/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/000512.MBX C L A S S A C T I O N R E P O R T E R Friday, May 12, 2000, Vol. 2, No. 93 Headlines ADVANCED LIGHTING: Plans Vigorous Defense of Shareholders' Suit in Ohio ASDAR INC: Intends to File to Dismiss Shareholders' Action in 1998 BAXTER HEALTH: Sp Ct Refuses to Disturb Blood Product Settlement Ruling BENNY'S RESTAURANTS: Hagens Berman Announces Lawsuit on OT Pay BURLINGTON NORTHERN: Some Take Money from Rail Co. for Chemical Spill CLARK REFINGING: Liability for ’94 Malfunction Not Fully Established COCA-COLA: Boycott Organizers to Target Sprite in 10 Cities DREYFUS CORP: Fined $2.95 Mil for Fooling Investors EUROTUNNEL: Small Shareholders Seek Redress; Moves in France Begin FOREST CITY: Construction Workers Sue over Asbestos, Mold, Mildew FOREST CITY: Lawsuit in Oregon over Pay Dismissed FOREST CITY: Seven Hills Homeowners Sue Partnership over Golf Course HAYES LEMMERZ: Minority Shareholders File Suit over Stock Offer HMO: Aetna Indicates Relaxation of Policies in Connecticut HOGGSBREATH BAR: Popular Restaurant Struggles after Hep. A Outbreak LOCKHEED MARTIN: Black Employees File Suits Alleging Discrimination MP3 COM: Tells Investors of Copyright Infringement Lawsuits PLAYCORE, INC: Sued in Wisconsin over Chartwell Merger Agreement PROVANTAGE HEALTH: Investor Sues over Sale to Merck RE-ARREST POLICY: Lawsuit Says Philadelphia Policy Unconstitutional SOLUTION 6: Australian Software Firm and US Elite Merger Plan Quashed SPECIALTY EQUIPMENT: Sued for Seeking Approval for Incentive Plans TENNESSEE DEPT: Group Files Fed Suit for Overhaul if Foster Care System TOBACCO LITIGATION: Bush Signs Legislation to Help Avoid Bankruptcy ********* ADVANCED LIGHTING: Plans Vigorous Defense of Shareholders' Suit in Ohio ----------------------------------------------------------------------- In April and May 1999, three class action suits were filed in the United States District Court, Northern District of Ohio, by certain alleged shareholders of the Company on behalf of themselves and purported classes consisting of Company shareholders, other than the defendants and their affiliates, who purchased stock during the period from December 30, 1997 through September 30, 1998 or various portions thereof. The named defendants are Advanced Lighting Technologies Inc. and Wayne R. Hellman, its Chairman and Chief Executive Officer. The lawsuits are now pending, in an action captioned In Re Advanced Lighting Technologies Securities Litigation (99 CV 836), before a single judge who has required the plaintiffs to file a single consolidated complaint on or before September 30, 1999. The complaints allege generally that certain disclosures attributed to the Company contained misstatements and omissions alleged to be violations of Section 10(b) of the Securities Act of 1934 and Rule 10b-5, including claims for "fraud on the market" arising from alleged misrepresentations and omissions with respect to the Company's financial performance and prospects and alleged violations of generally accepted accounting principles by improperly recognizing revenues. The complaints seek certification of their respective purported classes, unspecified compensatory and punitive damages, pre- and post-judgment interest and attorneys' fees and costs. The Company and Mr. Hellman believe that these claims lack merit and they intend to vigorously defend these actions. ASDAR INC: Intends to File to Dismiss Shareholders' Action in 1998 ------------------------------------------------------------------ In May, 1998, certain shareholders sued Asdar, its former Secretary, and the directors of the Registrant and asked the court to appoint a receiver to manage the affairs of the Company. The Court denied plaintiffs motion to appoint a receiver and plaintiff's counsel has since withdrawn from the action. The Company intends to file the appropriate pleadings to dismiss the entire action. BAXTER HEALTH: Sp Ct Refuses to Disturb Blood Product Settlement Ruling ----------------------------------------------------------------------- The U.S. Supreme Court has declined to disturb earlier court rulings rejecting "bait and switch" claims by 14 disgruntled members of the landmark $640 million hemophilia products class settlement. The petitioners refused to sign off on the arrangement because it contained a release they said would have resulted in forfeiture of their legal rights beyond the boundaries described in settlement notification documents. Tallakson et al. v. Baxter Health Care Corp. et al., No. 99-1140 , review denied (U.S., Mar. 20, 2000). The appellants maintained that they should be allowed to press their individual actions against the manufacturers of the tainted blood products they or their deceased relatives received. Because they declined to sign a release provided by the defendant pharmaceutical companies, the appellants claim their participation in the $100,000 per-person deal was voided and their freedom to litigate individually protected. The release contained significant differences when compared with the original settlement approved on May 8, 1997, by U.S. District Judge John Grady of Chicago, the appellants said. Judge Grady oversaw the multi-district litigation proceeding related to the thousands of individual HIV-infection suits filed nationwide. The petitioners added that the defendants, the plaintiffs' steering committee and the court itself acted to hasten approval of the agreement before the then-pending U.S. Supreme Court decision in Amchem Prod. Inc. v. Windsor, 521 U.S. 591, 117 S. Ct. (1997). Those parties, the plaintiffs said, knew that the awaited Amchem ruling would impose class settlement standards that could not be met by the proposed deal. The appellants said, after indicating their interest in joining the settlement as approved by Judge Grady, defendant Baxter Health Care Corp. and others provided them with a release that was "extraordinary" in that it contained a "stand alone" settlement document "complete with all terms, many of which are difficult to reconcile with the settlement that was the subject of the notice given to class members." They complained, for example, that the settlement notice had not adequately apprised class members that they would agree to extinguish all claims for any injury derived from factor concentrates, such as hepatitis, not just HIV infection. While the settlement notice guaranteed that claimants would have no liability for any subrogation liens that might be asserted against medical providers, the release placed the obligation "squarely upon the shoulders of the releasor." While the original settlement had originally preserved a claimant's right to pursue third-party remedies, the petitioners said, the release mandated a waiver of all claims against the United States and/or any other political subdivision. The appellants particularly disagreed with what they described as a coercive passage in the release indicating that class members agreeing to the settlement were doing so of their own free will and not as a result of the May 8, 1997, settlement order entered in the MDL proceeding. Before the district court, the appellants unsuccessfully sought relief from the May 8 order, arguing that the release constituted a changed circumstance, which made continued enforcement of the order unconscionable. The district court rejected their claims that their signatures on the release would have effectively resulted in their swearing under oath that their acceptance of the settlement "was not premised upon the fairness finding that produced the May 8 order" and their agreement to accept the settlement was not the product of duress stemming from an anti-suit injunction contained in the May 8 order. Neither condition was true, the appellants maintained. They argued that they could not have known of either stipulation "at the time they opted-in to what they thought was a class action settlement, approved by a court upon whose findings on which they thought they were entitled to rely." The U.S. Court of Appeals for the Seventh Circuit affirmed the district court's decision in favor of the defendants. Opposing the petition for U.S. Supreme Court review, the fractionators said the case did not warrant review because the appellants failed to avail themselves of a mechanism allowing "late opt-outs in extraordinary circumstances" as outlined by Judge Grady in a clarifying order issued May 15, 1997. "Petitioners bandy about the concepts of due process and Article III jurisdiction in an attempt to evade the final judgment that approved the class and settlement," argued Baxter and the other respondents in a reply brief filed Feb. 7, 2000. The arguments the petitioners attempted to raise here were not properly presented "on the anomalous facts of this case," the respondents said. "This is not a case in which absent class members sought to challenge fundamentally unfair provisions of a class settlement of which they were unaware until after the final judgment was entered," the respondents told the high court. "Petitioners received notice of the proposed class and settlement, chose to forego individual litigation and to participate in class settlement, and filed claim forms seeking payment under the terms of that settlement." The respondents told the court that the settlement agreement, which the petitioners continue to criticize, "expressly provided that claimants would be required to sign releases in order to receive payment." The district court, they said, "carefully reviewed the terms of the releases, the settlement agreement, and the final judgment approving the class settlement, and concluded that the releases were consistent with the settlement." In addition to Baxter, the respondents included Bayer Corp., Alpha Therapeutic Corp. and Rhone-Poulenc Rorer Inc. The petition was filed by Marc J. Bern of Napoli, Kaiser & Bern in New York and Robert E. Arceneaux of Barham & Arceneaux in New Orleans. Fred Magaziner and Richard A. Berkman of Dechert, Price & Rhoads in Philadelphia represent Baxter. Alpha is represented by Philip S. Beck and Andrew Goldman of Bartlit, Beck, Herman, Palenchar & Scott in Chicago. Armour and Rhone-Poulenc Rorer are represented by Sara J. Gourley, Eugene A. Schoon, Susan A. Weber and Catherine V. Barrad of Sidley & Austin in Chicago. Bayer is represented by Geoffrey R.W. Smith of Washington, D.C. (Pharmaceutical Litigation Reporter, May 2000) BENNY'S RESTAURANTS: Hagens Berman Announces Lawsuit on OT Pay -------------------------------------------------------------- Denny's Holdings and Denny's, a restaurant chain subsidiary of Advantica Restaurant Group (Nasdaq:DINE), is the target of a proposed class action lawsuit brought by restaurant managers in Washington state, claiming Denny's routinely used tactics that forced its managers to work overtime without pay. The suit, filed earlier this month in Superior Court of Washington and for King County in Seattle, states that Denny's intentionally understaffed its restaurants and required managers and general managers to work more than 40 hours per week without overtime pay, as required by the state's Minimum Wage Act (MWA). The suit also claims that Denny's deliberately misclassified salaried employees as managers -- exempting them from overtime -- while managers actually spent more than 40 percent of their time on duties that hourly or job code employees performed, such as cooking, cleaning, dishwashing, serving, and cashiering. "Denny's has shown that the company policy in Washington is to exploit its management for profit, by understaffing its restaurants and then backfilling restaurant help with the managers," said plaintiff's attorney Steve Berman. "They have abused the position of manager as a tactic to avoiding paying overtime." According to the suit, a single Denny's restaurant typically retains three managers to provide 24-hour, seven-day-a-week coverage of the restaurant. When the duties are evenly distributed among three managers, the work schedule is comprised of at least 56 hours per week. The suit also claims that it was common for Denny's to experience high turnover of managers, so when a general manager or manager quit or was terminated, the remaining two managers had to cover the vacant manager position until filled, often for several weeks. Lead plaintiff Robert Husted of Port Orchard, Wash., claims he routinely worked a minimum of 50 hours a week, and averaged 58 to 65 hours per week. Denny's regularly scheduled Husted to work 10 days in a row, and as many as four weeks straight without a day off. According to the MWA, executive or administrative employees in retail/service settings cannot work more than 40 percent of the time in non-management duties. However at Denny's, the suit claims, managers spent more than 50 percent of their time performing non-managerial tasks. Hourly workers are required to be paid one and one-half times their regular rate as required by the MWA Revised Code of Washington. The class action is open to all individuals who worked as managers after January 1, 1994 at Denny's Inc., Denny's Holdings or any Denny's restaurant located in Washington state, and were not paid overtime for more than 40 hours a week. The plaintiff group could include several hundred members. "It's ironic that Denny's was cited by Working Woman magazine as a Top 25 company for women executives, when they are treating their salaried managers with such little regard," added Berman. Contact: Hagens Berman Steve Berman, 206/623-7292 or Media Only: Firmani & Associates Inc. Mark Firmani, 206/443-9357 mark@firmani.com BURLINGTON NORTHERN: Some Take Money from Rail Co. for Chemical Spill --------------------------------------------------------------------- A railroad company involved in a chemical spill has paid claims totaling nearly $300,000 to people who said they were inconvenienced or made sick by the accident. Those payments cover only those who were willing to deal directly with Burlington Northern Santa Fe Railroad Co., rather than take the company to court in hopes of a big payday. The company faces at least three class-action lawsuits, the latest of which was filed by a group of lawyers including Johnnie Cochran. One was filed in U.S. District Court while the others were filed in state court. The two state lawsuits probably will be moved to federal court, where a judge may consolidate all three, said one of the attorneys, Ed Jones of Patterson. The lawsuits are seeking damages for everything from lost income for those who had businesses in the affected area to emotional stress caused to those who live nearby. Those who sought a quick payoff from the company lamented that their financial needs were too urgent to wait in hope for a lengthy legal proceeding to play out. "They're basically getting us to sign over our rights," said Whitney Lee, who elected to seek a claim from the company. "We're not looking for tomorrow. We're looking for today." Claim checks have averaged about $287 each, company officials said. To get a check, the person with a claim had to sign a release form excluding them from ever making another claim against the company, said Larry Mayronne, senior director at BNSF's office in Fort Worth, Texas. The May 3 spill involved an industrial solvent known as xylene and forced about 2,000 people from their homes or businesses for about a day. Mayronne said adjusters have rejected a number of suspicious claims. One man came in with a receipt for a 25-cent hotdog and wanted the railroad to pay, Mayronne said. But since the man could not prove he lived in the affected area, he left without the quarter, Mayronne said. Another party, after standing in line for hours, told an adjuster they had to leave all their clothes at home when their neighborhood was evacuated, and bought $1,000 in clothes for work the next day. They had no receipts and were not reimbursed, Mayronne said. (The Associated Press, May 10, 2000) CLARK REFINGING: Liability for ’94 Malfunction Not Fully Established -------------------------------------------------------------------- Clark Refining & Marketing Inc. is the subject of a purported class action lawsuit related to an on-site electrical malfunction at Clark R&M's Blue Island Refinery on October 7, 1994, which resulted in the release to the atmosphere of used catalyst containing low levels of heavy metals, including antimony, nickel and vanadium. This release resulted in the temporary evacuation of certain areas near the refinery, including a high school, and approximately fifty people were taken to area hospitals. Clark R&M offered to reimburse the medical expenses incurred by persons receiving treatment. The purported class action lawsuit was filed on behalf of various named individuals and purported plaintiff classes, including residents of Blue Island, Illinois and Eisenhower High School students, alleging claims based on common law nuisance, negligence, willful and wanton negligence and the Illinois Family Expense Act as a result of this incident. Plaintiffs seek to recover damages in an unspecified amount for alleged medical expenses, diminished property values, pain and suffering and other damages. Plaintiffs also seek punitive damages in an unspecified amount. As of December 31, 1999, the Company had accrued a total of $36.4 million for legal and environmental-related obligations that may result from the matter above and other legal and environmental matters and obligations associated with certain previously owned retail sites. Clark R&M says while it is not possible at this time to establish the ultimate amount of liability with respect to the Company's contingent liabilities, the Company is of the opinion that the aggregate amount of any such liabilities, for which provision has not been made, will not have a material adverse effect on its financial position; however, an adverse outcome of any one or more of these matters could have a material effect on quarterly or annual operating results or cash flows when resolved in a future period. COCA-COLA: Boycott Organizers to Target Sprite in 10 Cities ----------------------------------------------------------- A former Coca-Cola employee organizing a boycott against the soft-drink giant to protest alleged racial discrimination by management said the effort would begin in earnest this week in 10 large U.S. cities. The initial focus will be on getting fellow blacks to stop drinking Sprite, said Larry Jones, leader of the Committee for Corporate Justice. The group also hopes to persuade businesses to switch their Coke vending machines to those from rival Pepsi. So far, 15 businesses and churches in metro Atlanta have agreed to remove Coke machines, Jones said. "This is a boycott ordained of God," said Jones, who lost his job as a Coke human resources manager in layoffs earlier this year. "This boycott is about consumers who believe as we do that there is no room for discrimination in the workplace," Jones said Wednesday as he stood before about 50 protesters gathered under a giant neon Coke sign at the company's museum in downtown Atlanta. Eight black current and former workers sued the company last year, alleging they were denied raises, promotions and fair performance reviews because of their race. They are seeking to include as many as 2,000 others in a class action. Coke denies the discrimination claims and has been working to settle the suit. Coke spokesman Ben Deutsch said the company is "disappointed" by the boycott. "We take all comments and concerns voiced by our current and former employees seriously, but we do not think this action is justified," Deutsch said. The group will target its boycott at the 10 markets where the group says Coke sells the most to blacks. They are: Atlanta, Chicago, Detroit, Houston, Los Angeles, Miami, New York City, Philadelphia, St. Louis and Washington. Sprite will be the first product targeted because blacks make up 36 percent of the soft drink's consumer base, he said. A Coke spokesman was unable to confirm that figure. (The Associated Press, May 11, 2000) DREYFUS CORP: Fined $2.95 Mil for Fooling Investors --------------------------------------------------- Dreyfus Corp. was hit with a $2.95 million fine after regulators concluded it had lied about the performance of one of its mutual funds. The manager of the funds, Michael Schonberg, was fined $50,000 and suspended from the securities industry for nine months for trading securities held in the fund for his own account. Schonberg resigned from Dreyfus, but neither the man nor the company admitted or denied any wrongdoing. The fines settled separate investigations brought by the Securities and Exchange Commission and New York Attorney General Eliot Spitzer. "This case should serve as a warning to both investors and fund companies," said Spitzer. Both the SEC and the AG's office became suspicious when Dreyfus ran ads in fall 1996 stating that its Aggressive Growth fund had returns of more than 80 percent in its first year. But Dreyfus did not disclose that much of the gain came from one-time investments in initial public offerings - and was thus unlikely to be repeated. In fact, the performance was not repeated. In 1997, the fund fell 15.8 percent, and in 1998, it dropped 36.6 percent. "If a deal sounds too good to be true, it probably is," said Spitzer. "Investors should ask their brokers what the composition of their funds is, and fund companies have an obligation to let the public know the risk involved with certain investments." Working with Washington regulators during their concurrent investigations, Spitzer let the SEC pursue charges against Schonberg, the Dreyfus fund manager alleged to have made inappropriate trades for his own account. Schonberg, who was responsible for making the buy and sell calls for the Aggressive Growth fund, was said to have been buying stocks for his own account before buying them for the fund. The fund's actions may have made his own personal stake more valuable. Dreyfus put Schonberg on paid leave in 1998 when these allegations first arose and accepted his resignation this week, according to a Dreyfus spokeswoman. Although the $2.95 million fine settles the SEC and Attorney General probes, Dreyfus cannot yet put this matter behind it. It still faces a class-action lawsuit from shareholders who believe they suffered financial losses because of actions taken by Dreyfus management between October 1995 and June 1998. "We are in the process of certifying the class, which we expect to be in the thousands of people," said Lee Shalov, a partner with Shalov, Stone & Bonner, a law firm in New York. "We are seeking to cover the losses sustained by the misrepresentation by Dreyfus, but we are not currently asking for punitive damages," said Shalov, who said he could not estimate the potential liability for Dreyfus until he knows exactly how many shareholders will join the class-action lawsuit. The fund company is owned by the Mellon Financial Corp. But it was not the only portfolio manager censored by officials for lying about performance. A San Francisco hedge fund manager, Ballybunion Capital Partners' Michael Higgins, has been charged with raising $7.6 million by lying about his performance record, according to federal prosecutors. Higgins solicited investors by telling them his fund had impressive gains when it actually sustained severe losses, the San Francisco U.S. Attorney's office said. Even when the assets in the fund dwindled to $750,000, Higgins continued to tell investors that the fund had more than $7.5 million. (The New York Post, May 11, 2000) EUROTUNNEL: Small Shareholders Seek Redress; Moves in France Begin ------------------------------------------------------------------ Small shareholders will press for compensation from Eurotunnel after moves began in France to prosecute the tunnel operator's chiefs and financiers, including the architect of the project, Sir Alastair Morton, over the controversial 1994 rights issue worth pounds 858m . Christian Cambier heads an association representing many of the 786,000 small shareholders, who lost a fortune when share prices collapsed. He envisaged an American-style class action for damages. Senior politicians are likely to be questioned after the decision by an examining magistrate, Dominique de Talence, to initiate legal proceedings that could lead to the prosecution of the co-presidents of Eurotunnel until 1994, Andre Bernard and Sir Alastair Mor ton, chairman of the Strategic Rail Authority. Sir Alastair said: 'I advise everyone not to expend too much time and energy on the latest news. A full response has already been given by Eurotunnel. The process has gone on for six years and may continue for years." Sir Alastair said he understood the magistrate was making inquries on a number of fronts, including payment made to him while co-chairman and the possibility of insider dealing. 'The inquiry into insider trading involves parties outside the company, not me.' Among charges being considered against the two men and chairman, Patrick Ponsolle, are publishing false information on company prospects and falsifying accounts to make the share issue more attractive. If the judge decides there is a case to answer, they could be tried along with senior executives of Indosuez, Credit Lyonnais, Tiger Fund Management and SBC and three other Eurotunnel officials - Alain Bertrand, Georges Chazot and Graham Corbett. The investigation arises from a report by two financial experts, Andre Dana and Michel Levasseur, into the circumstances of the 1994 increase of capital. Insiders were said to have sold their shares in the run-up, knowing that predictions on Eurotunnel's profitability and traffic were doctored. The most misleading announcement concerned the opening of the Eurostar service. This was scheduled for summer 1994 in the prospectus but, immediately the share offer closed, French-state railways SNCF announced that the Eurotunnel link between London and Paris had been delayed for at least six months. (The Guardian (London), May 11, 2000) FOREST CITY: Construction Workers Sue over Asbestos, Mold, Mildew ----------------------------------------------------------------- On September 21, 1999, a complaint was filed in state court in Los Angeles County against Forest City Enterprises, Inc., Forest City California Residential Development, Inc., and Forest City Residential West, Inc. Plaintiffs are 63 construction workers who claim to have been exposed to asbestos and mold and mildew while engaged in renovation work at a construction site in Washington ("the Washington claims"). Three of the plaintiffs also claim to have been exposed to lead paint and asbestos at a construction site in California. Plaintiffs seek damages for unspecified personal injuries, lost income, and diminished earning capacity and also seek punitive and treble damages. Defendants filed a motion to dismiss or stay the Washington claims on the grounds that Washington was a more appropriate forum in which to hear these claims. On February 25, 2000, the Superior Court for the County of Los Angeles granted defendants' motion and severed the Washington claims from the California claims and stayed the Washington claims so that they can be tried in Washington, which the Court found to be the more appropriate forum. The Company will continue the defense of the California claims in the State of California court system. FOREST CITY: Lawsuit in Oregon over Pay Dismissed ------------------------------------------------- An action was filed in August 1997 against Forest City Trading Group, Inc. and 10 of its subsidiaries, all of which are in the business of trading lumber. The complaint alleged improper calculation and underpayment of commissions and other related claims. On September 11, 1998 Plaintiffs filed a Motion for Class Certification. On December 8, 1998 the court posted an order denying class certification. On April 5, 1999 the original four Plaintiffs filed a notice of dismissal of this lawsuit without prejudice in state court. On April 16, 1999, the case was re-filed in Federal court against Forest City Trading Group, Inc. and four of its subsidiaries. On November 30, 1999, the U.S. District Court for the District of Oregon dismissed the federal claims with prejudice and the state law claims without prejudice. The time to appeal has expired. There will be no further report on this case if no new developments take place. FOREST CITY: Seven Hills Homeowners Sue Partnership over Golf Course -------------------------------------------------------------------- The Company, through its subsidiaries, owns a 14.6% interest in the Seven Hills housing development located in Henderson, Nevada, which is owned by the Silver Canyon Partnership ("Silver Canyon") and is being developed next to a golf course. In August 1997, a class-action lawsuit was filed by the current homeowners in Seven Hills against the Silver Canyon Partnership, the golf course developers and other entities, including Forest City Enterprises Inc. In addition, separate lawsuits were filed by some of the production home-building companies at Seven Hills against some of the same parties, including the Company. Each of these lawsuits sought a commitment for public play on the golf course, as well as damages and, in October 1998, the court granted play rights. In February 1999, the owner of the golf course filed a cross-claim against the Silver Canyon Partnership and the Company. Silver Canyon has since settled with the Plaintiff homeowners and with certain of Silver Canyon's insurance carriers and the Company has been released. In addition, Silver Canyon has reached settlement agreements with the owner of the golf course and with one of the production home builders which are expected to be executed in the near future. These settlements include a release of the Company. The Company was dismissed as a defendant in the other two lawsuits filed by the production builders, and subsequent to the dismissal of the Company, Silver Canyon reached settlement in principle in connection with one of the production home builder lawsuits. The remaining lawsuit is set for trial in June 2000 against Silver Canyon. Silver Canyon believes it has meritorious defenses and intends to vigorously defend the lawsuit. HAYES LEMMERZ: Minority Shareholders File Suit over Stock Offer --------------------------------------------------------------- The SEC filing by Hayes Lemmerz International Inc. reminds investors that on January 9, 2000, JLL Fund II, on behalf of itself, TSG Capital Fund II, L.P. , CIBC WG Argosy Merchant Fund 2, L.L.C. , certain members of and interests associated with the Lemmerz family, Ron Cucuz, Chairman and Chief Executive Officer of the Company, and certain other stockholders of the Company, sent a letter to the Board of Directors of Hayes Lemmerz offering to acquire all of the outstanding shares of the Company’s Common Stock not owned by the Stockholders for a price of $21 per share in cash in a merger transaction. The Stockholders currently own in excess of 75% of the Company&’s outstanding Common Stock. The Stockholder Offer stated that the Stockholders were only interested in acquiring the Shares and that the Stockholders had no interest in selling their equity interest in the Company. The Board of Directors held a meeting on January 10, 2000 and appointed a Special Committee composed of the independent directors of the Company (John S. Rodewig and Ray H. Witt) to consider the Stockholders&’ proposal. The Special Committee has retained Wasserstein Perella & Co. as its financial advisor and Wachtell, Lipton, Rosen & Katz as its counsel. The Special Committee is evaluating the proposal, but has not yet made any recommendations regarding the Stockholder Offer. In response to the Stockholder Offer, four lawsuits have been filed in the Court of Chancery of the State of Delaware and are being consolidated into a single action. Plaintiffs allege, among other things, that the price of $21 per share is unfair and inadequate and that the Stockholders are breaching their duties as controlling stockholders. Plaintiffs have named the Company, all of its directors and Joseph Littlejohn Levy Inc. as defendants in this action and are seeking to have the action declared a class action on behalf of all of the Company’s minority shareholders. The action is in the early stages of discovery. HMO: Aetna Indicates Relaxation of Policies in Connecticut ---------------------------------------------------------- Less than a month after signing a landmark deal that changes how it does business with doctors and consumers in Texas, the health insurance giant Aetna Inc. said that it planned to relax some managed-care policies in Connecticut. The move is part of the company's efforts to make changes one market at a time to business practices and policies that landed Aetna and its managed-care industry peers at the center of criticism from those who say they are more concerned with profits than members' health needs. Eager to mend battered relations with doctors and deflect a series of class-action lawsuits and other legal entanglements, Aetna announced seven policy changes at Aetna US Healthcare, its health insurance unit, during a meeting of the Connecticut State Medical Association. They include the elimination of capitation agreements for primary care physicians with small practices, relaxing its mandatory "all products" requirement and allowing specialists to act as primary care physicians for very sick patients. Connecticut's attorney general, Richard Blumenthal, who has been investigating Aetna, said the changes were "a good start." But he said the company should end its practice of paying a fee for each patient, which "wrongly shifts the risk of health care to physicians and their patients." (The New York Times, May 11, 2000) HOGGSBREATH BAR: Popular Restaurant Struggles after Hep. A Outbreak ------------------------------------------------------------------- The once-popular Hoggsbreath bar and restaurant is suffering in the wake of a hepatitis A outbreak that became public about three weeks ago. The gathering spot that Tom Duray and his wife, Jocelyn, bought 24 years ago used to ring sales of $40,000 to $45,000 a week. But weekly receipts have dropped to about $6,000 to $7,000 since the Minnesota Department of Health announced April 14 that five Hoggsbreath employees and a customer had confirmed cases of hepatitis A. "You can have a very good business, and you can be operating it for many, many years. But something like this can turn it all upside down in one day and you can have no business at all," Duray said. The state health department says 36 people associated with the Hoggsbreath have been diagnosed with hepatitis A. Nine were workers and 27 were patrons. And a class-action lawsuit filed April 27 in Ramsey County District Court alleges that the Hoggsbreath "failed to discover and prevent" the contamination of its food or beverages. Duray insists that numerous inspections never found any of the Hoggsbreath's equipment to be tainted, and the establishment never was ordered to close. A health department official said risk at the Hoggsbreath was eliminated when employees were given the hepatitis vaccination. It may never be known how the initial infected employee, a line cook, got the virus. Hepatitis A is spread through contact with fecal material from an infected person, or consumption of contaminated food or water. Duray, 46, has spent much time trying to apologize to customers for the embarrassment and inconvenience they have suffered. The recent dearth of business has meant 15 people were laid off and hours were drastically cut for the rest of the 60-person Hoggsbreath staff. Duray hopes the move is temporary. "Things like this are virtually devastating to family-owned businesses, because they don't have the huge corporate backing of the Applebee's and the T.G.I. Fridays," he said. At least one other local restaurant operator can relate to the Hoggsbreath's troubles. It took well over a year for business to return to normal after Trigger's restaurant was hit with a shigellosis outbreak in August 1998, said Terry Correll, general manager of the longtime establishment at the Minnesota Horse and Hunt Club in Prior Lake. Duray knew his business would be seriously affected by the public announcement of the hepatitis A infection. Within hours of the April 14 release, news crews were in front of the Hoggsbreath interviewing customers as they tried to enter the bar. Sales volume began to drop that Friday night. For the next week, business was about 10 percent of normal, Duray said. It has improved to about 30 percent of normal in recent days, he said. If business remains at its current level, the Hoggsbreath would be able to remain open for only two to four more months, Duray estimated. (The Associated Press, May 9, 2000) LOCKHEED MARTIN: Black Employees File Suits Alleging Discrimination ------------------------------------------------------------------- Eleven black Lockheed Martin employees have filed two lawsuits claiming that they have had to endure racial taunts and discrimination in pay and promotions. The lawsuits ask the U.S. District Court to permit two class-action cases on behalf of blacks at the defense contractor's plants one for salaried employees and one for hourly workers. The plaintiffs' lawyers said they have more than 100 complaints of discrimination at plants from South Carolina to Texas. The lawsuits said qualified blacks at Lockheed's Marietta, Ga., plant have been denied promotions, raises and training while getting substandard salaries and being denied chances for overtime pay. The plaintiffs also allege they were exposed to slurs and have received ''back to Africa'' tickets and nooses placed on their lockers. Tom Burbage, the top executive at the suburban Atlanta plant, said he could not deny that some of the incidents could have occurred but ''we don't tolerate it.'' The plaintiffs' legal team, which includes Los Angeles lawyer Johnnie Cochran Jr., is also suing the International Association of Machinists & Aerospace Workers, claiming that union officials either allowed or collaborated in discrimination. Burbage said the company is willing to continue to negotiate a settlement with the workers and the Equal Employment Opportunity Commission. The EEOC notified Lockheed Martin last year that its investigation indicated violations might have occurred. ''To date, the EEOC has not shared with us the basis for these findings,'' the company said in a statement Wednesday. Lockheed Martin, which employs 149,000 workers worldwide at more than 900 plants, submitted a resolution proposal two weeks ago. The details of the offer are confidential, but the plaintiffs' attorneys characterized it as inadequate. MP3 COM: Tells Investors of Copyright Infringement Lawsuits ----------------------------------------------------------- MP3 Com Inc., which has been the targe of lawsuits over music copyright infringement, as reported in the CAR, reports on these lawsuits in its file to the SEC. The Company says that on January 21, 2000, ten major recording companies filed a copyright infringement lawsuit against MP3.com in the United States District Court for the Southern District of New York. The complaint alleges that MP3.com, in connection with its recently-introduced My.MP3.com service, made unauthorized copies of approximately 45,000 audio CDs in violation of the Copyright Act. The complaint further alleges that offering the new My.MP3.com service, which allows a user to listen, via the Internet, to the tracks of certain commercial audio CDs of his or her choosing, constitutes unauthorized copying and willful infringement of plaintiffs' copyrighted sound recordings. Plaintiffs seek damages (including statutory damages of up to $150,000 per violation) and injunctive relief prohibiting MP3.com from operating its My.MP3.com service or any other service that uses reproductions of plaintiffs' copyrighted sound recordings. In February 2000, MP3.com filed an answer to the complaint denying each of the substantive allegations therein, and the plaintiffs moved for summary judgement. In March 2000, MP3.com filed materials in opposition to the plaintiffs' motion for summary judgement, and a hearing on the motion was held by the court on April 14, 2000. The court was expected to provide a ruling on the motion on April 28, 2000. On March 14, 2000, two large music publishing companies filed a copyright infringement lawsuit against MP3.com in the United States District Court for the Southern District of New York. The complaint alleges that MP3.com, in connection with its recently-introduced My.MP3.com service, made unauthorized copies of approximately 45,000 audio CDs in violation of the Copyright Act, and that MP3.com, in connection with the streaming of audio content to users of the My.MP3.com service, continues to make unauthorized digital phonorecords in violation of the Copyright Act. The complaint further alleges that MP3.com's actions constitute unauthorized copying and willful infringement of plaintiffs' copyrights. Plaintiffs seek damages (including statutory damages of up to $150,000 per violation) and injunctive relief prohibiting MP3.com from operating its My.MP3.com service or any other service that uses unauthorized reproductions of plaintiffs' copyrighted works. On April 12, 2000, several artists filed a class action lawsuit in the United States District Court for the Southern District of New York against MP3.com and several major recording companies that claimed to own copyrights in sound recordings featuring the artists. The complaint alleges that the recording company defendants are claiming, their separate lawsuit against MP3.com (filed on January 21, 2000, rights in plaintiffs' recordings that they do not possess. In particular, the complaint alleges that the recording company defendants do not possess any copyright protections with respect to plaintiffs' pre-1972 published and pre-1978 unpublished recordings, do not possess the right to digitally transmit plaintiffs' pre-1996 recordings over the Internet, and do not possess the right to control the conversion of plaintiffs' recordings into mp3 files. The complaint further alleges that MP3.com has used the names and likenesses of plaintiffs without their consent or authorization and in a deceptive manner, in violation of the federal Lanham Act, the New York Civil Rights Law, and unspecified unfair competition and misappropriation laws. In their prayer for relief, plaintiffs ask to have their class action certified, to be awarded unspecified damages and attorneys' fees, to have the defendants enjoined from using plaintiffs' names and likenesses to promote downloading music over the Internet, and to receive declaratory relief regarding plaintiffs' rights in their pre- and post-1972 recordings. MP3.com believes that it has meritorious defenses to the plaintiffs' claims, including the fair use doctrine, based in part on the belief that these services augment the market for music and music CDs, and we intend to vigorously defend against such claims. MP3.com says it cannot assure investors that the company will be successful in defending these lawsuits. The compay says it may be required to pay license fees or substantial damages, including statutory, punitive or other damages that far exceed the resources and overall market capitalization of our company and may also be required at any time by the courts to cease all operations of the My.MP3.com, Instant Listening, Beam-it or other services. Furthermore, the Company's insurance coverage and other capital resources may be inadequate to cover anticipated costs of the lawsuit or any possible settlements or licenses. If successful, any of these lawsuits could seriously harm the company's business by forcing it to cease providing services to consumers or requiring the company to pay monetary damages. Even if unsuccessful, these lawsuits still can harm the company's business severely by damaging reputation, requiring us to incur legal costs, lowering our stock price and public demand for our stock, and diverting management's attention away from primary business activities in general. PLAYCORE, INC: Sued in Wisconsin over Chartwell Merger Agreement ---------------------------------------------------------------- PlayCore, Inc. (Amex: PCO), a commercial and consumer playground equipment and backyard products company, in its May 11 announcement on first quarter results, also announces that a complaint was filed in Rock County, Wisconsin state court against the Company and its board of directors. The Company was informed on May 4, 2000 that a complaint was filed on April 17, 2000, three days after the public announcement that the Company had entered into a definitive agreement and plan of merger with a newly-formed affiliate of Chartwell Investments II LLC. The complaint was filed as a purported class action on behalf of holders of Company common stock. The complaint alleges that the Company's board of directors, by entering into the agreement and plan of merger with the Chartwell entity, violated its fiduciary duties to Company stockholders. Neither the Company nor, to the Company's knowledge, any of its directors have been served with the complaint. The Company believes that the plaintiff's claims are without merit, and intends to defend the action vigorously. On April 14, 2000, the Company announced that it had entered into a definitive agreement and plan of merger with an affiliate of Chartwell Investments II LLC providing for the acquisition of all of the outstanding shares of PlayCore, Inc. for $10.10 per share in cash. The tender offer for the common stock of PlayCore was initiated on April 20, 2000 and is expected to close on May 18, 2000. PROVANTAGE HEALTH: Investor Sues over Sale to Merck --------------------------------------------------- ProVantage Health Services Inc. directors gained extra benefits for themselves as part of a purchase agreement, an investor alleges in a class-action lawsuit. Merck & Co.'s Medco division sais it wants to buy ProVantage for $222 million, or $12.25 a share. ProVantage, which provides health benefit management services for about 5 million people, began as a unit of ShopKo in 1994. The lawsuit, filed in Circuit Court by James Jorgensen, of Dunbar alleges ProVantage and six officers and directors did not seek competing bids and structured the transaction to benefit themselves, Merck and ShopKo Stores Inc., which owns 64.5 percent of ProVantage. The lawsuit was filed by Milberg Weiss Bershad Hynes & Lerach LLP, of San Diego. It does not detail how any of the defendants would benefit more than other shareholders. The lawsuit claims the defendants "stood on both sides of the transaction and engaged in self-dealing and obtained for themselves personal benefits, including personal financial benefits not shared equally by plaintiff or the class." John Nelson, investment director of small company stocks with the state Investment Board, said the board would not join the class action. He recently sold out of his position in ProVantage. "I'm assuming there's no foul play because ShopKo has blessed this deal," Nelson said. "They own so much I don't think they'd do it unless they thought they were getting a good deal at this time." ProVantage went public in an initial public offering in July 1999 at $18 a share. The price went as high as $22 before dropping as low as $6.37 March 7. The lawsuit described Merck's price of $12.25 a share as inadequate. The lawsuit, filed in Circuit Court by James Jorgensen, of Dunbar alleges ProVantage and six officers and directors did not seek competing bids and structured the transaction to benefit themselves, Merck and ShopKo Stores Inc., which owns 64.5 percent of ProVantage. (The Associated Press, May 11, 2000) RE-ARREST POLICY: Lawsuit Says Philadelphia Policy Unconstitutional ------------------------------------------------------------------- A coalition of criminal defense lawyers joined forces on May 10 to file a federal class action challenging a recently enacted policy of the Philadelphia District Attorney's Office to re-arrest some defendants immediately after a Municipal Court judge dismisses the charges. At issue in the case is the constitutionality of the D.A.'s interpretation of a new court rule Rule 143 of the Pennsylvania Rules of Criminal Procedure. The suit says that prior to the enactment of Rule 143, DA Lynne Abraham's office recognized that it needed prior court approval before making a re-arrest in a case where charges had been dismissed. But in mid-April, the suit says, Abraham instituted a policy of re-arresting defendants "without probable cause or judicial approval."Once re-arrested, such defendants are detained pending arraignment up to 48 hours and face the possibility of higher bail or stricter bail restrictions. Attorneys David Rudovsky and Jules Epstein of Kairys Rudovsky Epstein Messing & Rau, along with First Assistant Defender Charles Cunningham and Assistant Defender Bradley S. Bridge of the Defender Association, argue that the policy violates the Fourth and 14th amendments to the U.S. Constitution. They also argue that Abraham's interpretation of Rule 143 is flawed and that her policy doesn't even comply with the new rule. Abraham's spokeswoman, Cathie Abookire, said she has not yet seen the lawsuit, but that the office plans to defend its interpretation of the new rule. Abookire said the rule is being enforced only in the five satellite district courts and that experienced assistant district attorneys are making the decisions on when to re-arrest a defendant whose charges are dismissed." Every case does not warrant this," Abookire said. Although she has not yet seen the lawsuit, Abookire confirmed that the lead plaintiff, Robert Stewart, was subjected to the new rule. According to the suit, Stewart was arrested on March 23, 2000, and charged with aggravated assault. He was released on bail. At a preliminary hearing on April 28, the aggravated assault charge was dismissed and the matter remanded to the Municipal Court for trial on simple assault. The suit says detectives from the DA's Office immediately re-arrested Stewart who is now in custody on new bail imposed at arraignment on the same charges that were dismissed at the preliminary hearing. But Abookire pointed out that Stewart was also charged with possession of an instrument of crime and that the Municipal Court judge did not dismiss that count. By re-arresting, she said, the prosecutor was ensuring that the case would be transferred to Common Pleas Court. Abookire explained that prior to Rule 143, re-arrests followed one of two tracks, depending on the circumstances.In cases where the Municipal Court judge dismissed for "lack of prosecution," such as the failure of a police witness to appear in court, the prosecutor was required to return to Municipal Court to seek approval for the re-arrest. But in cases where the charges were dismissed for lack of evidence, the prosecutor was required to seek the approval of a judge on the Court of Common Pleas, she said. The new rule eliminated those requirements by vesting the District Attorney's Office with the power to approve the re-arrest on its own, she said.Rule 143, which was passed by the Pennsylvania Supreme Court, is captioned "Reinstituting Charges Following Withdrawal or Dismissal." The rule reads: "(A) When charges are dismissed or withdrawn at, or prior to, a preliminary hearing, the attorney for the Commonwealth may reinstitute the charges by approving, in writing, the refiling of a complaint with the issuing authority who dismissed or permitted the withdrawal of the charges."(B) Following the refiling of a complaint pursuant to paragraph (A), if the attorney for the Commonwealth determines that the preliminary hearing should be conducted by a different issuing authority, the attorney shall file a Rule 23 motion with the clerk of courts requesting that the president judge, or a judge designated by the president judge, assign a different issuing authority to conduct the preliminary hearing. The motion shall set forth the reasons for requesting a different issuing authority."Defense lawyers say Abraham has misinterpreted the rule as one that permits her prosecutors to re-arrest defendants and commit them to custody without judicial approval or a showing of probable cause even after a judge has ordered them discharged based on a finding of no probable cause.Her office, the suit says, has made the re-arrests "without complying with the mandates of Rule 143," since prosecutors have neither "approve[d] in writing the refiling of a complaint" nor refiled the original complaint with the "issuing authority who dismissed ... the charges." In a brief supporting their request for an injunction, they argue that "to the extent that the issuing authority refuses to accept such a refiling as improper for lack of a showing of probable cause, the sole remedy for the [DA's Office] is an appeal of this decision to the Court of Common Pleas."Under Abraham's policy, they says, "this system of re-arrest can continue for as many times and as many preliminary hearings as the Commonwealth as the [prosecutors] unilaterally determine, all in disregard of a judicial determination of no probable cause."The case, Stewart et al. v. Abraham, 00-cv-2425, has been assigned to U.S. District Judge Harvey Bartle III. (The Legal Intelligencer, May 11, 2000) SOLUTION 6: Australian Software Firm and US Elite Merger Plan Quashed ---------------------------------------------------------------------Solution 6 Holdings Ltd has suffered yet another setback to its expansion plans with the termination of its planned merger with US-based Elite Information Group Inc. The end of the deal finishes a horror fortnight for the Australian software firm. But analysts say that despite the latest setback, Solution 6 is unlikely to lose its competitive edge as one of Australia's leading technology players. Solution 6 said that it and Elite had decided to quash the $150 million deal, after continuing problems with the review of the transaction by the US Federal Trade Commission. Late last week, the FTC's Bureau of Competition advice that it would recommend a challenge to the deal. Solution 6 chief financial officer Tom Montgomery said the opposition to the deal, meant it "became clear to Elite and ourselves that the process would continue to be drawn out. "...We both thought it would not make sense to continue," he told AAP. Solution 6 had to extend the offer several times for the FTC review, which came after a US law firm filed a class action against both companies. "We are disappointed with the FTC's position and regret that the two companies were not able to join forces to bring continuing innovation to the professional service market," Solution 6 chief executive Chris Tyler said. One analyst, who did not wish to be named, said the move meant Solution 6 would not have as much access to the larger end of the US legal software market. "Becuause Elite was particularly strong in the large firm end (of the US legal software market), the acquisition of Elite would have given Solution 6 80 per cent of that market," he told AAP. "It would have given them a large market share." Mr Montgomery added that the company would now use its CMSData Corp to grow in the US. "It's very well positioned, its product is very functional and it's been very well received in the marketplace...it's a great platform to go forward with," he said. But the analyst said that CMSData would have to expand its marketing abilities to be able to be effective. "Instead of buying itself a market share solution in America, Solution 6 knows that it must go back to building it organically, which will take more time. "So, that is a negative for Solution 6, but it's something the market's been warned about over the last week or so...," he said. Solution 6 has suffered several setbacks in its global expansion plans, with the company's takeover of UK-accountancy software firm Pegasus plc falling through earlier in the year, and its planned merger with Sausage Software looking increasingly precarious. Mr Montgomery added that although Solution Six had $100 million left over from the Elite deal, it was not in any active dicussions with other companies in the US at the moment. "...Currently at this point in time there's no active discussions being conducted in the US..." he told AAP. The analyst noted that despite a cooling-off on the acquisition trail, Solution 6 was still a very strong company. "Nothing has fundamentally has changed for Solution 6, apart from these deals falling over," he said. "Solution 6 is still a very large organisation in terms of the scope of its business and the staff who work there...if you look at the pool of talent, Solution 6 has got a huge advantage over other companies," he said. Solution 6 shares closed down 42 cents to $3.00. (AAP Newsfeed, May 11, 2000) SPECIALTY EQUIPMENT: Sued for Seeking Approval for Incentive Plans ------------------------------------------------------------------ Specialty Equipment Companies Inc. and certain of its current and former directors are named as defendants in an action filed by Virginia A. Noerr, who claims to own shares of the Company's common stock. The action "Noerr v. Greenwood et al.," C.A. No. 14320, is pending in the Court of Chancery for the State of Delaware in and for New Castle County, Delaware. Plaintiff purports to bring this action both as a class action on behalf of all stockholders of record on April 2, 1993 and derivatively for the benefit of the Company. Plaintiff's complaint, which has twice been amended, asserts that (i) the defendants breached their fiduciary duties to the Company by soliciting stockholder approval of the Company's Executive Long-Term Incentive Plan and Non-Employee Directors Long-Term Incentive Plan by means of a misleading proxy statement and (ii) the Board breached its fiduciary duty in approving such option plans. The complaint seeks an order declaring the stockholder approval of those option plans void, canceling the options granted thereunder, enjoining the directors from exercising any such options, imposing a constructive trust for the benefit of Specialty upon any profits the individual named defendants may have made through exercise of their options, requiring an accounting in connection therewith, and awarding unspecified damages plus plaintiff's attorneys' fees and expenses in an unspecified amount. The most recent amended complaint was filed after the court granted in part the defendants' joint motion to dismiss the complaint, striking certain non-disclosure claims; the court's order, however, denied the remainder of defendants' motion to dismiss. Specialty and the individual defendants believe that the allegations made in the complaint as amended are without merit and are factually incorrect and Specialty intends to contest these allegations vigorously. The individual defendants have each made demand upon Specialty for indemnification with respect to this action. Management believes that if Specialty were liable to the individual defendants for indemnification, the uninsured portion of such liability would not be material. TENNESSEE DEPT: Group Files Fed Suit for Overhaul if Foster Care System ----------------------------------------------------------------------- A children's advocacy group that has won court-ordered changes in foster care systems in New York and elsewhere filed a federal class-action lawsuit on Thursday to force an overhaul of Tennessee's foster care system. The suit says thousands of Tennessee children are languishing in foster care, in violation of federal law, neither being returned to their parents nor being made available for adoption. Many are kept in emergency shelters for months, the suit says, and some 2,000 children have been moved from home to home 10 or more times. The complaint also says no concerted effort is being made to find adoptive parents for many of the children. Marcia Robinson Lowry, executive director of the group, Children's Rights, said the Tennessee Department of Children's Services was "a grossly mismanaged and overburdened child welfare system." The suit, filed in Federal District Court in Nashville on behalf of eight juvenile plaintiffs whom it named as well as all of the more than 10,000 foster children in Tennessee, asks the court to find the state in violation of federal laws, including the Adoption and Safe Families Act of 1997, which limits the time a state can hold children in foster care without either making them available for adoption or reuniting them with their parents. Children's Rights is asking the court to order the state to begin negotiations with the group on how the system should be overhauled. The suit also says the problems it outlines are even more acute for African-American children, and asks for additional relief for them. Gov. Don Sundquist, a Republican who was named as a defendant along with the state's children's services commissioner, George Hattaway, would not comment on the suit. But the governor's spokeswoman, Beth Fortune, said, "This administration has made many efforts to improve the foster care system in Tennessee." Ava Philson, a spokeswoman for the Department of Children's Services, said the agency had responded over the years to complaints about the system. In 1998, Ms. Philson said, the Legislature approved $19 million in extra money that helped the department hire more case managers and case workers. She said 36 additional lawyers were hired, almost tripling the number who represent children in efforts either to reunite them with their parents or have them adopted. In January 1999, Ms. Philson said, the department hired the Child Welfare League of America to assess the program and develop ways to change it. She also said the department installed a computer system last fall to allow case managers to better track children in the system. Ms. Lowry said these efforts were not enough. "Given how long the state has known about the very serious problems and ongoing harm to children," she said, "these efforts are really too little too late." Children's Rights is involved in litigation or settlement talks with nine other state or city child welfare systems. A suit by the group led to a court order that put the foster care system in Washington, D.C., under court receivership. In New York City, a December 1998 settlement of a Children's Rights suit established an expert panel that evaluates and monitors the system. But some advocates for foster children said they believe that the kind of large class-action suits that Children's Rights brings are not the answer, either. "Nobody's saying there are not problems in these foster care systems," said Doug Lasdon, executive director of the Urban Justice Center in New York, "but a humongous, global lawsuit that does not present concrete remedies is unlikely to change the system." Dean Hill Rivkin, a professor of public interest law at the University of Tennessee here, said the suit was "the first legal challenge to the state's foster care system as a whole," and called it "long overdue." According to the complaint, Brian A., the first plaintiff in the suit, is a 9-year-old who has been in foster care for four years and has been living in an emergency shelter near Memphis for the last seven months. Denise E., 8, who the suit says was placed in foster care after being removed at birth from her mother, was visited once by a case manager during her first week of life, but never since then, and has not received any services to monitor her care, needs or development. Pseudonyms were used for the eight named plaintiffs. "The stories in the lawsuit are emblematic of the problems across the state," Professor Rivkin said. (The New York Times, May 11, 2000) TOBACCO LITIGATION: Bush Signs Legislation to Help Avoid Bankruptcy ------------------------------------------------------------------- Gov. Jeb Bush signed legislation that protects tobacco companies from huge damages awarded in lawsuits brought by individuals who are sick from smoking. The new law, signed Tuesday, covers several key areas intended to help the companies avoid bankruptcy as they pay Florida's settlement, which is estimated to be $17.4 billion over 30 years. The money has been earmarked for programs that help children and the elderly. First, the bill allows legislators to begin securitizing, or selling, the future tobacco income. It's doubtful this option would occur any time soon as the bill calls for the Legislature's approval, which could not occur until the next session in the spring of 2001. However, the governor could call a special session to authorize securitizing the income. The bill also caps the amount tobacco companies must put up for a bond while they appeal rulings in individual and class action lawsuits at $100 million or 10% of the company's net worth, whichever is less. A special task force could be appointed to study other options to protect the settlement money, according to the signed legislation. (The Bond Buyer, May 11, 2000) ********* 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 * * *