rule of Civil l Procedure 2 23. The Cla ass consists o of all direct p purchasers in n the United S tates of GP b buttons that are FDA-ap pproved for O OrthoK uses s and manufa actured by or any wholl ly owned sub bsidiary of V Valeant. The ese currently y consist of t the followin ng Valeant o buttons in n Boston and d Paragon m materials: Quadra--P Paragon HDS S Violet (a) Quadra--P Paragon HDS S 100 Yellow w (b) Boston Eq qualens II for r OrthoK use e (c) Boston XO K use (d) O2 for Ortho Boston XO O for OrthoK K use (e) 3 ersons in the e Class are s so numerous dual joinder o of all membe ers is that individ The p 1. rsons impractic cable under t the circumst tances of this s case. Alth hough the pre ecise numbe er of such pe is unknow wn, the exac ct size of the Class is eas sily ascertain nable, as eac ch class mem mber can by identified d by the Def fendant’s sal es records. 3 e are commo on questions of law and f fact specific c to the Class s that There 2. predomin nate over any y questions a affecting ind dividual mem mbers, includ ding: Whether D Defendant ha as a monopo oly on the ma arket for Ort thoK buttons s; (a) Whether D Defendant ga ained this mo onopoly unla awfully; (b) actions in ac cquiring Para agon violate ed both feder ral (c) Whether D and state l Defendant’s aw; nd class mem mbers have b been damage ed by (d) Whether c Defendant consumers an t’s conduct; Whether D Defendant sh hould disgorg ge unlawful profits; and d (e) of injunctive e relief nece ssary to rest ore a (f) The nature competitiv e and scope o ve market. 3 tiff’s claims of the Class’ claims, as th they arise ou ut of the sam me are typical o Plaint 3. course of f conduct an d the same l legal theorie s as the rest of the Class s, and Plainti iff challenge es the practices and course of conduct e engaged in b by Defendant nt with respec ct to the Cla ass as a whol le. has 34 tiff will fairly y and adequ ately protect t the interest ts of the clas ss. Plaintiff Plaint 4. retained c counsel who o are able an nd experience ed class actio on litigators . 3 ution of this s action on a class-wide b basis is supe erior to other r available Resolu 5. methods and is a fair r and efficien nt adjudicatio on of the con ntroversy be ecause in the e context of t this litigation n, no individu ual class me mber can ju stify the com mmitment of f the large fin nancial resou urces to vigoro ously prosecu ute a lawsuit t against Def fendant. Sep parate action ns by individ dual class members s would also create a risk k of inconsis stent or varyi ing judgmen nts, which co ould establis sh incompat tible standar rds of conduc ct for Defen dant and sub bstantially im mpede or im mpair the abil lity of class m members to p pursue their claims. A c class action a also makes s sense becaus se Defendant t has acted and d refused to t take steps th hat are, upon n information n and belief, generally ap pplicable all l companie es in the mar rketplace, th hereby makin ng injunctive e relief appro opriate with h respect to th he Class as a whole. VIII. C COMMON C COURSE O OF CONDU CT EMANA ATING FR ROM NEW J JERSEY 3 information n and belief, the unlawfu ul course of c conduct outl lined above w was Upon 6. created, a adopted, rati ified and/or i implemented d in the corp porate headq quarters of V Valeant, locat ted in Bridgewa ater, New Je ersey. Upon information n and belief, the Valeant t executives r responsible for the series s of anticom petitive agre eements outl lined above a are based in New Jersey y and a substanti ial part, if no ot all, the ant ticompetitive e conduct to ok place in N New Jersey. Therefore, applicatio on of New J ersey law to o a nationwid de class is ap ppropriate. IX. C CLAIMS FIRST CA VIOL LATION OF CT (15 CTION ERMAN AC AUSE OF AC F THE SHE U.S.C. § 2) 3 of the forego oing allegati ions is incorp porated in th his claim for r relief. Each o 7. 3 elevant prod duct market i is the market t for OrthoK K buttons. The re 8. elevant geog graphic mark ket is the ent tire United S States. 3 The re 9. 4 ant possesses s monopoly p power in the e market for OrthoK butt tons. Valea 0. 4 use the manu ufacture and sale of Orth hoK buttons requires tim me-intensive and Becau 1. costly FD DA approval l, substantial l barriers to e entry and ex xpansion exis st in the rele evant market t. 4 ant has engag ged in antico ompetitive co onduct to un nlawfully obt tain, maintai in Valea 2. and enha ance its mono opoly in the OrthoK butt ton market a and to raise p prices above e previously competit ive levels. V Valeant’s act tions will lim mit competit tion in the m market for Or rthoK button ns and disco ourage future e innovation n in the overa all market fo or OrthoK le enses. 4 is no legitim mate busines ss justificatio on for Valea ant’s conduct t. There 3. 44 tiff and the C Class membe ers have been n injured an d will contin nue to be inj ured Plaint 4. in their b businesses an nd property b by higher pri ices in the O OrthoK butto on market tha an they wou uld have paid d in the abse ence of Valea ant’s unlawf ful acts. In a addition, due e to Defenda ant’s actions , Plaintiff and Class m members face e the threat o of future inju ury in that V aleant’s mon nopoly over the market fo or OrthoK bu uttons will a allow Valean nt to exclude e Plaintiff an nd Class mem mbers from t the OrthoK m market altog gether. 