Protecting What's Right

Apparently the phrase “The customer is always right,” means nothing to the United States Supreme Court.

A court decision earlier this month prohibits consumers from filing lawsuits to settle excessive fee disputes if their contracts contained an arbitration clause. Arbitration hearings are out-of-court settlements usually tipped in favor of the company, which hires its own arbiter.

Consumer watchdogs say the decision gives companies more firepower to impose unnecessary fees. And it takes away the consumer’s Constitutional right to a jury trial.

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Having major problems with your Mini?

You’re not alone.

A class action lawsuit filed by the national firm of Baron and Budd alleges that BMW of North America knew that the transmissions installed in some Mini Cooper models were prone to premature failure. Models include the 2002 through 2006 Mini Cooper Coupes and the 2005 to 2008 Mini Cooper Convertibles. This is the first class action lawsuit filed against the company regarding this issue.

The lawsuit, filed in the Central District of California, alleges that the transmission failures present a safety issue and place the vehicle’s occupants at risk of serious harm. Imagine driving down the highway and the transmission fails without warning. You lose power to the drive wheels, and you are exposed to speeding traffic as you try to find a safe place for your Mini to coast to a stop. Or, you’re in a busy intersection waiting to make a left turn. Just as the light turns yellow, you start to turn, but when you press on the gas pedal, nothing happens. Now, stranded in the middle of the intersection, you brace for impact and watch helplessly out the window as cars begin to approach from the opposite direction.

BMW Group concealed the faulty transmissions so that the warranty would expire before owners became aware of the problem, forcing them to repair the defect out of their own pocket, the suit states.

The first Generation Minis were introduced in the United States in 2002. The car had gained popularity in Britain during the 1960s for its unconventional small design. At the time of its American debut, the Mini was heralded as a stylish, affordable compact car under $20,000. An advertising blitz in America hyped the vehicle so much that BMW couldn’t keep up with demand and churned out a substandard, shoddy product, the lawsuit alleges.

The company even purchased the first-ever centerfold spread in Playboy magazine to show off the car’s beauty. A Playboy photographer was hired to show off the vehicle’s assets in the pictorial.

The beauty, however, was only skin deep. Owners of the first generation of Minis were duped into believing that their vehicles were not only beautiful but well-crafted. Instead, BMW left the owners of these faulty cars to foot the bill.

When the transmissions fail, Mini enthusiasts are required to spend $6,000 to $9,000 (a third to half of the Mini’s purchase price) to repair or replace the transmissions.

Not long after its American debut, BMW issued several technical service bulletins on the faulty transmissions. Instead of disclosing the problem to its loyal customers, BMW attempted to resolve the issue by simply replacing the transmission oil.

When more Mini owners began bringing their broken vehicles back to the dealership for service, BMW told its mechanics to only replace certain parts. The company knew about the problem, didn’t tell its customers and failed to replace shoddy workmanship that should’ve never come off the assembly line.

Contact Baron and Budd at 1.866.844.4556 or via email here to learn more about the Mini Cooper lawsuit.

Did you know that the meat substitute Quorn contains a fermented fungus?

Doesn’t exactly sound appetizing, does it?

Quorn has become a controversial product because it contains a microscopic fungus, called mycoprotein, known to cause violent allergic reactions, vomiting and diarrhea, according to a report by the nonprofit Center for Science in the Public Interest. The Washington, D.C.-based nonprofit has asked in a letter to the FDA to either take the Quorn off the market or place a warning label on its products.

Mycoprotein, the main Quorn ingredient, is a fermented fungus mixed with vegetable flavoring, egg whites and other ingredients that is then shaped into patties and frozen.

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Johnson & Johnson, makers of the popular No More Tears baby shampoo, recently announced plans to eliminate deadly carcinogenic chemicals from its products within two years.

Then why are our eyes still watering?

It’s because it took nearly two years for Johnson & Johnson to react after leading health and parents’ groups asked the company to remove the chemicals 1.4-dioxane and quaternium-15. The company only made the decision after the nonprofit group Campaign for Safe Cosmetics threatened to boycott its products.

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On what must be the happiest day in her 22 years, Molly Katchpole, a Washington, D.C. nanny who started an online petition urging Bank of America to drop its new debit fee, scored a big win for herself – and for consumers everywhere – when Bank of America announced plans to scrap its $5 monthly fee for debit card purchases.

