May 1, 2018 | Consumer Protection, Employment & Technology Archive
Kehoe Law Firm, P.C. is making consumers aware that on April 27, 2018, a class action complaint seeking damages and injunctive relief was filed against Liberty Student Loan Forgiveness, a company which “offers loan consolidation services and repayment programs,” for the alleged “illegal actions of Liberty Student Loan Forgiveness . . . in negligently or willfully contacting Plaintiff on Plaintiff’s cellular telephone, in violation of the Telephone Consumer Protection Act . . ..”
The Plaintiff, according to the complaint, had no preexisting relationship with Liberty Student Loan Forgiveness and never requested that the company review his student loans, provide the Plaintiff repayment programs or calculate consolidated payments. Despite neither a prior existing relationship nor the Plaintiff’s express consent to receive marketing phone calls, the Plaintiff received an “unwelcomed automated impersonal voicemail from phone number (800) 218-0839 on his cellular telephone” stating: “‘You’re prequalified for the federal student loan forgiveness program. Please call us back at (800) 549-6685 to discuss your repayment options or press one to be connected to a live representative. Press two if you would like to be removed.’”
Liberty Student Loan Forgiveness, allegedly, as part of its consumer solicitation efforts, “calls consumers advising them that ‘they prequalified for the federal student loan forgiveness program.’” Further, according to the complaint, the Defendant’s “voicemail is meant to deceive consumers into believing that they have dealings with Defendant or Defendant is currently servicing consumers’ student loans.” The class action complaint was filed in United States District Court, Central District of California (8:18-cv-00732).
Do You Believe You Are a Victim of Illegal Robocalls, Text Messages, “Junk” Faxes or Telemarketing Sales Calls?
If you have received illegal robocalls, text messages, “junk” faxes or telemarketing sales calls, you may be able to recover at least $500 for each illegal call, text or fax you received and, possibly, as much as $1,500 for each illegal call, text message or facsimile that was made either willfully or knowingly.
To help evaluate your potential legal claims under the Telephone Consumer Protection Act, please complete KLF’s confidential Robocall Questionnaire or, if you prefer to speak with an attorney, please complete the form above on the right, e-mail [email protected] or contact Michael Yarnoff, Esq., [email protected], (215) 792-6676, Ext. 804, for a free, no-obligation evaluation of your potential legal rights.
Apr 26, 2018 | Shareholder & Investor Protection
Wells Fargo Being Examined To Determine if the Bank Pushed 401(k) Retirement Plan Participants into More Expensive IRAs
On April 26, 2018, The Wall Street Journal reported that the U.S. Department of Labor
. . . is examining whether Wells Fargo & Co. has been pushing participants in low-cost corporate 401(k) plans to roll their holdings into more expensive individual retirement accounts at the bank, according to a person familiar with the inquiry.
Labor Department investigators also are interested in whether Wells Fargo’s retirement-plan services unit pressed account holders to buy in-house funds, generating more revenue to the bank, the person said.
Wells Fargo’s Handling of Client Retirement Savings at Issue
The Wall Street Journal reported:
At issue in the Labor Department’s investigation is how Wells Fargo handles its clients’ retirement savings. Under the Employee Retirement Income Security Act, entities that serve these accounts are supposed to put their clients’ interests ahead of their own.
Wells Fargo managers have pressed employees in the bank’s retirement division to recommend that clients open more expensive individual retirement accounts when they retire or leave their jobs, according to another person familiar with the bank’s operation.
The bank gives employees asset retention goals intended to keep these retirement accounts in-house, this person said, adding that Wells Fargo workers often generated higher fees for the bank by putting clients into mutual-fund shares that carried a front-end “load,” or fee.
Wells Fargo Reviewing Certain Activities to Determine If There Have Been Inappropriate Referrals or Recommendations
Wells Fargo, according to The Wall Street Journal:
. . . said its board is reviewing certain activities to assess “whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments, or referrals of brokerage customers to the company’s investment and fiduciary services business”; the review is at a preliminary stage.
