/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/000404.MBX C L A S S A C T I O N R E P O R T E R Tuesday, April 4, 2000, Vol. 2, No. 66 Headlines ADAM'S MARK: Black College Reunion Ends Well Despite Crowd AT HOME: Discloses Lawsuit Alleging Violations of Fed Antitrust Laws AVT CORPORATION: Keller Rohrback Files Securities Complaint CBS: Judge OKs Class of Female Technicians on Sex Discrimination Case FLIR SYSTEMS: Bernstein Liebhard Files Securities Suit in Oregon FRUIT OF: Bernstein Liebhard Files Securities Lawsuit in Kentucky GREEN TREE: Arbitration Clause Not Specifying Cost Payer Unenforceable INAMED CORP: Steers Clear of DOJ Breast Implant Suit for Medical Costs INTERNET E-COUPONS: Privacy May Be an Issue JUNK BOND: Appeals Court Cuts Law Firms' Fees More Than 80 Percent KANSAS CITY: Hispanic Employees Allege of Race Discrimination KANSAS CITY: Missouri Suit over Employment Race Discrimination Amended MICROSOFT CORP: Analysis of Antitrust Case on Cable News Network MICROSOFT CORP: Shares Tumble As Ruling on Antitrust Case Anticipated PACIFIC GAS: Case on Contaminated Water Supply in CA Subject of Movie REXALL SUNDOWN: Securities Complaint in Florida Dismissed THE STEPHEN: Announces Final Dismissal of Securities Suit in Florida TOBACCO LITIGATION: Closing Arguments Continue; Award in Recent Case VARSITYBOOKS COM: Columbia Suit Alleges False Internet Ad. on Discounts VITAMIN PRICE-FIXING: Bayer Sues Makers after Opting out of Settlement ********* ADAM'S MARK: Black College Reunion Ends Well Despite Crowd ---------------------------------------------------------- Black College Reunion ended quietly Sunday, April 2 as more than 100,000 weekend revelers packed up and headed home - but not before leaving a new twist to the event's legacy of controversy. The Adam's Mark Resort - which had been a focal point for BCR criticisms because of discrimination lawsuits filed in the aftermath of last year's event - was overwhelmed Saturday night with thousands of partygoers. Volusia County deputy sheriffs were called in to clear the lobby temporarily. Angry hotel officials said their guests suffered because of restrictions put in place as part of an $8 million settlement of the lawsuits involving the U.S. Justice Department and Florida Attorney General's Office. Adam's Mark officials estimate that at least 2,000 people were staying in the hotel's 437 rooms. Far more were in the hotel Saturday night about 10:30. False fire alarms were set off about a dozen times through the night, heightening tensions as hotel managers worried about what to do if they were forced by a genuine emergency to evacuate the densely packed crowd. "I have never been more scared for our guests and for myself than I was at points this evening," said Fred Kummer III, senior vice president and son of the hotel's founder. At one point late Saturday, Adam's Mark President Fred Kummer tore the name tag from the shirt of a hotel manager and thrust it at an agent for the Attorney General's Office. "Here, you're in charge," the 71-year-old founder of the hotel chain said. "What do we do?" No injuries were reported, and police were uncertain Sunday whether any arrests were related to the incident. Sheriff Bob Vogel ordered Adam's Mark officials to close down the hotel's bars at 11 p.m., about three hours earlier than usual, because he considered the situation a "tinderbox." The incident marred what city officials and organizers hailed as the best BCR ever. For the first time in three years, no fatalities were reported; the most violent incident police reported was a stabbing that required four stitches. Some merchants said profits were down this year because of competition from itinerant vendors selling T-shirts and bootleg CDs without permits from the city. Yet the squabbling over customers could be viewed as a step forward for BCR, which has been plagued in the past with accusations that businesses closed for racist reasons. Members of the local chapter of the National Association for the Advancement of Colored People said they received no complaints about shops or restaurants turning away BCR business. "I think this is the best one we've ever had," said Mayor Bud Asher, who maintained his habit of touring the streets throughout the event. "I think the students felt welcome here, and I think they responded. The attitude seemed much friendlier." That opinion seemed almost universal - at least during daylight hours. Business owners and law enforcement officers described a kind of metamorphosis that took place after dark, especially Saturday. Crowds that were friendly and easygoing during the day turned rougher at night. Arrest records bear out a difference. Police recorded 200 arrests the opening Friday up until 2 p.m. Saturday. By 6 a.m. Sunday, police had made another 241 arrests, representing an arrest every four minutes. Most of the arrests were for minor offenses - drinking in public, drug possession or disorderly conduct - but the early-Sunday total represented an increase by almost one-third over the past two years. Police reported 330 arrests in 1999 and 329 arrests in 1998. Late Saturday night, the raucous crowds spilled into the Adam's Mark, which had maintained its status as a popular gathering point despite publicity over the lawsuits. Five BCR visitors accused the hotel of discriminatory practices in a proposed class-action lawsuit filed in May. One of the foremost charges related to the use of orange wristbands to identify registered guests at the hotel. Plaintiffs compared the wristbands to the shackles of slavery, but Adam's Mark officials said they were intended to ensure the safety of those guests by controlling who had access to rooms. The Attorney General's Office joined the suit in December, and the Justice Department filed a second suit, alleging that discriminatory practices existed throughout the 21-hotel chain. The company lost millions of dollars in convention business that was canceled because of the suits. Though it admitted no wrongdoing, the Adam's Mark agreed in March to pay $8 million and make over its corporate policies to settle the discrimination charges. "It almost took this company under," Fred Kummer III said. "We had no other option but to settle." Kummer said Saturday's problems could have been avoided if representatives from the Attorney General's Office - on hand to ensure the hotel stuck to the terms of the settlement - had let hotel managers do their job. "They overruled instructions from us," he said. "They said we'd be held in contempt if we restricted access into the hotel. We had our hands tied. "I've got 18 years of experience in hotels, and I've never experienced anything like this tonight. Nothing compares," said Kummer, still shaking with rage nearly two hours after the crowds had been dispersed. "People who are totally ignorant of the hotel industry should have investigated this event before they tried to dictate how we should do business." Adam's Mark managers may have been overly cautious, said George Sheldon, deputy attorney general for Central Florida. "I think there's a sensitivity on their part to the settlement