As consumers, we use products with the understanding that they will make our lives easier or more pleasant. We trust them to be safe. Yet, thousands of people are injured or killed every year because of defective or dangerous products ranging from motor vehicles and children’s toys to building materials and medical equipment.

What is product liability?

Product liability deals with injuries resulting from the use of a product that is unsafe due to its design, the way it was manufactured, or the manner in which it was marketed. The following classifications represent the basic types of product liability:

• Design Defects: These flaws stem from the faulty design of a product, which means that the actual blueprint for creating the product was unreasonably dangerous. For example, a toy that is easily broken into small parts, presenting a choking hazard.
• Manufacturing Defects: These defects arise during the assembly of a product. The design was reasonably safe, but some error occurred during the manufacturing process. For example, if the product was manufactured using substandard materials.
• Marketing Defects and Deficient Warnings: These injuries are not caused by any defect with the product itself. Instead, the manufacturer and/or seller failed to adequately warn you about risks associated with the product. For example, a toxic chemical product that does not contain adequate information and precautions on how to use it safely.

Who is liable for a defective product?

A person who is injured by an unsafe or defective product may have legal grounds to file suit against anyone in the product’s chain of distribution. Depending on the circumstances and the nature of the defect, various parties could be held responsible under product liability law including the following:

How long do I have to file a product liability lawsuit?

Each state has laws governing the length of time you have to file a claim for products liability. This law is known as the statute of limitations.

In Florida, the statute of limitations for product liability claims is two years from the date of injury or death that occurred as a result of the product. These time frames often vary even more if the defendant is a governmental entity. These statements do not apply to all cases and it is best to speak with an attorney if you have specific questions about the statute of limitations or rules applying to your claim. The length of time may vary from state to state and product liability cases are usually litigated in the jurisdiction where the accident occurred.

What damages can you claim for a product liability case?

Your product liability claim should account for all of the damages you have sustained. This may include economic and non-economic losses:

How does my attorney get paid?

We work on a contingency basis, so we don’t get paid unless you do. We cover all of the upfront costs and only collect a fee if we win your case. If we cannot get you a financial recovery, you owe us nothing.

What should I do if I have been injured by an unsafe or defective product?

If you are injured by an unsafe or defective product, make sure you have your facts in order. Create a record:

• Keep the product if you can safely keep it in your possession
• Do not alter or fix the product
• Seek medical attention immediately
• Assemble any documentation you have related to the product including purchase records, technical information, owner’s manuals, and/or user instructions.
• Take photos of the product
• Arrange a free consultation with our Unsafe & Defective Products attorneys as soon as possible
• Do not discuss the case with anyone other than your attorney

Can a Florida product liability lawyer help me if I do not live in Florida or if the incident occurred in a different state?

Absolutely. We litigate cases across the nation and will travel as necessary to conduct investigations, interviews, and assessments of the defective product. Cohen Milstein is a national law firm with the experience and resources required to handle product liability cases across the United States. In some instances, we may partner with local reputable law firms to handle certain aspects providing them with the additional resources and expertise to pursue a case to its fullest extent.

What is an Inclusion Rider? 

An inclusion rider is a provision in an actor or content creator’s contract designed to promote diversity in film casting and production. It sets forth a hiring process that incorporates elements including: 

• Commitment to deepening and diversifying hiring pools 
• Establishment of benchmarks/targets for hiring 
• Collection, measurement, and analysis of application and hiring data 
• Implementation of measures of accountability for progress toward hiring goals 

The inclusion rider is a powerful tool that organizations and professionals can use to advance representation in the film and other industries. 

Adopting an Inclusion Rider 

Inclusion riders are based on a template that was originally developed by Cohen Milstein alumna Kalpana Kotagal along with Fanshen Cox of Pearl Street Films and Dr. Stacy L. Smith of the Annenberg Inclusion Initiative. We encourage you to download the current version of the template, as well as our model policy for companies: 

• Inclusion Rider Template for individuals 
• Inclusion Rider Model Policy for companies 

These materials provide a flexible framework adaptable to various contexts. They should be considered together with legal counsel. 

A Brief History of the Inclusion Rider 

The idea for the inclusion rider originated at Pearl Street Films in the fall of 2016. It was intended as a way for Hollywood A-listers to help make the industry more equitable both on- and off-camera. 

Soon after, several companies committed to adopting inclusion riders, including: 

• AMC Studios 
• Forest Whitaker’s Significant Productions 
• Scott Budnick’s One Community 
• Stephanie Allain’s HomeGrown Pictures 
• Layne Eskridge’s POV 
• Jeff Friday Media 
• Lynette Howell Taylor’s 51 Entertainment 
• Carri Twigg and Nicole Galovski’s Culture House 
• Matt Nicholas and Nastassja Kayln’s Rebel Maverick
• Farhoud Meybodi’s Ritual Arts 
• Harry and Gina Belafonte’s Sanfoka.org 
• Portal A 

The inclusion rider gained worldwide attention following the 2018 Academy Awards, where it was mentioned by Frances McDormand in her Best Actress acceptance speech. 

