/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010131.MBX C L A S S A C T I O N R E P O R T E R Wednesday, January 31, 2001, Vol. 3, No. 22 Headlines 3COM: Announces Dismissal of Hirsch and Kravitz Shareholder Suits in CA ASARCO, INC: Residents Await Cert at State Level after 8th Cir Dismissal AVALONBAY COMMUNITIES: CA Lawsuit Seeks Medical Fund for Mold, Asbestos BEHR PROCESS: Appeals Damage Verdict on Mold Allegedly Caused By Paint BRIDGESTONE/FIRESTONE: Hearing May Be Start of Yrs Of Work on 200+ Suits CANKER PROGRAM: MI Ap Ct Clears Way for Action for Tree Protection DELCO REMY: Plans Vigorous Defense in DE Suit over Court Square Offer FIRE DEPARTMENT: Suit Alleges Bias; Ct Halts Retraction in Job Offers HOLOCAUST VICTIMS: Feb 28 Set As Court Date; Compensation Not Until May HOT SPRINGS: Obligations Not Limited By Time-Share Act, 8th Cir Rules INTERNATIONAL INDUS: Court OKs Settlement Re 1999 Accounting Issues NATIONAL COLLEGIATE: Ct OKs Split of Settlement Fund among NCAA Coaches PHILADELPHIA: Judge Considers Settlement on Psychological Services PRE-PAID LEGAL: 7th Securities Lawsuit Filed While Income Climbs 28% PRE-PAID LEGAL: Releases Q-4 Results; Income Reduced By $1.5M Settlement QLT INC: Sued for Allegedly Overstating Projected Sales of Visudyne STB: Intends to Defend TX Suits over Secondary Public Offering in 1998 TAINTED BLOOD: Canadian Red Cross Urges Judge to Accept Deal for Hep C TAINTED WATER: $50M Settlement Proposed for Walkerton E. Coli Victims VALERO REFINING: TX Judge Denies Class Status for Neighbors of Refinery ********* 3COM: Announces Dismissal of Hirsch and Kravitz Shareholder Suits in CA ----------------------------------------------------------------------- 3Com Corporation (Nasdaq:COMS) announced on January 29 it won summary judgment dismissing shareholder class actions that were set to go to trial in Santa Clara County Superior Court, Hirsch v. 3Com Corporation (Civil Action No. CV764977) and Kravitz v. 3Com Corporation (Civil Action No. CV765962). These lawsuits were previously reported in the CAR. In these class actions, the plaintiffs sued over a drop in 3Com's stock price on Feb. 10, 1997. On that day 3Com announced it matched a price cut on Fast Ethernet network interface cards that Intel Corp. announced five days before. In the ruling, Judge Conrad L. Rushing, the judge in charge of the Complex Case Division of the Santa Clara County Superior Court, rejected every element of plaintiffs' allegations. After reviewing an extensive factual record submitted by the parties, Judge Rushing found the plaintiffs had no evidence of misconduct that entitled them to try their claims before a jury. These class actions were brought on behalf of purchasers of 3Com stock between Sept. 24, 1996 and Feb. 10, 1997. 3Com previously won a related federal court class action, based on the same allegations. That lawsuit was dismissed with prejudice by United States District Judge Charles R. Breyer. 3Com was represented in the litigation by Wilson Sonsini Goodrich and Rosati, of Palo Alto, Calif., and Boies Schiller and Flexner, of Armonk, N.Y. About 3Com Corporation 3Com simplifies how people connect to information and services through easy-to-use, connectivity products and solutions for consumers and commercial organizations. The company also provides access infrastructures and IP services platforms for network service providers. 3Com is a registered trademark of 3Com Corporation. All other company and product names may be trademarks of the respective companies with which they are associated. ASARCO, INC: Residents Await Cert at State Level after 8th Cir Dismissal ------------------------------------------------------------------------ Residents who had their federal case dismissed by the Eighth Circuit Nov. 28 are waiting for a Nebraska judge to rule on their petition for class certification in their lead contamination case at the state level (Von R. Trimble, et al. v. Asarco Inc., No. 355, Neb. Dist., Douglas Co.). The case was previously reported in the CAR. The class, Omaha, Neb.-area residents, sued Asarco Inc. in 1997 for contamination from a lead and smelter facility. The U.S. District Court for the District of Nebraska dismissed the suit for lack of subject matter jurisdiction. The Eighth Circuit affirmed, but ruled the court should have dismissed for failure to state a claim and converted to a motion for summary judgment. The court also found that the class medical monitoring claim under Nebraska law was not asserted. Claim The class members first brought claims against Asarco on Sept. 5, 1997, alleging their properties had been contaminated by pollutants from the Asarco site. That complaint was later amended to include a CERCLA private cost-recovery claim, as well as state law claims for trespass, nuisance, negligence, strict liability, unjust enrichment and medical monitoring. In its response, Asarco admitted that while from time to time in the past certain lead particulates were emitted into the air, the particulates did not have an adverse effect on the public health. Asarco moved to have the case dismissed for subject matter jurisdiction and the court agreed, finding that the class had failed to allege facts sufficient to show that they had incurred response costs consistent with the National Contingency Plan. The court further held that it lacked subject matter jurisdiction over the class's state law claims, as the individuals of the class, under 28 U.S. Code Section 1332, are required to show that they each meet the $ 75,000 amount-in-controversy requirement. The court did, however, grant the class leave to amend their complaint on a deficiency issue. Upon review of the third amended complaint, the District Court dismissed the case entirely, granting Asarco's motion to dismiss for lack of subject matter jurisdiction by finding that the amount-in-controversy requirement had not been met. The court ruled that since the class members' CERCLA claim was dismissed, their only remedy for future medical monitoring would be a state law claim. State Court Level Citing Nebraska Revised Statute Section 25-319, the proposed class argues the case meets both requirements for a class action: an issue of common interest to all class members and parties so numerous that joinder may