agreement," said Sheldon, who spent the weekend touring BCR events. Sheldon blamed the incident on a bottleneck at the hotel's elevators caused by management's decision to close the stairwells as a security measure. There was a run on the elevators at the end of a televised NCAA basketball tournament game, and people grew impatient with lengthy delays. "I don't think that a one- or two-hour bottleneck should mar the effort from the overall weekend," Sheldon said. "I was overall extremely impressed with how the Adam's Mark managed the weekend." Terrence Wright, 25, of West Palm Beach saw firsthand the problems that security staffers faced and praised their work. "There were just too many people hanging out, so they had to take control," Wright said. "The officers did their job." Another guest, Melvin Martinez from New York City, complained that security was too tight afterward. "You pay so much money, and they don't let you in the elevator," he said. "You've got to ask permission from the cops to get into your own room." Three Tampa women said the Adam's Mark had redeemed itself in their view. Tracee Whitehurst, who works as a real-estate agent, said the service desk was quick to respond to requests, upgraded their rooms without an extra charge and gave them access to every place that had been blocked before. "With the problems at the Adam's Mark last year, they were definitely more accommodating this year," she said. "They really reclaimed their name." (The Orlando Sentinel, April 3, 2000) AT HOME: Discloses Lawsuit Alleging Violations of Fed Antitrust Laws -------------------------------------------------------------------- In its report to the SEC, AT Home Corp mentions that in October 1999, GTE filed a lawsuit in a U.S. District Court and in November 1999, a class action was filed, each alleging violations of the federal antitrust laws. The Company says although it is too early to predict the outcome of this litigation, it could be forced to pay damages, allow other service providers to utilize its network, otherwise alter the way they do business or incur significant costs in defending these litigations. The Company believes any of these outcomes could harm business. In addition, others could initiate litigation on similar legal theories in the future. AVT CORPORATION: Keller Rohrback Files Securities Complaint ----------------------------------------------------------- On March 30, 2000 Keller Rohrback L.L.P. filed a new class action complaint against AVT Corporation (Nasdaq: AVTC) and certain of its officers and directors on behalf of all persons who purchased shares of AVT common stock between January 20, 2000 and March 17, 2000, inclusive (the "Class Period"). The Complaint alleges that defendants violated federal securities laws by issuing a series of false and misleading statements during the Class Period, concealing the Company's true financial condition in order to prevent the decline in the price of AVT stock and reap profits of over $46 million on insider sales. On March 17, 2000, the Company stunned investors revealing that it would fall desperately short of meeting its forecasted earnings for the first quarter 2000 and for the entire year 2000. This revelation caused AVT stock trading to be halted on Nasdaq and ultimately caused the stock price to plummet to $11.38 per share, a decline of approximately 34% from its Class Period high of $33.25. Contact: Jen Veitengruber of Keller Rohrback L.L.P., 800-776-6044, or investor@kellerrohrback.com CBS: Judge OKs Class of Female Technicians on Sex Discrimination Case --------------------------------------------------------------------- A federal district court in Minnesota issued on April 3 a ruling approving a sex discrimination class action on behalf of all female technicians at five CBS television stations. The class, as approved, contains well over 150 women. In the same order, Judge Donovan Frank rejected all of CBS's arguments that the case should be dismissed on its merits. The lawsuit, filed in 1996, charges CBS with discrimination against female technical employees at five television stations that it owns and operates in New York, Los Angeles, Chicago, Minneapolis, and Green Bay. Plaintiffs allege that CBS denies female technicians, as a class, promotion, training and overtime opportunities that have been given to male technicians, and forces them to work in a sexually hostile work environment that is accepted and condoned by CBS management. Judge Frank approved the class action based on persuasive statistical evidence and testimony from plaintiffs and class members. The statistics showed that women worked far less overtime than men and were stuck in lower paying jobs. The testimony was just as strong. The judge quoted one class member who, when she complained about overtime assignments, was told "you don't have the same family responsibilities" and "a woman couldn't handle the story." Another class member, the judge reported, was told, "I had one of you girls in this position before, and it didn't work out." The station manager told her, "It's a man's world and there is nothing we can do about it." The women are represented by the law firm of Sprenger & Lang, P.L.L.C. One of the firm's attorneys, Susan Stokes, said, "This is a wonderful ruling for these victims of blatant discrimination. Hopefully, CBS will not be adopt the same tactics as the federal government when dealing with similar allegations by female employees against the Voice of America. By fighting meritorious claims to the bitter end and being unwilling to change, the government ended up paying over $500 million." Plaintiffs anticipate that the case will be tried within the next few months. Contact: Sprenger & Lang, Minneapolis Susan Stokes, 612/387-5577 or Sprenger & Lang, Washington DC Michael Lieder, 202/265-8010 or Sprenger & Lang, Minneapolis Larry Schaefer 612/871-8910 or 612/816-5388 FLIR SYSTEMS: Bernstein Liebhard Files Securities Suit in Oregon --------------------------------------------------------------- A securities class action lawsuit was commenced on behalf of purchasers of the common stock of FLIR Systems, Inc.(Nasdaq:FLIR), between February 9, 2000 and March 3, 2000, inclusive, (the "Class Period"), in the United States District Court for the District of Oregon. The complaint charges FLIR and certain of its directors and executive officers with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that the defendants issued materially false and misleading information and projections concerning the Company's business, earnings, growth and prospects. In fact, defendants had no basis to issue the favorable statements because the companies financial records contained numerous "accounting errors." As a result, FLIR's stock price was artificially inflated throughout the Class Period. When these "accounting errors" were disclosed and it was announced that FLIR's CFO had resigned, FLIR's stock price collapsed, declining to as low as $9.00 per share, nearly 50% below the Class Period high of $17-1/2. Contact: Bernstein Liebhard Mike Egan, 212/779-1414 FRUIT OF: Bernstein Liebhard Files Securities Lawsuit in Kentucky ----------------------------------------------------------------- A securities class action lawsuit was commenced on behalf of purchasers of the common stock of Fruit of the Loom, Inc.