In 2021, a reimagined inclusion rider template was released, as well as a model inclusion rider policy for companies. These materials were developed by Kalpana Kotagal, Fanshen Cox, and Endeavor Content HR head Dr. Tasmin Platter as part of a coalition involving Color Of Change’s #ChangeHollywood initiative.  

The updated inclusion rider expands on the original legal framework. It focuses on intersectional inclusivity, encompassing gender, race and ethnicity, LGBTQIA identity, age, and disability. It also provides additional tools for hiring crew from underrepresented backgrounds and introduced accountability measures.

Authored by Christine E. Webber

Understanding Your Rights & Legal Resources _­

If you are concerned about pay equity, this tip sheet can help you collect the information you need, provide an overview of your legal rights, and tell you where to turn for additional assistance.

Things to Look For

Pay Comparisons: Learn what others with comparable experience and jobs in your company are being paid. Glass Door, PayScale.com and other salary review websites may provide information reported by current or former employees. New job postings at your company may also list salary ranges. Information from peers at other companies can also be useful.

How Is Pay Set at Your Company: Learn how pay is set at your company. What factors are used in setting starting pay? Do they reflect what’s important in performing the job?  When can pay be adjusted? What factors are considered in making adjustments?  Who controls decision-making?

Be Aware

• Pay differences may arise at time of hire.  Sometimes a new employer may base their salary offer on your last salary – that’s a red flag.
• Pay differences at time of hire may also be caused by slotting women into lower-level positions at hire than men with comparable qualifications.
• Pay disparities also arise in awards of bonuses and stock options, where differences may be even larger than with salary.
• Annual reviews and pay raises may exacerbate or create pay differences. Sometimes pay raises are based on evaluation systems that may disadvantage women.

Informal Steps to Take

• Collect as much information as you can about pay ranges in your company and industry.
• Ask your manager about benchmarks for your compensation in your annual review
• Seek assistance from your work sponsors to correct any pay disparities impacting you.
• Learn how best to negotiate for what you want.  While equal pay should not depend on negotiation, it’s one of the tools you may find helpful.  For example, AnitaB.org, a non-profit organization that helps women in the tech sector, offers salary negotiation workshops.
• Encourage employers to conduct rigorous pay equity audits and make changes based on the results. Salesforce, for example, has been recognized as a leader in that respect, as cited by Wired, How Salesforce Closed the Pay Gap Between Men and Women, (Oct. 15, 2019) and Inc., How to Fix Gender Inequality at Your Company, From the HR Exec Who Helped Close Salesforce’s Pay Gap, (Sept. 12, 2019).

Know Your Rights

Title VII Protections

• Prohibits discrimination in every aspect of employment, including compensation, on many grounds including sex, race, religion. Other statutes cover age discrimination or disability discrimination. 
• Requires that you file a charge with the EEOC or parallel state agency as a first step before you can go to court. 
• Some claims require proof of intent to discriminate, while others require only identification of a specific practice that appears neutral, but which disproportionately disadvantages women, and cannot be justified. 
• The deadline to file a charge can be as short as 180 days from the discriminatory event, but you have 300 days when your state or local municipality has an enforcement agency that enforces a parallel state law against discrimination. Thus, in most states you have 300 days to file your charge.

Equal Pay Act Protections

• The federal Equal Pay Act (EPA) prohibits paying employees of different sexes differently if they do equal work on jobs which require equal skill, effort, and responsibility, in the same establishment. (Pay differentials based on productivity, seniority, merit, or other job-related factor other than sex are
  permitted.) No proof of intent to discriminate is required. 
• You must file an EPA case in court within two years of the paycheck challenged or in three years if a willful violation is proved. 
• Many states have their own equal pay statutes, and some have provisions with stronger worker protections than the federal EPA.

Individual & Class Actions

• Each type of claim can be pursued by an individual on behalf of herself, or on behalf of herself and a class of other “similarly situated” women. 
• Class action lawsuits focus on an employer’s pattern of compensating women less. Relief can include not just money damages for members of the class, but also changes to the system going forward, such as an overhaul of the policies for deciding compensation. 
• Individual cases focus on the individual bringing the suit. Courts may exclude evidence related to how others were treated, even when claims are similar; relief can include money damages, but not any system-wide change.