4 pro-competit tive effects o of Valeant’s conduct are outweighed d by the clear r Any p 5. anticomp petitive effec cts. 4 tiff and the C Class membe ers are entitle ges for their i injuries, as w well ed to damag Plaint 6. s as an inju unction that terminates th he ongoing v violations al lleged in this s Complaint and require Valeant t to divest itse elf of all Orth hoK-related holdings acq quired in its f Paragon. purchase of S VIO OLATION SECOND CA OF THE NE RUST ACT (N AUSE OF A EW JERSE N.J.S.A. 56 ACTION EY ANTITR :9-4) 4 of the forego oing allegati ions is incorp porated in th his claim for r relief. Each o 7. 4 elevant prod duct market i is the market t for OrthoK K buttons. The re 8. 4 ant transacts business thr roughout the e United Stat tes, including g New Jerse ey. Valea 9. 5 ant’s unlawfu ul acts were carried out a at least in pa art at its U.S. ers in . Headquarte Valea 0. Bridgewa ater, New Je ersey. 5 ant has willf fully obtaine d a 100% m monopoly of t the market f for OrthoK Valea 1. buttons th hrough its ac cquisition of f B&L and P Paragon. Th his purchase h has eliminat ted competit tion in the ma arket for Orth hoK buttons s. 5 result of Val eant’s condu uct, Plaintiff f and Class m members hav ve been force ed to As a r 2. purchase OrthoK but ttons at a pri ce substantia ally higher t than they wo ould have pa aid in the abs sence of this un nlawful cond duct. 5 ant’s price in ncreases follo owing its pur rchase of Pa aragon demo onstrate the Valea 3. success o of its attempt t to monopo lize the mark ket for Ortho oK buttons, and its purc hase of finis shing labs, cou upled with pr rice increase s sufficient t to drive the r remaining la abs from the e OrthoK ma arket altogethe er, will have the effect of f eliminating g competitio n, discourag ging innovati ion, and givi ing it a monopo oly over the patient (end d-user) mark ket for finishe ed OrthoK l enses. As a result, patie ents will have e access to a substantially y smaller sel lection of len ns products at prices tha at are higher than they othe erwise would d be. X. J URY TRIA AL DEMAN NDED 54 tiff hereby de emands a tri ial by jury on n all issues t triable of rig ght by jury. Plaint 4. PRAYER R FOR REL LIEF 5 REFORE, P Plaintiff pray ys for judgme ent against D Defendant as s follows: WHER 5. (a) he Federal Ru Representati ules ive Certificati of Civil Pr and Plainti on of the act rocedure, an iff’s counsel tion as a Cla d appointme l of record a ass Action pu ent of Plainti s Class Coun ursuant to th iff as Class R nsel; e damages, a and (b) Actual dam such other mages, statut r relief as pro tory damage ovided by th es, punitive a he statutes cit and/or treble ted herein; (c) Prejudgment and post-judgment interest on such monetary relief; (d) Equitable relief in the form of restitution and/or disgorgement of all unlawful or illegal profits received by Defendant as a result of the anticompetitive conduct alleged in herein; (e) An injunction restoring competitive market conditions by requiring Valeant to divest itself of the OrthoK assets of Paragon and/or B&L; (f) Other appropriate injunctive relief; (g) The costs of bringing this suit, including reasonable attorneys’ fees; and (h) All other relief to which Plaintiff and members of the Class may be entitled at law or in equity. Dated: December 22, 2015 LITE DEPALMA GREENBERG, LLC /s/ Bruce D. Greenberg Bruce D. Greenberg 570 Broad Street, Suite 1201 Newark, NJ 07102 Telephone: (973) 623-3000 Facsimile: (973) 623-0858 [email protected] THE PAYNTER LAW FIRM PLLC Stuart M. Paynter (pro hac vice pending) 1200 G Street N.W., Suite 800 Washington, DC 20005 Telephone: (202) 626-4486 Facsimile: (866) 734-0622 [email protected] Celeste H.G. Boyd (pro hac vice pending) 1340 Environ Way Chapel Hill, NC 27517 Telephone: (919) 307-9991 Facsimile: (866) 734-0622 [email protected] Attorneys for Plaintiff Tru-Form Optics, Inc. LOCAL CIVIL RULE 11.2 CERTIFICATION Pursuant to Local Civil Rule 11.2, I hereby certify that the matter in controversy is not related to any other action, pending arbitration or administrative proceeding currently pending in any court. I hereby certify that the following statements made by me are true. I am aware that if any of the foregoing statements made by me are willfully false, I am subject to punishment. Dated: December 22, 2015 LITE DEPALMA GREENBERG, LLC /s/ Bruce D. Greenberg Bruce D. Greenberg 570 Broad Street, Suite 1201 Newark, NJ 07102 Telephone: (973) 623-3000 Facsimile: (973) 623-0858 [email protected] THE PAYNTER LAW FIRM PLLC Stuart M. Paynter (pro hac vice pending) 1200 G Street N.W., Suite 800 Washington, DC 20005 Telephone: (202) 626-4486 Facsimile: (866) 734-0622 [email protected] Celeste H.G. Boyd (pro hac vice pending) 1340 Environ Way Chapel Hill, NC 27517 Telephone: (919) 307-9991 Facsimile: (866) 734-0622 [email protected] Attorneys for Plaintiff Tru-Form Optics, Inc.

