/raid1/www/Hosts/bankrupt/CAR_Public/040430.mbx
C L A S S A C T I O N R E P O R T E R
Friday, April 30, 2004, Vol. 6, No. 85
Headlines
AT&T CORPORATION: Telephone Customers Lodge Consumer Suit in CA
CFM CORPORATION: Recalls Fireplace Receivers Due To Fire Hazard
CLEAN HARBORS: Shareholders Lodge Securities Fraud Suits in MA
EASYHOME LTD.: Canadian Customers File Suit Over Service Fees
ENBRIDGE PIPELINES: Landowners Lodge Pipeline Lawsuit in Canada
FIREPOND INC.: SEC Launches Civil Suit V. Canadian Businessman
GOLDEN STAR RESOURCES: Indemnified by Cambior In Omai Mine Suit
IMPERIAL TOBACCO: Ontario Court Junks Smokers Statement of Claim
ITT EDUCATIONAL: Faces Several Securities Fraud Suits in IN, DC
ITT EDUCATIONAL: Plaintiffs Lodges Consolidated Derivative Suit
MEDCO HEALTH: TX Atty. Gen. Reaches "Drug Switching" Settlement
OXFORD HEALTH: CT Atty. General Appeals ERISA Lawsuit Dismissal
OXFORD HEALTH: CT Court Hears Appeals on CUTPA Lawsuit Dismissal
OXFORD HEALTH: NY Court Yet To Rule on Dismissal of HMO Lawsuit
OXFORD HEALTH: Discovery Proceeds in NJ Breach of Contract Suit
OXFORD HEALTH: MSNJ Appeals Dismissal of New Jersey HMO Lawsuit
OXFORD HEALTH: Asks NY Court To Dismiss ERISA Violations Lawsuit
PROFESSIONAL TRANSPORTATION: Court Enters Judgment V. Controller
RADIOSHACK: "Sales Managers" Commence Overtime Wage Suit in FL
TROJAN TECHNOLOGIES: Recalls 3,900 Water Disinfection Systems
UNITED LIBERTY: Enters Mediation For Policyholder Lawsuit in OH
UNITED STATES: Senate To Tackle Lawsuit Reform Bill in June
WEYERHAUSER COMPANY: NY Court Approves Linerboard Antitrust Pact
WHITE-RODGERS: Recalls 88T Temperature Controls For Fire Hazard
Asbestos Alert
ASBESTOS LITIGATION: Bairnco's Litigation Costs Reduce Income
ASBESTOS LITIGATION: Crane Faces 71,881 Pending Asbestos Claims
ASBESTOS LITIGATION: Electrolux Group Faces 732 Asbestos Suits
ASBESTOS LITIGATION: Fairfax Losses Adjusted For Asbestos Claims
ASBESTOS LITIGATION: Norcross Safety Implicated In 669 Lawsuits
ASBESTOS LITIGATION: Owens Illinois Asbestos Payments Reduced
ASBESTOS LITIGATION: St. Paul Travelers Suit Settlement Approved
ASBESTOS LITIGATION: Asbestos Trust Fund Bill Fails in Test Vote
ASBESTOS ALERT: Asbestos Corporation, Mazarin Involved In Suits
ASBESTOS ALERT: Butler Firm Refuses RCC Proposal, Reveals Claims
ASBESTOS ALERT: Credit Suisse Professes Reduction In Exposure
ASBESTOS ALERT: Duke Energy Corporation Insured Against Claims
ASBESTOS ALERT: NYC Newco Says CSXT May Incur Asbestos Claims
ASBESTOS ALERT: Northbridge Claims Reserves At $1.69 Trillion
ASBESTOS ALERT: Xerium Technologies Inc. Named in Injury Suits
New Securities Fraud Cases
CHINA LIFE: Chitwood & Harley Lodges Securities Suit in S.D. NY
NORTEL NETWORKS: Scott + Scott Lodges Securities Suit in S.D. NY
NORTEL NETWORKS: Much Shelist Announces Class Period For IL Suit
ODYSSEY HEALTHCARE: Lasky & Rifkind Files Stock Suit in N.D. TX
SPEAR & JACKSON: Schiffrin & Barroway Files Lawsuit in S.D. FL
SUPERCONDUCTOR TECHNOLOGIES: Brian M. Felgoise Files Suit in CA
ODYSSEY HEALTHCARE: Brian M. Felgoise Lodges TX Securities Suit
*********
AT&T CORPORATION: Telephone Customers Lodge Consumer Suit in CA
---------------------------------------------------------------
AT&T Corporation faces a class action filed on behalf of the
Allen Lund Company of Georgia, Inc., and other telephone
customers who were unlawfully billed by the Company for long-
distance charges added to their local phone bills.
The Allen Lund Company, a national transportation broker based
in La Canada, California, is not an AT&T customer and did not
use AT&T long-distance services, but repeatedly was assessed
AT&T long-distance charges through its local phone bill by
BellSouth.
On April 23, 2004, Florida Attorney General Charlie Crist issued
a consumer advisory warning telephone customers that AT&T long-
distance charges are being improperly added to local phone
bills. AT&T attributes the improper billing to a computer
problem that has affected approximately one million customers
nationally, many of whom are not current customers of AT&T.
On April 27, 2004, the Florida Attorney General released a
public letter to John Polumbo, president and chief executive
officer of AT&T, demanding that AT&T implement "immediate
corrections" to AT&T's automated customer service system. AT&T's
automated system prevents callers from speaking with live
customer service representatives and obstructs consumers from
receiving refunds for the improper long-distance charges.
The class action was filed on August 15, 2003 and asserts claims
against AT&T for unlawful, unfair or fraudulent business
practices in violation of the California Unfair Competition Law,
for unjust enrichment, and for money had and received.
According to the complaint, AT&T unlawfully bills some consumers
who are not AT&T customers through their local phone bills, and
AT&T's computerized billing system continues to assess charges
on phone lines not subscribed to AT&T long-distance service even
though AT&T's own records indicate that there is no AT&T call
activity on the phone lines or that AT&T does not provide
service to such lines. The class action is pending in Los
Angeles County (Ca.) Superior Court under docket number
BC300915.
For more details, contact Girard Gibbs & De Bartolomeo LLP
(Daniel Girard & Sanjay Ranchod) by Mail: 601 California Street,
Suite 1400, San Francisco, CA 94108 by Phone: (866) 981-4800 by
E-Mail: mail@girardgibbs.com or Visit Their Website:
http://www.girardgibbs.com/at&t.html
CFM CORPORATION: Recalls Fireplace Receivers Due To Fire Hazard
---------------------------------------------------------------
CFM Corporation is cooperating with the U.S. Consumer Product
Safety Commission by voluntarily recalling 4,300 Majestic
Vermont Castings fireplace remote receivers. The circuit board
can overheat and catch fire, posing a burn and fire hazard. The
Company has received four reports of the remote receivers
catching fire and causing minor property damage.
Majestic Vermont Castings fireplace remote receivers were sold
with the HES40R and HES40 electric fireplaces/stoves and sold as
accessory items for CFM DEF33/36, DEF36S2, Addision, DEF26, and
HE32EF electric fireplaces and stoves. The recalled remote
receivers have the words "Majestic Vermont Castings" on a label
affixed to the face of the receiver. Model number ERX15 B can
be found on the CSA approval sticker on the back of the remote
receiver.
Fireplace retailers sold these remote receivers nationwide from
November 2001 to February 2004 for about $70.
Consumers who purchased an ERC1 remote receiver as an accessory
to their fireplace should immediately unplug it and contact CFM
Corporation for a free replacement, by Phone: (866) 757-6649
between 8 a.m. to 8 p.m. ET Monday through Friday or visit the
Company's Web site: http://www.cfmcorp.com.
CLEAN HARBORS: Shareholders Lodge Securities Fraud Suits in MA
--------------------------------------------------------------
Clean Harbors, Inc. faces several securities class actions filed
in the United States District Court for the District of
Massachusetts against it and one of its current and former
officers.
The plaintiff alleges violation of the Securities Exchange Act
of 1934 and regulations promulgated thereunder by the Securities
and Exchange Commission (SEC), and seeks certification of a
class that would consist of all purchasers of the Company's
stock between November 19, 2002 and August 14, 2003.
Principally, the complaints allege that in connection with
certain of the Company's public announcements the Company failed
to disclose adverse information with respect to the impact of
the acquisition of the CSD assets on the Company and that
certain financial projections included in those announcements,
particularly the guidance issued with respect to anticipated
EBITDA for 2003, were overstated and made without reasonable
basis.
In January 2004, several plaintiffs within the putative class
filed, through their attorneys, competing motions asking to be
named lead plaintiff, seeking the right to select lead counsel
and seeking consolidation of the four suits. The Company
anticipates that these actions will be consolidated during the
second quarter of 2004, after which the Company will file its
formal legal response to the consolidated suit.
The Company said in a disclosure to the Securities and Exchange
Commission that it believes that at all times during the
purported class period the Company and the two other defendants
conducted themselves in compliance with relevant securities laws
and that the guidance as to anticipated EBITDA and other
forward-looking statements contained in the Company's public
announcements are protected by the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995.
EASYHOME LTD.: Canadian Customers File Suit Over Service Fees
-------------------------------------------------------------
A class action lawsuit seeking approximately $200 million in
damages has been launched against Easyhome Ltd. and RTO Asset
Management Inc. (RTO),`a merchandise rental company
headquartered in Toronto with 133 stores across Canada.
Easyhome stores were formerly called First Choice Rent to Own
and Rentown.
The lawsuit alleges that the companies violate the Criminal Code
of Canada by charging and collecting fees and expenses at an
effective annual interest rate in excess of 60% (the limit
allowed by law) on credit advanced to purchase home furnishings
and other items. Only customers who obtained ownership of the
items will be included in the class action. The lawsuit has
been filed by Lawrence Nantais of Windsor, Ontario who paid an
effective annual interest rate above 60% on his agreement to
purchase a home furnishing item with Easyhome.
Easyhome says its services typically appeal to customers "who
may not be able to purchase merchandise because of a lack of
credit or insufficient cash resources." The lawsuit alleges
that Easyhome and RTO exploit economic vulnerability and
pressing need as they specifically target the poorest and most
vulnerable members of society.
