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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 31, 2003, Vol. 5, No. 22
Headlines
BANKRATE INC.: Appeals Court Affirms Dismissal of Securities Fraud Suit
BAYER AG: Share Prices Fall On Word of Likely Increase in Baycol Suits
CREDIT CARDS: Tel Aviv Court Allows Consumer Fraud Lawsuit to Proceed
FASTFOOD LITIGATION: Lawyers Use Reports Saying Overeating "Addictive"
GEORGIA: Bankers Association Files Suit To Block Predatory Lending Law
MASSACHUSETTS: Court Orders Special Help For Retarded In Nursing Homes
MICROSOFT CORPORATION: ND High Court Allows Antitrust Suit To Proceed
NEBRASKA: Low-Income Parents Commence Lawsuit Seeking Medicaid Benefits
NEVADA: NV Judge Faces Civil Rights Lawsuit Over Sentencing Violations
STOCKWALK GROUP: Moves Closer To Settlement of MN Securities Fraud Suit
TENNESSEE: Court Monitor Recommends Remodeling of Knox County Facility
Asbestos Alert
ASBESTOS LITIGATION: Asbestos Claims Against US Insurers Approach $34B
ASBESTOS LITIGATION: Swindon Firms Start Drive to Stop Asbestos Deaths
ASBESTOS LITIGATION: Parliament to Hold Public Hearings on Asbestos
ASBESTOS LITIGATION: Ashland Inc. Reports Loss on Asbestos Litigation
ASBESTOS LITIGATION: Crane Posts Net Loss on Asbestos-Related Charges
ASBESTOS LITIGATION: Shares of Owens-Corning May Become Worthless
ASBESTOS LITIGATION: UK Insurers Accused of Avoiding Asbestos Liability
ASBESTOS LITIGATION: Saint-Gobain Rules Out ABB-Style Asbestos Payment
ASBESTOS LITIGATION: Sealed Air Posts Loss Due to Asbestos Charges
ASBESTOS LITIGATION: W.R. Grace Documents Unsafe Asbestos Dust Levels
ASBESTOS ALERT: Ace Ltd. Adds $2.18B to Reserve for Asbestos Charges
ASBESTOS ALERT: American International CEO Plays Down Asbestos Charges
ASBESTOS ALERT: T&N Could Pay Out Asbestos Claims Next Year
New Securities Fraud Cases
AEGON NV: Charles Piven Launches Securities Fraud Suit in S.D. New York
AMERICREDIT CORPORATION: Cauley Geller Commences Securities Suit in TX
ARIBA INC.: Stull Stull Commences Securities Fraud Lawsuit in N.D. CA
CLEARONE COMMUNICATIONS: Wolf Haldenstein Lodges Securities Suit in UT
CLEARONE COMMUNICATIONS: Abbey Gardy Commences Securities Lawsuit in UT
MCSi INC.: Charles Piven Commences Securities Fraud Suit in S.D. Ohio
*********
BANKRATE INC.: Appeals Court Affirms Dismissal of Securities Fraud Suit
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The United States Second Circuit Court of Appeals affirmed the
dismissal of a securities class action pending against Bankrate, Inc.
(Nasdaq:RATE). The suit was filed in the United States District Court
for the Southern District of New York last March 2000 against the
Company, certain of its officers and directors and their underwriters
on behalf of stockholders who purchased company stock from May 13, 1999
to March 27, 2000.
The suit alleged that the Company violated federal securities laws
by misrepresenting and omitting material information concerning the
Company's financial results for the quarter ended March 31, 1999. The
suit further alleged that the Company also misrepresented information
in the Company's registration statement filed with the Securities and
Exchange Commission in connection with the Company's initial public
offering.
BAYER AG: Share Prices Fall On Word of Likely Increase in Baycol Suits
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German pharmaceutical firm Bayer AG's share prices fell to its lowest
in ten years, over concerns on the litigation pending against it over
its cholesterol drug Baycol, Bloomberg.com reports. The Company
recalled the drug in 2001 after it was linked to more than 100 deaths.
Chicago lawyer Kenneth Moll, who filed a class-action lawsuit on behalf
of Baycol patients worldwide, predicted as many as 15,000 cases, HSBC
Holdings Plc said in a report. The Company said earlier this month it
knew of 7,400 lawsuits involving the drug.
Bayer shares have dropped as the number of lawsuits mounts from
patients who contend they were harmed by the cholesterol- lowering
medication, once Bayer's third-best-selling product, Bloomberg.com
reports. The withdrawal cut profit by more than 800 million euros
($870 million) that year, prompting Bayer to step up the search for a
partner for its drug business.
"When such numbers appear from the plaintiff side, it's about raising
the pressure on Bayer and gaining as much from it as possible," said
Alexander Kachler, an analyst at Merck, Finck & Co. in Munich, who
rates the stock "hold."
Bayer paid as much as $1.25 million to settle cases involving
fatalities, Moll said, according to HSBC. "When there are lawsuits in
the U.S., there's always a risk," said Lorenzo Carcano, who helps
manage 8 billion euros in European equities at Bankhaus Metzler in
Frankfurt. "I'm not sure I'd like to get my fingers burned,"
Bayer shares fell 57 cents, or 3.5 percent, to 15.97 euros as of 5:18
p.m. in Frankfurt after trading as low as 15.30, their lowest price
since 1993, Bloomberg reports. The shares have fallen 56 percent in
the last 12 months.
Bayer spokeswoman Annette Josten declined to comment on the number of
lawsuits or the size of settlements, Bloomberg states. Mr. Moll wasn't
immediately available to comment, according to his office.
CREDIT CARDS: Tel Aviv Court Allows Consumer Fraud Lawsuit to Proceed
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The Tel Aviv District Court in Israel allowed a NIS1 billion lawsuit
against several credit card companies to proceed as a class action, the
Israel Business Arena reports. The suit is the largest ever class
action approved in Israeli history, and names as defendants:
(1) CAL,
(2) Diners Club Israel,
(3) Isracard, and
(4) American Express
Howard Rice filed the suit in August 1998. Mr. Rice owns a pharmacy in
Kikar Hamedina in Tel Aviv and serves as chairman of the Pharmaceutical
Association of Israel. The suit alleges that between May 1996 and
August 1998 the respondents abused their position by charging
businesses clearing fees in excess of 2%.
Tel Aviv District Court Judge Gavriel Kling noted that the claimant
provided prima facie proof that the respondents had a monopoly position
in the clearing market, which they abused by overcharging for their
services, the Israel Business Arena states. He said the fees were
lowered after the period stated in the lawsuit.
FASTFOOD LITIGATION: Lawyers Use Reports Saying Overeating "Addictive"
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Overeating may be addictive, lawyers spearheading the litigation
against restaurants and fast-food chains said, stating several studies
by scientists, the Independent reports.
Several reports allegedly state that "overeating might not be a simple
matter of self-control. Lovers of burgers, fries, fizzy drinks and
other fast foods could be in the grip of an addiction similar to that
experienced by users of hard drugs, scientists claim."
According to preliminary animal studies, bingeing on foods that are
high in fat and sugar may cause changes in the brain that make it hard
to say no. By stimulating the brain's natural opioids, large doses of
the foods can produce a high that is similar, though less intense, to
that produced by heroin and cocaine, they say, the Independent states.
The claims are based on preliminary animal studies but are being cited
by lawyers acting for overweight Americans, who in a class action
against the fast food industry are seeking compensation for the cost of
caring for obesity. John Banzhaf, the lawyer who took on the tobacco
companies and won, is leading the case.
Mr Banzhaf says that to win he only has to convince a jury that fast
food companies share the blame for Mr Barber's health problems. "We
might even discover that it's possible to become addicted to the all-
American meal of burgers and fries," he told New Scientist.
