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C L A S S A C T I O N R E P O R T E R
Friday, January 17, 2003, Vol. 5, No. 12
Headlines
ANIKA THERAPEUTICS: Agrees To Settle Investigation, Securities Suit
CALIFORNIA: Forest Supervisors Suspended For Alleged Sexual Harassment
CAPRIUS INC.: Faces Two Lawsuits For Securities Violations in NJ Court
CIRCUIT CITY: Asks VA Court To Dismiss Consolidated Securities Lawsuit
CLOVER BOTTOM: TN State Sends Out Warning About AIDS-Infected Ex-Worker
COMDISCO INC.: Officers Ask IL Court To Dismiss Securities Fraud Suit
DISCOVER BANK: Court Allows Provision Barring Cardholders' Class Action
INTRAWARE INC.: NY Court Dismisses Officers, Directors From Fraud Suit
NATIONAL SERVICE: Faces Lawsuits Over National Linen Surcharges, Taxes
NUMERICAL TECHNOLOGIES: Investors Sue Over Planned Takeover by Synopsys
OHIO: 25 Women Reach Settlement Over 17 Minute Workout Center Closure
ROBOTIC VISION: Reaches Settlement Of Securities Fraud Lawsuit in MA
SEMINIS INC.: Faces Suits Over Savia, Fox Paine Stock Acquisition Plan
UNITED STATES: Judge's Ruling Prohibits Somalian Refugees' Deportation
Asbestos Alert
ASBESTOS LITIGATION: Asbestos Ruling Will Cost Car Makers Billions
ASBESTOS LITIGATION: House of Lords Hears Landmark Asbestos Litigation
ASBESTOS LITIGATION: Congoleum Seeks to Resolve Asbestos Related Claims
ASBESTOS LITIGATION: Georgia-Pacific Corporation Warns of Asbestos Loss
ASBESTOS LITIGATION: Kaiser Aluminum Subsidiaries File Bankruptcy in DE
ASBESTOS LITIGATION: RPM Expects to Manage Asbestos Related Litigation
ASBESTOS LITIGATION: Travelers Sets $3.4 Billion Asbestos Provisions
ASBESTOS LITIGATION: Tyler Pipe to Pay $26M for Asbestos Injuries
ASBESTOS ALERT: CRH PLC Shares Fall as Asbestos Related Claims Emerge
ASBESTOS ALERT: NC Judge Okays Wives' Weyerhaeuser Inc. Asbestos Suit
ASBESTOS ALERT: Wolseley PLC Downplays Asbestos Related Litigation
New Securities Fraud Cases
MOTOROLA INC.: Bernard Gross Commences Securities Fraud Suit in N.D. IL
TELLIUM INC.: Bernstein Liebhard Commences Securities Fraud Suit in NJ
WESTAR ENERGY: Cauley Geller Launches Securities Fraud Suit in KS Court
WESTAR ENERGY: Schiffrin & Barroway Lodges Securities Fraud Suit in KS
*********
ANIKA THERAPEUTICS: Agrees To Settle Investigation, Securities Suit
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Anika Therapeutics Inc. reached a settlement with the Securities and
Exchange Commission (SEC) to resolve the commission's investigation
into its accounting for sales of Orthovisc under a distribution
agreement with Bristol-Myers Squibb Co.'s Zimmer Inc. unit, the Dow
Jones Business News reports.
Additionally, the Company settled a class action filed against it and
its officers and directors on behalf of all purchasers of the Company's
shares between April 15, 1998 and May 30, 2000, in the United States
District Court in Massachusetts. The suit alleges that the Company and
the individual defendants violated the federal securities laws by
making material misrepresentations and omissions in certain public
disclosures during the class period. The alleged misrepresentations
and omissions relate to the Company's historical revenue recognition
policies and its restatement of revenues for 1998 and the first three
quarters of 1999.
The Company, a maker of therapeutic products and devices, said recently
that the settlement with the SEC does not impose any monetary
sanctions, nor will it affect the company's results of operations or
financial condition. The Company, which is not admitting or denying
wrongdoing, consented to a cease-and-desist order. The SEC launched a
formal investigation into the company's accounting for Orthovisc in may
2000, accusing the Company of improperly recognizing $1.5 million in
revenue in 1998 and 1999.
CALIFORNIA: Forest Supervisors Suspended For Alleged Sexual Harassment
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US Forest Service officials recommended that 10 supervisors be
suspended up to 30 days following a sexual harassment scandal at the
Los Padres National Forest, Associated Press Newswires reports.
The scandal erupted after two firefighters who are part of an elite
team known as the Hotshots were found with photos of scantily clad
women. Formal sexual harassment charges were filed with the Forest
Service and are being monitored by a federal judge in Oakland,
California, as part of a sexual harassment class action.
Forest Service officials said letters of warning have been sent to 13
temporary and two permanent employees in connection with the discovery
of the photographs. None of the employees disciplined were identified
because of federal privacy laws, officials said. Those to be suspended
have 15 days to appeal.
Critics have called for disbanding the Hotshot chapter at Los Padres
and replacing top management officials there. Forest Service officials
said the suspensions are intended to ensure the agency believes
management was at fault in creating a climate where sexual harassment
had become a major problem.
"While not pornographically explicit, many of the photos do show nude
and semi-nude women in suggestive poses," said state forest chief Jack
Blackwell. "The important point is that such photos are demeaning.
They simply do not belong in government vehicles."
After the sexual harassment incident was reported, Mr. Blackwell
responded by ordering emergency harassment education sessions for all
8,300 permanent and temporary Forest Service employees in the state.
The Los Padres Forest covers much of Ventura and Santa Barbara
counties, one of 18 national forests in California.
CAPRIUS INC.: Faces Two Lawsuits For Securities Violations in NJ Court
----------------------------------------------------------------------
Parties in the securities class actions pending against Caprius, Inc.
and its top two officers agreed to extend the Company's time to answer
the suits, which were filed on behalf of purchasers of the Company's
securities between February 14, 2000 and June 25, 2002, in the United
States District Court in New Jersey.
The suit alleges, among other things, violations of the federal
securities laws, including Sections 10(b) and 20(a) of the Securities
and Exchange Act of 1934, and Rule 10b-5 promulgated thereunder,
against the Company and its top two officers, defendants George Aaron
and Jonathon Joels.
According to the suit, the individual defendants first devised a
fraudulent plan and scheme by which they sought to obtain control of
Caprius. In May 1999, the Individuals Defendants proposed a merger
transaction to Caprius' Board of Directors and executive officers. On
June 28, 1999, Caprius consummated a merger through which the
Individual Defendants acquired 45.6% ownership of Caprius -- equivalent
to 6,178,978 million shares of Caprius' common stock.
The suit alleges that once they gained control of Caprius, the
Individual Defendants breached their fiduciary duties to Caprius and
its shareholders by disseminating false and misleading statements
concerning Caprius' business, operations, and financial results for
fiscal 1999, 2000, 2001, and portions of fiscal 2002, according to an
earlier Class Action Reporter story.