Mr. Nantais is represented by Harvey T. Strosberg, Q.C. of
Sutts, Strosberg LLP, a Windsor, ON based law firm specializing
in class action lawsuits. "We believe that these excessive
interest rates exploit those who are the most disadvantaged in
society - single parents, pensioners, persons on social
assistance, the chronically unemployed and the working poor -
most of whom live pay cheque to pay cheque, or pension cheque to
pension cheque," said Mr. Strosberg in a statement. "We will
ask the court to conclude that Easyhome and RTO flout the law by
masking the true nature of the agreements made with class
members and that they charged interest at a criminal rate."
In its annual report, Easyhome states that it is in the business
of "renting, with or without an option to purchase, brand name
home entertainment products, appliances, household furniture and
computers across Canada." The class action alleges that the
agreements offered by Easyhome and RTO extend credit to
customers to allow for the purchase of home furnishing items and
the effective annual interest rate in each agreement violates
section 347 of the Criminal Code of Canada. In a press release
issued on March 1, 2004, Easyhome stated that it earned $79
million in revenue for the fiscal year ended December 31, 2003.
The class action seeks damages, including punitive damages, in
the sum of approximately $200 million on behalf of all persons
in Canada, except Quebec, who signed an agreement with Easyhome,
First Choice Rent to Own or Rentown on or after April 26, 1998
and acquired ownership of an item or items, except those persons
who completed the purchase of the item or items within 90 days
of signing their agreement.
For more details, contact Harvey T. Strosberg, Q.C. of Sutts,
Strosberg LLP, by Phone: (519) 561-6285, by Fax: (519) 561-6203,
by E-mail: harvey@strosbergco.com or visit the Website:
http://www.strosbergco.comor http://www.easyhomeclassaction.com
ENBRIDGE PIPELINES: Landowners Lodge Pipeline Lawsuit in Canada
---------------------------------------------------------------
The Canadian Alliance of Pipeline Landowners' Associations and
two individual landowners filed a lawsuit, which they will be
applying for certification as a class action, against Enbridge
Pipelines, Inc. and TransCanada PipeLines Limited.
The claim relates to restrictions in the National Energy Board
Act on crossing the pipeline and the landowners' use of land
within a 30-metre control zone on either side of the pipeline
easements. The Company believes it has a sound defense and
intends to vigorously defend the claim, it stated in a
disclosure to the Canadian Securities and Exchange Commission.
Since the outcome is indeterminable, the Company has made no
provision for any potential liability.
FIREPOND INC.: SEC Launches Civil Suit V. Canadian Businessman
--------------------------------------------------------------
The Securities and Exchange Commission filed a civil fraud
action against James E. Reid, a Canadian businessman, for
causing Firepond, Inc., a software development company formerly
based in Waltham, Massachusetts, to materially misstate its
financial results for two quarters in 2002.
The Commission's complaint alleges that in January and April
2002, Mr. Reid caused Firepond to make these material
misstatements by fabricating license agreements with three
purported customers of the software developer, forging
signatures and correspondence, and engaging in an elaborate
scheme with confederates and impersonators to prevent Firepond
from discovering his wrongdoing.
Earlier, Mr. Reid was arrested on federal criminal charges
involving the same conduct charged in the Commission's complaint
and made an initial appearance in federal court in Buffalo on
the criminal charges. Prior to his appearance, an indictment
presented by the U.S. Attorney's Office for the District of
Massachusetts and returned by a federal grand jury sitting in
Boston was unsealed.
According to the Commission's complaint, Mr. Reid, who was
acting vice president of North American sales at Firepond for
much of the relevant period, conducted several sales meetings on
behalf of Firepond with Bombardier, Inc., a large equipment
manufacturer based in Montreal, Canada. Although the sales
meetings stalled and Bombardier never purchased Firepond
software, on December 19, 2001, Mr. Reid provided Firepond
management with a purported executed license agreement between
Firepond and Bombardier worth approximately $3.5 million in
revenue.
According to the Commission's complaint, Mr. Reid had forged the
name of a high-level Bombardier executive to the agreement. Mr.
Reid was paid over $156,000 in commissions for the forged
Bombardier deal. The Commission's complaint also alleges that
Reid used similar methods to create forged contracts with two
other Firepond customers. Firepond is now headquartered in
Minnesota.
In its complaint, the Commission further alleged that, due to
Reid's deception, Firepond filed materially misleading financial
statements for the two fiscal quarters ended January 31, 2002,
and April 30, 2002, and issued misleading press and earnings
releases, all of which reported results that included revenue
and other information from the agreements Reid had falsified.
The Commission's complaint alleged that Reid's conduct violated
certain provisions of the federal securities laws, specifically
Sections 10(b) and 13(b)(5) of the Securities Exchange Act of
1934 and Rules 10b-5, 13b2-1 and 13b2-2 thereunder. The
Commission's complaint also alleged that Reid aided and abetted
Firepond's uncharged violation of Sections 13(a) and 13(b)(2)(A)
of the Exchange Act and Rules 12b-20 and 13a-13 thereunder.
The suit is styled "SEC v. James E. Reid, USDC, District of
Massachusetts, Civil Action No. 04-CV-10832-JLT."
GOLDEN STAR RESOURCES: Indemnified by Cambior In Omai Mine Suit
---------------------------------------------------------------
Cambior, Inc. indemnified Golden Star Resources Ltd. after it
was named as one of the 14 defendants in a class action lawsuit
filed in the High Court of the Supreme Court of Judicature of
Guyana on May 19, 2003 related to the August 1995 accidental
release of cyanide-bearing waste into a stream near the Omai
gold mine, in which the Company then owned a 30% equity
interest. Other defendants include Cambior Inc., which co-owned
and operated the mine in 1995 and to which we subsequently sold
the mine in 2002.
The plaintiffs claim to represent residents near the stream and
its tributaries. The plaintiffs claim various environmental and
other damages and have asked for substantial damages, in excess
of $1.0 billion, from all defendants, jointly and severally,
among other remedies.
During the third quarter of 2003 Cambior filed a motion to
dismiss the lawsuit. The Company has not been served with
process in this litigation. While it believes this claim is
without merit, the Company cannot reasonably predict the outcome
of this litigation, it stated in a disclosure to the Canadian
Securities and Exchange Commission. In connection with the sale
of its interest in the Omai mine to Cambior in 2002, Cambior
indemnified the company from any claims related to the mine.
IMPERIAL TOBACCO: Ontario Court Junks Smokers Statement of Claim
----------------------------------------------------------------
The Ontario Court of Justice dismissed the statement of claim
filed against Imperial Tobacco Limited and the other two major
Canadian tobacco manufacturers, on behalf of several Canadian
smokers.
The plaintiffs alleged, among other things, that they were
addicted to tobacco, that the defendants conspired to withhold
information on addiction and manipulated levels of nicotine in
tobacco to make it addictive, and that they were entitled to
damages for losses said to be consequential to the alleged
addiction. The plaintiffs sought awards of $1 million each, as
well as punitive damages, and sought to have the suit certified
as a class action. The scope of the purported class was unclear
but if plaintiffs had succeeded in having the suit certified, it
could have involved a large but indeterminate number of people.
The certification hearing occurred in January 2004. On February
5, 2004, the Ontario Court of Justice dismissed the application,
on the basis that the class definition was inappropriate, that
the individual issues outweighed the common issues, and that a
class action was not a fair, efficient and manageable means of
resolving the claims of the individual class members. Although
the plaintiffs publicly announced their intention to appeal, no
formal appeal was filed. The Company is currently seeking costs
against the plaintiffs' counsel.
ITT EDUCATIONAL: Faces Several Securities Fraud Suits in IN, DC
---------------------------------------------------------------
ITT Educational Services, Inc. and three of its executive
officers have been named as defendants in several securities
class actions, styled:
(1) Richard Darquea, Individually and On Behalf of All
Others Similarly Situated v. ITT Educational Services,
Inc., et al.;
(2) Eastside Investors, Individually and On Behalf of All
Others Similarly Situated v. ITT Educational Services,
Inc., et al;
(3) Roger Segalla, on behalf of himself and all others
similarly situated v. ITT Educational Services, Inc.,
et al.;
(4) Allan Coffin, Individually and On Behalf of All Others
Similarly Situated v. ITT Educational Services, Inc.,
et al.;
(5) Muriel & Wilbur Shapiro, Individually and On Behalf Of
All Others Similarly Situated v. ITT Educational
Services, Inc., et al.;
(6) Linda A. Lowson, individually and on behalf of herself
and all others similarly situated v. ITT Educational
Services, Inc., et al.;
(7) Linda D. Dudek, Individually and On Behalf Of All
Others Similarly Situated v. ITT Educational Services,
Inc., et al.;
(8) Richard Murad, Individually and On Behalf Of All Others
Similarly Situated v. ITT Educational Services, Inc.,
et al.;
(9) Thomas D. and Cheryl K. Bejgrowicz, Individually and On
Behalf Of All Others Similarly Situated v. ITT
Educational Services, Inc., et al.;
(10) Irene Rosen, On Behalf of Herself and All Others
Similarly Situated v. ITT Educational Services, Inc.,
et al.;
(11) William E. Norton, Individually and On Behalf of All
Others Similarly Situated v. ITT Educational Services,
Inc., et al.;
(12) Barbara R. Ritchie, On Behalf of Herself and All Others
Similarly Situated v. ITT Educational Services, Inc.,
et al.; and
(13) James Shandrom, on behalf of himself and all others
similarly situated v. ITT Educational Services, Inc.,
et al.
Seven of those suits were filed in the United States District
Court for the Southern District of Indiana, and six were filed
in the United States District Court for the District of
Columbia.
The complaints allege, among other things, that the defendants
violated Sections 10(b) and 20(a) of the 1934 Act, and Rule 10b-
5 promulgated thereunder, by employing devices, schemes and
artifices to defraud, making untrue statements of material fact
and/or omitting to state material facts necessary to make
statements not misleading and engaging in acts, practices and a
course of business which operated as a fraud and deceit on the
purchasers of the Company's securities in an effort to maintain
artificially high market prices for Company stock.
The putative class periods in such actions are from April 17,
2003 through February 24, 2004 in nine of the actions, from
October 16, 2003 through February 25, 2004 in two of the
actions, from October 17, 2002 through February 24, 2004 in one
of the actions and from October 17, 2002 through March 9, 2004
in one of the actions. The plaintiffs seek, among other things,
an award of unspecified compensatory damages, interest, costs
and attorney's fees and, in one of the actions, unspecified
extraordinary equitable and/or injunctive relief.
ITT EDUCATIONAL: Plaintiffs Lodges Consolidated Derivative Suit
---------------------------------------------------------------
Four of ITT Educational Services, Inc.'s current and former
executive officers and each of its directors face consolidated
shareholder derivative lawsuit filed in the Superior Court of
Hamilton County, Indiana, styled, In re ITT Educational
Services, Inc. Derivative Litigation.
