/raid1/www/Hosts/bankrupt/CAR_Public/000419.MBX
C L A S S A C T I O N R E P O R T E R
Wednesday, April 19, 2000, Vol. 2, No. 77
Headlines
BREAST IMPLANT: Argument over Ch 11 Ruling on Dow Corining on April 12
BREAST IMPLANT: Corning Inc. Reports on Implant Tort Lawsuits
CINAR CORPORATION: Canadian Mounted Police Reveal Details of Tax Netted
COCA-COLA: 45 Join 'Bus Ride for Justice' for Black Employees
CORNING INC: Stockholders Allege of Misrepresentation Re Breast Implant
GIACCHETTO: Who Is Liable for Investors' Loss in Check Scams?
HOLOCAUST VICTIMS: 'Economic Strangulation' in France Put at $1.2 Bil
HOLOCAUST VICTIMS: German Insurers Pledge 500 Million Marks to Fund
LAFARGE CANADA: Homeowners Handed Cash after Nightmares of Bad Cement
PACIFIC GAS: Gets Zapped in Boston; Environmentalists Sue for Clean-up
SAFETY-KLEEN: Keller Rohrback Announces Subpoena by Federal Grand Jury
SCHEIN PHARMACEUTICAL: Faces FL Qui Tam Action under False Claims Act
SCHEIN PHARMACEUTICAL: Settles Securities Lawsuit in New Jersey
SHELDAHL INC: Resolves Certain Claims over Proposed Deal with Molex
SOLECTRON CORP: Discloses Securities Suits against Smart Modular in CA
SPANLINK COMMUNICATIONS: Rabin & Peckel Files Securities Lawsuit in MN
TERAYON COMMUNICATION: Seeger Weiss Files Securities Lawsuit in CA
TERAYON COMMUNICATIONS: Bernstein Liebhard Files Securities Suit in CA
TERAYON COMMUNICATIONS: Stull, Stull Files Securities Lawsuit
TOBACCO LITIGATION: NC Farmers, Quota Holders Sign onto Lawsuit
TOBACCO LITIGATION: Philip Morris Issues Statement on CA Class Denial
U.S. FILTER: Schiffrin & Barroway Files Securities Lawsuit in CA
UNITED COMPANIES: Keller Rohrback Tells of Securities Suit Lead Counsel
VISTA EYECARE: Sued in CA in ' 99 over OT; Presently under Ch 11
VISX, INC: Ruling That Torpedoed Stock Turned Congress Sights on ITC
*********
BREAST IMPLANT: Argument over Ch 11 Ruling on Dow Corining on April 12
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Corning and The Dow Chemical Company each own 50% of the common stock of
Dow Corning Corporation. On May 15, 1995, Dow Corning sought protection
under the reorganization provisions of Chapter 11 of the United States
Bankruptcy Code. The bankruptcy proceeding is pending in the United
States Bankruptcy Court for the Eastern District of Michigan, Northern
Division (Bay City, Michigan). The effect of the bankruptcy is to stay
the prosecution against Dow Corning of approximately 19,000
breast-implant product liability lawsuits, including 45 class actions.
In the period from December 1996 through February 1998, Dow Corning
filed a plan of reorganization and two amended plans, each of which was
opposed by the Tort Claimants committee and other creditor
representatives. In 1998, Dow Corning and the Tort Claimants Committee
engaged in extended negotiations and reached certain compromises. On
November 8, 1998, Dow Corning and the Tort Claimants Committee jointly
filed a revised Plan of Reorganization ("Joint Plan"). The Joint Plan
and related disclosure materials were mailed to claimants for their
approval.
Following a favorable vote from all but four classes of creditors, a
hearing to confirm the Joint Plan was held in late June and into July
1999.
On November 30, 1999, the Bankruptcy Court entered an order confirming
the Joint Plan and indicated that certain written opinions would follow.
On December 21, 1999, the Bankruptcy Court issued an opinion that
approved the principal elements of the Joint Plan with respect to tort
claimants, but construed the Joint Plan as providing releases for the
third parties (including Corning and Dow Chemical as shareholders) only
with respect to tort claimants who voted in favor of the Joint Plan.
Opponents of the Joint Plan have filed appeals on a variety of grounds
to the United States District Court for the Eastern District of
Michigan. Dow Corning and the Committee of Tort Claimants have filed a
notice of appeal (as well as motions to vacate and for related relief)
seeking review of the ruling limiting the scope of the shareholder
releases. Corning and Dow Chemical filed separate notices of appeal on
this issue and each joined in the motions by the Proponents of the Joint
Plan. Some parties, including the United States of America and the
Nevada tort claimants, have filed motions asking the District Court to
dismiss the appeals of Dow Corning, Dow Chemical and Corning, and the
Tort Claimants Committee, as untimely as not taken within 10 days of the
November 30 order of confirmation.
Corning believes these dismissal motions are not likely to be granted
and that the issues raised by the appeals are in any event before the
District Court by way of the proponents' motion to vacate the December
21, 1999 opinion. These appeals and motions are set for argument before
the District Court on April 12, 2000.
The Proponents contend that the Bankruptcy Court misconstrued the
release provisions in the Joint Plan and that the Plan cannot be
confirmed without the shareholder releases. The timing and eventual
outcome of these proceedings, including any subsequent appeals, remain
uncertain. If, after all appeals are exhausted, the Joint Plan is upheld
but the third party releases are held to be effective only with respect
to tort claimants who voted in favor of the Joint Plan, Corning would
rely on its summary judgment victories, and its pending motion for
summary judgment awaiting decision by the Michigan Federal Court, to
defeat the claims of those tort claimants who did not vote in favor of
the Joint Plan.
Infra, Implant Tort Lawsuits
Under the terms of the Joint Plan, Dow Corning would be required to
establish a Settlement Trust and a Litigation Facility to provide means
for tort claimants to settle or litigate their claims. Dow Corning would
have the obligation to fund the Trust and the Facility, over a period of
up to 16 years, in an amount up to approximately $3.2 billion (nominal
value), subject to the limitations, terms and in conditions stated in
the Joint Plan. Dow Corning proposes to provide the required funding
over the 16 year period through a combination of cash, proceeds from
insurance, and cash flow from operations. Corning and Dow Chemical have
each agreed to provide a credit facility to Dow Corning of up to $150
million ($300 million in the aggregate), subject to the terms and
conditions stated in the Joint Plan. The Joint Plan also provides for
Dow Corning to make full payment, through cash and the issuance of
senior notes, to its commercial creditors.
BREAST IMPLANT: Corning Inc. Reports on Implant Tort Lawsuits
-------------------------------------------------------------
In the period from 1991 through December 1999, Corning and Dow Chemical,
the shareholders of Dow Corning Corporation, were named in a number of
state and federal tort lawsuits alleging injuries arising from Dow
Corning's implant products. The claims against the shareholders allege a
variety of direct or indirect theories of liability.
From 1991 through December 1999, Corning has been named in approximately
11,470 state and federal tort lawsuits, some of which were filed as
class actions or on behalf of multiple claimants.
In 1992, the federal breast implant cases were coordinated for pretrial
purposes in the United States District Court, Northern District of
Alabama (Judge Sam C. Pointer, Jr.). In 1993, Corning obtained an
interlocutory order of summary judgment, which was made final in April
1995, thereby dismissing Corning from over 4,000 federal court cases. On
March 12, 1996, the U.S. Court of Appeals for the Eleventh Circuit
dismissed the plaintiffs' appeal from that judgment. The District Court
thereafter entered orders in May and June 1997 directing that Corning be
dismissed from each case pending in or later transferred to the Northern
District of Alabama after Dow Corning filed for bankruptcy protection.
In state court litigation, Corning was awarded summary judgment in
California, Connecticut, Illinois, Indiana, Michigan, Mississippi, New
Jersey, New York, Pennsylvania, Tennessee, and Dallas, Harris and Travis
Counties in Texas, thereby dismissing approximately 7,000 state cases.
On July 30, 1997, the judgment in California became final when the
Supreme Court of California dismissed further review as to Corning. In
Louisiana, Corning was awarded summary judgment dismissing all claims by
plaintiffs and a cross-claim by Dow Chemical on February 21, 1997. On
February 11, 1998, the intermediate appeals court in Louisiana vacated
this judgment as premature.
Corning has filed notices transferring the Louisiana cases to the United
States District Court for the Eastern District of Michigan, Southern
District (the "Michigan Federal Court") to which substantially all
breast implant cases were transferred in 1997. In the Michigan Federal
Court, Corning is named as a defendant in approximately 70 pending cases
(including some cases with multiple claimants), in addition to the
transferred Louisiana cases, but Corning is not named as a defendant in
the Master Complaint, which contains claims against Dow Chemical only.
Corning has moved for summary judgment in the Michigan Federal Court to
dismiss these remaining cases by plaintiffs as well as the third party
complaint and all cross-claims by Dow Chemical. The Michigan Federal
Court heard Corning's motion for summary judgment on February 27, 1998,
but has not yet ruled. Based upon the information developed to date and
recognizing that the outcome of complex litigation is uncertain,
management believes that the risk of a materially adverse result in the
implant litigation against Corning is remote.
