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/raid1/www/Hosts/bankrupt/CAR_Public/001229.MBX C L A S S A C T I O N R E P O R T E R Friday, December 29, 2000, Vol. 2, No. 251 Headlines ALLSCRIPTS, INC: Wolf Haldenstein Commences Securities Lawsuit in IL AUTO INSURANCE: Joinder Rule Allows for 48 PIP Claims Vs. State Farm COCA-COLA: Is $192 Mil Race Bias Settlement Low Or Breathtaking CREDIT CARDS: Bank One Offers $40M To Settle Suit over Late Fees ECONOMY-CLASS SYNDROME: 25 Died at Tokyo airport, Japanese Doctor Said FORD MOTOR: Drivers Cited As Problem, The Washington Times Reports FORD MOTOR: Has Settled at Least 8 Firestone-Related Lawsuits FORD MOTOR: USA Today Takes Look at Bumpy Road For The Radial-Ply Tire FOSTER CARE: FL Suit Spurred Scrutiny; Staff Turnover Is Big Problem HOLOCAUST VICTIMS: Austria Makes Compensation Offer for Property Seizure ICE STORM: Lawsuit Seeks $75-a-Day Compensation for Victims IMMIGRANTS' WAGES: NY Tries to Help the Courtroom Shy with Settlements INTERNET HOAX: Prosecutors Say Man Will Plead Guilty in Emulex Hoax MOBILE PHONE: Firms May Face New Suits Over Tumours MONEYGRAM PAYMENT: Announces Settlement of Wire Transfer Consumers Suit ORBITAL SCIENCES: Settlement for Securities Suit Okayed in Virginia PINE CREEK: Ogden Attorney Files Suit Charging Home Defects RECORD FIRMS: 42 AGs File Suit; Minimum Ad. Prices for CDs under Attack SARNIA CONTAMINATION: Ontario's Environment Ministry Blamed after Spill TOBACCO LITIGATION: Analysts Say Legal Threats Diminish ********* ALLSCRIPTS, INC: Wolf Haldenstein Commences Securities Lawsuit in IL -------------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP commenced a class action lawsuit in the United States District Court for the Northern District of Illinois against Allscripts, Inc. (NASDAQ: MDRX-news), on behalf of all investors who purchased Allscripts common stock during the period July 27, 2000 through and including October 26, 2000 (the "Class Period") and who suffered damages. A copy of the complaint may be viewed on the firm's web site located at www.whafh.com. The complaint charges defendants with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint alleges that during the Class Period, defendants disseminated to the investing public false and misleading statements about the Company's business and financial results. Specifically, on October 26, 2000, after the close of trading, the Company issued a press release announcing its financial results for the third quarter ending September 30, 2000. In that press release, the Company disclosed for the first time that its results for the second quarter of 2000 were being revised to correct an issue with respect to the recognition of revenue. Specifically, the Company announced that its previously reported revenues for the second quarter of 2000 were revised from$12.6 million to $12.1 million and previously reported revenues for the first 6 months of 2000 have been revised from $22.2 million to$ 21.7 million. The revisions increased Allscript's net loss for the second quarter of 2000 from $24.3 million to $24.8 million and net losses for the first six months of 2000 from $26.3 million to $26.8 million. On the heels of this announcement, the price of Allscripts' common stock fell nearly 45%, from a closing price of $16-1/8 on October 26, 2000 to $8-7/8 on October 27, 2000, on heavy volume. Contact: Wolf Haldenstein Adler Freeman & Herz LLP, New York Michael Miske, George Peters, Fred Taylor Isquith, Esq., or Gregory M. Nespole, Esq. 800/575-0735 classmember@whafh.com AUTO INSURANCE: Joinder Rule Allows for 48 PIP Claims Vs. State Farm -------------------------------------------------------------------- Lech v. State Farm Insurance Co., Appellate Division, A-1866-99T2, November 28, 2000, approved for publication November 28, 2000. By Conley, J. Also on panel: Skillman and Wecker. Appealed from Kirby, J., Law Division, Essex County. The plaintiff assignee was permitted to bring 48 separate PIP claims against the defendant insurer in the same complaint under Rule 4:27-1 -- the permissive joinder Rule. Chiropractor Robert E. Lech is the assignee of 48 PIP claims against State Farm Insurance Company. Lech filed a single complaint against State Farm, asserting the claims of all 48 assignors. State Farm moved to dismiss the complaint based on the improper joinder of claims. State Farm relied on the unreported decision of Lech v. National Consumer Insurance Co., Docket No. A-5458-97T2 (App. Div. June 25, 1999), which dismissed a similar complaint under the party joinder Rule and rejected as an ancillary matter the application of the claims joinder Rule. Based upon the unreported decision, the motion judge granted State Farm's motion to dismiss. Lech appealed. Disagreeing with the rationale of both the National Consumer Insurance Co. decision and the motion judge, the Appellate Division reversed and remanded. Both the Appellate Division in National Consumer Insurance Co. and the motion judge in this case relied upon the party joinder Rule. Both accepted the proposition that an assignee should not be permitted to join separate claims in one complaint against a single insurer because the separate claims of the "multiple patient assignors" could not be jointly brought in one lawsuit. Furthermore, the court in National Consumer Insurance Co. refused to apply the claims joinder Rule, finding that the Rule did not intend to create a " single cause of action" for an assignee where one did not otherwise exist. The Appellate Division in this case disagreed with both the court in National Consumer Insurance Co. and the motion judge, and it reversed the dismissal of Lech's complaint. However, the appeals court made clear that its holding was limited to "single plaintiff, single defendant permissive claims joinder and does not involve preclusive entire controversy doctrine issues." While it acknowledged that Lech could be bound by the decision in National Consumer Insurance Co., the Appellate Division in this case found that State Farm did not raise collateral estoppel or issue preclusion defenses and that the issue on appeal "likely transcends this particular litigation." Returning to the issue of permissive claims joinder, the Appellate Division first observed that the issue was whether the Court Rules permitted Lech's complaint, which contained all of his claims against a single insurer. To answer the question, the court determined Lech's interest in each of the PIP claims. Based on property law, the appeals court concluded that Lech had 48 choses in action against State Farm. Under N.J.S.A. 2A:25-1, choses in action that arise under contract are assignable. Because the patients' PIP claims are contractual, the court concluded that they were assignable and that the assignments gave Lech the "contractual right" to prosecute the PIP claims. The Appellate Division noted that, if a claim transferred by an assignment can be sued upon, then the assignee may sue "in his own name." Case law from other jurisdictions suggests that, in the case of a PIP claim, the "real party in interest" is the healthcare provider and that the assignment "divests the patient" of his right to pursue the claim. Assuming that the assignments by Lech's patients were valid, the Appellate Division held that Lech had "a claim, in his own right, against State Farm arising from each of the State Farm insured's PIP assignments." The court concluded that none of Lech's claims was "any less viable" merely because 48 different patients assigned their claims to him. Because there was one plaintiff and one defendant, and because the action did not involve the mandatory joinder of claims, the appeals court concluded that the permissive joinder of claims under Rule 4:27-1 applied. The court observed that Rule 4:27-1 allows a single plaintiff to join "as many potential claims" as he may have against a single defendant regardless of their nature. The court recognized that the Rule "encourages efficiency in the conduct of litigation" at the same time that it perpetuates the policy that each complaint should carry "the maximum burden of controversy to the full limit of trial capacity." The appeals court found the Federal Rules of Civil Procedure to be "instructive." Federal Rule 18(a) -- which is similar to Rule 4:27-1 -- does not restrict the type or number of claims which can be brought in one action when there is one plaintiff and one defendant. Therefore, the commentators found that, when there are properly joined parties, a claims misjoinder is "simply