Two suits were originally filed, styled:
(1) Joseph DeVita, Derivatively on Behalf of ITT
Educational Services, Inc. v. Rene R. Champagne, et al.
and ITT Educational Services, Inc., nominally; and
(2) Alexander Solano, Derivatively on Behalf of ITT
Educational Services, Inc. v. Rene R. Champagne, et al.
and ITT Educational Services, Inc., nominally
The derivative lawsuits alleged, among other things, that the
individual defendants breached their fiduciary duties to
ITT/ESI, abused their ability to control and influence ITT/ESI,
grossly mismanaged ITT/ESI, caused ITT/ESI to waste corporate
assets and were unjustly enriched, and that certain individual
defendants engaged in unlawful insider trading, each of which
caused ITT/ESI to suffer significant damages.
Both complaints seek undisclosed damages, extraordinary
equitable and/or injunctive relief, disgorgement of profits,
costs and attorney's fees.
MEDCO HEALTH: TX Atty. Gen. Reaches "Drug Switching" Settlement
---------------------------------------------------------------
Texas Attorney General Greg Abbott announced a settlement with
Medco Health Solutions Inc., the world's largest pharmaceutical
benefits management company, over the Company's practice of
"drug switching."
Under the settlement, Texas will receive $2.5 million of the $29
million settlement, which must be used in connection with
prescription drugs to benefit public health, according to the
judgment. The attorneys general from 19 states are still
studying the settlement and finding out how this money will be
allocated is being studied by the Attorneys General. Medco also
agreed to a number of reforms to the way it does business.
The company was accused under the Texas Deceptive Trade
Practices Act of falsely representing to patients, health care
plans and physicians that cost savings would result if
physicians switched some patients to different prescription
drugs. However, the switches generally resulted in greater
profits to Medco through rebates from drug manufacturers.
"The goal of any managed care plan is to hold down costs, not
drive up costs or increase profits above and beyond what is
reasonable and expected," said Attorney General Abbott in a
statement. "This was purely a way to deceive health plans that
are striving to offer their members affordable coverage."
The drug switches often resulted in increased costs to patients
and plans due to follow-up doctor visits and laboratory tests
when patients were moved to newer or similar drugs. The result
was more out-of-pocket co-pays for the patient and additional
payments by health plans. The practice also drove up costs in
cases where Medco targeted a specific drug for switching that
may have been more expensive or had no generic equivalent.
"Today's settlement implements ground-breaking changes in how
pharmacy benefit management companies like Medco must operate,"
the Attorney General said. "Companies that manage the delivery
of prescription drugs to consumers through benefit plans now
must provide meaningful disclosures about cost-savings to
benefit plans, physicians and patients."
The settlement requires Medco to:
(1) disclose to physicians and patients the minimum or
actual cost savings for health plans;
(2) reveal its financial incentives for making certain drug
switches;
(3) make physicians aware of any side effects between
prescribed drugs and proposed drugs;
(4) notify and reimburse patients for out-of-pocket costs
for health care costs tied to drug switching;
(5) obtain authorization from physicians for all drug
switches;
(6) monitor the effects of drug switching on the health of
patients;
(7) develop a code of ethics and professional conduct.
Medco will pay the Texas Attorney General's Office $210,000 in
investigative costs and fees, and nationwide, about $2.5 million
to patients who incurred expenses related to a switch between
cholesterol-controlling drugs.
Other states participating in this settlement are Arizona,
California, Connecticut, Delaware, Florida, Illinois, Iowa,
Louisiana, Maine, Maryland, Massachusetts, Nevada, New York,
North Carolina, Oregon, Pennsylvania, Vermont, Virginia and
Washington.
OXFORD HEALTH: CT Atty. General Appeals ERISA Lawsuit Dismissal
---------------------------------------------------------------
The Connecticut Attorney General appealed the United States
District Court for the Southern District of Florida's dismissal
of the class action he filed against Oxford Health Plans, Inc.
and three other Health Maintenance Organizations (HMOs).
The suit was initially filed in the United States District Court
in Connecticut, on behalf of a putative class consisting of all
Connecticut members of the defendant HMOs who were enrolled in
plans governed by the Employee Retirement Income Security Act
(ERISA). The suit alleged that the named HMOs breached their
disclosure obligations and fiduciary duties under ERISA by,
among other things:
(1) failing to timely pay claims;
(2) the use of inappropriate and arbitrary coverage
guidelines as the basis for denials;
(3) the inappropriate use of drug formularies;
(4) failing to respond to member communications and
complaints; and
(5) failing to disclose essential coverage and appeal
information.
The suit sought preliminary and permanent injunctions enjoining
the defendants from pursuing the complained of acts and
practices.
On September 7, 2000, a group of plaintiffs' law firms commenced
an action in federal district court in Connecticut against the
Company and four other HMOs on behalf of a putative national
class consisting of all members of the defendant HMOs who are or
have been enrolled in plans governed by ERISA within the past
six years. The substantive allegations of this complaint, which
also claimed violations of ERISA, were nearly identical to that
filed by the Connecticut Attorney General. The complaint
demanded the restitution of premiums paid and/or the
disgorgement of profits, in addition to injunctive relief.
Although this complaint was dismissed without prejudice as
to the Oxford defendants, another identical complaint against
the Company was filed on December 28, 2000 in the federal
district court in Connecticut under the caption "Patel v. Oxford
Health Plans of Connecticut, Inc." On November 30, 2000, the
Judicial Panel on Multidistrict Litigation (JPMDL) issued a
Conditional Transfer Order, directing that the Connecticut
Attorney General action be transferred to the Southern District
of Florida for consolidated pretrial proceedings along with
various other ERISA and Racketeering Influenced and Corrupt
Organizations (RICO) cases pending against other HMOs, which
order was confirmed on April 17, 2001.
On November 13, 2001, the JPMDL issued a Conditional Transfer
Order, directing that the Patel action also be transferred to
the consolidated proceedings in Florida, which order was
confirmed on February 20, 2002. By Order dated September 26,
2002, Judge Moreno of the Southern District of Florida, denied
the motion for class certification made by plaintiffs in the
member proceeding (the Subscriber Track). The Company reached
agreement to settle the Patel action by paying the individual
plaintiffs a total of $12,500, which case has now been
dismissed.
By Orders dated September 18, 2003, Judge Moreno granted the
motion of the Company and other defendants to dismiss the
Connecticut Attorney General action and ruled that the
Subscriber Track in this multidistrict litigation was closed in
light of the dismissal of all cases in that track.
OXFORD HEALTH: CT Court Hears Appeals on CUTPA Lawsuit Dismissal
----------------------------------------------------------------
The Connecticut state court heard appeals on the dismissal of
the lawsuit filed against Oxford Health Plans, Inc.'s
Connecticut HMO subsidiary by the Connecticut State Medical
Society (CSMS) on behalf of both itself and its members who had
Oxford contracts.
The suit asserted claims for breach of contract, breach of the
implied duty of good faith and fair dealing, violation of the
Connecticut Unfair Trade Practices Act (CUTPA) and negligent
misrepresentation based on, among other things, the Company's
alleged:
(1) failure to timely pay claims or interest;
(2) refusal to pay all or part of claims by improperly
"bundling" or "downcoding" claims, or by including
unrelated claims in "global rates;"
(3) use of inappropriate and arbitrary coverage guidelines
as the basis for denials; and
(4) failure to provide adequate staffing to handle
physician inquiries.
The Court ruled on December 13, 2001 that CSMS lacked standing
to assert any claims on behalf of its member physicians, and on
October 25, 2002 granted the Company's motion to strike the
complaint for failure to state a claim under CUTPA. On November
12, 2002, CSMS filed a notice of appeal with respect to the
Court's October 25, 2002 decision.
OXFORD HEALTH: NY Court Yet To Rule on Dismissal of HMO Lawsuit
---------------------------------------------------------------
The New York State Court has yet to rule on the appeal of the
dismissal of the lawsuits filed against Oxford Health Plans,
Inc. and its New York HMO subsidiary by the Medical Society of
the State of New York (MSSNY), and three individual physicians,
on behalf of all members of the MSSNY who provided health care
services pursuant to contracts with the Company during the
period August 1995 through the present.
The suit filed by the individual physicians was styled as a
class action complaint. Both suits asserted claims for breach
of contract and violations of New York General Business Law,
Public Health Law and Prompt Payment Law, based on, among other
things, the Company's alleged:
(1) failure to timely pay claims or interest;
(2) refusal to pay all or part of claims by improperly
bundling or downcoding claims, or by including
unrelated claims in "global rates;"
(3) use of inappropriate and arbitrary coverage guidelines
as the basis for denials; and
(4) failure to provide adequate staffing to handle
physician inquiries
The complaint filed by the MSSNY seeks a permanent injunction
enjoining the Company from pursuing the complained of acts and
practices, as well as attorney's fees and costs. By Order dated
January 23, 2003, the Court granted the Company's motion to stay
the purported class action case and compel arbitration. The
Court further dismissed the claims under the Prompt Pay Law and
the Public Health Law. By order dated January 24, 2003, the
Court granted the Company's motion to dismiss the MSSNY
complaint in its entirety. On February 28, 2003, MSSNY and the
individual physicians filed notices of appeal regarding the
January 23, 2003 and January 24, 2003 orders.
OXFORD HEALTH: Discovery Proceeds in NJ Breach of Contract Suit
---------------------------------------------------------------
Discovery is proceeding in the class action filed against Oxford
Health Plans, Inc. by Dr. John Sutter, a New Jersey physician,
on behalf of all New Jersey providers who provide or have
provided health care services to members of the Company's health
plans.
The suit asserts claims for breach of contract, breach of the
implied duty of good faith and fair dealing, and violations of
the New Jersey Prompt Pay Act and Consumer Fraud Act, and seeks
compensatory damages, treble damages on the Consumer Fraud Act
claim, punitive damages, reformation of the provider contracts,
and attorney's fees and costs.
On October 25, 2002, the Court dismissed the complaint and
granted the Company's motion to compel arbitration. On December
11, 2002, Dr. Sutter filed the same purported class action
complaint with the American Arbitration Association. The
parties are now engaged in discovery to determine whether the
arbitration may proceed as a class.
