/raid1/www/Hosts/bankrupt/CAR_Public/040312.mbx
C L A S S A C T I O N R E P O R T E R
Friday, March 12, 2004, Vol. 6, No. 51
Headlines
9/11 LITIGATION: Victims Kin File Lawsuit vs. S. Arabia, Banks
ADELPHIA: Defense Questions Ex-exec's Testimony in Fraud Trial
AK STEEL: Discovery Underway In Amended OH Lawsuit
AK STEEL: Reaches Settlement In Securities Lawsuit
AK STEEL: OH Court Denies Summary Judgment In Suit
AMEREN CORPORATION: Faces Retiree Benefits Lawsuit In IL Court
ARGENTINA: U.S. Judge To Review Claimant Status In Debt Suit
BANK OF AMERICA: Fined $10M For Hindering Stock Probe
CALIFORNIA: Seeks Testimony from Five Firms Over Viatical Sales
CANADA: Quebec Court Authorizes Breast Cancer Patients' Suit
CHAR-BROIL: Recalls Outdoor Gas Grills For Defective Temp. Gauge
COEUR D'ALENE: Second Amended Complaint Filed in ID Court
CSFB: Manhattan Judge Allows IPO Underpricing Lawsuit To Proceed
DAIMLERCHRYSLER: Faces Dodge Durango Defect Lawsuit In NC Court
DRESS BARN: Faces Overtime Pay Suit In California Court
E-MAIL PROVIDERS: Suing Online Marketers Under New Anti-Spam Law
HARBOR FREIGHT: Recalls Cord Reels For Fire/Injury Hazard
KEY WEST: SEC Shelves NASD Findings On Fraud Scheme
LADO CO: Recalls Hair Dryers Due to Electrocution Hazard
LIFEPOINT HOSPITALS: TN Court Certifies ADA Violations Suit
LIGHT DISTRIBUTION: Recalls Hair Dryers For Injury Hazard
MARATHON OIL: Faces Several Suits For MTBE Contamination
MARTHA STEWART: 60 Minutes to Air 1995 TV Interview Uncut
MERRILL LYNCH: Dismissal Granted In Consolidated IPO Suit
MICHIGAN: Lawsuits Target Twelve Cities Over Franchise Fees
MICROSOFT CORPORATION: Trial To Begin Monday In Anti-Trust Case
NEW YORK: Residents, Workers Sue EPA Over Post 9/11 Air Quality
NL INDUSTRIES: Files Latest Update on Pending Lead-pigment Suits
NL INDUSTRIES: N.D. Oklahoma Suit Seeks Medical Monitoring
NL INDUSTRIES: Six Oklahoma Cases Seek $20M for Lead Exposure
NL INDUSTRIES: Quapaw Tribe in Oklahoma Seeks Punitive Damages
NL INDUSTRIES: Local Exec Seeks Relocation Program, Among Others
NOVEN PHARMACEUTICALS: FL Court Consolidates Securities Suits
OBESITY: May Pass Smoking As Top Cause Of Death, Report Says
OBESITY LEGISLATION: House Approves Ban on Fast Food Lawsuits
PACIFIC CAPITAL: Cross-collection Illegal, Say RAL Customers
PACIFIC CAPITAL: Refund Transfer Customers Drop Lawsuits
SAME-SEX MARRIAGES: San Jose, CA Votes To Recognize Gay Weddings
SAME-SEX MARRIAGES: NJ AG Orders Halt To License Gay Weddings
TRI-STATE CREMATORY: Funeral Homes Reach Pacts In Civil Lawsuit
TYCO INT'L: Judge Rules Chubb Unit To Pay For Legal Fees In Suit
UCLA: Halts Receipt of Cadaver Donations Amid Probe
VERDISYS INC: SEC Suspends Trading Over Accuracy Of Statements
Asbestos Alert
ASBESTOS LITIGATION: 3M Still Plagued By Asbestos Claims
ASBESTOS LITIGATION: Alfa Laval Faces 123 Lawsuits in MI Courts
ASBESTOS LITIGATION: American Standard Battles 139,733 Claims
ASBESTOS LITIGATION: Armstrong Holdings' Liability Increases
ASBESTOS LITIGATION: BNS Co. Pump-Related Lawsuits Increase
ASBESTOS LITIGATION: Badger Meter Faces Lawsuit in TX, IL Courts
ASBESTOS LITIGATION: Boise Cascade Lawsuits Persist
ASBESTOS LITIGATION: CNA Financial Corp. Assesses APMT Reserves
ASBESTOS LITIGATION: Cleveland Cliffs Faces Exposure Claims
ASBESTOS LITIGATION: DANA Corp.'s Pending Claims On The Decline
ASBESTOS LITIGATION: Fairfax To Replicate Canada Reserve Record
ASBESTOS LITIGATION: General Cable MARDOC Cases Remain Pending
ASBESTOS LITIGATION: GE Capital Posts Adverse Losses From Suits
ASBESTOS LITIGATION: Halliburton Settlement Buoys Van Kampen
ASBESTOS LITIGATION: Hanson Announces Total Of 124,200 Claimants
ASBESTOS LITIGATION: Ladish Co. Announce Pending Suits in MI, IL
ASBESTOS LITIGATION: Metlife Reports Payments Of Injury Claims
ASBESTOS LITIGATION: National Waterworks Predecessor Sued
ASBESTOS LITIGATION: RJR Tobacco Asbestos Case Goes To Trial
ASBESTOS LITIGATION: St. Paul Co. Reaches Pact On Injury Claims
ASBESTOS LITIGATION: St. Paul Affiliate TPC Develops Reserves
ASBESTOS LITIGATION: Tyler Pays Trust $1.4 Million Over Claims
ASBESTOS LITIGATION: U.S. Steel Battles 3,900 Claims in Courts
ASBESTOS ALERT: Kaman Corp. Predecessor Implicated in Lawsuit
ASBESTOS ALERT: Selective Insurance Reserves For 2,772 Claims
ASBESTOS ALERT: United Fire Shelves $3.3M In Reserves For Claims
ASBESTOS ALERT: White Mountains Insurance Covered For Old Claims
New Securities Fraud Cases
AaiPHARMA: Shepherd Finkelman Files Securities Suit in E.D. NC
AaiPHARMA: Goodkind Labaton Commences Securities Suit in E.D.NC
ACTIVISION INC: Schiffrin & Barroway Files Securities Suit in CA
SIEBEL SYSTEMS: Cauley Gellar Launches Securities Suit in CA
SPX CORPORATION: Cauley Geller Files Securities Suit in W.D. NC
SPX CORPORATION: Schiffrin & Barroway Commences Stock Suit in NC
VANS INCORPORATED: Bernstein Liebhard Launches Stock Suit in CA
*********
9/11 LITIGATION: Victims Kin File Lawsuit vs. S. Arabia, Banks
--------------------------------------------------------------
The estate and family of John P. O'Neill, Sr., famed FBI
counter-terrorism expert who perished in the World Trade Center
attack just days after starting his job as Chief of Security at
the Twin Towers, are filing two class action lawsuits: one
against the Kingdom of Saudi Arabia, and the nation-states of
Syria and the Sudan; the other against banks, charities,
companies and key individual financiers that acted to sponsor,
aid, abet, and support the al Qaeda terrorist organization that
perpetrated the attacks of September 11, 2001 in New York and
Washington, D.C, Market Wire reports.
Two class actions are being filed, with the estate of John P.
O'Neill, Sr., as lead Plaintiff in both. The first suit is
historic: it is the first suit to be filed against the Kingdom
of Saudi Arabia, on behalf of individuals killed in 9/11
attacks, for its role in supporting and funding the terrorists
who perpetrated the attacks. The suit also names the governments
of Syria and the Sudan. This suit is aimed at the regimes that
funded and provided material support to Osama bin Laden and al
Qaeda, the principal terrorist group responsible for the 9/11
attacks.
The second suit is against a number of the principal banks,
corporations, "charities," organizations, and individuals
responsible for aiding, abetting, financing, and facilitating
the efforts of the terrorist network al Qaeda that perpetrated
the 9/11 attacks. Class action status enables all other
decedents of the 9/11 attacks to be represented in the suits.
Joshua Ambush, the attorney who is filing the actions on behalf
of the Mr. O'Neill's estate and the O'Neill family said, "John
O'Neill devoted his life to fighting terrorism and his family is
continuing his legacy. By filing suit today against some of the
primary sponsors of terrorism they are hoping to bring a measure
of justice and a sense of comfort to all victims of the 9/11
tragedy."
ADELPHIA: Defense Questions Ex-exec's Testimony in Fraud Trial
--------------------------------------------------------------
At the fraud trial for John Rigas and two of his sons Tuesday,
defense attorney Ben Preziosi questioned the testimony of a
former director concerning when he learned the Rigases were
using debt guaranteed by Adelphia Communications Corp. to fund
securities purchases, the Associated Press reports.
Last week, former Adelphia director Dennis Coyle had testified
he first learned the Rigases were using debt that way when it
was disclosed to the public on a conference call March 27, 2002.
Coyle conceded that at a board meeting in Cancun, Mexico, on
March 6, 2002, he identified securities purchases by the Rigas
family for an amount close to the sum of Adelphia-guaranteed
loans the family drew for purchases during the same quarter. His
testimony came during cross-examination.
In response to questioning by Preziosi, Coyle said that the
"Rigas Family Purchase draws" amounted to $429.06 million during
the fourth quarter of 2001, when the total sum of securities
purchased by the Rigases was $427.3 million. In earlier
testimony Tuesday, Coyle said that some of Adelphia's lending
covenants required that the Rigas family maintain its voting
control and that violating those covenants could have landed
much of its debt in default.
The defense has been trying to show that the Rigases borrowed
money from the company to maintain their voting control by
buying stock, and that their voting control was in Adelphia's
interest. Coyle, however, said he differed from the Rigas family
on the importance of their voting control. "It was my
understanding that the Rigas family made a big point of saying
it was important to Adelphia," Coyle said. "It was not, in my
opinion."
Former Adelphia Chairman John Rigas, his sons Timothy and
Michael Rigas, and Michael Mulcahey are on trial on charges of
conspiracy and fraud. They have pleaded not guilty. John Rigas
was not in court Monday or Tuesday. He had appointments at the
Mayo Clinic in Minnesota for his bladder cancer.
AK STEEL: Discovery Underway In Amended OH Lawsuit
--------------------------------------------------
Discovery is underway in an amended purported class action
complaint filed in the United States District Court for the
Southern District of Ohio against the Company, alleging
discrimination against African-Americans in its hiring practices
and that the Company discriminates against all of its employees
by preventing its employees from working in a racially
integrated environment free from racial discrimination.
The named plaintiffs seek various forms of declaratory,
injunctive and unspecified monetary relief (including back pay,
front pay, lost benefits, lost seniority and punitive damages)
for themselves and unsuccessful African-American candidates for
employment at AK Steel. No trial date has been set. The Company
continues to contest this matter vigorously.
AK STEEL: Reaches Settlement In Securities Lawsuit
--------------------------------------------------
A settlement has been reached in a class action lawsuit filed in
the United States District Court for the Southern District of
Ohio by Plaintiff Bernard Fidel and others against the Company
and certain of its directors and officers, alleging material
misstatements and omissions in the Company's public disclosure
about its business and operations.
Pursuant to the terms of the settlement, the parties will
stipulate to certification of the action as a class action. The
settlement of the case is conditioned upon receiving final
judicial approval from the District Court. If the settlement is
approved, and subject to the right of individuals to opt out of
the settlement, all claims pending in the action will be
dismissed with prejudice.
AK STEEL: OH Court Denies Summary Judgment In Suit
--------------------------------------------------
The United States District Court for the Southern District of
Ohio denied defendant's Motion For Entry of Judgment in a
lawsuit brought on behalf of Plaintiff John D. West, et al.,
against the AK Steel Corporation Retirement Accumulation Pension
Plan, or AK RAPP, and the AK Steel Corporation Benefit Plans
Administrative Committee, or AK BPAC, claiming that the method
used under the AK RAPP to determine lump sum distributions does
not comply with the Employment Retirement Income Security Act of
1974 and results in underpayment of benefits to putative class
members.
The AK RAPP is the cash balance plan component of the AK
Steel Noncontributory Pension Plan, or AK NCPP. The AK NCPP
provides that the Company will indemnify members of AK BPAC from
any liability and expense incurred by reason of serving as a
member of AK BPAC.
On May 1, 2002, plaintiff moved for certification of a class
consisting of all employees covered by the AK RAPP who
terminated employment with AK Steel or its predecessors since
January 1, 1995 and who received some or all of their AK RAPP
benefits in the form of a lump sum payment. On July 22, 2002,
defendants opposed the motion for class certification and also
moved for entry of judgment that plaintiff's claim is time
barred. The plaintiff's motion for class certification has not
yet been ruled upon. Discovery was completed in December 2002.
No trial date has been set.
AMEREN CORPORATION: Faces Retiree Benefits Lawsuit In IL Court
--------------------------------------------------------------
A lawsuit was filed in the U.S. District Court for the Southern
District of Illinois against Ameren Corporation, et al., and
against the company's Retiree Medical Plan, on behalf of
retirees and other former non-management employees and their
surviving spouses who retired from January 1, 1992 through
October 1, 2002, whose medical benefits are reduced or are
threatened with reduction.
The complaint, styled as Barnett, et al. vs. Ameren Corporation,
et al., alleges the following:
(1) the labor organizations which represented the
plaintiffs have historically negotiated retiree
medical benefits with the defendants and that pursuant
to the negotiated collective bargaining agreements
and other negotiated documents, the plaintiffs are
guaranteed medical benefits at no cost or at a fixed
maximum cost during their retirement;
(2) Ameren has unilaterally announced that, beginning in
2004, retirees must pay a portion of their own
healthcare premiums and either an increasing
portion of their dependents' premiums or newly
imposed dependents' premiums, and that surviving
spouses will be paying increased amounts for their
medical benefits;
(3) the defendants' actions deprive the plaintiffs of
vested benefits and thus violate ERISA and the
Labor Management Relations Act of 1947, and
constitute a breach of the defendants' fiduciary
duties; and
(4) the defendants are estopped from changing the
plan benefits. (This allegation was subsequently
dropped from the amended complaints)
The plaintiffs seek to have this lawsuit certified as a class
action, seek injunctive relief and declaratory relief, seek
actual damages for any amounts they are made to pay as a result
of the defendants' actions, and seek payment of attorney fees
and costs.
An amended complaint that added three plaintiffs was filed July
15, 2003. In response to the Court's ruling on the defendants'
motions to dismiss various counts of the complaint, a second
amended complaint was filed on December 15, 2003, clarifying
some of the allegations, adding two and dropping two plaintiffs,
and adding the Ameren Group Medical Plan as a defendant.
ARGENTINA: U.S. Judge To Review Claimant Status In Debt Suit
------------------------------------------------------------
The judge presiding over Argentina's U.S. court battle with
jilted bondholders said on Wednesday he would reconsider whether
Argentines holding their own country's bonds could also take
part in a class action suit against the South American nation's
government, Reuters News reports.
New York-based Federal Judge Thomas Griesa in January ruled that
investor Horst Urban, a German businessman, could organize a
class action lawsuit aimed at recouping partial repayment of the
$88 billion in bonds on which Argentina defaulted on in January
2002. The original ruling let Argentine nationals join the suit.
Griesa said he would reconsider their participation after
Argentina's lawyers filed a motion seeking to exclude them but
said he saw no immediate reason to bar them. "Those bonds were
marketed to Argentina's citizens," said Griesa, of the U.S.
Court for the Southern District of New York. "It seems to me
they have the right to sue in New York."
Many disgruntled bondholders are taking the Argentine government
to court to recoup their losses as the country stands by its
offer to pay back only a quarter of the debt on which it
defaulted. Creditors want at least 65 percent. Urban heads the
only class action lawsuit so far given a green light. He hopes
to include thousands of creditors in several countries holding
two series of defaulted global bonds due to mature in 2017 and
2009.
Argentina's lawyer Jonathan Blackman argued that Argentines
should be excluded because their priorities differed from those
of bondholders from other countries and they were subject to
different laws. He said Argentina likely sought to exclude
Argentines so it could face a smaller class action lawsuit.
Judge Griesa last May denied a request to allow a class action
lawsuit to be brought against Argentina on behalf of all jilted
investors, saying the group would be too amorphous and ill-
defined.
BANK OF AMERICA: Fined $10M For Hindering Stock Probe
-----------------------------------------------------
Bank of America Corp. has announced that it will pay a record
$10 million penalty for hindering a federal probe into possible
improper trading at the bank's securities unit, Reuter News
reports.
The U.S. Securities and Exchange Commission said the unit, Banc
of America Securities, repeatedly failed to promptly provide
requested documents, gave "misinformation" about the documents'
availability, and engaged in "dilatory tactics." The agency said
it is probing whether Banc of America Securities improperly
traded securities before issuing market-moving research about
those securities. It said it is probing the personal trading of
a former senior employee at the unit. Neither the SEC nor the
bank named the employee. The SEC penalty was the largest ever
against a company for failing to produce documents, SEC
spokesman John Heine said.
Charlotte, North Carolina-based Bank of America, the third-
largest U.S. bank, also agreed to an SEC censure, and to refrain
from further record-keeping violations. It neither admitted to
nor denied the SEC's findings. Bank of America spokeswoman
Shirley Norton said the bank considers the problems addressed in
the settlement "isolated." She said the bank has created an
internal regulatory investigation unit to develop "new
procedures and new technology to enhance e-mail recovery," and
hired Davis Polk & Wardwell as new outside legal counsel for the
SEC inquiry. "We continue to look for ways to improve our
ability to respond to inquiries such as this," Norton said.
In its settlement order, the SEC said it received in 2001 an
anonymous informant's letter alleging that senior equities
managers at the securities unit may have caused the firm to buy
or sell securities that it knew would be the subject of reports
generated by its equity research analysts. Bank of America
shares on Wednesday fell $1.78, or 2.2 percent, to close at
$79.99 on the New York Stock Exchange. They have risen 20
percent in the last year.
CALIFORNIA: Seeks Testimony from Five Firms Over Viatical Sales
---------------------------------------------------------------
A state agency issued subpoenas Monday to five entities,
including one in Ontario and one in Fontana, seeking information
about companies that buy life insurance policies from terminally
ill people and then sell them to investors as a security,
Knight-Ridder/ Tribune Business News reports.
The notices were mailed as part of an investigation by the
California Department of Corporations into "the possible
widespread, illegal selling of viaticals or 'death benefit'
investments in California," according to an agency statement.
Tru-Mor Inc., which is registered as doing business in Ontario,
and Tru-Mor Financial Group, which is registered to an Ontario
address, along with three other firms, have until March 26 to
respond to the state subpoenas.
The agency has listed viatical fraud as one of the top ten scams
or scandals to be on the lookout for in 2004, and organizations
like the American Association of Retired Persons has repeatedly
warned its members about viatical fraud. Viaticals, as a
security, are legal in California but only if their sale is
regulated by the state, said Department of Corporations
spokesman Shad Balch by phone. He said many viatical brokers are
not licensed with the state, however. The California Department
of Insurance lists 29 companies as being licensed to deal in
viaticals in California, most of them based out of state.
Viatical brokers work by raising money from investors who are
willing to gamble on the life expectancy of individuals or
groups of individuals. They buy life insurance policies from
people who have decided they would rather have the cash before
they die. After taking a commission, the brokers then turn the
policies over to the investors, who collect the money when the
person dies. The investments, which Balch called "morbid," can
become fraudulent, however, if the broker tells investors he has
purchased policies when he hasn't, or if he lies about the
health or life expectancy of the people whose polices he owns.
Mark Dunbar, a San Diego attorney who is handling a class action
lawsuit against a now-defunct viatical company, also in Ontario,
said there are many ways to defraud people with viaticals and
that it is easy for them to fall between the cracks. "Wherever
senior citizens are located, you will find viatical companies,"
he said. No one from either Tru-Mor company could be reached for
comment.
CANADA: Quebec Court Authorizes Breast Cancer Patients' Suit
------------------------------------------------------------
The Quebec Superior Court authorized a class action for breast
cancer patients who are or were as of October 13, 1997 on Quebec
hospital waiting lists for radiation treatment that they could
not receive within eight weeks of their last surgery, Canada
Newswire reports.