CINAR CORPORATION: Canadian Mounted Police Reveal Details of Tax Netted
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Canadian children's TV producer Cinar received at least C$ 7.8 million
($ 5.4 million) in Quebec provincial tax credits for shows that were
written by American scriptwriters and did not qualify as Canadian
content, according to documents filed in a Quebec court by the Royal
Canadian Mounted Police.
At the request of Heritage minister Sheila Copps, the Mounties have been
investigating the Montreal-based TV company since last October.
The court documents are the first details unveiled so far by the Canuck
police regarding the lengthy Cinar probe. The Mounties allege the
company put Canadian names on scripts actually written by U.S. writers
in order to fulfill the Canadian content requirements of the tax-credit
program.
The RCMP has yet to reveal publicly how much money Cinar netted from the
federal tax-credit program in the alleged scheme, as federal authorities
have refused to cooperate with the police, citing tax confidentiality
rules.
According to the RCMP documents, several top Cinar execs, including
co-CEO Ronald Weinberg, asked former Cinar employee Thomas Lapierre to
create subcontracts that would be used to pay U.S. scriptwriters.
At the same, Lapierre's name appeared on the official credits of the
shows. The series that carried Canadian names on the credits but were
really penned by Americans included "Are You Afraid of the Dark," "Chris
Cross," "The Busy World of Richard Scarry" and "The Country Mouse and
the City Mouse Adventures."
Lapierre told the Mounties that Weinberg and other Cinar execs told him
to draw up subcontracts for American writers Don Rifkin and Gary Cohen
for episodes of the series "Chris Cross."
Weinberg also asked Lapierre to set up a subcontract with American
writer David Ehrman for 12 episodes of the series "Richard Scarry." In
these cases, the U.S. scribes were not included in the documents filed
with the Canadian funders, according to the RCMP.
Cinar execs had no comment on the allegations, and a spokesman said the
company has yet to be contacted by the police.
At the same time, speculation is increasing that Cinar founders Weinberg
and Micheline Charest --- who were forced out of their positions last
month but are still the majority shareholders --- are in talks to sell
all or parts of the company.
Reps from both CanWest Global and Nelvana have said they are interested
in acquiring some of Cinar's assets, but the pending class-action
lawsuits and other legal question marks remain a major hurdle to any
potential deal.
A Cinar spokesman said new management has been brought in to fix the
company, not sell it. (Daily Variety, April 18, 2000)
COCA-COLA: 45 Join 'Bus Ride for Justice' for Black Employees
-------------------------------------------------------------
On a "bus ride for justice" that is said to have evoked powerful civil
rights symbols, about 45 former and current employees of Coca-Cola Co.
traveled to Washington for a noon rally on April 18 at the Capitol to
publicize what they allege is the company's discrimination against black
employees.
According to the Washington Post, the bus ride through the South
coincides with settlement negotiations that began on April 17 in Atlanta
in a federal lawsuit filed by eight current and former employees of the
company. They accuse Coke of denying blacks fair pay, promotions and
raises.
The company, which denies the allegations, has fought efforts to turn
the case into a class-action suit involving 2,000 current and former
employees.
"The real story is that there's discrimination inside Coca-Cola against
blacks," said Larry Jones, leader of the protest and a former Coke
benefits manager who was laid off in February. "It's more than just a
few disgruntled employees. There's a cancer in corporate America that is
killing black employees."
The suit is just one of Coke's recent troubles, the Washington Post
says. Jones was among thousands laid off in a surprise plan to trim 18
percent of the work force. The layoff depressed Coke share prices while
the company was still struggling to restore sales--and image--after a
European contamination scare last summer.
The suit alleges that black employees at Coca-Cola were paid on average
$ 27,000 a year less than white employees, said Cyrus Mehri, lead
counsel for the plaintiffs.
"The evidence shows details of a disturbing glass ceiling that begins at
first-line managers at Coke and even more disturbing glass walls where
the few African Americans that make it to the higher echelons of the
company are channeled away from the power centers," said Mehri, a
Washington lawyer who represented plaintiffs in a racial discrimination
suit against Texaco Inc. in 1996. The oil company was ordered to pay a
record $ 176 million.
"It's so frustrating being black at Coca-Cola," said Kenneth Phillips, a
former employee on the protest bus ride. "You come in enthusiastic and
with a lot of energy, only to find once you're in the company that
you're underpaid, you're not promoted and you're overlooked in a lot of
areas." Phillips, an administrator at the Atlanta headquarters, was also
laid off in February.
Coke, the world's largest maker of soft drinks, denies any racial bias.
Spokesman Ben Deutsch said he is barred from talking about the mediation
efforts and also declined comment on the protest bus. But he said the
company is committed to "an expeditious and equitable resolution of the
lawsuit," implying that it wants to avoid going to court. He said new
chairman and chief executive Doug Daft has tied his bonus this year to
meeting diversity goals.
The multi-city protest bus ride, aimed at raising awareness of both the
complaints against Coke and racial discrimination at other companies,
began in Atlanta. It stopped in Greensboro, N.C., where a rally was held
near the historic Woolworth's store where four black college students
demanded service at a lunch counter four decades ago, sparking the 1960s
sit-in movement.
The bus ride will end April 19 at Coca-Cola's annual shareholders
meeting in Wilmington, Del. Demonstrators, most of whom are shareholders
through their 401(k) plans, are expected to speak at the meeting,
company officials said. (The Washington Post, April 18, 2000)
CORNING INC: Stockholders Allege of Misrepresentation Re Breast Implant
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A federal securities class action lawsuit was filed in 1992 against
Corning and certain individual defendants by a class of purchasers of
Corning stock who allege misrepresentations and omissions of material
facts relative to the silicone gel breast implant business conducted by
Dow Corning. This action is pending in the United States District Court
for the Southern District of New York. The class consists of those
purchasers of Corning stock in the period from June 14, 1989 to January
13, 1992 who allegedly purchased at inflated prices due to the
non-disclosure or concealment of material information and were damaged
when Corning's stock price declined in January 1992 after the Food and
Drug Administration requested a moratorium on Dow Corning's sale of
silicone gel implants. No amount of damages is specified in the
complaint.
In 1997 the Court dismissed the individual defendants from the case. In
December 1998, Corning filed a motion for summary judgment requesting
that all claims against it be dismissed. Plaintiffs requested the
opportunity to take depositions before responding to the motion for
summary judgment. The Court permitted limited additional discovery of
certain Dow Corning, Corning and Dow Chemical officers and directors.
These depositions were completed in the second quarter of 1999. On
September 23, 1999, the Court granted in part the request by plaintiffs
for certain additional documentary discovery. The discovery process is
continuing and the Court has set no schedule to address the pending
summary judgment motion. Corning intends to continue to defend this
action vigorously. Based upon the information developed to date and
recognizing that the outcome of litigation is uncertain, management
believes that the possibility of a materially adverse verdict is remote.
GIACCHETTO: Who Is Liable for Investors' Loss in Check Scams?
-------------------------------------------------------------
Unlike those of his celebrity clients, Dana Giacchetto's autograph was
worthless . . . except, apparently, when it was on the back of a check
made out to one of his clients. The money manager to the stars allegedly
cashed 58 checks totaling $ 11 million that were made out to celebrity
investors such as Matt Damon, Ben Stiller and the rock group Phish. To
Giacchetto's investors, the shock of his brazenness is matched only by
the astonishment that nobody ever raised an eyebrow.
"If I misspelled my name on a check, my bank would bounce it," says
David Comarow, a lawyer who is representing two Giacchetto investors,
artists Robert Ginder and Cara Wood Ginder. Cara is Comarow's
stepdaughter. Apparently, Comarow doesn't bank at Boston-based U.S.
Trust, where a critical breakdown in normal banking protocol seems to
have taken place in the Giacchetto case. Cassandra Group, Giacchetto's
company, had an account there and the bank cashed his clients' checks
for him, no questions asked.
Two weeks after Giacchetto was charged with stealing more than $ 6
million from his clients, an internal bank investigation as well as
Securities and Exchange Commission and federal criminal investigations,
are searching for answers. Was it incompetence at following normal
banking procedures? Did Giacchetto's stature as a money manager cause
the bankers to look the other way? Or did he have an operative inside
the bank? How Giacchetto managed these transactions will go a long way
toward identifying who will be left holding the bag for Giacchetto's
alleged scams, who will be liable for money lost by investors.
Already, lawyers are organizing investors for potential lawsuits, with
Giacchetto's banking relationships at the heart of their efforts.
"You've got to follow the bouncing ball, which means you have to follow
the banking transactions," said Howard Meyers, a former SEC lawyer in
New York who is lining up Giacchetto investors for a possible
class-action lawsuit.
Court records suggest that Giacchetto, 37, who could face up to 20 years
in prison on three federal criminal counts, never even had to deal with
the kind of routine banking procedures that are supposed to prevent such
abuses. "Should this have happened? Absolutely not. He did not have, and
should not have had, the ability to withdraw money for the benefit of
Dana Giacchetto," said Steven Cohen, a court-appointed receiver who now
oversees the assets of Giacchetto's operation.