OXFORD HEALTH: MSNJ Appeals Dismissal of New Jersey HMO Lawsuit
---------------------------------------------------------------
The Medical Society of New Jersey appealed the dismissal of the
class action it filed against Oxford Health Plans, Inc. and four
other health management organizations (HMOs) in New Jersey
Chancery Court, on behalf of itself and its members who have
contracted with the Company and the other defendants.
The suit against the Company asserted several claims, including
violations of the New Jersey Prompt Pay Act and Consumer Fraud
Act and tortious interference with prospective economic
relations, based on, among other things, the Company's alleged:
(1) failure to timely pay claims or interest;
(2) refusal to pay all or part of claims by improperly
"bundling" or "downcoding" claims, or by including
unrelated claims in "global rates;"
(3) use of inappropriate and arbitrary coverage guidelines
as the basis for denials;
(4) failure to provide adequate staffing to handle
physician inquiries; and
(5) practice of forcing physicians into unfair contracts
that infringe on relationships with patients.
The complaint sought a permanent injunction enjoining the
Company from pursuing the complained of acts and practices, as
well as attorney's fees and costs. By order dated September 22,
2003, the Court granted Oxford's motion to dismiss the complaint
in its entirety for lack of standing and for failure to state an
actionable claim.
OXFORD HEALTH: Asks NY Court To Dismiss ERISA Violations Lawsuit
----------------------------------------------------------------
Oxford Health Plans, Inc. asked the United States District Court
for the Southern District of New York to dismiss the lawsuit
filed against it and Triad Healthcare, Inc. on behalf of all
Oxford members who are or were Oxford policyholders with
coverage for chiropractic care.
The suit alleges that the Company and Triad, which the Company
engaged to assist in managing chiropractic services, have
breached their disclosure obligations and fiduciary duties under
The Employee Retirement Income Security Act (ERISA) by, among
other things:
(1) the use of inappropriate and cost-based criteria as the
basis for denials;
(2) providing financial incentives to Triad to deny care;
(3) failing to disclose such financial incentives and
misrepresenting that chiropractic coverage would be
based on medical necessity; and
(4) intentionally delaying the payment of claims
The complaint demands the restitution of premiums paid and/or
the disgorgement of profits, in addition to injunctive relief
and attorney's fees. On January 14, 2004, the Company filed a
motion to dismiss the complaint in its entirety for failure
to state a claim under ERISA.
PROFESSIONAL TRANSPORTATION: Court Enters Judgment V. Controller
----------------------------------------------------------------
The Honorable Clarence Cooper, U.S. District Judge for the
Northern District of Georgia, entered a Final Judgment as to
defendant William S. Cole, controller of Professional
Transportation Group, Ltd., Inc., a trucking business
headquartered in Marietta, Georgia.
The judgment enjoined Mr. Cole from further violations of
Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(5) of the
Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-13
and 13b2-1 thereunder. Mr. Cole consented to the entry of the
judgment without admitting or denying any of the allegations of
the Commission's complaint. Mr. Cole was also ordered to pay a
civil penalty in the amount of $25,000.
The complaint alleges that Mr. Cole and others engaged in a
scheme to inflate the company's net income by recording sales
and receivables actually earned by another trucking entity
controlled by Professional Transportation's majority
shareholder. This scheme caused the company to fraudulently
report a cumulative net profit of $1.4 million for the six
months ended June 30, 2000, instead of a net loss of $1.7
million.
The suit is styled "SEC v. Dennis A. Bakal, et al., USDC, NDGA,
Civil Action No. 1:03-CV-2909-CC."
RADIOSHACK: "Sales Managers" Commence Overtime Wage Suit in FL
--------------------------------------------------------------
RadioShack faces a nationwide class action filed by the Florida
law firm Herman & Mermelstein seeking to recover unpaid overtime
on behalf of RadioShack "sales managers" that routinely work 60,
70 and 80 hours per week.
The lawsuit, "Lloredo, et al v. RadioShack," is pending in the
United States District Court for the Southern District of
Florida. The suit charges the Company with violations of
federal law by deliberately mis-classifying current and former
employees as executives to avoid paying overtime wages as
required by the Fair Labor Standards Act (FLSA). The Florida
law firm of Herman and Mermelstein, Ltd., is coordinating its
efforts with Touhy & Touhy, Ltd. and Callahan, McCune & Willis,
to fight for these individuals' rights to overtime compensation.
Under the FLSA, employees are entitled to time-and-a-half pay
for each hour over 40 hours worked in a workweek. While
employees in executive, administrative and professional
positions are exempt from the Act's requirements, the mere fact
that an employee is given a title, classified by an employer as
exempt and paid on a salary basis does not extinguish the right
to overtime.
In 2000, Callahan, McCune & Willis filed a California class
action entitled, Belazi v. RadioShack, against RadioShack
seeking to recover unpaid overtime for sales managers under
state law. In the summer of 2002, RadioShack agreed to settle
that case and pay California managers almost $30million.
Shortly thereafter, Touhy & Touhy Ltd., filed the first
nationwide lawsuit against RadioShack in the Northern District
of Illinois in Chicago, asserting similar overtime violations as
the California case, but under the FLSA. Callahan, McCune &
Willis brought their expertise from the California case and are
co-counsel in connection with this lawsuit. In that case,
entitled Perez et al v. RadioShack, over 3,200 current and
former sales managers "opted in" to the lawsuit by filing
consent forms with the Court. While a record number of people
opted-in to the Perez suit, many more missed the Court ordered
opt-in deadline who still wanted to pursue their rights to
unpaid overtime. The Lloredo action was filed for these people
and it is anticipated that the additional number of opt-ins in
this case will exceed 1,000.
"We wanted to file this second nationwide lawsuit now to ensure
that the thousands of employees we believe were improperly
denied overtime by RadioShack receive fair compensation for the
all the long weeks they worked," stated Jeffrey Herman, attorney
for the Plaintiffs, in a press release.
In both cases, Plaintiffs allege that RadioShack employees, mis-
classified as "Y" Store Managers were required to work in excess
of 50 hours per week and were paid a minimal base salary.
Plaintiffs also allege that these employees spent most of their
50 hour plus workweeks engaged in non-managerial duties such as
sales, pricing and store maintenance. They have not been
compensated for overtime.
Recent proposed regulations would have no retroactive impact on
either lawsuit, both of which seek damages under the current
version of the FLSA.
For more details, contact Daniel K. Touhy of Touhy & Touhy, Ltd.
by Phone: 312-372-2209 by Fax: 312-456-3838 or visit the firm's
Website: http://www.touhylaw.comor contact Robert Thompson by
Phone: 714-730-5700 by Fax: 714-730-1642 or contact Jeffrey
Herman of Herman & Mermelstein by Phone: 954-962-2200 by Fax:
954-962-4292 or visit the Website:
http://radioshackclassaction.com.
TROJAN TECHNOLOGIES: Recalls 3,900 Water Disinfection Systems
-------------------------------------------------------------
Trojan Technologies, Inc. is cooperating with the U.S. Consumer
Product Safety Commission by voluntarily recalling 3,900
TrojanUVMax(r) Water Disinfection Systems. Some of the lamp
pins used in these disinfection systems are improperly soldered,
and can cause the units to overheat, posing a fire hazard. The
Company has received 40 reports of the systems overheating
worldwide, resulting in some damaged units. No
injuries or other property damage have been reported.
The recalled TrojanUVMax system, designed for residential and
light commercial application, uses ultraviolet light to
disinfect water. "TROJANUVMAX" is written on the system's steel
chamber. Models included in the recall are D, D Plus, E, E Plus,
F, F Plus, Pro 7 and 15. Model numbers are written on the
Underwriters Laboratories label on the power supply. No other
Trojan Technologies model or product is included in this recall.
The lamps were manufactured in the U.S. and the system is
assembled in Canada.
Water treatment dealers, plumbing stores and through direct-
sales from plumbers sold these items from August 2000 through
April 2004 for between $500 and $1,500.
For more details, contact the Company by Phone: (800) 241-7923
anytime, or visit the firm's Web site: http://www.trojanuv.com.
UNITED LIBERTY: Enters Mediation For Policyholder Lawsuit in OH
---------------------------------------------------------------
United Liberty Life Insurance entered mediation for the class
action filed against it in the Court of Common Pleas for
Butler County, Ohio by two policyholders in June 2000.
The complaint refers to a particular class of life insurance
policies that United Liberty issued over a period of years
ending around 1971. It alleges that the Company's dividend
payments on these policies from 1993 through 1999 were less than
the required amount. It does not specify the amount of the
alleged underpayment but implies a maximum of about $850,000.
The plaintiffs also allege the Company is liable to pay punitive
damages, also in an unspecified amount, for breach of an implied
covenant of good faith and fair dealing to the plaintiffs in
relation to the dividends. The action has been certified as a
class action on behalf of all policyholders who were Ohio
residents and whose policies were still in force in
1993. The Company has denied the material allegations of the
Complaint and is defending the action vigorously. Pre-trial
discovery is continuing.
The Company has filed a motion for summary judgment, which has
been completely briefed and argued and awaits decision by the
Court. At the Company's request, an initial mediation session
has been completed and negotiations are continuing. As a pre-
requisite for the mediation, the Company offered to settle the
matter for payments over time, which would include attorneys'
fees, and which would be contingent upon an exchange or
reformation of the insurance policies currently owned by the
members of the class.
UNITED STATES: Senate To Tackle Lawsuit Reform Bill in June
-----------------------------------------------------------
The industry backed Class Action Fairness Act, S. 2062, will
once again see Senate floor action on June 1, 2004. Re-
introduced by Senate Majority Floor Leader Bill First, R-Tenn,
the bill is intended to clamp down on abuses in class action
lawsuits. Despite being the top priority of both insurers and
the White House legislation has remained dormant since early
this year. Speculations are high that the bill, a Republican
agenda for almost six years, will pass this time around. If the
presence of Democrats: Sen. Charles Schumer, D-N.Y.; Sen.
Christopher Dodd, D-Conn.; and Sen. Mary Landrieu, D-La., who
opposed the bill last year and are now one of the ten co-
sponsors of it, is any indication, BestWire Services, April 28,
2004, 4:32pm.
First introduced to the Senate in 1998, the class action reform
bill has been stalled in the House three times, most recently in
December 2003. It's also been through 10 committee hearings.
Technically speaking the bill has the effect of limiting many
large judgments against companies and the insurers who cover
their losses. The bill enjoys widespread popular support from
the insurance industry, the business community and even the
amongst its Republican backers. In fact, the bill enjoys such
support that even the U.S. Chamber of Commerce, whose members
will benefit a lot from the class action reform bill issued the
following statements: "We are extremely pleased that after six
years the United States Senate will finally have the opportunity
to debate and vote on legislation to fix the country's broken
state court class action system," said Stanton Anderson, the
group's executive vice president and chief legal officer as
quoted by BestWire Services. "The Class Action Fairness Act is a
moderate and reasonable bill that enjoys broad bipartisan
support. It should be made law," he added.