antitrust

RrtADIcBD5gMZwczhkg7

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF PENNSYLVANIA Case No. JEFFREY LEZARK, Plaintiff, CLASS ACTION v. JURY TRIAL DEMANDED I.C. SYSTEM, INC., Defendant. COMPLAINT Plaintiff, individually and on behalf of all others similarly situated, bring this action against Defendant and alleges as follows: NATURE OF THE ACTION 1. This action seeks damages, attorneys’ fees, and costs against Defendant for its violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq. JURISDICTION AND VENUE 2. The Court has subject matter jurisdiction over the claims at issue under 28 U.S.C. § 1331 and 15 U.S.C. § 1692. 3. The Court has personal jurisdiction over Defendant because the claims at issue arose in this district and Defendant does substantial business in this district. 4. Venue is proper under 28 U.S.C. § 1391 because a substantial part of the events and/or omissions at issue occurred in this district. PARTIES 5. Plaintiff is a natural person that resides in Allegheny County, Pennsylvania. 6. Defendant is a corporation with its principal place of business in Saint Paul, Minnesota. 7. Defendant’s sole business is collecting debts. 8. Defendant regularly collects or attempts to collect debts owed or due or asserted to be owed or due to another. 9. Defendant uses instrumentalities of interstate commerce, such as telephone, mail, and the internet, to collect consumer debt. FACTUAL ALLEGATIONS 10. This case concerns a past-due medical obligation (the “Account”) that is allegedly owed to Tri-State Ortho and Sports Medicine Inc. (“Tri-State”). 11. The Account arose out of a transaction primarily for personal, family, or household purposes. 12. No part of the Account was related to business transactions. 13. At some point, Tri-State contracted with Defendant to collect the Account. 14. On April 1, 2019, Defendant mailed and/or caused to be mailed to Plaintiff a letter in an attempt to collect the Account. 15. Plaintiff reviewed the April 1, 2019 letter. 16. The letter stated: “If you fail to contact us to discuss payment of this account, our client has authorized us to pursue additional remedies to recover the balance due, including referring the account to an attorney.” 17. This statement is false, deceptive, and misleading because it implies that legal action is possible with respect to the Account. 2 18. The least sophisticated consumer would reasonably believe or be confused that an attorney could be involved and/or legal action was a possibility based on the claim that Defendant was “authorized … to pursue additional remedies to recover the balance due, including referring the account to an attorney.” 19. Unbeknownst to the least sophisticated consumer at the relevant time of review of the subject letter, legal action was not a possibility and/or intended with respect to the Account. 20. According to a public records search, Tri-State, over the past decade, has not filed a lawsuit in any Allegheny County court. 21. Additionally, most Pennsylvania medical providers do not pursue legal action against consumers in the Commonwealth of Pennsylvania. 22. By claiming it was authorized to refer the Account to an attorney and pursue additional remedies, Defendant implied legal action was possible with respect to the Account. 23. This implication was false, deceptive, and misleading because legal action was not a possibility and/or intended with respect to the Account. 24. It is not bizarre or idiosyncratic for the least sophisticated debtor to read the language identified in Defendant’s letter and take the language to mean that legal action was possible with respect to the Account. 25. A debtor that believed legal action was possible could be induced to make payment to Defendant. 26. The letter’s false, deceptive, misleading, and/or confusing language was material. 27. Defendant’s conduct harmed Plaintiff and violated Plaintiff’s legal rights. 28. Defendant regularly collects debts in the Commonwealth of Pennsylvania. 3 29. Defendant regularly sends letters to Pennsylvania consumers as part of these collection activities. 30. Defendant’s letters routinely state that Defendant may refer a medical account to an attorney although Defendant’s medical provider client(s) never pursue legal action. 31. These letters, similar to the letter Plaintiff received, harmed Pennsylvania consumers and violated their legal rights. CLASS ALLEGATIONS 32. Plaintiff brings this action individually and on behalf of all others similarly situated under Rules 23(a) and (b)(3) of the Federal Rules of Civil Procedure. 33. Plaintiff seeks to certify the following class: “All individuals in the state of Pennsylvania who, within the applicable statute of limitations, received a letter from Defendant in which Defendant claimed it was authorized to refer a medical debt to an attorney.” 34. Plaintiff reserves the right to expand, narrow, or otherwise modify the class as the litigation continues and discovery proceeds. 35. Numerosity: The class is so numerous that joinder is impracticable. On information and belief, the members of the class number in the hundreds. 36. Ascertainability: The class is ascertainable because Defendant and its clients keep and collect identifying information on each class member. 37. Typicality: Plaintiff’s claims are typical of the claims of the class because the claims of Plaintiff and the class are based on the same legal theories and arise from the same conduct. 