be impracticable. The proposed class must prove that contamination exists, that Asarco caused the contamination, that the contamination caused injury to the properties or plaintiffs' use of the properties and that Asarco acted in a way such that it should be held liable for the resulting damages. The plaintiffs contend that soil samples and expert testimony will prove contamination, evidence of Asarco's smelter operations will show causation, evidence of serious health risks will show injury and that evidence regarding the history of Asarco's smelter facility and its knowledge of emissions together with Asarco's alleged failure to take precautions will show liability. Issues In Dispute The plaintiffs argue that Asarco's summary judgment motion should be denied because Asarco's numerous expert affidavits "demonstrate only that there are numerous issues of material fact in dispute." According to plaintiffs' expert Raymond Sadowski, soil samples for residences in the class area demonstrate that there are extensive areas of lead contamination in soils downwind of the Asarco smelter. Asarco's expert, Andy Davis, disagrees, saying that the deposition pattern of lead and other metals in the class area soils is not consistent with emissions from the Asarco Smelter and Refinery. Sadowski argues there are flaws in Davis' reasoning, saying that Davis fails to take into account various facts, such as the variations in smokestack heights, which would affect the deposition patterns. The U.S. Environmental Protection Agency also disagrees with Davis. Health Risks Toxicologist Richard C. Pleus, M.D., said the residents of the class area have, and will continue to have, an increased attributable risk of developing significant adverse health effects due to their excessive exposure to lead. Asarco's expert, Joseph Rodricks, disputes that any members of the proposed classes have increased risks of disease other than a small subset for whom childhood IQ could be effected - a risk that Rodricks belittles. The plaintiffs argue that medical monitoring is essential because early recognition can allow for treatment and prevent serious adverse, irreversible effects. Asarco contends that medical monitoring is unwarranted. Class Status Defended The plaintiffs argue that Asarco's contention that there are conflicts of interest among members of the proposed class ignores the substance of Nebraska case law. Citing Hoiengs v. County of Adams (245 Neb. 877, 901, 516 N.W. 2d 223 [Neb. 1994]), the plaintiffs argue that they only need to show that the relief sought is beneficial to the class members and that the plaintiffs' interests are consonant with those of the other members of the class. Asarco, the plaintiffs contend, fails to account for the procedural protections afforded by the notice and opt-out procedures described in Hoiengs. Class Request Supplement The plaintiffs list 29 cases which were certified as class actions as support for its request before the Douglas County District Court. "Where issues of liability, causation and remedies are common as in this case, class treatment eliminates the need for individual trials and this places a significantly smaller burden on the court and the parties than a series of individual cases," the plaintiffs argue. The plaintiffs assert that it would be neither efficient nor fair to require multiple trials to hear the same evidence and decide the same issues. Von Trimble and co-plaintiffs are represented by Richard A. DeWitt and Robert S. Lannin of Croker, Huck, Kasher, DeWitt, Anderson & Gonderinger in Omaha, Neb., David D. Hoff, Loren R. Dunn and Lucy Lee Helm of Graham & James in Seattle and Phillip S. Lorenzo, Michael G. Martin and Demetri E. Munn of Baker & Hostetler in Denver. Asarco is represented by Stephen M. Bruckner of Fraser Stryker in Omaha, Neb.; Steven E. Guenzel of Barlow Johnson in Omaha; Peter J. Nickels, Neil A. Rieman, Lewis Rosman, Emily Leonard and Steven J. Rosenbaum of Covington Burling in Washington, D.C.; Linda R. Larson of Heller Ehrman in Seattle; and Lawrence J. Jensen of Fillmore, Bellinston in Provo, Utah. (Mealey's Emerging Toxic Torts, January 19, 2001) AVALONBAY COMMUNITIES: CA Lawsuit Seeks Medical Fund for Mold, Asbestos ----------------------------------------------------------------------- California apartment residents seek the establishment of a medical monitoring fund for injuries relating to alleged toxic mold and asbestos exposure, according to a proposed class action complaint (Sharon R. Wheeler, et al. v. Avalonbay Communities, et al., No. BC 237274, Calif. Super., Los Angeles Co.). Sharon Wheeler and others assert negligence, negligence per se, breach of implied warranty of habitability, public nuisance, negligence, intentional misrepresentation, negligent misrepresentation and unfair business practices claims. Named defendants include Avalonbay Communities, Olympus/April Joint Venture, Bay Apartment Communities Inc., Anchor Pacifica Management Co., Asbestos Management Group of California Inc., Tri-H Environmental Services Inc., Hart Laboratory, Bernard Ward, Kit Millen, Jason Peterson, Fredia Murphy and James Wilden. The proposed class action filed in the Los Angeles County Superior Court includes former and present residents of apartment units owned by Avalonbay Communities and any other individuals exposed to the alleged hazardous conditions. According to the complaint, the Avalonbay apartments developed substantial water leaks that caused excessive water intrusion. In May, the class representatives learned that mold, mildew and fungus were growing in their apartments as a result of the defectively built and improperly maintained apartment building, the complaint says. Health Damage Alleged Wheeler alleges that the efforts to abate the mold, mildew, fungus and termite infestation with pesticides and other chemicals damaged their health. In order to determine whether the apartment residents have suffered, or will suffer, injuries cased by the exposure, Wheeler maintains that a medical monitoring program should be implemented. "As a further, direct and proximate result of the negligence of Defendants, the members of the Class have been exposed to an increased risk of contracting and suffering from the effects of serious latent diseases and