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Could billionaire Bill Gates be in trouble? On February 22, 2008 a federal judge said that consumers may go ahead with a class action lawsuit against Microsoft Corp. The lawsuit was prompted by the marketing techniques the software giant used to launch its Vista operating system. Basically, many consumers who purchased computers assumed that the new Vista operating system would run on their computers because a jazzy little sticker on the box promised them it would.

The lawsuit claims that Microsoft allowed PC manufacturers to stick a “Windows Vista Capable” sticker on computers that were not technologically capable or running the system. The devil is in the details.

Technically, most computers could run a particular version of Vista, the Home Basic version. But to run more advanced versions of the system with enhanced features, like the ones advertised, your computer would need to be newer, bigger, better…you get the idea. So the consumers who bought the lower end computers were stuck with the most basic version of the system. This differentiation was not clear to many consumers.

In a series of emails exchanged between Microsoft employees, it became clear that Microsoft had knowledge of the problems they created for consumers. In one email, Jim Allchin, who was the co-president of the Platforms and Services Division wrote “We really botched this. You guys have to do a better job with our customers.”

Microsoft has downplayed their actions and the importance of the emails that were presented in the courtroom. Their attorney claims that consumers were able to access blogs, magazine articles, technical reviews and other sources of information about the operating system. Basically, it was the responsibility of consumers to do their own homework before making their purchase. Microsoft’s biggest concern at this point is that they may not be able to successfully defend the suit. If that happens, anyone who purchased a Windows Vista Capable computer may be eligible to make a claim for damages, and that is going to add up.

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Blaming a struggling economy and less than expected holiday sales, specialty retailer Sharper Image, and catalog merchant Lillian Vernon, both have filed bankruptcy.  Nationwide, consumers are spending less on retail items.  Some analyst believe that in addition to the shaky economy, rising gas prices and weakening house markets are partially to blame for consumers clutching more tightly to their hard earned dollars.

Sharper Image is based in San Francisco and will close just under half of its retail stores, once their inventories have been depleted.  Recently a class action settlement was rejected, having to do with Sharper Image’s popular air purifier, and this caused their stock price to decline, which lead to further shaken confidence in their vendors and suppliers.  Company officials claim that the retailer will continue to operate as usual while developing a reorganization plan.

The class action lawsuit began when a mother of children with respiratory health ailments sued on the grounds that the Ionic Breeze air purifier did not perform as advertised by Sharper Image, and claimed the air purifier did not conform to federal ozone emissions regulations.   The air purifier is a machine that uses electrostatic technology and claims to clean the air of irritants, allergens, odors, pollutants, while freshening the air. Interestingly enough, when Consumer Reports magazine rated the model as “poor,” Sharper Image sued the magazine.

At Lillian Vernon, the company has been experiencing lower profits and increased costs over the past ten years.  Company executives have still not decided if it’s in their best interest to liquidate or sell completely.  The recent holiday season was described as a typical cycle, however it wasn’t enough to stabilize their future.

Taking another dramatic step, Sharper Image appointed a crisis management expert as the top company executive, while Lillian Vernon laid off 50% of its work force.

Additional Reading:

The Sharper Image Bankruptcy: How failing to create customers can undermine a brand

What happened to Sharper Image?

Just Hand Brookstone your Sharper Image Gift Card

Chapter 11: More on Lillian Vernon 

Sharper Image Professionals 

Sharper Image Bankruptcy Renews My Faith in Basic Consumer Intelligence 

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Accusing the Oklahoma Department of Human Services of failing to protect children in state custody from suffering “extreme abuse and neglect,” four Oklahoma law firms, a national child advocacy organization, and an international law firm have filed suit.

Nine individual children are named as plaintiffs.  The class is made up of children taken from their homes by the state, a number totaling around 10,000.   The action claims that children’s constitutional rights were violated by the Oklahoma DHS by routinely placing them in situations that were unsafe and unsupervised.  This put the children further in harms way and some of the children even died.

