/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/001020.MBX C L A S S A C T I O N R E P O R T E R Friday, October 20, 2000, Vol. 2, No. 205 Headlines AGRICULTURE DEPT: Durum Farmers to Get Money Soon; Legal Fees Undecided ANTI-ABORTIONISTS: Case Won for Every Woman Who Has Been Deterred BREAST IMPLANT: Arguments on Future Silicon Claims Vs Dow Corning Ensues BROOKTROUT INC: Implicated in Interspeed Fraud, Schiffrin & Barroway Say BROOKTROUT, INC: Rabin & Peckel Files Securities Suit in Massachusetts BROOKTROUT, INC: Schatz & Nobel Announces of Securities Suit Filed in MA BROOKTROUT, INC: The Pomerantz Firm Files Securities Lawsuit in MA COPLEY PHARMACEUTICAL: 10th Cir OKs Fee Slicing Arrangement in MDL Suit DOJ: Reps. Object to Legislative Provisions for Ban on Overtime Payments FORD MOTOR: Recall of Firestone Tires Cut Ford Profits by 7 Percent INFORMATION ARCHITECTS: Announces Dismissal of Securities Suit in NC NHL: PA Ap Ct Says League and Teams Not Responsible for Eagleson’s Fraud PILOT NETWORK: Milberg Weiss Files Securities Lawsuit in California RICHMOND HOUSING: Homeless Disabled Man Files Bias Suit RITE AID: Dept of Labor Investigates Matters Related to 401(k) Plan RITE AID: Lawsuits Challenge Overrides by Pharmacists for Cash Purchases RITE AID: Stockholders May File 4th Amended Complaint in PA in November RITE AID: Yet to Decide on Response to Derivative Complaints in Delaware SOTHEBY'S HOLDINGS: Judge OKs Former Chairman's Access to Information THOMAS & BETTS: Berman DeValerio Reminds of Lead Role Date Approaching ********* AGRICULTURE DEPT: Durum Farmers to Get Money Soon; Legal Fees Undecided ----------------------------------------------------------------------- More than $41 million owed in a federal crop insurance dispute could be paid to durum farmers next week - 19 months after they sued the federal Agriculture Department. But wrangling over legal fees for their attorneys continues. Attorneys for the USDA and its Risk Management Agency protest the $1.3 million request from Sarah Vogel, who represented the farmers. The government lawyers claim the fee - 3 percent of the total amount owed - is unfair to the farmers. "Such a huge windfall - more than a million dollars over and above what would be needed to compensate them - is unjustified and inequitable," wrote Assistant U.S. Attorney Lynn Crooks, of Fargo, and Justice Department lawyers Michael Jay Singer and Frank Rosenfeld. Vogel counters that the farmers who brought the lawsuit agree with the payment, which will be covered by more than $1.9 million in interest earned on the owed funds. She also argues the government should have no say in how much she gets paid. "It's not their money, it's not their arrangement," she said. Government lawyers say Vogel and attorney Courtney Koebele should be paid a total of $230,020, based on their legal fees and documentation of the hours they worked on the case. Even 1 percent or 2 percent of the principal would be a better deal for farmers than the 3 percent now set out, the government contends. Vogel said she expects U.S. District Judge Rodney Webb to issue a written order on the question of the legal fees at some point after a federal court hearing Monday. Paul Wiley and more than two dozen other plaintiffs filed the lawsuit in federal court in March 1999, claiming the government unfairly changed the formula under which the farmers were to be paid insurance claims on lost durum crops. The crop insurance policy at issue in the lawsuit is called crop revenue coverage, which offered durum growers protection against both poor yields and low prices. After offering the insurance, the government cut 77 cents per bushel from what the farmers expected to receive from their insurance policies. The farmers sued and demanded to be paid according to the original formula. The government refused and said it had the right to deny payment when the risk of loss was excessive. Webb ruled in the farmers' favor in September 1999. The government appealed his decision, but Congress passed a law that directed the money be freed to the farmers. The law took effect Oct. 1 Documents detailing the lawsuit and a preliminary payment plan were mailed to about 8,000 farmers who held the crop revenue policies. Any objections brought by farmers will be considered at Monday's hearing. Vogel said 58 people have called a toll-free number set up to take questions on the case, and three written comments that were essentially positive had been received by the deadline early this week. Webb could decide to go forward with the preliminary payment plan, which calls for checks to be sent no later than Oct. 27, Vogel said. The farmers will receive an average of $5,000 when checks are cut. The government is not objecting to a request from the farmers who are named as plaintiffs to receive extra for the time and money they spent to bring the lawsuit. Those additional payments would range from $2,500 to $50,000. (The Associated Press State & Local Wire, October 18, 2000) ANTI-ABORTIONISTS: Case Won for Every Woman Who Has Been Deterred ----------------------------------------------------------------- The issue of how the federal anti-racketeering law may be used against militant abortion opponents has reached the federal appellate level in two courts. Either case could provide the opportunity for the courts to say whether free speech rights include the aggressive activities of abortion opponents, who have found themselves being treated like organized crime families, the original target of the anti-racketeering law known as RICO-the Racketeer Influenced and Corrupt Organizations Act. Protesters in other arenas, such as animal rights, could also be affected by the outcomes. The two cases were argued last month only two days apart. They differ greatly in many respects. But in both, defense attorneys are challenging the use of RICO by relying heavily on the First Amendment. Appellants also dispute the district courts' interpretation of anti-abortion activities as extortion, which qualified them as crimes covered by RICO. One case was argued on Sept. 14 in the 7th U.S. Circuit Court of Appeals. In that case, the National Organization for Women and two abortion clinics had won $85,927 in a class action against the Pro-Life Action League and Operation Rescue on behalf of every woman in the country who has been deterred in her attempt to enter an abortion clinic. The case was the first to charge anti-abortionists with racketeering. It is based on the sit-ins, blockades and other tactics used by abortion opponents at clinics in the late 1980s and early 1990s. NOW Inc. v. Scheidler, No. 99-3076. Appellants in its western counterpart, which was argued Sept. 12 in the 9th Circuit, are 12 individuals, the American Coalition of Life Activists, and Advocates for Life Ministries, which operated a Web site listing the names, addresses, telephone numbers and other information on hundreds of doctors who performed abortions. Planned Parenthood and a group of doctors last year won $109 million, the largest judgment ever against anti-abortion groups, by applying RICO and the 1994 Freedom of Access