/raid1/www/Hosts/bankrupt/CAR_Public/040326.mbx
C L A S S A C T I O N R E P O R T E R
Friday, March 26, 2004, Vol. 6, No. 61
Headlines
AMERICAN PHARMACEUTICAL: Faces Suits For Securities Fraud in IL
BLUE MARTINI: Approves Settlement of Securities Suit in S.D. NY
BRUSH WELLMAN: Current, Ex-Employees File Personal Injury Suits
CHESAPEAKE ENERGY: Reaches Settlement For OK Royalties Lawsuit
CORTLAND BANCORP: Appeals Court Upholds Dismissal of Ohio Suits
FLUOR CORPORATION: Plaintiffs Appeal CA Stock Lawsuit Dismissal
GENZYME CORPORATION: Investors Launch Securities Suits in NY, MA
GENZYME CORPORATION: Amended Fraud Suit Hearing Pending
HERTZ CORPORATION: Plaintiffs Appeal NY Consumer Suit Dismissal
HERTZ CORPORATION: To Ask For Summary Judgment in Consumer Suit
HERTZ CORPORATION: Discovery Proceeds in CA Consumer Fraud Suit
HERTZ CORPORATION: NJ Court Dismisses Lawsuit For Consumer Fraud
HERTZ CORPORATION: FL Consumers Launch Lawsuit For Overcharging
J. RAY MCDERMOTT: Trial For Texas Lawsuit Set For July 5, 2004
J. RAY MCDERMOTT: Faces Several Negligence Lawsuits in TX Court
LEVEL 3: Court Hears Arguments on Appeal of Settlement Approval
LEVEL 3: CO Shareholder Derivative Suit Stayed Until June 2004
OMNICOM GROUP: Asks NY Court To Dismiss Securities Fraud Lawsuit
ORTHODONTIC CENTERS: Asks LA Court To Dismiss Securities Lawsuit
ORTHOLOGIC CORPORATION: Reaches Settlement of AZ Stock Lawsuit
PEROT SYSTEMS: Forges Securities Fraud Lawsuit Settlement in NY
PEROT SYSTEMS: CA Court Refuses Plaintiffs' Motion To Amend Suit
PEROT SYSTEMS: Asks TX Court To Dismiss Securities Fraud Lawsuit
SCIENTIFIC GAMES: Asks CA Court To Dismiss Unfair Trade Lawsuit
STILLWATER MINING: MT Court Sets March 30 Deadline To Amend Suit
TRANSKARYOTIC THERAPIES: MA Court Mulls Dismissal of Stock Suit
TRANSKARYOTIC THERAPIES: MA Court Hears Motion To Dismiss Suit
US ONCOLOGY: Shareholders File Suit V. Oiler Acquisition Merger
WELLMAN INC.: Plaintiffs Dismiss 9 Polyester Antitrust Lawsuits
WELLMAN INC.: Faces Indirect Purchaser Federal Antitrust Suits
WELLMAN INC.: Faces Polyester Fiber Antitrust Lawsuits in Canada
Asbestos Alert
ASBESTOS LITIGATION: AMETEK Defends Against Indeterminate Claims
ASBESTOS LITIGATION: AMPCO Pittsburgh Facing 18T Asbestos Claims
ASBESTOS LITIGATION: Albany International Asbestos Claims Lower
ASBESTOS LITIGATION: ABI Takes Charges From Subsidiary Congoleum
ASBESTOS LITIGATION: B&W Expected Asbestos Liability Increase
ASBESTOS LITIGATION: Berkshire Estimates Acquisition's Reserves
ASBESTOS LITIGATION: California Coastal Refutes Asbestos Claims
ASBESTOS LITIGATION: CompuDyne Carrier Excludes Certain Claims
ASBESTOS LITIGATION: Congoleum Corp. Bares Asbestos Liabilities
ASBESTOS LITIGATION: Ford Motors Asbestos Claims Increasing
ASBESTOS LITIGATION: Grainger W W, Inc. Copes With 3T Plaintiffs
ASBESTOS LITIGATION: Huttig Sues For Asbestos Claims Recovery
ASBESTOS LITIGATION: NL Has 425 Pending Asbestos-Related Cases
ASBESTOS LITIGATION: Northrop Grumman Sued For Asbestos Exposure
ASBESTOS LITIGATION: United Industrial Allots Asbestos Provision
ASBESTOS ALERT: W.R. Berkley's Net Reserves Show Increase In`03
ASBESTOS ALERT: Fording Canadian Coal Trust Faces Asbestos Risk
ASBESTOS ALERT: Troutline Sees Diminished Prospects in Asbestos
ASBESTOS ALERT: Water Pik Defending Against Asbestos Suits
New Securities Fraud Cases
CANADIAN SUPERIOR: Milberg Weiss Lodges Securities Lawsuit in NY
CHINA LIFE: Cauley Geller Files Securities Fraud Suit in S.D. NY
NORTEL NETWORKS: Scott + Scott Lodges Securities Suit in S.D. NY
ROYAL DUTCH: Rabin Murray Lodges Securities Fraud Lawsuit in NJ
*********
AMERICAN PHARMACEUTICAL: Faces Suits For Securities Fraud in IL
---------------------------------------------------------------
American Pharmaceutical Partners, Inc. faces several securities
class actions filed against it, four of its officers and
American BioScience, Inc. in the United States District Court
for the Northern District of Illinois.
The complaints allege violations of Section 10(b) and Section
20(a) of the Securities Exchange Act of 1934, and rule 10b-5,
principally relating to purportedly false and misleading
statements made by us regarding ABRAXANE.
Additionally, in December 2003 a purported shareholder
derivative class action was filed in the Circuit Court of Cook
County, Illinois, Chancery Division against each member of the
Company's Board of Directors and one non-director executive
officer. The Company is a nominal defendant in this lawsuit,
which alleges claims relating to essentially the same purported
misleading statements that are at issue in the pending
securities class action lawsuits. In the securities class
action lawsuits, the Company denies making any misleading
statements. The derivative complaint also alleges claims
relating to stock transactions by certain of the director and
officer defendants.
BLUE MARTINI: Approves Settlement of Securities Suit in S.D. NY
---------------------------------------------------------------
Blue Martini Software, Inc. reached a settlement for the
consolidated securities class action filed in the United States
District Court for the Southern District of New York against it,
and:
(1) Monte Zweben,
(2) William Zuendt,
(3) Andrew Verhalen,
(4) certain of its former officers and directors,
(5) Goldman Sachs and
(6) the other underwriters of the Company's initial public
offering, or IPO
The suit, styled "In re Blue Martini Initial Public Offering
Securities Litigation," claims that the defendants violated the
federal securities laws because the Company's IPO registration
statement and prospectus allegedly contained untrue statements
of material fact or omitted material facts regarding the
compensation to be received by, and the stock allocation
practices of, the IPO underwriters. The plaintiffs seek
unspecified monetary damages and other relief.
Similar complaints were filed in the same Court against hundreds
of other public companies that conducted IPOs of their common
stock since the mid-1990s. On August 8, 2001, all IPO-related
lawsuits were consolidated for pretrial purposes before United
States Judge Shira Scheindlin of the Southern District of New
York.
In accordance with Judge Scheindlin's orders, the Company did
not answer the complaint, and no discovery was served. Also in
accordance with Judge Scheindlin's orders, plaintiffs filed
amended consolidated complaints on April 19, 2002. The Company
joined in a global motion to dismiss the IPO Lawsuits on July
15, 2002. On October 9, 2002, the Company's directors and
officers were dismissed without prejudice pursuant to a
stipulated dismissal and tolling agreement between the
plaintiffs and certain individual defendants.
On November 1, Judge Scheindlin presided over an all-day hearing
on the global motions to dismiss. On February 19, 2003, Judge
Scheindlin issued a ruling on the global motion to dismiss; with
respect to the Company, the motion was granted in part and
denied in part. In June 2003, the Company joined in a tentative
global settlement that would, among other things, result in the
dismissal with prejudice of all claims against all issuers and
their officers and directors in the IPO-related lawsuits, and
the assignment to plaintiffs of certain potential claims that
the issuers may have against their IPO underwriters.
The tentative settlement provides that, in the event that the
plaintiffs ultimately recover less than $1 billion in
settlement or judgment against the underwriter defendants in the
IPO-related lawsuits, the plaintiffs would be entitled to
payment by each participating Issuer's insurer of a pro rata
share of any shortfall in the plaintiffs' guaranteed recovery.
The tentative settlement does not involve any payment or
admission of wrongdoing by the Company.
In July 2003, pursuant to the authorization of a special
litigation committee of the Company's Board of Directors, the
Company entered into a non-binding memorandum of understanding
reflecting the settlement terms described above. In September
2003, in connection with the possible settlement, our officers
and directors described above who had entered tolling agreements
with plaintiffs agreed to extend those agreements so that they
would not expire prior to any settlement being finalized.
Although the Company has approved this settlement proposal in
principle, it remains subject to a number of procedural
conditions, as well as formal approval by the court.
BRUSH WELLMAN: Current, Ex-Employees File Personal Injury Suits
---------------------------------------------------------------
Brush Wellman faces various lawsuits filed in various state and
federal courts by some of its employees or former employees and
by third party individuals (typically employees of customers or
of independent contractors) alleging that they contracted, or
have been placed at risk of contracting, chronic beryllium
disease or other lung conditions as a result of exposure to
beryllium.
Plaintiffs in beryllium cases seek recovery under theories of
intentional tort and various other legal theories and seek
compensatory and punitive damages, in many cases of an
unspecified sum. Spouses, if any, claim loss of consortium.
During 2003, the number of beryllium cases decreased from 33
(involving 70 plaintiffs), as of December 31, 2002 to 15 cases
(involving 33) plaintiffs as of December 31, 2003. During 2003,
an aggregate of 24 cases involving 47 plaintiffs were settled.
Five cases involving 12 plaintiffs were voluntarily dismissed by
the plaintiffs. Eleven cases involving 22 plaintiffs were filed
in 2003.
The 15 pending beryllium cases fall into three categories. One
is an "employee case" involving one former employee. 12 cases
involve third-party individual plaintiffs, with 12 individuals
(and five spouses who have filed claims as part of their
spouse's case, and five children who have filed claims as part
of their parent's case). Two are purported class actions
involving 10 individuals.
In one purported class action in which Brush Wellman is seeking
review of the appellate court's reversal of the trial court's
denial of class certification, the named plaintiffs allege that
past exposure to beryllium has increased their risk of
contracting chronic beryllium disease and possibly cancer,
although they do not claim to have actually contracted any
disease. They seek medical monitoring funds to be used to
detect medical problems that they believe may develop as a
result of their exposure, and seek punitive damages. This
purported class action was brought by named plaintiffs on behalf
of tradesmen who worked in one of Brush Wellman's facilities as
employees of independent contractors.
In the second purported class action that is pending against
Brush Wellman, the named plaintiffs allege that they were
exposed to beryllium in the course of their employment with a
customer of Brush Wellman, and that they are sensitized to
beryllium. They seek medical monitoring funds to be used to
detect medical problems that they believe may develop as a
result of their exposure, and seek punitive damages. This
purported class action was brought by named plaintiffs on behalf
of employees who worked in the state of California at the
facilities of one of Brush Wellman's customers, and the spouses
of those workers.
From January 1, 2004 to March 8, 2004, Brush Wellman was served
with a third purported class action, in which the named
plaintiffs allege that they were exposed to beryllium in the
course of their employment with a customer of Brush Wellman.
They seek medical monitoring funds to be used to detect medical
problems that they believe may develop as a result of their
exposure, and seek punitive damages. This purported class
action was brought on behalf of current and former employees who
worked at the Marietta, Georgia facility of one of Brush
Wellman's customers, and their spouses.
CHESAPEAKE ENERGY: Reaches Settlement For OK Royalties Lawsuit
--------------------------------------------------------------
Chesapeake Energy Corporation reached a settlement for a lawsuit
filed against it in Oklahoma Court, pursuant to which the
Company agreed to refund Oklahoma royalty owners $10.5 million,
including interest.
The refund amount includes $3.6 million relating to marketing
fees which the Company have previously paid into the court ($0.3
million and $3.3 million were charged to provisions for legal
settlements in 2003 and 2002, respectively), $2.4 million
relating to gathering, compression, dehydration, field fuel or
transportation costs with respect to certain of the Company's
gathering systems, and $4.5 million relating to other such
gathering system costs and other claims.
The lawsuit has been certified for settlement as a class action,
and the court has preliminarily approved the settlement for the
purpose of giving class members notice of the proposed
settlement and setting a fairness hearing on May 6, 2004.
