/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/001221.MBX C L A S S A C T I O N R E P O R T E R Thursday, December 20, 2000, Vol. 2, No. 247 Headlines ABNH: Ct OKs American Bank Note Holographics Securities Suit Settlement ALLSTATE INSURANCE: Attack on Illegal Practice of Law Stands ALLSTATE: Agents File Suit in Florida Seeking Pay for Overtime BREAST IMPLANT: Report Tells of $ 36.8M Settlement for Trilucents In UK BRIDGESTONE CORP: Says Ford Shares Blame For Fatal Accidents EXXON MOBIL: Settlement Efforts Fail Over Fires At Baton Rouge Plants EXXON MOBIL: State May Wait Years For Money for Royalties Underpayment FIRESTONE INC: Blames Illinois Plant, Explorer For Tire Troubles GM: Krislov & Associates Files Suit over 1996 And Later Model Years HOLOCAUST VICTIMS: Fed Judge Has Dismissed 42 Suits against German Firms HOLOCAUST VICTIMS: Generali Seeks To Consolidate Claims In New York INMATES LITIGATION: Chowchilla Draws Attention Again after Recent Deaths MASSACHUSETTS: Agrees to Spend on Mentally Retarded and Settle Suit PENNSYLVANIA LIFE: Distribution Plan for Winning Policyholders Approved PPA LITIGATION: CA Man Sues 5 Makers on Unfair Competition, Deceptive Ad RYLAND GROUP: Fixing Sinkhole in Crystal Oaks; Suit Not Resolved Yet TAINTED BLOOD: Claims over HIV Precluded By Settlement, 7th Cir Rules VICKSBURG CASINOS: MS High Court Reviews Restraint of Trade Verdict WYETH-AYERST: Duract Cost-Recovery Class Certified By TX Federal Judge ********* ABNH: Ct OKs American Bank Note Holographics Securities Suit Settlement ----------------------------------------------------------------------- American Bank Note Holographics, Inc. ("ABNH" or the "Company", OTC Bulletin Board:ABHH) announced that the United States District Court for the Southern District of New York has entered a judgment giving final approval to the settlement of the consolidated securities class actions against the Company and all other defendants, including the Company's former parent, American Banknote Corporation ("ABN"), certain former officers and directors of the Company, certain current and former officers and directors of ABN and the Company's former independent auditors, Deloitte & Touche LLP, named in the actions entitled, In re American Bank Note Holographics, Inc., Securities Litigation and In re American Banknote Corporation Securities Litigation filed in the United States District Court for the Southern District of New York (the "Court"). Approval of the settlement by the Bankruptcy Court for the Southern District of New York in which the Chapter 11 proceeding of ABN is pending had been given on November 3, 2000. The settlement of the class action litigation provides for a release of all claims that the plaintiffs and class members in each action have and may have against the Company and the other defendants. The plaintiffs and class members will receive an aggregate cash payment of $14,850,000 as a result of the settlement, $12,500,000 of which will be paid by the insurance carrier for the Company and ABN, and the remaining $2,350,000 will be paid by defendant Deloitte & Touche LLP. The Company will have no cash payment obligation with respect to the settlement, but will issue 1,460,000 shares of the Company's Common Stock, as well as warrants to purchase 863,647 shares of the Company's Common Stock at an exercise price of $6.00 per share. The warrants will be exercisable for the 30-month period commencing with the Court’s approval. ABN will also issue certain of its securities as part of the settlement. American Bank Note Holographics is a world leader in the origination, production and marketing of mass-produced holograms. The Company's products are used primarily for security applications such as counterfeiting protection and authentication of transaction cards, identification cards, documents of value, and consumer and industrial products, as well as for packaging and promotional applications. ALLSTATE INSURANCE: Attack on Illegal Practice of Law Stands ------------------------------------------------------------ New York The 4th U.S. Circuit Court of Appeals left standing a West Virginia finding that Allstate Insurance Co. engaged in unauthorized practice of law by telling claimants that they didn't need lawyers. The Nov. 30 action in Richmond, Va., was the first ruling by an appellate court regarding a practice widely attacked by the civil plaintiffs' bar. The panel is the highest court so far to review Allstate's "Claim Core Process Redesign," whereby adjusters contact and negotiate directly with people who have been injured in accidents. They try to persuade the claimants to deal with Allstate, not through lawyers. 'Do I Need An Attorney?' The 4th Circuit refused to address the merits of Allstate's claim that commercial free speech rights protect the company's "Do I Need an Attorney?" brochures and "Customer Service Pledge" letters. The opinion by Judge H. Emory Widener Jr. left in place a decision by the West Virginia State Bar committee on unlawful practice that the letters and policies were illegal. The attorney who filed the original complaint with the State Bar in 1995, said that the opinion is strong enough to prompt him to file a nationwide class action against Allstate. James C. Peterson, a name partner at Hill Peterson Carper Bee & Deitzler of Charleston, W.Va., said he intends to sue to seek damages for the millions of claimants who say Allstate misled them into accepting less than they were owed or cost them their chance to sue by persuading them that they didn't need attorneys. The court said that Allstate had sought a sympathetic venue in federal court, where the company has appealed at least six similar state bar decisions. "In short, Allstate attempted to preempt the West Virginia procedure by filing this federal suit in district court," wrote Judge Widener, who was joined by Senior Judge Clyde H. Hamilton of Columbia, S.C. (The third panel member, Francis D. Murnaghan of Baltimore, died after oral arguments last year.) "It is difficult to conceive a matter closer or more important to the State of West Virginia, not to mention her people, than the question of who is to practice law in that state," Judge Widener wrote. Bar committees and insurance commissioners in 26 states have filed similar efforts to halt the spread of the company's brochures and letters, according to the Association of Trial Lawyers of America. Individual plaintiffs in 22 states have filed 47 challenges to the anti-attorney policy, according to an Allstate report turned over in discovery during one of those suits. Trial lawyer groups in at least 12 states have held seminars offering CLE credit that focus on strategies to beat Allstate. Allstate has had mixed success batting back the attacks. In January, the Washington State Bar Association found it guilty of the unauthorized practice of law. That case was appealed to federal court in Seattle. In March, an Illinois federal judge turned away a proposed class action against the practice. S. Benjamin Bryant, a partner at Allen Guthrie & McHugh in Charleston, represented the West Virginia bar before the 4th Circuit. Bailey and Glasser name partner Benjamin Lee Bailey of Charleston represented Allstate. Neither Bailey nor Robert Pike of Northbrook, Ill., who heads Allstate's corporate legal office, responded to queries over a three-day period. In documents, Allstate disputed trial lawyer characterizations that the company's intent is to exclude lawyers from the process. It said that its actions grew from a January 1995 analysis showing that when attorneys were involved, injury claims had inflated medical expenses, leading to unreasonable general-damages demands. The company determined that the excess money was going to attorneys as fees, it said. The Adjusters' Manual Allstate's strategy was presented in a 500-page adjusters' manual with a goal of settling claims early, before a lawyer is involved. The manual was replaced in August 1999 by a 1,000-page text titled "The Unrepresented Unit of the Future." Both books give adjusters tips on how to conduct conversations that establish "immediate rapport" and "show empathy." They are to visit claimants, in the hospital if necessary, and to bring checks to most meetings. A follow-up letter includes a promise of quick and fair handling of their claim, just as if they too were insured by the company. Also enclosed is a brochure called "Do I Need An Attorney?" that includes statistics from an insurance-industry group that found claimants without lawyers receive more money than those with counsel. It asks, "Am I required to hire an attorney to handle my claim?" Allstate answers, "No. In fact, each year Allstate settles claims directly with many collision victims with no attorneys involved in the claim settlement process." Trial lawyers insist that the letter and brochure leave the impression that the Allstate adjuster works independently for the claimant. Like other bar groups, the West Virginia Bar argued that Allstate does not clearly disclose its adversarial position. West Virginia argued that Allstate