to the Clinic Entrances statute, which, unlike RICO, allows punitive damages. Planned Parenthood of Columbia Willamette v. American Coalition of Life Activists, No. 99-35320. Using RICO, juries in both cases awarded damages based on economic loss to the plaintiffs, specifically the bulletproof vests and other security measures that the clinics and doctors claimed they were forced to buy for self-defense. Some legal experts see the application of RICO in these cases as an inappropriate expansion of the anti-racketeering law. Many warn of a chilling effect, if not an outright threat, to all sorts of causes, including Greenpeace, animal rights, civil rights and anti-war protests. The trial judge in Scheidler remarked that Congress is the proper forum for complaints that RICO would have crushed the civil rights movement of the 1960s. It has already been used against other political crusaders, such as animal rights groups. "When RICO was passed, the ACLU and others expressed concern over the broad definition of predicate crimes," says Operation Rescue attorney Walter M. Weber of the American Center for Law and Justice. Of Scheidler, he says, "The theory the plaintiffs went to the jury on is that whenever you stop someone from exercising their rights by getting in the way, you are committing extortion, the idea being that property includes everything of value, including abstract rights. So every unlawful protest activity is extortion, and if it happens more than once, it's racketeering." The Meaning of 'Extortion' The U.S. Supreme Court already has taken up Scheidler once, when the district court dismissed the lawsuit in 1994 on the ground that RICO requires an economic motive. The court disagreed, but left unanswered the questions of First Amendment protection and the meaning of "extortion." "A sit-in is not protected activity, but we're claiming it's not extortion," Weber says. "Trespassing is not protected either, but it's not extortion." To Fay Clayton, lead counsel for NOW, what constitutes extortion in the 7th Circuit is clear: "When you use force or violence to force others to give up protected property rights, that's extortion because it interferes with the right to do business." Clayton, of Chicago's Robinson Curley & Clayton, says that she does not consider the First Amendment to be the issue the appellants say it is. "We're just concerned about unlawful acts," she says. "The Supreme Court has made it very clear the First Amendment applies in RICO like everything else. The First Amendment is alive and well." In the 9th Circuit, the free speech issue seems more pronounced. During last month's arguments, the judges wondered aloud at what point speech becomes a threat. The Planned Parenthood case involves no allegations of physical confrontation, only the publication of the Web site lists and some "Wanted" posters distributed by the defendant groups. Defense attorney Christopher Ferrara of the American Catholic Lawyers Association argued that no explicit or immediate threats were used in any of the group's materials. Although the Web site named doctors, it did not call for violent acts against them, he said. Furthermore, he said, the publishers were not responsible for the shootings and other violent acts that followed the publication. Three of the doctors listed on the site were subsequently killed. The Web site, called "The Nuremberg Files," also listed car license-plate numbers of the doctors and the names of some of their spouses and children. Lines were drawn through the names of doctors who had been killed. The names of the injured were shaded in gray. Protected Speech? In 1990, the 9th Circuit said that threats "should be considered in light of their entire factual context, including the surrounding events and the reaction of the listeners." Maria T. Vullo, who argued the appeal for the plaintiffs, says the trial judge who issued an injunction against the defendants concluded they were not engaging in protected speech. Conspiring to commit illegal acts isn't protected by the First Amendment, she noted. Vullo, a member of Paul, Weiss, Rifkind, Wharton & Garrison in New York, says her case has faced some of the same challenges as Scheidler: whether profit must be a motive under RICO, protected speech and the definition of extortion. Those issues, and the actions of the trial court, yielded about 30 arguments for the anti-abortion groups to offer to the 9th Circuit last month. As the first plaintiff to obtain a civil jury verdict under the clinic access statute, Planned Parenthood was able to obtain punitive damages and an injunction, on which the appellate courts are divided. The law bans the use of force or the threat of force against anyone seeking or performing an abortion. The statute, which applies only to anti-abortion activities, could replace RICO in such cases in the future. But Vullo says the anti-racketeering law was a natural fit. "It's pretty easy," she says, "to show that the anti-abortion activists are part of a criminal enterprise." (Fulton County Daily Report, October 19, 2000) BREAST IMPLANT: Arguments on Future Silicon Claims Vs Dow Corning Ensues ------------------------------------------------------------------------ The Nevada claimants, along with the Texans representing the rights of children exposed to silicone, have filed supplemental briefs in the Dow Corning bankruptcy. They assert that a recent decision by the Sixth Circuit supports the bankruptcy court's ruling that future claims against Dow Corning's parent companies should be allowed. In re Dow Corning: Supplement to Nevada Claimants' Opening Brief, No. 99-75924 (E.D. Mich., Aug. 18, 2000); In re Dow Corning: Children Claimants' Supplement to Appellants' Opening Brief , No. 99-75925 (E.D. Mich., Aug. 21, 2000). The U.S. Court of Appeals for the Sixth Circuit decertified the class in In re Telectronics Pacing Systems Inc., No. 99-3476-80 (6th Cir., July 19, 2000), finding that a mass tort non-opt out class action compromised certain claimants constitutional rights; see Breast Implant LR, Aug. 21, 2000, P. 8. The claimants in the Dow Corning bankruptcy contend that their due process rights will also be violated if those women who voted against the Amended Joint Plan of Reorganization are not permitted to sue Dow's parents, The Dow Chemical Co. and Corning Inc. In December, U.S. Bankruptcy Judge Arthur J. Spector issued his controversial opinion, which held that those claimants who voted against the plan could still sue the parent companies. In response, the debtor and its corporate shareholders have filed their own appeals asserting that third-party releases are within the bankruptcy court's authority and are a condition precedent to the plan's implementation. According to certain Class 5 Texas claimants, Dow Corning's reorganization plan also infringes on the children's Fifth and 14th Amendment constitutional rights by limiting the period in which they could file claims against the breast implant manufacturer to 15 years. This effectively makes them a mandatory class, say the appellants, and these children (even if they voted against the plan) will have no recourse outside of the "draconian structure" of the litigation facility if Judge Spector's opinion is not affirmed. According to the briefs opposing the ruling, the parent companies argue they should be released because they have contributed substantially to Dow's reorganization and will fund a large part of the litigation facility once the appeals are concluded. The Texas claimants argue that the Telectronics holding, which followed the precedent established in Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), prohibits any bar that would prevent them from seeking a remedy against solvent tortfeasors. They assert that mandatory opt-in requirements are unconstitutional. The Telectronics court said: The Supreme Court in Ortiz also articulated several constitutional considerations compromised in a non-opt-out class action regarding a mass tort. Both Seventh Amendment jury trial rights and the Fifth Amendment due process principal regarding the right to "a day in court" are implicated in aggregating individual claims sounding in tort. The Texas claimants also contend that there is a long latency period for silicone-induced disease in children and that some of the potential victims exposed to silicone in breast milk are still unborn. There is a significant number of future claimants whose rights will be cut off by the requirement to litigation or negotiate their claims in the litigation facility, they assert. The Nevada claimants have joined with the Texas claimants in bringing this opinion to the attention of Judge Denise Page Hood who is currently deciding the numerous appeals to the reorganization plan. They assert the Sixth Circuit rejected arguments similar to those made by Dow in its fight for plan confirmation. Telectronics had threatened to file for bankruptcy protection if further litigation was allowed. According to the Nevada claimants, the Sixth Circuit rejected these arguments and concluded that even if Telectronics had to file for bankruptcy protection, "This would leave open for adjudication the liability of the parent companies." The children claimants are represented by Alan S. Levin of Reno, Nev. The Nevada claimants are represented by John A. White Jr., also of Reno. Dow Corning & Creditors Respond to Future Claims Assertion In response to the assertions that a recent Sixth Circuit opinion applies to the disputes over Dow Corning's reorganization plan, the breast implant manufacturer and the Official Committee of Tort Claimants argue the limited fund class-action settlement addressed in In re Telectronics should not be applied to bankruptcy proceedings. In re Dow Corning: Response of Dow Corning Corp . and the Official Committee of Tort Claimants to Supplemental Submissions of Certain Children and Nevada Claimants , No. 99-75924 (E.D. Mich., Aug. 28, 2000); see previous story. The circuit court decertified the class of approximately 40,000 individuals in In re Telectronics Pacing Systems Inc., No. 99-3476-80 (6th Cir., July 19, 2000), and rejected the proposed settlement with the manufacturer of the allegedly defective pacemakers. The court found that the settlement terms violated Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), and its prohibition against "mandatory" classes. According to Dow Corning, the claimants in the Telectronics settlement would not have had the limited opt-out right provided in Ortiz, much less the full protected right to a jury trial in Dow's Amended Joint Plan of Reorganization. Under Dow Corning's plan, a litigation facility will be established where breast implant recipients who do not settle may pursue their claims. Moreover, Dow Corning says the Telectronics settlement did not allow for full payment to claimants. The $57 million settlement fund would have been spread among 17,000 class members and their attorneys, says Dow, even though a non-binding summary jury trial awarded class members between $150,000 and $3 million each for the defective pacemakers. In contrast, the Eastern District of Michigan bankruptcy court specifically found that there is more than ample cushion for the women filing against Dow Corning, says the company, and that all claims will be paid in full. Therefore, the release of Dow's parent companies, The Dow Chemical Co. and Corning Inc., does not prejudice the claimants, the debtor argues, because any separate damages claims against the third-party shareholders will be unnecessary. After the plan was confirmed, U.S. Bankruptcy Judge Arthur J. Spector issued his controversial opinion holding that those women who voted against the plan could still pursue their claims against Dow's parent companies. Dow asserts that although third-party releases are disfavored in bankruptcy, their plan falls within the exceptions established in In re A.H. Robins Co., 880 F. 2d 709 (4th Cir., 1989). According to the debtor, the releases are permitted when the following factors are met: -- Substantially all claims will be paid; -- The plan was approved by the majority of those voting; -- The third-party parent companies have made substantial contributions to the reorganization; -- The release is essential to the reorganization; and -- There is a close connection between the cases against the third- party and the debtor. The Dow plan satisfies these elements, asserts the debtor, and the $400 million fund set aside for opt-out claims is sufficient to pay any non-settling claimants; see Breast Implant LR, May 8, 2000, P. 4. "Objector's submissions are inappropriately argumentative," says Dow. The implant manufacturer contends the Telectronics court's discussion of bankruptcy is dicta, which merely acknowledge the ordinary rule that discharge of a debtor in bankruptcy would leave third-party liability "open for adjudication." Dow Corning is represented by George Tarpley and David Ellerbe of Sheinfeld, Maley & Kay in Dallas. The Official Committee of Tort Claimants is represented by Kenneth H. Eckstein and Jeffrey S. Trachtman of Kramer, Levin, Naftalis & Frankel in New York; Dennis S. Meir and Alfred S. Lurey of Kilpatrick Stockton in Atlanta; Patrick L. Hughes of Verner, Liipfert, Bernhard, McPherson and Hand in Houston; and Edward Blizzard and Dianna Pendleton of Blizzard & McCarthy in Houston. (Breast Implant Litigation Reporter, September 18, 2000) BROOKTROUT INC: Implicated in Interspeed Fraud, Schiffrin & Barroway Say ------------------------------------------------------------------------ According to a statement issued on October 19 by the law firm of Schiffrin & Barroway, LLP, earlier this year, investors represented by Schiffrin & Barroway, LLP filed a class action lawsuit in the United States District Court for the District of Massachusetts on behalf of all purchasers of the common stock of Interspeed, Inc. (Nasdaq: ISPD) from September 24, 1999 through October 6, 2000, inclusive, and Interspeed's September 24, 1999 Initial Public Offering (the "Class Period"), and Brooktrout, Inc. (Nasdaq: BRKT) Interspeed is subsidiary of Brooktrout. The complaint alleges that both Interspeed and Brooktrout's financial statements were false and misleading during the Class Period