/raid1/www/Hosts/bankrupt/CAR_Public/000117.MBX
C L A S S A C T I O N R E P O R T E R
Monday, January 17, 2000, Vol. 2, No. 11
Headlines
ADAC LAB: Announces Agreements-in-Principle to Securities Litigation
AMOCO PIPELINE: Class Certification Upheld in LA Spill Suit
AUTO INSURANCE: Motorist in Accident Sues Liberty Mutual Re Repair Shop
BLUE CROSS: Georgia Ap Ct Will Hear Arguments Re Stock to Policyholders
BOSTON HOUSING: Grant Is Met with Criticism Amidst Suit on Racial Bias
CAMPBELL SOUP: Shapiro Haber, Berger & Montague File NJ Securities Suit
DOJ: Opt-in Deadline for Lawyers’ Action on OT Pay Extended to Feb. 16
DREYFUS CORP: Mutaual Fund Shareholders Suit over Fid Breach Will Go on
FEN-PHEN: Feuding Lawyers Could Unravel AHP Settlement Pact
FREEMARKETS INC: Bernstein Liebhard Files Securities Suit in PA
HOLOCAUST VICTIMS: Government Delays Presenting Law For Nazi Labor Fund
LOCKHEED MARTIN: Fed. Probe Finds Racial Bias Against Black Employees
MANHATTAN GROCERS: A.G. Sues over Minimum Wages for Delivery Workers
MEDIAONE GROUP: Desire to Suppress Criticism Is Not a Motive for Fraud
MOUNT GLENWOOD: Edelman, Combs Sues Cemeteries on Racial Discrimination
NEWCASTLE UNITED: To Defend in Feb Magpie Fans' Claims Re Stadium Seats
PUBLIC GUARDIANS: Daughter of Elderly Mother Sues over Neglect & Abuse
TOBACCO LITIGATION: NY Judge Oks $37M for Attys. In Philip Morris Case
UNITED AIRLINES: IL Ct Oks Class for Suit over Delay at X’mas Eve 1997
VALUE AMERICA: Abbey, Gardy Files Securities Suit in Virginia
Y2K LITIGATION: Active Voice Defends Case In Indiana after MA, AL Cases
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ADAC LAB: Announces Agreements-in-Principle to Securities Litigation
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ADAC Laboratories (NASDAQ: ADAC) announced on January 13 that it has
reached an agreement-in-principle to settle the consolidated class
action lawsuit currently pending against the Company. The plaintiff
class will receive $20 million in full settlement of their claims. A
final settlement is contingent upon the satisfaction of numerous
conditions, including among others, approvals by the Federal Court in
the Northern District of California and by the Company's Board of
Directors. In addition, ADAC announced it has concurrently reached an
agreement-in-principle to settle related derivative litigation filed
against current and former officers and directors of the Company. The
derivative settlement calls for the defendants to contribute their
respective benefits under certain Directors and Officers Insurance
Policies to the Company. This settlement is similarly contingent on
satisfying certain conditions.
The total pre-tax cost of these settlements to ADAC, net of insurance,
is expected to approximate $9 million. As a result, the Company
announced that it intends to record a non-ordinary pre-tax charge of
$10-11 million representing its total costs for the settlements,
including the related legal fees to bring these matters to a conclusion.
These charges will be recorded in ADAC's first fiscal 2000 quarter ended
January 2, 2000.
R. Andrew Eckert, ADAC's Chairman and CEO stated, "The settlement of
this litigation will be an important milestone for our Company. We feel
that by resolving the litigation now, we can move forward more
confidently, focusing all our energies on achieving our strategic
objectives and creating shareholder value." He went on to say, "We will
have no further comment on the litigation until the settlements have
been finalized."
ADAC Laboratories is the world market-share leader in nuclear medicine
and radiation therapy planning systems and a technology leader in
providing clinical workflow solutions, management information and
knowledge systems to healthcare organizations in North America. ADAC is
headquartered in Milpitas, CA with its HealthCare Information Systems
Division in Houston, TX. Additional information about ADAC can be found
on its web site at http://www.adaclabs.com
AMOCO PIPELINE: Class Certification Upheld in LA Spill Suit
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An appellate panel in Louisiana has unanimously upheld class action
status for thousands of residents in an area where 3,000 barrels of
crude oil were released by an overfilled tank. Mayho et al. v. Amoco
Pipeline Co. et al., No. 99-CA-620--624 (LA Ct. App., Dec. 15, 1999).
In 1992, crude oil was released into a containment dyke when a tank
overfilled at a Louisiana Shell Oil Co. facility. None of the oil
escaped the containment dyke, cleanup began immediately, and all oil was
returned to the system the day after the release.
In separate consolidated complaints, the plaintiff neighbors sued in St.
James Parish District Court, alleging that fumes from the oil spill
caused them great discomfort, reached hazardous levels, and threatened
their health and safety.
Shell claimed that its employees had monitored air quality around the
site from the time of the spill until cleanup was finished, and also
reported that hydrogen sulfide levels never reached a hazardous level.
The proposed class representatives suffered no recoverable damages, the
company said, but merely were inconvenienced by the nuisance.
Judge Guy Holdridge granted the plaintiffs' motion for class
certification, and Shell appealed.
The Court of Appeals, Fifth Circuit, unanimously affirmed in an opinion
by Judge Marion F. Edwards, finding no abuse of discretion in granting
certification.
First, the panel rejected Shell's argument that the trial court failed
to exercise its gatekeeper role, finding there was sufficient testimony
from two experts, one in meteorology and air dispersion modeling and the
other in toxicology.
Second, it said the plaintiffs met their burden of proving numerosity,
commonality, and adequacy of representation. Several thousand people,
many of whom filed proofs of claim with Shell, live within the
geographic borders established by the trial judge, the court said. All
class representatives allegedly experienced adverse effects from
inhalation of hydrogen sulfide fumes as well. In addition, there was a
common character to their claims, namely that Shell is liable for any
damages from the released of hydrogen sulfide and benzene into the air.
The court declined to decide Shell's argument that the plaintiffs failed
to state a cause of action for damages. Roy F. Amedee Jr. of LaPlace,
LA, argued for the plaintiffs. Patrick A. Talley Jr. and Michael R.
Phillips of Frilot, Partridge, Kohnke & Clements in New Orleans appeared
for the defense. (Hazardous Waste Litigation Reporter, December 23,
1999)
AUTO INSURANCE: Motorist in Accident Sues Liberty Mutual Re Repair Shop
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A Peterborough motorist is pursuing a class-action lawsuit against
Liberty Mutual Insurance Co. for allegedly telling auto repair shops to
use low-quality replacement parts on clients' autos.
Terrance O'Brien charges in his claim that Liberty ordered installation
of imitation parts or agreed to pay an amount based on using them in
repairs at a specific shop. O'Brien said Liberty's policy calls for the
installation of parts of ''like kind and quality'' and it should have
used components from original manufacturers after his car sustained
damages in an accident.
He is seeking $10 million in aggravated, exemplary and punitive damages
on behalf of himself and other drivers insured by Liberty and other
companies for allegedly breaching their policies.
Liberty, which alone has 212,000 holders of auto insurance policies,
said the company is aware of the claim but has not seen it. ''Because we
haven't officially been served with the suit, it would be premature to
comment on the allegations,'' said Arlene Healy, Liberty's manager of
communications.
In his accident, O'Brien allegedly attempted to steer his 1994 Chevrolet
Blazer sport utility vehicle around an obstacle on the highway, lost
control and landed in a ditch. O'Brien, 45, was unhurt but the truck
allegedly sustained damage to the front and rear ends and the roof.
In his claim, O'Brien alleged U.S.-based Liberty directed the shop to
install the inferior replacement parts without his consent or knowledge.
Another shop owner informed him later that those parts had been
installed on his truck.
