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Case No. 19-cv-6632 SHAKED LAW GROUP, P.C. Dan Shaked (DS-3331) 14 Harwood Court, Suite 415 Scarsdale, NY 10583 Tel. (917) 373-9128 E-mail: [email protected] 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 - SANMEDICA INTERNATINAL, LLC d/b/a serovital.com, Defendant. -----------------------------------------------------------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 Sanmedica International, LLC d/b/a serovital.com (hereinafter “Sanmedica” 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. 1 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 Sanmedica 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 Sanmedica provides to their non-disabled customers through http//:www.Serovital.com (hereinafter “Serovital.com” or “the website”). Defendant’s 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. Serovital.com provides to the public a wide array of the goods, services, price specials, employment opportunities and other programs. Yet, Serovital.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, Sanmedica 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. 2 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 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. Sanmedica’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 Serovital.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 the “SeroVital Anti-Aging Therapy” on Serovital.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 Serovital.com. 3 11. Because Defendant’s website, Serovital.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 Sanmedica’s policies, practices, and procedures so that Defendant’s website 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. Because of this 4 targeting, it is not unusual for Sanmedica 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 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. 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 the “SeroVital Anti-Aging Therapy” on Defendant’s website, Serovital.com. PARTIES 16. Plaintiff, is and has been at all relevant times a resident of Kings County, State of New York. 5 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. Plaintiff, Marion Kiler, has been denied the full enjoyment of the facilities, goods and services of Serovital.com, as a result of accessibility barriers on Serovital.com. 18. Defendant, Sanmedica International, LLC, is a Utah Foreign Limited Liability Company with its principal place of business located at 5742 West Harold Gatty Drive, Salt Lake City, UT 84116. 19. Sanmedica provides to the public a website known as Serovital.com which provides consumers with access to an array of goods and services, including, the ability to view and learn about the hair restoration and anti-aging therapies and related products, make purchases, and learn about promotions, among other features. Consumers across the United States use Defendant’s website to purchase hair restoration and anti-aging devices and related products. Defendant’s products are sold at many retailers throughout the country. 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 Serovital.com has deterred Plaintiff from buying the “SeroVital Anti-Aging Therapy.” 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. 6 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. 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 7 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. FACTUAL ALLEGATIONS 25. Defendant, Sanmedica International, LLC, controls and operates Serovital.com. in New York State and throughout the United States. 26. Serovital.com is a commercial website that offers products and services for online sale. The online store allows the user to browse and learn about hair restoration, skin care, and anti-aging therapies and related products, make purchases, and perform a variety of other functions. 27. Among the features offered by Serovital.com are the following: (a) Consumers may use the website to connect with Sanmedica on social media, using such sites as Facebook, Twitter, Instagram, and Pinterest; (b) an online store, allowing customers to learn about and purchase hair restoration, skin care, and anti-aging therapies; and (c) learning about the product and the company, read reviews, get answers to frequently asked questions, and learn about promotions. 28. This case arises out of Sanmedica’s policy and practice of denying the blind access to the goods and services offered by Serovital.com. Due to Sanmedica’s failure and refusal to remove access barriers to Serovital.com, blind individuals have been and are being denied equal access to Sanmedica, as well as to the numerous goods, services and benefits offered to the public through Serovital.com. 8 29. Sanmedica denies the blind access to goods, services and information made available through Serovital.com by preventing them from freely navigating Serovital.com. 30. Serovital.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 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 Serovital.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 Serovital.com customers are unable to determine what is on the website, browse the website or investigate and/or make purchases. 32. Serovital.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 Serovital.com, these forms include search fields to select order options 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. 9 33. Specifically, when Plaintiff attempted to make a purchase, she encountered the following problems: Summary Serovital has a critical error at the very start of the page that renders the entire website useless to screen-reader users unless they enter their email address. The promotional pop-up is the second item announced on the website. Plaintiff and screen-reader users and keyboard-only users are trapped in this pop-up unless they enter their email address. The close button is not announced, nor does it receive focus so these users cannot move forward unless they enter their email. The homepage menus were announced but none of the other actionable elements on the homepage were announced. These should all be in the tab index but they were all skipped. After the menu, Plaintiff heard “dialog” once. Homepage  Focus moves to the pop-up but Plaintiff could only hear the email field and button. Plaintiff was unable to get any text to announce. Screen-reader users won’t know what this pop-up is for or why they’re being asked for their email.  Items such as the hamburger menu are not labeled so users hear random characters and don’t realize there is a menu available.  Plaintiff heard elements announced on the page such as “multiplication link” but could not find it on the page.  Focus randomly appears and disappears on the homepage.  The cart is not labeled.  Plaintiff heard other random unlabeled links and graphics but couldn’t tell where they were on the page. They were announced but it’s not clear what it was since they were not labeled and focus wasn’t available. Consequently, blind visitors to the website are unable to complete a transaction. 34. Furthermore, Serovital.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 Serovital.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. 10 35. Serovital.com also lacks accessible forms. Plaintiff is unable to locate the shopping cart because the shopping basket form does not specify the purpose of the shopping bag. As a result, blind customers are denied access to the shopping cart and to the ability to check out. Consequently, blind customers are unsuccessful in adding products into their shopping carts and are essentially prevented from purchasing items on Serovital.com. 36. Moreover, the lack of navigation links on Defendant’s website makes attempting to navigate through Serovital.com even more time consuming and confusing for Plaintiff and blind consumers. 37. Serovital.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, Serovital.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 Serovital.com. 38. Due to Serovital.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 Serovital.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. 11 Plaintiff must tab through every navigation bar option and footer on Defendant’s website in an attempt to reach the desired service. Thus, Serovital.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 Serovital.com. 39. Serovital.com thus contains access barriers which deny the full and equal access to Plaintiff, who would otherwise use Serovital.com and who would otherwise be able to fully and equally enjoy the benefits and services of Serovital.com in New York State and throughout the United States. 40. Plaintiff, Marion Kiler, has made numerous attempts to complete a purchase on Serovital.com, most recently on November 16, 2019, but was unable to do so independently because of the many access barriers on Defendant’s website. These access barriers have caused Serovital.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 the “SeroVital Anti-Aging Therapy.” 41. As described above, Plaintiff has actual knowledge of the fact that Defendant’s website, Serovital.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 Serovital.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 12 (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 Serovital.com, Plaintiff and the class have suffered an 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 Serovital.com and as a result have been denied access to the enjoyment of goods and services offered by Serovital.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 Serovital.com and as a result have been denied access to the enjoyment of goods and services offered by Serovital.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 13 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 Serovital.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 Serovital.com. 50. There are common questions of law and fact common to the class, including without limitation, the following: (a) Whether Serovital.com is a “public accommodation” under the ADA; (b) Whether Serovital.com is a “place or provider of public accommodation” under the laws of New York; (c) Whether Defendant, through its website, Serovital.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, Serovital.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 Sanmedica has violated the ADA, and/or the laws of New York by failing to update or remove access barriers on their website, Serovital.com, so it can be independently accessible to the class of people who are legally blind. 14 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. 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 15 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. Serovital.com is a sales establishment and public accommodation within the definition of 42 U.S.C. §§ 12181(7). 59. Defendant is subject to Title III of the ADA because it owns and operates Serovital.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.” 16 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.” 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 Sanmedica who are blind have been denied full and equal access to Serovital.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, 17 accommodations and/or opportunities of Serovital.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 her statutory right to injunctive relief to remedy the discrimination. 70. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 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. Serovital.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 Serovital.com. Defendant is a person within the meaning of N.Y. Exec. Law. § 292(1). 18 76. Defendant is violating N.Y. Exec. Law § 296(2)(a) in refusing to update or remove access barriers to Serovital.com, causing Serovital.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 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. 19 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. 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 Serovital.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 her 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. 20 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. 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. Serovital.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 Serovital.com. Defendant is a person within the meaning of N.Y. Civil Law § 40-c(2). 21 93. Defendant is violating N.Y. Civil Rights Law § 40-c(2) in refusing to update or remove access barriers to Serovital.com, causing Serovital.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 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. 22 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 (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. Serovital.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 Serovital.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 Serovital.com, causing Serovital.com to be completely inaccessible to the blind. This inaccessibility denies blind patrons full and equal access to the 23 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). 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 Serovital.com under N.Y.C. Administrative Code § 8- 107(4)(a) and/or its implementing regulations. Unless the Court enjoins Defendant from 24 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. 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 Serovital.com contains access barriers denying blind customers the full and equal access to the goods, services and facilities of Serovital.com, which Sanmedica 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. 25 PRAYER FOR RELIEF WHEREFORE, Plaintiff respectfully demands judgment in favor of Plaintiff and the class and against the Defendant 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, Serovital.com, into full compliance with the requirements set forth in the ADA, and its implementing regulations, so that Serovital.com is readily accessible to and usable by blind individuals; c) A declaration that Defendant owns, maintains and/or operates its website, Serovital.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 her attorneys as Class Counsel; e) An order directing Defendant 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; 26 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: Scarsdale, New York November 25, 2019 SHAKED LAW GROUP, P.C. Attorneys for Plaintiff By:/s/Dan Shaked_________ Dan Shaked (DS-3331) 14 Harwood Court, Suite 415 Scarsdale, NY 10583 Tel. (917) 373-9128 e-mail: [email protected] 27

civil rights, immigration, family

2_s3FIcBD5gMZwczD2me

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION Plaintiffs, Case No.: Defendant. COMPLAINT The Plaintiff, Marcus Powers ("Mr. Powers"), individually and on behalf of all INTRODUCTION 1. This is an action for failure to pay overtime wages pursuant to 29 U.S.C. § 2. In 1937, President Franklin D. Roosevelt introduced to Congress a piece To protect the fundamental interests of free labor and a free people we propose that only goods which have been produced under conditions which meet the minimum standards of free labor shall be admitted to interstate commerce. Goods produced under conditions which do not meet rudimentary standards of decency should be contraband and ought not to be allowed to pollute the channels of interstate trade. 1 3. The FLSA was signed into law on June 28, 1938, with support from both 4. As explained by Justice Reed, "[i]n a period of widespread unemployment 5. Section 11(c) of the FLSA requires every covered employer to: [M]ake, keep, and preserve such records of the persons employed by him and of the wages, hours, and other conditions and practices of employment maintained by him, and shall preserve such records for such periods of time, and shall make such reports therefrom to the Administrator as he shall prescribe by regulation or order as necessary or appropriate for the enforcement of the provisions of this chapter or the regulations or orders thereunder. 29 U.S.C. $211(c). 6. Title 29, Part 516, Subpart B contains the FLSA's implementing 7. The Defendant in this case is a leading international provider of pallet and 8. The Defendant in this case failed to keep accurate records of the actual 2 9. 10. By virtue of its actions Defendant is unfairly competing with companies 11. This action is intended to cover all of Defendant's non-exempt, hourly STATEMENT OF FACTS 12. This Court has original jurisdiction over Plaintiff's claims pursuant to 28 13. Venue is proper as the acts and omissions giving rise to Plaintiffs' claims Defendants 14. Defendant Brambles Industries, Inc. ("Brambles") is a Foreign For Profit 15. Brambles was originally founded in Australia in 1875 and was a butchery. 16. In the 1920's Brambles expanded its operations as a "logistics" company. 3 17. 18. Brambles specialises in the pooling of unit-load equipment and associated 19. Brambles is publically traded on the Australian Securities Exchange 20. In 2013, Brambles reported more than $5.8 billion (USD) in sales and 21. CHEP was originally an Australian public entity (formally known as the Handling Equipment Pool). See 22. CHEP was privatized in 1949 and was acquired by Brambles Industries in 23. CHEP is now a fictitious brand name for business operations conducted 24. CHEP and Brambles have equipment pooling operations in Europe, South 25. In 2002, CHEP opened a location in Orlando, Florida where the putative 26. CHEP is owned and operated exclusively by Brambles Industries, Inc. 27. Brambles and CHEP have a common business purpose - namely, 28. The goods utilized by Defendant include but are not limited to pallets, 430. Brambles Industries, Inc. is an employer as defined by the Fair Labor 31. Brambles is a covered enterprise as defined by the FLSA, 29 U.S.C. § 32. In 2011, Brambles grossed more than $500,000 in gross sales or annual 33. In 2012, Brambles grossed more than $500,000 in gross sales or annual 34. In 2013, Brambles grossed more than $500,000 in gross sales or annual 35. In 2011, Defendant and its related entities collectively grossed more than 36. In 2012, Defendant and its related entities collectively grossed more than 37. In 2013, Defendant and its related entities collectively grossed more than 38. Defendant, through its related activities, is an "enterprise" as defined by Plaintiffs 39. Marcus Powers ("Powers") is a resident of the State of Florida. 5 41. Powers worked for Defendant from approximately May 2011 until May 42. Powers was a non-exempt hourly paid employee. 43. Powers' primary job duties included the performance of manual labor 44. Powers never traveled out of state as part of his job duties with Defendant. 45. Powers was never expected to travel out of state as part of his job duties 46. Powers and other similarly-situated employees were regularly required to 47. If Powers and his coworkers did not attend their mandatory pre-shift 48. The unpaid meetings that form the basis of this Complaint were and are 49. Powers regularly worked more than forty (40) hours per workweek during 50. During one or more work weeks, Defendant failed to pay Powers for all of 51. During one or more work weeks, Defendant failed to pay Powers time and 52. Defendant did not comply with the provisions of 29 C.F.R. § 778.106. 6 54. Defendant knew or had reason to know that Powers and others similarly 55. By virtue of its mandatory meeting policy, Defendant failed to pay Powers 56. To the extent they exist, Defendant is in exclusive possession of the 57. Defendant either knew its conduct violated the Fair Labor Standards Act 58. Defendant had a policy and practice of requiring its hourly-paid laborers 59. Defendant had a policy and practice of failing to pay their hourly-paid 60. Defendant did not rely upon the advice of counsel in formulating the pay 61. Defendants did not rely upon any opinion of the U.S. Department of Labor 763. There exists other individuals who are similarly-situated to the named COUNT - UNPAID OVERTIME WAGES 64. Powers reincorporates and adopts the allegations in paragraphs 1-63 65. Powers is an employee as defined by the FLSA. 66. Brambles d/b/a CHEP is an employer as defined by the FLSA. 67. At all times relevant, Brambles was Powers' employer as defined by the 68. Brambles is a covered enterprise as defined by the FLSA. 69. Powers was individually covered by the FLSA. 70. The persons similarly-situated to Powers are individually covered by the 71. Defendant employed Powers and other similarly-situated hourly-paid 8 73. Powers and all similarly situated are entitled to be paid overtime wages in 74. Defendant failed to pay Powers and all similarly-situated employees for all 75. Defendant had a uniform policy and practice of requiring its hourly-paid 76. Defendant's mandatory pre-shift meeting policy was applied uniformly to 77. In one or more work weeks of their employment, Defendant's mandatory 78. Plaintiffs suffered harm and continue to suffer harm in the form of unpaid 79. Plaintiffs are entitled to be paid overtime wages for all of their hours 80. Plaintiffs are entitled to an equal amount in liquidated damages. 81. Plaintiffs are entitled to recover their attorneys' fees and costs pursuant to 82. Defendant knew or had reason to know that Powers and other similarly- 83. Defendants' violations were willful. 9 Respectfully submitted this 25th of July, 2014, Christina J Thomas, Esq. Florida Bar No.: 0074846 [email protected] Bernard R. Mazaheri, Esq. Florida Bar No.: 64792 [email protected] Morgan & Morgan, P.A. 20 N. Orange Ave., 14th Floor Orlando, Florida 32801 Tel: (407) 420-1414 Fax: (407) 245-3487 Counsel for Plaintiffs 10

employment & labor

1gEGFYcBD5gMZwczXOqg

CV 13-3757 CIVIL ACTION NO.: Plaintiffs, COMPLAINT - against - SPATT, J. Defendants. BROWN, M. Plaintiff Crystal Persaud, by and through her undersigned counsel, as and for her NATURE OF THE CLAIMS 1. This is an action for declaratory, injunctive and equitable relief as well as JURISDICTION AND VENUE 2. The Court has jurisdiction over this action pursuant to 28 U.S.C. §§ 1331 and - -1 - 3. Venue is proper in this district pursuant to 28 U.S.C. § 1391(b) because a 4. Plaintiff has complied with all statutory prerequisites to her ADA claims. A 5. After investigation, the Division of Human Rights found that probable cause 6. On March 21, 2013 the commissioner of the New York State Division of Human 7. Plaintiff received notice of right to sue from the EEOC on April 8, 2013. A 8. Any and all other prerequisites to the filing of this suit have been met. EQUITABLE TOLLING 9. To the extent that the Defendant argues that the plaintiff did not file her - -2 - PARTIES Crystal Persaud 10. Plaintiff Crystal Persaud is a 32 year old female with disabilities, including 11. The Plaintiff resides with her Mother in St. Albans, Queens County, New York. 12. At all relevant times, Ms. Persaud met the definitions of an "employee" and a Wal-Mart 13. Defendant Wal-Mart Stores, Inc. is a corporation with its headquarters located at 14. Defendant Wal-Mart Stores East, L.P. is a limited partnership existing under the 15. Wal-Mart Stores East, L.P. and Wal-Mart Stores, Inc. are collectively referred to 16. At all relevant times, Wal-Mart has met the definition of an "employer" under all CLASS-WIDE FACTUAL ALLEGATIONS 17. Ms. Persaud and many others similarly situated are current and former 3 - 18. ACCESS-VR provides Vocational Rehabilitation services to individuals who 19. Wal-Mart knowingly applies for and receives the tax benefits of hiring disabled (a) The New York State Workers with Disabilities Tax Credit (N.Y. Tax Law § 187-a); and (b) The Work Opportunity Tax Credit (26 U.S.C.A. § 51); 20. Under 29 U.S.C.A. 51(d)(6) Wal-Mart is only eligible for a tax credit for hiring 21. Wal-Mart's application for and receipt of the Work Opportunity Tax Credit for 22. The requirements for eligibility for the New York Workers With Disabilities Tax - 4 -" 23. Wal-Mart's application for and receipt of the WETC for Plaintiff and others 24. Wal-Mart hires these disabled individuals for work in an integrated setting, in 25. "The provision of reasonable accommodations is consistent with a 26. All of the individuals who are referred by ACCESS-VR to Wal-Mart have been 27. Despite the fact that Wal-Mart accepts the tax benefits of giving employment to - 5 - 28. At the time of Ms. Persaud's employment and up to the present time, Wal-Mart 29. Wal-Mart has the obligation, when it hired individuals referred by ACCESS-VR, 30. Upon information and belief, Wal-Mart continues to discriminate against the 31. Wal-Mart has also refused to comply with the Second Circuit's opinion in Brady 32. Neither Has Wal-Mart meaningfully complied with the consent decree issued in INDIVIDUAL FACTUAL ALLEGATIONS 33. Crystal Persaud is a 33 year old female born on December 30, 1979. She has 6 - 34. Ms. Persaud is a qualified individual with a disability, namely hearing loss, 35. In December 2005, at the age of 26, Crystal Persaud was evaluated by the New 36. In conducting the evaluation, VESID also found that Ms. Persaud would need to 37. On May 1, 2007 Crystal was hired by Wal-Mart as a Garden Clerk. She was 38. Upon information and belief, Wal-Mart applied for and received the WETC and - 7 -39. Despite knowing that Ms. Persaud had a disability at the time of hiring Wal- 40. Shortly after she was hired as a Garden Clerk, Ms. Persaud's duties were 41. Ms. Persaud was repeatedly reprimanded both verbally and in writing when she 42. Sometime during her employment Crystal had a confrontation with an assistant 43. After the meeting the Store Manager intervened and reinstated Crystal. 44. After the Plaintiff's Mother intervened and Crystal was allowed to keep her job, 8 - 45. The abuse by Carmen Garcia became so difficult for the plaintiff that towards 46. Despite Crystal's limitations in her emotional endurance for varied tasks, ability 47. Crystal did not have time to unload two carts in her department on the night of 48. Wal-Mart also contested Ms. Persaud's eligibility for Unemployment Insurance 9 - 49. A hearing was held before the New York State Department of Labor, CLASS ACTION ALLEGATIONS 50. Plaintiff brings the First and Second causes of action, under Rule 23 of the The class includes all such 51. Excluded from the Rule 23 Class are Defendants, Defendants' legal 52. The members of the Rule 23 Class are SO numerous that joinder of all members - 10 -53. Upon information and belief, the size of the Rule 23 Class is at least 500 54. Defendants have acted or have refused to act on grounds generally applicable to 55. Common questions of law and fact exist as to the Rule 23 Class that (a) Whether Defendant availed itself of the tax benefits of hiring people with known disabilities; (b) Whether Defendant created and/or implemented procedures to assure that these individuals received reasonable accommodations under the ADA and the NYSHRL. (c) Whether Defendant has refused to comply with the Second Circuit's decision in Wal-Mart V. Brady which in essence ordered Wal-Mart to engage in an interactive process with all employees with known disabilities, regardless of whether an accommodation was requested; (d) Whether Wal-Mart's violations of the NYSHRL and the ADA as alleged herein constitute violations of the consent decree issued in EEOC V. Wal- Mart Stores, Inc., No. S99 CIV 0414, 2001 WL 1904140 (E.D.Cal. Dec. 17, 2001). - 11 - (e) Whether Defendant's failure to enact and/or implement policies regarding the interactive process to be engaged in with individuals hired through VESID constitutes of failing to pay workers was willful or with reckless disregard of the law; and 56. The Homogeneous nature of class has already been established by the 57. Wal-Mart knew each member of the class had been determined to be disabled 58. Wal-Mart regarded each member of the class as having a disability based upon 59. Wal-Mart knew or regarded each member of the class as having a disability 60. The actions for class relief alleged herein are typical of the claims of the Rule 23 12 - 61. Plaintiff will fairly and adequately represent and protect the interests of the 62. A class action is superior to other available methods for the fair and efficient - 13 -63. This action is properly maintainable as a class action under Federal Rule of Civil AS AND FOR A FIRST CAUSE OF ACTION (Class Action for Failure to Accommodate in violation of ADA) 64. Plaintiff hereby repeats and realleges each and every preceding allegation, 65. Plaintiff hereby repeats and realleges each and every prior allegation as if fully 66. Plaintiff and all those similarly situated are persons with disabilities under the 67. Defendant Wal-Mart regarded Plaintiff and all those similarly situated as being 68. Defendant Wal-Mart knew that the Plaintiff and all those similarly situated were 69. Plaintiff and all those similarly situated could perform the essential functions of 70. Defendant Wal-Mart failed to enact and/or implement policies regarding 71. Defendant Wal-Mart failed to reasonably accommodate the actual or perceived 72. Defendant Wal-Mal't's unlawful and discriminatory actions constitute willful - 14 - 73. Plaintiff and each person similarly situated is entitled to declaratory and AS AND FOR A SECOND CAUSE OF ACTION (Class Action for Failure to Engage in the Interactive Process in violation of NYSHRL) 74. Plaintiff hereby repeats and realleges each and every preceding allegation, 75. Plaintiff and all those similarly situated are persons with disabilities under the 76. Defendant Wal-Mart regarded Plaintiff and all those similarly situated as being 77. Defendant Wal-Mart knew that the Plaintiff and all those similarly situated were 78. Defendant Wal-Mart failed to enact and/or implement policies regarding 79. Plaintiff and each person similarly situated is entitled to declaratory and AS AND FOR A THIRD CAUSE OF ACTION (Harassment in Violation of the ADA) 80. Plaintiff hereby repeats and realleges each and every preceding allegation, - 15 - 81. Plaintiff is a qualified individual with a disability, 82. She was subjected to unwelcome harassment. 83. The harassment was based on her disability. 84. The harassment was severe and pervasive. 85. Defendant Wal-Mart created, fostered, condoned, accepted, ratifying and/or 86. As a direct and proximate result of Defendant Wal-Mart's unlawful and 87. As a direct and proximate result of Defendant Wal-Mart's unlawful and 88. Defendant Wal-Mal't's unlawful and discriminatory actions constitute willful AS AND FOR A FOURTH CAUSE OF ACTION (Harassment in Violation of the NYSHRL) 89. Plaintiff hereby repeats and realleges each and every preceding allegation, 90. Plaintiff is a qualified individual with a disability, 91. She was subjected to unwelcome harassment. - 16 - 92. The harassment was based on her disability. 93. The harassment was severe and pervasive. 94. Defendant Wal-Mart created, fostered, condoned, accepted, ratifying and/or 95. As a direct and proximate result of Defendant Wal-Mart's unlawful and 96. As a direct and proximate result of Defendant Wal-Mart's unlawful and AS AND FOR A FIFTH CAUSE OF ACTION (Discrimination in Violation of the ADA) 97. Plaintiff hereby repeats and realleges each and every preceding allegation, 98. Plaintiff is a qualified individual with a disability.99. Plaintiff could perform the essential functions of her job with or without a 100. She was fired because of her disability. - 17 - 101. As a direct and proximate result of Defendant Wal-Mart's unlawful and 102. Defendant Wal-Mal't's unlawful and discriminatory actions constitute willful AS AND FOR A SIXTH CAUSE OF ACTION (Discrimination in Violation of the NYSHRL) 103. Plaintiff hereby repeats and realleges each and every preceding allegation, 104. Plaintiff is a qualified individual with a disability. 105. Plaintiff could perform the essential functions of her job with or without a 106. The behavior for which the Plaintiff was terminated was caused by the 107. As a direct and proximate result of Defendant Wal-Mart's unlawful and 108. As a direct and proximate result of Defendant Wal-Mart's unlawful and - 18 - AS AND FOR A SEVENTH CAUSE OF ACTION (Negligent Hiring, Retention and Supervision) 109. Plaintiff hereby repeats and realleges each and every preceding allegation, 110. In hiring, training and supervising supervisory personnel such as Carmen Garcia, 111. Defendant Wal-Mart has a duty to prevent such personnel from engaging in 112. Defendant Wal-Mart negligently and/or recklessly breached its duty of care in 113. Defendant Wal-Mart knew or should have known that Defendant Garcia would 114. As a direct and proximate result of Defendant Wal-Mart's breach of its duty of 115. As a direct and proximate result of Defendant Wal-Mart's breach of its duty of 116. Defendant Wal-Mart's negligence was reckless and in knowing disregard of its - 19 - PRAYER FOR RELIEF WHEREFORE, Plaintiff prays that the Court enter judgment in its favor and against A. A declaratory judgment that the actions, conduct and practices of Defendants complained of herein violate the laws of the United States and the State of New York, B. An injunction and order permanently restraining Defendants from engaging in such unlawful conduct, C. An order directing Defendants to create and implement procedures for engaging in the interactive process with individuals referred by VESID, D. An award of damages in an amount to be determined at trial, plus prejudgment interest, to compensate Plaintiff for all monetary and/or economic damages, including but not limited to, the loss of past and future income, wages, compensation, seniority and other benefits of employment, E. An award of damages in an amount to be determined at trial, plus prejudgement interest, to compensate Plaintiff for all non-monetary and/or compensatory damages, including but not limited to, compensation for her severe mental anguish and emotional distress, F. An award of damages for any and all other monetary and/or non-monetary losses suffered by Plaintiff in an amount to be determined at trial, plus prejudgement interest, G. An award of punitive damages for plaintiff and each member of the prospective class up to the Maximum of $300,000.00 per class member. - 20 -H. An award of costs that Plaintiff has incurred in this action, as well as Plaintiffs reasonable attorneys' fees to the fullest extent permitted by law, and I. Such other and further relief as the Court may deem just and proper. JURY DEMAND Plaintiff hereby demands a trial by jury on all issues of fact and damages stated July 2, 2013 Respectfully submitted, STEVEN J. MOSER, P.C. for BY: Steven John Moser Three School Street, Suite 207B Glen Cove, NY 11542 (516) 671-1150 (800) 597-6958 F (516) 882-5420 [email protected] Attorneys for Plaintiffs - 21 -

discrimination

Z6NSCYcBD5gMZwczMK8v

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION CIVIL ACTION NO. ___________ BRIAN WRIGHT, CHASE STOLTZ, ZACKARY KINSEL, BRIAN OLIVER, and JOSHUA TEDDER on Behalf of Themselves and on Behalf of All Others Similarly Situated, Plaintiffs, JURY TRIAL DEMANDED § § § § § § § § § § WT3 LLC, JAMES WINGO AND STANLEY PEACH, Defendants. PLAINTIFFS’ ORIGINAL COMPLAINT COLLECTIVE ACTION & JURY DEMAND I. SUMMARY 1. Congress designed the Fair Labor Standards Act of 1938 (“FLSA”) to remedy situations “detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.” 29 U.S.C. § 202(a). To achieve this broad remedial purpose, the FLSA establishes minimum wage and overtime requirements for covered employees. 29 U.S.C. §§ 206, 207. These provisions, coupled with an effective integrated cause of action within the FLSA, prevent employers from pilfering the wages rightfully earned by their employees. 2. Plaintiffs Brian Wright, Chase Stoltz, Zackary Kinsel, Brian Oliver, and Joshua Tedder and the employees they seek to represent (“Class Members”) are current and former manual laborers paid on a day rate basis employed by Defendants WT3 LLC, James Wingo and Stanley Peach (“Defendants”) between May 17, 2010 and the time notice is issued. Defendants knowingly and deliberately failed to compensate Plaintiffs and Class Members for their overtime hours based on the time and half formula in the FLSA. 3. Defendants violated the FLSA by paying the Plaintiffs and Class Members a daily rate instead of an hourly rate. 4. Consequently, Defendants’ compensation policy violates the FLSA’s mandate that non-exempt employees, such as Plaintiffs and Class Members, be compensated at one and one- half times their regular rate of pay for each hour worked over forty (40) in a week. 5. Plaintiffs seek to recover, on behalf of themselves and the Class Members, all unpaid wages and other damages owed under the FLSA as a collective action pursuant to 29 U.S.C. § 216(b). 6. Plaintiffs also pray that the class of similarly situated manual labor workers be notified of the pendency of this action to apprise them of their rights and provide them an opportunity to opt into this litigation. II. SUBJECT MATTER JURISDICTION AND VENUE 7. This Court has federal question jurisdiction pursuant to 28 U.S.C. § 1331 as this case is brought under the laws of the United States, specifically the FLSA, 29 U.S.C. § 216(b). 8. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) because a substantial portion of the events and omissions giving rise to this claim occurred in this District, including many of the wrongs herein alleged. Defendants do business in this District and some of the violations took place while Plaintiffs worked in this District. III. PARTIES AND PERSONAL JURISDICTION 9. Plaintiff Brian Wright is an individual currently residing in Montgomery County, Texas. His written consent to this action is attached hereto as Exhibit “A.” 2 10. Plaintiff Chase Stoltz is an individual currently residing in Harris County, Texas. His written consent to this action is attached hereto as Exhibit “B.” 11. Plaintiff Zackary Kinsel is an individual currently residing in Montgomery County, Texas. His written consent to this action is attached hereto as Exhibit “C.” 12. Plaintiff Brian Oliver is an individual currently residing in Montgomery County, Texas. His written consent to this action is attached hereto as Exhibit “D.” 13. Plaintiff Joshua Tedder is an individual currently residing in Montgomery County, Texas. His written consent to this action is attached hereto as Exhibit “E.” 14. The Class Members are all manual laborers employed by Defendants from May, 17, 2010 to the time notice is issued who worked more than 40 hours in at least one workweek. 15. Defendant WT3 LLC is a limited liability company organized under the laws of Texas that does business in Texas. Defendant may be served process through its registered agent Raptor Group, Inc. 11723 Timber Crest Dr. Tomball, TX 77375. 16. Defendant James Wingo is an individual who resides in Magnolia County, Texas. He may be served with process at his regular place of business, 15487 Ein Oak Dr. Conroe, TX 77384. 17. Defendant Stanley Peach is an individual who resides in Magnolia County, Texas. He may be served with process at his regular place of business, 15487 Ein Oak Dr. Conroe, TX 77384. 18. This Court has personal jurisdiction over Defendants because they are residents of the State of Texas. 3 IV. FLSA COVERAGE 19. In an FLSA case, the following elements must be met. (1) the existence of an employment relationship; (2) that she/he was engaged in commerce or employed by an enterprise engaged in commerce; (3) that Defendants failed to pay her/him overtime/minimum wage; and (4) that she/he is owed the amount claimed by a just and reasonable inference. See, e.g., Jones v. Willy, P.C., Civil Action No. H-08-3404, 2010 WL 723632, at *2 (S.D. Tex. Mar. 1, 2010) (citing 29 U.S.C. § 207(a) (maximum hours) and Harvill v. Westward Commc’ns, L.L.C., 433 F.3d 428, 439 (5th Cir. 2005)). EMPLOYMENT RELATIONSHIP 20. At all material times, Defendants have been an employer within the meaning of the FLSA. 29 U.S.C. § 203(d). See Exhibits, “F” “G” and “H” (earnings statements for Brian Wright, Brian Oliver, and Joshua Tedder, respectively). 21. Moreover, Defendants James Wingo and Stanley Peach are the owners of WT3, LLC. Defendant Peach is the Director of WT3, LLC. 22. Defendants Wingo and Peach controlled the nature, pay structure, and employment relationship of the Plaintiffs and Class Members. 23. Further, Defendants Wingo and Peach have, at all times relevant to this lawsuit, the authority to hire and fire employees, the authority to direct and supervise the work of employees, the authority to sign on the business' checking accounts, including payroll accounts, and the authority to make decisions regarding employee compensation and capital expenditures. Additionally, they are responsible for the day-to-day affairs of the corporation. In particular, Defendants Wingo and Peach are responsible for determining whether the corporation complied with the FLSA. 4 24. As the owners of WT3, LLC, Defendants Wingo and Peach employed the Plaintiffs and Class Members as manual laborers. 25. As such, pursuant to 29 U.S.C. § 203(d), Defendants Wingo and Peach acted directly or indirectly in the interest of Plaintiffs’ and Class Members’ employment as their employers, which makes them individually liable under the FLSA. ENGAGED IN COMMERCE 26. At all material times, Defendants have been an enterprise in commerce within the meaning of the FLSA. 29 U.S.C. § 203(r). 27. “The Supreme Court has made clear that the FLSA extends federal control ‘throughout the farthest reaches of the channels of interstate commerce.’” Alvarez v. Amb-Trans Inc., 2012 WL 4103876 *2 (W.D. Tex., 2012), (citing Walling v. Jacksonville Paper Co., 317 U.S. 564, 567). “The Fifth Circuit has also emphasized that no de minimis rule applies to the FLSA; any regular contact with commerce, no matter how small, will result in coverage.” Alvarez, 2012 WL 4103876 *2 (Citing Marshall v. Victoria Trans. Co., Inc., 603 F.2d 1122, 1124 (5th Cir.1979)). 28. “The FLSA protects employees who fall under either of two types of coverage: (1) ‘enterprise coverage,’ which protects all those who are ‘employed in an enterprise engaged in commerce or in the production of goods for commerce,’ or (2) ‘individual coverage,’ which protects those who are individually ‘engaged in commerce or in the production of goods for commerce,’ regardless of whether the employer constitutes an enterprise.” Duran v. Wong 2012 WL 5351220, *2 (S.D.Tex., 2012); See also, 29 U.S.C. § 207(a)(1); See also Martin v. Bedell, 955 F.2d 1029, 1032 (5th Cir. 1992) (“Either individual or enterprise coverage is enough to invoke FLSA protection.”). 5 29. Both the individual and enterprise coverage are applicable in this case. 30. First, with regards to individual coverage, the FLSA states that if the employee is “engaged in commerce or in the production of goods for commerce,” individual coverage applies. 29 U.S.C. § 207(a)(1). “In determining whether an employee is engaged in interstate commerce within the meaning of the FLSA, the Fifth Circuit applies a ‘practical test.’” Aberle v. Saunders MEP, Inc., 2011 WL 2728350, *3 (E.D.Tex., 2011) (citing Sobrinio v. Medical Ctr. Visitor's Lodge, Inc., 474 F.3d 828, 829 (5th Cir. 2007)). “Any regular contact, no matter how minimum, will result in coverage under the FLSA. Id. (citing Marshall v. Victoria Transp. Co., 603 F.2d 1122, 1124 (5th Cir.1979)); (See also, Sobrinio, 474 F.3d at 829). “The employee's work must be ‘entwined with the continuous stream of interstate commerce.’” Id. (citing Marshall, 603 F.2d at 1125). “A key factor in determining if a plaintiff engaged in commerce for purposes of individual coverage under the FLSA is whether such activities were a ‘regular and recurrent’ part of the plaintiff's employment duties.” Id. (citing, 29 C.F.R. 776.10(b)). 31. At all material times, Plaintiffs and Class Members were employees who engaged in commerce or in the production of goods for commerce as required by 29 USC § 206-207. 32. Here, Defendants employed Plaintiffs as manual laborers. Plaintiff Wright worked for Defendants as a field technician. His job duties consisted of laying pipes that transferred water from a water source to the oil rigs. He traveled on interstate highways to reach his work location. He used tools that were acquired by Defendants through interstate commerce. 33. Plaintiff Stoltz worked for Defendants as a field technician and as a yard hand. As a yard hand, he did routine maintenance on vehicles that belonged to Defendants, and fixed machines that broke down. He used equipment that was acquired by Defendants through 6 interstate commerce. Further, while he was a field technician, he likewise had the same duties as Plaintiff Wright detailed above. 34. Plaintiff Kinsel was a yard hand. His job was to do routine maintenance on vehicles that belonged to Defendants, and fix Defendants’ machines that broken down. He used equipment that was acquired by Defendants through interstate commerce. 35. Plaintiff Oliver was a yard hand. His job was to do routine maintenance on vehicles that belonged to Defendants, and fix Defendants’ machines that broken down. He used equipment that was acquired by Defendants through interstate commerce. 36. Lastly, Plaintiff Tedder was a field technician. His job duties consisted of laying pipe that transferred water from a water source to the oil rigs for Defendants’ customers. He traveled on interstate highways to reach his work location. He used tools that were acquired by Defendants through interstate commerce. 37. Clearly individual coverage applies since the Plaintiffs are engaged in commerce as required by 29 USC § 206-207. At all material times, Defendants have been an enterprise in commerce or in the production of goods for commerce within the meaning of the FLSA because Defendants have had and continue to have employees engaged in commerce. 29 U.S.C. § 203(s)(1). 38. Second, with regards to enterprise coverage, the FLSA states it applies to “employees of enterprises that (1) have other employees engaged in interstate commerce and (2) have an annual gross volume of business equal to or in excess of five hundred thousand dollars.” Aberle, 2011 WL 2728350, *3, (citing, 29 U.S.C. § 203(s)(1)(A)). 39. In addition to Plaintiffs, Defendants employed numerous other employees, who like Plaintiffs, are manual laborers engaged in interstate commerce. Further, Defendants 7 themselves are engaged in interstate commerce since they order supplies across state lines, conduct business deals with merchants across state lines, advertise on the internet with companies based in other states, processes customers’ credit cards with banks in other states, and advertise that they service not only Texas, but Oklahoma, South Dakota, Louisiana, West Virginia, and Ohio.1 40. Further, Defendants enjoys an annual gross business volume in excess of $500,000 and has likewise done so in the three years prior to the filing of this complaint. VIOLATION OF FLSA 41. Plaintiffs are nonexempt employees under the FLSA. 42. Defendants did not pay time and a half for overtime. Instead, Defendants paid Plaintiffs and Class Members a day rate without regard for hours worked. See Exhibits, “F” “G” and “H” (earnings statements for Brian Wright, Brian Oliver, and Joshua Tedder, respectively). 43. The Plaintiffs typically worked over forty hours per week. 44. Consequently, Defendants are in violation of the FLSA. V. FACTS 45. Defendants provide water transfer and completion services. Defendants offer these services to oil field operators across the country. They specialize in frac, flowback and pit to pit water transfer, but also offer an array of completion fluids and engineering services. They provide their services to over 20 of the top oil and gas companies including, Hess, Plymouth, Sundance, and SM Energy.2 46. Plaintiffs and Class Members are employed by Defendants as manual laborers who perform services in the categories identified in the preceding paragraph. 1 See Exhibit, “I” (A print out from Defendants’ website showing their service areas). 2 See Exhibit, “J” (A print out from Defendant’s website showing their customers). 8 47. Defendants dispatch field technicians and other manual laborers to its customers’ oil fields. Defendants also hire manual labors to work on its “yard” which is where its vehicles and other equipment are stored. 48. Defendants pay their manual labors a day rate only without regard to actual hours worked. 49. Plaintiffs and Class Members typically work over forty hours per week. 50. Defendants never pay time and a half for hours worked over forty. VI. COLLECTIVE ACTION ALLEGATIONS 51. Plaintiffs bring this action as an FLSA collective action pursuant to 29 U.S.C. § 216(b) on behalf of all persons who were or are employed by Defendants as manual laborers within the three (3) years preceding the filing of this complaint to the present. 52. Plaintiffs have actual knowledge, through conversations with their co-workers, that a class of similarly situated Class Members exists who have been subjected to Defendants’ policy of not paying the overtime rate for all hours worked over forty. 53. Class Members are similarly situated to Plaintiffs in that they all performed manual labor, were paid on a day rate and were victims of the same violations of the FLSA. 54. Defendants’ failure to pay overtime at the rates required by the FLSA results from generally applicable policies or practices and does not depend on personal circumstances of individual Class Members. 55. The experience of Plaintiffs, with respect to their employment classification and pay, is typical of manual laborers across Defendants’ business. 56. The specific job titles or precise job responsibilities of each Class Member does not foreclose collective treatment. 9 57. Like Plaintiffs, all Class Members are entitled to receive overtime. 58. The claims of all Class Members arise from a common nucleus of facts. Liability is based on a systematic course of wrongful conduct by Defendants that caused harm to all Class Members. 59. The names and addresses of the Class Members are available from Defendants’ records. To the extent required by law, notice will be provided to these individuals by first class mail or by the use of techniques and a form of notice similar to those customarily used in representative actions. 60. Although the exact amount of damages may vary among the individual Class Members in proportion to the number of hours they worked, damages for each individual can be easily calculated using a simply formula. 61. Between May 17, 2010 and May 17, 2013, Defendants employed at least thirty- five (35) manual laborers paid on a day rate. 62. Between May 17, 2010 and May 17, 2013, Defendants employed at least twenty- five (50) manual laborers paid on a day rate. 63. Between May 17, 2010 and May 17, 2013, Defendants employed at least twenty- five (100) manual laborers paid on a day rate. 64. Between May 17, 2010 and May 17, 2013, Defendants employed at least twenty- five (150) manual laborers paid on a day rate. 65. Between May 17, 2010 and May 17, 2013, Defendants employed at least twenty- five (200) manual laborers paid on a day rate. 66. Between May 17, 2010 and May 17, 2013, Defendants employed at least twenty- five (250) manual laborers paid on a day rate. 10 67. As such, the class of similarly situated employees is properly defined as follows: All of Defendants’ current and former manual laborers paid on a day rate basis between May 17, 2010 and the date notice is issued. VII. CAUSES OF ACTION COUNT I VIOLATION OF THE FAIR LABOR STANDARDS ACT FAILURE TO PAY OVERTIME (COLLECTIVE ACTION) 68. Plaintiffs incorporate the preceding paragraphs by reference. 69. This count arises from Defendants’ violation of the FLSA for their failure to pay Plaintiffs and Class Members overtime based on FLSA’s time-and-a-half formula. 70. For each hour worked in excess of forty (40) each week, Plaintiffs and Class Members were entitled to be paid one and one-half times their regular rate of pay. 29 U.S.C. § 71. By failing to pay overtime based on that formula, Defendants violated and continue to violate the FLSA. 72. No exception contained in the FLSA, its implementing regulations, or recognized by any Court of the United States permits an employer in the position of Defendants to skirt its obligation to pay overtime to an employee situated in the position of Plaintiffs and Class Members. 73. Defendants’ failure to pay overtime to Plaintiffs and Class Members, in violation of the FLSA, was willful and not based on a good faith belief that its conduct did not violate the FLSA. As such, the foregoing conduct, as alleged, constitutes a willful violation within the meaning of the FLSA. 29 U.S.C. § 255(a). 11 74. In fact various employees complained to Defendants about the fact that they were not receiving overtime, yet the Defendants continued on with their illegal pay practices. VIII. WAGE DAMAGES SOUGHT 75. Plaintiffs and Class Members are entitled to recover their unpaid overtime premiums for the three years preceding the filing of this complaint to the present. 29 U.S.C. § 76. Plaintiffs and Class Members are entitled to recover an equal amount of their unpaid overtime premiums as liquidated damages. 29 U.S.C. § 216(b). 77. Plaintiffs are also entitled to recover their attorney’s fees and costs, as required by the FLSA. 29 U.S.C. § 216(b). IX. JURY DEMAND 78. Pursuant to their rights under the Constitution of the United States, U.S. CONST. amend VII, and FED R. CIV. P. 38(a), Plaintiffs hereby demand trial by jury. X. PRAYER FOR RELIEF 79. For these reasons, Plaintiffs respectfully request that judgment be entered in favor of themselves and the Class Members awarding them: a. Overtime compensation for all hour worked in excess of forty (40) per week at the rate of one and one-half times their regular rates of pay; b. An equal amount of their unpaid overtime premiums as liquidated damages, as allowed under the FLSA; c. Reasonable attorney’s fees, costs, and expenses of this action as provided by the FLSA; and d. Such other and further relief to which Plaintiff and Class Members may be entitled, both in law and in equity. 12 Respectfully submitted, KENNEDY HODGES, L.L.P. By: /s/ Galvin B. Kennedy Galvin B. Kennedy [email protected] State Bar No. 00796870 Federal Bar No. 20791 711 W. Alabama St. Houston, TX 77006 Telephone: (713) 523-0001 Facsimile: (713) 523-1116 LEAD ATTORNEY IN CHARGE FOR PLAINTIFFS AND CLASS MEMBERS OF COUNSEL: Beatriz Sosa-Morris State Bar No. 24076154 Federal Bar No. 1552137 KENNEDY HODGES, LLP 711 W. Alabama Street Houston, Texas 77006 Telephone: 713-523-0001 Facsimile: 713-523-1116 [email protected] 13

employment & labor

0q_PCocBD5gMZwczDqeW

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.: 121708 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK Rachael Bell, individually and on behalf of all others similarly situated, Plaintiff, Case No: CLASS ACTION COMPLAINT v. JURY TRIAL DEMANDED Mediation Recovery Center, Inc., Defendant. Rachael Bell, individually and on behalf of all others similarly situated ( “Plaintiff”), by and through the undersigned counsel, complains, states and alleges against Mediation Recovery Center, Inc. (“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). The Court has supplemental jurisdiction exists over the any state law claims pursuant to 28 U.S.C. §1367. 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 York. PARTIES 5. Plaintiff Rachael Bell is an individual who is a citizen of the State of New York residing in Kings 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 Mediation Recovery Center, Inc., is an Illinois Corporation with a principal place of business in Dekalb County, Illinois. THE FDCPA AS IT RELATES TO THE CLAIMS HEREIN 9. 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). 10. 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). 11. 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). 12. 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). 13. 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. 14. 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. 15. 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. FACTUAL ALLEGATIONS 16. Defendant regularly collects or attempts to collect debts asserted to be owed to others. 17. Defendant is regularly engaged, for profit, in the collection of debts allegedly owed by consumers. 18. The principal purpose of Defendant's business is the collection of such debts. 19. Defendant uses the mails in its debt collection business. 20. Defendant is a “debt collector” as defined by 15 U.S.C. § 1692a(6). 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 calls to Plaintiff's telephone. 28. In its efforts to collect the alleged Debt, Defendant contacted Plaintiff in writing including by the letter dated March 4, 2020. (the “Letter”) (A true and accurate copy of the Letter is annexed hereto as Exhibit 1). 29. The Letter conveyed information regarding the alleged Debt. 30. The Letter is a “communication” as defined by 15 U.S.C. § 1692a(2). 31. The Letter was received and read by Plaintiff. 32. 15 U.S.C. § 1692e protects Plaintiff's concrete interests. Plaintiff has the interest and right to be free from deceptive and/or misleading communications from Defendant. As set forth herein, Defendant deprived Plaintiff of this right. 33. Plaintiff's injury is “particularized” and “actual” in that the letter that caused the injury was addressed and sent to Plaintiff specifically. 34. Plaintiff's injury is directly traceable to Defendant's conduct, because Defendant sent the Letter. 35. A favorable judicial resolution of Plaintiff's case would redress Plaintiff's injury with damages. 36. The deprivation of Plaintiff's rights will be redressed by a favorable decision herein. 37. Plaintiff has been misled by Defendant's actions. 38. Plaintiff justifiably fears that, absent this Court's intervention, Defendant will continue to use abusive, deceptive, unfair and unlawful means in its attempts to collect the Debt. 39. Plaintiff justifiably fears that, absent this Court's intervention, Defendant will ultimately cause her unwarranted economic harm. 40. As a result of Defendant's conduct, Plaintiff was forced to hire counsel and therefore has incurred damages including reasonable attorneys' fees in reviewing Plaintiff's rights under the law and prosecuting this claim. 41. As a result of Defendant's conduct, Plaintiff's counsel was forced to expend time and money to investigate the enforceability of the Debt. 42. Upon information and belief, Plaintiff can prove that all actions taken by Defendant as described in this Complaint were taken willfully, with either the desire to harm Plaintiff with knowledge that its actions would very likely harm Plaintiff, and/or with knowledge that its actions were taken in violation of the law. FIRST COUNT 43. Plaintiff repeats and realleges the foregoing paragraphs as if fully restated herein. 44. To comply with the FDCPA, the statement of an amount due, without notice that the amount is already increasing due to accruing interest or other charges, can mislead the least sophisticated consumer into believing that payment of the amount stated will pay the account in full and therefore the FDCPA requires debt collectors, when they notify consumers of their account balance, to disclose that the balance may increase due to interest and fees. Avila v. Riexinger & Associates, LLC, 817 F.3d 72, 76 (2d Cir. 2016) 45. 15 U.S.C. § 1692e provides, generally, that a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. 46. 15 U.S.C. § 1692e(2)(A) prohibits the false representation of the character, amount, or legal status of any debt. 47. 15 U.S.C. § 1692e(10) prohibits the use of any false representation or deceptive means to collect or attempt to collect any debt. 48. A debt collection practice can be a “false, deceptive, or misleading” practice in violation of 15 U.S.C. § 1692e even if it does not fall within any of the subsections of 15 U.S.C. § 49. A collection letter violates 15 U.S.C. § 1692e if, in the eyes of the least sophisticated consumer, it is open to more than one reasonable interpretation, at least one of which is inaccurate. 50. A collection letter also violates 15 U.S.C. § 1692e if it is reasonably susceptible to an inaccurate reading by the least sophisticated consumer. 51. A statement of an amount due, without notice that the amount may increase, can mislead the least sophisticated consumer into believing that payment of the amount stated will clear her account. 52. For this reason, 15 U.S.C. § 1692e requires debt collectors, when they notify consumers of their account balance, to disclose that the balance may increase or to state that payment of a sum certain by a specified date will fully satisfy the debt. 53. The failure to provide the aforementioned disclosures makes a collection letter deceptive under 15 U.S.C. § 1692e. 54. The Letter includes a line item for “interest accrued” in the amount of $143.67. 55. The Letter fails to advise Plaintiff that the amount of the alleged Debt would increase of the alleged Debt was not paid. 56. The Letter fails to advise Plaintiff that payment of a sum certain by a specified date will fully satisfy the debt. 57. For the foregoing reasons, Defendant also violated 15 U.S.C. §§ 1692g(a)(1), 1692e, 1692e(2)(A) and 1692e(10) and is liable to Plaintiff therefor. SECOND COUNT 58. Plaintiff repeats and realleges the foregoing paragraphs as if fully restated herein. 59. 15 U.S.C. § 1692e prohibits a debt collector from using any false, deceptive, or misleading representation or means in connection with the collection of any debt. 60. 15 U.S.C. § 1692e(10) prohibits the use of any false representation or deceptive means to collect or attempt to collect any debt. 61. A debt collection practice can be a “false, deceptive, or misleading” practice in violation of 15 U.S.C. § 1692e even if it does not fall within any of the subsections of 15 U.S.C. § 1692e. 62. A collection letter violates 15 U.S.C. § 1692e if, in the eyes of the least sophisticated consumer, it is open to more than one reasonable interpretation, at least one of which is inaccurate. 63. A collection letter also violates 15 U.S.C. § 1692e if it is reasonably susceptible to an inaccurate reading by the least sophisticated consumer. 64. For purposes of 15 U.S.C. § 1692e, the failure to clearly and accurately identify the owner of a debt is unfair and deceptive to the least sophisticated consumer. 65. The owner of a debt must be clearly, accurately, accurately and without ambiguity conveyed from the perspective of the least sophisticated consumer. 66. The identity of the owner of a debt is a material piece of information to a consumer. 67. Knowing the identity of the owner of a debt affects how a consumer responds to a debt collector's attempts to collect the debt. 68. The Letter identifies “Credit One Bank, N.A.” as the “original creditor.” 69. The Letter does not identify the name of the current creditor. 70. The Letter fails to state the name of the entity which Defendant represents. 71. The Letter instructs Plaintiff to make any remittances payable to the order of Defendant. 72. Defendant failed to explicitly state the owner of the alleged Debt. 73. Defendant failed to clearly state the owner of the alleged Debt. 74. The least sophisticated consumer would likely be confused as to the owner of the alleged Debt. 75. The least sophisticated consumer would likely be uncertain as to owner of the alleged Debt. 76. Because the Letter can reasonably be read by the least sophisticated consumer to have two or more meanings concerning the owner of the alleged Debt, one of which is inaccurate as described, it is deceptive within the meaning of 15 U.S.C. § 1692e. 77. Because the Letter is reasonably susceptible to an inaccurate reading by the least sophisticated consumer concerning the owner of the alleged Debt as described, it is deceptive within the meaning of 15 U.S.C. § 1692e. 78. The least sophisticated consumer would likely be deceived by the Letter. 79. The least sophisticated consumer would likely be deceived in a material way by the 80. For the foregoing reasons, Defendant violated 15 U.S.C. §§ 1692g(a)(2), 1692e and 1692e(10) and is liable to Plaintiff therefor. THIRD COUNT 81. Plaintiff repeats and realleges the foregoing paragraphs as if fully restated herein. 82. 15 U.S.C. § 1692e provides, generally, that a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. 83. The July Letter contains a notice of a special offer stating: “This Letter is to inform you of a special offer on the collection account listed above”. 84. The Letter purports to extend various settlement offers. 85. While a settlement offer in and of itself is not improper, such offer runs afoul of the FDCPA if it impresses upon the least sophisticated consumer that if he or she does not accept the settlement offer by the stated deadline, he or she will have no further opportunity to settle the alleged Debt for less than the full amount. 86. These concerns can be adequately addressed by the debt collector including with the offer the following language: “We are not obligated to renew this offer.” Evory v. RJM Acquisitions Funding L.L.C., 505 F.3d 769, 776 (7th Cir. 2007). 87. The impetus behind the holding in Evory was the observation that debt collectors will often use language such as “TIME’S A WASTIN!” or “payment must be received by” a date certain to take advantage of the settlement offer. 88. The Court found this to be a false and/or deceptive practice, insofar as it was solely a mechanism designed to create a false sense of urgency for a consumer to make a payment when, in reality, debt collectors will often renew (or make better) settlement offers thereafter. 89. To strike a balance between discouraging debt collectors from making settlement offers in collection letters, while still protecting consumers from having debt collectors using such offers to create a false sense of urgency, the Court adopted the “safe harbor” language quoted 90. By requiring the inclusion of language indicating that the debt collector is “not obligated to renew” an offer, the consumer will be empowered with the knowledge that an offer may be renewed, but it is not guaranteed. 91. 15 U.S.C. § 1692e protects Plaintiff's concrete interests. Plaintiff has the interest and right to be free from deceptive and/or misleading communications from Defendants. As set forth herein, Defendants deprived Plaintiff of this right. 92. 15 U.S.C. § 1692e prohibits a debt collector from using any false, deceptive, or misleading representation or means in connection with the collection of any debt. 93. 15 U.S.C. § 1692e(10) prohibits the use of any false representation or deceptive means to collect or attempt to collect any debt. 94. A debt collection practice can be a “false, deceptive, or misleading” practice in violation of 15 U.S.C. § 1692e even if it does not fall within any of the subsections of 15 U.S.C. § 1692e. 95. A collection letter violates 15 U.S.C. § 1692e if, in the eyes of the least sophisticated consumer, it is open to more than one reasonable interpretation, at least one of which is inaccurate. 96. A collection letter also violates 15 U.S.C. § 1692e if, it is reasonably susceptible to an inaccurate reading by the least sophisticated consumer. 97. The phrase “we are not obligated to renew this offer” adequately conveys to the least sophisticated consumer that there is a renewal possibility, but also that it is not assured. 98. The Letter does not state “we are not obligated to renew this offer,” nor does it include any kind of substantially similar language. 99. The least sophisticated consumer would likely be misled by the settlement offer, by reasonably believing it was his last opportunity to settle the alleged Debt for less than the amount owed, insofar as the July letter preceding it included the Evory safe harbor language. 100. The least sophisticated consumer would likely be misled in a material way by the settlement offer, by reasonably believing it was his last opportunity to settle the alleged Debt for less than the amount owed. 101. Plaintiff was confused by the settlement offer. 102. For the foregoing reasons, Defendants violated 15 U.S.C. §§ 1692e and 1692e(10) and are liable to Plaintiff therefor. CLASS ALLEGATIONS 103. Plaintiff brings this action individually and as a class action on behalf of all persons similarly situated in the State of New York. 104. Plaintiff seeks to certify the following class: 105. All consumers to whom Defendant sent a collection letter substantially and materially similar to the Letter sent to Plaintiff, which Letter was sent on or after a date one year prior to the filing of this action to the present. 106. 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. 107. The Class consists of more than thirty-five persons. 108. 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. 109. 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. 110. 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 JURY DEMAND 111. Plaintiff hereby demands a trial of this action by jury. PRAYER FOR RELIEF WHEREFORE, Plaintiff respectfully requests judgment be entered as follows: 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. Awarding Plaintiff statutory damages in the amount of $1,000.00 as provided under 15 U.S.C. § 1692k(a)(2)(A); and e. Awarding Plaintiff actual damages in an amount to be determined at trial as provided under 15 U.S.C §1692k(a)(1) and NYGBL §349; and f. Awarding Plaintiff's the costs of this action and reasonable attorneys' fees as provided under 15 U.S.C. § 1692k(a)(3); and g. Awarding Plaintiff such other and further relief that the Court determines is just and proper. DATED: March 5, 2021 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.: 121708

consumer fraud

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SHEEHAN & ASSOCIATES, P.C. Spencer Sheehan 505 Northern Blvd., Suite 311 Great Neck, NY 11021 Telephone: (516) 303-0552 Facsimile: (516) 234-7800 [email protected] -and- REESE LLP Michael R. Reese 100 West 93rd Street, 16th Floor New York, NY 10025 Telephone: (212) 643-0500 Facsimile: (212) 253-4272 [email protected] United States District Court Southern District of New York 1:19-cv-10463 Mario Vinales, individually and on behalf of all others similarly situated, Plaintiff, Class Action Complaint - against - Kemps LLC, Defendant Plaintiff by attorneys alleges upon information and belief, except for allegations pertaining to plaintiff, which are based on personal knowledge: 1. Kemps LLC (“defendant”) manufactures, distributes, markets, labels and sells ice cream products purporting to contain flavor from their natural characterizing flavor, vanilla, specifically, Vanilla Bean Ice Cream, under their Simply Crafted brand (“Products”). 2. The Products include multipe varieties including Heavenly Vanilla and Strawberry Rhubarb Cobbler (“Vanilla ice cream with luscious strawberry rhubarb swirl and oatmeal cookie pieces”) among others. 3. The Heavenly Vanilla Product is below. I. Vanilla is Perennial Favorite Ice Cream Flavor 4. Ice cream is a year-round treat enjoyed by 96% of Americans.1 5. Its popularity is attributed “to the perfect combination of elements – sugar, fat, frozen water, and air – that make up the mouthwatering concoction.”2 6. Ice cream is defined by a minimum of 10 percent milkfat, weighing no less than 4.5 pounds to the gallon and containing less than 1.4 % egg yolk solids.3 7. Vanilla is the consistent number one flavor for 28% of consumers, confirmed two groups who would know – the International Dairy Foods Association (IDFA) (ice cream producers) and National Ice Cream Retailers Association (ice cream parlors). 8. The reasons for vanilla’s staying power are “not only because it is creamy and 1 Arwa Mahdawi, The big scoop: America's favorite ice-cream flavor, revealed, The Guardian, July 11, 2018 2 Vox Creative, The Reason You Love Ice Cream So Much Is Simple: Science, Eater.com, October 12, 2017. 3 21 C.F.R. § 135.110(a)(2) (“Ice cream and frozen custard.”). delicious, but also because of its ability to enhance so many other desserts and treats.”4 9. By some estimates, approximately two-thirds of “all ice cream eaten is either vanilla or vanilla with something stirred into it, like chocolate chips.”5 10. The applications of vanilla ice cream include its centerpiece between chocolate wafers (“sandwich”), enrobed in chocolate on a stick (“bar”), topping a warm slice of fresh-baked pie (“à la Mode”), drizzled with hot fudge and sprinkled with crushed nuts and topped by a maraschino cherry (“sundae”) or dunked in a cold frothy glass of root beer (“float”).6 A. Philadelphia-style v. French Ice Cream 11. In the development of ice cream, the two main types were Philadelphia-style and French ice cream, flavored of course, with vanilla. 12. Philadelphia-style and French ice cream were introduced to the United States by two men who had served as ambassadors to France: Ben Franklin and Thomas Jefferson. 13. While these two Founding Fathers could agree on the terms of the Declaration of Independence, they could not reach consensus on which type of vanilla ice cream was superior. 14. According to legend, Ben Franklin’s “crème froid” was “one of the earliest recorded ice cream recipes from the United States,” introduced during the sweltering summer of the Constitutional Convention of 1787.7 15. Due to the abundance of dairy farms in the Philadelphia area, the lack of hens to provide an egg yolk base and the need to quickly prepare batches of this refreshing treat for the 4Press Release, IDFA, Vanilla Reigns Supreme; Chocolate Flavors Dominate in Top Five Ice Cream Favorites Among Americans, July 1, 2018 5Bill Daley (the other one), Which vanilla ice cream is the cream of the crop? We taste test 12 top brands, Chicago Tribune, July 18, 2018 6 The True Wonders of Vanilla Ice Cream, FrozenDessertSupplies.com. 7 Julia Reed, Ice cream two ways: A tale of two continents, King Arthur Flour, Blog, Aug. 24, 2018; but see Jeff Keys, Ice Cream Mix-ins, N.p., Gibbs Smith (2009) at 14. delegates, Philadelphia-style ice cream was not cooked.8 16. Future President Thomas Jefferson, on the other hand, was a partisan of the egg yolk base, describing this treat as “French ice cream.”9 17. The egg yolk solids, coupled with vanilla, distinguish a “French” vanilla ice cream from its “vanilla” counterpart by providing a: 10 • smoother consistency and silkier mouthfeel than typical vanilla ice cream; • caramelized, smoky and custard-like taste; and • deep-yellow color.11 18. Today, ice cream with 1.4% or more egg yolk solids as part of its base is referred to as “french ice cream.”12 19. Philadelphia-style and French ice creams also differed in the form of vanilla they used to provide flavor. 20. The French varieties used vanilla extract, the liquid created when the flavor molecules of a vanilla bean are extracted by alcohol.13 21. The Philadelphia-style ice creams used the dark brown seeds contained inside the vanilla bean pod which had not been subject to extraction – referred to as “caviar,” “specks” or 8 Vanilla Ice Cream, Philadelphia-Style, The Perfect Scoop, Epicurious.com, Dec. 2011; Dr. Annie Marshall, Vanilla Bean Ice Cream Two Ways, and Ice Cream Basics, July 8, 2011, Everyday Annie Blog (“Varieties of ice cream generally fall into two main categories: Philadelphia-style or French-style. Philadelphia style ice creams are quicker and simpler, with a heavy cream/milk mixture for the base. French-style ice creams have a custard base, with cooked egg yolks to help achieve a creamy texture and rich flavor.”). 9 Thomas Jefferson’s Handwritten Vanilla Ice Cream Recipe, Open Culture, July 13, 2014; Thomas Jefferson’s Vanilla Ice Cream, Taste of Home, June-July 2012; Thomas Jefferson’s Original Vanilla Ice Cream Recipe, Jefferson Papers, Library of Congress; Anna Berkes, “Ice Cream” in Thomas Jefferson Encyclopedia, Thomas Jefferson Foundation, Inc., Monticello.org, June 28, 2013 10 The descriptor “French” or “french” preceding “vanilla” does not modify the word “vanilla.” 11 Sheela Prakash, What’s the Difference Between Vanilla and French Vanilla Ice Cream?, The Kitchn, June 7, 2017. 12 21 C.F.R. § 135.110(f)(1) (“The name of the food is ‘ice cream’; except that when the egg yolk solids content of the food is in excess of that specified for ice cream by paragraph (a) of this section, the name of the food is ‘frozen custard’ or ‘french ice cream’ or ‘french custard ice cream’.) 13 21 C.F.R. §§ 169.175 (Vanilla extract.) (at least thirty-five (35) percent ethyl alcohol). “flecks.” Vanilla Extract Vanilla Beans 22. Vanilla beans are valued by consumers because they provide a more intense and pure flavor than vanilla extract and add visual appeal.14 23. The majority of ice cream today is made in the Philadelphia-style, but the form of vanilla predominantly used is vanilla extract. 24. Vanilla bean ice cream is expected to contain vanilla extract and vanilla beans as the only sources of flavoring. II. Vanilla is Constantly Subject to Efforts at Imitation Due to High Demand 25. The tropical orchid commonly known as “vanilla” does not develop its prized flavor on its own, but must be developed over several months following harvest. 14 Lisa Weiss and Gale Gand, Chocolate and Vanilla: A Baking Book, United States: Potter/Ten Speed/Harmony/Rodale (2012) at 113-14; Louisa Clements, Pantry 101: Vanilla extract vs. vanilla beans, Chat Elaine, Nov. 30, 2015; David Lebovitz, The Perfect Scoop: Ice Creams, Sorbets, Granitas, and Sweet Accompaniments. United States: Potter/TenSpeed/Harmony (2011) at 26. 26. By law, vanilla refers to the “the total sapid and odorous principles extractable from one-unit weight of vanilla beans.”15 27. Shortly after the passage of the Pure Food and Drugs Act of 1906, E. M. Chace, Assistant Chief of the Foods Division of the U.S. Department of Agriculture’s Bureau of Chemistry, noted “There is at least three times as much vanilla consumed [in the United States] as all other flavors together.”16 28. This demand could not be met by the natural sources of vanilla, leading manufacturers to devise methods to imitate vanilla’s flavor and appearance. 29. Though the Pure Food and Drugs Act was enacted to “protect consumer health and prevent commercial fraud,” this was but one episode in the perpetual struggle against those who have sought profit through sale of imitation and lower quality commodities, dressed up as the genuine articles.17 30. Daily headlines tell a story of a “resurgent” global threat of “food fraud” – from olive oil made from cottonseeds to the horsemeat scandal in the European Union.18 31. While “food fraud” has no agreed-upon definition, its typologies encompass an ever- expanding, often overlapping range of techniques with one common goal: giving consumers less than what they bargained for. 32. Vanilla is considered a “high-risk [for food fraud] product because of the multiple 15 21 C.F.R. §169.3(c) 16 E. M. Chace, “The Manufacture of Flavoring Extracts,” Yearbook of the United States Department of Agriculture 1908 (Washington, DC: Government Printing Office, 1909) pp.333–42, 333 quoted in Nadia Berenstein, "Making a global sensation: Vanilla flavor, synthetic chemistry, and the meanings of purity," History of Science 54.4 (2016): 399-424 at 399. 17 Berenstein, 412; some of the earliest recorded examples of food fraud include unscrupulous Roman merchants who sweetened wine with lead. 18 Jenny Eagle, ‘Today’s complex, fragmented, global food supply chains have led to an increase in food fraud’, FoodNavigator.com, Feb. 20, 2019; M. Dourado et al., Do we really know what’s in our plate?. Annals of Medicine, 51(sup1), 179-179 (May 2019); Aline Wisniewski et al., "How to tackle food fraud in official food control authorities in Germany." Journal of Consumer Protection and Food Safety: 1-10. June 11, 2019. market impact factors such as natural disasters in the source regions, unstable production, wide variability of quality and value of vanilla flavorings,” second only to saffron in price.19 A. Food Fraud as Applied to Vanilla 33. The efforts at imitating vanilla offers a lens to the types of food fraud regularly employed across the spectrum of valuable commodities in today’s interconnected world.20 Type of Food Fraud Application to Vanilla ➢ Addition of markers • Manipulation of the carbon isotope ratios to produce specifically tested for synthetic vanillin with similar carbon isotope composition instead of natural to natural vanilla component of vanilla beans • Ground vanilla beans and/or seeds to provide visual appeal as “specks” so consumer thinks they are a result of the product containing real vanilla beans, when the ground beans have been exhausted of flavor, and any vanilla flavor may not even be from real vanilla ➢ Appearance of more and/or higher quality of the • Caramel in vanilla extracts to darken the substance’s color valued ingredient additives like caramel to enhance the hue of an imitation vanilla so it more closely resembles real vanilla21 • Annatto and turmeric in dairy products purporting to be flavored with vanilla, to darken the color to better resemble the hue of rich, yellow butter ➢ Substitution and • Tonka beans, which are banned from entry to the United replacement of a high States, instead of vanilla beans 19 Société Générale de Surveillance SA, (“SGS “), Authenticity Testing of Vanilla Flavors – Alignment Between Source Material, Claims and Regulation, May 2019. 20 Kathleen Wybourn, DNV GL, Understanding Food Fraud and Mitigation Strategies, PowerPoint Presentation, Mar. 16, 2016. 21 Renée Johnson, “Food fraud and economically motivated adulteration of food and food ingredients." Congressional Research Service R43358, January 10, 2014. quality ingredient with • Coumarin, a toxic phytochemical found in Tonka beans, alternate ingredient of to increase the vanilla flavor perception lower quality ➢ Addition of less expensive substitute ingredient to • Synthetically produced ethyl vanillin, derived from wood mimic flavor of more pulp, tree bark or coal tar, to imitate taste of real vanilla valuable component • “to mix flavor materials together at a special ratio in which they [sic] compliment each other to give the desirable aroma and taste.”22 • Combination with flavoring substances such as propenyl guaethol (“Vanitrope”), a “flavoring agent [, also] ➢ Compounding, Diluting, unconnected to vanilla beans or vanillin, but unmistakably Extending producing the sensation of vanilla”23 • “Spiking” or “fortification” of vanilla through addition of natural and artificial flavors including vanillin, which simulates vanilla taste but obtained from tree bark • Alleged injection of vanilla beans with mercury, a poisonous substance, to raise the weight of vanilla beans; ➢ Addition of fillers to give see International Flavors and Fragrances (IFF), Inc. v. the impression there is more of the product than Day Pitney LLP and Robert G. Rose, 2005. Docket there actually is Number L-4486-09, Superior Court of New Jersey, Middlesex County. • Subtle, yet deliberate misidentification and obfuscation of ➢ Ingredient List Deception24 a product’s components and qualities as they appear on the 22 Chee-Teck Tan, "Physical Chemistry in Flavor Products Preparation: An Overview" in Flavor Technology, ACS Symposium Series, Vol. 610 1995. 1-17. 23 Berenstein, 423. 24 Recent example of this would be “evaporated cane juice” as a more healthful sounding term to consumers to identify sugar. ingredient list o “ground vanilla beans” gives impression it describes unexhausted vanilla beans when actually it is devoid of flavor and used for aesthetics o “vanilla flavoring” – “-ing” as suffix referring to something like that which is described III. The Use of Vanillin to Simulate Vanilla 34. The synthesis of vanillin from sources other than the vanilla beans by German chemists in the mid-1800s was the equivalent of steroids for vanilla flavor. 35. Today, only 1-2% of vanillin in commercial use is vanillin obtained from the vanilla plant, which means that almost all vanillin is synthetically produced and has no connection to the vanilla bean. 36. According to Skip Rosskam, a professor of vanilla at Penn State University and former head of the David Michael flavor house in Philadelphia, “one ounce of vanillin is equal to a full gallon of single-fold vanilla extract.”25 37. Nevertheless, disclosure of this powerful ingredient has always been required where a product purports to be flavored with vanilla. See Kansas State Board of Health, Bulletin, Vol. 7, 1911, p. 168 (cautioning consumers that flavor combinations such as “vanilla and vanillin…vanilla flavor compound,” etc., are not “vanilla [extract] no matter what claims, explanations or formulas are given on the label.”). 38. Since vanilla is the only flavor with its own standard of identity, its labeling is controlled not by the general flavor regulations but by the standards for vanilla ingredients. 25 Katy Severson, Imitation vs. Real Vanilla: Scientists Explain How Baking Affects Flavor, Huffington Post, May 21, 2019. 39. This means that if a product is represented as being characterized by vanilla yet also contains non-vanilla vanillin, the label and packaging must declare the presence of vanillin and identify it as an artificial flavor. See Vanilla-vanillin extract at 21 C.F.R. § 169.180(b) (“The specified name of the food is "Vanilla-vanillin extract _-fold" or "_-fold vanilla-vanillin extract", followed immediately by the statement "contains vanillin, an artificial flavor (or flavoring)".); see also 21 C.F.R. § 169.181(b), § 169.182(b) (similar declarations required for Vanilla-vanillin flavoring and Vanilla-vanillin powder). 40. The required disclosure is applicable even if the vanillin is made from natural materials and through a natural process. 41. This prevents consumers from being misled by products which may taste similar to real vanilla but are actually made from tree bark, clove oil and recycled paper. 42. Even “natural vanillins” are alleged to run afoul of FDA guidance for these ingredients. 43. This is because the “natural” process of high heat and high pressure used to obtain vanillin from the non-vanilla material of eugenol (component of clove oil) is considered by the FDA to a synthetic method of obtaining a flavor. 44. This ingredient is mainly produced in China, with little transparency or verification, before it is delivered to the flavor companies for use in flavor mixes. 45. The implication of such a non-natural vanillin is that its hypothesized addition to the “WONF” part of a “Vanilla WONF” is misleading and contrary to law. IV. More Recent Attempts at Imitating Vanilla through “WONF” 46. The global shortage of vanilla beans has forced the flavor industry to “innovate[ing] natural vanilla solutions…to protect our existing customers.”26 47. These “customers” do not include the impoverished vanilla farmers who are at the mercy of global conglomerates nor consumers, who are sold products labeled as “vanilla” for the same or higher prices than when those products contained only vanilla. 48. According to Suzanne Johnson, vice president or research at a North Carolina laboratory, “Many companies are trying to switch to natural vanilla with other natural flavors [WONF] in order to keep a high-quality taste at a lower price.” 49. According to industry leaders like the head of “taste solutions” at Irish conglomerate Kerry, flavor manufacturers must “[G]et creative” and “build a compounded vanilla flavor with other natural flavors.” 50. These compounded flavors typically exist in a “black box” and “consist of as many as 100 or more flavor ingredients,” blended together in a special ratio to complement and enhance the vanilla component.27 51. A compounded vanilla flavor “that matches the taste of pure vanilla natural extracts” can supposedly “provide the same vanilla taste expectation while requiring a smaller quantity of vanilla beans. The result is a greater consistency in pricing, availability and quality.”28 V. Ice Cream Flavor Labeling 52. Daphna Havkin-Frenkel, editor of the Handbook of Vanilla Science and Technology, and a leading scholar and researcher on vanilla, summarized these issues in the context of ice 26 Amanda Del Buouno, Ingredient Spotlight, Beverage Industry, Oct. 3, 2016. 27 Hallagan and Drake, FEMA GRAS and U.S. Regulatory Authority: U.S. Flavor and Food Labeling Implications, Perfumer & Flavorist, Oct. 25, 2018; Charles Zapsalis et al., Food chemistry and nutritional biochemistry. Wiley, 1985, p. 611 (describing the flavor industry’s goal to develop vanilla compound flavors “That Seem[s] to be Authentic or at Least Derived from a Natural Source”) (emphasis added). 28 Donna Berry, Understanding the limitations of natural flavors, BakingBusiness.com, Jan. 16, 2018. cream flavored by vanilla:29 There are three categories of vanilla ice cream, as defined by the FDA Standard of Identity. Vanilla ice cream Category I contains only vanilla extract. Vanilla ice cream Category II contains vanilla made up of 1 oz of synthetic vanillin per 1 gallon of 1-fold vanilla extract. Vanilla ice cream Category III contains synthetic ingredients. 53. Carol McBride, U.S. vanilla category manager for global flavor giant Symrise, pointed out that “If the flavor comes partially or fully from another source, the company must stamp ‘vanilla flavored’ or ‘artificial vanilla’ on the front of the package, a likely turnoff to consumers.”30 A. Early Ice Cream Flavoring Debate is “Stirring” 54. Before formal regulations were enacted, Congressional Hearings from the 1930s offered the legislature the opportunity to state their position on the non-misleading designation of flavors on ice cream products. 55. Unsurprisingly, the starting point for the debate was how to label vanilla ice cream flavored with vanillin obtained not from vanilla beans but from clove oil, a natural source material. 56. Why, the lobbyists, asked Congress, could they not label their products as “vanilla ice cream” if it contained vanillin from sources other than vanilla beans? 57. In response, Congressmen E.A. Kenny of New Jersey and Virgil Chapman of Kentucky inquired of the ice cream lobby’s representative, Mr. Schmidt: Mr. Kenney: Do you not think, though, Mr. Schmidt, that if you label it vanilla ice cream, it ought to be vanilla; and if it is made with vanillin extracted from oil of cloves, you ought to label it manufactured with such vanillin? Mr. Schmidt: Well, we, of course, do not think so. That is why we are here 29 Daphna Havkin-Frenkel and Faith C. Belanger, eds., Handbook of Vanilla Science and Technology, Wiley, 2018 (221). 30 Melody M. Bomgardner, “The problem with vanilla,” Chemical & Engineering News, Sept. 12, 2016. making our protest. We think, after all, the consuming public is accustomed to accepting as vanilla artificial vanillas. Mr. Kenney: We agree that Barnum educated us along that line a long time ago. (emphasis added) …………… Mr. Chapman: I do think that if it is chocolate it ought to be labeled "chocolate"; and if it is flavored with vanillin made from oil of cloves, it ought to be labeled to show that it is flavored with vanillin made from oil of cloves; and if it is flavored with vanilla, it ought to be labeled "vanilla"; and if it is " flavored with lemon, it ought to be labeled lemon "; and if it is cherry, it ought to be labeled "cherry.” 58. Later in the hearing, Mr. Chapman and another industry representative engaged over the proper declaration of flavor for ice cream: Mr. Chapman: Do you make raspberry? Mr. Hibben. Yes. Mr. Chapman And you put that on the label? Mr. Hibben We say “raspberry ice cream.” Mr. Chapman And if it is peach, you put that on the label? Mr. Hibben. It Is peach ice cream; yes. Mr. Chapman. And If you call it vanilla, what do you put on? Mr. Hibben We put "vanilla ice cream" on our labels. That Is what we want to continue to do. We want to put vanilla on those labels. Mr. Chapman But you say you put in It oil of cloves instead of vanilla. Mr. Hibben We do not use cloves. We use vanillin derived from the oil of cloves. Mr. Chapman. If you put out strawberry ice-cream, you would not want to use raspberry to make it, would you? Mr. Hibben No; but we use vanillin, which is an ingredient of the vanilla bean and, its true to name. Mr. Chapman Is it an extract from the vanilla bean? Mr. Hibben It is both. It is taken both from the eugenol and the vanilla bean and is the same product. If you were a chemist you could not tell the difference, and if you were a doctor, you would say that one is just as harmless as the other. Mr. Chapman I do not object to buying artificial vanilla ice cream if it is pure, but if it is artificial. I would like to know what I am getting. 59. The above highlighted portions reveal that even before ice cream standards were established, the central question for ice cream flavoring was whether the flavor source was entirely derived from the characterizing flavor – whether raspberry for raspberry ice cream, vanilla for vanilla ice cream and so on. B. Ice Cream Flavoring Regulations 60. The ice cream standard of identity at 21 C.F.R. § 135.110, established in the early 1960s “provided for a system for designating characterizing flavors in ice cream which has come to be referred to as the ‘3 category flavor labeling.’” Exhibit “A,” FDA, Taylor M. Quinn, Associate Director for Compliance, Bureau of Foods, to Glenn P. Witte, International Association of Ice Cream Manufacturers, May 31, 1979 (“Quinn Letter, May 31, 1979”). 61. The requirements “recognize[s] three distinct types of ice cream, based on the use of natural and various combinations of natural and various combinations of natural and artificial flavors that characterize this food.” Quinn Letter, May 31, 1979; see 21 C.F.R. § 135.110(f)(2)(i)- (iii); 21 C.F.R. § 135.110(f)(3)-(5). Vanilla Ice Cream Labeling Quick Chart Category Label Diagram Flavor Source Authority (21 C.F.R.) Vanilla Beans §135.110(f)(2)(i) I [“characterizing flavor”] + [“ice cream”] → “Vanilla Ice Cream” or “Strawberry Ice Cream” §135.110(f)(2)(ii) II [“characterizing flavor”] + [“flavored”] + [“ice cream”] → “Vanilla Flavored Ice Cream” or “Peach Flavored Ice Cream” Vanilla Beans; Non-Vanilla Beans §135.110(f)(2)(iii) Vanilla Beans; Non-Vanilla Beans III [“artificial” or “artificially flavored”] + [“characterizing flavor”] + [“ice cream”] → “Artificially Flavored Vanilla Ice Cream” or “Artificially Flavored Strawberry Ice Cream” 62. The key distinction between labeling flavors in ice cream compared to other foods is in the meaning of “natural flavor.” 63. In ice cream, “natural flavor” refers to flavor derived only from the characterizing flavor, while “artificial flavor” refers to flavors derived from sources other than the characterizing 64. For a category 1 ice cream, which “contains no artificial flavor, the name on the principal display panel or panels of the label shall be accompanied by the common or usual name of the characterizing flavor, e.g., ‘vanilla,’ in letters not less than one-half the height of the letters used in the words ‘ice cream.’” 21 C.F.R. §135.110(f)(2)(i); see Quinn Letter, May 31, 1979 (“the designation of a characterizing flavor for category I ice cream is based on the premise that only natural flavor derived from the product whose flavor is simulated may be used.”). 65. Category II and III both may contain a natural characterizing flavor and artificial flavor simulating it, but differ based on whether the natural characterizing flavor predominates. See 21 C.F.R. §135.110(f)(2)(ii) (“Category II”) (“If the food contains both a natural characterizing flavor and an artificial flavor simulating it, and if the natural flavor predominates”); 21 C.F.R. §135.110(f)(2)(iii) (“Category III”) (“If the food contains both a natural characterizing flavor and an artificial flavor simulating it, and if the artificial flavor predominates”); Quinn Letter, May 31, 1979 (“The flavor designation for category II ice cream is on the basis that the product contains both natural and artificial flavor, but the natural flavor predominates, whereas in category III the artificial flavor predominates.”). 66. The non-vanilla flavor which simulates the natural characterizing vanilla flavor is deemed to predominate when “the amount of vanillin used is greater than 1 ounce per unit of vanilla constituent.” See 21 C.F.R. §135.110(f)(5)(i). 67. A non-vanilla flavor “is deemed to simulate [resemble or reinforce] vanilla if the addition of the non-vanilla flavor results in a reduction in the amount of vanilla bean derived flavor that would otherwise be used in a vanilla flavored ice cream.” Exhibit “B,” FDA, R.E. Newberry, Assistant to the Director, Division of Regulatory Guidance, Bureau of Foods, to Daniel P. Thompson, October 30, 1979 (“Newberry Letter, October 30, 1979”) (“such a product would come under category III and have to be labeled as ‘artificial vanilla.’”). VI. Ice Cream Flavor Designation is Unique to this Food 68. One of the reasons for these different requirements is because ice cream is a high quality and expensive product made mainly from milk and cream. 69. Since the flavor designation for ice cream is set out in its own standards and was established long before the general flavor regulations were developed, “the labeling requirements for the declaration of flavors in the name of ice cream are specifically provided for by the standard.” Exhibit “A,” Quinn Letter, May 31, 1979 (“The general flavor regulations are not applicable to this standardized food.”); Exhibit “C,” FDA, J.L. Summers, Assistant to the Director, Division of Regulatory Guidance, Bureau of Foods, April 10, 1979 to David B. Daugherty (“Summers Letter, April 10, 1979”) (“Consequently, the labeling requirements for the declaration of flavors in the name of ice cream are specifically provided for by the standard and is separate and apart from the general flavor regulations.”).31 70. Under 21 C.F.R. § 101.22(a)(3), “natural flavor” is defined generally as “the essential oil, oleoresin, essence or extractive…which contains the flavoring constituents” from a natural source such as plant material and can refer to combinations of natural flavors. 71. “Artificial flavor” in contrast is any substance whose function is to impart flavor that is not derived from a natural source. See 21 C.F.R. § 101.22(a)(1). 72. For the purposes of designating the type of ice cream on the front label, whether a flavor complies with the general definition of natural flavor in other regulations has no relevance. Exhibit “C,” Summers Letter, April 10, 1979 (“A product identified as ‘Vanilla Ice Cream’ is subject to the category I ice cream requirements and, therefore, must contain only the characterizing flavor derived from vanilla beans.”); Exhibit “A,” Quinn Letter, May 31, 1979 (“It is our understanding that there are available in the market place, natural flavoring compounds that resemble, simulate and/or enhance vanilla flavor but are not derived from vanilla bean. These flavor compounds would not comply with the intent of the flavor provisions of Category I ice cream”). 73. At best, “[N]atural flavors not derived from vanilla beans may be used in combination with the standardized items included under 21 CFR 169 (vanilla-vanillin extract or vanilla-vanillin flavoring) for category II vanilla flavored ice cream provided that the flavoring contributed by or derived from the vanilla beans predominates.” Exhibit “D,” FDA, Quinn to Kenneth Basa, August 22, 1979. VII. The Products are Misleading Because they Contain Non-Vanilla Flavoring 31 Compare 21 C.F.R. § 135.110(f)(2)-(5) with 21 C.F.R. § 101.22. 74. The front label statement of “Vanilla Ice Cream” without qualification and the vignette of the vanilla beans are understood by consumers to identify a product where (1) vanilla is the characterizing flavor, (2) vanilla is contained in a sufficient amount to flavor the product, (3) no other flavors in the product simulate vanilla, (4) no other flavors in the product simulate, resemble, reinforce, or enhance vanilla and (5) vanilla is the exclusive source of flavor. A. Ingredient List Declares “Natural Flavors” 75. The ingredient list reveals the Products contain non-vanilla flavors because “Natural Flavors” is declared. INGREDIENTS: SWEET CREAM BUTTERMILK, CREAM, SUGAR, WHEY, CONTAINS LESS THAN 2% OF NATURAL FLAVOR, CAROB BEAN GUM, GUAR GUM, ANNATTO EXTRACT (COLOR). 76. Where a Category 1 vanilla ice cream product purports to have a characterizing flavor of vanilla or vanilla bean, without any qualification, but the ingredient list identifies “natural flavor” as the exclusive flavoring ingredient or as one of the flavoring ingredients, it means (1) the flavoring in the food is not exclusively vanilla and (2) the product contains non-vanilla flavors obtained from arguably natural sources other than vanilla beans and made through supposed natural processes.32 77. The common or usual names of the exclusively vanilla ingredients include Vanilla Extract, Concentrated Vanilla Extract, Vanilla Flavoring and Concentrated Vanilla Flavoring, specified in the regulations for vanilla ingredients. See 21 C.F.R. §§ 169.175 to 169.178. 32 These natural processes may include fermentation but when high heat and high pressure is used, the FDA considers this to be a synthetic method of obtaining a flavor. This “natural” process of high heat and high pressure is used to obtain vanillin from the non-vanilla material of eugenol, the main component of clove oil. Vanillin derived from eugenol through a high heat and high pressure process is not considered “natural vanillin” which makes its addition to the “WONF” part of “Vanilla WONF” misleading. Further, it is misleading and unlawful to use any type of vanillin with vanilla and not explicitly disclose that vanillin is considered an artificial flavor because this flavor was created to “boost” a real natural flavor, vanilla. 78. These exclusively vanilla ingredients – vanilla flavoring, vanilla extract, etc. – differ only in that the former is at least thirty-five (35) percent ethyl alcohol while the latter is less than this amount.33 79. Because ice cream is a standardized food and the vanilla ingredients are subject to their own standards of identity, the designation of these vanilla ingredients is controlled by 21 U.S.C. §343(g) – they are required to be specifically declared:34 A food shall be deemed to be misbranded – (g) Representation as to definition and standard of identity If it purports to be or is represented as a food for which a definition and standard of identity has been prescribed by regulations as provided by section 341 of this title, unless (1) it conforms to such definition and standard, and (2) its label bears the name of the food specified in the definition and standard, and, insofar as may be required by such regulations, the common names of optional ingredients (other than spices, flavoring, and coloring) present in such food. 80. It is also a general requirement that all ingredients be listed by their common or usual name. See 21 C.F.R. § 101.4(a)(1). B. “Natural Flavor” as Declared on Ingredient List in Accordance with 21 C.F.R. § 101.22 ≠ Vanilla Extract or Vanilla Flavoring 81. “Natural Flavor” on the Products’ ingredient list does not refer to an exclusively “Vanilla Extract.” 82. This is because if it did, this high-valued ingredient would be declared. 83. The reasons why “natural flavor” is permitted as a designation for flavoring include (1) the flavor package received from a supplier will be a mix of multiple flavors, without any standard way to declare such a blend, (2) protection of valuable trade secrets since identification 33 21 C.F.R. §§ 169.175 (Vanilla extract.), 169.177 (Vanilla flavoring.); also concentrated versions of each of these. 34 21 U.S.C. § 343(g)(2) read with 21 C.F.R. § 135.110(f)(2)(i) and 21 C.F.R. §§ 169.175 – 169.178. of the flavor components would then be known to competitors. 84. It would not be permitted to hide behind “natural flavor” on the ingredient list while at the same time claiming this ingredient is entirely vanilla extract or vanilla flavoring. 85. The truth is that certain statements – like the ingredient list – are more judicious than 86. Where it comes to an ingredient list, there is a greater expectation for compliance with the letter of the law, because this part of the product labeling has implications for safety, and is less prone to creative license than the front label. C. Front Label “Made With Rich Cream and Vanilla” Claim is Misleading 87. The front label contains a scoop of vanilla ice cream, a waffle piece, the vanilla flower and states the brand name, “Simply Crafted,” “Premium Ice Cream,” “No Artificial Flavors,” “No High Fructose Corn Syrup,” “Made with Real Cream From Family Farms,” and beneath the product variety, “Heavenly Vanilla,” the label states “Made with Rich Cream and Vanilla.” 88. The statements and images give a reasonable consumer the impression that the Product is flavored exclusively from vanilla beans. 89. This is a reasonable expectation because (1) the front label does not contain any qualifiers with respect to the “vanilla” designation – i.e., “flavored,” “with other flavors,” etc. and (2) for over fifty years products labeled as “vanilla ice cream” contained only flavor derived from vanilla, which could be confirmed by checking the ingredient list and seeing “vanilla extract” or “vanilla flavoring” instead of “natural flavor” which contains compounds that simulate, resemble or enhance vanilla. 90. In this context, the statement, “Made with Rich Cream and Vanilla,” is true, as far as it goes, but also is misleading. 91. This is because the Products presumably do contain vanilla, but their flavoring contains compounds which supplement vanilla and allow the defendant to provide less vanilla to consumers by simulating and resembling vanilla instead of adding more of it. 92. The front label does not tell the truth – “Made with Rich Cream, Some Vanilla and Some Compounds that Will Trick You into Thinking There is More Vanilla Than There Actually Is, and We Couldn’t Tell You What They Are Because We Don’t Know Either.” D. Product Analysis May Reveal Presence of Non-Vanilla Flavors 93. The four most significant markers for vanilla from real vanilla beans are identified below with their relative amounts. Compounds Percent Present in Vanilla Beans vanillin 1.3-1.7 % p-hydroxybenzaldehde 0.1% vanillic acid 0.05% p-hydroxybenzoic acid 0.03% 94. An analysis of the Products using gas chromatography-mass spectrometry (“GC- MS”) may support the contention that the Products are not exclusively flavored with vanilla from vanilla beans. 95. Based on similar sample testing, the ratio of vanillin to p-hydroxybenzaldehyde may exceed the 10:1 ratio of these compounds when found in vanilla derived from vanilla beans. 96. This would mean there is vanillin not derived from the vanilla bean present in the Products. 97. The analysis of similar products has detected maltol, a compound not typically found in vanilla. 98. Maltol is well-known in the flavor industry as a flavor enhancer or potentiator with a long-established usage in ice cream products. 99. Maltol improves overall flavor, increases sweetness, and enhances the sensation of creaminess, all attributes relevant to developing a vanilla ice cream product. 100. Sample testing of similarly identified products has determined that many Vanilla WONF ingredients contain added vanillin, to “boost” the miniscule amount of vanilla from actual vanilla beans, which is inconsistent with a category I product. 101. Without disclosure of added vanillin, the consumers will believe the product has more vanilla than it actually does. 102. The reasonable conclusion is that (1) such products contain a small amount of vanilla derived from vanilla beans and (2) the “Natural Flavor” does not refer exclusively to vanilla extract or vanilla flavoring. E. Natural Flavor Refers to Vanilla WONF (in Sheep’s Clothing) 103. Because the “Natural Flavor” is not identical to an exclusively vanilla flavor ingredient, there must be some differences between these ingredients. 104. The “Natural Flavor” used in the Product is most likely the ingredient known as “Vanilla With Other Natural Flavors” or “Vanilla WONF.” 105. This is a compounded flavor which typically contains potentiators and enhancers, like maltol, and may contain vanillin. 106. A company like defendant may invoke reliance on its flavor supplier who has told them the product contains “100% natural vanilla flavorings” or is “almost all vanilla.”35 35 “Almost all” is not “all” and the suffix, “-ing,” is a giveaway that the flavor ingredient used is like vanilla, in the same way the suffix “-ey” applied to chocolate is another way of saying, “this product tastes like chocolate, but is not chocolate.” 107. Attempts at prying open this “black box” of the flavor industry invokes terms such as “proprietary,” “trade secret” and “confidentiality.” 108. Such an argument is incredulous because there is nothing proprietary about vanilla extract, which has been prepared the same way for one hundred years, even before a standard of identity was established. 109. Eventually, the flavor company may produce a single page document which says something like “Nat Vanilla Extract WONF” followed by a string of letters and numbers. 110. All of these arguments miss the point and cast aside the long-established (and adhered to) three-category flavor labeling regime for ice cream. 111. The requirements – and resulting consumer expectations for almost fifty years – are clear: “the flavor agent for vanilla ice cream (a category I product) is limited to vanilla bean and/or flavor derived from vanilla beans.” Exhibit “A,” Quinn Letter, May 31, 1979; see also Exhibit “C,” Summers Letter, April 10, 1979 (“A product identified as ‘Vanilla Ice Cream’ is subject to the category 1 ice cream requirements and, therefore, must contain only the characterizing flavor derived from vanilla beans,” “the standard for ice cream does not provide for the label designation of “With other [natural] flavors” (WONF).”). 112. The flavor houses are partially responsible for the consumer deception because even though they do not manufacture the final Product, they supply its most valuable and important component – the flavoring. 113. The flavor companies are also in the best position to correct any deceptive or incorrect label statements with respect to flavor. 114. The manufacturers are agreeable to following the misleading guidance of their flavor suppliers who are complicit in the mislabeling of the Products and ensuing consumer deception. VIII. Vanilla Ice Cream Products are Misleading Because They are Labeled and Named Similar to Other Products 115. Competitor brands to defendant’s Products are labeled as or containing vanilla ice cream, and are not misleading because they only contain vanilla. A. Vanilla Ice Cream of Competitor and Defendant 116. The following is an example of Vanilla Ice Cream of defendant and a competitor product. Competitor Product Product INGREDIENTS: SWEET CREAM BUTTERMILK, CREAM, SUGAR, WHEY, CONTAINS LESS THAN 2% OF NATURAL FLAVOR, CAROB BEAN GUM, GUAR GUM, ANNATTO EXTRACT (COLOR). INGREDIENTS: CREAM, SKIM MILK, CANE SUGAR, EGG YOLKS, VANILLA EXTRACT. 117. The competitor product lists “Pure Vanilla Extract” on its ingredient list and does not indicate the presence of other flavors not derived from vanilla, such as “Natural Flavor,” as listed in defendant’s Products. B. Misleading to Have Identical or Similar Product Names Where Significant Differences in Product Quality or Composition 118. Product names and identity statements for ice cream are established through application of the relevant regulations. 119. Products are required to be identified and labeled in a way consistent with other products of similar composition. 120. This framework assures consumers will not be misled by the quality and components of similarly labeled products where one product contains a greater amount, type and/or proportion of a characterizing and valuable ingredient.36 121. Where two products are identified by the same descriptive terms and noun such as “Vanilla Ice Cream” and where the front label has no other modifications of these terms, consumers will be deceived into purchasing the lower quality product under the false impression that it contains the equivalent amount of said ingredients or components. 122. Defendant’s Products are misleading because they are represented as identical to another product which contains higher quality ingredients, which causes consumers to be misled and purchase the former expecting the two products to be identical in quality and fill. IX. Conclusion 123. The proportion of the characterizing component, vanilla, has a material bearing on price or consumer acceptance of the Products because it is more expensive and desired by consumers. 124. The Products are misleading because they do not contain the amount, type and 36 See 21 C.F.R. § 135.110(f) and 21 C.F.R. § 102.5(a) (“General principles.”) (“General principles.”) (“The name shall be uniform among all identical or similar products and may not be confusingly similar to the name of any other food that is not reasonably encompassed within the same name. Each class or subclass of food shall be given its own common or usual name that states, in clear terms, what it is in a way that distinguishes it from different foods.”). percentage of vanilla as a component of the flavoring in the product which is required and consistent with consumer expectations. 125. The representations of “vanilla (bean)” describing the ice cream products are unqualified, and the labels and packaging do not disclose the addition of non-vanilla flavors as part of the Products. 126. Had plaintiff and class members known the truth about the Products, they would not have bought the Product or would have paid less for it. 127. The Products contain other representations which are misleading and deceptive. 128. As a result of the false and misleading labeling, the Products are sold at premium prices, approximately no less than $6.59 per 9.12 OZ, calculated on an average per ounce basis across the Products, excluding tax – compared to other similar products represented in a non- misleading way. Jurisdiction and Venue 129. Jurisdiction is proper pursuant to 28 U.S.C. § 1332(d)(2) (Class Action Fairness Act of 2005 or “CAFA”). 130. Under CAFA, district courts have “original federal jurisdiction over class actions involving (1) an aggregate amount in controversy of at least $5,000,000; and (2) minimal diversity[.]" Gold v. New York Life Ins. Co., 730 F.3d 137, 141 (2d Cir. 2013). 131. Upon information and belief, the aggregate amount in controversy is more than $5,000,000.00, exclusive of interests and costs. 132. Plaintiff is a citizen of New York. 133. Defendant Kemps LLC is a Delaware limited liability company with a principal place of business in Saint Paul, Ramsey County, Minnesota. 134. This court has personal jurisdiction over defendant because it conducts and transacts business, contracts to supply and supplies goods within New York. 135. Venue is proper because plaintiff and many class members reside in this District and defendant does business in this District and State. 136. A substantial part of events and omissions giving rise to the claims occurred in this District. Parties 137. Plaintiff Mario Vinales is a citizen of New York County, New York. 138. Defendant is a Delaware limited liability company with a principal place of business in Saint Paul, Ramsey County, Minnesota and upon information and belief, at least one member of defendant is not a citizen of New York. 139. During the class period, plaintiff purchased one or more of the Products identified herein for personal use, consumption or application based on the above representations, for no less than the price indicated, supra, excluding tax, in her state or an immediately adjacent state. 140. Plaintiff would consider purchasing the Product again if there were assurances that the Products’ representations were no longer misleading. Class Allegations 141. The classes will consist of all consumers in all 50 states with sub-classes for the individual states and nationwide classes. 142. Common questions of law or fact predominate and include whether the representations were likely to deceive reasonable consumers and if plaintiff and class members are entitled to damages. 143. The claims and the basis for relief of plaintiff are typical to other members because all were subjected to the same representations. 144. Plaintiff is an adequate representative because his interests do not conflict with other members. 145. No individual inquiry is necessary since the focus is only on defendant’s practices and the class is definable and ascertainable. 146. Individual actions would risk inconsistent results, be repetitive and are impractical to justify, as the claims are modest. 147. The counsel for plaintiff is competent and experienced in complex class action litigation and intends to adequately and fairly protect class members’ interests. 148. Plaintiff seeks class-wide injunctive relief because the practices continue. New York General Business Law (“GBL”) §§ 349 & 350 and Consumer Protection Statutes of Other States and Territories 149. Plaintiff asserts causes of action under the consumer protection statutes of New York, General Business Law (“GBL”) §§ 349 & 350. 150. Defendant’s acts and omissions are not unique to the parties and have a broader impact on the public. 151. Plaintiff and class members desired to purchase products which were as described by defendant and expected by reasonable consumers, given the product type. 152. Defendant’s conduct was misleading, deceptive, unlawful, fraudulent, and unfair because (1) it gives the impression to consumers the Products are only flavored by the characterizing ingredient and contains more of the characterizing ingredient than they actually do and (2) the ingredient list fails to dispel ambiguity and reinforces the front-label impression as to a greater amount of the characterizing ingredients. 153. Plaintiff and class members relied on the representations and omissions, paying more than they would have, causing damages. Negligent Misrepresentation 154. Plaintiff incorporates by reference all preceding paragraphs. 155. Defendant misrepresented the substantive, quality, compositional, organoleptic and/or nutritional attributes of the Products through representing the characterizing ingredient was present in greater amount and proportion than it was and affirmatively representing the Products was flavored only by this ingredient or component. 156. Defendant had a duty to disclose and/or provide non-deceptive labeling of the Products and knew or should have known same were false or misleading. 157. This duty is based on defendant’s position as an entity which has held itself out as having special knowledge and experience in the production, service and/or sale of the product or service type. 158. The representations took advantage of consumers’ (1) cognitive shortcuts made at the point-of-sale and (2) trust placed in defendant, a well-known and respected brand in this sector. 159. Plaintiff and class members reasonably and justifiably relied on these negligent misrepresentations and omissions, which served to induce and did induce, the purchase of the Products. 160. Plaintiff and class members would not have purchased the Products or paid as much if the true facts had been known, suffering damages. Breaches of Express Warranty, Implied Warranty of Merchantability and Magnuson Moss Warranty Act, 15 U.S.C. §§ 2301, et seq. 161. Plaintiff incorporates by reference all preceding paragraphs. 162. Defendant manufactures and sells products which contain the identified characterizing ingredients and/or flavors which are desired by consumers. 163. The Products warranted to plaintiff and class members that they possessed substantive, functional, nutritional, qualitative, compositional, organoleptic, sensory, physical and other attributes which they did not. 164. Defendant’s front labels informed and warranted to plaintiff the Products contained only the characterizing ingredients to impart flavor, and that they were present in amounts sufficient to independently characterize the food and that the flavor imparted to the Products was a result of the food ingredients and not “natural flavors” or “other natural flavors.” 165. Defendant had a duty to disclose and/or provide a non-deceptive description of the Products flavoring on the front labels and knew or should have known same were false or misleading. 166. This duty is based, in part, on defendant’s position as one of the most recognized companies in the nation in this sector. 167. Plaintiff provided or will provide notice to defendant and/or its agents, representatives, retailers and their employees. 168. The Products did not conform to their affirmations of fact and promises due to defendant’s actions and were not merchantable. 169. Plaintiff and class members relied on defendant’s claims, paying more than they would have. Fraud 170. Plaintiff incorporates by references all preceding paragraphs. 171. Defendant’s purpose was to sell products which purported to contain valuable and desired characterizing ingredient(s) or flavor(s), and represent the Products were exclusively or predominantly flavored from that ingredient and contained sufficient independent amounts of 172. The Products were not flavored exclusively from the characterizing ingredient but from flavor compounds blended together and labeled as “natural flavor.” 173. Defendant’s fraudulent intent is evinced by its failure to accurately indicate the Products contained flavor from non-vanilla sources on the front label, because it knows consumers prefer foods that are flavored from food ingredients instead of added flavor ingredients and contain enough of the characterizing food ingredients to flavor the Products. 174. Defendant’s intent was to secure economic advantage in the marketplace against competitors by appealing to consumers who value products with sufficient amounts of the characterizing ingredients for the above-described reasons. 175. Plaintiff and class members observed and relied on defendant’s claims, causing them to pay more than they would have, entitling them to damages. Unjust Enrichment 176. Plaintiff incorporates by references all preceding paragraphs. 177. Defendant obtained benefits and monies because the Products were not as represented and expected, to the detriment and impoverishment of plaintiff and class members, who seek restitution and disgorgement of inequitably obtained profits. Jury Demand and Prayer for Relief Plaintiff demands a jury trial on all issues. WHEREFORE, Plaintiff prays for judgment: 1. Declaring this a proper class action, certifying plaintiff as representative and the undersigned as counsel for the class; 2. Entering preliminary and permanent injunctive relief by directing defendant to correct the challenged practices to comply with the law; 3. Injunctive relief to remove and/or refrain from the challenged representations, restitution and disgorgement for members of the State Subclasses pursuant to the consumer protection laws of their States; 4. Awarding monetary damages and interest, including treble and punitive damages, pursuant to the common law and consumer protection law claims, and other statutory claims; 5. Awarding costs and expenses, including reasonable fees for plaintiff's attorneys and experts; and 6. Other and further relief as the Court deems just and proper. Dated: November 11, 2019 Respectfully submitted, Sheehan & Associates, P.C. /s/Spencer Sheehan Spencer Sheehan 505 Northern Blvd., Suite 311 Great Neck, NY 11021 Telephone: (516) 303-0552 Facsimile: (516) 234-7800 [email protected] E.D.N.Y. # SS-8533 S.D.N.Y. # SS-2056 -and- Reese LLP Michael R. Reese 100 West 93rd Street, 16th Floor New York, NY 10025 Telephone: (212) 643-0500 Facsimile: (212) 253-4272 [email protected] 1:19-cv-10463 United States District Court Southern District of New York Mario Vinales, individually and on behalf of all others similarly situated, Plaintiff, - against - Kemps LLC, Defendant Class Action Complaint Sheehan & Associates, P.C. 505 Northern Blvd., #311 Great Neck, NY 11021 Tel: (516) 303-0552 Fax: (516) 234-7800 Pursuant to 22 NYCRR 130-1.1, the undersigned, an attorney admitted to practice in the courts of New York State, certifies that, upon information, and belief, formed after an inquiry reasonable under the circumstances, the contentions contained in the annexed documents are not frivolous. Dated: November 11, 2019 /s/ Spencer Sheehan Spencer Sheehan

consumer fraud

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK Civil Action No. CLASS ACTION x ROYAL PARK INVESTMENTS SA/NV, Individually and on Behalf of All Others Similarly Situated, Plaintiff, vs. U.S. BANK NATIONAL ASSOCIATION, as Trustee, COMPLAINT FOR BREACH OF CONTRACT, UNJUST ENRICHMENT, CONVERSION, BREACH OF TRUST, EQUITABLE ACCOUNTING AND FOR DECLARATORY AND INJUNCTIVE RELIEF DEMAND FOR JURY TRIAL : : : : : : : : : : : : x Defendant. Plaintiff Royal Park Investments SA/NV (“plaintiff” or “RPI”) alleges the following on information and belief based upon the investigation of plaintiff’s counsel (except as to the allegations pertaining to plaintiff, which are based on personal knowledge), which included an investigation and review of information concerning defendant U.S. Bank National Association (“U.S. Bank” or “defendant”), a review and analysis of information concerning the Covered Trusts (as defined below) and the documents governing U.S. Bank’s duties and rights (“Governing Agreements”) at issue herein. Plaintiff and plaintiff’s counsel believe that additional evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. SUMMARY OF THE ACTION 1. Plaintiff brings this action on its own behalf and on behalf of a Class (as defined below) of residential mortgage-backed securities (“RMBS”) investors in the following 21 substantially similar RMBS trusts for which defendant U.S. Bank serves as trustee (collectively, the “Covered Trusts”): COVERED TRUST NAME HEREINAFTER REFERRED TO AS 1. Banc of America Funding 2007-C Trust BAFC 2007-C 2. BNC Mortgage Loan Trust 2007-2 BNCMT 2007-2 3. Bear Stearns Asset Backed Securities I Trust 2006-AC2 BSABS 2006-AC2 4. Bear Stearns Asset Backed Securities I Trust 2006-AC5 BSABS 2006-AC5 5. GreenPoint Mortgage Funding Trust 2007-AR1 GPMF 2007-AR1 6. GreenPoint Mortgage Funding Trust 2007-AR2 GPMF 2007-AR2 7. GreenPoint Mortgage Funding Trust 2007-AR3 GPMF 2007-AR3 8. Home Equity Asset Trust 2006-5 HEAT 2006-5 9. Home Equity Asset Trust 2006-6 HEAT 2006-6 10. Lehman XS Trust 2006-10N LXS 2006-10N 11. Lehman XS Trust 2006-15 LXS 2006-15 12. Lehman XS Trust 2007-7N LXS 2007-7N 13. MASTR Asset Backed Securities Trust 2006-HE2 MABS 2006-HE2 14. Merrill Lynch Mortgage Investors Trust 2006-WMC2 MLMI 2006-WMC2 - 1 - 1304564_1 COVERED TRUST NAME HEREINAFTER REFERRED TO AS 15. Structured Adjustable Rate Mortgage Loan Trust 2006-9 SARM 2006-9 16. Structured Asset Securities Corporation Mortgage Loan Trust 2006-NC1 SASC 2006-NC1 17. Structured Asset Securities Corporation Mortgage Loan Trust 2006-WF2 SASC 2006-WF2 18. Structured Asset Securities Corporation Mortgage Loan Trust 2006-WF3 SASC 2006-WF3 19. Structured Asset Securities Corporation Mortgage Loan Trust 2007-EQ1 SASC 2007-EQ1 20. Structured Asset Securities Corporation Mortgage Loan Trust 2007-WF1 SASC 2007-WF1 21. WaMu Mortgage Pass-Through Certificates Series 2007-OA2 Trust WAMU 2007-OA2 2. This dispute arises from another litigation in this district between RPI and U.S. Bank, Royal Park Inv. SA/NV v. U.S. Bank Nat’l Ass’n, No. 1:14-cv-02590-VM (S.D.N.Y.) (the “Litigation”), pending before the Honorable Victor Marrero. In the Litigation, U.S. Bank has been reimbursing its legal fees and costs incurred in its defense directly from the Covered Trusts for eighteen of the Covered Trusts. As a result, U.S. Bank’s legal expenses related to defending itself in the Litigation against allegations that it breached its contractual and common law duties owed to investors are currently being paid by funds out of the Covered Trusts’ assets that belong to the investors in those trusts. 3. Under both the Governing Agreements and the common law of trusts, U.S. Bank is not permitted to receive advancement, reimbursement or indemnification for the legal fees and costs it incurs in relation to the Litigation. Rather, U.S. Bank is improperly and illegally financing its defense of the Litigation with funds from the very investors that have accused U.S. Bank of wrongdoing. Thus, the investors are being harmed by U.S. Bank twice – first through U.S. Bank’s - 2 - 1304564_1 misconduct as alleged in the Litigation, and again through U.S. Bank’s improper and illegal use of those same investors’ funds to defend its misconduct. 4. Because U.S. Bank is improperly and illegally using the Covered Trusts’ funds to defend itself in the Litigation, U.S. Bank must pay back to plaintiff and the Class immediately all funds it has wrongfully taken. In addition, plaintiff and the Class request that U.S. Bank be enjoined from improperly taking such funds from all 21 trusts in the future.1 JURISDICTION AND VENUE 5. This Court has diversity jurisdiction pursuant to 28 U.S.C. §1332(a). The amount at controversy is significantly higher than $75,000. 6. Venue is proper in this District pursuant to 28 U.S.C. §1391(b). Indeed, in the PSAs for the BAFC 2007-C and MABS 2006-HE2 Covered Trusts, U.S. Bank expressly consented to litigating claims arising out of such PSAs in this District. PARTIES 7. Plaintiff RPI is a limited liability company incorporated under the laws of Belgium, with its principal place of business in Brussels, Belgium. RPI acquired RMBS in each of the Covered Trusts on or about the dates indicated below, and has continuously held such RMBS since 1 The Governing Agreements for the HEAT 2006-5, HEAT 2006-6 and WAMU 2007-OA2 trusts expressly permit U.S. Bank to seek indemnification from either the Depositor (HEAT 2006-5, HEAT 2006-6) or the Servicer (WAMU 2007-OA2) of the respective trusts. See Ex. A. Concerning the HEAT 2006-5 and HEAT 2006-6 deals, the Governing Agreements are clear that U.S. Bank may not pursue any other sources of indemnification, including indemnification from the Covered Trust itself; the Pooling and Servicing Agreement (“PSA”) for the WAMU 2007-OA2 trust, however, is silent as to whether U.S. Bank may pursue indemnification from the trust fund in the event the Servicer will not provide indemnification for its legal expenses. Id. Further discovery will demonstrate whether U.S. Bank has made efforts to improperly and illegally obtain indemnification for the Litigation from these Covered Trusts. - 3 - 1304564_1 COVERED TRUSTS TRANCHE/CLASS INITIAL FACE AMOUNT OF CERTIFICATE DATE ACQUIRED BAFC 2007-C M4 $ 3,216,000 May 6, 2010 M5 $ 3,216,000 May 6, 2010 BNCMT 2007-2 M4 $ 4,000,000 May 12, 2009 BSABS 2006-AC2 1M3 $ 2,944,000 May 6, 2010 BSABS 2006-AC5 M1 $ 6,891,000 June 23, 2010 GPMF 2007-AR1 3A4 $ 20,042,000 May 12, 2009 GPMF 2007-AR2 2A3 $ 30,000,000 May 12, 2009 2M2 $ 11,614,000 May 12, 2009 A3 $ 45,914,000 May 12, 2009 GPMF 2007-AR3 M1 $ 10,991,000 May 12, 2009 M2 $ 7,993,000 May 12, 2009 HEAT 2006-5 M2 $ 5,000,000 February 12, 2010 HEAT 2006-6 M1 $ 5,500,000 June 23, 2010 LXS 2006-10N 1A4B $ 2,147,000 February 12, 2010 LXS 2006-15 A5 $ 30,000,000 May 12, 2009 LXS 2007-7N 1A3 $ 39,000,000 May 12, 2009 M1 $ 39,583,000 May 12, 2009 MABS 2006-HE2 M2 $ 4,900,000 February 12, 2010 MLMI 2006-WMC2 M1 $ 10,000,000 May 12, 2009 SARM 2006-9 B1II $ 8,367,000 June 23, 2010 SASC 2006-NC1 M2 $ 12,000,000 February 12, 2010 SASC 2006-WF2 M6 $ 4,000,000 February 12, 2010 SASC 2006-WF3 M6 $ 2,000,000 June 23, 2010 SASC 2007-EQ1 M2 $ 2,000,000 May 12, 2009 M3 $ 1,500,000 May 12, 2009 SASC 2007-WF1 M3 $ 1,567,000 May 12, 2009 WAMU 2007-OA2 B3 $ 2,023,000 May 6, 2010 B4 $ 4,719,000 May 6, 2010 8. Defendant U.S. Bank is a national banking association organized and existing under the laws of the United States with its principal place of business in Minnesota. U.S. Bank is a - 4 - 1304564_1 market leader in the RMBS trustee business, serving as trustee for thousands of RMBS trusts, including the Covered Trusts. U.S. Bank has served as the trustee for 18 of the 21 Covered Trusts since those Covered Trusts’ closing. As to the remaining three Covered Trusts, U.S. Bank succeeded Bank of America N.A. (“Bank of America”) as trustee in 2009 and 2011, respectively, and has served as trustee for those Covered Trusts continuously since. These three Covered Trusts are listed below, with the date that U.S. Bank became trustee: Covered Trust Date U.S. Bank Became Trustee LXS 2006-15 September 2009 MLMI 2006-WMC2 March 2009 WAMU 2007-OA2 January 2011 FACTUAL ALLEGATIONS 9. RPI is the plaintiff in the Litigation currently proceeding against U.S. Bank. In that case, RPI alleges that U.S. Bank failed to fulfill its duties as trustee of the Covered Trusts and thereby damaged RPI and the class of RMBS certificateholders. The operative complaint in the Litigation (the “Complaint”) is found at Dkt. No. 2 of the Litigation and incorporated by reference herein. RPI has also filed a supplemental complaint (“Supplement”) (Dkt. No. 242), which alleges that U.S. Bank failed to fulfil its contractual obligations to certificateholders by failing to pursue claims on behalf of Covered Trusts impacted by the Lehman Brothers bankruptcy.2 10. In the Complaint, RPI alleges breach of contract and breach of trust causes of action against U.S. Bank. RPI alleges that, although required by the Governing Agreements and its common-law duties as trustee, U.S. Bank willfully ignored and failed to effectuate the repurchase of 2 All ¶__ or ¶¶__ references are to the Complaint filed in the Litigation. Any references to the Supplement are cited expressly. - 5 - 1304564_1 mortgage loans in the Covered Trusts that had breached the representations and warranties from the originators, warrantors and/or sellers (“Warrantors”), despite receiving extensive notification and possessing actual knowledge of specific breaches, and possessing knowledge from numerous sources of pervasive substandard underwriting and outright fraud in the origination of those loans. U.S. Bank took virtually no action to protect the investors because its primary concern was preserving its lucrative business interests with the deal parties responsible for making the repurchases. 11. In addition, RPI alleges U.S. Bank discovered and knew of numerous loan servicer events of default (“Events of Default”) committed by the loan Servicers or Master Servicers (collectively “Servicers”) under the Governing Agreements, but failed to give notice and cure those Events of Default. U.S. Bank also willfully failed to discharge its fiduciary duty to protect certificateholders’ interests following Events of Default, once again electing to place its own financial self-interest ahead of the interests of certificateholders. 12. The Complaint also alleges that U.S. Bank acted negligently and engaged in willful malfeasance in connection with the conduct referenced above. See ¶¶298, 300, 302, 304, 305, 325. 13. For example, the Complaint catalogs a series of lawsuits regarding specific loans in specific Covered Trusts that informed U.S. Bank that there were numerous defective mortgage loans in the Covered Trusts that breached the Warrantors’ representations and warranties. ¶¶94-101, 103- 104. Moreover, U.S. Bank had visibility into the breaches of representations and warranties, such as misstated income or debt ratios, learned through the bankruptcies of the mortgage loan borrowers and through the due diligence of its own affiliates. ¶¶153-173, 178-180. 14. U.S. Bank discovered rampant failures by the Master Servicer and Servicers to service the loans in conformance with the customary and usual standards of loan servicing practice, which constituted numerous Events of Default under the Governing Agreements. As early as - 6 - 1304564_1 September 2008, for example, U.S. Bank learned that one of the Servicers of the Covered Trusts, EMC, was charged by the Federal Trade Commission with violating the FTC Act, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and the Truth in Lending Act’s Regulation Z, again all Events of Default under the Governing Agreements. ¶185. In addition, the Servicers botched numerous foreclosure actions due to gross errors, blatant misrepresentations or criminal conduct. Courts noted that U.S. Bank was even acquiescing in or actively participating in this misconduct, ¶193, yet U.S. Bank did not take action to protect the certificateholders as it was required to do under the prudent-person standard, a duty of care akin to that of a fiduciary. 15. In defending itself against the Litigation, U.S. Bank has spent and continues to spend an enormous amount on legal expenses, which has been paid from the assets of the Covered Trusts – the investors’ money. As of the filing of this complaint, U.S. Bank has filed an Answer to the Complaint, opposed RPI’s motion for class certification, engaged in a “scorched earth” defense strategy, and filed unmeritorious motions for sanctions against RPI. It has undertaken wholly irrelevant and wasteful discovery, including harassing plaintiff with 117 individual requests for production, many of which are irrelevant or duplicative, serving approximately 110 requests for admission, in blatant violation of Pilot Project rules, and taking irrelevant or duplicative fact and expert depositions, again using investors’ money. 16. U.S. Bank and its counsel have consistently incurred unreasonable expenses in defending U.S. Bank in the Litigation. For example, U.S. Bank has insisted on taking depositions of numerous witnesses with little or no knowledge of information relevant to the Litigation, despite having access to the testimony of those witnesses regarding nearly identical issues in similar matters and/or being informed on multiple occasions by RPI’s counsel and through sworn affidavits that those individuals had little or no relevant knowledge. - 7 - 1304564_1 17. Despite the excessive legal expenses racked up in the Litigation, U.S. Bank has not paid or advanced any of its own legal costs and attorney fees, nor has it sought to control its litigation expenses. One might wonder why a litigant would engage in such excessive, expensive and unnecessary litigation tactics. During the course of discovery in the Litigation, the reason became clear – in early 2017, RPI became suspicious that U.S. Bank may have been billing the costs of defending the Litigation to the Covered Trusts. On February 23, 2017, RPI alerted U.S. Bank of these suspicions and demanded that it provide invoices detailing any costs it was billing the Covered Trusts. In a March 3, 2017 letter to RPI’s counsel, U.S. Bank confirmed that it has been improperly “indemnified” for its defense from funds belonging to the Covered Trusts. This means that, through the Covered Trusts’ beneficial ownership structure, RPI and the Class have been paying for U.S. Bank’s defense in the Litigation even though U.S. Bank’s alleged negligence, willful conduct and bad faith is the cause of the Litigation, a perverse result specifically forbidden under the Governing Agreements and the law. The investors have been damaged by U.S. Bank’s wrongdoing in the Litigation and U.S. Bank avoids responsibility for such wrongdoing by defending such misconduct with the funds of the investors it wronged. 18. Because the certificateholders are the sole beneficiaries of the Covered Trusts, U.S. Bank’s improper use of the Covered Trusts’ funds reduces the amount of money that the certificateholders are entitled to receive as part of their beneficial ownership of the certificates. Certificateholders have a beneficial interest in the interest and principal payments derived from the mortgage loans that serve as the corpus for each Covered Trust. However, before the certificateholders receive their monthly remittances, the trustee (and certain other deal parties) to the Governing Agreements may withdraw funds from the Covered Trusts’ assets to pay for the costs of administering the trust or servicing the loans. - 8 - 1304564_1 19. While the certificateholders are not a party to the Governing Agreements, the Governing Agreements require U.S. Bank to administer the Covered Trusts for the sole benefit of the certificateholders. See, e.g., Ex. B, an exemplar copy of one of the Governing Agreements, the PSA for the BAFC 2007-C Covered Trust (the “BAFC 2007 PSA”), §2.01(a). Thus, as the only intended beneficiaries of the Covered Trusts, they are directly damaged whenever assets or funds are wrongly siphoned from the Covered Trusts’ assets. Accordingly, it is the certificateholders themselves that are funding the defense of U.S. Bank, the party that wronged them, in the Litigation. The Governing Agreements 20. The obligations, duties and rights of U.S. Bank as trustee for the Covered Trusts are expressly delineated in the Covered Trusts’ Governing Agreements, known as Pooling and Servicing Agreements, or PSAs, and documents related thereto. All of the Governing Agreements for the Covered Trusts are substantially similar and are incorporated herein by reference. See, e.g., Ex. B, BAFC 2007 PSA. 21. Twenty of the 21 Covered Trusts’ Governing Agreements are governed by New York state law. The WAMU 2007-OA2 trust is governed by Delaware state law. 22. The purpose of having trustees, such as U.S. Bank, for the Covered Trusts is to ensure that there is at least one independent party to the Governing Agreements that – unlike plaintiff and the Class – does not face collective action, informational, or other limitations, thereby allowing and requiring the trustee to protect the interests of plaintiff and the Class and administer the Covered Trusts for their benefit. 23. The corpus of the Covered Trusts, or the “Trust Fund,” contains all the assets of the trust, including the mortgage loans and the mortgage loan interest and principal payments prior to remittance to the certificateholders. Prior to remittance, parties to the Governing Agreements, such - 9 - 1304564_1 as the trustee, or the Servicer can take specific permitted withdrawals from the Trust Fund prior to the funds being sent to certificateholders. These permitted withdrawals are outlined in the Governing Agreements. One such permitted withdrawal is the trustee fee U.S. Bank is paid for its services as trustee. U.S. Bank can also incur extraordinary expenses for certain activities it undertakes for the benefit of the Covered Trusts that fall outside of the regular duties and routine administration of the Covered Trusts contemplated by the Governing Agreements. The Governing Agreements do not give U.S. Bank unfettered discretion to use trust assets carte blanche. 24. While the Governing Agreements contain a number of provisions governing the indemnification of legal fees and costs related to the discharge of U.S. Bank’s mandated obligations under the Governing Agreements, there are some significant restrictions on U.S. Bank’s ability to use the Covered Trusts’ funds. Absent from these provisions is any unequivocal language explicitly indemnifying lawsuits between indemnitor and indemnitee, parties to the Governing Agreements or beneficiaries themselves to be enforced under New York contract law. In all relevant respects, the certificateholders’ Litigation is functionally equivalent to a first-party lawsuit for purposes of applying the indemnification provisions. Accordingly, in the Litigation, the purported indemnitors (the certificateholders) are suing the indemnitee (U.S. Bank) and indemnification is prohibited by New York and Delaware law. 25. The provisions of the Covered Trusts’ Governing Agreements addressing U.S. Bank’s ability to seek indemnification for expenses are set forth in Exhibit A. The provisions are nearly identical in substance and in prohibiting the trustee from using the Covered Trusts’ funds to indemnify expenses that are incurred as a result of the trustee’s willful misfeasance, bad faith or gross negligence in the performance of its duties. See id. - 10 - 1304564_1 26. Notwithstanding the fact that the Governing Agreements expressly and explicitly prohibit U.S. Bank from using the Covered Trusts’ assets to indemnify itself against claims resulting from its own willful misfeasance, bad faith or gross negligence, as is alleged and being proven through discovery in the Litigation, U.S. Bank has, in violation of the Governing Agreements, used the Covered Trusts’ assets to finance its defense in the Litigation. In short, U.S. Bank is improperly and illegally using the money of the certificateholders it has previously harmed by failing to discharge its duties under the Governing Agreements to prevent those certificateholders’ from obtaining compensation for that same misconduct. U.S. Bank’s actions are improper, inequitable and in violation of the Governing Agreements. 27. In the Litigation, RPI alleges that “U.S. Bank’s failures to act, and its breaches and violations alleged herein, were grossly negligent and were willful malfeasance.” ¶298; see also ¶¶300, 302, 304, 305, 325. Moreover, the federal government’s 2011 “Interagency Review of Foreclosure Policies and Practices” cited by RPI as the factual basis for its claims found that U.S. Bank engaged in the same misconduct as the Master Servicers and Servicers to the Covered Trusts. ¶¶232-243. 28. Further demonstrating U.S. Bank’s gross negligence and/or intentional misconduct in eschewing its duties to certificateholders, on February 22, 2017, the Honorable Coleen McMahon of this District affirmed that U.S. Bank had “‘effectively abandoned’” and “‘walked away from’” hundreds of thousands of claims against the estate of Lehman Brothers Holdings for Lehman’s representation and warranty failures as RMBS Warrantors. Supplement, ¶¶8-14. The bankruptcy claims abandoned by U.S. Bank concerned 60% of the one million mortgage loans that U.S. Bank initially claimed in 2009 as subject to repurchase. Supplement, ¶12. - 11 - 1304564_1 29. The Governing Agreements provide that no provision of the relevant Agreement shall be construed to relieve the trustee from liability for its own grossly negligent action, its own grossly negligent failure to act or its own willful misfeasance. See Ex. C. 30. In addition, under New York law, it is well settled that parties are responsible for their own legal fees and expenses. Therefore, where, as in the Litigation, the dispute is between or among parties to an agreement, indemnification for legal fees and expenses is not permitted unless expressly stated in the contract. The Governing Agreements do not authorize indemnification for legal expenses or costs in internecine disputes between the parties to the Governing Agreements, including the Litigation. 31. U.S. Bank has asserted that the Governing Agreements entitle it to indemnification, as a general matter, from certificateholders. However, where U.S. Bank is taking the Covered Trusts’ funds to defend itself against allegations that it willfully, negligently and/or in bad faith failed to perform the duties mandated by the Governing Agreements, the Governing Agreements expressly forbid U.S. Bank’s financing of its defense with the Covered Trusts’ funds. See, e.g., Ex. C. 32. Moreover, the Governing Agreements do not contain provisions providing for an advancement of U.S. Bank’s legal fees and costs. U.S. Bank may only receive indemnification and subsequent reimbursement of those fees and costs which are permitted, and only if it can establish that the fees and costs are expressly permitted – which here, they are not. See Ex. A. Given that the Governing Agreements: (a) do not allow U.S. Bank to seek advancement or indemnification from the Covered Trusts for legal expenses incurred due to the conduct alleged in the Litigation; (b) prohibit indemnification for expenses incurred as a result of its bad faith and negligent or willful misconduct; and (c) limit indemnification to only reasonable expenses, the Governing Agreements - 12 - 1304564_1 do not permit advancement or indemnification for any or all of the legal fees and costs incurred in relation to the Litigation. 33. Furthermore, because the Governing Agreements do not provide for U.S. Bank’s indemnification in these circumstances, under trust law, U.S. Bank is not permitted to seek indemnification for expenses not incurred for the benefit of the Covered Trusts. As the benefit provided by the legal fees and costs incurred in the Litigation only benefits U.S. Bank, none of its expenses can be billed to the Covered Trusts. 34. Just as U.S. Bank’s indemnification for any costs associated with the Litigation is improper, so would indemnification for its costs in defending this action be improper. This action is another lawsuit for which the Governing Agreements do not unequivocally provide for indemnification of U.S. Bank’s costs or expenses, and so, to the extent that U.S. Bank bills the Covered Trusts for the costs of defending its misconduct, it will be in violation of the Governing Agreements. Just as in the Litigation, this lawsuit arises from U.S. Bank’s willful misconduct, bad faith or negligence in the performance of duties under the Governing Agreements. Therefore, any indemnification that U.S. Bank seeks from the Covered Trusts for defending this action is unlawful and should be paid back to the Covered Trusts. CLASS ACTION ALLEGATIONS 35. Plaintiff brings this action as a class action on behalf of a Class consisting of all current and former investors who held RMBS certificates in the Covered Trusts during the time when U.S. Bank improperly paid for its legal fees and costs in the Litigation from the Covered Trusts’ assets and were damaged as a result (the “Class”). Excluded from the Class are U.S. Bank, the loan originators, the Warrantors, the Master Servicers and the Servicers of the Covered Trusts, - 13 - 1304564_1 and their officers and directors, their legal representatives, successors or assigns, and any entity in which they have or had a controlling interest. 36. 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 though appropriate discovery, plaintiff believes that there are at least hundreds of members of the proposed Class. Record owners and other members of the Class may be identified from records maintained by U.S. Bank, The Depository Trust Company or others 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. 37. Plaintiff’s claims are typical of the claims of the members of the Class, as they all acquired RMBS certificates in the Covered Trusts and held the RMBS certificates during the time when U.S. Bank began impermissibly billing the Covered Trusts for its Litigation fees and costs; all the claims are based upon the Governing Agreements substantially in the same form as the BAFC 2007-C PSA; U.S. Bank’s alleged misconduct was substantially the same with respect to all Class members; and all Class members suffered similar harm as a result. Thus, all members of the Class are similarly affected by U.S. Bank’s contractual breaches and common law violations that are alleged herein. 38. 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 RMBS litigation. 39. U.S. Bank has acted in a manner that applies generally to the Class because each Class member is impacted through any improper charge to the Covered Trusts’ assets. Accordingly, declaratory or injunctive relief will apply to the Class as a whole. - 14 - 1304564_1 40. 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 U.S. Bank is contractually permitted under the Governing Agreements to receive indemnification of any of its legal fees and costs from the Covered Trusts incurred in relation to the Litigation; (b) whether U.S. Bank must seek indemnification from the Warrantors and/or Servicers for legal fees and costs incurred in relation to the Litigation; (c) whether U.S. Bank is permitted to obtain indemnification of legal fees and costs incurred in relation to the Litigation because of willful misconduct, bad faith or negligence in the performance of any of the its duties; (d) whether U.S. Bank’s legal fees and costs incurred in relation to the Litigation were unreasonable; (e) whether U.S. Bank, as trustee, was permitted to bill the Covered Trusts for the Litigation expenses as a principle of trust law; (f) whether U.S. Bank’s conduct in obtaining its legal fees and costs out of the Covered Trusts’ assets is tortious or inequitable; and (g) whether U.S. Bank is entitled to the advancement of its legal fees and costs incurred in relation to the Litigation. 41. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all Class members is impracticable. There will be no difficulty in the management of this action as a class action. - 15 - 1304564_1 COUNT I Breach of Contract 42. Plaintiff repeats and realleges each and every allegation set forth in the preceding paragraphs as if fully set forth herein. 43. As set forth in detail above, the Governing Agreements are contracts setting forth the duties U.S. Bank owed to plaintiff, the Class and the Covered Trusts, along with the conditions and limitations governing U.S. Bank’s right to indemnification or use of Covered Trust funds. U.S. Bank took actions not permitted by the Governing Agreements or by New York law, including, without limitation: (a) using the Covered Trusts’ funds for legal fees and costs U.S. Bank incurred in defending the Litigation because the Governing Agreements and New York law do not permit indemnification of first-party claims or those between indemnitor and indemnitee; (b) using the Covered Trusts’ funds for legal fees and costs incurred in defending against allegations of negligence, bad faith and willful misconduct in the Litigation because the Governing Agreements and New York law prohibit the use of the Covered Trusts’ funds for such purposes; (c) using the Covered Trusts’ funds for unreasonable legal fees and costs incurred in defending itself in the Litigation; and (d) obtaining advancement of its legal fees and costs from the Covered Trusts incurred in relation to the Litigation. 44. As alleged herein, U.S. Bank took actions not permitted by the Governing Agreements and therefore breached the Governing Agreements. U.S. Bank’s contractual breaches deprived plaintiff, the Class and the Covered Trusts of the consideration they bargained for, i.e., they - 16 - 1304564_1 did not obtain RMBS certificates with a trustee that complied with its obligations under the Governing Agreements and could be relied on to properly bill its legal expenses. These breaches of the Governing Agreements by U.S. Bank caused plaintiff, the Class and the Covered Trusts to suffer damages caused by the improperly billed legal expenses. 45. Plaintiff and the Class did not receive the benefit of their bargain under the Governing Agreements when U.S. Bank took actions that resulted in the payment of legal fees and costs from the Covered Trusts incurred in defending against allegations of bad faith and willful or negligent misconduct. 46. Furthermore, plaintiff and the Class did not receive the benefit of their bargain under the Governing Agreements when U.S. Bank took actions that resulted in it receiving an advancement of legal fees and costs from the Covered Trusts incurred in relation to the Litigation. 47. Finally, plaintiff and the Class did not receive the benefit of their bargain under the Governing Agreements when U.S. Bank billed unreasonable legal fees and costs to the Covered 48. As a result of U.S. Bank’s multiple breaches of the Governing Agreements alleged herein, U.S. Bank is liable to plaintiff, the Class and the Covered Trusts for the damages they suffered as a direct result of U.S. Bank’s actions alleged herein in contravention of the Governing Agreements. 49. In addition, U.S. Bank has engaged in multiple, new and additional breaches of the Governing Agreements by continuing to take further actions as alleged herein, in both the Litigation and this action, and will cause plaintiff, the Class and the Covered Trusts to suffer additional damages. - 17 - 1304564_1 COUNT II Unjust Enrichment 50. Plaintiff repeats and realleges each and every allegation set forth in the preceding paragraphs as if fully set forth herein. 51. U.S. Bank has received a specific benefit from its use of the Covered Trusts’ funds for legal fees and costs at the expense of plaintiff and the Class. 52. As trustee, U.S. Bank had a fiduciary relationship to plaintiff, the Class and the Covered Trusts, and U.S. Bank was aware of that relationship. 53. In light of the egregious use of the Covered Trusts’ funds to finance the defense of the Litigation, restitution is necessary because equity and good conscience cannot permit U.S. Bank to retain the legal fees and costs. COUNT III Conversion 54. Plaintiff repeats and realleges each and every allegation set forth in the preceding paragraphs as if fully set forth herein. 55. As described above, U.S. Bank’s administration of the Covered Trusts and the funds therein must only be for the benefit of the certificateholders unless provided for by the Governing Agreements. 56. By using the Covered Trusts’ funds for unlawful and unreasonable legal fees and costs, U.S. Bank has wrongfully converted the Covered Trusts’ funds belonging to plaintiff and the 57. As a direct and proximate result of U.S. Bank’s wrongful taking and interference of the Covered Trusts’ funds, plaintiff and the Class have sustained damages and losses equal to the specific and identifiable amount of legal fees and costs misappropriated by U.S. Bank. - 18 - 1304564_1 58. At no point did plaintiff or Class members consent to U.S. Bank’s use of the Covered Trusts’ funds for defending itself in the Litigation. 59. U.S. Bank’s conduct was gross, willful and wanton, and at the least was undertaken with reckless disregard of plaintiff’s rights, and therefore warrants the imposition of punitive damages. COUNT IV Breach of Trust 60. Plaintiff repeats and realleges each and every allegation set forth in the preceding paragraphs as if fully set forth herein. 61. Under the common law, U.S. Bank had a duty to plaintiff and the Class to only seek indemnification of permitted legal fees and costs incurred for the benefit of the Covered Trusts. 62. As a result of U.S. Bank’s actions in relation to allegations in the Litigation, U.S. Bank is not entitled to indemnity. 63. U.S. Bank breached its duty of trust owed to plaintiff and the Class by advancing its own interests at the expense of plaintiff and the Class, because it is being sued in the Litigation in its capacity as trustee for failing to protect the interests of plaintiff and the Class but billing the Covered Trusts for its defense. Accordingly, the legal fees and expenses incurred in defending itself in the Litigation are for the exclusive benefit of U.S. Bank and not for the benefit of the Covered Trusts. 64. In addition, U.S. Bank breached its duty of trust owed to plaintiff and the Class by seeking unreasonable legal fees and expenses from the Covered Trusts’ assets. 65. Furthermore, U.S. Bank has continued to bill the Covered Trusts as alleged above and thus has continued to fail to fulfill its duty of trust, and has thereby engaged in numerous, continuing additional breaches of its duty of trust to the present time, in both the Litigation and this action. - 19 - 1304564_1 66. As a result of U.S. Bank’s breach of its duty of trust, unpermitted legal fees and costs were billed to and paid from the Covered Trusts’ assets, causing the plaintiff and Class damages. 67. U.S. Bank’s conduct was gross, willful and wanton, and at the least was undertaken with reckless disregard of plaintiff’s rights, and therefore warrants the imposition of punitive damages. COUNT V Equitable Accounting 68. Plaintiff repeats and realleges each and every allegation set forth in the preceding paragraphs as if fully set forth herein. 69. As an RMBS trustee, U.S. Bank had, and continues to have, a fiduciary relationship with and duty to certificateholders regarding the assets of the Covered Trusts in which certificateholders have a beneficial interest. 70. The funds held in the Covered Trusts are entrusted to U.S. Bank’s administration and oversight. 71. U.S. Bank’s fiduciary duty and control of entrusted funds impose a burden of accounting. 72. Plaintiff and the Class require an accounting of the legal fees and costs paid for using the Covered Trusts’ assets to determine the amount improperly taken. 73. U.S. Bank has declined to provide such an accounting upon plaintiff’s request. COUNT VI Declaratory Judgment Regarding U.S. Bank’s Right to Indemnification from the Covered Trusts for Legal Fees and Costs Incurred in Defending the Litigation 74. Plaintiff repeats and realleges each and every allegation set forth in the preceding paragraphs as if fully set forth herein. - 20 - 1304564_1 75. A valid and justiciable controversy exists between plaintiff and U.S. Bank regarding U.S. Bank’s right to indemnification from the Covered Trusts for legal fees and costs U.S. Bank incurred in defending the Litigation. Plaintiff contends, and U.S. Bank denies, that U.S. Bank is not entitled to indemnification from the Covered Trusts for any loss, liability or expense associated with the Litigation, because the Governing Agreements and New York law prohibit: (a) indemnification of first-party claims or those between indemnitor and indemnitee; (b) the use of the Covered Trusts’ funds for legal fees and costs incurred in defending against allegations of negligence, bad faith and willful misconduct; (c) using the Covered Trusts’ funds for the unreasonable legal fees and costs incurred in defending itself in the Litigation; and (d) obtaining advancement of U.S. Bank’s legal fees and costs from the Covered Trusts incurred in relation to the Litigation. 76. Plaintiff seeks a declaration that U.S. Bank is not permitted indemnification from the Covered Trusts for any loss, liability or expense associated with the Litigation and that U.S. Bank is not entitled to draw against the Covered Trusts for the purpose of advancing its attorneys’ fees and expenses associated with the Litigation. The requested declaratory judgment will serve a useful purpose in clarifying and settling the legal issue regarding whether U.S. Bank is entitled to indemnity from the Covered Trusts against any loss, liability or expense associated with the Litigation. - 21 - 1304564_1 PRAYER FOR RELIEF WHEREFORE, plaintiff prays for relief and judgment as follows: A. Determining that this action is a proper class action, certifying plaintiff as a Class representative under Rule 23 of the Federal Rules of Civil Procedure, and appointing the undersigned as Class counsel; B. Compelling U.S. Bank to provide an accounting of the legal fees and costs it has sought and/or received from the Covered Trusts in defending itself in the Litigation and this action; C. Providing declaratory relief in favor of plaintiff and the Class to establish that U.S. Bank is prohibited from advancement and reimbursement of fees and costs incurred in relation to the Litigation and this action from the Covered Trusts; D. Issuing a preliminary and permanent injunction enjoining the indemnification of U.S. Bank or the further advancement of funds from the Covered Trusts’ assets for U.S. Bank’s legal fees and costs incurred in the Litigation and this action; E. Awarding damages and/or equitable relief in favor of plaintiff, the Class and the Covered Trusts against U.S. Bank for breaches of its contractual and common law duties alleged in the Litigation and this action, including interest thereon; F. Disgorging any benefits or profits received as a result of U.S. Bank’s breach of its duty of loyalty to avoid unjust enrichment; G. Awarding punitive damages to plaintiff, the Class and the Covered Trusts against U.S. Bank related to the claims of conversion and breach of trust; H. Awarding plaintiff, the Class and the Covered Trusts their reasonable costs and expenses incurred in this action, including counsel and expert fees; and I. Such other relief as the Court may deem just and proper. - 22 - 1304564_1 JURY DEMAND Plaintiff demands a trial by jury on all claims so triable. DATED: September 6, 2017 ROBBINS GELLER RUDMAN & DOWD LLP SAMUEL H. RUDMAN s/ Samuel H. Rudman SAMUEL H. RUDMAN 58 South Service Road, Suite 200 Melville, NY 11747 Telephone: 631/367-7100 631/367-1173 (fax) [email protected] ROBBINS GELLER RUDMAN & DOWD LLP ARTHUR C. LEAHY STEVEN W. PEPICH LUCAS F. OLTS DARRYL J. ALVARADO HILLARY B. STAKEM 655 West Broadway, Suite 1900 San Diego, CA 92101-3301 Telephone: 619/231-1058 619/231-7423 (fax) [email protected] [email protected] [email protected] [email protected] [email protected] ROBBINS GELLER RUDMAN & DOWD LLP CHRISTOPHER M. WOOD 414 Union Street, Suite 900 Nashville, TN 37219 Telephone: 615/244-2203 615/252-3798 (fax) [email protected] Attorneys for Plaintiff - 23 - 1304564_1

securities

MbfDC4cBD5gMZwczXVY5

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS Civil Case No.: 16-cv-2142 CLASS ACTION COMPLAINT ANGELE GETSO, on behalf of herself and all others similarly situated, Plaintiff, v. DIRECT ENERGY, L.P., Defendant. INTRODUCTION 1. This action arises out of Defendant Direct Energy, L.P’s practice of placing autodialed telemarketing calls to individuals in the absence of consent and after those individuals asked Defendant to stop calling, in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. (“TCPA”). 2. Plaintiff Angele Getso is one such recipient of Defendant’s spam telephone calls. 3. Despite Plaintiff never providing express written consent for autodialed telemarketing calls from Defendant, Defendant made such calls to Plaintiff’s cellular telephone, and continued after Plaintiff asked Defendant to stop. 4. All of these telephone calls were placed without the prior express written consent of Plaintiff Getso. 5. All of these calls were placed using an automatic telephone dialing system, and none of these calls were placed for an emergency purpose. 6. Many of the calls also used a prerecorded or artificial voice. 7. Accordingly, Plaintiff Getso brings this TCPA action on behalf of herself and a proposed class of similarly situated individuals for Defendant’s violations of the TCPA. JURISDICTION AND VENUE 8. This Court has subject matter jurisdiction under 28 U.S.C. § 1331, as this action arises under the TCPA, which is a federal statute. 9. This Court has personal jurisdiction over Defendant because Defendant conducts significant amounts of business within this District and its wrongful conduct was directed at this District. 10. Venue is proper in this District under 28 U.S.C. § 1391(b) because Defendant conducts significant amounts of business within this District, because the wrongful conduct was directed at this District, and because Plaintiff resides in this District. PARTIES 11. Plaintiff is, and at all times mentioned herein was, a citizen and resident of Dallas, 12. Plaintiff is, and at all times mentioned herein was, a “person” as defined by 47 U.S.C. § 153 (39). 13. Defendant Direct Energy, L.P., and at all times mentioned herein was, a Texas corporation headquartered in Houston, Texas. 14. Defendant Direct Energy, L.P. is, and at all times mentioned herein was, a “person” as defined by 47 U.S.C. § 153 (39). FACTS 15. Defendant has placed numerous telephone calls to Plaintiff’s cellular telephone number – 214-###-8840 – from its telephone numbers, including, but not limited to, 469-224- 16. These calls were all in an effort to sell Defendant’s energy services to Plaintiff, making them advertisements and/or telemarketing. 17. Accordingly, Defendant was required to obtain prior express written consent prior to making these autodialed telemarketing calls. 18. Plaintiff never gave Defendant such consent. 19. Furthermore, because Plaintiff never agreed to the calls and did not want the calls, Plaintiff asked Defendant on numerous occasions to stop calling her. 20. All of these calls were placed using an “automatic telephone dialing system” as defined at 47 U.S.C. § 227(a)(1) and as explained in subsequent FCC regulations and orders. The system(s) used by Defendant has/have the capacity to store number and to dial those numbers, or to produce telephone numbers to be called using a random or sequential number generator. 21. This is evidenced by: • The inability to stop the calls; • The frequency of the calls; • A brief and unnatural pause from the time Plaintiff answered the calls until the time Defendant’s agent comes on the line (for example, Defendant would not appear on the line until Plaintiff’s second “hello”); • That none of the calls were initiated using human intervention. • That several of the calls used a prerecorded or artificial voice. 22. As mentioned, many of the calls were made using an artificial or prerecorded voice, which, aside from being suggestive of autodialer usage, is a separate category of illegal calls under the TCPA. 23. Plaintiff knew that these calls used a prerecorded voice because she is familiar with normal human interaction, and could tell that the voice on the other line was a recording rather than a live person with whom she could interact. She was unable to interrupt the voice or get the voice to deviate from the prerecorded message, as is the case with prerecorded messages. 24. These calls were not made for any emergency purpose. 25. Plaintiff has suffered actual injury as a result of Defendant’s telephone calls, including, but not limited to: • Device storage; • Data usage; • Lost time tending to and responding to the unsolicited calls; • Depleted battery and cost in charging her phone; • Tying up of her telephone line; • Invasion of Privacy; • Nuisance. 26. These forms of actual injury are sufficient for Article III standing purposes. 27. Plaintiff is entitled to statutory damages, actual damages, and injunctive relief. 28. Specifically, Plaintiff is entitled to at least $500 for each call placed to her cellular telephone in violation of 47 U.S.C. § 227(b). 29. Plaintiff is also entitled to treble damages for each call made willfully or knowingly and in violation of the TCPA. 30. Defendant’s actions were willful because Defendant made the calls of its own volition. 31. Defendant’s actions were knowing violations of § 227(b) because Defendant knew it was placing calls to cellular telephones, knew it was using an automatic telephone dialing system, and knew or should have known it did not have consent. 32. Accordingly, Plaintiff is entitled to $1,500 per call for violations of § 227(b). CLASS ACTION ALLEGATIONS 33. Plaintiff brings this action under Fed. R. Civ. P. 23 on behalf of a proposed class, defined as follows: Plaintiff and all persons within the United States to whose cellular telephone number Defendant Direct Energy, L.P. placed, since October 16, 2013, a telemarketing telephone call using an automatic telephone dialing system when Defendant’s records show that it obtained those cellular telephone numbers through the same method in which it obtained Plaintiff’s telephone number, or Defendant’s records show a request to stop calling that telephone number. 34. Excluded from the class are Defendant and any entities in which Defendant has a controlling interest; Defendant’s agents and employees; any Judge and Magistrate Judge to whom this action is assigned and any member of their staffs and immediate families, and any claims for personal injury, wrongful death, and/or emotional distress. 35. The Class members for whose benefit this action are brought are so numerous that joinder of all members is impracticable. 36. The exact number and identities of the persons who fit within the class are ascertainable in that Defendant maintains written and electronically stored data showing: a. The time period(s) during which Defendant placed its telephone calls; b. The telephone numbers to which Defendant placed its telephone calls; c. The telephone numbers for which Defendant had prior express written consent; d. The telephone numbers associated with any “stop calling” requests; e. The equipment and systems used to make each call. 37. The Class is comprised of hundreds, if not thousands, of individuals nationwide. 38. There are common questions of law and fact affecting the rights of the Class members, including, inter alia, the following: a. Whether Defendant used an automatic telephone dialing system; b. Whether Defendant took adequate steps to acquire and/or track consent; c. The purpose(s) of Defendant’s calls; d. Whether Plaintiff and the Classes were damaged thereby, and the extent of damages for such violations; and e. Whether Defendant should be enjoined from engaging in such conduct in the future. 39. Plaintiff is a member of the class in that Defendant placed a telemarketing call to her cellular telephone using an automatic telephone dialing system, including calls placed after Plaintiff asked Defendant to stop calling. 40. Plaintiff’s claims are typical of the Class members’ claims in that they arise from Defendant’s uniform conduct and are based on the same legal theories as Class members’ claims. 41. Plaintiff and all putative Class members have also necessarily suffered actual damages in addition to statutory damages, as all Class members spent time tending to Defendant’s unwanted calls, suffered depleted battery, and suffered a nuisance and an invasion of their privacy. 42. Plaintiff has no interests antagonistic to, or in conflict with, the Class. 43. Plaintiff will thoroughly and adequately protect the interests of the Class, having retained qualified and competent legal counsel to represent herself and the Class. 44. Defendant has acted and refused to act on grounds generally applicable to the Class, thereby making injunctive and declaratory relief appropriate for the Class as a whole. 45. The prosecution of separate actions by individual class members would create a risk of inconsistent or varying adjudications. 46. A class action is superior to other available methods for the fair and efficient adjudication of the controversy since, inter alia, the damages suffered by each class member make individual actions uneconomical. 47. Common questions will predominate, and there will be no unusual manageability issues. FIRST CAUSE OF ACTION Violations of the TCPA, 47 U.S.C. § 227(b) (On Behalf of Plaintiff and the Class) 48. Plaintiff and the proposed Class incorporate the foregoing allegations as if fully set forth herein. 49. Defendant placed numerous telephone calls to Plaintiff and Class members. 50. These calls all used an automatic telephone dialing system. 51. The calls were not made for “emergency purposes” as defined by 47 U.S.C. § 227(b)(1)(A)(i). 52. All of the calls were telemarketing, in that the calls were meant to sell Defendant’s services to Plaintiff and putative Class Members. 53. None of the calls were placed with prior express written consent of the called party. 54. Furthermore, calls made after the called party asked Defendant to “stop calling” were made without any form of consent. 55. Plaintiff and Class members are entitled to an award of $500 in statutory damages for each call, pursuant to 47 U.S.C. § 227(b)(3)(B). 56. Plaintiff and Class members are entitled to an award of treble damages in an amount up to $1,500 for each telephone call, pursuant to 47 U.S.C. § 227(b)(3). REQUEST FOR RELIEF WHEREFORE, Plaintiff Angele Getso, individually and on behalf of the Class, prays for the following relief: A. An order certifying the Classes as defined above, appointing Plaintiff Getso as the representative of the Class, and appointing her counsel as Class Counsel; B. An order declaring that Defendant’s actions, as set out above, violate 47 U.S.C. § C. An award of injunctive and other equitable relief as necessary to protect the interests of the Class, including, inter alia, an order prohibiting Defendant from engaging in the wrongful and unlawful acts described herein; D. An award of statutory damages for each violation of of 227(b); E. An award of treble damages; F. An award of reasonable attorneys’ fees and costs; and G. 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. Dated: July 25, 2016 /s/ Jeremy M. Glapion__________ Jeremy M. Glapion THE GLAPION LAW FIRM, LLC 1704 Maxwell Drive Wall, New Jersey 07719 Tel: 732.455.9737 Fax: 732.709.5150 [email protected] Pro Hac Vice to be filed

privacy

Zs6eDocBD5gMZwczyl9A

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK Mirl Brach, individually and on behalf of all others similarly situated, C.A. No.: Plaintiff, CLASS ACTION COMPLAINT DEMAND FOR JURY TRIAL -v.- Radius Global Solutions LLC and John Does 1-25, Defendants. Plaintiff Mirl Brach (hereinafter, “Plaintiff”) brings this Class Action Complaint by and through her attorneys, Stein Saks PLLC, against Defendant Radius Global Solutions LLC (hereinafter “Defendant Radius”), 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 1 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. 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 Commonwealth of New York, County of Orange, residing at 5 Lizensk Blvd., Monroe, NY 10950. 8. Defendant Radius 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 500 North Franklin Turnpike, Ste 200, Ramsey, NJ 07446 and can be served process upon the C T Corporation System at 28 Liberty Street, New York, New York 10005. 9. Upon information and belief, Defendant Radius 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. 10. John Does l-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 New York; b. to whom Defendant Radius sent a collection letter attempting to collect a consumer debt; c. regarding collection of a debt; d. that states that the amount due may increase due to “other charges,” without any explanation of the other charges; 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. 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 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. 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 Defendants' written communications to consumers, in the forms attached as Exhibit A, violate 15 U.S.C. §§ l692e and 1692f. 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 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 § 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. 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, 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. 21. Some time prior to November 6, 2019, an obligation was allegedly incurred to American Express. 22. The obligation arose out of a transaction in which money, property, insurance or services, which are the subject of the transaction, were incurred solely for personal purposes, specifically and American Express credit card. 23. The alleged American Express obligation is a "debt" as defined by 15 U.S.C.§ 1692a(5). 24. American Express is a "creditor" as defined by 15 U.S.C.§ 1692a(4). 25. American Express contracted with the Defendant to collect the alleged debt. 26. 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 Services, telephone and internet. November 6, 2019 Collection Letter 27. On or about November 6, 2019, Defendant sent the Plaintiff an initial collection letter (the “Letter”) regarding the alleged debt owed to American Express. See Letter attached as Exhibit A. 28. The collection letter states: “As of the date of this letter, you owe $15,050.09. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your payment. 29. Defendant’s letter does not explain the term “other charges” and Plaintiff has no way of determining what the “other charges” may be. 30. Plaintiff has no basis to determine what “other charges” could affect his balance day to day besides interest and late fees. 31. Defendant misleads and deceives Plaintiff into the belief that there are “other charges” which will possibly increase the daily balance when there are no other charges. 32. If Defendant is aware of “other charges” that would lead to an increase the balance, Defendant should clarify and explain them in the letter. 33. 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. 34. 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. 35. 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. 36. 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. 37. Defendant violated said section by: a. Making a false and misleading representation in violation of §1692e(10). 38. 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. 39. 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. 40. 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. 41. 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. 42. Defendant violated this section by a. unfairly stating that the balance may increase due to “other charges” 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. DEMAND FOR TRIAL BY JURY 43. 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 Mirl Brach, individually and on behalf of all others similarly situated, demands judgment from Defendant Radius 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: March 6, 2020 Respectfully Submitted, /s/ Raphael Deutsch By: Raphael Deutsch, Esq. Stein Saks PLLC 285 Passaic Street Hackensack, NJ 07601 Phone: (201) 282-6500 ext. 101 Fax: (201) 282-6501 Attorneys For Plaintiff 1

consumer fraud

Qdn9D4cBD5gMZwczfmpR

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA 2211 United States Courthouse 75 Spring Street, S.W. Atlanta, Georgia 30303-3361 § CHARLES W. GOODE, Plaintiff § EEOC NO. : 410-2010-03943 On behalf of himself and all non-exempt § Employees of Wild Wing Café both past & § present who consent to representation § § CASE NO : Attorney for Plaintiff § Goode Law LLC § Katrenia C. Goode, Esq. § 555 North Point Center East § Suite 400 § Alpharetta GA 30022 § (770) 755-1762 § V. § CIVIL ACTION § WILD WING CAFÉ, a d/b/a of Tapps Two § LLC § PLAINTIFF’S COMPLAINT Defendant(s) § § OF RACIAL DISCRIMINATION IN § VIOLATION OF TITLE VII; Attorney(s) for Defendant(s) § VIOLATION OF 42 U.S.C. 1981; Downey & Cleveland, LLP § FAIR LABOR STANDARDS ACT G. Lee Welborn, Esq. § VIOLATION; AND VIOLATION OF 288 Washington Street § O.C.G.A. §34-7-2 Marietta, GA 30060 § (770) 422-3233 § § Agent for Service – Tapps Two LLC § Gregory L. Dockery § and Individually § 16615 Westbrook Rd § Alpharetta, GA 30004 § ___________________________________ § VENUE Venue is proper in the Northern District of Georgia under (42 U.S.C. § 2000e et seq.); under 42 U.S.C. § 1981; under the Fair Labor Standards Act, 29 U.S.C. et. Seq. and under 29 U.S.C. § 216(b), because the acts complained of occurred within Alpharetta, Georgia, in Fulton County and in the jurisdiction of this Court and because Defendant(s) are subject to personal jurisdiction in this District. JURISDICTION Plaintiffs invokes the jurisdiction of the District court under the "federal question" statute, 28 U.S.C. Sec. 1331, pursuant to Title VII of the Civil Rights Act of 1964 as amended (42 U.S.C. § 2000e et seq.), 42 U.S.C. § 2000e-5; pursuant to 42 U.S.C. § 1981 and pursuant to The Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et. Seq. and under 29 U.S.C. § 216(b). The FLSA permits employees to sue on behalf of themselves and of other similarly situated employees, who may become Party Plaintiffs by issuing their written consent. 29 U.S.C. § 216(b). Pursuant to 28 U.S.C. 1367, Plaintiff’ invokes the courts supplemental jurisdiction of the related state law claim for non-payment of wages under O.C.G.A. § 34-7-2 . DEMAND FOR JURY TRIAL Plaintiff demands a trial by jury on any and all issues which may be tried by a jury. PARTIES Plaintiff Charles Goode (“Plaintiff") resides in Alpharetta, Georgia (within this District) and is a citizen of the United States. Plaintiff was employed by Defendant Wild Wing Café (“Defendant”) a business located in Alpharetta, Georgia from on or about October 2009 to on or about June 2010 as a non-exempt employee. At all times material to this action, Plaintiff and other non-exempt employees of Defendant(s) were intentionally and routinely denied payment for any over-time hours work. I. PLAINTIFF’S DISCRIMINATION CLAIM This is a civil rights employment discrimination case filed pursuant to Title VII of the Civil Rights Act of 1964, as amended (42 U.S.C. § 2000e et seq.) (hereinafter "Title VII") and 42 U.S.C. § 1981 by Charles W. Goode (hereinafter "the Plaintiff'), who was employed as a dishwasher and prep cook at Wild Wing Café in Alpharetta, Georgia, Fulton County, against Defendants Wild Wing Café a d/b/a of Tapps Two LLC and Tapps Two LLC, its owners, assigns, successors in interest (hereafter collectively referred to as "Defendants"). Defendant is a restaurant with annual revenues exceeding $500,000.00. Summary of the Case In this First Amended Complaint, the Plaintiff, a member of a protected class, alleges that the Defendants violated his civil rights by (1) wrongfully terminating him in violation of Title VII (i.e., by treating him less favorably then similarly situated whites; and/or that Defendants engaged in a discriminatory practice or practices with malice or reckless indifference to Plaintiff’s federally protected rights under 42 U.S.C. § 1981(a)(b)(1). Statement of the Law Title VII of the Civil Rights Act of 1964 protects individuals against Employment Discrimination on the basis of race and color as well as national origin, sex, or religion. It is unlawful to discriminate against any employee because of race or color in regard to hiring, termination, promotion, compensation, job training, or any other term, condition, or privilege of employment. Title VII prohibits both intentional discrimination and neutral job policies that disproportionately exclude minorities and that are not job related. Plaintiff filed a charge of discrimination with the Equal Employment Opportunity Commission ("EEOC") alleging that Wild Wing Café engaged in disparate treatment on the basis of his race. He affirms that he received a right to sue notice from the EEOC and timely filed this action within ninety (90) days thereafter. The statute of limitations for filing a 42 U.S.C. § 1981, wrongful termination claim is 4 years. Plaintiff affirms that he has timely filed this action under 42 U.S.C. § 1981 (a) which states in pertinent part “All persons within the jurisidiction of the United States shall have the same right in every state and territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses and exactions of every kind, and to no other.” Punitive damages are recoverable where the employer engaged in intentional discrimination and has done so either with malice or with reckless indifference to the federally protected rights of the Plaintiff.” Kolstad v. American Dental Association, 119 Sup. Ct. 2118 (1999). Complaint Wild Wing Café fired Plaintiff an African American non-exempt employee with a previously unblemished work record for an alleged “No call-No show” at work. Wild Wing Cafes written policy mandates termination for all “No Call No show” infractions. Wild Wing Cafe did not fire A.J. Siska - a white male (kitchen manager) or Dylan Frasek – a white male (non-exempt employee) for their actual “No call-No shows”; nor did Wild Wing Cafe fire a white female Jennifer Gerster (non-exempt employee) for her actual “No call- No show”. 1. The Plaintiff, Charles Goode, is an African American male and as such is a member of a protected class. Plaintiff was employed by Wild Wing Café in Alpharetta, Georgia from on or about October 25, 2009 to on or about June 2010. The Plaintiff , Charles Goode alleges that Wild Wing Café illegally engages in disparate treatment of people on the basis of race. Plaintiff, Charles Goode further alleges that he was wrongfully terminated in violation of Title VII and that the reason given for his termination was a pretext in violation of 42 U.S.C. § 1981. 2. The Plaintiff, Charles Goode, a non-exempt employee was qualified for his position as a dishwasher and for nearly eight months had performed his job satisfactorily. Plaintiff, Charles Goode had a good work ethic and always reported to duty when assigned. Moreover, Plaintiff always reported on time. Plaintiff never missed a single day of work. In fact until the day he was wrongfully terminated, Plaintiff had an unblemished work record. Also, until just two weeks before his termination, Plaintiff had always enjoyed cordial interaction with kitchen managers Anthony Siska and Kelly Lindberg, and Manager, Greg Dockery. 3. In May 2010, a couple of weeks before his termination, Plaintiff asked a white female co-worker named Liz for a date. Liz then asked Plaintiff about his racial background specifically asking if Plaintiff was part African-American. Plaintiff confirmed this was the case. Liz then said that she would need to think about Plaintiffs request first, as she had inadvertently dated an African-American male for a couple of years before discovery of his identity and had some misgivings about another inter-racial involvement. 4. A day or so later an Asian Co-worker named Stephanie approached Plaintiff at work and told him that there had been some discussion among the employees as to Plaintiff’s true racial identity. Plaintiff has a fair complexion, is freckled with hazel eyes and has an ash-blond mustache. Plaintiff again confirmed that he did in fact have some African American ancestry. 5. The next day or shortly thereafter Plaintiff (a dishwasher) arrived at work to find the kitchen in complete disarray, with dishes piled high on every surface including the floor, in direct violation of both the restaurant policy and the County health code. As required, Plaintiff immediately notified his supervisor the kitchen manager Kelly Lindberg of the violations and the state in which he had found the kitchen. Prior to this time Plaintiff had a friendly relationship with his supervisor Kelly Lindberg. This day however, Plaintiff was stunned when Kelly Lindberg reacted by immediately launching into an emotionally charged, profane, irrational unprovoked tirade heavily laced with filthy language and anger, whose illogical rhetoric seemed aimed squarely and solely at Plaintiff. During this vitriolic monologue Kelly Lindberg repeatedly threatened to fire Plaintiff over and over for some never articulated offense. Her tirade lasted for approximately several minutes throughout which time Plaintiff miraculously remained silent and began tackling the mess in the kitchen area. [Thereafter, and for the remainder of his employment Kelly Lindberg never again spoke to Plaintiff until the day a couple of weeks later when she gleefully confirmed his firing in a phone call when Plaintiff called to request reconsideration of his termination.] 6. Plaintiff continued to report to work timely, but noticed a new unexplained permanent chill in relations with kitchen managers AJ Siska and Kelly Lindberg and also with Manager Greg Dockery who for the remaining days of his employment now barely acknowledged Plaintiff’s existence and no longer engaged in the exchange of any pleasantries. 7. ON or about May 28th, 2010 Plaintiff reported to work at 5 p.m. per the posted schedule he had viewed at the end of his last shift. On his timely arrival, Mgr. AJ Siska, informed Plaintiff that the posted schedule now reflected that Plaintiff was to have been at work earlier that afternoon and that in spite of the fact that Plaintiff had reported to work (albeit late per then posted schedule) Plaintiff’s alleged tardiness was going to be treated as a “No call, No show”. Plaintiff was immediately fired. Plaintiff protested because the shift had been changed after it had been posted, yet he had not been told of the shift change. AJ Siska the kitchen manager then informed Plaintiff that he, Kelly and Doc (Greg Dockery) had already discussed the issue and decided that Plaintiff was a “No call, No show” and would be immediately terminated once he arrived. 8. The employee manual states that all no call no shows are to be terminated. No exceptions to that policy were listed. Kitchen Manager A.J. Siska told Plaintiff that every no call no show was automatically fired. This however was not true. It was common knowledge that Kitchen Manager, AJ Siska ( a white male) had two such “No call No shows” in his record. Siska has twice previously failed to show up for work because both times he had been arrested and was in jail at the time of his shift. Wild Wings first demoted, then transferred Siska. However, Wild Wing Café did not fire Siska – a white male. Plaintiff believes that Defendants gave a pretextual reason for his firing. A “No- call No show” is a person who never reports to work. Plaintiff actually reported to work, albeit late because of the unknown change to the schedule. In any case, Plaintiff reported to work and thus was not a “No show” as alleged. Even if Plaintiff had actually been a “No call No Show” he was treated far more harshly than his white male counterpart - Dylan Fracek. Dylan Fracek was a non- exempt employee , like the Plaintiff. In April 2010, Dylan Fracek failed to show up for work and did not call, (i.e. Dylan had a “No Call, No Show”). This occurred just one month before Plaintiff was terminated for an alleged “No call No show”. Was Dylan fired when he completely failed to show for his shift at all and never called? No, he was not. Instead Wild Wing Café did not enforce it’s so called mandatory firing policy and Dylan, was only given a warning and agreed to do extra cleaning at the restaurant as punishment. Wild Wing Café did not fire Dylan Fracek – a white male. Earlier in the year 2010, Jennifer Gerster, a white female, also (like Plaintiff) a non-exempt employee, failed to show for her shift at all and she did not call, (i.e. Jennifer had a “No Call, No Show”). Was Jennifer fired when she completely failed to show for her shift at all and never called? No, she was not. Instead Wild Wing Café did not enforce it’s so called mandatory firing policy and Jennifer, was only given a warning. However, Wild Wing Café did not fire Jennifer Gerster – a white female. On numerous other occasions other similarly situated Whites who failed to report on time were simply given a phone call by management and invited to come in late. By comparison Plaintiff was treated much more harshly than the white employees at Wild Wing Café who actually did violate the rules. 9. Plaintiff timely filed an EEOC complaint for violation of Title VII because of the disparate treatment he received as an African American male in comparison to his white counterparts at Wild Wing Café. 10. Thereafter, in retaliation and as further evidence of disparate treatment , Wild Wings manager’s AJ Siska and Greg Dockery wrongly opposed Plaintiff’s unemployment claim and as a result Plaintiff did not receive unemployment benefits. While another white male employee Mike McDaniel who voluntarily quit and should have been ineligible for benefits nonetheless received his unemployment benefits. RELIEF REQUESTED Discrimination Claim Wherefore Plaintiff respectfully requests the Court find that Defendants did in fact wrongfully terminate Plaintiff in violation of Title VII and 42 U.S.C. § 1981 and order Defendant to compensate Plaintiff for back pay, inclusive of benefits, compensatory and punitive damages and costs. Defendant further requests that the Court grant Defendant Attorney’s fees and all such other relief as Plaintiff may be due both in law and equity. PLAINTIFF’S FAIR LABOR STANDARDS ACT CLAIM Summary of the Case Defendant is a Restaurant, Plaintiff was employed as a non-exempt hourly employee at Defendant’s restaurant. Defendant regularly alters, redacts and under reports hours worked by its non-exempt hourly employees to avoid payment of regular and over-time. Plaintiff brings an action for violation of FLSA for non- payment of wages and overtime on behalf of himself and all other plaintiffs known or unknown; and for violation of O.C.G.A. § 34-7-2 for non-payment of the full net amount of wages or earnings due. Statement of the Law FLSA Under the Fair Labor Standards Act, 29 U.S.C. § 201 et. Seq. an employee may sue for unpaid overtime. The FLSA is a remedial statute that “has been construed liberally to apply to the furthest reaches consistent with congressional direction.” Johnston v. Spacefone Corp., 706 F.2d 1178, 1182 (11th Cir. 1983) (quoting Mitchell v. Lublin, McGaughy & Assoc., 358 U.S. 207, 211, 79 S.Ct. 260, 264 (1959)). It requires employers to pay one and one-half times the employee’s regular rate of pay for hours worked in excess of forty hours per week. 29 U.S.C. § 207(a)(1). Normally FLSA actions have a two-year statute of limitations, but where the violation of the act has been willful, the statute of limitations is extended to three years. Where the employee can show a willful violation of the FLSA, the employee can also recover liquidated damages, that is a doubling of the overtime. Any employee who is fired, demoted or not promoted for complaining about overtime violations or for filing a claim for overtime benefits can recover back pay, liquidated damages and attorney’s fees. An FLSA claim may be brought as a collective action under 29 U.S.C. §216(b). An FLSA action for overtime pay can be maintained by “one or more employees for and in behalf of himself or themselves and other employees similarly situated.” 29 U.S.C. § 216 (b). However, prospective plaintiffs under FLSA must expressly consent to join (“Opt in to”) the class, because §216 (b) contains this provision: “No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.” Id. For an opt-in class to be created [P]laintiffs need show only 'that their positions are similar, not identical,' to the positions held by the putative class members." Sperling v. Hoffman-LaRoche, 118 F.R.D. 392, 407 Motion for Conditional Class Certification Plaintiff hereby motions the Court for Conditional Class Certification and Court- Authorized Notice Pursuant to FLSA, 29 U.S.C. § 216(b) Plaintiff, on behalf of himself individually and all other similarly situated employees, bring a Motion for Conditional Class Certification and Court- Authorized Notice pursuant to FLSA, 29 U.S.C. § 216(b). As a necessary component of this Application, Plaintiff also seeks discovery of the names of former and current employees who may be similarly situated. Plaintiff’s Motion The basis for Plaintiffs' Motion is that (a) Plaintiff and potential opt-in Plaintiff’s complain of Wild Wing Café company policy of not paying employees who are present and working hourly wages for all of the time that they were actually present and working; (b) are all hourly non-exempt employees who clock into to work or should be allowed to clock in to work); (c) are employees who have had work time worked reduced by Defendant (manually adjusted) to a different start time than when Plaintiff and the potential opt-in plaintiffs actually clocked in/showed up for work and commenced performing tasks for the Defendant employer; and (d) who were paid less than time actually present and working; and/or (e) who were not paid overtime for hours worked in excess of forty (40) hours in a work week. District courts have adopted a two-stage approach to determine whether a cause may be certified under FLSA. For a collective action under FLSA, Plaintiffs must "establish: (1) that the named plaintiffs and proposed members of the class are `similarly situated,' and (2) that the proposed class members opt-in (consent in writing) to be bound by the result of the suit." Abrams v. General Elec. Co., 1996 WL 663889, at *1 (N.D.N.Y. Nov. 4, 1996). Step One The first step is the notice stage in which the Court determines, based on plaintiffs' pleadings and affidavits, whether the plaintiffs and potential opt-in plaintiffs are sufficiently "similarly situated" to issue notice and allow the case to proceed as a collective action through discovery. See Iglesias-Mendoza v. La Belle Farm, Inc., 239 F.R.D. 363, 367 (S.D.N.Y.2007). ("[P]laintiff need only describe the potential class within reasonable limits and provide a factual basis from which the court can determine if similarly situated potential plaintiffs exist."); Mete v. New York State Office of Mental Retardation and Dev. Disabilities, 1993 WL 226434, at *2 (N.D.N.Y. June 24, 1993) (requiring "nothing more than substantial allegations that the putative class members were together the victims of a single decision, policy, or plan"). Plaintiffs' burden is minimal because the determination that the parties are similarly situated is merely a preliminary one that may be modified or reversed at the second stage." Levy v. Verizon Info. Servs., Inc., 2007 WL 1747104, at *3 (E.D.N.Y. June 11, 2007); Roebuck v. Hudson Valley Farms, Inc., 239 F.Supp.2d 234 (N.D.N.Y.2002). The law does not require that named plaintiffs and the putative class members be or have identical claims, Abrams v. Gen. Elec. Co., 1996 WL 663889, at *2 (N.D.N.Y. Nov. 4, 1996) By Affidavit appended hereto Plaintiff swears or affirms that Plaintiff and putative class members were victims of Defendant Wild Wing Café’s plan or policy whereby Plaintiff and potential opt-in Plaintiff’s were not paid hourly wages for all of the time that they were actually present and working for Defendant including over-time wages. Step Two Once the court determines that potential opt-in plaintiffs may be "similarly situated" for the purposes of authorizing notice, the court "conditionally certifies" the collective action, and the plaintiff sends court-approved notice to potential members. Id. Those potential plaintiffs may then elect to opt-in pursuant to section 216(b) by filing Consent Forms with the court. Id. Once notice is accomplished, the action proceeds as a collective action throughout the discovery process. Lee v. ABC Carpet & Home, 236 F.R.D. 193, 197 (S.D.N.Y.2006). Plaintiff petitions for Court-Authorized Notice of Collective Action The United States Supreme Court confirmed that district courts have discretion, within appropriate cases, to implement FLSA § 216(b) and to play a significant role in prescribing the terms and conditions of communications from the named plaintiffs to the potential members of the class on whose behalf the collective action has been brought and to permit discovery of the names and addresses of affected putative members. Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 171-73, 110 S. Ct, 107 L.Ed.2d. 480 (1989). A court's early intervention in the notice and discovery process is "distinguishable in form and function from the solicitation of claims." Id. at 174, 110 S.Ct. 482 Plaintiff hereby petitions the Court for Court-Authorized Notice of Collective Action Pursuant to FLSA 29 U.S.C. § 216(b). Plaintiff makes this motion because the statute of limitations is not tolled and valid claims, if any, may be either lost or compromised, and because those who may be similarly situated to the Plaintiffs would not know about this case or even their rights to pursue FLSA claims. As for example an African American male employee, an hourly non-exempt employee named “Kane” whose employment predates that of Plaintiff, but who reportedly physically chased a former kitchen manager named Dan Zeeley (spelling?) through the restaurant in an effort to get him to correct his paycheck to reflect the actual time worked. As for further example, “Danielle Mason“ an hourly non-exempt employee Plaintiff met while employed at Defendant Restaurant, Plaintiff was aware that this particular putative class member named “Danielle Mason“ had confronted Defendant and verbally demanded that she be paid for the hours that she had clocked into work. Manager Greg Dockery flatly refused to pay her for her actual time worked. Angered by the great discrepancy in her pay, “Danielle Mason “crumpled and threw her check at Greg Dockery. Danielle Mason quit sometime prior to Plaintiff’s wrongful termination. Because of the potential to have a large pool of employees (due to industry high turnover) Plaintiff seeks to have notice of this collective action distributed nationwide to the putative class members earlier rather than later. Plaintiff petitions for Court-Ordered Discovery of Putative Class When a court approves notice to the putative class, discovery of the names and addresses of putative class members has consistently been granted. Hoffmann- La Roche Inc. v. Sperling, 493 U.S. at 170, 110 S.Ct. 482 (noting that the district court was correct in permitting discovery); United States v. Cook, 795 F.2d 987 (Fed. Cir.1986); Summa v. Hofstra Univ., 2008 WL 3852160 (E.D.N.Y. Aug. 14, 2008); Roebuck v. Hudson Valley Farms, Inc., 239 F.Supp.2d at 240. To appraise the scope of discovery, we must first determine who would be eligible to receive this Court's approved notice. Plaintiff submits that if discovery is required, the relevant period should be three years and not two years. The discovery period, which is the statute of limitations, would be three years if the employer's violation was willful. 29 U.S.C. § 255(a). A willful violation exists when an employer knew or recklessly disregarded that its conduct violated the FLSA. McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988). The Plaintiff alleges that Defendant "failed to make, keep, and preserve records with respect to each of its employees sufficient to determine their wages, hours, and other conditions and practice of employment. Therefore Defendant’s conduct is willful. In conjunction with providing notice to a putative class, Plaintiff respectfully request the Court consider whether discovery of the names and addresses of similarly situated employees at all Wild Wing Café locations is warranted. Wild Wing Café is a Regional Chain, currently located in the South Eastern United States. Plaintiff seeks the production of a list of all non-exempt employees in the Alpharetta, Georgia store or alternatively throughout the South East region within the last three years, if the Court in its wisdom determines that there may be other non-exempt employees who either have been or may have been subject to the same Corporate culture as the named Defendant who need to have notice of this action so that they can determine if they are affected by a common policy or plan that may curtail their statutory rights to overtime. Plaintiff needs to be provided with their names and addresses so that they can inform them of this action. Relief Requested Plaintiff prays the Court find that potential opt-in plaintiffs are similarly situated to Plaintiff. Plaintiff respectfully moves the Court for Conditional Class Certification; Requests Court-Authorized Notice pursuant to FLSA, 29 U.S.C. § 216(b); and respectfully requests the Court order Discovery of a Putative Class of Plaintiffs. O.C.G.A. § 34-7-2 Statement of law Every person, firm, or corporation … shall make wage and salary payments to such employees or to their authorized representatives (1) by lawful money of the United States, (2) by check, or (3) with the consent of the employee, by authorization of credit transfer to his account with a bank, trust company or other financial institution authorized by the United States or one of the several states to receive deposits in the United States…. Provided, however, that the dates so selected shall be such that the month will be divided into at least two equal periods; and provided further that the payments made on each such dated shall in every case correspond to the full net amount of wages or earnings due the employee for the period for which the payment is made. O.C.G.A. § 9-3-22 All actions for the recovery of wages, overtime, or damages and penalties accruing under laws respecting the payment of wages and overtime shall be brought within two years after the right of action has accrued. Statement of the facts Plaintiff Goode was a dishwasher and prep cook for Defendant Wild Wing Café, employed from on or about October 2009 through on or about June 1st, 2010. Plaintiff was an hourly non-exempt employee who under the FSLA and state law was entitled to wages for hours worked and entitled to one and one-half times his hourly pay for each hour worked above forty hours per week. Plaintiff contends that he and other similarly situated hourly non-exempt employees of Wild Wing Café who perform prep duties performed work for which they were not compensated. Plaintiff alleges that Defendants intentionally reduced the time reported for Defendant and other hourly employees by manually editing employee time records to reduce or remove both regular time and overtime entries, even though employees have already performed the work. Relief requested Wherefore Plaintiff requests the Court find Defendant’s have violated O.C.G.A. § 9-3-22 and grant Plaintiff recovery of wages, overtime or damages and penalties accruing under laws respecting the payment of wages and overtime. Respectfully submitted this 26th day of April 2011, _______________________________ Katrenia C. Goode, Esq. Attorney for Plaintiff- Charles Goode PLAINTIFF’S AFFIDAVIT IN SUPPORT OF A COLLECTIVE ACTION

employment & labor

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FOR THE SOUTHERN DISTRICT OF FLORIDA CLASS ACTION JURY TRIAL DEMANDED AUDRIS DE LA IGLESIA, individually and on behalf of all others similarly situated, Plaintiff, vs. RAPID MULTISERVICE & MESSENGER CORP. a Florida corporation, Defendant. ______________________________________/ CLASS ACTION COMPLAINT 1. Plaintiff, Audris De La Iglesia, brings this action against Defendant, Rapid Multiservice & Messenger Corp., 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 travel and shipping agency to Cuba. 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 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. Further, Defendant’s tortious conduct against Plaintiff occurred within the State of Florida 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 Florida. PARTIES 7. Plaintiff is a natural person who, at all times relevant to this action, was a resident of Miami-Dade County, Florida. 8. Defendant is a Florida corporation whose principal office is located at 4026 West 12 Ave, Hialeah, Florida 33012. Defendant directs, markets, and provides its business activities throughout the State of Florida. 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 October 2, 2019 and October 21, 2019, and October 30, 2019, Defendant sent the following telemarketing text messages to Plaintiff’s cellular telephone number ending in 8922 (the “8922 Number”): 24. Defendant’s text messages were transmitted to Plaintiff’s cellular telephone, and within the time frame relevant to this action. 25. Defendant’s text messages constitute telemarketing because they encouraged the future purchase or investment in property, goods, or services, i.e., selling travel tickets and shipping services. communicated in Spanish, which Defendant sends to promote its business. 27. Plaintiff received the subject texts 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. 29. Plaintiff is the subscriber and sole user of the 8922 Number, and is financially responsible for phone service to the 8922 Number. 30. Plaintiff has been registered with the national do-not-call registry since 2012. 31. 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)). 32. The text messages originated from telephone number 305-876-6106, a number which upon information and belief is owned and operated by Defendant. 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. 34. 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 are responsible for relaying those messages to the intended mobile phone. This allows for the transmission of a large number of SMS messages to and from a long code. 35. 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. 36. 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. 37. The Platform has the capacity to store telephone numbers, which capacity was in fact utilized by Defendant. 38. The Platform has the capacity to generate sequential numbers, which capacity was in fact utilized by Defendant. 39. The Platform has the capacity to dial numbers in sequential order, which capacity was in fact utilized by Defendant. 40. The Platform has the capacity to dial numbers from a list of numbers, which capacity was in fact utilized by Defendant. capacity was in fact utilized by Defendant. 42. The Platform has the capacity to schedule the time and date for future transmission of text messages, which occurs without any human involvement. 43. 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; b. The Platform then generated each number in the sequential order listed and 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. 44. 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. 45. 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. dialing of the text messages at issue was done by the Platform automatically and without any human intervention: 47. Defendant’s unsolicited text messages caused Plaintiff actual harm, including invasion 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. 48. Defendant’s unsolicited text messages caused Plaintiff actual harm. Specifically, Plaintiff estimates that he has wasted approximately ten minutes reviewing all of Defendant’s unwanted messages. Each time, Plaintiff had to stop what he was doing to either retrieve her phone and/or look down at the phone to review the message. 49. Furthermore, Defendant’s text messages 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). 50. 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). PROPOSED CLASS 51. Plaintiff brings this case as a class action pursuant to Fed. R. Civ. P. 23, on behalf of herself and all others similarly situated. 52. 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. Do Not Call Registry Class: All persons in the United States who from four years prior to the filing of this action (1) were sent a text message by or on behalf of Defendant; (2) more than one time within any 12-month period; (3) where the person’s 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 (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. 53. 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 54. 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. 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 56. 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. 57. The common questions in this case are capable of having common answers. If Plaintiff’s 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 58. 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 59. 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. 60. 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. 61. 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) 62. Plaintiff re-alleges and incorporates the foregoing allegations as if fully set forth herein. 63. 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). 64. 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. 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. 66. 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. 67. 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. 68. 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. COUNT II Knowing and/or Willful Violation of the TCPA, 47 U.S.C. § 227(b) (On Behalf of Plaintiff and the Class) 69. Plaintiff re-allege and incorporate paragraphs 1-61 as if fully set forth herein. 70. At all times relevant, Defendant knew or should have known that its conduct as alleged herein violated the TCPA. 71. 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. 72. 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. 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). COUNT III Violation of the TCPA, 47 U.S.C. § 227 (On Behalf of Plaintiff and the Do Not Call Registry Class) 74. Plaintiff repeats and realleges the paragraphs 1 through 61 of this Complaint and incorporates them by reference herein. 75. 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.” 76. 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.”1 77. 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.” 78. 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” 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. 47 U.S.C. § 227(c). 1 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 telephone solicitations to 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. 80. 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 entitled, inter alia, to receive up to $500 in damages for such violations of 47 C.F.R. § 64.1200. 81. 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 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: January 20, 2020 SHAMIS & GENTILE, P.A. /s/ Andrew J. Shamis Andrew J. Shamis, Esq. Florida Bar No. 101754 [email protected] /s/ Garrett O. Berg Garrett O. Berg, Esq. Florida Bar No. 1000427 [email protected] 14 NE 1st Avenue, Suite 1205 Miami, FL 33132 Telephone: 305-479-2299 EDELSBERG LAW, PA /s/ Scott Edelsberg Scott Edelsberg, Esq. Florida Bar No. 0100537 [email protected] 20900 NE 30th Ave, Suite 417 Aventura, FL 33180 Telephone: 305-975-3320 Counsel for Plaintiff and the Class

privacy

0O14EocBD5gMZwczq2IA

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION JOSEPH TAYLOR, ) Civil Action No. individually and on behalf of all other ) similarly situated individuals, ) ) COMPLAINT Plaintiff, ) ) (Jury Trial Demanded) v. ) ) FTS USA, LLC, and ) UNITEK USA, LLC ) Defendants. ) _______________________________) Plaintiff Joseph Taylor, both individually and on behalf of all other similarly situated individuals, by way of his Complaint in the above-captioned matter, makes the following allegations contained herein: I. NATURE OF CLAIMS 1. This action is brought individually and as a collective action for unpaid minimum wages, overtime compensation, liquidated damages, and other relief under the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq. (“FLSA”). The collective action provisions under the FLSA provide for opt-in class participation. 1 II. PARTIES, JURISDICTION, AND VENUE 2. Plaintiff Joseph Taylor is a citizen and resident of Lawrenceville, Georgia, and was employed by Defendants as a cable installation technician in Georgia from December 2013 until July 2014. Prior to that time, Plaintiff Taylor also worked for Defendants as a cable installation technician in Texas and Alabama. 3. Defendant FTS USA, LLC (“FTS”) is a limited liability company with its principal place of business in Blue Bell, Pennsylvania and doing business in numerous locations across the country, including Alabama, Texas, and Georgia, with a warehouse and office located in Chamblee, Georgia. FTS is an enterprise with over $500,000 in annual revenues. 4. Defendant Unitek USA, LLC (“Unitek”) is a limited liability company with its principal place of business in Blue Bell, Pennsylvania. Unitek owns FTS, and is an employer within the meaning of the FLSA, 29 U.S.C. § 203(d). 5. Plaintiff brings this action individually and as an opt-in, collective action pursuant to 29 U.S.C. § 216(b), on behalf of a class of all employees who worked as cable installation technicians at any of Defendants’ locations in the southeastern United States at any time within the three years prior to joining this lawsuit. 2 6. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331, as this action is brought under 29 U.S.C. § 216(b). 7. Venue is proper in this Court pursuant to 28 U.S.C. § 1391 and Local Rule 3.1(B), N.D. Ga., because Defendants operate within this judicial district and division, and the unlawful labor practices giving rise to Plaintiffs’ claims were committed, at least in part, within this district and division. III. COLLECTIVE ACTION ALLEGATIONS 8. Plaintiff brings this action on behalf of himself and all other similarly situated employees of Defendants. Plaintiff’s written consent form is attached hereto as Exhibit A. 9. Plaintiff and those similarly situated were employed by Defendants to perform cable television installation and repair services. 10. Plaintiff and those similarly situated were paid a piece rate wage for each job performed. 11. Plaintiff and those similarly situated routinely worked six or seven days per week, often over 60 hours per week. 12. For example, Plaintiff Taylor worked over 70 hours per week for several weeks in December 2013, when he first began work as a technician out of 3 Defendants’ Chamblee warehouse. 13. Defendants knew that Plaintiff and similarly situated technicians performed work beyond forty hours per week that required overtime pay, but failed to compensate Plaintiff and other employees for all of this work. 14. For example, Defendants’ managers and supervisors implemented a company-wide policy by which they instructed Plaintiff and all similarly situated technicians not to record all of their work hours, with the promise that they would receive more lucrative assignments in the future if they did not record all of their time. In doing so, Defendants failed to accurately record all overtime hours worked by Plaintiff and similarly situated technicians, and failed to pay all overtime and minimum wages due under the Fair Labor Standards Act. COUNT I (Fair Labor Standards Act–Failure to Pay Minimum Wage) (Individual and Collective Action) 15. Plaintiff repeats and realleges each and every allegation of Paragraphs 1-13 as if restated herein verbatim. 16. Defendants FTS and Unitek are “employers” for purposes of the Fair Labor Standards Act, 29 U.S.C. § 203(s). 4 17. Plaintiff and the members of the Plaintiff class are covered employees under the FLSA because they were involved in interstate commerce on a regular basis during their employment with Defendants. 18. Plaintiff and the members of the Plaintiff class were employees of Defendants for purposes of the Fair Labor Standards Act during all times relevant to this Complaint. 19. Defendants failed to pay Plaintiff and the members of the Plaintiff class an hourly rate of at least the minimum wage of $7.25 per hour for each and every hour worked, as required by Section 6(a)(1)(C) of the FLSA, 29 U.S.C. § 206(a)(1)(C). 20. The failure of Defendants to compensate Plaintiff and the members of the Plaintiff class at least minimum wage was knowing, willful, intentional, and done in bad faith. 21. Plaintiff and the members of the Plaintiff class are also entitled to liquidated damages equal to the amount of unpaid minimum wages due to them under the FLSA, pursuant to section 16(b) of the FLSA, 29 U.S.C. § 216(b). 22. The work and pay records of Plaintiff and the members of the Plaintiff class are in the possession, custody, and/or control of Defendants, and Defendants 5 are under a duty pursuant to section 11(c) of the FLSA, 29 U.S.C. § 211(c), and pursuant to the regulations of the United States Department of Labor to maintain and preserve such payroll and other employment records from which the amount of Defendants’ liability can be ascertained. Plaintiff and the members of the Plaintiff class request an order of this Court requiring Defendants to preserve such records during the pendency of this action. 23. Plaintiff and those similarly situated are also entitled to an award of reasonable attorneys’ fees and costs incurred in prosecuting this action, pursuant to 29 U.S.C. § 216(b). COUNT II (Fair Labor Standards Act–Failure to Pay Overtime Wages) (Individual and Collective Action) 24. Plaintiff repeats and realleges each and every allegation of Paragraphs 1-22 as if restated herein verbatim. 25. Plaintiff and the members of the Plaintiff class routinely worked in excess of forty (40) hours per workweek for Defendants. 26. Defendants FTS and Unitek failed to pay Plaintiff and the members of the Plaintiff class at the rate of one-and-a-half times their regular rate of pay for all 6 hours worked in excess of forty hours weekly as required by section 7(a) of the FLSA, 29 U.S.C. § 207(a). 27. Plaintiff and the members of the Plaintiff class are entitled to back wages at the rate of one-and-a-half times their regular rate of pay for all overtime hours worked in excess of forty hours per week, pursuant to section 16(b) of the FLSA, 29 U.S.C. § 216(b). 28. The failure of Defendants to compensate Plaintiff and the members of the Plaintiff class for overtime work as required by the FLSA was knowing, willful, intentional, and done in bad faith. 29. Plaintiff and the members of the Plaintiff class are also entitled to liquidated damages equal to the amount of unpaid overtime compensation due to them under the FLSA, pursuant to section 16(b) of the FLSA, 29 U.S.C. § 216(b). 30. Plaintiff and those similarly situated are also entitled to an award of reasonable attorneys’ fees and costs incurred in prosecuting this action, pursuant to 29 U.S.C. § 216(b). 7 WHEREFORE, having fully set forth their allegations against Defendants, Plaintiff respectfully requests that the Court enter judgment for the following relief: a. An order authorizing the sending of appropriate notice to current and former employees of Defendants who are potential members of the collective action under the Fair Labor Standards Act; b. A declaratory judgment that Defendants have willfully and in bad faith violated the minimum wage and overtime compensation provisions of the FLSA, and have deprived Plaintiff and the members of the Plaintiff class of their rights to such compensation; c. An order requiring Defendants to provide a complete and accurate accounting of all the minimum wages and overtime compensation to which Plaintiff and the members of the Plaintiff class are entitled; d. An award of monetary damages to Plaintiff and the members of the Plaintiff class in the form of back pay for unpaid minimum wages and overtime compensation due, together with liquidated damages in an equal amount; e. An award of monetary damages to Plaintiff and the members of the Plaintiff class for any and all unlawful kick-backs paid to Defendants, 8 together with liquidated damages in an equal amount; f. Injunctive relief ordering Defendants to amend their wage and hour policies to comply with applicable laws; g. Pre-judgment interest; h. Attorneys’ fees and costs; and i. Such further relief as the Court deems just and proper. Respectfully submitted, s/ John L. Mays John L. Mays Georgia Bar No. 986574 MAYS & KERR, LLC 235 Peachtree Street NE 202 North Tower Atlanta, Georgia 30303 (404) 410-7998 (office) (404) 855-0820 (facsimile) [email protected] Harold Lichten, Pro Hac Vice Forthcoming Matthew Thomson, Pro Hac Vice Forthcoming LICHTEN & LISS-RIORDAN, P.C. 729 Boylston St., Suite 2000 Boston, MA 02116 (617) 994-5800 (office) 9 (617) 994-5801 (facsimile) [email protected] [email protected] Attorneys for Plaintiff December 23, 2015 10

employment & labor

9c2CDocBD5gMZwczyn1I

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION JUAN CRENA, CASE NO. Plaintiff, CLASS ACTION JURY TRIAL DEMANDED NAVITELIA INDUSTRIES, INC., d/b/a OXYBREATH PRO, and d/b/a DRESIDE, Defendant. ___________________________________/ CLASS ACTION COMPLAINT Plaintiff Juan Crena (“Crena”), individually and on behalf of all others similarly situated, by and through his attorneys, sues Defendant Navitelia Industries, Inc., d/b/a OxyBreath Pro and d/b/a Dreside (“Navitelia”), for damages and equitable relief and, in support thereof, alleges the following: INTRODUCTION Wis is a class action lawsuit for violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”). Navitelia, who appears to sell exclusively protective equipment necessary during the COVID-19 pandemic, illegally sent countless unsolicited, automated messages to Crena and other similarly situated putative class members, in violation of the TCPA. PARTIES 1. Plaintiff is an individual who resides in Broward County, Florida. 2. Defendant is a corporation that is incorporated in Florida and has its principal place of business in Miami-Dade County, Florida. Upon information and belief, Navitelia does business worldwide through its online stores at oxybreath.club and dreside.com. Navitelia has two physical locations in Florida: an office at 601 NE 36th St, Apt 1505, Miami, FL 33137 and a warehouse at an unspecified address in Homestead, Florida.1 JURISDICTION AND VENUE 3. Wis is a class action lawsuit for damages within the jurisdiction of this Court. 4. Wis Court has federal question jurisdiction over this action pursuant to 28 U.S.C. § 1331, in that this is a civil action arising under the TCPA, 47 U.S.C. § 227. 5. Wis Court also has jurisdiction because at least one class member is from a state different from Defendant and Plaintiff is seeking up to $1,500 per violation of the TCPA, which, when aggregated among the thousands of proposed class members, exceeds the $5,000,000 threshold for jurisdiction under the Class Action Fairness Act.2 6. Venue is proper in this district under 28 U.S.C. § 1391(b)(1), in that Defendant resides in this district. Additionally, venue is proper in this district under 28 U.S.C. § 1391(b)(2), in that a substantial part of the events or omissions giving rise to the claim occurred in this district. Moreover, Defendant’s wrongful acts have impacted the general public of this district, and the ends of justice require that parties residing in other districts be brought before this Court. FACTUAL ALLEGATIONS APPLICABLE TO ALL COUNTS Overview of the TCPA 7. In 1991, faced with nationwide complaints over the volume of robocalls being received by American consumers, Congress enacted the TCPA to address the companies’ abusive solicitation through automated calling. 1 See https://dreside.com/pages/contact-us (last visited 07/02/2020). 2 In fact, Navitelia’s website states it has reached over 50,000 “Happy Clients,” making the class potentially that large. 8. We TCPA prohibits, among other things, making any call to a cellphone using an “automatic telephone dialing system” (“ATDS” or “Autodialer”), unless it is made for emergency purposes or with the express consent of the party called. 9. We TCPA defines an Autodialer as any “equipment which 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). 10. According to the Federal Communications Commission (“FCC”), which is charged with implementing the Act, these calls are prohibited because they can be costly and inconvenient. 11. We FCC has recognized that “Robotexts” generated through an ATDS are also prohibited under the TCPA. 12. Any equipment that has the capacity to “store or produce telephone numbers to be called, using a random or sequential number generator,” satisfies the definition of an ATDS, even if that capacity is not used. 13. Under the TCPA and implementing regulations, the burden is on defendants like Navitelia to demonstrate that Crena and the putative class of plaintiffs provided express consent within the meaning of the statute. 0e Plaintiff and Navitelia’s Texts 14. At all relevant times, Crena was the owner of cellular phone number 1-xxx-xxx- 0376 (the “0376 Number”). 15. On or before April 15, 2020, Navitelia sent at least two but not more than five unsolicited text messages to the 0376 Number regarding its products. 16. Prior to Navitelia sending Crena unsolicited text messages about its products, Crena had never reached out to Navitelia for information, given out his phone number to it, asked about its products, done business with it, or otherwise had known about Navitelia. 17. On April 15, 2020, Navitelia sent an unsolicited text message to the 0376 Number regarding its products. See Image 1. 18. On April 19, 2020, Navitelia sent an unsolicited text message to the 0376 Number regarding its products. See Image 2. Image 1 Image 2 19. On April 20, 2020, Navitelia sent an unsolicited text message to the 0376 Number regarding its products, to which Crena replied “Stop.” See Image 3. 20. On May 21, 2020, Navitelia sent an unsolicited text message to the 0376 Number regarding its products, to which Crena again replied “Stop.” See Image 4. Image 3 Image 4 21. When Crena replied “stop,” Crena explicitly conveyed to Navitelia that he did not wish to be subscribed to or receive its automatic text messages. 22. On May 21, 2020, Navitelia sent a text message to Crena stating that he had “successfully unsubscribed and [would] no longer receive any text messages.” See Image 5. 23. Notwithstanding this “un-subscription,” on May 24, 2020, Navitelia sent another text message to the 0376 Number at 02:07 AM, which woke Crena up, promoting its “stay safe” products, such as washable masks and gloves. See Image 6. Image 5 Image 6 24. On May 28, 2020, Navitelia also sent an email to Crena advertising its products. On information and belief, Navitelia emailed Crena several other times. 25. On June 4, 2020, Navitelia sent Crena another text message to the 0376 Number, promoting its N-95 and KN-95 masks, 3-ply cotton masks, and hand sanitizer. See Image 7. Image 7 Image 8 26. On June 10, 2020, Navitelia again sent another text message to the 0376 Number, identical to the June 4, 2020 one. See Image 8, above. 27. On June 13, 2020, Navitelia sent another text message to the 0376 Number, which included a “coupon” to save 10% on its COVID-19 related products. See Image 9. 28. On June 15, 2020, Navitelia again sent the text message promoting its 10% savings coupon to the 0376 Number. See Image 10. Image 9 Image 10 29. In a two-month span, beginning in mid-April up until mid-June 2020, Navitelia has contacted and solicited business from Crena more than a dozen times. Navitelia’s relentless texts to Crena, without his authorization, invaded Crena’s privacy and were an intense interference with his life and business. 30. Specifically, Crena is a real estate professional and the constant unsolicited texts from Navitelia distract him from the analysis he does of his client’s properties. Further, the random non-stop texts distract him during showings and calls with his clients and other agents. 31. All of Navitelia’s text messages were sent to Crena within the timeframe relevant to this class action. 32. Navitelia’s text messages constitute telemarketing because they encourage the future purchase of or investment in property, goods, or services. 33. Navitelia and its agents sent the Robotexts from different phone numbers using a random number generator. We numbers used by Navitelia include but are not limited to 202-547- 1491, 786-756-7420, 786-699-8274, 786-699-8939, 786-755-0582, 786-757-0595, and the short code number 82149. All of these numbers are controlled or owned by Navitelia or its agents. 34. On information and belief, Navitelia contacts consumers in association with a text marketing company, which acts as an agent of Navitelia. In association and coordination with the text marketing company, Navitelia uses an automated random number generating system in order to text consumers from hundreds, if not thousands, of phone numbers. Wis is a common practice used by TCPA violators to circumvent the fact that, as consumers receive the unsolicited marketing texts, consumers tend to block the number from where the text came from. By having these texts always come from a different phone number, Navitelia and its agents ensure that the texts land in the consumer’s cell phone, thereby invading their privacy. 35. We impersonal and generic nature of Navitelia’s text messages also reflect that they were sent via an ATDS. In fact, when looking at some of the texts received by Crena, one can see that several of them are identical to each other. 36. Further, a look at the texts reflects that they are not written in natural language or in a way people usually write, but rather that they are machine-created. 37. On information and belief, the platform used by Navitelia has the capacity to generate or store random or sequential numbers or to dial sequentially or randomly at the time the text is sent, and to send them en masse, in an automated basis, without human intervention. 38. Additionally, none of the phone numbers from which Crena received texts are the contact numbers for Navitelia in its websites, further supporting the use of an ATDS. 39. Moreover, Navitelia’s messages contained direct links to unsecure websites that jeopardized consumers’ personal information, making them vulnerable to hackers. See Image 11. Image 11 40. Similar or identical text message advertisements were sent to thousands of putative class members’ cell phones. 41. Because the putative class members’ cellphones alert them whenever they receive a text message, each unsolicited text message transmitted by Navitelia invaded their privacy and, upon receipt, intruded upon their seclusion. 42. None of the recipients of the messages gave their prior express consent permitting Navitelia to send such text messages to them. In fact, Crena specifically replied at least two times saying that he did not wish to receive these text messages (see Images 3 and 4, above). Despite this request, Navitelia continued to send unsolicited messages to Crena in violation of the TCPA. 43. Moreover, even before Crena’s replies “unsubscribing” from Navitelia’s messages, Navitelia should have been on notice that Crena did not want to receive them, as he had the 0376 Number registered in the National Do Not Call List. 44. We unsolicited text messages sent to thousands of putative class members caused each class member damages, including the costs associated with loss of use of their cellular phones, interruption of other usage of their cellular phones, nuisance, annoyance, invasion of privacy, lack of sleep, mental anguish, other suffering, and/or additional costs incurred when the number of texts in a given month exceeded his/her cell phone data plan. CLASS ACTION ALLEGATIONS 45. Plaintiff re-alleges and incorporates by reference all the allegations contained in paragraphs 1 through 44. 46. Plaintiff brings this class action on behalf of himself and others similarly situated pursuant to Fed. R. Civ. P. 23(b)(2) and (3). 47. Plaintiff seeks certification of the following Class: All persons in the United States who, between July 2, 2016, and the present, (1) received a non-emergency text in their cellular phones, (2) through the use of an ATDS, (3) from Navitelia, (4) regarding the future purchase of goods. We Class definition is subject to amendment as needed. 48. Excluded from the Class are Navitelia, its respective affiliates, subsidiaries, agents, board members, directors, officers, employees, any members of the judiciary to whom this case is assigned, their court staff, and Plaintiff’s counsel. Numerosity 49. Wis class action satisfies the numerosity requirement of Fed. R. Civ. P. 23(a)(1). We Class defined in this Class Action Complaint is sufficiently numerous that separate joinder of each member is impracticable as the Class will include thousands of members. Wough Plaintiff does not know at the time of filing the exact number of putative class members, Navitelia claims to have reached over 50,000 customers, and thus the Class will likely be in the thousands. Commonality and Predominance 50. Wis class action satisfies the commonality requirement of Fed. R. Civ. P. 23(a)(2), and the predominance requirement of Fed. R. Civ. P. 23(b)(3), as the claims raise questions of law and fact common to each member of the Class and such questions predominate over questions affecting only individual members. Wese include, without limitation, the following: (a) whether Navitelia used an ATDS; (b) whether Navitelia used its ATDS to text consumer class members; (c) whether Navitelia’s texts were sent due to an emergency; (d) whether Navitelia obtained express consent from the class members before messaging them; (e) whether Navitelia’s conduct violates the TCPA; (f) whether Navitelia’s conduct was negligent; (g) whether Navitelia’s conduct was knowing and/or willful; (h) whether Navitelia is liable for damages and the amount of said damages; (i) whether Plaintiff and the other class members are entitled to declaratory relief; and (j) whether Navitelia should be enjoined from engaging in such conduct in the future. Typicality 51. Wis class action satisfies the typicality requirement of Fed. R. Civ. P. 23(a)(3), as the claims made by Plaintiff are similar to those of the other class members. For example, most putative class members received the same type of non-emergency soliciting text messages and the texts were sent to them using an ATDS. Adequacy 52. Wis class action satisfies the adequacy requirement of Fed. R. Civ. P. 23(a)(4) because Crena will fairly and adequately protect and represent the interests of each class member, since he has suffered the same wrongs as the other class members. 53. Further, Crena is well aware of his responsibilities as class representative and has retained Ayala Law, P.A., Garcia-Menocal, Irias & Pastori LLP, and Fulgencio Law PLLC as counsel, all of whom are experienced in complex litigation and have the necessary resources to meet the costs and requirements of a case of this nature. Superiority 54. Wis class action satisfies the superiority requirement 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 for a variety of reasons, including, without limitation, that it would be an inefficient use of judicial resources to require each putative class member affected by Navitelia’s actions to bring their own claim. Moreover, the case deals with common issues of law that may be adjudicated uniformly in one single action without the unnecessary duplication of evidence, effort, and expense that numerous individual actions would require. Class action under Fed. R. Civ. P. 23(b)(2) 55. We prerequisites for maintaining a class action under Fed. R. Civ. P. 23(b)(2) also exist because by ignoring consumers’ requests to stop text messages, Navitelia has acted or refused to act on grounds that apply to the entire class, making injunctive and equitable relief appropriate. 56. Specifically, Plaintiff seeks an order declaring that Navitelia’s text marketing tactics are in violation of the TCPA. Plaintiff also requests an injunction against Navitelia, preventing it from further taking advantage of unsuspecting class members, using the COVID-19 crisis as an opportunistic excuse to text them unsolicited. COUNT I – VIOLATION OF THE TCPA 47 U.S.C. § 227 et seq. 57. Plaintiff incorporates paragraphs 1 through 56 fully in this Count. 58. Plaintiff and each member of the Class received more than one text message sent by or on behalf of Navitelia during the class period. Additionally, all such messages were sent via the same dialing technology, which qualifies as an ATDS within the meaning of the TCPA, as evidenced by the generic, impersonal nature of the text messages, the use of different phone numbers that are not the regular numbers of Navitelia, the repetitive nature of the texts, and the persistence of the texts even after “unsubscribing.” 59. Neither Plaintiff nor any other class member provided his/her phone number to Navitelia. 60. Neither Plaintiff nor any other class member provided Navitelia with his/her prior express consent, within the meaning of the TCPA, to receive the autodialed text messages. 61. Navitelia’s use of an ATDS to send text messages to telephone numbers, including Crena’s 0376 Number and the numbers of all members of the Class, without their requisite prior express consent, constitute violations of the TCPA by Navitelia, including but not limited to violations of 47 U.S.C. § 227(b)(1)(A)(iii). 62. Navitelia’s use of an ATDS to send text messages to the telephone numbers of class members registered on the National Do Not Call List constitute a willful and knowing violation of the TCPA as described in 47 U.S.C. § 227(b)(3)(C). 63. Navitelia’s use of an ATDS to send text messages to the telephone numbers of class members, even after they “unsubscribed” to marketing texts they never consented to, constitutes a willful and knowing violation of the TCPA as described in 47 U.S.C. § 227(b)(3)(C). 64. Plaintiff and all class members are entitled to, and do seek, an award of $500 in statutory damages for each such violation of the TCPA committed by or on behalf of Defendant (or $1,500 for any such violation committed willfully or knowingly). 65. Plaintiff, individually and on behalf of the Class, seeks an award of attorneys’ fees and costs to Plaintiff’s counsel pursuant to Fed. R. Civ. P. 23. WHEREFORE, Plaintiff Juan Crena respectfully requests a judgment in his favor and the Class as follows: (a) injunctive relief sufficient to ensure Navitelia refrains from violating the TCPA in the future; (b) statutory damages of $500 for Plaintiff and each putative class member for each of Navitelia’s violations of 47 U.S.C. § 227(b) (or $1,500 for each such violation to the extent it was committed willfully or knowingly); (c) an order certifying this action to be a class action pursuant to Fed. R. Civ. P. 23, establishing an appropriate class and any subclass(es) this Court deems appropriate, finding that Plaintiff is a proper representative of the Class, and appointing the attorneys representing Plaintiff as counsel for the Class; and (d) an award of attorneys’ fees and costs to Plaintiff’s counsel, payable from any class- wide damages recovered by the Class, pursuant to Fed. R. Civ. P. 23. DEMAND FOR JURY TRIAL Plaintiff demands a trial by jury on all claims so triable pursuant to Fed. R. Civ. P. 38(b). Dated: July 2, 2020 Respectfully submitted, Eduardo A. Maura, Esq. Luis F. Quesada Machado, Esq. Attorneys for Plaintiff Ayala Law, P.A. 1390 Brickell Ave, Ste 335 Miami, FL 33131 Telephone: 305-570-2208 Email: [email protected] By: /s/ Eduardo A. Maura Eduardo A. Maura Florida Bar No. 91303 Jorge Garcia-Menocal, Esq. Attorney for Plaintiff Garcia Menocal, Pastori & Irias LLP 368 Minorca Ave Coral Gables, FL 33134 Telephone: 305-400-9652 Email: [email protected] By: /s/ Jorge G. Menocal Jorge G. Menocal Florida Bar No. 17990 Felipe Fulgencio, Esq. Attorney for Plaintiff Fulgencio Law PLLC 105 S Edison Ave, Tampa, FL 33636 Telephone: 813-463-0123 Email: [email protected] By: /s/ Felipe Fulgencio Felipe Fulgencio Florida Bar No. 95961

privacy

18IXDYcBD5gMZwcz4A53

IN THE UNITED STATES DISTRACTION FOR THE SOUTHERN DISTRICTOF NEW YORK Plaintiffs, Civ. Action No. CLASS & COLLECTIVE OCT 15 2011 ACTION COMPLAINT U.S.D.C.S.D. CASHIERS N.Y. Defendants. NATURE OF THE ACTION 1. Plaintiffs DONY LIMARVIN ("Limarvin") and DARWIN LIBERTTO 2. Plaintiffs further complain, on behalf of themselves, each opt-in plaintiff, and a 1 JURISDICTION AND VENUE 3. This Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. 4. Venue is proper in this district pursuant to 28 U.S.C. § 1391. 5. This Court is empowered to issue a declaratory judgment pursuant to 28 U.S.C. THE PARTIES 6. Limarvin was, at all relevant times, an adult individual residing in Queens 7. Libertto was, at all relevant times, an adult individual residing in Westchester 8. Upon information and belief, Defendant Edo Restaurant Corporation is an active 2 9. Upon information and belief, Defendant Shodan Inc. is an active New York 10. Upon information and belief, Defendant Higuchi has been, at all material times COLLECTIVE ACTION ALLEGATIONS 11. Pursuant to 29 U.S.C. § 207, Plaintiffs seek to prosecute their FLSA claims as a 12. The Collective Action Members are so numerous that joinder of all members is 3 13. Plaintiffs will fairly and adequately protect the interests of the Collective Action 14. A collective action is superior to other available methods for the fair and efficient 15. Questions of law and fact common to the members of the collective action a. whether Defendants employed Plaintiffs and the Collective Action Members within the meaning of the FLSA; b. whether Defendants failed to keep true and accurate time records for all hours worked by Plaintiffs and the Collective Action Members; c. what proof of hours worked is sufficient where the employer fails in its duty to maintain time records; 4d. whether Defendants failed to post or keep posted a notice explaining the minimum wages and overtime pay rights provided by the FLSA in any area where Plaintiffs were employed, in violation of 29 C.F.R. § 516.4; e. whether Defendants failed to pay Plaintiffs and the Collective Action Members compensation for hours worked in excess of forty hours per workweek, in violation of the FLSA and the regulations promulgated thereunder; f. whether Defendants' violations of the FLSA are willful as that term is used within the context of the FLSA; and g. whether Defendants are liable for all damages claimed hereunder, including but not limited to compensatory, punitive and statutory damages, interest, costs and disbursements and attorneys' fees. CLASS ALLEGATIONS 16. Pursuant to the NYLL, Plaintiffs sue on their own behalf, and on behalf of a class 17. Plaintiffs seek to prosecute their NYLL claims as a class action on behalf of all 5 18. The Class Members are so numerous that joinder of all members is impracticable. 19. Plaintiffs' claims are typical of the claims of the Class, and a class action is 20. As stated above, questions of law and fact common to the Class Members 21. Plaintiffs are committed to pursuing this action and have retained competent 6 22. Plaintiffs understand that in order to provide adequate representation, they must 23. A class action is superior to other available methods for the fair and efficient 24. There are questions of law and fact common to the Class which predominate over a. whether Defendants employed Plaintiffs and the Class Members within the meaning of the NYLL; b. whether Defendants failed to keep true and accurate time records for all hours worked by Plaintiffs and the Class Members; C. what proof of hours worked is sufficient where employers fail in their duty to maintain time records; 7d. whether Defendants failed and/or refused to pay Plaintiffs and the Class Members premium pay for hours worked in excess of forty (40) hours per workweek; e. whether Defendants are liable for all damages claimed hereunder. including but not limited to compensatory damages, liquidated damages, interest, costs and disbursements and attorneys' fees; and f. whether Defendants failed to pay Plaintiffs and the Class Members an additional hour of pay for each hour worked in excess of ten (10) hours in one day and an additional hour of pay for each split shift worked in a day. STATEMENT OF FACTS 25. At all relevant times, Defendants have been in the restaurant business. 26. Defendants employ at least sixty (60) employees at any one time in their 27. Limarvin worked for Defendants from approximately April 2004 through 28. Throughout the Limarvin Employment Period, Limarvin typically worked five (5) 29. Throughout the Limarvin Employment Period, Limarvin and the other hibachi 8 30. Throughout the Limarvin Employment Period, Limarvin was paid a daily rate of 31. Throughout the Limarvin Employment Period, Limarvin was paid his wages 32. Libertto worked for Plaintiffs from approximately May 2001 through December 9 33. Throughout the Libretto Employment Period, Libretto was required to be in 34. Throughout the Libertto Employment Period, Libertto was paid partly by check 35. Beginning in approximately 2004, after an investigation by the New York State 36. Defendants established a tip pooling system for restaurant staff. Three percent of 1037. Plaintiffs' work was performed in the normal course of Defendants' business and 38. The work performed by Plaintiffs required little skill and no capital investment. 39. Throughout the Class Period and, upon information and belief, continuing until 40. Upon information and belief, Defendants have willfully failed to pay these 41. As stated, the exact number of such similarly situated individuals is presently 42. Upon information and belief, throughout all relevant time periods and during the FIRST CLAIM FOR RELIEF FAIR LABOR STANDARDSACT 43. Plaintiffs repeat and reallege each and every allegation of the preceding 11 44. At all relevant times Defendants have been and continue to be an employer 45. At all relevant times, Defendants employed, and/or continue to employ, Plaintiffs 46. Upon information and belief, at all relevant times, the Corporate Defendants have 47. Plaintiffs have provided their consent in writing to be parties to this action, 48. At all relevant times, Defendants had a policy and practice of refusing to pay their 49. As a result of Defendants' willful failure to compensate its employees, including 50. As a result of the Defendants' failure to record, report, credit and/or compensate 12 51. The foregoing conduct, as alleged, constitutes a willful violation of the FLSA 52. Due to Defendants FLSA violations, Plaintiffs and the Collective Action SECOND CLAIM FOR RELIEF NEW YORK LABOR LAW - FAILURE TO PAY OVERTIME AND SPREAD-OF-HOURS PAYMENTS 53. Plaintiffs, on behalf of themselves, the opt-in Plaintiffs and the members of the 54. At all relevant times, Plaintiffs and the Class Members were employed by 55. Defendants willfully violated Plaintiffs' rights and the Class Members' rights by 56. The Defendants' NYLL violations have caused Plaintiff and the Class Members 57. Due to Defendants' NYLL violations, Plaintiffs and the Class Members are 13THIRD CLAIM FOR RELIEF NEW YORK LABOR LAW - UNLAWFUL GRATUITY PRACTICES 58. Plaintiffs, on behalf of themselves, the opt-in Plaintiffs and the members of the 59. Upon information and belief, Defendants have failed to compensate Plaintiffs and PRAYER FOR RELIEF Wherefore, Plaintiffs on behalf of themselves and all other similarly situated Collective a. Designation of this action as a collective action on behalf of the Collective Action Members and ordering the prompt issuance of notice pursuant to 29 U.S.C. § 216(b) to all similarly situated members of an FLSA Opt-In Class, 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 Plaintiffs and their counsel to represent the Collective Action Members; 14 b. Certification of this action as a class action pursuant to Fed. R. Civ. P. 23(a), (b)(2) and (b)(3) on behalf of the Class Members and appointing Plaintiffs and their counsel to represent the Class; c. An order tolling the statute of limitations; d. A declaratory judgment that the practices complained of herein are unlawful under the FLSA and the NYLL; e. An injunction against Defendants and its officers, agents, successors, employees, representatives and any and all persons acting in concert with Defendants, as provided by law, from engaging in each of the unlawful practices, policies and patterns set forth herein; f. An award of damages arising out of the non-payment of minimum wages; g. An award of damages arising out of the non-payment of wages; h. An award of liquidated and/or punitive damages as a result of the Defendants' willful failure to pay minimum wages and overtime compensation pursuant to the FLSA and the NYLL; i. An award of damages for the non-payment of spread-of-hour pay for each split shift and/or shift in excess of ten hours worked; j. An award of prejudgment and post-judgment interest; k. An award of costs and expenses of this action together with reasonable attorneys' and expert fees; and 1. Such other and further relief as this Court deems just and proper. Dated: New York, New York October 18, 2011 PELTON & ASSOCIATES PC 15 By: Bn E for Brent E. Pelton (BP 1055) Attorney for Plaintiff, Individually, and on Behalf of All Other Persons Similarly Situated 111 Broadway, Suite 901 New York, New York 10006 Telephone: (212) 385-9700 Facsimile: (212) 385-0800 16 CONSENT TO BECOME PARTY PLAINTIFF 10/6/11 Dony Limeevin Signature Date Printed NameCONSENT TO BECOME PARTY PLAINTIFF 3 10/12/2011 Darwin Libertho Signature Date Printed Name

employment & labor

wv6XFIcBD5gMZwczD2xv

LAW OFFICES OF MITCHELL S. SEGAL P.C. Mitchell Segal, Esq. Law Offices of Mitchell Segal, P.C. 1010 Northern Boulevard Suite 208 Great Neck, New York 11021 Ph. (516) 415-0100 Fx. (516) 706-6631 Attorneys for Plaintiff and the Class UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK _____________________________________________ KENNETH T. CHAVEZ, on behalf of himself and all others similarly situated, Case No.: Plaintiff, CLASS ACTION COMPLAINT -against- 7BE LLC d/b/a BROOKLYN HOUSE, Defendant. ______________________________________________ COMPLAINT Plaintiff, KENNETH T. CHAVEZ (hereinafter “Plaintiff”), on behalf of himself and all others similarly situated, by their attorney, the Law Offices of Mitchell S. Segal, P.C., hereby files this Class Action Complaint against the Defendant 7BE LLC d/b/a BROOKLYN HOUSE (hereinafter each individually “Defendant”) and state as follows: INTRODUCTION 1. This class action seeks retribution for the Defendant’s actions against the Plaintiff and other individuals who suffer what constitutes a “qualified disability” under the American with Disabilities Act of 1990. The Plaintiff is uniped and an amputee and uses a wheelchair for mobility. The Defendant owns and/or operates and/or maintains and/or manages the 7BE LLC d/b/a BROOKLYN HOUSE, located at 9 Beaver Street, Brooklyn, NY 11206 (the “Hotel”) along with its website located at the domain of www.bklynhousehotel.com (the “Website”). The Website describes the hotel in detail providing information about the hotel, rooms and local attractions including pictures allows an individual to make reservations through its Website and provides information regarding guestrooms and amenities. Other websites operated by third parties also allow individuals to use a reservation system to reserve rooms at the Hotel (the Website and these third-party websites shall be referred to as the “Websites”). 2. Pursuant to the American with Disabilities Act (the “ADA”) Defendant, as hotel owner and operator was required to update and modify its reservation systems, including its online reservation systems in order to (a) identify and describe disabled accessible features of the Hotel in detail; (b) identify and describe disabled accessible features of ADA compliant guest rooms in detail; (c) permit disabled individuals to independently assess whether the Hotel and its available guestrooms meet their individual accessibility needs (by describing accessible features or the lack thereof); and (d) allow reservations to be taken for accessible guestrooms in the same manner as for non- accessible guestrooms pursuant to 28 C.F.R. § 36.302 (e)(1) . The Defendant has not complied and discriminate against the Plaintiff and other disabled individuals in violation of the rights granted under the ADA. JURISDICTION AND VENUE 3. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §1331 and 42 U.S.C. § 12181 for Plaintiff’s claims which arise under Title III of the Americans with Disabilities Act, 42 U.S.C. § 12181, et seq., and 28 U.S.C. § 1332 because this is a class action defined by 28 U.S.C. § 1332(d)(1)(b), in which a member of the presumed Class is a citizen of a different state of Defendant and the amount in controversy exceeds the sum or value of $ 5,000,000, excluding interests and costs. 28 U.S.C. § 1332 (d)(2). 4. This Court has supplemental jurisdiction pursuant to 28 U.S.C. § 1367 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. (“NYCHRL”). 5. Venue is proper in the Eastern District of New York pursuant to 28 U.S.C. §§ 1391 (b)-(c) and 1441(a). 6. The Court has personal jurisdiction over the Defendant in this action. Defendant transacts substantial business in this District through its Hotel, located in this District. 7. Venue lies in this District pursuant to 28 U.S.C. §1391(a)(2), because a substantial part of the actions and/or omissions giving rise to the Plaintiff’s claims occurred in this District. Defendant has been and is continuing to commit the alleged acts and/or omissions in the Eastern District of New York that caused injury and violated the Plaintiff’s rights and the rights of other disabled individuals. 8. This honorable Court has the authority to issue a declaratory judgment under 28 U.S.C. §§ 2201 and 2202. PARTIES 9. The Plaintiff, KENNETH T. CHAVEZ, was and is over the age of 18 years and is a resident of New York County, New York. 10. Plaintiff has at all herein suffered from a “qualified disability” as defined in the ADA under 42 U.S.C. § 12102(1)-(2), 28 CFR §§ 36.105, the New York State Human Rights Law and the New York City Human Rights Law. Plaintiff is uniped and an amputee, and must use a wheelchair or other motorized mobility device. 11. The Defendant 7BE LLC, is a Domestic Limited Liability Company organized under the laws of the State of New York having an address at 45 North Station Plaza, #315, Great Neck, New York 11021 and is authorized to conduct business in New York. The Defendant owns and/or manages and/or operates and or otherwise controls BROOKLYN HOUSE HOTEL and its Website. 12. The Defendant owns, manages controls and maintains the website with the domain name of www.bklynhousehotel.com which is used in conjunction with its hotel, BROOKLYN HOUSE HOTEL. 13. The purpose of the ADA is to provide laws, standards and regulations which can provide national guidelines in order to eliminate discrimination against individuals with disabilities. Pursuant to 42 U.S.C. §12134(a), the Department of Justice, Office of the Attorney General (“DOJ”), published revised regulations for Title III of the Americans With Disabilities Act of 1990 requiring, among other things, that public accommodations, including places of lodging, conform to these revised regulations on or before March 15, 2012. Defendant’s hotel is a place of public accommodation that is required to conform to these regulations. 14. A website is a place of accommodation defined as “places of exhibition and entertainment,” places of recreation,” and “service establishments.” 28 C.F.R. § 36.201 (a); 42 U.S.C. § 12181 (7). 15. The Plaintiff seeks injunctive and declaratory relief requiring the Defendant to correct the barriers which prevent access for the disabled. CLASS ACTION ALLEGATIONS 16. Plaintiff, for himself and on behalf of others similarly situated, seeks class action certification pursuant to the Federal Rules of Civil Procedure Rule 23(a) and 23 (b)(2) of all disabled individuals in the United States that are unable to walk as a result of their disability and, as a consequence, must use a wheelchair or other motorized mobility device and who have been denied equal access to goods and services of the Defendant’s Hotel, Website and the Websites. 17. Plaintiff, on behalf of himself and on behalf of all others similarly situated, seeks to certify a New York State subclass under Federal Rules of Civil Procedure Rule 23(a) and 23 (b)(2) of all disabled individuals in State of New York who are unable to walk as a result of their disability and, as a consequence, must use a wheelchair or other motorized mobility device and who have been denied equal access to goods and services of the Defendant’s Hotel, Website and the Websites. 18. Plaintiff, on behalf of himself and on behalf of all others similarly situated, seeks to certify a New York State subclass under Federal Rules of Civil Procedure Rule 23(a) and 23 (b)(2) of all disabled individuals in the City of New York who are unable to walk as a result of their disability and, as a consequence, must use a wheelchair or other motorized mobility device and who have been denied equal access to goods and services of the Defendant’s Hotel, Website and the Websites. 19. The Class is so numerous, being composed of millions of disabled individuals in the United States that are unable to walk as a result of their disability and must use a wheelchair or other motorized mobility device, that joinder of all members is impracticable, Additionally, there are questions of law and/or fact common to the Class and the claims of the Plaintiff are typical of the Class claims. 20. Common questions of law and fact exist amongst the Class including: a. Whether the Hotel and Website are "public accommodation[s]" under the ADA and New York laws; b. Whether there was a violation under the ADA due to the barriers that exist at the Defendant’s Hotel and its Website and whether the Plaintiff and the Class were denied full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations; and c. Whether there was a violation under New York law due to the barriers that exist on the Defendant’s Hotel and its Website and whether the Plaintiff and the Class were denied full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations. 21. The Plaintiff’s claims are typical of those of the Class as they both claim that Defendant violated the ADA, and/or the laws of New York by failing to have its Hotel, Website and the Websites accessible. 22. Plaintiff will fairly and adequately represent and protect the interests of the Class members as the Plaintiff and the Class are individuals having the same claims as they are unable to walk and must use a wheelchair or other motorized mobility device. 23. Class certification is appropriate under Fed. R. Civ. P. 23(b)(2) because Defendant has acted or refused to act on grounds applicable to the Class making declaratory and injunctive relief appropriate. 24. Questions of law or fact common to Class members predominate questions affecting individual Class members and a class action will fairly and efficiently decide this action. 25. Counsel for the Plaintiff is experienced representing both Plaintiffs and Defendants in Class actions. As such the Class will be properly represented. 26. Judicial economy will be served by maintaining this lawsuit as a class action as it will prevent the filing of a voluminous number of individual lawsuits throughout the United States by people who are individuals having the same claims as the Plaintiff all of whom are disabled, unable to walk and must use a wheelchair or other motorized mobility device. FACTUAL ALLEGATIONS 27. Defendant is required by the ADA, its accompanying regulations contained in the Code of Federal Regulations (C.F.R.), Architectural Guidelines and 2010 ADA Standards to ensure that its place of lodging complies with the standards applicable to public accommodations and is accessible to disabled individuals. 28. 28 C.F.R. §36.302(e)(l), which became effective on March 12, 2012, provides: “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 through 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 have been rented and the accessible room requested is the only remaining room 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 reservations systems; and (v) Guarantee that the specific accessible guest room 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”. 29. “§ 36.302 of the 1991 Title III regulation requires public accommodations to make reasonable modifications in policies, practices or procedures when such modifications are necessary to afford access to any goods, services, facilities, privileges advantages or accommodations, unless the entity can demonstrate that making such modifications would fundamentally alter the nature of such goods, services, facilities, privileges, advantages or accommodations. Hotels, timeshares resorts, and other places of lodging are subject to this requirement and must make reasonable modifications to reservation policies, practices or procedures when necessary to ensure that individuals with disabilities are able to reserve accessible hotel rooms with the same efficiency, immediacy, and convenience as those who do not need accessible rooms”. 28 C.F.R. Part 36, Appx. A. 30. Third-Party reservation services should also be subject to these requirements. 31. Hotels, motels and other places of lodging are required to identify and describe all accessible features in the hotel and guestrooms; “[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.” “As a practical matter, ……. designating a 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. 32. “Further hotel rooms that are in full compliance with current standards may differ, and individuals with disabilities must be able to ascertain which features – in new and existing facilities – are included in the hotel’s accessible guest rooms. For example, under certain circumstances, an accessible hotel bathroom may meet accessibility requirements with either a bathtub or a roll in shower. The presence or absence of particular accessible features such as these may mean the difference between a room that is usable by a particular person with a disability and one that is not”. 28 C.F.R. Part 36, Appx. A. 33. For hotels that were built after the effective date of the 1991 Standards, it is sufficient to advise that the hotel itself is fully ADA compliant, and for each accessible guestroom, 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. 34. “For older hotels with limited accessibility features, information about the hotel should include, at a minimum, information about accessible entrances to the hotel, the path of travel to guest check- in and other essential services, and the accessible route to the accessible room or rooms. In addition to the room information described above, these hotels should provide information about important features that do not comply with the 1991 Standards. For example, if the door to the “accessible” room or bathroom is narrower than required, this information should be included (e.g., door to g u e s t r o o m m e a s u r e s 3 0 i n c h e s c l e a r ) ” . 2 8 C . F . R . P a r t 3 6 , A p p x . A . 35. The Hotel is a place of public accommodation that owns and/or leases and operates a place of lodging pursuant to the ADA. Additionally, the Website is a place of public accommodation defined as a “place[s] of exhibition and entertainment,” “places of recreation,” and “service establishments.” 28 C.F.R. § 36.201(a); 42 U.S.C. § 12181 (7). 36. Defendant, by itself or by and through a third party owns, operates, maintains and controls the Website and Websites which contains an online reservation system located at www.bklynhousehotel.com, www.hotels.com, www.booking.com, and www.travelocity.com. The Website and Websites are subject to the requirements of 28 C.F.R. Section 36.302(e). 37. Prior to the commencement of this action, On May 17, 2019 and various additional dates thereafter, Plaintiff visited the Website and Websites to learn about accessible features of the Hotel and in order to assess whether he could reserve an accessible room at the Hotel. However, the Plaintiff was unable to do so as the Website does not comply with the requirements of the ADA, including the requirements contained in 28 C.F.R. § 36.302(e). 38. The Defendant discriminates against the Plaintiff and other disabled individuals throughout the United States who are unable to walk and must use a wheelchair or other motorized mobility device excluding them of the same goods, services, features, facilities, benefits, advantages and accommodations of the Hotel and Website that are available to others. 39. The Website’s homepage is barren as to any accessibility features of the Hotel and its common areas. The homepage offers a link to reserve a room or you can click on the rooms link to also reserve a room. Most of the time, there is no information about the room’s accessibility features. When you click on the link “Book Now” various rooms are displayed. One display shows an accessible room but you cannot book it. This accessible room option does come up when you seek a reservation sometimes in the future. 40. The Website contains some information as to whether any of its rooms contain accessible features including but not limited to roll in showers or bathtubs, built in seating, grab bars, lowered sinks, wrapped pipes, sink and door hardware, or sufficient maneuvering space complaint within the room. However is barren as to the accessible communication features 41. The Website also is devoid of accessibility information concerning common areas and hotel amenities and whether the Hotel is accessible in accordance with the 1991 Standards, or if not, the ways in which it is not with regard to the Hotel’s entrance, the registration desk, recreational facilities, the restaurants, the parking areas, business center and the routes to and from all of the aforementioned to and from each other such that the Plaintiff, the Class and Subclass can evaluate to determine whether the Hotel is accessible to them. 42. Plaintiff has saved and retained all webpages from the Website and Websites concerning his claim and that of the Class and Subclass. 43. Upon information and belief, Defendant has not complied with various reservation system requirements: (i) that accessible rooms are held for use by individuals with disabilities until all other non-accessible guest rooms have been rented and the accessible room requested is the only remaining room of that type [§ 36.302 (e)(1)(iii)] and (ii) the requirement to reserve, upon request, accessible guest rooms or specific types of guest rooms and ensure that the guest rooms requested are blocked and removed from reservation systems. 28 C.F.R. § 36.302 (e)(1)(iv). 44. Plaintiff will visit the Website and Websites again to determine if the Defendant has complied with the laws and to learn about the accessible (and inaccessible) features of the Hotel and rooms. 45. Plaintiff and other disabled individuals requiring mobility assistance are aware that the Website is non-compliant at this time and that they have been discriminated against by the Defendant. 46. The Website can be viewed by individuals located in New York State in addition to the other states of the United States and can be reached from computers, tablets and cellphones which can access the internet. 47. Defendant has discriminated against Plaintiff and all other mobility-impaired individuals by denying full and equal access to and enjoyment of the goods, services, facilities, privileges, advantages and accommodations offered on the Website in violation of the ADA. 48. Modifying the Website and Websites to comply with the ADA is readily achievable without undue burden. 49. Defendant’s non-compliant acts prevents the Plaintiff, Class and Subclass from having equal access as the remaining public preventing them from enjoying the goods, services and benefits offered by the Website. FIRST CAUSE OF ACTION ON BEHALF OF THE PLAINTIFF, THE CLASS AND THE SUBCLASS Violation of Title III of the Americans with Disabilities Act 50. The Plaintiff realleges and incorporates by reference the allegations contained in paragraphs “1” to “49” as if set forth fully herein. 51. The Plaintiff is uniped, an amputee, and must use a wheelchair or other motorized mobility device. The Plaintiff has an impairment that substantially limits one or more of his major life activities and is therefore an individual with a disability as defined under the ADA, 42 U.S.C. § 12102(2). 52. Title III of the ADA 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." 42 U.S.C. § 12182(a); 28 C.F.R. §36.201. 53. Title III of the ADA provides that “places of public accommodation” may not discriminate against people with disabilities. Defendant operates a place of public accommodation as defined by Title III of ADA, 42 U.S.C. § 12181(7) ("place of exhibition and entertainment," "place of recreation," and "service establishments"). 54. Defendant has failed to provide accessibility features on its Website and Websites about the Hotel, its common areas, its features, its reservation system and its rooms thereby making it non- accessible to disabled individuals who cannot walk without the use of use a wheelchair or other motorized mobility device. 55. Discrimination under Title III includes the denial of an opportunity for the person who cannot walk without the use of use a wheelchair or other motorized mobility device to participate in programs or services or providing a service that is not equal to that afforded to others. 42 U.S.C. § 12182(b)(l)(A)(i-iii). 56. Discrimination includes the failure to maintain accessible features of facilities and equipment that are required to be readily accessible to and usable by persons with disability. 28 C.F.R. § 36.211. 57. Defendant discriminates against the Plaintiff, the Class and Subclass on the basis of their disability by denying them an equal opportunity to participate in and benefit from Defendant’s goods, services, facilities, privileges, advantages and/or accommodations in violation of Title III of the ADA, 42 U.S.C. § 12182 (b)(l)(A)(I). 58. It is unlawful to discriminate against individuals with disabilities or a class of individuals having disabilities to participate in or benefit from the goods, services, facilities, privileges, advantages, or accommodation offered to others. 59. Failure to make modifications that are reasonable in policies, practices, or procedures, when such modifications are necessary to afford goods, services, facilities, privileges, advantages, or accommodations to individuals with disabilities is unlawful, unless implementing these modifications would fundamentally alter the nature of such goods, services, facilities, privileges, advantages or accommodations under Title III of the ADA, 42 U.S.C. § 12182(b)(2)(A)(ii). 60. "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" is a prohibited discriminatory practice under Title III of the ADA, 42 U.S.C. § 12182(b)(2)(A)(iii). 61. The Defendant’s actions or lack of actions are discriminatory acts against the Plaintiff, the Class and the Subclass as it has denied individuals who are disabled and who cannot walk without the use of use a wheelchair or other motorized mobility device (i) an equal opportunity to participate and benefit from Defendant’s goods, services, facilities, privileges, advantages and/or accommodations, in violation of 42 U.S.C. § 1282(b)(1)(A); (ii) a failure to make reasonable modifications in policies, practices and procedures when necessary to afford the Plaintiff, the Class and Subclass such goods, services, facilities, privileges, advantages or accommodations in violation of 42 U.S.C. § 1282(b)(2)(A)(ii); (iii) and failing to take necessary steps to ensure that the Plaintiff and other disabled individuals who cannot walk without the use of use a wheelchair or other motorized mobility device are not excluded, denied services, segregated or treated differently than others because of the absence of accessibility features of the Defendant’s Hotel, Website and Websites, including its reservation systems. 62. The Defendant has denied full and equal access to disabled individuals who cannot walk without the use of use a wheelchair or other motorized mobility device to its Website and Websites by having barriers to their services and accommodations while providing access to their services and accommodations to non-disabled individuals. 63. Making necessary modifications by adding proper accessibility or non-accessibility descriptions to its Website and by updating and modifying its reservation system on its Website and Websites to correct the ADA violations existing on the Defendant’s Website and Websites in order to make them compliant with ADA and ADAAG requirements would not alter the nature of Defendant’s goods, services, privileges, advantages or accommodations nor would it result in an undue burden. 64. The Defendant must be enjoined from engaging in these unlawful discriminatory practices such that the Plaintiff, the Class and Subclass will no longer be discriminated against. 65. Absent injunctive relief, there is a clear and imminent risk that the Defendant’s discriminatory actions will continue against the Plaintiff, the Class and Subclass causing irreparable harm. 66. Plaintiff is entitled to injunctive relief in addition to attorney fees, costs and disbursements pursuant to the ADA, 42 U.S.C. § 12188(a)(1). SECOND CAUSE OF ACTION ON BEHALF OF THE PLAINTIFF AND THE SUBCLASS Violation of New York State Human Rights Law 67. The Plaintiff realleges and incorporates by reference the allegations contained in paragraphs “1” to “66” as if set forth fully herein. 68. At all times relevant to this action, the New York Human Rights Law (“NYHRL”), Article 15 of the N.Y. Executive Law §§ 290 et. seq. covers the actions of the Defendant. 69. The Plaintiff, at all times relevant to this action, has a substantial impairment to a major life activity of walking and is an individual with a disability under Article 15 of the N.Y. Executive Law § 292(21). 70. The Defendant, at all relevant times to this action, owns and operates a place of accommodation, the Website and the Hotel, within the meaning of Article 15 of the N.Y. Executive Law § 292(9). Defendant is a person within the meaning of Article 15 of the N.Y. Executive Law § 292(1). 71. The Website and Websites are gateways to and part of the Hotel which is a place of public accommodation. 72. Plaintiff has visited the Website and Websites and has encountered barriers of access that exist. 73. Pursuant to Article 15 N.Y. Executive Law § 296(2)(a) “it shall be 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. Discrimination includes the refusal to adopt and implement reasonable modifications in policies, practices or procedures when they are necessary to afford, facilities, privileges, advantages or accommodations to individuals with disabilities. Article 15 of the N.Y. Executive Law§ 296(2)(a), § 296(2)(c)(i). 75. Defendant’s actions violate Article 15 of the N.Y. Exec. Law§ 296(2)(a) by discriminating against the Plaintiff and Subclass by (i) owning and operating the Website that is inaccessible to disabled individuals who cannot walk without the use of use a wheelchair or other motorized mobility device; and (ii) by not removing access barriers to its Website in order to make accessibility features of the Hotel and its rooms known to disabled individuals who cannot walk without the use of use a wheelchair or other motorized mobility device; and (iii) by refusing to modify the Hotel’s online reservation systems on its Website and Websites when such modifications are necessary to afford facilities, privileges, advantages or accommodations to individuals with disabilities. This inaccessibility denies disabled individuals who cannot walk without the use of use a wheelchair or other motorized mobility device full and equal access to the facilities, goods and services that the Defendant makes available to individuals who are not disabled and can walk without the need of a wheelchair or other motorized mobility device. Article 15 of the N.Y. Exec. Law§ 296(2)(c). 76. The Defendant’s 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.” Article 15 of the N.Y. Exec. Law§ 296(2)(c). 77. Established guidelines exist for making websites accessible to disabled individuals who cannot walk without the use of use a wheelchair or other motorized mobility device and are easily obtainable. These guidelines have been used and followed by government and businesses in making their websites accessible to disabled individuals who cannot walk without the use of use a wheelchair or other motorized mobility device, including but not limited to, having descriptions of accessibility features of a hotel or lack thereof of its entrance, its common areas, its rooms, its travel routes to and from various components of the hotel and having a reservation system that does not exclude the disabled. Incorporating these components in its Website and Websites would not fundamentally alter the Defendant’s Website, Hotel or business and would not result in an undue burden. 78. Defendant has intentionally and willfully discriminated against the Plaintiff and Subclass in violation of the New York State Human Rights Law, Article 15 of the N.Y. Exec. Law § 296(2) and this discrimination continues to date. 79. Absent injunctive relief, Defendant’s discrimination will continue against the Plaintiff and Subclass causing irreparable harm. 80. Plaintiff and the Subclass are therefore entitled to compensatory damages, civil penalties and fines for each and every discriminatory act in addition to reasonable attorney fees and the costs and disbursements of this action. Article 15 of the N.Y. Exe. Law §§ 297(9), 297(4)(c) et seq. THIRD CAUSE OF ACTION ON BEHALF OF THE PLAINTIFF AND THE SUBCLASS Violation of New York State Civil Rights Law 81. The Plaintiff realleges and incorporates by reference the allegations contained in paragraphs “1” to “80” as if set forth fully herein. 82. Plaintiff served notice thereof upon the attorney general as required by N.Y. Civil Rights Law § 41. 83. Persons within N.Y.S. are entitled to full and equal accommodations, advantages, facilities and privileges of 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 of a place of public accommodation, shall directly or indirectly refuse, withhold from, or deny to any person any of the accommodations, advantages, facilities and privileges thereof. N.Y. Civ. Rights Law § 40. 84. No person because of disability, as defined in § 292 (21) of the Executive Law, shall be subjected to any discrimination in his or her civil rights by person or by any firm, corporation or institution, or by the state or any agency or subdivision. N.Y. Civ. Rights Law (“CVR”) § 40-c. 85. § 292 of Article 15 of the N.Y. Executive Law deems a disability a physical, mental or medical impairment resulting from anatomical, physiological, genetic or neurological conditions which prevents the exercise of a normal bodily function. As such the Plaintiff is disabled under the N.Y. Civil Rights Law. 86. Defendant discriminates against the Plaintiff and Subclass under CVR § 40 as Defendant’s Website is a public accommodation that does not provide full and equal accommodations, advantages, facilities and privileges to all persons and discriminates against disabled individuals who cannot walk without the use of use a wheelchair or other motorized mobility device. 87. Defendant intentionally and willfully failed to remove the barriers on their Website discriminating against the Plaintiff and Subclass preventing access in violation of CVR §40. 88. Defendant has failed to take any steps to halt and correct its discriminatory conduct and discriminates against and will continue to discriminate against the Plaintiff and the Subclass members. 89. Under N.Y. Civil Rights Law § 41 a corporation which violates any of the provisions of §§ 40, 40-a, 40-b or 42 shall be liable for 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 plaintiff or defendant shall reside. 90. Plaintiff and the Subclass hereby demand compensatory damages of five hundred dollars for the Defendant acts of discrimination including civil penalties and fines pursuant to N.Y. Civil Law § 40 et seq.. FOURTH CAUSE OF ACTION ON BEHALF OF THE PLAINTIFF AND THE SUBCLASS Violation of New York City Human Rights Law 91. The Plaintiff realleges and incorporates by reference the allegations contained in paragraphs “1” to “90” as if set forth fully herein. 92. At all times, the New York City Human Rights Law (“NYCHRL”), New York City Administrative Code §§ 8-101 et. seq. applied to the conduct of the Defendant as the Defendant owns and operates the Website and are persons under the law. 93. At all times concerning this action the Plaintiff and the Subclass have had a substantial impairment to a major life activity of walking and are individuals with a disability under N.Y.C. Administrative Code § 8-102(16). 94. At all times concerning this action the Defendant’s Website is a place of public accommodation as defined in N.Y.C. Administrative Code § 8-102(9). 95. “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 the actual or perceived ……. disability …. of any person to withhold from or deny to such person any of the accommodations required to make reasonable accommodations to a disabled individual and may not “refuse, withhold from or deny to such person any of the accommodations, advantages, facilities or privileges thereof” N.Y.C. Admin. Code § 8-107(4)(a). 96. The willful and intentional non-removal of the Website’s barriers of access for the Plaintiff and the Subclass by the Defendant discriminates against disabled individuals who cannot walk without the use of use a wheelchair or other motorized mobility device by denying them full and equal access to the facilities, goods, and services that Defendant makes available to the non-disabled individuals who can walk without the use of use a wheelchair or other motorized mobility device. 97. It is discriminatory for the Defendant “not to provide a 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). 98. Defendant’s actions will continue to prevent the Plaintiff and Subclass from accessing the Website as the remaining public can and the Plaintiff requests injunctive relief. 99. Plaintiff and Subclass are also entitled to compensatory damages for the injuries and loss sustained as a result of the Defendant’s discriminatory conduct in addition to punitive damages and civil penalties and fines for each offense, attorney fees, costs and disbursements of this action. N.Y.C. Administrative Code § 8-120(8), § 8-126(a) and § 8-502(a). FIFTH CAUSE OF ACTION ON BEHALF OF THE PLAINTIFF CLASS AND SUBCLASS FOR DECLARATORY RELIEF 100. The Plaintiff realleges and incorporates by reference the allegations contained in paragraphs “1” to “99” as if fully set forth herein. 101. The Plaintiff claims that the Website and Websites contains barriers denying disabled individuals who cannot walk without the use of a wheelchair or other motorized mobility device full and equal access to the goods and services of the Website. 102. Defendant’s Website and Websites fail to comply with applicable laws and the Defendant discriminates against the Plaintiff and Subclass under 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. Administrative Code § 8-107, et seq. 103. The Defendant denies these claims. 104. The Plaintiff seeks a declaratory judgment such that the parties understand and know their respective rights and obligations. PRAYER FOR RELIEF WHEREFORE, Plaintiff requests relief as follows: a. A declaratory judgment pursuant to Federal Rules of Civil Procedure Rule 57 declaring the Defendant’s policies, procedures and practices are discriminatory against the Plaintiff in violation of Title III of the Americans with Disabilities Act, The New York Human Rights Law, the New York City Human Rights Law and the laws of New York; b. Enjoining the Defendant’s from actions that deny disabled individuals who cannot walk without the use of use a wheelchair or other motorized mobility device access to the full and equal enjoyment of Defendant’s Website and Websites and 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; c. An Order of the Court requiring the Defendant to make the Website and Websites fully compliant with the requirements set forth in the ADA, and its regulations pursuant to 28 C.F.R. § 36.302(e)(1) and the 2010 ADAAG Standards, so that the Website is readily accessible to and usable by disabled individuals who cannot walk without the use of use a wheelchair or other motorized mobility device; d. An Order of the Court which certifies 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 attorney as counsel for the Class; e. Compensatory damages, statutory penalties and fines for Plaintiff and the proposed Subclass for violations of their civil rights under the New York State Human Rights Law; f. Compensatory damages, statutory penalties and fines for Plaintiff and the proposed Subclass for violations of their civil rights under the New York State Civil Rights; g. Compensatory damages, punitive damages, statutory penalties and fines for Plaintiff and the proposed Subclass for violations of their civil rights under the New York City Human Rights Law; h. Reasonable costs, disbursements and Plaintiff’s attorney fees pursuant to the ADA, New York Human Rights Law, New York City Human Rights Law and the laws of New York; i. For pre-judgment and post-judgment interest to the highest extent permitted by law; and j. Such other and further relief as the Court deems just and proper. DEMAND FOR JURY TRIAL Plaintiff, on behalf of himself the Class and Subclass demands a trial by jury on all issues and requested relief. Dated: Great Neck, New York March 17, 2020 /s/ Mitchell Segal ________________________ Mitchell Segal, Esq. Law Offices of Mitchell Segal, P.C. Attorneys for Plaintiff, the Class and Subclass 1010 Northern Boulevard, Suite 208 Great Neck, New York 11021 Ph. (516) 415-0100 Fx. (516) 706-6631

civil rights, immigration, family

5qazCYcBD5gMZwczLbo_

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION Case No. Class Action Craftwood Lumber Company, an Illinois corporation, individually and on behalf of all others similarly situated, Plaintiff, v. Complaint for Violations of the Junk Fax Prevention Act (47 U.S.C. § 227 and 47 C.F.R. § 64.1200); Demand for Jury Trial; Exhibit [FED. R. CIV. P. 3, 8, 23; 28 U.S.C. § 1331] Auburn Armature, Inc., a New York corporation, Defendant. Plaintiff Craftwood Lumber Company (“Plaintiff”), brings this action on behalf of itself and all others similarly situated, and avers: Introduction 1. More than two decades ago the Telephone Consumer Protection Act of 1991, 47 U.S.C. § 227 (“TCPA”) was enacted into law. The law responded to countless complaints by American consumers and businesses about the cost, disruption and nuisance imposed by junk faxes. The law prohibited the transmission of facsimile advertising without the prior express invitation or permission of the recipient. In 2005, because consumers and businesses continued to be besieged with junk faxes, Congress strengthened the law by amending it through the Junk Fax Prevention Act of 2005 (collectively “JFPA”).1 As amended, the law, together with regulations adopted by the Federal Communications Commission thereunder (“FCC regulations”), require a sender to include in its faxed advertisements a clear and conspicuous notice that discloses to recipients their right to stop future faxes and explains how to exercise that right. 2. Plaintiff brings this class action to recover damages for, and to enjoin faxing by, Defendant Auburn Armature, Inc., in violation of the JFPA and FCC regulations. Defendant’s violations include, but are not limited to, the facsimile transmission of an advertisement on January 12, 2012, to Plaintiff, a true and correct copy of which is attached as Exhibit 1. 3. Subject Matter Jurisdiction, Standing and Venue. This Court has subject matter jurisdiction over this matter under federal-question jurisdiction, 28 U.S.C. § 1331; see Mims v. Arrow Financial Services, LLC, 132 S. Ct. 740, 747, 1818 L. Ed. 2d 881 (2012). Plaintiff has standing to seek relief in this Court because § (b)(3) authorizes commencement of a private action to obtain damages for Defendant’s violations of the JFPA and/or FCC regulations, to obtain injunctive relief, or for both such actions. Venue is proper in this Court because Defendant sent the faxes at issue within this judicial district, including to Plaintiff and Defendant resides in this judicial district. 4. Personal Jurisdiction. This Court has personal jurisdiction over Defendant because it regularly conducts business within the state of Illinois, because Defendant intentionally directed the facsimile advertisements the subject of this action to recipients within the state of Illinois and because Defendant committed at least some of 1 Unless otherwise noted, all statutory references are to this statute in effect since 2005. its violations of the JFPA and/or FCC regulations within the state of Illinois. The Parties 5. Individual Plaintiff/Class Representative. Plaintiff Craftwood Lumber Company is, and at all times relevant hereto was, a corporation duly organized and existing under the laws of the state of Illinois, with its principal place of business in Highland Park, Illinois. Plaintiff is, and at all times relevant hereto was, the subscriber of the facsimile telephone number (847) 831-2805 to which faxed advertisements, including Exhibit 1, were sent by Defendant. 6. Defendant Auburn Armature, Inc. Defendant Auburn Armature, Inc. is, and at all times relevant hereto was, a corporation organized and existing under the laws of the state of New York, having its principal place of business in Auburn, New York. Unless otherwise indicated, Defendant Auburn Armature, Inc. is referred to throughout this Complaint as “Auburn” or “Defendant.” The JFPA’s Prohibition Against Junk Faxing 7. By the early 1990s, advertisers had exploited facsimile telephone technology to blanket the country with junk fax advertisements. This practice imposed tremendous disruption, annoyance, and cost on the recipients. Among other things, junk faxes tie up recipients’ telephone lines and facsimile machines, misappropriate and convert recipients’ fax paper and toner, and require recipients to sort through faxes to separate legitimate faxes from junk faxes and discard the latter. Congress responded to the problem by passing the TCPA. It was enacted to eradicate “the explosive growth in unsolicited facsimile advertising, or ‘junk fax.’” H.R. Rep. No. 102-317 (1991). 8. In the decade following the TCPA’s enactment, however, American consumers and businesses continued to be “besieged” by junk faxes because senders refused to honor requests by recipients to stop. FCC, Report and Order on Reconsideration of Rules and Regulations Implementing the TCPA of 1991, 29 Comm. Reg. 830 ¶ 186 (2003). Congress responded by strengthening the law through the JFPA. The JFPA, for the first time, required senders to clearly and conspicuously disclose on their faxes that recipients have the right to stop future faxes and to explain the means by which recipients can exercise that right (hereinafter collectively the “Opt-Out Notice Requirements”).2 Auburn’s Junk Fax Programs 9. Auburn is an electrical products distributor, manufacturer, and services company. Commencing within four years preceding the filing of this Complaint, Auburn conducted a fax-blasting programs to advertise the sale of its property, goods and services.3 These advertisements include, but are not limited to, the facsimile advertisement sent on January 12, 2012, attached as Exhibit 1. 10. Defendant is a sender of the facsimile advertisements at issue because the advertisements were sent on its behalf and because the faxes advertised or promoted Defendant’s property, goods or services, within the meaning of 47 C.F.R. § 2 The Opt-Out Notice Requirements are contained in § 227 (b)(1)(C)(iii), (b)(2)(D) and (b)(E), and the FCC’s regulations and orders found at 47 C.F.R. § 64.1200(a)(4)(iii)-(vi) and the FCC’s 2006 order. See Federal Communications Commission, Report and Order and Third Order on Reconsideration, 21 FCC Rcd. 3787 ¶ 26 (2006). 3 The statute of limitations for this action is the four-year limitations period provided in 28 U.S.C. § 1658. 64.1200(a)(4), (f)(10). 11. Plaintiff did not give Defendant “prior express invitation or permission” as used in the JFPA (§ (a)(5)) to send Exhibit 1 or any other facsimile advertisements. Plaintiff did not have an “established business relationship” as used in the JFPA (§ (a)(2)) with Defendant at the time the faxed advertisements at issue were sent to Plaintiff. Plaintiff is informed and believes, and upon such information and belief avers, that Defendant transmitted via facsimile Exhibit 1 and other advertisements without obtaining prior express invitation or permission from other recipients and/or without having an established business relationship with them. In sending these faxes, Defendant also failed to include the disclosures mandated by the Opt-Out Notice Requirements, in further violation of the JFPA and FCC regulations. Class Action Allegations 12. Statutory Reference. This action is properly maintainable as a class action because (a) all prerequisites of rule 23(a) are satisfied; (b) prosecution of separate actions by one or more individual members of the class would create a risk of inconsistent or varying adjudications with respect to individual members of the class and would establish incompatible standards of conduct for Defendant, in the manner contemplated by rule 23(b)(1)(A); (c) Defendant has acted on grounds that apply generally to the class, so that final injunctive relief is appropriate respecting the class as a whole, as contemplated by rule 23(b)(2); and (d) questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy, as contemplated by rule 23(b)(3). 13. Class Definition. The Plaintiff Class consists of all persons and entities that were at the time subscribers of telephone numbers to which material was sent via facsimile transmission, commencing within four years preceding the filing of this action, which material discusses, describes, or promotes Defendant’s property, goods or services, including, without limitation, Exhibit 1 hereto (“Plaintiff Class”). Plaintiff reserves the right to amend the class definition following completion of class certification discovery. 14. Numerosity. Plaintiff is informed and believes, and upon such information and belief avers, that the Plaintiff Class is sufficiently numerous that the joinder of all members is impracticable due to the class’s size and due to the relatively small potential monetary recovery for each Plaintiff Class member, in comparison to the time and costs associated with litigation on an individual basis. 15. Typicality. The claims of Plaintiff are typical of the Plaintiff Class in that, among other things, they were sent faxed communications by Defendant that violated the JFPA and FCC regulations; they have same claims under the same statute and regulations; and they are entitled to the same statutory damages and injunctive relief. 16. Adequacy of Representation. The Plaintiff Class will be well represented by the class representative and class counsel. Plaintiff appreciates the responsibilities of a class representative and understands the nature and significance of the claims made in this case. Plaintiff can fairly and adequately represent and protect the interests of the Plaintiff Class because there is no conflict between its interests and the interests of other class members. Class counsel have the necessary resources, experience (including significant experience in litigating cases under the Act and FCC regulations) and ability to prosecute this case on a class action basis. 17. Common Questions of Law and Fact Are Predominant. Questions of law and fact common to the class predominate over questions affecting only individual class members: A. Common Questions of Fact. This case presents numerous questions of fact that are common to all class members claims. Defendant has engaged in a standardized course of conduct vis-à-vis Plaintiff and class members, and their damages arise out of that conduct. Plaintiff is informed and believes, and upon such information and belief avers, that the case arises out of a common nucleus of fact because, among other things, the faxes at issue advertised Auburn’s property, goods or services, the faxes are the product of an organized fax-blasting campaign targeting the class, and the faxes were sent in the same or similar manner. B. Common Questions of Law. The case presents numerous common questions of law, including, but not limited to: (1) whether the faxes at issue advertise the commercial availability or quality of property, goods or services and therefore fall within the ambit of the JFPA and FCC regulations; (2) Defendant’s mode and method of obtaining the telephone numbers to which the faxes at issue were sent and whether that mode and method complied with the requirements of § (b)(1)(C)(ii) and FCC regulations; (3) whether Defendant obtained prior express invitation or permission as defined in § (a)(5); (4) whether Defendant complied with the Opt-Out Notice Requirements of the JFPA and FCC regulations, and the legal consequences of the failure to comply with those requirements; (5) what constitutes a knowing or willful violation of the JFPA within the meaning of § (b)(3); (6) whether Defendant committed knowing and/or willful violations of the JFPA and/or FCC regulations; (7) whether damages should be increased on account of Defendant's knowing and/or willful violations of the JFPA and/or FCC regulations and, if so, by what amount; and (8) what injunctive relief as prayed for in the Complaint is warranted. 18. Appropriate Method for Fair and Efficient Resolution of the Controversy. A class action is an appropriate method for the fair and efficient adjudication of this case for several reasons, including: A. Prosecuting separate actions by individual class members would create a risk of inconsistent or varying adjudications that would establish incompatible standards of conduct for Defendant. B. Questions of law and fact common to members of the class, including those identified in paragraph 17, predominate over any questions affecting only individual members, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy. C. Class adjudication will conserve judicial resources. D. Members of the Plaintiff Class are not likely to join or bring an individual action due to, among other reasons, the small amount to be recovered relative to the time, effort and expense necessary to join or bring an individual action. Because the statutory minimum damage is $500 per violation and the JFPA does not authorize an award of attorneys’ fees to a successful plaintiff, individual action to remedy Defendant’s violations would be uneconomical. As a practical matter, the claims of the vast majority of the Plaintiff Class are not likely to be redressed absent class certification. E. Equity dictates that all persons who stand to benefit from the relief sought herein should be subject to this action and, hence, subject to an order spreading the cost of litigation among class members in relationship to the benefits received. F. Class adjudication would serve to educate class members about their rights under the Act and FCC regulations to stop unwanted junk faxes, a particularly important public purpose. Claim for Relief for Violations of the JFPA and FCC Regulations 19. Incorporation. Plaintiff and the Plaintiff Class reassert the averments set forth in paragraphs 1 through 18, above. 20. Defendant's Violations of the Act and FCC Regulations. Commencing within four years preceding the filing of this action, including, without limitation, on January 12, 2012, Defendant violated the JFPA and FCC regulations by, among other things, by sending from or to the United States, unsolicited advertisements and/or advertisements that violate the Opt-Out Notice Requirements, via facsimile, from telephone facsimile machines, computers, or other devices to telephone facsimile machines via facsimile telephone numbers of Plaintiff and members of the Plaintiff Class. 21. Private Right of Action. Under § (b)(3), Plaintiff has a private right of action to bring this claim for damages and injunctive relief on behalf of itself and on behalf of the Plaintiff Class to redress Defendant’s violations of the JFPA and FCC regulations. 22. Injunctive Relief. Plaintiff is entitled to have preliminary and permanent injunctions entered to: (1) prohibit Defendant, its employees, agents, representatives, contractors, affiliates and all persons and entities acting in concert with them, from committing further violations of the JFPA and FCC regulations, and thereby, among other things, prohibiting Defendant, its employees, agents, representatives, contractors, affiliates, and all persons and entities acting in concert with them, from sending any further unsolicited faxed advertisements to any person or entity or sending faxed advertisements that do not comply with the Opt-Out Notice Requirements; (2) require Defendant to deliver to Plaintiff all records of facsimile advertisements sent commencing within four years preceding the filing of this action, including all content sent via facsimile, fax lists, and transmission records; (3) require Defendant to adopt ongoing educational, training and monitoring programs to ensure compliance with the JFPA and FCC regulations, and limiting facsimile advertising activity to personnel who have undergone such training; (4) require Defendant to provide written notice to all persons and entities to whom Defendant sent, via facsimile transmission, advertisements in violation the JFPA and/or FCC regulations, warning such persons and entities that the faxing of unsolicited advertisements, or advertisements that do not comply with the Opt- Out Notice Requirements, violates the JFPA and that they should not be led or encouraged in any way by Defendant’s violations of the JFPA and/or FCC regulations to send advertisements of their own that violate the JFPA and/or FCC regulations; and (5) require Defendant to conspicuously place on the homepage of its website the warnings contained in subsection 4 of this paragraph. 23. Damages. Plaintiff and all members of the Plaintiff Class are entitled to recover the minimum statutory amount of $500 for each violation by Defendant of the JFPA and FCC regulations, as expressly authorized by § (b)(3). In addition, Plaintiff is informed and believes, and upon such information and belief avers, that Defendant committed its violations willfully and/or knowingly and that the amount of statutory damages should be increased up to three times, also as authorized by § (b)(3). Prayer for Relief WHEREFORE, Plaintiff and the Plaintiff Class pray for relief against Defendant: 1. Certifying a class described in paragraph 13 of the Complaint; 2. Appointing Plaintiff as representative for the Plaintiff Class and awarding Plaintiff an incentive award for its efforts as class representative; 3. Appointing Plaintiff’s counsel as counsel for the Plaintiff Class; 4. Awarding statutory damages in the minimum amount of $500 for each violation of the JFPA and/or FCC regulations and the trebling of such statutory damages, in an overall amount not less than $1,000,000, exclusive of interest and costs, according to proof; 5. Entering the preliminary and permanent injunctions requested in paragraph 22 of the Complaint; 6. Ordering payment of Plaintiff’s costs of litigation, including, without limitation, costs of suit and attorneys’ fees, spread among the members of the Plaintiff Class in relation to the benefits received by the Plaintiff Class; 7. Awarding Plaintiff and the Plaintiff Class prejudgment interest; and 8. Awarding Plaintiff and the Plaintiff Class such other and further relief as the Court shall deem just and proper. Jury Demand Plaintiff demands trial by jury on all issues triable by jury. DATED: September 2, 2014 By: s/ Scott Z. Zimmermann One of the Attorneys for Plaintiff Craftwood Lumber Company and for all others similarly situated Scott Z. Zimmermann [California Bar No. 78694; Admitted to the General Bar of this Court] Email: [email protected] 601 S. Figueroa St., Suite 2610 Los Angeles, CA 90017 Telephone: (213) 452-6509 *Additional Counsel: ** LOCAL Counsel: Charles R. Watkins [Illinois Bar No. 3122790] Email: [email protected] Guin, Stokes & Evans, LLC 321 South Plymouth Court, Suite 1250 Chicago, IL 60604 Telephone: (312) 878-8391 C. Darryl Cordero [California Bar No. 104527; Admitted to the General Bar of this Court] Email: [email protected] Payne & Fears LLP 801 S. Figueroa St., Suite 1150 Los Angeles, CA 90017 Telephone: (213) 439-9911 Frank Owen [Illinois Bar No. 3124947; Florida Bar No. 0702188] Email: [email protected] Frank F. Owen & Associates, P.A. 1091 Ibis Avenue Miami Springs, Florida 33166 Telephone: (954) 964-8000