due to improper accounting practices. In addition, the complaint alleges that Brooktrout had knowledge of its subsidiary's improper accounting practices which it turned a blind eye to which allowed Brooktrout to improperly record revenue as well. In addition to being a named defendant in this action, Brooktrout's public stockholders have initiated securities fraud actions against Brooktrout to recover damages under the federal securities laws. Contact: Marc A. Topaz, Esq., or Robert B. Weiser, Esq., 888-299-7706, (toll free) or 610-667-7706, or info@sbclasslaw.com, both of Schiffrin & Barroway, LLP. BROOKTROUT, INC: Rabin & Peckel Files Securities Suit in Massachusetts ---------------------------------------------------------------------- A class action complaint has been filed in the United States District Court for the District of Massachusetts on behalf of all persons or entities who purchased or otherwise acquired Brooktrout, Inc. common stock (Nasdaq: BRKT) between February 3, 2000 and October 6, 2000, inclusive. The Complaint alleges that Brooktrout and certain of its officers violated the Securities Exchange Act of 1934 by making a series of materially false and misleading statements concerning Brooktrout's financial results during the Class Period. In particular, it is alleged that Brooktrout's financial results during the first three quarters of fiscal 2000 included improperly recognized revenue from the Company's majority owned subsidiary, Interspeed, Inc., and require restatement. The Complaint alleges that as a result of these false and misleading statements the price of Brooktrout common stock was artificially inflated throughout the Class Period causing plaintiff and the other members of the Class to suffer damages. Contact: Rabin & Peckel LLP, New York Joseph V. McBride or Elana M. Bourkoff 800/497-8076 or 212/682-1818 Fax: 212/682-1892 email@rabinlaw.com BROOKTROUT, INC: Schatz & Nobel Announces of Securities Suit Filed in MA ------------------------------------------------------------------------ A class action lawsuit has been filed in the United States District Court for the District of Massachusetts on behalf of all persons who bought common stock in Brooktrout, Inc. between February 3, 2000 and October 6, 2000. The Defendants in this class action lawsuit are Brooktrout, Eric R. Giler, President of Brooktrout, Stephen Ide, Senior Vice President of Brooktrout, and Robert C. Leahy, Vice President of Finance and Operations and Treasurer of Brooktrout. The class action complaint alleges that the Defendants committed securities fraud by issuing false and misleading statements concerning its consolidated financial results for the fourth quarter and year-end 1999 and for the first two quarters of 2000. These statements were false and misleading because they included improperly recognized revenues from Interspeed, Inc, a subsidiary of which Brooktrout is the majority owner. A class action lawsuit has been commenced by Interspeed shares holders for securities fraud after Interspeed announced on October 6, 2000 that it anticipated its unaudited results for the first three quarters of 2000 would be restated due to improper revenue recognition. Plaintiff seeks to recover damages on behalf of all Class members. If you purchased stock in Brooktrout between February 3, 2000 and October 6, 2000, and wish to act as a lead plaintiff, you may move the Court to serve in that capacity not later than December 12, 2000. If you wish to discuss your rights as lead plaintiff or as a class member, you may wish to contact Schatz & Nobel, P.C. at the following toll-free number: (800) 797-5499, or by e-mail at SN06106@aol.com. Contact: Andrew M. Schatz, Jeffrey S. Nobel, Patrick A. Klingman, Robert W. Cassot, all of Schatz & Nobel, P.C., 800-797-5499, SN06106@aol.com BROOKTROUT, INC: The Pomerantz Firm Files Securities Lawsuit in MA ------------------------------------------------------------------ Pomerantz Haudek Block Grossman & Gross LLP (http://www.pomerantzlaw.com) has filed a class action lawsuit against Brooktrout, Inc. (Nasdaq: BRKT) and three of the Company's senior executives. The case was filed in the United States District Court for the District of Massachusetts on behalf of all those persons or entities who purchased the common stock of Brooktrout during the period between February 3, 2000 through October 6, 2000, inclusive (the "Class Period"). The Complaint charges that Brooktrout and its executives violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by allegedly issuing a series of false and misleading statements during the Class Period concerning, among other things, the Company's financial results, the strength of the Company's balance sheet and overall financial condition, and its ability to meet growth targets and analyst estimates. In particular, the Complaint alleges that Brooktrout's statements regarding its consolidated financial results for the fourth quarter and year-end 1999 and for the first three quarters of 2000 were materially false and misleading because they included improperly recognized revenues from the company's majority owned subsidiary, Interspeed, Inc (Nasdaq: ISPD). When the Company announced to the market on October 6, 2000 that it anticipates that its unaudited results for the interim periods will be restated due to incorrect recognition of certain revenue, and that two high level executives of the Company had been fired, the price of Brooktrout's common stock fell more than 25%. Contact: Andrew G. Tolan, Esq. of Pomerantz Haudek Block Grossman & Gross LLP, 888-476-6529 ((888) 4-POMLAW) or agtolan@pomlaw.com. COPLEY PHARMACEUTICAL: 10th Cir OKs Fee Slicing Arrangement in MDL Suit ----------------------------------------------------------------------- Chicago Some lawyers breathed a sigh of relief and others gasped for air when they learned of a ruling by the 10th U.S. Circuit Court of Appeals in the Copley Pharmaceutical Inc., albuterol products liability litigation.Circuit Judges Robert H. Henry and Mary Beck Briscoe, and District Judge Milton I. Shadur of the Northern District of Illinois, sitting by designation, issued the order and judgment in Saul v. Plaintiffs' Steering Committee, an unpublished opinion. Albuterol is the generic name for a bronchodilator, a medication used to open air passages in patients with such lung problems such as asthma and chronic bronchitis. In the case, some patients were affected by albuterol manufactured by Copley Pharmaceutical, Inc., that had been contaminated by bacteria, Peter J. Brodhead, a member of the Cleveland, Ohio, firm Spangenberg Shibley & Liber, one of the plaintiffs' attorneys in the case, told American Lawyer Media News Service.Ultimately, several patients died, in what Brodhead termed a rare consequence of the contamination. Many others contracted pneumonia and other protracted infections and needed to be hospitalized. Attorney Lewis J. Saul, of Washington, D.C., and Paul Rheingold of the New York firm of Rheingold Valet Rheingold & Shkolnik, filed a class action on behalf of the more than 10,000 patients affected by the contaminated medicine, court