O'Brien said in his claim that Liberty's insurance policy called for the
company to pay for the repair, replacement or rebuilding a client's
vehicle with the ''like kind and quality'' parts. He claimed inferior
imitation parts are not authorized for use by auto manufacturers and
installation into an insured vehicle does not restore it to pre-loss
condition. ''Since many of these imitation parts are manufactured in
Taiwan, in the motor vehicle repair trade they are commonly referred to
as 'Taiwan tin' which reflects their inferior quality and
craftmanship,'' the claim said. O'Brien said the use of imitation parts
has diminished his vehicle's value, jeopardized the manufacturer's
warranty and impaired the auto's structural integrity and occupant
safety. He described the company's conduct as ''high- handed, reckless,
deliberate and disgraceful.''
O'Brien wants a court declaration that Liberty breached its policy, is
liable for damages and his class of policyholders is entitled to
installation of replacement parts from the original manufacturer when
there are damages.
His lawyer, Harvin Pitch, said O'Brien is seeking an order to certify
the claim into a class-action proceeding, which could affect thousands
of other auto-insurance policyholders.
The Automobile Protection Association, which represents motorists'
interests, said there is generally nothing wrong with after-market parts
in repairs. They also keep prices down, according to the association.
However, the association said it has found problems with some parts and
the insurance industry is slow to acknowledge and address them.
Consumer Reports magazine found in its research that some imitation
parts offered less protection because of improper fit and quality in
low-speed collisions. (The Toronto Star, January 14, 2000)
BLUE CROSS: Georgia Ap Ct Will Hear Arguments Re Stock to Policyholders
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Georgia's Court of Appeals will hear oral arguments in March that could
settle the issuing of up to $28 million in stock to Blue Cross and Blue
Shield of Georgia policyholders.
The money constitutes shares of Cerulean Inc., the parent company of the
Georgia Blues. The stock was offered to all 144,000 policyholders of the
Georgia companies, but only about half had accepted the offer of five
shares each when the distribution was closed. The shares originally had
no value but are now believed to be worth $800 each, or $4,000 for the
five shares issued to each policyholder who accepted the offer.
The issue the Court of Appeals is to review is whether the 70,000
policyholders who either made no response or declined the initial
offering still have vested rights to the stock. Blue Cross and Blue
Shield of Georgia v. Tiller, No. A00A0874 (Ga. Ct. App. Dec. 15, 1999).
In June, State Insurance Commissioner John W. Oxendine refused to review
the way the company offered common stock to policyholders in 1996 when
it converted to a for-profit business.
However, Richmond Superior Court Judge J. Carlisle Overstreet struck
down Oxendine's decision and found that Georgia Blue's conversion plan,
which Oxendine had approved in December 1995, created a vested right to
shares of Cerulean common stock.
Oxendine, Cerulean and Georgia Blue all seek review of Overstreet's
decision. Oral arguments are scheduled for the week of March 20, says
Cerulean and Georgia Blue's lawyer, Bruce P. Brown, a partner with Long,
Aldridge & Norman LLP. (Brown and his firm also represent the Daily
Report).
Cerulean is seeking to merge with Wellpoint Health Networks of
California, but the two have postponed their agreement-first announced
in July 1998-until Dec. 31. (Daily Report, Jan. 5, 2000).
Declaratory Judgment Sought
The policyholders had asked Oxendine for a declaratory judgment that
Georgia Blue should have issued, not just offered, shares of Cerulean
common stock to its 144,000 policyholders in 1996. Georgia Blue created
Cerulean at the time of the company's conversion as a holding company
for the new for-profit corporation.
About half the policyholders, or some 74,000 people, accepted the offer
of the Cerulean stock when it was made. These policyholders received
five shares each. The policyholders who petitioned Oxendine were part of
a group of 70,000 who either failed to respond to the offer or rejected
it.
The stock initially had no set value because it could not be publicly
traded. However, says Cerulean spokesman Charles E. Harman, WellPoint
has agreed as part of the proposed merger to pay approximately $800 for
each share, or $4,000 a shareholder.
Oxendine decided "it would be inequitable to revisit this process now,
more than two years after it was completed"-which Overstreet's ruling
reversed.
Overstreet said the policyholders' rights to the shares should be
resolved before Cerulean's merger with WellPoint. "The petitioner has
exhausted his administrative remedies and a review of the merits of the
petitioner's claim is appropriate," Overstreet ruled.
Conversion Plan Called Contract
Overstreet said Georgia Blue's conversion plan was a contract with the
policyholders who were "specifically identified third-party
beneficiaries of the plan." He found that Georgia Blue's conversion
plan, which Oxendine had approved in December 1995, created a vested
right to shares of Cerulean common stock.
Brown says the stock distribution was designed to prevent adverse tax
consequences to those receiving the stock. "There was a risk of taxation
because these people were getting something without any additional
consideration," says Brown. "The reason why it wasn't automatically
considered income is because we structured it as an exchange."
Georgia Blue's policyholders "had a legislative right under O.C.G.A.
section 33-20-33 to be given a right of first offer if Georgia Blue ever
distributed shares to the public," says Brown. "And what we argued was,
since you are giving up that right by taking it, or not taking it,
that's an exchange for the shares and therefore you can make an argument
that it's an exchange that's not subject to taxation."
Overstreet's order, "because of its content, has made it very difficult
to proceed" with the merger, Brown says.
Lawyers for the policyholders have filed a motion to dismiss arguing,
Cerulean and Georgia Blue lack standing to bring their appeal. They
point to the denial of Cerulean and Georgia Blue's attempts to intervene
in the proceedings before Oxendine and in Overstreet's judicial review.
"Our contention is they are not a party to the case and they don't have
standing to appeal," says Atlanta lawyer Jerry L. Sims of Sims, Moss,
Kline & Davis LLP. Sims admits that if the motion to dismiss is granted,
"it would only dismiss the appeal of Georgia Blue. The commissioner has
also appealed. And there's no question they have standing to do that
appeal."
2nd Ruling for Policyholders
Overstreet's decision is his second in favor of the policyholders. His
first came in December 1998 in a class action suit filed by the same
policyholders. Tiller v. Cerulean Companies Inc., et al., No.
98-RCCV-806 (Richmond Super. Ct. Filed Sept. 18, 1998).
That suit contained a declaratory judgment request that the plaintiffs
should have shares of Cerulean and also contained fraud claims related
to the stock distribution (Daily Report, March 15, 1999).
Overstreet certified a class in that suit of all eligible subscribers
who did not receive Cerulean common stock. In December 1998, Overstreet
granted relief to the plaintiffs in that case after a two-day bench
trial. He issued a declaratory judgment that the class plaintiffs each
deserved five shares of the Cerulean common stock, even if they
previously had made no response to the offer or rejected it.
However, that ruling was reversed in a 6-1 decision by the Georgia
Supreme Court (Daily Report, May 4, 1999). The high court said
Overstreet had no jurisdiction to hear the policyholders' claims until
they had exhausted administrative remedies before Oxendine, who the
court said was entrusted with overseeing the process of conversion.
This ruling brought the disgruntled policyholders to Oxendine for relief
in June. But that decision by the Georgia Supreme Court did not end the
suit in Overstreet's court. "We filed a motion for judgment saying, 'We
won it; let's go ahead and get a judgment on this,' " says Brown.
Overstreet "denied it and denied our petition for appeal," Brown says.
"He said that, 'I'll hold it until the administrative petitions are
exhausted.' "Overstreet and the plaintiffs are looking at exhaustion of
remedies as punching your ticket," Brown says. "You just gotta get your
ticket punched and then you can go get the real relief."
Amended Complaint Filed
In the wake of the Supreme Court's May ruling, lawyers for the
policyholders filed an amended complaint with Overstreet, expanding the
fraud claims against Cerulean and Georgia Blue, and adding claims by two
of the named plaintiffs, Charles Deal and Olean Lokey, that they never
even received the offering materials. "The fraud claim is that everybody
was defrauded," says another of the five lawyers representing the
plaintiffs, Atlanta lawyer Jay Brownstein of Brownstein & Nguyen, LLC.