privacy

Mr6pDIcBD5gMZwczWJR9

Sheehan & Associates, P.C. Spencer Sheehan [email protected] (516) 303-0552 United States District Court Eastern District of New York 1:19-cv-00768 Lashawn Sharpe and individually and on behalf of all others similarly situated Plaintiff - against - Complaint A & W Concentrate Company and Keurig Dr Pepper Inc. Defendant Plaintiff by attorneys alleges upon information and belief, except for allegations pertaining to plaintiff, which are based on personal knowledge: 1. A & W Concentrate Company and Keurig Dr Pepper Inc. (“defendants”) manufacture, market, distribute, bottle and sell “root beer” and “cream soda” carbonated soft drinks (“CSD” or “soda”) under the A & W brand. 2. The Products are sold in plastic and glass bottles and aluminum cans, in sizes such as 12 oz, 20 oz and 2 liters (67.6 oz), sold to consumers individually or in cases, from brick-and- mortar stores and online, by third-parties. 3. Root beer and cream soda are inextricably linked through their association with the coffee shops of their era – the luncheonette – and their principal flavoring component – vanilla. 4. Until the bottling industry matured to enable mass production, sodas were commonly handmade and dispensed at the soda fountain, a staple of every lunch counter, whether in a pharmacy, five-and-dime store or department store. 1 5. Though it is unknown who pioneered the idea of adding ice cream to carbonated water, this confection was an original “loss leader,” due to the labor-intensive process of preparing and cleaning the porcelain or glass serving cup. 6. The delicacies were served up by the baristas of their day – “soda jerks” – who took pride in their craft which was surprisingly detailed.1 7. Ice cream floats were a popular invention around the very end of the 1800's - they were sold in pharmacies which kept carbonated water and flavored syrups on hand to serve to customers. 8. Root beer was also a soda which saw great success when mixed with vanilla ice cream, and to this day it is called a “root beer float.” 9. The “original” ice cream soda may have relied on the most popular flavor of ice cream – vanilla – as the “cream” in the “cream soda” name. 10. However, it has been argued that the “cream” flavor provided by cream soda actually derived from vanilla. 11. This hypothesis draws support from scientific studies showing that vanilla can trigger identify a flavor as creamy without any textural changes.2 12. The representations lead consumers to reasonably believe that Defendants' soft drink is made from, and contains, real vanilla extract, and that consumers who drink the soft drink will be engaging in a “healthy indulgence” if they had consumed Products made with real vanilla and will be receiving value for their dollar. 13. In truth, Defendants' soft drink is not made from real vanilla but from carbonated 1 Standard Manual of Soda and Other Beverages, 1897. 2 Sarah V. Kirkmeyer et al., "Understanding creaminess perception of dairy products using free-choice profiling and genetic responsivity to 6-n-propylthiouracil," Chemical Senses 28.6 (2003): 527-536. 2 water, high fructose com syrup, preservatives, and a chemical flavor compound manufactured to mimic the taste of vanilla but with none of the actual flavorings, benefits or value of real vanilla. 14. Defendants prominently made the claim "MADE FROM AGED VANILLA" on the front label panel of its Products cultivating a wholesome and natural image in an effort to promote the sale of its soft drink and to compete with small batch vanilla beverages that do use real vanilla. 15. the barrel imagery fosters the impression that even though the products are obviously not made in a barrel anymore, the products contain ingredients which could be used in the era where soda in a barrel was commonplace. 3 16. The extra-label representations – on the defendants’ website www.rootbeer.com and in images provided to third-parties– promote the connection of vanilla to the Products – through the connection to vanilla ice cream. 4 17. Consumers value the representation "MADE FROM AGED VANILLA" because studies have found that real vanilla simulates a creamy texture, satisfying consumers’ needs for consumption of fat-rich foods, without the actual fat and calories. 18. Consumers also value it because it is the ideal combination of spice and sweet – contrary to its dictionary definition of “plain.” 19. Defendants' product labels did not disclose that the soft drink contains no real vanilla and that the products’ vanilla content is non-existent or minimal, because if there were real vanilla, the ingredient list would indicate this as required and permitted by law. 20. The Products’ contain direct and/or indirect representations with respect to the primary recognizable flavors of the foods – vanilla. 5 21. The result is a labeling scheme that is designed to mislead consumers, and which does so effectively. 22. This is because the ingredient lists on the Products indicate they do not contain “aged vanilla,” “vanilla” or any other kind of vanilla. Root Beer3 Cream Soda CARBONATED WATER, HIGH CARBONATED WATER, HIGH FRUCTOSE CORN SYRUP, SODIUM BENZOATE FRUCTOSE CORN SYRUP, CARAMEL COLOR, SODIUM BENZOATE (PRESERVATIVE), CARAMEL COLOR, (PRESERVATIVE), NATURAL AND CITRIC ACID, YUCCA EXTRACT, ARTIFICIAL FLAVORS, QUILLAIA NATURAL AND ARTIFICIAL FLAVORS. EXTRACT. 3 The non-diet root beer and cream sodas contain high fructose corn syrup while the diet versions contain aspartame. 6 23. Each Product's ingredient list discloses that it is instead flavored with compounds identified as "natural and/or artificial flavor." 24. These Products in fact owe their characterizing flavors to Defendant's use of artificial and natural flavors, which are not derived from real vanilla. 25. The relevant differences are quillaia extract in the root beer and yucca extract in the cream soda. 26. It is misleading to claim the Products are “Made With Aged Vanilla” because the vanilla bean is the fruit of the vanilla plants. 27. The vanilla bean is not consumed by itself – it is necessary to scrape the seed from the pod, infuse it or extract it. 28. Various commercial products are derived from the vanilla plant including extracts, flavor, powder and vanillin. 29. Vanilla extracts are considered the product type most equivalent to “vanilla” and are defined by regulations as solution in aqueous ethyl alcohol of the sapid and odorous principles extractible from vanilla beans.4 30. Ethyl alcohol content of such an extract is not less than 35% by volume, and the extractible matter of one or more units of vanilla constituent. 31. A unit of vanilla constituent is 13.35 oz of beans containing not more than 25% moisture per gallon of finished extract. 32. This amounts to the extractible matter of not less than 10.0125 oz of beans on the moisture-free basis. 33. This means that the weight of beans to manufacture each gallon of vanilla extract can 4 21 C.F.R. § 169.175 (“Vanilla extract.”) 21 CFR 169.175–169.182, 7 vary, depending on the moisture content of the beans. 34. Vanilla flavoring is similar to vanilla extract but contains less than 35% ethyl alcohol by volume. 35. Where a product claims to be made with actual vanilla but is made with flavors that simulate vanilla – derived from non-vanilla plants – it is misleading to consumers. 36. The Products contain derivatives chemically related to the vanilla bean but not from the vanilla bean. 37. Consumers are led to believe that they would obtain the real vanilla extract or flavor when, as a matter of fact, the product was not vanilla extract, but was a compound and imitation substituted in its place. 38. Defendants actions were undertaken to compete with the rise of artisanal beverage producers who include actual vanilla, derived from the vanilla plant, in their products. 39. The fluctuations in vanilla supply has caused companies like defendant to rely on flavoring which purports to simulate vanilla extract, which is not feasible given the number of unique compounds contained in the vanilla bean. 40. To the extent the Products disclose the presence of natural and artificial flavors, this is in addition to the claims that the Products are “Made with Aged Vanilla.” 8 41. The result is the consumer has no way to tell if real vanilla is a part of the natural and artificial flavors. 42. Moreover, if the consumer would look at the ingredient list, they would see ingredients like “quillaia extract” and “yucca extract,” exotic sounding names, giving them confidence that “real vanilla must be in there somewhere because it’s got these other natural, plant sounding ingredients.” 43. The Products contain other representations which are misleading and deceptive. 44. Excluding tax, the Products cost no less than $1.99 per 12 oz, a premium price compared to other similar products. Jurisdiction and Venue 9 45. Jurisdiction is proper pursuant to 28 U.S.C. § 1332(d)(2). 46. Upon information and belief, the aggregate amount in controversy is more than $5,000,000.00, exclusive of interests and costs. 47. This court has personal jurisdiction over defendant because it conducts and transacts business, contracts to supply and supplies goods within New York. 48. Venue is proper because plaintiff and many class members reside in this District and defendant does business in this District and in New York. 49. A substantial part of events and omissions giving rise to the claims occurred in this District. Parties 50. Plaintiffs are citizens of Kings County, New York (1) and Cook County, Illinois (2). 51. Defendant A & W Concentrate Company is a Delaware corporation with a principal place of business in Plano, Texas. 52. Defendant Keurig Dr Pepper Inc. is a Delaware corporation with a principal place of business in Burlington, Massachusetts. 53. In 2016, 2017 and/or 2018, plaintiff 1 purchased one or more Products for personal consumption as represented herein, for no less than $1.99 per (12 oz) product, excluding tax, within this district and/or State and plaintiff 2 purchased in the corresponding district to residence. 54. Plaintiffs paid this premium because prior to purchase, plaintiffs saw and relied on the misleading representations. 55. Plaintiffs would purchase the Products again if there were assurances that the Products’ representations were no longer misleading. Class Allegations 10 56. The classes consist of all consumers in the following states: all, New York who purchased any Products with actionable representations during the statutes of limitation. 57. A class action is superior to other methods for fair and efficient adjudication. 58. The class is so numerous that joinder of all members, even if permitted, is impracticable, as there are likely hundreds of thousands of members. 59. Common questions of law or fact predominate and include whether the representations were likely to deceive reasonable consumers and if plaintiff(s) and class members are entitled to damages. 60. Plaintiff(s) claims and the basis for relief are typical to other members because all were subjected to the same representations. 61. Plaintiff(s) is/are an adequate representative because his/her/their interests do not conflict with other members. 62. No individual inquiry is necessary since the focus is only on defendant’s practices and the class is definable and ascertainable. 63. Individual actions would risk inconsistent results, be repetitive and are impractical to justify, as the claims are modest. 64. Plaintiff(s) counsel is competent and experienced in complex class action litigation and intends to adequately and fairly protect class members’ interests. 65. Plaintiff(s) seeks class-wide injunctive relief because the practices continue. New York General Business Law (“GBL”) §§ 349 & 350 and Illinois Consumer Fraud and Deceptive Business Practices Act 66. Plaintiffs incorporates by references all preceding paragraphs. 67. Defendants’ representations are false, unfair, deceptive and misleading 68. Defendants’ acts, practices, advertising, labeling, packaging, representations and 11 omissions are not unique to the parties and have a broader impact on the public. 69. Plaintiff desired to purchase products which were as described by defendant and expected by reasonable consumers, given the product type. 70. The representations and omissions were relied on by plaintiff and class members, who paid more than they would have, causing damages. Negligent Misrepresentation 71. Plaintiffs incorporates by references all preceding paragraphs. 72. Defendant misrepresented the composition of the Products. 73. Defendants had a duty to disclose and/or provide non-deceptive labeling of the Products and knew or should have known same were false or misleading. 74. This duty is based, in part, on the representations that the Products were “Made With Aged Vanilla” because vanilla is the singularly most favorable spice used in everyday consumer products. 75. Defendant negligently misrepresented and/or negligently omitted material facts. 76. Plaintiffs reasonably and justifiably relied on these negligent misrepresentations and omissions, which served to induce and did induce, the purchase of the Products. 77. Plaintiff and class members would not have purchased the Products or paid as much if the true facts had been known, thereby suffering damages. Breach of Express Warranty and Implied Warranty of Merchantability 78. Plaintiff incorporates by references all preceding paragraphs. 79. Defendants manufactures, labels and sells Products purporting to be derived from aged vanilla which is deceptive because all vanilla is “aged” in that the extractives need time to release the odorous substances contained therein and the Products do not contain any actual vanilla. 12 80. The representations warranted to plaintiff and class members that they contained constituents which were a part of the vanilla plant and had those qualities associated therewith. 81. Defendant warranted such attributes to plaintiffs and class members, when this was not truthful and was misleading. 82. Defendant owed a special duty based on its responsibility as one of the largest grocery sellers in the nation. 83. The Products did not conform to their affirmations of fact and promises, wholly due to defendant’s actions. 84. Plaintiff and class members relied on defendant’s claims, paying more than they would have. Fraud 85. Plaintiffs incorporates by references all preceding paragraphs. 86. Defendants purpose was to mislead consumers who increasingly seek products from upstart competitors which use real vanilla-derived ingredients in beverages. 87. Defendants’ purpose was to highlight a wholesome and natural ingredient in a product category which has been trending downwards owing to awareness of the link between sugary soft drinks, obesity and numerous ailments. 88. Plaintiffs and class members observed and relied on defendant’s claims, causing them to pay more than they would have, entitling them to damages. Unjust Enrichment 89. Plaintiffs incorporates by references all preceding paragraphs. 90. Defendants obtained benefits and monies because the Products were not as represented and expected, to the detriment and impoverishment of plaintiff and class members, 13 who seek restitution and disgorgement of inequitably obtained profits. Jury Demand and Prayer for Relief Plaintiffs demands a jury trial on all issues. WHEREFORE, plaintiff prays for judgment: 1. Declaring this a proper class action, certifying plaintiff(s) as representative and the undersigned as counsel for the class; 2. Entering preliminary and permanent injunctive relief by directing defendant to correct such practices to comply with the law; 3. Awarding monetary damages and interest, including treble and punitive damages, pursuant to the common law, GBL and ICFDBPA claims; 4. Awarding costs and expenses, including reasonable fees for plaintiffs’ attorneys and experts; and 5. Such other and further relief as the Court deems just and proper. Dated: February 7, 2019 Respectfully submitted, Sheehan & Associates, P.C. /s/Spencer Sheehan Spencer Sheehan (SS-8533) 505 Northern Blvd., Suite 311 Great Neck, NY 11021 (516) 303-0552 [email protected] Levin-Epstein & Associates, P.C. Joshua Levin-Epstein 1 Penn Plaza, Suite 2527 New York, NY 10119 (212) 792-0046 14 1:19-cv-00768 United States District Court Eastern District of New York Lashawn Sharpe and individually and on behalf of all others similarly situated Plaintiff - against - A & W Concentrate Company and Keurig Dr Pepper Inc. Defendant Complaint Sheehan & Associates, P.C. 505 Northern Blvd., #311 Great Neck, NY 11021 Tel: (516) 303-0052 Fax: (516) 234-7800 Pursuant to 22 NYCRR 130-1.1, the undersigned, an attorney admitted to practice in the courts of New York State, certifies that, upon information, and belief, formed after an inquiry reasonable under the circumstances, the contentions contained in the annexed documents are not frivolous. Dated: February 7, 2019 /s/ Spencer Sheehan Spencer Sheehan

consumer fraud

CFAKBIkBRpLueGJZ2FgO

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS The Retirees of the ) Goodyear Tire and Rubber Company ) Health Care Trust Committee ) ) and all others similarly situated, ) FIRST AMENDED CLASS ACTION COMPLAINT CIVIL ACTION NO: 13-10124 ) ) ) Plaintiffs, ) v. ) ) State Street Corporation, State Street ) Bank & Trust Co., ) and State Street Global Advisors, ) ) Defendants. ) Plaintiff, The Retirees of the Goodyear Tire & Rubber Company Health Care Trust Committee (the “Committee”), as fiduciary of the Goodyear Tire & Rubber Company Health Care Plan and Trust (the “Goodyear VEBA” or “VEBA”), brings this action on behalf of the Goodyear VEBA , and on behalf of all similarly-situated ERISA plans (the "ERISA Plans") and other plans (the "Non-ERISA Plans"; collectively, the “Plans”), that suffered losses as a result of the breaches of fiduciary duties committed by Defendants State Street Corporation (“SSC”), State Street Bank & Trust Company (“SSBT”), and State Street Global Advisors (“SSGA”) (collectively with their affiliates, the “Defendants”). The Committee brings this action by and through the undersigned attorneys based upon personal knowledge and information obtained through counsel’s investigation. The Committee anticipates that discovery will uncover yet further substantial support for the allegations in this Complaint. 1. This Complaint presents a case of fiduciary self-dealing and enrichment in violation of Defendants’ fiduciary obligations under the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq. (“ERISA”) and, alternatively, common law at the expense of the Plans (and their respective participants and beneficiaries), to whom Defendants owed some of the highest duties known to the law. 2. The Goodyear VEBA is an employee welfare benefit plan within the meaning of ERISA §3(1). It was established and funded by the Goodyear Tire and Rubber Company (“Goodyear”) in August, 2008, pursuant to court order, to provide health and welfare benefits to its participants, all of whom are retirees from and former employees of Goodyear, or their spouses or dependents. 3. Defendants were (and are) Plan fiduciaries, responsible for managing Plan investments prudently and solely in the interests of the Plan and its participants and prohibited from self-dealing and entering into certain other transactions described by ERISA and the common law. 4. The Goodyear VEBA, like many other plans, invested in co-mingled or common trust funds offered and managed by Defendants (the “Common Trusts”). Common Trusts are investment funds that pool the investments of many institutional investors, much like mutual funds. Defendants received investment advisory, custodial, trustee, and administrative fees for managing the Common Trusts. By the phrase ”Common Trusts,” the Committee, to be clear, refers to all commingled investments trusts (excluding those Defendants call “collective trusts”) operated by Defendants in which the Plans have invested. 5. The Common Trusts engaged in a practice known as “securities lending” through which they made securities they held on behalf of the Plans available for loan to third 2 parties, such as short sellers, for short term use. In such an arrangement, the borrower secures the loan with collateral which is invested in various income-producing instruments so that the Common Trusts receive investment income from the collateral investment. 6. Accordingly, third party borrowers provided the Common Trusts with cash collateral when they borrowed the Common Trusts’ securities. The Common Trusts engaged in securities lending in order to garner the interest income generated from the collateral investment, which, given the extent of their holdings, could equal millions of dollars each year. 7. Defendants controlled all aspects of the Common Trusts’ securities lending programs. Defendants decided which securities would be loaned to which borrowers, collected the collateral from those borrowers, and invested that collateral in another set of co-mingled or pooled funds ̶ which Defendants also managed and established solely for the purpose of investing the securities lending collateral in income-producing instruments (the “Collateral Pools”). As with the Common Trusts, Defendants received investment advisory, custodial, trustee, and administrative fees in exchange for managing the Collateral Pools. 8. Upon return of the borrowed securities, the collateral is returned to the borrower. In addition, the borrower is generally paid a “rebate” (essentially interest) for the investment use of the collateral. The difference between (a) the gross income generated from Collateral Pool investments and (b) the fees and expenses of managing the Collateral Pools plus the rebate paid to the borrower is the “spread.” The spread is split between the manager of the securities lending program, commonly known as the Lending Agent, here Defendants, and the lenders, here the Plans. As alleged below, Defendants took an exorbitant share of the spread for themselves. 3 9. In violation of ERISA § 406(b) and §406(a), prohibiting a fiduciary from engaging in self-dealing and certain specified transactions, and, alternatively, in violation of the common law, Defendants selected themselves to serve as the agent to provide securities lending services for the Plans, set their own compensation for such services and paid themselves for such services with Plan assets. In further violation of their fiduciary duties to the Plans under ERISA § 404 and the common law, Defendants took unreasonably large compensation for the securities lending services they provided, separate and apart from the fees they collected for managing the Common Trusts and Collateral Pools. Indeed, Defendants took fifty percent of all income, i.e., the spread, generated by the Collateral Pools for the benefit of the Common Trusts (net of expenses and rebates as explained above). Thus, only fifty percent of the gains generated through the securities lending program managed by Defendants inured to the Plans. Defendants took from the Plans – to whom they owed fiduciary obligations – much higher compensation for managing securities than they collected from other institutional investors. Moreover, the fifty percent received by Defendants far exceeds industry standards. 10. Defendants’ excessive compensation is not surprising given that their investment relationship with the Plans was fraught with conflicts and self-dealing. As shown in greater detail below, Defendants, on the one hand, managed the Common Trusts and purportedly represented the Common Trusts and the Plans in setting the terms of and executing a Securities Lending Agreement with Defendants, on the other hand, representing themselves as the Lending Agent. The Defendants, acting as Lending Agent, then allocated to themselves, or an affiliate, the responsibility for managing the collateral investment program via the Collateral Pools. Essentially, Defendants, all of whom operate under the same corporate umbrella, negotiated with themselves the terms of their compensation, discretion, authority, and even liability. Not 4 surprisingly, these arrangements led to Defendants setting and receiving excessive and unreasonable compensation for themselves. 11. Every dollar Defendants collected in excess of reasonable compensation was one dollar less that the Plans, and their respective participants and beneficiaries, received. Moreover, the Plans suffered additional losses in the form of lost investment opportunity on the securities lending income wrongfully taken by Defendants for themselves where such income would have been reinvested in the respective Common Trusts, rather than taken by Defendants for their own profit and use. As a result, the Plans suffered hundreds of millions of dollars in losses due to Defendants’ fiduciary breaches and prohibited self-dealing. I. JURISDICTION AND VENUE 12. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §1331, ERISA §502(e)(1), codified at 29 U.S.C. § 1132(e)(1), and 28 U.S.C. § 1332. The claims asserted herein are brought as a class action under Rule 23 of the Federal Rules of Civil Procedure. 13. Venue is proper in this district pursuant to ERISA §502(e)(2), codified at 29 U.S.C. §1132(e)(2), and 28 U.S.C. § 1391, because SSC, SSBT, and SSGA are located in this judicial district. II. THE PARTIES Plaintiff 14. The Committee is the named fiduciary of the Goodyear VEBA. As such, the Committee is authorized under ERISA §502(a)(2) and the common law to represent the Goodyear VEBA in lawsuits arising under ERISA and, alternatively, the common law. As of 5 December 31, 2010, the Goodyear VEBA held approximately $940 million in assets. The Goodyear VEBA Summary Annual Report is available at http://www.goodyear-veba.com. 15. The Goodyear VEBA invested its assets with State Street. Specifically, during the period September 30, 2008 through September 30, 2010, the Goodyear VEBA invested in the following Common Trusts offered or managed by Defendants which participated in Defendants’ securities lending program: Credit 1-3 Year Index SL CTF; Passive Bond Market SL CTF; Russell 3000 Lending Index CTF; MSCI EAFE Index SL CTF; Credit 3-10 Year Index SL CTF; and the MSCI Emerging Markets Index SL CTF. Defendants 16. State Street Bank & Trust Company (“SSBT”). SSBT is the principal banking subsidiary of SSC. SSBT is an investment manager of the funds in the Goodyear VEBA and is located at 3 Batterymarch Park, Quincy, Massachusetts. As trustee, SSBT is, by definition, a fiduciary to the Plan. 17. State Street Corporation (“SSC”). SSC is a financial holding company, organized in 1970 under the laws of the Commonwealth of Massachusetts. Through its subsidiaries, including its principal banking subsidiary, SSBT, SSC provides a full range of products and services for institutional investors worldwide. Its executive offices are located at One Lincoln Street, Boston, Massachusetts. 18. State Street Global Advisors (“SSGA”). SSGA is the investment management arm of SSC. On information and belief, SSGA is the Investment Manager, and therefore a fiduciary, for some or all of the Common Trusts that State Street Defendants offer and manage. To the extent that the investment advisor for a given Common Trust is not an 6 affiliate of State Street Defendants, State Street Defendants retain the discretion and control over the securities lending feature of the Common Trust. III. DEFENDANTS’ FIDUCIARY STATUS 19. ERISA treats as fiduciaries not only persons explicitly named as fiduciaries under §402(a)(1), 29 U.S.C. §1102(a)(1), but also any other persons who in fact perform fiduciary functions. Thus, a person is a 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). The common law is to the same effect. 20. Investment Manager. Under ERISA, an investment manager or investment adviser is a fiduciary. ERISA defines investment manager as: (38) any fiduciary (other than a trustee or named fiduciary, as defined in section 1102(a)(2) of this title) – (A) who has the power to manage, acquire, or dispose of any asset of a plan; (B) who (i) is registered as an investment adviser under the Investment Advisers Act of 1940 [15 U.S.C. 80b-1 et seq.]; (ii) is not registered as an investment adviser under such Act by reason of paragraph (1) of section 203A(a) of such Act [15 U.S.C. 80b-3a (a)], is registered as an investment adviser under the laws of the State (referred to in such paragraph (1)) in which it maintains its principal office and place of business, and, at the time the fiduciary last filed the registration form most recently filed by 7 the fiduciary with such State in order to maintain the fiduciary’s registration under the laws of such State, also filed a copy of such form with the Secretary; (iii) is a bank, as defined in that Act; or (iv) is an insurance company qualified to perform services described in subparagraph (A) under the laws of more than one State; and (C) has acknowledged in writing that he is a fiduciary with respect to the plan. ERISA §3(38), 29 U.S.C. §1002(38). 21. Here, at all relevant times, Defendants were named and/or serve as the Investment Manager, Trustee, Advisor or administrator of all the Common Trusts, and the Lending Agent, as described below, and thus were fiduciaries of the Goodyear VEBA and the Plans. Moreover, Defendants exercised discretion and control over the Plans’ assets because the State Street Defendants managed the Collateral Pools, and thus decided how to invest the Collateral posted by borrowers. Further, Defendants set their own compensation for managing the securities lending program and received that compensation from the Plans’ assets. Thus, Defendants were responsible for prudently and loyally managing the assets that were invested in the Common Trusts and Collateral Pools for the benefit of the Plans. IV. DEFENDANTS’ FIDUCIARY DUTIES 22. ERISA §502(a)(2), 29 U.S.C. §1132(a)(2), provides, in relevant part, that a civil action for breach of fiduciary duty for relief under ERISA §409, 29 U.S.C. §1109 may be brought by a participant, beneficiary or fiduciary of a plan. 23. ERISA §409(a), 29 U.S.C. §1109(a), “Liability for Breach of Fiduciary Duty,” provides, in relevant part: 8 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 subchapter 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. 24. ERISA §§404(a), 29 U.S.C. §§1104(a), provides 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 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. 25. These fiduciary duties under ERISA §§404(a) are referred to as the duties of loyalty, exclusive purpose and prudence and are the “highest known to the law.” Donovan v. Bierwith, 680 F.2d 263, 272 n.2 (2d Cir. 1982). They entail, among other things: 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, including, in this case, the State Street Defendants’ personal interests in receiving some of the cash collateral from securities lending; and 26. ERISA also prohibits certain transactions with plan involving parties in interest and fiduciaries because of their high potential for abuse. Specifically, ERISA §406 provides as follows: (a) Transactions between plan and party in interest Except as provided in section 1108 of this title: 9 (1) 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; (B) lending of money or other extension of credit 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; or (E) acquisition, on behalf of the plan, of any employer security or employer real property in violation of section 1107 (a) of this title. (2) No fiduciary who has authority or discretion to control or manage the assets of a plan shall permit the plan to hold any employer security or employer real property if he knows or should know that holding such security or real property violates section 1107 (a) of this title. (b) Transactions between plan and fiduciary 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, (2) 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, or (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. V. DEFENDANTS’ VIOLATIONS OF ERISA AND THE COMMON LAW 27. Defendants’ violations of ERISA and the common law arise from their self- dealing in selecting themselves as lending agent, paying themselves from Plan assets and setting their own compensation for acting in that capacity, and taking an unreasonable amount of compensation for providing lending services on behalf of the Common Trusts. 28. As shown above, Defendants were (and are) fiduciaries responsible for managing the Plans’ investments in the Common Trusts prudently and solely in the interests of 10 the Plans and their respective participants and beneficiaries. Defendants received investment advisory, custodial, trustee, and administrative fees for managing the Common Trusts. In addition to investing and managing the Plans’ assets in accordance with a given Common Trust’s stated objectives, Defendants also invested Plan assets through their securities lending program. 29. Through the securities lending program, the Common Trusts, and the Plans indirectly, made securities available for loan. Defendants set the terms and conditions, via a securities lending authorization agreement between the Common Trusts and Defendants, of the Common Trusts’ participating in the securities lending program. Defendants, acting as the “Lending Agent,” decided which securities would be loaned to which borrowers, collected the collateral from the borrowers, and invested the collateral in one or more Collateral Pools. 30. Defendants established and managed the Collateral Pools and received investment advisory, custodial, trustee, and administrative fees for managing them. In addition, Defendants took fifty percent of the spread, that is, the income, after expenses and rebates, generated by the Collateral Pools. Only half of the income generated from the securities lending collateral went to the Common Trusts. Defendants controlled all aspects of the securities lending program and all agreements and contracts created and executed thereunder. 31. These arrangements were fraught with conflicts and self-dealing. Defendants managed the Common Trusts and purportedly represented the Common Trusts and the Plans in setting the terms of and executing a Securities Lending Agreement with one or more of themselves, who acted as the Lending Agent. One or more of Defendants, as Lending Agent, then allocated to one or more of Defendants, or an affiliate, the responsibility for managing the collateral investment program via the Collateral Pools. Essentially, Defendants negotiated with themselves the terms of their compensation, discretion, authority, and even liability. Not 11 surprisingly, these arrangements led to Defendants setting and receiving excessive and unreasonable compensation for themselves. 32. Although Defendants set their own compensation at fifty percent of the net income produced by the Collateral Pools pursuant to their self-dealing arrangements, in arm’s length securities lending agreements, Defendants received far less compensation. For example, Defendants’ securities lending arrangements with the state retirement plans of Missouri and Florida provided that Defendants received only 30% of securities lending income. (Exhibits 1 (Missouri), 2 (Florida).) 33. Moreover, the fifty percent received by Defendants far exceeds industry standards. As one financial columnist explained, a “few exemplary firms, like T. Rowe Price Group and Vanguard Group, rebate all securities-lending income (net of expenses) back to the funds that generated it. The total cost of Vanguard’s securities-lending program is well under 1%, says Tom Higgins, chief financial officer of the funds. That suggests that most of the 30%- to-50% toll charged by other fund managers is pure profit ̶ in effect, money for nothing.” Is Your Fund Pawning Shares at Your Expense, Jason Sweig, Wall Street Journal, May 30, 2009. (Exhibit 3.) 34. An August 2002 survey by Plansponsor.com found that the norm for division of securities lending income was between 70 and 80% to the lender, i.e., the investors. Charles Ruffel, Lending Logic (available at http://www.plansponsor.com/MagazineArticle.aspx?id=6442460188&magazine=6442459) (Exhibit 4.) 35. A leading consultant and investment advisor to retirement plans and other institutional investors, Enis Knupp & Associates, Inc., reported in an October 2003 article that 12 securities lending agents typically receive 15 to 35% of the income from collateral investment. Less is More: Securities Lending Revisited, Enis Knupp & Associates, Inc., 2003. (Exhibit 5.) The trend for large investors, however, has been toward a split of 80-20 in favor of the investor. Lending Logic, supra. (Exhibit 4.) 36. A 2010 RFP shows that plans sponsored by the State of Oklahoma receive 85% of the securities lending income for the securities that they loan. (Exhibit 6.) In 2006, the State of Florida maintained securities lending arrangements with several large banks, including Defendants. Under four of the contracts, Florida plans received 80% of securities lending income, and Florida plans received 70% of the income from its arrangement with SSGA. (Exhibit 2.) 37. A vice-president at Citibank, Brendan McCarthy, commented, “anyone over $1 billion in assets still at 60/40 should be talking to agent lenders … and any large [investors] ($ billion and better) not at 80/20 should likewise be talking to lenders.” Lending Logic, supra. (Exhibit 4.) 38. The Common Trusts at issue in this case collectively possessed millions of dollars of holdings. Defendants, fiduciaries of the Common Trusts, of course failed to take advantage of the Common Trusts’ massive bargaining power and leverage to negotiate a favorable compensation arrangement for its clients. Instead, they gave themselves a sweetheart deal, 50% of the net lending income, that was not the product of arm’s length negotiations. 39. Each time Defendants received compensation from the Collateral Pools, on information and belief, each fiscal quarter, they engaged in a self-dealing transaction with the Plans’ assets. Each Defendant was a fiduciary for the Plans, as alleged above. Therefore, each Defendant was, by definition, also a party-in-interest to the Plans. 13 40. In setting, receiving, and controlling their own compensation, as well as creating and managing the Collateral Pool investments, Defendants caused all of the securities lending transactions, from making the securities available for loan, to contracting with themselves, to investing the collateral in Collateral Pools, to managing the Collateral Pools, to receiving income from the Collateral Pools. These repeated violations over many years were breaches of their duty of loyalty under ERISA § 404(a) and violations of per se rules against self- dealing transactions under ERISA § 406(b) and of prohibited transactions under §406(a), as well as, alternatively, violations of the common law. 41. As a result of Defendants’ fiduciary breaches and self-dealing, the Plans and their respective participants and beneficiaries suffered hundreds of millions of dollars in losses. Every dollar collected by Defendants in excess of reasonable compensation was one dollar less for the Plans. Moreover, the Plans also suffered additional losses in the form of lost investment opportunity on the securities lending income wrongfully taken by Defendants for themselves. That income would have been reinvested in the respective Common Trusts and would have produced additional gains for the Plans. VI. CLASS ACTION ALLEGATIONS 42. ERISA §§ 409(a) and 502(a)(2) and Massachusetts common law authorize fiduciaries, such as the Committee, to sue in a representative capacity for losses suffered by plans and trusts as a result of breaches of fiduciary duty. Pursuant to that authority, and, alternatively, pursuant to the common law, the Committee brings this action as a class action under Fed. R. Civ. P. 23 on behalf of the Goodyear VEBA and all other similarly-situated Plans, i.e., all the ERISA Plans – or, alternatively, all the Plans ̶ that invested Collateral in the Collateral Pools through the Common Trusts. The Committee seeks to restore losses to the Plans, 14 for which the State Street Defendants are personally liable pursuant to ERISA §§ 409 and 502(a)(2), 29 U.S.C. §§ 1109, and 1132(a)(2), and, alternatively, pursuant to the common law. 43. Class Definition. The Committee brings this action as a class action pursuant to Rules 23(a), (b)(1), (b)(2), and, in the alternative, (b)(3) of the Federal Rules of Civil Procedure on behalf of itself and the following class of persons similarly situated (the “ERISA Class”): ERISA plans that, during the period January 22, 2007 to the present: (1) invested in a Common Trust established by Defendants that loaned securities under a Master Securities Lending Authorization Agreement, and (2) paid to Defendants fifty percent (50%) of the net securities lending income that the Common Trust earned from a Lending Fund.1 Alternatively, with respect to Count III, asserting (in the alternative) claims for breach of fiduciary duty under the common law, the Committee brings this action as a class action pursuant to Rules 23(a), (b)(1), (b)(2), and, in the alternative, (b)(3) of the Federal Rules of Civil Procedure on behalf of itself and the following class of persons similarly situated (the Non- ERISA Class”): Plans that, during the period January 22, 2007 to the present: (1) invested in a Common Trust established by Defendants that loaned securities under a Master Securities Lending Authorization Agreement, and (2) paid to Defendants fifty percent (50%) of the net securities lending income that the Common Trust earned from a Lending Fund. 44. Numerosity. The members of each of the ERISA Class and the Non- ERISA Class (collectively, the “Classes”) are so numerous that joinder of all members is impracticable. While the exact number of the members of each Class is unknown to the Committee at this time and can only be ascertained through appropriate discovery, the 1 The (“Lending Funds”) are those collective investment funds managed by SSgA that lend securities under Defendants’ securities lending program. 15 Committee understands that dozens or hundreds of ERISA Plans and Non-ERISA Plans throughout the country invested in the Common Trusts during the Class Period, and sustained losses as a result of the State Street Defendants’ securities lending activities. 45. Commonalilty. The claims of the Committee and all members of each of the Classes originate from the same misconduct, breaches of duties and violations of ERISA perpetrated by the Defendants. Proceeding as a class action is particularly appropriate here, because Goodyear VEBA assets were held in Common Trusts and/or Collateral Pools managed by the Defendants, where each investor shared in gains and losses on a pro rata basis, and, therefore, Defendants’ imprudent actions affected all Plans in the same manner. Furthermore, common questions of law and fact exist as to all members of each of the Classes and predominate over any questions solely affecting individual members of each of the Classes. The many questions of law and fact common to the each of the Classes include: a. Whether Defendants are fiduciaries; b. Whether Defendants breached their fiduciary duties; c. Whether Defendants’ acts proximately caused losses to the Plans and, if so, the appropriate relief to which the Committee, on behalf of the Plans and the each of the Classes, is entitled; d. Whether the compensation Defendants received in connection with transactions involving Plan assets was reasonable; e. Whether Defendants caused the Plans to engage in prohibited transactions with parties in interest, fiduciaries, and Defendants or their affiliates; f. Whether an affirmative defense to prohibited transactions applies and can be satisfied by Defendants. 16 46. Typicality. The Committee's claims are typical of the claims of the members of each of the Classes because the Committee seeks relief on behalf of the Plans pursuant to ERISA §502(a)(2), and, alternatively, pursuant to the common law, and, thus, the Committee's claims on behalf of the Plans are not only typical of, but identical to, a claim brought by any member of each of the Classes. If cases were brought and prosecuted individually, each of the members of the Classes would be required to prove the same claims based upon the same facts, pursuant to the same remedial theories, and would be seeking the same relief. 47. Adequacy. The Committee will fairly and adequately protect the interests of the members of the Classes and has retained counsel competent and experienced in class action, ERISA, and fiduciary litigation. The Committee has no interests antagonistic to or in conflict with those of the Classes. 48. Rule 23(b) (1)(A) & (B) Requirements. Class action status in this action is warranted under Rule 23(b)(1)(A), because prosecution of separate actions by the members of the Classes would create a risk of establishing incompatible standards of conduct for Defendants. Class action status is also warranted under Rule 23(b)(1)(B), because prosecution of separate actions by the members of the Classes would create a risk of adjudications with respect to individual members of the Classes that, as a practical matter, would be dispositive of the interests of other members not parties to this action, or that would substantially impair or impede their ability to protect their interests. 49. Rule 23(b)(2) Requirements. Certification under 23(b)(2) is warranted because Defendants have acted or refused to act on grounds generally applicable to the Classes, 17 thereby making appropriate final injunctive, declaratory, or other appropriate equitable relief with respect to the Classes as a whole. 50. Rule 23(b)(3) Requirements. In the alternative, certification under Rule 23(b)(3) is appropriate because questions of law or fact common to members of the Classes predominate over any questions affecting only individual members, and class action treatment is superior to the other available methods for the fair and efficient adjudication of this controversy. VII. REMEDY UNDER ERISA FOR BREACHES OF FIDUCIARY DUTIES 51. ERISA §502(a)(2), 29 U.S.C. §1132(a)(2), authorizes the Secretary of Labor, or a participant, beneficiary or fiduciary of a plan, 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 such plan any losses to the plan ....” Section 409 also authorizes “such other equitable or remedial relief as the court may deem appropriate....”, including disgorgement of all fees and compensation received by Defendants as a result of their unlawful conduct. 52. With respect to calculation of the losses to the ERISA Plans, breaches of fiduciary duty result in a presumption that, but for the violations of ERISA, the ERISA Plans would have received hundreds of millions of dollars in additional securities lending income and additional investment returns on that reinvested income. In this way, the remedy restores the ERISA Plans’ lost value and puts the participants in the position they would have occupied had the ERISA Plans been properly administered. 53. Plaintiff, on behalf of the ERISA Plans, is therefore entitled to relief from Defendants in the form of: (a) a monetary payment to the ERISA Plans in an amount to be proven at trial based on the principles described above, as provided by ERISA §409(a), 29 18 U.S.C. §1109(a); (b) injunctive and other appropriate equitable relief to remedy the breaches alleged above, including on order permitting the ERISA Plans and the ERISA Class to withdraw assets from Common Trusts, as provided by ERISA §§409(a), 502(a)(2) and (3), 29 U.S.C. §§1109(a), 1132(a)(2); (c) disgorgement of compensation and profits earned thereon as a result of prohibited transactions; (d) 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; (e) taxable costs and interest on these amounts, as provided by law; and (f) such other legal or equitable relief as may be just and proper. 54. Under ERISA, each Defendant is jointly and severally liable. VIII. CLAIMS FOR RELIEF COUNT I FOR PROHIBITED TRANSACTIONS INVOLVING PLAN ASSETS 55. The Committee repeats and realleges each of the allegations set forth in the foregoing paragraphs as if fully set forth herein. 56. Under Section 3(21) of ERISA, 29 U.S.C. §1002(21), Defendants were at all relevant times ERISA fiduciaries with respect to the Goodyear VEBA and the invested assets of the ERISA Plans. 57. Under Section 3(38) of ERISA, 29 U.S.C. §1002(38), one or more of Defendants were at all relevant times the Investment Managers of the Goodyear VEBA and the ERISA Plans. 58. The scope of the fiduciary duties and responsibilities of the Defendants included managing the assets of the Goodyear VEBA and the ERISA Plans. 59. Defendants, through the Common Trusts, engaged in numerous self- 19 dealing and prohibited transactions with fiduciaries and parties in interest, namely themselves, which transactions were per se prohibited by Section 406 of ERISA, 29 U.S.C. §1106. Such transactions were not exempted by an individual, class, or statutory exemption. 60. Pursuant to ERISA §§409, 502(a)(2), and (a)(3), 29 U.S.C. §§1109(a), and 1132(a)(2), Defendants are liable to restore the losses to the Goodyear VEBA and the ERISA Plans caused by their violations of Section 406, and to disgorge their compensation and profits thereon, and subject to other equitable relief as appropriate. COUNT II FOR FAILURE TO PRUDENTLY AND LOYALLY MANAGE PLAN ASSETS 61. The Committee repeats and realleges each of the allegations set forth in the foregoing paragraphs as if fully set forth herein. 62. Under Section 3(21) of ERISA, 29 U.S.C. §1002(21), Defendants were at all relevant times ERISA fiduciaries with respect to the Goodyear VEBA and the invested assets of the Goodyear VEBA. 63. Under Section 3(38) of ERISA, 29 U.S.C. §1002(38), one or more of Defendants were at all relevant times the Investment Managers of the Goodyear VEBA and the ERISA Plans. 64. The scope of the fiduciary duties and responsibilities of Defendants included managing the assets of the Goodyear VEBA and the ERISA Plans. 65. Defendants were obligated to discharge their duties with respect to the Goodyear VEBA and the ERISA Plans’ assets with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with 20 such matters would use in the conduct of an enterprise of a like character and with like aims. ERISA §404(a)(1)(B), 29 U.S.C. §1104(a)(1)(B). 66. Contrary to their duties and obligations under ERISA, Defendants failed loyally and prudently to manage the assets of the Goodyear VEBA and the ERISA Plans. Specifically, Defendants breached their duties to the Goodyear VEBA and the ERISA Plans and their participants, in violation of ERISA §404(a), by, inter alia, entering into contracts with their affiliates purportedly for the benefit of the Goodyear VEBA and the ERISA Plans, in which the Goodyear VEBA and the ERISA Plans were not represented by independent fiduciaries in order for Defendants to award themselves unreasonable compensation far in excess of industry standards. 67. As a consequence of Defendants’ breaches of fiduciary duties, the Goodyear VEBA and the ERISA Plans suffered massive losses. Had Defendants collected reasonable compensation, the losses suffered by the Goodyear VEBA and the ERISA Plans would have been minimized or avoided. Therefore, as a direct and proximate result of the breaches of fiduciary duty alleged herein, the ERISA Plans collectively lost hundreds of millions of dollars of retirement savings. 68. Pursuant to ERISA §§409, 502(a)(2) and (3), 29 U.S.C. §§1109(a), and 1132(a)(2), Defendants are liable to restore the losses to the ERISA Plans caused by their breaches of fiduciary duties alleged in this Count and to provide other equitable relief as appropriate. 21 COUNT III (In the Alternative) FOR BREACH OF FIDUCIARY DUTY UNDER MASSACHUSETTS COMMON LAW 69. The Committee incorporates by reference and realleges each and every allegation above as though fully set forth herein, except for those allegations pertaining specifically to ERISA. This claim is asserted only on behalf of members of the Non-ERISA Class described in paragraph 43, above, i.e. entities that are determined to be not covered by ERISA. 70. In the event that the Goodyear VEBA and/or the Plans are determined not to be governed by ERISA, Defendants nonetheless owed, at all relevant times, fiduciary duties to the Goodyear VEBA and the Plans under Massachusetts law. Pursuant to the trust agreements between Defendants and members of the proposed Non-ERISA Class and the declarations of trust establishing the Common Trusts, Defendants served as the trustee and investment manager of plan assets in the Collateral Pools. As such, they owed Plaintiff and the Plans the highest obligation of due care, good faith and loyalty. The scope of the fiduciary duties and responsibilities of Defendants included managing the assets of the Goodyear VEBA and the Plans, including the cash collateral derived from securities lending and invested in the Collateral 71. Defendants were obligated to discharge their duties with respect to the Goodyear VEBA and the Plans’ assets 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 addition, Defendants were obligated act for the benefit of Plaintiff and the Plans and to refrain acting in their own interests or utilizing Plan assets for their own benefit or gain. 22 72. Contrary to their duties and obligations as fiduciaries, Defendants failed loyally and prudently to manage the assets of the Goodyear VEBA and the Plans. Specifically, Defendants breached their duties to the Goodyear VEBA and the Plans by, inter alia, entering into contracts with themselves or their affiliates purportedly for the benefit of the Goodyear VEBA and the Plans, in which the Goodyear VEBA and the Plans were not represented by independent fiduciaries in order for Defendants to award themselves unreasonable compensation far in excess of industry standards. 73. The Committee was not aware of Defendants’ breach of duty until it became aware in late 2011 that the securities lending fees that Defendants collected from the Goodyear VEBA and the Plans were excessive compared to the standard in the industry and the fees that Defendants charged other clients for securities lending services. Specifically, the Committee did not learn of the facts alleged in paragraph 32 and paragraphs 33 through 37, above, until late 2011. 74. Defendants breached their fiduciary duties to the Goodyear VEBA and the Plans, and the Goodyear VEBA and the Plans suffered a separate injury, each time Defendants collected a 50% share of securities lending revenue from the Goodyear VEBA and the Plans to compensate Defendants for their securities lending services. Defendants have collected such fees from the Goodyear VEBA on a monthly basis since September, 2008, including on multiple occasions since January 2010. 75. As a consequence of Defendants’ breaches of fiduciary duties, the Goodyear VEBA and the Plans suffered massive losses. Had Defendants collected reasonable compensation, the losses suffered by the Goodyear VEBA and the Plans would have been minimized or avoided. Therefore, as a direct and proximate result of the breaches of fiduciary 23 duty alleged herein, the Plans collectively lost hundreds of millions of dollars. IX. PRAYER FOR RELIEF WHEREFORE, the Committee prays for judgment as follows: A. A determination that this action is a proper class action and certifying the Committee as a class representative under Rule 23 of the Federal Rules of Civil Procedure; B. A Declaration that Defendants, and each of them, have breached their ERISA fiduciary duties to the Goodyear VEBA and the Classes; C. A Declaration that Defendants, and each of them, are not entitled to the protection of ERISA §404(c)(1)(B), 29 U.S.C. §1104(c)(1)(B); D. A Declaration that Defendants, and each of them, have violated ERISA §406, 29 U.S.C. §1106; E. A Declaration, in the alternative, that Defendants, and each of them, have breached their common law fiduciary duties to the Goodyear VEBA and the Non-ERISA Class. F. An Order compelling Defendants to make good to the Goodyear VEBA and the Classes all losses resulting from the securities lending program and to restore to the Goodyear VEBA and the Classes all profits that the participants and beneficiaries would have made if Defendants had fulfilled their fiduciary obligations; G. Imposition of a constructive trust on any amounts by which any Defendants were unjustly enriched at the expense of the Goodyear VEBA and the Classes as the result of beaches of fiduciary duty; H. Restoration of any losses to the Goodyear VEBA and the Classes, allocated among the participants’ individual accounts within the Goodyear VEBA and the Class of Plans, in proportion to the accounts’ losses; 24 I. Recovery of 100 percent of the securities lending fees paid to Defendants in violation of ERISA §406, 29 U.S.C. §1106; J. An Order awarding costs, including pursuant to 29 U.S.C. §1132(g); K. An Order awarding attorney fees pursuant to the common fund doctrine, 29 U.S.C. §1132(g), and other applicable law; L. An Order for equitable restitution and other appropriate equitable and injunctive relief against Defendants; and M. Granting such other and further relief as the Court may deem just and proper. X. DEMAND FOR JURY TRIAL The Committee demands a jury trial on all claims so triable. Dated: May 7, 2013 Respectfully submitted, Todd M. Schneider Mark T. Johnson SCHNEIDER WALLACE COTTRELL KONECKY LLP 180 Montgomery Street, Suite 2000 San Francisco, CA 94104 Tel: (415) 421-7100 Fax: (415) 421-7105 /s/ Todd S. Collins Todd S. Collins Shanon J. Carson Ellen T. Noteware BERGER & MONTAGUE, P.C. 1622 Locust Street Philadelphia, PA 19103 Tel: (215) 875-3040 Fax: (215) 875-4604 Garrett W. Wotkyns SCHNEIDER WALLACE COTTRELL KONECKY LLP 8501 North Scottsdale Rd., Suite 270 Scottsdale, AZ 85253 Tel: (480) 428-0142 Fax: (866) 505-8036 Gregory Y. Porter BAILEY & GLASSER LLP 910 17th Street, NW Suite 800 Washington, DC 20006 Tel: (202) 463-2101 Fax: (202) 463-2103 25 John Roddy BAILEY & GLASSER LLP 125 Summer Street Suite 1030 Boston, MA 02110 Tel: (617) 439-6730 Fax: (617) 951-3954 Brian A. Glasser Michael L. Murphy BAILEY & GLASSER LLP 209 Capitol Street Charleston, WV 25301 Tel: (304) 345-6555 Fax: (304) 342-1110 Attorneys for Plaintiffs CERTIFICATE OF SERVICE I, Todd S. Collins hereby certify that this First Amended Complaint filed through the ECF system will be sent electronically to the registered participants as identified on the Notice of Electronic Filing (NEF) on May 7, 2013. /s/ Todd S Collins 26

securities

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Michael L. Greenwald (pro hac vice pending) Greenwald Davidson Radbil PLLC 5550 Glades Road, Suite 500 Boca Raton, FL 33431 Telephone: (561) 826-5477 Facsimile: (561) 961-5684 [email protected] Attorney for Plaintiff UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Jennifer Ramos, on behalf of herself and others similarly situated, Plaintiff, vs. Case No. CLASS ACTION COMPLAINT AND TRIAL BY JURY DEMAND Kohl’s Department Stores, Inc., Defendant. ) ) ) ) ) ) ) ) ) ) Jennifer Ramos (“Plaintiff”), by and through her undersigned counsel, and on behalf of herself and others similarly situated, sues Kohl’s Department Stores, Inc. (“Defendant”), and alleges as follows: Nature of the Action 1. This is a class action against Defendant for violations of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. 2. Section 227(b)(1)(A)(iii) of the TCPA sets forth restrictions on the use of automated telephone equipment and prerecorded voice calls, and provides in pertinent part: 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, unless such call is made solely to collect a debt owed to or guaranteed by the United States[.] 3. Upon information and belief, Defendant routinely violates 47 U.S.C. § 227(b)(1)(A)(iii) by placing non-emergency telephone calls to the cellular telephones of consumers using an automatic telephone dialing system and/or an artificial or prerecorded voice, without the prior express consent of the consumers, in that it repeatedly dials the cellular phone numbers of its customers after being instructed to stop calling. Jurisdiction 4. This Court has subject matter jurisdiction pursuant to 47 U.S.C. § 227(b)(3) and 28 U.S.C. § 1331. 5. Venue is proper before this Court pursuant to 28 U.S.C. § 1391(b), where Plaintiff resides in this State and in this District, a substantial part of the events giving rise to Plaintiff’s action occurred in this State and in this District, and where Defendant transacts business in this State and in this District. Parties 6. Plaintiff is a natural person who at all relevant times resided in the State of Arizona, County of Maricopa, and City of Tempe. 7. Defendant is an operator of department stores throughout the country. 8. Defendant also operates an e-commerce website (www.Kohls.com). 9. Defendant sells private label, exclusive and national brand apparel, footwear, accessories, beauty and home products. Factual Allegations 10. Plaintiff is subscribed to a cellular telephone service and has been assigned a wireless number in connection with such subscription. 11. Prior to February 2016, Plaintiff obtained credit through Defendant and Capital One for a Kohl’s-branded credit card. 12. Plaintiff had an outstanding balance on her Kohl’s-branded credit card, and was unable to make timely payments. 13. On or before February 16, 2016, Defendant placed a call to Plaintiff’s wireless number. 14. To the extent Defendant had Plaintiff’s prior express consent to place calls to Plaintiff’s wireless number, Plaintiff revoked such consent on or about February 16, 2016 upon answering one of Defendant’s calls and instructing Defendant to cease calling her. 15. In response to Plaintiff telling Defendant to stop calling her wireless number, Defendant told Plaintiff that it would not stop calling until she paid off her balance. 16. Following the initial time that Plaintiff revoked consent to receive telephone calls via an automatic telephone dialing system to her cellular telephone, she has since directed Defendant to stop calling her on at least two other occasions. 17. No matter, Defendant placed additional calls to Plaintiff’s wireless number, including, on the following dates and times: 1) February 16, 2016 at 6:46 P.M.; 2) February 17, 2016 at 7:18 P.M.; 3) February 18, 2016 at 6:33 P.M.; 4) February 20, 2016 at 2:46 P.M.; 5) February 22, 2016 at 7:22 P.M.; 6) February 23, 2016 at 6:03 P.M.; 7) February 25, 2016 at 7:17 P.M.; 8) February 26, 2016 at 4:55 P.M.; 9) February 28, 2016 at 10:40 A.M.; 10) February 29, 2016 at 6:14 P.M.; 11) March 7, 2016 at 7:14 P.M.; 12) March 8, 2016 at 6:59 P.M.; 13) March 12, 2016 at 2:33 P.M.; 14) March 15, 2016 at 7:01 P.M.; 15) March 16, 2016 at 8:04 P.M.; 16) March 18, 2016 at 1:15 P.M.; 17) March 19, 2016 at 11:22 A.M.; 18) March 29, 2016 at 6:51 P.M.; 19) April 1, 2016 at 12:24 P.M.; 20) April 2, 2016 at 1:34 P.M.; 21) April 3, 2016 at 1:10 P.M.; 22) April 7, 2016 at 7:37 P.M.; 23) April 8, 2016 at 12:48 P.M.; 24) April 10, 2016 at 8:39 P.M.; 25) April 13, 2016 at 11:11 A.M.; 26) April 13, 2016 at 8:24 P.M.; 27) April 14, 2016 at 5:41 P.M; 28) April 15, 2016 at 12:49 P.M.; 29) April 17, 2016 at 12:41 P.M.; 30) April 25, 2016 at 8:08 P.M.; 31) April 28, 2016 at 5:17 P.M.; 32) April 30, 2016 at 12:54 P.M.; 33) May 2, 2016 at 5:53 P.M.; 34) May 4, 2016 at 5:24 P.M.; 35) May 9, 2016 at 5:22 P.M.; 36) May 13, 2016 at 10:26 A.M.; 37) May 16, 2016 at 5:16 P.M.; 38) May 17, 2016 at 5:20 P.M.; and 39) May 18, 2016 at 5:47 P.M. 18. During some of the above-referenced calls, Defendant delivered a voice message to Plaintiff’s wireless number. 19. Some of the voice messages left by Defendant used an artificial or pre- recorded voice. 20. For example, on February 14, 2016, Defendant left the following voice message on Plaintiff’s cellular telephone using an artificial voice: Please call Kohl’s Department store at 1-888-814-3555. Please call Kohl’s Department store at 1-888-814-3555. Please call Kohl’s Department store at 1-888-814-3555. Again, please call Kohl’s Department store at 1-888-814-3555. 21. Upon information and good faith belief, and in light of the frequency, large number, nature, and character of the calls at issue, including the prerecorded nature of some of the calls, Defendant placed the calls to Plaintiff’s cellular telephone number by using an automatic telephone dialing system. 22. Upon information and good faith belief, and in light of the frequency, large number, nature, and character of the calls at issue, including the prerecorded nature of some of the calls, Defendant placed them by using equipment which has the capacity (i) to store or produce telephone numbers to be called, using a random or sequential number generator, and (ii) to dial such numbers. 23. Upon information and good faith belief, and in light of the frequency, large number, nature, and character of the calls at issue, including the prerecorded nature of some of the calls, Defendant placed them by using (i) an automated dialing system that uses a complex set of algorithms to automatically dial consumers’ telephone numbers in a manner that “predicts” the time when a consumer will answer the phone and a person will be available to take the call, or (ii) equipment that dials numbers and, when certain computer software is attached, also assists persons in predicting when a sales agent will be available to take calls, or (iii) hardware, that when paired with certain software, has the capacity to store or produce numbers and dial those numbers at random, in sequential order, or from a database of numbers, or (iv) hardware, software, or equipment that the FCC characterizes as a predictive dialer through the following, and any related, reports and orders, and declaratory rulings: In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 17 FCC Rcd 17459, 17474 (September 18, 2002); In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 FCC Rcd 14014, 14092-93 (July 3, 2003); In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 23 FCC Rcd 559, 566 (Jan. 4, 2008). 24. Defendant did not place any of the calls at issue to Plaintiff’s wireless number for emergency purposes. 25. Defendant did not have Plaintiff’s prior express consent to make calls to Plaintiff’s wireless number. 26. Upon information and belief, Defendant voluntarily placed the calls at issue to Plaintiff’s wireless number. 27. Upon information and belief, Defendant placed all calls to Plaintiff’s wireless number under its own free will. 28. Upon information and belief, Defendant had knowledge that it was using an automatic telephone dialing system or an artificial or prerecorded voice to place each of the calls at issue. 29. Upon information and belief, Defendant intended to use an automatic telephone dialing system or an artificial or prerecorded voice to place each of the calls at issue. 30. Upon information and belief, Defendant maintains business records that show all calls Defendant placed to Plaintiff’s wireless number, which may reveal the existence of additional violations beyond those pleaded above. 31. Plaintiff suffered harm as a result Defendant’s telephone calls at issue in that she suffered an invasion of her privacy, an intrusion into her life, and a private nuisance. 32. As well, Defendant’s telephone calls at issue depleted or consumed, directly or indirectly, Plaintiff’s cellular telephone minutes, for which she paid a third party. 33. Additionally, the unwanted calls at issue unnecessarily tied up Plaintiff’s telephone line. Class Action Allegations 34. Plaintiff brings this action as a class action under Federal Rule of Civil Procedure 23(a) and (b) on behalf of herself and a class of similarly situated individuals as defined below: All persons and entities throughout the United States (1) to whom Kohl’s Department Stores, Inc. placed, or caused to be placed, calls (2) directed to a number assigned to a cellular telephone service, by (3) using an automatic telephone dialing system or an artificial or prerecorded voice, (5) in the four years preceding the filing of this complaint, (6) after being instructed to cease placing such calls. Excluded from the class are Defendant, its officers and directors, members of their immediate families and their legal representatives, heirs, successors, or assigns, and any entity in which Defendant has or had a controlling interest. 35. The proposed class is so numerous that, upon information and belief, joinder of all members is impracticable. The exact number of class members is unknown to Plaintiff at this time and can only be ascertained through appropriate discovery. The proposed class is ascertainable in that it is defined with reference to objective criteria. Moreover, upon information and belief, the names, addresses, and cellular telephone numbers of all members of the class can be identified in business records maintained by Defendant. 36. Plaintiff’s claims are typical of the claims of the members of the class because Plaintiff and all of the class members’ claims originate from the same conduct, practice and procedure on the part of Defendant and Plaintiff possesses the same interests and has suffered the same injuries as each class member. Like all members of the class, Plaintiff received telephone calls from Defendant using an automatic telephone dialing system and an artificial or prerecorded voice, without her consent, in violation of 47 U.S.C. § 227. 37. Plaintiff will fairly and adequately protect the interests of the members of the class and has retained counsel experienced and competent in class action litigation. Plaintiff has no interests that are contrary to or in conflict with the members of the class that she seeks to represent. 38. 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 impracticable for class members to individually redress the wrongs done to them. There will be little, if any difficulty in the management of this action as a class action. 39. Issues of law and fact common to the members of the class predominate over any questions that may affect only individual members, in that Defendant has acted on grounds generally applicable to the class. Among the issues of law and fact common to the class are: a. Defendant’s violations of the TCPA as alleged herein; b. Defendant’s use of an automatic telephone dialing system; c. Defendant’s use of an artificial or prerecorded voice when leaving messages for consumers on their cellular telephones; d. Defendant’s practice of continuing to autodial cellular phone numbers after being instructed to stop doing so; and e. the availability of statutory damages. 40. Absent a class action, Defendant’s violations of the law will be allowed to proceed without a full, fair, judicially supervised remedy. COUNT I VIOLATION OF 47 U.S.C. § 227(b)(1)(A)(iii) 41. Plaintiff repeats and re-alleges each and every factual allegation contained in paragraphs 1–40. 42. Defendant violated 47 U.S.C. § 227(b)(1)(A)(iii) by utilizing an automatic telephone dialing system and an artificial or prerecorded voice to make and/or place telephone calls to Plaintiff’s cellular telephone number, without her consent. 43. As a result of Defendant’s violations of 47 U.S.C. § 227(b)(1)(A)(iii), Plaintiff and the class are entitled to damages in an amount to be proven at trial. WHEREFORE, Plaintiff prays for relief and judgment, as follows: (a) Determining that this action is a proper class action and designating Plaintiff as class representative under Rule 23 of the Federal Rules of Civil Procedure; (b) Adjudging that Defendant violated 47 U.S.C. § 227(b)(1)(A)(iii), and enjoining Defendant from further violations of 47 U.S.C. § 227(b)(1)(A)(iii) with respect to Plaintiff and the other members of the class; (c) Awarding Plaintiff and members of the class actual damages or statutory damages pursuant to 47 U.S.C. § 227(b)(3) in an amount up to $1,500.00 per violation; (d) Awarding Plaintiff and members of the class their reasonable costs and attorneys’ fees incurred in this action, including expert fees, pursuant to Rule 23 of the Federal Rules of Civil Procedure; and (e) Awarding other and further relief as the Court may deem just and proper. Jury Trial Demanded Plaintiff hereby demands a trial by jury. Dated: September 2, 2016 Respectfully submitted, s/ Michael L. Greenwald Michael L. Greenwald (pro hac vice pending) Greenwald Davidson Radbil PLLC 5550 Glades Road, Suite 500 Boca Raton, FL 33431 Telephone: (561) 826-5477 Facsimile: (561) 961-5684 [email protected] Attorney for Plaintiff

privacy

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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x JOHN MAHONEY, on behalf of himself and all others similarly situated, Plaintiffs, v. CLASS ACTION COMPLAINT FOR INJUNCTIVE AND DECLARATORY RELIEF HERSHEY ENTERTAINMENT & RESORTS COMPANY, Defendant. : : : : : : : : : : : : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x INTRODUCTION 1. Plaintiff JOHN MAHONEY (“Plaintiff” or “MAHONEY”), on behalf of himself and others similarly situated, asserts the following claims against Defendant HERSHEY ENTERTAINMENT & RESORTS COMPANY (“Defendant” or “HERSHEY PARK”) 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 2.1 million who are blind, and according to the American Foundation for the Blind’s 2016 report, approximately 300,000 visually impaired persons live in the State of Pennsylvania. 3. “Being unable to access website puts individuals at a great disadvantage in today’s society, which is driven by a dynamic electronic marketplace and unprecedented access to information.” U.S. Dep’t of Justice, Statement of Eve L. Hill before the Senate Comm. on Health, Educ., Labor & Pensions, at 3 (May 14, 2013). 4. Plaintiff is a blind, visually-impaired handicapped person and a member of a protected class of individuals under the 5. ADA, under 42 U.S.C. § 12102(1)-(2), and the regulations implementing the ADA set forth at 28 CFR §§ 36.101 et seq. 6. Plaintiff 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. 7. Plaintiff brings this civil rights action against Defendant to enforce Title III of the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq. (“Title III”), which requires, among other things, that a public accommodation (1) not deny persons with disabilities the benefits of its services, facilities, privileges and advantages; (2) provide such persons with benefits that are equal to those provided to nondisabled persons; (3) provide auxiliary aids and services—including electronic services for use with a computer screen reading program—where necessary to ensure effective communication with individuals with a visual disability, and to ensure that such persons are not excluded, denied services, segregated or otherwise treated differently than sighted individuals; and (4) utilize administrative methods, practices, and policies that provide persons with disabilities equal access to online content. 8. By failing to make its Website available in a manner compatible with computer screen reader programs, HERSHEY PARK, a public accommodation subject to Title III, deprives blind and visually-impaired individuals the benefits of its online goods, content, and services—all benefits it affords nondisabled individuals—thereby increasing the sense of isolation and stigma among these Americans that Title III was meant to redress. 9. Upon information and belief, because HERSHEY PARK’s Website has never been accessible and because HERSHEY PARK 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 HERSHEY PARK 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 HERSHEY PARK 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 HERSHEY PARK work with the Mutually Agreed Upon Consultant to perform an automated accessibility audit on a periodic basis to evaluate whether HERSHEY PARK’s Website may be equally accessed and enjoyed by individuals with vision related disabilities on an ongoing basis; d. that HERSHEY PARK 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 HERSHEY PARK’s Website may be equally accessed and enjoyed by individuals with vision related disabilities on an ongoing basis; e. that HERSHEY PARK 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 HERSHEY PARK has adopted and implemented adequate accessibility policies. 10. 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. JURISDICTION AND VENUE 11. This Court has subject-matter jurisdiction over this action under 28 U.S.C. § 1331 and 42 U.S.C. § 12188. 12. HERSHEY PARK purposefully targets and otherwise solicits business from Pennsylvania residents through its Website. Because of this targeting, it is not unusual for HERSHEY PARK to conduct business with Pennsylvania residents. In fact, the opposite is true: HERSHEY PARK clearly does business over the Internet with Pennsylvania residents, having entered into contracts with Pennsylvania residents that involve the knowing and repeated transmission of computer files over the Internet. See Gniewkowski v. Lettuce Entertain You, Order, ECF No. 123 (W.D. Pa Apr. 25, 2017) clarified by Order of Court, ECF No. 169 (W.D. Pa. June 22, 2017) (Judge Schwab) (The court exercised personal jurisdiction over an out-of-forum defendant for claims its website is inaccessible to a visually disabled resident of the forum state.); see also Access Now Inc. v. Otter Products, LLC, Case No. 1:17-cv-10967-PBS (D.Mass. Dec. 4, 2017) (exercising personal jurisdiction over forum-based plaintiff’s website accessibility claims against out-of-forum website operator). 13. Venue in this District is proper under 28 U.S.C. § 1391(b)(2) because this is the judicial district in which a substantial part of the acts and omissions giving rise to Plaintiff claims occurred. 14. This Court is empowered to issue a declaratory judgment under 28 U.S.C. §§ 2201 and 2202. PARTIES 15. Plaintiff, at all relevant times, is and was a resident of Bucks County, Pennsylvania. 16. Defendant is and was at all relevant times a Florida Corporation with its principal place of business located at 27 West Chocolate Avenue, Hershey, Pennsylvania 17033. 17. Defendant’s Entertainment Park, its Website and the 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 18. 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. 19. In today’s tech-savvy world, blind and visually impaired people have the ability to access website 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 website are designed to be read by screen-reading software, blind and visually-impaired persons are unable to fully access website, and the information, products, goods and contained thereon. 20. 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 is NonVisual Desktop Access “NVDA.” Plaintiff uses the latter. 21. 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 visually-impaired user is unable to access the same content available to sighted users. 22. 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 website accessible to blind and visually-impaired people. These guidelines are universally followed by most large business entities and government agencies to ensure their website are accessible. 23. Non-compliant website 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 24. Defendant is a Park and Entertainment Resort that owns and operates www.hersheypa.com (its “Website”), offering features which should allow all consumers to access its goods and services throughout the United States, including Pennsylvania. 25. 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. 26. Plaintiff has attempted to use Defendant’s Website at least once in the past. Unfortunately, because of HERSHEY PARK’s failure to build its Website in a manner that is compatible with screen reader programs, he is unable to understand, and thus is denied the benefit of, much of the content and services he wishes to access or use. For example: a. 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. b. 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. c. 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. 27. As a result of visiting HERSHEY PARK’s Website and from investigations performed on his behalf, Plaintiff is aware the Website include 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. 28. These barriers, and others, deny Plaintiff full and equal access to all of the services the Website offers, and now deter him from attempting to use the Website and/or visit HERSHEY PARK. Still, Plaintiff would like to, and intends to, attempt to access HERSHEY PARK’s Website in the future to research the services the Website offers, or to test the Website for compliance with the ADA. 29. 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. 30. If the Website were accessible, i.e. if HERSHEY PARK removed the access barriers described above, Plaintiff could independently research the Website’s offerings, including booking a stay at the HERSHEY PARK Resort. 31. 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. 32. Though HERSHEY PARK may have centralized policies regarding the maintenance and operation of its Website, upon and information and belief, HERSHEY PARK has never had a plan or policy that is reasonably calculated to make its Website fully accessible to, and independently usable by, individuals with vision related disabilities. As a result, the complained of access barriers are permanent in nature and likely to persist. 33. The law requires that HERSHEY PARK reasonably accommodate Plaintiff’s disabilities by removing these existing access barriers. Removal of the barriers identified above is readily achievable and may be carried out without much difficulty or expense. 34. Plaintiff’s above request for injunctive relief is consistent with the work performed by the United States Department of Justice, Department of Transportation, and U.S. Architectural and Transportation Barriers Compliance Board (the “Access Board”), all of whom have relied upon or mandated that the public-facing pages of website complies with an international compliance standard known as Web Content Accessibility Guidelines version 2.1 AA (“WCAG 2.1 AA”), which is published by an independent third party known as the Worldwide Web Consortium (“W3C”). 35. Plaintiff and the Class have been, and in the absence of an injunction will continue to be, injured by HERSHEY PARK’s failure to provide its online content and services in a manner that is compatible with screen reader technology. 36. HERSHEY PARK has long known that screen reader technology is necessary for individuals with visual disabilities to access its online content and services, and that it is legally responsible for providing the same in a manner that is compatible with these auxiliary aids. 37. Indeed, the Disability Rights Section of the DOJ reaffirmed in a 2015 Statement of Interest before the United States District Court for the District of Massachusetts that it has been a “longstanding position” of the Department of Justice “that the ADA applies to website of public accommodations.” See National Association of the Deaf v. Massachusetts Institute of Technology, No. 3:15-cv-300024-MGM, DOJ Statement of Interest in Opp. To Motion to Dismiss or Stay, Doc. 34, p. 4 (D. Mass. Jun. 25, 2015) (“MIT Statement of Interest”); see also National Association of the Deaf. v. Harvard University, No. 3:15-cv-30023- MGM, DOJ Statement of Interest of the United States of America, Doc. 33, p.4 (D. Mass. Jun. 25, 2015) (“Harvard Statement of Interest”). 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. There is no DOJ administrative proceeding that could provide Plaintiff with Title III injunctive relief. 40. While DOJ has rulemaking authority and can bring enforcement actions in court, Congress has not authorized it to provide an adjudicative administrative process to provide Plaintiff with relief. 41. Plaintiff alleges violations of existing and longstanding statutory and regulatory requirements to provide auxiliary aids or services necessary to ensure effective communication, and courts routinely decide these types of matters. 42. Resolution of Plaintiff’s claims does not require the Court to unravel intricate, technical facts, but rather involves consideration of facts within the conventional competence of the courts, e.g. (a) whether HERSHEY PARK offers content and services on its Website, and (b) whether Plaintiff can access the content and services. 43. 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 44. 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. 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 denies the full and equal enjoyment of its products, services, facilities, privileges, advantages, or accommodations to people with visual disabilities, violating the ADA. 46. Plaintiff’s claims are typical of the Class. The Class, like Plaintiff, are visually impaired or otherwise blind, and claim that Defendant has violated the ADA by failing to remove access barriers on its Website so as to 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. 48. 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 the Class as a whole. 49. 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. 50. 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 throughout the United States. FIRST CAUSE OF ACTION VIOLATIONS OF THE ADA, 42 U.S.C. § 12181 et seq. 51. Plaintiff, on behalf of himself and the Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 52. 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). 53. 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. 54. 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). 55. 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). 56. 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). 57. 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 not been provided any reasonable accommodation to those services. Defendant has failed to take any prompt and equitable steps to remedy its discriminatory conduct. These violations are ongoing. 58. 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 DECLARATORY RELIEF 59. Plaintiff, on behalf of himself and the Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 60. 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. prohibiting discrimination against the blind. 61. 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: 62. A Declaratory Judgment that at the commencement of this action HERSHEY PARK was in violation of the specific requirements of Title III of the ADA described above, and the relevant implementing regulations of the ADA, in that HERSHEY PARK took no action that was reasonably calculated to ensure that its Website is fully accessible to, and independently usable by, individuals with visual disabilities; 63. A permanent injunction pursuant to 42 U.S.C. § 12188(a)(2) and 28 CFR § 36.504(a) which directs Defendant to take all steps necessary to bring its Website into full compliance with the requirements set forth in the ADA, and its implementing regulations, so that its Website is fully accessible to, and independently usable by, blind individuals, and which further directs that the Court shall retain jurisdiction for a period to be determined to ensure that Defendant has adopted and is following an institutional policy that will in fact cause it to remain fully in compliance with the law—the specific injunctive relief requested by Plaintiff is described more fully in paragraph 8 above; 64. An award of costs and expenses of this action; 65. Payment of reasonable attorneys’ fees, pursuant to 42 U.S.C. § 12205 and 28 CFR § 36.505, including costs of monitoring Defendant’s compliance with the judgment (see Hadix v. Johnson, 143 F.3d 246 (6th Cir. 1998), aff'd in part, rev'd in part, 527 U.S. 343 (1999); Jenkins v. Missouri, 127 F.3d 709 (8th Cir. 1997); Walker v. U.S. Dep't of Hous. & Urban Dev., 99 F.3d 761 (5th Cir. 1996); Stewart v. Gates, 987 F.2d 1450, 1452 (9th Cir. 1993) (district court should permit compensation for the post judgment monitoring efforts by the plaintiff’s counsel that are “useful and necessary to ensure compliance with the court's orders”); Garrity v. Sununu, 752 F.2d 727, 738-39 (1st Cir. 1984); Adams v. Mathis, 752 F.2d 553 (11th Cir. 1985); Willie M. v. Hunt, 732 F.2d 383, 385, 387 (4th Cir. 1984); Bond v. Stanton, 630 F.2d 1231, 1233-34 (7th Cir. 1980); Northcross v. Board of Educ., 611 F.2d 624, 637 (6th Cir. 1979) (“Services devoted to reasonable monitoring of the court's decrees, both to ensure full compliance and to ensure that the plan is indeed working…are essential to the long-term success of the plaintiff's suit.”) (citing 3rd Circuit’s support for District Court’s award of prospective fees to plaintiff’s counsel); 66. An order certifying the Class under Fed. R. Civ. P. 23(a) & (b)(2) and/or (b)(3), appointing Plaintiff as Class Representative, and his attorneys as Class Counsel; and 67. Such other and further relief as this Court deems just and proper. Dated: Philadelphia, Pennsylvania August 13, 2019 GLANZBERG TOBIA LAW, P.C. By: /s/ David S. Glanzberg David S. Glanzberg, Esq. [email protected] 123 South Broad Street, Suite 1640 Philadelphia, PA 19109 Tel: (215) 981-5400 Fax: (267) 319-1993 ATTORNEYS FOR PLAINTIFF

civil rights, immigration, family

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Rafey S. Balabanian (SBN 315962) [email protected] Todd Logan (SBN 305912) [email protected] Brandt Silver-Korn (SBN 323530) [email protected] EDELSON PC 123 Townsend Street, Suite 100 San Francisco, California 94107 Tel: 415.212.9300 Fax: 415.373.9435 Counsel for Plaintiffs and the Proposed Class UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION Case No. _________________ CLASS ACTION COMPLAINT JURY DEMAND JENNIFER ANDREWS and JOHN SARLEY, individually and on behalf of all others similarly situated, Plaintiffs, v. GOOGLE LLC, a Delaware limited liability company, Defendant. Plaintiffs Jennifer Andrews and John Sarley, individually and on behalf of a proposed class, bring this Class Action Complaint against Google LLC seeking restitution, damages, an injunction, and other appropriate relief from Google’s ongoing participation in an illegal internet gambling enterprise. Plaintiffs allege as follows upon personal knowledge as to themselves and their own acts and experiences, and as to all other matters, upon information and belief. INTRODUCTION 1. Over the last decade, the world’s leading slot machine makers—companies like International Game Technology, Scientific Games Corporation, and Aristocrat Leisure—have teamed up with American technology companies to develop a new product line: social casinos. 2. Social casinos are apps, playable from smartphones, tablets, and internet 4. Nevertheless, like Las Vegas slots, social casinos are extraordinarily profitable and highly addictive. Social casinos are so lucrative because they mix the addictive aspects of traditional slot machines with the power of the Platforms, including Defendant Google, to leverage big data and social network pressures to identify, target, and exploit consumers prone to addictive behaviors.3 5. Simply put, the social casino apps do not, and cannot, operate and profit at such a high level from these illegal games on their own. Their business of targeting, retaining, and collecting losses from addicted gamblers is inextricably entwined with the Platforms. Not only do the Platforms retain full control over allowing social casinos into their stores, and their distribution and promotion therein, but they also share directly in a substantial portion of the gamblers’ losses, which are collected and controlled by the Platforms themselves. 6. Because the Platforms are the centers for distribution and payment, social casinos gain a critical partner to retain high-spending users and collect player data, a trustworthy marketplace to conduct payment transactions, and the technological means to update their apps with targeted new content designed to keep addicted players spending money. 7. Last year alone, consumers purchased and gambled away an estimated $6 billion in social casino virtual chips.4 8. By utilizing Google for distribution and payment processing, the social casinos entered into a mutually beneficial business partnership. In exchange for distributing the casino games, providing them valuable data and insight about their players, and collecting money from consumers, Google (and the other Platforms) take a 30 percent commission off of every wager, earning them billions in revenue. By comparison, the “house” at a traditional casino only takes 1 to 15 percent, while also taking on significant risk of loss in its operation. Google’s 30 percent rake, on the other hand, is guaranteed for its ability to act as a casino “host” and bankroll. 9. The result (and intent) of this dangerous partnership is that consumers become 3 See, e.g., How social casinos leverage Facebook user data to target vulnerable gamblers, PBS NEWS HOUR (Aug. 13, 2019), https://bit.ly/3tSHqMI. addicted to social casino apps, maxing out their credit cards with purchases amounting to tens or even hundreds of thousands of dollars. Consumers addicted to social casinos suffer a variety of non-financial damages ranging from depression to divorce to attempted suicide. 10. These devastating consequences are not hypothetical or hyperbole: below are excerpts of sworn testimony from individuals describing their experiences with three different social casinos at issue in this case: they have sent other players flowers and candies . . . This game has changed my way of thinking and caring. I never thought I would get addicted to anything except cigarettes, but this has taken too much of my life away. I don’t know how my life would be different without this game, but I know that it would be better and I know that I would be much better off financially. . . . I wish it didn’t exist.” Exhibit 4, Declaration of Donna Reed [emphasis added]. • High 5 Casino: “I have spent at least $10,000 on coins in High 5 Casino . . . I believe I am addicted to High 5 Casino. . . . I have tried to quit but I believe three weeks is the longest amount of time I’ve ever been able to stop. . . . Sometimes I feel guilty about playing High 5 Casino and spending so much money. My husband does not know I have spent money on it. My grandkids will sometimes ask for money and I can’t give it to them because I have to save it for this game.” Exhibit 5, Declaration of Aida Glover [emphasis added]. 12. Unsurprisingly, social casinos are illegal under many states’ gambling laws. 13. As the Ninth Circuit held in Kater v. Churchill Downs Inc., 886 F.3d 784, 785 (9th Cir. 2018): In this appeal, we consider whether the virtual game platform “Big Fish Casino” constitutes illegal gambling under Washington law. Defendant– Appellee Churchill Downs, the game’s owner and operator, has made millions of dollars off of Big Fish Casino. However, despite collecting millions in revenue, Churchill Downs, like Captain Renault in Casablanca, purports to be shocked—shocked!—to find that Big Fish Casino could constitute illegal gambling. We are not. We therefore reverse the district court and hold that because Big Fish Casino’s virtual chips are a “thing of value,” Big Fish Casino constitutes illegal gambling under Washington law. 14. As an instructive example, DoubleDown Casino is illegal both in Washington and here in California (where the Platforms, including Defendant Google, host it and collect their 30% rake). This year, consumers will purchase approximately $300 million worth of virtual casino chips in DoubleDown Casino. That $300 million will be divided up approximately as follows: $170 million to DoubleDown; $30 million to International Game Technology (“IGT”) (a multinational slot machine manufacturer that licenses slot machine game intellectual property to DoubleDown); and—as particularly relevant here—the remaining $100 million to Google and the other Platforms (for hosting the app, driving vulnerable consumers to it, and processing the payments for those consumers’ virtual chip purchases). 15. In other words, despite knowing that DoubleDown Casino is illegal, Google and the other Platforms continue to maintain a sizable (30%) financial interest by hosting the game, driving customers to it, and acting as the bank. 16. As such, DoubleDown, Google, and the other Platforms are all liable as co- conspirators to an illegal gambling enterprise. Moreover, DoubleDown Casino is just one of more than fifty social casino apps (the “Illegal Slots”) that the Platforms illegally host and profit 17. Consequently, Google and the other Platforms—alongside the Illegal Slot companies—are liable as co-conspirators to an illegal gambling conspiracy. 18. Defendant Google, for its part, is a direct participant in an informal association and enterprise of individuals and entities with the explicit purpose of knowingly devising and operating an online gambling scheme to exploit consumers and reap billions in profits (the “Social Casino Enterprise”). 19. This ongoing Enterprise necessarily promotes the success of each of its members: Social casino operators, like DoubleDown, need Platforms like Google, Apple, and Facebook, to access consumers, host their games, and process payments. The Platforms, for their part, need developers like DoubleDown to publish profit-driven and addictive applications on their platforms to generate massive revenue streams. 20. Through this case, Plaintiffs seek to force Google to stop participating in, and to return to consumers the money it has illegally profited from, the Social Casino Enterprise. 21. Plaintiffs, on behalf of the putative Class, bring claims for damages and for injunctive relief under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961, et seq. (“RICO”), and California’s Unfair Competition Law, Business and Professions Code § 17200, et seq. (“UCL”). PARTIES 22. Plaintiff Jennifer Andrews is a natural person and a citizen of the State of Minnesota. 23. Plaintiff John Sarley is a natural person and a citizen of the State of California. 24. Defendant Google LLC is a corporation existing under the laws of the State of Delaware, with its principal place of business located at 1600 Amphitheatre Parkway, Mountain View, California 94043. Google develops, markets and distributes the Google Android Operating System (OS), an open-source operating system for mobile devices. Google owns and operates the Google Play Store, which comes preinstalled on every Android device. JURISDICTION AND VENUE 25. Federal subject-matter jurisdiction exists under 28 U.S.C. § 1332(d)(2) because (a) at least one member of the proposed class is a citizen of a state different from Defendant, (b) the amount in controversy exceeds $5,000,000, exclusive of interests and costs, and (c) none of the exceptions under that subsection apply to this action. 26. The Court has personal jurisdiction over Defendant because Defendant is headquartered in this District and Defendant’s alleged wrongful conduct occurred in and emanated from this District. 27. Venue is proper in this District under 28 U.S.C. § 1391(b) because a substantial part of the events giving rise to Plaintiffs’ claims occurred in and emanated from this District. GENERAL ALLEGATIONS I. Social Casinos Are Illegal Slot Machines Under California Law . 28. Slot machines have long been outlawed in California. 29. California law recognizes that a device can be an illegal slot machine without offering users the opportunity to win money. 30. In fact, if a gaming machine has the look and feel of a slot machine, accepts real money for gameplay, and rewards a winning spin with an “additional chance or right to use the slot machine or device,” the device is an illegal slot machine. 31. Consequently, social casinos, as described herein, are illegal slot machines under California law. 32. California gambling law is, on this point, consistent with the laws of many other states—including Washington. In Kater, for example, the Ninth Circuit held that social casinos are illegal under Washington law because, while users cannot win money, social casino chips are “things of value” because they can be purchased for money, are awarded as prizes in social casino slot machines, and then can be used to allow players to keep spinning social casino slot machines. After two years of subsequent litigation, the parties in Kater reached a $155 million nationwide class action settlement. The settlement was finally approved in February 2021.5 33. California aggressively regulates all forms of gambling. One reason it does so is to prevent consumers from being cheated by professional gambling operations. 34. Because social casinos have previously operated as if they were not subject to gambling regulations, they do not comply with any of the regulations that govern the operation of slot machines. 35. Notably, while any legitimately operated slot machine must randomize its results, social casinos do not randomize their results. Instead, social casinos tailor “wins” and “losses” in such a way as to maximize addiction (and, in turn, revenues). As the CEO of DoubleDown Casino once explained, “[o]ur games aren’t built to be bulletproof like you’d need to be if you’re a real gambling company. We can do things to make our games more [fun] that if you were an operator in Vegas you’d go to jail for, because we change the odds just for fun.”6 36. In other words, social casinos are not just illegal under California law, but they would not be legal slot machines under any state law as they cheat players out of a legitimately randomized slot machine experience. Not only can players never actually win money, but their financial losses are maximized by deceptive gameplay tweaks that would never be allowed in a legitimate slot machine. II. Google Hosts and Facilitates At Least Fifty Illegal Social Casinos. 37. The Platforms, including Defendant Google, have directly assisted in creating the unregulated market of virtual casino games from the outset of the industry. 38. Before gaining access to these social media platforms, the Illegal Slots used 5 Settlements in two related cases were also finally approved in February 2021. Three more related cases are being litigated in Washington, against the owners and operators of certain social casino games. See Wilson v. Huuuge, Inc., 351 F. Supp. 3d 1308, 1316 (W.D. Wash. Nov. 13, 2018) (settled); Wilson v. Playtika, Ltd., 349 F. Supp. 3d 1028, 1041 (W.D. Wash. Nov. 20, 2018) (settled); Fife v. Sci. Games Corp., No. 2:18-cv-00565, 2018 WL 6620485, at *4 (W.D. Wash. Dec. 18, 2018) (in litigation); Wilson v. PTT, LLC, 351 F. Supp. 3d 1325, 1337 (W.D. Wash. Dec. 14, 2018) (same); and Benson v. Double Down Interactive, LLC, 798 F. App’x 117 (9th Cir. 2020) (same). methods like loyalty cards to track data on how much gamblers spent, how frequently they played, or how often they bet. The Platform partnerships upgraded their business model to an in- app payment system and provided additional user data which skyrocketed revenue by providing them with access to a whole new market of consumers. 39. The core marketing for the Illegal Slots is accomplished in concert with the Platforms, and their systems are inextricably linked. DoubleDown described this very setup in a public filing: Our games are distributed through several main platform providers, including Apple, Facebook, Google, and Amazon, which also provide us valuable information and data, such as the rankings of our games. Substantially all of our revenue is generated by players using those platforms. Consequently, our expansion and prospects depend on our continued relationships with these providers. …. We focus our marketing efforts on acquiring new players and retaining existing players. We acquire players both organically and through paid channels. Our paid marketing includes performance marketing and dynamic media buying on Facebook, Google, and other channels such as mobile ad networks. Underlying our paid marketing efforts are our data analytics that allow us to estimate the expected value of a player and adjust our user acquisition spend to a targeted payback period. Our broad capabilities in promotions allow us to tailor promotional activity around new releases, execute differentiated multi-channel campaigns, and reach players with preferred creative content. …. Our player retention marketing includes advertising on Facebook as well as outreach through email, push notifications, and social media posts on channels such as Facebook, Instagram, and Pinterest. Our data and analytics also inform our retention marketing efforts. Campaigns are specially designed for each channel based upon player preferences for dimensions such as time of day and creative content. We consistently monitor marketing results and return on investment, replacing ineffective marketing tactics to optimize and improve channel performance. …. We employ a rigorous, data-driven approach to player lifecycle management from user acquisition to ongoing engagement and monetization. We use internally-developed analytic tools to segment and target players and to optimize user acquisition spend across multiple channels. …. We continuously gather and analyze detailed customer play behavior and assess this data in relation to our judgments used for revenue recognition.7 40. By moving to online platforms for marketing, distribution, and payment processing, Defendant Google entered into a mutually beneficial business partnership with the Illegal Slots. In exchange for pushing and distributing the social casino apps and collecting money from consumers, Google and the other Platforms take a 30 percent commission off of every in-app purchase, earning them billions in revenue. 41. Prior to being published in the Google Play Store, developers must submit their app for review. In this process, Google examines whether the app violates any company policies and demands that apps comply with all relevant laws within the jurisdiction where the app is available. Apps may be, and often are, removed at Google’s discretion for violating its policies and can be audited at any time. 42. Google closely monitors its gambling liability by responding to the changing market landscape when it deems necessary. For example, in response to the FTC’s increasing consumer protection concerns around gambling in 2018, Google changed its policies for loot boxes, requiring games with that feature to “disclose the odds of receiving those items in advance of purchase.”8 Google likewise heavily regulates advertising in its system that involves gambling, stating “[w]e support responsible gambling advertising and abide by local gambling laws and industry standards.”9 43. As such, Google, and the Platforms, through their app review process, are keenly aware of the illegal and deceptive nature of the Illegal Slots. Google knew of the unlawful nature of the Illegal Slots and nonetheless knowingly hosted the unlawful gambling apps and promoted their success. 44. Furthermore, on information and belief, in the wake of the Kater decision, the Platforms did not remove any social casinos from their offerings and conferred with each other at that time, jointly deciding that they would each continue to offer illegal social casino games. 8 Mariella Moon, Google Will Force Android Apps to Show the Odds of Getting Loot Box Items, ENGADGET (May 30, 2019), https://engt.co/31hmCCk. A. The Illegal Slots 45. Each of the following fifty social casinos offered by Google (together the “Illegal Slots”) is an illegal slot machine under California law.10 Figure 4 – The Illegal Slots # Game Title Google Play URL 1 Slotomania Free https://play.google.com/store/apps/details?id=air.com.playtika. slotomania Slots: Casino Slot Machine Games 2 Jackpot Party https://play.google.com/store/apps/details?id=com.williamsint eractive.jackpotparty Casino Games: Spin Free Casino Slots 3 Cash Frenzy Casino - Free Slots Games https://play.google.com/store/apps/details?id=slots.pcg.casino. games.free.android 4 Cashman Casino: https://play.google.com/store/apps/details?id=com.productmad ness.cashmancasino Casino Slots Machines! 2M Free! 5 Huuuge Casino https://play.google.com/store/apps/details?id=com.huuuge.casi no.slots Slots - Best Slot Machines 6 Vegas Slots - https://play.google.com/store/apps/details?id=com.ddi DoubleDown Casino 7 POP! Slots - Play https://play.google.com/store/apps/details?id=com.playstudios. popslots Vegas Casino Slot Machines! 8 House of Fun: Free https://play.google.com/store/apps/details?id=com.pacificinter active.HouseOfFun Slots & Casino Slots Machines 9 Lotsa Slots - Free https://play.google.com/store/apps/details?id=com.diamondlife .slots.vegas.free Vegas Casino Slot Machines 10 DoubleU Casino - Free Slots https://play.google.com/store/apps/details?id=com.doubleuga mes.DoubleUCasino 11 Slots: Heart of https://play.google.com/store/apps/details?id=com.productmad ness.hovmobile Vegas- Free Casino Slots Games 12 Lightning Link https://play.google.com/store/apps/details?id=com.productmad ness.lightninglink Casino: Best Vegas Casino Slots! 13 Caesars Casino: https://play.google.com/store/apps/details?id=com.playtika.cae sarscasino Casino & Slots For Free 14 Quick Hit Casino https://play.google.com/store/apps/details?id=com.ballytechno logies.quickhitslots Games - Free Casino Slots Games 15 Hit it Rich! 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Most or all of the Illegal Slots are also hosted and promoted by the other Platform members of the Social Casino Enterprise: Apple and Facebook. B. Google’s Facilitation, Promotion, and Control Over the Illegal Slots 47. Google, for its part, routinely facilitates the success of social casinos by counseling the app developers through the app launch process and providing them with resources and business tools necessary to maximize their success on the Google Play Store. 48. The Illegal Slot companies and Google monitor the game activity and use the collected data to increase user spending. This access to data is critical for the developers: since all payment processing occurs through third-party platforms, the Illegal Slot companies have limited access to personal user data unless players login through Google or otherwise sign up for loyalty programs.11 49. Because the Illegal Slots depend on the spending of a small, targeted audience, the Illegal Slot companies and Platforms work together to target and exploit high-spending users, or “whales,” as Illegal Slot companies like DoubleDown refer to their top spenders.12 50. The data that the Illegal Slot companies and the Platforms collect on monetization necessarily contributes to the structure and success of the Social Casino Enterprise. 51. Google allows Illegal Slot companies to target high-spending users and activate non-spending users. Google aids in the design and direction of targeted advertising, both on Google.com, its larger Display Network, and within other apps and platforms, all aimed at driving new customers to the Illegal Slots and retaining current gamblers. 52. Likewise, because they act as the “bank” for the Illegal Slots, the Platforms are entirely aware that certain consumers spend hundreds of thousands of dollars on the Illegal Slots. 53. Additionally, because the Illegal Slots are required to use Google’s payment system to process all in-game purchases, Google collects a 30 percent service fee off of every 11 DoubleDown Interactive Co., Ltd., Form F-1/A at 16 (June 30, 2020), https://bit.ly/2QqLW6v. transaction. If Google ever discovers an illegal or fraudulent transaction in breach of its terms or policies, it can deny developers from redeeming the proceeds in its active balance. 54. Unfortunately, Google used its developer tools to take advantage of users with severe gambling problems. As a result, Google has unlawfully made billions of dollars on the backs of consumers. III. California’s Public Policy Against Enforcing Gambling Contracts Means Plaintiffs Must Turn to Federal Law to Recover Their Damages. 55. Under California’s in pari delicto doctrine, California courts generally refuse to enforce gambling debts or help plaintiffs recover gambling losses, except where a statute confers a right to bring such claims. 56. California’s in pari delicto doctrine does not bar this Court from issuing an injunction, under California law, enjoining Google’s participation in the Social Casino Enterprise. 57. Moreover, federal law—specifically, RICO—confers upon Plaintiffs a right of action, enforceable by this Court, to recover their alleged damages from Google. FACTS SPECIFIC TO PLAINTIFF JENNIFER ANDREWS 58. Plaintiff Andrews has paid money to DoubleDown Casino, through Defendant Google, for nearly ten years. Plaintiff Andrews is addicted to DoubleDown Casino. 59. Plaintiff Andrews would often play DoubleDown Casino for several hours per day and spend hundreds of dollars per day. 60. Playing DoubleDown Casino has had a devastating impact on Plaintiff Andrew’s life. In total, Plaintiff Andrews has lost at least $50,000 playing DoubleDown Casino. 61. Playing the game and its related losses have also placed a significant strain on her personal relationships and caused her great financial hardship. FACTS SPECIFIC TO PLAINTIFF JOHN SARLEY 62. Plaintiff Sarley has paid money to DoubleDown Casino, through Defendant Google, for at least five years. Plaintiff Sarley is addicted to DoubleDown Casino. 63. Playing DoubleDown Casino through Google has had a negative impact on Plaintiff Sarley’s life. In total, he has lost at least $50,000 in the app. 64. Plaintiff Sarley has asked Google to block him from making purchases for DoubleDown Casino, but they have never complied with this request. 65. Plaintiff Sarley’s addiction has put significant strain on his personal relationships and his mental well-being, as well as a significant strain on his financial well-being, including his ability to pay his bills. CLASS ALLEGATIONS 66. Class Definition: Plaintiffs bring this action pursuant to Fed. R. Civ. P. 23(b)(2) and (b)(3) on behalf of themselves and a Class of similarly situated individuals, defined as follows: All persons in the United States who have lost money to any Illegal Slots through the Google platform. The following people are excluded from the Class: (1) any Judge or Magistrate presiding over this action and members of their families; (2) Defendant, Defendant’s subsidiaries, parents, successors, predecessors, and any entity in which the Defendant or its parents have a controlling interest and their current or former employees, officers and directors; (3) persons who properly execute and file a timely request for exclusion from the Class; (4) persons whose claims in this matter have been finally adjudicated on the merits or otherwise released; (5) Plaintiffs’ counsel and Defendant’s counsel; and (6) the legal representatives, successors, and assigns of any such excluded persons. 67. Numerosity: On information and belief, tens of thousands of consumers fall into the definition of the Class. Members of the Class can be identified through Defendant’s records, discovery, and other third-party sources. 68. Commonality and Predominance: There are many questions of law and fact common to Plaintiffs’ and the Class’s claims, and those questions predominate over any questions that may affect individual members of the Class. Common questions for the Class include, but are not necessarily limited to the following: A. Whether the Illegal Slots are illegal slot machines as defined by California Penal Code § 330b; B. Whether Google, pursuant to California Penal Code § 330.1, is liable for having the Illegal Slots in its management, possession, or control; C. Whether Google, pursuant to California Penal Code § 330b, is liable for profiting off of the Illegal Slots; D. Whether Google should be enjoined from further participation in the Social Casino Enterprise; E. Whether Google is a participant in the Social Casino Enterprise; and F. Whether Google has committed illegal predicate acts under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961, et seq. 69. Typicality: Plaintiffs’ claims are typical of the claims of other members of the Class in that Plaintiffs and the members of the Class sustained damages arising out of Defendant’s wrongful conduct. 70. Adequate Representation: Plaintiffs will fairly and adequately represent and protect the interests of the Class and have retained counsel competent and experienced in complex litigation and class actions. Plaintiffs’ claims are representative of the claims of the other members of the Class, as Plaintiffs and each member of the Class lost money playing the Illegal Slots. Plaintiffs also have no interests antagonistic to those of the Class, and Defendant has no defenses unique to Plaintiffs. Plaintiffs and their counsel are committed to vigorously prosecuting this action on behalf of the Class and have the financial resources to do so. Neither Plaintiffs nor their counsel have any interest adverse to the Class. 71. Policies Generally Applicable to the Class: This class action is appropriate for certification because Defendant has acted or refused to act on grounds generally applicable to the Class as a whole, thereby requiring the Court’s imposition of uniform relief to ensure compatible standards of conduct toward the members of the Class and making final injunctive relief appropriate with respect to the Class as a whole. Defendant’s policies that Plaintiffs challenge apply and affect members of the Class uniformly, and Plaintiffs’ challenge of these policies hinges on Defendant’s conduct with respect to the Class as a whole, not on facts or law applicable only to Plaintiffs. The factual and legal bases of Defendant’s liability to Plaintiffs and to the other members of the Class are the same. 72. Superiority: This case is also appropriate for certification because class proceedings are superior to all other available methods for the fair and efficient adjudication of this controversy. The harm suffered by the individual members of the Class is likely to have been relatively small compared to the burden and expense of prosecuting individual actions to redress Defendant’s wrongful conduct. Absent a class action, it would be difficult for the individual members of the Class to obtain effective relief from Defendant. Even if members of the Class 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. 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. 73. Plaintiffs reserve the right to revise each of the foregoing allegations based on facts learned through additional investigation and in discovery. COUNT I Cal. Business and Professions Code § 17200, et seq. (UCL) Unlawful Business Practices (Injunctive Relief Only) 74. Plaintiffs incorporate the foregoing allegations as if fully set forth herein. 75. Plaintiffs have suffered injury in fact and have lost money or property as a result of Google’s allegedly unlawful conduct. 76. The Illegal Slots are illegal slot machines as defined by Cal. Penal Code § 330b(d) because, among other reasons, when a player purchases and wagers virtual casino chips in the Illegal Slots, a winning spin affords the player an “additional chance or right to use” the Illegal Slots. Pursuant to Cal. Penal Code § 330b(a), Defendant Google, among other shares, lends and gives away, transports, and exposes for sale or lease, the Illegal Slots. Google also offers to repair, sells, rents, leases, lets on shares, lends and gives away, permits the operations, placement, maintenance, and keeping of, in places, rooms, spaces, and buildings owned, leased, or occupied, managed, or controlled by Google, the Illegal Slots. 77. The Illegal Slots are illegal slot machines as defined by Cal. Penal Code § 330.1 because, among other reasons, when a player purchases and wagers virtual casino chips in the Illegal Slots, a winning spin affords the player an “additional chance or right to use” the Illegal Slots. Pursuant to Cal. Penal Code § 330.1(a), Defendant Google, among other violative conduct, manufactures, owns, stores, keeps, possesses, sells, rents, leases, lets on shares, lends and gives away, transports, and exposes for sale and lease, the Illegal Slots. Google also offers to sell, rent, lease, let on shares, lends and gives away and permits the operation of and permits to be placed, maintained, used, or kept in rooms, spaces, and building owned, leased, or occupied by Google or under Google’s management and control, the Illegal Slots. 78. California’s Unfair Competition Law (“UCL”), Business and Professions Code § 17203, specifically authorizes this Court to issue injunctive relief to enjoin ongoing acts of unfair competition and unlawful conduct. 79. Under the UCL, unfair competition encompasses any unlawful act, including acts made unlawful under the penal code and acts made unlawful by federal law. 80. Consequently, the UCL authorizes this Court to enjoin Google’s ongoing violations of Sections 330b and 330.1 of the California Penal Code, as well as violations of the federal RICO law. 81. Plaintiffs, on behalf of themselves and the Class, seek an order from the Court, enjoining Google from further participation in the Social Casino Enterprise. COUNT II 18 U.S.C. § 1962(c) (RICO) Racketeering Activities and Collection of Unlawful Debts (Damages and Injunctive Relief) 82. Plaintiffs incorporate by reference the foregoing allegations as if fully set forth herein. 83. At all relevant times, Google is and has been a “person” within the meaning of 18 U.S.C. § 1961(3), because it is capable of holding, and does hold, “a legal or beneficial interest in property.” 84. Plaintiffs are each a “person,” as that term is defined in 18 U.S.C. § 1961(3), and have standing to sue as they were injured in their business and/or property as a result of the Social Casino Enterprise’s wrongful conduct described herein, including but not limited to Defendant Google, the Platforms, and the Illegal Slots (1) having unlawfully taken and received money from Plaintiffs and the Class; (2) having never provided Plaintiffs and members of the Class a fair and objective chance to win—they could only lose; and (3) having directly and knowingly profited from, on information and belief, rigged and manipulated slot machines. 85. Section 1962(c) makes it unlawful “for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.” 18 U.S.C. § 1962(c). 86. 18 U.S.C. § 1961(1) defines “racketeering activity” to include, among other things, (i) any act which is indictable under Title 18, Section 1084 of the United States Code (relating to the transmission of gambling information); and (ii) any act which is indictable under Title 18, Section 1955 of the United States Code (relating to the prohibition of illegal gambling businesses). 87. Because illegal gambling is indictable under both Section 1084 and Section 1955 of Title 18 of the United States Code, the Social Enterprise is engaged in “racketeering activity.” 88. 18 U.S.C. § 1961(6) defines “unlawful debt” as a debt “(A) incurred or contracted in gambling activity which was in violation of the law of the United States, a State or political subdivision thereof,” and “(B) which was incurred in connection with the business of gambling in violation of the law of the United States, a State or political subdivision thereof.” 89. Because the Social Casino Enterprise collects debts incurred from a gambling activity in violation of California law, described herein, its profits derived from its ownership and maintenance constitute “unlawful debt” as defined in Section 1961(6). 90. Google violated 18 U.S.C. § 1962(c) and § 1962(d) by participating in, facilitating, or conducting the affairs of the Social Casino Enterprise through a pattern of racketeering activity composed of indictable offenses under California Penal Code §§ 330b and 91. The affiliation between the Defendant Google, the other Platforms, and the Illegal Slot companies constitutes a conspiracy to use an enterprise for the collection of unlawful debt in violation of 18 U.S.C. § 1962(d). Social Casino Enterprise 92. RICO defines an enterprise as “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” 18 U.S.C. § 1961(4). 93. Under 18 U.S.C. § 1961(4), a RICO “enterprise” may be an association-in-fact that, although it has no formal legal structure, has (i) a common purpose, (ii) relationships among those associated with the enterprise, and (iii) longevity sufficient to pursue the enterprise’s purpose. See Boyle v. United States, 556 U.S. 938, 946 (2009). 94. The Social Casino Enterprise is an association-in-fact composed of Google, Apple, Facebook, and the Illegal Slot companies who are engaged in and whose activities affect interstate commerce, and which have affected and damaged interstate commercial activity. This Enterprise exists separately from the otherwise legitimate businesses operations of each individual participant. 95. The pattern of racketeering activity conducted by the members of the Social Casino Enterprise is distinct from the Social Casino Enterprise itself, as each act of racketeering is a separate offense committed by an entity while the Social Casino Enterprise itself is an association-in-fact of legal entities. The Social Casino Enterprise has an informal structure of app developers and platforms with continuing functions or responsibilities. 96. For approximately a decade, the Social Casino Enterprise has collaborated together to target and retain high-spending users in its online gambling scheme throughout the country. At the very latest, following the Ninth Circuit’s March 28, 2018 holding in Kater, Defendant Google and the other Platforms, on information and belief, mutually agreed to continue their Enterprise through their ongoing collection of unlawful debts, functioning as a cohesive unit with the purpose of gaining illicit gambling profits. Structure of the Social Casino Enterprise 97. The Social Casino Enterprise consists of dozens of Illegal Slot companies and the Platforms (Google, Apple and Facebook). Each participant agreed to conduct and carry out the affairs and goals of the Social Casino Enterprise: A. The Illegal Slot companies agreed to conduct the affairs of the Social Casino Enterprise by developing, updating and operating the illegal slot machines: the “gambling devices.” The Illegal Slot companies operate as the principals, forming the necessary business partnerships with Google, Apple and Facebook for the successful execution of their unlawful gambling scheme. The Illegal Slot companies fundamentally rely on the Platforms to host their games, access consumers, and collect revenue. Upon constructive notice of the unlawful nature of the virtual social gambling applications, the Illegal Slot companies agreed with all Enterprise participants to uphold their roles in the Social Casino Enterprise and to continue functioning as a single unit with the common purpose of collecting unlawful debts from online gambling activity. B. Google, Apple and Facebook agreed to conduct the affairs of the Social Casino Enterprise by serving as the gambling premises, hosting the virtual social gambling applications and processing all in-app transactions in exchange for a share in the gamblers’ losses. Additionally, upon notice of the unlawful nature of the virtual social gambling applications, Google, Apple, and Facebook agreed with all participants to uphold their roles in the Social Casino Enterprise and to continue functioning as a single unit with the common purpose of collecting unlawful debts from online gambling activity. 98. At all relevant times, each Social Casino Enterprise participant was aware of the conduct of the Social Casino Enterprise, was a knowing and willing participant in that conduct, and reaped profits from that conduct through in-app sales. 99. The persons engaged in the Social Casino Enterprise are systematically linked through contractual relationships, financial ties, and continuing coordination of activities. 100. All members of the Social Casino Enterprise coordinate and maintain their respective roles in order to enrich themselves and to further the common interests of the whole. 101. Each Social Casino Enterprise participant participated in the operation and management of the Social Casino Enterprise by directing its affairs as described herein. 102. The wrongful conduct of the Social Casino Enterprise has been and remains part of the Social Casino Enterprise’s ongoing way of doing business and constitutes a continuing threat to the Plaintiffs’ and the Class’s property. Without the repeated illegal acts and intentional coordination between all participants, the Social Casino Enterprise’s scheme would not have succeeded and would not pose a threat to Plaintiffs and the Class into the future. Pattern of Racketeering Activity 103. The affairs of the Social Casino Enterprise were conducted in such a way to form a pattern of racketeering activity. The Social Casino Enterprise’s general pattern of activity consists of designing and operating illegal internet-based slot machines and repeatedly violating public policy against gambling by: A. Developing illegal slot machine games and disguising them as innocuous video game entertainment; B. Distributing and operating illegal slot machine games that are, on information and belief, rigged and manipulated; C. Concealing the scope and deceptive nature of their gambling applications despite knowledge of their predatory design and business model; D. Providing a host platform to house unlicensed gambling activity; E. Injuring the public interest by continuously advertising to and soliciting the general public to play illegal slot machines; F. Conspiring to uphold the Social Casino Enterprise; and G. Unjustly collecting unlawful debts and retaining the profits from their illegal social gambling applications. 104. The Social Casino Enterprise has operated as a continuous unit since at least 105. Pursuant to and in furtherance of their fraudulent scheme, Google committed multiple predicate act violations of California law as previously alleged herein, including violations of California Penal Code §§ 330b and 330.1. COUNT III RICO § 1962(d) Conspiracy to Engage in Racketeering Activities and Collection of Unlawful Debts (Damages and Injunctive Relief) 106. Plaintiffs incorporate by reference the foregoing allegations as if fully set forth herein. 107. 18 U.S.C. § 1962(d) states that “[i]t shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section.” 108. As described throughout, and in detail in Count II, even if it did not direct or manage the affairs of the Social Casino Enterprise, Google conspired to commit predicate acts in violation of § 1962(c), including violations of California Penal Code §§ 330b and 330.1. 109. Defendant Google acted knowingly at all times when agreeing to conduct the activities of the Social Casino Enterprise. Google agreed to and indeed did participate in the requisite pattern of racketeering activity which constitutes this RICO claim, collected unlawful debts, engaged in racketeering activities, and intentionally acted in furtherance of the conspiracy by conducting the pattern of racketeering and unlawful debt collection as described above. 110. At the very latest, Google had notice of the illegality of the Social Casino Enterprise as of the Ninth Circuit’s 2018 holding in Kater. Google’s post-Kater participation in the Social Casino Enterprise demonstrates its commitment to upholding and operating the structure of the Social Casino Enterprise. 111. As a result of Google’s conduct, Plaintiffs and Members of the Class were deprived of money and property that they would not otherwise have lost. 112. Under 18 U.S.C. § 1964(c), the Class is entitled to treble their damages, plus interest, costs, and reasonable attorneys’ fees. PRAYER FOR RELIEF Plaintiffs Jennifer Andrews and John Sarley, individually and on behalf of all others similarly situated, respectfully request that this Court enter an Order: a) Certifying this case as a class action on behalf of the Class defined above, appointing Jennifer Andrews and John Sarley as representatives of the Class, and appointing their counsel as Class Counsel; b) Declaring that Defendant’s conduct, as set out above, is unlawful under the UCL; c) Declaring that Defendant’s conduct, as set out above, constitutes racketeering activities, collection of unlawful debts, and conspiracy to engage in the same; d) Entering judgment against Defendant Google, in the amount of the losses suffered by Plaintiffs and each member of the Class; e) Enjoining Defendant from continuing the challenged conduct; f) Awarding damages to Plaintiffs and the Class members in an amount to be determined at trial, including trebling as appropriate; g) Awarding restitution to Plaintiffs and Class members in an amount to be determined at trial, h) Requiring disgorgement of all of Defendant Google’s ill-gotten gains; i) Awarding reasonable attorney’s fees and expenses; j) Awarding pre- and post-judgment interest, to the extent allowable; k) Requiring injunctive and/or declaratory relief as necessary to protect the interests of Plaintiffs and the Class; and l) Awarding such other and further relief as equity and justice require, including all forms of relief provided for under the UCL and RICO. JURY DEMAND Plaintiffs request a trial by jury of all claims that can be so tried. Respectfully Submitted, JENNIFER ANDREWS and JOHN SARLEY, individually and on behalf of all others similarly situated, Dated: March 25, 2021 By: /s/ Todd Logan One of Plaintiffs’ Attorneys Rafey S. Balabanian (SBN 315962) [email protected] Todd Logan (SBN 305912) [email protected] Brandt Silver-Korn (SBN 323530) [email protected] EDELSON PC 123 Townsend Street, Suite 100 San Francisco, California 94107 Tel: 415.212.9300 / Fax: 415.373.9435 Counsel for Plaintiffs and the Proposed Class EXHIBIT 1 The Honorable Ronald B. Leighton UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA No. 2:18-cv-00525-RBL ADRIENNE BENSON and MARY SIMONSON, individually and on behalf of all others similarly situated, Plaintiffs, v. DOUBLE DOWN INTERACTIVE, LLC, a Washington limited liability company, and INTERNATIONAL GAME TECHNOLOGY, a Nevada corporation, Defendants. DECLARATION OF WILLA MOORE I, Willa Moore, pursuant to 28 U.S.C. § 1746, declare as follows: 1. I first downloaded DoubleDown Casino in 2013, after I was hospitalized for chronic pain issues. Because my mobility had decreased, I went on the internet more and more often, and when I was on Facebook, I found DoubleDown. I was drawn to DoubleDown because I could play the same games that I played when I went to real casinos. 2. I started out playing probably 2-3 times a week, maybe for 4-6 hours each day. But very quickly, I was playing every day, sometimes more than 12 hours a day. 3. Overall, I estimate that I have spent over $40,000 on chips in DoubleDown Casino. 4. I am addicted to DoubleDown Casino. I never thought something like this could happen. I knew being on DoubleDown Casino every day for hours was a problem, but I couldn’t seem to stop. 5. I believe that DoubleDown is taking advantage of people’s addictions. They know that gambling is addictive, and they act exactly like a physical casino that pays out money. But of course that’s not the case. You buy more chips and you can’t win money even though you’re using real money to buy those chips. They are profiting off people’s addiction to the game. 6. I feel alone and embarrassed about spending money to do something that only feeds my addiction. DoubleDown Casino consumes you, and makes you feel like you always have to go play. I feel guilty because I’ve spent money on DoubleDown that I’ve needed to pay bills or buy food. I declare under penalty of perjury that the above and foregoing is true and correct. ������� ���� �� Executed on May ____ at ___________, _______________. WILLA MOORE EXHIBIT 2 The Honorable Ronald B. Leighton UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA No. 2:18-cv-00525-RBL ADRIENNE BENSON and MARY SIMONSON, individually and on behalf of all others similarly situated, Plaintiffs, v. DOUBLE DOWN INTERACTIVE, LLC, a Washington limited liability company, and INTERNATIONAL GAME TECHNOLOGY, a Nevada corporation, Defendants. DECLARATION OF JAN SAARI I, Jan Saari, pursuant to 28 U.S.C. § 1746, declare as follows: 1. I first started playing DoubleDown Casino around 2017 when I saw an ad on Facebook. Most Facebook ads I can ignore, but the DoubleDown Casino ad came up and said it was �f�ee �la�� a� �hei� ca�i�� j��� by signing up. The graphics were colorful, they had a big selection of slot machines to choose from, and they offered a large amount of free chips to start playing with. 2. At the beginning, I would stop playing once my free chips ran out. But then I started purchasing, and everything changed. I would play every day, 7 days a week, for approximately 2-3 hours in the afternoon. 3. Overall, I believe I have spent close to $25,000 on DoubleDown Casino. I would b�� �he chi�� �i�h a c�edi� ca�d �hich I c��ld��� �a� i�-full, so �he�e�� interest on top of that too. 4. DoubleDown Casino quickly �e�� f��� �� �be�� f�ie�d� �� �� ����� �igh��a�e. My partner was suffering serious health problems so I would turn to DoubleDown Casino to forget about all the problems he was having. I had a 2-3 hour window where I could tune out and have my time to play and feel the adrenaline rush of winning. As the free chips began running out (because I kept losing), I put a credit card on file to buy some more so I could keep playing. You could buy different packages that they would offer from $9.99 to $249.00. The more you spent, the more chips you would receive. After buying the smaller packages, I found that I would lose them in a short time, while if I bought a more expensive package, I would receive more jackpots and get to play longer. 5. This type of online casino has a lot of pitfalls. When you go to their site each day, they let you know that certain games have a better chance of hitting the jackpots. They also say that the higher the bet you place, the better your chance of hitting a big jackpot. This tells me that they can manipulate the games to pay more or less, and they have the power to do that. If they see you as a repeat buying customer, they may make your games pay less so you buy more chips to keep playing. At least, that is how it seems to me. You also are given ranks so that when you reach a new level (by purchasing more chips) you are given more free chips. They also give you an ambassador or V.I.P. rep to contact if you have any concerns with purchasing chips or other matters. It makes you feel like you have a friend on the other end. 6. I was a well-respected, active member of my community who owned my own business for 36 years. But when I retired, and my fellow started having health problems, DoubleDown Casino made me fall into the trap of escape and adrenaline rush to cope with all my other responsibilities. When I won, it was just great. When I lost, and started buying more and more chips, I felt lower than pond scum. I was sick to my stomach, felt like a total loser, wondered about suicide (although I would never leave my partner), could not sleep, had anxiety a��ack� �i�h a ���hi�g hea��, a�d c��ld��� ea�. I j��� c��ld��� ��de���a�d h�� I c��ld le� i� ge� �� out of control. It was as if it had a power over me that I could��� b�eak. I c��ld��� ����. I declare under penalty of perjury that the above and foregoing is true and correct. ��������� �� ���������� Executed on this ____ day of March at ___________, _______________. JAN SAARI EXHIBIT 3 The Honorable Ronald B. Leighton UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA SHERYL FIFE, individually and on behalf of all others similarly situated, No. 2:18-cv-00565-RBL Plaintiff, v. SCIENTIFIC GAMES CORP., a Nevada corporation, Defendant. DECLARATION OF LAURA PERKINSON I, Laura Perkinson, pursuant to 28 U.S.C. § 1746, declare as follows: 1. I downloaded Jackpot Party Casino because of my disability. I was disabled in an accident in the early 90s. It is very depressing to not be able to do what you have always done in the past and not be able to run or walk well at all. I turned to friends on the computer and they led me to games of a different kind. Soon, I started to get emails and letters from online casinos. At first, I did not follow up, but they kept giving me more and more great offers. I started playing many games including Jackpot Party Casino. Before I knew it, I found myself playing and paying way more than I should have. 2. At first, I played for only maybe an hour at a time or when I had any down time at all. When I lost my husband, I spent a lot more time playing these games, sometimes 4 to 5 hours 3. Overall, I believe that I have spent between $10,000-$20,000 playing Jackpot Party Casino. 4. I was addicted to Jackpot Party Casino and I hate that. Having very little to do every day and getting such amazing offers makes you think you might actually win something. Yet, you don’t. I didn’t even realize they fix the games. If you ever get to a high amount such as a billion, you will lose until you have to buy. If you don’t buy you won’t have enough coins to play longer than 10 minutes. At that point, they start bombarding you with offers that sound great. Even then if you buy in, you may have to do so 3 or 4 times before they make it so you can win. I was stupid enough to keep on playing. This kind of loss put a huge strain on my ability to even buy food since I had spent money on a stupid game. 5. I believe Jackpot Party Casino had been taking advantage of my addiction. Each day you get a small amount of free coins just to get you going and sucked in for the day. Those coins don’t last long so you end up buying more in order to keep playing. Once you get down to a lower amount of coins they will instantly start flashing deals onto your screen. Instead of paying $49.99, you can get the same amount of coins for just $29.99. A lot of these are deals that you can’t resist at all. When I would get an email with some kind of offer, I would go play it, each and every time. Just as I was going to lose all the coins they gave me, I would almost win a big amount, which was enough to get me to pay more money. 6. This game hurt me and the worst part was that when my husband was alive, he would say, “You’re not spending money on there are you?” and I lied. I hate that I have to live with that now. I declare under penalty of perjury that the above and foregoing is true and correct. �� ��������� ���������� Executed on this ____ day of March at ___________, _______________. LAURA PERKINSON EXHIBIT 4 The Honorable Ronald B. Leighton UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA SHERYL FIFE, individually and on behalf of all others similarly situated, No. 2:18-cv-00565-RBL Plaintiff, v. SCIENTIFIC GAMES CORP., a Nevada corporation, Defendant. DECLARATION OF DONNA REED I, Donna Reed, pursuant to 28 U.S.C. § 1746, declare as follows: 1. I first started playing Jackpot Party Casino in 2013 after a friend sent it to me. It was addictive right away. 2. I would play Jackpot Party Casino 7 days a week for probably 5 to 6 hours a day. 3. I believe that I’ve spent at least $30,000 on Jackpot Party Casino over the 6 years that I played. I didn’t spend that much at first. But once I retired and started going through marital problems, it became my vice. I didn’t realize how much I was spending. 4. I am married to a very controlling man and he spends money like water on things he wants such as classic cars and photography equipment. I would just stay home and take care of our 4 dogs. It got to where Jackpot Party Casino was the only outlet I had in my life. And it got out of control. 5. I saw my husband spending all this money so I thought to myself, “look I can do the same.” It’s so easy to spend money from home so you keep purchasing because you don’t realize how much you’re spending at the time. I work at a casino now and I don’t gamble at all there; Jackpot Party makes it so easy to gamble from your own home. 6. I am going through a divorce right now, in part because of how much money I spent on Jackpot Party. This has made it very difficult to stop playing and spending. But I have cut down my spending because I just don’t have the money anymore. 7. I believe Scientific Games has acted unfairly and taken advantage of my addiction. I began to lose more frequently when I was spending a lot and that meant that I had to keep purchasing coins. Scientific Games will provide incentives to their top spenders so that they continue to spend. I have received Christmas gifts two times. They have sent me a robe, oils, phone charger, bath bombs, a blanket, and more. I know that they have sent other players flowers and candies. 8. This game has changed my way of thinking and caring. I never thought I would get addicted to anything except cigarettes, but this has taken too much of my life away. I don’t know how my life would be different without this game, but I know that it would be better and I know that I would be much better off financially. I am going to try to get some help and I think these games of gambling should be banned from the internet. I wouldn’t miss it if they got rid of it. I wish it didn’t exist. I declare under penalty of perjury that the above and foregoing is true and correct. ���������� ��� ���������� Executed on this ____ day of March at ___________, _______________. DONNA REED EXHIBIT 5 THE HONORABLE RONALD B. LEIGHTON UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA Case No. 18-cv-05275-RBL SEAN WILSON, individually and on behalf of all others similarly situated, Plaintiff, v. PTT, LLC, a Delaware limited liability company, d/b/a HIGH 5 GAMES, LLC, a Delaware limited liability company, Defendant. DECLARATION OF AIDA GLOVER I, Aida Glover, pursuant to 28 U.S.C. § 1746, declare as follows: 1. I first started playing High 5 Casino approximately 5 or 6 years ago when I 2. I play High 5 Casino every day, multiple times a day. 3. Overall, I believe I have spent at least $10,000 on coins in High 5 Casino. 4. I believe I am addicted to High 5 Casino. I do not have kids and there really isn’t a whole lot to do. This passes the time, but I have really gotten sucked into it. I have tried to quit but I believe three weeks is the longest amount of time I’ve ever been able to stop. 5. High 5 Casino really draws you into their game. It is very addicting because you get bonus coins, and they also put out a new game every Thursday. That keeps it exciting and gives me something new to look forward to. I believe it’s a way for High 5 to keep people playing and spending. 6. I believe that High 5 Casino is unfair. My belief is that that they manipulate the machine by looking at the level you are on and how much you have spent. There are so many pop-up messages to try to get you to buy more coins and I think they intentionally do this when your coins are getting lower so you are much more likely to purchase. 7. Sometimes I feel guilty about playing High 5 Casino and spending so much money. My husband does not know I have spent money on it. My grandkids will sometimes ask for money and I can’t give it to them because I have to save it for this game. I declare under penalty of perjury that the foregoing is true and correct. �� ���������� ������ Executed on May ____ 2020 at ___________, _______________. AIDA GLOVER EXHIBIT 6 (Samsung Galaxy Tablet Lodged with Court) INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS-CAND 44 Authority For Civil Cover Sheet. The JS-CAND 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as required by law, except as provided by local rules of court. This form, approved in its original form by the Judicial Conference of the United States in September 1974, is required for the Clerk of Court to initiate the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of Court for each civil complaint filed. The attorney filing a case should complete the form as follows: I. a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use only the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and then the official, giving both name and title. b) County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the time of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land condemnation cases, the county of residence of the “defendant” is the location of the tract of land involved.) c) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, noting in this section “(see attachment).” II. Jurisdiction. The basis of jurisdiction is set forth under Federal Rule of Civil Procedure 8(a), which requires that jurisdictions be shown in pleadings. Place an “X” in one of the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below. (1) United States plaintiff. Jurisdiction based on 28 USC §§ 1345 and 1348. Suits by agencies and officers of the United States are included here. (2) United States defendant. When the plaintiff is suing the United States, its officers or agencies, place an “X” in this box. (3) Federal question. This refers to suits under 28 USC § 1331, where jurisdiction arises under the Constitution of the United States, an amendment to the Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes precedence, and box 1 or 2 should be marked. (4) Diversity of citizenship. This refers to suits under 28 USC § 1332, where parties are citizens of different states. When Box 4 is checked, the citizenship of the different parties must be checked. (See Section III below; NOTE: federal question actions take precedence over diversity cases.) III. Residence (citizenship) of Principal Parties. This section of the JS-CAND 44 is to be completed if diversity of citizenship was indicated above. Mark this section for each principal party. IV. Nature of Suit. Place an “X” in the appropriate box. If the nature of suit cannot be determined, be sure the cause of action, in Section VI below, is sufficient to enable the deputy clerk or the statistical clerk(s) in the Administrative Office to determine the nature of suit. If the cause fits more than one nature of suit, select the most definitive. V. Origin. Place an “X” in one of the six boxes. (1) Original Proceedings. Cases originating in the United States district courts. (2) Removed from State Court. Proceedings initiated in state courts may be removed to the district courts under Title 28 USC § 1441. When the petition for removal is granted, check this box. (3) Remanded from Appellate Court. Check this box for cases remanded to the district court for further action. Use the date of remand as the filing (4) Reinstated or Reopened. Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date. (5) Transferred from Another District. For cases transferred under Title 28 USC § 1404(a). Do not use this for within district transfers or multidistrict litigation transfers. (6) Multidistrict Litigation Transfer. Check this box when a multidistrict case is transferred into the district under authority of Title 28 USC § 1407. When this box is checked, do not check (5) above. (8) Multidistrict Litigation Direct File. Check this box when a multidistrict litigation case is filed in the same district as the Master MDL docket. Please note that there is no Origin Code 7. Origin Code 7 was used for historical records and is no longer relevant due to changes in statute. VI. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional statutes unless diversity. Example: U.S. Civil Statute: 47 USC § 553. Brief Description: Unauthorized reception of cable service. VII. Requested in Complaint. Class Action. Place an “X” in this box if you are filing a class action under Federal Rule of Civil Procedure 23. Demand. In this space enter the actual dollar amount being demanded or indicate other demand, such as a preliminary injunction. Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded. VIII. Related Cases. This section of the JS-CAND 44 is used to identify related pending cases, if any. If there are related pending cases, insert the docket numbers and the corresponding judge names for such cases. IX. Divisional Assignment. If the Nature of Suit is under Property Rights or Prisoner Petitions or the matter is a Securities Class Action, leave this section blank. For all other cases, identify the divisional venue according to Civil Local Rule 3-2: “the county in which a substantial part of the events or omissions which give rise to the claim occurred or in which a substantial part of the property that is the subject of the action is situated.”

criminal & enforcement

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Civil Action No.: ____________ CLASS ACTION COMPLAINT UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK NEAL D’ALESSIO, KIMBERLY STEVENS, and MARK BECK, individually and on behalf of all others similarly situated, Plaintiff(s), JURY TRIAL DEMANDED MATCH GROUP, LLC. Defendant. _______________________________________ CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Plaintiffs NEAL D’ALESSIO, KIMBERLY STEVENS, and MARK BECK, (“Plaintiffs”), individually and on behalf of all others similarly situated, through their undersigned counsel, alleges for their Class Action Complaint against Defendant, Match Group, LLC, (“Defendant”) based upon personal knowledge as to themselves and their own acts and experiences, and, as to all other matters, upon information and belief, including the investigation conducted by their counsel as follows: NATURE OF ACTION 1. This action stems from Defendant’s practice of using a variety of deceptive and unfair means to trick consumers into purchasing subscriptions to use Defendant’s online dating service, even where Defendant knows that these consumers are being targeted by scam artists and are at risk of being defrauded, and then prevent its users from cancelling their subscriptions and/or obtaining the full benefits for which they paid. These deceptive practices, which have given rise to a separate complaint by the Federal Trade Commission for violations of the Federal 1 Trade Commission Act and the Restore Online Shoppers’ Confidence Act, see FTC v. Match Group, Inc., Case No. 3:19-cv-02281, (N.D. Tex.), have also harmed innumerable private consumers including these Plaintiffs and the Class members they represent. JURISDICTION AND VENUE 2. This Court has jurisdiction over this action pursuant to the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d)(2) because this is a class action where members of the proposed class of plaintiffs are citizens of a state different from Defendant and the aggregated amount in controversy exceeds $5,000,000, exclusive of interest and costs. 3. This Court has personal jurisdiction over Defendant because it has a continuous, systematic, and substantial presence within the State of New York. Defendant regularly solicits and conducts business within the State of New York. In addition, Defendant has committed the below described acts in the State of New York, which have directly harmed residents of the State of New York. 4. Venue is proper in this district pursuant to 28 U.S.C. § 1391 because a substantial part of the events giving rise to the claim occurred in this district. In addition, upon information and belief, thousands of class members reside in this district. PARTIES 5. Plaintiff Neal D’Alessio (“Plaintiff #1”) is a natural person who resides in Stanford, Connecticut, and who utilized Defendant’s service while a resident of New York. Plaintiff #1 is a member of the putative class defined herein, and specifically of subclasses 1, 1A, 2, 2A, 4, 4A, and 6 proposed below. 2 6. Plaintiff Kimberly Stevens (“Plaintiff #2”) is a natural person who resides in Carrollton, Texas. Plaintiff #3 is a member of the putative class defined herein, and specifically of subclasses 1, 2, and 3 proposed below. 7. Plaintiff Mark Beck (“Plaintiff #3”) is a natural person who resides in Towson, Maryland. Plaintiff #3 is a member of the putative class defined herein, and specifically of subclasses 1, 2, 4, and 5 proposed below. 8. Collectively, the plaintiffs are referred to herein as “Plaintiffs.” 9. Defendant Match Group, LLC is a Delaware limited liability company with its principal place of business at 8750 North Central Expressway, Suite 1400, Dallas, Texas 75231. Defendant transacts or has transacted business in this District and throughout the United States. FACTUAL BACKGROUND 10. Defendant operates Match.com, one of the world’s largest dating Web portals. The company’s diverse portfolio of apps and products brands includes Tinder, PlentyOfFish, Meetic, OkCupid, and Hinge. 11. Online dating services such as Defendant’s purport to enable people to find and introduce themselves to potential connections over the Internet, usually with the goal of developing personal, romantic, or sexual relationships. Users of such services first create a profile containing personal information such as age, gender, and location along with a photograph. Other members of the same service can view each other’s profiles to decide whether or not to initiate contact. If a member locates someone with whom they do want to contact (a “match”), the platforms offer methods for members to communicate such as direct messaging, emails, online chat, and message boards. Members can constrain their interactions to the online space, or they can arrange a date to meet in person. 3 12. Unfortunately, criminals and other fraudsters often use online dating services such as Defendant’s to locate potential victims and as tools to perpetrate their schemes. For example, perpetrators will send messages to other members claiming to be interested in a romantic match. If the innocent user responds, the scammer will attempt to establish a relationship with the victim with the goal of obtaining sensitive information or money from the victim. A. Defendant’s Use of Fraudulent Communications to Sell Subscriptions 13. Defendant’s Match.com service allows users to create a “free” profile and to review other members’ profiles without charge, as an enticement to join Defendant’s database of users. However, Defendant primarily earns revenue from the Match.com service by upselling consumers into a paid subscription to the service which offers additional benefits. Subscriptions are sold in packages ranging from one to twelve months in length and automatically renewed unless the consumers take affirmative steps to cancel. 14. Members who use the “free” services without paying for a subscription have limited abilities to interact with other members beyond passively reviewing profiles on the service. For example, “free” members are informed by Defendant when another member wishes to communicate with them. However, the “free” users are blocked from reading the communications or from viewing the profiles of members who wish to form a “match.” 15. Once a free subscription is established, users often begin receiving communications from Defendant indicating that another member wishes to make contact with them. However, due to the limitations of the “free” memberships, the user cannot read the communication from the other member or view their information in order to contact them directly. Defendant uses these limitations to encourage the user to upgrade to a paid subscription in order to communicate with their “match.” 4 16. Unbeknownst to the users, many of these communications are actually scammers attempting to make contact with new victims. Indeed, Plaintiffs are informed and believe that Defendant itself has identified as many as half of the instant message initiations and “favorites” sent in some months as fraudulent, i.e., sent for the purpose of perpetrating a scam. 17. Defendant is well aware of the prevalence of scammers on its platform and that many of the communications sent to “free” users are illegitimate. Nevertheless, Defendant presents these fraudulent communications as legitimate attempts by other members to form a romantic match, and actively encourages these users to read these communications in order to sell more subscriptions. 18. Based on Defendant’s communications, users such as Plaintiffs reasonably believed that these fraudulent communications were in fact legitimate members looking for a romantic connection. Accordingly, the users paid for Defendant’s subscriptions in order to view the other member’s communication or their profiles, only to later determine that the communication was in fact illegitimate. Over the past several years, Plaintiffs are informed and believe and thereon allege that hundreds of thousands of consumers subscribed to Defendant’s Match.com service after receiving a fraudulent communication. 19. Indeed, after a user agrees to purchase a subscription in order to make contact with the “match” referenced by Defendant, the user often receives a notification saying that the profile of the member who sent the communication is “unavailable.” The profile is “unavailable” because Defendant itself determined that the account was fraudulent and deleted it. Defendant neither informs the user that the member attempting to contact them was fraudulent nor permits the user to cancel their subscription. 5 20. If a new subscriber complains about purchasing a subscription in order to review a profile that is actually “unavailable,” Defendant misleadingly responds “Please be assured, Match.com does not send members misleading notifications, e-mails or winks professing romantic interest. We have too much respect for our members to ever compromise their trust. If you have received communications from members with profiles that are not immediately available, the member may have temporarily hidden their profile.” B. Defendant Knowingly Allowed Fraudsters to Operate on Defendant’s Platform and Defraud Class Members 21. As noted above, Defendant is well aware of the prevalence of scam artists and criminals on its platform. Indeed, Defendant created an internal process to screen for users who appear to be illegitimate or attempting to perpetrate some form of fraud using Defendant’s platform. Through this screening process, Defendant has the capability of blocking communications from suspected fraudsters, and has in fact used that technology to prevent suspected fraudulent communications from being sent to paid subscribers. However, until approximately mid-2018, Defendant knowingly allowed such fraudulent communications to be sent to “free” users – i.e., the users that Defendant was hoping to entice into upgrading to a paid subscription. 22. As a result, for years Defendant knowingly passed along millions of fraudulent communications to their “free” users, well aware that a significant number of these communications were intended to entrap the users in a scam. Placing its own greed ahead of the interests of its customers, Defendant ignored the obvious harm of its actions because it knew that many of these fraudulent communications would entice the users into purchasing a subscription. 6 C. Defendant Used Misleading “Guarantees” to Sell Subscriptions 23. Until mid-2019, Defendant misleadingly advertised on its Match.com website that users who purchased a six-month subscription received a “match GUARANTEE.” 24. As described in these advertisements, Defendant promised that any consumer who purchased a six-month paid subscription but did not “meet someone special” during the first six months would receive an additional six-month subscription for free. The advertisement did not disclose that this offer was subject to any additional terms or conditions. 25. In fact, Defendant imposed terms and conditions on this “guarantee” which were nearly impossible for consumers to achieve, and which were only made known to consumers who followed a complicated process. 26. Specifically, consumers would first need to click a “Learn more” button set out in Defendant’s advertisement for the guarantee, which directed them to a rules page setting out several requirements that the consumer had to satisfy to receive the guarantee. This included requiring the consumers to sign up for a six-month subscription, creating a truthful public profile with a primary photo, and initiating or responding to communications with at least five unique Match.com members each month. 27. In addition, this page stated the consumers must comply with a lengthy set of “Program Rules,” which included such requirements as submitting a photo and having it approved by Defendant within the first seven days of purchasing the qualifying subscription. 28. Although the “Program Rules” set forth these additional requirements in separate numbered paragraphs, which gave the appearance that all of the program’s requirements were contained in these numbered paragraphs, numerous additional requirements were also misleadingly buried in unnumbered paragraphs that followed. One such requirement was that 7 consumers did not automatically receive the free six-month subscription even if they fulfilled all of the program requirements – they had to affirmatively “accept” the free six months, which could only be done during the final week of the initial six-month term. 29. Also buried in these unnumbered paragraphs was a note that Defendant’s website included a “progress page” tracking their compliance with the guarantee’s rules. However, if consumers used this “progress page,” the page misled consumers into believing that they were in compliance with the program’s requirements by informing the consumers of their progress with respect to some requirements – such as creating a public profile with a photograph and starting a conversation with at least five Match.com members each month – but not identifying others, such as the requirement that consumers obtain Defendant’s approval of their photograph within the first seven days. 30. Given the misleading manner in which Defendant presented these various requirements, most consumers who purchased a six-month subscription in reliance on Defendant’s “guarantee” were unaware of some or all of these various requirements, including that they must affirmatively accept the additional “free” subscription during the final week of their initial subscription. 31. Moreover, even if a consumer did locate and review these various rules, followed them precisely and affirmatively accepted the free subscription during the narrow window permitted, Defendant would then present a prompt asking the consumer “[d]id you meet anyone during your 6-month guarantee program?” If the consumer honestly answered that they were introduced to “anyone” during their first six months – even if they did not meet “someone special” – they were disqualified from receiving the free six-month extension. 8 32. As a result of the misleading way Defendant advertised the guarantee and applied its convoluted rules and requirements, most consumers who purchased a six-month subscription in reliance on Defendant’s purported “guarantee” and then failed to meet “someone special” never received the promised free six-month extension. Plaintiff is informed and believes, and thereon alleges that of the nearly 2.5 million subscriptions sold by Defendant between 2013 and 2016 which were subject to the guarantee, only 32,438 free six-month subscriptions were given, while nearly 1 million of these consumers were charged for an additional six-month subscription. D. Defendant Intentionally Uses a Misleading Cancellation Process Which Caused Class Members to Continue Being Charged Even After Believing They Cancelled Their Subscription 33. Members who purchase a subscription package from Defendant are required to provide their credit card or other payment information to pay for the initial subscription package. Once they have done so, Defendant uses a “negative option renewal” feature, meaning that Defendant automatically charges consumers for a new term at the end of each subscription period, unless the consumer affirmatively cancels their subscription. 34. To try to dissuade consumers from doing so, Defendant knowingly adopted a convoluted process which either discourages consumers from cancelling their subscription or deceives them into believing they have cancelled, only to later discovery that their credit card or other payment source was charged for a renewed subscription because their cancellation was ineffective or incomplete. 35. Defendant is aware and has been aware for many years that the process it uses is difficult and deceptive for its customers. Indeed, thousands of consumers have complained about Match.com’s cancellation procedures and/or claimed that Defendant billed them after they believed they effectively canceled their Match.com subscriptions. 9 E. Defendant Withholds Paid-For Services from Class Members Who Disputed Defendant’s Charges 36. Because of Defendant’s deceptive advertising, billing, and cancellation practices, consumers often raise billing disputes with Defendant. In numerous instances, consumers dispute Defendant’s charges through their financial institutions. 37. When consumers dispute these charges, Defendant contests the disputes. Until mid-2019, when Defendant prevailed in a billing dispute, Defendant often failed to provide consumers access to their Match.com accounts or to the subscription services that the consumers paid for. Instead, Defendant terminated the consumers’ accounts and deleted their profiles. 38. In fact, Match.com’s Terms of Use warned that if Defendant “successfully disputes the reversal [of charges], and the reversed funds are returned, you are not entitled to a refund or to have your account or subscription reinstated.” Defendant placed this disclosure near the end of its lengthy Terms of Use document and did not set it off or otherwise made it conspicuous to consumers. Defendant has since modified these Terms of Use to indicate that “If you initiate a chargeback or otherwise reverse a payment made with your Payment Method, Match may terminate your account immediately in its sole discretion.” 39. Many of the consumers who disputed a charge and lost the dispute often had remaining time in their subscriptions, yet were prevented accessing the services they paid for due to Match’s termination of their account. 10 ALLEGATIONS SPECIFIC TO PLAINTIFFS A. Plaintiff #1 40. In 2017, Plaintiff #1 created a free online profile on Match.com. Almost immediately thereafter, Plaintiff began to receive emails from Match.com stating that other Match.com users were interested in him. 41. In reliance on Defendant’s email, Plaintiff #1 agreed to upgrade his free membership to a paid subscription in order to make contact with these individuals. 42. After Plaintiff #1 upgraded to a paid subscription, he attempted to view the profile of the member that purportedly wanted to communicate with him. However, the profile was listed as “unavailable.” This pattern repeated multiple times over the next several weeks – Plaintiff #1 would receive a communication indicating that another member was interested in speaking with him, only to later discover that the member’s account was deleted by Defendant. Ultimately, nearly all of the communications that Plaintiff #1 received were from illegitimate members using fake profiles. 43. When Plaintiff #1 attempted to contact Defendant’s customer service department to complain, he received an email in which Defendant misleadingly stated: “Please be assured, Match.com does not send members misleading notifications, e-mails or winks professing romantic interest. We have too much respect for our members to ever compromise their trust. If you have received communications from members with profiles that are not immediately available, the member may have temporarily hidden their profile.” 44. But for the communications Plaintiff #1 received indicating that a legitimate user wished to make contact with him, he would never have agreed to upgrade his membership to a paid subscription. 11 45. In addition, Plaintiff #1 discovered that many users were in fact scam artists attempting to solicit money from Plaintiff #1, rather than a legitimate members. 46. But for Defendant’s representation that this was a legitimate user seeking to form a “match,” Plaintiff #1 would not have paid for a subscription to Defendant’s service or initiated a communication with this individual. Indeed, had Defendant simply used its screening process to block this individual’s initial fraudulent communication, as Defendant was capable of doing and in fact did for its paid subscribers, Plaintiff #1 would not have been injured as herein described. 47. Later, and before his paid subscription period ended, Plaintiff #1 decided to cancel his subscription. Plaintiff #1 attempted to do so via the cancellation instructions on the Match.com website. However, because of the deliberately confusing manner in which those instructions were created, Plaintiff #1 was misled into believing that he had cancelled his subscription, when in fact he did not. As a result, and because of Defendant’s “negative option renewal” policy whereby subscriptions are automatically renewed unless a subscriber affirmatively completes Defendant’s cancellation process, when Plaintiff #1’s initial subscription period ended he was charged for another subscription period. 48. Finally, When Plaintiff #1 cancelled his subscription, Defendant did not return all personal information to him upon termination in accordance with New York state law. Instead, Defendant advised Plaintiff #1 members that Defendant "cannot promise that all data will be deleted within a specific timeframe due to technical constraints." 12 B. Plaintiff #2 49. In 2017, Plaintiff #2 created a free online profile on Match.com. Almost immediately thereafter, Plaintiff began to receive emails from Match.com stating that other Match.com users were interested in her. 50. In reliance on these communications, Plaintiff #2 agreed to upgrade her free membership to a paid subscription in order to make contact with these individuals. 51. After Plaintiff #2 upgraded to a paid subscription, she attempted to view the profile of the member that purportedly wanted to communicate with her. However, the profile was listed as “unavailable.” This pattern repeated multiple times over the next several weeks – Plaintiff #2 would receive a communication indicating that another member was interested in speaking with her, only to later discover that the member’s account was deleted by Defendant. Ultimately, nearly all of the communications that Plaintiff #1 received were from illegitimate members using fake profiles. 52. But for the communications Plaintiff #2 received indicating that a legitimate user wished to make contact with her, she would never have agreed to upgrade her membership to a paid subscription. 53. In addition, Plaintiff #2 reviewed one of the communications she received while a “free” user, and initiated communication with this user. 54. Ultimately, however, Plaintiff #2 discovered that this user was in fact a scam artist attempting to solicit money from Plaintiff #2, rather than a legitimate member. 55. But for Defendant’s representation that this was a legitimate user seeking to form a “match,” Plaintiff #2 would not have paid for a subscription to Defendant’s service or initiated a relationship with this individual. Indeed, had Defendant simply used its screening process to 13 block this individual’s initial fraudulent communication, as Defendant was capable of doing and in fact did for its paid subscribers, Plaintiff #2 would not have been injured as herein described. 56. Plaintiff #2 also agreed to purchase a six-month subscription to use the Match.com service. At the time Plaintiff did so, it was in response to an advertisement on the Match.com website that promised a “match GUARANTEE,” whereby Defendant promised simply that any consumer who purchased a six-month paid subscription but did not “meet someone special” during the first six months would receive an “extra 6 months FREE.” 57. In reliance on this “guarantee,” Plaintiff #2 purchased the six-month subscription. 58. Thereafter, Plaintiff #2 did not make a romantic connection with any other member on the Match.com platform within the first six months of her subscription. Nevertheless, when Plaintiff #3’s initial six-month subscription ended, Defendant, rather than immediately grant her an additional six-month enrollment with no additional cost, offered Plaintiff #2 a “discount” an additional three-month subscription. 59. When Plaintiff #2 demanded that she receive the promised additional six-month subscription for free, Defendant refused to honor its original promise, citing the additional requirements for the guarantee that were not specifically delineated or referred to in the original advertisement. 60. Contrary to Defendant’s simple representation of a “love guarantee,” Defendant advised Plaintiff #2 that, during the six-month “guarantee” period, any communication whatsoever from another user, regardless of the outcome of the communication, satisfied Defendant’s “love guarantee.” 14 C. Plaintiff #3 61. In 2017, Plaintiff #3 created a free online profile on Match.com. Almost immediately thereafter, Plaintiff began to receive emails from Match.com stating that other Match.com users were interested in him. 62. In reliance on Defendant’s email, Plaintiff #3 agreed to upgrade his free membership to a paid subscription in order to make contact with these individuals. 63. After Plaintiff #3 upgraded to a paid subscription, he attempted to view the profile of the member that purportedly wanted to communicate with him. However, the profile was listed as “unavailable.” This pattern repeated multiple times over the next several weeks – Plaintiff #3 would receive a communication indicating that another member was interested in speaking with him, only to later discover that the member’s account was deleted by Defendant. Ultimately, nearly all of the communications that Plaintiff #3 received were from illegitimate members using fake profiles. 64. But for the communications Plaintiff #3 received indicating that a legitimate user wished to make contact with him, he would never have agreed to upgrade his membership to a paid subscription. 65. In addition, Plaintiff #3 discovered that many users were in fact scam artists attempting to solicit money from Plaintiff #3, rather than legitimate members. 66. But for Defendant’s representation that this was a legitimate user seeking to form a “match,” Plaintiff #3 would not have paid for a subscription to Defendant’s service or initiated a communication with this individual. Indeed, had Defendant simply used its screening process to block this individual’s initial fraudulent communication, as Defendant was capable of doing 15 and in fact did for its paid subscribers, Plaintiff #3 would not have been injured as herein described. 67. Later, and before his paid subscription period ended, Plaintiff #3 decided to cancel his subscription. Plaintiff #3 attempted to do so via the cancellation instructions on the Match.com website. However, because of the deliberately confusing manner in which those instructions were created, Plaintiff #3 was misled into believing that he had cancelled his subscription, when in fact he did not. As a result, and because of Defendant’s “negative option renewal” policy whereby subscriptions are automatically renewed unless a subscriber affirmatively completes Defendant’s cancellation process, when Plaintiff #3’s initial subscription period ended he was charged $59.97 for several additional subscription periods. 68. Moreover, because of Defendant’s deliberately confusing cancellation process and subsequent charges to Plaintiff #3, Plaintiff #3 initiated a dispute with his credit card company in an attempt to recover monies improperly taken by Defendant. 69. Ultimately, Plaintiff #3’s financial institution sided with Defendant and rejected Plaintiff #3’s dispute to the charges. At this point, Defendant deleted Plaintiff #3’s account and blocked Plaintiff #3 from further use of the Match.com services. At the time Defendant did so, Plaintiff #3 still had time left on his paid-for subscription, but Defendant provided no refund for this remaining time. Accordingly, as the result of Defendant’s actions, Plaintiff #3 did not receive the full benefits for which he paid. CLASS ACTION ALLEGATIONS 70. This action satisfies the prerequisites for maintenance as a class action provided in Fed. R. Civ. P. 23, as set forth herein. 16 71. Class Definition. Plaintiffs bring this action individually and on behalf of the following class of similarly situated persons (the “Class”), of which Plaintiffs are members: All natural persons domiciled in the United States or its territories who, within the applicable statutes of limitation, paid for a subscription to the Match.com dating site and who further fall into one of the following ten subclasses: a. Subclass #1: All natural persons domiciled in the United States or its territories who, within the applicable statutes of limitation, paid for a subscription to the Match.com dating site after receiving a notification from Defendant that a message was sent from a user who was not a legitimate user of the site. b. Subclass #1A: All natural persons domiciled in the State of New York who, within the applicable statutes of limitation, paid for a subscription to the Match.com dating site after receiving a notification from Defendant that a message was sent from a user who was not a legitimate user of the site. c. Subclass #2: All natural persons domiciled in the United States or its territories who, within the applicable statutes of limitation, received a communication Defendant had already flagged as potentially fraudulent at the time the communication was passed to the subclass member. d. Subclass #2A: All natural persons domiciled in the State of New York who, within the applicable statutes of limitation, received a communication Defendant had already flagged as potentially fraudulent at the time the communication was passed to the subclass member. 17 e. Subclass #3: All natural persons domiciled in the United States or its territories who, within the applicable statutes of limitation, paid for a six- month subscription to the Match.com dating site, did not meet someone special during the six-month period, and did not receive a further six-month subscription for free. f. Subclass #3A: All natural persons domiciled in the State of New York who, within the applicable statutes of limitation, paid for a six-month subscription to the Match.com dating site, did not meet someone special during the six- month period, and did not receive a further six-month subscription for free. g. Subclass #4: All natural persons domiciled in the United States or its territories who, within the applicable statutes of limitation, paid for a subscription to the Match.com dating site, attempted to cancel their subscription, and were nevertheless charged for an additional subscription period. h. Subclass #4A: All natural persons domiciled in the State of New York who, within the applicable statutes of limitation, paid for a subscription to the Match.com dating site, attempted to cancel their subscription, and were nevertheless charged for an additional subscription period. i. Subclass #5: All natural persons domiciled in the United States or its territories who, within the applicable statutes of limitation, paid for a subscription to the Match.com dating site, unsuccessfully disputed a charge made by Defendant with their financial institution, and then had their account 18 with Defendant terminated before their paid-for subscription period ended and without any refund from Defendant. j. Subclass #5A: All natural persons domiciled in the State of New York who, within the applicable statutes of limitation, paid for a subscription to the Match.com dating site, unsuccessfully disputed a charge made by Defendant with their financial institution, and then had their account with Defendant terminated before their paid-for subscription period ended and without any refund from Defendant. k. Subclass #6: All natural persons domiciled in the United States or its territories who, within the applicable statutes of limitation, paid for a subscription to the Match.com dating site, cancelled their subscription, and contrary to New York State law, Defendant did not return all information to the Subclass #6 members upon termination of their subscriptions or deletion of their accounts. Instead, Defendant advised Subclass #6 members that Defendant “cannot promise that all data will be deleted within a specific timeframe due to technical constraints.” 72. Excluded from the Class and each Subclass are Defendant and any of its respective officers, directors or employees, the presiding judge, Class counsel and members of their immediate families, and persons or entities who timely and properly exclude themselves from the Class. 73. Numerosity. The members of the Class and of each Subclass are so numerous and geographically dispersed throughout the United States such that joinder of all members is impracticable. Plaintiffs are informed and believe and thereon allege that there are thousands of 19 persons in the Class and in each Subclass. The exact number and identity of Class members is unknown to Plaintiffs at this time and can only be ascertained from information and records in the possession, custody or control of Defendant. 74. Commonality. There are questions of law or fact common to each Subclass including, but not limited to, the following: a. Whether Plaintiffs #1, #2, and #3 and each member of Subclasses 1 and 1A received advertisements from Defendant encouraging them to purchase subscriptions in order to review messages from users Defendant knew or should have known were not legitimate. b. Whether Plaintiffs #1, #2, and #3 and each member of Subclasses 2 and 2A received advertisements from Defendant encouraging them to review messages that Defendant already flagged as potentially fraudulent and did not send to its paid subscribers. c. Whether Plaintiff #2 and each member of Subclasses 3 and 3A purchased six- month subscriptions after viewing an advertisement which promised that Defendant would “guarantee” that the purchasing users would meet “someone special” or they would receive a free six-month extension to their subscriptions. d. Whether Plaintiff #3 and each member of Subclasses 4 and 4A were charged by Defendant for a renewed subscription after the users attempted to cancel their memberships. e. Whether Plaintiff #3 and each member of Subclasses 5 and 5A initiated a dispute with their financial institution over charges made by Defendant, and 20 subsequently had their accounts terminated before the end of their paid-for subscription period. f. Whether Plaintiff #1 and the members of Subclass 6 failed to receive their personal information back upon termination of their subscriptions in accordance with New York state law. 75. Typicality. The claims of Plaintiffs are typical of the claims of the Class and each Subclass to which the Plaintiffs belong as alleged herein. The claims of Plaintiffs and the other members of each Subclass to which Plaintiffs respectively belong arise out of Defendant’s uniform conduct and statements. 76. Adequacy. Plaintiffs will fairly and adequately protect the interests of the Class. Plaintiffs have retained counsel who are competent and experienced in the prosecution of complex and class action litigation. The interests of Plaintiffs are aligned with, and not antagonistic to, those of the Class and of each Subclass. 77. Superiority. A class action is superior to all other available means of fair and efficient adjudication of the claims of Plaintiffs and members of the Class. The injury suffered by each individual Class member is relatively small compared to the burden and expense of individual prosecution of the complex and extensive litigation necessitated by Defendant’s conduct. It would be nearly impossible for members of the Class to individually redress the wrongs done to them in separate actions. Individualized rulings and judgments could result in inconsistent relief for similarly-situated individuals. 21 COUNT I - FRAUD (On behalf of Plaintiffs #1, #2, and #3 and Subclasses 1 and 1A) 78. Plaintiffs incorporate by reference each allegation of Paragraph 1 through 77 as if fully set forth herein. 79. Under New York law, to state a claim for fraud in the inducement, a plaintiff must demonstrate: (1) a misrepresentation or omission of material fact; (2) which the defendant knew to be false; (3) which the defendant made with the intention of inducing reliance; (4) upon which the plaintiff reasonably relied; and (5) which caused injury to the plaintiff. 80. As set forth herein, Defendant made a material misrepresentation or omission of material fact when it implied that the users purportedly attempting to contact these Class members were legitimate users. Defendant did so in order to induce these members to purchase a paid subscription to Defendant’s services. 81. Alternatively, Defendant concealed, suppressed or omitted the material fact that such messages could be and frequently were from inactive users who were not available for the dating referral service. 82. As a direct and proximate result of the foregoing, Plaintiffs #1, #2, and #3 and the members of Subclasses 1 and 1A purchased subscriptions from Defendant that they would not have purchased had the true facts been known to them. 83. Alternatively, Plaintiffs #1, #2, and #3 and the members of Subclasses 1 and 1A lacked the information necessary to make an informed choice regarding their decision to purchase such subscriptions. 84. As a result, Plaintiffs #1, #2, and #3 and the members of Subclasses 1 and 1A have been damaged in an amount to be proven at trial. 22 COUNT II - FRAUD (On behalf of Plaintiffs #1, #2, and #3 and Subclasses 2 and 2A) 85. Plaintiffs incorporate by reference each allegation of Paragraph 1 through 77 as if fully set forth herein. 86. As set forth herein, Defendant made a material misrepresentation or omission of material fact when it implied that the users purportedly attempting to contact these Class members were legitimate users, even though Defendant had already flagged these communications as potentially fraudulent. Defendant did so in order to induce these members to purchase a paid subscription to Defendant’s services. 87. Alternatively, Defendant concealed, suppressed or omitted the material fact that such messages could be and likely were from illegitimate users who were attempting to engage in some form of fraudulent behavior. 88. As a direct and proximate result of the foregoing, Plaintiffs #1, #2, and #3 and the members of Subclasses 2 and 2A purchased subscriptions from Defendant that they would not have purchased had the true facts been known to them. 89. Alternatively, Plaintiffs #1, #2, and #3 and the members of Subclasses 2 and 2A lacked the information necessary to make an informed choice regarding their decision to purchase such subscriptions. 90. As a result, Plaintiffs #1, #2, and #3 and the members of Subclasses 2 and 2A have been damaged in an amount to be proven at trial. 23 COUNT III - FRAUD (On behalf of Plaintiff #2 and Subclasses 3 and 3A) 91. Plaintiffs incorporate by reference each allegation of Paragraph 1 through 77 as if fully set forth herein. 92. As set forth herein, Defendant made a material misrepresentation or omission of material fact when it promised these Class members that, if they purchased a six-month subscription and did not “meet someone special” within that six-month period, they would receive an additional six-month subscription for free. Defendant did so in order to induce these members to purchase the six-month subscription to Defendant’s services. 93. Alternatively, Defendant concealed, suppressed or omitted the material fact that any such “guarantee” was subject to convoluted rules not readily apparent to the members based on the manner in which Defendant provided access to said rules. 94. As a direct and proximate result of the foregoing, Plaintiff #2 and the members of Subclasses 3 and 3A purchased subscriptions from Defendant that they would not have purchased had the true facts been known to them. 95. Alternatively, Plaintiff #2 and the members of Subclasses 3 and 3A lacked the information necessary to make an informed choice regarding their decision to purchase such subscriptions. 96. As a result, Plaintiff #2 and the members of Subclasses 3 and 3A have been damaged in an amount to be proven at trial. 24 COUNT IV – BREACH OF CONTRACT (On behalf of Plaintiff #2 and Subclasses 3 and 3A) 97. Plaintiffs incorporate by reference each allegation of Paragraph 1 through 77 as if fully set forth herein. 98. As set forth herein, these Class members entered into an agreement with Defendant whereby the members agreed to purchase a six-month subscription to Defendant’s services in exchange for, among other things, a “guarantee” that if the members did not meet “someone special” during the initial six-month period, Defendant would provide an additional six-month subscription for free. 99. Plaintiff #2 and the members of Subclasses 3 and 3A performed all of the conditions and covenants owed to Defendants under the terms of their agreement, except for those obligations that may have been excused by the conduct of Defendant. Specifically, Plaintiff #2 and the members of Subclasses 3 and 3A purchased and paid for six-month subscriptions to Defendants’ services and thereafter did not meet “someone special” during the initial six-month subscription period. 100. Defendant breached the parties’ agreement in performing the acts described herein, including without limitation, by failing to honor its guarantee and failing to provide a free six-month subscription to each of these Class members upon the conclusion of their initial six- month subscription period. 101. As a result, Plaintiff #2 and the members of Subclasses 3 and 3A have been damaged in an amount to be proven at trial. 25 COUNT V – BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING (On behalf of Plaintiff #2 and Subclasses 3 and 3A) 102. Plaintiffs incorporate by reference each allegation of Paragraph 1 through 77 as if fully set forth herein. 103. The implied covenant of good faith and fair dealing is breached when a party acts in a manner that would deprive the other party of the right to receive the benefits of their agreement. The implied covenant includes any promises which a reasonable promisee would be justified in understanding were included. 104. As set forth herein, these Class members entered into an agreement with Defendant whereby the members agreed to purchase a six-month subscription to Defendant’s services in exchange for, among other things, a “guarantee” that if the members did not meet “someone special” during the initial six-month period, Defendant would provide an additional six-month subscription for free. 105. Plaintiff #2 and the members of Subclasses 3 and 3A performed all of the conditions and covenants owed to Defendants under the terms of their agreement, except for those obligations that may have been excused by the conduct of Defendant. Specifically, Plaintiff #3 and the members of Subclasses 3 and 3A purchased and paid for six-month subscriptions to Defendants’ services and thereafter did not meet “someone special” during the initial six-month subscription period. 106. Defendant thereafter failed to honor its guarantee and failed to provide a free six- month subscription to each of these Class members upon the conclusion of their initial six-month subscription period. In insisting on compliance with convoluted and concealed rules that were not made apparent to the members, and/or providing indications that a member was following 26 such rules through “progress” pages that were incomplete, Defendant deprived these members of the benefit of their agreement. 107. As a result, Plaintiff #2 and the members of Subclasses 3 and 3A have been damaged in an amount to be proven at trial. COUNT VI – BREACH OF CONTRACT (On behalf of Plaintiff #1 and #3 and Subclasses 4 and 4A) 108. Plaintiffs incorporate by reference each allegation of Paragraph 1 through 77 as if fully set forth herein. 109. As set forth herein, these Class members entered into an agreement with Defendant whereby the members agreed to purchase a subscription to Defendant’s services for a limited time, with the option for these members to cancel the subscriptions to avoid further fees. 110. Plaintiffs #1 and #3 and the members of Subclasses 4 and 4A performed all of the conditions and covenants owed to Defendants under the terms of their agreement, except for those obligations that may have been excused by the conduct of Defendant. Specifically, Plaintiffs #1 and #3 and the members of Subclasses 4 and 4A purchased and paid for subscriptions to Defendants’ services and thereafter made good faith efforts to cancel their subscriptions but were either prevented from doing so due to the manner in which Defendant intentionally obfuscated the cancellation process or were misled into believing that they had cancelled when they had not. 111. Defendant breached the parties’ agreement in performing the acts described herein, including without limitation, by preventing these members from cancelling their subscriptions to avoid further fees, and thereafter charging them for additional subscription periods. 27 112. As a result, Plaintiffs #1 and #3 and the members of Subclasses 4 and 4A have been damaged in an amount to be proven at trial. COUNT VII – BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING (On behalf of Plaintiffs #1 and #3 and Subclasses 4 and 4A) 113. Plaintiffs incorporate by reference each allegation of Paragraph 1 through 77 as if fully set forth herein. 114. As set forth herein, these Class members entered into an agreement with Defendant whereby the members agreed to purchase a subscription to Defendant’s services for a limited time, with the option for these members to cancel the subscriptions to avoid further fees. 115. Plaintiffs #1 and #3 and the members of Subclasses 4 and 4A performed all of the conditions and covenants owed to Defendants under the terms of their agreement, except for those obligations that may have been excused by the conduct of Defendant. Specifically, Plaintiffs #1 and #3 and the members of Subclasses 4 and 4A purchased and paid for subscriptions to Defendants’ services and thereafter made good faith efforts to cancel their subscriptions but were either prevented from doing so due to the manner in which Defendant intentionally obfuscated the cancellation process or were misled into believing that they had cancelled when they had not. In taking the actions herein alleged, Defendant deprived these members of the benefit of their agreement. 116. As a result, Plaintiffs #1 and #3 and the members of Subclasses 4 and 4A have been damaged in an amount to be proven at trial. 28 COUNT VIII – BREACH OF CONTRACT (On behalf of Plaintiff #3 and Subclasses 5 and 5A) 117. Plaintiffs incorporate by reference each allegation of Paragraph 1 through 77 as if fully set forth herein. 118. As set forth herein, these Class members entered into an agreement with Defendant whereby the members agreed to purchase subscriptions to Defendant’s services in exchange for full use of such services for the period paid for. 119. Plaintiff #3 and the members of Subclasses 5 and 5A performed all of the conditions and covenants owed to Defendants under the terms of their agreement, except for those obligations that may have been excused by the conduct of Defendant. 120. Defendant breached the parties’ agreement in performing the acts described herein, including without limitation, by terminating these users’ accounts in retaliation for their initiation of chargebacks with their financial institutions, and preventing them from using Defendant’s services for the remainder of their subscription periods even if the chargebacks were declined and Defendant kept the subscription fees for these periods. 121. As a result, Plaintiff #3 and the members of Subclasses 5 and 5A have been damaged in an amount to be proven at trial. COUNT IX – BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING (On behalf of Plaintiff #3 and Subclasses 5 and 5A) 122. Plaintiffs incorporate by reference each allegation of Paragraph 1 through 77 as if fully set forth herein. 29 123. As set forth herein, these Class members entered into an agreement with Defendant whereby the members agreed to purchase subscriptions to Defendant’s services in exchange for full use of such services for the period paid for. 124. Plaintiff #3 and the members of Subclasses 5 and 5A performed all of the conditions and covenants owed to Defendants under the terms of their agreement, except for those obligations that may have been excused by the conduct of Defendant. 125. Defendant breached the parties’ agreement in performing the acts described herein, including without limitation, by terminating these users’ accounts in retaliation for their initiation of chargebacks with their financial institutions, and preventing them from using Defendant’s services for the remainder of their subscription periods even if the chargebacks were declined and Defendant kept the subscription fees for these periods. In taking the actions herein alleged, Defendant deprived these members of the benefit of their agreement. 126. As a result, Plaintiff #3 and the members of Subclasses 5 and 5A have been damaged in an amount to be proven at trial. COUNT X – VIOLATION OF NEW YORK GEN. BUS. LAW §349 (On behalf of Plaintiff #1 and Subclasses 1A, 2A, 3A, 4A and 5A) 127. Plaintiffs incorporate by reference each allegation of Paragraph 1 through 77 as if fully set forth herein. 128. Defendant’s deceptive actions as alleged herein, including but not limited to Defendant’s attempts to induce users to purchase subscriptions based on fraudulent communications from illegitimate users; Defendant’s permitting known and suspected fraudulent communications to be sent to free users in order to entice those users into purchasing paid subscriptions; Defendant’s false or misleading “guarantee”; Defendant’s deliberate creation of a 30 confusing cancellation process designed to prevent users from completing their cancellation or to be misled into believing they cancelled when they did not; and Defendant’s practice of terminating users’ accounts without refund in retaliation for initiating chargebacks with financial institutions; has been, and continues to be, materially misleading and deceptive to these members of these subclasses in material respects. 129. Defendant’s actions as alleged herein were and are directed at consumers such as Plaintiff #1 and these members, and has had, and continues to have, a broad negative impact on the general public, including to these members of these subclasses. 130. Defendant’s actions as alleged herein were and are likely to mislead reasonable consumers such as Plaintiff #1 and the members of subclasses 1A, 2A, 3A, 4A and 5A. 131. Defendant’s actions -- in collecting subscription fees based on inactive and fraudulent profiles, instituting complex and opaque cancellation, and penalizing subscribers who dispute Defendant’s charges -- have materially misled reasonable consumers including Plaintiff #1 and the members of subclasses 1A, 2A, 3A, 4A and 5A. 132. Defendant’s aforementioned misleading and deceptive practices violate the consumer protection provisions of § 349 of the New York General Business Law. 133. Plaintiff #1 and members of subclasses 1A, 2A, 3A, 4A and 5A have been, and continue to be, injured by reason of their being deceived and misled by Defendant’s actions. 134. At least some of Defendant’s deceptive actions as alleged herein are ongoing and will continue unless enjoined by the Court. By reason of the foregoing, Plaintiffs are entitled to a restraining order, preliminary injunction and permanent injunction, enjoining Defendant from continuing their deceptive actions. 31 135. By reason of the foregoing, Plaintiffs are entitled to recover their actual damages and attorneys’ fees. COUNT XI – VIOLATION OF NEW YORK GEN. BUS. LAW §394-c (On behalf of Plaintiff #1 and Subclass 6) 136. Plaintiffs incorporate by reference each allegation of Paragraph 1 through 77 as if fully set forth herein. 137. In addition to being deceptive and fraudulent as hereinabove alleged, Defendant’s policies and practices also violate N.Y. G.B.L § 394-c and deprive consumers of their rights under this law. 138. N.Y. G.B.L § 394-c applies to “social referral services.” N.Y. G.B.L. § 394-c(1). The law defines a “social referral service” to “include any service for a fee providing matching of members of the opposite sex, by use of computer or any other means, for the purpose of dating and general social contact.” N.Y. G.B.L. § 394-c(1)(a). Because Defendant’s service is a fee- based service, by computer, with the purpose of dating and general social contact, it is a “social referral service” under the statute. Nevertheless, Defendant’s service fails to comply with this 139. Specifically, N.Y. G.B.L § 394-c(6) states that “[e]very contract for social referral service shall provide that at the expiration of the contract or at the expiration of services rendered by the seller, for any reason, all information and material of a personal or private nature acquired from a purchaser directly or indirectly including but not limited to answers to tests and questionnaires, photographs or background information shall be promptly returned by the seller to the purchaser by certified mail.” By use of the word “shall,” this provision is mandatory. 32 140. Plaintiffs are informed and believed and thereon allege that Defendant does not, however, return all such information to its subscribers upon termination of their subscriptions or deletion of their accounts. Rather, Defendant retains such information in accordance with its privacy policy, which provides in part that Defendant retains such information “as long as we need it for legitimate business purposes.” Defendant further notes that “we cannot promise that all data will be deleted within a specific timeframe due to technical constraints.” 141. By maintaining such information from users who are no longer subscribed to Defendant’s service, Defendant can artificially “pad” its subscriber base to make it appear that Defendant has more subscribers – and thus more potential matches – than it actually does, thereby enticing more people to subscribe to its service. 142. Plaintiff #1 and members of subclass 6 have been, and continue to be, injured by reason of these violations of New York law. 143. Pursuant to N.Y. G.B.L § section 394-c, Plaintiff #1 on his own behalf and on behalf of the members of Subclass #6 seeks the greater of actual or statutory damages, costs and expenses, and pre- and post-judgment interest. 144. Defendant’s actions as alleged herein are ongoing and will continue unless enjoined by the Court. By reason of the foregoing, and pursuant to N.Y. G.B.L § 394-c(9)(b), Plaintiffs are entitled to a restraining order, preliminary injunction and permanent injunction, enjoining Defendant from continuing their actions. COUNT XII – Unjust Enrichment (On behalf of All Plaintiffs and All Subclasses) 145. Plaintiffs incorporate by reference each allegation of Paragraph 1 through 77 as if fully set forth herein. 33 146. On information and belief, at all times material to this action the average annual cost of a subscription to Match.com was over $200. 147. The Plaintiffs and class members of Subclasses 1 through 6 and 1A through 5A paid valuable consideration for their subscriptions to Match.com. 148. In exchange for their subscription fees, the Plaintiffs and class members of Subclasses 1 through 6 and 1A through 5A encountered inactive dating profiles, fraudulent dating profiles, an inoperative guarantee of finding love, difficulty cancelling their subscriptions, and a punitive response from Match when they initiated a chargeback against Match due to a billing dispute. 149. By collecting subscription fees from Plaintiff class members, Defendant was enriched. 150. Defendant’s enrichment occurred at the expense of the class members. 151. It is against equity and good conscience to permit the Defendant to retain Plaintiff class members’ subscription fees. PRAYER FOR RELIEF WHEREFORE, Plaintiffs, individually and on behalf of all others similarly situated, requests relief and judgment against Defendant as follows: a. That the Court enter an order certifying the Class, appointing Plaintiffs as representatives of the Class and of each Subclass, appointing Plaintiffs’ counsel as class counsel, and directing that reasonable notice of this action, as provided by Federal Rule of Civil Procedure 23(c)(2), be given to the Class and each Subclass; b. For a judgment against Defendant for the causes of action alleged against it; 34 c. For compensatory damages in an amount to be proven at trial, including treble damages as allowed by the Court; d. For punitive damages based upon Defendant’s full knowledge that it was offering Plaintiffs and the class members non-responsive and fraudulent dating profiles to the detriment of Plaintiffs, class members, and the general public; e. For appropriate injunctive relief, enjoining Defendant from continuing to engage in the conduct alleged herein; f. For equitable relief including, inter alia, a finding that the contracts they entered into are void and unenforceable and disgorgement of Defendant’s ill-gotten gains; g. For pre-judgment and post-judgment interest at the maximum rate permitted by law; h. For Plaintiffs’ attorney’s fees; i. For Plaintiffs’ costs incurred; and j. For such other relief in law or equity as the Court deems just and proper. 35 DEMAND FOR JURY TRIAL Plaintiffs hereby demand a trial by jury on all issues so triable. Dated: July 6, 2021 Respectfully submitted, /s/ Richard A. Klass__________________ Richard A. Klass, Esq. Attorney for Plaintiffs 16 Court Street, 28th Floor Brooklyn, NY 11241 718-643-6063 [email protected] Marcus W. Corwin, Esq. (pro hac vice to be filed) Stephen L. Conteaguero, Esq. (pro hac vice to be filed) CORWIN LAW MARCUS W. CORWIN, P.A. 6001 Broken Sound Parkway NW Suite 404 Boca Raton, FL 33487 561.482.3636 – Telephone 561.482.5414 – Facsimile [email protected] [email protected] Attorneys for Plaintiffs and the Proposed Class 36

consumer fraud

lPNEE4cBD5gMZwczBsfD

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION BRIDGEPORT PAIN CONTROL ) CENTER, LTD., ) on behalf of plaintiff and ) the class members defined herein, ) ) 16 C 577 Plaintiff, ) ) v. ) ) W.E. BANQUETS, LLC, ) and JOHN DOES 1-10, ) ) Defendants. ) COMPLAINT – CLASS ACTION MATTERS COMMON TO MULTIPLE COUNTS INTRODUCTION 1. Plaintiff Bridgeport Pain Control Center, Ltd. brings this action to secure redress for the actions of defendant W.E. Banquets, LLC, in sending or causing the sending of unsolicited 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. 2. The TCPA expressly prohibits unsolicited fax advertising. Unsolicited fax advertising damages the recipients. The recipient is deprived of its paper and ink or toner and the use of its fax machine. The recipient also wastes valuable time it would have spent on something else. Unsolicited faxes prevent fax machines from receiving and sending authorized faxes, cause wear and tear on fax machines, and require labor to attempt to identify the source 1 and purpose of the unsolicited faxes. PARTIES 3. Plaintiff Bridgeport Pain Control Center, Ltd. is an Illinois corporation. Its offices are located in Chicago, Illinois, where it maintains telephone facsimile equipment. 4. Defendant W.E. Banquets, LLC is an Illinois limited liability company. Its registered agent and office is Michael Leonard Loprieno, 319 Dee Court, Bloomingdale, Illinois 60108. Its members are Illinois residents. 5. 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 6. 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). 7. 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. c. Are located in Illinois. 8. Venue in this District is proper for the same reason. 2 FACTS 9. On October 16, 2015, plaintiff Able Home Health, LLC received the unsolicited fax advertisement attached as Exhibit A on its facsimile machine. 10. Discovery may reveal the transmission of additional faxes as well. 11. Defendants are responsible for sending or causing the sending of the faxes. 12. Defendant W.E. Banquets, LLC, as the entity whose products or services were advertised in the faxes, derived economic benefit from the sending of the faxes. 13. Defendant W.E. Banquets, LLC, either negligently or wilfully violated the rights of plaintiff and other recipients in sending the faxes. 14. Plaintiff had no prior relationship with defendants and had not authorized the sending of fax advertisements to plaintiff. 15. The faxes do not contain an “opt out” notice that complies with 47 U.S.C. §227. 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. On information and belief, the faxes attached hereto were sent as part of a mass broadcasting of faxes. 19. On information and belief, defendants have transmitted similar fax advertisements 3 to at least 40 other persons in Illinois. 20. 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. COUNT I – TCPA 21. Plaintiff incorporates ¶¶ 1-20. 22. 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. 23. 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. 24. Plaintiff and each class member is entitled to statutory damages. 25. Defendants violated the TCPA even if their actions were only negligent. 26. Defendants should be enjoined from committing similar violations in the future. 4 CLASS ALLEGATIONS 27. 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 to the filing of this action (28 U.S.C. §1658), (c) were sent faxes by or on behalf of defendant W.E. Banquets, LLC in the form of Exhibit A, promoting its goods or services for sale (d) and which did not contain an opt out notice as described in 47 U.S.C. §227. 28. 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. 29. 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 unsolicited 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. 30. 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 5 practices. Neither plaintiff nor plaintiff's counsel have any interests which might cause them not to vigorously pursue this action. 31. Plaintiff’s claims are typical of the claims of the class members. All are based on the same factual and legal theories. 32. 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. 33. Several courts have certified class actions under the TCPA. Holtzman v. Turza, 08 C 2014, 2009 WL 3334909, 2009 U.S. Dist. LEXIS 95620 (N.D.Ill., Oct. 14, 2009), aff’d in relevant part, 728 F.3d 682 (7th Cir. 2013); Sadowski v. Med1 Online, LLC, 07 C 2973, 2008 WL 2224892, 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 WL 744262, 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, 6 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). 34. 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 unsolicited fax advertisements; d. Costs of suit; e. Such other or further relief as the Court deems just and proper. COUNT II – ILLINOIS CONSUMER FRAUD ACT 35. Plaintiff incorporates ¶¶ 1-20. 36. Defendants engaged in unfair acts and practices, in violation of ICFA § 2, 815 ILCS 505/2, by sending fax advertising to plaintiff and others. 37. 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. 38. Plaintiff and each class member suffered damages as a result of receipt of the unsolicited faxes, in the form of paper and ink or toner consumed as a result. 7 39. Defendants engaged in such conduct in the course of trade and commerce. 40. Defendants’ conduct caused recipients of their advertising to bear the cost thereof. This gave defendants an unfair competitive advantage over businesses that advertise lawfully, 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. 41. 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. 42. Defendants should be enjoined from committing similar violations in the future. CLASS ALLEGATIONS 43. 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 W.E. Banquets, LLC in the form of Exhibit A, promoting its goods or services for sale (d) and which did not contain an opt out notice as described in 47 U.S.C. §227. 44. 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. 45. There are questions of law and fact common to the class that predominate over 8 any questions affecting only individual class members. The predominant common questions include: a. Whether defendants engaged in a pattern of sending unsolicited 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. 46. 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. 47. Plaintiff’s claims are typical of the claims of the class members. All are based on the same factual and legal theories. 48. 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. 49. Management of this class action is likely to present significantly fewer difficulties that those presented in many class actions, e.g. for securities fraud. 9 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 unsolicited fax advertising; 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 50. Plaintiff incorporates ¶¶ 1-20. 51. By sending plaintiff and the class members unsolicited faxes, defendants converted to their own use ink or toner and paper belonging to plaintiff and the class members. 52. Immediately prior to the sending of the unsolicited 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. 53. By sending the unsolicited 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. 54. Defendants knew or should have known that such appropriation of the paper and ink or toner was wrongful and without authorization. 55. 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 unsolicited faxes. 10 56. Defendants should be enjoined from committing similar violations in the future. CLASS ALLEGATIONS 57. 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 W.E. Banquets, LLC in the form of Exhibit A, promoting its goods or services for sale (d) and which did not contain an opt out notice as described in 47 U.S.C. §227. 58. 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. 59. 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 unsolicited 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. 60. 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 11 practices. Neither plaintiff nor plaintiff’s counsel have any interests which might cause them not to vigorously pursue this action. 61. Plaintiff’s claims are typical of the claims of the class members. All are based on the same factual and legal theories. 62. 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. 63. 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 unsolicited fax advertisements; c. Costs of suit; d. Such other or further relief as the Court deems just and proper. COUNT IV – PRIVATE NUISANCE 64. Plaintiff incorporates ¶¶ 1-20. 65. Defendants’ sending plaintiff and the class members unsolicited faxes was an unreasonable invasion of the property of plaintiff and the class members and constitutes a private nuisance. 12 66. 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). 67. Defendants acted either intentionally or negligently in creating the nuisance. 68. Plaintiff and each class member suffered damages as a result of receipt of the unsolicited faxes. 69. Defendants should be enjoined from continuing its nuisance. CLASS ALLEGATIONS 70. 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 W.E. Banquets, LLC in the form of Exhibit A, promoting its goods or services for sale (d) and which did not contain an opt out notice as described in 47 U.S.C. §227. 71. 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. 72. 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 unsolicited fax advertisements; b. Whether defendants thereby violated the TCPA; c. Whether defendants thereby engaged in unfair acts and practices, in 13 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. 73. 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. 74. Plaintiff’s claims are typical of the claims of the class members. All are based on the same factual and legal theories. 75. 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. 76. 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 unsolicited fax advertisements; c. Costs of suit; 14 d. Such other or further relief as the Court deems just and proper. COUNT V – TRESPASS TO CHATTELS 77. Plaintiff incorporates ¶¶ 1-20. 78. Plaintiff and the class members were entitled to possession of the equipment they used to receive faxes. 79. Defendants’ sending plaintiff and the class members unsolicited 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 unsolicited faxes), vacated on jurisdictional grounds 131 F.3d 507 (5th Cir. 1997). 80. Defendants acted either intentionally or negligently in engaging in such conduct. 81. Plaintiff and each class member suffered damages as a result of receipt of the unsolicited faxes. 82. Defendants should be enjoined from continuing trespasses. CLASS ALLEGATIONS 83. 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 W.E. Banquets, LLC in the form of Exhibit A, promoting its goods or services for sale (d) and which did not contain an opt out notice as described in 47 U.S.C. §227. 84. 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. 15 85. 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 unsolicited 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. 86. 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. 87. Plaintiff’s claims are typical of the claims of the class members. All are based on the same factual and legal theories. 88. 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. 89. Management of this class action is likely to present significantly fewer difficulties 16 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 unsolicited fax advertisements; c. Costs of suit; d. Such other or further relief as the Court deems just and proper. s/ Daniel A. Edelman Daniel A. Edelman Daniel A. Edelman Cathleen M. Combs James O. Latturner Heather Kolbus EDELMAN, COMBS, LATTURNER & GOODWIN, LLC 20 S. Clark Street, Suite 1500 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 20 S. Clark Street, Suite 1500 Chicago, Illinois 60603 (312) 739-4200 (312) 419-0379 (FAX) 18

privacy

3Edq_YgBF5pVm5zYShiE

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 SIDNEY NAIMAN, 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)] AAA REMODELING & DEVELOPMENT, INC., 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)] 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 SIDNEY NAIMAN (“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 AAA REMODELING & DEVELOPMENT, INC. (“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 corporation. 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) because Defendant does business within the State of California and a substantial portion of the events giving rise to Plaintiff’s claims occurred in this District. PARTIES 4. Plaintiff, SIDNEY NAIMAN (“Plaintiff”), is a natural person residing in Contra Costa, California and is a “person” as defined by 47 U.S.C. § 153 (39). 5. Defendant, AAA REMODELING & DEVELOPMENT, INC. (“Defendant”) is a remodeling contracting 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 2018, Defendant contacted Plaintiff on Plaintiff’s cellular telephone number ending in -6443, 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 (510) 274-6644, (510) 274-6645, and (510) 871-7366, confirmed to be Defendant’s numbers. 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 his cellular telephone pursuant to 47 U.S.C. § 227(b)(1)(A). 13. Further, Plaintiff’s cellular telephone number ending in -6443 had been on the National Do-Not-Call Registry well over thirty (30) days prior to Defendant’s initial call. 14. Defendant placed multiple calls soliciting its business to Plaintiff on his cellular telephone ending in -6443 in or around December 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 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 members 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 to 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 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). 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 to 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 to 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 4th Day of February, 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

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x EDWIN DIAZ, on behalf of himself and all others similarly situated, Plaintiffs, CLASS ACTION COMPLAINT v. AND DEMAND FOR JURY TRIAL CIELO LTD, Defendant. : : : : : : : : : : : : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x INTRODUCTION 1. Plaintiff EDWIN DIAZ, on behalf of himself and others similarly situated, asserts the following claims against Defendant CIELO LTD (hereinafter, “CIELO”) 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 services offered thereby and in conjunction with its physical locations, is a violation of Plaintiff’s rights under the Americans with Disabilities Act (“ADA”). 5. Because Defendant’s website, www.cieloclub.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. 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. § 1281, 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 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, 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 the in this District: on several separate occasions, Plaintiff has been denied the full use and enjoyment of the facilities, services of Defendant’s physical locations and/or 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 visiting Defendant’s brick-and mortar physical locations. 10. This Court is empowered to issue a declaratory judgment under 28 U.S.C. §§ 2201 and 2202. THE PARTIES 11. Plaintiff EDWIN DIAZ, at all relevant times, is a resident of Bronx, 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 a New York Corporation doing business in New York. NATURE OF ACTION 13. 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. 14. 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. 15. 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. 16. 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. 17. 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. 18. 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 19. Defendant is a party venue and night club that operates the CIELO Club as well as the CIELO website, offering features which should allow all consumers to access the services which Defendant offers in connection with their physical locations. 20. Defendant operates CIELO (its “Party Venue”) in New York City, at 18 Little West 12th Street, New York, NY 10014. 21. Its Party Venue constitutes a place of public accommodation. Defendant’s Party Venue provides to the public important services. Defendant’s Website provides consumers with access to an array of services including Party Venue locations and hours, access to extensive event calendars, information pertaining to booking its party venue services, and related services available both online and in its physical establishment. 22. Defendant offers the commercial website, www.cieloclub.com, to the public. The website offers features which should allow all consumers to access the services which Defendant offers in connection with their physical locations. The services offered by Defendant include, but are not limited to the following: Party Venue locations and hours, access to extensive event calendars, information pertaining to booking its party venue services, and related services available both online and in its physical establishment. 23. 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 services that are offered and integrated with Defendant’s Party Venue. 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 Party Venue and the numerous services and benefits offered to the public through the Website. 24. 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. 25. During Plaintiff’s visits to the Website, the last occurring in August 2018, Plaintiff encountered multiple access barriers that denied Plaintiff full and equal access to the facilities, services offered to the public and made available to the public; and that denied Plaintiff the full enjoyment of the facilities, services of the Website, as well as to the facilities, services of Defendant’s physical locations in New York by being unable to learn more information about Party Venue locations and hours, access its extensive event calendar, information pertaining to booking its party venue services, and related services available both online and in its physical establishment. 26. 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 mouse moves 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 potential customers are unable to determine what is on the website, browse, look for Party Venue locations and hours, access to extensive event calendars, information pertaining to booking its party venue services, and related services available both online and in its physical establishment. b. Empty Links That Contain No Text causing the function or purpose of the link to not be presented to the user. This can introduce confusion for keyboard and screen-reader users; 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 27. 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 accessing the Website. 28. These access barriers on Defendant’s Website have deterred Plaintiff from visiting Defendant’s physical locations and enjoying them equal to sighted individuals because: Plaintiff was unable to find the location and hours of operation of Defendant’s physical Party Venue on its Website and other important information, preventing Plaintiff from visiting the locations to take advantage of the services that it provides to the public. 29. If the Website was equally accessible to all, Plaintiff could independently navigate the Website and complete a desired transaction as sighted individuals do. 30. 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. 31. 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 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. 32. Defendant therefore uses standards, criteria or methods of administration that have the effect of discriminating or perpetuating the discrimination of others, as alleged herein. 33. 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). 34. Because Defendant’s Website have 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 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 2.0 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 Websites, with contact information for users to report accessibility-related problems. 35. If the Website was accessible, Plaintiff and similarly situated blind and visually- impaired people could independently view service items, locate Defendant’s physical locations and hours of operation, shop for and otherwise research related services available via the Website. 36. 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. 37. 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. 38. 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 39. 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 services offered in Defendant’s physical locations, during the relevant statutory period. 40. Plaintiff, on behalf of himself and all others similarly situated, seeks 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 services offered in Defendant’s physical locations, during the relevant statutory period. 41. 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 services offered in Defendant’s physical locations, during the relevant statutory period. 42. 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 NYSHRL or 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 NYSHRL or NYCHRL. 43. 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, NYSYRHL or NYCHRL by failing to update or remove access barriers on its Website so either can be independently accessible to the Class. 44. 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. 45. 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. 46. 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. § 1281 et seq. 47. Plaintiff, on behalf of himself and the Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 48. 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). 49. Defendant’s Party Venue are public accommodations 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 Party Venue. The Website is a service that is integrated with these locations. 50. 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). 51. 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). 52. 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). 53. 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. 54. 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 55. 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. 56. 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.” 57. Defendant’s physical locations are located in State of New York and throughout the United States and constitute sales establishments and public accommodations 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 these physical locations. 58. Defendant is subject to New York Human Rights Law because it owns and operates its physical locations and Website. Defendant is a person within the meaning of N.Y. Exec. Law § 292(1). 59. 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 locations to be completely inaccessible to the blind. This inaccessibility denies blind patrons full and equal access to the facilities, services that Defendant makes available to the non-disabled public. 60. 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". 61. 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.” 62. 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. 63. 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 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. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 65. 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 products, 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. 66. 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. 67. 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. 68. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 69. 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 VIOLATION OF THE NEW YORK STATE CIVIL RIGHTS LAW 70. 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. 71. Plaintiff served notice thereof upon the attorney general as required by N.Y. Civil Rights Law § 41. 72. 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 . . .” 73. 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.” 74. Defendant’s New York State physical locations are sales establishments and public accommodations within the definition of N.Y. Civil Rights Law § 40-c(2). Defendant’s Website is a service, privilege or advantage of Defendant and its Website is a service that is by and integrated with these establishments. 75. Defendant is subject to New York Civil Rights Law because it owns and operates its physical locations and Website. Defendant is a person within the meaning of N.Y. Civil Law § 40-c(2). 76. Defendant is violating N.Y. Civil Rights Law § 40-c(2) in refusing to update or remove access barriers to its Website, causing its 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, services that Defendant makes available to the non-disabled public. 77. 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 . . .” 78. Under NY 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 ...” 79. Defendant has failed to take any prompt and equitable steps to remedy its discriminatory conduct. These violations are ongoing. 80. Defendant discriminates, and will continue in the future to discriminate against Plaintiff and New York State Sub-Class Members on the basis of disability are being directly or indirectly refused, withheld from, or denied the accommodations, advantages, facilities and privileges thereof in § 40 et seq. and/or its implementing regulations. 81. Plaintiff is entitled to compensatory damages of five hundred dollars per instance, as well as civil penalties and fines under N.Y. Civil Law § 40 et seq. for each and every offense. FOURTH CAUSE OF ACTION VIOLATIONS OF THE NYCHRL 82. 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. 83. 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.” 84. Defendant’s locations are sales establishments and public accommodations within the definition of N.Y.C. Admin. Code § 8-102(9), and its Website is a service that is integrated with its establishments. 85. Defendant is subject to NYCHRL because it owns and operates its physical locations 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). 86. 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 locations 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. 87. 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). 88. 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. 89. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 90. 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 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. 91. Defendant’s actions were and are in violation of the NYCHRL and therefore Plaintiff invokes his right to injunctive relief to remedy the discrimination. 92. 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. 93. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 94. 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. FIFTH CAUSE OF ACTION DECLARATORY RELIEF 95. 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. 96. 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 and by extension its physical locations, 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. 97. 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. 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 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 State 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: Brooklyn, New York August 28, 2018 COHEN & MIZRAHI LLP By: ____________________ Joseph H. Mizrahi, Esq. [email protected] 300 Cadman Plaza West, 12 Fl. Brooklyn, N.Y. 11201 Telephone: (929) 575-4175 Facsimile: (929) 575-4195 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 ATTORNEYS FOR PLAINTIFF

civil rights, immigration, family

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Eustace de Saint Phalle Rains Lucia Stern St. Phalle & Silver, PC 2300 Contra Costa Blvd. Pleasant Hill, CA 94523 Tel. (415) 341-9341 │ Fax: (925) 609-1690 [email protected] Jonathan M. Jagher (pro hac vice forthcoming) Kimberly A. Justice (pro hac vice forthcoming) FREED KANNER LONDON & MILLEN LLC 923 Fayette St Conshohocken, PA 19428 Tel. (610) 234-6487│ Fax: (224) 632-4521 [email protected] [email protected] Douglas A. Millen (pro hac vice forthcoming) Robert J. Wozniak, Jr. (pro hac vice forthcoming) FREED KANNER LONDON & MILLEN LLC 2201 Waukegan Rd, Suite 130 Bannockburn, IL 60015 Tel. (224) 632-4500 │ Fax: (224) 632-4521 [email protected] [email protected] IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION RAMA KOLESNIKOW on behalf of himself and all others similarly situated, Plaintiff, v. SK ENERGY AMERICAS, INC.; SK TRADING INTERNATIONAL CO. LTD.; VITOL INC.; DAVID NIEMANN; and BRAD LUCAS Defendants. Case No. 3:20-cv-4101 CLASS ACTION COMPLAINT: (1) THE SHERMAN AND CLAYTON ACTS (15 U.S.C. §§ 1, 26); (2) THE CARTWRIGHT ACT (CAL. BUS. & PROF. CODE § 16720); (3) UNFAIR COMPETITION LAW (CAL. BUS. & PROF. CODE § 17200 ET SEQ.); AND (4) UNJUST ENRICHMENT DEMAND FOR JURY TRIAL Plaintiff Rama Kolesnikow (“Plaintiff”) on behalf of himself and all others similarly situated, brings this Class Action Complaint against Defendants Vitol Inc. (“Vitol”), SK Energy Americas, Inc. (“SK Energy”), and SK Trading International Co. Ltd. (“SK Trading”) (Defendants SK Energy and SK Trading are hereinafter referred to as “SK”) (collectively “Defendants”) for violations of Section 1 of the Sherman Act (15 U.S.C. § 1), California’s Cartwright Act, California Business and Professions Code section 16720 et seq., engaging in unlawful, unfair, or fraudulent practices in violation of California’s Unfair Competition Law, California Business and Professions Code section 17200 et seq., and unjust enrichment. As alleged herein, Defendants colluded to increase the price of gasoline in California by, among other things, manipulating trades in the spot market, which led to artificially high prices for both Regular and Premium gasoline. As a direct and foreseeable result of Defendants’ conduct, which was intentionally concealed, thereby tolling applicable statutes of limitations, any individual or entity that purchased gasoline during the Class Period (defined below) suffered economic injury INTRODUCTION 1. Defendants entered into a per se unlawful agreement to restrain competition in the spot market for gasoline formulated for sale in California and for particular gasoline blending components. 2. At all relevant times, Defendants participated in the spot market for refined gasoline and gasoline blending components in California. 3. The illegal acts alleged herein began at least as early as February 2015 following an explosion at a gasoline refinery complex located in Torrance, California that supplied approximately 10 percent of all gasoline in the state and 20 percent of all gasoline in parts of Southern California. A portion of the refinery was substantially damaged, which caused an unanticipated shortage of refined gasoline in California and eliminated the refinery’s ability to refine alkylates, a gasoline blending stock. Defendant’s unlawful conduct continued through at least late 2016. 4. Prices for gasoline contracts rose on the California spot markets and, beginning in February 2015, California purchasers experienced unprecedented increases in prices for retail gasoline. 5. These events allowed Defendants the opportunity to artificially inflate the price of gasoline traded on wholesale spot markets in California and alkylate prices, which are tied directly to the wholesale price of gasoline. 6. Defendants Vitol and SK began negotiating sizable contracts to supply gasoline and gasoline blending components for delivery in California, conspiring to manipulate and raise the spot market price for gasoline to achieve greater profits. 7. The unlawful scheme detailed herein was primarily carried out by lead traders for Defendants Vitol and SK who orchestrated agreements with one another, as well as other third parties, to manipulate the spot market price of gasoline in California. These individuals also entered into agreements to share profits and conceal their unlawful activity. 8. As set forth below, Defendants violated Section 1 of the Sherman Act (15 U.S.C. § 1), California’s Cartwright Act, California Business and Professions Code section 16720 et seq., engaged in unlawful, unfair, or fraudulent practices in violation of California’s Unfair Competition Law, California Business and Professions Code section 17200 et seq., and were unjustly enriched. JURISDICTION AND VENUE 9. Plaintiff brings this action under §§ 4, 12, and 16 of the Clayton Act (15 U.S.C. §§ 15, 22, and 26) for treble damages, injunctive relief, and reasonable attorneys’ fees and costs with respect to the injuries sustained by Plaintiff arising from violations by Defendants of the federal antitrust laws, including Section 1 of the Sherman Antitrust Act (15 U.S.C. § 1). 10. This Court has jurisdiction over this action pursuant to 28 U.S.C. §§ 1331, 1337(a) and 1367 and as a result of diversity jurisdiction. 11. This Court has in personam jurisdiction over Defendants because each, directly and/or through its ownership or control of subsidiaries: (a) transacted business in the United States, including in this District; (b) are registered to do business in the state of California; (c) had substantial aggregate contacts with the United States, including this District; and/or (d) engaged in anticompetitive acts that were directed at, and had a direct, substantial, and reasonably foreseeable and intended effect of injuring, the business or property of persons and entities residing in, located in, or doing business throughout the United States, including in this District. Defendants conduct business throughout the United States, including in this District, and purposefully availed themselves of the laws of the United 12. Venue is proper in this District pursuant to 15 U.S.C. §§ 15 and 22, and 28 U.S.C. § 1391(b) and (c), 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 was carried out in this District, and one or more of the Defendants reside in this District or is licensed to do business in this District. Each Defendant has transacted business, maintained substantial contacts, and/or committed overt acts in furtherance of the illegal restraint of trade throughout this District. The anticompetitive conduct alleged herein has been directed at, and has had the intended effect of, causing injury to persons residing in, located in, or doing business in this District. PARTIES A. Plaintiff 13. Rama Kolesnikow is a resident of Culver City, California. During the Class Period, Mr. Kolesnikow regularly purchased gasoline at retail for his own use and not for resale and was damaged as a result of Defendants’ conduct. B. Defendants 1. Defendant Vitol 14. Defendant Vitol, a Delaware corporation, is registered with the California Secretary of State to conduct business in California. 15. Vitol’s trading activities have been scrutinized by government regulators both in the United States and abroad. Recently, the Federal Energy Regulatory Commission found the company’s trading activity manipulated California energy markets and sued to recover $3.75 million in fines assessed against Vitol and one of its traders.1 Additionally, French Authorities fined Vitol S.A. five million Euros after it was found to have manipulated the French southern gas trading point “Peg Sud” between June of 2013 and March of 2014.2 1 ECF No. 1 in Federal Energy Regulatory Comm’n v. Vitol, Inc., No. 2:20-cv-00040-KJM-AC (E.D. Cal. Jan. 6, 2020). 2 “UPDATE 1-French regulator fines Vitol 5 mln euros for gas market manipulation,” Reuters, (Accessed May 8, 2020), https://www.reuters.com/article/vitol-france-fine-gas/update-1-french- regulator-fines-vitol-5-%2027mln-euros-for-gas-market-manipulation-idUSL8N1WP399.mln-euros-for- gas-market-manipulation-idUSL8N1WP399. 2. The SK Defendants 16. Defendant SK Energy Americas, Inc. is a California corporation. Defendant SK Energy Americas, Inc is a wholly-owned subsidiary of SK Energy International ("SKEI"). SKEI is a Singaporean corporation. SKEI is the parent entity of Defendant SK Energy Americas, Inc and is itself a wholly-owned subsidiary of Defendant SK Trading International Co., Ltd. 17. Defendant SK Trading International Co., Ltd. ("SKTI") is a South Korean corporation with its head office at 26 Jongno, Jongno-gu, Seoul, South Korea. Defendant SKTI is the grandparent entity of Defendant SK Energy Americas, Inc. and the parent entity of SKEI. Defendant SKTI is a sister entity to SK Energy, also located in South Korea, which operates one of the largest oil refineries in the 18. The ultimate parent entity for the SK Defendants, and for SK Energy, is SK Innovation Co., Ltd., a publicly-traded South Korean company. 19. At all times relevant to this Complaint, Defendant SK Energy Americas, Inc. was an agent and alter ego of Defendant SKTI, due to the nature and extent of control that SKTI exercised over Defendant SK Energy Americas, Inc. 20. At all times relevant to this Complaint, there existed a unity of interest and ownership between SK Defendants such that any separateness between them had ceased to exist and SKTI controlled, dominated, managed, and operated SK Energy Americas, Inc to suit its convenience. Specifically, SKTI controlled the business and affairs of SK Energy Americas, Inc such that the distinction between the companies were mere technicalities. 21. Additionally, at all times relevant to the Complaint, SK Energy Americas, Inc. was acting within the course and scope of its agency with the knowledge, consent, permission, authorization, and ratification, either express or implied, of SKTI in performing the acts alleged in this Complaint. C. The Individual Defendants 22. During the relevant period, Defendant David Niemann was an executive of SK Energy and was the senior trader responsible for executive trades on the U.S. West Coast, including in California. Niemann colluded with Brad Lucas from Vitol, as more fully alleged herein. On information and belief, David Niemann is a resident of Houston, Texas. 23. During the relevant period, Defendant Brad Lucas was an executive of Vitol. Lucas was the primary trader at Vitol with responsibility for trading gasoline and gasoline blending components that were delivered via pipeline within California. As alleged herein, Lucas and Niemann, along with others, colluded to increase the prices of gasoline in California. On information and belief, Brad Lucas is a resident of Houston, Texas. 24. SK, Vitol, Niemann, and Lucas are collectively referred to herein as “Defendants.” AGENTS AND CO-CONSPIRATORS 25. Various other individuals, partnerships, corporations, and other business entities, unknown to the Plaintiff, participated in the illegal conduct alleged herein and performed acts and made statements in furtherance thereof. The Attorney General for the State of California expressly named individual and corporate executives involved in the conspiracy. Plaintiff reserves the right to name some or all these persons and others as Defendants. 26. The acts charged in this complaint were carried out by Defendants or were ordered or carried out by Defendants’ officers, agents, employees, or representatives, while actively engaged in the management of Defendants’ affairs. 27. Any reference herein to any act, deed, or transaction of any corporation is an allegation that the corporation 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 business or affairs. 28. Any reference herein to a corporate family or companies by a single name is intended to allege that one or more employee or agent of entities within the corporate family engaged in conduct on behalf of all of the Defendant companies within that family. Individual participants in conspiratorial meetings and discussions did not distinguish among any entities within a given corporate family. The individual participants entered into agreements on behalf of and reported back to their respective corporate families. Additionally, to the extent any subsidiaries within corporate families distributed the alkylate products discussed in this Complaint, such subsidiaries played a direct role in the alleged conspiracy because Defendants wished to ensure that the prices paid for such products would not undercut their scheme. Thus, all Defendant entities within the corporate families were active, knowing participants in the alleged conspiracy. FACTUAL ALLEGATIONS 28. Using the explosion at the Torrance, California refinery and the resulting supply disruption as a pretext, Defendants engaged in a number of collusive and coordinated schemes to unlawfully increase retail gasoline prices in California beyond levels that would have existed in a competitive market. 29. Beginning at least as early as February 2015, Defendants reached agreements with one another, and other third parties, as part of a conspiracy to raise, fix, and tamper with the price of finished gasoline in California by using various tactics. Despite their cooperation, coordination, and collusion, SK and Vitol were supposed to be competitors (not collaborators) in the California gasoline market. 30. When an unexpected supply disruption occurs, such as the one at the Torrance facility, this can cause a severe supply shortage in California due to California’s strict vehicle emissions standards, as more fully explained herein. When such supply disruptions occur, market participants typically must obtain gasoline for California from foreign sources, usually Asia, which can take several weeks to make its way to California. 31. Defendants were not simply market participants. Instead, they engaged in collusive conduct that drove up prices for spot market gasoline contracts delivered to major population centers like Los Angeles and San Francisco. Significantly, this caused subsequent gasoline purchasers to pay more for gasoline than they would have absent Defendants’ conduct. This is supported by studies revealing how changes in the wholesale price of gasoline are passed through and incorporated into retail prices. Moreover, as industry analysts note, such increases in wholesale prices are passed through more quickly than any decrease.3 32. SK Energy employee David Niemann (“Niemann”) was the senior trader responsible for executing trades on the U.S. West Coast, including California. Another SK Energy employee, Shelly Mohammed (“Mohammed”), held the role of gasoline scheduler and was Niemann’s subordinate. 33. Vitol employee Brad Lucas (“Lucas”) held the title “USWC Trader.” Lucas was the primary trader at Vitol with responsibility for trading gasoline and gasoline blending components that were delivered via pipeline within California. Lucas reported to John Addison (“Addison”), a Vitol executive who in turn reported to the President of Vitol Americas. In addition to supervising Lucas, Addison also had trading responsibility that included trading gasoline and gasoline blending components that were primarily delivered via marine vessels to locations in the U.S. West Coast, including California. 34. The initial coordination alleged herein began shortly after SK hired Niemann in August 2014, who immediately began trading gasoline contracts on the California spot market. Before working for SK, Nieman had held a similar role at Vitol for approximately ten years, where he and Lucas overlapped for a period of time. After leaving Vitol, Nieman maintained connections with his former colleagues, including Lucas, with whom he instant messaged, emailed, and spoke to on the phone. The two also had in-person meetings and met for dinner and drinks. 35. By February 2015, Niemann was the senior trader for SK with responsibility for California trading, while Lucas held a similar role with Vitol. Although the extent of their coordination prior to that point is currently unknown, in February 2015 Lucas and Niemann expanded their existing coordination agreement to encompass Premium CARBOB. 36. Additionally, Defendants’ scheme to fix and manipulate the California spot market price was facilitated by the explosion at the Torrance Refinery. 37. This explosion occurred in the facility’s unit responsible for fluid catalytic cracking (“FCC”), a key part of a refinery complex that produces gasoline and related high-value products like alkylate. For the Torrance facility, the FCC unit was particularly important because it produced a significant portion of all the high-octane alkylate produced in California, which is a key ingredient in blending Premium CARBOB produced in California. 38. Following the blast, the Torrance Refinery immediately shut down the FCC unit and reduced production of gasoline products, including alkylate, as repair efforts and a federal investigation into the explosion commenced. As a result of this unplanned outage, ExxonMobil needed to replace a significant amount of lost gasoline and alkylate production in Southern California to fulfill its supply 39. This explosion would have long term effects on the facility’s production, as it caused the refinery to be run at limited capacity for over a year. 40. Following this, Vital and SK reached agreements with each other and with third parties as part of a scheme to raise, fix, and tamper with the price of finished gasoline in California by using various tactics. 41. An essential aspect of the scheme was to manipulate the OPIS-reported price during pricing windows for large contracts. The object of this was to drive up or stabilize the OPIS-reported price, thus allowing Defendants to realize supra-competitive profits while limiting bona fide market risk. 42. While the Defendants employed varied and complex tactics to carry out their scheme, there were two key components: (1) engaging in trades to inflate the OPIS-published price in the Spot Market Report and (2) execute “facilitating trades” to obfuscate the nature of the scheme, to limit or eliminate bona fide market risk on the reported trades, and to share profits with one another other. 43. Through this first strategy, Defendants manipulated trades to inflate the OPIS-reported price during the pricing windows for large contracts. To do so, defendants would selectively report certain transactions and engage in loss-leader transactions reported to OPIS. This had the effect of driving up, stabilizing, or arresting the decline of the OPIS reported price. At times, this was facilitated through direct trades between the Defendants, while at others they used intermediary brokers. 44. Many of the Defendants’ loss-leader transactions were “leveraged” because they took losses on the purchase of smaller quantities of gasoline in order to increase the profits on sales of larger quantities of gasoline or alkylate. While the individual market-moving transactions were often uneconomic, or against their own self-interest, Defendants were able to realize a price increase on the larger floating price contracts and thus made up for any losses associated with loss-leader transactions. 45. One manner in which Defendants accomplished this when trading Regular CARBOB was to transact the “high deal of the day” when that deal was reported to OPIS. This had the effect of bidding up the OPIS-reported price, as OPIS would report purchases at increasingly higher prices. Sometimes, this deal was the highest deal of the day, while other times, subsequent deals pushed the price even 46. By transacting the high deals, Defendants moved up the average of the OPIS Spot Market Report and created the impression that there was strong demand. This also had the effect of making it seem as though there was demand at higher than prevailing market prices. 47. Another tactic used with Regular CARBOB would be done when transacting the “first deal.” Defendants transacted this deal at an inflated price during key pricing windows, which involved completing an initial transaction during the early trading hours. OPIS would then report an inflated purchase price to other market participants. This would signal artificially high demand, thereby discouraging would-be sellers from submitting offers to sell below that price. 48. Defendants would also engage in market-spiking trades for Premium CARBOB. As further discussed herein, there is significantly less trading of Premium CARBOB. Therefore, individual Premium trades reported to OPIS can dramatically impact the spot market price. 49. Defendants engaged in this practice to increase the OPIS-reported price for Premium during pricing windows for large sales of alkylate. While alkylate is a key blending component for Premium CARBOB, alkylate is not a separately reported commodity on California’s spot markets. Consequently, large price contracts for alkylate were most commonly tied, with a small differential, to the OPIS-reported spot price for Premium CARBOB during the associated pricing window. 50. Defendants’ manipulation of spot prices for Regular gasoline also affected alkylate contract prices because spot prices for Regular and Premium gasoline often move in tandem. 51. Therefore, to realize supra-competitive profits on alkylate contracts, Defendants worked together to inflate the spot price of Regular and Premium CARBOB during key pricing windows, and then coordinated their importation of alkylate into California at these supra-competitive prices. 52. The second component of Defendants scheme involved the execution of “facilitating trades” related to the OPIS-reported transactions referenced above. 53. These facilitating trades were used to, among other things, obfuscate the nature of the scheme, limit or eliminate bona fide market risk on the reported trades, and to share profits. These trades could be executed at the same time, before, or after the OPIS-reported trades and were executed between the Defendants and with third parties. 54. For example, prior to a pricing window, Defendants took preplanned “short” positions, ensuring that they would need to buy during the pricing window. Then, when Defendants went on buying sprees that pushed up the OPIS-reported prices during the pricing windows, it would appear to other participants that there was an increase in demand. In fact, this demand was preplanned and artificial. 55. These facilitating trades were often not reported to OPIS, and therefore hid the manipulative nature of the reported trade from OPIS and the wider market. The second trade ensured that no gasoline would actually change hands as a result of the OPIS-reported trade that inflated the price reported in the Spot Market Report. 56. By moving in the opposite direction of the reported trade, the facilitating transaction ensured that there was little or no market risk associated with the reported transaction. Many of the facilitating trades – sometimes called “accommodation” or “prearranged” trades – appear to have been preplanned. The facilitating trade often had the effect of locking in a loss but also limiting the total exposure that Defendants faced as result of the reported transactions. 57. Another facilitating tactic was to engage in unreported trades as a means of sharing profits from the scheme. In this way, Defendants entered into prearranged buy and sell contracts with each other as a means of transferring money rather than actual gasoline. These contracts often deviated from the prevailing market price and, therefore, were uneconomic. 58. SK specifically approved and ratified decisions to agree and coordinate conduct and trading activities with Vitol. Defendants Vitol and SK also entered into agreements to share profits and took steps to conceal this other market participants. 59. Defendants called their illegal agreements “joint ventures” or “JVs,” however they were nothing more than secret agreements between the Defendants to facilitate their scheme. These agreements often started out as verbal agreements only, but were later referenced in various writings. During the Class Period, Defendants’ illegal conduct generated millions of dollars of profits for them per month, and Lucas and Niemann also financially benefitted as a result of their conduct. 60. At some point in mid- to late-2015, the Defendants expanded their so-called JVs to include alkylate cargoes. Under this arrangement, one of the Defendants would import a cargo, but the two would work together to boost the profits from the sale. 61. The agreement to share the profits of the alkylate cargoes was a crucial component of the scheme. As discussed above, Defendants engaged in market-spiking trades during the pricing windows for large sales of alkylate. Therefore, when Defendants shared the profits from the alkylate cargoes, it aligned their incentives to inflate the OPIS-reported prices during the pricing window for that alkylate. 62. While the so-called JV agreements were being reached, Defendants engaged in the trading manipulation described above to benefit their common interest. Therefore, while it may have appeared to market participants the Defendants were competitors, the two companies were in fact working together. 63. Furthermore, the agreements to coordinate Regular and Premium CARBOB trading and to share the profits of alkylate cargoes also reduced and eliminated competition between the Defendants for those products. As part of this coordination, Defendants entered into a large number of preplanned trades that diverged from prevailing market prices. 64. Defendants’ unlawful conduct allowed them to artificially move and inflate the price of Regular and Premium CARBOB. As a result, they reaped extraordinary and supra-competitive profits, as California trading generated millions of dollars of profits per month. However, this gain came at the expense of gasoline consumers. 65. While the precise end date of the scheme is not yet known, the illicit conduct continued into 2016. The scheme likely terminated at or around the time that Niemann left SK in late 2016. 66. In order to understand Defendants’ scheme, it is important to understand the supply chain and how higher prices were ultimately passed through and paid by businesses and consumers at the pump. The average consumer obtains gasoline via a supply chain that begins with the extraction of crude oil and ultimately reaches a retail gas station. However, a number of intermediary steps occur in the process. 67. Once crude oil has been extracted, it is transported to a refinery primarily by means of pipelines, marine tankers, and barges. At the refinery, crude oil is processed into gasoline and other petroleum products, with refined gasoline then transported to storage terminals for wholesale distribution. Like crude oil, refined gasoline is also transported via pipelines, marine tankers, and barges. 68. From this point, refined gasoline is then shipped by truck to retail gas stations, where it ultimately reaches the consumer. This process is illustrated by the figure produced by the Governmental Accountability Office (“GAO”) below: 69. The gasoline market for California is often described as a “fuel island” due to the relatively few ways in which gasoline can physically enter the region. Production or maintenance issues at California refineries can have a major impact on gasoline prices. For example, in April 2019, Los Angeles County reported a spike in gasoline prices overnight, with responsibility being attributed to a combination of refinery issues and a lack of gasoline imports.4 70. While California does utilize gasoline pipelines, there are none that ship finished gasoline products into California. Instead, the pipelines connecting California and other adjacent states only ship gasoline products out of California. As a result, additional gasoline and gasoline blending components must be brought into California via other channels when local supplies are insufficient to meet California’s demand. 71. California also has stricter vehicle emissions standards than other states. Gasoline produced pursuant to these standards is called California Reformulated Gasoline Blendstock for Oxygenate Blending (“CARBOB”). 72. The CARBOB specifications are unique to California. Thus, gasoline used in neighboring states does not meet CARBOB specification and cannot be used as a substitute source of supply. Most of the CARBOB consumed in California is produced by refineries located in clusters near metropolitan centers in the San Francisco Bay Area and in the greater Los Angeles area. 73. One such facility is located in Southern California in Torrance, California (the “Torrance Refinery”), which was owned by ExxonMobil Corp. (“ExxonMobil”) at the time Defendants’ alleged unlawful activity began in 2015. This refinery produces approximately twenty percent of all the gasoline sold in Southern California (and ten percent of the statewide supply). The Torrance Refinery also has the capacity to produce significant quantities of alkylate, a high-quality gasoline blending component that can be combined with other blendstocks to create the two common grades of CARBOB: Regular CARBOB (“Regular”) and Premium CARBOB (“Premium”). 4 Tracy Bloom and Lynette Romero, “L.A. Gas Prices Hit Average of $4 Per Gallon After Rising 24 Cents in 1 Week: AAA,” www.ktla.com, (Accessed May 9, 2020), https://ktla.com/news/local-news/l-a- gas-prices-hit-average-of-4-per-gallon-after-rising-24-cents-in-1-week-aaa/. 74. These two grades of CARBOB are the most commonly consumed by California motorists in addition to being the most commonly traded on the spot market. Of the two, Regular is traded with far more frequency than Premium, although premium trades at a higher price. 75. Participants in the gasoline market buy and sell the product for physical delivery within a short time frame in what is known as the “spot market.” Spot markets are referred to as “physical” markets because market participants use them to obtain supplies of the actual product, with the parties negotiating for the fuel “on the spot.” As a result, physical markets are located at or near refinery hubs. 76. There are various spot markets where gasoline and other fuels are traded throughout the United States, however the two most relevant in this litigation are in California: one in Los Angeles that serves Southern California and the other in San Francisco that serves Northern California. 77. The prices on the two California spot markets are influenced by gasoline prices on the New York Mercantile Exchange (“NYMEX”). These NYMEX prices are determined in a centralized market: there are typically thousands of gasoline trades on the NYMEX amounting to billions of gallons on every trading day. In addition, each transaction on the NYMEX is publicly reported, thereby making the price transparent to market participants. 78. NYMEX is an exchange platform on which buyers and sellers can trade fuel commodities any time from a month to eighteen months in the future. This market is often called a “paper” market because physical barrels rarely pass between buyers and sellers. Instead, parties buy and sell contracts for fuel for a period in the future.5 79. Prices on the California spot markets are generally influenced by the NYMEX price, as well as by regional and local supply and demand conditions6 For many transactions on the California spot market, the price for a refined gasoline is not transacted as a “flat price” (i.e. $2.00/gallon). Instead, such transactions are conducted in relationship to the commodity price on the NYMEX. This relationship is called a “differential” to the “cost basis.” Thus, the spot price is measured by adding together the NYMEX price and the differential of the cost basis. 5 Scott Berhang, “Pricing 101 Part 1: Your Basic Guide to Pricing Gasoline and Diesel,” www.blog.opisnet.com, (Accessed May 9, 2020), http://blog.opisnet.com/spot-fuel-markets-made- simple http://blog.opisnet.com/pricing-101-your-basic-guide-to-pricing-gasoline-and-diesel. 6 Berhang, “Pricing 101 Part 2: Spot Fuel Markets Made Simple,” supra. 80. Large quantities of gasoline are traded on the California spot market. Generally, spot market deals in California range between 420,000 gallons (10,000 barrels) to 2.1 million gallons (50,000 barrels). As noted, Regular CARBOB is traded with far more frequency than Premium CARBOB, although Premium trades at a higher price. 81. Additionally, “Rack” or “Wholesale” purchases can be made along the fuel distribution system, often occurring at pipeline terminals. Unlike spot transactions, the quantities of such transactions are based on the amount of fuel in a typical fuel truck, which is in approximately 8,000- gallon increments.7 Companies that re-sell fuel, as well as retailers or end users (e.g., trucking companies), pull fuel from the wholesale racks. 82. The spot market price translates to the “rack” market prices, which are the wholesale prices that are paid when a gasoline tanker truck is filled up. Inflated rack market prices then directly translate into inflated prices in the retail market and ultimately what is paid at the pump. 83. In contrast to the NYMEX, California spot market trades are made through non-public transactions, sometimes called over-the-counter (“OTC”) trades. Unlike the NYMEX, these transactions are not on a centralized, open exchange and thus California spot market prices are not immediately made public. 84. Consequently, market participants are forced to rely on price-reporting services that report spot market prices from sources that participate in the market, such as traders, refiners, and brokers. 85. The most widely used reporting service in California is the Oil Price Information Service, LLC (“OPIS”). The OPIS is a subscription service that publishes a daily OPIS West Coast Spot Market Report (the “Spot Market Report”), which is the industry pricing benchmark used by both buyers and sellers in California. Subscribers to OPIS get the Spot Market Report and can also receive market updates from OPIS throughout the day that include reported deals and other industry news. 86. Price reporting by OPIS plays a crucial role in gasoline contracts which use a “floating price” that is determined at a future date as indicated in the contract. The parties agree on a differential 7 Berhang, “Pricing 101 Part 3: Wholesale Rack Fuel Pricing Essentials,” supra. above or below the spot price or prices published by OPIS. These floating price contracts can be tied to the future price of Regular or Premium as reported by OPIS in the Spot Market Report. 87. The future dates on which the floating price in the contract is set are often referred to as “pricing windows.” The pricing window can be an agreed-upon date or a date range. Pricing windows can also be tied to the dates of delivery or other conditions as indicated in the contract. 88. Market participants voluntarily submit information on their trades to OPIS. OPIS calculates a daily spot price by, among other things, aggregating the trades that are reported to OPIS by market participants on a voluntary basis. Therefore, the reporting of trades is a critical component of how OPIS calculates the daily spot prices. 89. The Spot Market Report includes, among other gasoline products, the prices for Regular and Premium gasoline contracts for prompt (i.e., near term) delivery in Southern California and in Northern California. The Spot Market Report also contains forward prices for Regular and Premium delivery in upcoming future months. 90. On a daily basis, there are usually many more Regular trades than Premium trades listed· in the Spot Market Report. Because trading in Premium is less common than Regular, a single Premium trade reported to OPIS tends to have a bigger impact on the spot market price than a single trade of Regular. 91. The gasoline and gasoline blending components market in California is conducive to a price-fixing agreement because of its structure and other characteristics, which make collusion particularly attractive in this market. Specifically, the gasoline and gasoline blending components market: (1) has high barriers to entry and (2) has inelasticity of demand. 92. A collusive arrangement that raises product prices above competitive levels would, under basic economic principles, attract new entrants seeking to benefit from the supra-competitive pricing. Where, however, there are significant barriers to entry, new entrants are less likely to enter the market. Thus, barriers to entry help to facilitate the formation and maintenance of a cartel. 93. There are substantial barriers that preclude, reduce, or make more difficult entry into the gasoline and gasoline blending components market. A new entrant into the business would face costly and lengthy start-up costs, including multi-million-dollar costs associated with manufacturing plants and equipment, energy, transportation, distribution infrastructure, skilled labor, and long-standing customer relationships. 94. “Elasticity” is a term used to describe the sensitivity of supply and demand 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 so continue to purchase despite a price increase. 95. 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 purchased substitute products or declined to buy altogether. Inelastic demand is a market characteristic that facilitates collusion, allowing producers to raise their prices without triggering customer substitution and lost sales revenue. 96. Demand for gasoline and gasoline blending components market is highly inelastic because there are no close substitutes for these products. In addition, customers must purchase gasoline to drive their gasoline-powered vehicles, even if the prices are kept at a supra-competitive level. 97. During the relevant time period, Defendants imported gasoline and gasoline blending components (e.g., alkylate) in California. Accordingly, they would have been active participants in the California gasoline Spot Market. 98. Defendant Vitol bought and sold spot market contracts for various types of fuel products, including Regular and Premium, and imported gasoline and gasoline blending components, such as alkylate, into California. 99. Vitol employee Brad Lucas (“Lucas”) held the title “USWC Trader.” Lucas was the primary trader at Vitol with responsibility for trading gasoline and gasoline blending components that were delivered via pipeline within California. Lucas reported to John Addison (“Addison”), a Vitol executive who in turn reported to the President of Vitol Americas. In addition to supervising Lucas, Addison also had trading responsibility that included trading gasoline and gasoline blending components that were primarily delivered via marine vessels to locations in the U.S. West Coast, including California. 100. Similarly, Defendant SK was an active participant in trading gasoline in California, during the relevant period. 101. SK Energy bought and sold spot market contracts for various types of fuel products, including Regular and Premium, and imported gasoline and gasoline blending components, such as alkylate, into California. 102. The effect of Defendants’ collusive market manipulation is further evidenced by the following chart created by Severin Borenstein, chair of the PMAC—a group formed to investigate gasoline pricing in California between late 2014 and the end of 2016. Illustrating the unprecedented spikes in California’s gasoline prices compared to the rest of the United States, this graphic demonstrates how the Defendants’ illegal conduct, as described more fully herein, had an immediate and dramatic effect on California’s gasoline prices. 103. Spot market trading of gasoline must comply with California’s commodities fraud statute. See Cal. Corp. Code § 29504. Under this statute it is unlawful to engage in certain fraudulent acts when buying or selling commodity contracts. See Corp. Code § 29536, (a-d). 104. Under section 29536(c) it is unlawful to “[t]o willfully engage in any transaction, act, practice, or course of business which operates or would operate as a fraud or deceit upon any persons.” See Corp. Code § 29536(c). 105. In addition, the federal Commodity Exchange Act (“CEA”) makes unlawful certain types of “[p]rohibited transactions.” See 7 U.S.C. § 6c. More specifically, the CEA prohibits any transaction that “is, of the character of, or commonly known to the trade as, a ‘wash sale’ or ‘accommodation trade.’” See 7 U.S.C. § 6c(a)(2)(A)(i). 106. The CEA also prohibits a transaction that “is used to cause any price to be replied, registered, or recorded that is not a true and bona fide price.” See 7 U.S.C. § 6c(a)(2)(B). 107. As a consequence of Defendants’ conduct, California businesses and consumers paid higher gasoline prices. 108. In 2018, Californians paid an average of 30 cents more per gallon of gasoline than average citizen of other states at retailers like 76, Chevron, and Shell. This equates to an extra $4.50 to fill up a 15-gallon gasoline tank.8 109. On May 4, 2020, Attorney General Becerra announced the filing of a lawsuit against the Defendants for alleged manipulation of California’s gas prices resulting in artificially inflated retail gasoline prices.9 110. Asserting allegations substantially similar to those in this action, the Attorney General claims the Defendants took advantage of market disruption caused by the February 2015 explosion at the Torrance Refinery and violated California’s antitrust laws and engaged in unlawful, unfair, and fraudulent practices that raised the price of gasoline in the state. 111. In particular, the lawsuit accuses the Defendants of engaging in manipulative trades to increase profits by selectively reporting trades to the OPIS in order to drive up the benchmark prices of Regular and Premium gasoline in OPIS’s Spot Market Report. 112. The Attorney General further alleged the Defendants engaged in market-spiking trades to drive up the prices of large trades, while executing other trades to hide their scheme and share profits. 113. In short, the investigations led the state of California to conclude there was sufficient evidence to pursue action against Defendants for engaging in the same unlawful conduct alleged herein. CLASS ALLEGATIONS 114. Plaintiff brings this action both on behalf of himself and as a class action pursuant to Federal Rules of Civil Procedure 23(a) and (b)(3), on behalf of the following Class: All persons or entities that purchased gasoline from a retailer within the State of California from at least as early as February 18, 2015 through December 31, 2016 (“Class Period”). 115. This definition specifically excludes the following: (a) any of the Defendants named herein; (b) any of the Defendants’ parent companies, subsidiaries, and affiliates; (c) any of the Defendants’ officers, directors, management, employees, subsidiaries, affiliates or agents; (d) all 8 California Energy Commission, “Additional Analysis on Gasoline Prices in California,” www.energy.ca.gov, p. 1, (Accessed May 9, 2020), https://www.energy.ca.gov/sites/default/files/2019- 10/Gas_Price_Report_0.pdf. 9Press Release, “Attorney General Becerra Announces Lawsuit Against Two Multinational Companies for Manipulating Gas Market, Costing Californians More at the Pump,” www.oag.gov.gov (Accessed May 9, 2020), https://oag.ca.gov/news/press-releases/attorney-general-becerra-announces-lawsuit- against-two-multinational-companies. governmental entities; and (e) the judges and chambers staff in this case, as well as any members of their immediate families. Plaintiff reserves the right to expand, modify, or alter the Class definition in response to information learned during discovery. 116. This action is properly brought as a class action under Federal Rule of Civil Procedure 23(a) for the following reasons: (a) Numerosity (Fed. R. Civ. P. 23(a)(1)): The proposed Class is so numerous and geographically dispersed throughout California that the joinder of all Class members is impracticable. While Plaintiff does not know the exact number and identity of all Class members, Plaintiff is informed and believe that there are millions of Class members. The precise number of Class members can be ascertained through discovery; (b) Commonality and Predominance (Fed. R. Civ. P. 23(a)(2) and 23(b)(3)): There are questions of law and fact common to the proposed Class that predominate over any questions that may affect individual Class members. Such common questions of law and fact include, but are not limited to: i. Whether Defendants contracted, combined, or conspired with one another to restrain trade in the spot market for gasoline at any time during the Class Period; ii. The identity of the participants of the alleged conspiracy; iii. The duration of the alleged conspiracy and the acts carried out by the Defendants and their co-conspirators in furtherance of the conspiracy; iv. Whether Defendants’ conduct caused the prices of gasoline sold at retail to be higher than the competitive level as a result of their restraint of trade; v. Whether Plaintiff and the other members of the Class were injured by Defendants’ conduct and, if so, the determination of the appropriate Class- wide measure of damages; vi. Whether Plaintiff and other members of the Class are entitled to, among other things, injunctive relief, and, if so, the nature and extent of such relief; vii. Whether the alleged conspiracy violated the Sherman Act; viii. Whether the alleged conspiracy violated California’s antitrust and unfair competition laws; ix. Whether Defendants unjustly enriched themselves to the detriment of the Plaintiff and the members of the Class, thereby entitling Plaintiff and the members of the Class to disgorgement of all benefits derived by Defendants; x. Whether Plaintiff and members of the Class had any reason to know or suspect the conspiracy, or any means to discover the conspiracy; and xi. Whether the Defendants and their co-conspirators fraudulently concealed the conspiracy’s existence from Plaintiff and the members of the Class. (c) Typicality (Fed. R. Civ. P. 23(a)(3)): Plaintiff’s claims are typical of the claims of the members of the proposed Class. Plaintiff and the Class were injured by the same wrongful practices of Defendants. Plaintiff’s claims arise from the same practices and conduct that give rise to the claims of the Class and are based on the same legal theories; (d) Adequacy of Representation (Fed. R. Civ. P. 23(a)(4)): Plaintiff will fairly and adequately protect the interests of the Class in that they have no interests antagonistic to those of the other members of the Class, and Plaintiff has retained attorneys experienced in antitrust class actions and complex litigation as counsel; 117. This action is properly brought as a class action under Federal Rule of Civil Procedure 23(b) for the following reasons: (a) Declaratory and Injunctive Relief (Fed. R. C. P. 23(b)(2)): Certification under Rule 23(b)(2) is warranted because Defendants 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. (b) Superiority and Predominance (Fed. R. Civ. P. 23(b)(3)): Certification under Rule 23(b)(3) is appropriate because questions of law or fact common to members of the Class predominate over any questions affecting only individual members, and class action treatment is superior to the other available methods for the fair and efficient adjudication of this controversy. (c) The proposed Class is ascertainable and there is a well-defined community of interest in the questions of law or fact alleged herein since the rights of each proposed Class member were infringed or violated in the same fashion; 118. A class action is superior to other available methods for the fair and efficient adjudication of this controversy for at least the following reasons: (a) Given the size of individual Class member’s claims and the expense of litigating those claims, few, if any, Class members could afford to or would seek legal redress individually for the wrongs Defendants committed against them and absent Class members have no substantial interest in individually controlling the prosecution of individual actions; (b) This action will promote an orderly and expeditious administration and adjudication of the proposed Class claims, economies of time, effort and resources will be fostered and uniformity of decisions will be insured; (c) Without a class action, Class members will suffer damages, and Defendant’s violations of law will proceed without remedy while Defendants reaped and retained the substantial proceeds of their wrongful conduct; and (d) Plaintiff knows of no difficulty that will be encountered in the management of this litigation which would preclude its maintenance as a class action. 119. Plaintiff intends to provide notice to the proposed Class by communicating the existence of the action in popular trade publications in the industry, utilizing online advertisements, and using professional notice companies to strategically and comprehensively develop additional methods to reach class members. TOLLING OF THE STATUTE OF LIMITATIONS A. Plaintiff’s Delayed Discovery Tolled the Statute of Limitations 120. Plaintiff and Class members had no knowledge of Defendants’ combination or conspiracy, or of facts sufficient to place them on inquiry notice of the claims set forth herein until the California Attorney filed a complaint against Defendants on May 4, 2020. 121. Plaintiff and Class members purchased refined gasoline at prices that were artificially inflated as a result of Defendants’ unlawful agreement to manipulate the California refined gasoline market. They had no direct contact or interaction with any of the Defendants in this case and had no means from which they could have discovered the combination and conspiracy. 122. Throughout the Class Period, and until May 4, 2020, no information in the public domain was available to Plaintiff and Class members that revealed sufficient information to suggest that any of the Defendants was involved in an unlawful scheme to raise, fix, maintain and stabilize retail prices for refined gasoline. 123. It was reasonable for Plaintiff and Class members not to suspect that Defendants were engaging in any unlawful anticompetitive behavior. 124. Plaintiff allege a continuing course of unlawful conduct by and among Defendants, including conduct within the applicable statutes of limitation. That conduct inflicted continuing and accumulating harm. 125. For these reasons, the statutes of limitations applicable to the claims set forth herein were B. Defendants’ Fraudulent Concealment Tolled the Statute of Limitations 126. Additionally or alternatively, application of the doctrine of fraudulent concealment tolled the statutes of limitations on Plaintiff’s claims. Plaintiff and Class members had no knowledge of the combination or conspiracy alleged in this complaint, or of facts sufficient to place them on inquiry notice of their claims, until May 4, 2020 when the California Attorney filed a complaint against Defendants. No information in the public domain or otherwise available to Plaintiff and the Class during the Class Period suggested that Defendants were involved in an unlawful scheme to artificially inflate and maintain refined gasoline prices in California. 127. Defendants concealed their scheme by not disclosing that they were conspiring to manipulate California refined gasoline prices, and also through the obscure facilitating trading activity described herein. Defendants’ scheme also was inherently self-concealing because, as Defendants knew, its disclosure would lead to governmental enforcement activity or civil liability. Refined gasoline is subject to antitrust and unfair competition law regulation, so it was reasonable for Plaintiff and Class members to presume that California refined gasoline was being sold in a competitive market. A reasonable person under the circumstances would have no reason to suspect that refined gasoline was being sold at supra-competitive prices at any time during the Class Period. 128. Because Defendants’ scheme was self-concealing and affirmatively concealed by Defendants, Plaintiff and Class members had no knowledge of the conspiracy or of any facts or information that would have caused a reasonably diligent person to suspect a conspiracy existed during the Class Period. 129. Moreover, Defendants took steps to affirmatively conceal their illicit activities. In one such instance before the California Energy Commission, Vitol’s Lucas knowingly misrepresented the reason for high gasoline prices following the Torrance Refinery explosion. In speaking to the PMAC, as well as Kathleen Foote, Senior Assistant Attorney General and Chief of the Antitrust Division, Lucas deceptively blamed ExxonMobil’s lack of transparency for high gasoline prices. However, Lucas knew full well that such prices stemmed from his participation in illegal manipulation of the spot market. He So you know, last year we brought in quite a few cargos into L.A., both alkaloid (phonetic) and finish CARBOB that went through Kinder Morgan’s system and sold direct to Exxon and some other refiners. You know, one of the big things that this whole conversation has entailed is about the high prices. One of the reasons why, in my opinion, was the lack of transparency with what was going on with Torrance. Because if you remember when it first blew up back in February, there was like an eternal rolling one- month period where they were going to get back up and running. And they kept saying next month, next month, next month. So the trading companies in general, it takes four to five weeks to ship a cargo out, if Exxon is coming back up they’re not going to ship into closed ARB. So because there was no real timeline of when Exxon was going to come back up and running, we would generally not—you don’t put cargos on the water and ship them to the West Coast just on a punt, basically, hoping that you can sell them when they get there. That’s what happened with that one cargo that was done by another trading company who sent it out there, at which point in time the market had collapsed, and so he was unable to sell it, and so he sailed it away again. So that’s what happened with that one. So if there was more transparency with what was going on with refinery maintenance, when it was going to come back up, it would have allowed us to see if it was more—if we were going to be able to land these cargos and actually into a competitive market. If Exxon is back up and running the market is going to fall dramatically. So basically kind of that lack of information kept cargos at bay. There were still a lot shipped into the West Coast, but not as many as could have been or would have been done. If we had actually known that Exxon was going to be down for over a year there would have been a much bigger import play over that time frame.10 130. Moreover Defendants repeatedly misled OPIS about the true nature of their trading activities by reporting artificially high spot trades directly or indirectly between them, but concealing the existence of offsetting wash trades that reduced or effectively limited any market risk in the primary 131. Therefore, by operation of Defendants’ fraudulent concealment, the statutes of limitations applicable to the claims set forth below were tolled throughout the Class Period. CLAIMS FOR RELIEF COUNT ONE Violation of the Sherman Act (15 U.S.C. § 1—Injunctive Relief Only) (Against all Defendants) 132. Plaintiff hereby repeats and incorporates by reference each preceding paragraphs as though fully set forth herein. 133. Defendants entered into and engaged in a continuing combination, conspiracy or agreement to unreasonably restrain trade or commerce in violation of Section 1 of the Sherman Act (15 U.S.C. § 1) by artificially restraining competition with respect to the price of gasoline within the State of California. 10 See https://www.energy.ca.gov/data-reports/planning-and-forecasting/petroleum-market- advisory- committee, August 16, 2016 Meeting Transcript at pp. 129:24-131:10. 134. Defendants’ activities constitute a per se violation of Sections 1 of the Sherman Act. 135. Defendants’ anticompetitive and unlawful conduct has proximately caused injury to Plaintiff and members of the Class by restraining competition and thereby raising, maintaining and/or stabilizing the price of gasoline at levels above what would have occurred if competition had prevailed. For this conduct, Plaintiff and members of the Class are entitled to injunctive relief pursuant to 15 U.S.C. § 26. COUNT TWO Violation of the Cartwright Act (California Business and Professions Code section 16720 et seq.) (Against all Defendants) 136. Plaintiff incorporates by reference and realleges the preceding allegations as though fully set forth herein. 137. Defendants entered into and engaged in a continuing combination, conspiracy or agreement to unreasonably restrain trade or commerce in violation of California Business and Professions Code § 16720 et seq. by artificially restraining competition with respect to the price of gasoline within the State of California. 138. Defendants’ activities constitute a per se violation of the Cartwright Act. 139. Defendants’ anticompetitive and unlawful conduct has proximately caused injury to Plaintiff and members of the Class by restraining competition and thereby raising, maintaining and/or stabilizing the price of gasoline at levels above what would have occurred if competition had prevailed. For this conduct, Plaintiff and members of the Class are entitled to treble damages and injunctive relief pursuant to California Business and Professions Code section 16750(a). COUNT THREE Violation of the Unfair Competition Law (California Business and Professions Code section 17200 et seq.) (Against all Defendants) 140. Plaintiff incorporates by reference and realleges the preceding allegations as though fully set forth herein. 141. Defendants committed acts of unfair competition, as described above, in violation of the 142. Defendants’ conduct constitutes an “unlawful” business practice within the meaning of the UCL, and includes, without limitation, the following: (a) Violating the Sherman and Cartwright Acts, as set forth above; (b) Engaging in wash sales and otherwise manipulating the benchmark prices reported on the California gasoline spot market in violation of California Corporations Code §§ 29535, 29536, 29537, 29538 and the Commodity Exchange Act, 7 U.S.C. § 1 et seq. 143. Defendants’ conduct separately constitutes an “unfair” business practice within the meaning of the UCL because Defendants’ practices caused and are “likely to cause substantial injury” to the Plaintiff and the members of the Class that is not “reasonably avoidable” by them. 144. Defendants’ conduct, as alleged herein, is and was contrary to public policy, immoral, unethical, oppressive, unscrupulous and/or substantially injurious to consumers. Any purported benefits arising out of Defendants’ conduct do not outweigh the harms caused to the victims of Defendants’ conduct. 145. Defendants’ conduct is also “unfair” because it is contrary to numerous legislatively- declared policies, as set forth in the Sherman Act, the Cartwright Act, the California Corporations Code and in the Commodities Exchange Act. Here, Defendants’ conduct not only violates the letter of the law, but it also contravenes the spirit and purpose of each of those statutes. The conduct threatens an incipient violation of each of those laws and has both an actual and a threatened impact on competition. 146. Defendants’ conduct, as described above, also constitutes an “fraudulent” business practice within the meaning of the UCL. Defendants’ trading activity on the California gasoline spot market fraudulently raised the price of gasoline above the competitive level through fictitious “wash” trades and other manipulative conduct that did not shift economic risk for the transaction to an arm’s length counterparty. This conduct was designed to deceive—and did deceive—other market participants about the true supply and demand situation for gasoline in order to artificially increase the price of gasoline in California. 147. Plaintiff and the members of the Class suffered injury in fact and lost money as a result of Defendants’ violations of the UCL in that they paid more for gasoline than they would have paid in a competitive market. They are therefore entitled to restitution and injunctive relief pursuant to California Business and Professions Code §17203. COUNT FOUR Unjust Enrichment (Against All Defendants) 148. Plaintiff incorporates by reference the allegations in the preceding paragraphs. 149. Plaintiff brings this claim under the laws of California. 150. As a result of its unlawful conduct described above, Defendants were unjustly enriched. 151. Defendants were unjustly enriched by the receipt of, at a minimum, unlawfully inflated prices and unlawful profits on sales of gasoline blending components. 152. Defendants benefited from its unlawful acts and it would be inequitable for them to be permitted to retain any of the ill-gotten gains resulting from the overpayments made by Plaintiff and the members of the Class. 153. Plaintiff and the members of the Damages Class are entitled to the amount of the Defendants’ ill-gotten gains resulting from its unlawful, unjust, and inequitable conduct. Plaintiff and the members of the Class are entitled to the establishment of a constructive trust consisting of all ill- gotten gains from which Plaintiff and the members of the Class may make claims on a pro rata basis. 154. Pursuit of any remedies against the firms from which Plaintiff and the members of the Class purchased gasoline subject to Defendants’ conspiracy would have been futile. PRAYER FOR RELIEF WHEREFORE, Plaintiff requests that the Court enter judgment on its behalf and on behalf of the Class defined herein, by adjudging and decreeing that: 1. This lawsuit may be maintained as a class action under Federal Rules of Civil Procedure 23(b)(2) and 23(b)(3), that Plaintiff be certified as class representative, and Plaintiff’s counsel be appointed as counsel for the Class; 2. That the unlawful contract, combination or conspiracy alleged be adjudged and decreed to be an unreasonable restraint of trade or commerce in violation of Section 1 of the Sherman Act; 3. Defendants contracted, combined and conspired in violation of the Cartwright Act. 4. Defendants violated the UCL by engaging in conduct that constitutes unlawful, unfair and fraudulent business practices. 5. Plaintiff and the Class were injured in their business and property as a result of Defendants’ violations 6. That Plaintiff and the Class recover damages, as provided by law, determined to have been sustained as to each of them, in an amount to be trebled in accordance with the antitrust laws, and that judgment be entered against Defendants on behalf of Plaintiff and the Class; 7. That Plaintiff and the Class recover their costs of suit, including reasonable attorneys’ fees, costs, and expenses of the lawsuit, as provided by law; 8. That Defendants, their subsidiaries, affiliates, successors, transferees, assignees and the respective officers, directors, partners, agents, and employees thereof and all other persons acting or claiming to act on their behalf be permanently enjoined and restrained from continuing and maintaining the combination, conspiracy, or agreement alleged herein; 9. That Plaintiff and the Class be awarded pre-judgment and post-judgment interest, and that such interest be awarded at the highest legal rate from and after the date of service of the initial complaint in this action; and 10. Plaintiff and the Class are entitled to equitable relief appropriate to remedy Defendants’ past and ongoing restraint of trade, including: i. A judicial determination declaring the rights of Plaintiff and the Class, and the corresponding responsibilities of Defendants; and ii. Issuance of a permanent injunction against Defendants and their parents, subsidiaries, affiliates, successors, transferees, assignees and the Respective officers, directors, partners, agents, and employees thereof and all other persons acting or claiming to act on their behalf from violations of the law as alleged herein. 11. Defendants are to be jointly and severally responsible financially for the costs and expenses of a Court-approved notice program through post and media designed to give immediate notification to the Class; 12. Plaintiff and the Class recover their costs of this suit, including reasonable attorneys’ fees as provided by law; and 13. For such other and further relief as is just under the circumstances. DEMAND FOR JURY TRIAL Pursuant to Federal Rule of Civil Procedure 38(b), Plaintiff and the Class demand a trial by jury of all the claims asserted in this complaint that are so triable. Dated: June 19, 2020 Respectfully Submitted, /s/ Eustace de Saint Phalle Eustace de Saint Phalle Rains Lucia Stern St. Phalle & Silver, PC 2300 Contra Costa Blvd. Pleasant Hill, CA 94523 Tel. (415) 341-9341 │ Fax: (925) 609-1690 [email protected] Jonathan M. Jagher (pro hac vice forthcoming) Kimberly A. Justice (pro hac vice forthcoming) FREED KANNER LONDON & MILLEN LLC 923 Fayette St Conshohocken, PA 19428 Tel. (610) 234-6487│ Fax: (224) 632-4521 [email protected] [email protected] Douglas A. Millen (pro hac vice forthcoming) Robert J. Wozniak, Jr. (pro hac vice forthcoming) FREED KANNER LONDON & MILLEN LLC 2201 Waukegan Rd, Suite 130 Bannockburn, IL 60015 Tel. (224) 632-4500 │ Fax: (224) 632-4521 [email protected] [email protected]

antitrust

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Case No.: 16-CV-10632 CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS JURY TRIAL DEMANDED UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS ANNEMARIE TARARA, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. TREEHOUSE FOODS, INC., SAM K. REED, and DENNIS F. RIORDAN, Defendants. Plaintiff Annemarie Tarara (“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 regulatory filings made by TreeHouse Foods, Inc., (“TreeHouse” 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 TreeHouse; and (c) review of other publicly available information concerning TreeHouse. NATURE OF THE ACTION AND OVERVIEW 1. This is a class action on behalf of persons and entities that acquired TreeHouse securities between February 1, 2016, and November 2, 2016, inclusive (the “Class Period”), against the Defendants, seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”). 2. TreeHouse is a food manufacturer that operates approximately 24 manufacturing facilities in the United States and Canada. The Company’s stated goal is to be a leading supplier of private label food and products including coffee-creamer, canned soups, salad dressings, salsa and Mexican sauces, jams and pie fillings. 3. On February 1, 2016, TreeHouse announced that it completed the acquisition of ConAgra Foods, Inc.’s (“ConAgra’s”) private brands operations. The Company stated that it paid $2.7 billion in cash plus transaction expenses for the business. TreeHouse touted the acquisition as a boon to the Company, stating, “[t]he acquisition of ConAgra’s private brands operations meaningfully expands TreeHouse’s presence in private label dry and refrigerated grocery, and will be called TreeHouse Private Brands.” 4. Throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) the Company’s private label business was underperforming; (2) the Company’s acquisition strategy was underperforming; (3) that the Company had overstated its full-year 2016 guidance; and (4) that, as a result of the foregoing, Defendants’ statements about TreeHouse’s business, operations, and prospects, were false and misleading and/or lacked a reasonable basis. 5. On November 3, 2016, TreeHouse lowered its full year adjusted earnings per share forecast to $2.80-$2.85, from $3.00-$3.10 due to underperformance of the Private Brands acquisition and over softness in the private label manufacturing business. The Company also announced the closure of a plant in Delta, British Columbia, and reported job cuts at its facility in Battle Creek, Michigan. 6. The Company also surprised investors by announcing the resignation of its newly- appointed President, Chris Sliva, who had been President for less than six months, and the appointment of a new Chief Financial Officer. 7. On the above news, the Company’s shares fell $16.87 per share, or nearly 20%, to close at $69.72 per share on November 3, 2016. 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, as TreeHouse is headquartered 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 Annemarie Tarara, as set forth in the accompanying certification, incorporated by reference herein, purchased TreeHouse 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 TreeHouse is incorporated in Delaware, and the Company’s principal executive offices are located in Oak Brook, Illinois. TreeHouse’s common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “THS.” 15. Defendant Sam K. Reed (“Reed”) has served at all relevant times as the Company’s Chief Executive Officer and Chairman. 16. Defendant Dennis F. Riordan (“Riordan”) served at all relevant times as the Company’s Chief Financial Officer (“CFO”) and currently serves as the Company’s President effective November 3, 2016. 17. Defendants Reed and Riordan (collectively the “Individual Defendants”), because of their positions with the Company, possessed the power and authority to control the contents of TreeHouse’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 Materially False and Misleading Statements Issued During the Class Period 18. The Class Period begins on February 1, 2016. On that day the Company issued a press release announcing the completion of its acquisition of ConAgra’s private brands operations, stating: OAK BROOK, Ill., Feb. 1, 2016 /PRNewswire/ -- TreeHouse Foods (NYSE: THS) announced today that it has completed the acquisition of ConAgra Foods’ (NYSE: CAG) private brands operations. TreeHouse paid $2.7 billion in cash plus transaction expenses for the business and financed the transaction through the closing of its previously announced offerings of $775 million in aggregate principal senior notes due 2024 with a 6.0% annual interest rate and common stock issuance of 13.3 million shares at a price of $65per share (which includes the exercise, in full, of the overallotment option), aggregating $862.5 millionin gross proceeds. The remainder of the purchase price was financed under the Company’s revolving credit facility. “We are pleased to have closed the acquisition, and will continue to focus on driving shareholder value and offering our customers value without compromise through economies of scale, quality products and superior customer service,” said Sam K. Reed, Chairman, President and Chief Executive Officer of TreeHouse Foods. “The Private Brands acquisition broadens our portfolio of offerings for our customers. We remain unwaveringly committed to supporting our customers’ efforts to build their corporate brands and offer consumers the best combination of choice and value,” Mr. Reed continued. “We are looking forward to working as one go-to-market team to achieve success and will work tirelessly to develop the systems and infrastructure to deliver a seamless integration.” The acquisition of ConAgra’s private brands operations meaningfully expands TreeHouse’s presence in private label dry and refrigerated grocery, and will be called TreeHouse Private Brands. Bay Valley Foods (with Flagstone Foods) and TreeHouse Private Brands will be the operating platforms of TreeHouse Foods, Inc. Following the Private Brands acquisition, TreeHouse Foods, Inc. has pro forma sales of approximately $7 billion for the twelve months ended December 31, 2015, more than 50 manufacturing facilities and over 16,000 employees. 19. On February 11, 2016, the Company issued a press release announcing fourth quarter 2015 financial results, and announced financial guidance for 2016 of $2.95 to $3.10 in adjusted earnings per share. For the fourth quarter 2015, the Company announced earnings per share of $1.08 on net sales of $865.4 million. Commenting on the Company’s results, Defendant Reed told investors: We finished the year strong, and our employees deserve a great deal of credit for continuing to focus on improving our operations and driving excellent margin progress. While overall market conditions remained soft and weakness in the Canadian dollar persisted, both of which weighed on our top line, we are very proud to have delivered margin expansion of 150 basis points in the fourth quarter. This year marks the beginning of an important journey for us, as we press forward with our strategic vision and relentlessly focus on tactical execution. We remain fully committed to growth and simplification, and believe that our greatest opportunities continue to lie ahead. We remain dedicated to building a private label platform that offers a broad portfolio of products that are important to our customers and supports their efforts to build their corporate brands, while offering consumers the best combination of choice and value. 20. On February 18, 2016, the Company filed its annual report on Form 10-K with the SEC. The Company reiterated the results previously published in its press release for the fourth quarter 2015, and reported earnings per share of $2.67 on net sales of $3.2 billion. The Company also touted to investors the tremendous growth available for private label manufacturing in the United States: According to independent market research studies, private label grocery products have increased their market share in the United States from 12.7% in 1989 to approximately 17.8% in 2015. Despite gains in market share, private label penetration in the United States remains below that of many other developed economies, including France (27%), Spain (42%), Germany (35%), the United Kingdom (41%) and Switzerland (45%) (market research estimates based on 2014 data). Over time, we expect private label market share in the United States will approach the levels currently present in Europe, but due to structural differences, we do not anticipate this in the short term. 21. On May 5, 2016, the Company issued a press release announcing first quarter results for the period ended March 31, 2016. Therein, the Company reported earnings per share of $0.48 on net sales of $1.3 billion, “a 62.2% increase from 2015, driven by the Private Brands acquisition.” The Company also “tightens full year 2016 adjusted earnings per share guidance range to $3.00 to $3.10,” with Defendant Reed commenting in relevant part: We delivered sequential progress in the first quarter and are off to a solid start, despite the ongoing challenges of a stagnant retail landscape. In the first quarter, growth in retail single-serve coffee and broad gains in snacks led our combined Bay Valley Foods and TreeHouse Private Brands organization, while our cold season products such as non-dairy creamers, hot cereal, and soup were negatively affected by the unseasonably warm weather. I am very pleased with the progress our teams are making integrating the Private Brands business, and our sense of functional unity is growing. Our Private Brands team is already making great progress in customer service improvements and is starting to regain lost distribution that resulted from past service issues. Our integration activities are on track and on budget as a result of the strong collaboration of our teams during the transition. 22. On the same day, May 5, 2016, the Company filed its quarterly report on Form 10-Q with the SEC. The Company reiterated the results previously published in press release issued earlier that day, and noted its continued focus on expanding the Private Brands business, and the expected overall growth in the United States private label business. 23. On August 4, 2016, the Company issued a press release announcing second quarter results for the period ended June 30, 2016. Therein, the Company reported earnings per share of $0.27 on net sales of $1.5 billion, “a 103.0% increase from 2015, driven by the Private Brands acquisition.” The Company also reaffirmed its 2016 outlook, with Defendant Reed commenting in relevant part: We continue to progress in accordance with our plans for the year and our second quarter results represent further sequential improvement. Total Company revenue was up significantly due to the Private Brands acquisition. Volume/mix grew 4% in North American Retail Grocery, representing one of our best quarters in many years. Our operating results continue to show steady improvement, as we focus on customers, categories, consumers, and organizational capabilities.” The detailed integration of legacy TreeHouse and Private Brands is well underway, and we are gaining momentum. I’m pleased to report that we completed a virtually flawless integration of the acquired condiments business onto the TreeHouse SAP system in early July, linking seven product categories and eleven plants that serve over 500 customers. The work that is being undertaken across the organization to establish standardized processes, organizational structures, functional responsibilities and reporting relationships is extraordinary and is a testament to the robust level of collaboration within our organization. 24. On the same day, August 4, 2016, the Company filed its quarterly report on Form 10-Q with the SEC. The Company reiterated the results previously published in its August 4, 2016 press release, and noted its continued dominance of the private label food manufacturing business, the success of the Private Brands acquisition, and the expected growth in the overall United States private label market. 25. On August 4, 2016, the Company announced that Christopher D. Sliva had been elected President of TreeHouse Foods. Defendant Reed commented on the appointment of Mr. Chris’ contributions over the last four years have both strengthened and advanced our organization and culture. I’m proud of the way Chris has led our Company through the operational complexity that is inherent in private label. Because of his leadership and efforts to focus our organization on simplification, our legacy business has delivered gross margin expansion year in, year out. Chris has also been the driving force in focusing our organization on the private label fundamentals of customers, categories, consumers and organizational capabilities. As we look forward, it is under Chris’ tutelage that we are designing an organizational structure to deliver on the transformative potential of the TreeHouse promise to our customers. 26. The above statements contained in ¶¶18-25 were materially false and/or misleading, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. 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 the Company’s private label business was underperforming; (2) that the Company’s acquisition strategy was underperforming; (3) that the Company had overstated its full-year 2016 guidance; and (4) that, as a result of the foregoing, Defendants’ statements about TreeHouse’s business, operations, and prospects, were false and misleading and/or lacked a reasonable basis. Disclosures at the End of the Class Period 27. On November 3, 2016, TreeHouse lowered its full year adjusted earnings per share forecast to $2.80-$2.85 per share from $3.00-$3.10. In relevant part, the Company stated: “We are lowering our full year 2016 earnings expectations due to the combination of lower than expected third quarter sales from the Private Brands business, along with our belief that fourth quarter Private Brands sales will fall short of our goal to stem its year-over-year sales declines,” said Mr. Reed. “We do believe this is a short term situation. Our new go-to-market sales structure is designed to improve our ability to help customers merchandise and drive their private label programs. Our resumed focus on our products and customers in the fourth quarter will quickly restore our Company to our original expectations for the combined TreeHouse Foods business.” The Company expects fourth quarter GAAP and adjusted earnings to be in the range of $1.07 to $1.12per fully diluted share. Because the Company cannot predict some of the items included in reported GAAP results, such as the impact of foreign exchange, the fourth quarter forecast for both GAAP and adjusted earnings are the same. Please refer to the “Comparison of Adjusted Information to GAAP Information” below for further detail. With regard to the full year, TreeHouse expects GAAP earnings to be in the range of $1.95 to $2.00 per fully diluted share and adjusted earnings to be in a range of $2.80 to $2.85 per fully diluted share. The difference between the high end and low end of the full year GAAP and non-GAAP guidance ranges is consistent with the $0.85 impact of adjusting items per fully diluted share for the nine months ended September 30, 2016, as outlined in the chart above. 28. Defendant Reed, in commenting on the poor performance of the Private Brands business, stated in relevant part: The third quarter was a tale of two cities. Our legacy business continued to perform well, paced by Retail volume/mix growth of 4.6% and 80 basis points of direct operating income margin expansion. On the other hand, while the Private Brands business showed sequential improvement, its results fell short of our expectations for the quarter. We believe the underperformance of the Private Brands business is attributable to our all-encompassing efforts to smoothly integrate the operations of the new business. While we have made great progress in consolidating plants, stabilizing the workforce and reducing our reliance on the transition services, the shift in management attention led to less robust Private Brands sales than we experienced in the legacy organization. We will be unveiling a new go-to-market sales structure to better align and focus our sales teams to drive new and consistent growth. 29. The Company further announced the closure of a plant in Delta, British Columbia, and reported job cuts at its facility in Battle Creek, Michigan. In relevant part, the Company OAK BROOK, Ill., Nov. 3, 2016 /PRNewswire/ -- TreeHouse Foods, Inc. (NYSE: THS) today announced its intention to close a facility in Delta, British Columbia and reduce its manufacturing footprint in Battle Creek, Michigan. The decision follows an analysis of the Company’s plant network to align operations with the current and future needs of its customers and eliminate excess manufacturing capacity. The Delta facility employs approximately 90 employees and produces frozen griddle products, primarily for the North American Retail Grocery segment. Production is expected to cease in early 2018. The Company operates two facilities in Delta, and this announcement only affects the frozen griddle facility. The Battle Creek facility produces ready-to-eat cereal, primarily for the North American Retail Grocerysegment. The partial closure will affect approximately 100 of the current 160 employees over a 15 month period beginning in January 2017. The decision is being announced in advance of the downsizing in order to provide employees with as much notice as possible and to ensure a seamless transition for customers. Both the Battle Creek and Delta griddle facilities were part of the Company’s acquisition of the ConAgra Foods private brands business in February 2016. The Company will provide support to employees whose positions are being eliminated. Total costs to close the Delta facility and downsize Battle Creek are expected to be approximately $14.7 million, or $0.16 per fully diluted share, of which approximately $6.8 million, or $0.08 per fully diluted share, is expected to be in cash. Components of the charges include non-cash asset write-offs of approximately $7.9 million, employee-related costs of approximately $4.6 million and other closure costs of approximately $2.2 million. The Company expects approximately $4.0 million and $3.1 million of the charges to be incurred in the fourth quarter of this year and the first quarter of 2017, respectively, with the balance of the charges being incurred through the end of 2018. 30. Finally, the Company disclosed the resignation of its newly appointed President, Chirs Sliva, and the appointment of a new Chief Financial Officer. 31. On this news, the Company’s shares fell $16.87 per share, or nearly 20%, to close at $69.72 per share on November 3, 2016. CLASS ACTION ALLEGATIONS 32. 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 TreeHouse’s securities between February 1, 2016, and November 2, 2016, 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. 33. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, TreeHouse’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 TreeHouse shares were traded publicly during the Class Period on the NYSE. As of September 30, 2016, the Company had 56,729,138 shares of common stock outstanding. Record owners and other members of the Class may be identified from records maintained by TreeHouse 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. 34. 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. 35. 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. 36. 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 TreeHouse; and (c) to what extent the members of the Class have sustained damages and the proper measure of damages. 37. 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 38. The market for TreeHouse’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, TreeHouse’s securities traded at artificially inflated prices during the Class Period. Plaintiff and other members of the Class purchased or otherwise acquired TreeHouse’s securities relying upon the integrity of the market price of the Company’s securities and market information relating to TreeHouse, and have been damaged thereby. 39. During the Class Period, Defendants materially misled the investing public, thereby inflating the price of TreeHouse’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 TreeHouse’s business, operations, and prospects as alleged herein. 40. 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 TreeHouse’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 41. Defendants’ wrongful conduct, as alleged herein, directly and proximately caused the economic loss suffered by Plaintiff and the Class. 42. During the Class Period, Plaintiff and the Class purchased TreeHouse’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 43. 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, Individual Defendants, by virtue of their receipt of information reflecting the true facts regarding TreeHouse, their control over, and/or receipt and/or modification of TreeHouse’s allegedly materially misleading misstatements and/or their associations with the Company which made him privy to confidential proprietary information concerning TreeHouse, participated in the fraudulent scheme alleged herein. APPLICABILITY OF PRESUMPTION OF RELIANCE (FRAUD-ON-THE-MARKET DOCTRINE) 44. The market for TreeHouse’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, TreeHouse’s securities traded at artificially inflated prices during the Class Period. On July 11, 2016, the Company’s stock price closed at a Class Period high of $104.35 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 TreeHouse’s securities and market information relating to TreeHouse, and have been damaged thereby. 45. During the Class Period, the artificial inflation of TreeHouse’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 TreeHouse’s business, prospects, and operations. These material misstatements and/or omissions created an unrealistically positive assessment of TreeHouse 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. 46. At all relevant times, the market for TreeHouse’s securities was an efficient market for the following reasons, among others: (a) TreeHouse 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, TreeHouse filed periodic public reports with the SEC and/or the NYSE; (c) TreeHouse 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) TreeHouse 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. 47. As a result of the foregoing, the market for TreeHouse’s securities promptly digested current information regarding TreeHouse from all publicly available sources and reflected such information in TreeHouse’s stock price. Under these circumstances, all purchasers of TreeHouse’s securities during the Class Period suffered similar injury through their purchase of TreeHouse’s securities at artificially inflated prices and a presumption of reliance applies. 48. 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 49. 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 TreeHouse 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 50. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. 51. 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 TreeHouse’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. 52. 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 TreeHouse’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. 53. 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 TreeHouse’s financial well-being and prospects, as specified herein. 54. 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 TreeHouse’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 TreeHouse 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. 55. 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. 56. 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 TreeHouse’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. 57. 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 TreeHouse’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 TreeHouse’s securities during the Class Period at artificially high prices and were damaged thereby. 58. 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 TreeHouse was experiencing, which were not disclosed by Defendants, Plaintiff and other members of the Class would not have purchased or otherwise acquired their TreeHouse 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. 59. By virtue of the foregoing, Defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. 60. 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 61. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. 62. Individual Defendants acted as controlling persons of TreeHouse within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level position, 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, 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. 63. In particular, Individual Defendants had direct and supervisory involvement in the day-to-day operations of the Company and, therefore, are 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. 64. As set forth above, TreeHouse and 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 position as a controlling person, Individual Defendants is 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: November 16, 2016 Respectfully submitted, By:/s/ Peter E. Cooper GLANCY PRONGAY & MURRAY LLP Lionel Z. Glancy Robert V. Prongay Lesley F. Portnoy 1925 Century Park East, Suite 2100 Los Angeles, CA 90067 Telephone: (310) 201-9150 Facsimile: (310) 201-9160 [Pro Hac Vice Pending] LAWRENCE, KAMIN, SAUNDERS & UHLENHOP, L.L.C Mitchell B. Goldberg John S. Monical Peter E. Cooper 300 S. Wacker Drive, Suite 500 Chicago, IL 60606 Telephone: (312) 372-1947 Facsimile: (312) 372-2389 Email: [email protected] [email protected] [email protected] [Local Counsel] Attorneys for Plaintiff 11/15/2016 Annemarie Tarara's Transactions in Treehouse Foods, Inc. (THS) Date Transaction Type Quantity Unit Price 10/07/2016 Bought 3 $87.0000

securities

oA-7FocBD5gMZwcziai5

H. Tim Hoffman (SBN 049141) Arthur W. Lazear (SBN 083603) Chad A. Saunders (SBN 257810) E-filing HOFFMAN & LAZEAR 180 Grand Avenue, Suite 1550 Oakland, California 94612 FILED Tel:(510)763-5700 Fax: (510)835-1311 MAR - 1 2011 Email: [email protected] NORTHERN DISTRICT OF CALIFORNIA CLERK, U.S. DISTRICT COURT RICHARD W. WIEKING Attorneys for Plaintiff OAKLAND ADR UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA C11-00947 NANCY DARDARIAN, individually and Case No. on behalf of all others similarly situated, CLASS ACTION COMPLAINT Plaintiffs, [JURY TRIAL DEMANDED] VS. OFFICEMAX INCORPORATED, a Delaware corporation, Defendant. I. INTRODUCTION 1. cardholder, as a condition to accepting the credit card as payment, to provide the customer's personal identification information, which the retailer then causes to be written, or otherwise records it upon the credit card transaction form or elsewhere. 2. Defendant operates retail stores throughout the United States, including California. 1747.08. Defendant's acts and practices as described herein were at all times intentional. 3. from the cardholder to acquire additional personal information, including the cardholder's physical residential address, by pairing the PII with the cardholder's name obtained from the cardholder, and is of potentially great benefit to the Defendant. 4. affecting the public interest and will confer significant benefits, both pecuniary and non- pecuniary, on a large class of persons. Private enforcement is necessary and places a disproportionate financial burden on Plaintiff in relation to Plaintiff's stake in the matter. II. JURISDICTION AND VENUE 5. This Court has original jurisdiction over all the state claims under the Class Action Fairness Act, 28 U.S.C. $1332(d), because, Plaintiff is informed and believes, and thereon interest and costs, and the parties are citizens of diverse jurisdictions. 6. because Defendant conducts business in the district, is subject to personal jurisdiction in the district, and a substantial part of the events giving rise to the claims occurred in the district. 7. or Oakland Division, because a substantial portion of the events giving rise to this dispute occurred in Contra Costa County, California. III. THE PARTIES A. Plaintiff 8. Costa County California, and entered into a retail transaction with Defendant at one of Defendant's California stores. 9. as the "Class"). B. Defendant 10. as "Defendant"). Plaintiff is informed and believes, and thereon alleges, that Defendant's principal place of business is located in Illinois. Defendant operates retail stores throughout California, including stores in Contra Costa County. IV. CONDUCT GIVING RISE TO VIOLATIONS OF THE LAW A. Plaintiff's Contact with Defendant 11. Costa County, California. 12. Plaintiff entered Defendant's store and proceeded to select a product that Plaintiff intended to purchase from the store. 13. pay for the item selected through the use of a credit card. 14.the consequences if Plaintiff did not provide Defendant's employee with Plaintiff's personal identification information. 15. Plaintiff, believing that she was required to provide her ZIP code to complete the transaction, told Defendant's employee Plaintiff's ZIP code. 16. Defendant's employee then typed and recorded Plaintiff's personal identification and Plaintiff. 17. Defendant's employee informed Plaintiff of the amounts due to Defendant for the recorded in its databases. 18. credit card number was recorded. 19. Defendant's employee and Plaintiff completed the transaction and Plaintiff left Defendant's store with her purchased items. V. PLAINTIFF'S CLASS ACTION ALLEGATIONS 20. The proposed Class is defined as: all persons in California from whom Defendant requested and recorded personal identification information in conjunction with a credit card persons or entities. 21. agents. 22. and consistency in judicial results. Relief concerning Plaintiff's rights under the law alleged herein and with respect to the Class as a whole would be appropriate. Plaintiff knows of no as a class action. 23. the Class, and Plaintiff can fairly and adequately represent the interests of the Class. 24. and fact common to the Class are: a. whether each Class member engaged in a credit card transaction with Defendant; b. whether Defendant requested the cardholder to provide personal identification information and recorded the personal identification of the cardholder, during credit card transactions with Class members; C. whether Defendant's conduct of requesting the cardholder to provide personal d. whether Plaintiff and the Class are entitled to injunctive relief; and damages. 25. Civil Code section 1747.08(e). 26. class action and civil litigation. [SONG-BEVERLY CREDIT CARD ACT OF 1971] 27. 1 through 26 of this Complaint. 28. 29. Defendant is a corporation that accepts credit cards for the transaction of business. 30. during the one-year period preceding the filing of this Class Action Complaint through theusing credit cards at the point-of-sale in Defendant's retail establishments. 31. described in this cause of action with respect to every person who, while using a credit card, purchases any product from any of Defendant's stores in the State of California. 32. civil penalties in amounts of up to one thousand dollars ($1,000) per violation pursuant to California Civil Code section 1747.08(e). PRAYER FOR RELIEF follows: 1. or she is entitled under California Civil Code section 1747.08(e); 2. establishments; 3. That the Court certifies this action as a class action; 4. fund" doctrine, and as authorized by the "substantial benefit" doctrine; 5. For costs of the suit; 6. For prejudgement interest at the legal rate; and 7. For such other relief as the Court may deem just and proper. Dated: HOFFMAN & LAZEAR By SKT H. (TM HOFFMAN Attorney for Plaintiffs