However, to be part of the class action, patients must not have
undergone chemotherapy between their surgery and the start of
radiation treatment. The class action is authorized against
twelve hospitals that offer radiation treatment in Quebec.
"The permission to go ahead with a class action is an important
step in our efforts to determine the hospitals' obligations and
to ensure recognition of the damages suffered by the patients
who did not receive the care they needed within a medically
reasonable time period," stated the applicant and now Court-
appointed representative of the group, Anahit Cilinger.
It is estimated that dating back to October 13, 1997, some
10,000 breast cancer patients will qualify for this class
action. Approximately 4,500 cases of breast cancer are diagnosed
each year in Quebec and 1,450 deaths are associated with this
form of cancer. Breast cancer affects 2 out of every 19 women.
The Court is of the opinion that the applicant had, at this
stage, established the existence of a higher risk of breast
cancer recurrence when the elapsed time between the surgery and
radiation treatment is beyond what is medically acceptable. The
Court is also of the opinion that the applicant provided
sufficiently clear evidence that a medically acceptable time
period between surgery and radiation treatment ranges from 8 to
12 weeks.
This decision now allows the group to begin proceedings to
obtain a judgment on the merits of the issue. The Court will
have to determine whether the respondent hospitals had a legal
obligation to provide radiation treatment within a medically
reasonable time frame, identify what constitutes a reasonable
time frame, whether calculation of this time frame depends on
each patient's situation, whether damages were suffered by
members of the group, and on what basis the damages should be
established.
CHAR-BROIL: Recalls Outdoor Gas Grills For Defective Temp. Gauge
----------------------------------------------------------------
Char-Broil, in cooperation with the U.S. Consumer Product Safety
Commission (CPSC), is recalling 108,000 outdoor gas grills
because of defective temperature gauges that have caused at
least a dozen minor injuries.
The Columbus, Ga., company, a division of W.C. Bradley Co., has
received 30 reports of the glass cover on gauges breaking,
including 12 incidents involving injuries, the Consumer Product
Safety Commission said Wednesday.
The three types of recalled grills are the Commercial Series
(model numbers 4632210, 4632215, 463221503 and 463231503);
Professional Series (model numbers 4632235, 4632236, 4632240 and
4632241); and Stainless Steel Series (model number 4632220).
Numbers are located on a label on the back panel of the storage
cart.
Hardware, home improvement and appliance stores and specialty
dealers sold the grills nationwide from January 2002 to November
2003. The products cost between $450 and $1,000, depending on
the model. Consumers are advised to stop using the grills and
contact the company at (866) 239-6769 for a free replacement
gauge.
COEUR D'ALENE: Second Amended Complaint Filed in ID Court
---------------------------------------------------------
In May 2003 a Second Amended Complaint was filed in Idaho State
District Court for the First District in Kootenai County, Idaho,
in regards a lawsuit brought against Coeur d Alene Mines Corp,
other mining companies and the Union Pacific Railroad Company,
on behalf of eight northern Idaho residents seeking medical
monitoring and real property damages from the mining companies
and railroad who operated in the Bunker Hill Superfund site. The
lawsuit is styled as Baugh v. Asarco, et al.
In October 2002, the court conducted a hearing on motions
resulting in an order striking certain of the alleged causes of
action from the complaint, and dismissing the complaint with
leave to amend it. In January 2003, the plaintiffs filed the
first amended complaint. The court dismissed the amended
complaint with leave to amend.
CSFB: Manhattan Judge Allows IPO Underpricing Lawsuit To Proceed
----------------------------------------------------------------
In a 32-page opinion Tuesday, U.S. District Judge Shira A.
Scheindl in Manhattan allowed a lawsuit to proceed that alleges
Donaldson Lufkin & Jenrette, now owned by Credit Suisse First
Boston Inc. (CSFB), deliberately underpriced initial public
offerings during the Internet boom, the Associated Press
reports.
The case was filed in 2002 by Xpedior Inc., an e-commerce
consulting firm that DLJ took public in late 1999. Xpedior
claimed that DLJ capitalized on the "irrational exuberance" of
the late 1990s tech market by underpricing IPOs, then giving
shares to favored clients who would in turn pay unusually high
commissions to DLJ. A spokeswoman for CSFB, a unit of Swiss
banking company Credit Suisse Group, declined to comment.
Xpedior fell into bankruptcy and liquidated in 2002. The firm
says DLJ breached its fiduciary duty as an underwriter to
companies it took public. Xpedior has said the class it
represents should be paid $7 billion, the amount DLJ allegedly
underpriced the IPOs. Even if the case isn't certified as a
class action, Xpedior is claiming damages for itself of $68.7
million.
Judge Scheindlin allowed three Xpedior claims to proceed against
CSFB but dismissed a fourth claim that accused DLJ of unjust
enrichment. She noted that Xpedior doesn't claim that DLJ was
enriched at Xpedior's expense. "To the contrary, DLJ allegedly
received excess compensation from its own customers," she said.
"They, not Xpedior, might have a cause of action."
Xpedior's breach-of-contract suit is one of many that allege
misconduct related to IPO practices. Judge Scheindlin also is
presiding over hundreds of securities-fraud suits in which
investors accuse numerous underwriters of IPO abuses.
DAIMLERCHRYSLER: Faces Dodge Durango Defect Lawsuit In NC Court
---------------------------------------------------------------
A class action lawsuit filed March 5 in Durham County Superior
Court on behalf of North Carolina attorney John Bussian, claims
DaimlerChrysler should repair alleged defects in Dodge Durangos
made between 1998 and 2003, the Associated Press reports.
The National Highway Traffic Safety Administration has not
issued a recall of the sport utility vehicles. The agency
started investigating Durangos last year after four drivers
reported the failure of a ball joint in the front suspension.
A highway safety administration representative says 749
complaints allege that those ball joints are wearing out
prematurely. About 450,000 Durangos of the applicable model
years were on U.S. roads last year.
DRESS BARN: Faces Overtime Pay Suit In California Court
-------------------------------------------------------
The Company was served with a class action lawsuit in California
Court, brought on behalf of all Managers, Assistant Managers and
Associate Managers who worked for Dress Barn in California for
the past four years.
The complaint alleges that Dress Barn improperly classified
these employees as "salaried exempt", and argues that if the
employee spent 50% or more of their time doing work similar to
that done by hourly associates, they should be entitled to
overtime, etc.
The Company does not expect the outcome to have a material
adverse effect on the Company's consolidated financial
condition, results of its operations or cash flows.
E-MAIL PROVIDERS: Suing Online Marketers Under New Anti-Spam Law
----------------------------------------------------------------
Four of the nation's largest e-mail providers said on Wednesday
they had sued hundreds of online marketers under a new federal
law that outlaws the worst kinds of "spam" e-mail, Reuters News
reports.
The lawsuits, filed by EarthLink Inc., Microsoft Corp., Yahoo
Inc. and Time Warner Inc. unit America Online , mark the first
time the law has been tested since it took effect in January.
Six suits were filed in federal courts in California, Georgia,
Virginia and Washington state. They claim the defendants
obscured their identities and used other deceptive tactics to
send out hundreds of millions of pitches for get-rich-quick
schemes, pornography and other types of spam. Spam accounts for
roughly half of all e-mail traffic, Internet providers say,
driving up bandwidth costs and frustrating customers.
Company officials said the CAN-SPAM Act, passed last year, makes
their fight easier by imposing national standards and increasing
penalties to force spammers out of business. "The lawsuits we
file now have some added punch they didn't have before," AOL
General Counsel Randall Boe told reporters at a news conference.
The lawsuits filed Tuesday night invoke a wide array of federal
and state laws, from trespass to trademark and organized crime
statutes. But much of the behavior in question is specifically
outlawed by CAN-SPAM. Defendants falsified return addresses,
routed their messages through other computers to cover their
tracks, and used misleading subject lines like "important
message from AOL," the lawsuits charged. Many did not include
physical addresses or a way to unsubscribe from the mailing
list, as required by the law. One group of defendants in Canada
sent nearly 100 million messages to Yahoo customers in January
alone and resold the e-mail addresses of those who asked to be
taken off their mailing list, according to one lawsuit. The
defendants could not be reached for comment.
Officials from the four companies said they worked together to
track down the defendants and made sure that their lawsuits did
not overlap. The companies are also working on technical methods
to more effectively weed out spam but have not yet settled on a
common standard. They said they expected foreign defendants
could be held accountable under the U.S. law.
More than 200 defendants were called "John Doe" in filings, as
investigators do not know their names. Officials said they
expect to eventually uncover their identities. The civil suits
filed by the e-mail providers seek unspecified amounts of
damages and penalties. Violators could also face jail time under
the new law, though government prosecutors have filed no
criminal charges yet. Officials with the Federal Trade
Commission and the FBI were not immediately available for
comment. Lawmakers who drafted the statute, as well as
technology and marketing groups that had pushed for its passage,
praised the legal actions.
HARBOR FREIGHT: Recalls Cord Reels For Fire/Injury Hazard
---------------------------------------------------------
Harbor Freight Tools of Camarillo, Calif., in cooperation with
the U.S. Consumer Product Safety Commission (CPSC), is
voluntarily recalling 9, 390 Heavy Duty Portable Industrial Cord
Reels since the internal grounding conductor may not be properly
secured to the receptacle, and thus may cause electric shock or
fire. No reports of incidents or injury have been made.
The recalled heavy duty portable industrial cord reels are
yellow with a carrying handle, extendable/retractable extension
cord and 6 electrical outlets/plugs. The units are marked "Cord
Reel Portable Power" and sold as "SKU 42053." The label on the
rear of the unit contains the following information: "Cord Reel,
10 Amps, 125 Volts, 1250 Watts, Caution, Disconnect all plugs
inserted into the outlets on this face before winding cord reel
in either direction, Made in Taiwan, R.O.C."
The industrial cord reels, manufactured in Taiwan, were sold
only through The Harbor Freight Tools catalog and Web site from
January 2000 through the beginning of February 2004 for
approximately $10 to $13.
Consumers are urged to stop using the cord and reel immediately.
Consumers should call Harbor Freight Tools at (800) 444-3353
between 8 a.m. and 4:30 p.m. PT Monday through Friday to obtain
a refund. Harbor Freight Tools is contacting owners of affected
cord reels by direct mail where the name is known to the firm.
Consumers can also visit the firm's Web site at
http://www.harborfreight.com
KEY WEST: SEC Shelves NASD Findings On Fraud Scheme
---------------------------------------------------
The Securities and Exchange Commission (SEC) has set aside NASD
findings and sanctions against Amr Elgindy and Key West
Securities Inc. regarding an alleged manipulative scheme
concerning the stock of Saf T Lok, Inc. in October and November
1997. According to the findings, Elgindy and Key West
manipulated the market for Saf T Lok stock.
The record did not support NASD's allegations. The Commission
sustained NASD's findings that Elgindy and Key West had violated
NASD public communication rules by not disclosing in the press
releases that Key West made a market in Saf T Lok stock. The
Commission found that NASD's imposition of a $1,000 fine on
Elgindy and Key West jointly and severally was not excessive,
oppressive nor an unnecessary or inappropriate burden on
competition.
LADO CO: Recalls Hair Dryers Due to Electrocution Hazard
--------------------------------------------------------
Lado Co. of America, of Flushing, N.Y., in cooperation with the
U.S. Consumer Product Safety Commission (CPSC), is recalling 600
electric hand-held hair dryers since these hair dryers do not
have an immersion protection device or ground fault circuit
interrupter (GFCI) on the power cord, which poses a serious
electrocution hazard if dropped in water. In 1991, a voluntary
standard was implemented that called for all hair dryers used by
consumers to protect against electrocution in both the "on" and
"off" positions. There have been no reports of incidents or
injuries relating to this product.
The recalled units are the Formula 3000, Energy Turbo, and Rapid
1085 electric hand-held hair dryers. These hair dryers have a
pistol grip, black or dark blue colored plastic casing, two-
prong power cord, and a label that reads in part: "Lado
Professional" and "110V/60HZ". The model name and number also
are printed on the label.
The hair dryers, manufactured in Italy and Spain, were sold at
retail beauty supply stores in the metropolitan New York area
from March 2003 through December 2003 for about $50.
Consumers are urged to stop using these hair dyers immediately
and return the unit to the firm for a refund or replacement.
For more information, contact Lado Company of America
representatives at (800) 368-1130 between 8 a.m. and 4:30 p.m.
ET Monday through Friday. Media Contact: David Chung at
(718) 886-4160.
LIFEPOINT HOSPITALS: TN Court Certifies ADA Violations Suit
-----------------------------------------------------------
In January 2002, the United States District Court for the
Eastern District of Tennessee certified a lawsuit brought
against each of the Company's hospitals, on behalf of
Access Now, Inc., a disability rights organization, alleging
non-compliance with the accessibility guidelines under the
Americans with Disabilities Act.
The lawsuit does not seek any monetary damages but, instead,
seeks only injunctive relief requiring facility modification,
where necessary, to meet the ADA guidelines, along with
attorneys fees and costs. Along with the certification of the
class, the Court also issued a scheduling order that requires
the parties to complete discovery and inspection for
approximately six facilities per year.
The Company will fight the lawsuit, but recognized its
obligation to correct any deficiencies in order to comply with
the ADA. As of December 31, 2003, the Company has conducted
inspections at 17 of its hospitals.
LIGHT DISTRIBUTION: Recalls Hair Dryers For Injury Hazard
---------------------------------------------------------
Light Distribution Inc., of Miami, Fla., in cooperation with the
U.S. Consumer Product Safety Commission (CPSC), is voluntarily
recalling 500 electric hand-held hair dryers since these hair
dryers do not have an immersion protection device or ground
fault circuit interrupter (GFCI) on the power cord, which poses
a serious electrocution hazard if dropped in water. In 1991, a
voluntary standard was implemented that called for all hair
dryers used by consumers to protect against electrocution in
both the "on" and "off" position. Incidents/Injuries: None
reported. One consumer reported loss of control resulting in a
tip over. The consumer received a black eye, along with cuts and
bruises.
The recalled units are the Turbo 1650 and Turbo 2650 electric
hand-held hair dryers. These hair dryers have a pistol grip,
black or red and black colored plastic casing, two-prong power
cord, and a label that reads in part: "Light Distribution" or
"Windsor" and "110V/60HZ". The model name and number also are
printed on the label.
The hair dryers, manufactured in Spain, were sold at retail
beauty supply stores in Florida from March 2003 through November
2003 for about $50.
Consumers are urged to stop using these hair dyers immediately
and return the unit to the firm for a free replacement unit.
For more information, contact Light Distribution toll-free at
(877) 418-1881 between 8 a.m. and 4:30 p.m. ET Monday through
Friday.
MARATHON OIL: Faces Several Suits For MTBE Contamination
--------------------------------------------------------
The Company is a defendant along with many other refining
companies in over forty recently filed cases in thirteen states
alleging methyl tertiary-butyl ether (MTBE) contamination in
groundwater.
The plaintiffs generally are water providers or governmental
authorities and they allege that refiners, manufacturers and
sellers of gasoline containing MTBE are liable for manufacturing
a defective product and that owners and operators of retail
gasoline sites have allowed MTBE to be discharged into the
groundwater.
Several of these lawsuits allege contamination that is outside
of Marathon's marketing area. A few of the cases seek approval
as class actions. Many of the cases seek punitive damages or
treble damages under a variety of statutes and theories. As a
result, The Company has stopped producing MTBE at its
refineries. The potential impact of these recent cases and
future potential similar cases is uncertain. Marathon intends to
vigorously defend these cases.
MARTHA STEWART: 60 Minutes to Air 1995 TV Interview Uncut
---------------------------------------------------------
Martha Stewart, the domestic trendsetter convicted last week of
lying to cover up an illegal stock sale, told a television news
program in 1995 that dishonesty was a sin she could not abide in
people, Reuters News reports.
Dishonesty "bothers me a lot and I'm always amazed at how many
people are dishonest," she told "60 Minutes" correspondent
Morley Safer. The comments have never been aired before on
television and will be broadcast for the first time by CBS on
its "60 Minutes II" program on Wednesday night.
Last week a jury found Stewart guilty of conspiring with her
former Merrill Lynch stock broker, Peter Bacanovic, to hide the
reason behind her Dec. 27, 2001, sale of shares in the biotech
company ImClone Systems Inc. Stewart saved herself less than
$50,000 by acting on information that her friend and ImClone
founder Sam Waksal was selling his shares. In the 1995
interview, she downplayed the importance of material wealth in
her life. "I could leave this place tomorrow and not feel any
sense of loss whatsoever," she said in the interview conducted
at her Connecticut home. Asked about having to start all over
again, she said, "No problem. I wouldn't miss a thing."
She was found guilty of one count of conspiracy, two counts of
making false statements and one count of obstruction, and faces
a possible prison term of five years and a $250,000 fine for
each of the four counts. Legal experts believe the sentencing
guidelines will suggest a range of less than 18 months. But
according to Stewart's 1995 comments, the jury may still be out
on whether she will learn her lesson. "You know dishonesty seems
to be something (that) once you get into it, people just seem
not to be able to get out of it," she said.
MERRILL LYNCH: Dismissal Granted In Consolidated IPO Suit
---------------------------------------------------------
The United States District Court for the Southern District of
New York granted defendant's Motion to Dismiss a consolidated
class action complaint brought against the Company, and nine
other underwriting defendants in relation to it's Initial Public
Offering (IPO).
The complaint alleges that the defendants and unnamed co-
conspirators violated antitrust laws by conspiring to require
from customers consideration in addition to the underwriters
discount for allocation of shares of initial public offerings of
certain technology companies and to inflate the aftermarket
prices for such securities. Plaintiffs have appealed.
MICHIGAN: Lawsuits Target Twelve Cities Over Franchise Fees
-----------------------------------------------------------
A Detroit law firm, Charfoos and Christensen P.C., has filed
would-be class action suits in several Michigan courts, against
12 cities, claiming the towns collect more money from consumers
in the form of franchise fees than regulators need to recoup
their costs, Multi-channel News reports.
The suits are unique to Michigan: The challenge is based on a
section of the state constitution called the Headlee Amendment,
a 1971 article that requires cities to seek voter approval for
new taxes. The law firm has targeted 12 cities in suits filed
last November: Troy, Midland, Warren, Grand Rapids, Ann Arbor,
St. Clair Shores, Canton, Royal Oak, Muskegon, Livonia, Plymouth
and Westland.
Lawyers examined city budget documents and found that some were
not specific in accounting for the spending of franchise fees.
But one city documented that $100,000 of its cable-TV funds went
toward the local library, a firm representative said. Another
city was said to have ended 2002 with a $1 million balance in
its cable fund. On Feb. 23, attorneys for St. Clair Shores
argued in Macomb County District court that franchise fees are
not taxes, but are user fees paid only by cable subscribers.
Federal law enables localities to collect franchise fees, which
can amount to 5% of a cable bill.
Attorneys for the plaintiffs argued that when a city takes in
more money than it uses, that's a tax in violation of state law.
The St. Clair Shores spokesperson did not respond to calls
seeking comment on the case. The judge did not rule after the
hearing, but instead asked for additional briefs from the
combatants. Earlier this year, the case against Muskegon was
argued in full, according to Parker, who said the firm hopes for
a decision by late March.
Cities are unlikely to give up this revenue easily. The local
newspapers are filled with coverage of service cutbacks
triggered by a lack of revenue in town budgets. One of the
cities, Plymouth, tried to convince voters last November to
overturn the application of the Headlee Amendment there so
officials could create new taxes. The effort failed. Cities
could also worry about setting precedents.
Should the suits succeed, municipalities could be forced to roll
back franchise fees to their actual level of spending, and grant
a rebate to consumers equal to the amount of the fee the court
determines they overpaid the previous year, Parker said.
Representatives of Charfoos and Christensen indicated the 12
towns might just be the initial defendants: More suits could be
filed if the plaintiffs prevail.
