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/raid1/www/Hosts/bankrupt/CAR_Public/010129.MBX C L A S S A C T I O N R E P O R T E R Monday, January 29, 2001, Vol. 3, No. 20 Headlines ALLSTATE INSURANCE: Ct Finds Violation of PA Law in "Do I Need an Atty" AURORA FOODS: Execs Enter Pleas of Not Guilty Re Financial Statements BP AMOCO: Lawsuit Accuses of Inflating CA Gas Prices with Export to Asia CONSECO FINANCE: MN Ct Dismisses Securities Suit; Appeal Made to 8th Cir DAIMLERCHRYSLER: Harvey Greenfield Announces Securities Suit Filed in NY FEN-PHEN: AHP Boosts Liability Reserves to Cover Settlement of Claims FLORIDA: Judge Hears Arguments on Foster Care; No Decision Before Feb. FLORIDA PROGRESS: Ct OKs Suit Re Use of Electric Transmission Easements FLORIDA PROGRESS: Lawsuit Seeks to Enjoin Share Exchange with CP&L FLORIDA POWER: Tries to Settle Employee Age Discrimination Suit HOLOCAUST VICTIMS: Polish Senate OKs Law on Payments for Seized Property IBP INC: Tyson Delays Takeover for Being Kept in the Dark Re SEC Probe INTRENET, INC: Cauley Geller Announces Securities Lawsuit in Ohio L.A POLICE: Nearly 200 Current & Former Officers Claim Retaliation LEVEL PROPANE: Settles with Customers in NY, MI, KY; Ohio Suits Come in LOUISIANA: Oyster Farming Topic of State House Committee Hearing MERRILL LYNCH: Foley & Bezek Files Suit Re Failure to Pay Injury Claims MTBE LITIGATION: Trade Group Files Suit Seeking To Block Ban in CA N.J. POLICE: 4 Alleged Victims Of Profiling Have Lawsuit Reinstated NEW ERA: Berger & Montague Files Securities Lawsuit in Colorado PRE-PAID LEGAL: Berman DeValerio Announces Securities Suit Filed in OK RAZORFISH, INC: Weiss & Yourman Announces Securities Lawsuit in New York TOBACCO LITIGATION: Two Former Soviet Republics File Suit in Florida U OF CA: Cited for Nuclear Safety Breach at Los Alamos National Lab. URINE TEST: Lawsuit Can Come out for Effect of Presumed Tampering on Job VERIZON COMMUNICATIONS: Tackles Problems with Internet Service WASHINGTON MUTUAL: CA Sp Ct Decertifies Nationwide Mortgagors' Lawsuit ********* ALLSTATE INSURANCE: Ct Finds Violation of PA Law in "Do I Need an Atty" ----------------------------------------------------------------------- Harrisburg Allstate Insurance Co. violated Pennsylvania's consumer-protection law by trying to dissuade people involved in traffic accidents with Allstate policyholders from hiring lawyers to pursue their claims, the Commonwealth Court has ruled. Apparently as part of an organized effort to reduce its expenses, the judge said, Allstate deliberately misled these ''third-party'' claimants in hopes of minimizing lawyer involvement in settling their claims. ''Because it was Allstate's intent to create confusion in the minds of its third-party claimants, its conduct was willful and in violation of the Consumer Protection Law,'' Commonwealth Court Judge Dan Pellegrini wrote in a 13-page summary judgment recently on a lawsuit that the attorney general's office filed two years ago. Attorney General Mike Fisher is seeking civil fines of between $ 1,000 and $ 3,000 for each of the ''thousands'' of violations that occurred over several years. A sentencing hearing is set for Feb. 15. Allstate, based in Northbrook, Ill., said it disagreed with the ruling and it plans to appeal. At issue in the case are several letters and forms that Allstate routinely sent to third-party claimants from 1995 until the state filed suit in December 1998. After that, the company changed its literature to remove the legally questionable material, said Barbara Petito, a spokeswoman for Fisher's office. The literature advised claimants that they were not required to hire a lawyer, that claims handled by lawyers often take longer to settle, and that lawyers may claim a large chunk of any settlement as their compensation. The papers also promised claimants that Allstate would treat them fairly in resolving their claims and sought permission to obtain their medical and employment records. In reaching his conclusions, Pellegrini cited confidential internal documents involving a claims reorganization that Allstate undertook to reduce losses and bolster shareholders' returns. The reorganization plan was built largely around an insurance industry study that identified lawyers' involvement as ''a big cost to the auto-insurance reimbursement system.'' In its statement earlier this month, Allstate noted that its literature has been revised but that the forms ''still answer simple, frequently asked questions that claimants have.'' In related news, New London, Conn., attorney Robert I. Reardon Jr. has requested certification of the case for a national class action against Allstate for the same claims. Plaintiffs' lawyers estimate that hundreds of thousands of people might qualify for the national class. So far, at least 47 plaintiffs in 22 states have filed independent lawsuits, claiming they trusted Allstate and are worse off for doing so. (Pennsylvania Law Weekly, January 29, 2001) AURORA FOODS: Execs Enter Pleas of Not Guilty Re Financial Statements --------------------------------------------------------------------- Aurora Foods Inc.'s former chairman, Ian Wilson, and three other ex-executives have entered not guilty pleas to charges they manipulated the company's financial statements. At their arraignment, Wilson and three former colleagues --- M. Laurie Cummings, Dirk Grizzle and Ray Chung --- denied they conspired to hide higher-than-expected promotional expenses at Aurora, maker of Duncan Hines cake products, Log Cabin syrup and Mrs. Paul's seafood. But prosecutors said they overstated EBITDA --- an accounting term that's short for earnings before interest, taxes, depreciation, and amortization --- as well as the company's net income and current assets by more than $ 43 million. (The Atlanta Journal and Constitution, January 26, 2001) BP AMOCO: Lawsuit Accuses of Inflating CA Gas Prices with Export to Asia ------------------------------------------------------------------------ BP Amoco accused of inflating Calif. prices Los Angeles --- BP Amoco PLC was sued by a consumer who alleges the company artificially raised gas prices in California by exporting oil to Asia. Alan Wayne filed the complaint in Los Angeles Superior Court, seeking class-action status on behalf of all California gas buyers. London-based BP could not be immediately reached for comment. The suit says that BP from 1992 to 1999 reduced its supply of crude oil to the West Coast during the winter, when demand typically drops, by exporting it to Asia. (The Atlanta Journal and Constitution, January 26, 2001) CONSECO FINANCE: MN Ct Dismisses Securities Suit; Appeal Made to 8th Cir ------------------------------------------------------------------------ Conseco Finance has been served with various lawsuits in the United States District Court for the District of Minnesota. These lawsuits were generally filed as purported class actions on behalf of persons or entities who purchased common stock or options to purchase common stock of Conseco Finance during alleged class periods that generally run from February 1995 to January 1998. One of these lawsuits did not include class action claims. In addition to Conseco Finance, some of Conseco Finance's current and former officers and directors are named as defendants in one or more of the lawsuits. The lawsuits have been consolidated into two complaints, one relating to an alleged class of purchasers of Conseco Finance's common stock and the other relating to an alleged class of