CIRCUIT CITY: Asks VA Court To Dismiss Consolidated Securities Lawsuit
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Circuit City Stores, Inc. asked the United States District Court for
the Eastern District of Virginia to dismiss the consolidated securities
class action pending against it, its chief executive officer, chief
financial officer and principal accounting officer, on behalf of
purchasers of the Company's securities between December 6, 2001 and
February 22, 2002, inclusive.
The suit 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 December 6, 2001 and February 22, 2002, thereby
artificially inflating the price of Company securities, according to an
earlier Class Action Reporter story.
The complaint also alleges defendants issued materially false and
misleading statements during the class period when it failed to
disclose, among other things, that the Company was facing significant
inventory shortages and experiencing problems with its internal
controls, which would result in the Company incurring additional
expenses associated with the lease termination and remodeling of almost
half its retail stores.
The Company expects the court to hold a hearing on this motion during
the first quarter of calendar year 2003. At the present time, no class
has been certified in the case. The Company believes that the
allegations in the consolidated amended complaint are without merit and
that the Company and the other defendants have substantial defenses to
the claims alleged.
CLOVER BOTTOM: TN State Sends Out Warning About AIDS-Infected Ex-Worker
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The state of Tennessee sent warnings to family members of residents of
the Clover Bottom Developmental Center stating that someone previously
involved with the center has the AIDS virus, the Tennessean reports.
The warning stated that there may be a "health risk to others who
reside (at Clover Bottom) or receive services at this facility."
Richard Kellogg, deputy commissioner of the Tennesee Division of Mental
Retardation Services, said about 800 letters were sent out to family
members of current and past patients, as well as to employees at the
home and former employees. "We have gone back 15 years for staff
members and patients," Mr. Kellogg told the Tennessean.
The letter, obtained by The Tennessean yesterday, said the incident
appeared to have been an isolated one, and there was no evidence "to
conclude that there is any imminent threat to the well being of this
population."
Mr. Kellogg further added that state officials were being overly
cautious by notifying so many people. State officials, citing strict
federal confidentiality laws on HIV and AIDS, said they were forbidden
from saying whether the infected person was a patient or caregiver.
"Federal law says that we cannot do anything directly or indirectly to
reveal the identity of anyone in a state institution community who may
have contracted this disease," Lola Potter, spokeswoman for the
Division of Mental Retardation Services told the Tennessean. Ms.
Potter did say, however, that the person was no longer a part of the
Clover Bottom community.
An investigation is under way to try to determine how the person
contracted the infectious disease. The state is offering free HIV
tests to residents and employees, past and present. The Division of
Mental Retardation Services has called a meeting this morning at Clover
Bottom to address concerns of family members and employees alike.
Dana Jones, president of the Parent-Guardian Association of Clover
Bottom, said she would be attending today's meeting but did not know
much. "I really don't know any details about who has it and how it
came about," she said. She said she would know more after today about
whether there is cause for concern.
In 1996, People First of Tennessee, a group representing people with
disabilities, brought a class action against Clover Bottom alleging
neglect, abuse and civil rights violations at the facility. The
Justice Department and the state negotiated a settlement with People
First that year, and the federal government has been monitoring the
home's progress since, the Tennessean reports.
COMDISCO INC.: Officers Ask IL Court To Dismiss Securities Fraud Suit
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Comdisco, Inc.'s officers asked the United States District Court for
the Northern District of Illinois to dismiss the consolidated
securities class action, alleging violations of federal securities
laws.
Several suits were originally filed in February 2001 against the
Company, Nicholas K. Pontikes, and John J. Vosicky, alleging violations
of Section 10(b) and Section 20(a) of the Securities Exchange Act of
1934, as amended. Mr. Pontikes is a former chief executive officer and
director of the Company, while Mr. Vosicky formerly served as a
director, executive vice president, and chief financial officer. of
Comdisco, Inc. Those individual class action lawsuits were dismissed
and the complaints were combined into a single action.
As a result of the bankruptcy filing on July 16, 2001, the consolidated
lawsuit against Comdisco, Inc. was stayed pursuant to the automatic
stay issued by the bankruptcy court. The lead plaintiff filed a motion
to lift the automatic stay in order to permit the lawsuit to proceed
against the Company and the bankruptcy court denied this motion. The
consolidated lawsuit, however, was allowed to proceed individually
against Nicholas K. Pontikes and John J. Vosicky.
In connection with the plan confirmation process, plaintiffs in the
consolidated lawsuit agreed to dismiss the action with respect to
Comdisco, Inc., but maintained their rights, if any, against Nicholas
K. Pontikes, John Vosicky and any person not released from liability by
the plan. The settlement with such plaintiffs is pursuant to a
stipulation and agreed order dated June 13, 2002.
On November 15, 2002, the plaintiffs in the consolidated lawsuit filed
their amended suit. The Company was not named as a defendant in the
amended suit. The only defendants named were Nicholas K. Pontikes and
John J. Vosicky.
DISCOVER BANK: Court Allows Provision Barring Cardholders' Class Action
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The United States Second District Court of Appeals in Los Angeles ruled
that Discover Bank could put a provision in its cardholder agreements
that prevented angry customers from filing for class action
arbitrations, the LA Times reports.
A lawsuit was filed against the Bank, which added an arbitration clause
to its cardholder agreements by sending a change-of-terms flier to all
its customers. Under the agreement, cardholders could pursue
complaints against the Bank only through individual arbitration cases
and specifically prohibited customers from joining a class action
arbitration against the Bank.
Los Angeles cardholder Christopher Boehr, who obtained a credit card
from Discover Bank in 1986, commenced the suit in August 2001 in the
Los Angeles County Superior Court. The suit alleges breach of contract
and violation of the Delaware Consumer Fraud Act, which governs the
Bank's cardholder agreements. The suit further states that the Bank's
breach involved not disclosing that cardholders could be charged a $29
late payment fee and interest if their monthly payment came in on the
due date but was not processed until after 1 pm that day, Barry Kramer,
a Los Angeles attorney involved in the suit, told the LA Times.
The lower court sided with Mr. Boehr, ruling that enforcing the class
action waiver would violate fundamental public policy under California
law, the LA Times reports. "It deprives the consumer of any potential
remedy when they have been improperly charged a relatively minor
amount," Mr. Kramer said. "It is an incredible encroachment on consumer
rights."
Mr. Kramer plans to appeal the ruling to the state Supreme Court. Rick
Richmond, a partner at Kirkland & Ellis in Los Angeles who represented
Discover, declined to comment, saying he couldn't speak publicly
without first conferring with his Chicago-based client.
INTRAWARE INC.: NY Court Dismisses Officers, Directors From Fraud Suit
----------------------------------------------------------------------
The United States District Court for the Southern District of New York
dismissed Intraware, Inc.'s officers and directors as defendants in the
consolidated securities class action filed on behalf of all persons who
purchased the Company's common stock from February 25, 1999 (the date
of our initial public offering) through December 6, 2000. The suit
also names as defendants the Company and several investment banking
firms that served as underwriters of the Company's initial public
offering.