John Hoebel, a psychologist at Princeton University, and colleagues
showed that rats fed a diet containing 25 per cent sugar developed
withdrawal symptoms when the sugar was removed, including chattering
teeth and shivering, the Independent states. When the rats were given
a dose of naloxone, a drug that blocks opioid receptors, the
researchers noted a drop in dopamine levels in the nucleus accumbens, a
cluster of cells in the mid-brain linked with feelings of reward.
Writing in Obesity Research, he says this is the same pattern of
neurochemical activity seen in heroin addicts going through withdrawal.
"Drugs give a bigger effect, but it's essentially the same process," he
said. Other scientists, including Ann Kelley, a neuroscientist at the
University of Wisconsin medical school, have observed similar changes
in brain chemistry.
Michael Jacobson, director of the Centre for Science in the Public
Interest, Washington, said there was little evidence to back the
claims, the Independent states. Jeanne Randolph, psychiatrist at the
University of Toronto with an interest in obesity, said it was well
known that eating fast food and sugary snacks stimulated a cycle of
instant satiation followed by a plunge in blood sugar, which triggered
desire for another snack.
Yesterday Professor James Griffith Edwards, editor of the scientific
journal Addiction, said, "Whether a burger habit can be regarded as an
addiction depends on how you define addiction. The difference (between
a habit and an addiction) is not a qualitative one but a quantitative
one. I am quite fond of dark chocolate but it is not going to destroy
my life like a heroin addiction."
GEORGIA: Bankers Association Files Suit To Block Predatory Lending Law
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The National Minority Mortgage Bankers Association filed a suit in the
Dekalb County, Georgia State Court, seeking to block the state's
predatory lending law because the law allegedly hurts those it was
meant to protect - the poor and minorities, the Ledger-Enquirer states.
The National Minority Mortgage Bankers Association says the Georgia
Fair Lending Act is causing a "severe reduction in the availability of
credit to the public, particularly low- and moderate-income
households." Several residents of DeKalb, Cobb and Fulton counties who
were unable to get loans have joined the suit.
Both sides agreed to expedite the case because of its impact on
residents' ability to receive home loans. "I am concerned about the
timing of all of this and protecting the rights of residents and the
state," Fulton County Superior Court Judge Stephanie Manis told the
Ledger-Inquirer. No further hearing dates were immediately set.
The predatory lending law applies to home loans of less than $322,700
and protects borrowers from exorbitant balloon payments, prepayment
penalties and other fees on high-interest loans. However, lawmakers
have pledged to rework the law because it's scaring some mortgage
companies out of the state.
An earlier Class Action Reporter story states that the law already
prompted 26 lenders to pull out of the state. With Standard & Poor
having decided to cease rating investments covered under the law, it is
believed many banks may follow in their wake. The law was approved
last April and applies to home loans of less than $322,700. The Act
protects borrowers from exorbitant terms, including prepayment
penalties and many fees on high- interest loans. Other states have
predatory lending laws, but Georgia's is unique in allowing borrowers
to seek punitive damages from lenders and anyone down the financial
chain who bought the loan or a security that covers the loan.
Banks or other institutions that offer home loans often sell them to
large companies like Freddie Mac and Fannie Mae, which often bundle
groups of loans together and sell them on the open market like bonds.
Investors decide which ones to buy based on how agencies like Standard
& Poor's rate them.
Republican senators introduced a new predatory lending bill Monday
which they say reforms the current law and will help stabilize the
state's mortgage industry, the Ledger-Inquirer states. State Sen.
Vincent Fort, an Atlanta Democrat who sponsored the current law, has
said the Republican proposal would gut the law.
Mr. Fort told the Ledger-Inquirer the National Minority Mortgage
Bankers Association was "a front organization for the predatory
lenders" and said its executives were worked with the Georgia
Association of Mortgage Brokers last session to weaken his bill. "This
suit is designed to make it appear as if African-Americans have a
problem with protecting consumers, and that's not the case," he said.
MASSACHUSETTS: Court Orders Special Help For Retarded In Nursing Homes
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A federal appeals court recently upheld a decision requiring the state
of Massachusetts to provide specialized services for mentally retarded
nursing home residents, according to a report by Associated Press
Newswires.
The ruling comes almost five years after advocates filed a class action
on behalf of approximately 1,600 seriously disabled residents of
Massachusetts nursing homes. In, 1999, after the suit was filed in US
District Court in Springfield, state officials pledged to seek regular
housing for people with mental retardation or other serious
disabilities, who ended up in nursing homes but could live in private
homes if given special services.
In May 2002, however, the federal judge found that the state was
failing to provide specialized services required by federal law. The
state appealed, arguing that the law requires it to provide specialized
services only to people who do not require nursing home care.
Requiring the state to pay for specialized services for residents both
in and out of nursing homes "runs directly counter to one of the
primary purposes of the law, the conservation of federal and state
funds."
The appeals court, while saying it understood the state's current
"exigent budgetary circumstances," said the state must pay for the
services. The appeals court said that Congress was concerned with
fiscal conservatism, "but clearly the statute's primary purpose is to
ensure that the needs of all mentally retarded nursing facility
residents are identified and served," the court said in its ruling.
The law at issue in the case was passed by Congress in 1987, in
response to a widespread problem of mentally retarded residents being
inappropriately placed in nursing homes at the expense of Medicaid,
where they were not even receiving the specialized services they
needed.
For residents of nursing homes who were found not to require nursing
care, the law required states to find alternate housing for them and to
provide the specialized services they needed. It is this mandate which
the appeals court decision upheld, finding it to be embodied in the
lower court's ruling that the state was failing to provide the
specialized services called for by the 1987 federal law.
MICROSOFT CORPORATION: ND High Court Allows Antitrust Suit To Proceed
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North Dakota's Supreme Court ruled recently that an antitrust class
action against Microsoft Corporation may go ahead, the Associated Press
Newswires reports. The decision could affect thousands of buyers of
the Company's Windows computer operating system.
The court, in a unanimous ruling, rejected Microsoft's arguments that
there were too many differences among buyers of the company's product
to justify class action status. A class action represents many people
who have similar grievances against a defendant. Microsoft faces
similar lawsuits in more than a dozen states, including Minnesota and
South Dakota. California reached a $1.1 billion settlement two weeks
ago.
Henry Howe, a Grand Forks attorney, and Michael Simonson, a Fargo city
transit planner, as plaintiffs, filed the North Dakota class action in
Grand Forks in 2000. The lawsuit argues that Microsoft's business
practices established a monopoly for Windows, an operating system that
controls a computer's basic workings, and thereby stifled potential
competitors.
Northeast Central District Judge Bruce Bohlman, in Grand Forks agreed
to certify the lawsuit as a class action. His decision gave attorneys
for Mr. Howe and Mr. Simonson authority to represent the interests of
Windows buyers in North Dakota, dating back to May 1994.
Microsoft then appealed, arguing that members of the proposed class
could not prove they all were harmed in the same fashion by the
company's alleged conduct. Microsoft's attorneys also contended the
case relied on dubious testimony from economics Professor Keith Leffler
at the University of Washington, whose theories were recently rejected
by a Michigan state appeals court. In sworn statement filed in the
North Dakota case, Professor Leffler set out what he believes are
Microsoft's methods of passing through overcharges to buyers of
computers equipped with Windows.
North Dakota law, however, does not require a judge to sort through the
claims of competing expert witnesses in deciding whether to certify a
case as a class action, Supreme Court Justice Kapsner wrote. "As long
as the basis for the expert's opinion is not so blatantly flawed that,
on its face, it would be inadmissible as a matter of law, the court may
consider the expert's evidence in determining whether to certify," she
wrote.
David Tulchin, an attorney for Microsoft, called the ruling "a first
step in the case. All this means is that under North Dakota standards,
the plaintiffs can get a class certified," Mr. Tulchin said. "It says
nothing whatsoever about the merits of the case, and who might
eventually have the better argument, and who might eventually win."