traders in options for Conseco Finance's common stock. In addition to these two complaints, a separate non-class action lawsuit containing similar allegations was also filed. Plaintiffs in the lawsuits assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. In each case, plaintiffs allege that Conseco Finance and the other defendants violated federal securities laws by making false and misleading statements about Conseco Finance's current state and Conseco Finance's future prospects, particularly about prepayment assumptions and performance of some of our loan portfolios, which allegedly rendered Conseco Finance's financial statements false and misleading. Conseco Finance filed motions to dismiss these lawsuits. On August 24, 1999, Conseco Finance's motions to dismiss were granted with prejudice. The plaintiffs subsequently appealed the decision to the U.S. Court of Appeals for the 8th Circuit, and the appeal is currently pending. Conseco Finance believes that the lawsuits are without merit and intends to defend the lawsuits vigorously. DAIMLERCHRYSLER: Harvey Greenfield Announces Securities Suit Filed in NY ------------------------------------------------------------------------ A class action lawsuit was filed in the United States District Court for the Southern District of New York, brought on behalf of shareholders of DaimlerChrysler A.G. (NYSE: DCX) stock who (1) purchased or acquired shares of DCX between November 14, 1998 and October 29, 2000; (2) received DaimlerChrysler stock in exchange for Chrysler shares as a result of the merger with Daimler-Benz; and/or (3) owned Chrysler stock as of July 20, 1998 and suffered damages as a result of the merger. The Complaint alleges, among other things, that DaimlerChrysler and certain of its top officers misled the shareholders into approving the merger by falsely representing that the merged company's U.S. operations would remain in the control of Chrysler's management on an equal basis with Daimler-Benz. In fact, Daimler-Benz had orchestrated a plan to take over complete control of Chrysler and replace its management team, making the company subordinate to German managers and long-time Daimler-Benz Chairman Jurgen Schrempp. If you have any questions or wish to discuss this action or your rights with regard to this litigation, you may contact Harvey Greenfield, Esq. at the Law Firm of Harvey Greenfield, 60 East 42nd Street, Suite 2001, New York, NY 10165, telephone 212-949-5500, or toll free 877-949-5500, facsimile 212-949-0049, or by e-mail at hgreenf@banet.net. FEN-PHEN: AHP Boosts Liability Reserves to Cover Settlement of Claims --------------------------------------------------------------------- American Home Products Corp. announced that it has added $ 7.5 billion to reserves to complete the settlement of product-liability claims stemming from litigation over the combination of diet drugs known as fen-phen. That brings the company's total reserve for the cases to $ 12.25 billion -- one of the largest such charges in the pharmaceutical industry's history. As recently as last fall, company executives said they did not believe additional diet-drug litigation charges would exceed $ 4.75 billion. About $ 4 billion of the $ 12.25 billion already has been paid, the company said. "While this [charge] is more than we anticipated . . . it is in the best interest of the company and its shareholders to put the diet-drug litigation behind us," Louis L. Hoynes, the company's executive vice president and general counsel, said in a conference call with Wall Street analysts. "A more protracted process involving many months of litigation and possible appeals and ongoing disputes over many claims could have been ultimately less costly in dollars," he added. "But the prolonged disruption would have been more costly to the company in many tangible and intangible ways. We firmly believe that the extra cost of an early resolution is warranted. "The diet-drug litigation has in our judgment finally been contained." The litigation is related to two drugs -- dexfenfluramine, which the company sold under the name Redux, and fenfluramine, which it sold as Pondimin -- that were prescribed as diet aids and sometimes combined with another drug, phentermine, to make the fen-phen "cocktail." Dexfenfluramine and fenfluramine were recalled in 1997 after being linked to heart-valve damage. The lawsuits have alleged that users of these drugs were not adequately warned of their potential dangers. American Home Products, the fifth-largest U.S. drug company, made the announcement as it released its fourth-quarter earnings for 2000. It said $ 12.25 billion should cover all remaining claims against the company arising from a national class-action lawsuit settlement and separate lawsuits brought by thousands of other individuals. Officials said "aggressive action" -- in the form of the $ 7.5 billion fourth-quarter charge -- was necessary so the company could settle the remaining lawsuits and turn its attention to growing its markets in the United States and overseas. Moody's Investors Service downgraded American Home Products' long- and short-term debt ratings a notch. Overall, however, the new ratings are still considered strong, said David Neuhaus, a Moody's vice president. "They've got a very strong underlying business -- the pharmaceutical business -- and this has been a major distraction for them for the past few years," he said. He attributed the downgrade to expectations that there will be a "significant increase" in the company's debt level over the next two years. "And, secondly, while we're comfortable that while the current charges [can cover claims], litigation has a way of not being able to finally settle itself. You know, asbestos came back to haunt companies. And until we gain comfort that the national settlement is beyond appeal and until we see that the number of [individual lawsuits] decreases substantially we think there's some risk that the situation is not finally stable." American Home Products reported a net loss of $ 3.82 billion in the fourth quarter last year, compared with a profit of $ 593.2 million in the same period in 1999. Investors seemed unruffled by the news: American Home Products stock closed at $ 57.64, up $ 2.89, or 5 percent Thursday, from Wednesday's close on the New York Stock Exchange. (The Washington Post, January 26, 2001) FLORIDA: Judge Hears Arguments on Foster Care; No Decision Before Feb. ---------------------------------------------------------------------- A lawyer for the state belittled a foster care lawsuit before a Miami federal magistrate on January 25 by characterizing the case as a national advocacy group's attempt to get attention and outdo another advocacy group. "It is a shotgun, rambling document; it literally takes hours for anyone to decipher what the claims are," Paul Hancock, deputy Attorney General for South Florida, said while arguing why the suit should be either dismissed or, at the very least, denied class-action status. "What we have here is an effort to make headlines," he said. Hancock represents the state Department of Children & Families, Department Secretary Kathleen Kearney and Gov. Jeb Bush in what's referred to as the "Bonnie L" foster care lawsuit -- named for the first plaintiff in the complaint. The suit, filed in June, outlines the plight of 22 foster children, most from Palm Beach County, who allege they were abused, neglected or otherwise mistreated while in state care. The suit originally was filed by Karen Gievers, an