The complaint alleges liability under Sections 11 and 15 of the
Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, on the grounds that the registration statement
for the offerings did not disclose that:
(1) the underwriters had agreed to allow certain customers to
purchase shares in the offerings in exchange for excess
commissions paid to the underwriters; and
(2) the underwriters had arranged for certain customers to
purchase additional shares in the aftermarket at predetermined
prices.
The amended complaint also alleges that the underwriters misused their
securities analysts to manipulate the price of Company stock. No
specific damages are claimed.
Lawsuits containing similar allegations have been filed in the Southern
District of New York challenging over 300 other initial public
offerings and secondary offerings conducted in 1999 and 2000. All of
these lawsuits have been consolidated for pretrial purposes before
United States District Court Judge Shira Scheindlin of the Southern
District of New York.
On July 15, 2002, an omnibus motion to dismiss was filed in the
coordinated litigation on behalf of the issuer defendants, of which the
Company and its three named current and former officers and directors
are a part, on common pleadings issues. That motion was heard before
the Court in New York on November 1, 2002.
On October 9, 2002, the court entered and ordered a Stipulation of
Dismissal, which dismissed the three named current and former officers
and directors from the litigation without prejudice. No discovery has
been served on us. The Company believes it has meritorious defenses to
these claims and intends to defend against them vigorously. The
Company is not presently able to estimate losses, if any, related to
this lawsuit.
NATIONAL SERVICE: Faces Lawsuits Over National Linen Surcharges, Taxes
----------------------------------------------------------------------
National Service Industries, Inc. faces four putative class actions,
including a case brought "on behalf of the general public" in
California, relating to the collection by National Linen Service of
energy surcharges, environmental charges and, in two of the cases,
sales taxes.
The first case was filed in the Circuit Court of Barbour County,
Alabama in May 2001 and was removed to the United States District Court
for the Middle District of Alabama. The federal court denied the
plaintiff's motion to remand the case to state court.
The second case was filed in the Court of Common Pleas, Fifteenth
Judicial Circuit, County of Horry, South Carolina in October 2001.
That case was removed to the United States District Court for South
Carolina, Florence Division. The South Carolina federal court also
denied plaintiff's motion to remand.
The third case was filed in Superior Court of Napa County, California
in May 2002. This case alleges that National Linen Service and
numerous other linen and uniform suppliers have violated Sections 17200
and 17500 of the California Business and Professions Code.
The fourth case was filed in the United States District Court in the
Southern District of Illinois in June 2002. This case alleges
National Linen Service and numerous other linen and uniform suppliers
and the Textile Rental Services Association violated federal antitrust
laws and state statutes in setting and charging the fees described
above.
As of January 1, 2003, no substantive discovery had occurred in any
case. Based on information currently available, it is the opinion of
management that the claims in these cases are without merit and that
the ultimate resolution of these legal proceedings will not have a
material adverse effect on the Company's financial condition or results
of operations.
NUMERICAL TECHNOLOGIES: Investors Sue Over Planned Takeover by Synopsys
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Numerical Technologies, Inc. faces a class action filed over Synopsys,
Inc.'s planned takeover of the Company in the Superior Court for Santa
Clara County, E in-site reports. The suit also names the Company's
board of directors as defendants.
According to Numerical, the lawsuit alleges that the Company's
directors breached their fiduciary duties by approving the terms of the
proposed acquisition of the company's stock by Synopsys. The suit
seeks an injunction preventing the closing of the acquisition, along
with other injunctive relief. The Company said it believes the suit is
without merit and intends to vigorously contest it.
OHIO: 25 Women Reach Settlement Over 17 Minute Workout Center Closure
---------------------------------------------------------------------
Twenty-five women who sued a now-defunct center and fitness chain that
abruptly closed its doors more than a year ago, have reached a
settlement to get some of their membership dues back, the Akron Beacon
Journal (OH) reports.
A trial was scheduled to start this week in Stark County Common Pleas
Court, Ohio. The agreement will pay the plaintiffs $50,000. After
attorneys' fees and costs, each of the women will receive portions of
the settlement that will be prorated according to the amount of time
they had left in their memberships, said plaintiffs' attorney Denise
Houston.
Members of Women's 17 Minute Workout Center found the doors shuttered
in December 2001. The women later learned that a new company,
Nubolics, owned by relatives of the former company's owners, would be
honoring their contracts. However, Nubolics would not honor the low
lifetime renewal rates (some as low as $1 a year) that came with many
of the contracts. Some former customers, who had paid as much as
$2,300 upfront for three-year contracts, said Nubolics did not offer
the same workout philosophy, but focused more on nutrition. They were
not offered refunds.
A lawsuit was filed in March 2002, against both companies and their
owners, including Jeffrey C. Stone, founder of Women's 17 Minute
Workout, seeking to hold him and his family personally liable for the
debts of the corporation. The suit alleged that the companies had
violated the state's prepaid entertainment contract and the Ohio
Consumer Sales Practices Act.
At one point, the plaintiffs were seeking class-action status for their
suit, and lawyers for Tzangas, Plakas, Mannos & Recupero in Canton,
Ohio, said they had had more than 300 women signed up. However, over
time, many of the women were able to get refunds from their credit card
companies and dropped out of the lawsuit. That left the 25 women
plaintiffs who either had paid cash or were otherwise unable to obtain
refunds for their losses. Scott Sandrock, attorney for the defendants,
said no appeal is planned.
Susan Schweitzer of Akron said although it took more than a year to get
resolution, it was worth it. "If this keeps anybody else from getting
burned like we all did, I hope it works," said Ms. Schweitzer, who now
works out at a local YMCA.
ROBOTIC VISION: Reaches Settlement Of Securities Fraud Lawsuit in MA
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Robotic Vision Systems, Inc. agreed to settle the consolidated
securities class action pending against it, Pat V. Costa, Chief
Executive Officer, and Frank Edwards, our former Chief Financial
Officer, in the United States District Court for the District of
Massachusetts.
The plaintiffs seek damages for alleged false and misleading statements
made prior to the Company's announcement that it would restate its
financial results for fiscal year 2000 and the first quarter of fiscal
year 2001.
The suit, filed on behalf of purchasers of Company stock between
January 27, 2000 and May 15, 2001, alleges that the Company and certain
of its officers and directors violated the Securities Exchange Act of
1934. The suit alleges that during the class period, the Company
reported materially false and misleading financial results for fiscal
year 2000 in violation of generally accepted accounting principles.
On December 6, 2002, the parties agreed in principle to settle this
matter, subject to the parties drafting and executing appropriate
settlement documents, conducting certain limited confirmatory discovery
and obtaining court approval. The Company expects the settlement
amount to be covered by proceeds from the Company's directors and
officers liability insurance policy.
SEMINIS INC.: Faces Suits Over Savia, Fox Paine Stock Acquisition Plan
----------------------------------------------------------------------
Seminis, Inc. faces four class actions filed relating to a December 13,
2002 announcement made by its majority stockholder, Savia, S.A. de
C.V., that it signed a letter of intent with Fox Paine & Company, LLC,
a San Francisco based private equity firm, under which Fox Paine and
certain Savia related parties will acquire all of the outstanding
shares of Seminis, Inc. Three of these actions were filed in the
Delaware Court of Chancery (New Castle County), while the fourth was
filed in California Superior Court (Ventura County). The suits also
name as defendants Savia S.A. de C.V. (Savia) and the Company's
directors.