Mr. Howe, one of the plaintiffs, said that with the certification, the
way is now clear for the case to go forward. He said he was unsure how
many North Dakota computer buyers might benefit from the class action,
but he thought that was the kind of information that would be part of
the discovery record.
Last year, the US Justice Department settled its own antitrust suit
against Microsoft. During the protracted legal struggle, a federal
district judge ruled that the company was guilty of monopolistic
behavior.
NEBRASKA: Low-Income Parents Commence Lawsuit Seeking Medicaid Benefits
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The state of Nevada faces a class action filed on behalf of low-income
parents who are losing their Medicaid health-care benefits because of
budget cuts this summer, journalstar.com reports. The suit demands the
"return of desperately needed Medicaid health care coverage," according
to a news release from the Nebraska Appleseed Center for Law in the
Public Interest.
The suit contends that the state must provide these parents, called
"caretaker relatives," with the same transitional Medicaid coverage it
offers parents who are being weaned off the Aid to Dependent Children
program, journalstar.com reports. Former ADC recipients get six months
of Medicaid coverage once they begin work. Then they can get an
additional six months if their incomes are less than 185 percent of the
federal poverty level, far above the cutoff for these caretaker
relatives.
The Legislature ended Medicaid coverage for about 10,000 low-income
parents or caretaker relatives this summer during a special budget
cutting session by ending a practice called "stacking." That practice
allowed parents with some income whose children are covered by Medicaid
to qualify for the federal and state-funded health-care program. The
children of these parents continue to be covered by Medicaid even after
the parents' eligibility ends, according to journalstar.com.
The plaintiffs, Teresa Kai of Pender and Stacy Noller of Kearney, are
both working mothers with small children. Both have chronic medical
problems but were able to work and support their families with the help
of Medicaid assistance. However, without the medical care, including
prescription drugs, they will not be able to work, according to the
suit filed in US District Court for Nebraska.
"Unfortunately the plaintiffs' situation are just a couple of the very
many heartbreaking stories that I'm hearing every day," Ann Vogel, a
social worker with the Appleseed's Welfare Due Process Project told
journalstar.com. "Working parents who have cancer, immune
deficiencies, disabilities, seizure disorders, diabetes, depression,
schizophrenia, fibromyalgia -- they all have been cut off of Medicaid.
They have nowhere else to turn other than Medicaid."
NEVADA: NV Judge Faces Civil Rights Lawsuit Over Sentencing Violations
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Nevada District Court Judge Donald Mosley faces a class action,
alleging that he violated a criminal defendant's civil rights by
toughening her sentence and exposing her to double jeopardy, the Las
Vegas Sun states. The suit, filed in United States District Court in
Nevada also names as defendants:
(1) former District Attorney Stewart Bell,
(2) Deputy District Attorney David Barker,
(3) Nevada Department of Corrections Director Jackie Crawford,
(4) Nevada Department of Public Services Director Richard Kirkland
and
(5) Nevada Chief of Parole and Probation R. Warren Lutzow
Plaintiff Jeanette Faye Sadoski alleged that Judge Mosley changed her
sentence for theft from a misdemeanor to a felony after another charge
came to light. According to her attorney Clark Garen, the suit stemmed
from a June 2000 guilty plea by Ms. Sadoski to a $6,000 theft from a
Las Vegas store where she worked.
Judge Mosley originally sentenced Ms. Sadoski to a gross misdemeanor
and a suspended sentence of one year in prison. However, between the
time that Sadoski gave her plea and the time she was sentenced she was
arrested on a drug trafficking charge, according to court documents
filed by the District Attorney's office.
Mosley then ordered new sentencing, the Las Vegas Sun reports. Ms.
Sadoski was re-sentenced to 32 months in prison with minimum parole
eligibility of 12 months. In July 2002, Ms. Sadoski was paroled on the
drug charge, but remains under house arrest on the theft charge, which
runs concurrent to the drug charge.
The suit could potentially affect other cases presided over by Judge
Mosley, as it calls for him to review all of his past criminal cases to
determine if he illegally re-sentenced any defendants. The suit
alleges that during a 2002 hearing Judge Mosley admitted to "violating
the rights of other criminal defendants in a similar manner ever since
his appointment to District Court." Nevada law specifically allows a
judge to reduce sentences but does not address lengthening them.
STOCKWALK GROUP: Moves Closer To Settlement of MN Securities Fraud Suit
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Stockwalk Group is nearing the settlement of a securities class action
filed in June 2002 in the United States District Court in Minnesota by
lawfirm Chestnut & Cambrone, on behalf of Dr. Daryl Cooper and all
others who purchased Stockwalk Group Commercial Paper and held such
paper on September 27, 2001.
The suit states that approximately $32 million in Stockwalk commercial
paper was unregistered and sold in violation of Section 12(1) of the
Securities Act of 1933, 15 U.S.C. sec. 77l(1). Since the collapse of
the issuer, Stockwalk Group, Inc., and the bankruptcy of that company,
the securities have become worthless, an earlier Class Action Reporter
states.
Attorney Karl Cambronne of the Minneapolis law firm of Chestnut &
Cambronne, who filed the class action suit last June, told the
Minneapolis Business Journal that the Company had agreed to pay holders
of its commercial paper a total of $5.65 million. The suit covers
about $25 million in commercial paper sold by the Company before it
collapsed. The settlement represents about 20 cents on the dollar of
the original investment. About 400 investors are members of the class
action and will split the proceeds along with their attorneys, Mr.
Cambronne said. However, before that can happen, the preliminary
agreement must be confirmed by the US District Court in Minneapolis.
Mr. Cambronne expects a final court decision some time in early April.
Mr. Cambronne added that there are a number of issues surrounding the
collapse of Stockwalk in 2001 that still have to be resolved. Among
those is a claim against Deutsche Bank, which allegedly was involved in
the transaction that brought down Stockwalk.
TENNESSEE: Court Monitor Recommends Remodeling of Knox County Facility
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Federal court appointed special master Charles C. Banks recommended
that part of Knox County, Tennessee's Detention Facility should be
remodeled to house maximum-security inmates, in a report to the US
District Court Judge James Jarvis, the Knoxville News Sentinel reports.
For 16 years, the county has faced litigation over the overcrowding
issue. Last year, lawyers in a class action asked that the county be
held in contempt for surpassing the downtown cap of 215 inmates on 111
different occasions last year. The court appointed Mr. Burks to sort
things out and threatened the county with a $5,000 fine for each day
the cap is surpassed. The county then immediately instituted a
computer system, which all facets of the judicial system now have
access to, to better track inmates. County Executive Mike Ragsdale
also got various parties together to look at other ways to alleviate
jail crowding.
Mr. Burks recommended that county continue to pursue other
alternatives, such as pretrial release and other diversion programs.
County officials have also talked about citing more people to court on
minor offenses rather than jailing them. Mr. Burks cautioned that
those programs would take time to implement, so he recommended the
Detention Facility option, too, the Knoxville News Sentinel states.
That idea surfaced late last year informally and received some positive
reaction from several commissioners because it would be vastly less
expensive than building a new jail downtown. However, residents point
to a promise by the county administration, at the time the facility
opened in the early 1990s, that maximum-security inmates would never be
housed there.
The recommendation brought swift reaction from the Northeast Knox
County area, where the Detention Facility is located. "That is just
horrible news. That is just appalling," Gail Farzanegan, who lives
nearby and is the former president of the North East Knox Preservation
Association told the Sentinel.
"This will chill (residential) development in this area that is getting
ready to start," said Lisa Starbuck, president of NEKPA.
Knox County spokesman Mike Cohen told the Sentinel the county would
comply with Jarvis' request that the county explain to him in writing
within 30 days how the county plans to deal with persistent
overcrowding.
