Two longtime Annapolis lobbyists have switched firms just as the General Assembly readies to open its 90-day session.
American Joe Miedusiewski, a former state legislator who ran for governor in 1994, has joined Old Line Government Affairs, LLC, a subsidiary of the Baltimore law firm Nemphos Braue. He was joined by Brett S. Lininger, who will serve as an outside attorney for the firm.
Together, the lobbyists represented more than 30 clients in Annapolis while working for Semmes, Bowen & Semmes of Baltimore, according to the most recent list of lobbyist employers filed with the Maryland State Ethics Commission.
Miedusiewski previously was the chairman of the firm’s Government Affairs practice. Lininger was a principal and chairman of the Business Practice Group at Semmes, Bowen & Semmes in Baltimore.
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New Delhi, Jan 7 () A number of insolvency-bound companies, reeling under huge unserved loans, are scouting for front entities to buy them out in a distress sale under an ‘asset reconstruction’ model with the help of ‘friendly’ IRPs, but have landed themselves under the regulatory scanner.
According to top regulatory officials, some of these firms are approaching senior NBFC executives with a good reputation in the market with a novel idea of setting up their own ‘asset reconstruction startups’ and then bidding for the assets being sold under the insolvency process.
They are also trying to rope in some ‘friendly’ IRPs (Insolvency Resolution Professionals) to help achieve their motive of a ‘front entity’ acquiring the assets on sale, but the regulators and the government agencies have got a whiff of the whole design including with the help of some whistleblowers, a senior official said.
The companies which are currently under scanner include those from the steel, power and textiles sectors, the official said, but refused to divulge the names as the investigation is currently underway.
There are apprehensions that more such ‘frauds’ may happen once the individual insolvency regime is introduced as several HNIs may want follow similar routes to get away from paying debt and still retain some of their assets.
The government is, however, aware of such possible attempts and will keep strengthening the law to check any misuse, officials added.
Around 500 corporates have been admitted for resolution and about 100 companies have commenced voluntary liquidation under the Insolvency and Bankruptcy Code (IBC), which is a little over a year old.
A tentative estimate of the total underlying default amount which formed the basis for initiation of resolution of about 500 corporate debtors is about Rs 1.3 lakh crore.
A significant number of lenders have initiated insolvency proceedings against various companies with regard to stressed assets while proceedings have also been started against realty firms and others.
The government recently amended the law to bar wilful defaulters as well as those with NPA accounts from bidding in auctions to recover bad loans through insolvency proceedings, to prevent unscrupulous persons from misusing or vitiating the provisions of the IBC.
The amendment also makes certain persons ineligible for being a resolution applicant.
The ineligible persons or entities include undischarged insolvent, wilful defaulters, and those whose accounts have been classified as non-performing asset.
These persons, however, can become “eligible to submit a resolution plan” if they clear all overdue amounts with interest and other charges relating to NPA accounts.
The amendment to the IBC has been brought to address concerns that “persons who, with their misconduct contributed to defaults of companies or otherwise undesirable, may misuse this situation due to lack of prohibition or restrictions to participate in the resolution or liquidation process, and gain or regain control of corporate debtor”.
Moreover, this may undermine the process laid down in the IBC as “unscrupulous person would be seen to be rewarded at the expense of creditors”.
As the amendment bill was getting passed in Parliament, Finance Minister Arun Jaitley said last week that the government has entered into uncharted territory as far as bankruptcy and insolvency code is concerned and would continue to modify the law dealing with the issue.
“Insolvency and bankruptcy is an area in which it is only in the recent years that we have chartered into. It is a learning experience,” he said while winding up a debate on the Insolvency and Bankruptcy Code Amendment Bill.
The government, Jaitley said, has been encountering situations which were not anticipated earlier and assured that it would continue to take corrective action.
Jaitley said banks and unsecured creditors will have to take some haircut during the insolvency process and if the same management comes back, nothing would change.