38. Commonality and Predominance: Plaintiff and the class members share numerous common questions of law and fact that will drive the resolution of this litigation and that 4 predominate over any individual issues. For instance, there is a single common answer to the question of whether it is false, misleading, or deceptive for Defendant to claim it is authorized to refer a medical debt to an attorney even though the medical provider does not take legal action against its customers. The answer to this question will drive the resolution of Plaintiff’s claims and the claims of the members of the class simultaneously. This common question and others will predominate over any individual issues. 39. Adequacy: Plaintiff is an adequate representative of the class because Plaintiff’s interests do not conflict with the interests of the class members. Plaintiff will fairly, adequately, and vigorously represent and protect the interests of the class. Plaintiff has no interest antagonistic to the class. Plaintiff has retained counsel who are competent and experienced in the prosecution of class action litigation generally and FDCPA litigation specifically. 40. Superiority: The injury sustained by each class member is not of such magnitude that it is economically feasible to prosecute individual actions against Defendant. Requiring many injured plaintiffs to file individual actions would impose a crushing burden on the court system and almost certainly lead to inconsistent judgments. By contrast, class treatment presents far fewer management difficulties and provides benefits of a single adjudication, economies of scale, and comprehensive supervision by a single court. COUNT I Violation of the Fair Debt Collection Practices Act 15 U.S.C. §§ 1692, et seq. 41. Plaintiff repeats and re-alleges all prior allegations as if set forth at length herein. 42. This claim is brought individually and on behalf of the class. 43. Plaintiff is a consumer, the Account is a debt, and Defendant is a debt collector under the FDCPA. 15 U.S.C. §§ 1692a(3), (5), (6). 5 44. Defendant’s actions and practices described herein constitute as: false, deceptive or misleading representations or means in connection with the collection of a debt, in violation of 15 U.S.C. § 1692e; and/or unfair or unconscionable means to collect or attempt to collect any debt, in violation of 15 U.S.C. § 1692f. 45. As a result of Defendant’s failure to comply with the provisions of the FDCPA, and the resulting injury and harm Defendant’s failure caused, Plaintiff and the members of the class are entitled to actual damages, statutory damages, and attorneys’ fees and costs under 15 U.S.C. § PRAYER FOR RELIEF WHEREFORE, Plaintiff prays for the following relief: a. An order certifying the proposed class, appointing Plaintiff as representative of the proposed class, and appointing undersigned counsel as counsel for the proposed class; b. An order awarding actual, statutory, and all other damages available by law, along with pre-and post-judgment interest; c. An order awarding attorneys’ fees and costs; d. An order declaring Defendant’s conduct unlawful; e. An order awarding all other relief that is just, equitable and appropriate. JURY TRIAL DEMANDED Plaintiff requests a jury trial on all claims so triable. 6 Respectfully Submitted, Dated: March 20, 2020 By: /s/ Kevin Abramowicz Kevin Abramowicz PA ID No. 320659 BCJ Law LLC 186 42nd Street, PO Box 40127 Pittsburgh, PA 15201 (412) 223-5740 – office (412) 626-7101 – fax [email protected] Eugene D. Frank, Esquire PA ID No. 89862 Law Offices of Eugene D. Frank, P.C. 3202 McKnight East Drive Pittsburgh, PA 15237 (412) 366-4276 – office (412) 366-4305 – fax [email protected] Attorneys for Plaintiff 7

consumer fraud

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Todd M. Friedman (SBN 216752) Meghan E. George (SBN 274525) Adrian R. Bacon (SBN 280332) LAW OFFICES OF TODD M. FRIEDMAN, P.C. 21550 Oxnard St., Suite 780 Woodland Hills, CA 91367 Phone: 877-206-4741 Fax: 866-633-0228 [email protected] [email protected] [email protected] Attorneys for Plaintiff UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA ERIK TRIMBLE, individually and on behalf of all others similarly situated, Plaintiff, vs. Case No. CLASS ACTION COMPLAINT FOR VIOLATIONS OF: 1. NEGLIGENT VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT [47 U.S.C. §227 ET SEQ.] 2. WILLFUL VIOLATIONS OF THE LIBERTY ACTION GROUP PAC; DOES 1 through 10, inclusive, Defendant(s). TELEPHONE CONSUMER PROTECTION ACT [47 U.S.C. §227 ET SEQ.] ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) DEMAND FOR JURY TRIAL Plaintiff, ERIK TRIMBLE (“Plaintiff”), on behalf of himself and all others similarly situated, alleges the following upon information and belief based upon personal knowledge: NATURE OF THE CASE 1. Plaintiff brings this action for himself and others similarly situated seeking damages and any other available legal or equitable remedies resulting from the illegal actions of LIBERTY ACTION GROUP PAC (“Defendant”), in negligently, knowingly, and/or willfully contacting Plaintiff on Plaintiff’s cellular telephone in violation of the Telephone Consumer Protection Act, 47. U.S.C. § 227 et seq. (“TCPA”), thereby invading Plaintiff’s privacy. JURISDICTION & VENUE 2. Jurisdiction is proper under 28 U.S.C. § 1332(d)(2) because Plaintiff, a resident of California, seeks relief on behalf of a Class, which will result in at least one class member belonging to a different state than that of Defendant, a company with its principal place of business and State of Incorporation in Florida state. Plaintiff also seeks up to $1,500.00 in damages for each call in violation of the TCPA, which, when aggregated among a proposed class in the thousands, exceeds the $5,000,000.00 threshold for federal court jurisdiction. Therefore, both diversity jurisdiction and the damages threshold under the Class Action Fairness Act of 2005 (“CAFA”) are present, and this Court has jurisdiction. 