(Nasdaq: FTL), between September 28, 1998 and November 4, 1999 inclusive, (the "Class Period"), in the United States District Court for the Western District of Kentucky. The complaint charges Fruit and certain of its directors and executive officers with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that the defendants issued materially false and misleading information and projections concerning the Company's business, earnings, growth and prospects. Specifically, the complaint charges that defendants misrepresented demand for the Company's products and concealed the existence of tens of millions of dollars of overvalued inventory, which the Company was ultimately forced to write off. When Fruit's true financial condition was disclosed Fruit's stock price collapsed. Subsequently, Fruit filed for bankruptcy protection in December 1999. Contact: Mark Punzalan, Director of Shareholder Relations, of Bernstein Liebhard & Lifshitz, LLP, 800-217-1522, or 212-779-1414, FTL@bernlieb.com GREEN TREE: Arbitration Clause Not Specifying Cost Payer Unenforceable ---------------------------------------------------------------------- The Supreme Court agreed on April 3 to clarify federal courts' role in enforcing business contracts that say all disputes are to be resolved by arbitration. The justices said they will hear the appeal of an Alabama financial company that wants to force a woman whose mobile home it financed to go through arbitration. A federal appeals court said she can sue instead because the contract's arbitration language did not specify who would have to pay for the arbitration. Larketta Randolph bought a mobile home in 1994 from a company in Opelika, Ala., and financed it through Green Tree Financial Corp.-Alabama. Her lawsuit said the financial company did not properly disclose that it required her to buy insurance to protect it in case Green Tree had to repossess the home. Her class-action lawsuit against Green Tree, filed in 1996, said the company violated the Truth in Lending Act and the Equal Credit Act by requiring arbitration of all claims. A federal judge dismissed the lawsuit, ruling that the purchase contract required the dispute to be submitted to arbitration. But the 11th U.S. Circuit Court of Appeals revived the lawsuit last June, ruling it could hear Randolph's appeal because the judge issued a final dismissal of all her claims. The appeals court said the contract's arbitration clause was not enforceable because it did not specify who would pay the costs. Randolph might be forced to pay substantial costs even if the arbitrator ruled in her favor, the appeals court said. In the appeal, Green Tree's lawyers said a federal law that encourages arbitration of business disputes barred the 11th Circuit court from hearing Randolph's appeal until after the arbitration was carried out. The law does not allow immediate appeals when an arbitration question is combined with other issues, the appeal said. Green Tree's lawyers also argued that the arbitration agreement was valid even though it did not say who would pay the costs. The appeals court should not have assumed ''the worst possible outcome'' but should have required Randolph to prove she would have to pay substantial fees, they said. Randolph's lawyers said the appeals court properly decided the judge's ruling was a final order that could be appealed immediately. They also said that the court correctly said the arbitration clause created an ''unacceptable risk'' she would have to pay large fees. The case is Green Tree Financial Corp.-Alabama vs. Randolph, 99-1235. (AP Online, April 3, 2000) INAMED CORP: Steers Clear of DOJ Breast Implant Suit for Medical Costs ----------------------------------------------------------------------- Inamed Corporation (Nasdaq: IMDC) commented on April 3 on the recent lawsuit filed by the Justice Department against six other former manufacturers of silicone breast implants, which seeks to recover government-paid medical costs. Ilan Reich, Inamed's president and co-CEO, stated: "We are not a defendant in that lawsuit because last year we resolved any potential liability through an amicable agreement with the Justice Department, as part of the overall class action settlement of Inamed's breast implant litigation. As part of Inamed's class-action settlement, Inamed obtained a settlement of all such claims against it, paid the agreed amount in full and obtained a legal release of all such claims. Consequently, Inamed will not be involved in any way in the current litigation." INTERNET E-COUPONS: Privacy May Be an Issue ------------------------------------------- Among Sunday newspaper inserts and Val-Pak mailings, coupon clippers can count another ally in their hunt for bargains: the Internet. Many Web sites now offer coupons online -- everything from 25 books for $25 at Barnesandnoble.com to $250 off a transmission installation from Mr. Mechanic in Southfield. They supply features unmatched offline, including search engines that find coupons for local stores, directory listings by product category and e-mail notices on new offers from dot-coms desperate for more eyeballs. But serious questions remain about what consumers give up to get good deals and whether some deals are all that good. Experts say privacy may be as much an issue with e-coupon Web sites as it is with e-tailers. "There's a significant online privacy problem associated with online coupons that isn't associated with newspaper coupons," said Jason Catlett, president of Junkbusters, a privacy watchdog group. Bargain hunting Web sites come in various shapes and sizes. Most come in the form of bulletin boards with direct links to online offers, printable coupons or special codes that can be used for online purchases. Amazing-bargains.com offers a regularly updated list of links to special discounts and breaks down offers into categories, popular e-tailers and dates offered. It also includes a search engine to peruse the entire database for discounts on specific products and services. Bigbigsavings.com focuses on special offers for music, DVDs, pet supplies and books. It also distributes an e-mail newsletter with updates on the latest offers. BigCoupons.com includes a category on "Free Stuff" available from E-tailers. Val-Pak, the coupon-book distributor, has a Web site (http://www.valpak.com)that generates coupons for local use after entering a zip code. Websites such as Actionpack.com and Freestuff.com focus exclusively on free offers. A Web site run by the Certificate Clearing Corporation (certccc.com) allows consumers to swap coupons issued in class-action lawsuits. Other Web sites focus on savings for the home (Clevermoms.com), visitors to New Orleans (Neworleansdiscount.com), Michigan residents (Saveonsite.com), computer buyers (Rebateplace.com) and shoppers at Hispanic groceries (mmwest.com). Roomsaver.com offers discounts for hotel rooms at tourist meccas nationwide. Yahoo! lists an