District Attorney General Randy Nichols, who attended Wednesday's
hearing, is supportive of the potential renovation of a pod at the
detention facility. "I think we ought to take a look at it," Mr.
Nichols said. "It can be certified as maximum."
The 140-by-90-foot building was constructed in 1997 in response to the
overcrowding problem. It cost $589,000 to construct and furnish the
building, and another $1.77 million to operate it, according to county
documents, the Sentinel states. That included funding for everything
from salaries and benefits for jailers to expenses for food and
clothing for prisoners to paying for garbage pickup. The building has
since been decertified as a jail, but there have been discussions about
having it re-certified.
Asbestos Alert
ASBESTOS LITIGATION: Asbestos Claims Against US Insurers Approach $34B
----------------------------------------------------------------------
Insurance companies paid as much as $34,000,000,000 in asbestos-related
claims through 2000, and the total cost of all past, present, and
future asbestos litigation could total more than $200 billion,
according to new research released by the US Chamber of Commerce.
Asbestos liabilities have also played a "substantial role" in the
bankruptcies of as many as 67 companies since the late 1970s, the
research concluded.
Citing the research, the US Chamber of Commerce called on the federal
government to "solve the asbestos litigation mess." "We believe
today's briefing will provide policymakers with sound data that
highlights the need to protect our nation's communities and stimulate
legislative reforms that, first and foremost, provide the truly sick
with fair compensation," said chamber President Thomas Donahue in a
statement.
The chamber released three asbestos-litigation studies, one by the Rand
Institute for Civil Justice, one by National Economic Research
Associates and one by Sebago Associates and based on a paper
commissioned by the American Insurance Association. Among the
highlights of the studies:
(1) Estimated total costs of resolving asbestos claims through
2000 are $54,000,000,000, including $22,000,000,000 by U.S.
insurers, $8,000,000,000 to $12,000,000,000 by non-U.S.
insurers and $20,000,000,000 to $24,000,000,000 by other
defendants;
(2) Estimated costs of resolving future asbestos claims range from
$145,000,000,000 to $210,000,000,000;
(3) At least five major companies, which weren't named in the
study, have spent more than $1,000,000,000 each on asbestos
litigation;
(4) There are now 600,000 claimants and 8,400 defendants in
asbestos litigation;
(5) The number of asbestos claims filed annually has risen sharply
in recent years, while the average severity of the claimed
injuries has declined;
(6) An increasing proportion of claims now involve less serious
injuries, and the majority of recent claimants are "not
currently functionally impaired;"
(7) An increasing number of corporate defendants are outside the
asbestos and building-products industries;
(8) As many as 67 companies have declared bankruptcy since the
1970s because of asbestos liabilities--with 29 such
bankruptcies occurring in the past three years;
(9) Between 52,000 and 60,000 U.S. jobs have been lost because of
asbestos-related bankruptcies.
ASBESTOS LITIGATION: Swindon Firms Start Drive to Stop Asbestos Deaths
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Companies in Swindon in the United Kingdom are being urged to take
action in a new drive to reduce the number of asbestos-related deaths.
New legislation to improve the management of asbestos in workplaces
aims to reduce exposures to asbestos and cut the number of deaths by
5,000 over the next 50 years.
The Control of Asbestos at Work Regulations 2002, which will come into
force in May 2004, features a new duty to manage asbestos and ensure
that workers, especially those in the maintenance trades, are not
accidentally exposed to lethal fibers.
The asbestos-related cancer mesothelioma - dubbed the Swindon Disease -
has accounted for thousands of lives in Swindon, many of whom worked at
the Great Western Railway works in the town. Last year a sensory
garden in memory of those who died from the disease was finished in
Queen's Park.
ASBESTOS LITIGATION: Parliament to Hold Public Hearings on Asbestos
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South African Parliament's Portfolio Committee on Environmental Affairs
and Tourism will embark on a second stakeholder consultation process by
holding public hearings into asbestos-related matters in the Old
Assembly at Parliament, Cape Town.
Hundreds of former Cape Public Limited Corporation (Cape Plc) workers
died from asbestos-related diseases and more than 6,500 were diagnosed
with such diseases over the years. The issue of asbestos-related
sicknesses has been in the public domain since former workers and their
families challenged the British-based company Cape Plc in court in
April last year.
Although an agreement was reached in London, the company has not yet
paid any compensation to the families - most of whom were previously
employed at the Cape Plc-owned asbestos mines of Mafefe in the Northern
Province and Prieska in the Northern Cape, which closed in the 1970s.
The victims charged that Cape Plc ought to have compensated them for
asbestos-related diseases, which had left thousands of South Africans
blind and some crippled.
Asbestos-related diseases destroy the lungs and eventually kill the
victims. The latency period of mesothelioma, an asbestos-related
cancer, could be as long as 35 to 40 years. The Department of
Environmental Affairs and Tourism said in a statement that the public
hearings into asbestos would also consolidate South Africa's position
for the forthcoming SADC conference on the same topic that would take
place at the end of February. It is envisaged that a SADC declaration
would be presented to the International Conference on Chrysotile
Asbestos Cement Products, from 5-6 March, in New Dehli, India.
The outline for the hearings includes representation from the
governments of South Africa and Zimbabwe, the asbestos related
industry, organized labor, lawyers representing affected parties and
NGOs. Portfolio Committee on Environmental Affairs Chairperson Gwen
Mahlangu-Nkabinde, environmental affairs and tourism minister Mohammed
Valli Moosa and senior representatives from Zimbabwe are expected to
address the media on the merits of the conference. The first South
African summit on asbestos-related matters was held in Johannesburg in
1998, to discuss the issue of asbestos and its impact on communities
and the environment.
Meanwhile, individuals and organizations who still wish to make
presentations to the committee but have not been invited, are welcome
to do so in writing to the committee secretary Mr A.Myeni by Fax:
(021) 461 7969.
ASBESTOS LITIGATION: Ashland Inc. Reports Loss on Asbestos Litigation
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Ashland Inc. (NYSE: ASH), maker of Valvoline motor oil, said quarterly
results swung to a loss, hurt by a hefty asbestos liability charges and
high crude oil costs. During the quarter, the Covington, Kentucky-
based company took a $95,000,000 charge and added to its asbestos
liability reserves to cover costs over the next 10 years. The size of
the charge, related to a former subsidiary, rattled some Wall Street
analysts.
"We haven't seen the end," said Fadel Gheit, oil analyst with
Fahnestock & Co. "Liabilities usually grow bigger, not smaller, with
time. It's an uncertainty."
Ashland, Inc. reported a net loss of $92,000,000 or $1.35 a share, for
its fiscal first quarter ended Dec. 31, down from a profit of
$27,000,000 or 38 cents, last year. Even without the asbestos charge,
earnings dropped well below last year's levels as raw material costs
and slack demand for highway construction pushed down results to a
profit of 4 cents a share. Overall revenue slipped about 2 percent to
$1,850,000,000.
ASBESTOS LITIGATION: Crane Posts Net Loss on Asbestos-Related Charges
---------------------------------------------------------------------
Industrial products maker Crane Co. (NYSE: CR) reported a fourth-
quarter loss after taking a hefty charge for increased asbestos-related
liabilities. The Company, whose products include valves, fiberglass
reinforced panels for recreational vehicles, coin-changing equipment
and aircraft fuel pumps, posted a quarterly net loss of $51,200,000 or
86 cents a share, compared with a net profit of $18,000,000 or 30 cents
a share, a year ago.
Excluding a $73,300,000 charge to increase its net estimated liability
for asbestos-related claims, the Company earned 37 cents per share.
Crane said in a statement the charge "reflects the recent significant
increase in the rate of new claims filed."
Analysts' estimates ranged from 33 cents to 34 cents a share, with an
average forecast of 33 cents, according to market tracker Thomson First
Call. Stamford, Connecticut-based Crane made the announcement after
its shares had closed up 47 cents, or 2.5 percent, at $19.40.