3. Venue is proper in the United States District Court for the Northern District of California pursuant to 18 U.S.C. 1391(b) and 18 U.S.C. § 1441(a) because Defendant does business within the state of California and Plaintiff resides within this District. PARTIES 4. Plaintiff, ERIK TRIMBLE (“Plaintiff”), is a natural person residing in San Francisco, California and is a “person” as defined by 47 U.S.C. § 153 (39). 5. Defendant, LIBERTY ACTION GROUP PAC (“Defendant” or “DEFENDANT”), is a revenue management company and is a “person” as defined by 47 U.S.C. § 153 (39). 6. The above named Defendant, and its subsidiaries and agents, are collectively referred to as “Defendants.” The true names and capacities of the Defendants sued herein as DOE DEFENDANTS 1 through 10, inclusive, are currently unknown to Plaintiff, who therefore sues such Defendants by fictitious names. Each of the Defendants designated herein as a DOE is legally responsible for the unlawful acts alleged herein. Plaintiff will seek leave of Court to amend the Complaint to reflect the true names and capacities of the DOE Defendants when such identities become known. 7. Plaintiff is informed and believes that at all relevant times, each and every Defendant was acting as an agent and/or employee of each of the other Defendants and was acting within the course and scope of said agency and/or employment with the full knowledge and consent of each of the other Defendants. Plaintiff is informed and believes that each of the acts and/or omissions complained of herein was made known to, and ratified by, each of the other Defendants. FACTUAL ALLEGATIONS 8. Beginning in or around August 2016, Defendant contacted Plaintiff on his cellular telephone ending in -5080, in an effort to sell or solicit its services. Defendant called, including but not limited to around August 8, 2016 at 9:32 a.m., August 12, 2016 at 3:19 p.m., August 15, 2016 at 9:41 a.m., August 16, 2016 at 4:35 p.m., and August 17, 2016 at 10:55 a.m. Defendant often called from telephone numbers (646) 604-9033, (202) 813-9371, (646) 600-8266, and (202) 599-9203. 9. Defendant used an “automatic telephone dialing system”, as defined by 47 U.S.C. § 227(a)(1) to place its calls to Plaintiff seeking to sell or solicit its business services. 10. Defendant’s calls constituted calls that were not for emergency purposes as defined by 47 U.S.C. § 227(b)(1)(A). 11. Defendant’s calls were placed to telephone number assigned to a cellular telephone service for which Plaintiff incurs a charge for incoming calls pursuant to 47 U.S.C. § 227(b)(1). 12. Plaintiff is not a customer of Defendant’s services and has never provided any personal information, including his cellular telephone number, to Defendant for any purpose whatsoever. In addition, on at least one occasion, Plaintiff answered the telephone and told Defendant to stop calling him. Accordingly, Defendant never received Plaintiff’s “prior express consent” to receive calls using an automatic telephone dialing system or an artificial or prerecorded voice on her cellular telephone pursuant to 47 U.S.C. § 227(b)(1)(A). CLASS ALLEGATIONS 13. Plaintiff brings this action on behalf of himself and all others similarly situated, as a member of the proposed class (hereafter “The Class”) defined as follows: All persons within the United States who received any telephone calls from Defendant to said person’s cellular telephone made through the use of any automatic telephone dialing system or an artificial or prerecorded voice and such person had not previously consented to receiving such calls within the four years prior to the filing of this Complaint 14. Plaintiff represents, and is a member of, The Class, consisting of All persons within the United States who received any telephone calls from Defendant to said person’s cellular telephone made through the use of any automatic telephone dialing system or an artificial or prerecorded voice and such person had not previously not provided their cellular telephone number to Defendant within the four years prior to the filing of this Complaint. 15. Defendant, its employees and agents are excluded from The Class. Plaintiff does not know the number of members in The Class, but believes the Class members number in the thousands, if not more. Thus, this matter should be certified as a Class Action to assist in the expeditious litigation of the matter. 16. The Class is so numerous that the individual joinder of all of its members is impractical. While the exact number and identities of The Class members are unknown to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff is informed and believes and thereon alleges that The Class includes thousands of members. Plaintiff alleges that The Class members may be ascertained by the records maintained by Defendant. 17. Plaintiff and members of The Class were harmed by the acts of Defendant in at least the following ways: Defendant illegally contacted Plaintiff and Class members via their cellular telephones thereby causing Plaintiff and Class members to incur certain charges or reduced telephone time for which Plaintiff and Class members had previously paid by having to retrieve or administer messages left by Defendant during those illegal calls, and invading the privacy of said Plaintiff and Class members. 