records indicate. Many similar cases filed by lawyers across the country against Copley were eventually consolidated in the U.S. District Court of Wyoming by a multidistrict litigation (MDL) order. The case was assigned to District Judge Clarence A. Brimmer. Bring on the Lawyers The consolidated cases involved some of the top mass-tort practitioners in the country on both sides of the aisle. Because of the schedule Judge Brimmer ordered, the case, which was filed in January 1994, was ready for full-blown discovery by October of that year. Lawyers were ensconced in Boston and New York City for depositions that lasted, on and off, until May 1995, Brodhead said.The case eventually went to a jury trial in Cheyenne, Wyo., that lasted for 42 days. Litigation teams from both sides were holed up in motel rooms like soldiers in trench warfare, returning from court to face boxes of exhibits and pages of daily copy. Three or four days before the trial was expected to conclude, Sheila Birnbaum of New York City's Skadden Arps Slate Meagher & Flom, worked out a settlement, Brodhead said. The case was settled for $ 150 million, with $ 19.5 million, or 13 percent, going to the many attorneys on the plaintiffs' team. Judge Brimmer ordered these attorneys fees "to be allocated amongst themselves by class counsel." Splitting the Money When the dust cleared, Saul was awarded $ 700,000 for 2,409.6 hours, an average $ 290.50 an hour, while Brodhead was awarded $ 2,391,580 for 2,180.5 hours, an average $ 1,096.80 an hour a difference of more than $ 800 per hour. Other attorneys received awards between and, in some cases below, the two poles, court records indicate. On June 2, 1999, Judge Brimmer approved the fee allocation by the plaintiffs' steering committee. Several attorneys appealed. The 10th Circuit panel approved Judge Brimmer's method of allocating the fee in accordance with the relevant factors expressed in the 5th Circuit decision in Johnson v. Georgia Highway Express. The 10th Circuit previously had followed this formula in Brown v. Phillips Petroleum Co.But when it came to applying the Johnson case to the facts presented, Judge Brimmer did not follow a precise recipe, court records indicate.Referring to the factor of "experience, reputation and ability," Judge Brimmer said Brodhead was admitted in 1979, but Saul was not admitted until 1990, when in fact he was admitted in 1980. Judge Brimmer said "time and labor, novelty and difficulty, preclusion of other employment, amount involved and results obtained, experience (admitted 1979) and reputation of Brodhead, as well as the undesirability of the case and nature and length of the relationship" supported the award. The panel approved Judge Brimmer's fee allocation. In deciding fee allocations in cases where many lawyers have been involved, to differing degrees and performing different aspects, the best solution is if the attorneys can agree, Brodhead said. When they disagree, the judge must determine "who (partner, associate or paralegal) did what (pretrial office work, depositions, trial work, settlement negotiations or other work)," he added. "There is a difference between trial and deposition work [and other types of work in such cases], especially when traveling. Almost every hour my firm billed was mine, except for very specific aspects of pharmaceutical research. I had to give up a lot of other work, and spent months on end of 'premium time' on the case," Brodhead said. As the panel pointed out, Saul did not try the case, and about 75 percent of the time billed by his firm was for work performed by junior associates and paralegals. Furthermore, "after the initial stages, his involvement significantly diminished," the panel said. Most importantly, his involvement after the MDL order did not encompass "novel and complex issues of law," compared to depositions by Brodhead and another attorney that involved "complex scientific issues, including bacteriology, manufacturing, pulmonology and chemistry." "None of this is to say that the district court's allocation of fees was necessarily perfect. However, our task is not to independently assess the merit of each attorney's performance and fine-tune individual fee awards. Instead, our job is to determine whether the district court abused its discretion. "While the district court's calculation was necessarily imprecise, it cannot be described as exceeding the bounds of permissible choice. All in all, the district court fairly and skillfully performed the unenviable job of allocating a fixed amount of money among 19 attorneys," the panel wrote. The panel affirmed the decision, and remanded the case with directions to Judge Brimmer to disburse any amounts remaining in the fund.After ALM faxed him a copy of the order, Saul did not return telephone calls asking for his comments on the ruling. This article originally appeared on Law.com/il. (The Legal Intelligencer, October 18, 2000) DOJ: Reps. Object to Legislative Provisions for Ban on Overtime Payments ------------------------------------------------------------------------ Reps. Thomas M. Davis III (R-Va.) and James P. Moran Jr. (D-Va.) wrote the Office of Management and Budget this week to object to legislative provisions folded into the Justice Department's fiscal 2001 spending bill. One provision would require any judgment in the overtime pay suit to be paid out of Justice's account for employee salaries and expenses. If Justice loses the suit, "this provision could cut funds available for DOJ salaries and expenses by as much as one-third, which could cause reductions in force that would seriously impair the ability of the department," Davis and Moran said in their letter. Another provision "attempts to impose a permanent ban on overtime payments to DOJ attorneys," which the letter says is contrary to current personnel laws. Davis and Moran sent their letter to OMB Director Jacob "Jack" Lew and urged the administration to insist that the provisions be stripped out of the spending bill. The letter did not say who put the provisions in the bill. The class-action lawsuit against the Justice Department seeks more than $ 500 million in damages for uncompensated overtime work. The department contends its lawyers are "professionals" who accept the fact that they will often work more than 40 hours a week to perform their duties. (The Washington Post, October 19, 2000) FORD MOTOR: Recall of Firestone Tires Cut Ford Profits by 7 Percent ------------------------------------------------------------------- The controversial recall of Firestone tires on millions of Ford Explorer sport-utility vehicles has cost the automaker $ 500 million -- so far. The expense of replacing those tires caused Ford Motor Co. to report its first decline in quarterly profits since 1996. But Chief Financial Officer Henry Wallace said "the priority this quarter was to get the Firestone recall settled. We still hope to resolve that by mid-November." The world's second-largest automaker said it earned $ 888 million in July, August and September, down more than 7 percent from the third quarter of 1999, when it made $ 959 million. If not for