Currently awaiting passage, the bill gives the federal courts
jurisdiction over any class action in which $5 million or more
is at stake, and in which any member of the class of plaintiffs
is a resident of a state different from any of the defendants.
But as usual the backers of the bill will be facing stiff
opposition due too some of the bill precedents.
For more information, contact Chris Grier, Washington bureau
manager, by E-Mail: Chris.Grier@ambest.com
WEYERHAUSER COMPANY: NY Court Approves Linerboard Antitrust Pact
----------------------------------------------------------------
The United States District Court for the Eastern District of New
York granted final approval to the settlement of two civil
antitrust lawsuits filed against Weyerhauser Company and several
other major containerboard and packaging producers.
The complaint in the first case alleges the defendants conspired
to fix the price of linerboard and that the alleged conspiracy
had the effect of increasing the price of corrugated containers.
The suit requested class certification for purchasers of
corrugated containers during the period from October 1993
through November 1995.
The complaint in the second case alleges that the company
conspired to manipulate the price of linerboard and thereby the
price of corrugated sheets. The suit requested class
certification for purchasers of corrugated sheets during the
period October 1993 through November 1995. Both suits seek
damages, including treble damages, under the antitrust laws. No
specific damage amounts have been claimed.
In September 2001, the district court certified both classes.
Class certification was upheld on appeal and class members were
given until June 9, 2003, to opt out of the class.
Approximately 165 members of the classes have opted out and
filed lawsuits against the company in federal and state courts.
In September 2003, the company, Georgia-Pacific and
International Paper filed a motion with the court requesting
preliminary approval of a $68 million settlement of the class
action litigation. Weyerhaeuser's portion was approximately $23
million before taxes. The company recognized an after-tax
charge of $15 million, or 7 cents per share, in the third
quarter of 2003. Since no objections were filed, the
settlement is final and binding on the companies and class
members.
WHITE-RODGERS: Recalls 88T Temperature Controls For Fire Hazard
---------------------------------------------------------------
White-Rodgers is cooperating with the U.S. Consumer Product
Safety Commission by voluntarily recalling 88,000 LP and
Convertible Gas Water Heater Temperature Controls. The gas
water heater controls can gradually open instead of snapping
open to full flow, which can cause soot to build up on the water
heater burner, presenting a fire hazard. The Company has
received 12 reports involving soot build-up. Eight of these
reports included minor fire damage.
The temperature control is a small metal box located above the
access panel door of the gas water heater. A white label with
red lettering located on the right side of the control contains
one of the following model numbers: 37C55U 658, 3757C72U 602,
37C72U 520, 37C72U 546, 37C72U 547, or 37C72U 548, and 37C72U
676. There should be a four-digit metal stamped date code
located below the label on the right side of the control.
Recalled controls will have date codes 0240 to 0329 (40th week
of 2002 to 29th week of 2003). Potentially affected gas water
heaters include: AO Smith, Apollo, Crosley, Energysense,
Freedom, Interthrem, Kenmore, Maytag, Mission, Myers, Penfield,
President, Reliance, Sentry, or State. Beginning serial numbers
on these gas water heaters can be checked at the Web site:
http://www.regcen.com/tempcontrolrecall.
Retail distributors and independent servicers have sold and/or
installed water heaters with the controls from October 2002
through March 2004.
Contact White-Rodgers to arrange for a qualified service
technician to replace the recalled control free of charge. For
more details, contact the Company's Special Project Office:
(800) 426-3579 or visit their Web site:
http://www.regcen.com/tempcontrolrecall.
Asbestos Alert
ASBESTOS LITIGATION: Bairnco's Litigation Costs Reduce Income
-------------------------------------------------------------
Bairnco Corporation recorded an additional $4,000,000 pre-tax
provision for litigation costs in the fourth quarter of 2002.
After recognition of related tax benefits, the litigation
provision reduced net income in 2002 by $2,640,000 or about
$0.36 per share. The litigation provisions added to the
existing reserves for asbestos-related litigation expenditures
due to changes in the estimates to defend the Transaction
Lawsuit.
An injunction entered pursuant to the Keene Plan of
reorganization provided that only the Keene Creditors Trust
(KCT), and no other entity, can sue Bairnco on account of
damages caused by a Keene asbestos-containing product.
Therefore, although a number of other asbestos-related personal
injury and property damage cases against Bairnco based on
Keene's liabilities nominally remain pending in courts around
the country, the injunction bars such claims and Bairnco's
liability, if any, will be finally determined in the
Transactions Lawsuit. Management believes that Bairnco
(including its subsidiaries) has meritorious defenses to all
claims or liability purportedly derived from Keene and that it
is not liable, as an alter ego, successor, fraudulent transferee
or otherwise, for the asbestos-related claims against Keene or
with respect to Keene products.
ASBESTOS LITIGATION: Crane Faces 71,881 Pending Asbestos Claims
---------------------------------------------------------------
As of March 31, 2004, Crane Company was a defendant, among a
number of defendants, typically over 50 and frequently in the
hundreds, in cases filed in various state and federal courts
alleging injury or death as a result of exposure to asbestos.
Of the 71,881 pending claims as of March 31, 2004, around 25,000
claims are pending in New York and around 30,000 claims are
pending in Mississippi. These filings typically do not identify
any of the Company's products as a source of asbestos exposure.
A substantial majority of the New York claims have been placed
on a deferred docket and are ineligible for trial on the merits
without medical evidence of asbestos-related disease.
Generally, the Company has required evidence of exposure to
asbestos-containing materials in products manufactured or sold
by the Company, as well as medical evidence of asbestos-related
disease, as a prerequisite to settling an asbestos claim. A
significant proportion of the resolved claims against the
Company have been dismissed without payment because these
criteria are not satisfied. Despite this litigation posture,
the Company has recognized that the number of asbestos claims
pending against it continues to increase, and the settlement
demands from asbestos claimants continue to escalate. The
Company believes that federal legislation establishing a trust
fund to compensate asbestos victims is the most appropriate
solution to the asbestos litigation problem. The Company has
been actively monitoring, studying and supporting developments
in federal legislation during the past year and believes that
there is a reasonable possibility that legislation will be
passed in the current or next Congress. In addition, the
Company continues to monitor and study the structured settlement
transactions announced by certain other asbestos defendants.
In addition, there will be periods during which cash payments
increase because the Company's insurance coverage for asbestos
claims involves multiple insurers, with different policy terms
and certain gaps in coverage, and, consequently, the timing and
amount of insurance reimbursement will vary. A long-term
liability was recorded to cover the estimated cost of asbestos
claims through 2007 and a long-term asset was recorded
representing the probable insurance reimbursement for such
claims (around 40 percent of settlement and defense costs). The
Company's liability for asbestos-related claims before insurance
recoveries, which is included in other liabilities, was
$187,000,000 and $193,000,000 at March 31, 2004 and December 31,
2003, respectively, or $112,000,000 and $116,000,000,
respectively, after probable insurance recoveries. At March 31,
2004 and December 31, 2003 around 54% and 60%, respectively, of
the asbestos liability represented the estimated cost of
unasserted claims against the Company.
ASBESTOS LITIGATION: Electrolux Group Faces 732 Asbestos Suits
----------------------------------------------------------------
As of March 31, 2004, the Electrolux Group had a total of 732
lawsuits pending, representing around 22,500 plaintiffs, up from
the 584 lawsuits (21,000 plaintiffs) the Company reported as of
December 31, 2003. A total of 163 new cases with around 1,700
plaintiffs were filed during the first quarter of 2004 and 15
pending cases were resolved. Around 21,500 of the plaintiffs
relate to cases pending in the state of Mississippi.
Almost all of the cases refer to externally supplied components
used in industrial products manufactured by discontinued
operations prior to the early 1970s. Many of the cases involve
multiple plaintiffs who have made identical allegations against
many other defendants who are not part of the Electrolux Group.
ASBESTOS LITIGATION: Fairfax Losses Adjusted For Asbestos Claims
----------------------------------------------------------------
Fairfax Financial Holdings Ltd. Canada reported that for the
year ended December 31, 2003, it increased its loss and loss
adjustment expense reserves relating to prior periods by
$456,300,000 (before recovery under the Swiss Re Cover,
described in its management's discussion and analysis),
primarily relating to asbestos claims and runoff business. At
December 31, 2003, the Company's gross asbestos reserves were
$1,600,000,000, and asbestos reserves, net of reinsurance but
excluding vendor indemnities, were $772,200,000. However, these
claims and related litigation could result in liability
exceeding these reserves by an amount that could be material to
the Company's operating results and financial condition in
future periods.
Legislation has been introduced in Congress that would require,
as an essential element of an asbestos claim, a certification of
physical impairment to which asbestos exposure was a substantial
contributing factor. To date, Congress has taken no action on
that legislation.
ASBESTOS LITIGATION: Norcross Safety Implicated In 669 Lawsuits
---------------------------------------------------------------
Norcross Safety Products LLC reported in a regulatory filing
that its North Safety Products subsidiary, its predecessors
and/or the former owners of such business are presently named as
a defendant in around 669 lawsuits involving respirators
manufactured and sold by it or its predecessors. The Company is
also monitoring an additional 11 lawsuits in which it feels that
North Safety Products, its predecessors and/or the former owners
of such businesses may be named as defendants. Collectively,
these 680 lawsuits represent a total of around 32,000
plaintiffs. Around 88% of these lawsuits involve plaintiffs
alleging they suffer from silicosis, with the remainder alleging
they suffer from other or combined injuries, including
asbestosis. These lawsuits typically allege that these
conditions resulted in part from respirators that were
negligently designed or manufactured. Invensys plc, formerly
Siebe plc, is contractually obligated to indemnify the Company
for any losses, including costs of defending claims, resulting
from respiratory products manufactured prior to the acquisition
of North Safety Products in October 1998.
The Company maintains insurance against product liability
claims, with the exception of asbestosis and silicosis cases,
for which coverage is not commercially available), but it is
possible that its insurance coverage will not continue to be
available on terms acceptable to the Company or that such
coverage will not be adequate for liabilities actually incurred.
In addition, the Company is not a party to any lawsuits
involving asbestosis or silicosis relating exclusively to
product usage in the period after October 1998.