entire directory of e-coupon Web sites under its "Business and Economy" subject heading. But consumer advocates say many of these Web sites make money through referrals to merchants who pay to be featured. That limits their coupon selections. "What we have are major search engines selling links," said Robert Ellis, director of operations for the Center for the Study of Services. He advises shopping around on multiple sites before taking an offer. "As a consumer, unless you have a lot of time, I'm not sure you come out ahead unless you use three or more (Web sites)," he said, "and be prepared to spend some time at it." Customer abuse of some e-coupon Web sites may threaten the concept. Several sites have reported large losses from bargain bingers: visitors repeatedly using coupons meant for one-time use. Sometimes e-companies won't honor coupons obtained through freebie Web sites. Customers will receive their order, use the coupon or coupon code and still get charged the full price. Others cancel discounts if too many people respond. Security and Privacy Security and privacy are two other issues for online shoppers to consider. Junkbusters' Catlett says the online privacy equivalent of "Good Housekeeping" seals of approval such as the widely displayed "TRUSTe" seal offer little or no protection from unsolicited invasions. Other watchdog groups, including the Federal Trade Commission, the Consumers Union (which runs Consumers Reports) and the Consumer Federation of America, have yet to conduct formal investigations of e-coupon Web sites. The FTC doesn't go into much detail on future operations, but said it will conduct more Internet sting operations in the future after its recent, multinational sweep of more than 1,500 "get-rich-quick" Web sites. It can be difficult for consumers to conduct their own investigations. Contact information for a Web site is generally available through the Web site and Web site registries such as Register.com but some, including Amazing-bargains.com, offer nothing beyond an e-mail address. Alex Shardanovsky, the 22-year old marketing major at New York University who runs Bigbigsavings.com, says the use of software such as "cookies" to track consumer buying history and surfing habits is pervasive among e-coupon Web sites. (The Detroit News, April 3, 2000) JUNK BOND: Appeals Court Cuts Law Firms' Fees More Than 80 Percent ------------------------------------------------------------------ New York The two lead firms who represented plaintiffs burned in the Drexel Burnham Lambert scandal of the 1980s will receive less than 20 percent of the fees they sought following a decision by the 2nd U.S. Circuit Court of Appeals. Milberg Weiss Bershad Hynes & Lerach, along with Abbey Gardy & Squitieri, will receive $ 2.1 million for engineering the settlement of the $ 54 million class action filed in the wake of the junk bond crisis involving Drexel Burnham and junk bond superstar Michael Milken. It is a far cry from the $ 13.5 million the firms sought in Goldberger v. Integrated Resources Inc. The appeals court, in upholding a fee award by Southern District Senior Judge Shirley Wohl Kram, conceded that "this circuit's approach to the alternative methods of calculating fees has evolved in a somewhat circuitous fashion.... We hold that either the lodestar or percentage of the recovery methods may be properly used to calculate fees in common fund cases, and that the district court did not abuse its discretion in choosing the lodestar in this case," said Senior Circuit Judge Joseph M. McLaughlin, writing for the court. "Nor do we find an abuse of discretion in the district court's award of a fee of about 4 percent of the recovery." In 1989, Drexel Burnham pleaded guilty to federal securities fraud and agreed to pay $ 650 million in fines and restitution. Milken also pleaded guilty and was assessed $ 600 million. The pleas came after authorities accused Milken and the firm of stringing together what McLaughlin called a "daisy chain" of high risk bond investors with "proceeds from their own [typically over-financed] junk offerings." The judge summed up by saying, "The whole pyramid fell apart when the market realized that junk debt carried a much higher default rate than had been advertised." Following the settlement against Milken and Drexel Burnham, the law firms made their first fee application in 1992. A second application followed in 1996. In both applications, Kram applied the lodestar method, which is based on the number of hours worked in the case. On appeal, counsel claimed that Kram erred both in refusing to award fees on a percentage of recovery basis and declining to enhance their lodestar with a multiplier, which reflects the degree of risk and the quality of representation, among other things. Reviewing the history of fee calculations in common fund actions, McLaughlin said that the lodestar approach grew in popularity as people came to feel that the percentage approach "increasingly tended to yield too little for the client-class," while giving unjustified windfalls to attorneys. Nonetheless, " ... experience with the lodestar method proved vexing. Our district courts found it created a temptation for lawyers to run up the number of hours for which they could be paid," he said. "But the primary source of dissatisfaction was that it resurrected the ghost of Ebenezer Scrooge, compelling district courts to engage in a gimlet-eyed review of line-item fee audits. "McLaughlin, citing case law showing that district courts have had the discretion to apply either approach, said the 2nd Circuit has been wary of compelling its district courts to engage in the "cumbersome" lodestar method. "That said, we reject counsel's arguments to 'junk' the lodestar altogether," he said. "We choose to follow our own precedents, which clearly establish that the lodestar approach is an accepted but not exclusive methodology in common fund cases." The firms had said that Kram had abused her discretion by assuming she had no authority to award a percentage fee. "We disagree," McLaughlin said. "Counsel's assertion that the district court erroneously refused even to consider using the percentage approach is squarely contradicted by the record." Minimal Risk Stuck with the lodestar calculation, counsel's next argument was that Kram should have applied a multiplier of six, because a 25 percent fee standard was a "benchmark" in the profession.While not "unaware" of that benchmark, McLaughlin said "we are nonetheless disturbed by the essential notion of a benchmark... We agree that many class actions serve a useful purpose, that lawyers who successfully prosecute them deserve reasonable compensation, and that market rates, where available, are the ideal proxy for their compensation." He continued: "The problem is that we cannot know precisely what fees common fund plaintiffs in an efficient market for legal services would agree to, given an understanding of the particular case and the ability to engage in collective arms-length negotiation with counsel." McLaughlin went on to say that "the principal analytical flaw in counsel's argument lies in their