essentially acted as counsel because adjusters valued cases, assessed strategies and predicted outcomes for claimants unsophisticated in the law without mentioning that a quick and cheap settlement was best for the company. In 1997, the state bar made its finding and ordered Allstate to stop distributing the letter and brochure. Allstate sued in federal court, but lost when U.S. District Judge Charles H. Haden II ruled that the issue should be addressed by state courts. This article previously appeared in The National Law Journal, an American Lawyer Media publication. (The Legal Intelligencer, December 18, 2000) ALLSTATE: Agents File Suit in Florida Seeking Pay for Overtime -------------------------------------------------------------- The battle between Allstate and agents who say they were forced out of their jobs as the company has been streamlining its operations took another turn Tuesday December 19. In a lawsuit filed in Federal District Court in Tampa, Fla., 49 agents from across the country accused Allstate of requiring them to work overtime but refusing to pay them for it. Aaron Kaufmann, a lawyer for the agents, said the lawsuit was seeking court approval to permit hundreds of other agents to join in a collective action similar to a class action. Michael Trevino, a spokesman for Allstate, said the insurer regarded the agents as exempt from the federal law requiring time-and-a-half pay for anyone working more than 40 hours a week and that "they are not due any overtime pay." The agents, who work on commission, say they should receive overtime pay because Allstate, starting in January 1999, required them to keep their offices open more than 40 hours a week. The agents say they often worked longer hours by choice, but they contend they should have been paid for it once the company required it. The federal suit is the latest development in a long-running battle between Allstate and some of its current and former agents growing out a decision by the company to transform its sales force from employees with pensions, health benefits and subsidies for office expenses to independent contractors. Allstate, the second-largest insurer of autos and homes in the United States behind State Farm, has also recently begun selling insurance over the Internet and through through call centers, which some agents say undermines their sales opportunities. By last June, all but 6,500 of the company's 15,000 agents were independent contractors. By the end of that month, the remaining 6,500 agent employees were dismissed. They were given the choice of staying on as independent contractors or leaving the company. Allstate said 2,400 agents left. All the agents who stayed were required to sign a waiver that they would not sue Allstate in the future. Those who left were given enhanced severance packages if they signed the waiver. Seventy of the agents, including some who stayed with the company, complained to the Equal Employment Opportunity Commission. And in September, the agency said it thought that Allstate had coerced and intimidated agents into surrendering their rights in violation of federal law. The agents and the insurance company, Allstate executives said, are negotiating a possible settlement. In July, Allstate agreed to pay $2 million to settle a suit by agents in Montana, North Dakota and South Dakota for reimbursement of money they had spent on office rent, secretaries and advertising while classified as employees. A similar suit is working its way through the courts in California, and David W. Smith, an Allstate agent in Kingwood, Tex., said lawyers were extending the suit to other states. The agents say they spent their own money because subsidies from Allstate were insufficient. Since the agents became independent contractors, Allstate has no responsibility for expenses. Despite the litigation, Mr. Trevino said Allstate felt the transition, which left the company with 13,000 agents, some newly recruited, had gone smoothly. He said that while employee benefits had been eliminated, sales commissions had been increased. "I wouldn't say we've got a lot of unhappy agents," he said. But some agents have a different view. "Allstate used to be the best place I ever worked," said Ron Harper, an agent in Thomson, Ga., who stayed on but joined in the complaint to the employment commission and the latest suit. "I don't share that same opinion now." (The New York Times, December 20, 2000) BREAST IMPLANT: Report Tells of $ 36.8M Settlement for Trilucents In UK ----------------------------------------------------------------------- A British manufacturer and distributor of Trilucent soya oil breast implants agreed Nov. 24 to a reported $ 36.8 million settlement of claims by women in the United Kingdom who received the implants and want them removed following a government recommendation. The settlement was announced and confirmed in English newspapers by Paul Balen of Freethcartwright Solicitors in Nottingham, England, defense counsel Paul Llewellyn of Eversheds Solicitors in Nottingham, and manufacturer LipoMatrix Inc., a subsidiary of Collage Aesthetics UK Ltd., and distributor AEI Inc. A posting on Freethcartwright's Web site says the compensation scheme will pay women who have had the implants removed. It says compensation will be based on pain and suffering experienced by each woman, the need for additional surgery and medical problems associated with the implants. Under the scheme, Freethcartwright says expenses, including the cost of implant operations, should be reimbursed by LipoMatrix, along with medical and legal costs. Freethcartwright says the settlement would avoid long and expensive litigation. No lawsuits have been filed in England. Reported Compensation Levels The statement did not state the value of the settlement or the range of payments. The London Daily Telegraph reported Nov. 25 that the settlement was worth more than $ 36,836,060. The Telegraph, The Scotsman, the Nottingham Evening Post and the Press Association news service all reported that claimants will receive between $ 7,438 and $ 21,252, while those with more serious injuries will receive more than $ 446,283. The settlement allows for claimants to receive additional compensation if they develop future medical problems, the papers said. Llewellyn told The Scotsman that claimants only need to show they had the implants removed after the June 6 MDA notice and need not prove injury or product defect. The plan reportedly goes into effect in January 2001. The newspapers said about 5,000 women in the United Kingdom received Trilucent implants. Balen reportedly represents 2,000 women. In March 1999, the British Medical Devices Agency issued a voluntary recall of the implants because of questions about the long-term safety and integrity of the soy oil. In June, the agency issued a hazard notice stemming from dozens of adverse incident reports and concerns of increased cancer risk and danger to unborn children. The agency recommended that women who received the implants have them removed. Some Women 'Unhappy' Jeffrey M. Herman of Herman & Mermelstein in Miami, who represents U.K. plaintiffs in two lawsuits filed in U.S. federal court, said he has received numerous e-mails from women who are unhappy with the settlement. He said they have told him the settlement "doesn't come close to compensating them." Herman said he understands that negotiations took place only between Freethcartwright and the manufacturer/distributor and that no women were represented. He said he understands that the settlement will eliminate the right to sue the manufacturer/distributor in the United Kingdom. Additionally, Herman said he understands that the settlement will not pay for pain and suffering, only for medical problems relative to explantation. Herman said he understands that Freethcartwright will be compensated separately by the manufacturer/distributor and that defense counsel is referring inquiries about filing claims to Freethcartwright. Herman has two Trilucent suits on behalf of British women pending in the U.S. District Court for the Northern District of California: an individual claim, Sarah Jane Crane v. Collagen Aesthetics Inc., et al. (No. 00-2873) and a class action, Rachel Kerr, et al. v. Inamed Corp, et al. (No. 00-3026). A defense motion to dismiss for forum non conveniens is scheduled to be heard Jan. 30. (Mealey's Emerging Drugs & Devices, December 7, 2000) BRIDGESTONE CORP: Says Ford Shares Blame For Fatal Accidents ------------------------------------------------------------ The world's biggest tyre maker Bridgestone Corp. Wednesday pointed the finger of blame at US auto giant Ford Motor Co. for contributing to 148 deaths in accidents linked to Firestone tyres. "It doesn't matter what they do or insist upon," said Yoichiro Kaizaki, the president of the Japanese company, whose US subsidiary Bridgestone/Firestone Inc. (BFS) has recalled 6.5 million tyres in the United States. "I am just asking them to face up to the facts," Kaizaki told a news conference. BFS released a report Tuesday which said its tread design