During the fourth quarter, the company said it recorded a non-cash
charge to increase its net estimated liability for asbestos-related
costs to $120,000,000. The asbestos charge in the quarter was made to
reflect the increase in estimated costs of asbestos related claims
through 2007, net of anticipated insurance recoveries of $80,000,000.
The rate of new claims filed, and the costs of settling claims and
defense costs, increased significantly, particularly during the last
few months of 2002, and the company increased the estimated liability
to reflect this more recent claims and cost data, it said.
ASBESTOS LITIGATION: Shares of Owens-Corning May Become Worthless
-----------------------------------------------------------------
Speculators who bought in at 50 cents dreamed of a windfall. Anxious
employees hoped for help for their badly deflated retirement saving
accounts. Instead, the rug was pulled out from under those wishes this
month when Owens Corning made it clear that its shares will become
worthless if a judge approves a company plan to cancel existing stock
and issue new shares to creditors as part of the firm's emergence from
bankruptcy. The stock fell from 60 cents before the announcement to as
low as 8 cents in trading on the over-the-counter market last week.
Executives at Toledo's third-largest corporation had hinted at such an
outcome ever since the firm filed for Chapter 11 reorganization two
years ago to escape multibillion-dollar asbestos liability. Still,
some investors were surprised by the plan for the stock, which was
revealed in OC's proposed plan of reorganization, January 17. A man
who said he owned 3,500 shares called a Toledo radio talk show one
morning to express outrage and to demand that something be done.
In bankruptcies in which creditors are not fully repaid -- there are
predictions that some with claims against OC will only get a few cents
on the dollar of the amounts they are owed-shareholders are entitled to
nothing. The window apparently has closed on one of the few
opportunities open to shareholders: a lawsuit against individual
officers and directors of the company that would attempt to prove they
fraudulently misled investors about the building products maker's
financial health.
Financial advisers say the situation is a textbook example of why
people contemplating investing in a publicly held firm should go beyond
the glossy annual reports and corporate cheerleading to read the fine
print of financial reports filed with the US Securities and Exchange
Commission.
Glen Hiner, who was chairman and chief executive for a decade until his
retirement last spring, long declared the asbestos liability
"manageable." Creditors have alleged in bankruptcy court filings that
his boosterism sometimes crossed the line. Mr. Hiner continued to heap
praise on a series of out-of-court settlements reached with asbestos
claimants long after the firm recognized that the settlement program
didn't work, a committee representing banks, bond holders, and vendors
contends in a motion in US Bankruptcy Court in Wilmington, Delaware.
The company denies that. Legal chief Maura Abeln Smith, who is
overseeing the firm's financial reorganization and helped craft the
settlement program, said: "There is extensive disclosure in our SEC
filings about asbestos litigation."
Indeed, those reports - sometimes in footnotes - describe how the
number of claims and size of settlements escalated over the decade
prior to bankruptcy. "You really have to read the footnotes," said
investment consultant Alan Lancz, whose clients include some of the
1,000 people employed at OC's downtown Toledo headquarters. "It was a
situation at OC that, if you read the chairman's annual shareholder
letter, even in the late '90s, it was incredibly optimistic and
grandiose. Lots of investors, unfortunately, will just read the glossy
material and don't go in the back with footnotes talking about
liabilities and litigation."
Complicating OC's relationship with shareholders, it has filed a
creditor-inspired lawsuit against large shareholders who received
$100,000 or more in dividends between 1996 and 2000. The action,
citing a recent legal opinion, demands the return of the dividend
payments on the grounds that the company may have been technically
insolvent, and thus prohibited from paying dividends, because of huge,
but at the time unknown, asbestos liability.
Still, legal experts agree that shareholders have few options now.
Based on the firm's most recent estimates, debts will approach
$20,000,000,000. That is more than three times the $5,700,000,000 in
listed assets. Because liabilities outweigh assets, shareholder claims
have "no value" under bankruptcy law, said Michael Hammer, a bankruptcy
lawyer with Dickinson, Wright, Moon, Van Dusen & Freeman in Detroit.
In bankruptcy, shareholders are considered owners, not creditors. "The
concept is that if the creditors aren't getting paid, in the natural
order shareholders shouldn't get anything," he said.
The statute of limitations on securities fraud suits is two years after
the wrongdoing is discovered, according to lawyers. Such actions
involve "intense legal battles," said Mr. Hammer. "They are very
expensive and time-consuming." They are most likely when stock is
concentrated in a few, well-financed hands.
The only action against OC officers and directors within the two-year
allowance was filed by bond holders, who contend that information was
withheld about the firm's other financial obligations at the time of a
bond offering in 1998. The suit is pending in a federal court in
Massachusetts.
Lots of people bought the firm's stock after the Chapter 11 filing,
some in hopes that shareholders would get something as part of the
reorganization, others in a speculative attempt to take advantage of
minor increases and decreases in the stock price. The price slumped to
50 cents on the first day of trading after the bankruptcy, closing at
75 cents that day, but has been up to nearly $4 during the bankruptcy.
ASBESTOS LITIGATION: UK Insurers Accused of Avoiding Asbestos Liability
-----------------------------------------------------------------------
Royal & Sun Alliance, the UK's second-biggest general insurer, was
accused in court of trying to "wriggle out of its liability" to pay
compensation to potentially thousands of victims of asbestos-related
diseases.
A High Court judge in London was told that R&S and the Lloyd's of
London syndicate were relying on an exclusion clause to avoid having to
pay millions of pounds to former employees of asbestos manufacturing
group Turner & Newall (T&N), an engineering company, now in
administration.
Scores of workers at the firm's Clydeside shipyard in Dalmuir, who
worked between 1972 and 1977, have contracted asbestosis but have yet
to receive any money. The hearing in London was in response to a case
brought by the administrators of T&N on behalf of the victims and their
families but the insurers have denied liability, claiming that T&N's
cover specifically excluded asbestosis. Claimants have argued that,
since 1972, companies have been bound by law to take out full
employers' liability insurance.
Colin Edelman QC, representing the company's administrators and the
interests of the asbestos victims and their families, told Mr Justice
Lawrence Collins that the defense which R&S had the "temerity" to put
forward was "just ridiculous". A spokesman for R&S assured families it
was not shirking any of its responsibilities.
The insurers argued that a policy clause, which excluded cover for
pneumoconiosis - known as asbestosis when caused by asbestos - also
excluded other asbestos-related lung and gut diseases such as
mesothelioma and cancer. The hearing in London will last about three
weeks.
ASBESTOS LITIGATION: Saint-Gobain Rules Out ABB-Style Asbestos Payment
----------------------------------------------------------------------
French glassmaker Saint-Gobain (SGOB:PA) has no plans to follow the
example of Swiss firm ABB by making a major payment to settle US
asbestos claims, a senior executive said. "These transactions are
feasible within the framework of bankruptcy. We are not in a bankruptcy
situation," chief financial officer Philippe Crouzet said after a
results presentation.
Industrial engineering firm ABB announced a crucial $1,200,000,000
agreement to settle US asbestos liabilities, removing considerable
doubt over the survival of the heavily indebted group. Financial
analysts said the deal, while not yet final, removed fears that ABB
could go bankrupt.
Shares in Saint-Gobain spiked after it reassured investors that its US
asbestos liabilities were not rising significantly. Analysts said
investors were also comforted by Saint-Gobain's annual results, which
were broadly in line with expectations and its forecast for modest
growth in 2003, assuming writedowns of 100 million euros for US
asbestos litigation risks, the same as in 2002.
"Saint-Gobain is a resilient, cash generative, undervalued company,
whose asbestos liabilities are discounted as likely to rise
significantly, but which are not rising," Merrill Lynch analysts said
in a note.