Sharing Salary Information – Important Protections

• Many employers prohibit or discourage employees from sharing salary information with each other. It’s important to know your right to discuss pay information with your colleagues.
• Some states explicitly forbid employers from prohibiting employees from discussing their wages with other employees, including in Massachusetts, New York, Illinois, California and Washington. 
• These state’s laws prohibit employers from retaliating against an employee for disclosing the employee’s own wages or inquiring about or discussing the wages of another employee, as long as they do not reveal information about others that they obtained because of particular job responsibilities, such as in HR.
• Even better, some states now require employers to provide information about the salary range for jobs. 
  • Colorado was the first, requiring that both internal and external job postings list the salary range.
  • As of May 15, 2022, New York City requires job postings to list salary ranges.
  • Beginning January 1, 2023, California and Washington state also require job postings to list salary ranges.
  • Beginning September 17, 2023, New York state also requires job postings to list salary ranges.
  • Several other states have laws that require disclosure of wages, salary range or rate of pay upon request, including Connecticut, Maryland, Nevada and Rhode Island.
  Federal law offers some protections for discussing pay with co-workers but excludes managers. Enforcement is not as robust and proceeds through the National Labor Relations Board.  See:
• National Labor Relations Board – Your Right to Discuss Wages
• National Labor Relations Board – Investigated Charges

Prohibitions on Using Prior Salary to Set Pay

• Just as important as making sure you have information you need about salary, is making sure your prospective employer does not use information about your prior salary to offer you a lower pay rate than it would otherwise at your new job. 
• The legal trend has been for courts to find that employers cannot rely upon prior pay in defending a claim of pay discrimination.  See Rizo v. Yovino, 950 F.3d 1217 (9th Cir. 2020) (en banc); Aldrich v. Randolph Central School District, 963 F.2d 520, 525 (2d Cir. 1992).
• Many states, including Illinois and New York, specifically prohibit employers from asking applicants to disclose their salary history. Some also prohibit relying on prior salary even if disclosed voluntarily.  For example:
  • California: Employers cannot rely on or ask for prior salary in deciding whether to make an offer or what salary to offer.  If the applicant does disclose their salary history voluntarily and without prompting, the employer may not rely on that information in determining the applicant’s salary.
  • Massachusetts: The law prohibits employers from asking either an applicant or their prior employer about prior pay or requiring that an applicant’s prior pay meet any particular criteria.  Even if prior pay is volunteered, the employer cannot rely upon such prior pay as a defense to an equal pay claim. 
• Complete List of State Bans or Restrictions on Discussing Prior Pay: See Workplace Fairness: Salary History Disclosure #2; see also: States with Salary History Bans. States with bans include: Alabama; Colorado; Connecticut; Delaware; Hawaii; Illinois; Maryland; Massachusetts; Missouri; Nevada; New Jersey; New York; Oregon; Puerto Rico; Rhode Island; Vermont; Washington. Additional states and localities prohibit government employers from asking about salary history.

Legal Resources

• How to file an EEOC charge
• If possible, consult with an attorney first, before filing a charge with the EEOC.
  • Local Bar Association: Many local bar associations have referral services that may connect you with attorneys
  • National Employment Lawyers Association (NELA): NELA is the largest professional organization for lawyers who represent employees in employment disputes, you can search its directory.
  • Cohen Milstein Sellers & Toll PLLC: We work specifically in class action, including gender pay discrimination class actions. We would be happy to consult with you: https://www.cohenmilstein.com/contact

A pdf of The Cohen Milstein Pay Equity Tip Sheet is available.

The Fall 2023 issue of the Shareholder Advocate includes:

• Harnessing Antitrust Laws, Investors Deal Blow to Bank Collusion in Market for Stock Lending – Kate Fitzgerald
• Report: Shareholder Suits Abroad Gravitate Toward Low-Risk Countries with Strong Track Records – Richard E. Lorant
• Can You Commit Securities Fruad by Tweeting an Emoji? One Court Says Yes You Can. – Jan E. Messerschmidt
• Securities Litigation 101: Surviving Defendants’ Motions to Dismiss – Christopher Lometti and Richard E. Lorant
• Fiduciary Focus: The Responsibilities and Duties of Trustees When Delegating Investment Management Authority – Jay Chaudhuri

Download the Fall 2023 issue (PDF).

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Is your employer or a business you know defrauding a government program such as Medicare or Medicaid? If so, consider reporting the fraud – becoming a whistleblower.

False Claims Act Litigation

The False Claims Act (FCA) is a federal law that protects and potentially rewards whistleblowers. It allows people to report fraud on the government confidentially. If also allows whistleblowers to collect a financial reward if the government recovers from the fraudsters.

Lawsuits arising under the FCA must be filed “under seal.” Only the whistleblower, their counsel, the court, and the government will know it has been filed. This way, the government can investigate the claim while letting the whistleblower remain anonymous.

The government will then decide whether to pursue, or “intervene” in, the case. If it chooses to intervene, the government assumes responsibility for litigating the case. The government works with the whistleblower’s counsel in the litigation. Whistleblowers can receive awards ranging from 15-30 percent of any amount recovered.

Standing with Whistleblowers

Cohen Milstein’s lawyers have decades of experience successfully representing whistleblowers in cases across the country. We handle all types of whistleblower cases, from simple to highly complex matters, across various industries.

Are you thinking about reporting a business you believe is defrauding the government? If so, please complete the form below to contact us and discuss your potential claim. We represent clients on a contingency basis and only receive a fee if we win your case.

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Has your doctor recommended care that was denied by your insurance company, such as surgery or specialist treatment? Have you tried to fill a prescription, only to have your insurance company refuse coverage or raise your co-pay? You may have experienced managed care abuse.

Denial of Care

Managed care abuse occurs when an HMO or other insurer denies or delays crucial doctor-prescribed care, breaching its obligations. Managed care abuse violates both the law and the insurer’s own healthcare policy.

For instance, an insurance company may deny patient claims multiple times before finally approving them. Such delays may lead to physical harm, including the exacerbation of a physical condition that has not been properly treated. It may also cause emotional pain and suffering.   

If you have been subjected to managed care abuse, you may have a valid legal claim against your insurance company. Before you seek legal counsel, though, you must appeal the company’s decision through its internal appeals process.

Appeals of Insurance Company Decisions

Your company’s internal appeals process should be clearly defined in your insurance policy. Each appeals process is unique and subject to specific deadlines and communication requirements.

Make sure you understand why your claim was denied. This information will be in the Denial of Care letter or Explanation of Benefits form you received from your insurance company. Are your ailments and treatments accurately reflected? A denial could be due to a medical coding error that can be corrected through the appeals process.

Always document your calls and record your call reference number.  Keep copies of all important documents, including:

• Denial letters
• Doctors’ referrals
• Notes of calls with insurance company representatives

Also, know what resources are available. The U.S. Department of Health & Human Services provides guidance to help you navigate the appeals process. State healthcare insurance consumer assistance programs may also assist.

Managed Care Abuse Litigation

If you’ve exhausted the appeals process without your claim being resolved, you may bring a lawsuit against your insurer. Cohen Milstein has extensive trial experience in this challenging area of law, representing patients with the most egregious claims.

Previously, our attorneys tried Chipps v. Humana, one of the country’s most influential managed care abuse lawsuits. We uncovered widespread corruption at Humana impacting its patient approval process. This discovery that ultimately resulted in stricter healthcare industry regulations. We’ve represented clients against many other major insurance companies in state and federal courts. Through the courts, we’ve helped patients receive just compensation and put a stop to managed care abuse.

Do you believe you’ve been subject to an improper denial or delay of medical care? If so, please use the CONTACT US box below to discuss your potential claim. We represent clients on a contingency basis and only receive a fee if we win your case.

An Overview of Benefits and Limitations

The Pregnant Workers Fairness Act (PWFA), which went into effect on June 27, 2023, is a landmark development for pregnant workers’ rights and worthy of celebration.  The law, which will be enforced by the Equal Employment Opportunity Commission (EEOC), gives pregnant employees a new tool to bring into negotiations with their employers and will help many achieve the flexibility they need to remain in the workforce and protect the health and safety of their pregnancies. The law, however, is not without limitations. 

What Does the PWFA Require Employers to Do?

The new law will require covered employers – including government and private employers with at least 15 employees – to provide pregnant workers with reasonable accommodations to any limitations related to pregnancy, childbirth, or related medical conditions, unless such accommodations will cause the employer an “undue hardship.”  

A Landmark Development for Pregnant Workers’ Rights

While several laws exist to protect pregnant workers, lawmakers recognized the opportunity to strengthen those protections.  Until now, pregnant people have been protected from employment discrimination by the Americans with Disabilities Act (ADA), which prohibits discrimination on the basis of disability, and the Pregnancy Discrimination Act (PDA), which amended Title VII of the Civil Rights Act of 1964 and makes discrimination illegal against women because of pregnancy, childbirth, and related conditions.  Unfortunately, pregnant workers – especially those earning low wages, who are often workers of color – continued to be fired or forced out of jobs during pregnancy rather than granted an accommodation.  

Proposed Regulations Flesh Out the Statute

On August 11, the EEOC issued a Notice of Proposed Rulemaking  to implement the PWFA. 

Notably, the proposed rules include “predictable assessments,” which appear to be reasonable accommodations that won’t impose an undue hardship on the employer.  These include: “(1) allowing an employee to carry water and drink, as needed, in the employee’s work area; (2) allowing an employee additional restroom breaks; (3) allowing an employee whose work requires standing to sit and whose work requires sitting to stand; and (4) allowing an employee breaks, as needed, to eat and drink.”  The proposed rule also defines a “known limitation” on a worker’s ability to perform their job, thereby explaining operative terms that close an important gap in coverage left by pre-existing laws.

The public can comment on the proposed rules through October 10, after which the agency’s guidance will become final.

The ADA and PDA Have Limits to Protecting Pregnant Workers

The ADA guarantees reasonable accommodations for workers with a qualifying disability.  However, for most pregnant workers, conditions associated with pregnancy or childbirth do not rise to the level of a disability under the ADA, so the ADA does not require they be provided accommodations. 

Also, courts’ interpretations of statutes prior to passage of the PWFA have created hurdles for workers to enforce their rights.  For example, in a 2015 decision, Young v. United Parcel Service, Inc., the Supreme Court addressed the application of the PDA in the case of a pregnant delivery worker who, following her doctors’ advice, asked to be excused from the employer’s requirement that she lift heavy objects.  Rather than grant her request, the employer forced her to take an unpaid leave of absence from her job.  The Supreme Court’s opinion requires pregnant workers claiming discrimination under the PDA to show that they were treated differently from comparable nonpregnant workers.  

The PWFA Builds on the PDA and ADA and Fills in Important Gaps

The PWFA, which passed in December 2022 with bipartisan support, requires employers to provide reasonable accommodations to employees with a limitation stemming from pregnancy, childbirth or related conditions and prioritizes the accommodation of workers in the workplace over the alternative of forcing an employee to take leave.  Under the new law, a pregnant worker does not have to have a condition that rises to the level of a disability to receive an accommodation. 

So, the PWFA imports a mechanism of the ADA that allows workers to negotiate accommodations with their employers.  Similarly, in the area of litigation, the law will likely be effective and beneficial for addressing individual accommodations and claims.

Continued Benefits to the PDA

Even with passage of the PWFA, the PDA remains a powerful tool when challenging systemwide bias and discrimination. We are presently engaged in two cases alleging systemic discrimination against pregnant workers  – Cynthia Allen, et al. v. AT&T Mobility Services LLC  and U.S. Customs & Border Protection Agency Pregnancy Discrimination Litigation, both of which challenge policies with a widespread adverse impact on pregnant workers, including a so called “no-fault” attendance policy, and a policy that changes what work pregnant workers can engage in, without the worker having a say in the matter.  Going forward, workers are likely to rely on a combination of new and existing workplace protections to bring pregnant workers into true parity with their counterparts.    

The protections afforded by the PWFA for pregnant individuals is worthy of celebration. It is an important step forward, as we continue to challenge pervasive, system-wide discrimination on behalf of pregnant workers under the PDA.

Legal Resources

How to file an EEOC charge: https://www.eeoc.gov/how-file-charge-employment-discrimination If possible, consult with an attorney first, before filing a charge with the EEOC.

Local Bar Association:  Many local bar associations have referral services that may connect you with qualified attorneys.

National Employment Lawyers Association (NELA):  NELA is the largest professional organization for lawyers who represent employees in employment disputes. You can search NELA’s directory here:  https://exchange.nela.org/memberdirectory/findalawyer

Download What Is the Pregnant Workers Fairness Act?

Employee Stock Ownership Plans (ESOPs) are retirement plans that are set up to invest solely in the stock of the employer.

Among other things, ESOPs offer the company and employee participants various tax benefits, making them “qualified” plans that are regulated by the Employee Retirement Income Security Act (ERISA). If managed properly, and in accordance with ERISA, ESOPs can be help employees save for retirement.

Traditionally used by smaller, privately held companies, ESOPs can be used by larger, publicly held companies and can complement 401(k) retirement plans. Similar to the 401(k)-vesting period, an ESOP participant earns an increased portion of company shares in the plan for every year of service. When an employee retires or resigns, they can “cash out” of the ESOP and claim their nest egg.

ESOPS: Vulnerabilities and Potential for Abuse

Unfortunately, ESOPs are vulnerable to abuse that is difficult for participants to detect. ESOPs provide a mechanism that allows an owner to transfer ownership of a company to its employees. While Congress permits ESOPs to encourage employee ownership of companies, it was aware that owners can use ESOPs to receive more money for their interest in the company than it’s actually worth. To protect employees from these abuses, Congress put stringent requirements on employees that choose to use ESOPs.

ERISA requires that ESOPs be managed prudently and with undivided loyalty to the employee-ESOP participant, and imposes strict “prohibited transaction” restrictions on owners wishing to use an ESOP for their employees.

Employees and ESOP participants suffer the consequences of an ESOP overpaying for a company. Overpayment not only reduces the amount of retirement savings a participant will ultimately earn, but also can put a strain on a company’s financial health that may imperil job security.

Fortunately, ESOP-participants that are harmed by a mismanaged ESOP can seek redress and assert their rights under ERISA.

Real Life Examples

Case in point. We are representing approximately 750 employee ESOP beneficiaries of the Casino Queen Hotel & Casino, the former famed riverboat casino which moved on land in 2007 to East St. Louis, Illinois.

In the complaint, we allege that the owners of Casino Queen tried to sell the casino to third party buyers for years. Unsuccessful, they decided to create their own buyer and established the Casino Queen ESOP for the purpose of buying 100% of the company’s outstanding common stock for $170 million.

The Complaint explains how, employees were told initially that the ESOP was a great opportunity that would lead to the creation of greater wealth, this alluring promise was revealed to be a mere illusion.

The Complaint alleges numerous ERISA violations, including that the ESOP’s trustee concealed that the ESOP had significantly overpaid for the company stock in 2012, and that they engaged in other ERISA violations, including selling all the casino’s real property out from under the ESOP.

The lawsuit names as Defendants several people who profited handsomely from the sale of the casino.

We also represent the employees of the following private companies in ESOP litigation. Plaintiffs’ allegations in those cases are summarized below:

• Western Milling, an agribusiness, specializing in fertilizer, pesticides, seeds, and animal feed formulas, where the Kruse family, among others, formed Western Milling ESOP to buy 100% of outstanding Kruse-Western stock for over $244 million. Just two months after the transaction, Kruse-Western stock was valued at just 10% of what it was previously valued.
• World Travel, a full-service concierge travel management company. In 2017, the founders of the company created the ESOP and then sold 100% of their World Travel stock to the newly created ESOP at an above-market price. Further, despite selling 100% of their stock ownership and touting that the company is 100% employee owned on its website, the founders have retained full control of the company.
• Triad Manufacturing, a vertically integrated design and manufacturing company that builds retail store environments, nationally and globally.  Allegedly the owners of the company and the ESOP’s Trustee, GreatBanc Trust Company, breached their fiduciary duties by selling 100% of the owner’s company stock to the newly created Triad ESOP. Approximately two weeks later, Triad’s stock dropped nearly 97%.
• Envision Radiology, an outpatient radiology company with locations in five states. Allegedly, the original owners and top ex of Envision Management Holding, Inc. as well as Argent Trust Company (which served as the trustee to the ESOP), breached their fiduciary duties to the ESOP and engaged in prohibited transactions in connection with the sale of Envision company stock to the newly created Envision Management Holding, Inc. Employee Stock Ownership Plan in 2017.
• W BBQ Holdings, Inc., the owner of Dallas BBQ, a restaurant and catering chain in New York City that serves low-cost barbeque and beverages. Allegedly, the controlling members and shareholders of W BBQ Holdings and the trustee of the WBBQ ESOP, caused the ESOP to engage in transactions that are prohibited under ERISA and breached their fiduciary duties to the ESOP in connection with the sale of the company to the ESOP at a dramatically inflated price over fair market value.

Early Warning Signs

While early warning signs are hard to detect, there are certain themes these cases have in common.

• An ESOP is quickly created
• No to little information is given to employees about the ESOP and projected benefits
• Employees have no voice, no vote in the creation of the ESOP or the selection of the trustee
• The ESOP overpays, i.e., over fair market value, for shares of the company stock or other company assets
• Employees have no voice, no vote in the ESOP’s transactions

Employees are best served when they understand the risks and rewards of ESOPs. Please contact us if you have concerns about your company’s ESOP.

Michelle C. Yau, Esq. – myau@cohenmilstein.com

Kai Richter, Esq. – krichter@cohenmilstein.com

Daniel R. Sutter, Esq. – dsutter@cohenmilstein.com

Eleanor Frisch, Esq. – efrisch@cohenmilstein.com

Ryan Wheeler, Esq. – rwheeler@cohenmilstein.com

Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W., Suite 500
Washington, D.C. 20005
Telephone: 888-240-0775 or 202-408-4600

Employee Stock Ownership Plans – Understanding the Risks and Rewards

Employee Stock Ownership Plans (ESOPs) are retirement plans that are set up to invest solely in the stock of the employer.

Among other things, ESOPs offer the company and employee participants various tax benefits, making them “qualified” plans that are regulated by the Employee Retirement Income Security Act (ERISA). If managed properly, and in accordance with ERISA, ESOPs can be help employees save for retirement.

Traditionally used by smaller, privately held companies, ESOPs can be used by larger, publicly held companies and can complement 401(k) retirement plans. Similar to the 401(k)-vesting period, an ESOP participant earns an increased portion of company shares in the plan for every year of service. When an employee retires or resigns, they can “cash out” of the ESOP and claim their nest egg.

Is Your Retirement Plan Imposing a Marriage Penalty? What You Need to Know / June 22, 2022

If you are a married person who participates in a pension plan, you should be on alert that your plan might violate the federal law ERISA’s actuarial equivalence, anti-forfeiture, and joint and survivor annuity requirements. You’ve worked for the same length of time at the same company as your unmarried co-worker. You’re both ready to retire, yet it’s possible that your single co-worker might take home more pension benefits than you and your spouse. While ERISA requires that both your pensions be overall worth the same, a growing number of lawsuits allege that companies are failing to ensure that pensions are actuarially equivalent—and specifically that the companies’ failures are systematically underpaying married couples. This means that you and your surviving spouse could be the subject of a “marriage penalty” resulting in a substantial loss of benefits.

There are a number of lawsuits currently challenging this conduct. In one case, pension plan participants allege that their plan used outdated mortality tables to determine the value of joint and survivor annuities, resulting in married retirees not receiving their full ERISA-protected pension benefits.

Here’s what you need to know.

Equivalence Suits Target ERISA Fiduciaries
February 10, 2020

It is important for Taft-Hartley plan trustees to be informed of developments related to ERISA fiduciary liability. Cohen Milstein continuously monitors ERISA lawsuits, and in this issue of the Shareholder Advocate, we summarize developments related to several lawsuits concerning actuarial equivalence rules found in certain ERISA provisions. Over the last year, there were nine class cases filed that allege pension plans are violating ERISA by paying less than actuarially equivalent benefits to defined benefit plan participants. Plaintiffs in these lawsuits generally allege that plan fiduciaries and sponsors of their defined benefit plans violate ERISA when a plan uses outdated mortality tables to calculate alternative forms of benefits or “form factors,” which are predetermined factors used to convert normal form benefits into alternative forms. The plans at issue in these lawsuits are those sponsored by household names, such as American Airlines, U.S. Bancorp, AT&T, Metropolitan Life Insurance Company, Anheuser-Busch, Raytheon Company, and Huntington Ingalls Industries.

ERISA and Health Plans: The Latest Cigna Case Illustrates the Changing Landscape of ERISA Litigation
February 3, 2020

In a 150-page complaint filed on December 31, 2019, styled Advanced Gynecology and Laparoscopy of North Jersey.et. al. v. Cigna Health and Life Insurance, Cigna is accused of violations of  the Employee Retirement Income Security Act of 1974 (ERISA), of acting in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), and of committing a variety of state law violations. The Complaint accuses Cigna of engaging in several “brazen embezzlement and conversion schemes, through which it maximizes profits by defrauding patients, healthcare providers, and health plans of insurance out of tens of millions of dollars every year.”

Watch These ERISA Cases in 2019
January 1, 2019

Daniel R. Sutter

A number of vexing issues facing ERISA practitioners came to a head in 2018 and are primed to be resolved in the coming year. This article will examine the cases raising these issues, and the impact their resolution in the coming year will have on retirees and the retirement industry.

Is Congress Protecting Its Constituents or Running Interference for Bad Actors?
November 14, 2018

A group of twenty-seven legislators has authored a letter asking President Trump and the Department of Labor (“DOL”) to provide the ESOP industry with guidance on substantive issues, most importantly the issue of valuation, and to stop engaging in what it termed “regulation through litigation”. The letter asks the DOL to collaborate with the ESOP community and basically requests the President and the DOL to stop engaging in enforcement activities until such meaningful guidance is provided.

Is My ESOP Account at Risk?
August 30, 2018

An Employee Stock Ownership Plan (“ESOP”) is an ownership program where a company provides its employees with company stock, usually at no cost to the employees.  Shareholders often create an ESOP by selling their shares of stock to the newly created ESOP as a form of an “exit strategy.”  The ESOP may pay the shareholders for these shares of stock by taking out a loan (“leveraged ESOP”).  As the company creates revenue, it repays the ESOP’s loan, and the ESOP releases shares of company stock to its employees.

Employee Stock Ownership Plans: Vulnerable to Abuse?
May 30, 2018

Many traditional 401(K) plans are being replaced with employee stock ownership plans (“ESOPs”). While in many cases an ESOP is a valuable benefit to employees, they are also vulnerable to abuse.

What is an ESOP?