The consumer outcry, spawned by Katchpole, had already prompted other major banks, including JPMorgan Chase & Co. and Wells Fargo & Co., to cancel tests of similar debit card fees. But Bank of America hung on, hoping that somehow the outcry would stop and they could go back to doing business as usual (read: business on their own terms, without considering the consumer).

They were wrong.

In this latest instance, involving the $5 per month fee, Bank of America succumbed to the pressure of fed-up folks who felt their new money-making angle was one charge too many.

“For a lot of consumers, this was the last straw,” said Jean Ann Fox, director of financial services for the Washington- based Consumer Federation of America. “Banks have been making a lot of changes to accounts, adding fees and raising the minimum balance needed, and consumers were clear that they objected to one more fee.”

But at other times consumers need more than social media and online petitions to create change. Sometimes they need the power of our legal system through class actions.

In fact, just last year, Bank of America’s strategy to maximize overdraft charges by re-ordering debit transactions was felled by a consumer class action against a number of financial institutions. The result was a $410 million settlement with Bank of America, the largest of the financial institutions involved. The lawsuit accused the banks of manipulating the timing of debit card transactions to increase overdraft fees, sometimes resulting in hundreds of dollars of fees for tens of dollars of actual transactions. Besides the monetary recovery, the lawsuit forced banks across the country to change their overdraft policies. Now they no longer offer “courtesy” overdraft protection or “re-ordering debits.”

Baron and Budd was honored to be involved with the overdraft fee consumer class action and is honored to applaud today the work of Molly Katchpole, the consumer advocate who thought she could – and did.

For anyone out on a weekend spending spree (a.k.a. running errands), it’s pretty simple: you check your bank balance before you leave the house and do the simple subtraction in your head as you hand your debit card to the mega (and well-priced) grocery store, the cleaners, the coffee shop and wherever.

And, by Monday morning when you awake from your jam-packed weekend, you check again just to make sure you did the mental math right.

So what could go wrong?

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Everyone knows that if you have a home mortgage you are required to have home insurance. And that makes sense. But are you aware that, depending upon where you live, you may also be required to have certain types of hazard insurance? Most people don’t realize this – and it’s one of several ways that mortgage companies, banks and loan servicers may be getting to your pocketbook.

If you don’t have the required hazard insurance, or if you’re running behind  on your homeowners policy, your mortgage company just might “help you out” by buying a policy on your behalf, and then charging you for it. Sounds great but there’s a big catch:

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Just last week, the federal Occupational Safety and Health Association (OSHA) issued a Hazard Alert for the popular hair straightening treatment Brazilian Blowout. The very same day, the class in the class action lawsuit against GIB, the maker of Brazilian Blowout, was certified by a California federal court and Baron & Budd was appointed class counsel.

The law firm of Baron & Budd filed a lawsuit against GIB in November of 2010, regarding their products Brazilian Blowout Solution and Brazilian Blowout Acai Professional Smoothing Solution. The suit claimed that GIB misled salon owners and hair stylists with deceptive marketing and advertising about the Brazilian Blowout Solution. The product, touted as “formaldehyde-free” and “healthy” for the hair, was found to have incredibly high levels of the harmful chemical in it by tests conducted by Oregon OSHA and California OSHA.

Find out more about the Brazilian Blowout litigation, along with Baron & Budd’s involvement here.

An HSBC Holdings Plc. unit was sued earlier this week for collecting what are described as “excessive” overdraft fees and failing to alert consumers when they make a transaction that incurs the bank’s $35 overdraft charge.

The lawsuit, filed in the New York state Supreme Court by a group of customers who claim they were billed improper overdraft fees, is a proposed class action that seeks to represent New York residents who bank at HSBC Bank USA NA.

According to the lawsuit, HSBC Bank reorders debits from highest to lowest during the course of the day. Therefore, the suit claims, if a customer has a $50 balance and makes four transactions of $10 and one for $100 later the same day, HSBC debits the transactions from largest-to-smallest, subjecting the customer to four overdraft fees instead of just one.

“”It is through manipulation of customers’ transaction records that HSBC maximizes overdraft penalties imposed on customers,” the complaint states.

Baron & Budd has been at the forefront of the excessive bank overdraft fee litigation. Bruce Steckler, head of the firm’s general litigation section, currently serve on an MDL for cases that have been consolidated in California. Learn more here.