The other lawyers for the plaintiffs in this suit and the appeal are
Sims, Augusta lawyers Travers W. Paine III of Paine Little LLP and John
C. Bell Jr. of Bell & James; and Palm Beach lawyer Richard L. Stone of
Blackner, Stone & Associates.
Says Brownstein: "Some folks were defrauded by never having been told,
they never received any material, no notice whatsoever that they had a
right to the stock and those that did receive the materials weren't told
the entire picture." Those claims are now in discovery, Brownstein says,
and Overstreet has ordered that the case be ready for trial by the end
of August.
Lawyer Conflict Claimed
Brown and his co-counsel, Augusta lawyer David E. Hudson, a partner in
Hull, Towill, Norman, Barrett & Salley, filed a motion on Dec. 27 to
disqualify the plaintiffs' lawyers in the ongoing Richmond County suit.
The motion contends Brownstein, Sims and Stone have conflicts of
interest in representing policyholders who did not get stock because
they previously represented those who did.
The motion refers to their representation in 1998 of Cerulean common
stockholders in an attempt to intervene in a suit to protest a
settlement between Georgia Blue and activists who claimed the insurer
should have transferred all its assets in a charitable foundation when
it converted to a for-profit business.
The intervention request was denied and the matter was never appealed.
"It's a motion that can clearly be seen for what it is, which is a
tactic. It doesn't have any weight to it," says Brownstein. Says Sims:
"We don't believe they have standing to assert a conflict. Also, what
they allege creates a conflict are facts they have known since before
the case was started. "We have client waivers," he adds.
The motion also seeks to disqualify all the plaintiffs' lawyers,
including Paine and Bell, on the grounds that their representation of
Deal and Lokey-who claim never to have received offering materials-has
suffered because of the interests of the larger class who received the
offering materials but did not respond.
"Plaintiffs' counsel, in their effort to avoid splitting their class,
has downplayed the Deal/Lokey claim and in fact alleged and asserted at
trial that all members of the class received this offer," says the
motion by Cerulean and Georgia Blue.
This has left Deal and Lokey vulnerable to the argument that they waived
their right to their unique claims, the motion argues.
Brownstein disagrees. "If you analyze what our class members want, their
claims are in harmony."
Sims says the parties "have had settlement discussions but it wouldn't
be accurate to say that they are ongoing at this time." Brown agrees.
"But you know I can't say what's going to happen next month or next
week," Sims adds. (Fulton County Daily Report, January 14, 2000)
BOSTON HOUSING: Grant Is Met with Criticism Amidst Suit on Racial Bias
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US Housing Secretary Andrew Cuomo embarrassed Boston nationally last
year with a scathing report accusing the Boston Housing Authority of
fostering racial discrimination and ignoring the complaints of harassed
tenants. Now, Cuomo has made the BHA the envy and the enemy of housing
advocates nationwide by awarding the agency almost $300,000 in
fair-housing funds.
In a move that has incensed fair-housing organizations across the
country, the BHA has won a $297,060 grant to produce brochures and
conduct a door-to-door campaign to teach tenants about fair housing and
their right to file discrimination complaints. The BHA had promised to
start the programs as part of a $1.5 million settlement it reached in
July with tenants who sued over the authority's failure to stop a
pattern of racial harassment in the Old Colony and Bunker Hill
developments. The grant appears to violate terms of the federal Fair
Housing Initiatives Program, which prevents the funds from being spent
to settle legal claims. Housing advocates also say it sends a dangerous
message: Civil rights violations will be rewarded with federal cash.
"It really is like saying to housing authorities, 'It pays to
discriminate,' " said Nadine Cohen, interim director of the Lawyers
Committee for Civil Rights Under the Law, and one of the lawyers who
represented tenants in the case against the BHA. " 'You get caught and
we'll give you a lot more money so you can remedy your problems.' "
Lydia Agro, a BHA spokeswoman, said the authority is simply trying to
comply with its settlement agreement, and it sought the grant for the
benefit of tenants. In addition to the brochures and door-to-door
campaign, the grant would pay for diversity training for residents in
about 20 developments across the city, Agro said.
"It was our understanding that we could apply for that funding," Agro
said. "It was a competitive process, and we applied."
The case is generating grass-roots opposition across the country among
organizations that compete for limited funds to promote equal access to
housing, said Lisa Rice, president of the National Fair Housing Alliance
in Washington.
"From the civil rights perspective or the fair-housing practitioners'
perspective, this establishes a very scary precedent," she said. "If
you're going to now start funding violators of the law, what does this
signify? Is this indicative of something that's very ominous for the
future" for the fair-housing program?
The program, administered through the department of Housing and Urban
Development that Cuomo heads, more typically benefits private
organizations that educate tenants about fair housing and try to crack
down on discrimination.
Of the $15 million HUD awarded to 53 cities on Dec. 15, Boston's was the
only public housing authority to win funding; most went to legal
services or groups promoting equal access to housing.
After the grants were announced, an unsigned complaint was sent Jan. 3
to the US inspector general's office, an independent arm of HUD. The
complaint, obtained by the Globe, alleges that the Boston grant amounts
to a misappropriation of funds through the fair-housing program, which
specifically prohibits using grants to settle lawsuits.
Peggy Johannsen, a HUD spokeswoman in Washington, said she was unaware
of the complaint to the inspector general, but was aware of controversy
surrounding the grant.
"This matter was recenty brought to our attention, and we're reviewing
it," she said. She declined to detail what remedies were possible if HUD
determines the funds were misappropriated. However, the grant money has
not yet been received in Boston.
The advocates don't dispute the need for the grant, but they object to
the source.
"I don't question the appropriateness of HUD providing financial support
to the BHA to fulfill the agreement," said David Harris, executive
director of the Fair Housing Center of Greater Boston, a new
organization that won $100,000 in federal funds. "It's the particular
pool of money that I think is really a problem. It's a finite pool that
people competed for."
When the BHA settled its case with tenants in July, it made it clear
that it would need HUD funding to comply with some terms of the
agreement. One item was the hiring of a "civil rights outreach
coordinator" to visit each unit in the two developments to explain civil
rights protections.
Since HUD offered no explanation of how the funding was awarded to the
BHA, some housing advocates allege that there was a deal cut at the time
of the settlement agreement to make compliance easier for the city,
which already had suffered considerable bad publicity from HUD. But
Cohen suggested that the sprawling agency may have simply failed to take
note of the settlement agreement in awarding the BHA grant.
Cohen said that during settlement negotiations in the Boston case, HUD
declined to give the BHA additional funding to comply with the
settlement. "They said they'd have to apply and go out and get it,"
Cohen said. "It was never intended to be FHIP money."
Some speculated privately that the grant was a peace offering from Cuomo
to Mayor Thomas M. Menino, who was stung by his criticism last year.
Cuomo, whose department had conducted a three-year probe into the BHA,
had called it the most serious discrimination case ever brought against
an agency.
Menino suggested at the time that Cuomo was grandstanding on a problem
that had been alleviated in recent years. The HUD report ended in 1996.
That year, 13 tenants had filed a class-action suit alleging the BHA had
failed to protect them from racial harassment and assaults in the
historically white Charlestown and South Boston housing developments;
the city's housing developments were forced to desegregate in 1988.
The case dragged on until last February, when Cuomo issued the HUD
report and a subsequent study that looked at progress since 1996. While
that study confirmed there had been improvements, it included a host of
other suggestions and urged a settlement with the tenants. (The Boston
Globe, January 14, 2000)
CAMPBELL SOUP: Shapiro Haber, Berger & Montague File NJ Securities Suit
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The Boston law firm Shapiro Haber & Urmy LLP and the Philadelphia law
firm Berger & Montague, P.C. filed a class action suit in the United
States District Court for the District of New Jersey against Campbell
Soup Company alleging securities fraud has been committed said company
and certain of its officers. The case was filed on behalf of all persons
who purchased Campbell Soup common stock during the period November 18,
1997 through January 8, 1999, inclusive.