An ESOP is a qualified defined-contribution employee benefit plan designed to invest primarily in the stock of the sponsoring employer. That means, instead of investing the retirement contributions into traditional investment vehicles like stocks, bonds or money market funds, the retirement contributions are invested back into company stock. ESOPs are “qualified” in the sense that the ESOP’s sponsoring company, the selling shareholder and participants receive various tax benefits. For these reasons, ESOPs are often used to give the employees a vested interest in the company’s success and aligning their interests with the company’s shareholders. Unfortunately, ESOPs can be used for improper purposes, which harms employees and violates the Employee Retirement Income Security Act (“ERISA”), a federal statute that protects employee retirement assets from abuse.

A Rule in Flux: The Department of Labor’s Fiduciary Rule
December 1, 2017

Daniel Sutter

As litigation about the legality of the Department of Labor’s controversial Fiduciary Rule reaches federal circuit courts, the current administration has turned into the Fiduciary Rule’s biggest adversary.

Over a year ago, insurance companies started a broad offensive against the Fiduciary Rule in federal courts across the country. Challengers to the rule have filed six cases in three federal district courts to date. Despite the success of the Department of Labor (“DOL”) in defending the Fiduciary Rule, recent changes of position by the Department of Justice and DOL have cast a shadow over the Fiduciary Rule’s future.

What is Your Claim?

Cohen Milstein begins the process of filing your whistleblower claim by listening to you, asking questions, and undertaking on our own the necessary additional factual and legal research. We commonly reach out to government attorneys with whom we have worked, to investigators or to consultants with expertise in the government program or the industry involved.

What Is the False Claims Act?

There are a host of federal and state statutes (sometimes referred to as “qui tam” statutes) which provide financial incentives to private citizens (often referred to as “whistleblowers” or “relators”) who report fraudulent acts that have been committed against the government.  The primary federal statute is the False Claims Act (“FCA”), a law that dates back to 1863 and the Civil War.  The FCA imposes triple damages and penalties against any business or person that commits fraud in connection with obtaining a payment from the federal government. The failure to return government  funds  which a company has reason to know it has an obligation to return can also constitute an FCA violation. Many states (29 at last count) and the District of Columbia, have their own False Claims Act statutes, most of which parallel the federal FCA. 

Confidentiality Is Essential

The process of preparing your claim is kept confidential  and culminates in a complaint being filed with the court “under seal”  which means that the existence of the complaint must be kept confidential and thus only the whistleblower, his or her counsel, the court and the government will know it has been filed.  This  “under seal” requirement provides the government an opportunity to investigate the claims on its own,  without alerting the defendant to the investigation  while also providing anonymity to the whistleblower until the government reaches a decision as to whether it will pursue, or “intervene” in the case or not.  Indeed, it is common  for a whistleblower to simply continue working at his/her employer after he/she has filed a whistleblower complaint under seal against it.

Other Unique Features to FCA Claims

Once the complaint is filed, additional unique features of claims brought under the FCA and its state law counterparts  come into play:

• The period of time during which the government conducts its investigation can last months or several years. 
• If it chooses to intervene, the government assumes  responsibility for litigating the case.  Sometimes, however, the government looks to the whistleblower’s counsel for assistance in the litigation, an opportunity which Cohen Milstein welcomes. 
• Generally, with respect to both the federal and state statutes, whistleblowers can receive awards ranging from 15% to 30% of any amount recovered, plus reasonable attorney’s fees and costs.

FCA Enforcement Awards

In 2020, the U.S. Department of Justice recovered more than $2.2 billion dollars through False Claims Act enforcement. Since 1986, when Congress substantially strengthened the  False Claims Act, recoveries have totaled more than $64 billion. The vast majority of these recoveries came from FCA cases that were initiated by whistleblowers.

Whistleblowers, proceeding under the False Claims Act, have protected government expenditures made in response to financial crises, natural disasters, Medicare and Medicaid expansion, and more recently, government outlays made in the wake of the Covid pandemic.  

Who You Choose to Represent You Matters

Our Whistleblower/False Claims Act team has well over 75 years of combined experience devoting our careers to representing whistleblowers. Cohen Milstein attorneys are respected, zealous advocates in fighting fraud perpetrated against the government. Our reputation as skilled and ethical professionals is one we value and protect. And our abiding goal is simple: to provide representation of the highest caliber.  We work tenaciously to achieve that goal each day.

Cohen Milstein’s Whistleblower/False Claims Act practice is a part of one of the largest, most highly respected plaintiffs’ law firms in the United States. The firm’s size, its proven expertise in multiple areas of the law (such as securities fraud, antitrust and consumer protection) and its ability to litigate large complex cases and successfully take them to trial, are all valuable resources from which our practice group directly benefits.