impossible." Moreover, even though there are manageability problems in an action with a large number of unrelated claims, the Appellate Division found that, under New Jersey Court Rule 4:38-2(a), a trial judge has "broad case management discretion." While the Federal Rules provide for the same discretion, the court noted that the Federal Rules do not require that all of the claims be tried together. Furthermore, while there are some specific instances in which a case with a single plaintiff and multiple claims is limited under the New Jersey Court Rules, the appeals court found that there have been no proposed amendments to the Rules to restrict actions by a healthcare provider against an insurer. Finally, the Appellate Division concluded that the application of the permissive claims joinder Rule "furthers the legislative concern" that an injured driver has a "ready means" to receive prompt medical treatment. While it acknowledged the danger of "personal injury mills," the Appellate Division found that, when such a situation is suspected, an insurer may assert defenses or other "affirmative relief." However, the court concluded that these concerns do not cause the application of Rule 4:27-1 to Lech's claims to be "per se inapplicable." For appellant: William C. Slattery (Jack L. Cohen, attorneys). For respondent: Julie C. Smith (Chierici, Chierici & Smith). (New Jersey Lawyer, December 11, 2000) COCA-COLA: Is $192 Mil Race Bias Settlement Low Or Breathtaking --------------------------------------------------------------- Washington, D.C., attorney Cyrus Mehri describes a $ 192 million race discrimination settlement with the Coca-Cola Co. as "breathtaking." "These are probably the most sweeping reforms any company has agreed to," says Mr. Mehri, of Mehri, Malkin & Ross, who represents plaintiffs in a class action against the soft drink company. It's even better than Texaco's 1997 $ 176 million settlement of a similar race discrimination suit, he says. The Texaco agreement was hailed at the time as a record settlement of its kind. Tricia "C. K." Hoffler, a partner of attorney Willie E. Gary, disagrees. "It's a historic agreement in that it's pitifully low," she says. "This is a big public relations sham." Mr. Gary's firm, Stuart, Fla.'s Gary, Williams, Parenti, Finney, Lewis, McManus, Watson & Sperando, already represents four Coke employees who were named plaintiffs in the original suit, but parted company with Mr. Mehri and co-counsel Bondurant, Mixson & Elmore of Atlanta last year. Coke and plaintiffs' attorneys announced on Nov. 16, with great fanfare, that after months of negotiation, they had agreed to a historic settlement. Actually, there is only a draft settlement, attorneys for both sides say, and the final settlement still needs the approval of U.S. District Judge Richard W. Story of the Northern District of Georgia. The draft still has not been released to class members or the public. Coke's black employees ultimately will determine whether the company can put charges of racial discrimination behind it. If Mr. Mehri and Coke can persuade most of the 2,000 employees eligible to participate in the settlement that it's a good deal, Coke can close the book on this troublesome chapter. But if employees buy the view of Mr. Gary's firm, Coke may not be able to lay the discrimination charges to rest. Possibility of cancellation Coke has the option of canceling the settlement agreement if 200 or more of the eligible employees elect not to participate. Coke insists that's unlikely. But clearly, Mr. Gary could continue to keep the company entangled in litigation and battling negative publicity in the important public relations arena. With a settlement in hand, both Coke and the plaintiffs' lawyers want to persuade employees that the offer is attractive. Mr. Mehri's firm and Bondurant Mixson stand to get $ 20.6 million from the settlement. Mr. Gary's firm won't share in this largesse. It stands to reap such generous fees only if Coke employees believe Mr. Gary can win them a better deal in separate litigation. While plaintiffs' lawyers say that they still hope to send the details of the settlement to prospective class members by the end of this month. Coke spokesman Ben Deutsch says that Coke is now telling its employees the material may not be mailed out until January. Coke is represented by company attorneys and a team of King & Spalding attorneys led by William A. Clineburg Jr. that includes Larry D. Thompson, former U.S. attorney for the Northern District of Georgia. However, Coke has insisted that its public relations staff handle all media inquiries regarding the suit. The biggest issue is exactly how much cash employees will receive. Mr. Mehri has said, in a signed column in the Atlanta Journal-Constitution and on his Web site, that employees will receive an average of $ 40,000 each. Jeffrey O. Bramlett, a partner at Bondurant Mixson, calls that figure "somewhat misleading." "It's going to depend on the circumstances of the individual," he said. Each of Coke's salaried black employees in the United States -- a prospective class that does not include hourly wage-earners -- will share $ 58.7 million in compensatory damages, based on their tenure with the company. But the $ 40,000 average also is based on an additional $ 23.7 million in back pay. Securing a commitment from Coke to change its corporate culture was the real point of the litigation, says Elvenyia Barton-Gibson, a named plaintiff who is now a class representative. She says that she is "very pleased" with the settlement. Gregory A. Clark isn't so sure. One of the suit's original plaintiffs, he became disenchanted last April when, he says, he overheard Mr. Mehri and other lawyers privately gloating over the money they would make while their clients would get only a fraction of their take. Mr. Mehri says that Mr. Clark either "misunderstood or has chosen to misrepresent what was said on the call." Mr. Clark and several other plaintiffs were dropped as named plaintiffs and were told to find another lawyer after they attempted to add Mr. Gary to the legal team already in place. "As far as the people are concerned, many of them are disappointed with the amount of cash that the attorneys settled for," says Mr. Clark. (The National Law Journal, December 25, 2000) CREDIT CARDS: Bank One Offers $40M To Settle Suit over Late Fees ---------------------------------------------------------------- Bank One's First USA unit has proposed paying $40 million to settle lawsuits alleging improper charges to its credit card customers. A class-action lawsuit, filed in U.S. District Court in East St. Louis, alleges that First USA the nation's largest issuer of Visa cards hit cardholders with improper late fees and finance charges. The proposed settlement is outlined in a letter First USA sent to customers, though the company denies any wrongdoing and says it will ''vigorously defend itself'' if the plan is not approved. A Bank One spokesman confirmed that millions of letters were mailed but declined to give the exact number. Douglas Sprong, a lawyer representing customers in the class-action suit, said about 18 million letters were sent. According to the letter, the settlement would affect only customers whose payments were handled in the Atlanta or Louisville, Ky., facilities of third-party vendor National Processing Co. between Jan. 1, 1998 and Aug. 31, 1999. The court has scheduled a hearing Jan. 24 to decide whether to approve the settlement, the notice said. (AP Online, December 28, 2000) ECONOMY-CLASS SYNDROME: 25 Died at Tokyo airport, Japanese Doctor Said ----------------------------------------------------------------------Twenty-five people including a US pilot have died over the past eight years at Tokyo airport after suffering blood clots caused by cramped airline seating, a Japanese doctor said. The so-called "economy-class syndrome" was a misnomer as anyone could die from prolonged confinement in a plane, said Toshiro Makino, who heads the Nippon Medical School clinic at Tokyo's Narita international airport. "I opened my clinic in the airport's basement in 1992 and have seen the number of cases rising every year as more people travel by air," the doctor told AFP. All 25 people collapsed shortly after disembarking from lengthy flights and died at the airport hospital, he said. The syndrome is caused by passengers sitting in cramped seating, most commonly in economy class, and being exposed to dry recirculated air which thickens the blood and heightens the risk of embolisms. "Blood clots