assumption that there is a substantial contingency risk in every common fund case." Promising Case But Kram, he said, had found that from the outset, this was a promising case with almost certain prospects of a large recovery, and that enhancing rates "would likely result in [counsel's] overcompensation." McLaughlin also said the lower court found that counsel benefited from the advance work done by federal authorities in investigating Drexel Burnham and Milken, that there was no "groundbreaking issue that loomed significant" in the case, that the likelihood of non-payment was slim, and, finally, that the use of current hourly billing rates compensated counsel for both delay in payment and for the quality of their efforts. "Here," McLaughlin said, "the district court correctly found that this case fell in the low range of the risk continuum." Judges Chester A. Straub and Robert D. Sack joined in the opinion.This story originally appeared in the New York Law Journal. (The Legal Intelligencer, April 3, 2000) KANSAS CITY: Hispanic Employees Allege of Race Discrimination ------------------------------------------------------------- Carlos Salazar, Et Al. V. Kansas City Power & Light Company. On May 28, 1999, an action was filed against KCPL in the United States District Court Western District of Missouri by three current Hispanic employees. The complaint alleges race discrimination on behalf of all existing Hispanic employees and those who tried to obtain employment with KCPL from May 28, 1994 to the present. While the petition requests formation of and certification as a class action, the relief sought is wages and fringe benefits, alleged wage differentials, punitive damages, attorneys fees and costs of the action for the three named plaintiffs, together with an injunction prohibiting KCPL from retaliating. The Company says that due to the vagueness of the complaint, it is not possible to evaluate the materiality of the relief sought by the proposed class yet; however, KCPL believes it will be able to successfully defend the certification of the class. KANSAS CITY: Missouri Suit over Employment Race Discrimination Amended ---------------------------------------------------------------------- Patricia S. Lang, On Behalf Of Herself And All Others Similarly Situated V. Kansas City Power & Light Company. On October 8, 1999, a First Amended Class Action Complaint was filed against KCPL in the United States District Court, Western District of Missouri by Patricia Lang on behalf of herself and all others similarly situated. The plaintiff seeks to bring a claim of race discrimination as a class action on behalf of herself and all other current and former African American employees from May 11, 1994 to the present. The complaint alleges that plaintiff and members of the proposed class are subjected to a hostile and offensive working environment, denied promotional opportunities, compensated less than similarly situated or less qualified Caucasian employees; and are disciplined and/or terminated when they complain of racially discriminatory practices at KCPL. The complaint seeks a money award for alleged lost wages and fringe benefits, alleged wage differentials, as well as punitive damages, attorneys fees and costs of the action together with an injunction prohibiting KCPL from retaliating against anyone participating in the litigation and continuing monitoring of KCPL's compliance with anti-discrimination laws. The Company says that because of the vagueness of the complaint, it also is not possible at this time to evaluate the materiality of the relief sought by the proposed class if certified. MICROSOFT CORP: Analysis of Antitrust Case on Cable News Network ---------------------------------------------------------------- Broadcast on CNN on April 3, 2000 JACK CAFFERTY, CNNfn ANCHOR, BEFORE HOURS: Sitting with me in the studio now is Sanjiv Hingorani, he is a software analyst at Brown Brothers Harriman; and you were on that conference call yesterday. Welcome, by the way; nice to have you with us. SANJIV HINGORANI, BROWN BROTHERS HARRIMAN: Thank you. CAFFERTY: What did the company have to say and what did you come away from the call with in terms of their ability to try to spin their position here? HINGORANI: Well, I don't think there's any spinning of position. The facts are what the are. I think there's some very interesting procedural issues to consider here. The first being the judge is likely to issue his conclusions of law soon, at which point he will then request suggestions for remedies from the Justice Department and the 19 states attorneys general. That could take another six or seven weeks, or maybe even a couple of months, after which he will then give down his verdict of what the remedy should be. At that point in time, Microsoft Microsoft Corporation ; Ticker: MSFT ; URL: will request a stay on whatever remedy is imposed by the judge; he will likely grant that stay, and then immediately an appeal with the Court of Appeals. CAFFERTY: So the timeline is a lengthy one, conceivably here. HINGORANI: Absolutely. Absent a settlement, there is clearly going to be several months, possibly even over a year, before this whole case is decided. CAFFERTY: There are also 28 lawsuits pending in various states around the country, and one analyst suggested that the number of state lawsuits against the company almost takes on the aura of one of the class-action type cases against the tobacco industry. How do those play into the equation vis-...-vis the breaking off of a settlement with the federal government. It seems to me that one is linked to the other in terms of where we might wind up at the end of the day. How do you see that part of it? HINGORANI: Well I think it's very important to realize that until a final decision is issued by the Court of Appeals, any suit that is off a class-action status will find resistance in the courts, from what I know of how these legal issues are taken by the courts. So it will have to be a final ruling by Court of Appeals, before verdicts can be laid down by other courts in other jurisdictions. CAFFERTY: How does some of Microsoft's competitors in the software industry look at this thing? How do you look at their share prices, their future in terms of the situation that Microsoft is in this Monday morning? HINGORANI: Right. At this point in time, there will be probably some psychological shakedown of some of the related software companies, but I think that's going to be psychological, not fundamental. It's very important to realize that despite this trial, having been gone on for about a year now, Microsoft's fundamental business, and the business of the software companies affiliated with Microsoft - both as competitors and partners - has not been affected at all. So if you look at the fundamentals of the business, until a remedy is imposed and implemented, it will not change the way Microsoft or the software industry operates, which is why I think that the current weakness in the stock price, under $100 a share, provides us with a rare buying opportunity. CAFFERTY: And the ultimate resolution, as you suggested in the