was a factor in tyre failures on Firestone-fitted Ford Explorers, but that low tyre inflation recommended by Ford and overloading were also significant. The president cited US newspaper reports which said this month that just 10 percent of the Ford Explorer's total 1,200 fatal accidents were directly linked to tyre problems. "I am not saying (Ford) models had problems directly linked with the accidents, Kaizaki said. "But among the Explorer's 1,200 fatal accidents, just 10 percent were related to tyres, while the remaining 90 percent occurred through factors unrelated to the tyres." The BFS report was based on four months of intensive investigation into the cause of the accidents on the Explorer sports utility vehicle, the president said. "Both BFS and us firmly believe that tyre separation can contribute to serious and fatal accidents, but are not wholly the problem," he said. A small percentage of P235/75R15 ATX and Wilderness AT tyres, produced at Firestone's Illinois plant, were found to have increased risk of tread separation when coupled with the external factors, BFS said. The Illinois factory suffered labour unrest for two years from 1994 which Firestone critics say affected quality control. "Although the problems are said to have occurred during the labour strike, we do not think they are directly related," said Tadakazu Harada, Bridgestone executive vice president. While renewing the blame game, Kaizaki also stressed the century-long relationship between Ford and Firestone, which Bridgestone took over in 1988. "Ford is our customer, and both of us will be the accused in a trial," said the president. "We have many have common factors over which we will have to cooperate." Ford, which insists there was nothing wrong with the accident-prone Explorers, accounts for about five percent of BFS's total sales. A series of class-action lawsuits has been filed in Florida, threatening potentially huge punitive damages against BFS and Ford. Last week Bridgestone slashed its earnings forecasts for this year owing to a 750-million-dollar special loss from the massive tyre recall in the United States. (Agence France Presse, December 20, 2000) EXXON MOBIL: Settlement Efforts Fail Over Fires At Baton Rouge Plants --------------------------------------------------------------------- Two lawsuits stemming from major fires at Exxon Mobil Corp. plants around Baton Rouge have been set for trial after settlement efforts failed. U.S. District Judge Frank Polozola ordered a federal magistrate to begin pretrial preparations for the suits, which cover hundreds of plaintiffs. Polozola had put trials on hold to allow for negotiations. But in an order issued late last week, Polozola said he has "exhausted settlement negotiations in these case." Exxon Mobil attorney Charles McCowan confirmed Tuesday that talks had broken down and the case is being prepared for trial. He said a mediation effort failed. The lawsuits were filed after two fires. The first fire, on Aug. 2, 1993, killed three workers at the Exxon Chemical Co. Americas plant north of Baton Rouge. The second fire, on Aug. 8, 1994 at the company's refinery, injured several contract workers. McCowan said he was unsure when a trial would take place. "We're still in the early stages," he said. "It has proceeded in a settlement course for an extended period of time." Polozola had ordered the two sides to begin settlement discussions on Aug. 21. The pretrial preparations do not preclude a settlement from still reached. (The Associated Press State & Local Wire, December 20, 2000) EXXON MOBIL: State May Wait Years For Money for Royalties Underpayment ---------------------------------------------------------------------- The state and its attorneys may wait years to see any money from a jury's record $3.5 billion verdict against Exxon Mobil for underpaying natural gas royalties. Exxon Mobil spokesman Tom Cirigliano said the company will "take all legal steps to challenge the verdict." Bob Macrory, an attorney with the state Conservation Department and the author of Alabama's leases with Exxon, said the case is sure to be appealed all the way to the U.S. Supreme Court. That has been the route with some other big jury verdicts from Alabama. The Supreme Court has used two Alabama cases to set guidelines for determining whether jury awards are excessive. The state and Exxon Mobil sued each other over the payment of royalties from 13 natural gas wells that Exxon drilled in the state's coastal waters. A Montgomery jury found Tuesday that the oil company had fraudulently underpaid the state and levied $87.7 million in compensatory damages and $3.42 billion punitive damages. That broke the state's record for the largest punitive damage verdict returned by a jury, which was $581 million in Hale County. That judgment, resulting from a suit over the purchase of a satellite dish, was reduced by the trial court judge to $300 million and was later settled out of court for a smaller amount that the two sides declined to disclose. John McMillan, who was the state conservation commissioner in 1981 when Exxon signed the leases to drill along the coast, said the Exxon verdict could also be reduced or settled for a smaller amount. But no matter what happens, the state shouldn't expect anything for years, he said. Skip Tucker, director of Alabama Voters Against Lawsuit Abuse, said he had hoped the days of Alabama being known as "tort hell" were over when the Legislature put limits on punitive damage verdicts last year. But those limits didn't apply to the Exxon case because it was filed before the law was passed. "It might be cold in Alabama, but 'tort hell' is not yet frozen over," Tucker said. The $3.5 billion verdict, if paid to the state, would be nearly as big as the state's $4 billion education budget for this year and about two-thirds as big as the $5 billion judgment against Exxon for the Valdez oil spill in Alaska. For Alabama's suit against Exxon Mobil, the governor and attorney general agreed to hire the Mobile law firm of Cunningham, Bounds, Crowder, Yance and Brown. They were guaranteed 14 percent of anything they recovered and nothing if they lost. The $3.5 million verdict, if it stands up on appeal, would provide them $490 million. John Crowder and Robert Cunningham said their firm normally takes at least one-third of the judgment in any case it takes on a contingency fee, but agreed to a smaller fee for the state. Testimony in the case showed lawyers in the firm had devoted many months to preparing for court and paid financial and oil industry consultants at least $ 230,000 to help them. If they had lost, that would have been money out of their pockets. The current record for legal fees in a lawsuit in Alabama is $47.5 million for a class-action suit against Masonite Corp. over siding made by the company. The Cunningham Bounds law firm shared in that fee. Members of the law firm contributed to Siegelman's 1998 campaign for governor, and one of the members of the firm, Richard Dorman, headed the governor's Alabama Education Lottery Foundation. That organization financed the campaign for Siegelman's state lottery plan, which Alabama voters rejected in October 1999. Siegelman's press secretary, Carrie Kurlander, said the governor chose the firm because of their respect within the legal community and because they had the resources to pursue the suit. She said the firm's record speaks for itself. (The Associated Press State & Local Wire, December 20, 2000) FIRESTONE INC: Blames Illinois Plant, Explorer For Tire Troubles ---------------------------------------------------------------- Bridgestone/Firestone Inc. on December 19 blamed manufacturing problems at one of its plants for some tire failures linked to the deaths of 148 Americans, and also faulted the design of Ford Motor Co.'s Explorer sport utility vehicle. After a four-month investigation, the unit of Japan's Bridgestone Corp. said in a report that problems with tires made at its Decatur, Ill., plant were related to characteristics of belt adhesion, the chemical process that bonds together tire components. The problem tires exhibited lower adhesion than similar tires produced at other plants. But it also mentioned tire pressure and load levels as problem factors that were controlled by Ford, maker of the popular Explorers on which most of the faulty tires were mounted. The Nashville, Tenn.-based tire maker said it thought Ford would agree with its assessment after reviewing its findings. But a Ford spokeswoman expressed doubt, saying the company had no such problems with Goodyear tires on Explorers. The report concluded that a Bridgestone/Firestone recall of more than six million tires in August was 'more than adequate to protect the public' from problem tires. The company recalled 6.5 million 15-inch ATX, ATX II and Wilderness AT tires because of links to the fatal highway accidents and more than 500 injuries. The company said its Decatur plant is changing the way it processes 'skim stock' -- rubber used to bond together the steel belts inside the tires -- so its physical properties will be similar to that produced at other Firestone plants. 