The class action suit is seeking a complete overhaul of the Oklahoma DHS. The children’s advocacy group that helped bring suit is Children’s Rights, a New York based organization that lobbies for the rights of children all over the nation.  According to Children’s Rights, mistreatment of children in the care of the state of Oklahoma has been among the worst in the nation for the past five years.  The suit claims that foster children in Oklahoma experience four times the abuse than is the national norm, and further, the rates of abuse exceeded the rates of abuse and maltreatment among the general population of Oklahoma. In essence, they claim that children in foster care were subjected to more frequent episodes of abuse than children who were not in the welfare system.

Individually named in the suit as defendants are the Governor of Oklahoma, the Chair of the Oklahoma Commission for Human Services, the Director of DHS, and eight additional members of the Oklahoma Commission for Human Services.  Not surprisingly, the DHS has defended its record and claims that children in their care spend an average of 7 months less in foster care than children in other states.  They also point out that the shorter stays in foster care are in spite of the high rates of poverty, which is the biggest contributor to children being mistreated and victimized.

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Over the past 20 years, the law firm of Milberg Weiss made an estimated $250 million from corporate lawsuits. Now, one of the firm’s partners, lawyer William Lerach, will be spending the next two years in federal prison for his role in class action schemes.  A total of seven people, three who were once partners at the firm, have pled guilty.

Because you need a plaintiff to file a legal action, the firm made it a practice to compensate folks with kickbacks, paying them as an incentive to file suit.  Through this practice, the firm could successfully take on companies like Microsoft, AT&T, Lucent and other mega corporations. Plaintiffs that are paid in return for filing suit are considered “professional plaintiffs.”  Court documents show that over the years the law firm paid out a total of $11.3 million to professional plaintiffs.

According to court documents, their practice of using professional plaintiffs allowed the firm to secure the position of lead counsel.  This would increase their publicity, and their percentage of any court winnings.  Milberg Weiss was a key player in the field of securities class action suits.  Some of the charges against the lawyers in the case include racketeering, conspiracy, mail fraud, tax evasion, and obstruction of justice.

One former professional plaintiff, Seymour Lazar, also a retired attorney,  was paid more than $2.5 million for helping the firm pursue lawsuits. Lazar was fined $600,000 and ordered to house arrest for 6 months, and was given two years probation. Lerach is probably best known for his whopping $7 billion judgment against Enron, the now defunct energy corporation. While Lerach has pled guilty, he is still to be sentenced.  Prosecutors  are recommending he receive two years in prison, two years probation, and pay a fine of $250,000.

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In today’s digital age, it isn’t uncommon for folks to turn to the internet to try and make a love connection. One of the biggest draws to an on-line matchmaking or dating service is typically the claims of available or suitable matches available at any given time. The more subscribers a service has, the more possibilities of a potential love connection, right? Don’t count on it.

Many popular dating websites boast their matching techniques that ensure long term compatibility. Subscribers are required to answer a series of questions about their beliefs on many different subjects including religion, hobbies, career, family and on and on. The theory is that you’ll be introduced to profiles of other singles who have similar interests and lifestyles. There’s no perfect science to matchmaking, whether it’s online or in person. Chemistry, attraction, personality…so many factors make up a successful connection that most dating services refrain from making absolute promises of a love connection. However, many inflate their numbers of members or available singles to the point that their claims of introducing paying members to “X” available matches become fraudulent.

One such dating service, known as Great Expectations, was sued by the states of Pennsylvania and Kansas, respectively. The Pennsylvania lawsuit claimed that Great Expectations inflated its number of available singles, gave fraudulent success rates, misrepresented the costs and other elements of its dating service. The basis of the lawsuit was that Great Expectations violated the state’s Unfair Trade Practices and Consumer Protection Law. Consumers who signed up with Great Expectations paid an average of $1,000 to more than $3,000 for its matchmaking services!

Great Expectations closed its Pennsylvania doors in 2005. Online matchmaking does work for people if you believe the claims made by sites such as Match.com and Yahoo Personals. When shopping for an online matchmaking service, be wary of those who make incredulous claims to the singles available in your area, or who guarantee a love connection. As we all know, in love, there are no guarantees.