earlier part of the interview, could be a long ways away, and in fact, may never happen, depending on how things develop? HINGORANI: Absolutely. In fact, the Court of Appeals has, in the past, ruled against Judge Jackson's rulings and overturned his rulings, twice before, in cases related to Microsoft. CAFFERTY: Mr. Hingorani, it's nice to have you with us; thank you very much. HINGORANI: Thank you. CAFFERTY: Sanjiv Hingorani is software analyst with Brown Brothers Harriman. MICROSOFT CORP: Shares Tumble As Ruling on Antitrust Case Anticipated --------------------------------------------------------------------- Microsoft shares plunged Monday, April 3 as a federal judge prepared to issue his ruling in the government's antitrust case following the failure of talks aimed at an out-of-court settlement. In early New York trading, shares of the software giant plunged 14 or 13.7 percent, to 92-1/4. Federal Judge Thomas Penfield Jackson was expected to issue his ruling after the financial markets close in the case, in which the government alleges Microsoft abused its monopoly position to crush competitors. The ruling is widely expected to be unfavorable to Microsoft, although no remedy was expected to be issued immediately. It will however kick off a new phase in the case that could eventually led to a breakup of the software company. However, Microsoft officials said they remain confident of an eventual legal victory in the case. Many analysts reiterated positive recommendations for the software maker's shares. In a statement issued over the weekend, Gates said the company "went the extra mile to resolve this case, but the government would not agree to a fair and reasonable settlement." "Microsoft offered significant concessions ... Ultimately, it became impossible to settle because the Department of Justice and the states were not working together. Between them, they appeared to be demanding either a breakup of our company or other extreme concessions that go far beyond the issues raised in the lawsuit." But attorneys general involved in the case disagreed. "The contention that the difference between the states and DOJ (US Department of Justice) somehow scuttled the talks is absolutely unfounded," Connecticut Attorney General Richard Blumenthal told the Washington Post. "Microsoft simply wouldn't agree to the types of remedies that would satisfy Justice or the states," New York Attorney General Eliot Spitzer told the same paper. In an interview published Monday, Gates told the Post, "We feel very good about the legal case we have as it goes through the additional stages." "We absolutely believe that the judicial system will ultimately rule in our favor," he said in a separate interview with The New York Times. In November, Jackson issued his finding of fact -- his interpretation of the evidence presented at trial -- which said that Microsoft had stifled competition through a variety of means. During the four months since that ruling, Microsoft and the government have tried to negotiate a settlement to the case under the mediation of appellate judge Richard Posner in Chicago. The failure of the talks clears the way for Jackson to deliver his ruling, which unlike his earlier findings will become a part of the legal record that private companies or individuals can use as evidence in their own lawsuits against Microsoft. Microsoft already faces dozens of class action suits, and Jackson's ruling could make it easier for more to follow, creating a hefty legal challenge for the computer giant. But the lengthy appeals process could drag on for years, and the climate could change following the November presidential election, which will lead to new faces at the Justice Department. (Agence France Presse, April 3, 2000) PACIFIC GAS: Case on Contaminated Water Supply in CA Subject of Movie --------------------------------------------------------------------- The Pacific Gas and Electric Company of San Francisco used to think that its worst nightmare was a sassy legal assistant called Erin Brockovich. It was Ms Brockovich, a twice-divorced mother of three with no legal or scientific background, who almost single-handedly discovered that, for more than 30 years, the company had contaminated the water supply of a small Californian desert town in which it owned a natural gas-compressor station. When her tiny Los Angeles law firm brought a class-action suit, the company was eventually forced to pay out a whopping $ 333m - the biggest settlement of its kind in legal history - to the injured parties who had suffered respiratory diseases, kidney and liver disorders, colon cancer and other serious illnesses. But now PG&E faces a public humiliation of an altogether different order. Ms Brockovich's story, which never received much attention in the news media at the time, has been made into a movie. A movie starring Julia Roberts, the shiniest female star in Hollywood, who now commands an eye-catching $ 20m a role. A movie that, since its release two weeks ago, has been the number-one box-office smash across the United States. All of a sudden, a well-kept dirty secret has become widespread public knowledge. Now there is scarcely a teenager in the land who cannot tell you how PG&E dumped chromium 6 into the water in the dusty town of Hinkley, a few miles off the main Los Angeles-to-Las Vegas highway, and then sought to hush up its noxious effects. Erin Brockovich is no longer an abstract name of uncertain ethnic origin. To movie audiences, she is the former beauty queen with a penchant for push-up bras and low-cut tops; one of life's survivors, with a kick-ass attitude and a vocabulary to match; a true fighter for social justice, who will rail against the powerful but also has great wellsprings of compassion for the oppressed. And sensing the great human drama in the story they originally missed, the newspapers and television stations have made up for lost time, falling over themselves to cover the movie, and the scandal, in painstaking detail. Ms Brockovich herself has been profiled everywhere, from The New York Times to People magazine, and last Sunday she even popped up at the celebrity- jammed Oscars party hosted by Vanity Fair. Having already had to contend with the determined resourcefulness of Erin Brockovich the woman, PG&E's new nightmare is Erin Brockovich the movie - and there are already signs that the attendant Hollywood brouhaha has added new momentum to the real-life story. Since the film opened, almost 100 potential new plaintiffs, alerted by the entertainment on offer at their local multiplex, have called the offices of Masry & Vititoe, the law firm for which Ms Brockovich still works. The firm already has a number of follow-up cases in the pipeline. The biggest of them, due to come to court in November, involves around 1,500 people who live near a PG&E plant in Kettleman Hills, in California's Central Valley, who have similar health complaints to the 650 successful plaintiffs from Hinkley. There are also outstanding claims by 150 Hinkley people who failed to come forward the first time around, and by 20 others from Topock on the California -Arizona