The Justice Department and the Securities and Exchange Commission also are examining the bank’s retirement plan practices alongside a broader sales practices probe, people familiar with the matter said.
A whistleblower has come forward to speak with regulators about Wells Fargo’s IRA rollover activities, according to the person familiar with the inquiry, alleging that the bank breached its fiduciary duties to clients.
(Emphasis added)
Review of Certain Wealth and Investment Management Activities in Response to Inquiries from Federal Government Agencies
CNBC.com reported that in Wells Fargo’s latest quarterly filing, the bank “. . . disclosed a review of certain activities in the wealth and investment management business in response to inquiries from federal government agencies. The review included whether the division had made inappropriate referrals and recommendations for 401(k) participants.”
Specifically, the Wells Fargo & Company filing, an Exhibit to the Company’s Form 10-K, filed March 1, 2018, stated:
Review of Certain Activities Within Wealth and Investment Management A review of certain activities within Wealth and Investment Management (WIM) being conducted by the Board, in response to inquiries from federal government agencies, is assessing whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments, or referrals of brokerage customers to the Company’s investment and fiduciary services business. The review is in its preliminary stages.
For additional information, please see CNN Money’s “US government urged Wells Fargo to probe its 401(k) tactics.”
Apr 26, 2018 | Securities Class Action Archive
FTC Charges LendingClub with Falsely Promising Consumers Loans with “No Hidden Fees”
LC Stock Drops More than 15% to Close at $2.77 Per Share on April 25, 2018
Kehoe Law Firm, P.C. is investigating securities claims on behalf of investors of LendingClub Corporation (NYSE:LC) and purchasers of LendingClub’s Member Payment Dependent Notes. The class action investigation focuses on whether LendingClub issued materially misleading business information to the investing public or engaged in other unlawful business practices.
Investors who purchased, or otherwise acquired, LC stock shares or LendingClub’s Member Payment Dependent Notes can speak privately about the securities class action investigation by contacting John A. Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected].
LendingClub’s Fee Claims and Amount Consumers Would Receive “Could be Perceived as Deceptive”
On April 25, 2018, the Federal Trade Commission announced that it charged the LendingClub Corporation, d/b/a Lending Club, with falsely promising consumers they would receive a loan with “no hidden fees,” when, in actuality, the company deducted hundreds or even thousands of dollars in hidden up-front fees from the loans.
The FTC’s complaint stated that Lending Club recognized that its hidden fee was a significant problem for consumers, and an internal review noted that its claims about the fee and the amount consumers would receive “could be perceived as deceptive as it is likely to mislead the consumer.” An attorney for one of the company’s largest investors also warned the company that the “relative obscurity” of the up-front fee in light of the company’s prominent “no hidden fees” representation could make the company a target for a law enforcement action.
According to the FTC, Lending Club ignored these and other warnings and, over time, made its deceptive “no hidden fees” claim even more prominent.
The FTC also alleges that Lending Club falsely told loan applicants that “Investors Have Backed Your Loan” while knowing that many of them would never get a loan, a practice that delayed applicants from seeking loans elsewhere. In addition, in numerous instances, Lending Club has withdrawn double payments from consumers’ accounts and has continued to charge those who cancelled automatic payments or paid off their loans, which costs consumers overdraft fees and prevents them from making other payments. In addition, Lending Club failed to get consumers’ acknowledgment of its information-sharing policy as required by law.
Lending Club is charged with violating the FTC Act and the Gramm-Leach-Bliley Act.
Prospective Borrowers Lured by Promises of “No Hidden Fees”
According to the LendingClub Corporation complaint:
[Lending Club] offers unsecured consumer loans through its website, www.lendingclub.com. Defendant advertises its loan offerings and handles consumer interactions during the life of the application and loan, including application processing, assessment of creditworthiness, and loan servicing, although the loans are formally issued by a bank.
