/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/020927.mbx C L A S S A C T I O N R E P O R T E R Friday, September 27, 2002, Vol. 4, No. 192 Headlines BRIDGESTONE/FIRESTONE: Settles "Roll-over" Death Suit in California CHRONIMED INC.: Securities Suit Trial in Minnesota Set for January 2004 CONSECO FINANCE: Sued the Second Time for not Paying Overtime Work COOPER INDUSTRIES: County Residents to Work Out Individual Settlements ERPENBECK CO.: Homebuilder Involved In Kentucky's Biggest Bank Fraud FLEETBOSTON FINANCIAL: Summit Bancorp Investors Sue Over False Reports FLEMING COMPANIES: Cauley Geller Announces New Developments in Lawsuit GEORGIA-PACIFIC: Many Affected Residents in '97 Explosion Still Unpaid IPALCO ENTERPRISES: Investors Name President's Budget Director In Suit NORFOLK SOUTHERN: Class Action Filed Over Freight Train Derailment ROADHOUSE GRILL: Suit Will Likely Be Subordinated, Creditors Come First ROCK HILL: Former President, Two 0thers Charged with Fraud in Columbia ROCK HILL: Ex-President's Trial for Defrauding Bank to Begin November SOUTHWESTERN ENERGY: Settles Arkansas Suit by Agreeing to New Contract TRITON ENERGY: Settles Shareholders Suit in Texas for $49 Million UNITED STATES: Court Junks Claims Against Government for Toxic Exposure UNITED STATES: More Robins Air Force Base Workers Support Bias Suit * Amidst the Corporate Rubble, There Comes a Truth-Seeker * U.S. Judicial Conference Endorses Rule Changes To Protect Plaintiffs * Asbestos Alert * ASBESTOS ALERT: Foster Wheeler Faces 110,700 Cases at End-2001 ASBESTOS ALERT: Huttig Posts $900,000 Reserve for Asbestos Costs ASBESTOS ALERT: Union Carbide Ties Wave of Cases to Bankruptcies ASBESTOS ALERT: Viacom Has 118,000 Pending Asbestos Cases ASBESTOS ALERT: ABB Asbestos Cases Rise in March to 94,000 ASBESTOS LITIGATION: Companies Settle But Trial Goes Ahead ASBESTOS LITIGATION: Senate Panel to Hear Asbestos Woes New Securities Fraud Cases AT&T CORPORATION: Schatz & Nobel Commences Securities Suit in S.D. NY ESS TECHNOLOGY: Brodsky & Smith Commences Securities Suit in N.D. CA FLEMING COMPANIES: Marc Henzel Commences Securities Suit in E.D. Texas FLEMING COMPANIES: Milberg Weiss Lodges Securities Suit in E.D. Texas FLEMING COMPANIES: Wolf Popper Commences Securities Suit in E.D. Texas INTERBANK FUNDING: Cohen Milstein Commences Securities Suit in Columbia MERRILL LYNCH: Cohen Milstein Commences Securities Suit in S.D. NY MERRILL LYNCH: Rabin & Peckel Commences Securities Suit in S.D. NY METRIS COMPANIES: Cauley Geller Commences Securities Suit in Minnesota METRIS COMPANIES: Weiss & Yourman Lodges Securities Suit in Minnesota METRIS COMPANIES: Schiffrin & Barroway Files Securities Suit in MN SALOMON SMITH: Stull Stull Commences Securities Fraud Suit in S.D. NY VODAFONE GROUP: Milberg Weiss Lodges Securities Fraud Suit in S.D. NY VODAFONE GROUP: Scott + Scott Lodges Securities Suit in S.D. New York ********* BRIDGESTONE/FIRESTONE: Settles "Roll-over" Death Suit in California ------------------------------------------------------------------- Bridgestone/Firestone Inc. settled last week for an undisclosed amount another "roll-over" case involving its Wilderness ATX tire fitted onto a Ford Explorer, reports the Associated Press. Jury selection for the suit filed by Cristina Hernandez began September 4, but a Los Angeles County Superior Court judge ordered that settlement discussions occur before another judge, who approved the deal Thursday last week. Plaintiff's attorney John Denove says the accident happened on October 31, 1999 when the tire manufactured by Bridgestone/Firestone Inc. lost its tread and blew, causing the SUV to roll over. The accident, which killed 19-year-old Cathy Dizon and injured four others, occurred on a freeway near Bakersfield. Mr. Denove told jurors that he would prove Ford and Bridgestone/Firestone knew the type of tire on the SUV was defective but ignored years of evidence of accidents. In addition, he claimed that the Explorer had a defect that made it more susceptible to rollover. "After laying out our case in opening statement and putting on witnesses for a couple of days, the matter has settled," Mr. Denove told the Associated Press. For its part the tire manufacturer denied the allegations and argued that the tire on Ms. Hernandez's Explorer failed because it had been damaged and should have been repaired or replaced. Nevertheless, Bridgestone/Firestone Spokesman Dan MacDonald told the news agency that the company decided to settle because "we don't think that protracted litigation is in the best interests of anyone." "I can confirm that we've reached an agreement, but we respect the right to privacy of the family so we will not discuss the details," Ford spokeswoman Kathleen Vokes told the Associated Press Friday. More than 250 people have been killed and hundreds more injured in accidents involving Bridgestone/Firestone tires. Most of the accidents involved Ford Explorers and tires losing their tread. Bridgestone/Firestone has settled about 700 lawsuits and has several still pending. In November 2001, state attorneys general across the nation announced that Bridgestone/Firestone would pay $41.5 million in a settlement to end state lawsuits over the tires. CHRONIMED INC.: Securities Suit Trial in Minnesota Set for January 2004 ----------------------------------------------------------------------- On June 15, 2001, a putative class action lawsuit captioned Judith Barclay v. Chronimed Inc., et. al. (01-CV-1092 DWF) was commenced in the United States District Court for the District of Minnesota against Chronimed Inc. and certain of its current and former officers. The Complaint alleges that the company and individual defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10(b)-5 promulgated thereunder, and that the individual defendants violated Section 20(a) of the Exchange Act. Eight other lawsuits asserting claims identical to the Barclay case were brought by other plaintiffs during the weeks following the initial filing. The nine lawsuits have been consolidated into a single case. The Complaints allege in general terms that the company made false and misleading statements about its financial statements in violation of the securities laws. The alleged violations arise out of the requirement to restate previously issued financial statements. The company issued public statements regarding these matters on June 14, June 21, August 14, August 23, and September 25, 2001. Each plaintiff seeks compensatory damages in an unstated amount, interest, fees, expenses, and unspecified equitable relief. The company is unable to reasonably quantify the alleged damages on the basis of the general allegations of the Complaints. "We believe that the above claims are wholly without merit and will vigorously defend against the lawsuits. We have retained the law firm of Dorsey & Whitney LLP to represent us in the shareholder actions," a Securities and Exchange Commission disclosure said. "An adverse ruling in these actions in excess or outside of our insurance coverage could have a material adverse impact on us." The lawsuit is in the discovery phase and is scheduled for trial in January 2004. Chronimed specializes in special deliveries. Through agreements with such manufacturers as Amgen, Biogen, and Novartis, the company distributes some 2,700 brand name and generic prescription drugs for patients with such chronic conditions as AIDS, cancer, and multiple sclerosis, a Hoovers.com dossier says. Chronimed focuses on medications that have unique packaging or delivery requirements. It sells the drugs both by mail and through its StatScript retail pharmacy chain, which provides pharmacy services to HIV/AIDS patients. Chronimed also offers pharmaceutical management services to insurers and other third-party payers. The company expanded its services for transplant patients with its purchase of The Transplant Pharmacy from SangStat, the dossier says. CONSECO FINANCE: Sued the Second Time for not Paying Overtime Work ------------------------------------------------------------------ Beleaguered Conseco Finance Corporation faces a second class action for non-payment of overtime work and altering time sheets to reflect a 40- hour workweek, says the Tribune Business News. The suit filed Thursday last week before the U.S. District Court in Minneapolis accuses managers at St. Paul-based Conseco Finance of ordering employees not to record overtime hours. Potential class members include thousands of current and former loan originators at Conseco Finance's home improvement and manufactured housing division since April 2000 and its retail mortgage services division since March 2000. Lawyer Don Nichols of Minneapolis-based Nichols, Kaster & Anderson filed the suit on behalf of the employees. This same law firm filed the first suit in June 2000, disputing the company's classification of its employees. Changes made by Conseco in response to this original suit are key elements in the latest litigation. Some 2,900 plaintiffs claimed in the original suit that the company withheld overtime wages; 1 1/2 times regular pay beyond 40 hours per week, because it considered them "salaried and commissioned employees," Mr. Nichols said. In late March, the court ruled in favor of some 2,200 plaintiffs. The decision was based in part on Supreme Court and U.S. Department of Labor rulings that credit and finance institutions do not qualify under the "retail or service establishment" exemption of the Fair Labor Standards Act that would allow overtime to be denied, according to court documents cited by the Tribune Business News. Businesses that fall under the exemption, typically supermarkets, hardware stores, clothiers, restaurants and hotels, can forgo overtime if an employee's regular pay rate exceeds 1 1/2 times "the minimum hourly rate applicable" or if "more than half the employee's compensation represents commissions on goods or services." Loan originators at Conseco Finance earn a base salary of $25,000 annually, along with commissions and other payments that raise total compensation to an average of $65,000 to $70,000 a year. Although Conseco Finance changed its policy to include loan originators as overtime employees, the company continues to pressure employees not to claim overtime, Mr. Nichols said. He said damages from the original suit, which he expects to range from $15 million to $18 million, had yet to be determined. A hearing on that matter is scheduled for next week, he said. "But I would estimate that damages from our latest suit will be higher -- probably several times higher -- than the original suit," Mr. Nichols said. Officials at Conseco's Carmel headquarters could not be immediately reached for comment. COOPER INDUSTRIES: County Residents to Work Out Individual Settlements ---------------------------------------------------------------------- A Texas-based company blamed for contaminating Dayhoit with cancer- causing pollutants will be permitted to negotiate settlements with residents and others who frequented the Harlan County community, the Associated Press Newswires reported recently. Circuit Judge Ron Johnson approved a deal that will allow Cooper Industries to work out individual settlements with people who may have been adversely affected by polychlorinated biphenys, or PCBs. More than 3,000 Dayhoit residents and others who frequented the community have asked for $500 million in the class-action lawsuit. Only a portion of those is expected to receive settlements under the deal. Lead attorney Louise Roselle of Cincinnati, Ohio, worked out the settlement agreement in August. The settlement was viable only if Judge Johnson dissolved the class-action. Judge Johnson did that on Friday, the same day he ordered an attorney not to try to win clients away from Ms. Roselle. Donna Holt of Knoxville, Tenn., had asked Judge Johnson to appoint her to the case, because, she claimed, residents were not being adequately represented. Ms. Holt had represented a group of Dayhoit residents in a previous lawsuit against Cooper Industries, which owns property in Dayhoit, a community that has been declared a federal Superfund site. Ms. Holt asked the court to name her as the attorney in the case and require Ms. Roselle and other attorneys to turn case files and information over to her. Ms. Holt said that allowing Cooper to make individual settlement offers is not in the best interest of the people affected. Ms. Roselle responded by accusing Ms. Holt and her representatives of unethically recruiting her clients. The lawsuit originally asked for compensatory damages of at least $400 million, punitive damages of at least $100 million, and $10 million to provide for future health needs. ERPENBECK