border, where there is a risk that the contamination could seep into the Colorado river, one of the most crucial freshwater sources for the whole of the American South -west. "We won't feel resolved - morally, ethically, or legally - until we have found everyone we were supposed to," Ms Brockovich said recently. And that's a task the media will make a whole lot easier. PG&E, which runs pipelines from the Texas Panhandle up to San Francisco, and serves 4.5 million homes and businesses in northern California, is insisting on a jury trial for the Kettleman Hills class-action suit, presumably because the appeals process will make it easier to defer the effects of a negative judgement for several years. But already there are doubts about how easy it will be to find 12 jurors who have not been influenced by the film. (The plaintiffs would prefer, and might still get, binding arbitration by a judge, which means instant settlement with no possibility for appeal.) The cable channel Court TV, meanwhile, has requested permission to broadcast the proceedings, which would only expose the company to further negative publicity and the possibility of further claims from new plaintiffs. PG&E has been concerned about the movie for some time. According to company sources tapped by the Sacramento Bee newspaper, the top brass hired a Los Angeles public-relations firm to report on the script and the way it was being shot. "It was bad enough that a film was being made," a former company official told the Bee. "But the fact that Julia Roberts was in it really heightened anxiety. Everybody figured that Hollywood would slam the hell out of the company." A week before the film was released, PG&E's chief executive Bob Glynn put out an internal memo that has since formed the basis of all public statements by the company. "PG&E did not respond to the ground-water problem as openly, quickly or thoroughly as it should have," conceded the memo, which has since been made public. "It is clear, in retrospect, that our company should have handled some things differently at that time." However, Mr Glynn went on, the poster-line claim that the film is " 'based on a true story' doesn't mean that everything in the story is true. The movie is an entertainment vehicle." (The Independent (London), April 1, 2000) REXALL SUNDOWN: Securities Complaint in Florida Dismissed --------------------------------------------------------- Rexall Sundown, Inc. (Nasdaq: RXSD) announced on April 3 that the United States District Court for the Southern District of Florida granted Rexall Sundown's motion to dismiss the consolidated class action complaint filed against the Company and certain of its officers and directors alleging violations of the Federal securities laws. In entering its final order of dismissal on March 29, 2000, which the plaintiffs can appeal, the court ruled that the plaintiffs had failed to state a claim. Rexall Sundown, Inc. develops, manufactures, markets and sells vitamins, herbals, nutritional supplements and other consumer health products. THE STEPHEN: Announces Final Dismissal of Securities Suit in Florida -------------------------------------------------------------------- The Stephan Co. (Amex: TSC) on April 3 announces that on March 30, 2000, the United States District Court for the Southern District of Florida entered a Final Order of Dismissal granting the Company's motion to dismiss the Consolidated Amended Class Action Complaint for failure to state a cause of action. The class action litigation had been filed in April of 1999 against the Company and certain of its officers and a director alleging certain securities violations in connection with its restatement of interim financial results for the second and third quarters of 1998. TOBACCO LITIGATION: Closing Arguments Continue; Award in Recent Case -------------------------------------------------------------------- Closing arguments by the defense continued Monday, April 3 in the penalty phase of the first class-action suit to go to trial against the tobacco industry. Once the lawyers for the tobacco industry finish their arguments, Stanley and Susan Rosenblatt, attorneys for the three primary plaintiffs, will offer a rebuttal. Circuit Judge Robert P. Kay will then charge the jury to begin deliberations, reports United Press International. The jury ruled in July that the industry has tried to mislead the public about the dangers of smoking. The Rosenblatts said the plaintiffs decided to smoke because the tobacco industry withheld information about the dangers of cigarettes. Industry lawyers, on the other hand, argued that the plaintiffs were fully aware of the dangers but smoked anyway. Stanley Rosenblatt said in his closing arguments that his clients should get a total of $10 million to $14 million. After the jury decides on awards for the three primary plaintiffs, it will decide on awards for the 500,000 parties to the class-action suit. Estimates of the potential total award run up to $300 million, though an award of that size is unlikely, since Florida law forbids awards that are big enough to send a defendant into bankruptcy, the report says. The three plaintiffs are Mary Farnan, a nurse who has lung cancer that spread to her brain, Frank Amodeo, an Orlando clock-maker who has throat cancer and has been fed intravenously since 1987 and the estate of Angie Della Vecchia of New Port Richey, who died of lung and brain cancer last year, after the trial began. The defendants are Phillip Morris Co., R.J. Reynolds Tobacco, Brown & Williamson Tobacco, Lorillard Tobacco, the Liggett Group and two related organizations. (United Press International, April 3, 2000) Meanwhile, a report in Scripps Howard News Service draws attention to an award by a San Francisco jury last Monday March 27 to a woman dying of lung and brain cancer. The jury ordered two tobacco companies to pay her $20 million in punitive damages on top of $1.7 million to compensate for economic losses. The report ssys that when Leslie Whiteley started smoking in 1972, every pack of cigarettes she opened carried a warning from the surgeon general that smoking caused deadly disease. The U.S. Supreme Court had previously held that smokers who had taken up the habit after the warning labels couldn't win damages from tobacco companies on the grounds that they didn't know cigarettes were dangerous. On top of everything else, Whiteley, who's dying of lung and brain cancer, was a less than ideal defendant, having admitted a history of marijuana and drug use, the report remarks. The report also points out that it was the first court victory for a plaintiff who had taken up smoking after Congress placed warning labels on tobacco products in 1965. It says that suddenly, the ocean of litigation against the tobacco industry looks to have no bottom. The Whiteley case, the report says, is notable for what happens when a jury is offered a case of competing tobacco irresponsibilities - a child who ignored the plain risks of smoking (Whiteley was 13 when she began) against an industry that was aware its products were both addictive and dangerous but kept trying to lure