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/raid1/www/Hosts/bankrupt/CAR_Public/010112.MBX C L A S S A C T I O N R E P O R T E R Friday, January 12, 2001, Vol. 3, No. 9 Headlines AMERITRADE INC: Suit Remanded to State Court; No SLUSA Preemption CABLETRON SYSTEMS: Ruling on Securities Suit Not Expected Until Late ‘01 CALIFORNIA AMPLIFIER: Action against Insurer Ren Settled Suit Goes on CASTLE ENERGY: Settlement Underway Re Alleged Underpayment of Gas ECONOMY CLASS SYNDROME: Affects 400 A Year Flying To Sydney, Expert Says EXIDE TECHNOLOGIES: May Face Indictment As Former Sears DieHard Supplier HOLOCAUST VICTIMS: Polish Parliament Approves Law Returning Property MTBE CONTAMINATION: Multi-Million Dollar Suit Settled For $35,000 OTTAWA: Stuck With Veterans' Legal Bill Estimated At Over $800,000 PRESIDENTIAL ELECTION: Alpharetta Firm Accused In FL Voting Rights Suit PRESIDENTIAL ELECTION: CNN Coverage; Civil Rights Commission Hears Case PRESIDENTIAL ELECTION: NAACP Files Lawsuit over Florida Vote PROPULSID LITIGATION: NLJ Reports on Lawsuit Denney v. Johnson & Johnson TOBACCO LITIGATION: Cigarettes Emit More Tar Than FTC Says, Expert Says U S WEST: Minnesotans Share Settlement With Phone-Service Provider Qwest ********* AMERITRADE INC: Suit Remanded to State Court; No SLUSA Preemption ----------------------------------------------------------------- A breach-of-contract class action against online broker-dealer Ameritrade Inc. has been remanded to Nebraska state court by a federal judge who found the suit was not preempted by the Securities Litigation Uniform Standards Act. Green et al. v. Ameritrade Inc. et al. , No. 00-CV-0256 (D. Neb., Nov. 16, 2000). The SLUSA, enacted in 1998, preempts any class action that alleges misrepresentations or omissions of material fact in securities transactions or that the defendant broker-dealer deceived customers who purchased securities. The case, when removed to federal court, is then tried for alleged violations of federal securities law, including the antifraud provisions contained in Section 10(b) of the Securities Exchange Act. The decision at bar marks the second time this case has come before the U.S. District Court for the District of Nebraska, this time with markedly different results. The class action was originally filed in district court in Douglas County, Neb., by California resident Mitchell Green, who claimed that Internet broker-dealer Ameritrade failed to obtain real market quotes or last sales information for derivative options. Ameritrade is a Nebraska corporation. The state suit made claims for breach of contract and sought unspecified compensatory damages for a class of customers who paid $20 a month for the quote and sales service. Ameritrade removed the case to Nebraska federal court, where U.S. District Judge William G. Cambridge denied Green's motion to remand, finding his state-law breach-of-contract claims to be preempted by SLUSA. Judge Cambridge then allowed Green to file an amended complaint, and the case was assigned to U.S. District Judge Richard G. Kopf. Judge Kopf determined that the breach-of-contract claims in the amended complaint had cured the SLUSA preemption issue and he remanded the case back to the state trial court in Douglas County. "Green originally alleged that 'Ameritrade does not purchase or obtain real time last sales information from all option exchanges and/or market makers, yet the subscriber is led to believe that the option quotes on his/her quote list are in fact real time<>,'" the judge noted. "By contrast, Green now alleges that 'Ameritrade does not purchase or obtain real time last sales information from all options exchanges and/or market makers, yet the subscriber contracts for options quotes, which are supposed to be real time<>.'" The difference, the judge said, was that the amended complaint sounded "purely in contract" and did not raise fraud allegations covered by federal law. (Corporate Risk Spectrum, December 2000) CABLETRON SYSTEMS: Ruling on Securities Suit Not Expected Until Late ‘01 ------------------------------------------------------------------------ Riverside Networks, a subsidiary of Cabletron, reports in its filing with the SEC the consolidated class action lawsuit raising claims against Cabletron and some officers and directors of Cabletron, which was previously reported in the CAR. The lawsuit was filed in the United States district court for the district of New Hampshire and, following transfer, is pending in the district of Rhode Island. The complaint alleges that Cabletron and several of its officers and directors made materially false and misleading information about Cabletron's operations and acted in violation of Section 10(b) of and Rule 10b-5 under the Securities Exchange Act of 1934 during the period between March 3, 1997 and December 2, 1997. The complaint also alleges that Cabletron's accounting practices resulted in the disclosure of materially misleading financial results during the same period. More specifically, the complaint challenged Cabletron's revenue recognition policies, accounting for