Authorities still do not know whether to attribute Giacchetto's success
at pulling off the alleged scam to the same charm that enabled him to
cozy up to Hollywood stars such as Leonardo DiCaprio, Cameron Diaz and
major entertainment figures such as Michael Ovitz. Or whether it was the
kind of influence that came as a manager of some $ 100 million in funds
for the rich and famous. And there's that question of whether he might
have had an arrangement of some kind with a bank insider.
"What happened is at least in part the result of a system that didn't
have the usual checks and balances. Whether it was designed to be that
way intentionally, or happened inadvertently, isn't clear to me," Cohen
said.
Keeping Tabs on Clients
According to court papers and tape-recorded phone messages on file with
the SEC, Giacchetto over a period of more than two years would call up
Chase Manhattan Bank's discount brokerage unit, Brown & Co., where his
client investment accounts were held, often fishing around to find out
what balances were available. He was familiar to Brown's employees. On
one tape, a Brown employee tells another that Giacchetto is "a money
manager . . . a pretty big account."
On at least 58 occasions, he allegedly ordered checks without the
permission of his clients and had them delivered to his SoHo loft office
via Federal Express. This despite promises in promotional literature
given to clients that, "for maximum safety," he did not take possession
of clients' money, which "assures the client security of his or her
account."
Chase would not comment, but sources there have insisted that the
brokerage followed "procedures." People close to the case suggest that
Brown will argue that it also was duped, and that it did nothing wrong
because it wrote the checks to the clients, not to Giacchetto. Brown
also is expected to argue that it was following the instructions of an
authorized representative in Giacchetto, and had no way of knowing
Giacchetto would be the one cashing the checks.
Once in hand, records show, Giacchetto deposited the checks into the
accounts of his Cassandra Group at U.S. Trust. Authorities allege that
he used the money to fund his lifestyle and to keep his elaborate
juggling act from unraveling.
Even though the checks were made out to clients, many of them famous,
Giacchetto endorsed them in his own name. Although at least $ 6 million
is unaccounted for, authorities allege he misused some $ 20 million in
unauthorized transactions by shifting the money in and out of client
accounts to reimburse clients he had taken money from earlier.
Wealthy people, including some movie stars, who are too busy or
unsophisticated financially to handle their own money, often give
business managers and advisors wide discretion over their funds,
allowing them to cash checks, pay bills and make investments. The key
difference is that the money is supposed to be deposited in a client's
account, not find its way into an account of someone who oversees the
money, as it allegedly did with Giacchetto.
While U.S. Trust was the bank that allowed Giacchetto to cash the
checks, another institution, Citizens Bank in Boston, may ultimately be
on the hook. Citizens bought Boston's U.S. Trust three months ago, after
the majority of Giacchetto's questionable transactions took place and
before federal authorities pieced them together.
A spokeswoman for Citizens would say only that the bank is investigating
the relationship with Giacchetto. Giacchetto's lawyer, Andrew Levander,
has declined to comment on the case.
Banking lawyer Gene R. Eldering, a partner at Manatt, Phelps & Phillips
and former assistant general counsel at First Interstate Bank, says that
banks should be able to quickly spot such abuses. "When they see checks
payable to a third part in the hands of a fiduciary going into the
fiduciary's own account, a red flag goes up," said Eldering, who is not
involved in the Giacchetto case.
"Banks take it on the chin when they allow it to happen. Ultimately,
assuming a bad guy does have the funds, the bank that took the check is
responsible for it." In this case, that would be U.S. Trust of Boston,
or now Citizens Bank in Boston. (Los Angeles Times, April 18, 2000)
HOLOCAUST VICTIMS: 'Economic Strangulation' in France Put at $1.2 Bil
---------------------------------------------------------------------
An official French commission on April 17 put a price tag on the
ruthless and highly organized campaign of looting and expropriation that
French and foreign-born Jews fell victim to in France during World War
II--the contemporary equivalent of more than $ 1.2 billion.
"Two things struck us in particular. One was the scale of the
despoilment, which was much greater than we originally thought," said
commission member Claire Andrieu, a Paris-based historian. "The other
was the scale of the restitution after the liberation. The Republic
really did do its duty."
The government panel's 3,000-page report, which was handed to Prime
Minister Lionel Jospin during the day, marked another milestone in
France's painful coming to terms with its checkered wartime history.
Until recently, the official version was that the average Frenchman and
woman had been, at the very least, supporters of the Resistance.
When Jacques Chirac was elected president in 1995, he broke a
long-standing taboo by accusing the Vichy regime of Marshal Henri
Philippe Petain, and the Frenchmen and women who served it, of having
actively collaborated in the Nazis' war against the Jews.
For Henri Hajdenberg, president of the Council of French Jewish
Institutions, Monday's long-awaited report--the work of historians,
leaders of the French Jewish community and prominent public
figures--marked the "final phase" in France's facing up to the most
shameful episode in its modern history.
"For the first time, they the nine-member commission analyze how much
the French state under Petain was implicated in the economic
strangulation of Jews, which turned them into easy prey to be arrested
and deported," Hajdenberg said.
The World Jewish Congress called the report "an important step" in
French moral accounting for official conduct during the war, but
Executive Director Elan Steinberg said he would reserve judgment until
he could see the complete text.
Last year, the New York-based WJC, which once accused the French
commission of engaging in "juvenile statistics work," charged France's
banks and government with hiding billions of dollars of stolen Jewish
assets. The WJC threatened the same kind of boycott it had brandished
against Swiss and German banks operating in the United States.
In a transatlantic clash of cultures, French Jewish leaders said they
preferred to work with the government-created commission, rather than
engage in public confrontation or in U.S.-style class-action lawsuits.
But some commission members said a suit against five French banks,
brought in a New York court, might have been an effective lever that
compelled French financial institutions to open their records.
Looting Made Victims Easy Prey for Nazis
The core conclusion of the commission's report, three years in the
making, was that the vast array of official measures taken from 1940 to
1944 to strip the 330,000 Jews living in France of their homes, jobs,
factories, works of art and other belongings was seen as a necessary
component of the plan to annihilate European Jewry.
"For simple folk, despoiling them didn't just harm them, it condemned
them," commission member Ady Steg said. A family robbed of savings that
could have been used to buy false papers to escape, Steg said, became
helplessly sedentary and could easily be shipped to concentration camps.
The theft of a sewing machine from a tailor, the report said, might
instantly make him a pauper.
In May 1941, German authorities ordered the freezing of all assets
belonging to Jews. Procedures were begun to "Aryanize" 50,000
Jewish-owned companies in France. About 64,000 bank accounts belonging
to Jews were frozen. Three billion shares of stock were impounded, of
which nearly two-thirds were sold.
Members of the commission had fully expected to learn much about the
Nazi role in the campaign of expropriation. What "profoundly revolted"
them, said chairman Jean Matteoli, a former member of the French
Resistance and a non-Jewish concentration camp survivor, was discovering
how the Petain regime often surpassed the Germans in its zeal.
In a calculation that will probably kindle a good deal of controversy,
the panel estimated that 90% to 95% of the seized property had been
returned after the liberation, albeit often with long delays.
The panel found, though, that Jews were subject to other forms of theft.
About 40,000 apartments were emptied by the Germans so that their
furnishings could be given to German victims of Allied bombing, the
commission found. An estimated 8,000 pianos--a veritable "ocean" of the
instruments, according to the report--were confiscated.
More than 100,000 paintings and other art objects were shipped eastward
by the Germans. Of those, only 61,233 were returned to France after
war's end. According to the commission, of 2,143 of these works now in
the possession of French museums, 163 were certainly stolen from their
owners and 1,817 have a murky provenance.
A total of 75,271 Jews were deported from France during the occupation,
only 2,500 of whom returned alive. Jews interned in camps at Drancy,
north of Paris, or in the French provinces before being shipped to
Germany were habitually robbed of their cash, gold, jewelry and other
valuables.
Jean Kahn, president of the Central Hebrew Consistory of France and a
commission member, estimated the uncompensated losses because of German
pillage and theft from Jewish internees--over and above the organized
expropriation--at the equivalent today of $ 352 million.
Panel Recommends Holocaust Foundation
To make amends, commission members said they would recommend that the
government contribute $ 205 million, the estimated total of Jewish-owned
assets still in the hands of the French state, to a "Foundation for
Memory." The foundation would educate the French about the Holocaust and
other historical acts of genocide, and help victims in need.
Banks and other financial establishments would be asked to contribute $
147 million, the estimated value of the confiscated Jewish property they
still hold, according to the newspaper Le Monde.
"If that is supposed to get the banks off the hook from claims, then I
say it is absolutely not enough," said Shimon Samuels, European liaison
of the Simon Wiesenthal Center in Los Angeles, which is representing 163
plaintiffs in the class-action suit against the French banks.