'Our team's findings confirm what the initial statistical claims information demonstrated from the outset -- that a small number of tires generated higher rates of tread separation claims when used on Ford Explorers and that our recall initiated in August was more than adequate to protect the public,' said John Lampe, Bridgestone/Firestone president, chairman and chief executive. In its investigation, Firestone has been working with the U.S. National Highway Traffic and Safety Administration and Ford. It provided them with the company's findings last week. Susan Krusel, a Ford spokeswoman, said in response to claims that low tire pressure led to some of the tire failures, 'The weight factors do not explain that two million Goodyear Tires run at the exact PSI [pounds per square inch] as the Firestone tires but didn't experience the same problems.' In September, Ford agreed to raise the recommended tire pressure on its Explorer vehicles in an effort to allay concerns that low pressure may have played a role in Firestone tire failures. Mr. Lampe said the company is certain that tread separations alone are not the exclusive cause of serious accidents, including those that involve rollovers. Don Barrett, lead council in the class action suit involving some 180 cases against Firestone, said of the announcement, 'We think the attempt to blame it on Decatur is a desperate attempt by Firestone to avoid a wider and much more expensive recall.' (National Post (formerly The Financial Post), December 20, 2000) GM: Krislov & Associates Files Suit over 1996 And Later Model Years ------------------------------------------------------------------- The following statement was issued by Krislov & Associates, Ltd.: On December 15, 2000, purchasers of late model Oldsmobiles filed suit against GM on behalf of all purchasers and lessees of 1996 and later Oldsmobiles (other than GM and its affiliates and employees) seeking compensation for the reduction in value caused by GM's announcement on December 12th that it will phase out its Oldsmobile marketing division and brand over the next several years. The consumers claim that they bought vehicles that will now be worth substantially less than they would have been had GM not decided to stop producing the brand. "Incredibly, GM is ignoring those people who have been loyal Oldsmobile customers," the Plaintiff's attorney, Clint Krislov, said. Krislov added, "We believe these loyal Oldsmobile customers should be compensated for having purchased cars that GM knew were soon going to be obsolete. Indeed, we think GM will want to ensure that Oldsmobile customers have a satisfying purchase experience and to maintain goodwill among owners of other GM vehicles, who may fear their brands may be next to be dropped." The relief sought by the Plaintiffs could come in the form of extended warranties, an increase in trade-in for the next few years, rebates or other relief, Krislov said. As alleged in the Complaint, GM failed to tell purchasers of late model Oldsmobiles that it planned to stop producing the brand. Had these consumers known that Oldsmobile would soon be obsolete, the Plaintiffs claim they would not have purchased their vehicles or would have been able to negotiate a better deal. The Plaintiffs are represented by Krislov & Associates, Ltd. If you are a member of the Class described above, or if you wish to discuss this action or have any questions concerning your rights or interests, please contact: Clinton A. Krislov, Robert J. Stein, or William M. Sweetnam, 312-606-0500, or fax, 312-606-0207, email, mail@krislovlaw.com, all of Krislov & Associates, Ltd. HOLOCAUST VICTIMS: Fed Judge Has Dismissed 42 Suits against German Firms ------------------------------------------------------------------------ A federal judge says he dismissed 42 class actions against German businesses for their role in Nazi war crimes because it was a way of removing a barrier to recovery. Suit Dismissals Necessary To Pave Way for Nazi Reparations, Court Says A federal judge, explaining why he dismissed 42 class actions against German businesses accused of Nazi ties, says his move will allow the plaintiffs to be compensated by an international foundation. "Life can only be understood backwards but it must be lived forwards," U.S. District Judge William Bassler wrote on Dec. 5 in In Re Nazi Era Cases Against German Defendants Litigation, No. 98-4104. That quote from Kierkegaard, said Bassler, best summed up the plaintiffs' decision to dismiss the suits and accept nominal compensation -- and perhaps some closure -- from a foundation created to resolve the litigation. Bassler's opinion was an explanation of a ruling he issued on Nov. 13 from the bench, dismissing the cases. Under an international agreement reached last year, the foundation will make payments to Nazi war crime survivors worldwide -- but only after all U.S. suits alleging that German businesses were complicit in Nazi crimes are dismissed with prejudice. Thus, although a few suits remain, Bassler's dismissal of the 42 matters is significant. His action removes the largest chunk of suits that -- while providing the impetus for the creation of the foundation -- are now all that stands in the way of its operation. The class actions were filed beginning in 1998 on behalf of those who suffered at the hands of German industry during World War II, including former slave laborers for companies such as Volkswagen and the German subsidiary of Ford. Unlike previous Holocaust-related suits against Swiss banks, the suits sought compensation from businesses alleged to have played a direct role in Nazi atrocities. Although the class actions were brought by former slave laborers, anyone who claims to be a victim of Nazi war crimes is eligible for compensation, says John Gibbons, of Newark's Gibbons, Del Deo, Dolan, Griffinger & Vechionne, who served as liaison counsel for the defendants. Gibbons notes that relaxed standards of proof will govern the payment of claims, and that claimants don't necessarily need written proof to substantiate their claims. Because the suits were brought as class actions, court approval of the dismissals was required. And to avoid piecemeal rulings on the motions to approve the dismissals, most of the suits were consolidated and transferred to the District of New Jersey. Thus, it fell to Bassler to decide whether the international agreement creating the foundation adequately protected the interests of thousands of war crimes survivors nationwide -- and close to 1 million worldwide. Finding that there was no evidence of collusion between the German companies and the plaintiffs' lawyers, Bassler noted that the foundation was the result of international negotiations. The negotiations, noted Bassler, were attended by the parties' lawyers and the governments of Germany, the United States and Israel. Most important, however, Bassler concluded that the foundation was the best hope for survivors to obtain some measure of compensation for their suffering. Unlike the prospect of winning the litigation, which was highly uncertain, said Bassler, the foundation was ready to begin making payments. It would have an initial fund of 10 billion deutsche marks, to be contributed in equal shares by the German government and German industry. According to Bassler, only actual survivors are eligible for compensation, on the theory that the foundation was created to compensate the remaining survivors quickly, before their deaths. But heirs are eligible if the victim died after Feb. 16, 1999 -- the date the international agreement was tentatively reached. Bassler noted that the foundation will have a sliding scale of compensation based on the claim made. For example, former slave laborers can recover up to 15,000 DM. Meanwhile, a pool of 50 million DM will be available for property claims. (At present, one deutsche mark is worth about 45 cents.) Bassler also looked favorably at the agreement's award of attorneys' fees. The fees were capped at 125 million DM, or 1.25 percent of the total fund, and attorneys could only seek their share of fees through arbitration. "It's been a long road," says Allyn Lite, of Newark's Lite, DePalma, Greenberg & Rivas, the liaison counsel for the plaintiffs and one of the architects of the first suits. "To be able to try to close the book on this is a pretty remarkable feat," he says. (New Jersey Law Journal, December 18, 2000) HOLOCAUST VICTIMS: Generali Seeks To Consolidate Claims In New York ------------------------------------------------------------------- Assicurazioni Generali has asked the Judicial Panel on Multidistrict Litigation to transfer three individual Holocaust-era suits and a putative class action to federal court in New York, where two other class actions already are pending (In re: Assicurazioni Generali Holocaust Era Insurance Litigation, MDL No. 1374, JPMDL). New York Actions In August, the panel, at Generali's request, refused to transfer the two New York actions in In re: Holocaust Era German Industry, Bank and Insurance Litigation, MDL No. 1337. The panel found U.S. District Judge Michael B. Mukasey of the Southern District of New York, who is presiding over the New York actions, already had devoted significant time and effort to the matters. The Italian insurer contends that the four other actions, and perhaps some additional newly filed actions, belong in the Southern District of New York because the complaints all allege Generali breached policies issued to Holocaust victims prior to World War II, the cases involve common issues of fact and law, transfer will be convenient for the parties and will promote judicial efficiency, and failure to transfer will cause needless duplication of discovery and other proceedings. Pending in New York are Cornell v. Assicurazioni Generali (No. 97 Civ. 2262 [S.D. N.Y.]) and Winters v. Assicurazioni Generali (No. 98 Civ. 9186 [S.D. N.Y.]). The cases Generali seeks to consolidate there are Smetana v. Assicurazioni Generali (No. 00-02203 [N.D. Calif.]), Brauns v. Assicurazioni Generali (No. 00-06194 AHM [JWJx] [C.D. Calif.]), Mandil v. Assicurazioni Generali (No. 00 CV 1202 JM [POR] [S.D. Calif.]) and David v. Assicurazioni Generali (No. 00-C-0169 [E.D. Wis.]). Common Issues In support of its motion, Generali argues the issues common among the actions are whether the plaintiffs' or their forebears' contractual relationships with the insurer were canceled by Communist governments after the war, whether the insurer's assets were nationalized by Eastern European governments, and the value of the claims in light of devaluation of Eastern European currencies after the war. Transfer, Generali says, will avoid inconsistent pretrial rulings regarding whether U.S. law can be applied to the claims, whether the claims are time-barred, and whether forum selection clauses in some of the policies that favor European forums are enforceable. Transfer also will avoid duplication of discovery in the actions, Generali says. Further, any new actions will already have a forum, the carrier says. Meanwhile, Generali has moved to stay the subject actions pending a ruling by the MDL panel. Opposition In a joint memorandum of law opposing the motion to transfer, plaintiffs Benjamin Mandil and Dr. Jack Brauns contend Generali is misguided in its attempt to label the transfer as an outgrowth of the German Industry, Bank & Insurance Litigation. The order in question consolidated claims pending in 36 actions against German companies in an effort to facilitate coordination and dismissal pursuant to an international agreement between Germany and the United States. By contrast, the plaintiffs assert, Generali seeks to consolidate three individual actions and one class action with two class actions in which the insurer is only one of many defendants. Generali is not subject to the international agreement at issue in the other MDL, Brauns and Mandil say. With so few actions, Generali is unable to meet the strong burden of showing that any common factual issues are so complex and the discovery so time-consuming to justify consolidation, the plaintiffs argue. Legal vs. Factual Issues Further, the common issues tend to be legal, not factual, and the MDL transfer statute does not recognize common legal issues as a ground for transfer, they contend. Brauns' and Mandil's actions are based on individual policies issued by different Generali subsidiaries in different countries. The policies were payable in different currencies. Therefore, they contend, success by one plaintiff will not necessarily enable the plaintiff in the other case to succeed. "Generali's attempt to have the Brauns and Mandil actions transferred to the Southern District of New York is simply a tactical maneuver designed to place plaintiffs at a disadvantage by making the litigation more expensive and less convenient, and to halt the progress of those lawsuits by joining them with complex class actions that have ground to a complete halt over the last three years," the plaintiffs argue. "The motion should be denied." Counsel to Generali are Franklin B. Velie of Salans Hertzfeld Heilbronn Christy & Viener in New York and Peter Simshauser of Skadden, Arps, Slate, Meagher & Flom in Los Angeles. Brauns and Mandil are represented by William M. Shernoff and Jeffrey Isaac Ehrlich of Shernoff, Bidart & Darras in Claremont, Calif. (Mealey's Litigation Report:, Emerging Insurance Disputes, December 6, 2000) INMATES LITIGATION: Chowchilla Draws Attention Again after Recent Deaths ------------------------------------------------------------------------ State corrections officials are investigating three inmate deaths this month at a state women's prison in Chowchilla that was already under intense scrutiny over persistent complaints of inadequate medical care. Prison rights groups say two of the women were not given prompt attention after they began suffering severe health problems at the Central California Women's Facility. The deaths were among seven in little more than a month at the prison and came just weeks after a legislative hearing in Sacramento raised new concerns about medical care at the 3,500-inmate penitentiary. Activists say the deaths this month of Stephanie Hardie, 33, of Pomona, Pamela Coffey, 46, of Los Angeles and Eva Vallario, 33, of San Diego appear to be part of a pattern of slipshod medical attention for female inmates. "Because of the medical neglect in these institutions, women serving time for property offenses or other nonviolent crimes are instead getting death sentences," said Cynthia Chandler, co-director of Justice Network on Women in Oakland. Department of Corrections officials counter that medical practices at the Chowchilla prison, which was the target of a now-settled federal class-action lawsuit over shoddy health care, have improved dramatically. "It's too early to rush to judgment," said Russ Heimerich, a Corrections Department spokesman. "I wish they'd wait for the facts to come out in these deaths before indicting the whole health care system." The state routinely sends seriously ill women inmates to Chowchilla because it operates a hospice and skilled nursing facility. There have been 15 deaths at the prison this year. There were nine in 1999 and 10 in 1998. A coalition of prisoner advocacy groups has asked state Sen. Richard Polanco (D-Los Angeles) to investigate the latest deaths. Polanco heads the Joint Subcommittee on Prison Construction and Operations. His office did not return phone calls for comment. The prisoner advocates say an internal investigation by the prison's health care services division is not sufficient. Heidi Strupp of Legal Services for Prisoners with Children concluded that the years of tussling over prison health care prove that officials "can't police themselves." Prison officials said terminal illnesses claimed the lives of the four other women who died in recent weeks. But prisoner advocates say two of the women--Carolina Paredes, 67, and Michelle Wilson, 36--were not given timely or proper treatment by the prison health care system. Paredes, behind bars for real estate fraud, died of cancer, and Wilson, imprisoned for prostitution, died four months after brain surgery for a tumor. The investigation, conducted by the department's health care services division and the Madera County coroner, will examine the medical history of each inmate, along with toxicology tests and autopsy findings. In addition, an internal review of how prison staff handled the incidents is being conducted. Coffey, incarcerated for narcotics sales, died Dec. 2 in front of her cellmates after complaining for weeks about a large knot in her side. Inmates say she was given the antihistamine Benadryl by prison medical staff. The inmates say one of the prison's medical technical assistants, or MTAs, who serve as the first line of prison health care, disregarded Coffey's complaints less than an hour before her death. "I looked at her stomach and it had blown up, like she was pregnant nine months with twins," said Rhonda Smith, Coffey's cellmate. By the time an MTA arrived 45 minutes later, Smith said, Coffey could barely speak and could not sit up. After examining Coffey, the MTA said he couldn't understand what she was saying, Smith said. "He said, 'You could do more for her than I can,' " Smith said. "He just laughed and walked away." Inmates say another of the prison's MTAs took about 15 minutes to respond after Hardie collapsed in her cell a week later. They say a fellow inmate was left to administer CPR until medical help arrived. Bobbie Smith, a cellmate, said Hardie had been complaining of chest pains for weeks, saying "that it felt like someone was squeezing her heart." Hardie's mother, Diane Hardie Rios, said her daughter had a lifetime of drug problems and was halfway through a 10-year sentence for credit card fraud. "The judge gave her a sentence, and it wasn't death," said Rios, a juvenile probation officer in San Bernardino County. Rios added that she is considering a wrongful death lawsuit, saying the delay in medical care was too long. "There's still a lot of questions