ASBESTOS LITIGATION: Owens Illinois Asbestos Payments Reduced
-------------------------------------------------------------
Owens Illinois Inc. reported in a regulatory filing that its
asbestos-related cash payments in the first quarter of 2004 were
$50,400,000, a reduction of $4,700,000, or 8.5%, from the first
quarter of 2003. New claim filings were around 30% lower than
in the first quarter of 2003. As of March 31, 2004, the number
of asbestos-related lawsuits and claims pending against the
Company was around 31,000, up from around 29,000 pending claims
at December 31, 2003 due to a lower rate of claim disposition
than in the comparable earlier period.
Additionally, the Company believes that a significant number of
those pending cases have exposure dates after the Company's 1958
exit from the business for which the Company takes the position
that it has no liability or are subject to dismissal on account
of their having been filed in improper forums. The Company
anticipates that cash flows from operations and other sources
will be sufficient to meet its asbestos-related obligations on a
short-term and long-term basis. The Company expects to conduct
its annual comprehensive review of its asbestos-related
liabilities and costs in connection with finalizing and
reporting its results for the full year.
ASBESTOS LITIGATION: St. Paul Travelers Suit Settlement Approved
----------------------------------------------------------------
On April 16, 2004, the U.S. District Court for the Northern
District of California issued an order affirming the previously
announced confirmation order of January 2004 of the U.S.
Bankruptcy Court for the Northern District of California, which
approved the June 2002 asbestos-related settlement among The St
Paul Travelers Companies, Inc. (formerly known as The St Paul
Companies, Inc.) and certain affiliates (the "St. Paul Parties")
and MacArthur Co., Western MacArthur Co., and Western Asbestos
Company (the "MacArthur Entities") and the MacArthur Entities'
proposed Plan of Reorganization. In connection with its order,
the District Court also issued the injunctions contained in the
Plan, including the injunctions in favor of the St. Paul
Parties. All other objecting insurers have entered into
settlements with the MacArthur Entities and have withdrawn their
appeals. As a result, the confirmation order has become final
for purposes of the settlement agreement and the Plan of
Reorganization.
ASBESTOS LITIGATION: Asbestos Trust Fund Bill Fails in Test Vote
----------------------------------------------------------------
A Senate bill to establish a $124,000,000,000 trust fund for
people suffering from asbestos-related diseases failed in a test
vote, but Senate leaders hope that discussions with a mediator
could revive the legislation later this year. Republicans were
unable to gather enough support in the Senate to force Democrats
to consider a plan to give businesses immunity from asbestos
lawsuits in exchange for a trust fund to speed money to sick
people. Sixty votes were needed to force a debate, but the vote
was 50-47. Senators left open the possibility of reviving the
legislation, however. The Senate's Majority Leader, Bill Frist,
R-Tenn., and Minority Leader, Tom Daschle, D-S.D., will meet
with a mediator in hopes of coming to some kind of agreement.
Although the mediation with Federal Appeals Judge Edward Becker,
who has been working with Sen. Arlen Specter, R-Pa., since 2003
trying to come up with compromise legislation, will not be
binding, Senator Daschle said if Republicans and Democrats sit
down at the same table a solution might be reached. "I firmly
believe that an inclusive approach holds the best promise for
moving toward a consensus solution of this very contentious and
consequential issue," he said in a letter to Senator Frist. "I
am gratified that Judge Becker seconded that view, and I am
pleased that you have now agreed to this approach."
Democrats have been complaining that Republicans are trying to
rush a bill through to satisfy the business and insurance
lobbies, which have made ending asbestos lawsuits one of their
top priorities. Under the bill promoted by Senator Frist, and
Senator Hatch, the Judiciary Committee chairman, the government
would set up a trust fund that could reach as much as
$124,000,000,000. The fund, financed by businesses and
insurance companies, would speed money to people with asbestos-
related diseases.
Democrats contend that businesses would not be putting enough
into the fund in exchange for permanent immunity from lawsuits.
"The bill before us does not reflect what is necessary to
compensate the enormous number of workers who suffer from
asbestos-induced disease, it reflects only what the companies
who made them sick are willing to pay," said Sen. Edward
Kennedy, D-Mass. Republicans say Democrats will not let any
bill pass because trial lawyers do not want to lose the money
they make from asbestos legislation.
The Congressional Budget Office has said the bill could increase
the federal deficit by $13,000,000,000 over the next ten years,
an estimate that could influence the vote of some of the
Senate's fiscal conservatives. It would take 60 votes to force
a debate in the Senate, which has 51 Republicans, 48 Democrats
and one independent senator, Jim Jeffords of Vermont.
ASBESTOS ALERT: Asbestos Corporation, Mazarin Involved In Suits
---------------------------------------------------------------
Asbestos Corporation Limited reported that it is amongst various
suppliers of chrysotile fibres named as defendants in numerous
actions in the United States and Canada for bodily injury, filed
by persons claiming exposure to chrysotile fibres or to
chrysotile-containing products. In addition, the Company has
been named in various actions in which damages are claimed for
the removal of chrysotile-containing products.
The Company denies all liability and all the cases are
contested. However, according to the opinion of legal experts
consulted, even if a default judgment was rendered against the
Company, such judgment could not be enforced against the Company
prior to its verification or exemplification by a competent
court in the Province of Quebec. Finally, the liability of the
Company, which might eventually result from these actions, is,
for the most part, covered by its insurance.
Asbestos Corporation Limited and 9075-6453 Quebec Inc. are
subsidiaries of Mazarin Inc., and through their intermediary,
Mazarin's main mining assets are operated by LAB, Limited
Partnership. Mazarin holds, through its subsidiaries, an
interest in LAB, Limited Partnership and in LAB Chrysotile Inc.,
general partner of LAB. Subject to Article 123.66 of the
Companies Act, Mazarin has undertaken to indemnify its directors
and officers, as well as the directors and officers of its
subsidiaries, for any reasonable damages ensuing or resulting
from a claim in which they are involved as a result of being or
having been a director or an officer of Mazarin or of any of
Mazarin's subsidiaries. For this purpose, the Company maintains
a liability insurance policy in the amount of $5,000,000 for the
period from December 28, 2003 to December 28, 2004. The
deductible per claim is $25,000 overall. The premium, which
amounts to $20,500, is paid entirely by Asbestos Corporation
Limited, a subsidiary of the Company that generates the risk.
COMPANY PROFILE
Asbestos Corporation Limited (TSX: AB)
840 Ouellet Boulevard West
Thetford-Mines QC Canada G6G 7A5
Phone: 418-338-5195
Fax: 418-338-6069
http://www.asbestos-corp.com/
Employees : 2,000
Revenue : $ 6,182,000,000.00
Net Income : $ 196,000,000.00
Assets : $15,274,000,000.00
Liabilities : $ 9,693,000,000.00
(As of December 31, 2003)
Description: Asbestos Corporation Limited has minority
participation in a limited partnership which mines and mills
asbestos. It is the world's largest independent producer of raw
asbestos crudes and fibres and owns and operates four asbestos
mines: the King, Beaver, British Canadian and Normandie mines,
in the vicinity of Thetford Mines in the Eastern Townships of
Quebec.
ASBESTOS ALERT: Butler Firm Refuses RCC Proposal, Reveals Claims
----------------------------------------------------------------
In a regulatory filing with the Securities and Exchange
Commission, Butler Manufacturing Company rejected the
preliminary and non-binding funding proposals by Robertson-Ceco
Corporation (RCC), saying that they raised serious concerns that
any financing would be subject to special comfort on other
matters such as available insurance coverage and trends
regarding RCC's asbestos claims and the solvency of RCC before
and after the transaction, as well as detailed documentation and
legal, environmental, financial and business due diligence on
both Butler and the RCC companies. John Holland, Chairman of
the Company, wrote to RCC Chief Executive Michael E. Einsley,
Sr. on April 23, 2004 that in the absence of a Superior
Proposal, it is the duty of the Company's Board of Directors to
continue to recommend that Butler stockholders vote for the
approval and adoption of a merger with BlueScope Steel Limited.
Butler Manufacturing Company is a world leader in the production
of pre-engineered building systems, a leading supplier of
architectural aluminum systems and components, and a provider of
construction and real estate services for the nonresidential
construction market.
COMPANY PROFILE
Robertson-Ceco Corporation (NYSE: RHH)
70 W. Madison St., Ste. 5600
Chicago, IL 60602
Phone: 312-456-2535
Fax: 312-580-3514
http://www.cecobuildings.com
Employees : 1,450
Revenue : $ (285,800,000.00)
Net Income : $ (31,800,000.00)
Assets : $ (178,200,000.00)
Liabilities : $ (73,800,000.00)
(As of December 1999)
Description: Robertson-Ceco manufactures pre-engineered metal
buildings for the industrial and construction industries. The
company's three metal-building manufacturing companies, Ceco
Building Systems, Star Building Systems, and H. H. Robertson
Building Systems, operate five plants in the U.S. and one in
Canada. It manufactures buildings that range in size from under
150,000 sq. ft. to up to 1,000,000 sq. ft. and up to four
stories high. Robertson-Ceco sells through builder/dealer
networks in the U.S. and Canada and through direct sales and
local dealers in Asia.
ASBESTOS ALERT: Credit Suisse Professes Reduction In Exposure
-------------------------------------------------------------
Credit Suisse Group said in a regulatory filing that H. S.
Weavers was an underwriting agent that wrote business on behalf
of its Insurance division through year-end 1983. The agency
accepted commercial umbrella and excess casualty business from
U.S. companies, and, as a result, has significant exposure to
asbestos and other health hazard claims. Provision is only made
for health hazards that have resulted in reported claims. No
provision has been made for exposures to emerging mass torts,
such as electromagnetic fields, for which there is insufficient
information available to indicate a liability. Effective July
1, 2000, Insurance sold Republic Insurance Company, one of its
U.S. non-life insurance companies, to National Indemnity
Corporation (NICO) and thereby eliminated significant exposure
to asbestos and other health hazard risks related to this book
of business. Also effective July 1, 2000, Winterthur Insurance
purchased retroactive reinsurance coverage from the National
Indemnity Corporation to limit the exposure from this book of
business. The reinsurance provides coverage up to $800,000,000
against an estimated undiscounted exposure of $584,000,000. As
a result of this retroactive reinsurance transaction, Winterthur
Insurance recorded a net deferred gain in 2000 in the amount of
$233,000,000 (CHF381,000,000). The net deferred gain is
amortized to operating income over the estimated settlement
period of the underlying portfolio. At December 31, 2002 and
2001, the remainder of the deferred gain to be amortized in
future years was $199,000,000 (CHF277,000,000) and $203,000,000
(CHF340,000,000), respectively.