MICROSOFT CORPORATION: Trial To Begin Monday In Anti-Trust Case
---------------------------------------------------------------
Opening statements by the plaintiffs are expected Monday in a
class action lawsuit accusing Microsoft Corp. of overcharging
Minnesota customers for software, the Associated Press/ Dow
Jones Business News reports.
Microsoft is expected to make its opening statement Tuesday.
Jury selection has been under way since last week in Hennepin
County District Court. If a settlement isn't reached, this would
be the first state-level antitrust lawsuit against Microsoft to
go to trial. The company settled lawsuits in nine states and
Washington, D.C. for a total of $1.5 billion, including $1.1
billion in California. Cases in 16 other states were dismissed.
The only other Microsoft antitrust case that went to trial was a
federal lawsuit that resulted in a 1999 ruling that the company
illegally monopolized the operating system market. Like the
earlier cases, the Minnesota case involves Microsoft's Windows
operating system. The case also alleges overcharges for
Microsoft programs Word and Excel.
The plaintiffs are seeking damages of $283 million to $425
million for alleged overcharges on about 9.7 million Microsoft
software licenses issued in Minnesota from 1994 to 2001. The
case could affect nearly 1 million individuals and businesses.
NEW YORK: Residents, Workers Sue EPA Over Post 9/11 Air Quality
---------------------------------------------------------------
New York residents and workers in lower Manhattan and Brooklyn
sued the Environmental Protection Agency on Wednesday, saying
the agency improperly let thousands of people return to their
homes and businesses after the World Trade Center collapsed, the
Associated Press reports.
The lawsuit filed in U.S. District Court in Manhattan accused
the agency of making misleading statements about air quality
after the Sept. 11, 2001, terrorist attacks. The EPA did not
immediately return a message seeking comment. The lawsuit, which
seeks class-action status, said the EPA left people
"unnecessarily exposed to potentially hazardous levels of
asbestos and possibly other carcinogens and toxic substances."
It accused the agency and its leaders, including former EPA
Administrator Christie Whitman, of "a shockingly deliberate
indifference to human health." The lawsuit seeks unspecified
damages and reimbursement for cleanup and asks the court to
order a fund be set up to finance medical monitoring for
conditions resulting from exposure to trade center dust.
NL INDUSTRIES: Files Latest Update on Pending Lead-pigment Suits
----------------------------------------------------------------
The former operations of NL Industries, Inc. included the
manufacture of lead pigments for use in paint and lead-based
paint. Since 1987, NL, other former manufacturers of lead
pigments for use in paint (together the "former pigment
manufacturers"), and lead-based paint, and the Lead Industries
Association (the "LIA") (which discontinued business operations
in 2002) have been named as defendants in various legal
proceedings seeking damages for personal injury, property damage
and governmental expenditures allegedly caused by the use of
lead-based paints.
Certain of these actions have been filed by or on behalf of
states, large U.S. cities or their public housing authorities
and school districts, and certain others have been asserted as
class actions. These lawsuits seek recovery under a variety of
theories, including public and private nuisance, negligent
product design, negligent failure to warn, strict liability,
breach of warranty, conspiracy/concert of action, aiding and
abetting, enterprise liability, market share liability,
intentional tort, fraud and misrepresentation violations of
state consumer protection statutes, supplier negligence and
similar claims.
The plaintiffs in these actions generally seek to impose on the
defendants' responsibility for lead paint abatement and asserted
health concerns associated with the use of lead-based paints,
including damages for personal injury, contribution and/or
indemnification for medical expenses, medical monitoring
expenses and costs for educational programs. Several former
cases have been dismissed or withdrawn. Most of the remaining
cases are in various pre-trial stages. Some are on appeal
following dismissal or summary judgment rulings in favor of the
defendants. In addition, various other cases are pending (in
which the Company is not a defendant) seeking recovery for
injury allegedly caused by lead pigment and lead-based paint.
Although the Company is not a defendant in these cases, the
outcome of these cases may have an impact on additional cases
being filed against the Company.
These are the pending cases against the LIA and former
manufacturers of lead-based paint, including the company:
(1) Hall v. HANO, et al. (No. 89-3552) and Allen v. HANO, et al.
(No. 89-427)
These two cases are what remain of the 14 originally filed in
1989 and 1990 by the Housing Authority of New Orleans (HANO) as
third-party complaints against the former pigment manufacturers
and the LIA before the Civil District Court for the Parish of
Orleans, State of Louisiana. Seeking compensatory and punitive
damages for injuries allegedly caused by lead pigment, all but
these two have been dismissed. The remaining two have been
inactive since 1992.
(2) The City of New York, the New York City Housing Authority
and the New York City Health and Hospitals Corp. v. Lead
Industries Association, Inc., et al., No. 89-4617)
Pending in the Supreme Court of the State of New York, County of
New York, this suit was filed in June 1989 against the former
pigment manufacturers and the LIA. Plaintiffs sought damages in
excess of $50 million for monitoring and abating alleged lead
paint hazards in public and private residential buildings,
diagnosing and treating children allegedly exposed to lead paint
in city buildings, the costs of educating city residents to the
hazards of lead paint, and liability in personal injury actions
against New York City and the New York City Housing Authority
based on alleged lead poisoning of city residents.
As a result of pre-trial motions, the New York City Housing
Authority is the only remaining plaintiff in the case and is
pursuing damage claims only with respect to two housing
projects. Discovery had been proceeding in 2001, but no
activity has occurred since September 2001.
(3) Jackson, et al. v. The Glidden Co., et al., Court of Common
Pleas, Cuyahoga County, Cleveland, Ohio (Case No. 236835)
Filed in August 1992 against the Company, plaintiffs seek
compensatory and punitive damages for personal injury caused by
the ingestion of lead, and an order directing defendants to
abate lead-based paint in buildings. Plaintiffs purport to
represent a class of similarly situated persons throughout the
State of Ohio. The trial court has denied plaintiffs' motion
for class certification. Discovery and pre-trial proceedings
are continuing with respect to the individual plaintiffs.
Defendants have filed a motion for summary judgment on all
claims. The court has not yet ruled on the motion.
(4) Sabater, et al. v. Lead Industries Association, et al.
(Supreme Court of the State of New York, County of Bronx, Index
No. 25533/98)
Filed in December 1998 against the Company, plaintiffs
consisting of four children, represented by their guardians,
purport to represent a class of all children and mothers
similarly situated in New York State. The complaint seeks
damages from the LIA and other former pigment manufacturers for
establishment of property abatement and medical monitoring funds
and compensatory damages for alleged injuries to plaintiffs. In
February 2004, the trial court denied plaintiffs' motion for
class certification. The time for plaintiffs to appeal has not
yet begun to run.
(5) Thomas v. Lead Industries Association, et al. (Circuit
Court, Milwaukee, Wisconsin, Case No. 99-CV-6411)
Plaintiff, a minor, alleges injuries purportedly caused by lead
on the surfaces of premises in homes in which he resided.
Plaintiff seeks compensatory and punitive damages, and the
Company has denied liability. In January 2003 the trial court
granted defendants' motion for summary judgment, dismissing all
counts of the complaint. In June 2003, plaintiff appealed the
trial court's grant of summary judgment for defendants.
(6) State of Rhode Island v. Lead Industries Association, et al.
(Superior Court of Rhode Island, No. 99-5226)
Filed in October 1999 against the Company, The State seeks
compensatory and punitive damages for medical and educational
expenses, and public and private building abatement expenses
that the State alleges were caused by lead paint, and for
funding of a public education campaign and health screening
programs. Plaintiff seeks judgments of joint and several
liability against the former pigment manufacturers and the LIA.
Trial began in phase I of this case before a Rhode Island state
court jury on September 4, 2002 on the question of whether lead
pigment in paint on Rhode Island buildings is a public nuisance.
On October 29, 2002 the trial judge declared a mistrial in the
case when the jury was unable to reach a verdict on the
question, with the jury reportedly deadlocked 4-2 in the
defendants' favor.
Other claims made by the Attorney General, including violation
of the Rhode Island Unfair Trade Practices and Consumer
Protection Act, strict liability, negligence, negligent and
fraudulent misrepresentation, civil conspiracy, indemnity, and
unjust enrichment remain pending and were not the subject of the
2002 trial. Both plaintiff and defendants filed post trial
motions for judgment notwithstanding the verdict, which the
court denied in March 2003. In January 2004, plaintiff
requested the court to dismiss its claims for State-owned
buildings, claiming all remaining claims did not require a jury
and asking the court to reconsider the schedule. In February
2004 the trial Court dismissed the strict liability, negligence,
negligent misrepresentation and fraud claims with prejudice.
The time for plaintiffs to appeal has not yet begun to run. In
March 2004, the trial court ruled that the defendants have a
constitutional right to a trial by jury under the Rhode Island
Constitution. The plaintiffs have their intention to appeal
this decision. The trial court also set April 2005 as the date
for the retrial of all phases of this case.
(7) Smith, et al. v. Lead Industries Association, et al.
(Circuit Court for Baltimore City, Maryland, Case No. 24-C-99-
004490)
Filed in October 1999 against the Company, plaintiffs, seven
minors from four families, each seek compensatory damages of $5
million and punitive damages of $10 million for alleged injuries
due to lead-based paint. Plaintiffs allege that the former
pigment manufacturers and other companies alleged to have
manufactured paint and/or gasoline additives, the LIA, and the
National Paint and Coatings Association are jointly and
severally liable. The Company has denied liability, and all
defendants filed motions to dismiss various of the claims. In
February 2002 the trial court dismissed all claims except those
relating to product liability for lead paint and the Maryland
Consumer Protection Act. In November 2002 the trial court
granted defendants' motion for summary judgment against the
first plaintiffs and plaintiffs have appealed. The appellate
court held a hearing on the appeal in November 2003; however no
decision has yet been issued. Pre-trial proceedings and
discovery against the other plaintiffs are continuing. The
court has set trial dates in 2004 for these plaintiffs; however
the trials are stayed pending the appeal.
(8) City of St. Louis v. Lead Industries Association, et al.
(Missouri Circuit Court 22nd Judicial Circuit, St. Louis City,
Cause No. 002-245, Division 1)
Filed in February 2000 against the Company, plaintiff seeks
compensatory and punitive damages for its expenses discovering
and abating lead-based paint, detecting lead poisoning and
providing medical care and educational programs for City
residents, and the costs of educating children suffering
injuries due to lead exposure. Plaintiff seeks joint and
several liability against the former pigment manufacturers and
the LIA. In November 2002 defendants' motion to dismiss was
denied. In May 2003, plaintiffs filed an amended complaint
alleging only a nuisance claim. Defendants' renewed motion to
dismiss and motion for summary judgment are pending. Discovery
is proceeding.
(9) County of Santa Clara v. Atlantic Richfield Company, et al.
(Superior Court of the State of California, County of Santa
Clara, Case No. CV788657)
Filed in April 2000 against the Company the former pigment
manufacturers, the LIA and certain paint manufacturers,
plaintiff seeks to represent a class of California governmental
entities (other than the state and its agencies) to recover
compensatory damages for funds the plaintiffs have expended or
will in the future expend for medical treatment, educational
expenses, abatement or other costs due to exposure to, or
potential exposure to, lead paint, disgorgement of profit, and
punitive damages. Santa Cruz, Solano, Alameda, San Francisco,
and Kern counties, the cities of San Francisco and Oakland, the
Oakland and San Francisco unified school districts and housing
authorities and the Oakland Redevelopment Agency have joined the
case as plaintiffs. In February 2003, defendants filed a motion
for summary judgment. In July 2003, the trial court granted
defendants' motion for summary judgment on all remaining claims.
Plaintiffs have appealed.
(10) Spring Branch Independent School District v. Lead
Industries Association, et al. (District Court of Harris County,
Texas, No. 2000-31175), and Houston Independent School District
v. Lead Industries Association, et al. (District Court of Harris
County, Texas, No. 2000-33725)
These two cases were filed against the Company in June 2000 by
the two School Districts, seeking past and future damages and
exemplary damages for costs they have allegedly incurred or will
incur due to the presence of lead-based paint in their buildings
from the former pigment manufacturers and the LIA. The Company
has denied all liability. In June 2002, the trial court granted
the Company's motion for summary judgment in the Spring Branch
Independent School District case. Plaintiffs have appealed.
The Houston Independent School District case has been abated
pending appellate review of the trial court's dismissal of the
Spring Branch Independent School District case or certain other
events.
(11) Lewis, et al. v. Lead Industries Association, et al.
(Circuit Court of Cook County, Illinois, County Department,
Chancery Division, Case No. 00CH09800)
Filed in June 2000, plaintiffs seek to represent two classes,
one of all minors between ages six months and six years who
resided in housing in Illinois built before 1978, and one of all
individuals between ages six and twenty years who lived between
ages six months and six years in Illinois housing built before
1978 and had blood lead levels of 10 micrograms/deciliter or
more. The complaint seeks damages jointly and severally from the
former pigment manufacturers and the LIA to establish a medical
screening fund for the first class to determine blood lead
levels, a medical monitoring fund for the second class to detect
the onset of latent diseases, and a fund for a public education
campaign. In March 2002 the trial court dismissed all claims.
Plaintiffs appealed, and in June 2003, the appellate court
affirmed the dismissal of five of the six counts of plaintiffs'
complaint, but reversed the dismissal of the conspiracy count.
(12) Barker, et al. v. The Sherwin-Williams Company, et al.
(Circuit Court of Jefferson County, Mississippi, Civil Action
No. 2000-587)
Filed in February 2001 against the Company, the complaint seeks
joint and several liability for compensatory and punitive
damages from more than 40 manufacturers and retailers of lead
pigment and/or paint, including the Company, on behalf of 18
adult residents of Mississippi who were allegedly exposed to
lead during their employment in construction and repair
activities. One plaintiff has dropped his claims and the court
has ordered that the claims of nine of the plaintiffs be
transferred to Holmes County, Mississippi, state court. The
defendants petitioned the Mississippi Supreme Court to reverse
the trial court's transfer of these plaintiffs to Holmes County
and have requested that the plaintiffs be transferred to their
appropriate venues. The Mississippi Supreme Court has stayed
all activities in Holmes County pending its decision. With
respect to the eight plaintiffs remaining in Jefferson County,
pre-trial proceedings are continuing, and the court has set a
trial date of October 2004.
(13) City of Milwaukee v. NL Industries, Inc. and Mautz Paint
(Circuit Court, Civil Division, Milwaukee County, Wisconsin,
Case No. 01CV003066)
Filed in May 2001 against the Company, the complaint seeks
compensatory and equitable relief for lead hazards in Milwaukee
homes, restitution for amounts it has spent to abate lead, and
punitive damages. The Company has denied all liability. In
July 2003, the trial court granted defendants' motion for
summary judgment. The plaintiff has appealed.
(14) Harris County, Texas v. Lead Industries Association, et al.
(District Court of Harris County, Texas, No. 2001-21413)
Filed in May 2001 against the Company, the complaint seeks
actual and punitive damages and asserts claims jointly and
severally against the former pigment manufacturers and the LIA
for past and future damages due to the presence of lead paint in
County-owned buildings. The Company has denied all liability.
The case has been stayed pending appellate review of the trial
court's dismissal of the Spring Branch Independent School
District case or certain other events.
(15) In re: Lead Paint Litigation, (Superior Court of New
Jersey, Middlesex County, Case Code 702)
Originally numbering 25, this consolidated case was filed
against the company between January and February 2002 by New
Jersey municipalities and counties. Each complaint seeks
abatement of lead paint from all housing and all public
buildings in each jurisdiction and punitive damages jointly and
severally from the former pigment manufacturers and the LIA. In
November 2002 the trial court dismissed the cases with
prejudice. Plaintiffs have appealed.
(16) Jackson, et al., v. Phillips Building Supply of Laurel, et
al. (Circuit Court of Jones County, Mississippi, Dkt. Co. 2002-
10-CV1).
Filed in January 2002 against the Company, The complaint seeks
joint and several liability from three local retailers and six
non-Mississippi companies that sold paint for compensatory and
punitive damages on behalf of three adults for injuries alleged
to have been caused by the use of lead paint. After removal to
federal court, in February 2003 the case was remanded to
state court. The Company has denied all allegations of
liability, and pre-trial proceedings are continuing. In August
2003, the court set a trial date of June 2004. In February 2004
plaintiffs agreed to dismiss one plaintiff voluntarily upon
defendants' agreement to extend the statute of limitations
period for that plaintiff for 12 months.
(17) Liberty Independent School District v. Lead Industries
Association, et al. (District Court of Liberty County, Texas,
No. 63,332)
Filed in February 2002 against the Company, the school district
seeks compensatory and punitive damages jointly and severally
from the former pigment manufacturers and the LIA for property
damage to its buildings. The complaint was amended to add
Liberty County, the City of Liberty, and the Dayton Independent
School District as plaintiffs and drop the Lead Industries
Association as a defendant. The Company has denied all
allegations of liability. The case has been stayed pending
appellate review of the trial court's dismissal of the Spring
Branch Independent School District case or certain other events.
(18) Brownsville Independent School District v. Lead Industries
Association, et al. (District Court of Cameron County, Texas,
No. 2002-052081 B)
Filed in May 2002 against the Company, this complaint seeks
compensatory and punitive damages jointly and severally from the
Company, the former lead pigment manufacturers and the LIA for
property damage. The Company has denied all allegations of
liability. The case has been stayed pending appellate review of
the trial court's dismissal of the Spring Branch Independent
School District case or certain other events.
(19) City of Chicago v. American Cyanamid, et al. (Circuit Court
of Cook County, Illinois, No. 02CH16212)
Filed in September 2002 against the Company, this complaint
seeks damages to abate lead paint in a single-count complaint
alleging public nuisance against the Company and seven other
former manufacturers of lead pigment. In October 2003, the
trial court granted defendants' motion to dismiss. The plaintiff
has appealed.
(20) Walters v. NL Industries, et al. (Kings County Supreme
Court, New York, No. 28087/2002)
Filed in October 2002 against the Company, this complaint seeks
compensatory and punitive damages from the Company and five
other former lead pigment manufacturers for childhood exposure
to lead paint. The complaint alleges negligence and strict
product liability, and seeks joint and several liability with
claims of civil conspiracy, concert of action, enterprise
liability, and market share or alternative liability. In March
2003 the court granted defendants' motion to dismiss the product
defect allegations in the negligence and strict liability
counts. Discovery is proceeding.
(21) Russell v. NL Industries, Inc., et al. (Circuit Court of
LeFlore County, Mississippi, No.2002-0235-CICI)
Filed in April 2003 against the Company, this complaint alleges
strict liability, negligence, fraudulent concealment,
misrepresentation, and conspiracy, and seeks compensatory and
punitive damages for alleged injuries caused by lead paint.
Defendants removed this case to federal court, and plaintiffs
have dropped their motion to remand. Discovery is proceeding.
(22) Jones v. NL Industries, Inc., et al. (Circuit Court of
LeFlore County, Mississippi, Civil Action No. 2002-0241-CICI),
Filed in April 2003 against the company, this complaint was
brought by fourteen children from five families, alleging strict
liability, negligence, fraudulent concealment, and
misrepresentation, and seeking compensatory and punitive damages
for alleged injuries caused by lead paint. Defendants have
removed this case to federal court, and plaintiffs have moved to
remand the case back to state court. Discovery is proceeding.
(23) Brown v. NL Industries, Inc. et al (Circuit Court of Cook
County, Illinois, County Department, Law Division, Case No. 03L
012425)
Filed in November 2003 against the Company, this complaint seeks
damages against the Company and two local property owners on
behalf of a minor for injuries alleged to be due to exposure to
lead paint contained in the minor's residence. The Company has
denied all allegations of liability.
NL believes these actions are without merit, intends to continue
to deny all allegations of wrongdoing and liability and to
defend against all actions vigorously. NL has neither lost nor
settled any of these cases. NL has not accrued any amounts for
the pending lead pigment and lead-based paint litigation.
Liability that may result, if any, cannot reasonably be
estimated. There can be no assurance that NL will not incur
future liability in respect of the pending litigation in view of
the inherent uncertainties involved in court and jury rulings.