[Lending Club] lures prospective borrowers by promising “no hidden fees,” but when the loan funds arrive in consumers’ bank accounts, they are hundreds or even thousands of dollars short of expectations due to a hidden up-front fee that Defendant deducts from consumers’ loan proceeds. [Lending Club] is persisting in this conduct despite warnings from its own compliance department that Defendant’s concealment of the up-front fee is “likely to mislead the consumer.” Defendant also has misled consumers about whether their loan applications have been approved, stringing consumers along by, for example, telling consumers, “Hooray! Investors Have Backed Your Loan” when Defendant knew many such consumers would never receive a loan. Based on these misrepresentations, consumers believed that Defendant’s funds were forthcoming, and did not apply for credit with Defendant’s competitors. And with numerous consumers who have received a loan, [Lending Club] has withdrawn double payments from consumers’ accounts and continued to charge consumers who cancelled automatic payments or even paid off their loans entirely, costing consumers overdraft fees and preventing them from making other payments.
In addition, [Lending Club] failed to provide consumers with clear and conspicuous privacy notices.
(Emphasis added)
Up-Front Charge Information Hidden from Consumers
The FTC’s complaint alleges that consumers learned that what goes “straight into [their] account” is not the total represented during the online application process as the “Loan Amount.” Instead, what consumers received an amount reduced by hundreds or thousands of dollars. This, according to the FTC, is because Lending Club takes a hefty portion of the Loan Amount up front as an origination fee.
In response to consumer concerns about the undisclosed or inadequately disclosed up-front charge, Lending Club’s own quarterly complaint reviews have proposed “highlighting [the] origination fee.” According to one in-house compliance review, “The origination fee is disclosed on the offer page tooltip” – a small green-and-white hyperlinked question mark – “but is not readily apparent unless an applicant clicks on the tooltip. This omission could be perceived as deceptive as it is likely to mislead the consumer.”
One of Lending Club’s largest investors, according to the FTC’s complaint, warned the company that the fee “is not clear and conspicuous and could be subject to a UDAAP claim,” referring to an unfair or deceptive acts and practices claim. Additionally, the FTC says the investor’s legal counsel told Lending Club that despite the company’s prominent “no hidden fees” claim, “the documents we reviewed contain a large ($300 to $450) origination fee that only appears once” in “relative obscurity” – a practice the person said could result in law enforcement action.
The FTC alleges that Lending Club did not respond to the warnings. According to the complaint, “Rather than improving over time, [Lending Club’s] violations have become more egregious over the years,” with the company increasing the prominence of the “no hidden fees” claim and decreasing the already small, hyperlinked tooltip.
Allegedly, Lending Club told consumers, for example, “Great news! Investors have backed your loan 100%!,” when there were still additional obstacles for prospective borrowers, including a searching “back-end” credit review, consisting, among other things, of an additional credit inquiry, a phone call to the consumer, requests for additional documentation, and a detailed review of the consumer’s tax and bank records. Frequent back-end denials were issued, even to consumers who provided Lending Club with all the required documentation. As a result, the FTC alleges that borrowers who received the congratulatory messages, ultimately, were rejected, making Lending Club’s claims deceptive.
Lastly, in numerous instances, Lending Club, allegedly, made unauthorized withdrawals from consumers’ bank accounts by, for example, charging borrowers double payments in a single month, by continuing to make withdrawals from consumers who have paid off their loans, or by taking money from accounts when consumers have told Lending Club they want to pay by check or by a different account. Most consumers, according to the FTC, only learned of Lending Club’s unauthorized charges when they checked their bank statements or when they found out their accounts were overdrawn.
LendingClub Corporation Shareholders & Investors
If you purchased, or otherwise acquired, LendingClub Corporation securities and wish to discuss your potential legal rights or claims with an attorney, please contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].
Apr 24, 2018 | Securities Class Action Archive
Prothena Discontinues Development of NEOD001 for AL Amyloidosis; PRTA Stock Drops $25.34, or 68.78%, to Close at $11.50 on April 23, 2018
Kehoe Law Firm, P.C. is conducting a securities investigation on behalf of investors of Prothena Corporation plc (NASDAQ: PRTA) to determine whether Prothena and certain of its officers or directors engaged in securities fraud or other unlawful business practices.