Liabilities for gross losses and LAE for asbestos and
environmental claims were CHF742,000,000 and CHF936,000,000 at
December 31, 2002 and 2001, respectively. CHF639,000,000 in
2002 and CHF799,000,000 in 2001 relate to claims in North
America. The change in reserves in 2002 of CHF194,000,000
predominately relates to foreign exchange differences of
CHF135,000,000.
Liabilities for net losses and LAE for asbestos and
environmental claims were CHF 192,000,000 and CHF268,000,000 at
December 31, 2002 and 2001, respectively. Of this amount, CHF
107,000,000 in 2002 and CHF157,000,000 in 2001 relate to claims
in North America. The change in reserves in 2002 of
CHF76,000,000 includes foreign exchange differences of
CHF25,000,000. Included in this exposure are policies written
by H. S. Weavers. Strengthening of reserves for Italy and Spain
and asbestos and other health hazards resulted in major
cumulative deficiencies in net reserves for the years 1992-1995.
COMPANY PROFILE
Credit Suisse Group (NYSE: CSR [ADR])
Paradeplatz 8, P.O. Box 1
8070 Zurich, Switzerland
Phone: 41-1-212-1616
Fax: 41-1-333-2587
http://www.credit-suisse.com
Employees : 60,837
Revenue :$ 60,665,658,000.00
Net Income :$ 2,386,782,000.00
Assets :$689,314,673,000.00
Liabilities :$666,670,181,000.00
(As of December 31, 2002)
Description: Credit Suisse Group is the second-largest financial
services firm in Switzerland, behind rival UBS. The firm
provides conventional consumer and business banking services
within its home market, where it has some 250 locations, but
most of its business is done outside the nation. Bulge-bracket
investment bank subsidiary Credit Suisse First Boston (CSFB) one
of the top IPO underwriters in the world, provides corporate and
investment banking services throughout the world, and also
includes Credit Suisse First Boston (USA).
ASBESTOS ALERT: Duke Energy Corporation Insured Against Claims
--------------------------------------------------------------
Duke Energy Corporation has experienced numerous claims relating
to damages for personal injuries alleged to have arisen from the
exposure to or use of asbestos in connection with construction
and maintenance activities conducted by Duke Power on its
electric generation plants during the 1960s and 1970s. In late
1999, after experiencing a significant increase in claims and
conducting a comprehensive review, Duke Energy recorded an
$800,000,000 accrual to reflect the purchase of a third-party
insurance policy as well as estimated amounts for future claims
not recoverable under such policy. The insurance policy,
combined with amounts covered by self-insurance reserves,
provides for claims paid up to an aggregate of $1,600,000,000.
Duke Energy conducted another review in 2003 and continues to
believe the estimated claims relating to this exposure will not
exceed such amount. Duke Energy is uncertain as to the timing
of when claims will be received, and portions of the estimated
claims may not be received and paid for 30 or more years. While
Duke Energy has recorded an accrual related to this estimated
liability, such estimates cannot be made with certainty and may
change. However, due to Duke Energy's insurance program
relating to this liability, management believes that any changes
in the estimates would not have a material adverse effect on
consolidated results of operations, cash flows or financial
position.
COMPANY PROFILE
Duke Energy Corp. (NYSE: DUK)
526 South Church Street
Charlotte, NC 28202
Phone: 704-594-6200
Fax: 704-382-4964
http://www.duke-energy.com
Employees : 23,800
Revenue : $15,663,000,000.00
Net Income : $ 1,034,000,000.00
Assets : $60,966,000,000.00
Liabilities : $46,022,000,000.00
(As of December 31, 2003)
Description: Duke Energy is a diversified energy company with a
portfolio of natural gas and electric businesses, both regulated
and unregulated, and an affiliated real estate company. Duke
Energy supplies, delivers and processes energy for customers in
North America and selected international markets. In 2004, the
company celebrates the 100th anniversary of its electric utility
Duke Power. Headquartered in Charlotte, NC, Duke Energy is a
Fortune 500 company.
ASBESTOS ALERT: NYC Newco Says CSXT May Incur Asbestos Claims
-------------------------------------------------------------
NYC Newco Inc. reported in a regulatory filing that CSX
Transportation Inc. (CSXT) had a charge of $229,000,000 pretax,
$143,000,000 after tax, in conjunction with the change in
estimate of casualty reserves to include an estimate of incurred
but not reported claims for asbestos and other occupational
injuries to be received over the next seven years.
COMPANY PROFILE
CSX Transportation Inc. (CSX)
500 Water Street, 15th Fl.
Jacksonville, FL 32202
Phone: 904-359-3100
Fax: 904-359-2459
http://www.csxt.com
Employees : 32,892
Revenue : $ 6,182,000,000.00
Net Income : $ 196,000,000.00
Assets : $15,274,000,000.00
Liabilities : $ 9,693,000,000.00
(As of December 31, 2003)
Description: CSX Transportation operates the largest rail
network in the eastern United States and also provides
intermodal, container shipping and international terminal
management services to a broad range of customers throughout the
world. The Fortune 200 corporation was officially formed in
1980 by the merger of two major eastern railroads, the Chessie
System and Seaboard Coast Line. Chessie's predecessors include
the nation's first railroad, the Baltimore & Ohio, as well as
the Chesapeake and Ohio Railway and Western Maryland Railway.
Seaboard's predecessors include Atlantic Coast Line, Seaboard
Air Line and Louisville & Nashville. The merged railroads began
operating as CSX Transportation in 1986. In July 1998, the
federal Surface Transportation Board approved the joint
acquisition of Conrail by CSX and Norfolk Southern Corporation
and CSX Transportation began operating over newly acquired rail
lines in 1999.
ASBESTOS ALERT: Northbridge Claims Reserves At $1.69 Trillion
-------------------------------------------------------------
Northbridge Financial Corporation reported in a regulatory
filing that its claims reserves or gross provision for claims
was $1,690,200,000,000 at December 31, 2003. The major risk
that it faces as a property and casualty insurance and
reinsurance company is that the provision for claims is an
estimate and may be found to be deficient in the future as a
result of unanticipated frequency or severity of claims or for a
variety of other reasons including expansion of insurance
coverage to include exposures not contemplated at the time of
policy issue (e.g. asbestos).
COMPANY PROFILE
Northbridge Financial Corporation (TSX: NB)
105 Adelaide St. West
Toronto, Ontario M5H 1P9, Canada
Phone: 416-350-4630
Fax: 416-350-4417
http://www.northbridgefinancial.com
Employees : 1,293
Revenue :CAD1,166,197,000.00
Net Income :$ (34,000,000.00)
Assets :CAD3,689,324,000.00
(As of December 31, 2002)
Description: Northbridge Financial Corp. operates through four
key divisions, Lombard Canada, Markel, Federated Insurance and
Commonwealth Insurance Company. It is one of Canada's top
commercial property and casualty insurers. Northbridge also
provides home and automobile insurance to select demographics,
although personal insurance accounted for only 14% of gross
written premiums in 2002. Originally a wholly owned subsidiary
of Fairfax Financial, 26% of the Company or 13,400,000 shares
were recently sold through an initial public offering.
ASBESTOS ALERT: Xerium Technologies Inc. Named in Injury Suits
--------------------------------------------------------------
Xerium Technologies Inc. reported in a regulatory filing that
although it has not used asbestos in its manufacturing process,
it has been named as a defendant in lawsuits in the United
States filed by persons alleging injuries caused by asbestos
contained in clothing produced by other manufacturers. Although
the Company has been able to show that it did not use asbestos
and, as a result, has typically been successful in obtaining
dismissals from such lawsuits and accordingly, does not
anticipate incurring any material liabilities for asbestos-
related claims, it may be required to spend a significant amount
of money to defend against such claims and obtain dismissals.
COMPANY PROFILE
Xerium Technologies Inc.
One Technology Drive, Westborough Technology Park
Westborough, MA 01581
Phone: 508-616-9468
Employees : 4,000
Revenue : $ 560,700,000.00
Net Income : $ 3,000,000.00
(As of December 31, 2003)
Description: Xerium Technologies Inc. is a holding company and
has no direct operations. It is a leading global manufacturer
and supplier of two categories of consumable products used in
the production of paper clothing and roll covers. The Company
has a global footprint of 39 manufacturing facilities in 15
countries, in the major paper-producing regions of North
America, Europe, South America and Asia, and has around 4,000
employees worldwide. It markets its products to the paper
industry's leading producers through several brands.
New Securities Fraud Cases
CHINA LIFE: Chitwood & Harley Lodges Securities Suit in S.D. NY
---------------------------------------------------------------
Chitwood & Harley, LLP commenced a securities class action on
behalf of purchasers of securities of China Life Insurance
Company Ltd. (NYSE:LFC) between and including December 17, 2003
and February 3, 2004. The class action lawsuit is pending in
the United States District Court for the Southern District of
New York. In addition to China Life, the Complaint names the
following officers or directors of the Company as Defendants:
Wang Xianzhang, Long Yongtu, Chau Takhay, Miao Fuchun and Wu
Yan.
The Complaint alleges that, during the Class Period, Defendants
violated Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934, and Rule 10b-5 promulgated thereunder, and Sections 11
and 15 of the Securities Act of 1933. More specifically, the
Complaint alleges that defendants knew, but failed to disclose:
(1) that the Company, under its old name, and/or its
predecessor or parent, engaged in a massive financial
fraud;
(2) that at the time of the IPO, the National Audit Office
of China ("NAO") had completed and/or was about to
publish its adverse audit findings of the predecessor
company which, under a new name, controls the listed
company, China Life;
(3) that the predecessor company, under a different name,
engaged in criminal acts involving illegal agent
services, illegal premium payments, embezzlement and
depositing monies in illegal bank accounts; and
(4) that China Life's share price would be tied to the
illegal acts already known to the defendants, two-
thirds of whom were directors/executive officers and/or
senior managers of the predecessor company. As a result
of the defendants' false statements, China Life's stock
price traded at inflated levels during the Class
Period.
The Complaint also alleges that as a result of the omission of
this material information, the Registration Statement and
Prospectus the Company issued in connection with the initial
public offering was misleading. Yesterday, without many details,
the Company announced that the Securities and Exchange
Commission had commenced an informal inquiry into its business.
A copy of the Complaint is available from the Court under Civil
Action No. 04-CV-03218, or can be viewed on the Chitwood &
Harley website at www.classlaw.com
For more details, contact Lauren S. Antonino by Phone:
1-888-873-3999, ext. 6888 (toll-free) or by E-Mail:
lsa@classlaw.com
NORTEL NETWORKS: Scott + Scott Lodges Securities Suit in S.D. NY
----------------------------------------------------------------
Scott + Scott, LLC filed a securities class action against
Nortel Networks Corporation (NYSE: NT; TSX: NT). The case has
been brought in the United States District Court for the
Southern District of New York on behalf of people who purchased
or otherwise acquired Nortel securities during the period
between April 24, 2003 and March 15, 2004, inclusive.
On April 28, 2004, Nortel shocked the market by announcing that
it had fired its CEO and two other top executives and stated
that it would restate 2003 earnings- cutting the year's profit
in half. Further, the Company stated that it would delay
reporting its first quarter results. CEO Frank Dunn, CFO Douglas
Beatty and controller Michael Gollogly were all fired.
On March 29, 2004, the Company announced that due to the delay
in the filing of its 2003 financial statements, it would
postpone its Annual Shareholder' Meeting, scheduled for April
29, 2004, until after the filing of financial statements. On
April 5, 2004, Nortel announced that the U.S. Securities and
Exchange Commission had issued a formal order of investigation
into the company's previous restatement of financial results for
certain periods. Further, with more restatements likely to arise
at Nortel per their announcement in March 2004, Scott + Scott
welcomes any securities holder in Nortel to contact the firm for
additional information.
It is alleged that during the period from April 24, 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 previously.
If you bought the securities of Nortel between April 24, 2003
and March 15, 2004, inclusive and sustained damages, you may, no
later than May 16, 2004 move for appointment of "lead
plaintiff." Signing a certification with Scott + Scott, LLC will
not avail a shareholder to being submitted as a lead plaintiff
without further consultation and without adequately qualifying
for that position.
For more information, contact Scott + Scott attorney Neil
Rothstein by Mail: Three Bala Plaza East, Suite 400, Bala
Cynwyd, PA 19004 by Phone: 800/404-7770 or 860/537-3818 (EST)
or 800/332-2259 or 619/233-4565 (PST) or by E-Mail:
nrothstein@scott-scott.com
NORTEL NETWORKS: Much Shelist Announces Class Period For IL Suit
----------------------------------------------------------------
The Law Firm of Much Shelist Freed Denenberg Ament & Rubenstein,
P.C., filed a securities class action filed in the United States
District Court for the Southern District of Illinois. The
lawsuit was filed in behalf of purchasers of the securities of
Nortel Networks Corporation (NYSE:NT) between October 23, 2003
and March 15, 2004, inclusive.
The Complaint alleges that that certain senior officers in the
company issued materially false and misleading statements to the
market that had an effect of artificially inflating the market
prices of Nortel's securities. The Complaint also alleges that
Nortel, its president and CEO; Frank A. Dunn, its CFO; Douglas
C. Beatty, and its controller; Michael J. Gollogly were the ones
responsible for violating federal securities laws. Following an
investigation by Nortel's Audit Committee, the comapany
announced on March 28, 2003, that Dunn, Beatty and Gollogly were
being terminated. In response to this announcement, the price of
Nortel common stock plummeted almost 30%.
The Complaint further alleges that, on March 10, 2004, Nortel
suddenly announced that it would need to delay filing its 2003
annual financial statements with the Securities and Exchange
Commission and that the Company would need to revise its just-
announced results for the full-year and certain quarters of
2003. Nortel admitted that the delay in filing the 2003 annual
financial statement would violate the Company's debt covenants
and could, therefore put the Company in harm's way. Later in a
highly unusual move, Nortel announced on March 15, 2004, that,
it was placing defendants Beatty (Nortel's CFO) and Gollogly
(Nortel's controller) on a "paid leave of absence pending the
completion of the independent review being undertaken by the
Company's Audit Committee." The announcement dropped shares of
the Company's stock from $1.19 per share on the NYSE, or 18.5%,
to close at $5.24, in extremely heaving trading, and continued
to slide further in after-hours trading.
Then on the 29th of March, Nortel once again announced a delay
in its filling of first quarter results for 2004 and that only a
"limited preliminary unaudited" results for 2004 will be
released in April 29, 2004. Nortel also announced that the
Annual Shareholders' Meeting originally scheduled on the same
day for releasing financial results was to be postponed.
For more details, contact Much Shelist Freed Denenberg Ament &
Rubenstein, P.C. (Carol V. Gilden, Esq.) by Phone:
(800) 470-6824 or by E-Mail: investorhelp@muchshelist.com
ODYSSEY HEALTHCARE: Lasky & Rifkind Files Stock Suit in N.D. TX
----------------------------------------------------------------
Lasky & Rifkind, Ltd. launched a securities class action in the
United States District Court for the Northern District of Texas,
on behalf of persons who purchased or otherwise acquired
publicly traded securities of Odyssey Healthcare Inc.
(NASDAQ:ODSY) between May 5, 2003 and February 23, 2004,
inclusive. The lawsuit was filed against Odyssey and Richard R.
Burnham, David C. Gasmire and Douglas B. Cannon.
The complaint alleges that Defendants violated Sections 10(b)
and 20(a) of the Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. Specifically, the Complaint alleges that Defendants
failed to disclose and misrepresented that the Company's
financial results were materially inflated because a significant
amount of its Hospice programs exceeded the amounts they were
entitled to receive under Medicare reimbursement programs, that
the Company admitted patients to its programs that were not
eligible, and that its levels of care were below prescribed
standards.
On February 23, 2004, Odyssey announced that its first-quarter
earnings would be below analysts' expectations. For the first
fiscal quarter 2004 the Company had predicted EPS of $0.20 to
$0.22 per share, vs. its reported $0.19 actual results. Then on
April 12, 2004, Barron's published an article highlighting
various issues at the Company. These issues included the
aforementioned as well as suggested that the Company's financial
results were a result of providing poor care. Shares reacted
negatively to the news, falling approximately 26% in heavy
volume.
For more details, contact Lasky & Rifkind, Ltd., by E-Mail:
investorrelations@laskyrifkind.com or visit their website:
www.laskyrifkind.com
SPEAR & JACKSON: Schiffrin & Barroway Files Lawsuit in S.D. FL
--------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in
the United States District Court for the Southern District of
Florida on behalf of purchasers of the securities of Spear and
Jackson, Inc. (OTC Bulletin Board: SJCK.OB) between July 14,
2003 and April 15, 2004, inclusive.
The complaint charges that Spear and Jackson, William Fletcher,
and Dennis Crowley violated sections 10(b) and 20(a) of the
Exchange Act, and Rule 10b-5 promulgated thereunder, by issuing
a series of material misrepresentations to the market between
July 14, 2003 and April 15, 2004. More specifically, the
complaint alleges that defendants' statements during the Class
Period failed to disclose and misrepresented the following
material adverse facts then known to defendants or recklessly
disregarded by them:
(1) that defendants orchestrated a pump-and-dump scheme to
manipulate the share price of Spear & Jackson stock;
(2) that defendants used false information to tout Spear &
Jackson stock to registered representatives and broker-
dealers around the country;
(3) that defendants used nominee companies based in the
British Virgin Islands illegally to obtain over 1.2
million shares of Spear & Jackson stock during 2002,
some of which was obtained through the filing of a
fraudulent Form S-8 registration statement;
(4) that the Company's repurchase of shares was not in
compliance with applicable rules;
(5) that the Company never had any intention of making open
market purchases as suggested in its January 16, 2004
release; and
(6) that the Company was not on track to achieve earnings
of $0.50 to $0.55 per share for 2004.
On April 16, 2004, the SEC announced the that on April 15, 2004
it filed a complaint and obtained a temporary restraining order
(TRO) and other emergency relief against Spear & Jackson, Inc.,
an OTC Bulletin Board company headquartered in Boca Raton,
Florida, and its CEO Dennis P. Crowley. The SEC's complaint
charges that for the last two years, Crowley has been secretly
selling Spear & Jackson stock through brokerage accounts in the
name of nominee companies based in the British Virgin Islands.
To date, Crowley's illegal sales of Spear & Jackson stock total
more than $3 million. News of this shocked the market. Shares of
Spear & Jackson fell $0.47 per share, or 19.83 percent, to close
at $1.90 per share on April 16, 2004.
For more details, contact Schiffrin & Barroway, LLP (Marc A.
Topaz, Esq. or Stuart L. Berman, Esq.) by Phone: 1-888-299-7706
or 1-610-667-7706 by E-Mail: info@sbclasslaw.com
SUPERCONDUCTOR TECHNOLOGIES: Brian M. Felgoise Files Suit in CA
---------------------------------------------------------------
The Law Offices of Brian M. Felgoise, P.C. has announced the
commencement of a securities class action lawsuit on behalf of
shareholders who acquired Superconductor Technologies securities
between the periods of January 9, 2004 to March 1, 2004,
inclusive (the "Class Period"), Market Wire, April 28, 2004,
2:51pm.
Though still pending in the United States District Court for the
Central District of California, the suit has not yet certified a
class.
The class action alleges that defendants issued materially false
and misleading statements to the market during the Class Period,
which had the effect of artificially inflating the market price
of Company securities. The statements, the action claims was a
blatant violation of federal securities laws.
For more details, contact Brian M. Felgoise, Esquire by Mail:
261 Old York Road, Suite 423, Jenkintown, Pennsylvania, 19046,
by Phone: (215) 886-1900 or by E-Mail:
securitiesfraud@comcast.net
ODYSSEY HEALTHCARE: Brian M. Felgoise Lodges TX Securities Suit
---------------------------------------------------------------
The Law Offices of Brian M. Felgoise, P.C. initiated a
securities class action against Odyssey Healthcare and some of
its officers and directors. The suit was filed on behalf of
shareholders who acquired Company securities between the periods
of May 5, 2003 to February 23, 2004, inclusive.
Though still pending in the United States District Court for the
Northern District of Texas, the suit has not yet certified a
class.
The class action alleges that defendants issued materially false
and misleading statements to the market during the Class Period,
which had the effect of artificially inflating the market price
of Company securities. The statements, the action claims was a
blatant violation of federal securities laws.
For more details, contact Brian M. Felgoise, Esquire by Mail:
261 Old York Road, Suite 423, Jenkintown, Pennsylvania, 19046,
by Phone: (215) 886-1900 or by E-Mail:
securitiesfraud@comcast.net
*********
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
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