consumer fraud

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CLERK 2016 JUN 16 PM 12: 40 U.S. EASTERN DIST OF NEW YORK CV 16 COLLECTIVE ACTION Plaintiffs, COMPLAINT JURY TRIAL -against- DEMANDED AZRACK, J. Defendants. X 1. Plaintiffs, CRISTIAN CASTONEDA, SERGIO PEREZ MEJIA, and FRANCISCO PARRA-DELACRUZ, individually and on behalf of all others similarly situated, (hereinafter referred to as "Plaintiffs"), by their attorneys at Helen F. Dalton & Associates, P.C., alleges, upon personal knowledge as to himself and upon information and belief as to other matters, as follows: PRELIMINARY STATEMENT 2. Plaintiffs, CRISTIAN CASTONEDA, SERGIO PEREZ MEJIA, and FRANCISCO PARRA-DELACRUZ, individually and on behalf of all others similarly situated, through undersigned counsel, brings this action against TREES R US, INC. and TRACEY RECENELLO, an individual, (hereinafter referred to as "Defendants"), to recover damages for egregious violations of state and federal wage and hour laws arising out of Plaintiffs' employment at TREES R US, located at 99 South Saxon Avenue, Bayshore, NY 11706. 3. Plaintiff CRISTIAN CASTONEDA was employed by Defendants from in or around April 2014 until on or around April 11, 2016. 1 4. Plaintiff SERGIO PEREZ MEJIA was employed by Defendants from in or around November 2013 until on or around April 11, 2016. 5. Plaintiff FRANCISCO PARRA-DELACRUZ was employed by Defendants from in or around 2008 until on or around April 11, 2016. 6. As a result of the violations of Federal and New York State labor laws delineated below, Plaintiffs seek compensatory damages and liquidated damages in an amount exceeding $100,000.00. Plaintiffs also seek interest, attorneys' fees, costs, and all other legal and equitable remedies this Court deems appropriate. JURISDICTION AND VENUE 7. This Court has subject matter jurisdiction over Plaintiffs' federal claims pursuant to the FLSA, 29 U.S.C. §216 and 28 U.S.C. $1331. 8. This Court has supplemental jurisdiction over Plaintiffs' state law claims pursuant to 28 U.S.C. 1367. 9. Venue is proper in the EASTERN District of New York pursuant to 28 U.S.C. $1391(b) because a substantial part of the events or omissions giving rise to the claims occurred in this district. 10. This Court is empowered to issue a declaratory judgment pursuant to 28 U.S.C. §§2201 & 2202. THE PARTIES 11. Plaintiff CRISTIAN CASTONEDA residing at 137 Wittbert Street, Brentwood, NY, was employed by Defendants at TREES R US, INC. from in or around April 2014 until on or around April 11, 2016. 12. Plaintiff SERGIO PEREZ MEJIA residing at 49 2nd Street, Brentwood, NY, 11706 was employed by Defendants at TREES R US, INC. from in or around November 2013 until on or around April 11, 2016. 13. Plaintiff FRANCISCO PARRA-DELACRUZ residing at 290 Broadway, Amityville, NY 11701, was employed by Defendants at TREES R US, INC. from in or around 2008 until on or around April 11, 2016. 14. Upon information and belief, Defendant, TREES R US, INC, is a corporation organized under the laws of New York with a principal executive office at 99 South Saxon Avenue, Bayshore, NY 11706. 2 15. Upon information and belief, Defendant, TREES R US, INC., is a corporation authorized to do business under the laws of New York. 16. Upon information and belief, Defendant TRACEY RECENELLO owns and/or operates TREES R US, INC. 17. Upon information and belief, Defendant TRACEY RECENELLO is the Chairman of the Board of TREES R US, INC. 18. Upon information and belief, Defendant TRACEY RECENELLO is the Chief Executive Officer of TREES R US, INC. 19. Upon information and belief, Defendant TRACEY RECENELLO is an agent of TREES R US, INC. 20. Upon information and belief, Defendant TRACEY RECENELLO has power over personnel decisions at TREES R US, INC. 21. Upon information and belief, Defendant TRACEY RECENELLO has power over payroll decisions at TREES R US, INC. 22. Defendant TRACEY RECENELLO has the power to hire and fire employees at TREES R US, INC., establish and pay their wages, set their work schedule, and maintains their employment records. 23. During all relevant times herein, Defendant TRACEY RECENELLO was Plaintiffs' employer within the meaning of the FLSA and NYLL. 24. On information and belief, TREES R US, INC. is, at present and has been at all times relevant to the allegation in the complaint, an enterprise engaged in interstate commerce within the meaning of the FLSA in that the entity (i) has had employees engaged in commerce or in the production of goods for commerce, and handle, sell or otherwise work on goods or material that have been moved in or produced for commerce by any person: and (ii) has had an annual gross volume of sales of not less than $500,000.00. FACTUAL ALLEGATIONS 25. Plaintiff CRISTIAN CASTONEDA was employed by Defendants at TREES R US, INC. from in or around April 2014 until on or around April 11, 2016. 26. During Plaintiff CRISTIAN CASTONEDA'S employment by Defendants at TREES R US, INC., Plaintiff's primary duties were as a tree cutter, pruner, driver, cleaner, 3and performing other miscellaneous duties from in or around April 2014 until on or around April 11, 2016. 27. Plaintiff CRISTIAN CASTONEDA was paid by Defendants approximately $25 per hour from in or about April 2014 until on or around September 2014 and approximately $32 per hour from in or around October 2014 until in or around April 11, 2016. 28. Although Plaintiff CRISTIAN CASTONEDA worked approximately 60 (sixty) hours or more per week during the period of his employment by Defendants from in or around April 2014 until on or around April 11, 2016, Defendants did not pay Plaintiff time and a half (1.5) for hours worked over forty (40), a blatant violation of the overtime provisions contained in the FLSA and NYLL. 29. Plaintiff SERGIO PEREZ MEJIA was employed by Defendants at TREES R US, INC. from in or around November 2013 until on or around April 11, 2016. 30. During Plaintiff SERGIO PEREZ MEJIA'S employment by Defendants at TREES R US, INC., Plaintiff's primary duties were as a tree cutter, pruner, cleaner, and performing other miscellaneous duties from in or around November 2013 until on or around April 11, 2016. 31. Plaintiff SERGIO PEREZ MEJIA was paid by Defendants approximately $20.00 per hour from in or about November 2013, approximately $27.00 per hour from in or around December 2013 until in or around November 2014, and approximately $33 per hour from in or around December 2014 until in or around April 11, 2016. 32. Although Plaintiff SERGIO PEREZ MEJIA worked approximately 60 (sixty) hours or more per week during the period of his employment by Defendants from in or around November 2013 until on or around April 11, 2016, Defendants did not pay Plaintiff time and a half (1.5) for hours worked over forty (40), a blatant violation of the overtime provisions contained in the FLSA and NYLL. 33. Plaintiff FRANCISCO PARRA-DELACRUZ was employed by Defendants at TREES R US, INC. from in or around 2008 until on or around April 11, 2016. 34. During Plaintiff FRANCISCO PARRA-DELACRUZ employment by Defendants at TREES R US, INC., Plaintiff's primary duties were as a tree cutter, pruner, driver, 4 cleaner, and performing other miscellaneous duties from in or around 2008 until on or around April 11, 2016. 35. Plaintiff FRANCISCO PARRA-DELACRUZ was paid by Defendants approximately $36 per hour from in or about June 2010 until on or around December 2013, approximately $41 per hour from in or around January 2014 until in or around December 2015, and approximately $46 per hour from in or around January 2015 until in or around April 11, 2016. 36. Although Plaintiff FRANCISCO PARRA-DELACRUZ worked approximately 60 (sixty) hours or more per week during the period of his employment by Defendants from in or around 2008 until on or around April 11, 2016, Defendants did not pay Plaintiff time and a half (1.5) for hours worked over forty (40), a blatant violation of the overtime provisions contained in the FLSA and NYLL. 37. Upon information and belief, Defendants contracted with governmental agencies such as the City of New York Department of Parks and Recreation to perform tree removal and pruning in Richmond and Kings Counties. 38. Pursuant to NYLL $220, wages to a tree cutter/pruner employed upon public work shall not be paid less than the "prevailing rate of wages." 39. The prevailing rate of wage is the rate of wages paid in the locality due to collective bargaining agreements between labor organizations and employers of the private sector. 40. Upon information and belief, a schedule of prevailing rates of wages was attached to the contracts Defendants entered into with governmental agencies. 41. The Defendants did not pay the Plaintiffs the prevailing rate of wages that they were entitled to. 42. Additionally, the Defendants maintained a system wherein they only paid Plaintiffs for approximately 30 hours of work despite the fact that the Plaintiffs and other similarly situated employees worked well above 30 hours. 43. Upon information and belief, Defendants willfully failed to post notices of the minimum wage and overtime wage requirements in a conspicuous place at the location of their employment as required by both the NYLL and the FLSA. 5 44. Upon information and belief, Defendants willfully failed to keep payroll records as required by both NYLL and the FLSA. 45. As a result of these violations of Federal and New York State labor laws, Plaintiffs seek compensatory damages and liquidated damages in an amount exceeding $100,000.00. Plaintiff also seeks interest, attorneys' fees, costs, and all other legal and equitable remedies this Court deems appropriate. COLLECTIVE ACTION ALLEGATIONS 46. Plaintiffs bring this action on behalf of themselves and other employees similarly situated as authorized under the FLSA, 29 U.S.C. § 216(b). The employees similarly situated are: 47. Collective Class: All persons who are or have been employed by the Defendants as tree cutters, pruners, drivers, laborers, cleaners, or other similarly titled personnel with substantially similar job requirements and pay provisions, who were performing the same sort of functions for Defendants, other than the executive and management positions, who have been subject to Defendants' common practices, policies, programs, procedures, protocols and plans including willfully failing and refusing to pay required minimum and overtime wage compensation. 48. Upon information and belief, Defendants employed between 30 and 50 employees within the past three years subjected to similar payment structures. 49. Upon information and belief, Defendants suffered and permitted Plaintiffs and the Collective Class to work more than forty hours per week without appropriate overtime compensation. 50. Upon information and belief, Defendants failed to pay Plaintiffs and the Collective Class at the prevailing wage rates for work performed pursuant to contracts with governmental agencies. 51. Upon information and belief, Defendants failed to pay Plaintiffs and the Collective Class for their work performed after 30 hours per week. 52. Defendants' unlawful conduct has been widespread, repeated, and consistent. 53. Upon information and belief, Defendant had knowledge that Plaintiffs and the Collective Class performed work requiring overtime pay. 654. Defendants' conduct as set forth in this Complaint, was willful and in bad faith, and has caused significant damages to Plaintiffs and the Collective Class. 55. Defendants are liable under the FLSA for failing to properly compensate Plaintiffs and the Collective Class, and as such, notice should be sent to the Collective Class. There are numerous similarly situated current and former employees of Defendants who have been denied overtime pay in violation of the FLSA and NYLL, who would benefit from the issuance of a Court-supervised notice of the present lawsuit, and the opportunity to join the present lawsuit. Those similarly situated employees are known to Defendants and are readily identifiable through Defendants' records. 56. The questions of law and fact common to the putative class predominate over any questions affecting only individual members. 57. The claims of Plaintiffs are typical of the claims of the putative class. 58. Plaintiffs and their counsel will fairly and adequately protect the interests of the putative class. 59. A collective action is superior to other available methods for the fair and efficient adjudication of this controversy. FIRST CAUSE OF ACTION Overtime Wages Under The Fair Labor Standards Act 60. Plaintiffs re-allege and incorporate by reference all allegations in all preceding paragraphs. 61. Plaintiffs have consented in writing to be a party to this action, pursuant to 29 U.S.C. $216(b). 62. At all times relevant to this action, Plaintiffs were engaged in commerce or the production of goods for commerce within the meaning of 29 U.S.C. §§206(a) and 207(a). 63. At all times relevant to this action, Defendants were employers engaged in commerce or the production of goods for commerce within the meaning of 29 U.S.C. §§206(a) and 207(a). 64. Defendants willfully failed to pay Plaintiffs overtime wages for hours worked in excess of forty (40) hours per week at a wage rate of one and a half (1.5) times the 7 regular wage, to which Plaintiffs were entitled under 29 U.S.C. §§206(a) in violation of 29 U.S.C. $207(a)(1). 65. Defendants' violations of the FLSA as described in this Complaint have been willful and intentional. Defendants have not made a good effort to comply with the FLSA with respect to the compensation of the Plaintiffs. 66. Due to Defendants' FLSA violations, Plaintiffs are entitled to recover from Defendants, jointly and severally, their unpaid wages and an equal amount in the form of liquidated damages, as well as reasonable attorneys fees and costs of the action, including interest, pursuant to the FLSA, specifically 29 U.S.C. $216(b). SECOND CAUSE OF ACTION Overtime Wages Under New York Labor Law 67. Plaintiffs re-allege and incorporate by reference all allegations in all preceding paragraphs. 68. At all times relevant to this action, Plaintiffs were employed by Defendants within the meaning of New York Labor Law §§2 and 651. 69. Defendants failed to pay Plaintiffs overtime wages for hours worked in excess of forty hours per week at a wage rate of one and a half (1.5) times the regular wage to which Plaintiffs were entitled under New York Labor Law 652, in violation of 12 N.Y.C.R.R. 137-1.3. 70. Due to Defendants' New York Labor Law violations, Plaintiffs are entitled to recover from Defendants, jointly and severally, their unpaid overtime wages and an amount equal to their unpaid overtime wages in the form of liquidated damages, as well as reasonable attorneys' fees and costs of the action, including interest in accordance with NY Labor Law $198(1-a). THIRD CAUSE OF ACTION Minimum Wages Under The Fair Labor Standards Act 71. Plaintiffs re-allege and incorporate by reference all allegations in all preceding paragraphs. 8 72. Plaintiffs have consented in writing to be a party to this action, pursuant to 29 U.S.C. $216(b). 73. At all times relevant to this action, Plaintiffs were engaged in commerce or the production of services and goods for commerce within the meaning of 29 U.S.C. §§206(a) and 207(a). 74. At all times relevant to this action, Defendants were employers engaged in commerce or the production of goods for commerce within the meaning of 29 U.S.C. §§206(a) and 207(a). 75. Defendants willfully failed to pay Plaintiffs a minimum wage in accordance with 29 U.S.C. §§$201, 202 and 203, by failing to pay certain Plaintiffs wages for at least 4 hours of at least one workday, if not more. 76. Defendants' violations of the FLSA, as described in this Complaint have been willful and intentional. 77. Defendants have not made a good faith effort to comply with the FLSA with respect to the Plaintiffs' compensation. 78. Due to Defendants' FLSA violations, Plaintiffs are entitled to recover from Defendants, jointly and severally, their unpaid minimum wages and an equal amount in the form of liquidated damages, as well as reasonable attorneys' fees and costs of the action including interest, pursuant to the FLSA, specifically 29 U.S.C. $216(b). FOURTH CAUSE OF ACTION Minimum Wages Under New York Labor Law 79. Plaintiffs re-allege and incorporate by reference all allegations in all preceding paragraphs. 80. At all times relevant to this action, Plaintiffs were employed by Defendants within the meaning of NYLL §§2 and 651. 81. At all times relevant to this action, Defendants were employers within the meaning of NYLL. 82. Defendants failed to record, credit or compensate some of the Plaintiffs the applicable minimum hourly wage, in violation of the New York Minimum Wage Act, specifically NYLL §652 for at least four hours of at least one workday. 983. Defendants also failed to pay Plaintiffs the required minimum wage, which Plaintiffs were entitled under NYLL 652, in violation of 12 N. Y. C. R. R. 137-1.3. 84. Due to Defendants' NYLL violations, Plaintiffs are entitled to recover from Defendants, jointly and severally, their unpaid minimum wages and an amount equal to their unpaid minimum wages in the form of liquidated damages, as well as reasonable attorneys' fees and costs of the action, including interest in accordance with NYLL § 198 (1-a). FIFTH CAUSE OF ACTION Violation of the Notice and Recordkeeping Requirements of the New York Labor Law 85. Plaintiffs re-allege and incorporate by reference all allegations in all preceding paragraphs. 86. Defendants failed to provide Plaintiffs with a written notice, in English and in Spanish (Plaintiffs' primary language), of their rate of pay, regular pay day, and such other information as required by NYLL 195(1). 87. Defendants are liable to Plaintiffs in the amount of $2,500.00 each, together with costs and attorneys' fees. SIXTH CAUSE OF ACTION Violation of the Wage Statement Requirements of the New York Labor Law 88. Plaintiffs re-allege and incorporate by reference all allegations in all preceding paragraphs. 89. Defendants failed to provide Plaintiffs with wage statements upon each payment of wages, as required by NYLL $195(3) 90. Defendants are liable to Plaintiffs in the amount of $2,500.00 each, together with costs and attorneys' fees. SEVENTH CAUSE OF ACTION Violation of the Wage Statement Requirements of the New York Labor Law 91. Plaintiffs re-allege and incorporate by reference all allegations in all preceding paragraphs. 92. Defendants failed to provide pay the Plaintiffs the prevailing wage rates for their work performed for governmental agencies. 10 93. Defendants are liable for breach of those contracts but willfully failing to pay Plaintiffs at the prevailing wage rates. 94. Due to Defendants' NYLL violations, Plaintiffs are entitled to recover from Defendants, jointly and severally, their unpaid wages and an amount equal to their unpaid wages in the form of liquidated damages, as well as reasonable attorneys' fees and costs of the action, including interest in accordance with NYLL § 198 (1-a. PRAYER FOR RELIEF Wherefore, Plaintiffs respectfully request that judgment be granted: a. Declaring Defendants' conduct complained herein to be in violation of the Plaintiffs' rights under the FLSA, the New York Labor Law, and its regulations; b. Awarding Plaintiffs unpaid overtime wages; C. Awarding Plaintiffs minimum wages; d. Awarding Plaintiffs liquidated damages pursuant to 29 U.S.C. $216 and New York Labor Law §§198(1-a), 663(1); e. Awarding Plaintiffs prejudgment and post-judgment interest; f. Awarding Plaintiffs the costs of this action together with reasonable attorneys' fees; and g. Awarding such and further relief as this court deems necessary and proper. DEMAND FOR TRIAL BY JURY Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiffs demand a trial by jury on all questions of fact raised by the complaint. Dated: This 6th day of June of 2016. Roman/ Avshalumov, Esq. (RA 5508) Puja Sharma, Esq. (PS 5933) Helen F. Dalton & Associates, PC 69-12 Austin Street Forest Hills, NY 11375 Telephone: 718-263-9591 Fax: 718-263-9598 11 Plaintiffs, -against- Defendants. SUMMONS & COMPLAINT HELEN F. DALTON & ASSOCIATES, P.C. Attorneys for Plaintiffs 69-12 Austin Street Forest Hills, NY 11375 Phone (718) 263-9591 Fax (718) 263-9598 12

employment & labor

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK TOMMIE ZAKER, 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 EBANG INTERNATIONAL HOLDINGS INC., DONG HU, and LEI CHEN, Defendants. Plaintiff Tommie Zaker (“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 Ebang International Holdings Inc. (“Ebang” 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 Ebang; and (c) review of other publicly available information concerning Ebang. NATURE OF THE ACTION AND OVERVIEW 1. This is a class action on behalf of persons and entities that purchased or otherwise acquired Ebang securities between June 26, 2020 and April 5, 2021, inclusive (the “Class Period”). Plaintiff pursues claims against the Defendants under the Securities Exchange Act of 1934 (the “Exchange Act”). 2. Ebang purports to be a leading application-specific integrated circuit (“ASIC”) chip design company and a leading manufacturer of Bitcoin mining machines. 3. On April 6, 2021, before the market opened, Hindenburg Research published a report alleging, among other things, that Ebang is directing proceeds from its IPO last year into a “series of opaque deals with insiders and questionable counterparties.” According to the report, Ebang raised $21 million in November 2020, claiming the proceeds would go “primarily for development,” and that instead the funds were directed to repay related-party loans to a relative of the Ebang’s Chief Executive Officer, Dong Hu. The report also noted that Ebang’s earlier efforts to go public on the Hong Kong Stock Exchange had failed due to widespread media coverage of a sales inflation scheme with Yindou, a Chinese peer-to-peer online lending platform that defrauded 20,000 retail investors in 2018, with $655 million “vanish[ing] into thin air.” 4. On this news, the Company’s share price fell $0.82, or approximately 13%, to close at $5.53 per share on April 6, 2021, on unusually heavy trading volume. 5. On April 6, 2021, after the market closed, Ebang issued a statement stating that, though it believed the report “contain[ed] many errors, unsupported speculations and inaccurate interpretations of events,” the “Board, together with its Audit Committee, intends to further review and examine the allegations and misinformation therein and will take whatever necessary and appropriate actions may be required to protect the interest of its shareholders.” 6. On this news, the Company’s share price fell $0.12, or 2.17%, to close at $5.41 per share on April 7, 2021. The stock price continued to decline over the next trading session by $0.38, or 7%, to close at $5.03 per share on April 8, 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 the proceeds from Ebang’s public offerings had been directed to an low yield, long term bonds to an underwriter and to related parties rather than used to develop the Company’s operations; (2) that Ebang’s sales were declining and the Company had inflated reported sales, including through the sale of defective units; (3) that Ebang’s attempts to go public in Hong Kong had failed due to allegations of embezzling investor funds and inflated sales figures; (4) that Ebang’s purported crytocurrency exchange was merely the purchase of an out-of-the-box crypto exchange; 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 shares, 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 Tommie Zaker, as set forth in the accompanying certification, incorporated by reference herein, purchased Ebang shares 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 Ebang is incorporated under the laws of the Cayman Islands with its principal executive offices located in China. Ebang’s Class A ordinary shares trade on the NASDAQ exchange under the symbol “EBON.” 15. Defendant Dong Hu (“Hu”) was the Company’s Chief Executive Officer (“CEO”) at all relevant times. 16. Defendant Lei Chen (“Chen”) was the Company’s Chief Financial Officer (“CFO”) at all relevant times. 17. Defendants Hu and Chen (together, 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. Ebang purports to be a leading ASIC chip design company and a leading manufacturer of Bitcoin mining machines. Materially False and Misleading Statements Issued During the Class Period 19. The Class Period begins on June 26, 2020. On that day, Ebang filed its prospectus in connection with its initial public offering (the “IPO Prospectus”). Regarding the use of capital, the IPO Prospectus stated: The primary purposes of this offering are to create a public market for our Class A ordinary shares for the benefit of all shareholders, retain talented employees by providing them with equity incentives and obtain additional capital. We plan to use the net proceeds of this offering as follows, assuming no exercise of the underwriters’ option to purchase additional Class A ordinary shares: • approximately 35.0%, or US$31.8 million, for expansion of overseas business and new businesses, including establishing research and development centers and taking selling and marketing initiatives overseas; • approximately 20.0%, or US$18.2 million, for our development and introduction of new mining machines; • approximately 15.0%, or US$13.6 million, for corporate branding and marketing activities; and • the remainder of the net proceeds for general corporate purposes, which may include working capital needs and other corporate uses. 20. As to Ebang’s operations, the IPO Prospectus further stated: In recent years, sales of Bitcoin mining machines have increased as a result of the increasing adoption of blockchain technology and interest in cryptocurrencies, particularly when cryptocurrency prices increased. Global sales of Bitcoin computing hardware, the majority of which comprise sales of Bitcoin mining machines, have surged at a compound annual growth rate, or CAGR, of 61.3% from approximately US$0.2 billion in 2015 to approximately US$1.4 billion in 2019 and are expected to further increase at a CAGR of 24.8% to approximately US$4.3 billion in 2024, according to the F&S report. * * * Our blockchain products business primarily comprises sales of Bitcoin mining machines and mining machine hosting services. In 2018 and 2019, our revenues from sales of Bitcoin mining machine and related accessories were US$307.1 million and US$89.9 million, respectively, and our revenue from provision of mining machine hosting services was US$7.7 million and US$15.7 million, respectively. 21. Moreover, regarding product defects, the IPO Prospectus went on to state: Product defects resulting in a large-scale product recall or product liability claims against us could materially and adversely affect our business, results of operations and reputation We manufacture products in accordance with internationally accepted quality standards and specifications provided by our customers. However, we cannot assure you that all products produced by us are free of defects. Consequently, any product defects identified by our customers or end users might erode our reputation and negatively affect our customer relationships and future business. Product defects may also result in product returns and large-scale product recalls or product liability claims against us for substantial damages. For example, we are currently involved in an ongoing lawsuit against us in relation to our sales of mining machines to an individual customer who alleged that, among other things, our products did not meet advertised performance and product quality specifications. See “Business—Legal Proceedings.” Such claims, irrespective of the outcomes or the merits, would likely be time-consuming and costly to defend and could divert significant resources and management attention. Furthermore, even if we are able to defend any such claim successfully, we cannot assure you that our customers will not lose confidence in our products or that our future relationships with our customers will not be damaged. As a result, our business, results of operations, reputation and brand image could be materially and adversely affected by any product defects. 22. On August 14, 2020, Ebang issued a press release announcing that it was preparing to establish a cryptocurrency exchange. Specifically, the Company stated: Ebang International Holdings Inc. (Nasdaq: EBON, the “Company,” “we” or “our”), a leading application-specific integrated circuit (“ASIC”) chip design company and a leading manufacturer of high-performance Bitcoin mining machines, today announced that on August 13, 2020, it has established a wholly- owned subsidiary in Singapore in preparation for establishing a cryptocurrency exchange. Mr. Dong Hu, Chairman and CEO of the Company, commented, “With our newly established subsidiary in Singapore, we expect to expand our industry chain layout from providing equipment to offering trading services. We plan to establish a robust risk control system and develop an optimal transaction system, with the support from our dedicated professional team and industry experts, in order to provide investors with safe, fast and stable digital asset transaction services through blockchain technology. We look forward to providing systematic support to the development of blockchain and maximizing the values for our shareholders.” 23. On September 25, 2020, Ebang reported its financial results for the first six months of fiscal 2020: Operational and Financial Highlights for the First Six Months of Fiscal Year 2020 Total computing power sold in the first six months of 2020 was 0.25 million Thash/s, representing a year-over-year decrease of 86.02% from 1.82 million Thash/s in the same period of 2019. Total net revenues in the first six months of 2020 were US$11.04 million, representing a 50.60% year-over-year decrease from US$22.35 million in the same period of 2019. Gross loss in the first six months of 2020 was US$0.97 million, representing a 94.59% year-over-year decrease from US$17.87 million in the same period of 2019. Net loss in the first six months of 2020 was US$6.96 million compared to US$19.07 million in the same period of 2019. * * * Mr. Hu continued, “With the preparatory work we have initiated in Singapore and Canada, we are at an initial preparatory stage of executing our plan to launch blockchain-enabled financial business by establishing cryptocurrency exchange(s) and online brokerage(s) and by combining the blockchain-enabled financial businesses with the traditional ones to capture the entire value chain of the blockchain industry. Marching into these new fields, we are staying true to our mission in strengthening the technological innovation in our products and services to ensure their competitiveness in the market.” 24. On October 23, 2020, Ebang filed its registration statement on Form F-1 for an offering of Class A ordinary shares and warrants to purchase Class A ordinary shares. It was subsequently amended on October 26, 2020, November 6, 2020, and November 16, 2020 before the Company filed a related prospectus on Form 424b4 on November 20, 2020 (collectively, and together with October 23, 2020 registration statement, the “November Prospectus”). Regarding the use of capital, the November Prospectus stated: The primary purposes of this offering are to create a public market for our Class A ordinary shares for the benefit of all shareholders, retain talented employees by providing them with equity incentives and obtain additional capital. We plan to use the net proceeds of this offering as follows: • approximately 30%, or US$5.8 million assuming sales of all 4,000,000 Units at the initial closing, no sales of Additional Units and no exercise of the related warrants, or approximately US$11.7 million, assuming sales of all of the Units we are offering and no exercise of the related warrants, for development and application of blockchain technology into financial services; • approximately 30 %, or US$5.8 million assuming sales of all 4,000,000 Units at the initial closing, no sales of Additional Units and no exercise of the related warrants, or approximately US$11.7 million, assuming sales of all of the Units we are offering and no exercise of the related warrants, for sourcing core intellectual properties relating to our businesses; • approximately 20%, or US$3.9 million assuming sales of all 4,000,000 Units at the initial closing, no sales of Additional Units and no exercise of the related warrants, or approximately US$7.8 million, assuming sales of all of the Units we are offering and no exercise of the related warrants, for corporate branding and marketing activities; and • the remainder of the net proceeds for general corporate purposes, which may include working capital needs and other corporate uses. 25. As to Ebang’s operations, the November Prospectus further stated: In recent years, sales of Bitcoin mining machines have increased as a result of the increasing adoption of blockchain technology and interest in cryptocurrencies, particularly when cryptocurrency prices increased. Global sales of Bitcoin computing hardware, the majority of which comprise sales of Bitcoin mining machines, have surged at a compound annual growth rate, or CAGR, of 61.3% from approximately US$0.2 billion in 2015 to approximately US$1.4 billion in 2019 and are expected to further increase at a CAGR of 24.8% to approximately US$4.3 billion in 2024, according to the F&S report. * * * Our blockchain products business primarily comprises sales of Bitcoin mining machines and mining machine hosting services. In 2018, 2019 and the six months ended June 30, 2019 and 2020, our revenues from sales of Bitcoin mining machine and related accessories were US$307.1 million, US$89.9 million, US$12.6 million and US$4.5 million respectively, and our revenue from provision of mining machine hosting services was US$7.7 million, US$15.7 million, US$7.2 million and US$6.1 million, respectively. 26. Moreover, regarding product defects, the November Prospectus went on to state: Product defects resulting in a large-scale product recall or product liability claims against us could materially and adversely affect our business, results of operations and reputation We manufacture products in accordance with internationally accepted quality standards and specifications provided by our customers. However, we cannot assure you that all products produced by us are free of defects. Consequently, any product defects identified by our customers or end users might erode our reputation and negatively affect our customer relationships and future business. Product defects may also result in product returns and large-scale product recalls or product liability claims against us for substantial damages. For example, we are currently involved in an ongoing lawsuit against us in relation to our sales of mining machines to an individual customer who alleged that, among other things, our products did not meet advertised performance and product quality specifications. See “Business—Legal Proceedings.” Such claims, irrespective of the outcomes or the merits, would likely be time-consuming and costly to defend and could divert significant resources and management attention. Furthermore, even if we are able to defend any such claim successfully, we cannot assure you that our customers will not lose confidence in our products or that our future relationships with our customers will not be damaged. As a result, our business, results of operations, reputation and brand image could be materially and adversely affected by any product defects. 27. Regarding Ebang’s cryptocurrency exchange, the November Prospectus stated: We may not successfully develop, market or launch any cryptocurrency exchanges or online brokerages We have established wholly-owned subsidiaries in Singapore, Canada and Australia in preparation for establishing cryptocurrency exchanges since August 2020. . . . Additionally, as we have limited experience in operating the proposed business, we will need to obtain additional management, regulatory compliance technical expertise and devote substantial time and effort to these initiatives, which may not be as profitable as we expected or at all. We also need to obtain additional capital resources to pursue development of cryptocurrency exchanges or online brokerages, and we may not be successful in raising that capital. In addition, we may face relevant restrictions from existing and future regulations in connection with our expansion into this new line of business. While we have been closely monitoring the development of the relevant regulations and have been in communication with regulatory authorities, this new business initiative may not be viable due to regulatory concerns. Our plan to develop, market or launch any cryptocurrency exchanges or online brokerages may suffer significant delays in our efforts and may ultimately not be successful. It is possible that the launch of our cryptocurrency exchanges and/or online brokerages may never occur, and even if the proposed business is successfully developed, it is possible that it will not be accessed or utilized by a sufficient number of users or will otherwise not achieve viable business scale or market acceptance.. [Second and third emphases added.] 28. On December 31, 2020, Ebang announced that it would launch a cryptocurrency exchange, stating in a press release: Ebang International Holdings Inc. (Nasdaq: EBON, the “Company,” “we” or “our”), a blockchain technology company in the global market, today announced that the Company expects to commence public testing of its cryptocurrency exchange and officially launch the exchange in the first quarter of 2021. Currently, the Company has completed the internal testing of its cryptocurrency exchange. Mr. Dong Hu, Chairman and CEO of the Company, commented, “The completion of the internal testing of our cryptocurrency exchange is another step forward in expanding our blockchain financial services business. Meanwhile, we will also explore other business opportunities in the blockchain and cryptocurrency industry such as establishing mining farms and cryptocurrency mining to optimize the structure of our offerings in the blockchain industry value chain.” 29. On February 5, 2021, Ebang filed its registration statement on Form F-1 for an offering of Class A ordinary shares and warrants to purchase Class A ordinary shares. On February 11, 2021, Ebang filed a related prospectus on Form 424b4 (together with the February 5, 2021 registration statement, the “February Prospectus”). Regarding the use of capital, the February Prospectus stated: The primary purposes of this offering are to obtain additional capital to further expand our operations. We plan to use the net proceeds of this offering as follows: • approximately 55%, or US$41.2 million, for research, development, production and sales of ASICs and equipment related to cryptocurrencies; • approximately 25%, or US$18.7 million, for expansion of our cryptocurrency mining business as well as establishment and operation of cryptocurrency mining farms; and • the remainder of the net proceeds for general corporate purposes, which may include working capital needs and other corporate uses. 30. As to Ebang’s operations, the February Prospectus further stated: In recent years, sales of Bitcoin mining machines have increased as a result of the increasing adoption of blockchain technology and interest in cryptocurrencies, particularly when cryptocurrency prices increased. Global sales of Bitcoin computing hardware, the majority of which comprise sales of Bitcoin mining machines, have surged at a compound annual growth rate, or CAGR, of 61.3% from approximately US$0.2 billion in 2015 to approximately US$1.4 billion in 2019 and are expected to further increase at a CAGR of 24.8% to approximately US$4.3 billion in 2024, according to the F&S report. * * * Our blockchain products business primarily comprises sales of Bitcoin mining machines and mining machine hosting services. In 2018, 2019 and the six months ended June 30, 2019 and 2020, our revenues from sales of Bitcoin mining machine and related accessories were US$307.1 million, US$89.9 million, US$12.6 million and US$4.5 million respectively, and our revenue from provision of mining machine hosting services was US$7.7 million, US$15.7 million, US$7.2 million and US$6.1 million, respectively. 31. Moreover, regarding product defects, the February Prospectus went on to state: Product defects resulting in a large-scale product recall or product liability claims against us could materially and adversely affect our business, results of operations and reputation We manufacture products in accordance with internationally accepted quality standards and specifications provided by our customers. However, we cannot assure you that all products produced by us are free of defects. Consequently, any product defects identified by our customers or end users might erode our reputation and negatively affect our customer relationships and future business. Product defects may also result in product returns and large-scale product recalls or product liability claims against us for substantial damages. For example, we are currently involved in an ongoing lawsuit against us in relation to our sales of mining machines to an individual customer who alleged that, among other things, our products did not meet advertised performance and product quality specifications. See “Business—Legal Proceedings.” Such claims, irrespective of the outcomes or the merits, would likely be time-consuming and costly to defend and could divert significant resources and management attention. Furthermore, even if we are able to defend any such claim successfully, we cannot assure you that our customers will not lose confidence in our products or that our future relationships with our customers will not be damaged. As a result, our business, results of operations, reputation and brand image could be materially and adversely affected by any product defects. 32. Regarding Ebang’s cryptocurrency exchange, the February Prospectus stated: We may not successfully develop, market or launch any cryptocurrency exchanges or online brokerages We have established wholly-owned subsidiaries in Singapore, Canada and Australia in preparation for establishing cryptocurrency exchanges since August 2020. . . . Additionally, as we have limited experience in operating the proposed business, we will need to obtain additional management, regulatory compliance technical expertise and devote substantial time and effort to these initiatives, which may not be as profitable as we expected or at all. We also need to obtain additional capital resources to pursue development of cryptocurrency exchanges or online brokerages, and we may not be successful in raising that capital. In addition, we may face relevant restrictions from existing and future regulations in connection with our expansion into this new line of business. While we have been closely monitoring the development of the relevant regulations and have been in communication with regulatory authorities, this new business initiative may not be viable due to regulatory concerns. Our plan to develop, market or launch any cryptocurrency exchanges or online brokerages may suffer significant delays in our efforts and may ultimately not be successful. It is possible that the launch of our cryptocurrency exchanges and/or online brokerages may never occur, and even if the proposed business is successfully developed, it is possible that it will not be accessed or utilized by a sufficient number of users or will otherwise not achieve viable business scale or market acceptance.. [Second and third emphases added.] 33. On February 17, 2021, Ebang announced that it would launch a Bitcoin mining business. In a press release, the Company stated, in relevant part: Ebang International Holdings Inc. (Nasdaq: EBON, the “Company,” “we” or “our”), a blockchain technology company in the global market, today held a board meeting and passed a resolution (the “Resolution”) to launch Bitcoin mining business. According to the Resolution, the Company plans to operate its Bitcoin mining business by adopting a combination of deploying self-manufactured mining machines and mining machines purchased from other manufacturers as well as leasing computing powers from other mining farms. At the same time, the Company also expects to invest in data center constructions to provide support for Bitcoin mining activities. Mr. Dong Hu, Chairman and CEO of the Company, commented, “With the development of Bitcoin mining business, the Company will not only just continue to position itself as a Bitcoin mining machine producer. This move will increase our revenue in cryptocurrency business and optimize our product offering structure. We believe it will help the Company’s transformation from a hardware manufacturer to a blockchain company with comprehensive involvements in its industry chain.” 34. On March 2, 2021, Ebang filed its registration statement on Form F-1 for an offering of warrants to purchase Class A ordinary shares. On March 12, 2021, Ebang filed a related prospectus on Form 424b4 (together with the March 2, 2021 registration statement, the “March Prospectus”). Regarding the use of capital, the March Prospectus stated: We will not receive any of the proceeds from the sale of the Warrant Shares by the Selling Shareholders pursuant to this prospectus. We may receive up to approximately US$150 million in aggregate gross proceeds from cash exercises of the Warrants, based on the per share exercise price of the Warrants. Any proceeds we receive from the exercise of the Warrants will be used to for working capital and general corporate purposes. 35. As to Ebang’s operations, the March Prospectus further stated: In recent years, sales of Bitcoin mining machines have increased as a result of the increasing adoption of blockchain technology and interest in cryptocurrencies, particularly when cryptocurrency prices increased. Global sales of Bitcoin computing hardware, the majority of which comprise sales of Bitcoin mining machines, have surged at a compound annual growth rate, or CAGR, of 61.3% from approximately US$0.2 billion in 2015 to approximately US$1.4 billion in 2019 and are expected to further increase at a CAGR of 24.8% to approximately US$4.3 billion in 2024, according to the F&S report. * * * Our blockchain products business primarily comprises sales of Bitcoin mining machines and mining machine hosting services. In 2018, 2019 and the six months ended June 30, 2019 and 2020, our revenues from sales of Bitcoin mining machine and related accessories were US$307.1 million, US$89.9 million, US$12.6 million and US$4.5 million respectively, and our revenue from provision of mining machine hosting services was US$7.7 million, US$15.7 million, US$7.2 million and US$6.1 million, respectively. 36. Moreover, regarding product defects, the March Prospectus went on to state: Product defects resulting in a large-scale product recall or product liability claims against us could materially and adversely affect our business, results of operations and reputation We manufacture products in accordance with internationally accepted quality standards and specifications provided by our customers. However, we cannot assure you that all products produced by us are free of defects. Consequently, any product defects identified by our customers or end users might erode our reputation and negatively affect our customer relationships and future business. Product defects may also result in product returns and large-scale product recalls or product liability claims against us for substantial damages. For example, we are currently involved in an ongoing lawsuit against us in relation to our sales of mining machines to an individual customer who alleged that, among other things, our products did not meet advertised performance and product quality specifications. See “Business—Legal Proceedings.” Such claims, irrespective of the outcomes or the merits, would likely be time-consuming and costly to defend and could divert significant resources and management attention. Furthermore, even if we are able to defend any such claim successfully, we cannot assure you that our customers will not lose confidence in our products or that our future relationships with our customers will not be damaged. As a result, our business, results of operations, reputation and brand image could be materially and adversely affected by any product defects. 37. Regarding Ebang’s cryptocurrency exchange, the March Prospectus stated: We may not successfully develop, market or launch any cryptocurrency exchanges or online brokerages We have established wholly-owned subsidiaries in Singapore, Canada and Australia in preparation for establishing cryptocurrency exchanges since August 2020. . . . Additionally, as we have limited experience in operating the proposed business, we will need to obtain additional management, regulatory compliance technical expertise and devote substantial time and effort to these initiatives, which may not be as profitable as we expected or at all. We also need to obtain additional capital resources to pursue development of cryptocurrency exchanges or online brokerages, and we may not be successful in raising that capital. In addition, we may face relevant restrictions from existing and future regulations in connection with our expansion into this new line of business. While we have been closely monitoring the development of the relevant regulations and have been in communication with regulatory authorities, this new business initiative may not be viable due to regulatory concerns. Our plan to develop, market or launch any cryptocurrency exchanges or online brokerages may suffer significant delays in our efforts and may ultimately not be successful. It is possible that the launch of our cryptocurrency exchanges and/or online brokerages may never occur, and even if the proposed business is successfully developed, it is possible that it will not be accessed or utilized by a sufficient number of users or will otherwise not achieve viable business scale or market acceptance.. [Second and third emphases added.] 38. On March 11, 2021, Ebang issued a press release announcing beta testing for its cryptocurrency exchange. In a press release, the Company stated, in relevant part: Ebang International Holdings Inc. (Nasdaq: EBON, the “Company,” “we” or “our”), a blockchain technology company in the global market, today announced that the Company will commence beta testing of its cryptocurrency exchange by invitation only on March 15, 2021 and plans to officially launch the exchange by the end of March 2021. Mr. Dong Hu, Chairman and CEO of the Company, commented, “Our upcoming cryptocurrency exchange will accelerate the Company’s development in the financial technology industry. In addition to establishing a digital asset financial service platform, the Company will also explore other business opportunities in establishing mining farms and cryptocurrency mining to optimize the structure of the global cryptocurrency platform as well as our offerings in the blockchain industry value chain.” 39. On March 26, 2021, Ebang filed its registration statement on Form F-1 for an offering of Class A ordinary shares and warrants to purchase Class A ordinary shares. On April 2, 2021, Ebang filed a related prospectus on Form 424b4 (together with the March 26, 2021 registration statement, the “April Prospectus”). Regarding the use of capital, the April Prospectus The primary purposes of this offering are to obtain additional capital to further expand our operations. We plan to use the net proceeds of this offering as follows: • approximately 55%, or US$64.4 million, for expansion of our cryptocurrency mining business as well as establishment and operation of cryptocurrency mining farms; • approximately 25%, or US$29.3 million, for establishment and operation of cryptocurrency exchange platforms; and • the remainder of the net proceeds for general corporate purposes, which may include working capital needs and other corporate uses. 40. As to Ebang’s operations, the April Prospectus further stated: In recent years, sales of Bitcoin mining machines have increased as a result of the increasing adoption of blockchain technology and interest in cryptocurrencies, particularly when cryptocurrency prices increased. Global sales of Bitcoin computing hardware, the majority of which comprise sales of Bitcoin mining machines, have surged at a compound annual growth rate, or CAGR, of 61.3% from approximately US$0.2 billion in 2015 to approximately US$1.4 billion in 2019 and are expected to further increase at a CAGR of 24.8% to approximately US$4.3 billion in 2024, according to the F&S report. * * * Our blockchain products business primarily comprises sales of Bitcoin mining machines and mining machine hosting services. In 2018, 2019 and the six months ended June 30, 2019 and 2020, our revenues from sales of Bitcoin mining machine and related accessories were US$307.1 million, US$89.9 million, US$12.6 million and US$4.5 million respectively, and our revenue from provision of mining machine hosting services was US$7.7 million, US$15.7 million, US$7.2 million and US$6.1 million, respectively. 41. Moreover, regarding product defects, the April Prospectus went on to state: Product defects resulting in a large-scale product recall or product liability claims against us could materially and adversely affect our business, results of operations and reputation We manufacture products in accordance with internationally accepted quality standards and specifications provided by our customers. However, we cannot assure you that all products produced by us are free of defects. Consequently, any product defects identified by our customers or end users might erode our reputation and negatively affect our customer relationships and future business. Product defects may also result in product returns and large-scale product recalls or product liability claims against us for substantial damages. For example, we are currently involved in an ongoing lawsuit against us in relation to our sales of mining machines to an individual customer who alleged that, among other things, our products did not meet advertised performance and product quality specifications. See “Business—Legal Proceedings.” Such claims, irrespective of the outcomes or the merits, would likely be time-consuming and costly to defend and could divert significant resources and management attention. Furthermore, even if we are able to defend any such claim successfully, we cannot assure you that our customers will not lose confidence in our products or that our future relationships with our customers will not be damaged. As a result, our business, results of operations, reputation and brand image could be materially and adversely affected by any product defects. 42. Regarding Ebang’s cryptocurrency exchange, the April Prospectus stated: We may not successfully develop, market or launch any cryptocurrency exchanges or online brokerages We have established wholly-owned subsidiaries in Singapore, Canada and Australia in preparation for establishing cryptocurrency exchanges since August 2020. . . . Additionally, as we have limited experience in operating the proposed business, we will need to obtain additional management, regulatory compliance technical expertise and devote substantial time and effort to these initiatives, which may not be as profitable as we expected or at all. We also need to obtain additional capital resources to pursue development of cryptocurrency exchanges or online brokerages, and we may not be successful in raising that capital. In addition, we may face relevant restrictions from existing and future regulations in connection with our expansion into this new line of business. While we have been closely monitoring the development of the relevant regulations and have been in communication with regulatory authorities, this new business initiative may not be viable due to regulatory concerns. Our plan to develop, market or launch any cryptocurrency exchanges or online brokerages may suffer significant delays in our efforts and may ultimately not be successful. It is possible that the launch of our cryptocurrency exchanges and/or online brokerages may never occur, and even if the proposed business is successfully developed, it is possible that it will not be accessed or utilized by a sufficient number of users or will otherwise not achieve viable business scale or market acceptance. [Second and third emphases added.] 43. On April 5, 2021, Ebang announced the launch of its cryptocurrency exchange. The Company’s press release stated, in relevant part: Ebang International Holdings Inc. (Nasdaq: EBON, the “Company,” “we” or “our”), a blockchain technology company in the global market, today announced the official launch of its cryptocurrency exchange. Qualified investors will be able to register and trade by visiting the official website at www.ebonex.io. Mr. Dong Hu, Chairman and CEO of the Company, commented, “The official launch of our cryptocurrency exchange is the result of our continuing investment in research and development. In recent years we have made a considerable investment in R&D talent recruiting, as well as product innovation and iteration. The launch of our cryptocurrency exchange business will not only expand the revenue sources from our cryptocurrency business, but also optimize the development of our blockchain industry chain.” 44. The above statements identified in ¶¶ 19-43 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 proceeds from Ebang’s public offerings had been directed to an low yield, long term bonds to an underwriter and to related parties rather than used to develop the Company’s operations; (2) that Ebang’s sales were declining and the Company had inflated reported sales, including through the sale of defective units; (3) that Ebang’s attempts to go public in Hong Kong had failed due to allegations of embezzling investor funds and inflated sales figures; (4) that Ebang’s purported crytocurrency exchange was merely the purchase of an out-of-the-box crypto exchange; 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 45. On April 6, 2021, before the market opened, Hindenburg Research published a report alleging, among other things, that Ebang is directing proceeds from its IPO last year into a “series of opaque deals with insiders and questionable counterparties.” According to the report, Ebang raised $21 million in November 2020, claiming the proceeds would go “primarily for development,” and that instead the funds were directed to repay related-party loans to a relative of the Ebang’s Chief Executive Officer, Dong Hu. The report also noted that Ebang’s earlier efforts to go public on the Hong Kong Stock Exchange had failed due to widespread media coverage of a sales inflation scheme with Yindou, a Chinese peer-to-peer online lending platform that defrauded 20,000 retail investors in 2018, with $655 million “vanish[ing] into thin air.” The report summarized its findings as follows: • Ebang is a China-based crypto company that has raised ~$374 million from U.S. investors in 4 offerings since going public in June 2020. • While the company represented that it would use the majority of its numerous capital proceeds to develop its business operations, our research discovered it instead directed much of the cash out of the company through a series of opaque deals with insiders and questionable counterparties. • For example, the company directed $103 million, representing ~$11 million more than its entire IPO proceeds, into bond purchases linked to its U.S. underwriter, AMTD, which has a track record including (a) fraud and self- dealing allegations levied against it by one of the largest private equity firms in China and (b) listings that have subsequently imploded. • AMTD entered into similar bond transactions with another company it recently took public in January 2020 called Molecular Data. That company is down 70% since then, has seen 6 board members and its co-founder resign, and had its auditor decline to stand for re-election. • In November 2020, Ebang tapped the market for its first secondary offering, announcing a $21 million raise. It claimed proceeds would go “primarily for development”. Around the same time, the company directed $21 million to repay related-party loans to Ebang Chairman/CEO Dong Hu’s relative. • Before going public on NASDAQ in June of 2020, Ebang twice applied for a listing on the Hong Kong Stock Exchange, attempting to raise as much as $1 billion. Multiple media outlets reported that Ebang’s Hong Kong IPO plans were suspended following involvement in an alleged sales inflation scheme with a company called Yindou. • Yindou was a massive Chinese peer-to-peer online lending scheme that defaulted on its 20,000 retail investors in 2018, with $655 million “vanish(ing) into thin air”. Its ultimate beneficial owner “fled the country”, and Chinese prosecutors have been pursuing a criminal case against other suspects associated with Yindou. • Ebang claims to be a “leading bitcoin mining machine producer”, yet our research indicates this extraordinary claim is backed by no evidence. Ebang released its final miner in May 2019 and has since seen its sales dwindle to near-zero, delivering only 6,000 total miners in 1H20. • With its mining machine business failing, Ebang pivoted the story to a cryptocurrency exchange launch called “Ebonex”. Announcements about the exchange added as much as $922 million market capitalization to Ebang. • We found that Ebang’s exchange appears to be purchased from a white- label crypto exchange provider called Blue Helix that offers out-of-the-box exchanges for as little as no money up-front. • Ebonex reports what appears to be fictitious volumes. Despite just launching and having virtually no online presence, Ebonex volume data implies it is one of the largest spot exchanges in the world. Its trading metrics are absent from crypto exchange trackers such as FTX and CoinMarketCap. 46. The report detailed that Ebang’s plans to go public in Hong Kong prior to June 2020 had been suspended due to allegations of sales inflation and involvement with a Ponzi scheme. Specifically, Hindenburg stated: Multiple media outlets reported that Ebang’s Hong Kong IPO plans were suspended following involvement in an alleged sales inflation scheme involving a company called Yindou. [] Yindou 银豆网[] was a Chinese peer-to-peer online lending platform. According to media reports, Yindou’s platform offered short-term investments, usually with a one-year term, promising a 13% return. Below is a screenshot of its website, from February 24th, 2018 advertising 13% returns for 376 days. [image omitted] In July 2018, Yindou reportedly defaulted on its 20,000 retail investors, failing to pay back amounts totaling as much as RMB 4.4 billion (USD $676 million). Its ultimate beneficial owner then “fled the country”. Chinese prosecutors have been pursuing the case against other suspects associated with Yindou. [image omitted] Prior to its implosion, Yindou’s principals allegedly engaged in wash sales transactions with Ebang ahead of its IPO in order to create the false appearance of sales. Local media reported that the spouse of Yindou’s CFO, Cui Hongwei 崔宏伟, transferred ~RMB 520 million (USD $79.9 million) to Ebang between December 2017 and February 2018. Ebang then transferred RMB ~380 million (USD $58.4 million) back to Cui Hongwei several months later, between March and April 2018. It is unclear when the transactions began, but Yindou’s CFO’s wife was listed on Ebang’s IPO prospectus published in December 2018 as a customer who generated 12.1% of Ebang’s 2017 sales revenue. [image omitted] Yindou Had Directed $79.9 Million To Ebang, Via Accounts Linked To Yindou’s CFO’s Wife, According To Chinese Media The Funds Were Alleged To Have Been Used To Inflate Ebang’s Sales Ahead of Its IPO Yindou investors, looking to recover their investments, went to Ebang headquarters in Hangzhou to demand that Ebang return the money owed to them. [image omitted] Ebang subsequently stated that Cui Hongwei was a customer and claimed (a) that the RMB 520 million (USD ~$79.9 million) was payment for its products (mining rigs), (b) that it had returned RMB 380 million (USD ~$58.4 million) of the initial payment, and (c) that it would not return the remaining part (RMB 140 million or USD ~$21.5 million) because the products had been delivered. Yindou Investors Asked Hong Kong Regulators To Refuse Ebang’s Listing Application Due To The Alleged Embezzlement Yindou’s investors were angered to see Ebang’s subsequent attempt at going public in Hong Kong. Below is an October 12, 2018 screenshot from a letter sent to the Listing Department of the Hong Kong exchange asking authorities not to accept Ebang’s listing application. The letter is titled “Application to request the Hong Kong Stock Exchange deny Ebang’s IPO application”. It states that there is evidence that capital used in Ebang’s transactions or investment activities were provided from Yindou, a beneficiary of “illegal fundraising”. [image omitted] Around 3 months later, Ebang’s Hong Kong IPO listing lapsed for the first time. Ebang reapplied in December 2018, but its application suffered a similar fate to its first, lapsing again. 47. The report further alleged that Ebang had completed four offerings of its shares to U.S. investors since June 2020 but directed the funds to an underwriter and related parties rather than using the capital for the Company’s operations. Specifically, it stated: Less than a week after Ebang’s June 2020 IPO, it loaned $40 million directly to the controlling shareholder of AMTD, LR. Capital Property Investment. Days later, it began directing what would amount to $63.6 million into two bond purchases from a Cayman-based entity linked to AMTD, called International Merchants Holdings. [Pg. F-49][3] The original $40 million bond was redeemed as of an undisclosed date, while the other $63.6 million seems to remain outstanding. Based on the company’s last available balance sheet, this sum would represent its single largest balance sheet asset. [Pg. 74] Note that the bonds have maturities ranging from 2023-2025, which could tie the capital up for years at interest rates ranging from only 4.0%-6.8%. In other words, rather than using the capital to expand its business, as originally claimed, Ebang has apparently tied it up in low yielding, long-term bonds backed by an opaque Cayman-based issuer. * * * With Its IPO Cash Gone, Ebang Raised $21 Million Through A Secondary Offering To Be Used “Primarily for Development” Around the Same Time, $21 Million Went to Pay Back Related Party Loans to the Chairman/CEO’s Relative With essentially all cash proceeds from its IPO directed back to its underwriter, Ebang was almost immediately short on cash. In November 2020 it tapped the market for its first secondary offering, announcing a raise of $21 million.[] In the press release, the company provided the following explanation for how it would use the proceeds: “The Company intends to use the net proceeds from the offering primarily for development and application of blockchain technology into financial services, sourcing core intellectual properties relating to its businesses, corporate branding and marketing activities, and general corporate purposes, which may include working capital needs and other corporate uses.” Despite these representations, we see from a prospectus filed just weeks earlier that the company used $21 million to repay related-party loans to its Chairman/CEO Dong Hu’s relative.[] 48. The report also disputed Ebang’s claim that it is the leading bitcoin mining producer globally. Specifically, Hindenburg stated: Ebang Is Not The World’s Leading Bitcoin Mining Machine Producer. In Fact, It Has Sold A Pittance Compared To Other Large Chinese Producers. A far larger competitor called Bitmain controls around 65% of the bitcoin miner market in terms of hash rate in 2019. Bitmain is currently private and doesn’t disclose its precise numbers. However, Ebang’s prospectus discloses a breakdown of its annual sales and makes clear that it isn’t even #2. Terahashes per second (TH/s) is a key measure of a mining machine’s processing power. [Pg. 86] For 2019, the company sold total computer power of 5.97 million TH/s in 2019, at an average price of $15 per TH/s. From these disclosures it is evident that Ebang is not the leading mining machine producer in terms of hash rate sales. Chinese competitor MicroBT sold 6x what Ebang sold in 2019, 600 thousand units, at an average of 60 Th/s per unit at almost double the price per TH/s. In An Industry Scorching Hot With Growth, Ebang’s Miner Sales Have Been In Decline Since 2018 And Are Now Close To Zero Ebang notes in its prospectus that from 2015, to 2019 the mining machine market has grown at a 61.3% CAGR. “Sales of Bitcoin computing hardware, the majority of which comprise sales of Bitcoin mining machines, have surged at a CAGR of 61.3% from approximately US$0.2 billion in 2015 to approximately US$1.4 billion in 2019 and are expected to further increase at a CAGR of 24.8% to approximately US$4.3 billion in 2024, according to the F&S report.” [Pg. 1] Yet Ebang doesn’t seem to be participating in this fast-paced growth. Ebang had its best year in 2018, when it sold 415,930 units at an average selling price of $737. Ebang’s first half 2020 numbers imply it is on track to sell 11,588 units, a ~97% decline. Ebang’s average selling price per unit during the first half of 2020 was $775. 49. Furthermore, Hindenburg alleged that some of Ebang’s reported sales appeared to be “defective units or just fabricated altogether.” Specifically, the Company stated: Example 1: In 2018, a customer called Beijing Mobcolor Alleged in a Lawsuit that an Ebang Director Asked Them to Fake a $15 Million Purchase Through a ‘Round-Trip’ Transaction Ebang was alleged to have engaged in yet another scheme to book fake sales in the run up to its Hong Kong IPO, according to a Chinese court judgment.[8] Customer Beijing Mobcolor asserted that a director of Ebang, Zhang Hao (章昊), called an executive of Beijing Mobcolor, Gu Hongliang (谷红亮), in November 2018 and told Gu Hongliang that Ebang was listing in Hong Kong and needed USD $1.5 million to “balance its books.” The two individuals had been classmates, according to local media reports. Beijing Mobcolor asserted in its lawsuit that Ebang would arrange the payment of USD $1.5 million through a third party, which it would then use it to pay Ebang. The Ebang director asked Beijing Mobcolor to sign a “Letter to Apply for Delayed Payment (延期付款申请函)” for around USD $15 million, which would represent a remaining payment for a purchase order of 100,000 mining rigs.[] Example 2: In the lead up to its NASDAQ IPO, Ebang claimed in a press release that it had a $100 million order from a company called Madison Holdings. Madison Holdings only had ~$5.9 million in available cash around the time and mainly sold alcohol products. In October 2019, Ebang publicized a $100 million dollar order from Madison Holdings (8057 HK), a company that “retails and wholesales alcohol products”, mainly red wine, but recently got into blockchain last year when it purchased part of exchange Diginex Limited. [image omitted] At the time of the announcement, Madison Holdings was a penny stock trading on the Hong Kong Exchange at ~24 cents. It had unsegregated bank balances of US ~$5.9 million on September 30th 2019, according to its financials. [Pg. 6]. Madison’s Hong Kong filings stressed that the deal was “non-legally binding”. Madison ultimately sold its crypto currency business 3 months later in January 2020. [Pg. 13] Ebang Had a Reputation For Delivering Defective Products Example: Chinese Media Reported That An Order of 500 E10 Miners Needed 873 Repairs In Three Months While not well covered in the US media, extensive product issues at Ebang have been covered in Chinese media. A slew of lawsuits against Ebang’s Chinese subsidiary suggest that the machines Ebang was able to deliver resulted in disputes. Chinese corporate information site QCC references at least 10 different judgement documents As one example, according to a 2019 lawsuit by miner Ma Xiaoyun, 500 E10 Ebang miners he purchased were so defective that they started malfunctioning immediately, and ultimately required 873 repairs in just three months. That lawsuit presented a live recording of Ebang Vice President Zhang Hao admitting the E10 miners had a high failure and repair rate. * * * We interviewed former employees that corroborated the quality issues. A former employee in Zhejiang who was with the company for 3 years told our local investigator that the brand had declined significantly: “Now Ebang equipment is basically famous for being awful. The reputation is completely gone. Sales of miners are really bad.” 50. Finally, the report alleged that the Company’s recent launch of a cryptocurrency exchange was merely the “purchase[ of] a white label out-of-the box crypto exchange [with] minor modifications.” Specifically, Hindenburg stated, in relevant part: Our review of Ebang’s “Ebonex” crypto exchange immediately turned up irregularities. In particular, Ebonex’s source code repeatedly references “Bhex”, an exchange closely affiliated with Blue Helix. Blue Helix is an Asia based Crypto Exchange and provider of white label crypto exchange software. The company counts a large exchange called Houbi as an investor and reports having over 270 clients. Blue Helix has advertised white-label exchange solutions for as little as zero upfront cost. * * * In fact, when reviewing the Ebonex exchange, we see the logos on the top right of the page are the exact same as Blue Helix’s. Ebonex’s source code even reveals that the logos are literally labeled Bhex, which is the Blue Helix-affiliated exchange. We found a total of 40 references to Bhex on just one spot trading page shown below. * * * Ebang’s Ebonex Exchange Reports Incredibly Suspicious Volume Metrics, Suggesting That the Day-Old, Relatively-Unknown Platform is Already on Par With the Largest Crypto Exchanges in the World Already we are seeing red flags with Ebonex’s platform, including massive 24-hour trading volume Ebonex displayed on the day of its launch. For instance, Ebonex shows 24h volume of the ETH/BTC pair at $243 million (115319 ETH at $2,114 each). Around the same time, Coin Marketcap showed a total ETH/BTC volume of only $60 million at Huobi Global, the second largest crypto exchange globally. Coinbase Pro only transacted around $28 million for the same pair. We don’t think there is any way that Ebonex is trading this volume itself given its limited web and social media footprint. Ebonex currently only has around 1.8 thousand Twitter followers, 1.3 thousand Facebook followers and 14 Telegram members. Google Trends displays near-zero search interest. Compared to other exchanges, Ebonex’s volume does not reconcile.[] Ebonex is also absent from all major crypto exchange trackers we reviewed, including FTX and CoinMarketCap. This is a major red flag. 51. On this news, the Company’s share price fell $0.82, or approximately 13%, to close at $5.53 per share on April 6, 2021, on unusually heavy trading volume. 52. On April 6, 2021, after the market closed, Ebang issued a statement stating that, though it believed the report “contain[ed] many errors, unsupported speculations and inaccurate interpretations of events,” the “Board, together with its Audit Committee, intends to further review and examine the allegations and misinformation therein and will take whatever necessary and appropriate actions may be required to protect the interest of its shareholders.” 53. On this news, the Company’s share price fell $0.12, or 2.17%, to close at $5.41 per share on April 7, 2021. The stock price continued to decline over the next trading session by $0.38, or 7%, to close at $5.03 per share on April 8, 2021, on unusually heavy trading volume. CLASS ACTION ALLEGATIONS 54. 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 Ebang securities between June 26, 2020 and April 5, 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. 55. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Ebang’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 Ebang 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 Ebang 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. 56. 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. 57. 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. 58. 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 Ebang; and (c) to what extent the members of the Class have sustained damages and the proper measure of damages. 59. 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 60. The market for Ebang’s shares 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, Ebang’s shares traded at artificially inflated prices during the Class Period. Plaintiff and other members of the Class purchased or otherwise acquired Ebang’s shares relying upon the integrity of the market price of the Company’s shares and market information relating to Ebang, and have been damaged thereby. 61. During the Class Period, Defendants materially misled the investing public, thereby inflating the price of Ebang’s shares, 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 Ebang’s business, operations, and prospects as alleged herein. 62. 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 Ebang’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 shares 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 shares at artificially inflated prices, thus causing the damages complained of herein when the truth was revealed. LOSS CAUSATION 63. Defendants’ wrongful conduct, as alleged herein, directly and proximately caused the economic loss suffered by Plaintiff and the Class. 64. During the Class Period, Plaintiff and the Class purchased Ebang’s shares at artificially inflated prices and were damaged thereby. The price of the Company’s shares 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 65. 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 Ebang, their control over, and/or receipt and/or modification of Ebang’s allegedly materially misleading misstatements and/or their associations with the Company which made them privy to confidential proprietary information concerning Ebang, participated in the fraudulent scheme alleged herein. APPLICABILITY OF PRESUMPTION OF RELIANCE (FRAUD-ON-THE-MARKET DOCTRINE) 66. The market for Ebang’s shares 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, Ebang’s shares traded at artificially inflated prices during the Class Period. On March 17, 2021, the Company’s share price closed at a Class Period high of $11.78 per share. Plaintiff and other members of the Class purchased or otherwise acquired the Company’s shares relying upon the integrity of the market price of Ebang’s shares and market information relating to Ebang, and have been damaged thereby. 67. During the Class Period, the artificial inflation of Ebang’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 Ebang’s business, prospects, and operations. These material misstatements and/or omissions created an unrealistically positive assessment of Ebang and its business, operations, and prospects, thus causing the price of the Company’s shares 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 shares at such artificially inflated prices, and each of them has been damaged as a result. 68. At all relevant times, the market for Ebang’s shares was an efficient market for the following reasons, among others: (a) Ebang 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, Ebang filed periodic public reports with the SEC and/or the NASDAQ; (c) Ebang 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) Ebang was followed by shares 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. 69. As a result of the foregoing, the market for Ebang’s shares promptly digested current information regarding Ebang from all publicly available sources and reflected such information in Ebang’s share price. Under these circumstances, all purchasers of Ebang’s shares during the Class Period suffered similar injury through their purchase of Ebang’s shares at artificially inflated prices and a presumption of reliance applies. 70. 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 71. 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 Ebang 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 72. Plaintiff repeats and re-alleges each and every allegation contained above as if fully set forth herein. 73. 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 Ebang’s shares 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. 74. 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 shares in an effort to maintain artificially high market prices for Ebang’s shares 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. 75. 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 Ebang’s financial well-being and prospects, as specified herein. 76. 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 Ebang’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 Ebang 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 shares during the Class Period. 77. 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. 78. 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 Ebang’s financial well-being and prospects from the investing public and supporting the artificially inflated price of its shares. 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. 79. 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 Ebang’s shares was artificially inflated during the Class Period. In ignorance of the fact that market prices of the Company’s shares 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 shares trade, 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 Ebang’s shares during the Class Period at artificially high prices and were damaged thereby. 80. 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 Ebang was experiencing, which were not disclosed by Defendants, Plaintiff and other members of the Class would not have purchased or otherwise acquired their Ebang shares, or, if they had acquired such shares during the Class Period, they would not have done so at the artificially inflated prices which they paid. 81. By virtue of the foregoing, Defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. 82. 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 shares during the Class Period. SECOND CLAIM Violation of Section 20(a) of The Exchange Act Against the Individual Defendants 83. Plaintiff repeats and re-alleges each and every allegation contained above as if fully set forth herein. 84. Individual Defendants acted as controlling persons of Ebang 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. 85. 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 86. As set forth above, Ebang 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 shares 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: April 8, 2021 By: /s/ Gregory B. Linkh GLANCY PRONGAY & MURRAY LLP Gregory B. Linkh (GL-0477) 230 Park Ave., Suite 358 New York, NY 10169 Telephone: (212) 682-5340 Facsimile: (212) 884-0988 Email: [email protected] 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 Tommie Zaker EBANG INTERNATIONAL HOLDINGS SECURITIES LITIGATION I, Tommie Zaker, 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 Ebang International Holdings 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 Ebang International Holdings 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. 4/8/2021 ________________ _________________________________________ Date Tommie Zaker Tommie Zaker's Transactions in Ebang International Holdings Inc. (EBON) Date Transaction Type Quantity Unit Price 2/18/2021 Bought 50 $12.9000 2/18/2021 Bought 800 $12.0999 2/18/2021 Bought 40 $12.2100

securities

5sn_DYcBD5gMZwczAFRm

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA MARGARETTE DUVERGER, individually, and on behalf of all others similarly situated, NO. Plaintiff, CLASS ACTION COMPLAINT v. ANDRES VIEIRA, a Florida individual, JURY DEMAND Defendant. This case addresses a disturbing trend whereby realtors cold call consumers without consent violating the Telephone Consumer Protection Act. Plaintiff Margarette Duverger (“Duverger”) brings this Class Action Complaint and Demand for Jury Trial against Defendant Andres Vieira (“Vieira”) to stop the Defendant from violating the Telephone Consumer Protection Act by placing solicitation calls without consent to consumers using a pre-recorded voice message. Plaintiff Duverger, for this 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. PARTIES 1. Plaintiff Margarette Duverger is a resident of Miramar, Florida. 2. Defendant Vieira is a realtor located in Miami, Florida. Defendant places calls into this District. JURISDICTION AND VENUE 3. This Court has personal jurisdiction over Defendant and venue is proper in this District under 28 U.S.C. § 1391(b) because Defendant’s wrongful conduct of calling the Plaintiff was directed to and received by Plaintiff in this District. INTRODUCTION 4. As the Supreme Court explained at the end of its term this year, “Americans passionately disagree about many things. But they are largely united in their disdain for robocalls. The Federal Government receives a staggering number of complaints about robocalls—3.7 million complaints in 2019 alone. The States likewise field a constant barrage of complaints. For nearly 30 years, the people’s representatives in Congress have been fighting back.” Barr v. Am. Ass'n of Political Consultants, No. 19-631, 2020 U.S. LEXIS 3544, at *5 (U.S. July 6, 2020). 5. When Congress enacted the TCPA in 1991, it found that telemarketers called more than 18 million Americans every day. 105 Stat. 2394 at § 2(3). 6. By 2003, due to more powerful autodialing technology, telemarketers were calling 104 million Americans every day. In re Rules and Regulations Implementing the TCPA of 1991, 18 FCC Rcd. 14014, ¶¶ 2, 8 (2003). 7. The problems Congress identified when it enacted the TCPA have only grown exponentially in recent years. 8. According to online robocall tracking service “YouMail,” 3.3 billion robocalls were placed in June 2020 alone, at a rate of 111.2 million per day. www.robocallindex.com (last visited July 28, 2020). 9. “Robocalls and telemarketing calls are currently the number one source of consumer complaints at the FCC.” Tom Wheeler, Cutting off Robocalls (July 22, 2016), statement of FCC chairman.1 10. “The FTC receives more complains about unwanted calls than all other complaints combined.” Staff of the Federal Trade Commission’s Bureau of Consumer Protection, In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Notice of Proposed Rulemaking, CG Docket No. 02-278, at 2 (2016).2 1 https://www.fcc.gov/news-events/blog/2016/07/22/cutting-robocalls 2 https://www.ftc.gov/system/files/documents/advocacy_documents/comment-staff-ftc-bureau- consumer-protection-federal-communications-commission-rules- regulations/160616robocallscomment.pdf COMMON ALLEGATIONS 11. Defendant Andres Vieira is a real estate agent. 12. Defendant places solicitation calls are placed to generate business for Defendant’s real estate agent business. 13. Defendant places solicitation calls to consumers using pre-recorded voice messages. 14. On November 28, 2020 at approximately 2:00 PM, Plaintiff Duverger received an unsolicited call from Defendant to her cell phone using phone number 305-982-7893. 15. Plaintiff did not answer this call, but a pre-recorded voice message was left on Plaintiff’s cell phone voicemail. 16. The pre-recorded message was left by Defendant with regards to whether Plaintiff is interested in engaging Defendant to assist in buying or selling a property. 17. In the pre-recorded message, Defendant asks Plaintiff to call him back to the phone number 786-973-0860. 18. Defendant owns and/or operates the phone number 786-973-0860.3 19. Plaintiff Duverger has never provided her phone number to the Defendant. 20. The unauthorized solicitation telephone call that Plaintiff received from Vieira, as alleged herein, has harmed Plaintiff Duverger in the form of annoyance, nuisance, and invasion of privacy, and disturbed the use and enjoyment of her phone, in addition to the wear and tear on the phone’s hardware (including the phone’s battery) and the consumption of memory on the phone. 21. Seeking redress for these injuries, Plaintiff Duverger, on behalf of herself and a Class of similarly situated individuals, bring suit under the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq., which prohibits unsolicited prerecorded telemarketing calls to cellular telephones. 3 https://www.robertslackflorida.com/leticia-malcolm-team/andres-vieira-licensed-real-estate- agent CLASS ALLEGATIONS 22. Plaintiff Duverger brings this action pursuant to Federal Rules of Civil Procedure 23(b)(2) and 23(b)(3) and seek certification of the following Class: Pre-recorded No Consent Class: All persons in the United States who from four years prior to the filing of this action through class certification (1) Defendant (or an agent acting on behalf of Defendant) called on their cell phone number (2) using a pre-recorded voice message, and (3) for whom the Defendant claims (a) he obtained prior express written consent in the same manner as Defendant claims he supposedly obtained prior express written consent to call Plaintiff, (b) he did not obtain prior express written consent, or (c) he obtained the person’s cell phone number in the same manner he obtained the Plaintiff’s cell phone number. 23. The following individuals are excluded from the Class: (1) any Judge or Magistrate presiding over this action and members of their families; (2) Defendant, their subsidiaries, parents, successors, predecessors, and any entity in which either 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 Duverger anticipates the need to amend the Class definitions following appropriate discovery. 24. Numerosity: On information and belief, there are hundreds, if not thousands of members of the Class such that joinder of all members is impracticable. 25. Commonality and Predominance: There are many questions of law and fact common to the claims of the Plaintiff and 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 necessarily limited to the following: (a) whether Defendant Vieira systematically placed pre-recorded voice message solicitation calls to consumers without first obtaining consent to make the calls; (b) whether Defendant Vieira’s calls to Plaintiff and other consumers were made for telemarketing purposes; (c) whether Defendant’s conduct constitutes a violation of the TCPA; (d) whether members of the Class are entitled to treble damages based on the willfulness of Defendant’s conduct. 26. Adequate Representation: Plaintiff Duverger will fairly and adequately represent and protect the interests of the Class, and has retained counsel competent and experienced in class actions. Plaintiff Duverger has no interests antagonistic to those of the Class, and Defendant has no defenses unique to Plaintiff. Plaintiff Duverger and her counsel are committed to vigorously prosecuting this action on behalf of the members of the Class, and have the financial resources to do so. Neither Plaintiff Duverger nor her counsel have any interest adverse to the Class. 27. Appropriateness: This class action is also appropriate for certification because Defendant has acted or refused to act on grounds generally applicable to the Class and as a whole, thereby requiring the Court’s imposition of uniform relief to ensure compatible standards of conduct toward the members of the Class and making final class-wide injunctive relief appropriate. Defendant’s business practices apply to and affect the members of the Class uniformly, and Plaintiff’s challenge of those practices hinges on Defendant’s conduct with respect to the Class as wholes, not on facts or law applicable only to Plaintiff Duverger. Additionally, the damages suffered by individual members of the Class 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 Class 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. FIRST CLAIM FOR RELIEF Telephone Consumer Protection Act (Violation of 47 U.S.C. § 227) (On Behalf of Plaintiff Duverger and the Pre-recorded No Consent Class) 28. Plaintiff repeats and realleges the prior paragraphs of this Complaint and incorporates them by reference herein. 29. Defendant and/or his agents transmitted unwanted solicitation telephone calls to Plaintiff Duverger and the other members of the Pre-recorded No Consent Class using a pre- recorded voice message. 30. These pre-recorded voice calls were made en masse without the prior express written consent of the Plaintiff Duverger and the other members of the Pre-recorded No Consent 31. Defendant has, therefore, violated 47 U.S.C. § 227(b)(1)(A)(iii). As a result of Defendant’s conduct, Plaintiff Duverger and the other members of the Pre-recorded No Consent Class are each entitled to a minimum of $500 in damages, and up to $1,500 in damages, for each violation. PRAYER FOR RELIEF WHEREFORE, Plaintiff Duverger individually and on behalf of the Class, prays for the following relief: 32. An order certifying this case as a class action on behalf of the Class as defined above; appointing Plaintiff Duverger as the representative of the Class; and appointing her attorneys as Class Counsel; 33. An award of actual and/or statutory damages and costs; 34. An order declaring that Defendant’s actions, as set out above, violate the TCPA; 35. An injunction requiring Defendant to cease all unsolicited calling activity, and to otherwise protect the interests of the Class; and 36. Such further and other relief as the Court deems just and proper. JURY DEMAND Plaintiff Duverger requests a jury trial. Respectfully Submitted, MARGARETTE DUVERGER, individually and on behalf of those similarly situated, DATED this 14th day of January, 2021. By: /s/ Stefan Coleman Stefan Coleman (FL Bar no. 30188) [email protected] LAW OFFICES OF STEFAN COLEMAN, P.A. 201 S. Biscayne Blvd, 28th Floor Miami, FL 33131 Telephone: (877) 333-9427 Facsimile: (888) 498-8946 Avi R. Kaufman (FL Bar no. 84382) [email protected] KAUFMAN P.A. 400 NW 26th Street Miami, FL 33127 Telephone: (305) 469-5881 Attorneys for Plaintiff and the putative Class

privacy

eLxYDIcBD5gMZwczDQXc

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NEW YORK CASE NO.:_____________________ x CLASS ACTION JURY TRIAL DEMANDED CHRISTOPHER GLOBUS and MICHAELENE DAWSON, on behalf of themselves and others similarly situated, Plaintiff, vs. PIONEER CREDIT RECOVERY, INC., a Delaware Corporation, Defendant. : : : : : : : : : : : : : x CLASS ACTION COMPLAINT FOR DAMAGES, DECLARATORY AND INJUNCTIVE RELIEF Christopher Globus (“Mr. Globus”) and Michaelene Dawson (“Mrs. Dawson”), by and through the undersigned counsel, file this Complaint against Pioneer Credit Recovery, Inc., a Delaware corporation (“Defendant” or the “Company”), and state as follows: NATURE OF ACTION 1. This is a class action brought pursuant to the Electronic Fund Transfer Act (“EFTA”), 15 U.S.C. §1693, et seq., and the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. 2. The EFTA establishes the basic rights, liabilities, and responsibilities of consumers who use electronic fund transfer services and of persons or entities that offer those services. The primary objective of the EFTA is the protection of individual consumers engaging in electronic fund transfers. The Consumer Financial Protection Bureau has established regulations intended to carry out the purposes of the EFTA. 1 3. The FDCPA is a comprehensive statute that prohibits a catalog of activities in connection with the collection of debts by third parties. The FDCPA imposes civil liability on any person or entity that violates its provisions, and establishes general standards of debt collector conduct, defines abuse, and provides for specific consumer rights. 15 U.S.C. §1692(k). The provisions of the FDCPA declare certain rights available to debtors, forbid deceitful and misleading practices, and prohibit harassing and abusive tactics. PARTIES 4. Mr. Globus is a natural person who is obligated, or allegedly obligated, to pay a debt owed or due, or asserted to be owed or due, a creditor other than Defendant. At all relevant times, Mr. Globus resided in the State of New York, County of Erie. As a natural person, Mr. Globus is a “consumer” as defined by 15 U.S.C. § 1692a(3) and 15 U.S.C. §1693a(6). 5. Mrs. Dawson is a natural person who is obligated, or allegedly obligated, to pay a debt owed or due, or asserted to be owed or due, a creditor other than Defendant. At all relevant times, Mrs. Dawson resided in the State of New York, County of Erie. As a natural person, Mrs. Dawson is a “consumer” as defined by 15 U.S.C. § 1692a(3) and 15 U.S.C. §1693a(6). 6. Mr. Globus and Mrs. Dawson are husband and wife, and are sometimes hereinafter collectively referred to as “Plaintiffs.” 7. Plaintiffs’ obligation, or alleged obligation, owed or due, or asserted to be owed or due, arises from a transaction in which the money, property, insurance, or services that are the subject of the transaction were incurred primarily for personal, family, or household purposes— namely a student loan (the “Debt”). 2 8. Defendant is a Delaware corporation with principal offices located at 26 Edward Street, Arcade, New York. Defendant can be served through its registered agent Corporation Service Company, 80 State Street, Albany, NY 12207-2543. 9. Defendant is an entity that at all relevant times was engaged, by use of the mails and telephone, in the business of attempting to collect the Debt from Plaintiffs, as defined by 15 U.S.C. § 1692a(5). 10. At all relevant times, Defendant acted on behalf of, and as an agent of, the New York State Higher Education Services Corporation (“NYSHESC”). 11. At the time the NYSHESC hired Defendant to collect the alleged Debt from Plaintiffs, the alleged Debt was in default. 12. Defendant uses instrumentalities of interstate commerce or the mails in a business the principal purpose of which is the collection of any debts, and/or regularly collects or attempts to collect, directly or indirectly, debts owed or due, or asserted to be owed or due, another. 13. Defendant is a “debt collector” as defined by the FDCPA, 15 U.S.C. §1692a(6). JURISDICTION AND VENUE 14. This Court has jurisdiction under 15 U.S.C. § 1692, 15 U.S.C. §1693, and 28 U.S.C. §1331. 15. Venue is proper before this Court pursuant to 28 U.S.C. §1391(b), where the acts and transactions giving rise to Plaintiffs’ action occurred in this State and this District, where Plaintiffs reside in this State and this District, and where Defendant maintains its principal offices in this District. 3 FACTUAL ALLEGATIONS 16. On May 13, 2014, the NYSHESC sent Mrs. Dawson a letter titled “Notice Prior to Wage Withholding.” 17. The May 13, 2014 correspondence advised Mrs. Dawson that NYSHESC would begin garnishing her wages unless she paid the Debt in full or entered into a written repayment agreement with Defendant. 18. The May 13, 2014 correspondence provided a phone number by which Mrs. Dawson could contact Defendant. 19. In or about June 2014, Mr. Globus spoke with Defendant by telephone regarding the alleged Debt. 20. On that call, Mr. Globus was advised by Defendant that the Debt was in default, and that Plaintiffs needed to make monthly payments in order to rehabilitate the Debt, and avoid wage garnishment. 21. On the call, Mr. Globus provided Defendant with his checking account and routing information for his First Niagara Bank checking account (the “First Niagara Account”), and Defendant and Mr. Globus agreed, orally, that Plaintiffs would make payments on the Debt in the amount of $115 per month by recurring transfer by Defendant from the First Niagara Account. 22. The First Niagara Account was established primarily for personal, family, or household purposes, and thus, is an “account” as defined by 15 U.S.C. 1693a(2). 23. Though Defendant thereafter provided Plaintiffs with a “Rehabilitation Acknowledgement Form” for Plaintiffs to complete, Plaintiffs did not sign any written agreement authorizing the fund transfers from the First Niagara Account. 4 24. In late June 2014, Plaintiffs received from Defendant correspondence dated June 24, 2014 titled “Notice of Intent to Debit Account.” A true and correct copy of the June 24, 2014 correspondence is attached hereto as Exhibit A. 25. The June 24, 2014 correspondence advised Plaintiffs that Defendant would be taking their “scheduled payment” in the amount of $115 on July 4, 2014. 26. The June 24, 2014 correspondence stated in capitalized letters: “PLEASE SEE REVERSE SIDE FOR IMPORTANT CONSUMER INFORMATION AND TO PAY BY CREDIT CARD OR BANK AUTOWITHDRAWAL.” 27. The reverse side of the June 24, 2014 correspondence contained a form authorizing payment by credit card or by automatic withdrawal from a bank account (the “ACH Agreement”). 28. At the top of the ACH Agreement was the language “[d]etach and return this portion with your payment.” 29. Around this time, Mr. Globus opened a Meridia Community Federal Credit Union checking account (the “Meridia Account”), and closed the First Niagara Account. 30. The Meridia Account was established primarily for personal, family, or household purposes, and thus, is an “account” as defined by 15 U.S.C. 1693a(2). 31. Plaintiffs wanted to use the Meridia Account to make the Debt payments to Defendant going forward. 32. As such, Mr. Globus completed the ACH Agreement that Defendant provided with the June 24, 2014 correspondence. 33. In order to complete the ACH Agreement, Mr. Globus input his Meridia Account number, routing number, bank name and city and state of the bank onto the form, checked the 5 box that said “autowithdraw my bank account – ACH,” signed and dated the ACH Agreement, and provided his email address as a way for Defendant to contact him. 34. Thereafter, Mr. Globus returned the ACH Agreement by mail to Defendant. 35. The ACH Agreement that Mr. Globus signed contained the following provision: I hereby authorize Pioneer Credit Recovery to initiate an ACH withdrawal or credit charge from my bank account or credit card as shown above. This authority is to remain in full force and effect until Pioneer Credit Recovery receives written notification from me of its termination in such time and in such manner as to afford Pioneer Credit Recovery and the bank a reasonable opportunity to act on it. 36. The “ACH withdrawal” referenced in the ACH Agreement was a “preauthorized electronic fund transfer” as defined by 15 U.S.C. §1693a(10). 37. Notwithstanding Plaintiffs’ submission of the ACH Agreement, Defendant processed the $115 payment for July 2014 from the First Niagara Account. 38. As the First Niagara Account was closed, Defendant was unable to obtain funds from that account, and subsequently, on July 11, 2014, mailed to Plaintiffs correspondence stating that the July 7, 2014 payment had been returned. A true and correct copy of the July 11, 2014 correspondence is attached hereto as Exhibit B. 39. The July 11, 2014 correspondence advised Plaintiffs to “[p]lease deposit funds sufficient to cover this returned payment from your bank, and call us within 48 hours to notify us that you have resolved this matter.” 40. The July 11, 2014 correspondence contained a blank copy of the ACH Agreement that Mr. Globus had previously completed and submitted to Defendant. 41. Shortly thereafter, Mr. Globus called Defendant to inquire as to why Defendant attempted to withdraw money from the First Niagara Account when Plaintiffs had submitted the ACH Agreement for the Meridia Account. 6 42. During the call, Defendant’s representative advised Mr. Globus that the ACH Agreement and the July 11, 2014 correspondence were “misleading” because Plaintiffs could not change the account from which Defendant was withdrawing payments by completing and returning the ACH Agreement, and also because Plaintiffs could not elect to have Defendant communicate with them through electronic mail by providing their email address on the ACH Agreement. 43. Instead, Plaintiffs could only change the account by calling Defendant and requesting such a change over the telephone. 44. Thereafter, Mr. Globus again provided Defendant with his checking account and routing information for the Meridia Account, and authorized Defendant over the phone to begin taking $115 per month by recurring transfer from his Meridia Account. 45. Thereafter, Defendant began transferring $115 per month from the Meridia Account. CLASS ACTION ALLEGATIONS 46. Plaintiff brings this action as a class action pursuant to Federal Rules of Civil Procedure 23(a) and (b)(3) on behalf of two Classes consisting of: The EFTA Class All persons located in the United States who, within one year before the date of this Complaint, signed an ACH Agreement with Defendant containing the following provision: “I hereby authorize Pioneer Credit Recovery to initiate an ACH withdrawal or credit charge from my bank account or credit card as shown above. This authority is to remain in full force and effect until Pioneer Credit Recovery receives written notification from me of its termination in such time and in such manner as to afford Pioneer Credit Recovery and the bank a reasonable opportunity to act on it.” The FDCPA Class All persons located in the United States, to whom Pioneer Credit Recovery, Inc., within one year before the date of this Complaint, and in connection with an 7 attempt to collect any purported consumer debt, (1) mailed a copy of its form “Notice of Intent to Debit Account” correspondence, including its form ACH Agreement, (2) where the person completed the accompanying ACH Agreement and returned it to Pioneer Credit Recovery, Inc, (3) but where Pioneer Credit Recovery, Inc. did not honor the ACH Agreement by withdrawing money from the checking or savings account, or charging money on the credit card, provided in the ACH Agreement. Excluded from the Classes is Defendant, the officers, members, and directors of Defendant, members of their immediate families and their legal representatives, heirs, successors, or assigns, and any entity in which Defendant has or had a controlling interest. 47. The proposed Classes are believed to be so numerous that joinder of all members is impracticable. The exact number of members of the Classes is unknown to Plaintiffs at this time and can only be ascertained through appropriate discovery. The proposed Classes are believed to be ascertainable in that the names and addresses of all members of the Classes can be identified in business records maintained by Defendant. 48. Plaintiffs’ claims are typical of the claims of the members of the Classes because Plaintiffs’ and all Class members’ claims originate from the same conduct, practice and procedure on the part of Defendant and Plaintiffs possess the same interests and have suffered the same injuries as each Class member. 49. Plaintiffs will fairly and adequately protect the interests of the members of the Classes and have retained counsel experienced and competent in class action litigation. Plaintiffs have no interests that are contrary to or in conflict with the members of the Classes that Plaintiffs seeks to represent. 50. 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 members of the Classes may be relatively small, the expense and burden of individual litigation make it impracticable for the members of the Classes to 8 individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. 51. Issues of law and fact common to the members of the Classes predominate over any questions that may affect only individual members, in that Defendant has acted on grounds generally applicable to the both Classes. Among the issues of law and fact common to the Classes are: a. Defendant’s violations of the EFTA, as alleged herein; b. Defendant’s waiver of rights afforded to consumers under the EFTA; c. Defendant’s violations of the FDCPA, as alleged herein; d. the availability of statutory penalties; and e. the availability of attorneys’ fees and costs. 52. Upon information and belief, absent a class action, Defendant’s violations of the law will be allowed to proceed without a full, fair, judicially supervised remedy. COUNT I: VIOLATION OF THE ELECTRONIC FUND TRANSFER ACT, 15 U.S.C. §1693l, AS TO PLAINTIFF AND THE EFTA CLASS 53. Plaintiff repeats and re-alleges each and every allegation contained in paragraphs 54. Section 1693e(a) of the EFTA provides in pertinent part: A preauthorized electronic fund transfer from a consumer’s account may be authorized by the consumer only in writing, and a copy of such authorization shall be provided to the consumer when made. A consumer may stop payment of a preauthorized electronic fund transfer by notifying the financial institution orally or in writing at any time up to three business days preceding the scheduled date of such transfer. The financial institution may require written confirmation to be provided to it within fourteen days of an oral notification if, when the oral notification is made, the consumer is advised of such requirement and the address to which such confirmation should be sent. (emphasis added). 9 55. Section 1693l of the EFTA provides in pertinent part: No writing or other agreement between a consumer and any other person may contain any provision which constitutes a waiver of any right conferred or cause of action created by this subchapter. Nothing in this section prohibits, however, any writing or other agreement which grants to a consumer a more extensive right or remedy or greater protection than contained in this title or a waiver given in settlement of a dispute or action (emphasis added). 56. Defendant’s form ACH Agreement contains the following provision: I hereby authorize Pioneer Credit Recovery to initiate an ACH withdrawal or credit charge from my bank account or credit card as shown above. This authority is to remain in full force and effect until Pioneer Credit Recovery receives written notification from me of its termination in such time and in such manner as to afford Pioneer Credit Recovery and the bank a reasonable opportunity to act on it. 57. Defendant violated 15 U.S.C. § 1693l by entering into written agreements with Plaintiffs and members of the EFTA Class that contained provisions constituting waivers of Plaintiffs’ and the Class members’ rights under the EFTA and the regulations promulgated by the Consumer Financial Protection Bureau—specifically the rights to (1) cancel preauthorized electronic fund transfers orally, (2) cancel preauthorized electronic fund transfers by providing notice to the financial institution, and (3) cancel preauthorized electronic fund transfers by providing three-days’ notice. 58. As a result, Defendant, via its form ACH Agreement, waives valuable consumer rights set forth under 15 U.S.C. §1693e(a), in violation of 15 U.S.C. §1693l. COUNT II: VIOLATION OF THE FAIR DEBT COLLECTION PRACTICES ACT, 15 U.S.C. §1692e, AS TO PLAINTIFF AND THE FDCPA CLASS 59. Plaintiff repeats and re-alleges each and every allegation contained in paragraphs 10 60. The FDCPA at 15 U.S.C. §1692e provides that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 61. Upon information and belief, when a consumer agrees to a payment, and prior to each payment being withdrawn from the consumer’s account, Defendant sends the consumer its “Notice of Intent to Debit Account” correspondence. 62. Upon information and belief, Defendant attaches to each of its “Notice of Intent to Debit Account” correspondence a blank copy of the ACH Agreement, and advises the consumer to complete the ACH Agreement in order “to pay by credit card or bank autowithdrawal.” 63. Upon information and belief, Defendant does so even when the consumer is already making payments by credit card, bank autowithdrawal, or demand draft. 64. Such conduct would lead the least sophisticated consumer to believe that by completing and returning the ACH Agreement, the consumer could direct Defendant to take payments from a new bank account, or a different credit card, other than the account or credit card from which Defendant was previously taking payments. 65. However, Defendant’s policy, as set forth above, is to require consumers to change the account or credit card they are using for payment by calling Defendant and requesting such a change over the telephone. 66. As such, the mailing of the “Notice of Intent to Debit Account” correspondence to consumers whose accounts Defendant is already withdrawing payments from, or whose credit cards Defendant is already charging, is misleading to the least sophisticated consumer. 11 67. Such conduct has the likelihood of causing significant harm, as it did to Plaintiffs, where Defendant attempted to withdraw money from an account that Plaintiffs had closed, resulting in a late payment of the Debt by Plaintiffs. 68. As such, Defendant violated 15 U.S.C. § 1692e. WHEREFORE, Plaintiff prays for relief and judgment, as follows: a) Determining that this action is a proper class action and designating Plaintiff as class representative under Rule 23 of the Federal Rules of Civil Procedure; b) Adjudging and declaring that Defendant violated 15 U.S.C. § 1693l and enjoining Defendant from further violations of 15 U.S.C. §1693l with respect to Plaintiffs and the other members of the EFTA Class; c) Adjudging and declaring that Defendant violated 15 U.S.C. § 1692e and enjoining Defendant from further violations of 15 U.S.C. §1692e with respect to Plaintiffs and the other members of the FDCPA Class; d) Awarding Plaintiffs and members of the EFTA Class statutory damages pursuant to 15 U.S.C. §1693m(a)(2)(B); e) Awarding Plaintiff and members of the FDCPA Class statutory damages pursuant to 15 U.S.C. § 1692k(a)(2)(B); f) Awarding Plaintiff and members of the FDCPA Class actual damages pursuant to 15 U.S.C. § 1692k(a)(1); g) Awarding Plaintiff and members of the Classes their reasonable costs and attorneys’ fees incurred in this action, including expert fees, pursuant to Rule 23 of the Federal Rules of Civil Procedure and 15 U.S.C. §1693m(a)(3), and 15 U.S.C. § 1692k(a)(3); and h) Awarding other and further relief as the Court may deem just and proper. 12 TRIAL BY JURY Plaintiffs are entitled to and hereby demand a trial by jury. DATED: February 17, 2015 Respectfully submitted, /s/ Jeanne Lahiff Jeanne Lahiff 16 South Avenue West, #178 Cranford, NJ 07016 Telephone: (862) 812-0623 Fax: (866) 565-1327 [email protected] James L. Davidson* GREENWALD DAVIDSON RADBIL PLLC 5550 Glades Road, Suite 500 Boca Raton, FL 33431 Telephone: (561) 826-5477 Fax: (561) 961-5684 [email protected] Counsel for Plaintiff and the proposed Classes * To seek admission pro hac vice 13

products liability and mass tort

4EKKAokBRpLueGJZD-r3

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK BARBARA VALENTI, on behalf of herself and all others similarly situated, Plaintiff, v. Case No.: COMPLAINT SYNERGY CHC CORP., Defendant. Plaintiff Barbara Valenti, on behalf of herself and all others similarly situated (“Plaintiff”), by and through her undersigned counsel, Denlea & Carton LLP, states for her Complaint against Synergy CHC Corp. (“Synergy” or “Defendant”), as follows: PRELIMINARY STATEMENT 1. This action seeks to redress the false, misleading and deceptive advertising and marketing claims that have made Synergy one of the world’s largest manufacturers of a purported “memory supplement” or “brain health supplement” called “FOCUSfactor,” namely, the claim that a clinical study showed that FOCUSfactor increased memory recall by 44% in six weeks of use. As set forth in more detail below, that claim (which is the centerpiece of Defendant’s ubiquitous marketing campaign) is blatantly false and deceptive because even its own flawed study showed that after six weeks, the difference in the number of words recalled between the study’s participants who took a placebo and those that took FOCUSfactor was just 4.3%, not 44%. 2. The global market for brain-health supplements is expected to reach $5.8 billion by 2023. A survey conducted by the AARP showed that 26% of Americans aged 50 and older regularly take supplements, believing they will maintain or enhance their brain health. They are falling prey to false and deceptive claims and wasting their money. The Global Council on Brain Health (“GCBH”) is a prestigious independent collaborative of scientists, health professionals, scholars, and policy experts from around the world who work in the areas of brain health related to human cognition. The GCBH has concluded: There is no convincing evidence to recommend dietary supplements for brain health in healthy older adults…. For most people, the best way to get your nutrients for brain health is from a healthy diet. Unless your health care provider has identified that you have a specific nutrient deficiency, there is not sufficient data to justify taking any dietary supplement for brain health. The GCBH does not endorse any ingredient, product or supplement formulation specifically sold for brain health. Because no government agency determines dietary supplements are safe or effective before they are sold, consumers should approach supplements claiming to improve or boost brain function with skepticism. Because dietary supplements can be sold without a government agency first determining that they are safe or and effective before they are sold, consumers should also be aware that in addition to being a waste of money, some supplements could physically harm them. Despite claims to the contrary, brain health supplements have not been established to maintain thinking skills or improve brain function. However, there are many other lifestyle habits such as getting enough sleep, exercising regularly, eating a healthy diet, staying mentally active and being socially engaged that are recommended by the council.1 (Emphasis added.) 3. But this action has not been commenced to establish that brain-health supplements, including FOCUSfactor, do not work. Instead, by this action, Plaintiff seeks to redress Synergy’s false and deceptive marketing campaign built upon the misleading claim that a clinical study has shown that FOCUSfactor can increase word recall by 44% after six weeks of use, when in fact Synergy’s sole study showed only a 4.3% greater increase in word recall when compared to a placebo. This misleading claim (a tenfold misrepresentation) and the foundation 1 Global Council on Brain Health (2019). “The Real Deal on Brain Health Supplements: GCBH Recommendations on Vitamins, Minerals, and Other Dietary Supplements.” Available at www.GlobalCouncilOnBrainHealth.org. DOI: https://doi.org/10.26419/pia.00094.001. upon which Defendant’s marketing is based begat additional misrepresentations, such as claims of “a decrease of 20 years in cognitive aging” (CRC Clinical Study Report: p. 15). THE PARTIES 4. Plaintiff Barbara Valenti is an individual who resides in Queens, New York. 5. Defendant Synergy is a Nevada corporation with its principal address at 865 Spring Street, Westbrook, Maine 04092. 6. Upon information and belief, Synergy manufactures, markets and sells FOCUSfactor, “Flat Tummy” (purportedly “a lifestyle brand that provides a suite of nutritional products to help women to achieve their weight management goals”), and Hand MD (a skin care product). FOCUSfactor represented 71% of Synergy’s revenues in the six months ended June 30, 2021. FOCUSfactor is sold through its website and other retailers such as Costco, Amazon.com, Walmart, Walgreen, CVS, The Vitamin Shoppe and Target. FOCUSfactor is heavily advertised on major news and entertainment networks. JURISDICTION AND VENUE 7. This Court has subject matter jurisdiction over this action pursuant to the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d), because (1) the amount in controversy exceeds the sum or value of $5,000,000.00, exclusive of interest and costs, and (2) the named Plaintiff and Defendant are citizens of different states. 28 U.S.C. § 1332(d)(2)(A). Based on publicly available sources, Plaintiff estimates that Synergy had net revenues of approximately $4.6 million from the sale of FOCUSfactor in New York during the three-year period preceding this action. Assuming that Synergy’s net revenues from the sale of FOCUSfactor is 50% of the total revenues that both Synergy and its retailers recognize from the sale of FOCUSfactor, Synergy and its retailers sold $9.2 million worth of FOCUSfactor in New York during the three- year period preceding this action. Synergy charges a premium for FOCUSfactor based on the false claim that FOCUSfactor is ten times more effective than its own study shows. Statutory damages under GBL §§ 349 and 350 are $50 or $500 per purchase plus attorneys’ fees. Plaintiff estimates that between 368,000 and 613,333 sales of separate bottles of FOCUSfactor occurred in New York, yielding enormous potential statutory damages of over $18.4 million. Plaintiff estimates that there are at least 10,000 potential class members in New York. 8. The Court also has jurisdiction over this action pursuant to 28 U.S.C. § 1332(a), as the parties are diverse and the amount in controversy exceeds the requisite threshold. 9. This Court may exercise jurisdiction over Defendant because Defendant has sufficient minimum contacts in New York and purposely avails itself of the markets within New York through the promotion, sale, marketing, and distribution of its products, thus rendering jurisdiction by this Court proper and necessary. 10. Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b)(2) because a substantial part of the events giving rise to Plaintiff’s claims occurred within this judicial district and because Defendant has marketed and sold the products at issue in this action within this judicial district and has done business within this judicial district. CHOICE OF LAW 11. New York law governs the state law claims asserted herein by Plaintiff and the New York class she seeks to represent. 12. New York has a substantial interest in protecting the rights and interests of New York consumers against wrongdoing by companies that market and distribute their products within the State of New York. FACTUAL BACKGROUND I. THE BRAIN-HEALTH SUPPLEMENT MARKET 13. As stated, there is a significant market for brain-health supplements taken by 26% of Americans over the age of 50. The success of the market participants is directly tied to the magnitude of their false efficacy claims and their marketing budgets. For example, FOCUSfactor has been on the market for over 20 years, marketed solely under the aegis of its own “clinical study” conducted in 2011 and upon which Synergy has made its false 44% memory recall increase claim. According to Synergy, it launched a national advertising campaign in August 2020 targeting adults 45 years of age and older and FOCUSfactor’s net revenue doubled.2 Synergy estimates that FOCUSfactor’s gross revenues have increased $4 for every $1 of advertising spend and, as of January 2022, Synergy planned to further expand that advertising. 14. In the last three years, FOCUSfactor has faced two major competitors for the brain-health hucksterism crown: (a) “Prevagen,” sold by Quincy Bioscience Holding Company, and (b) “Neuriva,” sold by Reckitt Benckiser LLC. Both of those purveyors of purported memory supplements have been sued in class actions and forced to pay large amounts to defrauded consumers, as well as forced to throttle their baseless claims. 15. Prevagen claimed to “improve memory within 90 days,” “support healthy brain function,” and similar claims. Prevagen’s purported active ingredient is a protein called apoaequorin, apparently derived from a species of jellyfish called Aequorea victoria — in other words, the modern version of snake oil. Needless to say, the maker of Prevagen was sued in a 2 Significantly, the average age of the individuals in the study was 48.4 years, well below the age of typical clinically manifest cognitive decline, further calling into question the efficacy of a product directed at an aging, cognitively impaired community. number of separate class actions and compelled to pay dearly for its exorbitant claims. Quincy Bioscience agreed to a settlement of over $40 million in which defrauded consumers received 30% of their purchase price up to $70, and Prevagen had to eliminate its misleading claims. The Federal Trade Commission and New York Attorney General have also commenced an action against Quincy Bioscience. That action is ongoing. 16. Neuriva claimed that it has “clinically proven natural ingredients” that “fuels 5 indicators of brain performance” including “Focus, Memory, Learning, Accuracy, and Concentration.” In reality, none of the Neuriva Products had ever been clinically studied. The makers of Neuriva, Reckitt Benckiser LLC and RB Health (US) LLC, were sued in a putative class action that was recently settled for approximately $8 million and injunctive relief, providing consumers with proof of purchase $32.50 per purchase up to $65 and without proof of purchase $5 per purchase up to $20. 17. There are numerous other makers of so-called brain-health supplements that make unfounded claims of efficacy and the competition among them is fierce. When the marketplace for these brain snake oils is rife with outrageous claims, the only way for the snake oil purveyors to distinguish themselves is to lead the pack in mendacity. II. SYNERGY’S FALSE CLAIMS CONCERNING FOCUS FACTOR 18. Synergy’s marketing of FOCUSfactor centers around its claims that a clinical study it funded in 2011 proves that FOCUSfactor is “clinically shown to improve MEMORY, CONCENTRATION and FOCUS” and FOCUSfactor “improves verbal learning and short term memory by 44%.” For example, in Synergy’s national advertising campaign, a consumer turns into a characterization of Albert Einstein (a characterization that is obviously false and misleading itself but not the subject of this complaint), followed by the actionable false claims3: “Wait! How are you doing [all these super-smart things]?” “FOCUSfactor!” 3 A sample television commercial for FOCUSfactor is available at https://www.youtube.com/watch?v=sldtqpCveUk. “Improves verbal learning and short-term memory by 44%.” 19. FOCUSfactor also markets on its website and other sites with the following format for its claims: 20. A link on the opening page of the FOCUSfactor website takes the visitor to the “Science” page which claims that: “The findings from our study were simple; FOCUSfactor was shown to improve memory, concentration and attention (focus) following six weeks of administration. More specifically, an increase of 44% in memory recall was reported for those participants in the FOCUSfactor group, compared to those in the placebo group.” (Emphasis added.) 4 Illustration from opening page of FOCUSfactor website. https://www.focusfactor.com/. 21. The “Science” page contains a link to the “Full Clinical Study” in which the visitor would expect to see the evidence of FOCUSfactor’s claim that “an increase of 44% in memory recall was reported for those participants in the FOCUSfactor group compared to those in the placebo group.” In fact, the “clinical study” makes no such claim or comes to that conclusion. 22. At the beginning of the study report, it states that: The present study demonstrates that, compared to placebo, FOCUSfactor improves abilities referred to as memory (i.e., short term memory), attention (e.g., focus), concentration and working memory in healthy adults. Following 6 weeks of treatment, subjects who received FOCUSfactor had a mean increase in recall of 6.5 words compared to 4.5 words for those who received placebo (t = -4.32, df = 87, p <0.001). The total words recalled over Trials 1-5 following 6 weeks of treatment (corrected for baseline score) was 51.9 words for subjects receiving FOCUSfactor compared to 49.7 words for subjects receiving placebo (t = -2.98, df =87; p = 0.002). The significant effect on RAVLT Sum 1-5 supports the hypothesis that FOCUSfactor improves memory, attention (e.g. focus), and concentration. One can infer from the foregoing that the FOCUSfactor group started with 45.4 words recalled and increased recall to 51.9 words recalled after six weeks, and the placebo group increased recall from 45.2 to 49.7 words after six weeks. That means the FOCUSfactor group increased the number of words recalled by 14.3% and the placebo group increased word recall by 10%, a difference of 4.3%, not 44%. 23. Where did FOCUSfactor get its false 44% improvement in recall number which is the linchpin of its false and misleading advertising campaign? Apparently, some marketing genius at FOCUSfactor had the brilliant (but mendacious) idea that if one was to compare the increased recall of the placebo group of 4.5 words to the increased recall of the FOCUSfactor group of 6.5 words, the FOCUSfactor word increase is 44% more than the placebo group increase. That ignores, however, the 45.2 – 45.4 words recalled by both the placebo and FOCUSfactor group at the beginning of the study, and the increase in words recalled is merely 14.3% for the FOCUSfactor and 10% for the placebo group, a 4.3% difference not a 44% difference. Significantly, FOCUSfactor did not follow the proper statistical lines. One needs to compare the placebo numbers with the placebo numbers, and the FOCUSfactor numbers with the FOCUSfactor numbers. The change in each group is what is then compared to arrive at the true difference. That is not what was done. FOCUSfactor crossed statistical lines by comparing the two groups without regard for the respective baselines, resulting in a tenfold statistical error (i.e., a 4.3% difference not a 44% difference). 24. The increase in words for the placebo group is presumably due to learning the test over the course of six weeks (tending to prove, at least, that better recall can be learned — a good thing), but that would equally apply to the FOCUSfactor group, so a difference of 4.3% is not statistically significant, given the nature of the word recall test. Stated another way, the placebo group was able to increase their scores without ever having taken FOCUSfactor. What would account for that increase? 25. In reality, that delta can be directly attributed to the well-understood and documented neuropsychological testing artifice known as the “practice effect,” whereby memory improves due to repeated exposure to the testing material. Because of the practice effect, scholars have observed that these kinds of tests are particularly ill-suited for drug trials for cognitive therapeutics (much less OTC vitamin/nutraceuticals like FOCUSfactor): [S]erial cognitive assessments are used in the development of novel pharmaceutical treatments for conditions affecting cognition. Inherent limitations of these early Phase I investigational drug trials include the use of healthy volunteers, small sample sizes, the use of scales originally developed for patients with compromised cognition, and short retest intervals. These factors limit the study’s power to detect cognitive changes in healthy volunteers, which is partially due to the learning that results from repeated exposure to the testing materials (i.e., “practice effects”). Individual variability in test performance across time can also limit the findings in these Phase I studies, as intra-individual variability overcomes the drug effect.5 26. Yet this action does not seek to answer the question of whether a 4.3% increase in word recall is statistically significant or even answer the question of whether FOCUSfactor increased word recall to that small degree. Instead, this action seeks to redress Synergy’s false and deceptive marketing campaign built upon the false, misleading and deceptive claim that a clinical study has shown that FOCUSfactor can increase word recall by 44% after six weeks of 5 Beglinger L. J., Gaydos B., Tangphao-Daniels O., Duff K., Kareken D. A., Crawford J., et al.. (2005). “Practice effects and the use of alternate forms in serial neuropsychological testing”. Arch. Clin. Neuropsychol. 20, 517–529. Available at https://academic.oup.com/acn/article/20/4/517/2682 III. PLAINTIFF PURCHASED AND USED FOCUS FACTOR 27. FOCUSfactor is sold as “FOCUSfactor Original,” “FOCUSfactor Extra Strength,” and “FOCUSfactor Max Strength.” FOCUSfactor costs approximately $211 -$1,271 per year, depending on bottle size, method of purchase, and dosage. 28. Plaintiff is a resident of Queens, New York. 29. Plaintiff purchased FOCUSfactor Original at Walgreens in Middle Village in Queens in or about February 2022 after seeing television ads for the product touting its ability to greatly improve memory, concentration and focus. Plaintiff took FOCUSfactor but she did not experience improved memory, concentration, or focus, and stopped taking the product. 30. Prior to purchasing FOCUSfactor, Plaintiff was exposed to Synergy’s deceptive marketing that claims that FOCUSfactor was clinically shown to increase memory by 44% after six weeks of use. 31. Synergy’s prominent marketing that claims that FOCUSfactor was clinically shown to increase memory recall by 44% after six weeks is designed to mislead a reasonable consumer acting reasonably under the circumstances, like Plaintiff here, into believing that FOCUSfactor would provide a significant and valuable increase in memory recall. 32. Had Plaintiff known that FOCUSfactor had not been clinically shown to increase memory recall by 44% or that, in fact, its own study showed that participants taking a placebo increased their recall by 10% simply by taking six recall tests and the study showed that FOCUSfactor offered the prospect of just 4.3% greater recall than a placebo, she would not have purchased it. At the very least, Plaintiff paid a premium for FOCUSfactor based on a promise of a 44% improvement in memory recall when at best FOCUSfactor only improved memory recall by 4.3%, less than one-tenth of the improvement promised by FOCUSfactor. For example, there are at least two brain supplements with the same ingredients as FOCUSfactor: “Mind & Memory Matrix” made by Nature’s Craft and “Brain Booster” made by Rainbow Nutrients. Neither of those supplements, however, make a claim that it will improve memory recall by 44% or any percentage, which explains why FOCUSfactor costs 43% more than those supplements.6 FOCUSfactor is able to command a premium price based on its false claims. CLASS DEFINITION AND ALLEGATIONS 33. Plaintiff brings this action on behalf of herself and all other similarly situated consumers in the State of New York pursuant to Rule 23 of the Federal Rules of Civil Procedure, and seeks certification of the following class (the “Class”): All consumers who, within the applicable statute of limitations period, purchased in the State of New York (whether online or in- person) “FOCUSfactor Original,” “FOCUSfactor Extra Strength,” and “FOCUSfactor Max Strength” which is manufactured, marketed, distributed and/or sold by Defendant (the “Class Product”). Excluded from the class are Defendant, its parents, subsidiaries, affiliates, officers and directors, judicial officers and their immediate family members and associated court staff assigned to this case, and those who purchased the Class Product for resale. 34. Plaintiff expressly disclaims any intent to seek any recovery in this action for personal injuries that she or any Class member may have suffered. 35. Numerosity. This action is appropriately suited for a class action. The members of the Class are so numerous that joinder of all members of the Class is impracticable. Plaintiff is informed, believes, and thereon alleges, that the proposed Class contains thousands of purchasers of the Class Product who have been damaged by Synergy’s conduct as alleged herein. The precise number of Class members is unknown to Plaintiff. 6 Both Mind & Memory Matrix and Brain Booster cost $.42 per dose, while FOCUSfactor costs $.60 per dose or 43% more than its competitors. 36. Existence and Predominance of Common Questions of Law and Fact. This action involves questions of law and fact common to the Class. The common legal and factual questions include, but are not limited to, the following:  Whether Defendant’s conduct, as alleged herein, constitutes violations of New York General Business Law Section 349.  Whether Defendant’s conduct, as alleged herein, constitutes violations of New York General Business Law Section 350.  Whether Defendant labeled, advertised, marketed, and/or sold the Class Product as providing a 44% increase in memory recall.  Whether Defendant’s labeling, advertising, marketing, and/or selling of each Class Product as providing a 44% increase in memory recall was and/or is false, fraudulent, deceptive, and/or misleading. 37. Typicality. Plaintiff’s claims are typical of the claims of the members of the Class, because, inter alia, all Class members have been injured through the uniform misconduct described above and were subject to Synergy’s blatant misrepresentation that the Class Product provided a 44% increase in memory recall after six weeks of use. Moreover, Plaintiff’s claims are typical of the Class members’ claims. Plaintiff is advancing the same claims and legal theories on behalf of herself and all members of the Class. 38. Adequacy of Representation. Plaintiff will fairly and adequately protect the interests of the members of the Class. Plaintiff purchased the Class Product, and she was harmed by Synergy’s deceptive misrepresentations. Plaintiff has therefore suffered an injury in fact as a result of Synergy’s conduct, as did all Class members who purchased a Class Product. 39. Superiority. A class action is superior to other methods for the fair and efficient adjudication of this controversy. The damages or other financial detriment suffered by individual Class members is relatively small compared to the burden and expense that would be entailed by individual litigation of their claims against Synergy. It would be virtually impossible for a member of the Class, on an individual basis, to obtain effective redress for the wrongs done to him or her. Further, even if the Class members could afford such individualized litigation, the court system could not. Individualized litigation would create the danger of inconsistent or contradictory judgments arising from the same set of facts. Individualized litigation would also increase the delay and expense to all parties and the court system from the issues raised by this action. By contrast, the class action device provides the benefits of adjudication of these issues in a single proceeding, economies of scale, and comprehensive supervision by a single court, and presents no management difficulties under the circumstances here. 40. Plaintiff seeks monetary damages, including statutory damages on behalf of the entire Class. Unless a Class is certified, Synergy will be allowed to profit from its deceptive practices, while Plaintiff and the members of the Class will have suffered damages. COUNT I (Violation of New York General Business Law Section 349) 41. Plaintiff realleges and incorporates by reference the allegations in paragraphs 1 through 40 as if fully set forth herein. 42. New York General Business Law § 349 prohibits “deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in [New York].” 43. By labeling, advertising, marketing, distributing, and/or selling the Class Product to Plaintiff and the other Class members as providing a 44% increase in memory recall after six weeks of use, Synergy engaged in, and continues to engage in, deceptive acts and practices because the Class Product does not, in fact, provide a 44% increase in memory recall after six weeks of use. 44. In taking these actions, Synergy failed to disclose material information about FOCUSfactor, including the fact that its own study showed a mere 4.3% greater memory recall when compared to a placebo, which omissions were misleading in a material respect to consumers and resulted in the purchase of the Class Product. 45. Synergy has deceptively advertised, marketed, promoted, distributed, and sold the Class Product to consumers. 46. Synergy’s conduct was consumer oriented. 47. Synergy engaged in the deceptive acts and/or practices while conducting business, trade, and/or commerce and/or furnishing a service in New York. 48. Synergy’s false claims were and are misleading in a material respect as to whether the Class Product provides a 44% increase in memory recall after six weeks of use. 49. Based on, among other things, Synergy’s knowledge that the Class Product did not provide a 44% increase in memory recall after six weeks of use, Plaintiff and other consumers would be misled into purchasing the Class Product and/or paying a premium price for the Class Product. 50. Plaintiff and the Class members have been aggrieved by and have suffered losses as a result of Synergy’s violations of Section 349 of the New York General Business Law. By virtue of the foregoing unfair, unconscionable, and deceptive acts in the conduct of trade or commerce, Plaintiff and the members of the Class have been substantially injured by purchasing and/or overpaying for the Class Product that is not what Synergy represents it to be. 51. By reason of the foregoing, Synergy’s conduct, as alleged herein, constitutes deceptive acts and practices in violation of Section 349 of the New York General Business Law, and Synergy is liable to Plaintiff and the Class for the actual damages that they have suffered as a result of Synergy’s actions, the amount of such damages to be determined at trial, plus statutory damages, treble damages, and attorneys' fees and costs. 52. Synergy’s conduct, as alleged herein, in violation of Section 349 of the New York General Business Law was engaged in by Synergy willfully and/or knowingly. Accordingly, Plaintiff and members of the Class are entitled to an award of damages above and beyond their actual damages in accordance with Section 349(h) of the New York General Business Law. COUNT II (Violation of New York General Business Law Section 350) 53. Plaintiff realleges and incorporates by reference the allegations in paragraphs 1 through 40 as if fully set forth herein. 54. Synergy’s marketing, and advertising of the Class Product is “misleading in a material respect,” as it fails to disclose to consumers material information in Synergy’s sole possession and, thus, is “false advertising.” 55. No rational individual would purchase the Class Product at the premium prices at which they are sold if that individual knew that the Class Product did not provide a 44% increase in memory recall after six weeks of use, which is how Synergy markets the Class Product. 56. Synergy’s advertisements and marketing of the Class Product as alleged were consumer oriented. 57. Synergy’s advertisements and marketing of the Class Product as alleged were misleading in a material respect. 58. By virtue of the foregoing unfair, unconscionable, and deceptive acts in the conduct of trade or commerce in New York, Plaintiff and the members of the Class have been substantially injured by overpaying for a product that has diminished value due to the fact that it did not provide a 44% increase in memory recall after six weeks of use. 59. Synergy’s conduct, as alleged herein, constitutes false advertising in violation of Section 350 of the New York General Business Law, and Synergy is liable to Plaintiff and the members of the Class for the actual damages that they have suffered as a result of Synergy’s actions, the amount of such damages to be determined at trial, statutory damages, plus treble damages, and attorneys’ fees and costs. PRAYER FOR RELIEF WHEREFORE, Plaintiff respectfully requests that the Court enter judgment against Synergy as follows: A. Certifying this action as a class action as soon as practicable, with the Class as defined above, designating Plaintiff as the named Class representative, and designating the undersigned as Class Counsel. B. On Plaintiff’s Count I, awarding against Synergy the damages that Plaintiff and the other members of the Class have suffered as a result of Synergy’s actions, the amount of such damages to be determined at trial, plus statutory damages and treble damages. C. On Plaintiff’s Count II, awarding against Synergy the damages that Plaintiff and the other members of the Class have suffered as a result of Synergy’s actions, the amount of such damages to be determined at trial, plus statutory and treble damages. D. On Plaintiff’s Count I and II, awarding Plaintiff and the Class interest, costs, and attorneys’ fees. E. Awarding Plaintiff and the Class such other and further relief as this Court deems just and proper. DEMAND FOR TRIAL BY JURY Plaintiff hereby demands a trial by jury on all issues so triable. Dated: July 25, 2022 White Plains, New York DENLEA & CARTON LLP By: /s/ Jeffrey I. Carton James R. Denlea Jeffrey I. Carton Steven R. Schoenfeld Robert J. Berg 2 Westchester Park Drive, Suite 410 White Plains, New York 10604 Tel.: (914) 331-0100 Fax: (914) 331-0105 [email protected] [email protected] KRAVIT SMITH LLP Philip M. Smith 75 South Broadway, Suite 400 White Plains, New York 10601 Tel.: (646) 493-8004 Fax: (917) 858-7101 [email protected] Attorneys for Plaintiff

products liability and mass tort

rkiJ_YgBF5pVm5zYYC2e

Mark L. Javitch (CA SBN 323729) JAVITCH LAW OFFICE 480 S. Ellsworth Ave San Mateo, CA 94401 Telephone: (650) 781-8000 Facsimile: (650) 648-0705 [email protected] Attorney for Plaintiff and the Putative Class UNITED STATES DISTRICT COURT DISTRICT OF NEBRASKA REGAN SMITH, individually, and on behalf of all others similarly situated, Plaintiff, Case No.: __________________ CLASS ACTION COMPLAINT JURY TRIAL DEMANDED SPANISH QUOTES, INC., an Arizona Corporation, d/b/a WE SPEAK INSURANCE, and JOHN DOE, an unknown business entities Defendants. CLASS ACTION COMPLAINT 1. Plaintiffs REGAN SMITH (“Plaintiff”) brings this Class Action Complaint and Demand for Jury Trial against Defendant SPANISH QUOTES, INC. d/b/a WE SPEAK INSURANCE (“We Speak”), and Defendant JOHN DOE (“John Doe,” or together, “Defendants”) to stop their illegal practice of sending unauthorized text messages to the residential telephones of consumers who are registered on the Federal Do Not Call Registry, and to obtain redress for all persons injured by their conduct. Plaintiff alleges as follows upon personal knowledge as to herself and own acts and experiences, and, as to all other matters, upon information and belief, including investigation conducted by her attorney. 1 NATURE OF THE ACTION 2. As a part of their marketing efforts, Defendant We Speak hired John Doe to send thousands of text messages to cell phones who were registered on the Federal Do Not Call Registry. 3. Defendants had not received consent prior to sending these texts and, therefore, are in violation of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. 4. Congress enacted the TCPA in 1991 to restrict the use of sophisticated telemarketing equipment that could target millions of consumers en masse. Congress found that these calls were not only a nuisance and an invasion of privacy to consumers specifically but were also a threat to interstate commerce generally. See S. Rep. No. 102-178, at 2-3 (1991), as reprinted in 1991 U.S.C.C.A.N. 1968, 1969-71. 5. Despite such strong legislation passed 30 years ago, the same problem persists. 6. To illustrate the scale of the problem facing America, it is estimated that there were over 47 billion robocalls placed in 2018, and 29 billion placed in just the first half of 2019. 7. The TCPA targets unauthorized texts exactly like the ones alleged in this case, based on Defendants’ targeting consumers that have given official notice 8. By sending the texts at issue, Defendants have violated the privacy and statutory rights of Plaintiff and the Class. 9. Plaintiff therefore seeks an injunction requiring Defendants to stop their unconsented texting, as well as an award of actual and statutory damages to the Class members, together with costs and reasonable attorneys’ fees. PARTIES 10. Plaintiff REGAN SMITH is a natural person and is a citizen of the District of Nebraska. 2 11. Defendant SPANISH QUOTES, INC. is Arizona Domestic For-Profit Business Corporation Entity ID 11271316. 12. Defendant(s) JOHN DOES 1-5 (“John Doe”) are unknown business entities. JURISDICTION AND VENUE 13. This Court has federal subject matter jurisdiction under 28 U.S.C. § 1331, as the action arises under the Telephone Consumer Protection Act, 47 U.S.C. § 227, which is a federal statute. 14. This Court has personal specific jurisdiction over Defendants because Defendants texted Plaintiff Regan Smith, who resides in Omaha, Nebraska, and was at all times present in this district during these phone calls. Defendants’ texts placed towards residents of Nebraska is the subject of this dispute from which this lawsuit arises. 15. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b)(2) because the conduct giving rise to this case, texts placed to residents of Nebraska, substantially occurred in this District. COMMON FACTUAL ALLEGATIONS 16. To increase their sales, We Speak hired John Doe to market their company and produce inbound leads. 17. We Speak amassed a list of thousands of phone numbers from unknown sources. 18. On behalf of We Speak, John Doe texted cellular phones that were registered on the National Do Not Call List as prohibited by 47 U.S.C. § 227(c) and 47 C.F.R. § 64.1200(c)(2). 19. Defendants did not possess consent from Plaintiff and the Class as required prior to deploying these prohibited messages. FACTS SPECIFIC TO PLAINTIFF REGAN SMITH 20. On April 13, 2020, Plaintiff received two text messages from Defendants. 3 21. At 11:24 a.m., the first message said: “Hi Regan! It’s Monique w. SaveToday- you’ve qualified for car insurance that costs as low as $1/day. Call us back. To opt out, Msg ‘NO’” 22. Also on the same day, at 1:33 p.m., the next message said: “Hey Regan! Im[sic] Monique- You have qualified for car insurance that costs as low as $1/day! Call me back. Msg ‘no’ to end” 23. Then, on April 14, 2020, Plaintiff received another text message at 11:54 a.m. that said: “Regan, call me; You could be spending too much on your auto insurance. We can change this. Get covered for as low as $1/day. Give us a call. – Monique.” 24. Plaintiff responded to the texts to determine the identity of the texter. 25. Also on April 14, 2020, she was solicited by Chad W. from All State. 26. Plaintiff received an email from Chad from All State containing a quote from All State entitled “Allstate Vehicle and Property Insurance Company House and Home Based Insurance Quote.” 27. Plaintiff’s attorney sent a letter to All State requesting the identity of the party who texted Plaintiff’s phone and All State disclosed Defendant We Speak. 28. Plaintiff never consented to receive texts from Defendants. Plaintiff had no relationship with Defendants and had never requested that Defendants contact Plaintiff in any manner, let alone by CLASS ALLEGATIONS 89. Class Definition: Plaintiff brings this action pursuant to Federal Rule of Civil Procedure 23(b)(2) and/or 23(b)(3) on behalf of Plaintiff and a class and subclass defined as follows: DNC List Class. All persons in the United States who: (1) from the last 4 years to present (2) received at least text message; (3) on his or her telephone number that was registered on the Do Not Call list; (4) for the purpose of selling Defendants’ products and/or services 4 90. The following people 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 the Defendants or their parents have a controlling interest and their current or former employees, officers and directors; (3) persons who properly execute and file a timely request for exclusion from the Class; (4) persons whose claims in this matter have been finally adjudicated on the merits or otherwise released; (5) Plaintiff’s counsel and Defendants’ counsel; and (6) the legal representatives, successors, and assigns of any such excluded persons. 91. Numerosity: The exact number of the Class members is unknown and not available to Plaintiff, but it is clear that individual joinder is impracticable. On information and belief, Defendants sent text messages to thousands of consumers who fall into the definition of the Class Members of the Class can be identified through Defendants’ records. 92. Typicality: Plaintiff’s claims are typical of the claims of other members of the Class, in that Plaintiff and the Class members sustained damages arising out of Defendants’ uniform wrongful conduct and unsolicited text messages. 93. Adequate Representation: Plaintiff will fairly and adequately represent and protect the interests of the other members of the Class. Plaintiff’s claims are made in a representative capacity on behalf of the other members of the Class. Plaintiff has no interests antagonistic to the interests of the other members of the proposed Class and is subject to no unique defenses. Plaintiff has retained competent counsel to prosecute the case on behalf of Plaintiff and the proposed Class. Plaintiff and Plaintiff’s counsel are committed to vigorously prosecuting this action on behalf of the members of the Class and have the financial resources to do so. 94. Policies Generally Applicable to the Class: This class action is appropriate for certification because Defendants have acted or refused to act on grounds generally applicable to the Class 5 as a whole, thereby requiring the Court’s imposition of uniform relief to ensure compatible standards of conduct toward the Class members and making final injunctive relief appropriate with respect to the Class as a whole. Defendants’ practices challenged herein apply to and affect the Class members uniformly, and Plaintiff’s challenge of those practices hinge on Defendants’ conduct with respect to the Class as a whole, not on facts or law applicable only to Plaintiff. 95. Commonality and Predominance: 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. Common questions for the Class include, but are not necessarily limited to the following: i. Whether Defendants’ conduct violated Section 227(c) of the TCPA; ii. Whether Defendants’ conduct violated the TCPA willingly and/or knowingly; iii. Whether Defendants possessed express consent prior to contacting Plaintiff and the members of the Class; iv. Whether members of the Class are entitled to treble damages based on the knowingness or willfulness of Defendants’ conduct. 96. Superiority: 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 as joinder of all parties is impracticable. The damages suffered by the individual members of the Class will likely be relatively small, especially given the burden and expense of individual prosecution of the complex litigation necessitated by Defendants’ actions. Thus, it would be virtually impossible for the individual members of the Class to obtain effective relief from Defendants’ misconduct. Even if members of the Class 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 6 and factual controversies presented in this Complaint. 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. CAUSE OF ACTION Telephone Consumer Protection Act Violation of 47 U.S.C. § 227(c) (On behalf of Plaintiff and the DNC Class) 97. Plaintiff incorporates the foregoing allegations as if fully set forth herein. 98. The telephone numbers of Plaintiff and the DNC Class are registered on the Do Not Call Registry. 99. Plaintiff registered her phone number on the DNC List on March 9, 2020. 100. Defendants and/or their agents sent text messages to Plaintiff’s and the Class members’ DNC-registered telephones without having their prior express consent to do so. 101. The foregoing acts and omissions of Defendants and/or their agents constitute multiple violations of the TCPA, 47 U.S.C. § 227(c), by making telemarketing solicitations to residential and wireless telephone numbers listed on the National Do Not Call Registry. 47 C.F.R. § 64.1200(c)(2). 102. Defendants’ texts were made for a commercial purpose. 103. Plaintiffs are entitled to an award of at least $500 in damages for each such violation. 47 U.S.C. § 227(c)(5)(B). 104. Plaintiffs are entitled to an award of up to $1,500 in damages for each such knowing or willful violation. 47 U.S.C. § 227(c)(5). 105. Plaintiffs also seek a permanent injunction prohibiting Defendants and their agents from making telemarketing solicitations to residential and wireless telephone numbers listed on the National Do Not Call Registry. 7 PRAYER FOR RELIEF WHEREFORE, Plaintiff REGAN SMITH, individually and on behalf of the Class, prays for the following relief: A. An order certifying the Class as defined above, appointing Plaintiff REGAN SMITH and as the Class representative and appointing Plaintiff’s counsel as Class Counsel; B. An order declaring that Defendants’ actions, as set out above, violates section 227(b) and 227(c) of the TCPA; C. An order declaring that Defendants’ actions, as set out above, violate the TCPA willfully and knowingly; D. An order declaring that Defendants’ actions, as set out above, constitute negligence; E. An injunction requiring Defendants to cease all unlawful text messages to phone numbers registered on the Federal Do Not Call Registry without first obtaining the recipients’ express consent to receive such texts, and otherwise protecting interests of the Class; F. An award of statutory damages and penalties; G. An award of costs; and H. 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. Dated: June 29, 2021 Respectfully submitted, PLAINTIFF REGAN SMITH, individually and on behalf of all 8 others similarly situated, By: /s/ Mark L. Javitch . Mark L. Javitch (California SBN 323729) JAVITCH LAW OFFICE 480 S. Ellsworth Ave San Mateo CA 94401 Tel: (650) 781-8000 Fax: (650) 648-0705 Attorney for Plaintiff and the Putative Class 9

privacy

gsalDYcBD5gMZwcz6oVt

Isaac P. Hernandez (SBN 025537) Hernandez Law Firm, PLC 55 East Thomas Road Phoenix, Arizona 85012 Tel: 602.753.2933 Fax: 855.592.5876 [email protected] Daniel R. Ortega, Jr. (SBN 005015) Ortega Law Firm, P.C. 361 East Coronado Rd., Ste 101 Phoenix, Arizona 85004 Tel: 602.386.4455 Fax: 602.386.4480 [email protected] Attorneys for Plaintiff Octavio Valle and the Plaintiff Class IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA No. COMPLAINT (Jury Trial Demanded) Octavio Valle, on behalf of himself and all similarly situated individuals, Plaintiffs, v. L.R. Cowan Concrete Co., Inc.; Leonard Cowan and Patricia Cowan, individually, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) COMES NOW Plaintiff Octavio Valle (“Plaintiff”) on behalf of himself and all similarly situated individuals (“Plaintiff Class”), by and through undersigned counsel, and in support of this Complaint against Defendants L.R. Cowan Concrete Co., Inc.; Leonard Cowan and Patricia Cowan (collectively “Defendants”), hereby alleges on behalf of himself and all other similarly situated individuals, as follows: I. NATURE OF THE ACTION 1. Plaintiff, on behalf of himself and the Plaintiff Class, brings this collective action to recover unpaid compensation and other appropriate relief from the Defendants pursuant to the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. Plaintiff contends that Defendants failed to compensate Plaintiff and Plaintiff Class members at one-and-a-half times their regular rate for overtime worked over their regular forty-hour workweek, and failed to pay them at all for certain time periods worked, thereby depriving Plaintiffs of compensation to which they were entitled. Plaintiff, on behalf of himself and the Plaintiff Class, seeks declaratory relief, back-pay for nonpayment and underpayment of wages, liquidated damages, attorney’s fees and costs, and other relief available under 29 U.S.C. § 216 and any other applicable law. II. JURISDICTION AND VENUE 2. Jurisdiction over Plaintiffs’ federal law claims is conferred on this Court pursuant to 28 U.S.C. § 1331 and 29 U.S.C. § 216(b). 3. Venue is proper in this Court pursuant to 28 U.S.C. § 1391, because the violations of the FLSA alleged herein occurred in whole, or in part, in Maricopa County, Arizona, and because Defendants maintain a place of business in, and regularly conduct business in Maricopa County, Arizona, and throughout the geographic region comprising this judicial district. III. PARTIES 4. Defendant L.R. Cowan Concrete Co., Inc. (“Defendant Cowan Concrete”), an Arizona corporation, is a construction company with an emphasis on concrete construction services for residential and commercial customers. 5. Plaintiff is a resident of Maricopa County, Arizona. 6. Defendants employed Plaintiff as a non-exempt hourly employee from 1997 until his termination on or about October 21, 2011. 7. Plaintiff brings this action on behalf of himself and all other similarly situated individuals, current and former non-exempt hourly employees who performed work on construction projects for Defendants at any time from three years prior to the filing of this Complaint to the entry of judgment in this action. 8. During the applicable statutory period, Defendants employed between 25 and 40 non-exempt hourly employees to perform work on construction projects for Defendants, including but not limited to, general laborers, concrete framers/finishers, lead men, and foremen. 9. Upon information and belief, Defendant Leonard Cowan has been an owner and/or officer of Defendant Cowan Concrete during the applicable statutory period. 10. Upon information and belief, Defendant Patricia Cowan has been an owner and/or officer of Defendant Cowan Concrete during the applicable statutory period. 11. Upon information and belief, Defendants Leonard and Patricia Cowan were responsible for all business operations of Defendant Cowan Concrete, including but not limited to, administering and implementing all company policies and procedures concerning or affecting employees. 12. Upon information and belief, Defendants Leonard and Patricia Cowan have been residents of Maricopa County, Arizona, at all times during the applicable statutory period. 13. At all times relevant herein, Defendants qualified as “employers” as defined in 29 U.S.C. § 203(d), and thus subject to the requirements of the FLSA, 29 U.S.C. § 201 et seq. IV. FACTUAL BACKGROUND 14. Plaintiff began working for Defendants in June or July 1997 as a general laborer, earning about $6.50 per hour. 15. Sometime around late 2000 or early 2001, Plaintiff began working for Defendants as a concrete framer/finisher. 16. Sometime in 2002, Plaintiff was promoted to the position of “lead man,” supervising a crew of four to six employees. 17. In October 2006, Plaintiff received a pay increase to $22.00 per hour. 18. In May 2009, Plaintiff’s hourly rate was reduced to $19.80 per hour. 19. In September 2009, Plaintiff’s hourly rate was reduced to $18.00 per hour. 20. On or about June 3, 2011, Plaintiff suffered a work-related injury, which limited his ability to perform his regular duties. 21. Defendants terminated Plaintiff’s employment on or about October 21, 2011. 22. Beginning in early 2009, Defendants implemented a policy requiring or permitting employees, including Plaintiff and Plaintiff Class members, to “volunteer” their work time. 23. During the applicable statutory period, Plaintiff and Plaintiff Class members worked about two hours of “volunteer” time per day, Monday through Friday. 24. During the applicable statutory period, Plaintiff and Plaintiff Class members worked about four to six hours of “volunteer” time two or three Saturdays per month. 25. During the applicable statutory period, Plaintiff and Plaintiff Class members performed work for Defendant for which they were not paid. 26. During the applicable statutory period, Plaintiff and Plaintiff Class members were not paid one-and-a-half times their regularly hourly rate for all hours worked in excess of 40 hours per work week. 27. Upon information and belief, Defendant retaliated against employees who refused to work “volunteer” time by subjecting them to adverse employment actions, including but not limited to, reducing their work schedules and ultimately forcing those employees who refused to work “volunteer” time to voluntarily resign. V. CLASS ALLEGATIONS 28. Plaintiff files this case as an “opt-in” class action as specifically allowed by 29 U.S.C. § 216(b). (See Plaintiff’s Consent Form attached hereto as Exhibit A). 29. Plaintiff and members of the Plaintiff Class are non-exempt hourly employees who are currently or have been employed by Defendants to perform work on construction projects for Defendants at any time from three years prior to the filing of this Complaint to the entry of judgment in this action. 30. Plaintiff contends that this action is appropriate for class action status because of the large number of potential plaintiffs, and because Defendants have acted in the same manner with regards to Plaintiff and all members of the Plaintiff Class. 31. By failing to pay Plaintiff and Plaintiff Class members for all hours of work, Defendants violated Plaintiffs’ rights under the FLSA and implementing regulations, including but not limited to 29 C.F.R. §§ 785.11 and 785.12. 32. Defendants’ failure to pay Plaintiff and Plaintiff Class Members for all hours of work was knowing, willful, and in reckless disregard of Plaintiffs’ rights under the FLSA. 33. By failing to pay Plaintiff and Plaintiff Class members one-and-one-half times their regular hourly rate for all hours worked in excess of 40 hours per work week, Defendants violated Plaintiffs’ rights under the FLSA and implementing regulations, including but not limited to 29 U.S.C. § 207. 34. Defendants’ failure to pay Plaintiff and Plaintiff Class members one-and-a- half times their regular hourly rate for all hours worked in excess of 40 hours per work week was knowing, willful, and in reckless disregard of Plaintiffs’ rights under the FLSA. VI. DEMAND FOR TRIAL BY JURY 35. Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiffs demand a trial by jury on all triable questions of fact raised by the complaint. WHEREFORE, Plaintiffs pray for relief against Defendants as follows: A. Declare that Defendants violated the FLSA by failing to pay Plaintiff and Plaintiff Class members for all hours worked for Defendants; B. Declare that Defendants violated the FLSA by failing to pay Plaintiff and Plaintiff Class members one-and-a-half times their regularly hourly rate for all hours worked in excess of 40 hours per work week; C. Award Plaintiff and Plaintiff Class members payment for all unpaid wages; D. Award Plaintiff and Plaintiff Class members liquidated damages in an amount equal to their unpaid wages; E. Order Defendants to pay Plaintiffs’ reasonable attorney’s fees and costs pursuant to 29 U.S.C. § 216(b); F. Order Defendants to pay pre-judgment interest on all amounts for which pre- judgment interest is legally allowable, at the highest lawful rate; G. Order Defendants to pay post-judgment interest at the highest lawful rate for all amounts, including attorney fees, awarded against Defendant; and H. Order all other relief, whether legal, equitable or injunctive, as may be necessitated to effectuate full relief to the Plaintiffs. RESPECTFULLY SUBMITTED this 25th day of October, 2012. By: /s/ Isaac P. Hernandez Isaac P. Hernandez Hernandez Law Firm, PLC 55 East Thomas Road Phoenix, Arizona 85012 and /s/ Daniel R. Ortega, Jr. Daniel R. Ortega, Jr. Ortega Law Firm, P.C. 361 East Coronado Rd., Ste. 101 Phoenix, Arizona 85004 Attorneys for Plaintiff Octavio Valle and the Plaintiff Class

employment & labor

HFbHBIkBRpLueGJZ7fTc

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK -------------------------------------x LORRAINE PADRO, DHANASAR RAMAN, TOBY MARLOW, as court-appointed guardian for JUDITH BLUMENSOHN, CARMEN DURAN, JOHN EDWARDS, ERNEST A GUTIERREZ, JULIA JUAN, and JANE DOE, individually and on behalf of all others similarly situated, CLASS ACTION COMPLAINT Plaintiffs, _-CV-_(_) v. MICHAEL J. ASTRUE, AS COMMISSIONER OF SOCIAL SECURITY, Defendant. -------------------------------------X PRELIMINARY STATEMENT 1. Plaintiffs, on behalfofthemselves and all others similarly situated (together "Class Plaintiffs"), bring this action against the Commissioner of the Social Security Administration Michael J. Astrue ("the Commissioner"), for bias against Social Security disability claimants by the Queens Office of Disability Adjudication and Review ("QODAR"), resulting in a systematic failure to provide full and fair Social Security benefit hearings. 2. Class Plaintiffs comprise a vulnerable group of disabled individuals with extremely limited means of subsistence. Many have profound disabilities-the kind of disabilities, as one court put it, that "dominate life." Notwithstanding clearly documented and disabling medical conditions, Class Plaintiffs, and thousands like them, have diligently pressed their rights for years--cataloging their conditions, meeting with doctors, being subjected to innumerable tests and procedures-only to run headlong into the QODAR brick wall of bias. 3. Prior court judgments have found routine derelictions of duty, and commission of the same legal errors, in case after case after case. Courts have used various phrases to describe the problem, highlighted more fully below, with Administrative Law Judges ("ALJs") from QODAR, including: a. Proceedings that were "a far cry" from the required standards; b. Rationale that was "plucked from thin air"; c. Conduct that "trivializes plaintiff's impairments" and "raises the possibility that the ALJ was not seeking to neutrally develop the record, but rather to find support for the conclusions he had already formed"; d. Analysis that was "deficient" and "incoherent"; e. Decisions that were "at odds with established precedent," "replete with conclusory statements," "arbitrary," "illogical," and "not supported by substantial evidence"; f. Delay that was "particularly egregious"; g. Witness examinations that were "a study in combative questioning"; and h. Overall conduct that demonstrates "serious negligence and could possibly even suggest bias." 4. Many similar criticisms can be found on hundreds of pages of judicial ink devoted to reviewing and remanding the decisions of the ALJs discussed below. Again and again and again, claimants, their advocates, and, finally, judges, must wade through thousands of pages oftestimony and records only to find the same errors-a monumental waste of judicial and legal time and resources. 5. In each case, the victim of the error was not the Commissioner-it was the claimant. Viewed in proper context, these errors are routine, clearly intentional, and an obvious manifestation of general bias against claimants. 6. Indeed, QODAR has the third highest benefits-denial rate in the entire country, the highest benefits-denial rate in the New York region, and almost all of the AUs below rank high on the national list of top claims deniers. On appeal, the QODAR suffers one of the highest remand rates in the country. 7. These statistics are all the more deplorable in light of the Second Circuit's pronouncement in Cutler v. Weinberger, 516 F.2d 1282, 1285 (2d Cir. 1975), that the Social Security Act (the "Act") must be liberally applied. The Act's intent is inclusion, not exclusion, except in QODAR. 8. In particular, five members of QODAR have demonstrated persistent and flagrant bias against benefits claimants as demonstrated conclusively by their persistent and intentional legal and procedural errors, as well as unprofessional behavior and disregard of court-imposed rules. 9. Accordingly, Class Plaintiffs seek a declaratory judgment that the ALJs in question-Michael D. "Manuel" Cofresi, Seymour Fier, Marilyn P. Hoppenfeld, David Z. Nisnewitz, and Hazel C. Strauss, (together, the "Named ALJs"): a. Routinely fail to develop administrative records in dereliction of their duties; b. Routinely refuse to apply correct legal standards even when instructed by federal court to do so; c. Routinely make erroneous credibility determinations against claimants, including by failing to consider claimants' work histories; d. Routinely engage in unprofessional and unfair behavior to the detriment of claimants; and e. Taken together, these consistent actions deprive Class Plaintiffs and other claimants of their rights to fair hearings before an impartial adjudicator, in violation of the Social Security Act, the Administrative Procedure Act, and the due process guarantee of the Fifth Amendment to the United States Constitution. 10. Plaintiffs also seek an injunction barring the Commissioner from allowing the Named ALJs to preside over any claims for Social Security disability benefits ("SSD") under Title II of the Act, 42 U.S.C. §§ 401 et seq., and Supplemental Security Income benefits ("SSI") under Title XVI of the Act, 42 U.S.C. §§ 1381 et seq. JURISDICTION 11. This Court has jurisdiction under 42 U.S.C. §§ 405(g) and 1383( c), and 28 U.S.C. §§ 1331 and 1361. Plaintiffs seek declaratory relief pursuant to 28 U.S.C. §§ 2201 and 2202 and Rule 57 ofthe Federal Rules of Civil Procedure, and injunctive relief pursuant to Rule 65 ofthe Federal Rules of Civil Procedure. 12. Venue lies within this district pursuant to 28 U.S.C. § 1391(b)(l) and (2). PARTIES 13. Plaintiff Lorraine Padro is a resident of Ozone Park, New York, and a claimant for SSI. Ms. Padro's case is assigned to the Honorable Nicholas G. Garaufis, District Judge, U.S. District Court for the Eastern District ofNew York 10-CV-3387. 14. Plaintiff Toby Marlow is a party to this lawsuit as the court-appointed guardian for Judith Blumensohn. Both Ms. Marlow and Ms. Blumensohn are residents of Queens, New York, and Ms. Blumensohn is a claimant for SSD. Ms. Blumensohn's case is assigned to the Honorable Sandra L. Townes, District Judge, U.S. District Court for the Eastern District ofNew York, 11-CV -00860. 15. Plaintiff John Edwards is a resident of Brooklyn, New York, and a claimant for SSI. Mr. Edwards' case is assigned to the Honorable Kiyo A. Matsumoto, District Judge, U.S. District Court for the Eastern District ofNew York, 11-CV-00971. 16. Plaintiff Jane Doe is a resident of Far Rockaway, New York, and a claimant for SSI. Jane Doe's case is pending before the Appeals Council. 17. Plaintiff Carmen Duran is a resident ofRichmond Hill, New York, and a claimant for SSI. Ms. Duran's case is pending before the Appeals Council. 18. Plaintiff Ernesta Gutierrez is a resident of Sunnyside, New York, and a claimant for SSI. Ms. Gutierrez is preparing to file her case in the U.S. District Court for the Eastern District of New York. 19. Plaintiff Julia Juan is a resident of Elmhurst, New York, and a claimant for SSD and SSI. Ms. Juan's case is pending before the Appeals Council. 20. PlaintiffDhanasar Raman is a resident of South Ozone Park, New York, and a claimant for SSD and SSI. Mr. Raman's case is pending before the Appeals Council. 21. Defendant Michael J. Astrue is the Commissioner ofthe Social Security Administration ("SSA") and is statutorily responsible for the administration of the Act. SSA employs a corps of ALJs to adjudicate claims under the Act by claimants who request hearings. The SSA established the Office of the Chief Administrative Law Judge which oversees the hearing process conducted by SSA's ALJs; formulates and develops broad policies and objectives and establishes program goals for the ALJs; engages in continuous examination of all aspects ofthe Office of Disability Adjudication and Review ("ODAR") operations and implements improvements where needed; is responsible for developing and maintaining procedures for effective operations of the hearings; provides management oversight for all managerial activities in ODAR field offices; and coordinates regional and hearing office activities. CLASS ACTION ALLEGATIONS 22. The named plaintiffs bring their claims on behalf of themselves and other similarly situated persons, pursuant to Federal Rules of Civil Procedure ("FRCP") 23(a) and 23. The class consists of all claimants whose claims will be assigned to the Named ALJ s for a hearing and/or decision and all SSI and SSD claimants who, since January 1, 2005, have received an unfavorable or partially favorable decision, not reversed on any subsequent appeal, from the Named ALJs. 24. The class action requirements ofFRCP 23(a) and (b)(2) are met in that: a. The class is so numerous that joinder of all members is impracticable. Upon information and belief, the Named ALJs each conduct over 150 hearings a year and deny benefits to up to 80% of claimants who appear before them. Every individual eligible for a hearing before the Named ALJ s is a potential class member. b. There are questions of law and fact common to the class, including whether the Named ALJs are generally biased against claimants for SSI and SSD and whether this bias deprives Class Plaintiffs of their right to a full and fair hearing before an impartial adjudicator, in violation ofthe Act, the Administrative Procedure Act, and the Due Process Clause of the Fifth Amendment. c. The named plaintiffs' claims are typical of the claims ofthe class, and the named plaintiffs have no conflict of interest with other members of the class, all of whom would benefit from the relief sought in this case. d. The named plaintiffs will fairly and adequately represent the interests of the class. Plaintiffs are represented by counsel experienced in class action litigation, and in litigating cases involving the SSA as well as other public benefit programs. Counsel has previously litigated numerous class action suits in federal court and has sufficient resources to prosecute the present case. e. The Commissioner has acted on grounds generally applicable to the class by allowing plaintiffs' claims to be assigned to the Named ALJs despite their bias and inability or unwillingness to provide fair hearings. If class certification is not granted, individuals would be forced to bring separate actions, thereby wasting judicial resources, as well as the time of attorneys from government agencies and free legal services programs. FACTUAL ALLEGATIONS COMMON TO THE CLASS A. Applying for Social Security Benefits 25. The Commissioner administers several types of benefits under the Act, including benefits based on disability or old age. A disabled person can apply for two distinct forms of disability benefits administered by SSA: SSD, which is based on work history, and SSI, which is based on limited income and resources. Some individuals are eligible for both SSI and SSD. 26. A disabled individual may be eligible for SSD based on his or her work history, or the work history of a parent or spouse. A claimant for SSD must prove disability as of the date the worker was last insured. 27. An individual may be eligible for SSD as a disabled adult child ("DAC") if he or she became disabled prior to age 22 and has an insured parent who is receiving Social Security benefits or is deceased. 28. An adult individual can be found to be "disabled" for purposes of SSI and SSD if . he or she is unable "to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months." 42 U.S.C. §§ 423(d)(l)(A), 1382c(a)(3)(A). 29. An adult individual is found to be disabled if"his physical or mental impairment or impairments are of such severity that he is not only unable to do his previous work, but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy .... " 42 U.S.C. §§ 423(d)(2)(A), 13 82c( a )(3 )(B). 30. The evaluation of medical disability for both SSI and SSD is the same and consists of a "five-step sequential evaluation" codified by SSA. 20 C.F.R. §§ 416.920, 404.1520. 31. The first step of the sequential evaluation determines whether the claimant is engaged in "substantial gainful activity." 32. If the claimant is not engaged in such activity, the severity of the claimant's impairment is evaluated in the second step. An impairment is defined as "severe" if it interferes with basic work-related activities and is expected to result in death or last more than twelve months. 33. If the impairment is found to be severe, the claimant's impairments are evaluated against the Listing oflmpairments ("Listing") contained in SSA's regulations. 20 C.F.R. Pt. 404 Subpt. P. App. 1; 20 C.F.R. §§ 416.920(d), 404.1520(d). The Listing sets forth a set of symptoms and other criteria specific to several medical conditions. A claimant can "meet" the Listing and be found disabled with medical evidence that supports the exact requirements of the Listing or "equals" a Listing. 34. If the claimant's impairment does not meet or equal a Listing, the process moves to the fourth step, with a determination of the claimant's "residual functional capacity." This finding assesses the claimant's capacity to engage in basic work activities, including prior relevant work. 3 5. If the claimant does not retain the residual functional capacity to return to prior relevant work, the process moves to the fifth step, where a determination is made regarding whether the claimant has the capacity to perform other work in the national economy in light of the claimant's residual functional capacity assessment, age, education, and work experience. If the claimant cannot perform other work, benefits are awarded. The burden of proof at this step is on the Commissioner. 36. Applications for SSI and SSD are initially processed through a network of SSA field offices and state disability determination services. A claimant begins the process by completing an application and an adult disability report, and submitting the documents to one of SSA's field offices. In New York, the initial determination of whether a claimant is disabled is made by New York State's Office of Temporary and Disability Assistance ("OTDA"), pursuant to a contract with SSA. At this stage, OTDA may order a consultative examination of the claimant. 37. If the claim is denied, that claimant is entitled to a hearing before an ALJ in SSA's ODAR. The ALJ reviews the claim de novo. 38. ALJ hearings are informal and non-adversarial proceedings. The claimant may have an attorney or non-attorney act as his or her representative at the hearing. 39. If the ALI's decision is adverse to the claimant, he or she may seek review by the Appeals Council, a component ofSSA's ODAR. The Appeals Council has the power to deny the request for review, accept the case for review and deny or grant benefits, or accept the case for review and remand it to an ALI for further review. The Appeals Council has the power to review an ALI's decision sua sponte within 60 days of the decision. 40. On information and belief, the average processing time for the Appeals Council to review a case and issue a decision is fourteen months. 41. If the claimant disagrees with the Appeals Council's decision or the Appeals Council declines to review the claim, the claimant may seek judicial review in a federal district court pursuant to 42 U.S.C. §§ 405(g), 1383(c). If a federal court remands the claim, it goes to the Appeals Council, which may grant benefits or remand the case to an ALJ with instructions. If a denial from the same ALI is remanded more than twice, it is the policy and practice of the Appeals Council to remand to a different ALI. A federal court and the Appeals Council can remand to a different ALJ at any time. 42. SSI and SSD claimants are often unrepresented by counsel due to a lack of financial means and/or sufficient information to understand the importance of retaining an attorney. In addition, SSI and SSD claimants often have mild or severe mental disabilities. Many also have limited means of transportation to disability interviews, meetings, and hearings. Denial of claims can and do have severe consequences for claimants and their families. B. Seminal Principles of Social Security Law 43. The chronic failure of the Named ALJs to correctly apply the law is all the more alarming given the well-settled principles that govern the components of an SSA benefits determination. Indeed, as evidenced below, the Second Circuit has clearly opined on many of the standards to be applied and provided the Named ALis with a roadmap for the correct adjudication ofbenefits applications. 1. Liberal Construction of the Act 44. As explained by the Second Circuit in Cutler v. Weinberger, 516 F.2d 1282, 1285 (2d Cir. 1975), the Act is "a remedial statute which must be 'liberally applied'; its intent is inclusion rather than exclusion." 2. Evidentiary Standard 45. It is the longstanding policy of the Commissioner to apply the preponderance of evidence standard, the traditional evidentiary standard in civil or administrative adjudicatory proceedings. This standard of proof applies at all levels of administrative review, but the Named ALis effectively, and wrongfully, have held Class Plaintiffs to a much higher standard. 3. Treating Physician Rule 46. In determining the nature, scope and effect of a disability, an ALJ is required to · follow the "Treating Physician Rule." Originally articulated by Courts of Appeals, and later codified by SSA, 20 C.F.R. §§ 416.927(d)(2), 404.1527(d)(2), the Treating Physician Rule was intended as a means to control rampant denials of SSI and SSD claims. 47. Based on the notion that the claimant's treating physician (as opposed to non- treating physicians, typically retained by OTDA and SSA for one-time consultative examinations, and non-examining physicians used to review claims files without ever meeting the claimant) are in a better position to render a reliable diagnosis and prognosis based on the deeper knowledge and insight gained from the physician's longitudinal treatment of the claimant, the Treating Physician Rule requires the decision-maker to give special deference to the treating physician in cases where the medical evidence is in conflict. The application of the Treating Physician Rule is the single-most important determinant in weighing SSI and SSD claims. 48. For example, in Schisler v. Heckler, 787 F.2d 76, 81 (2d Cir. 1986), the seminal case on the interpretation of the Treating Physician Rule, the Second Circuit held: The treating-physician rule governs the weight to be accorded the medical opinion of the physician who treated the claimant . . . relative to other medical evidence before the fact-finder, including opinions of other physicians. The rule, which has been the law of this circuit for at least five years, provides that a treating physician's opinion on the subject of medical disability, i.e., diagnosis and nature and degree of impairment, is: (i) binding on the fact-finder unless contradicted by substantial evidence; and (ii) entitled to some extra weight because the treating physician is usually more familiar with a claimant's medical condition than are other physicians, although resolution of genuine conflicts between the opinion of the treating physician, with its extra weight, and any substantial evidence to the contrary remains the responsibility of the fact-finder. 49. The Second Circuit further honed this directive in Rosa v. Callahan, 168 F.3d 72, 78-79 (2d Cir. 1999), where it held that the opinion of a treating physician must in fact be given controlling weight if it is well supported by medical finding and not inconsistent with other substantial evidence. The Court held further that ALJs "cannot arbitrarily substitute [their] own judgment for competent medical opinion" and that it is improper for an ALJ to "'set [her] own expertise against that of the treating physician." 50. Yet despite this bright-line test, and as evidenced in detail below, the Named ALJs routinely misapply the Treating Physician Rule--a critical component of the eligibility analysis. Their misconduct ranges from entirely ignoring the treating physician to finding obvious pretexts for marginalizing his or her medical opinion. Often, the Named ALI s engage in this illegal behavior because the treating physician's evidence contradicts a conclusion the Named ALJ has already reached. 4. Analysis of Subjective Symptoms 51. Equally critical to the adjudication of a benefits claim under the Act is the proper analysis of subjective symptoms, including pain. The Second Circuit instructs that claims of pain and functional limitation need not be supported by objective medical evidence. See Green- Younger v. Barnhart, 335 F.3d 99, 107 (2d Cir. 2003). Indeed, the Second Circuit cites favorably to the Eighth Circuit's pronouncement that "[a] patient's reports of complaints, or history, is an essential diagnostic tool." Id. (citing Flanery v. Chater, 112 F.3d 346,350 (8th Cir. 1997)). Moreover, "[a]s a general matter, 'objective' findings are not required in order to find that an applicant is disabled." Green-Younger, 335 F.3d at 108. Sadly, the record demonstrates that the Named ALJs do not properly assess subjective symptoms. Instead, they readily ignore directives to consider these important components of a claimant's disability, and routinely marginalize any such testimony or evidence if it is not consistent with the ruling, that in many cases, the Named ALJs have pre-ordained. 52. Moreover, in assessing the degree to which a claimant's pain interferes with his or her ability to work, an ALI's ability to disregard the claimant's testimony about such pain is strictly limited. Once a claimant is determined to have a pain-producing disability, the ALJ may not disregard her testimony about the scope of, and limitations created by, such pain. 20 C.F.R. § 404.1529(c)(2)-(3). Rather, the ALI must consider seven factors in evaluating a claimant's testimony concerning pain: (1) the claimant's daily activities; (2) the location, duration, frequency, and intensity of the claimant's pain and other symptoms; (3) precipitating and aggravating factors; ( 4) the type, dosage, effectiveness, and side effects of any medication the claimant takes to alleviate pain or other symptoms; (5) any treatment, other than medication that the claimant received; (6) any measures the claimant uses to relieve pain or other symptoms; and (7) other factors concerning the claimant's functional limitations and restrictions due to pain or other symptoms. 20 C.F.R. §§ 404.1529(c)(3)(i)-(vii), 416.929(c)(3)(i). 5. Claimant Credibility 53. The ALJs' failure to correctly consider subjective complaints is often manifest in improper credibility determinations. 54. The proper assessment of a claimant's credibility is of vital importance in determining whether an individual qualifies for benefits. Accordingly, the Commissioner and the Second Circuit have both issued explicit guidance that an ALJ must adhere to in their adjudication ofbenefits claims. In guidance to all ALJs, the Commissioner specifically instructed: It is not sufficient for the adjudicator to make a single, conclusory statement that 'the individual's allegations have been considered' or that 'the allegations are (or are not) credible.' It is also not enough for the adjudicator simply to recite the factors that are described in the regulations for evaluating symptoms. The determination or decision must contain specific reasons for the finding on credibility, supported by the evidence in the case record, and must be sufficiently specific to make clear to the individual and to any subsequent reviewers the weight the adjudicator gave to the individual's statements and the reasons for that weight. SSR 96-7p, 1996 WL 374186, at *2 (S.S.A.). 55. The Second Circuit has additionally clarified that in assessing credibility, "[a] claimant with a good work record is entitled to substantial credibility when claiming an inability to work because of a disability." Rivera v. Schweiker, 717 F.2d 719, 725 (2d Cir. 1983). 56. Once again, despite having been provided with a clear set of guidelines for assessing credibility, the record demonstrates that the Named ALJs operate as ifthere are no guidelines at all. Routinely, the Named ALJs disregard the factual evidence in the record and substitute their own opinions in place of a claimant's testimony. Additionally, in multiple instances, the Named ALJs failed to accord the appropriate weight to a claimant's previous work experience. 6. Duty to Develop the Record 57. Whether or not a claimant has counsel, and often they do not, an ALJ is required to develop the evidentiary record pursuant to 20 C.F.R. §§ 416.912,404.944, and 404.1512, and seek additional information from the treating physician. The Court of Appeals for the Second Circuit has held that an ALJ has an affirmative duty to develop the administrative record and that it is the duty of an ALJ to seek additional information from the treating physician sua sponte where clinical findings are inadequate. Clark v. Comm 'r of Soc. Sec., 143 F.3d 115, 118 (2d Cir. 1998). This duty includes the responsibility to investigate and develop evidence and arguments in favor of and against awarding benefits. 58. As demonstrated below, the Named ALJs consistently and chronically fail to satisfy their obligation to create the proper record. 7. Use of a Vocational Expert 59. The Second Circuit has also provided instructions governing the proper implementation of a vocational expert to supplement the use of medical-vocational guidelines in assessing a claimant's ability to perform work. In Bapp v. Bowen, 802 F .2d 601, 605 (2d Cir. 1986), the Second Circuit held: [A]pplication of the grid guidelines and the necessity for expert testimony must be determined on a case-by-case basis. If the guidelines adequately reflect a claimant's condition, then their use to determine disability status is appropriate. But if a claimant's nonexertional impairments "significantly limit the range of work permitted by his exertional limitations" then the grids obviously will not accurately determine disability status because they fail to take into account claimant's nonexertional impairments. 60. The Second Circuit, through its decision in Bapp, established a test that hinges the need for a vocational expert upon the non-exertional impairments of the claimant. Yet despite this clear directive, and as evidenced repeatedly below, the Named ALJs fail time and time again to properly utilize vocational experts, and instead thrust their own biased opinions into the evaluation of non-exertional impairments to the great detriment of the claimants. * * * 61. The practical effect of the Named ALJs' failure to follow these long-standing and clear principles is a tremendous waste of judicial resources. The manifest errors cause claimants to spend years, and sometimes more than a decade, being shuttled back and forth between the multi-layered bureaucracy. Tellingly, several of the rulings made by this Court and discussed herein, reflect the district court judges' frustration with the Named ALJ s for repeating the exact same mistakes in the exact same manner over and over again. Based on their complete lack of faith in the Named ALJs' ability to carry out their mandate, in many instances the cases at issue are either remanded to different ALJs or remanded solely for a benefits calculation. C. The Queens Office Of Disability Adjudication & Review 62. According to the hiring standards set forth by the U.S. Office of Personnel Management, "ALJs serve as independent impartial triers of fact in formal proceedings requiring a decision on the record after the opportunity for a hearing." The Association of Administrative Law Judges, representing ALJs employed by the Commissioner, has noted that "the administrative law judges in [SSA] have the responsibilities of developing a complete record for both parties; to protect the trust fund as well as the due process rights of the claimant; and render a legally defensible decision based on the evidence in the hearing record." 63. The Commissioner employs ALJs, pursuant to 5 U.S.C. § 3105, to adjudicate claims for benefits under the Act in Queens, New York, and assigns them to various hearing offices. There are currently eight ALJs assigned to QODAR, including QODAR's Chief ALJ Nisnewitz, and ALJs Cofresi, Fier, Hoppenfeld, and Strauss. 64. The Named ALJs are not fair adjudicators; they each have a general bias against SSA claimants and use any means available, legal or not, to prevent claimants from having fair hearings before an impartial decision maker, and to deny valid claims. 65. The bias of the Named ALJs is described in four sections below: a. Section 1 reviews the history of bias of each Named ALJ based on published and unpublished judicial decisions. b. Section 2 discusses the Commissioner's indifference, and failure to act, in response to this pattern and practice of gross misconduct, which made this lawsuit (and the relief sought by plaintiffs) the last resort. c. Section 3 addresses the lack of public accountability for ALJs. d. Section 4 addresses the specific mistreatment of plaintiffs and class members by the Named ALJs. 1. History of Bias 66. The Named ALJs each have a clear and unambiguous history ofbias against SSI and SSD claimants. Their disturbing pattern of conduct, which the Commissioner has failed to address or remediate, is demonstrated conclusively by their: (1) routine failure to develop the administrative record; (2) routine failure to follow the law; (3) erroneous and faulty credibility determinations; and (4) aberrantly high denial rates. Each category of misconduct is described below for each ALJ. a) ChiefALJ David Z. Nisnewitz 67. Since January 1, 2008, thirteen district court cases identified ALJ Nisnewitz as the author of the decision under review. In these federal court opinions he was found to have committed error in ten cases. There is little doubt, when the overall record is considered, that Chief ALJ Nisnewitz's consistent errors are highly probative ofhis anti-claimant bias. (1) Failure to Develop the Record 68. In a vast majority of ALJ Nisnewitz's cases, this Court found him in error for failing to discharge his duty to "affirmatively develop the record." The Courts' factual findings are wholly consistent with a clear pattern of denial of meritorious claims based on pre-existing bias against claimants. Below are several notable examples, demonstrating this clear pattern between 2008 and the present: 69. In Ginsberg v. Astrue, 2008 WL 3876067 (E.D.N.Y. Aug. 18, 2008), ALJ Nisnewitz denied benefits to a 55-year-old prose claimant who experienced extended periods of being completely bedridden and multiple chronic conditions. This Court found that ALJ Nisnewitz made numerous errors and was unfair. Noting that "the ALI is under a heightened duty to scrupulously and conscientiously probe into, inquire of, and explore for all the relevant facts," the Court found him in dereliction ofhis duty. For example: a. Rather than calling witnesses to develop the record, ALJ Nisnewitz callously stated, "I don't make calls." b. ALJ Nisnewitz's response to a prose claimant's request for guidance on how to establish a doctor's expertise were "intemperate, brusque, and unhelpful." c. ALJ Nisnewitz's questioning of another medical expert was, according to the Court, "a study in combative questioning, which hampered the truth seeking process." d. ALJ Nisnewitz constantly interrupted a treating physician's testimony with leading questions designed "to elicit the responses he apparently wanted or expected to hear." e. His manner of conduct chilled the pro se claimant during the Commissioner's case, resulting in "virtually no cross-examination at all." f. Based on these errors, the Court found ALJ Nisnewitz was "a far cry" away from satisfying his duty to develop the record. Thus, the Court vacated and remanded. 70. In Rudt-Pohl v. Astrue, 2009 WL 2611320 (E.D.N.Y. Aug. 25, 2009), ALJ Nisnewitz denied benefits to claimant twice and was found both times to have failed to properly develop the record. This Court found that "[claimant] has a very serious medical condition [an allergy] that clearly dominates her life." In fact, claimant's allergy was so severe that she had an acute allergic reaction in front of ALJ Nisnewitz, forcing her to attend the adjourned hearing telephonically. Ignoring the evidence, ALJ Nisnewitz found that claimant could hold a job and denied her benefits claim, a decision this Court held was based on no proof at all. For these reasons, the Court found that the "AU's conclusion cannot be sustained on the record before this Court," vacated his decision, and remanded the matter solely for the calculation of benefits. 71. In Larkins v. Astrue, 2009 WL 3148763 (E.D.N.Y. Sept. 29, 2009), ALJ Nisnewitz had denied benefits to a multiple sclerosis victim, who had an impressive 30-year work history. ALJ Nisnewitz had been remanded earlier in this case by the Second Circuit Court of Appeals for his failure to develop the record, including a failure to resolve inconsistencies in the medical testimony. In addition to legal errors (discussed below), this Court found that ALJ Nisnewitz failed again to develop the record. "Here," the Court explained, "over the course of twelve years, the record has been developed and reviewed by the ALJ, twice." Nevertheless, the Court found that ALJ Nisnewitz's determination was "not supported by substantial evidence." The Court further found that, "[a]lthough the Court of Appeals for the Second Circuit instructed the ALJ to resolve the apparent tension [between two physicians], the ALJ failed to do so." Rather than acceding to the Commissioner's request for further remand for additional proceedings, the Court made a finding of disability and remanded solely for the calculation of benefits. 72. In Baldwin v. Astrue, 2009 WL 4931363 (S.D.N.Y. Dec. 21, 2009), this Court again found that ALJ Nisnewitz "neglected his duty to properly develop the record," stating that he failed to consider "the incompleteness of the record before him" in making his adverse benefits decision, and that he "failed to meet his responsibility to resolve ambiguities or evidentiary gaps in the record." The Court remanded, further finding that ALJ Nisnewitz's "failure to acknowledge relevant evidence or to explain its implicit rejection is plain error." 73. In Gross v. Astrue, 2010 WL 301945 (E.D.N.Y. Jan. 15, 2010), this Court went even farther, finding that ALJ Nisnewitz's behavior "raises the possibility that the ALJ was not seeking neutrally to develop the record, but rather to find support for the conclusions he had already formed in his first decision." ALJ Nisnewitz had denied benefits, twice, to a claimant suffering from severe conditions, including congenital hip dysplasia and associated osteoarthritis. Among other errors, ALJ Nisnewitzagain "failed to develop the medical record, failed to consider the proper factors in evaluating [claimant's] claims of subjective pain, and failed to provide a function-by-function assessment of [claimant's] ability to do work-related activities." Using an unusual remedy, but one used all too often for the Named ALJs, the Court ordered the Commissioner to assign the case to a new ALI on remand. In doing so, the Court concluded that ALJ Nisnewitz's conduct suggested a lack of impartiality and a dereliction ofhis duties. 74. InAas v. Astrue, 2010 WL 3924687 (E.D.N.Y. Sept. 29, 2010), ALJ Nisnewitz denied benefits to a former New York City firefighter with severe medical conditions, including spinal disk degeneration, depression, and associated alcoholism. This Court found that ALI Nisnewitz had denied benefits without developing and evaluating all available evidence. Indeed, ALJ Nisnewitz erred, according to the Court, in rejecting claimant's benefits without even mentioning the limits of claimant's ability to move. ALI Nisnewitz failed to seek any evidence on this important issue. 75. In Legare v. Astrue, 2010 WL 5390958 (E.D.N.Y. Dec. 22, 2010), this Court excoriated ALJ Nisnewitz, stating that his determination of claimant's income eligibility and his analysis "were so deficient and so incoherent as to prevent meaningful review ofhis decision." The Court called ALI Nisnewitz's analysis "opaque and nonspecific," and found his decision "so palpably deficient" that it ordered a remand. Convinced that ALJ Nisnewitz could not fairly develop the record, the Court ordered the Commissioner to assign the matter to a different ALJ. 76. In Smith v. Astrue, 2011 WL 1253233 (E.D.N.Y. Mar. 31, 2011), this Court found that ALJ Nisnewitz "failed to develop the record enough to show that his decision was supported by substantial evidence." ALJ Nisnewitz neglected to obtain records from claimant's actual treating physician prior to 2006, disregarded the treating physician's diagnosis of osteoarthritis, and discounted claimant's complaints regarding her severe impairment because the incomplete records reflected the diagnosis "on only one occasion." The Court emphasized that not only is there "no rule requiring a claimant's impairments to be diagnosed more than once," but ALI Nisnewitz "should have examined the physician's treatment records and addressed any remaining questions or doubts to that physician." The Court held that ALJ Nisnewitz's mostrecent failure to properly develop the record required remand. (2) Failure to Follow the Law 77. In a clear majority of ALJ Nisnewitz's cases, this Court found error for failing to follow the law, including by repeatedly ignoring the Treating Physician Rule. Below are several notable examples, demonstrating a clear pattern between 2008 through the present: 78. In Ginsberg v. Astrue, 2008 WL 3876067 (E.D.N.Y. Aug. 18, 2008), this Court remanded ALI Nisnewitz's denial for, among other errors, failing to follow the Treating Physician Rule. ALI Nisnewitz erroneously gave little weight to two physicians' findings. The Court found further error because ALI Nisnewitz relied, instead, on a non-treating expert, who only reviewed claimant's medical records. Further, the Court found objectionable ALI Nisnewitz's decision to interrupt and curtail claimant's counsel's cross-examination of that non- treating physician. Citing other "inexplicabl[e)" errors, the Court also decried ALJ Nisnewitz's reliance on a previously discredited orthopedist as a basis for benefits denial, ignoring the Court's prior determination that the orthopedist's "slipshod and specious" analysis thwarted "the ability oflegitimately disabled individuals ... to receive the much-needed compensation to which they are entitled." 79. In Rudt-Pohl v. Astrue, 2009 WL 2611320 (E:D.N.Y. Aug. 25, 2009), ALJ Nisnewitz denied benefits to a 65-year-old former nurse. This Court found that, among other maladies, the claimant suffered from a "quite critical" allergy, which resulted in an attack in front of ALJ Nisnewitz and the Commissioner's own medical expert. Based on that attack, the Commissioner's own expert conceded the allergy was "significant," and further found that claimant's allergy "threatens her life on a 'moment to moment' basis and 'can occur at any time without any warning, and without being aware of the noxious agent that precipitates the attack.'" The Commissioner's own expert further testified that it was "virtually impossible" to determine whether a particular work environment would trigger a potentially life-threatening allergic reaction. Despite the overwhelming evidence, ALJ Nisnewitz found that claimant could safely work. The Court found ALJ Nisnewitz's determination was based on "no evidence." Instead, the Court found that he relied on "spare and conclusory responses to the ALJ' s" own questions. The Court remanded only for the calculation of benefits. 80. In Larkins v. Astrue, 2009 WL 3148763 (E.D.N.Y. Sept. 29, 2009), this Court held that ALJ Nisnewitz "improperly discounted the opinion of treating physicians, including the neurologist ... who had treated claimant for at least seven years," and instead relied on a non-treating government doctor engaged only for the purpose of the hearing. In a common theme, the Court emphasized that "the ALJ imposed a stricter standard than is required by law." His decision to cherry-pick medical opinions supporting an adverse finding toward claimant "undermine[ d) the court's confidence in the ALJ's assessments of the medical evidence." Contrary to ALJ Nisnewitz's determination, the Court found that the medical evidence established a right to benefits, and the Court remanded only for a calculation of benefits. 81. In Baldwin v. Astrue, 2009 WL 4931363 (S.D.N.Y. Dec. 21, 2009), this Court found, again, that ALJ Nisnewitz failed to abide by the Treating Physician Rule. Again, the Court was forced to remand in the face of ALJ Nisnewitz's "un-explained decision to credit the opinion of Dr. Rothenberg, a non-examining source, over the [treating physician]," which the court called "improper." 82. In Gross v. Astrue, 2010 WL 301945 (E.D.N.Y. Jan. 15, 2010), this Court determined that ALJ Nisnewitz "disregard[ ed] the treating physician's opinion, [and] ... in effect made [his own] medical findings concerning" plaintiffs hip pain. In doing so, ALJ Nisnewitz violated a basic precept of the benefit-review process by "form[ing] his own medical opinion" and "set[ ting] his own expertise against that of a physician." He also erred by "failing to provide a basis for disregarding the treating physician's opinion" and, instead, relied upon a purported medical expert who "agreed to cease treating patients in the face of multiple charges of malpractice." ALJ Nisnewitz's conduct is all the more egregious considering that the Appeals Council had previously remanded this action due to the reversible error he had committed. Accordingly, after a second remand was warranted for the exact same errors, the Court ordered the case assigned to a different ALJ, apparently acknowledging that ALJ Nisnewitz was incapable of properly adjudicating this claim. 83. Similarly, in Calderon v. Astrue, 683 F.Supp.2d 273 (E.D.N.Y. 2010), this Court ordered a second remand of ALJ Nisnewitz's denial based on his repeated failure to properly apply the law. In 2000, ALJ Nisnewitz's decision was vacated and the matter remanded to him for further proceedings because of his failure to give controlling weight to the claimant's treating physician. A decade later in 2010, the claimant's case was again before this Court, and again, the Court found reversible error. In remanding ALJ Nisnewitz's decision a second time, the Court highlighted his wrongful maneuvering, stating: The Court gave Nisnewitz an opportunity to correct his step-five error nearly ten years ago. Instead, he disregarded the Court's mandate and changed his step- four determination, a tactic that at least suggests an improper attempt to justify, by whatever means necessary, a preordained conclusion that [claimant] was not disabled. For these reasons, the Court concludes that remand for the calculation ofbenefits is warranted. 84. While ALJ Nisnewitz received public rebuke, the real suffering was left to the claimant who spent ten unnecessary years deprived of disability benefits so that ALJ Nisnewitz could further his improper agenda. 85. In Smith v. Astrue, 2011 WL 1253233 (E.D.N.Y. Mar. 31, 2011), this Court found that ALJ Nisnewitz did not "abide by the treating-physician rule" because he knowingly ignored health records that were available for inspection and instead misleadingly asserted that there was a "lack of record" supporting claimant's symptoms. Instead of according the appropriate weight to the treating physicians and their associated records, ALJ Nisnewitz relied upon a non-treating physician whose testimony was "afflicted by several defects: cherry- picking from the record, mischaracterizing the record, and placing weight ... on facts in the record that do not bear that weight." The Court emphasized that ALJ Nisnewitz should have contacted the treating physician to give him a chance to address any discrepancy ALJ Nisnewitz saw in his assessment. Based on these failures to properly apply the law, among other errors, the case was remanded for proper application of the Treating Physician Rule. (3) Erroneous Credibility Determination 86. In several cases, this Court found ALJ Nisnewitz in error for making adverse credibility findings against claimants, including by consistently disregarding their description of the pain endured as a result of their disabling conditions. Below are several notable examples, demonstrating a clear pattern between 2008 and the present: 87. In Ginsberg v. Astrue, 2008 WL 3876067 (E.D.N.Y. Aug. 18, 2008), ALI Nisnewitz "summarily determined that Plaintiff was not entirely credible" without fully understanding the nature of her affliction. In ruling that his credibility determination lacked basis, this Court noted that claimant's ability to care for herself at times was wholly consistent with the fluctuations in frequency and severity of her chronic fatigue syndrome. The Court remanded the case, with specific directions to review claimant's credibility according to law. 88. In Larkins v. Astrue, 2009 WL 3148763 (E.D.N.Y. Sept. 29, 2009), ALI Nisnewitz failed to accord the proper weight to claimant's "long employment history" and found claimant's multiple sclerosis-related pain complaints not credible in light of the MRI results. In remanding the case solely for the calculation of benefits, this Court found claimant's statements to be supported by the reports of multiple neurologists and determined that "no evidence [existed] that [claimant] is prone to exaggeration." 89. In Gross v. Astrue, 2010 WL 301945 (E.D.N.Y. Jan. 15, 2010), ALJ Nisnewitz found claimant's complaints of pain related to her documented congenital hip dysplasia lacked credibility, and he erroneously opined that "there is little in the record to support this allegation objectively." He based his rejection of claimant's credibility on the timing ofher application for disability benefits, which coincided with the birth of her second child, leading him to theorize-without any support in the record-that claimant was trying to game the system by using Social Security benefits to support her child. In remanding the matter for additional proceedings, the Court found that ALI Nisnewitz "rejected plaintiffs claims of subjective pain without any meaningful basis in the record for doing so." ( 4) High Denial Rate 90. Disposition data for 2005-2008 shows that ALJ Nisnewitz denied 56% of the claims before him, a rate 28 percentage points higher than the average. In fact, ALJ Nisnewitz was in the top 5% of deniers nationally for that period. 91. More recent data confirms this stunning trend has continued, as ALI Nisnewitz's denial rate for the period between September 25, 2010 and February 25, 2011 (the most recent reporting period for SSA) has in fact increased to 61. 7%. b) ALJ Michael D. "Manuel" Cofresi 92. Since January 1, 2008, nineteen district court cases identified ALI Cofresi as the author of the decision under review. This Court found he committed errors serious enough to warrant remand in fourteen cases. There is little doubt, when the overall record is considered, that ALJ Cofresi's consistent errors are highly probative ofhis anti-claimant bias. (1) Failure to Develop the Record 93. In several of ALJ Cofresi' s cases, this Court found him to be in error for failing to develop the record. The Court's factual findings are wholly consistent with a clear pattern of his denial of meritorious claims based on pre-existing bias against claimants. Below are several notable examples, demonstrating a clear pattern between 2008 and the present: 94. In Day v. Astrue, 2008 WL 63285 (E.D.N.Y. Jan. 3, 2008), this Court found that ALJ Cofresi decided "to read conclusions into the Medical Expert's testimony that are not supported therein" and, through his questioning, "succeeded in convincing [the expert] to cabin her initial conclusion." The Court also found that ALI Cofresi decided to "discredit the treating physician's conclusions because ofhis penmanship." The Court cautioned ALI Cofresi, on remand, against basing his decision on "retrospective opinions" by non-treating physicians, and the court imposed a strict 90-day time limit on remand proceedings. 95. In Taylor v. Astrue, 2008 WL 2437770 (E.D.N.Y. June 17, 2008), the Commissioner conceded that ALJ Cofresi erred, and this Court found that, among many other errors, ALJ Cofresi had failed in his fundamental duty "to elicit further supporting information" before rejecting a doctor's medical opinion. 96. In Vicari v. Astrue, 2009 WL 331242 (E.D.N.Y. Feb. 10, 2009), the Commissioner agreed, on appeal, that ALJ Cofresi's underlying decision contained "multiple legal errors and cannot be affirmed." Among other errors, the Court found that ALJ Cofresi' s determination about the severity of claimant's disability was "at odds with established precedent." The Court was so concerned about ALJ Cofresi's conduct that it ordered a new ALJ to preside over the case on remand. Taking additional precaution, the Court included lengthy directives to the new ALJ, to make sure the record was fully developed on remand and all medical evidence considered objectively. 97. In Valerio v. Comm 'r Soc. Sec., 2009 WL 2424211 (E.D.N.Y. Aug. 6, 2009), this Court again reversed ALJ Cofresi's decision, this time with a specific order to award benefits to the claimant. The Court used harsh language to describe the claimant's plight: "[n]ow, after the ALJs' and Appeals Council's repeated misapplication of the treating physician's rule and failure to supplement the record, and ten years since plaintiff originally filed for SSD[] benefits, there is no showing that further development of the record and additional proceedings would result in the evidence required to substantiate a conclusion that [claimant] is not disabled." To the contrary, the court found "substantial evidence in the record that [claimant] is disabled," and ordered benefits to be awarded. 98. In Lopez v. Comm 'r of Soc. Sec., 2009 WL 2922311 (E.D.N.Y. Sept. 8, 2009), this Court found that ALJ Cofresi failed to "supplement the administrative record" as was his "affirmative duty." The Court found that, although ALJ Cofresi disregarded medical testimony because of inconsistencies in, or an absence of, those physicians' medical records, he "failed" or "made no attempt" to get the records. 99. In Hilsdorfv. Comm 'r of Soc. Sec., 724 F.Supp.2d 330 (E.D.N.Y. 2010), this Court found that ALJ Cofresi failed to develop the record sufficiently, including by failing to obtain "any treatment records" demonstrating claimant's disability. The Court held that the record included "numerous references-spanning dozens of pages ... [but that the treating doctors records and notes were] conspicuously absent from the record." Indeed, the court concluded that ALJ Cofresi, rather than addressing the merits of claimant's disability "omitted any discussion of the nature or severity of' claimant's disability or its impact on his functioning. Because of the Court's assessment that the record was "so deficient" and ALJ Cofresi's delay was "particularly egregious," the Court mandated that remand proceedings occur within 120 100. In Talavera v. Astrue, 2010 WL 3325408 (E.D.N.Y. Aug. 19, 2010), ALJ Cofresi inherited a case where a claimant had to endure a 1 0-year fight to secure benefits, during which ALJ denials from QODAR were remanded three separate times for failing to follow the law and failing to develop the record. At a fourth hearing, ALJ Cofresi again denied benefits, failing to address claimant's obesity as a disability. Though complimentary of his handling of a complex case with a long history, the Court nevertheless remanded, finding: "[a]ll previous remand orders in this matter have also stated that the ALJ is to evaluate [claimant's] obesity under the applicable Social Security ruling," but that ALJ Cofresi failed to do so. ALJ Cofresi also failed to develop the record concerning claimant's "fibromyalgia-like syndrome." Despite specific directions from the Appeals Council to develop the record on these two issues, "no attempt to supplement that record has been shown." 101. In Holder v. Astrue, 2010 WL 3322507 (E.D.N.Y. Aug. 20, 2010), this Court found that ALJ Cofresi again failed to develop the record, in a case involving a pro se claimant. In doing so, ALJ Cofresi repeatedly noted that information was missing from the factual record, but "nevertheless reached a conclusion as to [claimant's] disability," ignoring his "heightened obligation" to develop the record. (2) Failure to Follow the Law 102. In several of ALJ Cofresi' s cases, this Court found him to be in error for failing to follow the law, including by repeatedly ignoring the Treating Physician Rule. Below are several notable examples, demonstrating a clear pattern between 2008 and the present: 103. In Kirkland v. Astrue, 2008 WL 267429 (E.D.N.Y. Jan. 29, 2008), this Court did not need to find that ALJ Cofresi failed to follow the Treating Physician Rule, because the Commissioner conceded as much on appeal. ALJ Cofresi had denied benefits, and the case went to the Appeals Council for review. The Appeals Council reversed, finding that "a significant amount of medical evidence was missing from the file." On remand, ALJ Cofresi conducted more proceedings and issued an opinion that "discounted the opinions of every doctor other than" one who had never examined the claimant (and found no evidence of a disability). The Appeals Council remanded again with specific directions. After another hearing, ALJ Cofresi again denied benefits, again failing to fully address the Appeals Council's concerns. The Appeals Council this time denied review. After the claimant filed an action in the Eastern District, the Commissioner conceded error. This process, and all its many proceedings, left the claimant without benefits from 1994 until 2006. In remanding the case of a claimant with a 22-year work history at the same job before becoming disabled, the Court found that "[a ]!though it has been almost 15 years since [claimant] first filed for benefits, there are still significant gaps in the record and inconsistencies in the medical evidence." 104. In Taylorv. Astrue, 2008 WL2437770 (E.D.N.Y. June 17, 2008), this Court again was compelled to remand a decision by ALJ Cofresi for his failure to follow the Treating Physician Rule. While recognizing the discretion to assign less weight under the rule, the Court bluntly chided him, saying "[w]hen a treating physician's medical opinion is not given controlling weight, an ALJ cannot simply disregard it outright." The Court found that, through claimant's "decade[-]long sojourn" to secure benefits, ALI Cofresi "twice committed legal error ... even after explicit instructions from the Second Circuit." Indeed, the Court further found that ALJ Cofresi's repeated commissions of legal error "[demonstrated] serious negligence and could possibly even suggest bias." 105. In Vicari v. Astrue, 2009 WL 331242 (E.D.N.Y. Feb. 10, 2009), the Commissioner conceded ALJ Cofresi's "multiple legal errors." In deciding to remand to a new ALJ, this Court bemoaned the "manifest legal errors," which had the effect of dragging the claimant "up and down the administrative ladder." The Court put the problem in blunt terms: "the fact remains that [ALJ Cofresi's decision], which was authored with the benefit ofmultiple remand orders from the Appeals Council, contained fundamental errors of law and evinced a failure on the part of the presiding ALI to consider the full medical evidence before him." 106. In FM on behalfofB.M., an infant, 2009 WL 2242134 (E.D.N.Y. July 27, 2009), ALJ Cofresi ignored "persuasive proof' of an infant's disability, including "severe receptive and expressive language delays," causing the Commissioner to concede error on appeal. This Court found it would be "futile" to remand the matter, because "the only conclusion supported by the record evidence is that [the infant] suffers" from a disability. 1 07. In Lopez v. Comm 'r Soc. Sec., 2009 WL 2922311 (E.D .N.Y. Sept. 8, 2009), this Court found that ALJ Cofresi violated the Treating Physician Rule with his "impermissible evaluation of [the doctor's] findings based on his own judgment." Indeed, ALJ Cofresi "noted that five physicians, including [claimant's] three treating physicians, determined that [claimant] was disabled, [but] he did not explain why the balance of the medical evidence justified disregarding those opinions." In this regard too, the Court found that ALJ Cofresi engaged in "speculation" and "improperly applied his own judgment" rather than objectively evaluating the overall medical evidence. 108. InKingv. Astrue, 2009 WL 3300261 (E.D.N.Y. Oct. 14, 2009), this Court found that ALJ Cofresi "disregard[ed] the treating physicians' opinions," in violation of"controlling regulations." In this matter, ALJ Cofresi ignored not just one but three consistent opinions from claimant's treating physicians. The Court found remand futile, saying "this is [claimant's] eleventh judicial proceeding following her request for [benefits] over twelve years ago." Thus, the Court awarded benefits. 109. In Regan v. Astrue, 2010 WL 1459194 (E.D.N.Y. April 12, 2010), this Court remanded ALJ Cofresi's denial of benefits, again, because of his violation of the Treating Physician Rule. The Court found that ALJ Cofresi "rejected entirely" the doctor's diagnosis despite the fact that it was "based on the sorts of observable medical signs and symptoms well- accepted within" the doctor's field of expertise. 110. In Milien v. Astrue, 2010 WL 5232978 (E.D.N.Y. Dec. 16, 201 0), this Court remanded ALJ Cofresi's denial of benefits to a woman with a 24-year work history, who suffered from AIDS-related dementia and obesity. The Court catalogued a laundry list of errors, including ALJ Cofresi's failure to state any basis for disregarding a "potentially dispositive [medical] report" from claimant's treating physician. (3) Erroneous Credibility Determinations 111. In several cases, this Court found ALJ Cofresi in error for making adverse credibility findings against claimants, including by consistently disregarding claimants' description of the pain endured because of their disabling conditions. Below are several notable examples, demonstrating a clear pattern between 2008 and the present: 112. In King v. Astrue, 2009 WL 3300261 (E.D.N.Y. Oct. 14, 2009), this Court found that ALJ Cofresi "did not objectively assess the credibility of' the claimant. The claimant had testified about multiple places where her condition caused pain, which she rated "as a seven on a scale of 10." The claimant testified that her pain limited her ability "to carry more than five pounds." Indeed, she testified that, because ofher condition, she "cannot hold a cup for too long before it slips out of her hand." The Court found these descriptions "supported by the extensive record in this case." 113. In Regan v. Astrue, 2010 WL 1459194 (E.D.N.Y. April 12, 2010), this Court found that ALJ Cofresi's decision to discredit a claimant "was not based on an evaluation of the appropriate factors." While rejecting claimant's testimony about "panic attacks, debilitating depression, and [daily] visual hallucinations ofher deceased daughter," ALJ Cofresi instead relied on "his interpretation of counseling records ... suggesting that [claimant's] symptoms had improved." He did so despite the absence of such an opinion from any doctor. 114. In Milien v. Astrue, 2010 WL 5232978 (E.D.N.Y. Dec. 16, 2010), this Court remanded ALJ Cofresi's denial ofbenefits to a woman with a 24-year work history who suffered from AIDS-related dementia and obesity. ALJ Cofresi found claimant's testimony lacked credibility, in part, because she had not sought treatment for her dementia-related symptoms. The Court said, [Although claimant] did not allege that her failure to seek psychological treatment was due to her financial status, it was not proper for the ALJ to draw an inference against her given that, moments prior to being asked about her psychological treatment, she had stated that she could no longer visit her infectious disease specialist due to her lack of insurance . . . if the ALJ was concerned about [claimant's] reasons for not seeking psychological treatment, he should have asked her about them. Perhaps, upon hearing the answer, he might not have concluded that she was testifying falsely about her pain and depression. (4) High Denial Rate 115. Disposition data for 2005-2008 (the period immediately preceding all of the matters described above), shows that ALJ Cofresi denied 57% of the claims before him, a rate 29 percentage points higher than the national average. In fact, ALJ Cofresi was in the top 4% of deniers nationally for that period. 116. More recent data confirms this stunning trend has continued, as ALJ Cofresi's denial rate for the period between September 25, 2010 and February 25, 2011 (the most recent reporting period for SSA) in fact increased to 62.9%. c) ALJ Seymour Fier 117. Since January 1, 2008, twelve district court cases identified ALJ Fier as the author of the decision under review. This Court found he committed error serious enough to warrant remand in ten cases. There is little doubt, when the overall record is considered, that ALJ Fier's consistent errors are highly probative of his anti-claimant bias. (1) Failure to Develop the Record 118. In several of ALJ Fier's cases, this Court found him to be in error for failing to develop the record. The Court's factual findings are wholly consistent with a clear pattern of his denial of meritorious claims based on a pre-existing bias against claimants. Below are several notable examples, demonstrating a clear pattern between 2008 and the present: 119. In Gonzalez v. Astrue, 2008 WL 755518 (E.D.N.Y. Mar. 20, 2008), this Court had earlier remanded ALJ Fier's denial of benefits based on his failure to adequately develop the evidentiary record. When the case came back to the Court, it was clear that ALJ Fier had not followed the Court's instructions. The Commissioner, in fact, agreed to remand. Not only had ALJ Fier again failed to develop the record, but he also relied on the opinion of an SSA expert who had been "remov[ ed] from the New York State Agency panel of physicians eligible to perform consultative examinations for the [SSA]." He did so despite a specific, internal directive from the SSA that the expert's opinions were "no longer entitled to any weight." Thus, on remand, the Court specifically had to instruct ALJ Fier not to rely on that expert's report, and, in light of the fact that the claimant had "endured significant delays," the Court "strongly urge[ d]" the Commissioner to resolve the matter within 90 days. 120. In Rustico v. Astrue, 2008 WL 2622926 (E.D.N.Y. July 1, 2008), this Court remanded ALJ Fier's denial ofbenefits to a 65-year-old woman who had worked at the same job for 22 years. Finding that ALJ Fier failed to develop the record, including by deciding that an indigent woman should have paid for medical tests to prove her disability, the court gave a special instruction on remand: "[t]he ALJ is further ordered to refrain from making medical findings and to reevaluate [claimant's] credibility." The Court further found that ALJ Fier' s decision was "replete with conclusory statements and without specific references to the medical record necessary for the effective review of the Commissioner's decision." The Court ordered the Commissioner to "commence [further] proceedings within sixty days" of the Court's order. 121. In Savino v. Astrue, 2009 WL 2045397 (E.D.N.Y. July 8, 2009), this Court remanded ALJ Fier's denial ofbenefits based on numerous failures to develop the record, despite his affirmative obligation to do so. ALJ Fier committed these errors and ignored "explicit instructions" from the Appeals Council, which had previously remanded the case to correct prior errors. In evaluating ALJ Fier's decision, the Court said, "ALJ Fier's reasoning does not make sense." The Court further observed, "ALJ Fier ignored the remand order to use a vocational expert to help determine whether plaintiff could perform his past relevant work." Despite instructions from the Appeals Council that the new testimony should be used to address any conflicts in the record, ALJ Fier also "confined" a new medical expert's testimony to resolving an inconsistency between two other experts. And, over claimant's objection, ALI Fier refused to provide claimant's expert with all relevant medical records. For these and other reasons, the Court concluded: "[i]n sum, ALJ Fier disregarded the Appeals Council's explicit directives. On that basis alone, remand is required." 122. In Zubizarreta v. Astrue, 2010 WL 2539684 (E.D.N.Y. June 16, 2010), this Court remanded ALJ Fier's denial of disability benefits to a retired police sergeant with nearly 20 years of service based on "several legal and factual errors." Embarrassingly, the Commissioner was forced to concede error and consent to remand despite the Appeals Council having previously remanded ALI Fier's denial based on earlier errors. In this second review, the Court found a litany of errors, including ALJ Fier's reliance on allegedly contradictory medical opinions. "[A) closer review," according to the Court, "indicates that a majority of the physicians' findings are consistent" with the treating physician's determination. Noting that ALI Fier had "two chances to fully develop the record," the Court concluded that further proceedings were "futile" and directed remand solely for the calculation of benefits. Not surprisingly, the Court, again, directed that remand be to a different ALJ. In this instance, the Commissioner also agreed. Still, the Court gave special instructions for additional determinations about the onset date for claimant's disability, requiring that the new ALJ offer "a convincing rationale for the date chosen." 123. In McDowell v. Comm 'r of Soc. Sec., 2010 WL 5026745 (E.D.N.Y. Dec. 3, 2010), this Court remanded ALJ Fier's denial ofbenefits. In doing so, a frustrated Court recounted ALJ Fier's view that claimant's disability was not sufficiently severe to merit benefits. "In his Notice and Decision, however, the ALJ did not devote even a single sentence of analysis to [support] this finding." In response to the Commissioner's position that a single line of testimony in the hearing transcript was support for ALJ Fier's decision, the Court gave a terse response: "[ s ]uffice it to say that the single line of testimony from the medical examiner was not 'substantial evidence' for the ALJ to make his determination." To further punctuate the Court's frustration, the Court directed the Commissioner "to assign the claim to a different ALJ" on remand. The Court also gave specific instructions, based on problems inherent in the testimony of the Commissioner's vocational expert, that "the Commissioner must obtain new testimony from a [vocational expert]." 1 (2) Failure to Follow the Law 124. In several of ALJ Fier's cases, this Court found him to be in error for failing to follow the law, including by repeatedly ignoring the Treating Physician Rule. Below are several notable examples, demonstrating a clear pattern between 2008 and the present: Similarly, in Murray v. Astrue, 2010 WL 5290063 (E.D.N.Y. Dec. 20, 2010), this Court found that ALJ Fier erred by refusing plaintiff's request to call a vocational expert and that ALJ Fier had misstated plaintiff's evidence. The Court found these errors were not reversible. 125. In Gonzalez v. Astrue, 2008 WL 755518 (E.D.N.Y. Mar. 20, 2008), the Commissioner agreed that ALJ Fier's determination was "based on legal error, and that [the Court] must accordingly remand the decision for further proceedings." This Court further noted, "[t]he Commissioner recognizes that the ALI's decision [was] inconsistent, ambiguous and contains legal error" for, among other reasons, failing to follow the Treating Physician 126. In Rustico v. Astrue, 2008 WL 2622926 (E.D.N.Y. July 1, 2008), this Court, in remanding another denial ofbenefits, said bluntly: "[i]t is evident that the ALI improperly applied the treating physician rule." Indeed, ALJ Fier could not offer a sufficient explanation for his failure to give controlling weight to claimant's treating physician. 127. In Henry v. Astrue, 2008 WL 2697317 (E.D.N.Y. July 3, 2008), this Court remanded ALJ Fier, again for failing to follow the Treating Physician Rule. Again, the Commissioner consented to the remand of this case, conceding "that the ALJ' s decision was based on legal error." 128. In Motley v. Astrue, 2008 WL 2755840 (S.D.N.Y. July 14, 2008), this Court found ALI Fier's decision "arbitrary," "illogical" and "not supported by substantial evidence." The Court held that the decision should be remanded solely for the calculation of benefits. 129. In Hach v. Astrue, 2010 WL 1169926 (E.D.N.Y. Mar. 23, 2010), this Court remanded ALI Fier again for his failure to correctly assess the weight accorded to a treating physician. Although the Court found ALJ Fier did not err in refusing to give the treating physician controlling weight on disability, "the ALI did commit legal error in failing to properly determine how much weight should be afforded." The Court concluded: "[t]he ALI's incomplete analysis on this score constitutes proper grounds for remand." On remand, the Court gave ALJ Pier specific instruction to conduct the appropriate analysis under the applicable regulations. 130. In Zubizarreta v. Astrue, 2010 WL 2539684 (E.D.N.Y. June 16, 2010), while, as described above, this Court remanded for factual errors, as described above, the Court found that "the ALI's most significant error" was under the Treating Physician Rule. The Court bluntly concluded: "[t]he Court is hard-pressed to find any evidence, let alone substantial evidence, that is inconsistent or contradicts" the treating physician's medical opinion on disability. The Commissioner conceded this point in consenting to a remand and reassignment to a different ALJ. 131. ALJ Pier's clear choice to misapply and ignore standards for treating physicians continues. Less than a month ago, in Dooknah v. Astrue, 2011 WL 997196 (E.D.N.Y. Mar. 21, 2011), ALJ Pier's denial ofbenefits was· again remanded because he "committed legal error by failing to give adequate (or indeed any) weight to the opinion of [claimant's] treating physician." The Court remanded solely for the calculation of benefits, finding that "the record evidence persuasively establishes that [claimant] was disabled due to chronic and ongoing back pain prior to October 9, 2009." (3) Erroneous Credibility Determination 132. In several cases, this Court found ALI Pier in error for making adverse credibility findings against claimants, including by consistently disregarding claimants' description of the pain endured because of their disabling conditions. Below are several notable examples, demonstrating a clear pattern between 2008 and the present: 133. In Rustico v. Astrue, 2008 WL 2622926 (E.D.N.Y. July 1, 2008}, this Court, in remanding another denial ofbenefits, found error in ALI Pier's unsupported and ambiguous decision to discredit a woman with a 22-year-work history with the same employer. "Because the ALJ finds the claimant is not credible," the Court held, "he must set forth the reasons for that finding 'with sufficient specificity to permit intelligible plenary review of the record."' 134. In Savino v. Astrue, 2009 WL 2045397 (E.D.N.Y. July 8, 2009), this Court again determined that ALJ Fier discounted a claimant's testimony without sufficient basis. Having already determined that ALJ Fier disregarded the Appeals Council's "explicit directives," requiring remand, the Court further noted its strong disagreement with ALJ Fier's decision to, and stated basis for, discrediting the claimant. None of ALJ Fier's proffered explanations, according to the Court, "provides grounds for disbelieving [claimant's] testimony about his symptoms." The Court concluded that "closer examination of the specific manner in which [claimant] has [lived his life] reveals that [his] activities highlight, rather than undermine, the severity of his limitations." The Court thus remanded for reconsideration on this issue, directing the ALJ to give due weight to claimant's "long work history, which may be probative of credibility." 135. In McDowell v. Comm 'r of Soc. Sec., 2010 WL 5026745 (E.D.N.Y. Dec. 3, 201 0), this Court remanded ALI Fier' s denial of disability, in part, because of the basis on which ALI Fier discounted claimant's testimony about the painful nature ofher disability. The Court found ALI Fier erred in "determin[ ing] that [claimant's] statements ... were not credible in a single, conclusory pen-stroke without providing even a modicum of analysis or a token recitation of a single fact," constituting "both legal error and a lack of substantial evidence." As noted above, the Court demanded reassignment to a new ALJ on remand. (4) High Denial Rate 136. Disposition data for 2005-2008 shows that ALJ Fier denied 55% of the claims before him, a rate 27 percentage points higher than the national average. In fact, ALI Fier was in the top 6% of deniers nationally for that period. 137. More recent data confirms this stunning trend has continued, as ALJ Fier's denial rate for the period between September 25, 2010 and February 25, 2011 (the most recent reporting period for SSA) has in fact increased to 62.9%. d) ALJ Marilyn P. Hoppenfeld 138. Since January 1, 2008 there are twelve district court decisions where ALJ Hoppenfeld is identified as the author of the decision under review. This Court found she committed error in eleven cases. There is little doubt, when the overall record is considered, that ALJ Hoppenfeld's consistent errors are highly probative of her anti-claimant bias. (1) Failure to Develop the Record 139. In several of ALJ Hoppenfeld's cases, this Court found her to be in error for failing to develop the record. The Court's factual findings are wholly consistent with a clear pattern ofher denial of meritorious claims based on pre-existing bias against claimants. Below are several notable examples, demonstrating a clear pattern between 2008 and the present: 140. In Tempesta v. Astrue, 2009 WL 211362 (E.D.N.Y. Jan. 28, 2009), this Court held that ALJ Hoppenfeld failed to fulfill her "affirmative duty to seek [claimant's] medical records from [the treating physician]" and that there was "no indication in the record that the ALJ attempted to comply with this duty." The Court also found that ALJ Hoppenfeld had "failed to affirmatively develop the record; misunderstood the nature of [claimant's] diagnosed condition ... [and] inexplicably gave credence to [claimant's] delusional statement ... that he was a successful businessman." Moreover, ALJ Hoppenfeld suggested during the hearing "that [claimant] had an 'unrealistic interpretation of [his] physical signs or sensation[ s]' ... and bizarrely inquired whether [claimant] had discussed 'sexual orientation' with his psychiatrist-a topic appearing nowhere else in the record and of no conceivable relevance." 141. In Pierre v. Astrue, 2010 WL 92921 (E.D.N.Y. Jan. 6, 2010), this Court held that ALI Hoppenfeld failed to develop the record where the medical records of a treating physician who had seen claimant for three years were "entirely absent from the record." This was after two hearings by ALJ Cofresi, two remands by the Appeals Council, and a hearing by ALJ Hoppenfeld (which also led to a remand), all of which spanned over ten years. 142. In Brown v. Astrue, 2010 WL 2195568 (E.D.N.Y. May 28, 2010), this Court held, again, that ALJ Hoppenfeld "failed to adequately develop the record" where "the administrative transcript contained virtually no records from [the treating physician]" who stated that he had treated claimant on a monthly basis for at least two years. In fact, the Court noted that there was "no indication that the ALJ made any effort to obtain [claimant's] complete medical file from [the treating physician]," in violation of her affirmative duty. 143. In Tiborsky v. Astrue, 2010 WL 2730791 (E.D.N.Y. July 8, 2010), this Court found, yet again, that ALJ Hoppenfeld failed to fulfill her affirmative duty to develop the record and ordered remand to the Commissioner for further proceedings .. 144. In Maline v. Astrue, 2010 WL 4258259 (E.D.N.Y. Oct. 21, 2010), ALJ Hoppenfeld denied benefits to an electrician of20 years who became disabled after falling from a ladder, severely injuring his hip and back. This Court held, among other errors, that ALJ Hoppenfeld failed to develop the record when she failed to contact "[the treating physicians] for clarification" before finding that the "treating physicians' statements were not supported by adequate evidence in the record." The Court remanded the case with explicit instruction to "further develop the evidence." (2) Failure to Follow the Law 145. In all eleven of ALJ Hoppenfeld's remanded cases, this Court found her to be in error for failing to follow the law, including by repeatedly ignoring the Treating Physician Rule. Below are several notable examples, demonstrating a clear pattern between 2008 and the present: 146. In Schnetzler v. Astrue, 533 F. Supp. 2d 272 (E.D.N.Y. 2008), this Court held that ALJ Hoppenfeld "failed to even acknowledge the treating physician rule." The Court found that ALJ Hoppenfeld "failed to adequately explain what good reasons she had in discounting the opinions of [claimant's] treating physicians," and that her "total silence on the weight accorded" various treating physicians "was error." These errors persisted even after three hearings before various ALJs. In addition, the Court noted that there was "no indication in the record that the ALJ considered any [statutory] factors when viewing the opinions of [claimant's] treating physicians." The Court also held that ALJ Hoppenfeld "improperly substituted her opinion for the observations of [claimant's] physicians, and the opinion of the medical expert." 147. InKearneyv. Astrue, 2008 WL2705525 (E.D.N.Y. July 11, 2008), this Court criticized ALJ Hoppenfeld for her "baffling failure to apply the treating-physician rule" after it had remanded this very case in 2006 with explicit instructions to reconsider the claim "in accordance with the treating-physician rule." Instead of following the order on remand, "ALJ Hoppenfeld, for reasons defying comprehension, chose to repeat the same error that caused [the judge] to remand the case to the Commissioner." Indeed, ALJ Hoppenfeld acknowledged "on the record at the supplemental hearing, that the purpose of the remand was to consider the opinion of [claimant's] treating doctors." Judge Gleeson punctuated his decision by noting "that ALJ Hoppenfeld has apparently held her current position since at least 1985 ... I do not see how ALJ Hoppenfeld could have failed to understand my order, and am at a loss as to why she failed to comply with it." The Court further noted the claimant's "nine-year quest for disability insurance benefits" and was so concerned with ALJ Hoppenfeld that the Court remanded the case for a calculation of benefits only and directed the Commissioner to assign the case to a different ALJ upon remand. 148. In Silva v. Astrue, 2008 WL 4911767 (E.D.N.Y. Nov. 14, 2008), this Court found, again, that ALJ Hoppenfeld misapplied the Treating Physician Rule in her "flawed" analysis, in which she "minimized the significance of [the treating physician's] findings and mischaracterized them." The court punctuated this finding by describing other errors, including her decision to "largely dismiss[]" key evidence, analysis that was "simply wrong," and conclusions that amounted to a "substitution ... of her own judgment" for the treating physician's. The Court held that "further administrative proceedings in this case would serve no purpose ... [and remanded the case solely] for the purpose of calculating benefits." The Court noted that this disposition was '"particularly appropriate' in light ofthe fact that [claimant's] application has been pending since February 16, 2000." 149. In Tempesta v. Astrue, 2009 WL 211362 (E.D.N.Y. Jan. 28, 2009), this Court found ALJ Hoppenfeld "misapplied the treating physician rule by discounting [the treating physician's] opinions for improper reasons," such as lack of objective findings and conflicts with a state examiner. Moreover, the Court found that ALJ Hoppenfeld's assessment of the claimant's physical abilities was "plucked from thin air." Ultimately, the Court held that, contrary to ALI Hoppenfeld's findings, "the treating physician rule compels a finding of disability as to that period, [and ordered] an immediate calculation ofbenefits." 150. In Pierre v. Astrue, 2010 WL 92921 (E.D.N.Y. Jan. 6, 2010), this Court held, once again, that AU Hoppenfeld failed to apply the Treating Physician Rule. Additionally, the Court found that AU Hoppenfeld "utterly failed to perform the required task of determining what weight" the treating physicians' opinions deserved and that this "constitute[ d) an independent legal error warranting remand." 151. In Brown v. Astrue, 2010 WL 2195568 (E.D.N.Y. May 28, 2010), this Court held that ALJ Hoppenfeld erred in not giving the treating physician's opinion controlling weight because it "is supported by the medical record ... [and] the ALJ failed to provide sufficient reasons for disregarding [the treating physician's] opinion." Indeed, the Court noted that ALJ Hoppenfeld "did not even mention ... much less make any effort to apply" the statutory factors for determining the weight of medical opinions as required by regulation. 152. In Tiborsky v. Astrue, 2010 WL 2730791 (E.D.N.Y. July 8, 2010), this Court held that ALJ Hoppenfeld "not only failed to give good reasons for disregarding [the treating physician's] opinion, but arbitrarily substituted her views for those of the medical professionals who had examined [claimant]" and "trivialized [claimant's] impairments by characterizing them as 'low back pain, cervical neck pain and bilateral knee sprain."' The Court noted that ALJ Hoppenfeld "chose to rely on her own expertise," rather than on medical experts, in determining claimant's residual functional capacity. 153. In Lopez v. Astrue, 2010 WL 4054116 (E.D.N.Y. Oct. 8, 2010), this Court once again noted ALJ Hoppenfeld's "abject failure" to properly apply the Treating Physician Rule, despite being told on remand from the Appeals Council to "give further consideration to the medical expert opinion." In particular, the Court pointed out that "the ALJ failed to give reasons why she did or did not consider five MRis supportive of [claimant's] severe lower back pain and [the treating physician's] determinations." Incredulously, the Court also noted that ALJ Hoppenfeld discounted the opinion of the treating physician who had "provided [a] consistent opinion during his six-year treating relationship ... [where he saw claimant] every two-to-four months" in favor of the opinion of the state physician who met with claimant on one single occasion. 154. In Maline v. Astrue, 2010 WL 4258259 (E.D.N.Y. Oct. 21, 2010), this Court found, for the tenth time in three years, that ALJ Hoppenfeld failed to apply the Treating Physician Rule. The Court held that ALJ Hoppenfeld improperly discredited the treating physicians' opinions, because among other reasons, "[the opinion] appeared on a 'check-off- the-box "form" assessment."' 155. In Mitchell v. Astrue, 2010 WL 5437207 (E.D.N.Y. Dec. 23, 2010), the Commissioner conceded that ALJ Hoppenfeld "committed legal error by failing to properly consider the medical opinions of two physicians: ... the ALJ discounted the opinion of [one doctor] as a non-treating source, despite the fact that the doctor testified he had seen [claimant] every few months ... [and] [t]he ALJ did not even address [another treating physician's] medical opinion at all." (3) Erroneous Credibility Determinations 156. In several cases, this Court found ALJ Hoppenfeld in error for making adverse credibility findings against claimants, which included consistently disregarding claimants' description of the pain endured because of their disabling conditions. Below are several notable examples, demonstrating a clear pattern between 2008 and the present: 157. In Brown v. Astrue, 2010 WL 2195568 (E.D.N.Y. May 28, 2010), this Court held that ALJ Hoppenfeld "erred in discounting [claimant's] subjective claims of pain." The Court found that ALJ Hoppenfeld "incorrectly implied" there were no positive neurological findings where the record contained such findings and that "even ifthere had been no positive neurological findings ... there was still ample evidence to support [claimant's] subjective claims of pain." 158. In Tiborsky v. Astrue, 2010 WL 2730791 (E.D.N.Y. July 8, 2010), this Court held that ALJ Hoppenfeld "not only disregarded the doctor's medical opinions, but disregarded portions ofthe record and [claimant's] testimony in evaluating [claimant's] claims of pain." The Court found, "the ALJ selectively mentioned only the evidence supporting her contention that plaintiff's 'activities [were] consistent with light work,' while ignoring all evidence to the contrary." In fact, the Court noted that there was "no indication that the ALJ made any serious attempts to evaluate other relevant factors" that are enumerated in the regulations. 159. In Lopez v. Astrue, 2010 WL 4054116 (E.D.N.Y. Oct. 8, 2010), this Court found ALJ Hoppenfeld's "reasons for not crediting [claimant's] allegations of pain were largely inaccurate" and that ALJ Hoppenfeld had "misrepresented [claimant's] testimony." Indeed, the Court noted ALJ Hoppenfeld "inexplicably" gave "purported reasons for discrediting [claimant's] testimony, but did not explain why she rejected [claimant's] testimony." 160. In Maline v. Astrue, 2010 WL 4258259 (E.D.N.Y. Oct. 21, 201 0), this Court held, yet again, that "ALJ Hoppenfeld erred in concluding that [claimant] was not credible without discussing in form or in substance the factors governing credibility determinations." The court remanded this case with explicit instruction to apply the statutory credibility factors. ( 4) High Denial Rate 161. Disposition data for 2005-2008 shows that ALJ Hoppenfeld denied 39% of the claims before her, a rate 11 percentage points higher than the national average. In fact, ALJ Hoppenfeld was in the top 23% of deniers nationally for that period. 162. More recent data confirms this stunning trend has continued, as ALJ Hoppenfeld's denial rate for the period between September 25, 2010 and February 25, 2011 (the most recent reporting period for SSA) in fact increased to 48.3%. e) ALJ Hazel C. Strauss 163. Since January 1, 2008, sixteen district court cases identified ALJ Strauss as the author of the decision under review. This Court found she committed error in thirteen of these cases. There is little doubt, when the overall record is considered, that ALJ Strauss's consistent errors are highly probative of her anti-claimant bias. (1) Failure to Develop the Record 164. In several of ALJ Strauss's cases, this Court found her to be in error for failing to develop the record. The Court's factual findings are wholly consistent with a clear pattern of her denial of meritorious claims based on pre-existing bias against claimants. Below are several notable examples, demonstrating a clear pattern between 2008 and the present: 165. In Harris v. Astrue, 2008 WL 5517087 (E.D.N.Y. Jan. 20, 2008), ALJ Strauss denied benefits to a pro se claimant who suffered from a "severe" panic disorder and depression. In so doing, ALJ Strauss failed to adequately develop the record because she gave "significant weight" to a non-treating and non-examining consultant but "failed to seek an opinion as to [claimant's] disability from her treating physician." Thus, "the record was improperly developed and [claimant] did not receive 'a fair and adequate hearing before the [Commissioner]."' The Court noted that ALJ Strauss's failures "clash[ed] with the 'essentially non-adversarial nature of a benefits proceeding."' 166. In Bommarito v. Astrue, 2008 WL 5085093 (E.D.N.Y. Dec. 2, 2008), the Appeals Council gave ALJ Strauss explicit instructions "as to specific methods of developing the record" because the case had already been remanded twice due to legal errors. In direct violation of these instructions, ALJ Strauss again did not properly develop the record by failing to "recontact the claimant's treating physicians" after marginalizing their opinions at the first hearing. This Court remanded the case for an expedited hearing-repeating the explicit instructions already given by the Appeals Council-because "the ALJ has failed to properly develop the record in her consideration of the treating source rule." 167. In Robinson v. Astrue, 2009 WL 4722256 (E.D.N.Y. Dec. 9, 2009), ALJ Strauss committed no less than "four errors warranting remand" when she denied benefits to the claimant. Among those errors, ALJ Strauss failed to properly develop the record when she unilaterally determined that claimant's depression was not severe "without input from any professional." She did so, despite the existence of"considerable evidence" to the contrary, which should have prompted ALJ Strauss to pursue additional information. 168. In Martinez v. Astrue, 2010 WL 5126224 (E.D.N.Y. Dec. 9, 2010), this Court remanded the case back to ALJ Strauss for additional development of the record after determining that she "failed to carry out her obligation to adequately develop the administrative record" when she declined to seek clarification about the claimant's condition from the claimant's treating physician, who had provided "ongoing treatment" to claimant "that began more than a year before the end of the relevant time period." 169. InPatelv. Astrue, 2010 WL 5125986 (E.D.N.Y. Dec. 10, 2010), which this Court characterized as "a 12-year-long series of denials and remands," ALJ Strauss "failed to fulfill [her] duty" to fully develop the record because she rejected "out of hand" the opinions of a doctor whom she merely assumed had not treated the claimant during the period at issue. The Court described ALJ Strauss's reason for rejecting the opinions as "insufficient" and a "non sequitur." Regarding ALJ Strauss's conclusion that the doctor's opinion deserved no weight because it did not relate to the relevant time period, the Court simply stated "[t]hat was wrong." The Court remanded the case and directed ALJ Strauss to properly develop the record with regard to this physician. (2) Failure to Follow the Law 170. In several of ALJ Strauss's cases, this Court found her to be in error for failing to follow the law, including by repeatedly ignoring the Treating Physician Rule. Below are several notable examples, demonstrating a clear pattern between 2008 and the present: 171. In Canton v. Astrue, 2010 WL 5391184 (E.D.N.Y. Dec. 22, 201 0), this Court rejected ALJ Strauss's findings because she "fail[ed] to consider even a single medical opinion [authored by the treating physician]- irrespective of the substantial weight of controverting evidence or a medical opinion's legibility- [which] constitutes reversible error." 172. In Scandura v. Astrue, 2009 WL 648611 (E.D.N.Y. Mar. 10, 2009), ALI Strauss accorded little weight to a veritable battery of treating physicians, relying instead on the opinions of two SSA doctors, one ofwhom had never examined the claimant and relied on evidence that "seem[ ed] to appear out of thin air." This Court found that ALI Strauss "too readily dismissed" the opinions of three treating physicians while "ignoring completely" the opinions of others. The Court described. ALI Stauss's reasons for dismissing the opinions of the claimant's treating physicians as "questionable" and "unreasonable." 173. In Primiani v. Astrue, 2010 WL 474642 (E.D.N.Y. Feb. 5, 2010), ALJ Strauss denied benefits to a claimant who had worked for twenty-seven years as a secretary before being hit by a truck as a pedestrian. In the process, ALJ Strauss decided that the claimant's treating physicians' opinions were "not entitled to controlling weight or even significant weight." That is, except for a single cherry-picked statement by the claimant's longtime rheumatologist-which was only entered into evidence as hearsay by a state agency medical consultant-that the claimant had some basic movement left in her hands. "Inexplicably," this Court noted, ALI Strauss gave significant weight to this secondhand statement "even as she virtually disregarded [the treating physician's] own firsthand assessments." The Court saw no reason to remand for a determination of disability because ALJ Strauss "lacked good reasons for refusing to give controlling weight to [the treating physician's] assessment of [the claimant's] ability to work." Instead, "rather than subject [the claimant] once again to the painfully slow process by which disability determinations are made, the case [was] remanded solely for the calculation ofbenefits." 174. In LoRusso v. Astrue, 2010 WL 1292300 (E.D.N.Y. Mar. 31, 2010), ALJ Strauss again refused to give significant weight to the claimant's treating physician. Instead she favored the opinions of two consulting physicians who had only examined the plaintiff one time each over a year before the claimant underwent subsequent surgeries that confirmed her treating physician's diagnosis. This Court stated that it was "puzzled" and "surprised (to say the least) that ALJ Strauss continued to assign any weight, let alone significant weight, to [the consulting physicians'] opinions." The Court found ALJ Strauss's failure to explain the lack of weight given to the plaintiffs treating physicians "particularly troubling" because explicit instructions to do so had been given on a previous remand. These repeated failures to follow instructions on remand "frustrated the entire point of the remand" and "rendered remand unproductive." In sum, "ALJ Strauss misapplied several legal standards" and "her finding as to [the claimant's] residual capacity function [was] not supported by substantial evidence." The Court noted that "it is regrettable ... that this matter must be returned to the Commissioner for a third review." However, the record was too incomplete for the Court to rule that the claimant was disabled. Accordingly, the Court again issued explicit instructions about how to properly weigh the opinions of a treating physician and remanded the case. Because it had been nearly nine years since the claimant had filed her initial application, the Court urged the Commissioner "to reach a decision on her claim expeditiously." 175. In Martinez v. Astrue, 2010 WL 5126224 (E.D.N.Y. Dec. 9, 201 0), this Court criticized ALJ Strauss for making a "determination [that] is neither supported by substantial evidence nor based upon the correct legal standards." ALJ Strauss's opinion was "not based upon a medical assessment of plaintiff's physical limitations. Instead, the ALJ based her determination on her own evaluation of the medical findings in the record, committing legal error." For example, ALJ Strauss asserted that there was no evidence that the claimant suffered spasms or a decreased range of motion due to her back problems, an assertion directly "contradicted by the record." Indeed, ALJ Strauss completely disregarded any evidence of claimant's back pain and, incredibly, ruled that the claimant could perform any of her previous jobs. The Court remanded the case and ordered an expedited hearing. 176. In Patel v. Astrue, 2010 WL 5125986 (E.D.N.Y. Dec. 10, 2010), ALJ Strauss again failed to comply with the Treating Physician Rule. The Court stated that ALJ Strauss had wrongly discounted the opinion of the claimant's treating physician of fourteen years in a "cursory way" although the physician "emphatically and consistently" maintained that claimant was fully disabled. The court noted that "[t]he ALJ explained away as 'uncorroborated by objective testing' a handful of diagnoses (including one in which there was an MRI) and ignored the rest." It further stated that "ALJ Strauss should have discussed, or at least acknowledged" the occasions on which the claimant's doctor had diagnosed her. Because ALJ Strauss "nowhere interact[ ed] substantively with [the treating physician's findings]" the court remanded the case holding that ALJ Strauss's decision was "fatally flawed." 177. In Pluck v. Astrue, 2011 WL 917654 (E.D.N.Y. Mar. 9, 2011), after more than six years and multiple hearings and remands, ALJ Strauss denied the claimant benefits. The claimant appealed to the district court which once again remanded due to legal errors. This Court noted that ALJ Strauss had misapplied the Treating Physician Rule by disregarding the testimony of two doctors who had seen the claimant on dozens of occasions. In typical fashion, she instead favored a consulting doctor who testified as an expert at the hearing. The Court noted that the consulting doctor "did not provide any reasoning to support his conclusions, but the ALJ nonetheless adopted them at face value." Moreover, ALJ Strauss adopted them despite "so many observations in the records of [the claimant's] treating physicians, which went unexplained or unacknowledged in her decision." In essence, ALJ Strauss had "incorrectly sifted through [the] evidence and referenced only those items that contradicted [the claimant's] account." This "selective reading of the evidence was improper." In disregarding evidence that supported the claimant's treating physicians, ALJ Strauss "disregarded her obligations to make 'every reasonable effort' to understand the bases of [the treating physician's] opinion." Moreover, she "insufficiently explained" her disregard of the treating physicians' opinions. Instead, ALJ Strauss simply "ignore[ ed]" the "observations that did not square with her conclusions." (3) Erroneous Credibility Determinations 178. In several cases, this Comi found ALJ Strauss in error for making adverse credibility findings against claimants, including by consistently disregarding claimants' descriptions of the pain endured because of their disabling conditions. Below are several notable examples, demonstrating a clear pattern between 2008 and the present: 179. In Harris v. Astrue, 2008 WL 5517087 (E.D.N.Y. Jan. 20, 2008), this Court ordered ALJ Strauss to "revisit [her] adverse credibility determination with closer attention to the record." The Court specifically noted that ALJ Strauss characterized the claimant as able to cook food and visit friends despite the claimant's testimony that she "really 'no longer cook[ s )"' and that she only went out once a month with her significant other and otherwise had no friends. The Court stated that ALJ Strauss had the duty to engage in a "meticulous review of the testimony and record," but "[t]here is reason to believe that such a review was lacking here." 180. In Scandura v. Astrue, 2009 WL 648611 (E.D.N.Y. Mar. 10, 2009), ALJ Strauss had twice denied benefits to a claimant who had testified that she was "racked with pain throughout [her] body" and whose treating physician rated her "constant" pain level "at a 10 on a 10-point scale." This Court criticized ALJ Strauss's credibility determination as "an attempt by the ALJ to substitute her own judgment for that of [the treating physicians]." Not only did ALI Strauss "set[] the bar too high" by requiring the claimant to "peg her subjective complaints to objective evidence," but she created a "Catch-22 situation" in which the "plaintiffwould have virtually no objective way to demonstrate the veracity of her own subjective complaints." 181. In Wilkins v. Astrue, 2009 WL 1262380 (E.D.N.Y. May 8, 2009), this Court remanded the case because ALJ Strauss "improperly disregarded [the claimant's] complaints of severe pain." ALJ Strauss had relied on apparent contradictions in the claimant's testimony to attack her credibility. However, upon reviewing the record, the Court found "no reason to doubt [the claimant's] credibility." 182. In Primiani v. Astrue, 2010 WL 474642 (E.D.N.Y. Feb. 5, 2010) ALJ Strauss assumed that the claimant must have testified falsely about her pain because she drove her daughter to school, cooked, and cleaned. This Court disagreed, stating that "[t]hese functions are life's necessities, and [the claimant] a single mother, has no one else to do them for her. That she manages to accomplish them (with the help of200 pills per month) does not make it likely that she lied about the pain she endures." ALJ Strauss further erred by finding claimant's testimony not credible despite evidence that "strongly suggest[ ed] a determination to work for as long as [the claimant] could." In light of these egregious errors, the Court remanded solely for the calculation of benefits. 183. In LoRusso v. Astrue, 2010 WL 1292300 (E.D.N.Y. Mar. 31, 2010), ALJ Strauss ignored explicit instructions from a previous remand by failing to consider several surgeries when determining that claimant's complaints of pain were not credible. In fact, ALJ Strauss failed to provide any reason for finding that the claimant lacked credibility which "'fatally undermine[ d) [her] argument that there is substantial evidence adequate to support h[er] conclusion that claimant is not under a disability"' and therefore warranted remand. 184. In Pena v. Comm 'r of Soc. Sec., 2010 WL 4340449 (E.D.N.Y. Oct. 22, 2010), ALJ Strauss once again committed "legal error" when she failed to "properly evaluate [claimant's] subjective testimony concerning her disability." Specifically, she ignored the claimant's medication regime, non-pharmaceutical treatments, and other factors the claimant testified to concerning the severity of her condition. 185. In Canton v. Astrue,2010 WL 5391184 (E.D.N.Y. Dec. 22, 2010), this Court remanded because ALJ Strauss improperly analyzed claimant's credibility by failing to "take into account any precipitating and aggravating factors, such as [the claimant's] diabetes" when analyzing the claimant's subjective complaints of pain. 186. In Pluck v. Astrue, 2011 WL 917654 (E.D.N.Y. Mar. 9, 2011), ALJ Strauss "erred in using isolated events" to discredit the claimant's account ofher limitations. For example, ALJ Strauss relied on evidence that the claimant had made several attempts to return to work as an indication that the claimant was not disabled at all during the thirteen year period of claimed disability. The Court noted that these were best characterized as "unsuccessful work attempt[s]" that did not prove the claimant was not disabled. ALJ Strauss had "effectively penalized [the claimant] for returning to work when she was able." ( 4) High Denial Rate 187. Disposition data for 2005-2008 shows that ALJ Strauss denied 69% of the claims before her, a rate 41 percentage points higher than the national average. In fact, ALJ Strauss was in the top 2% of deniers nationally for that period. 188. More recent data confirms this stunning trend has continued, as ALJ Strauss's denial rate for the period between September 25,2010 and February 25,2011 (the most recent reporting period for SSA) has bloated to an alarming rate of 81%. 2. Commissioner's Indifference 189. The Commissioner is aware or should have been aware, based on statistics, complaints, and errors presented on appeal, that the Named ALJs are biased against people with disabilities and claimants generally. 190. The Commissioner is also aware or should have been aware, based on statistics, complaints, and errors presented on appeal, that the Named ALJs routinely refuse to apply Social Security law and regulations in rendering their decisions. 191. The Commissioner has failed to take adequate steps to prevent the Named ALJ s from failing to provide fair hearings, or from rendering decisions based on bias. 192. Despite this long history of mistreatment and bias, the Commissioner failed to take any meaningful action to correct the improper and illegal behavior of the ALJs in the QODAR. Without action by the Commissioner, these administrative law judges have no accountability to the public because only agencies are allowed to take action against administrative law judges for good cause established and determined by the Merit Systems Protection Board after a hearing pursuant to 5 U.S.C. § 7521. 193. Indeed, it was only on February 23,2010 that the Commissioner issued public notice of intent to establish a new system of records and routine uses entitled "Administrative Law Judge/Public Alleged Misconduct Complaints System" to manage and monitor complaints. In his announcement, the Commissioner acknowledged, "[a ]t present, we do not have a good mechanism to track complaints about ALJs from initiation to resolution." 3. Lack of Accountability to the Public 194. Absent the Court's intervention, the Named ALJs have no direct accountability to the public. Pursuant to 5 U.S.C. § 7521, only agencies are allowed to take action against ALJs for good cause established and determined by the Merit Systems Protection Board after a hearing, and, upon information and belief, the Commissioner has not taken any action against any of the Named ALJs. 195. Additionally, pursuant to the SSA's Office of Hearings and Appeals (Now ODAR), Hearings, Appeals and Litigation Law Manual, at I-2-0-S.A (updated, Sept. 28, 2005), it is the responsibility of the Hearing Office Chief ALJ to "participate[] in investigations, in coordination with the Regional Chief Administrative Law Judge, into allegations of misconduct on the part of any employee, including ALJ s . . . [and to] ensure[] the timely and accurate response to public and congressional inquiries; ... and conduct[] periodic training." Accordingly, under the current paradigm for investigation of wrongdoing, one of the primary offenders-ALI Nisnewitz-would be responsible for participating in investigations into the very misconduct of which he is accused. 196. Without the intervention of this Court, there is no practical means for the public generally, and the plaintiffs and class members particularly, to hold the Named ALJs accountable for their actions and to obtain the necessary relief from unfair hearings and decisions based on bias. 4. Bias Toward Class Plaintiffs Specifically 197. As detailed below, each of the Class Plaintiffs has experienced one or more of the very errors which this Court has had to correct time, after time, after time with the Named ALJs. Most commonly, Class Plaintiffs have experienced the Named ALJs' clear and systematic failure to abide by the Treating Physician Rule. Many have also suffered from the Named ALJs' dereliction of duty to develop the record and support their conclusions with cogent explanation and evidence. Many have suffered erroneous adverse credibility determinations. Some have suffered from more obvious bias, hostility and unprofessional behavior (which is indicative ofbias). There is little doubt, when the overall record is considered, that Class Plaintiffs have experienced the same pattern of bias identified above. a) Plaintiff Lorraine Padro 198. Ms. Padro's case was heard by ALI Hoppenfeld. ALJ Hoppenfeld's decision denying benefits to Ms. Padro was premised on several errors, including failure to abide by the Treating Physician Rule, failure to develop the record, erroneous and faulty credibility determinations, and failure to support conclusions with substantial evidence. 199. Background Facts: Ms. Padro, born January 12, 1969, is a 42-year-old woman who lives with a family friend in a basement in Ozone Park, New York. She has been unable to work since July 15, 2006, and has not engaged in substantial gainful activity since at least that date. She receives public assistance. Ms. Padro has a sixth-grade education, and her subsequent attempts to obtain a high school equivalency diploma were unsuccessful. Ms. Padro has limited ability to read and write and can only perform addition. Her work history has included positions as a cleaner for a fast food restaurant and as a clerical worker. 200. Disabilities: Ms. Padro suffers from several disabling conditions, including diabetes (and associated obesity), asthma, major depressive disorder with psychotic and anxious features, bipolar disorder, chronic low back pain, migraine headaches, and radiculopathy. Her benefits application focused on her well-documented and severe mental illness, which, in the words of one of her treating physicians made her "unemployable." Indeed, after trying to place her in a number of positions, the New York City Human Resources Administration ("HRA") exempted Ms. Padro from participating in its work programs because of her physical and psychiatric conditions. 201. Procedural History: On July 24, 2009, Ms. Padro appealed the denial of benefits. ALJ Hoppenfeld held a hearing and determined that Ms. Padro was not disabled. The Appeals Council denied Ms. Padro's request for review, and, on July 23, 2010, she appealed the denial in the U.S. District Court for the Eastern District of New York. Only then, the Commissioner conceded error by ALJ Hoppenfeld, and urged remand rather than a court- directed award of benefits. This amended complaint incorporates by reference, and requests the same relief requested, in the original complaint as to Ms. Padro. 202. Errors: ALJ Hoppenfeld's decision was premised on the following errors: a. Treating Physician Rule: As conceded by the Commissioner upon appeal to this court, ALI Hoppenfeld ignored the requirements of the Treating Physician Rule. b. Failure to develop the record: ALI Hoppenfeld discounted the treating physician, in part, because of an absence of treatment records. However, ALI Hoppenfeld did not request such records, as was her obligation, and ignored the records actually submitted. c. Failure to support conclusion with substantial evidence: ALI Hoppenfeld based her central conclusion-that Ms. Padro could performed low-stress, nonrepetitive, and unsupervised work, which did not bring her into close proximity with others-on a highly leading and hypothetical series of questions to the Commissioner's own vocational expert ("VE"). In relying on the VE's testimony that a hypothetical person with Ms. Padro's limitations could perform such work, ALI Hoppenfeld failed to consider, or even address, HRA's determination that Ms. Padro's mental illness made her unsuitable for employment. d. Erroneous credibility determination: ALI Hoppenfeld noted, in assessing Ms. Padro's testimony, the "many inconsistencies in this record, which makes claimant's allegations suspect, questionable and unable to be accepted." However, ALJ Hoppenfeld failed to address, or even mention, the severe mental illness that gave rise to some of the inconsistencies upon which she focused as a basis to discredit Ms. Padro. e. Other errors: In various ways, it is clear that, in rendering her decision, ALI Hoppenfeld was distracted by Ms. Padro's history of child custody proceedings and prior drug dependency. She also often substituted her own medical opinion for that of the doctor, often to absurd conclusions, such as by suggesting, while receiving testimony about a diabetes-related foot injury, that the injury was brought on by drug use. 203. Thus, it is quite clear that Ms. Padro suffered the same exact errors and misconduct that this Court, time and time again, has been called upon to correct. Absent action from this Court, Ms. Padro will be subjected to continuing bias from ALI Hoppenfeld's errors and behavior. 204. In the meantime, the denial of SSI benefits is causing Ms. Padro to endure severe deprivation and hardship. Since her mother's death, Ms. Padro has lived with a friend of the family and looks to public assistance as her sole income. Ms. Padro's psychotherapist found that her lack of income has an adverse effect on her emotional stability and has intensified her symptoms of depression. It has been four years since Ms. Padro filed her claim for SSI, and each day of delay brings her closer to total destitution and harm to her health. b) PlaintiffDhanasar Raman 205. Mr. Raman's case was heard by ALJ Strauss. ALJ Strauss's decision denying benefits to Mr. Raman was premised on several errors, including failure to abide by the Treating Physician Rule, failure to develop the record, erroneous credibility determinations, and failure to support conclusions with substantial evidence. 206. Background Facts: Dhanasar Raman, born July 4, 1960, is a 50-year-old resident of South Ozone Park, New York. Mr. Raman attended school up through the 5th grade in his native Guyana, and previously worked as a machinist. 207. Disabilities: Dhanasar Raman suffers from cervical dystonia, a painful disorder of involuntary muscle contractions causing sustained twisting movements and abnormal posture. Both Mr. Raman's neck and upper torso are severely twisted to the right. This twisting affects his posture in that his upper lumbar spine tilts to the left. His right shoulder is positioned higher than his left shoulder and Mr. Raman is neither able to rotate his spine to the left nor bend to the left. Mr. Raman also suffers herniated discs in his cervical spine due to his condition. 208. Procedural History: On December 5, 2007, Mr. Raman applied for SSI and SSD benefits. His initial application was denied on June 6, 2006. Mr. Raman appealed the denial of benefits, and a hearing was held before ALJ Strauss. On February 25, 2010, ALJ Strauss denied disability benefits to Mr. Raman. On May 3, 2010, Mr. Raman requested that the Appeals Council review ALJ Strauss's decision, but to date he has not received a decision on this request. 209. Errors: ALJ Strauss' decision was premised on the following errors: a. Treating Physician Rule: ALJ Strauss discounted the report of Mr. Raman's treating physician because it allegedly lacked clinical findings and relied on subjective complaints of neck pain. This determination contained serious legal and factual errors as it failed to give the doctor's diagnosis and prognosis controlling weight, despite the report being consistent with the evidence in the record and "well-supported by medically acceptable clinical and laboratory diagnostic techniques." Indeed, the treating physician's report was based, in part, on two MRI scans and an EEG, as well as a physical examination of Mr. Raman. ALI Strauss also discounted a second medical report proffered by a treating physician. In that instance, ALI Strauss offered opaque and inconsistent grounds for her dismissal of the report. ALI Strauss also ignored medical evidence from an MRI, dated June 6, 2005, which revealed herniated discs in the area of the cervical spine. b. Failure to develop the record: ALI Strauss failed to develop the record through the use of expert medical testimony before determining that Mr. Raman's impairments from cervical dystonia do not constitute an impairment in the SSA's Listing. Instead, ALJ Strauss conducted her own evaluation of the medical record, which overlooked almost all of the medical findings by Mr. Raman's treating physicians and ignored the serious effects ofhis condition which include: permanent involuntary movement, interference with his ability to perform normal motor functions, hampered locomotion and limited use ofhis hands. c. Failure to support conclusion with substantial evidence: ALJ Strauss also erred as a matter oflaw by finding that Mr. Raman could perform light work. Light work is defined as the ability to stand for at least 6 hours out of an 8 hour work day and to lift up to 20 pounds. ALJ Strauss failed to consider the impact of Mr. Raman's dystonia, which affects Mr. Raman's gait and balance and causes his head to remain in the same right-facing position. In addition, ALJ Strauss failed to account for the difficulty anyone would encounter in using both hands while their head is chronically turned. This condition impacted Mr. Raman's ability to navigate the ordinary hazards of a typical working environment. d. Erroneous credibility determination: In rejecting Mr. Raman's request for benefits, ALJ Strauss questioned his credibility. This decision was clear error-particularly in light of Mr. Raman's strong 20-year work record, which under well-settled law entitles him to a presumption of credibility. Not surprisingly, ALJ Strauss's credibility determination is belied by the nature of Mr. Raman's complaints, which are consistent with a diagnosis of cervical dystonia. Nonetheless, in an effort to support her own flawed conclusion, ALJ Strauss questioned Mr. Raman's credibility because he failed to seek out physical therapy, a "work hardening program," chiropractic treatment, or narcotic pain medication-none of which were recommended by Mr. Raman's treating physicians. c) Plaintiff Toby Marlow as Court-Appointed Guardian for Judith Blumensohn 210. Ms. Blumensohn's case was heard by ALJ Nisnewitz. In denying benefits to Ms. Blumensohn, ALJ Nisnewitz failed to properly apply well-settled Social Security law. 211. Background Facts: Judith Blumensohn, born July 19, 1955, is a 55-year-old woman who for the past year has been an in-patient at the Zucker Hillside Hospital, a psychiatric hospital in Queens, New York. She has no past relevant work experience and has never engaged in substantial gainful activity. Since 2002, Ms. Blumensohn has received SSI disability benefits. 212. Disabilities: The Commissioner concedes that, since 2002, Ms. Blumensohn has suffered from the severe mental impairment of schizophrenia. At issue during Ms. Blumensohn's hearing was whether Ms. Blumensohn's impairment began prior to her 22nd birthday. 213. Procedural History: On October 23, 2006, Ms. Blumensohn filed an application for DAC benefits, SSD benefits that are available under the Act to an unmarried child over the age of 18 with a disability that began before age 22, based on a parent's Social Security earnings record. In her application, Ms. Blumensohn alleged severe mental illness that began when she was 12 years old-the age at which the Family Court ofKings County found her to be a "person in need of supervision." Ms. Blumensohn's application for benefits was denied. Ms. Blumensohn appealed the denial of benefits, and a hearing was held on June 23, 2008 before ALI Nisnewitz. On February 10, 2009, ALJ Nisnewitz rejected Ms. Blumensohn's contention that she was disabled prior to her 22nd birthday. On June 15, 2010, the Appeals Council remanded Ms. Blumensohn's case. The Appeals Council concluded that Ms. Blumensohn's impairment was "severe" prior to her 22nd birthday and that Social Security Ruling 83-20 allows for inferences of a mental illness onset date. Accordingly, the Appeals Council instructed ALJ Nisnewitz to obtain the assistance of a medical expert to aid in the interpretation ofMs. Blumensohn's disability onset date. A second hearing was held before ALJ Nisnewitz, and on October 22, 2010, ALJ Nisnewitz again rejected Ms. Blumensohn's contention that she was disabled prior to her 22nd birthday. Ms. Marlow as court-appointed guardian for Ms. Blumensohn appealed this final ruling to the U.S. District Court for the Eastern District of New York, prose, on February 17, 2011. 214. Error: In issuing both decisions, ALJ Nisnewitz erred by failing to correctly apply Social Security Ruling 83-20, which instructs an ALJ to infer a mental illness onset date prior to the actual start of recorded treatment, if such inference is consistent with available evidence. Despite this rule, ALJ Nisnewitz refused to permit an inference of disability which was supported by medical evidence and witness testimony. Instead, ALJ Nisnewitz complained of a dearth of psychiatric treatment records prior to Ms. Blumensohn's 22nd birthday and rejected her application for benefits. ALI Nisnewitz erred as a matter oflaw in this determination. After explicit instruction on remand to apply Social Security Ruling 83-20, ALI Nisnewitz, once again, ignored compelling medical evidence such as Ms. Blumensohn's institutionalization on December 6, 1967 (when she was 12 years old) and a psychological report on August 1, 1967, which supported a finding that Ms. Blumensohn was disabled by that date and entitled to DAC benefits. d) Plaintiff Carmen Duran 215. Background Facts: Carmen Duran, born November 19, 1959, is a 51-year-old woman who lives in Richmond Hill, New York. She has been unable to work since 1998, which was the last time she engaged in substantial gainful activity. Ms. Duran has a third-grade education, meets the criteria for Listing oflmpairments section 12.05 Mental Retardation, and has an IQ measured in the 40s. Ms. Duran reads at a second grade level and has difficulty communicating in English. Her work history includes some factory work, applying price tickets to clothing and babysitting. 216. Disabilities: Ms. Duran suffers from several disabling conditions, including cognitive impairment, depression, post-traumatic stress disorder, adjustment disorder, osteoarthritis and chronic back pain. 217. Procedural History: Ms. Duran first applied for SSI disability benefits on June 30, 2006. She appealed the denial ofbenefits on February 13, 2007. ALJ Jay L. Cohen held a hearing, after which he determined that Ms. Duran was not disabled. The Appeals Council remanded the case for further proceedings on January 16, 2009, noting that ALJ Cohen had not adequately evaluated the opinions of the treating and non-treating physicians and had failed to adequately address Ms. Duran's claims of physical disability. In addition, ALJ Cohen did not consider the full range of factors when assessing Ms. Duran's credibility. On September 3, 2009, ALJ Hoppenfeld heard the case on remand, after which she denied Ms. Duran benefits for a second time. On November 24, 2010, Ms. Duran requested that the Appeals Council review ALJ Hoppenfeld' s decision, but to date she has not received a decision on this request. 218. Errors: ALJ Hoppenfeld's decision was premised on the following errors: a. Treating Physician Rule: ALJ Hoppenfeld failed to properly consider the opinion of Ms. Duran's treating psychiatrist, Dr. Rodolfo Sandin, who submitted a report stating that Ms. Duran experiences restriction of aptitudes needed for basic tasks associated with holding a job such as cooperating with coworkers, responding to supervisors, maintaining regular attendance, being punctual within customary tolerances and performing at a consistent pace without an unreasonable number of rest periods. Despite these significant obstacles to employment, in rejecting Ms. Duran's benefits request, ALJ Hoppenfeld chose to cherry-pick one statement from the report which provided that Ms. Duran's speech was coherent, her affect and dress were appropriate, and she was oriented to person, place, and time. b. Failure to develop the record: Though the medical evidence conflicted, ALJ Hoppenfeld failed to complete the record by following up with Ms. Duran's treating physicians. Instead, she simply concluded that "the treating source did not supply sufficient basis for an inability to function." This failure to develop additional facts directly conflicts with the established requirements of a Social Security benefits hearing. c. Erroneous credibility determination: ALJ Hoppenfeld relied on the opinion of a consultative psychologist in concluding that Ms. Duran's testimony lacked credibility. To further support this vacuous conclusion, ALJ Hoppenfeld determined that Ms. Duran can manage money, care for children, travel, and maintain her household. This finding is fatally flawed. Indeed, Ms. Duran performs these functions only with supervision, sometimes by her 72-year-old mother, her children, or the home aide assigned to her household. In fact, Ms. Duran does not drive, she does not leave the house alone because her children fear that she will not remember to look both ways before stepping into the street; she does not even carry her own wallet, her children do. 219. Other Errors: Stating that she did not "trust" the diagnosing facility, ALJ Hoppenfeld wrongly rejected the report of a New York State-licensed facility, which concluded that Ms. Duran has cognitive deficiencies. Instead of relying on this fully acceptable report, ALJ Hoppenfeld referred Ms. Duran to a consultative examiner who utilized a different and less comprehensive test to determine that Ms. Duran had greater cognitive abilities than she claimed. Notably, the particular test administered by the consultative examiner is expressly prohibited in New York State for the purpose of assessing cognitive abilities. e) Plaintiff John Edwards 220. Mr. Edwards' case was heard by ALJ Nisnewitz. ALJ Nisnewitz's decision, denying benefits to Mr. Edwards, was premised on several errors, including failure to abide by the Treating Physician Rule, failure to develop the record, erroneous adverse credibility determinations, and failure to support conclusions with substantial evidence. 221. Background Facts: John Edwards, born August 14, 1965, is a 45-year-old man with a ninth-grade education who lives alone in Brooklyn, New York. He has been unable to work since July 1, 2003, and has not engaged in substantial gainful activity since at least that date. When he was able to work, Mr. Edwards held the position of truck helper through which he assisted truck drivers in loading and unloading payloads, among other tasks. In performing this work, he engaged in frequent heavy lifting that caused certain of his medical problems. 222. Disabilities: Mr. Edwards suffers from multiple disabling conditions, including deteriorating herniated discs, which have caused extremely limited mobility and intense pain, asthma, high cholesterol, depression, bipolar disorder, panic attacks and difficulty with memory and concentration. Mr. Edwards' depression prevents him from tolerating "even low stress jobs," as determined by his treating physician. Mr. Edwards also hears voices calling his name and telling him to sell drugs and rob people. 223. Procedural History: On August 1, 2006, Mr. Edwards appealed the denial of benefits. ALJ Nisnewitz held a hearing on July 23, 2007, and on December 17, 2007, ALJ Nisnewitz rendered a decision finding Mr. Edwards not disabled. Mr. Edwards requested review by the Appeals Council, which in tum vacated the decision and remanded the matter back to ALJ Nisnewitz, citing ALJ Nisnewitz's failure to abide by the Treating Physician Rule and his failure to adequately develop the record or support his conclusions. ALJ Nisnewitz held a second hearing, and again found Mr. Edwards not disabled. On July 1, 2009, Mr. Edwards appealed the second decision by ALJ Nisnewitz to the Appeals Council, stating that ALJ Nisnewitz failed to properly evaluate his psychiatric impairment and his work-related physical limitations. Mr. Edwards' request is currently pending. 224. Errors: ALJ Nisnewitz's first decision, as reviewed by the Appeals Council, was premised on the following errors: a. Treating Physician Rule: ALJ Nisnewitz ignored the requirements of the Treating Physician Rule by failing to accord controlling weight to Mr. Edwards' treating sources (or, in the alternative, explain the basis for declining to give controlling weight to the physicians' diagnoses).2 2 In his second decision, which is pending review by the Appeals Council, ALJ Nisnewitz implemented the Treating Physician Rule incorrectly by requiring that medical opinions be supported by objective evidence, such as laboratory results. In fact, the rule is that treating b. Failure to develop the record: ALJ Nisnewitz discounted all of the opinion evidence, in part, because of his failure to clarify the nature and severity of Mr. Edwards' depression and the effect of the assessed limitations on his occupational potential. The Appeals Council also required ALJ Nisnewitz to give further consideration to Mr. Edwards' maximum residual functional capacity and to request additional medical evidence, or opinion clarification, where necessary. c. Failure to support conclusion with substantial evidence: ALJ Nisnewitz based his central conclusion-that Mr. Edwards could perform a full range oflight work-on his erroneous belief that Mr. Edwards' ongoing substance abuse was immaterial to the disability determination. In fact, the Appeals Council specifically instructed ALJ Nisnewitz to determine "the impact of [Mr. Edwards'] drug abuse on his mental impairment" and whether drug addiction is a material contributing factor to the finding of disability. Despite this directive, ALJ Nisnewitz affirmatively ignored the Appeals Council. d. Erroneous credibility determination: In assessing Mr. Edwards' testimony, ALJ Nisnewitz noted that Mr. Edwards' subjective complaints about the persistence, intensity, and limiting effects of his symptoms . were "not entirely credible." However, he did so without making any physicians must be accorded controlling weight unless the opinions are substantially contradicted by the record evidence. evaluation of Mr. Edwards' subjective complaints and their impact on his residual functional capacity, as required by law.3 f) Plaintiff Ernesta Gutierrez 225. Ms. Gutierrez's case was heard by ALJ Cofresi. ALJ Cofresi's decision, denying benefits to Ms. Gutierrez, was premised on several errors, including his failure to abide by the Treating Physician Rule, failure to consider the effect of the claimant's impairments in combination rather than individually, erroneous adverse credibility determinations, and failure to support conclusions with substantial evidence. 226. Background Facts: Ms. Gutierrez, born November 7, 1966, has only a marginal education and is unable to communicate effectively in English. She has been disabled since at least February 20, 2008 and has not engaged in substantial gainful activity since that date. She had previously worked as a private housekeeper and assistant cook. 227. Disabilities: Ms. Gutierrez suffers from several disabling medical conditions including low back pain, scoliosis, bilateral knee patello-femoral syndrome, bilateral shoulder rotator cuff tendinitis, vertigo/dizziness, insomnia and depressive disorder, among other problems. Her treating psychotherapist opined that her mental illnesses make it impossible for her to remember locations and work-like procedures, carry out short and simple instructions, or perform at a consistent pace without an unreasonable number ofrest periods, all of which make it unrealistic for her to seek employment. 228. Procedural History: Ms. Gutierrez applied for SSI benefits on March 11, 2009. Her claim was initially denied and a hearing was held before ALJ Cofresi, who issued a 3 In his second decision, ALJ Nisnewitz made the same adverse finding regarding Mr. Edwards' credibility, and further noted that his subjective complaints were not supported by the medical record. In fact, subjective complaints may not be disregarded simply because they are not substantiated by objective medical evidence according to SSR 96-7p. decision finding Ms. Gutierrez ineligible for benefits. On December 7, 2010, the Appeals Council denied Ms. Gutierrez's request for review. On February 15,2011, Ms. Gutierrez requested an extension of time from the Appeals Council to file an action in federal district court seeking the review of ALJ Cofresi' s decision finding her not disabled within the meaning of the Act. 229. Errors: ALJ Cofresi's decision was premised on the following errors: a. Treating Physician Rule: ALI Cofresi failed to abide by the Treating Physician Rule. Without explanation, he gave the opinions of Ms. Gutierrez's treating physician and psychotherapist little weight, and engaged in no analysis of the statutorily required factors for determining how much non-controlling weight should be given to the treating physicians' opinions. ALJ Cofresi discounted these opinions largely because they did not reflect his own interpretation of the medical evidence, essentially substituting his own lay opinions for those of medical professionals. b. Failure to consider impairments in combination: ALJ Cofresi improperly discounted the limiting effects of Ms. Gutierrez's impairments in part because he failed to consider the effect of her depression combined with her other impairments, as is required by the Social Security law. c. Erroneous credibility determination: ALJ Cofresi found that Ms. Gutierrez's description of her symptoms, including their intensity, persistence and limiting effects was not credible. In reality, Ms. Gutierrez's statements were credible and consistent with objective medical evidence, which ALJ Cofresi ignored. Further, even in the absence of objective medical evidence, ALJ Cofresi was under an obligation to consider Ms. Gutierrez's statements independently, and to provide reasons for his credibility determinations. ALJ Cofresi did neither. d. Failure to support conclusion with substantial evidence: ALJ Cofresi, in part, based his determination that Ms. Gutierrez was employable on his erroneous finding that she was literate and able to communicate in English. Apparently, ALJ Cofresi came to this conclusion based on his own conviction that anyone who has lived in the United States for a period of years could communicate effectively in English. He wholly ignored evidence that in fact, Ms. Gutierrez is unable to speak or communicate in English with any proficiency, a fact which should have been considered his assessment of her residual functional capacity. e. Other errors: ALJ Cofresi also demonstrated significant bias against Ms. Gutierrez for her immigrant status. Beyond the improper application of the law with regard to her language skills, examples ofharsh language directed at Ms. Gutierrez and skewed reasoning with regard to her immigrant status abound. For example, although the elements of a disability claim relate only to the claimant's medical condition, ALJ Cofresi questioned Ms. Gutierrez about her immigration history at length, going back more than 20 years, and asking for details about when she entered the United States and whether she had had a visa or had entered illegally. Additionally, ALJ Cofresi went out of his way to use Ms. Gutierrez's immigration history to cast her in a negative light; although Ms. Gutierrez has been a legal permanent resident throughout the application process, ALJ Cofresi described her as having evaded and disregarded the law. This entire line of questioning was irrelevant to her eligibility for disability benefits and evidenced ALJ Cofresi's flagrant bias against claimant. g) Plaintiff Julia Juan 230. Ms. Juan's case was heard by ALJ Nisnewitz. ALJ Nisnewitz's decision, denying benefits to Ms. Juan, was premised on several errors, including failure to abide by the Treating Physician Rule, erroneous credibility determinations, and failure to support conclusions with substantial evidence. 231. Background Facts: Julia Juan, born November 23, 1952, is a 58-year-old resident of Elmhurst, New York. Ms. Juan has been disabled since February 5, 2005, and has not engaged in substantial gainful employment since that date. She had previously worked as a school kitchen helper. 232. Disabilities: Ms. Juan suffers from the following severe impairments within the meaning of the Act: lumbago,4 diabetes, hypertension, obesity, arthritis, allergies and sinusitis. Ms. Juan experiences constant pain in her back and the side of her leg, as well as muscle spasms and cramps in her toes. 4 Lombago is a condition causing acute or chronic pain in the lower back. 233. Procedural History: Ms. Juan applied for SSD benefits on August 19, 2008, and for SSI benefits on August 22, 2008. These claims were both initially denied and a hearing was held before ALJ Nisnewitz, who rendered a decision on September 30, 2009 finding Ms. Juan not eligible for benefits. Ms. Juan requested review by the Appeals Council. On September 14,2010, the Appeals Council found that ALJ Nisnewitz had failed to provide an adequate rationale for the weight he assigned to the treating physicians' opinions. The Appeals Council remanded her case back to ALI Nisnewitz, despite Ms. Juan's request to be heard before a different ALI, amounting, in effect, to a denial of a fair hearing. In late March 2011, Ms. Juan appealed ALJ Nisnewitz's second denial of benefits to the Appeals Council. 234. Errors: ALI Nisnewitz's decision was premised on the following errors: a. Treating Physician Rule: ALJ Nisnewitz failed to explain why he afforded the opinion of the non-examining physician more weight than that of Ms. Juan's treating physician. ALJ Nisnewitz also failed to explain why he chose to discount the three other medical opinions in the record which assessed much more severe limitations than the single residual functional capacity assessment that supported ALI Nisnewitz's determination. b. Erroneous credibility determination: ALI Nisnewitz improperly discounted Ms. Juan's testimony concerning the intensity, persistence, and limiting effects ofher symptoms, and applied incorrect legal standards. At the hearing, Ms. Juan testified that she could only stand for up to ten minutes and only walk for two blocks before becoming fatigued. She also detailed constant pain in her back, leg, and toes, and stated that she experiences pain when rising from the toilet. ALJ Nisnewitz refused to believe Ms. Juan's testimony regarding the pain she experienced. He also ignored supporting objective medical evidence and distorted Ms. Juan's care for her grandson with help from a neighbor to support his "theory" that she lacked a disability. c. Failure to support conclusions with substantial evidence: ALJ Nisnewitz rejected Ms. Juan's testimony about the severity of her pain in part because her treatment has been "mostly conservative." This was legal error as established precedent confirms that an ALJ cannot impose his own opinion of pain severity based on the course of medical treatment recommended. ALJ Nisnewitz committed further error when he determined that Ms. Juan's depression is a non-severe impairment. This finding ignored the medical records of several examining physicians who observed signs of depression in Ms. Juan sufficient to support a conclusive presumption that Ms. Juan is disabled. h) Plaintiff Jane Doe 235. Ms. Doe's case was heard by ALJ Pier. ALJ Pier's decision, denying benefits to Ms. Doe, was premised on several errors, including failure to honor a request for a representative, failure to develop the record, failure to properly apply the Treating Physician Rule and failure to support conclusions with substantial evidence. 236. Background Facts: Jane Doe is a 46-year-old woman who lives in Far Rockaway, New York. She has worked as a housecleaner and babysitter, but she has not engaged in substantial gainful activity since 2002. She receives public assistance. 237. Disabilities: Ms. Doe suffers from several disabling conditions, including major depressive disorder, panic disorder with agoraphobia, and obsessive-compulsive disorder. Due to her mental illness, Ms. Doe has been exempted as unemployable from New York City's work requirements for recipients of public assistance. 238. Procedural History: In 2007, Ms. Doe filed an application for SSI benefits, which was denied. Ms. Doe appealed and a hearing was held in 2009 before ALJ Pier at which. Ms. Doe appeared prose. One month after the hearing, ALJ Pier rendered a decision finding Ms. Doe not disabled. In late 2009, with the aid of counsel, Ms. Doe appealed ALJ Pier's decision to the Appeals Council. Ms. Doe submitted additional evidence to the Appeals . Council earlier this year. Her request for review is still pending. 239. Errors: ALJ Pier's decision was premised on the following errors: a. Failure to honor a request for a representative: Although regulations required ALJ Pier to ask Ms. Doe questions to ensure she understood her right to representation, ALJ Pier did not do so. Instead, he opened the hearing by cortcluding that it was "evident" that Ms. Doe wished to proceed without representation. When Ms. Doe subsequently asked if she should have an attorney, and indicated that an agency had offered her representation if given time to prepare, ALJ Pier did not offer an adjournment and conducted the hearing without any representation for Ms. Doe, who suffers from several mental impairments. b. Failure to develop the record: ALJ Pier failed to develop the record- as was his duty-for Ms. Doe, a pro se, mentally ill claimant. At the hearing, Ms. Doe testified that she had an emergency room visit in 2008 and that she was currently receiving mental health treatment. Despite his mandate to do so, ALJ Fier made no attempt to obtain any related records regarding her hospital visit or treatment notes. Additionally, during the hearing, he asked no questions about the various medications prescribed to Ms. Doe nor did he enquire about Ms. Doe's depression, panic attacks, fears of leaving the house, or obsessive compulsive behaviors. c. Treating Physician Rule: ALJ Fier failed to assign weight to numerous medical source statements about Ms. Doe's mental limitations. Instead, he weighed the various medical source statements only as they apply to exertionallevels of work, crediting an unnamed treating source and an unnamed consultative source for his finding that Ms. Doe can perform work at any exertionallevel. At no point did he assign weight to the opinions in the record regarding mental limitations. d. Failure to support conclusion with substantial evidence: ALJ Fier failed to base his analysis of Ms. Doe's residual functional capacity assessment on all of the relevant evidence. He ignored most of the extensive non-exertionallimitations described in the record, improperly marginalizing her ailments and concluding, without proper basis, that she could perform "simple work not requiring too much interaction with others." * * * 240. It is quite clear that each of the plaintiffs has suffered from the same series of errors that this Court, time and time again, has been called upon to correct. Absent action from this Court, Class Plaintiffs will be subjected to continuing bias from the Named ALI's errors. 241. In the meantime, the denial of SSI and SSD benefits is causing plaintiffs and other members of the class to endure severe deprivation and hardship. IRREPARABLE INJURY AND NO ADEQUATE REMEDY AT LAW 242. The Commissioner's failure to take adequate steps to prevent Chief ALJ Nisnewitz, and ALJs Cofresi, Pier, Hoppenfeld, and Strauss from failing to provide fair hearings, or from rendering decisions based on bias has led to the wrongful denial of benefits to plaintiffs and class members and has caused them severe deprivation and hardship, which is irreparable injury. 243. Plaintiffs and class members have no adequate remedy at law. COUNT I -SOCIAL SECURITY ACT- 42 U.S.C. §§ 405(b)(l) AND 1383(c)(l) 244. Plaintiffs repeat and reallege Paragraphs 1 through 243, as if fully set forth herein. 245. As a result of the bias of Chief ALI Nisnewitz and ALJs Cofresi, Pier, Hoppenfeld, and Strauss against Social Security Act claimants, and their failure to follow applicable law and applicable instructions from the Appeals Council and the federal district courts, plaintiffs and members of the plaintiff class have been denied fair hearings before an impartial adjudicator in violation ofthe Social Security Act, 42 U.S.C. §§ 405(b)(l) and 1383(c)(l). COUNT II-ADMINISTRATIVE PROCEDURE ACT- 5 u.s.c. § 556(b) 246. Plaintiffs repeat and reallege Paragraphs 1 through 245, as if fully set forth herein. 247. As a result ofthe bias of Chief ALJ Nisnewitz and ALJs Cofresi, Fier, Hoppenfeld, and Strauss against Social Security Act claimants, and their failure to follow applicable law and applicable instructions from the Appeals Council and the federal district courts, plaintiffs and members of the plaintiff class have been denied fair hearings before an impartial adjudicator in violation of the Administrative Procedure Act, 5 U.S.C. § 556(b). COUNT III- THE NAMED ALJs VIOLATED THE DUE PROCESS CLAUSE OF THE FIFTH AMENDMENT TO THE UNITED STATES CONSTITUTION 248. Plaintiffs repeat and reallege Paragraphs 1 through 247, as if fully set forth herein. 249. As a result ofthe bias of Chief ALJ Nisnewitz and ALJs Cofresi, Fier, Hoppenfeld, and Strauss against Social Security Act claimants, and failure to follow applicable law and applicable instructions from the Appeals Council and the courts, plaintiffs have been and will be denied fair hearings before an impartial adjudicator, in violation of the Due Process Clause of the Fifth Amendment to the United States Constitution. COUNT IV- COMMISSIONER VIOLATED THE DUE PROCESS CLAUSE OF THE FIFTH AMENDMENT TO THE UNITED STATES CONSTITUTION 250. Plaintiffs repeat and reallege Paragraphs I through 249, as if fully set forth herein. 251. Defendant is, or should be aware, of the bias and other improper conduct of Chief ALJ Nisnewitz and ALJs Cofresi, Fier, Hoppenfeld, and Strauss, but has failed to take adequate steps to eliminate the harm that their bias and improper conduct is causing to Social Security Act claimants, in violation of the Social Security Act and the Due Process Clause of the Fifth Amendment. COUNT V- THE NAMED ALJs' DECISIONS ARE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE AND ARE CONTRARY TO LAW- 42 U.S.C. §§ 405(g) AND 1383(c)(3) 252. Plaintiffs repeat and reallege Paragraphs 1 through 251, as if fully set forth 253. The decisions in the individual named plaintiffs' claims are a product of the bias of Chief ALJ Nisnewitz and ALJs Cofresi, Fier, Hoppenfeld, or Strauss, are not supported by substantial evidence and are contrary to law. 42 U.S.C §§ 405(g) and 1383(c)(3). PRAYER FOR RELIEF WHEREFORE, the plaintiffs respectfully request that this Court: 1. Certify this action as a class action pursuant to Rule 23(b)(2) of the Federal Rules of Civil Procedure; 2. Declare, pursuant to 28 U.S.C. §§ 2201 and 2202 that Chief ALJ Nisnewitz and ALJs Cofresi, Fier, Hoppenfeld, and Strauss: (a) are generally biased against claimants for benefits under the Social Security Act; (b) routinely fail to apply applicable law and district court and Appeals Council instructions; and (c) that Chief ALJ Nisnewitz and ALJs Cofresi, Fier, Hoppenfeld, and Strauss's conduct deprived Class Plaintiffs of their right to a fair hearing before an impartial adjudicator, in violation of the Social Security Act, the Administrative Procedure Act, and the Due Process Clause of the Fifth Amendment to the United States Constitution; 3. Enter a permanent injunction prohibiting the Commissioner from allowing the Named ALJs to preside over any claims for SSI or SSD benefits; 4. Enter a permanent injunction ordering defendant to: a. Provide plaintiffs and class members who have received an unfavorable decision from the Named ALJs with the opportunity for new hearings before Administrative Law Judges other than the Named ALJs; b. In the event that the Named ALJs continue hearing disability claims, provide them with retraining to ensure that in the future decisions of the Named ALJs are not tainted by generalized bias; and c. In the event that the Named ALJs continue hearing disability claims, develop a system to monitor any future decisions of the Named ALJs to ensure that they are not tainted by generalized bias. 5. Order the Commissioner to notify plaintiff class members of the determination of this court and of their right to new hearings on their Social Security Act claims. 6. Annul the decision denying benefits or partially denying benefits in each of the Class Plaintiffs' claims and remand them to the Commissioner for new hearings or for the award ofbenefits before an Administrative Law Judge other than the Named ALJs. 7. A ward plaintiffs' attorneys' fees, costs and expenses under the Equal Access to Justice Act, 28 U.S.C. §§ 2412(a) and (d) or any successor legislation. 8. Grant such other relief as the court may deem just and proper. Dated: New York, New York April 12, 2011 :~BSON, DUNN ~TCHER LLP J" Mla den (JW-0447) li r M. Olanoff (00-0209) yl H. Amass (TA-7742) a on I. Grysman (SG-2383) 200 Park A venue, 50th Floor New York, New York 10166-0193 Telephone: 212.351.4000 Facsimile: 212.351.4035 URBAN JUSTICE CENTER Ian F. Feldman (IF-9140) Emilia Sicilia (ES-1215) 123 William Street, 16th Floor New York, New York 10038 Telephone: 646.602.5600 Facsimile: 212.533.4598 Attorneys for PlaintiffS