The complaint charges the defendants with violations of Section 10(b) of
the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. As alleged in the Complaint, Campbell claimed to have "sold"
product to major distributors or resellers when in actuality Campbell
never shipped the product to its customers. Campbell claimed these
phantom sales in order to meet Wall Street's earnings estimates for the
Company and therefore artificially inflate the price of Campbell's
stock. When Campbell disclosed that it would have declining earnings as
a result of lower sales, the price of Campbell stock dropped from
approximately $54 per share to approximately $46 per share and has never
recovered.
Contact: Ted Hess-Mahan, Esq. or Lisa Palin, paralegal Shapiro Haber &
Urmy LLP 75 State Street, Boston, MA 02109 800-287-8119 Fax:
617-439-0134 e-mail: cases@shulaw.com or Sherrie R. Savett, Esq. Stuart
J. Guber, Esq. Michael T. Fantini, Esq. Berger & Montague, P.C. 1622
Locust Street Philadelphia, PA 19103 888-891-2289 or 215-875-3000 Fax:
215-875-4604 Web site: http://home.bm.nete-mail: InvestorProtect@bm.net
DOJ: Opt-in Deadline for Lawyers’ Action on OT Pay Extended to Feb. 16
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Current and former Justice Department lawyers have another chance to
join the overtime class action against the department. U.S. Court of
Federal Claims Judge Robert Hodges Jr. extended the opt-in deadline from
Dec. 2 to Feb. 16 because about 20 percent of the addresses the DOJ
provided to plaintiffs lawyers were wrong. According to plaintiffs
lawyer Robert Van Kirk of Williams & Connolly, about 6,800 DOJ lawyers
have joined the suit. The class is open to any DOJ lawyer who, since
Nov. 25, 1992, has at least once worked more than 40 hours in a week or
eight hours in a day.
Former Hogan & Hartson partner David Martin has joined the Securities
and Exchange Commission as director of the Division of Corporation
Finance. He will oversee the SEC's corporate disclosure operation.
Former director Brian Lane left the agency to join the D.C. office of
L.A.'s Gibson, Dunn & Crutcher as a partner.
Commissioner Gloria Tristani of the Federal Communications Commission
has decided not to return to New Mexico to run for Congress. Tristani, a
Democrat, had been eyeing the seat held by freshman Republican Heather
Wilson, but federal law would have required her to resign from the FCC
as soon as she announced her candidacy. In a statement, she said she was
staying at the Administration's request; her term ends July 2003. Also
at the FCC, Linda Kinney has been named special advisor for advanced
services at the Common Carrier bureau. She was a legal advisor to
Commissioner Susan Ness, focusing on common carrier issues. Her
replacement is Jordan Goldstein.
Several high-level changes at DOJ's Criminal Division. Bruce Swartz, a
partner at D.C.'s Shea & Gardner, likely will take the place of Mark
Richard as deputy assistant attorney general early next year. Swartz,
who was deputy independent counsel in the investigation of HUD
officials, would oversee the DOJ's Office of International Affairs, the
Office of Special Investigations, and the Internal Security Section.
Richard Rossman, chief of staff to Criminal Division chief James
Robinson, will be leaving the DOJ at the end of the year to return to
the Detroit office of Philadelphia's Pepper Hamilton as senior
litigation partner. Rossman will be replaced by Deputy Assistant
Attorney General Michael Horowitz, who now oversees the department's
Fraud Section. Alan Gershel, chief assistant U.S. attorney for the
Eastern District of Michigan, will assume Horowitz's post.- Jenna
Greene at jgreene@legaltimes.com and Sam Skolnik at
sskolnik@legaltimes.com
DREYFUS CORP: Mutaual Fund Shareholders Suit over Fid Breach Will Go on
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A U.S. judge has given a green light to a class action by mutual fund
shareholders against Dreyfus Corp., a unit of Mellon Financial Corp. in
Pittsburgh.
In an order dated Jan. 5, Judge Harold Baer of the U.S. district court
ruled that the plaintiffs could proceed with allegations that Dreyfus
breached its fiduciary duty in violation of state and federal securities
laws.
The suit, filed in June 1998, alleges that Michael L. Schonberg, who
managed two aggressive growth funds for Dreyfus, which is based in New
York, made trades in the funds to benefit his personal holdings. Dreyfus
which manages $117.4 billion of mutual fund assets, placed Mr. Schonberg
on administrative leave in April 1998.
Judge Baer's ruling came in response to a motion filed by Dreyfus to
dismiss the case. The judge threw out five additional claims that had
been filed by the group under the Investment Company Act of 1940. (The
American Banker January 14, 2000)
FEN-PHEN: Feuding Lawyers Could Unravel AHP Settlement Pact
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Two factions of attorneys fighting for the same cause are now embroiled
in a power struggle in one of the nation's biggest product liability
battles -- over the diet drug combination fen-phen. The contentious mood
that has settled over the two camps could, at the very least, put an end
to some state court claims and might even derail the multibillion-dollar
settlement reached with the makers of the weight-loss drug.
At the center of the debate is whether all fen-phen users who are part
of class action litigation in Florida and several other states should be
forced to accept a deal hammered out last October by American Home
Products, manufacturer of the drug. "There is disagreement among the bar
as to whether the settlement is acceptable," said Karen Cohen, a Miami
attorney who is litigating a handful of fen-phen cases. "I don't think
it's an adequate settlement."
American Home Products agreed to pay $3.75 billion to settle the federal
multidistrict litigation overseen by U.S. District Judge Louis Bechtle
in Philadelphia.
Now there is growing sentiment among attorneys in several states that
the deal is unacceptable and will not address the needs of their
clients.
Opting out
"There are a lot of problems with the settlement," said Paul Napoli, a
New York attorney with Napoli Kaiser & Bern. Napoli represents some
5,000 fen- phen users, many of whom are opting out of the national
settlement agreement. "We are getting 300 to 400 opt-outs a day," he
said.
Like Napoli, Ervin Gonzalez of Robles & Gonzalez in Miami believes the
agreement does not do enough to compensate his clients. "If the federal
deal is allowed to go through and it's rubber-stamped, then all of these
people will not have local doctors checking them out. They are not going
to have a court-appointed administrative plan to make sure they are
healthy. They will not have the ability to be diagnosed at an early
stage. I don't think that's right," said Gonzalez, who represents some
5,000 Florida residents in a class action against American Home
Products. "We are doing what we are doing because we want to make sure
that Floridians are properly treated," he added.
Last month, Gonzalez won a ruling from a Florida state appellate court,
which ruled that former fen-phen users should have the right to free
follow-up exams to check for possible health problems even if they show
no signs of illness.
If attorneys continue to make good on their threats to opt out of the
federal settlement, the deal will fall apart, Gonzalez predicts.
"Ultimately there will be no settlement deal approved by the court. It's
approved subject to several conditions, one of them is being accepted
nationally," he said.
American Home Products has the right to terminate the settlement if
there are too many opt-outs after class notice ends in March.
If that happens, it will be because there were just "too many egos
involved," said J. Michael Papantonio, a Pensacola, Fla., attorney who
served on the plaintiffs' multidistrict litigation steering committee.
"Rather than say what is the best thing here, what is the most
efficient, effective thing to do for the victims, too often that becomes
secondary to people's egos," Papantonio said. "We have to consider how
to bring closure to this program in the best way we can for the
clients."
While he is sympathetic to Gonzalez and other attorneys who believe they
are acting in the best interests of their clients, Papantonio said that
ultimately the fate of the litigation will be up to Judge Bechtle. His
prediction: "The judge will not allow class action cases to go forward
because the validity of what he is doing will be diluted. To make this
thing move, it has to move with some form." Susan R. Miller is a
reporter at the Miami Daily Business Review, an American Lawyer Media
affiliate. (The Recorder, January 14, 2000)
FREEMARKETS INC: Bernstein Liebhard Files Securities Suit in PA
---------------------------------------------------------------
Bernstein Liebhard Lifshitz, LLP commenced a securities class action
lawsuit in the United States District Court for the Western District of
Pennsylvania on behalf of all purchasers of the common stock of
FreeMarkets, Inc., between December 10, 1999 and January 4, 2000,
inclusive.