activist who sued Children & Families on similar grounds in 1990. It now boasts a legal team of at least 30 lawyers, some of whom hail from the New York-based Children's Rights Inc. Children's Rights is embroiled in child-welfare litigation in at least nine states. Hancock argued that past foster care-related class-action suits -- some settled, one ongoing -- makes this latest one redundant. In stating his case, he pitted Children's Rights against the San Francisco-based Youth Law Center, another national advocacy group that settled last year with the state over a Broward County foster care suit, named "Ward." "What we have here, your honor, is the issue of dueling advocacy groups," Hancock said. "What is it in the Ward settlement they don't like? They want a panel of experts outside Florida to come forward and manage the foster care system." Gievers scoffed at Hancock's portrayal of the Bonnie L case. "If you have the facts, you argue the facts. If you have the law, you argue the law," she said. "If you don't have either you just attack the messenger and try to confuse things." Last Thursday January 25, lawyers for both sides went before U.S. Magistrate Robert Dube in Miami to argue the state's motion to dismiss the case and the plaintiffs' motion for class-action certification. Dube will review the motions as well as other related documents before making recommendations to U.S. Judge Federico Moreno. Moreno won't decide the case until at least February. Class action status would widen the suit from 22 children to between 15,000 and 18,000 kids. That, in turn, would empower advocates to implement a statewide reform of the foster care system, Gievers said. "We've got to get some handle on this," she said. "The fact of the matter is we need kids to have a life while the bureaucracy tinkers and fixes itself." (Sun-Sentinel (Fort Lauderdale, FL), January 26, 2001) FLORIDA PROGRESS: Ct OKs Suit Re Use of Electric Transmission Easements ----------------------------------------------------------------------- In December 1998, Florida Power was served with this class action lawsuit seeking damages, declaratory and injunctive relief for the alleged improper use of electric transmission easements. The plaintiffs contend that the licensing of fiber optic telecommunications lines to third parties or telecommunications companies for other than Florida Power's internal use along the electric transmission line right-of-way exceeds the authority granted in the easements. In June 1999, plaintiffs amended their complaint to add Progress Telecommunications Corporation as a defendant and add counts for unjust enrichment and constructive trust. In January 2000, the court conditionally certified the class statewide. Management does not expect that the results of these legal actions will have a material impact on Florida Progress' financial position, operations or liquidity. Accordingly, no provision for loss has been recorded pertaining to this matter. FLORIDA PROGRESS: Lawsuit Seeks to Enjoin Share Exchange with CP&L ------------------------------------------------------------------ In August 1999, Florida Progress announced that it entered into an Agreement and Plan of Exchange with Carolina Power & Light Company (CP&L), and CP&L Energy, Inc., a wholly owned subsidiary of CP&L. A lawsuit was filed in September 1999, against Florida Progress and its directors seeking class action status, an unspecified amount of damages and injunctive relief, including a declaration that the agreement and plan of exchange was entered into in breach of the fiduciary duties of the Florida Progress board of directors, and enjoining Florida Progress from proceeding with the share exchange. The complaint also seeks an award of costs and attorney's fees. Florida Progress believes this suit is without merit, and intends to vigorously defend itself against this action. Accordingly, no provision for loss has been recorded pertaining to this matter. FLORIDA POWER: Tries to Settle Employee Age Discrimination Suit --------------------------------------------------------------- Florida Power and Florida Progress have been named defendants in an age discrimination lawsuit. The number of plaintiffs remains at 116, but four of those plaintiffs have had their federal claims dismissed and 74 others have had their state age claims dismissed. While no dollar amount was requested, each plaintiff seeks back pay, reinstatement or front pay through their projected dates of normal retirement, costs and attorneys' fees. In October 1996, the federal Court approved an agreement between the parties to provisionally certify this case as a class action suit under the Age Discrimination in Employment Act. Florida Power filed a motion to decertify the class and in August 1999, the Court granted Florida Power's motion. In October 1999, the judge certified the question of whether the case should be tried as a class action to the Eleventh Circuit Court of Appeals for immediate appellate review. In December 1999, the Court of Appeals agreed to review the judge's order decertifying the class. In December 1998, during mediation in this age discrimination suit, plaintiffs alleged damages of $100 million. Company management, while not believing plaintiffs' claim to have merit, offered $5 million in an attempted settlement of all claims. Plaintiffs rejected that offer. Florida Power and the plaintiffs engaged in informal settlement discussions, which were terminated on December 22, 1998. As a result of the plaintiffs' claims, management has identified a probable range of $5 million to $100 million with no amount within that range a better estimate of probable loss than any other amount; accordingly, Florida Power has accrued $5 million. In December 1999, Florida Power also recorded an accrual of $4.8 million for legal fees associated with defending its position in these proceedings. There can be no assurance that This litigation will be settled, or if settled, that the settlement will not exceed $5 million. Additionally, the ultimate outcome, if litigated, cannot presently be determined. HOLOCAUST VICTIMS: Polish Senate OKs Law on Payments for Seized Property ------------------------------------------------------------------------ Poland's Senate decided on January 26 to widen eligibility under a long-delayed bill to compensate people whose property was seized by the communist regime, but it was unclear whether the amendment would stand. The draft now goes for final approval to the Sejm, parliament's lower house. It already has voted once for a tight citizenship requirement that could exclude many Polish emigres, including Jews who fled communist-era persecution. The law allows compensation equivalent to 50 percent of the value of property seized under communist rule from 1944 to 1962. It was unclear whether the Sejm would try to restore its earlier language limiting payments to claimants who were Polish citizens as of Dec. 31, 1999 a provision that has drawn strong objections from Jewish groups. The Senate version would allow payments to former owners who were Polish citizens, or their direct heirs, regardless of current citizenship. The Solidarity-led government backs the more liberal version, but has met opposition in the Sejm where it has not had a working majority since the small Freedom Union quit the governing coalition last year. The ex-communist opposition opposes the restitution measure outright. Other deputies have sought to limit financial liability for fear the bill's costs could