product returns, and the validity of some sales. The complaint does not specify the amount of damages sought on behalf of the class. Cabletron and other defendants moved to dismiss the complaint and, by order dated December 23, 1998, the district court expressed its intention to grant Cabletron's motion to dismiss unless the plaintiffs amended their complaint. The plaintiffs served a second consolidated class action complaint, and Cabletron has filed a motion to dismiss this second complaint. Update A ruling on that motion is not expected earlier than the fourth quarter of fiscal 2001. If the plaintiffs prevail, Cabletron could be required to pay substantial damages. Riverside Networks says the company has not assumed any liabilities from Cabletron for this litigation and has not been named as a defendant in this litigation and none of its officers or directors is named as a defendant to this litigation. However, the plaintiffs might attempt to involve Riverside in this litigation or might seek to have Riverside pay damages if Cabletron has insufficient assets to cover any resulting damages. Any involvement in this litigation could be protracted and may result in a diversion of management and other resources. CALIFORNIA AMPLIFIER: Action against Insurer Ren Settled Suit Goes on --------------------------------------------------------------------- As previously reported in the CAR, on June 11, 1997, the Company and certain of its directors and officers had two legal actions filed against them, one in the United States District Court, Central District of California, entitled Yourish v. California Amplifier, Inc., et al., Case No. 97-4293 CBM (Mcx), and the other in the Superior Court for the State of California, County of Ventura, entitled Yourish v. California Amplifier, Inc. et al., Case No. CIV 173569. On June 30, 1997, another legal action was filed against the same defendants in the Superior Court for the State of California, County of Ventura, entitled Burns, et al., v. California Amplifier, Inc., et al., Case No. CIV 173981. All three actions were purported class actions on behalf of purchasers of the common stock of the Company between September 12, 1995 and August 8, 1996. The actions claimed that the defendants engaged in a scheme to make false and misleading statements and omit to disclose material adverse facts to the public concerning the Company, allegedly causing the Company's stock price to artificially rise, and thereby allegedly allowing the individual defendants to sell stock at inflated prices. Plaintiffs claimed that the purported stockholder class was damaged when the price of the stock declined upon disclosure of the alleged adverse facts. On September 21, 1998, the Federal legal action was dismissed in the United States District Court. The dismissal was upheld by the U.S. Court of Appeals for the Ninth Circuit on October 8, 1999. On March 27, 2000 the trial began for the lawsuit filed in the Superior Court for the State of California, County of Ventura, entitled Yourish v. California Amplifier, Inc., et al., Case No. CIV 173569. On March 29, 2000 the parties reached a settlement. The terms of the settlement called for the issuance by the Company of 187,500 shares of stock along with a cash payment of $3.5 million, funded in part by insurance proceeds, for a total settlement of approximately $11.0 million. Of the total settlement, $9.5 million was accrued in the accompanying consolidated financial statements for the year ended February 26, 2000 and November 25, 2000. By Order dated September 14, 2000, the court approved the terms of the settlement and dismissed the action with prejudice. As of November 25, 2000, the Company had issued 65,625 of the 187,500 shares and paid $2.5 million of the $3.5 million and one of its insurance carriers the remaining $1.0 million. In connection with the settlement of the Yourish action, the Company and certain of its former and current officers and directors have filed a lawsuit (California Amplifier, Inc., et al. v. RLI Insurance Company, et al., Ventura County Superior Court Case No. CIV196258), against one of its insurance carriers to recover $2.0 million of coverage the insurance carrier has stated was not covered under its policy of insurance. Update The insurance carrier filed a Motion for Judgment on the Pleadings seeking judgment on the basis, inter alia, that the claims in the Yourish action for alleged violations of Sections 25400 and 25500 of the California Corporation Code were not insurable as a matter of law pursuant to Insurance Code Section 533. The Plaintiffs opposed the motion and a hearing was held on September 22, 2000. On October 18, 2000, the Court entered an Order granting the motion for judgment on the pleadings. Judgment was entered on November 9, 2000, and Notice of Entry of Judgment given on November 15, 2000. Plaintiffs filed a Notice of Appeal on November 21, 2000 and intend to pursue an appeal vigorously. CASTLE ENERGY: Settlement Underway Re Alleged Underpayment of Gas ----------------------------------------------------------------- In May 1996, Larry