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Case No.: CLASS ACTION COMPLAINT UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA Janet Smith, Debra Thorne, Sonja Lindley and Pamela Kaberline, on behalf of themselves and all others similarly situated, Plaintiffs, vs. U.S. Bancorp, the Employee Benefits Committee and John/Jane Does 1-5, Defendant. Plaintiffs Janet Smith, Debra Thorne, Sonja Lindley and Pamela Kaberline, by and through their attorneys, on behalf of themselves and all others similarly situated, based on personal knowledge with respect to their own circumstances and based upon information and belief pursuant to the investigation of their counsel as to all other allegations, allege the following. INTRODUCTION 1. This is a class action under the Employee Retirement Income Security Act of 1974 (“ERISA”), concerning the unreasonable, excessive reductions to the pension benefits that Plaintiffs earned under the U.S. Bank Pension Plan’s (the “Plan”) final average pay formula when they retired before age 65. 2. The Plan is the combination of numerous defined benefit plans sponsored by U.S. Bank and its predecessors, some of which used different formulae to calculate the accrual of benefits. Beginning in 2002 for most, and by 2003 for all, participants began accruing benefits under a new final average pay formula (“Final Average Pay Formula”). 3. The Plan’s normal retirement age is 65, and the Plan’s normal retirement benefit assumes retirement at that age. Participants who accrued benefits under the Final Average Pay Formula can retire as early as age 55. When a participant retires before age 65, the participant’s benefits are reduced by a prescribed early commencement factor (“ECF”), which represents the percentage of that participant’s normal retirement benefit that the participant will receive when retiring early. For example, an ECF of .90 means that participants receive 90% of the normal retirement benefit they would have been entitled to at age 65. 4. ERISA § 204(c)(3), 29 U.S.C. § 1054(c)(3), provides that an early retirement benefit must be actuarially equivalent to the normal retirement benefit the participant would receive at age 65 under the terms of the plan based on reasonable actuarial assumptions about future interest rates and life expectancies. 5. The ECFs applicable to the Final Average Pay Formula egregiously violate this requirement. They are unreasonable, excessive and incongruent with the interest rates and life expectancies that existed throughout the Class Period. For example, the ECFs improperly reduce participants’ retirement benefits by as much as 22 percent compared to the current actuarial assumptions that the Plan uses to calculate the “actuarial equivalent” of other benefits and by as much as 32 percent compared to the ECFs that apply to the Plan’s other benefit accrual formulae. 6. By reducing Plaintiffs’ benefits in greater amounts than are actuarially reasonable to account for Plaintiffs’ retirements before age 65, Defendants caused Plaintiffs to forfeit part of their vested retirement benefits in violation of ERISA Sections 203 and 204, 29 U.S.C. §§ 1053 and 204. 7. Plaintiffs accordingly seek an order from the Court reforming the Plan to conform to ERISA, payment of future benefits under the terms of the reformed Plan and as required under ERISA, payment of amounts improperly withheld, and such other relief as the Court determines to be just and equitable. JURISDICTION AND VENUE 8. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331 because it is a civil action arising under the laws of the United States, and pursuant to 29 U.S.C. § 1332(e)(1), which provides for federal jurisdiction of actions brought under Title I of ERISA. 9. This Court has personal jurisdiction over Defendant, U.S. Bancorp, because it is headquartered and transacts business in, or resides in, and has significant contacts with, this District, and because ERISA provides for nationwide service of process. 10. This Court has personal jurisdiction over the Benefits Administration Committee (the “Committee”) because it is headquartered and transacts business in, or resides in, and has significant contacts with, this District, and because ERISA provides for nationwide service of process. 11. This Court has personal jurisdiction over the individual members of the Committee because, upon information and belief, each transacts business in, or resides in, and has significant contacts with, this District, and because ERISA provides for nationwide service of process. 12. Venue is proper in this District pursuant to ERISA § 502(e)(2), 29 U.S.C. § 1132(e)(2), because some or all of the violations of ERISA occurred in this District and Defendant resides and may be found in this District. Venue is also proper in this District pursuant to 28 U.S.C. § 1391 because Defendant does business in this District and a substantial part of the events or omissions giving rise to the claims asserted herein occurred within this District. PARTIES Plaintiffs 13. Plaintiff Janet Smith is a resident of Medford, Oregon. She worked for U.S. Bank or its predecessors from June, 1973 until December, 2013 and accrued benefits under the Final Average Pay Formula from January 1, 2002 until her retirement. She started receiving her pension benefits at age 59. 14. Plaintiff Debra Thorne is a resident of Crystal, Minnesota. She worked for U.S. Bank or its predecessors from September, 1985 until May, 1993, and then again from April, 1999 until September, 2018 and accrued benefits under the Final Average Pay Formula from January 1, 2002 until her retirement. She started receiving her pension benefits at age 62 years, 11 months. 15. Plaintiff Pamela Kaberline is a resident of Troy, Illinois. She worked for U.S. Bank or its predecessors from March, 1999 until January, 2017 and accrued benefits under the Final Average Pay Formula from January 1, 2003 until her retirement. She started receiving her pension benefits at age 61 years, 2 months. 16. Plaintiff Sonja Lindley is a resident of Aloha, Oregon. She worked for U.S. Bank or its predecessors from 1989 until December, 2013 and accrued benefits under the Final Average Pay Formula from January 1, 2002 until her retirement. She started receiving her pension benefits at age 56 years, 5 months. Defendants 17. Defendant U.S. Bancorp is a financial services company headquartered in Minneapolis, Minnesota that provides a full range of financial services, including lending and depository services, cash management, capital markets services, investment management, credit card services and mortgage banking. U.S. Bancorp’s banking subsidiary is U.S. Bank, National Association, which has over $357 billion in deposits. U.S. Bank appoints the Committee. See 2017 SPD at 18. 18. The Committee is an unincorporated association with a principal place of business in Robbinsdale, Minnesota. The Committee is the Plan’s administrator and a named fiduciary under ERISA. See 2002 Plan Restatement at §§ 12.6, 12.7. 19. John/Jane Does 1 through 5, inclusive, are the individual members of the Committee, or any other committee(s) responsible for administering the Plans. Their names and identities are not currently known. APPLICABLE STATUTES AND REGULATIONS 20. In a defined benefit plan, a participant’s “accrued benefit” as an “an individual’s accrued benefit under the plan and, except as provided in (ERISA § 204(c)(3), expressed in the form of an annual benefit commencing at normal retirement age.” ERISA § 3(23)(A), 29 U.S.C. § 1002(23)(A). 21. ERISA § 204(c)(3), 29 U.S.C. § 1054(c)(3), provides that if a participant’s accrued benefit is determined before the plan’s normal retirement age, it “shall be the actuarial equivalent” of the benefit that the participant would receive at the plan’s normal retirement age. See also 26 U.S.C. § 411(c)(3). 22. The Treasury’s regulations that construe I.R.C. § 411(c)(3), states that the “actuarial equivalence” of the participant’s accrued benefit “as determined by the Commissioner.” 26 C.F.R. § 1.411(c)-1(e). 23. Section 203(a) of ERISA, 29 U.S.C. § 1053(a), provides that an employee’s right to his or her vested retirement benefits is non-forfeitable. The Treasury regulation for the Tax Code provision corresponding to ERISA § 203 (26 U.S.C. § 411), states that “adjustments in excess of reasonable actuarial reductions, can result in rights being forfeitable.” 26 C.F.R. § 1.411(a)-4(a). SUBSTANTIVE ALLEGATIONS I. The Plan. A. General Provisions. 24. The Plan is an “employee pension benefit plan” within the meaning of ERISA § 3(2)(A), 29 U.S.C. § 1002(a)(A). 25. The Plan is a defined benefit plan within the meaning of ERISA § 3(35), 29 U.S.C. § 1002(35). 26. The Plan covers eligible employees of U.S. Bancorp and its subsidiaries. U.S. Bancorp is the Plan’s sponsor. The Committee is Plan’s administrator under ERISA § 3(16)(A), 29 U.S.C. § 1002(16)(A). See 2002 Plan Restatement at § 12.6. 27. The Plan is the result of the merger on January 1, 2002 of the U.S. Bancorp Cash Balance Pension Plan (the “Old Cash Balance Plan”) and the Firstar Corporation Employees Pension Plan (the “Firstar Plan”). See 2002 Plan Restatement at § 1.1. The Firstar Plan included the Mercantile Bancorporation, Inc. Retirement Plan (the “Mercantile Plan”). 28. The Old Cash Balance Plan and the Mercantile Plan are cash balance plans. See 2017 SPD at Attachments 1 and 3. The Firstar Plan was a traditional defined benefit pension plan whereby participants earned benefits in the form of an annuity based on their wages and the number of years they worked for Firstar before December 31, 2001. See SPD at Attachment 2; see also 2002 Plan Restatement at Appendix F. 29. Beginning on January 1, 2002 for participants in the Old Cash Balance Plan and the Firstar Plan and beginning on January 1, 2003 for participants in the Mercantile Plan, the Plan changed its benefit accrual formula to the Final Average Pay Formula. See 2002 Plan Restatement at §§ 1.1, 1.2, 1.3 and 1.4. Under the Final Average Pay Formula, participants earn retirement benefits based on their final average pay and their years of service. See 2002 Plan Restatement at § 2.1.1. 30. Effective November 15, 2009, participation in the Plan was frozen so that no new U.S. Bancorp employees became participants in the Plan. New employees became participants in the U.S. Bank 2010 Cash Balance Plan (the “2010 Cash Balance Plan”), a component of the Plan. See 2010 Cash Balance Plan at § 1. Under the 2010 Cash Balance Plan, participants receive an annual pay credit to a hypothetical plan account and earn interest on those credits. See 2010 Cash Balance Plan at § 2.1.1. They did not accrue benefits under the Final Average Pay Formula. 31. Plan participants with accrued benefits under the Final Average Pay Formula could choose whether they would continue to accrue benefits under Final Pay Formula or begin accruing benefits under the 2010 Cash Balance Plan’s formula effective January 1, 2010. 2017 SPD at 2. Plan participants that did not choose to participate in the 2010 Cash Balance Plan continued to accrue pension benefits under the Final Average Pay Formula while they were employed by U.S. Bancorp. 32. The Plan’s benefits comprised of three parts: (a) the benefits accrued under either the Old Cash Balance Plan, the Firstar Plan or the Mercantile Plan, if applicable (the Plan’s “A” benefit); (b) the benefits accrued under the Final Average Pay Formula (the Plan’s “B” benefit); and (c) the benefits accrued under the 2010 Cash Balance Component, if applicable (the Plan’s “C” benefit). Participants’ retirement benefits under the Plan are equal to the sum of the benefits they accrued under the A, B, and C formulae. B. Plan Terms Applicable to the Final Average Pay Formula. 33. The Plan’s Final Average Pay Formula provides retirement benefits that are “an important part of (participants’) total compensation.” See 2017 SPD at 2. 34. The Plan’s normal form of benefit is a single life annuity (SLA) commencing at age 65, a payment stream that starts when participants retire and ends when they die. See 2002 Plan Restatement at § 5.2.3. 35. The Plan offers many optional forms of benefits other than other than a SLA. Married participants may select Joint and Survivor Annuities (“JSAs”) that provide for annuities for the life of the participant and a percentage of that benefit for the life of the spouse. The percentage of the participant’s benefit available for the life of the spouse may be, for example, 50%, 75% or 100%. See 2002 Restatement at § 6.1(c). 36. Plan participants can start receiving their benefits after their employment with U.S. Bancorp ends and as early as age 55 if they have at least five years of service. See SPD at 11, Plan Document at § 2.1.25. 37. An early commencement factor, or “ECF,” is applied to the benefits accrued under the Final Average Pay Formula when a participant retires before age 65. The ECF is the percentage of the normal retirement benefit that the participant would receive if he or she waited until age 65 to start receiving benefits. For example, an ECF of .90 means that a participant will receive 90% of the amount he or she would receive at age 65. 38. The Plan prescribes the ECFs that apply to the benefits accrued under Final Average Pay Formula, as shown in the chart below. Age Final Average Pay ECF Age Final Average Pay ECF 64 .90 59 .55 63 .81 58 .50 62 .73 57 .46 61 .66 56 .42 60 .60 55 .38 See 2002 Plan Restatement at Appendix C, § 4; see also 2017 SPD at 11. 39. For each month that the participant starts receiving benefits that follows an age (e.g., 55), the ECF is increased by one-twelfth of the difference between the ECF of the participant’s attained age and the factor at the participant’s next highest age. See 2017 SPD at 11. For example, a participant who retires at 55 years and 6 months would have an ECF of .40. II. The ECFs Applicable to the Final Average Pay Formula Are Unreasonable, Excessive and Result in an Illegal Forfeiture of Benefits under ERISA. A. Calculating ECFs. 40. When a participant in a defined benefit plan begins receiving a pension before the plan’s normal retirement date, each monthly pension payment is reduced to account for the fact that the participant will receive benefits over a longer period, e.g., from age 63 instead of age 65. A participant who retires early is foregoing benefits later through a reduced benefit payment in exchange for starting the payment stream earlier. 41. The amount that each payment is reduced is expressed as a percentage or decimal of the benefit the participant would receive at the plan’s normal retirement date of age 65, and is called an ECF. 42. An ECF should leave the participant and a defined benefit plan no worse off economically than if the participant waited until age 65 to begin receiving benefits. ERISA requires that a plan participant receive the “actuarial equivalent” of the accrued benefits payable at normal retirement age” ERISA § 204(c)(3), 29 U.S.C. § 1054(c)(3). 43. When calculating an ECF, reasonable actuarial assumptions must be used. See 26 C.F.R. § 1.401(a)-14(c)(2). An ECF is based on two actuarial assumptions: an interest rate and a mortality table. 44. An interest rate is used to determine the present value of each future payment that a participant will receive. The rate is based on the time value of money, meaning that money available now is worth more than the same amount in the future due to the ability to earn investment returns. The rate used is often called a “discount rate” because it discounts the value of a future payment. The higher the interest rate, the lower the ECF. 45. The interest rate that a defined benefit plan uses to calculate ECFs should be based on prevailing market conditions and projections of future interest rates when the payments will be made. As such, the interest rate is commonly broken into segments of short-term, medium-term and long-term expectations that pertain to each future payment. 46. A mortality table predicts how many people at a given age will die before attaining the next higher age. More recent tables are “two-dimensional” in that the rates are based not only on the age of the individual but the year of birth. The Society of Actuaries, an independent actuarial group, publishes the mortality tables that are the most widely-used by defined benefit plans when doing these conversions. New mortality tables were published in 1971, 1983, 1984 (the “UP 1984”), 1994 (the “1994 GAR”), 2000 (the “RP-2000”) and 2014 (“RP-2014”) to account for changes to a population’s mortality experience. 47. Moreover, in the years between the publication of a new mortality table, mortality rates are often “projected” to future years to account for expected improvements in mortality. For example, the RP-2014 mortality table is commonly projected by actuaries using a mortality improvement scale to account for additional reductions in mortality rates that have occurred since 2014. 48. Since the 1980s, the life expectancies in mortality tables have steadily improved as shown below: Source: Aon Hewitt, Society of Actuaries Finalizes New Mortality Assumptions: The Financial and Strategic Implication for Pension Plan Sponsors (November 2014) at 1. 49. Older mortality assumptions (i.e., those using a mortality table with higher probabilities of death at a given age) generate lower present values of future payments, and the amount of the monthly benefit decreases. The higher the mortality rate, the lower the B. The ECFs Applicable to the Final Average Pay Formula Are Unreasonable. 50. The Plan does not specify how ECFs applicable for the Final Average Pay Formula were calculated. See 2002 Plan Restatement at Appendix C. It does not identify an interest rate or mortality table; instead it sets forth fixed ECFs, which have not changed since at least 2002 despite dramatic increases in longevity. These ECFs are outdated, unreasonable and result in the illegal forfeiture of vested benefits under ERISA. 51. There have been historically low interest rates during the Class Period. Pension plans and actuaries commonly use the interest rates of bonds to determine the present value of future pension payments. Bonds with durations that match (or closely resemble) the projected future pension payments are used to calculate the present value of the future payments. For example, the interest rate for a bond with a 20-year maturity is used to calculate the value of a pension payment expected to be made in 20 years. 52. The FTSE (formerly Citi) Pension Liability Index is commonly used as a rate by pension plans to discount future pension liabilities. It represents a single discount rate used to calculate the present value of future liabilities by discounting a pension plan’s standardized set of liabilities, using AA zero coupon bonds. From November, 2012 until November, 2018, the FTSE Pension Liability Index ranged from 3.48 percent to 4.95 percent. 53. The Mercer Yield Curve is another common way that pension plans generate a discount rate to value future payments. The Mercer Yield rate was 4.25 percent and 3.41 percent at the end of November 2018 and 2017, respectively, and at all times during the Class Period, was similar to that of the FTSE Pension Liability Index. 54. The “segment” interest rates prescribed by ERISA § 205(g)(3), 29 U.S.C. § 1055(g)(3) and Section 417(e)(3) of the Internal Revenue Code, 26 U.S.C. § 417(e)(3), to calculate the present value of a lump sum payment is another common way that a pension plan selects a discount rate. For example, the Plan uses the Section 417 interest rates to calculate many forms of benefits under the Plan. See, e.g., 2002 Plan Restatement at Appendix C, § 3 (using § 417 interest rates to determine the lump sum value of annuity), 2010 Cash Balance Plan at § 2.1.22 (converting accrued benefit to single life annuity). 55. Like the FTSE Pension Liability Index, ERISA’s “segment” rates provide an average interest rate for years 0-5 (“1st Segment”), years 5-19 (“2nd Segment”) and years 20 and later (“3rd Segment”) of a future benefit stream such as an annuity. 26 U.S.C. §§ 417(e)(3)(C) and (D). The rates for the 1st Segment, 2nd Segment and 3rd Segment in October, 2018 were 3.33 percent, 4.39 percent and 4.72 percent, respectively and have been relatively consistent throughout the Class Period. 56. Accordingly, throughout the Class Period, an interest rate of 4 percent would have been reasonable to use when calculating ECFs for the Plan’s Final Average Pay Formula. 57. As alleged above, mortality rates have dramatically improved since the 1980s and have continued to improve during the Class Period. ERISA § 205(g)(3), 29 U.S.C. § 1055(g)(3) and Section 417(e)(3) of the Internal Revenue Code, 26 U.S.C. § 417(e)(3), prescribe a mortality table that must be used when calculating the lump sum value of an annuity. This regulation requires the use of the RP-2014 mortality table as updated under the mortality improvement scale to account for additional reductions in mortality rates that have occurred since 2014. 58. The Plan correctly uses the mortality table prescribed by I.R.C. § 417(e)(3) to calculate numerous forms of benefits, including to calculate the maximum amount of benefits that a participant may receive in a given year (2002 Plan Restatement at § 1.1.1(a)) and to convert a participant’s hypothetical account in the 2010 Cash Balance Plan to a single life annuity (2010 Cash Balance Plan at § 2.1.22). 59. Accordingly, throughout the Class Period, the use of the mortality table prescribed by I.R.C. § 417(e) would have been reasonable to use when calculating ECFs for the Plan’s Final Average Pay Formula. Defendants easily could have done so. 60. The ECFs generated when using a reasonable interest rate (e.g., 4 percent) and a reasonable mortality table (e.g., the one prescribed by I.R.C. § 417(e)), are substantially more favorable for participants than those that the Plan uses for the Final Average Pay Formula, as shown in the below chart and graph: Final Average Pay ECF Difference Age ECFs Using Current Interest Rates and Mortality Tables 55 .4881 .38 22% 56 .521 .42 19% 57 .557 .46 17% 58 .597 .50 16% 59 .640 .55 14% 60 .686 .60 13% 61 .738 .66 11% 62 .794 .73 8% 63 .856 .81 5% 64 .924 .90 3% ECFs Using I.R.C. Section 417(e) Interest Rates and  Mortality Table vs. Final Average Pay's ECFs 1 0.9 0.8 0.7 0.6 0.5 0.4 Early Commencement Factor 0.3 55 56 57 58 59 60 61 62 63 64 65 Age I.R.C. Section 417 Final Average Pay 61. At shown above, the ECFs that Defendants use for the Final Average Pay Formula are substantially lower (i.e., worse for participants) than the ECFs that would be generated using reasonable interest and mortality rates as required by ERISA. 62. Plaintiffs, and each member of the Class who retired before age 65 with accrued benefits under the Final Average Pay Formula, received a lower pension than they were entitled to because of the excessive, unreasonable reductions that Defendants applied through the ECFs. By using the unreasonable ECFs applicable to the Final Average Pay Formula instead of ECFs reflecting interest rate and mortality assumptions during the year Plaintiffs retired, Defendants caused Plaintiff Janet Smith’s Final Average Pay Formula by 16% each month, Plaintiff Debra Thorne’s benefits by 6.6% each month, Plaintiff Sonja Lindley’s benefits by 22% each month, and Plaintiff Pamela Kaberline’s benefits by 12% each month. III. The ECFs For the Final Average Pay Formula Are Unreasonable Compared to Those Applicable to Other Plan Benefits. 63. The ECFs applicable to the Final Average Pay Formula are also substantially worse for participants than those applicable to other parts of the Plan. 64. For participants in the Firstar Plan who retire before age 65, the part “A” of their benefit is reduced by only 1/180 for each month between ages 60 and 65, or 6 and 2/3% each year. Between ages 55 and 60, the part “A” benefit is reduced by only 1/360 for each month, or 3 and 1/3% per year. See 2017 SPD at Attachment 2. The ECFs for the Firstar Plan and difference between the Firstar ECFs and the Plan’s ECFs are summarized in the table and graph below. Age Firstar Plan’s ECF Final Average Pay ECF Difference 55 .5 .38 24% 56 .534 .42 21% 57 .567 .46 19% 58 .60 .50 17% 59 .633 .55 13% 60 .666 .60 10% 61 .733 .66 10% 62 .80 .73 9% 63 .866 .81 6% 64 .933 .90 3% Firstar Plan's ECFs vs.  Final Average Pay Formula's ECFs 1 0.9 0.8 0.7 0.6 0.5 0.4 Early Commencement Factor 0.3 55 56 57 58 59 60 61 62 63 64 65 Age Firstar Plan Final Average Pay 65. The calculation of Plaintiff Thorne’s benefits illustrates the unreasonableness of the Final Average Pay Formula’s ECFs in relation to the Firstar Plan. Plaintiff Thorne was a fully vested participant, accruing benefits in the Firstar Plan and under the Final Average Pay Formula. When she retired at age 62 years, 11 months, Defendants applied an ECF of .8611 to her benefits under the Firstar Plan but an ECF of only .80330 to the benefits she accrued under the Final Average Pay Formula. Thus, Ms. Thorne’s benefits under the Final Average Pay Formula were 6.7% less than they would have been if the Defendants applied the Firstar Plan’s ECFs, which are reasonable under ERISA and which would not have resulted in Plaintiff Thorne illegally forfeiting her benefits. Defendants easily could have applied the Firstar ECFs as the Final Average Pay 66. The ECFs under the Final Average Pay Formula are also substantially worse for participants than those under the 2010 Cash Balance Plan. Under the 2010 Cash Balance Plan, U.S. Bancorp credits a percentage of the participant’s wages each year to a hypothetical account, with balances accruing interest each year. See 2002 Plan Restatement at Appendix I, § 2.1.1. The 2010 Cash Balance Plan’s normal form of benefit is a single life annuity. See 2002 Plan Restatement at Appendix I, § 5.1.3. To convert the participant’s cash balance account to an annuity, Defendants use an interest rate and a mortality table. 67. If a participant in the 2010 Cash Balance Plan retires before age 65, the interest rate that is applied is the greater of: (a) the annual interest rate on 10-year Treasury Securities during the previous October; or (b) 3 percent. See 2002 Plan Restatement at Appendix I, § 5.1.3. During each October during the Class Period, the annual interest rate on the 10-year Treasury Securities has been less than 3 percent.1 1 The historical rates of return on 10-year Treasury notes are provided on www.treasury.gov, with each year have its own webpage. See, e.g., https://www.treasury.gov/resource-center/data-chart-center/interest- Accordingly, the 3 percent interest rate has applied when calculating ECFs for the 2010 Cash Balance Plan since January 1, 2010. The mortality table used to calculate the ECFs for the 2010 Cash Balance Plan is the “mortality table prescribed under § 417(e)(3)(B) of the Internal Revenue Code.” 2002 Plan Restatement at Appendix I, § 2.1.22. 68. The ECFs for the 2010 Cash Balance and the Final Average Pay Formula, and the difference between the two, are summarized in the table and graph below. Age 2010 Cash Balance Plan’s ECF Final Average Pay ECF Difference 55 .5618 .38 32% 56 .5917 .42 29% 57 .6239 .46 26% 58 .6586 .50 24% 59 .6960 .55 21% 60 .7366 .60 19% 61 .7806 .66 15% 62 .8284 .73 12% 63 .8806 .81 8% 64 .9376 .90 4% rates/Pages/TextView.aspx?data=yieldYear&year=2015 (last visited December 10, 2018). 2010 Cash Balance Plan's ECFs  vs. Final Average Pay's ECFs 1 0.9 0.8 0.7 0.6 0.5 0.4 Early Commencement Factor 0.3 55 56 57 58 59 60 61 62 63 64 65 Age 2010 Cash Balance Plan Final Average Pay 69. The ECFs applicable to the 2010 Cash Balance Plan were adopted effective January 1, 2010. See 2002 Plan Restatement at Appendix I, § 2.1.22. Defendants could have easily applied the Cash Balance Plan’s ECFs to the Final Average Pay Formula. IV. The Plan Uses Reasonable Actuarial Assumptions to Calculate Other Forms of Benefits. 70. The ECFs applicable to the Final Average Pay Formula are also unreasonable and excessive, considering the actuarial assumptions that Defendants use to calculate other forms of benefits. 71. Under the Final Average Pay Formula, participants accrue benefits in the form of a SLA. See 2002 Plan Restatement at § 5.1.3. Married participants can choose to receive their benefits in the form of a joint and survivor annuity (“JSA”) which provides for an annuity for the life of the first spouse to pass away and a percentage of that benefit for the life of the surviving spouse. That percentage may be 50%, 75% or 100%. 2002 Restatement at § 6.1(c). 72. Like it does for early retirement benefits, ERISA requires that a JSA be the “actuarial equivalent” of a SLA for the life of the participant. ERISA §§ 205(d)(1)(B) and (d)(2)(A), 29 U.S.C. §§ 1055(d)(1)(B) and (d)(2)(A); see also 26 C.F.R. § 1.401(a)-20 Q&A 16 (A JSA “must be as least as valuable as any other optional form of benefit under the plan at the same time.”). Accordingly, the present value of the JSA must equal a SLA’s present value. 73. The Plan provides that a participant who elects a 50% JSA will receive .92 of the benefit they would have received as an SLA. See 2002 Plan Restatement at Appendix C, § 2. This means that a participant who is entitled to a SLA of $1,000 a month will receive $920 a month for the rest of his or her life, with his or her surviving spouse receiving $460 a month after the participant’s death. The .92 factor that applies to the 50% JSA is called the “annuity factor.” Under the Plan, an annuity factor of .89 applies to the 75% JSA and a .86 annuity factor applies to the 100% JSA. 74. While the Plan does not state which interest rate or mortality table are used to generate the applicable annuity factors, the annuity factors are the same as those that would be generated using the interest rates and mortality table under I.R.C. § 417(e). When calculating the “actuarial equivalence” of a JSA, Defendants use current, reasonable actuarial assumptions to calculate optional forms of benefit. But when calculating the “actuarial equivalence” of early retirement benefits under the Final Average Pay Formula, Defendants use different assumptions, which are substantially worse for participants. Assumptions that are the “actuarial equivalence” for the JSA under ERISA § 205(d)(1)(B) and (d)(2)(A), 29 U.S.C. § 1055(d)(1)(B) and (d)(2)(A), should be actuarially equivalent for early retirement benefits under ERISA § 204(c)(3), 29 U.S.C. § 1054(c)(3), because both use the same statutory language. 75. The Plan also permits participants who are receiving their benefits as an annuity to roll over their accounts in the U.S. Bancorp 401(k) Savings Plan in order to purchase an annuity. See 2002 Plan Restatement at § 6.5. When converting participants’ 401(k) balances to an annuity, the Plan provides that the interest rates and mortality assumptions in I.R.C. § 417(e) will apply. See 2002 Plan Restatement at § 6.5. 76. When determining the maximum permissible benefit that a participant may receive, the Plan also uses a 5 percent interest rate and the mortality table in I.R.C. § 417(e). See 2002 Plan Restatement at Appendix A, § 1.1. CLASS ACTION ALLEGATIONS 77. Plaintiffs bring this action as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of themselves and the class (the “Class”) defined as follows: All participants in and beneficiaries of the Plan who accrued benefits under the Final Average Pay Formula who began receiving their vested benefits before age 65. Excluded from the Class are Defendants and any individuals who are subsequently to be determined to be fiduciaries of the Plan. 78. The members of the Class are so numerous that joinder of all members is impractical. Upon information and belief, the Class includes thousands of persons. There are over 54,000 active participants in the Plan and more than 20,000 participants who are retired and receiving benefits. According to the Plan’s most recent Form 5500 filed with the Department of Labor in October, 2018, participants, on average, begin receiving their pension benefits under the Plan at age 63. See 2017 Form 5500 at Schedule SB Attachment. 79. Plaintiffs’ claims are typical of the claims of the members of the Class because they arise out of the same policies and practices as alleged herein, and all members of the Class are similarly affected by Defendants’ wrongful conduct. 80. There are questions of law and fact common to the Class and these questions predominate over questions affecting only individual Class members. Common legal and factual questions include, but are not limited to: A. Whether the ECFs applicable to the Final Average Pay Formula cause participants to illegally forfeit their vested benefits; B. Whether the actuarial assumptions used to generate the ECFs applicable to the Final Average Pay Formula are reasonable; C. Whether the Plan should be reformed to comply with ERISA; and D. Whether Plaintiffs and Class members should receive additional benefits. 81. Plaintiffs will fairly and adequately represent the Class and have retained counsel experienced and competent in the prosecution of ERISA class actions. Plaintiffs have no interests antagonistic to those of other members of the Class. Plaintiffs are committed to the vigorous prosecution of this action and anticipate no difficulty in the management of this litigation as a class action. 82. This action may be properly certified under either subsection of Rule 23(b)(1). Class action status is warranted under Rule 23(b)(1)(A) because prosecution of separate actions by the members of the Class would create a risk of establishing incompatible standards of conduct for Defendants. Class action status 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 that, as a practical matter, would be dispositive of the interests of other members not parties to this action, or that would substantially impair or impede their ability to protect their interests. 83. In the alternative, certification under Rule 23(b)(2) is warranted because 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. 84. In the alternative, certification under Rule 23(b)(3) is warranted because the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy. FIRST CLAIM FOR RELIEF Declaratory and Equitable Relief (ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3)) 85. Plaintiffs re-allege and incorporate herein by reference all prior allegations in this Complaint. 86. The Plan improperly reduces benefits under the Final Average Pay Formula by using ECFs that are based on unreasonable actuarial assumptions. Participants who accrued a benefit under the Final Average Pay Formula who retire before age 65 receive a benefit that is significantly less than that they would be entitled to at the Plan’s normal retirement age of 65 in violation of ERISA § 204(c)(3), 29 U.S.C. § 1054(c)(3). 87. ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3), authorizes a participant or beneficiary to bring a civil action to: “(A) enjoin any act or practice which violates any provision of this title or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this title or the terms of the plan.” 88. Pursuant to this provision, 28 U.S.C. §§ 2201 and 2202, and Federal Rule of Civil Procedure 57, Plaintiffs seek declaratory relief, determining that the ECFs applied to the Final Average Pay Formula do not provide an equivalent benefit to that which they would receive at the Plan’s normal retirement age and are not based on reasonable actuarial assumptions. By reducing benefits in excess of what is reasonable to account for participants’ early retirement, Defendants have violated ERISA’s anti-forfeiture clause, ERISA § 203(a), 29 U.S.C. § 1053(a). 89. Plaintiffs further seek orders from the Court providing a full range of equitable relief, including but not limited to: (a) re-calculation and correction of benefits previously paid using the Final Average Pay Formula’s ECFs; (b) an “accounting” of all prior benefits and payments; (c) a surcharge; (d) disgorgement of amounts wrongfully withheld; (e) disgorgement of profits earned on amounts wrongfully withheld; (f) a constructive trust; (g) an equitable lien; (h) an injunction against further violations; and (i) other relief the Court deems just and proper. SECOND CLAIM FOR RELIEF For Reformation of the Plans and Recovery of Benefits Under the Reformed Plans (ERISA § 502(a)(1), 29 U.S.C. § 1132(a)(1)) 90. Plaintiffs re-allege and incorporate herein by reference all prior allegations in this Complaint. 91. ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3), authorizes a participant or beneficiary to bring a civil action to: “(A) enjoin any act or practice which violates any provision of this title or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this title or the terms of the plan.” 92. The Plan improperly reduces vested benefits under the Final Average Pay Formula for participants who begin receiving their benefits before age 65. By not providing participants and beneficiaries with a benefit that is equivalent to the Plan’s normal retirement benefit, Defendants have violated ERISA § 204(c)(3), 29 U.S.C. § 1054(c)(3), and ERISA’s anti-forfeiture clause, ERISA § 203(a), 29 U.S.C. § 1053(a). 93. Plaintiffs are entitled to reformation of the Plan to require them to provide an early retirement benefit that is actuarially equivalent to the normal retirement benefit. 94. ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), authorizes a participant or beneficiary to bring a civil action to “recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 95. Plaintiffs seek to recover actuarially equivalent benefits, to enforce their right to the payment of past and future actuarially equivalent benefits, and to clarify their rights to future actuarially equivalent benefits, under the Plan following reformation. THIRD CLAIM FOR RELIEF Breach of Fiduciary Duty (ERISA §§ 1104 and 502(a)(3), 29 U.S.C. §§ 1104 and 1132(a)(3)) 96. Plaintiffs re-allege and incorporate herein by reference all prior allegations in this Complaint. 97. The Committee, and each member of the Committee, are named fiduciaries of the Plan and its participants and beneficiaries. 98. ERISA treats as fiduciaries not only persons explicitly named as fiduciaries under § 402(a)(1), 29 U.S.C. § 1102(a)(1), but also any other persons who in fact perform fiduciary functions. Thus, a person is a 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), 29 U.S.C. § 1002(21)(A). This is a functional test. Neither “named fiduciary” status nor formal delegation is required for a finding of fiduciary status, and contractual agreements cannot override finding fiduciary status when the statutory test is met. 99. The Committee and each member of the Committee are fiduciaries for the Plan and its participants and beneficiaries because they exercised discretionary authority or discretionary control respecting management of such plan or exercised any authority or control respecting management or disposition of Plan assets. In particular, they had authority or control over the amount and payment of benefits paid when a participant with vested benefits under the Final Average Pay Formula retired before age 65. 100. ERISA § 404(a)(1), 29 U.S.C. § 1104(a)(1), provides that a fiduciary shall discharge its duties with respect to a plan in accordance with the documents and instruments governing the plan insofar as the Plans are consistent with ERISA. 101. The Plan is not consistent with ERISA because the ECFs applicable to the Final Average Pay Formula result in a forfeiture of benefits in violation of ERISA §§ 203 and 204, 29 U.S.C. §§ 1053 and 1054. 102. In following the Plan’s terms that violated ERISA, the Committee and its members exercised their fiduciary duties and control over the Plan and Plan assets. 103. In following the terms of the Plan in violation of ERISA, the Committee and its members breached their fiduciary duties. 104. ERISA imposes on fiduciaries that appoint other fiduciaries the duty to monitor the actions of those appointed fiduciaries to ensure compliance with ERISA. U.S. Bank appointed the Committee. In allowing the Committee to pay unreasonably low benefits in violation of ERISA, U.S. Bank breached its fiduciary duties to supervise and monitor the Committee. 105. ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3), authorizes a participant or beneficiary to bring a civil action to: “(A) enjoin any act or practice which violates any provision of this title or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this title or the terms of the plan.” 106. Pursuant to this provision, 28 U.S.C. §§ 2201 and 2202, and Federal Rule of Civil Procedure 57, Plaintiff seeks declaratory relief, determining that the ECFs applicable to the Final Average Pay Formula violate ERISA because they do not provide an actuarially equivalent benefit to what the participant would receive at the Plan’s normal retirement age, 65. 107. Plaintiffs further seek orders from the Court providing a full range of equitable relief, including but not limited to: (a) re-calculation and correction of benefits previously paid under the Final Average Pay Formula’s ECFs; (b) an “accounting” of all prior benefits and payments; (c) a surcharge; (d) disgorgement of amounts wrongfully withheld; (e) disgorgement of profits earned on amounts wrongfully withheld; (f) a constructive trust; (g) an equitable lien; (h) an injunction against further violations; and (i) other relief the Court deems just and proper. PRAYER FOR RELIEF WHEREFORE, Plaintiffs pray that judgment be entered against Defendants on all claims and requests that the Court awards the following relief: A. Certifying this action as a class pursuant to FED. R. CIV. P. 23; B. Declaring that the Plan fails to properly calculate and pay retirement benefits for participants with vested benefits under the Final Average Pay Formula who retire before age 65; C. Ordering Defendants to bring the Plans into compliance with ERISA, including, but not limited to, reforming the Plan to bring it into compliance with ERISA with respect to the ECFs for the Final Average Pay Formula; D. Ordering Defendants to correct and recalculate benefits that have been paid; E. Ordering Defendants to provide an “accounting” of all prior payments of benefits under the Plan to determine the proper amounts that should have been paid; F. Ordering U.S. Bancorp to pay all benefits improperly withheld, including under the theories of surcharge and disgorgement; G. Ordering U.S. Bancorp to disgorge any profits earned on amounts improperly withheld; H. Imposition of a constructive trust; I. Imposition of an equitable lien; J. Reformation of the Plan; K. Ordering Defendants to pay future benefits in accordance with ERISA; L. Ordering Defendants to pay future benefits in accordance with the terms of the Plan, as reformed. M. Awarding, declaring, or otherwise providing Plaintiffs and the Class all relief under ERISA § 502(a), 29 U.S.C. § 1132(a), or any other applicable law, that the Court deems proper, and such appropriate equitable relief as the Court may order, including an accounting, surcharge, disgorgement of profits, equitable lien, constructive trust, or other remedy; N. Awarding to Plaintiffs’ counsel attorneys’ fees and expenses as provided by the common fund doctrine, ERISA § 502(g), 29 U.S.C. § 1132(g), and/or other applicable doctrine; and O. Any other relief the Court determines is just and proper. Dated: December 14, 2018 Respectfully submitted, s/Daniel E. Gustafson Daniel E. Gustafson (#202241) Amanda M. Williams (#341691) GUSTAFSON GLUEK LLP Canadian Pacific Plaza 120 South Sixth Street, Suite 2600 Minneapolis, MN 55402 Telephone: 612-333-8844 Facsimile: 612-339-6622 Email: [email protected] Email: [email protected] IZARD, KINDALL & RAABE LLP Robert A. Izard (pro hac vice forthcoming) Mark P. Kindall (pro hac vice forthcoming) Douglas Needham (pro hac vice forthcoming) Seth R. Klein (pro hac vice forthcoming) 29 South Main Street, Suite 305 West Hartford, CT 06107 Telephone: 860-493-6292 Facsimile: 860-493-6290 Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected] BAILEY & GLASSER LLP Gregory Y. Porter (pro hac vice forthcoming) Mark G. Boyko (pro hac vice forthcoming) 1054 31st Street, NW, Suite 230 Washington, DC 20007 Telephone: (202) 463-2101 Facsimile: (202) 463-2103 Email: [email protected] Email: [email protected] Attorneys for Plaintiffs

consumer fraud

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Rosemary M. Rivas (State Bar No. 209147) [email protected] Mark Punzalan (State Bar No. 247599) [email protected] FINKELSTEIN THOMPSON LLP 100 Bush Street, Suite 1450 San Francisco, California 94104 Telephone: (415) 398-8700 Facsimile: (415) 398-8704 Attorneys for Individual and Representative Plaintiff Lindsay Kamakahi [Additional Counsel Listed on Signature Page] UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA LINDSAY KAMAKAHI, an individual, on behalf of herself and all others similarly situated, Plaintiff, vs. Case No. 3:11-CV-1781 SBA FIRST AMENDED CLASS ACTION COMPLAINT DEMAND FOR JURY TRIAL AMERICAN SOCIETY FOR REPRODUCTIVE MEDICINE; SOCIETY FOR ASSISTED REPRODUCTIVE TECHNOLOGY, Defendants. Plaintiff Lindsay Kamakahi (“Plaintiff”), based upon personal knowledge, information, belief, and the investigation of counsel, alleges as follows: NATURE OF THE ACTION 1. This action challenges, as per se illegal under Section 1 of the Sherman Act, a horizontal price fixing agreement among purchasers of human egg donor services (“Donor Services”). As described more fully herein, Donor Services consist of the time, inconvenience, labor, and discomfort incurred by women who agree to supply their own human eggs for assisted fertility and reproductive procedures (“AR Eggs”). - 1 - 2. Specifically, in 2000, Defendant American Society for Reproductive Medicine (“ASRM”) promulgated certain rules setting forth the maximum compensation its members should pay for Donor Services (“Maximum Price Rules”), and Defendant Society for Assisted Reproductive Technology (“SART”) adopted the Maximum Price Rules. 3. ASRM, SART, and SART-member fertility clinics (“SART Clinics”) agreed amongst themselves to follow the Maximum Price Rules, as did agencies serving such clinics. Their agreement constitutes a contract, combination, and conspiracy in restraint of trade that is a per se violation of the Sherman Act. 4. This action is brought as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of a plaintiff Class, defined more fully below, consisting of all women who sold Donor Services directly to a member of the Defendant Class (defined below) during the Class Period defined below. (“Plaintiff Class”). 5. This action is brought against defendants SART and ASRM, both in their individual capacities and as representatives of a Defendant Class, defined more fully below, consisting of ASRM, SART, and all SART Clinics and all AR Egg agencies (other than those who purchased Donor Services in Indiana) that were either signatories to an agreement to abide by the Maximum Price Rules or otherwise agreed to adhere to such rules, and that paid for Donor Services during the Class Period (“Defendant Class”). JURISDICTION AND VENUE 6. The Court has subject matter jurisdiction under 28 U.S.C. § 1331 (federal question) and 28 U.S.C. § 1337 (commerce and antitrust regulation), as this action arises under Section 1 of the Sherman Act, 15 U.S.C. § 1, and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15(a) and 26. The Court also has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(d), in that this is a class action in which the matter or controversy exceeds the sum of $5,000,000, exclusive of interest and costs, and in which some members of the proposed class are citizens of a state different from the Defendants. - 2 - 7. Venue is proper because Defendants reside, are found, have agents, and transact business in this District as provided in 28 U.S.C. § 1391(b) and (c) and in Sections 4 and 12 of the Clayton Act, 15 U.S.C. §§ 15 and 22. 8. The Court has personal jurisdiction over Defendants because, inter alia, they: (a) transacted business throughout the United States, including in this District; (b) had substantial contacts with the United States, including in this District; and (c) were engaged in an illegal anticompetitive scheme 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. PARTIES 9. Plaintiff Lindsay Kamakahi sold Donor Services directly to a SART-member clinic located and doing business in this District during the Class Period. 10. Defendant American Society for Reproductive Medicine (“ASRM”) is an organization “devoted to advancing knowledge and expertise in reproductive medicine.” ASRM membership is multidisciplinary and consists of medical professionals and corporations located throughout the United States. It has its headquarters at 1209 Montgomery Highway, Birmingham, Alabama 35216-2809 and has a public relations office in Washington, DC. It is incorporated in California. A central function of ASRM’s Ethics Committee is the publication of “ethics reports” setting forth certain ethical standards for reproductive professionals, and a central function of ASRM’s Practice Committee is to promulgate guidelines and standards to be followed by reproductive professionals. It is being sued on its own behalf and as a class representative on behalf of the Defendant Class defined below. 11. Defendant Society for Assisted Reproductive Technology (“SART”) is an affiliated society to ASRM. It bills itself as the “primary organization of professionals dedicated to the practice of assisted reproductive technologies in the United States.” According to its website, SART’s members include over 392 practices (including many in this District), representing over 85% of the clinics engaged in the practice of assisted reproductive technologies in the United States. Many SART-member clinics in this District have paid SART money in exchange for having their name and address listed on SART’s web page. SART’s mission is “to set and to help maintain the standards for assisted - 3 - reproductive technologies” including guidelines regarding ethical considerations, laboratory practice and proper advertising.” It has its headquarters at 1209 Montgomery Highway, Birmingham, AL 35216- 2809, which is the same address as the ASRM’s headquarters. It is being sued on its own behalf and as a class representative on behalf of the Defendant Class defined below. CLASS ACTION ALLEGATIONS Plaintiff Class 12. Plaintiff brings this action under Federal Rules of Civil Procedure 23(b)(2) and (b)(3) on her own behalf and on behalf of the following Plaintiff Class: All women who, at any time during the time period from April 12, 2007 to the present (the “Class Period”), sold Donor Services for the purpose of supplying AR Eggs to be used for reproductive purposes, within the United States and its territories, to any Defendant Class member (defined infra). 13. The Plaintiff Class is so numerous, and its members so geographically dispersed throughout the United States, that joinder of all Plaintiff Class members would be impracticable. While the exact number of Plaintiff Class members is unknown at this time, Plaintiff believes that there are, at least, thousands of members of the Plaintiff Class and that their identities are contained in Defendants’ books and records. 14. Plaintiffs’ claims are typical of the claims of the other members of the Plaintiff Class. Plaintiff and other members of the Plaintiff Class sold Donor Services at artificially low, non- competitive levels as a result of the actions of the Defendant Class and the restraint of trade alleged herein. Plaintiff and the members of the Plaintiff Class have all sustained damage compensable under federal antitrust law. 15. Plaintiff will fairly and adequately protect the interests of the members of the Plaintiff Class and has retained counsel competent and experienced in class action and antitrust litigation. 16. Defendants and the Defendant Class have acted or refused to act on grounds generally applicable to the Plaintiff Class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the Class as a whole. - 4 - 17. Common questions of law and fact exist as to all members of the Plaintiff Class and predominate over any questions solely affecting individual members of the Plaintiff Class. Among the questions of law and fact common to the Plaintiff Class are: a. Whether Defendants engaged in a contract, combination or conspiracy among themselves to fix, maintain, or stabilize the price of Donor Services purchased in the United States; b. Whether the conduct of Defendants caused the prices of Donor Services to be artificially depressed; c. Whether Defendants’ conduct caused injury to the members of the Class and, if so, the proper measure of damages; and d. Whether an injunction voiding the Maximum Price Rules should issue. 18. A class action is superior to other available methods for the fair and efficient adjudication of this controversy since joinder of all Plaintiff Class members is impracticable. The prosecution of separate actions by individual members of the Plaintiff Class would impose heavy burdens upon the courts and Defendants, and would create a risk of inconsistent or varying adjudications of the questions of law and fact common to the Plaintiff Class. A class action would achieve substantial economies of time, effort and expense, and would assure uniformity of decision as to persons similarly situated without sacrificing procedural fairness. Defendant Class 19. This action is brought under Federal Rules of Civil Procedure 23(b)(2) and (b)(3) against a Defendant Class consisting of: ASRM, SART, and all SART-member Fertility Clinics and all AR Egg Agencies that agreed to comply with SART/ASRM rules on donor egg compensation and who paid for Donor Services at any time during the time period from April 12, 2007 to the present.. Excluded from the Defendant Class are all SART-member Fertility Clinics and AR Egg Agencies located in the state of Indiana. 20. Both Defendants are Defendant Class Representatives. - 5 - 21. The Defendant Class is so numerous, and its members so geographically dispersed, that joinder of all members is impracticable. There are hundreds of members of the Defendant Class located throughout the United States. 22. All Defendant Class members were engaged in an illegal anticompetitive scheme 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. 23. Each Defendant Class Member demonstrates its membership in the Defendant Class by virtue of its membership in SART or, in the case of AR Egg Agencies, by agreeing to the Maximum Price Rules. 24. Each Defendant Class Member is jointly and severally liable for the total damages caused by the Defendant Class. 25. Defendants are typical of the Defendant Class. Defendants have injured Plaintiffs and the Plaintiff Class by participating in the antitrust conspiracy alleged herein, as have all other Defendant Class members. 26. Defendants will fairly and adequately protect the interests of the members of the Defendant Class. 27. Common questions of law and fact exist as to all members of the Defendant Class and predominate over any questions solely affecting individual members of the Defendant Class. Among the questions of law and fact common to the Defendant Class are: a. Whether Defendant Class Members engaged in a contract, combination or conspiracy among themselves to fix, maintain, or stabilize the price of Donor Services in the United States; b. Whether the conduct of Defendant Class Members caused the price of Donor Services to be artificially depressed; and c. Whether Defendant Class Members conduct caused injury to the members of the Plaintiff Class and, if so, the proper measure of damages. - 6 - 28. A class action is superior to other available methods for the fair and efficient adjudication of this controversy since joinder of all Defendant Class members is impracticable. The prosecution of separate actions against individual Defendant Class members would impose heavy burdens upon the courts and Plaintiffs, and would create a risk of inconsistent or varying adjudications of the questions of law and fact common to the Defendant Class. A class action would achieve substantial economies of time, effort and expense, and would assure uniformity of decision as to persons similarly situated without sacrificing procedural fairness. RELEVANT MARKET 29. Defendants’ Maximum Price Agreement is per se illegal and requires no allegations of market definition. 30. Plaintiffs also allege, in the alternative, that the Maximum Price Agreement is anticompetitive and illegal under the Rule of Reason. 31. For purposes of the Rule of Reason, the Relevant Product Market is the market for the purchase of Donor Services. The Defendant Class controls over 85% of the relevant product market. 32. The Relevant Geographic Market is the United States. INTERSTATE TRADE AND COMMERCE 33. The business activities of Defendants that are subject of this action were within the flow of, and substantially affected, interstate trade and commerce. 34. During the Class Period, Defendants transacted business in multiple states in a continuous and uninterrupted flow of interstate commerce throughout the United States. FACTS Assisted Reproductive Eggs in the United States Background 35. AR Eggs (also known as “oocytes”) are a necessary component of human reproduction. There is no available substitute. - 7 - 36. While most AR Eggs are naturally produced by women who become pregnant, some are provided by females who provide Donor Services (“AR Egg Providers”) by undergoing an extensive screening process and an administered cycle of hormones to medically induce ovulation. 37. AR Eggs acquired from AR Egg Providers are used to enable women whose ovaries do not produce enough healthy eggs to become pregnant. 38. AR Egg Providers go through a thorough screening and testing process before becoming eligible to provide their eggs. 39. The screening process requires potential AR Egg Providers to first compile and disclose a detailed medical and psychological history about themselves and their close blood relatives, including questions about their use of cigarettes, alcohol, and both prescription and illegal drugs. 40. AR Egg Providers are also required to have a physical examination, including a pelvic exam. As a part of this exam, AR Egg Providers are screened for infectious diseases, including gonorrhea, chlamydia, syphilis, hepatitis B and C, HTLV-1, and HIV. AR Egg Providers are also screened for inherited diseases and undergo psychological screening. 41. In the event the potential AR Egg Provider passes the screening process, the AR Egg Provider must then go through the egg donation process. 42. This requires the AR Egg Provider to receive a three-week course of painful hormone injections, aimed at stimulating egg production. During this period, the donor cannot have unprotected sex, smoke, or drink alcohol, and must receive permission to take any other drugs. 43. While receiving hormone treatment, AR Egg Providers must also receive frequent blood tests and ultrasound examinations to track the developing eggs and to monitor reaction to the hormones, thereby requiring frequent doctor visits. 44. Short-term side effects during treatment include mood swings, fluid retention, and enlarged ovaries. Occasionally, AR Egg Providers suffer serious side effects. 45. When the eggs are ready for retrieval, they are removed from the AR Egg Provider’s ovaries in a surgical procedure called transvaginal ovarian aspiration. Following the procedure, the AR Egg Provider may require several days of restricted activity to recover. - 8 - The Donor Services Market 46. Persons seeking to acquire AR Eggs do so through one of four means: a. Through an individual donating for the benefit of a close friend or family member; b. Through a full-service fertility clinic’s (“Fertility Clinic”) paid-provider recruitment program; c. Through an egg-donor agency (“AR Egg Agency”) that recruits through a paid provider program; or d. Through a paid egg donor recruited directly by the person seeking to acquire the AR Eggs, either independently or through a broker, agent, or other intermediary. 47. Since it is difficult (and frequently impossible) for an individual seeking AR Eggs to find a desirable person willing to provide Donor Services for no compensation, the majority of AR Eggs are acquired from women who are compensated for their services. 48. Such payment is necessary to provide incentive for AR Egg Providers to go through the arduous process of providing AR Eggs. Most Fertility Clinics and AR Egg Agencies actively recruit AR Egg Providers with the promise of compensation for their Donor Services, including the time, effort, discomfort, and health risks resulting from the medical procedures involved. 49. The Donor Services market involves sales of approximately $80 million annually. Fertility Clinics and AR Egg Agencies Agree to Follow SART and ASRM Rules 50. The Donor Services market is largely self-regulated. There are no federal laws or regulations governing economic compensation for Donor Services. Plaintiff is aware of only two states with laws governing compensation for Donor Services: Louisiana, which bars such payments, and Indiana, which provides for a statutory cap on such payments. 51. Assisted reproductive technology professionals agree to abide by ethical and professional standards promulgated by ASRM’s Ethics Committee and ASRM’s Practice Committee. Indeed, all SART-member clinics must agree to abide by these standards as a condition of membership. One commentator has noted this agreement “is intended to discourage any possible governmental legislation that would encumber the free practice US doctors now enjoy.” - 9 - 52. SART, ASRM, and their member clinics openly admit that they have agreed to comply with ASRM’s rules. For example, a September 25, 2009 press release issued by ASRM noted that clinics who wish to become members of SART are “required to” agree to “[a]dhere to all standards and recommendations of the ASRM Practice Committee” and to “[a]dhere to all standards and recommendations of the ASRM Ethics Committee.” 53. Similarly, a “frequently asked questions” page on SART’s web site notes that “SART members must agree to . . . abide by all practice, laboratory, ethical, and advertising guidelines” as part of SART’s “rigorous requirements for membership.” These practice and ethical “guidelines” include the Maximum Price Rules. 54. Moreover, SART sent a letter to certain AR Egg Agencies in February 2006 noting that Fertility Clinics must “comply with . . . ASRM and SART guidelines as a requirement of SART membership.” 55. SART-member clinics comprise approximately 85% of the assisted reproductive clinics in the United States. One observer has noted that “[a]lmost uniformly, the major, mainstream IVF clinics are SART members and therefore ‘SART compliant.’” The Illegal Agreement Background 56. ASRM has long been concerned about the prices paid AR Egg Providers for AR Eggs used for reproductive purposes, and have promulgated ethical guidelines concerning such payments since at least 1994. 57. Prior to 2000, ASRM’s standards of practice merely stated that compensation for AR Donor Services “should not be so excessive as to constitute undue inducement” but neither organization had quantified a maximum (or indeed any) specific price. ASRM Promulgates an Artificially Low Fixed Price for Donor Services 58. In 2000, ASRM, SART, and its members determined it would formally suppress the price paid to AR Egg Providers for Donor Services. - 10 - 59. Thus, in 2000, ASRM’s Ethics Committee promulgated a report entitled “Financial Incentives in Recruitment of AR Egg Providers.” (“2000 Maximum Price Report”). 60. The 2000 Maximum Price Report specifically set forth the Maximum Price Rules, which reflect what ASRM believes Fertility Clinics and AR Egg Agencies should pay for Donor Services. That Report stated “at this time sums of $5000 or more require justification and sums above $10,000 go beyond what is appropriate.” 61. The rates set forth in the Maximum Price Rules were originally keyed to the market rates for sperm donation, i.e. by taking the average price a sperm donor receives for a donation, computing an hourly rate based on that price, and then multiplying that hourly rate by the number of hours it takes for an egg donor to donate eggs. That number was then purportedly slightly adjusted upwards to account for the additional inconveniences of Donor Services. 62. However, one commentator recently noted that Egg Donors receive an “average hourly compensation of between roughly $75 and $93 for time spent in a medical setting, about the same as hourly sperm donor rates.” (emphasis added). 63. In 2007, ASRM reaffirmed the $5000 and $10,000 Maximum Price Rules in a report entitled “Financial Compensation of Oocyte Donors.” (“2007 Maximum Price Report”). 64. The rates called for by the Maximum Price Rules have never increased in the ten years since they were initially promulgated. 65. ASRM’s Practice Committee has repeatedly issued rules requiring compliance with the Maximum Price Rules. 66. For example, the ASRM Report entitled “2002 Guidelines for gamete and embryo donation” specifically noted that “[c]ompensation to the donor should be in compliance with the” maximum prices set forth in the 2000 Maximum Price Report. 67. Similarly, ASRM’s “2006 Guidelines for gamete and embryo donation” noted that “[c]ompensation to [AR Egg Providers] should be in compliance with the ASRM Ethics Committee report on the subject.” - 11 - 68. ASRM’s “2008 Guidelines for gamete and embryo donation” made an identical observation, i.e. that “[c]ompensation to [AR Egg Providers] should be in compliance with the ASRM Ethics Committee report on the subject.” SART Member Fertility Clinics Agreed to the Fixed Price 69. As previously mentioned, SART-member Fertility Clinics agree to “[a]dhere to all standards and recommendations” of ASRM’s Practice and Ethics Committees as a requirement of their membership in SART. 70. Consistent with this obligation, SART-member Fertility Clinics agreed to abide by the Maximum Price Rules. 71. This agreement was memorialized in, inter alia, a 2006 letter from SART indicating that its members were required to agree to the Maximum Price Rules. 72. A survey of approximately 375 websites of SART-member clinics found that of those that mentioned the price for donor services, all of them were at or under $10,000. 73. Moreover, certain SART-member Fertility Clinics and AR Egg Agencies admit their agreement to the Maximum Price Rules on their websites. 74. For example, Defendant Class Member Pacific Fertility Center’s web site noted during the Class Period that “[b]ecause of [its] continued efforts to practice medicine within guidelines set forth by ASRM and SART, egg donors participating in our program will NOT be paid above $10,000 per AR Egg Agencies Serving SART Member Fertility Clinics Agreed to the Fixed Price 75. As some SART-member Fertility Clinics procure AR Eggs from AR Egg Agencies, AR Egg Agencies serving SART-member Fertility Clinics have also agreed to comply with the Maximum Price Rules. 76. In May 2005, SART sent a letter to independent AR Egg Agencies informing them that all AR Egg Agencies serving SART-member clinics were expected to agree to comply with the Maximum Price Rules, and requesting those agencies sign an agreement to abide by those rules and inform the SART-member clinics with whom they worked of their agreement. In exchange, AR Egg - 12 - Agencies signing the agreement would be listed on SART’s web site, and their names would be provided to two national infertility organizations (RESOLVE and the American Fertility Organization) to provide information to patients seeking guidance in their efforts to locate AR Egg Agencies. 77. Many AR Egg Agencies did so, including many in this District. 78. In February 2006, SART sent a second letter to AR Egg Agencies. This letter first noted that SART clinics agreed to comply with the Maximum Price Rules as a requirement of SART membership. It then noted that the names of AR Egg Agencies who had signed the agreement to comply with the Maximum Price Rules had been posted on SART’s website and again requested the AR Egg Agencies sign such an agreement. The letter also noted that a failure to comply with the Maximum Price Rules would result in removal of their agencies from the list of SART-approved donor programs. 79. In March 2011 ASRM’s web site contained a document listing the names and addresses of all AR Egg Agencies that had signed an agreement to comply with the Maximum Price Rules. It is attached hereto as Attachment A and contains the following text: The egg donor agencies listed below have signed an agreement with the Society for Assisted Reproductive Technology (SART) that they do and will abide by the American Society for Reproductive Medicine (ASRM) Ethics and Practice committees’ guidelines governing . . . financial compensation of oocyte donors. (emphasis added) 80. In March 2011, SART’s web site contained a similar list, attached hereto as Attachment B and prefaced by text reading: The egg donor agencies listed below have signed an agreement with the Society for Assisted Reproductive Technology (SART) that they do and will abide by the American Society for Reproductive Medicine (ASRM) Ethics and Practice committees’ guidelines governing . . . financial compensation of oocyte donors. (emphasis added). 81. AR Egg Agencies acknowledge this agreement. - 13 - 82. For example, AR Egg Agency and Defendant Class Member ConceiveAbilities, Inc. noted on its web site that “ConceiveAbilities strictly adheres to the guidelines as established by the American Society for Reproductive Medicine (asrm.org) which state egg donor compensation more than $10,000 is unethical. Simply stated, a reputable agency will adhere to the guidelines and those that don’t should be viewed with extreme skepticism.” 83. AR Egg Agency and Defendant Class Member Tiny Treasures, LLC’s web site noted that it “adheres to ASRM guidelines” and that “[c]ompensation requests may not exceed $10,000 per the guidelines set forth by the American Society for Reproductive Medicine.” 84. AR Egg Agency and Defendant Class Member Conceptual Options’ web site noted that “[w]e abide by all ASRM and SART guidelines . . . A single donor will not be paid more than $5000 without written justification and payments of $10,000 or more are not appropriate.” 85. AR Egg Agency and Defendant Class Member The Donor Source noted on its web site that it “is compliant with all regulations and standards set forth by the American Society for Reproductive Medicine,” which would necessarily include the Maximum Price Rules. 86. AR Egg Agency and Defendant Class Member The Stork Society’s web site noted “[t]he ASRM guideline states that, ‘Total payments to donors in excess of $5,000 require justification and sums above $10,000 are not appropriate.’ Donors will NOT be paid over $10,000 under any circumstance.” 87. AR Egg Agency and Defendant Class Member Beverly Hills Egg Donation’s web site noted “in compliance with ASRM/SART Guidelines, donor fees start at $6500, but will never be more than $9500.” 88. AR Egg Agency and Defendant Class Member Peas in a Pod, Inc. noted on its web site that “[o]ur agency prides itself in adhering to the ASRM’s guidelines.” 89. The web site of San Diego Fertility Center’s AR Egg Agency and Defendant Class Member (Egg Donor for You) notes that “[e]gg donor[s] are paid compensation based on American Society of Reproductive Medicine guidelines.” - 14 - 90. AR Egg Agency and Defendant Class Member A Perfect Match’s web site notes that “[w]e abide by all ASRM and SART guidelines regarding financial compensation of oocyte donors.” 91. AR Egg Agency and Defendant Class Member Circle Surrogacy notes that it “complies with ASRM guidelines for egg donation compensation.” 92. AR Egg Agency and Defendant Class Member Heartfelt Egg Donation’s web site states it “has signed an agreement with the Society for Assisted Reproductive Technology (SART) that states that we will abide by the American Society for Reproductive Medicine (ASRM) Ethics Committee Guidelines governing the payment of egg donors. The guidelines pertaining to appropriate donor compensation specifically state: ‘Total payments to donors in excess of $5,000 require justification and sums above $10,000 are not appropriate.’ Donors will not be compensated over $10,000 under any circumstance” 93. AR Egg Agency and Defendant Class Member Asian Egg Donation LLC’s web site states its “suggested compensation for Donors is $6000-$8000. Compensation requests may not exceed $10,000 per the guidelines set forth by the American Society for Reproductive Medicine (ASRM).” 94. AR Egg Agency and Defendant Class Member Fertility Resources of Houston LLC’s web site states that it “has agreed to be responsible for providing services in accordance with,” among other things, the Minimum Price Rules. 95. AR Egg Agency and Defendant Class Member Prime Genetics, LLC’s web site states that it “strictly complies with ASRM guidelines on Egg Donor compensation. Most Egg Donors are compensated $5000 for their time, inconvenience, discomfort and other related services. ASRM guidelines require justification for compensation paid in excess of $5000 and prohibits compensation over $10,000 under any circumstance.” 96. AR Egg Agency and Defendant Class Member Heartfelt Egg Donation’s web site notes that it “has signed an agreement with the Society for Assisted Reproductive Technology (SART) that states that we will abide by the American Society for Reproductive Medicine (ASRM) Ethics Committee Guidelines governing the payment of egg donors.” - 15 - Fertility Clinics and AR Egg Agencies’ Compliance with the Maximum Price Agreement Has Suppressed the Price of Donor Services 97. SART-member Fertility Clinics and AR Egg Agencies serving SART-member clinics have successfully suppressed the price of Donor Services to prices within the range set by the Maximum Price Rules. 98. Indeed, a 2007 survey performed for SART reported that SART-member Fertility Clinics paid an average of $4,217 for AR Eggs per donor cycle, while AR Egg Agencies serving SART-member Fertility Clinics paid an average of $5,200 per donor cycle. 99. An article recounting the results of that survey was published in the journal Fertility and Sterility. That article noted “the vast majority of clinics” are following the Maximum Price Rules. 100. Defendant Class Members’ agreement to comply with the Maximum Price Rules violates the antitrust laws. Indeed, one commentator has made the following observation: This naked price-fixing of egg donor compensation is so unusual in the modern U.S. regulatory environment of unrestrained competition that the most intriguing question it raises is not whether it violates the Sherman Act—under existing precedent it does. Rather, the relevant question is how, given the government’s substantial enforcement resources and the presence of an active and entrepreneurial plaintiffs’ bar, this buyers’ cartel has managed to survive unchallenged since at least 2000. ANTITRUST INJURY 101. During the Class Period, Plaintiff and the members of the Plaintiff Class sold Donor Services to Defendant Class members in the United States. 102. Plaintiff and members of the Class have suffered injury of the type that the antitrust laws are designed to punish and prevent. The price-fixing agreement eliminated price competition among SART member clinics in the procurement of Donor Eggs, a necessary component in the provision of AR Services. 103. By collectively agreeing to maintain artificially low supply prices for Donor Eggs, Defendant Clinics have been able to reap anti-competitive profits for themselves. Plaintiff and the - 16 - members of the Egg Donor Class have been injured by the absence of a competitive market for the supply of Donor Eggs because they have been paid less for Donor Services than they would have been paid absent the Maximum Price Rules. Plaintiffs and the members of the Class were injured and financially damaged in their businesses and property, in amounts that are not presently determined. As the direct victims of Defendants’ antitrust violations, Plaintiffs are efficient enforcers of the antitrust claims made herein. 104. As set forth above, the average hourly rate Egg Donors receive for Donor Services is approximately the same as the hourly rate received by sperm donors. Since the process of donating eggs is far more painful and risky than is the process for donating sperm, a price paid for Donor Services that does not account for those difference must be artificially low. COUNT ONE SHERMAN ACT SECTION ONE (15 U.S.C. § 1) Maximum Price Fixing 105. Plaintiffs reallege each allegation set forth above, as if fully set forth herein. 106. Defendants have entered into a per se maximum price fixing agreement, in violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. 107. In the alternative, if evaluated under the Rule of Reason, the Maximum Price Agreement is an unreasonable restraint of trade in violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 108. In formulating and effectuating the Maximum Price Agreement, Defendants engaged in anti-competitive activities, the purpose and effect of which were to artificially suppress the price paid to Class Members for Donor Services. These activities include the following: a. agreeing to pay certain prices for Donor Services and otherwise fix, raise, maintain, and/or stabilize the prices of Donor Services; and b. paying certain prices for Donor Services, thereby fixing the price of Donor Services at the agreed-upon rates. 109. The illegal combination and conspiracy alleged had the following effects, among others: - 17 - a. price competition in the pricing for the purchase of Donor Services for reproductive uses and, consequently, the price of such purchases has been restrained, suppressed, or eliminated; b. prices paid by Defendants for Donor Services for reproductive purposes has been fixed, raised, maintained, and/or stabilized at artificially low, non-competitive levels by the fixing of prices of Donor Services; c. payments received by Class Members for Donor Services for reproductive purposes has been fixed, raised, maintained, and/or stabilized at artificially low, non-competitive levels by the fixing of prices of Donor Services; and d. Class Members have been deprived of the benefit of free and open competition. PRAYER FOR RELIEF WHEREFORE, Plaintiffs respectfully request that: A. The Court certify the Plaintiff Class and appoint Plaintiff as Plaintiff Class Representative. B. The Court certify the Defendant Class and appoint Defendants as Defendant Class Representatives. C. Defendants be adjudged to violate Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. D. The Court declare the Maximum Price Rules to be unlawful and null and void. E. Judgment be entered for Plaintiff and members of the Plaintiff Class against Defendants and the Defendant Class for three times the amount of damages sustained by Plaintiff and the Plaintiff Class, together with the costs of the action, including reasonable attorneys’ fees, and such other relief as is appropriate. F. Defendants, their affiliates, successors, transferees, assignees, and the officers, directors, partners, agents and employees thereof, and all other persons acting or claiming to act on their behalf, be permanently enjoined and restrained from, in any manner, continuing, maintaining, or renewing the contract, combination, or conspiracy alleged herein, or from engaging in any other contract, combination, or conspiracy having similar purpose or - 18 - effect, and from adopting or following and practice, plan, program, or device having a similar purpose or effect. G. Plaintiffs and the members of the Plaintiff Class have such other, further, and different relief as the case may require and the Court may deem just and proper under the circumstances. DATED: Thursday, June 23, 2011 FINKELSTEIN THOMPSON LLP By: /s/ Rosemary M. Rivas Rosemary M. Rivas Mark Punzalan 100 Bush Street, Suite 1450 San Francisco, California 94104 Telephone: (415) 398-8700 Facsimile: (415) 398-8704 Douglas G. Thompson [email protected] Michael G. McLellan [email protected] FINKELSTEIN THOMPSON LLP 1050 30th Street NW Washington, DC 20007 Telephone: 202-337-8000 Facsimile: 202-337-8090 Bryan Clobes [email protected] Ellen Meriwether [email protected] CAFFERTY FAUCHER LLP 1717 Arch Street, Suite 3610 Philadelphia, PA 19103 Telephone: 215-864-2800 Facsimile: 215-864-2810 Counsel for Individual and Representative Plaintiff Lindsay Kamakahi - 19 -

antitrust

2v1rFIcBD5gMZwczKwuZ

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA PHILADELPHIA FEDERATION OF CLASS ACTION COMPLAINT No: TEACHERS HEALTH AND WELFARE FUND, on behalf of itself and all others DEMAND FOR JURY TRIAL similarly situated, Plaintiffs, v. Lannett Company, Inc., Impax Laboratories, Inc., West-Ward Pharmaceuticals Corporation, Allergan pie; Mylan Pharmaceuticals, Inc., and Par Pharmaceutical Companies, Inc. Defendants. INTRODUCTION 1. Plaintiff Philadelphia Federation of Teachers Health and Welfare Fund, ("PFTHW" or "Plaintiff') brings this action both individually and on behalf of: a. a national injunctive class of persons or entities in the United States and its territories who purchased, paid and/or provided reimbursement for some or all of the purchase price of generic digoxin or doxycycline products manufactured by Defendants during the period from October 1, 2012 to the present; and b. a damage class of persons or entities in the purchased, paid and/or provided reimbursement for some or all of the purchase price of generic digoxin or doxycycline products manufactured by Defendants during the period from October 1, 2012 to the present in the 30 states identified herein and the District of Columbia. Defendants are accused of engaging in a conspiracy to fix, maintain, and/or stabilize the prices of these generic drug products. All allegations herein are based on information and belief, except for those relating to the Plaintiff. 2 The claims in this case arise from a broad conspiracy among manufacturers of generic drugs to fix the prices charged for those drugs in recent years. The conspiracy appears to have been effectuated by direct company-to-company contacts among generic drug manufacturers, as well as joint activities undertaken through trade associations such as the Generic Pharmaceutical Association ("GPHA"). The unlawful acts undertaken with respect to generic digoxin and doxycycline are merely two manifestations of that overall conspiracy. The Antitrust Division of the United States Department of Justice ("DOJ'') commenced in 2014 a wide-ranging criminal investigation of this broad conspiracy and has caused grand jury subpoenas to be issued to various Defendants in connection with this investigation. The investigation encompasses generic drugs other than digoxin and doxycycline and, as the scope of the DOJ' s investigation is further clarified, Plaintiff reserves the right to amend its complaint to add more parties and/or claims. According to a June 26, 2015 report by the service Policy and Regulatory Report ("PaRR Report") (available at http://www.mergermarket.com/pdf/DoJ-Collusion-Generic-Drug-Prices- 2015.pdf): A PaRR source says prosecutors see the case much like its antitrust probe of the auto parts industry, which has gone on for years and morphed into the department's largest criminal antitrust probe ever. Like in that case, prosecutors expect "to move from one drug to another in a similar cascading fashion." 3. The entire purpose of permitting a generic drug industry in the United States was to encourage the manufacture of less expensive, non-branded substitutes for branded prescription drugs that either had no patent exclusivity or for which the patent exclusivity was expiring. According to a March 12, 2015 PowerPoint presentation by Defendant Larmett ("Larmett 2015 Presentation"), eight out of ten prescriptions are filled for generic drugs. According to that presentation, this is because the United States healthcare system focuses on "cost saving", thereby "increasing demand for cheaper generic drugs." 1 In a January 2012 report, the Government Accounting Office noted that "[ o ]n average, the retail price of a generic drug is 75 percent lower than the retail price of a brand-name drug."2 4. As reflected in a chart compiled by Representative Elijah E. Cummings ("Cummings"), Ranking Member of the House Committee on Oversight and Government Reform and Senator Bernie Sanders ("Sanders"), Chairman of the Subcommittee on Primary Health and Aging of the Senate Committee on Health, Education, Labor and Pensions, prices for certain generic drugs, including digoxin and doxycycline, increased dramatically in 2013 :3 1 https://www .business.illinois.edu/finance/rcmp/research/LCI2015-3 .pptx. 2 http://www.gao.gov/assets/590/588064.pdf. 3 http://www. sanders. senate. gov I download/face-sheet-on-generic-drug-price- increases?inline=file. Doxycycline Hyclate antibiotic used to treat a $20 $1,849 8,281% (bottle of 500, 100 mg tablets) variety of infections Albuterol Sulfate used to treat asthma and $11 $434 4,014% (bottle of 100, 2 mg tablets) other lung conditions Glycopyrrolate (box of 10 0.2 used to prevent irregular $65 $1,277 2,728% mg/mL, 20 mL vials) heartbeats during surgery Divalproex Sodium ER (bottle of used to prevent migraines 80, 500 mg tablets ER 24H) and treat certain types of $31 $234 736% seizures Pravastatin Sodium used to treat high (bottle of 500, 10 mg tablets) cholesterol and to prevent $27 $196 573% heart disease Neostigmine Methylsulfate used in anesthesia to reverse the effects of $25 $121 522% (box of 1 O 1: 1000 vials) some muscle relaxants Benazepril/Hydroch loroth iazide used to treat high blood $34 $149 420% (bottle of 100, 20-25 mg tablets) pressure 5. Digoxin is used to treat mild to moderate heart failure in adults, increase the heart contracting functions for pediatric patients with heart failure, and control the resting heart rate in adult patients with chronic atrial fibrillation. 4 It is derived from the leaves of a digitalis (or foxglove) plant and was first described in medical literature around 1785. Digoxin helps an injured or weakened heart pump blood more efficiently and strengthens the force of the heart muscle, which helps to restore a normal, steady heart rhythm. It is on the World Health Organization's ("WHO") list of essential medicines.5 Digoxin must be taken daily and exactly as prescribed to be effective. Failure to take digoxin as 4 As used herein, the term "digoxin" is intended to refer to doses of digoxin taken orally in the form of a tablet or capsule. 5 See http://www.who.int/selection medicines/committees/expert/20/EML 2015 FINAL amended A UG2015.pdf?ua=l. prescribed can have catastrophic consequences. According to data from IMS Health, annual sales of digoxin in the United States are approximately $44 million as of the beginning of 2014. As indicated in the discussion below, those sales numbers increased dramatically in 2014 and 2015. 6. Doxycycline monohydrate is an antibiotic used in treating humans and animals. It is useful for bacterial pneumonia, acne, chlamydia infections, Clostridium difficile colitis, early Lyme disease, cholera and syphilis. It is also useful for the treatment of malaria when used with quinine and for the prevention of malaria. It came into use in 1967 and is also on WHO's list of essential medicines referenced above. Doxycycline hyclate is a variation of doxycycline mono hydrate that entered the market in 1985. As used herein, the term "doxycycline" refers to both doxycycline monohydrate and doxycycline hyclate in tablet or capsule form, unless otherwise indicated. 7. The price increases described above endanger human lives. Many patients with cardiovascular conditions need to take digoxin daily in order to survive. Likewise, people with serious infections or other life-threatening diseases need access to a ready, affordable supply of doxycycline. Many have limited ability to cope with these types of price hikes. 8. Defendants, Lannett Company, Inc. ("Lannett"), Impax Laboratories, Inc. ("Impax"), West-Ward Pharmaceuticals Corp. ("West-Ward"), Mylan Pharmaceuticals, Inc. ("Mylan"), and Par Pharmaceutical Companies, Inc. ("Par"), are manufacturers and/or distributors of generic digoxin. These Defendants collectively sell tens of millions of dollars' worth of digoxin every year in the United States. Lannett, West-Ward, Par and Mylan are also manufacturers of generic doxycycline. Another major supplier of generic doxycycline has been the Actavis unit of Defendant Allergan plc.6 On March 17, 2015, Actavis plc ("Actavis") completed its acquisition of Allergan, Inc. in a cash and equity transaction valued at approximately $70.5 billion. As part of the transaction, Actavis plc changed its name to Allergan plc ("Allergan"), the entity named as a Defendant herein. 9. The markets for generic digoxin and generic doxycycline are oligopolies. Thus, in the generic digoxin market, mergers and withdrawals from the market caused the number of competitors to shrink drastically. By October 2013, the generic digoxin market was essentially a duopoly controlled by Larmett and Impax. Defendant West-Ward, a subsidiary of Hikma Pharmaceuticals PLC ("Hikma"), is also a competitor, but it had to suspend operations in November of 2012 in the wake of an investigation by the United States Food & Drug Administration ("FDA") into production problems at its manufacturing facility. It resumed participation in the generic digoxin market in July 2013. Mylan and Par entered that market in 2014 and 2015, respectively. Arthur Bedrosian ("Bedrosian"), the CEO of Larmett, calls these companies "rational" competitors. Similarly, Par, West-Ward, Mylan, Allergan and Larmett are also major players in the market for generic doxycycline. 10. Defendants' dramatic and unexplained pnce hikes have engendered extensive scrutiny by the United States Congress and by federal and state antitrust regulators. In a January 8, 2014, letter to members of key committees of the United States House of Representatives and Senate, Douglas P. Hoey, Chief Executive Officer of the 6 http://www.allergan.com/Actavis/media/PDFDocuments/2013 US Rx Product Catalog.pdf. The predecessor to Actavis plc also manufactured a generic form of digoxin at plants in New Jersey, but in December of2008, it agreed to cease doing so after the DOJ sued it for violating the FDA's manufacturing regulations. See http://www.law360.com/articles/8 l 363/correction- actavis-to-halt-production-at-3-plants. The company no longer sells generic digoxin in the United States. National Community Pharmacists' Association, asked Congress to conduct an investigation of generic drug price increases. 7 On October 2, 2014, Sanders and Cummings sent letters to Actavis, Larmett, Impax, Mylan, and West-Ward ("October Letters") asking for detailed information on the generic digoxin and/or generic doxycycline hyclate price hikes, among others. 8 11. On November 20, 2014, Sanders's committee held a hearing entitled "Why Are Some Generic Drugs Skyrocketing In Price?" ("Senate Hearing"). Various witnesses discussed the price hikes for generic drugs. Although Bedrosian, the CEO ofLannett, was invited to testify, neither he nor any other chief executive of a generic drug manufacturer did so.9 12 Industry analysts have also questioned manufacturers' claims that price increases are due to supply disruptions. Indeed, Richard Evans at Sector & Sovereign Research recently wrote: "[a] plausible explanation [for price increases of generic drugs, including generic digoxin] is that generic manufacturers, having fallen to near historic low levels of financial performance are cooperating to raise the prices of products whose characteristics - low sales due to either very low prices or very low volumes - accommodate price inflation."10 13. Antitrust regulators have also been actively investigating the price hikes. In August 2014, the Connecticut Attorney General ("AG") opened an antitrust investigation into digoxin pricing. Larmett, Impax and Par were subpoenaed concerning a conspiracy to 7 https ://www .ncpanet.org/pdf/leg(j an 14/letter-generic-spikes.pdf. 8 The October Letters may be found at http://www.sanders.senate.gov/newsroom/press- releases/congress- investigating-why-generic-drug-prices-are-skyrocketing. 9 http://www.sanders.senate.gov/newsroom/press-releases/drugmakers-mum-on-huge-price-hikes. 10 http://blogs.wsj.com/pharmalot/2015/04/22/generic-drug-prices-keep-rising-but-is-a- slowdown-coming. restrain trade by fixing the price of digoxin or allocating and dividing customers or territories. A copy of the subpoena issued to Lannett is attached hereto as Exhibit "A" and confirms that digoxin pricing is at the heart of the investigation. Par reported that it completed its "response" to the Connecticut AG on October 28, 2014. 14. By November 3, 2014, as noted above, the DOJ opened a criminal grand jury investigation into the pricing of various generic drugs, including generic digoxin and generic doxycycline. To date, according to statements in public filings with the Securities & Exchange Commission ("SEC") discussed below, the grand jury has issued subpoenas to Lannett and Lannett's Vice-President of Sales and Marketing (believed to be Kevin Smith ("Smith"), according to Lannett's website (http://www.lannett.com/about-lannett- management.php)); Impax and an unidentified sales representative of Impax; Allergan; Par; and Mylan. 15. Plaintiff alleges that during the Class Period, Defendants conspired, combined and contracted to fix, raise, maintain and stabilize prices at which generic digoxin and generic doxycycline would be sold. As a result of Defendants' unlawful conduct, Plaintiff and the other members of the proposed Classes paid artificially inflated prices that exceeded the amount they would have paid if a competitive market had determined prices for generic digoxin and generic doxycycline. JURISDICTION AND VENUE 16. Plaintiff brings this action under Section 16 of the Clayton Act (15 U.S.C. § 26), for injunctive relief and costs of suit, including reasonable attorneys' fees, against Defendants for the injuries sustained by Plaintiff and the members of the Class by reason of the violations of Sections 1 and 3 of the Sherman Act (15 U.S.C. § 1, 3). 17. This action is also instituted under the antitrust, consumer protection, and common laws of various states for damages and equitable relief, as described in Counts Two through Four below. 18. Jurisdiction is conferred upon this Court by 28 U.S.C. §§ 1331and1337 and by Section 16 of the Clayton Act (15 U.S.C. §26). In addition, jurisdiction is also conferred upon this Court by 28 U.S.C. §1367. 19. Venue is proper in this judicial district pursuant to 15 U.S.C. §§15(a) and 22 and 28U.S.C§1391(b), (c) and (d) because during the Class Period, Defendants resided, transacted business, were found, or had agents in this District, and a substantial portion of the affected interstate trade and commerce described below has been carried out in this District. Venue is also proper in this District because the federal grand jury investigating the pricing of generic drugs is empanelled here and therefore it is likely that acts in furtherance of the alleged conspiracy took place here, where Larmett and Mylan are headquartered and where Impax's generics division, Global Pharmaceuticals ("Global"), is located. 20. This Court has personal jurisdiction over each Defendant because, inter alia, each Defendant: (a) transacted business throughout the United States, including in this District; (b) sold digoxin 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 scheme and price-fixing 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. PLAINTIFF 21. Plaintiff, PFTHW, is a voluntary employee benefits plan organized pursuant to § 501 ( c) of the Internal Revenue Code for the purpose of providing health benefits to eligible participants and beneficiaries. PFTHW maintains its principal place of business in Philadelphia, Pennsylvania. PFTHW provides health benefits, including prescription drug benefits, to approximately 20,000 active participants, and their spouses and dependents. During the Class Period, PFTHW has been billed for and paid charges for drugs. As a result of the alleged conspiracy, Plaintiff was injured in its business or property by reason of the violations of law alleged herein. DEFENDANTS 22. Larmett is a Delaware corporation that has its principal place of business in Philadelphia, Pennsylvania. Larmett is a distributor of generic digoxin and generic doxycycline. During the Class Period, Larmett sold generic digoxin and genenc doxycycline to customers in this District and other locations in the United States. 23. Impax is a Delaware corporation that has its principal place of business in Hayward, California. As noted above, Impax's generics division is called Global Pharmaceuticals ("Global") and is a manufacturer and distributor of generic digoxin. During the Class Period, Global sold generic digoxin to customers in this District and other locations in the United States. 24. Par is a Delaware corporation with its principal place of business in Chestnut Ridge, New York. In January 2014, Par announced that it had entered into an exclusive United States supply and distribution agreement with Covis Pharma S.a.r.l. ("Covis") to distribute the authorized generic version of Covis' Lanoxin® (digoxin) tablets. At that time, Par began selling and shipping 0.125 mg and 0.250 mg strengths of digoxin tablets in this country. Par also manufactures generic doxycycline. During the Class Period, Par sold generic digoxin and generic doxycycline to customers in this District and other locations in the United States. 25. West-Ward is a Delaware corporation with its principal place of business in Eatontown, New Jersey. West-Ward is the United States agent and subsidiary of Hikma Pharmaceuticals PLC ("Hikma"), a London-based global pharmaceutical company and is a manufacturer and distributor of generic digoxin. During the Class Period, West-Ward sold generic digoxin and generic doxycycline to customers in this District and other locations in the United States. ')fi Allergan is an Irish corporation that has its global headquarters in Dublin, Ireland and its administrative headquarters in Parsippany-Troy Hills, New Jersey. During the Class Period, Allergan sold generic digoxin and generic doxycycline to customers in this District and other locations in the United States. Tl. Mylan is a Delaware corporation with its principal place of business in Canonsburg, Pennsylvania. During the Class Period, Mylan sold generic digoxin and generic doxycycline to customers in this District and other locations in the United States. 28. Whenever in this Complaint reference is made to any act, deed or transaction of any corporation, the allegation means that the corporation 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 business or affairs. 29. All acts alleged in this Complaint to have been done by Defendants were performed by their officers, directors, agents, employees or representatives while engaged in the management, direction, control or transaction of Defendants' business affairs. CO-CONSPIRATORS 30. Various other persons, firms, corporations and entities have participated as unnamed co-conspirators with Defendants in the violations and conspiracy alleged herein. In order to engage in the offenses charged and violations alleged herein, these co- conspirators have performed acts and made statements in furtherance of the antitrust violations and conspiracies alleged herein. 31. At all relevant times, each Defendant was an agent of each of the remaining Defendants, and in doing the acts alleged herein, was acting within the course and scope of such agency. Each Defendant ratified and/or authorized the wrongful acts of each of the Defendants. Defendants, and each of them, are individually sued as participants and as aiders and abettors in the improper acts and transactions that are the subject of this action. INTERSTATE TRADE AND COMMERCE 32 The business activities of Defendants that are the subject of this action were within the flow of, and substantially affected, interstate trade and commerce. 33. During the Class Period, Defendants sold substantial quantities of generic digoxin and/or generic doxycycline in a continuous and uninterrupted flow of interstate commerce to customers throughout the United States. FACTUAL ALLEGATIONS The Industry 34. Defendants manufacture and sell, inter alia, generic versions of branded drugs once the patent on the branded drug expires. 35. According to the FDA's Glossary, a generic drug is "the same as a brand name drug in dosage, safety, strength, how it is taken, quality, performance, and intended use." 11 Once the FDA approves a generic drug as "therapeutically equivalent" to a brand drug, the generic version "can be expected to have equal effect and no difference when substituted for the brand name product." Id. According to a PowerPoint presentation given by Larmett at the 2014 Bank of America/Merrill Lynch Healthcare Conference, the cost of generics is "[ o ]ften 80-85% less than the brand. " 36. Due to the price differentials between branded and generic drugs, as well as other institutional features of the pharmaceutical industry, pharmacists liberally and substantially substitute the generic drug when presented with a prescription for the branded drug. Since passage of the Hatch-Waxman Act (Pub. L. No. 98-417, 98 Stat. 1585 (codified at 15 U.S.C. §§68b-68c, 70b; 21 U.S.C. §§301 note, 355, 360cc; 28 U.S.C. §2201; 35 U.S.C. §§156, 271, 282)), every state has adopted substitution laws requiring or permitting pharmacies to substitute generic drug equivalents for branded drug prescriptions (unless the prescribing physician specifically orders otherwise by writing "dispense as written" or similar language on the prescription). Market for Generic Digoxin 37. The market for generic digoxin is mature and the Defendants in that market can only gain market share by competing on price. 38. Lanoxin® is a branded version of digoxin. It was formerly a registered trademark of GlaxoSmithKline ("GSK"), which in December of 2011 sold its commercial rights in Lanoxin to Covis. Currently, Lanoxin® is manufactured by DSM Pharmaceuticals, Inc. and distributed by Covis. As noted above, in January of 2014, Par 11 http://www.fda.gov/Drugs/lnformation0nDrugs/ucm079436.htm#G. contracted with Covis for distribution rights for an authorized generic version ofLanoxin® in the United States. 39. According to the 2015 edition of the FDA's Orange Book, the 0.250 mg strength of Lanoxin® is a reference listed drug ("RLD"). An RLD is an "approved drug product to which new generic versions are compared to show that they are bioequivalent," that is, the generic version "performs in the same manner as the Reference Listed Drug." FDA's Glossary, available at http://www.fda.gov/Drugs/InformationOnDrugs/ucm079436.htm#RLD. A drug company seeking approval to market a generic equivalent must refer to the Reference Listed Drug in its Abbreviated New Drug Application (ANDA)." Id. Once the FDA determines that a drug company's application contains sufficient scientific evidence establishing the bioequivalence of the product to the RLD, an applicant may manufacture and market the generic drug product to provide a safe, effective, low cost alternative to the American public. Id. 40. Furthermore, the FDA will generally assign a Therapeutic Equivalence Code ("TE Code") of AB to those products it finds to be bioequivalent. 12 This coding system allows users to quickly determine important information about the drug product in question. 13 For example, the FDA states that "[p ]roducts generally will be coded AB if a study is submitted demonstrating bioequivalence. Even though drug products of distributors and/or repackagers are not included in the List, they are considered http://www.fda.gov/Drugs/DevelopmentApprovalProcess/FormsSubmissionRequirements/ElectronicSubmi ssions/DataStandardsManualmonographs/ucm071713 .htm. 13 http://www.fda.gov/Drugs/DevelopmentApprovalProcess/ucm079068.htm#TEC. therapeutically equivalent to the application holder's drug product if the application holder's drug product is rated AB."14 41. Lanoxin® in tablet form has TE Code of"AB." As the FDA has listed in its Orange Book with regard to Therapeutic Equivalents for Lanoxin®, current generic equivalents which share the code AB are those distributed by Lannett; Global, a division of Impax; West- Ward; Par; Mylan; and Caraco Pharmaceutical Laboratories, Ltd. ("Caraco"), which is a subsidiary of Sun Pharmaceutical Industries, Ltd., an Indian company. As noted above, on February 12, 2012, the FDA sent a warning letter to West- Ward over managing and testing issues that caused its generic digoxin tablets to fail to be in compliance with current good manufacturing practices as defined in 21 C.F .R. Parts 210- 11.15 West-Ward closed its New Jersey facility in November of 2012 after FDA inspectors found other problems and reopened it in July of 2013 after Hikma spent $39 million on remediation. 42 According to its Form 10-K filed with the United States Securities & Exchange Commission ("SEC") on August 27, 2015,16 Lannett has been involved in the business of generic digoxin distribution since at least March of 2004. In March 2004, Lannett entered into a supply agreement with Jerome Stevens Pharmaceuticals ("JSP") for the exclusive distribution rights in the United States to generic digoxin and two other drugs manufactured by JSP. As reflected in the aforementioned Form 10-K, this agreement was made in exchange for four million shares of Lannett's common stock. Lannett and JSP thereafter amended the original agreement to extend the initial contract for five more years 14 http://www. fda. gov /Drugs/DevelopmentApprovalProcess/F ormsSubmissionRequirements/Electr onicSubmissions/DataStandardsManualmonographs/ucm071713 .htm. 15 http://www.fda.gov/ICECI/EnforcementActions/WamingLetters/2012/ucm29 l 643 .htm. 16 http://www.sec.gov/ Archives/edgar/data/57725/000110465915062047/al5-13005 l lOk.htm. (until March of 2019). As further reflected in the aforementioned Form 10-K, for additional consideration, Lannett issued to JSP 1.5 million shares of Lannett common stock, valued at approximately $20.1 million. 43. Lannett markets and distributes two potencies of generic digoxin: 0.125 mg and 0.250 mg. They both have a TE Code of AB and therefore are generic equivalents to the corresponding respective strengths of Lanoxin®. As reflected in SEC Form 10-Ks from 2007-14, Lannett's sales of generic digoxin totaled $12.4 million in 2011; $10.9 million in 2012; $11.7 million in 2013; and $54.7 million in the 2014 fiscal year. 44. By October 2013, the generic digoxin market was essentially a duopoly controlled by Lannett and Impax. Defendant West-Ward was also a competitor, but it had to suspend operations in November of 2012 in the wake of an investigation by the FDA into production problems at its manufacturing facility. It resumed participation in the generic digoxin market in July 2013 after Hikma spent $39 million in remediation efforts. Market for Generic Doxycycline 45. The market for generic doxycycline is mature and the Defendants in that market can only gain market share by competing on price. 46. The primary actors in that market are Allergan, Lannett, Par, West-Ward and Mylan, which collectively control a commanding market share. 47. As with generic digoxin, generic doxycycline halclate in capsule form almost universally has a TE Code of AB and the RLD is Pfizer's Vibramycin®. Doxycyline monohydrate in capsule or tablet form also almost universally has a TE Code and its RLD is listed as a generic form of the drug. 48. Total United States retail sales of doxycycline in 2013 were estimated to be over $972 million. 17 Defendants' Pricing Conduct For Generic Digoxin And The Effects Thereof 49. Generic digoxin pricing was remarkably stable until approximately mid- October of2013. That stability is reflected in the following chart submitted by Dr. Stephen Schondelmeyer ("Schondelmeyer"), Director of the PRIME Institute at the College of Pharmacy for the University of Minnesota, as part of his testimony at the Senate Hearing. 18 Figure 12. Digoxin 0.25 mg Tablet {Lnnnett) Price per Day of Therapy: (January 1, 2005 to December 31, 2013) The terms "A WP" and "WAC" in this chart refer, respectively, to "Average Wholesale Price" and "Wholesale Acquisition Price." Both prices are referred to by Schondelmeyer 17 http://www.drugs.com/stats/doxycycline. 18 That testimony is available at http://www.help.senate.gov/imo/media/doc/Schondelmeyer.pdf. as benchmark prices. 19 50. This chart reflects only a portion of the price hikes for generic digoxin that occurred. The October Letters referenced above note that prices for generic digoxin increased dramatically between October 2012 and June 2014 for the market as a whole: 51. These astounding price increases were caused by sudden and abrupt pricing changes made by Lannett, West-Ward, and Impax that were followed by Par and Mylan when it entered the market in 2014 and 2015, respectively. In or about November and December 2013, pricing for .125 mg and .250 mg tablets of digoxin increased more than 750%, from $.11 and $.12 per tablet to $.91 and $1.01 per tablet. Between December 2013 and January 2014, the prices of digoxin jumped again to $1.08 and $1.11 per tablet. Daily heart medication that cost 11 or 12 cents per pill in early November 2013, cost nearly ten times more by early January 2014. 52 Data from the National Average Drug Acquisition Cost ("NADAC") on generic digoxin show price increases that led to identical prices for Lannett' s, West-Ward's and Impax's generic digoxin products. The same was true of Par's pricing of generic digoxin in the United States beginning in early 2014 and of Mylan's pricing of generic digoxin when it entered the market in 2015. The following chart shows Lannett's, West- Ward's, Impax's Par's and Mylan's pricing of the 0.125 mg tablet dosage of generic digoxin during the period from October 2012 to April 2015. 19 Id. at 15. NADAC of. MG Digoxin Tablets Date B Lannett lmpax (Global Pharm) I West-Ward II Par I Mylan 53. The following chart, based on NADAC data, shows Lannett's, West- Ward's, Impax's Par's and Mylan's pricing of the 0.125 mg tablet dosage of generic digoxin during the period from October 2012 to mid-March 2015. NADAC of .250 MG Digoxin Tablets Date 11!!1 Lannett lrnpax (Global Phann) !!Ill West-Ward m Par ilW Mylan 54. There were no reasonable justifications for this abrupt shift in pricing conduct. 55. Federal law requires drug manufacturers to report potential drug shortages to the FDA, the reasons therefor, and the expected duration of the shortage.20 No supply disruption was reported by the relevant Defendants with respect to digoxin in the fall of 2013. As stated at the website of the Generics and Biosimilars Initiative on August 29, 2014, "[a]t the time of the price increases, the US Food and Drug Administration had reported no drug shortages, there was no new patent or new formulation and digoxin is not 20 See http://www.fda.gov/Drugs/DrugSafety/DrugShortages/ucm050796.htm#g. difficult to make. The companies have not yet provided an explanation for the price rise."21 No explanation was presented at the Senate Hearing; as noted above, executives from Larmett, Impax and Par refused to testify. 56. The presence or absence ·of competitors in the marketplace also does not explain the price of generic digoxin. From October 2012 to around November 21, 2013, the NADAC of generic digoxin was consistently around $0.11 for the 0.125 mg tablets and between $0.11 and $0.12 for the 0.250 mg tablets. The chart presented by Schondelmeyer confirms this. This was the case even though for a portion of that period after West-Ward suspended production, Larmett and Impax were the only significant players in the market. West-Ward returned to the market in July 2013, but pricing still remained stabilized for several months. Indeed, throughout 2012 and through September 2013, as Schondelmeyer's chart shows, the price of generic digoxin remained steady. Following the astronomical price increases in the fall of 2013, Par entered the market in early 2015 and Mylan entered the market in 2015. Prices did not fall despite the addition of new competitors. Pricing has remained inflated to this day. 57. This abrupt shift in the pricing of generic digoxin has had a catastrophic effect on consumers. Alan Katz ("Katz"), a Bloomberg reporter, wrote a December 12, 2013, article titled "Surprise! Generic-Drug Prices Spike" and reported: Bill Drilling, an owner of a pharmacy in Sioux City, Iowa, apologizes as he rings up a customer's three-month supply of the heart medicine digoxin. The total is $113 .12 - almost 10 times the cost for the same prescription in August. Digoxin isn't a new miracle drug . . . . "I've been doing this since 1985, and the only direction that generics - drug prices have gone is down," Drilling says. *** "This is starting to create hardship," he says. Many of his customers fall 21 http://www.gabionline.net/Generics/General/Lawyers-look-at-new-price-hike-for-old-drug. into what is known as the Medicare "doughnut hole," a coverage gap in which patients pay 4 7 .5 percent of branded-drug costs and 79 percent of a generic's price. Russ Clifford, a retired music teacher, learned digoxin's cost had jumped more than fourfold when he picked up his 30-day supply in mid-November. Clifford and his wife have had to dip into savings to pay their rising pharmaceutical bills.22 58. As further noted in the October Letters: This dramatic increase in generic drug prices results in decreased access for patients. According to the National Community Pharmacists Association (NCPA), a 2013 member survey found that pharmacists across the country "have seen huge upswings in generic drug prices that are hurting patients and pharmacies ability to operate" and "77% of pharmacists reported 26 or more instances over the past six months of a large upswing in a generic drug's acquisition price." These price increases have a direct impact on patients' ability to purchase their needed medications. The NCPA survey found that "pharmacists reported patients declining their medication due to increased co-pays," and "84% of pharmacists said that the acquisition price/lagging reimbursement trend is having a 'very significant' impact on their ability to remain in business to continue serving patients." (Footnotes omitted). 59. Independent pharmacist Robert Frankil ("Frankil") illustrated the hardship caused by the digoxin price increases with this anecdote offered at the Senate Hearing: A recent example from my own experience is the price of Digoxin - a drug used to treat heart failure. The price of this medication jumped from about $15 for 90 days' supply, to about $120 for 90 days' supply. That's an increase of 800%. One of my patients had to pay for this drug when he was in the Medicare Part D coverage gap in 2014. Last year, when in the coverage gap he paid the old price. This year he paid the new price. Needless to say, the patient was astounded, and thought I was overcharging him. The patient called all around to try to get the medicine at the old, lower price, but to no avail. This caused him lots of stress and time, and caused us lots of stress and time in explaining the situation, reversing, and re billing the claim. This example is typical of how these price spikes put consumers and pharmacists in a bad position, often grasping at straws for explanations. And all the while, everyone pays more, including the patient, the pharmacy, and the insurer (often the federal government).23 Defendants' Pricing Conduct For Generic Doxycycline And The Effects Thereof 22 See http://www.bloomberg.com/bw/articles/2013-12-12/generic-drug-prices-spike-in- pharmaceutical- market-surprise. 23 http://www.help. senate. gov limo/media/ doc/Frankil. pdf. 8l For generic doxycycline, the pattern of huge price increases started in the fall of 2012, a year earlier than for generic digoxin. 61. Schondelmeyer, in his testimony at the Senate Hearing, presented the following chart showing the sudden increase in West-Ward's pricing for generic doxycycline the A WP of which went from under $2.50 for a day of therapy for 1 OOmg capsules of doxycycline hyclate to over $11 by January 2013: $tWJ r-r-"JF"'"W-r--rr-,,.,,,..-r--r-"'r"""'r-F"'"W-r-r-1-.,~-r-...,....r-11"""4-r-r"""'F""r"-r-~r-r-1--r-r~--:···-rr-,-·-ri $11.SO ·r•·i--"i"'·'f···+·'"' ··-+·~ --'<--·i·•J·-·+"•r·"•r"""'"""'+-·+-.;• • 'ii••'f•"i'~-.···f··r··r"·'r••·?••r• ·«···r·'"F''"i''''" , , •• r ·+--4 ·· •i·· .; .• • $:tt00 $Ill SO ,. •• ; • .,,.;. .• ., •.• ,,;, •• ~-··4*-~·-·+-+··+· •+··+•·?-'*'"""""''"'" ··~···"1··"1·· ., • $5.50 ""-r• ""' -<1··•-«••<1.,-• si.so ~S~3'.~~~f~E6~~:T±ffE6~:t±~±f'.EEE $2.00 .(: $!.).$!) ' $. .,, ~ ~ 8 8 8 ~ ~ ~ s s s s ~ 8 ~ ~ s ~ ~ s $ ~ ~ g ~ ~ ~ ~ ~ ~ ~ ~ ~ a ~ ~ s l l l 0 0 0 0 0 0 0 0 0 0 0 0 0 0 15 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N ~ N N M M N N M N N N M N M N N N N N N N N ~ N N N N N N N N N N ~J~~~J~JJJJJJJJJJ~JJJJJJJJJJJ~~JJJJJJJ~J t: ~-; ·t; ~;,tic t"S ~ ~ Q."S t c-. "'S TS c • ·:; 'G c ~'5 tj e lo.,,-; c e ~ '5 t> c Q.'; t:l !c-o~l~o!c-o!c-o!t~o•f~o•c-o!f-a•t~a•~-o 62 Similarly, Sanders and Cummings noted huge increases in the price of generic doxycycline in their October Letters: Doxycycline Hyclate $3 $191 $187 4,986% Doxycycline Hyclate $3 $70 $67 2,191% Doxycycline Hyclate $27 $1,849 $1,822 7,105% Doxycycline Hyclate $20 $!,849 $!,829 8,281% 63. The NADAC data for 50 mg and 100 mg of generic doxycycline hyclate capsules manufactured by Defendants Allergan and West-Ward reveals a similar pattern: Cl u ·;::: 0.. NADAC of 50 MG Doxycydine Hydate Capsules 0.80000 0 .. 60000 0.40000 0.20000 0.00000 '. iii! Allergan-SOMG m West-Ward 50-MG NADAC of lOOMG Doxycydine Hydate Capsules Date !I Allergan -100MG !!I West-Ward-100MG 64. Although there was some decline in prices for both dosages of doxycycline hyclate capsules, prices did not decline to the levels that existed prior to December of2012 in this period. 65. The NADAC data for 1 OOmg of generic doxycycline hyclate tablets manufactured by Allergan and West-Ward likewise illustrates a similar pattern: 0.00000 Date IM Allergan- 100 MG Ill West-Ward- 100 MG There were no reasonable justifications for this abrupt shift in pricing conduct. The FDA did announce that a shortage of doxycycline in January of 2013; but that generic drug was placed on the resolved shortage list in October of 2013.24 24 See http://www. cdc. gov I std/treatment/ doxycyclineShortage .htm. (i). The NADAC data for 1 OOmg doxycycline monohydrate tablets manufactured by Larmett, Par and Mylan during the period from October of 2012 through mid-February of 2015 is depicted in the following chart; while prices for this dosage reflect more of a saw tooth pattern, again, it is one of a substantial increasing trend. NADAC of 100mg Doxycydine Monohydrate Tablets 130000 1.20000 U.0000 1.00000 0.90000 0.80000 0.70000 0.60000 050000 0.40000 n Larmett·- 100 MG !l!ill Par- 100 MG Mylan- 100 MG 67. These price hikes caused extreme hardship to consumers. As reported on WSMV-TV ofNashville's website in March 2013: Many people may not recognize the name, but they have probably used it for a health problem at one point. Doctors use doxycycline to treat a wide range of issues, including everything from acne to Lyme disease, anthrax exposure and even heartworm in our pets. However, the once cheap and effective drug has now dramatically gone up in price, and that has health professionals concerned. Hospitals like Vanderbilt University Medical Center keep doxycycline in stock, but some folks worry the cure for their ailment could now be financially out of reach. "It's a change that occurred overnight," said Vanderbilt pharmacy manager Michael 0 'Neil. Not long ago, the pharmacy at Vanderbilt's hospital could purchase a 50- count bottle of 100 mg doxycycline tablets for $10, but now the same bottle costs a staggering $250. "That's concerning to us, both as citizens and practitioners, when you see a huge increase like this in a price of a drug," O'Neil said. Vanderbilt keeps thousands of doxycycline pills on hand in the event of a bioterrorist attack, like anthrax, and O'Neil said replacing expired pills is prohibitive. "This one is just hurting us when we need to replace the medication," he said. But it's the most vulnerable who are in the most jeopardy. For a pet, a heartworm diagnosis can be a death sentence without doxycycline. Veterinarian Dr. Joshua Vaughn of the Columbia Hospital for Animals is already seeing the tragic results. "We had one patient who we diagnosed with heartworm. We recommended heartworm treatment, but when they saw the total dollar amount, they elected not to treat the dog at all,: Vaughn said. While manufacturers say they are having problems with raw supply, many in the medical community see greed as an overriding factor. Vaughn said he wrote a recent prescription for doxycycline that cost $77. This week, the price increased to nearly $3,000.25 Lannett's Statements About Generic Drug Competition 68. Defendants' sudden and massive price increases represented a sharp departure from the previous years of low and stable prices. This in itself is indicative of 25 http://www.wsmv.com/story/21616095/sudden-increase-in-cost-of-common-drug-concerns-many. collusion. In addition, Defendant Lannett's own statements - in documents and in oral remarks by Bedrosian of Larmett at quarterly earnings calls with market analysts and the investigations of state and federal antitrust regulators - reinforce this inference of collusion.26 (f). In a fourth quarter 2013 earnings call that occurred on September 10, 2013, Bedrosian signaled Lannett's intention to increase prices and his expectations that his competitors would follow suit. Discussing the role of Smith, one of the persons apparently subpoenaed by DOJ, Bedrosian said: \ We're not a price follower. We tend to be a price leader on price increasing and the credit goes to my sales vice president. He takes an aggressive stance towards raising prices. He understands one of his goals, his objectives as a sales vice president is to increase profit margins for the company. And he's the first step in that process .... I am finding a climate out there has been changed dramatically and I see more price increases coming from our competing-competitors than I've seen in the past. And we're going to continue to lead. We have more price increases planned for this year within our budget. And hope/ ully, our competitors follow suit. (Emphases added). 70. In a subsequent earnmgs call, Bedrosian reported that Lannett's chief competitor had indeed heeded its price increase signal. In a first quarter 2014 earnings call on November 7, 2013 -- after the initial generic digoxin price increases -- Bedrosian noted, referring to Impax, that "[w]e've had a recent price increase on the [generic digoxin] product as well because we are now only 1 of 2 people in the market. And as a result, I expect that product to do very well." (Emphases added). 71. The very next quarter, Bedrosian expressed complacency about the entry of a new competitor in the form of Par. On February 6, 2014 - after more price increases on 26 http://seekingalpha.com/ symbol/LCI?source=search general&s= lei. generic digoxin had occurred and after Par had entered the market -- Bedrosian said he was not concerned about this new entry: "[a]nd we see Par as one of our rational competitors in the marketplace." As he went on to note, "we're not troubled by their pricing in the marketplace. Not at all." 72. In some quarterly earnings call held on November 3, 2014, Bedrosian again expressed confidence that Lannett would not have to engage in price competition generally in the generic drug market. He said Lannett and its competitors were "less concerned about grabbing market share. We 're all interested in making a profit, not how many units we sell." (Emphases added). Bedrosian went on to discuss, inter alia, Par and Impax, saying "the companies we're looking at here are not irrational players. I don't see them just going out and trying to grab market share." (Emphases added). He also noted that Mylan was expected to enter the market, "but Mylan is one of those rational competitors, so we're not really expecting anything crazy from them." (Emphases added). He predicted that price increases would continue. 73. On February 4, 2015, in another quarterly earnings call, Bedrosian confirmed there would be a moratorium on price competition. He stated: "I think you 're going to find more capital pricing [in the generic marketplace}, more - I'll say less competition, in a sense. You won't have price wars." (Emphases added). In his view, "I just don't see the prices eroding like they did in the past." (Emphases added). 74. Thus, for Lannett, irrational competitors were those who competed on price in order to obtain market share. It understood that Impax, Par and Mylan, among others, were no longer interested in doing that, an understanding that could only exist if the three firms had reached a consensus on how to price. Bedrosian's predictions bespeak that consensus. Bedrosian was also certain of reaching the same consensus with Mylan. 75. Frederick Wilson, the CEO of Impax, also spoke to this topic in a third quarter 2014 earnings call: "we've done what most of the other generic competitors have done, we look at opportunities, we look at how competition shifts, we look at where there may be some market movement that will allow us to take advantages on price increases and we've implemented those .... "27 76. This meeting of the minds among the competing sellers of generic digoxin and generic doxycycline assured them handsome profits. Bedrosian noted in the February 4, 2015, earnings call that Larmett "recorded the highest net sales and net income in our company's history." Gross profits in the first six months of the 2015 fiscal year were $158.8 million or 76% of net sales, compared with $42.3 million or 37% of net sales during the previous fiscal year. Generic digoxin pricing played a big role in its success. The 2015 Lannett Presentation noted that generic digoxin accounted for 23% of the company's revenues. As noted in the same presentation, Larmett is highly dependent on price increases for revenue growth. 77. Likewise, according to its 2015 SEC Form 10-K filed on February 26, 2015, Impax experienced $596 million in total revenues in the 2014 calendar year, compared to $511 million in 2013-a 1 7% increase. 28 One of the primary factors in this growth was "higher sales of our Digoxin." Id. at 61-62. Congressional And Regulators' Responses 78. As noted above, the unseemly profits made by the generic drug 27 http://www.nasdaq.com/symbol/ipxl/call-transcripts. 28 http://dllge852tjjqow.cloudfront.net/CIK-OOO 1003642/c545ab21-aa3d-4426-a0b9- ba4373b6c213.pdf?noexit=true. manufacturers led to inquiries by Congress and to the Senate Hearing, where numerous witnesses referenced the pricing history summarized above. 79. Sanders and Cummings followed up on the Senate Hearing by writing a letter on February 24, 2015, to the Office of the Inspector General ("OIG") of the Department of Health & Human Services, asking it to investigate the effect price increases of generic drugs, including generic digoxin, have had on generic drug spending within the Medicare and Medicaid programs.29 The OIG responded in a letter dated April 13, 2015, saying it planned to engage in a review of quarterly average manufacturer prices for the 200 top generic drugs from 2005 through 2014.30 00. In July of 2014, George Jepsen, the Connecticut AG, issued subpoenas to each of the Defendants, specifically saying that there was "reason to believe" that a conspiracy took place "which is for the purpose, or has the effect of, (a) fixing, controlling or maintaining prices, rates, quotations, or fees; or (b) allocating or dividing customers or territories .... " This subpoena is thus not a "fishing expedition"; it is very exact, as reflected in Appendix A. 81. Commencing in November 2014, the DOJ issued grand jury subpoenas to Lannett, Impax, Par, Allergan, and Mylan and, in some cases, their employees. These subpoenas have been acknowledged in SEC filings by all three companies. (It is not publicly known if West-Ward also received a subpoena, because its foreign parent, Hikma, does not make disclosures to the SEC). 82. In an SEC Form 10-Q dated February 6, 2015, Lannett has said that on 29 http://www.sanders.senate.gov/download/sanders-cummings-letter?inline=file. 30 http://www.sanders.senate.gov/download/oig-letter-to-sen-sanders-4-13-2015?inline=file. November 3, 2014, "the Senior Vice-President of Sales and Marketing was served with a grand jury subpoena relating to a federal investigation of the generic pharmaceutical industry into possible violations of the Sherman Act."31 The responses to that subpoena led to the issuance of a second grand jury subpoena to Lannett itself. It noted in the same SEC filing that on December 5, 2014, "[t]he Company was served with a grand jury subpoena related to the federal investigation of the generic pharmaceutical industry into possible violations of the Sherman Act. The subpoena requests corporate documents from the Company relating to corporate, financial, and employee information, communications or correspondence with competitors regarding the sale of generic prescription medications, and the marketing, sale, or pricing of certain products." A report in Pharmacy Times described the subpoenas as follows: The Lannett Company, Inc., subpoena covers 2 specific areas related to antitrust laws and generic drug pricing. The first portion covers a Connecticut Attorney General investigation into whether the company or its employees engaged in price fixing, maintaining, or controlling for digoxin. The second portion serves the company's senior vice president of sales and marketing with a grand jury subpoena pertaining to Sherman antitrust act violations in the generic drug industry. That subpoena requests any documents exchanged with competitors related to the sale of any generic prescription medications during any time period. 32 Similar statements are contained in Lannett's most recent SEC Form 10-Q, filed on February 9, 2016.33 83. On August 27, 2015, Lannett issued a new SEC Form 10-K. It contains this further explanation of the DOJ investigation: In fiscal year 2015, the Company and certain affiliated individuals each 31 http://app.quotemedia.com/data/downloadFiling?webmasterld=101533&ref=10044800&type=H TML&symbol=LCI&companyName=Lannett+Co. +Inc.&formType= 1O-Q&dateFiled=2015-02- 06. 32 http://www.phannacytimes.com/publications/issue/20l4/December2014/Senate-Hearing- Investigates- Generic-Drug-Prices. 33 http://www.sec.gov/ Archives/edgar/data/57725/000110465916094983/al 5-24119 11 Oq.htm. were served with a grand jury subpoena relating to a federal investigation of the generic pharmaceutical industry into possible violations of the Sherman Act. The subpoenas request corporate documents of the Company relating to corporate, financial, and employee information, communications or correspondence with competitors regarding the sale of generic prescription medications, and the marketing, sale, or pricing of certain products, generally for the period of 2005 through the dates of the subpoenas. 34 Similar statements are contained in Lannett's most recent Form 10-Q, referenced above. Thus, Larmett has now indicated that the DOJ has caused subpoenas to be issued to a number of "affiliated individuals" and that the scope of the investigation extends back a decade. 84. Similarly, in an SEC Form 10-K dated March 12, 2015, Par stated that "[o]n December 5, 2014, we received a subpoena from the Antitrust Division of the DOJ requesting documents related to communications with competitors regarding our authorized generic version ofCovis's Lanoxin® (digoxin) oral tablets."35 Par repeated this disclosure in its Form 10-Qs issued for the second quarter of 2015.36 In a Form 10-Q for the third quarter of 2015, Endo International plc, the parent company for Par, stated that "[o]n December 5, 2014, the Company's subsidiary, Par, received a Subpoena to Testify Before Grand Jury from the Antitrust Division of the DOJ and issued by the U.S. District Court for the Eastern District of Pennsylvania. The subpoena requests documents and information focused primarily on product and pricing information relating to Par's authorized generic version of Lanoxin (digoxin) oral tablets and Par's generic doxycycline 34 http://www.sec.gov/Archives/edgar/data/57725/000110465915062047/a15-13005 l lOk.htm. 35 https://www.sec.gov/ Archives/edgar/data/878088/000087808815000002/prx- 2014123 lxl Ok.htm. 36 This filing was formerly available at the web page that follows, but has since been withdrawn: http ://pr. parpharm.corn/phoenix.zhtml ?c=81806&p=irol- SECText& TEXT=aHROcDov L2FwaS5 0ZW 5rd216YXJkLmN vbS9ma WxpbmcueG 1 sP2lwYW d lPTEwNDlwNTlxJkRTRVE9MCZTRVE9MCZTUURFUOM9UOVDVElPT19FTlRJUkUmc3Vi c2lkPTU3. products, and on communications with competitors and others regarding those products. Par is cooperating fully with the investigation."37 85. Impax's 2015 Form 10-K referenced above states that "[o]n November 3, 2014, a sales representative of the Company received a subpoena from the Justice Department's Antitrust Division requesting the production of documents to and testimony before the grand jury of the Eastern District of Pennsylvania. The request relates to any communication or correspondence with any competitor (or an employee of any competitor) in the sale of generic prescription medications." Subsequently, in an SEC Form 10-Q filed on May 11, 2015, Impax indicated that the "[o]n December 5, 2014, we received a subpoena from the Antitrust Division of the DOJ requesting documents related to communications with competitors regarding our authorized generic version of Covis's Lanoxin® (digoxin) oral tablets and our generic doxycycline products."38 This assertion was repeated in Impax's Form 10-Q filed on August 10, 2015 and reconfirmed in its Form 10-K filed on February 22, 2016.39 86. On August 6, 2015, Allergan filed an SEC Form 10-Q, in which it disclosed that "[o]n June 25, 2015, the Company received a subpoena from the U.S. Department of Justice ('DOJ'), Antitrust Division seeking information relating to the marketing and pricing of certain of the Company's generic products and communications with 37 http://phx.corporate-ir.net/phoenix.zhtml ?c= 123 046&p=iro l- SECText&TEXT=aHROcDovL2FwaS50ZW 5rd216YXJkLmNvbS9ma WxpbmcueG 1 sP2lwYW d lPTEwNTY2NjAwJkRTRVE9MCZTRVE9MCZTUURFUOM9UOVDVElPT19FTlRJUkUmc3V ic2lkPTU3. 38 http:/ Id 1lge852tjjqow.cloudfront.net/CIK-OOO1003642/88fbdd3c-25b3-4640-93 5d- 4c2ced2a6a4 7. pdf?noexit=true. 39 http:// d l lge8 52tj j qow. cloudfront.net/CIK-0001003 64 2/0995ec20-ce96-4de1-9 8aa- 4aacfdb6 7 5 e6. pdf?noexit=true; http:// d 1lge85 2tj j qow. cloudfront.net/CIK- 0001003 64 2/0d3 96bab-03 06- 4c61-90fe-b5cce6e02624 .pdf?noexit=true. competitors about such products."40 As one article noted, "[l]ike the other generic manufacturers who have been subpoenaed-Impax Laboratories, Lannett Company, and Par Pharmaceutical Companies, Inc. - Actavis has manufactured digoxin. Actavis has also supplied doxycycline, which may be significant because Par had disclosed that its DOI subpoena sought communications related to doxycycline."41 '61. On December 4, 2015, Mylan N.V., the parent of Defendant Mylan, issued an SEC Form 8-K that stated "[o]n December 3, 2015, a subsidiary of Mylan N.V .... received a subpoena from the Antitrust Division of the U.S. Department of Justice ... seeking information relating to the marketing, pricing and sale of our generic Doxycycline products and any communications with competitors about such products."42 Regulatory investigations against Mylan are not limited to doxycycline, however. In its SEC Form 10- K filed on February 16, 2016, Mylan N.V. reported that "[o]n December 21, 2015, the Company received a subpoena and interrogatories from the Connecticut Office of the Attorney General seeking information relating to the marketing, pricing and sale of certain of the Company's generic products (including Doxycycline) and communications with competitors about such products."43 88. The fact that these companies and/or their employees received subpoenas from a federal grand jury is significant, as is reflected in Chapter 3 of the 2014 edition of the DOI' s Antitrust Division Manual. 44 Section F .1 of that chapter notes that "staff should 40 https://www.sec.gov/ Archives/edgar/data/1578845/000156459015006357 /agn- 1 Oq 20150630.htm. 41 http://www.antitrustupdateblog.com/blog/doj-generic-price-fixing-investigation-targets- allergans- actavis-unit/. 42 http://www.sec.gov/ Archives/edgar/data/1623613/000119312515394875/d225442d8k.htm. 43 http://files.shareholder.com/downloads/ ABEA-2LQZGT/146191293xOxS 1623613-16- 46/1623613/filing.pdf. 44 http://www.justice.gov/atr/public/divisionmanual/chapter3.pdf. consider carefully the likelihood that, if a grand jury investigation developed evidence confirming the alleged anticompetitive conduct, the Division would proceed with a criminal prosecution." Id. at III-82. The staff request needs to be approved by the relevant field chief and is then sent to the Antitrust Criminal Enforcement Division." Id. "The DAAG [Deputy Assistant Attorney General] for Operations, the Criminal DAAG, and the Director of Criminal Enforcement will make a recommendation to the Assistant Attorney General. If approved by the Assistant Attorney General, letters of authority are issued for all attorneys who will participate in the grand jury investigation." Id. at III-83. "The investigation should be conducted by a grand jury in a judicial district where venue lies for the offense, such as a district from or to which price-fixed sales were made or where conspiratorial communications occurred." Id. Thus, the fact that Larmett, Impax, Allergan, Mylan and Par or their employees received federal grand jury subpoenas is a strong indicator that antitrust offenses have occurred. ~. Commentators have also taken note of the criminal subpoenas being issued. As noted on one legal website: The Justice Department's subpoenas focus on sharing and exchanging of pricing information and other issues among generic drug companies. The initial subpoenas, including two senior executives, suggest that the Justice Department has specific information relating to their participation in potentially criminal conduct. It is rare for the Justice Department to open a criminal investigation with specific subpoenas for individuals, along with company-focused subpoenas. Given the breadth of such a potential cartel investigation, the Justice Department's inquiry of the generic pharmaceutical industry could be significant. The prices for a large number of generic drug prices have increased significantly over the last year. There does not appear to be any rational explanation for such increases involving a diverse set of products. The scope of these price increases and the timing of them certainly raise serious concerns about collusive activity among competitors.45 Or, as Mark Rosman, former assistant chief of the National Criminal Enforcement Section of the DOJ's Antitrust Division noted in an article on the "unusual" nature of the criminal subpoenas, "[a] DOJ investigation into the alleged exchange of pricing information in the pharmaceutical industry likely indicates that the agency anticipates uncovering criminal antitrust conduct in the form of price-fixing or customer allocation."46 SX). And, as another legal commentator has recently noted: The recent disclosure widens the DOJ's criminal probe into whether or not leading generic drug providers are colluding to artificially raise generic drug prices. According to data from the Centers for Medicare and Medicaid Services (CMS), more than half of all generic drug prices rose between June 2013 and June 2014, including 10 percent of all generic drugs doubling in price during that time. As the fourth largest generics producer in the world, at least prior to the Teva deal, Allergan is largest company to be involved in the DOJ investigation so far. The probe became public last November when lmpax was served with several criminal grand jury subpoenas. Lannett announced in a regulatory filing earlier in the year that the company, as well as its senior vice-president of sales and marketing, was being served with grand jury subpoenas as well. Like Lannett, Allergan wrote that it intends to fully cooperate with the investigation. Neither the DOJ, nor the company would comment further on the investigation beyond the filings. While Allegan made no mention of the medicines involved in the suspected collusion, filings from other companies indicate that the heart drug digoxin and the antibiotic doxycycline are among those under investigation. 4 7 Factors Increasing The Market's Susceptibility To Collusion 91. Publicly available data on the generic digoxin and doxycycline markets in the United States demonstrates that it is susceptible to cartelization by the Defendants. Factors that make a market susceptible to collusion include: (1) a high degree of industry concentration; (2) significant barriers to entry; (3) inelastic demand; ( 4) the lack of 45 http://www. j dsupra.com/legalnews/ criminal-global-cartel-focus-on-generic-923 8 7 I. 46 https://www.wsgr.com/publications/PDFSearch/rosman-1114.pdf. 47 http://www.legalreader.com/doj-subpoenas-allergan-as-generics-antitrust-probe-widens/. available substitutes for the goods involved; (5) a standardized product with a high degree of interchangeability between the goods of cartel participants; ( 6) absence of a competitive fringe of sellers; and (7) intercompetitor contacts and communication. 92. Industry Concentration. A high degree of concentration facilitates the operation of a cartel because it makes it easier to coordinate behavior among co- conspirators. 93. In the United States generic digoxin and generic doxycycline markets, the number of competitors has dwindled, creating cartel conditions. The firms that currently control most of the market are the Defendants. A graphic available at the website of one pharmacy benefits manager ("PBM")48 reflects this development with respect to the market for generic digoxin: 94. As the PBM goes on to explain: Overall, a grand jury is investigating the generic pharmaceutical industry as a whole for possible violations of anti-trust laws. More specifically, in early November 2014, the U.S. Department of Justice issued subpoenas to two generic drug makers seeking 48 https ://www. op tum. com/thought-leadership/whatcanbedone.html.html.

antitrust

FRDjFocBD5gMZwczPulA

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION ) ) ) Case No. ) Plaintiffs, ) Judge ) V. ) Magistrate Judge ) ) ) ) ) TRIAL BY JURY ) DEMANDED ) Defendants. ) COMPLAINT Plaintiffs Robert Schaefer and Nicholas Flax, on behalf of themselves and all other NATURE OF PLAINTIFFS' CLAIMS 1. This lawsuit arises under the Fair Labor Standards Act, 29 U.S.C. §201, et. seq. Page 1 Walker Brothers paid their servers a sub-minimum hourly wage under the tip-credit THE PARTIES 2. Plaintiff Robert Schaefer resides in and is domiciled in Cook County, Illinois. Page 2 3. Plaintiff Nicholas Flax resides in and is domiciled in Cook County, Illinois. 4. Defendant Walker Bros. Enterprises, Inc., is an Illinois corporation that owns and 5. Defendant Walker Bros. Highland Park Inc., is an Illinois corporation that owns 6. Defendant Walker Bros., Inc., is an Illinois corporation that owns and operates the 7. Defendant Walker Bros. Lake Zurich, Inc., is an Illinois corporation that owns and 8. Defendant Walker Bros. Lincolnshire, Inc., is an Illinois corporation that owns 9. Defendant Walker Bros. West, Inc., is a Delaware corporation that owns and 10. Defendant Ray E. Walker resides in this judicial district, is the sole or principal Page 3 11. At all times relevant hereto, Plaintiffs were "employee(s)" of Defendants as 12. At all times relevant hereto, Defendants were "employer[s]" as defined in the COUNT I Violation of the Illinois Minimum Wage Law - Minimum Wages Class Action 13. This count arises from Defendants' willful violation of the Illinois Minimum 14. Plaintiffs and other similarly-situated persons were employed by Defendants as Page 415. An employer may pay a tipped employee less than minimum wage, that is, take a 16. Although Defendants took the tip credit by paying Plaintiffs and the class less 17. Further, Defendants have a practice of regularly utilizing tipped employees to 18. Defendants' practices violate the minimum wage provisions of the IMWL and the 19. Plaintiffs will seek to certify this Count I as a class action, and ask the Court to Page 5 20. This Count I is brought as a class action because the class members similarly 21. The issues involved in this lawsuit present common questions of law and fact. 22. The books and records of Defendants are material to Plaintiffs' action as they 23. Defendants violated the Illinois Minimum Wage Law by failing to compensate Page 6 24. Pursuant to 820 ILCS 105/12(a), affected employees are entitled to recover unpaid WHEREFORE, Plaintiffs and the class pray for judgment against Defendants as follows: A judgment in the amount of all unpaid minimum wages due as provided by the Illinois Minimum Wage Law; B. 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); C. reasonable attorneys' fees and costs of this action as provided by the Illinois Minimum Wage Law; D. an injunction precluding Defendants from violating the Illinois Minimum Wage Law; and E. such other and further relief as this Court deems just and proper. COUNT II Violation of the Fair Labor Standards Act - Minimum Wages Section 216(b) Collective Action 25. Plaintiffs hereby reallege and incorporate paragraphs 1 through 24 of this 26. This count arises from Defendants' willful violation of the Fair Labor Standards Page 727. As servers, Plaintiffs and other current and former employees were not exempt 28. Plaintiffs and other current and former employees, as tipped employees, were 29. Although Defendants took a tip credit in paying hourly wages to Plaintiffs, 30. Defendants' failure to comply with the terms of the minimum wage requirements 31. Plaintiff and other similarly-situated persons are due unpaid minimum wage and WHEREFORE, Plaintiffs pray for judgment against Defendants as follows: A. judgment in the amount of the owed minimum wages for all time worked by Plaintiffs; B. liquidated damages in an amount equal to the amount of unpaid minimum wages; C. reasonable attorneys' fees and costs incurred in prosecuting this action; and D. such other and further relief as this Court deems just and proper. Plaintiffs demand trial by jury. Page 8 Respectfully submitted, ROBERT SCHAEFER, NICHOLAS FLAX /s/Jamie G. Sypulski One of the Attorneys for Plaintiffs Page 9 EXHIBIT A FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION NOTICE OF CONSENT TO JOIN COLLECTIVE ACTION UNDER THE FAIR LABOR STANDARDS ACT I represent to the Court that I have worked as a server at a Walker Bros. The Original and other similarly-situated employees and to be represented by counsel for Plaintiffs. ROBERT SCHAEFER SIGNED DATED 10-4- , 2010 Counsel for Plaintiffs: Jamie G. Sypulski Law Office of Jamie G. Sypulski 122 South Michigan Avenue, Suite 1720 Chicago, Illinois 60603 312/360-0960 Douglas M. Werman Maureen A. Bantz David E. Stevens Werman Law Office, P.C. 77 West Washington Street, Suite 1402 Chicago, Illinois 60602 312/419-1008

employment & labor

2ajwCYcBD5gMZwczxqns

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x JAMES MURPHY, ON BEHALF OF HIMSELF AND ALL OTHER PERSONS SIMILARLY SITUATED Plaintiffs, v. ECF CASE No.: _________________ CLASS ACTION COMPLAINT JURY TRIAL DEMANDED : : : : : : : : : : : : BEAVER MEADOW FAMILY CAMPGROUND, INC., Defendant. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X INTRODUCTION 1. Plaintiff, JAMES MURPHY, on behalf of himself and all other persons similarly situated (“Plaintiff”), asserts the following claims against Defendant, BEAVER MEADOW FAMILY CAMPGROUND, INC., (“Defendant” or “Beaver Meadow Family Campground”), 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 website https://beavermeadowcampground.com/, (the “Website” or “Defendant’s Website”) is not equally accessible to blind and visually- impaired consumers and violates the ADA 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 locations, is a violation of Plaintiff’s rights under the Americans with Disabilities Act (“ADA”). 6. The 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. 7. Because Defendant’s Website, https://beavermeadowcampground.com/, is not equally accessible to blind and visually-impaired consumers because it violates the ADA and fails to identify and describe accessible features in the hotel 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)). 8. 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 hotel and guest rooms to reasonably permit individuals with disabilities, including Plaintiff, to assess independently whether Defendant’s hotel or guest rooms meet his or her accessibility needs so that Defendant’s hotel becomes and remains 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 9. 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. 10. 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. 11. Venue is proper in this District under 28 U.S.C. §1391(b)(1) and (2) because Defendant does business by owning, managing, operating and/or marketing a hotel in New York to residents 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 from his home in New York, NY. 12. 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 hotel 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 13. Plaintiff has been denied the full use and enjoyment of the facilities, goods, and services of Defendant’s Website with respect to Defendant’s hotel located in New York. 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 hotel location. This includes, Plaintiff attempting to obtain information about Defendant’s hotel (locations and hours and other important information) in New York County. 14. The Court is empowered to issue a declaratory judgment under 28 U.S.C. §§ 2201 and 2202. THE PARTIES 15. 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. 16. Defendant, BEAVER MEADOW FAMILY CAMPGROUND, INC., is and was, at all relevant times herein, registered to do business in New York State and is a New York Domestic Business Corporation that owns, operates and manages the Beaver Meadow Family Campground located at 1455 Beaver Meadow Road, Java Center, NY. 17. The Beaver Meadow Family Campground is a hotel in New York that offers a unique lodging experience to tourists visiting the Java Center Area and markets to residents of the City of New York as well as to residents throughout the State of New 18. The Beaver Meadow Family Campground gives access to their hotel’s reservation system by way of offering a link on their website. These links on the Beaver Meadow Family Campground’s website, connect its users with the reservation of system of their hotel so that users may make a reservation and/or contact the property for more information, such as amenities and property location. NATURE OF ACTION 19. 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. 20. 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. 21. 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. 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 or visually-impaired user is unable to access the same content available to sighted users. 23. 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. 24. 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 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. 25. 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 26. 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 that a guest room is “accessible” or “ADA compliant” or list accessibility features that may (or may not) be offered within a particular room. 27. 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. 28. 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 Barriers on Its Website 29. Defendant offers the commercial website https://beavermeadowcampground.com/ to the public. The website offers features which should allow all consumers to access the goods and services which Defendant offers in connection with their physical locations. The goods and services offered by Defendant include, but are not limited to the following, which allow consumers to: find information about hotel location and hours of operation, shopping and entertainment options, including an on-site store, pool, fishing pond, recreational activities, and other goods and services offered at the Defendant’s hotel. 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 and integrated with Defendant’s hotel. 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 hotel and the numerous goods, services, and benefits offered to the public through the Website. 31. 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. 32. During Plaintiff’s visits to the Website, the last occurring in August, 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 locations in New York by being unable to learn more information on the hotel location and hours, information about Defendant’s products and services like the various shopping and entertainment options, including an on-site store, pool, fishing pond, recreational activities, and other goods and services offered at the Defendant’s hotel. 33. 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. 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. As a result, visually-impaired hotel customers are unable to determine what is on the website, browse, look for hotel location and hours of operation and related goods available via the Website and access to various other goods and services; 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 users; 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 34. 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. 35. These access barriers on Defendant’s Website have deterred Plaintiff from visiting Defendant’s physical hotel location, and enjoying them equal to sighted individuals because: Plaintiff was unable to find the location and hours of operation of Defendant’s physical hotel on its Website and other important information, preventing Plaintiff from visiting the locations, and access to various other goods and services such as finding information about shopping and entertainment options, including an on-site store, pool, fishing pond, recreational activities, and other goods and services offered at the Defendant’s hotel. 36. If the Website was equally accessible to all, Plaintiff could independently navigate the Website and complete a desired transaction as sighted individuals do. 37. 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. 38. 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 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. 39. Defendant therefore uses standards, criteria or methods of administration that have the effect of discriminating or perpetuating the discrimination of others, as alleged herein. 40. 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). 41. 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; d. Develop an accessibility policy that is clearly disclosed on Defendant’s Websites, with contact information for users to report accessibility-related problems. 42. If the Website was accessible, Plaintiff and similarly situated blind and visually-impaired people could independently access goods and services, locate Defendant’s hotel locations and hours of operation, and shop for and otherwise research related goods available via the Website. 43. 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. 44. 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 and the inclusion of information required under the ADA regulations on the Website reservation system. 45. Without injunctive relief, Plaintiff and other visually-impaired consumers will continue to be unable to independently use the Website, violating their rights. Defendant’s Website and Compliance with Requirement to Describe Accessibility Features 46. Defendant owns and operates a hotel in New York. This location also offers shopping and entertainment options, including an on-site store, pool, fishing pond, recreational activities, and other goods and services offered at the Defendant’s hotel. 47. Defendant’s Website offers features to the public that should allow all consumers to access the facilities and services that it offers about their hotel. The Website is heavily integrated with their hotel, serving as their gateway. 48. 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 hotel. 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 hotel and the numerous goods, services, and benefits offered to the public at Defendant’s hotel. 49. 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. 50. During Plaintiff’s visits to the Website, Plaintiff was not able to determine from the reservation system on the Website what ADA compliant features, if any, the hotel offers 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 location in New York State by being unable to learn any information about the accessibility features of the hotel or its guest rooms. Defendant Must Include Information Relating to ADA Compliant Rooms and Handicap Accessibility Features Through Its Website Reservation System 51. Due to the lack of information relating to the accessibility features of Defendant’s hotel 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 hotel. 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 hotel offers to the public because of the lack of information on accessibility through the reservation system on the Website. Plaintiff intends to visit Defendant’s hotel or book rooms in Defendant’s hotel as soon as the Plaintiff is able to learn about the accessibility of Defendant’s hotel 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. 52. 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 hotel guest rooms for blind and visually-impaired people and other important information, preventing Plaintiff from reserving a room at the hotel, staying at the hotel and using the facilities of the hotel including an on-site store, pool, fishing pond, recreational activities, and other goods and services offered at the Defendant’s hotel. 53. If the hotel 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. 54. 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. 55. Because simple compliance with the provisions of the ADA relating to providing information about accessibility features of the hotel 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 hotel, 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 hotel is 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. 56. Defendant therefore use standards, criteria or methods of administration that have the effect of discriminating or perpetuating the discrimination of others, as alleged herein. 57. 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). 58. 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 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 hotel and guest rooms on the Website reservation system and a statement that the hotel is 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, staff, transportation providers, security personnel, 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 reviewing the hotel bill and charges; counting and identifying currency; using a signature guide or template in conjunction with their credit card; luggage rooms, lounge facilities, rest rooms; orienting guests to hotel and guest room layouts; location of fire alarms, emergency exits and equipment; heating and air conditioning controls; TV remote controls; message retrieval system; and automated wake-up systems. 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 hotel provides a braille and/or large print menu for restaurants and/or on-site dining options, 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 ADAAG1 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 comply with ADAAG standards. 7. Whether or not the hotel has 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 rest rooms, vending and ice machines and all other hotel facilities and amenities. b. Regularly check the accessibility of the Website and its reservation system under the WCAG 2.0 guidelines; 1 ADA Accessibility Guidelines promulgated by the United States Access Board 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 hotel 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. 59. 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 hotel 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 60. 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. 61. 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 hotel and their guest rooms, violating their rights. CLASS ACTION ALLEGATIONS 62. 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/or have been denied access to the 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. 63. 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/or have been denied access to the Website 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. 64. 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/or have been denied access to the Website 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. 65. Common questions of law and fact exist amongst Class, including: a. Whether Defendant’s Website is a “place or provider of public accommodation” under the ADA; b. Whether Defendant’s Website reservation system contains the information on accessibility required under the ADA regulations; c. Whether Defendant’s Website is a “place or provider of public accommodation” 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 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. 66. 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 and/or by failing to include the ADA-required information on the Website reservation system so individuals with disabilities can independently assess if Defendant’s hotel or guest rooms meet the accessibility needs of the Plaintiff and the 67. 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. 68. 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. 69. 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. 70. Plaintiff, on behalf of himself and the Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 71. 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). 72. Defendant’s hotel is a place 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 hotel. The Website is a service that is integrated with the Defendant’s hotel and is a gateway thereto. 73. 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). 74. 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). 75. 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). 76. 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 and 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 has failed to take any prompt and equitable steps to remedy its discriminatory conduct. These violations are ongoing. 77. 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 78. 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. 79. 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.” 80. Defendant’s physical hotel is located in the State of New York and constitute a 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 heavily integrated with these physical locations and is a gateway thereto. 81. 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). 82. Defendant is violating N.Y. Exec. Law § 296(2)(a) in refusing to update or remove access barriers on its Website and 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. 83. 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." 84. 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.” 85. Readily available, well-established guidelines exist on the Internet for making websites accessible to the blind and the visually impaired as well as for including ADA-required information on its Website. 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. 86. 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 is not accessible and does not contain the ADA-required information on its reservation system making their hotel 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 that is inaccessible to blind class members; and/or c. 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 d. constructed and maintained a website that is inaccessible to blind class members with knowledge of the discrimination. 87. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 88. 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 harm. 89. 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. 90. 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. 91. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 92. 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 93. 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. 94. 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.” 95. Defendant’s hotel is a place 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. 96. Defendant is subject to NYCHRL because it owns and operates a physical location in New York and the Website, making the Defendant a person within the meaning of N.Y.C. Admin. Code § 8-102(1). 97. Defendant is violating N.Y.C. Administrative Code § 8-107(4)(a) in refusing to update the Website and remove access barriers to its hotel and 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. 98. 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). 99. 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 not accessible and does not contain the ADA-required information on its reservation system making their hotel inaccessible to blind class members with knowledge of the discrimination; and/or b. constructed and maintained a website that is inaccessible to blind class members with knowledge of the discrimination; and/or c. constructed and maintained a website that is not sufficiently intuitive and/or obvious that is inaccessible to blind class members; and/or d. 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. 100. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 101. 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. 102. Defendant’s actions were and are in violation of the NYCHRL and therefore Plaintiff invokes his right to injunctive relief to remedy the discrimination. 103. 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. 104. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 105. 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. FOURTH CAUSE OF ACTION DECLARATORY RELIEF 106. 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. 107. 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 and that the Website also 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. 108. 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 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 contains the ADA-required information making their hotel and guest rooms accessible to and usable by blind and vision-impaired individuals; d. A declaration that Defendant owns, maintains and/or operates the Website and 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 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 e. 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; f. 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; g. Pre- and post-judgment interest; h. An award of costs and expenses of the action together with reasonable attorneys’ and expert fees; and i. 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: Garden City, New York August 20, 2019 THE LAW OFFICE OF DARRYN SOLOTOFF s/Darryn G. Solotoff Darryn G. Solotoff 100 Quentin Roosevelt Blvd, #208 Garden City, New York 11530 Phone: 516.695.0052 Fax: 212.656.1845 [email protected] GOTTLIEB & ASSOCIATES s/Jeffrey M. Gottlieb Jeffrey M. Gottlieb (JG-7905) 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] [email protected] Attorneys for Plaintiffs

civil rights, immigration, family

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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 11539 –against– PIEROGI 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 PIEROGI 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 PIEROGI 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.pierogi2000.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 155 Suffolk Street, New York, New York. 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 155 Suffolk Street, New York, NY 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

6kyKCIoBWgSZx1wwU24n

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK 1:22-cv-3634 TODD C. BANK, Individually and on Behalf of All Others Similarly Situated, COMPLAINT Plaintiff, -against- PELICAN INVESTMENT HOLDINGS GROUP, LLC, Defendant. INTRODUCTION 1. This action concerns Defendant’s forcing of its advertisements on Plaintiff and thousands of other persons throughout the United States in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”). 2. The allegations contained herein are based upon Plaintiff’s personal knowledge as to himself and his own acts and experiences; and otherwise upon information and belief, including investigation. 3. Defendant, in the course of selling its services, placed, in violation of the TCPA, thousands of telephone calls, to residential and cellular telephone lines, using a pre-recorded message and/or an artificial voice. 4. Plaintiff brings this action individually and intends to maintain this action on behalf of all other persons to whose residential or cellular telephone number one or more of Defendant’s telephone calls were placed during the period beginning four years prior to the commencement of this action until the resolution of this action (hereinafter, Plaintiff and the other persons described in this paragraph are referred to as the “Class,” and each is referred to as a “Class Member”). 5. Plaintiff seeks, individually, statutory damages and injunctive relief, and intends to seek the same relief on behalf of the other Class Members. 6. The term “person,” as used in this Complaint, incorporates the definition of “person” provided by 47 U.S.C. Section153 (39). PARTIES 7. Plaintiff, Todd C. Bank (“Bank”), is a resident of the Eastern District of New York. 8. Defendant, Pelican Investment Holdings Group, LLC (“Pelican”), is a limited-liability company organized and existing under the laws of Delaware, and has a principal place of business at 900 Osceola Drive, Suite 100, West Palm Beach, Florida 33409. APPLICABLE LAW 9. With respect to residential telephone lines, the TCPA states that it is “unlawful . . . to initiate any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party.” 47 U.S.C. § 227(b)(1)(B). 10. With respect to cellular telephone numbers, the TCPA states that it is “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) 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). 11. The Federal Communications Commission (“FCC”) is the agency that is authorized to issue regulations implementing the TCPA. See 47 U.S.C. § 227(b)(2). 12. The FCC requires that “a[] telephone call to a[] residential line using an artificial or prerecorded voice to deliver a message” be preceded by “prior express written consent” if the telephone call “include[s] or introduce[s] an advertisement or constitute[s] telemarketing.” 47 C.F.R. § 64.1200(a)(3)(iii). 13. The FCC requires that a telephone call that is made to a cellular telephone number be preceded by “prior express written consent” if the telephone call “includes or introduces an advertisement or constitutes telemarketing, using . . . an artificial or prerecorded voice.” 47 C.F.R. § 64.1200(a)(2). 14. The TCPA and the FCC define “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), 47 C.F.R. § 64.1200(f)(16). 15. The FCC defines “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, which is transmitted to any person.” 47 C.F.R. § 64.1200(f)(13). 16. Persons to whose telephone line a call is made in violation of 47 U.S.C. Section 227(b)(1) may bring an action to enjoin such violations and to recover, for each violation, the greater of the monetary loss caused by the violation or $500. See 47 U.S.C. Section 227(b)(3). If the court finds that a defendant willfully or knowingly violated Section 227(b)(1), the court may increase the award by up to $1,000 per violation. See id. JURISDICTION AND VENUE 17. This Court has jurisdiction under 28 U.S.C. Section 1331. 18. Venue is proper in this District pursuant to 28 U.S.C. Section 1391(b)(2). FACTS 19. Pelican is a nationwide seller of automotive extended-warranty plans, which are known as vehicle service contracts (“VCSs”). 20. On or about May 18, 2022, Pelican made a telephone call (“Bank’s Pelican Call”). 21. Bank’s Pelican Call was made to a cellular telephone number. 22. At all relevant times, Bank has been a regular user of the cellular telephone number to which Bank’s Pelican Call was made. 23 Upon the answering of Bank’s Pelican Call, a message was played that was obviously pre-recorded, as it sounded robotic, did not respond when spoken to, did not ask to speak to any particular person, and stated: “to speak with a coverage specialist to go over your options, press one.” 24. Upon the pressing of the “1” key on the telephone, Bank spoke with three employees of Pelican, each of whom asked for, and/or confirmed, information that Bank provided to them regarding a vehicle for which Bank falsely expressed, in response to being questioned, an interest in purchasing a VSC. 25. During Bank’s Pelican Call, Pelican sent an email to Bank confirming that Bank had purchased a VSC from AAP, which is a trade name that Pelican uses. 26. On or about May 25, 2022, Bank received, by regular mail, materials that identified AAP, i.e., Pelican, as the seller of the VSC that Bank had purchased (which Bank subsequently canceled, as he had made the purchase solely in order to obtain evidence of the identify of the caller). 27. Bank’s Pelican Call included and introduced an advertisement for extended vehicle- warranty coverage. 28. Bank’s Pelican Call constituted telemarketing. 29. Bank’s Pelican Call was made without the prior express written consent of any person who had the legal right to provide such consent. 30. Pelican placed, to recipients other than Bank, thousands of telephone calls that were identical or materially similar to Bank’s Pelican Call and that was made without the prior express written consent of any person who had the legal right to provide such consent (“Additional Pelican Calls,” and, together with Bank’s Pelican Call, the “Pelican Calls”). 31. The Pelican Calls temporarily caused the receiving telephone line to be unavailable for other uses. 32. The Pelican Calls disturbed the peace, solitude, and tranquility of Bank and the other Class Members. 33. The Pelican Calls annoyed and frustrated Bank and the other Class Members. 34. The Pelican Calls were a nuisance to Bank and the other Class Members. CAUSE OF ACTION 35. Plaintiff repeats and re-alleges, and incorporates herein, each and every allegation contained in paragraphs “1” through “34” inclusive of this Complaint as if fully set forth herein. 36. The placement of the Pelican Calls violated 47 U.S.C. Section 227(b)(1). 37. Bank and the other Class Members are entitled to an Order, pursuant to 47 U.S.C. Section 227(b)(3)(A), enjoining Pelican from violating 47 U.S.C. Section 227(b)(1). 38. Bank and Class Members are entitled to statutory damages of $500 per violation pursuant to 47 U.S.C. Section 227(b)(3)(B). 39. In the event that Pelican willfully or knowingly violated 47 U.S.C. Section 227(b)(1), Bank and the other Class Members are entitled up to an additional $1,000 per violation pursuant to 47 U.S.C. Sections 227(b)(3)(C). CLASS ALLEGATIONS 40. Bank brings this action individually, and intends to maintain this action, pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(3), on behalf of all other persons to whose residential or cellular telephone number one or more Pelican Calls were made during the period beginning four years prior to the commencement of this action until the resolution of this action (the “Class Period”). 41. There are thousands of persons who are similarly situated to Bank and would therefore be Class Members. 42. Excluded from the Class are Pelican, any subsidiary or affiliate of Pelican, and the directors, officers, and employees of Pelican or of their subsidiaries and affiliates. 43. Bank’s individual claims are, both factually and legally, typical of the putative claims of the other Class Members. 44. Bank would fairly and adequately protect the interests of the other Class Members. Bank has no interests that are antagonistic to, or in conflict with, the other Class Members. Indeed, Bank’s interests are, for purposes of this litigation, coincident with the interests of the other Class Members. 45. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy. Because the Class is so numerous that joinder of all Class Members is impracticable, and because the damages suffered by most of the individual Class Members are too small to render prosecution of the claims asserted herein economically feasible on an individual basis, the expense and burden of individual litigation makes it impractical for Class Members to adequately address the wrongs complained of herein. Bank knows of no impediments to the effective management of this action as a class action. 46. Common questions of law and fact predominate over questions that affect only individual Class Members. Among those questions are: (i) whether Pelican made telephone calls to residential or cellular telephone lines; (ii) whether Pelican violated Section 227(b)(1) of the TCPA; (iii) whether Pelican willfully or knowingly violated Section 227(b)(1) of the TCPA; (iv) whether the Class Members are entitled to damages as a result of Pelican’s violations of Section 227(b)(1) of the TCPA, and, if so, how much; and (v) whether the Class Members are entitled to injunctive relief as a result of Pelican’s violations of Section 227(b)(1) of the TCPA. PRAYER FOR RELIEF WHEREFORE, Plaintiff demands judgment against Defendant as follows: (a) Pursuant to 47 U.S.C. Section 227(b)(3)(A), an order enjoining Defendant from violating 47 U.S.C. Section 227(b)(1); (b) Pursuant to 47 U.S.C. Section 227(b)(3)(B), statutory damages of $500 per violation of 47 U.S.C. Section 227(b)(1) for Plaintiff and the other Class Members; and (c) Pursuant to 47 U.S.C. Section 227(b)(3)(C), up to $1,000 of statutory damages for Plaintiff and the other Class Members, in addition to the statutory damages prayed for in the preceding paragraph, if the Court finds that Defendant knowingly or willfully violated 47 U.S.C. Section 227(b)(1). Dated: June 20, 2022 Respectfully submitted, s/ Todd C. Bank TODD C. BANK, ATTORNEY AT LAW, P.C. 119-40 Union Turnpike Fourth Floor Kew Gardens, New York 11415 (718) 520-7125 By Todd C. Bank Counsel to Plaintiff

privacy

7dotEIcBD5gMZwczGejG

ROBBINS GELLER RUDMAN & DOWD LLP PATRICK J. COUGHLIN (111070) DAVID W. MITCHELL (199706) BRIAN O. O’MARA (229737) STEVEN M. JODLOWSKI (239074) CARMEN A. MEDICI (248417) 655 West Broadway, Suite 1900 San Diego, CA 92101 Telephone: 619/231-1058 619/231-7423 (fax) [email protected] [email protected] [email protected] [email protected] [email protected] ROBBINS ARROYO LLP BRIAN J. ROBBINS (190264) GEORGE C. AGUILAR (126535) GREGORY DEL GAIZO (247319) 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: 619/525-3990 619/525-3991 (fax) [email protected] [email protected] [email protected] Attorneys for Plaintiffs [Additional counsel appear on signature page.] UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA '16CV2552 KSC LAB Case No. J THOMPSON and WILLIAM P. DUNCANSON, Individually and on Behalf of All Others Similarly Situated, CLASS ACTION Plaintiffs, vs. COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT AND CALIFORNIA’S CARTWRIGHT ACT AND UNFAIR COMPETITION LAW 1-800 CONTACTS, INC., VISION DIRECT, INC. and DOES 1-15, DEMAND FOR JURY TRIAL ) ) ) ) ) ) ) ) ) ) ) ) ) ) Defendants. Plaintiffs J Thompson and William P. Duncanson (“plaintiffs”) hereby bring this action for damages and other relief against defendants 1-800 Contacts, Inc. (“1- 800 Contacts” or the “Company”), Vision Direct, Inc. (“VisionDirect”) and Does 1-15 (collectively “defendants”) for violations of the Sherman Antitrust Act (15 U.S.C. §§1-3), and California’s Cartwright Act (California Business & Professions Code §16700, et seq.) and Unfair Competition Law (“UCL”) (Cal. Bus. & Prof. Code §17200, et seq.). Plaintiffs make all allegations upon information and belief except as to those paragraphs that are based on plaintiffs’ personal knowledge. THE CONSPIRACY 1. Plaintiffs bring this action on behalf of all direct-to-consumer purchasers of contact lenses, including those who purchased contact lenses online, in the United States and a subclass of all California residents against defendant 1-800 Contacts as the ringleader behind a scheme to prevent competition in the online market for contact lenses and against 1-800 Contacts’ currently unnamed co-conspirators, Does 1-15. This action arises out of defendants’ overarching scheme to restrain competition in the direct-to-consumer and online markets for contact lenses. 2. As recently revealed in a complaint by the Federal Trade Commission (“FTC”), 1-800 Contacts is the instigator and enforcer of an unlawful series of agreements between 1-800 Contacts and at least 14 of its “competitors” to divide up the direct-to-consumer and online markets for sales of contact lenses. These 15 “competitors” combine to control over 50% of the direct-to-consumer and online markets for contact lenses. 1-800 Contacts accounts for over 50% of the online market by itself. In particular, 1-800 Contacts abused its monopoly power and entered into bilateral agreements with each of its competitors/co-conspirators to not bid against each other in advertising auctions conducted by internet search engines. 3. Due to the massive amount of information available on the internet, internet search engines have become indispensable to anyone seeking to use the internet. Internet search engines are generally simple to use – a user need only enter keywords, such as “contact lenses,” into a field and the search engine will use an algorithm to find and list the webpages that are responsive to the query, usually ranked in order of relevance. Search engines, such as Google or Bing, are usually free to users. The main source of revenue for these search engines is the advertising they sell, which appears in response to a user’s search and is displayed adjacent to the respective search engine’s organic results. This form of advertising has a proven track record of being successful, as it allows the advertisers to market directly to consumers at the very moment they are looking to make a purchase or have expressed an interest in a specific subject. Online search engine advertising is critical to nearly every company’s ability to compete in the digital age. Google and Bing sell this advertising through automated auctions. 4. A successful way for competitors to raise awareness of their products and compete for sales is to purchase search advertising that mentions their competitors, especially as a comparison. For example, if a consumer is looking to buy a television for the cheapest price and knows a big retailer like Best Buy sells televisions, the consumer might search for “cheaper than best buy for tvs.” Such a search will likely yield sponsored ads by Best Buy, but also ads by competitors, such as Walmart. 5. This is not the case in the contact lenses industry. A search of “cheaper than 1-800 contacts for contact lenses” yields sponsored advertising by only one company, 1-800 Contacts. The reason for this disparity is that anticompetitive bilateral agreements between 1-800 Contacts and its co-conspirators prevent each other from bidding on any search keywords or phrases with the other company’s brand names, websites or trademarks in them. In addition, the agreements require that 1-800 Contacts and its co-conspirators use “negative keywords.” This is an instruction to the search provider that a company’s advertisement should not appear in response to a search query that contains a particular term or terms. Normally negative keywords are used to prevent advertising appearing from irrelevant queries that may contain similar words. For example, a company that sells billiards accessories would bid for the term “pool” in order to advertise for pool sticks, but use a negative keyword of “swimming” to prevent its ads from appearing when someone is looking for water-related accessories. While many companies use negative keywords to properly tailor advertisements to interested consumers, defendants use negative keywords to allocate the market for contact lenses. 1-800 Contacts and its co- conspirators agreed to instruct search advertisers that their advertising should not appear when a search includes a competitor’s trademark through the use of negative keywords. 6. The 1-800 Contacts-led scheme has been ongoing for more than a decade. In 2003, there was an estimated $200 million worth of online contact lens sales. Though 1-800 Contacts accounted for $187 million worth of those sales, the Company realized that it was beginning to have real competition for direct sales. 1- 800 Contacts thereafter devised a plan to unlawfully stifle online competitors so that it could continue to sell contact lenses at higher prices than its rivals without losing market share. Specifically, in order to restrict competition and maintain its market share and pricing, 1-800 Contacts began accusing its then competitors of trademark infringement if a rival’s advertisement appeared on the search results page in response to internet search queries that involved 1-800 Contacts’ brand name, websites or trademarks. 1-800 Contacts’ position was legally baseless and a transparent threat to inundate its competitors with prolonged and costly litigation. 7. Between 2004 and 2013, fourteen of 1-800 Contacts’ competitors agreed with 1-800 Contacts not to bid against 1-800 Contacts in certain auctions in order to settle the sham lawsuits or threat thereof. Most of the competitors agreed to 1-800 Contacts’ terms before even asserting counter claims. The agreements – which are reciprocal – prevented 1-800 Contacts and its competitors from bidding in search advertising auctions for any of the others’ trademarked terms and common variations, including common misspellings, of any of those terms. Each competitor knew that by entering into this agreement, its market share and profits would be protected. Of course, to ensure this was the case, all a competitor needed to do was a Google search. In addition, 13 of the agreements called for the adoption of negative keywords. Only one competitor, Lens.com, refused to enter into an agreement. 1-800 Contacts and Lens.com proceeded to litigate 1-800 Contacts’ bogus trademark claim, and after years of litigation, Lens.com prevailed. The district court in that action specifically called the practice of seeking agreements that preclude a competitor’s advertisements from appearing on a search results page any time its mark is entered as a search term “an anti-competitive, monopolistic protection to which [1-800 Contacts] is not entitled.”1 Notably, in its answer to the FTC action, 1-800 Contacts admitted that it entered into these agreements with competitors in all but one case to allegedly resolve threatened or actual trademark litigation. 8. Members of the Class and the California Subclass (as defined herein) were injured by defendants’ actions. First, the members of the Class and California Subclass paid supracompetitive prices for contact lenses. Indeed, the impetus for 1- 800 Contacts’ scheme was to suppress competition to protect the margins the Company traditionally enjoyed before competition entered the marketplace. 9. In addition, defendants’ actions prevented the Class and California Subclass from receiving the benefits of a fair and competitive marketplace for both information and pricing of contact lenses sold directly to consumers, including online. Because of the unlawful agreements, competitors could not advertise against 1-800 Contacts, and therefore customers did not receive information concerning competitors’ products and pricing. Because of these agreements, 1-800 Contacts continued to give the impression that it was a low-cost provider of contact lenses, shielding the public from information that would have driven the price of contact lenses down. 1 1-800 Contacts, Inc. v. Lens.com, Inc., 755 F. Supp. 1151, 1174 (D. Utah 2010), aff’d in part and rev’d in part on other grounds, 722 F.3d 1229 (10th Cir. 2013). 10. Thus far, defendants’ scheme has worked, at least for 1-800 Contacts. 1-800 Contacts was able to carve up the direct-to-consumer market for contact lens sales and prevent the dissemination of its competitors’ advertisements, allowing it to continue to sell contact lenses at supracompetitive prices. During the relevant time period, 1-800 Contacts has consistently been the highest priced seller of the most popular contact lenses. Despite charging more (in some cases substantially more) than its competitors, 1-800 Contacts has retained its dominant market position. In a competitive marketplace, absent 1-800 Contacts’ action and its competitors’ agreement to the scheme, accurate and fulsome information would have driven prices down. VENUE AND JURISDICTION 11. 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 members 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. 12. The Court has personal jurisdiction over each of the defendants because, inter alia, each of the defendants: (a) transacted business throughout the United States, including in this District; (b) sold billions of dollars in and provided services related to contact lenses 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. 13. Defendants engaged in conduct inside the United States that caused direct, substantial, and reasonably foreseeable and intended anticompetitive effects upon interstate commerce within the United States. 14. The activities of defendant 1-800 Contacts and its 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 and services are sold in the flow of interstate commerce. 15. The anticompetitive conduct, and its effects on U.S. commerce described herein, proximately caused antitrust injury to plaintiffs and members of the Class and the California Subclass in the United States. 16. 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. 17. Defendants’ conspiracy and wrongdoing described herein adversely affected persons in the United States, including plaintiffs and members of the Class and the California Subclass. 18. 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)-(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 herein 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. PARTIES 19. During the Class Period (as defined below), plaintiff J Thompson (“Thompson”) purchased contact lenses directly from 1-800 Contacts through its website. Plaintiff Thompson purchased these lenses at supracompetitive prices, and was injured thereby. Plaintiff Thompson is a resident of San Diego, California. 20. During the Class Period, plaintiff William P. Duncanson (“Duncanson”) purchased contact lenses directly from 1-800 Contacts through its website. Plaintiff Duncanson purchased these lenses at supracompetitive prices, and was injured thereby. Plaintiff Duncanson is a resident of San Francisco, California. 21. Defendant 1-800 Contacts is a corporation organized, existing, and doing business under and by virtue of the laws of the United States, with its principal place of business located at 261 West Data Drive, Draper, Utah 84020. 1-800 Contacts sells contact lenses and related products over the internet and by telephone throughout the United States, including to California residents. 22. Defendant VisionDirect is a leading online retailer of contact lenses and vision care supplies. The Bellevue, Washington-based company offers a full line of bestselling products like Acuvue®, Bausch & Lomb®, CIBA Vision®, and CooperVision®, plus specialty brands and lenses. VisionDirect was founded in 2000 and has since shipped over 8 million orders. In 2003, VisionDirect was acquired by drugstore.com®, and in 2011, it became part of the Walgreens group of companies. 23. The true names and capacities of defendants sued herein as Does 1 through 15, inclusive (“Doe Defendants”), are presently not known to plaintiffs, who therefore sue these defendants by such fictitious names. Plaintiffs will seek to amend this complaint and include these Doe Defendants’ true names and capacities when they are ascertained. Each of the fictitiously named defendants is responsible in some manner for the conduct alleged herein and for the injuries suffered by the Class and California Subclass. THE MARKET FOR CONTACT LENSES The Relevant Markets 24. Plaintiffs first plead a relevant market for antitrust purposes as the market for direct-to-consumer sales of contact lenses. This includes both online and telephone sales of contact lenses to consumers (“direct-to-consumer”). Because of the ease of purchasing contacts without going to a physical store, the traditional retail market for contacts exists separately, and is not a substitute for online and telephone sales. A small but significant increase in the price for online contacts would not drive consumers to purchase contacts in a retail store. Alternatively, the relevant market for antitrust purposes is only online sales. Discovery and expert testimony may reveal that online sales and telephone sales are not close economic substitutes. As detailed below, the traditional retail sale of contact lenses exists in a different market. The relevant geographic market is the United States. Regardless of whether the market is defined as direct-to-consumer or online sales only, 1-800 Contacts has a significant enough market share to exert market power. 25. A contact lens is a lightweight, corrective, cosmetic or therapeutic device that is usually placed directly onto the cornea of the eye. Contact lenses have many benefits for wearers, including appearance and practicality. 26. Contact lenses are considered medical devices by the United States Food and Drug Administration (the “FDA”). Accordingly, the FDA regulates the manufacture, distribution and sale of contact lenses in the United States. 27. In addition, in 2003, Congress enacted the Fairness to Contact Lens Consumers Act, 15 U.S.C. §§7601-7610. Pursuant to this act, the FTC promulgated rules concerning the sale of contact lenses with the intention of increasing competition for the sale of contact lenses (the “Contact Lens Rule”). The Contact Lens Rule places certain restrictions on how contact lenses can be sold. Most notably, the Contact Lens Rule requires sellers to only sell to customers who have a valid prescription and can confirm the accuracy of the prescription. 28. The U.S. Centers for Disease Control and Prevention estimates that there are approximately 40.9 million contact lens wearers in the United States aged eighteen years and older, or approximately 16.7% of the adult population. 29. The markets for direct-to-consumer and online sales of contact lenses are distinct from the traditional brick and mortar market. Direct-to-consumer contact lens sellers are able to sell contact lenses anywhere in the United States that receives mail. Online contact lens sellers provide the consumer the convenience of being able to order contacts from any location without having to find a brick and mortar store selling their needed type of contact lenses. According to data from Bain Capital regarding the future of independent optometry, in 2012 an estimated 20% of contact lens sales occurred online. That number has since increased. 30. In contrast to direct-to-consumer sales of contacts, retailers in the traditional market operate from physical storefronts or professional offices, maintain an eye-care professional on-site to examine and fit their customers, and issue contact lens prescriptions. Traditional retailers do not set their prices based upon direct-to- consumer prices. According to an economist with the FTC who examined online and offline prices for contact lenses, “[O]ffline firms set prices on the assumption that most of their customers are unaware of online prices.” See James C. Cooper, Prices and Price Dispersion in Online and Offline Markets for Contact Lenses, FTC Bureau of Economics Working Paper (Nov. 29, 2006). The Demand for Contact Lenses Is Inelastic 31. “Elasticity” is a term used to describe the sensitivity of supply and demand to changes in one or the other. For example, demand is said to be “elastic” if an increase in the price of a product results in diminished revenues, with declines in the quantity sold of that product outweighing the effects of higher prices. For products with a highly elastic demand, customers have many feasible alternatives for cheaper products of similar quality and decrease purchases sharply in the face of even a small price increase. Here, the demand for contact lenses is inelastic. 32. Markets with lower elasticity facilitate collusion, allowing producers to raise their prices without triggering customer substitution and sufficient lost sales revenues as to offset the beneficial effect of higher prices on profits for products they still continue to sell. 33. There is only one other medical device that provides some of the same benefits as contact lenses – eyeglasses. Many people choose to wear contact lenses as opposed to eyeglasses because they do not steam up, they provide a wider field of vision, and they are more suitable for a number of sporting activities. In addition, some people find wearing contact lenses more aesthetically pleasing than eyeglasses. Contact lenses also have the ability to alter the color of a user’s eye and can be used solely for cosmetic purposes. Contact lens manufacturers, distributors, online sellers, brick and mortar retailers and consumers do not compare the price of contact lenses to those of glasses. 34. Contact lenses have a limited lifespan, and therefore a contact lens user will have to periodically purchase more contact lenses. Contact lens users will purchase contact lenses that are good for a set amount of time and buy a certain supply of the contact lens. Usually, the contact lens users’ eye-care providers will decide the type of contact used, the strength of the contact, and whether a contact lens has to be replaced daily, weekly or monthly. Therefore, consumers exert little choice in the particular type of contact lens they will buy. As a result, contact lens purchasers will continue to use and acquire contact lenses even if there is an increase in price. The Markets for Direct-to-Consumer and Online Contact Lens Sales Are Highly Concentrated 35. 1-800 Contacts has dominated the market for direct-to-consumer sales of contact lenses since it was founded in 1995. 36. In 1999, orders of contact lenses in the direct-to-consumer market, as opposed to the brick-and-mortar or traditional market, began to shift from over-the- phone sales to sales through online channels. 37. Since then, sales of contact lenses through the internet have increased due to the ease and convenience of ordering contacts online, among other factors. For instance, a contact lens user can order new contact lenses online, even if they have recently moved and have yet to find a new eye-care provider. Indeed, this is the exact scenario that happened to plaintiff Thompson, which led to his first purchases from 1- 800 Contacts. 38. 1-800 Contacts is by far the most dominant company in direct-to- consumer and online contact lens sales, accounting for between 50%-55% of the market since 2005. Collectively, 1-800 Contacts and the fourteen companies that it entered into the illegal bilateral agreements with account for over 80% of the market for online contact lens sales. ANTICOMPETITIVE CONDUCT BY THE DEFENDANTS 39. Defendants are horizontal competitors. 40. The conspiracy consisted of a continuing agreement, understanding or concerted action between and among defendants and their co-conspirators in furtherance of which defendants fixed, maintained or made artificial prices for contact lenses sold directly to consumers, including online, in the United States and to California residents by rigging search engine advertising auctions and preventing the dissemination of information to the Class and California Subclass during the Class Period. Defendants’ conspiracy constitutes a per se violation of the Sherman Antitrust Act and the Cartwright Act and is an unreasonable and unlawful restraint of trade and an unlawful, unfair or fraudulent practice under the UCL. 41. At all relevant times, other corporations, individuals and entities willingly conspired with defendants in their unlawful and illegal conduct. Numerous individuals and entities participated actively during the course and in furtherance of the scheme described herein. The individuals and entities acted in concert by joint ventures and by acting as agents for principals in order to advance the objectives of the scheme to benefit defendants and themselves through the manipulation of contact lens prices in the United States and sold to California residents. Online Advertising and Sale of Contact Lenses 42. Contact lens retailers such as 1-800 Contacts rely heavily on internet advertising to attract and inform consumers about their products and to direct consumers to their websites and phone representatives. The vast majority of this advertising is done through internet search engines such as Google and Yahoo!. Internet search engines are computer programs that allow web users to search the World Wide Web for websites containing particular content. When a search term is entered, the search engine compares the term against its databases and applies a formula or algorithm to produce a search engine results page that lists the websites that may relate to the user’s search terms. Google’s search engine, for example, has a natural or organic system that lists results with the most relevant websites appearing near the top of the page. In addition, search results pages list paid advertisements above or to the right of the organic search results. These paid advertisements are referred to as “sponsored links.” Consumers depend on search engines to navigate the nearly unlimited amount of content on the internet. 43. Search engine companies sell advertising space on search engine results pages by way of auction. Advertisers bid on certain words or phrases known as “keywords.” When a user’s search term matches an advertiser’s keyword, a sponsored link appears for that advertiser. The order and location of the sponsored link depends on the amount bid for the keyword and the quality of the advertisement. According to the terms and conditions of the search engine companies, advertisers cannot pay to be listed in a specific order on the search engine results page, they can only pay for advertisements. 44. When bidding on a keyword, an advertiser may specify whether keywords should be applied as a “broad match,” “phrase match,” “exact match,” or “negative match.” When an advertiser designates a keyword as a “broad match,” its sponsored link will appear anytime a search is conducted for that keyword, its plural forms, its synonyms, or phrases similar to the word. When an advertiser designates a keyword as a “phrase match,” its sponsored link will appear when a user searches for a particular phrase, even if the user includes other terms before or after the phrase. When an advertiser designates a keyword as an “exact match,” then its sponsored link will appear only when the exact phrase bid on is searched on Google. In contrast, when an advertiser designates a keyword as a “negative match,” the advertiser ensures that its link will not appear when certain terms are searched. For example, a contact lens seller may specify that its link should not appear when the phrase “contact lists” is entered. 45. Defendants pay for advertisements on a “cost-per-click” basis. This means if a keyword generates a sponsored link, but the internet user does not click on that link, the advertiser does not pay for its link appearing on the search results page. The appearance of an advertiser’s link on a user’s computer is called an “impression.” An advertiser selects the language used in its advertisements. The language can be important in capturing a user’s attention so the user will click on the link to an advertiser’s website. An advertiser can gauge the success of an impression (and the search terms that led to that impression) by calculating how many impressions occur in comparison to the number of clicks. 46. Search advertising is crucial to advertisers because it allows them to deliver a message to the consumer exactly when the consumer is expressing interest in a specific subject and potentially at the same time the consumer is ready to make a purchase. In the online contact lens market, consumers rarely have preference over which particular retailer they make their purchase from. Instead, consumers most frequently use generic search terms such as contact, contact lens and replaceable lens, and purchase based on the lowest price available for their prescription. 1-800 Contacts’ Scheme to Restrain Competition and Maintain Its Dominant Market Position 47. 1-800 Contacts was founded in February 1995 as 1-800-LENSNOW, but changed its name to 1-800 Contacts in July 1995. Within one month of changing its name, 1-800 Contacts received 2,000 calls and produced $38,000 in revenue. 1-800 Contacts’ business grew rapidly over the next few years, as it became the most dominant company in direct-to-consumer contact lens sales, including online sales. 48. By the early 2000s, however, competitors began to enter the direct-to- consumer market for the sale of contact lenses. These competitors, like VisionDirect, heavily invested in online search advertising and undercut 1-800 Contacts’ prices. Through lower prices, these competitors quickly grew their sales and became a serious threat to 1-800 Contacts’ dominant market position. 49. This sparked concern at 1-800 Contacts. In 2005, as Americans’ comfort with the internet and online shopping increased, in an effort to deter its competitors and reduce competition, 1-800 Contacts implemented a business practice whereby it conducted periodic online searches of “1-800 Contacts” and variations thereof on internet search engines. Anytime its searches returned the sponsored link of a competitor, 1-800 Contacts would send a cease-and-desist letter to the competitor that accused the competitor of infringing upon its trademark by purchasing a keyword using 1-800 Contacts’ name from the internet search engine. But this claim was incorrect. 50. 1-800 Contacts understood that it had no legal basis for these accusations. 1-800 Contacts knew that an internet search for “1-800 Contacts” would return a list of links from various retailers that had acquired generic, non-infringing search terms such as “contact” and “contact lens.” 51. Before sending the cease-and-desist letters, 1-800 Contacts did not confirm that its competitors had purchased “1-800 Contacts” as a keyword. With respect to at least one competitor, Lens.com, 1-800 Contacts did not run any privacy reports to determine the keywords that had generated search results containing the links for the rival’s website. Rather, it simply presumed that Lens.com had purchased “1-800 Contacts” as a keyword.2 52. Indeed, in response to litigation threats, several competitors of 1-800 Contacts advised 1-800 Contacts that: (i) they had never used 1-800 Contacts’ trademark in their advertisements, and/or (ii) the use of generic keywords would 2 Whether or not it is legal to use a competitor’s trade name as a search term (it likely is) is irrelevant. The intent of the threatened legal action was to monopolize the industry and to get 1-800 Contacts’ competitors to agree to divvy up the market. sometimes result in a search triggering a multitude of other contact lens sites, including legitimate sponsored advertisements. Through its counsel, one competitor, Memorial Eye, specifically advised 1-800 Contacts that it had “‘never used, or even considered using, [1-800 Contacts’] trademark in its sponsored advertisements, or even a search phase trigger.’” 1-800 Contacts nevertheless continued with its threats, hoping to protect its market share and extract an anticompetitive agreement from its competitors by forcing them to incur substantial cost and/or limit the keywords they purchased from search engines. 53. Competitors who refused to bow to 1-800 Contacts’ demands concerning a limitation on keywords or use of negative keywords were threatened with litigation. Most of these rivals lacked the size and resources to withstand substantial litigation. Between 2004 and 2013, 1-800 Contacts was able to extract at least 14 horizontal agreements that restrained trade and reduced output in the relevant markets. 54. All of the agreements prohibit 1-800 Contacts’ competitors from bidding in a search advertising auction for 1-800 Contacts’ trademarked terms, as well as variations thereof. All of the agreements are reciprocal, meaning that 1-800 Contacts is likewise prohibited from bidding in a search advertising auction for its competitors’ trademarked terms, as well as variations thereof. This part of the agreement is market allocation, a naked horizontal restraint on trade and per se illegal under the Sherman Antitrust Act. Additionally, 13 of the agreements require 1-800 Contacts’ competitors to use “negative keywords,” which direct a search engine not to display the competitor’s advertisement in response to a search query that includes 1-800 Contacts’ trademarked names or variations thereof. 55. One such competitor who entered into an agreement with 1-800 Contacts is VisionDirect. VisionDirect sold contact lenses online at www.visiondirect.com. It entered into two horizontal agreements with 1-800 Contacts. (a) The first agreement was entered into on June 24, 2005 (the “2005 Agreement”). Under the 2005 Agreement, VisionDirect was prohibited from “‘causing [its] website or Internet advertisement to appear in response to any Internet search for [1-800 Contacts’] brand name, trademark or URL.’” The agreement also prohibited VisionDirect from “‘causing [its] brand name, or link to [its] Websites to appear as a listing in the search results page of an Internet search engine, when the user specifically searches for [1-800 Contacts’] brand name, trademark or URLs.’” On information and belief, VisionDirect, through its counsel, Wilson Sonsini Goodrich & Rosati, expressed serious antitrust concerns about the enforceability of the 2005 Agreement as it related to the implementation of negative keywords. On January 24, 2008, Wilson Sonsini wrote 1-800 Contacts’ General Counsel: (b) The second agreement was entered into in 2009 (the “2009 Agreement”). Under the 2009 Agreement, 1-800 Contacts and VisionDirect agreed to implement negative keyword lists in connection with their internet advertising efforts. There, too, VisionDirect expressed concern about the antitrust law problems associated with 1-800 Contacts’ agreement. VisionDirect expressed its concerns in the 2009 Agreement, which provided: 56. This action by VisionDirect was against its economic interests. In a competitive marketplace, VisionDirect would have continued to compete, in both advertising and on price. It could have covered its prices and increased its market share, taking from 1-800 Contacts. Instead, it agreed not to compete. This rationale applies to the remainder of the Doe Defendants. No Doe Defendant was acting in its best economic interest, unless there was a conspiracy. 57. Importantly, VisionDirect and the remainder of the Doe Defendants must have known that the other defendants were coming to the same agreement with 1-800 Contacts. This tacit agreement, in light of the other allegations in the complaint, including the continued market share of 1-800 Contacts, are enough to establish §1 liability through a hub-and-spoke conspiracy with 1-800 Contacts at the center. On information and belief, 1-800 Contacts assured VisionDirect and the other Doe Defendants that it was entering into agreements with all the participants in the direct- to-consumer contact lens market. This would ensure that each market participant was guaranteed to maintain its market share and, with no competing search results coming up when each company’s name was searched for, would enable VisionDirect and the co-conspirators to charge supracompetitive prices. 58. Another factor making this conspiracy successful was how easy it was to ensure that no competitor was cheating on the conspiracy and violating the terms of their agreement. All it would take to ensure that a competitor was abiding by the conspiracy was a simple internet search. 59. 1-800 Contacts also sought to force many of its other competitors to implement measures similar to those agreed to by VisionDirect,3 including the following: (a) JSJ Enterprises: JSJ sold replacement contact lenses to consumers at www.contactlensconnection.com. (b) Premier Holdings: Premier Holdings sold replacement contact lenses to consumers at www.ezcontactusa.com and www.filmart.com. After 1-800 3 On information and believe, these likely co-conspirators are the Doe Defendants. Contacts initiated litigation, 1-800 Contacts and Premier Holdings entered into a string of eight stipulations to extend the deadline to answer in order for the parties to continue settlement discussions. (c) LensWorld: LensWorld sold replacement contact lenses to consumers at www.lensworld.com, www.contactmania.com and www.contactlensworld.com. After extensive settlement discussions, LensWorld ultimately allowed the court to enter an order, through a default motion, which required LensWorld to “‘implement the negative keywords attached hereto as Exhibit A in any search engine advertising campaign performed for the benefit of [LensWorld], where possible, for so long as any one of [1-800 Contacts’] federally registered trademarks remain active.’” The list included 36 different search terms, including “www.contacts.com.” (d) Lensfast: Lensfast sold replacement contact lenses to consumers at www.lensfast.com, www.contactlens.com and www.e-contacts.com. It also sold contacts over the telephone at 1-800 LENSFAST. (e) Lenses for Less: Lenses for Less sold replacement contact lenses to consumers at www.lensesforless.com. (f) Arlington Contact Lens Service: Arlington Contact Lens Service, which did business as Discount Contact Lenses, sold replacement contact lenses to consumers at www.discountcontactlenses.com and www.aclens.com. (g) Empire Vision Center: Empire Vision Center sold replacement contact lenses to consumers at www.lens123.com. (h) Contact Lens King: Contact Lens King sold replacement contact lenses to consumers at www.contactlensking.com. (i) Tram Data: Tram Data LLC sold replacement contact lenses to consumers at www.replacemycontacts.com. (j) Walgreen Company: Walgreen Company sold replacement contact lenses to consumers at www.walgreens.com. (k) Standard Optical: Standard Optical sold replacement contact lenses to consumers at www.standardoptical.net. (l) Web Eye Care: Web Eye Care, Inc. sold replacement contact lenses to consumers at www.webeyecare.com. (m) Memorial Eye: Memorial Eye P.A. sold replacement contact lenses to consumers at www.shipmycontacts.com, www.ship-my-contacts.com and www.iwantcontacts.com. 1-800 Contacts’ Lawsuit Against Lens.Com Is Dismissed for Lack of Merit 60. 1-800 Contacts also sent cease-and-desist letters and ultimately filed a lawsuit against it rival, Lens.com. As it had with many of its other rivals, 1-800 Contacts sought an order preventing Lens.com “‘from using any variation of the 1-800 CONTACTS Marks and any other marks or names that are confusingly similar,’” including “‘sponsored advertising triggers, other identifiers, keywords or other terms used to attract or divert traffic on the Internet or to secure higher placement within the search engine results.’” Also, as it had with its other rivals, 1-800 Contacts based its lawsuit on the incorrect presumption that Lens.com had purchased “1-800 Contacts” as a keyword from search engines. However, Lens.com fought the lawsuit. 61. On December 14, 2010, the district court dismissed 1-800 Contacts’ lawsuit. In a published 40-page decision, the court found that “[1-800 Contacts] has presented no evidence to show that [Lens.com] ever purchased [1-800 Contacts’] exact service mark as a keyword.” 1-800 Contacts, Inc., 755 F. Supp. at 1160. More importantly, the court took aim at 1-800 Contacts’ practice of seeking agreements, through cease-and-desist letters, that precluded a competitor’s advertisements from appearing on a search-results page anytime its mark is entered as a search term. It said that such a result would be “an anti-competitive, monopolistic protection to which it is not entitled”: As stated above, Plaintiff [1-800 Contacts] sends cease and desist letters anytime a competitor’s advertisement appears when Plaintiff’s mark is entered as a search term. Were Plaintiff actually able to preclude competitor advertisements from appearing on a search-results page anytime its mark is entered as a search term, it would result in an anti- competitive, monopolistic protection, to which it is not entitled. Id. at 1174. 62. The district court’s skepticism about such agreements continued, as it questioned whether any such contract between 1-800 Contacts and Lens.com would survive an antitrust challenge. According to the order: Were this actually an agreement entered into by the parties, the court questions whether it would survive an antitrust challenge. [1-800 Contacts] does not seek merely to preclude usage of its trademark. Instead, it wants to obliterate any other competitor advertisement from appearing on a search-results page when a consumer types in “1800Contacts” as a search term or some variation of it. This is disturbing given that broad matching of the generic term “contacts” could trigger an advertisement if a consumer enters the search term “1800Contacts.” A trademark right does not grant its owner the right to stamp out every competitor advertisement. Id. at 1188 (emphasis in original). 63. On July 16, 2013, the Tenth Circuit affirmed the district court’s summary judgment on all of 1-800 Contacts’ claims based on keyword use that did not result in ads displaying 1-800 Contacts’ mark in their text. ANTICOMPETITIVE EFFECTS OF THE AGREEMENTS 64. Defendants’ conduct harmed plaintiffs and the Class and California Subclass by depriving them of a marketplace in which consumers of contact lenses make their decisions about the purchase of contact lenses free from the influence of defendants’ bilateral agreements, which restrain truthful advertising by competitors responsible for the vast majority of direct-to-consumer sales of contact lenses. 65. Defendants’ price-fixing conspiracy had the following anticompetitive effects, among others: (a) price competition has been restrained or eliminated with respect to contacts lenses sold directly to consumers, including online, in the United States and California; (b) the price of contact lenses sold directly to consumers, including online, in the United States and California has been fixed, raised, maintained, or stabilized at artificially inflated levels; and (c) purchasers of contact lenses sold directly to consumers, including online, in the United States and California have been deprived of free and open competition. During the Class Period, plaintiffs and the members of the Class and the California Subclass paid supracompetitive prices for contact lenses sold directly to consumers, including online, in the United States and California. 66. Plaintiffs have suffered significant injury as a result of defendants’ contact lens price manipulation conspiracy. Typically, when consumers conduct web searches for contact lenses, they are presented with options from a range of contact lens sellers. Any sellers who were offering the same contact lenses at prices higher than their competitors would either (i) retain higher prices and risk losing business to rivals or (ii) lower prices to bring their prices in line with their competitors’ prices and compete for the business. Falling prices would, in turn, stimulate additional competition among various contact lens sellers. However, through agreements that rigged search results in response to online user queries, defendants ensured that consumers were presented with only one option – the option to pay whatever defendants wanted to charge in a competition-free market – as long as it was not enough to drive them to run another search. But for defendants’ anticompetitive conduct, consumers such as plaintiffs would have been aware of and presented with options from various sellers of contact lenses, and would have purchase lenses from the seller featuring the lowest price. 67. By reason of the alleged violations of federal and California laws, plaintiffs and the members of the Class and California Subclass have sustained injury to their business or property in the form of the overcharges they paid for contact lenses sold directly to consumers, including online, in the United States and California. Plaintiffs and the Class paid more for contact lenses than they would have 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. 68. In formulating and effectuating the contract, combination or conspiracy, defendants and their co-conspirators engaged in anticompetitive activities, the purpose and effect of which was to fix, maintain, suppress, inflate and otherwise make artificial the price of contact lenses sold directly to consumers, including online, in the United States and to California residents. 69. Plaintiffs suffered antitrust injury in that they paid more for contact lenses purchased from defendants than they would have paid had the manipulation not occurred. 70. Injury to plaintiffs and the Class and the California Subclass also resulted from defendants’ deprivation of the benefits of free and open competition in the market for online contact lens sales. CLASS ALLEGATIONS 71. Plaintiffs bring this action as a class action pursuant to Rules 23(a), (b)(2) and (b)(3) of the Federal Rules of Civil Procedure on behalf of all Class members, defined as: All persons that made at least one retail purchase of contact lenses from defendants from January 1, 2004 through the present (“Class Period”). Excluded from the Class are defendants, their parent companies, subsidiaries and affiliates, any co- conspirators, governmental entities and instrumentalities of government, states and their subdivisions, agencies and instrumentalities. 72. Plaintiffs also bring this action on behalf of the California Subclass, which is defined as: all members of the Class that reside in California that made at least one retail purchase of contact lenses from defendants from January 1, 2004 through the present. 73. The Class and California Subclass are ascertainable and are ones for which records should readily exist. 74. Members of each class are so numerous that joinder is impracticable. Plaintiffs do not know the exact size of the Class and Subclass, but because of the nature of the trade and commerce involved, plaintiffs believe that there are tens, if not hundreds, of thousands of Class members as described above, the exact number and identities being known to defendants and their co-conspirators. Moreover, the members of the Class are dispersed across the United States. 75. There is a well-defined community of interest among plaintiffs and the members of the Class and California Subclass. Because defendants have acted in a manner generally applicable to the Class and California Subclass, questions of law and fact common to members of the Class and California Subclass predominate over questions, if any, that may affect only individual members of the Class and California Subclass. Such generally applicable conduct is inherent in defendants’ wrongful and anticompetitive conduct. 76. Among the questions of law and fact common to the Class are: (a) whether defendants and their co-conspirators entered into an agreement, combination or conspiracy to rig the bidding in search engine advertising auctions, increase or maintain supracompetitive prices for contact lenses, allocate the market for online contact lens sales, and/or prevent the dissemination of information concerning competitors’ pricing of contact lenses; (b) the identity of the participants of the alleged conspiracy; (c) the duration of the conspiracy alleged herein and the acts performed by defendants and their co-conspirators in furtherance of the conspiracy; (d) whether, pursuant to bidding agreements, defendants agreed to restrict bidding in search advertising auctions; (e) whether the bidding agreements were necessary to yield a procompetitive benefit that is cognizable and non-pretextual; (f) whether such agreements are per se unlawful because they restrict competition; (g) whether such agreements are unlawful under the rule of reason; (h) whether 1-800 Contacts possessed market power or monopoly power over direct-to-consumer and online sales of contact lenses; (i) whether the law requires definition of a relevant market when direct proof of market power or monopoly power is available and, if so, the definition of the relevant market(s); (j) whether defendants’ conduct affected interstate and intrastate commerce; (k) whether the conduct of defendants and their co-conspirators, as alleged in this complaint, caused injury to plaintiffs and the other members of the Class; (l) whether the effects of defendants’ alleged conspiracy were anticompetitive in nature; and (m) the appropriate nature of class-wide injunctive or other equitable relief. 77. Among the questions of law and fact common to the California Subclass are: (a) whether the alleged conspiracy violated the Cartwright Act; (b) whether the alleged conspiracy violated the UCL; (c) whether the conduct of defendants and their co-conspirators, as alleged in this complaint, caused injury to the plaintiffs and the other members of the California Subclass; (d) the effect of defendants’ alleged conspiracy on the prices of contact lenses sold directly to consumers, including online, to California residents during the Class Period; (e) the appropriate class-wide measure of damages; and (f) the appropriate nature of class-wide injunctive or other equitable relief. 78. There are no defenses of a unique nature that may be asserted against plaintiffs individually, as distinguished from the other members of the Class, and the relief sought is common to the Class. 79. There are no defenses of a unique nature that may be asserted against plaintiffs individually, as distinguished from the other members of the California Subclass, and the relief sought is common to the California Subclass. 80. Plaintiffs are members of the Class and their claims are typical of the claims of the other members of the Class. Plaintiffs were damaged by the same wrongful conduct of defendants. 81. Plaintiffs are members of the California Subclass and their claims are typical of the claims of the other members of the California Subclass. Plaintiffs were damaged by the same wrongful conduct of defendants. 82. Plaintiffs will fairly and adequately protect the interests of other Class and California Subclass members because they have no interests antagonistic to, or that conflict with, those of any other Class or California Subclass member. Plaintiffs are committed to the vigorous prosecution of this action and have retained competent counsel, experienced in litigation of this nature, to represent them and the other members of the Class and California Subclass. 83. A class action is the superior method for the fair and efficient adjudication of this controversy. Class treatment will enable a large number of similarly situated parties to prosecute their claims in a single forum simultaneously, efficiently, and without the unnecessary duplication of evidence, effort and expense that would result if individual actions were pursued. 84. This case is also manageable as a class action. Plaintiffs know of no difficulty to be encountered in the prosecution of this action that would preclude its maintenance as a class action. In any event, the benefits of proceeding as a class action, including providing injured persons or entities with a method for obtaining redress for claims that could not practicably be pursued individually, substantially outweigh potential difficulties in the management of this action as a class action. 85. Defendants’ unlawful acts alleged in this complaint had a substantial effect on commerce and caused antitrust injury to plaintiffs and the Class and the California Subclass. 86. Defendants’ unlawful acts had the purpose and effect of manipulating the price of contact lenses sold directly to consumers, including over the internet, in the United States and to California residents. 87. As a direct result of defendants’ violations, plaintiffs and the members of the Class and California Subclass have been damaged. 88. As a direct and foreseeable result of defendants’ unlawful anticompetitive acts, the prices of contact lenses sold directly to consumers, including online, in the United States and to California residents was manipulated and inflated. 89. In addition, as a direct and foreseeable result of defendants’ unlawful anticompetitive acts, plaintiffs, the Class and the California Subclass were deprived of the ability to receive truthful and non-misleading advertising. INTERSTATE AND INTRASTATE COMMERCE 90. At all relevant times, 1-800 Contacts and its co-conspirators promoted, distributed and sold substantial amounts of contact lenses in a continuous and uninterrupted flow of commerce across state and national lines throughout the United States. 91. Defendants transmitted and received funds, as well as contracts, invoices and other forms of business communications and transactions, in a continuous and uninterrupted flow of commerce across state and national lines throughout the United States. 92. In furtherance of their efforts to monopolize and restrain competition, defendants employed the United States mails and interstate telephone lines, as well as interstate travel. Defendants’ activities were within the flow of, and have substantially affected (and will continue to substantially affect), interstate commerce. 93. Defendants’ anticompetitive conduct also had substantial intrastate effects in that price competition in California has been restrained or eliminated with respect to contact lenses sold directly to consumers and online, the price of contact lenses sold directly to consumers and online in California has been fixed, raised, maintained or stabilized at artificially inflated levels, and purchasers of contact lenses sold directly to consumers and online in California have been deprived of free and open competition. The agreements to restrict bidding in search advertising auctions for the online sale of contact lenses directly impacted and disrupted commerce within California. 94. During the Class Period, contact lenses sold by defendants were shipped into California and were sold to or paid for by plaintiffs and Class members in California. PLAINTIFFS’ CLAIMS ARE TIMELY 95. Plaintiffs bring their claims within the applicable statute of limitations. 96. Defendants concealed their anti-competitive activities by, among other things, engaging in secret communications in furtherance of the conspiracy. Defendants agreed among themselves not to discuss publicly or otherwise reveal the nature and substance of their agreements alleged herein. 97. None of the facts or information available to plaintiffs, if investigated with reasonable diligence, could or would have led to the discovery of the conduct alleged in this complaint. Plaintiffs and the Class were led to believe that the prices offered to them were the product of legitimate market conditions rather than defendants’ manipulative collusive activities. 98. As a result, plaintiffs were prevented from learning of the facts needed to commence suit against defendants until no earlier than August 8, 2016, when the FTC filed a complaint against 1-800 Contacts. There are many other reasons why these facts could not have been known, including that: (i) defendants’ advertising strategies are not public information; (ii) search engines do not publish information concerning particular search terms and search algorithms; and (iii) the horizontal agreements restricting trade were not disclosed publicly. 99. Because of defendants’ active steps, including the fraudulent concealment of their conspiracy to prevent plaintiffs from discovering and suing them for the anti-competitive activities alleged in this complaint, defendants are equitably estopped from asserting that any otherwise applicable limitations period has run, or that the statute of limitations began running before August 8, 2016. MONOPOLY POWER 100. At all relevant times, 1-800 Contacts had market power because it had the power to maintain the price of contact lenses sold directly to consumers and online without losing so many sales as to make the supracompetitive price unprofitable. Indeed, to this day, 1-800 Contacts’ prices for contact lenses are consistently up to 40% higher than the prices charged by others in the direct-to-consumer and online markets. 101. At all relevant times, 1-800 Contacts operated in the relevant markets. 1- 800 Contacts sold contact lenses directly to consumers and online at prices well in excess of its marginal costs and the competitive price for contact lenses, and enjoyed the resulting high profit margins and correspondence financial benefits – to the financial detriment of plaintiffs and Class members. 102. 1-800 Contacts, at all relevant times, had enjoyed high barriers to entry with respect to competition in the relevant product market due to regulatory protections. The FTC has studied the various barriers to entry in the contact lens market. Such barriers to entry include: (a) New entrants must acquire and possess a substantial amount of inventory of contact lenses from various manufacturers to attract consumers and meet their needs with prompt delivery. (b) Before entering the market, new entrants must invest an enormous amount of money and other resources into their businesses. For example, new entrants must recruit, hire and train personnel and lease or buy real estate. New entrants must invest in the significant information and systems infrastructure necessary to support online commerce. New entrants must also create and then invest in the significant promotional activities necessary to attract customers to their online sales website. (c) New entrants must overcome established, dominant sellers such as 1-800 Contacts, VisionDirect and the Doe Defendants, and established buyer preferences. As alleged herein, 1-800 Contacts has dominated the market for direct- to-consumer and online sales of contact lenses for many years. (d) 1-800 Contacts’ practices also serve to deter potential new competitors from entering the direct-to-consumer and online markets for the sale of contact lenses. (e) New entrants must establish and maintain relationships with contact lens manufacturers and consumers. New entrants must negotiate and acquire distribution rights from contact lens manufacturers to sell their products online. Establishing and maintaining relationships with manufacturers is costly and time- consuming. New entrants must also attract enough customers to cover their substantial operating expenses. 1-800 CONTACTS’ UNILATERAL ARBITRATION PROVISION IS NOT BINDING AND UNENFORCEABLE 103. 1-800 Contacts’ website has a “Terms of Service” page. The terms of service page claims that “Any dispute relating in any way to your visit to this website or to products you purchase through us shall be submitted to confidential arbitration in Salt Lake City, Utah, except that, to the extent you have in any manner violated or threatened to violate our intellectual property rights, we may seek injunctive or other appropriate relief in any state or federal court in the state of Utah, and you consent to exclusive jurisdiction and venue in such courts.” 104. This paragraph about arbitration, however, is not binding on plaintiffs, the Class or the California Subclass. Any agreement to arbitrate is not specifically highlighted. In fact, there are no direct links to the “Terms of Service” page on 1-800 Contacts homepage. The only way to find the Terms of Service page is to click on the “Common Questions (FAQ)” link on the 1-800 Contacts’ homepage, which itself is in extremely small print and is likely to be overlooked, as shown in Exhibit A. 105. After clicking on the Common Questions link, there is still no immediate mention of arbitration. Instead, the last link on the Common Questions page, which has to be scrolled down to see in most browsers, is a link entitled “Terms of Service,” as shown in Exhibit A. 106. After clicking on the Terms of Service link, a consumer can finally access the Terms of Service page, which contains the mention of arbitration. Even in the unlikely event that a consumer did find and review the Terms of Service page before ordering contact lenses through 1-800 Contacts’ website, the arbitration language is only viewable if a user scrolls down to a section titled “Disputes,” as shown in Exhibit A. 107. In addition, there is no place for a consumer to acknowledge receipt of the arbitration provision or for a consumer to acknowledge that it understood that it was governed by the arbitration provision. In fact, there is no requirement that a 1-800 Contacts customer even see the arbitration provision before ordering contacts through 1-800 Contacts’ website, let alone take action to expressly consent to the arbitration provision. Accordingly, there was never any meeting of the minds, as required by law, regarding the arbitration of disputes and any reasonable user of 1-800 Contacts’ website would be surprised by the existence of the arbitration provision. 108. 1-800 Contacts retained the full right to unilaterally modify the terms of the arbitration agreement, as shown by its carve out of intellectual property disputes. 109. Accordingly, 1-800 Contacts’ arbitration provision is unconscionable, contrary to public policy and unenforceable. COUNT I For Violations of §§1 and 3 of the Sherman Antitrust Act Against All Defendants (On Behalf of the Class) 110. Plaintiffs incorporate by reference the preceding allegations. 111. 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 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 artificially fixed, raised, maintained and/or stabilized the prices for contact lenses sold directly-to-consumers, including online, throughout the United States. 112. Defendants’ unlawful conduct was through mutual understandings, combinations or agreements by, between and among 1-800 Contacts, VisionDirect and the other Doe Defendants. Defendants’ conspiracy is a per se violation of the Sherman Antitrust Act and is, in any event, an unreasonable and unlawful restraint of trade. 113. There is no legitimate business justification for, or procompetitive benefit caused by, defendants’ unreasonable restraint of trade. Any ostensible procompetitive benefit was pretextual or could have been achieved by less restrictive means. 114. Defendants’ conspiracy, and the resulting impact on the prices of contact lenses, and the information provided to consumers, occurred in and affected interstate commerce and commerce in and between the territories of the United States. 115. As a direct, intended, foreseeable, and proximate result of defendants’ conspiracy and overt acts taken in furtherance therefore, plaintiffs and each member of the Class have suffered injury. Plaintiffs’ and each Class member’s damages are directly attributable to defendants’ conduct, which resulted in all Class members paying more for contact lenses than they would have otherwise paid, but for defendants’ agreements. 116. Plaintiffs’ and the Class’s injuries are the type the antitrust laws were designed to prevent and flow from that which makes defendants’ conduct unlawful. 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 For Violation of §2 of the Sherman Antitrust Act Against 1-800 Contacts (On Behalf of the Class) 117. Plaintiffs incorporate by reference the preceding allegations. 118. At all relevant times, 1-800 Contacts possessed substantial monopoly and market power with respect to direct-to-consumer and online sales of contact lenses. 1- 800 Contacts possessed the power to control prices, and prevent prices from falling, in direct-to-consumer sales of contact lenses, including in online sales. 119. In violation of §2 of the Sherman Antitrust Act, 1-800 Contacts monopolized, attempted to monopolize and conspired or agreed to monopolize the direct-to-consumer and online markets for contact lenses. As previously alleged, beginning in 2004 and continuing thereafter, 1-800 Contacts abused its monopoly power to inflate the price of contact lenses sold directly to consumers, among other ways, by (i) sending a series of cease-and-desist letters that included baseless representations regarding competitors’ supposed purchases and uses of 1-800 Contacts’ service mark as a keyword for online searches, (ii) seeking agreements that far exceed the scope of 1-800 Contacts’ trademark rights, (iii) filing objectively and subjectively baseless litigation against competitors for the purpose of interfering with their ability to compete in the online market for contact lenses, and (iv) entering into anticompetitive agreements with its competitors that prevented direct-to-consumer and online sellers of contact lenses from competing against each other, and with 1-800 Contacts. 120. 1-800 Contacts did not obtain or maintain its monopoly power by reason of a superior product, business acumen or historic accident. 121. 1-800 Contacts’ scheme harmed competition as detailed above. 122. As a direct and proximate result of 1-800 Contacts’ illegal and monopolistic conduct, as alleged herein, plaintiffs and the Class were injured. COUNT III For Violations of the Cartwright Act Against All Defendants (On Behalf of the California Subclass) 123. Plaintiffs incorporate by reference the preceding allegations. 124. The acts and practices detailed above violate the Cartwright Act, Cal. Bus. & Prof. Code §16700, et seq. 125. It is appropriate to bring this action under the Cartwright Act because many of the purchasers reside in California and because other overt acts in furtherance of the conspiracy and overcharges flowing from those acts occurred in California. 126. As detailed above, the anticompetitive conduct described herein constitutes a per se violation of California’s antitrust laws and is an unreasonable and unlawful restraint of trade. The anticompetitive effects of defendants’ conduct far outweigh any purported non-pretextual, pro-competitive justification. 127. As a proximate result of defendants’ unlawful conduct, plaintiffs and the members of the California Subclass they seek to represent have been injured in their business or property in violation of the Cartwright Act, Cal. Bus. & Prof. Code §16700, et seq., by paying supracompetitive prices for contact lenses bought over the internet during the Class Period. Such overcharges are the type of injury the antitrust laws were designed to prevent and flow directly from defendants’ unlawful conduct. Plaintiffs and members of the California Subclass are proper entities to bring a case concerning this conduct. 128. Plaintiffs and members of the California Subclass have standing to and hereby seek monetary relief, including treble damages, together with other relief, as well as attorneys’ fees and costs, as redress for defendants’ Cartwright Act violations. COUNT IV For Violations of California’s Unfair Competition Law Against All Defendants (On Behalf of the California Subclass) 129. Plaintiffs incorporate by reference the preceding allegations. 130. Plaintiffs bring this claim under §§17203 and 17204 of the Cal. Bus. & Prof. Code to enjoin, and obtain restitution and disgorgement of all monetary gains that resulted from, acts that violated §17200, et seq., of the Cal. Bus. & Prof. Code, commonly known as the UCL. 131. Plaintiffs and the members of the California Subclass have standing to bring this action under the UCL because they have been harmed and have suffered injury by being forced to pay inflated, supracompetitive prices for contact lenses sold directly to California residents during the Class Period. 132. 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, and these acts constitute unfair competition in violation of the UCL. 133. Defendants’ conspiracy had the following effects, among others: (i) price competition in the market for contact lenses sold directly to California residents, including online, during the Class Period was restrained, suppressed and/or eliminated; (ii) prices for contact lenses sold to California residents during the Class Period by defendants and their co-conspirators have been fixed, raised, maintained and stabilized at artificially high, non-competitive levels; and (iii) plaintiffs and members of the California Subclass who purchased contact lenses in California during the Class Period directly from defendants have been deprived of the benefits of free and open competition. 134. As a direct and proximate result of defendants’ anticompetitive conduct, plaintiffs and members of the California Subclass have been injured in their business or property by paying more for contact lenses sold directly to California residents and purchased directly from defendants during the Class Period than they would have paid absent of the conspiracy. 135. The anticompetitive behavior, as described above, is unfair, unconscionable, unlawful and fraudulent, and in any event it is a violation of the policy or spirit of the UCL. PRAYER FOR RELIEF WHEREFORE, plaintiffs pray that the Court: A. Determine that this action may be maintained as a class action pursuant to Fed. R. Civ. P. 23(a), (b)(2), 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 California Subclass, and declare plaintiffs representative of the Class and California Subclass; B. Enter a judgment awarding plaintiffs and the Class and California Subclass damages against defendants as a result of defendants’ unlawful conduct alleged in this complaint, plus treble damages and all other available damages, including any statutory or liquidated damages or otherwise; C. Award to plaintiffs and the Class and California Subclass their costs of suit, including reasonable attorneys’ and experts’ fees and expenses; D. 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 E. Award any other and further relief as the Court may deem just and proper. DEMAND FOR JURY TRIAL Plaintiffs respectfully demand a trial by jury on all issues that can be tried to a jury. DATED: October 13, 2016 ROBBINS GELLER RUDMAN & DOWD LLP PATRICK J. COUGHLIN DAVID W. MITCHELL BRIAN O. O’MARA STEVEN M. JODLOWSKI CARMEN A. MEDICI s/Steven M. Jodlowski STEVEN M. JODLOWSKI 655 West Broadway, Suite 1900 San Diego, CA 92101 Telephone: 619/231-1058 619/231-7423 (fax) ROBBINS ARROYO LLP BRIAN J. ROBBINS GEORGE C. AGUILAR GREGORY DEL GAIZO 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: 619/525-3990 619/525-3991 (fax) BROWNSTEIN LAW GROUP, PC JOSHUA S. BROWNSTEIN M. RYDER THOMAS 353 Sacramento Street, Suite 1140 San Francisco, CA 94111 Telephone: 415/986-1338 415/986-1231 (fax) Attorneys for Plaintiffs I:\Admin\CptDraft\Antitrust\Cpt 800 Contacts.docx

antitrust

ca6zCocBD5gMZwczX8kb

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF PENNSYLVANIA PITTSBURGH DIVISION 2:21-cv-826 TODD KATONA, individually and on behalf of all others similarly situated, Plaintiff, Docket No. Jury Trial Demanded v. THE JUDGE GROUP, INC., Defendant. CLASS AND COLLECTIVE ACTION COMPLAINT 1. The Judge Group, Inc. (Judge Group) has failed to pay Todd Katona (Katona), and other workers like him, overtime as required by the Fair Labor Standards Act (FLSA) and the Pennsylvania Minimum Wage Act (PMWA). 2. Instead, Judge Group improperly classified Katona and other workers like him as exempt employees and paid them a salary with no overtime compensation. 3. Katona bring this class and collective action to recover unpaid overtime and other damages. I. JURISDICTION AND VENUE 4. This Court has original subject matter jurisdiction pursuant to 28 U.S.C. § 1331 because this action involves a federal question under the FLSA. 29 U.S.C. § 216(b). 5. The Court also has federal jurisdiction over this action pursuant to the jurisdictional provisions of the Class Action Fairness Act, 28 U.S.C. § 1332(d). 6. The Court also has supplemental jurisdiction over any state law class pursuant to 28 U.S.C. § 1367. 7. Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b)(2) because Judge Group operates in this District and Division and because a substantial portion of the events giving rise to this action occurred in this District. II. THE PARTIES 8. Katona worked for Judge Group as a Recruiter from approximately February 2018 through November 2018. 9. Katona worked for Judge Group throughout Pennsylvania, including in Wayne, Pennsylvania. 10. Throughout his employment with Judge Group, Katona was classified as an exempt employee and paid a salary with no overtime compensation. 11. Katona’s consent to be a party Katona is attached as Exhibit A. 12. Throughout his employment with Judge Group, Katona was classified as an exempt employee and paid a salary with no overtime compensation. 13. Katona brings this action on behalf of himself and all other similarly situated workers who were classified as recruiters and paid a salary with no overtime compensation. Judge Group paid each of these workers a salary for each day worked on location and failed to pay them overtime for all hours that they worked in excess of 40 hours in a workweek in accordance with the FLSA. 14. The class of similarly situated employees or putative class members sought to be certified is defined as follows: All current and former recruiters that worked for Judge Group, Inc. who were paid a salary during the last three (3) years. (“FLSA Recruiters”). 15. Katona further seeks certification of a class under Fed. R. Civ. P. 23 to remedy Judge Group’s violations of the PMWA. 16. The class of similarly situated employees or putative class members sought to be certified is defined as follows: 2 All current and former recruiters that worked for Judge Group, Inc. in Pennsylvania who were paid a salary during the last three (3) years. (“Pennsylvania Recruiters”). 17. Collectively, the FLSA Recruiters and Pennsylvania Recruiters are referred to as the “Putative Class Members.” 18. Judge Group, Inc. is a Pennsylvania corporation and may be served via its registered agent, Martin E. Judge, Conshohocken State Rd., Ste. 300, Conshohocken, PA 19428-3820. III. COVERAGE UNDER THE FLSA 19. At all times hereinafter mentioned, Judge Group has been an employer within the meaning of the Section 3(d) of the FLSA, 29 U.S.C. § 203(d). 20. At all times hereinafter mentioned, Judge Group has been part of an enterprise within the meaning of Section 3(r) of the FLSA, 29 U.S.C. § 203(r). 21. At all times hereinafter mentioned, Judge Group has been part of an enterprise engaged in commerce or in the production of goods for commerce within the meaning of Section 3(s)(1) of the FLSA, 29 U.S.C. § 203(s)(1), in that said enterprise has and has had employees engaged in commerce or in the production of goods for commerce, or employees handling, selling, or otherwise working on goods or materials – such as computers, cell phones, and office supplies - that have been moved in or produced for commerce by any person and in that Judge Group have had and have an annual gross volume of sales made or business done of not less than $1,000,000 (exclusive of excise taxes at the retail level which are separately stated). 22. At all times hereinafter mentioned, Katona and the Putative Class Members were engaged in commerce or in the production of goods for commerce. IV. FACTS 23. Judge Group is an employment and staffing company operating throughout the United States and internationally, including in Pennsylvania. 3 24. To provide services to its clients, Judge Group employs recruiting personnel, including Katona. 25. Many of the individuals who worked for Judge Group were paid a salary and misclassified as exempt employees, and these make up the proposed Putative Classes. While the exact job titles and job duties may differ, the Putative Class Members are and were subjected to the same or similar illegal pay practices for similar work. These so-called exempt employees were paid a salary for each day worked, regardless of the number of hours that they worked that day (or in that workweek) without any overtime pay for hours that they worked in excess of forty (40) hours in a workweek. 26. For example, Katona worked for Judge Group as a Recruiter during the relevant time period (in Pennsylvania). Throughout his employment with Judge Group, he was classified as an exempt employee and paid a salary with no overtime compensation. 27. As a Recruiter, Katona regularly worked more than 40 hours each week without receiving overtime compensation. On average, Katona estimates he worked approximately 50-55 hours each week. 28. As a Recruiter, Katona (and all other recruiters) performed non-exempt job duties including calling potential employees for placement into companies that contracted with Judge Group. 29. The job functions of Katona and the Putative Class Members were primarily technical in nature, requiring little to no official training, much less a college education or other advanced degree. 30. Katona and the Putative Class Members perform the same or similar job duties and are subjected to the same or similar policies and procedures which dictate the day-to-day activities performed by each person. 31. Katona and the Putative Class Members also worked similar hours and were denied overtime as a result of the same illegal pay practice. 4 32. The work Katona performed was an essential and integral part of Judge Group’s core business. 33. No advanced degree is required to become a recruiter. 34. Being a recruiter does not require specialized academic training as a standard prerequisite. 35. For example, Katona does not have any advanced degree. 36. Katona and the Putative Class Members did not have any supervisory or management 37. To the extent the recruiters make “decisions,” such decisions do not require the exercise of independent discretion and judgment. 38. Instead, the Recruiters apply well-established techniques and procedures and use established standards to evaluate any issues. 39. Recruiters do not set the techniques and procedures utilized to perform their job duties and do not set quality standards. 40. Recruiters are not allowed to deviate from the techniques and procedures utilized to perform their job duties or from any quality standards. 41. With these job duties, the Recruiters are clearly non-exempt employees under the 42. Judge Group does not pay its Recruiters overtime for hours worked in excess of 40 in a single workweek. 43. Instead, Judge Group pays these workers a base salary. 44. Katona and the Recruiters worked for Judge Group in the past three years throughout the United States, including in Pennsylvania. 5 45. As a result of Judge Group’s pay policies, Katona and the Putative Class Members were denied the overtime pay required by federal law, because these workers are, for all purposes, employees performing non-exempt job duties. 46. Judge Group keeps accurate records of the hours, or at least the days, its recruiters 47. Judge Group also keeps accurate records of the amount of pay its recruiters receive. 48. Because Katona (and Judge Group’s other recruiters) was misclassified as exempt employees by Judge Group, they should receive overtime for all hours that they worked in excess of 40 hours in each workweek. V. CLASS AND COLLECTIVE ACTION ALLEGATIONS 49. Katona incorporates all previous paragraphs and alleges that the illegal pay practices Judge Group imposed on Katona were likewise imposed on the Putative Class Members. 50. Numerous individuals were victimized by this pattern, practice, and policy which is in willful violation of the FLSA. 51. Numerous other individuals who worked with Katona indicated they were improperly classified as exempt employees, paid in the same manner, performed similar work, and were not properly compensated for all hours worked as required by federal wage laws. 52. Based on his experiences and tenure with Judge Group, Katona is aware that Judge Group’s illegal practices were imposed on the Putative Class Members. 53. The Putative Class Members were all improperly classified as exempt employees and not afforded the overtime compensation when they worked in excess of forty (40) hours per week. 54. Judge Group’s failure to pay wages and overtime compensation at the rates required by federal law result from generally applicable, systematic policies, and practices which are not dependent on the personal circumstances of the Putative Class Members. 6 55. The specific job titles or precise job locations of the Putative Class Members do not prevent collective treatment. 56. Absent this action, many Putative Class Members likely will not obtain redress of their injuries and Judge Group will reap the unjust benefits of violating the FLSA. 57. Furthermore, even if some of the Putative Class Members could afford individual litigation against Judge Group, it would be unduly burdensome to the judicial system. 58. Concentrating the litigation in one forum will promote judicial economy and parity among the claims of individual members of the classes and provide for judicial consistency. 59. Although the issue of damages may be somewhat individual in character, there is no detraction from the common nucleus of liability facts. Therefore, this issue does not preclude collective treatment. CAUSES OF ACTION FLSA VIOLATIONS 60. As set forth herein, Judge Group has violated, and is violating, Section 7 of the FLSA, 29 U.S.C. § 207, by employing employees in an enterprise engaged in commerce or in the production of goods for commerce within the meaning of the FLSA for workweeks longer than forty (40) hours without compensating such employees for their employment in excess of forty (40) hours per week at rates no less than 1 and ½ times the regular rates for which they were employed. 61. Judge Group knowingly, willfully, or in reckless disregard carried out this illegal pattern or practice of failing to pay Katona and the Putative Class Members overtime compensation. Judge Group’s failure to pay overtime compensation to these employees was neither reasonable, nor was the decision not to pay overtime made in good faith. 7 62. Accordingly, Katona and all those who are similarly situated are entitled to overtime wages under the FLSA in an amount equal to 1 and ½ times their rate of pay, plus liquidated damages, attorney’s fees and costs. PMWA VIOLATIONS 63. Accordingly, brings this claim under the PMWA as a Rule 23 class action. 64. Judge Group is subject to the overtime requirements of the PMWA because Judge Group is an employer under 43 P.S. § 333.103(g). 65. During all relevant times, Katona and the Pennsylvania Recruiters were covered employees entitled to the above-described PMWA’s protections. See 43 P.S. § 333.103(h). 66. Judge Group’s compensation scheme that is applicable to Katona and the Pennsylvania Recruiters failed to comply with either 43 P.S. § 333.104(c) or 34 Pa. Code § 231.43(b). 67. At all relevant times, Judge Group was subject to the requirements of the PMWA. 68. At all relevant times, Judge Group employed Katona and each Pennsylvania Recruiter as an “employee” within the meaning of the PMWA. 69. The PMWA requires employers like Judge Group to pay employees at one and one- half (1.5) times the regular rate of pay for hours worked in excess of forty (40) hours in any one week. Katona and each Pennsylvania Recruiter are entitled to overtime pay under the PMWA. 70. Judge Group has and had a policy and practice of misclassifying Katona and each Pennsylvania Class Member as exempt from overtime pay and failing to pay these workers overtime for hours worked in excess of 40 hours per workweek. 71. Katona and the Pennsylvania Recruiters seek unpaid overtime in amount equal to 1.5 times the regular rate of pay for work performed in excess of 40 hours in a workweek, prejudgment interest, all available penalty wages, and such other legal and equitable relief as the Court deems just and proper. 8 72. Katona and the Pennsylvania Recruiters also seek recovery of attorneys’ fees, costs, and expenses of this action, to be paid by Judge Group, as provided by the costs. VI. JURY DEMAND 73. Katona demands a trial by jury. VII. RELIEF SOUGHT 74. WHEREFORE, Katona pray for judgment against Judge Group as follows: a. An Order designating this lawsuit as a collective action and permitting the issuance of a notice pursuant to 29 U.S.C. § 216(b) to all similarly situated individuals with instructions to permit them to assert timely FLSA claims in this action by filing individual Consents to Sue pursuant to 29 U.S.C. § 216(b); b. An Order certifying a Rule 23 class action on behalf of Pennsylvania Recruiters; c. Judgment awarding Katona and the Pennsylvania Recruiters all unpaid overtime and other damages available under the PMWA; d. An Order awarding Katona and the Putative Class Members their reasonable attorneys’ fees and expenses as provided by the FLSA and PMWA. e. For an Order appointing Katona and their counsel as Class Counsel to represent the interests of the FLSA class; f. For an Order awarding attorneys’ fees, costs and pre- and post-judgment interest; and g. For an Order granting such other and further relief as may be necessary and appropriate. 9 Respectfully submitted, By: /s/ Michael A. Josephson Michael A. Josephson PA I.D. # 308410 Texas Bar No. 24014780 Andrew W. Dunlap Texas Bar No. 24078444 Carl A. Fitz Texas Bar No. 24105863 JOSEPHSON DUNLAP LAW FIRM 11 Greenway Plaza, Suite 3050 Houston, Texas 77046 713-352-1100 – Telephone 713-352-3300 – Facsimile [email protected] [email protected] [email protected] AND Richard J. (Rex) Burch Texas Bar No. 24001807 BRUCKNER BURCH PLLC 11 Greenway Plaza, Suite 3025 Houston, Texas 77046 713-877-8788 – Telephone 713-877-8065 – Facsimile [email protected] AND Joshua P. Geist PA ID No. 85745 GOODRICH & GEIST PC 3634 California Ave. Pittsburgh, Pennsylvania 15212 412-766-1455 – Telephone 412-766-0300 – Facsimile [email protected] ATTORNEYS IN CHARGE FOR KATONA AND PUTATIVE CLASS MEMBERS 10

employment & labor

mFazBIkBRpLueGJZDDp7

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x Case no. 1:22-cv-10880 CLASS ACTION COMPLAINT JASMINE TORO, on behalf of herself and all others similarly situated, Plaintiffs, v. AND DEMAND FOR JURY TRIAL Hub Hobby Center, Inc., Defendant. : : : : : : : : : : : : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x INTRODUCTION 1. Plaintiff, JASMINE TORO (“Plaintiff” or “TORO”), brings this action on behalf of herself and all other persons similarly situated against Hub Hobby Center, Inc. (hereinafter “Hub Hobby Center” 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 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 Hub Hobby Center 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 Hub Hobby Center provides to their non-disabled customers through https://www.hubhobby.com (hereinafter “Hubhobby.com” or “the website”). Defendant’s 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. Hubhobby.com provides to the public a wide array of the goods, services, price specials and other programs offered by Hub Hobby Center. Yet, Hubhobby.com contains significant 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, Hub Hobby Center 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 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. Hub Hobby Center’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 Hubhobby.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. The Plaintiff intended to make an online purchase of a children's model kit on Hubhobby.com. The product was intended as a gift for a relative's child. She browsed the categories on the website and found the desired product. Plaintiff attempted to purchase the selected item, but due to difficulties while navigating the website ("skip to content" was not implemented, navigation sub-menus were not accessible from keyboard, inaccurate alt-text on graphics) it was difficult for Plaintiff to complete the purchase procedure. 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 Hubhobby.com. 11. Because Defendant’s website, Hubhobby.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 Hub Hobby Center’s policies, practices, and procedures to that Defendant’s website 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. 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”). 13. Venue is proper in this District of New York pursuant to 28 U.S.C. §§ 1391(b)(c) and 144(a) 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. 14. 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. Because of this targeting, it is not unusual for Hub Hobby Center 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 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. PARTIES 15. Plaintiff, is and has been at all relevant times a resident of Bronx County, State of New York. 16. 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, JASMINE TORO, cannot use a computer without the assistance of screen reader software. Plaintiff has been denied the full enjoyment of the facilities, goods and services of Hubhobby.com as a result of accessibility barriers on Hubhobby.com. 17. Defendant, Hub Hobby Center, Inc., is a Minnesota Corporation doing business in this State with its principal place of business located at 82 Minnesota Avenue, Little Canada, MN, 55117. 18. Hub Hobby Center provides to the public a website known as Hubhobby.com which provides consumers with access to an array of goods and services, including, the ability to view radio control toys, art and science products, adhesives, collectible and plastic models, slot cars, books, gadgets, fidget and sensory toys, stuffed animals, board and card games, puzzles, trains. Consumers across the United States use Defendant’s website to purchase toys, games, art and craft kits. 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 Hubhobby.com has deterred Plaintiff from making an online purchase of a model kit. NATURE OF THE CASE 19. 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. 20. 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. 21. 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. 22. Blind users of Windows operating system-enabled computers and devices have several screen- reading software programs available to them. NonVisual Desktop Access, otherwise known as “NVDA”, is currently one of the most popular, downloaded screen-reading software program available for blind computer users. 23. 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 24. Defendant controls and operates Hubhobby.com in New York State and throughout the United 25. Hubhobby.com is a commercial website that offers products and services for online sale. The online store allows the user to view toys, games, art and craft kits, make purchases, and perform a variety of other functions. 26. Among the features offered by Hubhobby.com are the following: a) Consumers may use the website to connect with Hub Hobby Center, Inc. on various social media platforms, including Instagram, Twitter, Facebook, and YouTube; b) an online store, allowing customers to purchase radio control toys, art and science products, adhesives, collectible and plastic models, slot cars, books, gadgets, fidget and sensory toys, stuffed animals, board and card games, puzzles, trains, gift cards and other products for delivery to their doorsteps, and; c) Learning about shipping, return policies, and learning about the company, amongst other features. 27. This case arises out of Hub Hobby Center’s policy and practice of denying the blind access to the goods and services offered by Hubhobby.com. Due to Hub Hobby Center’s failure and refusal to remove access barriers to Hubhobby.com, blind individuals have been and are being denied equal access to Hub Hobby Center, as well as to the numerous goods, services and benefits offered to the public through Hubhobby.com. 28. Hub Hobby Center denies the blind access to goods, services and information made available through Hubhobby.com by preventing them from freely navigating Hubhobby.com. 29. Hubhobby.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: inaccurate landmark structure, inaccurate heading hierarchy, inadequate focus order, inaccessible contact information, changing of content without advance warning, unclear labels for interactive elements, inaccurate alt-text on graphics, inaccessible drop-down menus, the lack of navigation links, the lack of adequate labeling of form fields, and the requirement that transactions be performed solely with a mouse. 30. 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 Hubhobby.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 Hubhobby.com customers are unable to determine what is on the website, browse the website or investigate and/or make purchases. 31. Hubhobby.com also lacks prompting information and accommodations necessary to allow blind shoppers who use screen-readers to locate and accurately fill-out online forms. 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. 32. When visiting the Website, Plaintiff, using NVDA, encountered the following specific accessibility a) “Skip to content” link was not implemented. Plaintiff was not provided with the mechanism to bypass repeated blocks of content; b) Landmarks were not properly inserted into the home page. Plaintiff tried to bypass navigation menus and could not access “main” region of the page using landmarks; c) Landmark structure was incorrectly defined. There was more than one “navigation” landmark without unique labels. It was difficult for Plaintiff to navigate through the home page using landmarks, as she could not perceive the unique purpose of the navigation regions and select the content of interest; d) More than one heading level 1 was used per home page. Heading level 1 provides important indication of what the page is about and outlines its content. Using more than one <h1> is allowed by the HTML specification, but is not considered beneficial for screen reader users. Plaintiff used keyboard shortcuts to navigate directly to the <h1>, and was forced to listen to more of the web page content to understand its overcomplicated structure, because the <h1> appeared somewhere other than at the start of the main content; e) The Navigation menu had elements with drop-down menu, and they did not announce their state - “collapsed” or “expanded”. As a result, Plaintiff was unaware about the additional links that she might have accessed; f) Plaintiff could not access sub-menu elements from the navigation menu using the keyboard. Plaintiff tried to use “tab” or “arrow” keys to no avail. The website had functionality that was dependent on the specific devices such as a mouse, and was not available to the legally blind users; g) Interactive elements of the carousel on the home page did not receive focus in an order that followed sequences and relationships in the content. While tab controls should be the first focusable elements, screen reader moved directly to the content of the carousel and Plaintiff was not allowed to skip this section of the page; h) Interactive elements (“search” button, “tab control carousel” buttons) did not have descriptive name. Plaintiff could not identify the purpose of the interactive element; i) On the Category page, Plaintiff was forced to repeatedly tab through elements with the same destination: the link text of products conveyed similar information and led to the same destinations as interactive images above the links; j) The Category page was reloaded after Plaintiff tried to filter items on it and the keyboard focus moved to the top of the page. As a result, Plaintiff was confused by the change of context; k) Different images of the same product on the Product details page had similar alternative text. The similar description impeded Plaintiff from learning more detailed information about the selected product; l) Plaintiff was unable to determine if the form fields on the Checkout page were mandatory (“Required”). The lack of detailed instructions while filling in the form, prevented Plaintiff from successful submission of personal information; m) The telephone number and email on the content info “footer” region was presented in plain text, and therefore was non-interactive and inaccessible to the screen reader software. As a result, Plaintiff was unable to contact the customer support to clarify details about products or purchase procedure; n) Plaintiff tried to follow Social media links from the content info “footer” region and received no prior warning that the links opened a new window. As a result, Plaintiff unsuccessfully tried to use the “Back” function of the browser to go to the previous page and found herself disoriented. Consequently, blind customers are essentially prevented from purchasing any items on Hubhobby.com. 33. Hubhobby.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, Hubhobby.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 Hubhobby.com. 34. Due to Hubhobby.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 Hubhobby.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 element on Defendant’s website in an attempt to reach the desired service. Thus, Hub Hobby Center has inaccessible design that deprives the Plaintiff and blind customers of the opportunity to make purchases on Hubhobby.com on their own. 35. Hubhobby.com thus contains access barriers which deny the full and equal access to Plaintiff, who would otherwise use Hubhobby.com and who would otherwise be able to fully and equally enjoy the benefits and services of Hubhobby.com in New York State and throughout the United States. 36. Plaintiff, JASMINE TORO, has made numerous attempts to complete a purchase on Hubhobby.com, most recently on December 23, 2022, but was unable to do so independently because of the many access barriers on Defendant’s website. These access barriers have caused Hubhobby.com to be inaccessible to, and not independently usable by, blind and visually-impaired persons. Amongst other access barriers experienced, Plaintiff was unable to make an online purchase of a model kit. 37. Moreover, Plaintiff intends on visiting the Website in the future in order to make additional potential purchases of a plush toy and other products from Hubhobby.com. Plaintiff enjoys the various selections of toys, games, art and craft kits, and would like to order products to be shipped directly to her home from Defendant’s website. 38. As described above, Plaintiff has actual knowledge of the fact that Defendant’s website, Hubhobby.com, contains access barriers causing the website to be inaccessible, and not independently usable by, blind and visually-impaired persons. 39. These barriers to access have denied Plaintiff full and equal access to, and enjoyment of, the goods, benefits and services of Hubhobby.com. 40. 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. 41. Defendant utilizes standards, criteria or methods of administration that have the effect of discriminating or perpetuating the discrimination of others. 42. Because of Defendant’s denial of full and equal access to, and enjoyment of, the goods, benefits and services of Hubhobby.com, Plaintiff and the class have suffered an injury-in-fact which is concrete and particularized and actual and is a direct result of defendant’s conduct. CLASS ACTION ALLEGATIONS 43. 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 Hubhobby.com and as a result have been denied access to the enjoyment of goods and services offered by Hubhobby.com, during the relevant statutory period.” 44. 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 Hubhobby.com and as a result have been denied access to the enjoyment of goods and services offered by Hubhobby.com, during the relevant statutory period.” 45. 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. 46. 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 Hubhobby.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 Hubhobby.com. 47. There are common questions of law and fact common to the class, including without limitation, the following: (a) Whether Hubhobby.com is a “public accommodation” under the ADA; (b) Whether Hubhobby.com is a “place or provider of public accommodation” under the laws of New York; (c) Whether Defendant, through its website, Hubhobby.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, Hubhobby.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. 48. 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 Hub Hobby Center has violated the ADA, and/or the laws of New York by failing to update or remove access barriers on their website, Hubhobby.com, so it can be independently accessible to the class of people who are legally blind. 49. 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. 50. 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. 51. 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. 52. 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) 53. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 56 of this Complaint as though set forth at length herein. 54. 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). 55. Hubhobby.com is a sales establishment and public accommodation within the definition of 42 U.S.C. §§ 12181(7). 56. Defendant is subject to Title III of the ADA because it owns and operates Hubhobby.com. 57. 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 58. 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. 59. 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.” 60. 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.” 61. 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. 62. 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 Hub Hobby Center who are blind have been denied full and equal access to Hubhobby.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. 63. Defendant has failed to take any prompt and equitable steps to remedy its 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 goods, services, facilities, privileges, advantages, accommodations and/or opportunities of Hubhobby.com in violation of Title III of the Americans with Disabilities Act, 42 U.S.C. §§ 12181 et seq. and/or its implementing regulations. 65. 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. 66. The actions of Defendant were and are in violation of the ADA, and therefore Plaintiff invokes her statutory right to injunctive relief to remedy the discrimination. 67. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 68. 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.)) 69. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 72 of this Complaint as though set forth at length herein. 70. 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.” 71. Hubhobby.com is a sales establishment and public accommodation within the definition of N.Y. Exec. Law § 292(9). 72. Defendant is subject to the New York Human Rights Law because it owns and operates Hubhobby.com. Defendant is a person within the meaning of N.Y. Exec. Law. § 292(1). 73. Defendant is violating N.Y. Exec. Law § 296(2)(a) in refusing to update or remove access barriers to Hubhobby.com, causing Hubhobby.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. 74. 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 making such modifications would fundamentally alter the nature of such facilities, privileges, advantages or accommodations.” 75. 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.” 76. 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. 77. 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. 78. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 79. 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 Hubhobby.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. 80. The actions of Defendant were and are in violation of the New York State Human Rights Law and therefore Plaintiff invokes her right to injunctive relief to remedy the discrimination. 81. 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. 82. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 83. 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.)) 84. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 87 of this Complaint as though set forth at length herein. 85. Plaintiff served notice thereof upon the attorney general as required by N.Y. Civil Rights Law § 41. 86. 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 . . .” 87. 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.” 88. Hubhobby.com is a sales establishment and public accommodation within the definition of N.Y. Civil Rights Law § 40-c(2). 89. Defendant is subject to New York Civil Rights Law because it owns and operates Hubhobby.com. Defendant is a person within the meaning of N.Y. Civil Law § 40-c(2). 90. Defendant is violating N.Y. Civil Rights Law § 40-c(2) in refusing to update or remove access barriers to Hubhobby.com, causing Hubhobby.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. 91. 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. 92. 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 . . .” 93. 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 . . .” 94. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 95. 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. 96. 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 (Violation of New York City Human Rights Law, N.Y.C. Administrative Code § 8-102, et seq.) 97. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 100 of this Complaint as though set forth at length herein. 98. 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.” 99. Hubhobby.com is a sales establishment and public accommodation within the definition of N.Y.C. Administrative Code § 8-102(9). 100. Defendant is subject to City Law because it owns and operates Hubhobby.com. Defendant is a person within the meaning of N.Y.C. Administrative Code § 8-102(1). 101. Defendant is violating N.Y.C. Administrative Code § 8-107(4)(a) in refusing to update or remove access barriers to Hubhobby.com, causing Hubhobby.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 § 8107(15)(a). 102. 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. 103. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 104. 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 Hubhobby.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. 105. The actions of Defendant were and are in violation of City law and therefore Plaintiff invokes her right to injunctive relief to remedy the discrimination. 106. 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. 107. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 108. 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) 109. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 112 of this Complaint as though set forth at length herein. 110. An actual controversy has arisen and now exists between the parties in that Plaintiff contends, and is informed and believes that Defendant denies, that Hubhobby.com contains access barriers denying blind customers the full and equal access to the goods, services and facilities of Hubhobby.com, which Hub Hobby Center 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. 111. 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, Hubhobby.com, into full compliance with the requirements set forth in the ADA, and its implementing regulations, so that Hubhobby.com is readily accessible to and usable by blind individuals; c) A declaration that Defendant owns, maintains and/or operates its website, Hubhobby.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 her 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: Forest Hills, New York December 26, 2022 MARS KHAIMOV LAW, PLLC Attorneys for Plaintiff /s/ Mars Khaimov By: Mars Khaimov, Esq. 108-26 64th avenue, Second Floor Forest Hills, New York 11375 Tel (929) 324-0717 Fax (929) 333-7774 Email: [email protected]

civil rights, immigration, family

27V6C4cBD5gMZwczFQjp

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK Case No.: JAM-WOOD HOLDINGS LLC, Individually and On Behalf of All Others Similarly Situated, Plaintiff, CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS v. JURY TRIAL DEMANDED FERROGLOBE PLC, PEDRO LARREA, and PHILLIP MURNANE, Defendants. Plaintiff Jam-Wood Holdings LLC (“Plaintiff”), individually and on behalf of all others similarly situated, by and through its 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 Ferroglobe PLC (“Ferroglobe” 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 Ferroglobe; and (c) review of other publicly available information concerning Ferroglobe. NATURE OF THE ACTION AND OVERVIEW 1. This is a class action on behalf of persons and entities that purchased or otherwise acquired Ferroglobe securities between August 21, 2018 and November 26, 2018, inclusive (the “Class Period”), seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”). 2. Ferroglobe purports to produce silicon metal, silicon-based alloys, and manganese-based alloys and to sell products such as aluminum, silicone compounds, automotive parts, photovoltaic cells, electronic semiconductors, and steel. 3. 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 that: (i) there was excess supply of the Company’s products; (ii) demand for the Company’s products was declining; (iii) consequently, the pricing of the Company’s products would be materially impacted; and (iv) 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. 4. On November 26, 2018, the Company reported a net loss of $2.9 million for the third quarter 2018, compared to a net profit of $66.0 million the prior quarter. 5. On this news, the Company’s share price fell $2.97 per share, more than 62%, to close at $1.80 per share on November 27, 2018, on unusually high trading volume. 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. 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, as set forth in the accompanying certification, incorporated by reference herein, purchased Ferroglobe 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 Ferroglobe is incorporated under the laws of England and Wales with its principal executive offices located in London, United Kingdom. Ferroglobe’s shares trade on the NASDAQ exchange under the symbol “GSM.” 13. Defendant Pedro Larrea (“Larrea”) was the Chief Executive Officer of the Company at all relevant times. 14. Defendant Phillip Murnane (“Murnane”) was the Chief Financial Officer of the Company at all relevant times. 15. Defendants Larrea and Murnane, (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 SUBSTANTIVE ALLEGATIONS Background 16. Ferroglobe purports to produce silicon metal, silicon-based alloys, and manganese-based alloys and to sell products such as aluminum, silicone compounds, automotive parts, photovoltaic cells, electronic semiconductors, and steel. Materially False and Misleading Statements Issued During the Class Period 17. The Class Period begins on August 21, 2018. On that day, the Company published a press release announcing the second quarter 2018 financial results. It reported a net profit of $66.0 million, or $0.39 per share, and adjusted EBITDA of $86.3 million. 18. In the press release, Defendant Larrea stated that volumes and selling prices “have significantly increased” in the year to date. Moreover, regarding the demand for products, he The steel industries in North America and Europe – the main end markets for most of [the Company’s] alloys – are experiencing strong demand and high capacity utilizations in the wake of recent trade protection measures. Prices of our products have remained broadly stable overall, and current supply/demand dynamics in our industry should support continued healthy pricing. 19. On August 22, 2018, Defendants Larrea and Murnane participated in a conference call to discuss the financial results with analysts. Regarding silicon metal, Defendant Larrea stated that “despite some pricing declines in the US and in European indices, Ferroglobe maintained a flat realized average selling price for silicon metal, reflecting a well-managed commercial strategy and a good mix of fixed and index price contracts.” 20. During the call, Defendant Larrea reiterated strong market conditions supported the business. Specifically, he stated that “the overall supply/demand tension in the market, as well as increasing input costs, provide good reason to expect prices [of silicon metal] to remain broadly stable around these levels.” Moreover, he stated: “A recent wave of earnings updates and outlooks by many of our major customers across these verticals reinforces our confidence that demand in the next eighteen months should remain healthy. We do not think the evolving trade wars and tariffs which has targeted the steel and aluminum sectors in particular will impact the aggregate demand for steel or aluminum globally.” 21. On September 5, 2018, in the middle of the third quarter, the Company participated in the Goldman Sachs Leveraged Finance Conference, where Defendants Larrea and Murnane led investors to believe that the factors underlying the Company’s growth during the first half of the fiscal year would continue. Specifically, Defendant Larrea stated that “market fundamentals are accelerating the demand for our products,” pointing to population growth, urbanization, energy efficiency, and sustainability as megatrends that increase demand for the Company’s products. Defendant Murnane used the quarterly trend in revenue and adjusted EBITDA to suggest that the second quarter’s strong performance would continue. 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 that: (i) there was excess supply of the Company’s products; (ii) demand for the Company’s products was declining; (iii) as a result, the pricing of the Company’s products would be materially impacted; and (iv) 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 November 26, 2018, Ferroglobe reported poor financial results for the third quarter 2018. In a press release, Ferroglobe reported a net loss of $2.9 million and adjusted EBITDA of $45.0 million, which was down 47.9% from the prior quarter adjusted EBITDA of $86.3 million. 24. In the press release, Defendant Larrea attributed the poor performance to “market conditions in our main products [that] deteriorated through Q3.” Regarding Ferroglobe’s response to these conditions, Defendant Larrea stated: Ferroglobe has taken swift action to optimize our position across our global production base. In this regard, we are curtailing production in our silicon metal and manganese-based alloys businesses in order to take advantage of our diversified portfolio by optimizing production among our most cost effective plants and geographies. We also continue to look at further measures to control our costs, to draw down inventories, and to enhance our free cash flow profile. That said, we are operating in a volatile environment currently and our financial results may continue to be challenged in the near-term. 25. On November 27, 2018, Defendants Larrea and Murnane participated in a conference call to discuss the financial results with analysts. Defendant Larrea stated that “the most significant driver of the Q3 results was reduced pricing, specifically average sales price for silicon metal declined 4.9% versus Q2 2018 [due to] silicon production at high rates, the impact of customers stocking up in anticipation of the trade case, and availability of aluminum scrap.” Additionally, he stated that the sales of silicon metal “were impacted by the availability of aluminum scrap, which is now burdened by a 25% tariff on imports from the US into China.” 26. Regarding the manganese-based alloys, Defendant Larrea stated that, in addition to the delink of alloy prices from ore prices, the Company faced “logistical challenges along the supply chain which resulted in some orders not being shipped during the quarter.” 27. Regarding the adjusted EBITDA, Defendant Larrea reiterated that “the biggest factor contributing to the decline this quarter has been pricing.” 28. On this news, Ferroglobe’s share price fell $2.97 per share, more than 62%, to close at $1.80 per share on November 27, 2018, on unusually high trading volume. CLASS ACTION ALLEGATIONS 29. 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 Ferroglobe securities between August 21, 2018 and November 26, 2018, 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. 30. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Ferroglobe’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 Ferroglobe 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 Ferroglobe 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. 31. 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. 32. 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. 33. 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 Ferroglobe; and c) to what extent the members of the Class have sustained damages and the proper measure of damages. 34. 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 35. The market for Ferroglobe’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, Ferroglobe’s securities traded at artificially inflated prices during the Class Period. Plaintiff and other members of the Class purchased or otherwise acquired Ferroglobe’s securities relying upon the integrity of the market price of the Company’s securities and market information relating to Ferroglobe, and have been damaged thereby. 36. During the Class Period, Defendants materially misled the investing public, thereby inflating the price of Ferroglobe’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 Ferroglobe’s business, operations, and prospects as alleged herein. 37. 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 Ferroglobe’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 38. Defendants’ wrongful conduct, as alleged herein, directly and proximately caused the economic loss suffered by Plaintiff and the Class. 39. During the Class Period, Plaintiff and the Class purchased Ferroglobe’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 40. 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 Ferroglobe, their control over, and/or receipt and/or modification of Ferroglobe’s allegedly materially misleading misstatements and/or their associations with the Company which made them privy to confidential proprietary information concerning Ferroglobe, participated in the fraudulent scheme alleged herein. APPLICABILITY OF PRESUMPTION OF RELIANCE (FRAUD-ON-THE-MARKET DOCTRINE) 41. The market for Ferroglobe’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, Ferroglobe’s securities traded at artificially inflated prices during the Class Period. On August 29, 2018, the Company’s share price closed at a Class Period high of $8.53 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 Ferroglobe’s securities and market information relating to Ferroglobe, and have been damaged thereby. 42. During the Class Period, the artificial inflation of Ferroglobe’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 Ferroglobe’s business, prospects, and operations. These material misstatements and/or omissions created an unrealistically positive assessment of Ferroglobe 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. 43. At all relevant times, the market for Ferroglobe’s securities was an efficient market for the following reasons, among others: a) Ferroglobe shares met the requirements for listing, and were listed and actively traded on the NASDAQ, a highly efficient and automated market; b) As a regulated issuer, Ferroglobe filed periodic public reports with the SEC and/or the NASDAQ; c) Ferroglobe 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) Ferroglobe 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. 44. As a result of the foregoing, the market for Ferroglobe’s securities promptly digested current information regarding Ferroglobe from all publicly available sources and reflected such information in Ferroglobe’s share price. Under these circumstances, all purchasers of Ferroglobe’s securities during the Class Period suffered similar injury through their purchase of Ferroglobe’s securities at artificially inflated prices and a presumption of reliance applies. 45. 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 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 Ferroglobe who knew that the statement was false when made. COUNT I (Violations 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 Ferroglobe’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. 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 purchasers of the Company’s securities in an effort to maintain artificially high market prices for Ferroglobe’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 Ferroglobe’s financial well-being and prospects, as specified herein. 51. 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 Ferroglobe’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 Ferroglobe 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. 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. 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 Ferroglobe’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 Ferroglobe’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 Ferroglobe’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 Ferroglobe was experiencing, which were not disclosed by Defendants, Plaintiff and other members of the Class would not have purchased or otherwise acquired their Ferroglobe 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 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 and sales of the Company’s securities during the Class Period. COUNT II (Violations 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 Ferroglobe 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, 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, the 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. 61. As set forth above, Ferroglobe and the 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, 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: March 15, 2019 Respectfully submitted, POMERANTZ LLP /s/ Jeremy A. Lieberman Jeremy A. Lieberman J. Alexander Hood II Jonathan D. Lindenfeld 600 Third Avenue, 20th Floor New York, New York 10016 Telephone: (212) 661-1100 Facsimile: (212) 661-8665 Email: [email protected] [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 CERTIFICATION PURSUANT TO FEDERAL SECURITIES LAWS 1. I make this declaration pursuant to Section 27(a)(2) of the Securities Act of 1933 (“Securities Act”) and/or Section 21D(a)(2) of the Securities Exchange Act of 1934 (“Exchange Act”) as amended by the Private Securities Litigation Reform Act of 1995. 2. I have reviewed a Complaint against Ferroglobe PLC (“Ferroglobe” or the “Company”) and authorize the filing of a comparable complaint on my behalf. 3. I did not purchase or acquire Ferroglobe securities at the direction of plaintiffs’ counsel or in order to participate in any private action arising under the Securities Act or Exchange Act. 4. I am willing to serve as a representative party on behalf of a Class of investors who purchased or acquired Ferroglobe securities during the class period, including providing testimony at deposition and trial, if necessary. I understand 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 my transactions in Ferroglobe 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, I have not sought to serve as a representative party on behalf of a class under the federal securities laws. 7. I agree not to accept any payment for serving as a representative party on behalf of the class as set forth in the Complaint, beyond my 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. 8. I declare under penalty of perjury that the foregoing is true and correct. If Representing Corporation, Trust, Partnership or other entity, Name of Entity Jam-Wood Holdings, LLC If Representing an Entity, Position at Entity Configurable list (if none enter none) (see attached) Configurable list (if none enter none) Documents & Message Upload your brokerage statements showing your individual purchase and sale orders. Ferroglobe plc (GSM) Jam-Wood Holdings LLC List of Purchases and Sales Purchase Number of Price Per Date or Sale Shares/Unit Share/Unit 9/4/2018 Purchase 1,500 $8.0300 9/4/2018 Purchase 200 $8.0250 9/4/2018 Purchase 2,298 $8.0290 9/4/2018 Purchase 2 $8.0300 9/4/2018 Purchase 6,000 $8.0250 10/9/2018 Purchase 5,000 $7.2915

securities

bwn9FYcBD5gMZwczF6qj

UNITED STATES DISTRICT COURT| DISTRICT OF MASSACHUSETTS JOSEPH BARRETT, on behalf of himself and others similarly situated, Plaintiff, Case No. v. VIVINT SOLAR DEVELOPER, LLC and JOHN DOE CORPORATION D/B/A NATIONAL SOLAR PROGRAM Defendants. CLASS ACTION COMPLAINT Preliminary Statement 1. As the Supreme Court explained at the end of its term this year, “Americans passionately disagree about many things. But they are largely united in their disdain for robocalls. The Federal Government receives a staggering number of complaints about robocalls—3.7 million complaints in 2019 alone. The States likewise field a constant barrage of complaints. For nearly 30 years, the people’s representatives in Congress have been fighting back. As relevant here, the Telephone Consumer Protection Act of 1991, known as the TCPA, generally prohibits robocalls to cell phones and home phones.” Barr v. Am. Ass'n of Political Consultants, No. 19-631, 2020 U.S. LEXIS 3544, at *5 (July 6, 2020). 2. Plaintiff Joseph Barrett (“Plaintiff”) brings this action to enforce the consumer- privacy provisions of the TCPA alleging that Vivint Solar Developer, LLC commissioned pre- recorded telemarketing calls to his number on the National Do Not Call Registry and to other putative class members without their prior express written consent. 3. The calls were sent pursuant to an agreement between Vivint and John Doe Corporation, who identified itself as “National Solar Program” on the call. 4. The Plaintiff and putative class members never consented to receive these calls. Because telemarketing campaigns generally place calls to hundreds of thousands or even millions of potential customers en masse, The Plaintiff bring this action on behalf of a proposed nationwide class of other persons who received illegal telemarketing calls from or on behalf of 5. A class action is the best means of obtaining redress for the Defendants’ wide- scale illegal telemarketing and is consistent both with the private right of action afforded by the TCPA and the fairness and efficiency goals of Rule 23 of the Federal Rules of Civil Procedure. Parties 6. Plaintiff Joseph Barrett is a resident of the Commonwealth of Massachusetts and this District. 7. Defendant Vivint Solar Developer, LLC is a Delaware limited liability company with its principal place of business in Lehi, UT. Vivint Solar Developer, LLC is registered to do business in this District and has a registered agent of CT Corporation System located at 155 Federal St., Suite 700 in Boston, MA 02110. 8. Defendant John Doe Corporation, who identified itself as “National Solar Program” on the call to Mr. Barrett, is a telemarketing vendor for Vivint and contracted with Vivint to originate new customers for them through telemarketing, including calls made into this District. Jurisdiction & Venue 9. The Court has federal question subject matter jurisdiction over these TCPA claims. Mims v. Arrow Financial Services, LLC, 132 S. Ct. 740 (2012). 10. The Court has personal jurisdiction over Vivint Solar Developer and John Doe Corporation because they engaged in telemarketing conduct into this District and Vivint Solar Developer services contracts in this District and is registered to do business in this District. 11. Venue is proper under 28 U.S.C. § 1391(b)(2) because a substantial part of the events or omissions giving rise to the claim occurred in this District. TCPA Background 12. 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). The TCPA Prohibits Automated Telemarketing Calls to Cellular Telephones 13. 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 or to a number that is charged per call. See 47 U.S.C. § 227(b)(1)(A). 14. The TCPA provides a private cause of action to persons who receive calls in violation of 47 U.S.C. § 227(b)(1)(A). See 47 U.S.C. § 227(b)(3). 15. 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. 16. The FCC also recognized that “wireless customers are charged for incoming calls whether they pay in advance or after the minutes are used.” In re Rules and Regulations Implementing the Tel. Consumer Prot. Act of 1991, CG Docket No. 02-278, Report and Order, 18 F.C.C. Rcd. 14014, 14115 ¶ 165 (2003). 17. In 2013, the FCC required prior express written consent for all autodialed or prerecorded telemarketing calls (“robocalls”) to wireless numbers and residential lines. Specifically, it ordered that: [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 Tel. Consumer Prot. Act of 1991, 27 F.C.C. Rcd. 1830, 1844 (2012) (footnotes omitted). Factual Allegations Call to Mr. Barrett 18. Plaintiff Barrett is a “person” as defined by 47 U.S.C. § 153(39). 19. Mr. Barrett’s telephone number, (781) 315-XXXX, is assigned to a cellular telephone service. 20. Mr. Barrett’s telephone number has been on the National Do Not Call Registry for more than a year prior to the call at issue. 21. On July 16, 2019, Mr. Barrett received a pre-recorded call on his cellular telephone. 22. The call was made with an ATDS, as that term is defined by the TCPA. 23. The Plaintiff knew the call were made with an ATDS because: a. The call used a pre-recorded voice; b. The call came from a spoofed caller ID; c. The call was commercial in nature; and d. Right before the call connected with a live individual there was a distinctive “click” sound, associated with an automated dialer. 24. When Mr. Barrett connected with a live individual, he was informed that he was speaking with the “National Solar Program”. 25. To identify an actual company, Mr. Barrett engaged with the telemarketer. 26. The telemarketing company set an appointment for Mr. Barrett. 27. Mr. Barrett then received a confirmation from a representative that said he was calling from Vivint regarding the call from National Solar Program. 28. To confirm his association with Vivint, Mr. Barrett received an e-mail from “John Stanasek”, [email protected]. 29. Vivintsolar.com is a domain registered and owned by the Defendant. 30. John Stanasek is a District Solar Manager for Vivint in Wilmington, MA. 31. Plaintiff and the other call recipients were harmed by these calls. They were temporarily deprived of legitimate use of their phones because their phone lines was tied up during the telemarketing calls and their privacy was improperly invaded. Moreover, these calls injured Plaintiff and the other call recipients because they were frustrating, obnoxious, annoying, were a nuisance and disturbed the solitude of Plaintiff and the class. Furthermore, the calls injured Plaintiff because in many cases Plaintiff were charged per minute or per character for the messages sent. Vivint Solar Developer’s Liability for John Doe’s Conduct 32. For more than twenty years, the FCC has explained that its “rules generally establish that the party on whose behalf a solicitation is made bears ultimate responsibility for any violations.” In re Rules & Regulations Implementing the TCPA, CC Docket No. 92-90, Memorandum Opinion and Order, 10 FCC Rcd 12391, 12397 (¶ 13) (1995). 33. In its January 4, 2008 ruling, the FCC likewise held that a company on whose behalf a telephone call is made bears the responsibility for any violations. Id. (specifically recognizing “on behalf of” liability in the context of an autodialed or prerecorded message call sent to a consumer by a third party on another entity’s behalf under 47 U.S.C. § 227(b)). 34. In fact, the Federal Communication Commission has instructed that sellers such as Vivint may not avoid liability by outsourcing telemarketing to third parties, such as the co- defendants: [A]llowing the seller to avoid potential liability by outsourcing its telemarketing activities to unsupervised third parties would leave consumers in many cases without an effective remedy for telemarketing intrusions. This would particularly be so if the telemarketers were judgment proof, unidentifiable, or located outside the United States, as is often the case. Even where third-party telemarketers are identifiable, solvent, and amenable to judgment limiting liability to the telemarketer that physically places the call would make enforcement in many cases substantially more expensive and less efficient, since consumers (or law enforcement agencies) would be required to sue each marketer separately in order to obtain effective relief. As the FTC noted, because “[s]ellers may have thousands of ‘independent’ marketers, suing one or a few of them is unlikely to make a substantive difference for consumer privacy.” May 2013 FCC Ruling, 28 FCC Rcd at 6588 (¶ 37) (internal citations omitted). 35. On May 9, 2013, the FCC released a Declaratory Ruling holding that 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 either section 227(b) or section 227(c) that are committed by third-party telemarketers.”1 36. The May 2013 FCC Ruling held that, even absent evidence of a formal contractual relationship between the seller and the telemarketer, a seller is liable for telemarketing calls if the telemarketer “has apparent (if not actual) authority” to make the calls. 28 FCC Rcd at 6586 (¶ 34). 37. The May 2013 FCC Ruling further clarifies the circumstances under which a telemarketer has apparent authority: 1 In re Joint Petition Filed by DISH Network, LLC et al. for Declaratory Ruling Concerning the TCPA Rules, 28 FCC Rcd 6574, 6574 (¶ 1) (2013) (“May 2013 FCC Ruling”). [A]pparent authority may be supported by evidence that 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. The ability by the outside sales entity to enter consumer information into the seller’s sales or customer systems, as well as the authority to use the seller’s trade name, trademark and service mark may also be relevant. It may also be persuasive that the seller approved, wrote or reviewed the outside entity’s telemarketing scripts. Finally, a seller would be responsible under the TCPA for the unauthorized conduct of a third-party telemarketer that is otherwise authorized to market on the seller’s behalf if 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. FCC Rcd at 6592 (¶ 46). 38. John Doe Corporation is believed to be a Vivint Authorized Dealer. 39. Vivint hired John Doe Corporation to originate new business knowing that they were using telemarketing calls. 40. Vivint could have restricted John Doe Corporation from using automated telemarketing, but it did not. 41. Vivint also accepted the benefits of John Doe Corporation’s illegal telemarketing by accepting live transfers of leads directly from John Doe Corporation despite the fact that those leads were generated through illegal telemarketing. 42. Vivint permitted John Doe Corporation to place calls using Vivint’s name as the provider of services without mentioning John Doe Corporation name during the call. 43. Vivint had absolute control over whether, and under what circumstances, it would accept a customer. 44. Vivint determined the parameters and qualifications for customers to be transferred to a live Vivint representative and required John Doe Corporation to adhere to those requirements. 45. Vivint knew (or reasonably should have known) that John Doe Corporation was violating the TCPA on its behalf and failed to take effective steps within its power to force the telemarketer to cease that conduct. Any reasonable seller that accepts telemarketing call leads from lead generators would, and indeed must, investigate to ensure that those calls were made in compliance with TCPA rules and regulations. 46. John Doe Corporation transferred customer information directly to Vivint. Thus, the company that Vivint hired has the “ability . . . to enter consumer information into the seller’s sales or customer systems,” as discussed in the May 2013 FCC Ruling. 47. DSI also had the right to bind Vivint in contract, a hallmark of agency. 48. Finally, the May 2013 FCC Ruling states that called parties may obtain “evidence of these kinds of relationships . . . through discovery, if they are not independently privy to such information.” Id. at 6592-593 (¶ 46). Evidence of circumstances pointing to apparent authority on behalf of the telemarketer “should be sufficient to place upon the seller the burden of demonstrating that a reasonable consumer would not sensibly assume that the telemarketer was acting as the seller’s authorized agent.” Id. at 6593 (¶ 46). Class Action Allegations 49. As authorized by Rule 23(b)(2) and/or (b)(3) of the Federal Rules of Civil Procedure, Plaintiff bring this action on behalf of a class of all other persons or entities similarly situated throughout the United States. 50. The Class of persons Plaintiff propose to represent is tentatively defined as: All persons within the United States to whom: (a) Defendants and/or a third party acting on its behalf, made one or more non-emergency telephone calls; (b) to their cellular telephone number or number that is charged per call; (c) using an automatic telephone dialing system or an artificial or prerecorded voice; and (d) at any time in the period that begins four years before the date of the filing of this Complaint to trial. 51. Excluded from the Class are counsel, the Defendants, and any entities in which the Defendant has a controlling interest, the Defendants’ agents and employees, any judge to whom this action is assigned, and any member of such judge’s staff and immediate family. 52. The Class as defined above is identifiable through phone records and phone number databases. 53. The potential Class’s members likely number at least in the thousands. Individual joinder of these persons is impracticable. 54. Plaintiff Perrong is a member of all of the Class. 55. Plaintiff is a member of the Class. 56. There are questions of law and fact common to Plaintiff and to the proposed Class, including but not limited to the following: a. Whether Defendants violated the TCPA by using automated calls to contact putative class members cellular telephones; b. Whether Defendants’ agent(s) initiated calls without obtaining the recipients’ prior express invitation or permission for the call; c. Whether Vivint Solar is vicariously liable for the telemarketing conduct of its agent(s); and d. Whether the Plaintiff and the class members are entitled to statutory damages because of Defendants’ actions. 57. Plaintiff’s claims are typical of the claims of class members. 58. Plaintiff is an adequate representative of the Class because his interests do not conflict with the interests of the Class, he will fairly and adequately protect the interests of the Class, and he is represented by counsel skilled and experienced in class actions, including TCPA class actions. 59. Common questions of law and fact predominate over questions affecting only individual class members, and a class action is the superior method for fair and efficient adjudication of the controversy. The only individual question concerns identification of class members, which will be ascertainable from records maintained by Defendants and/or their 60. The likelihood that individual members of the Class will prosecute separate actions is remote due to the time and expense necessary to prosecute an individual case. Legal Claims Count One: Violation of the TCPA’s Automated Call provisions 61. Plaintiff incorporates the allegations from all previous paragraphs as if fully set forth herein. 62. The Defendants violated the TCPA by (a) initiating automated telephone solicitations to telephone numbers, or (b) by the fact that others made those calls on its behalf. See 47 U.S.C. § 227(b). 63. The Defendants’ violations were willful and/or knowing. 64. Plaintiff and members of the Class are also entitled to and do seek injunctive relief prohibiting Defendants and/or their affiliates, agents, and/or other persons or entities acting on Defendants’ behalf from making calls, except for emergency purposes, to any telephone numbers using an ATDS and/or artificial or prerecorded voice in the future. Relief Sought WHEREFORE, for himself and all class members, Plaintiff request the following relief: A. Injunctive relief prohibiting Defendants and/or its affiliates, agents, and/or other persons or entities acting on Defendants’ behalf from making calls, except for emergency purposes, to any telephone numbers using an ATDS and/or artificial or prerecorded voice in the B. Because of Defendants’ violations of the TCPA, Plaintiff seek for themselves and the other putative Class members $500 in statutory damages per violation or—where such regulations were willfully or knowingly violated—up to $1,500 per violation, pursuant to 47 U.S.C. § 227(b)(3). D. An order certifying this action to be a proper class action under Federal Rule of Civil Procedure 23, establishing any appropriate classes 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. Plaintiff request a jury trial as to all claims of the complaint so triable. Plaintiff, By Counsel, Dated: August 3, 2020 /s/ Anthony I. Paronich Anthony I. Paronich Paronich Law, P.C. 350 Lincoln Street, Suite 2400 Hingham, MA 02043 508.221.1510 E-mail: [email protected] Alex M. Washkowitz CW LAW GROUP, P.C. 188 Oaks Road Framingham, MA 01702 Telephone: (508) 309-4880 [email protected] Brian K. Murphy (subject to pro hac vice) Jonathan P. Misny (subject to pro hac vice) Murray Murphy Moul + Basil LLP 1114 Dublin Road Columbus, OH 43215 Telephone: 614.488.0400 Facsimile: 614.488.0401 E-mail: [email protected] [email protected]

privacy

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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI Cause No.: Nancy Spatz, Dawn Carl, Gail Grygar, Cheryl Peterson, Teri Hargrave, Heather Kenney, Jodi Mallette, Beth Ratty, Stacy Orf and Brooke Morehead on behalf of themselves and others similarly situated, Plaintiffs, Jury Trial Demanded v. Lee’s Summit R-7 School District, Defendant. COMPLAINT Nancy Spatz, Dawn Carl, Gail Grygar, Teri Hargrave and Cheryl Peterson, Heather Kenney, Jodi Mallette, Beth Ratty, Stacy Orf and Brooke Morehead (collectively, the “Plaintiffs”), by and through their attorneys, on behalf of themselves and others similarly situated, bring this cause of action against Defendant Lee’s Summit R-7 School District (the “Defendant” or “District”) for appropriate legal and equitable relief for violations of the Equal Pay Act of 1963, 29 U.S.C. § 206(d), as amended (the “Equal Pay Act”). PARTIES 1. Defendant the Lee’s Summit R-7 School District is a public-school district organized under Missouri law and located in Jackson County, Missouri. 2. Defendant has the power to sue and to be sued and to exercise such other and further powers as may be conferred by the Constitution or statutes of the State of Missouri. 3. Defendant is an “employer” within the meaning the Fair Labor Standards Act, 29 U.S.C. § 203. Plaintiffs’ employment with Defendant is subject to the provisions of the Equal Pay Act. 4. Plaintiff Nancy Spatz (“Spatz”) is a field technology specialist who was hired by the District in 2001. Spatz is a female who is paid less than male field technology specialist for performing substantially the equal work requiring equal skill, effort, and responsibility performed under similar conditions. 5. Plaintiff Dawn Carl (“Carl”) is a field technology specialist who was hired by the District in 2005. Carl is a female who is paid less than male field technology specialist for performing substantially the equal work requiring equal skill, effort, and responsibility performed under similar conditions. 6. Plaintiff Gail Grygar (“Grygar”) is a field technology specialist who was hired by the District in 2000. Grygar is a female who is paid less than male field technology specialist for performing substantially the equal work requiring equal skill, effort, and responsibility performed under similar conditions. 7. Plaintiff Teri Hargrave (“Hargrave”) is field technology specialist who was hired by the District in 1994. Hargrave is a female who is paid less than male field technology specialist for performing substantially the equal work requiring equal skill, effort, and responsibility performed under similar conditions. 8. Plaintiff Cheryl Peterson (“Peterson”) is a field technology specialist who was hired by the District in 2001. Peterson is a female who is paid less than male field technology specialist for performing substantially the equal work requiring equal skill, effort, and responsibility performed under similar conditions. 9. Plaintiff Heather Kenney is employed by the District as an elementary school principal. Kenney is a female who is paid less than male principals for performing substantially the equal work requiring equal skill, effort, and responsibility performed under similar conditions. 10. Plaintiff Jodi Mallette is employed by the District as an elementary school principal. Mallette is a female who is paid less than male principals for performing substantially the equal work requiring equal skill, effort, and responsibility performed under similar conditions. 11. Plaintiff Beth Ratty is employed by the District as an elementary school principal. Ratty is a female who is paid less than male principals for performing substantially the equal work requiring equal skill, effort, and responsibility performed under similar conditions. 12. Plaintiff Stacy Orf is employed by the District as an elementary school assistant principal. Orf is a female who is paid less than male assistant principals for performing substantially the equal work requiring equal skill, effort, and responsibility performed under similar conditions. 13. Plaintiff Brooke Morehead is employed by the District as an elementary school assistant principal. Morehead is a female who is paid less than male assistant principals for performing substantially the equal work requiring equal skill, effort, and responsibility performed under similar conditions. 14. During the relevant period from 2017 to the present, Defendant also employed other women, who like the Plaintiffs, were paid less than males for equal work requiring equal skill, effort, and responsibility performed under similar conditions. JURISDICTION AND VENUE 15. This Court has jurisdiction pursuant to 29 U.S.C. § 201, et seq., and 28 U.S.C. § 1331 and 1343. 16. The unlawful pay practices alleged in this Complaint were committed within this judicial district. 17. Venue is proper in this Court pursuant to 28 U.S.C § 1391(b). CLAIM FOR VIOLATION OF EQUAL PAY ACT, 29 U.S.C. § 206(d)(1) (Plaintiffs brings this claim as an “opt in” collective action pursuant to 29 U.S.C. § 216(b)) 18. Plaintiffs incorporate by reference the allegations of paragraphs 3 through 17 and reassert said allegations as if fully set forth herein. 19. The salaries for employees are determined by a salary schedule (each a “Salary Schedule”) similar to that required by § 168.110 R.S.Mo. 20. Throughout each Plaintiffs’ employment with the District, the Salary Schedules have classified, administrative and support salaries generally, though not always, by years of service (referred to as “Steps”) and some salaries schedules have ranges that correspond with certain job positions. 21. Throughout each Plaintiffs’ employment with the District, and during the relevant period from 2017 to the present, the District’s application of the Salary Schedules has been unreasonably and unsystematically applied so that the District pays different salaries to men and women for equal work requiring equal skill, effort, and responsibility performed under similar conditions and not for any reason having to do with a seniority system, a merit system, a system which measures pay by quantity or quality of production, or any other factor other than sex. 22. Defendant paid Plaintiffs and others similarly situated at rates less than its male employees, even though the jobs performed by Plaintiffs and others similarly situated required equal skill, effort, and responsibility, and were performed under similar working conditions. 23. For instance, based on records provided by the Defendant, female field technology specialists are paid substantially less than similarly situated or less senior men. A male employee hired on June 2, 2015, with 18 years’ experience outside the district and an AS degree was started at step 17., in comparison Plaintiff Spatz was promoted from Site Technician to Field Technician after working in the district since 2001, Spatz has a BS in Engineering, and MS in Engineering Management and 20 years combined experience. Spatz was placed at Step Level 1. 24. Accordingly, not only were women paid less then men, when a female employee was promoted from within the District the years of service were not considered in factoring step placement. Thus, in Plaintiff Spatz position a male with less education and less experience was placed at step 17 and Spatz was placed at step 1. 25. Over the past 10 years all females promoted from Site Technician to Field Technician have started over at step position 1 as opposed to being given credit for their years of service. Whereas all male employees promoted from Site Technician to Field Technician have retained their step placement despite movement to a new range on the salary schedule. 26. All employees hired from outside the district directly to the position of Field Technician have been male and all have been given credit toward step placement for prior work experience. Whereas women within the District are not given such credit and are, in fact, reduced to step level 1 upon any promotion. 27. A male employee with one-year experience started with the Defendant in February of 2018, as a Site Technician level 2, after six months he was promoted to Field Technician and was placed at step level 2. Whereas, Plaintiff Hargrave, was a Site Technician for 6 years and in January of 2018 was promoted to Field Technician but was told that all Field Technicians start at step level 1. 28. A male employee, who started in 2013 was promoted to Field Technician in 2014 and has a placement of step level 5. Plaintiff Peterson who started with the Defendant in 2001 was promoted to Field Technician and placed on step level 1. Despite having 18 years’ experience including 12 more than her male counterpart she was at step 6 and he was at step 5. 29. Another male employee hired in 2017 with seven years’ experience is now at a step level 9, whereas a similarly situated female employee with 18 years’ experience including 12 as a Field Technician was only at step placement 7. 30. A male employee with 4 years’ experience was hired and placed on step placement 5, Plaintiff Spatz who has 8 years’ experience as a Field Technician and 24 years of technology experience was at step level 3 two steps below a male with substantially less experience. 31. A male employee with 18 years prior experience was started at step placement 17 and this employee is now listed at step 18. Plaintiff Carl a senior field technician, who actually trained the male employee at step 18, was only at step placement 7. 32. Female Field Technicians within the Defendant District have an average of 17 years of technology experience, they average 18 years of service to the District and have an average step placement of 5.6 Whereas, male Field Technicians average 10 years technology experience, 5 years of service to the District and have an average step placement of 7.7. 33. The Defendant investigated the pay of its Field Technology Specialists and concluded, “Male Field Technology Specialists are paid a higher salary than female Field Technology Specialists with similar or more experience.” 34. Another stark example of the disparity is evident in the pay of elementary school principals and assistant principals. Although female elementary principals outnumber males by more than 3 to 1, the highest paid elementary principals are each male. What is worse, 3 of the 4 highest paid male elementary principals have little, very little or no experience within the district, having been hired within the last 3 years. Moreover, there is disparity in the education levels. Whereas female principals with their doctorate are placed lower on the salary scale than male principals without their doctorates. 35. The pay disparity between male and female elementary school principals is due to the District’s gross inconsistency in the District’s application of its Salary Schedule. There are no authorized guidelines and no systematic approach to the application of the District’s Salary Schedule. Whatever the system used by the District for determining the salary of elementary school principals, it is unknown to employees, is not based on predetermined criteria, is unstructured and unorganized, and is clearly based on sex. 36. Over the past 4 years men hired within the district to the position of Elementary principal received credit for their years of service. Whereas female employees promoted from within were not similarly credited with prior service. 37. Likewise, the District pays male assistant principals more than female assistant principals for reasons that are unknown to employees, that are not based on predetermined criteria, and that are clearly based on sex. 38. For instance Plaintiff Orf and Plaintiff Morehead each had three years prior administrative experience, and each were placed on step 4 with an annual salary of $73,947. There are five male assistant principals with three or less years of prior administrative experience, the men were placed on step placements 7, 8 and 9 with annual salaries ranging from $87,157 to $89,336. Accordingly, female assistant principals this school year were paid almost $15,000.00 a year less than their male counterparts. 39. The pay disparity between male and female assistant principals is due to the District’s gross inconsistency in the District’s application of its Salary Schedule. There are no authorized guidelines and no systematic approach to the application of the District’s Salary Schedule. Whatever the system used by the District for determining the salary of assistant elementary school principals, it is unknown to employees, is not based on predetermined criteria, is unstructured and unorganized, and is clearly based on sex. 40. As with the Field Technicians, the Defendant investigated the pay of elementary principles and concluded that males were paid more than similarly situated or more veteran females. The Defendant District, through its Superintendent explained that the disparity was the result of having negotiated the step placements with male employees. 41. Upon information and belief, the disparity in pay is not limited to Field Technicians, Elementary principals and assistant principals, rather the crediting of prior years of service for newly hired employees and/or allowing male employees to negotiate step placement has resulted in broad disparities in pay between female employees within the Defendant District and male employees. 42. Defendant’s violation of the Equal Pay provisions of the Fair Labor Standards Act, as set forth above, was a willful violation, in that defendant knew, or should have known, of the provisions pertaining to equal pay contained in the Fair Labor Standards Act, but continued to pay male employees performing the same work as plaintiffs under similar working conditions at a higher rate than plaintiffs even after plaintiffs complained of such discrimination. Such discrimination by defendant continues to the present time. 43. Plaintiffs brings this Complaint as a collective action pursuant to 29 U.S.C. §216(b) of the FLSA, on behalf of all persons who were, are, or will be employed by the Defendant as similarly situated employees within three years from the commencement of this action who have been paid less than employees performing the same work under similar working conditions based on sex, as aforesaid. 44. The names and addresses of similarly situated employees are available from Defendant. To the extent required by law, notice will be provided to said individuals via First Class Mail and/or using techniques (including and a form of notice) similar to those customarily used in representative and collective actions. WHEREFORE, Plaintiffs, on behalf of themselves and all similarly situated employees of Defendant, respectfully pray that this Court enter judgment against the Lee’s Summit R-7 School District and award damages plaintiffs in the amount found to be the unpaid differential due under 29 U.S.C.A. § 206, an amount equal to wages and benefits lost, and an additional equal amount as liquidated damages for defendant's malicious and willful violation of the Equal Pay Act, plus reasonable attorney's fees and costs of this action, with interest as provided by law, and such other and further relief as the Court deems just and equitable. Plaintiffs pray also for the additional relief as follows: a. Designation of this action as a collective action and prompt issuance of notice pursuant to 29 U.S.C. §216(b) to all similarly situated employees of the Defendant apprising them of the pendency of this action and permitting them to assert timely FLSA claims in this action by filing individual Consents To Join pursuant to U.S.C. §216(b); b. Designation of Plaintiffs as Representative Plaintiffs, acting for and on behalf of the collective; c. A declaratory judgment that the practices complained of herein are unlawful under the FLSA, 29 U.S.C. §206; d. An award of damages, including compensatory and liquidated damages, to be paid by Defendant; f. Costs and expenses of this action incurred herein, including reasonable attorneys’ fees, expert fees and costs; g. Pre-Judgment and Post-Judgment interest, as provided by law; and h. Any and all such other and further relief as this Court deems necessary, just and KAPKE & WILLERTH L.L.C. By: /s/ George E. Kapke, Jr. George E. Kapke, Jr. MO #52114 The Chape1 Ridge Law Building 3304 N.E. Ralph Powell Road Lee’s Summit, Missouri 64064 Telephone: 816-461-3800 Facsimile: 816-254-8014 [email protected] THE KLAMANN LAW FIRM Andrew Schermerhorn MO 62101 4435 Main Street, Suite 150 Kansas City, MO 64111 Telephone: (816) 421-2626 Facsimile: (816) 421-8686 [email protected] ATTORNEYS FOR PLAINTIFFS