For more information, contact NL Industries Inc. by Mail: 5430
LBJ Freeway, Suite 1700, Dallas TX 75240-2697 or by Phone:
(972) 233-1700
NL INDUSTRIES: N.D. Oklahoma Suit Seeks Medical Monitoring
----------------------------------------------------------
NL Industries, Inc. was served in June 2003 with a complaint,
styled Cole, et al. v. ASARCO Incorporated et al. (U.S. District
Court for the Northern District of Oklahoma, Case No. 03C V327
EA (J)).
A purported class action on behalf of two classes of persons
living in the Picher/Cardin, Oklahoma area: (1) a medical
monitoring class of persons who have lived in the area since
1994; and (2) a property owner class of residential, commercial
and government property owners.
Plaintiffs are nine individuals and, in their official
capacities, the Mayor of Picher and the Chairman of the
Picher/Cardin School Board. Plaintiffs allege causes of action
in trespass and nuisance and seek a medical monitoring program,
a relocation program, property damages and punitive damages. The
Company has answered the complaint and has denied all of the
plaintiffs' allegations.
For more information, contact NL Industries Inc. by Mail: 5430
LBJ Freeway, Suite 1700, Dallas TX 75240-2697 or by Phone:
(972) 233-1700
NL INDUSTRIES: Six Oklahoma Case Seek $20M for Lead Exposure
------------------------------------------------------------
NL Industries, Inc. was served in July 2003 with complaints in
six cases asserting personal injuries due to exposure to lead
from mining waste on behalf of, respectively, two, four, two,
three, four and two children these cases:
(1) Crawford, et al. v. ASARCO Incorporated, et al. (Case No.
CJ-03-304);
(2) Barr, et al. v. ASARCO Incorporated, et al. (Case No. CJ-03-
305);
(3) Brewer, et al. v. ASARCO Incorporated, et al. (Case No. CJ-
03-306);
(4) Kloer, et al. v. ASARCO Incorporated, et al. (Case No. CJ-
03-307);
(5) Rhoten, et al. v. ASARCO Incorporated, et al. (Case No. CJ-
03-308; and
(6) Nowlin, et al. v. ASARCO Incorporated, et al. (Case No. CJ-
2003-342)(all in the District Court in and for Ottawa
County, State of Oklahoma).
Each complaint alleges causes of action in negligence, strict
liability, nuisance, and attractive nuisance; and each seeks $20
million in compensatory and $20 million in punitive damages. The
Company has answered each complaint and has denied all of the
plaintiffs' allegations.
For more information, contact NL Industries Inc. by Mail: 5430
LBJ Freeway, Suite 1700, Dallas TX 75240-2697 or by Phone:
(972) 233-1700
NL INDUSTRIES: Quapaw Tribe in Oklahoma Seeks Punitive Damages
--------------------------------------------------------------
NL Industries, Inc. was served in December 2003 with a complaint
in The Quapaw Tribe of Oklahoma et al. v. ASARCO Incorporated et
al. (United States District Court, Northern District of
Oklahoma, Case No. 03-CV-846H(J)).
The complaint alleges public nuisance, private nuisance,
trespass, unjust enrichment, strict liability and deceit by
false representation against the Company and six other mining
companies with respect to former operations in the Tar Creek
mining district in Oklahoma. The complaint seeks class action
status for former and current owners, and possessors of real
property located within the Quapaw Reservation. Among other
things, the complaint seeks actual and punitive damages from the
defendants.
The Company has moved to dismiss the complaint and intends to
deny all allegations. The plaintiff has also notified the
Company that it intends to file a separate lawsuit seeking
natural resource damages and injunctive relief under the
Resource Conservation Recovery Act and CERCLA.
For more information, contact NL Industries Inc. by Mail: 5430
LBJ Freeway, Suite 1700, Dallas TX 75240-2697 or by Phone:
(972) 233-1700
NL INDUSTRIES: Local Exec Seeks Relocation Program, Among Others
----------------------------------------------------------------
NL Industries, Inc. was served in February 2004 with a
complaint, styled as Evans v. Asarco (United States District
Court, Northern District of Oklahoma, Case No. 04-CV-94EA(M)).
The complaint purports to be a class action on behalf of two
classes of persons living in the town of Quapaw, Oklahoma: (1) a
medical monitoring class of persons who have lived in the area
since 1994, and (2) a property owner class of residential,
commercial and government property owners.
Plaintiffs are four individuals, the mayor of the town of
Quapaw, Oklahoma, and the School Board of Quapaw, Oklahoma.
Plaintiffs allege causes of action in nuisance and seek a
medical monitoring program, a relocation program, property
damages, and punitive damages. The Company intends to deny all
of the plaintiffs' allegations.
For more information, contact NL Industries Inc. by Mail: 5430
LBJ Freeway, Suite 1700, Dallas TX 75240-2697 or by Phone:
(972) 233-1700
NOVEN PHARMACEUTICALS: FL Court Consolidates Securities Suits
-------------------------------------------------------------
Noven Pharmaceuticals, Inc. faces a class action, styled as
Miller Donovan v. Noven Pharmaceuticals, Inc., Robert C.
Strauss, James B. Messiry, and Juan A. Mantelle, United States
District Court, Southern District of Florida.
Filed on August 7, 2003, the plaintiff purports to represent a
class of purchasers of Noven's common stock during the period
from October 29, 2001 through April 28, 2003. The complaint
alleges that, during the subject period, Noven and its officers
named as defendants violated the Securities Exchange Act of 1934
by making false and misleading statements in its public
disclosures regarding MethyPatch. Following the filing of
Plaintiff's complaint, five other substantially similar
complaints were filed against Noven and its officers named as
defendants in the above referenced action.
In response to a joint motion, on or about January 6, 2004, the
Court entered an order consolidating the six related actions.
Pursuant to this order, plaintiffs must file a consolidated
class action complaint not later than 60 days after the entry of
an order appointing lead plaintiff and lead counsel. An order
appointing lead plaintiff and lead counsel has not yet been
entered.
"This development did not have a material effect on the action
or on Noven's financial position or results of operations," the
company said in its most recent SEC filing. "Noven believes the
lawsuit is without merit, and intends to vigorously defend the
lawsuit, but its outcome cannot be predicted. The lawsuit, if
determined adversely to Noven, could have a material adverse
effect on Noven's financial position and results of operations.
Noven's ultimate liability, if any, with respect to the lawsuit
is presently not determinable."
For more information, contact Noven Pharmaceuticals, Inc. by
Mail: 11960 SW 144th St, Miami FL 33186 or by Phone:
(305) 253-5099
OBESITY: May Pass Smoking As Top Cause Of Death, Report Says
------------------------------------------------------------
According to a study released Tuesday by the federal Centers for
Disease Control and Prevention, more Americans soon will be
dying of obesity than from smoking if current trends persist,
which would make being fat the nation's No. 1 cause of
preventable death, the Associated Press reports.
A poor diet and physical inactivity caused 400,000 deaths in
2000, a 33 percent jump over 1990, the study said. Tobacco-
related deaths in the same period climbed by less than 9 percent
to 435,000 as the gap between the two narrowed substantially. At
this rate, obesity will claim the top spot, the report said.
"Our worst fears were confirmed," said Dr. Julie Gerberding, the
CDC's director and an author of the study.
An ad campaign that begins Wednesday tells viewers they can lose
midsection love handles and double chins one step at a time if
they eat less and exercise more. "We're just too darn fat,
ladies and gentlemen, and we're going to do something about it,"
Health and Human Services Secretary Tommy Thompson said at a
news conference. Thompson, a fierce anti-smoking advocate who
has trimmed his own waistline since coming to Washington, drew
parallels between the drives to stop smoking and to get
Americans to eat less and exercise more.
The Bush administration wants to cut funding for the VERB
campaign, a CDC project to promote physical activity among 9-to-
13-year-olds, from $36 million this year to $5 million in 2005.
Gerberding said the program has resulted in a 30 percent
increase in exercise among those children. While Congress
rejected limits on lawsuits against tobacco companies, the House
will debate a bill Wednesday that would shield restaurants and
fast food franchises from lawsuits seeking to blame them for
obesity and health problems related to it. The bill was prompted
by the fast-food industry's complaints about a rash of lawsuits
that fault their food for Americans' bulging bellies.
McDonald's has announced it will end Supersize fries and drinks
except for special promotions in its more than 13,000 U.S.
restaurants by year's end. Several soft-drink makers also have
announced plans to offer a larger number of healthier products.
Many states are making attempts to slow the increase in obesity
among children by limiting their access to unhealthful foods
during the school day.
The CDC study is the latest in a line of research that documents
widespread weight gain, and its consequences, among Americans
from children to the elderly. The researchers analyzed data from
2000 for the leading causes of death and for those preventable
factors known to contribute to them. Like tobacco, obesity and
inactivity increase the risks for the top three killers: heart
disease, cancer and such cerebrovascular ailments as strokes.
Obesity and a sedentary lifestyle also strongly increase the
risk of diabetes, the sixth leading cause of death. The results
appear in Wednesday's Journal of the American Medical
Association.
The Food and Drug Administration also is expected to issue a
report on obesity this week. The FDA has been considering
whether to require restaurants to provide more nutrition
information and change nutrition labels on food sold in grocery
stores and other outlets to help consumers.
OBESITY LEGISLATION: House Approves Ban on Fast Food Lawsuits
-------------------------------------------------------------
The GOP-controlled House on Wednesday voted to ban super-sized
lawsuits that blame the food industry for people's expanding
waistlines and health woes, saying such cases could bankrupt
fast-food chains and restaurants, the Associated Press reports.
The 276-139 vote is intended to prevent class action lawsuits
that contend food companies and their offerings are responsible
for Americans' putting on the pounds and lurching toward
obesity. House Republicans have in recent years approved similar
bills barring suits against the gun industry for gun crimes and
against businesses for asbestos-related health problems. Not one
measure has passed the closely divided Senate.
"We as Americans need to realize that suing your way to better
health is not the answer," said House Speaker Dennis Hastert, R-
Ill. "Trial lawyers need to stop encouraging consumers to blame
others for the consequences of their actions just so they can
profit from frivolous lawsuits against restaurants." The White
House endorsed the bill, which the Senate is not expected to
pass this year. Democrats said the industry did not need the
federal protection. The debate came a day after the government
said overeating could soon replace smoking as the No. 1
preventable cause of death. Two out of three adults and 9
million children are overweight or obese, the report said.
House Republicans said fast-food franchises and mom-and-pop
restaurants should not take the blame for the public's poor
eating choice and lack of exercise. "Americans are eating
themselves to death and looking for someone to blame," said Rep.
David Dreier, R-Calif. Republicans said that exposing the food
industry to suits similar to those used against the tobacco
industry could wreck the economy and make it more expensive to
eat out. The industry employs almost 12 million people and is
the nation's second largest employer behind the government.
Most obesity claims have been dismissed in court. Last year, a
federal judge in New York dismissed two class action suits
blaming McDonald's for making people fat.
Restaurants and snack food makers have announced plans to offer
a larger number of more healthful products. McDonald's has
announced it will end supersize fries and drinks except for
special promotions in its more than 13,000 U.S. restaurants by
year's end. A poor diet and physical inactivity caused 400,000
deaths in 2000, a 33 percent jump over 1990, Tuesday's
government report said.
The bill, sponsored by Rep. Ric Keller, R-Fla., would prohibit
many obesity or weight-related claims against the food industry.
It would still allow claims to go forward if state or federal
laws had been broken and as a result a person gained weight.
PACIFIC CAPITAL: Cross-collection Illegal, Say RAL Customers
------------------------------------------------------------
Pacific Capital Bancorp is a defendant in a class action lawsuit
brought on behalf of persons who entered into a refund
anticipation loan application and agreement (the RAL Agreement)
with the Company from whose tax refund the Company deducted a
debt owed by the applicant to another RAL lender.
The lawsuit was filed on March 18, 2003 in the Superior Court in
San Francisco, California as Canieva Hood and Congress of
California Seniors v. Santa Barbara Bank & Trust, Pacific
Capital Bank, N.A., and Jackson-Hewitt, Inc.
The Company is a party to a separate cross-collection agreement
with each of the other RAL lenders by which it agrees to collect
sums due to those other lenders on delinquent RALs by deducting
those sums from tax refunds due to its RAL customers and
remitting those funds to the RAL lender to whom the debt is
owed. This cross-collection procedure is disclosed in the RAL
Agreement with the RAL customer and is specifically authorized
and agreed to by the customer.
The plaintiff does not contest the validity of the debt, but
contends that the cross-collection is illegal and requests
damages on behalf of the class, injunctive relief against the
Company, restitution of sums collected, punitive damages and
attorneys' fees. Venue for this suit has been changed to Santa
Barbara.
"The Company believes that there is no merit to the claims made
in this action and intends to vigorously defend itself," a
recent Pacific Capital SEC disclosure states.
For more information, contact Pacific Capital Bancorp by Mail:
1021 Anacapa Street, P.O. Box 60839, Santa Barbara CA 931600839
or by Phone: (805) 564-6312
PACIFIC CAPITAL: Refund Transfer Customers Drop Lawsuits
--------------------------------------------------------
Pacific Capital Bancorp is a defendant in a class action lawsuit
brought on behalf of persons who entered into a refund transfer
application and agreement (the RT Agreement) with the Company
from whose tax refund the Company deducted a debt owed by the
applicant to another RAL lender.
The lawsuit was filed on May 13, 2003 in the Superior Court in
San Francisco, California as Alana Clark, Judith Silverstine,
and David Shelton v. Santa Barbara Bank & Trust. The cross-
collection procedures mentioned in the description above of the
Hood case is also disclosed in the RT Agreement with the RT
customer and is specifically authorized and agreed to by the
customer.
The plaintiffs do not contest the validity of the debt, but
contend that the cross-collection is illegal and request damages
on behalf of the class, injunctive relief against the Company,
restitution of sums collected, punitive damages and attorneys'
fees. The Company filed a motion for a change in venue from San
Francisco to Santa Barbara. The plaintiffs' legal counsel
stipulated to the change in venue. Thereafter, the plaintiffs
have dismissed the complaint without prejudice. Their legal
counsel has advised the Company's legal counsel that it intends
to file a new complaint in San Francisco limited to a single
cause of action alleging a violation of the California Consumer
Legal Remedies Act.
"The Company believes that there is no merit to the claims made
in this action and intends to vigorously defend itself," Pacific
Capital said in its latest SEC disclosure.
For more information, contact Pacific Capital Bancorp by Mail:
1021 Anacapa Street, P.O. Box 60839, Santa Barbara CA 931600839
or by Phone: (805) 564-6312
SAME-SEX MARRIAGES: San Jose, CA Votes To Recognize Gay Weddings
----------------------------------------------------------------
Legislators in San Jose, California, the center of Silicon
Valley, agreed on Tuesday night to recognize gay marriage
licenses granted by San Francisco and other cities, Reuters News
reports.
The 8-1 vote by the city council after hours of debate follows
an order on Monday by Seattle Mayor Greg Nickels to give city
employees in same-sex marriages the same benefits as
heterosexual marriages.
"We believe it is right and just that employee benefits provided
to spouses of city employees should be applied evenhandedly in
accordance with our firm and successful commitment to ending
bias and discrimination in the workplace," San Jose Mayor Ron
Gonzales said in a memo to the city council. Gonzales referred
to a petition to the California Supreme Court by the state
attorney general seeking to end gay marriages in San Francisco.
About 3,700 same-sex couples have tied the knot in the liberal
gay rights center in the past month.
State law defines marriage as a union of a man and a woman, but
San Francisco is arguing that gay marriage should be permitted
under the equal rights guaranteed under the U.S. Constitution.
The San Jose mayor said the issue arose after a city employee
recently married in San Francisco was not able to enroll her
spouse in the employee benefits program.
Several other cities including Portland, Oregon, have issued
same-sex wedding licenses since San Francisco's move, prompting
a growing number of lawsuits and political debates. President
Bush, who is seeking to win reelection in November, has called
for a constitutional ban on homosexual marriage.
SAME-SEX MARRIAGES: NJ AG Orders Halt To License Gay Weddings
-------------------------------------------------------------
One day after New Jersey's first gay marriage was performed,
state Attorney General Peter C. Harvey Tuesday ordered city
officials to stop issuing marriage licenses to same-sex couples
and performing gay marriages - or face criminal charges, the
Associated Press reports.
Harvey also warned officials marriage licenses issued to same-
sex couples are invalid. Letters were sent Tuesday to the city
clerk, mayor and deputy mayor, who married two gay men Monday.
Harvey told Deputy Mayor James Bruno he was wrong to do so.
"We urge you to carry out your official duties in a manner
consistent with the well-established court decisions and advice
set forth in the accompanying letter to avoid the initiation of
legal action by our office," Harvey wrote.
More marriages could mean "potential criminal prosecution." A
conviction could result in a fine up to $10,000 and possible
jail time, a spokesman for the attorney general's office said.
Frederick C. Raffetto, an attorney for Asbury Park, said a
decision would be announced Wednesday about whether the city
intended to abide by the order.
Meanwhile, same-sex couples continued to file for licenses
through Tuesday afternoon; 10 of 18 applications had been
completed, officials said. Gay marriage has so far been rejected
by state courts. Last Nov. 5, a judge ruled nothing in the state
constitution guarantees same-sex unions as a right, and that the
appropriate forum to change marriage laws is the Legislature.
The ruling is being appealed by gay activists.
TRI-STATE CREMATORY: Funeral Homes Reach Pacts In Civil Lawsuit
----------------------------------------------------------------
Court officials announced Wednesday that all the funeral homes
named in a civil lawsuit along with Tri-State Crematory operator
Ray Brent Marsh have settled, the Associated Press reports.
The lawsuit in federal court in Rome stemmed from the criminal
case against Marsh, who is accused of dumping 334 bodies and
passing off cement dust as ashes to families of some of the
deceased. He also faces 787 state felony charges. The class-
action suit was originally filed against nearly 50 funeral
homes, Marsh and the estate of Marsh's late father on behalf of
1,600 relatives of people whose bodies were sent to the
crematory between 1988 and 2002 from funeral homes in Georgia,
Tennessee and Alabama.
The suit accuses Marsh of negligence and fraud and also names of
Marsh's family members who served as officers at the crematory
and funeral homes that sent corpses to the crematory.
Plantiff's lawyers blamed funeral directors for not knowing more
about what was taking place at the crematory, and the operators
for mishandling human remains. By Wednesday morning, only Wann
Funeral Home and Covenant Funeral Service, both of Chattanooga,
Tenn., and about 220 families were involved in the lawsuit, in
addition to Marsh and his family, said funeral home lawyer Andy
Davis. The other funeral homes had settled previously.
The two remaining funeral homes settled on Wednesday, a clerk
for U.S. District Judge Harold L. Murphy said after court
recessed at mid-morning. Davis said Wednesday that he hoped the
settlement would bring closure. Robert Smalley, a lawyer for the
plaintiffs, said he could not comment on the amount of money
awarded in the settlements pending the notification of all
families involved.
On Tuesday, two other funeral homes that settled - Turner
Funeral Home and Family Mortuary of Chattanooga, Tenn., and the
now-defunct House of Overstreet Mortuary in Dalton - received
pre-approval for agreements reached with plaintiff's lawyers.
Martin Karo, who represents Turner Funeral Home, said he could
not give details of the proposed settlement, citing
confidentiality agreements. Officials said Family Mortuary and
House of Overstreet were not insured. Civil lawsuits also are
pending in Georgia and Tennessee courts.
TYCO INT'L: Judge Rules Chubb Unit To Pay For Legal Fees In Suit
----------------------------------------------------------------
A New York state Supreme Court judge has ruled that Chubb
Corp.'s subsidiary Federal Insurance Co. is responsible for
legal fees incurred by Tyco International Ltd.'s former chief
executive officer, L. Dennis Kozlowski, under the terms of a
directors and officers policy Tyco held with the insurer, Best
Wire reports.
In a 12-page decision, Justice Helen Freedman ruled that false
statements made by Tyco in filings with the U.S. Securities and
Exchange Commission misrepresenting the company's dealings and
financial status, which Federal argued should have voided the
coverage, couldn't be attributed directly to Kozlowski under a
"severability" clause in the policy.
However, Freedman kept the door open for Federal to recover its
losses if Kozlowski is "found guilty of criminal proceedings."