Hajdenberg also objected that the exchange rate chosen to convert
wartime francs into today's money -- and thus to calculate the value of
unreturned Jewish assets -- was "far too low." (Los Angeles Times, April
18, 2000)
HOLOCAUST VICTIMS: German Insurers Pledge 500 Million Marks to Fund
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German insurance companies pledged 500 million marks ($ 250 million)
Tuesday April 18 to the industry fund aimed at protecting firms from
lawsuits for their actions during the Nazi era.
All 463 members of the Association of German Insurance Companies will be
contributing to the 10 billion mark ($ 5 billion) fund - the first time
a business group in Germany has joined together to give money in the
effort. ''We look forward to other associations following this very good
example,'' said Wolfgang Gibowski, spokesman for the fund, who added
that discussions are ongoing with other business groups.
Chancellor Gerhard Schroeder and the leader of Germany's Jewish
community, Paul Spiegel, have led calls for more companies to join the
fund to help industry meet its 5 billion mark ($ 2.5 billion) share.
This past weekend, the leader of Germany's Jewish community also urged
more companies to contribute, saying most firms who profited from the
use of Nazi-provided forced and slave labor had not yet pledged to pay.
Gibowski said he was still confident the companies would collect their
share by sometime this summer.
Industry and government are splitting the fund 50-50 and before the
insurance contribution, industry had collected more than 2.4 billion
marks ($ 1.2 billion) from about 1300 companies as of Tuesday.
The fund is mainly aimed at compensating the long-forgotten victims of
Nazi-era forced labor policies, mostly non-Jews from Eastern Europe, who
were made to work to help keep the German war machine running. Part of
the fund is also aimed at resolving other still-open issues concerning
German companies' activities during World War II.
The firms formed the foundation last year under pressure of class-action
lawsuits in the United States. In exchange for the fund, they will
receive legal protection backed by promises from the U.S. government.
As part of the 10 billion mark fund, 500 million marks are aimed at
compensating those who had their insurance policies stolen by the Nazis
as part of their so-called Aryanization the confiscation of Jewish
assets. In a statement, the insurance association said they were giving
the money because the companies feel they have an obligation to help the
goal of the industry foundation. The attempt to try and compensate
victims for the crimes they suffered and also support humanitarian
projects ''is a part of moral and societal responsibility that the
insurance industry belongs to along with all other groups of society.''
(AP Worldstream, April 18, 2000)
LAFARGE CANADA: Homeowners Handed Cash after Nightmares of Bad Cement
---------------------------------------------------------------------
Danielle Robitaille smiled through tears of joy after an Ottawa judge
delivered on April 17 a stunning verdict worth up to $ 20 million for a
group of homeowners with crumbling concrete basements. "People were
saying, 'You're never going to get anything,' but we had to keep trying
and this is the result: A very, very happy day for us," Robitaille said
as she celebrated with neighbours outside the Ottawa courthouse.
In one of the largest civil suits ever in Eastern Ontario, Justice
Albert Roy found Lafarge Canada Inc. and Bertrand & Frere Construction
Co. Ltd. of L'Orignal negligent in the building of some 130 foundations
between Cumberland and Hawkesbury.
"None of the plaintiffs could have forseen the nightmares that awaited
them," Roy said in handing down his decision more than a year after the
civil trial was completed. "For over 10 years they haven't been able to
really enjoy their homes," the judge said.
Bob Smith, the lawyer who represented the bulk of the homeowners, termed
the verdict a victory over "giants" since Lafarge is one of the largest
concrete companies in the world and was joined in court by two dozen
insurance firms.
Repair Basements
Under the ruling, Lafarge will be responsible for 80% of the costs of
repairing the basements while Bertrand is on the hook for the remainder.
Most of the costs are to be shouldered by their insurers, however, and
29 of the homes are still covered by Ontario's home warranty program.
The repairs are likely to cost as much as $ 13 million, and the courts
must also decide pre-judgment interest and legal costs in the lengthy
battle. Roy also imposed thousands of dollars in hardship damages for
many of the homeowners.
An application for a class-action suit involving dozens of other
homeowners is also still before the courts.
But Lafarge spokesman Alain Fredette said an appeal is possible. "The
cause of the problem is not our product," Fredette said in suggesting
Bertrand had improperly mixed the concrete.
'Right Direction'
Roy only concluded that fly ash added to the cement had made the
foundations prone to the harmful effects of sulphate. "This is a start
in the right direction," said 68-year-old Joseph Vaillancourt, who
bought his ill-fated condo in Hawkesbury eight years ago. " We still
don't know how much we will get or when the work will begin, but this
takes a little bit of the weight off our shoulders." "It's taken too
long," added a tearful Beth Jefferson, who noticed her basement
deteriorating a few years after her Cumberland home was built in 1987.
"But if the repairs get done, you'll see a very happy person." (The
Ottawa Sun, April 18, 2000)
PACIFIC GAS: Gets Zapped in Boston; Environmentalists Sue for Clean-up
----------------------------------------------------------------------
If Pacific Gas and Electric Co. thought it was going to escape negative
publicity from the movie "Erin Brockovich" by moving this week's annual
shareholder meeting out of San Francisco for the first time, the utility
was very much mistaken.
A day before the meeting convenes in Boston, a group of New England
environmentalists said it will begin legal proceedings on April 18
against PG&E to force the company to clean up a pair of power plants it
purchased in the area two years ago.
Critics say the two plants are responsible for contaminating the
groundwater with a variety of toxic chemicals and exposing surrounding
communities to potentially harmful airborne pollutants.
Activists also plan to hold a protest outside the shareholder meeting
tomorrow and to stage a rally afterward. "They really have inadvertently
stepped into the lion's den," said Robert Russell, an attorney with
Boston's Conservation Law Foundation, which is spearheading the lawsuit
against PG&E. He said the utility underestimated the depth of feeling of
New Englanders regarding the oil- and coal-burning power plants on Salem
Harbor and at Brayton Point in Somerset.
While Russell said he could understand how PG&E might hope to avoid
"Brockovich"-related headlines for this year's shareholder meeting, he
called the decision to come to Boston "exceedingly dumb."
However, PG&E spokesman Greg Pruett said the utility has been planning
to take its shareholder meetings on the road for the past two years. He
denied any connection between "Erin Brockovich" and the fact that this
will be the utility's first meeting held outside San Francisco. "The New
England area is one where we have significant operations," Pruett said.
"It makes sense to go there."
PG&E has operations in 21 states and Canada. Pruett said future
shareholder meetings will be held in different areas where the company
owns plants, as well as at its San Francisco headquarters.
In the case of the oncoming Boston event, the utility's top brass almost
certainly will be forced to field questions not just on pending
litigation regarding environmental matters but also on the company's
shaky financial performance.
Last month, PG&E reported a quarterly loss of $611 million ($1.67 per
share), compared with profit of $196 million (51 cents) a year earlier.
Revenue in the period fell 11 percent, to $4.8 billion, from almost $5.4
billion a year ago.
The utility is scheduled to post its latest quarterly results Thursday,
a day after the shareholder meeting. This will be PG&E's first assembly
of shareholders since "Erin Brockovich" opened. The movie, starring
Julia Roberts, tells of how the utility reached a $ 333 million
settlement after poisoning residents of the small Southern California
town of Hinkley with toxic chemicals.
A similar lawsuit involving the real-life Brockovich is scheduled to go
to trial in November. That case focuses on a PG&E plant in the city of
Kettleman Hills, near Fresno.
As if the utility hadn't seen enough of Brockovich, both real and reel,
she recently voiced her support for environmentalists in New England and
said her Los Angeles law firm, Masry & Vittitoe, may be interested in
handling a class-action suit by local residents. Chrissy Albice, an
investigator at the firm who works with Brockovich, said she has already
paid a visit to the area to see the two plants for herself.
The suit now being brought against PG&E by the Conservation Law
Foundation under the federal Resource Conservation and Recovery Act
requires a 90-day notice before the court filing. The foundation's
Russell said the notice was to be served on April 18, to be followed in
three months by a formal lawsuit in U.S. District Court. The suit will
not seek damages but will instead seek only to change the operation of
the plants.
Russell said the lawsuit will charge that PG&E mishandled coal waste at
the Salem and Brayton Point plants, allowing chromium, arsenic, mercury
and other toxic chemicals to seep into the groundwater and the nearby
harbor. These chemicals are known to cause cancer, heart and liver
damage, circulatory ailments and other illnesses.
Although state officials have confirmed contamination of groundwater
near the plants, it is not known whether the contamination spreads to
the harbor or to food sources like fish, crabs and lobsters. "One of the
goals of the suit is to determine the extent of the hazard," Russell
said. "We don't know all the facts because we haven't been given access
to PG&E's property."
PG&E's Pruett insisted that the Salem and Brayton Point plants function
"well within the guidelines" set by federal authorities for safe
operation of such facilities.
But aside from questions of groundwater contamination, local
environmentalists also are concerned about possible airborne pollutants
billowing from the plants' smokestacks. "If these plants were built
anytime in the last 25 years, they would be considered illegal," said
Lori Ehrlich, a Salem area accountant and founder of the environmental
group Salem Power Plant HealthLink, which is demanding changes at the
Salem Harbor facility.