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Prothena Announces Discontinuance of Development of Drug for Treatment of AL Amyloidosis
On April 23, 2018, Prothena Corporation announced that it
. . . is discontinuing development of NEOD001, an investigational antibody that was being evaluated for the treatment of AL amyloidosis. The decision was based on results from the Phase 2b PRONTO study and a futility analysis of the Phase 3 VITAL study.
Based on the results from the Phase 2b PRONTO study, which did not meet its primary or secondary endpoints, [Prothena] asked the independent data monitoring committee (DMC) of the Phase 3 VITAL study to review a futility analysis of the ongoing VITAL study. The DMC recommended discontinuation of the VITAL study for futility. [Prothena] therefore decided to discontinue all development of NEOD001, including the VITAL study as well as the open label extension studies. (Emphasis added)
The Phase 3 VITAL Study
Prothena, “a clinical stage biotechnology company focused on the discovery and development of novel therapies in the neuroscience and orphan categories,” also announced that
The VITAL Amyloidosis Study was a Phase 3 global, multi-center, randomized, double-blind, placebo-controlled clinical study of NEOD001 vs. placebo in treatment-naïve patients with AL amyloidosis and cardiac dysfunction, with both arms of the study receiving standard of care. The composite primary endpoint was event-based, with all-cause mortality or cardiac hospitalizations as events.
- The futility analysis, based on 103 adjudicated events of the 156 events specified to complete the study, was not statistically significant.
- The hazard ratio was 0.84 favoring NEOD001 vs. control arm. (Emphasis added)
Prothena’s Steep Stock Drop
According to the San Francisco Business Times:
The failure of Prothena Corp.’s main experimental drug in a mid-stage clinical trial led to a massive selloff of its stock Monday, a nearly 70 percent decline in its share price and the decision to stop development of the drug.
. . .
In AL amyloidosis, misfolded amyloid proteins are deposited in tissue, causing progressive organ damage, including heart failure. An estimated 30,000 to 45,000 people in the United States and Europe have been diagnosed with the condition.
Prothena shares had already dropped 47 percent from their 52-week high, Bloomberg noted, after short-sellers last year raised concerns about NEOD-001’s effectiveness, compared to existing treatments, and Prothena’s chief medical officer, Dr. Sarah Noonberg, quit her $465,000 job in February, nine months after joining the company with a $100,000 hire-on bonus.
It was reported by Bloomberg that Prothena’s “shares lost more than two-thirds of their value after having already fallen 30 percent in the prior 12 months.” According to Bloomberg:
Muddy Waters Capital founder Carson Block attacked Prothena last June, saying NEOD001 didn’t help patients much more than existing therapies. Five months later, Kerrisdale Capital Management’s Sahm Adrangi predicted that the drug would fail the Phase 2b study, dubbed ‘Pronto.’ Investor concerns only grew from there as within weeks, they learned that results from a late-stage study of NEOD001 would take a year longer than planned. And then the chief medical officer abruptly resigned in February.
Prothena Corporation Investors and Shareholders
If you purchased, or otherwise acquired, Prothena Corporation stock and have questions or concerns about the securities investigation or your potential legal rights, please contact John A. Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].
Apr 17, 2018 | Overtime & Wages
Fair Labor Standards Act & Higher Education Overtime Compensation
The Fair Labor Standards Act requires that a non-exempt employee receive minimum wages, as well as overtime pay whenever he or she works more than 40 hours in a workweek.
Section 13(a)(1) of the FLSA, however, exempts certain employees who perform bona fide executive, administrative, professional, and outside sales duties from minimum wage and overtime requirements. These exemptions are often called the “white collar” exemptions.
General Requirements for the “White Collar” Exemption
To qualify for a “white collar” exemption, an employee must generally satisfy three tests:
- The employee must be paid on a salary basis that is not subject to reduction based on the quality or quantity of work (the “salary basis test”), rather than, for example, on an hourly basis;
- The employee must receive a salary at a rate not less than $455 per week (the “salary level test”); and
- The employee’s primary duty must involve the kind of work associated with the exempt status sought, such as executive, administrative, or professional work (the “duties test”).