18. Common questions of fact and law exist as to all members of The Class which predominate over any questions affecting only individual members of The Class. These common legal and factual questions, which do not vary between Class members, and which may be determined without reference to the individual circumstances of any Class members, include, but are not limited to, the following: a. Whether, within the four years prior to the filing of this Complaint, Defendant made any call (other than a call made for emergency purposes or made with the prior express consent of the called party) to a Class member using any automatic telephone dialing system or any artificial or prerecorded voice to any telephone number assigned to a cellular telephone service; b. Whether Plaintiff and the Class members were damages thereby, and the extent of damages for such violation; and c. Whether Defendant should be enjoined from engaging in such conduct in the future. 19. As a person that received numerous calls from Defendant using an automatic telephone dialing system or an artificial or prerecorded voice, without Plaintiff’s prior express consent, Plaintiff is asserting claims that are typical of The Class. 20. Plaintiff will fairly and adequately protect the interests of the members of The Class. Plaintiff has retained attorneys experienced in the prosecution of class actions. 21. A class action is superior to other available methods of fair and efficient adjudication of this controversy, since individual litigation of the claims of all Class members is impracticable. Even if every Class member could afford individual litigation, the court system could not. It would be unduly burdensome to the courts in which individual litigation of numerous issues would proceed. Individualized litigation would also present the potential for varying, inconsistent, or contradictory judgments and would magnify the delay and expense to all parties and to the court system resulting from multiple trials of the same complex factual issues. By contrast, the conduct of this action as a class action presents fewer management difficulties, conserves the resources of the parties and of the court system, and protects the rights of each Class member. 22. The prosecution of separate actions by individual Class members would create a risk of adjudications with respect to them that would, as a practical matter, be dispositive of the interests of the other Class members not parties to such adjudications or that would substantially impair or impede the ability of such non- party Class members to protect their interests. 23. Defendant has acted or refused to act in respects generally applicable to The Class, thereby making appropriate final and injunctive relief with regard to the members of the California Class as a whole. FIRST CAUSE OF ACTION Negligent Violations of the Telephone Consumer Protection Act 47 U.S.C. §227 et seq. 24. Plaintiff repeats and incorporates by reference into this cause of action the allegations set forth above at Paragraphs 1-23. 25. The foregoing acts and omissions of Defendant constitute numerous and multiple negligent violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227 et seq. 26. As a result of Defendant’s negligent violations of 47 U.S.C. § 227 et seq., Plaintiff and the Class Members are entitled an award of $500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B). 27. Plaintiff and the Class members are also entitled to and seek injunctive relief prohibiting such conduct in the future. SECOND CAUSE OF ACTION Knowing and/or Willful Violations of the Telephone Consumer Protection Act 47 U.S.C. §227 et seq. 28. Plaintiff repeats and incorporates by reference into this cause of action the allegations set forth above at Paragraphs 1-23. 29. The foregoing acts and omissions of Defendant constitute numerous and multiple knowing and/or willful violations of the TCPA, including but not limited to each and every one of the above cited provisions of 47 U.S.C. § 227 et 30. As a result of Defendant’s knowing and/or willful violations of 47 U.S.C. § 227 et seq., Plaintiff and the Class members are entitled an award of $1,500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B) and 47 U.S.C. § 227(b)(3)(C). 31. Plaintiff and the Class members are also entitled to and seek injunctive relief prohibiting such conduct in the future. PRAYER FOR RELIEF WHEREFORE, Plaintiff requests judgment against Defendant for the following: FIRST CAUSE OF ACTION Negligent Violations of the Telephone Consumer Protection Act 47 U.S.C. §227 et seq.  As a result of Defendant’s negligent violations of 47 U.S.C. §227(b)(1), Plaintiff and the Class members are entitled to and request $500 in statutory damages, for each and every violation, pursuant to 47 U.S.C. 227(b)(3)(B); and  Any and all other relief that the Court deems just and proper. SECOND CAUSE OF ACTION Knowing and/or Willful Violations of the Telephone Consumer Protection Act 47 U.S.C. §227 et seq.  As a result of Defendant’s willful and/or knowing violations of 47 U.S.C. §227(b)(1), Plaintiff and the Class members are entitled to and request treble damages, as provided by statute, up to $1,500, for each and every violation, pursuant to 47 U.S.C. §227(b)(3)(B) and 47 U.S.C. §227(b)(3)(C); and  Any and all other relief that the Court deems just and proper. Respectfully Submitted this 31st day of August, 2016. LAW OFFICES OF TODD M. FRIEDMAN, P.C. By: /s Todd M. Friedman Todd M. Friedman Law Offices of Todd M. Friedman Attorney for Plaintiff

privacy

3cfRDYcBD5gMZwczGOEY