start to circulate when passengers disembark from the airplane. Within five or 10 minutes, the clots can move to the heart and then the lungs, causing breathing difficulties," said Makino. The most at risk are the overweight and the elderly. The average age of the fatalities observed by the doctor was 64, with the youngest case a 46-year-old US man and the oldest an 84-year-old man from the Philippines. But the syndrome is indiscriminate, said the doctor. A 65-year-old US airline captain collapsed in the cockpit after an eight-hour flight from Southeast Asia and died from breathing difficulties at the airport hospital. "We should not underestimate the danger of this syndrome," Makino warned. "It could happen to anyone, whether you are sitting in economy class or first class or even working in the cockpit. For this reason, I would prefer to actually call this aircraft syndrome," he said. Annually, 50 to 60 people are hospitalized at Narita and 100 to 150 complain of minor breathing difficulties resulting from the syndrome, the doctor said. The syndrome has been grabbing the headlines recently, with a Sydney law firm this month warning that airlines face huge damages claims by possibly hundreds of passengers over their alleged failure to warn of the risks. Slater and Gordon, renowned in Australia for initiating successful class actions against major companies, said it had been deluged with inquiries following a newspaper report of the case. "People should be made aware of the syndrome," said the Japanese doctor. "They should drink enough water and stretch their legs while on the plane, and they should not drink too much alcohol because it makes them dehydrate much more quickly." All Nippon Airways Co. Ltd., Japan's second largest carrier, said it had been urging passengers via its in-flight magazines and videos to drink enough water and stretch their legs. "We train our flight attendants to make sure passengers have enough water and also post such preventive measures on our website," said ANA spokesman Hiroyuki Miyakawa. (Agence France Presse, December 28, 2000) FORD MOTOR: Drivers Cited As Problem, The Washington Times Reports ------------------------------------------------------------------ You wouldn't take a sports car off-roading - or expect it to plow through a snowstorm. Low ground clearance and high performance tires with stiff sidewalls are not the ticket for slogging through mud or negotiating unpaved, rock-strewn roads. It's generally understood that these purpose-built vehicles are designed to corner and accelerate better than average cars on dry, paved roads - but the price one pays for this superior capability in the "sporty" department is offset by a built-in disadvantage when the pavement ends or the weather turns foul. Not surprisingly, few people think sports cars are "defective" because they aren't good in snow. Yet America's personal injury lawyers are in the process of tarring and feathering another type of purpose-built vehicle - in this case SUVs - for just such a "failing." Sport-utility vehicles are like sports cars in that they are specifically designed to be especially good at certain things - in this case, handling both bad weather as well as being able to scramble up rough trails and unpaved roads. In order to offer this capability, SUVs are built to ride higher than conventional passenger cars. They have tires of the "light truck" and "all-terrain" type that are designed specifically to maximize off-road ability and complement their truck-type suspension systems. But, as with purpose-built sports cars, the design characteristics of SUVs do exact a price. SUVs are not as stable at higher speeds, and do not corner or "handle" as well, as sports cars - or even conventional passenger cars. But this is only a problem if an SUV is driven inappropriately - aggressively, at high speed in bad weather, for instance - as if it were a conventional passenger car. These facts are commonsensical - and even if they weren't, SUV manufacturers go to great lengths to inform people of the different handling characteristics of SUVs in the owners' manuals they supply with each vehicle. They also place hard-to-miss advisory warnings on the back of sun visors. Unfortunately, in our "blame-anyone but me" society, personal injury lawyers have found scores of people willing to be used as props for class-action litigation against SUV manufacturers - precisely because they do not want to accept responsibility for having driven their SUVs inappropriately. Ford's popular Explorer SUV is the personal injury lawyer's primary target - but if successful, the present litigation could easily encompass other makers of SUVs, with far-reaching consequences for the entire economy. The lawyer's have painted bull-eyes on the Explorer in part because of its popularity and in part because the vast majority of its rollover accidents have involved vehicles equipped with Bridgestone/Firestone tires that reportedly suffered tread separation typically while traveling at freeway speeds in hot weather. Ford, to its credit, moved swiftly to replace some 6 million Bridgestone/Firestone tires on its Explorers. The fast response did not appease the trial lawyers, who contend the "inherent instability" of SUVs is partially to blame for the rollovers. According to this logic, all SUVs are susceptible to being labeled "defective" - for no greater crime than delivering the specific type of functionality sought by those who purchased them. But are the Ford Explorer or other SUVs "dangerous" beyond the inherent limitations imposed by their design characteristics? The evidence - and it is abundant - overwhelmingly says no. According to accident data compiled by the federal government's Fatal Accident Reporting System (FARS), Explorers, are, in fact, not only safer overall than other comparable SUVs - but safer than most passenger cars as well. FARS data for the period 1991-1999 (the decade during which SUV sales boomed), show there were 1.1 deaths per million vehicle miles traveled (VMT) in accidents involving the Ford Explorer. The figure for other compact SUVs was 1.3 deaths per 100 million VMT; and for passenger cars, 1.5 deaths per 100 million VMT. Moreover, similarly sized SUVs were involved in almost 20 percent more rollover accidents than the Ford Explorer. The Insurance Institute for Highway Safety says that the four-door Explorer has the lowest rollover fatality rate of any large SUV, while the two-door is rated second-best in the midsize SUV category. The real-world evidence shows that the interior of an Explorer is one of the safest places to be in if you happen to have an accident - as is true of SUVs in general. The size and mass (as well as the higher ground clearance) provides excellent occupant protection far superior to that of the typical subcompact, compact and even mid- sized automobile. This fact was acknowledged by the recent decision taken by State Farm Insurance to give insurance premium discounts to drivers of several popular SUV and truck models. The discounts, which reflect the generally lower medical and personal injury costs sustained by SUV occupants involved in accidents, affect the medical portion of the premium, amounting to a reduction of that part of the total cost of approximately 30 percent. (SUVs do incurgreater liability - i.e., body damage, etc. - costs than do most passenger cars.) Without diminishing the losses suffered by those involved in SUV rollover accidents, it must be pointed out that Ford sells about 450,000 Explorers every year -and has done so for many years. Yet of that vast number of Explorers, only a relative handful have been involved in rollover or tire separation accidents. This suggests the possibility that driver behavior (e.g., excessive speed; failure to properly inflate tires, etc.) may have contributed to these specific types of accidents. Of course, contingency-fee personal injury lawyers continually downplay Explorer's excellent overall safety record, as well as the idea that their clients may bear at least some of the responsibility for their woes. What they are interested in is whipping up fear and hysteria about vehicles that are paragons of safety - if driven appropriately and within the limits of their design. Helping people - and juries -forget this fact could lead to big paydays for the plaintiffs' bar. But then again, when you're a plaintiff's lawyer, that's ultimately what it's all about. (The Washington Times, December 27, 2000) FORD MOTOR: Has Settled at Least 8 Firestone-Related Lawsuits ------------------------------------------------------------- According to Reuters news, Ford Motor Co. has settled at least eight lawsuits and plans to settle many more of the cases, which stem from accidents involving Ford Explorer vehicles and Firestone tires in which 148 people died and more than 525 were injured, plaintiffs' attorneys and Ford said on Wednesday. Reuter reports that an eighth case was settled with a south Florida family on Dec. 14, according to Bruce Kaster, the Florida attorney involved. The report says that as many as 200 lawsuits have been filed against Ford and Bridgestone/Firestone Inc. on behalf of people injured or killed in accidents involving Firestone tires on Explorers, according to groups working with plaintiffs' attorneys. Most of the accidents occurred in Florida, California and Texas. According to the report, Ford spokeswoman Susan Krusel said that most such lawsuits are settled out of court and some settlements were made before the suits were filed. At least three lawsuits hadn't been scheduled for trial and three others hadn't even been filed, the report cited Krusel. All of the settled lawsuits were personal-injury cases filed in state court, said Kaster, who declined to disclose settlement amounts. He said he has two other Florida cases he hasn't filed yet but that Ford also indicated it wanted to settle. Ford's attorneys were apologetic to Kaster's clients, he said, and the automaker took responsibility for its responsibility in the accidents without acknowledging any problems with its vehicles. The company has said the problems are related to the tires alone, while Bridgestone/Firestone said Ford shares in the blame. Ford's Krusel said the company's sincerity was not new. ''Whenever there's an accident involving our customers, it's tragic and we're concerned,'' she said. Tab Turner, an Arkansas attorney with a case in Corpus Christi, Texas, due to go to trial in early January, said Ford's efforts were not unusual, the report goes on. Turner said the company has also sought to settle the 36 lawsuits he is handling against the automaker and Bridgestone/Firestone. FORD MOTOR: USA Today Takes Look at Bumpy Road For The Radial-Ply Tire ----------------------------------------------------------------------The radial-ply tire has a long and controversial history. A product of European manufacturers, it was only grudgingly adopted by U.S. tiremakers. Some tire experts say, in fact, that U.S. firms never quite mastered the art of radial-tire manufacturing because their hearts weren't in it. A look at the radial's bumpy road, especially where it intersects Firestone: 1913: Radial tire invented in Britain. 1955: Radials standard on most European cars. 1968: Goodrich, only U.S. tiremaker favoring radials, launches big "Radial Age" ad campaign to sell U.S. buyers on radial benefits. 1969: Ford equips 1970-model Lincolns with radials by French tiremaker Michelin to bypass U.S. tiremakers' resistance. 1971: Firestone begins high-volume radial production, attempting to adapt existing processes to radial production -- "a harebrained idea," production-control manager Alvin Warren says later. Within a year, the tires are failing. "We are in danger of being cut off by Chevrolet because of separation failures," says a November 1972 memo from Thomas Robertson, tire-development supervisor, to head of North American operations. 1972: Management change at Goodyear steers the company toward radials. 1973: Oil embargo drives U.S. consumers into fuel-efficient foreign cars. Most have radial tires. 1975: Firestone launches modified steel radial 500, hoping to cure tread separation. After launching the new design, Firestone discovers the real problem -- moisture gets inside, corroding the steel and leading to tread separation. Firestone continues making and selling the tires while trying to find a solution. 1976: Firestone executives approve "dry technology" to minimize moisture problems. 1977: National Highway Traffic Safety Administration orders Firestone to recall 400,000 radials made at its Decatur, Ill., plant because the tires fail high-speed tests. Firestone begins phasing out the 500 radial model and phasing in the 721 radial. Goodyear launches Tiempo, a mainstream radial tire, signaling its commitment to radials. 1978: Congress holds hearings on Firestone 500 problems. Firestone tells Congress the problems are consumer ignorance and underinflation. The Center for Auto Safety tallies 34 deaths blamed on Firestones. Firestone hires an attorney to quietly negotiate a settlement with NHTSA, limiting the number of tires that would be recalled while publicly maintaining the tires were not defective. Firestone agrees to recall 10 million Firestone 500 and similar TPC radials, plus 1.5 million private-label tires made for retailers. 1980: Firestone reports $106 million loss. 1983: All U.S.-made new cars have radials. 1988: Japanese tiremaker Bridgestone buys Firestone. 1997-98: Ford receives reports of tire tread separation on Explorers in Saudi Arabia. July 1998: State Farm Insurance researcher notifies NHTSA about 21 Firestone ATX tread failures, 14 on Explorers. August 1999: In the Middle East, Ford replaces 16-inch Firestone Wilderness AT tires with Goodyears. Bridgestone/Firestone says there is no need for the replacement. February: In Malaysia and Thailand, Ford replaces Firestone ST6 with Goodyears. Bridgestone/Firestone says there is no need. Houston TV station reports on tire tread separation. NHTSA sees a surge in complaints about Firestones. April: After a five-month study of Firestone tires on Explorers in Arizona, Texas and Nevada, Bridgestone/Firestone says there is no evidence of a problem in the USA. May: In Venezuela, Ford replaces some Firestones with Goodyears. Bridgestone/Firestone says there is no need. May 2: NHTSA opens preliminary investigation into Firestone tread separation. Agency has 90 complaints, 33 reports of crashes involving 27 injuries and four deaths. Aug. 4: Ford analysis of Bridgestone/Firestone data pinpoints tread peeling problems on P235/75R-15 ATX and Wilderness AT tires, especially tires made at Decatur, Ill. Sears stops selling the suspect Firestones. Aug. 7: NHTSA says at least 46 deaths are possibly related to the Firestone tread problems. Discount Tire and Montgomery Ward suspend sale of Firestone tires. Aug. 9: Bridgestone/Firestone recalls 6.5 million ATX and Wilderness tires. Aug. 15: NHTSA says at least 62 deaths are thought to be linked to Firestones. Aug. 21: Ford suspends production at three plants so 70,000 tires can be used as replacements for recalled tires. Ford CEO Jacques Nasser begins prime-time TV ads to reassure customers. Aug. 22: Bridgestone says it will fly tires from Japan to USA as replacements. Aug. 23: Bridgestone says it will boost production at three Japanese plants to 450,000 tires annually for recall replacements. Aug. 28: Bridgestone says it will boost production in Japan to 650,000 tires annually to help speed the recall. Aug. 31: NHTSA raises death toll linked to Firestones to 88 and injuries to 250. It upgrades investigation. Sept. 1: NHTSA warns that an additional 1.4 million Firestones may have greater problems than those recalled. Firestone disagrees and refuses to recall them. Sept. 4: Bridgestone/Firestone settles labor dispute to avert a strike at nine U.S. plants. The company agrees to recall all 62,000 Wilderness AT tires in Venezuela. Sept. 6: In House and Senate hearings, Ford and Bridgestone/ Firestone are criticized by lawmakers. Firestone's CEO Masatoshi Ono apologizes. Sept. 7: A bill is introduced in the Senate allowing second- degree murder charges for executives withholding information on defective products that cause death and requiring companies to report foreign recalls to U.S officials. Sept. 14: House lawmakers introduce the Tread Act, a bill seeking to improve consumer protection and communication between auto and tire manufacturers and the federal government. Sept. 27: Sales of Explorers in Venezuela plunge 37% from a year earlier. Oct. 4: Bridgestone/Firestone refuses to attend a meeting arranged by the Venezuelan government and about 50 victims of accidents involving Firestone tire failures on Explorers. Oct. 10: Ono steps down as CEO of Bridgestone/Firestone. Executive Vice President John Lampe takes the job. Oct. 11: The House and Senate pass a House-written bill giving federal regulators more authority to punish companies for knowingly selling defective products. Oct. 17: Bridgestone/Firestone lays off 450 workers at its Decatur plant and cuts production at two other plants. Oct. 18: Ford says third-quarter earnings fell 7% to $888 million, largely due to costs of the recall. Oct. 25: A panel of judges rules that 180 personal injury and class- action lawsuits filed in federal courts against Ford and Firestone should be lumped together for pretrial hearings. Oct. 26: Florida officials announce that they will pursue allegations by retired Firestone workers that production shortcuts may have contributed to tire failures that killed 25 people there. Nov. 1: October Explorer sales were off 16% from a year earlier. Ford partially blames the recall. Nov. 6: Bridgestone/Firestone says it is focusing on faulty product design and manufacturing problems at its Decatur plant as possible causes for the tire failures. Nov. 13: Bridgestone says sales of the Firestone brand in the U.S. replacement-tire market fell 40% in September and October from a year earlier. Dec. 5: Bridgestone says it will book a loss of $900 million for the year ending Dec. 31 because of the recall and tire-related lawsuits. The company later revises that to $750 million. Dec. 6: NHTSA says it has received reports of 29 more deaths from accidents involving Firestone tires, including three deaths from accidents after the recall. Dec. 11: NHTSA investigators meet with Ford officials in Detroit to discuss the cause of the tread separations. Dec. 13-14: NHTSA investigators meet with Firestone officials at the company's technical facility in Akron, Ohio, to discuss problems with the tires. (USA Today, December 26, 2000) FOSTER CARE: FL Suit Spurred Scrutiny; Staff Turnover Is Big Problem -------------------------------------------------------------------- A fresh set of eyes is peering into Florida's historically troubled children's institutions -- bringing relief to both state officials and child welfare advocates. The in-depth review of seven of the state's riskiest residential youth facilities was spurred by a Broward County lawsuit settled in February, said Fotena Zirps, director of mission support and planning for the state Department of Children & Families. The class-action suit, on behalf of all those in Broward's foster care system, charged that children were in as much risk under state care as with their allegedly abusive families. Plaintiff's attorneys requested the independent review in August. On Dec. 6 and 7, national child-welfare experts and state employees from both Broward and Palm Beach counties examined two Brown Schools programs in Broward. Early next year, they'll scour five others -- from a Plantation assessment center to a psychiatric treatment facility in Tampa. The reviewers are analyzing three things: children's safety, well-being and permanence, or how soon a child is able to leave the facility and return to a stable home. When they're done, the experts will report on each facility and recommend how the state should continue to better monitor its residential programs. The state is paying the reviewers $750 a day plus travel expenses. So far, the reviewers have found no pressing safety concerns, said Paul DeMuro, one of the experts and a consultant with the Annie E. Casey Foundation in Baltimore. That's a comfort to Zirps. "I sleep better at night when [DeMuro] says the kids are safe there," she said. Yet DeMuro said his group was disturbed by the lack of permanence for children lingering in these places, which focus on children with serious emotional and mental problems. "When there's such a turnover of child-welfare workers at the front end, when it's unclear about who's supervising the cases, and the cases are moving from one supervisor to another and a kid gets into residential care, it can get extremely complicated about who's in charge of moving that child to permanence," he said. That's been the pattern for decades, as Florida's troubled children languish in institutions with no clear end to psychological treatment and no clear goal for returning home or getting adopted, said Michael Dale, a Nova Southeastern University law professor and one of the plaintiff's lawyers in the Broward suit. "You just can't take these kids, put them in residential facilities, ... and give them a little bit of psychotherapy and medication," Dale said. "That makes them very, very angry. And we've seen a lot of that." Statewide, about 1,160 children under the department's direct care live in residential facilities. More than 150 of them come from Broward County, 73 from Miami-Dade and 45 from Palm Beach, according to state statistics. When investigating these facilities, a state monitor typically focuses on staff-to-child ratios, code enforcement and treatment. A review done by DeMuro's group is much more intimate. He and the others talk to children about whether they feel safe, whether they've had visitors, whether the food, shelter and staff are to their liking, and whether they know what will happen to them in the future. They also analyze whether the right children have been placed in the appropriate setting. "They're looking not just at a paper trail, they're actually trying to evaluate what goes on physically at the place," Dale said. (South Florida Sun-Sentinel, December 27, 2000) HOLOCAUST VICTIMS: Austria Makes Compensation Offer for Property Seizure ------------------------------------------------------------------------ Austrian officials met recently with representatives of Jewish groups to try to set a compensation figure for Nazi-era property seizures. The main focus of a daylong meeting on December 21 at the State Department was to be the offer from Austria's government delegation. At stake are claims over private apartments, businesses, industrial holdings, real estate and other property seized from Jews after Nazi Germany absorbed Austria in 1938, and not covered by previous Austrian legislation. Officials declined to say before the meeting what offer they were bringing. The leader of the Austrian Jewish community, Ariel Muzicant, said earlier this month that Austria had made an initial offer of $156 million. Attorneys for the victims or their heirs had originally reportedly demanded about $1 billion. Under international pressure, Austria agreed earlier this year to start examining ways to compensate Jews stripped of property in what the Nazis called "aryanization." Chancellor Wolfgang Schuessel had previously said that most aryanization claims had been covered under existing laws passed after the end of World War II. At the inaugural meeting of the Board of Trustees of the Austrian Reconciliation Fund, Dr. Richard Ludwig Steiner was appointed chair. The five-member committee acts as the decision- making body for Fund affairs delegated to it by the Fund. Dr. Richard Wotava was appointed general secretary. No payments can be made to claimants until the class action lawsuits brought before US courts have been fully withdrawn and/or dismissed. (The Jerusalem Post, December 22, 2000) ICE STORM: Lawsuit Seeks $75-a-Day Compensation for Victims ----------------------------------------------------------- A lawyer has filed a class-action suit demanding $ 75-a-day compensation for up to 1,200 people forced to leave their homes during the 1998 ice storm. Lawyer Louise Denoncourt, who filed the suit on December 27, said the storm victims had to seek shelter in hotels or with family and friends. She said the suit against 10 insurance firms seeks "$ 75 a day for each day that the person was deprived of electricity." The suit argues the storm victims are entitled to the money under a clause in their insurance policies. But the Insurance Bureau of Canada says the clause in question doesn't provide money for daily expenses. Raymond Medza, a bureau official, said only people with all-risk policies are covered if their homes are damaged -- and then only for their additional living expenses. "The coverage is not on a per diem basis," Medza said. "It's on demonstrated additional living expenses." He said insurance firms have already paid out $ 1.4 billion in compensation to more than 600,000 ice-storm claimants. The suit likely was filed now because a time limit for initiating a class action expires at the end of January, Medza said. (The London Free Press, December 28, 2000) IMMIGRANTS' WAGES: NY Tries to Help the Courtroom Shy with Settlements ---------------------------------------------------------------------- Recent settlements over illegally low wages are part of a concerted effort by the State to protect immigrant workers who fear their status might be affected by bringing such matters to court, Attorney General Eliot Spitzer said. An agreement between the State Attorney General's Office and Food Emporium, in which the grocery store chain agreed to pay $ 3 million in back wages to its underpaid deliverymen, is one such example. "There is a fear on the part of immigrants because there is a perception that there is a risk involved in bringing the government into these type of things." Mr. Spitzer said. "We worked hard to get through this problem." The deliverymen, most of whom are recent immigrants from West Africa, were allegedly paid between $ 1.25 to $ 1.75 per hour by Food Emporium through the companies with which it contracted for the deliverymen, Hudson Delivery and Chelsea Trucking; and The Great American Delivery Company. State law requires that delivery people be paid $ 3.20 per hour, plus whatever tips they earn. Under the settlement, the Attorney General's Office will disperse the $ 3 million to affected deliverymen who file an application with the office requesting wages due. Calculations based on the number of hours each deliveryman worked and the amount of applications received will determine each individual award. While Mr. Spitzer complimented Food Emporium, and its parent company The Great Atlantic and Pacific Tea Company, for its cooperation in reaching the settlement, he points out that the case underscores the problem of employers who are too willing to exploit immigrants' fear of retribution if they bring their complaints to the authorities. Catherine K. Ruckelshaus, litigation director of the National Employment Law Project, the non-profit legal organization to which the deliverymen first brought their claim, confirms that the men were anxious about bringing their case to court. "It's a huge problem," said Ms. Ruckelshaus. "Even if these workers are being exploited, they would rather be here making a little bit of money than be sent home." The Food Emporium case makes this point clearly: The original plaintiff had second thoughts about bringing a complaint, only agreeing to participate in the lawsuit after a dozen co-workers were fired. Faty Ansoumana approached Ms. Ruckelshaus in early 1999. Initially discouraged by his co-workers from pursuing his case, Mr. Ansoumana signed on as one of nine name plaintiffs after 12 deliverymen were fired for going out on strike. M. Patricia Smith, chief of the Labor Bureau at the Attorney General's Office, became involved in the case around the time the striking men were fired. She made the point that immigrant fears of retribution are unwarranted under New York State labor laws, which protect all workers, regardless of their citizenship status. "We don't ask whether a worker is legal or not," said Ms. Smith. "New York State labor laws protect you if you work here. Just as we wouldn't ask someone's marital status, we wouldn't ask their immigrant status because its not relevant." Back Pay The Attorney General's push to protect immigrant workers began in earnest last August, when the State entered into settlements, similar to the one with Food Emporium, with two Manhattan greengrocers, Lucky Farm and 118 First Avenue Food & Vegetable Corp. In those cases, the State was able to obtain nearly $ 100,000 in back pay on behalf of workers who were predominantly Mexican immigrants. David G. Januszewski, the Cahill Gordon & Reindel attorney who represented Food Emporium, said that, while he could not speak for all employers, his client did not intimidate or exploit its workers. "These individuals were not employees of Food Emporium. They were employees of outside delivery service companies," Mr. Januszewski said. "So the responsibility for payment of the workers rested with the outside companies, not with Food Emporium." Mr. Januszewski believes that if Food Emporium did not settle, it would have prevailed on summary judgment or at trial. Nevertheless, after discussions with the Attorney General, Food Emporium resolved to settle the matter to avoid the uncertainties of litigation. Other Businesses In addition to the Food Emporium case, the garment industry and several businesses in Chinatown have been targeted by the Attorney General's Office for unfair labor practices. In the past, individual Chinatown business owners have faced criminal charges for systematically deducting 5 percent of their employees' wages, a practice that Ms. Smith says has been reported to be commonplace in that part of the city. The National Employment Law Project has just filed a case alleging underpayment against a Queens construction company on behalf of immigrant workers from India and Bangladesh, according to Ms. Ruckelshaus. The drive to obtain unpaid wages for Food Emporium's predominantly West African immigrant workers will also continue. According to Ms. Ruckelshaus, actions are pending against both delivery companies involved in the Food Emporium case. Gristede's supermarket and drug store chain Duane Reade also remain as defendants in the class action suit because the delivery contractors also provided those stores with deliverymen. (New York Law Journal, December 18, 2000) INTERNET HOAX: Prosecutors Say Man Will Plead Guilty in Emulex Hoax ------------------------------------------------------------------- Reuters news from Los Angeles says that a college student accused of staging one of the biggest Internet financial hoaxes by issuing a bogus press release about technology company Emulex Corp. will plead guilty to federal charges, authorities said. Jakob allegedly staged the hoax by sending a false press release about Emulex to news dissemination service Internet Wire Inc. The alleged fraud netted Jakob a profit of $240,000 while costing investors some $110 million and slashing the stock of Emulex in half. Jokob has signed a plea deal with prosecutors, according to U.S. Attorney Alejandro Mayorkas and would enter his guilty pleas in U.S. District Court in Los Angeles, said Mayorkas as cited in the Reuters report. Mayorkas said the 23-year-old Jakob, a former employee of Internet Wire who resigned before the hoax, would plead guilty to two counts of securities fraud and one count of wire fraud, the report goes on. Those charges carry a maximum penalty of 25 years in prison, but Mayorkas said the terms of Jakob's plea agreement call for a sentence of between 37 and 46 months. Jakob could also be ordered to pay fines and restitution of up to double the $110 million in losses suffered by his alleged victims, the report adds. Events related to the hoax have been previously reported in the CAR. MOBILE PHONE: Firms May Face New Suits Over Tumours --------------------------------------------------- Mobile phone companies are facing fresh legal action from brain tumour victims in the United States. As cited by Reuters, Britain's Times newspaper said Peter Angelos, a U.S. lawyer who recently helped win $4.2 billion in damages from the tobacco industry, was planning to launch 10 claims against handset manufacturers, mobile network operators and fixed-line phone companies. Verizon Wireless [VZ], the largest U.S. mobile operator, will be named in nearly all of the actions, the newspaper said. According to Reuters, the news comes amid continued concern among some mobile phone users that radiation from handsets could cause brain tumours, despite research that has failed to find any link. The report says that Britain's Vodafone Group Plc , which owns 45 percent of Verizon, said UK government-sponsored research published this year gave mobile phones a clean bill of health. Company spokesman Mike Caldwell said he did not know of any legal cases that named Vodafone directly, but it would defend itself very vigorously if necessary. "The mobile phone industry is not the tobacco industry," he told BBC Radio. Expert Witness Needed But there is no irrefutable medical evidence that mobile phones cause brain tumours or other medical problems, the report says. John Trotter, a partner specialising in product liability at London law firm Lovells, said such cases needed an expert willing to say there was a possibility of a link. The U.S. lawyers would also be hoping that a court would grant them access to mobile companies' documents, the report goes on. According to Reuters, a U.S. study published this month concluded there did not appear to be any link, though it said more research was needed into the impact of long-term use of mobiles. The study by the American Health Foundation was funded in part by a research group established by the cellular telephone industry, which put more than $28 million into a blind escrow account for the group to finance research, Reuters news says. Angelos, who fought the tobacco industry in Maryland, plans to launch two claims against the mobile companies before March, and the remaining seven or eight within a year, The Times said. They will be launched initially in California, Kentucky and Maryland. "If these companies knew about the dangers of cellphone radiation they should be punished and they should be punished dearly: not only for what they did to the public, but for the billions of pounds of profits they made," John A. Pica, an attorney at Angelos's law firm, told The Times. The report hit Vodafone shares, which were 1.8 percent weaker at 233.25 pence at 1200 GMT, notes the Reuters article. Christian Maher, telecoms analyst at Investec Henderson Crosthwaite Securities, doubted the story would hurt the sector much, according to the Reuters report. MONEYGRAM PAYMENT: Announces Settlement of Wire Transfer Consumers Suit ----------------------------------------------------------------------- MoneyGram Payment Systems, Inc., announced it has received court approval of a nationwide settlement of a class action lawsuit. The suit addressed MoneyGram's disclosures to consumers of currency exchange rates on money transfers from the U.S. to Mexico. The United States District Court for the Northern District of Illinois preliminarily approved the settlement in May 1999 and has now confirmed its approval as being in the best interest of the consumers. As part of the settlement, MoneyGram will issue discount coupons to customers who wired funds to Mexico between Dec. 16, 1996, and Aug. 31, 1999. The coupons can be used to offset fees on future MoneyGram transactions. MoneyGram will also donate more than $630,000 to a fund to be administered by charitable organizations serving the Hispanic community in the United States. Prior to Dec. 16, 1996, MoneyGram was owned by First Data Corporation. First Data has joined in the settlement and will provide similar benefits to MoneyGram customers who wired funds to Mexico prior to Dec. 16, 1996. MoneyGram provides worldwide electronic cash transfer services with 35,000 locations in 140 countries around the world. MoneyGram is part of Travelers Express, a subsidiary of Viad Corp (NYSE: VVI). ORBITAL SCIENCES: Settlement for Securities Suit Okayed in Virginia ------------------------------------------------------------------- Five months after the deal was made, it took all of five minutes to seal it. U.S. District Judge Leonie Brinkema of the Eastern District of Virginia has approved without wasting a moment the proposed settlement in the class action against Dulles-based space technology and satellite services company Orbital Sciences Corp. The settlement, the Summary Notice on which was reported in the CAR in October, brings to a close one of the first securities class actions against a local high-tech firm that the court heard. The management of the case likely will serve as a template as such litigation increases in the Eastern District. The total payout to the class, agreed on in July, is $ 22.5 million. The plaintiffs attorneys in the case will receive $ 3.37 million in fees, as well as up to $ 1.45 million for litigation expenses. As local counsel in the case, Arlington's Cohen, Gettings & Dunham likely will receive a nice portion of the fees, though exactly how much is not yet known. The lion's share will go to New York's Goodkind Labaton Rudoff & Sucharow, counsel to the New York pension fund that served as lead plaintiff in the stock fraud suit. (Legal Times, December 18, 2000) PINE CREEK: Ogden Attorney Files Suit Charging Home Defects ----------------------------------------------------------- An Ogden attorney has filed a lawsuit in 4th District Court against a Santaquin building company, charging that new homes were built without proper footings and that they had wiring, plumbing and heating defects. The lawsuit, filed Dec. 13, charges that Pine Creek Construction Inc. concealed the defects from potential homebuyers. It asks for a jury trial with general and exemplary damages to be determined. Attorney Randy Phillips of Ogden represents eight homeowners in the case. He has asked the court to certify it as a class action lawsuit. Principals in Pine Creek Construction are Steve Jaussi and Fil Askerlund. Calls to Jaussi and Askerlund for comment were not returned. Mayor LaDue Scovill earlier said the builders would repair the homes. He called the matter resolved and "water under the bridge." "I have no knowledge of a lawsuit," Scovill said. Askerlund is a member of the city planning commission. He served as chairman of the panel until the problems with the homes surfaced. The homes had been inspected, but Santaquin didn't inspect for the footing, called a shovel footing. Most cities don't inspect for a shovel footing, Scovill said earlier. The center bearing wall footing is normally poured with the foundation and basement walls. If not, the footing is shoveled out and poured later, hence the name, Scovill said. However, Santaquin will no longer allow shovel footings, Askerlund said. Askerlund has offered to put in support footings and beams to take the place of the missing footings. Some residents have accepted the offer and have not joined inthe lawsuit. Other residents don't want the added support beam, nor do they want to be a part of the suit, neighbors say. (Deseret News, Wednesday, December 27, 2000) RECORD FIRMS: 42 AGs File Suit; Minimum Ad. Prices for CDs under Attack ----------------------------------------------------------------------- In the music industry, Napster has grabbed the headlines, but another series of lawsuits could be as important to the nation's recording companies. In a suit filed by 42 state attorneys general, as well as in separate class actions filed by the plaintiffs' bar, the industry's practice of setting minimum advertising prices for CDs is under antitrust attack. And while the challenged program has unique features, the suits, which could heat up as early as January, may clarify how far a manufacturer can go in directing store advertising. The suits are another combined effort of the states and the plaintiffs' bar to cooperate in pressing consumer complaints. And, like the recent price-fixing charges against Toys "R" Us Inc., the suits parallel a Federal Trade Commission investigation that culminated last May. At issue is a cooperative arrangement under which recording companies share the costs of advertising with music retailers. The suits allege, as did the FTC in its investigation, that the recording companies provided what's known as cooperative financing only if the retailers agreed to a minimum advertising price on music, known as a MAP agreement. The companies allegedly threatened to withhold money even if the lower price appeared in an ad for which the retailer paid independently. Sharing advertising costs with manufacturers is a common practice in many retailing areas. While arrangements vary, often a manufacturer provides rebates for advertising. Restrictions are common as well: Some apparel companies restrict when products may be advertised at sale prices. And so long as the prices appear in jointly funded ads, manufacturer control of ad content may be permissible, some say. But control heads into a gray area if the constraints are imposed on noncooperative advertising. In that instance, experts say, the limits could approach price-fixing. Setting a minimum price is per se illegal, although maximum price restraints are now subject to the more flexible rule-of-reason review, says Steven Sunshine, a partner in the Washington, D.C., office of New York's Shearman & Sterling. And that appears to be at least one of the theories underlying these cases. Says Harry First, head of the New York antitrust bureau and co-lead counsel with Patricia Conners, who heads Florida's antitrust section, the enforcement mechanism in the MAP -- withholding advertising support -- "effectively puts a floor on retail prices." It is, he says, an "extreme" program. The recording companies, which include Warner Bros., Capitol Records, Sony Music, Universal Music and EMI, settled the allegations with the FTC without admitting any wrongdoing, promising not to engage in the practice for seven years. The settlement provided only for injunctive relief. Long-term investigations Meanwhile, the states had been investigating the music industry's practices "for some time," says Mr. First. The private suits -- which, like the states', seek damages -- piggybacked on the FTC action. Joseph Kohn, of Philadelphia's Kohn Swift & Graf, and David Bershad, Sanford Dumain, Michael Buchman and Doug Richards of New York's Milberg Weiss Bershad Hynes & Lerach, are expected to be named co-lead counsel, although other petitions to take the lead were filed as well. (Judge D. Brock Hornby, who was assigned the cases by the multidistrict panel on litigation, has appointed Portland, Maine's Preti, Flaherty, Beliveau, Pachios & Haley as local counsel.) The plaintiffs' lawyers must file their amended complaint by Dec 22. Mr. First says that the states are coordinating with the private bar so that the plaintiffs' lawyers will pursue only state court cases onto which the attorney general has not signed. While no one has specified the damages sought, last summer, New York Attorney General Eliot Spitzer said that they could approximate $ 500 million, the figure the FTC cited in its settlement. How any award would be distributed is unclear. When the Toys "R" Us case settled, consumers did not receive direct payments; rather, the settlement was divided between contributions to charities and administrative expenses and legal fees. While saying that talk of damages was "premature," Mr. Kohn suggested that in this case, direct payments to consumers could be "feasible." Defense counsel either declined to talk about the litigation or did not return calls seeking comment. But the defense has an all-star lineup for its representation -- including New York's Weil, Gotshal & Manges, Paul, Weiss, Rifkind, Wharton & Garrison and Cahill Gordon & Reindel; Los Angeles' Munger Tolles & Olson; and Chicago's Mayer, Brown & Platt. (The National Law Journal, December 25, 2000 - January 1, 2001) SARNIA CONTAMINATION: Ontario's Environment Ministry Blamed after Spill ----------------------------------------------------------------------- Sarnia residents may be at risk because chemical companies may not be reporting spills, Mayor Mike Bradley said on Wednesday, December 27. Bradley also blamed Ontario's Environment Ministry for not aggressively monitoring chemical producers. Bradley is worried two incidents of air contamination this month may point to a breakdown in an agreement between the city and Chemical Valley that the industry would report spills promptly. "We've had two incidents where we have not had reporting back to us about what created the emissions. "We are really concerned because it's very difficult for us to alert the public when we don't know what we're dealing with." A chemical release Dec. 10 left people in Sarnia dizzy and nauseous but officials have not determined where the release came from, Bradley said. A Dec. 20 report of a propane or butane smell at a high school also failed to produce an origin report from the chemical industry. "There's a concern industry is getting shyer about reporting." Earlier this year, a sulphur release at a Shell Canada refinery in Corunna sent 34 people to hospital but Sarnia was not alerted for a couple of hours, Bradley said. A class action lawsuit was later launched. Bradley said the city has a "gentleman's agreement" with chemical companies they will report spills. He has asked Sarnia's police chief if the agreement can be made binding. "To me (the issue is) accountability and it's honesty," Bradley said. But the administrator of the Community Awareness Emergency Response committee representing 40 groups that co-ordinate firefighting and community relations in chemical emergencies -- said companies aren't always aware they have caused a spill or toxic emission. "Sometimes when there's a smell you know the cause and that you produced it right away, sometimes you don't" said Allen Wells. "The feeling that the mayor is expressing that industry is hiding or covering up is not realistic." Companies are required to report spills or emissions to the municipality and to the ministry promptly, Wells said. He also did not know why the two December incidents Bradley mentioned were not reported. Bradley said the ministry confirmed at a recent meeting it has shifted responsibility for monitoring to the industry. "The ministry told us they don't see themselves as the front line enforcer," Bradley said. Only after a spill at NOVA Chemicals Ltd. on Dec 16 that killed waterfowl and released toxic vapour did the ministry become involved. "We're not an emergency response organization," said Ingrid Thompson, a spokesperson for Environment Minister Dan Newman. "We're there to support fire crews, police and health officials when there is an emergency." The ministry sets standards chemical companies must comply with, Thompson said. She said it also takes an active role in detecting violations and can require a company to pay for a live monitoring facility, she added. Bradley said the ministry has cut the number of staff at its Sarnia office in half in the last five years. (The London Free Press, December 28, 2000) TOBACCO LITIGATION: Analysts Say Legal Threats Diminish ------------------------------------------------------- Philip Morris Cos. Inc. shares (MO/NYSE) jumped 96.7% this year, a record rise for the world's largest tobacco company, and the top performance among the 30 stocks in the Dow. That's a far cry from last year, when the company had the index's biggest drop because smoking-related lawsuits pulled the stock down by more than half. The gains may continue next year, analysts said, as legal threats diminish. President-elect George W. Bush has indicated he will drop the federal government's suit against the tobacco industry once he's in office. Cigarette makers have won 14 of the past 18 smoking trials, and more courts have refused to certify class action suits against the industry. The so-called litigation taint crippled the shares of Philip Morris, maker of top-selling Marlboro cigarettes, in 1999. The year got off to a bad start for U.S. cigarette makers when President Bill Clinton said during his State of the Union address in January that he was going after them for federal money spent treating sick smokers. The Justice Department filed a suit the following September. Then, two record-setting jury awards in individual smokers' cases were handed down in California and Oregon. They were soon eclipsed by worries surrounding a Miami case, dubbed Engle after the lead plaintiff, which became the first class action smokers' suit ever to go to trial. This year has been a different story. The Florida legislature in May passed a bill to cap at US$100-million any bond the tobacco companies would be required to put up if they lost the Engle case at trial. The suit's US$145-billion punitive damage award, the largest such levy, came down two months later on July 14 and tobacco stocks hardly responded. Philip Morris ended the day down just 1.5%. 'It was like investors were saying, 'Well, it can't get any worse than this,' ' Loomis Sayles's Mr. Patriquin said. Philip Morris and other cigarette makers got another boost in March, when the U.S. Supreme Court ruled that tobacco isn't subject to U.S. Food and Drug Administration regulation. Mr. Bush told Media General News Service in August that he wouldn't pursue the Justice Department lawsuit against the industry if elected. A month later, two of the U.S. government's three claims against the industry were thrown out. 'Tobacco has [moved] to secondary national status,' Morgan Stanley Dean Witter analyst David Adelman wrote in a recent report. While the industry's legal threats aren't going to disappear any time soon, the Bush presidential victory may help curb activism against tobacco companies, analysts said. A Republican administration may help muffle political rhetoric, leave out tobacco excise tax increases in federal budgets and pave the way for tort reform, analysts said. The only immediate clouds may appear in a New York courtroom, analysts said. A group of 10 smoking-related cases is on the docket in the court of Jack Weinstein, the U.S. district judge who has ordered tobacco companies and plaintiffs' lawyers to develop a plan to settle all major suits against the industry. Industry losses in Judge Weinstein's court may weigh on tobacco valuations, analysts said. 'Just like you never know where a lightning bolt is going to strike, you don't know where the litigation will crop up,' said Michael Foss, portfolio manager at Fleming American Fund, which owns about 1.0 million Philip Morris shares. (National Post (formerly The Financial Post), December 28, 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. 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