devastate public finances. The government estimates that about 170,000 eligible claims would cost about 43 billion zlotys (dlrs 10 billion). The bill also must be approved by President Aleksander Kwasniewski, an ex-communist with close ties to the government opposition. Poland is the only former communist state in Eastern Europe that has yet to approve such a compensation law, and Warsaw has come under mounting international pressure to act. The government also hopes bill will blunt class-action suits by Jewish groups in the United States seeking the return of private property. While a 1997 law governs return of communal Jewish property, this is the first that specifically addresses the return of businesses, homes and other property that belonged to individual Jews. (AP Worldstream, January 26, 2001) IBP INC: Tyson Delays Takeover for Being Kept in the Dark Re SEC Probe ---------------------------------------------------------------------- According to the Atlanta Journal and Constitution, January 26, 2001, Tyson delays takeover, cites SEC probe at IBP Springdale, Ark. --- Tyson Foods delayed its $ 4.7 billion takeover of IBP Inc., saying IBP failed to disclose a federal probe of its accounting practices. IBP stock fell 14 percent. The Securities and Exchange Commission notified IBP on Dec. 29, three days before Tyson agreed to a cash-and-stock takeover, Tyson said in a statement. IBP didn't tell Tyson about the SEC review until Jan. 10, Tyson said. On a different matter, Callicrate, a cattle feeder who is pursuring a nationwide fight against cattle price-fixing, is hoping to galvanize a global uprising about corporate agriculture and envisioned a consumer boycott of IBP and Tyson products in thewake of their merger. "People are upset about concentration when they learn the most important thing - food - is under the control of a few hands," according to the Associated Press State & Local Wire, January 9, 2001. INTRENET, INC: Cauley Geller Announces Securities Lawsuit in Ohio ----------------------------------------------------------------- The Law Firm of Cauley Geller Bowman & Coates, LLP announced that it has filed a class action in the United States District Court for the Southern District of Ohio, Western Division, on behalf of all individuals and institutional investors who purchased the common stock of Intrenet, Inc. (Nasdaq:INET) (Nasdaq:INETE) between February 19, 1999 and October 13, 2000, inclusive (the "Class Period"). The Complaint alleges that defendants violated the federal securities laws by issuing false and misleading statements during the Class Period concerning the Company's business and financial condition, and as a result, the price of Intrenet stock was artificially inflated during the Class Period. Specifically, the complaint alleges that Intrenet's statements concerning its 1998 and 1999 financial results were materially false and misleading since the Company's reported financial results were based upon improper accounting practices in violation of Generally Accepted Accounting Principles. Contact: Cauley Geller Bowman & Coates, LLP, Boca Raton Media: Sue Null or Charlie Gastineau 888/551-9944 (Toll Free) or Jackie Addison, 888/551-9944 (Toll Free) E-mail: info@classlawyer.com L.A POLICE: Nearly 200 Current & Former Officers Claim Retaliation ------------------------------------------------------------------ Nearly 200 current and former officers are now plaintiffs in a class-action lawsuit against the Los Angeles Police Department, alleging that they were retaliated against when they tried to report misconduct, an attorney said last Thursday January 25. "Once you become an LAPD pickle, you can never become a cucumber again," said Bradley Gage, who represents former and current officers suing the department. "All of these officers have been pickled." The number of plaintiffs in the lawsuit, which also names selected LAPD supervisors as defendants, has tripled in the last three months. Originally filed in August in Los Angeles County Superior Court, it has been refiled in U.S. District Court downtown because it involves federal civil rights claims. At a news conference in his Woodland Hills office, Gage was joined by two plaintiffs, twin sisters Theresa and Lisa Golt, who said they had been jailed on false charges. In November, each was charged in Los Angeles County with issuing bail without a license and illegally accessing confidential information on law enforcement computers. They were arrested again in December in Orange County on suspicion of running a bail bond business without a license. Lisa Golt, a former LAPD officer, held up a driver's license-sized card that she said was her valid state bail agent license. But at the time she was arrested, she alleged, someone had tampered with her license status in the state's database. Golt, who was fired by the LAPD for using pepper spray while off duty, said she believed that she was retaliated against because the company she worked for provided bail for former Rampart officers charged with corruption, and for being an outspoken critic of LAPD Chief Bernard C. Parks. In 1999, she led a campaign to encourage other officers to sign written instructions to bar Parks from attending their funerals if they were killed in the line of duty. She also said she had refused to lie during what she called an unfair internal investigation of a sergeant and raised the ire of the LAPD's top management as a result. Theresa Golt, a current officer, is on administrative leave while charges against her are pending. Officer Jason Lee, an LAPD spokesman, declined to respond, saying department policy bars comment on pending lawsuits. (Los Angeles Times, January 26, 2001) LEVEL PROPANE: Settles with Customers in NY, MI, KY; Ohio Suits Come in -----------------------------------------------------------------------Westlake-based Level Propane has settled disputes over its business practices with three states -- New York, Michigan and now Kentucky. But in Ohio, where two separate lawsuits have been filed against the company, complaints are coming in at a fast pace. More than 400 of those complaints have been logged with the Ohio attorney general's office. The complaints detail a variety of problems: bad customer service, overbilling and running out of gas in the winter. Without propane, customers said they had to go without heat. The state's lawsuit against the company will not be tried for months, the attorney general's office said. Attorneys for the Equal Justice Foundation, a non-profit group that filed a federal class action lawsuit against Level Propane two years ago and expects to go to trial in July, said it is considering taking action soon that could offer customers immediate relief. Level Propane spokesman Tom Andrzejewski said the company "disagrees" with the allegations in the suits, but declined to discuss the pending litigation. "There are a myriad of options," he said. Earlier this month, Kentucky became the third state to reach a settlement with Level Propane Gases Inc. The Kentucky attorney general's office said more than 125 customers complained about the company last year and the complaints were similar to the allegations filed with the Ohio attorney general. In that settlement, Level Propane agreed to repay customers and pay $ 25,000 to the state. The company also agreed to change how it does business in that state. Under the settlement, the company said it would maintain enough staff to serve customers, provide timely deliveries and guaranteed price quotes, revise its contracts, refund undisclosed charges and sales taxes, and waive termination fees for customers who canceled their contracts. Level Propane did not admit any wrongdoing. The Ohio attorney general's office has been getting complaints about Level Propane for years and mediating the disputes individually. In 1999, more than 250 complaints were lodged against the company. And last year, 500 more were filed. But as the weather got colder and the complaints mounted, the attorney general's office decided to file a lawsuit in Common Pleas Court in Delaware County. The suit charges that Level Propane violated state consumer protection laws. The Ohio attorney general has not ruled out a settlement. Last year, Level Propane settled with the New York attorney general. It agreed to repay customers and pay the state $ 17,000 in penalties. In December, the company settled a dispute with the Michigan attorney general by allowing other companies to fill customers' tanks in a 10-county area. And earlier this month, the National Propane Gas Association said Level Propane "has not been acting in the best interests of the public," and told the privately-held company it is no longer welcome as a member of the international trade group. (Akron Beacon Journal, January 26, 2001) LOUISIANA: Oyster Farming Topic of State House Committee Hearing ---------------------------------------------------------------- The state has told leaseholders in two areas where Mississippi River water is being diverted into coastal marshes that their leases will not be renewed. Fresh water, which helps rebuild wetlands, can be deadly to oysters. The rejection of renewals is part of the state's effort to pave the way for the opening of the Davis Pond Freshwater Diversion in St. Charles Parish. The state is sending relocation offers to oyster-leaseholders in areas expected to be affected by the project. Just south of there, leaseholders are being told their Barataria Bay leases will not be extended because, while Davis Pond should not harm them, other planned projects eventually will. Pausina's family reef is in that area. The conflict between oyster farming and coastal restoration was the topic of a hearing before the state House Committee on Natural Resources. Len Bahr, Gov. Mike Foster's executive assistant for coastal affairs, said he had long seen "a train wreck approaching" between the oyster industry and one of the most effective tools in coastal restoration, diverting fresh water from rivers and streams into marshes. The collision occurred in December, when a Plaquemines Parish jury determined the Caernarvon Freshwater Diversion Structure sent too much fresh water into Breton Sound, damaging some oyster leases. The jury awarded five plaintiffs $48 million. That could balloon to $700 million if applied to other plaintiffs in the class-action suit, state officials say. Bahr told legislators that a member of a joint state-federal task force told him some projects will be put on hold "until the state gets its act together." Department of Natural Resources Secretary Jack Caldwell said the Plaquemines lawsuit showed the state its potential liability. Caldwell said the verdict prompted him to stop renewing leases that could be affected by the diversions. "The state faces the potential - the potential - to have another class-action suit at Davis Pond," Caldwell told the legislators. The federally funded Davis Pond project includes money to relocate affected oyster leases. Caldwell said that provision was added because the state learned its lesson with Caernarvon. Relocation offers will total about $5.7 million, Caldwell said. But leaseholders could choose to sue the state if they think they could win big awards like those in the Caernarvon lawsuit, he added. Oyster man Ralph Pausina, chairman of the board of the Oyster Growers and Dealers Association and one of dozens of oyster farmers whose state leases aren't being renewed because of planned coastal-restoration projects, says his industry's conflict with coastal-restoration efforts may spell the end to his family's 70-year tradition of harvesting the shellfish from the same reef. For years, such renewals were automatic. He said he may sue the state for not renewing his lease because he feels he needs to protect his investment in the reef. His family has other leases in the Davis Pond area, and he said he will accept relocation offers. "We don't know what the state is offering us, ... but I am going to go in there and sign," Pausina said. "I have to stay in business." Mike Voisin, a seventh-generation oyster farmer from Houma, said oyster growers support coastal restoration. "We supported freshwater diversion before it was cool," he said. Voisin said lease renewals have contained hold-harmless clauses that the industry has supported, and those provisions could be used to extend leases. The clauses are designed to protect the state from being sued if coastal-restoration efforts harm oyster beds. But Caldwell said the clauses have never been tested in court. Voisin and others said Caldwell is being vindictive with leases because of the Plaquemines verdict. Caldwell denied that. Under the buyout offers, the state would pay oyster farmers for setting up new reefs or would buy out the leases for slightly more than the relocation costs. The oystermen can also choose to do nothing and take their chances. State Wildlife and Fisheries Assistant Secretary John Roussel said 9 million to 13 million pounds of oysters are harvested in an average year, a value of $260 million. Leases produce about half of the harvest, with public reefs, which are open to anyone, accounting for the rest. (The Advocate (Baton Rouge, LA.), January 25, 2001) MERRILL LYNCH: Foley & Bezek Files Suit Re Failure to Pay Injury Claims ----------------------------------------------------------------------- Foley & Bezek, a Southern California law firm with a practice specializing in class actions, has filed a class action lawsuit in California against Merrill Lynch and its subsidiary Merrill Lynch Settlement Services for alleged failure to make timely payments to individuals who settled personal injury cases and agreed to accept periodic payments from Merrill Lynch Settlement Services utilizing "structured settlements." A structured settlement agreement is an agreement between an individual injured in a personal injury lawsuit who agrees to settle his or her lawsuit with the defendant who caused the injury, and accept a series of payments over time to be paid by Merrill Lynch Settlement Services, a subsidiary of Merrill Lynch. By utilizing a "structured settlement" through Merrill Lynch Settlement Services, the payments to the injured individual are tax free. Merrill Lynch, through its settlement services subsidiary, Merrill Lynch Settlement Services, assumed full responsibility for these payments to the injured individuals. To accomplish this, Merrill Lynch Settlement Services purchased U.S. Treasury Bonds which it placed in trust and agreed to use the income from the bonds to make the agreed upon payments to the injured individuals. Subsequently, Merrill Lynch sold its ownership in its settlement services' subsidiary to a third party. The third party pledged the treasury bonds to Morgan Stanley as collateral for a loan to the third party. When the third party defaulted on the loans, Morgan Stanley foreclosed on the treasury bonds to repay its loan to the third party. Now, over 100 individuals, many of whom were disabled by their injuries, have not received the payments that Merrill Lynch Settlement Services promised to make. The lawsuit was initiated by Martha Torbitt, a Southern California woman, on behalf of all other California residents who entered into structured settlements with Merrill Lynch's subsidiary. Any inquiries concerning the Merrill Lynch class action should be directed to Foley & Bezek, LLP at 805/962-9495, or you can contact them through their Web site: www.FoleyBezek.com. A copy of the complaint can be sent via facsimile or E-mail. Contact: Foley & Bezek Thomas Foley, Jr., 805/962-9495 MTBE LITIGATION: Trade Group Files Suit Seeking To Block Ban in CA ------------------------------------------------------------------ The Oxygenated Fuels Association filed suit in U.S. District Court in Sacramento asking a judge to invalidate a California ban on the fuel additive MTBE, which reduces air pollution but is blamed for fouling groundwater. The trade group filed a similar lawsuit in July 2000 challenging a New York law banning MTBE by 2004. Gov. Gray Davis ordered a ban on MTBE after Dec. 31, 2002, because contamination forced the closure of drinking water wells in Santa Monica and South Lake Tahoe. As little as a tablespoon in an Olympic-sized pool makes water taste and smell like turpentine. The group said the state should tackle the real problem of fixing leaking underground fuel tanks that taint water. MTBE, which moves swiftly through groundwater after being spilled or leaked, has been found in 10,000 sites in the state. The Environmental Protection Agency has labeled it a possible carcinogen. The federal government requires that gasoline sold in cities with smog problems contain 2 percent oxygen to make the fuel burn cleaner. Two fuel additives, called ``oxygenates,'' are commonly used to comply with the requirement. MTBE - methyl tertiary butyl ether, made from natural gas - has been used primarily in the Northeast and on the West Coast, while ethanol is used primarily in the Midwest. The association contends that MTBE is cheaper than ethanol and burns more cleanly. Ethanol producers say it is safer than MTBE. The Clinton administration considered for months whether to grant California a waiver to the requirement for oxygenates in gasoline, but did not act before President Bush took office Jan. 20. The Bush administration has not taken a position on waiver requests. A Senate committee approved a ban last year on MTBE, but the bill went no further. (AP, January 24, 2001) N.J. POLICE: 4 Alleged Victims Of Profiling Have Lawsuit Reinstated ------------------------------------------------------------------- In December 1998, Tyrone Hamilton of Elizabeth was twice pulled over by state police within a matter of minutes as he drove his aunt and 80-year-old grandmother down the New Jersey Turnpike to a family funeral in Maryland. On January 25, a federal judge in Camden reinstated a lawsuit filed by Hamilton, who is black, and by three other black men who claim they were victims of racial profiling on the turnpike. Lawyers for the four men want the lawsuit certified as a class action, meaning a ruling could affect thousands of minorities who the lawyers believe have been pulled over by state police on the southern and central portions of the turnpike since 1997. The case is one of several filed since state Attorney General Peter Verniero admitted in 1999 that racial profiling by New Jersey State Police was "real, not imagined." The cases include lawsuits filed not only by minority motorists, but by minority state troopers who allege discrimination, and even by the former head of the state police, who was fired by Governor Whitman after making remarks she considered racially insensitive. The suit reinstated on January 25 had originally been filed in May 1999. But lawyers for the four motorists agreed to put their case on hold pending the results of another lawsuit in state court brought by 12 minority motorists. A trial court judge dismissed that suit in August and the state Appellate Division two weeks ago declined to consider an appeal of the case. Attorneys for the 12 motorists asked the state Supreme Court to hear the case, but the court does not have to take the appeal. Given the uncertain outcome of the state case, attorneys in the federal case said that they felt they could wait no longer. "The case has dragged on and we felt we had to move forward," 1 said Attorney Alan Yatvin. On January 25, Yatvin received permission from U.S. District Judge Joseph E. Irenas to reopen the racial profiling case. Attorneys for the state now have 30 days to answer the lawsuit. It is expected that the Attorney General's office will move to dismiss the case. The federal suit says all four motorists were stopped between October 1997 and March 1999 because they were black. "They were pulled over simply because they are minorities," said Justin T. Loughry, another attorney for the motorists."It was typical of the experience, we think, of hundreds, thousands of African Americans on the turnpike during the relevant time period." Stefan Presser, legal director of the Pennsylvania chapter of the American Civil Liberties Union, said the racial profiling problem"is so large and egregious"that both the New Jersey and Pennsylvania chapters of the ACLU are joining the lawsuit. "To my knowledge, this is the first time in the history of the ACLU that the two state ACLUs are going to bring resources to bear on an issue,"he said."We think we will need significant resources to right this problem." In addition to monetary damages, attorneys for the motorists say they are seeking to get a federal judge to oversee reforms that end profiling by state police. Presser said the attorneys are concerned that the new Bush administration will not enforce a 1999 agreement the state signed with the U.S. Department of Justice in which the state promised to end racial profiling. Hamilton is the only New Jersey resident among the four plaintiffs; the other three are from Philadelphia. According to the suit, Hamilton was stopped near Exit 4, outside Mount Laurel. After the trooper who pulled him over learned that Hamilton was a juvenile detention officer in Union County, Hamilton was let go. But within minutes, the suit says, Hamilton was stopped again by a different trooper who gave him a ticket for speeding. After questioning the trooper, Hamilton was told, "You should have given me your ID before I wrote the ticket," the suit reads. (The Record (Bergen County, NJ), January 26, 2001) NEW ERA: Berger & Montague Files Securities Lawsuit in Colorado --------------------------------------------------------------- The law firm of Berger & Montague, P.C. (http://www.investorprotect.com), filed a class action on January 25 in the United States District Court for the District of Colorado on behalf of all persons or entities who purchased New Era of Networks, Inc. (Nasdaq: NEON) common shares during the period from October 18, through November 21, 2000, inclusive. The complaint charges New Era of Networks, Inc. and certain of its officers with violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 by reason of material misrepresentations and omissions. The complaint alleges that certain officers and directors issued false and misleading statements concerning the Company's financial results for the third quarter The Company did not disclose during the Class Period, but later acknowledged in an SEC filing, that the record revenues and earnings reported for its third quarter 2000 resulted from the Company's practice of selling software to companies in exchange for equity in its customers and booking the sales as non-cash revenue. Disclosure of this previously concealed information caused the Company's stock to plummet over 50% on November 21, 2000. Contact: Sherrie R. Savett, Esquire, Douglas M. Risen, Esquire or Kimberly A. Walker, Investor Relations Manager, all of Berger & Montague, 888-891-2289, or 215-875-3000, or fax, 215-875-5715 or InvestorProtect@bm.net PRE-PAID LEGAL: Berman DeValerio Announces Securities Suit Filed in OK ---------------------------------------------------------------------- Shareholders sued Pre-Paid Legal Services, Inc. (NYSE: PPD) for securities fraud, accusing the company of inflating its stock price by using misleading accounting methods, Berman DeValerio & Pease LLP (www.bermanesq.com) said. The lawsuit was filed in the United States District Court for the Western District of Oklahoma. It seeks damages for violations of federal securities laws on behalf of all investors who bought Pre-Paid Legal stock between April 19, 1999 and January 16, 2001 (the "Class Period"). This is a longer Class Period than some of the other class actions pending against Pre-Paid Legal. Based in Ada, Okla., Pre-Paid Legal underwrites and markets legal expense plans. Boston-based Berman DeValerio & Pease has represented defrauded investors in class actions for nearly two decades. The complaint contends that Pre-Paid Legal misled the investing public during the Class Period by overstating its financial results. Essentially, Pre-Paid Legal recorded the commissions it paid to its salespeople as assets instead of expenses in its financial statements. The complaint says this bookkeeping maneuver served to overstate revenues by at least $78 million and violated the generally accepted accounting principles Pre-Paid Legal claimed to follow. Pre-Paid Legal's shares have lost more than half their value since news of these accounting violations came to light. Contact: Sara Davis, Esq. of Berman, DeValerio & Pease LLP, 800-516-9926, bdplaw@bermanesq.com RAZORFISH, INC: Weiss & Yourman Announces Securities Lawsuit in New York ------------------------------------------------------------------------ A class action lawsuit against Razorfish, Inc. (NASDAQ:RAZF) and others was commenced in the United States District Court for the Southern District of New York, seeking to recover damages on behalf of purchasers of Razorfish shares. The complaint charges defendants with violations of the federal securities laws. The complaint alleges that defendants issued a series of materially false and misleading statements which artificially inflated the price of the common stock of Razorfish during the Class Period. Contact: Weiss & Yourman, New York James E. Tullman Mark D. Smilow David C. Katz 888/593-4771 or 212/682-3025 wynyc@aol.com TOBACCO LITIGATION: Two Former Soviet Republics File Suit in Florida -------------------------------------------------------------------- Two Central Asian nations have become the latest countries to sue the U.S. tobacco industry for the cost of smoking-related illnesses. ``We believe the tobacco cartel intentionally targeted these developing nations, where most of the citizens are poor, undereducated and unaware of the dangers of nicotine addiction,'' said Sonny Holtzman, attorney for the former Soviet republics of Tajikistan and Kyrgyzstan, on Wednesday. The case was filed in Florida Circuit Court in Miami-Dade County, which produced a record $145 billion award for Florida smokers last year. Similar suits filed in Miami by Russia and Brazilian states have been moved by the industry to federal court and consolidated in Washington. The republics intend to seek hundreds of millions of dollars spent treating smokers who developed cardiovascular disease, lung cancer, emphysema and other diseases blamed on cigarettes. The industry already is making payments on a $246 billion settlement reached in 1998 with U.S. states. The defendants include Philip Morris Inc., R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., Lorillard Tobacco Co. and Liggett Group Inc., which now is called Vector Group Ltd. An industry spokesman had called the Russian lawsuit silly because of government controls on the tobacco industry in the Soviet era. (AP, January 24, 2001) U OF CA: Cited for Nuclear Safety Breach at Los Alamos National Lab. -------------------------------------------------------------------- The Department of Energy said on January 24 it had cited the University of California for violations of nuclear safety rules at Los Alamos National Laboratory. The citation, listing several infractions, detailed an incident in March in which eight workers were exposed to airborne plutonium during a leak. Investigators said the mishap could have been prevented. The citation claimed plutonium was released when a worker disturbed a loose connection in an airtight device that allows workers to handle hazardous materials without being exposed to radiation. By law, the university and the lab are exempt from fines. ``Our institution will take the necessary steps to correct safety deficiencies,'' said Los Alamos director John Browne. The university, which has until Feb. 19 to refute the claims. (The Associated Press, January 24, 2001) URINE TEST: Lawsuit Can Come out for Effect of Presumed Tampering on Job ------------------------------------------------------------------------ Between 250 and 300 letters have been sent to federal laboratories in an effort to identify individuals who may have lost or failed to receive a job or had other adverse employment action taken against them because test results inaccurately showed they had tampered with their urine specimens. According to the Drug Detection Report, the Division of Workplace Programs, the office of the Substance Abuse and Mental Health Services Administration (SAMHSA) that runs the federal drug testing program, is winning praise for addressing this problem head on once it came to light during a Delta Air Lines pilot's appeal of his dismissal for a drug test shown to be "inconsistent with human urine," in other words substituted. The letters direct the laboratories involved in the several hundred instances to direct medical review officers (MROs) to consider those tests cancelled. The MROs, in turn, are to contact the employers involved in these instances and explain to them that the tests are cancelled and that cancelled tests cannot be viewed as violations of Department of Transportation (DOT) regulations. All the cases involved tests conducted under DOT regulations but DOT followed SAMHSA's standards for identifying a substituted specimen, the Drug Detection Report reveals. According to the report, the MROs are required to complete forms explaining the steps they have taken and return those forms to DOT. The article cites Charles Lodico of the Division of Workplace Programs as saying that the letters seek cancellation of tests where the creatinine level of the subject is 5 or the specific gravity is 1.001 or 1.00. The Drug Detection Report says that the standard for a substituted specimen, as outlined in Program Documents 35 and 37 is urine creatinine less than or equal to 5 mg/dL and urine specific gravity less than or equal to 1.001 or greater than or equal to 1.020. Program Document 37 informed laboratories that chose to conduct validity testing of specimens not to truncate the results - not to round the numbers for creatinine and specific gravity. But when the Delta pilot challenged the finding that he had substituted his urine specimen after a long flight, it was determined that the laboratory had truncated the results in his case, SAMHSA conducted a full investigation of all 66 federal laboratories and determined this practice had occurred in other cases, the Drug Detection Report reveals. Lodico pointed out that the 250 to 300 cases where truncating occurred over two years are a small percentage of the 13 million collected samples. Is Litigation Inevitable? Nevertheless, despite the swift action -- by government standards -- to correct problems that may have occurred, it might be too late to fix all the adverse employment actions that likely have been taken on the basis of assumptions that individuals tampered with their urine specimens. It is pointed out in the report that the federal government does not dictate what actions should be taken when a specimen is found, to have been substituted. Lodico said a good percentage of the cases at issue involved pre-employment drug tests. Random, for-cause and other types of tests also occurred. This raises questions about how an employer who declined to hire someone a year ago, because it was assumed he or she cheated on a drug test, can provide restitution to that individual, or whether restitution is even required. Individual lawsuits, or even a class action lawsuit, could potentially come out of this, suggested Robert Schoening of Drug Testing Consultants. If that happens, all the entities involved in the drug testing program will likely be named as defendants, including not just the federal government, but laboratories, medical review officers, individual employers and third-party administrators or consortia, Schoening said. Additional controversy will likely surface when SAMHSA issues a proposed rule to require validity testing of specimens under federally regulated drug testing programs, the Drug Detection Repor says. The testing in Program Documents 35 and 37 was voluntary, although Lodico said that all but two or three of the 66 federally certified laboratories have been doing such testing. Division of Workplace Programs Director Robert Stephenson announced in December 2000 that a rulemaking is needed and that this proposal, unlike a program document, will be subject to public comment. Stephenson said at the December Drug Testing Advisory Board meeting that the voluntary nature of the validity testing program may have contributed to the confusion among participating laboratories. (Drug Detection Report, January 11, 2001) VERIZON COMMUNICATIONS: Tackles Problems with Internet Service -------------------------------------------------------------- According to the Patriot-News, Verizon Communications Corp. says it's working through problems with its DSL high-speed Internet service that is the target of a nationwide class-action lawsuit filed by disgruntled customers. The lawsuit was filed in Washington, D.C., by the firm of Cohen, Milstein, Hausfeld & Toll. It accuses the nation's largest telephone company of signing up hundreds of thousands of DSL customers while knowing it was not ready to deliver customer-friendly service. As a result, the lawsuit says, customers experienced significant problems with the service and long delays in obtaining technical support, the report says. "If Verizon were to disclose to its potential new subscribers the problems with its services, it would be unable to attract those subscribers and lose market share to its competitors," the lawsuit says. The January 19 edition of the CAR cited a report in the Detroit News about a lawsuit over internet delays filed in Columbia. DSL, or digital subscriber line, service runs simultaneously with voice communications over the regular copper phone line to a customer's home or business. It provides connection to the Internet at speeds many times faster than available on standard dial-up modems and comparable to the connection speeds of cable modems, the Patriot-News report says. But it has a number of technical limitations, including that the subscriber live no more than about three line-miles from a telephone company central office, and the closer the better. Various enhancements to the line to improve voice service can make it impossible to do DSL, the report adds. Verizon spokesman Eric Rabe said that the company is "absolutely committed" to its Infospeed DSL service, while acknowledging that DSL "presents a whole bunch of technical challenges." Rabe said Verizon has more than 500,000 DSL customers, the benchmark figure that Verizon Chairman Ivan Seidenberg had publicly committed the company to reaching in 2000, and that demand from new customers continues to be "huge." The challenges, Rabe said, have been in getting sufficient hardware to serve DSL customers, training technicians and customer-service representatives, and setting up the computer systems to support Verizon DSL service. He said the company replaced most of the software in those systems last year. "There are also issues with customers and how they configure their gear to make it work," Rabe said. DSL service from Verizon has been available in the Harrisburg area for about a year, and few complaints about the service have surfaced, reports the Patriot-News. That apparently has not been the experience in most other parts of the company's 13-state territory in the mid-Atlantic and New England regions, the report says. According to the Patriot-News, Verizon DSL customers and customers of other DSL providers who must lease facilities from Verizon will meet in New York City on Feb. 5 to air their grievances and consider a so-called Broadband Bill of Rights. The meeting, which is open to the public, is being held in the Canadian consulate's office at 1251 Avenue of the Americas, between West 49th and 50th streets. An RSVP at rsvp@newnetworks.com is requested. Bruce G. and Leslie B. Forrest of Washington, D.C., are the "name" plaintiffs in the class-action lawsuit. The complaint says they signed up for Verizon DSL service last August and still did not have a consistently working connection in December, when they canceled the service. (The Patriot-News, January 26, 2001) WASHINGTON MUTUAL: CA Sp Ct Decertifies Nationwide Mortgagors' Lawsuit ---------------------------------------------------------------------- The California Supreme Court decertified a class-action lawsuit against Washington Mutual Inc., the largest U.S. savings and loan, ruling that a lower court didn't adequately analyze what state laws should apply in a nationwide case. Plaintiff Jayne Briseno sued Irvine thrift American Savings Bank, now Washington Mutual, alleging breach of contract and unfair business practices. An Orange County trial court in 1998 certified the case as a nationwide class-action suit, representing at least 25,000 mortgagors who were allegedly charged excessive insurance premiums since 1993. The Irvine S&L required mortgagors to maintain hazard insurance on their secured property. When mortgagors defaulted, American Savings imposed new premiums of up to five times the price. Washington Mutual, based in Seattle, purchased American in 1996. The state's high court sent the case back to the California Court of Appeal in Orange County. In a 26-page opinion, the state's high court said the class was certified on the "faulty legal assumption" that a decision on which state's law to use "need not be resolved as part of the certification process." (Los Angeles Times, January 26, 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 * * *