The company reported a 0.6 percent dip in net profit before capital
gains for the year to 1.051 billion euros, after it booked the 100
million euro charge for US asbestos litigation risks. Saint-Gobain
said the number of new cases reported in the United States last year
had risen slightly to 65,000 from 60,000 in 2001. This was due to an
exceptional rise in the number of new claims filed in Mississippi at
the end of last year as plaintiffs rushed to beat a new law more
favorable to defendants that came into effect on January 1, it said.
Some analysts said the number of new cases remained well below the rate
of millions of total claims discounted by the shares and would provide
impetus for the stock in the short-term. They however noted there were
still risks that asbestos costs could escalate several-fold.
ASBESTOS LITIGATION: Sealed Air Posts Loss Due to Asbestos Charges
-------------------------------------------------------------------
Sealed Air Corporation (NYSE: SEE) reported a quarterly net loss,
reversing a year-ago profit, after taking an $841,300,000 charge to
settle asbestos-related personal injury claims, but reaffirmed its
earnings outlook for this year.
Sealed Air, the maker of Bubble Wrap and other packaging materials,
announced in November it would pay $853,000,000 in cash and stock to
resolve all its asbestos claims, a settlement hailed by analysts for
putting a cap on the company's liabilities. The Saddle Brook, New
Jersey, company posted a fourth-quarter net loss of $501,800,000 or
$6.13 a share, compared with net earnings of $38,500,000 or 30 cents a
share, a year ago.
Excluding the asbestos settlement and other items, the company earned
68 cents a share in the latest quarter, at the high end of analysts'
forecasts. Chief Financial Officer David Kelsey said that the company
expects free cash flow of about $250,000,000 to $300,000,000 in 2003.
Sealed Air will use the funds to reduce debt, purchase preferred stock
or build up the cash reserve for its asbestos settlement. Revenue will
rise in the mid-single digit range in 2003, Mr. Kelsey said, helping
the company to earn between $2.40 and $2.45 a share. The First Call
estimate is $2.37 a share.
Pension liabilities, which have hurt a number of manufacturers, were
less than $150,000,000 at the end of 2002, Mr. Kelsey said, with assets
exceeding that amount by about $10,000,000. Fourth-quarter revenue
rose 8.3 percent to $846,100,000, helped by strong sales of food and
specialty packaging as well as the positive effect of foreign currency
translation.
ASBESTOS LITIGATION: W.R. Grace Documents Unsafe Asbestos Dust Levels
---------------------------------------------------------------------
At least four sets of data, some stemming from manufacturer W.R. Grace
& Co.'s own air samplings in the 1970s, have documented unsafe levels
of asbestos dust in vermiculite insulation. Attic tests in Montana,
Washington state and Canada since 1997 measured airborne asbestos
fibers at levels 50 times the federal worker exposure limit and higher.
However, the government has yet to warn homeowners or workers who spend
much of their time in attics.
Officials at the Environmental Protection Agency (EPA) said they were
unaware of some of the test data and were trying to obtain them. They
said they expect to do more to inform the public within the next two
weeks.
Sen. Mark Dayton, D-Minn., saying he is appalled by the agency's delay,
called EPA officials "criminally negligent." "It's the worst kind of
betrayal of the public trust to walk away from the lives of fellow
citizens," he said. "I don't know how they can live with themselves .
to withhold that information from the public is immoral and
despicable."
If inhaled, crumbly tremolite asbestos fibers in the vermiculite ore
can cause fatal respiratory diseases that don't show up for 10 to 40
years. The attic insulation was sold principally under the trade name
Zonolite by now-bankrupt Grace, and EPA officials say it may be present
in 10 million homes or more. Regional EPA officials, who spoke on
condition of anonymity, have accused the White House Office of
Management and Budget (OMB) of preventing EPA Administrator Christie
Whitman from issuing a national warning about Zonolite last April.
Ms. Whitman denied last week that the OMB dictated her decision. But
she said that, before she decides whether to issue a Zonolite warning,
she wants to see the results of a study of vermiculite insulation in
six Vermont homes.
The regional EPA officials said the Vermont study found slightly
elevated asbestos levels in two of the six homes. They said the study
was flawed, in part because it is not known whether all six homes were
insulated with vermiculite from Libby, Montreal, where hundreds of
miners who processed the ore have developed serious and even fatal
illnesses.
When his agency began the study, EPA environmental scientist Dan
Thornton said, it did not know that Libby vermiculite had higher
asbestos content than ore from other US vermiculite mines. Tom Simons,
an EPA environmental specialist, said the agency has been "pushing" for
completion of the study and is "about to make more public information
available." EPA officials also say they are being meticulous so that
any action they take will stand up to legal challenges.
However, it was August 2000 when assistant US Surgeon General Hugh
Sloan recommended that the National Institute for Occupational Safety
and Health (NIOSH) issue a "hazard alert" about vermiculite insulation
to workers. NIOSH also has taken no action. Gregory Wagner, director
of NIOSH's Respiratory Disease Studies Division, said that his agency
also is awaiting the results of the EPA study.
Dr. Sloan wasn't the only major public health figure to urge action. In
May 2000, Dr. Henry Anderson, a nationally known asbestos researcher,
said in an affidavit in a suit against Grace that he believed it was
"essential" that homeowners be warned about Zonolite.
Grace bought the mine in 1963 and operated it until 1990. Thornton
estimates that the firm shipped 5.5 million to 6 million tons of the
ore to 241 facilities nationwide, several of which were in Minnesota
including a Grace-owned plant in northeast Minneapolis. A second
northeast Minneapolis plant, operated from the 1940s until 1971 by the
B.F. Nelson Co., also made vermiculite attic insulation.
Grace contends the insulation has never harmed anyone. However, its
documents, introduced in property owners' class actions against the
company, show that its air samplings in 1977 exceeded 4.5 asbestos
fibers per cubic centimeter and some were above 10 fibers -- far above
the current worker exposure limit of 0.1 fiber.
Others have made similar findings:
(1) In 2000, a private asbestos consultant in Spokane, Washington,
simulated renovation work in an attic containing Zonolite and
got readings from 6.96 fibers to 12.48 fibers;
(2) In 1997, air samplings in a home in Manitoba showed readings
of 3.3 to 6.8 fibers, and more refined analysis identified
asbestos concentrations as high as 174 fibers;
(3) EPA officials also found significantly elevated asbestos
levels in Libby homes containing the insulation.
Workers and homeowners have expressed deep concerns about recent
revelations of the insulation hazards. Mark McLaughlin, one of more
than 100 Minnesota weatherization inspectors who move from attic to
attic checking the energy efficiency of low-income households, said he
has worked around vermiculite in "hundreds of attics" over the past 20
years.
"I'm a little disturbed," said Mr. McLaughlin, who lives in Apple
Valley. "They could easily give us a warning so we could provide more
protection for ourselves . I was hoping to have a nice retirement, not
a short one."
ASBESTOS ALERT: Ace Ltd. Adds $2.18B to Reserve for Asbestos Charges
--------------------------------------------------------------------
Ace Ltd. said it added $2,180,000,000 to reserves for asbestos-related
claims, giving the insurer a loss in the fourth quarter. The new
reserve cut fourth-quarter earnings by $354,000,000 or $1.32 a share,
the Hamilton, Bermuda-based company said. Operating income was 92
cents a share, versus the 89-cent average analyst estimate, according
to Thomson First Call.
Ace said $1,860,000,000 of the reserve was covered by reinsurance,
including about $533,000,000 from a policy written by National
Indemnity Co., a unit of Warren Buffett's Berkshire Hathaway Inc. The
asbestos reserves boost follows a similar move by rival Travelers
Property Casualty Corporation, which earlier this month added
$2,450,000,000 to asbestos loss reserves.