NOTE: The U.S. Department of Labor is undertaking rulemaking to revise the regulations located at 29 C.F.R. part 541, which govern the exemption of executive, administrative, and professional employees from the FLSA’s minimum wage and overtime pay requirements. Until the Department of Labor issues its final rule, it will enforce the part 541 regulations in effect on November 30, 2016, including the $455 per week standard salary level.
Various Types of Exemptions for Common Higher Education Jobs
Teacher Exemption
A teacher is exempt if his or her primary duty is teaching, tutoring, instructing, or lecturing to impart knowledge, and if he or she is performing that duty as an employee of an educational establishment. See 29 C.F.R. § 541.303.
Educational establishments include elementary school systems, secondary school systems, institutions of higher education, and other educational institutions. See 29 C.F.R. § 541.204(b).
If a bona fide teacher meets this duty requirement, the salary level and salary basis tests do not apply. See 29 C.F.R. §§541.303(d), 541.600(e). Given these standards, professors, instructors, and adjunct professors typically qualify for this exemption.
A faculty member who teaches online or remotely also may qualify for this exemption. The regulations do not restrict where bona fide teaching may take place, to whom the knowledge can be imparted, or how many hours a teacher must work per week to qualify for the exemption. The exemption, therefore, would ordinarily apply, for example, to a part-time faculty member of an educational establishment whose primary duty is to provide instruction through online courses to remote non-credit learners. The exemption could likewise apply, for example, to an agricultural extension agent who is employed by an educational establishment to travel and provide instruction to farmers, if the agent’s primary duty is teaching, instructing, or lecturing to impart knowledge. To determine a teacher’s primary duty, the relevant inquiry in all cases is the teacher’s actual job duties. Job titles or full/part-time status alone do not determine exempt status.
A teacher does not become non-exempt, merely because he or she spends a considerable amount of time in extracurricular activities (such as coaching athletic teams or supervising student clubs), provided the teacher’s primary duty is teaching.
Athletic Coaches
Athletic coaches employed by higher education institutions may qualify for the teacher exemption. After all, teaching may include instructing student-athletes in how to perform their sport. But a coach will not qualify for the exemption if his or her primary duties are recruiting students to play sports or visiting high schools and athletic camps to conduct student interviews. The amount of time the coach spends instructing student-athletes in a team sport is relevant, but not the exclusive factor, in determining the coach’s exempt status.
Professional Employees
The FLSA provides for several kinds of exempt professional employees—such as learned professionals, creative professionals, teachers, and employees practicing law or medicine. In higher education, employees eligible for the professional exemption are often either teachers (as previously discussed) or learned professionals (as discussed below).
To qualify as a learned professional, the employee must satisfy three requirements:
- The employee’s primary duty must be the performance of work requiring advanced knowledge;
- The advanced knowledge must be in a field of science or learning; and
- The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
See 29 C.F.R. § 541.301. Unless the employee is a teacher or practicing law or medicine, he or she must also satisfy the above-referenced salary basis and salary level tests to be an exempt professional.
In higher education, examples of exempt non-teacher learned professionals generally include certified public accountants, psychologists, certified athletic trainers, and librarians. Postdoctoral fellows, who conduct research at a higher education institution after completing their doctoral studies, likewise generally meet the duties requirements of the learned professional exemption, and they may additionally qualify for the teacher exemption if teaching is their primary duty. Of course, an employee’s qualification for the exemption depends on his or her actual job duties and education. Job titles alone are not sufficient for determining whether an employee satisfies the duties test.
Administrative Employees
Various employees at higher educational institutions may qualify as exempt administrative employees. The administrative exemption applies when the following requirements are met:
- The employee’s compensation must satisfy the above-referenced salary basis and salary level tests;
- The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
- The employee’s primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.