the Firestone-related costs, the Dearborn-based automaker would have made more than $ 1 billion and probably set a new Ford record for third-quarter profits. The cost of the Firestone recall will not be felt just by Ford's owners, the company's shareholders. It will also mean less money for the 156,000-plus hourly and salaried employees at Ford who have grown accustomed to ever-growing profit-sharing and bonus checks. Ford executives were not able to say exactly how much less on Wednesday, or whether the cost of the Firestone recall will reduce North American profits enough to result in smaller profit-sharing checks this winter. Thanks to a strong first half of the year, profits at Ford's auto-H making operations in the United States, Canada and Mexico are still up 6 percent through the first nine months of 2000. Company-wide sales also rose in the third quarter to $ 40.06 billion, up 8 percent from $ 37.2 billion a year ago. The company earned 53 cents a share for the 3-month period ending Sept. 30, down from 78 cents a share a year ago, but in line with Wall Street expectations. Experts who follow the industry for major investors had lowered their predictions for Ford profits back in September when the company first hinted at the looming Firestone bill. Even with the Firestone costs, Ford still topped the third-quarter profits of its prime rival, General Motors Corp., by $ 59 million. "They're still in real good shape compared with their competitors. Without those Firestone costs it would have been a real standout quarter for Ford," said Michael Bruynesteyn, an auto industry expert with Prudential Securities Inc. in New York. Again, it was brisk truck and sport-utility sales in the United States that drove Ford's profits, as the company sold 603,000 of those vehicles in the United States this quarter, 7,000 more than a year ago. GM, by comparison, sold 30,000 fewer trucks and sport utilities in the United States than a year ago. GM's third-quarter profits were down 5.5 percent from a year ago. Sport-utilities and trucks typically are more profitable than cars. The importance of them to Ford's bottom line, especially a hot-seller like the Explorer that can usually sell without incentives, explains the company's aggressive defense of the Explorer and insistence the Firestone recall is "a tire issue and not a car issue." Wallace said he expected more recall costs in the fourth quarter, but hoped to offset that expense by increasing production of compact Ranger pickups for the rest of the year. The company intentionally made about 23,000 fewer Rangers and 15,000 fewer Explorers last quarter to free up more new tires to replace the recalled 15-inch Firestone tires. The other Firestone-related costs Ford hasn't yet tallied, and which may take years to total, are potential damages and settlements for the 100-plus personal injury and class-action suits filed against the automaker due to accidents on Explorers equipped with Firestone tires. Firestone has estimated its recall costs at around $ 350 million. Without giving details, Ford has said Firestone will cover some of the automaker's costs. "I suspect the exact amount Firestone picks up will be the subject of intense negotiations and-or some litigation," said analyst Bruynesteyn. Wallace said idling three Ford truck plants for three weeks to free up replacement tires cost the automaker about $ 250 million, or roughly half the total cost associated with the recall. The other $ 250 million was from shipping and distributing new tires, buying new tire molds for tiremakers and the cost of numerous recall-related print and TV advertisements. The tire recall overshadowed Ford's results in North America, where the company saw profits fall to $ 782 million, down 17 percent from $ 946 million a year ago. From a Wall Street perspective, the Firestone costs weren't unexpected. Auto industry experts were more concerned about the company's persisting problems in overseas operations, especially in Europe where the company lost $ 221 million, far more than expected. Like GM, Ford is losing sales and money in Western Europe, especially Britain and Germany, the region's two biggest markets. Ford's quarterly sales in Britain dropped 15 percent while sales in Germany were down 8 percent. Ford also lost $ 77 million in its Canadian-Mexican operations and $ 64 million in South America. "Volkswagen is really hurting Ford and GM in Germany and across Europe," said John Casesa, an auto analyst with Merrill Lynch Inc. "Ford has very deep problems in Europe and even though they've put forward a credible team with a credible plan to fix it, it's a concern that it hasn't improved yet." Besides Firestone, Ford also had a $ 106-million charge related to the valuation of Land Rover inventory. Ford purchased Land Rover earlier this year. Ford Credit reported earnings of $ 386 million, up 22 percent from $ 317 million a year ago. Profit at Hertz, in which Ford has an 81-percent stake, rose $ 4 million to $ 143 million. For the first nine months of the year, Ford has profits of $ 4.3 billion compared to $ 4.79 billion for the same period a year ago. (Detroit Free Press, October 19, 2000) INFORMATION ARCHITECTS: Announces Dismissal of Securities Suit in NC -------------------------------------------------------------------- Information Architects Corp. (Nasdaq: IARC) announced on October 19 that the U.S. District Court for the Western District of North Carolina has dismissed the class action lawsuit against the company and certain current and former officers. The lawsuit resulted from the consolidation of four class action lawsuits filed between May 14, 1999 and July 13, 1999. Information Architects(R) (www.ia.com) offers Internet Infrastructure Content Delivery Solutions with its patented XML and RDF-based SmartCode(R) technology. The technology is implemented in Java and is based on the SmartCode Content Delivery Matrix composed of metadata "nodes" that locate, route and transform distributed content. This enables rapid creation of complex data aggregation, transformation, re-branding, and syndication solutions, often without any coding. SmartCode XML and XPath-based visual tools enable you to collect content from pre-existing distributed sources and applications, and dynamically syndicate it onto any channel or device, including cell phones, PDA's, desktops, etc. Information Architects is a member of the World Wide Web Consortium and is committed to building state-of-the-art products based on open standards. NHL: PA Ap Ct Says League and Teams Not Responsible for Eagleson’s Fraud ------------------------------------------------------------------------ A federal appeals court in Philadelphia agreed with a lower court's decision that the NHL and its teams were not responsible for the actions of Alan Eagleson, the former head of the NHL Players' Association who served six months in prison for fraud. Former NHL players Dave Forbes, Rick Middleton, Brad Park, Ulf Nilsson and Doug Smail filed a class action lawsuit against the NHL and all its teams in 1995 on behalf of about 1,000 NHL players who played during Eagleson's tenure. The players alleged that the NHL teams knew Eagleson was using his control of international hockey and NHL disability insurance funds to enrich himself, but allowed him to continue unrestrained. (The Atlanta Journal and Constitution, October 19, 2000) PILOT NETWORK: Milberg Weiss Files Securities Lawsuit in California ------------------------------------------------------------------- Milberg Weiss (http://www.milberg.com/pilot/)has announced that a class action has been commenced in the United States District Court for the Northern District of California on behalf of purchasers of Pilot Network Services, Inc. (NASDAQ:PILT) publicly traded securities during the period between April 27, 2000 and October 17, 2000. The complaint charges Pilot and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Pilot provides comprehensive security services over the Internet. The Company provides secure access and gateway services, secure hosting and electronic commerce services, and secure extranet and virtual private networking services. Pilot's protected services include e-commerce and e-business services, Internet access and gateways, and extranet/VPN. On 10/18/00, Pilot announced that: (i) its CFO, who had joined the Company just three weeks prior, had resigned; (ii) its Vice President of Financial Planning had resigned; (iii) it would not meet analysts' expectations for the September quarter; and (iv) it was conducting a formal investigation into its revenue recognition practices. Contact: Milberg Weiss Bershad Hynes & Lerach LLP William Lerach, 800/449-4900 wsl@mwbhl.com RICHMOND HOUSING: Homeless Disabled Man Files Bias Suit ------------------------------------------------------- A homeless man with disabilities has sued the Richmond Housing Authority in federal court, accusing the agency of discrimination by closing the waiting list for certain housing to the disabled but keeping it open for seniors. Leon Victoria, 49, said at a news conference on Wednesday that he was turned down four times by the housing agency in the past six months in his attempts to get an apartment. Each time, officials told him that the only available housing was for seniors 62 years and older. "I know it sounds strange, but I'm not in it for the money," Victoria said of his lawsuit, filed Tuesday in U.S. District Court in San Francisco. "I like money, but I want a roof over my head." The lawsuit, which Victoria seeks to be certified as a class action, accuses the agency of violating state and federal fair housing laws andthe Americans With Disabilities Act. The suit also seeks an courtinjunction that would open up the waiting list to the disabled. At issue are three Housing Authority complexes designated for seniorsor the disabled: Friendship Manor, the Hacienda and Nevin Plaza, totaling about 350 units. In May 1999, Ingram, in a letter to Richmond Mayor Rosemary Corbin and Housing Authority commissioners, said the agency would close the waiting lists a month later to disabled people while allowing senior citizens above the age of 62 to apply. Ingram said she was seeking the approval of the U.S. Department of Housing and Urban Development to place younger, disabled residents atthree other developments designated for families. In doing so, the Housing Authority wanted to achieve a balance of seniors and disabled people onthe waiting lists, she said. "Currently we have a need to increase our pool of senior applicants," Ingram wrote in the letter, a copy of which was included with the lawsuit. She said federal regulations and the agency's "administrative plan" allowed her to "open or close the waiting list." But attorneys for Victoria, Fred Nisen and Charis Moore of Protection & Advocacy, Inc. of Oakland, said the Housing Authority never got HUD'sapproval and therefore is in violation of state and federal laws. "They will not rent to people with disabilities, only seniors," said Nisen, who is disabled and uses a wheelchair. Victoria said he almost felt like giving up after years of sleeping in the back of his truck and cars, and under freeway overpasses. D. Scott Chang, a Belmont attorney who is also representing Victoria, said members of Housing Rights, Inc. posed as disabled people in April and called the Housing Authority, saying they were disabled and wanted to apply for units. An employee responded that the waiting list was closed for persons with disabilities and that applicants had to be at least 62 years old, the lawsuit said. (The San Francisco Chronicle, October 19, 2000) RITE AID: Dept of Labor Investigates Matters Related to 401(k) Plan ------------------------------------------------------------------- The U.S. Department of Labor has commenced an investigation of matters relating to the Company's employee benefit plans, including its principal 401(k) plan, which permitted employees to purchase the Company's common stock. Purchases of the Company's common stock under the plan were suspended in October 1999. The Company is cooperating fully with the Department of Labor. These federal investigations are ongoing and the Company cannot predict their outcomes. If the Company were convicted of any crime, certain contracts and licenses that are material to its operations may be revoked, which would have a material adverse effect on results of operations and financial condition. In addition, substantial penalties, damages or other monetary remedies assessed against the Company could also have a material adverse effect on the Company's results of operations, financial condition and cash flows. RITE AID: Lawsuits Challenge Overrides by Pharmacists for Cash Purchases ------------------------------------------------------------------------ Purported federal class actions lawsuits have been filed against the Company in Alabama and California and purported state class actions have been filed against the Company in New Jersey, New York, Oregon, and Pennsylvania. In all of the class actions the plaintiffs allege that the Company's former practice of allowing its pharmacists the discretion to charge non-uniform prices through the use of positive overrides for cash purchases of prescription drugs was unlawful and none of those class actions specify damages. The Company has asserted in court filings that its imposition of positive overrides was a legitimate utilization of non-uniform pricing similarly engaged in by many other sectors of retail commerce. The Company filed motions to dismiss each of the uncertified class action complaints for failure to state a claim for which relief could be granted. The Company's arguments have prevailed in each of the cases in which a court decision has been rendered thus far, other than the California case. On December 27, 1999, the United States District Court for the Northern District of Alabama dismissed the federal RICO claims against the Company with prejudice and the plaintiffs later filed an appeal with the Eleventh Circuit. That appeal is currently pending. On May 21, 2000, an Oregon state court judge granted the Company's motion to dismiss the purported class action there with prejudice. On June 27, 2000, a New Jersey state court dismissed that class action there. On August 16, 2000, a Pennsylvania state court dismissed that class action with prejudice. A motion to dismiss the state class action in New York is currently pending. The Company believes that all of the positive override lawsuits are without merit under applicable state consumer protection laws and/or state or federal RICO statutes. As a result, the Company intends to continue to vigorously defend each of the pending actions and does not anticipate, if fully adjudicated, that any of the lawsuits will result in an award of damages and/or civil penalties. However, the Company cannot give assurance on the outcome for each of the actions and a ruling against the Company could have a material adverse effect on the financial position and operations of the Company as well as necessitate substantial additional expenditures to cover legal costs as it pursues all available defenses. The Company is being investigated by multiple state attorneys general for its reimbursement practices relating to partially-filled prescriptions and fully-filled prescriptions that are not picked up by ordering customers. The Company is supplying similar information with respect to these matters to the Department of Justice. The Company believes that these investigations are similar to investigations which were, and are being, undertaken with respect to the practices of others in the retail drug industry. The Company also believes that its existing policies and procedures fully comply with the requirements of applicable law and intends to fully cooperate with these investigations. The Company cannot, however, predict their outcomes at this time. RITE AID: Stockholders May File 4th Amended Complaint in PA in November ----------------------------------------------------------------------- The Company, its former chief executive officer Martin Grass, its former president Timothy Noonan, its former chief financial officer Frank Bergonzi, and its former auditor KPMG LLP, have been sued in a number of actions, most of which purport to be class actions, brought on behalf of stockholders who purchased the Company's securities on the open market between May 2, 1997 and November 10, 1999. All of these cases have been consolidated in the U.S. District Court for the Eastern District of Pennsylvania, where plaintiffs have filed a third amended complaint and have been given leave of court to file a fourth amended complaint on or before November 11, 2000. The complaints assert claims against defendants under Sections 10, 18 and 20 of the Securities Exchange Act of 1934, as amended, various state securities laws and common law, based upon the allegation that the Company's financial statements for its 1997, 1998 and 1999 fiscal years fraudulently misrepresented its financial position and results of its operations for those periods, among other allegations. If any of these cases were to result in a substantial monetary judgment against the Company, or are settled on unfavorable terms, the Company's results of operations, financial position and cash flows could be materially adversely affected. RITE AID: Yet to Decide on Response to Derivative Complaints in Delaware ------------------------------------------------------------------------ Certain of the Company's former officers (Martin L. Grass, Timothy J. Noonan and Frank Bergonzi), certain of its current and former directors (Alex Grass, Philip Neivert, Franklin C. Brown, Leonard I. Green, Leonard N. Stern and Nancy A. Lieberman), its former auditor, KPMG LLP, and Rite Aid as nominal defendant, have been sued by Company shareholders derivatively on behalf of the Company in derivative actions brought in the U.S. District Court for the Eastern District of Pennsylvania and the Chancery Court of the State of Delaware. The derivative complaints purport to assert claims on behalf of the Company against the defendants for violation of duties asserted to be owed by such defendants to the Company, based upon allegations similar to those contained in the complaints in the securities cases described above. The time for defendants to respond to the derivative complaints has not yet run. The Company has made no determination yet as to how it will respond to the derivative complaints and is unable to predict the ultimate outcome of this litigation. The company tells investors that f any of these cases result in a substantial monetary judgment against the Company or is settled on unfavorable terms, the Company's results of operations, financial position and cash flows could be materially adversely affected. SOTHEBY'S HOLDINGS: Judge OKs Former Chairman's Access to Information --------------------------------------------------------------------- Alfred Taubman, the former chairman of Sotheby's and a target of the government's investigation into auction-house collusion, won a judge's approval on October 18 for access to information described as crucial to his case. "There's too much foot-dragging in this case," said the judge, Lewis A. Kaplan of Federal District Court in Manhattan, who rejected two motions to delay the turnover of records produced in a class-action lawsuit brought by customers of Sotheby's and its archrival, Christie's. Buyers and sellers say they were cheated by the two auction houses, which have acknowledged coordinating commission fees that were charged to customers. The two houses agreed to settle the case last month by paying plaintiffs a total of $512 million but have not signed legal papers solidifying the deal. Mr. Taubman and his lawyers have sought documents and other information that was provided to Christie's and prosecutors by a former chief executive of Christie's, Christopher M. Davidge, who came forward late last year with accounts of collusive behavior. Joseph Linklater, a lawyer for Mr. Davidge, moved unsuccessfully to block the turnover of Mr. Davidge's material as a possible risk to his Fifth Amendment privilege against self-incrimination. (The New York Times, October 19, 2000) THOMAS & BETTS: Berman DeValerio Reminds of Lead Role Date Approaching ---------------------------------------------------------------------- Thomas & Betts Corporation (NYSE: TNB) shareholders have until October 29 to file court papers requesting lead plaintiff status in a securities fraud lawsuit against the company, Berman DeValerio & Pease LLP (www.bermanesq.com) said on October 18. The class action seeks damages on behalf of anyone who acquired Thomas & Betts common stock between February 15, 2000 and August 21, 2000 (known as the "Class Period"). The complaint is filed in United States District Court for the Western District of Tennessee as Civil Action No. 00-CV11833. The complaint accuses Thomas & Betts of employing irregular accounting practices that will force the company to restate its financial reports for 1999 and possibly for the first quarter of 2000. When word of these actions became public, the stock lost more than 30% of its value. Contact: Berman DeValerio & Pease LLP Jennifer L. Finger, Esq. (800) 516-9926 bdplaw@bermanesq.com ********* 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 * * *