Long, representing himself and allegedly "others similarly situated," filed suit against the Company, three of the Company's natural gas marketing and transmission and exploration and production subsidiaries, Atlantic Richfield Company ("ARCO"), B&A Pipeline Company, a former subsidiary of ARCO ("B&A"), and MGNG in the Fourth Judicial District Court of Rusk County, Texas. The plaintiff originally claimed, among other things, that the defendants underpaid non-operating working interest owners, royalty interest owners, and overriding royalty interest owners with respect to gas sold to Lone Star pursuant to the Lone Star Contract. Although no amount of actual damages was specified in the plaintiff's initial pleadings, it appeared that, based upon the volumes of gas sold to Lone Star, the plaintiff may have been seeking actual damages in excess of $40,000,000. After some initial discovery, the plaintiff's pleadings were significantly amended. Another purported class representative, Travis Crim, was added as a plaintiff, and ARCO, B&A and MGNG were dropped as defendants. Although it is not completely clear from the amended petition, the plaintiffs apparently limited their proposed class of plaintiffs to royalty owners and overriding royalty owners in leases owned by the Company's exploration and production subsidiary limited partnership. In amending their pleadings, the plaintiffs revised their basic claim to seeking royalties on certain operating fees paid by Lone Star to the Company's natural gas marketing subsidiary limited partnership. In April 2000, Larry Long withdrew as a named plaintiff and in September 2000, the Company and the remaining plaintiff agreed to settle the case for a payment of $250,000 by the Company. The parties are currently finalizing the settlement agreement, subject to court approval. ECONOMY CLASS SYNDROME: Affects 400 A Year Flying To Sydney, Expert Says ------------------------------------------------------------------------ About 400 long-haul travellers a year who arrive at Sydney airport may be suffering the condition involving potentially fatal blood clots, a leading vascular surgeon said. A study by Reginald Lord, professor of surgery at St Vincent's Hospital, Sydney, found that his hospital had treated 122 cases of travel-related deep vein thrombosis (DVT) over three years. He estimated that St Vincent's, an inner-city hospital that sees many tourists and backpackers, would treat 10 per cent of Sydney's DVT cases, making the annual overall figure about 400. He said: "Quite often the deaths don't occur until later, typically a week or two after the clot starts in the leg. So in some cases the link between the travel and the sudden death may not be recognised." Of the 14 million long-haul travellers who passed through Sydney each year, the number affected by DVT was small. But the issue was of significant concern, and he had been urging airlines for almost a decade to let doctors carry out proper studies of the condition. Prof Lord, who is also professor of surgery at the University of New South Wales, is particularly keen to undertake detailed research in conjunction with colleagues in London, involving checks of passengers before and after long-haul journeys. He said airlines or specialist insurance firms could provide the funding for such a project, which was "in the best interests of everyone - passengers, airlines and the medical profession". More than 1,000 people, including a number of Britons, have contacted an Australian law firm that is preparing legal action over DVT against 20 of the world's top airlines, including British Airways and Qantas. Slater and Gordon, a Melbourne-based firm that specialises in class actions, has been inundated with queries from alleged victims or their relatives. In 47 of these cases, people have died as a result of DVT or ensuing pulmonary embolism, caused by clots in the leg travelling to the lungs. The lawsuit is expected to be launched within the next two months, with cases likely to be conducted on an individual basis rather than as a class action. Brendan Sydes, a partner with the firm, said: "We have got blokes in their 30s who can't run or jog any more because they have suffered this. There are professional people who were previously required to engage in frequent international air travel who are now limited in the work they can do because travel insurance won't cover them for an existing condition. "People are saying to us that some simple advice might have allowed them to take precautionary measures." Prof John Royle, director of the vascular surgery unit at the Austin and Repatriation Medical Centre in Melbourne, said incidence levels had not been properly evaluated but could be "enormous". In many cases, he said, passengers suffering from minor clots would not seek medical attention as they would mistake their condition for a simple calf strain. "It is not as if this is a rare condition," Prof Royle said. "I have had it myself, and two friends have died of it. Now at last it seems people are being made aware of the risks." (The Daily Telegraph(London), January 11, 2001) EXIDE TECHNOLOGIES: May Face Indictment As Former Sears DieHard Supplier ------------------------------------------------------------------------ Shares of Exide Technologies fell nearly 12 percent Thursday after the battery maker revealed it will likely face indictment or a plea agreement with federal prosecutors investigating its dealings as the former supplier of Sears DieHard batteries. The company, the world's largest maker of lead-acid and automotive batteries, said the plea agreement could include a substantial fine. "We have cooperated fully with the government in its investigation and we still hope to resolve this matter," said John Van Zile, Exide's executive vice president and general counsel. Exide's stock was down $1.19 at $8.44 in early afternoon trading on the New York Stock Exchange. The U.S. attorney for the Southern District of Illinois is investigating whether former officials with Exide and Chicago-based Sears, Roebuck and Co. knowingly sold inferior batteries under the DieHard label. Sears denies the allegations and has accused Exide in a lawsuit of bribing a buyer for the retailer for inside information on a battery-supply contract. The company has had a round of legal troubles ever since the fallout with the retailer and charges that the company engaged in financial misconduct, mislabeled batteries and tried to pass off old batteries as new to consumers. Sears alleged in a lawsuit that its former battery buyer received $20,000 from Exide. Exide has replaced its senior management team, paid nearly $2.8 million to settle allegations by the Florida attorney general and agreed to pay more than $ 10 million to resolve a class-action lawsuit against it. The company continues to face other lawsuits and state investigations, in addition to the federal probe. "While we are disappointed that the investigation could result in a fine, it does not detract from our accomplishments and is not deterring us from moving forward aggressively with our plans to continue taking advantage of the exciting opportunities in our key markets," said Exide chairman and chief executive Robert A. Lutz. The company, which moved its headquarters from Reading, Pa., to Princeton in September, declined further comment. Automotive batteries account for 65 percent of sales for Exide, which also makes batteries for farm equipment, golf carts, boats, submarines and U.S. Army tanks. It has more than 16,000 employees. (The Associated Press State & Local Wire, January 11, 2001) HOLOCAUST VICTIMS: Polish Parliament Approves Law Returning Property -------------------------------------------------------------------- Parliament approved Thursday a long-delayed law compensating Polish citizens whose property was seized under communist rule between 1944-62 but only those who retain Polish citizenship. The law was mired in 1 1/2 years of bitter disagreement over how to limit the government's financial liability while easing international pressure on Poland to finally compensate people whose property was seized including many Jews who fled communist-era persecution. The law's sponsor, Solidarity lawmaker Tomasz Wojcik, expressed hope that the law lifts the threat of class-action lawsuits by Jewish groups in the United States seeking the return of private Jewish property. While a 1997 law governs return of communal Jewish property, this is the first that in any way addresses the return of individual Jewish property, including assets seized by the communists when they took power. ''This is a historic moment,'' Wojcik said after lawmakers passed the law by a vote of 225-186 with five abstentions. The government estimates that some 170,000 eligible claims will cost about 43 billion zlotys (dlrs 10 billion). The law allows for the return of 50 percent of any property seized from Polish citizens or its equivalent either to the original owners or direct heirs but only if they held Polish passports on Dec. 31, 1999. The law, which also compensates Poles resettled after borders shifted following World War II, must be approved by the Senate and signed by President Aleksander Kwasniewski. While welcoming the prospect of restitution a full decade after the fall of communism, advocates for property owners criticized the law both for limiting compensation to 50 percent and for excluding emigres and their heirs who lack Polish passports. ''It's a scandal that heirs to Polish World War II soldiers who emigrated will be exempted from restitution because they don't have Polish citizenship,'' said Tadeusz Koss, head of the Property Owners' Association. It was the ex-communist contingent in parliament that fought hardest to limit compensation, saying it would bankrupt the government. They sought a 10-percent cap, but were overruled. ''It hurts the nation's possibilities of development,'' said Marek Borowski, a member of the ex-communist Democratic Left Alliance who is a deputy parliament speaker. In cases where the property cannot be recovered or is of exceptional or strategic value such as castles, forest, roads, or mines the government will issue restitution in the form of state-guaranteed bonds. (AP Worldstream, January 11, 2001) MTBE CONTAMINATION: Multi-Million Dollar Suit Settled For $35,000 ----------------------------------------------------------------- A multi-million dollar lawsuit against companies responsible for the use of MTBE in gasoline has been settled for $35,000, most of it coming from a motorist's car insurance. The suit was filed in Cumberland County Superior Court in 1998 by five homeowners from Standish, Litchfield, Casco, Cumberland. It grew out of the sale of gasoline containing methyl tertiary butyl ether, a chemical additive designed to reduce smog. Maine began requiring the sale of the reformulated fuel to meet federal clean-air mandates in southern Maine in 1995. The state discontinued the sale of the gas three years later after MTBE began turning up in groundwater. Plaintiffs in the lawsuit included several people whose wells were contaminated with the chemical. Others were concerned about the threat of contamination and wanted chemical companies to foot the bill for testing. The defendants, including Arco Chemical Co., Atlantic Richfield Co., Lyondell Chemical Co., the American Petroleum Institute and the Oxygenated Fuels Association, were accused of negligent misrepresentation, civil conspiracy and fraud for failing to warn of the potential for water contamination. But the plaintiffs failed to win certification as a class, meaning they could not sue on behalf of other people affected. William Kayatta, a lawyer who represented Arco Chemical Co. and Lyondell Chemical Co., said the defense was able to show that state and federal environmental regulators were aware that MTBE mixed easily with water and could spread in groundwater. But regulators determined that the benefits to air quality were worth the potential harm to groundwater, he said. Plaintiff Michael Millett of Standish was one of the first in Maine whose well was found to contain high levels of MTBE contamination. The source of the chemical was traced to gasoline that spilled from a car involved in a rollover accident. That led to Commercial Union, which insured the car, to pay $25,000 toward the settlement. The remaining $10,000 came from Atlantic Richfield Co., an oil company that once manufactured the chemical. Kayatta said the defense insisted the settlement be open to public inspection to demonstrate that his clients, the current manufacturers of the chemical, did nothing wrong. "Their position nationwide has been we did absolutely nothing wrong," Kayatta said. "The government and the refiners asked us to make this ingredient for gasoline that would clean up the air and it behaved exactly as we said." (The Associated Press State & Local Wire, January 11, 2001) OTTAWA: Stuck With Veterans' Legal Bill Estimated At Over $800,000 ------------------------------------------------------------------ The federal government has lost another round in a class-action suit on behalf of disabled veterans and their heirs, owed as much as $ 2 billion in back interest payments. Justice John Brockenshire ruled on January 10 the government will have to pay as much as 100 per cent of the veterans' legal costs, currently estimated at just over $ 800,000. Brockenshire declared the Crown acted in a "reprehensible" manner in withholding the interest payments for decades prior to 1990. (The London Free Press, January 11, 2001) PRESIDENTIAL ELECTION: Alpharetta Firm Accused In FL Voting Rights Suit ----------------------------------------------------------------------- A nearly unprecedented coalition of national civil rights organizations went to federal court, seeking to end Florida voting practices they say disenfranchised African-American voters in November. Georgia also figured in the federal lawsuit, which the National Association for the Advancement of Colored People and five other groups had threatened for weeks. The lawsuit accused Choicepoint Inc., a data research firm based in Alpharetta, of providing Florida officials with erroneous information as to which residents were ineligible to vote in the presidential election. Many of those kept from voting because of that information were African-American, the lawsuit contends. Along with Choicepoint, the lawsuit named Florida Secretary of State Katherine Harris and Florida elections director Clay Roberts, as well as several county election supervisors. Harris and Roberts are blamed in the suit for permitting a dysfunctional voting system and faulty machinery, which civil rights groups say barred tens of thousands of residents of African- American communities from voting. "The nation . . . and the civil rights community was appalled at what appeared to be an absolute disrespect of the right to vote of persons of color," said Dennis Hayes, NAACP general counsel. A Choicepoint representative said the company had not yet been served with the lawsuit and therefore could not comment. But in December and again Wednesday, Choicepoint issued a statement that appeared to shift blame to the state of Florida. "Florida law prevents names from being removed from the voting roll unless the information is confirmed by local officials --- not us," the statement read. Neither Harris nor Roberts could be reached for comment. Wednesday's lawsuit, filed in U.S. District Court in Miami, is one of a number of efforts to combat alleged voting irregularities in the Nov. 7 election in which Republican George W. Bush defeated Democrat Al Gore. Civil rights organizations have charged that the election was tipped in favor of Bush because many African-Americans --- who tend to vote Democratic --- were disenfranchised. Last week, the American Civil Liberties Union Voting Rights Project, based in Atlanta, filed a lawsuit alleging voting irregularities in Georgia. And today, the ACLU is expected to file another federal lawsuit addressing alleged irregularities in Illinois, said Laughlin McDonald, director of the ACLU Voting Rights Project. "I think what happened in Florida got everyone's attention," McDonald said. The lawyers for Wednesday's lawsuit said they hoped their legal action would spur more such action across the country. Rep. John Lewis (D-Ga.) has said he received numerous complaints from students at the Atlanta University Center who said they were registered to vote but could not because their names were absent from lists. Lewis applauded the class-action lawsuit. "People struggled long and hard for the right to vote, and then, after the signing of the Voting Rights Act, after Selma, (Ala.,) not to have the votes counted, it is a shame," Lewis said. The other organizations working on the case are the NAACP Legal Defense and Educational Fund, a nonprofit organization separate from the NAACP; the Lawyers' Committee for Civil Rights Under Law; People for the American Way; and the Advancement Project. In a related matter, Florida Gov. Jeb Bush, the president-elect's brother, was scheduled to testify on January 11 before the U.S. Commission on Civil Rights. The federal panel is investigating whether minority voters were discriminated against. (The Atlanta Journal and Constitution, January 11, 2001) PRESIDENTIAL ELECTION: CNN Coverage; Civil Rights Commission Hears Case ----------------------------------------------------------------------- (Broadcast on the Cable New Network on January 11, 2001) Highlight: The 2000 presidential election is history, but the election battle is not. Civil rights groups continue to fight. They've filed a class-action lawsuit against Florida election officials charging that thousands of people were disenfranchised by systemic efforts to keep them from voting. Today in Tallahassee, the U.S. Civil Rights Commission holds hearings on voting problems in Florida. CAROL LIN, CNN ANCHOR: The 2000 presidential election is history, but the election battle is not. President Clinton commented on the disputed results just the other night. And civil rights groups continue to fight. They've filed a class-action lawsuit against Florida election officials charging that thousands of people were disenfranchised by systemic efforts to keep them from voting. And today in Tallahassee, the U.S. Civil Rights Commission holds hearings on voting problems in Florida. CNN national correspondent Gary Tuchman is in the Florida capital. GARY TUCHMAN, CNN CORRESPONDENT (voice-over): ... for president. MARY FRANCES BERRY, U.S. COMMISSION ON CIVIL RIGHTS: Some bad things happened to people. The question is why? TUCHMAN: Mary Frances Berry is the chairperson of the U.S. Commission on Civil Rights, which will now hold hearings on what happened in Florida. BARRY: This investigation of voting rights -- potential voting rights abuses is one of the most important, if not the most important, inquiry that the Civil Rights Commission has been called upon to make. JESSE JACKSON, RAINBOW-PUSH COALITION: Everybody matters. Every vote matters. We are Americans. TUCHMAN: The Civil Rights Commission has presented with evidence, charging African-American communities had a higher proportion of the more problematic punch card ballot machines. Other charges? That many African Americans were told by poll workers they weren't registered to vote when they were; and that excess police presence in some precincts intimidated some African Americans from voting. In addition, complaints come from the disabled, who say they couldn't vote because they weren't give proper assistance. The commission will hear testimony from Florida Gov. Jeb Bush and Secretary of State Katherine Harris, and will try to determine if problems that did occur were because of deliberate actions, or due to things like inattention. BERRY: It's inattention, inaction, insensitivity and efficiency. We will say that. And if it is inefficiency and inattention, to me that is just as negligent and just as reprehensible as in some outright fashion getting together and try to prevent people from voting. Because however you cut it, that's interference with the right to vote. TUCHMAN: The commission could recommend remedies to Congress, the president and law enforcement. It has already made some initial determinations. What are they? BERRY: We would absolutely not tell anyone any findings. TUCHMAN: That information remains secret until the investigation is over. PRESIDENTIAL ELECTION: NAACP Files Lawsuit over Florida Vote ------------------------------------------------------------ Voting irregularities in Florida in the presidential election caused a disproportionate number of ballots cast by black voters to be invalidated, the NAACP claims in a class-action lawsuit filed Wednesday. The suit, filed in U.S. District Court in Miami, seeks a variety of voting reforms and technological improvements to ensure that irregularities that occurred Nov. 7 are not repeated. "We move today for justice that guarantees that every vote counts and will count equally," said Dennis Hayes, the NAACP's general counsel. The lawsuit was filed as the U.S. Commission on Civil Rights was set to convene a fact-finding hearing in Tallahassee over voting irregularities. The NAACP suit, which has been joined by six other civil rights groups, charges that the irregularities -- which included equipment malfunctions, poorly prepared poll workers and an election roll purge of qualified voters' names -- violated the Voting Rights Act of 1965 and equal protections guaranteed by the 14th Amendment of the Constitution. Theodore Shaw, a lawyer for the NAACP Legal Defense Fund, said the Voting Rights Act does not require the plaintiffs to prove that Florida officials intentionally sought to deny black voters their vote. Named as defendants are: Florida Gov. Jeb Bush; Secretary of State Katherine Harris; election supervisors in seven counties; and Choicepoint, Inc., a Georgia firm hired by Florida state officials to purge felons and other ineligible names from voter registration lists. In the election aftermath, county election officials conceded that eligible voters were purged from the lists erroneously. Elizabeth Hirst, Bush's press secretary, said the governor would not comment on the lawsuit until it had been reviewed by his lawyers. The lawsuit also seeks to rid Florida of its punch-card voting machine, the equipment that produced the infamous chads Americans came to know during the Florida recount. The punch-card machine, used in 25 counties, has an error rate in recording votes nearly three times higher than electronic voting systems used in 41 of Florida's 67 counties. (One county uses paper ballots.) Black precincts disproportionately use punch-card balloting systems; therefore they are "less likely to have their votes counted and accurately tabulated than other voters in the state," the suit alleges. Eliot Mincberg, a lawyer for People For the American Way, noted Florida officials are already working on some reforms requested in the suit. (USA Today, January 11, 2001) PROPULSID LITIGATION: NLJ Reports on Lawsuit Denney v. Johnson & Johnson ------------------------------------------------------------------------ Two drug manufacturers have been hit with a class action brought by consumers who took the heartburn drug Propulsid and charge they were never warned that it allegedly can cause heart damage -- and allegedly led to more than 100 deaths. Attorney Gene Locks of Philadelphia's Greitzer & Locks, joined by lawyers from five other firms, filed Denney v. Johnson & Johnson, No. 00-CV-6411. The suit includes claims of negligence and breach of express and implied warranty. The CAR previously reported on class action lawsuit in West Virginia brought by consumer Charles Sprouce against Johnson & Johnson. (The National Law Journal, January 8, 2001) TOBACCO LITIGATION: Cigarettes Emit More Tar Than FTC Says, Expert Says ----------------------------------------------------------------------- Annual federal tests of cigarette ingredients have yet to identify any ingredient that, on its own, is a threat to human health, a Maryland expert testified Thursday. The 600 ingredients include things like alfalfa, cocoa, ammonia and caffeine, said Dr. Jack Henningfield, a consultant with Pinney Associates in Bethesda and a part-time professor at Johns Hopkins University in Baltimore. He was the first witness in a landmark trial that pits healthy smokers against the tobacco industry. Lawyers argued for hours about what Henningfield was going to say or had already said. By day's end, he had begun to lay the foundation for claims that some 250,000 West Virginia smokers are entitled to free annual medical tests, even though they aren't sick. The class-action lawsuit - the first of its kind to go to trial in the United States - covers people who have smoked the equivalent of a pack a day for five years since 1995, but who do not currently have lung cancer or a pulmonary disease such as emphysema. The smokers want industry-funded medical tests that cigarette makers argue are experimental and so far unproven in changing the outcome for anyone who develops one of those diseases. The tests could cost the industry as much as $ 500 million. Using a rubber doll head and a covered glass tube called "Smoky Sally," Henningfield showed jurors how tar accumulates in the lungs upon inhaling. He then used a small utility knife and high-tech overhead projector to dissect several cigarettes and reveal how well-thought-out their designs are. "So, it's not just tobacco that comes out of the ground and gets wrapped up in paper?" Durand asked. "It's far from it," Henningfield said, citing the more than 600 ingredients and additives, which in turn generate some 4,000 chemicals when the cigarette is burned. Most cigarettes have tiny ventilation holes at the base, which consumers can, deliberately or accidentally, cover with either their lips or fingers. Those holes, Henningfield said, are designed to increase the amount of fresh air a smoker inhales, effectively diluting the cancer-causing smoke they suck into their lungs. In Federal Trade Commission tests, machines smoke cigarettes without covering those holes, so the amount of tar they report a cigarette contains is actually far lower than what an ordinary smoker is inhaling, Henningfield said. Consumers should not rely on those FTC ratings because the machines do not suck as long or as deeply on the cigarette as a person does, he said. Another problem with the FTC tar ratings is that the machines burn the cigarette to within three millimeters of the filter. In practice, smokers often burn right to the filter, he said. They can do that because the "overwrap," a small piece of paper that attaches the tobacco tube to the filter, creates an additional pocket of tobacco. The agency is working on a way to revise its tests, he said. Henningfield conceded under cross examination Thursday that the FTC has never claimed its tests replicate human smoking, because the behavior varies with the person. "The machine was not intended to mimic humans ... but it was intended to be relevant to humans," he said. For now, however, tobacco companies are required by law to have their products tested on the FTC machines. The smokers contend that manufacturers could have designed a cigarette that exposed people to fewer harmful chemicals, but opted not to. They say that shows reckless disregard for the health of their customers in West Virginia. Industry lawyers argue that smokers have knowingly and voluntarily exposed themselves to a risk that has been publicized on warning labels and in the media for nearly 50 years. They say they couldn't have withheld information that was already common knowledge by the early '50s. They also say they have developed lower-risk cigarettes, but consumers don't want them because they taste bad. Henningfield admitted that he is a longtime opponent of smoking and advocates increasing taxes on, and prices of, cigarettes. He said discouraging or eliminating smoking is more important than developing a "safer" cigarette. One juror did not report for duty Thursday because she was sick and may have to be excused. That would leave just two alternates for the remainder of the trial, which is expected to last more than three months. One juror was previously excused so he could return to spring semester classes at his college. (The Associated Press State & Local Wire, January 11, 2001) U S WEST: Minnesotans Share Settlement With Phone-Service Provider Qwest ------------------------------------------------------------------------ Pending final approval from a judge, about 95,000 Minnesota telephone customers will share a class-action settlement of $5.8 million because they encountered installment delays by the former U S West. The settlement received preliminary approval last month from Hennepin County District Judge Pamela Alexander, who has scheduled an April 17 hearing to consider final approval. Most affected customers will receive notices and become eligible for bill credits. "I think it's a fair and reasonable settlement," said Denver attorney Daniel Reilly, who represented customers from Minnesota and other states. "This lawsuit was focused on U S West's conduct. Qwest came in and took decisive action to put it behind them." Qwest Communications Corp. purchased U S West last June, inheriting the company's 14-state local phone service territory as well as complaints dating to 1993 about delays in getting phones installed. "We've made a promise to the Minnesota Public Utilities Commission that we would improve service," said Qwest spokesman Matt Barkett. "Putting this lawsuit behind us helps us avoid distractions to accomplishing that primary goal." In the lawsuit, customers claimed that U S West neglected local telephone service by failing to expand its local network to accommodate the demand for service, while putting its resources into cable and wireless services. "We're denying any liability in connection with those allegations," Barkett said. Settling the lawsuit is "the right thing to do for customers and shareholders at this point, to put it behind us and concentrate on improving service," he said. The average qualifying phone customer in Minnesota will receive less than $60 in bill credits, Barkett said. Most customers will receive claims forms in the mail, but those who don't can request them after final court action. (The Associated Press State & Local Wire, January 11, 2001) ********* 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 * * *