The complaint charges that FreeMarkets and certain of its directors and
executive officers have made some violations of the Securities Exchange
Act of 1934 and Rule 10b-5 promulgated thereunder. Further, it was also
alleged that the defendants failed to disclose material information
about the Company in the prospectus issued in connection with the
Company's initial public offering. Specifically, the complaint charges
that prior to the IPO, defendants knew that General Motors Corporation,
one of FreeMarkets' largest customers, intended to cancel its contract
with FreeMarkets in the first quarter 2000 and funnel its internet
business to Commerce One. The loss of this revenue would have a material
adverse impact on FreeMarkets. Defendants, however failed to disclose
this information to the investing public prior to the IPO. As a result
of these misrepresentations and omissions, the price of FreeMarkets's
common stock was artificially inflated throughout the Class Period. Upon
the disclosure of said facts, FreeMarkets's stock price plunged more
than $70 per share.
For further information and details regarding the above mentioned suit,
contact Mark Punzalan, Director of Shareholder Relations, Bernstein
Liebhard; Lifshitz, LLP, 10 East 40th Street, New York, New York 10016,
telephone: 800-217-1522 or 212-779-1414 or FreeMarkets@bernlieb.com via
e-mail.
HOLOCAUST VICTIMS: Government Delays Presenting Law For Nazi Labor Fund
-----------------------------------------------------------------------
The German government is pushing back the date to present a draft law
establishing how compensation will be distributed to victims of Nazi
labor, a government spokesman said on January 14, 2000.
The announcement comes a day after lawyers for the victims delivered a
letter to German envoy Otto Lambsdorff and U.S. envoy Stuart Eizenstat
complaining that the proposed law limits payments to some survivors and
is being drafted without their input.
One of the class-action lawyers said they will proceed with their suits
despite an earlier agreement to suspend them.
A spokesman for the German Finance Ministry that is drafting the law
stressed the government was not trying to circumvent those who
negotiated the Nazi labor compensation deal. ''Those leading the
negotiations must articulate want they want in the bill proposal, and
when that is articulated then that is what will be in the proposal,''
Torsten Albig said.
Government spokesman Bela Anda said the date for presenting the bill to
the Cabinet was delayed a week until Jan. 26 because of a
''misunderstanding'' about the earlier date.
The major point of contention was put aside last month when Germany
announced the fund would total 10 billion marks (dlrs 5.2 billion) to be
split by government and industry. Up to 2.3 million people, mostly
non-Jews from Eastern Europe, forced to work under the Nazis could be
eligible for payments.
But negotiators, who meet again this month or in early February in
Washington, still must work out how the fund will be divided.
A chief complaint of the class-action lawyers and Eastern European
governments is that Germany is making unilateral decisions that will
determine how much money the people they represent will receive. The
current draft, for example, deducts payments for compensation already
received. Since the war, Germany has paid about dlrs 60 billion in
compensation for Nazi crimes. The draft also would limit compensation to
those workers who were deported to Germany under its 1937 borders before
Hitler's offensives into Europe started.
''There will be absolutely no negotiations when a law is created without
the consultation of others,'' Jiri Sitler of the Czech foreign ministry
told ARD national television.
New York lawyer Deborah Sturman said the proposal to deduct for payments
already made was an act of bad faith, and said lawyers planned to resume
filing motions on class-action lawsuits, suspended after the December
agreement on the fund's size.
German firms that used slave and forced labor sought the fund largely to
receive protection from class-action suits. (AP Worldstream January 14,
2000)
LOCKHEED MARTIN: Fed. Probe Finds Racial Bias Against Black Employees
---------------------------------------------------------------------
A federal investigation has concluded that some white managers at
Lockheed Martin Aeronautical Systems discriminated against black
employees by overlooking them for promotion, training and overtime.
The U.S. Equal Employment Opportunity Commission found that, despite the
Marietta-based company's assertion that promotions were based on
seniority and experience, black employees often had more of both than
white employees who won the promotions, according to copies of the
findings obtained by the Journal-Constitution.
"This is an extremely serious situation with far-reaching consequences
for employees at both Lockheed's Marietta plant and other Lockheed
plants," said Josie A. Alexander, one of the lawyers representing more
than 20 current and former Lockheed employees. "My clients believe there
is an atmosphere of racism that permeates the plant."
Lockheed President Tom Burbage denied a racist culture exists in the
plant, and he emphasized that the defense contractor has long-standing
policies forbidding discrimination. "I don't think the issues that were
raised are widespread," he said. "I think it all relates to the past. I
can do nothing about the past but apologize for it. What I can deal with
is the future." The company is contesting the EEOC allegations, he said.
Bernice Williams-Kimbrough, director of the Atlanta District of the
EEOC, issued nine findings of racial discrimination and one case of
discrimination against the disabled. The EEOC also found Lockheed
managers retaliated against one employee for filing an EEOC complaint.
The investigation is continuing in at least 10 other cases, involving
race, gender and disability, Alexander said.
Alexander has teamed up with Johnnie Cochran, the prominent trial lawyer
who became a household name in the O.J. Simpson case, in pursing the
case against Cobb County's largest private employer. The case could
achieve class action status, since the EEOC found discrimination existed
against blacks as a group.
The EEOC outlined its allegations in "letters of determination," dated
Sept. 30, which do not carry a legal penalty. Instead they are one of
the steps in a long process of bringing discrimination claims under the
federal statute.
Lockheed and the plaintiffs are tentatively scheduled to engage in what
amounts to settlement talks in February, Alexander said. If an agreement
can't be reached, the EEOC will either issue a "right-to-sue" letter to
the plaintiffs, or elect to sue the company itself. "The process takes a
lot of time and a lot of investigation," Burbage said. "We work with the
EEOC office to understand the issues and resolve them."
The timing of the allegations, however, couldn't have been worse for
Lockheed. The Marietta plant has had its leadership reshuffled and
scattered, has just finished a tough budget fight in Congress to keep
funding for its F- 22 stealth fighter. It is struggling to find buyers
for its mainstay, the C-130J transport plane.
Burbage, who became president in April, said he was frustrated that
there has been so much focus on the allegations of a handful of the
company's employees, when he believed the company has a good record of
minority hiring and doing business with minority companies.
Burbage also has established committees, he said, to facilitate better
communication between the blue-collar labor force and upper management
to cut out the filter of middle-management --- where the EEOC documents
indicated the discrimination problem existed. "In any workforce that is
10,000 people big, it's not to say the same frailties don't exist there
as you find anywhere else in society," Burbage said. "If you get a
picture of this company by reading EEOC findings, that's one picture. If
you try to get a real understanding of what this company is all about,
that's another picture." (The Atlanta Journal and Constitution, January
14, 2000)
MANHATTAN GROCERS: A.G. Sues over Minimum Wages for Delivery Workers
--------------------------------------------------------------------
The state attorney general on January 13 sued companies employing
delivery workers at Manhattan supermarkets, alleging they violated
minimum-wage laws.
Eliot Spitzer filed a lawsuit in State Supreme Court 1 NEW3 in Manhattan
against several companies, including the Great Atlantic & Pacific Tea
Co., the parent of Food Emporium; Waldbaum's, and A & P.. The lawsuit
sought six years in back wages for grocery deliverers at the Food
Emporium store on Broadway and 68th Street. Aides said the wages could
total $ 1 million.
A separate lawsuit filed on January 13 in U.S. District Court in
Manhattan alleged that grocery stores including those operated by Great
Atlantic & Pacific were using delivery contractors which paid workers
far below minimum wage and no overtime. That lawsuit sought class-action
status on behalf of nine delivery persons and more than 500 additional
workers.