All four complaints purport to be brought on behalf of the Company's
common stockholders or their successors. All four complaints allege
that the above-described transaction, if consummated, would provide
insufficient consideration to the Company's common stockholders and
allege that the defendants breached their fiduciary duties in
connection with the transaction. The complaints seek a preliminary and
permanent injunction to enjoin the transaction and, in the event the
transaction is consummated, rescission and damages. The defendants
will vigorously defend these actions.
UNITED STATES: Judge's Ruling Prohibits Somalian Refugees' Deportation
----------------------------------------------------------------------
Federal Judge Marsha Pechman ruled to prohibit all deportations of
Somali refugees to their war-ravaged, homeland, and certified as a
class action a lawsuit filed on behalf of five Somali men facing
deportation in Seattle, Washington, the Seattle Times reports.
The suit, filed in Seattle in late November, contended that sending
Somalis back to their famine-and war-ravaged country violates INS
statutes, because the country lacks a functioning government and
therefore cannot agree to accept deportees, an earlier Class Action
Reporter story states. The same lawsuit also alleges the policy of
return, as practiced, violated international law and treaties such as
the United Nations Convention Against Torture.
The INS officials said that the policy they were following was lawful,
because Somalis are not required to present travel documents to enter
Somali, which means deportees are not rejected.
In December, Judge Pechman issued a temporary restraining order stating
that the Immigration and Naturalization Service should halt the
possible deportation of 2,747 Somalis nationwide - including 41 people
in INS detention.
The Seattle case initially involved five Somali men. Three had been
convicted of drug, drunken driving or assault charges. The other two
had been denied asylum, one of them later won an asylum appeal and was
released from detention. INS spokesman Bill Strassberger told the
Seattle Times, "What we are talking about are people who do not have
the legal right to be in the US."
In court yesterday, Justice Department attorney Greg Mack said the two
sides have different interpretations of what is meant by "acceptance"
of deportees, which is not defined in statutes. Mr. Mack said there is
a mistaken notion that a deportation ends with a receipt or papers
stamped to signify that the process is complete.
Judge Pechman asked him how the government knows whether someone has
been removed. He replied, "If they don't return to the US, the warrant
has been executed . It's not about what happens on the other end. If
someone got on the plane and the door was sealed, acceptance has
occurred."
Judge Pechman will decide on Friday whether the four Somali men in the
case should be released from a Seattle immigration jail. Their
attorneys now say the four still in detention should also be released.
In 2001, the US Supreme Court ruled that a person facing deportation
cannot be jailed indefinitely. Judge Pechman has asked both sets of
attorneys to submit briefs by tomorrow on whether she should take up
the detention issue Friday, the day she plans to issue yesterday's
ruling in writing, the Seattle Times reports.
Yesterday's ruling could be appealed by the government to the 9th US
Circuit Court of Appeals. The Department of Justice did not return
phone calls yesterday seeking comment.
Asbestos Alert
ASBESTOS LITIGATION: Asbestos Ruling Will Cost Car Makers Billions
------------------------------------------------------------------
The US Supreme Court ruled against US carmakers in an asbestos case
decision that could cost them $100 billion. The Justices refused to
let General Motors, Ford Motor and DaimlerChrysler move thousands of
asbestos-related cases to the federal bankruptcy court.
Such transfers would help businesses avoid state juries, which are
thought to be more sympathetic to personal injury lawsuits, and would
also consolidate all of the suits in one court. "The state courts have
now been buried under an avalanche of individual asbestos claims, many
of which name hundreds of defendants," lawyers for the carmakers told
the Supreme Court in filings.
The lawyers said the case "presents an opportunity for this court
actually to do something about the crisis . rather than simply
observing the grotesque distortion of American law under the hydraulic
pressure of current asbestos litigation."
About 15,000 car mechanics and factory workers are suing the carmakers
for exposing them to cancer-causing asbestos brake pads. Their lawyers
argued against consolidating the cases, saying each suit is different
and should be considered individually.
At the heart of the latest case is auto parts manufacturer Federal-
Mogul Global Inc., which filed for bankruptcy because of asbestos
lawsuits. Carmakers wanted to be named "related parties" in the
company's bankruptcy. Plaintiff lawyers have moved from suing bankrupt
parts companies to deeper-pocketed carmakers.
The Supreme Court also rejected an appeal from more than 200 people who
owned or leased Ford Explorers and who wanted to consolidate their
consumer complaints over the vehicles' Bridgestone/Firestone tires.
The cases dealt only with people who claimed they paid too much for
faulty tires, and not people who claimed the tires caused injury or
death.
ASBESTOS LITIGATION: House of Lords Hears Landmark Asbestos Litigation
----------------------------------------------------------------------
A landmark case brought by a Westcountry man who claims he was exposed
to asbestos while working for the Royal Navy started in the House of
Lords.
Alan Matthews, 64, of Exeter, says he became ill from asbestos exposure
while serving as an electrical engineer in the Royal Navy between 1955
and 1968. Mr. Matthews' counsel told a panel of five Law Lords, headed
by Lord Bingham, that a law, which stops former service personnel suing
the Ministry of Defense for negligence, is unjust.
Richard Gordon QC said he was challenging the right of the Government
to claim immunity from damages claims for injuries by former members of
the armed services. Mr. Justice Keith held in a judgment in January
last year that Government immunity under the 1947 Crown Proceedings Act
was a breach of an individual's right to a fair hearing under the
European Convention on Human Rights. However, three months later the
Court of Appeal reversed the decision.
Although the section of the 1947 law was repealed in 1987, allowing
servicemen to sue, it was not retrospective. Servicemen and women
therefore have no right to claim damages for incidents occurring before
1987. Mr. Gordon said his client first realized he was suffering from
the effects of asbestos exposure in 1999 and brought his action against
the MoD in 2001. The Defence Secretary responded by issuing a
certificate of immunity from prosecution under section 10 of the Crown
Proceedings Act. Mr. Gordon said, "In this appeal the appellant
challenges the legitimacy of section 10 in the light of the Human
Rights Act . It is widely believed that section 10 has operated
unjustly."
Mr. Gordon said that if the law is found to be incompatible with human
rights legislation, it will open the door for claims by other
servicemen who suffered after being exposed to asbestos while on duty.
Peter Mitchell, a solicitor from Mr. Matthews' law firm, Bond Pearce,
said, "The first day went as well as could be expected, and we were
encouraged by the way it went . However, we have not heard the other
side of the argument yet."
ASBESTOS LITIGATION: Congoleum Seeks to Resolve Asbestos Related Claims
-----------------------------------------------------------------------
Congoleum Corporation (AMEX:CGM) intends to file a prepackaged plan of
reorganization under Chapter 11 of the United States Bankruptcy Code as
its strategy for resolving current and future asbestos claims
liability.