"Charges are always an unpleasant thing, but this should clear the air
on asbestos," said Thomas Davis, an analyst at Loomis Sayles & Co.,
which manages $70,000,000,000 and owns Ace shares. "Hopefully they'll
be able to do what Travelers did" and provide enough disclosure to
satisfy investors.
Ace's total asbestos reserves "are now at the high end of the range
calculated by our internal analysis and are consistent with the
actuarial consulting firm's best estimate," Chairman and Chief
Executive Brian Duperreault said in a statement.
In an interview, Mr. Duperreault said commercial insurance pricing
hasn't peaked yet. "Property policies are starting to approach no
increases, but I haven't seen prices falling. Casualty pricing
continues to be quite strong. Overall commercial rates are still
rising."
COMPANY PROFILE
ACE Limited (NYSE: ACE)
ACE USA, 2 Liberty Pl., 1601 Chestnut St.
Philadelphia, PA 19101-1484
Phone: 215-640-1000
Fax: 215-640-2489
http://www.ace.bm
Employees : 7,676
Revenue : $6,644,700,000
Net Income : $(146,400,000)
Assets : $37,186,800,000
Liabilities : $31,080,100,000
(As of December 31, 2001)
Description: Through subsidiaries, ACE Limited (based in tax-friendly
Bermuda) sells property/casualty insurance and reinsurance in the US
and about 50 other countries. ACE International -- which is subdivided
into Asia Pacific, Europe, Far East, and Latin America -- sells
property/casualty lines to personal and commercial clients. ACE Global
Reinsurance, primarily through its Tempest Re unit, provides
catastrophe reinsurance to personal and commercial clients. Through
ACE Global Markets, the firm owns four Lloyd's of London managing
agencies. ACE USA provides US commercial and casualty insurance.
Expanding its operations, the company has also moved into health
insurance.
ASBESTOS ALERT: American International CEO Plays Down Asbestos Charges
----------------------------------------------------------------------
Maurice Greenberg, Chief Executive of American International Group Inc.
(NYSE:AIG), said that the insurer did not have a major problem with
asbestos, and that the next chief of AIG would come from inside the
company.
Mr. Greenberg allayed fears that AIG would be the next insurer to take
a massive hit on shoring up reserves for asbestos claims, after rivals
ACE Ltd. (NYSE:ACE) and Travelers Property Casualty Corp. (NYSE:TAPa)
recently took large asbestos charges. Hartford Financial Services
Group (NYSE:HIG) said it was reviewing its asbestos exposure, likely
clearing the way for a charge in the second quarter.
"We review reserves toward the end of the year, we are in the midst of
doing that," Mr. Greenberg said, speaking at a Salomon Smith Barney
financial services analyst conference. "If we require to increase
reserves, we will do so . We do not have a great deal of asbestos
exposure -- we were a very small company at the time asbestos became a
problem for others. It's not a major problem for us."
The release of AIG's fourth-quarter and year-end results -- which would
detail any increase in reserves -- is expected on Feb. 13.
COMPANY PROFILE
American International Group, Inc. (NYSE: AIG)
70 Pine St.
New York, NY 10270
Phone: 212-770-7000
Fax: 212-509-9705
http://www.aig.com
Employees : 81,000
Revenue : $55,459,000,000
Net Income : $5,363,000,000
Assets : $492,982,000,000
Liabilities : $440,832,000,000
(As of December 31, 2001)
Description: Helmed by financial legend Maurice "Hank" Greenberg,
American International Group (AIG) is one of the world's largest
insurance firms. Best known domestically as a leading provider of
property & casualty and specialty insurance, AIG also has strong life
insurance operations abroad and is a presence in financial services and
asset management (purchases have included leading annuities firm
SunAmerica and other companies specializing in retail financial
markets). Other operations include auto insurance, mortgage guaranty,
annuities, and aircraft leasing.
ASBESTOS ALERT: T&N Could Pay Out Asbestos Claims Next Year
-----------------------------------------------------------
Simon Freakley, in charge of the Administration of Turner and Newall in
the UK announced that they may pay out asbestos claims by next year.
Mr. Freakly says, "In my experience this case is moving as quickly as
any that I've seen. We're hopeful that money will start to get into the
hands of claimants at some stage during next year."
This is the most encouraging news asbestos claimants have had in a long
time. Turner and Newall was the world's biggest asbestos producer and
had factories in the North West. The Company is also one of the first
companies to be sued for asbestos-related liabilities.
Asbestos is now Britain's biggest industrial killer. Hundreds of
people in the North West alone are dying from asbestos-related cancer.
Yet the hazards of the material have been known about for over 100
years, according to Geoff Tweedale from the Manchester Business School.
Mr. Tweedale says, "The Government knew as early as 1900. The factory
inspectors - the employers - must have known at roughly the same time
but certainly by 1930."
Edmund Bracewell from New Moston worked as an asbestos pipe lagger at
Newall's Insulation in Ancoats for just 18 months. He is dying from
mesothelioma. This is a rare form of cancer almost always associated
with asbestos. He describes the extraordinary amount of dust generated
when working with asbestos, "I was covered in dust . We had a wash, but
its still on your clothing and hands."
In such conditions, asbestos fibers can float invisibly in the air.
These are so small that two million would fit on the head of a pin.
Each fiber could allegedly induce cancer. Mr. Bracewell feels angry
that such information was not given to him, saying, "I would not have
accepted the job knowing it would have damaged my health later in
life."
Jennifer Leeming, a North West coroner, shares Bracewell's sentiments.
She says, "It wouldn't be unusual for me to go and sit in Wigan, for
example, and do, say, six inquests and all of these in one particular
day will be related to asbestos related diseases."
Getting compensation for Bracewell and other victims should be
straightforward, but it isn't. Turner and Newall was taken over by
Federal Mogul, which also became responsible for its liabilities, in an
unfortunate time, five years ago, when asbestos claims in the States
have gone from a handful to a quarter of a million.
Federal Mogul couldn't survive financially if all the claims had to be
paid at once so they voluntarily filed for Chapter 11 Bankruptcy. The
action puts all the claims on hold, while still allowing the company to
trade and make profits.
In Britain, the company went into Administration. Administrators and
solicitors representing some British victims believe that the seriously
ill British people should be dealt with as a special case. They think
British victims should be pulled out of the legal maze so that
compensation payments can restart.
Presenter Tony Morris put this question to Federal Mogul's chief
lawyer, Jim Zamoyski. He declined to give an interview but says,
"There's a lot of US victims as well, so I think they're all going to
be handled at the same time."
One way the seriously ill British victims may receive compensation more
quickly is if the Government steps in and make payments now. When
Federal Mogul resolves the case, the Government would get its money
back.
Tony Lloyd is a North West Labour MP and former Turner and Newall
employee. He says, "It is not Government who created the problems or
who has all the answers . What we do want though is Government
galvanized across its different departments and to say that Government
can bring pressure to bear on those who can unlock this situation . But
what I can't promise is that the answer will come tomorrow. It will
take time."
Mr. Bracewell says, "I think I'll be dead before the compensation goes
through the courts."
The first recorded case of asbestosis was that of Nellie Kershaw who
worked for Turner and Newall in their Rochdale factory in 1917. She
was stationed in the spinning room, which took raw asbestos rock and
converted it into a host of products. In 1922, five years after
starting work, Ms. Kershaw fell ill. By 1924 she was dead. The
inquest, which followed Nellie's death, was the first on an asbestos
worker.