discrimination

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA CLASS ACTION JURY TRIAL DEMANDED YAZAN SALEH, individually and on behalf of all others similarly situated, Plaintiff, v. MIAMI GARDENS SQUARE ONE, INC. D/B/A TOOTSIE’S CABARET, a Florida corporation, and RCI HOSPITALITY HOLDINGS, INC., a Texas Corporation, Defendants. CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FAIR AND ACCURATE CREDIT TRANSACTIONS ACT (FACTA) Plaintiff YAZAN SALEH (“Plaintiff”), on behalf of himself and other similarly situated individuals, alleges the following, in relevant part, upon information and belief, and his own personal knowledge. I. NATURE OF THE CASE 1. This class action complaint is based upon Defendants’ violations of the Fair and Accurate Credit Transactions Act (“FACTA”) amendment to the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., as amended (the “FCRA”). Specifically, this action is based upon Section 1681c(g) of the FCRA, which states that, “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 the sale or transaction.” Despite the clear language of the statute, Defendants willfully chose not to comply with the FCRA. As such, all consumers who purchased goods or services from Defendants using 1 a credit or debit card suffered violations of Section 1681c(g), have been uniformly burdened with an elevated risk of identity theft, and are entitled to an award of statutory damages. II. JURISDICTION AND VENUE 2. This Court has jurisdiction under 15 U.S.C. § 1681p, and 28 U.S.C. §§ 1331 and 1337 because the claims in this action arise under violation of a federal statute. 3. Venue is proper in this District under 28 U.S.C. § 1391 because a substantial part of the events or omissions giving rise to the claim occurred here. Defendants do business in this District and their contacts here are sufficient to subject them to personal jurisdiction. III. PARTIES 4. Plaintiff YAZAN SALEH (“Plaintiff”) is a natural person, who resides in the State of Florida, Broward County. 5. Defendant, MIAMI GARDENS SQUARE ONE, INC. D/B/A TOOTSIE’S CABARET (“Defendant” or “Tootsie’s Cabaret”), is a Florida corporation whose principal address is 150 NW 183rd Street Miami Gardens, Florida 33169. 6. Defendant, RCI HOSPITALITY HOLDINGS, INC., (“Defendant” or “RCI Hospitality”), is a Texas corporation whose principal address is 10959 Cutten Road, Houston, Texas 77066. 7. Defendant Tootsie’s Cabaret is the country's largest adult entertainment complex and a subsidiary of RCI Hospitality Holdings, Inc. Tootsie’s Cabaret’s complex consists of 74,000 square feet, more than 300 attractive entertainers, four full liquor bars, a 400-plus square 2 foot main stage, more than 300 hi-definition TV screens, three levels of VIP areas, and a 15,000 square foot Knockers Sports Bar.1 8. On August 3, 2015, RCI Hospitality, a leading operator of gentlemen’s clubs, announced the acquisition of Tootsie’s Cabaret. At any relevant time, RCI Hospitality had control over its subsidiary Tootsie’s Cabaret having assumed management of the Miami club on December 1, 2015.2 IV. FACTUAL ALLEGATIONS A. Background 9. In 2003, FACTA was enacted by Congress, and signed into law by President George W. Bush. One of FACTA’s primary purposes was to amend the FCRA through the addition of identity theft protections for consumers. 10. One such FACTA provision was specifically designed to thwart identity thieves’ ability to gain sensitive information regarding a consumer’s credit or bank account from a receipt provided to the consumer during a point of sale transaction, which, through any number of ways, could fall into the hands of someone other than the consumer. 11. Codified at 15 U.S.C. § 1681c(g), this provision states the following: 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. (hereinafter, the “Receipt Provision”). 1 See Tootsie's Cabaret Miami Named "Club of The Year" at Industry Convention, PR News Wire (Sep 02, 2015), http://www.prnewswire.com/news-releases/tootsies-cabaret-miami-named- club-of-the-year-at-industry-convention-300136828.html. 2 Rick's Cabaret International, Inc. Enters Florida Market With $25 Million Acquisition of Tootsies Cabaret, Press Release, (August 2, 2015), http://www.rcihospitality.com/130/pressrelease.aspx. 3 12. After enactment, FACTA provided three years in which to comply with its requirements, mandating full compliance with its provisions no later than December 4, 2006. 13. The requirement was widely publicized among retailers and the FTC. 14. For example, in response to earlier state legislation enacting similar truncation requirements, on March 6, 2003, the CEO of Visa USA, Carl Pascarella, explained that “Today, I am proud to announce an additional measure to combat identity theft and protect consumers. Our new receipt truncation policy will soon limit cardholder information on receipts to the last four digits of their accounts. The card’s expiration date will be eliminated from receipts altogether. . . . The first phase of this new policy goes into effect July 1, 2003 for all new terminals. . . . .” “Visa USA Announces Account Truncation Initiative to Protect Consumers from ID Theft; Visa CEO Announces New Initiative at Press Conference With Sen. Dianne Feinstein,” PR Newswire, March 6, 2003. 15. Within 24 hours, MasterCard and American Express announced they were imposing similar requirements. 16. The card issuing organizations proceeded to require compliance with FACTA by contract, in advance of FACTA’s mandatory compliance date. 17. For example, the August 12, 2006 edition of “Rules for Visa Merchants” (p. 62), which is distributed to and binding upon all merchants that accept Visa cards, expressly requires that “only the last four digits of an account number should be printed on the customer’s copy of the receipt” and “the expiration date should not appear at all.” VISA required complete compliance by July 1, 2006, five months ahead of the statutory deadline. 18. Because a handful of large retailers did not comply with their contractual obligations with the card companies and the straightforward requirements of FACTA, Congress 4 passed a law absolving all past violations of FACTA. See The Credit and Debit Card Receipt Clarification Act of 2007, Pub. L. No. 110-241, 122 Stat. 1565 (2008). 19. Importantly, the Clarification Act did not amend FACTA to allow publication of more than the last 5 digits of the card number. Instead, it simply provided amnesty for past violators up to June 3, 2008. 20. Card processing companies continued to alert merchants, including Defendant of FACTA’s requirements. According to a Visa Best Practice Alert in 2010: Some countries already have laws mandating PAN truncation and the suppression of expiration dates on cardholder receipts. For example, the United States Fair and Accurate Credit Transactions Act (FACTA) of 2006 prohibits merchants from printing more than the last five digits of the PAN or the card expiration date on any cardholder receipt. (Please visit http://www.ftc.gov/os/statutes/fcrajump.shtm for more information on the FACTA.) To reinforce its commitment to protecting consumers, merchants, and the overall payment system, Visa is pursuing a global security objective that will enable merchants to eliminate the storage of full PAN and expiration date information from their payment systems when not needed for specific business reasons. To ensure consistency in PAN truncation methods, Visa has developed a list of best practices to be used until any new global rules go into effect. See Visa Alert attached hereto as Exhibit A. 21. Upon information and belief, most of Defendants’ business peers and competitors readily brought their credit card and debit card receipt printing process into compliance with FACTA by programming their card machines and devices to comply with the truncation requirement. Defendants could have readily done the same. 22. Not only were Defendants informed they could not print more than the last five numbers, it was contractually prohibited from doing so. Defendants accept credit cards from all 5 major issuers; these companies set forth requirements that merchants, including Defendants, must follow, including FACTA’s redaction and truncation requirements. 23. As noted above, the processing companies have required that the credit card account number be redacted since 2003 and still require it. For example, American Express required: Pursuant to Applicable Law, truncate the Card Number and do not print the Card's Expiration Date on the copies of Charge Records delivered to Card Members. Truncated Card Number digits must be masked with replacement characters such as “x,” “*,” or “#,” and not blank spaces or numbers. See Exhibit B, attached hereto. 24. Similarly, MasterCard required in a section titled Primary Account Number (PAN) truncation and Expiration Date Omission: A Transaction receipt generated by an electronic POI Terminal, whether attended or unattended, must not include the Card expiration date. In addition, a Transaction receipt generated for a Cardholder by an electronic POI Terminal, whether attended or unattended, must reflect only the last four digits of the primary account number (PAN). All preceding digits of the PAN must be replaced with fill characters, such as "X," "*," or "#," that are neither blank spaces nor numeric characters. See Exhibit C, attached hereto. 25. According to data from the Federal Trade Commission's 2015 Consumer Sentinel Network Data Book, Florida with its 306,133 complaints ranks No. 1 for the highest per capita rate of reported fraud and other types of complaints. For identity theft, Florida is ranked No. 3 in the country with a total of 44,063 complaints. Also, eight of the top 20 metro areas for identity theft are in Florida, according to the report. First is the Homosassa Springs area with 1290.0 6 complaints per 100,000 people, and the Miami area counts 482.3 complaints per 100,000 people.3 26. So problematic is the crime of identity theft that the three main credit reporting agencies, Experian, Equifax, and Transunion, joined to set-up a free website (<http://www.annualcreditreport.com>) in order to comply with FACTA requirements and to provide the citizens of this country with a means of monitoring their credit reports for possible identity theft. 27. In February 2014, the Department of Justice reported that from 2008 through May 2012, over 550,000 taxpayers had their identities stolen with the thieves claiming false tax refunds. Notwithstanding the constant efforts and new regulations to prevent identity theft, “greater efforts are [still] needed to address identity theft issues.”4 28. FACTA clearly prohibits the printing of more than the last 5 digits of the card number to protect persons from identity theft. B. Plaintiff’s Factual Allegations 29. On December 27, 2016, Plaintiff incurred two charges for services and/or goods purchased at Defendant Tootsie’s Cabaret’s club located at 150 NW 183rd Street Miami Gardens, Florida 33169. 30. Plaintiff paid for said goods and services using two different personal VISA® credit cards. Upon making the payment, he was provided with two electronically printed receipts 3 Consumer Sentinel Network Data Book for January-December 2015, Federal Trade Commission (February 2016), https://www.ftc.gov/system/files/documents/reports/consumer- sentinel-network-data-book-january-december-2015/160229csn-2015databook.pdf. 4 Annette Nellen, TTINs and protecting taxpayer identities (September 11, 2014), https://www.aicpastore.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_201 4/Tax/TTINs.jsp. 7 bearing the Miami Gardens Square 1 Inc. name, which also displayed the last four digits of his credit card as well as the first six digits of his account number. 31. Upon information and belief, the violations at issue have taken place at dozens of RCI Hospitality subsidiaries across the United States, including but not limited to the Tootsie’s Cabaret in Miami Gardens, Florida. 32. Upon information and belief, the violations at issue arose when Defendants installed dozens (if not hundreds) of credit card payment systems in its many clubs across the United States. 33. Upon information and belief, prior to the rollout of the new point-of-sale system, Defendants had a written policy in place requiring the truncation of credit card account numbers; this is evidenced by the fact that prior to the installation of the aforementioned retail system, Defendants were actually truncating credit card account numbers. 34. Upon information and belief, a manual was provided to RCI Hospitality and Tootsie’s Cabaret for the operation of the new point-of-sale system which explained that the retailer is able to determine which fields will appear on a printed receipt and further explained that the retailer is able to truncate credit card numbers and mask expiration dates. 35. Upon information and belief, it would take an individual less than thirty seconds to run a test receipt in order to determine whether the point-of-sale system was in compliance with federal law(s) or Defendants’ own alleged written policy requiring the truncation of credit card numbers. 36. Moreover, Defendant RCI Hospitality had actual knowledge of the statute’s requirements. In fact, in its Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended September 30, 2016, RCI Hospitality noted that: 8 We may in the future become subject to lawsuits or other proceedings for purportedly fraudulent transactions arising from the actual or alleged theft of our customers’ debit and credit card information or if customer or employee information is obtained by unauthorized persons or used inappropriately. Any such claim or proceeding, or any adverse publicity resulting from such an event, may have a material adverse effect on our business. 37. The Annual Report was signed by Eric S. Langan, Chief Executive Officer and President of RCI Hospitality. 38. Furthermore, Steven L. Jenkins,5 director of RCI Hospitality is a member of the American Institute of Certified Public Accountants (“AICPA”) that has published at least two articles concerning the need to comply with FACTA to prevent identity theft.6 39. The law is well settled that the knowledge of a corporation’s directors may be imputed to the corporation. Beck v. Deloitte & Touche, 144 F.3d 732, 736 (11th Cir. 1998); In re Hellenic Inc., 252 F.3d 391, 395 (5th Cir. 2001) (noting that “courts generally agree that the knowledge of directors or key officers, such as the president and vice president, is imputed to the corporation”). 40. In addition to having a written policy and its board members and directors having personal knowledge of FACTA’s truncation requirements, Defendants RCI Hospitality and Tootsie’s Cabaret also would have been alerted by its third-party payment processing company. Many payment processors, including Chase Paymentech in 2010, sent email alerts directly to all merchants regarding FACTA’s truncation requirement. Without the benefit of discovery, it is unknown which third-party payment processors were utilized by Defendant. 5 RCI Hospitality Holdings, Inc., Corporate Directors, http://www.rcihospitality.com/investor/biodirectors.aspx (last visited Dec. 28, 2016). 6 See, supra footnote No.4; infra footnote No. 7. 9 41. More so than most companies, RCI Hospitality was held to higher standards to prevent identity theft. In fact, in April 2013, the Securities and Exchange Commission (SEC) adopted joint rules with the Commodity Futures Trading Commission (CFTC) that require broker-dealers, mutual funds, investment advisers, and certain other entities defined as “financial institutions” or “creditors” regulated by the SEC and CFTC to adopt programs to prevent identity theft.7 RCI Hospitality is registered with the SEC and subject to its regulations. The so-called “Red Flags Rule” requiring the aforementioned institutions and creditors to establish reasonable policies and procedures for the implementation of the Commissions’ guidelines, became effective May 20, 2013, and compliance was required by November 20, 2013. C. Defendant’s Misdeeds 42. At all times relevant herein, Defendants were acting by and though their agents, servants and/or employees, each of which were acting within the course and scope of their agency or employment, and under the direct supervision and control of the Defendants. 43. At all times relevant herein, the conduct of the Defendants, as well as that of their agents, servants and/or employees, was in willful and reckless disregard for federal law and the rights of the Plaintiff. 44. It is Defendants’ policy and procedure to issue an electronically printed receipt to individuals at the point of sale – i.e., immediately upon receipt of credit card payment. 45. Consistent with Defendants’ policy and procedure, Defendants knowingly and intentionally includes more than the last 5 digits of the card number on its electronically printed receipts. 7 Commodity Futures Trading Commission and Securities and Exchange Commission, Joint final rules and guidelines, https://www.sec.gov/rules/final/2013/34-69359.pdf. 10 46. The digits appearing on the receipt are not printed accidentally; the equipment and software used to print the receipts and electronically store an image of same must be programmed to display certain information, and likewise, programmed not to display certain information. 47. Notwithstanding the fact that it has had years to comply, Defendants continue to issue point of sale receipts, which contain more than the last 5 digits of the card number, in direct violation of the Receipt Provision of the FCRA. 48. Notwithstanding the Receipt Provision, Defendants continue to deliberately, willfully, intentionally, and/or recklessly violate FACTA by issuing receipts which do not comply with the FCRA. 49. Notwithstanding the fact that Defendants had years to comply with FACTA’s requirements, Defendants continue to act in conscious disregard for the rights of others. 50. To paraphrase the words of Judge Richard Posner in Redman v. RadioShack Corp., --- F.3d ----, 2014 WL 4654477 (7th Cir. Sept. 19, 2014), Defendants have been engaged “in conduct that creates an unjustifiably high risk of harm that is either known or so obvious that it should be known…” Id. at *2. V. CLASS ACTION ALLEGATIONS 51. This action is also brought as a Class Action under Fed. R. Civ. P. 23. Plaintiff proposes the following class, defined as follows, subject to modification by the Court as required: (i) All persons in the United States (ii) who, when making payment for goods or services at one of RCI Hospitality Holdings, Inc.’s subsidiaries across the country (iii) made such payment using a credit or debit card (iv) and were provided with a point of sale receipt (v) which displayed 11 more than the last 5 digits of said credit or debit card (vi) within the two (2) years prior to the filing of the complaint. 52. The named Plaintiff falls within the class definition and is a member of the class. Excluded from the class are Defendants and any entities in which Defendants have a controlling interest, Defendants’ 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, and claims for personal injury, wrongful death, and/or emotional distress. A. Certification Under Either Rule 23(b)(2) or (b)(3) is Proper. 53. The members of the class are capable of being described without managerial or administrative problems. The members of the class are readily ascertainable from the information and records in the possession, custody or control of Defendants or third party credit card issuers. 54. Defendants operate adult entertainment clubs throughout the United States. Therefore, it is reasonable to conclude that the class is sufficiently numerous such that individual joinder of all members is impractical. The disposition of the claims in a class action will provide substantial benefit to the parties and the Court in avoiding a multiplicity of identical suits. The Class can be identified through Defendants’ records or Defendants’ agents’ records. 55. There are common questions of law and fact that predominate over any questions affecting only the individual members of the class. The wrongs alleged against Defendants are statutory in nature and common to each and every member of the putative class. 56. This suit seeks only statutory damages and injunctive relief on behalf of the class and it expressly is not intended to request any recovery for personal injury and claims related 12 thereto. Plaintiff reserves the right to expand the class definition to seek recovery on behalf of additional persons as warranted as facts are learned in further investigation and discovery. 57. There is a well-defined community of interest in the questions of law and fact involved affecting the parties to be represented. The questions of law and fact to the class predominate over questions that may affect individual class members, including the following: a. Whether, within the two years prior to the filing of this Complaint, Defendants and/or their agents accepted payment by credit or debit card from any consumer and subsequently gave that consumer a printed receipt upon which more than the last 5 digits of the card number was printed; b. Whether Defendants’ conduct was willful and reckless; c. Whether Defendants are liable for damages, and the extent of statutory damages for each such violation; and d. Whether Defendants should be enjoined from engaging in such conduct in the future. 58. As a person that purchased goods and/or services from Defendants and received a receipt upon which more than the last 5 digits of the card number were printed, Plaintiff is asserting claims that are typical of the proposed class. Plaintiff will fairly and adequately represent and protect the interests of the class in that Plaintiff has no interests antagonistic to any member of the class. 59. The principal question is whether the Defendants violated section 1681c(g) of the FCRA by providing class members with electronically printed receipts in violation of the Receipt Provision. The secondary question is whether it is Defendants’ policy and practice to provide such electronically printed receipts to consumers that make payment using a credit or debit card, 13 despite the advice of one of the nation’s largest law firms, and whether it was Defendants’ policy and practice to print receipts bearing more than the last 5 digits of consumer credit cards is willful noncompliance of the FCRA. 60. Plaintiff and the members of the class have all suffered irreparable harm as a result of the Defendants’ unlawful and wrongful conduct. Absent a class action, the class will continue to face the potential for irreparable harm. In addition, these violations of law would be allowed to proceed without remedy and Defendants would undoubtedly continue such illegal conduct. Because of the size of the individual class members’ claims, few class members could afford to seek legal redress for the wrongs complained of herein. 61. Defendants’ defenses are and will be typical of and the same or identical for each of the members of the class and will be based on the same legal and factual theories. There are no unique defenses to any of the class members’ claims. 62. A class action is a superior method for the fair and efficient adjudication of this controversy. Class-wide damages are essential to induce Defendants to comply with federal law. The interest of class members in individually controlling the prosecution of separate claims against Defendants is small. The maximum statutory damages in an individual action for a violation of this statute are minimal. Management of these claims is likely to present significantly fewer difficulties than those presented in many class claims. 63. Defendants have acted on grounds generally applicable to the class, thereby making appropriate final injunctive relief and corresponding declaratory relief with respect to the class as a whole. COUNT I – VIOLATIONS OF 15 U.S.C. § 1681(c)(g) 64. 15 U.S.C. §1681c(g) states as follows: 14 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. 65. This section applies to any “device that electronically prints receipts” (hereafter “Devices”) for point of sale transactions. 15 U.S.C. §1681c(g)(3). 66. Defendants employ the use of said Devices for point of sale transactions at the various locations of Defendants. 67. On or before the date on which this complaint was filed, Plaintiff and members of the class were provided receipt(s) by Defendants that failed to comply with the Receipt Provision. 68. At all times relevant to this action, Defendants were aware, or should have been aware, of both the Receipt Provision as well as the need to comply with said provision. 69. Notwithstanding the three year period to prepare for FACTA and its accompanying provisions, including but not limited to the Receipt Provision; knowledge of the Receipt Provision and FACTA as a whole; Defendants knowingly, willfully, intentionally, and/or recklessly violated and continue to violate the FCRA and the Receipt Provision. 70. As a result of Defendants’ willful violations of the FCRA, Plaintiff and members of the class continue to be exposed to an elevated risk of identity theft. Defendants are liable to Plaintiff and members of the class pursuant to 15 U.S.C. § 1681n for statutory damages, punitive damages, attorney’s fees and costs. WHEREFORE, Plaintiff YAZAN SALEH respectfully requests that this Court enter judgment in his favor and the class, and against Defendants MIAMI GARDENS SQUARE ONE, INC. D/B/A TOOTSIE’S CABARET and RCI HOSPITALITY HOLDINGS, INC. for: 15 a. Statutory damages; b. Punitive damages; c. Injunctive relief; d. Attorneys’ fees, litigation expenses and costs of suit, and e. Such other and further relief as the Court deems proper under the circumstances. JURY DEMAND Plaintiff demands a trial by jury on all counts. Dated: January 1, 2017 Respectfully submitted, By: /s/ Scott D. Owens Scott D. Owens, Esq. Florida Bar No. 0597651 SCOTT D. OWENS, P.A. 3800 S. Ocean Dr., Ste. 235 Hollywood, FL 33019 Telephone: (954) 589-0588 Facsimile: (954) 337-0666 [email protected] Jibrael S. Hindi, Esq. THE LAW OFFICE OF JIBRAEL S. HINDI, PLLC 110 SE 6th Street Ft. Lauderdale, FL 33301 Telephone: (954) 907-1136 Facsimile: (855) 529-9540 [email protected] BRET L. LUSSKIN, Esq. BRET LUSSKIN, P.A. 20803 Biscayne Blvd., Ste. 302 Aventura, Florida 33180 Telephone: (954) 454-5841 Facsimile: (954) 454-5844 [email protected] Attorneys for Plaintiff 16

consumer fraud

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IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK Civil Case No.: 18-cv-7976 CROWLEY WEBB AND ASSOCIATES, INC., on behalf of itself and all others similarly situated, Plaintiff, v. JURY TRIAL DEMANDED HEARST COMMUNICATIONS, INC.; GRAY TELEVISION, INC.; NEXSTAR MEDIA GROUP, INC.; TEGNA INC.; TRIBUNE MEDIA COMPANY; and SINCLAIR BROADCAST GROUP, INC., Defendants. ANTITRUST CLASS ACTION COMPLAINT TABLE OF CONTENTS TABLE OF CONTENTS .......................................................................................................... i I. NATURE OF ACTION ............................................................................................................. 1 II. JURISDICTION AND VENUE ........................................................................................ 3 III. PARTIES ........................................................................................................................... 4 A. PLANTIFF ............................................................................................................ 4 B. DEFENDANTS ..................................................................................................... 4 C. AGENTS AND CO-CONSPIRATORS ............................................................... 5 IV. FACTUAL ALLEGATIONS ............................................................................................ 6 A. The U.S. Department of Justice Investigation ...................................................... 6 B. The Local Television Advertising Market ............................................................ 6 1. The Structure and Characteristics of the Market for Local Television Advertising Supports the Existence of a Conspiracy................................ 9 a. The Local Television Industry Is Rapidly Consolidating ............. 9 b. Several Challenges Restrict Access to the Local Television Market ........................................................................................ 10 c. Defendants Had Motives and Opportunities to Conspire with Each Other.................................................................................. 12 V. FRAUDULENT CONCEALMENT AND TOLLING OF THE STATUTE OF LIMITATIONS ................................................................................................................ 16 VI. CLASS ACTION ALLEGATIONS ................................................................................ 17 VII. INTERSTATE TRADE AND COMMERCE ................................................................. 20 VIII. PLAINTIFF AND THE CLASS SUFFERED ANTITRUST INJURY .............................. 20 FIRST COUNT Violation of Section 1 of the Sherman Act (15 U.S.C. § 1) (Conspiracy in Restraint of Trade) ........................................................................................................................ 21 IX. PRAYER FOR RELIEF .................................................................................................. 22 X. JURY DEMAND ............................................................................................................. 24 i Plaintiff Crowley Webb and Associates, Inc. (“Plaintiff”), individually and on behalf of all others similarly situated (the “Class,” as defined below), upon personal knowledge as to the facts pertaining to itself and upon information and belief as to all other matters, and based on the investigation of counsel, brings this class action for damages, injunctive relief, and other relief pursuant to federal antitrust laws, demands a trial by jury, and alleges as follows: I. NATURE OF ACTION 1. This antitrust action concerns the illegal and anticompetitive practices of Defendants Hearst Communications, Inc. (“Hearst”), Gray Television, Inc. (“Gray”), Nexstar Media Group, Inc. (“Nexstar”), Tegna Inc. (“Tegna”), Tribune Media Company (“Tribune”), and Sinclair Broadcast Group, Inc. (“Sinclair”), (collectively, “Defendants”), who engaged in unlawful collusion and conspired to artificially inflate the price of local television advertisements in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. 2. This case is filed in this district because: (1) the New York Designated Marketing Area (“DMA”), which includes New York City, Long Island, portions of New York State, Connecticut, New Jersey, and Pike County, Pennsylvania is the largest in the United States, comprising more than 7.3 million television households; (2) Plaintiff purchased significant amount of television advertising from one or more Defendants in this district during the Class Period; (3) Defendants had ample opportunities to conspire through industry associations, including the Television Bureau of Advertising, Inc., the Media Rating Council, both of which are located in New York City, and at the industry’s up-front television advertising sales event which is held annually in New York City and attended by Defendants’ senior executives and representatives; and (4) Defendant Hearst has its headquarters in this district. 1 3. Defendants sell television advertising to local advertisers in multiple Designated Market Areas (“DMAs”) throughout the U.S. New York City is the largest DMA, reaching more than 7.3 million households. A DMA is a geographic area for which A.C. Nielsen Company furnishes broadcast television stations, and others with data to aid in evaluating audience size and composition. 4. Plaintiff seeks to represent a Class consisting of all persons and entities in the U.S. who paid for all or a portion of advertisement time on local TV provided by Defendants from at least January 1, 2012 until the effects of their unlawful conduct cease (the “Class Period”). 5. During the Class Period, Defendants unlawfully shared information and coordinated efforts to artificially inflate prices for television commercials. Specifically, instead of competing with each other on prices for advertising sales, as competitors normally do, Defendants and their co-conspirators shared proprietary information and conspired to fix prices and reduce competition in the market. 6. On July 26, 2018, The Wall Street Journal and other media outlets reported that Sinclair, Tribune, and certain independent local television stations are the subjects of an ongoing U.S. Department of Justice (“DOJ”) investigation regarding whether communication between the stations’ ad sales teams led to higher rates for TV commercials. Later that day, Newsmax.com, an online news journal, reported that Defendants Hearst, Nexstar, and Tegna are also subjects in the DOJ probe. 7. The impact of Defendants’ unlawful and anticompetitive conduct is ongoing and continues to this day and requires injunctive relief to prevent future harm to Plaintiff and members of the Class. 2 8. Until the publication of reports regarding the DOJ investigation on July 26, 2018, Defendants fraudulently concealed their unlawful conduct from Plaintiff and members of the Class, and Plaintiff and members of the Class had no way of knowing the advertising rates they were paying were the result of unlawful collusion. 9. Plaintiff and members of the Class seek injunctive relief and damages for their injuries caused by Defendants’ collusive, manipulative, and anticompetitive restraint of competition in the market for television advertising in the U.S. Specifically, Plaintiff seeks injunctive relief, treble damages, costs of suit, and reasonable attorneys’ fees on behalf of itself and the Class of direct purchasers, as defined herein, pursuant to Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. II. JURISDICTION AND VENUE 10. Plaintiff brings this class action lawsuit pursuant to Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26, to recover damages suffered by the Class and the costs of suit, including reasonable attorneys’ fees; to enjoin Defendants’ anticompetitive conduct; and for such other relief as is afforded under the antitrust laws of the U.S. for Defendants’ violations of Section 1 of the Sherman Act, 15 U.S.C. § 1. 11. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337, and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15(a), 26. 12. Venue is proper in this District pursuant to Sections 4, 12, and 16 of the Clayton Act, 28 U.S.C. §§ 15, 22, and 26, and pursuant to 28 U.S.C. § 1391(b), (c), and (d), because, at all times relevant to the Complaint, one or more of the Defendants resided, transacted business, was found, or had agents in this District and for the reasons alleged above in Paragraph 2. 3 III. PARTIES A. PLANTIFF 13. Plaintiff is located at 268 Main Street, Buffalo, New York. During the Class Period, Plaintiff purchased advertisement time directly from one or more of the Defendants in the New York DMA and elsewhere and has suffered monetary loss as a result of the antitrust violations alleged herein. B. DEFENDANTS 14. Defendant Hearst is headquartered at 300 West 57th Street, New York, New York 10019 and is a diversified media and information company. Hearst operates television stations and cable networks throughout the U.S. According to its website, Hearst has ownership interests in 31 televisions stations which reach a combined 19% of U.S. viewers. 15. Defendant Gray is a television broadcast company headquartered at 4370 Peachtree Road, NE, Suite 400, Atlanta, Georgia 30319. Gray owns and operates television stations and digital assets in the U.S. As of February 23, 2018, Gray owned and operated television stations in 57 television markets, broadcasting approximately 200 program streams, including approximately 100 channels affiliated with the CBS Network, the NBC Network, the ABC Network, and the FOX Network. On June 23, 2018, Gray entered into a merger agreement with, among others, Raycom Media, Inc. Giving effect to the merger and prior to divestitures of stations due to market overlaps, Gray expects to own and/or operate 142 full-power television stations serving 92 markets. Upon completion, Gray expects to reach approximately 24 percent of U.S. television households through nearly 400 separate program streams including approximately 165 affiliates of the ABC/NBC/CBS/FOX networks, and over 100 affiliates of the CW, My Network, and MeTV networks. 4 16. Defendant Nexstar is headquartered at 545 East John Carpenter Freeway, Suite 700, Irving, Texas 75062, and operates as a television broadcasting and digital media company in the U.S. As of December 31, 2017, the company owned, operated, programmed, or provided sales and other services to 170 television stations in 100 markets. 17. Defendant Tegna is a broadcasting, digital media, and marketing services company and is headquartered at 7950 Jones Branch Drive, McLean, Virginia 22107. Tegna owns and operates 47 television stations in 39 markets across the U.S. 18. Defendant Tribune is headquartered at 515 North State Street, Chicago, Illinois 60654 and operates, through its subsidiaries, as a media and entertainment company in the U.S. Tribune offers news, entertainment, and sports programming through Tribune Broadcasting local television stations, including FOX television affiliates, CW Network television affiliates, CBS television affiliates, ABC television affiliates, MY television affiliates, NBC television affiliates, and independent television stations; and television series and movies on WGN America, a national general entertainment cable network. Tribune owns 43 broadcast television stations in approximately 35 cities. 19. Defendant Sinclair is headquartered at 10706 Beaver Dam Road, Hunt Valley, Maryland 21030 and operates as a television broadcast company in the U.S. As of December 31, 2017, it owned, operated, and/or provided services to 191 stations in 89 markets, which broadcast 601 channels. C. AGENTS AND CO-CONSPIRATORS 20. The acts alleged against the Defendants in this Complaint were authorized, ordered, or done by their officers, agents, employees, or representatives, while actively engaged in the management and operation of Defendants’ businesses or affairs. 5 21. Various persons and/or firms not named as Defendants herein may have participated as co-conspirators in the violations alleged herein and may have performed acts and made statements in furtherance thereof. 22. Each Defendant acted as the principal, agent, or joint venture of, or for, other Defendants with respect to the acts, violations, and common course of conduct alleged by Plaintiff. IV. FACTUAL ALLEGATIONS A. The U.S. Department of Justice Investigation 23. On July 26, 2018, The Wall Street Journal reported that the DOJ is investigating whether Defendants Sinclair, Tribune, and other local television station owners unlawfully shared information and coordinated efforts to artificially raise prices for television commercials. Later that day, Newsmax.com, an online news journal, reported that, Defendants Hearst, Nexstar, and Tegna are also subjects in the DOJ probe. 24. Upon information and belief, during the review of a proposed $3.9 billion merger acquisition of Sinclair and Tribune, the DOJ uncovered anti-competitive market information that led it to investigate Defendants’ conspiracy to artificially inflate television advertising prices. Specifically, the DOJ is investigating whether Defendants “coordinated efforts when their ad sales teams communicated with each other about their performance” in order to artificially inflate television advertising prices in violation of federal antitrust laws.. 25. On August 9, 2018, Tribune announced its withdrawal from the $3.9 billion merger. B. The Local Television Advertising Market 26. The local television landscape in the U.S. consists of parent companies who own dozens of local TV stations that carry programming distributed through their broadcast 6 platform, consisting of programming provided by third-party network and syndicators, local news, their own networks, and other original programming. 27. Defendants sell television advertising to local advertisers in multiple DMAs throughout the U.S. A DMA is a geographic area for which A.C. Nielsen Company furnishes broadcast television stations, and others with data to aid in evaluating audience size and composition. 28. New York City is the largest DMA, reaching more than 7.3 million households. There are 210 DMAs in the U.S. According to Nielsen, the key benefits to DMAs including: 1) targeting local advertising and direct marketing campaigns across multiple media; 2) selling advertising by local television market; 3) selecting local research samples; and 4) segmenting and analyzing internal and third-party data by local television market. 29. In 2016 the six largest companies with the most television household reach in local TV were Sinclair, Tribune, Nexstar, Tegna, Gray, and Hearst. As reported by the Pew Research Center, these companies owned, operated or serviced more than 443 full- powered stations, a more than 147.5% increase from the number or local TV stations owned, operated and serviced in 2004. 30. In recent years, television broadcasting companies have experienced significant slowing of growth in their advertising revenues due to increased competition from internet and other advertising. The following chart depicts the slowing growth of television advertising spending in the U.S. since 2012: 7 31. In response to reduced spending, Defendants conspired to artificially inflate advertising prices in order to stabilize and grow revenues. 32. For example, television up-front advertising prices have increased steadily since 2012. In the television industry, an upfront is a gathering at the start of important advertising sales periods, held by television network executives and attended by major advertisers and the media. It is so named because of its main purpose, to allow marketers to buy television commercial airtime “up front”, or several months before the television season begins. Up-front advertising account for a substantial portion of Defendants’ revenues. In the U.S., the major broadcast networks’ upfronts traditionally occurred in New York City, starting in March or May each year. 33. Since 2012, despite stagnant and decreasing demand, up-front prices have materially increased: 8 TV primetime upfront advertising prices $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 $22.00 $24.00 $26.00 $28.00 $30.00 $32.00 34. Given the above factors, Defendants and their co-conspirators have responded to falling advertisement sales by colluding on pricing, forcing Plaintiff and members of the Class to pay supracompetitive prices for local television advertising. 1. The Structure and Characteristics of the Market for Local Television Advertising Supports the Existence of a Conspiracy 35. The structure and other characteristics of the market for local television advertising make it conducive to anticompetitive conduct among Defendants, and make collusion particularly attractive. Specifically, the local television advertising market (1) is in an industry that has been rapidly consolidating and is becoming increasingly concentrated; (2) has high barriers to entry; and (3) is comprised of participants who had motives and ample opportunities to conspire. a. The Local Television Industry Is Rapidly Consolidating 36. A highly-concentrated market is more susceptible to collusion and other anticompetitive practices than less concentrated markets. 37. In response to decreased advertisement spending, the local television industry market has been consolidating in recent years. This consolidation of the market continues as 9 station owners look to increase their leverage with broadcast networks, which supply much of their programming, and pay-TV distributors, which carry their channels. In 2013, “big owners of local TV stations got substantially bigger, thanks to a wave of station purchases.” 38. Moreover, on June 25, 2018 Defendant Gray TV agreed to buy fellow television-station owner Raycom Media Inc. in a $3.65 billion deal that would create a company that reaches nearly a quarter of U.S. TV households. If the Gray-Raycom deal is completed, the combined company would own 142 television stations in 92 U.S. markets, reaching 24% of TV households and owning the third-largest number of stations. b. Several Challenges Restrict Access to the Local Television Market 39. A collusive arrangement that raises product prices above competitive levels would, under basic economic principles, attract new entrants seeking to benefit from the supracompetitive pricing. When, however, there are significant barriers to entry, new entrants are much less likely to enter the market. Thus, barriers to entry help facilitate the formation and maintenance of a cartel and market-allocation agreements. In a conspiracy that increases the prices for consumers, market forces would typically attract new entrants seeking to exploit the pricing gap created by the conspiracy’s supracompetitive pricing. But 10 where, as here, there are high barriers to entry for an industry, new broadcast television companies are less likely to enter the market. 40. New entrants planning to enter into broadcasting markets typically face six critical barriers (1) governmental policy; (2) the presence of dominant broadcasters; (3) access to content; (4) audience behavior; (5) consumer costs; and (6) capital requirements. 41. Governmental policy, including regulatory or administrative practices may restrict market access. Responsible authorities take into account economic as well as cultural and social factors when issuing broadcasting licenses which may lead to distortions of competition. 42. The existing dominant broadcasters usually have a long-established relationships with its viewers and most likely also with advertisers. New entrants in the market would have to offer a better deal than the existing broadcasters in order to usurp any market share. Additionally, bigger companies have more clout to negotiate programming deals with networks or syndicators. “If you wanted a decent seat at the table talking to those guys, you had to have scale,” said Barry Lucas, senior vice president of research at the investment firm Gabelli & Co. “Otherwise you were irrelevant and got pushed around.” A new entrant to the market would have to invest significant capital and time in establishing itself before it could work with networks. 43. Additionally, successful entry into television broadcasting markets requires access at reasonable prices to desirable programming, including production or acquisition from third parties. Acquisition of this content, which is critical to attract viewers, is likely to constitute a significant cost to new market players. 44. Commercial broadcasters, whose operations are primarily financed through advertising fees, must establish within a short period of time an audience base that will also 11 attract a sufficient number of advertisers. Therefore, in the presence of established dominant broadcasters, new entrants must provide offers attractive enough to convince viewers to alter their already existing patterns of viewing and channel choice—a task that proves to be difficult. 45. Most likely, new entrants to the market will offer television broadcasting services using cable, satellite, or digital terrestrial technologies—all of which require viewers to incur hardware related costs. The inconvenience and costs that viewers may encounter when switching between different television broadcasters have the potential of discouraging them from altering their established patterns of viewing. For example, consumers who switch from one cable television provider to another generally have to incur costs related to the rental or purchase of adequate equipment, such as set-top boxes and will have to trade in the old equipment for the new equipment. 46. Finally, it would require considerable funding, time, and technical sophistication for a potential market entrant to gain the economies of scale and audience base achieved by Defendants necessary to compete in the market for local television advertising. For example, Defendant Sinclair “believe[s] the greatest opportunity for a sustainable and growing customer base lies within [its] local communities” which it has developed by training “a strong local sales force at each of [its] television stations, which is comprised of approximately 800 marketing consultants and 100 local sales managers company-wide.” Where the level of capital required is prohibitively high, it constitutes a significant barrier to entry. c. Defendants Had Motives and Opportunities to Conspire with Each Other 47. In 2017, U.S. television advertising sales fell 7.8 percent to $61.8 billion, the steepest decline experienced by the industry in at least 20 years. According to data from 12 MagnaGlobal, a resource that develops investment strategies for industry heads, there is no sign of an increase in 2018: 48. “In a healthy economy, we’re looking at no growth in advertising from traditional media companies,” said Michael Nathanson, an analyst with research firm, MoffettNathanson. “That’s a worrying trend.” The decline in television viewership is accelerating due to increased investments in the online video advertising market, capturing almost every new advertising dollar entering the marketplace. Almost half of the growth in local video ad spending during the next five years will go to digital platforms, including local mobile video, local online video and out-of-home video, according to a new study on advanced television advertising published last week by BIA/Kelsey industry analysts. “Television ad sales have fallen even as global advertising grows, leading research firms and analysts to predict that the business may never recover.” 49. According to Defendant Sinclair’s annual report for the year ended December 31, 2017 filed with the U.S. Securities and Exchange Commission on Form 10-K, a primary source of revenue for local television stations is “the sale of commercial inventory on . . . 13 television stations to . . . advertising customers.” However, Defendant Sinclair also concedes that “advertising revenue can vary substantially from period to period based on many factors beyond [its] control.” Further, “[t]his volatility affects [its] operating results and may reduce [its] ability to repay indebtedness or reduce the market value of [its] securities.” Defendant Sinclair specifically admits that its “operating results depend on the amount of advertising revenue [it] generate[s].” 50. As Defendants largely rely on revenue from local television advertising in order to sustain their daily operations, in the face of declining sales, Defendants had reason and motivation to conspire to artificially raise the prices of local TV advertisements. 51. Moreover, Defendants had numerous opportunities to meet and conspire with each other under the guise of legitimate business contacts and to perform acts necessary for the operation and furtherance of the conspiracy. In particular, almost 300 full-power local TV stations changed hands in 2013 and many of these deals resulted in stations in the same market being separately owned on paper but operated jointly, a practice that has grown exponentially in recent years. As of 2014, joint service agreements of one kind or another existed between Defendants and other local TV station owners in at least 94 markets, almost half of the 210 local television markets nationwide, and up from 55 in 2011. Specifically, Defendant Sinclair admits that “[c]ertain of [its] stations have entered into agreements with other stations in the same market, through which [it] provide[s] programming and operating services[,] . . . sales services[,] and other non-programming operating services.” 52. Additionally, Defendants and their co-conspirators had numerous opportunities to conspire through industry associations such as the Television Bureau of Advertising, Inc. (“TVB”), the National Association of Broadcasters (“NAB”), and the 14 Media Rating Council (“MRC”), conferences and meetings held by those associations, and through merger negotiations. 53. Defendants Hearst, Nexstar, Sinclair, Tegna, Gray, and Tribune are members of TVB, which is headquartered at 3 East 54th Street, New York, NY. Nexstar’s President and CEO serves as the Chairman of TVB. TVB is a “not-for-profit trade association representing America’s $21 billion local broadcast television industry.” TVB is designed to bring together and encourage information sharing among employees of broadcast television companies, including Defendants, especially advertising sales representatives. 54. On November 20, 2017, a group of broadcast television companies, including Defendants Hearst, Nexstar, Sinclair, Tegna, and Tribune, announced the launch of the TV Interface Practices or “TIP” Initiative, described as “an industry work group dedicated to developing standard-based interfaces to accelerate electronic advertising transactions for local TV broadcasters and their media agency partners.” Defendant Nexstar’s President and CEO made a public statement regarding TIP indicating that the industry “must work together as an industry.” President and CEO of Defendant Sinclair echoed this sentiment stating that “[t]he TIP Initiative demonstrates the industry’s shared commitment to working together” to grow their advertising sales. Defendant Tribune’s President and CEO also indicated that through the TIP Initiative, Defendants could “actively work[] together.” 55. Defendants Sinclair, Tribune, and other broadcast television companies are also members of the NAB, which describes itself as the “premier trade association for broadcasters.” Defendant Tegna’s President and CEO and Defendant Hearst’s President both serve on NAB’s Executive Committee. Defendant Gray’s Chairman, President, and CEO, Defendant Nexstar’s Chairman, President and CEO, Defendant Sinclair’s President and CEO, and Defendant Tribune’s COO each serve on the NAB Television Board of Directors. 15 NAB hosts numerous meetings and other events for industry members throughout the year, which are attended by Defendants’ executives. 56. Defendants and several other local television station owners are also members of MRC. MRC boasts that one of the “[b]enefits of MRC [m]embership” is that “[m]embers are exposed to other members’ ideas and thoughts” and that “[m]embers can attend formal education seminars” together. V. FRAUDULENT CONCEALMENT AND TOLLING OF THE STATUTE OF LIMITATIONS 57. Any applicable statute of limitations has been tolled by Defendants’ knowing and active concealment of the conspiracy and conduct alleged herein. Through no fault or lack of diligence, Plaintiff and members of the Class were deceived and had no knowledge regarding Defendants’ collusion to fix, maintain, stabilize, and/or artificially inflate prices in the market for the sale of television advertising and could not reasonably discover the collusion. 58. The very nature of Defendants’ conspiracy was secret and self-concealing. Defendants engaged in market manipulation that could not be detected by Plaintiff and members of the Class. 59. Plaintiff and members of the Class had no facts sufficient to place them on inquiry notice of the conspiracy alleged herein until July 26, 2018, when The Wall Street Journal published an article reporting that the DOJ was investigating collusion between Defendants and their coconspirators to inflate prices in the market for the sale of television advertising. 60. As alleged herein, Defendants’ collusion to fix prices in the market for the sale of television advertising was material to Plaintiff and members of the Class at all relevant times. Within the time period of any applicable statute of limitations, Plaintiff and 16 members of the Class could not have discovered through the exercise of reasonable diligence that Defendants and their co-conspirators were colluding to fix, maintain, stabilize, and/or artificially inflate prices for television advertising, which Defendants fraudulently concealed. 61. Plaintiff and members of the Class did not discover and did not know of any facts that would have caused a reasonable person to suspect that Defendants and their co- conspirators were colluding to fix, maintain, stabilize, and/or artificially inflate prices for television advertising. 62. Defendants knowingly, actively, and affirmatively concealed the facts alleged herein, including their collusion to fix, maintain, stabilize, and/or artificially inflate prices in the market for the sale of television advertising. 63. Plaintiff and Class members reasonably relied on Defendants’ knowing, active, and affirmative concealment. 64. For these reasons, all applicable statutes of limitations have been tolled based on the discovery rule and Defendants’ fraudulent concealment and Defendants are estopped from relying on any statutes of limitations in defense of this action. VI. CLASS ACTION ALLEGATIONS 65. Plaintiff brings this action on behalf of itself and as a class action under Rule 23(a), (b)(2) and (b)(3) of the Federal Rules of Civil Procedure on behalf of the following class (the “Class”): All persons and entities in the U.S. who paid for all or a portion of the cost of advertisement time directly to Defendants, or any current or former subsidiary or affiliate of Defendants, or any co-conspirator, during the period from at least and including January 1, 2012 until the effects of Defendants’ unlawful conduct ceases. Excluded from the Class are Defendants, their parent companies, subsidiaries, affiliates, agents, co- conspirators, federal governmental entities and instrumentalities of the 17 federal government, and states and their subdivisions, agencies and instrumentalities. 66. While Plaintiff does not know the exact number of members of the Class, Plaintiff believes the class size is numerous given Defendants’ substantial nationwide presence. 67. Common questions of law and fact exist as to all members of the Class. This is particularly true given the nature of Defendants’ unlawful anticompetitive conduct, which was generally applicable to all the members of the Class, 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 restrict output and fix, raise, maintain or stabilize the prices of local television advertising time; (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 Section 1 of the Sherman Act; (e) Whether the conduct of Defendants and their co-conspirators, as alleged in this Complaint, caused injury to the business or property of Plaintiff and the members of the Class; (f) The effect of the alleged conspiracy on the cost of local television advertising time during the Class Period; (g) Whether the Defendants and their co-conspirators fraudulently concealed the existence of their anticompetitive conduct from Plaintiff and the members of the Class; (h) The appropriate injunctive and related equitable relief for Plaintiff and the Class; and (i) The appropriate class-wide measure of damages. 68. Plaintiff’s claims are typical of the claims of the members of the Class, and Plaintiff will fairly and adequately protect the interests of the Class. Plaintiff and all members of the Class are similarly affected by Defendants’ unlawful conduct in that they paid 18 artificially inflated prices for local television advertising time provided by Defendants and/or their co-conspirators. 69. Plaintiff’s claims arise out of the same common course of conduct giving rise to the claims of the other members of the Class. Plaintiff’s interests are coincident with, and not antagonistic to, those of the other members of the Class. Plaintiff is represented by competent counsel who are experienced in the prosecution of antitrust and class action litigation. 70. The questions of law and fact common to the members of the Class predominate over any questions affecting only individual members, including legal and factual issues relating to liability and damages. 71. 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. 72. 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. 19 VII. INTERSTATE TRADE AND COMMERCE 73. Billions of dollars of transactions in local television advertisements are entered into each year in interstate commerce in the U.S. and the payments for those transactions flowed in interstate commerce. 74. Defendants’ manipulation of the market for the sale of local television advertising had a direct, substantial, and foreseeable impact on interstate commerce in the 75. Defendants intentionally targeted their unlawful conduct to affect commerce, including interstate commerce within the U.S., by combining, conspiring, and/or agreeing to fix, maintain, stabilize, and/or artificially inflate prices for local television advertising. 76. Defendants’ unlawful conduct has a direct and adverse impact on competition in the U.S. Absent Defendants’ combination, conspiracy, and/or agreement to manipulate the market for the sale of local television advertising, the prices of local television advertising would have been determined by a competitive, efficient market. VIII. PLAINTIFF AND THE CLASS SUFFERED ANTITRUST INJURY 77. Defendants’ antitrust conspiracy, conspiracy to monopolize, attempted monopolization, and monopolization had the following effects, among others: (a) Price competition has been restrained or eliminated with respect to local television advertising; (b) The prices of local television advertising have been fixed, raised, maintained, or stabilized at artificially inflated levels; (c) Purchasers of local television advertising time have been deprived of the benefits of free and open competition; and (d) Purchasers of local television advertising time paid artificially inflated prices. 78. The purpose of the conspiratorial and unlawful conduct of Defendants and their co-conspirators was to fix, raise, stabilize and/or maintain the price of local television advertising time. 20 79. The precise amount of the overcharge impacting the prices of local television advertising time paid by Plaintiff and the Class can be measured and quantified using well- accepted models. 80. By reason of the alleged violations of the antitrust laws, Plaintiff and the members of the Class have sustained injury to their businesses or property, having paid higher prices for local television advertising time than they would 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. FIRST COUNT Violation of Section 1 of the Sherman Act (15 U.S.C. § 1) (Conspiracy in Restraint of Trade) 81. Plaintiff repeats the allegations set forth above as if fully set forth herein. 82. From at least January 1, 2012 until the effects of their unlawful conduct ceases, Defendants and their co-conspirators entered into and engaged in a contract, combination, or conspiracy with regards to local television advertising in unreasonable restraint of trade in violation of Section 1 of the Sherman Act (15 U.S.C. § 1). 83. The contract, combination or conspiracy consisted of an agreement among the Defendants and their co-conspirators to fix, raise, stabilize or maintain at artificially high levels the prices they charged for local television advertising time in the U.S. 84. In formulating and effectuating this conspiracy, Defendants and their co- conspirators did those things that they combined and conspired to do, including: (a) participating in meetings and conversations among themselves during which they agreed to charge prices at certain levels, and otherwise to fix, increase, maintain, or stabilize prices of local television advertisements in the U.S.; and (b) participating in meetings and conversations among themselves to implement, adhere, and police the agreements they reached. 21 85. Defendants and their co-conspirators engaged in the actions described above for the purpose of carrying out their unlawful agreements to fix, maintain, raise, or stabilize prices of local television advertising time. 86. Defendants’ conspiracy had the following effects, among others: (a) Price competition in the market for local television advertisements has been restrained, suppressed, and/or eliminated; (b) Prices for local television advertisement time provided by Defendants and their co-conspirators have been fixed, raised, maintained, and stabilized at artificially high, non-competitive levels throughout the U.S.; and (c) Plaintiff and members of the Class who purchased local television advertisement time from Defendants and their co-conspirators have been deprived of the benefits of free and open competition. 87. Plaintiff and members of the Class have been injured and will continue to be injured in their business and property by paying more for local television advertising time purchased from Defendants and their co-conspirators than they would have paid and will pay in the absence of the conspiracy. 88. The alleged contract, combination, or conspiracy is a per se violation of the federal antitrust laws. 89. Plaintiff and members of the Class are entitled to treble damages and an injunction against Defendants, preventing and restraining the violations alleged herein. IX. PRAYER FOR RELIEF WHEREFORE, Plaintiff and the Class respectfully request the following relief: A. That 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; 22 B. The Court adjudge and decree that the acts of the Defendants are illegal and unlawful, including the agreement, contract, combination, or conspiracy, and acts done in furtherance thereof by Defendants and their co-conspirators be adjudged to have been a per se violation of Section 1 of the Sherman Act, 15 U.S.C. § 1; C. The Court permanently enjoin and restrain Defendants, their affiliates, successors, transferees, assignees, and other offices, directors, agents, and employees thereof, and all other persons acting or claiming to act on their behalf, from in any manner continuing, maintaining, or renewing the conduct, contract, conspiracy, or combination allege 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; D. That Judgment be entered against Defendants, jointly and severally, and in favor of Plaintiff and members of the Class for treble the amount of damages sustained by Plaintiff and the Class as allowed by law, together with costs of the action, including reasonable attorneys’ fees, pre- and post-judgment interest at the highest legal rate from and after the date of service of this Complaint to the extent provided by law; E. That each of the Defendants, and their respective successors, assigns, parent, subsidiaries, affiliates, and transferees, and their officers, directors, agents, and representatives, and all other persons acting or claiming to act on behalf of Defendants or in concert with them, be permanently enjoined and restrained from, in any manner, directly or indirectly, continuing, maintaining or renewing the combinations, conspiracy, agreement, understanding, or concert of action as alleged herein; and 23 F. That the Court award Plaintiff and members of the Class such other and further relief as the case may require and the Court may deem just and proper under the circumstances. X. 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. Dated: September 5, 2018 KAPLAN FOX & KILSHEIMER LLP By: /s/ Robert N. Kaplan Robert N. Kaplan Jeffrey P. Campisi 850 Third Avenue, 14th Floor New York, NY 10022 Telephone: (212) 687-1980 Facsimile: (212) 687-7714 Email: [email protected] [email protected] Arthur N. Bailey Marco Cercone RUPP BAASE PFALZGRAF CUNNINGHAM, LLC 1600 Liberty Building 424 Main Street Buffalo, New York 14202 Tel: (716) 664-2967 [email protected] [email protected] Counsel for Plaintiff and the Proposed Class 24

antitrust

80MJ_YgBF5pVm5zYQLpF

UNITED ST ATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA MARK SILVERSTEIN, Individually and on I Case No.: 15-cv-05386-WB Behalf of All Others Similarly Situated, Plaintiff, v. CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS JURY TRIAL DEMANDED GLOBUS MEDICAL, INC., DA YID C. PAUL, RICHARD A. BARON, DAVID M. DEMSKI, and STEVEN M. PAYNE, Defendants. AMENDED CLASS ACTION COMPLAINT Lead Plaintiff Austin J. Williams ("Plaintiff'), by and through his counsel, individually and on behalf of all others similarly situated, for his Amended Class Action Complaint against defendants, alleges the following based upon personal knowledge as to himself and his own acts, and information and belief as to all other matters, based upon, inter alia, the investigation conducted by and through his attorneys, which included, among other things, a review of the pleadings and evidence submitted in the action styled Globus Medical, Inc. v. Vortex Spine, LLC and James Chapman Long, 1 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 GLOBUS MEDICAL, INC. ("Globus" or the "Company"), analysts' reports and advisories about the Company, and information readily I No. 14-cv-3105-CDJ (E.D. Pa.). The pleadings and evidence reviewed include, but are not limited to, the transcript from the deposition of James Chapman Long ("Long Tr."), the Declaration of James Chapman Long ("Long Deel."), and Vortex Spine LLC's Counterclaim ("Vortex CC"). obtainable on the Internet. Plaintiff believes that substantial evidentiary support will exist for the allegations set forth herein after reasonable opportunity for discovery. NATURE OF THE ACTION I. This is a federal securities class action on behalf of a class consisting of all persons other than defendants who purchased or otherwise acquired Globus securities between February 26, 2014 and August 5, 20 I 4, 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 IO(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 1 Ob-5 promulgated thereunder, against the Company and certain of its top officers. 2. Globus is "a medical device company focused exclusively on the design, development and commercialization of musculoskeletal implants." Globus Medical, Inc., Annual Report (Form 10-K) (Mar. 14, 2014) (the "2013 10-K"), at 4. According to the Company itself, Globus is "currently focused on implants that promote healing in patients with spine disorderst and this "single-minded focus" has enabled it to "grow our sales at a faster rate than the broader spine industry." Id. at 4-5. 3. The Company views its sales force, which consists of both in-house sales representatives and independent distributors, as critical to its overall growth strategy. The Company promotes its sales force as being "highly trained in the clinical benefits of our products" and notes that both its direct and distributor sales representatives "frequently consult with surgeons and surgical staff inside the operating room regarding the use of our products." 2013 10-K at 9. This level of expertise and commitment to customer service, according to the Company, has enabled it to "react quickly to evolving surgeon and patient needs," "maximize our market penetration," and "expand our geographic presence." Id. 2 4. Since spinal implant products manufactured by well-known companies are viewed by many medical professionals to be interchangeable, Globus emphasizes the building and maintenance of personal goodwill as critical to the development, maintenance, and expansion of its customer base. One of the Company's first independent distributors, Vortex Spine, LLC ("Vortex"), took this mission to heart. Founded and managed by James Chapman Long ("Long"), Vortex gained, maintained, and built upon the trust of many spine surgeons practicing in locations throughout the Southeastern United States. From 1997 to 2004, Long worked as a distributor for manufacturers of spinal implant products other than Globus. Long Deel. ,i 7. He achieved such success that his customers often changed product suppliers in accordance with whatever brand Long happened to be affiliated with and selling at the time. Id. ,i 13. 5. Long's successes as a distributor prompted Globus to recruit him and Vortex in 2004, shortly after the Company was founded. Long Deel. ,i,i 16-17. Ultimately, Vortex executed an Exclusive Distributorship Agreement ("EDA"), pursuant to which it agreed to serve as the Company's exclusive distributor of spine implant products covering a territory that encompasses certain portions of Louisiana and Mississippi. The 2004 EDA was renewed in 2008 and again in 2010, the latter of which set an expiration date of December 31, 2013. Long Deel. ,i 21. 6. Despite the Company's successful partnership with Vortex of nearly 10 years, Globus determined in or about late 2013 that Vortex had become too successful in cultivating and servicing long-term customer relationships. One of Long's customers, Dr. John Steck, was the single largest prescriber of the Company's spine implant products. Long Deel. ,i 27. The Company sought to eliminate the middleman and cultivate a direct relationship with surgeons in Vortex's territory, including Dr. Steck. This was consistent with the Company's previously announced plan to transition gradually from a sales force relying heavily on independent distributors to one 3 consisting largely, if not exclusively, of in-house sales representatives. Globus intended this plan to save commissions and to enable the Company to exercise greater control over its sales force, a critical piece of its overall growth strategy. 7. With the EDA about to expire at the end of 2013, Globus saw its opportunity to eliminate Vortex from the supply chain. The Company strung Vortex along- promising to negotiate and finalize, within a 4-month period, a new EDA with new sales quotas and commission rates- while it recruited and secured a new in-house sales representative. Long Deel. ,i,i 48-50. While purportedly negotiating an EDA extension, the Company obtained significant confidential and proprietary customer data from Vortex, which it provided to its new territorial sales employee to facilitate the development of a direct relationship between Globus and Vortex's customers. Id. 1 53-54~ Vortex CC ,i 40. On or about April 18, 2014, the Company advised Vortex and Long that the distributorship was terminated, that no new EDA would be signed, and that it had hired a new in-house sales employee to cover Vortex's territory. Long Deel. ,i,i 51-53. 8. During the Class Period, not only did Defendants know of or recklessly disregard the Company's imminent termination of Vortex, they knew that the termination of Vortex would have a substantial, negative impact upon sales. Throughout the Class Period, with knowledge that past, similar distributor terminations had resulted in downward trends in sales that lasted two years, Defendants failed to disclose first their intention to terminate Vortex and then their actually terminating Vortex in April, 2014. In addition, Defendants failed to revise projections downward to account for their termination of Vortex. These omissions rendered the Company's guidance during the Class Period misleading. Moreover, once the Company elected to make statements to investors regarding revenue forecasts and the risks entailed in operating its network of independent 4 distributors, it was obligated to disclose the imminent or actual loss of a "significant" distributor to make the statement not misleading, which it failed to do. 9. On August 5, 2014, the Company issued a press release and held an earnings call in which its officers announced that Globus had decided "not to renew our existing contract with a significant U.S. distributor, negatively impacting our sales." As a result of this news, the price of the Company's shares fell $4.05 or 17. 9%, to close at $18.51, on unusually heavy trading volume on August 6, 2014. 10. As a result of the 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§§ lO(b) and 20(a) of the Exchange Act, 15 U.S.C. §§ 78j(b) and 78t(a), and SEC Rule lOb-5 promulgated thereunder, 17 C.F.R. § 240. tob-5. 12. 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. 13. Venue is proper in this District pursuant to§ 27 of the Exchange Act and 28 U.S.C. § 139l(b), as Globus is headquartered in this District and a significant portion of the defendants' actions, and the subsequent damages, took place within this 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. 5 PARTIES 15. Lead Plaintiff, Austin J. Williams, as set forth in the accompanying certification, incorporated by reference herein, purchased Globus common stock during the Class Period, and suffered damages as a result of the Company's violations of federal securities laws. 16. Defendant Globus is a Delaware corporation with its principal executive offices located at 2560 General Armistead A venue, Audubon, PA. 17. The following defendants are referred to collectively herein as the "Individual Defendants": a. Defendant David C. Paul ("Paul") was, at all relevant times, the Chairman and Chief Executive Officer ("CEO") of Globus; b. Defendant Richard A. Baron ("Baron") was, at all relevant times, Senior Vice President and the Chief Financial Officer ("CFO") of Globus; c. Defendant David M. Demski ("Demski") was at all relevant times President, Chief Operating Officer ("COO"), and a director of Globus; and d. Defendant Steven M. Payne ("Payne") was at all relevant times the Chief Accounting Officer of Globus. 18. The Individual Defendants, due to their respective positions with the Company, possessed the power and authority to control the contents of Globus' reports to the SEC, press releases and presentations to securities analysts, money and portfolio managers, and institutional investors, i.e., the market. Each Individual Defendant was provided with copies of the Company's reports, data, and statements detailed herein which are alleged to be misleading prior to, or shortly after, their issuance and had the ability and opportunity either to prevent their issuance or to cause them to be corrected. Because of their positions and access to material, non-public information 6 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 statements and revenue projections being made by the Company during the Class Period were materially false and/or misleading. SUBSTANTIVE ALLEGATIONS ltem303 19. SEC Regulation S-K, Item 303, I 7 C.F.R. § 229.303, imposes certain disclosure requirements upon registrants in discussing their financial condition and results of operations in their annual or quarterly reports. Among other things, Subsection (a) of Item 303, which pertains to annual reports, requires that registrants "describe any unusual or infrequent events or transactions or any significant economic changes that materially affected the amount of reported income from continuing operations and, in each case, indicate the extent to which income was so affected," and "any known trends or uncertainties that have had or that the registrant reasonably expects will have a materially favorable or unfavorable impact on net sales or revenues or income from continuing operations." Id. § 229.303(a)(3)(i), (ii). 20. The "Instructions to paragraph 303(a)" state that "[t]he discussion and analysis shall focus specifically on material events and uncertainties known to management that would cause reported financial information not to be necessarily indicative of future operating results or of future financial condition." I 7 C.F.R. § 229.303(a), Instructions. The Instructions further advise that "[t]his would include descriptions and amounts of (A) matters that would have an impact on future operations and have not had an impact in the past, and (B) matters that have had an impact on reported operations and are not expected to have an impact upon future operations." Id. 7

securities

plWdBIkBRpLueGJZNnWz

Case No. 4:21-cv-00586 UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION RADLEY BRADFORD, individually, and on behalf of all others similarly situated, Plaintiff, v. GOLDMAN SACHS & CO. LLC, Defendant. CLASS ACTION COMPLAINT NOW COMES RADLEY BRADFORD, individually and on behalf of all other similarly situated, by and through his undersigned counsel, complaining of GOLDMAN SACHS & CO., LLC, as follows: NATURE OF THE ACTION 1. Plaintiff brings this action seeking redress for violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq. 2. “Congress made it clear that the FCRA is designed to preserve the consumer’s privacy in the information maintained by consumer reporting agencies.” Cole v. U.S. Capital, Inc., 389 F.3d 719, 725 (7th Cir. 2004) citing 15 U.S.C. § 1681(a)(4). JURISDICTION AND VENUE 3. This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331. 4. Venue in the Southern District of Texas is proper pursuant to 28 U.S.C. § 1391(b)(2) because a substantial part of the events or omissions giving rise to the claims occurred in this District. 1 PARTIES 5. RADLEY BRADFORD (“Plaintiff”) is a natural person, who at all times relevant resided in Houston, Texas. 6. Plaintiff is a “consumer” as defined by 15 U.S.C. §§ 1681a(b) and (c). 7. Goldman Sachs & Co, LLC. (“Defendant”) maintains its principal place of business in New York, New York. 8. Defendant regularly conducts business in Texas and is registered with the Texas Secretary of State. FACTUAL ALLEGATIONS 9. In or about February 2021, Plaintiff discovered that Defendant requested and obtained Plaintiff’s Innovis credit report. 10. Plaintiff is not and has never been a customer of Defendant. 11. Moreover, Plaintiff has not applied for or otherwise sought any products or lines of credit from Defendant. 12. Plaintiff did not receive a firm offer of credit from Defendant after Defendant accessed his Innovis credit report.1 13. Accordingly, Plaintiff was perplexed by Defendant’s acquisition of his highly confidential credit information. 14. Defendant obtained Plaintiff’s Innovis credit report without Plaintiff’s consent or authorization and without a permissible purpose enumerated in the FCRA.                                                              1 “The term ‘firm offer of credit’ is defined in the FCRA as ‘any offer of credit or insurance to a consumer that will be honored if the consumer is determined, based on information in a consumer report on the consumer, to meet the specific criteria used to select the consumer for the offer.’” Cole v. U.S. Capital, Inc., 389 F.3d 719, 726 (7th Cir. 2004) citing 15 U.S.C. § 1681a(l). 2 15. Upon information and belief, Defendant misrepresented to Innovis (1) that Plaintiff applied for credit from Defendant; (2) that Plaintiff had a current business relationship with Defendant; or (3) that Defendant will be making a firm offer of credit to Plaintiff. 16. As a result of Defendant’s false representations, Innovis disseminated Plaintiff’s highly confidential credit information to Defendant. 17. At all times relevant, Defendant did not have a legitimate or lawful need for Plaintiff’s credit information. DAMAGES 18. Defendant’s unlawful conduct resulted in significant harm to Plaintiff. 19. Defendant’s conduct caused Plaintiff anxiety, distress, mental anguish, and led Plaintiff to fear that he may be a victim of identity theft as Plaintiff did not authorize Defendant’s credit inquiry. 20. Moreover, Defendant’s unauthorized access of Plaintiff’s credit information was highly intrusive and invaded Plaintiff’s privacy. 21. Alarmed by Defendant’s intrusive conduct, Plaintiff retained counsel to protect his privacy and enforce his rights. CLASS ALLEGATIONS 22. All paragraphs of this Complaint are expressly adopted and incorporated herein as though fully set forth herein. 23. Upon information and belief, Defendant systematically accesses consumers’ credit reports by falsely representing to the credit reporting agencies that consumers are seeking a line of credit from Defendant or that Defendant will be making firm offers of credit to consumers. 3 24. Defendant’s systematic practice of accessing consumers’ credit reports without a permissible purpose prescribed by the FCRA constitutes a willful and malicious violation(s) of 15 U.S.C. § 1681b(f). 25. Plaintiff brings this action pursuant to Fed. R. Civ. P. 23(b)(2) and 23(b)(3) individually, and on behalf of all others similarly situated (“Putative Class”) defined as follows: All persons within the United States (1) that had their consumer credit report(s) obtained by Defendant; (2) within the five (5) years preceding the date of the original complaint through the date of class certification; (3) from Innovis; (4) that were not existing customers of Defendant; (5) that did not seek a line of credit from Defendant; and (6) that did not receive a firm offer of credit from Defendant. 26. The following individuals are excluded from the Putative Class: (1) any Judge or Magistrate Judge presiding over this action and members of their families; (2) Defendant, Defendant’s 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 Putative 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. A. Numerosity 27. Upon information and belief, the members of the Putative Class are so numerous that joinder of them is impracticable. 28. The exact number of the members of the Putative Class is unknown to Plaintiff at this time and can be only be determined only through targeted discovery. 4 29. The members of the Putative Class are ascertainable because the class is defined by reference to objective criteria. 30. The members of the Putative Class are identifiable in that their names, addresses, and telephone numbers can be identified in business records maintained by Defendant. B. Commonality and Predominance 31. There are many questions of law and fact common to the claims of Plaintiff and the Putative Class. 32. Those questions predominate over any questions that may affect individual members of the Putative Class. C. Typicality 33. Plaintiff’s claims are typical of members of the Putative Class because Plaintiff and members of the Putative Class are entitled to damages as result of Defendant’s conduct. D. Superiority and Manageability 34. This case is also appropriate for class certification as class proceedings are superior to all other available methods for the efficient and fair adjudication of this controversy. 35. The damages suffered by the individual members of the Putative Class will likely be relatively small, especially given the burden and expense required for individual prosecution. 36. By contrast, a class action provides the benefits of single adjudication, economies of scale, and comprehensive supervision by a single court. 37. Economies of effort, expense, and time will be fostered and uniformity of decisions ensured. E. Adequate Representation 5 38. Plaintiff will adequately and fairly represent and protect the interests of the Putative 39. Plaintiff has no interests antagonistic to those of the Putative Class, and Defendant has no defenses unique to Plaintiff. 40. Plaintiff has retained competent and experienced counsel in consumer class action litigation. CLAIMS FOR RELIEF Count I: Defendant’s violation(s) of 15 U.S.C. § 1681b(f) (On behalf of Plaintiff and the Members of the Putative Class) 41. All paragraphs of this Complaint are expressly adopted and incorporated herein as though fully set forth herein. 42. Plaintiff is a “consumer” as defined by 15 U.S.C. §§1681a(c) and (b). 43. Defendant is a “person” as defined by 15 U.S.C. §1681a(b). 44. Plaintiff’s Innovis credit report that Defendant accessed without a permissible purpose is a “consumer report” as defined by §1681a(d)(1). 45. Defendant violated 15 U.S.C. §1681b(f) by obtaining Plaintiff’s Innovis credit report without Plaintiff’s authorization and without a permissible purpose enumerated in the 46. As stated above, Plaintiff has never been a customer of Defendant and did not seek a line of credit and or services from Defendant. 47. Moreover, Plaintiff did not receive a firm offer of credit from Defendant after Defendant accessed his Innovis credit report. 6 48. Defendant willfully and maliciously violated §1681b(f) when it accessed Plaintiff’s credit report without a permissible purpose under the FCRA. 49. In the alternative, Defendant negligently violated §1681b(f) by accessing Plaintiff’s credit report without a permissible purpose under the FCRA. 50. As described above, Plaintiff was harmed by Defendant’s conduct. 51. Upon information and belief, Defendant knowingly and systematically obtains consumer credit reports without a permissible purpose as prescribed by the FCRA. 52. Upon information and belief, Defendant does not maintain policies and procedures to protect consumers’ privacy interests and prevent the unlawful access of consumer credit reports. 53. Due to Defendant’s unlawful conduct, Plaintiff is entitled to actual damages, statutory damages, and punitive damages. WHEREFORE, Plaintiff respectfully requests that this Honorable Court enter judgment in his favor and against Defendant, as follows: A. Granting certification of the proposed class, including the designation of Plaintiff as the named representative, and the appointment of the undersigned as Class Counsel; B. Declaring that the practices complained of herein are unlawful and violate the Fair Credit Reporting Act; C. Enjoining Defendant from accessing consumer credit reports without a permissible purpose; D. Awarding Plaintiff and the class members actual damages, in an amount to be determined at trial, for each of the underlying FCRA violations; E. Awarding Plaintiff and the class members statutory damages of $1,000.00 for each violation of the FCRA pursuant to 15 U.S.C. §1681n; 7 F. Awarding Plaintiff and the class members punitive damages in an amount to be determined at trial for the underlying FCRA violations pursuant to 15 U.S.C. §1681n and 15 U.S.C. §1681o; G. Awarding Plaintiff his costs and reasonable attorney’s fees pursuant to 15 U.S.C. §1681n and 15 U.S.C. §1681o; and H. Awarding any other relief this Honorable Court deems just and appropriate. DEMAND FOR JURY TRIAL Pursuant to Fed. R. Civ. P. 38(b), Plaintiff demands a trial by jury. Date: February 24, 2021 Respectfully Submitted, RADLEY BRADFORD By: /s/ Victor T. Metroff Mohammed O. Badwan, Esq. Victor T. Metroff, Esq. Counsel for Plaintiff Sulaiman Law Group, Ltd 2500 S Highland Ave, Suite 200 Lombard, IL 60148 Telephone: (630) 575-8180 [email protected] [email protected] 8

consumer fraud

JhDHFocBD5gMZwcz2Qwk

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 Attorneys 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. SUNSET PHARMACEUTICALS, INC., Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) Plaintiff Retina Associates Medical Group, Inc., brings this class action under Rule 23 of the Federal Rules of Civil Procedure against Defendant Sunset Pharmaceuticals, 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 is a California corporation, conducts business in this state, including substantial business in this district, and is a resident of this state. PARTIES 4. Plaintiff Retina Associates Medical Group, Inc., is a citizen of the state of California, with its principal place of business in Orange County, California. 5. Defendant Sunset Pharmaceuticals, Inc., is a California corporation that filed a Statement of Information with the California Secretary of State identifying Defendant’s principal executive office at 5651 Palmer Way, Suite F, Carlsbad, CA 92010. 6. Defendant, directly or through others 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 7. On or about March 9, 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). 8. Plaintiff received the Fax through Plaintiff’s facsimile machine. 9. The Fax constitutes material advertising the quality or commercial availability of any property, goods, or services. 10. On information and belief, Defendant has sent facsimile transmissions of material advertising the quality or commercial availability of property, goods, or services 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. 11. 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. 12. 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. 13. 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. 14. 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. 15. 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. 16. The Fax and, on information and belief, Defendant’s similar facsimile advertisements lacked a notice stating that the recipient may make a request to the sender of the advertisement not to send future advertisements to a telephone facsimile machine or machines and that failure to comply, within 30 days, with such a request meeting 47 C.F.R. § 64.1200(a)(4)(v)’s requirements is unlawful. 17. The transmissions of facsimile advertisements, including the Fax, to Plaintiff, lacked a notice that complied with 47 U.S.C. § 227(b)(1)(C) and 47 C.F.R. § 64.1200(a)(4)(iii). 18. 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. 19. 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). 20. 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. 21. 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. 22. 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 23. 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 property, goods, or services, (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. 24. Excluded from the Class are Defendant, Defendant’s employees, and agents, and members of the judiciary. 25. 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 property, goods or services; iii. Whether the Fax, and other faxes transmitted by or on behalf of Defendant, contains material advertising the quality of any property, goods or services; 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. 26. 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). 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 express invitation or permission.” 47 U.S.C. § 227(a)(4). 28. 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). 29. 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. 30. 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. 31. 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). 32. 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 Defendants’ property, goods, or services, (b) Defendant did not have an established business relationship with Plaintiff and the other Class members, (c) the Fax and the other facsimile advertisements were advertisements, and (d) the Fax and the other facsimile advertisements did not display the proper opt-out notice. 33. 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: April 30, 2018 EDWARDS POTTINGER LLC By: /s/ Seth M. Lehrman Seth M. Lehrman Attorney for Plaintiff RETINA ASSOCIATES MEDICAL GROUP, INC.

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LEE LITIGATION GROUP, PLLC C.K. Lee (CL 4086) Anne Seelig (AS 3976) Taimur Alamgir (TA 9007) 30 East 39th Street, Second Floor New York, NY 10016 Tel.: 212-465-1188 Fax: 212-465-1181 Attorneys for Plaintiff, FLSA Collective Plaintiffs and the Class UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ANDREW CHANG, on behalf of himself, FLSA Collective Plaintiffs Case No: and the Class, Plaintiff, CLASS AND COLLECTIVE ACTION COMPLAINT v. PHILIPS BRYANT PARK LLC d/b/a BRYANT PARK HOTEL, PHIL COLUMBO, and MICHAEL STRAUSS, Defendants. Plaintiff, ANDREW CHANG (“Plaintiff”), on behalf of himself and others similarly situated, by and through his undersigned attorneys, hereby files this Class and Collective Action Complaint against Defendants, PHILIPS BRYANT PARK LLC d/b/a BRYANT PARK HOTEL (the “Corporate Defendant”), PHIL COLUMBO, and MICHAEL STRAUSS (the “Individual Defendants,” and collectively with the Corporate Defendant, the “Defendants”) and states as follows: INTRODUCTION 1. Plaintiff alleges, pursuant to the Fair Labor Standards Act, as amended, 29 U.S.C. §§201 et. seq. (“FLSA”), that he and others similarly situated are entitled to recover from Defendants: (1) unpaid overtime premium, (2) unpaid wages due to time shaving, (3) tips earned at private catering events that were illegally retained by Defendants, (4) portions of tips earned on room service orders illegally deducted and retained by Defendants, (5) liquidated damages and (6) attorneys’ fees and costs. 2. Plaintiff further alleges that, pursuant to the New York Labor Law (“NYLL”), he and others similarly situated are entitled to recover from Defendants: (1) unpaid overtime premium, (2) unpaid wages due to time shaving, (3) tips earned at private catering events that were illegally retained by Defendants, (4) portions of tips earned on room service orders illegally deducted and retained by Defendants, (5) mandatory surcharges illegally retained by Defendants, (6) statutory penalties, (7) liquidated damages and (8) attorneys’ fees and costs. 3. Plaintiff further alleges, pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq., as amended (“Title VII”), he is entitled to recover from Defendants for discrimination based on race: (1) back pay, (2) compensatory damages for emotional distress, (3) punitive damages and (4) attorneys’ fees and costs. 4. Plaintiff further alleges that, pursuant to the New York State Human Rights Law, (“NYSHRL”), he is entitled to recover from Defendants for discrimination based on race: (1) compensatory damages and (2) damages for retaliation. 5. Plaintiff further alleges that, pursuant to the New York City Human Rights Law, (“NYCHRL”), he is entitled to recover from Defendants for discrimination based on race: (1) compensatory and punitive damages, (2) damages for retaliation and (3) attorneys’ fees and JURISDICTION AND VENUE 6. This Court has jurisdiction over this controversy pursuant to 29 U.S.C. §216(b), 28 U.S.C. §§1331, 1337 and 1343, and has supplemental jurisdiction over Plaintiff’s state law claims pursuant to 28 U.S.C. §1367. 7. Venue is proper in the Southern District pursuant to 28 U.S.C. §1391. PARTIES 8. Plaintiff, ARTHUR CHANG, for all relevant time periods, was a resident of New York County, New York. 9. The Defendants operate a luxury boutique hotel doing business under the trade name “Bryant Park Hotel,” located at 40 West 40th Street, New York, NY 10018 (“Bryant Park Hotel” or the “Hotel”). The Hotel includes the Cellar Bar, an upscale lounge located in the Hotel’s basement. 10. PHILIPS BRYANT PARK, LLC d/b/a BRYANT PARK HOTEL is a domestic limited liability company organized under the laws of the State of New York with an address for service of process at c/o Lazer Aptheker Rosella & Yedid P.C., 225 Old Country Road, Melville, NY 11747 and a principal place of business located at 40 West 40th Street, New York, NY 10018. 10. Individual Defendant PHIL COLUMBO is a senior officer of the Corporate Defendant and the General Manager of Defendants’ Bryant Park Hotel. PHIL COLUMBO exercises operational control as it relates to all employees including Plaintiff, FLSA Collective Plaintiffs and the Class. Defendant PHIL COLUMBO exercises the power to (and also delegates to managers and supervisors the power to) fire and hire employees, supervise and control employee work schedules and conditions of employment, and determine the rate and method of compensation of employees including those of Plaintiff, FLSA Collective Plaintiffs and the Class. At all times, employees could complain to Defendant PHIL COLUMBO directly regarding any of the terms of their employment, and Defendant PHIL COLUMBO had the authority to effect any changes to the quality and terms of employees’ employment, including changing their schedule, compensation, or terminating or hiring such employees, and to reprimand employees for performing tasks improperly. 11. Individual Defendant MICHAEL STRAUSS is a senior officer of the Corporate Defendant and the Financial Director of Defendants’ Bryant Park Hotel. MICHAEL STRAUSS exercises operational control as it relates to all employees including Plaintiffs, FLSA Collective Plaintiffs and the Class, and is in charge of payroll operations at the Hotel. Defendant MICHAEL STRAUSS exercises the power to (and also delegates to managers and supervisors the power to) fire and hire employees, supervise and control employee work schedules and conditions of employment, and determine the rate and method of compensation of employees including those of Plaintiff, FLSA Collective Plaintiffs and the Class. At all times, employees could complain to Defendant MICHAEL STRAUSS directly regarding any of the terms of their employment, and Defendant MICHAEL STRAUSS had the authority to effect any changes to the quality and terms of employees’ employment, including changing their schedule, compensation, or terminating or hiring such employees, and to reprimand employees for performing tasks improperly. 12. At all relevant times, the Corporate Defendant was and continues to be an “enterprise engaged in commerce” within the meaning of the FLSA. 13. At all relevant times, the work performed by Plaintiff, FLSA Collective Plaintiffs and Class members was directly essential to the business operated by Defendants. FLSA COLLECTIVE ACTION ALLEGATIONS 14. Plaintiff brings claims for relief as a collective action pursuant to FLSA Section 16(b), 29 U.S.C. § 216(b), on behalf of all current and former non-managerial employees (including but not limited to room service delivery persons, servers, room service order takers, porters, housekeepers, bellboys, bartenders, barbacks, and concierges) employed by Defendants on or after the date that is six years before the filing of the Complaint in this case as defined herein (“FLSA Collective Plaintiffs”). 15. At all relevant times, Plaintiff and the other FLSA Collective Plaintiffs are and have been similarly situated, have had substantially similar job requirements and pay provisions, and are and have been subjected to Defendants’ decisions, policies, plans, programs, practices, procedures, protocols, routines, and rules, all culminating in a willful failure and refusal to pay them (i) overtime premiums at the rate of one and one half times the regular rate for work in excess of forty (40) hours per workweek and (ii) compensation for all hours worked due to a policy of time shaving. 16. In addition, a subclass of FLSA Collective Plaintiffs who worked as tipped room service delivery persons and/or servers and housekeepers (the “Tipped Subclass”) suffered from Defendants’ policies of illegally retaining tips from catering events and portions of tips on room service orders that they earned. Plaintiff was a member of both the Class and the Tipped Subclass. 17. The claims for relief are properly brought under and maintained as an opt-in collective action pursuant to §16(b) of the FLSA, 29 U.S.C. 216(b). The FLSA Collective Plaintiffs are readily ascertainable. For purposes of notice and other purposes related to this action, their names and addresses are readily available from the Defendants. Notice can be provided to the FLSA Collective Plaintiffs via first class mail to the last address known to Defendants. RULE 23 CLASS ALLEGATIONS – NEW YORK 18. Plaintiff brings claims for relief pursuant to the Federal Rules of Civil Procedure (“F.R.C.P.”) Rule 23, on behalf of all current and former non-managerial employees (including but not limited to room service delivery persons, servers, room service order takers, porters, housekeepers, bellboys, bartenders, barbacks and concierges) employed by Defendants on or after the date that is six years before the filing of the Complaint in this case as defined herein (the “Class Period”). 19. All said persons, including Plaintiff, are referred to herein as the “Class.” The Class members are readily ascertainable. The number and identity of the Class members are determinable from the records of Defendants. The hours assigned and worked, the position held, and rates of pay for each Class member may also be determinable from Defendants’ records. For purposes of notice and other purposes related to this action, their names and addresses are readily available from Defendants. Notice can be provided by means permissible under F.R.C.P. 23. 20. The proposed Class is so numerous such that a joinder of all members is impracticable and the disposition of their claims as a class will benefit the parties and the Court. Although the precise number of such persons is unknown because the facts on which the calculation of that number rests presently within the sole control of Defendants, there is no doubt that there are more than forty (40) members of the Class. 21. Plaintiff’s claims are typical of those claims that could be alleged by any member of the Class, and the relief sought is typical of the relief, that would be sought by each member of the Class in separate actions. All the Class members were subject to Defendants’ corporate practices of (i) failing to pay them overtime premium at the rate of one and one half times the regular rate for work in excess of forty (40) hours per workweek (ii) time-shaving hours that they worked each week, (iii) failing to pay spread of hours, (iv) failing to provide wage statements that were in compliance with requirements of the NYLL. Defendants’ corporate-wide policies and practices affected all Class members similarly, and Defendants benefited from the same type of unfair and/or wrongful acts as to each Class member. Plaintiffs and other Class members sustained similar losses, injuries and damages arising from the same unlawful policies, practices and procedures. 22. Furthermore, a subclass of all Class Members who were tipped room service delivery persons and/or servers and housekeepers (the “Tipped Subclass”) also suffered as a result of Defendants’ policy of unlawfully retaining tips from catering events and portions of tips on room service orders, to which they were entitled. Plaintiff is a member of both the Class and the Tipped Subclass. 23. Plaintiff is able to fairly and adequately protect the interests of the Class and has no interests antagonistic to the Class. Plaintiff is represented by attorneys who are experienced and competent in both class action litigation and employment litigation, and have previously represented plaintiffs in wage and hour cases. 24. A class action is superior to other available methods for the fair and efficient adjudication of the controversy – particularly in the context of the wage and hour litigation where individual class members lack the financial resources to vigorously prosecute a lawsuit against corporate defendants. Class action treatment will permit a large number of similarly situated persons to prosecute common claims in a single forum simultaneously, efficiently, and without the unnecessary duplication of efforts and expense that numerous individual actions engender. Because losses, injuries and damages suffered by each of the individual Class members are small in the sense pertinent to a class action analysis, the expenses and burden of individual litigation would make it extremely difficult or impossible for the individual Class members to redress the wrongs done to them. On the other hand, important public interests will be served by addressing the matter as a class action. The adjudication of individual litigation claims would result in a great expenditure of Court and public resources; however, treating the claims as a class action would result in a significant saving of these costs. The prosecution of separate actions by individual members of the Class would create a risk of inconsistent and/or varying adjudications with respect to the individual members of the Class, establishing incompatible standards of conduct for Defendants and resulting in the impairment of class members’ rights and the disposition of their interests through actions to which they were not parties. The issues in this action can be decided by means of common, class-wide proof. In addition, if appropriate, the Court can, and is empowered to, fashion methods to efficiently manage this action as a class action. 25. Defendants and other employers throughout the state violate the New York Labor Law. Current employees are often afraid to assert their rights out of fear of direct or indirect retaliation. Former employees are fearful of bringing claims because doing so can harm their employment, future employment, and future efforts to secure employment. Class actions provide class members who are not named in the Complaint a degree of anonymity, which allows for the vindication of their rights while eliminating or reducing these risks. 26. There are questions of law and fact common to the Class which predominate over any questions affecting only individual class members, including: a) Whether Defendants employed Plaintiff and the Class members within the meaning of the New York law; b) What are and were the policies, practices, programs, procedures, protocols and plans of Defendants regarding the types of work and labor for which Defendants did not pay the Class members properly; c) At what common rate, or rates subject to common methods of calculation, was and are Defendants required to pay the Class members for their work; d) Whether Defendants established the tip pool for Class members without the agreement or consent of the Class members;; e) Whether Defendants unlawfully retained tips earned by Plaintiff and the rest of the Tipped Subclass that were earned from customers at private catering events; f) Whether Defendants unlawfully retained a portion of each tip earned by Plaintiff and the rest of the Tipped Subclass Members on each room service order; g) Whether Defendants provided to Plaintiff and Class members annual wage notices, as required under the New York Labor Law; h) Whether Defendants provided to Plaintiffs and Class members proper wage statements with each payment of wages as required by New York Labor Law; i) Whether Defendants paid Plaintiffs and Class members spread of hours premium payment for each shift exceeding ten (10) hours in duration; j) Whether Defendants properly compensated Plaintiff and Class members overtime premiums for all hours worked in excess of forty (40) under state and federal law; k) Whether Defendants caused time-shaving by paying Plaintiff and Class members only for those hours during which they were scheduled to work, rather than for the actual hours that they worked; and l) Whether Defendants caused time-shaving by deducting a mandatory 30 minute break period from the hours of Plaintiff and Class members each workday, even though Plaintiff and Class members were not permitted to take any breaks, and were required to work throughout their shifts. STATEMENT OF FACTS 27. In or around October 2016, Plaintiff was hired by Defendants to work as a room service delivery person and server at Defendants’ Bryant Park Hotel, located at 40 West 40th Street, New York, NY 10018. Plaintiff’s employment by Defendants ended on January 16, 2017. 28. From the start of his employment by Defendants until late December 2016, Plaintiff worked approximately nine (9) – eleven (11) hours per day, three (3) days per week, and a “double-shift” of approximately seventeen (17) hours, one day per week, for a total of approximately forty-five (45) – fifty (50) hours per week . Similarly, FLSA Collective Plaintiffs and Class Members also worked at least forty (40) hours each workweek. 29. From the start of his employment in or around October 2016 until on or about December 31, 2016, Plaintiff was compensated at a regular hourly rate of $9.00. Then, starting from January 1, 2016 until January 16, 2017, the last day of Plaintiff’s employment by Defendants, Plaintiff was compensated at a regular hourly rate of $11.00. . 30. During Plaintiff’s employment by Defendants, Defendants subjected Plaintiff to time-shaving each workday, as follows: a) Defendants would require Plaintiff to come in approximately 15-30 minutes early for each shift, but would not permit him to clock in until the shift was officially scheduled to start. Similarly, FLSA Collective Plaintiffs and Class Members were required by Defendants to come in early for each shift, but were never allowed to clock in until the shift’s scheduled start time. b) Defendants always required Plaintiff to clock out as soon as his shift ended. However, after clocking out, he was required by Defendants to brief the employee replacing him regarding events going on at the Hotel and inform them of all tasks that still needed to be completed. This took approximately 15-30 minutes each day. Plaintiff was never compensated for this off-the-clock work. Similarly, FLSA Collective Plaintiffs and Class Members were also required by Defendants to brief their replacements after clocking out each day, and were never compensated for such time. c) Defendants would automatically deduct 30 minutes from the hours Plaintiff worked each day as a “mandatory break.” However, Plaintiff was actually required to work throughout his shifts with no break. Pursuant to the same policy, Defendants also deducted 30 minutes of each shift worked by FLSA Collective Plaintiffs and Class Members even though they similarly weren’t allowed to take breaks. 31. Due to Defendants’ policies of time-shaving, Plaintiff was deprived of regular and overtime pay for around five (5) – eight (8) hours each week during his employment. Similarly, FLSA Collective Plaintiffs and Class Members were deprived of minimum wages or overtime for five (5) or more hours worked each week. 32. Plaintiff was frequently required to work shifts exceeding ten (10) hours in duration, but was never paid spread of hours premium. Similarly, Class members were frequently required to work shifts exceeding ten (10) hours in duration but were never paid spread of hours. 33. The Bryant Park Hotel features 24-hour room service, as well as frequent banquets, receptions and other events held at the Cellar Bar in the basement of the Hotel. Plaintiff and Tipped Subclass members performed tipped duties, including delivering food to guest rooms and suites, and acting as servers for events held at the Cellar Bar. Housekeepers were also required to help clean up tipped events. 34. On each room service order, Defendants would deduct and unlawfully retain approximately 80% of each tip provided to Plaintiff and the other Tipped Subclass members. In order to conceal this deduction from tipped employees, Defendants never notified Plaintiff or Tipped Subclass members of the actual amount in tips that was provided by guests for each order. 35. On each room service order, Defendants collected a mandatory service charge from its customers. Plaintiff and other tipped employees did not receive any portion of the mandatory surcharge. Defendants and the Bryant Park Hotel management retained 100% of the mandatory surcharge. Prospective customers did not receive any notice that management would retain the mandatory surcharges. They would be misled to think that the service charge was a tip to Plaintiff and other Tipped Subclass Members. 36. For each private event held at the Cellar Bar, Defendants charged customers a built-in gratuity of 15% of the total bill for holding the event. However, Plaintiff and other Tipped Subclass members only received approximately 10% of the total bill from each event, as Defendants retained one-third of the gratuity charged. In order to conceal this deduction from tipped employees, Defendants never notified Plaintiff or Tipped Subclass members of the amount of the built-in gratuity for each event. 37. At all relevant times, Defendants instituted and mandated an illegal tip pooling scheme that Plaintiff and Tipped Subclass Members never agreed to. 38. At no time during the relevant time periods did Defendants provide Plaintiffs or Class members with proper wage statements, as required by the NYLL. Plaintiffs and Class members received wage statements that did not accurately reflect the hours that they worked, as Defendants failed to accurately maintain such records. The pay statements also incorrectly indicated “Bar Tips” each week, even though Plaintiff and all Class Members other than bartenders and barbacks never worked behind the bar. 39. Plaintiff frequently discussed Defendants’ illegal wage and hour policies with co- workers who held different positions at Bryant Park Hotel. He would speak to housekeepers, porters, and employees in other positions while riding in the elevators, while working during events at Cellar Bar, and while cleaning up following events at Cellar Bar. Based on such conversations and his own observations, Defendants’ policies of requiring off the clock work, time-shaving, and not paying spread of hours were uniformly applicable to all non-managerial employees at Bryant Park Hotel. 40. During Plaintiff’s employment by Defendants, Defendants permitted employees to foster a racially hostile work environment. Throughout his employment, Plaintiff was the only room service employee of Asian ethnicity. Due to his race, he frequently suffered severe discrimination and related verbal abuse. Plaintiff was constructively discharged from Bryant Park Hotel due to the discrimination that he suffered. 41. For example, during Plaintiff’s employment by Defendants, supervisory chefs at Bryant Park Hotel frequently made statements to Plaintiff clearly exhibiting racial and ethnic animus to Plaintiff on the basis of his Asian ethnicity and Chinese heritage. They would constantly refer to him as “that stupid Chinese,” and mock him for being Asian. 42. Defendants were made aware of this discriminatory conduct after Plaintiff complained to another supervisory employee, Esther Gonzalez, about the racial insults and abuse that he was constantly subjected to while working. However, Defendants PHIL COLUMBO, MICHAEL STRAUSS and other members of the Hotel’s senior management condoned the other employees’ racially offensive conduct towards Plaintiff, and refused to discipline them or do anything else to halt the racial abuse suffered by Plaintiff. 43. Because Plaintiff spoke out about the racially motivated abuse that he suffered while working at Bryant Park Hotel, Defendants PHIL COLUMBO and MICHAEL STRAUSS, the General Manager and Financial Director, and other managerial employees of the Hotel retaliated against him in an effort to force him to quit. 44. Plaintiff’s job performance was as good as or superior to that of his co-workers. However, following Plaintiff’s complaint about the regular discrimination that he faced on the job, Defendants and other supervisors acting on Defendants’ orders specifically and deliberately assigned Plaintiff to work on events at Bryant Park Hotel that were untipped (such as open bar events) in order to reduce his compensation. Further, around the same time, Defendant MICHAEL STRAUSS began to harass Plaintiff by accusing him without cause of committing petty infractions of Defendants’ rules for employees, such as stealing room service food. Non- Asian employees were never treated by Defendants in this manner. 45. Starting in approximately late December 2016, Defendant MICHAEL STRAUSS dramatically reduced the shifts that Plaintiff received each week. Ultimately, by the end of his employment on or about January 17, 2017, even though he was hired to work as a full time employee, Defendants reduced the number of shifts Plaintiff was assigned to only one shift each week. Non-Asian individuals were not subject to this reduction in hours. 46. Plaintiff was forced to quit Defendants’ employment due to the racial mockery and abuse that he faced on the job, and because of Defendants’ retaliation against him for daring to speak out about the discrimination that he suffered, including their dramatic reduction of his hours to only one shift per week. 47. Plaintiff’s health suffered due to the extreme emotional stress caused by the racial discrimination he faced while employed by Defendants. This stress was exacerbated by Defendants’ retaliation towards him for speaking out, and his eventual constructive discharge due to race. Plaintiff remains chronically depressed due to Defendants’ unlawful actions towards him. However, he has been unable to seek the regular psychiatric help that he requires as he no longer has health insurance. 48. On or about September 25, 2017, Plaintiff received his “Notice of Right to Sue” from the EEOC for his Charge of Discrimination pursuant to Title VII. See EXHIBIT A (Notice of Right to Sue). 49. Defendants unlawfully retained mandatory service charges represented to customers as gratuities, without providing notice to customers that management was retaining such service charges. 50. Defendants unlawfully misappropriated tips earned by Plaintiff and Tipped Subclass members on room service orders and during private events. This resulted from an invalid tip pooling scheme unlawfully instituted and mandated by Defendants. 51. Defendants unlawfully failed to pay Plaintiff, the FLSA Collective Plaintiffs, and members of the Class either the FLSA overtime rate (of time and one-half) or the New York State overtime rate (of time and one-half) for hours they worked in excess of forty (40) each workweek. 52. Defendants unlawfully failed to pay Plaintiff, FLSA Collective Plaintiffs and Class members spread of hours premium for working shifts exceeding ten (10) hours in duration. 53. Defendants unlawfully failed to pay Plaintiff, the FLSA Collective Plaintiffs, and members of the Class for all the hours that they worked, due to time shaving. 54. At no time during the relevant time periods did Defendants provide Plaintiff or Class members with proper wage statements as required by NYLL. Plaintiff and Class members received fraudulent wage statements that reflected only their scheduled hours, and not the actual hours worked. 55. Plaintiff retained Lee Litigation Group, PLLC to represent Plaintiff, FLSA Collective Plaintiffs and Class members, in this litigation and have agreed to pay the firm a reasonable fee for its services. STATEMENT OF CLAIM COUNT I VIOLATION OF THE FAIR LABOR STANDARDS ACT ON BEHALF OF PLAINTIFFS AND FLSA COLLECTIVE PLAINTIFFS 56. Plaintiff realleges and reavers Paragraphs 1 through 55 of this class and collective action Complaint as if fully set forth herein. 57. At all relevant times, Defendants were and continue to be employers engaged in interstate commerce and/or the production of goods for commerce within the meaning of the FLSA, 29 U.S.C. §§ 206(a) and 207 (a). Further, Plaintiff and FLSA Collective Plaintiffs are covered individuals within the meaning of the FLSA, 29 U.S.C. §§ 206(a) and 207 (a). 58. At all relevant times, Defendants employed Plaintiff and FLSA Collective Plaintiffs within the meaning of the FLSA. 59. At all relevant times, each Corporate Defendant had gross annual revenues in excess of $500,000.00. 60. At all relevant times, the Defendants engaged in a policy and practice of refusing to pay overtime compensation at the statutory rate of time and one-half to Plaintiff and FLSA Collective Plaintiffs for hours worked in excess of forty (40) hours per workweek. 61. At all relevant times, the Defendants engaged in time-shaving, refusing to compensate Plaintiff and FLSA Collective Plaintiffs for all hours that he worked each week. 62. At all relevant times, Defendants engaged in unlawful deduction of gratuities owed to Plaintiff and Tipped Subclass members; 63. Plaintiff is in possession of certain records concerning the number of hours worked by Plaintiff and FLSA Collective Plaintiffs and the actual compensation paid to Plaintiff and FLSA Collective Plaintiffs. Further records concerning these matters should be in the possession and custody of the Defendants. Plaintiff intends to obtain all records by appropriate discovery proceedings to be taken promptly in this case and, if necessary, will then seek leave of Court to amend this Complaint to set forth the precise amount due. 64. Defendants failed to properly disclose or apprise Plaintiff and FLSA Collective Plaintiffs of their rights under the FLSA. 65. As a direct and proximate result of Defendants’ willful disregard of the FLSA, Plaintiff and FLSA Collective Plaintiffs are entitled to liquidated (i.e., double) damages pursuant to the FLSA. 66. Due to the intentional, willful and unlawful acts of Defendants, Plaintiff and FLSA Collective Plaintiffs suffered damages in an amount not presently ascertainable of, unpaid overtime wages, unpaid wages and overtime premium due to time-shaving, disgorged tips, and an equal amount as liquidated damages. 67. Plaintiff and FLSA Collective Plaintiffs are entitled to an award of their reasonable attorneys’ fees and costs pursuant to 29 U.S.C. §216(b). COUNT II VIOLATION OF THE NEW YORK LABOR LAW ON BEHALF OF PLAINTIFFS AND CLASS MEMBERS 68. Plaintiff realleges and reavers Paragraphs 1 through 67 of this class and collective action Complaint as if fully set forth herein. 69. At all relevant times, Plaintiff and Class members were employed by the Defendants within the meaning of the New York Labor Law, §§2 and 651. 70. Defendants willfully violated Plaintiff’s and Class members’ rights by failing to pay them overtime compensation at the rate of not less than one and one-half times the regular rate of pay for each hour worked in excess of forty hours each workweek. 71. At all relevant times, the Defendants engaged in time-shaving, refusing to compensate Plaintiff and Class Members for all hours that he worked each week. 72. At all relevant times, Defendants unlawfully misappropriated tips each by Plaintiff and the Tipped Subclass. 73. Defendants failed to properly notify employees of their hourly pay rate and overtime rate, in direct violation of the New York Labor Law. 74. Defendants failed to provide a proper wage and hour notice, at the date of hiring and annually, to all non-exempt employees per requirements of the New York Labor Law. 75. Defendants failed to provide proper wage statements with every payment as required by New York Lab. Law § 195(3). 76. Due to the Defendants’ New York Labor Law violations, Plaintiff and Class members are entitled to recover from Defendants their unpaid overtime premium, unpaid wages and overtime premium resulting from time shaving, misappropriated gratuities, damages for unreasonably delayed payments, reasonable attorneys’ fees, liquidated damages, statutory penalties and costs and disbursements of the action, pursuant to New York Labor Law. COUNT III VIOLATION OF TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, 42 U.S.C. §§ 2000E ET SEQ. (RACIAL DISCRIMINATION) 77. Plaintiff realleges and reavers Paragraphs 1 through 76 of this Complaint as if fully set forth herein. 78. Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000E, et seq., prohibits discrimination in the terms, conditions, and privileges of employment on the basis of an individual’s race or national origin. 79. Plaintiff is an employee and a qualified person within the meaning of Title VII and Defendants are covered employers under the NYSHRL. 80. Defendants operated a business that discriminated against Plaintiff in violation of Title VII by subjecting Plaintiff to a hostile work environment, in the form of constant harassment about his race. Such discriminatory conduct by Defendants ultimately led to Plaintiff’s termination by Defendants. 81. Due to Defendants’ violations under the New York State Human Rights Law, as amended, based on discrimination on the basis of race, Plaintiff is entitled to recover from Defendants: (1) back pay, (2) compensatory damages for emotional distress, (3) punitive damages, and (2) attorney’s fees and costs. COUNT IV VIOLATION OF THE NEW YORK STATE HUMAN RIGHTS LAW (RACIAL DISCRIMINATION) 82. Plaintiff realleges and reavers Paragraphs 1 through 81 of this Complaint as if fully set forth herein. 83. The New York State Human Rights Law (“NYSHRL”) prohibits discrimination in the terms, conditions, and privileges of employment on the basis of an individual’s race or national origin. 84. Plaintiff is an employee and a qualified person within the meaning of NYSHRL and Defendants are covered employers under the NYSHRL. 85. Defendants operated a business that discriminated against Plaintiff in violation of the NYSHRL by subjecting Plaintiff to a hostile work environment, in the form of constant harassment about his race. Such discriminatory conduct by Defendants ultimately led to Plaintiff’s termination by Defendants. 86. Due to Defendants’ violations under the New York State Human Rights Law, as amended, based on discrimination on the basis of race, Plaintiff is entitled to recover from Defendants: (1) compensatory damages and (2) damages for retaliation. COUNT V VIOLATION OF THE NEW YORK CITY HUMAN RIGHTS LAW (RACIAL DISCRIMINATION) 87. Plaintiff realleges and reavers Paragraphs 1 through 86 of this Complaint as if fully set forth herein. 88. The New York City Human Rights Law (“NYCHRL”) prohibits discrimination in the terms, conditions, and privileges of employment on the basis of an individual’s race or national origin. 89. Plaintiff is an employee and a qualified person within the meaning of NYCHRL and Defendants are covered employers under the NYCHRL. 90. Defendants operated a business in New York City that discriminated against Plaintiff in violation of the NYCHRL by subjecting Plaintiff to a hostile work environment, in the form of constant harassment about his race. Such discriminatory conduct by Defendants directly led to Plaintiff’s termination by Defendants. 91. Due to Defendants’ violations under the New York City Human Rights Law, as amended, based on discrimination on the basis of race, Plaintiff is entitled to recover from Defendants: (1) compensatory damages, (2) punitive damages, (3) damages for retaliation, and (4) attorneys’ fees and costs. PRAYER FOR RELIEF WHEREFORE, Plaintiff on behalf of himself, FLSA Collective Plaintiffs and Class members, respectfully request that this Court grant the following relief: a. A declaratory judgment that the practices complained of herein are unlawful under the FLSA and the New York Labor Law, and the New York State Human Rights Law; b. An injunction against Defendants and their officers, agents, successors, employees, representatives and any and all persons acting in concert with them as provided by law, from engaging in each of the unlawful practices, policies and patterns set forth herein; c. An award of damages to Plaintiff, retroactive to the date of his discharge and prior, for all lost wages and benefits, past and future, back and front pay, resulting from Defendants’ unlawful employment practices and to otherwise make him whole for any losses suffered as a result of such unlawful employment practices; d. An award of unpaid overtime compensation due under the FLSA and the New York Labor Law; e. An award of unpaid minimum wages due under the FLSA and the New York Labor Law; f. An award of unpaid compensation due to Defendants’ policy of time-shaving; g. An award equal to the amount in gratuities misappropriated by Defendants; h. An award of statutory penalties as a result of Defendants’ failure to comply with New York Labor Law wage notice and wage statement requirements; i. An award of liquidated and/or punitive damages as a result of Defendants’ willful failure to pay overtime compensation, minimum wage and compensation for all hours worked, pursuant to 29 U.S.C. § 216; j. An award of liquidated and/or punitive damages as a result of Defendants’ willful failure to pay overtime compensation, minimum wage, compensation for all hours work, and misappropriated gratuities pursuant to the New York Labor Law; k. An award of back pay due under Title VII; l. An award of compensatory damages for emotional distress due under Title VII; m. An award of punitive damages due under Title VII; n. An award of compensatory damages due under the New York State Human Rights Law; o. An award of compensatory damages due under the New York City Human Rights Law; p. An award of punitive damages due under the New York City Human Rights Law; q. An award of prejudgment and post judgment interest, costs and expenses of this action together with reasonable attorneys’ and expert fees and statutory penalties; r. Designation of Plaintiff as Representative of the FLSA Collective Plaintiffs; s. Designation of this action as a class action pursuant to F.R.C.P. 23; t. Designation of Plaintiff as Representative of Class; and u. Such other and further relief as this Court deems just and proper. JURY DEMAND Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiff demands trial by jury on all issues so triable as of right by jury. Dated: November 13, 2017 Respectfully submitted, LEE LITIGATION GROUP, PLLC C.K. Lee (CL 4086) Anne Seelig (AS 3976) Taimur Alamgir (TA 9007) 30 East 39th Street, Second Floor New York, NY 10016 Tel.: 212-465-1188 Fax: 212-465-1181 Attorneys for Plaintiff, FLSA Collective Plaintiffs and the Class By: /s/ C.K. Lee . C.K. Lee (CL 4086)

employment & labor

ff19FIcBD5gMZwcz66J8

RACHEL E. KAUFMAN (CAL BAR NO. 259353) KAUFMAN P.A. 400 NW 26th Street Miami, FL 33127 Telephone: (305) 469-5881 [email protected] Attorney for Plaintiff and the Putative Classes UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CLASS ACTION JURY TRIAL DEMAND JORGE VALDES, individually and on behalf of all others similarly situated, Plaintiff, v. PREFERRED GROUP PROPERTIES, INC. a California corporation d/b/a HARCOURTS PRIME PROPERTIES, Defendant. CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Plaintiff Jorge Valdes (“Plaintiff” or “Valdes”) brings this Class Action Complaint and Demand for Jury Trial against Defendant Preferred Group Properties, Inc. d/b/a Harcourts Prime Properties (“Defendant” or “Harcourts Prime”) to stop Harcourts Prime from directing realtors to violate the Telephone Consumer Protection Act by making unsolicited autodialed calls to cellular telephone numbers and/or unsolicited calls to consumers who have registered their telephone numbers on the national Do Not Call registry, and to otherwise obtain injunctive and monetary relief for all persons injured by Harcourts Prime’s conduct. Plaintiff Valdes, for this Complaint, 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. INTRODUCTION 1. This case addresses a pervasive problem in the real estate industry: realtors’ incessant cold calls to consumers in violation of the Telephone Consumer Protection Act. 2. Harcourts Prime is an individual real estate franchise. 3. Harcourts Prime provides training and tools to its agents to make solicitation calls to consumers to generate leads for their real estate services. 4. Through this training, Harcourts Prime directs realtors to cold call consumers to sell them Harcourts Prime realty services. This includes specific instructions to call consumers with expired listings, who have previously listed their properties for sale with other realtors, but whose listings with those other realtors expired without a sale of the property and never included their personal phone numbers. 5. In addition to directly instructing realtors to make unsolicited cold calls to obtain listings, Harcourts Prime provides realtors with telephone numbers and other analytics for identifying leads to cold call and scripts for those cold calls. 6. In Plaintiff Valdes’s case, Harcourts Prime’s marketing plan for realtors resulted in him receiving unsolicited, autodialed calls from 6 different Harcourts Prime realtors to his cellular phone number registered on the DNC. This all occurred after the multiple listing service listing for Plaintiff’s property, which was maintained by Plaintiff’s former realtor and which did not include any of Plaintiff’s telephone numbers, was removed from the multiple listing service without Plaintiff having sold his home. 7. In response to these calls, Plaintiff Valdes files this lawsuit seeking injunctive relief, requiring Defendant to cease from directing realtors to violate, and otherwise ratifying realtors violations of the Telephone Consumer Protection Act by placing unsolicited autodialed calls to consumers, including consumers that have registered their telephone numbers on the DNC, as well as an award of statutory damages to the members of the Classes and costs. PARTIES 8. Plaintiff Jorge Valdes is a resident of Tustin, California. 9. Defendant Harcourts Prime is a California corporation with its headquarters located at 27372 Aliso Creek Rd., Aliso Viejo, CA 92656. Defendant conducts business throughout this District and throughout California. JURISDICTION AND VENUE 10. This Court has federal question subject matter jurisdiction over this action under 28 U.S.C. § 1331, as the action arises under the Telephone Consumer Protection Act, 47 U.S.C. §227 (“TCPA”). 11. This Court has personal jurisdiction over Defendant and venue is proper in this District under 28 U.S.C. § 1391(b) because both Plaintiff and the Defendant reside in this District, Defendant does significant business in this District and the state of California, and because the wrongful conduct giving rise to this case was directed from and/or occurred in this District. COMMON ALLEGATIONS Harcourts Prime Directs Realtors to Cold Call Consumers 12. Harcourts Prime directs realtors to use, and ratifies, realtors’ use of, certain proscribed practices to market Harcourts Prime’s realty services, including unsolicited autodialed calls to cellular telephone numbers and other telephone numbers registered on the DNC. 13. Harcourts Prime trains agents to make cold call solicitation calls to consumers. One such method is calling “expired listings.” An expired listing is when a homeowner contracts with an agent to sell a home and the listing agreement has an expiration date. A listing expires when the expiration date has passed without the property being sold. Defendant trains agents to cold call those homeowners on the day or week that their listing expires. 14. Defendant Harcourts Prime hosted a course called KickStart 2019 at their office regarding “How to Find Expired Listings and Get the Numbers Overcoming the Fear of Making an Expired Cold Call, Getting Excited about a ‘NO’ and the Follow Up Process Live Role Plays with Agents Experienced in Expired Listings Live Expired Calling Session with Real Sellers Introduction of the new Harcourts Expired Listing Kit Setting Your Number for the Year Ahead.”1 This training from Harcourts Prime to realtors, includes specific instructions on cold calls expired listings 1 https://harcourtsevents.com/usa/regional-events/ 15. In connection with this direction to cold call consumers, Defendant Harcourts Prime supplies its realtors with lists of telephone numbers and other data relating to prospective leads for property listings as is detailed on Harcourts Prime’s website: 2 16. On information and belief, Harcourts Prime does not check or scrub the lead lists it provides to realtors against the DNC and does not otherwise train realtors regarding how to scrub the lead lists or otherwise comply with the DNC’s requirements. 17. Defendant Harcourts Prime gives its agent access to its dialer system as is seen on their webpage: https://blue.harcourtsprime.com/Dialer_UC_RecordVoicemail.aspx.3 18. In addition, Defendant Harcourts Prime provides the technology, leads, training, and support to call leads like the Plaintiff in this case as is seen from Harcourts Prime’s job listing below.4 2 https://www.harcourtsprime.com/yourfuture 3 https://blue.harcourtsprime.com/Dialer_UC_RecordVoicemail.aspx 4 https://www.linkedin.com/jobs/view/real-estate-agent-at-harcourts-prime-properties- 1065172160/ 19. Harcourts Prime also supplies its realtors with scripts for cold calling 20. Additionally, Harcourts Prime partners with vendors to provide realtors with additional cold calling training, including Mike Ferry, whose “Coaching” is “All About Illegal Cold-calling without Regard to the Do Not Call List”5: 21. In connection with its direction to realtors to market themselves through cold calls to consumers, Harcourt also effectively promotes realtors’ 5 https://www.ripoffreport.com/reports/mike-ferry-organization/las-vegas-nevada-89113/mike- ferry-organization-beware-of-mike-ferry-coaching-its-all-about-illegal-cold-call-439809 purchases of other lists of leads for listings and autodialers. Harcourt does this by partnering through Mike Ferry with and/or otherwise endorsing companies such as RedX and Arch, both of which specialize in providing leads associated with properties that were previously listed on a multiple listing service, but that expired or were otherwise removed with a sale, and both of which supply an autodialer to facilitate calling the lists of leads they supply.6 22. Ultimately, Harcourts Prime directs realtors to cold call consumers without consent and/or knows or should know that realtors are doing so in violation of the TCPA, but fails to stop them anyway. PLAINTIFF’S ALLEGATIONS Harcourts Prime’s Realtors Made Unsolicited, Autodialed Cold Calls to Plaintiff 23. On February 8, 2010, Plaintiff Valdes registered his cellular phone number on the DNC to avoid receiving unsolicited phone calls. Since that time, the cellular phone number has been primarily for personal use. Plaintiff has never held the cellular phone number out to the public in connection with a business. 24. Valdes had a property listed for sale through a realtor, which he withdrew from the market on May 15, 2018. The listing for Plaintiff’s property never included Plaintiff’s cellular phone number (or any other number associated with him) as a means for inquiring about the property. 6 https://www.mikeferry.com/about/vendors/ 25. As a result of having the listing removed, Valdes started receiving calls from a multitude of Harcourts Prime realtors, including the following calls: • May 17, 2018 at 1:59 AM from phone number 949-244-7157 • May 22, 2018 at 1:18 PM from phone number 949-677-5053 • May 22, 2018 at 1:18 PM from phone number 949-677-5053 (same agent called twice) • May 22, 2018 at 1:54 PM from phone number 949-630-5511 • May 24, 2018 at 11:19 AM from phone number 949-283-2833 26. Months later when Valdes’ agreement with his prior realtor expired on October 29, 2018, Harcourts Prime’s realtors started calling him again, including on the following call: • October 30, 2018 at 1:24 PM from phone number 949-689-5415 27. On one or more of these above calls, Plaintiff told them that he was on the do not call list and/or to stop calling. 28. Plaintiff was called again on January 31, 2019 at 10:17 AM from phone number 562-884-0378 29. Plaintiff Valdes answered all of the calls that he received on his cellular phone from the many Harcourts Prime realtors. All of these calls were to market Harcourts Prime’s realty services and to solicit Plaintiff’s property listing. 30. For example, during the January 31, 2019 call, the realtor began by introducing himself as Felix, a Harcourts Prime agent. He asked if Plaintiff was still interested in selling his home. Plaintiff inquired as to how Felix received his contact information. Felix answered, explaining that it was provided through a program called Blue (which is something Harcourts Prime provides to its agents).7 Plaintiff then told Felix not to call him again and ended the call. 31. On information and belief, this call was autodialed because it was made from one the lead lists Harcourts Prime supplies to realtors, which are configured to be loaded into a number of different autodialers, all of which have the capacity to store and automatically dial all of the numbers from the list without human intervention and to dial multiple numbers at one time. 32. Plaintiff does not have a relationship with Harcourts Prime or its realtors and has never consented to any contact from them. To the contrary, Plaintiff registered his cell phone number with the DNC and hired a realtor when he was trying to sell his property specifically to avoid such calls. 33. Defendant’s unauthorized telephone calls harmed Plaintiff in the form of annoyance, nuisance, and invasion of privacy, and disturbed Valdes’ use and enjoyment of his cellular phone, in addition to the wear and tear on the phone’s hardware (including the phone’s battery) and the consumption of memory on the phone. 7 On information and belief, the agent is referring to the back-end web portal provided to agents of Harcourts here: https://blue.harcourtsprime.com/ 34. Seeking redress for these injuries, Valdes, on behalf of himself and Class of similarly situated individuals, brings suit under the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq., which prohibits autodialed calls to cellular phone numbers and other unsolicited calls to phone numbers registered on the DNC. CLASS ALLEGATIONS Class Treatment Is Appropriate for Plaintiff’s TCPA Claims 35. Plaintiff Valdes brings this action pursuant to Federal Rule of Civil Procedure 23(b)(2) and Rule 23(b)(3) on behalf of himself and all others similarly situated and seeks certification of the following Classes: Autodialed No Consent Class: All persons in the United States who from four years prior to the filing of this action through class certification (1) one of Defendant’s realtors called, (2) on the person’s cellular telephone, (3) for substantially the same reason Defendant’s realtors called Plaintiff (4) using substantially the same dialing equipment as Defendant’s realtors used to call Plaintiff, and (5) for whom Defendant claims (a) it obtained prior express written consent in the same manner as Defendant claims it supposedly obtained prior express written consent to call Plaintiff, or (b) it did not obtain prior express written consent. Do Not Call Registry Class: All persons in the United States who from four years prior to the filing of this action through class certification (1) one of Defendant’s realtors called more than one time, (2) within any 12-month period, (3) where the person’s telephone number had been listed on the national Do Not Call registry for at least thirty days, (4) for substantially the same reason Defendant’s realtors called Plaintiff, and (5) for whom Defendant claims (a) it obtained prior express written consent in the same manner as Defendant claims it supposedly obtained prior express written consent to call Plaintiff, or (b) it did not obtain prior express written consent. Internal Do Not Call Class: All persons in the United States who from four years prior to the filing of this action (1) one of Defendant’s realtors called more than one time (2) within any 12-month period, (3) for substantially the same reason Defendant’s realtors called Plaintiff. 36. The following individuals are excluded from the Classes: (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 Classes; (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 definitions following appropriate discovery. 37. Numerosity: On information and belief, there are hundreds, if not thousands of members of the Classes such that joinder of all members is impracticable. 38. 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 realtors systematically placed autodialed telephone calls to Plaintiff and consumers; (b) whether Defendant’s realtors systematically made multiple telephone calls to Plaintiff and consumers whose telephone numbers were registered with the DNC; (c) whether Defendant failed to implement policies and procedures for maintaining a list of persons who request not to be called by Defendant before engaging in telemarketing; (d) whether Defendant’s realtors placed calls to Plaintiff and consumers without having the necessary prior express written consent required for such calls; (e) whether Defendant’s realtors conduct constitutes a violation of the TCPA; and (f) whether members of the Classes are entitled to treble damages based on the willfulness of Defendant’s conduct. 39. 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 the Defendant has no defenses unique to Plaintiff. Plaintiff and his 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 his counsel have any interest adverse to the Classes. 40. Appropriateness: This class action is also appropriate for certification because the 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 CLAIM FOR RELIEF Telephone Consumer Protection Act (Violation of 47 U.S.C. § 227) (On Behalf of Plaintiff and the Autodialed No Consent Class) 41. Plaintiff repeats and realleges paragraphs 1 through 40 of this Complaint and incorporates them by reference. 42. Defendant’s realtors made unwanted solicitation calls to cellular telephone numbers belonging to Plaintiff and the other members of the Autodialed No Consent Class using equipment that, upon information and belief, had the capacity to store or produce telephone numbers to be called, using a random or sequential number generator. 43. These solicitation telephone calls were made en masse without the prior express written consent of Plaintiff and the other members of the Autodialed No Consent Class. 44. Defendant’s realtors made these calls negligently or willfully and knowingly. 45. Defendant is vicariously liable for its realtors’ calls because it directed, apparently authorized, and/or ratified the realtors’ actions. 46. Defendant has, therefore, violated 47 U.S.C. § 227(b)(1)(A)(iii). As a result of Defendant’s conduct, Plaintiff and the other members of the Autodialed No Consent Class are each entitled to a minimum of $500 in damages, and up to $1,500 in damages, for each violation. SECOND CAUSE OF ACTION Telephone Consumer Protection Act (Violation of 47 U.S.C. § 227) (On Behalf of Plaintiff Valdes and the Do Not Call Registry Class) 47. Plaintiff repeats and realleges paragraphs 1 through 40 of this Complaint and incorporates them by reference. 48. The TCPA’s implementing regulations provide 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.” 47 C.F.R. § 64.1200(c). 49. This regulation is “applicable to any person or entity making telephone solicitations or telemarketing calls to wireless telephone numbers.” 47 C.F.R. § 64.1200(e). 50. 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” 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. 47 U.S.C. § 227(c). 51. Defendant’s realtors initiated telephone solicitations to telephone subscribers such as Plaintiff and the Do Not Call Registry Class members who registered their respective telephone numbers on the DNC. 52. These solicitation telephone calls were made en masse without the prior express written consent of Plaintiff and the other members of the Do Not Call Registry Class. 53. Defendant’s realtors made these calls negligently or willfully and knowingly. 54. Defendant is vicariously liable for their realtors’ calls because it directed, apparently authorized, and/or ratified the realtors’ actions. 55. Defendant has, therefore, violated 47 U.S.C. § 227(c)(5). As a result of Defendant’s conduct, Plaintiff and the other members of the Do Not Call Registry Class are each entitled to a minimum of $500 in damages, and up to $1,500 in damages, for each violation. THIRD CAUSE OF ACTION Telephone Consumer Protection Act (Violations of 47 U.S.C. § 227) (On Behalf of Plaintiff and the Internal Do Not Call Class) 56. Plaintiff repeats and realleges paragraphs 1 through 40 of this Complaint and incorporates them by reference. 57. Under 47 C.F.R. § 64.1200(d), “[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 entities 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. If such requests are recorded or maintained by a party other than the person or entity on whose behalf the telemarketing call is made, the person or entity on whose behalf the telemarketing call is made will be liable for any failures to honor the do-not-call request. A person or entity making a call for telemarketing purposes must obtain a consumer's prior express permission to share or forward the consumer's request not to be called to a party other than the person or entity on whose behalf a telemarketing call is made or an affiliated entity. (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. 47 C.F.R. § 64.1200(d). 58. The TCPA 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. 47 U.S.C. § 227(c)(5). 59. Defendant’s realtors initiated telephone solicitations to Plaintiff and members of the Internal DNC Class notwithstanding Defendant and their realtors’ failure to implement internal procedures for maintaining a list of persons who request not to be called and/or by implementing procedures that do not meet the minimum standards for initiating telemarketing calls. 60. Defendant is vicariously liable for their realtors calls because they directed, apparently authorized and/or ratified the realtors’ actions. 61. Defendant has, therefore, violated 47 U.S.C. § 227(c)(5). As a result of Defendant’s conduct, Plaintiff and the other members of the Internal DNC Class are each entitled to up to $1,500 for each violation. PRAYER FOR RELIEF WHEREFORE, Plaintiff Valdes, individually and on behalf of the Classes, prays for the following relief: a. An order certifying the Classes as defined above; appointing Plaintiff as the representative of the Classes; and appointing his attorneys as Class Counsel; b. An award of actual and/or statutory damages for the benefit of Plaintiff and the Classes, and costs; c. An order declaring that Defendant’s actions, as set out above, violate the TCPA; d. An injunction requiring the Defendant to cease all unsolicited calling activity, to implement sufficient TCPA related policies and procedures, and to otherwise protect the interests of the Classes; and e. Such further and other relief as the Court deems just and proper. JURY TRIAL DEMAND Plaintiff requests a jury trial. Respectfully Submitted, JORGE VALDES, individually and on behalf of those similarly situated individuals Dated: March 9, 2020 By: /s/ Rachel E. Kaufman Rachel E. Kaufman (Cal Bar no. 259353) [email protected] KAUFMAN P.A. 400 NW 26th Street Miami, FL 33127 Telephone: (305) 469-5881 Attorney for the Plaintiff and the putative Classes

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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 Keivan Sarraf, DDS, Inc. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION CLASS ACTION JUNK-FAX COMPLAINT JURY TRIAL DEMANDED KEIVAN SARRAF, DDS, INC., individually and on behalf of all others similarly situated, Plaintiff, v. ORTHO ARCH COMPANY, INC. d/b/a ORTHO ARCH and KIMBERLY SUNDBLOM, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) CLASS ACTION JUNK-FAX COMPLAINT Plaintiff Keivan Sarraf, DDS, Inc., individually and on behalf of all others similarly situated, brings this class action under Rule 23 of the Federal Rules of Civil Procedure against Defendants Ortho Arch Company, Inc. d/b/a Ortho Arch and Kimberly Sundblom for their 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 Defendants because they conduct business in this state, have committed tortious acts within this state, including conversion of fax recipients’ paper, ink, and toner. or Defendants otherwise have sufficient minimum contacts with this state, such as the importing of products into this state and exhibiting at industry trade shows in this state. PARTIES 4. Plaintiff Keivan Sarraf, DDS, Inc., is a citizen of the State of California and has its principal place of business in Beverly Hills, California. 5. Defendant Ortho Arch Company, Inc. d/b/a Ortho Arch is an Illinois corporation and with its principal office at 1107 Tower Road, Schaumburg, Illinois 60173, and its secretary, Kristi Brehm, residing in Cardiff, California. 6. Defendant Kimberly Sundblom is an officer or employee of Ortho Arch and resides at 251 Peach Tree Ln, Elk Grove Village, IL 60007. 7. Defendants, directly or through other persons acting on their behalf, conspired to, agreed to, contributed to, assisted with, or otherwise caused the wrongful acts and omissions, including the dissemination of the junk faxes that are the subject matter of this Complaint. THE FAXES 8. On or about April 15, 2020, at 12:54 p.m. Defendants, or someone acting on their behalf, used a telephone facsimile machine, computer, or other device to send to Plaintiff’s telephone facsimile machine at (626) 813-4410 an unsolicited advertisement, a true and accurate copy of which is attached as Exhibit A. 9. The header of the Exhibit A states that the document is “FROM: KIM SUNDBLOM.” 10. The body of Exhibit A states, in part, “Get $30 off a NEW Razor Spectrum cutter or bender for each plier you trade in.” 11. The opt-out notice on Exhibit A states: 12. Plaintiff received additional faxes from Defendants using the same template as Exhibit A and also identifying Sundblom in the header. 13. A true and accurate copy of one of those additional faxes, dated April 16, 2020, is attached as Exhibit B. 14. Exhibits A and B and all additional faxes advertisements that Plaintiff received from Defendants are hereafter referred to as “the Faxes. 15. The Faxes constitutes material advertising the quality or commercial availability of any property, goods, or services. 16. On information and belief, Defendants have sent other facsimile transmissions of material advertising the quality or commercial availability of property, goods, or services to Plaintiff and to at least 40 other persons as part of a plan to broadcast fax advertisements, of which the Faxes are examples. 17. Upon information and belief, Defendants 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. Defendants 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. Defendants created, made, or ratified the sending of the Faxes and other similar or identical facsimile advertisements to Plaintiff and other members of the “Class” as defined below. 20. The Faxes to Plaintiff and, on information and belief, the similar facsimile advertisements sent by Defendants, lacked a proper notice on its first page informing the recipient of the ability and means to avoid future unsolicited advertisements and thereby contained numerous violations of the TCPA and 47 C.F.R. § 64.1200. 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 Faxes and, on information and belief, Defendants’ similar facsimile advertisements lacked a notice stating that the recipient may make a request to the sender of the advertisement not to send future advertisements to a telephone facsimile machine or machines and that failure to comply, within 30 days, with such a request meeting 47 C.F.R. § 64.1200(a)(4)(v)’s requirements is unlawful. 23. They also lacked a fax number in the opt-out notice. 24. The transmissions of facsimile advertisements, including the Faxes, to Plaintiff, lacked a notice that complied with 47 U.S.C. § 227(b)(1)(C) and 47 C.F.R. § 64.1200(a)(4)(iii). 25. On information and belief, Defendants 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. 26. Defendants violated the TCPA by transmitting the Faxes 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). 27. Defendants knew or should have known that (a) facsimile advertisements, including the Faxes, 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) Defendants’ facsimile advertisements did not display a proper opt-out notice. 28. Pleading in the alternative to the allegations that Defendants knowingly violated the TCPA, Plaintiff alleges that Defendants did not intend to send transmissions of facsimile advertisements, including the Faxes, 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 Defendants’ own understanding of the law or on the representations of others on which Defendants reasonably relied. 29. The transmissions of facsimile advertisements, including the Faxes, 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 30. 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 Defendants a telephone facsimile message of material advertising the commercial availability or quality of any property, goods, or services, (2) with respect to whom Defendants cannot provide evidence of prior express invitation or permission for the sending of such fax or (3) with whom Defendants 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. 31. Excluded from the Class are Defendants, their employees, agents, and members of the judiciary. 32. This case is appropriate as a class action because: a. Numerosity. On information and belief, based in part on review of the sophisticated Faxes 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 Defendants engaged in a pattern of sending unsolicited fax advertisements; ii. Whether the Faxes, and other faxes transmitted by or on behalf of Defendants, contains material advertising the commercial availability of any property, goods or services; iii. Whether the Faxes, and other faxes transmitted by or on behalf of Defendants, contains material advertising the quality of any property, goods or services; iv. The manner and method Defendants used to compile or obtain the list of fax numbers to which Defendants sent the Faxes and other unsolicited faxed advertisements; v. Whether Defendants faxed advertisements without first obtaining the recipients’ prior express invitation or permission; vi. Whether Defendants violated 47 U.S.C. § 227; vii. Whether Defendants willfully or knowingly violated 47 U.S.C. § 227; viii. Whether Defendants violated 47 C.F.R. § 64.1200; ix. Whether the Faxes, and the other fax advertisements sent by or on behalf of Defendants, 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 Defendants 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 Faxes were substantially the same as the faxes sent by or on behalf of Defendants 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. 33. 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). 34. 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). 35. 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). 36. 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. 37. Defendants’ actions caused concrete and particularized harm to Plaintiff and the Class, as a. receiving Defendants’ faxed advertisements caused the recipients to lose paper and toner consumed in printing Defendants’ faxes; b. Defendants’ actions interfered with the recipients’ use of the recipients’ fax machines and telephone lines; c. Defendants’ 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. Defendants’ faxes unlawfully interrupted the recipients’ privacy interests in being left alone and intruded upon their seclusion. 38. Defendants 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 Defendants’ advertisements; therefore, treble damages are warranted under 47 U.S.C. § 227(b)(3). 39. Defendants knew or should have known that (a) Plaintiff and the other Class members had not given express invitation or permission for Defendants or anyone else to fax advertisements about Defendants’ property, goods, or services, (b) Defendants did not have an established business relationship with Plaintiff and the other Class members, (c) the Faxes and the other facsimile advertisements were advertisements, and (d) the Faxes and the other facsimile advertisements did not display the proper opt-out notice. 40. Defendants violated the TCPA by transmitting the Faxes 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). JURY DEMAND Plaintiff requests a trial by jury. WHEREFORE, Plaintiff, for itself and all others similarly situated, demands judgment against Defendants, jointly and severally, 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 Defendants and their 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 Defendants 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 Defendants take affirmative steps to preserve all records, lists, emails electronic databases, spreadsheets, or other itemization fax numbers associated with the communication or transmittal of fax advertisements. If Defendants used a third party to send the faxes, contact that third party and ensure that all transmission records are maintained, and a copy provided to Defendants. DATED: June 9, 2020 EDWARDS POTTINGER LLC By: /s/ Seth M. Lehrman Attorney for Plaintiff Keivan Sarraf, DDS, Inc.

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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA Case No. GRACE LAVENDER, individually and on behalf of all others similarly situated, Plaintiff, v. AMERICAN RESIDENTIAL SERVICES, LLC, a Delaware registered company, Defendant. CLASS ACTION COMPLAINT DEMAND FOR JURY TRIAL CLASS ACTION COMPLAINT Plaintiff Grace Lavender (“Lavender” or “Plaintiff”) brings this Class Action Complaint and Demand for Jury Trial against Defendant American Residential Services LLC (“ARS” or “Defendant”) to stop Defendant from violating the Telephone Consumer Protection Act by making unsolicited, pre-recorded calls to consumers, including consumers on the National Do Not Call Registry (“DNC”), and to otherwise obtain injunctive and monetary relief for all persons injured by ARS’s 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. PARTIES 1. Plaintiff Lavender is a Jefferson, Georgia resident. 2. Defendant ARS is a Delaware corporation headquartered in Memphis, Tennessee with operational centers in Georgia. ARS conducts business throughout this District and the United States. JURISDICTION AND VENUE 3. This Court has federal question subject matter jurisdiction over this action under 28 U.S.C. § 1331, as the action arises under the Telephone Consumer Protection Act, 47 U.S.C. §227 (“TCPA”). 4. This Court has personal jurisdiction over Defendant and venue is proper in this District under 28 U.S.C. § 1391(b) because Plaintiff resides in this District and because Defendant operates operational centers in this District, does significant business here, and because the wrongful conduct giving rise to this case was directed to this District. INTRODUCTION 5. When Congress enacted the TCPA in 1991, it found that telemarketers called more than 18 million Americans every day. 105 Stat. 2394 at § 2(3). 20. By 2003, due to more powerful autodialing technology, telemarketers were calling 104 million Americans every day. In re Rules and Regulations Implementing the TCPA of 1991, 18 FCC Rcd. 14014, ¶¶ 2, 8 6. The problems Congress identified when it enacted the TCPA have only grown exponentially in recent years. 7. Industry data shows that the number of robocalls made each month increased from 831 million in September 2015 to 4.7 billion in December 2018—a 466% increase in three 8. According to online robocall tracking service “YouMail,” 5.2 billion robocalls were placed in March 2019 alone, at a rate of 168.8 million per day. www.robocallindex.com (last visited April 9, 2019). YouMail estimates that in 2019 robocall totals will exceed 60 billion. See id. 9. The FCC also has received an increasing number of complaints about unwanted calls, with 150,000 complaints in 2016, 185,000 complaints in 2017, and 232,000 complaints in 2018. FCC, Consumer Complaint Data Center, www.fcc.gov/consumer-help-center-data. INTRODUCTION TO ARS 10. ARS runs a network of company-owned locations throughout the U.S. that provide heating, air conditioning, plumbing and sewer and drain services to residential consumers and businesses.1 11. ARS places pre-recorded calls in which it identifies itself as ARS and/or Rescue Rooter. 12. ARS’s pre-recorded calls are for the purpose of marketing ARS’s services to consumers. 13. ARS places these pre-recorded sales calls to consumers without obtaining their prior express written consent. 14. ARS made numerous unsolicited calls to Plaintiff’s cell phone and left numerous pre-recorded voicemails in Plaintiff’s cell phone voicemail, despite Plaintiff’s requests for the calls to be stopped. 15. In response to these calls, Plaintiff files this lawsuit seeking injunctive relief, requiring Defendant to stop making pre-recorded voice sales calls to consumers without their consent, as well as an award of statutory damages to the members of the Class and costs. ARS Markets its Services by Placing Pre-recorded Calls to Consumers Without Their Consent 16. ARS makes pre-recorded calls to consumers without obtaining their prior written express consent. 1 https://www.ars.com/about-us 17. As explained by the Federal Communications Commission (“FCC”) in its 2012 order, the TCPA requires “prior express written consent for all … pre-recorded [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). 18. ARS’s pre-recorded voice calls therefore violate the TCPA. 19. In job postings, ARS reveals that it utilizes the Five9 Cloud Contact Center, which includes the use of pre-recorded calls. 2 20. Five9 gives Defendant the ability to make pre-recorded calls to consumers: 3 2 https://www.linkedin.com/jobs/view/web-lead-coordinator-8108-at-american-residential- services-1515340224/ 3 Id. 21. There are many complaints online regarding Defendant’s unwanted solicitation calls to consumers, including complaints from consumers who asked for the calls to stop, but who still continued to receive solicitation calls: • “ars. I have told them to stop calling.”4 • “ARS constantly calling to perform ac/heater unit check. 3 to 5 times a day!"5 • “ARS service call”6 • “ARS rescue rooter furnace special.”7 • “Unsolicited call”8 • “ARS business call”9 • 2 people reported 919-828-5147 as calling using a pre-recorded message. Online reports show this phone number is used by ARS.10 PLAINTIFF’S ALLEGATIONS ARS Placed Pre-recorded Calls to Plaintiff’s Cell Phone Number Without Her Consent, Despite Plaintiff Having Her Phone Number Registered on the DNC, And Despite Requests for the Calls to Stop 22. Plaintiff Lavender registered her cell phone number on the DNC on June 29, 2011. Plaintiff’s cell phone number has never been associated with a business and is used by Plaintiff as one would use a landline telephone number in a home. 23. On or around August 7, 2019, Plaintiff started receiving calls to her cell phone number from Defendant using phone number 770-908-8488. 24. Plaintiff did not answer the calls. 25. Plaintiff received as many as 5 unsolicited calls from Defendant in one day to her 4 https://www.shouldianswer.com/phone-number/7137777777 5 Id. 6 Id. 7 https://www.shouldianswer.com/phone-number/3034186001 8 https://www.shouldianswer.com/phone-number/9198285147 9 https://www.shouldianswer.com/phone-number/7138561344 10 https://www.reportedcalls.com/9198285147 cell phone, such as on August 16, 2019. 26. Defendant left numerous pre-recorded voicemails on Plaintiff’s cell phone voicemail regarding heating and air conditioner systems that Plaintiff had never inquired about. Plaintiff noted that the voicemails were left by the same agent, using the same wording and spoken in the same tone, indicating the use of a pre-recorded message. 27. After receiving calls and pre-recorded voicemails on her cell phone for more than 50 days, Plaintiff called 770-908-8488 and spoke with a live agent. Plaintiff explained that she was receiving unsolicited calls, that the calls were not relevant to her, as she does not own a property and Plaintiff asked for the calls to be stopped. 28. Despite her request for the calls to stop, Defendant continued to place calls, including pre-recorded calls to Plaintiff’s cell phone. 29. Plaintiff Lavender placed additional calls to 770-908-8488 asking for the calls to be stopped. 30. One agent of ARS that Plaintiff spoke to explained that it would be difficult to stop the calls to the Plaintiff’s cell phone number because although the calls identified on the Plaintiff’s cell phone number show as 770-908-8488, that number is spoofed, and a packet of many numbers is used to initiate the calls and it would be difficult to identify which of those numbers is initiating the calls. Plaintiff told the agent that ARS was breaking the law and stop the calls. Plaintiff continued to receive more calls after this conversation. 31. 770-908-8488 is a phone number commonly associated with ARS and if called back the pre-recorded message identifies itself as ARS Rescue Rooter. 32. When 770-908-8488 is called, an automated system identifies the company as being ARS/Rescue Rooter.11 11 As of January 12, 2020 33. Plaintiff does not have a relationship with ARS, or any of its affiliated companies, nor has she ever consented to any contact from Defendant. 34. Simply put, ARS did not obtain Plaintiff’s prior express written consent to place any solicitation telephone calls to her using a pre-recorded voice message. 35. Defendant’s unauthorized telephone calls harmed Plaintiff in the form of annoyance, nuisance, and invasion of privacy, and disturbed Lavender’s use and enjoyment of her phone, in addition to the wear and tear on the phone’s hardware (including the phone’s battery) and the consumption of memory on the phone. 36. Seeking redress for these injuries, Lavender, on behalf of herself and Class of similarly situated individuals, brings suit under the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq., which prohibits unsolicited pre-recorded voice calls to residential landline numbers and cellular phone numbers, as well as solicitation calls to residential landline and cellular phone numbers registered on the DNC. CLASS ALLEGATIONS Class Treatment Is Appropriate for Plaintiff’s TCPA Claims Arising From Calls Made by ARS 37. 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 Classes: Pre-recorded No Consent Class: All persons in the United States who from four years prior to the filing of this action through class certification (1) Defendant (or agents acting on behalf of Defendant) called on their cellular phone number or residential landline number (2) using a pre-recorded voice message (3) for substantially the same reason Defendant called Plaintiff and (4) for whom Defendant claims (a) it obtained prior express written consent in the same manner as Defendant claims it supposedly obtained prior express written consent to call Plaintiff, or (b) it did not obtain prior express written consent. Pre-recorded Stop Class: All persons in the United States who from four years prior to the filing of this action through class certification (1) Defendant (or agents acting on behalf of Defendant) called on their cellular phone number or residential landline number (2) using a pre-recorded voice message (3) for substantially the same reason Defendant called Plaintiff (4) after they told Defendant to stop calling. Do Not Call Registry Class: All persons in the United States who from four years prior to the filing of this action through class certification (1) Defendant (or an agent acting on behalf of Defendant) called more than one time on their residential cellular or landline number, (2) within any 12-month period, (3) where the person’s telephone number had been listed on the National Do Not Call Registry for at least thirty days, (4) for substantially the same reason Defendant called Plaintiff, and (5) for whom Defendant claims (a) it obtained prior express written consent in the same manner as Defendant claims it supposedly obtained prior express written consent to call Plaintiff, or (b) it did not obtain prior express written consent. Internal Do Not Call Registry Class: All persons in the United States who from four years prior to the filing of this action through class certification (1) Defendant (or an agent acting on behalf of Defendant) called more than one time on their residential cellular or landline number, (2) within any 12-month period, (3) for the purpose of selling Defendant’s products and services. 38. The following individuals are excluded from the Classes: (1) any Judge or Magistrate presiding over this action and members of their families; (2) Defendant, their 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 Classes; (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 definitions following appropriate discovery. 39. Numerosity: On information and belief, there are hundreds, if not thousands of members of the Classes such that joinder of all members is impracticable. 40. 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 utilized a pre-recorded voice message when placing calls to Plaintiff and the members of the Pre-recorded No Consent Class; (b) whether Defendant placed calls to Plaintiff and members of the Class who had their phone numbers registered on the DNC; (c) whether Defendant placed calls to Plaintiff and members of the Classes without first obtaining consent to make the calls; (d) whether Defendant continued to place calls to Plaintiff and members of the Class after being told to stop calling; (e) whether Defendant maintains a functional internal do not call system in order to stop calling consumers such as Plaintiff and members of the Class who asked for the calls to stop; (f) whether Defendant’s conduct constitutes a violation of the TCPA; and (g) whether members of the Classes are entitled to treble damages based on the willfulness of Defendant’s conduct. 41. 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 have any interest adverse to the Classes. 42. 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. FIRST CAUSE OF ACTION Telephone Consumer Protection Act (Violations of 47 U.S.C. § 227) (On Behalf of Plaintiff Lavender and the Pre-recorded No Consent Class) 43. Plaintiff repeats and realleges paragraphs 1 through 42 of this Complaint and incorporates them by reference herein. 44. Defendant and/or its agents made unwanted solicitation telephone calls to Plaintiff and the other members of the Pre-recorded No Consent Class using a pre-recorded voice message. 45. These pre-recorded voice message calls were made en masse without the consent of the Plaintiff and the other members of the Pre-recorded No Consent Class. 46. Defendant has, therefore, violated 47 U.S.C. § 227(b)(1). As a result of Defendant’s conduct, Plaintiff and the other members of the Pre-recorded No Consent Class are each entitled to a minimum of $500 in damages for each violation, and up to $1,500 in damages for each violation in the event that the Court determines that Defendant’s conduct was willful and knowing. SECOND CAUSE OF ACTION Telephone Consumer Protection Act (Violation of 47 U.S.C. § 227) (On Behalf of Plaintiff and the Pre-recorded Stop Class) 47. Plaintiff repeats and realleges paragraphs 1 through 42 of this Complaint and incorporates them by reference. 48. Defendant and/or its agents made unwanted solicitation telephone calls to telephone numbers belonging to Plaintiff and the other members of the Pre-recorded Stop Class after being told to stop calling. 49. These solicitation telephone calls were made en masse. 50. Defendant has, therefore, violated 47 U.S.C. § 227(b)(1). As a result of Defendant’s conduct, Plaintiff and the other members of the Pre-recorded Stop Class are each entitled to a minimum of $500 in damages, and up to $1,500 in damages, for each violation. THIRD 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) 51. Plaintiff repeats and realleges the paragraphs 1 through 42 of this Complaint and incorporates them by reference herein. 52. 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.” 53. 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.”12 54. 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 12 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 subsection may” 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. 47 U.S.C. § 227(c). 55. Defendant violated 47 C.F.R. § 64.1200(c) by initiating, or causing to be initiated, telephone solicitations to 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. 56. 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 are entitled to a minimum of $500 in damages, and up to $1,500 in damages, for each violation. FOURTH CAUSE OF ACTION Telephone Consumer Protection Act (Violations of 47 U.S.C. § 227) (On Behalf of Plaintiff and the Internal Do Not Call Class) 57. Plaintiff repeats and realleges paragraphs 1 through 42 and 53 of this Complaint and incorporates them by reference. 58. Under 47 C.F.R. § 64.1200(d), “[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 entities 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. If such requests are recorded or maintained by a party other than the person or entity on whose behalf the telemarketing call is made, the person or entity on whose behalf the telemarketing call is made will be liable for any failures to honor the do-not-call request. A person or entity making a call for telemarketing purposes must obtain a consumer's prior express permission to share or forward the consumer's request not to be called to a party other than the person or entity on whose behalf a telemarketing call is made or an affiliated entity. (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. 59. Defendant placed solicitation calls to Plaintiff and members of the Internal DNC Class without implementing internal procedures for maintaining a list of persons who request not to be called by the entity and/or by implementing procedures that do not meet the minimum requirements to allow Defendants to initiate telemarketing calls. 47 C.F.R. 64.1200(d)(1)-(6). 60. The TCPA 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. 47 U.S.C. § 227(c)(5). 61. Defendant has, therefore, violated 47 U.S.C. § 227(c)(5). As a result of Defendant’s conduct, Plaintiff and the other members of the Internal Do Not Call Class are each entitled to between $500 and $1,500 per violation. PRAYER FOR RELIEF WHEREFORE, Plaintiff Lavender, individually and on behalf of the Class, prays for the following relief: a) An order certifying the Class as defined above; appointing Plaintiff as the representative of the Class; and appointing her attorneys as Class Counsel; b) An award of actual and/or statutory damages for the benefit of Plaintiff and the Class; c) An order declaring that Defendant’s actions, as set out above, violate the TCPA; d) An injunction requiring Defendant to cease all unsolicited calling activity, and to otherwise protect the interests of the Class; and e) Such further and other relief as the Court deems just and proper. JURY DEMAND Plaintiff requests a jury trial. Respectfully Submitted, GRACE LAVENDER, individually and on behalf of those similarly situated individuals Dated: March 2, 2020 By: /s/ Tristan W. Gillespie Tristan Gillespie, Esq. (Ga Bar No. 268064) 5150 College Farm Rd. John’s Creek, GA 30022 Telephone: (404) 276-7277 Gillespie@[email protected] Stefan Coleman (FL Bar No. 30188)* [email protected] LAW OFFICES OF STEFAN COLEMAN, P.A. 201 S. Biscayne Blvd, 28th Floor Miami, Fl 33131 Telephone: (877) 333-9427 Facsimile: (888) 498-8946 Avi R. Kaufman (Fl Bar No. 84382)* [email protected] KAUFMAN P.A. 400 NW 26th Street Miami, FL 33127 Telephone: (305) 469-5881 *Pro Hac Vice motions forthcoming Attorneys for Plaintiff and the putative Class

privacy

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CASE NO.: CLASS ACTION COMPLAINT J. Paul Gignac, SBN 125676 J. PAUL GIGNAC, ESQ., APC 15 W. Carrillo Street, Suite 246 Santa Barbara, California 93101 Telephone: (805) 683-7400 Facsimile: (805) 962-0722 [email protected] Bobby Saadian, SBN 250377 WILSHIRE LAW FIRM 3055 Wilshire Blvd., 12th Floor Los Angeles, California 90010 Telephone: (213) 381-9988 Facsimile: (213) 381-9989 Attorneys for Plaintiff and Proposed Class UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION EDWARD FEINSTEIN, individually and on behalf of all others similarly situated, Plaintiff, vs. 1. BREACH OF IMPLIED CONTRACT 2. NEGLIGENCE 3. VIOLATION OF CALIFORNIA’S UNFAIR COMPETITION LAW CAL. BUS. & PROF. CODE § 17200 UNLAWFUL BUSINESS PRACTICES 4. VIOLATION OF CALIFORNIA’S UNFAIR FOUR SEASONS HOTELS LIMITED, a Canadian corporation; and DOES 1 to 10, inclusive, Defendants. COMPETITION LAW CAL. BUS. & PROF. CODE §17200 UNFAIR BUSINESS PRACTICES 5. VIOLATION OF CALIFORNIA’S UNFAIR COMPETITION LAW CAL. BUS. & PROF. CODE §17200 FRAUDULENT/DECEPTIVE BUSINESS 6. NEGLIGENCE PER SE 7. BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING 8. VIOLATION OF CALIFORNIA DATA BREACH ACT DEMAND FOR JURY TRIAL Plaintiff Edward Feinstein (“Plaintiff”), individually and on behalf of all others similarly situated, brings this action based upon personal knowledge as to himself and his own acts, and as to all other matters upon information and belief, based upon, inter alia, the investigations of his attorneys. NATURE OF THE ACTION 1. As of March 2018, Four Seasons Hotels (“Defendant”) owned or managed 115 properties all over the world. Every day, hundreds of customers book hotel rooms with Defendant. Hundreds of thousands of customers every year book hotel rooms using the Sabre SynXis Central Reservations system, which facilitates the booking of hotel reservations made by consumers through hotels, online travel agencies, and similar booking services. Defendant utilizes the SynXis Central Reservations system (“CRS”). Consumers expect the highest quality of services when booking a hotel room with Defendant. What consumers did not expect is that during the period between August 10, 2016 and March 9, 2017, their personal information would be collected by an unauthorized third party. The data of customers that stayed at Defendant’s hotels was accessed due to a data breach. 2. Plaintiff, individually and on behalf of those similarly situated persons (hereafter “Class Members”), brings this Class Action to secure redress against Defendant for its reckless and negligent violation of customer privacy rights. Plaintiff and Class Members are customers who booked hotel reservations with Defendant, during the period of August 10, 2016 to March 9, 2017. 3. Plaintiff and Class Members suffered injury. The security breach compromised hotel customers’ full name, credit and debit card account numbers, card expiration dates, card verification codes, emails, phone numbers, addresses, and other private identifiable information (“PII”). 4. As a result of Defendant’s actions, Plaintiff was forced to take remedial steps to protect himself from future loss. Indeed, all of the Class Members are currently at a very high risk of direct theft, and prophylactic measures, such as the purchase of credit monitoring, are reasonable and necessary to prevent and mitigate future loss. 5. As a result of Defendant’s wrongful actions and inactions, customer information was stolen. Many of the customers who booked rooms at Defendant’s hotels have had their PII compromised, have had their privacy rights violated, have been exposed to the risk of fraud and identify theft, and have otherwise suffered damages. THE PARTIES 6. Plaintiff is a California citizen residing in Los Angeles, California. Plaintiff is a long-time customer of Defendant who has given his personal identifying information to Defendant. Shortly after the breach, Plaintiff’s debit and credit card information was accessed by hackers. In addition, Plaintiff has to purchase credit and personal identity monitoring service to alert him to potential misappropriation of his identity and to combat risk of further identity theft. At a minimum, therefore, Plaintiff has suffered damages because he will be forced to incur the cost of monitoring service. Exposure of Plaintiff’s identifying personal information has placed him at imminent, immediate and continuing risk of further identity theft-related harm. 7. Plaintiff brings this action on his own behalf and on behalf of all others similarly situated, namely all other individuals who have made a booking at any of Defendant’s hotels during the period of August 10, 2016 to March 9, 2017. 8. Defendant Four Seasons Hotels Limited is a hospitality Canadian corporation, with its headquarters in Toronto, Ontario, Canada. Defendant conducts a large amount of its business in California, and the United States as a whole. JURISDICTION AND VENUE 9. This Court has subject matter jurisdiction over the state law claims asserted herein pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2), since some of the Class Members are citizens of a State different from the Defendant and, upon the original filing of this complaint, members of the putative Plaintiff class resided in states around the country; there are more than 100 putative class members; and the amount in controversy exceeds $5 million. 10. The Court also has personal jurisdiction over the parties because, on information and belief, Defendant conducts a major part of its national operations with regular and continuous business activity in California, through a number of hotels and with an advertising budget not exceeded in other jurisdictions throughout the United States. 11. Venue is appropriate in this District because, among other things: (a) Plaintiff is a resident of this District and a citizen of this state; (b) Defendant directed its activities at residents in this District; and (c) many of the acts and omissions that give rise to this Action took place in this judicial District. 12. Venue is further appropriate in this District pursuant to 28 U.S.C. § 1391 because Defendant conducts a large amount of its business in this District, and because Defendant has substantial relationships in this District. SUBSTANTIVE ALLEGATIONS A. The Four Seasons Data Breach 13. Sabre operates the SynXis Central Reservations system, which facilitates the booking of hotel reservations made by individuals and companies. Sabre’s CRS serves more than 36,000 properties with 2.4 hotels added to Sabre’s system every hour and with over 8 billion CRS shopping requests each month. See Sabre Results, available at http://www.sabrehospitality.com/. 14. On June 6, 2017, Defendant stated that “Following an examination of forensic evidence, Sabre confirmed to Four Seasons Hotels and Resorts on June 6, 2017 that an unauthorized party gained access to account credentials that permitted unauthorized access to certain unencrypted payment card information, as well as certain reservation information….” Notice of Data Breach attached hereto as Exhibit A. 15. In addition to the eight-month period, the unauthorized third-parties would have had access to booking information up to 60 days prior to the breach, as the SynXis CRS only deletes reservation details 60 days after the hotel stay. See June 29, 2017, Google Notice of Data Breach, attached hereto as Exhibit B. B. Stolen Information Is Valuable to Hackers and Thieves 16. It is well known, and the subject of many media reports, that payment card data is highly coveted and a frequent target of hackers. Especially in the technology industry, the issue of data security and threats thereto is well known. Despite well-publicized litigation and frequent public announcements of data breaches, Defendant opted to maintain an insufficient and inadequate system to protect the personable identifiable information of Plaintiff and Class Members. 17. Legitimate organizations and criminal underground alike recognize the value of PII. Otherwise, they would not aggressively seek or pay for it. As previously seen in one of the world’s largest data breaches, hackers compromised the card holder data of 40 million of Target’s customers. See “Target: 40 million credit cards compromised,” CNN Money, Dec. 19, 2013, available at http://money.cnn.com/2013/12/18/news/companies/target-credit-card/, attached hereto as Exhibit C. 18. Credit or debit card information is highly valuable to hackers. Credit and debit card information that is stolen from the point of sale are known as “dumps.” See Krebs on Security April 16, 2016, Blog Post, available at https://krebsonsecurity.com/2016/04/all-about-fraud-how-crooks-get-the-cvv/, attached hereto as Exhibit D. Credit and debit card dumps can be sold in the cybercrime underground for a retail value of about “$20 apiece.” Id. This information can also be used to clone a debit or credit card. Id. C. The Data Breach Has and Will Result in Additional Identity Theft and Identity Fraud 19. Defendant failed to implement and maintain reasonable security procedures and practices appropriate to protect the PII of Plaintiff and the Class Members. 20. The ramification of Defendant’s failure to keep Plaintiff’s and the Class Members’ data secure is severe. 21. According to Javelin Strategy and Research, “one in every three people who is notified of being a potential fraud victim becomes one . . . with 46% of consumers who had cards breached becoming fraud victims that same year.” “Someone Became an Identity Theft Victim Every 2 Seconds Last Year,” Fox Business, Feb. 5, 2014 available at http://www.foxbusiness.com/personal- finance/2014/02/05/someone-became-identitytheft-victim-every-2-seconds-last- year.html attached hereto as Exhibit E. 22. It is incorrect to assume that reimbursing a consumer for a financial loss due to fraud makes that individual whole again. On the contrary, after conducting a study, the Department of Justice’s Bureau of Justice Statistics (“BJS”) found that “among victims who had personal information used for fraudulent purposes, 29% spent a month or more resolving problems.” See “Victims of Identity Theft,” U.S. Department of Justice, Dec 2013, available at https://www.bjs.gov/content/pub/pdf/vit12.pdf attached hereto as Exhibit F. In fact, the BJS reported, “resolving the problems caused by identity theft [could] take more than a year for some victims.” Id. at 11. D. Annual Monetary Losses from Identity Theft are in the Billions of Dollars 23. Javelin Strategy and Research reports that losses from identity theft reached $21 billion in 2013. See 2013 Identity Fraud Report, attached hereto as Exhibit G. There may be a time lag between when harm occurs and when it is discovered, and also between when PII is stolen and when it is used. According to the U.S. Government Accountability Office (“GAO”), which conducted a study regarding data breaches: [L]aw enforcement officials told us that in 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. See GAO, Report to Congressional Requesters, at 33 (June 2007), available at http://www.gao.gov/new.items/d07737.pdf, attached hereto as Exhibit H. 24. Plaintiff and the Class Members now face years of constant surveillance of their financial and personal records, monitoring, and loss of rights. The Class is incurring and will continue to incur such damages in addition to any fraudulent credit and debit card charges incurred by them and the resulting loss of use of their credit and access to funds, whether or not such charges are ultimately reimbursed by the credit card companies. E. Plaintiff and Class Members Suffered Damages 25. The data breach was a direct and proximate result of Defendant’s failure to properly safeguard and protect Plaintiff’s and Class Members’ PII from unauthorized access, use, and disclosure, as required by various state and federal regulations, industry practices, and the common law. The data breach was also a result of Defendant’s failure to establish and implement appropriate administrative, technical, and physical safeguards to ensure the security and confidentiality of Plaintiff’s and Class Members’ PII to protect against reasonably foreseeable threats to the security or integrity of such information. 26. Plaintiff’s and Class Members’ PII is private and sensitive in nature and was inadequately protected by Defendant. Defendant did not obtain Plaintiff’s and Class Members’ consent to disclose their PII, except to certain persons not relevant to this action, as required by applicable law and industry standards. 27. As a direct and proximate result of Defendant’s wrongful action and inaction and the resulting data breach, Plaintiff and the Class Members have been placed at an imminent, immediate, and continuing risk of harm from identity theft and identity fraud, requiring them to take the time and effort to mitigate the actual and potential impact of the subject data breach on their lives by, among other things, placing “freezes” and “alerts” with credit reporting agencies, contacting their financial institutions, closing or modifying financial accounts, and closely reviewing and monitoring their credit reports and accounts for unauthorized activity. 28. Defendant’s wrongful actions and inaction directly and proximately caused the theft and dissemination into the public domain of Plaintiff’s and the Class Members’ PII, causing them to suffer, and continue to suffer, economic damages and other actual harm for which they are entitled to compensation, including: a. Theft of their PII; b. 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 already misused via the sale of Plaintiff’s and Class Members’ information on the Internet black market; c. The untimely and inadequate notification of the data breach; d. The improper disclosure of their PII; e. Loss of privacy; f. Ascertainable losses in the form of out-of-pocket expenses and the value of their time reasonably incurred to remedy or mitigate the effects of the data breach; g. Ascertainable losses in the form of deprivation of the value of their PII, for which there is a well-established national and international market; h. Overpayments to Defendant for bookings and purchases during the period of the subject data breach in that implied in the price paid for such booking by Plaintiff and the Class Members to Defendant was the promise that some amount of the booking charge would be applied to the costs of implementing reasonable and adequate safeguards and security measures that would protect customers’ PII, which Defendant and its affiliates did not implement and, as a result, Plaintiff and Class Members did not receive what they paid for and were overcharged by Defendant; and i. Deprivation of rights they possess under the Unfair Competition Laws. CLASS ACTION ALLEGATIONS 29. Plaintiff brings this action on his own behalf and pursuant to the Federal Rules of Civil Procedure Rule 23(a), (b)(2), (b)(3), and (c)(4). Plaintiff intends to seek certification of a Nationwide Class and a California Class. The Nationwide class is initially defined as follows: All persons residing in the United States who booked rooms at any of Defendant’s hotels from the time period August 10, 2016 to March 9, 2017 (the “Nationwide Class”). The California Class is initially defined as follows: All persons residing in California who booked rooms at any of Defendant’s hotels from the time period August 10, 2016 to March 9, 2017 (the “California Class”). 30. Excluded from each of the above Classes is Defendant, including any entity in which Defendant has a controlling interest, is a parent or subsidiary, or which is controlled by Defendant, as well as the officers, directors, affiliates, legal representatives, heirs, predecessors, successors, and assigns of Defendant. Also excluded are the judge and the court personnel in this case and any members of their immediate families. Plaintiff reserves the right to amend the Class definitions if discovery and further investigation reveal that the Classes should be expanded or otherwise modified. 31. Numerosity. Fed. R. Civ. P. 23(a)(1). The members of the Classes are so numerous that the joinder of all members is impractical. While the exact number of Class Members is unknown to Plaintiff at this time, Defendant has acknowledged that customers’ PII was stolen for a period of 8 months. The disposition of the claims of Class Members in a single action will provide substantial benefits to all parties and to the Court. The Class Members are readily identifiable from information and records in Defendant’s possession, custody, or control, such as reservation receipts and confirmations. 32. Commonality. Fed. R. Civ. P. 23(a)(2) and (b)(3). There are questions of law and fact common to the Classes, which predominate over any questions affecting only individual Class Members. These common questions of law and fact include, without limitation: a. Whether Defendant owed a duty of care to Plaintiff and Class Members with respect to the security of their personal information; b. Whether Defendant took reasonable steps and measures to safeguard Plaintiff’s and Class Members’ personal information; c. Whether Defendant violated California’s Unfair Competition Law by failing to implement reasonable security procedures and practices; d. Whether Defendant violated common and statutory law by failing to promptly notify Class Members that their Private Identifiable Information had been compromised; e. Which security procedures and which data-breach notification procedure should Defendant be required to implement as part of any injunctive relief ordered by the Court; f. Whether Defendant has an implied contractual obligation to use reasonable security measures; g. Whether Defendant has complied with any implied contractual obligation to use reasonable security measures; h. Whether Defendant’s acts and omissions described herein give rise to a claim of negligence; i. Whether Defendant knew or should have known of the security breach prior to its 2017 disclosure; j. Whether Defendant had a duty to promptly notify Plaintiff and Class Members that their personal information was, or potentially could be, compromised; k. What security measures, if any, must be implemented by Defendant to comply with its implied contractual obligations; l. The nature of the relief, including equitable relief, to which Plaintiff and the Class Members are entitled; m. Whether Defendant willfully and/or negligently violated the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq.; and n. Whether Plaintiff and the Class Members are entitled to damages, civil penalties, punitive damages, and/or injunctive relief. 33. Typicality. Fed. R. Civ. P. 23(a)(3). Plaintiff’s claims are typical of those of other Class Members because Plaintiff’s PII, like that of every other Class Member, was misused and/or disclosed by Defendant. 34. Adequacy of Representation. Fed. R. Civ. P. 23(a)(4). Plaintiff will fairly and adequately represent and protect the interests of the members of the Classes. Plaintiff has retained competent counsel experienced in litigation of class actions, including consumer and data breach class actions, and Plaintiff intends to prosecute this action vigorously. Plaintiff’s claims are typical of the claims of other members of the Classes and Plaintiff has the same non-conflicting interests as the other Class Members. Therefore, the interests of the Classes will be fairly and adequately represented by Plaintiff and his counsel. 35. Superiority of Class Action. Fed. R. Civ. P. 23(b)(3). A class action is superior to other available methods for the fair and efficient adjudication of this controversy since joinder of all the members of the Classes is impracticable. Furthermore, the adjudication of this controversy through a class action will avoid the possibility of inconsistent and potentially conflicting adjudication of the asserted claims. There will be no difficulty in the management of this action as a class action. 36. Damages for any individual class member are likely insufficient to justify the cost of individual litigation so that, in the absence of class treatment, Defendant’s violations of law inflicting substantial damages in the aggregate would go un-remedied. 37. Class certification is also appropriate under Fed. R. Civ. P. 23(a) and (b)(2), because Defendant has acted or refused to act on grounds generally applicable to the Classes, so that final injunctive relief or corresponding declaratory relief is appropriate as to the Classes as a whole. COUNT I Breach of Implied Contract (On Behalf of Plaintiff, the Nationwide Class and the California Class) 38. Plaintiff alleges and incorporates herein by reference each and every allegation contained in paragraphs 1 through 37, inclusive, of this Complaint as if set forth fully herein. 39. Defendant solicited and invited Plaintiff and the members of the Classes to book hotel rooms in one of Defendant’s hotels. Plaintiff and Class Members accepted Defendant’s offers and booked hotel rooms at one of Defendant’s hotels. 40. When Plaintiff and Class Members booked hotel rooms at one of Defendant’s hotels, they provided their Private Identifiable Information. In so doing, Plaintiff and Class Members entered into implied contracts with Defendant pursuant to which Defendant agreed to safeguard and protect such information and to timely and accurately notify Plaintiff and Class Members if their data had been breached and compromised. 41. Each booking by Plaintiff and Class Members was made pursuant to the mutually agreed-upon implied contract with Defendant under which Defendant agreed to safeguard and protect Plaintiff’s and Class Members’ PII and to timely and accurately notify them if such information was compromised or stolen. 42. Plaintiff and Class Members would not have provided and entrusted their PII to Defendant in the absence of the implied contract. 43. Plaintiff and Class Members fully performed their obligations under the implied contracts with Defendant. 44. Defendant breached the implied contracts which it made with Plaintiff and Class Members by failing to safeguard and protect the PII of Plaintiff and Class Members and by failing to provide timely and accurate notice to them that their PII was compromised as a result of the data breach. 45. Plaintiff and Class Members have lost the benefit of the bargain by having their PII compromised. Plaintiff and Class Members have spent more on booking Defendant’s rooms than they would have if they had known that Defendant was not providing the reasonable security that Plaintiff and Class Members expected. Plaintiff and Class Members have lost money and/or property as a result of Defendant’s actions. 46. As a direct and proximate result of Defendant’s breaches of the implied contracts between Defendant and Plaintiff and Class Members, Plaintiff and Class Members sustained actual losses and damages in an amount according to proof at trial but in excess of the minimum jurisdictional requirement of this Court. COUNT II Negligence (On Behalf of Plaintiff, the Nationwide Class and the California Class) 47. Plaintiff alleges and incorporates herein by reference, each and every allegation contained in paragraphs 1 through 37, inclusive, of this Complaint as if set forth fully herein. 48. Upon accepting Plaintiff’s and Class Members’ PII in its point-of-sale system, Defendant undertook and owed a duty to Plaintiff and Class Members to exercise reasonable care to secure and safeguard that information from being compromised, lost, stolen, misused, and or/disclosed to unauthorized parties and to utilize commercially reasonable methods to do so. This duty included, among other things, designing, maintaining, and testing Defendant’s security systems to ensure that Plaintiff’s and the Class Members’ PII was adequately secured and protected. 49. Defendant further had a duty to implement processes that would detect a breach of its security system in a timely manner. 50. A “special relationship” exists between Defendant and the Plaintiff and Class Members. Defendant entered into a “special relationship” with the Plaintiff and Class Members whose Personal Information was requested, collected, and received by Defendant. Defendant entered into a “special relationship” with all Plaintiffs and Class Members by placing their Personal Information in their database, and their affiliate’s database. Furthermore, Defendant also created a “special relationship” with Plaintiff and Class Members who provided their information to Defendant and its affiliates, by playing a large role in creating and maintaining centralized computer systems and data security practices that were used for storage of all of Defendant’s customers’ Personal Information. Finally, Defendant also created a “special relationship” with Plaintiff and Class Members whose Personal Information was placed in the Defendant database due to their dealings with its affiliates. Plaintiff’s and Class Members’ Personal Information was placed in the Defendant’s and/or its affiliates’ database so that they could receive access to hotel rooms with Defendant. 51. Due to Defendant’s negligence, Plaintiff and Class Members have suffered a loss of value in the form of diminution in the value of their PII. The diminution in the value of Plaintiff and Class Members’ PII results in physical damage to their property, namely, their PII. 52. Defendant had a duty to timely disclose to Plaintiff and Class Members that their PII had been or was reasonably believed to have been compromised. Timely disclosure was appropriate so that, among other things, Plaintiff and Class Members could take appropriate measures to avoid use of bank funds and monitor their account information and credit reports for fraudulent activity. 53. Defendant breached its duty to discover and to notify Plaintiff and Class Members of the unauthorized access by failing to discover the security breach within reasonable time and by failing to notify Plaintiff and Class Members of the breach until July of 2017. To date, Defendant still has not provided sufficient information to Plaintiff and Class Members regarding the extent and scope of the unauthorized access and continues to breach its disclosure obligations to Plaintiff and the Class Members. 54. Defendant also breached its duty to Plaintiff and Class Members to adequately protect and safeguard this information by knowingly disregarding standard information security principles, despite obvious risks, and by allowing unmonitored and unrestricted access to unsecured PII. Furthering its negligent practices, Defendant failed to provide adequate supervision and oversight of the PII, in spite of the known risk and foreseeable likelihood of breach and misuse, which permitted a third party to gather Plaintiff’s and Class Members’ PII, misuse the PII, and intentionally disclose it to others without consent. 55. Through Defendant’s acts and omissions as described in this Complaint, including Defendant’s failure to provide adequate security and its failure to protect Plaintiff’s and Class Members’ PII from being foreseeably captured, accessed, disseminated, stolen, and misused, Defendant unlawfully breached its duty to exercise reasonable care to adequately protect and secure Plaintiff’s and Class Members’ PII during the time it was within Defendant’s control. 56. Further, through its failure to timely discover and provide clear notification of the data breach to consumers, Defendant prevented Plaintiff and Class Members from taking meaningful, proactive steps to secure their PII. 57. Upon information and belief, Defendant improperly and inadequately safeguarded the PII of Plaintiff and Class Members and did so in a manner that deviated from standard industry rules, regulations, and practices at the time of the data breach. 58. Defendant’s failure to take proper security measures to protect Plaintiff’s and Class Members’ sensitive PII, as described in this Complaint, created conditions conducive to a foreseeable, intentional criminal act, namely the unauthorized access of Plaintiff’s and Class Members’ PII. 59. Defendant’s conduct was grossly negligent and departed from all reasonable standards of care, including, but not limited to: failing to adequately protect the PII; failing to conduct adequate regular security audits; and failing to provide adequate and appropriate supervision of persons having access to Plaintiff’s and Class Members’ PII. 60. Neither Plaintiff nor the other Class Members contributed to the data breach and subsequent misuse of their PII as described in this Complaint. 61. As a direct and proximate result of Defendant’s negligence, Plaintiff and Class Members sustained actual losses and damages in an amount according to proof at trial but in excess of the minimum jurisdictional requirement of this Court. COUNT III Violation of California’s Unfair Competition Law Cal. Bus. & Prof. Code § 17200 Unlawful Business Practices (On Behalf of Plaintiff and the California Class) 62. Plaintiff alleges and incorporates herein by reference, each and every allegation contained in paragraphs 1 through 37, inclusive, of this Complaint as if set forth fully herein. 63. Defendant has violated Cal. Bus. and Prof. Code §17200 et seq. by engaging in unlawful, unfair or fraudulent business acts and practices that constitute acts of “unfair competition” as defined in Cal. Bus. Prof. Code §17200. Defendant engaged in unlawful acts and practices with respect to its services by establishing the sub-standard security practices and procedures described herein; by soliciting and collecting Plaintiff’s and Class Members’ PII with knowledge that the information would not be adequately protected; and by gathering Plaintiff’s and Class Members’ PII in an unsecure electronic environment in violation of California’s data breach statute, Cal. Civ. Code § 1798.81.5, which requires Defendant to take reasonable steps to safeguard the PII of Plaintiff and the Class Members. Defendant also violated Federal Trade Commission Act (15 U.S.C. §45), and Cal. Civ. Code § 1798.81. 64. In addition, Defendant engaged in unlawful acts and practices with respect to its services by failing to discover and then disclose the data breach to Plaintiff and Class Members in a timely and accurate manner, contrary to the duties imposed by Cal. Civ. Code § 1798.82. To date, Defendant still has not provided sufficient information to Plaintiff and the Class Members. 65. As a direct and proximate result of Defendant’s unlawful acts and practices, Plaintiff and the Class Members were injured and lost money or property, including but not limited to the loss of their legally protected interest in the confidentiality and privacy of their PII, and additional losses described above. 66. Plaintiff and the Class Members seek relief under Cal. Bus. & Prof. Code § 17200, et. seq., including, but not limited to, restitution to Plaintiff and Class Members of money or property that Defendant acquired from Plaintiff and the Class Members by means of its unlawful, and unfair business practices, declaratory relief, attorney’s fees and costs (pursuant to Cal. Code Civ. Proc. § 1021.5), and injunctive or other equitable relief. COUNT IV Violation of California’s Unfair Competition Law Cal. Bus. & Prof. Code §17200 Unfair Business Practices (On Behalf of Plaintiff and the California Class) 67. Plaintiff alleges and incorporates herein by reference, each and every allegation contained in paragraphs 1 through 37, inclusive, of this Complaint as if set forth fully herein. 68. Defendant engaged in unfair acts and practices by soliciting and collecting Plaintiff’s and Class Members’ PII with knowledge that the information would not be adequately protected while Plaintiff’s and the Class Members’ PII would be processed in an unsecure electronic environment. These unfair acts and practices were immoral, unethical, oppressive, unscrupulous, unconscionable, and/or substantially injurious to Plaintiff and Class Members. They were likely to deceive the public into believing their PII was secure, when it was not. The harm these practices caused to Plaintiff and Class Members outweighed their utility, if any. 69. Defendant engaged in unfair acts and practices with respect to the provision of its services by failing to enact adequate privacy and security measures to protect Plaintiff’s and Class Members’ PII from further unauthorized disclosure, release, data breaches, and theft and by failing to timely discover and give notice of the data breach. These unfair acts and practices were immoral, unethical, oppressive, unscrupulous, unconscionable, and/or substantially injurious to Plaintiff and Class Members. They were likely to deceive the public into believing their Private Identifiable Information was secure, when it was not. The harm these practices caused to Plaintiff and the Class Members outweighed their utility, if any. 70. As a direct and proximate result of Defendant’s unfair practices and acts, Plaintiff and the Class Members were injured and lost money or property, including but not limited to the loss of their legally protected interest in the confidentiality and privacy of their PII, and additional losses described above. 71. Plaintiff and the Class Members seek relief under Cal. Bus. & Prof. Code § 17200, et. seq., including, but not limited to, restitution to Plaintiff and Class Members of money or property that Defendant acquired from Plaintiff and the Class Members by means of its unfair business practices, declaratory relief, attorney’s fees and costs (pursuant to Cal. Code Civ. Proc. §1021.5), and injunctive or other equitable relief. COUNT V Violation of California’s Unfair Competition Law Cal. Bus. & Prof. Code §17200 Fraudulent/Deceptive Business Practices (On Behalf of Plaintiff and the California Class) 72. Plaintiff alleges and incorporates herein by reference, each and every allegation contained in paragraphs 1 through 37, inclusive, of this Complaint as if set forth fully herein. 73. Defendant engaged in fraudulent and deceptive acts and practices by omitting, suppressing, and concealing the material fact of the inadequacy of the privacy and security protections for Plaintiff’s and Class Members’ PII. When Plaintiff and Class Members were booking hotel rooms with Defendant, Defendant failed to disclose to Plaintiff and Class Members that its data security systems failed to meet legal and industry standards for the protection of their Private Identifiable Information. Plaintiff and the Class Members would not have booked a hotel room with Defendant if they had known about its substandard data security practices. These nondisclosures were likely to deceive members of the public, including Plaintiff and Class Members, into believing their PII was secure, when it was not, and that Defendant was complying with relevant law and industry standards, when it was not. 74. As a direct and proximate result of Defendant’s deceptive practices and acts, Plaintiff and the Class Members were injured and lost money or property, including but not limited to the loss of their legally protected interest in the confidentiality and privacy of their PII, and additional losses described above. 75. Plaintiff and the Class Members seek relief under Cal. Bus. & Prof. Code § 17200, et. seq., including, but not limited to, restitution to the Plaintiff and Class Members of money or property that Defendant acquired from Plaintiff and the Class Members by means of its fraudulent and deceptive business practices, declaratory relief, attorney’s fees and costs (pursuant to Cal. Code Civ. Proc. §1021.5), and injunctive or other equitable relief. COUNT VI Negligence Per Se (On Behalf of Plaintiff and the California Class) 76. Plaintiff alleges and incorporates herein by reference, each and every allegation contained in paragraphs 1 through 37, inclusive, of this Complaint as if set forth fully herein. 77. Pursuant to the Federal Trade Commission Act (15 U.S.C. §45), Defendant had a duty to provide fair and adequate computer systems and data security practices to safeguard Plaintiff’s and the Class Members’ PII. 78. Defendant had a duty to Plaintiff and the Class Members to implement and maintain reasonable security procedures and practices to safeguard Plaintiff’s and Class Members’ PII as required by California Civil Code §1798.81.5. 79. Defendant breached its duties to Plaintiff and the Class Members under the Federal Trade Commission Act (15 U.S.C. § 45) and California Civil Code §1798.81.5 by failing to provide fair, reasonable, or adequate computer systems and data security practices to safeguard Plaintiff’s and the Class Members’ PII. 80. Defendant’s failure to comply with applicable laws and regulations constitutes negligence per se. 81. But for Defendant’s negligence per se, Plaintiff and the Class Members would not have been injured. 82. The injury and harm suffered by Plaintiff and the Class Members was the reasonably foreseeable result of Defendant’s negligence per se. 83. Defendant knew or should have known that its negligence per se would cause Plaintiff and the Class Members to experience the foreseeable harms associated with the exposure of their PII. 84. As a direct and proximate result of Defendant’s negligence per se, Plaintiff and Class Members have suffered injury and are entitled to damages in an amount to be proven at trial but in excess of the minimum jurisdictional requirement of this Court. COUNT VII Breach of the Covenant of Good Faith and Fair Dealing (On Behalf of Plaintiff, the Nationwide Class and the California Class) 85. Plaintiff alleges and incorporates herein by reference, each and every allegation contained in paragraphs 1 through 37, inclusive, of this Complaint as if set forth fully herein. 86. The law implies a covenant of good faith and fair dealing in every contract. 87. Plaintiff and Class Members contracted with Defendant by accepting Defendant’s offers and paying for the booking of hotel room(s). 88. Plaintiff and Class Members performed all of their duties under their agreements with Defendant. 89. All of the conditions required for Defendant’s performance under the contract have occurred. 90. Defendant did not provide and/or unfairly interfered with and/or frustrated the right of Plaintiff and the Class Members to receive the full benefits under their agreements. 91. Defendant breached the covenant of good faith and fair dealing implied in its contracts with Plaintiff and the Class Members by failing to use and provide reasonable and industry-leading security practices to safeguard the PII of Plaintiff and the Class Members. 92. Plaintiff and the Class Members were damaged by Defendant’s breach in that they paid for, but never received, the valuable security protections to which they were entitled. 93. As a direct and proximate result of Defendant’s breach of the covenant of good faith and fair dealing, Plaintiff and Class Members have suffered injury and are entitled to damages in an amount to be proven at trial but in excess of the minimum jurisdictional requirement of this Court. COUNT VIII Violation of California Data Breach Act (On Behalf of Plaintiff and the California Class) 94. Plaintiff alleges and incorporates herein by reference, each and every allegation contained in paragraphs 1 through 37, inclusive, of this Complaint as if set forth fully herein. 95. Defendant was required, but failed, to take all reasonable steps to dispose, or arrange for the disposal, of records within its custody or control containing PII when the records were no longer to be retained, by shredding, erasing, or otherwise modifying the personal information in those records to make it unreadable or undecipherable through any means. 96. Defendant’s conduct, as alleged herein above, violated California, Cal. Civ. Code §§ 1798.80 et. seq. 97. Defendant was required, but failed, to implement and maintain reasonable security procedures and practices appropriate to the nature and scope of the information compromised in the data breach. 98. The data breach constituted a “breach of the security system” within the meaning of section 1798.82(g) of the California Civil Code. 99. The information compromised in the data breach constituted “personal information” within the meaning of section 1798.80(e) of the California Civil Code. 100. California Civil Code § 1798.80(e) requires disclosure of data breaches “in the most expedient time possible and without unreasonable delay….” 101. Defendant violated Cal. Civ. Code § 1798.80(e) by unreasonably delaying disclosure of the data breach to Plaintiff and other Class Members, whose PII was, or was reasonably believed to have been, acquired by an unauthorized person. 102. Upon information and belief, no law enforcement agency instructed Defendant that notification to Plaintiff and Class Members would impede a criminal investigation. 103. As a direct and proximate result of Defendant’s violation of Cal. Civ. Code § 1798.80, et seq., Plaintiff and Class Members incurred economic damages, including expenses associated with monitoring their personal and financial information to prevent further fraud. 104. Plaintiff and the Class Members seek all remedies available under Cal. Civ. Code § 1798.84, including, but not limited to: (a) actual damages suffered by Class Members as alleged above; (b) statutory damages for Defendant’s willful, intentional, and/or reckless violation of Cal. Civ. Code § 1798.83; (c) equitable relief; and (d) reasonable attorneys’ fees and costs under Cal. Civ. Code §1798.84(g). 105. In violating the California Data Breach Act, Defendant acted in a willful, wanton and malicious manner, in callous and conscious disregard for the rights and interests of Plaintiff and the Class Members, and with knowledge that its conduct would substantially annoy, vex and damage Plaintiff and the Class Members thereby entitling Plaintiff and the Class Members to recover punitive and exemplary damages against Defendant pursuant to California Civil Code section 3294 in an amount according to proof at trial. II. PRAYER FOR RELIEF WHEREFORE, Plaintiff, individually and on behalf of all Class Members, respectfully requests that the Court enter judgment in his favor and against Defendant as follows: A. For an Order certifying the Nationwide Class and California Class as defined herein and appointing Plaintiff and his Counsel to represent the Nationwide Class and the California Class; B. For equitable relief enjoining Defendant from engaging in the wrongful conduct complained of herein pertaining to the misuse and/or disclosure of Plaintiff’s and Class Members’ Private Identifiable Information, and from refusing to issue prompt, complete, and accurate disclosures to Plaintiff and Class Members; C. For equitable relief compelling Defendant to utilize appropriate methods and policies with respect to consumer data collection, storage, and safety and to disclose with specificity to Class Members the type of PII compromised. D. For restitution and disgorgement of the revenues wrongfully obtained as a result of Defendant’s wrongful conduct; E. For an award of actual damages and compensatory damages, in an amount to be determined at trial; F. For punitive and exemplary damages; G. For an award of costs of suit, litigation expenses and attorneys’ fees, as allowable by law; and G. For such other and further relief as this Court may deem just and proper. DEMAND FOR JURY TRIAL Plaintiff, on behalf of himself and all others similarly situated, hereby demands a jury trial for all claims so triable. Dated: April 20, 2018 Respectfully Submitted, /s/ Bobby Saadian Bobby Saadian J. Paul Gignac Attorneys for Plaintiff

securities

2aWHCYcBD5gMZwczW1mY

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK : Civil Action No. CLASS ACTION DEMAND FOR JURY TRIAL CRYSTAL GARRETT-EVANS, Individually and on Behalf of All Others Similarly Situated, Plaintiff, vs. COTY INC., LAMBERTUS “BART” BECHT, CAMILLO PANE, PIERRE LAUBIES, PATRICE DE TALHOUËT, and PIERRE-ANDRE TERISSE, Defendants. : : : : : : : : : : : : : CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS Plaintiff Crystal Garrett-Evans (“Plaintiff”), individually and on behalf of all others similarly situated, by his undersigned counsel, hereby bring this Class Action Complaint (the “Complaint”) against Coty Inc. (“Coty” or “the Company”), Lambertus “Bart” Becht (“Becht”), Camillo Pane (“Pane”), Pierre Laubies (“Laubies”), Patrice de Talhouët (“Talhouët”), and Pierre- Andre Terisse (“Terisse”) (collectively, “Defendants”). The allegations herein are based on Plaintiff’s personal knowledge as to his own acts and on information and belief as to all other matters, such information and belief having been informed by the investigation conducted by and under the supervision of counsel, which includes a review of: U.S. Securities and Exchange Commission (“SEC”) filings by Coty; securities analysts’ reports and advisories about the Company; press releases and other public statements issued by the Company; and media reports about the Company. Counsel’s investigation into the matters alleged herein is ongoing and many relevant facts are known only to, or are exclusively within the custody or control of, Defendants. Plaintiff believes that substantial additional evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. On behalf of himself and the class he seeks to represent, Plaintiff alleges as follows: I. NATURE OF THE ACTION 1. This is a federal securities class action on behalf of all persons and entities who purchased or otherwise acquired Coty common stock during the period from October 3, 2016 to May 28, 2020, inclusive (the “Class Period”), and were damaged thereby. The action is brought against Coty and certain of its officers and directors for violations of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5 promulgated thereunder. 2. Coty is one of the world’s largest beauty companies. The Company operates three divisions: Coty Consumer Beauty (“Consumer Beauty”) which focuses on color cosmetics, retail hair coloring and styling products, body care and mass fragrances sold primarily in the mass retail channels; Coty Luxury (“Coty Luxury”) which focuses on prestige fragrances and skincare brands; and Coty Professional Beauty (“Coty Professional”) which focuses on servicing nail salon owners and professionals in both hair and nail. 3. On the first day of the Class Period, October 3, 2016, Coty issued a press release announcing the completion of its blockbuster merger with The Proctor & Gamble Company’s fine fragrance, color cosmetics, salon professional and hair color and certain styling businesses (“P&G Specialty Beauty Business”) for $12.5 billion to scale up its beauty business. In the press release, Defendant Becht, Chairman of Coty’s Board of Directors (“Board”), confirmed that “…we now have a much improved team, structure and culture to make the vision of this merger a reality.”1 4. But just four months later, on February 9, 2017, the truth began leaking out when Coty reported its second quarter fiscal 2017 results, which was the first quarter after its completion of the merger with the P&G Specialty Beauty Business. Coty disclosed what it characterized as “short-term negative transitional impacts especially including significant trade inventory build in the first quarter of fiscal 2017 in parts of the P&G business,” indicating that the P&G Specialty Beauty Business may have been overvalued. At the same time, Defendant Pane assured the market that “[o]n the P&G Beauty Business merger, we are reiterating our previously communicated $750 million synergy target by fiscal 2020. The integration is progressing as expected, with no major issues to date.”2 On this news, Coty’s stock price dropped $1.76 per share, or nearly 9%, from a close of $20.04 per share on February 8, 2017 to close at $18.28 per share on February 10, 2017 after two days of trading on heavy volume. 1 https://investors.coty.com/news-events-and-presentations/news/news-details/2016/Coty- Completes-Merger-with-PG-Specialty-Beauty-Business/default.aspx 2 https://investors.coty.com/news-events-and-presentations/news/news-details/2017/Coty-Inc- Reports-Second-Quarter-Fiscal-2017-Results-the-First-Quarter-After-Successful-Completion-of- the-Merger-with-PG-Beauty-Business/default.aspx 5. Less than a year later however, Coty surprised investors with disappointing financial results for the fourth quarter and fiscal year ended June 30, 2017 before the market opened on August 22, 2017, including a 10% organic revenue decline in Consumer Beauty – which historically accounted for nearly half of Coty’s revenue – signaling that the integration of P&G’s over 40 beauty brands was still not a reality. That same day, Defendant and Chief Executive Officer (“CEO”) Pane assured investors that “[w]e completed the incredibly complex acquisition of the P&G Beauty Business, fully reorganized into a product and customer focused organizational structure, successfully reached significant milestones in our integration efforts, and boosted our brand portfolio…” and that “[r]egarding the P&G Beauty Business, our integration efforts are proceeding well and we remain on track with the synergy delivery.”3 On this news, Coty’s stock price dropped $3.31 per share, or nearly 17%, from a close of $19.55 per share on August 21, 2017 to close at $16.24 per share on August 24, 2017 after three days of trading on heavy volume. 6. Then, before the market opened on November 7, 2018, Coty surprised the market again, announcing a bigger than expected decline in first quarter fiscal year 2019 sales due to “several temporary supply-chain related headwinds” which included “[w]arehouse and planning center consolidated disruptions in Europe and the U.S.” While conceding “the increased scope of the disruptions resulted in much weaker results than previously expected,” which reflected the internal challenges in integrating P&G’s beauty brands into Coty’s structure, Defendant Pane indicated that the challenges would be short-lived: “With the P&G Beauty integration near completion, and after we have overcome the internal challenges, we will be better equipped to 3 https://investors.coty.com/news-events-and-presentations/news/news-details/2017/Coty-Inc- Reports-Fiscal-2017-Fourth-Quarter-and-Full-Year-Results/default.aspx focus more externally.”4 On this news, Coty’s stock price dropped $2.88 per share, or nearly 26%, from a close of $11.18 per share on November 6, 2018 to a close of $8.30 per share on November 8, 2018 after two days of trading on heavy volume. 7. But on July 1, 2019, Coty announced the write down of about $3 billion in value of brands acquired from P&G as part of a four-year restructuring plan, confirming that the P&G Specialty Beauty Business had been overvalued. During the business update call, Defendant Laubies admitted that “it is clear that the difficulty of th[e P&G] merger lies at the heart of many of the issues that Coty has faced since then” because the “integration took longer and was more complex than originally envisioned,” “many parts of the acquired business had weak performance since the merger,” and “the sustained commitment to meeting the financial targets set at the start of the deal limited the organization’s ability to address some of the underlying trends.”5 At the same time, Laubies assured investors that “we have now identified what we need to change in our company to be lasting and sustainable performance with the focus initially building a better business before we build a significantly bigger one.” On this news, Coty’s stock price dropped $1.94, or over 14%, from an opening price of $13.53 per share on July 1, 2019 to a closing price of $11.59 per share that day on heavy volume. 8. Just over four months later, on November 18, 2019, Coty announced another beauty brand acquisition – a 51% majority stake in Kylie Cosmetics for $600 million in order to “build and further develop Kylie’s existing beauty business,” which “realized an estimated $177M net 4 https://investors.coty.com/news-events-and-presentations/news/news-details/2018/Coty-Inc- Reports-First-Quarter-Fiscal-2019-Results/default.aspx 5https://s23.q4cdn.com/980953510/files/doc_events/20190701_COTY_MA_Call_DN000000002 663079007.pdf revenues for the trailing twelve months (TTM).” Kylie Jenner was described “as the youngest-ever self-made billionaire on the cover of Forbes Self-Made Billionaire issue in August 2018.”6 9. But then, on May 29, 2020, Forbes reported that Kylie Jenner “has been inflating the size and success of her business. For years.” – revealing that Defendants had overvalued yet another acquisition.7 On this news, Coty fell $0.56, or over 13%, from a close of $4.19 on May 28, 2020 to a close of $3.63 per share on May 29, 2020 on heavy volume. 10. Throughout the Class Period, Defendants made materially false and/or misleading statements and/or failed to disclose material adverse facts about Coty’s business, operations, and prospects. Specifically, Defendants misrepresented and/or failed to disclose: (1) that despite being no stranger to beauty brand acquisitions, Coty did not have adequate processes and procedures in place to assess and properly value the P&G Specialty Beauty Business and Kylie Cosmetics acquisitions; (2) that as a result, Coty had overpaid for the P&G Specialty Beauty Business and Kylie Cosmetics; (3) that Coty did not have adequate infrastructure to smoothly integrate and support the beauty brands that it acquired from P&G, including an adequate supply chain; (4) that, as a result of its inadequate infrastructure, Coty was not successfully integrating the beauty brands it acquired from P&G and not delivering synergies from the acquisition; (5) and that, as a result of the foregoing, Coty’s financial statements and Defendants’ statements about Coty’s business, operations, and prospects, were materially false and/or misleading at all relevant times. 6 https://investors.coty.com/news-events-and-presentations/news/news-details/2019/Coty-and- Kylie-Jenner-Announce-Strategic-Partnership-to-Expand-Beauty-Brands-Globally/default.aspx 7 https://www.forbes.com/sites/chasewithorn/2020/05/29/inside-kylie-jennerss-web-of-lies-and- why-shes-no-longer-a-billionaire/#635aade725f7 11. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s stock, Plaintiff and other Class members have suffered significant losses and damages. II. JURISDICTION AND VENUE 12. 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). 13. 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). 14. 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, Coty maintains offices in this Judicial District. 15. In connection with the acts, transactions, and conduct alleged herein, Defendants directly and indirectly used the means and instrumentalities of interstate commerce, including the U.S. mail, interstate telephone communications, and the facilities of a national securities exchange. III. PARTIES 16. Plaintiff Crystal Garrett-Evans, as set forth in the accompanying certification, incorporated by reference herein, purchased Coty 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 material omissions alleged herein. 17. Defendant Coty is incorporated in Maryland and headquartered in Amsterdam, Netherlands. Coty’s common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “COTY.” 18. Defendant Becht served as the Chairman of Coty’s Board from October 2011 to November 2018 and continued as a member of the Board until January 2019. From September 2014 to September 2016, he also served as Interim CEO overseeing Coty’s operations and mergers and acquisitions agenda, including the acquisition of the P&G Specialty Beauty Business. Mr. Becht holds a Bachelor of Arts degree in economics from the University of Groningen and an MBA from the University of Chicago, Booth School of Business. 19. Defendant Pane served as Coty’s CEO and a member of its Board from September 2016 to November 2018. He had joined Coty’s Executive Committee in July 2015 as the Executive Vice President, Category Development. Prior to joining Coty, he spent nearly 20 years at Reckitt Benckiser in various roles, including Senior Vice President, Global Category Officer Consumer Health. Mr. Pane holds a degree in business administration from Bocconi University. 20. Defendant Laubies served as Coty’s CEO, a member of the Board, and a member of the Executive Committee from November of 2018 to May 2020. In January 2019, he also assumed the leadership for formulating and implementing the strategic vision for Consumer Beauty as its President. Prior to joining Coty, he served as the CEO of Jacobs Douwe Egberts BV from September 2013 to March 2018. Mr. Laubies holds a Master’s degree in Economics from Sciences Politiques de Paris, Université Sorbonne and a Law degree from the Université Paris 2 Pantheon-Assas. 21. Defendant Talhouët served as the Chief Financial Officer (“CFO”) of Coty from December 2013 to September 2018, joining the Executive Committee in January 2014. Prior to joining Coty, he was the Corporate Finance Officer Americas and a member of the finance executive committee for Mars Unisabi. Mr. Talhouët holds a bachelor’s degree from the Paris Nanterre University and a master’s degree from the National Conservatory of Arts & Crafts. 22. Defendant Terisse has served as the CFO of Coty and a member of the Executive Committee since February 2019 and as its Chief Operating Officer (“COO”) since February 2020. Prior to joining Coty, he spent the majority of his career at Danone, notably as Group CFO from 2008 to 2015 and Executive Vice President (“EVP”) for Danone Africa Division from 2015 to 2017. Terisse holds a Bachelor’s degree in Business and Management from IAE Lyon III and a Master’s degree in Finance from EM Lyon Business School, France. 23. Defendants Becht, Pane, Laubies, Talhouët, and Terisse are collectively referred to hereinafter as the “Individual Defendants.” 24. Because of the Individual Defendants’ executive positions, they each had access to the undisclosed adverse information about Coty’s business, operations, operational trends, controls, markets, and present and future business prospects via internal corporate documents, conversations and connections with other corporate officers and employees, attendance at management and Board meetings and committees thereof, including the Executive Committee. 25. It is appropriate to treat Defendants as a group for pleading purposes and to presume that the false, misleading and incomplete information conveyed in the Company’s public filings, press releases and other publications, as alleged herein, are the collective actions of the narrowly defined group of Defendants identified above. Each of the Individual Defendants was directly involved in the management and day-to-day operations of the Company at the highest levels and was privy to confidential proprietary information concerning the Company and its business, operations, controls, growth, products and present and future business prospects as alleged herein. In addition, the Individual Defendants were involved in drafting, producing, reviewing and/or disseminating the false and/or misleading statements and information alleged herein, were aware of, or recklessly disregarded, the false and misleading statements being issued regarding the Company, and approved or ratified these statements in violation of the federal securities laws. 26. As officers and controlling persons of a publicly-held company whose shares are registered with the SEC pursuant to the Exchange Act and trade on the NYSE which is governed by the provisions of the federal securities laws, the Individual Defendants each had a duty to promptly disseminate accurate and truthful information with respect to the Company’s operations, business, products, markets, management, and present and future business prospects. In addition, the Individual Defendants each had a duty to correct any previously-issued statements that had become materially misleading or untrue, so that the market price of the Company’s publicly-traded shares would be based upon truthful and accurate information. Defendants’ false and/or misleading misrepresentations and omissions during the Class Period violated these specific requirements and obligations. 27. The Individual Defendants, because of their positions of control and authority as Officers and Directors of the Company, were able to, and did, control the content of the various SEC filings, press releases and other public statements pertaining to the Company during the Class Period. Each Individual Defendant was provided with copies of the documents alleged herein to be misleading before or shortly after their issuance or had the ability or opportunity to prevent their issuance or cause them to be corrected. Accordingly, each Individual Defendant is responsible for the accuracy of the public statements detailed herein and is, therefore, primarily liable for the representations contained therein. 28. Each Defendant is liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of Coty shares by disseminating materially false and/or misleading statements and/or concealing material adverse facts. IV. DEFENDANTS’ FALSE AND MISLEADING STATEMENTS 29. Throughout the Class Period, Defendants were aware or severely reckless in not knowing that Coty did not have adequate processes and procedures in place to assess and properly value acquisitions, and that as a result, Coty had overpaid for the beauty brands acquired from P&G as well as Kylie Cosmetics. Further, Defendants were aware or severely reckless in not knowing that Coty did not have adequate infrastructure to smoothly integrate and support the beauty brands that it acquired from P&G, including an adequate supply chain, and that as a result, Coty was failing to successfully integrate and deliver synergies from the acquisition of those beauty brands. A. Defendants’ Valuation & Integration of the P&G Specialty Beauty Business 30. On the first day of the Class Period, October 3, 2016, Coty issued a press release announcing the completion of its blockbuster acquisition of the P&G Specialty Beauty Business for $12.5 billion to scale up its beauty business. In the press release, Defendant Becht, Chairman of Coty’s Board of Directors, confirmed that “…we now have a much improved team, structure and culture to make the vision of this merger a reality.”8 31. The following month, on November 9, 2016, Coty reported first quarter fiscal 2017 results for the stand-alone Coty business prior to the completion of the merger with P&G Specialty Beauty Business. In the Company’s press release, Defendant Bart declared that for the combines company, “[w]e continue to target the total four-year synergies and working capital benefits of 8 https://investors.coty.com/news-events-and-presentations/news/news-details/2016/Coty- Completes-Merger-with-PG-Specialty-Beauty-Business/default.aspx $750 million and $500 million, respectively, with no change to the operating costs to realize both,” assuring investors that “while there may be challenges as we integrate and rebuild the businesses, we are firmly committed to realizing the ambitions we have and delivering value for all our shareholders.” 32. The statements in ¶¶30-31 were materially false and/or misleading when made and/or omitted to state material facts necessary to make the statements not misleading because Coty did not have adequate infrastructure to smoothly integrate and support the beauty brands that it acquired from P&G, including an adequate supply chain, and that as a result, Coty was failing to successfully integrate and deliver synergies from the acquisition of those beauty brands. 33. On February 9, 2017, Coty reported its second quarter fiscal 2017 financial results, the first quarter after its completion of the merger with the P&G Specialty Beauty Business. While Coty disclosed “negative transitional impacts especially including significant trade inventory build in the first quarter of fiscal 2017 in parts of the P&G business” on the Combined Company’s net revenues, it assured investors those impacts were “short-term.” Defendant Pane similarly stated that “[t]he business was impacted by significantly higher-than-anticipated inventory levels in the market on the acquired P&G Beauty Business, competitive pressure in the Consumer Beauty division and the distraction associated with the merger integration efforts,” but described the impacts as “short term challenges like the ones we faced in the first semester.” Pane added that “[o]n the P&G Beauty Business merger, we are reiterating our previously communicated $750 million synergy target by fiscal 2020. The integration is progressing as expected, with no major issues to date.”9 9 https://investors.coty.com/news-events-and-presentations/news/news-details/2017/Coty-Inc- Reports-Second-Quarter-Fiscal-2017-Results-the-First-Quarter-After-Successful-Completion-of- the-Merger-with-PG-Beauty-Business/default.aspx 34. On May 10, 2017, Coty reported third quarter fiscal 2017 results and in its press release, Defendant Pane again stated that “[o]n the integration of the P&G Beauty Business, we are making good progress.” 35. The statements in ¶¶33-34 were materially false and/or misleading when made and/or omitted to state material facts necessary to make the statements not misleading because Coty did not have adequate processes and procedures in place to assess and properly value acquisitions, and that as a result, Coty overpaid for the beauty brands acquired from P&G. Further, far from being “short term,” Coty fundamentally did not have adequate infrastructure to smoothly integrate and support the beauty brands that it acquired from P&G, including an adequate supply chain, and that as a result, Coty was failing to successfully integrate and deliver synergies from the acquisition of those beauty brands. 36. On August 22, 2017, Coty reported financial results for the fourth quarter and fiscal year ended June 30, 2017, including a 10% organic revenue decline in Consumer Beauty – which historically accounted for nearly half of Coty’s revenue. As Defendant Pane conceded, “our Consumer Beauty division remains under pressure and its recovery is a key priority for us.” However, Pane continued to assure investors that “[w]e completed the incredibly complex acquisition of the P&G Beauty Business, fully reorganized into a product and customer focused organizational structure, successfully reached significant milestones in our integration efforts, and boosted our brand portfolio…” and that “[r]egarding the P&G Beauty Business, our integration efforts are proceeding well and we remain on track with the synergy delivery.”10 10 https://investors.coty.com/news-events-and-presentations/news/news-details/2017/Coty-Inc- Reports-Fiscal-2017-Fourth-Quarter-and-Full-Year-Results/default.aspx 37. On November 9, 2017, Coty reported its first quarter fiscal 2018 financial results and in its press release, Defendant Pane declared that “as of September 1, we have exited our third and final TSA with P&G for the ALMEA region and now have control of processes, systems and data across the new Coty.” 11 38. The statements in ¶¶36-37 were materially false and/or misleading when made and/or omitted to state material facts necessary to make the statements not misleading because Coty did not have adequate infrastructure to smoothly integrate and support the beauty brands that it acquired from P&G, including an adequate supply chain, and that as a result, Coty was failing to successfully integrate and deliver synergies from the acquisition of those beauty brands. 39. On February 8, 2018, Coty reported its second quarter fiscal 2018 financial results and in its press release, Defendant Pane stated with regard to margin that “we continue to aim for a healthy improvement in the second half of the year versus the prior year, with most of the impact coming in Q4, as we continue to deliver on our merger synergies.”12 40. On May 9, 2018, Coty reported its third quarter fiscal 2018 financial results and in its press release, Defendant Pane stated that “[t]he Consumer Beauty division continued its uneven performance, but with encouraging signs of stability” and that with regard to “adjusted operating margin, we continue to aim for a healthy improvement in the second half of the year versus the prior year, with most of the impact coming in Q4, as we continue to deliver on our merger synergies.” In addition, during the earnings call, Defendant Talhouët stated that “[t]he overall integration is progressing in line with our timetable.” As we advance towards the end of the 11 https://investors.coty.com/news-events-and-presentations/news/news-details/2017/Coty-Inc- Reports-First-Quarter-Fiscal-2018-Results/default.aspx 12 https://investors.coty.com/news-events-and-presentations/news/news-details/2018/Coty-Inc- Reports-Second-Quarter-Fiscal-2018-Results/default.aspx integration, we have fine-tuned our original estimate made 2 years ago and have broadened the scope, including further go-to-market changes, systems enhancements and more complete one order, one shipment, one invoice.” 41. The statements in ¶¶39-40 were materially false and/or misleading when made and/or omitted to state material facts necessary to make the statements not misleading because Coty did not have adequate infrastructure to smoothly integrate and support the beauty brands that it acquired from P&G, including an adequate supply chain, and that as a result, Coty was failing to successfully integrate and deliver synergies from the acquisition of those beauty brands. 42. On August 21, 2018, Coty reported its fiscal year 2018 fourth quarter and full year financial results and in its press release, disclosed “short term supply chain disruptions resulting from the consolidation of warehouses and planning centers in North America and Europe, as the ex P&G business is integrated into Coty.”13 At the same time, Defendant Pane assured the market that “[t]he peak of the impact of the supply chain disruptions due to our logistics and manufacturing consolidation will come in 1Q19, with a smaller tail end in 2Q19. . . . we do expect that these business integration related impacts will be largely over by the end of first half 2019 and our FY19 targets take these disruptions into consideration.” Pane also touted that “[t]he first half of our synergies commitment has been delivered as planned by FY18.” 43. On November 7, 2018, Coty announced a bigger than expected decline in first quarter fiscal year 2019 sales due to “several temporary supply-chain related headwinds” which included “[w]arehouse and planning center consolidated disruptions in Europe and the U.S.” In the Company’s press release, Defendant Pane also conceded “the increased scope of the 13 https://investors.coty.com/news-events-and-presentations/news/news-details/2018/Coty-Inc- Reports-Fiscal-2018-Fourth-Quarter-and-Full-Year-Results/default.aspx disruptions [in the first quarter from warehousing and planning consolidation] resulted in much weaker results than previously expected,” reflecting the internal challenges in integrating P&G’s beauty brands into Coty’s structure. However, Defendant Pane again indicated that the challenges would be short-lived and the integration was going as expected: “As a result of these disruptions, we have decided to modify our distribution center consolidation plan for the remainder of the year to minimize business impact. With a healthy synergy delivery already in 1Q19, these modifications should have no impact to our commitment of $225 million of synergies in FY19 and $750 million total by the end of FY20. . . . With the P&G Beauty integration near completion, and after we have overcome the internal challenges, we will be better equipped to focus more externally.”14 44. The statements in ¶¶42-43 were materially false and/or misleading when made and/or omitted to state material facts necessary to make the statements not misleading because rather than “short term” or “temporary,” Coty fundamentally did not have adequate infrastructure to smoothly integrate and support the beauty brands that it acquired from P&G, including an adequate supply chain, and that as a result, Coty was failing to successfully integrate and deliver synergies from the acquisition of those beauty brands. 45. On February 8, 2019, Coty reported its second quarter fiscal 2019 financial results and noted in its press release that there was “some moderation in the supply chain-related headwinds discussed in 1Q19.” Defendant Pane also touted that “the management team we have put into place is the right one to develop this plan, and that together with the broader Coty organization, we will be able to meet the objectives of driving gross margin improvement,” which 14 https://investors.coty.com/news-events-and-presentations/news/news-details/2018/Coty-Inc- Reports-First-Quarter-Fiscal-2019-Results/default.aspx “means managing revenue and costs, improving product mix and range, simplifying our portfolio and formulations, and systemically deploying lean-inspired methodologies in our manufacturing and logistics operations.” 15 46. On May 8, 2019, Coty reported its third quarter fiscal 2019 financial results and its press release noted that “we largely resolved the supply constraints across all divisions, resulting in a significant reduction in supply chain-related headwinds in 3Q19 and a minimal expected impact in 4Q19.” Defendant Pane also stated that “[t]hird quarter results clearly indicate that supply issues are largely resolved and we expect very limited impact from supply chain disruption on the business in the remainder of fiscal 2019.”16 47. The statements in ¶¶45-46 were materially false and/or misleading when made and/or omitted to state material facts necessary to make the statements not misleading because Coty fundamentally did not have adequate infrastructure to smoothly integrate and support the beauty brands that it acquired from P&G, including an adequate supply chain, and that as a result, Coty was failing to successfully integrate and deliver synergies from the acquisition of those beauty brands. 48. On July 1, 2019, Coty announced the write down of about $3 billion in value of brands acquired from P&G as part of a four-year restructuring “Turnaround Plan,” confirming that the P&G Specialty Beauty Business had been overvalued.17 During the business update call, Defendant Laubies admitted that “it is clear that the difficulty of th[e P&G] merger lies at the heart 15 https://investors.coty.com/news-events-and-presentations/news/news-details/2019/Coty-Inc- Reports-Second-Quarter-Fiscal-2019-Results/default.aspx 16 https://investors.coty.com/news-events-and-presentations/news/news-details/2019/Coty-Inc- Reports-Fiscal-Third-Quarter-2019-Results/default.aspx 17 https://investors.coty.com/news-events-and-presentations/news/news-details/2019/Coty- Announces-Turnaround-Plan-to-Better-Leverage-Its-Platform-and-Step-up- Performance/default.aspx of many of the issues that Coty has faced since then” because the “integration took longer and was more complex than originally envisioned,” “many parts of the acquired business had weak performance since the merger,” and “the sustained commitment to meeting the financial targets set at the start of the deal limited the organization’s ability to address some of the underlying trends.”18 At the same time, Laubies assured investors that “we have now identified what we need to change in our company to be lasting and sustainable performance with the focus initially building a better business before we build a significantly bigger one.” 49. On August 28, 2019, Coty reported its fourth quarter fiscal 2019 and full year results which were in-line with guidance and in its press release, Defendant Terisse declared that “[w]e now have a clear business and financial framework for the next four years.”19 50. The statements in ¶¶48-49 were materially false and/or misleading when made and/or omitted to state material facts necessary to make the statements not misleading because Coty still did not have adequate processes and procedures in place to assess and properly value acquisitions. B. Defendants’ Valuation & Integration of Kylie Cosmetics 51. On November 18, 2019, Coty announced another beauty brand acquisition – a 51% majority stake in Kylie Cosmetics for $600 million in order to “build and further develop Kylie’s existing beauty business,” which “realized an estimated $177M net revenues for the trailing twelve 18https://s23.q4cdn.com/980953510/files/doc_events/20190701_COTY_MA_Call_DN00000000 2663079007.pdf 19 https://investors.coty.com/news-events-and-presentations/news/news-details/2019/Coty-Inc- Reports-Fiscal-2019-Fourth-Quarter-and-Full-Year-Results-In-line-with-Guidance/default.aspx months (TTM).” Kylie Jenner was described “as the youngest-ever self-made billionaire on the cover of Forbes Self-Made Billionaire issue in August 2018.”20 52. On February 5, 2020, Coty reported its second quarter fiscal year 2020 financial results and in its press release, defendant Terisse stated that “we have now commenced a strategic partnership with Kylie Jenner, and we look forward to building a high growth, digitally native beauty brand.”21 53. The statements in ¶¶51-52 were materially false and/or misleading when made and/or omitted to state material facts necessary to make the statements not misleading because Coty did not have adequate processes and procedures in place to assess and properly value acquisitions, and that as a result, Coty overpaid for Kylie Cosmetics. V. The Truth Emerges 54. Before the market opened on February 9, 2017, the truth began leaking out when Coty reported its second quarter fiscal 2017 results, which was the first quarter after its completion of the merger with the P&G Specialty Beauty Business. Coty disclosed what it characterized as “short-term negative transitional impacts especially including significant trade inventory build in the first quarter of fiscal 2017 in parts of the P&G business,” indicating that the P&G Specialty Beauty Business may have been overvalued. At the same time, Defendant Pane assured the market that “[o]n the P&G Beauty Business merger, we are reiterating our previously communicated $750 million synergy target by fiscal 2020. The integration is progressing as expected, with no major issues to date.” 20 https://investors.coty.com/news-events-and-presentations/news/news-details/2019/Coty-and- Kylie-Jenner-Announce-Strategic-Partnership-to-Expand-Beauty-Brands-Globally/default.aspx 21 https://investors.coty.com/news-events-and-presentations/news/news-details/2020/Coty-Inc- Reports-Fiscal-Second-Quarter-2020-Results/default.aspx 55. On this news, Coty’s stock price dropped $1.76 per share, or nearly 9%, from a close of $20.04 per share on February 8, 2017 to close at $18.28 per share on February 10, 2017 after two days of trading on heavy volume. 56. Less than a year later however, Coty surprised investors with disappointing financial results for the fourth quarter and fiscal year ended June 30, 2017 before the market opened on August 22, 2017, including a 10% organic revenue decline in Consumer Beauty – which historically accounted for nearly half of Coty’s revenue – signaling that the integration of P&G’s over 40 beauty brands was still not a reality. That same day, Defendant and Chief Executive Officer (“CEO”) Pane assured investors that “[w]e completed the incredibly complex acquisition of the P&G Beauty Business, fully reorganized into a product and customer focused organizational structure, successfully reached significant milestones in our integration efforts, and boosted our brand portfolio…” and that “[r]egarding the P&G Beauty Business, our integration efforts are proceeding well and we remain on track with the synergy delivery.” 57. On this news, Coty’s stock price dropped $3.31 per share, or nearly 17%, from a close of $19.55 per share on August 21, 2017 to close at $16.24 per share on August 24, 2017 after three days of trading on heavy volume. 58. Then, before the market opened on November 7, 2018, Coty surprised the market again, announcing a bigger than expected decline in first quarter sales due to “several temporary supply-chain related headwinds” which included “[w]arehouse and planning center consolidated disruptions in Europe and the U.S.” While conceding that the internal challenges in integrating P&G’s beauty brands into Coty’s structure, Defendant Pane indicated that the challenges would be short-lived: “With the P&G Beauty integration near completion, and after we have overcome the internal challenges, we will be better equipped to focus more externally.” 59. On this news, Coty’s stock price dropped $2.88 per share, or nearly 26%, from a close of $11.18 per share on November 6, 2018 to a close of $8.30 per share on November 8, 2018 after two days of trading on heavy volume. 60. But on July 1, 2019, Coty announced the write down of about $3 billion in value of brands acquired from P&G as part of a four-year restructuring plan, confirming that the P&G Specialty Beauty Business had been overvalued. During the business update call, Defendant Laubies admitted that “it is clear that the difficulty of th[e P&G] merger lies at the heart of many of the issues that Coty has faced since then” because the “integration took longer and was more complex than originally envisioned,” “many parts of the acquired business had weak performance since the merger,” and “the sustained commitment to meeting the financial targets set at the start of the deal limited the organization’s ability to address some of the underlying trends.” At the same time, Laubies assured investors that “we have now identified what we need to change in our company to be lasting and sustainable performance with the focus initially building a better business before we build a significantly bigger one.” 61. On this news, Coty’s stock price dropped $1.94, or over 14%, from an opening price of $13.53 to a closing price of $11.59 per share on July 1, 2019 on heavy volume. 62. Just over four months later, on November 18, 2019, Coty announced another beauty brand acquisition – a 51% majority stake in Kylie Cosmetics for $600 million in order to “build and further develop Kylie’s existing beauty business,” which “realized an estimated $177M net revenues for the trailing twelve months (TTM).” Kylie Jenner was described “as the youngest-ever self-made billionaire on the cover of Forbes Self-Made Billionaire issue in August 2018.” 63. But then, on May 29, 2020, Forbes reported that Kylie Jenner “has been inflating the size and success of her business. For years.” – revealing that Defendants had overvalued yet another acquisition. 64. On this news, Coty fell $0.56, or over 13%, from a close of $4.19 on May 28, 2020 to a close of $3.63 per share on May 29, 2020 on heavy volume. VI. ADDITIONAL SCIENTER ALLEGATIONS 65. 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 Coty, their control over, and/or receipt and/or modification of Coty’s allegedly materially misleading misstatements and/or their associations with the Company which made them privy to confidential proprietary information concerning Coty, participated in the fraudulent scheme alleged herein. VII. APPLICABILITY OF PRESUMPTION OF RELIANCE (FRAUD-ON-THE- MARKET DOCTRINE 66. The market for Coty’s common stock 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, Coty’s securities traded at artificially inflated prices during the Class Period. On October 5, 2016, the Company’s share price closed at a Class Period high of $25.10 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 Coty’s securities and market information relating to Coty, and have been damaged thereby. 67. During the Class Period, the artificial inflation of Coty’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 Coty’s business, prospects, and operations. These material misstatements and/or omissions created an unrealistically positive assessment of Coty 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. 68. At all relevant times, the market for Coty’s common stock was an efficient market for the following reasons, among others: a. Coty common stock met the requirements for listing, and were listed and actively traded on the NYSE, a highly efficient and automated market; b. On average, more than 4% of Coty’s stock outstanding were traded weekly during the Class Period; c. As a regulated issuer, Coty filed periodic public reports with the SEC and/or the NYSE; d. Coty 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; e. Coty was followed by numerous securities analysts employed by major 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 were publicly available and entered the public marketplace. f. Multiple market makers made a market in Coty’s common stock during the Class Period; and g. The price of Coty’s common stock responded quickly to incorporate and reflect new public information concerning Coty during the Class Period. 69. As a result of the foregoing, the market for Coty’s securities promptly digested current information regarding Coty from all publicly available sources and reflected such information in Coty’s share price. Under these circumstances, all purchasers of Coty’s securities during the Class Period suffered similar injury through their purchase of Coty’s securities at artificially inflated prices and a presumption of reliance applies. 70. 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. VIII. NO SAFE HARBOR 71. 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 Coty who knew that the statement was false when made. IX. CAUSES OF ACTION COUNT I Violation of § 10(b) of The Exchange Act and Rule 10b-5 Promulgated Thereunder (Against All Defendants) 72. Plaintiff repeats and re-alleges each and every allegation contained in the foregoing paragraphs as if fully set forth herein. 73. 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 Coty’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. 74. 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 Coty’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. 75. 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 Coty’s financial well- being and prospects, as specified herein. 76. 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 Coty’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 Coty 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. 77. 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. 78. 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 Coty’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. 79. 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 Coty’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 Coty’s securities during the Class Period at artificially high prices and were damaged thereby. 80. 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 Coty was experiencing, which were not disclosed by Defendants, Plaintiff and other members of the Class would not have purchased or otherwise acquired their Coty 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. 81. By virtue of the foregoing, Defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. 82. 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. COUNT II Violation of § 20(a) of The Exchange Act (Against the Individual Defendants) 83. Plaintiff repeats and re-alleges each and every allegation contained in the foregoing paragraphs as if fully set forth herein. 84. Individual Defendants acted as controlling persons of Coty 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. 85. In particular, Individual Defendants had direct and supervisory involvement in the day-to-day operations of Coty 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. 86. As set forth above, Coty 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) Declaring this action to be a proper class action pursuant to Federal Rule of Civil Procedure (“Rule”) 23, certifying Plaintiff as Class Representatives pursuant to Rule 23(c), and appointing Roche Cyrulnik Freedman LLP as Class Counsel pursuant to Rule 23(g); 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’s reasonable costs and expenses, including attorneys’ fees, expert fees, and its other costs and expenses; and d) Awarding such equitable, injunctive or other relief as the Court may deem just and proper. JURY DEMAND Pursuant to Federal rule of Civil Procedure 38(b), Plaintiff hereby respectfully demands a trial by jury for all claims. Dated: September 4, 2020 Respectfully submitted, ROCHE CYRULNIK FREEDMAN LLP /s/ Constantine Economides Constantine Economides Velvel (Devin) Freedman (pro hac pending) Ivy T. Ngo (pro hac pending) 200 South Biscayne Boulevard Miami, Florida 33131 Telephone: (305) 971-5943 Facsimile: (646) 392-8842 Email: [email protected] [email protected] [email protected] Kyle Roche Jason Cyrulnik 99 Park Avenue, 19th Floor New York, NY 10016 Telephone: (646) 350-0527 Facsimile: (646) 392-8842 Email: [email protected] [email protected] Counsel for Plaintiff Crystal Garrett-Evans and the Proposed Class THE SCHALL LAW FIRM Brian Schall (pro hac pending) 1880 Century Park East, Suite 404 Los Angeles, CA 90067 Telephone: (424) 303-1964 Email: [email protected] Additional Counsel for Plaintiff Crystal Garrett-Evans 1. I, Crystal Garrett-Evans, make this declaration pursuant to §27(a)(2) of the Securities Act of 1933 (“Securities Act”) and/or §21D(a)(2) of the Securities Exchange Act of 1934 (“Exchange Act”) as amended by the Private Securities Litigation Reform Act of 1995. 2. I have reviewed a Complaint against Coty, Inc. (“Coty” or the “Company”) and authorize the filing of a comparable complaint on my behalf. 3. I did not purchase or acquire Coty securities at the direction of plaintiffs’ counsel or in order to participate in any private action arising under the Securities Act or Exchange Act. 4. I am willing to serve as a representative party on behalf of a Class of investors who purchased or acquired Coty securities during the class period, including providing testimony at deposition and trial, if necessary. I understand 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 (Schedule “A”) lists all of my transactions in Coty 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, I have not served or sought to serve as a representative party on behalf of a class under the federal securities laws. 7. I agree not to accept any payment for serving as a representative party on behalf of the class as set forth in the Complaint, beyond my 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 that the foregoing is true and correct. Executed this day of 9/4/2020 _____________________. _________________________________ Crystal Garrett-Evans SCHEDULE A Crystal Garrett-Evans’s Transactions in Coty Inc. (COTY) Date Transaction Quantity Price per Share 1/11/2017 PURCHASE 2 $ 23.0550 1/19/2017 PURCHASE 1 $ 28.40 1/23/2017 PURCHASE 1 $ 28.54

securities

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x JENISA ANGELES, on behalf of herself and all others similarly situated, INDEX NO.: 1:20-cv-8130 CLASS ACTION COMPLAINT AND Plaintiffs, v. DEMAND FOR JURY TRIAL BETTERIDGE JEWELERS, INC., Defendant. : : : : : : : : : : : : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x INTRODUCTION 1. Plaintiff JENISA ANGELES, on behalf of herself and others similarly situated, asserts the following claims against Defendant BETTERIDGE JEWELERS, 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.betteridge.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 JENISA ANGELES, at all relevant times, is and was a resident of New York 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 Connecticut 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 jewelry manufacturing company that owns and operates www.betteridge.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 September of 2020, Plaintiff visited Defendant’s website, www.betteridge.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 October 1, 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

BdtGEIcBD5gMZwcztrdm

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA CASE NO.: RENATA MEDEIROS, individually and on behalf of all others similarly situated, Plaintiff, v. SIMM ASSOCIATES, INC., a Delaware corporation, Defendant. / CLASS ACTION COMPLAINT JURY DEMAND COMES NOW Plaintiff, Renata Medeiros (hereinafter “Plaintiff”), individually and on behalf of all others similarly situated, by and through the undersigned counsel, and brings this action against Defendant, SIMM Associates, Inc. (hereinafter “Defendant”), and states the following in support thereof: PRELIMINARY STATEMENT 1. This is an action brought against Defendant for violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et. seq. (hereinafter the “FDCPA”) and the Florida Consumer Collection Practices Act, § 559.55, et seq., Florida Statutes (hereinafter the “FCCPA”). JURISDICTION AND VENUE 2. Subject matter jurisdiction arises under the FDCPA, 15 U.S.C. § 1692k(d), the FCCPA, Section 559.77(1), Florida Statutes, and 28 U.S.C § 1331. This Court has supplemental jurisdiction for Plaintiff’s FCCPA claims pursuant to 28 U.S.C. § 1367. 3. Defendant is subject to the provisions of the FDCPA and to the jurisdiction of this Court pursuant to Fed. R. Civ. P. 4(k). 4. Venue is proper pursuant to 28 U.S.C. §1391(b)(2) because the acts or omissions complained of were committed and/or caused by Defendant here and Plaintiff lives here. PARTIES 5. Plaintiff is a natural person, a resident of Miami-Dade County, Florida, and a consumer as defined by 15 U.S.C. § 1692a(3) and Fla. Stat. § 559.55(8). 6. Defendant is a Delaware corporation, whose primary business address is located at 800 Pencader Drive, Newark, DE 19702 and whose registered agent for service of process is Corporation Service Company, 1201 Hays Street, Tallahassee, FL 32301. 7. Defendant is a debt collector within the meaning of 15 U.S.C. § 1692a(6) and Fla. Stat. § 559.55(7), in that it uses postal mail, an instrumentality of interstate commerce, across state lines into Florida for its business, the principal purpose of which is the collection of debts, and/or it regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. 8. Defendant is licensed as a Consumer Collection Agency by the Florida Office of Financial Regulation, holding license number CCA0900771. 9. At all times relevant hereto, Defendant possessed knowledge concerning the requirements of both the FDCPA and FCCPA; and trained its employees regarding compliance with both the FDCPA and the FCCPA. FACTUAL ALLEGATIONS 10. Plaintiff allegedly incurred a debt concerning a consumer credit account issued by a nationally recognized bank (hereinafter the “Debt”). 11. At a time better known to Defendant, the current creditor engaged Defendant in order to direct debt collection activities in connection with the Debt toward Plaintiff. 12. Defendant made the affirmative business decision to communicate with Plaintiff and other consumers about the collection of the Debt via written correspondence. 13. However, rather than preparing and mailing written collection correspondence on its own, Defendant sent information regarding Plaintiff and the Debt to a third-party vendor (hereinafter the “Vendor”) in order to outsource the process. 14. Defendant disclosed to the Vendor, among other things: (i) Plaintiff’s status as a debtor; (ii) the fact that Plaintiff allegedly owed monies for the Debt; (iii) the fact the Debt concerned consumer credit account; and (iv) other highly personal pieces of information. 15. The Vendor then populated some or all of this information into a pre-written template, printed, and mailed the collection letter to Plaintiff’s residence in Florida. (Exhibit ‘A’). 16. The FDCPA defines “communication” as “the conveying of information regarding a debt directly or indirectly to any person through any medium.” See 15 U.S.C. § 1692a(3). 17. The sending of an electronic file containing information about Plaintiff and the Debt to the Vendor is therefore a communication under the statute. See Hunstein v. Preferred Collection and Management Services, Inc., 994 F.3d 1341, 1352 (11th Cir. 2021). 18. Defendant’s communication to the Vendor was in connection with the collection of a debt since it involved disclosure of information about Plaintiff and the Debt to a third-party, with the objective being communication with the consumer and motivation of the consumer to pay an alleged debt. 19. Plaintiff never consented to having her personal and confidential information, concerning the Debt or otherwise, shared with the Vendor. 20. In limiting communications with unauthorized third-parties, the FDCPA states, at 15 U.S.C. § 1692c(b): “Except as provided in section 1692b of this title, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a post judgment judicial remedy, 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.” (emphasis added). 21. The Vendor used by Defendant in conjunction with its debt collection efforts directed toward Plaintiff does not fall within any permitted exception provided for in 15 U.S.C. § 1692c(b). 22. Due to Defendant’s aforementioned communication to the Vendor, debt-related information about Plaintiff is within the possession of an unauthorized third-party. 23. If a debt collector “conveys information regarding the debt to a third party- informs the third-party that the debt exists or provides information about the details of the debt then the debtor may well be harmed by the spread of this information.” Brown v. Van Ru Credit Corp., 804 F.3d 740, 743 (6th Cir. 2015). 24. Defendant unlawfully communicates with the Vendor for the purpose of streamlining its generation of profits without regard to the propriety and privacy of the information, which it discloses to such third-party. 25. In its reckless pursuit of a business advantage, Defendant disregarded the known, negative effect that disclosing sensitive personal information to unauthorized third-parties has on consumers. 26. Because 15 U.S.C. § 1692c(b) bears a close relationship to a harm that American courts have long recognized as cognizable, the invasion of privacy, and Congress’s judgment indicates that violations of §1692c(b) constitute a concrete injury, Plaintiff has standing to sue Defendant. See Hunstein, 994 F.3d at 1348 (11th Cir. 2021). CLASS ALLEGATIONS 27. Plaintiff brings this action under Rule 23 of the Federal Rules of Civil Procedure on behalf of the following class of persons (hereinafter the “Class”), subject to modification after discovery and further case development: All persons in Florida whose information was communicated, in connection with the collection of a debt, to a third-party by Defendant without said persons’ prior consent from one year prior to the filing of the instant action through to the date of class certification. 28. The members of the Class are all identifiable through Defendant’s records and other third-party records. 29. Excluded from the Class are Defendant; any entities in which it has a controlling interest; its agents and employees; any Judge to whom this action is assigned, any member of such Judge’s staff, and the Judge’s immediate family; and Plaintiff’s counsel, any member of their staff, and immediate family. 30. Plaintiff proposes that he serve as class representative for the class as he and the members of the Class have all been harmed by Defendant’s actions. 31. The members of the Class are so numerous and geographically diverse that joinder of all of them is impracticable. 32. Plaintiff believes and therefore avers, that Defendant has improperly communicated debt-related information of over forty (40) consumers to unauthorized third-parties throughout the state of Florida during the relevant time period. 33. There are questions of law and fact common to Plaintiff and to the members of the Class, including without limitation: a. Whether Defendant’s conduct constitutes violations of 15 U.S.C. § 1692c(b); b. Whether Defendant’s conduct constitutes violations of Section 559.72(5), Florida Statutes; c. Whether Plaintiff and members of the Class are entitled to statutory damages pursuant to the FDCPA and the FCCPA; d. Whether Plaintiff and members of the Class are entitled to attorney’s fees and costs pursuant to the FDCPA and the FCCPA; and e. Whether Defendant should be enjoined from engaging in such conduct in the future. 34. Plaintiff’s claims are typical of the claims of the other members of the Class, and Plaintiff has no interests that are adverse or antagonistic to the interests of the other members of the Class. 35. Plaintiff is an adequate representative of the Class because she will fairly and adequately protect the interests of the Class, and counsel who is experienced in litigation of this nature represent her. 36. Common questions of law and fact predominate over questions affecting only individual class members, and a class action is the superior method for fair and efficient adjudication of this controversy. 37. 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. COUNT I (Violations of 15 U.S.C. § 1692c(b)) 38. Plaintiff adopts, realleges, and incorporates all of the foregoing paragraphs as if fully set forth herein. 39. At all times relevant to this action, Defendant is subject to and must abide by the laws of United States, including without limitation, 15 U.S.C. § 1692, et seq. 40. Congress enacted the FDCPA “to eliminate abusive debt collection practices by debt collectors” and “to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). 41. In enacting the statute, Congress identified the “invasion of individual privacy” as one of the harms against which the FDCPA is directed. See 15 U.S.C. § 1692(a) (emphasis added). 42. 15 U.S.C. § 1692c(b) provides: “Except as provided in section 1692b of this title, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a post judgment judicial remedy, 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.” (emphasis added). 43. The transmittal of personal debt-related information to a third-party mailing vendor constitutes a communication in connection with the collection of a debt. See Hunstein, 994 F.3d at 1352 (11th Cir. 2021). 44. Because 15 U.S.C. § 1692c(b) bears a close relationship to a harm that American courts have long recognized as cognizable, the invasion of privacy, and Congress’s judgment indicates that violations of §1692c(b) constitute a concrete injury, Plaintiff has standing to sue. See Id at 1348. 45. Defendant violated 15 U.S.C. § 1692c(b) when it communicated sensitive personal information about Plaintiff to the Vendor in connection with the collection of the Debt. 46. Specifically, Defendant communicated details about: (i) Plaintiff’s status as a debtor; (ii) the fact that Plaintiff allegedly owed monies; (iii) the fact the Debt concerned a consumer credit account; and (iv) other highly personal pieces of information 47. Defendant intentionally made these communications to the Vendor in order to attempt to gain an advantage over other debt collectors and generate additional profits. 48. As a result of Defendant’s aforementioned violation of the FDCPA, Plaintiff suffered damages, including without limitation, an invasion of privacy. 49. Defendant’s aforementioned conduct renders it liable for the above-stated violations of the FDCPA, and Plaintiff is therefore entitled to statutory damages not to exceed $1,000, as well as other relief. COUNT II (Violations of Fla. Stat. § 559.72(5)) 50. Plaintiff adopts, realleges, and incorporates all of the foregoing paragraphs as if fully set forth herein. 51. At all times relevant to this action, Defendant is subject to and must abide by the laws of Florida, including without limitation, Florida Statute § 559.72, et seq. 52. The Florida Legislature, in enacting the FCCPA, has further defined and protected an individual’s right of privacy in the State of Florida. Collection Bureau of Orlando v. Continental Casualty Co., 342 So. 2d 1019, 1020 (Fla. 4th DCA 1977) (emphasis added); See also Terri Jayne Salt, Note, Fair Debt Collection Practices: Analysis of Florida and Federal Law, 30 U. Fla. L. Rev. 892, 905 (1978). 53. In collecting consumer debts, no person shall disclose to a person other than the debtor or her or his family information affecting the debtor’s reputation, whether or not for credit worthiness, with knowledge or reason to know that the other person does not have a legitimate business need for the information or that the information is false. See Fla. Stat. § 559.72(5). 54. In the event of any inconsistency between any provision of the FCCPA and any provision of the FDCPA, the provision which is more protective of the consumer or debtor shall prevail. See Fla. Stat. § 559.552. 55. “A plaintiff is not required to prove actual damages, but only a violation of one of the prohibited practices in the Florida Consumer Collections Practices Act.” Laughlin v. Household Bank, Ltd., 969 So. 2d 509 (Fla. 1st DCA 2007). 56. Defendant violated Section 559.72(5), Florida Statutes, when it disclosed to the Vendor information that would affect Plaintiff’s reputation. 57. Specifically, Defendant disclosed details about: (i) Plaintiff’s status as a debtor; (ii) the fact that Plaintiff allegedly owed monies; (iii) the fact the Debt concerned a consumer credit account; and (iv) other highly personal pieces of information, all of which concern Plaintiff’s reputation. 58. Defendant knew there was no legitimate business need for this information, since Defendant could easily have prepared and mailed correspondence itself without disclosing Plaintiff’s sensitive personal information to a third-party. 59. Moreover, no legitimate business need for the disclosure of the aforementioned debt-related information could have existed because the FDCPA proscribed communicating said information to the Vendor. See 15 U.S.C. § 1692c(b). 60. Defendant intentionally chose to disclose this sensitive personal information to the Vendor as part of its debt collection efforts in order to increase its operational efficiency and 61. As a result of Defendant’s aforementioned violation of the FCCPA, Plaintiff suffered damages, including without limitation, an invasion of privacy. 62. Defendant’s conduct renders it liable for the above-stated violations of the FCCPA, and Plaintiff is therefore entitled to statutory damages not to exceed $1,000, as well as other relief. RELIEF REQUESTED WHEREFORE, Plaintiff respectfully requests this Honorable Court enter judgment against Defendant for the following: a. Certification of Plaintiff’s claims and all other persons similarly situated as class action claims under Rule 23 of the Federal Rules of Civil Procedure; b. Awarding statutory damages of $1,000.00 for each violation of the FDCPA pursuant to 15 U.S.C. § 1692k; c. Awarding statutory damages of $1,000.00 for each violation of the FCCPA pursuant to Section 559.77(2), Florida Statutes; d. Injunctive relief preventing Defendant from making any further communications to unauthorized third-parties when attempting to collect consumer debts. e. Awarding reasonable costs and attorney’s fees pursuant to pursuant to 15 U.S.C. § 1692k and Section 559.77(2), Florida Statutes; and f. Such other relief that this Court deems just and proper. JURY TRIAL DEMAND Plaintiff demands a jury trial on all issues so triable. Respectfully submitted, /s/ Christopher Legg Christopher Legg, Esq. Florida Bar No. 44460 CHRISTOPHER W. LEGG, P.A. 499 E. Palmetto Park Rd., Ste. 228 Boca Raton, Florida 33432 Telephone: 954-235-3706 [email protected] Attorney for Plaintiff and the putative class

consumer fraud

NLfFC4cBD5gMZwczYWae

POMERANTZ LLP Jennifer Pafiti (SBN 282790) 1100 Glendon Avenue, 15th Floor Los Angeles, CA 90024 Telephone: (310) 405-7190 [email protected] Attorney for Plaintiff [Additional Counsel on Signature Page] UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA PATRICE BERTRAND, 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 EHEALTH, INC., SCOTT N. FLANDERS, DEREK N. YUNG, and DAVID K. FRANCIS, Defendants. Plaintiff Patrice Bertrand (“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 eHealth, Inc. (“eHealth” 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. 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 eHealth securities between March 19, 2018 and April 7, 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 Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials. 2. eHealth is a health insurance marketplace with a technology and service platform that provides consumer engagement, education, and health insurance enrollment solutions. 3. 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) eHealth utilized highly aggressive accounting and modeling assumptions; (ii) eHealth faced a skyrocketing rate of member churn, resulting from the Company’s pursuit of low quality, lossmaking growth; (iii) eHealth relied heavily on direct response television advertising, which attracts an unprofitable, high churn enrollee; and (iv) as a result, Defendants’ public statements were materially false and/or misleading at all relevant times. 4. On April 8, 2020, pre-market, analyst Muddy Waters Research published a report in which it wrote that “EHTH’s highly aggressive accounting masks what we believe is a significantly unprofitable business.” Muddy Waters continued that “EHTH’s persistence assumptions in its LTV1 model seem highly aggressive when compared to reality,” that “[a]fter ASC 606 went into effect, member churn immediately skyrocketed,” and that “EHTH is pursuing low quality, lossmaking growth while its LTVs are based on lower churn, pre-growth cohorts.” Furthermore, Muddy Waters concluded that “the key 1 “LTV,” as used herein, refers to “long-term value.” attracts an unprofitable, high churn enrollee. To generate this unprofitable growth, EHTH has been incinerating cash, which we expect it to continue to do until this value destruction slows down or stops. EHTH management is, in our view, running a massive stock promotion.” (Emphases added.) 5. On this news, eHealth’s stock price fell $12.82 per share, or approximately 12%, to close at $103.20 per share on April 8, 2020. 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- 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)). The Company’s principal executive offices are located in this Judicial District and the Company conducts substantial business here. 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 U.S. mail, interstate telephone communications, and the facilities of a national securities exchange. PARTIES 11. Plaintiff, as set forth in the attached Certification, acquired eHealth securities at artificially inflated prices during the Class Period and was damaged upon the revelation of the alleged 12. Defendant eHealth is incorporated under the laws of Delaware, with its principal place of business at 2625 Augustine Drive, Second Floor, Santa Clara, CA 95054. Its common stock trades on the NASDAQ stock exchange under the symbol “EHTH”. 13. Defendant Scott N. Flanders (“Flanders”) has served at all relevant times as the Chief Executive Officer of eHealth and as a director of eHealth. 14. Defendant Derek N. Yung (“Yung”) has served as the Chief Financial Officer (“CFO”) of eHealth since June 2018. 15. Defendant David K. Francis (“Francis”) is the current Chief Operating Officer of eHealth and previously served as the Company’s CFO. 16. Defendants Flanders, Yung and Francis are sometimes referred to herein collectively as the “Individual Defendants.” 17. The Individual Defendants possessed the power and authority to control the contents of eHealth’s SEC filings, press releases, and other market communications. The Individual Defendants were provided with copies of eHealth’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 eHealth, 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. 18. eHealth and the Individual Defendants are collectively referred to herein as “Defendants.” SUBSTANTIVE ALLEGATIONS False and Misleading Statements Issued During the Class Period 19. The Class Period begins on March 19, 2018, when eHealth issued its 2017 Annual Report on Form 10-K with the SEC (the “2017 10-K”). The 2017 10-K stated, in relevant part: The seasonality of our commission revenue will materially change in the first quarter of 2018 as a result of our adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), as discussed in Note 1-Summary of Business and Significant Accounting Policies in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K. Since a significant portion of our marketing and advertising expenses consists of expenses incurred as a result of payments owed to our marketing partners in connection with health insurance applications submitted on our ecommerce platforms and Medicare-related leads referred to us by our marketing partners and other forms of marketing, our marketing expenses are influenced by seasonal submitted application patterns. For example, due to CMS changing the annual open enrollment period for individual and family health insurance to run from November 1, 2017 through December 15, 2017 for coverage effective in 2018, marketing and advertising expenses were highest during the fourth quarter of 2017. During the first through third quarters of 2017, marketing and advertising expenses were lower, consistent with the lower submitted applications compared to the fourth quarter of 2017. We expect these seasonal trends in marketing and advertising expenses to continue in 2018. In preparation for the Medicare annual enrollment period during 2015, 2016 and 2017, and to a lesser extent the open enrollment period for individual and family health insurance plans during the same periods, we began ramping up our customer care center staff during our second and third quarters to handle the anticipated increased volume of health insurance transactions. In the first quarters of 2016 and 2017, we retained substantially all of our Medicare sales and enrollment personnel to handle the anticipated increased volume of Medicare-related applications outside of the open enrollment period. We expect these seasonal trends to continue in 2018. 20. Individual Defendants Flanders and Francis signed certifications pursuant to the Sarbanes- Oxley Act of 2002 (“SOX”), which were appended to the 2017 10-K as exhibits. These certifications attested that “[t]he information contained in the [2017 10-K] fairly presents, in all material respects, the financial condition and results of operations of eHealth, Inc.” 21. On May 9, 2018, eHealth issued its quarterly report for the first quarter of 2018 on Form those above from the 2017 10-K. 22. Individual Defendants Flanders and Francis signed certifications pursuant to SOX, which were appended to the 1Q 18 10-Q as exhibits. These certifications attested that “[t]he information contained in the [1Q 18 10-Q] fairly presents, in all material respects, the financial condition and results of operations of eHealth, Inc.” 23. On August 7, 2018, eHealth issued its quarterly report for the second quarter of 2018 on Form 10-Q with the SEC (the “2Q 18 10-Q”). The 2Q 18 10-Q contained statements substantively similar to those above in the 2017 10-K and 1Q 18 10-Q. 24. Individual Defendants Flanders and Francis signed certifications pursuant to SOX, which were appended to the 2Q 18 10-Q as exhibits. These certifications attested that “[t]he information contained in the [2Q 18 10-Q] fairly presents, in all material respects, the financial condition and results of operations of eHealth, Inc.” 25. On November 6, 2018, eHealth issued its quarterly report for the third quarter of 2018 on Form 10-Q with the SEC (the “3Q 18 10-Q”). The 3Q 18 10-Q contained statements substantively similar to those above in the 2017 10-K, 1Q 18 10-Q, and 2Q 18 10-Q. 26. Individual Defendants Flanders and Francis signed certifications pursuant to SOX, which were appended to the 3Q 18 10-Q as exhibits. These certifications attested that “[t]he information contained in the [3Q 18 10-Q] fairly presents, in all material respects, the financial condition and results of operations of eHealth, Inc.” 27. On January 22, 2019, eHealth issued a press release on Form 8-K with the SEC in which it announced preliminary financial results for the fourth quarter and full year of 2018, as well as issued guidance for 2019. In this press release, the Company lauded its “operational achievements and financial results for the fourth quarter and the full year 2018,” with Defendant Flanders stating that eHealth’s proposition for this important market and has allowed us to exceed our revenue and EBITDA expectations for 2018. We expect to maintain this momentum as reflected in our 2019 annual guidance.” 28. In this same press release, the Company further stated: 2019 Guidance The company is providing the following guidance for the full year ending December 31, 2019 based on information available as of January 22, 2019. These expectations are forward-looking statements, and eHealth assumes no obligation to update these statements. Actual results may be materially different and are affected by the risk factors and uncertainties identified in this release and in eHealth’s annual and quarterly filings with the Securities and Exchange Commission: • Total revenue is expected to be in the range of $290 million to $310 million. Revenue from the Medicare segment is expected to be in the range of $256 million to $272 million. • GAAP net income is expected to be in the range of $16.3 million to $21.3 million. • Adjusted EBITDA[] is expected to be in the range of $45 million to $50 million 29. On February 21, 2019, eHealth filed another press release on Form 8-K with the SEC, announcing its official fourth quarter and full year 2018 financial results. In this release, which confirmed the preliminary results provided in the January 22, 2019 press release, Defendant Flanders stated: 2018 was a defining year for eHealth in validating our vision and growth strategy for the Medicare market. We delivered the strongest Medicare Annual Enrollment Period in the company’s history, achieved a number of important executional milestones and reported financial results which significantly exceeded our expectations. I am proud of these accomplishments. 30. On March 14, 2019, eHealth issued its 2018 Annual Report on Form 10-K with the SEC (the “2018 10-K”). In the 2018 10-K, Defendants stated: On January 22, 2018, we completed our acquisition of Wealth, Health and Life Advisors, LLC, more commonly known as GoMedigap, a technology-enabled provider of Medicare Supplement enrollment services. GoMedigap has built a leading consumer acquisition and engagement platform focused on meeting the Medicare Supplement insurance needs of its individual customers with a technology-enabled, consumer-centric approach that aligns with our mission and operations. This strategic acquisition significantly enhanced our growing presence in the Medicare Supplement market, put us in a stronger position with carriers and strategic partners and has helped us to us to accelerate our projected Medicare plan enrollment growth. * * * Increase Online Enrollment to Improve Margins and Enhance Operating Leverage We view our consumer engagement platform as unique in the Medicare market and as attractive to the growing number of Medicare beneficiaries who prefer to research, compare and purchase health insurance online. The percentage of members who submit applications for Medicare Advantage and Medicare Supplement products online through our platform has substantially increased from 10% in 2017 to 16% in 2018. Applications submitted online include applications submitted with no assistance or some assistance from call center agents prior to the final application submission. We are able to scale growth more rapidly and at an incrementally lower cost basis though our online platform, which significantly reduces our reliance on and financial and managerial resources associated with our contact center operations. We have successfully reduced our variable marketing cost per approved Medicare member year-over-year by 12% and 9% for the years ended December 31, 2018 and 2017, respectively. Expand Our Strategic Relationships The value of our consumer engagement and enrollment solution platform allows us to work closely with strategic partners in the health care market to leverage their relationships with consumers. In 2018, we had strategic relationships with major retail pharmacies in the United States, with leading hospital systems in the United States and with select financial and affinity marketing organizations to expand the availability of our platform to more consumers. Through greater data integration, co-branding and further investments to improve the customer experience with our platform, we believe that we can create significant value for each of our partners and further expand each of our partner relationships. Selectively Grow our Consumer Engagement Platform Outside of the Medicare Market Our current focus is to operate our individual and family plan business profitably and grow the small business portion of our business. We believe that our engagement, education and enrollment platform provides high-value solutions for consumers in these markets. To capitalize on our small business opportunity, we established a dedicated small business unit in 2016. Seasonality The majority of our commissions revenue is recognized in the fourth quarter of each calendar year as a result of our adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASC 606), which we adopted using the full retrospective transition method on January 1, 2018 and which is further discussed in Note 1-Summary of Business and Significant Accounting Policies in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K. We have historically sold a significant portion of the Medicare plans that we sell during the year in the fourth quarter during the Medicare annual enrollment period, when Medicare-eligible individuals are permitted to change their Medicare Advantage and Medicare Part D prescription drug coverage for the following year. During 2018, 2017 and 2016, 61%, 52% and 49%, respectively, of our Medicare plan-related applications were submitted during the fourth quarter. As a result, we generate a significant portion of our commission revenues related to new Medicare plan-related enrollments in the fourth quarter. The annual open enrollment period for individual and family health insurance also takes place in the fourth quarter of the calendar year, resulting in seasonality of individual and family plan submitted applications volume. During 2018, 2017 and 2016, 64%, 52% and 33%, respectively, of our individual and family plan-related applications were submitted during the fourth quarter. As a result, we generate a significant portion of our commission revenues related to individual and family plan-related enrollments in the fourth quarter. Our marketing and advertising expenses are typically lower in each of our first through third quarters compared to the fourth quarter. We incur a significant portion of our marketing and advertising expenses in the fourth quarter as a result of the Medicare annual enrollment period and the open enrollment period under the Affordable Care Act. Our marketing and advertising increases in the fourth quarter as a result of increased amounts owed to our marketing partners in connection with lead referral arrangements as well as an increase in the number of health insurance applications submitted on our ecommerce platforms referred to us by our marketing partners. We also typically incur an increase in other marketing and advertising related expenses in the fourth quarter. We expect this seasonal trend in marketing and advertising expenses to continue in 2019. In preparation for the Medicare annual enrollment period during 2018, 2017 and 2016, and to a lesser extent the open enrollment period for individual and family health insurance plans during the same periods, we began ramping up our customer care center staff during the third and fourth quarters to handle the anticipated increased volume of health insurance transactions, which resulted in higher customer care and enrollment expenses in the third and fourth quarters. We expect this seasonal trend in customer care and enrollment expenses to continue in 2019. * * * We utilize a practical expedient to estimate commission revenue for each insurance product by applying the use of a portfolio approach to group approved members by the effective month of the relevant policy (referred to as a “cohort”). This allows us to estimate the commissions we expect to collect for each approved member cohort by evaluating various factors, including but not limited to, contracted commission rates, carrier mix and expected member churn. 31. Individual Defendants Flanders and Yung signed certifications pursuant to SOX, which were appended to the 2018 10-K as exhibits. These certifications attested that “[t]he information of operations of eHealth, Inc.” 32. On April 25, 2019, eHealth issued a press release on Form 8-K with the SEC announcing its first quarter 2019 financial results. In this release, Defendant Flanders offered the following quote: We entered 2019 with great momentum, setting the stage for another year of strong execution and growth. Our first quarter financial results were driven by strong performance of our Medicare business which exceeded our expectations, demonstrating both our unique value proposition for health care consumers and our ability to drive those consumers to our market-leading engagement and enrollment platform at scale. We continue to see significant potential to scale customer acquisition in the Medicare market while maintaining attractive costs and achieving operating leverage with our fixed costs. Based on our first quarter outperformance and our current investment plans for the year, we are increasing our 2019 annual revenue and adjusted EBITDA guidance. At the mid-point of our revised annual guidance we now expect to generate revenue growth of approximately 29% and adjusted EBITDA growth of over 70%. 33. The Company also increased its 2019 guidance in this press release, noting that: Total revenue is expected to be in the range of $315 million to $335 million, compared to previous guidance of $290 million to $310 million. Revenue from the Medicare segment is expected to be in the range of $281 million to $297 million, compared to previous guidance of $256 million to $272 million. Revenue from the Individual, Family and Small Business segment is expected to be in the range of $34 million to $38 million, consistent with previous guidance. 34. On May 7, 2019, eHealth released its quarterly report for the first quarter of 2019 on Form 10-Q with the SEC (the “1Q 19 10-Q”). In the 1Q 19 10-Q, Defendants stated: Use of Estimates—The preparation of condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates, including those related to, but not limited to, the useful lives of intangible assets, fair value of investments, recoverability of intangible assets, the commissions we expect to collect for each approved member cohort, valuation allowance for deferred income taxes, provision for income taxes and the assumptions used in determining stock-based compensation. We base our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable. Actual results may differ from these estimates. * * * We utilize a practical expedient to estimate commission revenue for each insurance product by applying the use of a portfolio approach to group approved members by the effective month of the relevant policy (referred to as a “cohort”). This allows us to estimate the commissions we expect to collect for each approved member cohort by evaluating various factors, including but not limited to, contracted commission rates, carrier mix and expected member churn. * * * The constrained LTV of commissions per approved member for Medicare Advantage increased 8% in the three months ended March 31, 2019 compared to the three months ended March 31, 2018 primarily due to improved member retention and commission rate increases. The constrained LTV of commissions per Medicare Supplement approved member and constrained LTV of commissions per Medicare Part D approved member decreased 3% and 4%, respectively, in the three months ended March 31, 2019 compared to the three months ended March 31, 2018 primarily as a result of an increase in member churn. The constrained LTV of commissions per short-term approved member increased 9% in the three months ended March 31, 2019 compared to the three months ended March 31, 2018 primarily as a result of selling higher priced plans and an increase in average duration. 35. Individual Defendants Flanders and Yung signed certifications pursuant to SOX, which were appended to the 1Q 19 10Q as exhibits. These certifications attested that “[t]he information contained in the [1Q 19 10-Q] fairly presents, in all material respects, the financial condition and results of operations of eHealth, Inc.” 36. On July 25, 2019, eHealth issued a press release on Form 8-K with the SEC announcing its quarterly financial results for the second quarter of 2019. Defendant Flanders offered the following We delivered another strong quarter once again exceeding our expectations and building momentum in our Medicare business that has continued to scale rapidly accompanied by EBITDA margin expansion. Approved Medicare members grew 78% year-over-year, driving a 105% increase in Medicare revenue year-over-year and a significant increase in Medicare segment profit. Based on our performance to-date, access to expanded telesales capacity and continued progress in gaining greater effectiveness across our operations, we are increasing our 2019 revenue and Adjusted EBITDA guidance for the second time this year. 37. On August 8, 2019, eHealth issued its quarterly report for the second quarter of 2019 on Form 10-Q with the SEC (the “2Q 19 10-Q”). The 2Q 19 10-Q contained statements substantively similar The constrained LTV per approved member represents commissions estimated to be collected over the estimated life of an approved member’s policy after applying constraints in accordance with our revenue recognition policy. The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, expected policy churn and applied constraints. These factors may result in varying values from period to period. We evaluate constrained LTVs on a quarterly basis, and as part of that process, we apply an estimated future churn factor that is based on observed historical results for that relevant product. For additional information on constraints, see Note 1— Summary of Business and Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q. For small business, the constrained LTV represents the estimated commissions we expect to collect on each member covered by the policy over the following twelve months. The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, expected policy churn and applied constraints. These factors may result in varying values from period to period. The constrained LTV of commissions per approved member for Medicare Advantage plans increased 15% in the three months ended June 30, 2019 compared to the three months ended June 30, 2018 primarily due to improved member retention on some of our member cohorts, favorable product mix and commission rate increases. When comparing the three months ended June 30, 2019 to the three months ended June 30, 2018, the constrained LTV of commissions per Medicare Supplement approved member decreased 6% primarily as a result of an increase in member churn, and the constrained LTV of commissions per Medicare Part D approved member decreased 12% primarily due to carrier mix. We experienced a decreased member retention rate in the Medicare Advantage members that we enrolled during the Medicare annual enrollment period in the fourth quarter of 2018. We believe the reintroduction of the Medicare open enrollment period during the first quarter of 2019 contributed to the decreased retention rate since Medicare Advantage members that we enrolled during the annual enrollment period in the fourth quarter of 2018 were able to enroll in another Medicare Advantage plan or disenroll from their Medicare Advantage plan and return to original Medicare during the Medicare open enrollment period. While the net impact of the Medicare open enrollment period was positive to our Medicare business, we expect the constrained LTVs for Medicare Advantage plans to decrease in the fourth quarter of 2019 compared to the fourth quarter of 2018, as we expect lower retention rates for Medicare Advantage members that we enroll during the fourth quarter going forward. The constrained LTV of commissions per qualified health plans and non-qualified health plans increased 60% and 34%, in the three months ended June 30, 2019 compared with the three months ended June 30, 2018 mostly due to improved member churn. The constrained LTV of commissions per short-term approved member increased 67% in the three months ended June 30, 2019 compared to the three months ended June 30, 2018 primarily as a result of selling higher priced plans and an increase in average duration. were appended to the 2Q 19 10Q as exhibits. These certifications attested that “[t]he information contained in the [2Q 19 10-Q] fairly presents, in all material respects, the financial condition and results of operations of eHealth, Inc.” 39. On October 24, 2019, the Company issued a press release on Form 8-K with the SEC announcing its quarterly financial results for the third quarter of 2019. In this release, eHealth affirmed its 2019 guidance, and Defendant Flanders offered the following quote: Strong momentum in our business continued with another quarter of meaningful outperformance against our expectations. Our third quarter results reflect strong revenue and enrollment growth in our Medicare and Individual & Family Plan businesses and a significant investment in our telesales capacity ahead of the Medicare Annual Enrollment Period (AEP). We have entered this AEP from a position of strength, allowing us to recently guide up to the high end of our 2019 revenue and adjusted EBITDA forecast based on the quality and scale of call center resources in place, the acceleration of our online enrollments and strength of consumer demand. 40. On November 8, 2019, eHealth issued its quarterly report for the third quarter of 2019 on Form 10-Q with the SEC (the “3Q 19 10-Q”). The 3Q 19 10-Q contained statements substantively similar to those alleged above from the 1Q 19 10-Q and 2Q 19 10-Q. 41. Individual Defendants Flanders and Yung signed certifications pursuant to SOX, which were appended to the 3Q 19 10Q as exhibits. These certifications attested that “[t]he information contained in the [3Q 19 10-Q] fairly presents, in all material respects, the financial condition and results of operations of eHealth, Inc.” 42. On January 23, 2020, eHealth issued a press release on Form 8-K with the SEC announcing preliminary financial results for the fourth quarter and full year of 2019. In this press release, Defendant Flanders stated: I am proud of our achievements in 2019. After raising our guidance twice in the past year, we significantly exceeded our financial and operating targets driven by consistently strong execution throughout the year. 2019 culminated with an exceptional performance by our team during the fourth quarter Medicare annual enrollment period. Our marketing and business development organizations drove record consumer demand to the eHealth platform allowing us to grow fourth quarter approved Medicare members in excess of 85%,” commented Scott Flanders, chief executive officer of eHealth. “We remain excited about the Medicare market opportunity and significant growth potential ahead of us and are looking forward to sharing our outlook for 2020 as part of our fourth quarter earnings release next month. 43. This press release further stated, in relevant part: Fourth Quarter and Fiscal Year 2019 Preliminary Results Excluding any positive impact from the changes in estimates to residual revenue for Medicare Advantage members approved since our adoption of ASC 606 through the third quarter of 2019, we expect the following fourth quarter and fiscal year 2019 results: • Revenue for the fourth quarter of 2019 is expected to be in the range of $257.5 to $259.5 million with expected fourth quarter revenue from the Medicare segment in the range of $239.0 to $240.5 million. • GAAP net income for the fourth quarter of 2019 is expected to be in the range of $53.0 to $55.0 million. Adjusted EBITDA(a) for the fourth quarter of 2019 is expected to be in the range of $98.5 to $100.5 million. • Revenue for the year ended December 31, 2019 is expected to be in the range of $462.0 to $464.0 million as compared to the company’s guidance of $365.0 to $385.0 million. Revenue from the Medicare segment for the full year 2019 is expected to be in the range of $403.5 to $405.0 million as compared to the company's guidance of $318.0 to $333.0 million. • GAAP net income for the year ended December 31, 2019 is expected to be in the range of $31.0 to $33.0 million as compared to the company’s guidance of $20.9 to $25.9 million. • Adjusted EBITDA[] for the year ended December 31, 2019 is expected to be in the range of $89.0 to $91.0 million as compared to the company’s guidance of $65.0 to $70.0 million. Approved Members The number of approved members for all Medicare products, which includes Medicare Advantage, Medicare Supplement and Medicare Part D Prescription Drug Plans, grew 88% during the fourth quarter of 2019 compared to the fourth quarter of 2018. The number of approved members for Medicare Advantage products grew 100% over the same time period. For the full year 2019, the number of approved members for all Medicare products grew 81% compared to the full year 2018 with approved members for Medicare Advantage products growing 88% over the same time period. The number of approved members for major medical individual and family plan (IFP) products grew 1% during the fourth quarter of 2019 compared to the fourth quarter a year ago. For the full year 2019, the number of approved members for IFP products declined 25% compared to 2018. The decline in approved IFP members reflects weaker than expected enrollment activity in the overall individual and family health insurance market as well as our continuing emphasis on the Medicare business in allocating our marketing resources. 44. On February 20, 2020, eHealth issued a press release on Form 8-K with the SEC announcing its fourth quarter and full year 2019 financial results. This press release stated, in relevant Fourth Quarter 2019 Overview • Revenue for the fourth quarter of 2019 was $301.7 million, a 124% increase compared to $134.9 million for the fourth quarter of 2018. • GAAP net income for the fourth quarter of 2019 was $88.8 million compared to net income of $26.1 million for the fourth quarter of 2018. • Adjusted EBITDA was $142.6 million for the fourth quarter of 2019 compared to $51.9 million for the fourth quarter of 2018. • Fourth quarter 2019 revenue and adjusted EBITDA include the positive impact of $42.3 million in revenue resulting from a change in estimate for expected cash commission collections relating to existing Medicare Advantage plans enrolled in prior to the fourth quarter. • Fourth quarter 2019 approved members for all Medicare products grew 88% compared to the fourth quarter of 2018. * * * Scott Flanders, chief executive officer of eHealth stated, “We ended the year on a strong note, delivering the best annual enrollment period in the company’s history and generating financial results that significantly exceeded our 2019 annual guidance across multiple metrics, including revenue, GAAP net income and adjusted EBITDA. We also significantly increased our Medicare enrollment volumes and the number of major medical Medicare applications submitted online through our platform compared to a year ago - a critical element of our Medicare growth strategy. I would like to emphasize that the high level of enrollment and revenue growth that we achieved in 2019 were accompanied by meaningful adjusted EBITDA and GAAP net income margin expansion compared to 2018. Looking ahead, we anticipate the momentum we have built over the past two years to continue into 2020, and we believe we are well-positioned to continue outpacing the overall Medicare market growth as a result of our strong consumer value proposition, the depth of our technology platform and our demand generation expertise.” During the fourth quarter of 2019, eHealth worked with an external corporate valuation consultant to enhance its approach to estimating the lifetime values of plans it sold and to incorporate statistical tools to increase the accuracy of these estimates with an emphasis on improving member retention forecasting. Fourth quarter and full year 2019 financial results reflect the impact of the changes made to enhance eHealth's Medicare Advantage plan lifetime value forecasting model resulting from this project. Specifically, our fourth quarter and full year 2019 revenue each included a positive impact of $50.8 million from the change in estimate for expected cash commission collections relating to outstanding Medicare Advantage plans. Of this amount, $42.3 million is a change in estimate in expected cash commission collections for Medicare Advantage plans since we began selling such products through the third quarter of 2019. 45. On March 2, 2020, the Company issued its 2019 annual report on Form 10-K with the SEC (the “2019 10-K”). The 2019 10-K confirmed the financial results announced in the aforementioned February 20, 2020 press release on Form 8-K. The 2019 10-K stated, in relevant part: Our operating results will be impacted by factors that impact our estimate of the constrained lifetime value (LTV) of commissions per approved member. Effective January 1, 2018, we adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASC 606) using the full retrospective method, which required us to revise our historical financial information by applying the new standard. The adoption had a material impact on our consolidated financial statements. The most significant impact of the standard was on our commission revenue. Since the adoption of ASC 606, we recognize revenue at the time of plan approval by applying the latest estimated constrained LTV for that product. We estimate commission revenue for each product by using a portfolio approach to a group of approved members by plan type and the effective month of the relevant plan, which we refer to as “cohorts”. We estimate the cash commissions we expect to collect for each approved member cohort by evaluating various factors, including but not limited to, commission rates, carrier mix, estimated average plan duration, the regulatory environment, and cancellations of insurance plans offered by health insurance carriers with which we have a relationship. On a quarterly basis, we recompute LTV at a cohort level for all outstanding cohorts, review and monitor changes in the data used to estimate LTV as well as the cash received for each cohort as compared to our original estimates. The fluctuations of cash received for each cohort and LTV can be significant and may or may not be indicative of the need to adjust LTVs for prior period cohorts. Management analyzes these fluctuations and, to the extent we see changes in our estimates of the cash commission collections that we believe are indicative of an increase or decrease to prior period LTVs, we will adjust LTV for the affected cohorts at the time such determination is made. Changes in LTV may result in an increase or a decrease to revenue and a corresponding increase or decrease to commissions receivable, accordingly. We refer the net commission revenue from members approved in prior periods as “adjustment revenue” and our revenue can fluctuate significantly from period to period as a result of adjustment revenue. Adjustment revenue can have a significant favorable or unfavorable impact on our revenue. During the fourth quarter of 2019, we incorporated statistical tools to increase the accuracy of LTV estimates with an emphasis on improving member retention forecasting. As a result, we recognized adjustment revenue of $50.8 million for Medicare Advantage plans during the fourth quarter of 2019, which increased our adjustment revenue for all Medicare products to $55.3 million for the year ended December 31, 2019. As we continue to evaluate our LTV estimation models, we may in the future make further changes based on a number of factors and such changes could result in significant increases or decreases in our revenue. Constrained LTVs are estimates and are based on a number of assumptions, which include, but are not limited to, estimates of the conversion rates of approved members into paying members, forecasted average plan duration and forecasted commission rates we expect to receive per approved member's plan. These assumptions are based on historical trends and require significant judgment by our management in interpreting those trends and in applying the constraints. Changes in our historical trends will result in changes to our constrained LTV estimates in future periods and therefore could adversely affect our revenue and financial results in those future periods. As a result, negative changes in the factors upon which we estimate constrained LTVs, such as reduced conversion of approved members to paying members, increased health insurance plan termination or a reduction in the lifetime commission amounts we expect to receive for selling the plan to a member or other changes could harm our business, operating results and financial condition. In addition, if we ultimately receive commission payments that are less than the amount we estimated when we recognized commission revenue, we would need to write off the remaining commission receivable balance, which would adversely impact our business, operating results, and financial condition. The rate at which approved members become paying members is a significant factor in our estimation of constrained LTVs. For example, during the first open enrollment period under the Affordable Care Act, we experienced a decline in the rate at which members approved for individual and family health insurance turned into paying members, which harmed our operating results. To the extent we experience a similar decline in the rate at which approved members turn into our paying members, our business, operating results, and financial condition would be harmed. The forecasted average plan duration is another important factor in our estimation of constrained LTV. We receive commissions from health insurance carriers for health insurance plans sold through us. When one of these plans is canceled, or if we otherwise do not remain the agent on the policy, we no longer receive the related commission payment. Our forecasted average plan duration and health insurance plan termination rate are calculated based on our historical data by plan type. As a result, our inability to produce accurate forecasted average plan duration may adversely impact our business, operating results and financial condition. Commission rates are also part of the significant factors in our estimation of constrained LTVs. The commission rates we receive are impacted by a variety of factors, including the particular health insurance plans chosen by our members, the carriers offering those plans, our members’ states of residence, the laws and regulations in those jurisdictions, the average premiums of plans purchased through us and health care reform. Our commission revenue per member has in the past decreased, and could in the future decrease, as a result of reductions in contractual commission rates, a change in the mix of carriers whose products we sell during a given period, and increased health insurance plan termination rates, all of which are beyond our control and may occur on short notice. To the extent these and other factors cause our commission revenue per member to decline, our revenue may decline and our business, operating results and financial condition would be harmed. Given that Medicare-related and individual and family health insurance purchasing is concentrated during enrollment periods, we may experience a shift in the mix of Medicare- related and individual and family health insurance products selected by our members over a short period of time. Any reduction in our average commission revenue per member during the enrollment periods caused by such a shift or otherwise would harm our business, operating results and financial condition. 46. Individual Defendants Flanders and Yung signed certifications pursuant to SOX, which were appended to the 2019 10-K as exhibits. These certifications attested that “[t]he information contained in the [2019 10-K] fairly presents, in all material respects, the financial condition and results of operations of eHealth, Inc.” 47. The The statements referenced in ¶¶ 19-46 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) eHealth utilized highly aggressive accounting and modeling assumptions; (ii) eHealth faced a skyrocketing rate of member churn, resulting from the Company’s pursuit of low quality, lossmaking growth; (iii) eHealth relied heavily on direct response television advertising, which attracts an unprofitable, high churn enrollee; and (iv) as a result, Defendants’ public statements were materially false and/or misleading at all relevant times. The Truth Begins to Emerge 48. On April 8, 2020, pre-market, analyst Muddy Waters Research published a report in which it asserted that “EHTH’s highly aggressive accounting masks what we believe is a significantly seem highly aggressive when compared to reality,” that “[a]fter ASC 606 went into effect, member churn immediately skyrocketed,” and that “EHTH is pursuing low quality, lossmaking growth while its LTVs are based on lower churn, pre-growth cohorts.” Furthermore, Muddy Waters concluded that “the key driver of growth since 2018 has been EHTH’s reliance on Direct Response television advertising, which attracts an unprofitable, high churn enrollee. To generate this unprofitable growth, EHTH has been incinerating cash, which we expect it to continue to do until this value destruction slows down or stops. EHTH management is, in our view, running a massive stock promotion.” (Emphasis added.) 49. On this news, eHealth’s stock price fell $12.82 per share, or approximately 12%, to close at $103.20 per share on April 8, 2020. 50. 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 51. 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 other than defendants who acquired eHealth securities publicly traded on NASDAQ during the Class Period, and who were damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers and directors of eHealth and its subsidiaries, members of the Individual Defendants’ immediate families and their legal representatives, heirs, successors or assigns and any entity in which Defendants have or had a controlling interest. 52. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, eHealth securities were actively traded on NASDAQ. While the exact number of Class members is unknown to Plaintiff at this time and can be ascertained only through proposed Class. 53. 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. 54. 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. 55. 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 omitted and/or misrepresented material facts about the business, operations, and prospects of eHealth; • whether the Individual Defendants caused eHealth 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 eHealth 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. 56. 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 to them. There will be no difficulty in the management of this action as a class action. 57. 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; • eHealth 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 • Plaintiff and members of the Class purchased, acquired and/or sold eHealth 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. 58. Based upon the foregoing, Plaintiff and the members of the Class are entitled to a presumption of reliance upon the integrity of the market. 59. 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) 60. Plaintiff repeats and re-alleges each and every allegation contained above as if fully set forth herein. Act, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder by the SEC. 62. 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 eHealth securities; and (iii) cause Plaintiff and other members of the Class to purchase or otherwise acquire eHealth 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. 63. 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 eHealth 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 eHealth’ finances and business prospects. 64. By virtue of their positions at eHealth, 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 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. 65. 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 eHealth, the Individual Defendants had knowledge of the details of eHealth’ internal affairs. 66. 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 eHealth. 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 eHealth’ 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 eHealth securities was artificially inflated throughout the Class Period. In ignorance of the adverse facts concerning eHealth’ business and financial condition which were concealed by Defendants, Plaintiff and the other members of the Class purchased or otherwise acquired eHealth 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. 67. During the Class Period, eHealth 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 eHealth securities at prices artificially 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 eHealth securities was substantially lower than the prices paid by Plaintiff and the other members of the Class. The market price of eHealth securities declined sharply upon public disclosure of the facts alleged herein to the injury of Plaintiff and Class members. 68. 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. 69. 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) 70. Plaintiff repeats and re-alleges each and every allegation contained in the foregoing paragraphs as if fully set forth herein. 71. During the Class Period, the Individual Defendants participated in the operation and management of eHealth, and conducted and participated, directly and indirectly, in the conduct of eHealth’ business affairs. Because of their senior positions, they knew the adverse non-public information about eHealth’ misstatement of income and expenses and false financial statements. 72. 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 eHealth’ financial condition and materially false or misleading. 73. 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 eHealth disseminated in the marketplace during the Class Period concerning eHealth’ results of operations. Throughout the Class Period, the Individual Defendants exercised their power and authority to cause eHealth to engage in the wrongful acts complained of herein. The Individual Defendants therefore, were “controlling persons” of eHealth 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 eHealth securities. 74. Each of the Individual Defendants, therefore, acted as a controlling person of eHealth. By reason of their senior management positions and/or being directors of eHealth, each of the Individual Defendants had the power to direct the actions of, and exercised the same to cause, eHealth to engage in the unlawful acts and conduct complained of herein. Each of the Individual Defendants exercised control over the general operations of eHealth 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. 75. 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 eHealth. PRAYER FOR RELIEF WHEREFORE, Plaintiff prays for relief and judgment 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; 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. JURY TRIAL DEMANDED Plaintiff hereby demands a trial by jury. Dated: April 30, 2020 Respectfully submitted, POMERANTZ LLP /s/ Jennifer Pafiti Jennifer Pafiti (SBN 282790) 1100 Glendon Avenue, 15th Floor Los Angeles, CA 90024 Telephone: (310) 405-7190 [email protected] POMERANTZ LLP Jeremy A. Lieberman J. Alexander Hood II 600 Third Avenue, 20th Floor New York, New York 10016 Telephone: (212) 661-1100 [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 protected] BRONSTEIN, GEWIRTZ & GROSSMAN, LLC Peretz Bronstein 60 East 42nd Street, Suite 4600 New York, NY 10165 Telephone: (212) 697-6484 Facsimile: (212) 697-7296 [email protected] Attorneys for Plaintiff CERTIFICATION PURSUANT TO FEDERAL SECURITIES LAWS 1. I make this declaration pursuant to Section 27(a)(2) of the Securities Act of 1933 (“Securities Act”) and/or Section 21D(a)(2) of the Securities Exchange Act of 1934 (“Exchange Act”) as amended by the Private Securities Litigation Reform Act of 1995. 2. I have reviewed a Complaint against eHealth, Inc. ("eHealth" or the “Company”) and authorize the filing of a comparable complaint on my behalf. 3. I did not purchase or acquire eHealth securities at the direction of plaintiffs counsel, or in order to participate in any private action arising under the Securities Act or Exchange Act. 4. I am willing to serve as a representative party on behalf of a Class of investors who purchased or acquired eHealth securities during the class period, including providing testimony at deposition and trial, if necessary. I understand 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 my transactions in eHealth 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, I have not sought to serve as a representative party on behalf of a class under the federal securities laws. 7. I agree not to accept any payment for serving as a representative party on behalf of the class as set forth in the Complaint, beyond my 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. 8. I declare under penalty of perjury that the foregoing is true and correct. If Representing an Entity, Position at Entity Acquisitions Configurable list (if none enter none) Date Acquired Number of Shares Acquired Price per Share Acquired 03/27//2020 20 136.40 Documents & Message eHealth, Inc. (EHTH) Bertrand, Patrice List of Purchases and Sales Purchase Number of Price Per Date or Sale Shares/Unit Share/Unit 3/27/2020 Purchase 20 $136.4000

securities

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x JOSUE ROMERO, on behalf of himself and all others similarly situated, Plaintiffs, CLASS ACTION COMPLAINT v. AND DEMAND FOR JURY TRIAL MASHBURN, LLC, Defendant. : : : : : : : : : : : : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x INTRODUCTION 1. Plaintiff JOSUE ROMERO, on behalf of himself and others similarly situated, asserts the following claims against Defendant MASHBURN, 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.sidmashburn.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. 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 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, 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 JOSUE ROMERO, at all relevant times, is a resident of Brooklyn, 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 a Georgia Limited Liability Company doing business in New York. 13. Defendant’s 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). NATURE OF ACTION 14. 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. 15. 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. 16. 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. 17. 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. 18. 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 2.1”). 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. 19. 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 20. Defendant is a clothing and accessories manufacturer and retail company, and owns and operates the website, www.sidmashburn.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. 21. Defendant operates and distributes its products throughout the United States, including New York. 22. Defendant offers the commercial website, www.sidmashburn.com, to the public. The website offers features which should allow all consumers to access the goods and services whereby Defendant allows for the delivery of those ordered goods to consumers throughout the United States, including New York State. The goods and services offered by Defendant include, but are not limited to the following: the ability to browse various clothing and accessories for purchase and delivery, make an appointment, obtain defendant’s contact information, and related goods and services available online. 23. 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. 24. 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. 25. During Plaintiff’s visits to the Website, the last occurring in August 2020, 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. 26. 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: 27. 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 cursor moves over the picture. The lack of alt-text on these graphics prevents screen readers from accurately vocalizing a description of the graphics. 28. Empty Links That Contain No Text causing the function or purpose of the link to not be presented to the user. This can introduce confusion for keyboard and screen- reader users; 29. 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 30. 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. 31. 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 company logo acts as a link designed to take the user from wherever they may be within the Defendant's website to the homepage of that site. For this website, the link is not properly labeled and where the link ("logo") will operate properly (taking the user back to the home page), the missing label prevents the user (visually impaired) to interpret the logo/link and in the case of using a screen reader, the screen reader software cannot properly interpret the logo/link effectively hiding the purpose of that link from the user. b. When using a keyboard for navigation, neither the sub-menus, found from the menu options of the Main menu nor the main menu are properly labeled and are ineffective in either communicating what they contain or provide any information to the user so that they are aware of what is occurring on the website. c. The telephone numbers provided throughout the website lacks description and is not easily identified and understood by either the screen reader or the user, visitor of the website. d. Website images lack either direct text or an alternate text that explains the contents of the image so that the screen reader can interpret the text data and provide the description to the user so that he/she may understand the contents of the image and be able to determine what or where they wish to proceed based upon this information. e. The website contains social media links that allows the user to share a product. The links lacks proper description. At the time of the review the alternate text read only “link,”. The screen reader would read “link” with no other description thus barring the user from any understanding as to what to do with the link. Defendant Must Remove Barriers To Its 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. These access barriers on Defendant’s Website have deterred Plaintiff from learning about those various clothing and accessories for purchase and delivery, and enjoying them equal to sighted individuals because: Plaintiff was unable to determine and or purchase items from its Website, among other things. 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 have 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 2.0 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. If the Website was accessible, Plaintiff and similarly situated blind and visually- impaired people could independently view service items, shop for and otherwise research related goods and services available via the Website. 41. 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. 42. 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. 43. 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 44. 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. 45. Plaintiff, on behalf of himself and all others similarly situated, seeks 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 those services, during the relevant statutory period. 46. 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. 47. 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 NYSHRL or 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 NYSHRL or NYCHRL. 48. 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, NYSYRHL or NYCHRL by failing to update or remove access barriers on its Website so either can be independently accessible to the Class. 49. 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. 50. 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. 51. 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. 52. Plaintiff, on behalf of himself and the Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 53. 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). 54. 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. 55. 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). 56. 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). 57. 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). 58. 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. 59. 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 60. 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. 61. 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.” 62. Defendant’s Website and its’ sale of goods to the general public, constitute sales establishments and public accommodations within the definition of N.Y. Exec. Law § 292(9). Defendant’s Website is a service, privilege or advantage of Defendant. 63. Defendant is subject to New York Human Rights Law because it owns and operates its Website. Defendant is a person within the meaning of N.Y. Exec. Law § 292(1). 64. Defendant is violating N.Y. Exec. Law § 296(2)(a) in refusing to update or remove access barriers to its Website, causing its Website to be completely inaccessible to the blind. This inaccessibility denies blind patrons full and equal access to the facilities, services that Defendant makes available to the non-disabled public. 65. 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". 66. 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.” 67. 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. 68. 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 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. 69. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 70. 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 products, services, facilities, privileges, advantages, accommodations and/or opportunities of Defendant’s Website 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. 71. 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. 72. 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. 73. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 74. 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 VIOLATION OF THE NEW YORK STATE CIVIL RIGHTS LAW 75. 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. 76. Plaintiff served notice thereof upon the attorney general as required by N.Y. Civil Rights Law § 41. 77. 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 . . .” 78. 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.” 79. Defendant’s Website is a service, privilege or advantage of Defendant and its Website which offers such goods and services to the general public is required to be equally accessible to all. 80. Defendant is subject to New York Civil Rights Law because it owns and operates their Website, and Defendant is a person within the meaning of N.Y. Civil Law § 40-c(2). 81. Defendant is violating N.Y. Civil Rights Law § 40-c(2) in refusing to update or remove access barriers to its Website, causing its Website and the goods and services integrated with such Website 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. 82. 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 . . .” 83. Under NY 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 ...” 84. Defendant has failed to take any prompt and equitable steps to remedy its discriminatory conduct. These violations are ongoing. 85. Defendant discriminates, and will continue in the future to discriminate against Plaintiff and New York State Sub-Class Members on the basis of disability are being directly or indirectly refused, withheld from, or denied the accommodations, advantages, facilities and privileges thereof in § 40 et seq. and/or its implementing regulations. 86. Plaintiff is entitled to compensatory damages of five hundred dollars per instance, as well as civil penalties and fines under N.Y. Civil Law § 40 et seq. for each and every offense. FOURTH CAUSE OF ACTION VIOLATIONS OF THE NYCHRL 87. 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. 88. 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.” 89. Defendant’s Website is a sales establishment and public accommodations within the definition of N.Y.C. Admin. Code § 8-102(9). 90. 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). 91. 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. 92. 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). 93. 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. 94. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 95. 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. 96. Defendant’s actions were and are in violation of the NYCHRL and therefore Plaintiff invokes his right to injunctive relief to remedy the discrimination. 97. 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. 98. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 99. 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. FIFTH CAUSE OF ACTION DECLARATORY RELIEF 100. 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. 101. 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. 102. 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. 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 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 State 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: Brooklyn, New York September 2, 2020 COHEN & MIZRAHI LLP By: /s/ Joseph H. Mizrahi Joseph H. Mizrahi, Esq. [email protected] 300 Cadman Plaza West, 12th Fl. Brooklyn, New York 11201 Tel: (929) 575-4175 Fax: (929) 575-4195 Attorneys For Plaintiff

civil rights, immigration, family

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consumer fraud

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA FORT LAUDERDALE DIVISION SHANE FLAUM, individually and on behalf of others similarly situated, Plaintiff, CLASS ACTION DOCTOR’S ASSOCIATES, INC., a Florida corporation, doing business as SUBWAY, Defendant. _____________________________________/ CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FAIR AND ACCURATE CREDIT TRANSACTIONS ACT (FACTA) 1. This action arises from Defendant’s violation of the Fair and Accurate Credit Transactions Act (“FACTA”) amendment to the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., as amended (the “FCRA”), which requires Defendant to truncate certain credit card information on receipts. Despite the clear language of the statute, Defendant willfully or knowingly chose not to comply. As such, Plaintiff and certain other consumers who conducted business with Defendant during the time frame relevant to this complaint, each of whom paid for goods using a credit or debit card and were provided with a violative receipt, suffered violations of § 1681c(g). 2. As a result of Defendant’s reckless conduct, Plaintiff and the Class are entitled to an award of statutory damages and other relief as further detailed herein. 1 JURISDICTION AND VENUE 3. This Court has jurisdiction under 15 U.S.C. § 1681p, and 28 U.S.C. §§ 1331 and 1337 because the claims in this action arise under violation of a federal statute. 4. Venue is proper in this district under 28 U.S.C. § 1391 because a substantial part of the events or omissions giving rise to the claims herein occurred in this judicial district. Defendant conducts business in this district and its contacts here are sufficient to subject it to personal jurisdiction. PARTIES 5. Plaintiff Shane Flaum (“Plaintiff”) is a natural person, who resides in Broward County, Florida. 6. Defendant, DOCTOR’S ASSOCIATES, INC. (“Defendant” or “DAI”), is a Florida corporation, which does business under the brand name, SUBWAY®. Defendant’s principal address is 700 S. Royal Poinciana Boulevard, Suite 500, Miami Springs, Florida 33166, and whose registered agent for service of process is in the state of Florida is Corporation Service Company, 1201 Hays Street, Tallahassee, FL 32301. 7. Defendant owns the largest global fast food restaurant franchise with more than 44,000 locations, 27,000 of which are located in the United States.1 8. Defendant derives a royalty fee of 8% of gross sales from each SUBWAY® store operated in the United States.2 9. In 2016, it was reported that DAI’s annual revenues were more than $19 billion dollars.3 1 Source: http://www.forbes.com/companies/subway/ (last accessed June 4, 2016). 2 Source: http://www.franchisedirect.com/directory/subway/ufoc/915/ (last accessed: June 6, 2016) 3 Source: http://www.forbes.com/companies/subway/ (last accessed: June 4, 2016). 2 10. Defendant exercises control over its SUBWAY® franchisees, including but not limited to the type of point of sale (POS) terminal utilized in its many restaurants.4 11. In fact DAI was sued in the District of Connecticut for claims arising from DAI’s alleged involvement in an unlawful tying arrangement whereby purchasers of Subway franchises were required to also purchase certain computerized cash-register, or Point-of-Sale ("POS") systems from an exclusive vendor that DAI owned. See Subsolutions Inc, et al v. Doctor's Associates, et al., No. 98-cv-00470-AHN (D. Conn. Filed Mar. 12, 1998). 12. Upon information and belief, a portion of the profits derived from Defendant’s in store sales is specifically directed to compliance with certain federal privacy laws and securing customer data.5 13. Those customers who make purchases from a SUBWAY® store with a credit or debit card do so with the expectation that Defendant will secure their data, protect their personal information, and comply with federal privacy laws. 4 Source: http://www.computerweekly.com/news/2240088023/Subway-deploys-new-POS- across-30000-outlets (last accessed: June 5, 2016). 5 See generally, http://www.subway.com/en-us/legal/privacystatement-dai#1_Scope_of_This_Privacy_Statement (“Your privacy is very important to DAI. This Privacy Statement discloses how Doctor’s Associates Inc., (“DAI”) collects, protects, uses, and shares Personal Information gathered about you. DAI’s privacy practices are consistent with … All applicable country, national, state, and local Data Protection and Security Laws (some country’s laws require country specific information in a Privacy Statement;” “All reasonable steps are taken to safeguard your Personal Information against loss, unauthorized access, use, modification, disclosure, or any other misuse.”) (last accessed: June 4, 2016). 3 FACTUAL ALLEGATIONS Background of FACTA 14. Identity theft is a serious issue affecting both consumers and businesses. The Federal Trade Commission, received over 490,000 consumer complaints about identity theft, representing a 47 percent increase over the prior year. 15. Congress enacted FACTA to prevent actual harm. See Pub. L. No. 108-159 (December 4, 2003) (“An Act . . . to prevent identity theft . . . and for other purposes.”) 16. “[I]dentity theft is a serious problem, and FACTA is a serious congressional effort to combat it…the less information the receipt contains the less likely is an identity thief who happens to come upon the receipt to be able to figure out the cardholder’s full account information.” Redman v. Radioshack Corp., 768 F.3d 622, 626 (7th Cir. 2014). 17. Upon signing FACTA into law, President Bush also remarked that "Slips of paper that most people throw away should not hold the key to their savings and financial secrets." 39 Weekly Comp. Pres. Doc. 1746, 1757 (Dec. 4, 2003). President Bush added that the government, through FACTA, was "act[ing] to protect individual privacy." Id. 18. One such FACTA provision was specifically designed to thwart identity thieves’ ability to gain sensitive information regarding a consumer’s credit or bank account from a receipt provided to the consumer during a point of sale transaction, which, through any number of ways, could fall into the hands of someone other than the consumer. 19. Codified at 15 U.S.C. § 1681c(g), this provision states the following: 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. 4 (the “Receipt Provision”). 20. By shirking the requirements of a federal privacy statute by not complying with the Receipt Provision, Defendant has caused consumers actual harm, not only because consumers were uniformly burdened with an elevated risk of identity theft, but because a portion of the sale from credit or debit card transaction is intended to protect consumer data, including the masking of credit card or debit card expiration dates as required by both state and federal laws. 21. Defendant also invaded Plaintiff’s privacy by disclosing Plaintiff’s private information to those of Defendant’s employees who handled the receipts, as well as other persons who might find the receipts in the trash or elsewhere. FACTA WAS WIDELY PUBLICIZED 22. After enactment, FACTA provided three years in which to comply with its requirements, mandating full compliance with its provisions no later than December 4, 2006. 23. The requirement was widely publicized among retailers and the FTC. For example, on March 6, 2003, in response to earlier state legislation enacting similar truncation requirements, then-CEO of Visa USA, Carl Pascarella, explained that, “Today, I am proud to announce an additional measure to combat identity theft and protect consumers. Our new receipt truncation policy will soon limit cardholder information on receipts to the last four digits of their accounts. The card’s expiration date will be eliminated from receipts altogether. . . . The first phase of this new policy goes into effect July 1, 2003 for all new terminals. . . . .” 6 Within 24 hours, MasterCard and American Express announced they were imposing similar requirements. 24. Card issuing organizations proceeded to require compliance with FACTA by contract, in 6 Source: http://www.prnewswire.com/news-releases/visa-usa-announces-account-truncation- initiative-to-protect-consumers-from-id-theft-74591737.html (last accessed: June 4, 2016). 5 advance of FACTA’s mandatory compliance date. For example, the publication, “Rules for Visa Merchants,” which is distributed to and binding upon all merchants that accept Visa cards, expressly requires that “only the last four digits of an account number should be printed on the customer’s copy of the receipt” and “the expiration date should not appear at all.”7 25. Because a handful of large retailers did not comply with their contractual obligations with the card companies and the straightforward requirements of FACTA, Congress passed The Credit and Debit Card Receipt Clarification Act of 2007 in order to make technical corrections to the definition of willful noncompliance with respect to violations involving the printing of an expiration date on certain credit and debit card receipts before the date of the enactment of this 26. Importantly, the Clarification Act did not amend FACTA to allow publication of the expiration date of the card number. Instead, it simply provided amnesty for certain past violators up to June 3, 2008. 27. In the interim, Card processing companies continued to alert their merchant clients, including Defendant, of FACTA’s requirements. According to a Visa Best Practice Alert in Some countries already have laws mandating PAN truncation and the suppression of expiration dates on cardholder receipts. For example, the United States Fair and Accurate Credit Transactions Act (FACTA) of 2006 prohibits merchants from printing more than the last five digits of the PAN or the card expiration date on any cardholder receipt. (Please visit http://www.ftc.gov/os/statutes/fcrajump.shtm for more information on the FACTA.) 7 Source: http://www.runtogold.com/images/rules_for_visa_merchants.pdf (last accessed: June 4, 2016). 8 Source: https://www.govtrack.us/congress/bills/110/hr4008/text (last accessed: June 4, 2016). 6 To reinforce its commitment to protecting consumers, merchants, and the overall payment system, Visa is pursuing a global security objective that will enable merchants to eliminate the storage of full PAN and expiration date information from their payment systems when not needed for specific business reasons. To ensure consistency in PAN truncation methods, Visa has developed a list of best practices to be used until any new global rules go into effect. See Visa Alert attached hereto as Exhibit A. 28. According to data from the Federal Trade Commission's 2014 Consumer Sentinel Network report, the Miami-Fort Lauderdale-West Palm Beach ranks number one for identity theft-related consumer complaints, with 316.2 complaints per 100,000 people. That's 50% percent more than Seattle-Tacoma-Bellevue, which ranks a distant second. Also, six of the top twelve metropolitan areas for identity theft are in Florida, according to the report.9 29. So problematic is the crime of identity theft that the three main credit reporting agencies, Experian, Equifax, and Transunion, joined to set-up a free website (<http://www.annualcreditreport.com>) in order to comply with FACTA requirements and to provide the citizens of this country with a means of monitoring their credit reports for possible identity theft. Defendant’s Prior Knowledge of FACTA 30. Most of Defendant’s business peers and competitors readily brought their credit card and debit card receipt printing process into compliance with FACTA by programming their card machines and devices to comply with the truncation requirement. Defendant could have readily done the same. 9 Source: https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data- book-january-december-2014/sentinel-cy2014-1.pdf (last accessed: June 4, 2016). 7 31. Not only was Defendant informed it could not print the expiration date of credit or debit cards, it was contractually prohibited from doing so. Defendant accepts credit cards and debit cards from all major issuers; these companies set forth requirements that merchants, including Defendant, must follow, including FACTA’s redaction and truncation requirements. 32. As noted above, the processing companies have required that credit card or debit card expiration dates not be shown since 2003 and still require it. For example, American Express required: Pursuant to Applicable Law, truncate the Card Number and do not print the Card's Expiration Date on the copies of Charge Records delivered to Card Members. Truncated Card Number digits must be masked with replacement characters such as “x,” “*,” or “#,” and not blank spaces or numbers. See Exhibit B, attached hereto. 33. Similarly, MasterCard required in a section titled Primary Account Number (PAN) truncation and Expiration Date Omission: A Transaction receipt generated by an electronic POI Terminal, whether attended or unattended, must not include the Card expiration date. In addition, a Transaction receipt generated for a Cardholder by an electronic POI Terminal, whether attended or unattended, must reflect only the last four digits of the primary account number (PAN). All preceding digits of the PAN must be replaced with fill characters, such as "X," "* ," or "#," that are neither blank spaces nor numeric characters. See Exhibit C, attached hereto. 34. Despite the plethora of warnings, on April 13, 2007, a federal lawsuit was filed against DAI for failing to omit credit card expiration dates from receipts it created at the point of sale of its products. See, Kennedy v. Subway et al, No. 07-cv-01504-SD (E.D. Pa. Filed Apr. 13, 2007). Apparently, unpersuaded to ensure its retail outlets were in compliance with federal law, 8 Defendant was sued yet again, on at least three other occasions, for FACTA violations. See, Hanlon v. Doctor's Associates, Inc. et al., No. 07-cv-01392-NBF (W.D. Pa. Filed Oct. 15, 2007); Puerto v. Subway #33183, Inc. et al, No. 08-cv-60486 (S.D. Fla. Filed Apr. 3, 2008; Jackson v. Subway #25488, No. 09-cv-03276-MIS (N.D. Ill. Filed May 31, 2009). 35. Now, despite being previously sued for violating FACTA on at least four other occasions, Defendant has once again knowingly and willfully violated the aforesaid federal law by printing receipts displaying the full expiration date, along with the last four digits of its customers’ credit or debit cards. See Redman v. RadioShack Corp., --- F.3d ----, 2014 WL 4654477, *14 (7th Cir. Sept. 19, 2014) (explaining that issue of willfulness in FACTA class action lawsuit was “straightforward” wherein defendant violated a parallel state statute years earlier). Plaintiff’s Factual Allegations 36. On or about June 3, 2016, Plaintiff purchased certain goods from one of Defendant’s restaurants located in Pompano Beach (Broward County), Florida. 37. Plaintiff paid for the subject goods using his personal Visa® debit card at which time he was presented with an electronically printed receipt bearing the full expiration date, along with the last four digits of his card. 38. In addition to bearing the full expiration date along with the last four digits of the account, the receipt identifies whether the subject method of payment is a debit card (as opposed to a credit card). All purchases made with a credit or debit card cause to be printed a receipt which also electronically captures and records the store location, transaction date and time, and name of the cashier. 9 Defendant’s Misdeeds 39. At all times relevant herein, Defendant was acting by and though its agents, servants and/or employees, each of which were acting within the course and scope of their agency or employment, and under the direct supervision and control of the Defendant. 40. At all times relevant herein, the conduct of the Defendant, as well as that of their agents, servants and/or employees, was in willful and reckless disregard for federal law and the rights of the Plaintiff. 41. It is Defendant’s policy and procedure to issue an electronically printed receipt to individuals at the point of sale – i.e., immediately upon receipt of credit card payment. 42. Upon information and belief, the violations at issue arose when Defendant installed thousands of VeriFone® VX820 POS systems in its many retail restaurants across the United 43. Upon information and belief, prior to the nationwide rollout of the VeriFone® VX820 point of sale system, Defendant had a written policy in place requiring the truncation of credit card account numbers and masking of expiration dates; this is evidenced by the fact that prior to the installation of the aforementioned retail system, Defendant was actually truncating credit card account numbers. 44. Upon information and belief, a manual was provided with each VeriFone® VX820 point of sale system which explained that the retailer is able to determine which fields will appear on a 10 printed receipt and further explained that the retailer is able to truncate credit card numbers and mask expiration dates.10 45. The manual also specifically warns of the need to protect certain data elements, like the expiration date: “These data elements must be protected if stored in conjunction with the PAN. This protection should be per PCI DSS requirements for general protection of the cardholder environment. Additionally, other legislation (for example, related to consumer personal data protection, privacy, identity theft, or data security) may require specific protection of this data, or proper disclosure of a company's practices if consumer-related personal data is being collected during the course of business.11 (emphasis added). 46. Upon information and belief, it would take an individual less than thirty seconds to run a test receipt in order to determine whether the Verifone point-of-sale system was in compliance with federal law(s) or Defendant’s own alleged written policy requiring the masking of expiration dates. 47. More so than most companies, Subway was on heightened notice of the risks associated with identity theft. In a scheme dating back at least to 2008, a band of Romanian hackers is alleged to have stolen payment card data from the point-of-sale (POS) systems of hundreds of small businesses, including more than 150 Subway restaurant franchises and at least 50 other small retailers.12 10 Source: http://support.verifone.com/verifone/community/42550/PAYware%20SIM%20Integration%20G uide%202.0.2.4.pdf (last accessed: June 6, 2016). 11 Id. 12 Source: http://arstechnica.com/business/2011/12/how-hackers-gave-subway-a-30-million- lesson-in-point-of-sale-security (last accessed: June 6, 2016). 11 48. Because Defendant prints the full expiration date on the credit card receipt, any person, including an identity thief, can readily discern whether the card is still active and valid, thereby allowing identity thieves to narrow their focus to the more “viable” targets. 49. As explained in carious VeriFone® manuals, the digits appearing on the receipt are not printed accidentally; the equipment and software used to print the receipts and electronically store an image of same must be programmed to display certain information, and likewise, programmed not to display certain information. 50. Notwithstanding the fact that it has extensive knowledge of the requirements of FACTA and the dangers imposed upon consumers through its failure to comply, Defendant continues to issue point of sale receipts, which contain the full expiration date of the credit card or debit card, in direct violation of the Receipt Provision of the FCRA. 51. Notwithstanding the Receipt Provision, Defendant continues to deliberately, willfully, intentionally, and/or recklessly violate FACTA by issuing receipts which do not comply with the 52. Notwithstanding the fact that Defendant had years to comply with FACTA’s requirements and the fact Defendant was previously sued for violating the exact same federal statute, Defendant continues to act in conscious disregard for the rights of others. See Redman v. RadioShack Corp., 768 F.3d 622, 638 (7th Cir. Sept. 19, 2014) (explaining that issue of willfulness in FACTA class action lawsuit was “straightforward” wherein defendant violated a parallel state statute years earlier). 53. To paraphrase the words of Judge Posner in Redman v. RadioShack Corp., Defendant has been engaged “in conduct that creates an unjustifiably high risk of harm that is either known or so obvious that it should be known…” Id. at *2. 12 54. A company subject to the FCRA can be liable for willful violations of the FCRA within the meaning of §1681n if they show a “reckless disregard” for the law. See Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 69 (2007). CLASS ACTION ALLEGATIONS 55. This action is also brought as a Class Action under Fed. R. Civ. P. 23. Plaintiff proposes the following class, defined as follows, subject to modification by the Court as required: (i) All persons in the United States (ii) who, when making payment pursuant to a purchase made at a Subway restaurant (iii) made such payment using a credit or debit card (iv) and were provided with a point of sale receipt (v) which displayed the full expiration date of the credit or debit card (vi) within the two (2) years prior to the filing of the complaint. 56. Plaintiff falls within the class definition and is a member of the class. Excluded from the class is Defendant and any entities in which Defendant has a controlling interest, 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, and claims for personal injury, wrongful death, and/or emotional distress. Certification Under Either Rule 23(b)(2) or (b)(3) is Proper. 57. The members of the class are capable of being described without managerial or administrative problems. The members of the class are readily ascertainable from the information and records in the possession, custody or control of Defendant. 58. Defendant operates thousands of retail stores throughout the United States, accepts credit cards and debit cards at each and, upon information and belief, prints receipts reflective of credit card or debit card transactions. Therefore, it is reasonable to conclude that the class is sufficiently numerous such that individual joinder of all members is impractical. The disposition of the claims in a class action will provide substantial benefit to the parties and the Court in 13 avoiding a multiplicity of identical suits. The Class can be identified through Defendant’s records or Defendant’s agents’ records. 59. There are common questions of law and fact that predominate over any questions affecting only the individual members of the class. The wrongs alleged against Defendant are statutory in nature and common to each and every member of the putative class. 60. While all Class members have experienced actual harm as previously explained herein, this suit seeks only statutory damages and injunctive relief on behalf of the class and it expressly is not intended to request any recovery for personal injury and claims related thereto. Plaintiff reserves the right to expand the class definition to seek recovery on behalf of additional persons as warranted as facts are learned in further investigation and discovery. 61. There is a well-defined community of interest in the questions of law and fact involved affecting the parties to be represented. The questions of law and fact to the class predominate over questions that may affect individual class members, including the following: a. Whether, within the two years prior to the filing of this Complaint, Defendant and/or its agents accepted payment by credit or debit card from any consumer and subsequently gave that consumer a printed receipt upon which contained the full expiration date; b. Whether Defendant’s conduct was willful and reckless; c. Whether Defendant is liable for damages, and the extent of statutory damages for each such violation; and d. Whether Defendant should be enjoined from engaging in such conduct in the future. 14 62. As a person that patronized one of Defendant’s restaurants and received a printed receipt containing the full expiration date of his debit card, Plaintiff is asserting claims that are typical of the proposed class. Plaintiff will fairly and adequately represent and protect the interests of the class in that Plaintiff has no interests antagonistic to any member of the class. 63. The principal question is whether the Defendant violated section 1681c(g) of the FCRA by providing class members with electronically printed receipts in violation of the Receipt Provision. The secondary question is whether Defendant willfully or knowingly provided such electronically printed receipts, despite firsthand knowledge of the unlawful nature of such policy. 64. Plaintiff and the members of the class have all suffered harm as a result of the Defendant’s unlawful and wrongful conduct. Absent a class action, the class, along with countless future patrons of Defendant’s many retail establishments, will continue to face the potential for irreparable harm. In addition, these violations of law would be allowed to proceed without remedy and Defendant will (as it has already shown) continue such illegal conduct. Because of the size of the individual class members’ claims, few class members could afford to seek legal redress for the wrongs complained of herein. 65. Defendant’s defenses are and will be typical of and the same or identical for each of the members of the class and will be based on the same legal and factual theories. There are no unique defenses to any of the class members’ claims. 66. A class action is a superior method for the fair and efficient adjudication of this controversy. Class-wide damages are essential to induce Defendant to comply with federal law. The interest of class members in individually controlling the prosecution of separate claims against Defendant is small. The maximum statutory damages in an individual action for a 15 violation of this statute are minimal. Management of these claims is likely to present significantly fewer difficulties than those presented in many class claims. 67. Defendant has acted on grounds generally applicable to the class, thereby making appropriate final injunctive relief and corresponding declaratory relief with respect to the class as a whole. COUNT I – VIOLATIONS OF 15 U.S.C. § 1681(c)(g) 68. 15 U.S.C. §1681c(g) states 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. 69. This section applies to any “device that electronically prints receipts” (hereafter “Devices”) for point of sale transactions. 15 U.S.C. §1681c(g)(3). 70. Defendant employs the use of said Devices for point of sale transactions at the various locations of Defendant. 71. On or before the date on which this complaint was filed, Plaintiff and members of the class were provided receipt(s) by Defendant that failed to comply with the Receipt Provision. 72. At all times relevant to this action, Defendant was aware, or should have been aware, of both the Receipt Provision as well as the need to comply with said provision. 73. Notwithstanding the three year period to prepare for FACTA and its accompanying provisions, including but not limited to the Receipt Provision; and having knowledge of the Receipt Provision and FACTA as a whole; Defendant knowingly, willfully, intentionally, and/or recklessly violated and continues to violate the FCRA and the Receipt Provision. 16 74. By printing the expiration date of Plaintiff’s credit card number on Plaintiff’s transaction receipt, Defendant caused Plaintiff to suffer a heightened risk of identity theft; exposed Plaintiff’s private information to those of Defendant’s employees who handled the receipt and forced Plaintiff to take action to secure or destroy the receipts. 75. As a result of Defendant’s willful violations of the FCRA, Plaintiff and members of the class continue to be exposed to an elevated risk of identity theft. Defendant is liable to Plaintiff and members of the class pursuant to 15 U.S.C. § 1681n for statutory damages, punitive damages, attorney’s fees and costs. WHEREFORE, Plaintiff Shane Flaum respectfully requests that this Court enter judgment in his favor and the class, and against Defendant for: a. An Order granting certification of the Class; b. Statutory damages; c. Punitive damages; d. Injunctive relief; e. Attorneys’ fees, litigation expenses and costs of suit; and f. Such other and further relief as the Court deems proper under the circumstances. JURY DEMAND Plaintiff demands a trial by jury on all counts. Dated: June 6, 2016 Respectfully submitted, By: /s/ Bret L. Lusskin, Esq. Bret L. Lusskin, Jr., Esq. Florida Bar No. 28069 BRET LUSSKIN, P.A. 20803 Biscayne Blvd., Ste. 302 Aventura, FL 33180 17 Telephone: (954) 454-5841 Facsimile: (954) 454-5844 [email protected] By: /s/ Scott D. Owens, Esq. Scott D. Owens, Esq. Florida Bar No. 0597651 SCOTT D. OWENS, P.A. 3800 S. Ocean Dr., Ste. 235 Hollywood, FL 33019 Telephone: (954) 589-0588 Facsimile: (954) 337-0666 [email protected] 18

consumer fraud

5bRZC4cBD5gMZwczdAF3

THE ROSEN LAW FIRM, P.A. Laurence Rosen, Esq. 609 W. South Orange Avenue, Suite 2P South Orange, NJ 07079 Tel: (973) 313-1887 Fax: (973) 833-0399 Email: [email protected] Counsel for Plaintiff Case No. CLASS ACTION COMPLAINT FOR VIOLATIONS OF FEDERAL SECURITIES LAWS JURY TRIAL DEMANDED UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY JAMES CARMACK, Individually and on Behalf of all Others Similarly Situated, Plaintiff, v. AMAYA INC., DAVID BAAZOV, AND DANIEL SEBAG, Defendants. Plaintiff James Carmack (“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 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 Amaya Inc. (“Amaya” 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 (defined below) who purchased or otherwise acquired Amaya securities between June 8, 2015 and March 22, 2016, both dates inclusive (the “Class Period”). Plaintiff seeks to recover compensable 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 officers and/or directors. JURISDICTION AND VENUE 2. 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). 3. This Court has jurisdiction over the subject matter of this action under 28 U.S.C. §1331 and §27 of the Exchange Act. 4. Venue is proper in this District pursuant to §27 of the Exchange Act (15 U.S.C. §78aa) and 28 U.S.C. §1391(b) as Defendants conduct business and operate within 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 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 6. Plaintiff, as set forth in the accompanying Certification, purchased Amaya securities at artificially inflated prices during the Class Period and was damaged upon the revelation of the alleged corrective disclosures. 7. Defendant Amaya provides technology-based products and services in the global gaming and interactive entertainment industries. Amaya’s consumer technology business currently offers online and mobile real- and play-money poker and other online and mobile products, including casino, sports betting (also known as sportsbook) and daily fantasy sports. The Company is incorporated in Quebec, Canada with principal executive offices located at 7600 Trans Canada Hwy, Pointe-Claire, Quebec, Canada H9R 1C8. Amaya’s securities trade on the NASDAQ under the ticker symbol “AYA.” 8. Defendant David Baazov (“Baazov”) has been the Chief Executive Officer (“CEO”), President, and Chairman of the Board of Directors of Amaya throughout the Class Period. 9. Defendant Daniel Sebag (“Sebag”) has been the Chief Financial Officer (“CFO”), Treasurer, and a director of Amaya since the beginning of the Class Period. 10. Defendants Baazov and Sebag are sometimes referred to herein as the “Individual Defendants.” 11. Defendant Amaya and the Individual Defendants are referred to herein, collectively, as the “Defendants.” 12. Each of the Individual Defendants: a. directly participated in the management of the Company; b. was directly involved in the day-to-day 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 disclosure and procedure 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. Amaya 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 Amaya under respondeat superior and agency principles. SUBSTANTIVE ALLEGATIONS Background 15. On December 11, 2014, the Autorité des marchés financiers (the “AMF”), the securities regulatory authority in the Province of Quebec, launched an investigation into trading activities in Amaya securities surrounding the Company’s $4.9 billion acquisition of Oldford Group, the owner and operator of leading online poker sites PokerStars and Full Tilt, in August 2014. 16. The Oldford Group acquisition turned Amaya into the world’s largest publicly traded online gaming company. 17. On June 8, 2015, Amaya common shares began trading on NASDAQ. 18. On September 30, 2015, Amaya announced that the New Jersey Division of Gaming Enforcement authorized Amaya to operate the PokerStars and Full Tilt brands in New Jersey. Amaya previously entered into an agreement with Resorts Casino Hotel in Atlantic City to provide online poker and casino offerings in New Jersey through the PokerStars and Full Tilt brands. 19. On March 21, 2016, Amaya fully launched PokerStars online poker and casino in New Jersey. Materially False and Misleading Statements 20. On May 26, 2015, the Company filed a Registration Statement on Form 40-F (the “May Registration Statement”) with the SEC as part of listing its common trades on NASDAQ for trading. 21. Attached as exhibit 99.6 to the May Registration Statement was the Management Discussion and Analysis for the year ended December 31, 2014. Included in the Management Discussion and Analysis, was a section entitled, “Disclosure Controls and Procedures and Internal Control Over Financial Reporting,” which stated in relevant part: Disclosure Controls and Procedures The CEO and CFO have designed DC&P, or have caused them to be designed under their supervision, in order to provide reasonable assurance that: • material information relating to the issuer is made known to them by others, particularly during the period in which the annual filings are being prepared; • information required to be disclosed in the annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in the securities legislation. The CEO and CFO have evaluated, or caused to be evaluated under their supervision, the effectiveness of Amaya’s DC&P at the financial year end December 31, 2014. Based on that evaluation, the CEO and CFO concluded that DC&P are effective. (Emphasis added). 22. Attached as exhibits 99.9 and 99.10 to the May Registration Statement were Certifications of Refiled Annual Filings for the year ending December 31, 2014 dated May 1, 2015 and signed by Defendants Baazov and Sebag, respectfully. Both certifications stated in relevant part: No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings. * * * Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52- 109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. * * * Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR. 23. Attached as exhibits 99.13 and 99.14 to the May Registration Statement were Certifications of Interim Filings for the interim period ending March 31, 2015 dated May 14, 2015 and signed by Defendants Baazov and Sebag, respectfully. Both certifications state in relevant part: No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. * * * Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in Regulation 52-109 respecting Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. 24. Attached as exhibits 99.30 and 99.31 to the May Registration Statement were Certifications of Interim Filings for the interim period ending March 31, 2014 dated May 15, 2014 and signed by Defendants Baazov and Sebag, respectfully. Both certifications state in relevant part: No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. * * * Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. 25. Attached as exhibits 99.34 and 99.35 to the May Registration Statement were Certifications of Interim Filings for the interim period ending June 30, 2014 dated August 14, 2014 and signed by Defendants Baazov and Sebag, respectfully. Both certifications state in relevant part: No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. * * * Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. 26. Attached as exhibits 99.38 and 99.39 to the May Registration Statement were Certifications of Interim Filings for the interim period ending September 30, 2014 dated November 14, 2014 and signed by Defendants Baazov and Sebag, respectfully. Both certifications state in relevant part: No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. * * * Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. 27. The Class Period begins on June 8, 2015 when Amaya’s shares began trading on NASDAQ. 28. On November 30, 2015, the Company filed a Registration Statement on Form F-10/A (the “November Registration Statement”) with the SEC. The November Registration Statement incorporated the May Registration Statement by reference and was signed by Defendants Baazov and Sebag. 29. On March 14, 2015, the Company filed its annual report for the fiscal year ended December 31, 2015 on Form 40-F (the “2015 40-F”) with the SEC. The 2015 40-F contained exhibits including Amaya’s Annual Information Form, Auditor Consolidated Financial Statements, and Management’s Discussion and Analysis for the year ended December 31, 2015. The 2015 40-F was signed by Defendant Sebag. The 2015 40-F also contained signed certifications pursuant to the Sarbanes-Oxley Act of 2002 (“SOX”) by Defendants Baazov and Sebag attesting to the adequacy of disclosure controls and procedures and that all fraud was disclosed. 30. Attached as exhibit 99.3 to the 2015 40-F was the Management’s Discussion and Analysis for the year ended December 31, 2015. Included in the Management’s Discussion and Analysis was a section entitled, “Disclosure Controls and Procedures and Internal Control Over Financial Reporting,” which stated in relevant part: Disclosure Controls and Procedures The CEO and CFO have designed DC&P, or have caused them to be designed under their supervision, to provide reasonable assurance that: • material information relating to the Corporation is made known to them by others, particularly during the period in which the annual filings are being prepared; and • information required to be disclosed in the annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in the securities legislation. The CEO and CFO have evaluated, or caused to be evaluated under their supervision, the effectiveness of the Corporation’s DC&P at the financial year end December 31, 2015. Based on that evaluation, the CEO and CFO concluded that the Corporation’s DC&P are effective. (Emphasis added). 31. The statements referenced in ¶¶ 20 — 30 above were materially false and/or misleading because they misrepresented and 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: (1) Defendant Baazov was engaged in illegal insider trading; (2) Amaya had inadequate disclosure controls and procedures; and (3) as a result, Defendants’ statements about Amaya’s business and operations were false and misleading and/or lacked a reasonable basis. The Truth Emerges 32. On March 23, 2016, the AMF issued a press release announcing that it had filed charges against Defendant Baazov, stating in relevant part: Matter of Amaya inc. - AMF files 23 charges against three individuals and three companies MONTRÉAL, March 23, 2016 /CNW Telbec/ - The Autorité des marchés financiers (the “AMF”) has filed penal proceedings consisting of 23 charges against David Baazov , Benjamin Ahdoot , Yoel Altman , Diocles Capital inc, Sababa Consulting inc. and 2374879 Ontario inc. More specifically, David Baazov, president, CEO, board chairman and a significant shareholder of Amaya inc., is facing five charges, in particular for aiding with trades while in possession of privileged information, influencing or attempting to influence the market price of the securities of Amaya inc., and communicating privileged information. Benjamin Ahdoot and Yoel Altman are facing, respectively, four and six charges, in particular for trading while in possession of privileged information and influencing or attempting to influence the market price of the securities of Amaya inc. Diocles Capital inc. is facing five charges of trading while in possession of privileged information and influencing or attempting to influence the market price of the securities of Amaya inc. Sababa Consulting inc. and 2374879 Ontario inc. are facing a total of three charges for trading while in possession of privileged information. Based on the AMF’s investigation, the respondents are alleged in particular to have used, between December 2013 and June 2014, privileged information pertaining to the securities of Amaya inc. for trading purposes. As well, a few of the respondents are alleged to have conspired to commit some of the offences. “We have made suppressing illegal insider trading and market manipulation a top priority, as this type of conduct profoundly affects public confidence and the integrity of our markets,” said AMF President and CEO Louis Morisset. Under the provisions of the Securities Act (Québec), pursuant to which these proceedings are filed, offenders are liable to stiff fines as well as prison terms. The AMF is pursuing its investigation in this matter and may file other charges. The Autorité des marchés financiers (the “AMF”) is the regulatory and oversight body for Québec’s financial sector. (Emphasis added). 33. On this news shares of Amaya fell $3.07 per share or approximately 21.5% from its previous closing price to close at $11.18 per share on March 23, 2016, damaging investors. 34. 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 35. 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 Amaya securities trade on the NASDAQ 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. 36. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Amaya 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 Amaya 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. 37. 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. 38. 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. 39. 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 Amaya; • whether the Individual Defendants caused Amaya to issue false and misleading public statements during the Class Period; • whether Defendants acted knowingly or recklessly in issuing false and misleading public statements; • whether the prices of Amaya 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. 40. 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. 41. 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; • Amaya 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 Amaya 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. 42. Based upon the foregoing, Plaintiff and the members of the Class are entitled to a presumption of reliance upon the integrity of the market. 43. 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 44. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. 45. 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. 46. 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 Amaya securities; and (iii) cause Plaintiff and other members of the Class to purchase or otherwise acquire Amaya 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. 47. 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 Amaya 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 Amaya’s disclosure controls and procedures, business operations, and employee conduct. 48. By virtue of their positions at Amaya, 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. 49. 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 Amaya, the Individual Defendants had knowledge of the details of Amaya’s internal affairs. 50. 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 Amaya. 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 Amaya’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 for Amaya’s securities was artificially inflated throughout the Class Period. In ignorance of the adverse facts concerning Amaya’s business and financial condition which were concealed by Defendants, Plaintiff and the other members of the Class purchased or otherwise acquired Amaya 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 upon the revelation of the alleged corrective disclosures. 51. During the Class Period, Amaya’s 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 Amaya 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 Amaya securities was substantially lower than the prices paid by Plaintiff and the other members of the Class. The market price of Amaya’s securities declined sharply upon public disclosure of the facts alleged herein to the injury of Plaintiff and Class members. 52. 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. 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, 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 Violation of Section 20(a) of The Exchange Act Against The Individual Defendants 54. Plaintiff repeats and realleges each and every allegation contained in the foregoing paragraphs as if fully set forth herein. 55. During the Class Period, the Individual Defendants participated in the operation and management of Amaya, and conducted and participated, directly and indirectly, in the conduct of Amaya’s business affairs. Because of their senior positions, they knew the adverse non-public information regarding Amaya’s business practices. 56. 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 Amaya e’s financial condition and results of operations, and to correct promptly any public statements issued by Amaya which had become materially false or misleading. 57. 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 Amaya disseminated in the marketplace during the Class Period. Throughout the Class Period, the Individual Defendants exercised their power and authority to cause Amaya to engage in the wrongful acts complained of herein. The Individual Defendants therefore, were “controlling persons” of Amaya 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 Amaya securities. 58. Each of the Individual Defendants, therefore, acted as a controlling person of Amaya. By reason of their senior management positions and/or being directors of Amaya, each of the Individual Defendants had the power to direct the actions of, and exercised the same to cause, Amaya to engage in the unlawful acts and conduct complained of herein. Each of the Individual Defendants exercised control over the general operations of Amaya 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. 59. 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 Amaya. 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: April 5, 2016 Respectfully submitted, THE ROSEN LAW FIRM, P.A. By: /s/Laurence Rosen Laurence Rosen, Esq. 609 W. South Orange Avenue, Suite 2P South Orange, NJ 07079 Tel: (973) 313-1887 Fax: (973) 833-0399 Email: [email protected] Counsel for Plaintiff

securities

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Case No. CLASS ACTION COMPLAINT JURY TRIAL DEMANDED POMERANTZ LLP Jennifer Pafiti (SBN 282790) 1100 Glendon Avenue, 15th Floor Los Angeles, California 90024 Telephone: (310) 405-7190 Facsimile: (917) 463-1044 Email: [email protected] Attorney for Plaintiff [Additional Counsel on Signature Page] UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA TERRENCE PETERS, Individually and on Behalf of All Others Similarly Situated, Plaintiff, v. COLONY CREDIT REAL ESTATE, INC., F/K/A/ COLONY NORTHSTAR CREDIT REAL ESTATE, INC., RICHARD B. SALTZMAN, KEVIN P. TRAENKLE, SUJAN S. PATEL, NEALE W. REDINGTON, CATHERINE D. RICE, VERNON B. SCHWARTZ, DARREN J. TANGEN, JOHN E. WESTERFIELD, and WINSTON W. WILSON, Defendants. Plaintiff Terrence Peters (“Plaintiff”), by and through Plaintiff’s 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, Plaintiff’s counsel’s investigation, which includes, without limitation: (a) review and analysis of regulatory filings made by Colony Credit Real Estate, Inc. f/k/a/ Colony NorthStar Credit Real Estate, Inc. (“Colony Credit” 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 Colony Credit; and (c) review of other publicly available information concerning Colony Credit. NATURE OF THE ACTION 1. This is a federal securities class action on behalf of persons and/or entities who purchased or otherwise acquired the common stock of Colony Credit pursuant and/or traceable to the Company’s false and/or misleading Registration Statement and Prospectus (collectively, the “Registration Statement”) issued in connection with the combination of Colony NorthStar, Inc. (“Colony NorthStar”) and NorthStar Real Estate Income Trust, Inc. (“NorthStar I”) and NorthStar Real Estate Income II, Inc. (“NorthStar II”) on or about February 1, 2018 (the “Merger”), seeking to pursue remedies under Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”). investment trust (“REIT”) that purports to manage a diversified portfolio of CRE senior mortgage loans, mezzanine loans, preferred equity, debt securities, and net leased properties predominantly in the U.S. 3. The Company’s common stock was registered with the SEC in connection with the Merger. Following the Merger, Colony Credit’s common stock was listed on the New York Stock Exchange (“NYSE”) without an initial public offering: stockholders of NorthStar I received 0.3532 shares of the Company’s Class A common stock for each share of NorthStar I common stock they owned; and stockholders of NorthStar II received 0.3511 shares of the Company’s Class A common stock for each share of NorthStar II common stock they owned. 4. The Registration Statement was materially false and misleading and omitted to state: (i) that the credit quality of certain of the Company’s assets had deteriorated prior to the Merger and were continuing to deteriorate at the time of the Merger; (ii) that certain of the Company’s loans, including four loans of approximately $261 million related to a New York hotel, were substantially impaired, there was insufficient collateral to secure the loans, and it was unlikely that the loans would be repaid; (iii) that, as a result, the valuation attributed to certain of the Company’s assets was overstated; (iv) that certain of the assets contributed as part of the Merger were of substantially lower value than reflected in the Company’s financial statements and the Registration Statement; (v) that, as a result, and (vi) that, as a result of the foregoing, the positive statements in the Registration Statement about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis. 5. On August 8, 2019, Colony Credit issued a press release to report its second quarter 2019 financial results, in which it reported a $119 million provision for loan losses. 6. On this news, the Company’s share price fell $2.00 per share, or more than 12%, over two consecutive trading sessions to close at $14.05 per share on August 12, 7. On November 8, 2019, the Company announced a portfolio bifurcation of certain assets and disclosed a $127 million provision for loan losses. 8. On this news, the Company’s share price fell $2.50 per share, or nearly 18%, to close at $11.75 per share on November 8, 2019. 9. As of the date of the filing of this complaint, Colony Credit’s shares last closed at $5.40 per share, representing a more than 78% decline from the $25 book value per share valued at the time of the Merger. JURISDICTION AND VENUE 10. The claims asserted herein arise under and pursuant to Sections 11 and 15 of the Securities Act (15 U.S.C. §§ 77k and 77o). 11. This Court has jurisdiction over the subject matter of this action pursuant to 12. Venue is proper in this Judicial District pursuant to Section 22 of the Securities Act, 15 U.S.C. § 77v. Colony Credit is headquartered in this Judicial District, Defendants conduct business in this Judicial District, and a significant portion of Defendants’ activities took place within this Judicial District. 13. 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 14. Plaintiff, as set forth in the attached Certification, acquired Colony Credit common stock in the Merger pursuant to the Registration Statement and has been damaged thereby. 15. Defendant Colony Credit is a Maryland corporation with its principal executive offices located at 515 S. Flower Street, 44th Floor, Los Angeles, California 90071. Colony Credit’s common stock trades in an efficient market on the NYSE under the symbol “CLNC.” 16. Defendant Richard B. Saltzman (“Saltzman”) was, at all relevant times, the Chairman of the Board of Directors of the Company. Saltzman signed or authorized the signing of the Company’s Registration Statement filed with the SEC. Chief Executive Officer and a director of the Company, and signed or authorized the signing of the Company’s Registration Statement filed with the SEC. 18. Defendant Sujan S. Patel (“Patel”) was, at all relevant times, the Chief Financial Officer (“CFO”) of the Company, and signed or authorized the signing of the Company’s Registration Statement filed with the SEC. 19. Defendant Neale W. Redington (“Redington”) was, at all relevant times, the Chief Accounting Officer of the Company, and signed or authorized the signing of the Company’s Registration Statement filed with the SEC. 20. Defendant Catherine D. Rice (“Rice”) was, at all relevant times, a director of the Company, and signed or authorized the signing of the Company’s Registration Statement filed with the SEC. 21. Defendant Vernon B. Schwartz (“Schwartz”) was, at all relevant times, a director of the Company, and signed or authorized the signing of the Company’s Registration Statement filed with the SEC. 22. Defendant Darren J. Tangen (“Tangen”) was, at all relevant times, a director of the Company, and signed or authorized the signing of the Company’s Registration Statement filed with the SEC. director of the Company, and signed or authorized the signing of the Company’s Registration Statement filed with the SEC. 24. Defendant Winston W. Wilson (“Wilson”) was, at all relevant times, a director of the Company, and signed or authorized the signing of the Company’s Registration Statement filed with the SEC. 25. Defendants Saltzman, Traenkle, Patel, Redington, Rice, Schwartz, Tangen, Westerfield, and Wilson are collectively referred to hereinafter as the “Individual Defendants.” 26. Colony Credit and the Individual Defendants are collectively referred to herein as “Defendants.” SUBSTANTIVE ALLEGATIONS Background 27. Colony Credit is a CRE credit REIT that purports to manage a diversified portfolio of CRE senior mortgage loans, mezzanine loans, preferred equity, debt securities, and net leased properties predominantly in the U.S. The Company conducts substantially all of its business through Credit RE Operating Company, LLC (the “OP”), a wholly- owned subsidiary of the Company, and owns 97.7% of the outstanding OP units in the OP. 28. Prior to the Merger, NorthStar I and NorthStar II were REITs with diversified portfolios of CRE debt, select equity and securities investments, predominantly in the U.S. mezzanine loans, and participations in such loans and preferred equity interests. Their real estate equity interests included direct ownership in property and indirect interests through real estate private equity funds. Their CRE securities primarily consisted of commercial mortgage-backed securities. 29. The Merger consisted of a combination of a select portfolio of Colony Capital Operating Company, LLC (“CLNY OP”) assets and liabilities (the “CLNY OP Contributed Entities”); a select portfolio of assets and liabilities of NRF RED REIT Corp. (“RED REIT”), an indirect subsidiary of CLNY OP (the “RED REIT Contributed Entities”); substantially all of the assets and liabilities of NorthStar I; and all of the assets and liabilities of NorthStar II. 30. Specifically, the Merger consisted of the following steps: (i) CLNY OP received approximately 44.4 million shares of the Company’s Class B-3 common stock in exchange for the CLNY OP Contributed Entities, and RED REIT received approximately 3.1 million common membership units in the OP in exchange for the RED REIT Contributed Entities; (ii) NorthStar I merged with and into the Company, with stockholders of NorthStar I (including Colony Capital, Inc. and its affiliates) receiving 0.3532 shares of the Company’s Class A common stock for each share of NorthStar I common stock they owned, for a total of approximately 42.1 million shares of the Company’s Class A common stock; (iii) NorthStar II merged with and into the Company, receiving 0.3511 shares of the Company’s Class A common stock for each share of NorthStar II common stock they owned, for a total of approximately 40.4 million shares of the Company’s Class A common stock; and (iv) Colony Credit contributed to its operating company: (a) the CLNY OP Contributed Entities, (b) the equity interests of NorthStar Real Estate Income Trust Operating Partnership, LP (“NorthStar I OP”), the operating partnership of NorthStar I, and (c) the equity interests of NorthStar Real Estate Income Operating Partnership II, LP (“NorthStar II OP”), the operating partnership of NorthStar II, and in connection with that transaction received approximately 126.9 million OP Units. 31. On February 1, 2018, the Company issued a press release entitled “Colony NorthStar Credit Real Estate, Inc. Lists on New York Stock Exchange with $5.1 Billion in Total Assets.” That press release stated, in relevant part: Colony NorthStar Credit Real Estate, Inc. (NYSE: CLNC) (“Colony NorthStar Credit” or the “Company”) today announced the completion of the combination (the “Combination”) of a select debt and credit real estate portfolio of Colony NorthStar, Inc. (“Colony NorthStar”) with substantially all of the assets and liabilities of NorthStar Real Estate Income Trust, Inc., (“NorthStar I”), and all of the assets and liabilities of NorthStar Real Estate Income II, Inc. (“NorthStar II”). The Combination was originally announced on August 28, 2017, and approved by NorthStar I and NorthStar II stockholders at their respective special meetings held on January 18, 2018. In connection with the closing of the Combination, the Company also today announced the listing of its Class A common stock on the [NYSE]. Trading of the Company’s Class A common stock will officially commence this morning under the ticker symbol “CLNC.” The Company is externally managed by a subsidiary of Colony NorthStar, a NYSE-listed global real estate and investment management firm, with a history of consummating approximately $25 billion of commercial real estate debt and credit asset investments. Colony NorthStar and its affiliates own approximately 37% of the Company’s common equity on a fully diluted basis, evidencing a strong and continuing alignment of interests between Colony NorthStar and Company stockholders. The Company has a diversified portfolio with approximately $5.1 billion[] in total assets and $3.3 billion[] in equity value, making it one of the largest [CRE] credit [REITs] by shareholders’ equity. The Company’s strategy is to originate senior mortgages, mezzanine loans and preferred equity interests, and selectively acquire other CRE debt and credit assets and net leased real estate. * * * The Company has a book value per share of approximately $25[], and the Company anticipates an initial annualized dividend yield of approximately 7% of its book value per share[]. Any dividend will be subject to approval by the Company’s Board of Directors. The Company expects to have immediate access to over $600 million of liquidity (including the $400 million corporate revolver closed concurrently with the Combination) and over $2 billion[] of repurchase facility capacity to continue to execute on its investment strategy and potentially grow its dividend. (Footnotes omitted.) Materially False and Misleading Statements Issued in the Registration Statement 32. On December 5, 2017, Colony Credit filed its final amendment to the Registration Statement with the SEC on Form S-4/A, which forms part of the Registration Statement. On December 6, 2017, the Company filed its prospectus on Form 424B3 with the SEC, which forms part of the Registration Statement. 33. The Registration Statement was declared effective on December 6, 2017. Registration Statement, which was declared effective on February 1, 2018. 35. The Registration Statement was negligently prepared and, as a result, contained untrue statements of material facts or omitted to state other facts necessary to make the statements made not misleading, and was not prepared in accordance with the rules and regulations governing its preparation. 36. Under applicable SEC rules and regulations, the Registration Statement was required to disclose known trends, events or uncertainties that were having, and were reasonably likely to have, an impact on the Company’s continuing operations. 37. Regarding the financial information for NorthStar I, the Registration Statement stated: 38. Similarly, regarding the financial performance of NorthStar II, the Registration Statement provided, in relevant part: 39. Moreover, the Registration Statement provided generic, boilerplate representations regarding risks related to the provision for loan losses, stating, in relevant Provision for loan losses are difficult to estimate, particularly in a challenging economic environment. In a challenging economic environment, we may experience an increase in provisions for loan losses and asset impairment charges, as borrowers may be unable to remain current in payments on loans and declining property values weaken our collateral. Our determination of provision for loan losses requires us to make certain estimates and judgments, which may be difficult to determine, particularly in a challenging economic environment. Our estimates and judgments are based on a number of factors, including projected cash flow from the collateral securing our CRE debt, structure, including the availability of reserves and recourse guarantees, likelihood of repayment in full at the maturity of a loan, potential for refinancing and expected market discount rates for varying property types, all of which remain uncertain and are subjective. Our estimates and judgments may not be correct, particularly during challenging economic environments, and therefore our results of operations and financial condition could be severely impacted. Plainly, the foregoing risk warning was a generic, catch-all provision that was not tailored to Colony Credit’s actual known risks regarding the provision for loan losses. 40. Additionally, with specific respect to assessments of any impairments regarding NorthStar I and NorthStar II, the Registration Statement stated, in relevant part: During the quarterly credit review, or more frequently as necessary, investments are put on highly-monitored status and identified for possible loan loss reserves/asset impairment, as appropriate, based upon several factors, including missed or late contractual payments, significant declines in collateral performance and other data which may indicate a potential issue in our ability to recover our invested capital from an investment. Our Advisor uses an experienced portfolio management and servicing team that monitors these factors on our behalf. * * * Each of our debt investments is secured by CRE collateral and requires customized portfolio management and servicing strategies for dealing with potential credit situations. The complexity of each situation depends on many factors, including the number of properties, the type of property, macro and local market conditions impacting supply/demand, cash flow and the financial condition of our collateral and our borrowers’/tenants’ ability to further support the collateral. Further, many of our investments may be considered transitional in nature because the business plan is to re-position, re-develop or otherwise lease-up the property in order to improve the collateral. At the time of origination or acquisition, the underlying property revenues may not be sufficient to support debt service, lease payments or generate positive net operating income. The business plan may necessitate an interest or lease reserve or other reserves, whether through proceeds from our loans, borrowings, offering proceeds or otherwise, to support debt service or lease payments and capital expenditures during the implementation of the business plan. There may also be a requirement for the borrower, tenant, guarantor or us, to refill these reserves should they become deficient during the applicable period for any reason. As of December 31, 2016, each of our CRE debt investments was performing in accordance with the contractual terms of its governing documents in all material respects. There can be no assurance that our investments will continue to perform in accordance with the contractual terms of the governing documents or underwriting and we may, in the future, record loan loss reserves/asset impairment, as appropriate, if required. (Emphases added.) 41. The statements referenced in ¶¶ 37-40 were materially false and misleading because the Registration Statement was negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading and was not prepared in accordance with the rules and regulations governing its preparation. Specifically, the Registration Statement made false and/or misleading statements and/or failed to disclose that: (i) the credit quality of certain of the Company’s assets had deteriorated prior to the Merger and were continuing to deteriorate at the time of the Merger; (ii) certain of the Company’s loans, including four loans of approximately $261 million related to a New York hotel, were substantially impaired, there was insufficient collateral to secure the loans, and it was unlikely that the loans would be repaid; (iii) as a result, the valuation attributed to certain of the Company’s assets was overstated; (iv) certain of the assets contributed as part of the Merger were of substantially lower value than reflected in the Company’s financial statements and the Registration Statement; (v) as a result, the Company’s financial condition, including its statements in the Registration Statement about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis. The Truth Begins to Emerge 42. On May 15, 2018, the Company filed its quarterly report on Form 10-Q for the period ended March 31, 2018. Therein, Colony Credit disclosed that certain loans had been placed on “nonaccrual status.” Specifically, it stated: In March 2018, the borrower on the Company’s $260.2 million NY hospitality loan failed to make its interest payment. The Company has placed the loan on nonaccrual status and has commenced discussions with the borrower to resolve the matter. No provision for loan loss was recorded during the three months ended March 31, 2018 as the Company believes sufficient collateral value exists to cover the outstanding loan balances. These discussions typically include numerous points of negotiation as the Company and the borrower work towards a settlement or other alternative resolution, which can impact the potential for loan repayment or receipt of collateral. 43. However, Colony Credit assured investors that the asset’s performance was improving to support repayment of the loan. On August 7, 2018, in a conference call with investors regarding its second quarter 2018 financial results, the Company disclosed that: [The] $261 million unlevered first mortgage and mezzanine investment secured by New York City Hotel . . . is now on non-accrual status and negatively impacting CLNC’s quarterly core earnings by approximately $0.03 per share. Ultimately, we believe this asset performance will improve as the New York City hospitality market emerges from recent oversupply issues. Through the first six months of this year, the asset is already seeing positive top and bottom line growth, and 2018 projected NOI [i.e., net operating income] has increased approximately 70% from the beginning of the year. (Emphasis added.) 44. On November 6, 2018, in a press release reporting its third quarter 2018 financial results, Colony Credit reported a $35 million provision for loan losses for the four loans secured by the New York hotel, as “the progress of discussion with [the] borrower . . . led the Company to explore additional options for a potential resolution, including a recapitalization and earlier than expected receipt and sale of collateral.” 45. That same day, the Company held a conference call to discuss the results, and Defendant Patel elaborated: As mentioned on our last call, we are working through the restructuring of four loans secured by a New York City hotel, which is on nonaccrual status and negatively impacting CLNC’s core earnings by approximately $0.03 per share per quarter. We continue to work through this asset resolution. However, during the quarter, discussions with the borrower did not progress as anticipated, which has led us to explore additional options for resolution. We’ve prepared a weighted average probability analysis of potential outcomes, which included a recapitalization and earlier than expected receipt and sale of the collateral. Based on this analysis, we recorded a $35 million provision for loan losses for the four loans secured by this hotel. As New York City hotel room additions are beginning to be absorbed, we continue to be New York City lodging market recovery looking ahead to 2019 and 2020. And the 2018 forecasted NOI for this particular hotel is up approximately 70% from its initial 2018 budget. (Emphases added.) 46. On this news, the Company’s share price fell $1.20 per share, or over 5%, to close at $19.97 per share on November 6, 2018. 47. On February 28, 2019, the Company issued a press release to disclose its fourth quarter and full year 2018 financial results. Therein, Colony Credit disclosed a $77 to the timing and likely range of outcomes achievable in connection with the asset foreclosures and dispositions.” 48. On this news, the Company’s share price fell $0.94 per share, or over 5%, to close at $16.49 per share on March 1, 2019. 49. On March 1, 2019, Colony Credit filed its annual report on Form 10-K for the period ended December 31, 2018. Therein, the Company described the provision for loan losses as follows: During the fourth quarter of 2018, the borrower entered into a listing agreement with a real estate brokerage firm and as a result, we believe sale of the underlying collateral and repayment of the four loans from the sales proceeds is the most likely outcome. As such, we recorded an additional $18.8 million of provision for loan loss on the four NY hospitality loans in 2018 to reflect the estimated proceeds to be received from the borrower following the sale. * * * During the fourth quarter of 2018, two separate borrowers on three of our regional mall loans with unpaid principal balances of $29.9 million, $26.5 million, and $7.0 million, respectively, notified us of the potential loss of anchor tenants. Following this notification, we concluded that foreclosure or sale of the underlying collateral and repayment for each of these loans is the most likely outcome. As such, we recorded a provision for loan loss of $8.0 million, $8.8 million and $7.0 million respectively, to reflect the estimated fair value of the collateral. We have commenced foreclosure proceedings on two of the three loans collateralized by one of the regional malls with unpaid principal balances totaling $36.9 million. We have been and are continuing to sweep all cash from the operations of the two regional malls. second quarter 2019 financial results, in which it reported a $119 million provision for loan losses “related to four separate borrowers.” Specifically, in a related conference call, the CFO stated: So let me provide some specifics about the $129 million in right [sic] down taken during the second quarter. One of the impairments is related to the ongoing resolution efforts of New York City Hospitality loans. This is a key part of our overall portfolio rationalization strategy, as the full loans secured by this asset remain on non-accrual status and therefore are not currently contributing core earnings. We initially impaired this asset in the third quarter of last year, based on market pricing estimates provided to the borrower by its broker. The borrower launched the sales process for the property earlier this year, which is adversely impacted by deteriorating hotel market conditions throughout New York City in the second quarter. This resulted in lower bids from potential buyers than originally anticipated. And therefore, during the second quarter, we impaired the asset to a revised estimate of current value. The borrower is monitoring market conditions, and we will share a progress with you in the near future. In addition, during the second quarter, we impaired a portfolio of owned real estate in preparation for disposition we intend to execute an accelerated timeframe. One of the assets from that portfolio is on the contracts and expect it to close during the third quarter. And lastly, additional impairments were also taken related to three separate borrowers whose loans secured by reasonable retail assets, deteriorated in credit quality during the quarter. These retail assets were a high priority focuses of QMC and are included in our portfolio rationalization strategy. 51. The same day, after the market closed, Colony Credit filed its quarterly report on Form 10-Q for the period ended June 30, 2019, in which it stated, regarding the During the three months ended June 30, 2019, the Company revised its estimated recovery and recorded an additional $104.3 million of provision for loan loss. The additional provision is based on significant deterioration in the NY hospitality market and feedback from the sales process and reflects the estimated value to be recovered from the borrower following a potential sale. * * * In June 2019, the Company completed foreclosure proceedings on two of the three loans secured by Northeast Regional Mall A with unpaid principal balances totaling $36.9 million. See Note 7, “Real estate, net and Real Estate Held for Sale” for further information. During the three months ended June 30, 2019, the Company recognized an additional $3.9 million provision for loan loss on Northeast Regional Mall B to reflect the estimated fair value of the collateral. The additional provision is based on current and prospective leasing activity. The Company has been and is continuing to sweep all cash. Also during the three months ended June 30, 2019, the Company separately recognized a $2.0 million provision for loan loss on two loans secured by one regional mall (“West Regional Mall”) to reflect the estimated fair value of the collateral. The Company has been and is continuing to sweep all cash. 52. On this news, the Company’s share price fell $2.00, or more than 12%, over two consecutive trading sessions to close at $14.05 per share on August 12, 2019. 53. On November 8, 2019, the Company announced a portfolio bifurcation of certain assets and disclosed a $127 million provision for loan losses. Specifically, during third quarter 2019, the Company recorded a $50.0 million provision for loan loss related to the NY hospitality loan “based on significant deterioration in the NY hospitality market, feedback from the sales process and the estimated value to be recovered from the borrower the regional malls, stating in the quarterly report filed the same day:  During the three and nine months ended September 30, 2019, the Company recognized additional provisions for loan loss of $6.5 million and $10.5 million, respectively, on Northeast Regional Mall B. The additional provisions are based on current and prospective leasing activity to reflect the estimated fair value of the collateral. Interest payments are current and the Company has been and is continuing to sweep all cash.  Also, during three and nine months ended September 30, 2019, the Company separately recognized provisions for loan loss of $16.5 million and $18.5 million, respectively, on two loans secured by one regional mall (“West Regional Mall”) to reflect the estimated fair value of the collateral. Interest payments are current and the Company has been and is continuing to sweep all cash.  Furthermore, during the three months ended September 30, 2019, the Company recognized a $37.3 million provision for loan loss on four loans to three separate borrowers (“South Regional Mall A”, “South Regional Mall B”, and “Midwest Regional Mall”) to reflect the estimated fair value of the collateral. Interest payments for South Regional Mall A, South Regional Mall B and Midwest Regional Mall are all current. The Company has been and is continuing to sweep all cash related to South Regional Mall A and South Regional Mall B. 54. On this news, the Company’s share price fell $2.50 per share, or nearly 18%, to close at $11.75 per share on November 8, 2019. 55. On February 18, 2020, The Wall Street Journal published an article identifying the troubled NY hospitality loan as being secured by Row Hotel near Times Square, which could “sell for as little as $50 million,” following years of declining room rates and increasing construction in the city. The article also stated that lenders had The article, titled “Defaults Are Rising in Sluggish New York City Hotel Market,” stated, in relevant part: New York’s average daily room rate fell to $255.16 last year, according to research firm STR. That is down from $271.15 in 2014 and the lowest figure since at least 2013. A continued construction boom could push these numbers down further: 22,117 new hotel rooms were under construction or in planning as of January, according to SIR. Colony Credit Real Estate Inc. recently hired a brokerage firm to sell the mortgage on the 1,331-room Row Hotel near Times Square at a loss, according to people familiar with the matter. Colony Credit said in a 2018 public filing that the loan package had a principal balance of $260.2 million. The loan could now sell for as little as $50 million, say people familiar with the matter. * * * The debt, which is secured by a long-term lease on the hotel rooms, has been in default since 2018 because income from the rooms isn’t enough to cover debt payments and rising expenses, according to filings with the Securities and Exchange Commission and people familiar with the matter. Several other hotel owners have had similar trouble. In June, a lender filed to foreclose on a hotel in Williamsburg, Brooklyn, over a defaulted $68 million loan, court records show. In December, a group of international lenders filed to foreclose on a Times Square hotel and retail tower once valued at $2.4 billion. Last month, the owner of the Blakely hotel in Midtown Manhattan said he would shut it down, citing stiff competition. And this month, a lender filed to foreclose on the former Hotel Americano, which in December was rebranded as Selina Chelsea. 56. On May 8, 2020, Colony Credit filed its quarterly report on Form 10-Q for the period ended March 31, 2020, in which it disclosed: During the three months ended March 31, 2020 the significant detrimental impact of COVID-19 on the U.S. hospitality industry further contributed to the deterioration of the Company’s four NY hospitality loans and as such the Company recorded an additional provision for loan losses of $36.8 million. On April 22, 2020, the Company completed a discounted payoff of the NY hospitality loans and related investment interests. 57. As of the date of the filing of this complaint, Colony Credit’s shares last closed at $5.40 per share, representing a more than 78% decline from the $25 book value per share valued at the time of the Merger. PLAINTIFF’S CLASS ACTION ALLEGATIONS 58. 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/or entities who purchased or otherwise acquired the common stock of Colony Credit pursuant and/or traceable to the Company’s false and/or misleading Registration Statement issued in connection with the Company’s Merger, and who were damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers and directors of the Company or its related entities, 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. 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. Moreover, record Colony Credit 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. 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. 61. 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. 62. 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 Securities Act was violated by Defendants’ acts as alleged herein; (b) whether the Registration Statement and statements made by Defendants to the investing public in connection with the Company’s Merger omitted and/or misrepresented material facts about the business, operations, and prospects of Colony Credit; and (c) to what extent the members of the Class have sustained damages and the proper measure of damages. 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 (Violations of Section 11 of the Securities Act Against All Defendants) 64. Plaintiff repeats and incorporates each and every allegation contained above as if fully set forth herein, except any allegation of fraud, recklessness or intentional misconduct. 65. This Count is brought pursuant to Section 11 of the Securities Act, 15 U.S.C. § 77k, on behalf of the Class, against all Defendants. 66. This Count does not sound in fraud. Plaintiff does not allege that the Defendants had scienter or fraudulent intent, which are not elements of a Section 11 claim. 67. The Registration Statement for the Merger was inaccurate and misleading, contained untrue statements of material facts, omitted to state other facts necessary to make the statements made not misleading, and omitted to state material facts required to be stated therein. Class for the misstatements and omissions. 69. None of the Defendants named herein made a reasonable investigation or possessed reasonable grounds for the belief that the statements contained in the Registration Statement were true and without omissions of any material facts and were not misleading. 70. By reason of the conduct herein alleged, each Defendant named herein violated, and/or controlled a person who violated, Section 11 of the Securities Act. 71. Plaintiff acquired Colony Credit common stock pursuant and/or traceable to the Registration Statement for the Merger. 72. Plaintiff and the Class have sustained damages. The value of Colony Credit common stock has declined substantially subsequent to and because of Defendants’ violations. 73. At the time of their purchases of Colony Credit common stock, Plaintiff and other members of the Class were without knowledge of the facts concerning the wrongful conduct alleged herein and could not have reasonably discovered those facts prior to the disclosures herein. Less than one year elapsed from the time that Plaintiff discovered or reasonably could have discovered the facts upon which this Complaint is based to the time that Plaintiff commenced this action. Less than three years elapsed between the time that commenced this action. COUNT II (Violations of Section 15 of the Securities Act Against the Individual Defendants) 74. Plaintiff repeats and incorporates each and every allegation contained above as if fully set forth herein, except any allegation of fraud, recklessness or intentional misconduct. 75. This Count is brought pursuant to Section 15 of the Securities Act, 15 U.S.C. § 77o, on behalf of the Class, against the Individual Defendants. 76. The Individual Defendants, by virtue of their offices, directorship and specific acts were, at the time of the wrongs alleged herein and as set forth herein, controlling persons of Colony Credit within the meaning of Section 15 of the Securities Act. The Individual Defendants had the power and influence and exercised the same to cause Colony Credit to engage in the acts described herein. 77. The Individual Defendants’ positions made them privy to and provided them with actual knowledge of the material facts concealed from Plaintiff and the Class. 78. By virtue of the conduct alleged herein, the Individual Defendants are liable for the aforesaid wrongful conduct and are liable to Plaintiff and the Class for damages suffered. WHEREFORE, Plaintiff prays for relief and judgment, as follows: 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; D. Awarding such other and further relief as this Court may deem just and proper. JURY TRIAL DEMANDED Plaintiff hereby demand a trial by jury. Dated: September 10, 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 Facsimile: (917) 463-1044 Email: [email protected] BRONSTEIN, GEWIRTZ & GROSSMAN, LLC Peretz Bronstein 60 East 42nd Street, Suite 4600 New York, New York 10165 Telephone: (212) 697-6484 Facsimile: (212) 697-7296 Email: [email protected] Attorneys for Plaintiff

securities

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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK Index No. 650427/2019 JURY TRIAL DEMANDED MARK LEE, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. UXIN LIMITED, KUN DAI, ZHEN ZENG, RONG LU, JULIAN CHENG, DOU SHEN, HAINAN TAN, MORGAN STANLEY & CO. INTERNATIONAL PLC, GOLDMAN SACHS (ASIA) L.L.C., J.P. MORGAN SECURITIES LLC, CHINA INTERNATIONAL CAPITAL CORPORATION HONG KONG SECURITIES LIMITED, and CHINA RENAISSANCE SECURITIES (HONG KONG) LIMITED, Defendants. Index No. 650509/2019 JURY TRIAL DEMANDED LEI LIANG, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. UXIN LIMITED, KUN DAI, ZHEN ZENG, RONG LU, JULIAN CHENG, DOU SHEN, HAINAN TAN, MORGAN STANLEY & CO. INTERNATIONAL PLC, GOLDMAN SACHS (ASIA) L.L.C., J.P. MORGAN SECURITIES LLC, CHINA INTERNATIONAL CAPITAL CORPORATION HONG KONG SECURITIES LIMITED, and CHINA RENAISSANCE SECURITIES (HONG KONG) LIMITED, Defendants. [continued on next page] Index No. 650604/2019 JURY TRIAL DEMANDED ADAM FRANCHI, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. UXIN LIMITED, KUN DAI, ZHEN ZENG, RONG LU, JULIAN CHENG, DOU SHEN, HAINAN TAN, MORGAN STANLEY & CO. INTERNATIONAL PLC, GOLDMAN SACHS (ASIA) L.L.C., J.P. MORGAN SECURITIES LLC, CHINA INTERNATIONAL CAPITAL CORPORATION HONG KONG SECURITIES LIMITED, and CHINA RENAISSANCE SECURITIES (HONG KONG) LIMITED, Defendants. Index No. 650613/2019 JURY TRIAL DEMANDED RAUL ARAUJO, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. UXIN LIMITED, KUN DAI, ZHEN ZENG, RONG LU, JULIAN CHENG, DOU SHEN, HAINAN TAN, MORGAN STANLEY & CO. INTERNATIONAL PLC, GOLDMAN SACHS (ASIA) L.L.C., J.P. MORGAN SECURITIES LLC, CHINA INTERNATIONAL CAPITAL CORPORATION HONG KONG SECURITIES LIMITED, and CHINA RENAISSANCE SECURITIES (HONG KONG) LIMITED, Defendants. AMENDED COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS Plaintiffs Adam Franchi, Raul Araujo, Lei Liang, and Mark Lee, by and through their undersigned counsel, allege the following upon information and belief, except as to those allegations concerning Plaintiffs, which are alleged upon personal knowledge. Plaintiffs’ information and belief is based upon, inter alia, the investigation conducted by and through Plaintiffs’ attorneys, which included, among other things: (a) review and analysis of regulatory filings made by Uxin Limited (“Uxin” or the “Company”) with the U. S. Securities and Exchange Commission (“SEC”); (b) review and analysis of press releases and media reports issued and disseminated by and about Uxin; and (c) review of other publicly available information concerning Uxin. Counsel’s investigation into the matters alleged herein is continuing, and many relevant facts are known only to, or are exclusively within the custody or control of, the defendants. Plaintiffs believe that substantial additional evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. NATURE OF THE ACTION AND OVERVIEW 1. This is a securities class action, brought on behalf of those persons and/or entities that purchased or otherwise acquired Uxin American depositary shares (“ADSs” or “shares”) pursuant or traceable to the Company’s false and/or misleading Registration Statement and Prospectus (collectively the “Registration Statement”) issued in connection with the Company’s June 27, 2018 initial public offering (“IPO” or the “Offering”), pursuing remedies under Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”) for those who were damaged thereby. For all claims stated herein, Plaintiffs expressly disclaim any allegation that could be construed as alleging fraud or intentional or reckless misconduct. 2. Uxin was founded in 2011 and is based in Beijing, China. 3. Through its subsidiaries, Uxin owns and operates a used car e-commerce platform in China. It owns and operates Uxin Used Car, an application that provides consumers with customized car recommendation, financing, title transfer, delivery, insurance referral, warranty and other related services; and Uxin Auction, an application that helps business buyers to source vehicles through online auctions. The Company facilitates used car transaction services and financing solutions offered by third-party financing partners to buyers for their used car purchases. 4. According to the Company, it operates in two main segments, known as “2C” (selling to Consumers) and “2B” (selling to Businesses), respectively. The 2C business, Uxin Used Car, primarily provides consumers with customized car recommendations, financing, title transfer, delivery, insurance referral, warranty, and other related services. The 2B business, Uxin Auction, primarily helps businesses source vehicles, optimizing their turnover, and facilitating cross-regional transactions. 5. The Company makes money from the fees for transaction facilitation and auto loan facilitation services. In 2017, 48% of Uxin’s revenue, or US $144 million, came from loan facilitation, and 38% of its revenue came from transaction facilitation to consumers and businesses. 6. On June 28, 2018, the Company filed a prospectus dated June 27, 2018, with the SEC for its IPO, which formed part of the Registration Statement. In the IPO, which commenced on June 27, 2018, the Company sold 25,000,000 ADSs at a price of $9.00 each for net proceeds of $205.1 million. Each ADS represents three shares of Uxin’s Class A common stock. Defendants stated the IPO’s proceeds would be used to improve the Company’s transaction service capabilities, for research and development, and for general corporate purposes. 7. Less than two months after the IPO, on August 22, 2018, in connection with reporting second quarter 2018 results for the fiscal period ending June 30, 2018, the Company announced an abrupt change to its business model that conflicted with the statements made in the Registration Statement. Specifically, the Company would drastically shrink the scope of its much-touted 2B business services—a competitive advantage differentiating the Company in the marketplace and a loss of which was not listed as a potential risk factor to investors—and cease providing inspections and ancillary services to consumers with car-selling needs who utilized the 2B service: Mr. Dai added, “as we continue to improve user experience and optimize our operating efficiency, we will implement a series of strategic measures in the second half of 2018. We will continue to invest in cutting-edge technology, such as virtual reality-enabled functions, which we believe will provide our users with more transparency and a better online used car shopping experience. Separately, we historically provided inspection and other complementary services that enabled consumers to sell used cars through our 2B business. Starting in the second half of 2018, we will take an alternative approach that connects these consumers with quality dealers on our platform without us providing inspection and other services directly. Due to this change to our service approach, we will no longer record the corresponding GMV [i.e., gross merchandise value], which has historically made an immaterial contribution to our overall business. Our B2B auction business remains unchanged. The e-commerce market for used cars is still in its infancy in China. We are excited about the tremendous opportunities ahead, and we will continue to optimize our model and provide more value-added services to our users.” 8. Thereafter, on November 20, 2018, Uxin issued a press release reporting third quarter earnings for the period ended September 30, 2018. In the release, the Company stated that the transaction volume associated with its 2B business declined 8.5% year-over-year and the associated gross merchandise value (“GMV”)1 had declined 14.8% year-over-year due to the 1 According to the Registration Statement, GMV is the gross selling price of used cars, excluding service fees and interests (if any) charged thereon. Company’s decision to stop providing those services. Indeed, by the Company’s own calculation, “excluding the impact of the change in business approach B2B business experienced a 13.3% year-on-year growth in terms of GMV.” 9. The Company’s cash and cash equivalent position also materially declined during the first three quarters of 2018. In fact, as of March 31, 2018 (prior to the IPO), the Company reported had RMB1.2 million ($194 million) in cash and cash equivalents. By September 30, 2018, the Company’s cash and cash equivalents position fell to just RMB677.1 billion ($98.4 million). 10. Following the news of the abrupt shift in the Company’s 2B business, Uxin’s share price fell $0.60 to close at $4.50 per ADS, or just half of the IPO price of $9.00 per ADS. By December 4, 2018, the Company’s stock traded as low as $2.86 per ADS. 11. Additional bad news was to follow on March 14, 2019. On that day, the Company reaffirmed that the abrupt shift in its business model had proven even more detrimental to the Company’s earning when it released fourth quarter and year end earnings for the period ended December 31, 2018. With respect to the fourth quarter of 2018, the 2B business was hit hard 12. The earnings release and subsequent conference call with securities industry analysts detailed that transaction volume for the 2B business decreased to 72,081 units in the fourth quarter of 2018, representing year-on-year decline of 37.1%, due to the Company’s change of approach in serving consumers with car-selling needs, as well as dealers’ growing appetite for retail transactions through Uxin’s 2C platform. 13. Similarly, the full year 2018 results reflected the bad news for investors: Transaction volume for the 2B business decreased to 319,672 units in the full year 2018, representing year-on-year decline of 8.8%, due to the Company’s change of approach in serving consumers with car-selling needs, as well as dealers’ growing appetite for retail transactions through Uxin’s 2C platform. *** GMV for the 2B business decreased to RMB15,253 million in the full year 2018, representing year-on-year decline of 12.2%. 14. On this news, the Company’s shares sunk even further to close at $3.55 per ADS. 15. Defendants made materially false and misleading statements regarding the Company’s business, operational and financial position, and prospects in UXIN’s Registration Statement. Specifically, the Registration Statement was materially false and misleading and omitted to state: (1) that Uxin, which had emphasized in the Registration Statement the importance and quality of its 2B inspections due to the corresponding transparency and standardization across the Chinese used car market, was likely to stop providing those inspections for its business customers; (2) the extent of the risk that Uxin would change its business model to eliminate the highly-touted ancillary services; (3) the substantial effect that elimination of the ancillary services would have on Uxin’s business and operating condition and prospects; (4) that, instead of providing the high quality inspections that it emphasized as an important part of its operations, Uxin would be changing its business model to merely connect consumers with third- party dealers who would provide such services at a potential loss of its touted transparency and standardization; (5) that, as a result of the change of the business model that it was emphasizing in its Registration Statement, the Company’s 2B business would be materially adversely affected as shown through a significant reduction in GMV and transaction volume for the 2B business; and (6) that, as a result of the foregoing, Defendants’ statements in the Registration Statement regarding Uxin’s business, operations, and prospects were materially false or misleading. 16. Indeed, the Registration Statement did not disclose any information concerning the risks associated with and the effect on the Company (post-IPO) of no longer providing the ancillary services that differentiated it from competitors. These highly touted services purportedly differentiated the Company from its competitors and included providing complimentary inspections for the 2B business. Moreover, the Registration Statement did not disclose that the risk that dropping these services would result in a corresponding decrease in transactions on its 2B platform as well as a decrease in GMV and take rate for the 2B business. Further, the Registration Statement did not explicate the magnitude that such a change would have on the Company’s business, especially how business customers would react.2 17. Nor did the Registration Statement disclose that it would soon outsource these inspections and services, jeopardizing the transparent and standardized systems that it was selling to business owners that sought to purchase multiple vehicles. These omissions became glaring when the unidentified risks publicly materialized less than two months after the IPO. 18. Moreover, Defendants failed to explicate in the Registration Statement that the shift in business practices would exacerbate the negative trends already pressuring the Company’s debt and cash positions. Indeed, the Registration Statement omitted material information concerning the seriousness and significance of the Company’s cash burn rate and skyrocketing 19. In their capacities as signers of the Registration Statement or as an issuer, statutory seller, offeror, named director, control person, or underwriter of the shares sold pursuant to the Offering, each of the Defendants is strictly liable for such misstatements therein and omissions therefrom. 2 “Take rate” is a metric that measures the revenue of the Company’s 2C/2B business segment divided by the GMV of that particular business segment, i.e., 2B Revenue / 2B GMV = 2B Take Rate. 20. Additionally, because of the materially deficient Registration Statement, Defendants have violated their independent, affirmative duty to provide adequate disclosures about known adverse conditions, trends, risk, and uncertainties. See Item 303 of SEC Reg. S-K, 17 C.F.R. § 229.303(a)(3)(ii) (requiring that the materials incorporated in a registration statement disclose all “known trends or uncertainties” reasonably expected to have a material unfavorable impact on the Company’s operations). 21. Defendants also violated their independent, affirmative duty to adequately “provide under the caption ‘Risk Factors’ a discussion of the most significant factors that make the offering speculative or risky,” failing to disclose risks that had already materialized at the time of the Offering that were unknown to Plaintiffs and other Company investors. See Item 503 of SEC Reg. 14S-K, 17 CFR § 229.503(c). 22. As alleged herein, Plaintiffs, individually and on behalf of all other similarly situated Class Members (defined herein) who also acquired the Company’s shares pursuant or traceable to the Offering, now seek to obtain a recovery for the damages suffered as a result of Defendants’ violations of the Securities Act. JURISDICTION AND VENUE 23. The claims asserted herein arise under and are pursuant to Sections 11 and 15 of the Securities Act, 15 U.S.C. §§ 77k and 77o. This Court has jurisdiction over the subject matter of this action pursuant to § 22 of the Securities Act, 15 U.S.C. § 77v. Section 22 of the Act explicitly forbids removal of this case to federal court. Cyan, Inc. v. Beaver Cty. Emples. Ret. Fund, 138 S. Ct. 1061 (2018). 24. This Court has personal jurisdiction over each of the Defendants and venue is proper in this Court because Defendants conducted the IPO in this County, drafted the offering materials in this County, disseminated the statements alleged to be false and misleading herein into this County, solicited purchasers of Uxin ADS in this County and reside or are headquartered or have submitted to jurisdiction in this County, and those contacts have a substantial connection to the claims alleged herein. 25. The majority of the Underwriter Defendants have sizable practices in this County and each maintains substantial and continuous contact with New York by conducting significant investment banking operations in this County and throughout the New York State. In sum, the situs of this action lies within this County, Defendants’ tortious acts occurred in this County and caused injury to purchasers of Uxin ADS in this County, and each of the Defendants and members of the Class would foreseeably expect any case or controversy stemming from the IPO to be adjudicated in this County. PARTIES 26. Plaintiff Adam Franchi purchased Uxin ADSs pursuant and/or traceable to the Registration Statement issued in connection with the Company’s IPO and has been damaged thereby. 27. Plaintiff Raul Araujo purchased Uxin ADSs pursuant and/or traceable to the Registration Statement issued in connection with the Company’s IPO and has been damaged thereby. 28. Plaintiff Lei Liang purchased Uxin ADSs pursuant and/or traceable to the Registration Statement issued in connection with the Company’s IPO and has been damaged thereby. 29. Plaintiff Mark Lee purchased Uxin ADSs pursuant and/or traceable to the Registration Statement issued in connection with the Company’s IPO and has been damaged thereby. 30. Defendant Uxin is incorporated under the laws of the Cayman Islands with its principal executive offices located in Beijing, China. Uxin (NASDAQ: UXIN) is the largest used car e-commerce platform in China by number of transactions and GMV. Uxin’s asserts that its mission is to enable people to buy the car of their choice, no matter where they are located in 31. The Company’s website states that “Uxin allows consumers and dealers to buy and sell cars through an innovative, integrated online and offline platform that addresses each step of the transaction and covers the entire value chain, including discovery, car inspection, title transfer, warranty, financing, and insurance.” See http://ir.xin.com/investor-relations. 32. Defendant Kun Dai (“Dai”) was, at all relevant times, the Chief Executive Officer and Chairman of Uxin’s Board of Directors (the “Board”), and signed or authorized the signing of his name to the Company’s Registration Statement filed with the SEC. On June 27, 2018, Mr. Dai appeared on CNBC at its New York City studios to discuss the Company’s IPO, share that he had gone on a “road show” in the United States in connection with the IPO, and to detail the Company’s business model.3 33. Defendant Zhen Zeng (“Zeng”) was, at all relevant times, the Chief Financial Officer and a Director of the Company, and signed or authorized the signing of his name to the Company’s Registration Statement filed with the SEC. 3 See https://www.cnbc.com/video/2018/06/27/uxin-ceo-china-wants-to-solve-trade-war- problem.html. 34. Defendant Rong Lu (“Lu”) was a Director of the Company and signed or authorized the signing of his name to the Company’s Registration Statement filed with the SEC. 35. Defendant Julian Cheng (“Cheng”) was a Director of the Company and signed or authorized the signing of his name to the Company’s Registration Statement filed with the SEC. 36. Defendant Dou Shen (“Shen”) was a Director of the Company and signed or authorized the signing of his name to the Company’s Registration Statement filed with the SEC. 37. Defendant Hainan Tan (“Tan”) was a Director of the Company and signed or authorized the signing of his name to the Company’s Registration Statement filed with the SEC. 38. Defendants Dai, Zeng, Lu, Cheng, Shen, and Tan are collectively referred to hereinafter as the “Individual Defendants.” 39. Defendant Morgan Stanley & Co. International plc (“Morgan Stanley”) served as an underwriter for the Company’s IPO. In the Offering, Morgan Stanley agreed to purchase 8,125,000 shares of the Company’s ADSs, exclusive of the over-allotment option. 40. Defendant Goldman Sachs (Asia) L.L.C. (“Goldman Sachs”) served as an underwriter for the Company’s IPO. In the Offering, Goldman Sachs agreed to purchase 8,125,000 shares of the Company’s ADSs, exclusive of the over-allotment option. 41. Defendant J.P. Morgan Securities LLC (“J.P. Morgan”) served as an underwriter for the Company’s IPO. In the Offering, J.P. Morgan agreed to purchase 5,000,000 shares of the Company’s ADSs, exclusive of the over-allotment option. 42. Defendant China International Capital Corporation Hong Kong Securities Limited (“China International”) served as an underwriter for the Company’s IPO. In the Offering, China International agreed to purchase 1,875,000 shares of the Company’s ADSs, exclusive of the over- allotment option. 43. Defendant China Renaissance Securities (Hong Kong) Limited (“China Renaissance”) served as an underwriter for the Company’s IPO. In the Offering, China Renaissance agreed to purchase 1,875,000 shares of the Company’s ADSs, exclusive of the over- allotment option. 44. Defendants Morgan Stanley, Goldman Sachs, J.P. Morgan, China International, and China Renaissance are collectively referred to hereinafter as the “Underwriter Defendants.” CLASS ACTION ALLEGATIONS 45. Plaintiffs bring this action as a class action pursuant to Article 9 of the New York Civil Practice Law and Rules on behalf of a Class, consisting of all persons and entities that purchased or otherwise acquired the ADSs of Uxin pursuant and/or traceable to the Company’s false and/or misleading Registration Statement issued in connection with the Company’s IPO, and who were damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers and directors of the Company or its related entities, 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. 46. 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 or thousands of members in the proposed Class. The Company sold 25,000,000 ADSs in the IPO. Moreover, record owners and other members of the Class may be identified from records maintained by Uxin 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. 47. Plaintiffs’ 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. 48. Plaintiffs will fairly and adequately protect the interests of the members of the Class and have retained counsel competent and experienced in class and securities litigation. 49. 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 Securities Act was violated by Defendants’ acts as alleged b) whether the Registration Statement and statements made by Defendants to the investing public in connection with the Company’s IPO omitted or misrepresented material facts about the business, operations, and prospects of Uxin; and c) to what extent the members of the Class have sustained damages and the proper measure of damages. 50. 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 SUBSTANTIVE ALLEGATIONS The Company’s Business 51. Uxin was founded in 2011 and is based in Beijing, China. Uxin claims it is the largest used car e-commerce platform in China by number of transactions and GMV. Uxin’s stated “mission is to enable people to buy the car of their choice, no matter where they are located” in China. 52. Through its various subsidiaries, Uxin owns and operates a used car e-commerce platform in China. It owns and operates Uxin Used Car (also referred to as “2C”), an application that provides consumers with customized car recommendation, financing, title transfer, delivery, insurance referral, warranty and other related services, and; Uxin Auction (also referred to as “2B”), an application that helps business buyers to source vehicles through online auctions. The Company facilitates used car transaction services and financing solutions offered by third-party financing partners to buyers for their used car purchases. 53. Importantly for the Company, the car market inside China is surging. China is the second largest car market (behind the US) in terms of registered units (PARC).4 As of the end of 2017, there were 185 million PARC in China compared to 275 million PARC in the US. With a larger portion of the Chinese population becoming middle class and moving to cities, there is a greater need to purchase vehicles. Moreover, the Chinese population has more disposable income with which to purchase cars than it historically had, indicating future growth in the market. 54. Indeed, the Company purportedly seeks to capitalize on China outpacing the U.S. in vehicles purchased by 2023. The main driver of this change is China’s immense population. 4 “Parc” is a European term for all registered vehicles within a defined geographic region, originating from the French phrase “parc de véhicules” meaning the collective number of vehicles or a vehicle collection. China has 1 billion persons eligible to drive, while the U.S. only has a quarter of that number of persons eligible to drive. Breaking this down further, there are approximately 133 cars per 1,000 persons in China. The U.S., in comparison, has approximately 845 cars per 1,000 persons. 55. Uxin’s focus is used cars. In 2017, the transaction volume for used cars in China was 12.4 million vehicles compared to 41.5 million in the U.S. It is, however, difficult to find a reputable used car dealer in many parts of China due to the uneven distribution of car dealerships. 56. Cities in China are “tier” based on their size. A tier-1 city, for example, may have in the area of 15,000 used cars to choose from. A tier-5 city, on the other hand, might only have about 50 used cars. 57. Uxin’s business tries to mitigate this imbalance with its online platform employing actual inspections for used cars purchased online and other buyer friendly services that a consumer or business buyer would not ordinarily receive in an online purchase of a vehicle. Moreover, these inspections are pursuant to a proprietary process which allows for standardized evaluations across the platform, particularly important for repeat customers such as the business served in the 2B business segment of the Company. Making the online purchase akin to a dealership experience, including inspections, was a critical component of the Company’s business model, as detailed in the Company’s Registration Statement. 58. Analysts, including those of Defendant Morgan Stanley, noted that one of the Company’s strengths was its integrated online and off-line model, specifically stating upon initiation of coverage: Uxin has a seamlessly integrated online-offline business model: We think this model solves issues that hamper pure online and pure offline services, and it boosts network effects. Online, Uxin leverages strong data analytics capabilities, proprietary technology and data, and a user-friendly used car platform to offer a wide choice of cars with online and mobile vehicle search, and purchase and payment services. With an extensive offline infrastructure, Uxin offers comprehensive services to customer though the used car transaction process.5 59. Similarly, on August 16, 2018, Defendant Goldman Sachs initiated coverage of Uxin with a “Buy rating and a $9.70 price target.” Analyst Ronald Keung stated the Company “is safe in a sector with intense competition due to the presence of multiple, well-funded operations” and he expects Uxin to become profitable by 2020. Goldman is an underwriter defendant that earned substantial fees from the IPO. The Company’s Registration Statement 60. On May 29, 2018, Uxin registered its Class A common stock on Form F-1 with the SEC, which forms part of the Registration Statement. 61. On June 13, 2018, Uxin registered its ADSs on Form F-6 with the SEC, which forms part of the Registration Statement. 62. On June 22, 2018, Uxin filed its final amendment to the Registration Statement with the SEC on Form F-1/A. The Registration Statement was declared effective on June 26, 63. On June 28, 2018, the Company filed a prospectus, dated June 27, 2018, with the SEC for its IPO, which formed part of the Registration Statement. In the IPO, which commenced on June 27, 2018, the Company sold 25,000,000 ADSs at a price of $9.00 each for net proceeds of $205.1. Each ADS represents three shares of Class A common stock. The Company received approximately $205.1 million in proceeds from the IPO, net of underwriting discounts and commissions. The proceeds from the IPO were purportedly to be used to improve 5 Morgan Stanley, Leading Position with Integrated Model; Initiate at Overweight (July 22, 2018). the Company’s transaction service capabilities, research and development, and for general corporate purposes.6 64. Defendant Uxin is strictly liable for the materially untrue and misleading statements incorporated into the Registration Statement. Statutory Framework Applicable to the Registration Statement 65. The purpose of the Securities Act is “to provide investors with full disclosure of material information concerning public offerings of securities in commerce, to protect investors against fraud, and, through the imposition of specified civil liabilities, to promote ethical standards of honesty and fair dealing.” Ernst & Ernst v. Hochfelder, 425 U.S. 185, 195 (1976); see also Randall v. Loftsgaarden, 478 U.S. 647, 659 (1986); Pinter v. Dahl, 486 U.S. 622, 638 (1988) (“The primary purpose of the Securities Act is to protect investors by requiring publication of material information thought necessary to allow them to make informed investment decisions concerning public offerings of securities in interstate commerce.”). 66. To effectuate this purpose, a company’s registration statement must provide a full disclosure of material information. See Herman & MacLean v. Huddleston, 459 U.S. 375, 381 (1983). Failure to do so gives rise to private rights of action under the Securities Act. Id. at 381- 82 (the Securities Act’s private rights of action were “designed to assure compliance with [its] disclosure provisions . . . by imposing a stringent standard of liability on the parties who play a direct role in a registered offering.”). 6 On the eve of the IPO, Uxin cut the deal size to 25 million ADS (each ADS represents 3 ordinary shares) from 38.0 million, with the IPO pricing at $9.00 versus the $10.50-$12.50 expected price range. In all, the deal raised $225 million in gross proceeds, almost 50% less than it had anticipated. Section 11 of the Securities Act of 1933 67. Section 11 prohibits materially misleading statements or omissions in registration statements filed with the SEC. See 15 U.S.C. § 77k. Accordingly, Section 11 gives rise to liability if “any part of [a Company’s] registration statement, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading.” 15 U.S.C. § 77k(a). Section 11 provides for a cause of action by the purchaser of a registered security against certain statutorily enumerated parties, including: (1) “every person who signed the registration statement;” (2) “every person who was a director of (or person performing similar functions) or partner in the issuer at the time of the filing of . . . the registration statement;” (3) “every person who, with his consent, is named in the registration statement as being or about to become a director;” (4) “any person . . . who has with his consent been named as having prepared or certified any part of the registration statement;” and (5) “every underwriter with respect to such security.” 15 U.S.C. § 77k(a)(1-5). Regulation S-K Item 303 Requirements 68. Item 303 imposes an affirmative duty on issuers to disclose “events” or “uncertainties” that will have a material or unfavorable impact on the registrant’s future revenue. 17 C.F.R. § 229.303(a)(3)(i) & (ii); Mgmt’s Discussion and Analysis of Fin. Condition and Results of Operation, Exchange Act Release No. 6835 (“S.E.C. Release No. 6835”), 1989 WL 1092885, at *4 (May 18, 1989). 69. Specifically, Item 303 requires issuers to disclose in the registration statement any “trend, demand, commitment, event or uncertainty” that is “both presently known to management and reasonably likely to have material effects on the registrant’s financial condition or results of operations.” See S.E.C. Release No. 6835, 1989 WL 1092885, at *4; 17 C.F.R. § 229.303(a)(3)(ii). Pursuant to Item 303(a), for a fiscal year, a registrant has an affirmative duty to: (i) Describe any unusual or infrequent events or transactions or any significant economic changes that materially affected the amount of reported income from continuing operations and, in each case, indicate the extent to which the income was so affected; and (ii) Describe any known trends or uncertainties that have had or that the registrant reasonably expects will have a material favorable or unfavorable impact on net sales or revenues or income from continuing operations. If the registrant knows of events that will cause a material change in the relationship between costs and revenues (such as known future increases in costs of labor or materials or price increases or inventory adjustments), the change in the relationship shall be disclosed. 17 C.F.R. § 229.303(a)(3)(i)-(ii) (emphasis added); see also S.E.C. Release No. 6835, 1989 WL 1092885, at *8 (May 18, 1989) (“Other non-recurring items should be discussed as unusual or infrequent events or transactions that materially affected the amount of reported income from continuing operations.”) (citation and quotation omitted). 70. Thus, even a one-time event, if “reasonably expect[ed]” to have a material impact of results, must be disclosed. Examples of such required disclosures include: “[a] reduction in the registrant’s product prices; erosion in the registrant’s market share; changes in insurance coverage; or the likely non-renewal of a material contract.” S.E.C. Release No. 6835, 1989 WL 1092885, at *4. Accordingly, as the SEC has repeatedly emphasized, the “specific provisions in Item 303 [as set forth above] require disclosure of forward-looking information.” Id. at *3. Indeed, the SEC has stated that disclosure requirements under Item 303 are “intended to give the investor an opportunity to look at the company through the eyes of management by providing both a short and long-term analysis of the business of the company” and “a historical and prospective analysis of the registrant’s financial condition . . . with particular emphasis on the registrant’s prospects for the future.” Id. at *3, *17. Thus, “material forward-looking information regarding known material trends and uncertainties is required to be disclosed as part of the required discussion of those matters and the analysis of their effects.” See Comm’n Guidance Regarding Mgmt’s Discussion and Analysis of Fin. Condition and Results of Operations, S.E.C. Release No. 8350, 2003 WL 22996757, at *11 (December 19, 2003). Item 503 Requirements 71. Item 503 is intended “to provide investors with a clear and concise summary of the material risks to an investment in the issuer’s securities.” Sec. Offering Reform, S.E.C. Release No. 8501, 2004 WL 2610458, at *86 (Nov. 3, 2004). Accordingly, Item 503 requires that offering documents “provide under the caption ‘Risk Factors’ a discussion of the most significant factors that make the offering speculative or risky.” 17 CFR § 229.503(c). The discussion of risk factors: must be specific to the particular company and its operations and should explain how the risk affects the company and/or the securities being offered. Generic or boilerplate discussions do not tell the investors how the risks may affect their investment. Statement of the Comm’n Regarding Disclosure of Year 2000 Issues and Consequences by Pub. Cos., Inv. Advisers, Inv. Cos., & Mun. Sec. Issuers, 1998 WL 425894, at *14 (July 29, 1998). 72. Item 503 requires that a registration statement must disclose all known material risks that are “specific to the particular company and its operations.” Id. Item 503(c) expressly warns issuers: “Do not present risks that could apply to any issuer or any offering.” 17 CFR § 229.503(c). The Registration Statement Omitted Material Information and Contained Misstatements in Violation of the Statutory Framework 73. The Registration Statement contained untrue statements of material facts or omitted to state other facts necessary to make the statements made not misleading, and was not prepared in accordance with the rules and regulations governing its preparation. Under applicable SEC rules and regulations, the Registration Statement was required to disclose known trends, events or uncertainties that were having, and were reasonably likely to have, an impact on the Company’s continuing operation. 74. One such glaring omission from the Registration Statement was that the Company would imminently and drastically shrink the scope of its much-touted 2B business services—a competitive advantage differentiating the Company in the marketplace—and cease providing inspections and ancillary services to consumers with car-selling needs who utilized the 2B service, which in turn would adversely affect the Company’s GMV and transaction volume. 75. The Registration Statement stated that the Company is the largest used car e- commerce platform in China in terms of both the number of transactions facilitated and total GMV in 2017. With respect to the Company’s transaction volume and GMV, the Registration Statement stated, in relevant part: Our ability to continue to increase our transaction volume and GMV affects the growth of our business and our revenues. The total number of used cars sold through our platform increased from 377,777 in 2016 to 634,317 in 2017, representing a 67.9% increase, and from 102,098 in the first three months of 2017 to 165,003 in the first three months of 2018, representing a 61.6% increase. The total GMV of our platform grew from RMB26.0 billion in 2016 to RMB43.4 billion (US$6.9 billion) in 2017, representing a 67.0% increase, and from RMB7.9 billion in the first three months of 2017 to RMB11.6 billion (US$1.9 billion) in the first three months of 2018, representing a 46.8% increase. We anticipate that our future revenue growth will continue to depend largely on the increase of transaction volume on our platform. Our ability to increase transaction volume depends on, among other things, our ability to continually improve the service and user experience that we offer, increase brand awareness, expand our service network and enhance our transaction enablement and technology capabilities. 76. The Registration Statement stated that “[a]s the destination for online used car transactions in China, [Uxin] make[s] it possible for consumers to buy cars from dealers, and for dealers to buy cars from other dealers and consumers, through an innovative integrated online and offline platform.” 77. According to the Registration Statement, the Company facilitates these transactions, through two business segments. In relevant part, the Registration Statement stated: Our platform consists of two highly synergistic businesses: Uxin Used Car: our 2C business catering to consumer buyers, primarily provides consumers with customized car recommendations, financing, title transfer, delivery, insurance referral, warranty and other related services; and Uxin Auction: our 2B business catering to business buyers, primarily provides businesses with a comprehensive suite of solutions, helping them source vehicles, optimizing their turnover and facilitating cross-regional transactions. Since our founding, both Uxin Used Car and Uxin Auction have achieved significant success. They possessed market shares of 41% and 42% in terms of GMV in the online 2C and 2B used car markets in China in 2017, compared to 32% and 40% in 2016, respectively, according to iResearch. 78. Defendants further stated in the Registration Statement that Uxin’s “mission is to enable people to buy the car of their choice. Both consumers and businesses in China face significant challenges in buying and selling used cars, such as access to a limited number of vehicles, incomplete and unreliable information about vehicles, and complex transaction processes.” 79. The Registration Statement further stated “[o]ur platform addresses these issues by enabling consumers and businesses discover, evaluate and transact in used cars throughout China, providing a reliable and one-stop transaction experience.” 80. Emphasizing the alleged importance of Uxin’s proprietary inspection service, the Registration Statement touts as one of the Company’s strengths that it is “committed to providing comprehensive and accurate descriptions of vehicles on our platform. To accomplish this, we use our standardized and patented Check Auto system which is a standardized inspection process involve more than 300 check points. The inspection produces detailed reports including a comprehensive set of photos and videos of the cars, which we make available to users. We also provide a pricing assessment to users based on proprietary transaction data and market insights.” 81. According to the Registration Statement the Check Auto System is “an integrated, interactive vehicle inspection system that enables our inspection professionals to conduct a comprehensive examination of cars for listing on our platform.” The Check Auto System utilizes wearable technology such as wearable digital glasses and specialized software. The Registration Statement features a technician:7 82. The Registration Statement provided an example of the 2B user experience, complete with the interface viewed by the business buyer with images of the car condition from the report generated by the Check Auto system: 7 The Registration Statement indicates that, as of March 31, 2018, nearly a quarter of Uxin’s operational staff (2,581 of the 10,516 Operations employees) was devoted to car inspections. The Company had a total of 12,461 employees at the time. 83. The Registration Statement also described the 2B user’s “buying journey,” which included as one of the five key stages: “Evaluation: All car listings on Uxin Auction include a comprehensive car condition report generated by our Check Auto system. The buyer can also choose to inspect the car in person in one of our regional transaction centers.” 84. Indeed, with respect to the Company’s inspection capabilities, its attention to service, and how that has afforded it a competitive edge especially among business customers, the Registration Statement stated, in relevant part: We have transformed used car commerce in China through our innovative integrated online and offline approach that addresses each step of the transaction and covers the entire value chain. Our highly scalable online platform allows sellers to reach a broad audience and ensures that users have access to an extensive nationwide selection of used cars. Our offline infrastructure allows us to provide services that are important to enabling transactions, such as the inspection, title transfer and delivery of vehicles, in-person consultation and other after-sale services. In particular, our inspection capabilities allow us to collect proprietary data, images and videos of vehicles and generate accurate car condition reports that allow for standardized comparisons, which are crucial to our users’ online purchase decision-making processes. With a significant amount of data on buyers, sellers, vehicles and transactions on our platform, we are able to continue to innovate and improve our services to meet the varied needs of our users. Together, our services provide users with the superior experience and peace of mind that our brand embodies, in fact, our name – Uxin translates to quality and trust in Chinese. 85. The Registration Statement highlighted that the Company provides a “superior and differentiated transaction” in four specific ways, two of which explicitly involved its inspections for customers: • Transparency: We are committed to providing comprehensive and accurate descriptions of vehicles on our platform. To accomplish this, we use our standardized and patented Check Auto system which is a standardized inspection process involve more than 300 check points. The inspection produces detailed reports including a comprehensive set of photos and videos of the cars, which we make available to users. We also provide a pricing assessment to users based on proprietary transaction data and market insights. • Convenience: Our online platform, combined with our transaction enablement and service capabilities allow us to provide users with a one- stop solution in buying and selling used cars from start to finish, including inspection, loan facilitation, title transfer and delivery. This is particularly the case for cross-regional transactions. 86. The Registration Statement also touted that the Company’s “comprehensive services are supported by a number of critical foundations, including proprietary technology and data analytics capabilities, an extensive service network and unique transaction enabling capabilities.” 87. Further, the Registration Statement detailed the significance of the Company’s title transfer services: Uxin Transaction Enabling Capabilities: Our unique transaction enabling capabilities currently cover more than 200 cities and consist of our nationwide delivery and fulfillment network, title transfer services and industry-leading warranty program. Our title transfer services quickly handle a potentially time- consuming and complex process for our buyers. Our warranty program provides consumers with comprehensive after-sale protection. For a typical business seller on Uxin Used Car, the selling journey is as follows: Car inspection: Once a seller indicates the intention to sell cars, we will arrange for a standard inspection of the cars by our Check Auto car inspection system. Listing: After the inspection, the cars are listed on our platform for sale. Each car listing is accompanied by a Check Auto condition report. Additionally, our local employees regularly check the seller’s inventory by employing a systematic approach that includes using scanning technology and image recognition software to ensure that the listing is authentic and kept up-to-date. If the listing price submitted by the seller is excessively high compared to the fair value estimate of our Manhattan pricing engine, we will notify the seller and suggest the seller to adjust the listing price before the car is listed on our platform. Seller support: Our sales consultants provide online and offline assistance to the seller throughout the transaction process. The seller can also review key statistics and trends of the local used car market online. Signing and delivery: Once the seller agrees to sell a car, the seller will sign an agreement in person. The car may then be delivered to either the buyer’s home or to one of our local service centers for easy pickup, depending on the price paid. If the car is sold to a consumer in a different city from the seller, the seller can arrange for delivery using our nationwide delivery and fulfillment network. 88. The Registration Statement detailed the Company’s support for 2B business, including the significance of regional service centers that performed inspections: Our Transaction Enablement and Service Capabilities Regional transaction centers. Our seven regional transaction centers provide offline support to our 2B business. Cars for sale are parked at our regional transaction centers, and buyers can visit our regional transaction centers to inspect cars in person before participating in online auctions. Regional transaction centers can also provide other services such as car inspection, title transfer, delivery and payment processing. 89. The Registration Statement further stated that inspection and warranty services “are key to earn customer trust” and that “[i]f we fail to maintain a high level of customer satisfaction or fail to properly manage our warranty and car inspection programs or other services, our business, financial condition and results of the operation would be adversely affected.” 90. Moreover, the Registration Statement highlighted the benefits of Uxin’s proprietary technology: Our patented industry-leading car inspection system, Check Auto . . ., provides a comprehensive overview of a used car’s condition, while our AI- and big data- driven Manhattan pricing engine evaluates a car’s condition and provides buyers and sellers with pricing insights. Our Manhattan pricing engine also enables us to bottom forecast the residual value of vehicles. By leveraging both the Manhattan pricing engine and our proprietary Sunny risk control system, which makes credit assessments on prospective borrowers, we are able to effectively monitor car collateral and manage our risk exposure. Currently, our AI-enabled credit assessment system could automatically process approximately 80% of auto loan applications. In addition, based on the plethora of data we have on our users’ browsing history, behavior and preferences, our Lingxi . . . smart selection system provides highly personalized recommendations to consumers, making it more likely for them to find the car of their choice. 91. Defendants made materially false and misleading statements regarding the Company’s business, operational and financial position in UXIN’s Registration Statement. Specifically, the Registration Statement was materially false and misleading and omitted to state: (1) that Uxin, which had emphasized in the Registration Statement the importance and quality of its 2B inspections due to the corresponding transparency and standardization across the Chinese used car market, was likely to stop providing those inspections for its business customers in the near future; (2) the extent of the risk that Uxin would change its business model to eliminate the highly-touted ancillary services; (3) the substantial effect that elimination of the ancillary services would have on Uxin’s business and operating condition and prospects; (4) that, instead of providing the high quality inspections that it emphasized as an important part of its operations, Uxin would be changing its business model to merely connect consumers with third-party dealers who would provide such services at a potential loss of its touted transparency and standardization; (5) that, as a result of the change of the business model that it was emphasizing in its Registration Statement, the Company’s 2B business would be materially adversely affected as shown through a significant reduction in GMV and transaction volume for the 2B business; and (6) that, as a result of the foregoing, Defendants’ statements in the Registration Statement regarding Uxin’s business, operations, and prospects were materially false or misleading. 92. Indeed, the Registration Statement did not disclose any risk that the Company might remove the ancillary services that differentiated it from competitors directly following its IPO, such as the touted inspections for the 2B business, and incur a corresponding decrease in transactions on its 2B platform as well as a decrease in GMV and take rate for the 2B business. Nor did the Registration Statement disclose that Uxin would outsource these inspections and services, jeopardizing the transparent and standardized systems that it was selling to business owners that sought to purchase multiple vehicles. These omissions became glaring when the unidentified risks publicly materialized less than two months after the IPO. 93. The Registration Statement further contained notes to the financial statements indicating that the Company’s cash position was rapidly declining and its debts were mounting. 94. However, the Registration Statement omitted material information concerning the seriousness and significance of the Company’s cash burn rate and skyrocketing debt despite being a trend known or reasonably knowable by Defendants. The Undisclosed Shift in Business Model 95. On August 22, 2018, in connection with its second quarter 2018 financial results, Uxin announced a strategic change to its 2B business. The Company stated, in relevant part: [W]e historically provided inspection and other complementary services that enabled consumers to sell used cars through our 2B business. Starting in the second half of 2018, we will take an alternative approach that connects these consumers with quality dealers on our platform without us providing inspection and other services directly. Due to this change to our service approach, we will no longer record the corresponding GMV, which has historically made an immaterial contribution to our overall business. Our B2B auction business remains unchanged. 96. On November 19, 2018 after the market closed, in a press release announcing its third quarter 2018 financial results, Uxin reported that the transaction volume for the 2B business had decreased to 91,844 units, or a year-over-year decline of 8.5%, and GMV had decreased to RMB4.279 million, or a year-over-year decline of 14.8%. In the press release, the Company attributed these results to its “recent change of approach in serving customers with car-selling needs as disclosed in the prior quarter.” Excluding the impact of this change, “the B2B business experienced 13.3% year-on-year growth in terms of GMV.” 97. This purportedly immaterial change that was not disclosed as a risk to investors in the Registration Statement reduced the GMV of the used cars sold in the 2B segment of the Company during the third quarter by over RMB 700 million, as compared to the prior year. Indeed, the Company notes that if it excluded the adverse effects of the change in operation, the 2B business experienced considerable growth year-over-year instead of the decline that occurred. 98. Following this news, Uxin’s share price fell $.60 to close at $4.50 per share, or approximately 50% below the IPO price of $9.00 per share. This, however, was not the end of the bad news for investors. 99. On March 14, 2019, the Company reported fourth quarter and full year 2018 results for the period ending December 31, 2018. Once again, the purported immaterial change in the Company’s business practice was poorly received by the market. Specifically, the Company’s transaction volume in the 2B business suffered because of the shift away from the business-friendly practices touted in its Registration Statement that separated it from competitors: Transaction volume for the 2B business decreased to 72,081 units in the fourth quarter of 2018, representing year-on-year decline of 37.1%, due to the Company’s change of approach in serving consumers with car-selling needs, as well as dealers’ growing appetite for retail transactions through Uxin’s 2C platform. *** GMV for the 2B business decreased to RMB3,349 million in the fourth quarter of 2018, representing year-on-year decline of 40.2%. *** 100. 2B business for transaction volume and GMV also was negatively affected for the full year 2018: Transaction volume for the 2B business decreased to 319,672 units in the full year 2018, representing year-on-year decline of 8.8%, due to the Company’s change of approach in serving consumers with car-selling needs, as well as dealers’ growing appetite for retail transactions through Uxin’s 2C platform. *** GMV for the 2B business decreased to RMB15,253 million in the full year 2018, representing year-on-year decline of 12.2%. 101. With respect to 2B business in general, the Company disclosed that its “change in approach,” which was at odds with the business practices detailed in the Registration Statement, negatively impacted earnings: 2B Business: 2B transaction facilitation revenue was RMB145.7 million (US$21.2 million) in the fourth quarter of 2018, representing a decrease of 16.4% from the same period last year, due to the decline in transaction volume. The transaction volume for the 2B business decreased to 72,081 units in the fourth quarter of 2018, due to the Company’s change of approach in serving consumers with car- selling needs as disclosed in the 102. On this news, the Company’s shares sunk even further to close at $3.55 per ADS. The Company’s stock has not recovered as demonstrated by the following Company stock chart: UXIN ADS Price COUNT I (For Violations of Section 11 of the Securities Act Against All Defendants) 103. Plaintiffs repeat and re-allege each and every allegation contained above as if fully set forth herein. 104. This Count is brought pursuant to Section 11 of the Securities Act, 15 U.S.C. §77k, on behalf of the Class, against all Defendants (the “Section 11 Defendants”). 105. The Registration Statement was inaccurate and misleading, contained untrue statements of material facts, omitted to state other facts necessary to make the statements made not misleading, and omitted to state material facts required to be stated therein. 106. Uxin is the registrant for the IPO. The Section 11 Defendants named herein were responsible for the contents and dissemination of the Registration Statement. 107. As issuer of the shares, Uxin is strictly liable to Plaintiffs and the Class for the misstatements and omissions. 108. None of the Section 11 Defendants named herein made a reasonable investigation or possessed reasonable grounds for the belief that the statements contained in the Registration Statement were true and without omissions of any material facts and were not misleading. 109. By reasons of the conduct herein alleged, each Section 11 Defendant violated, and/or controlled a person who violated Section 11 of the Securities Act. Plaintiffs acquired Uxin shares pursuant and/or traceable to the Registration Statement for the IPO. Plaintiffs and the Class have sustained damages. The value of Uxin ADSs has declined substantially subsequent to and due to Section 11 Defendants violations. COUNT II (For Violations of Section 15 of the Securities Act Against the Individual Defendants) 110. Plaintiffs repeat and re-allege each and every allegation contained above as if fully set forth herein. 111. This count is asserted against the Individual Defendants (the “Section 15 Defendants”) and is based upon Section 15 of the Securities Act. 112. The Section 15 Defendants, by virtue of their offices, directorship and specific acts were, at the time of the wrongs alleged herein and as set forth herein, controlling persons of Uxin within the meaning of Section 15 of the Securities Act. The Section 15 Defendants had the power and influence and exercised the same to cause Uxin to engage in the acts described herein. 113. The Section 15 Defendants’ positions made them privy to and provided them with actual knowledge of the material facts concealed from Plaintiffs and the Class. 114. By virtue of the conduct alleged herein, the Section 15 Defendants are liable for the aforesaid wrongful conduct and are liable to Plaintiffs and the Class for damages suffered. WHEREFORE, Plaintiffs pray for relief and judgment, as follows: a) Determining that this action is a proper class action under Article 9 of the New York Civil Practice Law and Rules; b) Awarding compensatory and/or statutory damages in favor of Plaintiffs 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 Plaintiffs 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 Plaintiffs hereby demand a trial by jury. March 21, 2019 By: s/ Frank R. Schirripa Frank R. Schirripa, Esq. Gregory M. Nespole, Esq. Hillary Nappi, Esq. HACH ROSE SCHIRRIPA & CHEVERIE LLP 112 Madison Avenue, 10th Floor New York, New York 10016 Tel: (212) 213-8311 Fax: (212) 779-0028 Attorneys for Adam Franchi and the Class s/ Lesley Portnoy Lesley Portnoy, Esq. Robert Prongay, Esq. GLANCY PRONGAY & MURRAY LLP 1925 Century Park East, Suite 2100 Los Angeles, CA 90067 Tel: (310) 201-9150 Fax: (310) 432-1495 Attorneys for Mark Lee and the Class s/ Mark C. Rifkin Mark C. Rifkin, Esq. Kevin G. Cooper, Esq. WOLF HALDENSTEIN ADLER FREEMAN & HERZ LLP 270 Madison Avenue New York, NY 10016 Tel: 212-545-4600 Fax: 212-686-0114 Attorneys for Lei Liang and the Class s/ Patrick Slyne Aaron L. Brody, Esq. Patrick Slyne, Esq. STULL, STULL & BRODY 6 East 45th Street New York, NY 10017 Tel: (212) 687-7230 Fax: (212) 490-2022 Attorneys for Raul Araujo and the Class

securities

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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ARAB SALEM, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. Case No. CLASS ACTION COMPLAINT JURY TRIAL DEMANDED NIKOLA CORPORATION, TREVOR R. MILTON, MARK A. RUSSELL, and KIM J. BRADY, Defendants. Plaintiff Arab Salem (“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 Nikola Corporation (“Nikola” 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 Nikola securities between June 4, 2020 and September 9, 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 Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials. 2. Nikola purports to operate as an integrated zero-emissions transportation systems provider. The Company purports to design and manufacture battery-electric and hydrogen-electric vehicles, electric vehicle drivetrains, vehicle components, energy storage systems, and hydrogen fueling station infrastructure. The Company also purports to develop electric vehicle solutions for military and outdoor recreational applications. Nikola was founded in 2015 by Defendant Trevor 2 Milton (“Milton”), and in June 2020, the Company’s securities began trading publicly after the execution of a reverse merger with VectoIQ Acquisition Corp. 3. 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) Defendant Milton had repeatedly misrepresented and/or exaggerated Nikola’s financial, technological, and operational profile; (ii) the foregoing misrepresentations were intended to, and did, present a materially false image of the Company’s growth and success, thereby artificially inflating the Company’s stock price; (iii) the foregoing misrepresentations were foreseeably likely to subject the Company to enhanced regulatory scrutiny and/or enforcement, along with reputational harm when the truth came to light; and (iv) as a result, the Company’s public statements were materially false and misleading at all relevant times. 4. On September 10, 2020, Hindenburg Research (“Hindenburg”) published a report entitled, “Nikola: How to Parlay An Ocean of Lies Into a Partnership With the Largest Auto OEM in America” (the “Hindenburg Report” or the “Report”). Asserting that it had gathered “extensive evidence—including recorded phone calls, text messages, private emails and behind-the-scenes photographs,” Hindenburg represented that it had identified “dozens of false statements by” Milton, which had led Hindenburg to conclude that Nikola “is an intricate fraud built on dozen of lies over the course of . . . Milton’s career.” Defendant Milton made these misrepresentations, the Report asserted, to substantially grow the Company and secure partnerships with top auto companies. 5. On this news, Nikola’s stock price fell $4.80 per share, or 11.33%, to close at $37.57 per share on September 10, 2020. 3 6. Then, on September 14, 2020, after the market had closed, Bloomberg reported that the SEC was investigating Nikola to assess the merits of the Hindenburg Report. 7. Finally, on September 15, 2020, during intra-day trading, the Wall Street Journal reported that the United States Department of Justice (“DOJ”) had joined the SEC’s investigation of Nikola. 8. On this news, Nikola’s stock fell an additional $0.17 per share during intra-day trading, to close at $32.83 on September 15, 2020, an 8.27% decline from its previous close on September 14, 2020. 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 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). 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. 12. 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 the alleged misstatements entered and the subsequent damages took place in this Judicial District. Pursuant to Nikola’s most recent quarterly report on Form 10-Q, as of July 30, 2020, there were 378,980,941 shares of the Company’s common stock outstanding. Nikola’s common stock trades on the Nasdaq Stock Market (“NASDAQ”). Accordingly, there are presumably hundreds, if not thousands, of investors in 4 Nikola’s common stock located within the U.S., some of whom undoubtedly reside in this Judicial District. 13. 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 14. Plaintiff, as set forth in the attached Certification, acquired Nikola securities at artificially inflated prices during the Class Period and was damaged upon the revelations of the Company’s alleged fraud. 15. Defendant Nikola is a Delaware corporation with principal executive offices located in Phoenix, Arizona. The Company purports to operate as an integrated zero-emissions transportation systems provider. Nikola’s common stock trades on the NASDAQ under the ticker symbol “NKLA.” 16. Defendant Milton is Nikola’s founder and has served as the Company’s Executive Chairman at all relevant times. 17. Defendant Mark A. Russell (“Russell”) has served as Nikola’s President and CEO at all relevant times. 18. Defendant Kim J. Brady (“Brady”) has served as Nikola’s Chief Financial Officer at all relevant times. 19. Defendants Milton, Russell, and Brady are sometimes referred to herein as the “Individual Defendants.” 5 20. The Individual Defendants possessed the power and authority to control the contents of Nikola’s SEC filings, press releases, and other market communications. The Individual Defendants were provided with copies of Nikola’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 Nikola, 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. 21. Nikola and the Individual Defendants are collectively referred to herein as “Defendants.” SUBSTANTIVE ALLEGATIONS Background 22. Nikola purports to operate as an integrated zero-emissions transportation systems provider. The Company purports to design and manufacture battery-electric and hydrogen-electric vehicles, electric vehicle drivetrains, vehicle components, energy storage systems, and hydrogen fueling station infrastructure. The Company also purports to develop electric vehicle solutions for military and outdoor recreational applications. Nikola was founded in 2015 by Defendant Milton, and in June 2020, the Company’s securities began trading publicly after the execution of a reverse merger with VectoIQ Acquisition Corp. 6 Materially False and Misleading Statements Issued During the Class Period 23. The Class Period begins on June 4, 2020, the day after Nikola issued a press release announcing that the Company had closed its business combination with VectoIQ and that the Company would begin publicly trading on the NASDAQ the following day. The press release stated, in relevant part: The business combination . . . further solidifies Nikola as a global leader in zero- emissions transportation and infrastructure solutions. On June 4, 2020, the combined company’s shares will trade on the Nasdaq under the new ticker symbol “NKLA.” *** “Nikola is thrilled to complete the Nasdaq listing and be part of the ESG investment world. This is a significant endorsement in fuel-cell and battery-electric technology. Since Nikola launched its first fuel-cell semi-truck, you have seen the world rally behind hydrogen and follow our lead. What was once considered the fuel of the future is now accepted as today’s solution,” said Nikola’s Founder and Executive Chairman Trevor Milton. “With our Nikola IVECO joint venture and over $10 billion in pre-order reservations, Nikola is positioned to be a wonderful story of how one company can literally change the world.” 24. On July 17, 2020, Nikola filed a prospectus on Form 424B3 with the SEC (the “July 17, 2020 Prospectus”). In providing an overview of the Company, the July 17, 2020 Prospectus touted, in relevant part: We are a vertically integrated zero-emissions transportation solution provider that designs and manufactures state-of-the-art battery-electric and hydrogen fuel cell electric vehicles, electric vehicle drivetrains, energy storage systems, and hydrogen fueling stations. Our core product offering is centered around our battery-electric vehicle (“BEV”) and hydrogen fuel cell electric vehicle (“FCEV”) Class 8 semi-trucks. The key differentiator of our business model is our planned network of hydrogen fueling stations. We are offering a revolutionary bundled lease model, which provides customers with the FCEV truck, hydrogen fuel, and maintenance for a fixed price per mile, locks in fuel demand and significantly de-risks infrastructure development. (Emphasis added.) 7 25. Further, the July 17, 2020 Prospectus touted the Company’s purported performance in its three business units, stating, in relevant part: The Truck business unit is developing and commercializing battery-electric vehicle (“BEV”) and hydrogen fuel cell electric vehicle (“FCEV”) class 8 trucks that provide environmentally friendly, cost-effective solutions to the short haul and long-haul trucking sector. The Energy business unit is developing and constructing a network of hydrogen fueling stations to meet hydrogen fuel demand for FCEV customers. The Powersports business unit is developing electric vehicle solutions for military and outdoor recreational applications. 26. In addition, in a section entitled, “Who We Are,” the July 17, 2020 Prospectus touted, in relevant part: Nikola’s vision is to be the zero-emissions transportation industry leader. We plan to realize this vision through world-class partnerships, groundbreaking R&D, and a revolutionary business model. *** We believe our station network will provide a competitive advantage and help accelerate the adoption of our FCEVs. We believe our product portfolio and hydrogen fueling network provides a key strategic advantage that differentiates Nikola from competitors and will allow us to disrupt the estimated $600 billion global heavy-duty commercial vehicle and the related fueling and maintenance ecosystems. 27. Next, in providing an overview of the Company’s total addressable market, the July 17, 2020 Prospectus stated, in relevant part, “Nikola’s unique bundled lease which includes the FCEV truck, fuel, and maintenance, will allow us to expand our total addressable market significantly when compared to traditional OEMs[,]” and that, “[g]lobally, the total addressable market (“TAM”), is estimated to be a $600 billion per-year with steady growth expected to continue as e-commerce and global economic growth fuel the need for more heavy-duty trucks.” 28. The July 17, 2020 Prospectus also included a discussion of the Company’s products, touting, in relevant part: 8 As the commercial transportation sector transitions towards zero-emission solutions, we believe there will be a need to offer tailored solutions that meet the needs of each customer. Unlike the passenger vehicle market, where users typically return home each day, the commercial vehicle market contains multiple use cases often requiring vehicles to be out on the road for days, or weeks at a time. By offering both BEVs (for short-haul) and FCEVs (for medium- and long-haul), we believe Nikola is uniquely positioned to disrupt the commercial transportation sector by providing solutions that address the full range of customer needs. *** We have developed an extensive portfolio of proprietary technologies that are embedded and integrated in our highly specialized BEV and FCEV zero- emission vehicles. In addition, we plan to leverage our zero-emission powertrain expertise to address transportation adjacencies as exemplified with our Powersports product offerings. *** Our management team is primarily focused on the core semi-truck and hydrogen station programs. However, we believe that we can leverage our zero- emission powertrain expertise to address transportation adjacencies. Our Powersports product offerings provide significant benefits to our core semi-truck and hydrogen station programs, including branding halo, driving awareness of Nikola and our industry-defining technology, and R&D synergies on electric drivetrain, battery technology, and other core components. *** In addition to building heavy-duty zero-emission trucks, Nikola is also developing fueling and charging stations in North America and Europe to support our FCEV fleet customers and to help capture first mover advantage with respect to next generation fueling infrastructure. Over the next 8 to 10 years, Nikola intends to collaborate with strategic partners to build up to 700 fueling and charging stations in North America and approximately 70 fueling and charging stations in Europe. *** Nikola’s bundled lease includes maintenance for its vehicles. Service and maintenance of an electric vehicle is expected to be lower than the traditional ICE vehicle which has been proven in the electric passenger vehicle market. Fewer parts and considerably reduced complexity of the key drivetrain components should result in fewer breakdowns and less preventive maintenance, leading to better uptime and lower maintenance cost to operators. Reduced downtime could also lead to increased revenue for fleets as asset productivity increases. 9 *** A key requirement for our fleet customers is knowing there is an available service infrastructure for the maintenance and repair of our vehicles. Nikola is building a strong network of providers, a robust preventive maintenance program, as well as several levels of service depending on the complexity and type of maintenance required. Nikola’s plans with respect to the service and maintenance of its vehicles is expected to include the following: • Electric vehicles have a system of sensors and controls that allow for precise monitoring of the vehicle and component operation performance. We will use this data to provide smart predictive maintenance, which will decrease downtime and costs by identifying a potential problem before it results in a breakdown. • Nikola will have the ability to provide over the air updates and software fixes when the vehicle is stopped. This can significantly reduce the time for repair and improve uptime. • In cases where a customer has their own maintenance infrastructure, we will identify and provide procedures for items that can be maintained at their shops. This could include procedures such as tire changes, wiper and windshield repair and brake servicing. • In cases where the customer does not have a maintenance infrastructure or for more complex items, Nikola is leveraging its exclusive partner Thompson Caterpillar for maintenance and warranty work. Customers will have access to an already established network of 800 service stations as well as the ability to deploy a mobile service model. We will also support our partners with technologies like augmented reality and web-enabled video to support technicians for very complex tasks or newly identified issues. • If a vehicle requires maintenance of a complex system such as the fuel cell or battery, some of those items can be swapped or replaced with relative ease. This allows us to repair the downed component in the background and minimize vehicle downtime. We are also planning to develop a network of trained technicians that can travel to a customer or service partner site as necessary. 29. Finally, with respect to partnerships and suppliers, the July 17, 2020 Prospectus stated, in relevant part: 10 Nikola’s vision will be realized through a revolutionary business model, groundbreaking R&D, disciplined execution, and world-class partnerships. Our business model is validated and supported by world-class strategic partnerships that significantly reduce execution risk, improve commercialization timeline, and provide a long-term competitive advantage. These world-class partners have accelerated our internal development, growth, and learning and have positioned us to revolutionize the transportation sector. We believe our partnerships help increase the depth and breadth of our competitive advantage as well. Our partnership philosophy is a recognition that the world’s toughest challenges require bold solutions and a collaborative effort from multiple parties. Our goal is to provide zero-emission solutions to the transportation sector and to usher in next-generation grid solutions. With the help of our partners, we believe our chances of success are greatly improved. At Nikola, we are inspired by the knowledge that if we are successful, the whole world wins. 30. On July 27, 2020, Nikola filed a prospectus on Form 424B3 with the SEC (the “July 27, 2020 Prospectus”). The July 27, 2020 Prospectus contained substantively similar statements as those contained in the July 17, 2020 Prospectus, discussed above in ¶¶ 24-29. 31. On August 4, 2020, Nikola filed a Quarterly Report on Form 10-Q with the SEC, reporting the Company’s financial and operating results for the quarter ended June 30, 2020 (the “Q2 2020 10-Q”). In providing an overview of the Company, the Q2 2020 10-Q stated, in relevant We are a vertically integrated zero emissions transportation systems provider that designs and manufactures state of the art battery electric and hydrogen electric vehicles, electric vehicle drivetrains, energy storage systems, and hydrogen fueling stations. To date, we have been primarily focused on delivering zero emission Class 8 trucks to the commercial transportation sector in the U.S. and in Europe. Our core product offering includes battery electric and hydrogen fuel cell electric trucks and hydrogen fuel. We operate in three business units: Truck, Energy and Powersports. The Truck business unit is developing and commercializing BEV and FCEV Class 8 trucks that provide environmentally friendly, cost effective solutions to the short haul and long haul trucking sector. The Energy business unit is developing and constructing a network of hydrogen fueling stations to meet hydrogen fuel demand for our FCEV customers. The Powersports business unit is developing electric vehicle solutions for military and outdoor recreational applications. 11 32. Further, with respect to the Company’s controls and procedures, the Q2 2020 10-Q Evaluation of Disclosure Controls and Procedures We maintain a system of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), as appropriate, to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures under the Exchange Act as of June 30, 2020, the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting, as identified in connection with the evaluation required by Rule 13a-15(d) and Rule 15d-15(d) of the Exchange Act, that occurred during the three months ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 33. Appended to the Q2 2020 10-Q as exhibits were signed certifications pursuant to the Sarbanes-Oxley Act of 2002 (“SOX”) by Defendants Russell and Brady, attesting that “[t]he information contained in the [Q2 2020 10-Q] fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the [Q2 2020 10-Q].” 34. That same day, Nikola hosted an earnings call with investors and analysts to discuss the Company’s financial and operating results for the second quarter of 2020. During the call, 12 Defendant Russell touted the purported operational performance of the Company, stating, in relevant part: Nikola is a vertically integrated zero emissions transportation systems provider. We design and manufacture battery electric and hydrogen fuel cell electric vehicles along with the battery charging systems and hydrogen fueling stations to power them. Our core global offering centers on heavy commercial trucks. Our long haul commercial transport solution is especially unique with a revolutionary bundled lease or freight-as-a-service model. We provide customers with a fuel cell electric truck, the hydrogen fuel it needs and the all scheduled maintenance for a fixed total cost. All the customer needs to provide is a driver. This approach has proven very attractive and many customers are finding that they will be able to transition to zero emissions without an increase in total cost compared to their current fossil fuel solution. Our fuel cell electric truck reservation book exceeded 14,000 units or approximately $10 billion in potential revenue sometime ago. Since then we focused our efforts on direct partnerships with customers, who have dedicated routes rolling out our hydrogen station network along corporate customers dedicated routes or milk runs allows us to guarantee a high degree of hydrogen station utilization and avoid speculative investments in fueling infrastructure. Stations are being developed based on known customer demand along established dedicated routes. 35. Later on the call, when answering a question regarding whether the Company would expand beyond trucking and fuel stations, Defendant Russell replied: Well . . . you have to trust us, as there’s a lot more going on than you see in the announcements. As you know, we’re talking to lots of folks. We were talking to lots of folks before, but now this seems like just about everybody in the world knows about us. We’re having lots of conversations with lots of people. And when we are able to announce those publicly, we’re going to do it just as Kim said. A lot of the people we’re talking to would like to keep those conversations confidential for now. And so that’s one of the reasons we don’t announce everything that we have going on. But when we have something that we can publicly announce and you’re going to hear about it. I will make one additional to Kim’s point before. There’s going to be a lot of cool things in Nikola world. You want, you want to be there? We won’t wait. If we have something that’s material, of course, we’re going to announce it. We’re required to do that. But there’s going to be a lot of cool stuff that happens in Nikola world. That’s going to be a place. 13 (Emphases added.) 36. Finally, when asked a question regarding the grid and hydrogen’s role in balancing the energy demand, Defendant Russell replied, in relevant part: One of the great benefits of what Nikola is bringing to the world is the ability to balance the renewable energy that’s coming into the grid. *** So one of the great things that Nikola offers to the world is when we put these hydrogen stations in and we start to get a lot of them in there, it represents a tremendous amount of demand for electricity that can match up to the supply. So we can make a – we can make hydrogen when the electricity is available and then we don’t have to add significant demand to the peak. *** And so you got this mismatch between the peak of renewable production, if the wind happens to be blowing optimally around noon, and the sun always shines optimally at noon, then you’ve got way too much power at that point. And then but sometime around between four o’clock and seven o’clock you don’t have enough. Well, guess what, when Nicola is there in bulk, which we’re going to be in volume. We can take a lot of that extra power at the peak and turn it into hydrogen. And then we don’t have to be pulling power when the rest of the grid needs it so badly at the peak of demand. 37. On August 10, 2020, Nikola issued a press release entitled, “Nikola Receives Landmark Order of 2,500 Battery-Electric Waste Trucks from Republic Services.” The press release quoted Defendant Milton, touting, in relevant part: “Nikola specializes in heavy-duty, zero-emission Class 8 trucks. The refuse market is one of the most stable markets in the industry and provides long-term shareholder value,” said Nikola Founder and Executive Chairman Trevor Milton. “The Nikola Tre powertrain is ideal for the refuse market as it shares and uses the same batteries, controls, inverters and e-axle. By sharing the Tre platform, we can drive the cost down for both programs by using the same parts. You couldn’t pick a better partner than Republic Services, a leader in long-term environmental sustainability and customer service. Republic Services will help us ensure the Nikola Tre meets customer and fleet lifecycle demands and we are excited to have them participate in the design process.” 14 In addition, the press release quoted Defendant Russell, who stated that “[t]his is a game changer,” and that “[r]efuse truck customers have always ordered chassis from truck OEMs and bodies from other suppliers. Nikola has fully integrated the chassis and body, covering both with a single factory warranty. Trucks will include both automated side loaders and front-end loaders — all of which will be zero-emission.” 38. On September 8, 2020, Nikola issued a press release announcing that it had formed a strategic partnership with General Motors Co. The press release quoted Defendant Milton, stating, in relevant part: “Nikola is one of the most innovative companies in the world. General Motors is one of the top engineering and manufacturing companies in the world. You couldn’t dream of a better partnership than this,” said Nikola Founder and Executive Chairman Trevor Milton. “By joining together, we get access to their validated parts for all of our programs, General Motors’ Ultium battery technology and a multi-billion dollar fuel cell program ready for production. Nikola immediately gets decades of supplier and manufacturing knowledge, validated and tested production- ready EV propulsion, world-class engineering and investor confidence. Most importantly, General Motors has a vested interest to see Nikola succeed. We made three promises to our stakeholders and have now fulfilled two out of three promises ahead of schedule. What an exciting announcement.” 39. The statements referenced in ¶¶ 23-38 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) Defendant Milton had repeatedly misrepresented and/or exaggerated Nikola’s financial, technological, and operational profile; (ii) the foregoing misrepresentations were intended to, and did, present a materially false image of the Company’s growth and success, thereby artificially inflating the Company’s stock price; (iii) the foregoing misrepresentations were foreseeably likely to subject the Company to enhanced regulatory scrutiny and/or enforcement, along with reputational harm 15 when the truth came to light; and (iv) as a result, the Company’s public statements were materially false and misleading at all relevant times. The Truth Begins to Emerge 40. On September 10, 2020, Hindenburg published a report entitled, “Nikola: How to Parlay An Ocean of Lies Into a Partnership With the Largest Auto OEM in America.” Asserting that it had gathered “extensive evidence—including recorded phone calls, text messages, private emails and behind-the-scenes photographs,” Hindenburg represented that it had identified “dozens of false statements by” Milton, which had led Hindenburg to conclude that Nikola “is an intricate fraud built on dozen of lies over the course of . . . Milton’s career.” For example, the Report alleged, inter alia: • We reveal how, in the face of growing skepticism over the functionality of its truck, Nikola staged a video called “Nikola One in Motion” which showed the semi-truck cruising on a road at a high rate of speed. Our investigation of the site and text messages from a former employee reveal that the video was an elaborate ruse—Nikola had the truck towed to the top of a hill on a remote stretch of road and simply filmed it rolling down the hill. • In October 2019, Nikola announced it would revolutionize the battery industry. This was to be done through a pending acquisition, but the deal fell through when Nikola realized (a) the technology was vaporware and (b) the President of the battery company had been indicted months earlier over allegations that he conned NASA by using his expense account to procure numerous prostitutes. *** • Inexpensive hydrogen is fundamental to the success of Nikola’s business model. Trevor has claimed in a presentation to hundreds of people and in multiple interviews to have succeeded at cutting the cost of hydrogen by ~81% compared to peers and to already be producing hydrogen. Nikola has not produced hydrogen at this price or at any price as he later admitted when pressed by media. *** 16 • Trevor claims Nikola designs all key components in house, but they appear to simply be buying or licensing them from third-parties. One example: we found that Nikola actually buys inverters from a company called Cascadia. In a video showing off its “in-house” inverters, Nikola concealed the Cascadia label with a piece of masking tape. *** • Nikola’s much-touted multi-billion dollar order book is filled with fluff. U.S. Xpress reportedly accounts for a third of its reservations, representing ~$3.5 billion in orders. U.S. Xpress had only $1.3 million in cash on hand last quarter. *** • Trevor has ensured he is not going down with the ship. He cashed out $70 million around the IPO and amended his share lock-up from 1-year to 180 days. If he is fired, his equity awards immediately vest and he is entitled to collect $20 million over two years. Milton has laid the groundwork to extract hundreds of millions from Nikola years before ever delivering on his promises. Defendant Milton made these misrepresentations, the Report suggested, to substantially grow the Company and secure partnerships with top auto companies. 41. On this news, Nikola’s stock price fell $4.80 per share, or 11.33%, to close at $37.57 per share on September 10, 2020. 42. Then, on September 14, 2020, after the market had closed, Bloomberg reported that the SEC was investigating Nikola in connection with the allegations in the Hindenburg Report. 43. Finally, on September 15, 2020, during intra-day trading, the Wall Street Journal reported that the United States Department of Justice (“DOJ”) had joined the SEC’s investigation of Nikola. 44. On this news, Nikola’s stock fell an additional $0.17 per share during intra-day trading, to close at $32.83 on September 15, 2020, an 8.27% decline from its previous close on September 14, 2020. 17 45. 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 46. 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 Nikola 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. 47. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Nikola 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 Nikola 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. 48. 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. 18 49. 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. 50. 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 Nikola; • whether the Individual Defendants caused Nikola 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 Nikola 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. 51. 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. 52. Plaintiff will rely, in part, upon the presumption of reliance established by the fraud- on-the-market doctrine in that: 19 • Defendants made public misrepresentations or failed to disclose material facts during the Class Period; • the omissions and misrepresentations were material; • Nikola 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 • Plaintiff and members of the Class purchased, acquired and/or sold Nikola 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. 53. Based upon the foregoing, Plaintiff and the members of the Class are entitled to a presumption of reliance upon the integrity of the market. 54. 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) 55. Plaintiff repeats and re-alleges each and every allegation contained above as if fully set forth herein. 56. 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. 20 57. 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 Nikola securities; and (iii) cause Plaintiff and other members of the Class to purchase or otherwise acquire Nikola 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. 58. 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 Nikola 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 Nikola’s finances and business prospects. 59. By virtue of their positions at Nikola, 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 21 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. 60. 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 Nikola, the Individual Defendants had knowledge of the details of Nikola’s internal affairs. 61. 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 Nikola. 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 Nikola’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 Nikola securities was artificially inflated throughout the Class Period. In ignorance of the adverse facts concerning Nikola’s business and financial condition which were concealed by Defendants, Plaintiff and the other members of the Class purchased or otherwise acquired Nikola 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. 62. During the Class Period, Nikola securities were traded on an active and efficient market. Plaintiff and the other members of the Class, relying on the materially false and misleading 22 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 Nikola 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 Nikola securities was substantially lower than the prices paid by Plaintiff and the other members of the Class. The market price of Nikola securities declined sharply upon public disclosure of the facts alleged herein to the injury of Plaintiff and Class members. 63. 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. 64. 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) 65. Plaintiff repeats and re-alleges each and every allegation contained in the foregoing paragraphs as if fully set forth herein. 66. During the Class Period, the Individual Defendants participated in the operation and management of Nikola, and conducted and participated, directly and indirectly, in the conduct 23 of Nikola’s business affairs. Because of their senior positions, they knew the adverse non-public information about Nikola’s misstatement of income and expenses and false financial statements. 67. 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 Nikola’s financial condition and results of operations, and to correct promptly any public statements issued by Nikola which had become materially false or misleading. 68. 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 Nikola disseminated in the marketplace during the Class Period concerning Nikola’s results of operations. Throughout the Class Period, the Individual Defendants exercised their power and authority to cause Nikola to engage in the wrongful acts complained of herein. The Individual Defendants therefore, were “controlling persons” of Nikola 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 Nikola securities. 69. Each of the Individual Defendants, therefore, acted as a controlling person of Nikola. By reason of their senior management positions and/or being directors of Nikola, each of the Individual Defendants had the power to direct the actions of, and exercised the same to cause, Nikola to engage in the unlawful acts and conduct complained of herein. Each of the Individual Defendants exercised control over the general operations of Nikola 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. 70. 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 Nikola. 24 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: September 16, 2020 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 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 protected] 25 THE SCHALL LAW FIRM Brian Schall (pro hac vice application forthcoming) Rina Restaino (pro hac vice application forthcoming) 2049 Century Park East, Suite 2460 Los Angeles, CA 90067 Telephone: (424) 303-1964 [email protected] [email protected] Attorneys for Plaintiff 26 CERTIFICATION PURSUANT TO FEDERAL SECURITIES LAWS 1. I, Arab Salem, make this declaration pursuant to Section 27(a)(2) of the Securities Act of 1933 (“Securities Act”) and/or Section 21D(a)(2) of the Securities Exchange Act of 1934 (“Exchange Act”) as amended by the Private Securities Litigation Reform Act of 1995. 2. I have reviewed a Complaint against Nikola Corporation (“Nikola” or the “Company”) and authorize the filing of a comparable complaint on my behalf. 3. I did not purchase or acquire Nikola securities at the direction of plaintiffs’ counsel or in order to participate in any private action arising under the Securities Act or Exchange Act. 4. I am willing to serve as a representative party on behalf of a Class of investors who purchased or otherwise acquired Nikola securities during the class period, including providing testimony at deposition and trial, if necessary. I understand 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 my transactions in Nikola 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, I have not served or sought to serve as a representative party on behalf of a class under the federal securities laws. 7. I agree not to accept any payment for serving as a representative party on behalf of the class as set forth in the Complaint, beyond my 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. 8. I declare under penalty of perjury that the foregoing is true and correct. 9/10/2020 Executed _____________________________ (Date) _______________________________________ (Signature) Arab Salem _______________________________________ (Type or Print Name) Nikola Corporation (NKLA) Salem, Arab List of Purchases and Sales Transaction Number of Price Per Type Date Shares/Unit Share/Unit Purchase 6/17/2020 15 $64.9000 Purchase 7/8/2020 40 $49.1200 Purchase 7/8/2020 40 $48.9000 Purchase 7/8/2020 40 $49.5753 Purchase 7/8/2020 80 $49.8400 Purchase 7/8/2020 100 $49.6300 Purchase 7/8/2020 200 $49.9300 Purchase 7/8/2020 99 $50.0800 Purchase 7/8/2020 198 $50.3400 Purchase 7/8/2020 100 $54.5300 Purchase 7/8/2020 82 $54.5982 Purchase 7/9/2020 83 $59.6200 Purchase 7/21/2020 47 $41.7000 Purchase 7/24/2020 32 $30.6000 Purchase 8/21/2020 24 $40.4600

securities

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UNITED STATES DISTRICT COURT Docket Number: 1:19-cv-10605 SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x JOSEPH GUGLIELMO, on behalf of himself and all others similarly situated, CLASS ACTION COMPLAINT AND Plaintiffs, v. DEMAND FOR JURY TRIAL SKINNYCORP, LLC, Defendant. : : : : : : : : : : : : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x INTRODUCTION 1. Plaintiff JOSEPH GUGLIELMO, on behalf of himself and others similarly situated, asserts the following claims against Defendant SKINNYCORP, 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.bucketfeet.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 JOSEPH GUGLIELMO, at all relevant times, is and was a resident of Suffolk 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 Delaware 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 footwear company that owns and operates www.bucketfeet.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.bucketfeet.com, to make a purchase. 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, 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 his original search. 29. The Website requires the use of a mouse to effectively browse. Plaintiff, however, is unable to do so because manipulating the mouse is a visual activity of moving the pointer from one visual spot on the page to another, and Plaintiff relies exclusively on keyboard functions to navigate the Web. 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 equal access to the Website. 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. 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. 39. 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. 40. 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. 41. 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 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 and as a result have been denied access to the equal enjoyment of goods and services, during the relevant statutory period. 43. 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. 44. 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. 45. 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. 46. 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. 47. 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. 48. 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. 49. Plaintiff, on behalf of himself and the Class Members, repeats and realleges every allegation of the preceding paragraphs as if fully set forth herein. 50. 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). 51. 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. 52. 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). 53. 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). 54. 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). 55. 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. 56. 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 57. 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. 58. 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.” 59. Defendant’s Website is a sales establishment and public accommodations within the definition of N.Y.C. Admin. Code § 8-102(9). 60. 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). 61. 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. 62. 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). 63. 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. 64. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 65. 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. 66. Defendant’s actions were and are in violation of the NYCHRL and therefore Plaintiff invokes his right to injunctive relief to remedy the discrimination. 67. 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. 68. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 69. 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 70. 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. 71. 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. 72. 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 November 15, 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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Jonathan M. Lebe (State Bar No. 284605) [email protected] Annaliz Loera (State Bar No. 334129) [email protected] Nicolas W. Tomas (State Bar No. 339752) [email protected] Lebe Law, APLC 777 S. Alameda Street, Second Floor Los Angeles, CA 90021 Telephone: (213) 444-1973 Attorneys for Plaintiff Anna Delgado, Individually and on behalf of all others similarly situated UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA Anna Delgado, individually and on behalf of all others similarly situated, Plaintiff, CLASS ACTION COMPLAINT FOR VIOLATIONS OF FAIR LABOR STANDARDS ACT DEMAND FOR JURY TRIAL vs. Food 4 Less of California, Inc.; and Ralphs Grocery Company, Defendant. 1 situated, alleges as follows: NATURE OF ACTION AND INTRODUCTORY STATEMENT 1. Plaintiff Anna Delgado ("Plaintiff”) is an individual who worked for Defendants Food 4 Less of California, Inc. and Ralphs Grocery Company (“Defendants”). She brings this action on behalf of herself individually and a putative class of non-exempt employees working throughout California and nationwide. 2. Defendants operate grocery store shopping centers throughout California and nationwide. 3. Through this action, Plaintiff alleges that Defendant has engaged in a systematic pattern of wage and hour violations under the Fair Labor Standards Act, 29 U.S.C. § 201 et. seq. (“FLSA”). 4. Plaintiff brings this action based on Defendants’ failure to maintain a policy that compensates its employees for all overtime wages. On information and belief, there are many similarly situated current and former non-exempt employees who have not been paid for all hours worked over 40 in a workweek in violation of the FLSA. For example, Defendant failed to include shift premiums into the regular rate of pay for overtime compensation purposes when Plaintiff worked for Defendants during the workweeks of March 9, 2020 through March 15, 2020 and August 3, 2020 through August 9, 2020. 5. Plaintiff brings this lawsuit seeking monetary relief against Defendants on behalf of herself and all other similarly situated to recover, among other things, unpaid wages and commissions, interest, attorneys’ fees, costs, expenses, and penalties pursuant to the FLSA. JURISDICTION AND VENUE 6. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331, because this complaint alleges claims under the laws of the United States, specifically the FLSA. 2 has personal jurisdiction over Defendant because many of the acts complained of and giving rise to the claims alleged took place in California and in this District. THE PARTIES 8. Plaintiff is a citizen of California. Plaintiff was employed by Defendants during the FLSA time period. Details regarding Plaintiff’s precise hours, pay, and revenue generated for Defendants are available by reference to Defendants’ records. 9. Plaintiff is informed and believes, and thereon alleges, that Defendants at all times hereinafter mentioned, were employers as defined in and subject to the FLSA. COLLECTIVE ACTION ALLEGATIONS 10. Plaintiff brings this action pursuant to the FLSA, 29 U.S.C. § 216(b), on behalf of herself and all similarly situated non-exempt employees who elect to opt into this action who work or have worked for Defendants as non-exempt employees nationwide in the past three (3) years (“the FLSA Class”). 11. Defendants are liable under the FLSA for, inter alia, failing to properly compensate Plaintiff and other non-exempt employees. On information and belief, there are many similarly situated current and former non-exempt employees who have not been paid for all hours worked over 40 in a workweek in violation of the FLSA who would benefit from the issuance of a court-supervised notice regarding the present lawsuit and the opportunity to join it. Those similarly situated employees are known to Defendants, are readily identifiable, and can be located through Defendants’ records, such that notice should be sent to them pursuant to 29 U.S.C. § 216(b). FIRST CAUSE OF ACTION FAILURE TO PAY OVERTIME WAGES (Violation of 29 U.S.C. § 207, 211 & 29 C.F.R. § 516.2(b)) 1. Plaintiff hereby re-alleges and incorporates by reference all paragraphs above as though fully set forth herein. 2. At all relevant times, Defendants have been an employer and Plaintiff 3 protections of the FLSA. 3. The FLSA requires employers to keep accurate records of hours worked and wages paid, among other information, and to provide these records to their employees. 29 U.S.C. § 211(c); 29 C.F.R. § 516.2(b). Defendants’ practices and policies were violations of these requirements. 4. Although Plaintiff and putative FLSA members periodically worked more than 40 hours in a week, Defendants had a policy and practice of failing and refusing to pay employees overtime and thus violated and continue to violate the above-referenced overtime provisions of the FLSA. Indeed, during her employment, Plaintiff worked over 40 hours without being paid all overtime earned. For example, Defendant failed to include shift premiums into the regular rate of pay for overtime compensation purposes when Plaintiff worked for Defendants during the workweeks of March 9, 2020 through March 15, 2020 and August 3, 2020 through August 9, 2020. 5. Plaintiff and FLSA Members seeks the amount of the respective unpaid wages owed to them, liquidated damages, attorneys’ fees and costs pursuant to 29 U.S.C. §§ 201 et seq. 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, prays for judgment against Defendant as follows: 1. For certification of this action as a class action, including certifying the FLSA Class alleged by Plaintiff; 2. For appointment of Anna Delgado as the class representative; 3. For appointment of Lebe Law, APLC as class counsel for all purposes; 4. For compensatory damages in an amount according to proof with interest thereon; 4 with interest thereon; 6. For any unpaid wages and benefits, interest, attorneys’ fees, costs and expenses and penalties pursuant to the FLSA; 7. For liquidated damages pursuant to the FLSA; 8. For reasonable attorneys’ fees, costs of suit and interest to the extent permitted by law, inbcuding pursuant to the FLSA; 9. For pre-judgment interest; and 10. For other relief as the Court deems just and proper. Dated: March 1, 2022 LEBE LAW, APLC /s/ Jonathan M. Lebe By: Jonathan M. Lebe Annaliz Loera Nicolas W. Tomas Attorneys for Plaintiff Anna Delgado DEMAND FOR JURY TRIAL Plaintiff hereby demands a jury trial with respect to all issues triable of right by jury. Dated: March 1, 2022 LEBE LAW, APLC /s/ Jonathan M. Lebe By: Jonathan M. Lebe Annaliz Loera Nicolas W. Tomas Attorneys for Plaintiff Anna Delgado 5

employment & labor

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Case No. 21-cv-1036 SHAKED LAW GROUP, P.C. Dan Shaked (DS-3331) 14 Harwood Court, Suite 415 Scarsdale, NY 10583 Tel. (917) 373-9128 E-mail: [email protected] Attorneys for Plaintiff and the Class UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK -----------------------------------------------------------X LINDA SLADE, Individually and as the representative of a class of similarly situated persons, Plaintiff, - against - MENTED COSMETICS, INC., Defendant. -----------------------------------------------------------X COMPLAINT – CLASS ACTION INTRODUCTION 1. Plaintiff, Linda Slade (“Plaintiff” or “Slade”), brings this action on behalf of herself and all other persons similarly situated against Mented Cosmetics, Inc. (hereinafter “Mented” 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 Mented 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 Mented provides to their non-disabled customers through http//:www.Mentedcosmetics.com (hereinafter “Mentedcosmetics.com” or “the website”). Defendant’s 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. Plaintiff is also an advocate of the rights of similarly situated disabled persons and is a “tester” for the purpose of asserting his civil rights and monitoring, ensuring, and determining whether places of public accommodation and/or their websites and apps are in compliance with the ADA. 6. Mentedcosmetics.com provides to the public a wide array of the goods, services, price specials, employment opportunities and other programs. Yet, Mentedcosmetics.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, Mented 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 2 increasingly prominent part of everyday life, allowing blind and visually-impaired persons to fully and independently access a variety of services. 7. 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 means that blind people are excluded from experiencing transacting with Defendant’s website and from purchasing goods or services from Defendant’s website. 8. 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. Mented’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 Mentedcosmetics.com. 9. By failing to make the website accessible to blind persons, Defendant is violating basic equal access requirements under both state and federal law. 10. 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. 11. Plaintiff browsed and intended to take the Shade Quiz and make an online purchase of the Skin by Mented product on Mentedcosmetics.com. However, unless Defendant remedies the numerous access barriers on its website, Plaintiff and Class members will continue 3 to be unable to independently navigate, browse, use, and complete a transaction on Mentedcosmetics.com. 12. Because Defendant’s website, Mentedcosmetics.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 Mented’s policies, practices, and procedures so that Defendant’s website 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 13. 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). 14. 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”). 15. 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. 4 16. 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. Because of this targeting, it is not unusual for Mented 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 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. 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. PARTIES 17. Plaintiff, is and has been at all relevant times a resident of Bronx County, State of New York. 5 18. 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, Linda Slade, cannot use a computer without the assistance of screen reader software. Plaintiff, Linda Slade, has been denied the full enjoyment of the facilities, goods and services of Mentedcosmetics.com, as a result of accessibility barriers on Mentedcosmetics.com. 19. Defendant, Mented Cosmetics, Inc., is a Delaware Foreign Business Corporation doing business in New York with its principal place of business located at 141 West 128th Street, New York, NY 10027. 20. Upon information and belief, Mented has raised over $4,000,000 from venture capital firms. Upon information and belief, not a single dollar of the over $4,000,000 raised has been used to make its App accessible to the visually-impaired. 21. Mented provides to the public a website known as Mentedcosmetics.com which provides consumers with access to an array of goods and services, including, the ability to take a Shade Quiz and view the various lines of cosmetic products including products for the lips, face, nails, and body, make purchases, and learn about promotions, among other features. Consumers across the United States use Defendant’s website to purchase cosmetic products. Defendant’s products are sold at many retailers throughout the country. 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 Mentedcosmetics.com has deterred Plaintiff from taking the Shade Quiz and making an online purchase of the Skin by Mented product. 6 NATURE OF THE CASE 22. 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. 23. 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. 24. 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. 25. 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. 26. 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 7 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. FACTUAL ALLEGATIONS 27. Defendant, Mented Cosmetics, Inc., controls and operates Mentedcosmetics.com. in New York State and throughout the United States. 28. Mentedcosmetics.com is a commercial website that offers products and services for online sale. The online store allows the user to take a Shade Quiz, browse and learn about cosmetics products, make purchases, and perform a variety of other functions. 29. Among the features offered by Mentedcosmetics.com are the following: (a) Consumers may use the website to connect with Mented on social media, using such sites as Facebook, Twitter, Instagram, and Pinterest; (b) an online store, allowing customers to learn about and purchase cosmetics products including products for lips, face, nails, and body; and (c) learning about the product and the company, take a Shade Quiz, read reviews, get answers to frequently asked questions, learn about the ingredients, and learn about promotions. 30. This case arises out of Mented’s policy and practice of denying the blind access to the goods and services offered by Mentedcosmetics.com. Due to Mented’s failure and refusal to remove access barriers to Mentedcosmetics.com, blind individuals have been and are being 8 denied equal access to Mented, as well as to the numerous goods, services and benefits offered to the public through Mentedcosmetics.com. 31. Mented denies the blind access to goods, services and information made available through Mentedcosmetics.com by preventing them from freely navigating Mentedcosmetics.com. 32. Mentedcosmetics.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 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. 33. 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 Mentedcosmetics.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 Mentedcosmetics.com customers are unable to determine what is on the website, browse the website or investigate and/or make purchases. 34. Mentedcosmetics.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 Mentedcosmetics.com, these forms include search fields to 9 locate products, fields to select skin shade 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. 35. Specifically, when Plaintiff attempted to make a purchase, she encountered the following problems:  10% off pop-up is not announced. Consequently, blind visitors to the website have to pay full price while sighted visitors can take advantage of discounts and promotions. o Plaintiff was also not aware of the pop-up for 15% off.  Both shade charts are inoperable by keyboard. A user must click on a color for these to work. o The title and headline for the Shade finder were announced. o The Shade bar only announces the first color with Tab or Arrow key navigation. Plaintiff couldn’t hear any other colors and pressing Tab took her to the photo, but that was announced as an unlabeled graphic. o Sighted persons can use a mouse to click on any shade. When you click on a color, all of the images beneath the shade bar or next to the shade bar change to reflect the newly selected color. It just doesn’t work with keyboard or screen readers.  Skin by Mented product o When shown on the Best Seller category page, Plaintiff could hear the image and product information but didn’t hear a confirmation when she selected one of the color shades. The website does put a check mark on the shade selected and it changes the photo to reflect the newly selected color, but screen reader users don’t hear any of this. o The same happens on the Skin by Mented product page. Plaintiff could hear the colors but wasn’t notified when she selected a color. o The quantity button beneath the shade color is announced without a label. o When Plaintiff pressed add to cart, the cart pop-up was shown and focus moved to it for a second, but then she received a popup for a 60-second quiz and a second pop-up was shown at the same time. The second pop-up was a special offer of a 16 pack of sample shades for $1.50. After about 20 seconds, a third pop-up (for 15% off) was shown on top of the other two.  At this point, Plaintiff had three pop-ups and the cart window and she couldn’t do anything. She became stuck. 10  Plaintiff tried to make a purchase a second time. This time, the cart received focus, one pop-up was shown but focus was stuck on just the Cart name. She couldn’t hear anything else or move anywhere. She just kept hearing “Cart.” Consequently, Plaintiff and blind visitors to the website are unable to complete a transaction. 36. Furthermore, Mentedcosmetics.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 Mentedcosmetics.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. 37. Mentedcosmetics.com also lacks accessible forms. Plaintiff is unable to locate the shopping bag because the shopping bag form does not specify the purpose of the shopping bag. As a result, blind customers are denied access to the shopping bag and to the ability to check out. Consequently, blind customers are unsuccessful in adding products into their shopping bags and are essentially prevented from purchasing items on Mentedcosmetics.com. 38. Moreover, the lack of navigation links on Defendant’s website makes attempting to navigate through Mentedcosmetics.com even more time consuming and confusing for Plaintiff and blind consumers. 39. Mentedcosmetics.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 11 is a visual activity of moving the mouse pointer from one visual spot on the page to another. Thus, Mentedcosmetics.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 Mentedcosmetics.com. 40. Due to Mentedcosmetics.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 Mentedcosmetics.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, Mentedcosmetics.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 Mentedcosmetics.com. 41. Mentedcosmetics.com thus contains access barriers which deny the full and equal access to Plaintiff, who would otherwise use Mentedcosmetics.com and who would otherwise be able to fully and equally enjoy the benefits and services of Mentedcosmetics.com in New York State and throughout the United States. 42. Plaintiff, Linda Slade, has made numerous attempts to complete a purchase on Mentedcosmetics.com, most recently on January 20, 2021, but was unable to do so independently because of the many access barriers on Defendant’s website. These access barriers have caused Mentedcosmetics.com to be inaccessible to, and not independently usable 12 by, blind and visually-impaired persons. Amongst other access barriers experienced, Plaintiff was unable to take the Shade Quiz and make an online purchase of the Skin by Mented product. 43. As described above, Plaintiff has actual knowledge of the fact that Defendant’s website, Mentedcosmetics.com, contains access barriers causing the website to be inaccessible, and not independently usable by, blind and visually-impaired persons. 44. These barriers to access have denied Plaintiff full and equal access to, and enjoyment of, the goods, benefits and services of Mentedcosmetics.com. 45. 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. 46. Defendant utilizes standards, criteria or methods of administration that have the effect of discriminating or perpetuating the discrimination of others. 47. Because of Defendant’s denial of full and equal access to, and enjoyment of, the goods, benefits and services of Mentedcosmetics.com, Plaintiff and the class have suffered an injury-in-fact which is concrete and particularized and actual and is a direct result of Defendant’s conduct. CLASS ACTION ALLEGATIONS 48. 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 13 Rules of Civil Procedure: “all legally blind individuals in the United States who have attempted to access Mentedcosmetics.com and as a result have been denied access to the enjoyment of goods and services offered by Mentedcosmetics.com, during the relevant statutory period.” 49. 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 Mentedcosmetics.com and as a result have been denied access to the enjoyment of goods and services offered by Mentedcosmetics.com, during the relevant statutory period.” 50. 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. 51. 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 Mentedcosmetics.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 Mentedcosmetics.com. 52. There are common questions of law and fact common to the class, including without limitation, the following: (a) Whether Mentedcosmetics.com is a “public accommodation” under the ADA; (b) Whether Mentedcosmetics.com is a “place or provider of public accommodation” under the laws of New York; 14 (c) Whether Defendant, through its website, Mentedcosmetics.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, Mentedcosmetics.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. 53. 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 Mented has violated the ADA, and/or the laws of New York by failing to update or remove access barriers on their website, Mentedcosmetics.com, so it can be independently accessible to the class of people who are legally blind. 54. 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. 55. 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. 56. 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 15 system by the filing of numerous similar suits by people with visual disabilities throughout the United States. 57. 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) 58. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 57 of this Complaint as though set forth at length herein. 59. 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). 60. Mentedcosmetics.com is a sales establishment and public accommodation within the definition of 42 U.S.C. §§ 12181(7). 61. Defendant is subject to Title III of the ADA because it owns and operates Mentedcosmetics.com. 62. 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. 63. Under Title III of the ADA, 42 U.S.C. § 12182(b)(1)(A)(II), it is unlawful 16 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. 64. 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.” 65. 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.” 66. 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. 17 67. 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 Mented who are blind have been denied full and equal access to Mentedcosmetics.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. 68. Defendant has failed to take any prompt and equitable steps to remedy its discriminatory conduct. These violations are ongoing. 69. 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 Mentedcosmetics.com in violation of Title III of the Americans with Disabilities Act, 42 U.S.C. §§ 12181 et seq. and/or its implementing regulations. 70. 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. 71. The actions of Defendant were and are in violation of the ADA, and therefore Plaintiff invokes her statutory right to injunctive relief to remedy the discrimination. 72. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 73. 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.)) 74. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 73 of this Complaint as though set forth at length herein. 18 75. 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.”. 76. Mentedcosmetics.com is a sales establishment and public accommodation within the definition of N.Y. Exec. Law § 292(9). 77. Defendant is subject to the New York Human Rights Law because it owns and operates Mentedcosmetics.com. Defendant is a person within the meaning of N.Y. Exec. Law. § 78. Defendant is violating N.Y. Exec. Law § 296(2)(a) in refusing to update or remove access barriers to Mentedcosmetics.com, causing Mentedcosmetics.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 79. 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 making such modifications would fundamentally alter the nature of such facilities, privileges, advantages or accommodations.” 80. 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 19 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.” 81. 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. 82. 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. 83. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 84. 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, 20 accommodations and/or opportunities of Mentedcosmetics.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. 85. The actions of Defendant were and are in violation of the New York State Human Rights Law and therefore Plaintiff invokes her right to injunctive relief to remedy the discrimination. 86. 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. 87. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 88. 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.)) 89. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 88 of this Complaint as though set forth at length herein. 90. Plaintiff served notice thereof upon the attorney general as required by N.Y. Civil Rights Law § 41. 91. 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 21 place shall directly or indirectly refuse, withhold from, or deny to any person any of the accommodations, advantages, facilities and privileges thereof . . .” 92. 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.” 93. Mentedcosmetics.com is a sales establishment and public accommodation within the definition of N.Y. Civil Rights Law § 40-c(2). 94. Defendant is subject to New York Civil Rights Law because it owns and operates Mentedcosmetics.com. Defendant is a person within the meaning of N.Y. Civil Law § 40-c(2). 95. Defendant is violating N.Y. Civil Rights Law § 40-c(2) in refusing to update or remove access barriers to Mentedcosmetics.com, causing Mentedcosmetics.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 96. 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. 22 97. 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 . . .” 98. 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 . . .” 99. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 100. 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. 101. 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 (Violation of New York City Human Rights Law, N.Y.C. Administrative Code § 8-102, et seq.) 102. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 101 of this Complaint as though set forth at length herein. 23 103. 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.” 104. Mentedcosmetics.com is a sales establishment and public accommodation within the definition of N.Y.C. Administrative Code § 8-102(9). 105. Defendant is subject to City Law because it owns and operates Mentedcosmetics.com. Defendant is a person within the meaning of N.Y.C. Administrative Code § 8-102(1). 106. Defendant is violating N.Y.C. Administrative Code § 8-107(4)(a) in refusing to update or remove access barriers to Mentedcosmetics.com, causing Mentedcosmetics.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). 107. 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: 24 (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. 108. Defendant has failed to take any prompt and equitable steps to remedy their discriminatory conduct. These violations are ongoing. 109. 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 Mentedcosmetics.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. 110. 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. 111. 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. 112. Plaintiff is also entitled to reasonable attorneys’ fees and costs. 113. 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 25 (Declaratory Relief) 114. Plaintiff repeats, realleges and incorporates by reference the allegations contained in paragraphs 1 through 113 of this Complaint as though set forth at length herein. 115. An actual controversy has arisen and now exists between the parties in that Plaintiff contends, and is informed and believes that Defendant denies, that Mentedcosmetics.com contains access barriers denying blind customers the full and equal access to the goods, services and facilities of Mentedcosmetics.com, which Mented 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. 116. 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 Defendant 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, Mentedcosmetics.com, into full compliance with the requirements set forth in the ADA, and its implementing regulations, so that Mentedcosmetics.com is readily accessible to and usable by blind individuals; c) A declaration that Defendant owns, maintains and/or operates its website, Mentedcosmetics.com, in a manner which discriminates against the blind and which fails 26 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 her attorneys as Class Counsel; e) An order directing Defendant 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: Scarsdale, New York February 2, 2021 SHAKED LAW GROUP, P.C. Attorneys for Plaintiff By:/s/Dan Shaked_________ Dan Shaked (DS-3331) 14 Harwood Court, Suite 415 Scarsdale, NY 10583 Tel. (917) 373-9128 e-mail: [email protected] 27

civil rights, immigration, family

9PaNE4cBD5gMZwczeBU8

CLERK DEFENDANTS LUTHERAN AUGUSTANA CENTER INC County of Residence of First Listed Defendant (EXCEPT IN U.S. PLAINTIFF CASES) LAND INVOLVED Attorneys (If Known) CV 12 (Place an "X" in One Box Only) (For Diversity Cases Only) 3 Federal Question BLOCK PTF DEF PTF (U.S. Government Not a Parage Citizen of This State 1 1 Incorporated or Principal Place of Business In This State 4 Diversity Citizen of Another State 2 2 Incorporated and Principal Place (Indicate Citizenship of Parties of Business In Another State MANN. Citizendo Subject of a MJ 3 3 Foreign Nation Foreign Country (Place an "X" in One Box Only) TORTS FORFEITURE/PENALTY BANKRUPTCY PERSONAL INJURY PERSONAL INJURY 610 Agriculture 422 Appeal 28 USC 158 310 Airplane 362 Personal Injury 620 Other Food & Drug 423 Withdrawal 410 Amitrust 315 Airplane Product Med. Malpractice 625 Drug Related Seizure 28 USC 157 Liability 365 Personal Injury - of Property 21 USC 881 450 Commerce 320 Assault, Libel & Product Liability 630 Liquor Laws PROPERTY RIGHTS 460 Deportation Slander 368 Asbestos Personal 640 R.R. & Truck 820 Copyrights 330 Federal Employers' Injury Product 650 Airline Regs. 830 Patent Liability Liability 660 Occupational 840 Trademark 340 Marine PERSONAL PROPERTY Safety/Health 490 Cable/Sat TV 345 Marine Product 370 Other Fraud 690 Other Liability 371 Truth in Lending LABOR SOCIAL SECURITY 350 Motor Vehicle 380 Other Personal 710 Fair Labor Standards 861 HIA (1395ff) Exchange 355 Motor Vehicle Property Damage Act 862 Black Lung (923) Product Liability 385 Property Damage 720 Labor/Mgmt. Relations 863 DIWC/DIWW (405(g)) 12 USC 3410 360 Other Personal Product Liability 730 Labor/Mgmt Reporting 864 SSID Title XVI Injury & Disclosure Act 865 RSI (405(g)) CIVIL RIGHTS PRISONER PETITIONS 740 Railway Labor Act FEDERAL TAX SUITS 441 Voting 510 Motions to Vacate 790 Other Labor Litigation 870 Taxes (U.S. Plaintiff 442 Employment Sentence 791 Empl. Ret. Inc. or Defendant) 443 Housing/ Habeas Corpus: Security Act 871 IRS-Third Party Accommodations 530 General 26 USC 7609 Act 444 Welfare 535 Death Penalty IMMIGRATION 445 Amer. w/Disabilities 540 Mandamus & Other 462 Naturalization Application Employment 550 Civil Rights 463 Habeas Corpus to Justice 446 Amer. w/Disabilities 555 Prison Condition Alien Detainee Other 465 Other Immigration State Statutes 440 Other Civil Rights Actions (Place an "X" in One Box Only) Remanded from 4 Reinstated or Transferred from 2 Removed from 3 5 another district 6 Multidistrict 7 State Court Appellate Court Reopened Litigation (specify) Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity): 29 U.S.C. $8 206, 207, and 216(b) et seq. Brief description of cause: To recover unpaid minimum wages and overtime compensation CHECK IF THIS IS A CLASS ACTION DEMAND $ UNDER F.R.C.P. 23 JURY DEMAND: Yes (See instructions): JUDGE He DOCKET NUMBER SIGNATURE OF ATTORNEY OF RECORD AMOUNT APPLYING IFP JUDGE MAG. JUDGERelief other than monetary damages is sought. DISCLOSURE STATEMENT - FEDERAL RULES CIVIL PROCEDURE 7.1 RELATED CASE STATEMENT (SECTION VIII) NY-E DIVISION OF BUSINESS RULE 50.1(d)(2) no no yes (Note: A corporation shall be considered a resident of the County in which it has the most significant contacts.). BAR ADMISSION No (If yes, please explain) No LL 1283

employment & labor

DlfVBIkBRpLueGJZiW9Q

Jennifer Pafiti (SBN 282790) POMERANTZ LLP 468 North Camden Drive Beverly Hills, CA 90210 Telephone: (818) 532-6499 E-mail: [email protected] Counsel for Plaintiff [Additional counsel on signature page] UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA JACOB MCGOVNEY, Individually and on Behalf of All Others Similarly Situated, Plaintiff, vs. AEROHIVE NETWORKS, INC., DAVID K. FLYNN, and JOHN RITCHIE, Case No. 18-CV-00435-LHK CONSOLIDATED SECOND AMENDED CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS JURY TRIAL DEMANDED Defendants Lead Plaintiff Andrew Moreau (“Plaintiff”), individually and on behalf of all other persons similarly situated, by his undersigned attorneys, for his second amended complaint against Defendants (defined below), alleges the following based upon personal knowledge as to himself and his own acts, and information and belief as to all other matters, based upon, inter alia, the investigation conducted by and through his 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 Aerohive Networks, Inc. (“Aerohive” or the “Company”), analysts’ reports and advisories about the Company, 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 Aerohive common shares between November 1, 2017 and January 16, 2018, both dates inclusive (the “Class Period”). Plaintiff seeks to recover compensable 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. 2. Founded in 2006, Aerohive has designed and developed a cloud networking platform and portfolio of products that enable customers to manage their network systems and to collect and analyze data from users. Aerohive services the healthcare, education, manufacturing, distribution, and retail industries throughout the United States, Europe, the Middle East, and Asia. The Company is headquartered in Milpitas, California, and its stock trades on the New York Stock Exchange (“NYSE”) under the ticker symbol “HIVE.” 3. Despite its claims that the Company “lead[s] in innovation” and is “often imitated by the competition,” Aerohive has struggled to achieve profitability. During 2016, the Company reported that it had encountered some difficulties in the education sector, which historically, generated nearly 40 percent of the Company’s revenues. In particular, uncertainties surrounding the Schools and Libraries Program overseen by the Federal Communications Commission, also known as the “E-Rate” program, which provides discounts to educational institutions to purchase technology and internet access, were a growing concern for the Company. In addition, the Company launched the next generation of its cloud networking platform, HiveManager NG, which, due to delays in product updates, was creating what the added. 4. By year end 2016, Defendants faced increasing pressure to prove that Aerohive was a real player in the industry. Consequently, in or around January 2017, Defendants announced major changes to Aerohive’s sales organization and strategy, which Defendants assured investors would improve the pace and execution of the Company’s sales, thereby driving revenues and profitability. These changes included, among other things, (1) installing new sales leadership; (2) “unbundling” Aerohive’s product and service offerings; and (3) growing the Company’s business with Dell, one of its key strategic partners. 5. Throughout 2017, Defendants repeatedly assured investors that the Company was on track and that these changes were working. For instance, during an investor conference call in August 2017, Defendant Flynn touted that the “unbundled” products, Aerohive Connect and Aerohive Select, “provided disruptive entry pricing and a seamless software upgrade,” which “enabl[ed] us to recruit over 600 new resellers in the first half of the year.” Defendant Flynn dismissed the existence of any problems in the sales organization, emphasizing that the changes “will drive increased revenue and sales efficiency.” Defendant Flynn also highlighted that “Dell continues to be material” and “we continue to make progress … We have expansion with them.” 6. During the November 1, 2017 investor conference call to discuss the Company’s third quarter 2017 results, Defendant Flynn announced the departure of Vice President of Sales Thomas Wilburn and confidently declared that “[h]aving successfully restructured my leadership team under a COO organization paired with a unified products and marketing organization, I now have the capacity to take on global sales leadership to drive this crucial initiative …” Similarly, Defendant Ritchie assured investors that the Company had overcome any challenges and was “in a much better position to expecting Q4 revenue in the range of $40 to $42 million” 7. In actuality, and unbeknownst to investors, Defendants already knew – and indeed, had known and/or recklessly disregarded for months – that Aerohive’s guidance was unreliable and overstated, and the Company could never deliver that fourth quarter result. As an initial matter, Aerohive’s sales organization was in turmoil. The changes in sales leadership were disastrous: unexpected lay-offs of experienced, well-liked personnel, who were replaced with management’s former colleagues from an Aerohive competitor, decimated morale and triggered a massive employee exodus by the Summer of 2017. By the Fall of 2017, the majority of Aerohive’s sales force had been with the Company less than a year and was ill-equipped to close sales efficiently and to service existing customers. 8. In addition, Aerohive failed to implement adequate sales systems to ensure accountability and accuracy of forecasts. Thus, sales frequently failed to close on time, and contrary to Defendants’ statements, there was no indication that purported “elongated sales cycles” were shortening during the second half of 2017. One former Aerohive employee stated that sales quotas were so unrealistic and sales projections so inflated that only two of his colleagues were on target to reach their objectives by year-end 2017. 9. Moreover, the attempt to shift away from the E-Rate program had been so poorly executed that even existing E-Rate business suffered, and not just because there were administrative problems with the program as Defendants contended. Because E-Rate-experienced representatives were abruptly fired, no one was trained to step in and continue developing those accounts. In fact, at least one former employee noted that education customers stopped identifying Aerohive as a preferred vendor, and gains in the education sector made through the Company’s strategic partner, Dell, had been percent of the Company’s revenues made it virtually impossible to achieve fourth quarter targets. 10. The transition to Aerohive Connect and Aerohive Select was also not “seamless.” Rather, many existing customers, who previously received service and support for free, refused to renew their service contracts without receiving steep discounts. 11. Finally, the Company’s business with Dell remained flat and could not compensate for failures to execute in other areas. 12. Defendants ultimately resorted to cost-cutting measures in an attempt to disguise these shortfalls in revenue and deliver more promising results. But the cost-cutting proved counterproductive, instead leaving the sales organization understaffed, under-resourced, and unprepared to drive growth. 13. Nevertheless, on January 16, 2018, after market close, Aerohive announced that it “expects net revenue for the fourth quarter to be approximately $37 million, which is below the Company’s previously stated guidance of $40 million to $42 million.” (Emphasis added.) Aerohive attributed the reduced guidance to “underlying sales execution issues,” which Defendants claimed had only been discovered in December 2017. 14. On this news, Aerohive’s share price fell $1.63, or 28.6%, to close at $4.07 on January 17, 2018, damaging investors. 15. On February 8, 2018, during the fourth quarter 2017 earnings conference call, Defendants attempted to explain the purportedly-undetectable “sales execution issues,” stating that, inter alia: I think the primary issue was we were operating with sales forecasts that, obviously, substantiated the guidance we had given and we have seen normal linearity. And they had a projected close for what was going to happen in December and then just fully closed substantially less than what was the projection. So I think the execution issues were not adequately assessing the realistic close date and the probability of close inside the quarterly window, which led to bad forecasting. And so, as I said, we have closed a number of those deals since then in the first weeks of 2018, which was – that’s encouraging, indicating that in fact much of this was timing. But that kind of forecast and accuracy is a pretty serious execution problem that we have to fix. 16. However, the underlying issues in the sales organization, including but not limited to rapid employee departures, inadequate sales forecasting systems, abandonment of E-Rate, and problems with product transitions, made it readily apparent months earlier that Aerohive’s guidance was unrealistic. In the words of one former employee, “[Defendants] should have known; it was written all over the walls.” 17. Consequently, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and expected financial results. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Aerohive had uncovered sales execution issues at the Company by mid-year 2017 and before the end of the third quarter of 2017; (ii) consequently, Aerohive’s revenue guidance for the fourth quarter of 2017 was overstated; and (iii) as a result, Aerohive’s public statements were materially false and misleading at all relevant times. 18. 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. JURISDICTION AND VENUE 19. 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). and §27 of the Exchange Act. 21. 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). The Company’s principal executive offices are located within this Judicial District. 22. 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 23. Plaintiff, as previously set forth, purchased Aerohive common shares at artificially inflated prices during the Class Period and was damaged upon the revelation of the alleged corrective disclosure. 24. Defendant Aerohive is incorporated in California, and the Company’s principal executive offices are located at 1011 McCarthy Boulevard, Milpitas, California 95035. Aerohive’s common stock trades on the NYSE under the ticker symbol “HIVE.” 25. Defendant David K. Flynn (“Flynn”) has served as the Company’s Chief Executive Officer (“CEO”) since July 2007, as its President since November 2007 and as its Chairman since July 26. Defendant John Ritchie (“Ritchie”) has served as the Company’s Chief Financial Officer (“CFO”) and Senior Vice President since September 2015, and as its Chief Operating Officer (“COO”) since February 2017. 27. The Defendants referenced above in ¶¶ 25-26 are sometimes referred to herein as the “Individual Defendants.” power and authority to control the contents of Aerohive’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 A. Background 29. Founded in 2006, Aerohive designs and develops cloud networking and enterprise Wi-Fi solutions that enable customers to manage their network systems and to collect and analyze data. The Company’s products include hardware, such as routers and switches, network management and data collection applications, and maintenance and support services. Aerohive claims that it has sold to over 30,000 end-user customers (i.e., organizations holding licenses to products and/or software subscriptions or services) in the Americas, Europe, the Middle East, Africa, and Asia Pacific in the education, retail, healthcare, and hospitality industries, among others. 30. Aerohive reaches most of its end-user customer base through “channel partners,” who are authorized to resell, distribute, and service Aerohive’s technology platform. These channel partners are supported by Aerohive’s sales organization, which is comprised of regional sales offices and inside sales teams. Aerohive’s sales representatives also are responsible for identifying and selling directly to boasts that a “strategic alliance” with Dell materially contributes to the Company’s revenues. 31. Through 2016, Aerohive appeared to be headed in a positive direction. Although it faced intense competition from industry giants, such as Cisco, its main platform, HiveManager, and related wireless technology, were considered cutting-edge and were well-received by end-users. The Company also capitalized on a government-funded program known as E-Rate, which provides subsidies to schools, libraries, and educational institutions to purchase technology, in order to increase public sector sales and expand its customer base. By the end of 2016, approximately 40 percent of Aerohive’s revenues came from the education sector; roughly half of those revenues were attributable to the E-Rate program. 32. Despite its potentially disruptive technology and promising year-over-year increases in revenue from 2013 through 2016, Aerohive had never achieved profitability. By the end of 2016, analysts repeatedly emphasized that the Company needed to reach this important benchmark in order to maintain the value of its common stock. B. Aerohive Overhauls Its Sales Organization To Achieve Profitability 33. Aerohive had to overcome several obstacles to meet expectations in 2017. Defendants acknowledged that the Company had become overly dependent on E-Rate to close education sales, and the Company needed to diversify its customer base. At the same time, Aerohive changed its product offerings, launching a new version of its networking platform called HiveManager NG, as well as a lower-priced, entry-level option called Aerohive Connect. Defendants acknowledged that changes in the product line were creating “elongated sales cycles” as delays in updates and capabilities caused customers to wait longer for new features to roll out. 34. However, during an investor conference call in February 2017, Defendants assured investors that the Company was “taking tangible actions to improve [its] growth trajectory.” First, drive improved execution,” especially as it related to shortening sales cycles. Specifically, Aerohive announced that it hired Ron Gill as Vice President of Americas Sales, who previously worked for Ruckus, one of Aerohive’s competitors. Gill reported to Thomas J. Wilburn, who served as Senior Vice President, Worldwide Field Operations since April 2015 and who possessed extensive experience in technology and networking sales and marketing. Aerohive also added Alan Amrod, another industry veteran, in order to make the organization “faster and more nimble.” Under this new structure, Defendant Flynn stated that he would “continue to directly manage sales, marketing, and products.” 35. Second, the launch of Aerohive Connect was lauded as a key component to expanding and diversifying the Company’s customer base away from the E-Rate program. Aerohive Connect was intended as a “catalyst” that would drive sales by offering a low cost introduction, with additional features and upgrades that could be purchased as part of Aerohive Select, a subscription service that would generate deferred revenues on a going-forward basis. 36. When asked whether these shifts in sales and marketing would affect the sales force, Defendant Flynn stated: “I think you’re specifically saying, will be need to hire more salespeople to deal with the elongated sales cycle, and the answer is no.” 37. During a separate investor conference call, Defendant Ritchie similarly stated: “We left sales [expenses] mostly untouched because we do think, fundamentally, technology companies don’t cost-cut their way to success. So we didn’t want to do anything that would prohibit growth in the future.” 38. Throughout 2017, Defendants continued to emphasize that their re-alignment of the sales organization was a success. On May 3, 2017, Defendant Flynn reported: “The organizational changes we made have dramatically improved our pace and quality of execution on NG. This has gone a long execution is also leading to increased energy and results from our sales force …” 39. Defendant Flynn concluded: “In summary, we believe that the major challenges that affected our results began in the second half of 2016, are now behind us. In Q1, we saw that our most recent changes have led to improved execution and operational efficiency. We believe we are now back on a more positive trajectory and are poised to resume year-over-year growth in the second half of C. Multiple Confidential Witnesses Confirm That Aerohive Concealed Fatal Flaws In Its Sales Strategy Throughout 2017 40. Contrary to Defendants’ statements, and unbeknownst to investors, Defendants’ plan to achieve profitability by overhauling the sales organization showed signs of failing almost immediately. According to several former Aerohive sales employees, the purported “sales execution issues” that Defendant Flynn cited in February 2018 as the reason for missing revenue projections in the last quarter of 2017 were readily apparent by at least mid-year 2017, and consequently, Defendants knew and/or recklessly disregarded the fact that their revenue guidance was overstated. 41. First, rather than stemming the flow of talent, the installation of new sales leadership – and replacement of well-liked sales personnel – actually had the opposite effect, and departures accelerated beginning in January 2017. The abrupt resignation of Senior Director of Inside Sales Timothy Balistreri and loss of CMO/CSO David Greene, both respected leaders within the sales force, in conjunction with layoffs of existing Aerohive sales representatives in favor of VP Ron Gill’s hiring of former colleagues from Ruckus, an Aerohive competitor, ultimately hurt morale. 42. CW1 was a former Sales Operations Renewals Coordinator at Aerohive from September 2016 to June 2017. CW1 initially reported to the Director of Worldwide Sales Operations and Business, and ultimately reported to the Director of Sales, Eddie Ramirez. As a member of the business, introducing standardized discounts for relationship partners, and developing and growing relationships with resellers. In particular, CW1 was responsible for supporting the Company’s relationship with Synnex, a channel partner, and provided guidance to the renewals desk on partner renewals and quotes, and coordinated training for renewing contracts. In the course of CW1’s duties, CW1 worked directly with Aerohive’s sales team, regional sales managers and upper management to build and implement a more robust system for renewing the Company’s sales contracts. 43. According to CW1, on or about January 2017, Aerohive terminated half the members of its sales organization or 30 sales employees from a staff of, at least, 60 people. CW1 also recounted that Aerohive’s decision to increase revenues by offering a lower-priced product, Aerohive Connect, and then upsell a service subscription package, Aerohive Select, was plagued with problems from the outset because new equipment included free support automatically, and the free support never expired. This practice had been going on for nearly a decade, and CW1 states that Aerohive discovered this practice in November or December 2016. 44. CW1 further stated that most customers were provided with free support for four or more years instead of the expected six to nine months, and this free support service cost the Company hundreds of thousands of dollars a year. CW1 knows these facts because CW1 was responsible for formulating solutions to rectify this problem. According to CW1, Defendant Flynn knew that the Company provided unlimited free support to customers because he worked very closely with the Vice President of Sales Operations and Head of Customer Support, and these managers knew about the negative impact that unlimited free support had on the Company’s bottom line. Ultimately, sales teams were allowed to offer steep discounts on service contract renewals in order to secure deals, thereby generating lower-than-expected revenues. from January 2016 to June 2017. CW2 was responsible for building relationships with the Company’s channel partners in Texas, Oklahoma, Louisiana and Arkansas. CW2 managed the Company’s existing sales accounts in these states, and secured new customer relationships by contacting potential customers via the telephone and then following up with in person meetings. CW2 sold the Company’s wireless solutions to customers in the manufacturing, industrial, healthcare, assisted living, and financial services industries. CW2 confirmed CW1’s account regarding a mass exodus of employees in the beginning of 2017. CW2 stated that after Ron Gill was hired as Vice President of Sales for the Americas in the beginning of 2017, half the inside territory managers, or 6 out of a total of 12, left the Company. 46. CW3 served as an Opportunity Development Representative (“ODR”) in Aerohive’s inside sales department from October 2016 to July 2017. From July 2017 to September 2017, CW3 was rehired by the Company as a Sales Operation Business Analyst. As an ODR, CW3 qualified business leads and found meetings for the Company’s inside and outside sales representatives. CW3 collaborated with the inside and outside sales representatives to identify target accounts, filter inbound leads, and cold called or emailed potential clients from established target lists. CW3 also utilized customized campaigns to build sales relationships, recruited customers from Aerohive’s booths at various conferences and trained resellers regarding how to pitch the Company’s solutions to potential customers. 47. CW3 stated that in the summer of 2017, the Company abruptly laid off an overwhelming majority of ODRs, including CW3, and there were only 2 ODRs out of a team of 9 that remained at the Company. The layoffs were precipitated by the Company’s decision to shift away from its E-Rate business. Flynn and the Senior Vice President and General Manager of Products and Marketing, Alan Cuellar Amrod, from June 2015 to September 2017, confirmed that Aerohive and the Individual Defendants dramatically cut E-Rate-experienced sales personnel, who were responsible for generating nearly 40 percent of the Company’s revenue. As Aerohive’s K-12 program director, CW4 is a self-described expert for the Company’s E-Rate program in terms of sales strategy as well as compliance with federal and local rules. CW4 was responsible for growing Aerohive’s education-segmented sales, and focused on building relationships with educational institutions that purchased networking infrastructure equipment from the Company. In June 2015, CW4 developed Aerohive’s E-Rate 2.0 sales plan, which sought to take advantage of the public funding available to help schools modernize their Wi-Fi networks. 49. Initially, CW4 was tasked with growing Aerohive’s E-Rate business to $100 million over two years, and CW4 believes that the Company was on the path to achieving that goal until it abruptly shifted its focus away from public sector sales to commercial contracts. CW4 stated that many sales teams’ members lacked education-sales experience, and following the layoffs in early 2017, Aerohive did not have the resources to train employees to grow the E-Rate business. As a result, CW4 asserts that the E-Rate business declined from $32.4 million in 2017 to $23.35 million in 2018. As the Company’s expert for the E-Rate program, CW4 directly attributes the sudden fall in the Company’s E- Rate business to a lack of expertise caused by the dramatic cuts in the sales department in early 2017. 50. CW4 also asserted that the premature firing of Aerohive’s E-Rate representatives meant that no one was around to support Dell’s business, and the Company lost ground it had gained in E-Rate through that channel. According to CW4, Aerohive helped Dell grow its E-Rate business by 68 percent in 2016, but by the end of 2017, Dell had lost 72% of that business due to lack of adequate support from Aerohive. from August 2015 to September 2017. CW5 had nine people on the inside sales team and interfaced with two outside sales representatives. As a regional inside sales territory manager, CW5 was responsible for managing the Company’s sales in Texas, Louisiana and Arkansas in collaboration with CW2’s separate team. CW5 grew channel relationships, managed direct client engagement, closed deals, and directly engaged with the Company’s clients in an effort to pitch wireless solutions and provide architectural guidance. CW5 also managed the inside sales team’s productivity and finances, represented the Company at tradeshows and presented to the Company’s c-level executives at boardroom events. Like many other CWs, CW5 confirmed that Aerohive experienced an unprecedented level of attrition in the middle of 2017. According to CW5, six of the nine members of CW5’s inside sales team left the Company in the middle of 2017, and by the end of Fall 2017, the majority of the Company’s 30 to 35 regional sales managers had been with the Company less than a year, and these new managers did not understand Aerohive’s products well enough to sell them deftly. 52. CW5 recalled that Aerohive released a less-than-exciting iteration of its wireless networking switch in 2016, which was followed by an equally deficient update in 2017, and the lackluster reviews of this product also compromised the Company’s ability to meet its sales goals as the product was increasingly returned by customers. Second, Aerohive’s failure to implement a system that ensured accuracy and predictability in forecasting sales revenues compounded the employee turnover and weak product problems. 53. CW5 further explained that because sales quotas had become unrealistic and there was little accountability, representatives frequently inflated their projections, and deals almost never closed when promised. CW5 stated that Craig Lockwood, Aerohive’s Director of Commercial Sales, forecasted sales figures based on deals that closed in the last two weeks of the quarter. According to CW5, Lockwood had a substance abuse disorder, and he would remain away from the office for most of to the office, sales employees would show him deals that were lined up in the final weeks of the quarter, and Lockwood would forecast sales figures based on that information and report back to Gill, who shared these figures with the executive leadership. CW5 stated that sales quotas were so unrealistic and sales projections so inflated that only two of his colleagues were on target to reach their objectives by year-end 2017. 54. CW5 described Aerohive as a small Company where the Individual Defendants worked from a second floor office that was only one hundred feet from the sales staff. CW5 explained that both the commercial and the public sector sales teams had two 42-inch televisions mounted prominently in each of the two sales sections, and these televisions displayed a leaderboard for each team. The leaderboard showed sales projections, internal rankings, deals closed to date, and expected closings. The Individual Defendants had access to the leaderboard. According to CW5, the Individual Defendants visited the teams each week and commented on the sales teams’ progress and internal rankings. 55. These CW accounts confirm that although Defendants Flynn and Ritchie recognized that they could not “cost-cut their way to success” and promised that they “didn’t want to do anything that would prohibit growth in the future,” they nevertheless approved dramatic cuts in the Company’s sales force well before the beginning of the Class Period and knew facts to show that problems associated with the Company’s corporate strategy, sales projections, and product development were already having a seriously negative impact on the Company’s business and financial outlook. 56. Moreover, during investor conference calls throughout 2017, Defendants proudly reported declines in expenses without disclosing that these cuts were taking a toll on the organization that would inhibit revenue growth and prevent the Company from achieving its targets. end of the Class Period surfaced well before the last month of the fourth quarter of 2017, and undoubtedly were known to Defendants by the time that Vice President of Sales Thomas Wilburn left the Company. As CW3 stated: “[Defendants] should have known; it was written all over the walls.” 58. As set forth herein, Defendants knew and/or recklessly disregarded all indications that the Company was unlikely to achieve its revenue targets and that its revenue projections were therefore overstated. MATERIALLY FALSE AND MISLEADING STATEMENTS ISSUED DURING THE CLASS PERIOD 59. The Class Period begins on November 1, 2017, when Aerohive filed a quarterly report for the period ended September 30, 2017 on a Form 10-Q with the SEC (“3Q 2017 10-Q”), which was signed by Defendants Flynn and Ritchie, and which stated the Company’s reported financial results and financial position. The 3Q 2017 10-Q contained signed certifications by Defendants Flynn and Ritchie, stating that the financial information contained in the Form 10-Q was accurate and that they disclosed any material changes to the Company’s internal control over financial reporting. 60. In the 3Q 2017 10-Q, Defendants disclosed: “We also expect to continue to invest in our organization and our channel and strategic partnerships to meet the needs of our customers and to pursue opportunities in new and existing markets. In particular, we are investing to increase our sales capacity as well as our channel program.” 61. The statement identified in paragraph 60 was materially false and misleading when made because it omitted to disclose that (a) Aerohive dramatically reduced its entire sales staff by 50% months before the Class Period began, (b) Aerohive’s decision to shift away from education-sales and lay off experienced education-sales related personnel caused the E-Rate business to decline by over $9 the Company’s failure to accurately forecast sales revenues. 62. With respect to sales in the education sector, Defendants stated that “significantly slower pace of order volume” was attributable to “slower pace of funding approvals under the federal E-Rate program.” 63. The statement identified in paragraph 62 was materially false and misleading when made because (a) Aerohive laid off sales personnel specializing in the education sector and E-Rate program, who were responsible for generating nearly 40 percent of the Company’s revenues, (b) the remaining personnel lacked education-sales experience to grow the E-Rate business, and, as a result (c) the Company’s E-Rate business declined from $32.4 million to $23.5 million in 2018. 64. With respect to the transition to Aerohive Connect and Aerohive Select, Defendants In May 2017, we announced that our Aerohive Connect and Select offerings are available across our entire portfolio of access points and switches. We believe that separating our product line into these two offerings delivers compellingly priced cloud-managed hardware for connectivity-oriented deployments and enables us to capture more subscription and software license revenue from those customers who require a more advanced feature set and support. This program may reduce our revenue, or the rate of our revenue growth, as purchasers take advantage of the lower entry pricing for our products. In addition, it may be difficult and take time for us to adjust expenses sufficiently to compensate for a shortfall in revenue, even when we may anticipate the shortfall. 65. The statements identified in paragraph 64 were materially false and misleading when made because (a) Aerohive provided free support to customers for four or more years instead of the expected six to nine months, and this free support caused the Company to absorb hundreds of thousands of dollars a year in losses, and (b) Aerohive sought to rectify the problem by offering steep discounts on service contract renewals, which ultimately generated lower-than-expected revenues. NG resulted in “elongated sales cycles,” which affected revenue opportunities and operating results. 67. The statement identified in paragraph 66 was materially false and misleading when made because the Company’s revenue opportunities and operating results were negatively impacted by (a) lackluster reviews of a wireless networking switch that was increasingly returned by customers, and (b) sale representatives routinely inflated their sales projections in the last two weeks of the quarter, and these projections were ratified by a habitually absent Director of Commercial Sales, who suffered from a substance abuse disorder. 68. The 3Q 2017 10-Q also contained the following materially misleading statements regarding the Company’s future ability to attract and retain talent, and the prospective effect of unidentified turn-over on the Company’s operations: Our future success also depends on our ability to continue to attract, integrate and retain highly skilled personnel, especially skilled executives and sales and engineering employees. We have experienced in the past higher than normal turn-over, especially amongst our sales and engineering personnel, and continue to replace personnel where we think needed to improve our operations and product development capabilities and processes. We also continue to replace personnel as part of our ongoing performance and expense management initiatives. Turn-over is highly disruptive to our operations and has had and could continue to have an adverse effect on our revenue. **** Any failure to successfully attract, integrate or retain qualified personnel to fulfill our current or future needs may negatively impact our growth. Also, to the extent we hire personnel from our competitors, we may be subject to allegations that we have improperly solicited these employees, that they have divulged to us proprietary or other confidential information of their former employers, or that their former employers own their inventions or other work product. This may expose us to significant liability and litigation risk 69. The statements identified in paragraph 68 were materially false and misleading when made because they omitted to disclose that (a) Aerohive’s then-existing dramatic cuts to sales personnel Class Period, and (b) Aerohive had already failed at the time to retain “qualified personnel to fulfill [its] current or future needs.” To the extent that the Company sought to dribble out negative information with the half-truth that “[t]urn-over . . . has had or could continue to have an adverse effect on our revenue,” this half-truth was materially misleading because (a) Aerohive failed to disclose the full scale of the problems associated with its dramatic layoffs and its failed business strategy, and (b) Aerohive made materially inconsistent statements when the Company told investors that it would not “cost-cut [its] way to success.” 70. Post-market on November 1, 2017, Defendants held a conference call with investors and analysts to discuss its financial results for the period ended September 30, 2017 and expectations for the fourth quarter of 2017 (the “Q3 2017 Call”). During the Q3 2017 call, Defendant Flynn touted Aerohive’s sales team and operating efficiency, and discussed Aerohive’s sales efficiency, stating in pertinent part: In parallel, we continued strengthen our go-to-market, both through our full OEM relationship with Dell EMC and through the initiative we launched at the start of this year to pivot to a more channel centric go-to- market model to improve our sales efficiency and better address the mid- market. The foundation of this plan was the launch of our Connect to Select offering and the launch of a number of channel recruitment and development initiatives. Our sales leader, Tom Wilburn’s strength and passion is around larger enterprise direct touch business. So when we launched this initiative in Q1, he augmented his team with channel centric sales leaders who built much of Ruckus’ channel as well as new leadership in APAC. With this new program and team, we recruited 600 new resellers in the first half of the year and added 300 more in Q3 … Now with this team in place and the program on the right trajectory, Tom has decided to move on to pursue opportunities that better align with his prefer to go-to-market model. Having successfully restructured my leadership team under a COO organization paired with a unified products and marketing organization, I now have the capacity to take on global sales leadership to drive this critical initiative working directly with our three feeder sales leaders. * * * I am encouraged by the significant progress of our product delivery and this has given Dell EMC the confidence in us to expand into a full OEM relationship. Our results demonstrate that we are steadily improving our operating efficiency while positioning ourselves to resume growth. (Emphases added.) 71. The statements identified in paragraph 70 were false and misleading and/or omitted material information, because as set forth herein, inter alia, (a) the launch of Aerohive Connect and Aerohive Select and Aerohive’s strategic partnership with Dell were not delivering expected returns, (b) the de facto abandonment of the education sector and the E-Rate program, which historically comprised nearly 40 percent of the Company’s revenues, was negatively impacting revenues, (c) Defendants implemented severe cost cutting measures to create the appearance of operating efficiency and to disguise shortfalls in revenue, and (d) Defendants replaced knowledgeable, experienced sales personnel with former Ruckus employees, leaving the sales organization understaffed and ill-equipped to service existing customers and develop new opportunities. In addition, Defendants knew but failed to disclose that Tom Wilburn’s departure was due, in part, to dysfunction in the sales organization, including but not limited to, failures to retain experienced sales personnel, boost revenues, and successfully execute the Company’s sales strategy. 72. Nevertheless, reinforcing Defendant Flynn’s statements, Defendant Ritchie touted Aerohive’s “sales efficiency” and “sales productivity,” stating in pertinent part: We realized significant sales efficiency with our non-GAAP sales and marketing costs coming in at 39% of revenue driving this important metric to under 40% on a year-to-date basis. * * * During the quarter, we saw significant improvements in our sales efficiency as non-GAAP sales and marketing costs came in at $14.4 million or 39% of revenue in Q3, down $1.5 million from $15.9 million recognized in the second quarter. We are encouraged by several metrics that point to improved sales productivity. For the third quarter in a row, we have reported year-over-year decline in sales and marketing expenses. In addition, for the last two quarters and also on a year-to-date basis, our sales and marketing costs as a percentage of revenue were sub-40%. (Emphases added.) 73. These statements were false and misleading and/or omitted material information, because as set forth herein, Aerohive’s sales force was neither productive nor efficient, and Defendants merely had implemented severe cost cutting measures to create the appearance of operating efficiency and to disguise shortfalls in revenue. 74. Defendant Ritchie further stated: “We are currently expecting Q4 revenue in the range of $40 million to $42 million.” 75. The statement identified in paragraph 75 was materially false and misleading and/or omitted material information, because it 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: as set forth herein, inter alia, (a) the launch Aerohive Connect and Aerohive Select and Aerohive’s strategic partnership with Dell were not delivering expected returns, (b) the de facto abandonment of the education sector and the E-Rate program, which historically comprised nearly 40 percent of the Company’s revenues, was negatively impacting revenues, (c) Defendants implemented severe cost cutting measures to create the appearance of operating efficiency and to disguise shortfalls in revenue, (d) Defendants replaced knowledgeable, experienced sales personnel with former Ruckus employees, leaving the sales organization understaffed and ill-equipped to service existing customers and develop new opportunities, (e) Aerohive was aware of “sales execution issues” at the Company by at least mid-year 2017 and before the end of the third quarter of 2017, and (f) consequently, Aerohive’s statements were materially false and misleading at all relevant times. ADDITIONAL SCIENTER ALLEGATIONS 76. In addition to the allegations set forth herein, each of the following demonstrates Defendants’ scienter: 77. The Individual Defendants, as directors and/or officers of Aerohive during the Class Period, are liable as direct participants in all of the wrongs complained of herein. Through their positions of control and authority, these Defendants were in a position to, and did, control all of the Company’s false and misleading statements and omissions, including the contents of SEC filings and press releases, as set forth herein. 78. As alleged herein, Defendants acted with scienter in that they knew, or at least recklessly disregarded that the public documents and statements issued or disseminated by Defendants in the name of the Company were materially false and misleading; they knew that such statements or documents would be issued or disseminated to the investing public; and they knowingly and substantially participated or acquiesced in the issuance or dissemination of such statements or documents as primary violations of federal securities laws. The state of mind of Aerohive’s senior management, including but not limited to the Individual Defendants, is imputed to Aerohive. 79. With respect to Defendant Flynn, in addition to his experience, high level position, and access to information, Defendant Flynn stated during investor conference calls that he was directly responsible for the Company’s sales organization, and multiple confidential witnesses confirm that he participated in sales meetings and received regular updates from sales management. Consequently, Defendant Flynn knew and/or recklessly disregarded that, inter alia, the strategy to overhaul Aerohive’s sales organization and launch new product offerings was failing; knowledgeable and experienced employees were leaving at unprecedented levels; E-Rate business was threatened due to poor service remained flat. Consequently, Defendant Flynn knew and/or recklessly disregarded that the Company’s revenue guidance for the fourth quarter of 2017 were overstated and unattainable. 80. CW5 described Aerohive as a small Company where the Individual Defendants worked form the second floor office that was only a hundred feet away from the sales staff. CW5 stated that both the commercial and the public sector sales teams had two 42-inch televisions mounted prominently in each of the sales sections, and these televisions showed a leaderboard for each team that displayed sales projections, internal rankings, deals closed to date, and expected closings. CW5 confirmed that the Individual Defendants visited the teams each week and commented on the sales teams’ progress and internal rankings. In other words, the Individual Defendants monitored the Company’s sales performance on an ongoing basis in real time. 81. Wilburn’s abrupt departure at the end of the third quarter of 2017 is further evidence of Defendants’ scienter. As head of the sales organization through October 2017, Wilburn was responsible for executing Aerohive’s sales strategy and therefore by mid-2017, knew and/or recklessly disregarded that the Company was not on track to meet its guidance for the fourth quarter of 2017 for the reasons explained herein. At a minimum, any purported “sales execution issues” were and/or should have been known to Defendants when Wilburn resigned from the Company. 82. Furthermore, because the E-Rate program historically comprised nearly 40 percent of the Company’s revenues, and because the Company’s ability to meet revenue guidance was materially impacted by business in the education sector, education-sales and the E-Rate program constitute as a “core operation” of the Company, and the Defendants cannot credibly claim that they were unaware that, inter alia, (1) knowledgeable and experienced E-Rate sales representatives were fired or left the Company; (2) many education clients stopped identifying the Company as a preferred provider, and (3) revenues generated from the education sector were declining because the Company failed to devote the recklessly disregarded that the Company would not meet its revenue guidance. THE TRUTH BEGINS TO EMERGE 83. On January 16, 2018, post-market, Aerohive issued a press release entitled “Aerohive Networks Announces Preliminary Fourth Quarter 2017 Financial Results,” revealing that it “expects net revenue for the fourth quarter to be approximately $37 million, which is below the Company’s previously stated guidance of $40 million to $42 million.” (Emphasis added.) Aerohive attributed the reduced guidance to “underlying sales execution issues” uncovered at the end of the third quarter, stating in pertinent part: MILPITAS, Calif.--(BUSINESS WIRE)--Aerohive Networks™ (NYSE: HIVE) today announced preliminary results for the fourth quarter ended December 31, 2017. * * * • Aerohive® expects net revenue for the fourth quarter to be approximately $37 million, which is below the Company's previously stated guidance of $40 million to $42 million. * * * “We delivered non-GAAP operating profitability in our fourth quarter but were disappointed that our revenue was below our prior guidance,” stated David Flynn, President and Chief Executive Officer. “Following the change in our sales leadership at the end of our third quarter, we uncovered underlying sales execution issues which became fully apparent in the last month of the fourth quarter. We have taken actions to replace underperforming sales team members, and we believe that the new people we have been putting in place, combined with other actions, will enable us to capitalize on our improved product offering and exciting roadmap in 2018.” (Emphasis added.) 84. On this news, Aerohive’s share price fell $1.63, or 28.6%, to close at $4.07 on January 17, 2018, damaging investors. explain the alleged “sales execution issues” that resulted in the Company’s missed earnings. According to Defendant Flynn: “[Aerohive] had experienced typical order linearity in October and November, but as December progressed, orders came in well below forecast and frankly, this was due to poor execution within our sales organization, including in part overoptimistic assessments of closed dates for deals in the pipeline. 86. Defendant Ritchie elaborated: I think some of our sales execution issues that we took action around where there were some people that weren’t enabling and developing those VARs as effectively as we would have liked them to have been to drive growth. I think we’ve engaged a lot of VARs and they certainly are contributing, but we would have expected them to contribute. Part of that is people have to – people there may be more used to more direct touch selling. We need to change their motion and their behavior to be more channel-centric or, in some of these cases, we needed to bring in people that know how to really develop the VARs more effectively. So that’s an ongoing effort. 87. One analyst asked: “I want to understand the sales execution issues a little bit before. Because what’s not really reconciling is the comment that linearity in the first two months of the quarter was kind of as expected and then the issues uncovered in the last month of the quarter. So can you provide a little bit more detail as to kind of what was being over-modeled or what the underlying issue was? And then exactly how you've addressed that on a go-forward basis? 88. Defendant Ritchie further responded: Yeah. I think the primary issue was we were operating with sales forecasts that, obviously, substantiated the guidance we had given and we have seen normal linearity. And they had a projected close for what was going to happen in December and then just fully closed substantially less than what was the projection. So I think the execution issues were not adequately assessing the realistic close date and the probability of close inside the quarterly window, which led to bad forecasting. And so, as I said, we have closed a number of those deals since then in the first weeks of 2018, which was – that's encouraging, indicating that in fact much of this was timing. But that kind of forecast and accuracy is a pretty serious execution problem that we have to fix. 89. Although Defendants acknowledged the seriousness of the purported “execution issues” during the call, these issues were known and/or recklessly disregarded by Defendants by mid-year 2017 and before the announcement of Aerohive’s third quarter 2017 financial results and projections for the fourth quarter of 2017. 90. 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 91. 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 Aerohive common shares 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. 92. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Aerohive common shares 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 Aerohive 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. the Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that is complained of herein. 94. 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. 95. 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 Aerohive; • whether Defendants caused Aerohive 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 Aerohive 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. 96. 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. 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; • Aerohive common shares 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 common shares; and • Plaintiff and members of the Class purchased and/or sold Aerohive common shares 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. 98. Based upon the foregoing, Plaintiff and the members of the Class are entitled to a presumption of reliance upon the integrity of the market. 99. 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. INAPPLICABILITY OF THE STATUTORY SAFE HARBOR AND BESPEAKS CAUTION DOCTRINE 100. The statutory safe harbor or bespeaks caution doctrine applicable to forward looking statements under certain circumstances do not apply to any of the false and misleading statements pleaded in this Complaint. None of the statements complained of herein was a forward-looking statement. Rather, they were historical statements or statements of purportedly current facts and organization, the purported successful implementation of the Company’s sales strategy, and the likelihood that the Company would meet its guidance in the fourth quarter of 2017. 101. To the extent that any of the false and misleading statements alleged herein can be construed as forward-looking, those statements were not accompanied by meaningful cautionary language identifying important facts that could cause actual results to differ materially from those in the statements. As set forth above in detail, then-existing facts contradicted Defendants’ statements regarding the condition of the sales organization, the purported successful implementation of the Company’s sales strategy, among others. Given the then-existing facts contradicting Defendants’ statements, any generalized risk disclosures made by Aerohive were not sufficient to insulate Defendants from liability for their materially false and misleading statements. 102. To the extent that the statutory safe harbor does apply to any forward-looking statements pleaded herein, Defendants are liable for those false forward-looking statements because at the time each of those statements was made, the particular speaker knew that the particular forward-looking statement was false, and the false forward-looking statement was authorized and approved by an executive officer of Aerohive who knew that the statement was false when made. COUNT I Violation of Section 10(b) of The Exchange Act and Rule 10b-5 Against All Defendants 103. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. 104. This Count is asserted against Aerohive and the Individual 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 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. 106. Aerohive 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 Aerohive common shares during the Class Period. 107. Aerohive and the Individual Defendants acted with scienter in that they knew that the public documents and statements issued or disseminated in the name of Aerohive 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 Aerohive, their control over, and/or receipt and/or modification of Aerohive allegedly materially misleading statements, and/or their associations with the Company which made them privy to confidential proprietary information concerning Aerohive, participated in the fraudulent scheme alleged herein. 108. Individual Defendants, who are the senior officers and/or directors of the 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 the Class. 109. As a result of the foregoing, the market price of Aerohive common shares was artificially inflated during the Class Period. In ignorance of the falsity of Aerohive’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 Aerohive common shares during the Class Period in purchasing Aerohive common shares at prices that were artificially inflated as a result of Aerohive’s and the Individual Defendants’ false and misleading statements. 110. Had Plaintiff and the other members of the Class been aware that the market price of Aerohive common shares had been artificially and falsely inflated by Aerohive’s and the Individual Defendants’ misleading statements and by the material adverse information which Aerohive’s and the Individual Defendants did not disclose, they would not have purchased Aerohive’s common shares at the artificially inflated prices that they did, or at all. 111. 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. 112. By reason of the foregoing, Aerohive 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 Aerohive common shares during the Class Period. COUNT II Violation of Section 20(a) of The Exchange Act Against The Individual Defendants 113. Plaintiff repeats and realleges each and every allegation contained in the foregoing paragraphs as if fully set forth herein. management of Aerohive, and conducted and participated, directly and indirectly, in the conduct of Aerohive’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. 115. 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 Aerohive’s financial condition and results of operations, and to correct promptly any public statements issued by Aerohive which had become materially false or misleading. 116. 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 Aerohive disseminated in the marketplace during the Class Period. Throughout the Class Period, the Individual Defendants exercised their power and authority to cause Aerohive to engage in the wrongful acts complained of herein. The Individual Defendants therefore, were “controlling persons” of Aerohive 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 Aerohive common shares. 117. 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 Aerohive. 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; 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 7, 2019 Respectfully submitted, POMERANTZ LLP By: /s/ Omar Jafri Patrick V. Dahlstrom Omar Jafri Ten South La Salle Street, Suite 3505 Chicago, Illinois 60603 Telephone: (312) 377-1181 Facsimile: (312) 377-1184 E-mail: [email protected] [email protected] Jennifer Pafiti (SBN 282790) 468 North Camden Drive Beverly Hills, CA 90210 Telephone: (818) 532-6499 E-mail: [email protected] Jeremy A. Lieberman Michele S. Carino 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] BRONSTEIN, GEWIRTZ & GROSSMAN, LLC Peretz Bronstein 60 East 42nd Street, Suite 4600 New York, NY 10165 (212) 697-6484 [email protected] Attorneys for Plaintiff

securities

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ORIGINAL COMPLAINT Plaintiffs, JURY TRIAL DEMANDED -against- SUMMONS ISSUED CV 12 1718 Defendants. Plaintiff, JOSEPH ARENA (hereinafter "Plaintiff"), on behalf of himself and all others INTRODUCTION Plaintiffs amounting to wage and hour violations, as well as collective and class claims of violations of Federal and New York State wage and hour laws. 1 law of conversion; and Federal and New York State labor laws including without limitation those requiring overtime pay for employees, as well as those prohibiting retaliation for complaining about violations of the FLSA and New York State Labor Law. failing to compensate Plaintiff and similarly-situated employees their statutorily required spread of hours pay; deducting monies from wages for taxes even though no such taxes were actually paid amounting to conversion; and failing to compensate Plaintiff and similarly situated employees their statutorily required overtime pay as well as at a rate of pay in accordance with the Federal and State statutorily required minimum rate of pay per hour worked. JURISDICTION AND VENUE original jurisdiction upon this Court for actions arising under the laws of the United States, and pursuant to 28 U.S.C. §§ 1343(3) and 1343(4), which confer original jurisdiction upon this Court in a civil action to recover damages or to secure equitable relief (i) under any Act of Congress providing for the protection of civil rights; (ii) under the Declaratory Judgment Statute, 28 U.S.C. § 2201; (iii) under 29 U.S.C. § 201 et. seq. confers supplemental jurisdiction over all non-federal claims arising from a common nucleus of operative facts such that they form part of the same case or controversy under Article III of the United States Constitution. 2 judicial district lies in a State in which the unlawful employment practices occurred. Venue is also proper in this Court pursuant to 28 U.S.C. § 1391(b)(1) and (c), in that Defendants maintain offices, conduct business and reside in this district. PARTIES of the State of New York and has a principle place of business within Nassau County, New York. Main Street, Port Washington, New York, 11050. Delux. Delux exceeds $500,000.00, and thus subjects the business to the FLSA's overtime requirements. Additionally, all of Delux's employees are engaged in interstate commerce as they all handle goods that have been and continue to be moved in interstate commerce. This independently subjects Delux to the overtime requirements of the FLSA. COLLECTIVE ACTION ALLEGATIONS as those in the following class: Current and former employees of Defendants who perform any work in any of Defendants' locations as non-managerial employees who give consent to file a cause of action to recover monies wrongfully deducted from wages for taxes as no such taxes were 3 paid; the legally mandated spread of hours which is due to them for the time worked in excess of ten hours per day; and to recover overtime compensation which is legally due them for the time worked in excess of in excess of forty hours in a given work week, as well as to recover the difference between the amount of wages actually paid to them and the statutorily minimum amount due ("FLSA Plaintiffs"). Defendants, he and all FLSA Plaintiffs performed similar tasks; were subject to the same laws and regulations; had monies wrongfully withheld; had monies deducted from wages for taxes even though no such taxes were paid; were paid in the same or similar manner; were paid the same or similar rate; were required to work in excess of ten hours per day; forty hours per work-week; were not paid the required one and a half times their respective regular rates of pay for overtime hours worked; were not paid the legally mandated spread of hours for days worked in excess of 10 hours per day; were not paid any amount at all for overtime hours worked; were not paid at any rate for hours worked much less at an amount equal to the minimum hourly required rate of pay per hour worked; and were forced to give kickbacks under the threat of employment termination. work in shifts of approximately six days per week; twelve hours per day; seventy two hours a week; had monies wrongfully withheld from wages; were forced to give kickbacks under the threat of employment termination; had monies deducted from wages for taxes even though no such taxes were paid, and earned approximately $150.00 per week after splitting fares with the Defendants. 415. Defendants treated all FLSA Plaintiffs similarly; did not issue pay stubs to the FLSA Plaintiffs; paid all FLSA Plaintiffs in cash; specifically requiring them to work at no rate of pay much less the rate in accordance with the legally mandated rate; and in excess of 40 hours per workweek without being paid any rate much less the rate in accordance with the legally mandated overtime compensation rate. Plaintiff and FLSA Plaintiffs work and/or worked for Defendants at their place of business at no rate much less the rate in accordance with the legally mandated rate; in shifts of approximately six days per week; twelve hours per day; seventy two hours a week; earned approximately $150.00 per week after splitting fares with the Defendants; and Defendants did not pay them the statutorily required overtime compensation. FLSA Plaintiffs also had monies wrongfully withheld; wrongfully deducted from wages for taxes even though no such taxes were paid; worked without being compensated for the legally mandated spread of hours pay; were forced to give kick backs under the threat of employment termination; and were not compensated at an hourly rate in accordance with the minimum legally required hourly rate of pay. limitation those mandating compensation to Plaintiff and FLSA Plaintiffs for spread of hours; overtime hours worked; at a rate in accordance with the minimum rate of hour's laws for regular hours work; and yet Defendants purposefully chose not to abide by them. RULE 23 CLASS ALLEGATIONS Civ. P. 23(b)(3), on his own behalf as well as those who are similarly situated and are also FLSA Plaintiffs, who, during the applicable statutes of limitations, were subjected to violations of the FLSA and New York State Labor Law. 5 a. Is so numerous that joinder is impracticable; b. There are questions of law or fact common to the class which predominate any individual questions of law or fact; c. Claims or defenses of the representative are typical of the class; d. The representative will fairly and adequately protect the class; and, e. A class action is superior to other methods of adjudication. All non-managerial persons employed by Defendants to perform any work in any of Defendants' locations in any capacity during the statutory period within the State of New York who (1) worked in excess of forty hours per week and/or worked in excess of ten hours per day; and were not compensated with overtime pay; and/or (2) were not compensated at a rate in accordance with the minimum rate of hours laws and/or (3) had monies wrongfully withheld and/or deducted from wages for taxes even though no such taxes were paid and/or (4) were not compensated for the legally mandated spread of hours pay. Numerosity employed in excess of fifteen employees in order to staff Delux. Common Questions of Law and/or Fact and every Class Action Plaintiff, including but not limited to the following: a. Whether Class Action Plaintiffs worked in excess of forty hours per week and/or ten hours per day; 6 b. Whether Class Action Plaintiffs were scheduled to work and/or required to work in shifts of approximately twelve hours per day, six days per week; c. Whether Class Action Plaintiffs were compensated for overtime pay pursuant to law; d. Whether Defendants failed to pay Class Plaintiffs for the hours worked in excess of forty hours; e. Whether Class Action Plaintiffs were compensated at a rate less than the statutorily required minimum hourly rate of pay; f. Whether Defendants kept accurate records of hours worked by Class Action Plaintiffs; g. Whether Class Action Plaintiffs had monies deducted from wages for taxes whereupon no such taxes were paid; h. Whether Defendants have any affirmative defenses for any of these claims. Typicality of Claims and/or Defenses all of Defendants' non-managerial employees entitled to earn at least minimum wage; spread of hours; and time and a half for overtime services performed. At all times Plaintiff worked at Delux as was required. Specifically, Plaintiff was provided with a Delux car without a fare counter; given fixed routes; instructed not to take passengers who hail; instructed as to the hours and days he was to work; instructed as to which passengers to take; instructed as to which fares to take; instructed as to the rate of fare to charge; instructed as to which routes to take; instructed to take multiple fairs; told which routes to drive; instructed as to which company car he was to drive; instructed to perform 7an inspection of said car prior to driving; and yet he was not compensated at a rate that was equal to the minimum wage throughout his employment; the legally mandated spread of hours for days worked in excess of ten hours; and he was not paid for overtime services performed. Moreover, he was paid in cash with deductions made for taxes even though no such taxes were actually paid. Defendants wrongfully deducted from Plaintiff's wages without written authorizations. Defendants wrongfully deducted from Plaintiff's wages without receiving written authorization to do SO. there are common questions of law and fact which are applicable to each and every one of Defendants' non-managerial employees holding those exact or similar non-managerial positions. hours work; the proper overtime wages; legally mandated spread of hours; and failure to compensate employees in accordance with the statutorily prescribed minimum rate of pay. Adequacy adequate position to represent past and current employees. time spent thereof for Defendants and would properly and adequately represent the current and former employees who have been subjected to the treatment alleged herein. 8 Superiority by any other employee for the same violations and separate litigation would cause a risk of inconsistent results. Indeed, upon information and belief, Plaintiff was treated identically to other employees. Class Action Plaintiffs by being able to communicate with past employees and current employees that are still employed by Defendants. method. FACTS November 2011 as a for hire limousine driver. Defendants. which fares he could take; which company car he was to drive; and which routes he could take. employment with Defendants. 9 he could take during his work shift. designated by Defendants. of passengers. company vehicles according to Defendants' policy. Additionally, all company vehicles do not have fare counters. vehicle prior to commencing his work shift. After inspection, Plaintiff was required to fill out an inspection sheet and submit it to his supervisor. on his company assigned designated driving routes. Defendants. he was instructed to use by the Defendants. that Plaintiff earned. 10contribution, specifically, monies from fares and tips earned by Plaintiff, with the understanding that failure to comply with such request or demand would prevent him from procuring or retaining employment with Defendants. a pay stub; and Defendants made deductions from said payments for taxes withheld and never reported nor paid such taxes on plaintiff's behalf. Plaintiff during Plaintiff's work shift were deducted from Plaintiff's wages. twelve hours per day. cash after splitting the fares with Defendants with deductions taken by Defendants for benefits that Plaintiff never enjoyed. This compensation is far below the federal and state minimum rate of pay requirements. Additionally, Plaintiff was not compensated at any rate much less in excess of one and a half times the federal and state minimum rate of pay requirements for the hours he worked in excess of forty hours. Moreover, Plaintiff was not compensated for hours worked in excess of ten hours a day without being compensated for the legally mandated spread of hours pay. 11 similar to the manner in which Defendants treated and compensated Plaintiff while Plaintiff held his non-managerial position. compensated at the legally mandated minimum wage; overtime rate for hours worked per week in excess of forty hours; spread of hours; monies were wrongfully withheld; and they had their wages wrongfully garnished by Defendants for taxes and other benefits that were never paid for. Defendants also wrongfully charged Plaintiffs a daily fee to work at Delux. AS AND FOR A FIRST CAUSE OF ACTION AGAINST DEFENDANTS ON BEHALF OF PLAINTIFF AND ALL CLASS ACTION PLAINTIFFS (For Violation of the Fair Labor Standards Act, 29 U.S.C. §§ 201-219) allegation set forth above with the same force and effect as if more fully set forth herein. excess of forty hours a week without being compensated for those hours at any rate of pay, much less at the statutorily required time and a half pay; were not compensated at any rate for hours worked; were not compensated at the minimum hourly rate of pay for regular hours worked; and were not compensated at a rate of one and a half times the applicable minimum wage laws for overtime hours worked. These practices were willful and lasted for the duration of the relevant time periods. AS AND FOR A SECOND CAUSE OF ACTION AGAINST DEFENDANTS ON BEHALF OF PLAINTIFF AND ALL CLASS ACTION PLAINTIFFS 12 (For Violation of the New York Labor Law §§ 650 et. seq.) allegation set forth above with the same force and effect as if more fully set forth herein. excess of forty hours a week without being compensated for those hours at any rate of pay, much less at the statutorily required time and a half pay; were not compensated at any rate for hours worked; were not compensated at the minimum hourly rate of pay for regular hours worked; and were not compensated at a rate of one and a half times the applicable minimum wage laws for overtime hours worked. These practices were willful and lasted for the duration of the relevant time periods. AS AND FOR A THIRD CAUSE OF ACTION AGAINST DEFENDANTS ON BEHALF OF PLAINTIFF AND ALL CLASS ACTION PLAINTIFFS (For violation of 12 N.Y.C.R.R. § 142-2.4) allegation set forth above with the same force and effect as if more fully set forth herein. excess of 10 hours a day without being compensated for the legally mandated spread of hours pay. These practices were willful and lasted for the duration of the relevant time periods. AS AND FOR A FOURTH CAUSE OF ACTION AGAINST DEFENDANTS ON BEHALF OF PLAINTIFF AND ALL CLASS ACTION PLAINTIFFS (For Violations of the New York Labor Law §§ 190 et. seq.) 13allegation set forth above with the same force and effect as if more fully set forth herein. violation of all applicable laws. from their respective wages. managerial employees of Defendants for car insurance premiums even though no such insurance payments were actually paid. earned by Plaintiff and Class Action Plaintiffs, with the understanding that failure to comply with such request or demand would prevent them from procuring or retaining employment with Defendants. wages, specifically, charging them a fee to drive Defendants' vehicles, with the understanding that failure to comply with such request or demand would prevent them from procuring or retaining employment with Defendants. AS AND FOR A FIFTH CAUSE OF ACTION AGAINST DEFENDANTS ON BEHALF OF PLAINTIFF AND ALL CLASS ACTION PLAINTIFFS (Conversion) 14 allegation set forth above with the same force and effect as if more fully set forth herein. managerial employees of Defendants for car insurance premiums even though no such insurance payments were actually paid constitute fraud and conversion. Defendants' subsequent failure to pay such taxes constitutes fraud and conversion. PRAYER FOR RELIEF WHEREFORE, Plaintiff and the Class Action Plaintiffs demand judgment against 1. Demand a jury trial on these issues to determine liability and damages; 2. Preliminary and permanent injunctions against Defendants and their officers, 3. A judgment declaring that the practices complained of herein are unlawful and in 4. A judgment declaring that the Class Action Plaintiffs are not exempt from the 15 5. All damages, including without limitation liquidated damages, which Plaintiff and 6. An award to the Plaintiff and the Class Action Plaintiffs of liquidated damages, 7. An award to the Plaintiff and Class Action Plaintiffs of pre-judgment interest at 8. An award to the Plaintiff and Class Action Plaintiffs for the amount of unpaid 9. Exemplary and punitive damages in an amount to commensurate with 10. Awarding Plaintiff his costs and disbursements incurred in connection with this 11. Pre-judgment and post-judgment interest, as provided by law; and 12. Granting Plaintiff and Class Action Plaintiffs other and further relief as this Court 16 Great Neck, New York Respectfully submitted, THE LAW OFFICE OF BORRELLI & ASSOCIATES, PLLC Attorneys for Plaintiffs 1010 Northern Boulevard, Suite 328 Great Neck, NY 11021 (516) 248-5550 Oarly DAVID H. ROSENBERG, ESQ. (DR-2705) MICHAEL J. BORRELLI, ESQ. (MB8533) 17

employment & labor

lsH2DIcBD5gMZwczYwAC

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA --------------------------------------------------- ) Marcus Harris and Julius Caldwell, on ) behalf of themselves and all others ) similarly situated, ) ) Plaintiffs, ) CLASS ACTION v. ) COMPLAINT ) CHIPOTLE MEXICAN GRILL, INC., ) ) Defendant. ) ) -------------------------------------------------- INTRODUCTION 1. This is a federal collective and state class action brought pursuant to the Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (the “FLSA”) and the Minnesota Fair Labor Standards Act, Minn. Stat. § 1777.21 et seq. (“MFLSA”), respectively, to recover unpaid overtime compensation and other unpaid wages owed to Plaintiffs Marcus Harris, Julius Caldwell, and all others similarly situated, who are former or current hourly-paid employees of Defendant Chipotle Mexican Grill, Inc. (“Chipotle”). 2. Chipotle employs these employees within the District of Minnesota to work in its restaurants. Throughout the applicable time period, Chipotle has maintained offices and restaurants within the District of Minnesota. 3. For at least three years prior to the filing of this action and continuing through the date of this action, Chipotle has devised and implemented general policies and practices to deprive its hourly-paid employees of the compensation to which they are entitled. Chipotle routinely requires its hourly-paid employees to work “off the clock,” without pay, and utilizes timekeeping devices that automatically punch employees off the clock, even if they are still working. 4. Harris and Caldwell, on behalf of themselves and all others similarly situated former and current hourly-paid Chipotle employees during the applicable time period, seek unpaid overtime, unpaid regular wages, liquidated damages and/or pre- judgment interest, post-judgment interest and attorneys fees and costs. 5. Plaintiffs shall request that the Court authorize concurrent notice to all former and current hourly-paid employees who were employed by Chipotle during the applicable time period, informing them of the pendency of this action and of their right to opt in to this lawsuit pursuant to the FLSA, 29 U.S.C. § 216(b). 6. Harris and Caldwell also propose a Rule 23 class brought on behalf of themselves and all other former and current hourly-paid employees who were employed by Chipotle in Minnesota during the applicable time period. JURISDICTION AND VENUE 7. This Court has jurisdiction over this action pursuant to the Fair Labor Standards Act, 29 U.S.C. §216(b), federal question jurisdiction pursuant to 28 U.S.C. §§ 1331, jurisdiction over the class claims pursuant to the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d), and supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367. 8. Venue is proper under 28 U.S.C. §1391(b)(1) and § 1391(c), as the Defendant conducts business within this District, and many of the acts complained of occurred in this District. COVERAGE 9. At all times material hereto, Plaintiffs and all similarly-situated employees were “employees” of Defendant within the meaning of FLSA because they were individuals employed by and employer. Also, all similarly-situated employees were “employees” of Defendant within the meaning of FLSA because: a. the Defendant exercised control over Plaintiffs and all similarly-situated employees work schedules, work tasks and work processes; b. the Plaintiffs and all similarly-situated employees had no opportunity to experience a profit or loss consistent with the characteristics of being independent businesswomen/ businessmen; c. the Plaintiffs and all similarly-situated employees did not invest in Defendant’s business, did not include amount of large capital expenditures, such as risk capital and capital investments, not negligible items, or labor itself; d. Plaintiffs and all similarly-situated employees did not transfer from place to place as particular work is offered to them; Plaintiffs worked for only one employer, Defendant, and such relationship was continuous and of indefinite duration; e. Plaintiffs and all similarly-situated employees did not “make any independent judgments,” and thus did not exercise their skills “in any independent manner; f. Plaintiffs and all similarly-situated employees services were a necessary component of Defendant’s business; and g. Plaintiffs and all similarly-situated employees did not bring their own tools or equipment to work, all tools and equipment, including the ambulances Plaintiffs and all similarly-situated employees drove were property for Defendant. 10. At all times material hereto, Defendant was an “employer” within the meaning of FLSA because Defendant acted directly or indirectly in the interest of the employer in relation to an employee. 11. At all times material hereto, Defendant was an employer because it had the ability to do the following with respect to Plaintiffs and all similarly-situated employees: hire and fire, supervise work schedules and conditions of employment, determined rates and method of payment and were obligated under the law to maintain employment records. 12. Also, at all times material hereto, Defendant was an employer because it had exclusive operational control over Plaintiffs and all similarly-situated employees, were solely responsible for the day-to-day operations, and had direct responsibility for the supervision of the Plaintiffs and all similarly-situated employees. 13. At all times material hereto, Defendant had two (2) or more employees. 14. At all times material hereto, Defendant was, and continues to be an “enterprise engaged in commerce” within the meaning of FLSA. 15. At all times material hereto, Defendants were, and continues to be an “enterprise engaged in commerce” within the meaning of FLSA. 16. Also, the annual gross revenue of Defendant was in excess of $500,000 per annum during the relevant time periods. 17. At all times material hereto, Plaintiffs, and all similarly-situated employees were “engaged in commerce” and subject to individual coverage of the FLSA. PARTIES 18. Individual Plaintiff and Class Representative Marcus Harris (“Harris”) was, at all material times, a resident of Hennepin County, Minnesota. Harris is a current covered, non-exempt employee of Chipotle, as defined by the FLSA, 29 U.S.C. § 203(e) and (g). Chipotle employed Harris as an hourly-paid employee to work in its restaurants preparing, serving, and selling its food products, and to perform other related tasks, including cleaning. 19. Individual Plaintiff and Class Representative Julius Caldwell (“Caldwell”) was, at all material times, a resident of Hennepin County, Minnesota. Caldwell is a current covered, non-exempt employee of Chipotle, as defined by the FLSA, 29 U.S.C. § 203(e) and (g). Chipotle employed Caldwell as an hourly-paid employee to work in its restaurants preparing, serving, and selling its food products, and to perform other related tasks, including cleaning. 20. Defendant Chipotle Mexican Grill, Inc. is incorporated under the laws of the State of Delaware with its principal place of business located at 1401 Wynkoop Street, Suite 500, Denver, Colorado 80202. Chipotle has fast food Mexican restaurants throughout the United States, including in Minnesota, where Plaintiffs worked during the applicable time period. Plaintiffs are informed and believe that Chipotle currently employs over 30,000 hourly paid restaurant workers nationwide, hundreds of which currently work at approximately fifty (50) restaurants located throughout Minnesota. FACTUAL ALLEGATIONS 21. The preceding allegations are incorporated by reference as if fully stated herein. 22. Chipotle, a chain of non-franchised Mexican style restaurants, describes itself as “compet[ing] in a category of dining now called ‘fast-casual,’ the fastest growing segment of the restaurant industry, where customers expect food quality that’s more in line with full-service restaurants, coupled with the speed and convenience of fast food.” http://www.chipotle.com/en-us/company/about_us.aspx. 23. One of Chipotle’s largest expenses is the payroll of its hourly-paid employees. To reduce this expense and maximize profit, Chipotle maintains a company- wide policy of not paying hourly-paid employees for all time worked, and encouraging its general managers to require that work be performed off the clock. 24. Chipotle implements its policy with a system of reward and punishment. Payroll budgets are set that realistically can be met only if hourly employees work off the clock. General managers are awarded bonuses and other compensation for staying within their payroll budgets. If a payroll budget is exceeded, the general manager’s job security is threatened. 25. The pressure of reducing payroll expense and staying within payroll budgets results in general managers grossly understaffing each location. 26. The lack of adequate staff, which is a direct result of Chipotle’s policies, causes Chipotle to allow, encourage, and direct its hourly employees to perform work without proper compensation. 27. Chipotle routinely requires hourly-paid employees to punch out, and then continue working until they are given permission to leave. If an employee does not punch out as required, Chipotle utilizes time clock devices that automatically record an employee as having punched out, even if the employee has not punched out and is still working. 28. Chipotle routinely conducts trainings, meetings, and other activities that hourly-paid employees are required to attend, but for which they are not allowed to punch in. 29. Chipotle has failed, and continues to fail, to accurately record, report, and/or preserve records of hours worked by its hourly-paid employees. As a result, Chipotle does not make, keep, and preserve records with respect to each of its employees sufficient to determine their wages, hours, and other conditions and practices of employment. 30. Chipotle’s actions were pursuant to general policies and directives that were issued from its corporate offices in Colorado, and were carried out by general managers at its stores nationwide, including in Minnesota. 31. Chipotle has actual knowledge that work is performed by hourly employees without compensation. 32. Chipotle’s conduct in denying overtime and regular wages to its hourly- paid employees, and in failing to keep accurate records with respect to hours worked by its hourly-paid employees, was reckless and willful. Indeed, such conduct is consistent with corporate management’s view, as stated in Chipotle’s 2012 Annual Report (at p.16) to its shareholders, that “complying with the[] rules[,]” “including [federal and state] wage and hour laws,” “subjects us to substantial expense and can be cumbersome….” (A .pdf version of Chipotle’s 2012 Annual Report can be found at http://ir.chipotle.com/phoenix.zhtml?c=194775&p=irol-reportsAnnual.) FACTUAL ALLEGATIONS RELATING TO PLAINTIFFS 33. The preceding allegations are incorporated by reference as if fully stated herein. 34. During the applicable time period, Harris, Caldwell, and other hourly-paid Chipotle employees were required by Chipotle to work off the clock. 35. During the applicable time period, Harris, Caldwell, and other hourly-paid Chipotle employees regularly worked in excess of forty eight (48) hours per week, without receiving overtime compensation for all hours worked during the week, and without receiving regular pay for all hours worked during the week. 36. Harris, a Chipotle crew member, was required to work off the clock from the first day he started at Chipotle, when he was told not to punch in during his “training,” which lasted for an entire eight-hour shift. Subsequently, Chipotle has routinely required Harris to punch out at the end of his scheduled shift, but keep working for hours on “clean up” and other duties. Harris is not compensated for this work, which often exceeds ten to fifteen hours per week, on top of the approximately forty (40) hours per week for which he is paid. 37. If Harris fails to punch out as required, Chipotle’s time clock automatically punches him out and manipulates his time record to show him having punched out at the end of his scheduled shift, even though he worked for hours afterward. 38. If Harris complains about not being paid for all the hours he had worked, Chipotle retaliates by cutting his hours the following week. On one occasion, Chipotle reduced his scheduled hours from thirty five (35) one week, to fourteen (14) the next week. 39. During the applicable time period, Harris has witnessed other hourly-paid Chipotle employees being subjected to the same treatment, in that they are routinely required to punch out and then keep working, they are punched out automatically by the time clock, or they are otherwise required to work off the clock. 40. Caldwell, a Chipotle service manager, is also required to work off the clock. In addition to being required to punch out at the end of his scheduled shift, Caldwell is required to attend store meetings and other activities, off the clock. 41. In the store meetings, the general and assistant managers routinely stress to service managers that they must take whatever steps are necessary to stay within the payroll budget, including requiring hourly-paid employees to punch out early and work off the clock. 42. Caldwell has witnessed other hourly-paid Chipotle employees being subjected to the same treatment, in that they are routinely required to punch out and then keep working, they are punched out automatically by the time clock, or they are otherwise required to work off the clock. 43. Throughout the United States, including Minnesota, are numerous persons similarly situated to Plaintiffs, all of whom are former or current hourly-paid Chipotle employees during the applicable time period. FEDERAL COLLECTIVE ACTION ALLEGATIONS 44. The preceding allegations are incorporated by reference as if fully stated herein. 45. This lawsuit is brought by Plaintiffs as a collective action, on behalf of themselves and all others similarly situated, pursuant to the FLSA, 29 U.S.C. § 216(b) (the “Federal Collective Group”). 46. Plaintiffs are informed and believe that Chipotle currently has over 30,000 hourly-paid employees in the United States, including the District of Columbia and Puerto Rico. 47. Plaintiffs are similarly situated to the other members of the Federal Collective Group because they all (a) worked for Chipotle during the applicable time period; (b) performed the same or similar duties; (c) had limited or no administrative responsibilities; (d) were and are not professionals within the meaning of the FLSA; and (e) were required to work off the clock, without compensation. As a result, there are questions of law and fact common to the Federal Collective Group, Plaintiffs have a well- defined community of interest with the Federal Collective Group; and they are adequate representatives of the Federal Collective Group. 48. The following questions of law and fact predominate over questions that may affect individual members of the Federal Collective Group: a. Whether Chipotle failed to adequately compensate the members of the Federal Collective Group for all hours worked, as required by the FLSA; b. Whether the members of the Federal Collective Group have been damaged and, if so, the damages to which they are entitled; and c. Whether Chipotle willfully violated the FLSA and, if so, the liquidated damages to which members of the Federal Collective Group are entitled. CLASS ACTION ALLEGATIONS 49. In addition to bringing this lawsuit as a nationwide collective action under the FLSA, Plaintiffs propose a class on behalf of themselves and all persons in the State of Minnesota who, within three years prior to the filing of this action, were employed by Chipotle and paid on an hourly basis. 50. The proposed class meets the requirements of Rule 23(a) of the Federal Rules of Civil Procedure, in that a. The members of the Class are so numerous that joinder of all class members would be impracticable. On information and belief, members of the proposed class number in the thousands. b. There are numerous common questions of law and fact at issue. These questions include, but are not limited to, the following: (1) whether class members are non-exempt current or former hourly-paid employees within the meaning of Minn Stat. §§ 177.23 and 177.24; (2) whether Chipotle was or is the employer of class members within the meaning of Minn. Stat §§ 177.23, 177.24, and 181.171(4); (3) whether Chipotle is a “large employer” within the meaning of Minn. Stat. § 177.24; (4) whether class members were entitled to be compensated at the federal minimum wage rate of $7.25 per hour; (5) whether Chipotle, by its policies and practices, refused and failed to pay the requisite minimum wage to class members; (6) whether Chipotle’s failure to pay minimum wages violated the rights of class members; (7) whether Chipotle’s failure to pay overtime wages violated the rights of class members; (8) whether Chipotle failed to accurately record, report, and/or preserve records of hours worked by class members; (9) whether Chipotle’s actions were willful; (10) whether class members suffered loss of income and other economic injury as a result of Chipotle’s actions; and (11) whether class members are entitled to damages, liquidated damages, interest, and other relief. c. The representative Plaintiffs’ claims are typical of the claims of all other class members. Plaintiffs’ claims arise under the same acts and conduct as the claims of other class members. Plaintiffs also bring the same claims, under the same legal authority, and seek the same relief, as all other class members. d. Plaintiffs will fully and adequately represent the interests of the class. Plaintiffs have retained counsel who are knowledgeable and experienced in prosecuting class actions. There are no known conflicts with class members that would render Plaintiffs or their counsel inadequate. 51. The class meets the requirements of Rule 23(b)(2) of the Federal Rules of Civil Procedure, in that Chipotle has acted, or refused to act, on grounds that apply generally to the class as a whole. As alleged herein, all of Chipotle’s hourly-paid employees are subjected to the same treatment by Chipotle, in that they are all required to work off the clock, or face retaliation by Chipotle. 52. The class also meets the requirements of Rule 23(b)(3) of the Federal Rules of Civil Procedure, in that common questions of law or fact predominate over questions affecting only individual members, and a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. Specifically, the benefits of class treatment outweigh class members’ interests in individually controlling the prosecution of separate actions; plaintiffs are aware of no other litigation concerning the controversy that has already been brought by other class members; the efficiencies to be gained make it desirable to concentrate litigation of the claims in one forum; and there are no particular aspects of the claims that would make a class action unmanageable. COUNT I VIOLATION OF THE FEDERAL LABOR STANDARDS ACT 29 U.S.C. §207 (all hourly-paid employees nationwide) 53. The preceding allegations are incorporated by reference as if fully stated herein. 54. As an “enterprise engaged in commerce” within the meaning of 29 U.S.C. § 203(a), Chipotle is subject to the requirements of the FLSA. 55. All of Chipotle’s hourly-paid employees are considered “non-exempt” from the maximum hour requirements of the FLSA, 29 U.S.C. § 213(a)(1). 56. The FLSA requires that minimum compensation of $7.25 per hour be paid to non-exempt employees. 29 U.S.C. § 207. 57. The FLSA requires that overtime compensation be paid to non-exempt employees who work more than forty (40) hours in one week. 29 U.S.C. § 207. 58. The FLSA requires employers to keep accurate records of the wages, hours, and other terms of employment for each of their employees, including but not limited to the employee’s total hours worked each day and each week; the employee’s total daily or weekly earnings; the employee’s total daily or weekly regular wages; and the employee’s total daily or weekly overtime wages. 59. By requiring hourly employees to work off the clock, Chipotle willfully, knowingly and/or recklessly violated the minimum and overtime compensation provisions of the FLSA. 60. By failing to keep accurate records of the time its employees worked, Chipotle willfully, knowingly and/or recklessly violated the FLSA’s recordkeeping provisions. 61. As a result of Chipotle’s unlawful conduct, Plaintiffs and all other similarly situated persons have suffered injury, in that they have been deprived of overtime and regular compensation. 62. Plaintiffs and all other similar-situated persons are entitled to damages in an amount to be determined at trial. COUNT II VIOLATION OF THE MINNESOTA FAIR LABOR STANDARDS ACT MINN STAT. § 177.24 ET SEQ. (Plaintiffs and all other hourly-paid employees who are members of the Minnesota Rule 23 class) 63. The preceding allegations are incorporated by reference as if fully stated herein. 64. Plaintiffs and members of the Minnesota Rule 23 class are current or former hourly-paid employees of Chipotle within the meaning of Minn Stat. §§ 177.23 and 177.24. 65. Chipotle was or is the employer of Plaintiffs and members of the Minnesota Rule 23 class within the meaning of Minn. Stat §§ 177.23, 177.24, and 181.171(4). 66. At all relevant times, and on information and belief, Chipotle had an annual gross sales volume in excess of $625,000.00. 67. At all relevant times, and on information and belief, Chipotle constitutes a “large employer” within the meaning of Minn. Stat. § 177.24. 68. Pursuant to Minn. Stat. § 177.24, Plaintiffs and members of the Minnesota Rule 23 class were entitled to be compensated at the federal minimum wage rate of $7.25 per hour. 69. Chipotle, by its policies and practices, refused and failed to pay the requisite minimum wage to Plaintiffs and other members of the Minnesota Rule 23 class, as mandated by Minn. Stat. § 177.24(b). 70. By failing to compensate Plaintiffs and members of the Minnesota Rule 23 class, Chipotle violated, and continues to violate, the rights of Plaintiffs and members of the Minnesota Rule 23 class. 71. Chipotle also violated the MFLSA by failing to accurately record, report, and/or preserve records of hours worked by Plaintiffs and members of the Minnesota Rule 23 class, thereby failing to make, keep, and preserve records with respect to each of its employees sufficient to determine their wages, hours, and other conditions and practices of employment. 72. Chipotle’s actions in violating the above statutory provisions were willful and were not the result of mistake or inadvertence. 73. Plaintiffs, on behalf of themselves and all other members of the Minnesota Rule 23 class, seek damages in the amount of their respective unpaid wages, liquidated damages as allowed under the MFLSA, interest, and other legal and equitable relief, in an amount to be determined at trial, but which in the aggregate exceed $5 million. COUNT III VIOLATION OF THE MINNESOTA FAIR LABOR STANDARDS ACT MINN STAT. § 177.25 ET SEQ. (Plaintiffs and all other hourly-paid employees who are members of the Minnesota Rule 23 class) 74. The preceding allegations are incorporated by reference as if fully stated herein. 75. Minn. Stat. § 177.25 requires employers to pay employees one and one- half times the regular rate at which they are or were employed for all hours worked over forty-eight (48) per work week. Employers who violate §177.25 are liable to the affected employees in the amount of unpaid wages, costs, attorneys fees, and other appropriate relief. 76. Chipotle routinely required Plaintiffs and other members of the Minnesota Rule 23 class to work in excess of forty eight (48) hours per week. 77. By requiring Plaintiffs and other members of the Minnesota Rule 23 class to work off the clock, Chipotle routinely failed to record and compensate Plaintiffs and other members of the Minnesota Rule 23 class for hours they worked in excess of forty eight (48) hours per week. 78. As a result, Chipotle willfully failed and refused to pay Plaintiffs and other members of the Minnesota Rule 23 class their overtime wages for all hours they worked in excess of forty eight (48) hours per week. 79. Chipotle’s actions, policies, and/or practices as described above violate the MFLSA’s overtime requirements, in that Chipotle regularly and repeatedly failed to compensate Plaintiffs and other members of the Minnesota Rule 23 class at the requisite overtime rate. 80. Chipotle also violated the MFLSA by failing to accurately record, report, and/or preserve records of hours worked by Plaintiffs and members of the Minnesota Rule 23 class, thereby failing to make, keep, and preserve records with respect to each of its employees sufficient to determine their wages, hours, and other conditions and practices of employment. 81. As a direct and proximate result of Chipotle’s conduct, Plaintiffs and members of the Minnesota Rule 23 class have suffered, and continue to suffer, loss of income and other economic injury. 82. Plaintiffs and members of the Minnesota Rule 23 class are entitled to damages, attorneys fees, costs, and other relief, in an amount to be determined at trial, but which in the aggregate exceed $5 million. COUNT IV FAILURE TO MAINTAIN RECORDS MINN. STAT. § 177.30 (Plaintiffs and all other hourly-paid employees who are members of the Minnesota Rule 23 class) 83. The preceding allegations are incorporated by reference as if fully stated herein. 84. Plaintiffs and members of the Minnesota Rule 23 class are current or former hourly-paid employees of Chipotle within the meaning of Minn Stat. §§ 177.23 and 177.24. 85. Chipotle was or is the employer of Plaintiffs and members of the Minnesota Rule 23 class within the meaning of Minn. Stat §§ 177.23, 177.24, and 181.171(4). 86. Pursuant to Minn. Stat. § 177.30, employers are required to make and keep accurate records as delineated herein, including but not limited to: (a) the name, address, and occupation of each employee; (b) the rate of pay, the amount paid each pay period to each employee; and (c) the hours worked each day and each work week by the employee. 87. Chipotle unlawfully failed to maintain records as required by Minn. Stat. § 177.30. 88. Chipotle’s actions in violating the above statutory provisions were willful and were not the result of mistake or inadvertence. 89. As a direct and proximate result of Chipotle’s conduct, Plaintiffs and members of the Minnesota Rule 23 class have suffered injury, and are entitled to damages, attorneys fees, costs, and other relief, in an amount to be determined at trial, but which in the aggregate exceed $5 million. WHEREFORE, Plaintiffs request the following relief: (a) certification of this case as a collective action under the FLSA; (b) certification of a Minnesota class under Rule 23; (c) an order preliminarily and permanently enjoining Chipotle from engaging the above-described conduct; (d) an award of the value of Plaintiff’s unpaid wages, and the unpaid wages of all other current and former hourly-paid Chipotle employees included in this action; (e) an award of reasonable attorneys fees, expenses, expert fees and all other costs incurred in this action; (f) an award of pre- and post-judgment interest; and (g) any and all other relief that the Court deems proper. JURY DEMAND Plaintiffs request a jury trial on all issues so triable. Dated: July 2, 2013 _/s Kent M. Williams Kent M. Williams Minn. Bar No. 0222884 Attorney for Plaintiffs WILLIAMS LAW FIRM 1632 Homestead Trail Long Lake, MN 55356 Telephone: (612) 940-4452 Fax: (763) 473-0314 [email protected] Colleen T. Calandra, Esq. Colorado Bar No. 041788 Attorney for Plaintiffs BACHUS & SCHANKER, LLC 1899 Wynkoop Street, Suite 700 Denver, CO 80202 Tel: (303) 893-9800 Fax: (303) 893-9900 [email protected] Adam S. Levy, Esq. Penn. Bar No. 066866 Attorney for Plaintiffs LAW OFFICE OF ADAM S. LEVY, LLC P.O. Box 88 Oreland, PA 19075 Tel: (267) 994-6952 Fax: (215) 233-2992 [email protected]