Ehrlich's group has rejected a recent proposal from PG&E to spend about
$400 million to convert the Salem plant to exclusively coal-based
operations. Group members say the move is a ploy by the utility to boost
profits through increased use of the cheaper fuel source.
But local officials have offered tentative backing to the proposal.
Salem Mayor Stanley Usovicz has praised PG&E for mapping out a long-term
strategy to reduce health risks related to the plant.
The facility is Salem's single largest taxpayer, providing about $8
million a year to city coffers.
Ehrlich said a key goal of protests will be to compel PG&E to be more
forthright in its dealings with New England residents. Past negotiations
between her group and the utility, she observed, went nowhere. "I think
we've been greatly underestimated," Ehrlich said. (The San Francisco
Chronicle, April 18, 2000)
SAFETY-KLEEN: Keller Rohrback Announces Subpoena by Federal Grand Jury
----------------------------------------------------------------------
The following was released by Seattle's Keller Rohrback L.L.P.:
Safety-Kleen Corp. (NYSE:SK) has received a subpoena from a federal
grand jury requesting documents. The Company received the subpoena from
the grand jury in New York on or about March 22, according to a filing
with the Securities & Exchange Commission.
"Plaintiffs' counsel view this as a positive development because it
further confirms allegations contained in our complaints," according to
Lynn Lincoln Sarko, managing partner of Keller Rohrback L.L.P. "We
welcome the resources that the federal grand jury can bring to
investigating the causes of the announced accounting irregularities."
Pursuant to federal law, investors who purchased Safety-Kleen Corp.
(NYSE:SK) ("Safety-Kleen" or the "Company") common stock between July 7,
1998 and March 6, 2000, inclusive (the "Class Period"), are required to
act on or before May 5, 2000, to actively participate in the class
action lawsuit as a lead plaintiff in the securities suit filed against
Safety-Kleen and certain of its officers and directors.
Contact: Keller Rohrback L.L.P. Jen Veitengruber, 800/776-6044 E-mail:
investor@kellerrohrback.com Website: http://www.SeattleClassAction.com
SCHEIN PHARMACEUTICAL: Faces FL Qui Tam Action under False Claims Act
--------------------------------------------------------------------- In
November, 1999, the Company was informed by the U.S. Department of
Justice that it, along with several other pharmaceutical companies, is a
defendant in a QUI TAM action brought in 1995 under the U.S. False
Claims Act currently pending in the Federal District Court for the
Southern District of Florida. As of March 31, 2000, the Company had not
been served in this action.
A QUI TAM action is a lawsuit brought by an individual for an alleged
violation of a federal statute, in which the Department of Justice has
the right to intervene and take over the prosecution of the lawsuit at
its option. The Department of Justice has not yet decided whether to
intervene in the matter. Pursuant to applicable federal law, the QUI TAM
action is under seal and no details are available concerning the name of
the plaintiff, the various theories of liability or the amount of
damages sought from any of the defendants.
Based on industry information, the Company believes that the matter
relates to pharmaceutical pricing issues and whether allegedly improper
efforts by pharmaceutical manufacturers led to increased payments by
Medicare and/or Medicaid. Because detailed allegations have not been
revealed to the Company by the Justice Department, management does not
have any basis on which to determine the Company's liability, if any, in
connection with the lawsuit or the likely amount of any such liability,
or whether any resolution of the lawsuit would be likely to have a
material adverse affect on the Company's financial position, results of
operations or liquidity.
SCHEIN PHARMACEUTICAL: Settles Securities Lawsuit in New Jersey
---------------------------------------------------------------
In September and October 1998, following the commencement of the seizure
action by the FDA against Steris on September 10, 1998, a number of
substantially similar class action complaints asserting claims under the
federal securities laws were filed in federal Court in the District of
New Jersey against the Company and certain of its officers and
directors.
On December 21, 1998, the court entered an order consolidating the
actions, appointing lead plaintiffs and approving selection of lead and
liaison counsel. On or about March 29, 1999, lead plaintiffs filed a
consolidated and amended class action complaint (the Complaint), naming
as defendants the Company, its directors at the time of the Company's
April 9, 1998 initial public offering (the Offering), and three of the
underwriters of the Offering. Plaintiffs purport to sue on behalf of a
class of persons who purchased shares of the Company's common stock
pursuant or traceable to the Offering during the period from April 9,
1998 through September 28, 1998. They allege that defendants violated
the Securities Exchange Act of 1934 and Rule 10b-5 by making
misrepresentations and omissions of material facts in connection with
the Offering and in the registration statement and prospectus issued
pursuant to the Offering and in statements made immediately following
the FDA seizure action on September 10, 1998.
Plaintiffs allege, among other things, that defendants failed to
disclose or misrepresented facts concerning the status of the Company's
internal controls and ability to comply with government regulations
relating to its manufacturing activities, including the status of the
Company's corrective actions at the Steris facility and the effect of
the FDA enforcement action on the Company's operations. Plaintiffs on
behalf of the purported class seek damages, recision and/or recisionary
damages.
In May 1999, the Company and the other defendants in this action filed a
motion to dismiss the Complaint. In March 2000, and prior to any
decision on the motion to dismiss, plaintiffs and defendants entered
into a Memorandum of Understanding (MOU) to settle the actions. The MOU
provides for, among other things, the certification of the class, for
purposes of the settlement, and the taking of additional discovery by
plaintiffs appropriate and necessary to confirm the fairness and
reasonableness of the contemplated settlement. The MOU also contemplates
the execution of an appropriate Stipulation of Settlement and other
related documentation. In addition, the settlement can become effective
only upon notice to the proposed class and a hearing and approval by the
Court. The Company does not believe that, if approved, the contemplated
settlement, which is expected to be funded through insurance proceeds,
will have a material adverse effect upon its results of operations or
financial condition.
SHELDAHL INC: Resolves Certain Claims over Proposed Deal with Molex
-------------------------------------------------------------------
In late February and early March, five state court lawsuits were
commenced against the Company, its directors and Molex Incorporated. The
initial lawsuit was filed by Kelly Townsend, on behalf of herself and
others similarly situated, in the Hennepin County District Court. That
lawsuit was followed by similar lawsuits filed in the Rice County
District Court by James Delmonte, John DeSchepper and Michael Miller,
each on behalf of the named plaintiff and others similarly situated. A
fifth lawsuit was filed by Irwin L. Jacobs, Daniel T. Lindsay, Dennis M.
Mathisen and Marshall Financial Group, Inc. in the Rice County District
Court.
Each of the lawsuits claim that the consideration to be paid in a
proposed transaction between the Company and Molex Incorporated, as
announced by the Company on February 17, 2000, is unfair and inadequate
for the Company's shareholders. Each of the Complaints, other than the
Complaint filed by Irwin Jacobs, et al., requested certification as a
class action. All of the Complaints seek injunctive relief and
compensatory damages.
Subsequent to the receipt of the Complaints by the Company, the
plaintiffs sought temporary restraining orders and preliminary
injunctions in both the Hennepin and Rice County Courts. Both Courts
denied the plaintiffs' relief. On March 20, 2000, the Company announced
that Molex Incorporated had notified the Company that it would not make
a proposal to enter into an agreement to acquire the remaining equity
interests of Sheldahl not currently owned by Molex. On March 22, 2000,
Irwin Jacobs, et al. voluntarily dismissed their lawsuit. On April 5,
2000, Kelly Townsend, et al. and Michael Miller, et al. voluntarily
dismissed their lawsuits. The Company has filed motions to dismiss the
remaining lawsuits and expects that such motions will be granted. The
Company has also requested that the two remaining plaintiffs voluntarily
dismiss their lawsuits.
SOLECTRON CORP: Discloses Securities Suits against Smart Modular in CA
----------------------------------------------------------------------
Federal Action
Smart Modular Technologies, Inc. (SMART), a wholly owned subsidiary of
Solectron Corporation, and certain of SMART's ex-officers and
ex-directors have been named as defendants in six securities class
action lawsuits filed in the United States District Court for the
Northern District of California,
* Boren v. SMART Modular Technologies, Inc., et al., No. C 98 20692 JW
(PVT) (filed July 1, 1998),
* Woszczak v. SMART Modular Technologies, Inc., et al., No. C 98 2617
JL (filed July 2, 1998),
* Bisson v. SMART Modular Technologies, Inc., et al., No. C 98 20714 JF
(filed July 8, 1998),
* D'Amato v. SMART Modular Technologies, Inc., et al., No. C 98 2804
PJH (filed July 16, 1998),
* Cha v. SMART Modular Technologies, Inc., et al., No. C 98 2833 BZ
(filed July 17, 1998) and
* Chang v. SMART Modular Technologies, Inc., et al., No. C 98 3151 SI
(filed August 13, 1998).
The plaintiffs in these Federal Actions allege that defendants made
material misrepresentations and omissions during the period from July 1,
1997 through May 21, 1998 in violation of Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
The Federal Actions were consolidated on October 9, 1998, and a
consolidated complaint was filed on November 30, 1998 (the "Federal
Complaint"). On November 2, 1999, defendants filed a motion to dismiss
the Federal Complaint. This motion is pending.