in my mind." Six days after Hardie's death, Vallario died of unexplained causes just outside the prison visiting area. Prison officials say CPR was immediately administered, but failed to revive her. Heimerich said many inmates come into the prisons with preexisting conditions and health habits that lead to problems behind bars. In addition, he said, any allegations made by inmates should be taken with caution because "a lot of times they have an ax to grind. They may see someone sick, someone may pass away and the inmates put two and two together and get five." But prison activists say the recent spate of deaths fans existing concerns about the conflicting responsibilities of prison system medical technical assistants, who must juggle their role as health care givers with the basic responsibilities of prison guards. "Correctional officers are trained to be suspicious of prisoners, to always have an eye out," Chandler said. "If you put that in a medical context, you have a lot of people misdiagnosing because they're trained to be skeptical of what prisoners claim." Cayenne Bird, director of the Sacramento prisoners' rights group UNION, said the prison medical facilities amount to "just sort of concocted clinics run by MTAs who are essentially guards. They aren't trained in triage, and they can't even dispense anything more than Pepto-Bismol and Motrin." (Los Angeles Times, December 20, 2000) MASSACHUSETTS: Agrees to Spend on Mentally Retarded and Settle Suit ------------------------------------------------------------------- Massachusetts has agreed to almost quadruple spending on programs for mentally retarded adults to settle a class-action lawsuit over the lengthy wait for state services. The lawsuit was filed in March 1999 on behalf of Margaret Sullivan and 2,600 other mentally retarded adults, some of whom had waited more than a decade for residential care. U.S. District Judge Douglas P. Woodlock ruled in July that 90 days was a reasonable amount of time for the state Department of Mental Retardation to provide service to those who requested it. The state agreed to increase funding from $29 million to $114 million over five years, said Rich Copp, a spokesman for the Executive Office of Health and Human Services. ''This will likely make us the leader in the nation in providing services for this population,'' Copp said. ''It's definitely good news. Actually, it's great news.'' Neil McKittrick, an attorney for the families, said negotiations took six or seven weeks. ''We think we're finally there. We've got it signed, sealed and delivered,'' he said. Most adults on the waiting list are looking for group homes, shared apartments or other communal living arrangements where they can receive assistance. Other states including Florida, Hawaii, Maryland, New Jersey, New Mexico, New York and Oregon have faced the same obstacles Massachusetts does: too little money and too few places that can care for mentally disabled people. Many of those states are trying to develop their own plans to address the problems. (AP Online, December 20, 2000) PENNSYLVANIA LIFE: Distribution Plan for Winning Policyholders Approved ----------------------------------------------------------------------- Pennsylvania residents who held whole life and deferred annuity policies issued by Executive Life Insurance Company can expect to receive cash distributions from a successful class action suit against the Pennsylvania Life and Health Insurance Guaranty Association, James R. Malone, Jr., of Chimicles & Tikellis LLP, Co-Counsel for class members announced. Policyholders who fit within the class will share in a distribution of approximately 15 million dollars. Following a hearing on December 8th, the Philadelphia Court of Common Pleas approved the plan of allocation for the proceeds of a judgement entered in June 1998 by the Honorable Stephen E. Levin. Counsel presently expect to commence the process of distribution in early 2001. Under the plan of allocation approved by Judge Levin, policyholders will not need to file claims, but will receive distributions based upon the losses calculated by the actuaries retained by Gersenson's lawyers. The suit was filed in April 1994 by Mr. Herbert A. Gersenson on behalf of the policyholders who had held policies issued by Executive Life and who resided in Pennsylvania in December, 1991, when the company went insolvent. Gersenson's lawyers, from Chimicles & Tikellis LLP and Miller Faucher & Cafferty LLP, successfully litigated the case in the Phila-delphia Court of Common Pleas and won. The Court ruled that the Guaranty Association had failed to fulfill its obligation to guarantee assume or assure payment of Executive Life's contractual obligations to Pennsylvania residents. The judgement was paid in May, 2000, when the Guaranty Association's efforts to overturn the judgement on appeal failed. Contact: Chimicles & Tikellis LLP James R. Malone, Jr., 610/642-8500 or Eileen Rosenau, 215/735-5512 or Miller Faucher & Cafferty LLP J. Dennis Faucher, 215/864-2800 PPA LITIGATION: CA Man Sues 5 Makers on Unfair Competition, Deceptive Ad ------------------------------------------------------------------------ A California man has filed a state class action suit accusing five drug manufacturers of unfair competition and deceptive advertising for selling over-the-counter diet drugs and decongestants containing phenylpropanolamine (PPA) (Richard Webster, et al. v. Whitehall-Robins Healthcare, et al., No. BC239853, Calif. Super., Los Angeles Co.). In a complaint filed in late October in the California Superior Court for Los Angeles County, Richard Webster sued Whitehall-Robins Healthcare, Bayer Corp., SmithKline Beecham, Novartis Pharmaceuticals Corp. and Chattem Inc. for unfair competition and false advertising under the California Unfair Practices Act, Business & Professions Code subsection 17200 and 17500, et seq. The complaint says the defendants engaged in a pattern and practice of unfairly, deceptively and unlawfully marketing, advertising and promoting PPA. Side Effects Webster says that because PPA narrows or constricts blood vessels, it may increase blood pressure in persons with hypertension. His complaint says side effects include headache, painful or difficult urination, chest tightness, abdominal or stomach pain, irregular heartbeat, sweating, nausea and vomiting, nervousness, restlessness, confusion, convulsions, rapid breathing, hallucinations, hostile behavior, muscle tremors, dizziness, false sense of well-being and insomnia. The complaint says PPA-containing products were sold under the brand names of Acutrim 16 Hour, Acutrim Late Day, Acutrim II Maximum Strength, Amfed T.D., Dexatrim Caffeine-Free Extended Duration, Dexatrim Caffeine-Free Maximum Strength Caplets, Efed II, Propagest, Super Odrinex, Thinz Back to Nature, Thinz-Span and Unitrol Diet Plan Maximum Strength. PPA is also found in Alka-Seltzer Plus, Contac, Comtrex, Dimetapp, Triaminic, Robitussin CF and Tussin CF, the complaint says. Yale Study Cited The complaint cites the Yale Hemorrhagic Stroke Project, a five-year study of 2,000 stroke victims between 18 and 49 that was funded by a trade group, the Consumer Healthcare Products Association. It says the study found that stroke patients were 50 percent more likely than control subjects to have been exposed to PPA within three days of their incident. Those who use PPA decongestant products were about 23 percent more likely to have a stroke during the study period, the complaint says. The complaint says the study found that the risk of stroke increased 16-fold for those who used a PPA appetite suppressant. It says the study estimated that removing PPA from the market could prevent between 200 and 500 strokes each year in the 18-to-49 age group. On the basis of the study, the FDA asked drug manufacturers to replace PPA. Disgorgement, Restitution Sought The complaint says California consumers "paid substantial amounts of money for a drug which did not have the characteristics advertised." It says the defendants' systematic marketing campaigns were false, unfair, unlawful and likely to deceive consumer as to the safety, efficacy and uniqueness of PPA. Webster says the defendants should disgorge profits and pay restitution to PPA consumers. The complaint seeks to represent a class of all Californians who used any PPA product in the past four years. The complaint does not state if Webster is claiming personal injury from PPA products or which ones he may have used. Norman B. Blumenthal, David Markham, Sheldon A. Ostroff and Barron E. Ramos of Blumenthal, Ostroff & Markham in La Jolla, Calif., represent Webster. (Mealey's Emerging Drugs & Devices, December 7, 2000) RYLAND GROUP: Fixing Sinkhole in Crystal Oaks; Suit Not Resolved Yet -------------------------------------------------------------------- Ryland Group is having a layer of compacted sand and clay placed in the hole which has sparked lawsuits from some homeowners. The Crystal Oaks subdivision builder has agreed to make additional repairs to a sinkhole that opened in July. But the overture