employment & labor

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA Civil Action No. Class Action Complaint Jury Trial Demanded CASSANDRA OSVATICS, on behalf of herself and all others similarly situated, 13218 Ovalstone Lane Bowie, Maryland 20715 Plaintiff, v. LYFT, INC., Defendant. Plaintiff Cassandra Osvatics, individually and on behalf of all others similarly situated, by her attorneys, Outten & Golden LLP, upon personal knowledge as to herself and upon information and belief as to other matters, alleges as follows: INTRODUCTION 1. The District of Columbia, like other jurisdictions, has a carefully designed framework in place for regulating workplaces to protect employees. These protections include minimum wage guarantees, expense reimbursement requirements, and – critical to public health and the current pandemic – paid sick leave. 2. Experts have found that providing paid sick leave is a significant way to reduce the spread of illness.1 In the District of Columbia, employers – like Defendant Lyft, Inc. 1 Claire Cain Miller, et al., Avoiding Coronavirus May Be a Luxury Some Workers Can’t Afford, N.Y. Times (Mar. 2, 2020), https://www.nytimes.com/2020/03/01/upshot/coronavirus- sick-days-service-workers.html (quoting a Cornell University associate professor of economics as stating, “It’s very clear: When people don’t have access to sick leave, they go to work sick and spread diseases.”). (“Lyft”) – that are covered by the D.C. Accrued Safe and Sick Leave Act (“ASSLA”), D.C. Code §§ 32-531.01-531.16, are required to provide paid sick leave. 3. Given the current COVID-19 pandemic, which some experts predict could last for years,2 the need for paid sick leave is vitally important. Without it, Lyft forces its drivers into a Hobbesian choice: risk their lives (and the lives of their passengers) or risk their livelihoods. The D.C. Council enacted the ASSLA so that workers would not have to make such a choice. 4. Lyft in particular has a history of failing to comply with the ASSLA, to the detriment of its drivers and the public. Though it has claimed to provide paid sick leave to its drivers during the pandemic, the policy has been criticized as “illusory” and a “bait and switch.”3 Lyft’s vague and limited paid sick leave does not comply with the ASSLA because it only covers “drivers diagnosed with COVID-19 or put under individual quarantine by a public health agency — [for] an amount determined by the driver’s previous activity on the Lyft platform.” Helping Lyft’s Driver Community, Lyft, https://www.lyft.com/safety/coronavirus/driver (last visited May 26, 2020). 5. The ASSLA, which was first enacted in 2008, requires employers with 100 or more employees to provide not less than one hour of paid sick leave for every 37 hours worked. D.C. Code Ann. § 32-531.02(a)(1). Under the ASSLA, sick leave may be used for absences resulting in: physical or mental illness, preventive medical care, caring for an ill child, parent, spouse, domestic partner, or other family member, and/or an absence because the employee or 2 Stephen M. Kissler, et al., Projecting the Transmission Dynamics of SARS-CoV-2 Through the Postpandemic Period, Science, May 22, 2020 at 860-68, https://science.sciencemag.org/content/368/6493/860 (“One scenario is that a resurgence in SARS-CoV-2 could occur as far into the future as 2025.”). 3 Dana Kerr, Lyft Pulls Bait-and-Switch on Promised Coronavirus Sick Pay, Drivers Say, CNET (Apr. 8, 2020), https://www.cnet.com/news/lyft-quietly-adjusts-its-coronavirus-sick-pay- policy-for-drivers/. employee’s family member is a victim of “stalking, domestic violence, or sexual abuse.” Id. § 32-531.02(b). 6. For these reasons, Plaintiff brings this action against Lyft to enforce the essential rights provided under the ASSLA, on behalf of all drivers who work or worked for Lyft in the District of Columbia for at least 90 days between when Lyft began operating in the District of Columbia4 and the date of final judgment in this matter (the “Class” or “Class Members”). PARTIES Plaintiff Cassandra Osvatics 7. Plaintiff Cassandra Osvatics is an adult individual residing in Bowie, Maryland. 8. Plaintiff Osvatics has a driver’s license issued by the State of Maryland. 9. Plaintiff Osvatics worked as a driver for Lyft from approximately November 2015 to June 2018. Plaintiff Osvatics regularly worked between 10 to 15 hours per week for Defendant, with some weeks where she worked over 35 hours per week. 10. Plaintiff Osvatics spent more than 50% of her time with Lyft working in the District of Columbia. Defendant Lyft, Inc. 11. Defendant Lyft, Inc. is a Delaware corporation with its corporate headquarters and primary place of business in San Francisco, California. 12. Lyft does business in the District of Columbia, Maryland, Virginia, and, upon information and belief, in at least 30 other states in the United States. 13. Lyft is an App-based transportation provider that has been based in San Francisco, California, since 2012. 4 Upon information and belief, Lyft began operating in the District of Columbia after the enactment of the ASSLA on November 13, 2008. JURISDICTION AND VENUE 14. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332(a) because Plaintiff is a citizen of a different state from Defendant and the amount in controversy exceeds $75,000. The Court also has jurisdiction over this action pursuant to 28 U.S.C. § 1332(d) because this is a class action; Plaintiff Osvatics and, upon information and belief, at least one class member, is a citizen of a state different from Lyft; and the amount in controversy exceeds $5,000,000, exclusive of interest and costs. 15. Defendant is subject to personal jurisdiction in the District of Columbia. 16. Venue is proper in this District because a substantial part of the events or omissions giving rise to the claims occurred in this District. See 28 U.S.C. § 1391(b)(2). STATEMENT OF FACTS Lyft’s Business 17. Lyft provides riders with transportation by assigning Lyft drivers to riders using a mobile phone application (the “Lyft App”). 18. The driver then transports the rider, and the rider pays Lyft for the service with a credit card via the Lyft App. 19. Lyft sets the fare to be paid by the rider and communicates it to the rider via the Lyft App. 20. Upon information and belief, Lyft pays the driver approximately 80% of the ride fare plus 100% of any added tip, while Lyft keeps approximately 20% of the fare for itself. 21. Drivers cannot negotiate a different payment arrangement. Plaintiff and Class Members Are Employees. 22. The work that drivers perform is in the usual course of Lyft’s business – indeed, providing driving services is Lyft’s business. 23. Lyft describes itself as “one of the largest and fastest growing multimodal transportation networks in the United States.” See Lyft, Inc., Securities and Exchange Commission Form S-1 Registration Statement, at 1 (March 1, 2019) (“S-1 Statement”), https://www.sec.gov/Archives/edgar/data/1759509/000119312519059849/d633517ds1.htm. 24. As drivers, Plaintiff and Class Members provide or provided the service that Lyft sells to the public. 25. Lyft states that it participates in the “transportation . . . market,” and describes its business as “singularly focused on revolutionizing transportation.” S-1 Statement at 3-4. 26. Lyft earns money by providing its customers with a ride from point A to point B – a service that is wholly dependent on Lyft drivers, like Plaintiff. 27. Lyft’s “business depends largely on [its] ability to cost-effectively attract and retain qualified drivers.” S-1 Statement at 10. 28. Lyft does not merely provide a platform, nor is it an uninterested bystander between drivers and riders. As other courts have found, “Lyft concerns itself with far more than simply connecting random users of its platform. It markets itself to customers as an on-demand ride service, and it actively seeks out those customers. It gives drivers detailed instructions about how to conduct themselves. Notably, Lyft’s own drivers’ guide and FAQs state that drivers are ‘driving for Lyft.’” Cotter v. Lyft, Inc., 60 F. Supp. 3d 1067, 1078 (N.D. Cal. 2015); see also Cunningham v. Lyft, Inc., No. 19 Civ. 11974, 2020 WL 2616302, at *10 (D. Mass. May 22, 2020) (explaining that the “‘realities’ of Lyft’s business are no more merely ‘connecting’ riders and drivers than a grocery store’s business is merely connecting shoppers and food producers,” but rather “focusing on the reality of what the business offers its customers, the business of a grocery stores is selling groceries . . . and Lyft’s business – from which it derives its revenue – is transporting riders”). 29. Lyft screens every driver, including Plaintiff, “before they are permitted to drive on [its] platform, starting with professional third-party background and driving record checks.” See S-1 Statement at 148. Background checks are performed routinely. See Driver Requirements, Lyft, https://help.lyft.com/hc/en-us/articles/115012925687 (last visited May 22, 30. Lyft can terminate the right of drivers to provide driving services for violating one or more of the rules that Lyft imposes by contract. 31. Drivers lack business autonomy. Drivers are not engaged in an independently established business. They cannot provide transportation services without the Lyft App and cannot use contacts made through the Lyft App to solicit private transportation clients. Drivers are dependent on Lyft to identify riders for them. Drivers may not hire employees to assist them in providing services for Lyft. 32. Lyft drivers in the District of Columbia are required to display the Lyft emblem when driving for it in the “lower corner of the[ir] rear passenger side window.” Washington D.C. Driver Information, Lyft, https://help.lyft.com/hc/en-us/articles/115012929787- Washington-D-C-Driver-Information (last visited May 22, 2020). 33. Upon information and belief, when Lyft approves a driver to work in the District of Columbia, that driver still needs to get separate approval from Lyft to drive outside of Virginia, Maryland, or the District of Columbia. See Lyft Driver and Vehicle Requirements in Washington, DC, Lyft, https://www.lyft.com/driver/cities/washington-dc/driver-application- requirements (last visited May 22, 2020). 34. Lyft drivers do not need to possess any particular or special skills other than those required to obtain a driver’s license. See id. (listing as driver requirements a “Valid Washington, DC, Maryland, or Virginia driver’s license,” “21 or older,” “Pass driver screening,” and a “smartphone that can download and run the Lyft Driver app”). 35. By working for Lyft, drivers have not independently made the decision to go into business for themselves. 36. Lyft has unilaterally determined that drivers are independent contractors while precluding them from taking the usual steps toward promoting and establishing an independent business, such as forming business relationships with Lyft customers or otherwise promoting their services to the public. 37. Lyft also prohibits drivers from setting or in any way affecting the rates of pay for their own services. 38. Lyft prohibits drivers from communicating with riders about future ride services. 39. Lyft is solely responsible for recording drivers’ rides, including the time and distance for each ride, the ride fare and added Lyft fees, any tips, and for compiling drivers’ rates of pay for each ride. 40. Lyft controls the terms of employment and maintains uniform policies and terms of service with which all drivers must comply. 41. For example, Plaintiff used her own car to provide rides for Lyft, which per Lyft policy could not be a two-door car or more than a number of years old. See Lyft Driver and Vehicle Requirements in Washington, DC, supra (describing vehicle requirements). 42. Once drivers pass Lyft’s initial requirements, they are able to work for Lyft for an indefinite period of time. Lyft, however, may shut down drivers’ access to the Lyft App for myriad reasons, thus preventing them from obtaining and responding to ride requests. 43. Drivers perform work for Lyft by logging in to the Lyft App, making themselves available for assignments and visible to Lyft users, which benefits Lyft. While logged in, drivers typically receive ride assignments quickly, sometimes receiving a new ride assignment before completing the existing ride. 44. On information and belief, until the beginning of 2018, Lyft required that drivers accept at least 90% of ride assignments to avoid being terminated. Now, Lyft “use[s] acceptance rates to determine driver eligibility for certain features and help keep passenger wait times short.” Acceptance Rate, Lyft, https://help.lyft.com/hc/en-us/articles/115013077708- Acceptance-rate (last visited May 15, 2020). Lyft calculates drivers’ acceptance rates by adding the number of rides a driver completes to the number of rides cancelled by the rider, and dividing that number by the total number of ride assignments shown to the driver. Lyft explains that a driver’s acceptance rate may decrease due to missed assignments, such as when a driver lets the timer count down to zero, and by driver cancellations. 45. Lyft’s manner of assigning rides – including the frequency of ride assignment messages, the very short window within which a driver can accept rides, and the threat of termination for failure to accept the vast majority of rides – prevents drivers from engaging in personal activities while logged into the Lyft App. 46. For example, Plaintiff took care to log out of the Lyft App at all times when she was not engaged in providing a ride for Lyft or making herself available for the next ride. When performing work for Lyft that goes beyond those two activities, Plaintiff typically logged out of the Lyft App. She scheduled her personal activities to minimize the risk of missing ride assignments because of Lyft’s systematic pressure on drivers logged into the Lyft App to accept virtually all ride assignments. 47. Lyft recognizes that drivers’ time while logged into the Lyft App is not their own. Specifically, Lyft advises drivers to log out and take a break if they do not plan to accept ride assignments: “If you can’t or don’t want to accept ride requests, we recommend taking a break.” 48. Lyft has continued to classify Plaintiff and Class Members as independent contractors notwithstanding that its classification policy has been the subject of several lawsuits. See, e.g., Cotter, 60 F. Supp. 3d 1067. Plaintiff and Class Members Regularly Crossed and Cross Interstate Borders as Drivers. 49. As Lyft drivers in the D.C. metropolitan area, Plaintiff and Class Members routinely engaged and engage in interstate commerce by transporting riders across state lines in return for compensation from Lyft. 50. The D.C. metropolitan area encompasses not only the District of Columbia, but also adjacent counties in Maryland and Virginia.5 5 See, e.g., Sharon Feigon, et al., Broadening Understanding of the Interplay Between Public Transit, Shared Mobility, and Personal Automobiles (“Princeton Study”) at A-1 (2018), https://orfe.princeton.edu/~alaink/SmartDrivingCars/PDFs/TRB_Jan2018_BroadeningUnderstan dingnterplayBetweenPublic.pdf (defining Washington, D.C. as the “District of Columbia; Montgomery and Prince George’s counties, MD; Alexandria, Arlington, Fairfax, and Falls Church counties, VA”). 51. Indeed, according to the Princeton Study, peak-hour usage of rideshare apps like the Lyft App in the District of Columbia occur between certain “contiguous corridors” stretching “across the broadest central section of the District . . . which includes Union Station, west to Georgetown and across the Potomac to Arlington.”6 52. Lyft’s D.C. website reflects this reality and includes the entire metropolitan area within its service area. See Washington, D.C., Lyft, https://www.lyft.com/rider/cities/washington-dc (last visited May 22, 2020). 53. Given its multi-state scope, residents of the D.C. metropolitan area are especially likely to cross state lines, including for work. 54. For example, according to recent D.C. Department of Human Resources (“DHR”) statistics, nonresidents were a majority of the 35,302 employees in the various “career,” 6 Id. at 13 (emphasis added). “educational,” “excepted,” “executive,” “legal” and “management supervisory” services of the D.C. government, broken down as: 16,103 Marylanders, 3,579 Virginians, 429 residents of other jurisdictions, and 15,191 D.C. residents.7 55. As the seat of the federal government, the D.C. metropolitan area, defined by the Census Core Statistical Base Area (“CBSA”) that includes counties in Maryland, Virginia, and West Virginia, is home to approximately 282,666 federal employees, over 15% of the entire federal civilian workforce.8 Upon information and belief, many of these hundreds of thousands of federal workers cross state lines, in one direction or the other, to report to work each day at myriad federal agencies located in each of the subdivisions constituting the CBSA. 56. Reflecting the multi-state composition of the District of Columbia’s workforce, pursuant to Lyft’s policies and practices a driver can be dispatched for pickups in the District of Columbia if they have a driver’s license from the District of Columbia, Maryland, or Virginia. Washington D.C. Driver Information, Lyft, https://help.lyft.com/hc/en- us/articles/115012929787-Washington-D-C-Driver-Information (last visited May 22, 2020). 7 Colbert I. King, Washington, D.C., Is Run by People Who Don’t Even Live There, Wash. Post, July 1, 2016, https://www.washingtonpost.com/opinions/a-city-run-by- nonresidents/2016/07/01/e781bfe0-3f06-11e6-80bc-d06711fd2125_story.html. 8 U.S. Office of Pers. Mgmt., Data, Analytics, and Documentation. Federal Civilian Employment (Sept. 2017), https://www.opm.gov/policy-data-oversight/data-analysis- documentation/federal-employment-reports/reports-publications/federal-civilian-employment/. 57. Similarly, active members of the U.S. military, and their families, stationed in the District of Columbia, Maryland or Virginia can also drive for Lyft in the District of Columbia if they follow certain requirements. Id. 58. The District of Columbia’s major airports are also all located outside of the District of Columbia, requiring travel across state lines to reach them: Dulles International Airport and Reagan National Airport are located in Virginia, and the Baltimore-Washington International Thurgood Marshall Airport (“BWI”) is located in Maryland. 59. These airports are high volume trip origins and destinations for drivers, including Plaintiff.9 In fact, according to the Princeton Study, trips from the District of Columbia to the Virginia zip code containing Reagan National Airport was the fifth most frequent destination in the entire study dataset, which included studies of five major metropolitan areas covering tens of millions of rideshare users.10 9 See Princeton Study at 19, 23-24. 10 Id. at 7-8, 23-24. 60. Thus, Plaintiff frequently took passengers from the District of Columbia and Maryland to the airports in Virginia, and, likewise, frequently took passengers from the District of Columbia and Virginia to BWI, crossing state lines in the process. 61. Lyft specifically markets airport trips to D.C. riders. Washington, D.C., supra. 62. Airport business is sufficiently important to Lyft that it also has specific requirements for how Lyft drivers are to conduct themselves there when picking up or dropping off riders. See Washington D.C. Airport Information for Drivers, Lyft, https://help.lyft.com/hc/en-us/articles/115013082588 (last visited May 22, 2020). 63. Similarly, many Lyft rides, including those Plaintiff performed, originate or conclude at Union Station. 64. Union Station is a central hub for interstate rail and bus travel. For example, according to the U.S. Department of Transportation, in 2017, Union Station was the second busiest Amtrak station in the country, registering roughly 5.2 million passengers.11 65. At least six private companies provide interstate bus services at Union Station, including Bolt Bus, Megabus, BestBus, Washington Deluxe, Peter Pan, and Virginia Breeze.12 Many of these companies provide “daily service” from the District of Columbia to other states, such as New York.13 66. Many more passengers use Union Station for interstate transportation via the Washington Metropolitan Area Transit Authority’s (“WMATA”) Red Line, which provides direct access to Maryland, and indirect access to Virginia (and other parts of Maryland) through connections to other WMATA lines, such as the Orange, Blue, Yellow, Green, and Silver Lines. 67. Union Station further facilitates significant interstate travel as a central stop for the Maryland Area Regional Commuter (“MARC”) train. The MARC train has long served as the daily commuter line for over 30,000 passengers.14 68. Thus, Lyft drivers routinely transport people who themselves are engaged in interstate activity. 69. Plaintiff estimates that, when driving for Lyft, she spent at least 50% of her time in the District of Columbia, at least 20% of her time in Virginia, and at least 20% in Maryland. 11 U.S. Dep’t of Transp., Transportation Statistics Annual Report (2018), https://www.bts.gov/sites/bts.dot.gov/files/docs/browse-statistical-products-and- data/transportation-statistics-annual-reports/TSAR-Full-2018-Web-Final.pdf (last visited May 22, 2020). 12 See Ground Transportation, Union Station, https://www.unionstationdc.com/Ground- Transportation/ (last visited May 22, 2020). 13 Id. 14 Md. Transit Admin., MARC Growth and Investment Plan (Sept. 2007), https://www.washingtonpost.com/wp-srv/metro/documents/MARC02282010.pdf. 70. Together, because the D.C. metropolitan area consists of multiple states, drivers from the District of Columbia, Maryland, and Virginia can all drive for Lyft in the District of Columbia, and since the major D.C. airports are in separate states, Class Members routinely crossed and cross state lines in the performance of their work for Lyft. 71. For instance, because Plaintiff lives in Maryland, she repeatedly began her day of work for Lyft by taking a Maryland resident into the District of Columbia, and ended her day of work for Lyft by returning a Maryland resident from the District of Columbia to Maryland. 72. Plaintiff’s experiences resemble those of other Class Members. Lyft Did Not Maintain a Paid Sick Leave Policy and Did Not Provide Notice. 73. Lyft did not and does not have a sick leave policy that complies with the ASSLA. 74. Lyft did not and does not “post and maintain in a conspicuous place, a notice that sets forth excerpts from or summaries of the pertinent provisions of [Subchapter III, Chapter 5, Title 32 of the D.C. Code] and information that pertains to the filing of a complaint under” the same. D.C. Code § 32-531.09(a). 75. Lyft did not provide Plaintiff with any paid sick leave during her employment. 76. As a result, on multiple occasions, Plaintiff drove for Lyft while sick because she relied on hourly and tipped work for her wages and to pay bills. 77. Plaintiff would have used paid sick leave if Lyft had provided it to her. CLASS-WIDE FACTUAL ALLEGATIONS 78. Plaintiff hereby incorporates by reference all preceding paragraphs as alleged above as if fully set forth herein. 79. Plaintiff brings her Cause of Action pursuant to Rule 23(b)(2), (b)(3) and/or (c)(4) of the Federal Rules of Civil Procedure on behalf of all drivers who work or worked for Lyft in the District of Columbia for at least 90 days between when Lyft began operating in the District of Columbia and the date of final judgment in this matter (the “Class” or “Class Members”). 80. Plaintiff is a member of the Class she seeks to represent. 81. Not included in the Class are the following individuals and/or entities: Lyft’s officers and directors and all judges assigned to hear any aspect of this litigation, as well as their staffs and immediate family members. 82. The Class is so numerous that joinder of all members is impracticable. The precise number is uniquely within Lyft’s possession. Upon information and belief, the Class consists of at least 100 individuals.15 83. There are questions of law and fact common to the Class, and these questions predominate over any questions affecting only individual members. Common questions include, among others: a. Whether Class Members are employees or independent contractors; b. Whether Class Members are entitled to paid sick leave under the ASSLA; c. Whether Lyft’s classification of drivers as independent contractors was willful; d. The proper measure of damages sustained by Class Members; and e. Whether injunctive and declaratory relief is warranted regarding Lyft’s policies and practices. 15 According to U.S. Census data, the D.C. metropolitan area added nearly 10,000 new rideshare drivers across platforms each year between 2014 and 2017, converting the rideshare sector into a more than $1 billion industry in this region. See Jordan Fischer, 10,000 New Rideshare Drivers a Year: New Census Data Shows How Industry Has Exploded in DC Area, WUSA (June 28, 2019), https://www.wusa9.com/article/news/local/dc/10000-new-rideshare- drivers-a-year-new-census-data-shows-how-industry-has-exploded-in-dc-area/65-009e37e9- b33b-456f-bab2-3a97aa25aef7 (citing U.S. Census data). 84. Plaintiff, like other Class Members, was subjected to Lyft’s policies and practices that violated D.C. law. Plaintiff’s job duties and claims were and are typical of those of the Class Members. 85. Plaintiff will fairly and adequately represent and protect the interests of the Class Members. There is no conflict between Plaintiff and the Class Members. Plaintiff’s counsel is experienced in employment class actions and will fairly and adequately represent and protect the interests of the Class Members. 86. Class treatment would benefit the courts and Class Members. 87. Class certification is appropriate under Rule 23(b)(3) and/or (c)(4) because common questions of fact and law predominate over any questions affecting only individual Class Members. Penalties for violation of the ASSLA are provided by statute and can be mechanically calculated, and are relatively small compared to the significant expense and burden of individual prosecution of this litigation. In addition, a class action is superior to other available methods for the fair and efficient adjudication of this litigation and will obviate the need for unduly duplicative litigation which might result in inconsistent judgments about Lyft’s practices. 88. Class certification is also appropriate under Rule 23(b)(2) and/or (c)(4) because Defendant has acted and/or refused to act on grounds that apply generally to the class, so that final injunctive or declaratory relief is appropriate respecting the Class as a whole. Class Members are entitled to declaratory and injunctive relief to end Defendant’s common, uniform, unfair, and illegal policies and practices. CAUSE OF ACTION D.C. Accrued Safe and Sick Leave Act – Failure to Provide Sick Leave (Brought on Behalf of Plaintiff and the Class) 89. Plaintiff re-alleges and incorporates by reference all allegations in all preceding paragraphs. 90. At all relevant times, Plaintiff and Class Members have been employees and Lyft has been an employer within the meaning of the ASSLA. D.C. Code § 32-531.01(2), (3)(A). 91. Plaintiff and Class Members are covered by the ASSLA. 92. Lyft employed Plaintiff and Class Members. 93. Lyft violated the ASSLA, in relevant part, by failing to provide Plaintiff and Class Members “not less than one hour of paid leave for every 37 hours worked, not to exceed 7 days per calendar year.” D.C. Code § 32-531.02. 94. Lyft’s violations of the ASSLA are ongoing. 95. Because Lyft did not and does not “post and maintain in a conspicuous place, a notice that sets forth excerpts from or summaries of the pertinent provisions of [Subchapter III, Chapter 5, Title 32 of the D.C. Code] and information that pertains to the filing of a complaint under” the same, D.C. Code § 32-531.09(a), the statute of limitations for claims against Lyft has been tolled since the enactment of ASSLA, see id. § 32-531.10a. 96. Lyft’s violations of the ASSLA have been willful and intentional. 97. For example, while Lyft has recognized the propriety of providing some form of sick leave for D.C. drivers,16 it is a sham process and Lyft has otherwise refused to comply with the ASSLA – the D.C. Council mandated means of providing paid sick leave. 16 Kerr, supra note 3. 98. Due to Lyft’s violations of the ASSLA, Plaintiff and Class Members are entitled to recover from Lyft damages including but not limited to lost wages, statutory penalties, compensatory damages, punitive damages, reasonable attorneys’ fees and costs of the action, and pre-judgment and post-judgment interest. D.C. Code § 32-531.12(b), (c), (e), (g). 99. In addition to damages, Plaintiff and Class Members are entitled to injunctive and declaratory relief to correct Lyft’s illegal policies and practices. PRAYER FOR RELIEF For the foregoing reasons, Plaintiff respectfully requests that the Court grant the following relief: A. Certification of the Class pursuant to Rule 23 of the Federal Rules of Civil Procedure; B. Designation of Plaintiff as Class Representative for the Rule 23 Class and counsel of record as Class Counsel; C. Declaratory relief, including a declaration that the practices complained of in this Class Action Complaint are unlawful; D. Equitable and injunctive relief, including but not limited to a preliminary and permanent order enjoining Defendant from continuing its unlawful practices; E. An order that Defendant institute and carry out policies, practices, and programs that eradicate the effects of past and present unlawful employment practices including regarding sick leave; F. Monetary relief, including but not limited to compensation for the value of any paid sick leave denied by Defendant, statutory damages, compensatory damages, and punitive damages; G. Pre- and post-judgment interest; H. Attorneys’ fees and costs to the extent allowable by law; I. Payment of a reasonable service award to Plaintiff, in recognition of the services she has rendered and will continue to render to Class Members, and the risks she has taken and will take; and J. Such other relief as the Court deems just and proper. JURY DEMAND Plaintiff demands a trial by jury on all issues so triable. Dated: May 29, 2020 Respectfully submitted, Sally J. Abrahamson (Bar No. 999058) Mikael A. Rojas (Bar No. 1034085)* Pooja Shethji (Bar No. 1632574)* OUTTEN & GOLDEN LLP 601 Massachusetts Avenue NW, Suite 200W Washington, DC 20001 Tel.: (202) 847-4400 Fax: (646) 509-2097 Email: [email protected] Email: [email protected] Email: [email protected] Christopher M. McNerney** OUTTEN & GOLDEN LLP 685 Third Avenue, 25th Floor New York, NY 10017 Telephone: (212) 245-1000 Facsimile: (646) 509-2060 Email: [email protected] *Applications for admission pending ** Pro hac vice application forthcoming Attorneys for Plaintiff and the Proposed Class

employment & labor

sNRjD4cBD5gMZwczsZSr

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. WENDELL ROSE, Individually and on behalf of all others similarly situated, Plaintiff, v. ARRAY BIOPHARMA INC., RON SQUARER, DAVID HORIN, JASON HADDOCK, Defendants. CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS Plaintiff Wendell Rose (“Plaintiff”), by his attorneys, except for his own acts, which are based on knowledge, alleges the following based upon the investigation of counsel, which included a review of United States Securities and Exchange Commission (“SEC”) filings by Array Biopharma, Inc. (“Array” or the “Company”), as well as regulatory filings and reports, securities analyst reports and advisories by the Company, press releases and other public statements issued by the Company, and media reports about the Company. Plaintiff believes that 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 federal securities class action on behalf of all investors who purchased or otherwise acquired Array common stock between December 16, 2015, and March 17, 2017, inclusive (the “Class Period”), seeking remedies under the Securities Exchange Act of 1934 (the “Exchange Act”). 2. Array is a biopharmaceutical company focused on the discovery, development, and commercialization of targeted small molecule drugs to treat patients afflicted with cancer. The Company’s lead cancer drug binimetinib (MEK162) was evaluated in multiple trials and combinations, including a Phase 3 “NEMO” study versus dacarbazine in unresectable or metastatic NRAS-mutant melanoma patients. 3. Array made materially false and misleading statements as well as failed to disclose material adverse facts about the Company’s lead product binimetinib monotherapy for the treatment of NRAS-mutant melanoma. 4. As the truth was revealed, over the course of two trading days, the share price fell over 13% from a close of $10.56 per share on March 17, 2017 to close at $9.13 per share on March 21, 2017. 5. As a result of the fraudulent conduct alleged herein, Plaintiff and other members of the Class purchased Array securities at artificially inflated prices and suffered significant losses and damages once the truth emerged. JURISDICTION AND VENUE 6. The federal law 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). 7. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. § 1331, Section 27 of the Securities Act (15 U.S.C. §78aa.). This Court has jurisdiction over each Defendant named herein because each Defendant is an individual who has sufficient minimum contacts with this District so as to render the exercise of jurisdiction by the District Court permissible under traditional notions of fair play and substantial justice. 8. Venue is properly laid in this Judicial District pursuant to §27 of the Exchange Act and 28. U.S.C. §1391(b). The acts and conduct complained of herein occurred in substantial part in this Judicial District. 9. 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 10. Plaintiff purchased Array common stock within the Class Period and, as a result, was damaged thereby. Plaintiff’s certification evidencing his transactions is attached hereto as Exhibit A. 11. Defendant Array is incorporated in the state of Delaware. The Company’s principal executive offices are located at 3200 Walnut Street, Boulder, Colorado 80301. 12. Defendant Ron Squarer (“Squarer”) was the Company’s Chief Executive Officer (“CEO”) and a member of the Array’s Board of Directors at all relevant times. 13. Defendant David Horin (“Horin”) was the Company’s Chief Financial Officer (“CFO”) the beginning of the Class Period until July 28, 2016. 14. Defendant Jason Haddock (“Haddock”) has been the Company’s CFO from July 28, 2016, to date. 15. Defendants in paragraphs 12-14 are collectively referred to herein as the “Individual Defendants.” 16. Each of the Individual Defendants: (a) directly participated in the management of the Company; (b) was directly involved in the day-to-day operations of the Company at the highest levels; (c) was directly or indirectly involved in drafting, producing, reviewing and/or disseminating the false and misleading statements and information alleged herein; (d) was directly or indirectly involved in the oversight or implementation of the Company’s internal controls; (e) was aware of or deliberately recklessly disregarded the fact that the false and misleading statements were being issued concerning the Company; and/or (f) approved or ratified these statements in violation of the federal securities laws. 17. Because of the Individual Defendants’ positions within the Company, they had access to undisclosed information about Array’s business, operations, operational trends, financial statements, markets and present and future business prospects via access to internal corporate documents (including the Company’s operating plans, budgets and forecasts and reports of actual operations and performance), conversations and connections with other corporate officers and employees, attendance at management and Board meetings and committees thereof and via reports and other information provided to them in connection therewith. 18. As officers of a publicly-held company whose securities were, and are, registered with the SEC pursuant to the federal securities laws of the United States, the Individual Defendants each had a duty to disseminate prompt, accurate and truthful information with respect to the Company’s financial condition and performance, growth, operations, financial statements, business, markets, management, earnings and present and future business prospects, and to correct any previously-issued statements that had become materially misleading or untrue, so that the market price of the Company’s publicly-traded securities would be based upon truthful and accurate information. The Individual Defendants' misrepresentations and omissions during the Class Period violated these specific requirements and obligations. 19. The Individual Defendants, because of their positions with the Company, possessed the power and authority to control the contents of Array’s reports to the SEC, press releases, and presentations to securities analysts, money and portfolio managers, and institutional investors, i.e., the market. Each Individual 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. 20. Each of the Individual Defendants is liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of Array securities by disseminating materially false and misleading statements and/or concealing material adverse facts. The scheme: (i) deceived the investing public regarding Array’s business, operations, management and the intrinsic value of its securities and (ii) caused Plaintiff and other shareholders to purchase Array securities at artificially inflated prices. SUBSTANTIVE ALLEGATIONS A. Company Background 21. Array is a biopharmaceutical company focused on the discovery, development, and commercialization of targeted small molecule drugs to treat patients afflicted with cancer. 22. The Company’s lead cancer drug binimetinib (MEK162) was evaluated in multiple trials and combinations, including a Phase 3 “NEMO” study versus dacarbazine in unresectable or metastatic NRAS-mutant melanoma patients. B. Material Misstatements and Omissions during the Class Period 23. The Class Period begins on December 16, 2015, when Array issued a press release, also attached as exhibit 99.1 to the Form 8-K filed with the SEC announcing that the results of the Phase 3 NEMO trial (“December 2015 Press Release”). The Company made material misrepresentations in the press release, including in pertinent part: Array BioPharma Announces Phase 3 Binimetinib Trial Meets Primary Endpoint For NRAS-Mutant Melanoma -- Binimetinib achieves statistically significant progression free survival compared to chemotherapy -- -- Regulatory submissions planned for the first half of 2016 -- BOULDER, Colo., Dec. 16, 2015 /PRNewswire/ -- Array BioPharma (Nasdaq: ARRY) today reported top-line results from the ongoing Phase 3 clinical trial of binimetinib in patients with advanced NRAS-mutant melanoma, known as the NEMO trial. The study met its primary endpoint of improving progression-free survival (PFS) compared with dacarbazine treatment. The median PFS on the binimetinib arm was 2.8 months versus 1.5 months on the dacarbazine arm; hazard ratio (HR) 0.62, [95% CI 0.47-0.80], p < 0.001. In the trial, binimetinib was generally well-tolerated and the adverse events reported were consistent with previous results in NRAS melanoma patients. Array plans to submit binimetinib to regulatory authorities for marketing approval in NRAS-mutant melanoma during the first half of 2016. Results from the NEMO trial including progression free survival, overall survival, objective response rate, safety and prespecified subgroup analyses including outcomes in patients who received prior treatment with immunotherapy will be presented at a medical meeting in 2016. “We are excited to announce positive results from the NEMO trial, which suggest binimetinib has the potential to provide an important new treatment option for patients with advanced NRAS melanoma,” said Ron Squarer, Chief Executive Officer, Array BioPharma. “We look forward to discussing the data with the FDA and other regulatory agencies in the near future.” “The presence of an NRAS mutation is a poor prognostic indicator for patients with advanced melanoma,” said Keith T. Flaherty, M.D., Associate Professor, Medicine, Harvard Medical School and Director of Developmental Therapeutics, Cancer Center, Massachusetts General Hospital. "I am encouraged the NEMO trial met its primary endpoint and look forward to sharing the full results soon. As the first targeted therapy with positive results in NRAS melanoma, binimetinib will be a welcome addition in this high unmet need population, especially for patients whose disease has progressed following treatment with immunotherapy." Binimetinib is also being studied in the Phase 3 COLUMBUS trial for patients with BRAF-mutant melanoma and the Phase 3 MILO trial for patients with low grade serous ovarian cancer, as well as in several other earlier stage clinical trials. Emphasis added. 24. On May 3, 2016, Array issued a press release, also attached as exhibit 99.1 to the Form 8-K filed with the SEC announcing the Company’s financial and operating results for the third fiscal quarter and six months ended March 31, 2016 (“Q3 2016 Press Release”). The Q3 2016 Press Release stated in relevant part: BOULDER, Colo., May 3, 2016 /PRNewswire/ -- Array BioPharma Inc. (NASDAQ: ARRY), a biopharmaceutical company focused on the discovery, development and commercialization of targeted small molecule cancer therapies, today reported results for its fiscal year third quarter ending March 31, 2016 and provided an update on the progress of its key clinical development programs. "We have a number of near-term value-drivers, highlighted by our planned NDA submission for binimetinib based on results from our Phase 3 trial in NRAS- mutant melanoma patients (NEMO)," said Ron Squarer, Array's Chief Executive Officer. "At ASCO, we will present full results from the NEMO trial, as well as provide an update on our Phase 2 study of encorafenib plus cetuximab in BRAF- mutant colorectal cancer patients. Later this summer, we plan to share top-line results from COLUMBUS, our Phase 3 trial of binimetinib and encorafenib in BRAF melanoma patients. We also expect results from SELECT-1, a study of selumetinib in second line KRAS-mutant non-small cell lung cancer patients. Given our estimated cash runway, a series of strong partnerships and continued Novartis funding of ongoing binimetinib and encorafenib trials, we are well positioned to execute on our long-term strategy." KEY PIPELINE UPDATES Binimetinib (MEK162) and encorafenib (LGX818) Novartis Agreement Novartis continues to conduct and/or substantially fund all ongoing trials with binimetinib and encorafenib through their completion, including the NEMO and COLUMBUS trials. Reimbursement revenue from Novartis was approximately $74 million for the previous 9 months, of which $64 million was recorded over the past two quarters. NEMO: Global Phase 3 trial of binimetinib versus dacarbazine in NRAS- mutant melanoma patients Based on the results of the NEMO trial, Array plans to submit an NDA during the first half of 2016. Results from NEMO will be presented at the 2016 American Society of Clinical Oncology conference (ASCO), and will include progression free survival (PFS), overall survival (OS), objective response rate (ORR), safety and pre-specified sub-group analyses, including outcomes in patients who received prior treatment with immunotherapy. Emphasis added. 25. During the Q&A session of the conference call to discuss the Company’s financial and operating results for the third fiscal quarter ended March 31, 2016 (“Q3 2016 Conference Call”), Array’s executives made the following statements in response to Cantor Fitzgerald analyst Mara Goldstein’s questions about the results of the Columbus trial, stating in relevant part: Mara Goldstein Thanks very much. Can you just maybe clarify something for me? On the NDA filing for binimetinib for NRAS melanoma, once you have completed the COLUMBUS trial and would have plans to submit that, does that become a redundant to the NDA or is that a supplemental? And can you just speak for the timing? Ron Squarer Sure. Mara, I think best answered by Dr. Sandor. Victor Sandor Yes. So the way that would normally work is that it would be supplemental NDA or COLUMBUS would represent a supplemental NDA for the binimetinib label and it would be a new NDA for encorafenib. Remember, it’s a combination so it's essentially it is two separate NDA. One would be a labeling update hopefully and other one would be a new approval. Emphasis added. 26. With respect to the NRAS melanoma market and the commercial development of NEMO, Array’s executives responded to analyst Ted Tenthoff from Piper Jaffray in relevant part: Ted Tenthoff And if I may just recall because I do think there is really important if you don't mind, so back to competing with Novartis and Roche, how are you going to really field the sales force and target the sales force to get your component of that 850- ish plus the NRAS melanoma market? Ron Squarer Just a point out here, Roche was just recently approved and I think Andy’s forecast for the year of $850 million is sort of a flat line no growth forecast. So he could generalize how we reach the market exceed a billion and I think the total addressable market is probably close to $2 billion although it is unlikely that the entire market will be penetrated. Andy Robbins So, Ted it is a great question. I think that the first answer to question is assuming NEMO is approved by the FDA we will have an advantage to launch our sales force to the exact same call point and channel in indication where we won't have direct compensation. None of the other MEKs will have an indication in NRAS melanoma. So that is the first differentiator that we will go out and market that Binimetinib, it's a little bit special it is the only MEK that has demonstrated this effect in this disease. And then secondly and probably most importantly as you know oncologists and the prescribers are going to be influenced mainly by clinical data. And our drugs really differentiated and is there reason really to use them. And for us that's where we come back to our tolerability advantage. For patients who are expected to take MEK and RAF in the BRAF melanoma setting for a median about a year, the side effects like pyrexia and photosensitivity that Ron walk through are not safety challenges. They are not going to lead to necessarily hospitalization or very significant safety challenges. But they are tolerability issues. And so when you are taking a drug for a year, to have a favorable 102, every couple weeks for three or four days or to have blisters when you are driving your car around and you are out in the sun, if there is another set of agents that has similar or potentially better efficacy and it does not have the side effects that's where we are going to spend our marketing muscle messaging and positioning our products. Ron Squarer Perhaps I’ll just add one other thing. This point our position is that we expect to have similar activity in terms of duration of effect. We are the only MEK RAF combination in which we are able to dose the RAF inhibitor above its single agent MTD so we are offering higher levels of the RAF in relatively to the competition. But we have no evidence yet of some differentiated activity that would certainly be a very, very powerful outcome although we mentioned today on the call today in MEK RAF phase 3 readout the data has matured over time so it will be seen dynamic to decide when to call our activity profile but that would be the ideal. And then the only thing I will remind everyone is that while several hundred million dollars in revenue may not be as meaningful to in Novartis or Roche, given our current valuation it would be highly transformative and would come after we essentially established our commercial effort on NRAS melanoma so it could be a really important value driver. So not to diminish the opportunity but even modest sales could be very important to us let alone taking significant share of this very large market. Thanks for these questions, Ted. Emphasis added. 27. On June 30, 2016, Array issued a press release, also attached as exhibit 99.1 to the Form 8-K filed with the SEC announcing that the filing of a New Drug Application (“NDA”) for binimetinib in patients with advanced NRAS-mutant melanoma to the U.S. Food and Drug Administration (“FDA”) (“June 2016 Press Release”). The Company made material misrepresentations in the press release, including in pertinent part: Array BioPharma Submits Binimetinib New Drug Application to U.S. FDA First-ever NDA filing for Array BOULDER, Colo., June 30, 2016 /PRNewswire/ -- Array BioPharma (Nasdaq: ARRY) today announced the submission of a New Drug Application (NDA) for binimetinib in patients with advanced NRAS-mutant melanoma to the U.S. Food and Drug Administration (FDA). The submission is based on results of the pivotal Phase 3 NEMO (NRAS MELANOMA AND MEK INHBITOR) study, which found binimetinib significantly extended median progression-free survival (PFS), the study's primary endpoint, as compared with dacarbazine. “The new drug application for binimetinib represents Array's first – an important milestone for this promising compound and our Company,” said Ron Squarer, Chief Executive Officer, Array BioPharma. “NRAS-mutant melanoma represents an often overlooked subset of advanced disease without meaningful treatment options beyond immunotherapy and NEMO is the first-ever trial to meet a PFS endpoint in this population. We look forward to working with the FDA as they evaluate our application and the potential for binimetinib as a treatment option for these patients.” In the NEMO study, binimetinib significantly extended median PFS at 2.8 months, as compared with 1.5 months observed with dacarbazine [hazard ratio (HR)=0.62 (95% CI 0.47-0.80), p<0.001] in patients with advanced NRAS- mutant melanoma. In the pre-specified subset of patients who received prior treatment with immunotherapy, including ipilimumab, nivolumab or pembrolizumab, patients who received binimetinib experienced 5.5 months of median PFS (95% CI, 2.8–7.6), compared with 1.6 months for those receiving treatment with dacarbazine (95% CI, 1.5–2.8). Emphasis added. 28. On September 1, 2016, Array issued a press release, also attached as exhibit 99.1 to the Form 8-K filed with the SEC announcing that the FDA accepted the NDA for binimetinib in patients with advanced NRAS-mutant melanoma (“September 1, 2016 Press Release”). The Company stated in pertinent part: Array BioPharma Announces FDA Acceptance of Binimetinib NDA for Patients with Advanced NRAS-Mutant Melanoma BOULDER, Colo., Sept. 1, 2016 /PRNewswire/ -- Array BioPharma (Nasdaq: ARRY) today announced that the FDA has accepted its New Drug Application (NDA) for binimetinib with a target action date under the Prescription Drug User Fee Act (PDUFA) of June 30, 2017. Array completed its NDA submission of binimetinib in late June 2016 based on findings from the pivotal Phase 3 NEMO (NRAS MELANOMA AND MEK INHIBITOR) trial in patients with NRAS- mutant melanoma. The FDA also indicated that it plans to hold an advisory committee meeting (ODAC) as part of the review process. As previously reported, Array is currently preparing for an Application Orientation Meeting (AOM) with the FDA in September 2016, which it expects will include a discussion of the NDA package including clinical risk / benefit. “There are very few treatment advances beyond immunotherapy for this devastating disease, which impacts one out of five advanced melanoma patients,” said Victor Sandor, M.D., Chief Medical Officer, Array BioPharma. “Binimetinib is the first and only MEK inhibitor to demonstrate improvement on progression free survival in a Phase 3 trial for NRAS mutant melanoma patients.” 29. On September 26, 2016, Array issued a press release, also attached as exhibit 99.1 to the Form 8-K filed with the SEC announcing the results of another Phase 3 study of Binimetinib (COLOMBUS), this time for BRAF-Mutant Melanoma (“September 26, 2016 Press Release”). Throughout the September 26, 2016 Press Release, the Company used the opportunity to reapprove the previous statements about the NDA for binimetinib in patients with advanced NRAS-mutant melanoma, stating in pertinent part: Array BioPharma and Pierre Fabre Announce COLUMBUS Phase 3 Study of Encorafenib plus Binimetinib For BRAF-Mutant Melanoma Met Primary Endpoint - Demonstrated statistically significant results with median PFS on combination of encorafenib plus binimetinib 14.9 months versus 7.3 months on vemurafenib - - Generally well-tolerated and safety profile overall consistent with prior encorafenib plus binimetinib clinical trial results - - Global regulatory submissions planned for 2017 - BOULDER, Colo., Sept. 26, 2016 /PRNewswire/ -- Array BioPharma (Nasdaq: ARRY) and Pierre Fabre today jointly announced top-line results from Part 1 of the Phase 3 COLUMBUS (Combined LGX818 Used with MEK162 in BRAF Mutant Unresectable Skin Cancer) study evaluating LGX818 (encorafenib), a BRAF inhibitor, and MEK162 (binimetinib), a MEK inhibitor, in patients with BRAF-mutant advanced, unresectable or metastatic melanoma. The study met its primary endpoint, significantly improving progression free survival (PFS) compared with vemurafenib, a BRAF inhibitor, alone. * * * About Binimetinib & Encorafenib MEK and BRAF are key protein kinases in the MAPK signaling pathway (RAS- RAF-MEK-ERK). Research has shown this pathway regulates several key cellular activities including proliferation, differentiation, survival and angiogenesis. Inappropriate activation of proteins in this pathway has been shown to occur in many cancers, such as melanoma, colorectal and thyroid cancers. Binimetinib is a late-stage small molecule MEK inhibitor and encorafenib is a late-stage small molecule BRAF inhibitor, both of which target key enzymes in this pathway. Binimetinib and encorafenib are being studied in clinical trials in advanced cancer patients, including the recently initiated Phase 3 BEACON CRC trial that will study encorafenib in combination with cetuximab with or without binimetinib in patients with BRAF V600E-mutant colorectal cancer. Array submitted a New Drug Application (NDA) for binimetinib in NRAS-mutant melanoma to the FDA at the end of June 2016. The FDA accepted the NDA with a target action date under the Prescription Drug User Fee Act (PDUFA) of June 30, 2017. Array BioPharma retains exclusive rights to binimetinib and encorafenib in key markets including the U.S. and Japan. Emphasis added. 30. At the release of the news, the share price rose over 80% from a close of $3.66 on September 23, 2016 per share of Array’s common stock to a close of $6.61 per share on September 26, 2016. 31. The following day, on September 27, 2016, Array issued a press release announcing a proposed public offering of $100 million of shares of its common stock. 32. On September 28, 2016, Array filed a Prospectus Supplement on Form 424B5 with the SEC announcing the pricing of the above-mentioned public offering of 18,400,000 shares of its common stock at a public offering price of $6.25 per share (“Prospectus Supplement”). The Prospectus Supplement stated in relevant part: NEMO NEMO is a Phase 3 study comparing binimetinib versus dacarbazine in unresectable or metastatic NRAS-mutant melanoma patients. On September 1, 2016, Array announced that the FDA had accepted Array's New Drug Application, or NDA, for binimetinib in patients with advanced NRAS-mutant melanoma with a target action date under the Prescription Drug User Fee Act (PDUFA) of June 30, 2017. The FDA also indicated that it plans to hold an Oncologic Drugs Advisory Committee (ODAC) meeting as part of the regulatory process. Activating NRAS mutations are present in approximately 20% of patients with metastatic melanoma, and have been a poor prognostic indicator for these patients. Treatment options for this population remain limited beyond immunotherapy (PD- 1, CTLA4). Therefore, if approved, binimetinib could represent an important additional therapy for these patients. The NDA submission is based on results of the NEMO study, which found binimetinib extended median PFS, the study's primary endpoint, as compared with dacarbazine. In the NEMO study, binimetinib extended median PFS at 2.8 months, as compared with 1.5 months observed with dacarbazine [hazard ratio (HR)=0.62 (95% CI, 0.47-0.80), p<0.001] in patients with advanced NRAS- mutant melanoma. In the pre-specified subset of patients who received prior treatment with immunotherapy (n=85), including ipilimumab (n=54), and nivolumab or pembrolizumab (n=24), patients who received binimetinib experienced 5.5 months of median PFS (95% CI, 2.8-7.6), compared with 1.6 months for those receiving treatment with dacarbazine (95% CI, 1.5-2.8). While the results in the pre-specified sub-group of patients who had received prior treatment with immunotherapy are of interest, interpretation beyond overall consistency with the primary result should be made with care. Array anticipates that the primary consideration for marketing approval will be the results for the primary endpoint of the trial. In addition to improving PFS, binimetinib also demonstrated significant improvement in the secondary endpoints of ORR and disease control rate, or DCR. While there was no statistically significant difference demonstrated in overall survival, the numerical trend in median overall survival, or mOS, favored the binimetinib arm. Emphasis added. 33. On October 3, 2016, Array announced the closing of its underwritten public offering of 21,160,000 shares of its common stock, which included 2,760,000 shares of common stock issued upon the exercise in full of the option to purchase additional shares granted to the underwriters, at a public offering price of $6.25 per share. The total gross proceeds from the offering were $132.25 million, before underwriting discounts and commissions and offering expenses. 34. The statements in paragraphs 23-33 above were materially false and/or misleading because they misrepresented and failed to disclose the following adverse facts pertaining to the Company’s business, operations, and prospects, which were known to Defendants or recklessly disregarded by them. Specifically, Defendants made materially false and/or misleading statements and/or failed to disclose that: (i) Array’s NEMO study failed to show sufficient clinical benefit of the binimetinib NDA in use for patients with NRAS-mutant melanoma, (ii) that it was aware that this lack of supporting clinical data would not be sufficient to received FDA approval of binimetinib in use for patients with NRAS-mutant melanoma, and (iii) as a result of the foregoing, Array’s public statements were materially false and misleading at all relevant times. C. The Truth Emerges 35. On Sunday, March 19, 2017, Array issued a press release announcing the withdrawal of the binimetinib NDA in use for patients with NRAS-mutant melanoma (“March 2017 Press Release”), stating in relevant part: BOULDER, Colo., March 19, 2017 /PRNewswire/ -- Array BioPharma Inc. (ARRY) today announced that it has withdrawn from the U.S. Food and Drug Administration's (FDA) Division of Oncology Products 2 its new drug application (NDA) for binimetinib monotherapy for the treatment of NRAS- mutant melanoma, a rare, mutationally-driven subset of skin cancer. This action was based on thorough discussions and communications with the FDA, including exploration of various paths to approval, and followed the late cycle review meeting held with the FDA on Friday, March 17, 2017. Based on feedback from the agency, Array concluded that the clinical benefit demonstrated in the Phase 3 NEMO clinical trial would not be found sufficient to support approval of the NRAS-mutant melanoma NDA. Ongoing clinical trials for binimetinib will continue. This action will not impact the planned Phase 3 COLUMBUS trial NDA of binimetinib, in combination with encorafenib, for the treatment of BRAF-mutant melanoma, which remains on track for mid-2017. Emphasis added. 36. On March 20, 2017, before the market opened, biotech analyst John Carroll from Endpoints News published an article entitled “Array walks back its FDA pitch on binimetinib, derailing plans for commercial launch.” The article was updated the following day, stated in relevant part: Array BioPharma has some explaining to do. Fifteen months after the Boulder, CO-based biotech said that it had the data needed for its first approval of binimetinib for NRAS-positive melanoma, execs are walking back the application and its plans for a launch. In a statement out Sunday evening, Array $ARRY said that after getting feedback from the FDA, execs “concluded that the clinical benefit demonstrated in the Phase 3 NEMO clinical trial would not be found sufficient to support approval of the NRAS-mutant melanoma NDA.” Shares of Array dropped 26% in pre-market trading Monday. Michael Schmidt at Leerink was not pleased. He noted: While NRAS+ melanoma was only a small value driver for the company, we think this comes as a surprise to investors and is a clear setback for the company and mgmt.’s regulatory and commercial strategy. Recall, management planned to build a commercial infrastructure and visibility with customers this year around the launch in NRAS+ melanoma, which would also be in preparation for the planned launch in 2018 of binimetinib/encorafenib in more competitive BRAF+ melanoma, which is ARRY’s main value driver. It was a much different story back in late 2015 when CEO Ron Squarer said that their MEK blocker hit the primary endpoint on progression-free survival, with the drug arm registering 2.8 months compared to 1.5 months for a group on dacarbazine. It didn’t look like much, but Array said it was plenty to take to the FDA. In the summer of 2016, though, the biotech also conceded that the drug had not significantly improved overall survival. Array has had plenty of ups and downs with the drug. Novartis had partnered with the company, but punted the program when they executed a big asset swap with GlaxoSmithKline. Pierre Fabry then took their spot, but Array held on to US commercial rights. Emphasis added. 37. On this, over the course of two trading days, Array’s common stock price fell from $10.56 to $9.13 per share between March 17 and March 21, 2017. 38. On May 10, 2017, during a conference call to discuss the Company’s financial and operating results for the third fiscal quarter ended March 31, 2017 (“Q3 2017 Conference Call”), analyst Michael Schmidt from Leerink asked about the reasons of the withdrawal of the binimetinib NDA in use for patients with NRAS-mutant melanoma. Ultimately, while attempting to blur the truth, Array’s CEO and Individual Defendant Squarer admitted that: (i) Array lacked sufficient data to support approval of the binimetinib NDA in use for patients with NRAS-mutant melanoma, (ii) as a result, Array was aware it would not be able to launch binimetinib in use for patients with NRAS-mutant melanoma. In relevant part: Michael Schmidt And then I guess just a question going back to NRAS melanoma, just curious to the reasons why you put the NDA ahead of the outcome actually? Ron Squarer Yes Michael, it’s Ron. I think did what we could to explain the situation. We know that history, we feel we’ve always been transparent with the present cons of the data published and shared them and give and we always gave, we considered to be the appropriate attention meaning we never suggested that it was slam dunk and didn’t also suggest it was key to our evaluation, it was a very small population which would have yielded very low revenues. The reason we did what we did which was everything that could be done to pursue potential approval over a long period of time, an extensive conversation with the FDA was in an attempt to make the product available to patients who have really so few choices, so after you progress in NRAS melanoma, therapy, you really have no reasonable choice available. And so we believe that working with the FDA we would find a way but when it became clear that was not going to occur, we made the decision that we made and clearly we and they need to be focused now regarding the Array portfolio on Columbus and then later BECON. Michael Schmidt But was it basically a function of the changing treatment paradigm in the context of those patients or was it related to the data itself? Ron Squarer Those two are tightly linked, and so clearly the majority of our patients were in first line and in NRAS specifically IO is a clear first line therapy. And so then you're sure that is a component of the calculation. Without months of deliberation and creative work to find a path forward, it's impossible to sort of explain it is leading to one thing. The FDA has a job to do and they consider a lot of factors in doing it and the best we can do is present our best case and we feel we did that and that's all the insight I have on it. Emphasis added. ADDITIONAL SCIENTER ALLEGATIONS 39. As alleged herein, Defendants acted with scienter in that they knew that the public documents and statements issued or disseminated in the name of the Company 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. As set forth elsewhere herein in detail, Defendants, by virtue of their receipt of information reflecting the true facts regarding Array, their control over, and/or receipt and/or modification of Array’s allegedly materially misleading statements and/or their associations with the Company which made them privy to confidential proprietary information concerning Array, participated in the fraudulent scheme alleged herein. LOSS CAUSATION AND ECONOMIC LOSS 40. 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 Company’s stock price, and operated as a fraud or deceit on acquirers of the Company’s common stock. As detailed above, when the truth about Arrays’ misconduct and its lack of operational and financial controls was revealed, the value of the Company's securities declined precipitously as the prior artificial inflation no longer propped up its stock price. The decline in Arrays’ share price 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 the common stock price decline negates any inference that the loss suffered by Plaintiff and other members of the Class was caused by changed market conditions, macroeconomic or industry factors or Company-specific facts unrelated to the Defendants’ fraudulent conduct. The economic loss, i.e., damages, suffered by Plaintiff and other Class members was a direct result of Defendants' fraudulent scheme to artificially inflate the Company's stock price and the subsequent significant decline in the value of the Company's share, price when Defendants' prior misrepresentations and other fraudulent conduct was revealed. 41. At all relevant times, Defendants’ materially false and misleading statements or omissions alleged herein directly or proximately caused the damages suffered by the Plaintiff and other Class members. Those statements were materially false and misleading through their failure to disclose a true and accurate picture of Arrays’ business, operations and financial condition, as alleged herein. Throughout the Class Period, Defendants publicly issued materially false and misleading statements and omitted material facts necessary to make Defendants’ statements not false or misleading, causing Array’s securities to be artificially inflated. Plaintiff and other Class members purchased Array’s’ securities at those artificially inflated prices, causing them to suffer the damages complained of herein. PRESUMPTION OF RELIANCE; FRAUD-ON-THE-MARKET 42. At all relevant times, the market for Array securities was an efficient market for the following reasons, among others: (a) Array securities met the requirements for listing, and were listed and actively traded on the NASDAQ Global Market; (b) During the Class Period, Array securities were actively traded, demonstrating a strong presumption of an efficient market; (c) As a regulated issuer, Array filed with the SEC periodic public reports during the Class Period; (d) Array regularly communicated with public investors via established market communication mechanisms; (e) Array was followed by securities analysts employed by major brokerage firms who wrote reports that were distributed to the sales force and certain customers of brokerage firms during the Class Period. Each of these reports was publicly available and entered the public marketplace; and (f) Unexpected material news about Array was rapidly reflected in and incorporated into the Company's stock price during the Class Period. 43. As a result of the foregoing, the market for Array securities promptly digested current information regarding Array from all publicly available sources and reflected such information in Array’s stock price. Under these circumstances, all purchasers of Array securities during the Class Period suffered similar injury through their purchase of Array’s securities at artificially inflated prices, and a presumption of reliance applies. 44. Alternatively, reliance need not be proven in this action because the action involves omissions and deficient disclosures. Positive proof of reliance is not a prerequisite to recovery pursuant to the ruling of the United States Supreme Court in Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128 (1972). All that is necessary is that the facts withheld be material in the sense that a reasonable investor might have considered the omitted information important in deciding whether to buy or sell the subject security. Here, the facts withheld are material because an investor would have considered the Company’s true net losses and adequacy of internal controls over financial reporting when deciding whether to purchase and/or sell stock in Array. NO SAFE HARBOR; INAPPLICABILITY OF BESPEAKS CAUTION DOCTRINE 45. The statutory safe harbor provided for forward-looking statements under certain circumstances does not apply to any of the material misrepresentations and omissions alleged in this Complaint. 46. To the extent certain of the statements alleged to be misleading or inaccurate 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. 47. Defendants are also liable for any false or misleading “forward-looking statements” pleaded because, at the time each “forward-looking statement” was made, the speaker knew the “forward-looking statement” was false or misleading and the “forward-looking statement” was authorized and/or approved by an executive officer of Array who knew that the “forward-looking statement” was false. Alternatively, none of the historic or present-tense statements made by the 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, nor were any of the projections or forecasts made by the Defendants expressly related to or stated to be dependent on those historic or present-tense statements when made. CLASS ACTION ALLEGATIONS 48. Plaintiff brings this action on behalf of all individuals and entities who purchased or otherwise acquired Array common stock on the public market during the Class Period, and were damaged, excluding the Company, the defendants and each of their immediate family members, legal representatives, heirs, successors or assigns, and any entity in which any of the defendants have or had a controlling interest (the “Class”). 49. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Array securities were actively traded on the NASDAQ Global Market. 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 Array 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. Upon information and belief, these shares are held by thousands if not millions of individuals located geographically throughout the country and possibly the world. Joinder would be highly impracticable. 50. Plaintiff’s claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by the defendants’ respective wrongful conduct in violation of the federal laws complained of herein. 51. Plaintiff has and will continue to fairly and adequately protect the interests of the members of the Class and have retained counsel competent and experienced in class and securities litigation. Plaintiff has no interests antagonistic to or in conflict with those of the Class. 52. 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 defendants’ respective acts as alleged herein; (b) whether the defendants acted knowingly or with deliberate recklessness in issuing false and misleading financial statements; (c) whether the price of Array securities during the Class Period was artificially inflated because of the defendants’ conduct complained of herein; and (d) whether the members of the Class have sustained damages and, if so, what is the proper measure of damages. 53. 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 Violation of Section 10(b) and Rule 10b-5 Against All Defendants 54. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. 55. 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 Array securities at artificially inflated prices. In furtherance of this unlawful scheme, plan, and course of conduct, each of the Defendants took the actions set forth herein. 56. 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 that operated as a fraud and deceit upon the purchasers of the Company’s securities in an effort to maintain artificially high market prices for Array securities in violation of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. All Defendants are sued either as primary participants in the wrongful and illegal conduct charged herein or as controlling persons as alleged below. 57. 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 Array as specified herein. 58. 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 Array’s value and performance and continued substantial growth, which included the making of, or 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 Array and its business operations and future prospects in the 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 Array securities during the Class Period. 59. Individual Defendants’ primary liability, and controlling person liability, arises from the following facts: (1) Individual Defendants were high-level executives, directors, and/or agents at the Company during the Class Period and members of the Company’s management team or had control thereof; (2) each Individual Defendant, by virtue of his 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 financial condition; (3) each Individual Defendant enjoyed significant personal contact and familiarity with the other Individual Defendant 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 (4) each Individual Defendant was aware of the Company’s dissemination of information to the investing public which they knew or recklessly disregarded was materially false and misleading. 60. 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 Array’s operating condition and future business prospects from the investing public and supporting the artificially inflated price of its securities. As demonstrated by Defendants’ overstatements and misstatements of the Company’s financial condition throughout 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 deliberately refraining from taking those steps necessary to discover whether those statements were false or misleading. 61. 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 Array’s securities was artificially inflated during the Class Period. In ignorance of the fact that market prices of Array’s publicly-traded 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 common stock trades, 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 Array’s securities during the Class Period at artificially high prices and were or will be damaged thereby. 62. 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 Array’s financial results, which was not disclosed by Defendants, Plaintiff and other members of the Class would not have purchased or otherwise acquired their Array securities, or, if they had acquired such securities during the Class Period, they would not have done so at the artificially inflated prices that they 63. By virtue of the foregoing, Defendants have violated Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder. 64. 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. 65. This action was filed within two years of discovery of the fraud and within five years of each plaintiff’s purchases of securities giving rise to the cause of action. COUNT II The Individual Defendants Violated Section 20(a) of the Exchange Act 66. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. 67. The Individual Defendants acted as controlling persons of Array within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level positions, agency, ownership and contractual rights, and 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 that Plaintiff contends are false and misleading. The Individual Defendants provided with or had unlimited access to copies of the Company’s reports, press releases, public filings and other statements alleged by Plaintiff to have been 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. 68. 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. 69. As set forth above, Array, the Individual Defendants each violated Section 10(b), and Rule 10b-5 promulgated thereunder, by their acts and omissions as alleged in this Complaint. 70. 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. 71. This action was filed within two years of discovery of the fraud and within five years of each Plaintiff’s 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, certifying Plaintiff as class representative under Federal Rule of Civil Procedure 23 and Plaintiff’s counsel as class counsel; (b) Awarding compensatory damages in favor of Plaintiff and the other members of the Class against all Defendants, jointly and severally, for all damages sustained as a result of the 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) Granting extraordinary equitable and/or injunctive relief as permitted by law; and (e) Such other and further relief as the Court may deem just and proper. JURY TRIAL DEMANDED Plaintiff hereby demands a jury trial. Dated: November 20, 2017 /s/ Jeffrey A. Berens_________ Jeffrey A. Berens BERENS LAW LLC 2373 Central Park Boulevard, Suite 100 Denver, Colorado 80238 Telephone: (303) 861-1764 Facsimile: (303) 395-0393 Email: [email protected] Local Counsel Eduard Korsinsky LEVI & KORSINSKY, LLP (Trial Counsel) 30 Broad Street, 24th Floor New York, NY 10004 Telephone: (212) 363-7500 ext. 102 Facsimile: (212) 363-7171 Email: [email protected] Counsel for Plaintiff and Proposed Lead Counsel for the Class EXHIBIT A CERTIFICATION OF NAMED PLAINTIFF PURSUANT TO FEDERAL SECURITIES LAWS I, Wendell Rose , duly certify and say, as to the claims asserted under the federal securities laws, 1. I have reviewed the complaint and authorized its filing. 2. I did not purchase 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. 3. I am willing to serve as a representative party on behalf of the class, including providing testimony at deposition and trial, if necessary. 4. My transaction(s) in Array Biopharma, Inc. which are the subject of this litigation during the class period set forth in the complaint are set forth in the chart attached hereto. 5. Within the last 3 years, I have not sought to serve nor have I served as a class representative in any federal securities fraud case. 6. I will not accept any payment for serving as a representative party on behalf of the class beyond the Plaintiff's pro rata share of any recovery, except as ordered or approved by the court, including any award for reasonable costs and expenses (including lost wages) directly relating to the representation of the class. I hereby certify, under penalty of perjury, that the foregoing is true and correct. Executed this July Name: Wendell Rose Wendell Rose  Transactions in Array Biopharma, Inc. (ARRY) Common Stock Class Period: December 16, 2015, and March 17, 2017, inclusive Date of Transaction Buy (B) or Sell (S) Quantity 12/17/2015 B 500 12/18/2015 B 500 12/29/2015 B 1000 1/4/2016 B 1000 1/4/2016 B 2000 1/6/2016 B 2000 1/7/2016 B 1000 1/7/2016 B 1000 1/8/2016 B 1000 1/15/2016 B 1000 1/15/2016 B 2000 1/20/2016 B 2000 1/28/2016 B 2000 2/1/2016 B 1000 3/1/2016 B 1015 3/17/2016 B 985 4/29/2016* B 1000 4/29/2016 B 1000 5/9/2016* B 1000 5/11/2016* B 2000 5/17/2016* B 1000 6/17/2016* B 1,000 8/9/2016 S (24700) 8/9/2016 S (2300) 8/25/2016 B 1000 9/6/2016 S (1000) 10/18/2016 B 1000 10/27/2016 B 1000 11/3/2016 B 1000 11/22/2016 B 1000 1/27/2017* B 1194 2/14/2017* S (5194) 2/24/2017* B 5000 3/6/2017* B 2500 *Settlement Date Price ($) 4.55 $ 4.50 $ 4.25 $ 4.07 $ 4.08 $ 4.00 $ 3.85 $ 3.70 $ 3.65 $ 3.20 $ 3.15 $ 3.04 $ 3.03 $ 3.00 $ 2.53 $ 2.55 $ 3.20 $ 3.15 $ 3.10 $ 2.94 $ 2.75 $ 3.25 $ 3.50 $ 3.51 $ 3.15 $ 3.56 $ 6.30 $ 6.00 $ 5.50 $ 7.75 $ 11.00 $ 12.00 $ 10.95 $ 11.50 $

securities

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA Case No. ______________________ TODD STANAFORD, on behalf of himself and all others similarly situated, Plaintiff, vs. ROBERT DONALD BRUCE GENOVESE, TIFFENI ALIECE GRAVES, MARNIE MARKIN, GEOFFREY BROWNE, BG CAPITAL GROUP LTD, LOOK BACK INVESTMENTS, INC. AND LIBERTY SILVER CORPORATION, Defendants. DEMAND FOR JURY TRIAL CLASS ACTION COMPLAINT INTRODUCTION Plaintiff, Todd Stanaford (“Plaintiff”), by his undersigned attorneys, alleges the following upon personal knowledge as to himself and his 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 the public documents and announcements issued by Liberty Silver Corporation, (“Liberty Silver” or the “Company”), filings with the Securities and Exchange Commission (“SEC”), wire and press releases published by and regarding the Company, securities analysts’ reports and advisories about the Company, and other information readily obtainable on the Internet. NATURE OF THE ACTION 1. This is a federal securities class action on behalf of purchasers of the common stock of Liberty Silver (the “Class”) during the period April 1, 2008 through October 5, 2012, inclusive (the “Class Period”), seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”). 2. This Complaint alleges a massive and systemic financial fraud that was effected by the Defendants against the Class via a clear “pump and dump” scheme. In the course of this scheme, the Defendants promoted Liberty Silver in newsletters and reports published and disseminated over the internet. 3. Defendants’ made materially false or misleading statements regarding predictions in those reports, or caused them to be made. Following the Defendants' promotional efforts (the “pump”), Genovese, directly or indirectly, sold Liberty Silver to the investing public at an increased price (the “dump”), pocketing unlawful profits amounting to tens of millions of dollars. Genovese attempted to conceal his involvement in the fraudulent pump and dump scheme - and their receipt of illicit income from the fraud - by using nominee entities and operating offshore brokerage and bank accounts in Canada, the Turks and Caicos Islands, and elsewhere. PARTIES 4. Plaintiff purchased shares of Liberty Silver common stock, as set forth in the accompanying certification, which is incorporated by reference herein, and has been damaged thereby. Plaintiff is a resident of the state of Texas. 5. Defendant Robert Donald Bruce Genovese, (“Genovese”), is an investment capitalist, entrepreneur, and stock promoter. Upon information and belief, although he is a Canadian citizen, Genovese resides in Florida. 6. Defendant BG Capital Group LTD (“BG Capital”), is an investment management company incorporated in the Bahamas, with offices in the United States, Bahamas, and Barbados. BG Capital has its corporate office in Nassau, Bahamas, and its management office in Plantation, Florida. BG Capital is wholly owned and controlled by Genovese. 7. Defendant Liberty Silver is a company incorporated in Nevada and headquartered in Canada, with all its pertinent assets located in Nevada. Liberty Silver did extensive business with Genovese when he was in Florida including actions furthering the fraud connected with Genovese. 8. Defendant Look Back Investments, Inc., is a shell investment company incorporated in Panama, headquartered in Panama City, Panama, and wholly owned and controlled by Genovese. 9. Defendant Tiffeni Aliece Graves, former next door neighbor and personal friend of Marnie and Matthew Markin, purchased 250,000 pre-split shares of Liberty Silver stock at $.05 cents per share on April 1, 2008, the same day that Marnie Markin bought 250,000 shares. Upon information and belief, Graves made these purchases as part of Defendants’ pump and dump scheme, instigated by Genovese. Upon information and belief, Graves resides in and is a citizen of California. 10. Defendant Marnie Markin is the wife of Matthew Markin (CEO of American Lithium Minerals) and the sister in-law of Marco Markin (CEO of BG Capital and Neptune Society). Marnie Markin bought 250,000 pre-split shares of Liberty Silver stock at $.05 cents per share on April 1, 2008. Upon information and belief, Marnie Markin made these purchases as part of Defendants’ pump and dump scheme, instigated by Genovese. Upon information and belief, Marnie Markin resides in and is a citizen of Florida. 11. Defendant Geoffrey Browne, (“Browne”) is the Chairman of the Board of Directors, and CEO, of Liberty Silver. Browne approved the financings and decisions of Liberty Silver, with full knowledge of Genovese’s previous history of securities fraud, or was willfully reckless in not knowing. Upon information and belief, Browne resides in and is a citizen of Canada. 12. Defendants Genovese, Graves, Markin, and Brown are collectively referred to herein as the “Individual Defendants.” 13. The Individual Defendants, because of their positions with Liberty Silver, and/or their positions of influence, controlled and/or possessed the authority to control the contents of its reports, press releases and presentations to securities analysts and through them, to the investing public. By reason of their influence, management positions, and/or their ability to make public statements in the name of Liberty Silver, the Individual Defendants were and are controlling persons, and had the power and influence to cause (and did cause) Liberty Silver to engage in the conduct complained of herein. JURISDICTION AND VENUE 14. The claims alleged herein arise under §§ 10(b) and 20(a) of the Exchange Act, 15 U.S.C. §78j(b) and 78t(a), and Rule 10b-5 promulgated thereunder (17 C.F.R. §240.10b-5), and the rules and regulations of the SEC promulgated thereunder. 15. This Court has jurisdiction over the subject matter of this action pursuant to §27 of the Exchange Act, 15 U.S.C. §78aa, §22(a) of the Securities Act, 15 U.S.C. § 77v(a), and 28 U.S.C. §1331. 16. Venue is proper in this District pursuant to §27 of the Exchange Act, 15 U.S.C. §78aa, §22(a) of the Securities Act, 15 U.S.C. §77v, and §28 U.S.C. §1391(b), as a substantial part of the acts events or omissions giving rise to the claims pleaded herein occurred in this District and defendants named herein maintain their residence or principal places of business in this District. 17. 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 United States mails, interstate telephone communications and the facilities of the Toronto Stock Exchange and Over the Counter Bulletin Board. BACKGROUND INFORMATION 18. Genovese is believed to have used a pump and dump pattern of stock manipulations in Liberty Silver as well as in numerous other schemes, including but not limited to, schemes involving the following companies: Clearly Canadian Brands (CCBEF), Neptune Society (NPTI), Envoy Communications (ECGI), Spectrum Sciences & Software (SPSC), American Lithium Minerals, Inc. (AMLM), and others. This information should have been known, or was known, by Defendants Browne, Markin, Graves, and Liberty Silver. Genovese is a penny stock promoter and is notorious for operating on the fringes of the financial markets, making millions of dollars by touting penny stocks. He uses television shows, newsletters, false and misleading releases, and emails to pump up a stock, urging the public to invest in these stocks at artificially inflated rates driving the stock price higher; Genovese can then dump large blocks of stock at the artificially inflated prices, profiting millions of dollars in the process. When Genovese dumps his large blocks of stock, the stock price plummets leaving the general investing public with huge losses. Clearly Canadian 19. Clearly Canadian, a once prosperous boutique beverage company based in Vancouver, ran into financial difficulties around 2001 culminating in a Toronto Stock Exchange delisting in February of 2005. In March of 2005, Defendant BG Capital announced that it would invest $1,000,000 in a short-term financing facility that eventually led towards control of the company. Two months later in May, the company completed a 1:10 reverse stock split and listed on the OTCBB under the symbol CCBEF. Immediately following this, Genovese used a reality TV show to promote Clearly Canadian, while at the same time appointing his cronies in positions of power in the company and purchasing large blocks of stock. When the stock price became artificially inflated, Genovese and his nominees dumped their stock leaving the company in worse financial condition than when he took control. On March 17, 2010, Clearly Canadian filed for bankruptcy and was delisted. 20. Below is a graph of the stock for Clearly Canadian from the time BG Capital took control. The rising and falling pattern of the stock is caused by Genovese buying and selling large blocks of stock to drive up the price. Genovese would sell blocks of stock between various shell corporations he owned and controlled to create the illusion of volume and demand. At the same time, Genovese would promote the stock through various mediums such as newsletters, emails, press releases, and reports. When the time was right, Genovese would dump his shares for huge profits while cratering the market. Neptune Society 21. On January 20, 1999, an OTCBB shell named Lari Corp. announced that it would acquire the then private “Neptune Society” based in California. Lari Corp. was incorporated in Florida sometime in 1998 with 125,000 shares issued at par value. On August 26, 1998, Lari Corp. was listed on the OTCBB under the symbol LREE. On January 19, 1999 (one day before the announcement that Lari Corp. would acquire Neptune Society), Lari Corp. sold 250,000 shares at .80 cents per share raising $200,000. Each share purchased in January included the right to buy four more shares at the same price in the future. A large portion of these stocks were purchased, directly or indirectly, by Genovese through offshore companies under his control, and by his nominees. On April 7, 1999, shares that participated in the January 19, 1999, financing exercised their right to buy resulting in the issuance of an additional 1,000,000 shares of the now called Neptune Society (Lari Corp. took on the Neptune Society name following its acquisition) at $.80 cents per share. 22. The original 250,000 shares were purchased by twenty-four investors, including Genovese, BG Capital, and other offshore companies tied to, and most likely owned and controlled by, Genovese. The 1,000,000 shares were exercised by nine offshore companies. This means that the other fifteen investors immediately sold their shares to the nine offshore companies controlled by Genovese. Three of those companies were Crystal Overseas Trading, Inc., Private Investment Company, Ltd., and Seloz Gestion & Finance SA, all offshore companies affiliated with Genovese and used by Genovese to facilitate his stock schemes. 23. Shares of Neptune Society on the OTCBB traded at a split adjusted share price of between $20 in 1998, to as high as $60 in 2000. In that time over 1,770,000 shares of Neptune Society traded hands allowing the offshore owners of the 1,250,000 shares purchased for $.80 to liquidate their shares resulting in up to $40 million in profits. The rising and falling of the NPTI stock price in the graph below shows Genovese buying and selling stock with his various entities, driving the price up, then dumping the stock, causing the value to drastically drop in December 2000. 24. After the stock lost 95% of its value, with Genovese making a huge profit and the general investing public experiencing huge losses, Genovese purchased the remaining shares, taking the company private. In other words, Genovese had his cake and ate it too. Envoy Communications 25. Envoy Communications was a stock heavily touted by Bobby Genovese, using BG Capital along with emails and press releases, while his brother Geoffrey was the CEO of the company. After raising over $50 million in financings by making bold promises to consolidate the media industry, Envoy Communications ended up like all the other companies associated with Genovese, delivering over 90% losses to its investors while Genovese’s brother Geoff extracted millions of dollars in compensation, both from a $375,000 salary and over 1,500,000 shares in stock options. Note the rising and falling pattern of the stock below, as well as the massive increase in volume due to Genovese dumping his large blocks of stock, then a deep decrease in value, similar to all other companies associated with Bobby Genovese, including Liberty Silver: Spectrum Sciences & Software 26. Spectrum Sciences & Software (“SPSC”) began with the incorporation of a shell company named, Silva Bay International Inc. (“Silva Bay”) in Delaware in 1998. In a process that is nearly identical to the Neptune Society transaction, Silva Bay listed on the Pink Sheets under the symbol SIVY in the year 2000. On April 2, 2003, Silva Bay acquired a company named Spectrum Sciences for 2,500,000 shares of Silva Bay and changed its name to Spectrum Sciences & Software Inc., and its trading symbol to SPSC. 27. According to Part I – Item 4 of Form 10 filed with the SEC on June 10, 2003, SPSC had 18,844,000 shares outstanding which included 2,500,000 shares issued to Donald Myrick. Donald Myrick is the founder of SPSC. In other words, there were 16,344,000 shares of the Silva Bay shell which could be sold as part of the free trading float. 28. 3,700,000 shares were held by three offshore companies based in the Bahamas, Turks & Caicos, and Switzerland, respectively Crystal Overseas Trading, Inc., Private Investment Company, Ltd., and Seloz Gestion & Finance SA, all offshore companies controlled by Genovese that exercised the $.80 cent rights on Neptune Society in 1999, while the stock price was $50 dollars. The connection to Genovese does not end there. An SEC filing in 2004 shows those offshore companies as having entered into an agreement with BG Capital to sell BG Capital shares of Neptune Society as part of that private transaction. Crystal Overseas Trading and Martin Christen, who is the Turks & Caicos based director of Private Investment Company, Ltd., can both be linked back to Swiss Overseas Finance Company, another company that exercised those $.80 cent warrants on Neptune in 1999. The reason these shares are so important is that SPSC would subsequently be a target of an informal SEC inquiry, a negative New York Times article, and litigation directed at Genovese and BG Capital. 29. Genovese’s participation is found in a Stock Option Plan he formally entered into with SPSC on March 11, 2004. In the Agreement, Genovese would be given the right to buy shares of SPSC at $1.65 per share indefinitely, and using a Form S-8 (which is meant for only working executives of a company as opposed to stock promoters) these shares would be immediately free trading. In addition Genovese was paid exorbitant cash consulting fees, approximately $2,000,000 dollars, by SPSC. The Form 10-Q for the period ending March 31, 2004, revealed that Genovese exercised all of his options: The Form 10-Q filed on May 24, 2004, stated in relevant part “Between January 1, 2004 and May 21, 2004, Mr. Genovese has exercised 21,178,300 options.” 30. A Form 13D filed on August 3, 2004 by BG Capital, revealed that Genovese sold all of those shares as quickly as he received them: During March and April 2004, the Reporting Persons (Genovese) exercised Options relating to 20,078,300 shares of Common Stock, using Genovese's personal funds, BG Capital's working capital and/or cancellation of indebtedness owed to Genovese and his affiliates as consideration for the exercise price due therefore, The Reporting Persons (Genovese) have sold substantially all of such shares of Common Stock (SPSC stock). 31. From January 1, 2004 to May 21, 2004 (the period where Genovese exercised 21,000,000 options), SPSC traded 220,030,000 shares. That was enough volume to liquidate the 21,000,000 options but also the 16,344,000 shares that were purchased, upon information and belief, by Genovese for almost nothing. Note the high volume of trades illustrated by the graph: 32. The above graph shows the trading records of BG Capital in its attempt to raise the price of the stock by purchasing and selling massive blocks of stock in rapid succession. These are only the records of BG Capital, not those of all the offshore companies that Genovese controlled, and which have been traced back as owning millions of additional shares. Three days out of eight, BG Capital was responsible for more than half of the entire volume of trading for SPSC. This shows that Genovese was buying and selling, in massive quantities, to surge the price up. In addition to these manipulative trades, Genovese employed emails, false reports, newsletters, TV shows, and false websites to hype up a stock, driving the price up until he could dump his shares and make a huge profit. 33. In 2004, investors of SPSC filed a lawsuit against Genovese and BG Capital for violations of insider trading. After repeatedly ignoring the court’s rulings, including refusing to show up for depositions numerous times, failing to produce discovery, and being uncooperative, the court granted a motion to compel against Genovese and BG Capital. Instead of producing discovery or appearing for deposition, Genovese agreed to a settlement for $3.25 million less than a week after the motion to compel was granted. American Lithium Minerals 34. American Lithium Minerals started as Nugget Resources a shell company with 5,500,000 free trading shares sold at $.01 per share as documented in an S-1 filing dated March 22, 2006. As is customary for OTCBB scams, to lower the already low average cost of the free trading shares, Nugget Resources completed a 4 for 1 forward split on March 19, 2009. Upon information and belief, Genovese, directly or indirectly, purchased all 5,500,000 shares, therefore after the split Genovese had and/or controlled 22,000,000 shares, purchased for less than a penny per share. 35. On the date of the stock split, March 19, 2009, Nugget Resources changed its name to American Lithium Minerals, Inc. and its trading symbol to AMLM. Prior to the name change and split, Matthew Markin was appointed as President and CEO of the company. Matthew Markin is the brother of Marco Markin, the CEO of Neptune Society (a company now wholly owned and controlled by Genovese), and an associate/nominee of Genovese. Matthew Markin also shows up in filings for Neptune Society in 2003 as having provided consulting services for the company. 36. A press release from American Lithium Minerals dated September 2, 2009, disclosed that Stephen Cook was appointed as Vice President of Investor Relations. Upon information and belief, Cook was appointed as VP of Investor Relations merely as an instrument for Genovese to use in hyping the stock of American Lithium Minerals. In each of Genovese’s schemes, Cook is the man who leads Genovese’s multimedia promotional blitz to artificially inflate the stock. 37. Starting in June of 2009, American Lithium Minerals stock began to rise aggressively from $.20 cents a share to as high as $3.00. This drastic rise was due to false or misleading reports issued by Genovese and his associates (Cook and Markin), combined with massive and frequent trading between Genovese controlled shell entities, as well as largely exaggerated promotional materials. The sheer volume and frequency of the trades provided Genovese with plenty of time and volume to liquidate the entire 22,000,000 shares of undisclosed float for millions of dollars in profit. See, graph below: 38. In confirmation, on August 26, 2011 BG Capital emerged in an 8-K filing as having financed American Lithium Minerals, formally linking Genovese to yet another worthless OTCBB stock that currently trades for $.02 cents per share. 39. Every single public company that has been promoted or associated with Genovese has resulted in investor losses of between 90-100%. Browne and Liberty Silver allowed Genovese and his minions to employ the same scheme to defraud the Company’s investors. FACTS OF THE CASE 40. Liberty Silver states on its website that it is engaged in the exploration and development of mineral properties in North America. Specifically, the Company describes itself as an “advanced exploration play in Nevada with potential opportunity to quickly become a low cost, open pit operation.” The Company has an option on the Trinity Silver Project, an undeveloped silver prospect near Lovelock, Nevada. 41. Liberty Silver has entered into a joint venture with Renaissance Gold, whose chairman is Haywood Capital Markets chairman John Tognetti. Under the terms of the Joint Venture Agreement, Liberty Silver must spend $5 million to earn 70% ownership of the Trinity silver project from Renaissance. 42. On April 1, 2008, Lincoln Mining (soon to be Liberty Silver) filed an S-1 with the SEC registering 2,420,000 shares at $.05 per share raising a total of $121,000. One of the investors who was able to buy 250,000 pre-split shares at only $.05 cents in that offering was Marnie Markin. Marnie Markin is the wife of Matthew Markin (CEO of American Lithium Minerals) and the sister in-law of Marco Markin (CEO of BG Capital and Neptune Society). Marnie Markin is just another instrument of Genovese to purchase stock on his behalf. 43. Another investor who purchased 250,000 shares at $.05 a share was Tiffeni Aliece Graves. Graves was the next door neighbor of Marnie and Matthew Markin in California and is also believed to have purchased stock on behalf of Genovese. 44. At the time Marnie Markin and Tiffeni Aliece Graves purchased these large blocks of stocks, Lincoln Mining had no employees, no cash, no property, and no assets. In other words, there was no reason for Marnie Markin and Tiffeni Aliece Graves to purchase 500,000 shares of Liberty Silver except to participate in Genovese’s next scam. 45. On March 15, 2010, Lincoln Mining conducted a 20 for 1 forward stock split turning those 2,420,000 pre-split shares into 48,400,000. That same day, March 15, 2010, it changed its name to Liberty Silver Corp. Exactly ten days later, on March 25, 2010, shares of Liberty Silver began trading on heavy volume in a pattern that mimics all of Genovese’s past OTCBB companies. See Graph below. Note the familiar rising and falling pattern: 46. On November 11, 2011, Liberty Silver announced a $3.25 million non-brokered financing with a Panamanian Company named “Look Back Investments.” Under the terms of the financing Look Back Investments received 6,500,000 shares as well as the option to buy 6,500,000 more at $.65 cents per share. In an exhibit to the Form 8-K for the financing dated November 10, 2011, Liberty Silver disclosed that Look Back Investments is wholly owned and controlled by Genovese. 47. As of the November 11, 2011 financing of $3.25 million through the Genovese company Look Back Investments, shares of Liberty Silver had already traded no less than $33 million on volume of 55 million shares. In other words an owner (Genovese) of the undisclosed 48,400,000 shares could have liquidated, and upon information and belief did liquidate tens of millions of dollars worth of shares, making $3,250,000 a small amount to reinvest. Upon information and belief, Genovese directly or indirectly owned most, if not all, of the shares from the March 15, 2010, stock split. 48. In a Liberty Silver press release on December 21, 2011, Bill Tafuri, President and COO of Liberty Silver stated: We are very pleased with the progress on the Trinity property. Our 43-101 Report indicates a property of merit that contains a defined silver resource, which could be expanded through further drilling. Our team has identified and confirmed multiple silver and gold targets not discussed in the 43-101 Report. With the funding in place, we expect to initiate additional geochemical and geophysical surveys in conjunction with an aggressive drilling campaign targeting both high priority exploration targets, and the extensions from the original pit. Given our geographical location, the quality of historical data, and our geological interpretations, we anticipate the planned programs could expand the current resources and help to define the potential for a profitable mine. 49. On December 22, 2011, using the $3.25 million financing from Genovese through Look Back Investments, Liberty Silver was able to meet requirements for listing on the Toronto Stock Exchange (the “TSX”), even though Liberty Silver had 48,400,000 undisclosed free trading shares purchased for $.0025 per share, which violated the rules of the TSX. In addition, Liberty Silver somehow bypassed the advanced stage mineral development requirements of the TSX. The false reports issued by Genovese and his accomplices mislead the TSX to believe that the value of Liberty Silver was far greater than it actually was. Regardless of these deficiencies Liberty Silver obtained a listing on the TSX. Once Liberty Silver was listed on the TSX, the 48,400,000 shares were treated differently as they were no longer looked at by brokers and banks as red flagged OTCBB shares (red flagged because a company with 48,400,000 undisclosed shares should not have been allowed on the exchange) - but the more prestigious TSX shares. More importantly, by obtaining a listing on the TSX, Liberty Silver appeared to the public as another reputable mining company instead of the pump and dump vessel that it was. 50. In a further effort to leverage more shares, legitimize Liberty Silver, and drive the stock price higher, Genovese attempted to buy a more cash rich company. On July 16, 2012, Liberty Silver announced that it would make a tender offer for Sennen Resources, a reputable TSX listed company with nearly $14 million in cash. The proposed takeover would pay Sennen Resources investors with Liberty Silver stock in a ratio that would value Sennen Resources at its cash value ($14 million) and Liberty at a completely unfounded, ridiculous, and artificial valuation of $48,000,000. 51. Ian Rozier, CEO of Sennen Resources, opposed the merger and highlighted various red flags about Liberty Silver. The investors in Sennen voted to oppose the merger. Sennen’s opinion of the offer by Liberty Silver was that “the offer had always been a hostile, derogatory and insulting one, which was utterly inadequate for shareholders….shareholders were justifiably outraged by what they considered to be continual harassment by Liberty.” 52. Ian Rozier stated “Liberty's Offer is an insult to the intelligence of Sennen Shareholders who understand that this is a clear case of the management and promoters of an OTC shell company with very little money and questionable assets trying to back their ludicrously overvalued paper into an established company with tangible assets-in this case Sennen and its treasury.” He went on to highlight that Liberty Silver’s stock was actually valued between $0.005 and $0.07 per share instead of the $.20 per share Liberty Silver claimed. 53. From January 2012 to August 2012, Liberty Silver’s stock trading volumes averaged about 42,000 shares per day. However, as soon as Genovese began his familiar fraudulent and manipulative scheme, volumes drastically increased in September and early October, averaging roughly 236,000 shares per day. 54. In September of 2012, The Midas Letter, a subscriber-driven private investment strategy newsletter, believed to have been paid to falsely report by Genovese, reported the following about Liberty Silver: September 27, 2012 – The math is very straightforward with Liberty Silver’s Trinity Project: 50 million ounces of silver at $30 per ounce minus cash costs of $15 per ounce equals US$750 million divided by 80 million shares outstanding equals $9.38 a share. Chop that in half for the sake of conservativeness, and you still get a price of $4.68 per common share outstanding. * * * In the month of September so far, the company has traded over 20 million shares and doubled in value. Silver itself has traded in a similar trajectory, increasing in value by 35% since mid-summer, and outperforming gold smartly. The most respected and experienced traders in precious metals fully expect the ratio of how many ounces of silver it takes to buy one ounce of gold to head towards 16:1 from its current level of over 50:1. That would imply a silver value of $110 per ounce. If Liberty Silver shares continue to trade at such a high beta to the silver futures price, the premium being awarded Liberty Silver could be substantial. * * * What sets Liberty Silver apart from every other TSX and Venture –listed firm is the caliber of the management and board of directors. And, when it comes to raising money to put a project into production, a team with deep pockets themselves – and more importantly, access to deep institutional pockets – is critical. Starting with Chairman and CEO Geoffrey Browne, who was the head of private equity at Merrill Lynch Canada and is one of the founders and managing partners of MWI & Partners, a private equity firm. Prior to founding MWI & Partners, Mr. Browne was a senior executive at Canadian Imperial Bank of Commerce and CIBC Wood Gundy Inc. for over 20 years. He has managed more than $1 billion in merger, acquisition and private equity transactions. His experience includes overseeing CIBC’s purchase of Wood Gundy and Pelmorex’s acquisition of The Weather Network. Mr. Browne is currently a High Beta to Silver and a Fast Track to Production Midas Letter / September 24, 2012 2 director of Insight Sports, and the Alberta Enterprise Corporation, which oversees in excess of $100 million for early stage ventures. Then there’s the president, Bill Tafuri, with 40 years’ of diverse mining and exploration experience. He worked major international mining companies including Getty Mining Co, Kennecott Corp., Santa Fe Pacific Gold Corp. and Kinross Gold Corp. Paul Haggis, a Canadian business icon who is chairman of Canadian Pacific Railway Ltd., C.A. Bancorp Inc., a Canadian merchant bank and alternative asset manager, and Alberta Enterprise Corporation, a venture capital fund overseeing $100 million for early-stage ventures. He was previously, among other positions, president and CEO of OMERS, one of Canada’s largest pension funds, and executive vice-president at Manulife Financial. Mr. Haggis was also a director of Canadian Tire Bank until March 2012, chairman of the audit committee at Advantage Energy of Calgary, director and audit committee chair of Prime Restaurants Inc., which was sold to Fairfax Financial Holdings Limited, and a trustee and chair of Royal Ontario Museum’s finance committee. He also chairs the Insurance Corporation of British Columbia’s investment committee for early- stage ventures. Aye-aye and chair of Royal Ontario Museum’s finance committee. He also chairs the Insurance Corporation of British Columbia’s investment committee. But more importantly is the fact that legendary entrepreneur Bobby Genovese, Chairman of BG Capital Group, has become one of the biggest, if not the biggest shareholder of Liberty Silver Corp. I was able to reach Bobby in the Bahamas this morning, where he confirmed rumors that his involvement is indeed factual. “BG Capital Group is betting big on silver, and Liberty Silver Corp is our biggest bet,” said the charismatic Genovese. “We see a rapid and straightforward path to production, and with SRK Consulting as our technical advisors, we demonstrate our commitment to using only top-tier talent to achieve our aggressive timelines.” BG Capital Group is a Barbados-based private investment firm with offices throughout North America and with assets totaling well over $200 million and projected revenues of just over $240 million per year from interests across resources, real estate and financial services. 55. On September 20, 2012, at exactly 11:43:52 AM EST, 6,600,000 shares of Liberty Silver changed hands at $1.31 per share. This block of stock represented over 8% of the shares outstanding and was the single largest trade in the history of the stock. Sterne Agee & Leech, an asset management company and clearinghouse for John Thomas Financial, purchased the 6,600,000 shares of Liberty Silver, and it was only later discovered that BG Capital, owned and controlled by Genovese, sold those shares. 56. At numerous times throughout the pump and dump scheme perpetrated by Genovese, Genovese flew his private leer jet to New York, to visit with John Thomas Financial founder Anastasios Belesis (“Belesis”.) Genovese would bring paid celebrities with him (John Elway), to make his fraudulent companies seem more credible, as well as flying Belesis to the Bahamas where, upon information and belief, Belesis accepted $2,500,000 from Genovese to heavily sell John Thomas Financial owned Liberty Silver stock, to the detriment of the investing public, as well as purchase the 6,600,000 shares sold by Genovese on September 20, 2012. 57. Belesis, using John Thomas Financial, strongly pushed sales for other companies owned by Genovese, such as America West, Neptune Society, and Liberty Silver. Using his position in John Thomas Financial, Belesis bought and sold large portions of firm ownership in companies owned be Genovese (America West, Neptune Society, and Liberty Silver), while failing to execute client orders to sell the same stock. Of the fifteen sell orders that John Thomas Financial received in one day, only one was actually executed. FINRA has made a preliminary decision to discipline Belesis for his actions in connection with Genovese’s fraud, and possibly charge Belesis for deception to inflate stock prices. The SEC and the FBI are also investigating Belesis. 58. Genovese used Belesis and John Thomas Financial to artificially inflate stock prices by having Belesis order the John Thomas Financial “boiler room” to buy and sell large quantities of stock in companies wholly owned by Genovese. After the stock prices were artificially inflated, Genovese directed Belesis to heavily sell the stock, with Genovese making a large profit while the investing public sustaining huge losses. Belesis gave priority to selling the stock owned by Genovese and the stock owned John Thomas Financial, ignoring other clients’ demands to sell the same stock, in order for Genovese and Belesis to ensure their own TRUTH IS REVEALED 59. On Friday, October 5, 2012, the SEC Division of Enforcement halted trading on shares of Liberty Silver Corp. for a period of nearly two weeks resulting in the issuer being downgraded to the Grey Market pursuant to rule 15c2-11. According to the SEC, the reasons for the halt were “a lack of current and accurate information about the company concerning, among other things, the control of its stock, its market price, and trading in the stock.” 60. Only after the SEC halted trading and investigations began did the following information become clear: • Only after investigation of the purchasers in the April 1, 2008, Offering by Lincoln Mining (later Liberty Silver) is it readily known that Marnie Markin is the wife of Matthew Markin (CEO of American Lithium Minerals) and the sister in-law of Marco Markin (CEO of BG Capital and Neptune Society). Also, Tiffeni Aliece Graves was Marnie Markin’s next door neighbor. • The Trinity deposit is not economic — its 43-101 includes only inferred ounces, and no feasibility study, prefeasibility study or preliminary economic assessment has been performed on the property. A 43-101 is a national instrument for the Standards of Disclosure for Mineral Projects within Canada. Yet, even on the Liberty Silver website, in tiny print at the bottom, in the disclaimer page it states, “Inferred Mineral Resources must be excluded from estimates forming the basis of feasibility or other economic studies”. • In regard to the ownership of the Trinity project, Liberty Silver has not yet fulfilled the necessary obligations to earn a 70% interest in the Trinity project. According to an Oct. 16, 2011 Liberty Silver news release, the company has fulfilled only 85% of the required $5 million to earn 70%. • Genovese employed the use of Midas Letter to pump up Liberty Silver’s stock value, doubling the value of the stock in two months. • On September 20, 2012 BG Capital sold 6,600,000 shares to Sterne, Agee & Leech, at a unit price of $1.31 a share. BG Capital acquired those shares only two days before from Outlook Investments Inc., another firm controlled by Genovese. • The September 20, 2012 sale of 6,600,00 shares of Liberty Silver was fraudulently induced by Belesis, using John Thomas Financial, on behalf of Genovese. • In total, BG Capital and Outlook reduced their Liberty holdings by more than eight million shares between the start of the promotional campaign and the trading halt. • On October 19, 2012, Liberty Silver issued a press release attempting to distance the Company from Genovese, stating “The Company advises the investment community that it has never provided any form of compensation to a newsletter writer or anyone else for investment research or to recommend investment in the Company’s shares. The Company also advises that it has no contractual or other relationship with Mr. Robert Genovese, BG Capital Group or any other company owned or controlled by Genovese (the “Genovese Companies”) other than a subscription to a private placement in November 2011”. • Between BG Capital, Outlook Investments Inc., and Look Back Investments Inc., Genovese’s reported Liberty Silver holdings amounted to approximately 8.6 million shares, or more than 10% of the total. • In December, 2012, Genovese filed a document with Canadian regulators that shows he made more than 250 transactions involving Liberty Silver shares since late 2011. 61. In summary, Genovese employed the use of buying and selling massive blocks of Liberty Silver stock, fabricated newsletters, false and misleading reports, paid celebrity endorsements, deceitful offerings to other companies, using nominees and offshore companies to purchase stock on his behalf, and appointing officers/directors who are easily controlled by Genovese, all so that Genovese could make huge profits while leaving the company and investors in financial ruin. Genovese would assert control over Liberty Silver using his handpicked nominees and executives, and Genovese controlled companies. 62. Aiding Genovese in this fraudulent and malevolent scheme were Marnie Markin and Tiffeni Aleice Graves (who purchased Liberty Silver stock on Genovese’s behalf), the numerous offshore shell companies wholly owned and/or controlled by Genovese, Stephen Cook (Genovese’s hype man, Cook provides false information to pump up the stock, and adds another level of control that Genovese exerts on each company), and Browne, who as Chairman of the Board and CEO of Liberty Silver, was either culpably reckless, or was a willing participant in Genovese’s malicious scam involving Liberty Silver, and Belesis (who used John Thomas Financial to push Genovese owned companies on the investing public, with full knowledge of the fraudulent scheme). At no time did Browne or Liberty Silver warn its investors about Genovese’s fraudulent history, nor did they countermand any of Genovese’s ridiculous claims regarding the Company or its future prospects. CLASS ACTION ALLEGATIONS 63. Plaintiff brings this action as a class action pursuant to Federal Rules of Civil Procedure 23(a) and (b)(3) on behalf of all those who purchased or otherwise acquired Liberty Silver common stock from April 1, 2008, through and including October 5, 2012. This action also alleges claims on behalf of members of the Class that purchased or otherwise acquired Liberty Silver common stock during the Class Period. Excluded from the Class are Defendants herein, members of the immediate family of each of the Defendants, any person, firm, trust, corporation, officer, director or other individual or entity in which any Defendant has a controlling interest or which is related to or affiliated with any of the Defendants, and the legal representatives, agents, affiliates, heirs, successors-in-interest or assigns of any such excluded 64. The members of the Class are located in geographically diverse areas and are so numerous that joinder of all members is impracticable. Throughout the Class Period, Liberty Silver securities were actively traded on the TSX and OTCBB. Although the exact number of Class members is unknown at this time and can only be ascertained through appropriate discovery, Plaintiff believes there are thousands of members of the Class who traded the Liberty Silver’s common stock during the Class Period. 65. Common questions of law and fact exist as to all members of the Class and predominate over any questions affecting solely individual members of the Class. Among the questions of law and fact common to the Class are: a. Whether Defendants violated federal securities laws based upon the facts alleged herein; b. Whether Defendants omitted or misrepresented material facts about Liberty Silver, its business and its management; c. Whether statements made by Defendants to the investing public during the Class Period misrepresented material facts about the business, operations and management; d. Whether the Defendants caused Liberty Silver to issue false and misleading financial statements during the Class Period; e. Whether Defendants acted knowingly or recklessly in issuing false and misleading financial statements; f. Whether the prices of Liberty Silver securities during the Class Period were artificially inflated because of the Defendants’ conduct complained of herein; and g. Whether the members of the Class have sustained damages and, if so, the proper measure of damages. 66. Plaintiff’s claims are typical of the claims of the members of the Class as Plaintiff and members of the Class sustained damages arising out of Defendants’ wrongful conduct in violation of federal securities laws as complained of herein. 67. 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. 68. A class action is superior to alternative methods for the fair and efficient adjudication of this controversy since joinder of all members of this Class is impracticable. Furthermore, because the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation make it impossible for the Class members individually to redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. 69. Plaintiff will rely, in part, upon the presumption of reliance established by the fraud-on-the-market 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. Liberty Silver securities are traded in an efficient market; d. the Company’s shares were liquid and traded with moderate to heavy volume during the Class Period; e. the Company traded on the TSX and OTCBB, and was covered by multiple analysts; f. the misrepresentations and omissions alleged would tend to induce a reasonable investor to misjudge the value of the Company’s securities; and g. Plaintiff and members of the Class purchased, acquired and/or sold Liberty Silver 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. 70. Based upon the foregoing, Plaintiff and the members of the Class are entitled to a presumption of reliance upon the integrity of the market. ADDITIONAL SCIENTER ALLEGATIONS 71. The Defendants knew and/or recklessly disregarded the falsity and misleading nature of the information that they caused to be disseminated to the investing public. The ongoing fraudulent scheme described herein could not have been perpetrated over a substantial period of time without the knowledge and complicity of the personnel at the highest level of Liberty Silver, including the Individual Defendants. The Defendants were motivated to materially misrepresent the true nature of the Liberty Silver’s business, operations, ownership, and financial affairs to the public and regulators in order to keep Liberty Silver’s share price artificially high. 72. Further, Genovese has effected the pump and dump scheme upon numerous previous companies, even continuing in his actions in other companies after the halt of Liberty Silver trading. He has deliberately used nefarious, fraudulent, and manipulative means to further his own goals at the expense of the investors in the companies he has scammed. He willfully and intentionally manipulated stock prices using emails, newsletters, and other mediums, to drive the price of Liberty Silver stock up while at the same time dumping his own stock on unknowing investors. 73. Browne was the Chairman of the Board for Liberty Silver, as well as the CEO of the Company. Through any investigation whatsoever into the nature of Genovese’s involvement in previous companies, Browne could, and should have been able to prevent the fraudulent acts from taking place. Instead Browne acted in his own best interest, violating his fiduciary duty and the federal securities laws, by allowing Genovese to use Liberty Silver as a vessel for his fraud. Browne failed miserably in executing his duties by standing idly and recklessly by while Genovese and his associates mislead investors into purchasing Liberty Silver stock at artificially inflated prices. As Chairman of the Board and CEO, Browne could not have been unaware that Genovese was behind the November 11, 2011 financing, as well as Genovese’s ownership, directly and indirectly, in Liberty Silver. Also, Browne was issued 3,000,000 stock options to be purchased at $.75 cents a share, which was below the market price, so his motivation to keep the stock price artificially inflated was personal financial gain. LOSS CAUSATION / ECONOMIC LOSS 74. During the Class Period, as detailed herein, the Individual Defendants engaged in a scheme to deceive the market and a course of conduct that artificially inflated Liberty Silver’s common stock price, and operated as a fraud or deceit on acquirers of Liberty Silver’s common stock. As detailed above, when the truth about Liberty Silver’s financial situation, and ownership or control, was revealed, Liberty Silver’s common stock declined as the prior artificial inflation came out of its common stock price. That decline in Liberty Silver’s common stock price was a direct result of the nature and extent of the fraud finally being revealed to investors and the market. The timing and magnitude of the common stock price decline negates any inference that the loss suffered by Plaintiff and other members of the Class was caused by changed market conditions, macroeconomic or industry factors or Liberty Silver-specific facts unrelated to the fraudulent conduct. The economic loss, i.e., damages, suffered by the Plaintiff and other Class members was a direct result of the fraudulent scheme to artificially inflate Liberty Silver’s common stock price and the subsequent significant decline in the value of the Liberty Silver’s common stock when the prior misrepresentations and other fraudulent conduct were revealed. 75. At all times relevant, Defendants’ materially false and misleading statements or omissions or manipulative devices alleged herein directly or proximately caused the damages suffered by the Plaintiff and other Class members. Those statements were materially false and misleading because they failed to disclose a true and accurate picture of Liberty Silver’s business, operations and financial condition, as alleged herein. Throughout the Class Period, Defendants publicly issued materially false and misleading statements and omitted material facts necessary to make Defendants’ statements not false or misleading, causing Liberty Silver’s common stock price to be artificially inflated. Plaintiff and other Class members purchased Liberty Silver’s common stock at those artificially inflated prices, causing them to suffer the damages complained of herein. NO SAFE HARBOR 76. The statutory safe harbor under the Private Securities Litigation Reform Act of which applies to forward-looking statements under certain circumstances, does not apply to any of the allegedly false and misleading statements pled 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 adequately 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. Alternatively, to the extent that the statutory safe harbor is intended 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 particular speaker had actual knowledge that the particular forward-looking statement was materially false or misleading, and/or the forward-looking statement was authorized and/or approved by an executive officer of Liberty Silver who knew that those statements were false, misleading or omitted necessary information when they were made. COUNT I (Violations of Section 10(b) and Rule 10b-5 Promulgated Thereunder) 77. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein. 78. 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. 79. Pursuant to the above plan, scheme, conspiracy, course of conduct, and manipulation, each of these 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 Liberty Silver’s 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 Liberty Silver’s finances and business prospects. 80. By virtue of their positions at Liberty Silver, 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, these 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 these defendants. Such 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. 81. Information showing that these defendants acted knowingly or with reckless disregard for the truth is within these defendants’ knowledge and control. As the officers, owners and/or directors of Liberty Silver, Defendants had knowledge of the details of Liberty Silver’s internal affairs. 82. Defendants are liable both directly and indirectly for the wrongs complained of herein. Because of their positions of control and authority, Defendants were able to and did, directly or indirectly, control the content of the statements of Liberty Silver. As officers and/or directors of a publicly-held company, Defendants had a duty to disseminate timely, accurate, and truthful information with respect to Liberty Silver’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 Liberty Silver’s securities was artificially inflated throughout the Class Period. In ignorance of the adverse facts concerning Liberty Silver’s business and financial condition which were concealed by these defendants, Plaintiff and the other members of the Class purchased or otherwise acquired Liberty Silver’s 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 these defendants, and were damaged thereby. 83. During the Class Period, Liberty Silver’s 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 these defendants made, issued or caused to be disseminated, or relying upon the integrity of the market, purchased or otherwise acquired shares of the Liberty Silver’s securities at prices artificially inflated by these defendants’ wrongful conduct. Had Plaintiff and the other members of the Class known the truth, they would not have purchased or otherwise acquired such 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 Liberty Silver’s securities was substantially lower than the prices paid by Plaintiff and the other members of the Class. The market price of the Liberty Silver’s securities declined upon public disclosure of the facts alleged herein to the injury of Plaintiff and Class members. 84. By reason of the foregoing, Defendants knowingly or recklessly, directly or indirectly violated Section 10(b) of the Exchange Act and SEC Rule 10b-5 promulgated thereunder in that they: (a) employed devices, schemes and artifices to defraud; (b) failed to disclose material information; or (c) engaged in acts, practices and a course of business which operated as a fraud and deceit upon Plaintiff and the other members of the Class in connection with their purchases of Liberty Silver common stock during the Class Period. 85. 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 Liberty Silver’s securities during the Class Period, upon the disclosure that Liberty Silver had been disseminating materially false and misleading information to the investing public, and had been manipulating the price of Liberty Silver stock. COUNT II (Violations of Section 20(a) of the Exchange Act Against Defendants) 86. Plaintiff repeats and realleges each and every allegation contained in the foregoing paragraphs as if fully set forth herein. 87. During the Class Period, Defendants participated in the operation and management of Liberty Silver, and conducted and participated, directly and indirectly, in the conduct of Liberty Silver’s business affairs. Because of their senior positions, they knew the adverse non-public information about Liberty Silver’s business prospects and financial condition. 88. As officers and/or directors of a publicly owned company, Defendants had a duty to disseminate accurate and truthful information with respect to Liberty Silver’s business prospects, financial condition, and results of operations, and to correct promptly any public statements issued by Liberty Silver which had become materially false or misleading. 89. Because of their positions of control and authority as senior officers, the Defendants were able to, and did, control the contents of the various reports, press releases and public filings which the Company disseminated in the marketplace during the Class Period concerning Liberty Silver’s operations. Throughout the Class Period, the Defendants exercised their power and authority to cause the Liberty Silver to engage in the wrongful acts complained of herein. Defendants therefore, were “controlling persons” of the Company 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 Liberty Silver securities. 90. 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 Liberty Silver. PRAYER FOR RELIEF WHEREFORE, Plaintiff, on his own behalf and on behalf of the Class, prays for judgment as follows: A. Determining this action to be a proper class action and certifying Plaintiff as class representative under Rule 23 of the Federal Rules of Civil Procedure; B. Awarding compensatory damages in favor of Plaintiff and the other members of the Class against all Defendants, jointly and severally, for the damages sustained as a result of the wrongdoings of Defendants, together with interest thereon; C. Awarding Plaintiff the fees and expenses incurred in this action including reasonable allowance of fees for Plaintiff’s attorneys and experts; and D. Granting such other and further relief as the Court may deem just and proper. JURY TRIAL DEMANDED Plaintiff hereby demands a trial by jury. Dated: September 11, 2013 Respectfully submitted, S/Gary S. Menzer Gary S. Menzer (Florida Bar No. 60386) [email protected] MENZER & HILL, PA 2200 NW Corporate Blvd., Suite 406 Boca Raton, FL 33431 Telephone: (561) 327-7207 Facsimile: (561) 431-4611 William B. Federman [email protected] FEDERMAN & SHERWOOD 10205 North Pennsylvania Ave. Oklahoma City, OK 73120 Telephone: (405) 235-1560 Facsimile: (405) 239-2112 Attorneys for Plaintiff

securities

1Lj1C4cBD5gMZwczhOzY

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, Plaintiffs, v. DIGITALGLOBE, INC., GENERAL HOWELL M. ESTES III, NICK S. CYPRUS, ROXANNE DECYK, LAWRENCE A. HOUGH, WARREN C. JENSON, L. ROGER MASON, JR., JEFFREY R. TARR, KIMBERLY TILL, EDDY ZERVIGON, MACDONALD, DETTWILER AND ASSOCIATES LTD., SSL MDA HOLDINGS, INC., and MERLIN MERGER SUB, INC., Defendants. CLASS ACTION COMPLAINT AND JURY DEMAND 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 February 24, 2017 (the “Proposed Transaction”), pursuant to which DigitalGlobe, Inc. (“DigitalGlobe” or the “Company”) will be acquired by MacDonald, Dettwiler and Associates Ltd (“Parent”), SSL MDA Holdings, Inc. (“SSL MDA”), and Merlin Merger Sub, Inc. (“Merger Sub,” and together with Parent and SSL MDA, “MacDonald”). 2. On February 24 2017, DigitalGlobe’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 DigitalGlobe will receive $17.50 in cash and 0.3132 of a Parent share for each share of DigitalGlobe stock they own. 3. On April 27, 2017, defendants filed a Form F-4 Registration Statement (the “Registration Statement”) with the United States Securities and Exchange Commission (“SEC”) in connection with the Proposed Transaction. 4. The Registration Statement omits material information with respect to the Proposed Transaction, which renders the Registration 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 Registration 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 DigitalGlobe common stock. 9. Defendant DigitalGlobe is a Delaware corporation and maintains its principal executive office at 1300 West 120th Avenue, Westminster, Colorado 80234. DigitalGlobe’s common stock is traded on the NYSE under the ticker symbol “DGI.” 10. Defendant General Howell M. Estes III (“Estes”) has served as a director of DigitalGlobe since 2007 and as Chairman of the Board since February 2011. According to the Company’s website, Estes is Chair of the Governance and Nominating Committee. 11. Defendant Nick S. Cyprus (“Cyprus”) has served as a director of DigitalGlobe since June 2009. According to the Company’s website, Cyprus is Chair of the Audit Committee and a member of the Governance and Nominating Committee. 12. Defendant Roxanne Decyk (“Decyk”) has served as a director of DigitalGlobe since July 2014. According to the Company’s website, Decyk is Chair of the Risk Management Committee and a member of the Governance and Nominating Committee. 13. Defendant Lawrence A. Hough (“Hough”) has served as a director of DigitalGlobe since January 2013. According to the Company’s website, Hough is a member of the Compensation Committee. 14. Defendant Warren C. Jenson (“Jenson”) has served as a director of DigitalGlobe since 2008. According to the Company’s website, Jenson is Chair of the Compensation Committee and a member of the Governance and Nominating Committee. 15. Defendant L. Roger Mason, Jr. (“Mason”) has served as a director of DigitalGlobe since October 2015. According to the Company’s website, Mason is a member of the Risk Management Committee. 16. Defendant Jeffrey R. Tarr (“Tarr”) has served as a director of DigitalGlobe since April 2011 and is the Company’s President and Chief Executive Officer (“CEO”). 17. Defendant Kimberly Till (“Till”) has served as a director of DigitalGlobe since October 2010. According to the Company’s website, Till is a member of the Audit Committee and the Risk Management Committee. 18. Defendant Eddy Zervigon (“Zervigon”) has served as a director of DigitalGlobe since March 2014. According to the Company’s website, Zervigon is a member of the Audit Committee and the Compensation Committee. 19. The defendants identified in paragraphs 10 through 18 are collectively referred to herein as the “Individual Defendants.” 20. Defendant Parent is a corporation organized under the laws of British Columbia and a party to the Merger Agreement. 21. Defendant SSL MDA is a Delaware corporation, a wholly owned subsidiary of Parent, and a party to the Merger Agreement. 22. Defendant Merger Sub is a Delaware corporation, a wholly owned subsidiary of SSL MDA, and a party to the Merger Agreement. CLASS ACTION ALLEGATIONS 23. Plaintiff brings this action as a class action on behalf of himself and the other public stockholders of DigitalGlobe (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. 24. This action is properly maintainable as a class action. 25. The Class is so numerous that joinder of all members is impracticable. As of February 22, 2017, there were approximately 61,755,437 shares of DigitalGlobe common stock outstanding, held by hundreds, if not thousands, of individuals and entities scattered throughout the country. 26. 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. 27. 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. 28. 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. 29. 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 and the Proposed Transaction 30. DigitalGlobe is a leading global provider of high-resolution Earth imagery, data, and analysis. 31. Sourced from its own advanced satellite constellation and third-party providers, the Company’s imagery solutions and other services provide customers with accurate and mission-critical information about the changing planet, and support a wide variety of uses, including mission-planning, mapping and analysis, environmental monitoring, oil and gas exploration, and infrastructure management. 32. Additionally, hundreds of developers are building new applications and machine learning algorithms on DigitalGlobe’s Geospatial Big Data platform and in its recently expanded services business. 33. On February 24, 2016, DigitalGlobe issued a press release wherein it reported its financial results for the full year and fourth quarter ended December 31, 2016. DigitalGlobe reported that U.S. Government revenue increased by 3.3% in 2016; Diversified Commercial revenue increased by 3.3%; and net income increased 13.7% to $26.5 million, or $0.34 per diluted share. Additionally, net income margin expanded 40 bps to 3.7%; adjusted EBITDA increased 7.6% to $382.7 million; and adjusted EBITDA margin expanded 220 bps to 52.8%. With respect to the financial results, Individual Defendant Tarr commented: We wrapped up a solid year on a high note with our successful launch of WorldView-4 and the completion of the Radiant Group transaction[.] Our improved results reflect solid execution against our strategy for shareowner value creation and position us well for 2017. We look forward to continued profitable growth as we expand our International Defense and Intelligence business with assured access to our newest high resolution satellite, develop new commercial use cases, expand our rapidly growing geospatial big data analytics platform, and realize the full potential of our services business with the addition of Radiant. 34. Nevertheless, the Board caused the Company to enter into the Merger Agreement, pursuant to which the Company will be acquired by MacDonald for inadequate consideration. 35. To the detriment of the Company’s stockholders, the terms of the Merger Agreement substantially favor MacDonald and are calculated to unreasonably dissuade potential suitors from making competing offers. 36. 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 5.3(a) of the Merger Agreement states: (a) Except as permitted by this Section 5.3, the Company shall, and the Company shall cause its Subsidiaries and shall use its reasonable best efforts to cause its Representatives to, immediately cease, and cause to be terminated, any solicitation, encouragement, discussion or negotiation with any Persons conducted heretofore by or on behalf of the Company with respect to any actual or potential Company Acquisition Proposal, and with respect to third Persons with whom discussions or negotiations have been terminated on, prior to or subsequent to the date hereof, the Company shall request and use its commercially reasonable efforts to obtain (it being understood that such efforts shall not require the Company to engage in litigation), pursuant to its contract rights, the return or the destruction of confidential information previously furnished by the Company, its Subsidiaries or any of its or their Representatives. Except as otherwise specifically permitted by this Section 5.3, the Company shall not, and shall cause its Subsidiaries and shall use its reasonable best efforts to cause any of its or their Representatives not to, (i) initiate, solicit, knowingly facilitate or knowingly encourage (including by furnishing or providing information) any inquiries, proposals or offers with respect to, or the making of, any proposal or offer that constitutes, or could reasonably be expected to lead to a Company Acquisition Proposal; (ii) enter into, participate or engage in or continue any discussions or negotiations with any Person with respect to a Company Acquisition Proposal or any inquiry or indication of interest that could reasonably be expected to lead to a Company Acquisition Proposal; (iii) furnish or provide any non-public information regarding the Company or its Subsidiaries to any Person, or provide access to any Person to the properties, assets or employees of the Company or its Subsidiaries in connection with or in response to a Company Acquisition Proposal or any inquiry or indication of interest that could reasonably be expected to Company Acquisition Proposal; (iv) approve or recommend to the Company’s stockholders any Company Acquisition Proposal; or (v) approve or recommend to the Company’s stockholders, or execute or enter into, any letter of intent or agreement in principal, or any other Contract contemplating or otherwise relating to a Company Acquisition Proposal (other than a Company Acceptable Confidentiality Agreement as provided in Section 5.3(b)(ii)). 37. Further, the Company must promptly advise MacDonald of any proposals or inquiries received from other parties. Section 5.3(d) of the Merger Agreement states: (d) The Company shall advise Parent in writing within 24 hours of the receipt of (i) any Company Acquisition Proposal, and (ii) any request for material non- public information relating to the Company or any of its Subsidiaries made by any Person, and any inquiry or request for discussions or negotiations with the Company or any of its Representatives, in each case relating to a Company Acquisition Proposal or which could reasonably be expected to lead to a Company Acquisition Proposal. The Company shall provide to Parent, within such 24 hour time period, the identity of each Person that makes a Company Acquisition Proposal or request and a copy of any such Company Acquisition Proposal or request (or, where no such copy is available, a description of the material terms of any such Acquisition Proposal or request). The Company shall keep Parent informed on a reasonably prompt basis of the status of any such Company Acquisition Proposal or request (including the identity of the parties and price involved and any material change to the material terms and conditions thereof) and provide Parent as promptly as reasonably practicable, and in any event within 24 hours, with copies of all correspondence and other written material sent to or received from the party or parties making such Company Acquisition Proposal (or such party’s or parties’ Representatives) in connection with any such Company Acquisition Proposal or request. 38. 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 MacDonald a “matching right” with respect to any “Company Superior Proposal” made to the Company. Sections 5.3(c) of the Merger Agreement provides: (c) Notwithstanding anything to the contrary in this Section 5.3, prior to the obtaining of the Company Stockholder Approval, the Company Board may (i) in the case of a Company Acquisition Proposal that did not result from a material violation of Sections 5.3(a) or 5.3(b), make a Company Adverse Recommendation Change or terminate this Agreement pursuant to Section 7.1 if the Company Board shall have determined in good faith, after consultation with its outside legal counsel and independent financial advisors, that such Company Acquisition Proposal constitutes a Company Superior Proposal and the failure of the Company Board to take such action would be inconsistent with the directors’ fiduciary duties under applicable Law; or (ii) in the absence of a Company Acquisition Proposal, and solely in response to a Company Intervening Event, make a Company Adverse Recommendation Change if the Company Board shall have determined in good faith, after consultation with its outside legal counsel and independent financial advisors, that the failure of the Company Board to make such Company Adverse Recommendation Change in response to such Company Intervening Event would be inconsistent with the directors’ fiduciary duties under applicable Law. The Company Board shall not make a Company Adverse Recommendation Change pursuant to Section 5.3(c)(i) or terminate this Agreement pursuant to Section 7.1(g) unless prior to taking such action (A) the Company has given Parent prior written notice (which notice shall (1) include a copy of the proposed transaction agreements with the Person making such Company Superior Proposal, (2) specify the material terms and conditions of any such Company Superior Proposal not otherwise reflected by the agreements reflected in clause (1) (including the identity of the Person making such Company Superior Proposal), and (3) inform Parent that the Company intends to take such action at the end of the Company Superior Proposal Notice Period) (such notice being referred to herein as a “Company Superior Proposal Notice”); (B) the Company has negotiated and has used its reasonable best efforts to cause its Representatives to negotiate, in good faith with Parent, to the extent Parent wishes to negotiate, during the period starting on the date Parent receives the Company Superior Proposal Notice and ending at 11:59 p.m., Eastern Time on the fourth Business Day following such receipt (such time, a “Company Superior Proposal Notice Period”), with respect to any revisions of the terms of this Agreement proposed by Parent; and (C) at the end of such Company Superior Proposal Notice Period, the Company Board shall have determined in good faith, after consultation with its outside legal counsel and independent financial advisors and taking into account any proposed binding changes to the terms and conditions of this Agreement proposed by Parent in response to such Company Acquisition Proposal, that such Company Acquisition Proposal remains a Company Superior Proposal and that the failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable Law. The Parties agree that any amendment to the financial terms or other material terms of a Company Superior Proposal following the delivery of a Company Superior Proposal Notice in respect of such Company Superior Proposal shall require delivery of another Company Superior Proposal Notice and another Company Superior Proposal Notice Period in respect of such amended Company Superior Proposal, except that if the only change to the Company Superior Proposal is a change in price, then the Company Superior Proposal Notice Period shall be the greater of the remaining time of the Company Superior Proposal Notice Period in effect prior to the delivery of such new Company Superior Proposal Notice and the period starting on the date Parent receives such new Company Superior Proposal Notice and ending at 11:59 p.m., Eastern Time on the second Business Day following such receipt. The Company Board shall not make a Company Adverse Recommendation Change pursuant to Section 5.3(c)(ii) unless prior to taking such action: (A) the Company has given Parent prior written notice (which notice shall (1) provide a detailed description of the Company Intervening Event and (2) inform Parent that the Company intends to make such Company Adverse Recommendation Change at the end of the Company Intervening Event Notice Period) (such notice being referred to herein as a “Company Intervening Event Notice”); (B) the Company has negotiated, and has used its reasonable best efforts to cause its Representatives to negotiate, in good faith with Parent, to the extent Parent wishes to negotiate, during the period starting on the date Parent receives the Company Intervening Event Notice and ending at 11:59 p.m., Eastern Time on the fourth Business Day following such receipt (such time, a “Company Intervening Event Notice Period”), with respect to any revisions to the terms of this Agreement proposed by Parent; and (C) following the end of such Company Intervening Event Notice Period, the Company Board shall have considered in good faith any changes to this Agreement proposed in writing by Parent, and shall have determined in good faith, after consultation with its outside legal counsel and independent financial advisors, that notwithstanding such proposed changes, failure to take such actions in response to a Company Intervening Event would be inconsistent with the directors’ fiduciary duties under applicable Law. 39. Further locking up control of the Company in favor of MacDonald, the Merger Agreement provides for a “termination fee” of $85 million, payable by the Company to MacDonald if the Individual Defendants cause the Company to terminate the Merger Agreement. 40. By agreeing to 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. 41. The consideration to be provided to plaintiff and the Class in the Proposed Transaction is inadequate. 42. Among other things, the intrinsic value of the Company is materially in excess of the amount offered in the Proposed Transaction. 43. The merger consideration also fails to adequately compensate the Company’s stockholders for the significant synergies that will result from the Proposed Transaction. 44. 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. 45. Meanwhile, certain of the Company’s officers and directors stand to receive significant benefits as a result of the Proposed Transaction. 46. For example, Individual Defendants Estes, Mason, and Cyprus will be appointed to Parent’s board of directors following the consummation of the Proposed Transaction, as well as to Parent’s Human Resources and Management Compensation Committee, Governance and Nominating Committee, and Audit Committee, respectively. 47. Additionally, two of the Individual Defendants will be appointed to SSL MDA’s board of directors. The Registration Statement Omits Material Information, Rendering It False and Misleading 48. Defendants filed the Registration Statement with the SEC in connection with the Proposed Transaction. 49. The Registration Statement omits material information with respect to the Proposed Transaction, which renders the Registration Statement false and misleading. 50. First, the Registration Statement omits material information regarding the Company’s financial projections, MacDonald’s financial projections, and the financial analyses performed by the Company’s financial advisors, PJT Partners LP (“PJT Partners”) and Barclays Capital Inc. (“Barclays”). 51. With respect to DigitalGlobe’s financial projections, the Registration Statement fails to disclose: (i) interest; (ii) tax expense; (iii) depreciation and amortization; (iv) stock based compensation; (v) taxes; (vi) deferred revenue; (vii) deferred contract costs and other operating activities; (viii) changes in working capital; (ix) other cash flow items; (x) the net operating loss projections included in the “Scenario 1,” “Scenario 2,” and “Scenario 3” projections; and (xi) a reconciliation of all non-GAAP to GAAP metrics for years 2018 through 2021. 52. With respect to MacDonald’s financial projections, the Registration Statement fails to disclose: (i) interest; (ii) tax expense; (iii) depreciation and amortization; (iv) stock based compensation; (v) taxes; (vi) enterprise improvement costs; (vii) foreign exchange loss; (viii) executive termination settlement costs; (ix) income tax expenses; (x) changes in working capital; and (xi) other cash flow items. 53. With respect to PJT Partners’ Discounted Cash Flow Analysis for DigitalGlobe, the Registration Statement fails to disclose: (i) the effect of DigitalGlobe’s interest on taxes paid; (ii) the ranges of terminal values of DigitalGlobe as of December 31, 2021; and (iii) PJT Partners’ basis for applying perpetuity growth rates of 1.5% to 2.5%. 54. With respect to PJT Partners’ Discounted Cash Flow Analysis for MacDonald, the Registration Statement fails to disclose: (i) the effect of MacDonald’s interest on taxes paid; (ii) the ranges of terminal values of MacDonald as of December 31, 2021; and (iii) the estimated net debt as of December 31, 2016. 55. With respect to PJT Partners’ Discounted Equity Value Analysis for DigitalGlobe, the Registration Statement fails to disclose: (i) the estimated net debt as of December 31, 2020; and (ii) the fully diluted number of shares of DigitalGlobe common stock estimated to be outstanding as of December 31, 2020. 56. With respect to PJT Partners’ Discounted Equity Value Analysis for MacDonald, the Registration Statement fails to disclose: (i) the estimated net debt; and (ii) the fully diluted number of shares of MacDonald common shares estimated to be outstanding as of December 31, 57. With respect to PJT Partners’ Selected Comparable Company Analyses for DigitalGlobe and MacDonald, the Registration Statement fails to disclose the individual multiples and financial metrics for the companies observed in the analyses. 58. With respect to Barclays’ Discounted Cash Flow Analysis for DigitalGlobe, the Registration Statement fails to disclose: (i) the ranges of terminal values of DigitalGlobe as of December 31, 2021; (ii) Barclays’ basis for applying perpetuity growth rates of 1.5% to 2.5%; (iii) the estimated net debt as of December 31, 2016; and (iv) the net operating loss projections included in the “Scenario 1” projections. 59. With respect to Barclays’ Discounted Cash Flow Analysis for MacDonald, the Registration Statement fails to disclose: (i) the ranges of terminal values of MacDonald as of December 31, 2021; and (ii) the estimated net debt as of December 31, 2016. 60. With respect to Barclays’ Selected Comparable Company Analyses for DigitalGlobe and MacDonald, the Registration Statement fails to disclose the individual multiples and financial metrics for the companies observed in the analyses. 61. With respect to Barclays’ Selected Precedent Transaction Analysis, the Registration Statement fails to disclose the individual multiples and financial metrics for the transactions observed in the analysis. 62. Additionally, the Registration Statement fails to disclose the specific reasons PJT Partners used the Scenario 1, Scenario 2, and Scenario 3 projections and the “Synergy Projections” in connection with its financial analyses while Barclays used only the Scenario 1 projections, the Synergy Projections, and the “Standalone NOL Projections” in connection with its financial analyses. 63. 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. Moreover, 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. 64. The omission of this material information renders the Registration Statement false and misleading, including, inter alia, the following sections of the Registration Statement: (i) “Background of the Merger”; (ii) “DigitalGlobe’s Reasons for the Merger; Recommendation of the DigitalGlobe Board of Directors”; (iii) “Opinions of DigitalGlobe’s Financial Advisors”; and (iv) “Certain Unaudited Prospective Financial Information Used by the DigitalGlobe Board and DigitalGlobe’s Financial Advisors.” 65. Second, the Registration Statement omits material information regarding potential conflicts of interest of the Company’s officers and directors. 66. Specifically, the Registration Statement fails to disclose the timing and nature of all communications regarding future directorship and/or employment of DigitalGlobe’s directors and officers, including who participated in all such communications, including the communications relating to Individual Defendants Estes’, Mason’s, and Cyprus’s future board and committee positions. 67. 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. 68. The omission of this material information renders the Registration Statement false and misleading, including, inter alia, the following sections of the Registration Statement: (i) “Background of the Merger”; (ii) “DigitalGlobe’s Reasons for the Merger; Recommendation of the DigitalGlobe Board of Directors”; and (iii) “Interests of DigitalGlobe’s Directors and Executive Officers in the Merger.” 69. Third, the Registration Statement omits material information regarding potential conflicts of interest of the Company’s financial advisors. 70. For example, the Registration Statement fails to disclose: (i) whether PJT Partners has previously provided services to MacDonald and/or its affiliates, and the amount of compensation received for such services; (ii) the amount of compensation received by Barclays for the past services it provided to DigitalGlobe; and (iii) whether Barclays has previously provided services to MacDonald and/or its affiliates, and the amount of compensation received for such services. 71. The Registration Statement further fails to disclose whether the estimated compensation of $36 million and $18 million payable to PJT Partners and Barclays, respectively, is contingent upon consummation of the Proposed Transaction. 72. Additionally, the Registration Statement fails to disclose the Board’s “other reasons for engaging Barclays” as a second financial advisor, including whether such reasons included any potential or perceived conflict of interest on the part of PJT Partners. 73. 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. 74. The omission of this material information renders the Registration Statement false and misleading, including, inter alia, the following sections of the Registration Statement: (i) “Background of the Merger”; (ii) “DigitalGlobe’s Reasons for the Merger; Recommendation of the DigitalGlobe Board of Directors”; and (iii) “Opinions of DigitalGlobe’s Financial Advisors.” 75. The above-referenced omitted information, if disclosed, would significantly alter the total mix of information available to DigitalGlobe’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 DigitalGlobe 76. Plaintiff repeats and realleges the preceding allegations as if fully set forth herein. 77. The Individual Defendants disseminated the false and misleading Registration 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. DigitalGlobe is liable as the issuer of these statements. 78. The Registration 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 Registration Statement. 79. The Individual Defendants were at least negligent in filing the Registration Statement with these materially false and misleading statements. 80. The omissions and false and misleading statements in the Registration 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 Registration Statement and in other information reasonably available to stockholders. 81. The Registration Statement is an essential link in causing plaintiff and the Company’s stockholders to approve the Proposed Transaction. 82. By reason of the foregoing, defendants violated Section 14(a) of the 1934 Act and Rule 14a-9 promulgated thereunder. 83. Because of the false and misleading statements in the Registration 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 MacDonald 84. Plaintiff repeats and realleges the preceding allegations as if fully set forth herein. 85. The Individual Defendants and MacDonald acted as controlling persons of DigitalGlobe 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 DigitalGlobe and participation in and/or awareness of the Company’s operations and/or intimate knowledge of the false statements contained in the Registration 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. 86. Each of the Individual Defendants and MacDonald was provided with or had unlimited access to copies of the Registration 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. 87. 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 Registration Statement contains the unanimous recommendation of the Individual Defendants to approve the Proposed Transaction. They were thus directly in the making of the Registration Statement. 88. MacDonald also had direct supervisory control over the composition of the Registration Statement and the information disclosed therein, as well as the information that was omitted and/or misrepresented in the Registration Statement. 89. By virtue of the foregoing, the Individual Defendants and MacDonald violated Section 20(a) of the 1934 Act. 90. As set forth above, the Individual Defendants and MacDonald 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 Registration 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: May 3, 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

9Re2F4cBD5gMZwczC4iH

Yana A. Hart, Esq. (SBN: 306499) [email protected] 2221 Camino Del Rio South, Suite 101 San Diego, CA 92108 Telephone: (619) 233-7770 Facsimile: (619) 297-1022 LAW OFFICE OF DANIEL G. SHAY Daniel G. Shay (SBN: 250548) [email protected] 2221 Camino Del Rio South, Suite 308 San Diego, CA 92108 Telephone: (619) 344-8667 Facsimile: (619) 344-8657 Attorneys for Plaintiff Esperanza Collier UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA '19CV1235 NLS LAB Case No.: CLASS ACTION COMPLAINT FOR DAMAGES AND INJUNCTIVE RELIEF PURSUANT TO THE TELEPHONE CONSUMER PROTECTION ACT, 47 U.S.C. § 227 ET SEQ. Jury Trial Demanded ESPERANZA COLLIER, individually and on behalf of all others similarly situated, Plaintiff, v. EAGLE RECOVERY ASSOCIATES, INC., Defendant. 1. Esperanza Collier (“Plaintiff”), brings this action for damages, injunctive relief, and any other available legal or equitable remedies, resulting from the illegal actions of Eagle Recovery Associates, Inc. (“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. Plaintiff alleges as follows upon personal knowledge as to her own acts and experiences and, as to all other matters, upon information and belief, including investigation conducted by Plaintiff’s attorneys. 2. The TCPA was designed to prevent calls and messages like the ones described within this complaint and to protect the privacy of citizens like Plaintiff. “Voluminous consumer complaints about abuses of telephone technology—for example, computerized calls dispatched to private homes— prompted Congress to pass the TCPA.” Mims v. Arrow Fin. Servs., LLC, 132 S. Ct. 740, 744 (2012). 3. In enacting the TCPA, Congress intended to give consumers a choice as to how creditors and telemarketers may call them, and made specific findings that “[t]echnologies that might allow consumers to avoid receiving such calls that are not universally available, are costly, are unlikely to be enforced, or place an inordinate burden on the consumer.” TCPA, Pub.L. No. 102-243, § 11. Toward this end, Congress found that: 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. WL 3292838, at *4 (N.D. Ill. Aug. 10, 2012) (citing Congressional finding on TCPA’s purpose). 4. Congress also specifically found that “the evidence presented to the Congress indicates that automated or prerecorded calls are a nuisance and an invasion of privacy, regardless of the type of call […].” Id. at §§ 12-13. See also, Mims, 132 S. Ct. at 744. 5. As Judge Easterbrook of the Seventh Circuit explained in a TCPA case regarding calls similar to this one: The Telephone Consumer Protection Act […] is well known for its provisions limiting junk-fax transmissions. A less litigated part of the Act curtails the use of automated dialers and prerecorded messages to cell phones, whose subscribers often are billed by the minute as soon as the call is answered – and routing a call to voicemail counts as answering the call. An automated call to a landline phone can be an annoyance; an automated call to a cell phone adds expense to annoyance. Soppet v. Enhanced Recovery Co., LLC, 679 F.3d 637, 638 (7th Cir. 2012). 6. Plaintiff brings this case as a class action seeking damages for herself and all others similarly situated. JURISDICTION & VENUE 7. This Court has federal question jurisdiction because this case arises out of violation of federal law. 8. Jurisdiction of this Court arises pursuant to 28 U.S.C. § 1331, and 28 U.S.C. § 1367 for supplemental state claims. 9. Because Defendant conducts business within the State of California, personal jurisdiction is established. In addition, Defendant intentionally and voluntarily directed its phone calls at Plaintiff, a California resident, and this action arises from this contact with the forum. Plaintiff resides in the County of San Diego, State of California, which is within this judicial district; (ii) the conduct complained herein occurred within this judicial district; and (iii) Defendant conducted business within this judicial district at all times relevant. PARTIES & DEFINITIONS 11. Plaintiff is, and at all times mentioned herein was, a natural person residing in the County of San Diego, in the State of California. 12. Defendant is, and at all times mentioned herein, was a Delaware corporation located in the State of Illinois. Defendant is authorized to and regularly conducts business within the State of California. 13. Defendant is, and at all times mentioned herein was, a “person” as defined by 47 U.S.C. §153 (39). FACTS 14. Sometime prior to December 19, 2017, Plaintiff allegedly incurred financial obligations (the “Debt”) to a creditor. 15. Subsequently the Debt was assigned, placed, or otherwise transferred to Defendant for collection. 16. Prior to December 19, 2017, Plaintiff obtained representation from Attorney, Daniel G. Shay (“Mr. Shay”). 17. On or about December 19, 2017, Mr. Shay sent a cease and desist letter to all of Plaintiff’s creditors by facsimile advising the creditors of Plaintiff’s representation and demanding them to cease all communications with Plaintiff. 18. Mr. Shay’s letters expressly “revoke[d] any prior express consent that may have been given to receive telephone calls especially to [Plaintiff’s] cellular telephone, from an automated telephone dialing system or an artificial or pre- USC. § 227 et seq. 19. This revocation applies to all collection companies attempting to collect the creditors’ debt including Defendant. 20. Despite this unequivocal, explicit admonishment, on January 4, 2018, Defendant called Plaintiff’s cellular telephone. 21. Defendant, through a pre-recorded and artificial voice, left a message on Plaintiff’s cellular telephone stating, “We have an important message from Eagle Recovery Associates Inc. This call is from a debt collector, please call 1-800-706-3210.” It is precisely this type of call that the TCPA was created to address and prohibited by 47 U.S.C. § 227(b)(1)(A). 22. Plaintiff did not give “prior express consent,” to receive calls using a prerecorded or artificial voice; if Plaintiff ever unknowingly consented to such calls, she expressly revoked that consent through the letter, dated December 19, 2017. 23. Defendant’s call was not for the purpose of an emergency. 24. The telephone number Defendant called was assigned to a cellular telephone service for which Plaintiff incurred a charge for incoming calls pursuant to 47 U.S.C. § 227 (b)(1). 25. This telephone call made by Defendant was in violation of 47 U.S.C. § 227(b)(1). Further, this telephone call invaded Plaintiff’s privacy. CLASS ACTION ALLEGATIONS 26. Plaintiff brings this action on behalf of herself and on behalf of all others similarly situated (“the Class”). 27. Plaintiff represents, and is a member of, the Class, consisting of: All persons within the United States who had or have a number assigned to a cellular telephone service, who received at least one telephone call using an ATDS, or an artificial or prerecorded voice, from Defendant, or their agents calling on behalf of Defendant, between the date of filing this action and the four years preceding. 28. Defendant and their 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 is in the thousands, if not more. Thus, this matter should be certified as a Class action to assist in the expeditious litigation of this matter. 29. 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 cellular telephone charges or reduce cellular telephone time for which Plaintiff and the Class members previously paid, by having to retrieve or administer messages left by Defendant or its agents, during those illegal calls, and invading the privacy of said Plaintiff and the Class members. Plaintiff and the Class members were damaged thereby. 30. This suit seeks only damages 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. Plaintiff reserves the right to expand the Class definition to seek recovery on behalf of additional persons as warranted as facts are learned in further investigation and discovery. 31. Numerosity. The joinder of the Class members is impractical and the disposition of their claims in the Class action will provide substantial benefits both to the parties and to the Court. The Class can be identified through Defendant’s records and/or Defendant’s agent’s records. 32. Existence and Predominance of Common Questions of Law and Fact. There is a well-defined community of interest in the questions of law and fact fact to the Class predominate over questions which may affect individual Class members, including the following: i. Whether, within the four years prior to the filing of the Complaint, Defendant made any call(s) (other than a call made for emergency purposes or made with the prior express consent of the called party) to the Class members using any ATDS or an artificial or prerecorded voice to any telephone number assigned to a cellular telephone service; ii. Whether Defendant’s conduct was knowing and/or willful; iii. Whether Plaintiff and the Class members were damaged thereby, and the extent of damages for such violation(s); and iv. Whether Defendant should be enjoined from engaging in such conduct in the future. 33. Typicality. As a person who received calls from Defendant in which Defendant used an ATDS and an automated and prerecorded voice, without Plaintiff’s prior express consent, Plaintiff is asserting claims that are typical of the Class. Plaintiff will fairly and adequately represent and protect the interests of the Class in that Plaintiff has no interests antagonistic to any member of the Class. 34. Plaintiff and the members of the Class have all suffered irreparable harm as a result of the Defendant’s unlawful and wrongful conduct. Absent a class action, the Class will continue to face the potential for irreparable harm. In addition, these violations of law will be allowed to proceed without remedy and Defendant will likely continue such illegal conduct. The size of Class member’s individual claims causes, few, if any, Class members to be able to afford to seek legal redress for the wrongs complained of herein. 35. Adequacy of Representation. Plaintiff will fairly and adequately represent interest antagonistic to any Class member. Further, Plaintiff has retained counsel experienced in handling class action claims and claims involving violations of the Telephone Consumer Protection Act. 36. Superiority. A class action is a superior method for the fair and efficient adjudication of this controversy. Class-wide damages are essential to induce Defendant to comply with federal law. The interest of Class members in individually controlling the prosecution of separate claims against Defendant is small because the maximum statutory damages in an individual action for violation of privacy are minimal. Management of these claims is likely to present significantly fewer difficulties than those that would be presented in numerous individual claims. 37. Defendant has acted on grounds generally applicable to the Class, thereby making appropriate final injunctive relief and corresponding declaratory relief with respect to the Class as a whole. FIRST CAUSE OF ACTION: NEGLIGENT VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT 47 U.S.C. § 227 ET SEQ. 38. Plaintiff incorporates by reference all of the above paragraphs of this Complaint as though fully stated herein. 39. The foregoing acts and omissions of Defendant constitutes 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. 40. As a result of Defendant’s negligent violations of 47 U.S.C. § 227 et seq., Plaintiff and the Class are entitled to an award of $500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B). 41. Plaintiff and the Class are also entitled to and seek injunctive relief prohibiting such conduct in the future. KNOWING AND/OR WILLFUL VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT 47 U.S.C. § 227 ET SEQ. 42. Plaintiff incorporates by reference all of the above paragraphs of this Complaint as though fully stated herein. 43. The foregoing acts and omissions of Defendant constitute 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 seq. 44. As a result of Defendant’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, as provided by statute, up to $1,500.00, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B) and 47 U.S.C. § 227(b)(3)(C). 45. Plaintiff and the Class are also entitled to and seek injunctive relief prohibiting such conduct in the future. PRAYER FOR RELIEF 46. Wherefore, Plaintiff respectfully requests the Court grant Plaintiff and each Class member the following relief against Defendant: • Certify the Class as requested herein; • Appoint Plaintiff to serve as the Class Representative in this matter; • Appoint Plaintiff’s Counsel as Class Counsel in this matter; and • Any such further relief as may be just and proper. In addition, Plaintiff and the Class pray for further judgment as follows against each Defendant: FIRST CAUSE OF ACTION FOR NEGLIGENT VIOLATION OF THE TCPA, 47 U.S.C. § 227 ET SEQ. • As a result of Defendant’s negligent violations of 47 U.S.C. § in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B). • Pursuant to 47 U.S.C. § 227(b)(3)(A), injunctive relief prohibiting such conduct in the future. • Any other relief the Court may deem just and proper. SECOND CAUSE OF ACTION FOR KNOWING AND/OR WILLFUL VIOLATION OF THE TCPA, 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 seeks for herself and each Class member treble damages, as provided by statute, up to $1,500.00 for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B) and 47 U.S.C. § 227(b)(3)(C). • Pursuant to 47 U.S.C. § 227(b)(3)(A), injunctive relief prohibiting such conduct in the future. • Any other relief the Court may deem just and proper. TRIAL BY JURY 47. 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, Date: July 2, 2019 HYDE & SWIGART, APC By: s/ Yana A. Hart Yana A. Hart, Esq. Attorneys for Plaintiff [email protected]

privacy

1Oe9EYcBD5gMZwczDX0P

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION DAVID A. FOWLER, ) on behalf of plaintiff and the class members ) described herein, ) ) Plaintiff, ) ) vs. ) ) PORTFOLIO RECOVERY ASSOCIATES, LLC, ) and BLATT, HASENMILLER, LEIBSKER ) & MOORE, LLC, ) ) Defendants. ) COMPLAINT – CLASS ACTION INTRODUCTION 1. Plaintiff David A. Fowler, on behalf of plaintiff and a class, brings this action to secure redress from unlawful collection practices engaged in by defendants Portfolio Recovery Associates, LLC (“PRA”), and Blatt, Hasenmiller, Leibsker & Moore, LLC, (“Blatt”). Plaintiff alleges violation of the Fair Debt Collection Practices Act, 15 U.S.C. §1692 et seq. (“FDCPA”). 2. The FDCPA broadly prohibits unfair or unconscionable collection methods; conduct which harasses, oppresses or abuses any debtor; and any false, deceptive or misleading statements, in connection with the collection of a debt; it also requires debt collectors to give debtors certain information. 15 U.S.C. §§1692d, 1692e, 1692f and 1692g. VENUE AND JURISDICTION 3. This Court has jurisdiction under 15 U.S.C. §1692k (FDCPA), 28 U.S.C. §1331 (general federal question), and 28 U.S.C. §1337 (interstate commerce). 4. Venue and personal jurisdiction in this District are proper because defendants’ collection activities impacted plaintiffs within this District, because defendant Blatt is located within the District, and because defendant PRA does business within the District. 1 PARTIES 5. Plaintiff David A. Fowler is an individual who resides in Elmwood Park, Illinois. 6. Defendant PRA is a Delaware limited liability company with principal offices located at 120 Corporate Boulevard, Norfolk, Virginia 23502. It does business in Illinois. Its registered agent is Illinois Corporation Service, 801 Adlai Stevenson Drive, Springfield, Illinois 7. PRA is engaged in the business of using the mails and telephone to collect consumer debts originally owed to others. 8. PRA is a debt collector as defined in the FDCPA. 9. Defendant Blatt is a law firm organized as an Illinois limited liability company with offices at 10 S. LaSalle Street, Suite 2200, Chicago, IL 60603. 10. Defendant Blatt is engaged in the collection of allegedly delinquent consumer debts originally owed to others. 11. Defendant Blatt uses the mails and telephone system in conducting its business. 12. Defendant Blatt is a “debt collector” as defined in the FDCPA. FACTS RELATING TO DAVID A. FOWLER 13. This action concerns postjudgment collection proceedings through which defendants attempted to collect from David A. Fowler a debt incurred for personal, family or household purposes and not for business purposes. 14. On July 7, 2014, PRA, represented by Blatt, commenced a wage deduction proceeding against David A. Fowler in the First Municipal District of the Circuit Court of Cook County. PRA and Blatt sought to enforce a judgment entered on May 29, 2014 against David A. 15. David A. Fowler did not reside in the First Municipal District of Cook County. Elmwood Park is in the Fourth District. 16. The matter was not based on a contract signed in the First Municipal District of 2 Cook County. 17. Postjudgment collection proceedings must comply with 15 U.S.C. §1692i. Fox v. Citicorp Credit Servs., Inc., 15 F.3d 1507, 1515 (9th Cir. 1994) ("The plain meaning of the term `legal action' encompasses all judicial proceedings, including those in enforcement of a previously-adjudicated right."); Blakemore v. Pekay, 895 F.Supp. 972, 982-83 (N.D. Ill. 1995). 18. At the time the legal action was filed, Blatt was aware of the decision in Suesz v. Med-1 Solutions, LLC, 757 F.3d 636 (7th Cir., July 2, 2014) (en banc). FACTS – GENERAL 19. It was the policy and practice of PRA and Blatt to take legal action, including postjudgment collection proceedings, against consumers in a municipal district other than one in which the defendant lives or signed a contract in person. COUNT I – FDCPA – CLASS CLAIM 20. Plaintiff incorporates paragraphs 1-19. 21. Defendants’ practice of taking legal action in a district in which the debtor neither resides nor signed a contract on which the action is based violates 15 U.S.C. §1692i. 22. Section 1692i provides: § 1692i. Legal actions by debt collectors [Section 811 of P.L.] (a) Any debt collector who brings any legal action on a debt against any consumer shall-- (1) in the case of an action to enforce an interest in real property securing the consumer's obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or (2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity-- (A) in which such consumer signed the contract sued upon; or (B) in which such consumer resides at the commencement of the action. 3 (b) Nothing in this subchapter shall be construed to authorize the bringing of legal actions by debt collectors. CLASS ALLEGATIONS 23. Plaintiff brings this action on behalf of two classes, PRA and Blatt, pursuant to Fed. R. Civ. P. 23(a) and (b)(3). 24. The PRA class consists of (a) all natural persons (b) against whom PRA took legal action (c) on or after July 3, 2014, (d) in a Cook County municipal district (d) other than one in which the person resided or signed a contract on which the debt is based. 25. The Blatt class consists of (a) all natural persons (b) against whom Blatt (representing anyone) took legal action (c) on or after July 3, 2014, (d) in a Cook County municipal district (d) other than one in which the person resided or signed a contract on which the debt is based. 26. The class members are so numerous that joinder is impracticable. On information and belief, there are more than 40 members of each class. 27. There are questions of law and fact common to the class members, which common questions predominate over any questions that affect only individual class members. The predominant common question is whether defendants’ filing practices violate the FDCPA. 28. Plaintiff will fairly and adequately represent the interests of the class members. Plaintiff has retained counsel experienced in consumer credit and debt collection abuse cases. 29. A class action is the superior means of adjudicating this dispute. Individual cases are not economically feasible. WHEREFORE, plaintiff requests that the Court enter judgment in favor of plaintiff and the class members and against defendants for: (1) Statutory damages ($1,000 for David A. Fowler and the lesser of $500,000 or 1% of net worth for the class) against defendants; (2) Attorney’s fees, litigation expenses and costs of suit; 4 (3) Such other or further relief as the Court deems proper. s/ Daniel A. Edelman Daniel A. Edelman Daniel A. Edelman Cathleen M. Combs James O. Latturner Rebecca A. Cohen EDELMAN, COMBS, LATTURNER & GOODWIN, LLC 20 S. Clark Street, Suite 1500 Chicago, Illinois 60603 (312) 739-4200 (312) 419-0379 (FAX) 5 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 20 S. Clark Street, Suite 1500 Chicago, Illinois 60603 (312) 739-4200 (312) 419-0379 (FAX) 6

consumer fraud

B_xMFIcBD5gMZwczxxjX

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA ANDEE LEEDS, 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 Andee Leeds, individually and on behalf of all others similarly situated (the “Classes” as defined below), upon personal knowledge as to the facts pertaining to herself and upon information and belief as to all other matters, and based on the investigation of counsel, brings this class action for damages, injunctive relief and other relief pursuant to federal antitrust laws and state antitrust, unfair competition, and consumer protection laws, and the common law of unjust enrichment, demands a trial by jury, and alleges as follows: NATURE OF ACTION 1. This lawsuit is about a conspiracy among four manufacturers of Contact Lenses (defined below) and the largest distributor of Contact Lenses in the United States to eliminate discounting among retailers of Contact Lenses and to artificially fix, raise, maintain and/or stabilize the prices charged to consumers for Contact Lenses. 2. Plaintiff seeks to represent herself and classes (the “Classes”) consisting 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”) (together, the “Manufacturer Defendants”), or any current or former subsidiary or affiliate thereof, or any co- conspirator, that were subject to Price Floor Policies (defined below) 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 conspiracy 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 and spent $4.2 billion on them annually.1 5. The Manufacturer Defendants dominate and collectively control over 97% of the Contact Lens market in the United States. 6. 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”). 7. The PFPs set a minimum price below which no 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 price floor, 1 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)). Defendants have cautioned that they “will cease to supply” the retailer with those lenses. In a transparent attempt to evade antitrust scrutiny, the Manufacturing Defendants dubbed the PFPs “Unilateral Pricing Policies.” 8. Alcon implemented the first PFP in June 2013 and the other Manufacturer Defendants followed suit, rolling out nearly identical PFPs in the ensuing months. 9. The Manufacturer Defendants’ goal in implementing their PFPs was clear: to stifle price competition between independent eye care professional retailers and big-box stores (e.g., Wal-Mart), internet retailers (e.g., 1-800 CONTACTS), and warehouse clubs (e.g., Costco), who, on average, charge up to approximately 30% less for the same Contact Lenses sold by independent eye care professional retailers. (See Figure 3 below). 10. ABB, acting on behalf of ECPs, was instrumental in facilitating collusion among the Manufacturer Defendants. ABB acted as the hub of a hub and spoke conspiracy 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. 11. 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.2 12. Since Defendants coordinated 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 wearers, approximately 69% of J&J Contact Lens consumers. 13. 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. 14. There has also been a wave of complaints by consumers and industry participants to the Federal Trade Commission (“FTC”) concerning the negative impact of PFPs. Additionally, it has been reported that other government antitrust enforcement authorities are investigating the PFPs. 15. Additionally, 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.” 16. The implementation of anticompetitive policies that restrain price competition in the Contact Lens industry is not a new phenomenon. In the 1990s, a conspiracy existed between 2 Id. Contact Lens manufacturers and ECPs to curb the supply of Contact Lenses from moving through alternative sources of distribution (e.g., 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 17. 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, including Germany and China. 18. Defendants and their co-conspirators participated in a combination and 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, and to fix, raise, stabilize and/or maintain the prices of Contact Lenses sold in the United States. The combination and 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. 19. 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 20. 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, and the common law of unjust enrichment, and 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. 21. 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. 22. 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. 23. 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. 24. 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. 25. 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 26. Plaintiff Andee Leeds is a New York resident who purchased Contact Lenses indirectly from one or more Defendants. B. Defendants 27. Defendant Alcon is a Delaware corporation headquartered in Fort Worth, Texas that is owned by Novartis International AG, a Swiss multinational pharmaceutical company based in Basel, Switzerland. Alcon makes eye care products, including Contact Lenses. 28. Defendant J&J is a Florida corporation headquartered in Jacksonville, Florida. J&J makes eye care products, including Contact Lenses. 29. Defendant B+L is a New York corporation headquartered in Bridgewater, New Jersey; it is now owned by Valeant Pharmaceuticals International, Inc. B+L makes eye care products, including Contact Lenses. 30. Defendant CooperVision is a United States company incorporated in New York and headquartered in Pleasanton, California. CooperVision makes eye care products, including Contact Lenses. 31. 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. 32. 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 is a finite number of co-conspirators and Plaintiff believes that their identities can be ascertained through Defendants’ own records. AGENTS AND CO-CONSPIRATORS 33. 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. 34. 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. 35. 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 36. For purposes of this Complaint, “Contact Lenses” refer to disposable contact lenses. Contact Lenses were first introduced in the United States in 1987. Today, they constitute approximately 90% of all Contact Lenses sold in the United States. 37. Contact Lenses come in different forms. They 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, which 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). 38. Under FDA regulations classifying Contact Lenses as Class II and Class III pharmaceutical devices, consumers must obtain a prescription from an eye care professional to purchase Contact Lenses. Typically, after performing an eye exam and Contact Lens fitting, an eye care professional will issue to the patient a prescription for a specific brand and type of Contact Lens. 39. After obtaining a prescription, consumers can choose to purchase the specified Contact Lenses through their eye care professional, another independent eye care professional, or through other channels, such as big-box retailers (e.g., Wal-Mart), warehouse clubs (e.g., Costco), online retailers (e.g., 1-800-CONTACTS), or national optical chains (e.g., LensCrafters). 40. 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”). 41. 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, enacted in response to complaints of prescriptions being withheld from patients, requires ECPs to immediately provide patients with copies of their Contact Lens prescriptions so their method of purchase is uninhibited. 42. 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). 43. In 2004, the Contact Lens Rule (16 C.F.R. Parts 315 and 456), issued by the FTC, further clarifies 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 44. 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 demonstrates Contact Lens sales to ECPs compared to other retail channels. Figure 1 45. Additionally, as demonstrated by Figure 2 below, a majority of prescriptions for Contact Lenses are filled by ECPs. Figure 2 46. There is abundant data demonstrating that, prior to the implementation of the PFPs, Contact Lenses were more expensive when purchased through ECPs versus through internet or big-box retailers. 47. 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 demonstrated in Figure 3 below. Figure 3 48. Similarly, a 2005 FTC study found that, on average, Contact Lenses are least expensive when purchased through wholesale clubs (on average, prices were found to be approximately $30 less than ECPs). The study also found that Contact Lenses were approximately $15 less when purchased through internet retailers versus offline retailers. 49. The 2005 FTC study applauded the success of the FCLCA’s requirements, which have resulted in increased competition for Contact Lenses and lower prices across the United States. 50. 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 51. In response to price competition from alternative retailers to ECPs, the Manufacturer Defendants implemented PFPs nearly simultaneously. 52. Alcon announced its PFP in June 2013 and initially applied it to its FAILIES TOTAL1® line of Contact Lenses at that time. Alcon then expanded its PFP in January 2014 to its DAILIES® AquaComfort Plus® Multifocal and DAILIES® AquaComfort Plus® Toric Contact Lenses. In June of 2014, Alcon again extended its PFP policy to include AIR OPTIX® COLORS Contact Lenses. 53. 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. 54. Soon after Sauflon and Alcon’s PFP announcements, in February of 2014, B+L implemented its PFP for its ULTRA™ brand of lenses. 55. 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 roughly 9.66 million Contact Lens wearers, roughly 69% of J&J Contact Lens consumers. 56. 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. 57. 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”). 58. 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. 59. The coordination 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 . . . .” 60. 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 they can increase revenues and charge above PFP prices. 61. 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 62. 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 63. 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. 64. 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. 65. 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 66. The Contact Lens market is highly concentrated. The four Manufacturer Defendants collectively control 97% of the United States Contact Lens market, as demonstrated in Figure 5 below. Figure 5 67. The Manufacturer Defendants’ collective market share is broken down as follows: J&J has 35.3% market share; Alcon has 30.6% market share; CooperVision has 23.9% market share; and B+L has 7.2% market share. The Manufacturer Defendants’ market share is shown in Figure 6 below. Figure 6 2. The Market for Contact Lenses Has High Barriers to Entry 68. A collusive arrangement that raises product prices above competitive levels would, under basic economic principles, 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 help facilitate the formation and maintenance of a cartel. 69. Significant barriers preclude, reduce, or make more difficult for competitors to enter the Contact Lens market. To develop and manufacture Contact Lenses would take years and require complex technology, industry expertise, and skilled labor. 70. Designing Contact Lenses would require substantial research and development costs. Additionally, ultimately marketing lenses to consumers would require a manufacturer to obtain patents and necessary regulatory approvals. 71. In addition, 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 72. “Elasticity” is a term used to describe the sensitivity of supply and demand 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 so continue to purchase despite a price increase. 73. 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 purchased substitute products or declined to buy altogether. Inelastic demand is a market characteristic that facilitates collusion, allowing producers to raise their prices without triggering customer substitution and lost sales revenue. 74. 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 demand with other Contact Lenses and leaves consumers unable to constrain market 75. 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. 76. There are no substitutes for a Contact Lens wearer’s prescribed brand of Contact Lenses. As pointed out 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.”3 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 77. As admitted by Murphy of Alcon, Contact Lenses are a commodity-like product. 78. When products or services offered by different suppliers are viewed as interchangeable by purchasers, it is easier for suppliers to unlawfully agree on the price for the product or service in question, and it is easier to effectively police the collusively set prices. This makes it easier to form and sustain an unlawful cartel. 79. 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. 80. Where different types of retailers (e.g., independent eye care professional retailers, big-box stores, or internet retailers) offer the particular brand prescribed to a consumer, 3 American Antitrust Institute, Letter to the FTC and DOJ (Oct. 24, 2014) at 2. the consumer will make its purchase decision based primarily on price. The core considerations for a purchaser will be where, when, and how much. 81. This commoditization and interchangeability of Contact Lenses facilitated Defendants’ conspiracy by making coordination on price much simpler than if consumers were able to choose from numerous distinct Contact Lenses with varying features. 5. Defendants Had Ample Opportunities to Meet and Conspire 82. 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. 83. 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. 84. 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 . . . .” 85. 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. 86. 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. 87. 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.” 88. 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 89. 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. 90. 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. 91. 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 92. Manufacturer Defendants’ acts in implementing their PFPs were contrary to their independent economic self-interest. 93. 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. 94. 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. 95. 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. 96. 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 97. 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. 98. Alvarez of ABB acknowledged the “Fundamental Shift” these PFPs represented in the market for Contact Lenses. C. There is No Legitimate Business Justification for Defendants’ Concerted Price Floor Policies 99. Defendants cannot justify their PFPs as legitimate business decisions and any purported pro-competitive justification is pretextual. 100. Free-riding 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. 101. 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. On the other hand, PFPs do incentivize ECPs to prescribe certain lenses based on financial motivations. 102. 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 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 103. This is not the first time the Manufacturer Defendants have been accused of conspiring to unlawfully suppress competition in the market for Contact Lenses. 104. 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). 105. 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. 106. 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. 107. 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. 108. 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. 109. 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 110. 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. 111. Plaintiff also brings this action on behalf of herself 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”)4 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. 112. 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. 113. 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. 114. 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; 4 The Indirect Purchaser States include Arkansas, Arizona, California, District of Columbia, Florida, Hawaii, Illinois, 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. (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. 115. 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. 116. 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. 117. 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. 118. 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. 119. 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 120. 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. 121. During the Class Period, Plaintiff and the members of the Classes paid supra- competitive prices for Contact Lenses. Those overcharges have unjustly enriched Defendants. 122. 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. 123. 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. 124. 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) 125. Plaintiff repeats the allegations set forth above as if fully set forth herein. 126. 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). 127. 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. 128. 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. 129. The conspiratorial acts and combinations have caused unreasonable restraints in the market for Contact Lenses. 130. 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. 131. 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. 132. 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. 133. 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. 134. The alleged contract, combination, or conspiracy is a per se violation of the federal antitrust laws. 135. 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) 136. Plaintiff repeats the allegations set forth above as if fully set forth herein. 137. 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. 138. 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. 139. 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. 140. 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. 141. Defendants’ anticompetitive acts described above were knowing, willful and constitute violations or flagrant violations of the following state antitrust statutes. 142. 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. 143. 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. 144. 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. 145. Defendants have entered into an unlawful agreement in restraint of trade in violation of the Hawaii Revised Statutes Annotated §§ 480-1, et seq. 146. 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. 147. During the Class Period, Defendants’ illegal conduct substantially affected Hawaii commerce. 148. 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. 149. 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. 150. 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. 151. 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. 152. During the Class Period, Defendants’ illegal conduct substantially affected Illinois commerce. 153. 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. 154. 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. 155. 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. 156. 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. 157. 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. 158. 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. 159. 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. 160. 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. 161. 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. 162. 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. 163. 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. 164. 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. 165. 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. 166. 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. 167. 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. 168. 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. 169. 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. 170. 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. 171. 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. 172. 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. 173. 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. 174. 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. 175. 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. 176. 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) 177. Plaintiff repeats the allegations set forth above as if fully set forth herein. 178. 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. 179. Defendants have knowingly entered into an unlawful agreement in restraint of trade in violation of the Arkansas Code Annotated, § 4-88-101, et. seq. 180. 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. 181. 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). 182. 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 supracompetitive, artificially inflated prices for Contact Lenses. 183. During the Class Period, Defendants’ illegal conduct substantially affected Arkansas commerce and consumers. 184. 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. 185. 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. 186. 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. 187. 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. 188. 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. 189. 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. 190. 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. 191. 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. 192. 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. 193. 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 supracompetitive, artificially inflated prices for Contact Lenses. 194. During the Class Period, Defendants’ illegal conduct substantially affected Massachusetts commerce and consumers. 195. 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. 196. 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. 197. 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. 198. 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. 199. 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. 200. 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). 201. 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. 202. 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. 203. 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. 204. 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 supracompetitive, artificially inflated prices for Contact Lenses. 205. During the Class Period, Defendants’ illegal conduct had a substantial effect on South Carolina commerce. 206. 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. 207. 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. 208. 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) 209. Plaintiff repeats the allegations set forth above as if fully set forth herein. 210. 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. 211. 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. 212. 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: April 6, 2015 BY: /s/ Robert C. Josefsberg Fla. Bar No. 040856 John Gravante, III Fla. Bar No. 617133 Podhurst Orseck, P.A. City National Bank Building 25 West Flagler Street, Suite 800 Miami, FL 33130 Phone: (305) 358-2800 Fax: (305) 358-2382 [email protected] [email protected] Douglas G. Thompson [email protected] Michael G. McLellan [email protected] FINKELSTEIN THOMPSON LLP 1077 30th Street NW, Suite 150 Washington, DC 20007 Telephone: 202-337-8000 Facsimile: 202-337-8090 Counsel for Plaintiff and the Putative Classes

antitrust

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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, Case No. CLASS ACTION COMPLAINT FOR VIOLATIONS OF: Plaintiff, vs. 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)] THE MERCHANT GROUP USA, LLC d/b/a 1 800 MONEY MERCHANT, and DOES 1 through 10, inclusive, and each of them, Defendant. 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 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 THE MERCHANT GROUP USA, LLC d/b/a 1 800 MONEY MERCHANT (“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 Florida company doing business within and throughout California. 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 Alameda. PARTIES 4. Plaintiff, ABANTE ROOTER AND PLUMBING, INC. (“Plaintiff”), is a California company and is a “person” as defined by 47 U.S.C. § 153 (39). 5. Defendant, THE MERCHANT GROUP USA, LLC d/b/a 1 800 MONEY MERCHANT (“Defendant”) is a 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 January 2018, Defendant contacted Plaintiff on Plaintiff’s cellular telephone number ending in -1080, 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 (727) 475-2441 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 its cellular telephone pursuant to 47 U.S.C. § 227(b)(1)(A). 13. Further, Plaintiff’s cellular telephone number ending in -1080 was added to the National Do-Not-Call Registry on or about November 12, 2014. 14. Defendant placed a call soliciting its business to Plaintiff on his cellular telephone ending in -1080 on or about January 23, 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. Defendant continued to call 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 1-35. 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 1-35. 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 1-35. 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 7th Day of September, 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

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA Case No. 9:11-cv-80364-RYSKAMP THEODORE CLIMO, Individually and on Behalf of All Others Similarly Situated, Plaintiff, vs. OFFICE DEPOT, INC., et al., Defendants. ) ) ) ) ) ) ) ) ) ) ) CLASS ACTION DEMAND FOR JURY TRIAL AMENDED CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS Case No. 9:11-cv-80364-RYSKAMP NATURE OF THE ACTION 1. Lead Plaintiff Central Laborers’ Pension Fund (“Plaintiff”), individually and on behalf of a proposed class (the “Class”) of all purchasers of the publicly traded common stock of Office Depot, Inc. (“Office Depot” or the “Company”) between July 27, 2010 and March 31, 2011, inclusive (the “Class Period”), by and through its undersigned counsel, brings suit against Office Depot, Steve Odland (“Odland”), Michael D. Newman (“Newman”), and Neil R. Austrian (“Austrian”) (Office Depot, Odland, Newman, and Austrian are sometimes collectively referred to as “Defendants”). 2. Plaintiff seeks remedies under the Securities Exchange Act of 1934 (the “Exchange Act”) as a result of the fraudulent scheme undertaken by Defendants and the economic loss suffered when the true facts were revealed to the public. 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, 17 C.F.R. §240.10b-5. 3. Plaintiff makes the allegations herein concerning the falsity of Defendants’ statements and the scienter of the Individual Defendants based upon the investigation undertaken by Plaintiff’s counsel, which investigation included analysis of publicly available news articles and reports, public filings, securities analysts’ reports and advisories about Office Depot, interviews of former employees of Office Depot, press releases and other public statements issued by the Company, and media reports about the Company. Plaintiff believes that substantial additional evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. 4. This case concerns a material tax fraud whereby Defendants issued materially false and misleading statements about Office Depot’s earnings, free cash flow, tax receivables, and its Case No. 9:11-cv-80364-RYSKAMP overall financial condition. To accomplish their fraud, Defendants violated General Accepted Accounting Principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”), thereby causing Office Depot to issue materially false and misleading financial statements during the Class Period. Defendants’ accounting fraud culminated at the end of the Class Period, when the Company announced it would be restating its falsely reported financials. 5. Prior to the start of the Class Period, it was known throughout the market that Office Depot was losing market share to its competitors. For example, on March 8, 2010, Twice reported that “[t]wo office superstores reported two different fortunes in the fourth quarter, with Staples posting higher net sales and lower net earnings, while Office Depot posted lower sales and a loss.” Then, on May 20, 2010, MarketWatch reported that “Staples is better positioned to outperform smaller rivals Office Depot Inc. (ODP) and OfficeMax, Inc. (OMX) . . .” and that Staples continued to “take share,” “adding the company’s 4% sales increase compared against the average 2.5% drop for Office Max and Office Depot.” As a result, Defendants were highly motivated to report positive financial performance for Office Depot during the Class Period and devised a plan to increase cash flow by carrying back its 2010 losses to prior periods. 6. Defendants’ tax accounting manipulations enabled Defendants to successfully create the (false) impression among investors that Office Depot was experiencing increasingly positive financial results, i.e., losing less ground. 7. At the start of the Class Period, unbeknownst to investors, Defendants authorized Office Depot to make an irrevocable election to carry back tax losses incurred after 2007, but before 2010, pursuant to The Worker, Homeownership, and Business Assistance Act of 2009 (the “WHBAA legislation”). This election enabled the Company to claim a $63 million tax refund with Case No. 9:11-cv-80364-RYSKAMP the IRS. Defendants knew or recklessly disregarded, however, that Office Depot was ineligible for the carry back benefit because of the Company’s status as a 52 or 53 week tax filer. Specifically, the Company’s fiscal year ended on the last Saturday in December, which in 2009 was December 26th. While Office Depot’s 2010 fiscal year began on December 27, 2009, for purposes of the WHBAA, it was as if Office Depot’s fiscal year actually started on January 1, 2010. 8. The WHBAA “allows almost all taxpayers with business losses to make an irrevocable election to carry back losses incurred in one year (ending in 2007 and beginning before 2010) for up to five years.” As a result, the carry back, by its explicit terms, could not apply to Office Depot’s fiscal year that started – for purposes of the WHBAA – on January 1, 2010. Defendants knew or recklessly disregarded that the Company had no legitimate basis by which to qualify under the WHBAA legislation for the benefits that it claimed, which resulted in the denial by the IRS of Office Depot’s election. Further, due to the fact that the IRS is under an obligation to review the carry back election within 90 days of the filing, had there been any question as to Office Depot’s eligibility under the WHBAA, the Company should have waited to take the tax benefits in question until it received approval from the IRS in March 2011. 9. Defendants never disclosed there was any doubt that Office Depot was entitled to the tax carry back benefit; rather, throughout the Class Period, Defendants issued a series of the false and misleading statements regarding the Company’s recognized tax benefits, including: • July 27, 2010: “During the second quarter of 2010, we recognized tax benefits of $29 million, which resulted in a tax benefit rate of 75% on the second-quarter loss.” • October 27, 2010: “So in total, we recognized tax benefits of $47 million in the third quarter, reflecting an effective tax benefit rate of 295%.” • February 22, 2011: “Significant tax benefits, from carrying back 2010 tax losses to an earlier tax period, positively impacted earnings in the fourth quarter of 2010.” Case No. 9:11-cv-80364-RYSKAMP 10. Moreover, for each and every quarter during the Class Period, during the applicable periods of employment, the Individual Defendants personally signed certifications pursuant to §§302 and 906 of the Sarbanes-Oxley At of 2002 (“SOX Certifications”), under penalty of perjury, which falsely attested that each such quarterly “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. . . .” The Individual Defendants also certified that each such report, “fairly present[s] in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented. . . .” The SOX Certifications also represented that the Individual Defendants had personally “[d]esigned 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.” 11. The Company was later forced to admit that the Individual Defendants’ respective SOX Certifications were, in fact, false. On March 31, 2011, after the market closed, Office Depot announced that it would restate its financial results for the fiscal year ended December 25, 2010, and the quarters ended June 26, 2010 and September 25, 2010. Office Depot told the market the restatement would occur on or about April 6, 2011. Office Depot’s restatement stemmed from the Company’s claims to carry back certain tax losses pursuant to the WHBAA legislation, which the IRS rejected. 12. Accordingly, the Company’s restatement of prior periods’ financial results reduced full-year tax benefits by approximately $80 million and resulted in the Company recording a net loss Case No. 9:11-cv-80364-RYSKAMP of $46 million, a change from net earnings of $33 million for 2010. It also increased the net loss attributable to common stock shareholders from $2 million, or $0.01 per share, to $82 million, or $0.30 per share. Additionally, it was revealed that the Company had wrongly reported $63 million in current tax receivables associated with the carry back amount, which would now adversely impact the Company’s anticipated 2011 operating cash flow. 13. In response to the Company’s restatements of its financial results, the price of Office Depot common stock dropped $0.42 per share, or 9%, from a closing price of $4.63 on March 31, 2011, to close at $4.21 per share on April 1, 2011, on heavy trading volume. 14. On April 2, 2011, the Palm Beach Post published an article entitled “Tax Error Negates Office Depot Profits” discussing the Company’s restatement and the resulting $46 million net loss as a result of the IRS denial. Then on April 5, 2011, a Bloomberg article entitled “Office Depot Profit Turns into Loss After IRS Denies Tax Claim,” quoted tax and accounting analyst Robert Willens who stated “[i]t wasn’t that hard.” “What could possibly have been so confusing?” According to the article, during the April 1, 2011 conference call, an analyst at Levin Capital Strategies called the restatement “very, very disappointing for shareholders,” and further suggested the Company put itself up for sale. 15. The true facts, which were known by the Defendants, but concealed from the market during the Class Period, were as follows: (i) The $80 million in carry back tax “benefits” Office Depot recognized during the Class Period for the second, third, and fourth quarter of 2010 were not permitted; (ii) The $63 million in current tax receivables associated with the carry back amount should not have been reported on the Company’s balance sheet at December 25, 2010; Case No. 9:11-cv-80364-RYSKAMP (iii) Office Depot’s financial results were not reported in compliance with GAAP during the Class Period; (iv) Office Depot’s financial statements overstated the Company’s earnings and understated its losses in violation of GAAP throughout the Class Period; (v) The Company’s internal controls were inadequate to prevent it from improperly inflating the value of its earnings and assets throughout the Class Period; and (vi) Defendants overstated Office Depot’s business and financial metrics during the Class Period. 16. As a result of Defendants’ false and misleading statements, Office Depot’s stock traded at artificially inflated levels during the Class Period. When the truth about Office Depot’s true financial condition was revealed, Office Depot’s stock price fell nearly 31% from its Class Period high of $6.10 on January 5, 2011. This drop removed the inflation of Office Depot’s stock price, causing real economic loss to investors who had purchased the stock during the Class Period. JURISDICTION AND VENUE 17. This Court has jurisdiction over the subject matter of this action pursuant to §27 of the Exchange Act, 15 U.S.C. §78aa, and 28 U.S.C. §1331. 18. Venue is proper in this District pursuant to §27 of the Exchange Act, 15 U.S.C. §78aa, and 28 U.S.C. §1391(b). In addition, the causes of action asserted herein occurred and/or accrued, among other places, in this District. At all times relevant to this action, Office Depot was headquartered in this District, and many of the acts and transactions alleged herein, occurred in substantial part in this District. Case No. 9:11-cv-80364-RYSKAMP 19. 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 mails, interstate telephone communications, and the facilities of the national securities markets. PARTIES 20. Court-appointed Lead Plaintiff Central Laborers’ Pension Fund purchased Office Depot securities on the open market during the Class Period, as set forth in its certification previously filed with the Court. 21. Defendant Office Depot is a Delaware corporation headquartered at 6600 North Military Trail, Boca Raton, Florida. Office Depot is a global supplier of office products and services. The Company sells its products and services to consumers and businesses through three business segments: North American Retail Division; North American Business Solutions Division; and International Division. Sales are processed through multiple channels, consisting of office supply stores, a contract sales force, an outbound telephone account management sales force, internet sites, direct marketing catalogs and call centers, all supported by a network of supply chain facilities and delivery operations. 22. Defendant Odland served as a director, Chairman of the Board and Chief Executive Officer (“CEO”) of the Company until his resignation on November 1, 2010. 23. Defendant Newman served as Chief Financial Officer (“CFO”) of the Company during the Class Period, a role he has held since August 2008. 24. Defendant Austrian has served as a director of Office Depot since 1998, and assumed the roles of Interim Chairman of the Board of Directors and CEO on November 1, 2010. Austrian Case No. 9:11-cv-80364-RYSKAMP was appointed permanent Chairman and CEO on May 23, 2011. Previously, Austrian served as the Company’s Interim Chairman and CEO from October 4, 2004 until March 11, 2005. 25. Throughout the Class Period, Odland, Newman and Austrian (collectively, the “Individual Defendants”), were responsible for ensuring the accuracy of Office Depot’s public filings and other public statements, and they personally attested to and certified the accuracy of Office Depot’s financial statements. During the Class Period – specifically on July 27, 2010, October 27, 2010, and February 22, 2011 – the Individual Defendants each signed SOX Certifications included in the Company’s public filings stating: 1. I have reviewed this quarterly report on Form [10-Q or 10-K] of Office Depot 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. 26. The Individual Defendants, because of their positions with the Company, possessed the power and authority to control the contents of Office Depot’s quarterly reports, 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 Case No. 9:11-cv-80364-RYSKAMP 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 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 statements pleaded herein. CLASS ACTION ALLEGATIONS 27. Plaintiff brings this action as a class action pursuant to Federal Rules of Civil Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who purchased the common stock of Office Depot during the Class Period. Excluded from the Class are Defendants, the officers and directors of the Company, 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. Because Office Depot has millions of shares outstanding, and because the Company’s shares were actively traded on the New York Stock Exchange (the “NYSE”), members of the Class are so numerous that joinder of all members is impracticable. According to Office Depot’s SEC filings, as of January 22, 2011 (shortly before the close of the Class Period), Office Depot had approximately 277 million shares of common stock outstanding. While the exact number of Class members can only be determined by appropriate discovery, Plaintiff believes that Class members number at least in the thousands and that they are geographically dispersed. Case No. 9:11-cv-80364-RYSKAMP 29. Plaintiff’s claims are typical of the claims of the members of the Class because Plaintiff and all of the Class members sustained damages arising out of Defendants’ wrongful conduct complained herein. 30. Plaintiff will fairly and adequately protect the interests of the Class members and has retained counsel experienced and competent in class actions and securities fraud litigation. Plaintiff has no interests that are contrary to or in conflict with the members of the Class it seeks to represent. 31. 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 members of the Class may be relatively small, the expense and burden of individual litigation make it impossible for the 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. 32. Questions of law and fact common to the members of the Class predominate over any questions that may affect only individual members, in that Defendants have acted on grounds generally applicable to the entire Class. Among the questions of law and fact common to the Class (a) Whether Defendants violated the federal securities laws as alleged herein; (b) Whether Defendants’ publicly disseminated press releases and statements during the Class Period omitted and/or misrepresented material facts; (c) Whether Defendants breached any duty to convey material facts or to correct material facts previously disseminated; Case No. 9:11-cv-80364-RYSKAMP (d) Whether Defendants participated in and pursued the fraudulent scheme or course of business complained of; (e) Whether Defendants acted willfully, with knowledge or severe recklessness, in omitting and/or misrepresenting material facts; (f) Whether the market prices of Office Depot common stock during the Class Period were artificially inflated due to the material nondisclosures and/or misrepresentations complained of herein; and (g) Whether the members of the Class have sustained damages as a result of the decline in value of Office Depot’s stock when the truth was revealed and the artificial inflation came out and, if so, what is the appropriate measure of damages. DEFENDANTS’ FALSE FINANCIAL STATEMENTS FAILED TO COMPLY WITH GAAP AND SEC REGULATIONS 33. Defendants, as they have now admitted, violated GAAP and SEC rules and regulations, causing the Company to issue materially false and misleading financial statements during the Class Period. 34. Section 13 of the Exchange Act obligated Defendants to “make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect [the] transactions and dispositions of the assets of the issuer” and “devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that . . . transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and to maintain accountability for assets.” Case No. 9:11-cv-80364-RYSKAMP 35. Now, Defendants have admitted that, contrary to their representations during the Class Period, Office Depot possessed a “a material weakness in the operational controls in the area of accounting for income taxes.” 36. During the Class Period, Defendants falsely and misleadingly asserted that Office Depot’s financial statements were presented in conformity with GAAP. For example, the Company’s July 27, 2010 Financial Report stated: The consolidated financial statements of Office Depot and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America. 37. Pursuant to GAAP, “there are two primary objectives related to accounting for income taxes”:1 (a) To recognize the amount of taxes payable or refundable for the current year; (b) To recognize deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. 38. Defendants have now admitted that Office Depot violated these primary GAAP objectives in accounting for income taxes by materially overstating the amount of the Company’s income tax receivables and its net income during the Class Period. 39. For example, at December 31, 2010, Office Depot’s reported receivables were overstated by more than 6.5%, and its net loss attributable to common shareholders was understated 1 See, e.g., Accounting Standards Codification 740-10-1. Case No. 9:11-cv-80364-RYSKAMP by more than 97% when Office Depot’s true loss per share of $0.30 per share was reported to be a loss of $.01 per share. 40. Office Depot’s fiscal years are based on a 52 or 53 week period ending on the last Saturday in December. Accordingly, the Company’s fiscal 2010 year began on December 27, 2009. Since the Company’s fiscal 2010 year began prior to January 1, 2010, Defendants caused Office Depot to make an irrevocable election to carry back tax losses incurred after 2007 and before 2010 pursuant to the WHBAA legislation and claim a $63 million tax refund with the IRS. 41. Indeed, Defendants knew or with severe recklessness ignored that Office Depot was precluded from seeking such claim for a tax refund because it is hornbook law that entities with a 52 or 53 week tax year referencing the last day of a specified calendar month be deemed to end on the last day of the calendar month nearest to the last day of the 52 or 53 week taxable year. 42. Accordingly, Office Depot’s fiscal 2010 year was deemed to begin on January 1, 2010, thereby rendering it ineligible for the benefits afforded by the WHBAA legislation. 43. Indeed, Defendants knew or with severe recklessness ignored that Office Depot was ineligible to claim a tax refund pursuant to WHBAA legislation because the Company’s tax year is deemed to begin on January 1 for purposes of legislative, regulatory or administrative dates, including, but limited to, the due date when its income tax return is required to be filed, the date tax payments are due, or the time for performing other acts or filing other documents with the IRS. 44. Accordingly, Defendants knew that Office Depot’s tax year had historically been deemed to end on December 31, and therefore, knew or with severe recklessness disregarded that the Company had no basis to qualify for the benefits afforded by WHBAA legislation. Case No. 9:11-cv-80364-RYSKAMP 45. Confidential Witness #1 (“CW 1”) was employed by Office Depot for twenty years until March 2011. As a District Manager in the Retail organization, CW 1 was responsible for nine stores, including stores located in Ft. Lauderdale, Miramar, and North Miami, Florida. CW 1’s tasks included managing personnel to achieve assigned product and service sales goals. CW 1 reported to Regional Manager Ken Seher, who reported to Executive Vice President Joe Hills. Joe Hills reported to President of North American Retail Chuck Rubin (“Rubin”), who was replaced by Kevin Peters (“Peters”) in 2010. Rubin and later Peters reported to Odland and later Austrian. CW 1 has information regarding Company Directors questioning the tax benefits that Office Depot claimed for 46. Indeed, CW 1 recalled Directors in Office Depot’s Accounting organization questioning the Company’s 2010 claimed tax benefits, which ultimately resulted in the restatement announced at the end of the Class Period. To that end, CW 1 overheard Directors of Accounting discussing the 2010 tax benefits and making telling comments such as, “we did not learn it this way in school” or “other companies don’t do it this way.” 47. Confidential Witness #2 (“CW 2”) worked at Office Depot for approximately two years (until mid-calendar year 2010) as a Director of Tax Technology and Business Process Improvement. CW 2 was responsible for implementing the sales tax modules that were part of the Oracle Financials implementation utilized by Office Depot for its general ledger. CW 2 was also responsible for designing and implementing information technology controls pertaining to Office Depot’s Thompson Reuters tax information system. Among other things, CW 2 has information regarding the process for filing taxes at Office Depot. CW 2 also has knowledge of a town hall meeting held by Office Depot, during which the tax benefits the Company claimed for 2010 were Case No. 9:11-cv-80364-RYSKAMP discussed and Odland and Newman made a presentation that included specific details about the Company’s 2010 tax benefits. 48. According to CW 2, Office Depot held town hall meetings mid-calendar year 2010 for director-level and above employees, with some meetings attended by all Office Depot employees. During the meetings, “various scenarios” were presented, including detailed financial presentations that demonstrated the current cash position and financial plan for Office Depot for the year. CW 2 attended a financial presentation that included information about the 2010 tax benefits that Office Depot would claim at the end of the year and the projected impact on “net losses” for the year. According to CW 2, Odland and Newman, delivered the presentation. 49. Confidential Witness #3 (“CW 3”) was employed with Office Depot from 2008 to May 2011 as a Fixed Asset Accountant. CW 3 was responsible for fixed asset tax accounting, as well as working on the implementation of a tax accounting method change for repair and maintenance expenses. CW 3 has information regarding Deloitte Tax’s presentation regarding tax accounting and the possibility of “increase [in] cash flow,” as well as the IRS’s denial of the Company’s 2010 tax benefits. 50. According to CW 3, Deloitte Tax held a presentation in May 2010 on the third floor of Office Depot’s headquarters in room 310, during which four or five representatives delivered a presentation on a projector about tax accounting and the possibility of “increase[d] cash flow.” Vice President of Tax Siva Sellathurai (“Sellathurai”), General Accounting Manager Laura Boscia, and the Company’s Director of Income Tax Accounting were in attendance. In addition to the large presentation, there were four or five smaller meetings with one or two Deloitte Tax representatives. The 2010 tax benefits and related “plan” were reviewed by the Director of Income Tax Accounting and Sellathurai Case No. 9:11-cv-80364-RYSKAMP and presented to “upper [Office Depot] management,” including Controller Mark Hutchens and, as CW 3 believed, Newman for approval. 51. The “plan” Deloitte Tax presented to Office Depot included an accounting method change for repair and maintenance expenses on fixed assets, which ultimately increased near term cash flow by $28 million. According to CW 3, there was one problem with the implementation of the accounting method change for repair and maintenance expenses. In 2009, Office Depot implemented Oracle. The Oracle system did not allow the Company to electronically capture and categorize fixed assets and related expenses on projects. The process of capturing and categorizing the fixed assets and costs had to be done manually by reviewing project data in the “Skyline” information system, which did not interface with the Oracle system. Given the margin for human error associated with the manual process, CW 3 stated that errors were made in capturing and categorizing the costs. The manual process represented an internal control deficiency. According to CW 3, Office Depot planned to remediate the deficiency, but that plan had not yet been implemented by May 2011. 52. CW 3 confirmed that the IRS disallowed the 2010 tax benefits that Office Depot claimed because of the difference between the retail calendar year and the tax calendar year. For 2010, CW 3 stated that tax calendar year ended on December 31, 2010, whereas the retail calendar year ended on December 26, 2010. The retail calendar differed from the tax calendar because the retail calendar was based on the number of weeks in each month. Office Depot was aware of the difference in the calendar years when the Company filed the 2010 tax return and claimed the tax benefits. Office Depot failed to adhere to the tax guidelines that would have allowed for the tax Case No. 9:11-cv-80364-RYSKAMP benefits if the tax calendar year ended two weeks prior to the actual end date – the issue which ultimately led to the restatement. 53. CW 3 learned about the issue that ultimately resulted in the restatement via an internal email that was circulated by the Office Depot Communication department, as well as at a town hall meeting. Austrian made an announcement during the town hall meeting, which took place in the auditorium on the first floor of the Company’s headquarters in early calendar 2011. DEFENDANTS’ FALSE AND MISLEADING STATEMENTS ISSUED DURING THE CLASS PERIOD A. The July 27, 2010 Financial Report and Press Release 54. The Class Period begins on July 27, 2010. On that date, Office Depot issued its Financial Report for the second quarter ended June 26, 2010 (the “July 27, 2010 Financial Report”) along with an accompanying press release. Office Depot reported total Company sales of $2.7 billion, a 4% decrease compared to the second quarter of 2009. The press release stated, in part: The Company reported a loss, after preferred stock dividends, of $19 million in the second quarter of 2010, compared to a loss of $82 million in the second quarter of 2009. The loss per share was $0.07 for the quarter, versus a loss per share of $0.31 in the same period one year ago. Second quarter 2010 results included significant tax benefits and second quarter 2009 results include Charges related to restructuring activities which negatively impacted earnings by $0.09 per share. * * * In the second quarter of 2010, the Company’s free cash flow was a use of $62 million and closed the period with $578 million in cash on hand. * * * “Our second quarter operating results exceeded our expectations due to strong execution in North American Retail, North American Direct and the International Division,” said Mike Newman, Office Depot’s chief financial officer. “We’re pleased that these results include year-over-year gross profit margin improvement, marking the fourth consecutive quarter of such improvement.” Case No. 9:11-cv-80364-RYSKAMP 55. The July 27, 2010 Financial Report contained required SOX Certifications signed by Odland and Newman stating that the Form 10-Q did not include any material misrepresentations. The July 27, 2010 Financial Report further discussed the Company’s accounting policies, and stated: Basis of Presentation: Office Depot, Inc., including consolidated subsidiaries, is a global supplier of office products and services. Fiscal years are based on a 52- or 53- week period ending on the last Saturday in December. The Condensed Consolidated Balance Sheet at December 26, 2009 has been derived from audited financial statements at that date. The condensed consolidated interim financial statements as of June 26, 2010 and June 27, 2009, and for the 13-week and 26-week periods ended June 26, 2010 (also referred to as “the second quarter of 2010” and “the first half of 2010”) and June 27, 2009 (also referred to as “the second quarter of 2009” and “the first half of 2009”) are unaudited. However, in our opinion, these financial statements reflect adjustments (consisting only of normal, recurring items) necessary to provide a fair presentation of our financial position, results of operations and cash flows for the periods presented. We have included the balance sheet from June 27, 2009 to assist in analyzing our company. The June 27, 2009 balance sheet includes a line for Deferred income taxes, separate from Other assets, to conform to the June 26, 2010 and December 26, 2009 presentation. * * * CRITICAL ACCOUNTING POLICIES Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these statements requires management to make judgments and estimates. Some accounting policies have a significant impact on amounts reported in these financial statements. A summary of significant accounting policies and a description of accounting policies that are considered critical may be found in our 2009 Form 10-K, filed on February 23, 2010, in Note A of the Notes to the Consolidated Financial Statements and the Critical Accounting Policies section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations. 56. The statements highlighted above were materially false and misleading. Defendants never disclosed during the entire Class Period that the Company’s election to carry back losses from 2010 to prior periods was impermissible. The so-called “significant tax benefits” were illusory and were destined to be rejected by the IRS, thus negatively impacting Office Depot’s reported 2010 Case No. 9:11-cv-80364-RYSKAMP financial statements. Indeed, Office Depot’s July 27, 2010 Financial Report materially overstated and misrepresented the Company’s financial performance, and both the second quarter loss and loss per share were falsely reported and should have been materially increased. Specifically, the Company’s improperly recognized $6 million in tax benefits, Office Depot’s diluted losses per share should have increased by $0.02 for the second quarter 2010, and approximately $9 million of tax- related assets should have been removed from Office Depot’s balance sheet. It was also false for Defendants to represent that the Company’s financial statements were prepared in accordance with GAAP and accurately represented the Company’s true financial condition. B. The July 27, 2010 Conference Call 57. Following issuance of the July 27, 2010 Financial Report and accompanying press release, Office Depot hosted a conference call to discuss its second quarter 2010 financial results and operations. Odland and Newman participated in the call on behalf of the Company. During the call, numerous false and misleading statements were made that were designed to artificially inflate the Company’s stock price. For example, Odland commented on the Company’s second quarter recognized tax benefits, stating in part: During the second quarter of 2010, we recognized tax benefits of $29 million, which resulted in a tax benefit rate of 75% on the second-quarter loss. This benefit includes discrete items of approximately $13 million from the release of a valuation allowance in Europe because of improved performance in that jurisdiction and settlements with certain taxing authorities. Additionally, based on our latest estimate of the full-year effective tax rate, the current interim period includes a catch-up effect of prior-quarter results. As we mentioned on past calls, changes to temporary differences, combined with the need to recognize valuation allowances on our deferred tax assets in the US, will create volatility in our quarterly effective tax rates. Case No. 9:11-cv-80364-RYSKAMP Due to our Company’s mix of earnings and fluctuations in these temporary differences, we now expect our annual effective tax rate to be a benefit of approximately 10%, and our cash tax rate to be a slight benefit for 2010. * * * We now expect 2010 free cash flow to be in the $50 million to $70 million range, lower than our previous guidance, due mainly to unfavorable currency movements and our decision to delay the election to carry back tax losses from 2009 to the 2010 tax year. The decision to delay the tax loss carry-back election will maximize the cash flow benefit to the Company in the first quarter of 2011. 58. The representations highlighted above were materially false and misleading. Defendants knew at the time these statements were made that the Company lacked a reasonable basis, pursuant to the plain language of the WHBAA legislation, for claiming eligibility for 2010 carry back tax benefits. As a result, Odland’s statements regarding both expected tax benefits and 2011 free cash flow lacked a reasonable basis when made. Defendants knew or recklessly disregarded that the recognized tax benefits for the quarter would be clawed back and negatively impact Office Depot’s diluted earnings per share and 2011 free cash flow. 59. In response to Defendants’ false and misleading statements, the price of Office Depot common stock fell $0.33 per share, or 6.98%, from a closing price of $4.73 on July 26, 2010, to close at $4.40 per share on July 27, 2010. But for Defendants’ false and misleading statements, the price of Office Depot common stock would have fallen further. 60. On October 25, 2010, Office Depot announced that, effective November 1, 2010, Odland would be resigning. The Company also announced the appointment of Austrian as Interim Chairman and CEO. Case No. 9:11-cv-80364-RYSKAMP C. The October 27, 2010 Financial Report and Press Release 61. On October 27, 2010, Office Depot issued Financial Report for the third quarter ending September 25, 2010 (the “October 27, 2010 Financial Report”) along with an accompanying press release. Office Deport reported total Company sales of $2.9 billion, a 4% decrease compared to the third quarter of 2009. The press release further stated in part: The Company reported earnings, after preferred stock dividends, of $54 million in the third quarter, compared to a loss of $413 million in the third quarter of 2009. Earnings per share were $0.18 in the quarter, compared to a loss per share of $1.51 in the third quarter of 2009. Earnings in the third quarter of 2010 included significant tax and interest expense benefits related to the settlement of certain tax positions relating to open years which positively impacted earnings in the quarter by $0.15 per share. Third quarter 2009 results included charges for deferred tax asset valuation allowances, the reversal of tax benefits and Charges related to restructuring activities which negatively impacted earnings by $1.43 per share. * * * The Company’s free cash flow was $109 million in the third quarter of 2010 and cash on hand was $679 million at the end of the quarter. * * * “We are pleased with our strong cash flow performance in the third quarter which was driven by both earnings and good working capital management,” said Mike Newman, Office Depot’s chief financial officer. “We have been executing very well across the entire enterprise as we focus on returning to sales growth and delivering improved profit as we go forward.” 62. The October 27, 2010 Financial Report contained required SOX Certifications signed by Odland and Newman stating that the Form 10-Q did not include any material misrepresentations. The October 27, 2010 Financial Report discussed the Company’s accounting policies, and stated: Basis of Presentation: Office Depot, Inc., including consolidated subsidiaries, (“Office Depot”) is a global supplier of office products and services. Fiscal years are based on a 52- or 53-week period ending on the last Saturday in December. The Condensed Consolidated Balance Sheet at December 26, 2009 has been derived from audited financial statements at that date. The condensed consolidated interim financial statements as of September 25, 2010 and September 26, 2009, and for the Case No. 9:11-cv-80364-RYSKAMP 13-week and 39-week periods ended September 25, 2010 (also referred to as “the third quarter of 2010” and “the year-to-date 2010”) and September 26, 2009 (also referred to as “the third quarter of 2009” and “the year-to-date 2009”) are unaudited. However, in our opinion, these financial statements reflect adjustments (consisting only of normal, recurring items) necessary to provide a fair presentation of our financial position, results of operations and cash flows for the periods presented. We have included the balance sheet from September 26, 2009 to assist in analyzing our company. The September 26, 2009 balance sheet includes a line for Deferred income taxes, separate from Other assets, to conform to the September 25, 2010 and December 26, 2009 presentation. Additionally, the Deferred income taxes and Changes in working capital and other line items have been combined in the condensed consolidated statement of cash flows for the 39- week period ended September 26, 2009 to conform to the year-to-date 2010 presentation. * * * CRITICAL ACCOUNTING POLICIES Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these statements requires management to make judgments and estimates. Some accounting policies have a significant impact on amounts reported in these financial statements. A summary of significant accounting policies and a description of accounting policies that are considered critical may be found in our 2009 Form 10-K, filed on February 23, 2010, in Note A of the Notes to the Consolidated Financial Statements and the Critical Accounting Policies section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations. 63. The highlighted representations were materially false and misleading. Defendants never disclosed during the entire Class Period that the Company’s election to carry back losses from 2010 to prior periods lacked a reasonable basis and would be denied by the IRS, thus negatively impacting Office Depot’s 2010 financial statements. To that end, the Company’s September 25, 2010 Financial Report overstated Office Depot’s tax benefit for the third quarter and year-to-date periods, and overstated net earnings and income available to common shareholders by $22 million and $29 million, respectively. Diluted earnings per share was overstated by $0.06 for the third Case No. 9:11-cv-80364-RYSKAMP quarter and $0.10 for the year-to-date period. The Company also should have removed approximately $32 million of tax-related assets from its balance sheet. D. The October 27, 2010 Conference Call 64. Following issuance of the October 27, 2010 Financial Report and press release, Office Depot hosted a conference call to discuss its third quarter financial results and operations. Austrian and Newman participated in the call on behalf of the Company. During the call, numerous false and misleading statements were made that were designed to artificially inflate the Company’s stock price. For example, during the call, Newman discussed the purported tax benefit, stating: As mentioned at the outset of the call, we recognized significant tax and interest benefits during the quarter, and I will try to provide some additional color now. The third quarter was impacted by the settlement of uncertain tax positions relating to open years, as well as a catch-up benefit from the change in the estimated annual effective tax rate for 2010. These items favorably impacted third-quarter taxes by $40 million. The settlement also resulted in lower interest costs related to these positions totaling $13 million. Combined, the tax benefit of $40 million [and] interest expense benefit of $13 million positively impacted earnings per share by $0.15 in the third quarter. In addition, during the quarter, we adopted a tax accounting method change for repair and maintenance expenses which allows a faster recovery of these costs and increases near-term cash flows. This impact, combined with the tax benefit on pretax earnings, totaled $7 million, which are viewed to be operational in nature. So in total, we recognized tax benefits of $47 million in the third quarter, reflecting an effective tax benefit rate of 295%. Our fourth-quarter effective tax rate will be impacted by bonus depreciation rules enacted by US tax authorities after the end of our fiscal third quarter, and the accounting method change for repair and maintenance expense. These changes are expected to drive our annual effective tax rate to be a benefit of approximately 92% and our cash tax to be a benefit of about $56 million for 2010, with about $40 million having been realized September year to date. Case No. 9:11-cv-80364-RYSKAMP 65. The representations highlighted above were materially false and misleading. Defendants knew at the time these statements were made that the “significant” tax benefits depended upon the use of improper carry back claims. At the time Newman made these statements, Defendants knew or recklessly disregarded that Office Depot’s reported financial results – including its earnings and tax related assets – were overstated and would have to be restated, which would negatively impact Office Depot’s diluted earnings per share and 2011 free cash flow. 66. In response to the Company’s preannounced third quarter results, the price of Office Depot common stock rose by $0.16 per share, or 3.5%, from a closing price of $4.63 on October 22, 2010, to a closing price of $4.79 per share on October 25, 2010, on heavy trading volume. 67. On January 3, 2011, Janney Capital Markets upgraded Office Depot to “Buy” from “Neutral,” citing four key points to its upgrade: (1) the appointment of a new CEO; (2) improving job market; (3) company specific revenue and margin drivers; and (4) the Company’s improving balance sheet. Janney Capital Markets also raised Office Depot’s fair value to $10.00 from $6.00. Unbeknownst to the market, Office Depot’s “improving” balance sheet was, in reality, bolstered by improperly claimed tax benefits. E. February 22, 2011 Annual Report and Press Release 68. On February 22, 2011, Office Depot issued its Annual Report to Stockholders for the fiscal year ended December 25, 2010 (the “2010 Annual Report”), along with an accompanying press release. Office Deport reported total Company sales of $3.0 billion, a 3% decrease compared to the fourth quarter of 2009, and for full-year 2010, Office Depot reported sales of $11.6 billion, or a decrease of 4% compared to full-year 2009. The press release further stated, in part: Case No. 9:11-cv-80364-RYSKAMP The Company reported a net loss, after preferred stock dividends, of $58 million or $0.21 per share in the fourth quarter of 2010, compared to a loss of $77 million or $0.28 per share in the fourth quarter of 2009. • Fourth quarter 2010 results included charges related to actions to: 1) improve future operating performance; 2) change the ownership structure of certain international investments and 3) eliminate non-productive corporate assets and certain costs related to executive severance and retention. • Excluding these charges which total $87 million, net earnings, after preferred stock dividends, were $24 million or $0.09 per share in the fourth quarter of 2010. • Significant tax benefits, from carrying back 2010 tax losses to an earlier tax period, positively impacted earnings in the fourth quarter of 2010. * * * “Our fourth quarter operating results were stronger than we anticipated, excluding the charges,” said Neil Austrian, Office Depot’s Interim Chairman and Chief Executive Officer. “We are taking the necessary steps to improve the future operating performance of this Company.” * * * FULL YEAR RESULTS Full year 2010 sales were $11.6 billion, a decrease of 4% from the prior year. The reported net loss, after preferred stock dividends, for the full year 2010 was $2 million, compared to a loss of $627 million in 2009. The reported loss per share on a diluted basis was $0.01 in 2010, compared to a loss per share of $2.30 in 2009. Adjusted for charges and certain tax benefits, net earnings, after preferred stock dividends, were $30 million or $0.11 per diluted share for full year 2010, compared to a loss of $71 million or $0.26 per diluted share in 2009. The Company recognized additional tax benefits from carrying back 2010 tax losses to an earlier tax period, which positively impacted full year 2010 earnings. 69. The 2010 Annual Report contained required SOX Certifications signed by Austrian and Newman stating that the 10-K did not include any material misrepresentations. The 2010 Annual Report further stated, in part: Case No. 9:11-cv-80364-RYSKAMP The company experienced significant volatility in its effective tax rate throughout 2010 and 2009, in large part because of valuation allowances recorded during 2009 that limit the impact of deferred tax accounting. The 159% effective tax rate for 2010 includes approximately $30 million from favorable tax settlements, $10 million from the release of a European valuation allowance, $9 million tax benefits on the disposition of operating entities in Israel and Japan, as well as a tax accounting method change for repairs and maintenance expenses and the impact of bonus depreciation rules enacted during the fourth quarter of 2010. In addition to the tax settlement and other discrete items, the company recognized significant tax benefits from deductions that will be carried back to an earlier tax period. Because the company has valuation allowances in that jurisdiction, these carryback items impact the 2010 effective tax rate, and are unusual, but will be received as a tax refund. Carryback opportunities will not exist in this jurisdiction for future periods and the company will not be able to recognize originating deferred tax assets until the related valuation allowances are removed. This accounting will likely adversely impact future effective tax rates. * * * CRITICAL ACCOUNTING POLICIES Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these statements requires management to make judgments and estimates. Some accounting policies have a significant impact on amounts reported in these financial statements. A summary of significant accounting policies can be found in Note A of the Notes to Consolidated Financial Statements. We have also identified certain accounting policies that we consider critical to understanding our business and our results of operations and we have provided below additional information on those policies. 70. The highlighted representations above were materially false and misleading. Defendants never disclosed during the entire Class Period that the Company’s election to carry back losses from 2010 to prior periods was in question and could not be approved by the IRS, thus negatively impacting Office Depot’s 2010 financial statements. The financial results reported in Office Depot’s December 25, 2010 Financial Report were materially overstated and false. Specifically, the Company should have reduced its recorded full-year tax benefits by approximately Case No. 9:11-cv-80364-RYSKAMP $79.5 million, which would have resulted in a change from reported net earnings of $33.3 million to a net loss of $46.2 million. F. The February 22, 2011 Conference Call 71. Following issuance of the 2010 Annual Report and press release, Office Depot hosted a conference call to discuss its fourth quarter and full-year 2010 financial results and operations. Austrian and Newman participated in the call on behalf of the Company. During the call, numerous false and misleading statements were made that were designed to artificially inflate the Company’s stock price. For example, Austrian discussed the Company’s significant tax benefits from carrying back 2010 tax losses, and stated in part: The reported results for the fourth quarter of 2010 included actions to improve future operating performance, change the ownership structure of certain international investments, and eliminate nonproductive corporate assets. Excluding these actions and certain costs related to executive severance and retention, fourth-quarter 2010 net earnings after preferred stock dividends were $24 million or $0.09 a share. These results were favorable to the outlook we provided in October due to stronger than anticipated operating results and significant tax benefits from carrying back 2010 tax losses to an earlier tax period that positively impacted earnings in the fourth quarter. * * * Adjusted for charges and certain tax benefits, net earnings after preferred stock dividends for the full year 2010 were $30 million and the diluted earnings per share were $0.11 per share. We recognized additional tax benefits from carrying back 2010 tax losses to an earlier tax period, which positively impacted earnings for the full year 2010. Adjusted for charges and the impact of tax adjustments, the net loss for the full year 2009 was $71 million and the diluted loss per share was $0.26. 72. As the call went on, Newman further discussed the Company’s financial results, and stated in part: Turning to our results, the fourth quarter and full year 2010 tax rates on a reported basis were a benefit of 37% and 159% respectively. The tax benefits Case No. 9:11-cv-80364-RYSKAMP were primarily driven by tax settlements and the Company’s ability to carry back the 2010 tax loss to an earlier period. Because the Company continues to carry a full valuation against deferred tax assets in the US, the carry back of the 2010 tax loss and the resulting cash tax refunds are taken to operations and therefore impacted 2010 effective tax rate. With the completion of the 2010 tax year, the Company has exhausted its ability to carry back tax losses at the US federal level. This combined with the full valuation allowance against deferred tax assets in the US jurisdiction will likely adversely impact future effective tax rates. 73. Discussing the amount of Office Depot’s tax benefit and the Company’s anticipated tax refund in fiscal year 2011, Newman stated: Yes, we have received considerable tax refunds this year that relate to prior periods. To reiterate, if you look at our fourth quarter and total year reported tax rate, we are 37% and 157% respectively. For the current period, the cash tax impact of those rates is relatively small, but we have received refunds from prior periods that are significant and actually in 2010, in excess of $50 million. So we have had benefits this year that relate to prior periods. They are operational in nature. But those benefits that we have received do not relate to the current tax provisions in either Q4 or total year 2010. Does that help? * * * We would expect to see -- and we are not going to call the amount out, but we would expect to see additional cash tax refunds in 2011, yes. And that is factored into the guidance I gave earlier on free cash flow. 74. The representations highlighted above were materially false and misleading. Defendants knew or recklessly disregarded at the time these statements were made that the Company lacked a reasonable basis for claiming tax carry back benefits pursuant to the WHBAA legislation. The Company had no ability to carry back the 2010 tax loss to earlier periods. Indeed, the Company had long since exhausted an ability to “carry back tax losses at the US federal level.” As a result of the foregoing, the Company’s reported financial results discussed during the call were materially false and overstated. Indeed, the tax benefits recognized for the fourth quarter and full year 2010 Case No. 9:11-cv-80364-RYSKAMP were improper and would be clawed back, which would negatively impact, among other things, Office Depot’s diluted earnings per share and 2011 free tax flow. 75. Defendants’ false statements directly misled the market. For example, on February 22, 2011, Oppenheimer issued an analyst report entitled: “Quick Read: Signs of Process?” The reported stated that Office Depot’s “EPS Tops Expectations Primarily on Tax Benefits,” increasing to $0.09 from a loss of $0.06 in the prior year. Janney Capital Markets in a report entitled “It’s Getting Better – Waiting On The Macro” agreed that “[t]he quarter was significantly helped by a tax benefit.” G. The March 31, 2011 Press Release – The Truth is Revealed 76. On March 31, 2011, after the close of trading, Defendants issued a press release announcing that Office Depot would be restating its financial results. The restatement applied to 2010 reported financial results and stemmed from rejection of the Company’s improper attempt to carry back certain tax losses. The press release further stated, in part: [T]he Internal Revenue Service has denied the Company’s claim to carry back certain tax losses to prior tax years under economic stimulus-based tax legislation enacted in 2009, which claim was made after the Company consulted with its tax advisors. As a result, the Company has reassessed the carry back of tax losses in 2010 to prior periods and will restate its financial results to revise the accounting treatment regarding its original tax position. The periods covered by the restatement are the fiscal year ended December 25, 2010 and the quarters ended June 26, 2010 and September 25, 2010. The Company anticipates that it will file the restated financial statements on or about April 6, 2011. The expected impact of correcting the 2010 financial statements is to reduce full-year tax benefits by approximately $80 million, change net earnings for 2010 from $33 million to a net loss of $46 million and increase the net loss attributable to common shareholders from $2 million or $0.01 per share to $82 million or $0.30 per share. Additionally, the $63 million current tax receivable associated with the carry back amount will be removed from the balance sheet at December 25, 2010 and will adversely impact anticipated 2011 operating cash flow. Case No. 9:11-cv-80364-RYSKAMP H. April 1, 2011 Conference Call 77. Following issuance on the press release, on April 1, 2011, Office Depot hosted a conference to discuss the restatement. Newman participated in the call on behalf of the Company. During the call, Newman admitted that Defendants had been “working on this and speaking with [the Company’s] advisors” on the viability of “one-time election to carry back net operating losses five years under the American Recovery and Reinvestment Act of 2009 since the second quarter of 2010.” According to Newman, the entire “mistake” was the result of Office Depot’s status as a 52- 53 week filer, which Newman stated “pushed us out of this window where we could claw back our 2010 tax losses.” Despite knowing enough to restate the Company’s earnings, Newman could not confirm or deny that the Company would hold the tax preparer involved liable. Newman also stated that the restatement put Office Depot in violation of agreements with its lenders and caused the Company to seek a waiver on its debt covenants. Newman further attempted to explain the Company’s tax-related restatement, stating in part: Regarding the restatement, Office Depot originally prepared its 2010 financial statements under the belief and advice of our third-party tax advisor that it qualified for a one-time election to carry back net operating losses five years under the American Recovery and Reinvestment Tax Act of 2009. That legislation applied to tax years beginning before January 1, 2010. Because the Company is on a retail calendar, its 2010 fiscal year began on December 27, 2009, and this carry back provision was considered available to us. However in March 2011, the IRS denied the carry back claim citing other provisions in the tax code that superseded this legislation and put the filing outside of the allowable carry back time horizon. As a result of the denial of this claim, the Company will restate its financial results for the fiscal year ended December 25, 2010 included in its annual report on Form 10-K and its interim financial results filed on Form 10-Q for the quarters ended June 26, 2010 and September 25, 2010 to revise the accounting treatment regarding the carry back of tax provisions in 2010 to prior years. The Company anticipates that the amended financial statements will be filed on or about April 6, 2011. The expected impact of correcting the 2010 financial statements Case No. 9:11-cv-80364-RYSKAMP is to reduce full-year tax benefits of approximately $80 million; to change net earnings for 2010 from $33 million to a net loss of $46 million; and to increase the net loss attributable to common shareholders from $2 million or $0.01 per share to a net loss of $82 million or $0.30 per share. The expected impact to 2010 quarterly periods is a reduction in diluted earnings per share as compared to amounts previously reported in Qs 2 through 4. The bulk of these adjustments will be in Q4. The restatements have no impact on our previously reported 2010 EBIT or EBITDA and no net impact on 2010 cash flows. The Form 8-K was filed with the US Securities and Exchange Commission at 6 a.m. this morning and now I would like to talk about our first-quarter 2010 outlook both as it relates to EBIT and cash flow. * * * Had expected Q1 to be softer than prior year as a result of sales volume, reinvestments we are making back into key business initiatives, restructuring benefits, as well as paper cost increases in ink and toner pricing in Europe. Q1’s free cash flow is estimated to be a use of over $100 million, excluding the $60 million IRS cash refund shortfall, the Q1 free cash flow use was in line with our expectations and was principally driven by higher inventories, the timing of accounts payable, the normal payment of year-end accruals, and compensation-related items and restructuring activities. * * * For 2011 free cash flow, our previous guidance was $50 million for the year which had assumed a $60 million cash refund from the IRS. We do still expect 2011 free cash flow to be positive as we plan to offset some of the shortfall resulting from the IRS denial of the tax claim with other actions. 78. During the question and answer portion of the call, Newman commented on whether there were any material weaknesses in the Company’s controls or procedures, as well as the implications of any discovered material weaknesses. Newman also discussed the potential liability for bad advice from the Company’s external tax counsel, stating: Yes, we probably need a few more days before we would even be prepared to talk about that. You know, the gist of this is that when you have something like this of this magnitude, the first reaction, it is a material weakness. But at the same point in time when you look at the fact set, we are spending time really understanding how it came about and we’re working through this internally. Case No. 9:11-cv-80364-RYSKAMP This is just a tax issue. I don’t want to belittle it. We take this very seriously. It hasn’t impacted our EBIT, our EBITDA, or our cash flow, which is the metrics that we focus on. I am sick about it. It’s my responsibility. But we will -- I think from the standpoint of whether it’s material or not will just be a disclosure that we will make and then we will have internal process adjustments we’ll need to make to respond to it. * * * You know, I don’t want to go there, but I will say that we spent -- this restatement goes back to Q2 of 2010. So we have been working on this and speaking with our advisers on this since the second quarter of 2010. We got input from them. It was a mistake. It was a misread of statutes and how it applied to us being a 52, 53 week filer and as a result pushed us out of this window where we could claw back our 2010 tax losses. So at this point in time, I am interested in making sure we get the information out, making sure we get the investors understanding what happened. We will address the material weaknesses and everything else going forward. 79. In response to news of the restatement and the revelation of Office Depot’s true financial condition, the price of Office Depot common stock dropped sharply, falling 9%, or $0.42 per share, from a closing price of $4.63 on March 31, 2011, to close at $4.21 per share on April 1, 2011, on heavy trading volume, as set forth in the chart below: Case No. 9:11-cv-80364-RYSKAMP 4.8 35000000 4.7 30000000 4.6 25000000 4.5 20000000 Volume Price 4.4 15000000 4.3 10000000 4.2 5000000 0 3/30/11 3/31/11 4/1/11 4/4/11 4.1 80. On April 1, 2011, Forbes reported that Office Depot was pulling down its entire sector, stating its “[s]hares are trading down about 13.4% Friday” while “Rival Staples is trading down over .7%, while OfficeMax trades down over 3.6%.” MarketWatch also reported that “Office Depot drags down retail index,” reporting that while “[m]ost retailers’ stocks rose Friday after the Labor Department said the U.S. unemployment rate dipped in March, … a sharp drop in Office Depot Inc.’s shares helped to pull down the sector’s benchmark.” Benzinga reported that Office Depot was “one of the worst performers on the New York Stock Exchange.” 81. The true facts, which were known by the Defendants, but concealed from the market during the Class Period, were as follows: (a) The $80 million in carry back tax “benefits” Office Depot recognized during the Class Period for the second, third, and fourth quarter of 2010 were not permitted; (b) The $63 million in current tax receivables associated with the carry back amount should not have been reported on the Company’s balance sheet at December 25, 2010; Case No. 9:11-cv-80364-RYSKAMP (c) Office Depot’s financial results were not reported in compliance with GAAP during the Class Period; (d) Office Depot’s financial statements overstated the Company’s assets and profits in violation of GAAP throughout the Class Period; (e) The Company’s internal controls were inadequate to prevent it from improperly inflating the value of its earnings and assets throughout the Class Period; and (f) Defendants overstated Office Depot’s business and financial metrics during the Class Period. 82. As a result of Defendants’ false and misleading statements, Office Depot’s stock traded at artificially inflated levels during the Class Period. When the restatement came to light and Office Depot’s true financial condition was revealed, Office Depot’s stock price fell by nearly 31% from its Class Period high of $6.10 on January 5, 2011, to close at $4.21 per share on April 1, 2011. This drop removed the inflation of Office Depot’s stock price, causing real economic loss to investors who had purchased the stock at artificially inflated prices during the Class Period. ADDITIONAL SCIENTER ALLEGATIONS 83. The Individual Defendants were privy to confidential and proprietary information concerning Office Depot, its operations, finances, financial condition, and present and future business prospects. The Individual Defendants also had access to material adverse non-public information concerning Office Depot, as discussed in detail below. Because of their positions with Office Depot, the Individual Defendants had access to non-public information about its business, finances, products, markets and present and future business prospects via access to internal corporate documents, conversations and connections with other corporate officers and employees, attendance Case No. 9:11-cv-80364-RYSKAMP at management and board of directors meetings and committees thereof and via reports and other information provided to them in connection therewith. Because of their possession of such information, the Individual Defendants knew or were severely reckless in disregarding the fact that adverse facts specified herein had not been disclosed to, and were being concealed from (in order to mislead), the investing public. 84. Throughout the Class Period, the Individual Defendants were able to, and did, control the contents of the Company’s SEC filings, reports, press releases, and other public statements. The Individual Defendants were provided with copies of, reviewed and approved, and/or signed such filings, reports, releases, and other statements prior to or shortly after their issuance and had the ability and opportunity to prevent their issuance or to cause them to be corrected. The Individual Defendants were also able to, and did, directly or indirectly, control the conduct of Office Depot’s business, the information contained in its filings with the SEC, and its public statements. Moreover, the Individual Defendants made or directed the making of affirmative statements to the investing public, and participated in meetings, conference calls, and discussions concerning such statements. Each of 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 that were being made were then false and misleading. As a result, each of the Individual Defendants is responsible for the accuracy of Office Depot’s corporate releases detailed herein and is therefore responsible and liable for the misrepresentations and omissions contained therein. 85. The Individual Defendants are liable as direct participants and co-conspirators with respect to the wrongs complained of herein. In addition, the Individual Defendants, by reason of their status as senior executive officers and/or directors, were “controlling persons” within the Case No. 9:11-cv-80364-RYSKAMP meaning of §20 of the Exchange Act and had the power and influence to cause the Company to engage in the unlawful conduct complained of herein. Because of their positions of control, the Individual Defendants were able to and did, directly or indirectly, control the conduct of Office Depot’s business. 86. The Individual Defendants, because of their positions with the Company, controlled and/or possessed the authority to control the contents of its reports, press releases and presentations to the investing public. 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. Thus, the Individual Defendants had the opportunity to commit the fraudulent acts alleged herein. 87. As senior executive officers and/or directors and controlling persons of a publicly traded company whose common stock and other securities were, and are, registered with the SEC pursuant to the Exchange Act, and whose shares traded on the New York Stock Exchange (“NYSE”) and governed by the federal securities laws, the Individual Defendants had a duty to disseminate promptly accurate and truthful information with respect to Office Depot’s financial condition and performance, growth, operations, financial statements, business, products, markets, management, earnings and present and future business prospects, to correct any previously issued statements that had become materially misleading or untrue, so that the market price of Office Depot’s common stock would be based upon truthful and accurate information. The Individual Defendants’ misrepresentations and omissions during the Class Period violated these specific requirements and obligations. Case No. 9:11-cv-80364-RYSKAMP 88. The Individual Defendants are liable as primary participants in a fraudulent scheme and wrongful course of business which operated as a fraud or deceit on purchasers of Office Depot common stock by disseminating materially false and misleading statements and/or concealing material adverse facts. The fraudulent scheme employed by the Individual Defendants was a success, as it: (i) deceived the investing public regarding Office Depot’s prospects and business; (ii) artificially inflated the price of Office Depot common stock; and (iii) caused Plaintiff and other members of the Class to purchase Office Depot common stock at inflated prices (which artificial inflation came out of the stock when the relevant truth regarding the true financial condition of Office Depot was revealed). 89. As alleged herein, Defendants acted with scienter in that they knew or disregarded with severe recklessness that the public documents and statements, issued or disseminated in the name of the Company, 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. As set forth elsewhere herein in detail throughout this complaint, Defendants, by virtue of their receipt of information reflecting the true facts regarding Office Depot, their control over, and/or receipt and/or modification of Office Depot’s allegedly materially misleading misstatements and/or their associations with the Company which made them privy to confidential proprietary information concerning Office Depot, participated in the fraudulent scheme alleged herein. 90. Defendants knew and/or disregarded with severe recklessness the falsity and misleading nature of the information that they caused to be disseminated to the investing public. The Case No. 9:11-cv-80364-RYSKAMP ongoing fraudulent scheme described in this complaint could not have been perpetrated over a substantial period of time, as has occurred, without the knowledge and complicity of the personnel at the highest level of the Company, including each of the Individual Defendants. APPLICABILITY OF PRESUMPTION OF RELIANCE: FRAUD ON THE MARKET DOCTRINE 91. At all relevant times, the market for Office Depot common stock was an efficient market for the following reasons, among other things: (a) Office Depot stock met the requirements for listing, and were listed and actively traded on the NYSE, a highly efficient and automated market; (b) As a regulated issuer, Office Depot filed periodic public reports with the SEC; (c) Office Depot regularly communicated with public investors via established market communication mechanisms, including through regular disseminations 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. 92. As a result, the market for Office Depot common stock promptly digested current information regarding Office Depot from all publicly-available sources and reflected such information in the price of Office Depot stock. Under these circumstances, all purchasers of Office Depot common stock during the Class Period suffered similar injury through their purchase of Office Depot common stock at artificially inflated prices and a presumption of reliance applies. LOSS CAUSATION 93. During the Class Period, as detailed herein, Defendants engaged in a scheme to deceive the market and a course of conduct that artificially inflated Office Depot’s stock price Case No. 9:11-cv-80364-RYSKAMP throughout the Class Period. These acts and omissions operated as a fraud or deceit on Class Period purchasers of Office Depot stock by misrepresenting the Company’s business success and future business prospects, including, but not limited to, misrepresentations regarding Office Depot’s specific financial condition, including its earnings, income tax rates, tax-related receivables, and free cash flow. 94. As a result of Defendants’ fraudulent conduct, the prices at which Office Depot stock traded were artificially inflated during the Class Period. When Plaintiff and other members of the Class purchased their Office Depot securities, the true value of such securities was substantially lower than the prices actually paid by Plaintiff and the other members of the Class. 95. By misrepresenting the success of the Company’s business and concealing its improprieties, Defendants presented a misleading picture of Office Depot’s financial condition and future business prospects. These misleading financial results caused and maintained the artificial inflation in Office Depot’s stock price throughout the Class Period until the truth was revealed to the market, as described herein. 96. As a result of Defendants’ materially false and misleading statements and documents, as well as the adverse, undisclosed information known to the Defendants, Plaintiff and other members of the Class relied, to their detriment, on such statements and documents, and/or the integrity of the market, in purchasing their Office Depot stock at artificially inflated prices during the Class Period. Had Plaintiff and the other members of the Class known the truth, they would not have taken such actions. 97. As explained herein, Defendants’ materially false statements directly or proximately caused, or were a substantial contributing cause of, the damages and economic loss suffered by Case No. 9:11-cv-80364-RYSKAMP Plaintiff and other members of the Class. These statements served to maintain the artificial inflation in Office Depot’s stock price throughout the Class Period and until the truth leaked into and was revealed to the market, at which time the prior inflation came out of the stock. 98. Defendants’ false and misleading statements had their intended effect and directly and proximately caused, or were a substantial contributing cause of, Office Depot’s stock trading at artificially inflated levels, reaching as high as $6.10 per share on January 5, 2011. 99. Nevertheless, the market’s expectations were ultimately corrected on March 31, 2011, when Defendants revealed Office Depot’s shocking restatement of its financial results. This disclosure had a significant effect on the price of Office Depot common stock, as it fell by 9% to close at $4.21 per share, on April 1, 2011. The cumulative impact of this decline was that the price of Office Depot stock fell 31% from its Class Period high, causing substantial harm to investors who suffered hundreds of millions of dollars in losses as the artificial inflation generated by Defendants’ fraud was removed. 100. The timing and magnitude of the decline in Office Depot common stock negate any inference that the losses suffered by Plaintiff and other Class members were caused by changed market conditions, macroeconomic or industry factors, or Company-specific facts unrelated to the Defendants’ fraudulent conduct. The economic loss, i.e., damages, suffered by Plaintiff and other members of the Class was a direct result of Defendants’ fraudulent scheme to artificially inflate the price of Office Depot common stock and its subsequent decline in value as Defendants’ prior misrepresentations and other ongoing fraudulent conduct were revealed, market expectations were corrected, and the artificial inflation came out of the price of Office Depot common stock. Case No. 9:11-cv-80364-RYSKAMP 101. In addition, the decline in price of Office Depot common stock was a natural and probable consequence of Defendants’ fraud and should have been foreseen by Defendants in light of the attending circumstances. The market reactions to the disclosure of Office Depot’s true financial condition were foreseeable to Defendants and well within the “zone of risk” concealed by Defendants’ fraudulent conduct. NO SAFE HARBOR 102. The federal statutory safe harbor provision, which provides 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, Defendants are 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 executive officer of Office Depot who knew that those statements were false when made. Moreover, to the extent that Defendants issued any disclosures designed to “warn” or “caution” investors of certain “risks,” those disclosures were also false and misleading since they did not disclose that Defendants were actually engaging in the very actions about which they purportedly warned and/or had actual knowledge of material adverse facts undermining such disclosures. Case No. 9:11-cv-80364-RYSKAMP COUNT 1: FOR VIOLATIONS OF SECTION 10(b) OF THE EXCHANGE ACT AND RULE 10b-5 PROMULGATED THEREUNDER AGAINST ALL DEFENDANTS 103. Plaintiff repeats and realleges the allegations set forth above as though fully set forth herein. This claim is asserted against all Defendants. 104. During the Class Period, Office Depot and the Individual Defendants, and each of them, carried out a plan, scheme and course of conduct which was intended to and, throughout the Class Period, did: (i) deceive the investing public, Plaintiff and other Class members, as alleged herein; (ii) artificially inflate and maintain the market price of Office Depot common stock; and (iii) cause Plaintiff and other members of the Class to purchase Office Depot stock at artificially inflated prices. In furtherance of this unlawful scheme, plan and course of conduct, Office Depot and the Individual Defendants, and each of them, took actions set forth herein. 105. These 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 operate as a fraud and deceit upon the purchasers of the Company’s securities in an effort to maintain artificially high market prices for Office Depot common stock in violation of §10(b) of the Exchange Act and Rule 10b-5. These Defendants are sued as primary participants in the wrongful and illegal conduct charged herein. The Individual Defendants are also sued as controlling persons of Office Depot, as alleged below. 106. In addition to the duties of full disclosure imposed on Defendants as a result of their making affirmative statements and reports, or participating in the making of affirmative statements and reports, or participating 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 Case No. 9:11-cv-80364-RYSKAMP 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 operational performance, so that the market prices of the Company’s common stock would be based on truthful, complete and accurate information. 107. Office Depot and each of 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 the business, performance, and future prospects of Office Depot as specified 108. These Defendants each 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 Office Depot’s value, performance, and financial condition, which included the making of, or the participation in the making of, untrue statements of material facts and omitting to state necessary facts in order to make the statements made about Office Depot 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 and a course of conduct which operated as a fraud and deceit upon the purchasers of Office Depot common stock during the Class Period. 109. Each of the Individual Defendants’ primary liability, and controlling person liability, arises from the following facts: a) each of the Individual Defendants was a high-level executive and/or director at the Company during the Class Period; b) each of the Individual Defendants, by Case No. 9:11-cv-80364-RYSKAMP 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 financial performance, projections and/or reports; and c) each of the Individual Defendants was aware of the Company’s dissemination of information to the investing public which each knew or disregarded with severe recklessness was materially false and misleading. 110. Each of these Defendants had actual knowledge of the misrepresentations and omissions of material facts set forth herein, or acted with severely reckless disregard for the truth in that each failed to ascertain and to disclose such facts, even though such facts were available to each of them. Such Defendants’ material misrepresentations and/or omissions were done knowingly or with severe recklessness and for the purpose and effect of concealing Office Depot’s operating condition and future business prospects from the investing public and supporting the artificially inflated price of its securities. As demonstrated by Defendants’ misstatements of the Company’s financial condition and performance throughout the Class Period, each of the Individual Defendants, if he did not have actual knowledge of the misrepresentations and omissions alleged, was severely reckless in failing to obtain such knowledge by deliberately refraining from taking those steps necessary to discover whether those statements were false and misleading. 111. 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 prices of Office Depot common stock were artificially inflated during the Class Period. In ignorance of the fact that market prices of Office Depot common stock 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 trade, and/or on the absence of material adverse information that was known to or Case No. 9:11-cv-80364-RYSKAMP disregarded with severe recklessness by Defendants but not disclosed in public statements by Defendants during the Class Period, Plaintiff and the other members of the Class acquired Office Depot stock during the Class Period at artificially high prices and were damaged thereby, as evidenced by, among others, the stock price decline on or about April 1, 2011, when the artificial inflation was released from Office Depot stock. 112. 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, future prospects and intrinsic value of Office Depot, which were not disclosed by Defendants, Plaintiff and other members of the Class would not have purchased or otherwise acquired their Office Depot common stock during the Class Period, or they would not have done so at the artificially inflated prices which they paid. 113. By virtue of the foregoing, Office Depot and the Individual Defendants have each violated §10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder. 114. 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, as evidenced by, among others, the stock price decline on or about April 1, 2011, when the artificial inflation was released from Office Depot stock. COUNT II: FOR VIOLATIONS OF SECTION 20(a) OF THE EXCHANGE ACT AGAINST THE INDIVIDUAL DEFENDANTS 115. Plaintiff repeats and realleges the allegations set forth above as though fully set forth herein. This claim is asserted against the Individual Defendants. Case No. 9:11-cv-80364-RYSKAMP 116. Each of the Individual Defendants acted as a controlling person of Office Depot within the meaning of §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 fraudulent marketing and promotions and actual performance, each of 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. 117. 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 alleged herein, and exercised the same. 118. As set forth above, Office Depot 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, each of the Individual Defendants is liable pursuant to §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 stock during the Class Period, as evidenced by, among others, the stock price decline on or about April 1, 2011, when the artificial inflation was released from Office Depot stock. Case No. 9:11-cv-80364-RYSKAMP WHEREFORE, Plaintiff prays for relief and judgment, as follows: a. Determining that this action is a proper class action and designating Lead Plaintiff as a class representative 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. Case No. 9:11-cv-80364-RYSKAMP DATED: September 6, 2011 ROBBINS GELLER RUDMAN & DOWD LLP s/Robert J. Robbins ROBERT J. ROBBINS DAVID J. GEORGE Florida Bar No. 0898570 [email protected] ROBERT J. ROBBINS Florida Bar No. 0572233 [email protected] BAILIE L. HEIKKINEN Florida Bar No. 0055998 [email protected] 120 E. Palmetto Park Road, Suite 500 Boca Raton, FL 33432-4809 Telephone: 561/750-3000 561/750-3364 (fax) Lead Counsel for Plaintiff CAVANAGH & O’HARA JOHN T. LONG 407 East Adams Street Springfield, IL 62701 Telephone: 217/544-1771 217/544-9894 (fax) Additional Counsel for Plaintiff Case No. 9:11-cv-80364-RYSKAMP CERTIFICATE OF SERVICE I HEREBY CERTIFY that on September 6, 2011, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system. The electronic case filing system sent a “Notice of Electronic Filing” to the attorneys of record who have consented in writing to accept this notice as service of this document by electronic means. s/ Robert J. Robbins___________________ ROBERT J. ROBBINS

securities

S82QDocBD5gMZwczz-9_

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF PENNSYLVANIA 1:20-cv-214 Krystal Minich, individually and on behalf of all others similarly situated, C.A. No: Plaintiff, CLASS ACTION COMPLAINT DEMAND FOR JURY TRIAL -v.- Midland Credit Management, Inc., and John Does 1-25, Defendant(s). COMPLAINT Plaintiff Krystal Minich (hereinafter “Plaintiff”) brings this Class Action Complaint by and through her attorneys, Zukowsky Law LLC against Defendant Midland Credit Management, Inc. (hereinafter “Defendant MCM”) 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 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." 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 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 Pennsylvania 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 Pennsylvania, County of McKean, and resides at 1109 High Street, Bradford, PA 16701. 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, Corporation Service Company, at 80 State Street, Albany, NY 12207. 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 alleged to be due another. 13. John Does l-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 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 Pennsylvania; b. to whom Defendant MCM sent an initial collection letter attempting to collect a consumer debt; c. containing deceptively worded settlement offers; d. 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 communications to consumers, in the forms attached as Exhibit A, violate 15 U.S.C. §§ 1692e. 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 her 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 communications to consumers, in the forms attached as Exhibit A violate 15 U.S.C. § 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 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. 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 August 3, 2019, 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. 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 debt contracted with the Defendant MCM to collect the alleged debt. Violation – August 3, 2019 Collection Letter 25. On or about August 3, 2019, Defendant MCM sent the Plaintiff a collection letter (the “Letter”) regarding the alleged debt owed to Synchrony Bank See a true and correct copy of the Letter attached at Exhibit A. 26. The letter states a current balance of $821.33 and gives three payment options: 1) Save 10% - Pay 1 payment of $739.20 2) Save 5% - Pay 6 consecutive monthly payments of $130.04 3) Pay $50 per month – Payments as low as $50 per month. 27. The third option provided by Defendant is not adequately explained and results in two different possible interpretations. 28. First, Option 3 might be construed to be an option where a discounted amount is being paid in monthly payments of $50 a month. 29. Second, Option 3 might be construed to be an option where monthly payments of $50 would be made until the debt is paid off. 30. In addition, if Option 3 means that the $50 payment would be made until the debt is fully paid off, the letter is deceptive because it describes all three options as “a discount program designed to save you money.” If the debt is being paid in full under Option 3, it is not a discount program and therefore the letter is deceptive. 31. By failing to explain whether Option 3 is a settlement option or a full pay option, the Letter is false, deceptive and misleading. 32. As a result of Defendants’ 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. 33. 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. 34. Defendants’ 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. 35. 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. 36. Defendant violated §1692e: f. As the Letter it is open to more than one reasonable interpretation, at least one of which is inaccurate in violation of §1692e(2). g. By making a false and misleading representation in violation of §1692e(10). 37. 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 38. 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 Krystal Minich, 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 Amichai Zukowsky, 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. Respectfully Submitted, By:/s/ Amichai Zukowsky Amichai E. Zukowsky Attorney for Plaintiff Amichai E. Zukowsky, Esq. Zukowsky Law, LLC 23811 Chagrin Blvd, Suite 160 Beachwood, OH 44122 Phone: 216.800.5529 Email: [email protected]

consumer fraud

DvkAFIcBD5gMZwczprSL

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION BEATRIZ ROMERO, Individually and On Behalf of All Others Similarly Situated, Plaintiff, No._________________ JURY TRIAL DEMANDED SKY SECURITY SERVICES TEXAS, INC., Defendant. § § § § § § § § § § § § § § PLAINTIFF’S ORIGINAL COMPLAINT TO THE HONORABLE JUDGE OF SAID COURT: COMES NOW Plaintiff Beatriz Romero (referred to as “Plaintiff”) bringing this collective action and lawsuit on behalf of herself and all other similarly situated employees to recover unpaid regular and overtime wages from Defendant Sky Security Services, Inc. (referred to as “Defendant”). In support thereof, she would respectfully show the Court as follows: I. NATURE OF SUIT 1. The Fair Labor Standards Act (“FLSA”) is designed to eliminate “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well-being of workers … .” 29 U.S.C. § 202(a). To achieve its humanitarian goals, the FLSA defines appropriate pay deductions and sets overtime pay, minimum wage, and record keeping requirements for covered employers. 29 U.S.C. §§ 206(a), 207(a), 211(c). 2. Defendant violated the FLSA by failing to pay its nonexempt employees at one and one-half times their regular rates of pay for hours worked in excess of forty (40) hours per each seven (7) day workweek. 3. Plaintiff brings this collective action under section 216(b) of the FLSA on behalf of herself and all other similarly situated employees in order to recover unpaid regular and overtime wages. II. JURISDICTION AND VENUE 4. Plaintiff’s claims arise under the FLSA. 29 U.S.C. §§ 201-219. Accordingly, this Court has jurisdiction over the subject matter of this action pursuant to 29 U.S.C. § 216(b) and 28 U.S.C. § 1331. 5. Venue is proper in this district and division pursuant to 28 U.S.C. § 1391(b)(1), (2) because Defendant resides in the Houston Division of the Southern District of Texas and/or a substantial part of the events or omissions giving rise to the claim occurred in the Houston Division of the Southern District of Texas. III. THE PARTIES 6. Plaintiff Beatriz Romero is a resident of Harris County, Texas and was employed by Defendant within the meaning of the FLSA during the three (3) year period preceding the filing of this action. In performing her duties, Romero was engaged in commerce or in the production of goods for commerce. Romero regularly worked in excess of forty (40) hours per week. However, Romero did not receive overtime pay for hours worked in excess of forty (40) at a rate of time and one-half as required by the FLSA. 7. Defendant Sky Security Services Texas Inc. is a Texas corporation that may be served with process by serving its registered agent, Corporation Service Company d/b/a CSC-Lawyers Incorporating Service Company, at 211 E. 7th Street, Suite 620, Austin, Texas 78701. 8. Whenever in this Complaint it is alleged that Defendant committed any act or omission, it is meant that the Defendant’s officers, directors, vice-principals, agents, servants or employees 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 and normal course and scope of employment of the Defendant’s officers, directors, vice-principals, agents, servants or employees. IV. FACTS 9. Defendant owns and operates a private security company that operates in the territorial jurisdiction of this Court. 10. From approximately August 2012 through October 2012, Romero was employed by Defendant as a security guard. 11. Security guards, including Romero, are responsible for (i) patrolling residential premises to prevent and detect signs of intrusion and ensure security of doors, windows, and gates; (ii) answer alarms and investigate disturbances; (iii) monitor and authorize entrance and departure of residents, visitors, and other persons to guard against theft and maintain security of premises; (iv) write reports of daily activities and irregularities, such as equipment or property damage, theft, presence of unauthorized persons, or unusual occurrences; (v) call police or fire departments in cases of emergency, such as fire or presence of unauthorized persons; and (vi) circulate among visitors, residents, and other persons to preserve order and protect property. 12. Security guards, including Romero, regularly work in excess of forty (40) hours per week. 13. Defendant does not pay security guards, including Romero, at one and one- half times their regular rates of pay for hours worked in excess of forty (40) hours per each seven (7) day workweek as required by the FLSA. 14. Instead, Defendant pays security guards, including Romero, at their regular rate (or at some other rate less than one and one-half times their regular rate) for hours worked in excess of forty (40) hours per week. 15. On information and belief, these same illegal pay practices were applied to all employees of Defendant who were compensated in the same or similar manner to that of Plaintiff. V. PLAINTIFF’S INDIVIDUAL ALLEGATIONS A. Defendant Failed to Properly Compensate Plaintiff for All Hours Worked and at the Rate of Time and One-Half for All Overtime Hours. 16. On information and belief, Plaintiff was a nonexempt employee under the guidelines of the FLSA. 17. As a nonexempt employee, Plaintiff was legally entitled to be paid at one and one-half times her “regular rate” for all hours worked in excess of forty (40) during each seven (7) day workweek. 29 U.S.C. § 207(a). 18. Defendant failed to pay Plaintiff for all hours worked in excess of forty (40) at one and one-half times her regular rate. 19. Instead, Defendant paid Plaintiff at her regular rate (or at some other rate less than one and one-half times her regular rate) for all hours worked in excess of forty (40) each workweek. 20. As a result, Plaintiff was regularly “shorted” on her paycheck by not being paid at a rate of time and one-half for hours worked in excess of forty (40). 21. In the event that Defendant classified Plaintiff as exempt from overtime, Plaintiff was misclassified, as no proper exemption enumerated within the guidelines of the FLSA excused Defendant from appropriately paying Plaintiff full overtime wages for hours worked in excess of forty (40) hours during each seven (7) day workweek, as is specifically required by the FLSA. 22. Rather, Defendant knowingly, willfully, and with reckless disregard, carried out its illegal pattern and practice of failing to pay Plaintiff proper overtime wages. B. Defendant Failed to Keep Accurate Records of Time Worked. 23. The FLSA requires employers to keep accurate records of hours worked by nonexempt employees. 29 U.S.C. § 211(c). 24. In addition to the pay violations of the FLSA identified above, Defendant also failed to keep proper time records as required by the FLSA. C. Defendant’s Illegal Actions Were and Are Willful Violations of the FLSA. 25. The illegal pattern or practice on the part of Defendant with respect to compensation and failure to maintain accurate time records are direct violations of the FLSA. 26. No exemption excuses Defendant from failing to pay Plaintiff at her proper overtime rate of time and one-half for all hours worked in excess of forty (40). 27. Defendant has not made a good faith effort to comply with the FLSA. 28. Rather, Defendant knowingly, willfully and with reckless disregard carried out an illegal pattern or practice regarding overtime compensation and the payment of wages to Plaintiff. VI. COLLECTIVE ACTION ALLEGATIONS 29. Plaintiff re-alleges and incorporates by reference all of the facts set forth in the above sections of this Complaint. 30. On information and belief, other employees have been victimized by Defendant’s patterns, practices and policies identified above in violation of the FLSA. 31. These employees are similarly situated to Plaintiff because, during the relevant time period, they held similar positions, were compensated in a similar manner and were denied payment for all hours worked at the minimum wage and overtime wages at a rate of time and one-half for hours worked in excess of forty (40). 32. Defendant’s patterns or practices of failing to pay the minimum wage and overtime compensation are generally applicable policies or practices and do not depend on the personal circumstances of the Members of the Class. 33. Since, on information and belief, Plaintiff’s experiences are typical of the experiences of the Members of the Class, collective action treatment is appropriate. 34. All employees of Defendant, regardless of their rate of pay, who were not paid at their proper overtime rate for hours worked in excess of forty (40) are similarly situated. Although the issue of damages may be individual in character, there is no detraction from the common nucleus of liability facts. The Class is therefore properly defined as: All current and former security guards or any other employee who: (1) worked at any business located in the United States that was owned, operated, and/or acquired by Defendant during the class period; (2) claim they were misclassified as exempt from overtime compensation or was an hourly employee and now seek payment for overtime hours worked; and/or (3) were compensated on any basis where they were not properly paid at a rate of time and a half for hours worked in excess of forty (40). 35. Plaintiff has retained counsel well versed in FLSA collective action litigation who is prepared to litigate this matter vigorously on behalf of Plaintiff and any other Members of the Class. VII. CAUSE OF ACTION—FAILURE TO PAY WAGES 36. Plaintiff re-alleges and incorporates by reference all of the facts set forth in the above-sections of this Complaint. 37. Defendant’s practice of failing to pay its nonexempt employees at the minimum wage for all hours worked and overtime compensation at one and one-half times their regular rate for all hours worked in excess of forty (40) is in direct violation of the FLSA. 29 U.S.C. §§ 206(a), 207(a). 38. Defendant violated the FLSA as well as the Texas Labor Code by failing to pay Plaintiff her full and proper compensation. 39. Plaintiff is entitled to payment for all hours worked in excess of forty (40) in an amount that is one and one-half times her regular rate of pay. 40. Plaintiff is entitled to liquidated damages in an amount equal to her unpaid regular and overtime wages as a result of Defendant’s failure to comply with the guidelines of the FLSA. VIII. JURY REQUEST 41. Plaintiff requests a trial by jury. IX. PRAYER 42. WHEREFORE, Plaintiff and all similarly situated employees who join this action respectfully request this Court: a. Authorize the issuance of notice at the earliest possible time to all Defendant’s employees who were employed during the three (3) years immediately preceding the filing of this lawsuit, informing them of their rights to participate in this lawsuit if they should so desire; b. Declare Defendant have violated the overtime provisions of the FLSA as to Plaintiff and all those similarly situated; c. Declare Defendant’s violations of the FLSA to be willful; d. Award Plaintiff and all those similarly situated damages for the amount of unpaid overtime compensation, subject to proof at trial; e. Award Plaintiff and all those similarly situated an equal amount as liquidated damages, as specifically permitted under the guidelines of the FLSA; f. Award attorneys’ fees both for this cause and for any and all appeals as may be necessary; g. Award expert witness fees incurred by Plaintiff in the preparation and prosecution of this action; h. Award postjudgment interest as allowed by law; i. Award costs of court and costs of prosecuting Plaintiff’s claims; and j. Award such other and further relief to which Plaintiff may be justly entitled. Respectfully submitted, MOORE & ASSOCIATES By: /s/ Melissa Moore Melissa Moore State Bar No. 24013189 Federal Id. No. 25122 Curt Hesse State Bar No. 24065414 Federal Id. No. 968465 Lyric Center 440 Louisiana Street, Suite 675 Houston, Texas 77002 Telephone: (713) 222-6775 Facsimile: (713) 222-6739 ATTORNEYS FOR PLAINTIFF

securities

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS Class Action Jury Trial Demanded TINA PICONE, on behalf of herself and all others similarly situated, Plaintiff, v. SHIRE U.S., INC.; SHIRE, LLC, ACTAVIS ELIZABETH LLC, ACTAVIS INC., and JOHN DOES 1-100; ABC CORPS 1-100, inclusive, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) CLASS ACTION COMPLAINT TABLE OF CONTENTS PAGE I. NATURE OF ACTION ......................................................................................................... 1 II. PARTIES ............................................................................................................................... 5 III. JURISDICTION .................................................................................................................... 6 IV. FACTUAL ALLEGATIONS ................................................................................................ 7 A. Intuniv Was a Significant Source of Shire Revenue ..................................................... 7 B. Hatch-Waxman Background ......................................................................................... 8 C. Intuniv’s Hatch-Waxman Exclusivity and Patent Portfolio ........................................ 10 D. Generic Challenge to Intuniv ...................................................................................... 12 E. Shire’s Objectively Baseless Assertion of the ‘290 Method-of-Use Patent ............... 14 F. Shire’s Weak Litigation Position Regarding the ‘599 and ‘794 Extended Release Formulation Patents .................................................................................................... 16 G. Shire Makes Anchen Shire’s Authorized Generic at an Unreasonably Low Non-Arm’s Length Royalty ........................................................................................ 18 H. Shire and Actavis Enter an Anticompetitive Settlement, Which Delayed Generic Intuniv By Nearly Two Years ..................................................................................... 22 I. Effect on Interstate Commerce, Market Power and Competition ............................... 26 J. Factual Allegations as to Named Plaintiff .................................................................. 28 K. Fraudulent Concealment and Tolling .......................................................................... 28 V. CLASS ALLEGATIONS .................................................................................................... 30 A. Class Definition .......................................................................................................... 30 B. Fed. R. Civ. P. 23(a) Factors ....................................................................................... 31 C. Fed. R. Civ. P. 23(b)(2) Factors .................................................................................. 32 D. Fed. R. Civ. P. 23(b)(3) Factors .................................................................................. 33 VI. CAUSES OF ACTION ........................................................................................................ 34 A. First Cause of Action: Unreasonable Restraint of Trade Under State Law (premised on Section 1 of the Sherman Act) (against all Defendants) ....................... 34 B. Second Cause of Action: Unlawful Monopoly Under State Law (premised on Section 2 of the Sherman Act) (against Shire) ...................................... 37 C. Third Cause of Action: Unlawful Attempted Monopolization Under State Law (premised on Section 2 of the Sherman Act) (against Shire) ...................................... 40 D. Fourth Cause of Action: Unlawful Conspiracy to Monopolize Under State Law (premised on Section 2 of the Sherman Act) (against all Defendants) ....................... 43 E. Fifth Cause of Action: Violation of State Consumer Protection and Antitrust Law (not premised on violations of Sherman Act) (against all Defendants) ...................... 45 VII. PRAYER FOR RELIEF ...................................................................................................... 47 Plaintiff, Tina Picone, individually and on behalf of all others similarly situated (the “Class”), brings this action against Defendants Shire LLC and Shire U.S., Inc. (collectively, “Shire”), and Actavis Elizabeth LLC and Actavis Inc. (collectively, “Actavis”) and allege, based on personal knowledge, investigation of counsel, and information and belief as to all other matters, as follows: I. NATURE OF ACTION 1. This is a putative class action comprised of consumer indirect purchasers of Intuniv® (“Intuniv”), the popular branded once-daily, extended-release formulation of the prescription medication guanfacine hydrochloride (guanfacine) prescribed for pediatric and adolescent patients to treat attention deficit hyperactivity disorder (“ADHD”). Shire delayed generic entry of Intuniv for approximately two (2) years through sham patent litigation against generic guanfacine manufacturers and by entering into anticompetitive reverse payment settlement agreements with Actavis. As a result, Shire and Actavis, individually and collectively, were able to retain tens of millions of dollars in anticompetitive profits at the expense of consumers. 2. Shire manufactures and sells Intuniv, which is a non-stimulant (thus non-DEA scheduled) branded ADHD medication that was first approved by the Food and Drug Administration (“FDA”) on September 2, 2009. 3. The active ingredient of Intuniv – guanfacine hydrochloride – was first introduced to the market in 1986 under the brand name Tenex® (“Tenex”) as a new molecular entity (“NME”) for the treatment of hypertension. As of Intuniv’s approval in 2009 for ADHD, the active ingredient formulation of guanfacine hydrochloride had been off patent and in the public domain for years. 4. Branded pharmaceutical drugs are submitted to the U.S. Food and Drug Administration (“FDA”) through a New Drug Application (“NDA”) pursuant to 21 U.S.C. § 355, et seq. The FDA approves the NDA upon a showing – through several randomized controlled clinical trials – that the drug is safe and effective for the proposed indication. 5. Generic drugs are prescription drugs that contain the same active ingredient as their branded counterparts. In contrast to the extensive clinical trial requirements for branded drugs, generic drug approval is subject to the Hatch-Waxman Act of 1984, 21 U.S.C. § 355(j), et seq., which was enacted by Congress to streamline generic drug approval and encourage generic drug competition. 6. Generic drug applications are referred to as Abbreviated New Drug Applications (“ANDAs”), and are approved by the FDA upon a showing that the ANDA product is bioequivalent (i.e., no substantial differences) and bioequivalent to the FDA-approved reference listed drug (“RLD”), which usually refers to an NDA drug. Upon granting final approval for a generic drug, the FDA will typically state the generic drug is “therapeutically equivalent” to the branded drug. The FDA codes generic drugs as “A/B rated” to the RLD branded drug. 7. Patients and their prescribing physicians can thus expect to substitute “A/B rated” generic drugs with the full expectation that the generic drug will carry the same safety and efficacy profile as the branded RLD. Generic drug approval is streamlined because generic drugs are typically sold at much lower prices than their branded equivalents. 8. The branded pharmaceutical company may also elect to license what is commonly referred to as an “Authorized Generic” version of its branded drug. “Authorized Generic” drugs are launched by brand manufacturers as a means to retain revenue upon generic entry, and typically involve the brand manufacturer licensing its NDA formulation (as well as any intellectual property) to an authorized generic partner. The licensee partner then sells the authorized generic as a generic version of the brand drug (including during any generic exclusivity period, infra), and remits a royalty to the brand manufacturer. For major drugs, the licensing of an authorized generic has become commonplace. 9. Upon the market entry of a generic drug, substitution of the brand drug for the generic (“generic substitution” or “generic erosion”) occurs very swiftly. Typically, the brand drug (which holds 100% market share as of generic entry) will lose as much as 70% within weeks of generic entry. By one year, the process of generic erosion usually results in the brand drug holding 10% or less market share, with generic equivalents capturing the remaining 90% or greater. 10. Generic erosion occurred even more swiftly in the case of Intuniv, as reported by Shire. In its July 2015 Securities and Exchange Commission (“SEC”) Second Quarter 10-Q filing, Shire reported that branded Intuniv market share was a mere 9% within six (6) months of generic entry, with generics capturing 91% of the market. 11. Price erosion occurs swiftly as well. As more generics enter the market, a price collapse occurs, with generic price erosion reaching approximately 90%. With multiple generics on the market, generic drugs prices may fall to as low as 10% of pre-generic entry brand price. 12. There are several forces that drive generic substitution. First, most states have generic substitution laws that mandate and require pharmacies to substitute therapeutically equivalent generics absent exceptional circumstances. These statutes are enacted as consumer protection laws, and are designed to ensure that consumers benefit from the availability of less costly medications. 13. Second, managed care organizations (“MCOs”) including health insurance companies and pharmacy benefits managers (“PBMs”) – as entities that reimburse a large portion of prescription drug costs – encourage such substitution by their insured patients and physicians through the use of prescription drug formularies. Prescription drug formularies have been implemented by MCOs as a cost-sharing mechanism to control ever-increasing prescription drug costs and to encourage insured patients to utilize cheaper drugs. As co-payors for prescription drugs, it is in both the insurer’s and the insured’s interest that less expensive generic equivalents be utilized when available. MCOs routinely place generic drugs on the lowest co- payment tier of the formulary, while branded medications are found on higher co-payment tiers. 14. Shire’s patent protection on Intuniv ended on September 2, 2013. Shire extended its original patent protection by asserting patents of dubious validity and by prosecuting weak patent litigation against its generic rivals. Thereafter, Shire entered into reverse payment settlement agreements, with the active aid, consent and assistance of Actavis and successfully delayed the entry of generic competition for Intuniv for approximately two (2) years, extending the brand medication pricing and thus costing consumers hundreds of millions of dollars. 15. Defendants’ conduct constitutes an illegal restraint of trade, illegal monopoly, unlawful attempted monopolization, and/or an unlawful combination or conspiracy to monopolize in violation of both federal and state antitrust statutes, as well as state consumer protection acts, which harmed consumers by delaying generic entry. 16. Plaintiff therefore brings this action on behalf of herself and similarly situated indirect purchasers of Intuniv and generic Intuniv, asserting that Defendants’ anticompetitive, unfair, fraudulent, and/or deceptive behavior violates Massachusetts and New York state law. II. PARTIES 17. Plaintiff Tina Picone is, and at all times relevant hereto was, a citizen and resident of Dutchess County, New York. During the Class Period, Ms. Picone’s minor ward was prescribed Intuniv in Dutchess County for purposes other than resale. 18. Defendant Shire U.S., Inc. is a New Jersey corporation with a registered agent located in West Trenton, New Jersey 08628 and its principal place of business and headquarters at 300 Shire Way, Lexington, Massachusetts 02421. Throughout the Class Period, Shire U.S., Inc. marketed and sold Intuniv in Massachusetts and New York, and elsewhere. Upon information and belief, Shire U.S., Inc. is the manufacturer and distributor of Intuniv. 19. Defendant Shire LLC is a Kentucky limited liability company with its principal place of business at 9200 Brookfield Court, Florence, Kentucky 41042. Shire LLC is a successor entity to Shire Laboratories, Inc., a party to the anticompetitive reverse payment agreements at issue herein. Shire LLC develops, manufactures, and sells brand and generic pharmaceutical products in the United States, including Intuniv. Throughout the Class Period, Shire LLC marketed and sold Intuniv in Massachusetts and New York, and elsewhere. 20. Defendant Actavis Elizabeth LLC is a Delaware corporation with its principal place of business in New Jersey. Upon information and belief, Actavis Elizabeth LLC is a party to one of the anticompetitive reverse payment agreements at issue herein. Actavis Elizabeth LLC develops, manufactures, markets, and sells generic pharmaceutical products in the United States. Through the Class Period, Actavis Elizabeth conducted business in Massachusetts and New York, and elsewhere. 21. Defendant Actavis Inc. is a Delaware corporation with its principal place of business in New Jersey. Upon information and belief, Actavis Inc. controls and/or dominates Actavis Elizabeth LLC. Actavis Inc. develops, manufactures, markets, and sells generic pharmaceutical products in the United States. Through the Class Period, Actavis Inc. conducted business in Massachusetts and New York, and elsewhere. 22. The true names and capacities, whether individual, corporate, associated or otherwise of certain manufacturers, distributors, or their alter egos that are sued herein as JOHN DOES 1-100 inclusive are presently unknown to Plaintiff, who therefore sues these Defendants by fictitious names. Plaintiff will seek leave of this Court to amend the Complaint to show their true names and capacities when the same have been established. Plaintiff is informed and believes and based thereon alleges that JOHN DOES 1-100 were authorized to do and did business in Massachusetts and New York, and elsewhere in the United States. Plaintiff is further informed and believes and based thereon alleges that JOHN DOES 1-100 were or are, in some manner or way, responsible for and liable to Plaintiff for the events, happenings, and damages hereinafter set forth below. 23. Plaintiff is informed and believes and based thereon alleges that at all times relevant herein each of the Defendants was the agent, servant, employee, subsidiary, affiliate, partner, assignee, successor-in-interest, alter ego, or other representative of each of the remaining Defendants and was acting in such capacity in doing some or all of the things herein complained of and alleged. III. JURISDICTION 24. This Complaint is brought pursuant to, among other things, Mass. G.L. c. 93A, et seq., N.Y. Gen. Bus. Law § 349, et seq., and N.Y. Gen. Bus. Law § 340, et seq. to seek redress for Defendants’ unfair methods of competition, unconscionable acts or practices, and unfair or deceptive conduct in violation of state law. 25. This Court has jurisdiction pursuant to 28 U.S.C. § 1332(d) because the matter in controversy exceeds the sum of $5,000,000, exclusive of interest and costs, and is a class action in which at least one member of the Class is a citizen of a different state than Defendants. 26. Defendants have sufficient minimum contacts with this District or otherwise have intentionally availed themselves of the consumer markets within this District through the promotion, sale, marketing, and/or distribution of its products in this District and/or to this District’s residents to render the exercise of jurisdiction by this District’s courts permissible under traditional notions of fair play and substantial justice. 27. Defendants transact business within this District, and the interstate trade and commerce described herein is carried out, in substantial part, in this District. Shire is headquartered in this District, and caused the harm alleged herein to emanate, in at least substantial part, from and/or within this District to Class Members within as well as outside this District. Shire and Actavis receive substantial compensation and profits from sales of Intuniv Product in this District. Thus, their liability arose in part in this District. Venue is therefore appropriate under 15 U.S.C. § 22 and 28 U.S.C. § 1391(b) and (c). IV. FACTUAL ALLEGATIONS A. Intuniv Was a Significant Source of Shire Revenue 28. Intuniv is a non-stimulant central alpha2A-adrenergic receptor agonist indicated for the treatment of ADHD as monotherapy and adjunctive therapy to stimulant medications. 29. The active ingredient of Intuniv is guanfacine hydrochloride. Guanfacine hydrochloride was first introduced to the market in 1986 as Tenex. Active ingredient patents for guanfacine hydrochloride have long expired. 30. Shire developed Intuniv as an extended release version of guanfacine hydrochloride, and the FDA approved its NDA on September 2, 2009. 31. Shire – which offers a variety of branded ADHD medicines – sought to market Intuniv as an alternative to stimulant-based ADHD therapies, such as amphetamine-based products (e.g., Adderall) and methylphenidate (e.g., Ritalin). Intuniv enjoyed a successful launch, gaining more than 2% of the ADHD market within six (6) months. Intuniv peaked at approximately 5% of the ADHD market, and in 2013 – Shire’s last full year of exclusivity – net sales for Intuniv were $334 million. B. Hatch-Waxman Background 32. The Drug Price Competition and Patent Term Restoration Act of 1984 – more commonly referred to as the Hatch-Waxman Act – is codified at 21 U.S.C. § 355(j). 33. The stated purpose of Hatch-Waxman is to strike a balance between rewarding genuine innovation and drug discovery by affording longer periods of brand drug marketing exclusivity while at the same time encouraging generic patent challenge and streamlining generic drug competition so that consumers gain the benefit of generic drugs at lower prices as quickly as possible. 34. Brand drug companies submitting a New Drug Application (“NDA”) are required to demonstrate clinical safety and efficacy through well-designed clinical trials. 21 U.S.C. § 355 35. By contrast, generic drug companies submit an Abbreviated New Drug Application (“ANDA”). Instead of demonstrating clinical safety and efficacy, generic drug companies need only demonstrate bioequivalence to the brand or reference listed drug (“RLD”). Bioequivalence is the “absence of significant difference” in the pharmacokinetic profiles of two pharmaceutical products. 21 C.F.R. § 320.1(e). 36. The bioequivalence basis for ANDA approval is premised on the generally accepted proposition that equivalence of pharmacokinetic profiles of two drug products is accepted as evidence of therapeutic equivalence. In other words, if (1) the RLD is proven to be safe and effective for the approved indication through well-designed clinical studies accepted by the FDA, and (2) the generic company has shown that its ANDA product is bioequivalent to the RLD, then (3) the generic ANDA product must be safe and effective for the same approved indication as the RLD. 37. To encourage generic companies to challenge weak or improperly listed patents, the Hatch-Waxman Act sets up an artificial act of infringement to allow patent litigation to commence as soon as possible. When a generic company files an ANDA, it is required to submit to the FDA a certification regarding the patent status of the RLD. 21 U.S.C. § 355(j)(2)(A)(vii). If the ANDA applicant seeks to market its drug prior to expiration of a listed patent, it must submit a certification asserting that “such patent is invalid or will not be infringed by the manufacture, use, or sale of the new drug for which the application is submitted.” § 355(j)(2)(A)(vii)(IV). This is commonly referred to as a “Paragraph IV certification.” 38. A generic company must then serve upon the patent owner and NDA holder a notice letter regarding its Paragraph IV certification. The Hatch-Waxman Act then provides the patent/NDA holder forty-five (45) days in which to file a patent infringement suit. If such a suit is filed within this timeframe, Hatch-Waxman provides for a thirty (30) month stay on FDA approval of the ANDA. 21 U.S.C. § 355(j)(5)(B)(iii). 39. After expiration of the 30 month stay (unless a court has prior to this entered judgment that the patent is invalid, unenforceable, or not infringed), FDA may approve the ANDA, at which point the generic company may commercially market its ANDA product either “at risk” (if there has not been a final resolution of the patent litigation) or without risk (by waiting until conclusion of the patent litigation). 21 U.S.C. § 355(j)(5)(B)(iii). 40. As an inducement to challenge weak or improperly listed patents, Hatch-Waxman rewards the first generic company to file a substantially complete ANDA containing a Paragraph IV certification with a 180-day period of marketing exclusivity. 21 U.S.C. § 355(j)(5)(B)(iv). The 180-day exclusivity period is triggered upon either a first commercial marketing of the drug (including of the RLD) by the 180-day exclusivity holder or the date on which a court has entered a judgment finding that the patent subject to the Paragraph IV certification is invalid, unenforceable, or not infringed. C. Intuniv’s Hatch-Waxman Exclusivity and Patent Portfolio 41. Upon approval of Intuniv on September 2, 2009, Shire received a Hatch-Waxman regulatory exclusivity period that lasted until September 2, 2012. However, seeking to extend its Intuniv monopoly beyond September 2012, Shire asserted patents of dubious validity concerning the method of use and the extended release formulation for Intuniv tablets. 42. Shire’s Intuniv patent portfolio consists of U.S. Patent Nos. 5,854,290 (‘290 Patent), which is a now-invalidated (discussed infra) method-of-use patent, and U.S. Patent Nos. 6,287,599 (‘599 Patent) and 6,811,794 (‘794 Patent), which cover the sustained release coating allowing for the extended release of the active ingredients. 43. Patents are intended to encourage innovation by offering a monopoly period for inventions that are novel, useful, and non-obvious. However, the reality is that a large number of issued patents should have been rejected. A 2003 report by the Federal Trade Commission (“FTC”) found that the average patent application gets approximately 15-20 hours of review time by the U.S. Patent and Trademark Office’s (“PTO”) assigned examiner. Despite the PTO receiving hundreds of thousands of patent applications each year, approximately eighty-five percent (85%) of patent applications ultimately result in an issued patent. 44. Brand pharmaceutical companies seeking to take advantage of the PTO’s limited resources have increasingly applied a patent procurement strategy known as “evergreening.” “Evergreened” patents are patents not on the active pharmaceutical ingredient (“API”), but instead are non-API patents on some ancillary aspect of the drug, such as its delivery method or release mechanism. These “evergreened” patents – if litigated to judgment – have a high rate of being found invalid or not infringed. 45. Shire is no stranger to the strategy of evergreening, and its use of evergreened patents to engineer generic delay through anticompetitive reverse payment settlements is a pattern and practice of Shire and part of Shire’s business model as a specialty pharmaceutical company. As stated by one analyst: Shire’s historical strategy of marketing new reformulations of off- patent active ingredients has minimized the costs of drug development, [but] it has also made Shire’s patent portfolio weak. Shire has been relying principally on method of use and composition patents for its products, as well as short-term Hatch- Waxman exclusivity and orphan drug exclusivity, rather than on composition of matter patents, which have a generally stronger legal standing. 46. In fact, the pharmaceutical product that made Shire into an industry giant was Adderall®, a mixture of amphetamines that had been off-patent since the 1950’s. As with Intuniv, Shire introduced Adderall for the treatment of ADHD, and subsequently acquired patents on a line extension called Adderall XR® based upon an extended release formulation of Adderall. Shire subsequently settled the Adderall XR patent litigation after paying hundreds of millions of dollars in reverse payments to generic challengers. 47. Shire’s Intuniv Patent Portfolio consisted of three (3) evergreened patents, one now-invalidated method-of-use patent (‘290 Patent) of guanfacine hydrochloride and two extended release formulation patents (‘599 and ‘794 Patents). 48. Numerous Wall Street analysts, generic pharmaceutical companies, and even Shire understood Shire’s Intuniv patent protection to be weak. For example, one analyst wrote in late 2011 that “the Intuniv patent estate is formed through what are commonly viewed as weaker formulation and methods-of-use patents covering extended-release guanfacine in the treatment of ADHD.” D. Generic Challenge to Intuniv 49. Intuniv’s NDA was approved on September 2, 2009. The pharmacokinetic profile of Intuniv was so easy to copy that – within weeks – multiple generic companies had filed ANDAs related to Intuniv. 50. On or about December 29, 2009, Actavis filed a substantially complete ANDA with the U.S. Food and Drug Administration (“FDA”) to manufacture and sell a generic formulation of Intuniv it had developed. Actavis’s ANDA included a “Paragraph IV certification” as to all three (3) patents, which as described supra is a declaration by the ANDA filer that it believes the patents covering the registered listed drug are either invalid or not infringed by the ANDA product. Upon service of the Paragraph IV certification, the brand company may elect to initiate Hatch-Waxman patent litigation by filing a patent infringement lawsuit within forty-five (45) days. Such an action triggers a stay preventing the FDA from approving the ANDA until the earlier of thirty (30) months has elapsed or the issuance of a “court decision” finding the patents at issue invalid or not infringed by the ANDA drug (“the 30 month stay”). 51. Actavis’s ANDA, as the first-filed ANDA, entitled Actavis to a lucrative 180-day exclusivity period (“180-day exclusivity”). The 180-day exclusivity is a statutory incentive set forth in the Hatch-Waxman generic drug approval provisions, 21 U.S.C. § 355(j), for generic pharmaceutical companies to challenge brand manufacturers’ patents. The first filer’s ANDA – once approved and if containing a Paragraph IV certification – entitles the first filer to 180 days of generic marketing exclusivity during which the FDA cannot approve other generic companies’ later-filed ANDAs. The generic pharmaceutical industry trade group, the Generic Pharmaceutical Association (“GPhA”) has asserted that the “vast majority” of generic drug profits occur during the 180-day exclusivity period. 52. As set forth in the Hatch-Waxman Act, the 180-day exclusivity commences upon a “first commercial marketing” by the 180-day exclusivity holder (which applies to both ANDA and authorized generic launches) or upon a “court decision” finding the patents invalid, unenforceable, or not infringed. 53. Soon after Actavis filed its ANDA, TWi Pharmaceuticals, Inc. (“TWi”) and Anchen Pharmaceuticals, Inc. (“Anchen”) filed substantially complete ANDAs on January 25, 2010 and January 28, 2010, respectively. Upon information and belief, TWi had agreed that Anchen would distribute any generic Intuniv in the United States in collaboration with TWi. Hereinafter, TWi and Anchen are referred to as “TWi/Anchen.” 54. Actavis and TWi/Anchen each served Paragraph IV notice letters on Shire on or about April 2, 2010 (Actavis) and April 23, 2010 (TWi/Anchen). Other generic manufacturers also served Shire with Paragraph IV notice letters after first-filer Actavis did so, including Teva Pharmaceuticals, Inc. (“Teva”). 55. Having been served Paragraph IV letters by Actavis and TWi/Anchen, as well as others, Shire initiated lawsuits in the United States District Court for the District of Delaware. A number of Shire’s Hatch-Waxman lawsuits were consolidated into Shire LLC et al. v. Teva Pharmaceuticals USA Inc., et al. No. 10cv329 (D. Del.) by order dated August 2, 2010 (the “10cv329 litigation”). The other related cases included: Shire LLC et al. v. Actavis Elizabeth LLC et al., No. 10cv397 (D. Del.) and Shire LLC et al. v. Anchen Pharmaceuticals Inc. et al., No. 10cv484 (D. Del.). The Hatch-Waxman lawsuits filed by Shire (and consolidated into the 10cv329 litigation) triggered 30-month stays, preventing the FDA from approving Actavis’ ANDA until October 2012. The FDA was further prevented from approving any other ANDA until 180 days after the triggering of Actavis’s 180-day exclusivity period. 56. Other generic entities filed ANDAs thereafter. Watson Pharmaceuticals (“Watson”) (a predecessor entity of Actavis), Impax Laboratories, Inc. (“Impax”), Mylan Pharmaceuticals (“Mylan”), and Sandoz Inc. (“Sandoz”) all filed ANDAs in 2010, and served Shire with Paragraph IV notice letters in October 2010 (Watson), November 2010 (Impax), March 2011 (Sandoz) and February 2011 (Mylan). Anchen also filed its own ANDA in 2010 (apart from that filed earlier in collaboration with TWi), and served a Paragraph IV letter in October 2010. Shire filed Hatch-Waxman lawsuits against all of these companies (and others which subsequently filed ANDAs of their own, and then served Paragraph IV notice letters on Shire), triggering 30-month stays on generic approvals for the generic companies’ products. E. Shire’s Objectively Baseless Assertion of the ‘290 Method-of-Use Patent 57. Shire asserted all three (3) patents, including the ‘290 Patent, against Actavis and other generic ANDA filers. 58. The ‘290 Patent is a so-called “method-of-use” patent claiming a method of treating ADHD using guanfacine. Such method-of-use patents are inherently weak, because it is not the invention itself that is claimed as novel (i.e., the active ingredient), but rather its use to treat a new disease state. Two prominent scholars who have published extensively regarding pharmaceutical patent litigation have described method-of-use patents as “open to challenge” and that such challenges are “often [met] with success.” C. Scott Hemphill and Bhaven N. Sampat, When Do Generics Challenge Drug Patents?, 8(4) J. Emp. Legal Studies 613, 621 (2011); see also Jason Brewer, Updating the Patent System’s Novelty Requirement to Promote Small-Molecule Medicinal Progress, 45 J. Marshall L. Rev. 1151, 1164 (2012) (“Weakness in [pharmaceutical] method of use patents stems from case law and policy, enforcement problems, and easy work-arounds for would-be infringers.”). 59. Shire understood that the ‘290 Patent was exceedingly weak, but nevertheless litigated the patent for as long as possible to prolong its exclusivity. However, on March 22, 2012, Shire dedicated the ‘290 patent to the public. This occurred just days before Shire would have been required to tender expert reports regarding the ‘290 Patent in the 10cv329 litigation. As stated by TWi/Anchen, “[Shire] sued Anchen on the ‘290 patent, proceeded through complete fact discovery, and then, just days before the first expert disclosure date, announced that they were disclaiming the patent.” Indeed, Shire’s dedication occurred the very same day that the district court issued its claim construction opinion in the consolidated 10cv329 litigation. Shire eventually sought reconsideration of that opinion, which was denied. 60. Nevertheless, the ‘290 Patent dedication was nothing more than an attempt by Shire and Actavis (the first filer) to game the Hatch-Waxman system and prevent later filers from entering the market. 61. After dedicating the ‘290 Patent, Shire then sought dismissal of its ‘290 Patent claims without a judgment against the patent, a move supported by Actavis but vigorously opposed by TWi/Anchen (the second filer). Without a judgment against the ‘290 Patent, Actavis’s exclusivity as to the ‘290 Patent would be preserved until it launched its generic Intuniv. Thus, even if TWi/Anchen achieved victory against Shire’s ‘599 and ‘794 Patents (triggering Actavis’s exclusivity as to those patents), it still could not have launched a generic Intuniv until 180 days after Actavis’s launch because the ‘290 Patent’s exclusivity would have still been in effect. Such a move would have provided Actavis a guaranteed 180-day exclusivity period without ANDA Intuniv competition. As discussed in further detail below, a guaranteed 180-day exclusivity period for Actavis would have made Shire’s agreement not to launch an AG during that period even more valuable to Actavis. 62. TWi/Anchen’s counsel noted the collusion between Shire and Actavis in open court: “Think about it, how unusual is it that the first filer and the plaintiff are on the same side of the fence on a legal issue involving the validity of a patent? Why would that be?” 63. Shire’s likely calculation was odds-based, anticompetitively motivated, and speaks to the inherent weakness of the ‘290 Patent as well as Shire’s willingness to settle with Actavis on an anticompetitive basis. In other words, Shire thought it more likely that a court would dismiss without judgment the ‘290 Patent upon Shire’s request than affirm the ‘290 Patent’s validity in a merits judgment. However, just getting the ‘290 Patent dismissed faced long odds, and despite Shire’s request, the district court entered judgment against the ‘290 patent finding it invalid by order entered July 23, 2012. 64. Shire’s assertion of the ‘290 Patent was objectively baseless as Shire did not even present expert witnesses tendering an opinion that the ‘290 Patent was valid and/or infringed. Further, Shire’s attempt (supported by Actavis) to gain a dismissal of the ‘290 Patent was the first step in an anticompetitive arrangement between the two companies to delay generic Intuniv market entry. F. Shire’s Weak Litigation Position Regarding the ‘599 and ‘794 Extended Release Formulation Patents 65. The various litigations regarding the ‘599 and ‘794 Patents were not progressing well for Shire either. The ‘599 and ‘794 Patents are so-called “formulation” patents covering Intuniv’s extended release formulation. As with method-of-use patents, formulation patents are so-called “secondary” or “evergreened” patents. Such patents are highly susceptible to invalidation by courts or non-infringing work-arounds by competitors. 66. On March 22, 2012, the district court in the 10cv329 litigation entered a claim construction (a/k/a Markman) order construing the claim terms of the ‘599 and ‘794 Patents. The Court construed claim terms of the ‘599 and ‘794 Patents unfavorably to Shire. Other district courts followed suit. See Shire LLC et al. v. Impax Labs., Inc., et al., No. 3:10cv5467, Dkt. No. 180, at 9 (N.D. Cal. June 1, 2012) (“Accordingly, consistent with the Delaware district court’s determination of this issue, defendants’ urged limitation will be adopted.”). Recognizing that it had lost key battles, Shire moved for reconsideration of these claim construction orders. Shire’s motions were summarily denied by orders dated June 20, 2012 (10cv329) and October 9, 2012 (10cv5467). 67. TWi/Anchen understood that it had scored a key victory in the 10cv329 case and it moved for summary judgment the day the district court denied Shire’s motion for reconsideration of the Markman order. As stated in TWi/Anchen’s summary judgment, “the Court’s claim construction order legally precludes [Shire’s] primary argument against Anchen ….” TWi/Anchen was equally strong in its reply: “Because [Shire] do[es] not like the actual record, [Shire] ha[s] attempted to create a new one notwithstanding that expert discovery closed 68. More generally, the 10cv329 case is replete with – in TWi/Anchen’s words – “untimely effort[s] by [Shire] to prevent the Court from entering judgment in this matter ….” In other words, not only was Shire losing the Intuniv patent litigation, but it was attempting to delay the inevitable through untimely expert disclosures, motions for discovery, and other litigation tactics. The longer the court case dragged out, the longer Shire could maintain its monopoly position with respect to Intuniv. Shire’s conduct underscores the baselessness of its patent litigation, which was designed to delay generic entry rather than to vindicate valid patent rights. G. Shire Makes Anchen Shire’s Authorized Generic at an Unreasonably Low Non- Arm’s Length Royalty 69. Not long after TWi/Anchen’s summary judgment went under submission, and upon information and belief, the very day that the district court held the pretrial conference, Shire and TWi/Anchen settled the Intuniv patent litigation on or about September 4, 2012. The timing of the TWi/Anchen settlement reflected Shire’s doubts about the merits of its patent case. With TWi/Anchen’s summary judgment motion under submission, the district court could have entered judgment against Shire at any moment. 70. Furthermore, with trial just weeks away, Shire would have appropriately viewed a negative verdict as imminent. 71. The district court entered the proposed consent judgment on September 12, 2012, just five (5) days prior to trial. The proposed consent judgment misleadingly sought to create the impression to the district court (and subsequent courts) that Shire’s Intuniv patents were genuinely valid, enforceable, and infringed by Anchen’s generic Intuniv products. 72. With fact and expert discovery complete and with trial just days away, Shire’s anticipated future litigation costs would have been minimal. 73. TWi/Anchen’s challenges to Shire’s patents were likely to succeed. 74. On September 6, 2012, Shire issued a press release concerning the Anchen settlement and license. According to the press release, Anchen would be able to launch its generic Intuniv product on July 1, 2016, “or earlier in certain limited circumstances.” Further, Shire’s press release states that “under certain circumstances, Shire may authorize Anchen to sell authorized generic versions of INTUNIV supplied by Shire, on which Shire will receive a significant royalty.” Shire never disclosed that it retained complete discretion on whether any AG could be launched by TWi/Anchen. 75. Upon information and belief, Shire’s settlement with TWi/Anchen made Anchen Shire’s authorized generic (“AG”) licensee/distributor, and in the event of an unlicensed Actavis launch (i.e., if Actavis did not later settle with Shire), Anchen could enter the market as Shire’s AG to compete with Actavis during Actavis’s 180-day generic exclusivity period. 76. The combination of a late date certain by which TWi/Anchen could enter the market with their own generic (i.e., July 1, 2016), plus the ability to sell Shire’s AG product, was instrumental in Shire’s overarching anticompetitive scheme. By settling with TWi/Anchen first, Shire created anticompetitive leverage over Actavis – the first filer – to settle at non-competitive terms. That is, even if Actavis prevailed at trial in the 10cv329 litigation and began to sell its generic Intuniv product as soon as possible, Shire could undercut Actavis’s exclusive, first-filer profits by authorizing TWi/Anchen to start selling a Shire AG product. This would cut into Actavis’ anticipated profits in the first 180 days Actavis enjoyed as the first ANDA filer. But, if Actavis settled with Shire, and Shire did not launch an AG product through TWi/Anchen, then Actavis’ lucrative 180-day exclusivity would be retained. 77. This is exactly what happened. Shire’s settlement with TWi/Anchen transferred significant value to the latter – the right to sell Shire’s AG product (with royalties flowing back to Shire) – if Shire chose to launch an AG product. This transfer made little sense given that TWi/Anchen had already litigated the patent litigation to the threshold of trial, and before a ruling on its summary judgment motion, either of which could have extinguished Shire’s patent protection and allowed TWi/Anchen to launch its generic product after the expiration of Actavis’s 180-day exclusivity, which certainly would have been sooner than the July 1, 2016 launch date that TWi/Anchen agreed to in its settlements with Shire. 78. This sort of anticompetitive scheming is not novel. Industry and regulatory experts recognize the potential for anticompetitive settlements between pioneer manufacturers (such as Shire) and subsequent ANDA filers (such as TWi/Anchen). Later ANDA filers typically stand to gain little from launching their generic into a previously genericized market. As described supra, GPhA has stated that “[t]he vast majority of potential profits for a generic drug manufacturer materialize during the 180-day exclusivity period.” Public Comment from GPhA to Federal Trade Comm’n (“FTC”) re: Authorized Generic Drug Study, dated June 27, 2006. 79. By contrast, a later ANDA filer can potentially see a revenue windfall by settling its patent litigation with the brand company and becoming the brand’s AG to compete with the first filer. The FTC has taken note of such arrangements: “For the litigated product, the brand appoints a subsequent-filer as an AG marketer in competition with the first-filer.” And in the event that the first filer settles, the later filer can then launch 180 days after as likely would have happened without a settlement. Thus, such settlements for later filers represent a “win-win” scenario as they either realize additional revenue as the brand’s AG or launch in the same position they would have anyway without any legal risk. 80. The FTC holds the position that such settlements with subsequent filers, such as Anchen, may serve to delay generic entry in both a litigation and settlement context. The FTC noted with concern that “[o]ne way that an agreement with a subsequent filer could affect the timing of generic entry is by eliminating a patent challenge that could have precipitated generic competition. By continuing to litigate, a subsequent filer might obtain a court decision … that would trigger the first-filer’s exclusivity period or its forfeiture.” In the settlement context, the brand may use the subsequent filer as a means to place additional pressure upon the first filer. Upon information and belief, this is precisely what occurred in the Shire-TWi/Anchen settlement. 81. However, upon information and belief, Shire offered TWi/Anchen an additional inducement to settle aside from the simple “win-win” described above. Such AG licenses made pursuant to a reasonable arm’s length transaction routinely yield extremely high royalties, owing to the fact that the AG licensee would not otherwise be able to compete during the hyper- important 180-day exclusivity. Thus, arm’s length AG royalties payable to the brand in such situations are typically approximately 90% of net profits. Such royalties may decrease outside the 180-day period, but still remain at a very high percentage of net profits. 82. Upon information and belief, the authorized generic license to TWi/Anchen was negotiated at a commercially unreasonably low royalty rate given the circumstances. In essence, Shire traded a significant number of royalty percentage points to TWi/Anchen in exchange for TWi/Anchen settling its strong patent challenge, with such transfer of value constituting a disguised reverse payment in exchange for settlement and generic delay. Further, on information and belief, Shire retained sole discretion to decide whether TWi/Anchen could sell an AG product. 83. Shire actively and willfully concealed this payment in exchange for settlement. As stated above, Shire’s September 6, 2012 press release stated that Shire would receive a “significant royalty.” Shire at no point disclosed that it had in fact lowered the royalty with TWi/Anchen in exchange for settlement. In fact, the actual royalty percentage has not been publicly disclosed at all and could not be discovered in the exercise of reasonable diligence. 84. Thus, TWi/Anchen essentially switched from aggressive challenger of Shire’s patents to Shire’s bedfellow through a secret, sweetheart arrangement that left intact Shire’s patents which, to that point, TWi/Anchen had vigorously challenged. As a result of this outcome, Shire put itself in position to negotiate an anticompetitive agreement with Actavis, the first filer. H. Shire and Actavis Enter an Anticompetitive Settlement, Which Delayed Generic Intuniv By Nearly Two Years 85. Notwithstanding the Shire-TWi/Anchen settlement, the district court held a four (4) day bench trial on the ‘599 and ‘794 Patents from September 17-20, 2012, in order to resolve Shire’s still-pending claims against Actavis and Teva. 86. Wall Street analysts held dim prospects for Shire at trial. Most analysts concurred that generic Intuniv would be on the market by mid-2013. For example, just days after the Delaware district court summarily denied Shire’s reconsideration of the Markman order in June 2012, BNP Paribas wrote, “We now adopt a bear scenario with Shire losing the litigation vs generic makers (17 Sept 2012) on the two remaining formulation patents (599’/794’) and the entry of generics in mid-2013 after a 6-9 month trial.” This sentiment was echoed by other analysts in non-public reports. 87. Upon information and belief, Shire also viewed its prospects of winning the Intuniv litigation as a long shot. Shire also attempted to delay the court’s trial opinion through frivolous and non-substantive post-trial motions practice. 88. Meanwhile, the thirty (30) month stay against FDA approval of Actavis’s Intuniv ANDA expired in early October 2012, which prompted the FDA to issue final approval to Actavis by letter dated October 5, 2012. The FDA’s approval letter further granted Actavis 180 days of marketing exclusivity. 89. Contemporaneous third-party reports suggested Actavis would succeed in its litigation with Shire. 90. In early 2013, Actavis CEO Paul Bisaro echoed the company’s belief that time was “of the essence” for any settlement with Shire, because the court’s written decision on the bench trial would be “relatively soon.” 91. Yet, despite Actavis’s belief in an imminent ruling which would pave the way for Actavis’s launch of generic Intuniv in short order, on or about April 25, 2013, Shire and Actavis settled the Intuniv patent litigation post-trial but before the Delaware district court issued an opinion. Accordingly, Shire’s and Actavis’s anticipated future litigation costs at the time of the settlement were negligible. 92. As noted above, settling with TWi/Anchen first let Shire orchestrate an anticompetitive outcome in which (i) Actavis would not launch its generic product until December 1, 2014 (more than two years after Actavis had received FDA approval), (ii) Shire would forego launching its own AG product (thereby avoiding competing with its own branded product), (iii) Actavis would not face competition from a Shire AG product during Actavis’s 180-day exclusivity, and (iv) no other generic companies would be able to launch generic products until 180 days after Actavis did so. 93. According to Shire’s and Actavis’s press releases dated April 25, 2013, Actavis would be able to launch its generic Intuniv on December 1, 2014, and would pay Shire 25% royalties on gross profits. Actavis’s press release further stated that “[o]ther details of the settlement were not disclosed.” On information and belief, the 25% royalty rate was an unreasonable, commercially low rate, alone or in conjunction with other terms of the settlement, that represents a disguised, large transfer of value from Shire to Actavis. 94. Despite providing for a delayed generic entry date a full year and a half later than expectations, Actavis’s CEO Paul Bisaro falsely asserted that “consumers will benefit from an earlier launch of a guanfacine hydrochloride product,” concealing the true nature of the settlement and its terms. 95. In exchange for such a substantial generic delay, upon information and belief, Shire agreed, among other things, not to launch an AG to compete with Actavis during its highly valuable 180-day exclusivity period. Upon information and belief, Shire’s earlier settlement with Anchen provided Shire the ability to enter into a settlement with Actavis that included a so- called “No AG” agreement. This represents a large, and unjustified, transfer of value from Shire to Actavis, insofar as Shire gave up potentially millions of dollars that it could have earned had it launched an AG product during Actavis’s 180-day exclusivity. 96. Indeed, it has become commonplace for brand companies to launch AGs to compete for market share with the first-filer during the 180-day exclusivity period. For example, during the period 2003-2008, the FTC found that 19 of 24 of the largest selling drugs with an exclusivity period saw an authorized generic. Notably, this figure would have been higher but for some of the settlements containing a non-compete/no-AG clause. As discussed supra, generic substitution occurs very swiftly, and in the case of Intuniv Shire’s market share was reduced from 100% to 9% within six months of generic entry. AG licenses represent a means by which the brand company can retain market share post generic entry, and these high rates of AG launches reflect the fact that brand companies realize incremental revenue from launching an AG into the market. 97. As noted above, upon information and belief, through Shire’s agreements with TWi/Anchen and Actavis, Shire gave up substantial value by licensing TWi/Anchen’s AG launch at an artificially low royalty and/or by agreeing with Actavis not to launch an AG to compete with Actavis. Absent such anticompetitive terms, the Shire-Actavis settlement does not make economic sense. 98. Upon information and belief, Actavis earned approximately $110 million in profit from its generic Intuniv during its 180-day exclusivity period without AG competition. By contrast, a competing AG licensed by Shire would have roughly halved Actavis’s profits on its generic Intuniv product. Thus, upon information and belief, Shire’s commitment not to launch a competing AG was worth in excess of a large amount, $50 million, to Actavis. 99. Shire’s reverse payment of tens of millions of dollars to Actavis vastly exceeded Shire’s future anticipated litigation costs, which would have been minimal as the case was post- 100. Further, as with Shire-TWi/Anchen settlement, the Shire-Actavis settlement included a consent judgment drafted by the parties that misleadingly sought to create the impression to other potential generic manufacturers and to other courts that Shire’s Intuniv patents were valid and that Actavis’s product actually infringed Shire’s patents to conceal the true intent of the consent judgment. 101. Upon information and belief, the multi-year extension of Shire’s Intuniv monopoly imposed a substantial cost on consumers and conferred an enormous benefit to Shire worth hundreds of millions of dollars, some of which was shared with TWi/Anchen and Actavis in exchange for allowing Shire to unlawfully extend its monopoly. 102. With the Shire-Actavis settlement consummated, other generic manufacturers saw little reason to spend resources litigating when they could in no event launch until 180 days after triggering Actavis’s exclusivity and when Shire was willing to offer a license effective date that coincided with 180 days after Actavis’s entry. In this manner, Shire was able to buy off later challengers to avoid any ruling on the validity of Shire’s Intuniv patents. 103. These reverse payment settlement agreements with TWi/Anchen and Actavis were fraudulently concealed from public, Plaintiff, and other Class Members, who would not have learned about these agreements or their anticompetitive effects through reasonable and ordinary diligence. The patent litigations proceeded almost entirely under seal (even court orders were sealed), and the various settlement agreements and other agreements are non-public documents that have never been made publicly available in their entirety. Indeed, the very intent of the settling parties in structuring the payments as non-cash transfers was to disguise as best as possible their true nature as payments in exchange for delay. 104. As with the Shire-TWi/Anchen settlement, the Shire-Actavis settlement was against Actavis’s own self-interest inasmuch as what Actavis stood to obtain had Shire’s patents been found to be invalid and/or not infringed. The only way it made sense was if Shire forewent launching its own AG product during Actavis’s 180-day exclusivity period. I. Effect on Interstate Commerce, Market Power and Competition 105. At all relevant times, Defendants manufactured, sold, and shipped Intuniv across state lines, including into Massachusetts and New York. 106. At all relevant times, in connection with its sales of Intuniv, monies, contracts, bills, and business communications were transmitted continuously and uninterruptedly across state lines, including into Massachusetts and New York. 107. At all relevant times, various devices were employed to commit the illegal acts described herein, including U.S. mail, interstate travel, interstate telephone communications, and interstate commerce. Defendants’ complained-of activities occurred within the stream of, and have substantially affected, interstate commerce. 108. In this case, as alleged herein, there is direct proof of Defendants’ market (or monopoly) power over the price of Intuniv. This direct proof includes, but is not limited to: (a) Shire’s exclusion of competition from the market by way of its agreements with TWi/Anchen and Actavis; (b) the actual date of generic competition for Intuniv versus that expected; (c) price data demonstrating Shire’s ability to raise its prices without losing sufficient sales to render the price increases unprofitable; and/or (d) the lack of non-Intuniv drug products that can be reasonably substituted for Intuniv. 109. The relevant product market is Intuniv and its generic equivalents in all dosage forms and strengths. In the alternative, the relevant product markets are (i) branded Intuniv, and (ii) generic Intuniv, each in all forms and strengths. 110. The relevant geographic market is nationwide. Through the illegal conduct described herein, Defendants were able to charge artificially high prices without losing substantial sales, and thus, by definition, maintained monopoly power over Intuniv products sold in the United States and Massachusetts and New York. 111. Through the illegal conduct described herein, Defendants intentionally, purposefully, and successfully suppressed competition. Defendants’ exclusionary conduct suppressed the sale of Intuniv in the United States and Massachusetts and New York and unlawfully enabled Defendants to sell Intuniv Product at artificially inflated prices. 112. During the relevant time period, Plaintiff and Class Members purchased Intuniv Product indirectly from Defendants. As a result of Defendants’ anticompetitive and illegal conduct, Plaintiff and Class Members were forced to pay more money in the form of higher patient co-pays for “brand name” medication even though it was precisely the same as the generic Intuniv products. This is because Plaintiff and Class Members were deprived of the ability to purchase lower-priced generic Intuniv at competitive market prices. In addition, upon information and belief, Plaintiff or other Class Members paid more for generic Intuniv than they would have absent Defendants’ anticompetitive conduct. 113. Thus, Plaintiff and the Class Members, as a result of Defendants’ illegal conduct, have suffered monetary losses and damages. J. Factual Allegations as to Named Plaintiff 114. Plaintiff Tina Picone is a resident of Dutchess County, New York. Plaintiff’s minor ward was prescribed Intuniv during the Class Period. 115. During the Class Period, Plaintiff Picone had an insurance benefit that covered some but not all of the cost of prescription drugs. Upon information and belief, the co-pay amounts paid changed based on where a particular drug was placed on the insurer’s formulary. 116. Upon information and belief, Plaintiff Picone was required to pay a higher co-pay for Intuniv than patients typically pay for drugs where a generic option is available, and – upon information and belief – the co-pay was more than Plaintiff would have paid had Defendants not engaged in the conduct alleged herein. 117. Plaintiff was an indirect purchaser of Intuniv. K. Fraudulent Concealment and Tolling 118. Upon information and belief, Shire and Actavis each affirmatively concealed from Plaintiff and other Class Members their unlawful conduct. Shire and Actavis planned and implemented the unlawful schemes in private, and affirmatively strove to avoid discussing or disclosing the schemes, and took other actions to hide and conceal the unlawful conduct. 119. For instance, the patent infringement litigations proceeded mostly under seal, and the nature of these settlement agreements and related side deals and reverse payment arrangements in order to delay generic entry were fraudulently concealed from the public, Plaintiff, and other Class Members. 120. Furthermore, Actavis’s CEO misleadingly asserted – as quoted in Actavis’s press release – that the Shire-Actavis settlement meant that the availability of generic Intuniv would be accelerated. 121. Shire’s own press release regarding the TWi/Anchen settlement asserted that Shire would receive a “significant royalty” when in fact Shire’s royalty was significantly depressed from what would have constituted a commercially reasonable arms-length royalty. TWi/Anchen never disclosed the terms or true nature of the arrangement, including the royalty. 122. Further, the actual settlement documents (or any other terms that were not publicly disclosed) have not been made available to full public scrutiny. Nor were the precise terms of these agreements ever revealed to Plaintiff or other Class Members. Shire and Actavis (and TWi/Anchen) never disclosed the anticompetitive negotiations and terms set forth above, as it was Shire’s (and Actavis’s) intention to deceive Plaintiff and other Class Members. 123. Because of the above, Plaintiff and other Class Members did not discover, nor would they discover through reasonable and ordinarily diligence, Shire’s and Actavis’s deceptive, fraudulent, anticompetitive, and unlawful conduct alleged herein. Shire’s and Actavis’s false and misleading explanations, or obfuscations, lulled Plaintiff and Class Members into believing that the prices paid for Intuniv were the result of competitive market forces rather than collusive or monopolistic, anticompetitive practices. 124. As a result of Shire’s and Actavis’s affirmative and other acts of concealment, any applicable statute of limitations affecting the rights of Plaintiff and other Class Members has been tolled. Plaintiff and/or other Class Members exercised reasonable diligence by among other things promptly investigating and bringing the allegations contained herein. Despite these or other efforts, Plaintiff was unable to discover, and could not have discovered, the unlawful conduct alleged herein at the time it occurred or at an earlier time so as to enable this complaint to be filed sooner. 125. Defendants’ unlawful conduct alleged herein and the effects thereof are continuing and, as a direct and proximate result, Plaintiff and Class Members have and continue to suffer ascertainable losses. V. CLASS ALLEGATIONS A. Class Definition 126. Plaintiff brings this action pursuant to Federal Rules of Civil Procedure 23(b)(2) and (b)(3) on behalf of herself and on behalf of the Class defined below. The proposed Class includes: Nationwide Consumer Class: All persons who paid (for personal or household use) some or all of the purchase price for brand or generic Intuniv in the United States between October 5, 2012 and the present. New York Consumer Sub-Class: All persons who paid (for personal or household use) some or all of the purchase price for brand or generic Intuniv in the State of New York between October 5, 2012 and the present. 127. Excluded from the Class are: (1) third-party payors; (2) persons and entities who purchased directly from Defendants; (3) persons and entities who purchased only for resale purposes; (4) “flat co-pay” “Cadillac Plan” customers who made purchases only via fixed dollar co-payments that do not vary between a branded pharmaceutical and a generic equivalent; (5) patients with insurance coverage including a flat-rate co-pay provision; (6) governmental entities; (7) Defendants, as well as their officers, directors, affiliates, legal representatives, employees, co-conspirators, successors, subsidiaries and assigns, and entities in which each Defendant has a controlling interest; and (8) the judge, justices, magistrates or judicial officers presiding over this matter. 128. Said definition may be further defined or amended by additional pleadings, evidentiary hearings, a class certification hearing, and orders of this Court. B. Fed. R. Civ. P. 23(a) Factors 129. Numerosity. The members of the Class are so numerous that separate joinder of each member is impracticable. Plaintiff does not know the exact number of members in the Class, but based upon information and belief, Plaintiff reasonably believes that Class Members number at a minimum in the thousands. 130. Commonality. The claims of Plaintiff raise questions of law or fact common to the questions of law or fact raised by the claims of each member of the Class. Plaintiff’s claims arise from the same practice or course of conduct that gives rise to the claims of the Class members. The questions of law and fact common to Plaintiff and the Class predominate over questions affecting only individual Class Members, and include, but are not limited to, the following: • Whether Defendants’ patent settlement agreements constitute illegal restraints of trade in violation of Section 1 of the Sherman Act and/or Massachusetts and New York law. • Whether Defendants’ violations of Section 1 of the Sherman Act constitute violations of Massachusetts and New York law; • Whether Shire’s patent infringement lawsuits filed against TWi/Anchen, Actavis and others were filed with the improper purpose of preventing entry of competing generic products into the market, in violation of Section 2 of the Sherman Act and/or Massachusetts and New York law; • Whether Defendants’ violations of Section 2 of the Sherman Act constitute violations of Massachusetts and New York law; • Whether a relevant market needs to be defined in this case in light of the existence of direct evidence of any Defendant’s power to exclude generic competition and set supracompetitive prices for Intuniv; • If a relevant market needs to be defined, the definition of the relevant market for analyzing any Defendant’s monopoly power, and whether any Defendant had monopoly power in the relevant market; • Whether, independent of whether Defendants’ conduct violated the Sherman Act, Defendants’ conduct constitutes anticompetitive, unfair, fraudulent, and/or deceptive practices in violation of Massachusetts and New York law; and/or • Whether Plaintiff and the Class have been injured as a result of Defendants’ anticompetitive, unfair, fraudulent, and/or deceptive conduct, and the amount of damages. 131. Typicality. The claims of Plaintiff are typical of the claims of each member of the Class. Defendants engaged in a standardized course of conduct affecting the Class Members, and Plaintiff’s alleged injuries arise out of that conduct. All Class Members, including Plaintiff, have the same or similar injury to their property (i.e. paying higher prices for Intuniv) as a result of Defendants’ anticompetitive conduct. 132. Adequacy. Plaintiff can fairly and adequately protect and represent the interests of each member of the Class. Plaintiff fits within the class definition and her interests do not conflict with the interest of the members of the Class she seeks to represent. Plaintiff is represented by experienced and able attorneys. The undersigned Class Counsel have litigated numerous class actions and complex cases and intend to prosecute this action vigorously for the benefit of the entire Class. Plaintiff and Class Counsel can and will fairly and adequately protect the interests of all members of the Class. C. Fed. R. Civ. P. 23(b)(2) Factors 133. Defendants acted on grounds generally applicable to the entire Class, thereby making final injunctive relief and/or corresponding declaratory relief appropriate with respect to the Class as a whole. The prosecution of separate actions by individual Class Members would create the risk of inconsistent or varying adjudications with respect to individual members of the Class that would establish incompatible standards of conduct for Defendants. 134. Injunctive relief is necessary to prevent further anticompetitive conduct by Defendants. Money damages alone will not afford adequate and complete relief, and injunctive relief is necessary to restrain Defendants from continuing to engage in conduct which restrains, suppresses, and/or eliminates competition in the United States and Massachusetts and New York for the sale of Intuniv. D. Fed. R. Civ. P. 23(b)(3) Factors 135. Common issues predominate: As set forth in detail above, common issues of fact and law predominate because all of Plaintiff’s claims are based on identical anticompetitive conduct. 136. Superiority: Additionally, a class action is superior to other available methods for fair and efficient adjudication of the controversy. The damages sought by each Class Member are such that individual prosecution would prove burdensome and expensive given the complex and extensive litigation necessitated by Defendants’ conduct. It would be virtually impossible for the members of the Class to effectively redress the wrongs done to them on an individual basis. Even if the members of the Class themselves could afford such individual litigation, it would be an unnecessary burden on the courts. 137. The trial and litigation of Plaintiff’s claims are manageable. Individualized litigation presents a potential for inconsistent or contradictory judgments and increases the delay and expense to all parties and to the court system. By contrast, the class action device will result in substantial benefits to the litigants and the Court by allowing the Court to resolve numerous individual claims and the legal and factual issues presented by Defendants’ conduct based upon a single set of proof in just one case. 138. Further, Defendants have acted on grounds generally applicable to the Class, thereby making final injunctive relief with respect to the Class as a whole appropriate. Moreover, on information and belief, Plaintiff alleges that the conduct complained of herein is substantially likely to continue in the future if an injunction is not entered. 139. Notice to the Class: Notice to the Class sufficient to meet or exceed these standard of due process can may be made by publication. VI. CAUSES OF ACTION A. First Cause of Action: Unreasonable Restraint of Trade Under State Law (premised on Section 1 of the Sherman Act) (against all Defendants) 140. Plaintiff repeats and realleges the allegations set forth above, and incorporates the same as if set forth herein at length. 141. Defendants entered into reverse payment settlement agreements to suppress generic competition with Intuniv and/or its generic equivalent. The reverse payment settlement agreements alleged herein, individually and collectively, constitute a contract, combination, and/or conspiracy that substantially, unreasonably, and unduly restrained trade. 142. Defendants violated Section 1 of the Sherman Act by engaging in the unlawful, anticompetitive conduct set forth herein. Defendants have unreasonably restrained trade and interstate commerce in the relevant product market in violation of Section 1 of the Sherman Act. 143. Shire’s agreements with TWi/Anchen and Actavis, individually and collectively, were comprised of large and unjustifiable payments from Shire to Actavis (and from Shire to TWi/Anchen), each of whom in turn agreed to delay entry into the market, and/or not to compete vigorously. As such, each agreement, individually and collectively, is an unreasonable restraint of trade. The agreements and various side deals were for no purpose other than to delay the generic manufacturers’ entry into the drug market and offered no procompetitive benefits. 144. Competition, including price competition at the consumer level for Intuniv (through the emergence of generic alternatives) will continue to be restrained, suppressed or eliminated as a result of Defendants’ anticompetitive conduct described herein. The actual adverse effects of Shire’s illicit agreements with TWi/Anchen and Actavis include, but are not limited to: • Shire’s control of the Intuniv market; • The delayed entry of generic competition into the Intuniv market; • Higher prices for brand Intuniv (due to market unavailability of generic Intuniv); and • Higher prices for generic Intuniv (due to delayed market availability of generic Intuniv). 145. The agreements, individually and collectively, were per se anticompetitive for these reasons. Alternatively, the agreements, individually and collectively, constitute an unreasonable restraint under “quick look” or “rule of reason” analysis, the relevant market being Intuniv and generic equivalents sold nationwide, or the alternative markets for brand Intuniv and for generic Intuniv. 146. Competitors, actual and potential, have been, and will continue to be, restrained from vigorously competing with one another for selling Intuniv as a result of Defendants’ anti- competitive conduct. 147. Indirect purchasers (including Plaintiff and members of the putative Class), have been injured in their business and property because they have been deprived of choice, and have paid inflated prices for Intuniv (or paid higher co-pays for brand name medications), which they otherwise would not have had to pay in the absence of Defendants’ anticompetitive conduct. Plaintiff’s and the Class’s injuries flow from Defendants’ unlawful conduct. 148. There is and was no legitimate, non-pretextual, procompetitive justification for the agreements, individually or collectively, that outweighs the harmful effects alleged herein. Even if there was such justification, the agreements, individually and collectively, are broader than necessary to achieve any procompetitive purpose. 149. Defendants’ violation of Section 1 of the Sherman Act constitutes a violation of the New York General Business Law § 349 and the Donnelly Act (New York General Business Law § 340, et seq.). 150. Plaintiff Picone and Defendants are “persons” under New York General Business Law § 349(h), and Defendants’ conduct occurred in the course of trade or commerce. 151. Defendants’ conduct constitutes prohibited “[d]eceptive acts or practices in the conduct of any business, trade, or commerce,” N.Y. Gen. Bus. Law § 349. 152. In addition, Defendants’ conduct constitutes an unlawful restraint of trade under the Donnelly Act. See N.Y. Gen. Bus. Law § 340, et seq. 153. Defendants’ violation of Section 1 of the Sherman Act also constitutes a violation of Mass. G.L. c. 93A, et seq. 154. Plaintiffs and the Class are “persons” within the meaning of Mass. G.L. c. 93A, 155. Defendants’ conduct alleged herein relating to the sale of Intuniv constitutes a “sale” within the meaning of Mass. G.L. c. 93A, § 1(b). 156. Plaintiff sent a written demand for relief to Defendants pursuant to Mass. G.L. c. 93A § 9(3) on or about July 21, 2016 (to Shire), and August 3, 2016 (to Actavis). Neither of the Defendants has made a written tender of settlement. 157. Defendants’ conduct constitutes unfair methods of competition and unfair or deceptive acts or practices in violation of Mass. G.L. c. 93A, et seq. 158. Because of Defendants’ violations of Section 1 of the Sherman Act (and hence the state laws alleged herein), consumers (including Plaintiff and the Class) were deprived of a less expensive generic product, and were forced to purchase a more expensive brand name (or generic) product. These are the types of injuries the Sherman Act, and state laws alleged herein, seek to prevent. 159. As a direct and proximate result of Defendants’ violations of Section 1 of the Sherman Act (and hence the state laws alleged herein), Plaintiff and the Class have suffered a loss of money and suffered actual damages. 160. There is no federal or state law which affirmatively authorizes Defendants to engage in the unfair conduct alleged throughout this Complaint. 161. In addition to actual damages, Plaintiff and the Class are entitled to declaratory and injunctive relief as well as reasonable attorney’s fees and costs. B. Second Cause of Action: Unlawful Monopoly Under State Law (premised on Section 2 of the Sherman Act) (against Shire) 162. Plaintiff repeats and realleges the allegations set forth above, and incorporate the same as if set forth herein at length. 163. Shire violated Section 2 of the Sherman Act. Shire successfully gained and exercised unlawful monopoly power over the price of Intuniv, and over the relevant market—Intuniv and its generic equivalents—nationwide and in the States of Massachusetts and New York. But for Shire’s exclusionary practices, as set forth above, Shire would not have been able to maintain its monopoly power over the price of Intuniv in the relevant market. 164. By violating Section 2 of the Sherman Act, Shire has engaged in an unfair, unlawful, unconscionable, and/or deceptive practice in violation of Massachusetts and New York law, and caused Plaintiff and the Class to suffer ascertainable losses. 165. Shire’s violation of Section 2 of the Sherman Act is further illustrated by its successful attempt to exert an illegal monopoly over the price of Intuniv and over the relevant market. Shire entered into illegal reverse payment settlement agreements to delay generic entry. 166. During the relevant period, Shire willfully and unlawfully maintained its monopoly power by excluding and delaying competition from the market for Intuniv. The goal, purpose and/or effect of the scheme was to prevent and delay market entry of generic Intuniv competitors, who would have sold generic versions nationwide and in Massachusetts and New York at prices significantly below Shire’s prices for Intuniv, and therefore would have taken most of Shire’s market share. Such generic competition would have effectively caused the average market price of Intuniv to decline dramatically. 167. Shire has willfully acquired and/or maintained its monopoly power over the market for the sale of Intuniv, not through superior skill , quality of product, business acumen, or enterprise, but rather through the foregoing anticompetitive and exclusionary conduct. Shire’s conduct ran afoul of Section 2 of the Sherman Act. 168. There is no appropriate, procompetitive, or legitimate business justification for the actions and conduct that have facilitated Shire’s monopolization of the United States market for the sale of Intuniv. 169. Plaintiff and members of the putative Class have been injured because they have been deprived of choice, and have paid inflated prices for Intuniv or generic Intuniv, which they otherwise would not have had to pay in the absence of Shire’s anticompetitive conduct. Plaintiff’s and the Class’s injuries flow from Shire’s unlawful conduct. 170. Shire’s violation of Section 2 of the Sherman Act constitute a violation of the New York General Business Law § 349 and the Donnelly Act (New York General Business Law § 340, et seq.). 171. Plaintiff Picone and Defendants are “persons” under New York General Business Law § 349(h), and Shire’s conduct occurred in the course of trade or commerce. 172. Shire’s conduct constitutes prohibited “[d]eceptive acts or practices in the conduct of any business, trade, or commerce,” N.Y. Gen. Bus. Law § 349. 173. In addition, Shire’s conduct constitutes an unlawful restraint of trade under the Donnelly Act. See N.Y. Gen. Bus. Law § 340, et seq. 174. Shire’s violation of Section 2 of the Sherman Act constitutes a violation of Mass. G.L. c. 93A, et seq. 175. Plaintiffs and the Class are “persons” within the meaning of Mass. G.L. c. 93A, 176. Shire’s conduct alleged herein relating to the sale of Intuniv constitutes a “sale” within the meaning of Mass. G.L. c. 93A, § 1(b). 177. Plaintiff sent a written demand for relief to Defendants pursuant to Mass. G.L. c. 93A § 9(3) on or about July 21, 2016 (to Shire), and August 3, 2016 (to Actavis). Neither of the Defendants has made a written tender of settlement. 178. Shire’s conduct constitutes unfair methods of competition and unfair or deceptive acts or practices in violation of Mass. G.L. c. 93A, et seq. 179. Because of Shire’s violation of Section 2 of the Sherman Act (and hence the state laws alleged herein), consumers (including Plaintiff and the Class) were deprived of a less expensive generic product, and were forced to purchase a more expensive brand name product (and later a more expensive generic product). These are the types of injuries the Sherman Act seeks to prevent. 180. As a direct and proximate result of Shire’s violations of Section 2 of the Sherman Act (and hence the state laws alleged herein), Plaintiff and the Class have suffered a loss of money and suffered actual damages. 181. In addition to actual damages, Plaintiff and the Class are entitled to declaratory and injunctive relief as well as reasonable attorney’s fees and costs. C. Third Cause of Action: Unlawful Attempted Monopolization Under State Law (premised on Section 2 of the Sherman Act) (against Shire) 182. Plaintiff repeats and realleges the allegations set forth above, and incorporates the same as if set forth herein at length. 183. Shire violated Section 2 of the Sherman Act. Shire unlawfully attempted to gain and exercise monopoly power over the price of Intuniv, and over the relevant market—Intuniv and its generic equivalents—nationwide and in the states of Massachusetts and New York. Shire has or had a dangerous probability of so obtaining unlawful monopoly power, and specific intent to do so. But for Shire’s exclusionary practices, as set forth above, Shire would not have been able to achieve or to maintain its monopoly power over the price of Intuniv in the relevant market. 184. By violating Section 2 of the Sherman Act, Shire has engaged in an unfair, unlawful, unconscionable, and/or deceptive practice in violation of Massachusetts and New York law, and caused Plaintiff and the Class to suffer ascertainable losses. 185. Shire’s violation of Section 2 of the Sherman Act is further illustrated by its attempt to exert an illegal monopoly over the price of Intuniv and over the relevant market. Shire entered into illegal reverse payment settlement agreements to delay generic entry. 186. During the relevant period, Shire willfully and unlawfully attempted to gain unlawful monopoly power by excluding and delaying competition from the market for Intuniv. The goal, purpose and/or effect of the scheme was to prevent and delay market entry of generic Intuniv competitors, who would have sold generic versions nationwide and at prices significantly below Shire’s prices for Intuniv, and therefore would have taken most of Shire’s market share. Such generic competition would have effectively caused the average market price of Intuniv to decline dramatically. 187. Shire has willfully attempted to acquire and/or to maintain its monopoly power over the market for the sale of Intuniv, not through superior skill, quality of product, business acumen, or enterprise, but rather through the foregoing anticompetitive and exclusionary conduct. Shire’s conduct ran afoul of Section 2 of the Sherman Act. 188. There is no appropriate, procompetitive, or legitimate business justification for the actions and conduct that have facilitated Shire’s attempted monopolization of the United States market for the sale of Intuniv. 189. Plaintiffs and members of the putative Class have been injured because they have been deprived of choice, and have paid inflated prices for Intuniv or generic Intuniv, which they otherwise would not have had to pay in the absence of Shire’s anticompetitive conduct. Plaintiff’s and the Class’s injuries flow from Shire’s unlawful conduct. 190. Shire’s violation of Section 2 of the Sherman Act constitute a violation of the New York General Business Law § 349 and the Donnelly Act (New York General Business Law § 340, et seq.). 191. Plaintiff Picone and Defendants are “persons” under New York General Business Law § 349(h), and Shire’s conduct occurred in the course of trade or commerce. 192. Shire’s conduct constitutes prohibited “[d]eceptive acts or practices in the conduct of any business, trade, or commerce,” N.Y. Gen. Bus. Law § 349. 193. In addition, Shire’s conduct constitutes an unlawful restraint of trade under the Donnelly Act. See N.Y. Gen. Bus. Law § 340, et seq. 194. Shire’s violation of Section 2 of the Sherman Act constitutes a violation of Mass. G.L. c. 93A, et seq. 195. Plaintiffs and the Class are “persons” within the meaning of Mass. G.L. c. 93A, 196. Shire’s conduct alleged herein relating to the sale of Intuniv constitutes a “sale” within the meaning of Mass. G.L. c. 93A, § 1(b). 197. Plaintiff sent a written demand for relief to Defendants pursuant to Mass. G.L. c. 93A § 9(3) on or about July 21, 2016 (to Shire), and August 3, 2016 (to Actavis). None of the Defendants has made a written tender of settlement. 198. Shire’s conduct constitutes unfair methods of competition and unfair or deceptive acts or practices in violation of Mass. G.L. c. 93A, et seq. 199. As a direct and proximate result of Shire’s violations of Section 2 of the Sherman Act (and hence the state laws alleged herein), Plaintiff and the Class have suffered a loss of money and suffered actual damages. 200. In addition to actual damages, Plaintiff and the Class are entitled to declaratory and injunctive relief as well as reasonable attorney’s fees and costs. D. Fourth Cause of Action: Unlawful Conspiracy to Monopolize Under State Law (premised on Section 2 of the Sherman Act) (against all Defendants) 201. Plaintiff repeats and realleges the allegations set forth above, and incorporate the same as if set forth herein at length. 202. Defendants violated Section 2 of the Sherman Act. Defendants conspired to gain and exercise unlawful monopoly power, either collectively or individually, over the price of Intuniv, and over the relevant market—Intuniv and its generic equivalents—nationwide and in the States of Massachusetts and New York. 203. By violating Section 2 of the Sherman Act, Defendants have engaged in an unfair, unlawful, unconscionable, and/or deceptive practice in violation of Massachusetts and New York law, and caused Plaintiff and the Class to suffer ascertainable losses. 204. Defendants’ violation of Section 2 of the Sherman Act is further illustrated by Shire’s and/or Defendants’ exertion of illegal monopoly over the price of Intuniv and its generic equivalents, and over the relevant market(s), including in the alternative the market for brand Intuniv and the market for generic Intuniv. Defendants entered into illegal reverse payment settlement agreements to delay generic entry. 205. During the relevant period, Defendants willfully and unlawfully conspired to obtain or maintain Shire’s and/or Defendants’ monopoly power by excluding and delaying competition from the market for Intuniv and its generic equivalents. Each Defendant manifested an intention to participate in a common scheme as alleged herein. The goal, purpose and/or effect of the scheme was to prevent and delay market entry of generic Intuniv competitors, who would have sold generic versions nationwide and in Massachusetts and New York at prices significantly below Shire and/or Defendants’ prices for Intuniv and its generic equivalents, and therefore would have taken most of Shire and/or Defendants’ market share. Such generic competition would have effectively caused the average market price of Intuniv and its generic equivalents to decline dramatically. 206. There is no appropriate, procompetitive, or legitimate business justification for the actions and conduct that have facilitated Defendants’ conspiracy to monopolize the United States market for the sale of Intuniv and its generic equivalents. 207. Plaintiff and members of the putative Class have been injured because they have been deprived of choice and have paid inflated prices for Intuniv or generic Intuniv, which they otherwise would not have had to pay in the absence of Defendants’ anticompetitive conduct. Plaintiff’s and the Class’s injuries flow from Defendants’ unlawful conduct. 208. Defendants’ violation of Section 2 of the Sherman Act constitutes a violation of the New York General Business Law § 349, and the Donnelly Act (New York General Business Law § 340, et seq.). 209. Plaintiff Picone and Defendants are “persons” under New York General Business Law § 349(h), and Defendants’ conduct occurred in the course of trade or commerce. 210. Defendants’ conduct constitutes prohibited “[d]eceptive acts or practices in the conduct of any business, trade, or commerce,” N.Y. Gen. Bus. Law § 349. 211. In addition, Defendants’ conduct constitutes an unlawful restraint of trade under the Donnelly Act. See N.Y. Gen. Bus. Law § 340, et seq. 212. Defendants’ violation of Section 2 of the Sherman Act constitutes a violation of Mass. G.L. c. 93A, et seq. 213. Plaintiffs and the Class are “persons” within the meaning of Mass. G.L. c. 93A, 214. Defendants’ conduct alleged herein relating to the sale of Intuniv constitutes a “sale” within the meaning of Mass. G.L. c. 93A, § 1(b). 215. Plaintiff sent a written demand for relief to Defendants pursuant to Mass. G.L. c. 93A § 9(3) on or about July 21, 2016 (to Shire), and August 3, 2016 (to Actavis). Neither of the Defendants has made a written tender of settlement. 216. Defendants’ conduct constitutes unfair methods of competition and unfair or deceptive acts or practices in violation of Mass. G.L. c. 93A, et seq. 217. Because of Defendants’ violation of Section 2 of the Sherman Act (and hence the state laws alleged herein), consumers (including Plaintiff and the Class) were deprived of a less expensive generic product, and were forced to purchase a more expensive brand name product (and later a more expensive generic product). These are the types of injuries the Sherman Act seeks to prevent. 218. As a direct and proximate result of Defendants’ violations of Section 2 of the Sherman Act (and hence the state laws alleged herein), Plaintiff and the Class have suffered a loss of money and suffered actual damages. 219. In addition to actual damages, Plaintiff and the Class are entitled to declaratory and injunctive relief as well as reasonable attorney’s fees and costs. E. Fifth Cause of Action: Violation of State Consumer Protection and Antitrust Law (not premised on violations of Sherman Act) (against all Defendants) 220. Plaintiff repeats and realleges the allegations set forth above, and incorporate the same as if set forth herein at length. 221. Independent of whether Defendants’ conduct violated the Sherman Act, Defendants’ conduct, as described throughout the Complaint, constitutes unlawful, unfair, fraudulent, unconscionable, anticompetitive, and/or deceptive practices in violation of the New York General Business Law § 349 and the Donnelly Act (New York General Business Law § 340, et seq.). 222. Plaintiff Picone and Defendants are “persons” under New York General Business Law § 349(h), and Defendants’ conduct occurred in the course of trade or commerce. 223. Defendants’ conduct constitutes prohibited “[d]eceptive acts or practices in the conduct of any business, trade, or commerce,” N.Y. Gen. Bus. Law § 349. 224. In addition, Defendants’ conduct constitutes an unlawful restraint of trade under the Donnelly Act. See N.Y. Gen. Bus. Law § 340, et seq. 225. Defendants’ conduct also constitutes a violation of Mass. G.L. c. 93A, et seq. 226. Plaintiffs and the Class are “persons” within the meaning of Mass. G.L. c. 93A, 227. Shire’s conduct alleged herein relating to the sale of Intuniv constitutes a “sale” within the meaning of Mass. G.L. c. 93A, § 1(b). 228. Plaintiffs sent a written demand for relief to Defendants pursuant to Mass. G.L. c. 93A § 9(3) on or about July 21, 2016 (to Shire), and August 3, 2016 (to Actavis). Neither of the Defendants has made a written tender of settlement. 229. By utilizing, inter alia, sham patent litigation and anticompetitive settlements to delay the entry into the market of generic version of Intuniv, Defendants engaged in deceptive, fraudulent, unconscionable, anticompetitive, and/or unfair trade practices that caused Plaintiff and the Class to pay more for branded and subsequently generic Intuniv than they would have but for this wrongful conduct. 230. Defendants’ deceptive, fraudulent, unconscionable, anticompetitive, and/or unfair practices, as described herein, offend established public policy, are unconscionable, and caused ascertainable losses to consumers. Defendants forced users of their prescription medication, who had no reasonable alternatives, to pay higher prices for branded and generic Intuniv well into the period in which generic alternatives to Intuniv were available. Defendants were motivated solely by profit at the expense of Plaintiff and the Class. 231. As a direct and proximate result of Defendants’ unlawful practices (including practices prohibited by the enunciated state antitrust laws, as well as the enunciated state consumer protection laws), Plaintiff and the Class have suffered a loss of money and suffered actual damages. 232. In addition to actual damages, Plaintiff and the Class are entitled to treble damages, declaratory and injunctive relief, as well as reasonable attorney’s fees and costs. VII. PRAYER FOR RELIEF WHEREFORE, Plaintiff, on behalf of herself and on behalf of the members of the Class defined herein, request judgment and relief on all Causes of Action as follows: (a). An order certifying that the action may be maintained as a Class Action; (b). The acts alleged herein be adjudged and decreed to be an unfair, deceptive, anticompetitive, unconscionable and/or fraudulent business practices violating Massachusetts and New York law; (c). That judgment be entered against Defendants, and each of them jointly and severally, for damages as a result of Defendants’ violations of Massachusetts and New York law; (d). That judgment be entered against Defendants and in favor of Plaintiff and the Class on the Plaintiffs’ Massachusetts and New York law claims, for treble damages, actual and consequential damages, and equitable relief, including restitution and restitutionary disgorgement; (e). Actual, double, or treble damages, as appropriate; (f). For pre and post-judgment interest from the date of filing this suit; (g). Reasonable attorneys’ fees; (h). Costs of this suit; and (i). Such other and further relief as the Court may deem necessary or appropriate. JURY TRIAL DEMANDED Dated: November 22, 2016 Respectfully submitted, /s/ Stephen H. Galebach Stephen H. Galebach, Esq. BBO # 653006 GALEBACH LAW OFFICE 9-11 Touro Avenue Medford, MA 02155 Phone: (617) 429-1966 Email: [email protected] Allan Kanner, Esq. (LA Bar No. 20580) (PHV pending) Conlee S. Whiteley, Esq. (LA Bar No. 22678) (PHV pending) Marshall Perkins, Esq. (LA Bar No. 36979) (PHV pending) Layne Hilton, Esq. (LA Bar No. 36990) (PHV pending) KANNER & WHITELEY, LLC 701 Camp Street New Orleans, LA 70130 Phone: (504) 524-5777 Email: [email protected] [email protected] [email protected] [email protected] Ruben Honik, Esq. (PA Bar No. 33109) (PHV pending) David J. Stanoch, Esq. (PA Bar No. 91342) (PHV pending) GOLOMB & HONIK, P.C. 1515 Market Street, Suite 1100 Philadelphia, PA 19102 Phone: (215) 985-9177 Email: [email protected] [email protected] Attorneys for Plaintiff and the Proposed Class

antitrust

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Joshua Swigart, Esq. (SBN: 225557) [email protected] Yana A. Hart, Esq (SBN: 306499) [email protected] HYDE AND SWIGART, APC 2221 Camino Del Rio South, Suite 101 San Diego, CA 92108 Telephone: (619) 233-7770 Facsimile: (619) 297-1022 Kevin Lemieux, Esq (SBN: 225886) [email protected] The Law Office of Kevin Lemieux, APC 1775 Hancock Street, Suite 180 San Diego, CA 92110 Telephone: (619) 488-6767 Facsimile: (619) 488-6767 Attorneys for Plaintiff [Other Attorneys of Record Listed on Signature Page] Attorneys for Plaintiff, Kenneth Picha UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA Case No.: '18CV0643 AGS AJB CLASS ACTION Kenneth Picha, Individually and on behalf of All Others Similarly Situated, Plaintiff, v. CLASS ACTION COMPLAINT FOR DAMAGES AND INJUNCTIVE RELIEF PURSUANT TO THE TELEPHONE CONSUMER PROTECTION ACT, 47 U.S.C. § 227 ET SEQ. National Association for Medical and Dental, Inc. and Healthcare National Marketing, Inc., Jury Trial Demanded Defendants. INTRODUCTION 1. Kenneth Picha (referred to individually as“Plaintiff”), brings this class action for damages, injunctive relief, and any other available legal or equitable remedies, resulting from the illegal actions of National Association for Medical and Dental, Inc. (“NAFMD”) and Healthcare National Marketing, Inc. (“HNM” and collectively referred to as “Defendants”) 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. 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. 2. The TCPA was designed to prevent calls like the ones described within this complaint, and to protect the privacy of citizens like Plaintiff. “Voluminous consumer complaints about abuses of telephone technology – for example, computerized calls dispatched to private homes – prompted Congress to pass the TCPA.” Mims v. Arrow Fin. Servs., LLC, 132 S. Ct. 740, 744 (2012). 3. In enacting the TCPA, Congress intended to give consumers a choice as to how creditors and telemarketers may call them, and made specific findings that “[t]echnologies that might allow consumers to avoid receiving such calls are not universally available, are costly, are unlikely to be enforced, or place an inordinate burden on the consumer.” TCPA, Pub.L. No. 102-243, § 11. Toward this end, Congress found that: 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. at § 12; see also, Martin v. Leading Edge Recovery Solutions, LLC, 2012 WL 3292838, at *4 (N.D. Ill. Aug. 10, 2012) (citing Congressional finding on TCPA’s purpose). 4. Congress also specifically found that “the evidence presented to the Congress indicates that automated or prerecorded calls are a nuisance and an invasion of privacy, regardless of the type of call […].” Id. At §§ 12-13. See also, Mims, 132 S. Ct. at 744. 5. As Judge Easterbrook of the Seventh Circuit recently explained in a TCPA case regarding calls to a non-debtor similar to this one: The Telephone Consumer Protection Act […] is well known for its provisions limiting junk-fax transmissions. A less litigated part of the Act curtails the use of automated dialers and prerecorded messages to cell phones, whose subscribers often are billed by the minute as soon as the call is answered – and routing a call to voicemail counts as answering the call. An automated call to a landline phone can be an annoyance; an automated call to a cell phone adds expense to annoyance. Soppet v. Enhanced Recovery Co., LLC, 679 F.3d 637, 638 (7th Cir. 2012). JURISDICTION AND VENUE 6. Jurisdiction is proper under 47 U.S.C §227(b); Mims v. Arrow Fin. Servs., LLC, 132 S.Ct. 740 (2012), because Plaintiff alleges violations of federal law. 7. Venue is proper in the United States District Court for the Southern District of California pursuant to 18 U.S.C. § 1391(b) and 1441(a) because the events giving rise to Plaintiff’s causes of action against Defendants occurred in the State of California within the Southern District of California and Defendants conduct business in the area of San Diego, California. 8. Plaintiff is, and at all times mentioned herein was, an individual citizen and resident of the State of California. 9. Plaintiff is informed and believes, and thereon alleges, that NAFMD is, and at all times mentioned herein was, a corporation licensed in the state of Florida and headquartered in New Port Richey, Florida, and at all times mentioned herein was, a Limited Liability Company and a “person,” as defined by 47 U.S.C. § 153(39). 10. Plaintiff is informed and believes, and thereon alleges, that HNM are, and at all times mentioned herein were, a corporation licensed in the state of Florida and headquartered in New Port Richey, Florida, and at all times mentioned herein was, a Limited Liability Company and a “person,” as defined by 47 U.S.C. § 153(39). 11. NAFMD’s website is www.nafmd.com, on which it lists a variety of health and dental information and plans for consumers. 12. NAFMD and NHM work jointly in soliciting marketing leads, promoting NAFMD’s dental insurance plans. 13. Plaintiff is informed and believes, and thereon alleges, that at all relevant times, Defendants conducted and continue to conduct business in the State of California and in the County of San Diego, and within this judicial district. FACTUAL ALLEGATIONS 14. At all times relevant, Plaintiff was a citizen of the State of California. Plaintiff are, and at all times mentioned herein were, “persons” as defined by 47 U.S.C § 153 (10). 15. Defendants are, and at all times mentioned herein were, “persons” as defined by 47 U.S.C. §153 (10). 16. Sometime prior to January 1, 2013, Plaintiff was assigned, and became the owner of, a cellular telephone number from his wireless provider. 17. Prior to January, 2018, Plaintiff requested that Defendants cease and desist any and all calls to Plaintiff’s cellular number. See Picha v. National Association for Medical and Dental, 3:17-cv-01400-BEN-BLM. (Dkt 1.) 18. Plaintiff also registered his telephone number on the National Do Not Call Registry, on July 8, 2017. 19. In fact, to make it more apparent for Defendants, Plaintiff previously filed a civil action against Defendants in order to stop any unauthorized calls from Defendants to Plaintiff’s telephone cellular number. 20. Defendants’ calls or liability as to Plaintiff prior to January 2018 are not subject to this lawsuit. 21. Despite previously notifying Defendants that their calls are neither welcomed nor authorized, Defendants continued calling Plaintiff’s cellular telephone using an automatic telephone dialing system (“ATDS”) as defined by 47 U.S.C. § 227(a)(1), using an “artificial or prerecorded voice” as prohibited by 47 U.S.C. § 227(b)(1)(A). 22. On February 28, 2018, Defendants placed an autodialed call to Plaintiff’s cellular telephone number (ending in 8830), which came from the telephone number: (352) 888-6600. 23. When Plaintiff answered this call, there was a prolonged, about four to five second pause, where Plaintiff said hello, but nobody was on the line. Then Plaintiff heard a click and Defendants’ representative came on the line trying to sell him dental insurance. 24. Frustrated, Plaintiff stated “I’ve already sued you, so stop calling me!” and disconnected the call. 25. Despite previous request not to call Plaintiff, and another request to stop calling on February 28, 2018, Plaintiff received yet another marketing call from Defendants, now from a number 678-207-5365. 26. In blatant disregard for Plaintiff’s right to privacy and Plaintiff’s repeated requests to stop marketing calls, Defendants placed another call on March 8, 2018. 27. During this unauthorized and unwelcomed call, in order to procure more information on Defendants, Plaintiff requested that Defendants’ representative (Kristie) sends him a quote for the dental plan. 28. Kristie, at 1:52 pm (shortly after the unauthorized autodialed call), sent the following email to Plaintiff: “Hello, It was a pleasure speaking with you today, below is information on the dental policy we discussed. If you have any questions or would like to get enrolled please call 1-800-396-7683 ext 2112 and ask for Kristie or Text me at 727-216-9033. Visit our website at NAFMD.com.” 29. This email also came from “[email protected].” 30. The email also contained Defendant’s NAFMD’s logo. 31. Upon information and belief, NAFMD made the unauthorized calls by using HNM’s autodialing equipment. 32. Whenever Plaintiff answers these calls, there is a 4 or 5 second pause before a sales representative comes on the line trying to sell him dental insurance. 33. If you call back any of Defendants’ numbers that called Plaintiff, you hear a recorded message that informs you about “a new dental plan that has just become available to consumers in your area.” 34. The ATDS used by Defendants has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator. 35. The ATDS used by Defendants also has the capacity to, and does, call telephone numbers from a list of databases of telephone numbers automatically and without human intervention. 36. The telephone number Defendants called was assigned to a cellular telephone service for which Plaintiff incurred a charge for incoming calls pursuant to 47 U.S.C. § 227 (b)(1). 37. Plaintiff at no time provided “prior express consent” for Defendants to place telephone calls to Plaintiff’s cellular telephone with an artificial or prerecorded voice utilizing an ATDS as proscribed under 47 U.S.C. § 227(b) (1)(A). 38. Plaintiff had not provided his cellular telephone number to Defendant for the purposes to solicit him or call him. Plaintiff was never a customer of Defendants, and in fact, expressly prohibited Defendants from calling Plaintiff. Plaintiff had no “established business relationship” with Defendant, as defined by 47 U.S.C. § 227 (a)(2). 39. These telephone calls made by Defendants or their agents were in violation of 47 U.S.C. § 227(b)(1). STANDING 40. Standing is proper under Article III of the Constitution of the United States of America because Plaintiff’s claims state: a. a valid injury in fact; b. which is traceable to the conduct of Defendant; c. and is likely to be redressed by a favorable judicial decision. 41. See, Spokeo, Inc. v. Robins, 578 U.S. ___ (2016) at 6, and Lujan v. Defenders of Wildlife, 504 U.S. 555 at 560. 42. In order to meet the standard laid out in Spokeo and Lujan, Plaintiff must clearly allege facts demonstrating all three prongs above. a. The “Injury in Fact” Prong 43. Plaintiff’s injury in fact must be both “concrete” and “particularized” in order to satisfy the requirements of Article III of the Constitution, as laid out in Spokeo (Id.). 44. For an injury to be “concrete” it must be a de facto injury, meaning that it actually exists. In the present case, Plaintiff was called on his cellular phone by Defendant. Such calls are a nuisance, an invasion of privacy, and an expense to Plaintiff. Soppet v. Enhanced Recovery Co., LLC, 679 F.3d 637, 638 (7th Cir. 2012). All three of these injuries are concrete and de facto. 45. For an injury to be “particularized” means that the injury must “affect the plaintiff in a personal and individual way.” Spokeo, Inc. v. Robins, 578 U.S. ___ (2016) at 7. In the instant case, it was plaintiff’s phone that was called and it was plaintiff himself who answered the calls. It was Plaintiff’s personal privacy and peace that was invaded by Defendants' persistent unauthorized solicitation calls using an ATDS. Finally, plaintiff alone is responsible to pay the bill on his cellular phone. All of these injuries are particularized and specific to plaintiff, and will be the same injuries suffered by each member of the putative class. b. The “Traceable to the Conduct of Defendant” Prong 46. The second prong required to establish standing at the pleadings phase is that Plaintiff must allege facts to show that his injury is traceable to the conduct of Defendants. 47. In the instant case, this prong is met simply by the fact that the calls to plaintiff’s cellular phone were placed either, by Defendants directly, or by Defendants’ agent at the direction of Defendants. c. The “Injury is Likely to be Redressed by a Favorable Judicial Opinion” Prong 48. The third prong to establish standing at the pleadings phase requires Plaintiff to allege facts to show that the injury is likely to be redressed by a favorable judicial opinion. 49. In the present case, Plaintiff’s Prayer for Relief includes a request for damages for each call 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. 50. Furthermore, Plaintiff’s Prayer for Relief requests 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. 51. 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), Plaintiff has standing to sue Defendants on the stated claims. CLASS ACTION ALLEGATIONS 52. Plaintiff brings this action on behalf of himself and on behalf of all others similarly situated (“the Class”). 53. Plaintiff represents, and is a member of, the Class, consisting of: All persons within the United States who had or have a number assigned to a cellular telephone service, who received at least one call using an ATDS and/or an artificial prerecorded voice from either Defendant, or their agents, calling on behalf of either Defendant, between the date of filing this action and the four years preceding, where such calls were placed for marketing purposes, to non-customers of Defendants, at the time of the calls. 54. Defendants and their 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 thousands, if not more. Thus, this matter should be certified as a Class action to assist in the expeditious litigation of this matter. 55. Plaintiff and members of the Class were harmed by the acts of Defendants in at least the following ways: Defendants illegally contacted Plaintiff and the Class members via their cellular telephones thereby causing Plaintiff and the Class members to incur certain cellular telephone charges or reduce cellular telephone time for which Plaintiff and the Class members previously paid, by having to retrieve or administer messages left by Defendants or their agents, during those illegal calls, and invading the privacy of said Plaintiff and the Class members. Plaintiff and the Class members were damaged thereby. 56. This suit seeks only damages 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. Plaintiff reserves the right to expand the Class definition to seek recovery on behalf of additional persons as warranted as facts are learned in further investigation and discovery. 57. The joinder of the Class members is impractical and the disposition of their claims in the Class action will provide substantial benefits both to the parties and to the Court. The Class can be identified through Defendants' records and/or Defendants’ agent’s records. 58. There is a well-defined community of interest in the questions of law and fact involved affecting the parties to be represented. The questions of law and fact to the Class predominate over questions which may affect individual Class members, including the following: i. Whether, within the four years prior to the filing of the Complaint, Defendants made any call(s) (other than a call made for emergency purposes or made with the prior express consent of the called party) to the Class members using any ATDS or an artificial or prerecorded voice to any telephone number assigned to a cellular telephone service; ii. Whether Defendants called non-customers of Defendants for marketing purposes; iii.Whether Plaintiff and the Class members were damaged thereby, and the extent of damages for such violation(s); and iv.Whether Defendants should be enjoined from engaging in such conduct in the future. 59. As a person who received calls from Defendants in which Defendants used an ATDS or an artificial or prerecorded voice, without Plaintiff’s prior express consent, Plaintiff is asserting claims that are typical of the Class. Plaintiff will fairly and adequately represent and protect the interests of the Class in that Plaintiff has no interests antagonistic to any member of the Class. 60. Plaintiff and the members of the Class have all suffered irreparable harm as a result of the Defendants' unlawful and wrongful conduct. Absent a class action, the Class will continue to face the potential for irreparable harm. In addition, these violations of law will be allowed to proceed without remedy and Defendants will likely continue such illegal conduct. The size of Class member’s individual claims causes, few, if any, Class members to be able to afford to seek legal redress for the wrongs complained of herein. 61. Plaintiff has retained counsel experienced in handling class action claims and claims involving violations of the Telephone Consumer Protection Act. 62. A class action is a superior method for the fair and efficient adjudication of this controversy. Class-wide damages are essential to induce Defendants to comply with federal and California law. The interest of Class members in individually controlling the prosecution of separate claims against Defendants is small because the maximum statutory damages in an individual action for violation of privacy are minimal. Management of these claims is likely to present significantly fewer difficulties than those that would be presented in numerous individual claims. 63. Defendants have acted on grounds generally applicable to the Class, thereby making appropriate final injunctive relief and corresponding declaratory relief with respect to the Class as a whole. FIRST CAUSE OF ACTION: NEGLIGENT VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT 47 U.S.C. § 227 ET SEQ. 64. Plaintiff incorporates by reference all of the above paragraphs of this Complaint as though fully stated herein. 65. The foregoing acts and omissions of Defendants 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. 66. As a result of Defendants' negligent violations of 47 U.S.C. § 227 et seq., Plaintiff and the Class are entitled to an award of $500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3) (B). 67. Plaintiff and the Class 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. 68. Plaintiff incorporates by reference all of the above paragraphs of this Complaint as though fully stated herein. 69. The foregoing acts and omissions of Defendants 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 seq. 70. As a result of Defendants' knowing and/or willful violations of 47 U.S.C. § 227 et seq., Plaintiff and each of the Class are entitled to treble damages, as provided by statute, up to $1,500.00, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B) and 47 U.S.C. § 227(b)(3)(C). 71. Plaintiff and the Class are also entitled to and seek injunctive relief prohibiting such conduct in the future. PRAYER FOR RELIEF 72. Wherefore, Plaintiff respectfully requests the Court grant Plaintiff and the Class members the following relief against each Defendant: FIRST CAUSE OF ACTION FOR NEGLIGENT VIOLATION OF THE TCPA, 47 U.S.C. § 227 ET SEQ. 73. As a result of Defendants' negligent violations of 47 U.S.C. § 227(b)(1), Plaintiff seeks for himself and each Class member $500.00 in statutory damages, for each and every violation, pursuant to 47 U.S.C. § 227(b)(3) (B). 74. Pursuant to 47 U.S.C. § 227(b)(3)(A), injunctive relief prohibiting such conduct in the future. 75. Any other relief the Court may deem just and proper. SECOND CAUSE OF ACTION FOR KNOWING AND/OR WILLFUL VIOLATION OF THE TCPA, 47 U.S.C. § 227 ET SEQ. 76. As a result of Defendants' willful and/or knowing violations of 47 U.S.C. § 227(b)(1), Plaintiff seeks for himself and each Class member treble damages, as provided by statute, up to $1,500.00 for each and every violation, pursuant to 47 U.S.C. § 227(b)(3)(B) and 47 U.S.C. § 227(b)(3) (C). 77. Pursuant to 47 U.S.C. § 227(b)(3)(A), injunctive relief prohibiting such conduct in the future. 78. Any other relief the Court may deem just and proper. TRIAL BY JURY 79. Pursuant to the seventh amendment to the Constitution of the United States of America, Plaintiff is entitled to, and demands, a trial by jury. Date: March 28, 2018 HYDE & SWIGART, APC By: s/Joshua B. Swigart, Esq. Joshua B. Swigart [email protected] Attorneys for Plaintiff Other Attorneys of Record, besides caption page: Abbas Kazerounian, Esq. (SBN: 25283) [email protected] Kazerouni Law Group, APC 245 Fischer Avenue, Unit D1 Costa Mesa, CA 92626 Telephone: (800) 400-6808 Facsimile: (800) 520-5523

privacy

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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION KRISTY WILSON, DARREN MOORE, and KISHA ULYSSE, individually, and on behalf of all others similarly situated, Plaintiffs, v. Civil Action No. JURY DEMAND MICROS SYSTEMS INC., Defendant. COMPLAINT COME NOW the Plaintiffs Kristy Wilson (“Wilson”), Darren Moore (“Moore”), and Kisha Ulysse (“Ulysse”) (collectively “Plaintiffs”), by and through undersigned counsel, and file this Complaint as follows: NATURE OF THE ACTION 1. Plaintiffs bring this lawsuit against Micros Systems each on their own behalf, and on behalf of all those similarly situated who worked for Defendant Micros Systems Inc. (“Micros Systems” or “Defendant”) as an Implementation Specialist, or any other position performing substantially similar job duties under a different job title (collectively an “Implementation Specialist”) within the period beginning three years prior to the filing date of this Complaint through the date of judgment (the “Collective Period”) who worked any hours over forty in one or more work weeks without receiving the overtime compensation required by the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. (collectively the “Similarly Situated Employees”), for entry of judgment and to recover overtime pay, liquidated damages, prejudgment interest, costs, and attorney’s fees under the Fair Labor Standards Act. Plaintiffs file herewith as Attachment 1 their signed “Consents” to join this collective action under 29 U.S.C. § 216(b). 2. Named Plaintiff Ulysse (the “California Named Plaintiff”) also brings this action individually, collectively, and on behalf of all persons who were employed by Micros Systems in any Implementation Specialist position in the State of California and/or performed work in any Implementation Specialist position for Micros Systems in the State of California, and who did not receive the overtime and premium wages required by the overtime pay and restitution laws of the State of California at any time during the four years prior to the date of the filing of this Complaint for hours worked covered by the overtime pay and restitution laws of the State of California (hereinafter the “California Class Period”), which class of persons is hereinafter referred to as the “California Class.”1 This claim is brought both under Fed. R. Civ. P. 23 and under the “notice and opt-in” procedures set forth in section 216(b) of the Fair Labor Standards Act, which permits the “notice and opt-in” procedure to be used to prosecute state law claims that are supplemental to Plaintiff’s FLSA claims. 3. Each of the following allegations pertains and applies to all Plaintiffs, the Similarly Situated Employees, and the California Class equally throughout all or a substantial part of the Collective Period and the California Class Period. For purposes of simplicity, collective reference to both the Similarly Situated Employees and the California Class are referred to as the proposed “Class” and the proposed respective Collective and California Class Periods are referred to as the “Relevant Time Periods.” 1 The statute of limitations under California law for restitution is four years. Accordingly, the California Class Period for Plaintiff and the California Class’ restitution claim is the date four years preceding the filing date of this Complaint through judgment. 4. Defendant willfully violated the FLSA, the California Labor Code and its IWC Wage Orders, by failing to pay Plaintiffs, the California Class, and the Similarly Situated Employees for all overtime hours worked at a rate of time and one-half the required regular rate—inclusive of all compensation not excludable from the regular rate calculation under applicable law—for all hours worked above 40 in a workweek, and failing to pay Plaintiffs, the Class, and the Similarly Situated Employees all overtime compensation owed on a timely basis. Plaintiffs, the California Class, and the Similarly Situated Employees are entitled to unpaid wages from Defendant for all hours worked above 40 in a workweek, and are also entitled to liquidated damages, pursuant to the FLSA for Plaintiffs and all Similarly Situated Employees who join this collective action, and pursuant to California law for the California Named Plaintiff and the California Class. JURISDICTION AND VENUE 5. This Court has jurisdiction over Plaintiffs’ FLSA claims pursuant to 29 U.S.C. § 216(b) and 28 U.S.C. § 1331. 6. This Court also has supplemental jurisdiction, pursuant to 28 U.S.C. § 1367, over the claims of the California Named Plaintiff and the California Class for violations of California’s laws, because their state law claims and the federal claims derive from a common nucleus of operative fact and form part of the same case or controversy. 7. Upon information and belief, at least one member of the proposed California Class is a citizen of a state different from that of Defendant, and at least one member of the proposed California Class has claims which value in excess of $75,000, including damages, statutory damages and fees and costs. 8. Plaintiff’s claims involve matters of national or interstate interest. 9. Defendant maintains an office in Nashville, Tennessee, within this judicial district, located at 618 Grassmere Park Drive, Suite 1, Nashville, TN 37211. 10. Defendant is subject to personal jurisdiction in this judicial district. 11. Venue in this Court is proper pursuant to 28 U.S.C. § 1391 because a substantial part of the events or omissions giving rise to the Plaintiffs’ claims occurred in this District. Plaintiffs Wilson and Moore, and other Similarly Situated Employees and California Class members, labored for Defendant within this district and received wage payments from Defendant within this district. 12. This Court is empowered to issue a declaratory judgment pursuant to 28 U.S.C. §§ 2201 and 2202. 13. Under California Business & Professions Code § 17204, any person acting on his or her own behalf may bring an action in a court of competent jurisdiction. Thus, this Court has appropriate jurisdiction over the California Class claims. PARTIES 14. Defendant is a corporation organized and existing under the laws of the State of Maryland, with its principal place of business located at 7031 Columbia Gateway Drive, Columbia, Maryland 21046-2289. 15. Defendant develops, markets, and sells propriety enterprise software, services and solutions (“product”) to, among others, the restaurant/bar industry (referred to by Defendant as the “POS” side of the business) and the hotel/property management industry (referred to by Defendant as the “PMS” side of the business). 16. Among other duties, Implementation Specialists travel to/from and install and implement Defendant’s product at the customer site. 17. The Implementation Specialists have as their primary duty the onsite installation, implementation, and configuration of Defendant’s product. 18. Defendant represents to the public on its website, http://www.micros.com/AboutUs/CompanyProfile/Default.htm, the following information about the company: • Over 6,400 employees, more than 45 wholly or majority- owned subsidiaries and branch offices in major markets, and 90 distributors in 50 countries. • Global leader in the restaurant industry with more than 370,000 installations worldwide. • Global leader in the hotel industry with over 30,000 installations worldwide. 19. Defendant operates an enterprise engaged in commerce, and employs or employed Plaintiffs and other Implementation Specialists within the meaning of the FLSA and California’s wage laws. Defendant employs individuals in the State of Tennessee, maintains an office in this district, filed to transact business and maintained active foreign corporation status with the Tennessee Secretary of State’s Office, and is and was engaged in business in the State of Tennessee so that the exercise of jurisdiction over it is proper. 20. During the Relevant Time Periods, Defendant employed individuals who worked in the State of California, maintained one or more offices in the State of California, filed to transact business and maintained active foreign corporation status with the California Secretary of State’s Office, and is and was engaged in business in the State of California so that the application of California’s state wage laws to work performed in the State of California is proper. 21. Defendant had annual gross revenues in excess of $500,000.00 during the Relevant Time Periods applicable to this Complaint. 22. Plaintiff Wilson is an adult individual and a resident of Tennessee who worked for Defendant, and received wage payments from Defendant, as an Implementation Specialist in Mt. Juliet, Tennessee (Wilson County) within this judicial district from approximately March, 2009 through June, 2011. 23. At various times during her employment, including but not limited to approximately December, 2009, Plaintiff Wilson worked over eight (8) hours in a day and over forty (40) hours in a work week on an installation project for Defendant in the State of California. 24. Plaintiff Moore is an adult individual and a resident of Tennessee who worked for Defendant, and received wage payments from Defendant, as an Implementation Specialist in Nashville, Tennessee (Davidson County) within this judicial district from approximately November, 2012 to April, 2013. 25. Plaintiff Ulysse is an adult individual who worked for Defendant as an Implementation Specialist from approximately February, 2009 to September, 2013. 26. At various times during her employment, including but not limited to as recently as in 2013, Plaintiff Ulysse worked over eight (8) hours in a day and over forty (40) hours in a work week on installation projects for Defendant in the State of California. FACTS 27. At all times during the Relevant Time Periods, Defendant has been and continues to be, an employer engaged in interstate commerce and/or the production of goods for commerce, within the meaning of the FLSA, 29 U.S.C. §§ 206(a) and 207(a). 28. At all times during the Relevant Time Periods, Defendant employed Plaintiffs, and Plaintiffs met the definition of an “employee,” within the meaning of the FLSA. 29. At all times during the Relevant Time Periods, Defendant has had annual gross revenues exceeding $500,000. 30. At all times during the Relevant Time Periods, and, upon information and belief as to the California Class and the Similarly Situated Employees continuing until today, Defendant suffered or permitted Plaintiffs, the California Class, and the Similarly Situated Employees to work in excess of 40 hours per workweek during the Relevant Time Periods without receiving the legally required amount of overtime wages from Defendant for all overtime hours worked by them as required by the FLSA (for Plaintiffs and the Similarly Situated Employees) 31. Defendant uniformly misclassified Plaintiffs, the California Class, and the Similarly Situated Employees as exempt from the maximum hour and overtime payment requirements under applicable federal and state laws. Defendant knew and should have known that Plaintiffs, the California Class, and the Similarly Situated Employees did not satisfy the requirements for application of any bona fide exemption from the maximum hour and overtime payment requirements under applicable federal and state laws. Defendant’s misclassification was willful. 32. Defendant suffered or permitted Plaintiffs, the California Class, and the Similarly Situated Employees to work hours requiring overtime and other premium compensation under the FLSA and applicable state law, without paying Plaintiffs, the California Class, and the Similarly Situated Employees the overtime and other premium compensation required by the FLSA and applicable state law. 33. During the Relevant Time Periods, Defendant paid Plaintiffs, the California Class, and the Similarly Situated Employees, and upon information and belief as to the California Class and the Similarly Situated Employees continues to pay the California Class and the Similarly Situated Employees, company-wide under the same centralized and uniformly applied compensation structure, in accordance with the centralized compensation and benefit terms established by Defendant’s corporate office during the relevant period. 34. During the Relevant Time Periods, in addition to their regular weekly pay (referred to by Defendant as a “salary”), Plaintiffs, the California Class, and the Similarly Situated Employees were eligible to receive, and many did in fact receive, bonuses which caused their weekly pay amounts to vary based on whether a bonus was paid for that week and/or the amount thereof. 35. During the Relevant Time Periods, in addition to their regular weekly pay (referred to by Defendant as a “salary”), Plaintiffs, the California Class, and the Similarly Situated Employees were at all times eligible to receive from Defendant, and many did in fact receive, bonuses which caused their weekly pay amounts to vary based on whether a bonus was paid for that week and/or the amount thereof. 36. By way of non-exhaustive examples, Defendant paid Plaintiff Wilson a bonus of approximately $1500 during her employment as an Implementation Specialist, and Defendant paid Plaintiff Ulysse one or two bonuses of approximately $250 each during her employment as an Implementation Specialist. 37. During the Relevant Time Periods, in addition to their regular weekly pay (referred to by Defendant as a “salary”), Plaintiffs, the California Class, and the Similarly Situated Employees were at all times eligible to receive from Defendant, and many did in fact receive, “compensatory time” lump sum leave with pay as additional compensation and benefits for certain hours worked. 38. By way of non-exhaustive examples, Defendant awarded Plaintiff Moore lump sum hours of paid “compensatory time” leave during his employment as an Implementation Specialist. 39. All actions and omissions described in this Complaint were made by Defendant directly or through its supervisory employees and agents. CLASS ACTION ALLEGATIONS 40. The California Named Plaintiff sues on her own behalf and on behalf of the California Class as defined above, pursuant to FED. R. CIV. P. 23(a), (b)(2) and (b)(3). 41. The California Class is so numerous that joinder of all members is impracticable. Although the precise number of such persons is unknown, these similarly situated employees are known to Defendant, are readily identifiable, and can be located through Defendant’s records. Upon information and belief, there are at least 40 members of the California Class. 42. There are questions of law and fact common to the members of the California Class that predominate over any questions solely affecting the individual members of the California Class, including, without limitation: a. Whether Defendant employed the California Named Plaintiff and the California Class within the meaning of the California Labor Code; b. Whether Defendant failed to pay the California Named Plaintiff and the California Class the legally required amount of overtime compensation and other premium payments for hours worked, and consequently all wages due to them, in violation of the California Unfair Competition Law, Cal. Bus. & Prof. Code §17200 et seq., and the California Labor Code and related regulations, Cal. Labor Code §§ 201, 202, 203, 226, 510, 1174, 1174.5, and 1194, Cal. Wage Order No. 4; c. Whether Defendant willfully misclassified the California Named Plaintiff and the California Class as exempt from the overtime requirements of applicable state law; d. Whether Defendant owes the California Named Plaintiff and the California Class restitution for its unlawful policies; e. Whether Defendant is liable for all damages claimed by the California Named Plaintiff and the California Class, including, without limitation, compensatory, punitive and statutory damages, interest, costs and disbursements, and attorneys’ fees; and f. Whether Defendant should be enjoined from continuing to violate the California Labor Code in the future. 43. The California Named Plaintiff’s claims are typical of the claims of the members of the Class. The California Named Plaintiff has the same interests in this matter as all other members of the California Class. 44. The California Named Plaintiff is an adequate class representative, is committed to pursuing this action and has retained competent counsel experienced in wage and hour law and class action litigation. 45. Class certification of the California Named Plaintiff’s California state law 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 California Class, making appropriate both declaratory and injunctive relief with respect to the California Class as a whole. The members of the California Class are entitled to injunctive relief to end Defendant’s common and uniform illegal policy of misclassifying the California Class as exempt and denying them the wages to which they are entitled. 46. Class certification of the California Named Plaintiff’s California state law claims is also appropriate pursuant to FED. R. CIV. P. 23(b)(3) because questions of law and fact common to the California Class predominate over questions affecting only individual members of the California Class, and because a class action is superior to other available methods for the fair and efficient adjudication of this litigation. 47. The California Named Plaintiff knows of no difficulty that would be encountered in the management of this litigation that would preclude its maintenance as a class action. COUNT ONE: FAIR LABOR STANDARDS ACT 29 U.S.C. § 201 et seq. (ON BEHALF OF PLAINTIFFS AND THE SIMILARLY SITUATED EMPLOYEES) 48. All previous paragraphs are incorporated as though fully set forth herein. 49. As alleged above, Plaintiffs bring this action each both individually, and as a collective action under 29 U.S.C. § 216(b) on behalf of the Similarly Situated Employees. 50. Plaintiffs performed the same or similar job duties as the other Similarly Situated Employees during the Relevant Time Periods. 51. At all relevant times, Defendant had a uniform policy of willfully classifying Plaintiffs and the Similarly Situated Employees as exempt and thereby failing to pay them the legally required amount of overtime compensation for all hours worked in excess of forty hours per workweek under the FLSA on a timely basis in violation of the FLSA. 52. On numerous occasions during the relevant period, Defendant suffered or permitted Plaintiffs and the Similarly Situated Employees to work more than 40 hours in a work week without receiving overtime compensation at time-and-a-half their properly calculated regular rate for hours worked over 40 under the FLSA -- i.e., their regular rate inclusive of their base rate for non-overtime hours and all other compensation (including bonuses) not otherwise excludable under 29 U.S.C. § 207(e) (“regular rate”). 53. As a result of Defendant’s willful failure to compensate Plaintiffs and the Similarly Situated Employees at a rate not less than one and one-half times the required regular rate of pay for work performed in excess of forty hours in a workweek, Defendant has violated and continues to violate the FLSA, 29 U.S.C. §§ 201 et seq., including 29 U.S.C. §§ 207(a)(1) and 215(a). 54. Upon information and belief, Defendant has failed to make, keep and preserve records with respect to Plaintiffs and the Similarly Situated Employees sufficient to determine their wages, hours and other conditions and practices of employment in violation of the FLSA, 29 U.S.C. §§ 201, et seq., including 29 U.S.C. §§ 211(c) and 215(a). 55. Defendant’s conduct as alleged herein constitutes a willful violation of the FLSA within the meaning 29 U.S.C. § 255(a). Due to Defendant’s FLSA violations, Plaintiffs and the Similarly Situated Employees are entitled to recover from Defendant their unpaid wages for the legally required amount of overtime compensation for all of the hours worked by them in excess of forty in a workweek, including actual and liquidated damages, prejudgment interest, the Defendant’s share of FICA, FUTA, state unemployment insurance, and any other required employment taxes, reasonable attorneys’ fees and costs and disbursements of this action. COUNT TWO: CALIFORNIA STATE LABOR CODE – FAILURE TO PAY OVERTIME Cal. Wage Order No. 4; Cal. Labor Code §§ 510, 1194 (ON BEHALF OF THE CALIFORNIA NAMED PLAINTIFF AND THE CALIFORNIA CLASS) 56. All previous paragraphs are incorporated as though fully set forth herein. 57. At all times relevant to this action, the California Named Plaintiff and the California Class were employed by Defendants within the meaning of the California Labor Code and performed work for Defendant during one or more work weeks that was covered by the California Labor Code, including but not limited to performing installations and implementations at customer sites within the State of California. 58. The California Labor Code requires employers, such as Defendant, to pay overtime compensation to all non-exempt employees. 59. The California Named Plaintiff and the California Class were non-exempt employees entitled to be paid proper overtime compensation for all hours worked. 60. During the relevant statutory period, the California Named Plaintiff and the California Class worked in excess of eight hours in a work day and/or forty hours in a work week for Defendant. 61. During the relevant statutory period, Defendant failed and refused to pay the California Named Plaintiff and the California Class proper overtime compensation for overtime hours worked. 62. Defendant had a policy and practice of failing and refusing to pay proper overtime pay to the California Named Plaintiff and the California Class for their hours worked. 63. By the course of conduct set forth above, Defendant violated Cal. Labor Code §§ 510, 1194, and applicable IWC Wage Order (for the California Named Plaintiff and the California Class). Defendant’s violation of these laws was willful. The California Named Plaintiff and the California Class members who did not receive the overtime wages referenced in this paragraph within the Relevant Time Period for work covered by applicable California law shall constitute the “California Overtime Subclass.” 64. As a direct and proximate result of Defendant’s unlawful conduct, as set forth herein, the California Named Plaintiff and the California Class have sustained damages, including loss of earnings for hours of overtime worked on behalf of Defendant, prejudgment interest, and attorneys’ fees and costs. COUNT THREE: CALIFORNIA WAGE PAYMENT PROVISIONS OF LABOR CODE Cal. Labor Code §§ 201, 202 & 203 (ON BEHALF OF THE CALIFORNIA NAMED PLAINTIFF AND THE CALIFORNIA CLASS) 65. All previous paragraphs are incorporated as though fully set forth herein. 66. California Labor Code §§ 201 and 202 require Defendant to pay employees all wages due within the time specified by law. California Labor Code § 203 provides that if an employer willfully fails to timely pay such wages, the employer must continue to pay the subject employees’ wages until the back wages are paid in full or an action is commenced, up to a maximum of thirty days of wages. 67. At all times during the Relevant Time Periods, and, upon information and belief as to the California Class continuing until today, the California Named Plaintiff and the California Class who were terminated or separated from their employment from Defendant during the Relevant Time Periods were not timely paid all wages due as required by Labor Code § 203. Defendant’s violation of this law was willful. The California Named Plaintiff and the California Class members who did not receive these wages due referenced in this paragraph within the Relevant Time Period for work covered by applicable California law shall constitute the “California Separation Wages Subclass.” 68. As a consequence of Defendant’s willful conduct in not paying proper compensation for all hours worked, the California Named Plaintiff and the California Class are entitled to up to thirty days’ wages under Labor Code § 203, together with interest thereon, and attorneys’ fees and costs. COUNT FOUR: CALIFORNIA WAGE STATEMENT PROVISIONS OF LABOR CODE Cal. Wage Order No. 4; Cal. Labor Code § 226 (ON BEHALF OF THE CALIFORNIA NAMED PLAINTIFF AND THE CALIFORNIA CLASS) 69. All previous paragraphs are incorporated as though fully set forth herein. 70. Defendant knowingly and intentionally failed to provide timely, accurate, itemized wage statements including, inter alia, hours worked, to the California Named Plaintiff and the California Class in accordance with Labor Code § 226(a) and the IWC Wage Orders. Such failure caused injury to the California Named Plaintiff and the California Class, by, among other things, impeding them from knowing the amount of wages to which they are and were entitled. The California Named Plaintiff and the California Class members who did not receive the accurate itemized wage statements referenced in this paragraph within the Relevant Time Period for work covered by applicable California law shall constitute the “California Wage Statement Subclass.” COUNT FIVE: CALIFORNIA REST BREAK AND MEAL PERIOD PROVISIONS Cal. Wage Order No. 4; Cal. Labor Code §§ 226 et seq., 512, (ON BEHALF OF THE CALIFORNIA NAMED PLAINTIFF AND THE CALIFORNIA CLASS) 71. All previous paragraphs are incorporated as though fully set forth herein. 72. California Labor Code section 512 prohibits an employer from employing an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes, or for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes. 73. Section 11 of Wage Order No. 4 provides (and at all times relevant hereto provided) in relevant part that: No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes, except that when a work period of not more than six (6) hours will complete the day’s work the meal period may be waived by mutual consent of the employer and employee. Unless the employee is relieved of all duty during a 30 minute meal period, the meal period shall be considered an "on duty" meal period and counted as time worked. An "on duty" meal period shall be permitted only when the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to. The written agreement shall state that the employee may, in writing, revoke the agreement at any time. If an employer fails to provide an employee a meal period in accordance with the applicable provisions of this Order, the employer shall pay the employee one (1) hour of pay at the employee’s regular rate of compensation for each work day that the meal period is not provided. 74. Section 12 of Wage Order No. 4 provides (and at all times relevant hereto provided) in relevant part that: Every employer shall authorize and permit all employees to take rest periods, which insofar as practicable shall be in the middle of each work period. The authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof. However, a rest period need not be authorized for employees whose total daily work time is less than three and one-half (3 ½) hours. Authorized rest period time shall be counted, as hours worked, for which there shall be no deduction from wages. If an employer fails to provide an employee a rest period in accordance with the applicable provisions of this Order, the employer shall pay the employee one (1) hour of pay at the employee’s regular rate of compensation for each work day that the rest period is not provided. 75. California Labor Code section 226.7 prohibits any employer from requiring any employee to work during any meal or rest period mandated by an applicable IWC wage order, and provides that an employer that fails to provide an employee with a required rest break or meal period shall pay that employee one additional hour of pay at the employee’s regular rate of compensation for each work day that the employer does not provide a compliant meal or rest 76. Defendant willfully failed to provide the California Named Plaintiff and the California Class with meal periods as required by law, and willfully failed to authorize and permit the California Named Plaintiff and the California Class to take rest periods as required by law. The California Named Plaintiff and the California Class are therefore entitled to payment of the meal and rest period premiums as provided by law. The California Named Plaintiff and the California Class members who did not receive the rest breaks and premium wages referenced in this paragraph within the Relevant Time Period for work covered by applicable California law shall constitute the “California Rest Break Subclass.” The California Named Plaintiff and the California Class members who did not receive the meal breaks and premium wages referenced in this paragraph within the Relevant Time Period for work covered by applicable California law shall constitute the “California Meal Break Subclass.” COUNT SIX: CALIFORNIA UNFAIR COMPETITION LAW Cal. Bus. & Prof. Code §§ 17200 et seq. (ON BEHALF OF THE CALIFORNIA NAMED PLAINTIFF AND THE CALIFORNIA CLASS) 77. All previous paragraphs are incorporated as though fully set forth herein. 78. The foregoing conduct, as alleged, violates the California Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200 et seq. of the Cal. Bus. & Prof. Code prohibits unfair competition by prohibiting, inter alia, any unlawful or unfair business acts or practices. 79. Beginning at a date unknown to the California Named Plaintiff, but at least as long ago as the year 2009, Defendant committed acts of unfair competition, as defined by the UCL, by, among other things, engaging in the acts and practices described herein. Defendant’s conduct as herein alleged has injured the California Named Plaintiff and the California Class by wrongfully denying them earned wages, and therefore was substantially injurious to the California Named Plaintiff and the California Class. 80. Defendant engaged in unfair competition in violation of the UCL by violating, inter alia, each of the following laws. Each of these violations constitutes an independent and separate violation of the UCL: A. Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. B. California Labor Code §§ 510 & 1194 C. California Labor Code §§ 226.7 & 512 81. Defendant’s course of conduct, acts, and practices in violation of the California laws mentioned in the above paragraph constitute a separate and independent violation of the UCL. Defendant’s conduct described herein violates the policy or spirit of such laws or otherwise significantly threatens or harms competition. 82. The harm to the California Named Plaintiff and the California Class in being wrongfully denied lawfully earned wages outweighed the utility, if any, of Defendant’s policies or practices and therefore, Defendant’s actions described herein constitute an unfair business practice or act within the meaning of the UCL. 83. Pursuant to Business and Professions Code § 17200 et seq., the California Named Plaintiff and the California Class are entitled to restitution of the overtime earnings and other unpaid wages alleged herein that were withheld and retained by Defendant during a period that commences four years prior to the filing of this action, a permanent injunction requiring Defendant to pay required wages, an award of attorneys’ fees pursuant to Code of Civil Procedure § 1021.5 and other applicable law, and costs. PRAYER FOR RELIEF 84. WHEREFORE, Plaintiffs, on behalf of themselves and all members of the FLSA Collective, pray for relief as follows: A. Designation of this action as a collective action on behalf of the FLSA Collective and prompt issuance of notice pursuant to 29 U.S.C. § 216(b) to all similarly situated members of the Collective, apprising them of the pendency of this action, and permitting them to assert timely FLSA claims in this action by filing individual consent forms pursuant to 29 U.S.C. § 216(b); B. Judgment against Defendant for an amount equal to Plaintiff and the FLSA Collective’s unpaid overtime wages at the applicable rates; C. A finding that Defendant’s conduct was willful D. An equal amount to the overtime wages as liquidated damages; E. All costs and attorney’ fees incurred prosecuting these claims, including expert fees; F. Pre-judgment and post-judgment interest, as provided by law; 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. Such further relief as the Court deems just and equitable. 85. WHEREFORE, the California Named Plaintiff and the California Class pray for relief as follows: A. Unpaid overtime wages, other due wages, injunctive relief, and unpaid meal and rest premiums pursuant to California law; B. Appropriate equitable relief to remedy Defendants’ violations of state law; C. Appropriate statutory penalties; D. An award of damages and restitution to be paid by Defendant according to proof; E. Attorneys’ fees and costs of suit, including expert fees pursuant to Cal. Labor §§ 1194, and California Code of Civil Procedure § 1021.5; F. Pre-judgment and post-judgment interest, as provided by law; and G. Such other equitable relief as the Court may deem just and proper. H. DEMAND FOR JURY TRIAL 86. Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiffs, individually and on behalf of all others similarly situated, demand a trial by jury. Respectfully submitted this 22nd day of November, 2013, Respectfully submitted, GILBERT RUSSELL McWHERTER PLC /s/ Michael L. Russell MICHAEL L. RUSSELL #20268 5409 Maryland Way, Suite 150 Brentwood, Tennessee 37027 Telephone: (615) 354-1144 Email: [email protected] /s/ C. Andrew Head C. Andrew Head Georgia Bar No. 341472 (application for pro hac vice to be filed) FRIED & BONDER, LLC White Provision, Suite 305 1170 Howell Mill Road, N.W. Atlanta, Georgia 30318 Telephone: (404) 995-8808 Facsimile: (404) 995-8899 Email: [email protected] Attorneys for Plaintiff

employment & labor

R8EPDYcBD5gMZwczhcsE

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK ROBERT STIER, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. Case No.: _________________ CLASS ACTION COMPLAINT FOR VIOLATION OF THE SECURITIES EXCHANGE ACT OF 1934 DEMAND FOR JURY TRIAL DATAWATCH CORPORATION, CHRISTOPHER T. COX, DONALD R. FRIEDMAN, THOMAS H. KELLY, DAVID C. MAHONEY, JOAN MCARDLE, MICHAEL A. MORRISON, RICHARD DE J. OSBORNE, and RANDALL P. SEIDL, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Plaintiff Robert Stier (“Plaintiff”), on behalf of himself and all others similarly situated, by and through his attorneys, alleges the following upon information and belief, including investigation of counsel and review of publicly-available information, except as to those allegations pertaining to Plaintiff, which are alleged upon personal knowledge: NATURE OF THE ACTION 1. This is a class action brought by Plaintiff on behalf of himself and all other similarly situated public stockholders of Datawatch Corporation (“Datawatch” or the “Company”) against Datawatch and the members of the Datawatch’s board of directors (collectively referred to as the “Board” or the “Individual Defendants,” and, together with Datawatch, the “Defendants”) for their violations of Sections 14(d)(4), 14(e), and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. §§ 78n(d)(4), 78n(e), 78t(a), and U.S. Securities and Exchange Commission (“SEC”) Rule 14d-9, 17 C.F.R. §240.14d-9(d) (“Rule 14d-9”), and to enjoin the expiration of a tender offer (the “Tender Offer”) by Altair Engineering Inc. (“Altair”) through Dallas Merger Sub, Inc., a Delaware corporation and wholly- owned subsidiary of Altair (“Merger Sub”), to acquire all of the issued and outstanding shares of Datawatch (the “Proposed Transaction”). 2. On November 5, 2018, Datawatch, Altair, and Merger Sub entered into an Agreement and Plan of Merger (the “Merger Agreement”), whereby each holder of Datawatch common stock will receive $13.10 per share in cash (the “Offer Price”). 3. On November 14, 2018, in order to convince Datawatch stockholders to tender their shares, the Board authorized the filing of a materially incomplete and misleading Schedule 14D-9 Solicitation/Recommendation Statement (the “Recommendation Statement”) with the SEC. In particular, the Recommendation Statement contains materially incomplete and misleading information concerning: (i) the financial analyses conducted by the Company’s financial advisor, GCA Advisors, LLC (“GCA”), in support of their fairness opinion; (ii) the potential conflicts of interest faced by the Board; and (iii) the background process leading up to the Proposed Transaction. 4. The Tender Offer is scheduled to expire at 12:00 midnight, New York City time, at the end of the day on December 12, 2018 (the “Expiration Date”). It is imperative that the material information that has been omitted from the Recommendation Statement is disclosed to the Company’s stockholders prior to the Expiration Date so they can properly determine whether to tender their shares. 5. For these reasons, and as set forth in detail herein, Plaintiff seeks to enjoin Defendants from closing the Tender Offer or taking any steps to consummate the Proposed Transaction, unless and until the material information discussed below is disclosed to Datawatch stockholders or, in the event the Proposed Transaction is consummated, to recover damages resulting from the Defendants’ violations of the Exchange Act. JURISDICTION AND VENUE 6. This Court has jurisdiction over all claims asserted herein pursuant to Section 27 of the 1934 Act because the claims asserted herein arise under Sections 14(e), 14(d), and 20(a) of the 1934 Act. 7. Personal jurisdiction exists over each Defendant either because the Defendant conducts business in or maintains operations in this District, or is an individual who is either present in this District for jurisdictional purposes or has sufficient minimum contacts with this District as to render the exercise of jurisdiction over each Defendant by this Court permissible under the traditional notions of fair play and substantial justice. “Where a federal statute such as Section 27 of the [Exchange] Act confers nationwide service of process, the question becomes whether the party has sufficient contacts with the United States, not any particular state.” Sec. Inv’r Prot. Corp. v. Vigman, 764 F.2d 1309, 1315 (9th Cir. 1985). “[S]o long as a defendant has minimum contacts with the United States, Section 27 of the Act confers personal jurisdiction over the defendant in any federal district court.” Id. at 1316. 8. Venue is proper in this District under Section 27 of the Exchange Act, 15 U.S.C. § 78aa, as well as 28 U.S.C. § 1391, because Defendants are found or are inhabitants or transact business in this District. Indeed, Datawatch’s common stock trades on the Nasdaq stock exchange, which is headquartered in this District, which renders venue in this District appropriate. See, e.g., United States v. Svoboda, 347 F.3d 471, 484 n.13 (2d Cir. 2003) (collecting cases). PARTIES 9. Plaintiff is, and has been continuously throughout all times relevant hereto, the owner of Datawatch common stock. 10. Defendant Datawatch is a Delaware corporation and maintains its principal executive offices at 4 Crosby Drive, Bedford, Massachusetts 01730. Datawatch designs, develops, markets, and distributes business computer software products to self-service data preparation and visual data discovery markets in the United States and internationally. The Company’s common stock is traded on the NASDAQ under the ticker symbol “DWCH.” 11. Defendant Christopher T. Cox is, and has been at all relevant times, a director of the Company. 12. Defendant Donald R. Friedman is, and has been at all relevant times, a director of the Company. 13. Defendant Thomas H. Kelly is, and has been at all relevant times, a director of the Company. 14. Defendant David C. Mahoney is, and has been at all relevant times, a director of the Company. 15. Defendant Joan McArdle is, and has been at all relevant times, a director of the Company. 16. Defendant Michael A. Morrison is, and has been at all relevant times, a director of the Company, and also serves as Datawatch’s President and Chief Executive Officer (“CEO”). 17. Defendant Richard de J. Osborne is, and has been at all relevant times, a director of the Company, and also serves as Chairman of the Board. 18. Defendant Randall P. Seidl is, and has been at all relevant times, a director of the Company. 19. The defendants identified in paragraphs 11 through 18 are collectively referred to herein as the “Individual Defendants” and/or the “Board,” collectively with Datawatch the “Defendants.” CLASS ACTION ALLEGATIONS 20. Plaintiff brings this class action pursuant to Fed. R. Civ. P. 23 on behalf of himself and the other public stockholders of Datawatch (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. 21. This action is properly maintainable as a class action because: (a) the Class is so numerous that joinder of all members is impracticable. As of November 6, 2018, there were 12,736,747 shares of Datawatch common stock outstanding, held by hundreds to thousands of individuals and entities scattered throughout the country. The actual number of public stockholders of Datawatch will be ascertained through discovery; (b) There are questions of law and fact that are common to the Class that predominate over any questions affecting only individual members, including the following: i. whether Defendants have misrepresented or omitted material information concerning the Proposed Transaction in the Recommendation Statement, in violation of Sections 14(d)(4) and 14(e) of the Exchange Act; ii. whether the Individual Defendants have violated Section 20(a) of the Exchange Act; and iii. whether Plaintiff and other members of the Class will suffer irreparable harm if compelled to tender their shares based on the materially incomplete and misleading Recommendation Statement. (c) Plaintiff is an adequate representative of the Class, has retained competent counsel experienced in litigation of this nature, and will fairly and adequately protect the interests of the Class; (d) Plaintiff’s claims are typical of the claims of the other members of the Class and Plaintiff does not have any interests adverse to the Class; (e) the prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the Class, which would establish incompatible standards of conduct for the party opposing the Class; (f) Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole; and (g) a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. SUBSTANTIVE ALLEGATIONS I. Background of the Company and the Proposed Transaction 22. Datawatch designs, develops, markets, and distributes business computer software products to self-service data preparation and visual data discovery markets in the United States and internationally. The Company’s software solutions allow organizations to access, analyze, and visualize their information. Datawatch’s products include Datawatch Monarch, a self-service data preparation tool to explore, manipulate, and merge new data sources; Datawatch Monarch Swarm, a browser-based platform offers team-driven data preparation and centralized data marketplace for speed collaboration; Datawatch Panopticon designed for situations for data analysis; and Datawatch Report Mining Server, a solution for data preparation capabilities. The Company also provides implementation and support of its software products, as well as training on their use and administration. Datawatch sells its products to end-users through distributors, value-added resellers, original equipment manufacturers, and strategic partners. 23. Altair, together with its subsidiaries, provides enterprise-class engineering software worldwide. Altair operates through two segments, Software and Client Engineering Services. Altair’s integrated suite of multi-disciplinary computer aided engineering software optimizes design performance across various disciplines, including structures, motion, fluids, thermal management, electromagnetics, system modeling and embedded systems, as well as provides data analytics and true-to-life visualization and rendering. 24. On November 11, 2018, Datawatch and Altair issued a joint press release announcing the Proposed Transaction. The press release stated, in relevant part: Altair Announces Agreement to Acquire Datawatch TROY, Michigan and BEDFORD, Massachusetts – November 5, 2018 – Altair (Nasdaq: ALTR) and Datawatch Corporation (Nasdaq-CM: DWCH) today announced the signing of a definitive merger agreement under which Altair has agreed to acquire Datawatch. Under the terms of the agreement, Altair will pay $13.10 per share in cash, representing a fully diluted equity value of approximately $176 million. The transaction was unanimously approved by the Boards of Directors of both companies. James Scapa, Altair’s Founder, Chairman, and Chief Executive Officer, commented, “Bringing Datawatch into Altair should result in a powerful offering consistent with our vision to transform product design and decision making by applying simulation, data science and optimization throughout product lifecycles. We see a convergence of simulation with the application of machine learning technology to live and historical sensor data as essential to creating better products, marketing them efficiently, and optimizing their in-service performance. Datawatch is a great team of people with best-in-class products, and we look forward to their joining us.” Altair believes the acquisition of Datawatch is compelling for a number of reasons, including: • The data analytics and data science markets are evolving rapidly to leverage many of the same technologies, such as high-performance computing and visualization, as Altair has been leveraging in simulation for many years. • Datawatch’s solutions, which include data prep, data prediction, and real-time high-volume data visualization technologies, are highly relevant and applicable to almost any company and vertical market. • There is strong opportunity to cross-sell Datawatch products into Altair’s primarily manufacturing customer base, which will be facilitated by applying Altair’s proven licensing models to Datawatch solutions. • Datawatch’s historical strength has been in the financial services and capital markets sectors. There is meaningful opportunity to disrupt these markets and expand usage by making it easier to access products through Altair’s licensing model, and there is a cross-sell opportunity with some relevant Altair products in these markets. Michael Morrison, Chief Executive Officer of Datawatch, added, “The Datawatch team is excited to join Altair and benefit from its long track record of success with developing and bringing to market highly differentiated software technology across diverse industry verticals. We feel great about the cultural alignment and look forward to driving continued innovation in our market- leading solutions as an integral part of Altair’s vision.” Terms of the Transaction Under the terms of the definitive merger agreement, Altair will commence a tender offer within ten business days to acquire all of the outstanding shares of common stock of Datawatch for $13.10 per share in cash. This represents a 35% percent premium to the closing price of Datawatch’s common stock on November 2, 2018. The tender offer is subject to customary closing conditions, including the tender of at least a majority of the outstanding shares of Datawatch common stock and the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Following the closing of the tender offer, a wholly-owned subsidiary of Altair will merge with and into Datawatch, with each share of Datawatch common stock that has not been tendered being converted into the right to receive the same $13.10 per share in cash offered in the tender offer. The transaction is anticipated to close in the fourth quarter of 2018. Funding for the transaction will come primarily from cash, coupled with utilization of borrowings under Altair’s existing credit facility. RBC Capital Markets, LLC is acting as exclusive financial advisor to Altair. GCA Advisors is acting as exclusive financial advisor to Datawatch. Legal counsel for Altair is Lowenstein Sandler LLP and legal counsel for Datawatch is Choate Hall & Stewart LLP.1 II. The Materially Incomplete and Misleading Recommendation Statement 25. On November 14, 2018, the Defendants filed a materially incomplete and misleading Recommendation Statement with the SEC and disseminated it to Datawatch’s stockholders. The Recommendation Statement misrepresents or omits material information that is necessary for the Company’s stockholders to make an informed decision whether to tender their shares in connection with the Tender Offer. 26. First, the Recommendation Statement describes GCA’s fairness opinion and the various valuation analyses performed in support of their opinion. However, the description of GCA’s fairness opinion and their analyses fails to include key inputs and assumptions underlying the analyses. Without this information, as described below, Datawatch’s stockholders are unable to fully understand these analyses and, thus, are unable to determine what weight, if any, to place on GCA’s fairness opinion in determining whether to tender their shares in the Proposed 1 Datawatch Corporation, Current Report (Form 8-K), at Exhibit 99.2 (Press release dated November 5, 2018.) (November 5, 2018) Transaction. This omitted information, if disclosed, would significantly alter the total mix of information available to Datawatch’s common stockholders. 27. With respect to GCA’s Discounted Cash Flow Analysis, the Recommendation Statement fails to disclose the following key components used in their analysis: (i) Datawatch’s net operating losses; and (ii) the inputs and assumptions underlying the calculation of the terminal growth rates ranging from 2.0% to 4.0%. See Recommendation Statement at 31. 28. These key inputs are material to Datawatch’s common stockholders, and their omission renders the summary of GCA’s Discounted Cash Flow Analysis incomplete and misleading. As a highly-respected professor explained in one of the most thorough law review articles regarding the fundamental flaws with the valuation analyses bankers perform in support of fairness opinions, in a discounted cash flow (“DCF”) analysis a banker takes management’s forecasts, and then makes several key choices “each of which can significantly affect the final valuation.” Steven M. Davidoff, Fairness Opinions, 55 Am. U.L. Rev. 1557, 1576 (2006). Such choices include “the appropriate discount rate, and the terminal value…” Id. As Professor Davidoff explains: There is substantial leeway to determine each of these, and any change can markedly affect the discounted cash flow value. For example, a change in the discount rate by one percent on a stream of cash flows in the billions of dollars can change the discounted cash flow value by tens if not hundreds of millions of dollars…. This issue arises not only with a discounted cash flow analysis, but with each of the other valuation techniques. This dazzling variability makes it difficult to rely, compare, or analyze the valuations underlying a fairness opinion unless full disclosure is made of the various inputs in the valuation process, the weight assigned for each, and the rationale underlying these choices. The substantial discretion and lack of guidelines and standards also makes the process vulnerable to manipulation to arrive at the “right” answer for fairness. This raises a further dilemma in light of the conflicted nature of the investment banks who often provide these opinions. Id. at 1577-78 (emphasis added). Without the above-mentioned information, Datawatch stockholders cannot evaluate for themselves the reliability of GCA’s DCF analysis, make a meaningful determination of whether the implied per share value ranges reflect the true value of the Company or was the result of GCA’s unreasonable judgment, and make an informed decision regarding whether to tender their shares in the Proposed Transaction. 29. With respect to GCA’s premiums paid analysis, the Recommendation Statement fails to disclose the identities of the 35 U.S. publicly traded technology companies that were considered and the individual premiums paid in each transaction. See Recommendation Statement at 32. The omission of this information renders the summary of this analysis and the calculated implied per share value ranges materially misleading. A fair summary of a premiums paid analysis requires the disclosure of the identities of the individual transactions considered and their respective premiums; merely providing the 25th and 75th percentiles that a banker applied is insufficient, as Datawatch stockholders are unable to assess whether the banker considered comparable transactions, or, instead, only considered specific transactions in order to make the premium being touted to Company stockholders and the Offer Price appear more favorable. 30. Second, the Recommendation Statement omits material information regarding potential conflicts of interest faced by the Company’s officers and directors. 31. Specifically, the Recommendation Statement fails to disclose the timing and nature of all communications concerning future employment of the Company’s officers and directors, in addition to the identities of the parties who participated in such communications. 32. Indeed, the Recommendation Statement notes that “[a]s of the date of this Schedule 14D-9, Altair has not finalized any arrangements with the executive officers of Datawatch with respect to continued employment with Altair following the effective time of the [Proposed Transaction],” Recommendation Statement at 8 (emphasis added), but entirely fails to disclose when Altair initiated discussions with certain Company officers and directors, and the identities of the individuals who participated in such discussions. In fact, in press release announcing the Proposed Transaction, Defendant Michael Morrison—Datawatch’s CEO—stated that “[t]he Datawatch team is excited to join Altair.” See supra (emphasis added). 33. If such negotiations took place, the particular individuals who are negotiating continued employment with Altair and the timing and nature of such discussions must be disclosed to Datawatch stockholders. Indeed, the timing and nature of post-close employment provides key insight concerning motivations that would prevent fiduciaries from acting solely in the best interests of a company’s stockholders. If certain members of the Board negotiated for their own interests ahead of stockholder compensation, stockholders would certainly find such information material. 34. Accordingly, if such negotiations took place, the failure to disclose identities of those individuals and the timing and nature of the negotiations renders the statements made in the Background of the Transaction, Post-Employment Compensation, and Arrangements between Datawatch and its Executive Officers, Directors and Affiliates sections of the Recommendation Statement materially incomplete and misleading. 35. Finally, the Recommendation Statement omits material information concerning the background process leading up to the Proposed Transaction and entry into the Merger Agreement. 36. Specifically, the Background of the Transaction section of the Recommendation Statement states: On October 29, 2018, Mr. Scapa contacted Mr. Morrison by telephone to discuss the potential tax liability and the possibility of reducing the deal consideration to account for the identified potential tax exposure. On October 30, 2018, Altair requested a $7 million reduction in deal consideration to account for the identified tax exposure. Datawatch and Altair engaged in further discussions regarding this matter and, on November 1, 2018, the Datawatch Board met to consider the request…Subsequent to conclusion of the Datawatch Board meeting on November 1st, Mr. Morrison and the chief executive officer of Altair discussed the matter and agreed that deal consideration be reduced by $5.5 million, or $0.40 per share, and that the identified key material terms in the merger agreement be resolved in a manner satisfactory to Datawatch. Recommendation Statement at 18. 37. However, the Recommendation Statement fails to disclose what “potential tax liability” Altair identified that ultimately resulted in a $5.5 million reduction in the Proposed Transaction’s consideration. Indeed, after identifying the potential tax liability, Altair requested a $7 million reduction. Moreover, the Recommendation Statement fails to disclose whether the Board, Company management, or GCA evaluated the likelihood of Datawatch’s tax exposure, and if so, the details surrounding such evaluations (e.g., the dates on which the potential tax liability was considered and any analyses that were prepared). 38. Datawatch stockholders are entitled to an accurate, full, and fair characterization of the process leading up to the Proposed Transaction, particularly in light of the fact that the Company’s potential tax exposure resulted in the Board agreeing to a $5.5 million reduction in the Proposed Transaction’s consideration only 1 week before the Merger Agreement was executed. 39. In sum, the omission of the above-referenced information renders the Recommendation Statement materially incomplete and misleading, in contravention of the Exchange Act. Absent disclosure of the foregoing material information prior to the Expiration Date, Plaintiff and the other members of the Class will be unable to make an informed decision regarding whether to tender their shares in the Proposed Transaction, and they are thus threatened with irreparable harm, warranting the injunctive relief sought herein COUNT I (Against All Defendants for Violation of Section 14(e) of the Exchange Act) 40. Plaintiff incorporates each and every allegation set forth above as if fully set forth 41. Section 14(e) of the Exchange Act provides that it is unlawful “for any person to make any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading…” 15 U.S.C. §78n(e). 42. Defendants violated § 14(e) of the Exchange Act by issuing the Recommendation Statement in which they made untrue statements of material facts or failed to state all material facts necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, in connection with the tender offer commenced in conjunction with the Proposed Transaction. Defendants knew or recklessly disregarded that the Recommendation Statement 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. 43. The Recommendation Statement was prepared, reviewed, and/or disseminated by Defendants. It misrepresented and/or omitted material facts, including material information about the consideration offered to Company stockholders via the Tender Offer and the intrinsic value of the Company. 44. In so doing, Defendants made untrue statements of fact and/or omitted material facts necessary to make the statements made not misleading. Each of the Individual Defendants, by virtue of their roles as officers and/or directors, were aware of the omitted information but failed to disclose such information, in violation of Section 14(e). The Individual Defendants were therefore reckless, as they had reasonable grounds to believe material facts existed that were misstated or omitted from the Recommendation Statement, but nonetheless failed to obtain and disclose such information to shareholders although they could have done so without extraordinary 45. The omissions and incomplete and misleading statements in the Recommendation Statement are material in that a reasonable stockholder would consider them important in deciding whether to tender their shares or seek appraisal. In addition, a reasonable investor would view the information identified above which has been omitted from the Recommendation Statement as altering the “total mix” of information made available to stockholders. 46. Defendants knowingly or with deliberate recklessness omitted the material information identified above from the Recommendation Statement, causing certain statements therein to be materially incomplete and therefore misleading. Indeed, while Defendants undoubtedly had access to and/or reviewed the omitted material information in connection with approving the Proposed Transaction, they allowed it to be omitted from the Recommendation Statement, rendering certain portions of the Recommendation Statement materially incomplete and therefore misleading. 47. The misrepresentations and omissions in the Recommendation Statement are material to Plaintiff, and Plaintiff will be deprived of their entitlement to make a fully informed decision if such misrepresentations and omissions are not corrected prior to the expiration of the Tender Offer. COUNT II (Against all Defendants for Violations of Section 14(d)(4) of the Exchange Act and SEC Rule 14d-9, 17 C.F.R. § 240.14d-9) 48. Plaintiff repeats and realleges the preceding allegations as if fully set forth herein. 49. Defendants have caused the Recommendation Statement to be issued with the intention of soliciting stockholder support of the Proposed Transaction. 50. Section 14(d)(4) of the Exchange Act and SEC Rule 14d-9 promulgated thereunder require full and complete disclosure in connection with tender offers. Specifically, Section 14(d)(4) provides that: Any solicitation or recommendation to the holders of such a security to accept or reject a tender offer or request or invitation for tenders shall be made in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. 51. SEC Rule 14d-9(d), which was adopted to implement Section 14(d)(4) of the Exchange Act, provides that: Information required in solicitation or recommendation. Any solicitation or recommendation to holders of a class of securities referred to in section 14(d)(1) of the Act with respect to a tender offer for such securities shall include the name of the person making such solicitation or recommendation and the information required by Items 1 through 8 of Schedule 14D-9 (§ 240.14d-101) or a fair and adequate summary thereof. 52. In accordance with Rule 14d-9, Item 8 of a Schedule 14D-9 requires a Company’s directors to: Furnish such additional information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not materially misleading. 53. The omission of information from a recommendation statement will violate Section 14(d)(4) and Rule 14d-9(d) if other SEC regulations specifically require disclosure of the omitted information. 54. The Recommendation Statement violates Section 14(d)(4) and Rule 14d-9 because it omits material facts, including those set forth above, which omissions render the Recommendation Statement false and/or misleading. Defendants knowingly or with deliberate recklessness omitted the material information identified above from the Recommendation Statement, causing certain statements therein to be materially incomplete and therefore misleading. Indeed, while Defendants undoubtedly had access to and/or reviewed the omitted material information in connection with approving the Proposed Transaction, they allowed it to be omitted from the Recommendation Statement, rendering certain portions of the Recommendation Statement materially incomplete and therefore misleading. 55. The misrepresentations and omissions in the Recommendation Statement are material to Plaintiff, and Plaintiff will be deprived of their entitlement to make a fully informed decision if such misrepresentations and omissions are not corrected prior to the Expiration Date. COUNT III (Against the Individual Defendants for Violations of Section 20(a) of the Exchange Act) 56. Plaintiff repeats and realleges the preceding allegations as if fully set forth herein. 57. The Individual Defendants acted as controlling persons of Datawatch within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their positions as officers and/or directors of Datawatch and participation in and/or awareness of the Company’s operations and/or intimate knowledge of the false and misleading statements contained in the Recommendation 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. 58. Each of the Individual Defendants was provided with or had unlimited access to copies of the Recommendation 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. 59. 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 Recommendation Statement contains the unanimous recommendation of the Individual Defendants to approve the Proposed Transaction. They were thus directly involved in the making of the Recommendation Statement. 60. By virtue of the foregoing, the Individual Defendants violated Section 20(a) of the Exchange Act. 61. As set forth above, the Individual Defendants had the ability to exercise control over and did control a person or persons who have each violated Section 14(e) and 14(d)(4) of the Exchange Act and Rule 14d-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 Exchange Act. As a direct and proximate result of the Individual Defendants’ conduct, Plaintiff and the Class have suffered damage and actual economic losses (i.e., the difference between the Offer Price and the true value of Datawatch shares) in an amount to be determined at trial. 62. Plaintiff and the Class have no adequate remedy at law. Only through the exercise of this Court’s equitable powers can Plaintiff and the Class be fully protected from the immediate and irreparable injury that Defendants’ actions threaten to inflict. PRAYER FOR RELIEF WHEREFORE, Plaintiff prays for judgment and relief as follows: A. Declaring that this action is properly maintainable as a Class Action and certifying Plaintiff as Class Representative and his counsel as Class Counsel; B. Preliminarily and permanently enjoining Defendants and their counsel, agents, employees, and all persons acting under, in concert with, or for them, from proceeding with, consummating, or closing the Tender Offer, unless and until Defendants disclose the material information identified above which has been omitted from the Recommendation Statement; C. Rescinding, to the extent already implemented, the Merger Agreement or any of the terms thereof, or granting Plaintiff and the Class rescissory damages; D. Directing the Defendants to account to Plaintiff and the Class for all damages suffered as a result of their wrongdoing; E. Awarding Plaintiff the costs and disbursements of this action, including reasonable attorneys’ and expert fees and expenses; and F. Granting such other and further equitable relief as this Court may deem just and JURY DEMAND Plaintiff demands a trial by jury on all issues so triable. DATED: November 26, 2018 MONTEVERDE & ASSOCIATES PC /s/ Juan E. Monteverde Juan E. Monteverde The Empire State Building 350 Fifth Avenue, Suite 4405 New York, NY 10118 Tel.: (212) 971-1341 Fax: (212) 202-7880 Email: [email protected] Attorneys for Plaintiff

securities

80_0A4kBRpLueGJZJ4yu

Civil Action No.: COMPLAINT and JURY DEMAND Granovsky & Sundaresh PLLC Benjamin Rudolph Delson (BD-1724) Alexander Granovsky (AG-6962) 48 Wall Street / New York, NY 10005 [email protected] [email protected] (646) 524-6001 Attorneys for Plaintiff Mohammad Chowdhury UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK MOHAMMAD CHOWDHURY, on behalf of himself and all other persons similarly situated, Plaintiff, v. RAJA 786 FOOD INC and RAJA S. ALI, individually, Defendants. Plaintiff Mohammad Chowdhury, on behalf of himself and all others similarly situated, upon personal knowledge as to himself and upon information and belief as to other matters, by his attorneys, Granovsky & Sundaresh PLLC, as and for his Complaint against Defendants Raja 786 Food Inc. and Raja S. Ali, alleges as follows: NATURE OF ACTION 1. During the first frightening months of the pandemic, homemade signs hung all around Brooklyn, thanking frontline workers—and not just the doctors and nurses and EMTs who risked infection to tend to the sick, but also the restaurant workers and deliverymen who kept going to work so that others could shelter at home. 2. This lawsuit is about some of those restaurant workers and deliverymen, and what they suffered through while they helped keep Brooklyn safe. 3. The Domino's Pizza franchise located at the corner of Kings Highway and Rockaway Parkway in Brooklyn stayed open during the lockdown. That franchise is owned by Defendant Raja Ali, through his company, Defendant Raja 786 Food Inc. 4. Plaintiff Mohammad Chowdhury worked at that Domino's from March until June of 2020, helping run the store through the worst of the pandemic. 5. Defendants took advantage of Mr. Chowdhury's strong work ethic and his desire to help his borough out during its crisis. Defendants stole tips or wages from Mr. Chowdhury every day that he worked for them. Defendants not only failed to pay Mr. Chowdhury for the hours he worked, they systematically falsified their own records to cover their tracks. 6. When Mr. Chowdhury objected, the general manager of the store laid hands on Mr. Chowdhury—wrapping his fingers and thumbs around Mr. Chowdhury's neck in a pantomime of strangulation—in an effort to frighten Mr. Chowdhury into silence. 7. These allegations are described in detail in the Statement of Facts below. 8. Plaintiff, on behalf of himself and on behalf of all other similarly situated employees and former employees of Domino's franchises owned by Defendants in New York State, brings this lawsuit seeking recovery against Defendants for Defendants’ violation of the Fair Labor Standards Act, as amended (the “FLSA”), 29 U.S.C. § 201 et. seq., and alleges that he and all others who opt into this action pursuant to the collective action provision of the FLSA, 29 U.S.C. § 216(b), are entitled to recover: (i) unpaid wages and unpaid tips, for work performed for which they received less than full compensation; (ii) unpaid overtime wages for overtime work for which they did not receive overtime; (iii) liquidated damages; and (iv) attorneys’ fees and costs. 9. Plaintiff, on his own behalf, brings this lawsuit seeking recovery against Defendants on several other grounds, including under the New York Labor Law, Art. 6, §§ 190 et. seq., and Art. 19, §§ 650 et. seq., and the supporting New York State Department of Labor regulations, 12 N.Y.C.R.R. § 142 (collectively, “NYLL”), for Defendants' failure to pay tips, wages and overtime wages, and for their failure to provide wage notices and wage statements, and under the FLSA and NYLL for retaliatory discharge in violation of those statutes. JURISDICTION AND VENUE 10. This Court has subject matter jurisdiction over Plaintiffs’ FLSA claims pursuant to 28 U.S.C. §§ 1331, 1367, and 2201. 11. This Court has subject matter jurisdiction over Plaintiffs’ state law claims pursuant to 28 U.S.C. § 1367. 12. Venue is proper in this district pursuant to 28 U.S.C. § 1391(b) because a substantial part of the acts or omissions giving rise to the claims herein occurred in this District. 13. This Court is empowered to issue a declaratory judgment pursuant to 28 U.S.C. §§ 2201 and 2202. PARTIES Defendants 14. Defendant RAJA S. ALI ("Ali") is an individual residing at 17 Bailey Ave., Bay Shore, NY 11706. 15. Upon information and belief, Ali is the 100% owner of Defendant RAJA 786 FOOD INC ("the Corporate Defendant", and, together with Ali, "Defendants"), a New York corporation with offices located at 241 Rockaway Parkway, Brooklyn, NY 11212. 16. Defendants own and operate a Domino's Pizza franchise located at 241 Rockaway Parkway. 17. Ali has the authority power to hire, fire and control nearly every working condition of the employees at that Domino's franchise, including Plaintiff and all similarly situated employees. 18. Upon information and belief, Defendants also own—either directly, or indirectly through other corporations controlled by Defendants—several other Domino's Pizza franchises in and around New York City. Upon information and belief, all Domino's Pizza franchises owned and operated by Defendants adhere to the same patterns, practices and policies with respect to employee pay. Upon information and belief, Ali has the authority power to hire, fire and control nearly every working condition of the employees at the all Domino's Pizza franchises that he owns and operates. 19. At all times relevant to this Complaint, Defendants employed individuals on an hourly basis to oversee and operate their Domino's Pizza franchises, including Assistant Managers and deliverymen. 20. Upon information and belief, at all times relevant to this Complaint, Defendants' annual gross volume of sales made or business done was not less than approximately $500,000.00. 21. At all times relevant to this Complaint, the Defendants constituted an “enterprise engaged in commerce” under the FLSA, 29 U.S.C. § 201 et. seq., and were and continue to be employers engaged in interstate commerce and/or the production of goods for commerce within the meaning of the FLSA, 29 U.S.C. §§ 206(a) and 207(a) and the NYLL. 22. Upon information and belief, at all relevant times, Defendants have used goods produced in interstate commerce. 23. Defendants caused the violations set forth in this Complaint. Plaintiff 24. Plaintiff MOHAMMAD CHOWDHURY (“Chowdhury”) is an individual residing in Brooklyn, New York. 25. At all relevant times, the work performed by Chowdhury and similarly situated employees was to the benefit of the business operated by Defendants. 26. At all relevant times, Chowdhury and similarly situated employees worked in interstate commerce as to fall within the protections of the Act. 27. A written consent form for Chowdhury is attached as Exhibit A to this Collective Action Complaint. STATEMENT OF FACTS 28. In March of 2020 Plaintiff Mohammad Chowdhury ("Chowdhury") learned through a friend who worked for Defendants that there was an opening for an Assistant Manager at Defendants' Domino's franchise on Rockaway Parkway in Brooklyn. 29. Chowdhury had worked at a Domino's franchise in the past and was familiar with the Assistant Manager role. 30. As an Assistant Manager at a Domino's franchise, he would be asked to do a little bit of everything: customer service, deliveries, general management of the store, whatever was needed. 31. He would be a Level Two employee and would be paid $16.50 per hour. 32. The position was non-exempt, and he would be entitled to overtime wages of $24.75 for every hour he worked above forty hours in a given workweek. 33. Chowdhury was interviewed for the Assistant Manager position by the franchise's General Manager, a man named Soumic Chowdhury ("Defendants' General Manager"). Although Chowdhury has the same last name as Defendants' General Manager, the two men are not related. 34. Defendants' General Manager hired our client in mid-March of 2020, just as the pandemic began to devastate Brooklyn. 35. The pandemic both increased the demand for pizza delivery in Brooklyn, and reduced the available labor pool, and so Chowdhury immediately began to work very long hours. He would typically arrive between 10am and 11am, and would often work until 1am or even 2am. He worked six and occasionally seven day a week. 36. The job required Chowdhury to be in close contact with many other people, both in the restaurant, while overseeing customer's orders and the preparation of pizzas, and around the borough, when delivering pizzas. 37. The epidemiology of the coronavirus was only beginning to be understood at the time, but Chowdhury knew that he was placing himself at risk of infection by working. 38. However, he felt a commitment to his coworkers, to Defendants' business, and to his borough, and he put his shoulder to the wheel. Chowdhury was proud of his small role in helping the city survive the pandemic. 39. In March, April and May of 2020, Chowdhury was typically working at least 80, and occasionally in excess of 90 hours in a week. 40. But Defendants quickly made clear that they would not pay Chowdhury all wages he was due. 41. From the time he was first hired as an Assistant Manager, Defendants' General Manager entered Chowdhury into the payroll system as a delivery driver, not as an Assistant Manager. Defendants' payroll system therefore compensated Chowdhury at $15 per hour, not $16.50 per hour. 42. Chowdhury had been hired to be an Assistant Manager, not a delivery driver, and he had the responsibilities of an Assistant Manager, not a delivery driver. Indeed, at one point, Defendants' General Manager asked Chowdhury to "try" doing more deliveries. Chowdhury did try it, but after several shifts told Defendants' General Manager that, no, he preferred to remain an Assistant Manager. 43. Defendants' General Manager also made a practice of clocking Chowdhury and other employees out after ten hours of work, even when those employees worked longer. For example, if an employee had arrived at 10am, at 8pm the General Manager would clock them out, even if they worked until 1am. 44. Defendants' General Manager told employees that it was very important to him that the payroll system never record more than roughly sixty hours of work in a week for any given employee, no matter how many hours that employee worked. 45. Upon information and belief, Defendants knew that (i) their General Manager was paying their employees less than their promised hourly wages, and (ii) Defendants were aware that their General Manager was not paying their employees at all for hours worked in excess of sixty hours in a workweek. 46. Chowdhury objected to these pay practices. He did so orally, including to Defendants' General Manager. 47. Defendants' General Manager always had the same answer to Chowdhury's objections: "If you don’t like it, you can go." By this the Defendants' General Manager meant that, if Chowdhury wished to remain employed by Defendants, he would have to accept (i) being paid a base wage of $15 per hour, not the $16.50 per hour normally paid to Assistant Managers, and (ii) not being paid for hours worked in excess of sixty hours per week. 48. Defendants' General Manager was sometimes apologetic, telling Chowdhury, "I clocked you out after ten hours, I'm sorry." 49. But Defendants' General Manager was also very clear about why he was doing it, telling Chowdhury: "My bonus check will not be as big if I pay you overtime." Later in the spring, Defendants' General Manager also stated that he would get in trouble with Defendants if he continued to pay Chowdhury overtime. 50. Defendants also stole from their employees in less systematic ways. 51. Defendants' General Manager would send Chowdhury out to buy lunch for the staff of Defendants' franchise, but would then not reimburse Chowdhury for the $20 or $40 or $80 he spent on food. 52. Defendants' General Manager would also steal tips. On one occasion, when Chowdhury spent several hours delivering food, Defendants' General Manager announced that he would not pay Chowdhury any of the tips customers had paid that day, because "the system was short," and he, Defendants' General Manager, needed to keep the tips to make it balance. 53. Defendants attempted to buy silence from Chowdhury and other employees concerning Defendants' improper pay practices. 54. If a current employee worked in excess of sixty hours in a week, Defendants' General Manager would, on occasion, give that employee a second check, made out in the name of one of Defendants' former employees. Defendants' expectation was that the current employee would take the falsified check to a check cashing business and cash the check. 55. Defendants' General Manager issued two such checks to Chowdhury. He did not cash either improper check. 56. Chowdhury continued to ask Defendants' General Manager for his full pay. By late spring, Defendants decided to retaliate against Chowdhury for his persistent requests that he receive his full wages, including as owed under the FLSA and NYLL. 57. In about June of 2020, Defendants' General Manager stopped speaking to Chowdhury. And, on several occasions, when passing Chowdhury in the restaurant, Defendants' General Manager would turn and silently place his hands around Chowdhury's neck, in a pantomime of strangulation. Each such instance was an assault. 58. Defendants' General Manager, when passing Chowdhury in the restaurant, would also slap Chowdhury on the buttocks. Each such instance was an assault. 59. Defendants' General Manager assaulted Chowdhury in order to drive home a point: That Chowdhury was not to object to Defendants' pay practices, that Chowdhury must rather silently submit to abuse or else be fired. 60. Defendants' General Manager also assaulted other employees. Upon information and belief, on one occasion, Defendants' General Manager struck one employee in the testicles. 61. In July of 2020, Defendants' General Manager asked Chowdhury to sign papers certifying that changes made to our client's hours by Defendants' General Manager were accurate. Chowdhury refused. 62. Defendants' General Manager told Chowdhury that if he did not want to sign, he should not return to work. 63. Chowdhury had been fired. 64. Chowdhury had been fired for engaging the protected conduct, namely, asserting his right to be paid for all hours worked under the FLSA and NYLL. 65. After his termination, Chowdhury retained counsel to assert his rights under the FLSA and NYLL. When Defendants' General Manager learned that Chowdhury had retained counsel, he came to Chowdhury's house, and repeatedly demanded that Chowdhury's family allow him to speak with Chowdhury. Upon information and belief, Defendants' General Manager did so in an improper effort to threaten Chowdhury not to assert his rights under the FLSA and the NYLL. FLSA COLLECTIVE ACTION ALLEGATIONS 66. Plaintiff seeks to prosecute his FLSA claims as a collective action on behalf of all persons similarly situated, specifically: All persons who are employed or were formerly employed at any Domino's Pizza franchise owned by Defendants from three years before the filing of the Complaint in this case to the entry of judgment in this case (the “FLSA Collective Action Period”), who were non-exempt employees within the meaning of the FLSA, and who were not paid tips, not paid their full wages for all hours worked, and/or who were not paid overtime for hours worked in excess of forty hours per workweek. 67. At all relevant times, Plaintiff and the FLSA Collective Action Plaintiffs are and have been similarly situated, are and have had substantially similar job requirements and pay provisions, and are and have been subjected to Defendants’ decisions, policies, plans, programs, practices, procedures, protocols, routines, and rules, all culminating in a willful failure and refusal to pay them the proper tips, wages and overtime wages. 68. The claims of Plaintiff stated herein are essentially the same as those of the other FLSA Collective Action Plaintiffs. Specifically, Plaintiff and the FLSA Collective Action Plaintiffs claim that Defendants willfully violated Plaintiff's and FLSA Collective Action Plaintiffs’ rights. 69. The claims for relief are properly brought under and maintained as an opt-in collective action pursuant to Section 16(b) of the FLSA, 29 U.S.C. § 216(b). The FLSA 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 Defendants. Notice can be provided to the FLSA Collective Action Plaintiffs via text, via email, and/or via first class mail to the last email addresses, telephone numbers and residential addresses known to Defendants. 70. 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 Defendants, upon information and belief, there are more than ten Plaintiffs of the collective action who worked for Defendants during the FLSA Collective Action Period, most of whom would not be likely to file individual suits because they lack adequate financial resources, access to attorneys or knowledge of their 71. Plaintiff will fairly and adequately protect the interests of the FLSA Collective Action Plaintiffs and has retained counsel that is experienced and competent in the fields of employment law and collective action litigation. Plaintiff have no interests that are contrary to or in conflict with the FLSA Collective Action Plaintiffs of this action. 72. The FLSA Collective Action Plaintiffs are similarly situated to Plaintiff in that they are or were denied tips, wages or overtime wages for certain hours worked beyond forty hours in a 73. They are further similarly situated in that Defendants have or had a policy and practice of knowingly and willfully refusing to pay tips, wages and overtime. 74. They are further similarly situated in that, upon information and belief, Defendants have a policy and practice of failing to provide Plaintiffs with statutorily required notice of wages or statements of their pay received, in part so as to hide Defendants’ violations of the wage and hour laws and to take advantage of their employees' relative lack of sophistication in wage and hour laws. 75. They are further similarly situated in that, upon information and belief, Defendants have a policy and practice of willfully disregarding and purposefully evading recordkeeping requirements of the FLSA by failing to maintain accurate and complete timesheets and payroll records. 76. Upon information and belief, these practices by Defendants were done willfully to disguise the actual tips earned and actual number of hours Plaintiff and FLSA Collective Action Plaintiffs worked and to avoid paying Plaintiffs properly. 77. A collective action is superior to other available methods for the fair and efficient adjudication of this controversy, since joinder of all Plaintiffs is impracticable. Furthermore, inasmuch as the damages suffered by individual FLSA 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. 78. Questions of law and fact common to all Plaintiffs predominate over questions that may affect only individual Plaintiffs, because Defendants have acted on grounds generally applicable to all Plaintiffs. Among the common questions of law and fact common to Plaintiff and the FLSA Collective Action Plaintiffs are: a. whether Defendants employed Plaintiff and the FLSA Collective Action Plaintiffs within the meaning of the FLSA; b. whether Defendants failed to provide Plaintiff and the FLSA Collective Action Plaintiffs with a notice of wages explaining each employees’ compensation. c. whether Defendants failed to keep true and accurate records of all tips earned by Plaintiff and the FLSA Collective Action Plaintiffs; d. whether Defendants failed to keep time records for all hours worked by Plaintiff and the FLSA Collective Action Plaintiffs; e. what proof of tips and hours worked is sufficient where the employer fails in its duty to maintain records; f. whether Defendants failed to pay Plaintiff and the FLSA Collective Action Plaintiffs wages for all hours worked in excess of forty hours per workweek, in violation of the FLSA and the regulations promulgated thereunder; g. whether Defendants’ violations of the FLSA are willful as that term is used in the context of the FLSA; 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; and i. whether Defendants should be enjoined from such violations of the FLSA in the future. 79. Plaintiff knows of no difficulty that will be encountered in the management of this litigation that would preclude its maintenance as a collective action. COUNT I By Plaintiff and Collective Action Plaintiffs under the FLSA Failure to pay wages, overtime wages and tips. 80. Plaintiff, on behalf of himself and all Collective Action Plaintiffs, repeats, realleges, and incorporates by reference the foregoing allegations as if set forth fully and again herein. 81. At all relevant times, Defendants employed Plaintiff and each of the Collective Action Plaintiffs within the meaning of the FLSA. 82. At all relevant times, Defendants had a policy and practice of refusing to pay all wages due, including all overtime wages due, and of refusing to pay all tips earned by all employees. This included: a. Not paying employees at all for certain hours worked. b. Paying employees less, for certain hours worked, than the hourly wage that had been promised to those employees. c. Paying employees, for hours worked in excess of forty hours in a given workweek, less than one-and-one-half times the hourly wage that had been promised to those employees. d. Not paying employees the tips earned by those employees. 83. Defendants’ unlawful conduct has been widespread, repeated, and consistent. 84. The uncompensated and undercompensated time typically amounted to many hours per week for Plaintiff and each Collective Action Plaintiff. 85. As a result of Defendants’ willful failure to compensate their employees, including Plaintiff and the FLSA Collective Action Plaintiffs, Defendants have violated and continue to violate the FLSA. 86. The foregoing conduct, as alleged, constitutes a willful violation of the FLSA within the meaning of 29 U.S.C. §255(a). 87. Due to Defendants’ FLSA violations, Plaintiff and the Collective Action Plaintiffs are entitled to recover from Defendants their unpaid wages, overtime and tips, and an additional equal amount as liquidated damages, interest, reasonable attorneys’ fees, and costs and disbursements of this action, pursuant to the FLSA. COUNT II By Plaintiff under the FLSA Retaliation. 88. Plaintiff repeats, realleges, and incorporates by reference the foregoing allegations as if set forth fully and again herein. 89. At all relevant times, Defendants employed Plaintiff within the meaning of the FLSA. 90. Plaintiff engaged in activity protected by the FLSA, namely, he objected to Defendants' failure to pay him his wages, overtime and tips. 91. Defendants retaliated against Plaintiff for engaging in that protected activity; specifically, Defendants' General Manager physically assaulted Plaintiff a described above, and ultimately terminated Plaintiff because he objected to Defendants' failure to pay him his wages, overtime and tips. 92. Due to Defendants’ retaliation in violation of the FLSA, Plaintiff is entitled to recover from Defendants compensatory damages for his lost wages and benefits, including front and back wages, as well as for his emotional distress, suffering, pain and humiliation, and damage to his reputation and career, as well as punitive damages, interest, reasonable attorneys’ fees, and costs and disbursements of this action, pursuant to the FLSA. COUNT III By Plaintiff under the New York Labor Law Failure to pay wages, overtime wages and tips. 93. Plaintiff repeats, realleges, and incorporates by reference the foregoing allegations as if set forth fully and again herein. 94. At all relevant times, Plaintiff was employed by Defendants within the meaning of 95. Defendants willfully violated Plaintiff's rights under NYLL including by: a. Not paying Plaintiff at all for certain hours worked. b. Paying Plaintiff less than the hourly wage that had been promised to Plaintiff. c. Paying Plaintiff, for hours worked in excess of forty hours in a given workweek, less than one-and-one-half times the hourly wage that had been promised to Plaintiff. d. Not paying Plaintiff all tips earned by Plaintiff. 96. Defendants’ failure to pay overtime was willful within the meaning of NYLL. 97. Due to Defendants’ NYLL violations, Plaintiffs are entitled to recover from Defendants their unpaid wages, overtime and tips, liquidated damages, interest, reasonable attorneys’ fees, and costs and disbursements of this action, pursuant to NYLL. COUNT IV By Plaintiff under the New York Labor Law Retaliation 98. Plaintiff repeats, realleges, and incorporates by reference the foregoing allegations as if set forth fully and again herein. 99. At all relevant times, Defendants employed Plaintiff within the meaning of the NYLL. 100. Plaintiff engaged in activity protected by NYLL, namely, he objected to Defendants' failure to pay him his wages, overtime and tips. 101. Defendants retaliated against Plaintiff for engaging in that protected activity; specifically, Defendants' General Manager physically assaulted Plaintiff a described above, and ultimately terminated Plaintiff because he objected to Defendants' failure to pay him his wages, overtime and tips. 102. Due to Defendants’ retaliation in violation of NYLL, Plaintiff is entitled to recover from Defendants compensatory damages for his lost wages and benefits, including front and back wages, as well as for his emotional distress, suffering, pain and humiliation, and damage to his reputation and career, as well as punitive damages, interest, reasonable attorneys’ fees, and costs and disbursements of this action, pursuant to NYLL. COUNT V By Plaintiff under the New York Labor Law Failure to provide accurate wage notices and wage statements. 103. Plaintiff repeats, realleges, and incorporates by reference the foregoing allegations as if set forth fully and again herein. 104. At all relevant times, Plaintiff was employed by Defendants within the meaning of 105. Defendants have willfully failed to supply Plaintiff with the notices required pursuant to New York Labor Law § 195 (1). 106. Defendants have willfully failed to supply Plaintiff with accurate statements of pay with every payment of wages, violating New York Labor Law § 195 (3). 107. Due to Defendants' violations of New York Labor Law § 195 (1), Plaintiff is entitled to recover from Defendants fifty dollars ($50.00) for each work day that the violations occurred, up to a total of five thousand dollars ($5000.00), as provided for by New York Labor Law § 198(1)- b, plus reasonable attorneys’ fees, costs, injunctive and declaratory relief. 108. Due to Defendants' violations of New York Labor Law 195 (3), Plaintiff is entitled to recover from Defendants two hundred fifty dollars ($250.00) for each work day that the violations occurred, up to a total of five thousand dollars ($5000.00) per employee, as provided for by New York Labor Law §198(1)-d, reasonable attorneys’ fees, costs, injunctive and declaratory relief. PRAYER FOR RELIEF WHEREFORE, Plaintiff respectfully requests that this Court grant the following relief: (a) Enter a declaratory judgment that the acts and practices of Defendants complained of herein are in violation of the laws of the United States and the State of New York; (b) Enjoin and permanently restrain the Defendants’ violations of the laws of the United States and the State of New York; (c) 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 of an FLSA Opt-In Class, 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 and his counsel to represent the Collective Action Plaintiffs; (d) A compensatory award of unpaid tips, unpaid wages, and unpaid overtime wages due under the FLSA and NYLL; (e) An award of liquidated damages as a result of Defendants’ willful failure to pay tips, wages and overtime wages pursuant to FLSA and NYLL; (f) An award of $5000 to Plaintiff due to Defendants' violations of NYLL §195 (1), as provided for by NYLL § 198(1)-b; and an award of $5000 to Plaintiff due to Defendants' violations of NYLL § 195 (3), as provided for by NYLL §198(1)-d; (g) Compensatory and punitive damages, in an amount to be determined at trial, for retaliation under the FLSA and NYLL; (h) Judgment for interest (including pre-judgment interest); (i) Judgment awarding Plaintiff the costs of this action, together with reasonable attorneys’ fees as provided by the FLSA and NYLL; and (j) Such other and further relief as to this Court appears necessary and proper. JURY DEMAND Plaintiff demands a trial by jury on all issues so triable. Dated: New York, New York August 31, 2020 Respectfully Submitted, GRANOVSKY & SUNDARESH PLLC /s/ Benjamin Rudolph Delson Benjamin Rudolph Delson (BD-1724) Alexander Granovsky (AG-6962) 48 Wall Street / New York, NY 10005 [email protected] [email protected] (646) 524-6001 Attorneys for Plaintiff Mohammad Chowdhury Exhibit A

employment & labor

ZARXFYcBD5gMZwczfHfl

ROSS, J. GO M.J. Plaintiff, Case No.: COMPLAINT V. Jury Trial Demanded Defendants. Plaintiff, CARLOS SANCHEZ ("Plaintiff"), on behalf of himself and others similarly INTRODUCTION 1. Plaintiff alleges, pursuant to the Fair Labor Standards Act, as amended, 29 U.S.C. 2. Plaintiff further alleges that, pursuant to the New York Labor Law, he is entitled to JURISDICTION AND VENUE 3. This Court has jurisdiction over this controversy pursuant to 29 U.S.C. $216(b), 28 4. Venue is proper in the Eastern District pursuant to 28 U.S.C. $1391. PARTIES 5. Plaintiff, CARLOS SANCHEZ, is a resident of Westchester County, New York. 6. RAFICK CATANOV exercised control over the terms and conditions of Plaintiff's 7. At all relevant times, Defendant, RAFICK CATANOV d/b/a RAFAEL'S 8. At all relevant times, the work performed by Plaintiff was directly essential to the 9. At all relevant times, Defendant knowingly and willfully failed to pay Plaintiff his 10. At all relevant times, Defendant knowingly and willfully failed to pay Plaintiff his 11. At all relevant times, Defendant knowingly and willfully failed to pay Plaintiff, his 12. Plaintiff has fulfilled all conditions precedent to the institution of this action and/or STATEMENT OF FACTS 13. On or about June of 2009 Plaintiff, CARLOS SANCHEZ, was hired by Defendant to 14. Plaintiff worked for Defendant until on or about March 30, 2011. 15. During the employment of Plaintiff, CARLOS SANCHEZ, by Defendant, he worked 16. On average, Plaintiff, CARLOS SANCHEZ worked 6 days a week and for 12 hours 17. Defendant knowingly and willfully operated its business with a policy of not paying 18. Defendant knowingly and willfully operated its business with a policy of not paying 19. Defendant knowingly and willfully operated its business with a policy of not paying 20. Defendant knowingly and willfully operated its business with a policy of not 21. Plaintiff retained Law Offices of Robert L. Kraselnik, PLLC to represent him and STATEMENT OF CLAIM COUNT I VIOLATION OF THE FAIR LABOR STANDARDS ACT 22. Plaintiff realleges and reavers Paragraphs 1 through 21 of this Complaint as if fully23. At all relevant times, upon information and belief, Defendant was and continues to be 24. At all relevant times, Defendant employed Plaintiff within the meaning of the FLSA. 25. Upon information and belief, at all relevant times, Defendant, RAFAEL CATANOV 26. At all relevant times, the Defendant had a policy and practice of refusing to pay 27. Defendant failed to pay Plaintiff overtime compensation in the lawful amount for 28. Plaintiff worked hours for which he was not paid the statutory minimum wage. 29. At all relevant times, the Defendant had a policy and practice of refusing to pay the 30. Defendant failed to pay Plaintiff minimum wages in the lawful amount for his hours 31. Records, if any, concerning the number of hours worked by Plaintiff and the actual 32. Defendant knew of and/or showed a willful disregard for the provisions of the FLSA 33. Defendant knew of and/or showed a willful disregard for the provisions of the FLSA 34. Defendant failed to properly disclose or apprise Plaintiff of his rights under the 35. As a direct and proximate result of Defendant's willful disregard of the FLSA, 36. Due to the intentional, willful and unlawful acts of Defendant, Plaintiff suffered 37. Plaintiff is entitled to an award of his reasonable attorneys' fees and costs pursuant to COUNT II VIOLATION OF THE NEW YORK LABOR LAW 38. Plaintiff realleges and reavers Paragraphs 1 through 37 of this Complaint as if fully 39. At all relevant times, Plaintiff was employed by the Defendant within the meaning of 40. Defendant willfully violated Plaintiff's rights by failing to pay Plaintiff overtime 41. Defendant willfully violated Plaintiff's rights by failing to pay Plaintiff minimum 42. Defendant willfully violated Plaintiff's rights by failing to pay "spread of hours" 43. Defendant knowingly and willfully operated its business with a policy of not 44. Defendant willfully violated Plaintiff's rights by paying him on a salary basis, in 45. Due to the Defendant's New York Labor Law violations Plaintiff is entitled to PRAYER FOR RELIEF WHEREFORE, Plaintiff on behalf of himself and all similarly situated employees, a. A declaratory judgment that the practices complained of herein are unlawful under the FLSA and the New York Labor Law; b. An injunction against Defendant and its officers, agents, successors, employees, representatives and any and all persons acting in concert with them as provided by law, from engaging in each of the unlawful practices, policies and patterns set forth herein; c. An award of unpaid overtime compensation due under the FLSA and the New York Labor Law; d. An award of unpaid minimum wages under the FLSA and the New York Labor Law; e. An award of unpaid "spread of hours" premium due under the New York Labor Law; f. An award of liquidated and/or punitive damages as a result of Defendant's willful failure to pay overtime compensation and minimum wages pursuant to 29 U.S.C. § 216; g. An award of liquidated and/or punitive damages as a result of Defendant's willful failure to pay overtime compensation and minimum wages pursuant to the New York Labor Law; h. An award of statutory penalties, and prejudgment and postjudgment interest; i. An award of costs and expenses of this action together with reasonable attorneys' and expert fees; and j. Such other and further relief as this Court deems just and proper.JURY DEMAND Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiff demands trial by Respectfully submitted, LAW OFFICES OF ROBERT L. KRASELNIK, PLLC Robert L. Kraselnik (RK 0684) 271 Madison Avenue, Suite 1403 New York, NY 10016 Tel.: 212-576-1857 Fax: 212-576-1888 Attorney for Plaintiff By: ROBERT KRASELNIK (RK 0684) BK

employment & labor

xA2GFocBD5gMZwczgv5Y

Plaintiffs, COMPLAINT V. Civil Action No. No. 12-cv-6517 Defendants. Plaintiffs Ashley Hicks and Kristin Raymond ("Named Plaintiffs"), on behalf of NATURE OF CLAIM 1. This is a proceeding for declaratory relief, monetary damages or and equitable 2. Applebee's has a policy to pay Plaintiffs subminimum wage rates as described 3. Applebee's policy is to pay these subminimum rates to Plaintiffs even: a) when JURISDICTION AND VENUE 4. The jurisdiction of this Court is invoked pursuant to 28 U.S.C. $1331, 28 - 2 - 5. This Court's supplemental jurisdiction of claims arising under the NYLL is also 6. Venue is appropriate in the Western District of New York since the allegations PARTIES Plaintiffs Named Plaintiffs 7. Ashley Hicks and Kristin Raymond were employees of Defendants under the 8. Ashley Hicks worked for Defendants from approximately December 2005 to 9. Kristin Raymond worked for Defendants from approximately 2002 to 10. The Named Plaintiffs, along with other employees, were subject to Applebee's 11. While the Named Plaintiffs, along with other employees, were paid at - 3 - 12. Some examples of the jobs the Named Plaintiffs, along with other employees, 13. Plaintiffs performed these jobs at subminimum wages with great frequency. 14. Pursuant to their policy, Defendants did not adjust the Named Plaintiffs' pay, - 4 -Class Members 15. As described in more detail below, Class Members (or "Plaintiffs") are those Defendants 16. At all times relevant hereto, Plaintiffs were "employees" of Defendants as 17. At all times relevant hereto, Defendants are "employer[s]" as defined in the 18. Defendants own and operate restaurants in the state, are "enterprise[s]" as 19. Defendants' employees are engaged in interstate commerce, and their annual 20. During the course of their employment by Defendants, Plaintiffs handled 21. T.L. Cannon Corporation was co-founded by Defendants David A. Stein - 5 - 22. T.L. Cannon is a private company which, upon information and belief, is 23. T.L. Cannon obtained the exclusive franchise development rights for 24. T.L. Cannon was registered to do business in the State of New York on June 25. The T.L. Cannon Florida Offices are primarily responsible for payroll, accounts 26. Additional corporate offices are located at 180 Lawrence Bell Drive, Suite 100, 27. The T.L. Cannon New York Offices are primarily responsible for public and 28. T.L. Cannon's first Applebee's Restaurant was opened on March 12, 1991 in 29. The Applebee's restaurants owned and operated by T.L. Cannon vary - 6 - T.L. Cannon Management Corp. & TLC Companies 30. Over the years, the number of T.L. Cannon owned and operated Applebee's 31. Upon information and belief, in order to more efficiently operate and manage 32. Accordingly, T.L. Cannon Management Corporation (originally T.L. Cantina, 33. T.L. Cannon Management Corporation has the same officers and is located at 34. T.L. Cannon Management Corporation was registered to do business in the 35. Upon information and belief, T.L. Cannon Management Corp. is the entity 36. Upon additional information and belief, T.L. Cannon Management Corp. is - 7 -37. As the size and number of T.L. Cannon's Applebee's Restaurants have grown 38. As such, the following wholly owned and controlled companies were created a. TLC Central, LLC, registered with the State of New York Dept. of State on June 3, 1998; and b. TLC West, LLC, registered with the State of New York Dept. of State on June 3, 1998; and C. TLC North, LLC, registered with the State of New York Dept. of State on May 17, 2004; and d. TLC Utica, LLC, registered with the State of New York Dept. of State on October 16, 2006. 39. Upon information and belief, the above referenced domestic LLC's provide a 40. For example, upon information and belief, payroll and other corporate 41. Moreover, upon information and belief, all of the above named companies are - 8 - T.L. Cannon Individual Defendants 42. Stein and Fairbairn are also the co-founders and, upon information and belief, 43. Upon information and belief, Defendant Stein is the Chairman for both T.L. 44. Upon information and belief, Defendant Stein is also the co-owner and an 45. Upon information and belief, Defendant Fairbairn is the President of T.L. 46. Upon information and belief, Defendant Fairbairn is also the co-owner and 47. Upon information and belief, Defendant Perry is the Director of Operations 48. Upon information and belief, Defendant Perry is directly in charge of the 49. As such, Perry is primarily responsible for implementing Stein and Fairbairn's 50. Stein, Fairbairn, and Perry have been involved with T.L. Cannon's operation of - 9 - COUNT I Violation of the New York Labor Law - Minimum Wages Class Action 51. This count arises from Defendants' willful violation of the NYLL, New York 52. Defendants have a practice of paying Plaintiffs subminimum wages. 53. Defendants pay Plaintiffs these wages even though Plaintiffs perform jobs that 54. For example, Defendants' policy is to pay the Plaintiffs subminimum wages 55. Additionally, Defendants' policy is to pay the Plaintiffs subminimum wages 56. Further, Defendants' policy is to pay the Plaintiffs subminimum wages even on 57. Specifically, Defendants' policy is to utilize Plaintiffs to perform "back of the - 10 - 58. Thus, as described above, Defendants regularly requires Plaintiffs to perform 59. Defendants' policy requires the Plaintiffs to perform these jobs with such 60. Defendants' practices violate the minimum wage provisions of the NYLL. 61. Plaintiffs will seek to certify Count I as a class action, and ask the Court to 62. Count I is brought as a class action because the class members similarly 63. The issues involved in this lawsuit present common questions of law and fact. 11 -64. The books and records of Defendants are material to Plaintiffs' action as they 65. Defendants violated the NYLL by failing to compensate Plaintiffs and WHEREFORE, Plaintiffs and the class pray for judgment against Defendants as (a) an order preliminarily and permanently restraining Defendants from engaging in the aforementioned pay violations; (b) an award of the value of Plaintiffs' and Class Members' unpaid wages and overtime; (c) an award crediting Plaintiffs and Class Members for all hours worked; (d) an additional amount as liquidated damages up to one-hundred percent of the total amount of wages found to be due; (e) an award of reasonable attorneys' fees, expenses, expert fees and costs incurred in vindicating Plaintiffs' and Class Members' rights; (f) an award of pre- and post-judgment interest; (g) the amount equal to the value which would make Plaintiffs and Class Members whole for the violations; and (h) such other and further legal or equitable relief as this Court deems to be just and appropriate. - 12 - COUNT II Violation of the Fair Labor Standards Act - Minimum Wages Section 216(b) Collective Action 66. Plaintiffs hereby reallege and incorporate paragraphs 1 through 65 of this 67. This count arises from Defendants' willful violation of the Fair Labor 68. Plaintiffs are not exempt from the minimum wage provisions of the Fair Labor 69. Defendants' policy is to not pay Plaintiffs the legally required minimum wage 70. Defendants' policy is also not to pay Plaintiffs the legally required minimum 71. Defendants' practices violate the minimum wage provisions of the FLSA. 72. Because the Plaintiffs were all deprived minimum wage payments by the WHEREFORE, Plaintiffs pray for judgment against Defendants as follows: (a) judgment in the amount of the owed minimum wages for all time worked by Plaintiffs and those employees who join this lawsuit; (b) liquidated damages in an amount equal to the amount of unpaid minimum wages; - 13 - (c) an award crediting Plaintiffs and Class Members for all hours worked; (d) an award of reasonable attorneys' fees, expenses, expert fees and costs incurred in vindicating Plaintiffs' and Class Members' rights; (e) an award of pre- and post-judgment interest; and (f) such other and further relief as this Court deems just and proper. JURY DEMAND Plaintiffs demand a jury to hear and decide all issues of fact in accordance with THOMAS & SOLOMON LLP By: J. Thomas, Esq. mm Nelson velm moment Michael J. Lingle, Esq Justin M. Cordello, Esq. Attorney for Plaintiffs 693 East Avenue Rochester, New York 14607 Telephone: (585) 272-0540 [email protected] [email protected] [email protected] - 14 -

employment & labor

q7e8C4cBD5gMZwczUx2l

Case No. CLASS ACTION COMPLAINT JURY TRIAL DEMANDED UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION JUDITH ALMENDARIZ, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. ONESPAN INC., SCOTT CLEMENTS, and MARK S. HOYT, Defendants. Plaintiff Judith Almendariz (“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 OneSpan Inc. (“OneSpan” or the “Company”), analysts’ reports and advisories about the Company, and information readily obtainable on the Internet. 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 federal securities class action on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired OneSpan securities between May 9, 2018 and August 11, 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 Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials. 2. OneSpan was founded in 1991 and is headquartered in Chicago, Illinois. The Company was formerly known as VASCO Data Security International, Inc. and changed its name to OneSpan Inc. in May 2018. 3. OneSpan, together with its subsidiaries, designs, develops, and markets digital solutions for identity, security, and business productivity worldwide. 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) OneSpan had inadequate disclosure controls and procedures and internal control over financial reporting; (ii) as a result, OneSpan overstated its revenue relating to certain contracts with customers involving software licenses in its financial statements spread out over the quarters from the first quarter of 2018 to the first quarter of 2020; (iii) as a result, it was foreseeably likely that the Company would eventually have to delay one or more scheduled earnings releases, conference calls, and/or financial filings with the SEC; (iv) OneSpan downplayed the negative impacts of errors in its financial statements; (v) all the foregoing, once revealed, was foreseeably likely to have a material negative impact on the Company’s financial results and reputation; and (vi) as a result, the Company’s public statements were materially false and misleading at all relevant times. 5. On August 4, 2020, during pre-market hours, OneSpan postponed its second quarter 2020 earnings release and conference call by one week, attributing the delay to prior period revenue recognition problems relating to certain software license contracts spread out over the quarters from the first quarter of 2018 to the first quarter of 2020. OneSpan further stated that “[t]he net contract assets that originated from a portion of these contracts in prior periods were not properly accounted for in subsequent periods, which caused overstatements of revenue.” 6. On this news, OneSpan’s common share price fell $0.46 per share, or 1.40%, to close at $32.50 per share on August 4, 2020. 7. Then on August 11, 2020, during after-market hours, OneSpan disclosed that it would not timely file its quarterly report for the quarter ended June 30, 2020, with the SEC; reported that same quarter year-over-year revenues had declined; and withdrew its full year 2020 earnings guidance, which the Company had affirmed one quarter earlier. 8. On this news, OneSpan’s common share price fell $12.36 per share, or 39.62%, to close at $18.84 per share on August 12, 2020. 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 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). 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. 12. 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). OneSpan is headquartered in this Judicial District, Defendants conduct business in this Judicial District, and a significant portion of Defendants’ actions took place within this Judicial District. 13. 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 14. Plaintiff, as set forth in the attached Certification, acquired OneSpan securities at artificially inflated prices during the Class Period and was damaged upon the revelation of the alleged corrective disclosures. 15. Defendant OneSpan is a Delaware corporation with principal executive offices located at 121 West Wacker Drive, Suite 2050, Chicago, Illinois 60601. OneSpan’s securities trade in an efficient market on the NASDAQ stock market (“NASDAQ”) under the ticker symbol “OSPN.” 16. Defendant Scott Clements (“Clements”) has served as OneSpan’s Chief Executive Officer at all relevant times. 17. Defendant Mark S. Hoyt (“Hoyt”) has served as OneSpan’s Chief Financial Officer at all relevant times. 18. Defendants Clements and Hoyt are sometimes referred to herein as the “Individual Defendants.” 19. The Individual Defendants possessed the power and authority to control the contents of OneSpan’s SEC filings, press releases, and other market communications. The Individual Defendants were provided with copies of OneSpan’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 OneSpan, 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. 20. OneSpan and the Individual Defendants are collectively referred to herein as “Defendants.” SUBSTANTIVE ALLEGATIONS Background 21. OneSpan was founded in 1991 and is headquartered in Chicago, Illinois. The Company was formerly known as VASCO Data Security International, Inc. and changed its name to OneSpan Inc. in May 2018. 22. OneSpan, together with its subsidiaries, designs, develops, and markets digital solutions for identity, security, and business productivity worldwide. Materially False and Misleading Statements Issued During the Class Period 23. The Class Period begins on May 9, 2018. On May 8, 2018, during after-market hours, OneSpan issued a press release announcing its financial and operating results for the first quarter of 2018 (the “1Q18 Press Release”). Among other results, that press release reported that “[r]evenue for the first quarter of 2018 increased 8% to $45.4 million from $42.0 million in the first quarter of 2017,” and that software licenses revenue was $16.003 million for the quarter. 24. The 1Q18 Press Release also quoted Defendant Clements, who touted, in relevant part, that OneSpan “reported record non-hardware revenue in the first quarter with strong contributions from software licenses and subscriptions”; that this “success was underscored by the doubling of [OneSpan’s] mobile security software and an increase of nearly 50% in [OneSpan’s] e-signature solutions”; and that “[s]trong software and services revenue combined with expected Q1 declines in hardware revenue contributed to a higher gross profit margin.” 25. On May 9, 2018, OneSpan filed a quarterly report on Form 10-Q with the SEC, reporting the Company’s financial and operating results for the quarter ended March 31, 2018 (the “1Q18 10-Q”). The 1Q18 10-Q affirmed the Company’s revenue results reported in the 1Q18 Press Release, including the figure reported for software licenses revenue. 26. Additionally, with respect to how the Company accounts for license revenue, the 1Q18 10-Q represented, in relevant part, that “[r]evenue from the sale of software licensing is recorded upon the latter of when the customer receives the ability to access the software or when they are legally allowed to use the software”; that “[n]o significant obligations or contingencies exist with regard to delivery, customer acceptance or rights of return at the time revenue is recognized”; that “[c]ustomer payments normally correspond with delivery for perpetual licenses”; that, “[f]or term licenses, payments are either on installment or in advance”; that Defendants “have determined that, consistent with [their] conclusion under prior revenue recognition rules, [they] act as the principal with respect to the satisfaction of the related performance obligation and record the corresponding revenue on a gross basis from these transactions”; and that “[t]he fees paid to the third parties are recognized as a component of cost of sales when the revenue is recognized.” 27. With respect to how OneSpan recognized revenue following the Company’s adoption of Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers” (FASB Accounting Standards Codification (ASC) Topic 606, or “Topic 606”), the 1Q18 10-Q stated, in relevant part, that Defendants “determine revenue recognition through . . . [i]dentification of the contract, or contracts, with a customer,” “[i]dentification of the performance obligations in the contract,” “[d]etermination of the transaction price,” “[a]llocation of the transaction price to the performance obligations in the contract,” and “[r]ecognition of revenue when, or as, [they] satisfy a performance obligation”; that “[r]evenues are recognized when control of the promised goods or services is transferred to [OneSpan’s] customers, in an amount that reflects the consideration [Defendants] expect to be entitled to in exchange for those products or services, which excludes any sales incentives and amounts collected on behalf of third parties”; that “[t]axes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue”; and that “[s]hipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are in [sic] included in cost of revenues.” 28. With respect to OneSpan’s disclosure controls and procedures, the 1Q18 10-Q represented, in relevant part, that OneSpan’s “management, with the participation of [OneSpan’s] Chief Executive Officer and Chief Financial Officer . . . conducted an evaluation of the effectiveness of [the Company’s] disclosure controls and procedures . . . as of the end of the period covered by this Quarterly Report on Form 10-Q”; that “[d]isclosure controls and procedures include, without limitation, controls and procedures designed to ensure . . . the information required to be disclosed by [Defendants] in [OneSpan’s] reports that [Defendants] file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the [SEC]’s rules and forms,” as well as that “information required to be disclosed by [Defendants] in [their] reports that [they] file or submit under the Exchange Act is accumulated and communicated to [OneSpan’s] management, including [the] principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure”; and that OneSpan’s “disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.” 29. With respect to changes in internal controls, if any, that occurred during the quarter covered by the 1Q18 10-Q, the 1Q18 10-Q stated, in relevant part, that, “[e]ffective January 1, 2018, [OneSpan] adopted Accounting Standards Codification 606 (‘ASC 606’), ‘Revenue from Contracts with Customers’”; that “[c]hanges were made to the relevant business processes and the related control activities in order to monitor and maintain appropriate controls over financial reporting”; that “[t]hese included the development of new entity-wide policies based on the five- step model provided in the revenue recognition standard, new training, ongoing contract review requirements, and gathering of information provided for disclosures”; and that, “[o]ther than the changes noted above, there were no changes in [OneSpan’s] internal control over financial reporting during the quarter ended March 31, 2018 that have materially affected, or are reasonably likely to materially affect, [the Company’s] internal control over financial reporting.” 30. Additionally, the 1Q18 10-Q contained generic, boilerplate representations regarding the risks inherent in “all control systems.” Specifically, the 1Q18 10-Q represented, in relevant part, that OneSpan’s “management, including [its] Chief Executive Officer and Chief Financial Officer, do not expect that [the Company’s] disclosure controls and procedures or internal control over financial reporting will prevent all error and all fraud”; that “[a] control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met”; that “the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs”; that, “[b]ecause of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company are detected”; that “[t]he inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes”; that “[c]ontrols can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls”; that “[t]he design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions”; that “[p]rojections of any evaluation of controls’ effectiveness to future periods are subject to risks”; that, “[o]ver time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures”; and that, “[b]ecause of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.” Plainly, the foregoing risk warnings were generic, catch-all provisions that were not tailored to OneSpan’s actual known risks regarding the Company’s calculation of revenue for contracts with customers involving software licenses. 31. Appended as exhibits to the 1Q18 10-Q were signed certifications pursuant to the Sarbanes-Oxley Act of 2002 (“SOX”), wherein the Individual Defendants certified that “[t]he [1Q18 10-Q] fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended,” and that “[t]he information contained in the [1Q18 10-Q] fairly presents, in all material respects, the financial condition and results of operations of the [Company].” 32. On July 26, 2018, OneSpan issued a press release announcing its financial and operating results for the second quarter of 2018 (the “2Q18 Press Release”). Among other results, that press release reported that “[r]evenue for the second quarter of 2018 was $49.6 million, an increase of 8% from $45.7 million for the second quarter of 2017”; that “[r]evenue for the first six months of 2018 was $95.0 million, an increase of 8% from $87.7 million for the first six months of 2017”; and that software licenses revenue was $10.410 million and $26.413 million for the three and six months ended June 30, 2018, respectively. 33. The 2Q18 Press Release also quoted Defendant Clements, who touted, in relevant part, that “[t]he second quarter marked a significant turning point for OneSpan™, with a global rebrand, the launch of [the Company’s] Trusted Identity platform and the acquisition of identity verification innovator, Dealflo,” each of which that “was executed in support of [OneSpan’s] software focused growth strategy”; and that, “[d]uring the quarter, [OneSpan] benefitted from strong growth in [inter alia] . . . increased software licenses.” 34. On August 3, 2018, OneSpan filed a quarterly report on Form 10-Q with the SEC, reporting the Company’s financial and operating results for the quarter ended June 30, 2018 (the “2Q18 10-Q”). The 2Q18 10-Q affirmed the Company’s revenue results reported in the 2Q18 Press Release, including the figures reported for software licenses revenue. Additionally, the 2Q18 10-Q contained substantively the same statements as referenced in ¶¶ 26-28 and 30, supra. 35. The 2Q18 10-Q also represented that “[t]here were no changes in [OneSpan’s] internal control over financial reporting during the three months ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, [the Company’s] internal control over financial reporting.” 36. Appended as exhibits to the 2Q18 10-Q were substantively the same SOX certifications as referenced in ¶ 31, supra, signed by the Individual Defendants. 37. On October 30, 2018, OneSpan issued a press release announcing its financial and operating results for the third quarter of 2018 (the “3Q18 Press Release”). Among other results, that press release reported that “[r]evenue for the third quarter of 2018 was $52.5 million, an increase of 3% from $51.1 million for the third quarter of 2017”; that “[r]evenue for the first nine months of 2018 was $147.5 million, an increase of 6% from $138.8 million for the first nine months of 2017”; and that software licenses revenue was $9.826 million and $36.239 million for the three and nine months ended September 30, 2018, respectively. 38. On November 2, 2018, OneSpan filed a quarterly report on Form 10-Q with the SEC, reporting the Company’s financial and operating results for the quarter ended September 30, 2018 (the “3Q18 10-Q”). The 3Q18 10-Q affirmed the Company’s revenue results reported in the 3Q18 Press Release, including the figures reported for software licenses revenue. Additionally, the 3Q18 10-Q contained substantively the same statements as referenced in ¶¶ 26-28, 30, and 35, 39. Appended as exhibits to the 3Q18 10-Q were substantively the same SOX certifications as referenced in ¶ 31, supra, signed by the Individual Defendants. 40. On February 19, 2019, OneSpan issued a press release announcing its financial and operating results for the fourth quarter and full year of 2018 (the “4Q/FY18 Press Release”). Among other results, that press release reported that “[r]evenue for the fourth quarter of 2018 was $64.8 million, an increase of 19% from $54.5 million for the fourth quarter of 2017”; that “[r]evenue for the full year 2018 was $212.3 million, an increase of 10% from $193.3 million for the full year 2017”; and that software licenses revenue was $11.178 million and $47.417 million for the three and twelve months ended December 31, 2018, respectively. 41. The 4Q/FY18 Press Release also quoted Defendant Clements, who touted, in relevant part, that OneSpan “had a very strong fourth quarter with revenue up 19% on solid contributions across our portfolio of [inter alia] software,” and that “mobile security software license revenue grew more than 50%.” 42. On March 15, 2019, OneSpan filed an annual report on Form 10-K with the SEC, reporting the Company’s financial and operating results for the quarter and year ended December 31, 2018 (the “2018 10-K”). The 2018 10-K affirmed the Company’s revenue results reported in the 4Q/FY18 Press Release, including the figures reported for software licenses revenue. Additionally, the 2018 10-K contained substantively the same statements as referenced in ¶¶ 26- 28, 30, and 35, supra. 43. While acknowledging that OneSpan’s “disclosure controls and procedures were not effective as of December 31, 2018,” because of a “material weakness in [the Company’s] internal control over financial reporting,” and that “the Company’s internal control over financial reporting was not effective . . . as of December 31, 2018, due to the material weakness,” the 2018 10-K simultaneously downplayed the impact of this deficiency by representing that “[t]hese control deficiencies led to immaterial misstatements . . . some of which were corrected by the Company prior to the issuance of the December 31, 2018 consolidated financial statements.” 44. The 2018 10-K also downplayed the future impact or occurrence of future deficiencies by touting various remedial measures Defendants had implemented to cure these deficiencies, stating, in relevant part, that, “[d]uring the three months ended December 31, 2018, the Company initiated its remediation plan related to the material weakness that was identified in 2018”; that Defendants “[h]ave hired, and plan to continue hiring, additional accounting personnel with the requisite technical knowledge with respect to revenue recognition and internal control over financial reporting”; that Defendants “will consider use of third party resources to ensure [they] have a sufficient complement of resources”; that Defendants “[w]ill conduct an expanded training program for [their] new and existing personnel on internal control over financial reporting and accounting for revenue recognition”; that “[m]anagement will complete the implementation of a new comprehensive worldwide enterprise resource planning (ERP) system, effective January 1, 2019,” which “will improve and enhance the Company’s processes by increasing the level of automation, which is expected improve the efficiency and effectiveness of certain financial reporting and business processes”; that Defendants “[d]esign, implement and operate effective process-level controls throughout each of the processes in which there were ineffectively designed and implemented controls during 2018”; that Defendants “[d]esign and implement an effective continuous risk assessment processes to monitor changes that could significantly impact [their] internal control over financial reporting”; and that Defendants “expect remediation of the material weakness will be completed in fiscal year 2019.” 45. Appended as exhibits to the 2018 10-K were substantively the same SOX certifications as referenced in ¶ 31, supra, signed by the Individual Defendants. 46. On May 7, 2019, OneSpan issued a press release announcing its financial and operating results for the first quarter of 2019 (the “1Q19 Press Release”). Among other results, that press release reported that “[r]evenue for the first quarter of 2019 was $47.6 million, an increase of 5% from $45.4 million for the first quarter of 2018,” and that software licenses revenue was $7.571 million for the quarter. 47. That same day, OneSpan filed a quarterly report on Form 10-Q with the SEC, reporting the Company’s financial and operating results for the quarter ended March 31, 2019 (the “1Q19 10-Q”). The 1Q19 10-Q affirmed the Company’s revenue results reported in the 1Q19 Press Release, including the figure reported for software licenses revenue. Additionally, the 1Q19 10-Q contained substantively the same statements as referenced in ¶¶ 26-28, 30, and 35, supra. 48. While acknowledging that a material weakness still existed in the Company’s disclosure controls and procedures and internal control over financial reporting, the 1Q19 10-Q continued to downplay this deficiency by touting the Company’s remediation plan as described in the 2018 10-K, and by assuring investors that, “[a]dditionally, the Company concluded the implementation of a new global enterprise resource planning (‘ERP’) system during the three months ended March 31, 2019,” which “has replaced [OneSpan’s] existing operating and financial systems and is designed to accurately maintain the Company’s financial records, enhance operational functionality, and provide timely information to the Company’s management team related to the operation of the business.” 49. The 1Q19 10-Q further assured investors that Defendants “also implemented internal controls to ensure [they] adequately evaluated [their] contracts and properly assessed the impact of ASC 842 to facilitate the adoption on January 1, 2019, as well as [OneSpan’s] on-going accounting.” 50. Appended as exhibits to the 1Q19 10-Q were substantively the same SOX certifications as referenced in ¶ 31, supra, signed by the Individual Defendants. 51. On July 25, 2019, OneSpan issued a press release announcing its financial and operating results for the second quarter of 2019 (the “2Q19 Press Release”). Among other results, that press release reported that “[r]evenue for the second quarter of 2019 was $56.2 million, an increase of 13% from $49.6 million for the second quarter of 2018”; that “[r]evenue for the first six months of 2019 was $103.8 million, an increase of 9% from $95.0 million for the first six months of 2018”; and that software licenses revenue was $11.078 million and $18.649 million for the three and six months ended June 30, 2019, respectively. 52. On July 31, 2019, OneSpan filed a quarterly report on Form 10-Q with the SEC, reporting the Company’s financial and operating results for the quarter ended June 30, 2019 (the “2Q19 10-Q”). The 2Q19 10-Q affirmed the Company’s revenue results reported in the 2Q19 Press Release, including the figures reported for software licenses revenue. Additionally, the 2Q19 10-Q contained substantively the same statements as referenced in ¶¶ 28, 30, 35, and 48, supra. 53. Additionally, with respect to relevant accounting measures, the 2Q19 10-Q represented, in relevant part, that, “[e]xcept for the accounting policies related to lease accounting . . . there have been no changes to significant accounting policies described in [2018 10-K] . . . that have had a material impact on the Company’s condensed consolidated financial statements and related notes.” 54. Appended as exhibits to the 2Q19 10-Q were substantively the same SOX certifications as referenced in ¶ 31, supra, signed by the Individual Defendants. 55. On October 29, 2019, OneSpan issued a press release announcing its financial and operating results for the third quarter of 2019 (the “3Q19 Press Release”). Among other results, that press release reported that “[r]evenue for the third quarter of 2019 was $79.7 million, an increase of 52% from $52.5 million for the third quarter of 2018”; that “[r]evenue for the first nine months of 2019 was $183.6 million, an increase of 24% from $147.5 million for the first nine months of 2018”; and that software licenses revenue was $19.154 million and $37.803 million for the three and nine months ended September 30, 2019, respectively. 56. On October 30, 2019, OneSpan filed a quarterly report on Form 10-Q with the SEC, reporting the Company’s financial and operating results for the quarter ended September 30, 2019 (the “3Q19 10-Q”). The 3Q19 10-Q affirmed the Company’s revenue results reported in the 3Q19 Press Release, including the figures reported for software licenses revenue. Additionally, the 3Q19 10-Q contained substantively the same statements as referenced in ¶¶ 28, 30, 35, 48, and 53, supra. 57. Appended as exhibits to the 3Q19 10-Q were substantively the same SOX certifications as referenced in ¶ 31, supra, signed by the Individual Defendants. 58. On March 3, 2020, OneSpan issued a press release announcing its financial and operating results for the fourth quarter and full year of 2019 (the “4Q/FY19 Press Release”). Among other results, that press release reported that “[r]evenue for the fourth quarter of 2019 was $71.0 million, an increase of 10% from $64.8 million for the fourth quarter of 2018”; that “[r]evenue for the full year 2019 was $254.6 million, an increase of 20% from $212.3 million for the full year 2018”; and that software licenses revenue was $19.365 million and $57.168 million for the three and twelve months ended December 31, 2019, respectively. 59. The 4Q/FY19 Press Release also quoted Defendant Clements, who touted, in relevant part, that OneSpan’s “transformation continues to yield positive results as [the Company] enjoyed an impressive fourth quarter with [inter alia] software license revenue up 73% . . . contributing to total software revenue growth of 63%”; that “[t]otal revenue increased 20% to $255 million, [the Company’s] highest year ever”; and that “total software revenue grew 26%.” 60. On March 16, 2020, OneSpan filed an annual report on Form 10-K with the SEC, reporting the Company’s financial and operating results for quarter and year ended December 31, 2019 (the “2019 10-K”). The 2019 10-K affirmed the Company’s full year revenue results reported in the 4Q/FY19 Press Release, including the full year figure reported for software licenses revenue. Additionally, the 2019 10-K contained substantively the same statements as referenced in ¶¶ 26- 28 and 30, supra. 61. The 2019 10-K also represented that OneSpan had remediated the material weakness in the Company’s internal control over financial reporting identified in the 2018 10-K. Specifically, in its discussion of changes of internal control over financial reporting, the 2019 10- K asserted, in relevant part, that, “[d]uring the three months ended December 31, 2019, the Company finalized its remediation plan related to the material weakness that was disclosed in [the 2018 10-K]”; that Defendants “are satisfied that the material weakness in internal control over financial reporting identified as of December 31, 2018, has been remediated”; that Defendants “[h]ired additional accounting personnel with the requisite technical knowledge with respect to revenue recognition and internal control over financial reporting and have used third party resources to ensure we have a sufficient complement of resources”; that Defendants “[c]onducted an expanded training program for [their] new and existing personnel on internal control over financial reporting, accounting for revenue recognition, and other relevant accounting topics”; that Defendants “[c]oncluded the implementation of a new global enterprise resource planning (‘ERP’) system,” which “replaced [OneSpan’s] previous operating and financial systems and is designed to accurately maintain the Company’s financial records, enhance operational functionality, and provide timely information to the Company’s management team related to the operation of the business”; that Defendants “[d]esigned, implemented and operated effective process-level controls throughout each of the processes in which there were ineffectively designed and implemented controls as of December 31, 2018”; that Defendants “[d]esigned and implemented an effective continuous risk assessment processes to monitor changes that could significantly impact [OneSpan’s] internal control over financial reporting”; and that, “[e]xcept for the changes in connection with [Defendants’] finalization of the remediation plan discussed above, there have been no other changes in [OneSpan’s] internal control over financial reporting . . . that occurred during the fourth quarter of 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.” 62. Accordingly, the 2019 10-K also represented, in relevant part, that, based upon the Individual Defendants’ evaluation, “management have concluded that the Company’s disclosure controls and procedures are effective as of December 31, 2019,” and that “[m]anagement’s evaluation of [OneSpan’s] internal control over financial reporting determined that the Company’s internal control over financial reporting was effective . . . as of December 31, 2019.” 63. Appended as exhibits to the 2019 10-K were substantively the same SOX certifications as referenced in ¶ 31, supra, signed by the Individual Defendants. 64. On May 5, 2020, OneSpan issued a press release announcing its financial and operating results for the first quarter of 2020 (the “1Q20 Press Release”). Among other results, that press release reported that “[r]evenue for the first quarter of 2020 was $56.5 million, an increase of 19% from $47.6 million for the first quarter of 2019,” and that software licenses revenue was $18.522 million for the quarter. The 1Q20 Press Release also provided full year 2020 financial guidance of “[r]evenue in the range of $255 million to $265 million” and “[a]djusted EBITDA in the range of $24 million to $28 million.” 65. On May 7, 2020, OneSpan filed a quarterly report on Form 10-Q with the SEC, reporting the Company’s financial and operating results for the quarter ended March 31, 2020 (the “1Q20 10-Q”). The 1Q20 10-Q affirmed the Company’s revenue results reported in the 1Q20 Press Release, including the figure reported for software licenses revenue. Additionally, the 1Q20 10-Q contained substantively the same statements as referenced in ¶¶ 28, 30, and 35, supra. 66. Additionally, with respect to relevant accounting measures, the 1Q20 10-Q represented, in relevant part, that, “[e]xcept for certain changes which resulted from the adoption of ASU 2016-13, there have been no changes to the significant accounting policies described in the [2019 10-K] that have had a material impact on the Company’s condensed consolidated financial statements and related notes..” 67. The statements referenced in ¶¶ 23-66, supra, 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) OneSpan had inadequate disclosure controls and procedures and internal control over financial reporting; (ii) as a result, OneSpan overstated its revenue relating to certain contracts with customers involving software licenses in its financial statements spread out over the quarters from the first quarter of 2018 to the first quarter of 2020; (iii) as a result, it was foreseeably likely that the Company would eventually have to delay one or more scheduled earnings releases, conference calls, and/or financial filings with the SEC; (iv) OneSpan downplayed the negative impacts of errors in its financial statements; (v) all the foregoing, once revealed, was foreseeably likely to have a material negative impact on the Company’s financial results and reputation; and (vi) as a result, the Company’s public statements were materially false and misleading at all relevant times. The Truth Begins to Emerge 68. On August 4, 2020, during pre-market hours, OneSpan issued a press release announcing that it was postponing its second quarter 2020 earnings release and conference call by one week, attributing the delay to prior period revenue recognition problems relating to certain software license contracts spread out over the quarters from the first quarter of 2018 to the first quarter of 2020. Specifically, that press release stated, in relevant part: OneSpan . . . today announced it has changed the date it plans to release the company’s second quarter 2020 earnings release and hold its earnings conference call, previously scheduled for August 4, 2020. During the second quarter of 2020, OneSpan identified immaterial errors that originated in prior periods. The errors relate to certain contracts with customers involving software licenses. The net contract assets that originated from a portion of these contracts in prior periods were not properly accounted for in subsequent periods, which caused overstatements of revenue. The current estimated cumulative overstatements of revenue through March 31, 2020 total between $2 million and $2.5 million and were spread out over the quarters from Q1 2018 to Q1 2020, representing less than 0.5% of total revenue in that time frame. The Company currently believes these errors to be immaterial. To correct these immaterial errors related to prior periods, the Company expects to adjust the prior period revenue and related amounts in its Form 10-Q for Q2 2020 and future filings with the SEC. The Company is evaluating the impact on its prior determination that internal control over financial reporting was effective as of December 31, 2019. OneSpan plans to report its second quarter 2020 financial results on Tuesday, August 11, 2020, after the market close. The Company will host a conference call to discuss its second quarter 2020 financial results on the same day at 4:30 p.m. Eastern Time. 69. On this news, OneSpan’s common share price fell $0.46 per share, or 1.40%, to close at $32.50 per share on August 4, 2020. 70. Then, on August 11, 2020, during after-market hours, OneSpan issued a press release announcing its financial and operating results for the second quarter of 2020. That press release reported, among other results, that same quarter year-over-year revenues had declined, and that the Company was withdrawing its full year 2020 earnings guidance, which the Company had affirmed one quarter earlier. Specifically, that press release stated, in relevant part: Second Quarter 2020 Financial Highlights[]  Revenue for the second quarter of 2020 was $55.0 million, a decrease of 2% from $56.2 million for the second quarter of 2019. Revenue for the first six months of 2020 was $111.3 million, an increase of 8% from $103.3 million for the first six months of 2019. * * * Full Year 2020 Outlook Given the increased uncertainty about the impact of the pandemic on the global economy and our customers, the Company believes it prudent to withdraw its previously issued full-year guidance. Management will provide additional commentary during its second quarter earnings conference call. 71. That same day, also during after-market hours, OneSpan filed a notification of inability to timely file Form 10-Q on Form NT 10-Q with the SEC, disclosing that the Company could not timely file its quarterly report for the quarter ended June 30, 2020, by the original due date of August 10, 2020, because of the “immaterial errors” identified in the Company’s August 4, 2020 press release. Specifically, the Form NT 10-Q stated, in relevant part: OneSpan . . . has determined that it is unable to file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 (the “Form 10-Q”) by August 10, 2020, the original due date for such filing, without unreasonable effort or expense because it requires additional time to complete its financial statements. As previously announced, the Company identified immaterial errors related to certain contracts with customers involving term-based software licenses. The net contract assets that originated from a portion of these contracts in prior periods were not properly accounted for in subsequent periods, which caused overstatements of revenue. The cumulative overstatements of revenue total $2.2 million over the period from the first quarter in the year ended December 31, 2018 to the quarter ended March 31, 2020, representing less than 0.5% of total revenue in that time frame. The Company believes these errors to be immaterial. To correct these immaterial errors related to prior periods, the Company expects to adjust the prior period revenue and related amounts in its Form 10-Q and future filings with the SEC. 72. Following the issuance of the Company’s August 11, 2020 press release and the filing of the Form NT 10-Q, OneSpan’s common share price fell $12.36 per share, or 39.62%, to close at $18.84 per share on August 12, 2020. 73. 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 74. 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 OneSpan 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. 75. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, OneSpan 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 OneSpan 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. 76. 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. 77. 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. 78. 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 OneSpan;  whether the Individual Defendants caused OneSpan 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 OneSpan 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. 79. 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. 80. 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;  OneSpan 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  Plaintiff and members of the Class purchased, acquired and/or sold OneSpan 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. 81. Based upon the foregoing, Plaintiff and the members of the Class are entitled to a presumption of reliance upon the integrity of the market. 82. 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) 83. Plaintiff repeats and re-alleges each and every allegation contained above as if fully set forth herein. 84. 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. 85. 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 OneSpan securities; and (iii) cause Plaintiff and other members of the Class to purchase or otherwise acquire OneSpan 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. 86. 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 OneSpan 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 OneSpan’s finances and business prospects. 87. By virtue of their positions at OneSpan, 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. 88. 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 OneSpan, the Individual Defendants had knowledge of the details of OneSpan’s internal affairs. 89. 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 OneSpan. 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 OneSpan’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 OneSpan securities was artificially inflated throughout the Class Period. In ignorance of the adverse facts concerning OneSpan’s business and financial condition which were concealed by Defendants, Plaintiff and the other members of the Class purchased or otherwise acquired OneSpan 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. 90. During the Class Period, OneSpan 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 OneSpan 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 OneSpan securities was substantially lower than the prices paid by Plaintiff and the other members of the Class. The market price of OneSpan securities declined sharply upon public disclosure of the facts alleged herein to the injury of Plaintiff and Class members. 91. 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. 92. 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) 93. Plaintiff repeats and re-alleges each and every allegation contained in the foregoing paragraphs as if fully set forth herein. 94. During the Class Period, the Individual Defendants participated in the operation and management of OneSpan, and conducted and participated, directly and indirectly, in the conduct of OneSpan’s business affairs. Because of their senior positions, they knew the adverse non-public information about OneSpan’s misstatement of income and expenses and false financial statements. 95. 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 OneSpan’s financial condition and results of operations, and to correct promptly any public statements issued by OneSpan which had become materially false or misleading. 96. 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 OneSpan disseminated in the marketplace during the Class Period concerning OneSpan’s results of operations. Throughout the Class Period, the Individual Defendants exercised their power and authority to cause OneSpan to engage in the wrongful acts complained of herein. The Individual Defendants therefore, were “controlling persons” of OneSpan 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 OneSpan securities. 97. Each of the Individual Defendants, therefore, acted as a controlling person of OneSpan. By reason of their senior management positions and/or being directors of OneSpan, each of the Individual Defendants had the power to direct the actions of, and exercised the same to cause, OneSpan to engage in the unlawful acts and conduct complained of herein. Each of the Individual Defendants exercised control over the general operations of OneSpan 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. 98. 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 OneSpan. 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: August 20, 2020 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 Email: [email protected] Email: [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] HOLZER & HOLZER, LLC Corey D. Holzer (pro hac vice application forthcoming) 1200 Ashwood Parkway, Suite 410 Atlanta, Georgia 30338 Telephone: (770) 392-0090 Facsimile: (770) 392-0029 Email: [email protected] Attorneys for Plaintiff

securities

yfDeEocBD5gMZwcz9ZqY

CLASS ACTION COMPLAINT Plaintiff, Civil Action No. V. Defendants. NATURE OF CLAIM 1. This is a proceeding for declaratory relief and monetary damages to redress JURISDICTION AND VENUE 2. The jurisdiction of this Court is invoked pursuant to 28 U.S.C. § 1331, 28 3. This Court's pendent jurisdiction for claims arising under Illinois law is also 4. Venue is appropriate in the Northern District of Illinois since the allegations CLASS ACTION ALLEGATIONS 5. Plaintiff brings his FLSA claim as a collective action under 29 U.S.C. $216(b). 6. Plaintiff brings his 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 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 10. The class includes those employees whose title has been reclassified as non- 11. The class size is believed to be over 2,000 employees. 12. The named plaintiff will adequately represent the interests of the class -2- - 13. Common questions of law and fact predominate in this action because the 14. There are no known conflicts of interest between the named plaintiff and the 15. The class counsel, Thomas & Solomon LLP and Werman Law Office, P.C., are 16. The class counsel concentrate their practice in employment litigation, and 17. The class action is maintainable under subsection (1) of Rule 23(b) because 18. The class action is maintainable under subsection (3) of Rule 23(b) because 19. The class is also maintainable under Rule 23(c)(4) with respect to particular -3 PARTIES A. Defendants 20. Defendant Capital One Financial Corporation is a Delaware corporation and 21. Capital One is an enterprise engaged in the sale of goods crossing interstate 22. Capital One employed 50 or more people during the relevant time of this 23. Defendants are Plaintiff's "employer" as defined by the FLSA, 29 U.S.C. § 24. Capital One is an enterprise engaged in interstate commerce whose annual B. Plaintiff and Class Members 25. Named plaintiff Kenneth Beatty was an employee of defendants under the 26. The Class Members are those employees of defendants, as defined above, who - -4 -FACTUAL BACKGROUND 27. Named plaintiff, and other employees similarly situated to named plaintiff, 28. Capital One is in the business of extending credit to customers. 29. The product Capital One produces for its customers is loans. 30. Underwriting job functions are integral to Capital One's production of these 31. Defendants' policy is to not pay statutory overtime to employees who perform 32. This policy of not paying statutory overtime to employees who perform 33. This is a nationwide policy. 34. Capital One's policy of not paying statutory overtime to employees who 35. This failure to pay overtime as required by the FLSA and Illinois law was 36. Defendants have failed to maintain adequate and required records on the 37. Defendants have failed to pay plaintiff's and class members' wages as required -5 - FIRST CAUSE OF ACTION FLSA 38. Plaintiff realleges the above paragraphs as if fully restated herein. 39. Defendants violated their obligations under the FLSA and are liable to the SECOND CAUSE OF ACTION IMWL 40. Plaintiff realleges the above paragraphs as if fully restated herein. 41. Defendants violated their obligations under the IMWL and are liable to WHEREFORE, plaintiff demands judgment against defendants in his favor and a) an order preliminarily and permanently restraining defendants 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) prejudgement 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 defendants; and g) an award of compensatory damages in an amount determined by the jury to be able to reasonably compensate plaintiffs; and - -6- - 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 defendants' 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, s/ Douglas M. Werman One of Plaintiff's Attorneys 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- - - EXHIBIT A Date

employment & labor

RUiP_YgBF5pVm5zYrmUk

IN THE CIRCUIT COURT OF NINETH JUDICIAL CIRCUIT IN AND FOR ORANGE COUNTY, FLORIDA ROBERT GIBBS, : - CASE NO.:16-2021-CA-006459-XXXX-MA DIV: CV-E Plaintiff, : Vv. : DIVISON: BMW OF NORTH AMERICA,LLC, : JURY TRIAL DEMANDED Defendant. COMPLAINT For this Complaint, the Plaintiff, Robert Gibbs, by undersigned counsel, states as follows: PRELIMINARY STATEMENT 1. This is an action by the purchaser of vehicle (hereafter the “subject vehicle”) distributed, warranted, and sold by Defendant BMW of North America, LLC. Plaintiff seeks damagesrelated to his vehicle’s faulty engine that suffers from excessive consumption of engine oil and Defendant’s failure to honorits warranty. PARTIES 2s Plaintiff, Robert Gibbs (“Plaintiff”), is an individual residing in Jacksonville, Be Defendant BMW of North America, LLC (“BMW’’) is organized under the laws of Delaware with its principal place of business located at 300 Chestnut Ridge Road, Woodcliff, New Jersey. BMW wascreated in 1975 to act as the United States importer of BMW luxury and performance vehicles, which were traditionally manufactured in Munich, Germany. At all relevant times, BMW was engaged in the business of importing, assembling, marketing, distributing, and warranting BMW automobiles in the State of Florida and throughout the United 4. BMW sells BMW vehicles through a network of independently owned dealerships across the State of Florida and the United States that are agents of BMW. JURISDICTION AND VENUE 5. This is an action for equitable relief and with an amountin controversy in excess of $15,000, exclusive of interest, costs, and attorneys’ fees. 6. Venue in this Court is proper pursuant to Fla. Stat. § 47.011 because Plaintiff's claims arise in and a substantial part of the events or omissions giving rise to the claims asserted herein occurred in Orange County. STATEMENT OF FACTS 7. On or about July 26, 2013, Plaintiff purchased a 2012 BMW 650i, Vehicle Identification Number WBALZ3C52CDL70839 (hereafter the “Vehicle”’) from Fields Auto Group dealer in Florida. 8. Atthe time of sale the Vehicle’s odometer read about 17,479 miles. 9. Thetotal sales price for the Vehicle was $79,122.73. 10. Within several months after purchasing the Vehicle, Plaintiff observed that it consumed an excessive amountof engine oil which required him to add at least one quart of oil every 1,500 miles throughout the warranty period and well before the Defendant’s recommended oil changeintervals. 11. Plaintiff notified an authorized dealer of the Defendant on numerousoccasions throughout the warranty period that the Vehicle consumed an excessive amountof engineoil. 12. In response, Plaintiff was told that the vehicle’s heavy oil consumption was normal because the Vehicle had a twin turbo engine, and, accordingly, Plaintiff was told the vehicle’s consumption of engine oil did not warrant anyrepairs. 13s Asa result of the Vehicle’s excessive consumption of engine oil, Plaintiff had to add engine oil to the Vehicle in between the Defendant’s recommended oil changeintervals in order to prevent the vehicle’s engine from failing. 14.| BMW imported and placed into the stream of commerce the aforementioned vehicle, which the Plaintiff subsequently purchased. 15. Atthe time Plaintiff purchased the subject vehicle, BMW maderepresentationsas to the subject vehicle’s performance and quality and assured the Plaintiff that the subject vehicle wasfree from defects of workmanship. 16. Prior to purchasing his vehicle, Plaintiff relied upon BMW’s representations contained within Defendant’s New Vehicle Limited Warranty that accompanied the sale of the vehicle, including the representation that BMW would repair the vehicle’s engine; these representations were material to Plaintiff's decision to purchasehis vehicle. 17. Specifically, under its New Vehicle Limited Warranty, BMW promised to repair or replace components found to be defective in material or workmanship during the 4-year / 50,000-mile following such vehicle delivery to consumer. 18. BMW’s authorized dealers expressly assented to perform warranty repairs on the subject vehicle, necessary to bring BMW in compliance with its express warranty. 19. In its New Vehicle Limited Warranty, BMWstates: Warrantor BMW of North America, LLC (BMW NA) warrants 2013 US.- specification vehicles distributed by BMW NAorsold through the BMW NA European Delivery Program against defects in materials or workmanshipto thefirst retail purchaser, and each subsequent purchaser. Warranty Period The warranty period is 48 months or 50,000 miles, whicheveroccursfirst. Warranty Coverage To obtain warranty service coverage, the vehicle must be brought, upon discovery of a defect in material or workmanship, to the workshop of any authorized BMW center in the United States or Puerto Rico, during normalbusiness hours. The BMWcenter will, without charge for parts or labor, either repair or replace the defective part(s) using new or authorized remanufactured parts. The decision to repair or replace said part(s) is solely the prerogative of BMW NA.Parts for which replacements are made becomethe property of BMW NA. In all cases, a reasonable time must be allowed for warranty repairs to be completed after the vehicle is received by the BMW center. 20. BMWcontrols the execution of all warranty repairs by its dealers, as it provides training, materials, special tools, diagnostic software, and replacement parts to its dealers, and demands that the warranty repairs be performedin strict accordance with its repair guidelines, Technical Service Bulletins, and other instructions. Al In return, BMW paysits authorized dealerships monetary compensation for such watranty repairs. 22. Therefore, BMW’s authorized dealers are agents for purpose of vehicle repairs, and knowledgeof a defect reported to any such dealer can be imputed to BMW. 23. After purchasing his vehicle, Plaintiff discovered that, unbeknownst to him, the subject vehicle’s engine contains a manufacturing defect which causes it to consume engine oil at an extremely rapid rate. 24. Moreover, Plaintiff discovered that as a result of the subject vehicle’s above- described defect, Plaintiff was required to regularly add additional engine oil to his vehicle in between the Defendant’s recommended oil change intervals in order to prevent his vehicle’s engine from failing and suffering from other related damage. 25. In 2008, BMW introduced a new V8, twin-turbocharged engine, which BMW and enthusiasts refer to as the “N63.” This large, high-performance engine was designed to be BMW’snext generation V8 and wasplaced in certain BMW 5 Series, 6 Series, 7 Series, X5, and X6 vehicles from the 2009 through 2014 model years. 26. Upon information and belief, the N63 engine was included on the V8 versions of the following BMW vehicles: FO1 and FO2 (7 Series Sedan) — produced from 3/2009 to 6/2012 F04 (Active Hybrid 7) — produced from 4/2010 to 6/2012 F0O7 (Gran Turismo) — produced from 9/2009 to 6/2012 F10 (5 Series Sedan) — produced from 3/2010 to 7/2013 F12 (6 Series Convertible) — produced from 3/2011 to 7/2012 F13 (6 Series Coupe) — produced from 7/2011 to 7/2012 E70 (X5) — produced from 3/2010 to 6/2013 E71 (X6) — produced from 7/2008 to 6/2014 E72 (ActiveHybrid X6) — produced from 9/2009 to 9/2011 27. The subject vehicle is equipped with the N63 engine. 28. The N63 has become widely known and described as defective throughout the automotive industry and the BMW-enthusiast community. It is widely recognized that N63 engines consume excessive amounts of engine oil and require frequent engine repairs, especially as comparedto other, similar vehicles not containing N63 engines. 29. Some owners and enthusiasts blame the oil consumption on BMW’s decision to place the N63’s twin-turbochargers between the cylinder heads, and inside of the engine V, rather than outside of the engine V, away from sensitive components, where turbochargers are typically located. 30. N63 vehicles are notorious for consuming excessive amounts of engine oil and frequently need additional engine oil between scheduled oil changes to prevent catastrophic engine damageorfailure. 31. The oil consumption defect was particularly apparent in a Consumer Reports study on excessive oil consumption. Consumer Reports studied 498,900 vehicles across several makes and models for complaints about engine oil consumption and concluded that BMW’s N63 engine was included on four out of the five most defective vehicles. (See http://www.consumerreports.org/cro/magazine/2015/06/excessive-oil-consumption/index.htm (last visited Feb. 20, 2019)). 32. The V8 version of the BMW 5 Series, which contained the N63 engine in 2011, 2012, and 2013 model years, was the worst performer in the study with 43 percent of vehicles needing an additional quart of oil between oil changes as of 2015. BMW’s 6 Series and 7 Series, many of which contained the N63 engine, are the next worst performers. Finally, the V8 version of the X5 wasthe fifth worst performerin the study. 33. The Consumer Reports study also shows that a greater percentage of defective models start to consume oil as they age. This meansthat large numbers of N63 owners will begin to experience the oil consumption defect in the near future if they have notalready. 34. Many purchasers of vehicles containing the N63 engine have become upset about the excessive engine oil consumption — which was not disclosed by BMW in the product literature accompanying the sale of the vehicle — and have posted internet complaints about specific frustrations and hassles caused by the oil consumption defect. 35. For example, one N63 purchaser started a thread entitled, “Excessive oil consumption” on a BMWenthusiast website in November 2011: So I’m starting to geta little irritated at how much oil my 550is burning. In the last 6k I’ve had to add 1 quart of oil three times. In other wordsit is burning a quart every 2000 miles. I’ve read about some people posting about having to add oil before but this much?? I’ ve never owneda newcarthat burned any oil muchlessatthisrate. Anyoneelse having this issue? Oh btw the car has 9120 miles and I put 3100 in Europe during my ED. WhenI wasto haveredelivery I had the dealer do an oil change and was gonna changethe oil every 7.5k. (See http://www.bimmerfest.com/forums/showthread.php?t=58 1072 (last visited Feb. 20, 2019)). 36. A fellow BMW enthusiast responded with four separate links about the oil consumption issue and explained that the defect “was a hot topic back in September” 2011. (/d.) 37. An Internet search of “N63 AND Burning Oil” reveals thousands of similar complaints regarding the oil consumption defect.! 38. © BMW had a dutyto disclose the oil consumption defect and the associated out-of- pocket repair costs since the defect poses an unreasonable safety hazard, and because BMW had exclusive knowledge or access to material facts about N63 vehicles and engines, not known or reasonably discoverable by consumers. Defendant, however, failed to disclose the defect to consumerspriorto or at the time of purchaseorlease. ' See, e.g., http://www.bimmerfest.com/forums/showthread.php?t=581072 (last visited Dec. 10, 2019); http://www.e90post.com/forums/showthread.php?t=874786 (last visited Dec. 10, 2019). 7 39, The oil consumption defect has become so problematic that BMW has issued several technical service bulletins (“TSBs”) to address complaints of excessive oil consumption and other problemsrelated to the N63 engine.” 40. Withregard to the oil consumption issue, BMWissuedthe following TSBs: NHTSAID Number: 10046859 Service Bulletin Number: SIB-11-08-12 Summary: DUE TO DAMAGED SEAL RING, DURING ASSEMBLY, ENGINE OIL IS LEAKING FROM ENGINE OIL PUMP VOLUME CONTROL VALVE GASKET SEAL RING. MODELSE70, E71, FO1, FO2, F04, FO7, F10, F12, F13. NO MODEL YEARSLISTED. NHTSAID Number: 10045282 Service Bulletin Number: SIB-11-07-12 Summary: BMW: WHILE DRIVING VEHICLE, AT TIMES WOULD BE ROUGH RUNNING; WHITE OR BLUE SMOKE SEEN EXITING EXHAUST SYSTEM AND THE ENGINEOIL IS CONSUMED ABOVESPECIFICATIONS. 41. In June 2013, BMW issued SIB-11-01-13, which took the extraordinary step of changing engine oil consumption specifications for N63 vehicles, and specifically instructed service technicians to add two quarts of engine oil to N63 vehicles when the vehicles instruct owners to add only one additional quart of oil. (http://www.xbimmers.com/forums/showthread.php?p=14449679(last visited Feb. 20, 2019)). 42. Instead of addressing the underlying cause of excessive oil consumption in order to attempt to fix the defect, BMW recommended that its service technicians simply add more engine oil to respond to consumer complaints. Technicians were instructed to add two quarts of engine oil when the vehicles’ electronic system specifically called for one additional quart and to also add an additional quart as the default fill on N63 vehicles. While BMW did not address the underlying problem, it likely reduced the number of complaints because the engine oil level in ° TSBs are recommended repairs issued by automotive manufacturers and directed only to automotive dealers. TSBs are frequently issued when a manufacturer receives widespread reports of a particular problem with its vehicles. the subject vehicles would now beoverfilled, a condition that can cause the engine oil to become aeriated, resulting in potential oil starvation and reduced oil pressure. 43.| Technical Service Bulletin SIB-11-03-13 appears to be part of a campaign to conceal the oil consumption defect and represent it as a normal feature of BMW vehicles. To this effect, BMW issued SIB-11-03-13, which upon information and belief includes the following: Service Bulletin Number: SIB-11-03-13 Summary: All engines normally consumea certain amountof engineoil. This is necessary in order to properly lubricate the cylinder walls, pistons, piston rings, valves and turbocharger‘(s), if equipped. In addition, engines with less than 6,000 miles will generally consume additional engineoil because the internal engine componentsare notfully seated (break-in). Therefore, engine oil consumption complaints received prior to 6,000 miles cannot be considered. Once a new or remanufactured engine has accumulated 6,000 miles, oil consumption can be consideredif there is a drastic change in the engine oil consumptionrate (e.g., the engine oil consumptionrate triples) under similar driving conditions. Engines equipped with a turbocharger(s) will consume moreengine oil than normally aspirated engines (non-turbocharged). The additional oil that is consumedin a turbocharged engine is mainly due to the turbochargerlubrication requirements. Someofthe engine oil normally migrates past the turbochargerturbine bearing seals and will enter the intake tract of the engine. All turbocharged engines also require a complex crankcase ventilation system. The crankcase ventilation system needs to maintain a small vacuum on the crankcase andnotallow the crankcaseto be pressurized. Pressurizing the engine crankcase can lead to external engine oil leaks and increased engine oil consumptionvia the piston rings and valveseals. Whenthe load and the boostlevel of a turbocharged engineis varied, the path of the crankcase pressure is changed. During the crankcase ventilation path transition, a small amountof engine oil will pass through the crankcase ventilation system andis additionally consumed. The additional engine oil consumption of a turbocharged engine, as compared to a normally aspirated engine, is normal and not a defect. Oil Consumptionspecification: - All BMW engines(excluding Motorsport) can consume upto | quart of engine oil per 750 miles at any time. - Dueto the increased engine power, all Motorsport engines can consume up to 2.5 quarts of engine oil per 1,000 miles at any time. Turbocharged Engines: Enginesthat are fitted with a turbocharger(s) will consume more engine oil than naturally aspirated engines (non-turbocharged engines). In this case, a turbocharged engine could require topping of engine oil more frequently. For vehicles with N63 and N63T engines, refer to SIB-11-03- 13 for additional details. 44. BMWincluded every conceivable driving situation within this Service Bulletin as a factor for engine oil consumption so as to minimize its own responsibility and/or deflect blame onto consumers for the oil consumption defect. As can be seen from the TSBs, Defendant continued to misrepresent to its customers that the rate of oil consumption in the N63 engines was normal and to be expected in enginesthat are fitted with turbochargers. 45. BMW madetheserepresentations notwithstanding that the stated recommended oil service interval at the time of sale of the subject vehicle wasthe earlier of 15,000 miles or two years. Of course, at the rate of engine oil consumption referred to in BMW’s service bulletin, the N63 vehicles would consumenearly 20 quarts of engine oil between the recommended 15,000- mile oil service intervals. Clearly, there is nothing normal or expected about this rate of oil consumption. 46. Many N63 purchasers and automobile consumer advocates disagree that this level of engine oil consumption is normal and instead believe that it is excessive and well beyond 47. Consumer Reports offered its opinion of excessive oil consumption in the subtitle of its article: Excessive oil consumption isn’t normal: Automakers say adding oil between scheduled changesis acceptable. It’s not. 10 (http://www.consumerreports.org/cro/magazine/2015/06/excessive-oil-consumption/index.htm (last visited Feb. 5, 2019)). 48. Following hundreds of customer complaints about the oil consumption defect and other problems with N63 vehicles, BMW launched the “N63 Customer Care Package” (bulletin B001314) on December 29, 2014 (herein, “Customer Care Package’). The Customer Care Package consisted of several different measures, which merely mask, but do not correct, the serious design and/or manufacturing defects of the N63 engine including the oil consumption 49. The Customer Care Package instructed service representatives to check each covered vehicle’s timing chain, fuel injectors, mass air flow sensors, crankcase vent lines, battery, engine vacuum pump, and low pressure fuel sensor, and replace if necessary. BMW instructed its service representatives to inspect and replace these components for free, even if no longer covered by the manufacturer’s standard four-year/50,000 mile warranty. 50. Also, BMW had long emphasizedthe fact that its vehicles can go long periods without service and sold many N63 vehicles with the promise of a two-year or 15,000 mile service interval. The Customer Care Package significantly reduced the mileage of its recommended engine oil change intervals for the subject vehicles. As a result, BMW reduced the oil change intervals from the earlier of 15,000/two yearsto the earlier of 10,000 miles or one 51. BMWsimultaneously launched the “N63 Customer Loyalty Offer” which offered purchasers discounts on new BMW vehiclesto replace their defective N63 vehicles. 11 52. BMW also launched a related “N63 Customer Appreciation Program,” which authorized dealerships to provide purchasers with up to $50 of BMW merchandise or accessories. 53: Engine oil is important because it functions as an essential lubricant for the moving parts in internal combustion engines. The oil creates a film separating surfaces of adjacent moving parts to minimize direct contact, thereby decreasing heat caused by friction and reducing wear. Engine oil also has important cleaning and sealing functions, and serves as an important medium for dissipating heat throughout the engine. As a result, the subject vehicle needs the proper amount of engine oil in order for the engine and its related parts to function 54. As suggested by the N63 Customer Care Package, upon information and belief, the oil consumption defect impacts several components of N63 vehicles, either via combustion of excessive amounts of engine oil directly or by causing these components a lack of appropriate lubrication, which results in these components to prematurely fail and need frequent replacement. 55. The oil consumption defect is a safety concern because it prevents the engine from maintaining the proper level of engine oil, and causes voluminous oil consumption that cannot be reasonably anticipated or predicted. Therefore, this oil consumption defect is unreasonably dangerous because it can cause engine failure while the subject vehicle is in operation at any time and underanydriving conditions or speeds, thereby exposing the Plaintiff, his passengers, and others whoshare the road with him to seriousrisk of accident and injury. 56. Plaintiff is informed and believes, and based thereon alleges that BMW acquired its knowledgeof the oil consumption defect in 2008, if not before, through sources not available 12 to Plaintiff, including but not limited to pre-release testing data, durability testing, early consumer complaints about the oil consumption defect to Defendant and its dealers, testing conducted in response to those complaints, aggregate data from BMW dealers, including dealer repair orders and high warranty reimbursementrates, as well as, from other internal sources. 57. Defendant had a duty to disclose the oil consumption defect and the associated out-of-pocket repair costs to Plaintiff because the defect poses an unreasonable safety hazard, and because Defendant had exclusive knowledge or access to material facts about the subject vehicle that were not known or reasonably discoverable by the Plaintiff. Defendant, however, failed to disclose the Oil Consumption Defect to consumersprior to or at the time of purchase or 58. An enginethat is starved of oil can seize up and causethe vehicle to shut down whendriven, thus creating for Plaintiff an unreasonably dangerous circumstance that may result in a crash. 59. The oil consumption defect can be and has been enormously consequential to Plaintiff, burdening him with out-of-pocket expenses that would not be necessary but for such defect and depriving him of his original bargain. First, excessive engine oil consumption requires additional service visits and increased maintenance costs due to the recently decreased oil change intervals, which the Plaintiff specifically sought to avoid by purchasing a high-end BMWvehicle. Second, the oil consumption defect means that Plaintiff must be concerned with obtaining BMW-approved engine oil when needed. If Plaintiff continues to drive without adding oil, his vehicle might catastrophically fail and strand him or potentially cause a life-threatening accident. This discourages Plaintiff from traveling long distances in his N63 vehicle or forces him to carry an extra supply of oil. Third, Plaintiff will suffer significant loss whenhesells the 13 subject vehicle because the reputation of these vehicles has been impaired by now-public research establishing that these vehicles suffer from the oil consumption defect. 60. Plaintiff provided Defendant or one or more of its authorized dealers with an opportunity to repair the problems with the subject vehicle. Defendant has neglected, failed, refused or otherwise been unable to repair the substantial impairments to the subject vehicle within a reasonable amountof time or a reasonable numberof attempts. 61. The oil consumption defect experienced by the Plaintiff substantially impairs the use, value and safety of the subject vehicle to the Plaintiff. 62. The Plaintiff could not reasonably have discovered said nonconformities with the subject vehicle prior to Plaintiff's acceptance of the vehicle. 63. The Plaintiff would not have purchased the subject vehicle had he known,prior to the respective time of purchase, that he would be required to regularly purchase and add large volumesof engine oil to the subject vehicle in order to prevent the subject vehicle’s engines from TOLLING OF STATUTE OF LIMITATIONS I. Fraudulent Concealment Tolling 64. Plaintiff did not and could not have knownthat there was an oil consumption defect with the subject vehicle’s engine at the time that he purchased the subject vehicle or any time thereafter. 65.| The breach of warranties five-year statute of limitations, which might otherwise apply to bar someofthe Plaintiff’s claims, should be tolled because of Defendant’s knowing and active concealmentof the fact that the subject vehicle’s engine containsa defect. 66.| Defendant had a duty to disclose the oil consumption defect in the Plaintiff's vehicle and had a duty to warn the Plaintiff, who will foreseeably drive his vehicle, of those 14 dangers, as an enginethat is starved of oil can seize up and causethe vehicle to shut down when driven, thus creating for Plaintiff an unreasonably dangerous circumstance that may result in a 67. While Defendant issued TSBs making clear it was aware that there was a defect with the subject vehicle’s engine, Defendant failed to disclose the existence of the defect to Plaintiff at the time of the subject vehicle sale and at the time Plaintiff presented his vehicle to Defendant’s authorized dealer for repairs. 68. Moreover, Defendant’s authorized dealerships informed Plaintiff that the subject vehicle’s excessive consumption of engine oil was normal, rather than the result of a defect. 69. Defendant kept Plaintiff ignorant of vital information essential to the pursuit of his claims. 70. Defendant knowingly, affirmatively, and actively concealed the subject vehicle’s defect from the Plaintiff. 71. Defendant was awareof the defect with the subject vehicle. Td. Based upon the foregoing, Defendant is estopped from relying on any statutes of limitations in defense ofthis action. II. Discovery Rule Tolling 73. Plaintiff could not have discovered through the exercise of reasonable diligence that his vehicle contained the oil consumption defect within the time period of any applicable statutes of limitation. 74. Plaintiff did not know the engine in his vehicle was defective when he purchased his vehicle. Plaintiff did not and could not have known that the SIB-11-01-13 and the N63 Customer Care Package campaigns did not cure the oil consumption defect and left the subject vehicle engine vulnerable to catastrophic failure in the course of its normal operation. 15 75. Although Defendant launched the SIB-11-01-13 and the N63 Customer Care Package campaigns for the subject vehicle, the campaigns were limited in scope, and consumers were not informedthat that the campaigns would not cure the oil consumption defect and remove the risk of the subject vehicle engine vulnerable to catastrophic failure in the course of its normal operation. II. Estoppel 76. Defendant was under a continuous duty to disclose to the Plaintiff the true character, quality, and nature of the subject vehicle. 77. Defendant knowingly, affirmatively, and actively concealed the true nature, quality, and character of the subject vehicle from Plaintiff, and Defendant never intended to repair the oil consumption defect in the subject vehicle. 78. Based on the foregoing, Defendant is estopped from relying on any statutes of limitations in defense ofthis action. IV. Class Action Tolling 79. The statutes of limitation applicable to Plaintiff's claims — including, without limitation, its breach of express warranty claim — have additionally been tolled by class action tolling in light of the Bang v. BMW of North America, LLC (Case No. 2:15-CV-6945) Complaint, filed September 18, 2015, and the Second Amended Complaint, filed in that case on March 21, 2016 (attached hereto as Exhibit A). See Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 350, 103 S. Ct. 2392, 2396 (1983) (“The filing of a class action tolls the statute of limitations ‘as to all asserted membersofthe class’’’). 16 COUNT I Breach of Warranty Pursuant to the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301,et seq. 80. The Plaintiff incorporates by reference paragraphs 1 — 79 of this Complaint as though fully stated herein. 81. The Plaintiff is a “consumer” as defined in 15 U.S.C. § 2301(3). 82. Defendant is a “supplier” and “warrantor” as defined in 15 U.S.C. § 2301(4) and 83.| The subject vehicle is a “consumerproduct”as defined in 15 U.S.C. § 2301(6). 84. 15 U.S.C. § 2310(d)(1) provides a cause of action for any consumer who is damagedbythefailure of a warrantor to comply with a written warranty. 85. 15 U.S.C. § 2304(a)(1) requires Defendant, as a warrantor, to remedy anydefect, malfunction or nonconformance of the subject vehicle within a reasonable time and without chargeto the Plaintiff. 86.| Despite repeated demands, Defendant has failed to remedy the subject vehicle’s oil consumption defect within a reasonable time, and/or a reasonable number of attempts, thereby breaching the written warranty applicable to the subject vehicle. 87. As a result of Defendant’s breach of written warranty, and Defendant’s failure to remedy the same within a reasonable time and without charge to Plaintiff, Plaintiff has suffered damages. COUNT II Breach of Express Warranty underF.S.A.§ 672.313 88. The Plaintiff incorporates by reference paragraphs 1 — 87 of this Complaint as though fully stated herein. 17 89. In connection with the sale of the subject vehicle to the Plaintiff, Defendant provided the Plaintiff with a New Vehicle Limited Warranty, under which it agreed to repair original components found to be defective in material or workmanship under normal use and maintenance, including the subject vehicle’s engine. 90. Plaintiff relied on Defendant’s warranty when he agreed to purchase the subject vehicle and Defendant’s warranty waspart of the basis of the bargain. 91. Plaintiff submitted his vehicle for warranty repairs as referenced herein. Defendant failed to comply with the terms of the express written warranty provided to the Plaintiff, by failing to repair the Vehicle’s defects within a reasonable period of time under the Vehicle’s warranty as described herein. 92. Plaintiff has given the Defendant reasonable opportunities to cure said defect, but Defendant has been unable to do so within a reasonable time. 93. As a result of said nonconformities, the Plaintiff cannot reasonably rely on the Vehicle for the ordinary purpose of safe, comfortable and efficient transportation. 94. The Plaintiff could not reasonably have discovered said nonconformities with the subject vehicle prior to Plaintiff’s acceptance of the subject vehicle. 95. The Plaintiff would not have purchased the subject vehicle, or would have paid less for the subject vehicle, had he known, prior to the respective time of purchase, that the subject vehicle contained the defects identified herein. 96. As a direct and proximate result of the failure of the Defendant to comply with its obligations under the express warranty, Plaintiff has suffered actual and consequential damages. Such damagesinclude, but are not limited to, the loss of the use and enjoymentof his vehicle, and a diminution in the value of the subject vehicle containing the defects identified herein. 18 COUNT III Violation of Florida Deceptive and Unfair Trade Practices Act, F.S.A. § 501.201, et seq. 97. The Plaintiff incorporates by reference paragraphs | — 96 of this Complaint as though fully stated herein. 98. Plaintiff is an “interested party or person” and “consumer” as defined by F.S.A. 501.203(6) and (7) respectively. 99. Defendantis an “interested party or person”as defined by F.S.A. 501.203(6). 100. Plaintiff’s purchase of the subject vehicle is a “Trade” or “Commerce” as defined by F.S.A. 501.203(8). 101. The sale of the subject vehicle to the Plaintiff under the guise that it was free from defects that would substantially impair the use, safety, or value of the subject vehicle represents an unlawful or deceptive trade practice under F.S.A. 501.201, et seq. 102. The Defendant’s failure and refusal to repair the subject vehicle is unfair and deceptive practice. 103. Moreover, as alleged above, Defendant knew or should have knownthat the twin- turbo charged engine in Plaintiff's vehicle had one or more defects that causes the subject vehicle to be unable to properly utilize the engine oil and, in fact, to improperly burn off and/or consume abnormally high amountsof oil. The oil consumption defect decreases the lubrication available to engine parts, which results in premature failure. As a consequence, the oil consumption defect requires unreasonably frequent oil changes and/or the addition of oil between scheduled oil changes. 104. The oil consumption defect also is a significant safety concern in that it prevents the subject vehicle’s engine from maintaining the proper level of engine oil, and causes voluminous oil consumption that cannot be reasonably anticipated or predicted. Therefore, the 19 oil consumption defect is unreasonably dangerous because it can cause engine failure while the subject vehicle is in operation at any time and under any driving conditions or speeds, thereby exposing the subject vehicle’s driver, passengers, and others who share the road with them, to serious risk of accidents and injury. 105. Defendant acquired knowledge of the oil consumption defect prior to Plaintiff acquiring the subject vehicle, through sources not available to consumers such as Plaintiff, including but not limited to pre-production and post-production testing data, early consumer complaints about the engine defect made directly to Defendant and its network of dealers, aggregate warranty data compiled from Defendant’s network of dealers, testing conducted by Defendantin response to these complaints, as well as warranty repair and parts replacement data received by Defendant from Defendant’s network of dealers, amongst other sources of internal information. 106. While Defendant knew aboutthe oil consumption defect, and its safety risks since mid-2008, if not before, Defendant nevertheless concealed and failed to disclose the defective nature of the subject vehicle and its engineto Plaintiff at the time of purchase andthereafter. 107. Byfailing to disclose and concealing the defective nature of the N63 engine from Plaintiff, Defendant violated the Florida Deceptive and Unfair Trade Practices Act as it represented that the subject vehicle and its engine had characteristics and benefits that it does not have, and represented that the subject vehicle and its engine wasofa particular standard, quality, or grade whenit was of another. 108. The facts concealed or not disclosed by Defendant to Plaintiff are material in that a reasonable person would have considered them to be important in deciding whether or not to purchasethe subject vehicle. 20 109. Plaintiff relied to his detriment on those false, misleading, or deceptive acts or practices. 110. The Defendantis in the business of selling private automobiles and therefore the violationsare likely to affect the general public, now andin the future. 111. The Defendantviolated the law willfully and knowingly. PRAYER FOR RELIEF WHEREFORE,Plaintiff respectfully pray that judgment be awarded in Plaintiff's favor and against Defendantas follows: (a) An order approving revocation of acceptance of the subject vehicle; (b) Money damages in whatever amount the Plaintiff is found to be entitled, plusinterest, costs, incidental and consequential damages; (c) Equitable relief including, but not limited to, rescission or reformation of the subject contract or, alternatively, replacement or repair of the subject vehicle, extension of the express warranty and service contracts which are or were applicable to the subject vehicle in the event that Plaintiff is not foundto be entitled to rescission; and (d) Punitive damages; (e) Attorneys’ fees and costs, based on 15 USC 2310(d)(2); and (f) Such other and further relief as this Court deemsjust. 21 TRIAL BY JURY DEMANDED ON ALL COUNTS Dated: December 19, 2019 Respectfully submitted, By: _/s/Matthew Fornaro Matthew Fornaro, Esq. Florida Bar No. 0650641 Matthew Fornaro, P.A. 11555 Heron Bay Boulevard, Suite 200 Coral Springs, FL 33076 Telephone: (954) 324-3651 Facsimile: (954) 248-2099 Email: mfornaro @fornarolegal.com Secondary email: filings @lemberglaw.com Attorneysfor Plaintiff 22

consumer fraud

L9WGD4cBD5gMZwczeK31

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS JAMES ROBINSON, on behalf of himself and all others similarly situated, Civil Matter No. _________ Plaintiff, CLASS ACTION COMPLAINT v. TRIAL BY JURY DEMANDED NATIONAL STUDENT CLEARINGHOUSE, Defendant. Plaintiff JAMES ROBINSON, by his undersigned counsel, complains of Defendant NATIONAL STUDENT CLEARINGHOUSE, alleging as follows: I. PRELIMINARY STATEMENT 1. Plaintiff brings this consumer class action on behalf of himself and similarly situated consumers pursuant to the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681- 1681x, the Massachusetts Credit Reporting Act (“MCRA”), Mass. Gen. Laws ch. 93 §§ 50-67, and the Massachusetts Consumer Protection Act (“MCPA”), Mass. Gen. Laws ch. 93A §§ 1-11, seeking relief for Defendant’s unlawful and excessive charges for consumer file disclosures in violation of federal and Massachusetts law. 2. Specifically, Defendant maintains vast databases housing detailed information about college students and their college enrollment history from which it sells reports to potential creditors, insurers, and employers, among others. As such, Defendant functions as a consumer reporting agency (“CRA”) under the FCRA and MCRA. 3. FCRA section 1681j caps how much CRAs can charge consumers who request their own file disclosures. MCRA section 59(c) provides even greater protections for Massachusetts residents. Defendant, however, charges consumers such as Plaintiff well in excess of the permissible caps. II. JURISDICTION and VENUE 4. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1331 because it arises under the laws of the United States, specifically 15 U.S.C. § 1681p. 5. This Court has supplemental jurisdiction over Plaintiff’s claims brought under Massachusetts law pursuant to 28 U.S.C. § 1367. 6. Venue lies properly in this district pursuant to 28 U.S.C. § 1391(b)(2). III. The PARTIES 7. Plaintiff JAMES ROBINSON (“Plaintiff”) is an adult individual who resides in Boston, Massachusetts. 8. Defendant NATIONAL STUDENT CLEARINGHOUSE (“Defendant”) is a Virginia corporation with its principal office at 2300 Dulles Station Boulevard, Suite 220, Herndon, Virginia. Defendant does not maintain a place of business nor keep any assets within the Commonwealth of Massachusetts. IV. FACTUAL ALLEGATIONS A. The Scope of Student Enrollment Status Reporting 9. According to the U.S. Census Bureau, as of 2017, more than 60 percent of Americans 25 and older had attended a public or private college or university (“higher education institution”). 10. Upward of 43 million people currently owe money on student loans they took out to finance their education or that of their children. 11. Nearly all borrowers of student loans—including private student loans made by banks and other private lenders, federally-guaranteed student loans or student loans originated by the federal government—are eligible to defer payments on loans until graduation or separation from a higher education institution. 12. Higher education institutions must report student loan borrowers’ “enrollment status,” a record of the dates the borrower has been enrolled in school, whether they are currently enrolled, and their expected or actual graduation date. Such information determines, among other things, whether a borrower is eligible to defer payment of her student loans by qualifying for “in- school deferment,” and relatedly, when any unpaid interest is added to the outstanding loan balance and when a student loan servicer applies certain interest subsidies and other benefits to the borrower’s account. 13. The accurate and timely flow of this information ensures that a servicer can place private or federal loans into repayment status at the appropriate time and that borrowers’ loan balances and accrued interest are calculated correctly. 14. For loans and grants made under Title IV of the Higher Education Act, the Department of Education requires colleges and universities to report information about the enrollment status of students who have received such assistance to the Department of Education via the National Student Loan Data System (“NSLDS”). 15. Federal student aid servicers use the data in the NSLDS to assess borrowers’ eligibility for in-school deferments. B. Defendant Provides “Free” Services to Colleges and Universities So It Can Amass Student Data for Credit Reporting Purposes 16. The higher education and private student loan industry created Defendant in 1993. 17. Today, Defendant claims to be the largest third-party enrollment reporting company, with data on 99% of all students in public and private universities. 18. Defendant achieved this nearly universal coverage by offering services to higher education institutions designed to ease the administrative burden of processing and underwriting in-school deferment applications manually, free of charge to the institutions themselves. 19. However, in exchange for its “free” services, Defendant collects enrollment status data concerning all students, not just those who have private student loans or for whom federal student aid reporting requirements apply. 20. Defendant thereby is able to amass huge amounts of data about the enrollment and degree status of nearly every college and university student in the United States. 21. For private student loans, Defendant acts as a data repository for data furnished by colleges and used by student loan companies to determine borrowers’ eligibility to defer payment of a debt. 22. For federal student aid, while colleges can report enrollment information directly to the NSLDS, in practice most higher education institutions outsource this function to Defendant and Defendant then passes enrollment data on to the NSLDS. This data is then used by federal student aid servicers to determine borrowers’ eligibility for deferment and other benefits. 23. In addition to providing enrollment reporting services for private loan and federal aid servicers, Defendant sells the data it warehouses about these current and former students to third-party requestors for credit, employment, background screening, and other eligibility purposes as “verification” services, which Defendant variously calls DegreeVerify, EnrollmentVerify, and GradVerify, among others. 24. As such, Defendant is regulated by the FCRA and the MCRA. C. The Fair Credit Reporting Act Regulates Defendant’s Conduct 25. Congress enacted the FCRA because “[c]onsumer reporting agencies have assumed a vital role in assembling and evaluating consumer credit and other information on consumers” and “[t]here is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy.” 15 U.S.C. § 1681(a)(3)-(4). 26. The FCRA regulates CRAs, which the FCRA defines as: [A]ny person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports. 15 U.S.C. § 1681a(f). 27. Under the FCRA, a “consumer report” is: [A]ny written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for— credit or insurance to be used primarily for personal, family, or household purposes; employment purposes; or any other purpose authorized under [15 U.S.C. § 1681b]. 15 U.S.C. § 1681a(d)(1). 28. As alleged above, Defendant collects information on current and former students’ higher education enrollment, graduation, degree statuses, and dates of attendance (the “student information”), which it then assembles and subsequently publishes for sale in the form of verification products and services to its third party customers for the expected and actual use “as a factor in establishing the [students’] eligibility for credit,” insurance, and employment. 29. The student information that Defendant collects and reports to its customers bears upon the subject consumer’s “personal characteristics” because it reflects his or her level of education, field of study (e.g. major), and institutions attended. 30. Thus, Defendant is a CRA because, for a fee, it regularly engages in the practice of assembling “personal characteristic” information for the purpose of furnishing that information to third parties who use the information for permissible purposes. 31. In addition, for student loans, Defendant assembles that same student information for the purpose of providing it to private student loan servicers, who Defendant knows are using the data as the sole eligibility criteria for determining whether to defer payment of student debt. In-school deferments are “credit” under the FCRA, which defines that term to mean “the right granted by a creditor to a debtor to defer payment of debt . . . .” 15 U.S.C. § 1681a(r)(5); 15 U.S.C. § 1691a(d). Thus, the student information Defendant reports also bears upon the credit worthiness of the consumer because the information is used by creditors as the only factor in determining whether they will grant the right to defer payments for student loans, and hence extend credit, to the consumer borrower. 32. Thus, Defendant is a CRA for the separate reason that its enrollment reporting service to private student loan companies constitutes assembling consumer reports for student loan servicers who use such reports to determine eligibility for credit (here a decision to defer payment of debt). 33. As a CRA, Defendant must, upon a consumer’s request, disclose to the consumer “all information in the consumer’s file at the time of the request[.]” See 15 U.S.C. § 1681g(a). This includes the identification of each person who procured a consumer report in the prior year, or two years if for employment purposes. 15 U.S.C. § 1681g(a)(3). 34. Section 1681j(f) of the FCRA caps the amount a CRA may charge a consumer for his or her file disclosure (the “FCRA-mandated maximum allowable disclosure charge”). 35. For calendar years 2015 through 2018, the maximum allowable disclosure charge was $12.00 and for calendar year 2019, the maximum allowable disclosure charge is $12.50. 36. Nonetheless, and despite the clear statutory language above, Defendant charges consumers amounts in excess of the maximum allowable disclosure charge for file disclosures. 37. Defendant achieves its unlawful overcharging through a variety of methods. First, with regard to its “DegreeVerify” or Degree Verification product, Defendant’s uniform charge is $14.95. Second, for students who have attended more than one institution Defendant charges a DegreeVerify fee per school, resulting in cumulative charges for the same file disclosure. Third, in addition to its fee, Defendant also imposes a school surcharge for certain institutions. The aggregate total exceeds $12.00 and $12.50, as applicable. D. The MCRA Separately Regulates Defendant’s Conduct 38. The MCRA provides additional protections above and beyond those provided by the FCRA for Massachusetts residents like Plaintiff. 39. The MCRA regulates CRAs, which the MCRA defines as: [A]ny person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties. Mass. Gen. Laws ch. 93 § 50. 40. Under the MCRA, Mass. Gen. Laws ch. 93 § 50, a “consumer report” is: [A]ny written, oral or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing or credit capacity which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for . . . credit or insurance to be used primarily for personal, family, or household purposes[.] 41. In light of its above-alleged conduct, Defendant is a CRA for purposes of the MCRA. 42. Defendant’s above-described verification reports are “consumer reports” for purposes of the MCRA. 43. The MCRA provides that CRAs “may impose a reasonable charge, not to exceed eight dollars” (Mass. Gen. Laws ch. 93 § 59(c) (the “MCRA-mandated maximum allowable disclosure charge”) for disclosing “the nature, contents and substance of all information . . . in its file on the consumer at the time of the request, and which is obtainable based upon the identifying information supplied by the consumer when making such request[.]” Mass. Gen. Laws ch. 93 § 55(a)(1). 44. At all relevant times, Defendant undertook and continues to undertake the above- alleged actions for purposes of procuring monetary fees and/or on a cooperative non-profit basis. 45. At all relevant times, Defendant used and uses the Internet, a facility of interstate commerce, in order to furnish consumer reports. 46. At all relevant times, Defendant acted by and through its agents, servants and/or employees who acted within the course and scope of their agency or employment, and under Defendant’s direct supervision and control. 47. At all relevant times, Defendant’s conduct, as well as that of its agents, servants and/or employees, was intentional, willful, reckless, and in grossly negligent disregard of federal and state law and the rights of the Plaintiff herein. E. The Representative Plaintiff’s Experience 48. On February 8, 2019, Plaintiff, while in Massachusetts, visited Defendant’s website to obtain a file disclosure, and requested his file using the only method Defendant made available on the site. 49. Defendant’s website routes students and alumni to its Verification Services if they seek to request information. Plaintiff, who has obtained Bachelors and Masters degrees, was directed to and subsequently selected “Degree and School Certificate” from the menu on Defendant’s Verification Services webpage. When prompted, he specified that the purpose for obtaining the data Defendant maintains about him was to “Verify my own record(s).” 50. Defendant charged Plaintiff a total of $29.95 for the information he requested. 51. Plaintiff paid Defendant a total of $29.95 by credit card. 52. As a result of Defendant’s conduct, Plaintiff was injured and suffered actual damages in the form of money paid in excess of the maximum allowable disclosure charge. V. CLASS ACTION ALLEGATIONS 53. Plaintiff brings this action on behalf of the following Classes for Defendant’s violations of the FCRA: Nationwide Class For the period beginning five (5) years prior to the filing of this Complaint and continuing through the date of judgment, individuals who ordered a Degree Verification or Dates of Attendance service for the indicated purpose of “Verifying my own Record(s)” and who paid Defendant. Massachusetts Overcharging Class For the period beginning two (2) years prior to the filing of this Complaint and continuing through the date of judgment, Massachusetts residents who ordered a Degree Verification or Dates of Attendance service for the indicated purpose of “Verifying my own Record(s)” and who paid Defendant. Massachusetts Unfair Practices Class For the period beginning four (4) years prior to the filing of this Complaint and continuing through the date of judgment, Massachusetts residents who ordered a Degree Verification or Dates of Attendance service for the indicated purpose of “Verifying my own Record(s)” and who paid Defendant. 54. The members of the Classes are so numerous that joinder of all members is impracticable. Although the precise number of Class members is known only to Defendant, Plaintiff avers upon information and belief that the members of the Classes number in the thousands. Defendant channels all verification requests through its website, pursuant to uniform practices and procedures. 55. There are questions of law and fact common to the Classes that predominate over any questions affecting only individual Class members. The principal questions concern whether Defendant’s standard practice willfully and/or negligently violated the FCRA and MCRA by charging consumers more than the maximum allowable amount for file disclosure allowed by 56. Plaintiff’s claims are typical of the claims of the members of the Classes, which all arise from the same operative facts and are based on the same legal theories. 57. Plaintiff will fairly and adequately protect the interests of the members of the Classes. Plaintiff is committed to vigorously litigating this matter and has retained counsel experienced in handling consumer class actions involving the FCRA. Neither Plaintiff nor his counsel have any interests which might cause them not to vigorously pursue this claim. 58. This action should be maintained as a class action because the prosecution of separate actions by individual members of the Classes would create a risk of inconsistent or varying adjudications with respect to individual members which would establish incompatible standards of conduct for the parties opposing the Classes, as well as a risk of adjudications with respect to individual members which would as a practical matter be dispositive of the interests of other members not parties to the adjudications or substantially impair or impede their ability to protect their interests. 59. Whether Defendant violated the FCRA can be determined by examination of Defendant’s policies and conduct and a ministerial inspection of Defendant’s business records. 60. A class action is a 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 Defendant is slight because the maximum statutory damages are limited to between $100.00 and $1,000.00 under the FCRA. Management of the Classes’ claims is likely to present significantly fewer difficulties than those presented in many individual claims. The identities of the members of the Classes may be derived from Defendant’s records. VI. CLAIMS for RELIEF COUNT I Violation of the Fair Credit Reporting Act – 15 U.S.C. § 1681j(f) On behalf of Plaintiff and the Nationwide Class 61. Plaintiff incorporates by reference the above paragraphs as though set forth at length herein. 62. Plaintiff is a “consumer” as defined by 15 U.S.C. § 1681a(c). 63. Defendant is a “person” and a “consumer reporting agency” (“CRA”) as defined by 15 U.S.C. §§ 1681a(b) and (f), respectively. 64. At all relevant times, Defendant was not legally authorized to charge more than the maximum allowable disclosure charge for a verification service requested by the consumer subject of the report. 65. As alleged above, Defendant violated FCRA section 1681j(f)(1) when it charged Plaintiff more than the maximum allowable disclosure charge for his verification report on February 8, 2019. 66. As alleged above, Defendant’s conduct was willful. 67. In the alternative, as alleged above, Defendant’s conduct was negligent. 68. Defendant is liable to Plaintiff and members of the Nationwide Class for the relief sought herein. COUNT II Violation of the Massachusetts Credit Reporting Act Mass. Gen. Laws ch. 93 § 59(c) On behalf of Plaintiff and the Massachusetts Overcharging Class 69. Plaintiff incorporates by reference the above paragraphs as though set forth at length herein. 70. At all relevant times, Defendant was not legally authorized to charge more than the MCRA-mandated maximum allowable disclosure charge for a verification report requested by the subject of the report. 71. As alleged above, Defendant violated MCRA section 59(c) when it charged Plaintiff more than the MCRA-mandated maximum allowable disclosure charge of eight dollars ($8.00) for his degree verification report on February 8, 2019. 72. As alleged above, Defendant’s conduct was willful. 73. In the alternative, as alleged above, Defendant’s conduct was negligent. 74. Defendant is liable to Plaintiff and members of the Massachusetts Overcharging Class for the relief sought herein. COUNT III Violation of the Massachusetts Consumer Protection Act Mass. Gen. Laws ch. 93A § 2 On behalf of Plaintiff and the Massachusetts Unfair Practices Class 75. Plaintiff incorporates by reference the above paragraphs as though set forth at length herein. 76. As alleged above, Defendant engages in trade and commerce. 77. As alleged above, Defendant’s conduct violates the MCPA because it is unfair. 78. Defendant substantially injures consumers because it requires consumers to pay more than the FCRA-mandated maximum allowable disclosure charge and more than the MCRA-mandated maximum allowable disclosure charge. 79. Finally, Defendant’s unfair conduct provides no benefits to consumers or competition. Indeed, charging prices well above the FCRA- and MCRA-mandated maximum disclosure charges gives the company an unfair competitive advantage over competitors and market entrants who choose to follow the law. 80. As alleged above, Defendant’s conduct caused Plaintiff to suffer the loss of money, namely the amounts above the FCRA- and MCRA-mandated maximum disclosure charges he paid to Defendant to obtain a copy of his verification report. 81. As alleged above, Defendant’s conduct was a willful or knowing violation of Section 2 of the MCPA. 82. Defendant is liable to Plaintiff and members of the Massachusetts Unfair Practices Class for the relief sought herein. VII. PRAYER for RELIEF WHEREFORE, Plaintiff prays this Honorable Court would enter judgment in favor of Plaintiff and the Classes and against Defendant and grant the following relief: A. Certifying the proposed Classes under Federal Rule of Procedure 23 and appointing Plaintiff and his counsel to represent the Classes; B. Awarding monetary recovery to Plaintiff and the members of the Nationwide Class pursuant to 15 U.S.C. § 1681o(a) and to Plaintiff and members of the Massachusetts Overcharging Class pursuant to Mass. Gen. Laws ch. 93 § 64; C. Awarding statutory damages to Plaintiff and the members of the Nationwide Class in the amount of not less than $100 and not more than $1,000 per violation of the FCRA pursuant to 15 U.S.C. § 1681n(a); D. Awarding punitive damages to Plaintiff and the members of the Nationwide Class pursuant to 15 U.S.C. § 1681n(a)(2) and to Plaintiff and the members of the Massachusetts Overcharging Class pursuant to Mass. Gen. Laws ch. 93 § 63; E. Awarding monetary recovery in the amount of actual damages or twenty- five dollars, whichever is greater to Plaintiff and members of the Massachusetts Unfair Practices Class pursuant to Mass. Gen. Laws ch. 93A § 9(3); F. Awarding up to three but not less than two times the monetary recovery set forth in Prayer E above to Plaintiff and members of the Massachusetts Unfair Practices Class pursuant to Mass. Gen. Laws ch. 93A § 9(3) if the Court finds that the Defendant’s conduct was a willful or knowing violation of Section 2 of the MCPA ; G. Enjoining Defendant, pursuant to Mass. Gen. Laws ch. 93A § 9(3), from charging Massachusetts consumers sums in excess of the statutorily mandated maximum allowable disclosure charges to obtain copies of their own verification report(s); H. Awarding costs and reasonable attorney’s fees pursuant to 15 U.S.C. §§ 1681n and 1681o, Mass. Gen. Laws ch. 93 §§ 63 and 64, and Mass. Gen. Laws ch. 93A § 9; and I. Granting such other and further relief as may be just and proper. VIII. DEMAND for TRIAL by JURY 83. Plaintiff demands trial by jury on all issues so triable. DATED: April 18, 2019 Respectfully submitted, JAMES ROBINSON, by his attorneys, /s/Stuart Rossman Stuart Rossman, B.B.O. No. 430640 Joanna Darcus* Persis S. Yu, B.B.O. No. 685951 NATIONAL CONSUMER LAW CENTER 7 Winthrop Square, 4th Floor Boston, MA 02110 Tel: (617) 542-8010 [email protected] [email protected] [email protected] Benjamin David Elga* Brian James Shearer* JUSTICE CATALYST LAW 25 Broadway, 9th Floor New York NY 10004 518-732-6703 [email protected] [email protected] James A. Francis* John Soumilas* FRANCIS & MAILMAN, P.C. 1600 Market Street, 25th Floor Philadelphia, PA 19103 Tel: (215) 735-8600 Fax: (215) 940-8000 [email protected] [email protected] *petition to appear pro hac vice forthcoming

consumer fraud

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Case No. 3:19-cv-1936 Steven M. Tindall, SBN #187862 Caroline C. Corbitt, SBN #305492 Email: [email protected] GIBBS LAW GROUP LLP 505 14th Street, Suite 1110 Oakland, California 94612-1406 Telephone: (510) 350-9700 Facsimile: (510) 350-9701 Beth E. Terrell, SBN #178181 Email: [email protected] TERRELL MARSHALL LAW GROUP PLLC 936 North 34th Street, Suite 300 Seattle, Washington 98103 Telephone: (206) 816-6603 Facsimile: (206) 319-5450 [Additional Counsel Appear on Signature Page] Attorneys for Plaintiff and the Proposed Class UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION MICHELLE SHULTZ, Plaintiff, v. LINKNOW MEDIA, Defendant. COMPLAINT FOR DAMAGES AND INJUNCTIVE RELIEF CLASS ACTION JURY TRIAL DEMAND I. NATURE OF THE ACTION 1. LinkNow Media called Plaintiff Michelle Shultz’s cellular phone in an effort to market LinkNow’s website design services. LinkNow used an automatic telephone dialing system (“ATDS”) to make these calls. 2. Plaintiff has not been a LinkNow customer at any time. Plaintiff never consented to receive this call from LinkNow. 3. Plaintiff brings this class action for damages and other equitable and legal remedies resulting from LinkNow’s violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. (“TCPA”). II. PARTIES 4. Plaintiff Michelle Shultz resides in Alameda County, California. 5. Defendant LinkNow Media is a Canadian corporation with its principal place of business at 4700 Rue de la Savane, Suite 210, Montreal Qc H4P 1T7. The allegations in this Complaint as to acts and omissions by LinkNow shall be construed as allegations against LinkNow, whether such conduct was committed by LinkNow directly, or through its agents. III. JURISDICTION AND VENUE 6. This Court has subject matter jurisdiction under 28 U.S.C. § 1331 because Plaintiff’s claims present a federal question. 7. This Court has personal jurisdiction over LinkNow because it directed the call that is the subject of this action to Plaintiff’s cellular phone. Plaintiff’s cellular phone uses a California area code. LinkNow continuously and systematically conducts business in California, within this District. 8. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b)(2) because a substantial part of the events giving rise to Plaintiff’s claims occurred in this District. 9. Assignment to this Division is proper pursuant to Civil L.R. 3-2(c) because a substantial part of the events or omissions that give rise to Plaintiff’s claims—namely, receipt of the illegal telemarketing—occurred in Alameda County. IV. BACKGROUND AND FACTS A. The TCPA was enacted to curb harassing robocalls. 10. In 1991, Congress enacted the TCPA in response to a growing number of consumer complaints regarding certain telemarketing practices. 11. In enacting the TCPA, Congress found: “Evidence compiled by 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). 12. 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). 13. 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). The FCC refers to calls made by an automated telephone dialing system (“ATDS”) or with a prerecorded or artificial voice as “robocalls.” 14. Prior express written consent is required before making telemarketing robocalls to wireless numbers: [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 Tel. Consumer Prot. Act of 1991, 27 FCC Rcd. 1830, 1844 ¶ 33 (2012) (footnotes omitted) (internal quotation marks omitted). 15. The TCPA provides a private cause of action to persons who receive calls in violation of 47 U.S.C. § 227(b)(1). 47 U.S.C. § 227(b)(3). B. The number of robocalls continues to increase. 16. Industry data shows that the number of robocalls made each month increased from 831 million in September 2015 to 4.7 billion in December 2018—a 466% increase in three 17. According to online robocall tracking service “YouMail,” 5.2 billion robocalls were placed in March 2019 at a rate of 168.8 million per day. www.robocallindex.com (last visited April 9, 2019). YouMail estimates that 2019 robocall totals will exceed 60 billion. See id. 18. The FCC also has received an increasing number of complaints about unwanted calls, with 150,000 complaints in 2016, 185,000 complaints in 2017, and 232,000 complaints in 2018. FCC, Consumer Complaint Data Center, www.fcc.gov/consumer-help-center-data (last visited April 9, 2019). C. LinkNow placed an unsolicited, automated, telemarketing call to Plaintiff’s cell phone. 19. LinkNow designs websites for small businesses. 20. LinkNow attempts to identify new customers through telemarketing. 21. One of the ways that LinkNow identifies new customers involves an ATDS. 22. Plaintiff’s telephone number, 925-351-XXXX, is assigned to a cellular telephone service. 23. On February 1, 2019, Plaintiff received an automated call from a number with the Caller ID (909) 343-5488. 24. When Plaintiff answered the call, there was no one on the other line. 25. Plaintiff said “hello” several times. 26. Instead of a response, Plaintiff heard a loud click and then a pause. 27. The loud click and the pause are indicative of a predictive dialer being used, as the sound heard by the call recipient is the algorithm of the predictive dialer’s computer attempting to send the call to a telemarketing representative. 28. A predictive dialer is an ATDS for purposes of the TCPA. 29. When a live human finally came on the line, she identified herself as “Fallon” and promoted LinkNow’s services. 30. Plaintiff, skeptical of the unsolicited cold call, requested a written contact so she could investigate the call. 31. Plaintiff then received an e-mail from “Fallon Champagne – LinkNow Media” from the e-mail address “[email protected]”. D. LinkNow’s TCPA violations injured Plaintiff. 32. During the relevant period, Plaintiff has carried her cellular phone with her at most times so she can be available to family, friends, and associates. 33. LinkNow’s call invaded Plaintiff’s privacy and intruded on her right to seclusion. The call frustrated and upset Plaintiff by interrupting her daily life and wasting her time. 34. LinkNow’s call intruded upon and occupied the capacity of Plaintiff’s cell phone. The call temporarily seized and trespassed upon Plaintiff’s use of her cell phone and caused her to divert attention away from other activities to address the call. 35. Other people have complained about harassing calls from LinkNow. 36. Plaintiff’s experience with LinkNow is not unique. People recently have complained on the website 800notes.com about harassing calls from that telephone number. For example, on December 21, 2018, a person named Sasha complained, “Calls every day. Never leaves a message.” See https://800notes.com/Phone.aspx/1-909-343-5488 (last visited April 9, 2019). And on February 27, 2019, a “shop owner” complained “TELEMARKETER CALLS JUST ABOUT EVERY OTHER DAY.” Id. Interspersed among the complaints was a banner advertisement for LinkNowMedia. Id. 37. Recent complaint activity on the website everycaller.com shows four callers reported calls from that number as “spam.” See https://www.everycaller.com/phone-number/1- 909-343-5488/ (last visited April 9, 2019). V. CLASS ACTION ALLEGATIONS 38. Plaintiff brings this lawsuit under Federal Rules of Civil Procedure 23(a) and (b)(3) as a representative of the following Class: All persons within the United States to whom Defendant or a third party acting on its behalf, (a) made one or more non-emergency telephone calls; (b) to their cellular telephone number; (c) using an automatic telephone dialing system or an artificial or prerecorded voice; (d) at any time in the period that begins April 10, 2015 to trial. Plaintiff reserves the right to amend the Class definition following an appropriate period of discovery. 39. Because auto-dialing equipment maintains records of each contact, members of the Class can be identified through LinkNow’s or its agents’ or affiliates’ records. A. Numerosity. 40. At the time of filing, Plaintiff does not know the exact number of Class members. But the potential Class members number at least in the thousands, since automated telemarketing campaigns make calls to hundreds or thousands of individuals a day. 41. The alleged size and geographic dispersal of the Class makes joinder of all Class members impracticable. B. Commonality and Predominance. 42. There are questions of law and fact common to Plaintiff and to the proposed class, including but not limited to the following: 43. Whether LinkNow’s dialing system(s) constitute an ATDS under the TCPA; 44. Whether LinkNow used an ATDS to place non-emergency calls to the cellular telephones of Plaintiff and Class members without their prior express consent; 45. Whether LinkNow’s telephone calls were made knowingly or willfully; and 46. Whether Plaintiff and Class members were injured by receiving such calls. C. Typicality. 47. Plaintiff’s claims are typical of the claims of the Class, in that Plaintiff, like all Class members, has been injured by LinkNow’s uniform misconduct—the placement of calls to cellular telephones for non-emergency purposes without the prior written express consent of the called parties. D. Adequacy. 48. Plaintiff will fairly and adequately protect the interests of the Class and is committed to the vigorous prosecution of this action. Plaintiff has retained counsel experienced in class action litigation and matters involving TCPA violations. E. Superiority. 49. A class action is superior to other available methods for the fair and efficient adjudication of this controversy. Because the amount of each individual Class member’s claim is small relative to the complexity of the litigation, and because of LinkNow’s financial resources, Class members are unlikely to pursue legal redress individually for the violations detailed in this complaint. Class-wide damages are essential to induce LinkNow to comply with federal law. Individualized litigation would significantly increase the delay and expense to all parties and to the Court and would create the potential for inconsistent and contradictory rulings. By contrast, a class action presents fewer management difficulties, allows claims to be heard which would otherwise go unheard because of the expense of bringing individual lawsuits, and provides the benefits of adjudication, economies of scale, and comprehensive supervision by a single court. VI. FIRST CLAIM FOR RELIEF (Violations of the TCPA, 47 U.S.C. § 227, et seq.) 50. Plaintiff incorporates the above allegations by reference. 51. LinkNow or its agents used an automatic telephone-dialing system or an artificial or prerecorded voice to make non-emergency calls to the cellular telephones of Plaintiff and Class members, without their prior express written consent. 52. The foregoing acts and omissions violate the TCPA, including, but not limited to, 47 U.S.C. § 227(b)(1)(A)(iii). 53. Plaintiff and members of the Class are entitled to an award of $500 in damages for each such violation. 47 U.S.C. § 227(b)(3)(B). 54. Plaintiff and members of the Class are also entitled to an injunction prohibiting LinkNow or its affiliates and agents from placing non-emergency calls to any cellular telephone number using an ATDS and/or artificial or prerecorded voice. 55. The foregoing acts and omissions constitute knowing and/or willful violations of the TCPA, including, but not limited to, violations of 47 U.S.C. § 227(b)(1)(A)(iii) and 47 C.F.R. §§ 64.1200(a)(1)(iii). 56. Under 47 U.S.C. § 227(b)(3)(C), and as a result of the alleged knowing and/or willful violations of the TCPA, Plaintiff and Class members are entitled to an award of $1,500.00 in statutory damages for every call placed in violation of the TCPA VII. PRAYER FOR RELIEF WHEREFORE, Plaintiff, on her own behalf and on behalf of all members of the Class, pray for judgment against LinkNow 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 LinkNow and its affiliates, agents and related entities from making automated calls; 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. VIII. DEMAND FOR JURY Plaintiff demands a trial by jury for all issues so triable. RESPECTFULLY SUBMITTED AND DATED this 10th day of April, 2019. GIBBS LAW GROUP LLP By: /s/ Steven M. Tindall, SBN #187862 Steven M. Tindall, SBN #187862 Caroline C. Corbitt, SBN #305492 Email: [email protected] 505 14th Street, Suite 1110 Oakland, California 94612-1406 Telephone: (510) 350-9700 Facsimile: (510) 350-9701 Beth E. Terrell, SBN #178181 Email: [email protected] TERRELL MARSHALL LAW GROUP PLLC 936 North 34th Street, Suite 300 Seattle, Washington 98103 Telephone: (206) 816-6603 Facsimile: (206) 319-5450 Anthony I. Paronich (pro hac vice application to be submitted) Email: [email protected] PARONICH LAW, P.C.
 350 Lincoln Street, Suite 2400
 Hingham, MA 02043 Telephone: (617) 485-0018 Facsimile: (508) 318-8100 Andrew Heidarpour (pro hac vice application to be submitted) E-mail: [email protected] HEIDARPOUR LAW FIRM, PLLC 1300 Pennsylvania Avenue N.W., Suite 190 Washington, D.C. 20004 Telephone: (202) 234-2727 Attorneys for Plaintiff

privacy