State Complaint
On October 22, 1998, a putative securities class action lawsuit,
captioned Reagan v. SMART Modular Technologies, Inc., et al., Case No.
H204162-5, was filed against SMART and certain of ex-officers and
ex-directors in the Superior Court of the State of California, County of
Alameda. The State Complaint alleges violations of Sections 25400 and
25500 of the California Corporations Code and seeks unspecified damages
on behalf of a purported class of purchasers of SMART common stock
during the period from July 1, 1997 through May 21, 1998. The factual
allegations of the State Complaint are nearly identical to the factual
allegations contained within the Federal Complaint. On February 22,
1999, the Superior Court granted SMART's motion to stay the state action
pending resolution of the federal action.
SPANLINK COMMUNICATIONS: Rabin & Peckel Files Securities Lawsuit in MN
----------------------------------------------------------------------
A class action complaint has been filed in the United States District
Court for the District of Minnesota on behalf of all persons or entities
who held the securities of Spanlink Communications, Inc. (Nasdaq:SPLK)
on February 29, 2000 (the "Class Period").
The lawsuit against Spanlink, certain of its officers and directors, and
Spanlink Acquisition Corp. ("SA Corp."), for violations of the
Securities Exchange Act of 1934 ("Exchange Act"), arises out of and is
based on an offer by SA Corp. to purchase the outstanding shares of
Spanlink (the "Tender Offer"), which Tender Offer was made pursuant to a
Schedule to Tender Offer Statement under Section 14(d)(1) or Section
13(e)(1) of the Exchange Act (the "Schedule"), filed with the Securities
and Exchange Commission on February 29, 2000. The Tender Offer was for
$10.50 per share. If SA Corp. acquired sufficient shares, after the
Tender Offer, it intended to merge with Spanlink, with Spanlink as the
surviving entity.
The Complaint alleges that the Schedule, on which investors relied in
deciding whether to tender their shares and pursuant to which such
shares of Spanlink stock were tendered, contained materially false and
misleading information about Spanlink and failed to state facts
necessary to make the statements that were made not false and
misleading, in violation of section 14(e) of the Exchange Act.
Specifically, it is alleged that the Schedule lacked information about
Spanlink's newly-formed relationship with Cisco Systems, Inc. ("Cisco"),
germane to the shareholders' decision to tender their shares, i.e.,
whether the Cisco affiliation is being fairly allocated between the
public shareholders and the controlling shareholders. Absent information
such as the post-merger entity's anticipated growth of revenue and
earnings; a description of the type and quantity of products it intends
to manufacture and distribute; and any agreements or understandings
reached between Cisco and the individual defendants, shareholders could
not properly evaluate the fairness of the Tender Offer. By failing to
provide such information about Spanlink's highly favorable post-merger
relationship with Cisco, the complaint further alleges, defendants were
able to offer the Class a much lower price for tendered shares ($10.50)
and a much lower premium over Spanlink's common stock's price.
Contact: Rabin & Peckel LLP Joseph V. McBride tel: 800/497-8076 or
212/682-1818 fax: 212/682-1892 email@rabinlaw.com or visit website
http://www.rabinlaw.com
TERAYON COMMUNICATION: Seeger Weiss Files Securities Lawsuit in CA
------------------------------------------------------------------
Pursuant to 15 U.S.C. 78u-4(a)(3)(A)(i), Seeger Weiss LLP gives notice
that on April 17, 2000, a class action lawsuit was filed in the United
States District Court for the Central District of California on behalf
of all persons who purchased the publicly traded securities of Terayon
Communication Systems, Inc. (Nasdaq:TERN), from February 2, 2000 through
April 11, 2000, inclusive (the "Class Period"), and who were damaged
thereby.
Terayon develops, markets and sells cable modem systems that enable
cable operators to deploy two-way broadband access services.
The complaint charges Terayon and certain of its officers, directors and
Company insiders with violations of the Securities Exchange Act of 1934.
This action involves defendants' dissemination of materially false and
misleading statements concerning, among other things, the certification
of the Company's proprietary S-CDMA cable modem technology by CableLabs
(the industry regulating organization), the Company's financial
condition and their effects on the Company's operations. The complaint
alleges that defendants' scheme: (i) deceived the investing public
regarding Terayon's business, new product capabilities and acceptability
as an industry standard technology, foreseeable product demand, growth,
operations and the intrinsic value of Terayon common stock; (ii) allowed
defendants to register and/or sell over $439 million worth of Terayon
shares at artificially inflated prices via share-for-share acquisitions
of other companies, which acquisitions also allowed defendants to
appropriate valuable proprietary technologies previously owned by other
companies; (iii) allowed Company insiders, several of whom are named as
defendants herein, to sell over 71,000 shares of their privately held
Terayon common stock, during the Class Period, while in possession of
materially adverse, undisclosed information, allowing them to reap
proceeds of at least $ 15.9 million; and (iv) caused plaintiff and other
members of the Class to purchase Terayon common stock at artificially
inflated prices.
Plaintiff seeks to recover damages on behalf of all Class members and
has retained the law firm of Seeger Weiss LLP. Seeger Weiss LLP
maintains offices in New York City and New Jersey and is active in major
complex commercial litigations pending in federal and state courts
throughout the United States.
Contact: Seeger Weiss LLP Stephen A. Weiss, Esq., or Amy P. Albert, Esq.
One William Street New York, New York 10004 Tel.: (212) 584-0700 E-Mail:
sweiss@seegerweiss.com or aalbert@seegerweiss.com
TERAYON COMMUNICATIONS: Bernstein Liebhard Files Securities Suit in CA
----------------------------------------------------------------------
A securities class action lawsuit was commenced on behalf of purchasers
of the publicly-traded securities of Terayon Communications Systems,
Inc. (Nasdaq: TERN), between February 2, 2000 and April 11, 2000,
inclusive (the "Class Period"), in the United States District Court for
the Central District of California.
The complaint charges Terayon 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 concerning, among
other things, the certification of the Company's proprietary S-CDMA
cable modem technology by CableLabs (the industry regulating
organization), the Company's financial condition, and the Company's
operations. The complaint alleges that the defendants' scheme: (i)
deceived the investing public regarding Terayon's business, new product
capabilities, the acceptability of S-CDMA cable modem technology as an
industry standard technology, foreseeable product demand, growth,
operations, and the intrinsic value of Terayon common stock; (ii)
allowed defendants to register and/or sell over $439 million worth of
Terayon shares at artificially inflated prices via share-for-share
acquisitions of other companies, which acquisitions also allowed
defendants to appropriate valuable proprietary technologies previously
owned by other companies; (iii) allowed Company insiders, several of
whom are named as defendants herein, to sell over 71,000 shares of their
privately held Terayon common stock during the Class Period, while in
possession of materially adverse, undisclosed information, allowing them
to reap proceeds of at least $15.9 million; and (iv) caused plaintiff
and other members of the Class to purchase Terayon securities at
artificially-inflated prices. When the truth was disclosed, Terayon's
stock price plunged.
Contact: Mr. Mark Punzalan, Director of Shareholder Relations of
Bernstein Liebhard & Lifshitz, LLP, 800-217-1522, or 212-779-1414, or
TERN@bernlieb.com
TERAYON COMMUNICATIONS: Stull, Stull Files Securities Lawsuit
-------------------------------------------------------------
A class action lawsuit was filed in U.S. District Court on behalf of
purchasers of Terayon Communications Systems, Inc., (NASDAQ:TERN) common
stock between February 2, 2000 and April 11, 2000 (the "Class Period").
Terayon manufactures cable modem systems that enable cable operators to
offer Internet connection services to cable subscribers. The Company
sells its products to cable operators through direct sales forces in
North America, Latin America and Europe.
The defendants include Terayon, Zaki Rakib, Rakib Selim, Raymond Fritz,
Mark Stevens, and Christopher Schaepe. The Complaint charges that
defendants violated Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 and Rule 10-b(5). The action arises from damages incurred by
the Class as a result of a scheme and common course of conduct by
defendants which operated as a fraud and deceit on the Class during the
Class Period. Defendants' scheme included rendering false and misleading
statements and/or omissions concerning the present and future financial
condition and business prospects of the Company, as well as the
financial benefits that would enure to Terayon and its shareholders.
Specifically, defendants' disseminated materially false and misleading
statements concerning, among other things, the certification of the
Company's proprietary S-CDMA cable modem technology by CableLabs (the
industry regulating organization).
Contact: Marc L. Godino, Esq. Stull, Stull & Brody 888-388-4605
info@secfraud.com
TOBACCO LITIGATION: NC Farmers, Quota Holders Sign onto Lawsuit
---------------------------------------------------------------
Forty North Carolina tobacco farmers and quota holders have joined a
lawsuit against the tobacco industry for allegedly misleading them.
Attorney Alexander J. Pires Jr., who represents farmers in the lawsuit,
met with about 140 farmers and tobacco quota holders Monday April 17 at
the Wilson County Farm Service Agency to discuss the lawsuit filed in
February.