EUSTACE DE SAINT PHALLE, SBN 179100 JOSEPH R. LUCIA, SBN 278318 RAINS LUCIA STERN, PC 220 Montgomery Street, 15th Floor San Francisco, CA 94104 Tel: (415) 341-9341 Fax: (925) 609-1690 E-mail: [email protected] JOHN E. NORRIS (Pro Hac Vice pending) DAVIS & NORRIS LLP The Bradshaw House 2154 Highland Avenue South Birmingham, AL 35205 Tel: (205) 930-9900 Fax: (205) 930-9989 Email: [email protected] Attorneys for Plaintiff ADRIENNE FRASER UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA ADRIENNE FRASER on behalf of herself and all others similarly situated, Plaintiffs, vs. WYSONG CORPORATION and DOES 1-25, inclusive, Defendants. CASE NO. COMPLAINT AMOUNT DEMANDED EXCEEDS $10,000 DEMAND FOR JURY TRIAL CLASS ACTION CLASS ACTION COMPLAINT This is a California statewide class action seeking redress for the mislabeling of pet food and pet treats. Defendant Wysong Corporation (“Wysong”), labeled its pet food as “Made in USA,” when in fact it contained ingredients sourced from foreign countries. This is a violation of the California Unfair Competition Law (“UCL”) as well as the California Consumer Legal Remedies Act (“CLRA”). Plaintiff seeks, on her own behalf as well as on behalf of a statewide class of similarly situated consumers, UCL. Plaintiff also seeks injunctive relief under the CLRA, and requests that Plaintiff be allowed to amend this complaint to seek actual damages subject to the $1,000 statutory minimum for class action damages, restitution, punitive damages and attorneys’ fees under the CLRA thirty days after the service of this complaint in compliance with the notice requirements of the CLRA. In support of this complaint, Plaintiff states as follows: PARTIES, JURISDICTION, AND VENUE 1. Plaintiff Adrienne Fraser is an adult citizen of California residing in San Francisco County, which is within this district. Plaintiff purchased Defendant’s products, the marketing of which violates California law, in this district and division. 2. Defendant Wysong is a corporation formed under and existing pursuant to the laws of the state of Michigan. Defendant’s principal place of business is Midland, Michigan. 3. This Court has diversity jurisdiction over this case under 28 U.S.C. § 1332, as modified by the Class Action Fairness Act of 2005, because Plaintiff and Defendant are citizens of different states, and in this class action the aggregate amount in controversy is greater than $5,000,000.00 (five million dollars), exclusive of interest and costs. 4. Venue is proper in this court because the purchases were made by, and deliveries were made to, the Plaintiff in this district and division. FACTS RELATING TO THE SPECIFIC PLAINTIFF 5. On multiple occasions prior to January 1, 2016, Plaintiff Adrienne Fraser purchased Defendant’s Epigen Canine/Feline Diet food at two San Francisco retailers, the Animal House and Village Pets, as well as online. 6. The pet food that Plaintiff purchased from Defendant was labeled “Made in USA.” Plaintiff made these purchases relying on the labels on Defendant’s products stating that they were “Made in USA.” 7. The value of the product received by Plaintiff was less than the value she paid, because the “Made in USA” labeling was untrue. 8. Defendant manufactures and sells pet food in stores all over the United States, including California. Among other places, it sells its products in the San Francisco area at the following locations: The Animal House, located at 157 Fillmore St., San Francisco, CA 94117, and Village Pets, located 1036 Hyde St., San Francisco, CA 94109. Additionally, Defendant’s products are sold over the internet and shipped throughout the United States, including California. 9. Defendant’s pet food displays on its bags, in all capital letters, “MADE IN USA,” along with an American flag and “SINCE 1979.” 10. These labels stating that Defendant’s pet food is made in the United States are false, because Defendant’s pet food contains ingredients that are sourced from foreign countries. Specifically, the vitamin, mineral, and amino acid packs in defendant’s products contain ingredients from non-USA sources. 11. Defendant continues to sell pet food bearing the label “Made in USA.” 12. The buying public’s preference for pet foods and treats that are made exclusively in the United States stems in part from the widely-publicized and widespread recall of pet foods in 2007, when hundreds, and perhaps thousands, of dogs and cats died of kidney failure after eating pet food that contained a toxic chemical called melamine. This ingredient was placed in the pet food at manufacturing facilities in China and was mislabeled as “wheat gluten” or “rice protein.” This increased consumer’s preference for both fully American-made pet food and grain-free pet food. 13. For this and other reasons, the buying public generally believes that “Made in the U.S.A.” products are safer to feed their animals than foreign-sourced ingredients. 14. The Plaintiff and the class received products from Defendant that were worth less than what the Plaintiff and the class paid for the products. CLASS ACTION REQUIREMENTS 15. Plaintiff brings this case on her own behalf, and on behalf of all others similarly situated, pursuant to Rule 23 of the Federal Rules of Civil Procedure. The class consists of all residents of the state of California who, within the applicable statute of limitations period, bought pet food products from Defendant that were sold with labels bearing “Made in USA.” Excluded from the class are 16. Pursuant to Rule 23(a)(1), numerosity is satisfied because the members of the Class are so numerous and geographically dispersed that joinder of all Class members is impracticable. There are thousands of members of the Class located in the State of California. 17. Common questions of fact and law exist here, satisfying the requirement of Rule 23(a)(2), including but not limited to: a. whether Defendant participated in or committed the wrongful conduct alleged herein; b. whether Defendant’s acts, transactions, or course of conduct constitute the violations of law alleged herein; c. whether the members of the Class sustained and/or continue to sustain injury by reason of Defendant’s conduct, and, if so, the proper measure and appropriate formula to be applied in determining restitution for such injury; and d. whether the members of the Class are entitled to injunctive or other equitable relief. 18. Plaintiff’s claims are typical of the claims of all other members of the Class and involve the same violations of law by Defendant as other Class members’ claims. Plaintiffs and members of the Class also sustained injury arising out of Defendant’s common course of conduct complained of herein. Accordingly, Plaintiff satisfies the “typicality” requirements of Fed. R. Civ. P. 23(a)(3) with respect to the 19. Plaintiff will fairly and adequately protect the interests of the other members of the Class, and have no interests that are antagonistic to those of the Class, pursuant to Rule 23(a)(4). Plaintiff is interested in vigorously prosecuting claims on behalf of the Class, and Plaintiff has retained experienced and competent class action counsel to represent them and the Class. 20. Plaintiff seeks to certify a statewide class pursuant to Rule 23(b)(2) and 23(b)(3). 21. Pursuant to Rule 23(b)(2), Defendant has “acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” predominate over any questions affecting only individual members, and a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. Given the relatively small amount of damages suffered by each class member, it is unlikely that any of the class members are interested in individually controlling the prosecution or defense of separate actions. Plaintiff is not aware of any other litigation against Defendant asserting these claims, and doubts any other litigation outside of the class action device will be initiated against Defendant. It is desirable to hear all of these claims in one forum so that the class members can receive a full recovery, which they would not outside of a class action because of the relatively small amount of damages suffered by each class member, such that it would make no economic sense for individual class members to pursue individual claims in different forums. Plaintiff does not anticipate that there will be significant difficulties in managing this class action that are any more serious than other consumer class actions. CLAIMS FOR RELIEF COUNT ONE – CALIFORNIA UNFAIR COMPETITION LAW 23. All preceding paragraphs are incorporated by reference. 24. The foregoing unfair conduct violates the California Unfair Competition Law, codified at Business and Professions Code §§ 17200, et seq. (“UCL”). 25. Among other provisions, the foregoing conduct violates Business & Professions Code § 17533.7 dealing with “Made in the U.S.A.” product labeling. 26. The named Plaintiff and the class members suffered injury as a result of Defendant’s violation of the law because they paid more for the product than its actual value. 27. As a result, Plaintiff and the class are entitled to an injunction against continuing violations of the UCL and restitution of monies obtained. COUNT TWO – CALIFORNIA CONSUMERS LEGAL REMEDIES ACT 28. All preceding paragraphs are incorporated by reference. 29. Pursuant to Cal. Civ. Code § 1780(d), Plaintiff is filing an affidavit of proper venue and attaching it to this complaint as Attachment 1. 30. The foregoing conduct by Defendant violates the Consumers Legal Remedies Act, 31. Defendant’s pet food and treats are “goods” as defined in Civil Code Section 1761(a). 32. Plaintiff, and each of the Class members, is a “Consumer” as defined in Civil Code Section 1761(d). 33. Each of Plaintiff’s and Class members’ purchases of Defendant’s products constituted a “transaction” as defined in Civil Code Section 1761(e). 34. Plaintiff and each class member suffered an injury in fact because they received a product from Defendants that had less value than they paid for it, due to the false labeling. 35. Defendant’s violations of the Consumer’s Legal Remedies Act set forth herein were done with awareness of the fact that the conduct alleged was wrongful and were motivated solely for increased profit. Defendant did these acts knowing the harm that would result to Plaintiff and similarly situated persons, and Defendant continues to commit these acts notwithstanding that knowledge. PRAYER FOR RELIEF Based on the foregoing, Plaintiff prays for the following relief: A. An order certifying this as a California statewide class action pursuant to Rule 23 of the Federal Rules of Civil Procedure; B. An order appointing Plaintiff’s counsel as Class Counsel to represent the interests of the class; C. After trial, an injunction ordering Defendant to stop its violations of California law as alleged herein; D. An award of monetary relief for the Class in the amount by which Defendant has been unjustly enriched by its illegal conduct as alleged herein; E. An award of costs, including reasonable attorney’s fees; F. Pre and post judgment interest in the highest amount permitted by law; and Dated: January 5, 2016 Respectfully submitted, RAINS LUCIA STERN, PC /s/ Eustace de Saint Phalle By: Eustace de Saint Phalle Attorneys for Plaintiff ADRIANNE FRASER DEMAND FOR JURY TRIAL As to the matters complained of herein against Defendants WYSONG CORPORATION and DOES 1-25, and each of them, Plaintiff ADRIANNE FRASER, demands a trial by jury. Dated: January 5, 2016 Respectfully submitted, RAINS LUCIA STERN, PC /s/ Eustace de Saint Phalle By: Eustace de Saint Phalle Attorneys for Plaintiff ADRIANNE FRASER

consumer fraud