Assuming the settlement is approved and is not appealed, the
distribution of settlement proceeds is scheduled to occur prior
to October 5, 2004. The class members are substantially all
royalty owners under Oklahoma oil and gas leases or pooling
orders covering wells in which any of Chesapeake, its
subsidiaries or their predecessors is a joint working interest
owner or operator.
The Company believes the potential liability associated with
post-production claims made against it by royalty owners in
three other pending lawsuits filed as class actions is not
material. There has been no class certification in any of these
cases, the Company stated in a regulatory filing.
CORTLAND BANCORP: Appeals Court Upholds Dismissal of Ohio Suits
---------------------------------------------------------------
The 11th District Court of Appeals upheld a lower court's
dismissal of two class actions filed against Cortland Bancorp,
Inc.'s subsidiary bank, styled "Frank Slentz, et al. v. Cortland
Savings and Banking Company," and "McDonagh, et al v. Cortland
Savings and Banking Company," involving purchased interests in
two campgrounds.
These two class action cases originated in 1993 with filings in
the Northern District of Ohio Eastern Division of the Federal
Court system. In addition to their alleged federal claims,
plaintiffs had alleged state law claims including them as
pendent causes of action.
On October 20, 1997 the federal judge presiding over these cases
filed a judgment entry dismissing all federal claims against the
Company's subsidiary bank, without prejudice. The plaintiffs
appealed the judgment. On March 2, 1999 the United States Court
of Appeals for the Sixth Circuit affirmed the decision of the
district court to grant summary judgment in favor of the
defendant bank and dismissing all of plaintiffs' federal claims.
While awaiting the ruling of the Sixth Circuit Court of Appeals,
the plaintiffs asserted their alleged state law claims by filing
suit in the Common Pleas Court of Trumbull County seeking
damages of approximately $4.3 million.
On September 30, 2002, the Company received notice that The
Court of Common Pleas in Trumbull County, Ohio had ordered the
dismissal of all plaintiffs' claims and granted the Company's
subsidiary bank, Cortland Savings and Banking Company, summary
judgment on all counts of plaintiffs' complaint in both cases.
Plaintiffs appealed the judgment.
The Company and Plaintiffs filed all permitted briefs with the
11th District Court of Appeals and oral arguments were made
before the Court of Appeals on October 20, 2003. On March 4,
2004, the Company received notice that the 11th District Court
of Appeals had upheld the decision of the Court of Common Pleas
in Trumbull County, Ohio, in favor of the registrant and its
subsidiary bank. Plaintiffs have the right to appeal the 11th
District Court's decision to the Ohio Supreme Court.
FLUOR CORPORATION: Plaintiffs Appeal CA Stock Lawsuit Dismissal
---------------------------------------------------------------
Plaintiffs appealed the dismissal of the consolidated amended
securities class action filed against Fluor Corporation and
certain of its officers and directors in the United States
District Court for California, Central District, Southern
Division.
Plaintiffs allege that certain Company officers and directors
violated the Securities Exchange Act of 1934 by providing false
or misleading statements about the Company's business and
prospects. The suit was filed on behalf of purchasers of the
Company's stock during the period from May 22, 1996 through
February 18, 1997.
The company's initial motion to dismiss the action was granted
by the court with leave to amend. The plaintiffs filed their
amended complaint and the company moved the court to dismiss the
new amended complaint. The Court granted the company's motion
and dismissed plaintiff's action without leave to amend.
Plaintiffs appealed the dismissal and the Ninth Circuit Court of
Appeals has remanded the motion to the trial court with
instructions to allow plaintiff an additional chance to plead
additional claims.
GENZYME CORPORATION: Investors Launch Securities Suits in NY, MA
----------------------------------------------------------------
Genzyme Corporation faces several securities class actions filed
in Massachusetts Superior Court and the United States District
Court for the Southern District of New York.
Four suits were initially filed against the Company regarding
the exchange of all of the outstanding shares of Biosurgery
Stock and Molecular Oncology Stock for shares of Genzyme General
Stock. The first case, filed in Massachusetts Superior Court in
May 2003, was a purported class action on behalf of holders of
Biosurgery Stock alleging a breach of the implied covenant of
good faith and fair dealing in the Company's charter and a
breach of the Company's board of directors' fiduciary duties.
The plaintiff in this case was seeking an injunction to adjust
the exchange ratio for the tracking stock exchange. The Court
dismissed the complaint for failure to state a claim on November
12, 2003.
Two substantially similar cases were filed in Massachusetts
Superior Court in August and October 2003. These cases were
consolidated in January 2004. The fourth case, filed in the
U.S. District Court for the Southern District of New York in
June 2003, was brought by two holders of Biosurgery Stock
alleging, in addition to the state law claims contained in the
other cases, violations of federal securities laws, common law
fraud, and a breach of the merger agreement with Biomatrix. The
plaintiffs are seeking an adjustment to the exchange ratio, the
rescission of the acquisition of Biomatrix, and unspecified
compensatory damages.
The Company believes each of these cases is without merit, it
stated in a disclosure to the Securities and Exchange
Commission.
GENZYME CORPORATION: Amended Fraud Suit Hearing Pending
-------------------------------------------------------
Plaintiffs filed an amended securities class action filed
against Genzyme Corporation in the California Superior Court,
County of Alameda, styled "Pignone v. SangStat Medical Corp., et
al., (Case No. RG 03110801)."
The plaintiff alleged that he was a stockholder of SangStat
Medical Corporation and purported to bring the action on behalf
of the holders of SangStat common stock. The plaintiff named as
defendants in the action SangStat and each of SangStat's former
directors. The plaintiff's complaint asserts that SangStat and
each of its former directors breached fiduciary duties to
SangStat stockholders by consenting to the acquisition by
Genzyme Corporation. The plaintiff's complaint did not seek
monetary damages but instead sought only equitable relief,
including an order rescinding the transaction to the extent
already implemented.
The plaintiff also sought costs of the suit, including
attorneys' fees. The plaintiff filed an amended complaint on
November 2003. A hearing on the amended complaint and a case
management conference are scheduled for March 2004.
HERTZ CORPORATION: Plaintiffs Appeal NY Consumer Suit Dismissal
---------------------------------------------------------------
Plaintiffs appealed the Supreme Court of the State of New York,
County of New York's dismissal of a class action filed against
The Hertz Corporation, styled "James Han, individually and on
behalf of all others similarly situated, v. The Hertz
Corporation."
The suit was filed on behalf of persons who rented private
passenger vehicles from the Company in New York under rental
agreements containing provisions which allegedly violate the
express provisions of Section 396-z of the General Business Law
of New York and New York's consumer fraud statute (i.e., Section
349 of the General Business Law).
More specifically, the complaint alleged that rental agreements
used by the Company in New York included provisions that imposed
liability upon renters beyond the statutorily permitted amounts
and that the rental agreements failed to disclose to renters
their rights and responsibilities concerning vehicle damage. On
July 29, 2003, the Company's motion for summary judgment was
granted and an order of dismissal was thereafter entered.
HERTZ CORPORATION: To Ask For Summary Judgment in Consumer Suit
---------------------------------------------------------------
The Hertz Corporation intends to ask the United States District
Court for the Eastern District of New York to grant summary
judgment in their favor in a class action filed against it,
styled "Jennifer Myers, an individual and on behalf of all
others similarly situated, v. The Hertz Corporation."
The complaint alleges a nationwide "opt-in collective action" on
behalf of all Senior Station Managers, Station Managers and "B"
Station Managers employed by the Company throughout the United
States, contesting their exempt classification and seeking
payment of overtime compensation under the federal Fair Labor
Standards Act (FLSA).
The complaint also contains a subclass for all such managers
employed in New York for alleged violations of state labor laws.
Plaintiffs have not yet been permitted to obtain a nationwide
"opt-in," as discovery has been thus far limited to the location
where the plaintiffs are employed, in an effort by the court to
determine the viability of a nationwide action.
In the interim, the plaintiffs have been permitted to amend
their complaint to include an allegation of pay docking of
managers. Additional depositions have been taken concerning
this new allegation.
HERTZ CORPORATION: Discovery Proceeds in CA Consumer Fraud Suit
---------------------------------------------------------------
Discovery has commenced in the class action filed against The
Hertz Corporation and other rental companies in the Superior
Court of the State of California, for the County of San Diego,
styled "Wide World Tours of Mission Valley, Inc., Travel Support
Systems, Inc., Vacation Marketing Group of Hawaii., Cecilia
Pedroza, and International Travel Bureau, Inc. v. Avis Rent A
Car System, Inc., Budget Rent A Car System, Inc., Dollar Rent A
Car, Inc., Enterprise Rent-A-Car Company, The Hertz Corporation,
and Thrifty Rent-A-Car System, Inc."
The suit purports to be a class action on behalf of certain
United States travel agents and agencies that regularly book
customers with the major rental car companies. The complaint
alleges that the defendant rental car companies breached their
unwritten contracts with the plaintiffs by knowingly and
deliberately under-reporting and underpaying the commissions due
to the plaintiffs, that in so doing the defendants engaged in
deceit and that the defendants engaged in unfair competition by
deducting processing fees or other administrative fees from
payments they make to travel agents.
After the defendants filed misjoinder motions, an amended
complaint was filed against the Company with a separate new
lawsuit commenced against Avis. On November 25, 2003, the
Company served its answer to the amended complaint.
HERTZ CORPORATION: NJ Court Dismisses Lawsuit For Consumer Fraud
----------------------------------------------------------------
The Superior Court of New Jersey, Essex County dismissed the
class action filed against The Hertz Corporation, styled "Naomi
R. Henderson, individually and on behalf of all others similarly
situated, v. The Hertz Corporation."
The suit was filed on behalf of all persons who purchased
optional insurance products in the State of New Jersey or in
other states from or through the Company at times that the
Company did not have required licenses to sell such insurance.
HERTZ CORPORATION: FL Consumers Launch Lawsuit For Overcharging
---------------------------------------------------------------
The Hertz Corporation faces a class action, styled "Stephen
Moore on behalf of himself and all others similarly situated, v.
The Hertz Corporation," filed in the Circuit Court of the
Thirteenth Judicial Circuit of the State of Florida, in and for
Hillsborough County.
The suit purports to be a class action on behalf of persons who
rented vehicles from the Company in Florida and were allegedly
overcharged for the recovery of a tire and battery solid waste
management fee and the recovery of registration fees for the
issuance of Florida license plates.
Similar lawsuits were separately commenced by the same plaintiff
against Avis Rent A Car System Inc. and Budget Rent A Car
System, Inc. The Company has not yet filed an answer to the
complaint.
J. RAY MCDERMOTT: Trial For Texas Lawsuit Set For July 5, 2004
--------------------------------------------------------------
Trial in some of the claims in the class action filed against J.
Ray McDermott, Inc. (JRM) is set for July 5,2004 in the 58th
Judicial District Court of Jefferson County, Texas.
The suit, entitled "Doug Benoit, et al. v. J. Ray McDermott,
Inc. et al." was initiated against one of JRM's subsidiaries and
involves approximately 140 plaintiffs who have alleged injuries
as a result of exposures to asbestos and welding fumes while
working onboard JRM's marine construction vessels or in JRM's
fabrication facilities.
The Company believes that most or all of these claims are
subject to applicable workers' compensation laws or comparable
provisions of the Jones Act. The Company cannot now determine
the result of these claims, and anticipates that other similar
claims may be filed in the future. Nevertheless, the Company
does not expect that the outcome of these actions will have a
material adverse impact on its financial position, results of
operations or cash flows, the Company said in a regulatory
filing.
J. RAY MCDERMOTT: Faces Several Negligence Lawsuits in TX Court
---------------------------------------------------------------
J. Ray McDermott, Inc. faces several class actions, styled
"entitled Jose Fragoso, et al. v. J. Ray McDermott, Inc. et
al.," filed in the 404th Judicial District Court of Cameron
County, Texas.
This proceeding involves 163 non-employee plaintiffs who have
alleged negligence for exposure to silica while working at an
unspecified location. Thereafter, nine similar lawsuits were
filed in the same district by the same law firm. In total,
there are approximately 500 plaintiffs.
In addition to JRM and its parent McDermott International, Inc.
(MII), the suits name seven other premises defendants and allege
additional claims against more than 70 product defendants.
These ten proceedings are in the initial stages, and no trial
has been set at this time in any of these proceedings.
LEVEL 3: Court Hears Arguments on Appeal of Settlement Approval
---------------------------------------------------------------
The United States Seventh Circuit Court of Appeals heard
arguments on the appeal of a lower court's preliminary approval
of the settlement of the class actions filed against Level 3
Communications, Inc. and two of its subsidiaries.
In May 2001, Level 3 Communications, Inc. and two of its
subsidiaries were named as defendants in "Bauer, et. al. v.