Kozlowski and former Vice Chairman Mark Schwartz are charged
with a total of 32 counts of grand larceny, falsifying business
records and violating state business laws. The two are accused
of stealing $170 million from Tyco through alleged unauthorized
bonuses and loans, and of netting $430 million in stock
compensation through artificially inflating Tyco's stock price
by allegedly lying about the company's financial status.
Federal voided Tyco's D&O policy and returned the company's
premium after the insurer was notified in February 2003 of
criminal and civil cases lodged against Kozlowski and 15 other
Tyco officers. The insurer later filed suit to deny liability
for the company, on the basis that Tyco had been materially
misstating information on its insurance applications for more
than a decade.
Tyco's coverage was restored in May 2003, after the company paid
a total of $92 million to restore coverage for 2000-2003, to
purchase run-off coverage, and to exercise an option for an
extended reporting period (BestWire, May 16, 2003). However,
Chubb insisted that coverage wouldn't be restored for Kozlowski,
Schwartz, former general counsel Mark Belnick and former
director Frank Walsh, who pleaded guilty to securities fraud in
December 2002 for taking an unauthorized $20 million fee from
Tyco. Chubb spokesman Dave Hilgen said the company had no
comment on Freedman's ruling. Final arguments in Kozlowski's and
Schwartz's criminal case began March 8 after a six-month trial.
The company is the target of a major class-action suit alleging
that shareholders weren't told of $170 million in loans taken by
Tyco's chief executive, CFO and general counsel. The loans, many
of which reportedly were taken interest free and later written
off as benefits, weren't approved by Tyco's compensation
committee, the suit alleges.
UCLA: Halts Receipt of Cadaver Donations Amid Probe
---------------------------------------------------
A lawyer for the University of California, Los Angeles announced
that the school has agreed to stop accepting donated cadavers,
amid an internal probe into the alleged illegal sale of body
parts, the Associated Press reports.
Officials with the medical school said the willed body program
will hold bodies already donated for medical research and
education in cold storage while the internal investigation
continues. "Whether or not UCLA will restart the program is a
decision that has not been made at this time and will not be
made for some period of time. It is being examined," UCLA
attorney Louis Marlin said after a Superior Court hearing
Tuesday. Marlin said the move, incorporated into a restraining
order Tuesday, was needed to reassure anyone whose family
members had willed their body to the university or anyone
planning to.
As part of the deal, officials agreed that students in the gross
anatomy lab would be able to continue to use 25 to 30 bodies.
The university said it will not accept more bodies without
Superior Court Commissioner Bruce Mitchell's approval.
The hearing was for a lawsuit filed in 1996 by relatives of
people whose bodies had been donated to the university for
medical research. The suit charged that thousands of cadavers
had been illegally disposed of. That was separate from a lawsuit
filed Monday in Superior Court, which seeks class-action status
and claims that Henry Reid, director of UCLA's willed body
program, was illegally selling body parts and university
officials knew about it. Reid was hired in 1997. Reid and Ernest
Nelson, 46 -not a university employee, were arrested during the
weekend for investigation of trafficking in stolen body parts.
Both men were released after posting bail.
Attorney Raymond Boucher, who represents several family members,
praised the deal but chided the university for failing to rein
in the program when similar allegations arose in 1996. The
university has promised an independent audit of the willed body
program to be led by former California Gov. George Deukmejian.
VERDISYS INC: SEC Suspends Trading Over Accuracy Of Statements
--------------------------------------------------------------
The Securities and Exchange Commission (SEC) announced the
temporary suspension, pursuant to Section 12(k) of the Exchange
Act of 1934, of trading of the securities of Verdisys, Inc., of
Houston, Texas at 9:30 a.m. EST on March 10, 2004, and
terminating at 11:59 p.m. EST on March 23, 2004.
The Commission temporarily suspended trading in the securities
of Verdisys because of questions that have been raised about the
accuracy and adequacy of publicly disseminated information,
including assertions made in Commission filings, concerning,
among other things, the company's business operations related
to its lateral drilling services and the company's anticipated
and actual revenues.
The Commission cautions broker dealers, shareholders, and
prospective purchasers that they should carefully consider the
foregoing information along with all other currently available
information and any information subsequently issued by the
company. Further, brokers and dealers should be alert to the
fact that, pursuant to Rule 15c2-11 under the Exchange Act,
at the termination of the trading suspension, no quotation
may be entered unless and until they have strictly complied
with all of the provisions of the rule.
Asbestos Alert
ASBESTOS LITIGATION: 3M Still Plagued By Asbestos Claims
--------------------------------------------------------
3M Co. experienced in the first half of 2003 an increase in the
number of claims and an increase in the proportion of silica-
related claims in contrast to asbestos-related claims (which
nonetheless continue to represent the large majority of the
total claims). The total number of new claimants filing claims
against the Company during the second half of 2003 declined
somewhat from the first half, but the proportion of silica-
related claims relative to total claims continued at a rate that
is higher than the Company's historical experience. The Company
believes that much of the increased number of claims filed in
2003 is due to claimants filing claims before recent and
anticipated tort reform legislation affecting asbestos-related
actions might become effective and that many of these newer
claims have been asserted on behalf of asymptomatic claimants.
The vast majority of the lawsuits and claims resolved by and
currently pending against the Company allege use of some of the
Company's mask and respirator products and seek damages from the
Company and other defendants for alleged personal injury from
work-place exposures to asbestos, silica or other occupational
dusts, found in products manufactured by other defendants or
generally in the workplace. The remaining claimants generally
allege personal injury from occupational exposure to asbestos
from products previously manufactured by the Company, which are
often unspecified, and by other defendants, or occasionally at
Company premises.
In many of these lawsuits and claims, the Company is named as a
defendant with multiple co-defendants where no product the
Company manufactured is involved or where the Company is
ultimately determined not to have manufactured the products
identified by the plaintiffs. The Company's vigorous defense of
this litigation has resulted in:
(i) dismissals of many lawsuits without any payment by the
Company;
(ii) an average settlement value of less than $1,000 per
claimant for all of the claims and lawsuits that the Company has
resolved including those dismissed without payment; and
(iii) jury verdicts for the Company in four of the five
cases tried to verdict.
The single jury verdict adverse to the Company was returned in
Holmes County, Mississippi in 2001. The plaintiffs in that case
claimed that a 3M respirator and mask did not protect them
against contracting certain asbestos-related diseases allegedly
caused by exposure to asbestos-containing products manufactured
by other defendants. Based on the jury's findings of percentage
of fault attributable to each defendant, the Company's share of
the verdict was $22,500,000. The verdict is the subject of an
appeal now pending in that state's Supreme Court.
The Company estimates its respirator mask/asbestos liabilities,
both the cost to resolve the claim and defense costs, by
examining
(i) the Company's experience in resolving claims,
(ii) apparent trends,
(iii) the apparent quality of newly-filed claims (e.g., the
Company believes many of the recently filed claims have been
asserted on behalf of asymptomatic claimants),
(iv) changes in the nature and mix of claims (e.g., the
proportion of claims asserting usage of the Company's mask or
respirator products and alleging exposure to each of asbestos,
silica or other occupational dusts, and claims pleading use of
asbestos-containing products allegedly manufactured by the
Company),
(v) the number of current claims and an assumption for
projection of the number of future asbestos and other claims
that may be filed against the Company,
(vi) the cost to resolve recently settled claims, and
(vii) an estimate of the cost to resolve and defend against
current and future claims.
Because of the inherent difficulty in projecting claims that
have not yet been asserted, particularly with respect to the
Company's respiratory products that themselves did not contain
any harmful materials (which makes the various published studies
that purport to project future asbestos claims substantially
removed from the Company's principal experience and which
themselves vary widely) the Company does not believe that there
is any single best estimate of this liability, nor that it can
reliably estimate the amount or range of amounts by which the
liability may exceed the reserve the Company has established.
The Company's current estimate of its liabilities and associated
expenses for respirator mask/asbestos litigation is based on
facts and circumstances existing at this time. Additional
developments may occur that could affect the Company's estimate
of its liabilities and associated expenses. These developments
include, but are not limited to significant changes in
(i) the number of future claims,
(ii) the average cost of resolving claims,
(iii) the legal costs of defending these claims and in
maintaining trial readiness,
(iv) changes in the mix and nature of claims received,
(v) changes in the law and procedure applicable to these
claims,
(vi) the financial viability of other co-defendants and
insurers, and
(vii) other unknown variables.
The Company cannot determine the impact of these potential
developments on the current estimate of its liabilities and
associated expenses. Congress is currently considering
legislation that would terminate essentially all litigation
related to asbestos (but not other occupational dusts) in
exchange for substantial annual payments by the defendant
companies and their insurers and accordingly such legislation if
enacted would bring considerable certainty to the assessment of
the Company's future asbestos-related liability; the Company
supports such legislation in principle, although the proposed
legislation could cause the Company to record substantial
additional liabilities.
As a result of the larger caseload and the costs of aggressively
defending itself, the Company made payments of $103,000,000 and
increased its reserves in 2003 for the respirator mask/asbestos
liabilities by $231,000,000 to $289,000,000 at December 31, 2003
(previously $161,000,000 at December 31, 2002 and $156,000,000
at December 31, 2001). No liability has been recorded for the
one respirator mask adverse trial verdict now on appeal to the
Mississippi Supreme Court because the Company believes that
judgment will be overturned.
As of December 31, 2003, the Company had receivables for
insurance recoveries related to the respirator mask/asbestos
litigation of $448,000,000 ($264,000,000 at December 31, 2002
and $223,000,000 at December 31, 2001). The Company increased
its receivables in 2003 for insurance recoveries related to
respirator mask/asbestos litigation by $205,000,000 and received
payments from insurers of $21,000,000. While the Company has
substantial remaining claims-made and occurrence (pre-1986)
insurance coverage, future estimates of additional insurance
receivables are likely to represent a lower percentage, than in
the past, of future estimates of additional liabilities, if any,
due to lesser though still significant remaining coverage in the
higher layers of the Company's occurrence (pre-1986) insurance
coverage. Various factors could affect the timing and amount of
proceeds to be received under the Company's various insurance
policies, including
(i) delays in or avoidance of payment by insurers;
(ii) the extent to which insurers may become insolvent in
the future, and
(iii) the outcome of the currently ongoing negotiations and
possible future legal proceedings with respect to respirator
mask/asbestos liability insurance coverage.
There can be no absolute assurance that the Company will collect
all amounts recorded as being probable of recovery from its
insurers.
The Company increased its estimate of liabilities for the breast
implant and respirator mask/asbestos claims and litigation in
2003. Because of the time delay between payment of claims and
receipt of insurance reimbursements, the December 31, 2003,
amounts for both breast implant and respirator mask/asbestos
liabilities are less than expected insurance recoveries. Thus,
the expected net inflow of cash will increase future cash flows.
ASBESTOS LITIGATION: Alfa Laval Faces 123 Lawsuits in MI Courts
---------------------------------------------------------------
Alfa Laval Special Finance AB reported that as of December 31,
2003, Alfa Laval's subsidiary in the U.S., Alfa Laval Inc. was a
co-defendant in a total of 123 asbestos-related lawsuits with a
total of around 19,900 plaintiffs. The lawsuits filed in
Mississippi account for around 99 percent of all plaintiffs.
Alfa Laval strongly believes the claims against the company are
without merit and intends to vigorously contest each lawsuit.
After thorough investigations Alfa Laval continues to believe
that potential claims in connection with asbestos related
lawsuits against Alfa Laval Inc. will be covered by insurance
policies. Furthermore, primary insurance policies issued in
favor of Alfa Laval Inc. provide for coverage of its defense
costs.
During the fourth quarter 2003 Alfa Laval Inc. has been named as
co-defendant in an additional nine lawsuits with a total of 13
plaintiffs. During the fourth quarter, seven lawsuits involving
around 400 plaintiffs have been resolved. This gives a grand
total of 70 lawsuits that have been resolved.
Based on current information and Alfa Laval's understanding of
these lawsuits, Alfa Laval continues to believe that these
lawsuits will not have a material adverse effect on the
company's financial condition or results of operation.
ASBESTOS LITIGATION: American Standard Battles 139,733 Claims
-------------------------------------------------------------
Over the years, American Standard Companies Inc. has been named
a defendant in numerous lawsuits alleging various asbestos-
related personal injury claims arising primarily from sales of
low-risk-profile products, such as boilers and railroad brake
shoes. The Company believes it has ample insurance and has
never had an unfavorable court judgment.
In these asbestos-related lawsuits, the Company is usually named
as one of a large group of defendants, often in excess of one
hundred companies. Many of these lawsuits involve multiple
claimants, do not allege a connection between any Company
product and the claimed injury or disease, and/or do not contain
any allegations regarding the type of claimed injury or disease
incurred. As a result, numerous lawsuits have been placed and
may remain on inactive or deferred dockets, which some
jurisdictions have established.
Through December 31, 2003, there have been 139,733 claims filed
against the Company. At year-end 2003, there were 116,282
pending claims, compared with 96,541 and 52,211 at the end of
2002 and 2001, respectively. Since receipt of its first
asbestos claim more than fifteen years ago through December 31,
2003, the Company has resolved 23,451 claims, and $36,000,000 in
settlement payments has been made, for an average payment per
claim of $1,535. These settlement payments have been paid or
reimbursed or are expected to be reimbursed by insurance.
The Company has recorded an obligation of $69,000,000, which
represents the Company's estimated payments to claimants
associated with the 116,282 pending asbestos claims. It also
has recorded a related asset of $47,000,000, which represents
the probable recoveries from insurance companies for such
payments to claimants. The amount of the estimated obligations
is based on the claims resolved, the assessment of claims
pending, the status of ongoing litigation, defense and
settlement strategies, and an assessment of other entities'
responsibilities for the claims. The amount of the probable
recoveries is based on an analysis of insurance coverage, the
insurers' financial strength and insurance payments made to
date.
ASBESTOS LITIGATION: Armstrong Holdings' Liability Increases
------------------------------------------------------------
During 2003, Armstrong Holdings recorded non-cash, asbestos-
related charges of $81,000,000. During the fourth quarter of
2002, Armstrong recorded a non-cash charge of $2,500,000,000 to
increase the Company's estimated asbestos-related liability.
Armstrong Holdings, Inc. is the parent company of Armstrong
World Industries, Inc. (AWI). The Company said that its actual
results could differ materially from its forward-looking
statements as a result of factors that include the outcome of
AWI's asbestos-related liability and any other litigation.
Net charges for asbestos liability recorded were $2,500,000,000
for the three months ended December 31, 2002, $81,000,000 for
the year ended December 31, 2003, and $2,500,000,000 for the
year ended December 31, 2002.
ASBESTOS LITIGATION: BNS Co. Pump-Related Lawsuits Increase
-----------------------------------------------------------
BNS Co. sold its hydraulic pump division in 1992 but remains
subject to claims related to products manufactured prior to that
date. Since 1994 the Company has been named as a defendant in a
total of 375 known claims (as of February 23, 2004) relating to
these pumps, which is an increase from the 369 claims reported
in the February 27, 2004 edition of the Class Action Reporter.
In many cases these claims involve more than 100 other
defendants. Fifty-four of those claims were filed prior to
December 31, 2001. However, in 2002 the Company was named in 98
additional claims; in 2003 there were a total of 192 new claims
filed; and the Company has received notice of another 31 claims
through February 23, 2004. There are currently 265 claims that
are open and active. However, under certain circumstances, some
of the settled claims may be reopened.
BNS Co. is a real estate management company deriving rental
revenues from an owned office and industrial building in North
Kingstown, Rhode Island. The Company also owns a gravel
extraction and landfill property in the United Kingdom, from
which it derives royalty income.
ASBESTOS LITIGATION: Badger Meter Faces Lawsuit in TX, IL Courts
----------------------------------------------------------------
Badger Meter Inc. is a defendant in several multi-party asbestos
suits generally as a result of its membership in certain trade
organizations. The cases are pending in state courts in
Mississippi, Texas and Illinois. As reported in the January 16,
2004 edition of the Class Action Reporter, three of these cases
are pending in Mississippi although the company never had a
manufacturing plant in that state.
The Company does not believe the ultimate resolution of these
claims will have a material adverse effect on the Company's
financial position or results of operations, either from a cash
flow perspective or on the financial statements as a whole.
Badger Meter provides utilities and industrial customers with
instruments that measure and control the flow of liquids.
ASBESTOS LITIGATION: Boise Cascade Lawsuits Persist
---------------------------------------------------
Over the past several years and continuing into 2004," Boise
Cascade Corporation relates in its annual report for the year
ending December 31, 2003, "we have been named a defendant in a
number of cases where the plaintiffs allege asbestos-related
injuries from exposure to asbestos products or exposure to
asbestos while working at job sites. The claims vary widely and
often are not specific about the plaintiffs' contacts with the
company. None of the claims seeks damages from us individually,
and we are generally one of numerous defendants. Many of the
cases filed against us have been voluntarily dismissed, although
we have settled some cases. The settlements we have paid have
been covered mostly by insurance, and we believe any future
settlements or judgments in these cases would be similarly
covered."
To date, the Company says, no asbestos case against it has gone
to trial, "and the nature of these cases makes any prediction as
to the outcome of pending litigation inherently subjective." At
this time, Boise Cascade believes its involvement in asbestos
litigation is not material to either its financial position or
its results of operations.
Boise is a multinational contract and retail distributor of
office supplies and paper, technology products, and office
furniture, headquartered in Boise, Idaho, and generating
billions of dollars in annual revenue. Boise is also a major
distributor of building materials and an integrated manufacturer
and distributor of paper, packaging, and wood products. The
Company owns or controls around 2,400,000 acres of timberland in
the United States. In December 2003, Boise Cascade acquired
office supply retailer OfficeMax, Inc.
ASBESTOS LITIGATION: CNA Financial Corp. Assesses APMT Reserves
---------------------------------------------------------------
CNA Financial Corporation recently provided a description of its
Asbestos and Environmental Pollution and Mass Tort Reserves.
APMT consists of the losses and expenses related to the
centralized adjusting and settlement of APMT claims. Its other
operations included interest expense on corporate borrowings and
asbestos claims related to Fibreboard Corporation.
CNA regularly performs ground up reviews of all open APMT claims
to evaluate the adequacy of the Company's APMT reserves. In
performing its comprehensive ground up analysis, the Company
considers input from its professionals with direct
responsibility for the claims, inside and outside counsel with
responsibility for representation of the Company, and its
actuarial staff. These professionals review, among many
factors, the policyholder's present and predicted future
exposures, including such factors as claims volume, trial
conditions, prior settlement history, settlement demands and
defense costs; the impact of asbestos defendant bankruptcies on
the policyholder; the policies issued by CNA, including such
factors as aggregate or per occurrence limits, whether the
policy is primary, umbrella or excess, and the existence of
policyholder retentions and/or deductibles; the existence of
other insurance; and reinsurance arrangements.
CNA Financial Corporation is an insurance holding company whose
primary subsidiaries consist of property and casualty and life
and group insurance companies. Continental Casualty Company and
The Continental Insurance Company conduct the Company's property
and casualty insurance operations. Continental Assurance
Company, Valley Forge Life Insurance Company and CNA Group Life
Assurance Company conduct life and group insurance operations.
ASBESTOS LITIGATION: Cleveland Cliffs Faces Exposure Claims
-----------------------------------------------------------
Cleveland Cliffs Inc. said that it could be held liable for
consequences arising out of human exposure to hazardous
substances used, released or disposed of by the Company or other
environmental damage, including damage to natural resources.
In particular, Cleveland Cliffs and certain of its subsidiaries
are involved in various claims relating to the exposure of
asbestos and silica to seamen who sailed on the Great Lakes
vessels formerly owned and operated by certain of its
subsidiaries.
The full impact of these claims, as well as whether insurance
coverage will be sufficient and whether other defendants named
in these claims will be able to fund any costs arising out of
these claims, continues to be unknown. Based on currently
available information, however, Cleveland Cliffs believes the
resolution of currently pending claims in the aggregate would
not reasonably be expected to have a material adverse effect on
its financial position.
ASBESTOS LITIGATION: DANA Corp.'s Pending Claims On The Decline
---------------------------------------------------------------
DANA Corp. has been a defendant since the mid-1980s in asbestos
bodily injury litigation. For most of this period, the
Company's asbestos-related claims were administered by the
Center for Claims Resolution (CCR), which settled claims for its
member companies on a shared settlement cost basis. In February
2001, the CCR was reorganized and discontinued negotiating
shared settlements. Since then, the Company has independently
controlled its legal strategy and settlements. In August 2001,
the Company retained Peterson Asbestos Consulting Enterprise
(PACE), a subsidiary of Peterson Consulting, Inc., to administer
its claims, bill its insurance carriers and assist the Company
in claims negotiation and resolution.
At December 31, 2003, DANA had around 149,000 pending asbestos-
related product liability claims, consisting of around 139,000
unresolved claims and around 10,000 claims settled pending
payment (including 7,000 claims remaining from when the Company
was a member of the CCR and 3,000 claims it has settled
subsequently). This compares to around 139,000 pending claims
that the Company reported at December 31, 2002, consisting of
around 115,000 unresolved claims and around 24,000 claims
settled pending payment (including 14,000 claims remaining from
when the Company was a member of the CCR and 10,000 claims it
has settled subsequently). DANA believes that it is now being
named in more claims because claimants are routinely naming many
former CCR members in individual claims, and that more of its
claims are now pending for longer periods because the Company is
aggressively defending claims which might previously have been
settled by the CCR. DANA attributes the increase in the number
of claims that occurred in the first half of 2003 in large part
to the delayed service of numerous complaints that had been
filed in Mississippi in advance of the January 1, 2003 effective
date of new laws limiting the filing of tort claims in that
state. Many of these were amended claims that had not
originally named DANA as a defendant. The number of pending
claims declined by 5,000 in the fourth quarter of 2003.
The overall increase in the number of pending claims has not
materially affected the Company's aggregate loss estimate for
such claims. At December 31, 2003, the Company had accrued $133
for indemnity and defense costs for contingent asbestos-related
product liability claims and recorded $113 as an asset for
probable recoveries from insurers for such claims, compared to
$124 accrued for such liabilities and $105 recorded as an asset
at December 31, 2002. The Company reviews its claims database
annually and makes adjustments to its loss estimates if
appropriate. While DANA Corp. expects its legal defense costs
will continue at higher levels than when it was a member of the
CCR, it believes that its litigation strategy has reduced and
will continue to reduce its indemnity costs. DANA Corp. has
agreements with its insurance carriers providing for the payment
of a significant majority of the defense and indemnity costs for
the pending claims, as well as claims which may be filed against
the Company in the future.
At December 31, 2003 and 2002, DANA Corp. had amounts receivable
from its insurers and others of $33,000,000 and $38,000,000,
respectively, representing reimbursements for settled claims and
related defense costs. These receivables include billings in
progress and amounts subject to alternate dispute resolution
proceedings with certain of its insurers. Substantial progress
has been made in those proceedings and the Company expects the
outcome to be favorable. However, the amount receivable may
increase until the proceedings are ultimately concluded. During
2003, the Company received $4,000,000 from the CCR as a refund
of previous settlement advances and $21,000,000 from its
insurers as reimbursement for defense and indemnity costs.
Additional amounts were billed to the Company's insurers for
amounts it paid in 2003 in defense and indemnity costs.
ASBESTOS LITIGATION: Fairfax To Replicate Canada Reserve Record
---------------------------------------------------------------
Fairfax Financial Holdings Limited reports that it took
considerable reserve strengthening in 2003. The action the
Company took dealt primarily with reserves related to runoff,
latent asbestos claims and reinsurance business written during
1997 to 2000 and the Company does not believe it is reflective
of the strength of Fairfax's current book of business.
Fairfax's reserving record in Canada has been excellent (an
average reserve redundancy of 2.4% over the past ten accident
years) and its intent is to replicate this at all its ongoing
insurance and reinsurance companies. The Company intends no
complacency as it continues to have external actuaries review
its reserves, including an annual certification of its
consolidated reserves by PricewaterhouseCoopers LLP.
The U.S. insurance operations had unfavorable development of
$39.8 in 2003, resulting from asbestos development of $149.9
offset by $98.5 aggregate reinsurance coverage and $50.0 of
favorable development in non-latent lines, strengthening for
accident year 2001 by $53.3 partially offset by redundancies of
$33.4 in accident year 2002, and other items aggregating $18.5
(including uncollectible reinsurance, involuntary pools and
unallocated loss adjustment expenses). The Crum & Forster
numbers differ from those published by Crum & Forster Holdings
Corp. due to differences between Canadian and U.S. GAAP.
A number of Fairfax's subsidiaries, prior to their acquisition
by Fairfax, wrote general liability policies and reinsurance
under which policyholders continue to present asbestos-related
injury claims, claims alleging injury, damage or clean up costs
arising from environmental pollution, and other health hazard
related claims (APH). The vast majority of these claims are
presented under policies written many years ago.
A substantial number of the professional members of RiverStone's
APH claim staff are attorneys experienced in asbestos and
environmental pollution liabilities. At OdysseyRe a dedicated
claim unit also manages its APH exposure. This unit performs
audits of company policyholders with significant asbestos and
environmental pollution exposure to assess their potential
liabilities. This unit also monitors developments within the
insurance industry having a potential impact on their reserves.
ASBESTOS LITIGATION: General Cable MARDOC Cases Remain Pending
--------------------------------------------------------------
General Cable Co. stated that it is subject to asbestos
litigation and unexpected judgments or settlements could have a
material adverse effect on its financial results.
There are around 15,000 pending non-maritime asbestos cases
involving its subsidiaries namely Diversified Contractors Inc.,
Genca Corp., General Cable Industries LLC, General Cable
Management LLC, General Cable Overseas Holdings Inc., General
Cable Technologies Corp., General Cable Industries Inc., General
Cable Texas Operations LP, Marathon Manufacturing Holdings Inc.,
Marathon Steel Co., MLTC Co., General Cable Canada Ltd., General
Cable de Latinoamerica SA de CV, General Cable de Mexico del
Norte SA de CV, and GK Technologies Inc. The majority of these
cases involve plaintiffs alleging exposure to asbestos-
containing cable manufactured by the Company's predecessors. In
addition to its subsidiaries, numerous other wire and cable
manufacturers have been named as defendants in these cases. The
Company's subsidiaries have also been named, along with numerous
other product manufacturers, as defendants in around 33,000
suits in which plaintiffs alleged that they suffered an
asbestos-related injury while working in the maritime industry.
These cases are referred to as MARDOC cases and are currently
managed under the supervision of the U.S. District Court for the
Eastern District of Pennsylvania. On May 1, 1996, the District
Court ordered that all pending MARDOC cases be administratively
dismissed without prejudice and the cases cannot be reinstated,
except in certain circumstances involving specific proof of
injury. Additionally, certain of the Company's insurers may be
financially unstable and in the event one or more of these
insurers enter into insurance liquidation proceedings, the
Company will be required to pay a larger portion of the costs
incurred in connection with these cases.
ASBESTOS LITIGATION: GE Capital Posts Adverse Losses From Suits
---------------------------------------------------------------
General Electric Capital Services Inc. and General Electric
Capital Corporation stated in filings with the Securities and
Exchange Commission that a significant 2002 adverse development
was in asbestos pre-tax losses, which amounted to $200,000,000.
GE Capital also stated that the insurance liability for unpaid
claims and claims adjustment expenses related to policies that
may cover environmental and asbestos exposures is based on known
facts and an assessment of applicable law and coverage
litigation.
GE Global Insurance Holding Corp. also said that continuing
legislative proposals as to asbestos and environmental related
exposures, as well as broader measures dealing with general tort
reform in the United States. There is a high degree of
uncertainty inherent in the estimates of ultimate losses
underlying the liability for unpaid claims and claim expenses.
This inherent uncertainty is particularly significant for
liability-related exposures, including latent claim issues (such
as asbestos, environmental and other mass tort related coverage
disputes) due to the extended period, often many years, that
transpires between a loss event, receipt of related claims data
from policyholders and/or primary insurers and ultimate
settlement of the claim.
GE Global Insurance Holding Corp. recognized a fourth quarter
pre-tax charge of about $2,500,000,000 to increase recorded
reserves to reflect the revised indications of remaining
liability. The significant components of this adverse
development included asbestos-related exposures ($150,000,000).
ASBESTOS LITIGATION: Halliburton Settlement Buoys Van Kampen
------------------------------------------------------------
The Van Kampen Comstock Fund and the Van Kampen Life Investment
Trust portfolio were helped by the performance of two oil- and
gas-services stocks, Halliburton Co. and Schlumberger. As the
economic environment for oil-service and drilling stocks
improved, both companies rose off of very low valuations.
Rising commodity prices also helped the stocks. In addition,
Halliburton benefited from optimism about a potential settlement
of asbestos-related litigation.
ASBESTOS LITIGATION: Hanson Announces Total Of 124,200 Claimants
----------------------------------------------------------------
Hanson PLC recently provided its regular update on the number of
asbestos claims made against the group, the most recent being
its preliminary results announcement issued on February 19,
2004. While the number of claims made against the group has
continued to rise, as anticipated, the net cost of resolving
asbestos claims after insurance was $4,000,000.
Hanson's non-operating exceptional item charges totaled
GBP94,900,000. GBP76,600,000 of this amount relates to an
increase in the group's asbestos provision.
Various of the Company's U.S. subsidiaries are defendants in a
number of lawsuits alleging bodily injury due to exposure to
asbestos-containing products before 1984. At the end of 2003,
outstanding claimants totaled around 124,200 (81,500 for 2002
and 67,500 for 2001). In the U.S. claimants can file without
illness or product identification. In the absence to date of
federal reform, a number of states are looking to introduce an
unimpaired docket which will freeze claims until there is proven
evidence of illness. Notwithstanding these state level reforms,
however, we continue to believe that the outstanding numbers of
claimants are more likely to rise than fall in the near term.
New claimants were 7,900 for the second six months of 2003,
which was less than half of the 21,000 new claimants received in
the first six months. Most of the reduction was due to fewer
mass claims being filed in the period. Mass claimants in
Mississippi have slowed significantly since new legislation was
introduced effective April 1, 2003 to limit out of state mass
filings.
The gross cost of resolving asbestos claims in 2003 was
$43,200,000 ($37,300,000 and $26,800,000 in 2001) including
legal fees of $21,400,000. The net cost of asbestos for the
year after insurance was $3,800,000 ($4,100,000 for 2002 and
$1,000,000 for 2001).
The Company's approach to accounting for the asbestos claims
against its US subsidiaries is to provide for those costs of
resolution which are both probable and estimable. The costs of
resolving possible claims are accounted for as contingent
liabilities. At present, based on detailed analysis, the
provision for those costs which are both probable and estimable
equates to around eight years of gross cost at current levels.
In total, the full year increase in the provision for future
asbestos cost was $125,000,000, including a second half charge
of $20,000,000, taking the gross provision to $317,000,000.
Offsetting this is about $73,000,000 of remaining insurance
cover. Hanson continues to use a combination of litigation and
negotiation to maximize this insurance cover. The Company's
assumption at this stage is that its cover will decline
significantly over the next two years.
Other asbestos costs in 2003 were as follows: 28,900 new
claimants (32,200 in 2002 and 21,700 in 2001),
22,000 Ohio duplicates, 8,200 resolutions (18,200 in 2002 and
3,100 in 2001), less insurance recoveries of $39,400,000
($33,200,000 in 2002 and $25,800,000 in 2001) and an average
gross cost per resolution of $5,268 ($2,049 in 2002 and $2,049
in 2001).
ASBESTOS LITIGATION: Ladish Co. Announce Pending Suits in MI, IL
----------------------------------------------------------------
Ladish Co. Inc. was named as a defendant in 48 asbestos cases in
Mississippi and two asbestos cases in Illinois. As of February
25, 2004, the Company has been dismissed from 32 of the cases in
Mississippi and one case in Illinois. The Company has never
manufactured or processed asbestos. The Company's only exposure
to asbestos involves products the Company purchased from third
parties. The Company has notified its insurance carriers and is
defending these actions.
Ladish Co. Inc. designs and manufactures high-strength forged
and cast metal components for aerospace and industrial markets.
Jet engine parts, missile components, landing gear, helicopter
rotors, and aerospace products account for more than 90% of
sales. The company also makes large crankshafts and metal
forgings used in power-generation equipment and heavy-duty off-
road vehicles.
ASBESTOS LITIGATION: Metlife Reports Payments Of Injury Claims
--------------------------------------------------------------
MetLife Inc. reported that its asbestos personal injury claims
were around 111,700, 106,500, and 89,000 at December 31, 2003,
December 31, 2002, and December 31, 2001 respectively. The
number of new claims was around 60,300 during 2003, 66,000 for
2002, and 59,500 for 2001. Settlement payments during 2003 were
$84,200,000, during 2002 were $95,100,000, and during 2001 were
$90,700,000. Settlement payments represent payments made by
Metropolitan Life during the year in connection with settlements
made in that year and in prior years. Amounts do not include
Metropolitan Life's attorneys' fees and expenses and do not
reflect amounts received from insurance carriers.
ASBESTOS LITIGATION: National Waterworks Predecessor Sued
---------------------------------------------------------
National Waterworks Inc. may become subject to asbestos
liabilities in the future to the extent it is found to be a
successor to U.S. Filter and to the extent U.S. Filter, United
States Filter Corporation and Veolia are unable to fulfill their
contractual obligations, in which event the Company's financial
condition and earnings would deteriorate to the extent the
Company is required to satisfy these asbestos liabilities.
Certain of U.S. Filter's predecessors distributed or may have
distributed cement pipe containing asbestos. Certain of these
predecessors are or have been defendants in lawsuits seeking to
recover personal injury and other damages for alleged exposure
to asbestos in these pipes, and at December 31, 2003, 111
lawsuits remained outstanding. Total defense and settlement
costs paid in these settled actions through December 31, 2003 by
U.S. Filter have been about $2,500,000, the majority of which
has been paid by insurance companies. The Acquisition was
structured as an asset purchase, and the Company did not assume
any existing or future asbestos-related liabilities relating to
U.S. Filter or its predecessors. U.S. Filter and United States
Filter Corporation retained these liabilities and jointly and
severally agreed to indemnify and defend us from and against
these liabilities on an unlimited basis with no termination
date. United States Filter Corporation and U.S. Filter also
agreed that, until November 22, 2012, U.S. Filter will, and
United States Filter Corporation will cause U.S. Filter to
maintain U.S. Filter's corporate existence and ensure that U.S.
Filter has sufficient funds to pay any and all of its debts and
other obligations, including liabilities retained by U.S. Filter
and its indemnification obligations, as and when they become
due. In addition, Veolia Environnement (formerly Vivendi
Environnement S.A.) has guaranteed all obligations of United
States Filter Corporation and U.S. Filter under the asset
purchase agreement, including the indemnity discussed above, up
to an aggregate of $50,000,000 for a period ending November 22,
2017. Historically, courts have not held the acquirer of an
entity's assets liable for liabilities that are not assumed as
part of the transaction unless the asset buyer is found to be a
"successor" to the asset seller.
U.S. Filter and USFDG completed an agreement to sell
substantially all of the Group's assets, net of certain
liabilities as defined in the sales agreement, to NWW. The
November 2002 acquisition was structured as an asset purchase,
and the Company did not assume any existing or future asbestos-
related liabilities relating to U.S. Filter or its predecessors.
U.S. Filter and USFDG retained these liabilities and jointly and
severally agreed to indemnify and defend us from and against
these liabilities on an unlimited basis with no termination
date. U.S. Filter and USFDG also agreed that, until November22,
2012, U.S. Filter will cause USFDG to maintain USFDG's corporate
existence and ensure that USFDG has sufficient funds to pay any
and all of its debts and other obligations, including
liabilities retained by USFDG and its indemnification
obligations, as and when they become due. In addition, Veolia
has guaranteed all obligations of U.S. Filter and USFDG under
the asset purchase agreement, including the indemnity, up to an
aggregate of $50,000,000 through the period ending November 22,
2017. Historically, courts have not held the acquirer of an
entity's assets liable for liabilities that are not assumed as
part of the transaction unless the asset buyer is found to be a
"successor" to the asset seller. Accordingly, National
Waterworks could become subject to asbestos liabilities in the
future to the extent we are found to be a successor to USFDG and
to the extent USFDG, U.S. Filter and Veolia are unable to
fulfill their contractual obligations. As the asbestos claims
were retained by USFDG and U.S. Filter and in view of the
indemnity by USFDG and U.S. Filter with respect to retained
liabilities and the Veolia guarantee, management of NWW believes
that it has no liability related to asbestos claims at December
31, 2003 and 2002.
The Group and one of the Group's predecessors have been named as
defendants in 1,148 asbestos related lawsuits in which the
asbestos pipe was used in buildings. As of December 31, 2003,
910 lawsuits have been dismissed, 130 lawsuits have been settled
and 108 lawsuits remain open. The predecessor's insurance
carriers entered into a cost sharing agreement for the coverage
of these lawsuits, which provides for 100% coverage of the
related defense and settlement costs. Subsequently one of the
insurance carriers determined that its policies do not cover
asbestos liabilities and dropped out of the cost sharing
agreement. The Group has elected to cover the 42% share that
this insurance carrier had been contributing. Total related
aggregate settlement costs through December 31, 2003 are
$300,000 and total related aggregate defense costs are $800,000,
with the Group paying its share of $100,000 and $400,000,
respectively.
The Group and its predecessor companies have been named as
defendant in 22 other asbestos related lawsuits. As of December
31, 2003, nine lawsuits have been dismissed, ten lawsuits have
been settled and three lawsuits remain open. Total settlement
costs through December 31, 2003 are $900,000 and total defense
costs are $500,000, substantially all of which has been covered
by the Group's or predecessors' insurance carriers.
ASBESTOS LITIGATION: RJR Tobacco Asbestos Case Goes To Trial
------------------------------------------------------------
RJ Reynolds Tobacco Holdings Inc. reported that it has seven
asbestos contribution cases as of January 23, 2004. There was
no change in the number of cases since October 15, 2003. In
certain cases plaintiffs seek recovery on the claim that
cigarette smoking exacerbated injuries caused by exposure to
asbestos.
On April 28, 2004, the asbestos contribution case Major v.
Raybestos-Manhattan, Inc. goes to trial in the Superior Court
for Los Angeles County, California.
As of January 23, 2004, seven lawsuits were pending against RJR
Tobacco in which asbestos companies and/or asbestos-related
trust funds allege that they "overpaid" claims brought against
them to the extent that tobacco use, not asbestos exposure, was
the cause of the alleged personal injuries for which they paid
compensation. On May 24, 2001, a Mississippi state court judge
dismissed all such claims by Owens-Corning in Estate of Ezell
Thomas v. RJR Tobacco Co. Owens-Corning appealed the dismissal
to the Mississippi Supreme Court on August 15, 2001. Oral
argument was heard on October 1, 2003. A decision is pending.
A similar case, H.K. Porter Co., Inc. v. American Tobacco Co.,
was pending in the United States District Court for the Eastern
District of New York before Judge Weinstein. However, on July
26, 2001, the parties stipulated to a dismissal of the action.
In Fibreboard Corp. v. R. J. Reynolds Tobacco Co., a case
pending in state court in California, Owens-Corning and
Fibreboard asserted the same claims as those asserted in the
Mississippi case. Motions to dismiss those claims have been
held in abeyance pending the final determination of the
Mississippi case.
ASBESTOS LITIGATION: St. Paul Co. Reaches Pact On Injury Claims
---------------------------------------------------------------
On June 3, 2002, St. Paul Companies Inc. announced that it and
certain of its subsidiaries had entered into an agreement
settling all existing and future claims arising from any
insuring relationship of United States Fidelity and Guaranty
Company, St. Paul Fire and Marine Insurance Company and their
affiliates and subsidiaries, including us, with any of MacArthur
Company, Western MacArthur Company, and Western Asbestos
Company. In January 2004, the U.S. Bankruptcy Court for the
Northern District of California issued an order approving the
settlement agreement and confirming the MacArthur Companies'
proposed plan of reorganization. In the first quarter of 2003,
the Company made a payment of $747,000,000, (which included
$7,000,000 interest), related to the Western MacArthur
settlement agreement. That amount, along with $60,000,000 of an
initial $235,000,000 payment made in the second quarter of 2002,
is being held in escrow pending final confirmation of the
bankruptcy court approval of the settlement agreement and the
MacArthur Companies' plan of reorganization. Accordingly, as of
December 31, 2003, these payments were recorded in the amounts
of $807,000,000 in both "Other Assets" and "Other Liabilities."
In 2003, lawsuits were filed in Texas and Ohio against certain
of the Company's subsidiaries, and other insurers and non-
insurer corporate defendants, asserting liability for failing to
warn of the dangers of asbestos. It is difficult to predict the
outcome for financial exposure represented by this type of
litigation in light of the broad nature of the relief requested
and the novel theories asserted. The Company believes, however,
that the cases are without merit and we intend to contest them
vigorously. In this regard, we filed special exceptions in all
of the Texas cases. In October 2003, a court ruled on the
special exceptions in 11 of those cases, dismissing the cases
with prejudice. Subsequently, the court dismissed another case
on the same grounds. The Company views these as significant
rulings in its favor. The special exceptions in the remaining
50 cases have not yet been ruled upon. The Company intends to
file similar motions to dismiss in the Ohio cases.
ASBESTOS LITIGATION: St. Paul Affiliate TPC Develops Reserves
-------------------------------------------------------------
A recent filing by St. Paul Companies Inc. showed that Travelers
Property Casualty Corporation's analysis of full year operating
income recorded a prior year reserve development charge for
asbestos amounting to $1,394,000,000, after tax. Net of benefit
of $520,000,000 in YTD fourth quarter 2002 was related to
asbestos incurreds subject to the Citigroup indemnification
agreement.
TPC's Special Liability Group separately manages asbestos and
environmental claims. At December 31, 2003, the Company had
$11,174,000,000 in reinsurance recoverables. Of this amount,
$2,204,000,000 is for mandatory pools and associations that
relate primarily to workers' compensation service business and
have the obligation of the participating insurance companies on
a joint and several basis supporting these cessions. An
additional $2,411,000,000 of this amount is attributable to
structured settlements relating primarily to personal injury
claims, for which the Company has purchased annuities and
remains contingently liable in the event of any defaults by the
companies issuing the annuities. Of the remaining
$6,559,000,000 ceded to reinsurers at December 31, 2003,
$1,035,000,000 is attributable to asbestos and environmental
claims and the remainder principally reflects reinsurance in
support of ongoing business.
The liability for losses for certain fixed and determinable
asbestos-related settlements, where all payment amounts and
their timing are known, has also been discounted using various
interest rates ranging from 1.56% to 5.50%. At December 31,
2003, 2002 and 2001, the combined amounts of discount on the
consolidated balance sheet were $754,300,000, $802,900,000 and
$792,400,000, respectively, of which 98%, 95% and 100%,
respectively, related to workers' compensation.
ASBESTOS LITIGATION: Tyler Pays Trust $1.4 Million Over Claims
--------------------------------------------------------------
One of Tyler Technologies' non-operating subsidiaries, Swan
Transportation Company, has been involved in various claims
raised by former employees of a foundry that was owned by an
affiliate of Swan and Tyler prior to December1995. These claims
are for alleged work related injuries and physical conditions
resulting from alleged exposure to silica, asbestos, and/or
related industrial dusts. On December 20, 2001, Swan filed a
petition for relief under Chapter 11 of the U.S. Bankruptcy
Code, and on July 22, 2003, the United States Bankruptcy Court
for the District of Delaware entered a confirmation order
approving a plan of reorganization for Swan.
On December 23, 2003, Tyler, in accordance with the terms of the
plan of reorganization, transferred the stock of Swan to the
Swan Asbestos and Silica Trust, an unaffiliated entity that will
oversee the processing and payment of all present and future
claims related to the foundry. The Trust is to be principally
funded by the insurance carriers of Swan and/or Tyler. Also on
December 23, 2003, Tyler paid $1,480,000 to the Trust in full
and final satisfaction of its obligations under the plan of
reorganization. Under the terms of the plan of reorganization,
Tyler was released from all liability for claims associated with
the once-owned foundry and any claimant is barred from asserting
any such claim, either now or in the future, against Tyler and
its affected affiliates.
Net liabilities of two of Tyler's discontinued non-operating
subsidiaries included in accrued liabilities in the consolidated
balance sheet as of December 31, 2002 cited its restricted
asbestosis settlement cash with offsetting amount in current
liabilities ($1,325,000) and other current liabilities primarily
consisting of asbestosis settlement obligations ($3,472,000).
ASBESTOS LITIGATION: U.S. Steel Battles 3,900 Claims in Courts
--------------------------------------------------------------
United States Steel Corp. is a defendant in 3,900 active cases
in which, as of December 31, 2003, around 14,800 plaintiffs have
filed claims alleging injury resulting from exposure to
asbestos. There is a decrease from the 16,000 plaintiffs
reported in the December 12, 2003 edition of the Class Action
Reporter. Almost all of these cases involve multiple defendants
(typically from 50 to more than 100 defendants). Over 13,800,
or more than 90 percent, of the plaintiffs in cases in which
U.S. Steel is a defendant are in cases filed in Mississippi,
Ohio and Texas, jurisdictions that permit filings with massive
numbers of plaintiffs. Based upon U.S. Steel's experience in
such cases, the actual number of plaintiffs who ultimately
assert claims against U.S. Steel is likely to be a small
fraction of the total number of plaintiffs.
While U.S. Steel has excess casualty insurance, these policies
have multi-million dollar self-insured retentions. To date,
U.S. Steel has not received any payments under these policies
relating to asbestos claims. In most cases, this excess
casualty insurance is the only insurance applicable to asbestos
claims.
These asbestos cases allege a variety of respiratory and other
diseases based on alleged exposure to asbestos. U.S. Steel is
currently a defendant in cases in which a total of around 200
plaintiffs allege that they are suffering from mesothelioma.
The potential for damages against defendants may be greater in
cases in which the plaintiffs can prove mesothelioma. In many
such cases in which claims have been asserted against U.S.
Steel, the plaintiffs have been unable to establish any causal
relationship to U.S. Steel or its products or premises. In
addition, in many asbestos cases, the plaintiffs have been
unable to demonstrate that they have suffered any identifiable
injury or compensable loss at all; that any injuries that they
have incurred did in fact result from alleged exposure to
asbestos; or that such alleged exposure was in any way related
to U.S. Steel or its products or premises.
In every asbestos case in which U.S. Steel is named as a party,
the complaints are filed against numerous named defendants and
generally do not contain allegations regarding specific monetary
damages sought. To the extent that any specific amount of
damages is sought, the amount applies to claims against all
named defendants and in no case is there any allegation of
monetary damages against U.S. Steel. About 89 percent of the
cases against U.S. Steel state that the damages sought exceed
the amount required to establish jurisdiction of the court in
which the case was filed. (Jurisdictional amounts generally
range from $25,000 to $75,000.) About 4 percent do not specify
any damages sought at all, about 6 percent allege damages of
$1,000,000 or less, another 0.5 percent allege damages between
$2,000,000 and $10,000,000, and 0.5 percent allege damages over
$10,000,000. U.S. Steel does not consider the amount of damages
alleged, if any, in a complaint to be relevant in assessing its
potential exposure to asbestos liabilities. The ultimate
outcome of any claim depends upon a myriad of legal and factual
issues, including whether the plaintiff can prove actual
disease, if any; actual exposure, if any, to U.S. Steel
products; or the duration of exposure to asbestos, if any, on
U.S. Steel's premises. U.S. Steel has noted over the years that
the form of complaint including its allegations, if any,
concerning damages often depends upon the form of complaint
filed by particular law firms and attorneys. Often the same
damage allegation will be in multiple complaints regardless of
the number of plaintiffs, the number of defendants, or any
specific diseases or conditions alleged. U.S. Steel
aggressively pursues grounds for its dismissal from pending
cases and litigates cases to verdict where it believes
litigation is appropriate. U.S. Steel also makes efforts to
settle appropriate cases for reasonable, and frequently nominal,
amounts. For example, in 2001, U.S. Steel settled 11,166 claims
for a total of about $190,000, and had around 4,102 claims
dismissed or otherwise resolved and 1,679 new claims filed. At
December 31, 2001, U.S. Steel had a total of around 17,100
active claims outstanding.
In 2002, U.S. Steel settled 1,135 claims for a total of about
$700,000, and had a total of 2,662 claims dismissed or otherwise
resolved and 842 new claims filed. At December 31, 2002, U.S.
Steel had a total of around 14,100 active claims outstanding.
In 2003, except for the aberrant result in the Madison County
case, U.S. Steel settled 83 claims for a total of about
$4,600,000, and had a total of 2,038 claims dismissed or
otherwise resolved and added 514 new cases (or 2,856 new
claims). At December 31, 2003, U.S. Steel had a total of around
14,800 active claims outstanding. On March 28, 2003, a jury in
Madison County, Illinois returned a verdict against U.S. Steel
for $50,000,000 in compensatory damages and $200,000,000 in
punitive damages. U.S. Steel believes that the court erred as a
matter of law by failing to find that the Indiana workers'
compensation law provided the plaintiff's exclusive remedy.
U.S. Steel believes that this issue and other errors at trial
would have enabled it to succeed on appeal. However, in order
to avoid the delay and uncertainties of further litigation and
the posting of a large appeal bond in excess of the amount of
the verdict, U.S. Steel settled this case for an amount which
was substantially less than the compensatory damages award and
which represented a small fraction of the total award. This
settlement is reflected in the results for the quarter ended
March 31, 2003 and for the year ended December 31, 2003.
Management views the verdict and resulting settlement in the
Madison County case as aberrational, and believes that the
likelihood of similar results in other cases is remote, although
not impossible. U.S. Steel has not experienced any material
adverse change in its ability to resolve pending claims as a
result of the Madison County settlement.
The amount U.S. Steel has accrued for pending asbestos claims is
not material to its financial position. U.S. Steel does not
accrue for unasserted asbestos claims because it believes it is
not possible to determine whether any loss is probable with
respect to such claims or even to estimate the amount or range
of any possible losses. Among the reasons that U.S. Steel
cannot reasonably estimate the number and nature of claims
against it is that the vast majority of pending claims against
it allege so-called "premises" liability based exposure on U.S.
Steel's current or former premises. These claims are made by an
indeterminable number of people such as truck drivers, railroad
workers, salespersons, contractors and their employees,
government inspectors, customers, visitors and even trespassers.
It is not possible to predict the ultimate outcome of asbestos-
related lawsuits, claims and proceedings due to the
unpredictable nature of personal injury litigation. Despite
this uncertainty, and although U.S. Steel's results of
operations and cash flows for a given period could be adversely
affected by asbestos-related lawsuits, claims and proceedings,
management believes that the ultimate resolution of these
matters will not have a material adverse effect on the Company's
financial condition. Among the factors considered in reaching
this conclusion are:
(1) that U.S. Steel has been subject to around 34,000
asbestos claims over the past 12 years that have been
administratively dismissed or are inactive due to the
failure of the plaintiffs to present any medical
evidence supporting their claims;
(2) that over the last several years, the total number of
pending claims has generally declined;
(3) that it has been many years since U.S. Steel employed
maritime workers or manufactured electric cable; and
(4) U.S. Steel's history of trial outcomes, settlements and
dismissals, including such matters since the Madison
County jury verdict and settlement in March 2003.
United States Steel Corp. is primarily engaged in the
production, sale and transportation of steel mill products,
coal, coke and taconite pellets (iron ore) in the United States.
ASBESTOS ALERT: Kaman Corp. Predecessor Implicated in Lawsuit
--------------------------------------------------------------
Kaman Corporation's industrial distribution segment experienced
an increase in the number of "John Doe" type legal proceedings
filed against it, generally relating to parts allegedly supplied
to the U.S. Navy's shipyard in San Diego, California by a
predecessor company over 25 years ago that may have contained
asbestos. While management believes that the segment has good
defenses to these claims, it is in the process of settling
virtually all of the claims for amounts that are immaterial in
the aggregate, with contribution from insurance carriers.
Management does not currently expect that these circumstances
will have a material adverse effect on the corporation.
COMPANY PROFILE
Kaman Corp.
1332 Blue Hills Avenue
Bloomfield, CT 06002
Phone: 860-243-7100
Fax: 860-243-6365
http://www.kaman.com
Description: Kaman Corp. operates in three business segments:
Aerospace, Industrial Distribution and Music Distribution. The
Aerospace segment serves commercial, as well as domestic and
foreign defense markets, with a variety of products, including
the SH-2G Super Seasprite naval helicopter and the K-MAX medium-
to heavy-lift helicopter; aircraft structures and components for
commercial and military aircraft, including specialized aircraft
bearings, and various advanced technology products for
specialized applications, including missile and bomb fusing
devices. The Industrial Distribution segment provides bearings
and power transmission, motion control, material handling and
electrical components, as well as value-added services to a
highly diversified cross-section of North American industry.
The Music Distribution segment serves domestic and foreign
markets with a wide variety of musical instruments and
accessories for amateur and professional musicians.
ASBESTOS ALERT: Selective Insurance Reserves For 2,772 Claims
-------------------------------------------------------------
Selective Insurance Group Inc. reports that reserves established
for liability insurance include exposure to environmental
claims, both asbestos and non-asbestos. These claims have
arisen primarily under older policies containing exclusions for
environmental liability which certain courts, in interpreting
such exclusions, have determined do not bar such claims. The
emergence of these claims is slow and highly unpredictable.
Since 1986, policies issued by the Insurance Subsidiaries have
contained a more expansive exclusion for losses related to
environmental claims. The Company's asbestos and non-asbestos
environmental claims have arisen primarily from exposures in
municipal government, small commercial risks and homeowners'
policies.
"Asbestos claims" are claims presented to the Company in which
bodily injury is alleged to have occurred as a result of
exposure to asbestos and/or asbestos-containing products.
During the past two decades, the insurance industry has
experienced the emergence and development of an increasing
number of asbestos claims. At December 31, 2003, asbestos
claims constituted 91% of the Company's 3,058 environmental
claims compared with 90% of its 2,593 outstanding environmental
claims at December 31, 2002.
There are a total of 3,058 environmental claims, including
multiple claimants who are associated with the same site or
incident. Of these, 2,772 are asbestos related, of which 1,627
involve four insureds. The case reserves associated with these
four insureds amounted to $3,900,000 on a net and gross basis as
of December 31, 2003. The total case reserves for asbestos
related claims amounted to $7,000,000 on a gross basis and
$6,000,000 on a net basis. The overall net survival ratio for
asbestos and non-asbestos related claims was 10 years for 2003
and 11 years for 2002 and 2001.
COMPANY PROFILE
Selective Insurance Group Inc.
40 Wantage Avenue
Branchville, NJ 07890
Phone: 973-948-3000
Fax: 973-948-0282
http://www.selectiveinsurance.com
Description: Selective Insurance Group Inc. offers property and
casualty insurance products and diversified insurance services
products through its subsidiaries. The Company offers
commercial and personal insurance products through Selective
Insurance Company of America, Selective Way Insurance Company,
Selective Insurance Company of the Southeast, Selective
Insurance Company of South Carolina and Selective Insurance
Company of New York. The Company's Diversified Insurance
Services' products are sold by Alta Services LLC, a managed care
company that provides medical claims handling services to
Selective and other insurers, Consumer Health Network Plus, LLC
(CHN), a preferred provider organization (PPO), Selective HR
Solutions Inc., and Flood Connect, a provider of flood insurance
and claim services. In January 2004, CHN and Alta merged to
become CHN Solutions, offering a mix of PPO, managed care and
behavioral health services.
ASBESTOS ALERT: United Fire Shelves $3.3M In Reserves For Claims
----------------------------------------------------------------
At December 31, 2003, United Fire & Casualty Company established
$3,300,000 in asbestos and environmental loss reserves, compared
with $1,600,000 at December 31, 2002, and $1,100,000 at December
31, 2001. The estimation of loss reserves for environmental
claims and claims related to long-term exposure to asbestos and
other substances is one of the most difficult aspects of
establishing reserves, especially given the inherent
uncertainties surrounding such claims. Although the Company
records its best estimate of loss and loss adjustment expense
reserves, because of the significant uncertainties involved and
the likelihood that these uncertainties will not be resolved for
many years, the ultimate amounts paid upon settlement of such
claims may be more or less than the amount of the reserves.
Gross reserves for asbestos and other environmental losses and
settlement expenses are included in the other liability line of
business. Because of the type of property coverage the Company
writes, there exists the potential for exposure to asbestos
claims. United Fire & Casualty's underwriters are aware of
these exposures and use limited riders or endorsements to limit
exposure.
COMPANY PROFILE
United Fire & Casualty Co.
P.O. Box 73909, 118 Second Avenue S.E.
Cedar Rapids, IA 52407
Phone: 319-399-5700
Fax: 319-399-5499
http://www.unitedfiregroup.com
Description: United Fire & Casualty Co. is engaged in the
business of writing property and casualty insurance and life
insurance. The Company is licensed as a property and casualty
insurer in 41 states, primarily in the Midwest, west and south.
Around 1,140 independent agencies represent United Fire and its
property and casualty subsidiaries. The Company's life
insurance subsidiary, United Life Insurance Company, is licensed
in 26 states, primarily in the Midwest and west, and is
represented by around 1,330 independent agencies.
ASBESTOS ALERT: White Mountains Insurance Covered For Old Claims
----------------------------------------------------------------
White Mountains Insurance Group Ltd. reported in a regulatory
filing that in connection with its acquisition of the OneBeacon
Insurance Group LLC family of companies from Aviva plc (formerly
CGNU plc) on June 1, 2001, Aviva caused OneBeacon to purchase
reinsurance contracts with two reinsurance companies rated "AAA"
(the highest of twenty-one ratings) by Standard & Poor's Ratings
Services (S&P) and "A++" (the highest of fifteen ratings) by
A.M. Best: a full risk-transfer cover from National Indemnity
Company (NICO) for up to $2,500,000,000 in old asbestos and
environmental claims and an adverse development cover from
General Reinsurance Corporation (GRC) for up to $400,000,000 on
additional losses occurring in accident years 2000 and prior.
OneBeacon estimates its asbestos and environmental (A&E)
reserves based upon, among other factors, facts surrounding
reported cases and exposures to claims, such as policy limits
and deductibles, current law, past and projected claim activity
and past settlement values for similar claims, as well as
analysis of industry studies and events, such as recent
settlements and asbestos-related bankruptcies.
OneBeacon's liabilities for A&E losses from business
underwritten in the recent past are substantially limited by the
application of exclusionary clauses in the policy language that
eliminated coverage of such claims. After 1987 for pollution
and 1992 for asbestos, most liability policies contained
industry-standard absolute exclusions of such claims. In earlier
years, various exclusions were also applied, but the wording of
those exclusions was less strict and subsequent court rulings
have reduced their effectiveness.
More recently, since the 1990s, OneBeacon has experienced an
influx of claims from commercial insureds, including many non-
Fortune 500-sized accounts written during the 1970s and 1980s,
which are named as defendants in asbestos lawsuits. As a number
of large well-known manufacturers of asbestos and asbestos-
containing products have gone into bankruptcy, plaintiffs have
sought recoveries from peripheral defendants, such as
installers, transporters or sellers of such products, or from
owners of premises on which the plaintiffs' exposure to asbestos
allegedly occurred. At December 31, 2003, 642 policyholders had
asbestos related claims against OneBeacon. In 2003, 178 new
insureds with such peripheral involvement presented asbestos
claims under prior OneBeacon policies.
Historically, most asbestos claims have been asserted as product
liability claims. Recently, insureds that have exhausted the
available products liability limits of their insurance policies
have sought payment for asbestos claims under the premises and
operations coverage of their liability policies. It is more
difficult for plaintiffs to establish losses as stemming from
premises and operations exposures, which requires proof of the
defendant's negligence, rather than products liability under
which strict legal liability applies. Hence, there are fewer of
such claims and there is a great deal of variation in damages
awarded for the actual injuries. Additionally, several accounts
that seek such coverage find that previously paid losses were
subject to product liability and operations aggregate limits
that were previously exhausted. In these situations there is no
coverage for these claims. There are currently 97 active claims
against OneBeacon without product liability coverage asserting
operations or premises coverage.
Immediately prior to the OneBeacon Acquisition, Aviva caused
OneBeacon to purchase the NICO Cover for a premium of
$1,300,000,000. The NICO Cover entitles OneBeacon to recover up
to $2,500,000,000 in the future for asbestos claims arising from
business written by OneBeacon in 1992 and prior, and certain
other exposures. Under the terms of the NICO Cover, NICO
receives the economic benefit of reinsurance recoverables from
certain of OneBeacon's third party reinsurers in existence at
the time the NICO Cover was executed ("Third Party
Recoverables"). As a result, the Third Party Recoverables serve
to protect the $2,500,000,000 limit of NICO coverage for the
benefit of OneBeacon. Third Party Recoverables are typically
for the amount of loss in excess of a stated level each year. Of
claim payments in the past 11 years, approximately 65% of
asbestos losses and 41% of environmental losses have been
recovered under the historical third party reinsurance.
For purposes of determining available reinsurance, product
liability and operations asbestos claims typically are
aggregated as a single loss within each policy period. As a
result, losses often exceed the retention level under the
reinsurance agreement and reinsurance recoveries are obtained.
However, for claims being asserted under premises and operations
coverage, the losses are generally not aggregated for purposes
of determining reinsurance recoveries, so OneBeacon expects that
in the future a smaller percentage of these losses will be
covered as Third Party Recoverables than has been true
historically of products liability asbestos losses.
The large majority of OneBeacon's third party reinsurance has
been obtained from top-rated, financially strong companies. Of
the Third Party Recoverables presented for recovery to date,
around 3% has been determined to be unrecoverable due either to
inability of a reinsurer to pay or to disputes with the
reinsurer over the amounts due. For asbestos losses, this
unrecoverable percentage has been 4%. Amounts uncollectible from
third party reinsurers due to dispute or the reinsurers'
financial inability to pay are covered by NICO under its
agreement with OneBeacon.
Asbestos payments during 2003 reflect payments resulting from
intensified efforts by claimants to resolve asbestos claims
prior to enactment of potential Federal asbestos legislation.
To the extent that actual experience differs from OneBeacon's
estimate of ultimate A&E losses and Third Party Recoverable, the
remaining protection under the NICO Cover may be more or less
than the approximate $757,000,000 that OneBeacon estimates
remained at December 31, 2003.
OneBeacon's reserves for A&E losses, net of Third Party
Recoverables but prior to NICO recoveries, are $1,100,000,000 at
December 31, 2003. An industry benchmark of reserve adequacy is
the "survival ratio," computed as a company's reserves divided
by its historical average yearly loss payments. This ratio
indicates about how many more years of payments the reserves can
support, assuming future yearly payments are equal to historical
levels. OneBeacon's survival ratio was around 19.4 at December
31, 2003, which was computed as the ratio of A&E reserves, net
of Third Party Recoverables, of $1,100,000,000 plus the
remaining unused portion of the NICO Cover of $757,000,000, to
the average loss payments in the past three years. The average
loss payments used to calculate OneBeacon's survival ratio were
net of a large commutation ($64,000,000) in 2003 with a Third
Party Reinsurer. White Mountains believes that as a result of
the NICO Cover and its historical third party reinsurance
programs, OneBeacon should not experience material financial
loss from old A&E exposures under current coverage
interpretations and that its survival ratio compares favorably
to industry survival ratios.
OneBeacon's reserves for A&E losses at December 31, 2003
represent management's best estimate of its ultimate liability
based on information currently available. OneBeacon believes
the NICO Cover will be adequate to cover all of its A&E
obligations. However, as case law expands, medical and clean-up
costs increase and industry settlement practices change,
OneBeacon may be subject to asbestos and environmental losses
beyond currently estimated amounts. Therefore, OneBeacon cannot
guarantee that its A&E loss reserves, plus the remaining
coverage under the NICO Cover, will be sufficient to cover
additional liability arising from any such unfavorable
developments.
COMPANY PROFILE
White Mountains Insurance Group Ltd
80 South Main Street
Hanover, NH 03755
Phone: 603-640-2200
Fax: 603-643-4592
http://www.whitemountains.com
Description: White Mountains Insurance Group Ltd conducts
business through its subsidiaries and affiliates in the
businesses of property and casualty insurance and reinsurance.
The OneBeacon Insurance Group LLC family of companies consists
of property and casualty insurance writers based in the United
States, including OneBeacon Insurance Company, Pennsylvania
General Insurance Company and Camden Fire Insurance Association.
The Company's reinsurance operations are conducted primarily
through Folksamerica Holding Co. Inc. together with its
reinsurance subsidiary, Folksamerica Reinsurance Co.
New Securities Fraud Cases
AaiPHARMA: Shepherd Finkelman Files Securities Suit in E.D. NC
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Shepherd, Finkelman, Miller & Shah, LLC initiated a class action
lawsuit in the United States District Court for the Eastern
District of North Carolina, on behalf of all purchasers of
securities of aaiPharma Inc., against the Company and three of
its senior officers.
The Complaint, styled: Barone v. aaiPharma, Inc. et al., alleges
that, between and including April 24, 2002 and February 4, 2004,
Defendants violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by
failing to disclose that the aaiPharma's asserted quarter after
quarter "record" financial results were only made possible
through improper sales practices, such as "channel stuffing" or
flooding wholesalers with products in order to artificially
boost sales, and failing to properly reserve for product returns
in violation of Generally Accepted Accounting Principles. In
sum, the Complaint alleges that Defendants emphasized increased
revenues throughout the Class Period that were fueled by
allegedly strong sales of pharmaceutical products but failed to
disclose that these claimed financial results were predicated
upon improper sales and accounting practices.
On February 5, 2004, before the market opened, Defendants
shocked the investment community by announcing fourth quarter
net revenues that were reduced by $15.9 million. In response to
the news concerning aaiPharma's previously undisclosed inventory
issues, the price of aaiPharma stock dropped from over $27 per
share on February 4, 2004 to $21.30 on February 5, 2004, a drop
of over 23% on unusually large trading volumes of 4.8 million
shares traded. The stock continued to drop as the fraudulent
nature of the Company's sales and accounting practices came to
light, trading at only $20 per share on February 9, 2004. On
March 1, before the market opened, aaiPharma announced that it
had appointed an independent committee to investigate what the
Company has now admitted were "sales abnormalities"' or "unusual
sales"' in the Company's Brethine(r) and Darvoct(tm) product
lines during the second half of 2003. The Company also withdrew
previously issued first quarter and fiscal year 2004 guidance
and admitted that it may have to adjust 2003 results, depending
on the outcome of its announced inquiry. In response to the
Company's March 1 disclosure, the stock price closed at $9.77
per share, which was $5.51 or over 36% down from the previous
day's close.
After April 13, 2004, the Court will appoint a lead plaintiff
and lead counsel who will thereafter file a detailed,
consolidated amended complaint which pleading will set the class
period that the lead plaintiff and lead counsel determine is
appropriate, based on a review of facts available by that time.
The consolidated amended complaint may also name additional or
different defendants, based on a continued review of available
evidence. Based upon the proposed Class Period plead in certain
related class actions, the Class Period may be extended until
March 1, 2004 or beyond that date.
For more information, contact James E. Miller, by Phone:
866-540-5505, or by E-mail: jmiller@classactioncounsel.com; or
James C. Shah, by Phone: 877-891-9880, or by E-mail:
jshah@classactioncounsel.com.
AaiPHARMA: Goodkind Labaton Commences Securities Suit in E.D.NC
---------------------------------------------------------------
Goodkind Labaton Rudoff & Sucharow LLP initiated a class action
lawsuit in the United States District Court for the Eastern
District of North Carolina, Southern Division, on behalf of
persons who purchased or otherwise acquired publicly traded
securities of aaiPharma Inc. between April 24, 2002 and February
27, 2004, inclusive, against defendants aaiPharma, and:
(1) Frederick D. Sancilio,
(2) Phillip S. Tabbiner, and
(3) William S. Ginna Jr.
The complaint alleges that Defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder. Specifically, the complaint alleges
that, throughout the Class Period, Defendants issued numerous
statements to the market concerning the Company's financial
results, which failed to disclose and or misrepresented that the
Company's core business was deteriorating, that the company was
unloading inventory onto wholesalers in order to meet sales
projections, and that the aforementioned practice in order to
keep its stock price up in order to fend off a third party
suitor.
On February 5, 2004, aaiPharma announced that the Company
expected net revenues to be between $340 million and $355
million for 2004. Diluted earnings per share for 2004 were
expected to remain, as previously disclosed, between $1.45 and
$1.52. Earnings were expected in the range of $0.27 to $0.30 per
diluted share for the first quarter 2004. Additionally, the
Company announced that it was setting aside money to pay for
refunds on older medicines after an unusually high return rate
in the fourth quarter. In response to this news, shares of
aaiPharma fell 23%, or $6.36 per share to close at $21.24 per
share on very heavy volume. On March 1, 2004, the Company
announced that it was withdrawing its forecasts for 2004 and
indicated it had formed a committee of independent board members
to investigate "unusual sales" in two of aaiPharma's product
lines. Shares reacted negatively to this additional news,
falling an additional 36% on heavy volume.
For more information, contact Christopher Keller, by Phone:
800-321-0476, or by E-mail: investorrelations@glrslaw.com.
ACTIVISION INC: Schiffrin & Barroway Files Securities Suit in CA
----------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a class action lawsuit in
the United States District Court for the Central District of
California, on behalf of all purchasers of the common stock of
Activision, Inc. from February 1, 2001 through December 17,
2002, inclusive, against defendants Activision, and:
(1) Robert A. Kotick,
(2) Brian G. Kelly,
(3) Lawrence Goldberg,
(4) Steven T. Mayer,
(5) Kathy P. Vraback,
(6) Michael J. Rowe,
(7) Ronald Doornink,
(8) William J. Chardavoyne,
(9) Barbara S. Isgur,
(10) Richard A. Steele, and
(11) Daniel J. Hammett
The lawsuit alleges defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder. More specifically, the Complaint alleges
that defendants failed to disclose and indicate:
(i) that the Company's market share for its video games was
eroding;
(ii) that sales of its recently introduced products sharply
underperformed expectations, leading to reduced sales
and earnings;
(iii) that the slump in sales from its new products would
cause the Company to lose significant ground to its
closest competitors; and
(iv) that, as a result of the foregoing, defendants lacked a
reasonable basis for their positive statements about
the Company and their earnings projections.
On December 17, 2002, Activision slashed quarterly and yearly
earnings estimates amid weaker-than-expected sales during the
holiday season. The news followed defendant Kotick's statements
at the end of the fiscal second quarter that the Company would
likely have its "best year ever" next year. At that time, the
Company raised earnings and sales guidance for the next several
quarters. For the fiscal fourth quarter, the Company stated that
it expected to post a loss of 15 cents a share on revenue of
$100 million, compared with earlier expectations of a profit of
2 cents a share on revenue of $139 million.
News of this shocked the market. Shares of Activision plunged
down $3.10 per share to close at $12.63 per share on December
18, 2002.
For more information, contact Marc A. Topaz or Stuart L. Berman,
by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA
19004, by Phone: 1-888-299-7706 (toll-free) or 1-610-667-7706,
or by E-mail: info@sbclasslaw.com.
SIEBEL SYSTEMS: Cauley Gellar Launches Securities Suit in CA
------------------------------------------------------------
Cauley Geller Bowman & Rudman, LLP initiated a class action
lawsuit in the United States District Court for the Northern
District of California, on behalf of purchasers of Siebel
Systems, Inc. publicly traded securities during the period
between October 1, 2001 and July 17, 2002, inclusive, against
Siebel Systems and certain of its officers and directors.
The lawsuit alleges violations of the Securities Exchange Act of
1934. The complaint alleges that during the Class Period,
defendants issued false and misleading statements to the
marketplace that artificially inflated the price of Siebel
Systems shares. In particular, the Company misrepresented its
business and future prospects by overstating customer acceptance
of its new product offerings -- including Siebel 7 CRM -- and
failed to disclose that "independent" customer satisfaction
surveys which persuaded investors that a vast majority of the
Company's customers would purchase products from the Company in
the future were in fact carried out by an affiliated company and
could not be relied upon.
On July 17, 2002, Siebel announced its second quarter June 30,
2002 earnings reporting a precipitous drop in revenues of more
than 15% and a 33% shortfall in earnings compared to consensus
analyst forecasts. The Company also confirmed the continuing
slide in demand for Siebel Systems' products by slashing revenue
forecasts for the remainder of 2002 by an additional 25% -- or
$600,000,000 below guidance provided by defendants just six
months prior. In unusually heavy volume of 65 million shares
traded, Siebel Systems share prices dropped $2.13 on July 18 to
close at $9.61.
For more information, contact Samuel H. Rudman or David A.
Rosenfeld, Client Relations Department: Chandra West, Jackie
Addison or Heather Gann, by Mail: P.O. Box 25438, Little Rock,
AR 72221-5438, by Phone: 1-888-551-9944 (toll free), Fax:
1-501-312-8505, or by e-mail: info@cauleygeller.com.
SPX CORPORATION: Cauley Geller Files Securities Suit in W.D. NC
---------------------------------------------------------------
Cauley Geller Bowman & Rudman, LLP initiated a class action
lawsuit in the United States District Court for the Western
District of North Carolina on behalf of purchasers of SPX
Corporation publicly traded securities during the period between
July 28, 2003 and February 26, 2004, inclusive against
defendants SPX, and:
(1) John B. Blystone,
(2) Patrick J. O'Leary,
(3) Ronald L. Winowieck,
(4) Christopher J. Kearney, and
(5) Lewis M. Kling
The lawsuit alleges violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder. More specifically, the Complaint alleges that
defendants failed to disclose and indicate:
(i) that the $60 million gain from a legal settlement with
Microsoft made it possible for the Company to achieve
analysts' numbers for fiscal year 2003;
(ii) that the Company's "core" business was deteriorating;
(iii) that the Company was suffering from operating
weaknesses;
(iv) that defendants lacked a reasonable basis for their
positive statements about the Company and its earnings
projections; and
(v) that, as a result of the foregoing, defendants were
able to artificially inflate the value of its stock.
On February 26, 2004, after the market closed, SPX announced
that fourth quarter 2003 financial results were less than its
previously issued guidance. More specifically, SPX reported
fourth quarter 2003 results of $1.45 billion in revenues,
diluted earnings per share from continuing operations of $1.30,
and free cash flow from continuing operations of $303.8 million.
On February 27, 2004, the market reacted negatively to this news
with shares of SPX falling 21.20%, or $11.30 per share, to close
at $42.00 per share on heavy volume.
For more information, contact Samuel H. Rudman or David A.
Rosenfeld, Client Relations Department: Chandra West, Jackie
Addison or Heather Gann, by Mail: P.O. Box 25438, Little Rock,
AR 72221-5438, by Phone: 1-888-551-9944 (toll free), Fax:
1-501-312-8505, or by e-mail: info@cauleygeller.com.
SPX CORPORATION: Schiffrin & Barroway Commences Stock Suit in NC
----------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a class action lawsuit in
the United States District Court for the Western District of
North Carolina, on behalf of all purchasers of the securities of
SPX Corporation between July 28, 2003 and February 26, 2004,
inclusive, against defendants SPX, and:
(1) John B. Blystone,
(2) Patrick J. O'Leary,
(3) Ronald L. Winowieck,
(4) Christopher J. Kearney, and
(5) Lewis M. Kling
The lawsuit alleges violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b- 5 promulgated
thereunder. More specifically, the Complaint alleges that
defendants failed to disclose and indicate:
(i) that the $60 million gain from a legal settlement with
Microsoft made it possible for the Company to achieve
analysts' numbers for fiscal year 2003;
(ii) that the Company's "core" business was deteriorating;
(iii) that the Company was suffering from operating
weaknesses;
(iv) that defendants lacked a reasonable basis for their
positive statements about the Company and its earnings
projections; and
(v) that, as a result of the foregoing, defendants were
able to artificially inflate the value of its stock.
On February 26, 2004, after the market closed, SPX announced
that fourth quarter 2003 financial results were less than its
previously issued guidance. More specifically, SPX reported
fourth quarter 2003 results of $1.45 billion in revenues,
diluted earnings per share from continuing operations of $1.30,
and free cash flow from continuing operations of $303.8 million.
On February 27, 2004, the market reacted negatively to this news
with shares of SPX falling 21.20%, or $11.30 per share, to close
at $42.00 per share on heavy volume.
For more information, contact Marc A. Topaz or Stuart L. Berman,
by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA
19004, by Phone: 1-888-299-7706 (toll-free) or 1-610-667-7706,
or by E-mail: info@sbclasslaw.com.
VANS INCORPORATED: Bernstein Liebhard Launches Stock Suit in CA
---------------------------------------------------------------
Bernstein Liebhard & Lifshitz, LLP initiated a securities class
action lawsuit in the United States District Court for the
Central District of California, on behalf of all persons who
purchased or acquired Vans, Inc. securities between March 24,
1999 and May 23, 2002.
The complaint alleges that beginning in 1998, defendants
orchestrated a scheme where, on a routine basis, Vans illegally
"posted" product to three separate Distribution Centers,
including Unique Services, Pronto Services and Special
Dispatcher, in order to inflate its earnings per share on a
quarterly basis. This scheme took place each quarter, causing
Vans' quarterly financial statements to be false. Each quarter,
defendants' confidence in their ability to "cheat the market"
while simultaneously beating or meeting street expectations
increased and translated into a larger fraud as each quarter
ended. For example, at the end of September 2000, defendants
knew that the expected and published sales projections for the
Company would not be met. To ensure that the sales figures were
"hit," the Company sent product from its own Distribution Center
(in Santa Fe Springs) to a third-party Distribution Center more
than a month early, where it was held until defendants found
customers who actually needed it.
Thus, it appeared (and was booked financially) that the orders
were sent "to" the final customer, but in fact they were sent
into a holding pattern, earlier than they should have been, only
to artificially boost the sales figures for that time frame. The
product was "booked as sales" during the quarter, but in fact
did not get sent to the real end-user customer until the next
quarter.
Defendants were desirous to inflate the Company's EPS right
before the secondary offering so they could make it look like
they "hit" their projections and thereby allow Vans to complete
the secondary stock offering, which raised over $60 million in
proceeds. In truth, defendants had known the Company could not
legitimately hit these estimates. In addition, defendants
actually knew of the projected drop in sales for the U.S. and
South American markets four months before the last public
offering, but none of that was disclosed to the public until
eight months later, and when it was disclosed, defendants used
"September 11th" as a scapegoat when they actually knew these
problems predated September 11th. Finally, defendants were also
keenly aware that three of the five skate parks, including
Bakersfield, Ontario Mills and Potomac, were hemorrhaging cash,
causing not only negative cash flow but also requiring that Vans
take an impairment charge by September of 2000.
On May 23, 2002, Vans announced preliminary results for the
fourth quarter and fiscal year ending May 31, 2002, revisions to
its guidance for fiscal 2003, plans to close its Bakersfield,
California skate park, the impairment charge with respect to its
Denver, Colorado skate park, and a write-down of certain slow-
moving inventory. The market reacted swiftly to the news with
shares of Vans falling 19.87% or $2.53 per share to close at
$10.20 per share on May 24, 2002.
For more information, contact the Shareholder Relations
Department, by Mail: 10 East 40th Street, New York, New York
10016, by Phone: (800) 217-1522 or (212) 779-1414, or by E-mail:
VANS@bernlieb.com.
*********
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the Class Action Reporter. Submissions
via e-mail to carconf@beard.com are encouraged.
Each Friday's edition of the CAR includes a section featuring
news on asbestos-related litigation and profiles of target
asbestos defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
liabilities.
*********
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Class Action Reporter is a daily newsletter, co-published by
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Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland
USA. Roberto Amor, Aurora Fatima Antonio and Lyndsey Resnick,
Editors.
Copyright 2004. All rights reserved. ISSN 1525-2272.
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