It said those making deliveries earn $ 60 to $ 120 for work weeks
averaging 69 hours, or 87 cents to $ 1.74 an hour. State law allows
employers to pay workers in some low-level jobs as little as $ 4.25 an
hour, below the $ 5.15 federal minimum wage, but requires time and a
half for work beyond 40 hours a week. Under the $ 4.25 minimum, a
69-hour week translates to at least $ 354.88. (The Record (Bergen
County, NJ), January 14, 2000)
MEDIAONE GROUP: Desire to Suppress Criticism Is Not a Motive for Fraud
----------------------------------------------------------------------
Plaintiffs brought an uncertified securities fraud class action against
defendants. Defendants moved to dismiss the complaint, pursuant to
Federal Rule of Civil Procedure 9(b) and the Private Securities
Litigation Reform Act, for failure to plead fraud with particularity.
The court noted that all securities fraud actions were subject to Rule
9(b) and that the Reform Act heightened Rule 9(b)s requirement for
pleading scienter. Under the Reform Act, plaintiffs must "state with
particularity facts giving rise to strong inference that the defendant
acted with the required state of mind," by showing motive or opportunity
to commit fraud. The court found that plaintiffs failed to meet this
heightened requirement because plaintiffs argued that defendants were
motivated by a desire to suppress criticism and this desire was
insufficient to allege scienter.
Judge Scheindlin
KALNIT v. EICHLER QDS:02761952
Richard L. Kalnit, on behalf of himself and all others similarly
situated, brings this uncertified securities fraud class action against
MediaOne Group, Inc. ("MediaOne") and its directors, Frank M. Eichler,
Robert L. Crandall, Charles P. Russ III, Pierson M. Grieve, Louis A.
Simpson, Allan D. Gilmour, Charles M. Lillis, Grant A. Dove, John
Slevin, Kathleen A. Cote and Daniel W. Yohannes (collectively the
"Directors" or "individual defendants"). Plaintiff alleges that
defendants violated Section 10(b) of the Securities and Exchange Act of
1934 ("Exchange Act"), 15 U.S.C. @ 78j(b), and Rule 10b-5 promulgated
thereunder, 17 C.F.R. @ 240.10b-5, by fraudulently failing to disclose
certain information in connection with a publicly announced, proposed
merger between MediaOne and Comcast Corporation ("Comcast"). Plaintiff
brings an additional claim against the individual defendants for
controlling person liability pursuant to Section 20 of the Exchange Act.
Plaintiff seeks damages for losses incurred as a result of defendants'
alleged violations.
Defendants move to dismiss the Complaint pursuant to Fed. R. Civ. P.
12(b)(6), for failure to state a claim upon which relief may be granted,
and pursuant to Fed. R. Civ. P. 9(b) and the Private Securities
Litigation Reform Act of 1995 ("Reform Act"), 15 U.S.C. @ 78u-4 (1999),
for failure to plead fraud with particularity. Defendants' motion is
granted.
Dismissal of a complaint pursuant to Rule 12(b)(6) is proper "only where
it appears beyond doubt that the plaintiff can prove no set of facts in
support of the claim that would entitle him to relief." Scotto v.
Almenas, 143 F.3d 105, 109-10 (2d Cir. 1998) (internal quotations
omitted). "The task of the court in ruling on a Rule 12(b)(6) motion is
merely to assess the legal feasibility of the complaint, not to assay
the weight of the evidence which might be offered in support thereof."
Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir. 1998) (internal quotations
omitted). Thus, in deciding such a motion, the court must accept as true
all material facts alleged in the complaint and draw all reasonable
inferences in the nonmovant's favor. See Thomas v. City of New York, 143
F.3d 31, 36 (2d Cir. 1998). Nevertheless, "[a] complaint which consists
of conclusory allegations unsupported by factual assertions fails even
the liberal standard of Rule 12(b)(6)." De Jesus v. Sears, Roebuck &
Co., 87 F.3d 65, 70 (2d Cir. 1996) (internal quotations omitted). In
deciding a Rule 12(b)(6) motion, the district court must limit itself to
facts stated in the complaint, documents attached to the complaint as
exhibits or documents incorporated in the complaint by reference. See
Newman & Schwartz v. Asplundh Tree Expert Co., 102 F.3d 660, 661 (2d
Cir. 1996). However, in securities fraud actions, the court "may review
and consider public disclosure documents required by law to be and which
actually have been filed with the SEC...." Cortec Indus., Inc. v. Sum
Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991).
Fed. R. Civ. P. 9(b) sets forth additional pleading requirements with
respect to allegations of fraud. Rule 9(b) requires that "in all
averments of fraud or mistake, the circumstances constituting fraud or
mistake shall be stated with particularity." But, under Rule 9(b),
"malice, intent, knowledge and other condition of mind of a person may
be averred generally."
Securities fraud actions are subject to the requirements of Rule 9(b).
See Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1127 (2d Cir.
1994). However, the Reform Act heightened Rule 9(b)'s requirement for
pleading scienter. See 15 U.S.C. @ 78u-4(b)(3)(A); see also Press v.
Chemical Inv. Servs. Corp., 166 F.3d 529, 537-38 (2d Cir. 1999). As a
result, in securities fraud actions, scienter may not be averred
generally. Rather, plaintiffs must "state with particularity facts
giving rise to a strong inference that the defendant acted with the
required state of mind." Press, 166 F.3d at 538 (quoting 15 U.S.C. @
78u-4(b)(3)(A)); see also Chill v. General Elec. Co., 101 F.3d 263,
268-69 (2d Cir. 1996).
Defendants' motion to dismiss is granted with leave to amend. Any
amended complaint must be served and filed no later than twenty-one days
from the date of the court Order. A conference is scheduled for January
27, 2000 at 4:30 p.m. A discussion of the ruling is available in New
York Law Journal, January 3, 2000.
MOUNT GLENWOOD: Edelman, Combs Sues Cemeteries on Racial Discrimination
-----------------------------------------------------------------------
The Chicago law firm of Edelman, Combs & Latturner has filed a
class-action suit against three cemeteries under common ownership by
South Suburban -- Mount Glenwood Memory Gardens, Mount Glenwood Memory
Gardens West, and Evergreen Hills Memory Gardens for business practices
that discriminate against minorities. The case is Covington-Macintosh,
et al. v. Mount Glenwood Memory Gardens, Inc., et al., 00 C The suit was
filed in the U.S. District Court for the Northern District of Illinois.
The defendants own and operate three cemeteries -- Mount Glenwood South,
Mount Glenwood West and Evergreen Hills. The two Mount Glenwood
cemeteries historically serviced African-Americans. Evergreen Hills has
historically serviced Caucasians. The suit alleges that defendants
maintained Evergreen Hills in decent condition, while allowing the Mount
Glenwood cemeteries to fall into disrepair. The complaint alleges that
defendants violated the federal Civil Rights Acts by contracting with
minorities on a less favorable basis than Caucasians.
The conditions at the Mount Glenwood cemeteries have already received
widespread public attention from local news media. In August 1999,
hearings on the matter were conducted by the Office of State Comptroller
Dan Hynes.
The suit also alleges that defendants enforced unreasonable rules and
regulations at the Mount Glenwood cemeteries which hinder minority
families from decorating gravesites and installing upright headstones.
Contact: Daniel A. Edelman or John M. Broderick, both of Edelman, Combs
& Latturner, 312-739-4200 or fax, 312-419-0379
NEWCASTLE UNITED: To Defend in Feb Magpie Fans' Claims Re Stadium Seats
-----------------------------------------------------------------------
A court date has been set for Newcastle United to defend a claim against
fans who are being forced to leave their regular stadium seats.
Four thousand Magpie fans have been asked by the club to pay (GBP) 1,350
to keep their seats at the ground - which cost them less than (GBP) 500
- or move to the new upper tier of St James' Park at the end of the
season.
The Save Our Seats campaign, which is fighting the move, was at the High
Court in Leeds to issue class action proceedings against the club to bar
fans being moved to make way for corporate hospitality suites.
The legal action sought an injunction preventing the club from depriving
fans of their current seats, as well as damages for breach of contract
and misrepresentation on the part of the club.