CO.: Homebuilder Involved In Kentucky's Biggest Bank Fraud -------------------------------------------------------------------- Kentucky's top banking regulator says a Northern Kentucky loan fiasco that ensnared about 20 financial institutions in the state could be the biggest case of bank fraud in its history, The Lexington Herald Leader recently reported. Peoples Bank of Northern Kentucky arranged the "participation loans" with the homebuilder Erpenbeck Co. for a number of banks. Peoples faces a class-action lawsuit from shareholders, which was filed last Thursday in Campbell County Circuit Court on behalf of Jeffrey Eschenbach, who owns 565 shares of Peoples stock. "This is the first case of this magnitude that I am aware of," said Ella Robinson, Commissioner of the Kentucky Department of Financial Institutions. "We might have some small bank-fraud cases that happen occasionally, but nothing this unique given the size of losses and number of people involved." Banks as far away as Pikeville and Middlesboro lent Erpenbeck Co. $28.5 million through "participation loans" arranged by Peoples Bank. The bank with the most at stake is Frankfort-based Farmers Bank and Capital Trust. The 152-year-old bank took a $15.3 million piece of the Erpenbeck loan package. Others that have declared their Erpenbeck loans "non-earning" and have taken steps to recover their money include Bank of Corbin, $2 million; Community Trust Bank in Pikeville, $5.5 million; and First State Bank of Pineville, $3.8 million. In reports filed last week with the Federal Deposit Insurance Corp., all the banks said they remained in the highest bracket of capital-to- assets ratio, a chief indicator of a financial institution's health. Ms. Robinson said she does not anticipate any need for intervention in the wage of the participation loans gone bad. She called it an "isolated situation." Five months ago, the FBI began investigating Erpenbeck, an Edgewood-based homebuilder, and its former president A. William "Bill" Erpenbeck for possible bank fraud. Although no charges have been filed, the image of Peoples Bank and its finances have been tarnished by ties to the homebuilder. The lawsuit filed against Peoples Bank (described above, in part) seeks class-action status on behalf of the 40 or 50 people who own the 20 percent of Peoples' shares not owned by the bank's executives and directors. The stock, initially issued on the bank's formation in 1992, is privately held and not traded. The lawsuit, filed by Cincinnati lawyer Michael Brautigam, alleges that Peoples and its directors' "reckless conduct" and breach of fiduciary duties in the handling of Erpenbeck Co. home-sale closing proceeds caused the bank's assets to "evaporate," thereby damaging the stock's value. The lawsuit also names former Peoples executives John Finnan and Marc Menne, who were forced to resign in April for having separate, undisclosed business dealings with Erpenbeck. FLEETBOSTON FINANCIAL: Summit Bancorp Investors Sue Over False Reports ---------------------------------------------------------------------- Former Summit Bancorp shareholders have filed suit against FleetBoston Financial, alleging that the New England-based banking firm has misled them about the conditions of its operations in Argentina. The lawsuit, filed recently in U.S. District Court by Stull, Stull and Brody, a New York City law firm that specializes in shareholder actions, seeks class-action status and unspecified damages. The Summit shareholders' complaint alleges that statements FleetBoston made in several Securities and Exchange Commission filings, including a proxy statement, contained "false financial information" about earnings from its Argentine operations and reserves set aside for potential losses related to loans in Argentina. Troubled loans and investment in Argentina have resulted in FleetBoston taking $2.3 billion in charges, and its shares have fallen more than 40 percent this year. The Argentine government defaulted on $95 billion in bonds late last year and devalued its currency. FleetBoston has more exposure to possible loan and investment losses in financially troubled Argentina than any other U.S. banking company. FleetBoston's profits have been reduced by losses in Argentina, the decline and eventual shuttering of its investment banking business on the West Coast, and losses on large corporate loans in the United States. FLEMING COMPANIES: Cauley Geller Announces New Developments in Lawsuit ---------------------------------------------------------------------- The Law Firm of Cauley Geller Bowman & Coates, LLP previously announced that a class action was filed on August 29, 2002, on behalf of purchasers of Fleming Companies, Inc. (NYSE: FLM) common stock during the period between February 27, 2002 and July 30, 2002, inclusive. Late Tuesday, the Company lowered its third- and fourth-quarter guidance and said it would sell its off-price supermarket chains in a series of transactions over the next several months. Fleming announced on Wednesday that it has received multiple offers for most of its 110- store retail supermarket operation, Food 4 Less and Rainbow Foods supermarkets, which have been battered by intense competition and sluggish sales. The complaint filed by Cauley Geller late last month alleges violations of the Federal Securities Laws relating to Fleming's numerous positive statements regarding its "price-impact" retail supermarket division. The suit alleges that beginning in early 2002, defendants Fleming, Mark Hansen (CEO, Chairman), Neal J. Rider (CFO) and Thomas G. Dahlen (Executive FP, President of retail operations) issued numerous positive statements regarding Fleming's "price- impact" retail supermarket division. Defendants knew, or recklessly disregarded, that the "price-impact" stores were not living up to defendants' expectations, yet the statements were released to the investing public nonetheless. The effect of these statements was to falsely portray Fleming's business prospects and to artificially inflate and maintain the price of Fleming common stock. Further, the defendants used the artificially high stock price to: (1) lower the interest rate and extend the maturity on $250 million of Fleming's debt; (2) raise over $155 million through the June 13, 2002 sale of 8 million shares of Fleming common stock at $19.40 per share; (3) raise an additional $200 million through the June 13, 2002 sale of Fleming Notes due 2010; and (4) to use the proceeds of the June 13, 2002 securities sales to complete the purchase of Core-Mark International, Inc. and Head Distributing for $330 million in cash -- acquisitions described by the defendants as "key" to Fleming's implementation of its strategic transformation into an efficient, national, multi-tier supply chain for consumer packaged goods. Then, after only approximately six weeks after defendants sold $355 million worth of Fleming securities, Fleming startled the market by announcing after the close of trading on July 30, 2002 that its "price- impact" retail supermarket division was not only performing poorly, but performing so poorly that Fleming was considering abandoning this line of business entirely. The price of Fleming common stock dramatically declined on this announcement, falling from $15.21 on July 30, 2002 to $13.75 on July 31, 2002, on huge trading volume of 3.9 million shares, and continued to decline over the next two heavy trading days to a 52-week low of $10.76 on August 2, 2002. Since then, the price of Fleming common stock has never recovered, and currently trades well below the $19.40 price at which Fleming sold 8 million shares to unsuspecting investors on June 13, 2002. For more information, contact Cauley Geller Bowman & Coates, LLP through its Investor Relations Department: Jackie Addison, Sue Null or Ellie Baker by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 888-551-9944 (toll free) or by e-mail: info@cauleygeller.com GEORGIA-PACIFIC: Many Affected Residents in '97 Explosion Still Unpaid ---------------------------------------------------------------------- About 1,500 South Side Columbus residents have yet to receive compensation stemming from a 1997 explosion at the Georgia-Pacific chemical plant -- even though a settlement was approved more than nine months ago, reported The Columbus Dispatch. James Hopple, the court-appointed settlement administrator, said yesterday that the payments should be mailed by December 31. They initially were to be sent in early summer. Mr. Hopple said, "We are now in the process and trying very diligently to have it completed with the calendar year." Attorneys for the South Side Community Action Association, which had sued Georgia-Pacific in 1998, announced the $22 million settlement last October. And Franklin County Common Pleas Judge Jennifer Brunner approved the agreement on December 19. The settlement called for Georgia-Pacific to compensate as many as 6,000 people who suffered health problems or property damage resulting from the September 10, 1997, explosion of an 8,500-gallon resin kettle at the company's Watkins Road plant. The blast killed one employee and injured at least 13 others. About 1,750 area residents submitted claims by the deadline of February 15, and about 1,500 met the geographic criteria established by the settlement. IPALCO ENTERPRISES: Investors Name President's Budget Director In Suit ---------------------------------------------------------------------- A recently filed lawsuit by shareholders of IPALCO Enterprises Inc. has named President Bush's budget director Mitch Daniels as one of its defendants, according to a report by Associated Press Newswires. The proposed class-action lawsuit also names Chairman John Hodowal and 22 IPALCO officers and board members as defendants. The lawsuit contends that IPALCO insiders misled investors about the financial condition of the energy company AES Corporation and the volatile nature of its stock. Shareholders lost hundreds of millions of dollars when IPALCO was sold to AES. The lawsuit was filed on behalf of all IPALCO investors who held stock as of September 8, 2000. "We intend to show that while IPALCO company executives were publicly touting the sale to AES, they had information that painted a much different picture which they never disclosed," said Steve Berman, the attorney representing the plaintiffs. Mr. Daniels, when he became budget director in January 2001, sold millions of dollars worth of stock, including 60,000 shares of IPALCO stock. He made a $552,540 profit on the sale. Mr. Daniels, who has been mentioned as a possible Republican candidate for governor of Indiana, in 2004, has repeatedly said the stock sale had nothing to do with IPALCO's sale to AES. He has said he sold the stock because of an ethics agreement common to new administration officials designed to avoid appearances of impropriety. "To me, the cleanest, clearest thing to do was to liquidate everything," Mr. Daniels has said. Mr. Daniels was not named in the previous lawsuit over the IPALCO sale, but was included in the most recent one filed in U.S. District Court in Indianapolis, in which the new allegations are that AES originally offered to buy IPALCO for $25 a share in cash, an offer it later retracted without explanation and replaced with a stock-swap agreement. "It appears that the board of IPALCO was single-mindedly focused on closing the deal with AES, regardless of the terms or risk," said Mr. Berman. According to the lawsuit, former IPALCO executives received more than $46 million in stock sales and other compensation packages. Almost immediately after the purchase of IPALCO, AES stock plummeted. NORFOLK SOUTHERN: Residents File Suit Due To Freight Train Derailment --------------------------------------------------------------------- Two Knox County, Tennessee, residents filed a class-action lawsuit against Norfolk Southern Corp. railroad for damages from a freight train derailment that forced more than 3,000 people from their homes. Two attorneys, Donn Stelzer and Bret Freeman sued for up to $75,000 in punitive and compensatory damages for every plaintiff suffering "economic losses" caused by the 22-rail car pileup on September 15. The attorneys filed their complaint in Knox County Chancery Court the day after the wreck. A two-day evacuation was ordered after sulfuric acid leaked from a ruptured tank car. Norfolk Southern, which owned both the train and the tracks, set up a claims center to reimburse residents for everything from motel bills to lost pay. The cause of the accident remains under investigation by the railroad and the National Transportation Safety Board. ROADHOUSE GRILL: Suit Will Likely Be Subordinated, Creditors Come First ---------------------------------------------------------------------- As a result of a review of its accounting records, Roadhouse Grill Inc., in August 2001, restated its previously reported, audited financial statements for the fiscal years ended April 30, 2000, and April 25, 1999, and the related, unaudited quarterly financial statements for those periods, as well as the unaudited financial statements for the quarters ended July 30, 2000; October 29, 2000 and January 28, 2001. In connection with the restatement, the Company filed amended Form 10- Ks for fiscal years 2000 and 1999, and amended Form 10-Qs for the fiscal 2001, 2000 and 1999 quarters containing the restated financial statements. The restatement occurred because of a determination by the Company that certain operating expenses were more appropriately attributable to fiscal 2000 and 1999 than later periods. The restatement resulted in a decrease in net income for fiscal 2000 and 1999, and the related quarterly periods, and an increase in net income for the quarters ended July 30, 2000, October 29, 2000, and January 28, 2001. On April 10, 2002, a purported class action complaint alleging violations of federal securities laws was filed in the United States District Court for the Southern District of Florida against the Company, the chairman of the Company's board of directors, and the Company's president and chief executive officer. This action is styled: Sears v. Roadhouse Grill, Inc, et al., Case No.02-CV-60493. The Action purports to be brought on behalf of all purchasers of the stock of the Company between August 31, 1998 and August 1, 2001, with certain exclusions, and appears to be based principally if not solely on the fact that certain financial statements have been restated as described above. The Company believes there is no merit to the Action. The Company further believes that, under section 510(b) of the Bankruptcy Code, even if claims of the type asserted in the Action are allowed, they will be subordinated, in the Chapter 11 Case, to the claims of all creditors of the Company. Accordingly, such claims are treated under the Reorganization Plan as subordinate to the claims of all creditors. To the extent, if any, such claims are allowed, they will share in the distribution of stock in Reorganized Roadhouse Grill with the Holders of the Old Common Stock, and will not dilute the recoveries of Roadhouse Grill's creditors. The Company believes there is no merit to the Action. As the Company filed for relief under Chapter 11 of the United States Bankruptcy Code on April 16, 2002, any claims in this Action should have been filed by the plaintiffs with the United States Bankruptcy Court for the Southern District of Florida. If the plaintiffs had filed a claim with the Court, their claim against the Company would have been subordinated to the claims of all creditors of the Company. However, no claim against the Company was filed during the bankruptcy proceedings. Therefore, based on discussions with counsel, it is the Company's expectation that the case against the Company will be dismissed. However, this would not carry over to the individuals who are named as defendants. Roadhouse Grill operates nearly 80 casual dining restaurants (all but a handful are company-owned) that offer grilled entrees such as steak, chicken, and seafood. Roadhouse Grills can be found in about a dozen US states, as well as in Brazil and Malaysia. The company has inked deals to expand into Europe, and opened a franchise in Milan, Italy, in 2001. The restaurants' design offers traditional roadhouse elements: rough-sawed siding, wood plank porches, and tin roofs. Chairman Vincent Tan's Berjaya Group owns about 62% of the company. In 2001 Nasdaq temporarily halted trading of the company's stock and the SEC began investigating discrepancies in its financial statements. The following year Roadhouse Grill filed for Chapter 11 bankruptcy. ROCK HILL: Former President, Two 0thers Charged with Fraud in Columbia ---------------------------------------------------------------------- Rob Herron, the former president of Rock Hill Bank & Trust, faces 12 counts of bank fraud in the U.S. District Court in Columbia, says The Herald. He was set for arraignment Tuesday before the chamber of magistrate Judge Bristow Marchant. He was expected to plea innocent to the charges, which could put him behind bars for 30 years, plus fine of $1 million for each count, the report says. The indictment alleges that between April 8, 1998, and June 28, 2002, Mr. Herron, along with co-accused Philip Gear, 62, and Brian Cronenberger, 42, both of Fort Mill purchased 34 pieces of rental property in York, Chester and Lancaster counties at inflated prices. The loans were backed by appraisals issued by Mr. Herron that were based on properties that were not comparable, court documents cited by The Herald say. Loans ranged from $60,000 to $95,000. By overvaluing the property, the men could borrow more money than the property was worth and pocket the difference. The scheme was devised to help Mr. Herron make payments on a mobile home park in Fayetteville, N.C., court documents say. Documents show Mr. Gear reportedly received $93,689; Mr. Herron, $32,000 and his wife, Susan, $10,000. Shortly after Mr. Herron was fired July 3, the bank reported a $13.3 million loss for second quarter because of bad loans that have been attributed to Mr. Herron. The bank's recovery plan to the Federal Deposit Insurance Corp. includes an $8.8 million buyout by The South Financial Group of Greenville. The buyout is expected to close early in fourth quarter. Bank shareholders have filed two civil suits to recoup losses from the falling stock price. Attorneys of both suits hope the suits will be certified as class action, the paper said. ROCK HILL: Ex-President's Trial for Defrauding Bank to Begin November --------------------------------------------------------------------- The trial of Rock Hill Bank & Trust former President Rob Herron, who faces 12 counts of bank fraud in Columbia, will begin November, says The Herald in a report early this week. Chief Judge Joseph Anderson of the federal court in Columbia will handle the trial. Pre-trial motions are due Oct. 14, with a pre-trial conference set for Oct. 23, the paper said. Mr. Herron, along with co- accused Philip Gear, 62, and Brian Cronenberger, 42, both of Fort Mill, pleaded not guilty Tuesday. The not guilty plea places the burden on the prosecution to prove Herron's guilt beyond a reasonable doubt, Thomas McKinney, Mr. Herron's attorney, told The Herald. Mr. McKinney would not answer any other questions except to say that answers will come out in court. "We will find out the whys and ins and outs of it at a later time," he said. "You always need to wait for judgment until the facts are in." The prosecution alleges that between April 8, 1998, and June 28, 2002, the men purchased 34 pieces of rental property mostly in Great Falls, Chester and Lancaster at inflated prices. The loans were backed by appraisals issued by Mr. Herron that were based on properties that were not comparable. Loans ranged from $60,000 to $95,000. Some pieces of rental property were vacant lots. No surveys or appraisals were done on the rental property, the paper says. By overvaluing the property, the men could borrow more money than the property was worth and pocket the difference, court documents cited by The Herald show. The scheme was devised to help Mr. Herron make payments on a mobile home park in Fayetteville, N.C., documents say. Mr. Gear reportedly received $93,689; Mr. Herron, $32,000 and his wife, $10,000, the documents say. Most of the mortgages were put in the name of Mr. Cronenberger, who was coerced by Mr. Gear, according to an affidavit filed in August. Mr. Cronenberger had often provided maintenance work for Gear. "When he signed, he was acting on the advice of others," said Mr. Cronenberger's attorney, Dennis Bolt of Columbia, during an interview with The Herald after the hearing. Mr. Bolt said many people wonder if his client is a criminal or a victim. He pointed out that Mr. Cronenberger has no previous record. "This has been devastating to his wife and family. He's a carpenter, not a financier," Mr. Bolt said of his client. Since the irregularities were discovered, the bank reported a $13.3 million loss for second quarter because of bad loans. The bank's recovery plan to the Federal Deposit Insurance Corp. includes an $8.8 million buyout by The South Financial Group of Greenville. The buyout is expected to close early in the fourth quarter, the report says. Shareholders in the meantime are angry that their stock value has fallen from $14.35 to $5 and at least two suits have been filed against bank officers, with one filed against the board of directors. Attorneys of both suits hope they'll be certified as class action. SOUTHWESTERN ENERGY: Settles Arkansas Suit by Agreeing to New Contract ---------------------------------------------------------------------- Southwestern Energy Company disclosed in its latest Securities and Exchange Commission report that it has settled the suit filed against it and two subsidiaries in a state court in Sebastian County, Arkansas. The suit filed on August 25, 2000 relates to the company's Stockton Gas Storage Facility in Franklin County, Arkansas. The suit was filed on behalf of a class of plaintiffs comprised of all surface owners, mineral owners, royalty owners and overriding royalty owners in the Stockton Storage Facility. The plaintiffs alleged various wrongful, intentional and fraudulent acts relating to the operation of the storage pool beginning in 1968 and continuing to the present. According to the Class Action Reporter in its April 18, 2002 issue, the Company was granted authority in 1968 by the Arkansas Oil and Gas Commission to operate a gas storage facility in one section of Franklin County. Based upon subsequently developed geological data, the Company sought authority to expand this area and was granted authority by the Arkansas Oil and Gas Commission to operate gas storage in additional sections. The suit challenges the storage agreements that the Company obtained from the mineral interest owners in 1968, 1999 and 2000 to operate the gas storage facility known as "Stockton." The Company has owned and operated the Stockton storage unit through its Arkansas Western Gas Company subsidiary until 1994, at which time it was transferred to its subsidiary, SEECO, Inc. The suit claims ownership rights in the gas that the Company has stored in the storage pool in an amount in excess of $5 million in actual damages, interest, attorney's fees and punitive damages. Under the terms of the settlement, which is subject to approval by the Court, the Company will pay the plaintiffs a cash settlement amount and enter into new gas storage agreements at rental rates commensurate with current market rates. "The settlement of this litigation did not have a material impact on the Company's results of operations for 2001," the SEC document says. Southwestern Energy operates in Arkansas, Louisiana, New Mexico, Oklahoma, Texas, and along the Gulf Coast, where it has proved reserves of 402 billion cu. ft. of natural gas equivalent. Southwestern Energy is also engaged in natural gas transportation and marketing, a Hoovers dossier says. The company had announced plans to sell subsidiary Arkansas Western Gas, which distributes natural gas to more than 136,000 customers in Arkansas, to help pay a $109 million judgment in a lawsuit brought by royalty owners. However, another court ruling in its favor prompted Southwestern Energy to take the unit off the auction block. TRITON ENERGY: Settles Shareholders Suit in Texas for $49 Million ----------------------------------------------------------------- Shareholders of Triton Energy Ltd., who filed a suit under the Private Securities Litigation Reform Act (PSLRA), got a $49 million settlement from the oil company, reports the Texarkana Gazette. Believed to be the largest settlement in Texas, U.S. District Judge David Folsom signed the agreement Monday, allowing it to go forward. "We believe it's the largest PSLRA securities settlement in the Eastern District and one of the largest ever in the state of Texas," Richard Adams, the lawyer representing the shareholders, told the Texarkana Gazette. The shareholders' payout will be $42 million to $49 million -- based on an agreement between the company and the shareholders, led by D.H. Lee, a Texarkana resident. Shareholders sued the Dallas-based oil company in July 1998 alleging the company "oversold" the company and when a key deal failed to materialize, the stock prices tanked. The report says about seven national class action lawsuits were filed but were rolled into a "megasuit" in federal court in Texarkana, Texas. Mr. Adams said 9,000 notices were sent out to shareholders. At the time the lawsuit was filed, the company had 30 million shares outstanding. "We are extremely pleased with the results that we were able to give these shareholders," Mr. Adams told the newspaper. During the litigation, Triton was sold to Amerada Hess, which trades on the New York Stock Exchange as AHC, the report says. UNITED STATES: Court Junks Claims Against Government for Toxic Exposure ----------------------------------------------------------------------- U.S. District Judge James Jarvis, of the Eastern District of Tennessee in Knoxville, recently refused to certify a class in a suit against the federal government for exposing to toxic substances residents near federal facilities in Oak Ridge. According to the Oak Ridger, the judge, instead, granted defendants summary judgment based on the statute of limitations. "The classes proposed for certification and others which the plaintiffs have suggested, are overly broad, ill-defined and unmanageable in a class setting," Judge Jarvis said in its decision. "Accordingly the plaintiffs' motions to certify are denied. All individual claims are clearly barred by the one-year statue of limitations and the defendants are entitled to summary judgment on those claims." This case was originally filed in January 2001 by residents of Scarboro and other neighborhoods, alleging dangerous exposure over more than a 50-year period to radioactive and other toxic substances in Oak Ridge. Defendants included contractors of the federal facilities. Also named were Energy Secretary Spencer Abraham and John A Gordon, administrator of the National Nuclear Security Administration. "Thirteen separate defendants operated the Oak Ridge facility for a more than fifty-year period," wrote Judge Jarvis. "The plaintiffs have listed fifteen separate toxins which may have escaped the Oak Ridge facilities during that period. A few of the times when a specific toxin may have escaped are known, but the vast majority are unknown, if they in fact occurred. "Some were allegedly by air, some by land and some by water," continued Judge Jarvis. "The effect that these emissions may have had is unknown, and by any modern scientific standards, unknowable." The judge noted that only one disease, thyroid cancer, has been linked with an emission, and that during the period of the 1950s. The Oak Ridger says the court relied heavily on a research report funded by the Department of Energy and overseen by the Oak Ridge Health Agreement Steering Panel. The DOE, through a contract with the state Department of Health, hired private firms to study the federal facility's environmental releases and potential off-site health effects. ORHASP was formed for oversight. The paper says the report, completed in 1999, cited two groups of people who might have been affected by past releases from Oak Ridge plants: "Local children drinking milk from a 'backyard' cow or goat in the early 1950s; and fetuses carried in the 1950s and early 1960s by women who routinely ate fish taken from the contaminated creeks and rivers located downstream of the Oak Ridge Reservation." The plaintiffs claimed to have been exposed to a vast number of toxins including plutonium-239/240, tritium, uranium-233, uranium-235, iodine- 131, iodine-133, cesium-137, strontium-90, krypton-85, mercury, lead, cadmium, cesium and beryllium. They claimed to have been at risk for contracting a vast number of diseases, including leukemia, thyroid cancer, breast cancer and many others. UNITED STATES: More Robins Air Force Base Workers Support Bias Suit ------------------------------------------------------------------- More than 30 current and former Robins Air Force Base employees say minorities and women regularly get promoted over more-qualified white males at the base, according to affidavits filed recently in federal court, the Macon Telegraph recently said. The affidavits, from 34 current and former Robins employees who say they witnessed or were personally affected by discrimination at the base, were filed in response to an Air Force motion to dismiss a reverse-discrimination case filed by Robins employees this year. Lee Parks, the Atlanta attorney representing the employees, argued in his response to the motion that it was premature to dismiss the case, because neither side has had a chance to present any evidence. Mr. Parks included the affidavits in his filing late last week to bolster his motion to keep the case alive, saying they were examples of how the Air Force "consciously enforces the quota system that is at issue in this case." The Air Force has until October 15 to respond, although it can request a two-week extension. An example of one of the 34 affidavits, being used by Mr. Parks to keep alive the case of reverse discrimination, is embodied in the affidavit of sheet metal mechanic Richard Rogers, a white man who told lawyers he was teamed with Rene Primus, a black woman, to replace fasteners on aircraft wings. "I did almost all the work on this job because Ms. Primus disliked getting dirty," Mr. Rogers said in his affidavit. "She sat on the wing tapping cracks with a hammer to help me locate the fractures inside the wing fuel tanks as I repaired them." Despite their team status, Ms. Primus was singled out for an award on the work the two did, Mr. Rogers said, and Ms. Primus received a higher job appraisal score and was selected for promotion to an office job. Mr. Rogers said he was told he could not be the victim of discrimination because he is white. Others filing affidavits include supervisors who say they were told to downgrade favorable performance ratings for white males and raise the appraisal ratings for minorities and women. Five white men filed the lawsuit under consideration after e-mails surfaced that seemed to indicate that the performance appraisals of some white men were altered to give at least one minority employee a better evaluation. The lawsuit does not ask for a specific dollar amount but asks for back pay, lost benefits, lost money for pensions and bonuses, attorney's fees and other compensatory and punitive damages. The men who are suing are assigned to the software division of Robins' Avionics Management Directorate. Mr. Parks, the men's attorney, said he believes the appraisal discrimination practices could be more widespread. He has asked the court to certify the lawsuit as a class action so more workers could join the case. Robins officials said in a statement earlier this year that an informal inquiry into the allegations "concluded there was no wrongdoing with regard to either law or policy." * Amidst the Corporate Rubble, There Comes a Truth-Seeker --------------------------------------------------------- The leading lights of global finance still have plenty of explaining to do in relation to their various complex and creative dealings with Enron Corp., the once high-flying energy trader that crashed last year, taking billions of investors' dollars down with it, The Globe and Mail relates in a recent report. That includes such Canadian heavyweights as Royal Bank of Canada and Canadian Imperial Bank of Commerce, which were once proud to count Enron as a valued client and now must wish they had never heard of the Houston company and its remarkably nimble use of the tools of structured finance. But amid the welter of high-profile political, criminal and regulatory probes, lawsuits and countersuits stemming from Enron's collapse, who would have guessed that the ultimate truth-seeker would turn out to be a low-key, 61-year-old bankruptcy lawyer from Atlanta, named Neal Batson? Mention the U.S. Securities and Exchange Commission, the Justice Department or the U.S. Congress and the bankers merely shrug. In the face of formidable opposition, the politicians have all but abandoned any pretext of serious reform of the kind needed to prevent another Enron debacle, say, by more strictly regulating the use of leverage or derivatives. The public has scandal fatigue and Iraq is making all the headlines these days. Enron is such an old story it is barely on the radar screen any more. But Mr. Batson, who was appointed in May by a U.S. bankruptcy court to conduct an independent inquiry into Enron's collapse, gamely soldiers on in his effort to lift the veil of secrecy shrouding the bankers' dealings with the disgraced company. Armed with a wide mandate, bulldog-like tenacity and vast resources he has spent $9 million of Enron's dwindling capital on the effort so far. He seems to be just getting started. Earlier this month, Mr. Batson received the go-ahead to issue more than 200 subpoenas to major financial institutions, including six Canadian banks and prominent law firms to force them to hand over millions of documents related to their roles in a series of complex transaction that inflated Enron's revenue and kept debt off its balance sheet. Banks and brokerage houses are squirming, and with good reason. Mr. Batson already has concluded from a preliminary probe into six examples that these deals were essentially loans to Enron masquerading as sales of various assets by Enron or its affiliates to off-balance sheet entities set up solely for that purpose. More than the banks' cherished reputations are at stake here. Their claims to millions of dollars worth of real assets could be set aside. If the court agrees with the examiner's eventual findings, all of the assets underlying the transactions could be tossed back into the mix of surviving Enron holdings, where all the company's creditors would have a claim to them. And the financial institutions themselves could face massive lawsuits over their actions. As several observers have noted, with Enron in bankruptcy and auditor Arthur Andersen dissolved, the banks that played a crucial role in the creation of the world's biggest house of cards could become the target of U.S. class-action lawyers seeking fat damage awards for burned investors. We already know that Enron executives used every financial device available to make their company appear far healthier than it actually was. This, after all, is the crew that set up a fake trading room staffed by secretaries and salespeople to trick visiting analysts. On November 19, 2001, senior Enron executives met with a select group of the company's bankers at the Waldorf Astoria, in Manhattan. The folks from Enron revealed that while the company's debt was nearly $13 billion under generally accepted accounting principles, its actual obligations were a shade under $38.1 billion. That was the beginning of Enron's rapid slide into bankruptcy. Bankers, by the very nature of their work and by natural inclination, hate disclosing anything; and they rarely do beyond the bare minimum required by law. But they should have realized way back then that one day Mr. Batson would eventually come calling, armed with a subpoena. * U.S. Judicial Conference Endorses Rule Changes To Protect Plaintiffs ---------------------------------------------------------------------- The top policy-making body for the federal judicial system recently endorsed changes to the rules for class-action lawsuits, wrote Linda Greenhouse for The New York Times. The intention of the rule changes, wrote Ms. Greenhouse, is to protect individual plaintiffs from becoming trapped in a legal process that may not serve their best interests. The changes adopted by the Judicial Conference of the United States represent the most substantial revision of the class-action rules since the modern class-action lawsuit came into being in 1966. The new rules were described by Chief Judge Charles H. Haden II, the head of the Conference's executive committee, at a briefing that followed the group's semiannual closed-door meeting at the Supreme Court. The Judicial Conference, a group of 27 federal judges headed by Chief Justice William H. Rehnquist, conducted a 10-year study of class actions that included public hearings around the country. The proposals now go to the full Supreme Court, which will transmit them to Congress by next spring. Unless rejected or modified by Congress, the rules will achieve the status of law on December 1 of next year. The most significant change would allow judges who handle these lawsuits to give plaintiffs the opportunity to opt out of a settlement. Under the current rules, the only chance to opt out comes at the start of the lawsuit when plaintiff often have no way of knowing whether they will benefit from remaining in the class or whether they would be better served by bringing an individual lawsuit. But plaintiffs are now bound by the