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When a manufacturer discovers that it has produced and distributed a product into the marketplace that has defects to its design or safety, they may implement a product recall. For instance, recently Toyota implemented a product recall of more than one half million Toyota Tundra pick up trucks. A steering defect in the Tundra truck had been linked to a number of accidents, forcing the manufacturer to recall the product and attempt to resolve the safety issue. Product recalls are extremely costly to the manufacturer, both in production costs and bad publicity.

Consumer protection laws are designed to protect the consumer from faulty merchandise, and hold manufacturers responsible in their actions, and often their pocketbooks. They can be financially liable for huge penalties if they fail to conduct a product recall when consumer safety is at risk.

Toy manufacturers have received a lot of press in recent years, because so many children’s toys and baby products have been produced using harmful chemicals, like lead, which are linked to serious health hazards. Another popular reason for product recall is the possibility of choking, or suffocating, particularly with infant products.

The Consumer Product Safety Commission keeps a list of recalled products. Recalls typically urge the consumer to return the faulty product to the manufacturer, or the place of purchase for either a refund, or replacement. When a recall involves a motor vehicle, often times registered owners of the affected vehicle will be sent a notice in the mail with an urging that the vehicle is returned to the local car dealer for repairs. The repairs are typically offered at no cost to the consumer.

If you receive a notice that a product you have purchased is being recalled, particularly due to safety reasons, immediately return the product or follow the directions received from the manufacturer. If the recall is what is known as compulsory, your failure to do so could leave you liable for financial penalties, and also forfeit your rights to any future claim of damages.

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Lowe’s, the second largest home improvement retailer in the world, is facing charges in a class action lawsuit filed earlier this month, that it required workers to continue working after their shifts were over. If Lowe’s is held accountable in this lawsuit, it will mean they violated the Fair Labors Standards Act, and they will likely face charges in multiple states. A similar class action was filed against them in 2006 and is still being litigated. The 2006 claim states that Lowe’s required employees to complete more work than their schedules allowed.

When an employee is compensated by the hour, it is illegal for an employer to require them to do any work before they clock in, or after their shift has ended. The federal government and individual states have strict laws that make it illegal to harass, discriminate, or inflict illegal treatment on workers. Labor laws are designed to protect the employee and ensure that employers engage in fair and ethical practices.

The Federal Labor Standards Act (FLSA) says that if an employee works overtime, the employer is required to pay the employee a premium pay for the work. Currently, overtime is defined by the FLSA by any hours over 40, completed in a one week period. The overtime pay cannot be less than 1.5 times the employee’s regular salary.

While it varies from state to state, most employment is considered “at-will.” In essence if you are an at-will employee, it basically means that you can choose to resign your employment at any time, for any reason. Conversely, it also means that an employer can decide to terminate your employment for any (legal) reason, at any time. There are no implied contracts or promises of guaranteed employment with an at-will arrangement.

However, employees are protected from being required to work when they are not on the clock. As the class action lawsuit against Lowe’s moves through the courts, it’s likely more employees from different states may join in the lawsuit, or file separate claims.

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Signing a contract is a big deal. It means you are legally obligated to do something: pay a mortgage, make good on your car loan, stay married to a certain someone, or in some cases, get un-married to a certain someone. When you sign up for cell phone service, you’re also making a commitment, or are you?

A recent complaint against carrier Verizon Wireless disputed the company’s early termination fee. Meant to create customer loyalty, the company charges an excessive penalty if a customer decides to cancel service for any reason, including switching to another cell phone carrier, before their contract matures. Most cell phone contracts are for periods of 1 – 2 years. In today’s competitive marketplace, it’s one of the techniques cell phone companies use to discourage customers from changing carriers each time a better plan surfaces. While it’s generally a practice most customers dislike, it’s standard practice, and not specific to Verizon Wireless.

T-Mobile has been named in a recent lawsuit because the carrier enforces text messages charges, even when a subscriber doesn’t wish to receive or send them. Now T-Mobile takes an interesting step to discourage class action lawsuits by actually including a waiver in their contract. In order to get service through T-Mobile, subscribers have to waive their rights to seek damages through class actions, and can only go after T-Mobile as an individual party. While this may have been a pre-emptive strike to protect what some might consider a predatory practice of enforcing fees for services a subscriber does not wish to receive, the legality of this waiver may come into question, because of the legal filings against other carriers, like Verizon Wireless.

Neither carrier has made a public statement regarding the recent lawsuits, however consumer rights groups are watching anxiously to see if indeed the little guys, the consumers, can defend their right to free choice when it comes to choosing a cell phone plan.

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In case you didn’t know, yogurt contains live bacteria cultures. And some of those are actually supposed to be good for us, right? Well Dannon, the company known for its popular line of dairy products, including yogurt, is being sued because it touted the benefits of probiotic bacteria in its Activia brand. According to the lawsuit, there are no clinical health benefits of probiotic bacteria, and running an ad campaign saying there was, makes them guilty of false advertising. Incidentally, or perhaps most importantly, the Activia brand of yogurt sells for more than other Dannon brands.

The lawsuit claims that Dannon was aware they were making false claims, and only did so in order to get consumers to pay more for their Activia yogurt. Knowingly making false claims about a product is of course a business practice that can get you in a whole lot of hot water, but is it up to Dannon to do clinical tests to prove that you’ll be a healthier person by consuming probiotic bacteria? Or can they safely and legally put the ingredients of their product on the label? When is it false advertising, and when is it smart marketing?

Nutrition experts argue the importance of consuming healthy amounts of food from all the food groups, and in recent years, dairy has been promoted as a tool in weight loss. Should I sue the Dairy Commission if I didn’t lose 10 pounds last year, even though I took their advice and drank milk with my supper?

Athletes are paid millions of dollars in product endorsements every year. Do we hold them financially responsible if the product they endorse doesn’t perform the way we hoped? Is it false advertising if the shampoo that Eva Longoria of Desperate Housewives fame endorses doesn’t give me a lush and full head of hair, just like her? When does an advertising campaign graduate from pushing product to a fool proof promise?

I eat yogurt because it’s healthy, and I like it. I don’t care what kind of bacteria or cultures are in it, I just know it’s a healthier option than the chocolate bar. Does Dannon need to do clinical research to prove to me their product is better for me than chocolate? Maybe I’m not litigious enough, but I’ll let it slide this time.

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Some lawsuits are so incredibly silly they have to be filed in the “What the Heck Were They Thinking?” file. These lawsuits would make you laugh, maybe even smirk a little bit, at the geniuses who went to court seeking damages. Let’s take a look at the woman who sued the manufacturer of the popular video game “Grand Theft Auto”.

This woman, who admitted under oath, to purchasing the video game, which comes with a “mature” rating, for her young son, was shocked and appalled that the game that glorifies car chases, violence, sex with prostitutes, and a general gangster style life of crime…she was shocked when she discovered the game included the imagery of a naked male doll, presumably modeled after a Ken doll, could be manipulated to grind up against the naked body of the image of a female doll, one that looked remarkably like a Barbie doll. The x-rated exchange included sound effects. It was then that this woman decided she had been defrauded. The game she bought that glorified violence, sex, and crime suddenly didn’t seem appropriate for her young child.

Who is the real fraud here? Excuse my amazement, but it wasn’t the violent nature of the game that got to her, or even the violent sex with a prostitute angle that offended her. It was the Ken and Barbie date that pushed her over the edge. Wow! Naturally in addition to millions in damages, I would advocate this woman receive a “Mother of the Year” award for her diligent parenting.

And we wonder why youth today seem unaffected and disrespectful to adults and society at large? Allowing children to sit in front of a television and participate for hours on end in fantasy based violent games, which confuses reality with pretend, that might be worth exploring. This particular mother actually paid top dollar for the game, the one that a retailer wouldn’t sell to her son because he was too young.

Maybe we should file a class action lawsuit against such people as the one described above for stupid parenting? Just a thought!

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