Their request was upheld by the court, and a three to four day trial
will be held in Newcastle, in February, to hear the case.
The legal challenge of the bond-holders, who each paid (GBP) 500 five
years ago to secure their seats for ten years, is being spearheaded by
Jane Duffy, who was named as applicant on behalf of the bond-holders
bringing the action.
She said: "We are delighted the court case will be heard sooner rather
than later, and we would ask any bond-holders upset by the club's plans,
who have not yet done so, to get in touch on 0191-213 6015."
The club says the price rise is to meet the cost of extra perks,
including membership of a sports bar.
It has offered the 4,000 the chance to move to the upper tier, currently
under construction, for no extra cost with the added incentive of
purchasing an extra seat if they wish.
A spokesperson for the club said: "Eighty-seven per cent of bond
-holders affected by the development have met with the club and selected
their seats for next season. "The club regrets the legal action by a
named bond-holder on behalf of a minority of those affected. "The club
is keen this matter is resolved and sought the earliest possible court
date." (The Northern Echo December 22, 1999)
PUBLIC GUARDIANS: Daughter of Elderly Mother Sues over Neglect & Abuse
----------------------------------------------------------------------
A lawsuit filed on January 13 in Oakland charges that Alameda County
social service employees are working with nursing homes to suppress
complaints of neglect and abuse by elderly patients' families. The
workers, known as public guardians, intimidate relatives of the sick and
threaten to prevent them from visiting if they lodge complaints with
state health officials, the lawsuit alleges.
At issue in the lawsuit is the care of Eva Blacksher, an 85-year-old
Berkeley widow and double amputee who suffers from dementia. The
lawsuit, filed in U.S. District Court by Blacksher's daughter, Georgia
Blacksher-Hill, 49, of Oakland, seeks $2.5 million for physical and
emotional pain and suffering. "This is about incredible arrogance and
violation of human rights and the law by public agencies that know that
what they're doing is illegal," said Fremont attorney Susan
Guberman-Garcia.
County Counsel Richard Winnie denied any wrongdoing, saying public
guardians "are not biased toward any particular individual" and are
subject to scrutiny by the courts. Public guardians are appointed by
judges to take over decision-making for infirm or disabled adults.
Although it is not a class-action suit, Guberman-Garcia said other
elderly patients and their families have undergone similar experiences.
The suit claims public guardians and officials at Fremont HealthCare
Center prevented Blacksher-Hill from visiting because she repeatedly
complained about her mother's treatment, such as making sure she had
dentures to be able to eat. Officials also never consulted with
Blacksher-Hill about whether her mother should be transferred to other
nursing homes, the suit said. "It's devastating," Blacksher-Hill said.
"My mother is dying. She has been abused and tortured as if she's an
inmate in prison and has committed a crime."
Several years ago, another daughter of Blacksher granted conservatorship
to a public guardian.
The lawsuit said Blacksher was involuntarily transferred in November,
under an assumed name, from the Fremont nursing home to Guardian of
Elmwood in Berkeley with instructions from the public guardian's office
that no family members were to visit her. Guberman-Garcia called the
transfer, which occurred at night, a "kidnapping." "The public guardian
cannot hide people in solitary confinement," she said. When Blacksher's
family repeatedly asked about her whereabouts, public guardians refused
to answer them, the lawsuit said.
An assistant public guardian called Blacksher-Hill a "troublemaker" who
had a "tendency to file complaints," the lawsuit said. Guberman-Garcia
acknowledged that her client is "extremely pushy and won't take no for
an answer."
Officials at both nursing homes were unavailable for comment, as was
Vicky Morris, a supervisor in the public guardian's office who is named
in the suit. Another defendant, Linda Kretz, the director of the
county's Department of Adult and Aging Services, which oversees the
public guardian's office, did not return a call for comment.
Alameda County Superior Court Judge Sandra Margulies ruled that
Blacksher should have regular visits at Guardian of Elmwood as long as
relatives are not disruptive. But Winnie said the judge did not hear any
allegations that public guardians were allying themselves with nursing
homes. (The San Francisco Chronicle, January 14, 2000)
TOBACCO LITIGATION: NY Judge Oks $37M for Attys. In Philip Morris Case
----------------------------------------------------------------------
$$37,146,029 to attorneys who represented shareholders of Philip Morris
Companies Inc. (PM) in two class action suits which charged the company
with securities fraud for concealing the addictive properties of
nicotine in cigarettes. U.S. District Judge Michael B. Mukasey also
approved an award of $1,667,427 in costs for the attorneys. Kurzweil v.
Philip Morris Companies Inc. et al., No. 94 civ2373 (MBM) (SD NY, Nov.
24, 1999); see Securities Litigation & Regulation Reporter, Sept. 9,
1998, P. 4.
Judge Mukasey awarded the fees in connection with two class actions. One
of the suits , Kurzweil et al. v. Philip Morris Companies Inc. et al.,
was filed in the Southern District of New York on behalf of all those
who purchased shares of PM common stock between June 11, 1991, and May
6, 1994. The suit alleged that PM violated Section 10(b) of the
Securities Exchange Act of 1934 and SEC Rule 10b-5 by concealing from
investors material information regarding the addictive nature of
nicotine in its cigarettes and by making misrepresentations concerning
the addictive properties of nicotine and the company's manipulation of
nicotine in its products.
The suit was filed in April 1994, shortly after PM's former president,
William Campbell, and the CEOs of six other tobacco companies testified
under oath before the House Subcommittee on Health and the Environment
that nicotine is not addictive.
A separate suit, Lawrence et al. v. Philip Morris Companies Inc. et al.,
was filed in the Eastern District of New York against PM and four of its
officers. It alleged that the defendants violated federal securities
laws by failing to disclose that PM artificially inflated its financial
performance, including earnings, revenues, unit volumes, and market
shares, through an inventory management practice called "trade loading."
The practice allegedly involved the shipment of more inventory to PM's
direct customers than was necessary to satisfy consumer demand. PM
addressed the problem by cutting its cigarette prices by 40 cents per
pack in April 1993. The price cut caused the company's stock price to
plunge by 25 percent, and the Lawrence suit was filed shortly
thereafter.
PM agreed to a $123 million settlement of both class actions in June
1998. The shareholders said at the time that it was appropriate to
resolve both actions with a single settlement agreement because the
actions arose from the same stock purchases. Judge Mukasey approved a
plan for allocating the settlement proceeds to class members who
suffered recognized losses at a hearing on Nov. 8.
Counsel for the plaintiff shareholders asked for 30 percent of the
settlement fund, or $37,146,029, in fees, and Judge Mukasey granted
their request. In his Nov. 24 order awarding the fees, the judge
rejected arguments that the court should apply a lodestar approach in
determining the fees to be awarded. Under this approach, fees are based
on reasonably hourly rates and then multiplied by a factor typically
ranging between 1 and 5 to adjust for the difficulty of the case.
Application of a lodestar approach to this case would entail use of a
base figure of $15 million, an amount that would have to be multiplied
to reflect the difficulty of the case, the judge explained. He also
noted that the requested fee of $37 million is approximately 2.46 times
the lodestar figure, and that multipliers of this magnitude have been
approved in other securities fraud class actions.
The Kurzweil plaintiffs are represented by Daniel W. Krasner, Jeffrey G.
Smith, and Neil L. Zola with Wolf Hadenstein Adler Freeman & Herz,
L.L.P., in New York; Zachary A. Starr with Starr & Holman, L.L.P., in
New York; Charles D. Maurer of New York; and Pamela Tikellis with
Chimicles, Jacobsen & Tikellis in Wilmington, DE.