young smokers like her. In the weighing, the San Francisco jury, presented with the long documentary evidence of the industry's misconduct uncovered recently from its own files, found the greater irresponsibility belonged to the adults who acted recklessly in the pursuit of profit, not the 13-year-old who acted stupidly. Other juries might have decided differently, and some have. But it is hard to dismiss the San Francisco jury as an aberration, the product of "crunchy granola land," as one industry analyst put it. Until Congress puts in place a regulatory system for tobacco that reduces the number of young people hooked on smoking and the future damage to public health, the roulette of the civil justice system will continue to deal these blows to the tobacco industry. (Scripps Howard News Service, April 3, 2000) VARSITYBOOKS COM: Columbia Suit Alleges False Internet Ad. on Discounts ----------------------------------------------------------------------- On October 29, 1999, the National Association of College Stores, or N.A.C.S., sued us in the United States District Court for the District of Columbia. In their complaint, N.A.C.S. alleged that Varsitybooks Com Inc. use false and misleading advertisements in its efforts to sell textbooks. Specifically, the complaint alleges that the Company falsely advertise discounts of 40% on textbooks on our Web site. The complaint also alleges that there is no suggested retail price for textbooks from which to calculate discounts. N.A.C.S. claims that, in making the alleged false and misleading statements, the Company is implying that N.A.C.S. member stores over charge students for their textbooks. The complaint requests that the Company be prevented from claiming in any advertising or promotional material, packaging or the like, or representing in any way, that it offers discounts or percentages off of textbooks, unless it clearly and prominently identifies the true basis for the claimed discount, the source of the comparative price it uses to determine the discounts it offers and the true percentage of textbooks offered at the stated discounted price. In addition, N.A.C.S. seeks to have Varsitybooks retract all prior claims through prominent statements on our Web site. The complaint does not seek monetary damages, other than attorneys' fees. The Company decries merit of these claims. VITAMIN PRICE-FIXING: Bayer Sues Makers after Opting out of Settlement ---------------------------------------------------------------------- Bayer Corp. sued several large vitamin makers for price fixing, becoming the latest of several large companies to walk away from a settlement of this issue and file its own suit. Bayer, the U.S. arm of Germany's Bayer AG, filed suit in U.S. District Court for the Southern District of New York against Swiss drug company Roche Holding Ltd.; German chemicals maker BASF AG; Rhone-Poulenc SA, a French pharmaceuticals and chemicals company; German vitamin concern Merck KgaA; and Japanese vitamin makers Takeda Chemical Industries Ltd. and Eisai Co. The filing alleges pharmaceuticals concern Bayer overpaid for vitamins because the manufacturers manipulated wholesale prices and seeks unspecified damages. With this suit, Bayer is opting out of a settlement reached in November, under which the vitamin makers agreed to pay $1.17 billion to settle a class- action lawsuit over the long-running price-fixing plot. But, the size of that award is shrinking as plaintiff companies file their own suits. Quaker Oats Co. and Tyson Foods Inc. already have opted out. The District Court of the District of Columbia has given final approval to the November settlement. The settlement has dropped to $242 million because companies representing 75% of the vitamins purchased have opted to file individual suits, like Bayer. A spokesman for Roche's U.S. affiliate said, "we regret the past practices that led to the situation," noting that the company has taken steps to "make sure this doesn't happen again." (The Wall Street Journal, March 29, 2000) TOBACCO LITIGATION: RI Considers How to Spend Settlement Money -------------------------------------------------------------- PROVIDENCE, R.I. (AP), March 29, 2000 - Tobacco company whistleblower Jeffrey Wigand, whose story inspired the movie "The Insider," testified before a Senate panel considering how Rhode Island should spend its share of the national tobacco settlement. "This is an issue about children. The industry survived only through its ability to addict, dupe and manipulate, in this country, 3,000 kids a day," Wigand said. "It targets young girls by making them think that if they have a cigarette, they'll stay slim rather than having a sweet." Wigand, played by Oscar-nominated Russell Crowe in "The Insider," helped push the industry to a settlement of a class-action lawsuit brought by the 50 states. In 1995, he went to the CBS television show "60 Minutes" with claims of perjury and other wrongdoing by the industry. His story became the subject of the hit 1999 movie which also starred Al Pacino. Over the next 25 years, Rhode Island expects to receive about $1.45 billion from the estimated $206 billion national settlement, which covered 46 states. The four remaining states settled separately for an additional $40 billion. Wigand urged Rhode Island to spend more money on anti-tobacco programs, pointing to more successful efforts in Massachusetts, Florida and California. "The settlement dollars that came into the state are a direct result of many, many people paying with their lives for many, many years," Wigand said. "If you think what Philip Morris is doing today is going to be taking on a new responsibility, I challenge you to look at their ads that target battered women and ask, are they really trying to help battered women, or are they now trying to find a new way of targeting an exposed, at-risk group?" Rhode Island remains undecided on how to spend its tobacco settlement money. Wigand testified in favor of Lt. Gov. Charles Fogarty's bill, which proposes using at least half of Rhode Island's share of the tobacco settlement for health care and a smaller portion for antismoking programs. Rhode Island is spending only about $1 million of settlement money this year on limiting smoking among youths. "You have an industry that's spending 10 times that to get people to smoke in your state everyday," Wigand told members of the Health, Education and Welfare Committee. A spokeswoman for Gov. Lincoln Almond said any more money for anti-tobacco efforts would require him to shuffle around the budget. "If more money is going to be put toward tobacco-related efforts, than more money has to be taken away from another area. In the lieutenant governor's bill, he doesn't state how he would redesign the budget," said spokeswoman Lisa Pelosi. "We have to submit a balanced budget." Fogarty's bill was introduced earlier this year by Sen. Thomas Izzo. There is a similar bill in the House. ********* 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, Managing Editor. 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 written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *