The Business Of Law

It may be time to add exchange-traded funds (ETF) to the alphabet soup of culprits of the economic meltdown, and it may be that investors who lost money in ETF’s may have claims against the funds and/or their investment advisors.

ETFs offer public investors an undivided interest in a pool of securities and other assets and thus are similar in many ways to traditional mutual funds, except that shares in an ETF can be bought and sold throughout the day like stocks on a securities exchange through a broker-dealer. That of course makes them very different.

The fact that shares of an ETF can be traded daily on exchanges means they are vulnerable to the ups and downs of a given trading day, what’s more, many of these funds are leveraged, meaning they use borrowed money to try to double or even triple the daily return. The problem of course is that this leverage also means they can lose many times their underlying value, even in a single day.

With this in mind, it is generally recommended that ETF’s are most appropriate for sophisticated and institutional investors who are accustomed to the daily ups and downs of the market, and the increased risk that comes with leverage.

That’s where the trouble comes in. Since 2006 there has been increased marketing of these funds to conservative retail investors as long term investment vehicles. That’s a big problem, because the performance of ETFs over longer periods of time can differ significantly from their stated daily objective. Therefore, leveraged ETFs that are reset daily are typically unsuitable for retail investors who plan to hold them for longer than one trading session, particularly in volatile markets.

Leveraged ETFs in particular are more sensitive to market movements than non-leveraged ETFs. They are best used as day-trading vehicles, to be held no more than a day or two.

Both FINRA and the SEC have issued warnings in the last six months about the risks associated with the sale of ETFs to retail investors. ETFs are becoming extremely popular and are often marketed to retail investors without proper disclosure as to the significant losses that can incur with long-term investment.

The problem of marketing these risky products to retail investors has become so acute that regulators and investment advisors have started to warn consumers. In August, the SEC and FINRA issued an investor alert warning retail investors about the safety of leveraged ETFs calling them extremely complicated and confusing products.

Given the rapid growth of these funds, we expect there may be many investors who have suffered economic losses as a result of misleading marketing tactics. Many of these investors will likely have claims against their financial advisors and/or the funds or both.

If you are interested in learning more about this case-type and our work in this area, please drop me a note.

“Then he bummed a cigarette and faded off to sleep”

So goes the lyrics in Kenny Rogers’ iconic 1978 song, The Gambler. That song, along with countless Hollywood movies featuring either the suave sophisticated gambler lighting a lady’s cigarette while playing blackjack, or the down on his luck gambler chain smoking as he loses the mortgage have helped cement the relationship between gambling and smoking. So ubiquitous is smoking at the tables, that the tables are literally designed with ashtrays built into them.

Against the backdrop of indoor smoking bans that are sweeping the country, it’s almost funny to see smoking indoors at casinos, yet for the thousands of workers at Las Vegas casinos, the exposure to second-hand smoke is no laughing matter.

Last week a suit was filed against Wynn Las Vegas and its parent Company Wynn Resorts Ltd. by employees who claimed that their health was affected by second-hand smoke. A similar suit was filed in July against Harrah’s entertainment owner of Caesars Palace hotel-casino.

The suits allege that Wynn and Caesar’s have knowingly exposed their workers to dangerous second-hand smoke and have failed to take common sense measures to limit that exposure. Specifically, the suits talk about other large casinos in Las Vegas, most notably the Bellagio and Palazzo who have either changed operations or installed technology to cut down on second-hand smoke on the gaming floors. Some casinos even designate as much as 50% of the gaming floor as non-smoking.

The lawsuits allege that Wynn and Caesars have resisted even these simple measures and what’s worse, they have threatened employees who complain about second-hand smoke with disciplinary action.

I’m not going to argue whether smoking should or should not be allowed in casinos, I’ll leave that to the politicians, but there is clearly a problem when employers are allegedly refusing to take common-sense measures to limit exposure, or when they are actually forcing employees to endure that exposure or risk being disciplined. If this was a factory where the boss forced workers to be exposed to asbestos without proper ventilation, or safety precautions, we’d be up in arms, but because it’s cigarette smoke, for some reason we’re a little less appalled.

I expect we’ll be seeing a lot of cases from the workers at these casinos who for years have been exposed to this harmful carcinogen. If this is of interest to you and you intend to pursue it further, please get in touch with me.

We are currently investigating claims of women who have experienced serious complications arising out of the implantation of a Bard Avaulta transvaginal surgical mesh device.  Manufactured by C.R. Bard, Inc., the Avaulta Solo Support and Avaulta Plus Biosynthetic Support Systems are surgically implanted devices which are designed to help increase bladder control and provide relief from the pain caused by Pelvic Organ Prolapse (POP) and Stress Urinary Incontinence (SUI).  However, there have been numerous reports of mesh-related complications including mesh erosion, extrusion, perforation of the bowel, bladder and blood vessels, infection, vaginal scarring, and recurrence of prolapse or incontinence.

In October 2008, the FDA warned healthcare professionals of the side effects associated with vaginal mesh devices after receiving over one thousand reports over three years from nine surgical mesh manufacturers of complications associated with surgical mesh devices used to repair POP and SUI. In some cases, the pain and discomfort is so severe as to require additional surgery to repair any damage caused by implantation of the device or to remove it altogether.

We will be continuing to monitor concerns about this device.  If you’re interested in learning more about these types of cases, drop me a note.

We’ve been following reported side effects from Januvia (sitagliptin) and Janumet, which is combination of sitagliptin and metformin manufactured by pharma giant Merck for over two years now, and there’s been mounting evidence to cause concern.  Just last week, the FDA finally weighed in and issued a safety alert warning of possible health risks. Read the FDA announcement here.

Specifically, FDA made revisions to the prescribing information for Januvia and Janumet to include information on reported cases of acute pancreatitis in patients using these products.

But the latest alert is not the first of the problems for the once-daily prescription tablet used to treat Type II diabetes.  In fact, concerns have been expressed linking the drug to Stevens-Johnson Syndrome and other skin reactions.  In clinical studies, patients given Januvia experienced an increase in creatine levels in the blood which is an early indicator of kidney problems.  It has also been linked to serious allergic reactions.

The pancreatitis issue first surfaced in April, when researchers at UCLA linked Januvia to low-grade pancreatitis in some patients and a greater risk of pancreatic cancer in long-term users. All told from the drugs approval in 2006 to February of 2009 88 post-marketing cases of acute pancreatitis, including 2 cases of hemorrhagic or necrotizing pancreatitis in patients using sitagliptin, were reported to FDA between October 16, 2006 and February 9, 2009.

In the safety report, FDA said it is working with the mfg to revise the prescribing information to include:

1)    Information regarding post-marketing reports of acute pancreatitis, including the severe forms, hemorrhagic or necrotizing pancreatitis;

2)    Recommendations that healthcare professionals monitor patients carefully for the development of pancreatitis after initiation or dose increases of Januvia or Janumet and to discontinue either drug if pancreatitis is suspected while using these products;

3)    Information noting that sitagliptin has not been studied in patients with a history of pancreatitis. Therefore, it is not known whether these patients are at an increased risk for developing pancreatitis while using Januvia or Janumet.

The number of cases that we have taken on continues to increase and as always we are exploring ways to reach out to patients who may have suffered side effects associated with these pharmaceuticals if you are interested in working with us, drop me a note.

Here’s an amazing statistic I recently came across. According to the U.S. Department of Labor, in one year alone, they received 1,983 complaints of employees treated unfairly under the Family and Medical Leave Act (FMLA). Of those, 1,087 were found to be true violations resulting in $1.5 million in back wages for the workers. The primary violation found was that people who tried to take leave for family reasons were wrongfully terminated.

At Sokolove Law, we talk about our mission of providing access to justice and helping those who have no chance in our legal system. These are the people we’re talking about. Someone who loses their job simply because their employer refuses to grant them leave to care for a sick family member, or support a pregnant spouse.

But they’re also the kinds of cases that allow us to do well while doing good. The reason is that the FMLA is pretty clear cut, and yet as we’ve seen people violate it all the time. When they do, we and our co-counsel firms will be there.

The FMLA permits eligible employees to take up to a total of 12 work weeks of unpaid leave during any 12 month period for one or more of the following reasons:

• Birth and care of a newborn child of the employee
• Placement with the employee of a child for adoption or foster care
• Care of a spouse, child or parent with a serious health condition
• Serious health condition of the employee

In January 2009, the FMLA was amended to include employees who take a leave because of any qualifying exigency relating to the active duty or call to active duty of a spouse, child or parent.

Employers are required to continue to provide benefits and to reinstate the employee to their old job or an equivalent one when they return.

Unfortunately employers either don’t grant the leave, or fail to reinstate the employee. In the worst circumstances, they actually terminate the employee allegedly for “cause” which is very often not the case.

Under the FMLA, employees who prevail in court can collect actual damages for lost wages, benefits and expenses plus interest. In addition the can collect lawyer fees and equitable relief (meaning reinstatement to their job). FMLA even allows parties to collect liquidated (double) damages unless the defendant can prove they acted in good faith.

Another medical device case type that we’ve been watching has to do with Calaxo Osteonconductive Interference Screws, also known simply as the Calaxo Screw. These devices are used to repair knee ligaments and promote bone growth most often after ACL repair or reconstruction. ACL injuries are common in many athletics including football, soccer, ice hockey and downhill skiing.

The Calaxo Screw was supposed to be an innovative product because it’s made of a bioabsorbably polymer, so that unlike conventional screws used to reattach ligaments, it could be reabsorbed by the body 12 months after surgery.

The problem is that the Calaxo Screw has been linked to graft failure and premature material degeneration. Symptoms include swelling, fluid build-up around the knee redness around the joint, loss of flexibility in the knee area, screw fragmentation, and localized joint pain. These side effects often require additional surgery to remove dead or infected tissue.

From 2006 to 2009, more than 300 adverse effects related to Calaxo Screws were reported to the FDA, and in August 2007, the manufacturer Smith & Nephew voluntarily recalled 68,000 units implanted worldwide. Some of the product was also recalled in October 2007 in the U.K.

There have been several suits filed alleging failure to warn patients about possible side effects. We’ll be monitoring the case, and may engage in a marketing effort targeting potential litigants who may have been given one of these screwed up screws as part of their surgery.