failed to diffuse residents' lawsuits seeking compensation for any property devaluation. Ryland Group Inc., one of the largest developers in Florida, is paying $ 25,000 to remove about two feet of soil and replace it with a layer of compacted clay and sand, which will stabilize the area. Work began Tuesday and should be completed in a week. "We've always stood behind our products and our services," William Wright, president of Ryland's west Florida division, said Tuesday. "And we're very happy that they allowed us access to move forward with the final repairs." Ryland had offered to make the repairs if at least 60 homeowners waived claims against the company relating to the sinkhole. Last week, Ryland recanted the stipulation, saying it would pay for the work based on the number of waivers already received. Wright declined to say how many people signed on to the deal, only that the number falls short of 60. "It's irrelevant," he said, "because we've elected to move forward." Under Ryland's deal, the work is warranted for three years. The project is under the direction of Steven Counts Inc., a land development company based in Dunnellon. The clay will shore up the area and also act as a filter for rainwater which eventually makes its way to an aquifer. Ryland has already spent $ 37,000 filling the 40-foot sinkhole, which opened in a retention pond. But who is responsible for the second phase has been in question. The homeowners' group only recently gained ownership of the property. Residents of Crystal Oaks said they were shocked when the sinkhole opened in July. One month earlier, they had filed a lawsuit against Ryland, alleging that it failed to inform them about other sinkholes when they were buying their homes. Ryland said it was not involved in the building of the retention pond, which may have been dug too deep. Besides, officials say, sinkholes are a fact of life in Florida. "I don't know how you give assurances for acts of God," Wright said in a recent interview. Many of the homeowners maintain that Ryland is liable nonetheless and say they intend to continue legal action. Their attorney, Dan Pilka of Brandon, said nearly 50 homeowners are seeking class-action status. Among them is Bruce Wickersham, who bought a Crystal Oaks house in June 1998. "Nobody told us there was an active sinkhole." He said he would like Ryland to compensate him for any lost property value. Kathy Loseby, who moved to the subdivision in September 1999, signed the waiver because she thinks the suit has no grounds. "Sinkholes occur in Florida," she said, adding that she has seen no proof that property values have suffered. "We have been more than pleased with Ryland's product and service," Loseby said. Citrus County Property Appraiser Ron Schultz, who is aware of the sinkhole issue, said he will be paying close attention to sales in Crystal Oaks. He agreed that sinkholes in Florida are "about as natural as rain" and said they typically only affect the value of property directly next to a sinkhole. (St. Petersburg Times, December 20, 2000) TAINTED BLOOD: Claims over HIV Precluded By Settlement, 7th Cir Rules --------------------------------------------------------------------- A Seventh Circuit U.S. Court of Appeals panel on Nov. 15 affirmed dismissal of an HIV blood contamination case, finding that the plaintiffs' claims were precluded by a class action settlement. It also found the appeal was identical to a previous one in which the panel found that plaintiffs should have been on notice about the settlement (In Re: Factor VII or IX Concentrate Blood Products Litigation, Appeal of Edward Gadson, et al., No. 00-1961, 7th Cir.). Five plaintiffs who had hemophilia and contracted HIV from contaminated blood products sued various defendants in state court. The U.S. District Court for the Northern District of Illinois, Eastern Division, enjoined the plaintiffs from doing so to avoid a class settlement from which they had not opted out. The plaintiffs appealed. In what the Seventh Circuit panel called a "sequel" to two of its earlier opinions, it said the claims of three plaintiffs are identical to those rejected in one of those rulings. The panel agreed with the District Court that claims of four plaintiffs that they didn't receive notice of the settlement were factually unfounded. 'Ostrich Tactic' "One of these four, [Edward] Gadson, further claims that he didn't know he had HIV until after the deadline for opting out of the class, which was October 15, 1996," the panel wrote. "The reason he didn't know is that, though he had every reason to believe that he had not only HIV but indeed full-blown AIDS, having had seizures as early as 1987, he delayed being tested until 1997, at which time he discovered his infection had already proceeded to the AIDS stage. This was an ostrich tactic equivalent to knowledge." In response to the plaintiffs' claim that they should be entitled to mount a collateral attack on the settlement because it was improper under Rule 23, the panel said that while it did say the class action might be questionable, it "held that it was not void and could not be collaterally attacked." "The appellants have given us no reason to overrule our two-year-old decision," the panel said. The plaintiffs are represented by Marya C. Young of Binghamton, N.Y. Baxter Healthcare Corp. is represented by Charles G. Albert of Albert, Whitehead & McGaugh in Chicago. Rhone-Poulenc Rorer Pharmaceuticals Inc. and Armour Pharmaceutical Co. are represented by Sara J. Gourley of Sidley & Austin in Chicago. Alpha Therapeutic Corp. is represented by David I. Bell of Knapp, Peterson & Clarke in Glendale, Calif. Mull & Mull is represented by Robert E. Arceneaux of Barham & Arceneaux in New Orleans. (Mealey's Emerging Drugs & Devices, December 7, 2000) VICKSBURG CASINOS: MS High Court Reviews Restraint of Trade Verdict ------------------------------------------------------------------- Ameristar in October agreed to buy Station's sprawling Kansas City and St. Louis gaming properties for $475 million. But if Ameristar has trouble with the Gaming Commission over its Mississippi legal woes, then so does Harrah's Entertainment Inc., and perhaps Isle of Capri Casinos Inc. as well. All three are competitors in the crowded Vicksburg, Miss., gaming market - and prospectively in Kansas City. In two linked civil cases, Mississippi's high court is reviewing a $3.9 million restraint of trade verdict handed down a year ago. Final decisions could come at any time. The three Vicksburg casinos moor their boats in the Mississippi River on the city's west side. Minnesota-based Multi Gaming Management Inc. contends that Ameristar, Harrah's, Isle and others conspired during the mid-'90s to block its proposed casino and motor sports speedway project east of Vicksburg on the Big Black River. The site is along the main route between Vicksburg and Jackson, Miss., which happens to be the state capital and the casinos' top feeder city. A casino on the Big Black River would intercept a huge percentage of Vicksburg-bound gamblers. At one point during protracted proceedings, Ameristar Chairman and chief executive Craig H. Neilsen told the Mississippi Gaming Commission that Vicksburg casinos draw around two-thirds of their customers from the Jackson area. The Gaming Commission refused to license the project. Multi Gaming appealed and won. A judge ordered commissioners to license the casino. The Gaming Commission, along with Vicksburg city officials who feared the loss of jobs and their municipal cash cow, appealed to the state Supreme Court. In a separate case, a Pike County, Miss., jury awarded Multi Gaming and its principal owner, Jim Belisle, damages of $2.9 million. Big Black River landowner E.L. Pennebaker Jr. was awarded $1 million. The plaintiffs alleged the casino defendants improperly used their influence to sway the Mississippi Gaming Commission. They asked for $238 million in damages. The defendants, including an influential Mississippi bank, appealed to the state Supreme Court. Shortly before that November 1999 trial, Isle of Capri settled out of court and was dismissed from the case - avoiding a verdict, but not the taint. Neither Ameristar nor Harrah's would comment last week. In one of its few public statements, Ameristar last fall said it did nothing wrong and was appealing the verdict as "an unconstitutional restraint on Ameristar's free speech rights." The Missouri Gaming Commission is watching. The troublesome restraint-of-trade and conspiracy allegations upheld by a jury justify a close, hard look by regulators. If commissioners do not like what they see, they could deny Ameristar a license. Or they could issue one, along with a whopping 'Welcome-to-Missouri' fine. But fair play would demand commissioners also take identical disciplinary action against Harrah's, and Isle too. (The Kansas City Star, December 19, 2000) WYETH-AYERST: Duract Cost-Recovery Class Certified By TX Federal Judge ---------------------------------------------------------------------- A national cost-recovery class for people who bought