illnesses, which increased risks make periodic diagnostic medical examinations reasonably necessary," the complaint says. Wheeler further alleges that Asbestos Management, Tri-H and Hart Labs failed to properly abate asbestos laden portions of the apartments where the defendants worked. Wheeler maintains that the failure to abate the asbestos caused damages, including loss of use of apartments, lost income, medical expenses, investigative costs, past and future medical monitoring costs, mold abatement and remediation costs and emotional distress damages. Wheeler adds that Avalonbay, Olympus, Bay Apartments, and Anchor "have known for many months about the defective conditions of the apartments, the mold in the building, the presence of mycotoxins in the building, the presence of termites, the health risks to Plaintiffs from the mold and mycotoxins, and the health risks to Plaintiffs from the efforts to abate the mold and termites with pesticides and chemicals. Plaintiffs are further informed and believe that, despite this knowledge, these Defendants failed to notify Plaintiffs of the risks and dangers and, in some instances, even took steps to hide the risks and dangers from Plaintiffs." Plaintiffs are represented by Mike Arias, Mark A. Ozzello and Arnold Wang of Arias & Ozzello in Los Angeles, Gregory L. Dillion and John A. O'Hara of Newmeyer & Dillion in Newport Beach, Calif., and Stephen Heller of the Law Offices of Stephen Heller in Calabasas, Calif. (Mealey's Litigation Report: Asbestos, January 19, 2001) BEHR PROCESS: Appeals Damage Verdict on Mold Allegedly Caused By Paint ---------------------------------------------------------------------- A paint company on Sept. 12 appealed a damages verdict in a case in which residents alleged exterior paint caused mold and other property damage and violated discovery rules in the subsequent trial (Deborah Smith, et al. v. Behr Process Corp., No. 25670-3-II, Wash. App., Div. II). Deborah Smith and others in the class action sued Behr Process Corp. for mold damage allegedly caused by using Behr paint. The class represents all people who purchased Behr's products Super Liquid Rawhide Nos. 12 and 13 or Natural Seal Plus Nos. 80 and 92, and applied those products to a natural wood exterior within Washington state. Oregon residents have suffered economic losses caused by paints that failed to prevent mold, mildew and fungus from growing on exterior wood surfaces, according to a proposed class action (Jimmy Mitchell, et al. v. Behr Process Corp., et al., No. 0011-11665, Ore. Cir., Multnomah Co.) . According to the complaint, within weeks or months of application to an exterior wood surface, the products failed the intended purpose by allowing mildew formation and ultraviolet degradation. The case has been reported in an earlier edition of the CAR. (Mealey's Emerging Toxic Torts, January 19, 2001) BRIDGESTONE/FIRESTONE: Hearing May Be Start of Yrs Of Work on 200+ Suits ------------------------------------------------------------------------ A federal judge handling one of the nation's largest product-liability cases now faces the unenviable task of preparing the complex legal case against Bridgestone/Firestone Inc. for trial. Lawyers for Bridgestone/Firestone Inc. have asked a federal judge to dismiss about 80 proposed class-action lawsuits against the company over its massive tire recall. The motion filed Monday in U.S. District Court in Indianapolis, where Judge Sarah Evans Barker is presiding over the consolidation of 200 cases filed against the tire maker and Ford Motor Co. Barker, who convened a hearing in the case Tuesday morning, did not immediately rule on the motion. The development was not discussed during the morning's proceedings. After hearing from attorneys, Barker was expected to issue a case management order that spells out how the two sides will proceed. Such cases often drag on for years. Tuesday's hearing was expected to help determine how quickly all the lawsuits in the case are resolved. To streamline the pretrial phase, including document requests and depositions, cases from around the country were transferred last fall to Barker's court. Bridgestone/Firestone said in a news release that the suits it wants dismissed involve plaintiffs who are seeking cash payments and other actions by the company but who have suffered no financial or physical injury, and therefore there is nothing for the law to remedy. The company said its briefs supporting the motion were co-signed by attorneys for Ford, which is named in most of the lawsuits. Messages left for two Ford spokesmen were not immediately returned. Many of the attorneys in the case were attending the hearing in Barker's courtroom, and were not immediately available to discuss the motion. In August, Bridgestone/Firestone recalled 6.5 million Firestone ATX and Wilderness AT tires, many of which were original equipment on Ford's popular Explorer sport utility vehicle. The tires are prone to tear apart while in use. Federal safety officials say the tires might be linked to as many as 148 deaths in the United States. Bridgestone/Firestone has set aside $750 million to cover the cost of the tire recall and potential legal liabilities, but has said the move is not an admission of legal responsibility. Bridgestone/Firestone and Ford have been busy settling some cases to avoid the cost of drawn-out court proceedings, as well as the possibility of staggering punitive-damage awards. Earlier this month, the two companies opted to pay millions to a paralyzed Texas woman, just hours before her case was to go to trial. The amount of the settlement was not disclosed. In addition, Ford agreed to make public all previously confidential Ford and Bridgestone/Firestone documents submitted to Congress and the National Highway Traffic Safety Administration. Levin and other lawyers are seeking class-action status for the economic damage cases. (The Associated Press State & Local Wire, January 30, 2001) CANKER PROGRAM: MI Ap Ct Clears Way for Action for Tree Protection ------------------------------------------------------------------ A Michigan Court of Appeals ruling has been received, ordering a class-action lawsuit to proceed in Macomb County Circuit Court. The ruling caps an intense year-long legal battle waged by