Level 3 Communications, LLC, et al.," a purported multi-state
class action, filed in the U.S. District Court for the Southern
District of Illinois. In April 2002, the same plaintiffs filed
a second nearly identical purported multi-state class action in
state court in Madison County, Illinois. In July 2001,
the Company was named as a defendant in "Koyle, et. al. v. Level
3 Communications, Inc., et. al.," a purported multi-state class
action filed in the United States District Court for the
District of Idaho. In September 2002, Level 3 Communications,
LLC was named as a defendant in "Smith et al v. Sprint
Communications Company, L.P.," et al, a purported nationwide
class action filed in the United States District Court for the
Northern District of Illinois.
These actions involve the Company's right to install its fiber
optic cable network in easements and right-of-ways crossing the
plaintiffs' land. In general, the Company obtained the rights
to construct its network from railroads, utilities, and others,
and is installing its network along the rights-of-way so
granted. Plaintiffs in the purported class actions assert that
they are the owners of lands over which the Company's fiber
optic cable network passes, and that the railroads, utilities,
and others who granted the Company the right to construct and
maintain its network did not have the legal ability to do so.
The complaint seeks damages on theories of trespass, unjust
enrichment and slander of title and property, as well as
punitive damages. The Company has also received, and may in the
future receive, claims and demands related to rights-of-way
issues similar to the issues in these cases that may be based on
similar or different legal theories.
To date, all attempts to have class action status granted on
complaints filed against the Company or any of its subsidiaries
involving claims and demands related to rights-of-way issues
have been denied. On July 25, 2003, the Smith Court entered an
Order preliminarily approving a settlement agreement which will
resolve all claims against the Company arising out of the
Company's location of fiber optic cable and related
telecommunications facilities that the Company owns within
railroad rights-of-way throughout the United States. In
connection with the Court's Order preliminarily approving the
settlement, the Court entered an Order enjoining the parties in
all pending federal and state railroad rights-of-way class
action litigation involving the Company from further pursuing
those pending actions at this time.
Under the terms of the settlement agreement, landowners who own
property adjacent to the railroad rights-of-way in which the
Company placed its fiber optic cable and related facilities may
submit claims and receive specified compensation. The Company
is unable to quantify the ultimate amount of payments to be made
pursuant to the settlement until if and when the settlement
receives final approval and all appeals have been exhausted; and
the claims process has been completed.
In September 2003, a petition for appeal was granted which seeks
a reversal of the Smith Court's decision to preliminarily
approve the settlement and certify a nationwide class for
settlement purposes.
LEVEL 3: CO Shareholder Derivative Suit Stayed Until June 2004
--------------------------------------------------------------
The shareholder derivative lawsuit filed against Level 3
Communications, Inc. (as a nominal defendant), its current and
former directors and Peter Kiewit Sons, Inc. (PKS) has been
stayed until June 17, 2004.
The suit, filed in the District Court of Colorado for the City
and County of Broomfield and styled "Haegle v. Scott, et al.,
(Index No. 02-CV-0196)," alleges that the director defendants,
aided and abetted by PKS, breached their fiduciary duties to the
Company in connection with several transactions between the
Company and PKS including contracts under which PKS constructed
the Company's fiber optic cable network and manages the
Company's mine properties.
The complaint also alleges that in building the fiber optic
cable network, the defendants caused the Company to violate the
property rights of landowners, thereby subjecting the Company to
substantial potential liability. In addition, the complaint
alleges that Company assets were transferred to its officers and
directors in the form of personal loans, excessive salaries and
the payment of personal expenses. The action seeks both
equitable and legal relief, including restitution, compensatory
and punitive damages of an unspecified amount, imposition of a
constructive trust, disgorgement and injunctive relief.
The defendants filed a motion to dismiss, which was denied by
the court in early October. Subsequently, the Board of
Directors of the Company appointed a Special Litigation
Committee comprised of an independent director with the
exclusive power to conduct or cause to be conducted an impartial
and independent investigation of all matters alleged by the
Plaintiff and to determine whether the litigation should be
maintained, terminated, or otherwise disposed, in accordance
with its findings as to whether the litigation is in the best
interests of the Company.
In addition, the Company filed a motion to stay all proceedings
in the case, including all discovery, for a period of six months
to enable the Special Litigation Committee to complete its
evaluation. This Court granted the motion.
OMNICOM GROUP: Asks NY Court To Dismiss Securities Fraud Lawsuit
----------------------------------------------------------------
Omnicom Group, Inc. asked the United States District Court for
the Southern District of New York to dismiss the consolidated
securities class action filed against it and certain of its
senior executives, styled "In re Omnicom Group Inc. Securities
Litigation, No. 02-CV4483 (RCC)."
The suit was filed on behalf of a proposed class of purchasers
of our common stock between February 20, 2001 and June 11, 2002.
The consolidated complaint alleges among other things that the
Company's public filings and other public statements during that
period contained false and misleading statements or omitted to
state material information relating to:
(1) its calculation of the organic growth component of
period-to-period revenue growth,
(2) the Company's valuation of certain internet investments
made by our Communicade Group, which it contributed to
Seneca Investments LLC in 2001, and
(3) the existence and amount of certain contingent future
obligations in respect of acquisitions.
The complaint seeks an unspecified amount of compensatory
damages plus costs and attorneys' fees.
Additionally, a shareholder derivative action was filed on June
28, 2002 in New York State Court in New York City by a plaintiff
shareholder, purportedly on the Company's behalf, alleging
breaches of fiduciary duty, disclosure failures, abuse of
control and gross mismanagement in connection with the formation
of Seneca Investments LLC.
ORTHODONTIC CENTERS: Asks LA Court To Dismiss Securities Lawsuit
----------------------------------------------------------------
Orthodontic Centers of America, Inc. asked the United States
District Court for the Eastern District of Louisiana to dismiss
a consolidated securities class action filed against it,
Bartholomew F. Palmisano, Sr., its Chairman of the Board,
President and Chief Executive Officer, Bartholomew F. Palmisano,
Jr., Chief Operating Officer, and Thomas J. Sandeman, Chief
Financial Officer.
The consolidated action purports to be filed as a class action
on behalf of the plaintiff and other purchasers of shares of
Company common stock from November 14, 2002 to March 18, 2003.
The suit alleges that OCA and the other defendants violated
Section 10(b) of the Securities Exchange Act of 1934, as
amended, and Rule 10b-5 thereunder, by allegedly making false
and misleading statements, and/or omitting to state material
facts necessary to make the statements made not misleading,
about practices affiliated with OrthAlliance, and by allegedly
recognizing revenue, failing to timely expense uncollectible
receivables and failing to write-down certain long-lived assets
in violation of generally accepted accounting principles, in
order to inflate the market price of the Company's common stock.
The plaintiffs seek unspecified compensatory damages, interest
and attorneys' fees.
The Company cannot predict whether it will prevail in the action
or estimate the amount of damages that it might incur. The
Company is also unable to estimate any reimbursement that it may
receive from insurance policies in the event that it incurs any
damages or costs in connection with this action. The Company
denies these allegations and believes that this action lacks
merit, the Company said in a regulatory filing.
ORTHOLOGIC CORPORATION: Reaches Settlement of AZ Stock Lawsuit
--------------------------------------------------------------
OrthoLogic Corporation reached a settlement of the securities
class action filed against it and certain of its officers and
directors in the United States District Court for the District
of Arizona. The suit alleges violations of Sections 10(b) of
the Securities Exchange Act if 1934 and SEC Rule 10b-5
promulgated thereunder, and, as to other defendants, Section
20(a) of the Exchange Act.
The parties negotiated and the court approved a global
settlement of the consolidated class action suits. In return
for dismissal of both class actions, and releases by a
settlement class comprised of all purchasers of OrthoLogic
Common Stock during the period from January 18 through June 18,
1996, inclusive, the settlement called for $1 million in cash
and 1 million shares of newly issued OrthoLogic Common Stock.
Pursuant to the terms of the settlement, the cash portion of the
settlement fund has already been paid into the settlement fund,
with the substantial portion of the $1 million paid from the
proceeds of the Company's directors' and officers' liability
insurance policy, and the remaining cash paid by the Company.
Pursuant to the terms of the settlement and order of the court,
the Company issued and delivered the shares of Common Stock to
plaintiffs' settlement counsel as part of the plaintiffs'
counsel's fee award; however, only 300 shares of common stock
were issued during 2001. The remaining 700,000 shares were
issued during 2003. Notices were sent to stockholders of record
for the relevant time period to calculate the settlement pool
each stockholder is to receive.
Management believes the settlement is in the best interests of
the Company and its shareholders as it frees the Company from
the cost and significant distraction of the ongoing litigation.
The settlement does not constitute, and should not be construed
as, an admission that the defendants have any liability or acted
wrongfully in any way with respect to the plaintiffs or any
other person, the Company stated in a regulatory filing.
PEROT SYSTEMS: Forges Securities Fraud Lawsuit Settlement in NY
---------------------------------------------------------------
Perot Systems Corporation reached a settlement for the
consolidated securities class action filed against it, some of
its current and former officers and the investment banks that
underwrote its initial public offering, in the United States
District Court for the Southern District of New York.
The suit alleges violations of Rule 10b-5, promulgated under the
Securities Exchange Act of 1934, and Sections11, 12(a)(2) and 15
of the Securities Act of 1933. Approximately 300 issuers and 40
investment banks have been sued in similar cases. The suits
against the issuers and underwriters have been consolidated for
pretrial purposes in the IPO Allocation Securities Litigation.
The lawsuit involving the Company focuses on alleged improper
practices by the investment banks in connection with the
Company's initial public offering in February 1999. The
plaintiffs allege that the investment banks, in exchange for
allocating public offering shares to their customers, received
undisclosed commissions from their customers on the purchase of
securities and required their customers to purchase additional
shares in aftermarket trading. The lawsuit also alleges that
the Company should have disclosed in our public offering
prospectus the alleged practices of the investment banks,
whether or not the Company is aware that the practices were
occurring.
The Company believes the claims against it are without merit.
During 2002, the current and former officers and directors of
the Company that were individually named in the lawsuits
referred to above were dismissed from the cases. In exchange
for the dismissal, the individual defendants entered agreements
with the plaintiffs that toll the running of the statute of
limitations and permit the plaintiffs to re-file claims against
them in the future.
In February 2003, in response to the defendant's motion to
dismiss, the court dismissed the plaintiffs' Rule 10b-5 claims
against it, but did not dismiss the remaining claims. The
Company has accepted a settlement proposal presented to all
issuer defendants.
Pursuant to the proposed settlement, plaintiffs would dismiss
and release all claims against the Company and its current and
former officers and directors, in exchange for an assurance by
the insurance companies collectively responsible for insuring
the issuers in all of the IPO cases that the plaintiffs will
achieve a minimum recovery (including amounts recovered from the
underwriters), and for the assignment or surrender of certain
claims the Company may have against the underwriters.
The Company would not be required to make any cash payment with
respect to the settlement. The proposed settlement requires
approval of an unspecified percentage of issuers. The proposed
settlement would also require court approval, which cannot be
assured.
PEROT SYSTEMS: CA Court Refuses Plaintiffs' Motion To Amend Suit
----------------------------------------------------------------
The Superior Court of California, County of Sacramento refused
to grant plaintiffs' leave to amend the class action filed
against Perot Systems Corporation, alleging that the Company
conspired with energy traders to manipulate the California
energy market. This lawsuit is styled "Art Madrid v. Perot
Systems Corporation et al."
In September 2003, the Company filed a demurrer to the complaint
and an alternative motion to strike all claims for monetary
relief. In January 2004, the court granted the Company's
demurrer and did not grant the plaintiffs leave to amend their
complaint. The plaintiffs, however, have the right to appeal.
PEROT SYSTEMS: Asks TX Court To Dismiss Securities Fraud Lawsuit
----------------------------------------------------------------
Perot Systems Corporation asked the United States District Court
for the Northern District of Texas to dismiss the consolidated
class action filed against it, Ross Perot and Ross Perot, Jr.
The suit alleges violations of Rule 10b-5, and, in some of the
cases, common law fraud. These suits allege that the Company's
filings with the Securities and Exchange Commission contained
material misstatements or omissions of material facts with
respect to our activities related to the California energy
market. The suit is styled "Vincent Milano vs. Perot Systems
Corporation."
SCIENTIFIC GAMES: Asks CA Court To Dismiss Unfair Trade Lawsuit
---------------------------------------------------------------
Scientific Games Corporation asked the United States District
Court in California to dismiss a class action filed against it,
styled "Allard v. Autotote / Scientific Games Corporation, and
Does 1-10 Case No. BC 286382."