The Lawrence plaintiffs are represented by Richard A. Speirs and Jeffrey
A. Klafter with Benstein Litowitz Berger & Grossman in New York; Harold
Tyler with Patterson, Belknap, Webb & Tyler in New York; John E. Ryan
with Kwiatkowski & Ryan in Floral Park, NY; Richard A. Lockridge with
Schatz Paguin Lockridge Grindal & Holstein in Minneapolis; and Joseph
Goldberg with Freedman Boyd Daniel Peifer Hollander Guttman & Goldberg
in Albuquerque, NM. (Securities Litigation & Regulation Reporter,
December 22, 1999)
UNITED AIRLINES: IL Ct Oks Class for Suit over Delay at X’mas Eve 1997
----------------------------------------------------------------------
According to Chicago Daily Law Bulletin of January 12, 2000, Judge
Robert V. Boharic on January 11 granted the plaintiff's motion for class
certification in the case. United Flight 1536, carrying 168 passengers,
departed from Orange County, Calif., and was scheduled to arrive at
O'Hare International Airport at 5 p.m.
Instead, it was diverted to Milwaukee's Mitchell International Airport,
where it remained on the runway for six hours. During that time,
passengers were without food, water or functioning toilet facilities,
said plaintiff attorney Todd M. Hanson of the Law Offices of Stackler
and Holstein.
According to the complaint, the passengers were abandoned in Milwaukee
and had to find accommodations or make other arrangements to travel to
their final destination. Allyson W. Rudman v. United Airlines, No. 98 CH
547.
A status hearing in the matter is set before Boharic on Feb. 16.
David R. Zeigler of Merlo, Kanofsky & Brinkmeier Ltd. represents United
Airlines.
Chicago Tribune of January 14, 2000 says that for almost two years,
lawyers for United Airlines have been trying to quash a lawsuit filed by
a passenger who alleges the Elk Grove Township-based airline "abandoned"
more than 150 passengers when Flight 1536 to Chicago was diverted to
Milwaukee on Christmas Eve 1997.
Cook County Circuit Court Judge Robert Boharic rejected the airline's
arguments to dismiss the suit and certified the case for class-action
status. His decision may allow Allison Rudman, then a college student
returning home for Christmas, and the 167 other passengers to obtain
some compensation from United for the flight that turned into a
nightmare when the jet was diverted to Mitchell Field because of bad
weather in Chicago.
According to court documents, it's a flight that mimics the ones that
resulted in thousands of Northwest Airlines passengers being stranded
for hours aboard planes at Detroit Metropolitan Airport in the 1999 New
Year's Day snowstorm. Just like those passengers, United Flight 1536
passengers were left sitting on the tarmac in Milwaukee for hours,
without food, water or working toilets, before being allowed to
disembark just before midnight.
And when the flight finally was canceled, Rudman and the other
passengers were left standing in an empty terminal with no way to
complete their trip other than to call friends or relatives to pick them
up or find a hotel room on what was by then Christmas Day. "It was an
all-nighter for Allison and her parents, whom she called to pick her
up," said Todd Hanson, a member of the Chicago law firm of Stackler and
Holstein and the lead counsel in the almost two-year-old case. It goes
without saying that it also ruined Christmas Day plans for the family.
"The case has been highly contested up to this point," Hanson said. "We
are now in a position to obtain relief for a number of persons who were
seriously aggrieved and who otherwise would have had no opportunity to
be heard by the court."
As a result, the tune United's lawyers have been playing may change.
"Judge Boharic has given us the opportunity to see whether a settlement
is a possibility or whether the case will go to trial," said Rudman's
attorney. Too bad United just tried to crush the case.
Those 168 passengers aboard Flight 1536 likely will always believe
Congress needs to establish rules for the treatment of an airline's
customers, just as it threatened to do after last year's meltdown in
Detroit.
Bill of rights: The experience of Rudman and the other passengers is the
type of information that the U.S. Department of Transportation's
inspector general's office says it wants to obtain.
It is information that Sen. John McCain (R-Ariz.), chairman of the
Senate Commerce and Transportation Committee, has asked the inspector
general's office to collect in its review of implementation of the
airlines' customer-service commitments. The commitments were made after
Congress threatened to adopt a Passenger Bill of Rights that would have
established standards for passenger treatment.
In addition to reviewing implementation of the commitments, the
inspector general's office said it wants to review the practice of
overbooking flights and look at how to provide consumers access to the
lowest fares.
Consumers can obtain electronic forms at the IG Web site at
http://www.oig.dot.govand a hard copy can be obtained by calling
1-800-884-9190.
Other types of aviation complaints, such as canceled flights or lost
baggage, are being collected by the Department of Transportation's
Office of Aviation Consumer Affairs at http://www.dot.gov/airconsumer
and the inspector general is evaluating the plans and the extent to
which carriers have met all the commitments they have made. An interim
report to Congress is due June 15 with a final report due Dec. 31.
VALUE AMERICA: Abbey, Gardy Files Securities Suit in Virginia
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Abbey, Gardy & Squitieri, LLP gives notice on January 12 that a class
action lawsuit was filed on January 10, 2000 in the United States
District Court for the Western District of Virginia (Civ. No.
3:00-CV-00004) on behalf of purchasers of Value America, Inc. (Nasdaq:
VUSA) stock in the April 7, 1999 IPO, or at any time between April 7,
1999 and December 28, 1999.
The complaint charges defendants with violations of Sections 11,
12(a)(2) and 15 of the Securities Act of 1933, Section 10(b), 20 (a) of
the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.
Defendants include Value America, Craig A. Winn (former Chairman of the
Board), Thomas Morgan (former CEO), Rex Scatena (former Vice Chairman)
and Dean M. Johnson (former CFO). Among other things, plaintiff claims
that the defendants issued materially false and misleading statements
regarding the company's true operating condition and financial
performance.
Contact: Lee Squitieri, Esq. or James S. Notis, Esq., both of Abbey,
Gardy & Squitieri, LLP, by e-mail at jnotis@a-g-s.com telephone:
800-889-3701 or 212-889-3700, fax, 212-684-5191
Y2K LITIGATION: Active Voice Defends Case In Indiana after MA, AL Caes
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Active Voice Corp., which is defending class actions in Massachusetts
and Alabama, is also defending a previously unreported class action
brought by an Indiana user of Active Voice's "Replay Plus" voice mail
system (Leed Selling Tools Corp. v. Active Voice Corp., No.
82D03-9906-CP, Ind. Super., Vanderburgh Co.).
The plaintiff is Leed Selling Tools Corp., which filed the lawsuit on
June 16 in Vanderburgh County (Ind.) Superior Court.
Leed said it purchased the Replay Plus system in August 1997 and still
uses the system. Active Voice contacted the company in March to inform
it that Replay Plus is not Year 2000 compliant, and offered "very
special prices" for an upgrade to a Year 2000 program, according to the
complaint.
Active Voice offered a Year 2000 software patch, but Leed's local dealer
estimated installation at $ 818, Leed complained.
Leed is seeking damages for itself and all others similarly affected.
The complaint listed four counts: unjust enrichment, breach of
warranties, fraud and negligence.
Leed alleges in the fraud count that Active Voice falsely represented
that the product was "virtually foolproof," "flexible," extremely
sophisticated," "the latest" in technology, "easy to maintain," and
could be supported without on-site visits.
Leed has asked the court to order Active Voice to provide free updates
or upgrades, interest and other relief the court deems appropriate.
The case is in discovery with a hearing on class certification issues
tentatively set for February. The case has been assigned to Judge Scott
R. Bowers.
Leed is represented by Steve Barber of Barber, Hamilton & Shoulders in
Evansville.
2 Other Class Actions
Active Voice is defending two similar actions: H. Levenbaum Insurance
Agency Inc. v. Active Voice Corp. (No. 98-3864, Mass. Super., Suffolk
Co.) and Garrison and Sumrall v. Active Voice Corp. (No. CV 99 587, Ala.
Cir., Montgomery Co.). Those actions are also in discovery. Website of
Mealey Publications Inc. at http://www.mealeys.com(Mealey's Year 2000
Report, November 1999)
*********
S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by Bankruptcy
Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc.,
Washington, DC. Theresa Cheuk and Peter A. Chapman, editors.
Copyright 1999. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
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Information contained herein is obtained from sources believed to be
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term of the initial subscription or balance thereof are $25 each. For
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