residents in Warren, who have had to endure city trees strangling their sewer lines, as well as, amazingly, a city ordinance actually forbidding them from cutting down the offending trees. The trees were planted decades ago within a few feet of homeowners' sewer lines, and the tree roots grew, invading residents' sewer lines, destroying pipes, causing sewer backups, upheaving lawns, and cracking sidewalks. After the suit was initiated on behalf of thousands of Warren residents by Attorneys Gerard Mantese and Stuart Fraser, the Warren City Council passed an ordinance giving an extremely limited remedy to homeowners, specifically, allowing them to obtain partial reimbursement for tree-removal costs. Mantese and Fraser did not believe that relief was sufficient. Nor did Councilman James Fouts, as reported in the media. The ordinance passed in July 2000 -- after years of suffering by residents -- failed to compensate residents for damaged sewer lines, plumbing bills, sidewalk repairs, or complete tree-removal costs. The Court of Appeals ruling paves the way for the trial court to order relief for thousands of affected residents, rather than for simply the 20 representative plaintiffs who initiated the suit one year ago. The Court of Appeals ruling specifically held that common issues of law and fact predominated, making the case appropriate for a class-action suit, rather than requiring thousands of individual homeowners to file individual lawsuits. Mantese emphasized, "We are pleased with the court's ruling and we will continue to vigorously fight for these homeowners' rights." Contact: Gerard Mantese of Mantese Miller and Shea, attorney for plaintiffs, 248-267-1200, car, 248-909-4813, or home, 248-601-5074; or Stuart Fraser, co-counsel for plaintiffs, 810-463-0100 DELCO REMY: Plans Vigorous Defense in DE Suit over Court Square Offer --------------------------------------------------------------------- On December 28, 2000, Perry Fuller, Henry Rose and DPM Limited Partnership each filed separate complaints in the Court of Chancery of the State of Delaware, New Castle County, as a result of Court Square's initial communication to Delco Remy International Inc. of its intention to make the Offer on December 22, 2000. Each plaintiff of the Claims is a stockholder of the Company and is seeking class action certification on behalf of the stockholders of the Company. Court Square, the Company and the individual members of the Company Board are named defendants in the Claims. The Claims allege, among other things, that the timing of the tender offer is intended to "freeze out" the Public Stockholders to the benefit of Court Square without paying an adequate or fair price. The plaintiffs of the Claims have demanded certain remedies including a preliminary and permanent injunction of the transactions that are contemplated by the Offer. Court Square and the Purchaser do not believe that the Claims have any merit and Court Square will vigorously defend the Claims and seek their dismissal. FIRE DEPARTMENT: Suit Alleges Bias; Ct Halts Retraction in Job Offers --------------------------------------------------------------------- Prince George's County Executive Wayne K. Curry (D) was so dissatisfied with the fire department's recruiting efforts last year that he ordered the agency to retract employment offers to half of the recently hired applicants, the fire chief testified on Monday. Fire Chief Ronald J. Siarnicki told a packed courtroom that the county's director of public safety, Fred Thomas, told him in late October that Curry was not happy with the approved list of applicants and that the training class would have to be delayed. Siarnicki said Thomas did not say why Curry was dissatisfied. "I was told that he was not happy with the recruiting efforts," said Siarnicki, who has been chief for three years. "That's all." Siarnicki was questioned for nearly an hour by a county attorney and lawyers for 64 applicants whose employment offers were rescinded. A class-action discrimination lawsuit, filed on the applicants' behalf in early November, contends that the decision to rescind certain hiring decisions was based on race. Curry has denied that race was involved. Charles County Judge Christopher Henderson, who is hearing the case, issued a temporary injunction last month blocking the county from dismissing the plaintiffs and allowing them to continue training. Many have completed part of the training and have begun working, lawyers said. Of the 64 applicants whose offers were not rescinded, 21 had the benefit of legal preferences, such as those for veterans and county employees. Of the rest, 20 are black, 22 are white and one is Asian. Of those who were cut from the list, 13 are black, two are Asian and 49 are white, according to court testimony. Since the racial allegations were disclosed last month, Assistant County Attorney John Bielec has maintained that the issue is not whether the applicants were discriminated against but that hiring them would force the department deep into the red. "That has been the issue all along," he said. Bielec has argued that the county's vacancy review board -- a three-person board that reviews and authorizes hiring for individual departments -- had signed off on only 70 positions, which were then filled based on certain preferences, including residence in the county. Henderson has ruled that the residential preference was illegal. Tim Maloney, one of three attorneys for the 64 applicants, argued that the county would save money if it gave jobs to all 128 of the original hirees, a number that has dwindled to 99. Last year, the fire department spent $ 8.2 million in overtime. This year, it expects to spend $ 9.2 million, more than twice what was budgeted. Firefighters and paramedics who work more than the required 48 hours per week are paid an average of $ 43 per hour. The incoming class would be paid an average of $ 15 Siarnicki said that because of cost overruns from overtime and the added expense of the new recruits, the county may have to close 20 firehouses, nearly half of its stations. Under county regulations, there must be four employees at each location, which means that many firefighters end up working more than their scheduled hours. Assigning more firefighters to fewer stations, he said, would save the department money. Henderson will decide Thursday whether to make permanent the injunction he issued last month or whether other means should be pursued. They could include disbanding the current class or holding a lottery to fill the 70 slots. (The Washington Post, January 30, 2001) HOLOCAUST VICTIMS: Feb 28 Set As Court Date; Compensation Not Until May ----------------------------------------------------------------------- U.S. Judge Shirley Kram set Feb 28 as the next court date for the class action suits against German companies for compensation for victims of Nazi-era slave labour. Kram is expected to rule on a request to dismiss class action suits brought by U.S. survivors against German companies. Kram has been urged by a special judge Charles Stillman to dismiss the class complaints to unblock the monies for about 1 mln survivors. Under an international agreement, the German government and industries are willing to compensate the victims but only if the companies are guaranteed protection from future class action suits. Until Kram decides, none of the money can be distributed to the victims. Kram also asked for additional details about the date of availability of the 10 bln dm promised by the German government and private German industry for the programme. Otto Graf Lambsdorff, the German government's negotiator, criticised German business for failing to make good its pledge of half the fund, or 5 bln dm. "Ninety-eight per cent of the German companies have not yet contributed their portion of the money," Lambsdorff said. Lambsdorff also said that compensation payments by German firms to former Nazi slaves and forced labourers have been delayed to at least May because of the Feb 28 next court date. German industry wants legal closure against such suits before payments totalling billions of dollars can begin. Lambsdorff said that plans to begin payments in March will now "definitely not be met". (AFX European Focus, January 30, 2001) HOT SPRINGS: Obligations Not Limited By Time-Share Act, 8th Cir Rules --------------------------------------------------------------------- The company that took over operation of a time-share development on Lake Hamilton in Hot Springs, Ark., is responsible for an agreement made by the original developer, the 8th U.S. Circuit Court of Appeals said. The 2-1 ruling was in favor of Donald D. Kessler and others and overturned a decision by the U.S. District Court. The 8th Circuit, based in St. Louis, sent the case back to the lower court for a calculation of damages. In the mid-1980s, plaintiffs purchased time-share interests in the Lakeshore Resort & Yacht Club in Hot Springs. Lakeshore is surrounded by the Lake Hamilton Resort Hotel and, in December 1993, the hotel revoked an agreement that allowed time-share owners access to the hotel's parking and recreational facilities. The hotel also terminated Lakeshore's utilities. National Enterprises, Inc., the successor to Lakeshore's developer, sued the hotel to enforce the agreement. Kessler and others then filed a class action suit against NEI, claiming that Lakeshore's developer was obligated to provide utilities and continued access to the hotel's parking and recreational facilities. The district court ruled in favor of NEI, saying the property interests conveyed in a 1994 foreclosure sale did not include the initial developer's obligations. The 8th Circuit disagreed. In Tuesday's ruling, the court said the state's Time-Share Act cited by the lower court does not limit NEI's obligations to certain record-keeping functions. "Instead, the statute refers to all of the developer's obligations vis a vis the individual time-share owners," the 8th Circuit said. The majority opinion said the original developer misrepresented the plaintiffs' right to continued access to hotel amenities and parking. "Therefore, the plaintiffs are entitled to equitable relief in the form of partial rescission," the opinion said. Judge James B. Loken said in a dissenting opinion that he believed the plaintiffs' lawsuit was filed too late under Arkansas' statute of limitations governing actions for fraud. "My problem with the court's resolution of this difficult case stems from its sleight-of-hand treatment of the statute of limitation issues," Loken said. (The Associated Press State & Local Wire, January 30, 2001) INTERNATIONAL INDUS: Court OKs Settlement Re 1999 Accounting Issues ------------------------------------------------------------------- Indus International, Inc. (NASDAQ: IINT) announced on January 30 that the U.S. District Court for Northern California has given final approval to settlement and dismissed with prejudice the private securities class action litigation arising from Indus' previously announced restatement of earnings for the third quarter of 1999. Under the settlement, defendants' insurance carriers will pay plaintiffs $4.3 million. NATIONAL COLLEGIATE: Ct OKs Split of Settlement Fund among NCAA Coaches ----------------------------------------------------------------------- A plan for the allocation of a settlement fund among college coaches, in a class action antitrust lawsuit filed on their behalf against the National Collegiate Athletic Association, has been approved by Federal District Judge Kathryn Vratil. Earlier in the case, coaches won pre-trial rulings that an NCAA rule limiting the salaries that could be paid to certain coaches violated federal antitrust law (ELR 18:2:10, 20:3:14, 20:7:23). At trial, a jury returned a verdict in favor of the coaches for $22.3 million, which Judge Vratil trebled to $66.9 million. The judge awarded the coaches an additional $5 million "as a net present value adjustment," thus bringing the total judgment to almost $72 million. At that point, the NCAA decided to settle the case, rather than appeal the judgment; and it did so for $54.4 million. After paying the settlement, the NCAA was out of the case. But the case was not entirely over, because the $54.4 million settlement fund had to be allocated among the coaches who made up the class. At that point, another round of litigation began, among the coaches who were entitled to receive portions of the fund. This round of litigation appears to have been triggered by the fact that the plan of allocation originally proposed by class counsel was deemed to be unfair, by class counsel, because it overcompensated some coaches at the expense of others. As a result, a revised plan was proposed which reduced the share of those who would have been overcompensated and increased the share of those who deserved more. Coaches were able to see whether they were helped or hurt by the revised plan. And 26 of them objected to the revision. Judge Vratil considered, but rejected, each of their objections. She found that the revised plan of allocation "is fair, reasonable and adequate," because it "effectively matches each [coaches'] recovery to the strength of his or her claim." The judge noted that the value of each coach's claim was "not a reflection of his or her effort or contribution to his or her respective school." Instead, "it is a reasonable estimate of the extent of damages which each coach sustained because of the rule." Law v. National Collegiate Athletic Association, 108 F.Supp.2d 1193, 2000 U.S.Dist.LEXIS 11831 (D.Kan. 2000) (Entertainment Law Reporter, January, 2001) PHILADELPHIA: Judge Considers Settlement on Psychological Services ------------------------------------------------------------------ State welfare officials would be required to provide psychological services within 60 days to emotionally troubled young people under a proposed settlement in a class-action lawsuit being considered by a federal judge. The Disabilities Law Project sued state welfare officials in 1999, contending that state's HealthChoices' program was so slow and inefficient at providing specialized psychological care that it violated the Social Security Act's requirement that such services be provided "with reasonable promptness." U.S. District Judge Ronald L. Buckwalter heard testimony Monday on the settlement. "I do think that this is taking some steps to make things better," Buckwalter said during the hearing. Under the proposal, the state would provide the specialized services within 60 days. The program's effectiveness would be monitored and state welfare officials would be required to appoint a contact with the Disabilities Law Project to resolve complaints or problems. The lawsuit said that some HealthChoices clients wait as long as two years to receive psychological services. The settlement also calls for the number of home therapists working in the program to be increased. Buckwalter also would retain jurisdiction over the case for as long as 15 months. Rachel Mann, an attorney for the Disabilities Law Project, estimated that 350,000 Pennsylvania families have children who qualify for specialized emotional and psychological services under the Medicaid program. Mann said most of her agency's clients who responded supported the proposed settlement. State attorneys were also satisfied. "We feel this is a reasonable and adequate resolution of this case," said Doris M. Leisch, a lawyer for the state Department of Public Welfare. Most of those who testified Monday, however, were skeptical. Nine people testified that 60 days was too long to wait for treatment of a child in an emotional crisis. Some also said the settlement should provide more money to home therapists, because there are not enough people willing to do the job. (The Associated Press State & Local Wire, January 30, 2001) PRE-PAID LEGAL: 7th Securities Lawsuit Filed While Income Climbs 28% -------------------------------------------------------------------- Pre-Paid Legal Services Inc. announced Monday that net income and diluted earnings each rose 28 percent in the fourth quarter. The same day, a law firm announced a seventh lawsuit against the company on behalf of stockholders who allege company officials illegally inflated its stock price. The latest lawsuit was filed in federal district court by the law firm of Cauley Geller Bowman & Coates, LLP. It alleges that company officers violated federal securities laws by providing false or misleading information about Pre-Paid's publicly reported earnings and expenses, illegally inflating the company's stock price. Lawyers who filed the lawsuit said it covers people who bought Pre-Paid stock between Feb. 7, 2000 and Jan. 16, 2000, and that they plan to expand that time back to April 19, 1999. Pre-Paid stock has fallen more than 50 percent in the past three months. Meanwhile, income at the company for the quarter that ended Dec. 31 rose to $ 13.3 million from $10.4 million for the same period in 1999. Diluted earnings per share increased to 59 cents from 46 cents a year earlier. Total revenue for the quarter rose 26 percent to $68.7 million from $54.7 million. Tulsa stock analyst Fredric Russell said those were impressive figures. "Any time those numbers exceed 20 percent in an inflation environment of 3 or 4 percent, that's a very impressive performance," he added. Pre-Paid said income for the quarter was cut back by an "unanticipated" litigation settlement of $1.5 million, though it was not related to the recent class-action lawsuits filed against the company. Pre-Paid is the only publicly traded company in the United States that markets legal insurance policies. Those plans provide for legal service benefits, including attorney consultation, will preparation, traffic violation defense and document preparation. Last Friday, Pre-Paid filed a report with the Securities and Exchange Commission to explain its accounting practices. The company maintains its method is typical of an insurance agency, which often treats advanced commissions as assets that will result in later cash flow. (The Associated Press State & Local Wire, January 30, 2001) PRE-PAID LEGAL: Releases Q-4 Results; Income Reduced By $1.5M Settlement ------------------------------------------------------------------------ Pre-Paid Legal Services, Inc. (NYSE: PPD), on January 29 reported results for the fourth quarter and for the year ended December 31, 2000. Net income for the fourth quarter of 2000 rose 28 percent to $13.3 million from $10.4 million for the prior year's period. Diluted earnings per share increased 28 percent to 59 cents per share from 46 cents per share. Total revenues for the quarter rose 26 percent to $68.7 million from $54.7 million for the prior year's period. The Company's membership revenues increased 29 percent to $58.3 million from $45.1 million for the same period last year. Income for the quarter was adversely affected by an unanticipated litigation settlement of $1.5 million, which occurred on January 23, 2001, that reduced net income by $956 thousand and reduced diluted earnings per share by four cents to 59 cents. The $1.5 million litigation settlement reached was in response to an action brought by multiple plaintiffs and does not pertain to recent class action lawsuits filed against the company. This settlement occurred unexpectedly in a settlement conference on January 23, 2001 at which the Company received new information relating to similar litigation affecting another company which was unknown to the Company prior to that time. Based on that information, management felt that it was in the best interest of the Company to promptly settle. Net income for all of 2000 increased 33 percent to $51.7 million from $39 million. Diluted earnings per share for 2000 increased 37 percent to $2.28 per share from $1.67 per diluted share for 1999. Revenues for 2000 were up 30 percent to $254.9 million from $196.2 million for 1999 and membership revenues for 2000 increased 34 percent to $211.4 million from $157.2 million for the prior year. Cash flow from operating activities during the last quarter of 2000 increased 36 percent to $6.4 million from $4.7 million for the comparable quarter of 1999. Cash flow from operating activities for all of 2000 increased 31 percent to $22.9 million compared to $17.6 million for all of 1999. At December 31, 2000, the Company had cash and investment balances exceeding $41 million after spending $14.1 million during the 2000 fourth quarter to repurchase 421,500 shares of its outstanding stock. Since April 1999, the Company has repurchased 1.8 million shares at a cost of $49.3 million, or an average of $27.40 per share. QLT INC: Sued for Allegedly Overstating Projected Sales of Visudyne ------------------------------------------------------------------- QLT Inc., a biotechnology company whose top-selling drug treats the leading cause of blindness in the elderly, has been accused in a lawsuit of deceiving investors by overstating its projected sales. Shares of the Vancouver-based firm fell 31% on Dec. 14 after QLT said fourth-quarter sales growth of the drug, Visudyne, would be less than expected. Visudyne, which treats a condition known as wet, age-related macular degeneration, accounts for about 80% of QLT's revenue, the suit says. QLT executives had no basis in the months before the announcement to claim that fourth-quarter sales would be strong, the suit says. The plaintiffs also say the market for Visudyne was smaller than the company claimed. 'Defendants made a series of false and misleading statements about Visudyne that led the market to believe, among other things, that the demand for Visudyne remained strong,' the complaint says. The suit seeks class-action status on behalf of other investors. QLT has estimated the worldwide market for Visudyne, which is marketed by Switzerland's Novartis AG, at up to US$600-million yearly. In its earnings announcement in December, the company blamed the lag in Visudyne sales on delays by some European governments in reimbursing health-care providers for the drug. QLT also said a weakening euro and Swiss franc contributed to declining sales growth. The suit says QLT executives knew or should have known of the reimbursement problems before making their earlier, bullish announcements. The lawsuit names chief executive Julia Levy, QLT's co-founder, and Kenneth Galbraith, the former chief financial officer, as defendants. Ms. Levy and Mr. Galbraith 'demonstrated their fraudulent state of mind by selling over 157,000 shares of QLT stock, reaping proceeds of approximately US$ 18.32-million in insider sales during the months of August and September,' the suit says. (National Post (formerly The Financial Post), January 30, 2001) STB: Intends to Defend TX Suits over Secondary Public Offering in 1998 ---------------------------------------------------------------------- 3DFX Interactive Inc., reveals in its report to the SEC that a securities class action lawsuit was filed October 9, 1998 in Dallas County, Texas against STB, a wholly owned subsidiary of 3dfx acquired by merger in May, 1999. The suit was brought against STB and some of its officers and directors and the underwriters who participated in the STB secondary offering on March 20, 1998. The petition alleges that the registration statement for the secondary public offering contained false and misleading statements of material facts and omitted to state material facts. The petition asserts claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, and Sections 581-33A of the Texas Securities Act on behalf of a purported class of persons who purchased or otherwise acquired STB common stock in the public offering. The petition seeks recission and/or unspecified damages. STB denies the allegations in the petition and intends to defend the lawsuit vigorously. On December 17, 1999, a similar securities class action lawsuit was also filed in the United States District Court for the Northern District of Texas, Dallas Division, against STB and three of its officers and directors. The action asserts claims against Sections 10 and 20 of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities and Exchange Commission. STB denies the allegations in the petition and intends to defend the lawsuit vigorously. On February 8, 2000 another similar securities class action lawsuit was filed in the United States District Court for the Northern District of Texas, Dallas Division against STB and three of its officers and directors. STB denies allegations in the action and intends to vigorously defend the lawsuit. These two actions have now been consolidated. TAINTED BLOOD: Canadian Red Cross Urges Judge to Accept Deal for Hep C ---------------------------------------------------------------------- The Canadian Red Cross is urging a judge to accept a deal that would provide modest payouts to hepatitis C victims infected by tainted blood during periods not covered by federal compensation. John Harvey, a lawyer for the agency responsible for Canada's blood system until 1997, said the deal was reached after nearly three years of negotiation and is the best solution for the litigants. "The Canadian Red Cross only has so much money available," he told Justice Warren Winkler of the Ontario Superior Court. The $ 70-million settlement has been approved by 90 per cent of those taking part in a class- action suit against the Red Cross. It must be sanctioned by the Ontario court and courts in Quebec and British Columbia -- where similar suits have been launched -- before it can be enacted across the country. If it is permitted to go through, the agency would provide payments of $ 7,000 to $ 8,000 to about 7,300 people infected with hepatitis C before 1986 or between 1990 and 1998. Those who contracted the disease between 1986 and 1990, when Canadian standards for blood testing did not match those in the United States are eligible for compensation under a $ 1.1 billion offered by the federal government. The settlement would release the Red Cross from any further liability in what is acknowledged to have been the country's greatest medical disaster. If it is approved, even those disease sufferers who do not sign on to it could no longer sue the agency. And those who accepted the money would give up their right to sue a myriad of other parties who have some potential liability, including insurance companies, physicians and pharmaceutical manufacturers. But the deal would end the judicial wrangling that has prevented the infected litigants from pursuing claims from the federal and provincial governments -- claims theybelieve could ultimately be far more lucrative that any settlement they could obtain from the Red Cross. (The London Free Press, January 30, 2001) TAINTED WATER: $50M Settlement Proposed for Walkerton E. Coli Victims ---------------------------------------------------------------------- Every victim of Walkerton's tainted water would get at least $ 2,000 as part of a proposed $ 50-million settlement of a huge class-action suit, sources close to the legal battle said. The tentative deal -- guaranteed by the Ontario government -- also calls for the courts to supervise compensation for those with much higher claims arising out of the death of a relative or serious illness, the sources said. "From our point of view, that is of critical importance," said one lawyer who asked that his name not be used. The no-fault scheme would eliminate the need for a lengthy court battle over who is to blame for the tragedy in May that killed seven people and left 2,300 others ill. However, lawyers were still haggling over details of the deal and there was a possibility the settlement could fall apart, one source said. The deal resembles the Ontario government's no-fault compensation offer. But lawyers for the plaintiffs say a key difference is that the payout would be supervised by the court. An agreement would still need approval from Superior Court Justice Warren Winkler. (The Calgary Sun, January 30, 2001) VALERO REFINING: TX Judge Denies Class Status for Neighbors of Refinery ----------------------------------------------------------------------- A Texas state judge on Dec. 13 denied class certification for neighbors of a local refinery who alleged personal injuries and property damage from emissions (Sandra Otero, et al. v. Valero Refining Co., No. 96-1487-E, Texas Dist., 117th Jud. Dist., Nueces Co.). Class certification hearings were held April 6 and 7 and Dec. 7 before Nueces County District Court Judge Robert Blackmon. Valero Refining Co. presented evidence collected by a private investigator who conducted interviews with residents and business operators at more than half of the addresses in the proposed class area. Mealey Publications has learned 80 percent of those interviewed rejected the plaintiffs' claims. Valero presented evidence from a toxicologist to support the argument that plaintiffs had pre-existing medical conditions and that Valero was not the cause of the claimed injuries. Defense Experts A mobile home expert retained by Valero presented evidence regarding the installation and maintenance of plaintiffs' residences, an environmental air consultant, a metallurgist, a horticulturalist and a former Texas Air Control Board regulator to respond to claims of emissions from the plant. Valero challenged the class action on the grounds of no commonality or typicality. It said the double-tolling doctrine did not operate to toll time limitations during the pendency of class allegations for unnamed class members. It also argued the state law relation back doctrine did not allow time limitations to run from the original complaint to the current because plaintiffs originally alleged permanent nuisance and subsequently alleged temporary nuisance. The original suit was filed as Ventura v. Valero Refining Co. (No. 94-3423-D, Texas Dist., 105th Dist., Nueces Co.) in June 1994. The court entered a Lone Pine order requiring plaintiffs to disclose detailed information concerning dates and substances for each claim, to which the plaintiffs responded by withdrawing the suit. Filed March 1996 The claims were filed March 1996 as Otero v. Valero Refining Co. in Judge Blackmon's court. The complaint alleges emissions from the plant interfere with plaintiffs' use and enjoyment of their property, make them sick and damaged their homes, vehicles, fences and gardens. Plaintiffs sought to recover under the theories of res ipsa loquitor, gross negligence, temporary nuisance, strict liability and trespass. Plaintiffs also sought injunctive relief. The proposed class includes approximately 1,000 people who owned real estate or lived within an area one mile from the plant. Named class representatives are current or former owners of mobile homes in a subdivision. Three other subdivisions in the class area have single-family, commercial and mobile homes. Andrew Schirrmeister and Bob Flora of Schirrmeister Ajamie of Houston, Jim Ribochaux of Matthews & Branscomb in Corpus Christi, Texas, and Marty Loeber and Richard Walsh of Valero Reining Co. in San Antonio represent Valero Refining Co. Mike Davis and Shawn Isbell of Slack & Davis in Austin, Texas, Bob Hilliard and John Flood of Hilliard & Munoz in Corpus Christi and Robert D. Kizor of Manor, Texas, represent the plaintiffs. (Mealey's Emerging Toxic Torts, January 19, 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 * * *