A professional Pick Six bettor filed the suit on behalf of pari-
mutuel bettors in the U.S., alleging, among other things,
negligence, breach of contract and deceptive trade practices
arising from its handling of multiple-race wagers. The Company
removed the case to federal court, and moved to dismiss the
lawsuit.
On June 2, 2003, the federal court judge dismissed the action
finding that plaintiff's claims were barred as a matter of law
and public policy. Subsequently, on July 8, 2003, the federal
court judge determined that he did not have subject matter
jurisdiction over the case and set aside his previous dismissal
order and remanded the case to state court.
STILLWATER MINING: MT Court Sets March 30 Deadline To Amend Suit
----------------------------------------------------------------
The United States District Court for the District of Montana
gave plaintiffs in the consolidated securities class action
filed against Stillwater Mining Co. and certain of its senior
officers until March 30,2004 to amend the suit.
The suit was filed on behalf of a class of all persons who
purchased or otherwise acquired common stock of the company from
April 20, 2001 through and including April 1, 2002. The suit
asserts claims against the company and certain of its
officers under Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934. Plaintiffs challenged the accuracy of
certain public disclosures made by the company regarding its
financial performance and, in particular, its accounting for
probable ore reserves.
On January 30, 2004, the court held a status conference at which
time the plaintiffs were given until March 30, 2004 to file an
amended complaint. The court also set the following briefing
schedule for any motion to dismiss:
(1) defendants' motion to dismiss must be filed on or
before May 14, 2004,
(2) plaintiffs'opposition must be filed on or before June
14, 2004 and
(3) defendants' reply must be filed on or before June 28,
2004.
The court anticipates setting a hearing date on the motion to
dismiss in July 2004.
TRANSKARYOTIC THERAPIES: MA Court Mulls Dismissal of Stock Suit
---------------------------------------------------------------
The United States District Court for the District of
Massachusetts heard Transkaryotic Therapies, Inc.'s motion to
dismiss the consolidated securities class action filed against
it and Richard Selden, its then Chief Executive Officer.
Several suits were originally filed, generally alleging
securities fraud during the period from January 2001 through
January 2003. Each of the complaints asserts claims under
Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5
promulgated thereunder, and Section 20(a) of the Exchange Act.
The suits allege that the Company and its officers made false
and misleading statements and failed to disclose material
information concerning the status and progress for obtaining
United States marketing approval of its Replagal product to
treat Fabry disease during that period.
In March 2003, various plaintiffs filed motions to consolidate,
to appoint lead plaintiff, and to approve plaintiff's selections
of lead plaintiffs' counsel. In April 2003, various plaintiffs
filed a Joint Stipulation and Proposed Order of Lead Plaintiff
Applicants to Consolidate Actions, To Appoint Lead Plaintiffs
and to Approve Lead Plaintiffs' Selection of Lead Counsel,
Executive Committee and Liaison Counsel. In April 2003, the
Court endorsed the Proposed Order, thereby consolidating the
various matters under one matter: "In re Transkaryotic
Therapies, Inc., Securities Litigation, C.A. No.03-10165-RWZ."
In July 2003, the plaintiffs filed a Consolidated and Amended
Complaint against the Company and:
(1) Dr. Selden;
(2) Daniel Geffken, the Company's former Chief Financial
Officer;
(3) Walter Gilbert,
(4) Jonathan S. Leff,
(5) Rodman W. Moorhead, III,
(6) Wayne P. Yetter,
(7) William R. Miller,
(8) James E. Thomas,
(9) SG Cowen Securities Corporation,
(10) Deutsche Bank Securities,
(11) Pacific Growth Equities, Inc. and
(12) Leerink Swann & Company
The Amended Complaint alleges securities fraud during the period
from January 4, 2001 through January 10, 2003. The Amended
Complaint alleges that the defendants made false and misleading
statements and failed to disclose material information
concerning the status and progress for obtaining United States
marketing approval of Replagal during that period.
The Amended Complaint asserts claims against each of the
defendants under Section 11 of the Securities Act and against
Dr. Selden under Section15 of the Securities Act; against SG
Cowen Securities Corporation, Deutsche Bank Securities, Pacific
Growth Equities, Inc., and Leerink Swann & Company under Section
12(a)(2) of the Securities Act; against Dr. Selden and the
Company under Section 10(b) of the Exchange Act and Rule 10b-5
promulgated thereunder; and against Dr. Selden under
Section20(a) of the Exchange Act. The plaintiffs seek equitable
and monetary relief, an unspecified amount of damages, with
interest, and attorney's fees and costs.
In September 2003, the Company filed a motion to dismiss the
amended complaint. A hearing of the motion occurred in December
2003. A class has not been certified.
TRANSKARYOTIC THERAPIES: MA Court Hears Motion To Dismiss Suit
--------------------------------------------------------------
The Suffolk Superior Court in the Commonwealth of Massachusetts
heard Transkaryotic Therapies, Inc.'s motion to dismiss the
shareholder derivative suit filed against Dr. Richard Selden,
its former chief executive officer and:
(1) Jonathan S. Leff,
(2) Walter Gilbert,
(3) Wayne P. Yetter,
(4) Rodman W. Moorhead III,
(5) James E. Thomas,
(6) William Miller; and
(7) the Company (as nominal defendant)
The complaint alleges that the individual defendants breached
fiduciary duties owed to the Company and its shareholders by
disseminating materially false and misleading statements to the
market and causing or allowing the Company to conduct its
business in an unsafe, imprudent and unlawful manner. The
complaint purports to assert derivative claims against the
individual defendants for breach of fiduciary duty, and to
assert a claim for contribution and indemnification on behalf of
the Company for any liability the Company incurs as a result of
the individual defendants' alleged misconduct. The complaint
seeks declaratory, equitable and monetary relief, an unspecified
amount of damages, with interest, and attorney's fees and costs.
In August 2003, the plaintiff filed its Verified Amended
Derivative Complaint. The Amended Derivative Complaint alleges
that the individual defendants breached fiduciary duties owed to
the Company and its stockholders by causing the Company to issue
materially false and misleading statements to the public, by
signing its Form 10-Ks for the years 2000 and 2001 and by
signing a registration statement. The Amended Derivative
Complaint also alleges that defendant Dr. Selden sold the
Company's stock while in possession of material non-public
information. The plaintiffs seek declaratory, equitable and
monetary relief, an unspecified amount of damages, with
interest, and attorney's fees and costs.
US ONCOLOGY: Shareholders File Suit V. Oiler Acquisition Merger
---------------------------------------------------------------
US Oncology, Inc. and each of its directors face two purported
class action lawsuits. One of the lawsuits also names as a
defendant Welsh, Carson, Anderson & Stowe IX, L.P., an
investment partnership which owns approximately 14.5% of US
Oncology''s common stock.
The complaints allege, among other things, that the defendants
have breached their fiduciary duties to the stockholders of US
Oncology by entering into the merger agreement that was
announced on March 22, 2004 for the proposed merger of the
company with Oiler Acquisition Corporation, an affiliate of
Welsh Carson. Among other things, the consideration offered in
the merger is alleged to be inadequate and a result of unfair
dealing.
The complaints seek an injunction against the proposed
transaction or, if it is consummated, rescinding the
transaction, as well as money damages, attorneys'' fees,
expenses and other relief. The company believes that a third
lawsuit containing substantially similar allegations has been
filed, and additional lawsuits could be filed in the future.
The company stated that it believes that these lawsuits lack
merit and it intends to vigorously defend them. The lawsuits
were filed in the Court of Chancery of the State of Delaware by
purported stockholders of the company on behalf of all similarly
situated stockholders. Each alleges that a class should be
certified and the plaintiff be named as representative of the
purported class.
US Oncology''s Board of Directors approved the transaction
following the unanimous recommendation of a special committee
composed of independent directors that retained separate counsel
and a financial advisor, negotiated the merger agreement, and
received a fairness opinion. Under the terms of the merger
agreement, the holders of US Oncology common stock, other than
Welsh Carson, will receive $15.05 per share in cash for their
shares. Upon completion of the proposed merger, US Oncology
will become a privately held company. The closing of the
transaction is subject to various conditions contained in the
merger agreement, including the approval by the holders of a
majority of US Oncology''s shares held by stockholders other
than Welsh Carson and members of senior management participating
in the transaction, in addition to majority stockholder approval
statutorily required for a merger. The merger agreement allows
US Oncology until April 6, 2004 to actively solicit other
possible bidders and, thereafter, subject to certain conditions,
to respond to unsolicited inquiries by other persons interested
in acquiring the company. Should a superior offer be received
and accepted, US Oncology may, subject to certain conditions
(including payment of a "break-up" fee of $12 million),
terminate the merger agreement with the Welsh Carson affiliates.
For more details, contact the Company by Mail: US Oncology,
Inc., 16825 Northchase Drive, Suite 1300, Houston, Texas 77060,
Attention: Investor Relations, by Phone: (832) 601-8766 or by E-
mail: steve.sievert@usoncology.com.
WELLMAN INC.: Plaintiffs Dismiss 9 Polyester Antitrust Lawsuits
---------------------------------------------------------------
Plaintiffs voluntarily dismissed nine of 32 federal class
actions filed against Wellman, Inc. and certain other companies
on behalf of direct purchasers of polyester staple fiber,
alleging alleged violations of U.S. antitrust laws.
In each remaining lawsuit, the plaintiffs allege that the
defendants engaged in a conspiracy to fix the price of polyester
staple fiber in violation of the Sherman Act. In ten of the
cases, the plaintiff purports to represent a class of all
persons who directly purchased polyester staple fiber and were
similarly affected by such alleged conduct. Plaintiffs who do
not purport to represent a class have brought 13 of the cases.
All of the federal plaintiffs seek damages of unspecified
amounts, attorney's fees and costs and unspecified relief. In
addition, certain of the actions claim restitution, injunctions
against alleged illegal conduct and other equitable relief.
The federal suits were originally filed in the U.S. District
Court for:
(1) the Middle District of Alabama,
(2) the Northern District of California,
(3) the Middle District of Georgia,
(4) the District of New Jersey,
(5) the Middle District of North Carolina,
(6) the Western District of North Carolina,
(7) the District of South Carolina and
(8) the Western District of Virginia
The Judicial Panel on Multi-District Litigation ruled on April
22, 2003 to transfer all the federal cases, except for two
recently filed cases, where transfer has been requested, to the
Western District of North Carolina for coordinated or
consolidated pretrial proceedings.
On January 20, 2004, a plaintiff who does not purport to
represent a class filed a motion seeking leave to amend its
complaint adding nine defendants. The proposed new defendants
are various corporate entities and individuals, including two
Wellman employees. The Court has yet to rule on the matter.
On January 30, 2004, another plaintiff who does not purport to
represent a class filed a lawsuit, which named as defendants
Wellman, certain other companies and a number of individuals,
including two Wellman employees.
WELLMAN INC.: Faces Indirect Purchaser Federal Antitrust Suits
--------------------------------------------------------------
Wellman, Inc. faces 38 purported class actions alleging
violations of federal antitrust laws, state antitrust or unfair
competition laws and certain state consumer protection acts have
been filed in one federal court and various state courts on
behalf of purported classes of indirect purchasers of polyester
staple fiber products.
In each lawsuit, the plaintiffs allege that the defendants
engaged in a conspiracy to fix prices of polyester staple fiber
products. In addition, certain of the actions claim
restitution, injunction against alleged illegal conduct and
other equitable relief.
One indirect purchaser case is pending in the U.S. District
Court for the Western District of North Carolina and is subject
to the order issued by the Judicial Panel on Multi-District
Litigation for coordination or consolidation with the other
federal cases. The rest of the indirect purchaser cases were
filed in Arizona, California, the District of Columbia, Florida,
Kansas, Massachusetts, Michigan, New Mexico, North Carolina,
South Dakota, Tennessee, West Virginia and Wisconsin.
The case filed in West Virginia was removed to federal court and
subsequently remanded to the Circuit Court of Hancock County,
West Virginia. The case filed in Wisconsin was removed to
federal court and subsequently remanded to the Circuit Court for
Dane County, Wisconsin. In all of these cases, the plaintiffs
seek damages of unspecified amounts, attorney's fees and costs
and unspecified relief.
WELLMAN INC.: Faces Polyester Fiber Antitrust Lawsuits in Canada
----------------------------------------------------------------
Wellman, Inc. and certain other companies face several class
actions in Canadian courts, filed on behalf of direct and
indirect purchasers of polyester staple fiber.
The Company and certain other companies were named in an action
filed in the Superior Court of Justice for Ontario, Canada, by a
plaintiff purporting to represent a class of direct and indirect
purchasers of polyester staple fiber. This complaint asserts
claims under Canadian law. It contains three counts that ask
for compensatory damages of CDN50 million each. The extent to
which these three counts are duplicative and overlapping is
unclear. The complaint also contains one count asking for
punitive damages of CDN10 million.
Additionally, Wellman and certain other companies were also
named in an action filed in the Supreme Court of British
Columbia, Canada, by a plaintiff purporting to represent a class
of direct and indirect purchasers of polyester staple fiber.
This complaint also asserts claims under Canadian law and
requests compensatory, punitive and special damages, but does
not allege a specific dollar amount in damages.
Finally, Wellman and certain other corporations were named in an
action filed in the Superior Court for Quebec, Canada. This
complaint asserts claims under Canadian law seeking compensatory
damages of CDN15 million and punitive damages of CDN5 million.
Asbestos Alert
ASBESTOS LITIGATION: AMETEK Defends Against Indeterminate Claims
----------------------------------------------------------------
AMETEK Incorporated recently said in a regulatory filing that it
and its subsidiaries are among numerous industrial companies
named as defendants in lawsuits based on asbestos-related
claims. No significant resources have been required by the
Company to respond to these cases, no judgments have been made
against AMETEK, and no payments have been made to plaintiffs to
settle such asbestos-related claims. The Company believes it
has strong defenses to such claims, and it also is indemnified
against certain of these claims. If required, the Company
intends to defend itself vigorously in these matters.
ASBESTOS LITIGATION: AMPCO Pittsburgh Facing 18T Asbestos Claims
----------------------------------------------------------------
AMPCO Pittsburgh Co. reports that of the 18,000 claims pending
as of December 31, 2003, over 15,000 were made in six lawsuits
filed in Mississippi in 2002. Substantially all settlement and
defense costs were paid by insurers.
On February 7, 2003, Utica Mutual Insurance Company filed a
lawsuit in the Supreme Court of the State of New York, County of
Oneida against the Corporation and certain of the subsidiaries
named in underlying asbestos actions (the "Policyholder
Defendants") and three other insurance carriers that provided
primary coverage to the Corporation (the "Insurer Defendants").
In the lawsuit, Utica disputed certain coverage obligations to
the Policyholder Defendants and asserted that the Insurer
Defendants also had defense and indemnity obligations to the
Policyholder Defendants.
As of November 24, 2003, the Policyholder Defendants and Utica
had settled the Oneida County Litigation as among themselves,
although the Oneida County Litigation remained pending because
settlement had not been reached with all of the Insurer
Defendants. Pursuant to the settlement, Utica accepted
financial responsibility, subject to the limits of its policies
and based on fixed defense percentages and specified indemnity
allocation formulas, for a substantial majority of the asbestos
personal injury claims arising out of exposure to alleged
asbestos-containing components in products distributed by the
Policyholder Defendants that are subsidiaries of the
Corporation.
Utica's agreed share of such defense and indemnification costs
varies depending upon the alleged asbestos-containing product at
issue, whether Utica's primary or umbrella policies are
responsible for the claims and, for indemnification costs only,
the years of the claimant's exposure to asbestos.
On January 23, 2004, Utica sought the court's approval to file
an amended complaint seeking additional relief against the
Policyholder Defendants that is substantially identical to the
relief Utica seeks against those defendants in a separate
lawsuit filed by Howden Buffalo, Inc. in the U.S. District Court
for the Western District of Pennsylvania.
On November 25, 2003, Howden filed the Pennsylvania Litigation
against the Corporation, Utica and two of the Insurer Defendants
(with Utica, the "Howden Insurer Defendants"). Howden alleges
that
(1) Buffalo Forge Company, a former subsidiary of the
Corporation, or its predecessors had rights in certain
policies issued by the Howden Insurer Defendants;
(2) those rights were transferred in the 1993 transaction
whereby the Corporation sold all of the capital stock
of Buffalo Forge to Howden Group America, Inc. and
Howden Group Canada, Ltd.; and
(3) those rights currently reside in Howden, as successor
to Buffalo Forge.
In the lawsuit, Howden is seeking a judicial determination of
the rights and duties of the Corporation and the Howden Insurer
Defendants under those policies with respect to asbestos-related
personal injury claims asserted against Howden arising from the
historical operations of Buffalo Forge, as well as monetary
damages from Utica as a result of its denial of Howden's rights
under policies it issued that allegedly covered Buffalo Forge.
The Corporation intends to defend the lawsuit vigorously. If
Howden is successful in this lawsuit and obtains coverage from
the Howden Insurer Defendants, however, any insurance recovery
obtained by Howden under those policies could erode, in whole or
in part, the applicable coverage limits, which would reduce or
eliminate coverage amounts that otherwise may be available to
the Corporation under those policies.
Based on the Corporation's claims experience with the underlying
asbestos claims, the available insurance coverage and the
identity of the subsidiaries that are named in the cases, the
Corporation believes that the pending legal proceedings will not
have a material adverse effect on its consolidated financial
condition or liquidity. The outcome of particular lawsuits,
however, could be material to the consolidated results of
operations of the period in which the costs, if any, are
recognized.
The Corporation has made an accrual in its financial statements
to reflect its estimated share of costs for pending asbestos
claims, based on deductible and similar features of its relevant
insurance policies. In addition, the Corporation incurred
uninsured legal costs in connection with advice on certain
matters pertaining to these asbestos cases including insurance
litigation and other issues. Those costs amounted to about
$2,400,000 in 2003.
For the last two years, the Corporation been embroiled in and
incurred more than $3,000,000 on litigation and legal advice to
defend itself from asbestos personal injury claims, and in
efforts to compel insurance carriers to honor their obligations
to cover these claims. These claims are mostly related to
product specified by and for the United States.
The Corporation believes that the legal system is not
functioning in a fair or efficient way for asbestos plaintiffs
or defendants, and that federal or state legislation is the best
way to address this pervasive problem.
Defending the Corporation against claims for personal injury
alleged to result from asbestos-containing product manufactured
as many as sixty years ago is a major task for corporate
management and the Air and Liquid Processing group. The
Corporation believes substantially all of the claims are covered
by insurance; however, such coverage is currently subject to
challenge in the courts.
Operating income decreased by $5,973 in 2003 from 2002,
partially attributable to $2,393 of legal costs incurred for
case management and insurance recovery relating to lawsuits
filed in connection with asbestos-containing products
manufactured decades ago, an increase of $1,723 from the
previous year. Legal costs were also lower in 2002 against 2001
by about $1,708 as a result of the settlement of a lawsuit in
2001, which was unrelated to the aforementioned asbestos claims.
Expenses for 2003 and 2002 included $2,393 and $670,
respectively, for legal and case management costs for personal
injury claims litigation related to asbestos-containing product
and indemnity payments not expected to be recovered from
insurance carriers. Included in 2001 were $2,378 of litigation
costs incurred related to a lawsuit which was settled in 2001.
After consideration of these costs, selling and administrative
expenses for 2003, 2002 and 2001 were comparable.
The Company's Air and Liquid Processing segment was impacted by
the majority of the legal and case management costs for personal
injury claims litigation related to asbestos-containing product
and indemnity payments not expected to be recovered from
insurance carriers. Such costs approximated $2,285 and $564 in
2003 and 2002, respectively.
ASBESTOS LITIGATION: Albany International Asbestos Claims Lower
---------------------------------------------------------------
Albany International Corp. is a defendant in suits brought in
various courts in the United States by plaintiffs who allege
that they have suffered personal injury as a result of exposure
to asbestos-containing products previously manufactured by
Albany. Albany's production of asbestos-containing paper
machine clothing products was limited to certain synthetic dryer
fabrics marketed during the period from 1967 to 1976 and used in
certain paper mills. Such fabrics generally had a useful life
of three to twelve months.
Albany was defending against 28,390 such claims as of February
13, 2004. This compares with 28,838 such claims as of December
31, 2003, 28,691 claims as of October 24, 2003, 28,457 claims as
of August 1, 2003, 22,593 claims as of December 31, 2002, 7,347
claims as of December 31, 2001, 1,997 claims as of December 31,
2000, and 2,276 claims as of December 31, 1999. These suits
allege a variety of lung and other diseases based on alleged
exposure to products previously manufactured by Albany.
Albany anticipates that additional claims will be filed against
it and the related companies in the future but is unable to
predict the number and timing of such future claims. These
suits typically involve claims against from twenty to over two
hundred defendants, and the complaints usually fail to identify
the plaintiffs' work history or the nature of the plaintiffs'
alleged exposure to Albany's products. In the vast majority of
these suits, claimant work histories have not been provided. In
cases in which work histories have been provided, around one-
third of the claimants have alleged time spent in a paper mill,
and only a portion of those claimants have alleged time spent in
a paper mill to which Albany is believed to have supplied
asbestos-containing products.
Around 23,569 of the claims pending against Albany are filed in
various counties in Mississippi. The Company expects that only
a portion of these claimants will be able to demonstrate time
spent in a paper mill to which Albany supplied asbestos-
containing products during a period in which Albany's asbestos-
containing products were in use. Based on past experience,
communications from certain plaintiffs' counsel and the advice
of the Company's Mississippi counsel, the Company expects the
percentage of claimants with paper mill exposure in the
Mississippi proceedings to be considerably lower than the total
number of claims asserted. It is the position of Albany and the
other paper machine clothing defendants that there was
insufficient exposure to asbestos from any paper machine
clothing products to cause asbestos-related injury to any
plaintiff. Furthermore, asbestos contained in Albany's
synthetic products was encapsulated in a resin-coated yarn woven
into the interior of the fabric, further reducing the likelihood
of fiber release. While Albany believes it has meritorious
defenses to these claims, it has settled certain of these cases
for amounts it considers reasonable given the facts and
circumstances of each case. Albany's insurer, Liberty Mutual,
has defended each case under a standard reservation of rights.
As of February 13, 2004, the Registrant had resolved, by means
of settlement or dismissal, 6,168 claims, and had reached
tentative agreement to resolve an additional 4,563 claims
reported above as pending. The total cost of resolving all
10,731 such claims was $5,201,500. Of this amount, $5,166,500,
or 99%, was paid by the Registrant's insurance carrier. The
Registrant has more than $130,000,000 in confirmed insurance
coverage that should be available with respect to current and
future asbestos claims, as well as additional insurance coverage
that it should be able to access.
Brandon Drying Fabrics, Inc., a subsidiary of Geschmay Corp., is
also a separate defendant in most of these cases. Brandon was
defending against 10,491 claims as of February 13, 2004. This
compares with 10,242 such claims as of December 31, 2003, 11,983
claims as of October 24, 2003, 11,802 claims as of December 31,
2002, 8,759 claims as of December 31, 2001, 3,598 claims as of
December 31, 2000, and 1,887 claims as of December 31, 1999.
Albany acquired Geschmay Corp., formerly known as Wangner
Systems Corporation, in 1999. Brandon is a wholly owned
subsidiary of Geschmay Corp. In 1978, Brandon acquired certain
assets from Abney Mills, a South Carolina textile manufacturer.
Among the assets acquired by Brandon from Abney were assets of
Abney's wholly-owned subsidiary, Brandon Sales, Inc. which,
among other things, had sold dryer fabrics containing asbestos
made by its parent, Abney. It is believed that Abney ceased
production of asbestos-containing fabrics prior to the 1978
transaction. Although Brandon manufactured and sold dryer
fabrics under its own name subsequent to the asset purchase,
none of such fabrics contained asbestos. Under the terms of the
Assets Purchase Agreement between Brandon and Abney, Abney
agreed to indemnify, defend, and hold Brandon harmless from any
actions or claims on account of products manufactured by Abney
and its related corporations prior to the date of the sale,
whether or not the product was sold subsequent to the date of
the sale. It appears that Abney has since been dissolved.
Nevertheless, a representative of Abney has been notified of the
pendency of these actions and demand has been made that it
assume the defense of these actions. Because Brandon did not
manufacture asbestos-containing products, and because it does
not believe that it was the legal successor to, or otherwise
responsible for obligations of, Abney with respect to products
manufactured by Abney, it believes it has strong defenses to the
claims that have been asserted against it. In some instances,
plaintiffs have voluntarily dismissed claims against it, while
in others it has entered into what it considers to be reasonable
settlements. As of February 13, 2004, Brandon has resolved, by
means of settlement or dismissal, 5,999 claims for a total of
$152,499. Brandon's insurance carriers have agreed to pay 88.2%
of the total indemnification and defense costs related to these
proceedings, subject to the standard reservation of rights. The
remaining 11.8% is being sought from an insurance company that
denies that it issued a policy. Brandon's internal records
demonstrate otherwise, and Brandon has filed suit against this
company as well as its other carriers. Based on advice of
counsel, Brandon is confident that it will prevail in
establishing 100% indemnification and defense cost coverage.
In some of these cases, the Registrant is named both as a direct
defendant and as the "successor in interest" to Mount Vernon
Mills. The Registrant acquired certain assets from Mount Vernon
in 1993. Certain plaintiffs allege injury caused by asbestos-
containing products alleged to have been sold by Mount Vernon
many years prior to this acquisition. Mount Vernon is
contractually obligated to indemnify the Registrant against any
liability arising out of such products. The Registrant denies
any liability for products sold by Mount Vernon prior to the
acquisition of the Mount Vernon assets. Pursuant to its
contractual indemnification obligations, Mount Vernon has
assumed the defense of these claims. On this basis, the
Registrant has successfully moved for dismissal in a number of
actions.
ASBESTOS LITIGATION: ABI Takes Charges From Subsidiary Congoleum
----------------------------------------------------------------
American Biltrite Inc. reported that net loss from continuing
operations for 2003 was $6,800,000, including a $3,700,000
charge by its 55% owned consolidated subsidiary Congoleum
Corporation to resolve asbestos claims through a pre-packaged
plan of reorganization. The net loss from continuing operations
for 2002 was $6,800,000, which included a $16,800,000 asbestos
related charge by Congoleum.
American Biltrite Inc. produces both floor coverings and
jewelry. ABI gets about 55% of its sales from its controlling
ownership of Congoleum (vinyl sheet and tile) and its wholly
owned subsidiary Janus Flooring (hardwood floors). It produces
jewelry through its 95% control of costume-jewelry supplier K&M
Associates. ABI also makes industrial products such as
adhesive-coated, pressure-sensitive papers used to protect
materials during handling.
ASBESTOS LITIGATION: B&W Expected Asbestos Liability Increase
----------------------------------------------------------------
Due to a $286,500,000 expense in the fourth quarter 2002 related
to an increase in the Babcock & Wilcox Company's expected
asbestos liability, its net income of $24,100,000 for the 2003
fourth quarter had an increase of $274,900,000 versus the
corresponding period in 2002. This was according to a
regulatory filing by McDermott International Inc. Revenues
decreased $40,000,000, compared to the fourth quarter of 2002,
to $356,300,000 in the fourth quarter of 2003.
McDermott also said that it has not consolidated B&W with its
financial results since B&W's Chapter 11 bankruptcy filing in
February 2000.
ASBESTOS LITIGATION: Berkshire Estimates Acquisition's Reserves
----------------------------------------------------------------
Berkshire Hathaway Inc. said in its regulatory filing that
liabilities assumed under retroactive reinsurance contracts are
often expected to have an especially long-tail, as a significant
portion of the claims are expected to derive from asbestos and
other latent injury perils. These policies contain aggregate
limits of indemnification, so the risks of additional claims
under the contracts are limited.
On December 21, 1998 the Company acquired General Re, which
continuously estimates its liabilities and related reinsurance
recoverables for asbestos claims and claim expenses. Most
liabilities for such claims arise from exposures in North
America. Asbestos exposures do not lend themselves to
traditional methods of loss development determination and
therefore reserves related to these exposures may be considered
less reliable than reserves for standard lines of business
(e.g., automobile). The estimate for asbestos losses is
composed of four parts: known claims, development on known
claims, incurred but not reported (IBNR) losses and direct
excess coverage litigation expenses. At December 31, 2003,
environmental and asbestos loss reserves for North America were
$1,050,000,000 ($890,000,000 net of reinsurance). As of
December 31, 2002 such amounts totaled $1,161,000,000
($1,008,000,000 net of reinsurance). The changing legal
environment concerning asbestos and environmental claims has
made quantification of potential exposures very difficult.
Future changes to the legal environment may precipitate
significant changes in reserves.
Berkshire's insurance subsidiaries are exposed to environmental,
asbestos and other latent injury claims arising from insurance
and reinsurance contracts. Loss reserve estimates for
environmental and asbestos exposures include case basis
reserves, which also reflect reserves for legal and other loss
adjustment expenses and IBNR reserves. IBNR reserves are
determined based upon Berkshire's historic general liability
exposure base and policy language, previous environmental and
loss experience and the assessment of current trends of
environmental law, environmental cleanup costs, asbestos
liability law and judgmental settlements of asbestos
liabilities.
The liabilities for environmental, asbestos, and latent injury
claims and claims expenses net of reinsurance recoverables were
around $5,500,000,000 at December 31, 2003 and $6,600,000,000 at
December 31, 2002. These liabilities include $4,400,000,000 at
December 31, 2003 and $5,400,000 at December 31, 2002, of
liabilities assumed under retroactive reinsurance contracts
written by the Berkshire Hathaway Reinsurance Group. The
decline in these liabilities over the last twelve months was
primarily attributed to commutations of certain contracts in
2003. Claim liabilities arising from the retroactive contracts
are subject to aggregate policy limits. Thus, Berkshire's
exposure to environmental and latent injury claims under these
contracts is, likewise, limited. Claims paid or reserved under
these policies were around 86% of aggregate policy limits as of
the end of 2003.
ASBESTOS LITIGATION: California Coastal Refutes Asbestos Claims
----------------------------------------------------------------
In May 2002, Dresser Industries, Inc. filed litigation,
captioned Dresser Industries, Inc. vs. California Coastal
Communities, Inc. and RESCO Holdings, Inc. (a former affiliate),
in the 58th Judicial District Court of Jefferson County, Texas.
Dresser seeks a declaratory judgment regarding the rights and
obligations of the parties under a January 1988 purchase
agreement. Under the agreement, Dresser acquired an engineering
and construction business from The M.W. Kellogg Company, a
corporation formerly affiliated to the Company. Kellogg and its
parent company, Wheelabrator Technologies, Inc., agreed to
indemnify Dresser against certain pre-closing claims. In a
subsequent transaction, Wheelabrator assigned certain assets and
liabilities relating to the January 1988 purchase agreement to
the Company. Dresser also seeks unspecified damages for breach
of the 1988 purchase agreement, along with attorney's fees and
costs. Dresser's indemnity claims relate to several hundred
lawsuits encompassing around 5,800 contested asbestos claims
made by third parties in connection with work in facilities in
which the Dresser-acquired engineering and construction business
was allegedly connected.
The Company denies Dresser's allegations and is vigorously
defending itself in this case and related matters. The Company
was not formed until September 1988 and, upon being spun off in
December 1988 from Wheelabrator, agreed to indemnify
Wheelabrator for its potential liabilities under the January
1988 purchase agreement with Dresser to the extent that any such
liabilities are not covered by insurance. However, the Company
and RESCO contend that any contractual duty to indemnify Dresser
under the January 1988 purchase agreement for any third-party
asbestos claims expired in March 1991 under the terms of the
January 1988 purchase agreement. The Company also believes that
it has a number of other meritorious defenses to this
litigation.
This litigation is in the discovery process. The Company has
participated in initial settlement discussions in connection
with a mediation, which was ordered by the Court in advance of
the trial. The trial has been postponed to August 2004 in order
to allow time for Dresser to emerge from its Chapter 11
bankruptcy proceedings and for the mediation process to
continue. However, there can be no assurance that a settlement
can be reached before trial. Given the preliminary nature of
these proceedings, the Company is not able to assess its
potential exposure with any degree of accuracy. While the
Company's litigation accrual reflects its estimate for the
minimum costs which are probable and estimable, defense costs
and damage awards in asbestos cases can involve amounts that
would have a material adverse effect on the Company's business,
operations and financial condition, in the event that a judgment
for an indemnity for such defense costs and awards was to be
rendered against the Company.
The $1,100,000 of other expense, net in the current year as
compared with $100,000 of expense in 2002, primarily reflects
additional accruals of about $700,000 for estimated
environmental remediation costs, and $300,000 for contingent
indemnity obligations related to asbestos claims in the 2003
period.
ASBESTOS LITIGATION: CompuDyne Carrier Excludes Certain Claims
--------------------------------------------------------------
Over the past several years, CompuDyne Corporation has been
named in lawsuits involving asbestos related personal injury and
death claims in which the Company, individually and as an
alleged successor, is a defendant. CompuDyne Corp. has been
named as a defendant in cases related to claims for asbestos
exposure allegedly due to asbestos contained in certain of its
predecessor's products. The Company has advised its insurers of
each of these cases, and the insurers are providing a defense
pursuant to agreement with the Company, subject to reservation
of rights by the insurers. The insurers have advised that
claims in such litigation for punitive damages, exemplary
damages, malicious and willful and wanton behavior and
intentional conduct are not covered. One of the carriers has
given notice that asbestos related claims are excluded from
certain of these policies. The insurers have additional
coverage defenses, which are reserved, including that claims may
fall outside of a particular policy period of coverage.
Litigation costs to date have not been significant and CompuDyne
Corp. has not paid any settlements from its own funds.
ASBESTOS LITIGATION: Congoleum Corp. Bares Asbestos Liabilities
---------------------------------------------------------------
Congoleum Corporation reported its financial results for year
ended December 31, 2003. The net loss for 2003 was $6,800,000,
which included a previously announced $3,700,000 pre-tax charge
for asbestos liabilities, compared with a loss of $29,800,000 in
2002. The 2002 loss included a $17,300,000 charge for asbestos
liabilities and a $10,500,000 non-cash goodwill impairment
charge. The net loss per share in 2003 was $.82, compared to
$3.60 in 2002.
Roger S. Marcus, Chairman of the Board, commented that one of
the five major factors that caused the Company's disappointing
performance in 2003 was delay in finalizing the Company's pre-
packaged reorganization plan. The Company recorded a $3,700,000
asbestos-related charge for the legal fees and other costs to
complete the reorganization process.
During 2003, Congoleum elected to pursue a pre-packaged
bankruptcy proceeding as a means to resolve claims asserted
against it related to the use of asbestos in its products
decades ago and obtained the asbestos claimant votes necessary
for approval of its proposed plan of reorganization. On
December 31, 2003, Congoleum Corporation filed a voluntary
petition with the United States Bankruptcy Court for the
District of New Jersey (Case No. 03-51524) seeking relief under
Chapter 11 of the United States Bankruptcy Code. The Bankruptcy
Court has issued a final financing order approving its Debtor-
in-Possession revolving credit facility. The court has also
authorized Congoleum to pay its suppliers in the ordinary course
of business for amounts owed on account of goods and services
supplied prior to the bankruptcy filing. Congoleum has filed
its plan of reorganization and disclosure statement with the
court and is seeking confirmation of the plan as promptly as
possible.
ASBESTOS LITIGATION: Ford Motors Asbestos Claims Increasing
-----------------------------------------------------------
Ford Motor Credit Co. states in a regulatory filing with the
Securities and Exchange Commission that asbestos was used in
brakes, clutches and other automotive components dating from the
early 1900s. Along with other vehicle manufacturers, Ford
Motors has been the target of asbestos litigation and, as a
result, the Company is a defendant in various actions for
injuries claimed to have resulted from alleged contact with
certain Ford parts and other products containing asbestos.
Plaintiffs in these personal injury cases allege various health
problems as a result of asbestos exposure either from
(1) component parts found in older vehicles
(2) insulation or other asbestos products in Ford
facilities or
(3) asbestos aboard the Company's former maritime fleet.
The majority of these cases have been filed in the state courts.
Most of the asbestos litigation the Company faces involves
mechanics or other individuals who have worked on the brakes of
the Company's vehicles over the years. Also, in most asbestos
litigation Ford Motors is not the sole defendant. The Company
believes it is being more aggressively targeted in asbestos
suits because many previously targeted companies have filed for
bankruptcy. The Company is prepared to defend these asbestos
related cases and, with respect to the cases alleging exposure
from Ford Motors brakes, believes that the scientific evidence
confirms the Company's long-standing position that mechanics and
others are not at an increased risk of asbestos related disease
as a result of exposure to the type of asbestos formerly used in
the brakes on Ford Motors vehicles.
The extent of the Company's financial exposure to asbestos
litigation remains very difficult to estimate. The majority of
Ford Motors' asbestos cases do not specify a dollar amount for
damages, and in many of the other cases the dollar amount
specified is the jurisdictional minimum. The vast majority of
these cases involve multiple defendants, with the number in some
cases exceeding 100. Ford Motors' annual payout and related
defense costs in asbestos cases are increasing and may become
substantial in the future. The total number of claims pending
against the Company as of February 3, 2004 is around 41,500,
compared with around 25,000 as of February 2003. This, together
with the trends in civil litigation toward larger jury verdicts
and punitive damages awards, is expected to result in increased
payouts and defense costs in 2004.
The United States Congress continues to consider proposals to
reform asbestos litigation. The lead proposal would create a
trust fund from which eligible asbestos claimants would be
compensated and would preclude, during the life of the trust,
litigation in the United States based on exposure to asbestos.
The trust fund would be funded by asbestos defendants (including
us) and the insurance industry. These funds would be used to
pay eligible claimants (i.e., those who satisfy specific medical
criteria and can adequately demonstrate occupational exposure to
asbestos) according to a specified schedule. If legislation is
enacted creating such a trust fund, the Company would likely be
required to make substantial contributions to the fund over a
specified period of time, resulting in Ford Motors' incurring a
charge in the amount of the present value of such anticipated
contributions in the period in which the legislation becomes
effective. Ford Motor Credit cannot predict whether or in what
form the legislation will be enacted or the costs associated
with such enactment.
ASBESTOS LITIGATION: Grainger W W, Inc. Copes With 3T Plaintiffs
----------------------------------------------------------------
As of January 28, 2004, Grainger W W Inc. is named, along with
numerous other nonaffiliated companies, as a defendant in
litigation involving asbestos and/or silica filed on behalf of
around 3,300 plaintiffs in various states. These lawsuits
typically involve claims of personal injury arising from the
alleged exposure to asbestos and/or silica as a consequence of
products purportedly distributed by Grainger.
In 2003, lawsuits involving around 275 plaintiffs were dismissed
with respect to Grainger based on the lack of product
identification. Grainger has denied, or intends to deny, the
allegations in the remaining lawsuits. If a specific product
distributed by Grainger were identified in any of these
lawsuits, Grainger would attempt to exercise indemnification
remedies against the product manufacturer. In addition,
Grainger believes that a substantial portion of these claims is
covered by insurance. Grainger is engaged in active discussions
with its insurance carriers regarding the scope and amount of
coverage. While Grainger is unable to predict the outcome of
these lawsuits, it believes that the ultimate resolution will
not have, either individually or in the aggregate, a material
adverse effect on Grainger's consolidated financial position or
results of operations.
ASBESTOS LITIGATION: Huttig Sues For Asbestos Claims Recovery
-------------------------------------------------------------
In April 2002, Huttig Building Products Inc. filed a lawsuit in
the Supreme Court of the State of New York against The Rugby
Group Ltd., its principal stockholder, and Rugby IPD Corp., a
subsidiary of The Rugby Group Ltd., alleging that they breached
their contractual obligations to indemnify and defend Huttig
against asbestos-related liabilities and claims arising out of
the business that was acquired in 1994 by Rugby Building
Products, Inc. The Company acquired Rugby Building Products,
Inc., a distributor of building materials, in December 1999,
when it acquired the stock of its parent, Rugby USA, Inc., from
The Rugby Group Ltd. The Company's lawsuit seeks to recover
sums it has spent to defend and, with respect to one lawsuit,
settle its asbestos lawsuits, as well as a declaratory judgment
that Rugby Group and Rugby IPD indemnify and defend the Company
for these lawsuits and any similarly situated claims that may be
asserted against us in the future. Rugby Group has denied any
obligation to defend, or indemnify us for, any of these cases.
While the Company believes that its factual allegations and
legal claims are meritorious, there can be no assurance at this
time that Huttig will recover any of its costs related to past
or future asbestos-related claims from insurance carriers or
from The Rugby Group or Rugby IPD Corp. or that such costs will
not have a material adverse effect on Huttig's business or
financial condition.
In January 2004, Huttig, individually and as a successor-in-
interest to Rugby Building Products, Inc., was named in an
action filed in Superior Court of California, County of Alameda,
by an individual alleging that he suffered personal injury as a
result of exposure to asbestos-containing products distributed
by Huttig and/or Rugby Building Products. The plaintiff seeks
unspecified damages from Huttig and many other defendants named
in this pending action. Huttig believes that this lawsuit also
relates to products distributed by a business acquired by Rugby
Building Products and expect to seek indemnification for this
lawsuit as part of Huttig's action against The Rugby Group and
Rugby IPD Corp.
Huttig incurred lower system implementation costs by $1,100,000
and lower environmental costs by $800,000 in 2002 as compared to
2001. These decreases were partially offset by an increase of
$900,000 from an increase in Huttig's insurance reserves, due to
higher claims incidence, expenses of $900,000 for costs relating
to the settlement and legal expenses of an asbestos-related
product liability lawsuit.
ASBESTOS LITIGATION: NL Has 425 Pending Asbestos-Related Cases
--------------------------------------------------------------
NL Industries has been named a defendant in various lawsuits in
a variety of jurisdictions, alleging personal injuries as a
result of occupational exposure to asbestos, silica and/or mixed
dust in connection with formerly owned operations. Around 425
of these cases involving a total of around 32,000 plaintiffs and
their spouses remain pending. Of these plaintiffs, around
22,000 are represented by 8 cases pending in Texas and
Mississippi state courts. The Company has not accrued any
amounts for this litigation because liability that might result
to the Company, if any, cannot be reasonably estimated.
In addition, from time to time, the Company has received notices
regarding asbestos or silica claims purporting to be brought
against former subsidiaries of the Company, including notices
provided to insurers with which the Company has entered into
settlements extinguishing certain insurance policies. These
insurers may seek indemnification from the Company.
ASBESTOS LITIGATION: Northrop Grumman Sued For Asbestos Exposure
----------------------------------------------------------------
Northrop Grumman Corp. is a defendant in lawsuits alleging
personal injury as a result of exposure to asbestos integrated
into its premises and certain historical products. Many of
these claims have been dismissed with no payment and the
remaining resolved claims have involved amounts that were not
material either individually or in the aggregate. Based upon
the information available, the company does not believe that the
resolution of any of these proceedings will have a material
adverse effect upon its operations or financial condition.
ASBESTOS LITIGATION: United Industrial Allots Asbestos Provision
----------------------------------------------------------------
United Industrial Corp. reported that 2002 fourth quarter's
results include an asbestos-related pre-tax provision of
$11,500,000. Excluding the pension expense in both 2002 and
2003, the New York City office charge in 2003, and the asbestos
provision in 2002, income from continuing operations for the
2003 fourth quarter would have been $7,900,000, net of tax, or
$0.56 per diluted share, compared to $4,500,000, net of tax, or
$0.35 per diluted share, in the fourth quarter of 2002.
Income from continuing operations in 2003 included pre-tax
asbestos-related consulting and legal fees of $717,000. Results
for the 2002 full year included an asbestos-related pre-tax
provision of $11,500,000. Excluding the pension and asbestos-
related items in both years, the New York City office charge in
2003 and the foundry restructuring charges and insurance
recovery in 2002, income from continuing operations would have
been $20,000,000, net of tax, or $1.45 per diluted share, in
2003, compared to $15,100,000, net of tax, or $1.12 per diluted
share, in 2002.
Insurance receivable as to asbestos litigation was $20,317,000
at December 31, 2003 and $20,343,000 at December 31, 2002.
Reserve for asbestos litigation was $31,595,000 December 31,
2003 and $31,852,000 at December 31, 2002. Asbestos related
expense included in energy segment loss was $50,000 for the
three months ended December 31, 2003 and $11,509,000 for the
three months ended December 31, 2002 (unaudited) and $717,000
for the twelve months ended December 31, 2003 and $11,509,000
for the twelve months ended December 31, 2002. Asbestos related
expense amounted to $5,600 for the three months ended December
31, 2002, $300 for the twelve months ended December 31, 2003 and
$5,600 for the twelve months ended December 31, 2002.
ASBESTOS ALERT: W.R. Berkley's Net Reserves Show Increase In`03
---------------------------------------------------------------
W. R. Berkley Corp. reported that known asbestos and
environmental claims at its insurance company subsidiaries have
not had a material impact on its operations. Environmental
claims have not materially impacted the Company because these
subsidiaries generally did not insure the larger industrial
companies which are subject to significant environmental
exposures.
Berkley's net reserves for losses and loss adjustment expenses
relating to asbestos and environmental claims were $31,866,000
and $28,509,000 at December 31, 2003 and 2002, respectively.
The Company's gross reserves for losses and loss adjustment
expenses relating to asbestos and environmental claims were
$49,283,000 and $47,637,000 at December 31, 2003 and 2002,
respectively. Net incurred losses and loss expenses
(recoveries) for reported asbestos and environmental claims were
about $4,749,000, $6,652,000 and ($4,503,000) in 2003, 2002 and
2001, respectively. Net paid losses and loss expenses
(receivables) for reported asbestos and environmental claims
were about $1,391,000, $2,938,000 and $125,000 in 2003, 2002 and
2001, respectively. The estimation of these liabilities is
subject to significantly greater than normal variation and
uncertainty because it is difficult to make a reasonable
actuarial estimate of these liabilities due to the absence of a
generally accepted actuarial methodology for these exposures and
the potential affect of significant unresolved legal matters,
including coverage issues as well as the cost of litigating the
legal issues. Additionally, the determination of ultimate
damages and the final allocation of such damages to financially
responsible parties are highly uncertain.
COMPANY PROFILE
W. R. Berkley Corp. (NYSE: FDG)
475 Steamboat Road
Greenwich, CT 06830
Phone: 203-629-3000
Fax: 203-629-8336
http://www.wrberkley.com
Employees : 4,669
Revenues : $ 3,630,000,000.00
Net Income : $ 337,200,000.00
(As of December 31, 2003)
Description: W. R. Berkley Corp. is an insurance holding company
that, through its subsidiaries, operates in five segments of the
property casualty insurance business: specialty lines of
insurance, including excess and surplus lines and commercial
transportation; alternative markets, including the management of
alternative insurance market mechanisms; reinsurance; regional
commercial property casualty insurance, and international. The
Company's specialty insurance, alternative markets and
reinsurance operations are conducted nationwide. Regional
insurance operations are conducted primarily in the Midwest, New
England, southern (excluding Florida) and mid-Atlantic regions
of the United States. International operations are conducted
primarily in Argentina and the Philippines.
ASBESTOS ALERT: Fording Canadian Coal Trust Faces Asbestos Risk
----------------------------------------------------------------
Fording Canadian Coal Trust reported in a regulatory filing that
the presence of tremolite asbestos at one of the industrial
minerals operations ore sources in the United States and in some
of its products could result in NYCO Minerals becoming exposed
to liabilities, including workers' compensation and product
liability claims. Further, in the event that NYCO Minerals'
wollastonite products continue to contain small amounts of
asbestiform tremolite, the demand for these products could
materially decrease. Tripoli produced at American Tripoli is a
type of crystalline silica, which has been classified by the
International Agency for Research on Cancer as a Group 1 agent.
In the event that it was demonstrated that tripoli contributed
to the development of cancer, the markets for this product would
be very limited and American Tripoli could become exposed to
workers' compensation and product liability claims.
COMPANY PROFILE
Fording Canadian Coal Trust (NYSE: FDG)
205 - 9th Avenue S.E., Suite 1000, Fording Place
Calgary, AB T2G 0
Phone: 403-260-9800
Fax: 403-264-7339
http://www.fording.ca
Employees : 2,771
Revenues : CAD 990,400,000.00
Net Income : CAD (164,500,000.00)
(As of December 31, 2003)
Description: Fording Canadian Coal Trust is an open-ended
investment trust that invests in metallurgical coal and
industrial minerals mining and processing operations.
ASBESTOS ALERT: Troutline Sees Diminished Prospects in Asbestos
---------------------------------------------------------------
Troutline Investments Inc. reported that an increasing number of
lawsuits in respect of non-chrysotile types of asbestos fibres,
and regulatory pressures diminished prospects for new projects
in the entire asbestos sector.
COMPANY PROFILE
Troutline Investments Inc. (TSX: TXX)
804-470 Granville Street
Vancouver, BC, Canada, V6C 1V5
Phone: 403-260-9800
Fax: 403-264-7339
Description: Troutline Investments Inc. changed its name from
Cassiar Resources Inc. (TSX: CIR) with approval at the June 18,
2003 meeting of the shareholders. As Cassier Mines, it mined,
milled and sold raw asbestos fiber in Northern British Columbia
before filing for bankruptcy in 1992.
ASBESTOS ALERT: Water Pik Defending Against Asbestos Suits
------------------------------------------------------------
Water Pik Technologies Inc. disclosed in a regulatory filing
that it has been named in a small number of asbestos suits where
the alleged ties to its products are either unclear, or the
Company has been able to demonstrate that the identified product
did not contain asbestos. Water Pik has not made any settlement
payments or incurred any adverse verdicts or awards in the
asbestos cases that it has resolved, and it does not expect to
incur any material liabilities in connection with these
lawsuits. However, there is no assurance that it will continue
to be successful in defending asbestos claims. In addition,
Water Pik's historic insurance coverage, including that of its
predecessors, may not cover asbestos claims or the defense of
such matters, as coverage depends on the year of purported
exposure and other factors.
COMPANY PROFILE
Water Pik Technologies Inc. (NYSE: PIK)
23 Corporate Plaza, Suite 246
Newport Beach, CA 92660
Phone: 949-719-3700
Fax: 949-719-6472
http://www.waterpik.com
Employees : 1,600
Revenues : $ 305,100,000.00
Net Income : $ 11,000,000.00
(As of December 31, 2003)
Description: Water Pik Technologies Inc. is engaged in
designing, manufacturing and marketing a broad range of personal
healthcare products, swimming pool products and water-heating
products. Water Pik Technologies operates in two business
segments, the Personal Health Care segment and the Pool Products
and Heating Systems segment. The Personal Health Care segment
designs, manufactures and markets showerheads, oral health
products, water filtration products and personal stress relief
products, which are sold primarily under the Water Pik brand
name. The Pool Products and Heating Systems segment designs,
manufactures and markets pool and spa heaters, controls, valves,
pumps, filters and water features and residential and commercial
water-heating systems.
New Securities Fraud Cases
CANADIAN SUPERIOR: Milberg Weiss Lodges Securities Lawsuit in NY
----------------------------------------------------------------
Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities
class action on behalf of purchasers of the securities of
Canadian Superior Energy Inc. SNG (TSX: SNG) between December 8,
2003 to March 10, 2004, inclusive, seeking to pursue remedies
under the Securities Exchange Act of 1934. The action is
pending in the United States District Court for the Southern
District of New York, against the Company, Greg S. Noval
(President and CEO) and Michael E. Coolen (Director of East
Coast Operations).
According to the complaint, defendants violated sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder by the Securities and Exchange
Commission. The complaint alleges that during the Class Period,
defendants aggressively touted the progress and the purported
success of Canadian Superior's Mariner project, specifically the
Mariner I-85 well that was being drilled off the coast of Nova
Scotia.
For example, the Company issued press releases representing that
drilling was proceedings with "record setting progress," that
"drilling results to date have been very encouraging for the
Canadian Superior El Paso 'Mariner' I-85 Exploration well," that
"drilling is tracking our geological prognosis very well," and
that Company had detected "significant gas shows." The
complaint alleges that, in fact, defendants knew or recklessly
disregarded, but failed to disclose to investors, that the
Mariner I-85 well did not contain commercially viable volumes of
gas, was experiencing material budget overruns and would likely
have to be shut down.
Accordingly, the complaint alleges that the Company's barrage of
representations concerning the progress and success of the
Mariner I-85 drilling and the supposedly "significant gas shows"
was lacking in any reasonable basis when made. According to the
complaint, such materially false and misleading representations
were motivated by defendants' desire to artificially prop
Canadian Superior's stock price so that its planned private
placement would command a higher price than if investors knew
that its recently acquired, massive, and much touted project may
not be commercially viable.
On December 18, 2003, the Company sold 6.5 million special
warrants at a price of CDN $3.00 each, for total proceeds of CDN
$ 19.5 million. Defendants were further motivated to
artificially inflate the price of Canadian Superior common stock
so that they could sell their personally held shares. Indeed,
between January 27 and January 29, 2003, defendant Noval sold
approximately 1.14 million Canadian Superior shares, personally
and through entities that he controls, amounting to 25% of his
stake in the Company, at artificially inflated prices, reaping
gross proceeds of Cdn. $4.3 million.
On March 11, 2004, before the open of ordinary trading, Canadian
Superior announced that the Mariner I-85 well was not
commercially viable, that the project was not within budget and
that drilling would be discontinued. In reaction to this
announcement, the price of Canadian Superior stock dropped
precipitously, falling from $3.24 per share on March 10, 2004 to
close at $1.80 on March 11, 2004, a one day drop of 44.4% on
unusually high trading volume of approximately 14.5 million
shares.
For more details, contact Steven G. Schulman, Peter E. Seidman,
Andrei V. Rado by Mail: One Pennsylvania Plaza, 49th fl., New
York, NY, 10119-0165 by Phone: (800) 320-5081 by E-mail:
canadiansuperior@milberg.com or visit the firm's Website:
http://www.milberg.com
CHINA LIFE: Cauley Geller Files Securities Fraud Suit in S.D. NY
----------------------------------------------------------------
Cauley Geller Bowman & Rudman, LLP initiated a securities class
action in the United States District Court for the Southern
District of New York on behalf of purchasers of China Life
Insurance Co. Limited (NYSE: LFC) publicly traded securities
during the period between December 22, 2003 and February 3,
2004, inclusive.
The complaint charges China Life, Wang Xianzhang, Long Yongtu,
Chau Takhay, Miao Fuchun, and Wu Yan, with 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:
(1) that China Life and/or its predecessor company had
engaged in a huge financial fraud by misusing 5.4
billion yuan ($652 million) of funds;
(2) that China Life and/or its predecessor company had
engaged in criminal activities by making illegal and
unauthorized loans, investments, and payments;
(3) that at the time of its initial public offering ("IPO")
the National Audit Office of the Peoples Republic of
China (CNO) had completed and/or was about to publish
its report detailing this huge financial fraud; and
(4) that defendants knew that this information would have a
material impact on the share price of its $3 billion
IPO.
On February 3, 2004, Bloomberg reported that the CNO had
published its report detailing the massive fraud at China Life.
In the report, the CNO stated that China Life had misused 5.4
billion yuan ($652 million) of funds, making illegal and
unauthorized loans, investments, and payments. According to
Bloomberg, the CNO's probe uncovered 28 criminal cases involving
489 million yuan. Additionally, the CNO provided a partial
breakdown of more than 35 billion yuan in corruption and
irregularities.
More specifically, the CNO found that China Life offered illegal
agency services and made unusually high insurance payments to
the amount of 2.38 billion yuan. Moreover, the CNO reported that
the Company used 2.5 billion yuan to make illegal investments
and gave unauthorized loans. Government investigators also found
private caches holding 31.79 million yuan that were set up by
the Company.
News of this shocked the market. Shares of China Life fell $2.13
per share, or 7.4%, to close at $26.67 per share on usually high
trading volume on February 4, 2004.
For more details, contact Samuel H. Rudman, Esq., David A.
Rosenfeld, Esq., Jackie Addison or Heather Gann by Mail: P.O.
Box 25438, Little Rock, AR 72221-5438 by Phone: 1-888-551-9944
by Fax: 1-501-312-8505 by E-mail: info@cauleygeller.com or visit
the firm's Website: http://www.cauleygeller.com
NORTEL NETWORKS: Scott + Scott Lodges Securities Suit in S.D. NY
----------------------------------------------------------------
Scott + Scott, LLC initiated a securities class action lawsuit
against Nortel Networks Corporation (NYSE: NT, news)(TSX: NT) in
the United States District Court for the Southern District of
New York on behalf of people who purchased or otherwise acquired
securities during the period between December 23, 2003 and March
12, 2004, inclusive.
The complaint alleges that during the period from December 23,
2003 and March 12, 2004, Nortel and certain of its officers and
directors violated the securities laws of the United States (the
Securities Exchange Act of 1934). Nortel supplies products and
services that support the Internet and other public and private
data, voice and multimedia communications networks using wire
line and wireless technologies.
The complaint alleges that defendants caused Nortel's shares to
trade at artificially inflated levels through the issuance of
false and misleading financial statements. Defendants had
formulated a plan to have the Company's credit rating on its
$4.1 billion debt raised from "B3" to "investment grade."
Defendants were advised by Moody's that if the Company could
improve its financial position, the Company's rating would be
raised. Not only would this rating change have a positive impact
on the Company's stock price but this would, in turn, further
inflate the Company's net income beyond the already inflated
price due to falsified accounting.
By raising the Company rating, the Company could refinance its
debt at a preferable rate, and increase the Company's margins.
Defendants had hoped that the Company's positive fourth quarter
2003 report would put pressure on Moody's to raise its rating.
It is further alleged that by posting the false, positive fourth
quarter results, defendants and the Company's top executives
were rewarded with $30 million in bonuses. Then, as defendants'
scheme began to unfold, Nortel put its chief financial officer
and controller on leave of absence pending completion of an
investigation into the circumstances leading to the restatement.
On March 15, 2004, Nortel delayed filing its annual report and
admitted it may have to restate results for a second time in six
months while the timing of certain accruals and provisions in
2003 and earlier periods are re-examined. In response to this
delay in filing, the price of the Company's shares fell.
Defendants knew that as a result of their actions, Nortel's
lenders could demand early repayment of $3.6 billion of notes
and convertible bonds. The Company's shares reached over $8 per
share during this period and have declined to $5.19 at close
today.
For more details, contact Neil Rothstein by Mail: 108 Norwich
Avenue, Colchester, CT 06415 by Phone: 860/537-3818 by Fax:
860/537- 4432 or by E-mail: nrothstein@scott-scott.com
ROYAL DUTCH: Rabin Murray Lodges Securities Fraud Lawsuit in NJ
---------------------------------------------------------------
Rabin, Murray & Frank LLP initiated a securities class action on
behalf of purchasers of the securities, including the common
stock traded in overseas markets and the American Depository
Receipts trading on the NYSE, of Royal Dutch Petroleum Company
(NYSE:RD) and/or The Shell Transport and Trading Company, PLC
(NYSE:SC) between December 3, 1999 and January 9, 2004,
inclusive, seeking remedies under the Securities Exchange Act of
1934.
The action is pending in the United States District Court for
the District of New Jersey against defendants Royal Dutch, Shell
Transport, Shell Petroleum N.V., the Shell Petroleum Limited,
Maarten van der Bergh, Judy Boynton , Malcolm Brinded, S.L.
Miller, Harry J.M. Roels, Paul D. Skinner, M. Moody-Stuart,
Jeroen van der Veer, and Philip R. Watts. According to the
complaint, defendants violated sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder by the Securities and Exchange Commission, and all
amendments thereto by issuing a series of material
misrepresentations to the market during the Class Period.
The complaint alleges the defendants' deliberately violated
accounting rules and guidelines relating to oil and gas
reserves, resulting in a shocking and unprecedented
overstatement of oil and gas reserves, the eventual disclosure
of which damaged purchasers of Royal Dutch and Shell Transport
securities and rocked the investment community. The complaint
alleges Royal Dutch and Shell Transport had classified and
reported, in SEC filings and other public documents, certain
reserves as "proved reserves" from a project off the western
coast of Australia called the Gorgon Joint Venture, and various
projects in Nigeria.
In fact, unbeknownst to investors, the reserves did not meet SEC
and industry requirements necessary to be classified as
"proved," and were improperly reported as proved reserves in
Royal Dutch's and Shell Transport's financial reports, thereby
materially and artificially inflating a key measure of the
companies' financial position and competitive standing. As a
result of these material misrepresentations, Royal Dutch and
Shell Transport's true value in the marketplace was severely
overstated and misunderstood.
On January 9, 2004, Royal Dutch announced that it was going to
write-down its proved oil and gas reserves by 20%, or 3.9
billion barrels, from 19.5 billion barrels to 15.6 billion
barrels. The write-down: (a) cut Shell's reserve life from 13.4
years to 10.6 years; (b) increased its worldwide 5-year average
reserve replacement cost per barrel from $5.49 to $12.57 ---
$7.06, or 128% greater than the industry average of $5.51; (c)
increased Shell's finding and development costs to $7.90 per
barrel -- well above the costs of its competitors; and (d)
reduced Shell's Appraised Net Worth downward by up to 7.1%, or
$9.6 billion.
Following the announcement, Royal Dutch ADRs fell 7.87%, from
$52.76 to $48.61 on the NYSE, and Royal Dutch ordinary shares
fell by 7.10%, from the U.S. equivalent of $52.91 to $49.15, on
the Amsterdam exchange. Shell Transport ADRs were down 6.96%
from $44.81 to $41.69 on the NYSE and Shell Transport ordinary
shares were down 6.84% on the London exchange from the U.S.
equivalent of $7.36 to $6.86. In addition, Moody's placed the
AAA rating of Royal Dutch and Shell Transport under review for
possible downgrade because the write-down materially and
adversely affected the companies' reserves-to-debt ratio.
Following the belated disclosure, most analysts and commentators
concluded that, because of the magnitude of the write-down and
the clear SEC and industry guidelines relating to reserve
classification, the reserve overstatements could not have been a
result of error or accident, but rather, that the reserves were
knowingly overstated to preserve the companies' credit rating
and to shore up their competitive position.
For more details, contact Eric J. Belfi or Aaron D. Patton by
Phone: (800) 497-8076, (212) 682-1818 by Fax: (212) 682-1892 or
by E-mail: info@rabinlaw.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.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills,
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.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
The CAR subscription rate is $575 for six months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
* * * End of Transmission * * *