The class-action lawsuit has 5,512 plaintiffs who grow tobacco or own
federal tobacco quotas. It seeks $69 million from Philip Morris Inc.,
R.J. Reynolds Tobacco Co., Brown and Williamson Tobacco Corp., Lorillard
Tobacco Co. and several of their subsidiaries for allegedly conspiring
to reduce growers' income by manipulating the federal system that sets
tobacco prices.
Pires argued the companies misled farmers into helping them stop
congressional legislation in 1998 that would have given growers $28
billion. The companies later reached a settlement with the states that
will provide growers with much less - $5.15 billion over 12 years.
"I used to auction tobacco and I don't know of anyone who got together
before season, but I know that when a pile of tobacco brought a $1.75,
the buyers just had to stick up their finger and give $1.75," said
Luther H. Baines Jr. of Wilson, a quota holder who joined the lawsuit.
"There's no auctioning to it, it's a big joke."
Pires and the lawsuit's organizers are trying to get 15,000 farmers and
quota holders to join the lawsuit.
Joey Moore, a Belvoir oil distributor, is one of the people who paid
$100 to join the lawsuit. Moore said he leased 15 acres of tobacco
allotment which produced 45,000 pounds of tobacco in the early 1970s.
Quota cuts have reduced that amount by two-thirds, he said. "The thing
that most convinced me was when (Pires) talked about the U.S. Department
of Agriculture not controlling the quota system and the auction system,"
Moore said. "All the companies are doing is paying one penny above the
stabilization price." (The Associated Press, April 18, 2000)
TOBACCO LITIGATION: Philip Morris Issues Statement on CA Class Denial
---------------------------------------------------------------------
The following statement was issued April 17 by Philip Morris:
A San Diego judge has rejected class certification in two tobacco cases
after ruling that the claims involve too many individual issues in one
case and that the plaintiffs have no legal basis for class action
treatment in the other.
Superior Court Judge Ronald S. Prager's rulings are the latest in more
than two dozen state and federal court decisions rejecting class
certification sought by smokers for their alleged smoking-related
damages.
Only one smoking and health case, the Engle class-action case in Miami,
has gone to trial. That case is still under way after nearly two years
of trial.
Philip Morris has argued vigorously against class certification in
smoking cases, which by their very nature revolve around a jury's
evaluation of individual issues. Class actions, on the other hand, are
designed to resolve cases in which the same factual and legal claims
predominate over individual issues.
Prager said in his ruling on Brown et. al. v. Brown and Williamson et.
al. that the plaintiff's arguments for class certification simply did
not meet the legal requirements.
"In sum...plaintiff seeks class certification of a mass tort action,
seeking recovery under seven different common-law causes of action,
against 11 different defendants, concerning hundreds of different brands
of cigarettes, and premised on various wrongful acts spanning more than
four decades. It is almost academic from the mere face of such a
synopsis of this action that class certification is inappropriate,"
Prager said.
In the second class action case, Daniels et. al. v. Philip Morris
Companies Inc. et. al., Prager told the plaintiffs that there was no
legal basis for the case to be tried as a class action but that the law
did not prevent them from seeking damages through individual trials.
That lawsuit was filed on behalf of six San Diego residents who began
smoking when they were teens and who alleged tobacco companies'
advertisements and marketing were deceptive and designed to encourage
underage smoking.
William S. Ohlemeyer, Philip Morris vice president and associate general
counsel, said the class action rulings "further validate our position
that these cases cannot be tried as class actions because of the
multiplicity of individual issues. "We also think that ultimately a
higher court will agree with our assessment in the Engle case."
The rulings in the two class action cases has become final.
Also, claims brought in Prager's court by six labor union health funds
as a proposed statewide class action on behalf of their members who
allegedly were harmed by smoking were voluntarily dismissed by the
plaintiffs.
Numerous state and federal courts have ruled in other cases that the
labor union health funds' claims of damages on behalf of their members
are too remote to proceed to trial.
In the only labor health fund case to go to trial, a jury in Akron ruled
last year in favor of the tobacco industry in rejecting the claims.
U.S. FILTER: Schiffrin & Barroway Files Securities Lawsuit in CA
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The law firm of Schiffrin & Barroway, LLP gives notice on April 17 that
a class action lawsuit was filed in the United States District Court for
the Central District of California on behalf of all persons who tendered
shares of US Filter Corporation (NYSE: USF) to Vivendi S.A. (Nasdaq:
VVDIY) and its wholly-owned subsidiary, EAU Acquisition Corp., in
connection with Vivendi's purchase of the outstanding shares of US
Filter at $ 31.50 per share (the "Tender Offer").
The complaint charges US Filter and certain of its senior executives
with violations of the federal securities laws arising out of
defendants' unlawful payments to senior US Filter executives to obtain
their support in consummating the Tender Offer and their agreement to
tender their own shares.
Contact: Schiffrin & Barroway, LLP Marc A. Topaz, Esq. or Robert B.
Weiser, Esq., 888-299-7706 (toll free) or 610-667-7706
info@sbclasslaw.com
UNITED COMPANIES: Keller Rohrback Tells of Securities Suit Lead Counsel
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On April 5, 2000, Magistrate Judge Christine Noland signed an Order in
the United States District Court for the Middle District of Louisiana
appointing Norman Lasky, Linda Wheeler, Gary Poff, Frank Lopiccolo,
Jeffrey Parker and Savant Insurance Company as Lead Plaintiffs on behalf
of all persons who purchased United Companies Financial Corporation
(NYSE:UC, NYSE:UCPRI, OTC:UCFNQ, OTC:UCFPQ) securities during the period
of April 30, 1998 through February 2, 1999, inclusive (the "Class
Shareholders").
The Court also appointed Keller Rohrback L.L.P.
(http://www.SeattleClassAction.com),Stull Stull & Brody, and Milberg,
Weiss, Bershad, Hynes & Lerach L.L.P. to represent the Class
Shareholders. McKeithen, McKeithen & Bohman of Baton Rouge has been
appointed Liaison counsel.
Shareholders assert that certain officers and directors of United
Companies Financial issued false and misleading statements and public
filings during the Class Period. Specifically, the complaint alleges
that J. Terrell Brown and Dale E. Redman misled the investigating public
to believe that the Company was generating strong revenues and positive
earnings quarter after quarter when, in reality, they were overstating
income and assets by applying materially erroneous loan loss, discount
and prepayment rate assumptions in violation of the Securities Exchange
Act of 1934. The complaint states that not until September 1999 did they
reveal the extent of the errors, announcing write-offs to the Company's
1998 year-end financial statements in the amount of $605.6 million
attributable to the Company's Interest-only and residual certificate
asset. As a result, shareholder equity dropped from $505 million as of
September 30, 1998, to negative $114 million as of December 31, 1998.
Contact: Keller Rohrback L.L.P. Jen Veitengruber, 800/776-6044
investor@kellerrohrback.com Website: http://www.SeattleClassAction.com
VISTA EYECARE: Sued in CA in ' 99 over OT; Presently under Ch 11
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On October 6, 1999, former store managers of Frame-n-Lens filed a class
action in the Orange County Superior Court in California (Kremer and
Riddle v. Vista Eyecare, Inc.), alleging that the Company failed to pay
overtime wages to present and former store managers. The Company is
vigorously defending the lawsuit. The Company has also asserted a right
of indemnification pursuant to the share purchase agreement for the
acquisition of Frame-n-Lens.
On April 5, 2000, the Company and ten of its subsidiaries filed
voluntary petitions with the United States Bankruptcy Court for the
Northern District of Georgia for reorganization under Chapter 11 of the
Bankruptcy Code. The Debtors are currently operating their businesses as
debtors-in-possession. The Chapter 11 Cases have been consolidated for
the purpose of joint administration under case number 00-65214. All
affiliated entities of the Company are included in the Chapter 11 cases,
except only (a) three subsidiaries which are licensed managed care
organizations and (b) foreign subsidiaries of the Company.
VISX, INC: Ruling That Torpedoed Stock Turned Congress Sights on ITC
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Most of the time, no one pays much attention to the International Trade
Commission. Each year, the independent agency with 400 employees quietly
presides over a handful of import-related intellectual property
disputes-albeit ones with millions, or even billions, of dollars at
stake.
But after a new administrative law judge issued a ruling that torpedoed
the stock of laser eye surgery leader VISX Inc., some members of
Congress have turned their sights on the commission.
Led by Sen. Orrin Hatch (R-Utah), four senators and a member of the
House recently fired off sternly worded letters to the ITC, accusing the
agency of all but giving away American intellectual property rights to
foreign companies.
"A preliminary review of Commission determinations indicates that, since
1998, U.S. patent holders have faced a disturbing trend of unfavorable
outcomes," wrote Hatch, who chairs the Senate Judiciary Committee, in
the first of two letters to ITC Chairwoman Lynn Bragg. "Although each
case turns upon its own facts, a number of patent holders seeking
protection had their patents declared unenforceable and void."
Cases brought before the three administrative law judges at the agency
typically involve foreign corporations accused of selling products in
the United States that violate the patents of American companies. Nearly
all the disputes are highly technical, concerning items like random
access memory controllers or ion trap mass spectrometers, with enormous
discovery requests and teams of high-priced lawyers.
There are no outright monetary damages. Instead, the big prize for
claimants is an exclusion order directing the U.S. Customs Service to
turn away products at the border. The other reason companies choose the
ITC over federal court is speed-most cases are decided within a year of
filing.
According to attorneys who practice before the agency, the ITC had a
reputation for favoring U.S. patent holders. Indeed, in the 16 cases
decided between 1995 and 1997, the ALJs ruled in favor of such companies
70 percent of the time.
But in the last two years, things at the agency-at least on the surface-
seemed to change. Suddenly, the win/lose ratio flipped, and U.S. patent
holders have won just 30 percent of their cases.
Why the difference? Critics of the ITC point to the addition of Judge
Debra Morriss, a former Federal Energy Regulatory Commission and Social
Security Administration ALJ with no prior patent law experience.
During her 21 months on the bench, Morriss has issued only three
opinions, so she cannot be entirely responsible for the "trend." Still,
she has yet to find an instance of patent infringement.
As for her two colleagues, Paul Luckern has tended to rule in favor of
patent holders, while Sidney Harris has more often sided with
respondents.
ITC defenders stress that the three judges combined only hear about 12
to 15 cases a year, and half are resolved by settlement. That leaves
five or six cases yearly decided by a written opinion from one of the
judges.
When dealing with such a small universe, ITC officials argue,
fluctuations in percentage mean little.
"It doesn't have a darn thing to do with anything other than the merits
of those cases," says a senior ITC official indignantly. "All this means
is that in those two years, eight cases were filed in which the
intellectual property rights were invalid or not infringed, not because
there was a change in the agency."
Further, the official notes, all final decisions are issued by ITC
commissioners, a politically insulated six-member body split evenly
between Republicans and Democrats.
"Each ALJ decision is carefully reviewed and, when necessary, reversed
or revised by the commission and, ultimately, the commission is the
final decision-maker," the official says, adding that in the last two
years, all 12 ITC cases reviewed by the U.S. Court of Appeals for the
Federal Circuit have been upheld.
Seeing Red
The source of the complaints about the ITC is not difficult to trace.
The trail appears to lead to VISX-the Santa Clara, Calif.-based laser
eye surgery equipment maker that lost a crucial case before the ITC last
December.
In January 1999, VISX filed a complaint with the ITC, claiming that
competitor Nidek Co. of Japan was selling machines in the United States
that infringed upon its patents for lasers used in vision correction
surgery. VISX charged doctors $ 250 each time they used the laser,
helping garner revenue of $ 271 million last year-more than double the
company's earnings in 1998. Nidek charges doctors no fee to use its
laser.
Represented by a team of nine lawyers from Morrison & Foerster,
including D. C. managing partner Brian Busey and San Francisco-based
partner Harold McElhinny, VISX was seeking an exclusion order against
Nidek.
VISX figured things were looking good when ITC staff lawyers from the
Office of Unfair Import Investigations, the third party in the case,
took their side. But when Morriss issued her ruling in December 1999,
VISX got an unwelcome surprise.
Not only did Morriss find Nidek was not infringing VISX's patents, she
read the patents so narrowly that she concluded VISX's own laser system
did not come within the scope of the claims. She then went on to rule
that one of the founders of VISX was not the sole inventor of a key
patent, making it unenforceable and invalid.
The day after Morriss issued her initial determination, the company's
stock price dropped 40 percent, a $ 2.5 billion loss in value. VISX
stock has continued to sink and is now trading around $ 15 a share, down
from a pre- ruling high of $ 10378. Company officers are facing
securities fraud class actions filed by virtually every major plaintiffs
firm in the country.
"You can't believe how screwed we got by the government," says VISX
spokesperson Lola Wood. The company has not announced whether it will
appeal the ruling, made final by the ITC in March, to the Federal
Circuit. But VISX wasted no time in pleading its case to members of
Congress, turning to lobbyist Louis Dupart, a former antitrust
subcommittee chief counsel now with Fleischman & Walsh.
Sens. William Roth Jr. (R-Del.), Mike DeWine (R-Ohio), and Herbert Kohl
(D- Wis.) obliged by sending the ITC a joint letter in March, also
signed by Hatch.
Rep. Mary Bono (R-Calif.) sent a similar letter as well. "I echo the
calls for the ITC to carefully and fully review the decisions of its
Administrative Law Judges to ensure the rights of patent holders are
properly interpreted," she wrote.
Nor did the protests stop there. VISX General Counsel Kina Lamblin
landed a spot on a U.S. Patent and Trademark Office oversight hearing
panel in early March and used the opportunity to complain about the ITC
to members of the House IP subcommittee.
"The recent trend in ITC decisions is cause for concern regarding
possible errors made by individual ALJs who do not have the technical or
patent law training to make complex patent infringement and validity
decisions," she said. "Any such errors will have an enormous effect on
U.S. intellectual property rights and growth industries."
Are You Experienced? Implying that lack of experience led Morriss to
reach an erroneous conclusion, the company has suggested that the Office
of Personnel Management change its rules to make patent experience a
prerequisite for administrative law judges at the ITC. "You don't try to
change something because one decision goes badly," says a former Hill
staffer now in private practice. "But there appears to be a trend going
against American corporations by judges with no patent experience."
Other lawyers who practice before the ITC do not dispute there may be a
learning curve when dealing with patent cases. "In the short term, it is
very difficult to get a handle on those cases without some experience in
the area," says Charles Nalls, of counsel at Armstrong, Westerman,
Hattori, McLeland & Naughton. "But this is the same conundrum faced by
district court judges, most of whom also have no familiarity with patent
law."
In the long term, though, ITC judges gain considerably more experience
than their counterparts in federal court, since they hear almost nothing
but patent and trademark cases.
Nalls also notes that the ITC conducts its own review to make sure no
egregious mistakes get by. "To implicate Judge Morriss is also to
implicate two levels of review above her, the Office of the General
Counsel and all six commissioners," he says. " The commission has not
been loath to reverse or modify judges when they feel there is an error,
and they did not do that here."
Indeed, to Nidek lawyers Neil Siegel, a partner at Sughrue, Mion, Zinn,
MacPeak & Seas, and Sturgis Sobin, managing partner of Ablondi, Foster,
Sobin & Davidow, the gripes about inexperience are nothing more than
sour grapes.
"VISX didn't complain about the conduct of Judge Morriss and the trial
as it was going on," says Siegel. "I don't think you'll find a district
court opinion that has more meat and substance put into it than (her)
opinion."
Through an agency spokeswoman, Morriss declined to comment. But one ITC
administrative law judge notes that being a patent lawyer does not
necessarily prepare one for all the cases on the docket.
"Even if a judge has a background in one science, he might not have any
knowledge of the science in another field, especially if it is cutting
edge, as many of the ITC cases are," says the judge. "Patent law is just
like any other body of law, like torts. You just have to learn it."
Predictable Tendencies
Still, some lawyers who practice before the agency say they have
observed certain predilections among the trio of judges. "There is a
concern that when you bring a case, the outcome is almost determined the
day it's assigned a judge," says one veteran trade lawyer. "At that
point, you have a very good idea what will happen to the case."
Several lawyers say that Harris, a former antitrust lawyer, has a
reputation for siding with the respondents-that is, the companies
charged with infringement.
ITC online records show that Harris has heard 70 cases since joining the
ITC in 1984. The majority settled, but on the 29 occasions he has issued
decisions, he found for the respondents 17 times, or 59 percent.
Recently, Harris attracted attention for a pro-respondent decision.
Boise, Idaho-based Micron Technology Inc. charged Taiwanese-owned Mosel
Vitelic Inc. with infringing on its patents for semiconductor
manufacturing. In an initial determination issued in November, Harris
declared three of Micron's patents invalid and unenforceable.
By contrast, Luckern, who began his career in 1956 as a patent examiner
at the PTO, has had a tendency to favor the claimants-that is, companies
holding U.S. patents and claiming infringement.
In 16 years at the ITC, Luckern has heard 82 cases and issued 42
decisions. He found violations in 24 cases, or 57 percent of the
time-almost exactly the reverse of Harris.
Luckern, for one, disputes the perception that he is even slightly pro-
claimant. "I take a case as it comes to me, and based on the evidentiary
record, I make a decision," he says. "I don't consider myself a
pro-patent judge."
Lawyers who practice before the agency are sympathetic about the demands
placed on the ALJs, whose jobs have only gotten more difficult over the
years.
"Every case is a major case now," says Ralph Mittelberger, a partner at
the D.C. office of Boston's Fish & Richardson. "They are almost always
complicated and hotly fought, because the stakes are high."
But he also notes the decision to bring a case before the ITC is
essentially forum shopping, since companies have the option to pursue
the same grievances in federal court.
"The ITC offers a type of relief that cannot be obtained anywhere else,
both in terms of the actual remedy granted and the speed of relief," he
continues. "People will use the ITC, however, only so long as the ITC
continues to issue decisions based on the merits of specific cases,
without any political agenda." (Legal Times, April 17, 2000)
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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
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Information contained herein is obtained from sources believed to be
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