Jaitley said as far as asset-owning companies are concerned, fetching the best prices is the target and any bid which is not viable can be rejected. It is for creditors to decide how much haircuts they want, he said. BJ ABM Go to Source
MEMPHIS, Tenn. — When one of Martha Jane Pierce’s sons peeled back the white sock that had been covering his 82-year-old mother’s right foot for a month, he discovered rotting flesh.
“It looked like a piece of black charcoal” and smelled “like death,” her daughter, Cindy Hatfield, later testified. After Pierce, a patient at a nursing home in Memphis, was transferred to a hospital, a surgeon had to amputate much of her leg.
One explanation for Pierce’s lackluster care in 2009, according to financial records and testimony in a lawsuit brought by the Pierce family, is that the nursing home, Allenbrooke Nursing and Rehabilitation Center, appeared to have been severely underfunded at the time, with a $2 million deficit on its books and a scarcity of nurses and aides. “Sometimes we’d be short of diapers, sheets, linens,” one nurse testified.
That same year, $2.8 million of the facility’s $12 million in operating expenses went to a constellation of corporations controlled by two Long Island accountants who, court records show, owned Allenbrooke and 32 other nursing homes. The homes paid the men’s other companies to provide physical therapy, management, drugs and other services, from which the owners reaped profits.
In what has become an increasingly common business arrangement, owners of nursing homes outsource a wide variety of goods and services to companies in which they have a financial interest or that they control. Nearly three-quarters of nursing homes in the United States — more than 11,000 — have such business dealings, known as related party transactions, according to an analysis of nursing-home financial records by Kaiser Health News. Some homes even contract out basic functions like management or rent their own building from a sister corporation, saying it is an efficient way of running their businesses and can help minimize taxes.
But these arrangements offer another advantage: Owners can arrange highly favorable contracts in which their nursing homes pay more than they might in a competitive market. Owners then siphon off higher profits, which are not recorded on the nursing home’s accounts.
The Allenbrooke Nursing and Rehabilitation Center in Memphis. The facility is part of a chain of businesses that produced $145 million in revenue over eight years, from which the owners and their families’ trusts took 28 percent in distribution. (HOUSTON COFIELD/NYT)
The two Long Island men, Donald Denz and Norbert Bennett, and their families’ trusts collected distributions totaling $40 million from their chain’s $145 million in revenue over eight years — a 28 percent margin, legal documents show. In 2014 alone, Denz earned $13 million and Bennett made $12 million, principally from their nursing-home companies, according to personal income-tax filings.
Typical nursing-home profits are “in the 3 to 4 percent range,” said Bill Ulrich, a nursing-home financial consultant.
Contracts with related companies accounted for $11 billion of nursing-home spending in 2015 — a tenth of their costs — according to financial disclosures the homes submitted to Medicare.
In California, the state auditor is examining related party transactions at another nursing-home chain, Brius Healthcare Services, regarding reimbursements from the state’s Medicaid program. Rental prices to real-estate companies related to the chain of homes were a third higher than rates paid by other for-profit nursing homes in the same counties, according to an analysis by the National Union of Healthcare Workers.
Such corporate webs bring owners a legal benefit, too: When a nursing home is sued, injured residents and their families have a much harder time collecting money from the related companies — the ones with the full coffers.
After the Pierce family won an initial verdict against the nursing home, Denz and Bennett appealed, and their lawyer, Craig Conley, said they would not discuss the case or their business while the appeal was pending.
“For more than a decade, Allenbrooke’s caregivers have promoted the health, safety and welfare of their residents,” Conley wrote in an email.
Dr. Michael Wasserman, the head of the management company for the Brius nursing homes, called the subject of corporate structures a “nonissue” and said, “What matters at the end of the day is what the care being delivered is about.”