eventual settlement and may not sue on their own once the original period for opting out has passed. Another important change gives judges greater ability to shape class- action litigation, including more influence over the selection of the lawyers who represent the class and more control over the fees that plaintiffs' lawyers earn. The changes came in response to cases that ended with high fees for lawyers and little benefit for class members. "The award of large attorney fees in the absence of meaningful recoveries by class members in some class actions, brings the civil justice system in disrepute," according to an explanatory note that accompanied the proposal. Judith Resnik, a Yale Law School professor and specialist in class actions, said the new rules were "a big step forward" that reflected an evolution in the use of class actions. While originally the class action was a device to aggregate many small consumer claims, Professor Resnik said, it now is used for large-scale securities cases and mass damages suits against the makers of asbestos and other toxic substances, where the financial stakes are very high. Professor Resnik said the new rules struck a balance that would preserve the "entrepreneurship" of class actions, necessary to "counter the long-term resources of the defense bar," while curbing some of the abuses. * Asbestos Alert * ASBESTOS ALERT: Foster Wheeler Faces 110,700 Cases at End-2001 -------------------------------------------------------------- Foster Wheeler Ltd. reports that it has recorded a liability for probable losses on asbestos-related insurance claims of about $500,000 and an asset for probable recoveries of the same amount, net of an $18,000 reserve. About $60,000 of the balance is classified as short- term while the remainder is considered long-term. The liability is an estimate of future defense costs and indemnity payments, which are based upon assumed average claim resolution costs applied against currently pending and estimated future claims. The asset is an estimate of recoveries from insurers based upon assumptions relating to cost allocation and resolution of pending litigation with certain insurers, as well as recoveries under a funding arrangement with other insurers, which has been in place since 1993. The amount spent on asbestos litigation defense and case resolution, which was reimbursed or will be reimbursed from insurance coverage, was $66,900 in 2001, $56,200 in 2000 and $40,400 in 1999. On March 26, 2002, a San Francisco, California jury found Foster Wheeler liable for $10,600 in a case brought by a 59-year-old man suffering from mesothelioma that he claimed resulted from exposure to asbestos. The company says it believes there was no credible evidence presented by the plaintiff that he was exposed to asbestos contained in a Foster Wheeler product. In addition, the company believes that the verdict was excessive and should be set aside or reduced on appeal. The company intends to move to set aside the verdict. Some of the company's subsidiaries are also named as defendants in numerous lawsuits and out-of-court informal claims pending in the United States in which the plaintiffs claim damages for personal injury arising from exposure to asbestos in connection with work performed and heat exchange devices assembled, installed or sold by those subsidiaries, and the subsidiaries expect to be named as defendants in similar suits and claims filed in the future. The company says its asbestos-related insurance recoveries are uncertain. To date, insurance policies have provided coverage for substantially all of the asbestos costs. An agreement with a number of insurers to allow for efficient handling of claims against the company's subsidiaries will not cover claims filed after June 12, 2001. The company is in talks with its insurers for an arrangement for handling asbestos claims filed after June 12, 2001. Number of Claims 2001 2000 1999 ---- ---- ---- Balance, beginning of year 92,100 73,600 62,400 New claims 54,700 41,300 30,700 Claims resolved (36,100) (22,800) (19,500) Balance, end of year 110,700 92,100 73,600 COMPANY SNAPSHOT Foster Wheeler Ltd. Perryville Corporate Park Clinton, NJ 08809-4000 Phone: 908-730-4000 Fax: 908-730-5315 http://www.fwc.com Employees : 10,394 Revenue : $3,392,474,000 Net Income (Loss) : ($309,143,000) Assets : $3,316,379,000 Liabilities : $3,308,832,000 No. Of Asbestos Claims : 110,700 Estimated Asbestos Liabilities : $500,000 Insurance Recoveries : $500,000 (For the year ended December 28, 2001) Business Description: Foster Wheeler Ltd. operates through two business groups. The Engineering and Construction group designs and builds chemical, petroleum, and industrial plants, which produce such items as fine chemicals, fragrances, food additives, and vitamins. It also provides environmental remediation services. Foster Wheeler's Energy Equipment group makes steam generating units and related equipment for power and industrial plants, including feedwater heaters and steam condensers. In addition, the group builds, owns, and leases cogeneration and independent power projects. ASBESTOS ALERT: Huttig Posts $900,000 Reserve for Asbestos Costs ---------------------------------------------------------------- Huttig Building Products Inc. reports that it has agreed to settle in March 2002 one of three asbestos-related product liability lawsuits pending against it and recorded a reserve of $900,000 for the settlement and related legal costs. In May 2002, the company was dismissed as a defendant from one of its then pending asbestos-related product liability lawsuits. Also in May 2002 and in July 2002, the company was named as a defendant, individually and as successor-in-interest to Rugby Building Products Inc. and a predecessor company acquired by Rugby Building Products Inc. in 1994, in two separate asbestos-related product liability lawsuits. As of August 14, 2002, three such lawsuits were pending against the company. The company has filed a lawsuit against The Rugby Group Ltd. (the company's principal stockholder) and Rugby IPD Corp., a subsidiary of The Rugby Group Ltd., alleging that they have breached their contractual obligations to indemnify and defend Huttig against liabilities and claims arising out of the business that was acquired by Rugby Building Products Inc. in 1994. Huttig says it is uncertain if it will recover any of its costs related to asbestos claims from insurance carriers or from The Rugby Group or that such costs will not have a material adverse effect on its business or financial condition. COMPANY SNAPSHOT Huttig Building Products Inc. (NYSE: HBP) 14500 S. Outer Forty Rd. Lakeview Center, Ste. 400 Chesterfield, MO 63017 Phone: 314-216-2600 Fax: 314-216-2601 Web site: http://www.huttig.com Employees : 2,503 Revenue : $945,100,000 Net Income (Loss) : $5,700,000 Assets : $246,300,000 Liabilities : $167,200,000 No. Of Asbestos Claims : 3* Estimated Asbestos Liabilities : $900,000 Insurance Recoveries : Unknown (For the year ended December 31, 2001) (*As of August 14, 2002) Description: Huttig Building Products Inc. is one of the largest domestic distributors of building materials that are used principally in new residential construction and in home improvement, remodeling and repair work. The company distributes its products through 57 distribution centers serving 46 states, principally to building materials dealers, who, in turn, supply the end-user, directly to professional builders and large contractors, home centers, national buying groups and industrial and manufactured housing builders. Its American Pine Products manufacturing facility, located in Prineville, Oregon, produces softwood mouldings. ASBESTOS ALERT: Union Carbide Ties Wave of Cases to Bankruptcies ---------------------------------------------------------------- Union Carbide Corp. reports that asbestos-related lawsuits filed against it and Amchem Products Inc., a divested subsidiary, outpaced historical average during the third quarter of 2001, resulting in higher asbestos litigation accrual at December 31, 2001 compared with the year-ago level. The pace eased up in the fourth quarter. The company attributes the third-quarter increase in claims to the bankruptcy filings of several former members of the Center for Claims Resolution, of which both the company and Amchem were members. As CCR members, Union Carbide's and Amchem's strategy was to settle claims as two relatively small (percentage wise) members of the CCR group. The CCR has ceased operating in this manner although it still administers certain settlements. The company now utilizes Peterson Asbestos Claims Enterprise for claims processing and insurance invoicing. For pending cases, the company had asbestos-related litigation accruals of $233 million and $118 million at December 31, 2001 and 2000, respectively, and related insurance recovery receivables of $223 million and $108 million at December 31, 2001 and 2000, respectively. The company estimates that its asbestos liability can be reasonably placed at $233 million. Its insurance receivable associated with the most reasonable probable liability outcome for pending claims is $223 million. In all of the probable outcomes for pending claims, sufficient insurance coverage exists to provide a similar percentage of coverage for the accrued liability, the company says. In addition, insurance is available for future claims. Union Carbide is involved in a large number of asbestos-related suits filed, for the most part, in various state courts at various times over the past three decades. These suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both general and punitive damages, often in very large amounts. The alleged claims primarily relate to products that UCC sold in the past; alleged exposure to asbestos-containing products located on the company's premises; and its responsibility for asbestos suits filed against Amchem. The Dow Chemical Co. now owns 100 percent of Union Carbide and has been retained to provide its experience in mass tort litigation to manage its response to asbestos-related liability. The company has hired new outside counsel to serve as national trial counsel to defend or reasonably resolve both pending and future cases. To date, substantially all of the amounts paid to resolve asbestos- related suits have been covered by third-party insurance. COMPANY SNAPSHOT Union Carbide Corporation 39 Old Ridgebury Road Danbury, Connecticut 06817-0001 Phone: 203-794-2000 Fax: 203 794-2851 Web site: http://www.dow.com Employees : 2,503 Revenue : $5,402,000,000 Net Income (Loss) : ($699,000,000) Assets : $7,908,000,000 Liabilities : $5,791,000,000 Estimated Asbestos Liabilities : $233,000,000 Insurance Recoveries : $223,000,000 (For the year ended December 31, 2001) Description: Union Carbide Corp., a wholly owned subsidiary of The Dow Chemical Co., is a worldwide chemicals and polymers company. Its business activities are no longer operated as separate business units. Dow conducts its worldwide operations through global businesses. This results in Union Carbide's business activities comprising components of Dow's global businesses rather than stand-alone operations. Prior to its merger with a Dow subsidiary, Union Carbide was managed as two separate business segments -- Specialties and Intermediates, and Basic Chemicals and Polymers, as well as a nonoperating segment. ASBESTOS ALERT: Viacom Has 118,000 Pending Asbestos Cases --------------------------------------------------------- Viacom Inc., one of the world's largest media companies, says it is a defendant in lawsuits claiming various asbestos-related personal injuries, which allegedly occurred as a result of exposure caused by various products manufactured by Westinghouse, a predecessor, generally prior to the early 1970s. Westinghouse was neither a producer nor a manufacturer of asbestos. Viacom is typically named as one of a large number of defendants in both state and federal cases. Claims against the company in which a product has been identified principally relate to exposures allegedly caused by asbestos-containing insulating material in turbines sold for power-generation, industrial and marine use, or by asbestos-containing grades of decorative micarta, a laminate used in commercial ships. Claims typically are both filed and settled in large groups, which makes the amount and timing of settlements, and the number of pending claims, subject to significant fluctuation from period to period. As of June 30, 2002, the company had pending approximately 118,000 asbestos claims, compared with 129,700 as of June 30, 2001 and approximately 106,000 as of December31, 2001. Of the claims pending as of June 30, 2002, approximately 86,600 were pending in state courts, approximately 22,400 in federal court and approximately 9,000 were third party claims. During the second quarter of 2002, the company received approximately 9,700 new claims and closed approximately 6,600 claims. The company reports claims as closed when it becomes aware that a dismissal order has been entered by a court or when the company has reached agreement with the claimants on the material terms of a settlement. Settlement costs depend on the seriousness of the injuries that form the basis of the claim, the quality of evidence supporting the claims and other factors. To date, the company has not been liable for any third-party claims. The company's total costs in 2001 for settlement and defense of asbestos claims after insurance recoveries and net of tax benefits were approximately $21 million. A portion of such costs relates to claims settled in prior years. The company says its reserves and insurance are adequate to cover its asbestos liabilities. COMPANY SNAPSHOT Viacom Inc. (NYSE: VIA) 1515 Broadway New York, NY 10036 Phone: 212-258-6000 Fax: 212-258-6464 Web site: http://www.viacom.com Employees : 122,770 Revenue : $23,222,800,000 Net Income (Loss) : $223,500,000 Assets : $90,809,900,000 Liabilities : $26,881,300,000 No. of Asbestos Claims : 118,000* Asbestos Settlement Costs : $21,000,000 Insurance Recoveries : Unknown (For the year ended December 31, 2001) (*As of June 30, 2002) Description: Viacom Inc., together with its subsidiaries, is a diversified worldwide entertainment company. The company owns and operates advertiser-supported basic cable television program services through MTV Networks and BET: Black Entertainment Television and premium subscription television program services through Showtime Networks Inc. in the United States and internationally. The Television segment consists of the CBS and UPN television networks. Infinity's operations are focused on the out-of-home media business with operations in radio broadcasting. The Entertainment segment's principal businesses are Paramount Pictures, which produces and distributes motion pictures. The company operates in the home video retail business, which includes both rental and sale of videocassette and DVD products. The company also publishes and distributes consumer hardcover books. ASBESTOS ALERT: ABB Asbestos Cases Rise in March to 94,000 ---------------------------------------------------------- ABB Ltd. reports that, during the first quarter of 2002, 14,300 new claims were filed against Combustion Engineering Inc., a subsidiary that formerly conducted part of its divested power generation business and which now owns commercial real estate that it leases to third parties. The figures for the quarter are five percent lesser than the fourth quarter of 2001. About 13,500 claims were settled during the period, of which more than 50 percent were settled without payment. Settlement costs prior to reimbursement were approximately $51 million, up from $37 million in the first quarter of 2001. At March 31, 2002, there were about 94,0000 pending claims against Combustion Engineering, the company says. Plaintiffs claim damages for personal injury arising from exposure to or use of equipment, which contained asbestos that Combustion Engineering supplied, primarily during the 1970s and before. During 2001, Combustion Engineering experienced a significant increase in the level of new claims and higher total and per-claim settlement costs as compared to recent years. This resulted in an increase in the reserves for potential asbestos liabilities by $470 million. Cash payments to resolve asbestos claims were $136 million, $125 million and $67 million in 2001, 2000 and 1999, respectively. As of December 31, 2001 and 2000, reserves of $940 million and $590 million, respectively, were recorded in respect of asbestos claims and related defense costs. The reserves do not reflect probable insurance recoveries on those claims. ABB also recorded assets of about $150 million and $160 million at December 31, 2001 and 2000, respectively, for probable insurance recoveries, which were established with respect to the claims reserved against. Other ABB Group entities are also named as defendants in asbestos claims. These claims, however, are insignificant compared to the Combustion Engineering claims and have not had, and are not expected to have, a material impact on ABB's consolidated financial position or consolidated results of operations. In 2001, the average payment per claim in which a payment was made was $6,069, representing a 26 percent increase in the average payment per claim of $4,833 in 2000. Approximately $12.8 million, $10.5 million and $8.2 million in administration and defense costs were incurred in 2001, 2000 and 1999, respectively. COMPANY SNAPSHOT ABB Ltd. (NYSE: ABB) Affolternstrasse 44 CH-8050 Zurich, Switzerland Phone: +41-43-317-7111 Fax: +41-43-317-7958 Web site: http://www.abb.com Employees : 156,865 Revenue : $23,726,000,000 Net Income (Loss) : ($130,000,000) Assets : $32,344,000,000 Liabilities : $30,115,000,000 No. of Asbestos Claims : 94,000,000* Estimated Asbestos Liabilities : $940,000,000 Insurance Recoveries : $150,000,000 (For the year ended December 31, 2001) (*As of March 31, 2002) Description: Organized in Switzerland, ABB Ltd. is a global provider of products and systems incorporating advanced technologies and innovative applications of those products and systems, specializing in automation and power technologies for a broad range of industrial and commercial customers. The company works with customers to engineer and install networks, facilities and plants with particular emphasis on enhancing efficiency and productivity for customers that source, refine, transmit and distribute energy. ABB provides comprehensive market and product support services, as well as creative financing and risk management options to enable its customers to buy and use its products and services. ASBESTOS LITIGATION: Companies Settle But Trial Goes Ahead ---------------------------------------------------------- Asbestos trial against some of the world's largest companies got under way in West Virginia on Tuesday, despite an 11th-hour wave of out-of- court settlements that sharply reduced the number of corporations facing litigation. Two Kanawha County Circuit Court judges began the jury selection process by dismissing one of two prospective juror pools. Dozens of multinational companies fighting one of the largest asbestos compensation trials in U.S. history have broken ranks and opted to settle out of court on the eve of hearings. The cost of settling the case involving between 8,000 and 11,000 people claiming to have been exposed to the toxic mineral is said to be as a high as $3 billion, although some insurance analysts believe it will be lower than that. The plaintiffs claim they were exposed to asbestos and sued 259 corporate defendants ranging from manufacturers to groups of employers and building owners. The cases were consolidated into a mass trial by the Supreme Court of Appeals of West Virginia, sparking an appeal by defendants to the U.S. Supreme Court. The U.S. high court is still expected to consider the appeal just before the start of its next term on October 7. But by Tuesday morning, all but about 17 defendants had reached out-of- court settlements with plaintiffs. The move to avoid even higher costs awarded by jurors is also a blow for those who hoped the trial would act as a rallying point against a spiraling number of claims by people with few obvious symptoms of asbestos illness. Companies complain they have been unable to distinguish sick claimants from those with only hypothetical injuries and are worried that juries will award all the plaintiffs millions of dollars each. The biggest defendants included Exxon Mobil Corp., Owens-Illinois Inc., Dow Chemical Co.'s Union Carbide unit, British Nuclear Fuels unit Westinghouse Electric Co., and auto parts makers Dana Corp. and Borg- Warner Inc., according to a composite list of defendants provided by plaintiffs. "It doesn't matter if there are only a few defendants left, because this is an issue trial. You just have to prove that asbestos is a defective product," said plaintiff lawyer Scott Segal. In the past three years, the numbers of asbestos lawsuits have been increasing, forcing about 50 U.S. corporations into bankruptcy because of related liabilities. Nationwide, there are some 200,000 pending asbestos claims. Many of the companies being sued in West Virginia did not make asbestos, but used it in a range of products, such as car brake linings. On Monday, Honeywell, the U.S. industrial group that had been leading efforts to fight the case, confirmed it had decided to settle out of court. Honeywell said the cost of settling was confidential and declined to comment on its reasons, but analysts believe it is not alone. One unsourced estimate had put the cost of settling the claims at $300,000 each, although this is far beyond the $1,000 per claimant paid by Honeywell in other cases. Dow Chemical, which is heavily exposed through its Union Carbide subsidiary, said it would continue to fight the trial. ASBESTOS LITIGATION: Senate Panel to Hear Asbestos Woes ------------------------------------------------------- A trade group representative said an upcoming Senate Judiciary committee hearing on asbestos litigation is needed because the judicial system is overloaded with lawsuits from people who aren't sick and may never get sick. "A small, but influential, section of the trial bar has gamed this system and convince people who aren't sick that somehow, because they've been exposed, they may get sick," said Gary Karr, a spokesman for the American Insurance Association. "They sue, get a small amount of money, and sometimes give away their rights to sue later." Problems caused by the flood of asbestos litigation over the past several years will be the subject of a Senate Judiciary committee hearing, which will include testimony from one of several attorneys who have joined with the insurance industry in calling for reforms. The hearing is expected to focus specifically on the problems caused by the flood of asbestos litigation over the past several years, said Mr. Karr. The Judiciary Committee will look at the numerous companies that have filed bankruptcy because of the increase in lawsuits, and which of them can and cannot pay claims. "We're looking for legislation, but no one expects it to even be introduced this year," Mr. Karr said. "This is a complicated issue." No insurance industry representatives are on the witness list, but Oakland attorney Steven Kazan, part of the Asbestos Alliance, is. Mr. Kazan primarily represents clients with mesothelioma, a type of cancer caused by asbestos inhalation. He is among a group of trial lawyers working with insurers, manufacturers and victims, as part of the Asbestos Alliance, to call for reforms in the way asbestos litigation is handled. Companies that were the primary targets of asbestos lawsuits, those that manufactured it, have gone bankrupt. Secondary and tertiary companies that had slim, if any links to asbestos, have become the targets in recent years. London market insurers, led by Equitas, the massive reinsurance vehicle set up to run off Lloyd's 1992 and prior years' nonlife liabilities, began cracking down on the indemnification of asbestos bodily injury claims where claimants have no symptoms of injury In addition, they intend to ensure that future product, premises or occupational exposure liability is indemnified only when claims are settled by the insured that is responsible, rather than any company that plaintiffs' lawyers seek to pursue. The London market began imposing new documentation requirements in advance of any claim payments, with a particular view to class-action settlements, requiring adequate medical evidence of individual claimants' injuries and sworn testimony proving exposure to specific products responsible for that injury. The requirements are to ensure that if an insured client settles and wishes to be reimbursed by the London market for that settlement, he or she must show that their products have injured the claimants. New Securities Fraud Cases AT&T CORPORATION: Schatz & Nobel Commences Securities Suit in S.D. NY --------------------------------------------------------------------- Schatz & Nobel, P.C. filed recently a lawsuit seeking class action status in the United States District Court for the Southern District of New York on behalf of all persons who purchased or otherwise acquired the common stock of AT&T Corp. (NYSE: T) from November 29, 1999 through August 22, 2002, inclusive, or those who purchased the AT&T Wireless tracking stock (NYSE: AWE) from its inception until August 22, 2002. The Complaint alleges that Salomon Smith Barney and its well-known telecommunications stock analyst Jack Grubman violated the federal securities laws by issuing analyst reports recommending the purchase of AT&T during the Class Period without regard to the factual basis of those reports. The Complaint also alleges that Salomon failed to disclose a significant conflict of interest between its investment banking and research departments. Unbeknownst to the investing public, Salomon Smith Barney was granted a lucrative role in the April 2002 issuance of AT&T Wireless Tracking stock, after Mr. Grubman honored AT&T's request, and raised his recommendation of AT&T from "neutral to "buy." For more information, contact Nancy A. Kulesa by Phone: 800-797-5499 by e-mail: sn06106@aol.com or visit the firm's Web site: http://www.snlaw.net ESS TECHNOLOGY: Brodsky & Smith Commences Securities Suit in N.D. CA -------------------------------------------------------------------- Brodsky & Smith, L.L.C. announced Wednesday that a securities class action lawsuit has been commenced on behalf of shareholders who acquired ESS Technology, Inc. (Nasdaq:ESST) securities between January 23, 2002 and September 12, 2002, inclusive. The case is pending in the United States District Court for the Northern District of California, against the company and some of its officers and directors. The action charges that defendants violated the federal securities laws by issuing a series of materially false and misleading statements to the market throughout the Class Period which statements had the effect of artificially inflating the market price of the Company's securities. No class had yet been certified in the above action. For more information, contact Jason L. Brodsky, Esq. or Evan J. Smith, Esq. by Mail: Two Bala Plaza, Suite 602, Bala Cynwyd, PA 19004 by e- mail: esmith@Brodsky-Smith.com or by Phone: 877-LEGAL-90 (toll free) FLEMING COMPANIES: Marc Henzel Commences Securities Suit in E.D. Texas ---------------------------------------------------------------------- The Law Offices of Marc S. Henzel filed recently a class action lawsuit in the United States District Court for the Eastern District of Texas, Texarkana Division, on behalf of purchasers of Fleming Companies, Inc. (NYSE:FLM) common stock during the period between February 27, 2002 and July 30, 2002, inclusive. The complaint alleges violations of Sections 10(b) and 20(a), of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Specifically, the suit alleges that beginning in early 2002, the defendants issued numerous positive statements regarding Fleming's "price-impact" retail supermarket division. These statements were made despite the fact that the defendants knew, or recklessly disregarded, that the performance of Fleming's "price-impact" retail supermarket division was, in the words of the defendants, "disappointing." The complaint alleges that these statements falsely portrayed Fleming's business prospects and artificially inflated and maintained the price of Fleming common stock. The defendants capitalized on their false and misleading statements by: (1) lowering the interest rate and extending the maturity on $250 million of Fleming's debt; (2) raising over $155 million through the June 13, 2002 sale of 8 million shares of Fleming common stock at $19.40 per share; (3) raising an additional $200 million through the June 13, 2002 sale of Fleming Notes due 2010; and (4) using the proceeds of the June 13, 2002 securities sales to complete the purchase of Core-Mark International, Inc. and Head Distributing for $330 million in cash -- acquisitions described by the defendants as "key" to Fleming's implementation of its strategic transformation into an efficient, national, multi-tier supply chain for consumer packaged goods. Then, approximately six weeks after defendants sold $355 million worth of Fleming securities, Fleming announced after the close of trading on July 30, 2002 in an abrupt departure to the repeated and positive statements made by the defendants during the Class Period, that its "price-impact" retail supermarket division was not only performing poorly, but performing so poorly that Fleming was considering abandoning this line of business entirely. The price of Fleming common stock dramatically declined on this announcement, falling from $15.21 on July 30, 2002 to $13.75 on July 31, 2002, on huge trading volume of 3.9 million shares, and continued to decline over the next two heavy trading days to a 52-week low of $10.76 on August 2, 2002. Since then, the price of Fleming common stock has never recovered, and currently trades well below the $19.40 price at which Fleming sold 8 million shares to unsuspecting investors on June 13, 2002. For more details, contact Marc S. Henzel, Esq. by Mail: 273 Montgomery Ave, Suite 202 Bala Cynwyd, PA 19004-2808 by Phone: 888-643-6735 or 610-660-8000 by Fax: 610-660-8080 by e-mail: Mhenzel182@aol.com or visit the firm's Web site: http//members.aol.com/mhenzel182 FLEMING COMPANIES: Milberg Weiss Lodges Securities Suit in E.D. Texas --------------------------------------------------------------------- Milberg Weiss commenced recently a class action in the United States District Court for the Eastern District of Texas on behalf of purchasers of Fleming Companies Inc. (NYSE:FLM) common stock during the period between May 9, 2001 and Sept. 4, 2002. The complaint charges Fleming and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Fleming is a wholesale food distributor, supplying brand-name and private-label food and general merchandise to thousands of retailers. It also owns more than 100 stores, which operate under the Food4Less and Rainbow Foods banners. The complaint alleges that during the Class Period, Fleming issued false statements, including false financial results in which the Company included income from vendor discounts to which Fleming was not entitled. The Company also represented that it would achieve F02 and F03 EPS of $2.50+ and $3.30+. As a result of defendants' false statements, the Company's stock traded at artificially inflated levels, as high as $37.30 per share, permitting Fleming to complete an 8 million share secondary stock offering, a $200 million Note offering and the acquisition of Core-Mark International in the spring of 2002. Also, due to Fleming's artificially inflated earnings, its CEO and CFO received bonuses for 2001 of $2.6 million and $1.15 million, respectively. Then, on August 5, 2002, Fleming announced its estimates would need to be reduced. On the same day, The Wall Street Journal ran an expose of Fleming's practice of taking excessive deductions on the amounts it owed to vendors. The article mentioned an executive of the Company who resigned due to his objection to the practice, and also indicated that some vendors refused to ship to Fleming because of disputes with Fleming over the practice. Once this news was revealed, Fleming's stock collapsed to $6.87 before closing at $6.92, some 80% below the Class Period high of $37.30. For more information, contact Milberg Weiss Bershad Hynes & Lerach LLP through William Lerach by Phone: 800-449-4900 or by e-mail: wsl@milberg.com FLEMING COMPANIES: Wolf Popper Commences Securities Suit in E.D. Texas ---------------------------------------------------------------------- Wolf Popper LLP filed recently a securities fraud class action complaint against Fleming Companies, Inc. (NYSE:FLM) and two of its senior officers on behalf of purchasers of Fleming common stock from February 13, 2002 through September 3, 2002 inclusive. The suit is pending in the U.S. District Court for the Eastern District of Texas, Texarkana Division. The plaintiff alleges in this class action that during the Class Period (February 13, 2002 through September 3, 2002, inclusive) defendants materially misrepresented Fleming's financial results for 2001 and 2002 by failing to record properly the amounts owed to its suppliers. Defendants effected this scheme by taking large unwarranted deductions from payments made on invoices from vendors. The plaintiff further alleges in this action that during the Class Period, defendants materially misrepresented that its retail grocery segment was successful and operating according to plan. The facts began to be revealed on July 30, 2002, when Fleming issued a press release announcing that it was evaluating its strategic alternatives related to its price-impact retail stores. More facts about defendants' misconduct was revealed on September 4 and 5, 2002, when it was reported that Fleming was squeezing its suppliers by making large unwarranted deductions from payments on invoices from the suppliers. The plaintiff alleges that defendants engaged in this scheme in order to facilitate two securities offerings in June 2002: (1) an offering of 9.2 million shares of Fleming common stock, which netted the Company approximately $170 million, and (2) an offering of $200 million in 9.25 percent senior notes due 2010. During the Class Period, shares of Fleming common stock closed at as high as $22.95 per share. When the truth about Fleming's retail grocery operations was revealed on July 31, 2002, the Company's common stock fell to $10.81 per share within a few days. On September 5, 2002, after it was reported that Fleming had taken large unwarranted deductions from payments on invoices from its suppliers, Fleming common stock closed at $6.92 per share. Fleming common stock is currently trading in the $4 range. For more details, contact Wolf Popper LLP through Robert C. Finkel, Esq. by Mail: 845 Third Avenue, New York, NY 10022-6689 by Phone: 212-451-9620 (toll free) or 877-370-7703 by Fax: 212-486-2093 (toll free) or 877-370-7704 by e-mail: irrep@wolfpopper.com or visit the firm's Web site: http://www.wolfpopper.com INTERBANK FUNDING: Cohen Milstein Commences Securities Suit in Columbia ----------------------------------------------------------------------- Cohen, Milstein, Hausfeld & Toll, P.L.L.C. filed recently a lawsuit against several officers and directors of InterBank Funding Corporation and its affiliates and subsidiaries, and Radin Glass & Co., an accounting firm for InterBank, in the United States District Court for the District of Columbia on behalf all persons who purchased or otherwise acquired the securities of InterBank Funding Corp. between July 26, 1999 and June 7, 2002, inclusive. The Complaint alleges that the defendants violated the federal securities laws by knowingly issuing false and misleading statements regarding the past performance of InterBank securities, the ability of InterBank to make interest payments, and the true nature and amount of inter-fund transfers necessary for InterBank to operate. Specifically, the Complaint alleges that the defendants failed to disclose millions of dollars in loan losses and the impact of those losses on return statistics and financial statements published by InterBank. The Complaint further alleges that the defendants concealed the fact that interest payments to investors were made in significant part out of current or future offering proceeds, not out of income. The Complaint also alleges that defendants failed to disclose InterBank's ability to operate depended on tens of millions of dollars of inter- fund transfers. For more information, contact Steven J. Toll by Mail: 1100 New York Avenue, NW, Suite 500 - West Tower, Washington, DC 20005 by Phone: 888-240-0775 or 202-408-4600 or by e-mail: stoll@cmht.com MERRILL LYNCH: Cohen Milstein Commences Securities Suit in S.D. NY ------------------------------------------------------------------ Cohen, Milstein, Hausfeld & Toll, P.L.L.C. filed recently a securities fraud class action lawsuit in the U.S. District Court for the Southern District of New York on behalf of purchasers of shares of CMGI securities between March 23, 1999 through October 6, 2000. The Complaint alleges that Merrill Lynch and its well-known Internet stock analyst Henry Blodget violated the federal securities laws by knowingly issuing false and misleading analyst reports regarding CMGI during the Class Period. Based on e-mails and other internal Merrill Lynch communications, which were made public as a result of the investigation conducted by the New York State Attorney General, the Complaint alleges that Defendants failed to disclose a significant conflict of interest between their investment banking and research departments. Specifically, the Complaint alleges that Henry Blodget and other Merrill Lynch analysts issued very favorable analyst reports regarding CMGI to the public when they allegedly knew that the