COMPANY PROFILE
T&N,(f/k/a Turner & Newall)
A subsidiary of Federal Mogul
Federal-Mogul Corporation (OTC: FDMLQ)
26555 Northwestern Hwy.
Southfield, MI 48034
Phone: 248-354-7700
Fax: 248-354-8950
http://www.Federal-Mogul.com
Employees : 49,000
Revenue : $5,457,000,000
Net Income : $(1,145,900,000)
Assets : $9,053,200,000
Liabilities : $8,634,200,000
(As of December 31, 2001)
Description: T&N, formerly known as Turner & Newall, was among other
things, an English building materials manufacturer that used and sold
asbestos products. When Federal-Mogul acquired T&N, it no longer
manufactured these materials but was a recognized manufacturer of
automotive products headquartered in Manchester, England. Federal-
Mogul, a maker of components for cars, trucks, and construction
vehicles. Its products include chassis and engine parts, pistons, and
sealing systems sold under brand names such as Federal-Mogul, Glyco,
and Signal-Stat. Federal-Mogul has manufacturing and distribution
facilities primarily in the Americas and Europe; major customers
include global automakers such as General Motors, Ford,
DaimlerChrysler, BMW, and Volkswagen. Federal-Mogul also distributes
auto parts to aftermarket customers. The company has entered Chapter 11
as a result of asbestos claims related to its acquisition of T&N plc.
New Securities Fraud Cases
AEGON NV: Charles Piven Launches Securities Fraud Suit in S.D. New York
-----------------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who purchased, converted, exchanged or
otherwise acquired the common stock of Aegon N.V. (NYSE:AEG) between
August 9, 2001 and July 22, 2002, inclusive, in the United States
District Court for the Southern District of New York against the
Company and certain of its officers and directors.
The action charges that defendants violated 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.
For more details, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
AMERICREDIT CORPORATION: Cauley Geller Commences Securities Suit in TX
----------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the Northern District of Texas
on behalf of purchasers of AmeriCredit Corporation (NYSE: ACF) publicly
traded securities during the period between April 14, 1999 and January
15, 2003, inclusive.
The complaint charges AmeriCredit and certain of its officers and
directors with violations of the Securities Exchange Act of 1934.
AmeriCredit purchases auto finance contracts without recourse from
franchised and select independent automobile dealerships, and, to a
lesser extent, makes loans directly to consumers buying used and new
vehicles. Among other things, plaintiff alleges that defendants'
material omissions and the dissemination of materially false and
misleading statements regarding the nature of AmeriCredit's revenues
and earnings caused AmeriCredit's stock price to become artificially
inflated, causing huge damages for investors.
Specifically, the complaint alleges that defendants were improperly
deferring delinquent loans to avoid consumer defaults so AmeriCredit
would have access to cash which otherwise would have been restricted.
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
ARIBA INC.: Stull Stull Commences Securities Fraud Lawsuit in N.D. CA
---------------------------------------------------------------------
Stull, Stull & Brody, initiated a securities class action in the United
States District Court for the Northern District of California on behalf
of purchasers of Ariba, Inc. (Nasdaq:ARBAE) securities between January
11, 2000 and January 15, 2003, inclusive.
Ariba provides Internet-based business to business software and
services which assist companies in managing their operations' cash
costs. The complaint charges that the Company and certain of its
officers and directors violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10-b(5). The action alleges
that defendants issued a series of false and misleading statements
concerning the Company's financial condition while garnering over $692
million as the result of insider trading.
Specifically, the suit charges that defendants issued financial results
which were presented in violation of Generally Accepted Accounting
Principles (GAAP). As a result, the Complaint charges that defendants
were forced to restate the Company's financial statements for the
fiscal years ended September 30, 2000 and 2001, and for the quarters
ended March 31, 2000 through June 30, 2002. The Complaint further
alleges that as a result of defendants' actions, plaintiff and the
Class were damaged.
For more details, contact Michael D. Braun or Patrice L. Bishop by
Phone: 888/388-4605 by E-mail: info@secfraud.com
CLEARONE COMMUNICATIONS: Wolf Haldenstein Lodges Securities Suit in UT
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Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class
action in the United States District Court for the District of Utah,
Central District, on behalf of all persons who purchased the common
stock of Gentner Communications Corp. or ClearOne Communications
(Nasdaq: CLRO) between April 17, 2001 and January 14, 2003, inclusive
against the Company and certain of its officers and directors.
Specifically, this class period includes the following members:
(1) All purchasers of Gentner Communications' common stock from
April 17, 2001 through January 1, 2002, trading under the
ticker symbol c;
(2) All purchasers of ClearOne Communications' common stock from
January 2, 2002 through March 14, 2002, trading under the
ticker symbol GTNR; and
(3) All purchasers of ClearOne Communications' stock from March
15, 2002 when it began trading under the ticker symbol CLRO
through January 14, 2003.
The complaint alleges that during the class period, the defendants
issued financial statements that were materially false and misleading.
In order to artificially inflate the price of ClearOne's stock,
defendants falsely reported the Company's financial results during the
class period by recognizing revenue improperly. Among other practices,
defendants shipped products to certain clients with the agreement that
the clients would not have to pay for the merchandise until it was
sold, even though ClearOne would immediately record the shipments as
sales.
On January 15, 2003, the US Securities and Exchange Commission, Salt
Lake District Office, filed a complaint against ClearOne Communications
Inc. alleging violations of the Securities Act of 1933 and the
Securities Exchange Act of 1934. The complaint alleged that the
Company overstated revenues, income and accounts receivable by
improperly recording certain transactions with its distributors and
resellers as sales. ClearOne reported a net loss of $1.2 million, or
10 cents a share, on sales of $13 million for its first fiscal quarter
ended September 30, 2002.
For more details, contact Fred Taylor Isquith, Michael Miske, George
Peters, Derek Behnke by Mail: 270 Madison Avenue, New York, New York
10016, by Phone: (800) 575-0735 by E-mail: classmember@whafh.com or
visit the firm's Website: http://www.whafh.com. All e-mail
correspondence should make reference to ClearOne.
CLEARONE COMMUNICATIONS: Abbey Gardy Commences Securities Lawsuit in UT
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Abbey Gardy, LLP commenced a securities class action in the United
States District Court for the District of Utah on behalf of all persons
or entities who purchased securities of ClearOne Communications, Inc.
(Nasdaq: CLRO) between January 16, 2001 and January 15, 2003,
inclusive.
The suit charges the Company and Frances M. Flood, the Company's
Chairman, CEO and President, and Susie S. Strohm, the Company's CFO and
Vice President of Finance with violations of the Securities Exchange
Act of 1934. The suit alleges that, in order to inflate the price of
ClearOne's stock, defendants caused the Company to falsely report its
financial results during the class period through improper revenue
recognition practices, including recognizing revenue for shipments to
distributors even though the distributors had the right to return or
exchange unsold goods.
As a result of this inflation, ClearOne was able to complete a private
offering of 1.2 million shares, raising proceeds of $25.5 million on
December 11, 2001. On January 15, 2003, the last day of the Class
Period, the Securities and Exchange Commission (SEC) filed a federal
lawsuit alleging that defendants violated numerous federal securities
laws, primarily through a program of "channel stuffing" -- shipping
large amounts of inventory to the company's distributors with the
understanding that the distributors did not have to pay for these
products until the distributors resold the products, and that in some
instances the distributors were given the right to return or exchange
products the distributors were unable to sell. The stock dropped below
$1.50 per share on this news, more than 90% lower than its class period
high. On February 28, 2003, it was announced that the US Attorney in
Utah began an investigation of ClearOne stemming from the SEC
Complaint.
For more details, contact Nancy Kaboolian by Phone: 1-800-889-3701 by
E-mail: Nkaboolian@abbeygardy.com or visit the firm's Website:
http://www.abbeygardy.com
MCSi INC.: Charles Piven Commences Securities Fraud Suit in S.D. Ohio
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The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who purchased, converted, exchanged or
otherwise acquired the common stock of MCSi, Inc. (Nasdaq:MCSI) between
July 24, 2001 and February 26, 2002, inclusive, in the United States
District Court for the Southern District of Ohio against the Company
and certain of its officers and directors.
The action charges that defendants violated 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.
For more details, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
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