the withdrawn prescription pain drug Duract and insurers was certified Nov. 29 by a Texas federal judge (Elizabeth Rivera, et al. v. Wyeth-Ayerst Laboratories, et al., No. G-00-345, S.D. Texas, Galveston Div.). The class is for recovery of economic damages only and specifically excludes claims for personal injuries or claims against corporate officers and directors of defendants Wyeth-Ayerst Laboratories and its parent, American Home Products Corp. Duract was a non-steroidal anti-inflammatory drug that was introduced in It was withdrawn about 11 months later after reports of liver damage. Several personal injury suits have been filed across the country and at least one suit was reported settled (See 5/21/99, Page 6). Individual, Insurer Sue In the class action complaint, plaintiff Elizabeth Rivera and the Arkansas Carpenters Health and Welfare Fund claim that Wyeth and AHP were aware of alleged life-threatening side effects before introducing Duract and did not disclose those alleged risks to physicians and patients. The complaint seeks to recover economic damages, claiming violations of the Texas Deceptive Trade Practices Act (DTPA), breach of implied warranty and merchantability under Texas laws and unjust enrichment. The plaintiffs stipulated to dismiss claims of breach of implied warranty and private right of action under the Food, Drug and Cosmetic Act. A RICO complaint added to the first amendment complaint was omitted from the second amended complaint. Judge Samuel B. Kent of the U.S. District Court for the Southern District of Texas here denied a defense request to defer class certification pending additional discovery, saying that information was not necessary under Rule 23. In a Nov. 8 order, the judge dismissed the defendants' argument that the plaintiffs lacked standing to sue because they suffered no physical injury. The judge also dismissed the defendants' learned intermediary defense, saying the claims relate to the adequacy of warnings, not to whom they were given. In the Nov. 29 order, the judge also dismissed defense arguments that the plaintiffs had a potential conflict. The judge said that if that occurs, he can create subclasses and appoint subclass counsel. Rule 23 Requirements Judge Kent said the class met the Rule 23(a) prerequisites for numerosity because the potential class numbers in the tens of thousands of persons from across the nation, making joinder impractical. Judge Kent said common questions of law and fact in the case are deceptive marketing, breach of express or implied warranties, adequate warnings, failure to disclose safety information, whether the drug was in fact safe, whether the defendants were aware of the risks when they introduced the drug and whether the defendants were unjustly enriched. "These questions, when answered for one class member, are answered for all," Judge Kent said. "Thus, the commonality requirement is met." The typicality requirement is met, Judge Kent said, because both plaintiffs appear to be typical purchasers. "There is no indication that they will be preoccupied with defenses applicable only to themselves," he said. No Potential Conflict In finding the adequacy of representation prerequisite met, Judge Kent dismissed the defendants' argument that there could be a conflict between consumers and third-party payers regarding priority of payment. "In the unlikely event that a conflict does occur over allocation of damages of settlement funds, however," the judge wrote, "the Court can divide the class into two subclasses consisting of consumers and insurers, appointing separate counsel for each. "This speculative conflict raised by Defendants presents no barrier to class certification," the judge said. Learned Intermediary Unavailing The defendants argued that the learned intermediary doctrine requires individualized treatment because the judge will have to determine whether each physician relied on allegedly inadequate warnings about Duract. The judge said that argument lacked merit, citing his Nov. 8 ruling that "the learned intermediary doctrine governs to whom warnings must be given, not the adequacy of the warnings." The plaintiffs, the judge continued, claim there were inadequate warnings to both patients and physicians. In addition, he said the defendants concede that Duract was taken off the market because "no labeling change" would be sufficient. "The crux of Plaintiffs' case is the safety of Duract, an issue which does not require any individualized treatment," Judge Kent wrote. "In short, in this case for economic damages, the learned intermediary doctrine simply does not apply. After the risks associated with Duract became clear to Defendants and they took the drug off the market, Defendants specifically instructed class members not to take Duract and to throw the medicine out. "The class Plaintiffs were left with a completely worthless product. Defendants can hardly avoid liability by claiming that they warned doctors; the learned intermediary doctrine is not the doctrine of caveat emptor." State Law Variations Judge Kent dismissed the defendants' objections that variations in state law defeat the predominance requirement of Rule 23, saying case law they cite is not on point. "The Court can overcome difficulties created by variations in state law through the judicious use of subclasses," Judge Kent wrote. "Thus, keeping in mind that the Court can decertify the class at any time, the Court gives plaintiffs an opportunity to provide a workable subclass plan which will solve management problems created by variations in state law." Wyeth and AHP argued that the class would be unmanageable because the court would have to decide who prescribed the drug, when it was prescribed, whether the doctor read the label, if he or she knew of risks from any other source, if they would still have prescribed the drug, what plaintiffs paid and whether an insurer reimbursed plaintiffs. Judge Kent said most of those points are dismissed by his learned intermediary ruling. On the question of whether a doctor would have prescribed the drug knowing what he or she knows now, Judge Kent noted, "being that Duract has been taken off the market because of its health risks, it is incontestable that no physician would prescribe Duract now." Price No Concern The defendants' concerns about what plaintiffs paid for Duract was of no concern to certification because "there is obviously no requirement that all class members have identical damages," the judge said. Damages are readily ascertainable, he said. Judge Kent said the defendants' argument that the class would result in double recovery "is flawed and contradicted by Defendants' observation that reimbursements amounts will have to be determined." "Rather than creating a double recovery, having all these parties together prevents a double recovery," Judge Kent said. The judge said class treatment is superior because individual claims would number in the thousands for relatively small amounts of money. Sufficient DTPA Allegations In the Nov. 8 ruling denying the defendants' motion to dismiss, Judge Kent found that because the plaintiffs alleged that Duract was not what it was warranted to be - a safe pain reliever - the plaintiffs have alleged sufficient facts to support a claim under the DTPA. The judge said the plaintiffs adequately stated a claim for a refund of the purchase price and need not allege a physical injury. Dismissing the defendants' arguments against the breach of warranty claim, Judge Kent wrote: "Part of what people bargain for when they purchase medicine is a safe product which will not cause them to worry. The Court cannot say as a matter of law that there was no breach of warranty, even absent physical injury, for a medicine with a revoked assurance of safety." Judge Kent said he did not think the Texas Supreme Court "would adopt a blanket rule that would invalidate breach of warranty claims by purchasers who had not used up the medicine and were forced to throw it away. " Judge Kent said he could not say as a matter of law that any offset for benefits received by the plaintiffs would offset alleged unjust enrichment of the defendants. Nor, he added, is the plaintiffs' failure to return the drug significant because they were told to throw it away. Also denied was the defendants' argument that the union health and welfare fund did not suffer a compensable injury. Adequacy Of Warning In denying dismissal based on adequacy of warning, the judge said the plaintiffs are alleging failure to warn doctors, pharmacists and consumers. The doctrine, the judge said, does not govern adequacy of warnings. "Thus, since Plaintiffs allege that the warnings were inadequate, to whom the warnings were given is of no moment," Judge Kent wrote. Arthur Sadin of Youngdahl & Sadin and Richard Lee Melancon of Melancon & Hogue, both in Friendswood, Texas, represent the plaintiffs. Stephen R. Lewis Jr. of Lewis & Williams in Galveston, Texas, represents the defendants. (Mealey's Emerging Drugs & Devices, December 7, 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 * * *