The strategy involves negotiating a global settlement with current
asbestos plaintiffs. Congoleum has begun preliminary settlement
negotiations with attorneys representing the majority of plaintiffs
with asbestos claims pending against Congoleum. Upon successful
completion of these negotiations, Congoleum will file a prepackaged
plan of reorganization under Chapter 11 of the United States Bankruptcy
Code. Congoleum intends to propose a plan under which its trade
creditors would not be adversely affected.
Roger S. Marcus, Chairman of the Board, commented, "We believe this
step is a very positive move for Congoleum's future. Over the past
several years, there have been great improvements in Congoleum's
product offering, distribution, and manufacturing capability.
Unfortunately, these achievements have been overshadowed by the cloud
of asbestos litigation hanging over the company."
Congoleum expects that the plan of reorganization would provide for an
assignment of applicable Congoleum insurance to a trust that would fund
both the settlement of pending asbestos claims as well as future
asbestos claims, and that the plan would leave Congoleum's trade
creditors unimpaired and protect the company from any future asbestos-
related litigation.
Unlike a conventional bankruptcy proceeding, a prepackaged bankruptcy
can significantly reduce the time and cost of the Chapter 11 process,
resulting in a more predictable outcome for all constituents. Much of
the time consumed in a non-prepackaged bankruptcy proceeding is spent
on negotiations among various classes of creditors competing over how
their respective claims will be treated under a plan. By reaching an
agreement in advance of filing with the plaintiffs that leaves other
classes of creditors unimpaired, Congoleum expects that the post-filing
process would result in a swifter and less costly reorganization than
would be the case with a non-prepackaged bankruptcy.
Congoleum expects it would take from four to six months to negotiate a
prepackaged plan of reorganization, at which time it would file for
bankruptcy and request court approval of the plan. Congoleum expects
it would take another two to six months to have the plan confirmed and
emerge from the process. Upon filing, Congoleum intends to seek
immediate court approval to continue to pay all its pre-petition trade
creditors in the ordinary course of its business, and consistent with
past practices.
"Because this process now involves discussions with a wider circle, we
felt it best to communicate our strategy to assure our non-asbestos
creditors, customers, employees and other constituencies who might have
concerns about the asbestos issue and how it could affect them. We have
worked hard to craft a strategy that would resolve the asbestos problem
without harm to our trade creditors, customers, and employees, and we
look forward to receiving their full support throughout this process.
We expect to operate on a 'business as usual' basis throughout this
process. The net cash provided by operating activities and the funds
available under the existing credit facility should be more than
adequate to fund anticipated working capital requirements, debt service
and planned capital expenditures through this process. We believe this
settlement strategy of resolving our current and future asbestos
liabilities through a prepackaged bankruptcy is in the best interests
of the company, the claimants and the company's other constituencies,
and for that reason we are optimistic that it will succeed. However, if
a fair resolution cannot be reached, we are fully prepared to utilize
our insurance and other resources to return to the strategy of vigorous
defense that we have employed in the past," Mr. Marcus said.
"We have seen tremendous momentum with the sales success of Ultima,
Prelude, and Durastone, all of which contributed to our top line growth
in 2002. We expect to receive a second patent shortly that covers
Ultima and Durastone, further solidifying our proprietary advantage. We
have a new introduction package coming out this month, including the
Durastone Classic line and a major addition to the Ultima design and
color offering, which we are excited about. From a financial
perspective, we expect improvement from a recent price increase,
continued progress in cost reductions, and modest capital requirements
as we look ahead. While we are not expecting much improvement in the
overall economy or the manufactured housing business, we expect all the
above should benefit our operating results," he continued.
Mr. Marcus further stated, "Successfully resolving the asbestos problem
would eliminate a financial and management drain, permitting us to
return our focus exclusively to the business. It would also clean up
our balance sheet and eliminate the asbestos concerns the financial
community has had regarding Congoleum. Over the past several years,
we've invested significant capital to improve efficiencies. We also
rearranged our distribution network for the future, which required
another major investment. Finally, we've spent a great deal on new
product development, introduction, and merchandising. At the same time,
we've weathered the worst decline in manufactured housing in over a
decade. With the asbestos matter behind us, we would be positioned for
greater success. I look forward to our future opportunities."
Congoleum Corporation is a leading manufacturer of resilient flooring,
serving both residential and commercial markets. Its sheet, tile and
plank products are available in a wide variety of designs and colors,
and are used in remodeling, manufactured housing, new construction and
commercial applications. The Congoleum brand name is recognized and
trusted by consumers as representing a company that has been supplying
attractive and durable flooring products for over a century.
ASBESTOS LITIGATION: Georgia-Pacific Corporation Warns of Asbestos Loss
-----------------------------------------------------------------------
Georgia-Pacific Corporation (NYSE:GP), the world's second-largest
forest products company, warned it will post a fourth-quarter net loss
from a $315 million asbestos charge, higher costs and tough market
conditions in its building-products and consumer-products businesses.
Georgia-Pacific, which ranks behind International Paper Co.(NYSE:IP),
said asbestos-related expenses in 2002 were higher than expected. The
Company, which took a $350 million asbestos-related charge in the year-
earlier quarter, also said it now anticipates paying those costs
through 2012, a year longer than expected.
"Clearly, the fourth quarter was a more difficult environment than Wall
Street expected," said D.A. Davidson analyst Steven Chercover. "The
sector's ability to increase prices will be very limited this year
because so much capacity has been idled in recent years."
Atlanta-based Georgia Pacific said it expects break-even fourth-quarter
results from continuing operations, significantly lower than the
average profit estimate of 22 cents a share from analysts polled by
research firm Thomson First Call before unusual items and the sale of a
60 percent interest in its Unisource paper distribution subsidiary. The
company will report its earnings January 21.
An avalanche of asbestos personal injury claims has cost more than $54
billion in settlements so far and driven more than 60 US companies into
bankruptcy. Asbestos was widely used for fireproofing and insulation
until the 1970s, when scientists concluded that inhaled fibers could
cause cancer and other diseases.
Georgia-Pacific's quarterly results will also suffer because of costs
for suspending production at some plants, as well as competitive
pricing for lumber and panels. Meanwhile, competitive market
conditions, higher manufacturing costs and higher wastepaper and energy
costs hurt the company's North American consumer-products business.
In May, Georgia-Pacific's board approved the separation of its
lucrative consumer products and packaging division - the unit that
produces Quilted Northern and Angel Soft bathroom tissue, Dixie cups
and Brawny paper towels - from its building products division, which
faces costs from asbestos lawsuits.
The building products division has faced the potential payments from
asbestos litigation related to its gypsum board products. The Company
manufactured the asbestos products until 1977, and about 300,000
asbestos-related claims have been filed against the company to date.
Georgia-Pacific said it will remain in compliance with its existing
debt covenants after taking the charge for its asbestos liabilities.
ASBESTOS LITIGATION: Kaiser Aluminum Subsidiaries File Bankruptcy in DE
-----------------------------------------------------------------------
Nine subsidiaries of Kaiser Aluminum Corporation joined the parent
company in bankruptcy to avoid liens related to pension liabilities.