positive recommendations were unwarranted and false. The Complaint further alleges that, unbeknownst to the investing public, Merrill Lynch's buy recommendations and price targets were driven by its efforts to attract lucrative investment banking business rather than by the companies' fundamental merits. For more details, contact Steven J. Toll, Esq. (stoll@cmht.com) or Katrina Jurgill (kjurgill@cmht.com) by Phone: 888-240-0775 or 202-408-4600 or by Mail: 1100 New York Avenue, NW West Tower, Suite 500 Washington, DC 20005 MERRILL LYNCH: Rabin & Peckel Commences Securities Suit in S.D. NY ------------------------------------------------------------------ Rabin & Peckel LLP filed recently a class action complaint in the United States District Court for the Southern District of New York, civil action number 02-CV-7682, on behalf of all persons or entities who purchased or otherwise acquired CMGI, Inc. securities (Nasdaq:CMGI) between March 23, 1999 and October 6, 2000, both dates inclusive. Merrill Lynch & Co., Inc. and Henry Blodget are named as defendants in the complaint. The complaint charges Merrill Lynch and Blodget with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants issued analyst reports concerning CMGI that recommended the purchase of CMGI common stock and that set price targets for CMGI common stock, which were materially false and misleading and lacked any reasonable factual basis. In particular, it is alleged that defendants failed to disclose significant material conflicts of interest, which resulted from the use by defendant Merrill Lynch of defendant Henry M. Blodget's reputation and ability to issue favorable analyst reports, to obtain investment banking business for Merrill Lynch. It is also alleged that defendants, in issuing their CMGI analyst reports, in which they recommended the purchase of CMGI securities, failed to disclose material, non-public, adverse information, which they possessed about CMGI. Throughout the Class Period, defendants maintained an "Accumulate/Buy" recommendation on CMGI stock in order to obtain and support lucrative financial deals for Merrill Lynch. For more information, contact Eric J. Belfi or Sharon Lee by Mail: 275 Madison Avenue, New York, NY, 10016 by Phone: 800-497-8076 or 212-682-1818 by Fax: 212-682-1892 or by e-mail: email@rabinlaw.com METRIS COMPANIES: Cauley Geller Commences Securities Suit in Minnesota ---------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP filed recently a class action in the United States District Court for the District of Minnesota on behalf of purchasers of Metris Companies, Inc. (NYSE: MXT) publicly traded securities during the period between November 5, 2001 and July 16, 2002, inclusive. Metris is in the business of providing financial products and services, including issuing and managing credit cards through its wholly owned subsidiary, Direct Merchants Credit Card Bank, N.A. Specifically, the complaint alleges that Metris misled the investing community concerning the existence of a Report of Examination (the ROE) released by the Office of the Comptroller of the Currency (the OCC), the primary federal regulator of Direct Merchants. Moreover, the Complaint charges that defendants misled the investing community regarding the adverse material effect the ROE would have on Metris' financial condition. The Complaint also alleges that the OCC released the ROE to defendants on November 5, 2001, but that defendants failed to reveal the existence of the ROE to the public until April 17, 2002, and thereafter misrepresented the effect it would have on Metris. As outlined in the Complaint, the findings of the ROE were ultimately addressed in a consent agreement between Direct Merchants and the OCC, and obligated Direct Merchants to restructure significant parts of its operations including its credit policies, credit risk assessment, debt forbearance, allowance for loan and lease losses and internal controls. The Complaint further alleges that as a result of defendants' actions, plaintiff and the Class were damaged. For more details, contact Cauley Geller Bowman & Coates, LLP through its Client Relations Department: Jackie Addison, Sue Null or Ellie Baker by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 888-551-9944 (toll free) or by e-mail: info@cauleygeller.com METRIS COMPANIES: Weiss & Yourman Lodges Securities Suit in Minnesota --------------------------------------------------------------------- Weiss & Yourman filed recently a class action lawsuit against Metris Companies, Inc. (NYSE:MXT), and certain of its officers and directors was commenced in the United States District Court for the District of Minnesota, on behalf of purchasers of Metris securities between November 5, 2001 and July 17, 2002. The complaint charges the defendants with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants issued false and misleading statements, which artificially inflated the stock. For more details, contact James E. Tullman, David C. Katz, and/or Mark D. Smilow by Phone: 888-593-4771 or 212-682-3025 by e-mail: info@wynyc.com or by Mail: The French Building, 551 Fifth Avenue, Suite 1600, New York, New York 10176. METRIS COMPANIES: Schiffrin & Barroway Files Securities Suit in MN ------------------------------------------------------------------ Schiffrin & Barroway, LLP filed recently a class action lawsuit in the United States District Court for the District of Minnesota on behalf of all purchasers of the common stock of Metris Companies, Inc. (NYSE: MXT) securities between Nov. 5, 2001 and July 17, 2002, inclusive. Metris is in the business of providing financial products and services, including issuing and managing credit cards through its wholly owned subsidiary, Direct Merchants Credit Card Bank, N.A. Specifically, the complaint alleges that Metris misled the investing community concerning the existence of a Report of Examination (the ROE) released by the Office of the Comptroller of the Currency (the OCC), the primary federal regulator of Direct Merchants. Moreover, the Complaint charges that defendants misled the investing community regarding the adverse material effect the ROE would have on Metris' financial condition. The Complaint also alleges that the OCC released the ROE to defendants on November 5, 2001, but that defendants failed to reveal the existence of the ROE to the public until April 17, 2002, and thereafter misrepresented the effect it would have on Metris. As outlined in the Complaint, the findings of the ROE were ultimately addressed in a consent agreement between Direct Merchants and the OCC, and obligated Direct Merchants to restructure significant parts of its operations including its credit policies, credit risk assessment, debt forbearance, allowance for loan and lease losses and internal controls. The Complaint further alleges that as a result of defendants' actions, plaintiff and the Class were damaged. For more information, contact Schiffrin & Barroway, LLP through Marc A. Topaz, Esq. or Stuart L. Berman, Esq. by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 888-299-7706 (toll free) or 610-667-7706 or by e-mail: info@sbclasslaw.com SALOMON SMITH: Stull Stull Commences Securities Fraud Suit in S.D. NY --------------------------------------------------------------------- Stull, Stull & Brody filed Wednesday a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of purchasers of the common stock of Level 3 Communications, Inc. (NYSE:LVLT) between January 4, 1999 and June 18, 2001, inclusive against defendants Salomon Smith Barney, Inc. its star telecommunication research analyst, Jack Grubman, and Morgan Stanley Dean Witter & Co., Inc. The complaint alleges that Defendants Salomon, Mr. Grubman and Morgan Stanley urged investors to purchase Level 3 stock when defendants knew or should have known that such purchases were not a good investment. The complaint alleges that defendants issued "Buy" recommendations about Level 3 without any rational economic basis; failed to disclose that they were issuing "Buy" recommendations to obtain investment banking business; and concealed significant, material conflicts of interests that prevented them from providing independent objective analysis. For additional information, contact Tzivia Brody, Esq. by Phone: 800-337-4983 (toll free) by e-mail: SSBNY@aol.com by Fax: 212-490-2022 or by Mail: 6 East 45th Street, New York, NY 10017 VODAFONE GROUP: Milberg Weiss Lodges Securities Fraud Suit in S.D. NY --------------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach has filed a class action lawsuit against Vodafone PLC and four of its board members alleging that the mobile phone giant violated the Securities Exchange Act of 1934, according to The Daily Telegraph. The law firm said it had made the filing on behalf of purchasers of Vodafone's American Depository Receipts between March 7, 2001 and May 28, 2002. The suit is pending in the U.S. District Court for the Southern District of New York. The action alleges that Vodafone, its chairman Lord MacLaurin, Chief executive Sir Christopher Gent, Chief Operating Officer Julian Horn- Smith, and Finance Director Ken Hydon issued a series of material misrepresentations to the market between those dates, thereby artificially inflating the share price, the newspaper said. "If this action is served upon us, we will vigorously defend it," a Vodafone spokesman is quoted as saying. Vodafone has maintained an A credit rating with independent rating agencies despite market turbulence. The complaint alleges that Vodafone issued numerous statements, which highlighted the company's strong financial performance and growth and reassured investors that Vodafone maintained a "solid balance sheet". Milberg Weiss alleges Vodafone failed to disclose and/or misrepresented what it calls several "adverse facts". These include allegations that Vodafone was improperly delaying the write-down of billions of dollars of goodwill and impaired assets, thereby artificially inflating its reported financial results. VODAFONE GROUP: Scott + Scott Lodges Securities Suit in S.D. New York --------------------------------------------------------------------- Scott + Scott LLC filed recently a class action on behalf of purchasers of the securities of Vodafone Group plc (NYSE: VOD) between March 7, 2001 and May 28, 2002, inclusive. The action, numbered 02-CV-7592, is pending in the United States District Court, Southern District of New York, located at 500 Pearl Street, New York, NY, against defendants Vodafone, Ian Maclaurin, Chris Gent, Julian Horn-Smith and Ken Hydon. The Honorable Leonard B. Sand has been assigned to the case. 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 issuing a series of material misrepresentations to the market between March 7, 2001 and May 28, 2002, thereby artificially inflating the price of Vodafone securities. The complaint alleges that, throughout the Class Period, defendants issued numerous statements, which highlighted the Company's strong financial performance and growth and reassured investors that Vodafone maintained a "solid balance sheet." As alleged in the complaint, these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (a) that the Company was improperly delaying the write-down of billions of dollars of goodwill and impaired assets, thereby artificially inflating the Company's reported financial results. In fact, despite defendants' claims that the Company had a "solid balance sheet," when the Company finally did write-off the value of its impaired assets and goodwill, Vodafone obliterated all profits for 2001 and 2002; (b) that the Company had grossly overpaid for the numerous acquisitions it had made in prior years; and (c) based on the foregoing, defendants' representation that the Company would continue to maintain its "record of delivering outstanding performance" was lacking in a reasonable basis. On May 28, 2002, the last day of the Class Period, the Company announced its financial results for the fiscal year 2002, the period ending March 31, 2002, which included massive write downs for goodwill of approximately GBP13.47 billion and exceptional items and operating costs of GBP5.4 billion and exceptional non-operating costs of GBP865 million. At the end of the Class Period, the price of Vodafone ADRs closed at $15.19 per ADR, as compared to a Class Period high of $33.26 per ADR. For more information, contact Scott + Scott attorneys Neil Rothstein by e-mail: nrothstein@scott-scott.com or David R. Scott by e-mail: drscott@scott-scott.com or by Phone: 800-404-7770 ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2002. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re- mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *