/raid1/www/Hosts/bankrupt/CAR_Public/010321.MBX
C L A S S A C T I O N R E P O R T E R
Wednesday, March 19, 2001, Vol. 3, No. 56
Headlines
ADAMS MARK: Lawyers Dragged Too Long in Seeking Cert. in Race Bias Suit
ARIZONA DEPT: Fed Suit Settlement Brings Reform in Mental Health Care
AT&T: CWA Challenges in CA Ct Pregnancy Discriminatory Benefit Practices
BANK UNITED: Girard & Green Filess Lawsuit over Mortgage Loan Servicing
CARMEN VELAZQUEZ: LSC Lawyers Can Again Challenge Welfare Laws
CEZ, WESTINGHOUSE: U.S. Atty. Extends Time for Papers on Temelin Plant
CITIFINANCIAL: Right for Class Arbitration Depends on Express Provision
COCA-COLA: Average of $40,000 Would Be Given to Each in Race Bias Suit
FINANCIALWEB.COMS: Matthew E. Miller Announces Securities Lawsuit in FL
GUN MANUFACTURERS: FL Coalition to Stop Gun Violence; Opposes Bill
HIP IMPLANT: Texas Maker Denies Blame In Court
IACP: 5th Cir Upholds Cert. of Suit By More Than 1700 Continental Pilots
MISSISSIPPI: College Desegregation Deal Hinges on Enrollment Ratio
NET FILTER: Groups File Suit to Block Law Governing Schools & Libraries
REGENCE BLUESHIELD: Agree with Members to Arbitrated Settlement of Suits
SECURITY STORAGE: Judge Endorses Ruling That Stock Sale Killed Standing
TAINTED WATER: Ontario Top Judge Approves Walkerton E. Coli Settlement
TOBACCO LITIGATION: 5 States to Sue R.J. Reynolds over Settlement Breach
VIACOM: Fights to Keep Stations That Exceed 35% Cap after CBS Merger
UNILEVER: Lawsuit over Cosmetics Price-Fixing Amended and Pending in CA
WESTFIELD AMERICA: Served with Securities Lawsuit in Los Angeles
*********
ADAMS MARK: Lawyers Dragged Too Long in Seeking Cert. in Race Bias Suit
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Reversing himself, a federal magistrate judge has ruled that the
plaintiffs seeking class-action status in a two-year-old race
discrimination suit against the Adams Mark hotel chain are not entitled
to proceed as a class because their lawyers dragged their feet too long
in seeking class certification.
"Had plaintiffs put forth at least some reason that they could not have
previously moved for class certification or, at minimum, sought an
extension of time, the court would have perhaps been more lenient with
the time restrictions. Having received no justification for such delay,
though, the court cannot act as plaintiffs' advocate and search for some
reason to maintain the class action," U.S. Magistrate Judge Charles B.
Smith wrote in his 12-page opinion in Wilson v. Seven Seventeen HB
Philadelphia Corp. But the impact of the ruling is unclear because
plaintiffs' lawyers say that another, more recent suit seeking class
action status has been filed that will include all of the plaintiffs in
the Wilson case. In Vinson v. Seven Seventeen HB Philadelphia Corp., the
same team of plaintiffs lawyers allege that black employees at the 21
Adams Mark hotels around the country are routinely relegated to the
lowest paying jobs and work in racially hostile environments.
A third suit alleges that black patrons of Adams Mark hotels are
routinely discriminated against and that the hotel chain's owner, Fred
Krummer, has personally insisted that the hotels' nightclubs take efforts
to ensure that clientele is not predominantly black. The plaintiffs' team
in all three cases includes attorneys Samuel A. Dion and Benson
Goldberger of Dion-Goldberger; W.D. Masterson, Thomas C. Anderson and
Dorothy Elizabeth Masteron of Kilgore & Kilgore in Dallas, Tex.; Louis
Ginsberg of New York; and Alan Lescht of Washington, D.C.But the first of
the three cases has now been permanently denied class status.
Smith found that under Federal Rule of Civil Procedure 23, the plaintiffs
in a proposed class action must move for class certification within 90
days of filing suit unless granted an extension.
The Wilson case was filed in April 1999. After extensive motions and an
amendment of the suit, defense lawyers asked in October 1999 that the
plaintiffs' class allegations be stricken for failure to comply with the
90-day rule. Plaintiffs' lawyers responded four days later with their
first motion asking for an extension of time, and U.S. District Judge Jay
C. Waldman granted it, extending the deadline to Jan. 31, 2000. The
motion was filed on time, and defense lawyers opposed it. But the
plaintiffs had also filed a motion to compel certain discovery. Judge
Waldman ruled on both motions at once and ordered the defendants to
provide specified discovery to the plaintiffs by June 30, 2000. Waldman
then denied the motion for class certification "without prejudice" and
ordered that the plaintiffs could renew the motion within 20 days of the
completion of the court-ordered discovery.
In July 2000, the plaintiffs again moved to compel discovery. The case
was reassigned to U.S. District Judge Barclay Surrick, who referred the
discovery motion to U.S. Magistrate Judge Arnold Rapoport. In December
2000, Rapoport denied the motion to compel. At that point, defense
attorneys Michael M. Baylson, Teresa N. Cavenagh and Stephen A. Mallozzi
of Duane Morris & Heckscher filed a motion asking that class
certification be denied with prejudice due to the plaintiffs' failure to
comply with Waldman's order that set a 20-day deadline for renewing the
motion. The file landed on the desk of a fourth judge, Magistrate Judge
Smith, who held a conference and issued an order that denied the defense
motion as "unripe." But the defense lawyers pressed the point, filing a
motion for reconsideration that urged Smith to take a harder look at the
rules. "The law is clear that defendants' cross-motion was ripe and
should have been resolved," they wrote. Rule 23, they said, "is
party-neutral and has been interpreted to permit either a plaintiff or a
defendant to move for determination of the class certification issue."
Motions for reconsideration are rarely granted in the federal courts
because success depends on a finding by the judge that a prior ruling was
premised on a "manifest error of law." But Smith found that his prior
ruling was legally unsound because "defendants were entitled to seek a
class determination, even in the absence of a motion by plaintiffs. As
such, the motion was, indeed, ripe for consideration."
Turning to the merits of the motion, Smith found that the defense team
was asking the court to deny class certification with prejudice on two
grounds that the plaintiffs failed to abide by Judge Waldman's deadline
for seeking class certification; and that the plaintiffs cannot meet the
requirements of a class under Rule 23. Smith focused entirely on the
first reason. Although the 3rd Circuit has held that the denial of a
class certification motion as untimely under the local rule falls within
the trial court's discretion, Smith found that judges in the Eastern
District have shown "a reluctance to deny a motion for class
certification solely for failure to seek timely certification under Rule
23.1(c), absent some additional showing of prejudice to the defendants or
members of the class resulting from the delay."
But Smith also found that "in cases where the plaintiffs have violated a
court order setting a deadline, as opposed to simply missing the time set
forth by Local Rule 23.1, courts have been more apt to deny class
certification." In the Wilson case, Smith said, the plaintiffs' lawyers
took no action on class certification for more than six months over three
months beyond the deadline set forth in the local rule and sought an
extension only when prompted by a defense motion. And even when they were
granted an extension with their motion due 20 days after a six-month
discovery period ended Smith found that the plaintiffs again took no
action. "In light of these circumstances, the court finds itself
compelled to deny class certification," Smith wrote.
At the time of his February conference with the lawyers, Smith said, "the
motion was over six months late." Following the original denial of
certification, he said, "the court had given plaintiffs ample time to
either renew their motion or seek an extension of time." And the defense
team waited another five months before seeking a denial of class
certification with prejudice, Smith noted. "The case is now almost two
years old. With only one month remaining in the rather lengthy,
substantive discovery period, defendants are certainly entitled to a
determination so as to allow them to properly prepare this case either as
a class action suit or as an individual action," Smith wrote. The
plaintiffs, Smith said, presented "absolutely no excuse" for their
noncompliance with the deadlines. "Certainly, the court has the right,
indeed the duty ... to fix a time limit for class determination.
Plaintiffs cannot simply ignore such orders without providing some
justification," he wrote. (The Legal Intelligencer, March 16, 2001)
ARIZONA DEPT: Fed Suit Settlement Brings Reform in Mental Health Care
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An estimated 20,000 Arizona children will benefit from the landmark
settlement of a 10-year-old federal class action lawsuit announced on
March 20 reforming the state's behavioral healthcare system for children.
The suit known as J.K. v. Eden challenged Arizona's failure to provide
mental health services to poor children.
The agreement ending the lawsuit was announced jointly by Arizona
Governor Jane Hull and Catherine R. Eden, director of the Arizona
Department of Human Services and lawyers representing the children: Ira
Burnim, legal director of the Washington DC-based Bazelon Center for
Mental Health Law, Anne Ronan, staff attorney of the Arizona Center for
Disability Law, and Joseph McGarry, of Lewis and Roca, LLP, a Phoenix law
firm.
"The settlement is groundbreaking," Burnim said, "because it is the first
to overhaul a state mental health system that operates on a managed care
basis." The agreement is also unique in its approach to reform, he
explained, because it spells out in a legal document a "vision" defining
the purpose of children's behavioral health services and a set of 12
principles improving the quality of those services, to be incorporated in
all aspects of the system's operations [available online at
http://www.bazelon.org/jkprinciples.html].
The "Arizona Vision" is a fundamental shift in the way the state treats
children and families and children in foster care who seek mental health
treatment. It emphasizes respect for and partnership with families and
children in the planning, delivery and evaluation of services, and
stresses collaboration among the various agencies that serve children,
with the goal of enabling children "to achieve success in school, live
with their families, avoid delinquency and become stable and productive
adults."
The settlement commits the state to a series of concrete steps, including
a massive training program for frontline staff and supervisors, special
projects to pilot the new approach to services, and specific improvements
in the structure of the managed care arrangement. It anticipates
implementation over six years, and obliges the state to move "as quickly
as is practicable" to make needed changes. The agreement must still be
ratified by the court, following a hearing.