The Company and 16 other subsidiaries filed for bankruptcy in Delaware
in February and March last year, blaming soft demand and poor prices
for aluminum and asbestos litigation while facing significant debt
payments and growing obligations for retiree medical and pension costs.
At the time of the original bankruptcy, Kaiser said it had $3.3 billion
in assets, $3.1 billion in liabilities. Kaiser announced that it will
mothball its smelter in suburban Mead, Washington which has been on
standby status for two years. In mid-December, Kaiser said it was
selling a smaller smelter in Tacoma, Washington, for $12 million as the
company struggles to emerge from bankruptcy. About 1,000 steelworkers
were laid off from the Mead smelter when it was put on standby, and 25
had been working there recently.
The subsidiaries that filed for bankruptcy Tuesday are:
(1) Alpart Jamaica Inc., not including the Alpart alumina
refinery,
(2) KAE Trading,
(3) Kaiser Aluminum & Chemical Canada Investment Ltd. in Canada,
(4) Kaiser Aluminum & Chemical of Canada Ltd. in Canada,
(5) Kaiser Bauxite Company, which doesn't include the KJBC bauxite
mining operation,
(6) Kaiser Center Properties,
(7) Kaiser Export Co.,
(8) Kaiser Jamaica Corporation,
(9) Texada Mines Ltd. in Canada
ASBESTOS LITIGATION: RPM Expects to Manage Asbestos Related Litigation
----------------------------------------------------------------------
RPM Inc (NYSE:RPM), which makes specialty coatings like Rust-Oleum,
said it expects to successfully manage its asbestos-related litigation
in the future. "We have been successfully managing this issue for
close to 20 years," said RPM's Chief Executive Frank Sullivan. "Based
on the strength of our operating results, balance sheet and solid cash
flow, coupled with the numerous legal, defense and reserve strategies
available to the company, we expect to continue to successfully manage
this issue going forward."
The Company also said it believes the market overreacted to comments
Mr. Sullivan made about the litigation.
ASBESTOS LITIGATION: Travelers Sets $3.4 Billion Asbestos Provisions
--------------------------------------------------------------------
Travelers, the insurer spun off from the investment bank Citigroup last
year, yesterday admitted profits for 2002 would be wiped out by its
need to more than double its provisions to US$3.4 billion (GBPœ2.1
billion) for asbestos-related claims.
America's third-largest property insurer is the latest corporate giant
to be laid low by burgeoning asbestosis claims which have been waved
through by a series of controversial decisions in US courts. Travelers
is only one of many insurers affected by asbestos claims. Others,
including the St Paul Companies, CNA in Chicago and Berkshire Hathaway,
Warren Buffett's reinsurance giant, sharply increased reserves for
asbestos losses last year. Travelers said it would take a charge of
$1.3 billion, after tax, to boost reserves for ballooning asbestos-
related claims against corporate clients.
The charge will cause a loss of $793 million for the fourth quarter,
the company said, which wipes out the $766 million it earned in the
first nine months of last year. For the whole of 2002, Travelers said,
it would post a loss of $27 million, when it reports earnings this
month.
While Travelers' increase to its fund for paying out asbestosis claims
is one of the largest provisions made by a US company, analysts said
the business could easily meet its obligations. Reinsurers are paying
about $670 million of its provision, while $555 million is coming from
Citigroup, which agreed to back up Travelers asbestos reserves when it
spun off the insurer last year. Citigroup has already provided $800
million for asbestosis claims, which has now been used up.
Travelers' announcement follows its rivals Chubb, which put $625
million into asbestos reserves last year, and a settlement involving
Pittsburgh Corning, which made asbestos pipe covering, cost a group of
insurers $2.7 billion. A claim involving the Western Asbestos Co cost
the St Paul Companies $980 million. In a report to investors, Jay
Cohen, an analyst at Merrill Lynch, said the increase in reserves was
bigger than expected but "appears manageable from a capital
standpoint".
After tapering off in the early 1990s, claims from victims of asbestos,
once the most widely used insulating material, have begun to pick up in
the past few years. Plaintiffs' lawyers have moved beyond companies
that manufactured asbestos to those that shipped and installed it.
Lawsuits are being filed on behalf of children and wives who were
exposed to asbestos fibers workers brought home on their clothing.
Among the most troubling claims have been those filed on behalf of
people who can prove that they were exposed to asbestos but have not
yet begun to show any signs of sickness. As the insurers see it, this
tactic raises the prospect of a virtually unlimited stream of lawsuits.
Worried about being swamped by the claims, the insurance industry has
sent an army of lobbyists to Congress in the hope of getting new
legislation that will make it harder to bring these lawsuits. The
insurers are also concerned about another ominous development: lawsuits
accusing the insurers of conspiring with policyholders to conceal the
dangers of asbestos from potential plaintiffs.
Robert Lipp, Travelers' chief executive, said its reserves should now
cover all asbestos claims on its books. He added that asbestos had
become a "black hole" for insurers, but Travelers had now quantified
its exposure.
ASBESTOS LITIGATION: Tyler Pipe to Pay $26M for Asbestos Injuries
-----------------------------------------------------------------
Twice in less than a week in August 2000, a jury awarded longtime
employees of Tyler Pipe Industries Inc. a multimillion-dollar award for
occupational injuries from exposure to asbestos at Tyler's iron foundry
in Swan, Texas.
After 20 days of trial, the Smith County District Court jury awarded $9
million to eight Tyler Pipe employees (Dews). Six days later, another
Smith County jury returned a $17 million verdict to seven Tyler
employees (Blackburn). The verdicts came against Tyler Pipe, which
originated in 1936 as the Tyler Iron and Foundry Co. The company later
sold the business to Swan Transportation Co.
The trials were held simultaneously. Both juries awarded the employees
compensation for pain and mental anguish, loss of earning capacity
physical impairment and medical care.
Tyler Pipe is owned by Ransom Industries Inc., a private company
located in Birmingham Alabama. It has foundries in Texas and
Pennsylvania, and coupling/gasket production facilities in Missouri and
California.
ASBESTOS ALERT: CRH PLC Shares Fall as Asbestos Related Claims Emerge
---------------------------------------------------------------------
Shares in leading Irish construction and building materials company CRH
Plc fell after the firm said some of its operating companies had been
named in asbestos litigation. The Company said it did not think the
litigation would affect its financial position and added that it
"believes that these claims are without merit".
Companies operating in the United States are facing mounting lawsuits
due to links to cancers and other diseases with the substance, which
was used for fireproofing and insulation in the 1960s and 1970s.
"Anything about this is negative and it depends on the kind of further
detail that people are provided with," said John Sheehan, analyst with
NCB Stockbrokers in Dublin. "Only it looks to be mainly on the
distributions side rather than they haven't been involved in the
manufacture of asbestos."
The CRH subsidiary, Allied Building Products, has operations in 27 US
states and is a distributor of roofing products. The company has been
named along with other building companies in a total of 244 cases, 94%
of which originate from one law firm based in New Jersey involving a
total of 251 claimants.
It said the cases allege personal injury as a result of exposure to
products manufactured by others and allegedly sold by companies in the
distribution group prior to their ownership by CRH. It said the
companies had so far settled 33 cases for an aggregate amount of
$80,300. It added that a very small number of cases against CRH
subsidiaries outside of the distribution group also are pending.
The companies and insurance carriers involved were working to defend
the cases and settle "only on a minimal, pragmatic basis", CRH said.
It also noted that the companies had never suffered an adverse ruling
on the issue in the courts. "CRH does not believe that the outcome of
any pending actions will have a material adverse impact on the
financial position, results or operations of the group," the company
said.
COMPANY PROFILE
CRH plc (NASDAQ: CRHCY)
Belgard Castle, Clondalkin
Dublin 22, Ireland
Phone: +353-1-404-1000
Fax: +353-1-404-1007
http://www.crh.ie
Employees : 47,600
Revenue : $9,097,300,000
Net Income : $518,800,000
Assets : $9,606,600,000
Liabilities : $5,386,000,000
(As of December 31, 2001)
Description: Through an international group of subsidiaries, CRH makes
and distributes primary building materials and value-added products for
the construction industry and do-it-yourselfers. Construction products
include concrete blocks, pavers, roof tiles, clay bricks, insulation,
security gates and fences, and glass. CRH also makes primary products
such as cement, aggregates, asphalt, ready-mix concrete, and
agricultural and chemical lime. The company, which operates in 20
countries, is expanding through acquisitions, especially in North
America (including assets of bankrupt U.S. Aggregates) and in the
Middle East. North America accounts for about 60% of CRH's sales.
ASBESTOS ALERT: NC Judge Okays Wives' Weyerhaeuser Inc. Asbestos Suit
---------------------------------------------------------------------
A judge has allowed a lawsuit to proceed in which five women accuse
timber giant Weyerhaeuser of causing their asbestos-related illnesses
because their husbands brought home the fibers on their clothing from
their jobs at the company's Plymouth paper mill. At the same time,
Superior Court Judge William C. Griffin Jr. of Martin County dismissed
the wives' claim against a small Plymouth company that sold asbestos
products to the mill.
The ruling came nearly three weeks after a hearing before Griffin in
which Weyerhaeuser argued that the case should be dismissed because the
company had no legal duty to protect the women against asbestos. The
mineral insulated miles of pipe, walls and equipment at the mill, and
workers have said the fibers came loose every day. Hundreds of mill
employees have filed for workers' compensation saying that years of
inhaling the fibers had made them sick with the lung disease
asbestosis.
Weyerhaeuser Co.'s spokeswoman in the Carolinas, Susan Larkin, said of
Griffin's ruling: "We felt our motion (to dismiss the case) had merit,
but the court looked at it differently, and we respect that decision."
The case now moves into the discovery phase, in which the sides
exchange information about their cases. "We look forward to proving
our case when it comes to trial," Larkin said.
Employees are barred from suing employers in civil court for on-the-job
injuries or illnesses; those claims are settled in workers'
compensation proceedings. However, the wives' suit, the first of its
kind in North Carolina, says Weyerhaeuser should have at least warned
the families of its workers about the dangers of asbestos.
The women say their husbands carried home asbestos on their clothing
for decades, and the wives inhaled the microscopic fibers while doing
the laundry. The women also say that Weyerhaeuser knew families were
in danger of asbestos exposure and even drew up pamphlets to caution
families. The five women now all have asbestosis, an incurable and
often progressive illness that, in some cases, can lead to cancer.
Representing the women is Salisbury lawyer Mona Lisa Wallace. She also
represents a number of Plymouth workers with pending workers'
compensation claims. Also representing the women are Raleigh lawyers
Eugene and Daniel Boyce. Griffin's ruling Monday frees from the suit
East Carolina Supply Co. of Plymouth, the mill's provider of asbestos
materials for 50 years.
Before the December 19 hearing in Griffin's courtroom on Weyerhaeuser's
motion to dismiss, the women amended their lawsuit to include two
consulting companies that advised Weyerhaeuser on removing asbestos
from the Plymouth mill.
COMPANY PROFILE
Weyerhaeuser Company (NYSE: WY)
33663 Weyerhaeuser Way S.
Federal Way, WA 98063-9777
Phone: 253-924-2345
Fax: 253-924-2685
http://www.weyerhaeuser.com
Employees : 44,800
Revenue : $14,545,000,000
Net Income : $354,000,000
Assets : $18,293,000,000
Liabilities : $11,598,000,000
(As of December 31, 2001)
Description: One of the largest US forest products companies (and North
America's largest producer of softwood lumber), Weyerhaeuser manages
about 5.9 million acres of timberland mainly in the southern US and the
Pacific Northwest, but it also holds cutting rights to more than 32
million acres in Canada and has holdings in Australia, New Zealand, and
Uruguay. Weyerhaeuser manufactures building materials (lumber, plywood,
oriented strand board, and engineered wood), coated and uncoated
papers, newsprint, wood pulp, and containerboard. It also develops real
estate, including homes and master-planned communities.
ASBESTOS ALERT: Wolseley PLC Downplays Asbestos Related Litigation
------------------------------------------------------------------
The London-based company, Wolseley plc (NYSE: WOS), is among a number
of building product-related companies, including CRH Plc, facing
asbestos-related claims. The "several hundred" claims are covered by
insurance and are not expected to have an impact on profit.
"There's no change in the situation and no change in trends," the
Company said. "We are more than adequately covered by insurance and
not paying any of these claims ourselves." The Company declined to
give further details.
COMPANY PROFILE
Wolseley plc (NYSE: WOS)
Parkview 1220, Arlington Business Park
Theale, Berkshire RG7 46A, United Kingdom
Phone: +44-118-929-8700
Fax: +44-118-929-8701
http://www.wolseley.com
Employees : 37,136
Revenue : $12,451,800,000
Net Income : $450,400,000
Assets : $6,085,500,000
Liabilities : $3,585,200,000
(As of July 31, 2002)
Description: In business for more than 100 years, Wolseley is the
world's largest distributor of building, heating, and plumbing
equipment. The company distributes central heating equipment,
environmental control products, fittings, flooring, pipes, test-
measuring equipment, valves, and other building materials from more
than 2,970 outlets in Europe and the US. The company's customers
include builders, plumbing installers, and building and mechanical
contractors
New Securities Fraud Cases
MOTOROLA INC.: Bernard Gross Commences Securities Fraud Suit in N.D. IL
-----------------------------------------------------------------------
The Law Offices of Bernard M. Gross initiated a securities class action
in the United States District Court for the Northern District of
Illinois, on behalf of all persons and entities who purchased the
common stock of Motorola (NYSE:MOT) between February 3, 2000 and April
6, 2001, inclusive. The action, is pending in the United States
District Court, Northern District of Illinois, against the Company and:
(1) Christopher B. Galvin,
(2) Carl F. Koenemann,
(3) Robert L. Growney
The Complaint charges Motorola, Inc., Christopher B. Galvin, Chairman
of the Board of Directors and Chief Executive Officer, Robert L.
Growney, former President, Chief Operating Officer, and Carl F.
Koenemann, former Executive Vice President-Finance and Chief Financial
Officer and Director of Motorola with violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5, by
issuing a series of materially false and misleading statements to the
market during the class period.
Specifically, as alleged in the Complaint, defendants issued a press
release on February 3, 2000, stating that Motorola and Telsim signed a
$1.5 Billion GSM deal. This press release was false and misleading
because it failed to disclose that as part of the Telsim deal, Motorola
had agreed to provide at least $1.5 billion in vendor financing. While
vendor financing was a recognized practice in the industry and Motorola
had previously disclosed that it often agreed to provide vendor
financing, the February 3 press release did not disclose and defendants
concealed for several months: the extent to which the Telsim
transaction was being supported by vendor financing, the level of risk
which Motorola was facing by providing such vendor financing; or that
the vendor financing was secured primarily by a pledge of the stock of
Telsim. This information was material to an investor in assessing the
potential value of the Telsim deal to Motorola and to the level of risk
being incurred by Motorola.
On March 30, 2001, Motorola filed its Proxy Statement on SEC Schedule
14A. The 2001 Proxy Statement stated for the first time that Motorola
had provided over $1.5 billion of vendor financing in connection with
the Telsim deal. Because the foregoing information regarding Telsim
was buried deep within the 2001 Proxy Statement it took analysts some
time to process the information. Disclosure of Motorola's material
financing commitment to Telsim in light of shifting capital markets
drove the market price of Motorola's common stock down sharply.
Motorola's common stock fell from a closing price of $14.95 per share
on April 5, 2001 to close at $11.50 per share on April 6 - a 23% drop
in one day. Trading volume was extremely heavy at 64 million shares
traded. By July 2001, Telsim eventually did default on the $2 billion
loan from Motorola. The Company subsequently filed a lawsuit in the
Southern District of New York against Telsim in January 2002.
For more details, contact Deborah R. Gross or Susan R. Gross by Phone:
866-561-3600 (toll-free) or 215-561-3600 by E-mail:
susang@bernardmgross.com or debbie@bernardmgross.com or visit the
firm's Website: http://www.bernardmgross.com.
TELLIUM INC.: Bernstein Liebhard Commences Securities Fraud Suit in NJ
----------------------------------------------------------------------
Bernstein, Liebhard & Lifshitz, LLP initiated a securities class action
in the United States District Court for the District of New Jersey on
behalf of all persons who purchased or acquired Tellium, Inc. (NASDAQ:
TELM) common stock between May 17, 2001 and February 1, 2002,
inclusive.
The complaint alleges that throughout the class period, the Company
made numerous false and misleading public statements in connection with
the Company's initial public offering (IPO). In its May 17, 2001
Prospectus and Registration Statement, defendants stated that the
Company had obtained a minimum purchase commitment of $300 million from
Qwest Communications International, Inc. Tellium failed to disclose,
though, that Qwest did not need Tellium's products and could avoid its
contractual obligations. Following the IPO, Tellium continued to make
statements that its agreement with Qwest was an important achievement,
while certain Defendants sold their personal holdings of Tellium stock.
When, on February 1, 2002, news of Tellium's disappointing 2002 results
reached the market, the price of Tellium stock declined to under $3 per
share, from its class period high of over $29 per share.
For more details, contact Ms. Linda Flood, Director of Shareholder
Relations, by Mail: 10 East 40th Street, New York, New York 10016, by
Phone: (800) 217-1522 or 212-779-1414 or by E-mail: TELM@bernlieb.com.
WESTAR ENERGY: Cauley Geller Launches Securities Fraud Suit in KS Court
-----------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the District of Kansas on
behalf of purchasers of the common stock of Westar Energy Inc. (NYSE:
WR) and on behalf of all purchasers of Western Resources Capital I
Cumulative Quarterly Income Preferred Securities Series A (NYSE: WR--
pa) during the period between March 30, 2001 and December 26, 2002,
inclusive.
The complaint charges 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 materially false and misleading
statements to the market between March 30, 2001 and December 26, 2002.
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:
(1) that the Company had engaged in certain trades that may have
violated Federal Energy Regulatory Commission (FERC)
affiliate transaction rules, specifically that these
transactions involved power sales from one Cleco Corporation
(NYSE: CNL) affiliate to Westar and then back to another or
the same Cleco affiliate, these transactions totaled
approximately $3.4 million in 2000, $12.6 million in 2001 and
$3.8 million in 2002; and
(2) further as a result of a improper accounting practices
regarding Westar's approximately 88% ownership of Protection
One (NYSE: POI), a provider of property monitoring services,
including electronic monitoring and maintenance of alarm
systems, first and second quarter 2002 financial earning
results had to be re-audited and restated.
On December 26, 2002, the last day of the class period, Westar
announced in a press release that it had received a subpoena from the
Federal Energy Regulatory Commission on December 16, 2002, and that in
addition to seeking details on trades with Cleco and its affiliates,
FERC also requested documents concerning power transactions between
Westar's system and marketing operations, and information on power
trades in which Westar or other trading companies acted as
intermediaries.
For more details, contact Jackie Addison, Heather Gann or Sue Null by
Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone:
1-888-551-9944 by E-mail: info@cauleygeller.com or visit the firm's
Website: http://www.cauleygeller.com
WESTAR ENERGY: Schiffrin & Barroway Lodges Securities Fraud Suit in KS
----------------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the District of Kansas on behalf of
all purchasers of the common stock of Westar Energy Inc. (NYSE:WR) and
on behalf of all purchasers of Western Resources Capital I Cumulative
Quarterly Income Preferred Securities Series A (NYSE:WR--pa) from March
31, 2001 through December 26, 2002, inclusive.
The complaint charges 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 materially false and misleading
statements to the market between March 31, 2001 and December 26, 2002.
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:
(1) that the Company had engaged in certain trades that may have
violated Federal Energy Regulatory Commission (FERC)
affiliate transaction rules, specifically that these
transactions involved power sales from one Cleco Corporation
(Cleco) (NYSE:CNL) affiliate to Westar and then back to
another or the same Cleco affiliate, these transactions
totaled approximately $3.4 million in 2000, $12.6 million in
2001 and $3.8 million in 2002; and
(2) further as a result of a improper accounting practices
regarding Westar's approximately 88% ownership of Protection
One (NYSE:POI), a provider of property monitoring services,
including electronic monitoring and maintenance of alarm
systems, first and second quarter 2002 financial earning
results had to be re-audited and restated.
On December 26, 2002, the last day of the class period, Westar
announced in a press release that it had received a subpoena from the
Federal Energy Regulatory Commission on December 16, 2002, and that in
addition to seeking details on trades with Cleco and its affiliates,
FERC also requested documents concerning power transactions between
Westar's system and marketing operations, and information on power
trades in which Westar or other trading companies acted as
intermediaries.
For more details, contact Marc A. Topaz or Stuart L. Berman by Phone:
1-888-299-7706 (toll free) or 1-610-667-7706 or by E-mail:
info@sbclasslaw.com
*********
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-
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Information contained herein is obtained from sources believed to be
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