Almost every single one of these chains is doing the same thing. They’re just pulling money away from staffing.” – Charlene Harrington, a professor emeritus of the School of Nursing at UC, San Francisco
Networks of jointly owned limited liability corporations are fully legal and widely used in other businesses, such as restaurants and retailers. Nonprofit nursing homes sometimes use them as well. Owners can have more control over operations — and better allocate resources — if they own all the companies. In many cases, industry consultants say, a related company will charge a nursing home lower fees than an independent contractor might, leaving the chain with more resources.
“You don’t want to pay for someone else to make money off of you,” Ulrich said. “You want to retain that within your organization.”
But a Kaiser Health News analysis of inspection and quality records reveals that nursing homes that outsource to related organizations tend to have significant shortcomings: They have fewer nurses and aides per patient, they have higher rates of patient injuries and unsafe practices, and they are the subject of complaints almost twice as often as independent homes.
“Almost every single one of these chains is doing the same thing,” said Charlene Harrington, a professor emeritus of the School of Nursing at the University of California, San Francisco. “They’re just pulling money away from staffing.”
Cindy Hatfield and her, brother Glenn Pierce. After their mother’s amputation, the family sued over her care at the Allenbrooke Nursing and Rehabilitation Center in Memphis, which had a $2 million deficit on its books that year. (HOUSTON COFIELD/NYT)
Early signs of trouble
Martha Jane Pierce moved to Allenbrooke in 2008 in the early stages of dementia. According to testimony in the family’s lawsuit, when her children visited they often discovered her unwashed, with an uneaten, cold meal sitting beside her bed. Hatfield said in court that she had frequently found her mother’s bed soaked in urine. The front desk was sometimes vacant, her brother Glenn Pierce testified.
“If you went in on the weekend, you’d be lucky to find one nurse there,” he said in an interview.
After a stroke, Martha Pierce became partly paralyzed and nonverbal, but the nursing home did not increase the attention she received, said Carey Acerra, one of Martha Pierce’s lawyers. When Martha Pierce’s children visited, they rarely saw aides reposition her in bed every two hours, the standard practice to prevent bedsores.
“Not having enough staffing, we can’t — we weren’t actually able to go and do that,” one nurse, Cheryl Gatlin-Andrews, said in a deposition.
Kaiser Health News’ analysis of inspection, staffing and financial records nationwide found shortcomings at other homes with similar corporate structures:
• Homes that did business with sister companies employed, on average, 8 percent fewer nurses and aides.
• As a group, these homes were 9 percent more likely to have hurt residents or put them in immediate jeopardy of harm, and amassed 53 substantiated complaints for every 1,000 beds, compared with 32 per 1,000 beds at independent homes.
• Homes with related companies were fined 22 percent more often for serious health violations than independent homes, and penalties averaged $24,441 — 7 percent higher.
For-profit nursing homes utilize related corporations more frequently than nonprofits do, and have fared worse than independent for-profit homes in fines, complaints and staffing, the analysis found. Their fines averaged $25,345, which was 10 percent higher than fines for independent for-profits, and the homes received 24 percent more substantiated complaints from residents. Overall staffing was 4 percent lower than at independent for-profits.
Ernest Tosh, a plaintiffs’ lawyer in Texas who helps other lawyers untangle nursing-company finances, said owners often exerted control by setting tight budgets that restricted the number of nurses the homes could employ. Meanwhile, “money is siphoned out to these related parties,” he said. “The cash flow gets really obscured through the related party transactions.”
The American Health Care Association, which represents nursing homes, disputed any link between related businesses and poor care. “Our members strive to provide quality care at an affordable cost to every resident,” the group said in a statement. “There will always be examples of exceptions, but those few do not represent the majority of our profession.”
‘Piercing corporate veil’
The model of placing nursing homes and related businesses in separate limited liability corporations and partnerships has gained popularity as the industry has consolidated through purchases by publicly traded companies, private investors and private equity firms. A 2003 article in the Journal of Health Law encouraged owners to separate their nursing-home business into detached entities to protect themselves if the government tried to recoup overpayments or if juries levied large negligence judgments.
“Holding the real estate in a separate real-property entity that leases the nursing home to the operating entity protects the assets by making the real estate unavailable for collection by judgment creditors of the operating entity,” the authors wrote. Such restructuring, they added, was probably not worth it just for “administrative simplicity.”
In 2009, Harvard Medical School researchers found the practice had flourished among nursing homes in Texas, which they studied because of the availability of state data. Owners had also inserted additional corporations between themselves and their nursing homes, with many separated by three layers.
To bring related companies into a lawsuit, attorneys must persuade judges that all the companies were essentially acting as one entity and that the nursing home could not make its own decisions. Often that requires getting access to internal company documents and emails. Even harder is holding owners personally responsible for the actions of a corporation — known as “piercing the corporate veil.”
The complexity of the ownership in Martha Pierce’s case was a major reason it took six years to get to a trial, said Ken Connor, one of the lawyers for her family.
“It requires a lot of digging to unearth what’s really going on,” he said. “Most lawyers can’t afford to do that.”
The research paid off in a rare result: In 2016, the jury issued a $30 million verdict for negligence, of which Denz and Bennett were personally liable for $20 million.
The men’s own tax returns had bolstered the case against them. They claimed during trial they delegated daily responsibilities for residents to the home’s administrators, but they reported on their tax returns that they “actively” participated in the management. The jury did not find the nursing home responsible for her death later in 2009.
The appeal brought by Denz and Bennett challenges both the verdict and their inclusion.
They argue that Tennessee courts should not have jurisdiction over them since they spent little time in the state and neither was involved in the daily operations of the home or in setting staffing levels.
Their lawyers said jurors should never have heard from nurses who hadn’t cared directly for Martha Pierce.
“No way did I oversee resident care issues,” Bennett said in a deposition.
Whoever was responsible for Martha Pierce’s care, her family had no doubt it had been inadequate. Her son, Bill Pierce, was so horrified when he finally saw the wound on his mother’s foot, he immediately insisted that she go to the hospital.
Hatfield said the surgeon had told the family that “he had never seen anything like it.”
“He amputated 60 percent of the leg, above the knee,” she said.
After the amputation, Martha Pierce returned to the nursing home because her family did not want to separate her from her husband, who was also there.
At the trial, the nursing home’s lawyers argued that Martha Pierce’s leg had deteriorated not because of the infection but because her blood vessels had become damaged from a decline in circulation. The jury was unpersuaded after nurses and aides testified about how Allenbrooke would add staffing for state inspections while the rest of the time their pleas for more support went unheeded.
Workers also testified that supervisors had told them to fill in blanks in medical records regardless of accuracy.
One example: Allenbrooke’s records indicated that Martha Pierce had eaten a full meal the day after she died.
Over 130,000 British firms will be forced to pay VAT (value-added tax) up front on all goods imported from the European Union.
The controversial legislation is set to be considered on Monday after the MPs return to Westminster from their two-week holiday.
The move spelled out in the taxation bill as part of the post-Brexit laws now being prepared is likely to cause an uproar among British business groups concerned about the prospects of soaring bureaucracy and pressing cashflow issues.
The Labour MP and former Department for Constitutional Affairs minister Chris Leslie said that the VAT hit to firms was “yet another aspect of Brexit that the Leave campaign failed to inform the public about.” He noted that he is set to table urgent amendments to ensure the UK remained in the EU VAT area, which would definitely infuriate pro-Brexit MPs, who are concerned about tax revenues and the UK’s economic sovereignty.
READ MORE: It is ‘More Efficient’ for Britain to Join a Big Trading Bloc — Analyst
Pro-Brexit Chancellor of the Exchequer Philip Hammond said: “Britain is a great trading nation, and innovative UK businesses are central to the success of our economy.”
“This bill represents the first step in setting up an independent UK customs regime and reaffirms our commitment to deliver a smooth transition for businesses as we leave the EU.”
For now, UK companies that import machine parts or goods ready for sale from the Eurozone can currently register with HMRC, the UK’s Treasury, to bring them into the country free of tax. Later they register the VAT charge and reclaim it as part of the final price of the product.
Brexit negotiations started in June 2017 are set to be finalized by late March 2019. The first set of talks centered around the protection of rights of EU citizens in the United Kingdom and UK citizens in the European bloc, as well as the UK-Irish border, Gibraltar row and Britain’s financial obligations to the EU.
The second round of talks started in December and is now being resumed following Christmas holiday. It is expected to focus on the two-year transition period in EU-UK relations after the withdrawal, and their future long-term trade, security cooperation and EU court issues.
The government’s flagship EU Withdrawal bill is targeted at repealing the 1972 European Communities Act, which made EU law and European Court of Justice rulings significant part of British law. Most Brexiters see the repeal of the ECA as the ultimate expression of “freedom”.
Theresa May has already set an exact time and date, 11pm on March 29, 2019, when Britain will end its 46-year participation in the European project.
California State Sen. Scott Weiner, right, celebrates the opening of The Apothecarium for recreational marijuana sales in San Francisco on Saturday, Jan. 6, 2018. Joining him are The Apothecarium co-founder and CEO Ryan Hudson, center, and San Francisco Supervisor Jeff Sheehy. (AP Photo/Noah Berger) less
California State Sen. Scott Weiner, right, celebrates the opening of The Apothecarium for recreational marijuana sales in San Francisco on Saturday, Jan. 6, 2018. Joining him are The Apothecarium co-founder and … more
Photo: Noah Berger
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Gary Diehl shops for cannabis at Medithrive during the store’s first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no longer adopt a “hands-off” approach to legalized marijuana use sent some in the industry into a tailspin just days after the $7 billion California recreational weed market opened for business. (AP Photo/Noah Berger) less
Gary Diehl shops for cannabis at Medithrive during the store’s first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no … more
Photo: Noah Berger
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Customers wait for the opening of recreational marijuana sales at The Apothecarium on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no longer adopt a “hands-off” approach to legalized marijuana use sent some in the industry into a tailspin just days after the $1 billion California recreational weed market opened for business. (AP Photo/Noah Berger) less
Customers wait for the opening of recreational marijuana sales at The Apothecarium on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no longer adopt a “hands-off” … more
Photo: Noah Berger
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Dominic Rea reads a cannabis menu at The Apothecarium during the store’s first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no longer adopt a “hands-off” approach to legalized marijuana use sent some in the industry into a tailspin just days after the $1 billion California recreational weed market opened for business. (AP Photo/Noah Berger) less
Dominic Rea reads a cannabis menu at The Apothecarium during the store’s first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice … more
Photo: Noah Berger
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JP Noda stocks cannabis at The Apothecarium shortly before the store opened for its first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no longer adopt a “hands-off” approach to legalized marijuana use sent some in the industry into a tailspin just days after the $1 billion California recreational weed market opened for business. (AP Photo/Noah Berger) less
JP Noda stocks cannabis at The Apothecarium shortly before the store opened for its first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of … more
Photo: Noah Berger
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Customers line up to buy cannabis at The Apothecarium during the store’s first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no longer adopt a “hands-off” approach to legalized marijuana use sent some in the industry into a tailspin just days after the $1 billion California recreational weed market opened for business. (AP Photo/Noah Berger) less
Customers line up to buy cannabis at The Apothecarium during the store’s first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice … more
Photo: Noah Berger
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Customers line up outside The Apothecarium during the store’s first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no longer adopt a “hands-off” approach to legalized marijuana use sent some in the industry into a tailspin just days after the $1 billion California recreational weed market opened for business. (AP Photo/Noah Berger) less
Customers line up outside The Apothecarium during the store’s first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no … more
Photo: Noah Berger
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Customers line up outside The Apothecarium during the store’s first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no longer adopt a “hands-off” approach to legalized marijuana use sent some in the industry into a tailspin just days after the $1 billion California recreational weed market opened for business. (AP Photo/Noah Berger) less
Customers line up outside The Apothecarium during the store’s first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no … more
Photo: Noah Berger
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Marijuana firms shrug off Sessions’ new drug policy
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San Francisco
This week’s announcement that the U.S. Justice Department was ditching its hands-off approach to states that have legalized marijuana initially sent some in the industry into a tailspin, just days after California’s $7 billion recreational marijuana market opened for business.
But for long-term marijuana purveyors accustomed to changing regulatory winds, the decision was just another bump in a long and winding road to proving their business legitimacy.
Many in the industry said they’re keeping a wait-and-see attitude because the effect of Attorney General Jeff Sessions’ announcement depends on whether federal prosecutors crack down on marijuana businesses operating legally under state laws. Sessions provided no details other than saying individual U.S. attorneys are authorized to prosecute marijuana operators as they choose.
Stocks of publicly traded marijuana-related companies plunged Thursday after Sessions announced the Justice Department’s new policy. On Friday, though, many of those stocks recovered.
“The announcement was largely symbolic,” said Patrick Moen, general counsel of Privateer Holdings, a Seattle-based venture capital firm that invests in marijuana businesses. “This kind of stunt will not have a substantial effect on the industry.”
Moen noted Sessions’ action doesn’t change federal law, which includes a congressional provision barring authorities from spending federal money to prosecute medical marijuana operations that abide by state laws.
He conceded that the action would have a “near-term chilling effect” on the industry’s lobbying effort to compel banks and insurance companies to accept its business. Banks and insurance companies refuse to do business with cannabis companies because marijuana is illegal under federal law and most financial institutions are federally insured, forcing marijuana businesses to operate in cash.
Most of Seattle-based Privateer’s $150 million in investments are in companies based outside the United States, and Moen conceded that Sessions’ action Thursday would keep it that way for the short term because of regulatory uncertainty in the United States.
Online news and marijuana information site Leafly is the firm’s biggest U.S. investment.
MONTREAL — Two Quebec law firms are seeking authorization to file a class-action lawsuit against Apple for allegedly violating the province’s consumer-protection law.
They filed a motion in Quebec Superior Court last Dec. 29 after Apple acknowledged having secretly slowed down older iPhones.
The company said the move was necessary to avoid unexpected shutdowns related to battery fatigue.
LPC Avocats and Renno Vathilakis Avocats allege the one-year warranty offered to Quebec consumers for batteries is not reasonable, given the price and the expected use.
The law firms also allege the “AppleCare” extended warranty is not more advantageous than the legal guarantee under Quebec’s Consumer Protection Act and that “its price is disproportionate to the point of causing the objective lesion to all AppleCare purchasers.”
They are seeking yet to be determined compensatory damages as well as punitive damages of $300 per class member.
The application was filed on behalf of Quebecers who bought an Apple product, including iPhones, Apple Watches, iPads, iPods or MacBooks. It also covers people who purchased “AppleCare” or “AppleCare+” for an Apple product and were not informed of their legal warranty.
Two Quebec law firms are seeking authorization to file a class-action lawsuit against Apple for allegedly violating the province’s Consumer Protection Act.
They filed a motion in Quebec Superior Court last Dec. 29 after Apple acknowledged having secretly slowed down older iPhones.
The company said the move was necessary to avoid unexpected shutdowns related to battery fatigue.
LPC Avocats et Renno Vathilakis Avocats allege the one-year warranty offered to Quebec consumers for batteries is not reasonable, given the price and the expected use of the devices.
The law firms also allege the “AppleCare” extended warranty is not more advantageous than the legal guarantee under Quebec’s Consumer Protection Act and that “its price is disproportionate to the point of causing the objective lesion to all AppleCare purchasers.”
They are seeking yet-to-be-determined compensatory damages, as well as punitive damages of $300 per member of the lawsuit.
The application was filed on behalf of Quebecers who bought an Apple product, including iPhones, Apple Watches, iPads, iPods or MacBooks. It also covers people who purchased AppleCare or AppleCare+ for an Apple product and were not informed of their legal warranty.
Two Quebec law firms are seeking authorization from Quebec Superior Court to file a class action lawsuit against Apple, claiming that its warranty policies violate Quebec’s Consumer Protection Act.
In this Friday, Sept. 25, 2015, file photo, people wait in front of the Apple store in Munich, before the worldwide launch of the iPhone 6s. Matthias Schrader / AP
Two Quebec law firms are seeking authorization from Quebec Superior Court to file a class action lawsuit against Apple, claiming that its warranty policies violate Quebec’s Consumer Protection Act.
The application, filed on Dec. 29, comes after Apple admitted that it slows the performance of some iPhone models in certain situations. The company said that’s done to prevent unexpected shutdowns that result from aging, which makes batteries less effective.
Apple’s statement, and an update to its support website, include an acknowledgement that all rechargeable batteries have a limited lifespan.
That acknowledgment, along with the price of Apple products, is evidence that the company is violating Quebec’s Consumer Protection Act, said Joey Zukran, a lawyer at LPC Avocats, which filed the application for authorization along with Renno Vathilakis Avocats.
“There’s something wrong with this,” he said. “The law is very clear on this point, especially on electronic devices, that the manufacturer of the product … has to guarantee the product for a reasonable amount of time.”
Currently, purchasers of Apple products receive a one-year limited warranty, they can also buy an AppleCare extended warranty.
According to Zukran, that’s not enough.
Under Quebec’s Consumer Protection Act, goods “must be durable in normal use for a reasonable length of time, having regard to their price, the terms of the contract and the conditions of their use.”
“Considering the high prices paid by Class Members for Apple products, in normal use Apple products are not durable for a reasonable length of time,” reads the application for authorization filed with the court.
Additionally, by selling AppleCare, Zukran said, Apple has profited from failing to inform consumers of their rights under the province’s Consumer Protection Act.
If the class action lawsuit is authorized, a process called certification in the rest of Canada, it would include every Quebec resident who has purchased an Apple product with a rechargeable battery, a group that could include tens of thousands of people.
The lawsuit would seek compensation for class members, though the amount is still to be determined. It would also seek punitive damages of $300 per class member and it would ask the court to declare that a reasonable amount of time for Apple products to last — and therefore be covered by warranty — is six years.
In England and Wales, sellers are required to repair, replace or refund faulty goods for six years. In the European Union, that guarantee lasts two years.
“If my product is the same product as guaranteed in Europe for two years and in the U.K. for six years, why is it different for Quebec consumers?” Zukran said.
An authorization hearing could take place within a few months.
Apple did not respond to a request for comment from the Montreal Gazette on Thursday afternoon, except to confirm that the request had been received.
MONTREAL — Two Quebec law firms are seeking authorization to file a class-action lawsuit against Apple for allegedly violating the province’s consumer-protection law.
They filed a motion in Quebec Superior Court last Dec. 29 after Apple acknowledged having secretly slowed down older iPhones.
The company said the move was necessary to avoid unexpected shutdowns related to battery fatigue.
LPC Avocats et Renno Vathilakis Avocats allege the one-year warranty offered to Quebec consumers for batteries is not reasonable, given the price and the expected use.
The law firms also allege the “AppleCare” extended warranty is not more advantageous than the legal guarantee under Quebec’s Consumer Protection Act and that “its price is disproportionate to the point of causing the objective lesion to all AppleCare purchasers.”
They are seeking yet to be determined compensatory damages as well as punitive damages of $300 per class member.
The application was filed on behalf of Quebecers who bought an Apple product, including iPhones, Apple Watches, iPads, iPods or MacBooks. It also covers people who purchased “AppleCare” or “AppleCare+” for an Apple product and were not informed of their legal warranty.