The document incorporates many of the recommendations by Dr. Ivor Groves,
a nationally known expert in children's mental health care. Dr. Groves
was retained by the state under an earlier agreement in the lawsuit after
collapse of the system in Maricopa County, which serves two thirds of the
state's children with mental health needs. In July 1997 the Governor
declared an emergency in the county and appointed new leadership in the
key elements of the state system, beginning the process culminating in
the settlement.
"Arizona families and children can especially thank Catherine Eden for
her solid and productive commitment to reform," Burnim said. "I look
forward to working with her to implement the Arizona Vision on their
behalf."
History Of The J.K. Lawsuit
The J.K. lawsuit was originally filed in federal district court in 1991
by a father who had been unable to obtain services for his son. When the
managed care system refused to provide the day treatment recommended by
professionals, the boy ran away from home, attempted suicide and was
ultimately admitted to a psychiatric hospital.
The suit was potentially precedent-setting because Arizona's program was
the first in the country to provide mental health services statewide
through managed care. In 1993 the court certified it as a class action on
behalf of all Arizona children seeking Medicaid mental health services
and held the state responsible for the actions of the private companies
with which it contracted for managed behavioral healthcare. Two years
later the court upheld the children's right to due process
protections-notice and a hearing-when behavioral health services are
reduced or cut off.
A crisis came in 1997 when ComCare, managed care contractor in Maricopa
County, declared bankruptcy and the Department of Health Services, the
state's mental health authority, had to take over the county's system.
The resulting publicity drew attention to the inadequacy of children's
services, and the parties to the lawsuit agreed to commission an
evaluation of services provided in Maricopa County, which includes the
city of Phoenix.
Both the initial evaluation in 1998 and a follow-up review completed in
April 2000 were conducted by a team headed by Dr. Groves. The team found
"a wide gap between the basic standard of care expected ...and the level
of performance observed." The team determined that about half of the
children in the program fail to receive required behavioral health
services and that the system's performance was poorest for children with
the most serious problems. Up to 3,500 of the children have complex
needs, the experts reported, because their caretakers have disabilities,
they are involved with the child welfare or juvenile justice system, or
they have co-occurring disabilities, such as emotional disturbance and
mental retardation or addiction. The study called for a "fundamental
reassessment" of the children's managed behavioral healthcare program and
made recommendations.
The court stayed the litigation in 1998, giving the health department and
the lawyers for the children time to develop principles for the system's
operation and a work plan to implement the experts' recommendations.
During the same period, the Groves team reviewed programs in the rest of
the state and, in 1999, contracted with the health department to train
frontline staff.
Currently the state's managed care system is supervised by both Arizona
Health Care Cost Containment System [AHCCCS], which administers the
Medicaid program, and the Department of Health Services. The state
contracts with ValueOptions, a national for-profit corporation, to
operate the Maricopa County service system.
Contact: Lee Carty, Bazelon Center, 202-467-5730 ext 21 Anne Ronan,
Arizona Center for Disability Law, 602-274-6287 (AScribe Newswire, March
20, 2001)
AT&T: CWA Challenges in CA Ct Pregnancy Discriminatory Benefit Practices
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The Communications Workers of America and several AT&T employees March 20
filed a class action lawsuit against AT&T, charging that the company
discriminated against female employees who took pregnancy-related leave
before April 1979. The suit was filed in U.S. District Court for the
Northern District of California.
AT&T treated women workers who took pregnancy leave less favorably than
other employees who were disabled for any other reason during the same
period, CWA's suit charges. The class covers some 15,000 women workers
who took pregnancy-related disability leave before April 29, 1979, and
charges that AT&T's actions violate Title VII of the Civil Rights Act and
the Employee Retirement Income Security Act ERISA.
Employees who suffered from temporarily disabling conditions were given
"service credit" for their time absent from work. Pregnant women,
however, were required to take "personal leave" for their absences,
resulting in lower pensions and lost retirement opportunities, CWA said.
When the Pregnancy Discrimination Act was adopted in 1979, AT&T changed
its policy for new employees but continues to penalize women workers who
were pregnant and took leave prior to 1979, by disallowing credit for the
leave in calculating their pension and retirement benefits.
Ralph Maly, the CWA vice president representing workers at AT&T
operations, noted that AT&T has continued to ignore court rulings that
concluded that this policy violated both civil rights and equal
opportunity statutes.
In 1998, Pacific Bell, a former AT&T subsidiary, agreed to a
multi-million dollar settlement after a federal appeals court found that
a similar policy used by Pacific Bell violated pension and civil rights
laws. CWA was also a plaintiff in that case which provided relief to
thousands of Pacific Bell employees and retirees.
"Now it's time for AT&T to take responsibility and end this continuing
discrimination against women workers who took pregnancy-related leave
before 1979," Maly said. "CWA is committed to gaining these workers the
service credit and fair treatment they deserve," he added.
BANK UNITED: Girard & Green Filess Lawsuit over Mortgage Loan Servicing
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A class action lawsuit has been filed in the Pierce County Superior
Court, Washington, on behalf of borrowers for whom Bank United performed
mortgage loan servicing. The complaint alleges that defendants engaged in
deceptive, unfair and oppressive business practices directed at mortgage
loan borrowers, and breached the mortgage loan contracts which govern
their mortgage loan servicing transactions. These practices include
failing to post payments received from borrowers in a timely fashion and
then charging the borrower a "late charge" and additional interest;
imposing improper "property inspection" charges; and failing to respond
to borrower complaints or remove improper charges assessed to borrowers.
The complaint seeks an order that defendants pay back profits improperly
derived from deceptive and unfair business practices, and that those
amounts be distributed to those who have been harmed. The complaint
charges Washington Mutual, Inc., Bank United Corp., and Bank United of
Texas, FSB with violations of the Washington Consumer Protection Act,
breach of contract, and breach of the duty of good faith and fair
dealing. Washington Mutual, Inc. acquired Bank United Corp. and its
wholly-owned subsidiary, Bank United of Texas, FSB, on February 8, 2001.
Bank United operates one of the 25 largest residential mortgage loan
servicing businesses in the United States. As of September 30, 1999, Bank
United's single family mortgage servicing portfolio totaled$30.9 billion.
"We want to make sure homeowners do not lose their homes to foreclosure
as a result of defendants' unfair business practices," said Plaintiff's
counsel, Robert S. Green, of Girard & Green, LLP in San Francisco. Girard
& Green, LLP has extensive experience in prosecuting class actions and
other lawsuits involving consumer financial services. For more
information, please contact Plaintiff's counsel: GIRARD & GREEN, LLP
Robert S. Green Jenelle W. Welling Telephone: 415/981-4800 Facsimile:
415/981-4846 E-mail: bankunited@classcounsel.com
Contact: Girard & Green, LLP Robert S. Green, 415/981-4800
CARMEN VELAZQUEZ: LSC Lawyers Can Again Challenge Welfare Laws
--------------------------------------------------------------
Lawyers at legal aid agencies in Texas and other states that receive
federal funding can again legally represent poor people in litigation
challenging the constitutionality of welfare laws. Federally funded
lawyers who represent the poor are private speakers whose arguments
deserve the protection of the First Amendment, a narrowly divided U.S.
Supreme Court ruled on Feb. 28.
By a 5-4 vote, with Justice Anthony Kennedy writing for the majority, the
court overturned a law prohibiting lawyers funded by the Legal Services
Corp. from challenging welfare laws.
Lawyers in Texas who do legal services work say the ruling helps restore
a fundamental relationship between lawyers and their clients.
"This one goes to the core of being an attorney, picking a strategy to
help your client," says James Harrington, director of the Texas Civil
Rights Project. "The Supreme Court recognized the unique role that legal
service lawyers play, and I think that the teeth of the analysis has to
do with interfering with the independence of attorneys and their
representation of clients," says Regina Rogoff, director of Legal Aid of
Central Texas in Austin.
Legal Services Corp. v. Carmen Velazquez stems from conservative
lawmakers' efforts to rein in the LSC, a congressionally mandated private
organization that distributes money to local groups that represent the
poor.
In 1996, Congress barred the LSC from funding groups that join in class
actions and lobby legislators. Congress also prohibited the LSC from
funding local legal aid groups that challenge welfare laws.
The welfare restriction posed a major problem for Carmen Velazquez and
her lawyer from Bronx Legal Services.
Velazquez, then a 56-year-old grandmother, was in the process of suing
the state of New York over a regulation allegedly denying her welfare
benefits. She claimed the regulation unlawfully denied her a chance to
show that physical impairments prevented her from working.
When Velazquez's LSC attorney had to withdraw because of the new
restrictions, Velazquez could not afford another lawyer. As a result, the
Brennan Center for Justice at New York University School of Law took up
her cause, bringing a suit challenging many of the 1996 restrictions.
A federal district court upheld the curbs and was affirmed in almost all
respects by the 2nd U.S. Circuit Court of Appeals.
But the 2nd Circuit voted 2-1 that the welfare provision violated the
First Amendment. On Feb. 28, U.S. Supreme Court Justices Kennedy, John
Paul Stevens, David Souter, Ruth Bader Ginsburg and Stephen Breyer
agreed.
Similar Rules
A key issue was whether the LSC restrictions were similar to rules
prohibiting doctors and nurses at federally funded family planning
clinics from discussing abortion with patients. In 1991, a 5-4 court
upheld those restrictions as constitutional, with Kennedy and Souter in
the majority. However, Kennedy said the doctor restrictions in Rust v.
Sullivan differed significantly from the lawyer restrictions in the case
at hand.
In Rust and in later decisions, Kennedy explained, the court found
doctors were essentially speaking on behalf of a government program that
encouraged family planning without abortion.
"The LSC lawyer, however, speaks on the behalf of his or her private,
indigent client," not the government, which already has a lawyer arguing
its side, Kennedy wrote.
"Restricting LSC attorneys in advising their clients and in presenting
arguments and analyses to the courts distorts the legal system by
altering the traditional role of the attorneys," Kennedy continued.
Justice Antonin Scalia penned a dissent, joined by Chief Justice William
H. Rehnquist and Justices Sandra Day O'Connor and Clarence Thomas.
Not Like Rust
Scalia took issue with Kennedy's contrast of this case with Rust, calling
the majority argument "so unpersuasive it hardly needs response." "If the
private doctors' confidential advice to their patients at issue in Rust
constituted 'government speech,' it is hard to imagine what subsidized
speech would not be government speech."
Kennedy's distinction between the two types of speech adds to the
protections for university professors, museum officials and other
publicly funded speakers, says Arthur Eisenberg, legal director for the
New York chapter of the American Civil Liberties Union, which filed an
amicus brief in support of Velazquez.
Laurence Tribe, the Harvard Law School professor who argued - and lost -
Rust called last Wednesday's decision "an important affirmation that the
government's power to attach strings [to funding] is significantly
limited by the First Amendment."
For legal aid lawyers on the front lines, the decision is a major
victory.
Charles Greenfield, who directs Legal Services of Northern Virginia, says
that before the restrictions, challenging welfare laws was a classic line
of attack for legal aid lawyers. The Velazquez decision, he adds, "takes
the tape off our mouths. It gives us the full arsenal of arguments that
other lawyers throughout the country have to advocate on behalf of their
clients."
"You can phrase your lawsuit without challenging the constitutionality of
the program, but it makes it easier to do so," says Paul Furrh, executive
director of East Texas Legal Services in Nacogdoches.
Jonathan Vickery, executive director of Legal Services of North Texas,
says about 10 percent of his agency's caseload involves poor people who
need help getting welfare benefits. Under the restriction, the legal aid
lawyers could help their clients get benefits but couldn't challenge the
legality or constitutionality of welfare laws.
Vickery says poor people don't have options, other than legal aid
lawyers, for finding lawyers to help them get welfare benefits. "It's not
a practice where people can make a living off it. It's not like Social
Security, that you get fees if you prevail," he says.
An official with the LSC in Washington says the agency will immediately
review how it should modify its regulations in light of the court ruling.
"It's important to note that all the restrictions except for this one
remain in place," says Mauricio Vivero, vice president for government
relations at the LSC.
The Supreme Court has yet to announce whether it intends to review
Velazquez's attack on the other restrictions, which were upheld by the
2nd Circuit.
Furrh and Rogoff say it wouldn't surprise them if Congress tries to find
a way to reinstitute the restriction the Supreme Court's decision just
lifted. "It will be real interesting. It was a very specific act of
Congress to put that restriction in. I'm sure they will revisit it,"
Furrh says.
For this fiscal year, Congress gave LSC $ 300 million, $ 30 million more
than last year. In President George W. Bush's fiscal year 2002 budget,
funding would not change.
Rogoff, the legal services director in Austin, says Bush's plan to hold
the line on LSC spending is gratifying because past Republican
administrations have sought to cut or eliminate spending on legal
services. She says, "We're grateful for such small favors." (Texas
Lawyer, March 5, 2001)
CEZ, WESTINGHOUSE: U.S. Atty. Extends Time for Papers on Temelin Plant
----------------------------------------------------------------------
American attorney Ed Fagan on Tuesday extended by one month the deadline
for the Czech energy utility company CEZ and the U.S. concern
Westinghouse to submit documents proving that the nuclear power plant in
Temelin is safe. The initial deadline was to expire on Tuesday.
Fagan, who has made a name in class-action lawsuits representing
Holocaust victims, has offered to represent Czech and Austrian opponents
of the plant which is located only 50 kilometers (31 miles) from the
border with Austria.
Despite the original refusal by the management to let Fagan tour the
plant, now he could see most of the facility, including the main turbine
generator, the news agency CTK reported. He also was offered to look into
the documentation on the plant available in the information center.
Last month, Fagan called on CEZ that owns the plant, and Westinghouse,
which supplies the technology, to submit documents by March 20 proving
the plant is safe.
CEZ, which says Fagan never addressed them officially with the request,
has not submitted the documents, saying that as much of it as possible
has been already made public. Spokesman for the company, Daniel Castvaj,
said on Monday some of the information on the plant is confidential ''to
protect intellectual ownership of the technology by the suppliers.''
According to CTK, Fagan also received a negative response from
Westinghouse, which said in a letter sent to him on Tuesday that it had
no obligation to submit any kind of documents.
Fagan warned he would sue Westinghouse in the United States, in the
European Union and the Czech Republic, should the concern maintain its
stance. ''You think you have no obligation to submit these documents? You
are wrong, you will have to,'' the agency quoted Fagan as saying at a
news conference in Hluboka nad Vltavou, 160 kilometers (100 miles) south
of Prague on Tuesday. Fagan said, however, he would extend the deadline
by one month, adding he will announce his further steps at a press
conference in Salzburg, Austria on April 19.
The power plant has long been a source of friction between the Czech
Republic and non-nuclear Austria. Construction of the Soviet-designed
plant began in 1980, and its technology was upgraded by the U.S. firm
Westinghouse in the 1990s.
Activation of the nuclear fuel in October prompted protests from
politicians and environmentalists in Austria and led to repeated
blockades of the Czech border. After all tests have been completed with
the reactor running at 30 percent of its capacity, the plant received
permission late Monday to raise the output to 55 percent. The plant had
been expected to start operating at full capacity in early May. Recent
outages, however, will likely cause some delay.
Fagan, who said he would demand no fee for representing the activists who
demand that the plant be shut down, has repeatedly said he would sue CEZ
and Westinghouse after evaluating the documentation he demands.
But Czech radio on Tuesday quoted him as saying that his goal is an
independent evaluation of the plant's safety and not the plant's closure.
(AP Worldstream, March 20, 2001)
CITIFINANCIAL: Right for Class Arbitration Depends on Express Provision
-----------------------------------------------------------------------
If an arbitration clause does not contain an express provision allowing
for class arbitration, plaintiffs have no statutory right to bring a
class action, a Delaware County Common Pleas Court judge has ruled.
The decision appears to be one of the first on the issue in the
commonwealth. In the opinion, Lytle v. CitiFinancial Services Inc., PICS
Case No. 01-0467 C.P. Delaware (March 6, 2001) Bradley, J. (9 pages),
Delaware County Common Pleas Court Judge Harry J. Bradley cites only
federal court decisions from the 7th Circuit and California as authority.
Bradley also found that Pennsylvania's usury statute, Act 6, does not
allow for class action suits, sustaining the defendant's preliminary
objections.
Robert M. Firkser of DelSordo & Firkser represented the plaintiffs,
Robert and Judith Lytle. Marilyn Heffley and Barbara Mishkin of Reed
Smith represented defendant CitiFinancial Services Inc. The Lytles are
appealing the decision.
According to the opinion, the Lytles received a loan of $ 123,661 from
CitiFinancial in May 1997, secured by a mortgage on their home. In August
1998, the Lytles refinanced and made full prepayment to CitiFinancial. In
order to satisfy a full payment, CitiFinancial requested $ 124,554, which
included the principle balance, unearned interest, prepayment penalty and
unspecified charges.
The Lytles filed a complaint alleging the collection of a prepayment
penalty and unearned finance charges when a mortgage is paid early
violates state and federal laws and Pennsylvania common law. They filed
their complaint as a class action .Bradley focused the opinion
immediately on the arbitration clause in the Lytles' loan agreement. He
said that at the top and bottom of the page containing the arbitration
provision, there was a bold-type warning to the signers to read the
provision carefully as it "limits certain of your rights, including your
right to obtain redress through court action." The arbitration provision
was broad, Bradley said, with only a few exclusions. In fact, he said,
claims involving the Truth in Lending Act were even listed with claims
governed by the arbitration agreement. Bradley said the Federal
Arbitration Act, which the Lytles' arbitration agreement cites as
authority, also supported his ruling. "The arbitrability of a dispute is
governed by the FAA if the arbitration is part of an agreement involving
interstate commerce," Bradley said. "The court agrees with
[Citifinancial] that this claim is one based on a contract evidencing a
transaction involving commerce. Claims arising from a mortgage loan
transaction presumptively involve interstate commerce."
The Lytles also argued the agreement was not enforceable because it does
not allow for cases to be arbitrated on behalf of a class. But Bradley
rejected that argument stating that the agreement specifically excluded
class actions. He cited a 7th Circuit case, Champ v. Siegel Trading Co.
Inc., 55 F.3d 269 (7th Circ. 1995), in which the court said without an
express provision allowing for class arbitration a district court does
not have the authority to reform a party's action as a class action.
"Although the federal rules do not apply to the instant matter ... the
reasoning in Champ is sound and leads to the inescapable conclusion that
absent an express provision allowing class arbitration, the parties are
free to contract away their right to pursue a class action," Bradley
wrote. "That is exactly what occurred here, the parties consented to the
prohibition on class action."
Bradley also found authority in Act 6. Section 504 of the act states:
"Any person affected by a violation of the act shall have the substantive
right to bring an action on behalf of himself individually for damages by
reason of such conduct or violation together with costs including
reasonable attorney's fees ..." Bradley said there was another reason why
Act 6 did not permit the Lytles' action."A further reason that [the
Lytles'] allegation of an Act 6 violation must be dismissed is that the
act's prohibition on prepayment penalties and limitation on interest
rates of not apply to the mortgage in question," he said. "Act 6 is
limited to 'residential mortgages,' that is, it applies, by its terms to
only those mortgages for $ 50,000 or less." (Pennsylvania Law Weekly,
March 19, 2001)
COCA-COLA: Average of $40,000 Would Be Given to Each in Race Bias Suit
----------------------------------------------------------------------
Only 1 percent of the 2,200 class members have decided to "opt out" of
Coca-Cola's $192.5 million settlement of an employee racial
discrimination lawsuit. Class members had until Monday to decide whether
to participate in the settlement, which would provide an estimated
average of $40,000 per class member.
Some observers say the overwhelming support for the agreement makes it
more likely the federal judge in the case will give it final approval.
"This is a resounding victory for those who support this landmark
settlement," said lead plaintiffs' attorney Cyrus Mehri. "We're pleased
that the settlement process can continue to move forward," said Coca-Cola
spokesman Ben Deutsch.
At the time the details of the settlement were announced last November,
some predicted hundreds of employees might reject it and pursue their own
individual lawsuits for monetary damages. But only 23 decided to opt out,
including one who said he wants no part of any litigation.
Coke had the option of backing out of the settlement if at least 200, or
9 percent of class members, had rejected it. "To opt out was tantamount
to suicide," said Larry Jones, a former human resources manager at Coke
who led a boycott to pressure the company to settle. "You ran the grave
risk of getting nothing." Instead, Jones and about a dozen others have
remained in the class but filed objections to the settlement. The
objections, which challenge the fairness of the agreement or specific
parts of it, will be heard May 29. If the settlement is approved, those
who objected will still share in it.
Atlanta attorney Hunter Hughes, who mediated the settlement, said the
total of opt-outs and objections is a "very nominal number. There's
certainly been scores of cases that have been approved where opt-outs and
objections have been substantially higher."
Several legal experts predicted Monday that U.S. District Judge Richard
Story will approve the settlement after hearing the objections. "I think
with the relatively low number of opt-outs, there is a substantial
likelihood that the judge will approve the settlement as it is proposed,"
said Stephen Forte, managing partner of Smith, Gambrell & Russell. "There
could be some minor modifications, but, in principle, the deal seems to
make sense to the vast majority of the plaintiff class."
More than seven people who opted out are represented by Florida attorney
Willie Gary. "We're very, very happy if some people have found closure to
this," said attorney Tricia C.K. Hoffler, who works in Gary's office.
"However, we're going to aggressively pursue our clients' interests until
justice is served."
In general, Hoffler said, more class members stayed in because "I think
people felt trapped. They felt ... that their class attorneys did a great
disservice to the process, and to the settlement as a whole ... but they
felt they didn't have a lot of options." Class members had four options:
To agree to the terms, which varied based on seniority, pay and other
criteria. To accept a partial settlement averaging about $28,000. Class
members who thought they were discriminated against in a prior promotion
decision can take their case to a U.S. magistrate judge in an expedited
procedure. To opt out. Or to file objections.
Now Coke must send out a notice by March 29 to class members detailing
individual personnel information, such as years of service, salary and
education. That information will be used to calculate the back-pay award
for each individual class member. Class members have until April 30 to
correct any errors in the data. A month later, the judge will hold the
fairness hearing before deciding on final approval.
Last week, Coke and the plaintiffs announced that former U.S. Labor
Secretary Alexis Herman will head a seven-member panel that will oversee
the settlement. (The Atlanta Journal and Constitution, March 20, 2001)
FINANCIALWEB.COMS: Matthew E. Miller Announces Securities Lawsuit in FL
-----------------------------------------------------------------------
On March 12, 2001, the Law Offices of Matthew E. Miller
(http://www.mattmiller.com)and Litchford & Christopher, P.A.
(http://www.litchris.com)filed a class action lawsuit in the United
States District Court for the Middle District of Florida (Orlando
Division) on behalf of purchasers of the common stock of
FinancialWeb.com, Inc. (NASDAQ: FWEBE.OB) in private placements occurring
between November 30, 1999 and April 20, 2000, against defendants Kevin A.
Lichtman, James P. Gagel, Jere John Lane and Robb Peck McCooey Clearing
Corporation.
The complaint is available online at
http://www.mattmiller.com/financialweb.
The complaint alleges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by making materially false and misleading statements, and
failing to disclose material information, in the Private Offering
Memorandum dated November 30, 1999 and in the Company's report on Form
10-SB filed with the Securities and Exchange Commission on April 5, 1999.
For example, the complaint alleges that, in both the Form 10-SB and in
the Private Offering Memorandum, the Company failed to disclose that one
of its co-founders and promoters, Jack Cabasso, was a convicted felon who
had filed for personal bankruptcy protection.
The complaint further alleges that the Company failed to disclose
critical adverse information in its possession concerning Glenn Laken and
other financial advisors, controlling persons and officers, and the
nature of the relationships between these individuals and the Company.
Additionally, the complaint alleges that, in both the Form 10-SB and
Private Offering Memorandum, the Company published financial statements
that were not prepared in accordance with Generally Accepted Accounting
Principles. The complaint alleges that the Company reported modest losses
of $0.18 and$0.49 per share, respectively, for 1997 and 1998, when, in
fact, it incurred losses of $1.29 and $0.71 per share, respectively.
Additionally, the complaint alleges that in the Private Offering
Memorandum, the Company reported a net loss of $2,377,648 for the nine
months ending September 30, 1999, when, in fact, it had incurred tens of
millions of dollars in losses for that period.
The complaint also alleges that in June 2000, Laken was indicted for
securities fraud and wire fraud for allegedly conspiring with various
Internet stock promoters and stockbrokers to fraudulently inflate the
price of FinancialWeb stock, and to bribe brokers to create retail demand
for FinancialWeb stock. The complaint also alleges that, in June 2000,
the Company restated its financial results for 1997 and 1998, and
announced losses of $ 57,892,539 and $10.56 per share for 1999. The
complaint goes on to allege that in June 2000, the Company also
disclosed, for the first time, Cabasso's role as a promoter of the
Company, as well the fact that he had a prior criminal conviction.
Following the news announced in June 2000, the Company's stock price
plummeted, and it was no longer able to obtain financing for its
operations. A secured creditor foreclosed on its assets, and the Company
no longer has any business operations.
Contact: Law Offices of Matthew E. Miller Matthew E. Miller, 800/304-4679
or 703/248-9393 mail@mattmiller.com
GUN MANUFACTURERS: FL Coalition to Stop Gun Violence; Opposes Bill
------------------------------------------------------------------
The Florida Coalition to Stop Gun Violence announces its opposition to a
Senate/House bill that would prohibit Florida cities/counties from suing
gun manufacturers. On March 27 on the steps of the Capitol, the Florida
Coalition, in conjunction with several other gun violence prevention
organizations, will hold a press conference at 9:30 a.m.
The only city/county to file a civil suit has been Miami-Dade. This
government argues that gun makers are responsible for injuries caused by
their products, in particular, that gun manufacturers have ignored common
sense safety features and in fact have made their products less safe and
more deadly over time. In addition, manufacturers' distribution practices
have made it certain that guns would end up in the wrong hands.
The Florida Coalition opposes Senate Bill SB 0134 by Senator Charles
Bronson (R) and House Bill H 0449 by Rep Paul Bense (R). The Florida
Coalition believes that the validity and merits of lawsuits, whether
brought by individuals, class action, or government entities, should be
left up to the courts. It is not something for state legislatures to
dictate.
The only lawsuit initiated by a city/county in Florida has been Miami-
Dade's. This lawsuit has been dismissed and then dismissed again by an
appeals court which is ample evidence state courts have ruled in favor of
the Unified Sportsmen of Florida, an affiliate of the National Rifle
Association, and its legislative supporters, rendering the introduced
legislation redundant. It would appear this initiative is designed to
further discourage other Florida cities/counties from filing civil suits.
The gun lobby is trying to stop local government lawsuits that hold gun
manufacturers responsible for the millions of dollars these governments
pay for medical care, emergency services, police, courts and prisons
because of gun violence.
Cities and counties in the U.S. pay enormous costs from gun violence. In
addition to the severe personal harm suffered by shooting victims and
their families, gun violence has substantial economic costs. For example,
it cost more than $14,000 to treat each child wounded by gunfire. The
American College of Physicians estimates that the direct cost of firearm
injuries is more than $4 billion per year, with an additional indirect
cost of approximately $19 billion lost earnings.
For a number of reasons, lawsuits against gun manufacturers are
justified. First, gun manufacturers are guilty of willful negligence in
the distribution of guns by maintaining a distribution system that
ensures a steady supply of guns to criminals and juveniles. They follow a
strategy of "willful blindness": using dangerous and corrupt sales
practices and avoiding taking steps that would reduce them, such as
providing guidance to dealers, requiring dealers to abide by standards,
or terminating the supply of guns to the worst dealers.
Second, gun manufacturers are creating unsafe products, making accidents
and unauthorized use much more likely. Because guns are not regulated for
health and safety by any federal agency, gun manufacturers have focused
on making guns more lethal/powerful and easier to conceal rather than on
making them less dangerous to consumers and the public.
Third, the gun industry practices deceptive advertising; gun marketing
misleads the law-abiding public about the risk of keeping a firearm in
the home. The message that the purchase of a handgun will increase the
safety and security of the consumer and his or her family is at odds with
the result of study after study that shows that the presence of a gun in
the home increases the risk of homicide, suicide, and the unintentional
injury to family members.
The Florida Coalition to Stop Gun Violence is a statewide, grassroots gun
violence prevention organization working to reduce firearm-related deaths
and injuries in Florida.
Source: Florida Coalition to Stop Gun Violence
HIP IMPLANT: Texas Maker Denies Blame In Court
----------------------------------------------
A Texas subsidiary of one of the world's leading medical-device makers,
faced with lawsuits for allegedly failing to warn thousands of patients
about the dangers of its hip-replacement implant, has denied
responsibility for injuries.
Lawyers for Sulzer Orthopedics Inc., which had earlier accepted sole
responsibility for the defect that led to a recall, now are contending in
initial answers to several lawsuits that patients and unidentified third
parties are at fault for hip implant failures.
About 650 patients have had surgery to replace the faulty parts, a major
operation that generally involves three months of recovery. Hundreds of
patients hired lawyers to sue Sulzer for their suffering, lost wages and
other hardships. Lawyers in some national court cases are seeking
class-action status.
In December, Sulzer announced the voluntary recall after it found that
trace amounts of oil had not been cleaned from the implants during
manufacture at the company's Austin plant. In all, 17,500 of the recalled
Inter-Op acetabular hip shells were implanted into patients.
At first, Sulzer estimated that a small percentage would cause problems,
but some physicians are now saying up to half the patients may need new
surgery. ''It was our fault,'' Sulzer General Manager Steven Whitlock
told the Austin American-Statesman last month, echoing the company's
comments over the past few months.
Switzerland-based Sulzer Medica and its subsidiary earlier said it would
also pay for additional surgery.
However, Sulzer's answer to a lawsuit filed by a Texas man, Verlee Fort,
was a general denial, a standard Texas court practice that tells the
plaintiff to prove the alleged wrongdoing. ''It's the same thing as
saying 'not guilty,' '' said Pat Hazel, a University of Texas Law School
professor and trial law expert.
In a dozen affirmative defenses, attorneys for Sulzer also contend the
injuries were not caused by the company's acts but by third parties over
whom it had no control or authority.
Fort contends the hip he got in March 2000 had to be replaced because it
was defective.
But a Sulzer spokesman said the legal arguments are not unusual. ''You
list anything and everything as a defense because you don't know what the
other side has,'' said spokesman M.J. Nicchio. (AP Worldstream, March 20,
2001)
IACP: 5th Cir Upholds Cert. of Suit By More Than 1700 Continental Pilots
------------------------------------------------------------------------
The United States Court of Appeals for the Fifth Circuit on March 19
rejected a petition by Continental Airlines and the Independent
Association of Continental Pilots (IACP) to reconsider a Feb. 13, 2001
decision by a panel of Fifth Circuit justices which upheld certification
of a class action lawsuit filed on behalf of more than 1,700 Continental
pilots. The pilot class is represented by Rick Hammett, Larry Stuart, and
Charlene Tsang of the Houston office of Baker & McKenzie.
"The district court properly ruled that this case should be a class
action," Hammett said. "The union appealed that determination. Now the
Fifth Circuit has twice affirmed in no uncertain terms that not only is
this case classically suited for class action treatment but that the loss
of seniority in and of itself is a harm sufficient to support the class
action."
Class members alleged that IACP union leaders elevated the seniority of
11 former or current ALPA members to curry favor with ALPA in connection
with negotiations to merge the two unions. ALPA was the union that
represented Continental's pilots during the 1983 strike but in 1993, a
majority of Continental's pilots voted to replace ALPA with an
independent union.
All of the class members are IACP members, most of whom crossed ALPA
picket lines to go to work for Continental as replacement pilots during
the 1983 ALPA strike. Evidence in the case reveals that IACP leaders
referred to many of these pilots as "scabs." Each of the class members
lost seniority as a result of the changes, causing them significant
financial and personal harm.
This decision comes at a pivotal time in Continental's labor history.
Continental's pilots are currently voting on whether to merge their
independent union with ALPA. Ballots are scheduled to be counted April
12.
The seniority changes became an issue in 1996, when some of the IACP's
leaders, many of whom had supported ALPA, were pushing to merge IACP with
ALPA. In pursuing the seniority changes, the IACP leadership acted
against the advice of their union's attorneys, and evidence in the case
revealed that IACP officers discussed the status of the "scab" pilots
with ALPA executives during the 1996 ALPA merger effort. According to
A.J. Bertulli, one of the class representatives, ALPA supporters at
Continental Airlines and other carriers have at times refused to fly with
or transport Continental pilots who crossed the ALPA picket lines
throughout the 15 years since the strike ended.
In affirming the lower court's decision, the Fifth Circuit confirmed that
"a union may not juggle the seniority roster for no other reason than to
advance one group of employees over another." The court recognized that
even though the union and Continental elevated the seniority of only 11
pilots, elevating even one pilot's seniority harms many other pilots.
IACP and Continental repeatedly argued that their actions had not harmed
any of the class members. The Fifth Circuit soundly rejected that
contention, stating that the injury to the class members is not merely
loss of a specific work assignment or an identifiable sum of money; loss
of seniority is itself a harm.
"For a pilot, seniority is everything," Hammett said. "Here, over 1,700
pilots lost seniority because a few union officials wanted for their own
reasons to favor a small group of 11 pilots over the much larger group of
pilots that the union was supposed to also be representing. That is not
right. And the Fifth Circuit properly sent this case back to the district
court for trial as a class action."
Contact: Jane Powell or Alicen Swift, both of Powell Public Relations,
713-974-9300, for Baker & McKenzie
MISSISSIPPI: College Desegregation Deal Hinges on Enrollment Ratio
-------------------------------------------------------------------
Settlement of Mississippi's college desegregation case now centers on
what percentage of non-black enrollment the three historically minority
universities may be required to maintain.
Discussions on what started out as 12 percent non-black enrollment
proposed by the State College Board have now gone to 10 percent. By the
time any settlement reaches U.S. District Judge Neal Biggers Jr., the
figure could be lower.
Attorney General Mike Moore and U.S. Rep. Bennie Thompson, D-Miss., a
lead plaintiff, have said the maintaining of a percentage of non-black
enrollment at Jackson State, Mississippi Valley State and Alcorn State is
part of the settlement. However, both have said no endowment funds would
be withheld but the colleges would have more freedom to spend the money
as they wished if a level of non-black enrollment was sustained.
Final approval of the settlement worth about $500 million for three
universities rests with Biggers. Biggers has said he will give the public
60 days to comment on the proposal once he receives it.
Details of the agreement would not be released until then.
The College Board, state officials and black plaintiffs have been
negotiating a settlement since June.
The late Jake Ayers of Glen Allan filed the lawsuit in 1975, claiming the
state's three historically black colleges - Jackson State, Alcorn State
and Mississippi Valley State - were underfunded in comparison to five
historically white universities. The U.S. Supreme Court agreed and
ordered the state to remedy the situation.
Lawmakers said last week that they did not expect to finance the
settlement during the 2001 session.
The Legislature is planning to put $18 million into continued endowments
for the three historically black colleges after July 1.
In recent years, Biggers has said Mississippi's three historically black
universities must step up recruitment of white students as a key part of
the case. He's said it would be wrong to simply throw money at
historically black universities.
Lowering it to 10 percent "would definitely improve it," said Rep. George
Flaggs, D-Vicksburg, a Jackson State graduate. Other-race enrollment at
6,832-student Jackson State is now 5 percent, for instance. "That's a
real serious point that Judge Biggers emphasized, that the case is about
desegregation," said board member Roy Klumb of Gulfport. "The federal
judge wants the universities desegregated."
Board officials have discussed lowering the percentage to 10 percent,
Klumb said. "I feel like over time, JSU can get there with its off-campus
sites. It will draw white enrollment," Klumb said.
Jackson State President Ronald Mason has said his school would be
successful reaching a 12 percent other-race enrollment, noting the
opening July 1 of a new branch, an e-commerce center. "Once we get the
campus where we want it and the satellite facilities, we will be fine on
that count," Mason said.
Alcorn State President Clinton Bristow has said his school has been
successful attracting white students to its nursing school and other
programs on the Natchez campus. The nursing school is about 50 percent
white, 50 percent black. The main campus in Lorman is about 98 percent
black.
MVSU President Lester Newman has said his school has attracted a growing
number of white students to its Greenwood branch, about seven miles from
the main Itta Bena campus. Valley is now "close to 5 percent other-race
students," he said.
Without discussing specifics in the settlement package, board member
Ricki Garrett of Clinton said, "All historically black institutions are
capable of the kind of integration we want to see happen. I don't think
it will be a problem for those institutions to attract white students."
Klumb is critical of the way officials are going about this, calling it
"a big shell game. Valley will never reach the figure. Alcorn will never
get them to the main campus." Klumb said he has repeatedly voted against
the board's Ayers proposals in recent months. "I'd like to see it settled
as soon as possible if there is fairness in what' s being done," said
Rep. Rufus Straughter, D-Belzoni, president of the Legislative Black
Caucus.
Straughter and other black lawmakers share concerns about requiring
Mississippi's three historically black universities to have a percentage
of other-race students. "The lawsuit said nothing about other-race
students," Straughter said. "It had to do about underfunding." Straughter
said he had hoped the other-race student percentage was either eliminated
or strongly reduced. "It seems to me the historically black universities
never denied anyone access to the university. To place it on an
institution is unfair and unjustified." (The Associated Press State &
Local Wire, March 20, 2001)
NET FILTER: Groups File Suit to Block Law Governing Schools & Libraries
-----------------------------------------------------------------------
Civil liberties groups and the American Library Association filed suit
Tuesday to block a federal law that would require schools and libraries
to install Internet filters on computers to keep youngsters from seeing
smut.
The groups said the Children's Internet Protection Act would censor
constitutionally protected information a cyberspace equivalent to tearing
pages out of encyclopedias or removing books from shelves.
''The law has a nice-sounding name, but the truth is that it offers no
guarantee for children,'' said Elliot Minchberg, an attorney for the
People for the American Way Foundation. ''The only thing this law
guaranteed is that the rights of parents and the public will be seriously
violated.''
The foundation and the American Library Association filed the lawsuits on
behalf of nearly a dozen plaintiffs, including local library groups and
individuals.
The suits were filed in the same court where the successful challenge of
the 1996 Communications Decency Act was launched and where the earlier
Children's Online Protection Act was put on hold pending trial. Both
measures sought to shield children from online pornography.
Under last year's law which takes effect April 20 unless a judge issues
an injunction libraries would lose federal grants earmarked for
technology unless they install computer filtering software that blocks
access to online material deemed ''obscene,'' ''harmful to minors'' or
''child pornography.''
The conservative Family Research Council defended the law, calling it an
effective way to keep children safe from online pornography. ''Because of
the policies of the American Library Association, public libraries with
unrestricted Internet access are virtual peep shows open to kids and
funded by taxpayers,'' said Jan LaRue, the council's spokeswoman.
Critics of the law contend there is no guarantee the software will screen
out all objectionable material, and say it can inadvertently block access
to information regarding health, sexuality and social issues.
Stefan Presser, legal director of the American Civil Liberties Union of
Pennsylvania, said the law would mean that adults and children who cannot
afford Internet access at home will see only a filtered Internet at
libraries. ''The unintended consequence is the widening of the racial
digital divide,'' he said. ''This affects more African-American children,
whose only ability to get online is at the library, giving them less
access to information than their Caucasian counterparts'' whose families
can afford Internet access at home. (AP Online, March 20, 2001)
REGENCE BLUESHIELD: Agree with Members to Arbitrated Settlement of Suits
------------------------------------------------------------------------
Regence BlueShield and the attorneys representing Regence's members
announce that they have reached a settlement of two class action
lawsuits.
The settlement resolves claims arising out of Washington's "every
category of provider" law. The settlement will allow Regence BlueShield
members who paid for visits to chiropractors, massage therapists,
naturopaths, acupuncturists, and nutritionists between 1996 and March
2000 to claim a piece of a $30,400,000 settlement amount arrived at
through arbitration.
Today, the attorneys for the Class members and for Regence BlueShield
filed papers asking for court approval of the settlement. Under a process
requested by the parties, Regence BlueShield members who received
treatment from an alternative provider and paid for that treatment
out-of-pocket during the specified timeframe can make a claim. If
approved by the courts, notices and claim forms would be sent out to all
subscribers 60 days after approval. Subscribers would then have 120 days
to send in their claims.
After the claims process, unclaimed funds will be used by Regence
BlueShield to reduce health insurance premiums on all its policies
subject to the every category law over a five-year period.
For more information on this lawsuit and to obtain claim forms, visit
www.altcarelaw.com or www.wa.regence.com websites.
SECURITY STORAGE: Judge Endorses Ruling That Stock Sale Killed Standing
-----------------------------------------------------------------------
It was a new judge but the same answer for a shareholder plaintiff who
claimed that the Delaware Chancery Court wrongly barred him from
maintaining his derivative suit after he had to sell his shares in
Security Storage Co. of Washington. Newly installed Vice Chancellor John
Noble said former Vice Chancellor Myron Steele, who is now a Delaware
Supreme Court justice, correctly ruled that the plaintiff lost his
standing when he sold his stock. Norberg v. Security Storage Co. of
Washington et al., No. 12885 (Del. Ch., Jan. 12, 2001).
Plaintiff John Norberg argued that then-Vice Chancellor Steele should not
have dismissed his suit because he did not voluntarily tender his stock
to the cash-out merger that he was challenging in court. He said his IRA
refused to hold the stock after a related appraisal proceeding regarding
the merger deal was concluded.
But Vice Chancellor Noble held that Noble, despite his misfortune, was
not really forced to sell the stock and must live with his decision.
The directors on Security's board owned 82 percent of the company's
stock. So when they decided to cash out the other shareholders in early
1993, they had the votes to do it. The experts hired by the board said
$120 per share was a fair price to pay the minority stockholders because
it reflected 25 percent more than the appraised value.
However, some of the minority shareholders sued to get a court
determination of the share value instead of accepting $120 per share. In
March 1993, Norberg filed this class action on behalf of the minority
holders. He then waited until June 1998 to ask the court to certify the
class. Subsequently, Security's directors asked the court to dismiss
Norberg's complaint because he had voluntarily sold his shares to them
for $120 in August 1994.
Vice Chancellor Steele agreed with the directors that Norberg had waived
his right to complain by accepting the merger price, and dismissed
Norberg's complaint. Norberg filed a motion for reargument, claiming that
he would have suffered severe tax consequences if he did not authorize
the stock sale.
Vice Chancellor Noble said the no-stock-no-standing rule for derivative
suits sometimes has harsh results, but Norberg knew this going in.
"Although it cannot be denied that this litigation has proceeded slowly,
the decision whether to accept the merger consideration always involves,
at least to some extent, the potential loss of interest on the merger
consideration," the court wrote in explaining that at the very least, a
litigant in this type of suit knows going in that there is a real risk of
losing money on their investment in some way or another.
Norberg is represented by R. Bruce McNew of Taylor & McNew in Greenville,
Del., and Robert J. Kriner Jr. of Chimicles & Tikellis in Wilmington,
Del.
Defendants are represented by Thomas A. Beck of Richards, Layton & Finger
in Wilmington and by Alfred W. Putnam Jr. and Mary Catherine Roper of
Drinker Biddle & Reath in Philadelphia. (Delaware Corporate Litigation
Reporter, February 16, 2001)
TAINTED WATER: Ontario Top Judge Approves Walkerton E. Coli Settlement
--------------------------------------------------------
Ontario's umbrella compensation plan for victims of Walkerton's
tainted-water tragedy was approved, settling of a huge class-action suit
involving the worst E. coli outbreak in Canadian history.
The ruling in Walkerton by Superior Court Chief Justice Patrick LeSage
ends all civil litigation among the 13 parties involved, paying out a
minimum of $ 2,000 for each claimant.
"I'm of the view that the settlement is fair, reasonable and in the best
interests of the class," said LeSage, who noted it enjoyed widespread
support.
Ontario Attorney General David Young welcomed the decision, saying the
government has tried to help Walkerton's residents rebuild their lives
since the tainted-water tragedy claimed seven lives last May. Insurers
for the defendants, including the town's former public utilities
commission and its disgraced manager, will foot the bill for the first
$17 million in claims, as well as $4 million in legal fees. (The Calgary
Sun, March 20, 2001)
TOBACCO LITIGATION: 5 States to Sue R.J. Reynolds over Settlement Breach
------------------------------------------------------------------------
Five states announced plans Monday to sue R.J. Reynolds Tobacco Co.,
contending the company has violated a promise to stop marketing to
youngsters.
In county courthouses in Arizona, California, Ohio, New York and
Washington, state officials are alleging violations of different aspects
of the master settlement agreement signed by the major tobacco companies
and the states. They're asking that the courts come up with a punishment.
"We've mediated tobacco issues large and small," said Betty Montgomery,
Ohio's attorney general. "Today the attorneys general are sending a
unified message that we will not tolerate the marketing strategies of old
that targeted our children."
Four states, Arizona, California, New York and Washington, want the
company to remove Winston Cup billboards after a NASCAR race has been run
instead of leaving them up at tracks on the Winston Cup circuit
throughout the racing season. The agreement allowed signs to stay up for
10 days after "the last sponsored event." Reynolds said its signs comply
with that rule. (The Associated Press State & Local Wire, March 20, 2001)
VIACOM: Fights to Keep Stations That Exceed 35% Cap after CBS Merger
--------------------------------------------------------------------
Viacom moved swiftly Monday to keep its TV assets intact, filing an
emergency appeal in Washington, D.C., court for "interim relief" from a
looming deadline that would force it to sell a handful of stations it
badly wants to keep.
Viacom must unload the stations by May 4 to comply with the FCC's
broadcast ownership cap, under which no one company can reach more than
35% of U.S. television households. The conglom's merger with CBS last
year put it over the top.
But broadcasters are fighting the reg, heartened by a recent appeals
court ruling that eliminated a similar cap on cable ownership. Viacom
asked the FCC to stop the clock on the May deadline pending judicial
review. The FCC said no, since a regulation that hasn't been overturned
in the courts still stands as the law of the land.
Viacom requested that the appeals court rule on the interim relief by
April 9, since it would need "several weeks of lead time to comply with
the divestiture order."
Company insisted in its court filing that it meets the requirements for
such relief on several counts. First, it would suffer irreparable harm in
having to sell stations covering 6% of the U.S. TV audience. "Once Viacom
is forced to divest its ownership in these stations, it is unlikely to
regain its position in those markets if the 35% cap is later struck
down," company declared in the filing.
Also, Viacom said it thinks it is likely to succeed on the merits,
calling the broadcast ownership cap "not rational." If anything, it's
less justifiable than the cable cap, the company said, noting that in
half the nation's TV markets there are seven or more competing
over-the-air stations but usually only one cable operator. Viacom also
said there's no reason to believe any other parties will be harmed by
pushing the deadline past May 4.
Free Speech Tack
And, naturally, the company called on the First Amendment. "The sales
would preclude Viacom from using its editorial discretion through the
stations to communicate its chosen messages to its chosen audiences."
Separately, a federal judge in Los Angeles rejected class-action status
for an antitrust suit against Viacom-owned Blockbuster by nearly 200
independent videostore owners. Smaller rivals sued in January over
Blockbuster's revenue-sharing deals with Hollywood studios, claiming the
giant chain is monopolizing the video rental market and trying to drive
them out of business. (Daily Variety, March 20, 2001)
UNILEVER: Lawsuit over Cosmetics Price-Fixing Amended and Pending in CA
-----------------------------------------------------------------------
In June 2000, Unilever and other cosmetics manufacturers were served with
an amended complaint in proceedings pending in the Superior Court of
California in Marin County. The amended complaint alleges that cosmetic
manufacturers conspired with each other and with certain large California
department stores to fix retail prices for "high-end" cosmetics. The
action was brought as a class action on behalf of all the residents of
the State of California who purchased cosmetics from the defendant
department stores in the four years prior to the filing of the original
complaint in the fall of 1998.
Under the terms of the Arden acquisition, Unilever retains the conduct
of, and liability for, this lawsuit. Furthermore, Elizabeth Arden has
been indemnified by Unilever for any and all damages the Elizabeth Arden
Business incurs as a result of this lawsuit in respect of conduct
occurring prior to the Arden acquisition. Should the plaintiffs prevail
in this matter, there can be no assurance that such outcome would not
require the company to change the pricing of products acquired in the
Arden acquisition or that such outcome would not have a material and
adverse impact on the company’s operations and results on a going forward
basis.
WESTFIELD AMERICA: Served with Securities Lawsuit in Los Angeles
----------------------------------------------------------------
LAW OFFICES OF LIONEL Z. GLANCY
Lionel Z. Glancy, Esq. #134180
1801 Avenue of the Stars
Los Angeles, California 90067
Telephone: (310) 201-9150
Facsimile: (310) 201-9160
BERNSTEIN LIEBHARD & LIFSHITZ, LLP
Stanley D. Bernstein, Esq.
10 East 40th Street
New York, New York 10016
Telephone: (212) 779-1414
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
-----------------------------------------------X
JOSHUA TEITELBAUM, on his own behalf and : Case No. BC245070
on behalf of all others similarly situated,
Plaintiff, CLASS ACTION
COMPLAINT
:
FRANK P. LOWY, FRANCIS T. VINCENT, JR.,
LARRY A. SILVERSTEIN, DAVID H. LOWY, :
HERMAN HUIZINGA, BERNARD MARCUS,
ROY L. FURMAN, FREDERICK G. HILMER :
PETER S. LOWY, WESTFIELD AMERICA, INC.
WESTFIELD AMERICA TRUST and :
WESTFIELD HOLDINGS LIMITED,
:
Defendants.
:
- ----------------------------------------------X
Plaintiff alleges upon information and belief, except for
paragraph 1 hereof, which is alleged upon knowledge, as follows:
1. Plaintiff has been the owner of shares of the common stock
of Westfield America, Inc. ("Westfield" or the "Company") since prior to
the wrongs herein complained of and continuously to date.
2. Westfield is a corporation that maintains it principal
offices at 11601 Wilshire Boulevard, Los Angeles, California. The Company
is a real estate investment trust and is one of the leading owners of
shopping centers in the United States. Westfield owns interests in 39
major shopping centers that are branded as Westfield Shoppingtowns.
3. Defendant Westfield America Trust, is the fifth largest
property trust listed on the Australian Stock Exchange and is managed by
Westfield America Management Limited, a subsidiary of Westfield Holdings
Limited ("Westfield Holdings").
4. Defendant Westfield Holdings is a holding company that,
through its affiliates, owns interest in major shopping centers and
commercial properties worldwide.
5. Defendant Westfield America Trust, together with its
affiliate Westfield Holdings (collectively "Westfield Trust"), owns or
controls approximately 77.5% of the equity of the Company.
6. Defendant Frank P. Lowy is Chairman of the Board of
Directors of the Company and Chairman of Westfield Holdings.
7. Defendant David Lowy is a Director of the Company and a
director of Westfield Holdings. He is the son of Defendant Frank P. Lowy.
8. Defendant Peter S. Lowy is Co-President and a Director of
the Company and Managing Director and a Director of Westfield Holdings.
He
is the son of Defendant Frank P. Lowy.
9. Defendants Frank P. Lowy, David H. Lowy and Peter S. Lowy
(the "Lowy Family") control Westfield Holdings and Westfield Trust.
10. Defendants Francis T. Vincent, Larry A. Silverstein,
Herman
Huizinga, Bernard Marcus, Roy L. Furman and Frederick G. Hilmer are
Directors of the Company.
11. Westfield Trust, as controlling shareholder, and the
director defendants stand in a fiduciary position relative to the
Company's public shareholders and owe the public shareholders of
Westfield the highest duties of good faith, fair dealing, due care,
loyalty, and full and candid disclosure.
CLASS ACTION ALLEGATIONS
12. Plaintiff brings this action on his own behalf and as a
class action, pursuant to California Rules of Civil Procedure, on behalf
of all security holders of the Company (except the defendants herein and
any person, firm, trust, corporation, or other entity related to or
affiliated with any of the defendants) and their successors in interest,
who are or will be threatened with injury arising from defendants'
actions as more fully described herein.
13. This action is properly maintainable as a class action.
14. The class is so numerous that joinder of all members is
impracticable. There are approximately 73,346,541 shares of Westfield
common stock outstanding owned by hundreds, if not thousands, of holders
other than Westfield Trust and its affiliates.
15. There are questions of law and fact which are common to
the
class including, inter alia, the following: (a) whether defendants have
breached their fiduciary and other common law duties owed by them to
plaintiff and the members of the class; (b) whether defendants are
pursuing a scheme and course of business designed to eliminate the public
securities holders of Westfield in violation of the laws of the State of
California in order to enrich Westfield Trust and its affiliates at the
expense and to the detriment of plaintiff and the other public
stockholders who are members of the class; (c) whether the proposed
transaction, hereinafter described, constitutes a breach of the duty of
fair dealing with respect to he plaintiff and the other members or the
class; and (d) whether the class is entitled to injunctive relief or
damages as a result of the wrongful conduct committed by defendants.
16. Plaintiff is committed to prosecuting this action and has
retained competent counsel experienced in litigation of this nature. The
claims of the plaintiff are typical of the claims of other members of the
class and plaintiff has the same interests as the other members of the
class. Plaintiff will fairly and adequately represent the class.
17. Defendants have acted in a manner which affects plaintiff
and all members of the class alike, thereby making appropriate injunctive
relief and/or corresponding declaratory relief with respect to the class
as a whole.
18. The prosecution of separate actions by individual members
of the Class would create a risk of inconsistent or varying adjudications
with respect to individual members of the Class, which would establish
incompatible standards of conduct for defendants, or adjudications with
respect to individual members of the Class which would, as a practical
matter, be dispositive of the interests of other members or substantially
impair or impede their ability to protect their interests.
SUBSTANTIVE ALLEGATIONS
19. On February 15, 2001, Westfield announced that it had
received a proposal from Westfield Trust for the acquisition by Westfield
Trust of all of the shares of common stock of the Company not held by
Westfield Trust and its affiliates. Under the proposed transaction, the
Company's public shareholders would receive $16.25 per share in cash.
20. The price of $16.25 per share to be paid to class members
is unfair and inadequate consideration because, among other things: (a)
the intrinsic value of the stock of Westfield is materially in excess of
$16.25 per share, giving due consideration to the prospects for growth
and
profitability of Westfield in light of its business, earnings and
earnings
power, present and future; (b) the $16.25 per share price offers an
inadequate premium to the public stockholders of Westfield; and (c)
the $16.25 per share price is not the result of arm's length negotiations
but was fixed arbitrarily by Westfield Trust to "cap" the market price of
Westfield stock, as part of a plan for Westfield Trust to obtain complete
ownership of Westfield, its assets and businesses at the lowest possible
price.
21. The proposal is an attempt by Westfield Trust to unfairly
aggrandize Westfield Trust at the expense of Westfield's public
stockholders. The proposal will, for inadequate consideration, deny
plaintiff and the other members of the class their right to share
proportionately in the future success of Westfield and its valuable
assets,
while permitting Westfield Trust to benefit wrongfully from the
transaction.
22. Given Westfield Trust's (and the Lowy Family's) stock
ownership and representation on Westfield's Board and in management, they
are able to dominate and control the other directors, all of whom were
hand-picked by Westfield Trust (and the Lowy Family) and are beholden to
them for the prestige and perquisites of their offices. Under the
circumstances, none of the directors can be expected to protect the
Company's public shareholders in transactions which benefit Westfield
Trust at the expense of Westfield's public shareholders, as exemplified
by the proposed transaction.
23. Because of Westfield Trust's stock ownership and offices,
no third party, as a practical matter, can attempt any competing bid for
Westfield, as the success of any such bid would require the consent and
cooperation of Westfield Trust.
30. Plaintiff and the other members of the Class will suffer
irreparable damage unless defendants are enjoined form breaching their
fiduciary duties to Westfield's public shareholders in a proposed
transaction which will benefit fiduciaries at the expense of the public
shareholders of the Company.
31. Plaintiff and the other members of the Class have no
adequate remedy at law.
WHEREFORE, plaintiff demands judgment against defendants,
jointly and severally, as follows:
(1) declaring this action to be a class action and certifying
plaintiff as the Class representative and her counsel as Class counsel;
(2) enjoining, preliminarily and permanently, the transaction
complained of herein;
(3) to the extent, if any, that the transaction or
transactions
complained of are consummated prior to the entry of this Court's final
judgment, rescinding such transaction or transactions, or granting the
Class rescissory damages;
(4) directing that defendants account to plaintiff and the
other members of the Class for all damages caused to them and account for
all profits and any special benefits obtained as a result of their
unlawful
conduct;
(5) awarding plaintiff the costs and disbursements of this
action, including a reasonable allowance for the fees and expenses of
plaintiff's attorneys and experts; and
(6) Granting plaintiff and the other members of the Class
such
other and further relief as may be just and proper.
Dated: February 15, 2001 LAW OFFICES OF LIONEL Z. GLANCY
/s/ Lionel Z. Glancy, Esq.
---------------------------------
Lionel Z. Glancy, Esq.
1801 Avenue of the Stars
Los Angeles, California 90067
Telephone: (310) 201-9150
Facsimile: (310) 201-9160
Attorneys for Plaintiff
OF COUNSEL:
BERNSTEIN LIEBHARD & LIFSHITZ, LLP
Stanley D. Bernstein, Esq.
10 East 40th Street
New York, NY 10016
(212) 779-1414
LAW OFFICES OF LIONEL Z. GLANCY
LIONEL Z. GLANCY #134180
1801 Avenue of the Stars, Suite 308
Los Angeles, CA 90067
Telephone: 310/201-9150
Faxsimile: 310/201-9160
ABBEY GARDY, LLP
ARTHUR N. ABBEY
MARK C. GARDY
JAMES S. NOTIS
212 East 39th Street
New York, NY 10016
Telephone: 212/889-3700
Facsimile: 212/684-5191
Attorneys for Plaintiff
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
ADREINNE KAUFMAN, On ) CIV. NO. BC245136
Behalf of Herself and )
All Others Similarly ) CLASS ACTION
Situated, )
)
Plaintiff. )
)
vs. ) COMPLAINT BASED UPON
) UNFAIR BUSINESS
WESTFIELD AMERICA, INC., ) PRACTICES, SELF DEALING
WESTFIELD AMERICA TRUST ) AND BREACH OF FIDUCIARY
FRANK P. LOWY, PETER S. ) DUTY
LOWY, STEVEN M. LOWY, )
RICHARD E. GREEN, ROY L. )
FURMAN, HERMAN HUIZINGA, )
BERNARD MARCUS, LARRY A. )
SILVERSTEIN and FRANCIS T. )
VINCENT, JR., )
)
Defendants )
-------------------------------------)
Plaintiff, by her attorneys, alleges upon information and belief,
except as to paragraph 1 which plaintiff alleges upon knowledge, as
follows:
1. Plaintiff Adrienne Kaufman is a stockholder of defendant Westfield
America, Inc. ("WA Inc." or the "Company").
2. Defendant WA Inc. is a corporation with principal offices located
at 11601 Wilshire Boulevard, 12th Floor, Los Angeles, California
90025.
WA Inc. is a real estate investment trust or "REIT."
Through its subsidiaries and affiliates, WA Inc. owns, operates,
leases, develops, redevelops nd acquires super regional and
regional retail shopping centers located primarily in major
metropolitan areas in the United States.
3. Defendant Westfield America Trust ("WA Trust") is WA Inc.'s
largest shareholder, and owns or controls shares representing
approximately 77.5 percent of the Company's total shares
outstanding. WA Trust, through its affiliate, Westfield Holdings
Limited ("WA Holdings"), earns about half of its profits through
the U.S. operations of WA Inc.
4. Defendant Frank P. Lowy is the Chairman of the Board of Directors
of both WA Inc. and WA Trust.
5. Defendant Peter S. Lowy is a Director of WA Inc. and WA Trust.
Peter S. Lowy is also a Managing Director of WA Holdings. Peter S.
Lowy is the son of Frank P.Lowy.
6. Defendant Steven M. Lowy is a Director of WA Inc. and WA Trust, as
well as a Managing Director of WA Holdings. Steven Lowey in the son
of Frank P. Lowy and the brother of Peter S. Lowy.
7. Defendant Richard E. Green is a Director of WA Inc., and former
Co-President of the Company.
8. Defendant Roy L. Furman is a Director of WA Inc.
9. Defendant Herman Huizinga is a Director of WA Inc.
10. Defendant Bernard Marcus is a Director of WA Inc.
11. Defendant Larry A. Silverstein is a Director of WA Inc.
12. Defendant Francis T. Vincent, Jr. is a Director of WA Inc.
13. The defendants named in paragraphs 4 through 13 are sometimes
collectively referred to herein as the "Individual Defendants."
14. The Individual Defendants as officers and/or directors of WA Inc.
have a fiduciary relationship and responsibility to plaintiff and
the other common public stockholders of WA Inc. and owe to
plaintiff and the other class members the highest obligations of
good faith, loyalty, fair dealing, due care and candor.
CLASS ACTION ALLEGATIONS
15. Plaintiff brings this action pursuant toss.382 of the California
Code of Civil Procedure on her own behalf and as a class action on
behalf of all common stockholders of WA Inc., or their successors
in interest, who are being and will be harmed by defendants'
actions described below (the "Class"). Excluded from the Class are
defendants herein and any person, firm, trust, corporation, or
other entity related to or affiliated with any of defendants.
16. This action is properly maintainable as a class action because:
a. The Class is so numerous that joinder of all members is
impracticable. There are hundreds of WA Inc. stockholders of
record who are located throughout the United States;
b. There are questions of law and fact which are common to the
Class, including: whether the defendants have engaged or are
continuing to act in a manner calculated to benefit
themselves
at the expense of WA Inc.'s minority stockholders; and
whether
plaintiff and the other members of the Class would be
irreparably damaged if the defendants are not enjoined in the
manner described below;
c. The defendants have acted or refused to act on grounds
generally applicable to the Class, thereby making appropriate
final injunctive relief with respect to the Class os a whole.
d. Plaintiff is committed to prosecuting this action and has
retained competent counsel experienced in litigation of this
nature. The claims of plaintiff are typical of the claims of
the other members of the Class and plaintiff has the same
interests as the other members of the Class. Accordingly,
plaintiff is an adequate representative of the Class and will
fairly and adequately protect the interests of the Class; and
e. Plaintiff anticipates that there will be no difficulty in the
management of this litigation.
17. For the reasons stated herein, a class action is superior to other
available methods for the fair and efficient adjudication of this
controversy.
CLAIM FOR RELIEF
18. As a REIT, WA Inc. has no employees and is dependent on the
subsidiaries and affiliates of WA Holdings for the management of
the Company and its properties.
19. On February 15, 2001, WA Inc. publicly announced that it signed a
definitive merger agreement with WA Trust whereby WA Trust would
acquire all of the WA Inc. stock it does not already own for $16.25
cash per share.
20. As set forth above, WA Inc. is wholly dependant on WA Holdings for
its operations, and the loyalties of WA Inc. Board of Directors are
divided in the instant transaction. The Individual Defendants are
beholden to WA Trust and WA Holdings and cannot be expected to act
in the best interest of WA Inc.'s minority stockholders.
21. The purpose of the proposed acquisition is to enable WA Trust to
acquire the shares of WA Inc. it does not already own, as well as
WA Inc.'s valuable assets for WA Trust's own benefit at the expense
of WA Inc.'s minority stockholders.
22. The proposed acquisition comes at a time when WA Inc. has
performed well and WA Trust expects it will continue to perform
well because it is already well-positioned to do so.
23. WA Trust has timed this transaction to capture WA Inc.'s future
potential and use it to their own ends without paying an adequate
or fair price for the Company's remaining shares.
24. Amidst a backdrop of positive and improving financial position and
increased prospects for growth, WA Trust announced its desire to
acquire the remaining shares of WA Inc. for $16.25 cash per share.
The offer made by WA Trust represents a minimal premium over the
current price of WA Inc. common stock.
25. The Individual Defendants and WA Trust are in a position of
control and power over the WA Inc.'s stockholders and have access
to internal financial information about WA Inc., its true value,
expected increase in true value and the benefits to WA Trust of
100 percent ownership of WA Inc. to which plaintiff and the Class
members are not privy. Defendants are using their positions of
power and control to benefit WA Trust in this transaction, to the
detriment of the WA Inc. common stockholders.
26. In proposing the acquisition, WA Trust and the Individual
Defendants have committed or threatened to commit the following
acts to the detriment and disadvantage of WA Inc. minority
stockholders:
a. They have undervalued the WA Inc. common stock by ignoring
the full value of its assets and future prospects. The
proposed acquisition consideration does not reflect the
value
of WA Inc.'s valuable assets; and
b. They timed the announcement of the proposed buyout to place
an artificial lid on the market price of WA Inc.'s common
stock to justify a price that is unfair to WA Inc.'s
minority
stockholders.
27. The Individual Defendants have clear and material conflicts of
interest and are acting to better the interests of WA Trust and
themselves at the expense of WA Inc.'s minority stockholders.
28. In light of the foregoing, the Individual Defendants must, as
their fiduciary obligations require:
undertake an appropriate evaluation of WA Inc.'s worth as an
acquisition candidate;
act independently so that the interests of WA Inc.'s minority
stockholders will be protected, including but not limited to
the retention of independent advisors and the appointment of
a
Special Committee of some or all of the members of the WA
Inc.'s board to consider the WA Trust offer and negotiate
with
WA Trust on behalf of WA Inc.'s minority stockholders;
adequately ensure that no conflicts of interest exist between
defendants' own interests and their fiduciary obligation to
maximize stockholder value or, if such conflicts exist, to
ensure that all conflicts be resolved in the best interests
of
WA Inc.'s minority stockholders; and
if an acquisition transaction is to go forward, require that
it be approved by a majority of WA Inc.'s minority
stockholders.
29. As a result of the defendants' failure to take such steps to date,
plaintiff and the other members of the Class have been and will be
damaged in that they have not and will not receive their
proportionate share of the value of the Company's assets and
business, and have been and will be prevented from obtaining a fair
price for their common stock.
30. Defendants, in failing to disclose the material non-public
information in their possession as to the value of WA Inc.'s
assets,
the full extent of the future earnings potontial of WA Inc. and its
expected increase in profitability, are engaging in self-dealing,
are not acting in good faith toward plaintiff and the other members
of the Class, and have breached and are breaching their fiduciary
duties to the member of the Class.
31. As a result of the defendants' unlawful actions, plaintiff and the
other members of the Class will be irreparably harmed in that they
will not receive their fair portion of the value of WA Inc.'s
assets and business and will be prevented from obtaining the real
value of their equity ownership of the Company. Unless the proposed
acquisition is enjoined by the Court, defendants will continue to
breach their fiduciary duties owed to plaintiff and the members of
the Class, will not engage in arm's length negotiations on the
acquisition terms, and will not supply to WA Inc.'s minority
stockholders sufficient information to enable them to cast informed
votes on the proposed acquisition and may consummate the proposed
acquisition, all to the irreparable harm of the members of the
Class.
32. Plaintiff and the other members of the Class have no adequate
remedy at law.
WHEREFORE, plaintiff prays for judgment and relief as
follows:
A. Ordering that this action may be maintained as a class action
and certifying plaintiff as the Class representative;
B. Declaring that defendants have breached their fiduciary and
other duties to plaintiff and the other members of the Class;
C. Entering an order requiring defendants to take the steps set
forth hereinabove;
D. Preliminarily and permanently enjoining the defendants and
their counsel, agents, employees and all persons acting
under,
in concert with, or for them, from proceeding with,
consummating or closing the proposed transaction;
E. In the event the proposed acquisition is consummated,
rescinding it and setting it aside;
F. Awarding compensatory damages against defendants individually
and severally in an amount to be determined at trial,
together
with prejudgment interest at the maximum rate allowable by
law;
G. Awarding costs and disbursements, including plaintiff's
counsel's fees and experts' fees; and
H. Granting such other and further relief as to the Court may
seem just and proper.
Dated: February 15, 2001 LAW OFFICES OF LIONEL Z. GLANCY
LIONEL Z. GLANCY
/s/ Lionel Z. Glancy
-----------------------------------
LIONEL Z. GLANCY
1801 Avenue of the Stars, Suite 308
Los Angeles, CA 90067
Telephone: 310/201-9150
Facsimile: 310/201-9160
ABBEY GARDY, LLP
ARTHUR N. ABBEY
MARK C. GARDY
JAMES S. NOTIS
212 East 39th Street
New York, NY 10016
Telephone: 212/889-3700
Facsimile: 212/684-5191
Attorneys for Plaintiff
*********
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
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Washington, DC. Theresa Cheuk, Managing Editor.
Copyright 1999. All rights reserved. ISSN 1525-2272.
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