See 29 C.F.R. § 541.200. Such administrative employees in higher education might include, for example, admissions counselors or student financial aid officers. An employee’s qualification for the exemption depends on his or her actual job duties; job titles alone are not sufficient for determining whether an employee satisfies the duties test.
Notably, there are specific regulatory provisions for certain administrative employees—known as “academic administrative employees”—whose primary duty is performing administrative functions directly related to academic instruction or training in an educational establishment.
To be exempt as an academic administrative professional:
- The employee must satisfy the above-referenced salary basis and salary level tests or receive a salary of at least the entrance salary for teachers in the same educational establishment; and
- The employee’s primary duty must be to perform administrative functions directly related to academic instruction or training in an educational establishment.
See 29 C.F.R. § 541.204. Employees who work in higher education but whose work does not relate to the educational field (such as work in general business operations) do not qualify as exempt academic administrative employees. See id.
In higher education institutions, exempt academic administrative personnel generally include department heads, intervention specialists who are available to respond to student academic issues, and other employees with similar responsibilities. Exempt administrative personnel would likewise generally include academic counselors who administer school testing programs, assist students with academic problems, and advise students concerning degree requirements. Again, whether an employee satisfies the duties test for these exemptions depends on the employee’s actual job duties, not just the employee’s job title.
Executive Employees
To qualify for the executive exemption, an employee must satisfy the following tests:
- The employee must receive compensation that satisfies the above-referenced salary basis and salary level tests;
- The employee’s primary duty must be managing the enterprise or a customarily recognized department or subdivision thereof;
- The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent (for example, one full-time and two half-time employees); and
- The employee must have the authority to hire or fire other employees, or in the alternative, the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees must be given particular weight.
See 29 C.F.R. § 541.100. Various positions in higher education institutions might qualify for the executive exemption, including deans, department heads, directors, and any other manager or supervisor whose job duties and compensation satisfy the above criteria.
Student-Employees
As a general matter, most students who work for their college or university are hourly non-exempt workers and do not work more than 40 hours per week. The following, however, are examples of students who often receive a salary or other non-hourly compensation:
- Graduate Teaching Assistants. Graduate teaching assistants whose primary duty is teaching are exempt. Because they qualify for the teacher exemption, they are not subject to the salary basis and salary level tests.
- Research Assistants. Generally, an educational relationship exists when a graduate or undergraduate student performs research under a faculty member’s supervision while obtaining a degree. Under these circumstances, the Department would not assert that an employment relationship exists with either the school or any grantor funding the student’s research. This is true even though the student may receive a stipend for performing the research.
- Student Residential Assistants. Students enrolled in bona fide educational programs who are residential assistants and receive reduced room or board charges or tuition credits are not generally considered employees under the FLSA. They therefore are not entitled to minimum wages and overtime under the FLSA.
An employment relationship will generally exist when a student receives compensation and his or her duties are not part of an overall education program. For example, students who work at food service counters, sell programs or usher at events, or wash dishes in dining halls and anticipate some compensation (for example, money or meals) are generally considered employees entitled to minimum wage and overtime compensation.
Compensatory Time at Public Universities
Public universities or colleges that qualify as a “public agency” under the FLSA may compensate non-exempt employees with compensatory time off (or “comp time”) in lieu of overtime pay. A college or university is a public agency under the FLSA if it is a political subdivision of a State. When determining whether a college or university is a “political subdivision,” the Department considers whether (1) the State directly created the entity, or (2) individuals administering the entity are responsible to public officials or the general electorate.
If the public university or college qualifies as a public agency, non-exempt employees generally may not accrue more than 240 hours of comp time. However, employees engaged to work in a public safety activity, an emergency response activity, or a seasonal activity may accrue as much as 480 hours of comp time. See 29 U.S.C. 207(o)(3)(A). Private higher education institutions may not pay employees comp time in lieu of overtime pay.
Source: U.S. Department of Labor, Wage and Hour Division, Fact Sheet #17S: “Higher Education Institutions and Overtime Pay Under the Fair Labor Standards Act (FLSA),” March 2018.
